[Congressional Record Volume 143, Number 44 (Tuesday, April 15, 1997)]
[Senate]
[Pages S3199-S3224]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. GRASSLEY (for himself, Ms. Moseley-Braun, and Mr. Burns):
  S. 573. A bill to amend the Internal Revenue Code of 1986 to allow an 
income tax deduction for student loan interest payments; to the 
Committee on Finance.


            the loan interest forgiveness for education act

  Ms. MOSELEY-BRAUN. Mr. President, I am pleased to join my 
distinguished colleague from Iowa, Senator Grassley, and my colleague 
from Montana, Senator Conrad Burns, in introducing S. 573, the Loan 
Interest Forgiveness for Education Act, the LIFE Act. One of the major 
forces driving this bill is our growing concern that parents and 
students in this country have access to a quality education without 
amassing enormous student loan bills.
  The cost of college has a direct impact on access to college. The 
more tuition goes up, the more students will be

[[Page S3200]]

priced out of their opportunity for the American dream. Our country 
will suffer the loss of talent and training. We cannot as a nation 
prepare for the 21st century by making it more difficult for our 
children to access higher education.
  This Congress is working hard to eliminate the Federal deficit. In 
part, this is because we know that piling on more debt ultimately 
undermines the ability of the generations that follow us to achieve the 
American dream, and to do what we have done--live better than our 
parents. Mr. President, that is why we are introducing this LIFE bill. 
It will do two things: encourage individuals to go to college, and 
reduce the cost of a college education. I believe very strongly, Mr. 
President, that the way to achieve this dream is to ensure that 
everyone who is in need of financial assistance to attend an 
institution of higher learning has that opportunity. They should have 
the opportunity, as we did, to pursue their dreams.
  It is absolutely essential that we continue to invest in our most 
important asset--our children. That is what the Loan Interest 
Forgiveness for Education Act is all about. The bill will create a 
deduction for qualified student loan interest including expenses for 
interest paid on student loans used to pay postsecondary education 
expenses such as tuition, books, room and board. This bill is similar 
to provisions contained in both the Republican and Democratic 
leadership education bills, S. 1 and S. 12, and is also similar to a 
provision passed by Congress as part of the 1995 Budget Reconciliation 
Act.
  As you may know, President Clinton has proposed a bill to allow a 
$1,500 tax credit per year for the first 2 years of college or a 
$10,000 deduction per person per year for qualified college tuition 
expense. I am glad to see President Clinton focus on investing in 
education for the middle class because it is truly our only hope of 
remaining competitive in this global marketplace. However, I believe we 
should go even further by investing in those working parents too, who 
would otherwise not be able to send their children to college without 
loans.

  The median income for a family of four as reported by the Joint 
Committee on Taxation in 1995 was $49,531. If that household income was 
comprised entirely of wage or salary income and, if that household 
filed a joint return claiming the standard deduction and four personal 
exemptions, the household's income tax liability would have been $4,947 
and a total payroll tax liability of $7,578 resulting in a total tax 
liability of $12,525. When considering the tax liability and the 
limited income of the median household family, a large number of 
American families will not have the extra income to save $80,000 for 
two children to go to college.
  This legislation will focus on those that do not have parents who can 
afford to save for college. Those working parents who can barely afford 
to make ends meet; parents who provide the basics of life such as food, 
clothing, shelter, and medical insurance for their children but do not 
make the extra income to save for college. Even if families could 
afford to save the money to pay for their children's college education, 
income tax liability of many families is not high enough to benefit 
from the President's proposal because neither the $10,000 tax deduction 
nor $1,500 tax credit is refundable.
  Students whose parents are unable to pay for college up front are 
generally the ones who rely more heavily on student loans to pay for 
college and should be given the same type of tax relief as those that 
come from families that can afford to finance the costs of a college 
education from savings. That is why the Loan Interest Forgiveness for 
Education Act, or the LIFE Act, helps not only to improve the life of 
students who might not otherwise have the opportunity to attend 
college, it also helps to improve their life after graduation. These 
students generally have an enormous burden of debt and the interest 
costs impair their ability to get started in life after college. New 
college graduates just beginning their careers all too often have to 
pay a higher percentage of their income in educational loan bills than 
they do in rent.
  I believe we should encourage individuals who cannot afford to pay 
for college to realize that education is a wise investment in their 
future. Although some individuals must incur substantial debt to 
complete their education, the Government should do their part to make 
sure that these students will not suffer because of this decision for 
the next 20 years of their lives.
  The Government uses the Tax Code to help American families buy their 
own homes. It is equally important to use the Tax Code to encourage 
higher education. It is an investment in our children, our economy and 
our future. If a child receives a college education, that person is 
much more likely to be able to afford to purchase a home. The link 
between educational attainment and earnings is unquestionable. 
Statistics show that the average earnings of the most educated 
Americans are 600 percent greater than that of the least educated 
Americans. The Department of Labor estimates that, by the year 2000, 
more than half of all new jobs will require an education beyond high 
school. As we move nearer to the 21st century and into an information-
driven economy, the gap between high school and college graduates is 
growing. A college graduate in 1980 earned 43 percent more per hour 
than a high school graduate. By 1994, that had increased to 73 percent. 
When we reduce access to higher education, we reduce access to the 
American Dream.
  Given the fact that many of the people in the young generation are 
going to be pushed into the ocean of responsibility to pay off our 
national debt, and pay higher Social Security taxes to support us, the 
least that we could do, Mr. President, is to provide them with a life-
preserver. It is the ethical thing to do and the right thing to do. 
This life-preserver that I speak of, Mr. President, is education. By 
supporting this educational initiative we are affording members of this 
young generation and others a chance to arm themselves with knowledge 
as well as enhance their income potential. This is very important 
because most economist agree that education produces substantial 
spillover, which simply means indirect effects, that will benefit 
society in general. Examples cited of such positive spillover effects 
include a more efficient work force, lower unemployment rates, lower 
welfare costs, and less crime. All of these are issues that concern us 
greatly. Furthermore, an educated electorate is said to foster a more 
responsive and effective government. So as you can see this bill is 
very timely.
  This bill comes at a time when the cost of attending an institution 
of higher learning has increased at a rate higher than inflation. In 
the 1980's, for example, the cost of a year's tuition at a publicly 
supported college increased from $635 to $1,454, an increase of almost 
130 percent. And a year's tuition at a private college increased from 
an average of $3,498 to $8,772, an increase of 150 percent. A more 
recent figure can be found in the state of Illinois where, as of 1994, 
students at Northern Illinois University and Illinois State University, 
both public institutions, were paying nearly 96 percent more than the 
increase in the inflationary rate for that same year. The number of 
loans borrowed through the main Federal college loan programs rose by 
nearly 50 percent since 1990, from 4,493,000 in 1990 to 6,672,000 in 
1995. Rapid increases in college tuition force today's students to 
borrow much more than their predecessors did, yet in 1986, the interest 
deduction for student loans was eliminated.
  I am working with the GAO, [Government Accounting Office] to further 
investigate why college tuition is rising so rapidly, and what the 
Federal Government can most appropriately do about this problem. One of 
the arguments against providing up front tax cuts to parents for the 
costs of education is that tuition costs will increase to take into 
account the tax benefit given to parents. However, the Loan Interest 
Forgiveness for Education Act will not increase the cost of tuition 
because the benefit will be received after individuals have graduated. 
This bill will improve the life of college graduates while at the same 
time encouraging them to pay back their student loans.
  We must improve the accessibility of education, so that all Americans 
may receive a higher education, not just the wealthy elite.
  It is a critical matter in terms of the opportunities than this 
generation of

[[Page S3201]]

Americans will have to access and maintain the American dream. The fact 
that Americans depend on people being able to make a living and support 
themselves, and to reach as high as their talents will take them, 
should not be hampered in any way by the limitation of availability of 
educational opportunity because of costs.
  I know that I would not be in the Senate today were it not for 
quality public education and the accessibility of affordable higher 
education. The Chicago Public Schools gave me a solid foundation, and I 
was able to attend the University of Illinois and the University of 
Chicago in spite of the fact of that my parents were working-class 
people. I am committed to seeing that the students of this generation 
and those who follow them have even greater opportunities than I have 
had. I am absolutely determined to ensure that the exploding cost of 
college does not close the door to opportunity for them. Our generation 
has an absolute duty to keep the door open, and to preserve and enhance 
the opportunity for a better life and the American dream for the 21st 
century.
  Certainly this generation should not have to bear a burdensome loan 
portfolio when they graduate that keeps them from making other optimal 
economic choices.
  So, Mr. President, I introduce this legislation. I send it to the 
desk, and I encourage my colleagues to consider cosponsorship of it. I 
hope that by tax day next year we are able to provide those students 
who are going to college and have taken on loans the opportunity to 
have some loan forgiveness once they graduate.
                                 ______
                                 
      By Mr. ABRAHAM (for himself and Mr. Levin):
  S. 574. A bill to delay the application of the substantiation 
requirements to reimbursement arrangements of certain loggers; to the 
Committee on Finance.


                    TAX RELIEF FOR MICHIGAN LOGGERS

  Mr. ABRAHAM. Mr. President, April 15 is a day that generally is 
viewed with consternation throughout the Unided States. For many 
loggers in Michigan's Upper Peninsula, however, tax day is synonymous 
with bankruptcy. This is because the IRS insists on enforcing a little 
known, and less understood, tax law affecting loggers in my State.
  For nearly three decades, businesses in the timber industry have used 
an accounting plan that allocated a percentage of loggers' wages as 
rental for the use of the loggers' chain saws, thereby excluding this 
portion of their wages from income tax withholding, FICA, and FUTA 
taxes. This practice was acceptable to the IRS until the Family Support 
Act of 1988 required that an employee business expense reimbursement 
not be excluded from an employee's income unless it is paid under an 
accountable plan. The timber industry's traditional accounting 
procedure was not an accountable plan.
  Unaware of the change in policy, the timber industry continued to use 
their old accounting plan in violation of the new law. Many small 
logging operations and loggers have now been assessed penalties and 
interest by the IRS because of their violation of this obscure law. It 
should be noted that most of the timber industry was in line with the 
new policy by tax year 1993 and continues to abide by the correct 
accounting procedure policies. Nonetheless, some loggers face fines of 
$20,000 or more. Mr. President, many loggers in Michigan's Upper 
Peninsula earn less than $20,000 per year.
  To add to the frustration, IRS headquarters has stated that each 
district operation has the authority to decide the effective date of 
the requirement for accountable plans, and in other States, the IRS has 
decided to have an effective date for this accounting procedure as it 
relates to the timber industry of January 1, 1993. The IRS office in 
Michigan, however, will not agree to the January 1, 1993 date which is 
being used in other parts of the country. Michigan is the only State in 
which the IRS will not accept this date.
  Mr. President, relief for these loggers is long overdue, and today 
Senator Levin joins with me to introduce legislation that will change 
the Tax Code and make permissible the qualified logger reimbursement 
arrangement for loggers in any taxable year prior to January 1, 1993. 
It will also provide for a refund or credit of any overpayment of tax 
accrued during these years. This correction is long overdue and I hope 
for swift adoption during this session of Congress.
                                 ______
                                 
      By Mr. DURBIN (for himself, Mr. Hagel, Mrs. Murray, Ms. Snowe, 
        Mr. Harkin, Mr. Allard, Mr. Johnson, Mrs. Hutchison, Mr. Reid, 
        Mr. Shelby, Mr. Roberts, Mr. Baucus, Mr. Kerrey, Mr. Jeffords, 
        Mr. Mack, Ms. Collins, and Mr. Biden):
  S. 575. A bill to amend the Internal Revenue Code of 1986 to increase 
the deduction for health insurance costs of self-employed individuals; 
to the Committee on Finance.


         The Health Insurance Tax Equity For Self-Employed Act

  Mr. DURBIN. Mr. President, I will use just 2 or 3 minutes and defer 
to my colleague. I want to say I am glad he is with me today. It is one 
of our first bills as new Members of the U.S. Senate and one that is 
very important, not only to our States but also to the Nation. I think 
it is extremely fitting that Senator Hagel and 14 of our colleagues 
have joined me in introducing a bipartisan bill to provide tax relief 
for a group of hard-working Americans, namely the self-employed. What 
we are trying to do with this bill, and I think it is appropriate to 
discuss it on April 15, is to say that people who are self-employed, 
small business people, farmers and the like, should enjoy the same tax 
benefits of deduction for health insurance premiums as corporations. 
This is only simple fairness.
  If I work for a big company, they can literally write off every penny 
of the cost of my health insurance that they pay. However, if I happen 
to be a farmer in central Illinois, or a self-employed woman in Chicago 
working at home at a computer, and I go to buy health insurance, only 
40 percent of the premiums could be deducted. That is unfair and it 
creates a real disadvantage. We should encourage people to take out 
health insurance. The best way to encourage them to do it is to make it 
more affordable by providing full deductibility. In my State of 
Illinois there are over 400,000 people who are self-employed who would 
benefit from this tax relief. In fact, over 3 million Americans who are 
self-employed do not have health insurance. That represents 25 percent 
of the self-employed. That is a high percentage compared to other 
groups.
  So, what Senator Hagel and I are trying to do with our legislation is 
to level the playing field, give them all equal treatment and fair 
treatment. I think this tax relief could be worth $500 or $1,000 for 
somebody today who could deduct only 40 percent, but in the future 
could deduct 100 percent under our legislation.
  I thank my colleague for joining me in introducing this bill. It is 
supported not only by the National Federation of Independent 
Businesses, the National Farm Bureau, the Pork Producers, the Corn 
Growers and the Farmers Union, but also by the National Association of 
Women Business Owners. Between 1987 and 1996 the number of women-owned 
businesses increased by 78 percent, and about 80 percent of these are 
individual proprietorships.
  I think this is an issue whose time has come. I have spoken to many 
of my colleagues and they believe that is the case, too. I hope we can 
work as part of any budget agreement to include this provision.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 575

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Health Insurance Tax Equity 
     for Self-Employed Act''.

     SEC. 2. DEDUCTION FOR HEALTH INSURANCE COSTS OF SELF-EMPLOYED 
                   INDIVIDUALS INCREASED.

       (a) In General.--Section 162(l)(1) of the Internal Revenue 
     Code of 1986 (relating to special rules for health insurance 
     costs of self-employed individuals) is amended to read as 
     follows:
       ``(1) Allowance of deduction.--In the case of an individual 
     who is an employee within the meaning of section 401(c)(1), 
     there shall be allowed as a deduction under this section

[[Page S3202]]

     an amount equal to the amount paid during the taxable year 
     for insurance which constitutes medical care for the 
     taxpayer, the taxpayer's spouse, and dependents.''.
       (c) Effective Date.--The amendment made by this section 
     applies to taxable years beginning after December 31, 1996.

  Mr. HAGEL. Mr. President, I am pleased to join with my distinguished 
colleague from Illinois, Senator Durbin, to introduce legislation that 
will cut taxes and improve access to health insurance for millions of 
small business owners and farmers across America.
  Our legislation--the Health Insurance Tax Equity for Self-Employed 
Act--is a bill about fairness. Under current law, corporations can 
deduct from their income tax the full amount of money spent on health 
care for their employees. But the 10\1/2\ million self-employed men and 
women in America cannot fully deduct what they spend on their own 
health care. They can deduct a percentage--which is now 40 percent and 
will increase to 80 percent by 2006--but they cannot deduct the entire 
cost.
  Our bill would immediately eliminate this disadvantage--effective 
January 1, 1997--and put the self-employed on the same footing with 
their incorporated competitors. And it would make health insurance more 
affordable for the 3 million uninsured Americans who are self-employed.
  This bill will make a real difference to real people. The high cost 
of health insurance was the No. 1 problem that small businesses cited 
in a recent comprehensive study by the National Federation of 
Independent Businesses [NFIB]. Small business owners often pay 30 
percent more for the cost of their health insurance than do larger 
companies--they pay more, but they can deduct less.
  Our bill will make health insurance more affordable for small 
business owners. That is why it has been endorsed by the National 
Federation of Independent Businesses.
  It also is strongly supported by the National Farm Bureau and by the 
Nebraska Farm Bureau Federation. Both have sent me letters endorsing 
this legislation. I ask unanimous consent that the full text of these 
be submitted for the Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 7.)
  Mr. HAGEL. More than 95 percent of farmers and ranchers are self-
employed and generally pay the full cost of their insurance coverage 
themselves. Our bill makes a real difference to them as well.
  I am involved in this issue because it is vitally important to my 
home State of Nebraska. There are 98,000 self-employed people in 
Nebraska, of whom more than 10,000 are uninsured. These are real 
numbers. These are real people. This legislation can make a real 
difference for them--making their health insurance more affordable and 
their businesses more profitable.
  Every State in America has hardworking, self-employed men and women 
who need the tax relief and health care assistance this bill offers. I 
hope my colleagues will support this important effort.

                               Exhibit 1


                              Nebraska Farm Bureau Federation,

                                      Lincoln, NE, April 10, 1997.
     Hon. Chuck Hagel,
     U.S. Senate,
     Washington, DC.
       Dear Chuck: On behalf of Nebraska's largest farm 
     organization, I am writing to offer Nebraska Farm Bureau 
     Federation's strong support for your legislation that would 
     provide a 100 percent tax deduction of health insurance 
     premiums for the self-employed.
       Deductibility of health insurance premium costs for self-
     employed individuals has been a long standing goal of Farm 
     Bureau. More than 95 percent of farmers and ranchers are 
     self-employed and generally pay the full cost of their 
     insurance coverage themselves. In addition, many farm 
     families are forced into a situation where a spouse must get 
     an off-farm job primarily to obtain more affordable health 
     insurance coverage for their family.
       The cost of self-employed health insurance, when not 
     purchased as part of a group, can be significant and cause 
     financial hardships for some individuals and farm families. 
     In many cases, farmers and ranchers pay more than $3,000 to 
     $5,000 annually for health insurance. Farmers and ranchers 
     are looking at many avenues to cut skyrocketing health 
     insurance premiums. More farmers have moved to higher 
     deductible policies--quite often in the $2,500 to $5,000 
     range. In other cases, farmers are opting to go without 
     health insurance altogether.
       As you know, current federal tax law allows self-employed 
     people to deduct 30 percent of the cost of their health 
     insurance premiums. That will increase to 80 percent by the 
     year 2006. Current federal tax law also allows corporations 
     to deduct 100 percent of their health insurance premium 
     costs. Members of Nebraska Farm Bureau believe that fairness 
     and equity dictate that Nebraska's self-employed individuals 
     receive the same tax treatment as other employees and 
     employers.
       Nebraska Farm Bureau appreciates your work on the 
     introduction of this legislation and we wholeheartedly offer 
     our support to this effort.
           Respectively,
     Bryce P. Neidig, President.
                                                                    ____



                  National Federation of Independent Business,

                                   Washington, DC, April 10, 1997.
     Hon. Chuck Hagel,
     U.S. Senate,
     Washington, DC.
       Dear Senator Hagel: On behalf of the 600,000 small business 
     owners of the National Federation of Independent Business 
     (NFIB), I am writing to express our strong support of your 
     legislation to extend the deduction of health insurance 
     premiums for the self-employed to 100 percent, effective 
     immediately upon date of enactment.
       Current law's tax treatment of the health insurance 
     premiums for the self-employed is extremely unfair. The three 
     million self-employed Americans who are presently uninsured 
     should have access to the same 100 percent deduction that 
     CEO's and employees in Fortune 500 companies receive. The 
     Health Insurance Portability and Accountability Act of 1996 
     gave the self-employed the ability to take a 40-percent 
     deduction in 1997 and gradually phases in a permanent 
     deduction for the self-employed reaching 80 percent in 2006. 
     Enabling the self-employed to take an 100 percent deduction 
     would certainly help us to make health care more affordable 
     for this important group of employers and their employees.
       The cost of health insurance is the number one problem that 
     small businesses cited in a 1996 NFIB Education Foundation 
     study. Small Business Problems and Priorities, the most 
     comprehensive study of its kind in the country. Small 
     business owners often pay 30 percent more for the cost of 
     their health insurance than larger companies. In addition, 
     self-employed business owners face the cost that result from 
     having to pay income taxes on the majority of the amount of 
     their health insurance premiums. Instead of penalizing the 
     self-employed in this manner, Congress should be doing all it 
     can to help the self-employed, a group who plays a critical 
     role in our economy.
       NFIB appreciates your understanding of this issue and your 
     willingness to introduce this significant piece of 
     legislation.
           Sincerely,
                                                       Dan Danner,
                     Vice President, Federal Governmental Affairs.
                                 ______
                                 
      By Mr. LEVIN (for himself and Mr. McCain):
  S. 576. A bill to amend the Internal Revenue Code of 1986 to provide 
that corporate tax benefits from stock option compensation expenses are 
allowed only to the extent such expenses are included in corporate 
accounts; to the Committee on Finance.


           THE ENDING DOUBLE STANDARDS FOR STOCK OPTIONS ACT

  Mr. LEVIN. Mr. President, for the past several years, the Wall Street 
Journal has published a special pullout section of the newspaper with a 
number of articles on executive pay. Last year's headline read, ``The 
Great Divide: CEO Pay Keeps Soaring Leaving Everybody Else Further and 
Further Behind.'' Last week, Business Week magazine featured this cover 
story on its 47th annual pay survey: ``Executive Pay: It's Out of 
Control.''
  Both publications analyze the pay of top executives at approximately 
350 U.S. major corporations. Their analysis shows that the pay of the 
chief executive officers continues to outpace inflation, other workers' 
pay, the pay of CEO's in other countries, and company profits.
  According to Business Week, for CEO's of the leading 350 companies 
studied, their average total compensation rose 54 percent last year to 
about $5.7 million, which came on top of 1995 CEO pay increases of 30 
percent. So in 1995 we had the CEO's increasing their pay by 30 
percent, last year increases of 54 percent. Blue-collar employees 
received a 3 percent raise in 1996, and white-collar workers fared only 
slightly better with a 3.2 percent raise.
  So in 1996 the pay of the top executives was 209 times the pay of the 
factory employee, which is a huge increase. The ratio of executive pay 
to factory workers' pay in the United States was already two to three 
times more than the pay ratio in any other country. Suddenly, now we 
see this going up to a ratio of 209 times the pay of the average 
factory worker. The last time we had statistics, the ratio of executive 
pay to factory worker pay was 20 times in Japan and 25 times in 
Germany. Those statistics are a few years

[[Page S3203]]

old but we do not think they have changed that much.
  These statistics, the 3.2 percent pay increase that went to the white 
collar workers and the 3 percent increase in wages and benefits that 
went to America's blue collar workers, represent a growing problem in 
America, and represent a gap that is growing. The question is now what? 
Is this gap going to continue? That is a question more for the market 
than for government.
  There is something that government is currently doing that can change 
this, and that is right now we permit stock options, which represent 
the biggest portion of corporate pay, to be taken as a tax deduction 
for income tax purposes, although it is not shown as an expense on the 
company's books. There is no other form of executive compensation for 
which this is true. Every other form of executive compensation, of 
compensation for anybody, is shown as an expense on the company's books 
when it is taken as a deduction on income tax.
  There is no double standard for any form of compensation in our 
country, in our Tax Code, except for stock options. If a corporate 
executive gets stock, that is an expense on the company's books. It is 
a tax deduction on their income taxes. If there is a bonus based on 
performance, that is an expense on the company's books, and it is a tax 
deduction. But when it comes to stock options, the Tax Code right now 
permits there to be a tax deduction for the company when that stock 
option is exercised. However, the company does not show that stock 
option as an expense on its own books. It is a stealth exception. It is 
a double standard. We should end it.
  That is why, today, Senator McCain and I are introducing legislation 
to end this corporate tax loophole that is fueling the increases in 
executive pay and is fueling those increases with taxpayer dollars. 
Again, this loophole allows companies to deduct from their income taxes 
these multimillion dollar pay expenses that never show up on the 
company office books as an expense.
  A just completed survey of CEO pay at 55 major Fortune 500 
corporations by a leading executive compensation publication called 
Executive Compensation Reports, found that in 1996 stock options 
averaged about 45 percent of total executive pay. That is up from 40 
percent just 1 year ago, and stock options provided more money to the 
55 CEO's studied than their base salary or their annual bonus. In fact, 
for 1996, salary accounted for only 22 percent of CEO compensation 
while stock options accounted for 45 percent.

  These stock options enable a CEO typically to buy company shares at a 
set price for a period of time, which is usually 10 years. Since stock 
prices generally rise over time, stock options have become the most 
lucrative source of executive pay.
  Now, again, I do not think anyone is suggesting government ought to 
determine how much executives get paid. We should not. Stockholders and 
boards of directors should set that. But we should determine whether or 
not we want to allow our Tax Code to contain this loophole any longer, 
where this one form of executive compensation and only this form of 
compensation is dealt with by a double standard. We permit the company 
to get the tax deduction when it comes to filing their income tax 
return, but we do not require the company to show that same expense as 
an expense on their books, thereby hiding the cost to the company of 
the stock option cost but still getting a tax deduction.
  Now, say, a corporate executive exercises stock options to purchase 
company stock and makes a profit of $10 million. The company can claim 
the full $10 million as a business expense and deduct it from the 
company's tax bill. But when it comes to showing that expense on their 
books, on their annual report, it is not an expense. It is a footnote, 
not required to be shown as an expense like other forms of 
compensation, but rather hidden in a footnote.
  This is not an accounting issue. The accounting authorities, the 
experts, have decided how this should be handled as an accounting 
matter. This is now a tax loophole issue. The question is whether or 
not we, on tax day, want to continue a loophole for executives--because 
that is who we are talking about in approximately 98 percent of the 
cases. In perhaps 1 or 2 percent of the cases these stock option plans 
are broadly based and help average employees, and we would not include 
that in our bill. But in maybe 98 percent of the cases, these are 
narrowly based stock option plans only going to the top officials of 
companies.
  This bill would end the double standard. It gives a choice. If you 
want to take it as an expense for tax purposes, deduct this as 
compensation for tax purposes, that is fine, no restriction. But then 
you have to show it on your books as an expense also. You do not want 
to show it on your books as an expense? That is your choice, but then 
we will not let you take it as an expense on your income taxes and have 
the rest of the taxpayers of the United States foot the bill.
  Stock option pay is either a company expense or it is not. It either 
lowers company earnings or it does not. Something is clearly out of 
whack when in the tax law a company can say one thing at tax time and 
something else to investors at the annual meeting.
  This bill that I am introducing with Senator McCain today would end 
the double standard that allows corporations to treat stock option pay 
one way on the tax form and the opposite way on the company's books.
  I want to emphasize that this bill does not prohibit stock options. 
It doesn't put a cap on them. It doesn't limit them in any way. It just 
says, if you want to claim stock option pay as an expense at tax time, 
you have to treat it as an expense the rest of the year as well.
  In summary, the bill would not prohibit stock options. It would not 
put a cap on them or limit them in any way. It just says, if a company 
wants to claim stock option pay as an expense at tax time, it has to 
treat it as an expense the rest of the year as well. Period.
  The bill provides one exception to ensure that closing the stock 
option tax loophole doesn't affect the pay of average workers.
  Right now, stock option pay is overwhelmingly executive pay. In 1994, 
the most extensive stock option review to date, covering 6,000 publicly 
traded U.S. companies, found that only 1 percent of the companies 
issued stock options to anyone other than management and 97 percent of 
the stock options issued went to 15 or fewer individuals per company.
  Nevertheless, there are a few companies that issue stock options to 
all employees and do not disproportionately favor top executives. Our 
bill would allow companies that provide broad-based plans to continue 
to claim existing stock option tax benefits, even if they exclude stock 
option pay expenses from their books. Like FASB, we would encourage but 
not require these companies to treat these expenses consistently. By 
making this limited exception, we would ensure that average worker pay 
would not be affected by closing the stock option loophole. We might 
even encourage a few more companies to share stock option benefits with 
average workers.
  The bottom line is that the bill that Senator McCain and I are 
introducing today is not intended to stop the use of stock options. Our 
bill is aimed only at stopping the manipulation of stock option 
expenses by those companies that are trying to have it both ways--
claiming stock option pay as an expense at tax time, but not when 
reporting company earnings to Wall Street and the public. It is aimed 
at ending a stealth tax benefit that is fueling the wage gap, favoring 
one group of companies over another, and feeding public cynicism about 
the fairness of the Federal Tax Code.
  It would also curtail an expensive tax loophole. The Congressional 
Budget Office has estimated that eliminating the corporate stock option 
loophole would save taxpayers $373 million over 7 years and $933 
million--almost $1 billion--over 10 years. In this era of fiscal 
austerity, that's money worth saving.
  Mr. President, I ask unanimous consent that the bill Senator McCain 
and I are introducing be printed in the Record, along with a section-
by-section analysis of the bill that would end the double standards for 
stock options.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                 S. 576

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

[[Page S3204]]

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Ending Double Standards for 
     Stock Options Act''.

     SEC. 2. REQUIREMENTS FOR CONSISTENT TREATMENT OF STOCK 
                   OPTIONS BY CORPORATIONS

       (a) Consistent Treatment for Tax Deduction.--Section 83(h) 
     of the Internal Revenue Code of 1986 (relating to deduction 
     of employer) is amended by adding at the end the following 
     new paragraph:
       ``(2) Special rules for property transferred pursuant to 
     stock options.--
       ``(A) In general.--In the case of property transferred in 
     connection with a stock option, the deduction otherwise 
     allowable under paragraph (1) shall not exceed the amount the 
     taxpayer has treated as an expense for the purpose of 
     ascertaining income, profit, or loss in a report or statement 
     to shareholders, partners, or other proprietors (or to 
     beneficiaries). In no event shall such deduction be allowed 
     before the taxable year described in paragraph (1).
       ``(B) Exception for broad-based option programs.--
     Subparagraph (A) shall not apply to property transferred in 
     connection with a stock option if, at the time the stock 
     option was granted--
       ``(i) substantially all employees of the corporation 
     issuing such stock option were eligible to receive 
     substantially similar stock options from such corporation,
       ``(ii) no individual performing services for such 
     corporation received more than 20 percent of the total number 
     of stock options granted by such corporation during the 
     taxable year, and
       ``(iii) at least 50 percent of the total number of stock 
     options granted by such corporation during such taxable year 
     were issued to employees other than individuals performing 
     executive or management services for such corporation.
       ``(C) Employees covered.--For purposes of this paragraph, 
     an employee shall be taken into account only if--
       ``(i) the employee is a full-time employee, and
       ``(ii) substantially all of the services performed by the 
     employee for the corporation are performed within the United 
     States.
       ``(D) Special rules for controlled groups.--The Secretary 
     shall prescribe rules for the application of this paragraph 
     in cases where the stock option is granted by a parent or 
     subsidiary corporation (within the meaning of section 424) of 
     the employer corporation.''
       (b) Consistent Treatment for Research Tax Credit.--Section 
     41(b)(2)(D) of the Internal Revenue Code of 1986 (defining 
     wages for purposes of credit for increasing research 
     expenses) is amended by inserting at the end the following 
     new clause:
       ``(iv) Special rule for stock options and stock-based 
     plans.--The term `wages' shall not include any amount of 
     property transferred in connection with a stock option and 
     required to be included in a report or statement under 
     section 83(h)(2) until it is so included, and the portion of 
     such amount which may be treated as wages for a taxable year 
     shall not exceed the amount of the deduction allowed under 
     section 83(h) for such taxable year with respect to such 
     amount.''
       (c) Conforming Amendments.--Section 83(h) of the Internal 
     Revenue Code of 1986 is amended by striking ``In the case 
     of'' and inserting:
       ``(1) In general.--In the case of''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to property transferred and wages provided on or 
     after the date of enactment of this Act, pursuant to stock 
     options granted on or after such date.
                                                                    ____


   Section-by-Section Analysis of Ending Double Standards for Stock 
                              Options Act

       Short Title. Section 1 of the bill provides the short 
     title.
       Consistent Treatment. Section 2 of the bill would establish 
     requirements for consistent treatment of stock options by 
     corporations when deducting stock option compensation as a 
     business expense under Section 83(h) or claiming stock option 
     wages to obtain a research tax credit under Section 41.
       Tax Deduction. Subsection 2(a) of the bill would amend 
     section 83(h) of the Internal Revenue Code by adding at the 
     end a new paragraph (2) with special rules for corporate tax 
     deductions related to stock options. A new subparagraph 2(A) 
     of Section 83(h) would limit the deduction that a company 
     could claim for stock option compensation to no more than the 
     amount of stock option expense reported by that company in a 
     financial statement to stockholders. The subsection would 
     continue current law by allowing the deduction at the time 
     the stock option beneficiary exercises the option and 
     includes it in personal income.
       Average Workers Protected. A new subparagraph 2(B) of 
     Section 83(h) would establish an exception for stock option 
     plans that benefit average workers. To qualify, substantially 
     all full-time, U.S. employees in a company would have to be 
     eligible to receive substantially similar company stock 
     options during the taxable year; no one person could have 
     received more than 20 percent of the stock options issued 
     during the year; and at least 50 percent of the stock options 
     would have had to be issued to non-management employees 
     during the year. A new subparagraph 2(C) would state that 
     only full-time employees performing services in the United 
     States would need to be taken into account in determining 
     eligibility for the exception.
       Controlled Groups. A new subparagraph 2(D) of Section 83(h) 
     would authorize the Secretary of the Treasury to issue 
     regulations applying these rules to stock options granted by 
     a parent or subsidiary corporation of the employer 
     corporation.
       Tax Credit. Subsection (b) of the bill would amend Section 
     41 of the Internal Revenue Code to clarify the ``wages'' that 
     may be used in calculating the research tax credit allowable 
     under Section 41. The bill would add a new clause (iv) at the 
     end of Section 41(b)(2)(D) stating that the allowable 
     ``wages'' under Section 41 shall not include stock option 
     compensation, until a company reports that compensation in a 
     financial statement to stockholders, as provided in Section 
     83(h)(2) (as amended by this bill). The clause would limit 
     the amount of stock option compensation allowed as a 
     deduction under Section 83(h). Stock option wages could be 
     claimed under Section 41 only after a company reported the 
     compensation expense under Section 83(h)(2), as amended by 
     this bill.
       Conforming Amendment. Section (c) of the bill would make 
     technical conforming amendments to Section 83(h).
       Effective Date. Section (d) of the bill would make the 
     amendments applicable only to stock options granted on or 
     after the date of enactment.

  Mr. McCAIN. Mr. President, I rise today to introduce legislation with 
my friend and colleague, Senator Levin, entitled Ending Double 
Standards for Stock Options Act. This legislation requires companies to 
treat stock options for highly paid executives as an expense for 
bookkeeping purposes if they want to claim this expense as a deduction 
for tax purposes.
  Currently, corporations can hide these multimillion-dollar executive 
compensation plans from their stockholders or other investors because 
these plans are not counted as an expense when calculating company 
earnings. Even the Federal Accounting Standards Board [FASB] recognized 
that stock options should be treated as an expense for accounting 
purposes. This month, new accounting disclosure rules issued by FASB 
require that companies include in their annual reports a footnote 
disclosing what the company's net earnings would have been if stock 
option plans were treated as an expense.
  An article in the Wall Street Journal, dated January 14, 1997, stated 
these new rules could reduce some companies' annual earnings by as much 
as 11 to 32 percent. One might reasonably ask how an arcane accounting 
rule could have such a large effect on the bottom line of corporations. 
The answer lies in the growth and value of stock options as a means of 
executive compensation. These plans now account for about one-fourth of 
total executive compensation.
  We all have heard the reports of executives making multimillion-
dollar salaries, while average worker salaries stagnate or fall. 
Recently, The Washington Post reported that Michael Eisner, the CEO of 
Disney, was given a stock option package estimated to be worth as much 
as $771 million over the next 10 years. Why shouldn't the value of this 
compensation package be included in calculating Disney's earnings? How 
can stockholders evaluate the true value of executive compensation if 
the value is just buried in a footnote somewhere in the annual report?
  No other type of compensation gets treated as an expense for tax 
purposes, without also being treated as an expense on the company 
books. This double standard is exactly the kind of inequitable 
corporate benefit that makes the American people irate and must be 
eliminated. If companies do not want to fully disclose on their books 
how much they are compensating their executives, then they should not 
be able to claim a tax benefit for it.
  This legislation does not require a particular accounting treatment; 
the accounting decision is left to the company. This legislation simply 
requires companies to treat stock options the same way for both 
accounting and tax purposes.
  I hope my colleagues will join in cosponsoring this important 
legislation that will end the double standard for executive stock 
option compensation.
  I ask unanimous consent that the two articles to which I have 
referred be printed in the Record.
  There being no objection, the articles were ordered to be printed in 
the Record, as follows:

             [From the Wall Street Journal, Jan. 14, 1997]

    As Options Proliferate, Investors Question Effect on Bottom Line

                           (By Laura Jereski)

       How much does Microsoft Corp. really earn from its 
     business?

[[Page S3205]]

       For the fiscal year ended June 30, the Redmond, Wash., 
     software giant said pretax income rose 56% to a record $3.4 
     billion. But a telltale footnote to its income statement 
     revealed that pretax earnings would have been $2.8 billion--
     $570 million less--if Microsoft had compensated its employees 
     entirely with cash.
       But employees didn't get just cash. Like many companies 
     these days, Microsoft sprinkles stock options liberally among 
     its workers. That makes a big difference in the earnings 
     outlook at Microsoft and elsewhere.
       Wall Street and Main Street fervently embrace options as a 
     tonic for much of what ails corporate America. Lucrative for 
     employees, options appear to be cost-free to the employer. 
     Distribute them broadly, the wisdom goes, and employees will 
     pull together, company returns will rocket and shareholders 
     will cheer.
       But some investors and critics say the options downpour is 
     muddying companies' earnings pictures. Companies can show 
     investors higher earnings if they slash compensation costs by 
     handing out options. As Byron Wien, Morgan Stanley & Co.'s 
     top stock-market strategist, points out: ``In the short run, 
     people are overstating current earnings because part of 
     employees' compensation is coming in the form of options.''


                        bet on growth prospects

       Put another way: Investors may be making a bigger bet on 
     company growth prospects than they realize. If Microsoft's 
     options were treated as an expense, its net income last year 
     would have been about $1.8 billion, or $2.85 a share, instead 
     of $2.2 billion, or $3.43 a share--meaning its $83.75 closing 
     stock price on the Nasdaq Stock Market yesterday would 
     reflect an earning multiple of nearly 30 times last year's 
     earnings instead of about 24 times.
       Michael Brown, Microsoft's chief financial officer, scoffs 
     at that notion: ``The Street figures it our pretty fast.''
       But disparities will be popping up all over come March when 
     new accounting disclosure rules by the Financial Accounting 
     Standards Board take effect. For the first time, companies 
     will have to include a footnote in their annual reports 
     disclosing what net would have been if options were treated 
     as an expense--something Microsoft and some others are 
     already doing. Murray Akresh, a compensation expert with 
     Coopers & Lybrand, says the earnings difference could be as 
     much as 11% for some companies. By the time the full impact 
     of the new rule is felt at the end of a four-year transition 
     period, the difference could reach 32%.
       Companies' true earning power is of particular concern 
     because earnings growth has propelled the stock market's 
     sustained rise. But some money managers say that rise is 
     making options more costly for companies to issue.
       ``What's really happening is that companies are selling 
     their stock to employees at a discount,'' says Richard 
     Howard, a mutual-fund manager at T. Rowe Price Associates in 
     Baltimore. Often, the companies then turn around and buy 
     stock at the higher market price to hold steady the number of 
     shares outstanding.
       ``There's a real economic cost when stocks are going up,'' 
     Mr. Howard says. ``That's when options cost the most.''


                           options have value

       One measure of that aggregate cost can be seen in stock-
     buyback programs. In 1996, buybacks totaled $170 billion, 
     according to Securities Data Co., a Newark, N.J., securities-
     market-data company, up 72% from the previous year's $99 
     billion. Buyback costs are partly offset by the money 
     companies collect from employees who exercise their options 
     and buy.
       Some investors say the costs ought to be reflected in 
     companies' income statements at the time the employees earn 
     the options. ``Stock options have value, so they should be 
     recorded as an expense,'' says Jerry White, president of 
     Grace & White, a New York money-management firm.
       And some shareholder activists are rebelling against the 
     amount of options being dispensed. Institutional Shareholders 
     Services, which votes on shareholder issues on behalf of many 
     large investors, votes against about one in five option plans 
     as too generous and expensive. Says ISS research director 
     Jill Lyons: ``A human being has to say, `This is too much.' 
     ''
       ISS focuses on how much shareholder value option plans 
     transfer, rather than how they might affect company earnings. 
     For example, a magnanimous plan adopted two months ago by San 
     Jose, Calif., computer networker Cisco Systems Inc. will set 
     aside 4.75% of Cisco's stock for options annually for three 
     years. Three-fourths of those options will go to employees 
     below the vice-president level.
       Most of Wall Street applauds this employee motivator. 
     Analyst Suzanne Harvey at Prudential Securities wrote 
     recently that Cisco has the best employee benefits in the 
     computer industry.
       But ISS analyst Caroline Kim warned clients that the option 
     plan would double insiders' stake in Cisco to nearly 23%--
     twice what employees in comparable companies get--and hand 
     over to employees shareholder value of $3.6 billion during 
     the next three years. Shareholders approved the plan anyway.
       Many investors and financial analysts see nothing wrong 
     with companies' generosity with options. In a recent survey 
     of 300 top Wall Street stock analysts, eight of 10 said they 
     would disregard stock options entirely, as long as companies 
     don't have to take a charge for them. ``I think that's 
     accounting mumbo jumbo, as opposed to a value measure that 
     has to do with stock prices,'' says Bruce Lupatkin, head of 
     research at Hambrecht & Quist.
       That view prevailed in 1995, after a long and bruising 
     battle over whether such options largess should count against 
     earnings. Hundreds of companies, analysts, venture 
     capitalists, and even congressmen joined forces to defeat 
     accounting rule makers who wanted companies to reflect the 
     actual value of options in their earnings. When the FASB held 
     hearings on the proposal in Silicon Valley--where such 
     options have created thousands of fortunes--they were 
     disrupted by a ``Rally in the Valley'' of the local 
     citizenry, complete with marching bands, balloons and T-
     shirts stamped ``Stop the FASB.''


                            more widespread

       FASB opponents argued that companies incur no cash costs in 
     granting options. Further, not all options granted will be 
     exercised since employees leave and stock prices sometimes 
     fall below the option exercise price. The FASB accountants 
     argued that options are valuable because they give employees 
     a long-term right to buy stock at a set price. They lost, 
     which led to the compromise with the footnote disclosure.
       Since then, option grants have become more generous and 
     more widespread. Once they were mainly used by small, fast-
     growing high-technology companies loath to part with precious 
     cash. Today, big companies are enthusiasts, according to a 
     survey of 350 large companies by William M. Mercer Inc., a 
     New York compensation-consulting firm. Annual stock-option 
     grants soared by more than 20% between 1993 and 1995, the 
     firm's work shows.
       John McMillin, a food-industry analyst at Prudential 
     Securities, says that means ``the quality of the earnings you 
     are looking at is often not good.'' What's more, some 
     companies offer employees the chance to take raises and pay-
     related benefits in stock instead of cash, which distorts 
     earnings even more. (That can be a losing bet for the 
     employee if the stock fails to rise above the exercise 
     price.)
       One big proponent of options-for-all is General Mills Inc. 
     The Minneapolis cereal and baked-goods company started 
     granting options to all employees in 1993. General Mills had 
     already been offering its top 800 people the opportunity to 
     take raises and some other benefits in options instead of 
     cash.
       Mike Davis, General Mills' compensation vice president, 
     says the option programs are ``very attractive for 
     shareholders'' because they cut fixed costs and thereby boost 
     profits, though he can't say by how much. One clue: The 
     company's selling, general and administrative expenses, which 
     include compensation, dropped by $222 million, or 9%, to $2.1 
     billion, in May 1996, compared with May 1994. For that same 
     period, pretax earnings from continuing operations rose $194 
     million, or 34%, to $759 million.
       Meantime, General Mills' options grants have been steadily 
     ratcheting up. Today, the company distributes almost 3% of 
     its stock to employees annually, buying enough stock to match 
     that distribution. ``They are working hard to keep the 
     shares-outstanding line flat,'' Mr. McMillin of Prudential 
     says. ``That also means that they have to go into the market 
     arbitrarily, as options are exercised, and buy stock back at 
     a higher level.''
       Microsoft, to some extent, also uses buybacks to offset 
     option grants, says, Mr. Brown, its chief financial 
     officer. But the buybacks have become so expensive that 
     the company had to invent a new security to help offset 
     the cost. ``The impact of buying back shares has been more 
     extreme for them because the price took off so 
     dramatically,'' says Michael Kwatinetz, a stock analyst 
     who covers the company for Deutsche Morgan Grenfell. 
     Still, Mr. Kwatinetz views the options package overall as 
     ``a strong plus'' for employees.
       For a while, Microcsoft was coming out about even, in real 
     money terms. When employees exercise options for, say, $40 a 
     share, they pay Microsoft the exercise price. Microsoft gets 
     a tax deduction for the difference between the exercise price 
     and the market price.


                            no small change

       But the gross buyback cost has been rising, to $1.3 billion 
     last year from $348 million in 1994. Employees paid Microsoft 
     about $500 million last year for their stock, and tax savings 
     further reduced the company's out-of-pocket costs. But 
     Microsoft still had to shell out about $300 million.
       Compared with the $570 million in options expense, that 
     sounds like Microsoft is getting its money's worth. In fact, 
     the company is actually paying out $400 million in real cash, 
     to offset employee stock options whose cost isn't recognized 
     in its financial statements.
       Still, $400 million is no small change, even for a company 
     as flush as Microsoft. So in December, the company sold $1 
     billion of a newfangled convertible-preferred stock to 
     outside investors that will reduce such costs as long as the 
     stock rises more than 6.88% a year for the next three years. 
     (The preferred stock, which will be redeemed at as high as 
     $102.24 a share, can be exchanged for cash, debt or stock. If 
     Microsoft's stock price falls, the preferred would be 
     redeemed at no less than $79.875 a share.)
       Many investors consider the financial impact of the options 
     by focusing on earnings per share on a fully diluted basis, a 
     calculation that assumes that options outstanding

[[Page S3206]]

     at prices below the current market have been exercised. Tom 
     Stern at Chieftain Capital, a New York money manager, goes 
     one step further. He estimates how much the stock ought to 
     rise, if his earnings estimates are right, and figures out 
     how many more options will be exercised. ``We pay close 
     attention to options,'' he says. ``If you don't, your 
     earnings get diluted.''
       Will the required footnote disclosure in companies' annual 
     reports have a big impact? ``That's not chopped liver,'' says 
     Jack Ciesielski, author of the Analyst's Accounting Observer 
     newsletter. ``I don't think investors have any idea how big 
     the options programs are.''
       To calculate the cost, many companies will use option-
     pricing models in wide use on Wall Street that combine the 
     time span of the options with the volatility of each 
     company's stock price. Options in a hightech company tend to 
     be worth more since chances are better the stock will surge.
       A few companies have already bit the bullet. Bristol-Myers 
     Squibb Co., the New York pharmaceuticals concern, revealed 
     last year that its options plan would have trimmed 1995 net 
     by a mere $35 million, cutting seven cents a share from per 
     share earnings of $3.58, had options been treated as an 
     expense.
       The impact of options can be suprisingly big, however, even 
     if the company hasn't been that generous. At Foster Wheeler 
     Corp., the Clinton, N.J., builder of refineries and power 
     plants, the impact was heightened by a restructuring charge 
     that reduced reported earnings at the same time as its stock 
     took off. The result was that a 1995 grant of only 1.35% of 
     shares outstanding would have slashed the year's earnings by 
     14%, or $4.1 million.
       Tobias Lefkovich, a Smith Barney analyst who follows Foster 
     Wheeler, says nobody noticed. ``Investors are more focused on 
     consistent earnings growth and new orders'' than the option 
     cost, he explains. Nonetheless, Charles Tse, an outside 
     director at Foster Wheeler who serves on the compensation 
     committee, says, ``the whole compensation plan is being 
     reviewed.'' A company spokesman said later that the review 
     wasn't prompted by the stock-option disclosure.
                                                                    ____


                       [From the Washington Post]

         Disney Chief May Reap $771 Million From Stock Options

                            (By Paul Farhi)

       By any measure, Michael Eisner the chief executive of the 
     Walt Disney Co., has been one of America's most successful 
     corporate executives. And by any measure, he has been 
     handsomely compensated for it.
       Eisner, in fact, could be poised to become one of the most 
     richly rewarded employees in the history of American 
     business. Thanks to a new 10-year pay package that includes 
     generous stock options, the top executive of the 
     entertainment conglomerate could reap nearly $771 million 
     over the next decade, according to estimates by the 
     compensation expert who designed Eisner's new contract. The 
     figure doesn't include Eisner's $750,000-per-year salary or 
     bonuses that could add another $15 million annually.
       While Disney argues that Eisner has proved he's worth it, 
     the huge package has raised anew a debate over executive 
     compensation. A group of 22 institutional pension funds that 
     hold Disney stock plans to protest Eisner's contract at 
     Disney's annual meeting in Anaheim, Calif., next week.
       They intend to withhold their votes for the five 
     management-backed nominees to Disney's board--including 
     former Senate majority leader George Mitchell and Roy E. 
     Disney, Walt's nephew--and to vote against a resolution that 
     sets the formula for Eisner's annual bonus.
       The group, which includes the big public-employee pension 
     funds of California, Louisiana and Wisconsin, also is 
     displeased with the severance package awarded Michael Ovitz, 
     the Hollywood talent agent who served as Disney's president 
     for 14 months. Ovitz, who resigned in December, has received 
     $38.9 million in cash from Disney and options on 3 million 
     shares that have a current paper value of $54 million.
       The Washington-based Council of Institutional Investors, 
     which organized the pension fund protest, acknowledges the 
     action is largely symbolic--it is not voting for alternative 
     board candidates. The group's members control about 11.5 
     million Disney shares--a tiny fraction of the 675 million 
     Disney shares in the public's hands; it's not clear whether 
     the action has wide support among other shareholders.
       ``We're merely trying to send a message,'' said Alyssa 
     Machold, deputy director of the council. ``We don't want to 
     start burning Mickey Mouse in effigy. But by not voting, 
     we're calling into question the actions of Disney's board,'' 
     which approved the Eisner and Ovitz packages.
       The organization says Disney's 16-member board includes 10 
     directors whose financial ties to the company could 
     compromise their independence. Mitchell's Washington law 
     firm, for example, provides legal services to Disney.
       Even before his new pay package was disclosed in January, 
     Eisner was often at the center of the executive-pay 
     controversy. In 1992, he made headlines when he exercised 
     options on shares then worth about $202 million.
       According to Disney's records, the 54-year-old executive 
     has reaped $240 million in profits by exercising options and 
     selling stock in his past 12 years as chief executive. As of 
     September, he held stock that would bring an additional $304 
     million of profit if sold.
       His new contract awards him 8 million options. (An option 
     gives its owner the right to buy stock in a company at a 
     particular point in time at a predetermined price; it has 
     value if it permits the buyer to buy stock at a price below 
     the existing market price.)
       Assessing the future value of an option is an inexact 
     science because it requires guessing the future price of a 
     stock. Officially, Disney estimates the value of Eisner's new 
     options at $195.4 million over their 10-year life.
       Raymond Watson, the Disney board member who directed 
     negotiations on the contract with Eisner, says that is a 
     conservative figure, based on the low end of assumptions 
     about Disney's future performance.
       Graef ``Bud'' Crystal, an executive-pay expert whom 
     Disney's board consulted to formulate the contract, said the 
     value of the Eisner deal likely will be much higher. Assuming 
     an 11 percent annual return--Disney's average stock 
     performance for the past 10 years--Crystal calculated Eisner 
     could realize $770.9 million from exercising the options from 
     2003 to 2006.
       Asked about that figure, Watson said, ``I don't dispute it. 
     We looked at it that way and 30 other ways besides.''
       But Watson said Eisner's compensation will be worth it if 
     he can help Disney keep up its historical growth. He noted 
     that options only have value if the company's stock keeps 
     appreciating. Indeed, companies award executive options in 
     order to motivate them to keep share value rising.
       Under Eisner, Disney has been one of Wall Street's stellar 
     performers. Its revenue has grown from $1.5 billion in 1984 
     to $18.7 billion in 1996. And its stock has soared during 
     that period--from $3 per share to $75.37\1/2\ as of Friday, 
     after adjusting for splits.
       Even Crystal, a frequently quoted critic of huge executive 
     pay packages, grudgingly says Disney's board had to offer 
     Eisner his huge new deal. ``The package he got is awesome,'' 
     he said. ``But if Sony had tried to lure him away, they would 
     have offered him Tokyo and thrown in Kyoto as a bonus.''
                                 ______
                                 
      By Mr. GLENN (for himself and Mr. Lieberman):
  S. 577. A bill to increase the efficiency and effectiveness of the 
Federal Government, and for other purposes; to the Committee on 
Governmental Affairs.


          the government restructuring and reform act of 1997

  Mr. GLENN. Mr. President, I rise today to introduce the Government 
Restructuring and Reform Act of 1997, legislation whose objective is to 
reorganize the executive branch into a form and a structure that is 
capable of meeting the challenges of the 21st century. The bill is 
cosponsored by my distinguished colleague from Connecticut, Senator 
Lieberman.
  We are in an era of contraction at the Federal level. Some of this 
contraction is needed in my opinion, in some areas I don't think it's a 
good idea. But it is a fact. Many programs are being cut, others have 
been eliminated or consolidated into block grants to the States. 
Agencies and departments are being downsized and in some cases 
eliminated. In the last Congress, the Bureau of Mines, Office of 
Technology Assessment, Interstate Commerce Commission, and Advisory 
Commission on Intergovernmental Relations were all terminated. In 
addition, agency rules and paperwork are being pruned. And Federal 
employment has been cut by over 250,000 positions in the last 4 years 
and continues to fall.
  These are big and historic changes, spurred on by our efforts to 
reach a balanced budget and the desire of the American people for a 
more cost-effective Government.
  However, despite the overall downsizing effort, the basic structure 
of the Federal Government remains unchanged. In fact, the basic 
structure of the Federal Government has changed little in the last 25 
years, despite structural changes in the private sector, the economy, 
and our society over that same time period. The Federal Government has 
been the last to follow suit--and that's as it should be in a 
democracy--but that does not mean it should be immune from change 
forever. We cannot keep the status quo in the existing executive branch 
structure while continuing to downsize, cut budgets and programs and 
reduce personnel levels and also expect these same Federal agencies to 
perform effectively and maintain adequate levels of service. We'll end 
up with what I call the hollowing out of Government. We'll have the 
same agencies and departments in place doing most of the same 
activities as they do now. But with less money and less people on hand, 
these activities will be carried out less effectively. We'll have a 
less costly Federal

[[Page S3207]]

Government, but not a more cost-effective one. That is, unless we 
address reorganization and consolidation of Federal agencies and 
functions in a comprehensive, well-thought-out way.
  Reorganization issues are very difficult, perhaps among the most 
difficult issues we face in Government. It raises questions that don't 
have simple, right and wrong answers. Should we have greater 
centralization of Government functions in less, but larger Cabinet 
departments? This is the traditional, centralized model of how 
Government bureaucracy is organized. Or should we decentralize and 
spread Government functions across many smaller agencies and 
departments? Such an approach fits what many call the entrepreneurial 
model of Government organization.
  Well, I can think of pros and cons to both approaches. To add to this 
difficulty, reorganization necessarily involves questions of turf and 
jurisdiction. Turf battles in this town are as hotly contested as any 
policy issue. I know this through experience. Several years ago I 
proposed consolidating the Government's trade and technology functions 
into one Cabinet department and I faced very stiff opposition. 
Likewise, turf is just as jealously guarded at the other end of 
Pennsylvania Avenue. Ask the President's National Performance Review. 
They proposed integrating the Agency for International Development into 
the State Department in addition to consolidating the Federal law 
enforcement agencies only to be faced down by the bureaucracy. So I 
don't think comprehensive reorganization can be tackled successfully by 
either the Congress or the executive branch.

  That's why I'm in favor of establishing a Government commission to 
examine executive branch organization. My bill establishes a nine-
member, bipartisan Commission to make recommendations to the President 
and the Congress in 2 years on consolidating, eliminating, and 
restructuring Federal departments and agencies in order to eliminate 
unnecessary activities, reduce duplication across programs, and improve 
management and efficiency. This Commission would be not just any old 
Commission, producing some big thick study that would wind up largely 
unread in some recycling bin, or on the dusty shelf of academia. Rather 
the Commission's recommendations would be submitted to the Congress and 
have to be considered on a what I call a flexible fast-track basis. 
They could not perish in committee, as so often occurs with commission 
reports and recommendations.
  There is precedent for such a commission. In fact, the few successful 
Government reorganization efforts that have taken place have come about 
because of the work of a commission. Let me give you some background.
  The Hoover Commission is probably the most famous Government 
restructuring commission from recent times. It was formed in 1947 and 
chaired by former President Hoover. The 12-member commission operated 
until 1949 and issued 19 reports to the President recommending various 
changes in the structure of the Federal Government. From these 
recommendations, President Truman submitted eight reorganization plans 
to Congress in 1949, of which six became effective. The following year 
he submitted 27 reorganization plans, 20 of which became effective. 
Included among these plans were the creation of the General Services 
Administration, the expansion of the Executive Office of the President, 
and the creation of a centralized Office of Personnel.
  A second Hoover Commission was formed in 1953 and made 314 specific 
recommendations over the following 2 years, 202 of which were 
implemented. However, generally this Commission was not considered as 
successful as the first Hoover Commission, as it engaged itself in more 
controversial matters of policy rather than solely focus on management 
and organization as the first commission had done.
  Our next restructuring effort of note was put forward by President 
Nixon's Ash Council, which was in operation from 1969 to 1971. Headed 
by Roy Ash, chairman of Litton Industries, the Council supplied the 
President with nine memoranda detailing with specific reorganization 
and consolidation proposals. The Council recommended the formation of 
OMB, the EPA, and NOAA from the consolidation of existing programs. 
These proposals were all implemented. The Council also recommended the 
creation of several super-Departments, including a Department of 
Natural Resources, but these proposals ultimately did not pass the 
Congress.
  The next notable Commission came during the Reagan years, the Grace 
Commission, which was established by Executive order in 1982 and was in 
operation through 1984. The panel was composed of 161 corporate 
executives and it issued a massive 47 volume report with nearly 2,500 
recommendations. Many of its recommendations were policy-based rather 
than organizational in nature, hence they generated controversy and 
polarized debate in the Congress. Still, many of the recommendations 
were implemented, primarily through executive branch action. And the 
Commission did call for stronger financial management in the Federal 
bureaucracy. That's something we have built on in the Committee on 
Governmental Affairs through enactment of the Chief Financial Officers 
Act.

  More recently, the Committee on Governmental Affairs passed 
legislation to establish a bipartisan reorganization commission as part 
of our efforts to make the VA a Cabinet department. That Commission 
became law, Unfortunately, in order to pass it, we had to place a 
mechanism to trigger the activation of the Commission through a 
Presidential certification that the Commission was in the national 
interest. Unfortunately, that certification was not made, Had it been, 
perhaps we would have in place today the blueprint for the Government 
of the 21st century.
  Then in the 103d Congress, we reported out a Glenn-Roth-Lieberman 
Commission bill by a 12 to 1 vote. But we did not move it to the floor 
because the President's National Performance Review was just getting 
underway and we wanted to see what it might come up with before 
establishing the commission.
  Finally, last year the committee reported out a version of a 
government reorganization commission; however, it was tied to 
legislation dismantling the Commerce Department and thus died. Late in 
the session, Senator Stevens developed a substitute retaining the 
commission but dropping the dismantling provisions, We came close to an 
agreement and my hope this Congress is that we will reach one.
  For a more detailed history of government restructuring commissions I 
would refer my colleagues to an excellent report prepared by CRS titled 
``Reorganizing the Executive Branch in the Twentieth Century: Landmark 
Commissions.''
  I believe that a commission would complement nicely the efforts of 
the NPR. The Federal work force has been reduced by over 250,000 
positions, Federal paperwork and redtape has been simplified, 
procurement reform has been enacted, and unnecessary field offices at 
the Department of Agriculture has been closed. These accomplishments 
are due in significant part to the work and the efforts of the NPR.
  However, the NPR has generally not focused on government restricting. 
In the instances where it has made proposals--I noted two examples 
earlier in my statement--they have been rebuffed by the bureaucracy, 
the Congress or both.
  Recent congressional efforts have fallen short also, as several of my 
colleagues learned in advocating the dismantling of four Cabinet 
departments--HUD, DOE, Commerce, and Education. Those efforts were 
heavy-handed in my view and would have created more problems then they 
would have solved.
  In closing, I believe an examination of the experience of the private 
sector in restructuring and downsizing is instructive in 
differentiating between the right and wrong ways to downsize. A 1993 
survey of over 500 U.S. companies by the Wyatt Co. revealed that only 
60 percent of the companies actually were able to reduce costs in their 
restrucuting efforts. Both the Wyatt Survey and a similar one conducted 
by the American Management Association concluded that successful 
restructuring efforts must be planned carefully with a clear vision of 
their goals and objectives, and that proper attention be given to 
maintaining employee morale

[[Page S3208]]

and productivity. Otherwise, the costs of reorganization may outweigh 
its benefits.
  There is a right and a wrong way to reorganize and downsize. I 
believe that the Commission approach is the right way. I hope my 
colleagues will support this legislation.
  Mr. President, I ask unanimous consent that additional material be 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

     Summary of the Government Restructuring and Reform Act of 1997


                                mission

       To consolidate, eliminate and reorganize Federal government 
     departments, agencies and programs to improve efficiency and 
     effectiveness, streamline operations and eliminate 
     unnecessary duplication. To strengthen management capacity. 
     To propose criteria for government-sponsored corporations. To 
     define new/reorganized agency missions and responsibilities.


                               membership

       Nine Members (No more than five from any one party). Three 
     Members (including Chair) appointed by the President 
     (Chairman is selected in consultation with the respective 
     Republican and Democratic leaders of the House and Senate). 
     Six Members appointed by the Congress (1 each for each party 
     leader, then 1 by Speaker in concurrence with Sen. Majority 
     Leader and 1 by Sen. Minority Leader in concurrence with 
     House Minority Leader). Appointments made within 90 days of 
     enactment. Six Members must be in agreement for the 
     Commission to approve any recommendation.


                                reports

       President may submit his own recommendations (7/1/98) for 
     the Commission to consider. Commission issues a preliminary 
     (due 12/1/98) and final report (8/1/99) to the President, 
     Congress, and the public. Public hearings must be held and 
     the Commission is subject to FACA. President has 30 days to 
     suggest changes to final report. The final report is 
     forwarded to Congress by 10/1/99.


                              legislation

       ``Flexible'' fast-track process is in place. Commission 
     final report is introduced as one single bill and Committees 
     have 30 legislative days to act or bill is discharged. Bill 
     is then placed on the Senate calender and after 5th 
     legislative day it is in order to proceed to consideration of 
     the bill. Bill can be filibustered or amended (must be 
     relevant). Fast track procedures apply for the House as well. 
     House-Senate conferees then have 20 days to report.


                              funds/tenure

       $5 M per yr. Sunsets by 10/1/99.
      By Mr. DASCHLE (for himself, Mr. Harkin, Mr. Hatch, Mr. Grassley, 
        Mr. Abraham, Mr. Reid, Mr. Inouye, Mr. Baucus, Mr. Craig, Mr. 
        Kempthorne, and Mr. Thomas):
  S. 578. A bill to permit an individual to be treated by a health care 
practitioner with any method of medical treatment such individual 
requests, and for other purposes; to the Committee on Labor and Human 
Resources.


                  the access to medical treatment act

  Mr. DASCHLE. Mr. President, today I am introducing the Access to 
Medical Treatment Act. I am pleased to be joined by Senators Harkin, 
Hatch, Grassley, Reid, Abraham, Inouye, Baucus, Craig, Kempthorne, and 
Thomas in this effort to allow greater freedom of choice in the realm 
of medical treatments.
  I was introduced to the alternative medical treatment debate the same 
way many Americans are: through personal experience. Actually, in my 
case it was the experience of a personal friend: Berkley Bedell.
  Berkley Bedell, as many of you know, is a former Congressman from 
Iowa's 6th District. He is also--since his battle with Lyme disease 
several years ago--a tireless advocate for improving access to 
alternative treatments.
  As some may remember, Congressman Bedell was ill with Lyme disease 
when he left the House at the end of the 100th Congress. Having tried 
several unsuccessful rounds of conventional treatment consisting of 
heavy doses of antibiotics over approximately 4 years, he turned to an 
alternative treatment that he believes cured his disease.
  This treatment consisted on its most basic level of nothing more than 
drinking processed whey from a cow's milk. After about 2 months of 
taking regular doses of this processed whey, his symptoms disappeared.
  Despite Congressman Bedell's amazing recovery, and the fact that this 
same treatment appeared to be effective in treating other cases of Lyme 
disease, the treatment can no longer be administered because it has not 
gone through the FDA approval process.
  Congressman Bedell's story--and others I have heard since--have 
convinced me of two things: first, that our health care system actually 
discourages the development and use of alternative medical treatments; 
and second, that this myopic outlook does not serve the best interest 
of the American people.
  As I looked into the potential of alternative therapies, I was struck 
by what appears to be a deep-seated skepticism of alternative 
treatments within the medical establishment that may be impeding their 
use. It is clear to me that the public would benefit by greater debate 
about the value of alternative medical treatments, and it is to 
stimulate that debate and ultimately remove barriers to potentially 
effective treatments that I have reintroduced the Access to Medical 
Treatment Act.
  This legislation would allow individual patients and their physicians 
to use certain alternative and complementary therapies not approved by 
the FDA. A companion measure has been introduced in the House by 
Representative DeFazio and 43 of his colleagues.
  Mr. President, it has been my experience that efforts to expand 
access to alternative treatments often produce strong emotional 
reactions--on both sides of the issue. Sometimes, those reactions are 
so strong they detract from the merits of the debate.
  Therefore, let me clarify the intent of the Access to Medical 
Treatment Act.
  This bill is intended to promote greater access to alternative 
therapies under the supervision of licensed health practitioners and 
under carefully circumscribed guidelines. Hopefully, it will stimulate 
a constructive discussion of how best to achieve this objective.
  I appreciate the natural inclination to be wary of uncharted waters, 
and I am not suggesting that caution be thrown to the wind in the case 
of alternative therapies. Some have expressed concern that this bill 
could have the unintended effect of opening the door to unscrupulous 
entrepreneurs who seek to make profit on the despair of the sick. I 
don't minimize that concern. How to guard against such an unintended 
consequence is an issue we will want to examine closely and address.
  What I am suggesting, however, is that this concern should not blind 
us to the benefit and potential of alternative medicine. It is not a 
reason to shrink from the challenge of expanding access to alternative 
therapies.
  Alternative therapies constitute a legitimate field of endeavor that 
is an accepted part of medicine taught in at least 22 of the Nation's 
125 medical schools, including such prestigious institutions as 
Harvard, Yale, Columbia, Johns Hopkins, Georgetown, Albert Einstein, 
Mount Sinai, UCLA, and the University of Maryland.
  At the National Institutes of Health's Office of Alternative 
Medicine, scientists are working to expand our knowledge of alternative 
therapies and their safe and effective use.
  And the State medical licensing boards now have a committee 
discussing alternative medicine. I encourage that panel to explore how 
safe access to alternative medicine might be increased.
  Additionally, more and more Americans are turning to alternative 
therapies in those frustrating instances in which conventional 
treatments seem to be ineffective in combating illness and disease. In 
1990 alone, the New England Journal of Medicine found that Americans 
spent nearly $14 billion on alternative therapies, and made more visits 
to alternative practitioners than they did to primary care doctors. 
American consumers are turning to these therapies because they are 
perceived to be a less expensive and more prevention-based alternative 
to conventional treatments.

  Given the popularity of alternative therapies among the American 
public, it will be asked why this legislation is necessary. If a 
particular alternative treatment is effective and desired by patients, 
then why can't it simply go through the standard FDA approval process?
  The answer is that the time and expense currently required to gain 
FDA approval of a treatment makes it very

[[Page S3209]]

difficult for all but large pharmaceutical companies to undertake such 
an arduous and costly endeavor. The heavy demands and requirements of 
the FDA approval process, and the time and expense involved in meeting 
them, serve to limit access to the potentially innovative contributions 
of individual practitioners, scientists, smaller companies, and others 
who do not have the financial resources to traverse the painstakingly 
detailed path to certification.
  Thus, the current system has the unfortunate effect of both 
discouraging the exploration of life-saving treatments and preventing 
low-cost treatments from gaining access to the market. The Access to 
Medical Treatment Act attempts to open the door to promising treatments 
that may not have huge financial backing.
  I want to be absolutely clear, however, that this legislation will 
not dismantle the FDA, undermine its authority or appreciably change 
current medical practices. It is not meant to attack the FDA or its 
approval process. It is meant to complement it.
  The FDA should--and would under this legislation--remain solely 
responsible for protecting the health of the Nation from unsafe and 
impure drugs. The heavy demands and requirements placed upon treatments 
before they gain FDA approval are important, and I firmly believe that 
treatments receiving the Federal Government's stamp of approval should 
be proven safe and effective.
  The real question posed by this legislation is whether it is in the 
public interest to simply forgo the potential benefits of alternative 
treatments because of economies of scale, or whether, working with the 
FDA, it makes sense to explore ways to bring such treatments to the 
marketplace.
  Mr. President, the Access to Medical Treatment Act proposes one way 
to extend freedom of choice to medical consumers under carefully 
controlled situations. It suggests that individuals--especially those 
who face life-threatening afflictions for which conventional treatments 
have proven ineffective--should have the option of trying an 
alternative treatment, so long as they have been fully informed of the 
nature of the treatment, potential side effects and any other 
information necessary to fully meet FDA informed consent requirements. 
This is a choice that is rightly left to the consumer, and not dictated 
by the Federal Government.

  The bill requires that a treatment be administered by a properly 
licensed health care practitioner who has personally examined the 
patient. It requires the practitioner to comply fully with FDA informed 
consent requirements. And it strictly regulates the circumstances under 
which claims regarding the efficacy of a treatment can be made.
  No advertising claims can be made about the efficacy of a treatment 
by a manufacturer, distributor, or other seller of the treatment. 
Claims may be made by the practitioner administering the treatment, but 
only so long as he or she has not received any financial benefit from 
the manufacturer, distributor, or other seller of the treatment. No 
statement made by a practitioner about his or her administration of a 
treatment may be used by a manufacturer, distributor, or other seller 
to advance the sale of such treatment.
  What this means is that there can be no marketing of any treatment 
administered under this bill. As such, there should be little incentive 
for anyone to try to use this bill as a bypass to the process of 
obtaining FDA approval. Also, because only properly licensed 
practitioners are able to make any claims at all about the efficacy of 
a treatment, there should be little room for so-called quack medicine. 
In short, if an individual or a company wants to earn a profit off 
their product, they would be wise to go through the standard FDA 
approval process rather than utilizing this legislation.
  In essence, this legislation addresses the fundamental balance 
between two seemingly irreconcilable interests: the protection of 
patients from dangerous treatments and those who would advocate unsafe 
and ineffective medicine--and the preservation of the consumer's 
freedom to choose alternative therapies.
  The complexity of this policy challenge should not discourage us from 
seeking to solve it. I am convinced that the public good will be served 
by a serious attempt to reconcile these contradictory interests, and I 
am hopeful the discussion generated by introduction of this legislation 
will help point the way to its resolution. I welcome anyone who would 
like to join me in promoting this important debate to cosponsor this 
legislation. I also welcome alternative suggestions for accomplishing 
this objective.
  As I mentioned previously, I am sympathetic to the concern about the 
need to protect patients against unscrupulous practitioners. 
Individuals are often at their most vulnerable when they are in 
desperate need of medical treatment. That is why it is absolutely 
critical that a proposal of this nature include strong protections to 
ensure that patients are not subject to charlatans who would prey on 
their misfortunate and fears for personal gain. The Access to Medical 
Treatment Act contains such protections.
  Mr. President, this legislation represents an honest attempt to focus 
serious attention on the value of alternative treatments and overcome 
current obstacles to their safe development and utilization. If there 
is a better way to make alternative therapies available to people 
safely, let's find that way. But let's continue this discussion and get 
the job done.
  I ask unanimous consent that the text of the Access to Medical 
Treatment Act be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 578

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Access to Medical Treatment 
     Act''.

     SEC. 2. DEFINITIONS.

       In this Act:
       (1) Advertising claims.--The term ``advertising claims'' 
     means any representations made or suggested by statement, 
     word, design, device, sound, or any combination thereof with 
     respect to a medical treatment.
       (2) Danger.--The term ``danger'' means any negative 
     reaction that--
       (A) causes serious harm;
       (B) occurred as a result of a method of medical treatment;
       (C) would not otherwise have occurred; and
       (D) is more serious than reactions experienced with 
     routinely used medical treatments for the same medical 
     condition or conditions.
       (3) Device.--The term ``device'' has the same meaning given 
     such term in section 201(h) of the Federal Food, Drug, and 
     Cosmetic Act (21 U.S.C. 321(h)).
       (4) Drug.--The term ``drug'' has the same meaning given 
     such term in section 201(g)(1) of the Federal Food, Drug, and 
     Cosmetic Act (21 U.S.C. 321(g)(1)).
       (5) Food.--The term ``food''--
       (A) has the same meaning given such term in section 201(f) 
     of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
     321(f)); and
       (B) includes a dietary supplement as defined in section 
     201(ff) of such Act.
       (6) Health care practitioner.--The term ``health care 
     practitioner'' means a physician or another person who is 
     legally authorized to provide health professional services in 
     the State in which the services are provided.
       (7) Label.--The term ``label'' has the same meaning given 
     such term in section 201(k) of the Federal Food, Drug, and 
     Cosmetic Act (21 U.S.C. 321(k)).
       (8) Labeling.--The term ``labeling'' has the same meaning 
     given such term in section 201(m) of the Federal Food, Drug, 
     and Cosmetic Act (21 U.S.C. 321(m)).
       (9) Legal representative.--The term ``legal 
     representative'' means a parent or an individual who 
     qualifies as a legal guardian under State law.
       (10) Medical treatment.--The term ``medical treatment'' 
     means any food, drug, device, or procedure that is used and 
     intended as a cure, mitigation, treatment, or prevention of 
     disease.
       (11) Seller.--The term ``seller'' means a person, company, 
     or organization that receives payment related to a medical 
     treatment of a patient of a health practitioner, except that 
     this term does not apply to a health care practitioner who 
     receives payment from an individual or representative of such 
     individual for the administration of a medical treatment to 
     such individual.

     SEC. 3. ACCESS TO MEDICAL TREATMENT.

       (a) In General.--Notwithstanding any other provision of 
     law, and except as provided in subsection (b), an individual 
     shall have the right to be treated by a health care 
     practitioner with any medical treatment (including a medical 
     treatment that is not approved, certified, or licensed by the 
     Secretary of Health and Human Services) that such individual 
     desires or the legal representative of such individual 
     authorizes if--
       (1) such practitioner has personally examined such 
     individual and agrees to treat such individual; and

[[Page S3210]]

       (2) the administration of such treatment does not violate 
     licensing laws.
       (b) Medical Treatment Requirements.--A health care 
     practitioner may provide any medical treatment to an 
     individual described in subsection (a) if--
       (1) there is no reasonable basis to conclude that the 
     medical treatment itself, when used as directed, poses an 
     unreasonable and significant risk of danger to such 
     individual;
       (2) in the case of an individual whose treatment is the 
     administration of a food, drug, or device that has to be 
     approved, certified, or licensed by the Secretary of Health 
     and Human Services, but has not been approved, certified, or 
     licensed by the Secretary of Health and Human Services--
       (A) such individual has been informed in writing that such 
     food, drug, or device has not yet been approved, certified, 
     or licensed by the Secretary of Health and Human Services for 
     use as a medical treatment of the medical condition of such 
     individual; and
       (B) prior to the administration of such treatment, the 
     practitioner has provided the patient a written statement 
     that states the following:
       ``WARNING: This food, drug, or device has not been declared 
     to be safe and effective by the Federal Government and any 
     individual who uses such food, drug, or device, does so at 
     his or her own risk.'';
       (3) such individual has been informed in writing of the 
     nature of the medical treatment, including--
       (A) the contents and methods of such treatment;
       (B) the anticipated benefits of such treatment;
       (C) any reasonably foreseeable side effects that may result 
     from such treatment;
       (D) the results of past applications of such treatment by 
     the health care practitioner and others; and
       (E) any other information necessary to fully meet the 
     requirements for informed consent of human subjects 
     prescribed by regulations issued by the Food and Drug 
     Administration;
       (4) except as provided in subsection (c), there have been 
     no advertising claims made with respect to the efficacy of 
     the medical treatment by the practitioner;
       (5) the label or labeling of a food, drug, or device that 
     is a medical treatment is not false or misleading; and
       (6) such individual--
       (A) has been provided a written statement that such 
     individual has been fully informed with respect to the 
     information described in paragraphs (1) through (4);
       (B) desires such treatment; and
       (C) signs such statement.
       (c) Claim Exceptions.--
       (1) Reporting by a practitioner.--Subsection (b)(4) shall 
     not apply to an accurate and truthful reporting by a health 
     care practitioner of the results of the practitioner's 
     administration of a medical treatment in recognized journals, 
     at seminars, conventions, or similar meetings, or to others, 
     so long as the reporting practitioner has no direct or 
     indirect financial interest in the reporting of the material 
     and has received no financial benefits of any kind from the 
     manufacturer, distributor, or other seller for such 
     reporting. Such reporting may not be used by a manufacturer, 
     distributor, or other seller to advance the sale of such 
     treatment.
       (2) Statements by a practitioner to a patient.--Subsection 
     (b)(4) shall not apply to any statement made in person by a 
     health care practitioner to an individual patient or an 
     individual prospective patient.
       (3) Dietary supplements statements.--Subsection (b)(4) 
     shall not apply to statements or claims permitted under 
     sections 403B and 403(r)(6) of the Federal Food, Drug, and 
     Cosmetic Act (21 U.S.C. 343-2 and 343(r)(6)).

     SEC. 4. REPORTING OF A DANGEROUS MEDICAL TREATMENT.

       (a) Health Care Practitioner.--If a health care 
     practitioner, after administering a medical treatment, 
     discovers that the treatment itself was a danger to the 
     individual receiving such treatment, the practitioner shall 
     immediately report to the Secretary of Health and Human 
     Services the nature of such treatment, the results of such 
     treatment, the complete protocol of such treatment, and the 
     source from which such treatment or any part thereof was 
     obtained.
       (b) Secretary.--Upon confirmation that a medical treatment 
     has proven dangerous to an individual, the Secretary of 
     Health and Human Services shall properly disseminate 
     information with respect to the danger of the medical 
     treatment.

     SEC. 5. REPORTING OF A BENEFICIAL MEDICAL TREATMENT.

       If a health care practitioner, after administering a 
     medical treatment that is not a conventional medical 
     treatment for a life-threatening medical condition or 
     conditions, discovers that such medical treatment has 
     positive effects on such condition or conditions that are 
     significantly greater than the positive effects that are 
     expected from a conventional medical treatment for the same 
     condition or conditions, the practitioner shall immediately 
     make a reporting, which is accurate and truthful, to the 
     Office of Alternative Medicine of--
       (1) the nature of such medical treatment (which is not a 
     conventional medical treatment);
       (2) the results of such treatment; and
       (3) the protocol of such treatment.

     SEC. 6. TRANSPORTATION AND PRODUCTION OF FOOD, DRUGS, 
                   DEVICES, AND OTHER EQUIPMENT.

       Notwithstanding any other provision of the Federal Food, 
     Drug, and Cosmetic Act (21 U.S.C. 201 et seq.), a person 
     may--
       (1) introduce or deliver into interstate commerce a food, 
     drug, device, or any other equipment; and
       (2) produce a food, drug, device, or any other equipment,

     solely for use in accordance with this Act if there have been 
     no advertising claims by the manufacturer, distributor, or 
     seller.

     SEC. 7. VIOLATION OF THE CONTROLLED SUBSTANCES ACT.

       A health care practitioner, manufacturer, distributor, or 
     other seller may not violate any provision of the Controlled 
     Substances Act (21 U.S.C. 801 et seq.) in the provision of 
     medical treatment in accordance with this Act.

     SEC. 8. PENALTY.

       A health care practitioner who knowingly violates any 
     provisions under this Act shall not be covered by the 
     protections under this Act and shall be subject to all other 
     applicable laws and regulations.
                                 ______
                                 
      By Mr. ASHCROFT:
  S. 579. A bill to amend the Internal Revenue Code of 1986 to allow a 
deduction for the old-age, survivors, and disability insurance taxes 
paid by employees and self-employed individuals, and for other 
purposes; to the Committee on Finance.


               the working americans wage restoration act

  Mr. ASHCROFT. Mr. President, it has been said that America is a city 
on a hill, a special example for the rest of the world to observe--a 
place of hope, a place of opportunity--what America is and ought to be. 
But it might be said that if we are a city, we are in need of urban 
renewal. We need to restart our engine, to regenerate the potential for 
growth, for the development of opportunity in this culture.
  Economic growth has been the idea, it has been the mechanism whereby 
America could find a special place of opportunity, where America could 
be that particular country that said:

       Give me your tired, your poor, your huddled masses, 
     yearning to breathe free, the wretched refuse of your teeming 
     shore. Send these, the homeless tempest tossed, to me.

  With what the writer of that great poem inscribed on the Statue of 
Liberty, America could proudly proclaim, ``I lift my lamp beside the 
golden door.''
  America has been a place of opportunity because it has been a place 
of growth, with an understanding that we could always grow our way 
through problems. Growth has been that marvelous key toward providing 
some new hope for individuals. Individuals from anywhere and everywhere 
at all times in our history have provided a part of the stream of a 
growing America, a set of opportunities that is the envy of the world. 
Yet what is happening and has happened to our growth? What has happened 
to our culture? Working families are being stressed. They get up early. 
They work hard. They sacrifice time with each other and with their 
children, and they seem to have less and less to show for it. They are 
squeezed not just financially but as families.
  What is the reason? Why is that we as a culture find ourselves 
laboring under this weight rather than soaring with the opportunity 
characteristic of our heritage?
  I think we have a tax load that is weighing down individuals in this 
culture, and it is a major one. It is simple. It is not hard to 
understand. The most recent issue of Baron's magazine, which is a 
magazine that monitors business activity and government and families 
and opportunity, spells out the tremendous tax load--heavier at this 
moment in history than at any other time in the history of America. It 
is interesting to note that we were able to spend our way out of the 
Great Depression with lower tax rates than we now have. We were able to 
make the world safe for democracy or to work toward making it in the 
First World War. We were able to defeat the onerous and terrible power 
of Nazi Germany in the Second World War with lower tax rates than we 
have now.
  Big government is taking so much of the working wages of Americans 
that Americans no longer have the resources to spend on themselves that 
they need.
  The family budget in 1955, for example, was 27.7 percent in total 
taxes. Now the total taxes of the average American family is well over 
38 percent. And you are well aware of the fact that we spend more on 
taxes than

[[Page S3211]]

we do on food, clothing, and shelter combined. We need to take a look 
at what we are spending and how we are deploying it, to see what has 
happened to what we thought were our wage increases. We have had a lot 
of wage increases, but we end up with less and less. It turns out that 
the wage increase for America has been stolen by the Government. If we 
had the kind of income that we have now and we were paying 27.7 in 
total taxes like we were in 1955, we would have had real wage 
increases.
  Mr. President, today is April 15. It is tax day. Yet most Americans 
do not realize that we are forced to pay a double tax. We pay income 
tax on the Social Security taxes that are deducted from our check, on 
those taxes which are pulled out before we ever see our check. We pay 
income taxes on that tax. That is particularly unfortunate. We are 
double taxed. Money that we never see, money that goes to Government, 
we pay a second tax to Government on that money. It does not make 
sense.
  Interestingly enough, this is not a tax that hits American businesses 
the same way. As you will recall, half of the Social Security tax is 
paid by citizens; half is paid by corporations or the employers. The 
citizen who pays the tax pays a double tax--not only pays the Social 
Security tax but then has an income tax on that same money that is 
required to be taken out of his remaining funds. The business that pays 
Social Security taxes gets to deduct from its other taxes what it has 
paid in Social Security taxes, or gets to deduct from its taxable 
income what it has paid in Social Security taxes.

  So the business community gets fair treatment of a single tax while 
the working individual has a double tax situation there, and it is time 
to end that kind of arbitrary, unreasonable, unequal, discriminatory 
approach to the worker and to provide parity with the reasonable 
expectation that is demanded from the employer and the corporation. If 
this is deductible to the employers and to corporations and to 
businesses, the payment of those taxes should also be deductible to 
individuals in our culture.
  The ordinary citizen, the worker, cannot though, and it is time that 
we lift the American worker at least to tax parity and to tax equality, 
a position that they should share with the corporate community and the 
business community.
  For those who are fond of saying that every tax break is a tax break 
for the rich, it is time to think again. This is not a proposal that is 
designed to help people who make millions and millions of dollars. 
Social Security taxes are only levied on the first $65,000 of income. 
If we provide a deduction for those Social Security taxes which are 
paid, the person who makes $65,000 in income does not have any smaller 
deduction or any smaller benefit than the person who makes $650,000 in 
income or the person who makes $65 million in income. The tax benefit 
is the same once you reach the $65,000 level.
  So this is a tax benefit that is not focused on the rich. It is not 
any more valuable to the very rich than it is to the middle class. The 
truth is this is the middle-class tax cut that is fair. It provides for 
people who work, that they will not be double taxed on their work. 
Social Security taxes are the only tax in America levied on work. 
Income taxes are levied on earned income or unearned income, but Social 
Security taxes are levied on work. How ironic that in America we would 
have a double tax on work. We ought to be standing for a proposition, 
instead of double taxing work, at least give it equality with other 
income that would not be double taxed. We would give Americans an 
opportunity to retain some of that for which they had worked so they 
could spend it themselves.
  There would be a significant improvement in the setting for the 
average two-income family in America. The average two-earner family 
pays about $1,227 more in income taxes because they cannot deduct from 
their income tax the taxes they have already paid to Social Security. 
If we allow them to deduct those, that means that $1,227 that is paid 
in income taxes would be available for individuals to have to meet 
their family needs. This is not just a way of saying that people will 
be able to spend the money. It is saying that people will be able to 
spend this money on themselves rather than have Government spend this 
money on more Government programs. I think most Americans understand 
that they would be better off deciding what they need most and how best 
to meet those needs than expecting Government to spend the money for 
them.
  The thrust of the matter is that this $1,227 per year for the average 
two-income family would be a welcome relief from a tax load which is 
higher than it has ever been before in the history of this country.
  I had the privilege of being Governor in my State for two terms 
before I came here, and I know what jobs mean and how important jobs 
are. What is interesting to note is that if we were to implement this 
tax measure of relief for the American people, the scholars estimate it 
would mean 900,000 new jobs in this country. Nine hundred thousand new 
jobs would provide a real spurt of growth for this Nation and would 
help us reacquire the sense of dynamic that America has had 
historically and that our heritage contains. Nine hundred thousand new 
jobs would be an average of about 18,000 jobs per State. I know that 
18,000 jobs is equivalent to at least 3 car plants, new car plants, in 
a State. That would mean growth. That would mean opportunity. It would 
build for the future of this great country. I think we need to remind 
ourselves on a consistent basis when we tax people it is not a question 
of whether or not the money will be spent; it is a question of whether 
Government will spend the money or people will spend the money. I 
believe people can decide best.

  The passage of this act would affect the take-home pay of 77 million 
Americans who would have more resources to devote to meet the needs of 
their families, and it would be a measure of providing equity and 
fairness so that they would not be double taxed and neither would they 
be taxed unequally and in a discriminatory way as compared to the taxes 
which are levied on the corporate community.
  Mr. President, so often we say that bigger Government is required 
because some think that families will not do what they ought to do. I 
believe we have come to a juncture where Government has made it 
impossible for families to do what they need to do. Families want to 
share. They want to be involved in their communities. They want to be 
involved in reaching out to other people. When Government takes such a 
big portion of your income, when you have to work 3 hours every day to 
pay your taxes and you struggle through the rest of your day to meet 
your own needs, it does not leave much opportunity for sharing.
  The purpose of Government is related to growth. It is related to the 
growth of people, not the growth of Government. If we are to perpetuate 
a system where the only thing that can grow is Government, we have made 
a mistake. We would have destroyed the genius of America and repudiated 
our rich history of being able to grow our way through any challenge. 
It is time for us, the United States of America, the city on the Hill, 
again to be a city of hope and opportunity. It is time for us to 
provide a basis upon which the American worker and the American economy 
can grow. We can do that by ceasing the practice of double taxing work. 
We must stop double taxing working Americans.
  The bill, which I now send to the desk, is cosponsored by Senators 
Craig, Shelby, Cochran, Hagel, and Hatch. It would end the double 
taxation that American workers pay on Social Security taxes, because 
income taxes are levied on those amounts which are deducted as payroll 
taxes, known as Social Security taxes.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 579

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Working Americans Wage 
     Restoration Act''.

     SEC. 2. DEDUCTION FOR OLD-AGE, SURVIVORS, AND DISABILITY 
                   INSURANCE TAXES OF EMPLOYEES AND SELF-EMPLOYED 
                   INDIVIDUALS.

       (a) Taxes of Employees.--

[[Page S3212]]

       (1) Deduction allowed in arriving at adjusted gross 
     income.--Section 62(a) of the Internal Revenue Code of 1986 
     (defining adjusted gross income) is amended by inserting 
     after paragraph (16) the following new paragraph:
       ``(17) Employees' oasdi taxes.--The deduction allowed by 
     section 164(g).''
       (2) Determination of deduction.--Section 164 of such Code 
     (relating to deduction for taxes) is amended by redesignating 
     subsection (g) as subsection (h) and by inserting after 
     subsection (f) the following new subsection:
       ``(g) Employees' OASDI Taxes.--
       ``(1) In general.--In the case of an individual, in 
     addition to the taxes described in subsection (a), there 
     shall be allowed as a deduction for the taxable year an 
     amount equal to the sum of--
       ``(A) the taxes imposed by section 3101(a) for the taxable 
     year, and
       ``(B) the taxes imposed by section 3201(a) for the taxable 
     year but only to the extent attributable to the percentage in 
     effect under section 3101(a).
       ``(2) Special rule for certain agreements.--For purposes of 
     paragraph (1), taxes imposed by section 3101(a) shall include 
     amounts equivalent to such taxes imposed with respect to 
     remuneration covered by--
       ``(A) an agreement under section 218 of the Social Security 
     Act, or
       ``(B) an agreement under section 3121(l) (relating to 
     agreements entered into by American employers with respect to 
     foreign affiliates).
       ``(3) Coordination with special refund of social security 
     taxes.--Taxes shall not be taken into account under paragraph 
     (1) to the extent the taxpayer is entitled to a special 
     refund of such taxes under section 6413(c).
       ``(4) Coordination with earned income credit.--No deduction 
     shall be allowed under paragraph (1) for any taxable year if 
     the individual elects to claim the earned income credit under 
     section 32 for the taxable year.''
       (3) Conforming amendment.--The next to last sentence of 
     section 275(a) of such Code is amended by inserting ``or 
     164(g)'' after ``164(f)''.
       (b) Deduction for Self-Employed Individuals.--
       (1) In general.--Paragraph (1) of section 164(f) of the 
     Internal Revenue Code of 1986 (relating to deduction for one-
     half of self-employment taxes) is amended to read as follows:
       ``(1) In general.--In the case of an individual, in 
     addition to the taxes described in subsection (a), there 
     shall be allowed as a deduction for the taxable year an 
     amount equal to the sum of--
       ``(A) the taxes imposed by section 1401(a) for such taxable 
     year, plus
       ``(B) 50 percent of the taxes imposed by section 1401(b) 
     for such taxable year.

     In the case of an individual who elects to claim the earned 
     income credit under section 32 for the taxable year, only 50 
     percent of the taxes described in subparagraph (A) shall be 
     taken into account.''
       (2) Conforming amendments.--
       (A) Section 32(a)(1) of such Code is amended by inserting 
     ``who elects the application of this section'' after 
     ``eligible individual''.
       (B) The heading for section 164(f) of such Code is amended 
     by striking ``One-Half'' and inserting ``Portion''.
       (C) Section 1402(a)(12) of such Code is amended--
       (i) by striking ``one-half'' the first place it appears and 
     inserting ``portion'', and
       (ii) by striking subparagraph (B) and inserting:
       ``(B) a percentage equal to the sum for such year of the 
     rate of tax under section 1401(a) and one-half of the rate of 
     tax under section 1401(b);''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1997.
                                 ______
                                 
      By Mr. SMITH of New Hampshire (for himself, Mr. Faircloth, Mr. 
        Gramm, Mr. Hatch and Mr. Kyl):
  S. 580. A bill to amend the Internal Revenue Code of 1986 to allow 
individuals to designate that up to 10 percent of their income tax 
liability be used to reduce the national debt, and to require spending 
reductions equal to the amounts so designated; to the Committee on 
Finance.

                 The Taxpayer Debt Buy-Down Act of 1997

  Mr. SMITH, Mr. President, today I am introducing legislation to 
create an active role for ``We the People'' in the fiscal matters of 
the Federal Government.
  I am joined by my colleagues, Senators Faircloth, Gramm, Hatch, and 
Kyl, who are original cosponsors of this measure.


why we need the taxpayer debt buy-down: the president and congress have 
                      not stepped up to the plate

  On February 6, President Clinton submitted his fifth unbalanced 
budget.
  Then, on March 4, the Senate failed by one vote to approve the 
balanced budget constitutional amendment (BBCA).
  During the debate on the balanced budget constitutional amendment, 
the president and his congressional allies decried the constitutional 
change as too permanent, and argued that Congress could impose fiscal 
self-discipline.
  In response to these claims, today I am reintroducing the Taxpayer 
Debt Buy-Down Act. This legislation not only answers appeals for 
statutory restrictions, but also takes the balanced budget debate to 
the people.
  If the President and Congress cannot agree, the American people 
should decide.
  I first introduced the bill in 1992, and it was endorsed by President 
George Bush.
  More than one-third of the Senate voted for my plan which I offered 
as an amendment to the tax bill of 1992.
  I feel the time has come again to empower the taxpayers to tell 
Congress how much spending they want cut in order to balance the budget 
and buy down the debt.
  For example; in 1996, individual income tax revenue totaled over $650 
billion.
  So if every taxpayer checked off the maximum designation of 10-
percent, Congress would have to come up with roughly $65 billion in 
spending cuts.
  Admittedly, this level of participation is highly unlikely initially.
  A more reasonable estimate would be that the total taxpayer check-off 
would amount to about 3-percent of all individual tax revenue in the 
first few years.
  Under this scenario, Congress would only have to find less than $20 
billion in spending reductions.
  Considering the danger posed by our growing national debt, who could 
oppose $20 billion in spending cuts.
  The American people will be able to tell us if we are on the right 
track, or if they want more deficit and debt reduction.
  I challenge my colleagues to support their claims that they support a 
balanced budget. Ask the taxpayers.


                      the process would be simple

  First, by checking off a box on their April 1040 tax forms, taxpayers 
would designate up to 10 percent of their income tax liability, what 
they owe, for the purpose of deficit and debt reduction. Once the 
deficit is eliminated, designated cuts would buy down the debt.
  Second, the following October, the Treasury Department would 
calculate the amount demanded by the taxpayers. Congress would then 
have until the end of the next fiscal year to cut Federal spending in 
any area to meet this target.
  Third, if Congress failed to make the necessary cuts, an automatic 
across-the-board sequester of all Government accounts, with some 
necessary exemptions, would be triggered at the end of the session. 
This sequester would ensure compliance with the taxpayer-mandated 
spending reductions. However, I would hope this would not occur if 
Congress listens to the mandate of the taxpayers.
  Fourth, furthermore, to harmonize this grassroots effort with 
congressional efforts to balance the budget, the check-off will 
initially mandate spending cuts and debt retirement only over and above 
the savings that Congress otherwise enacts. For example, if Congress 
passes legislation that implements savings of $50 billion in fiscal 
year 1999, and the check-off for that year totals $60 billion, only an 
additional $10 billion would be cut under this bill.
                                 ______
                                 
      By Mr. DURBIN (for himself, Mr. Leahy, Mrs. Feinstein and Mr. 
        Torricelli):
  S. 581. A bill to amend section 49 of title 28, United States Code, 
to limit the periods of service that a judge or justice may serve on 
the division of the United States Court of Appeals for the District of 
Columbia to appoint independent counsels, and for other purposes; to 
the Committee on the Judiciary.


                    INDEPENDENT COUNSEL LEGISLATION

  Mr. DURBIN. Mr. President, I rise today to introduce, with Senators 
Leahy, Feinstein and Torricelli, legislation dealing with the three-
judge panel that appoints independent counsels.
  In the last few days, we have heard a flurry of speeches about the 
appointment of an independent counsel and about the grasp that the 
Attorney General has on her job. Recently some Members of Congress have 
suggested that we should open an investigation on the Attorney General 
because of her

[[Page S3213]]

decision not to seek the appointment of an independent counsel.
  This is a new high in the efforts to politicize the independent 
counsel statute and a new low in bullying tactics.
  And, Mr. President, these tactics have worked insofar as their goal 
was to politicize this issue. Many Americans now view this statute as 
just another political football. Here in Congress, we toss about calls 
for an independent counsel. We threaten to minutely examine every act 
of the Attorney General in her efforts to carry out her duties under 
the statute.
  Meanwhile, one of the most important institutions to the operation of 
the independent counsel statute goes unexamined. The three-judge panel 
that appoints and oversees the independent counsels wields enormous 
power. And it has tainted itself through close connections to partisan 
politics and through the appointment of special counsels who are 
likewise partisans.
  This panel seems to operate free of any genuine scrutiny. It plays 
one of the most important roles in the administration of the statute. 
And it is the most in need of some oversight.
  The last time an independent counsel was appointed, we all saw just 
how embroiled that three-judge panel is in partisan politics. The head 
of that panel, the Republican-appointed David Sentelle, had lunch with 
two Republican Senators just a few weeks before he appointed an 
independent counsel who was a Republican Justice Department official 
and who had just recently publicly contemplated running for the Senate 
as a Republican. As a result of this incident, five former presidents 
of the American Bar Association issued a letter rebuking Judge Sentelle 
for his actions.
  A recent article in the Legal Times noted:

     In fact, with the appointment of independent counsel[s] 
     handled by a highly secretive three-judge panel, named by the 
     chief judge of the United States, it could be argued that one 
     partisan system has simply been supplanted by another.

  Let me explain what the panel currently does and how that contributes 
to the failings of the statute.
  The first flaw in the statute is in the appointment terms of the 
judges who sit on this special panel. Currently, three judges are 
appointed to the panel by the Chief Justice of the United States. The 
judges are appointed to the division for 2-year terms.
  But David Sentelle is now serving his third 2-year term. Judge John 
D. Butzner, Jr., is in the middle of his fourth 2-year term. And Judge 
Peter T. Fay is in the midst of his second 2-year term.
  In short, some judges are becoming entrenched in the independent 
counsel process.
  A second flaw in the judges' panel is in its consistent failure to 
issue any rules of procedure and practice. In 1994, when we 
reauthorized the act, Congress called on the panel to promulgate rules 
of procedure for practice before it, clarify available avenues of 
appellate review, and undertake to catalog and preserve independent 
counsel reports and make public versions accessible upon request.
  They have not done so. Only recently, the panel issued some draft 
rules of procedure dealing with attorney fee applications, but in 3 
years they do seem to have not otherwise complied with Congress's 
request.
  This special division is like a magician's hat: independent counsels 
emerge from it. But we do not know how. Are there any criteria used by 
the panel to appoint an independent counsel? Does the panel make any 
effort to assure that the person it appoints is actually independent? 
How does someone get this job--a job with a virtually unlimited budget 
and a stunning array of powers?
  We do not know because the Court will not tell us, even though we 
asked them to 3 years ago.
  We need to do a few things about this panel. The legislation I 
introduce today is intended to remove any taint of partisan politics 
from this panel. It requires that judges on the panel serve no more 
than two, 2-year terms. This will ensure that no one judge gets 
entrenched in appointing independent counsels. And it assures that the 
division does not get politicized. In addition, it is consistent with 
current law. Why have 2-year terms if the judges just stay on as long 
as they want? The 2-year term was clearly inserted with the view that 
judges would not stay on the division forever.
  In addition to limiting judges on the panel to 4 years, the measure I 
introduce requires that the division promulgate the very rules that we 
asked them to issue 3 years ago.
  The special division should not be a mysterious black box. People who 
practice before it should know the rules. Attorney fee applications are 
the most common things the Division has to deal with, but this 
provision also requires that the Special Division have rules governing 
the appointment of an independent counsel. We should know what criteria 
and what procedure they use to assure that the independent counsel is 
indeed independent and qualified.
  Mr. President, I hope we can all agree that this measure is vitally 
needed. It is simply aimed at improving the operation of the 
independent counsel statute not tearing it down. It's goal is to take 
some partisan politics out of the system and to put a little more 
independence back into the statute.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 581

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

     SECTION 1. LIMITATION ON PERIODS OF SERVICE THAT A JUDGE MAY 
                   SERVE ON THE DIVISION TO APPOINT INDEPENDENT 
                   COUNSELS.

       (a) Limitation on Service.--
       (1) In general.--Section 49 of title 28, United States 
     Code, is amended by adding at the end the following:
       ``(g)(1) Notwithstanding subsections (a) through (f) and 
     subject to paragraphs (2) and (3) of this subsection, no 
     judge or justice may serve more than 2 two-year periods 
     assigned to the division to appoint independent counsels 
     under this section.
       ``(2) For purposes of paragraph (1), service in filling a 
     vacancy on the division of--
       ``(A) less than 1 year shall not apply; and
       ``(B) 1 year or more shall be considered service for the 
     full two-year period.
       ``(3) A judge of the United States Court of Appeals for the 
     District of Columbia who has served 2 two-year periods on the 
     division may be assigned to serve an additional two-year 
     period, if--
       ``(A) every other judge of such Court otherwise eligible 
     for such assignment has served 2 two-year periods in such 
     assignment; and
       ``(B) the period of time since such judge last served in 
     such assignment is not less than the period of time any other 
     judge of such Court (who is otherwise eligible to serve) last 
     served in such assignment.''.
       (2) Effective date.--The amendments made by this subsection 
     shall take effect on the date of enactment of this Act and 
     shall apply to any judge or justice serving on such date on 
     the division to appoint independent counsels of the United 
     States Court of Appeals for the District of Columbia.
       (b) Administration of Division by the Circuit Judicial 
     Council.--
       (1) In general.--Section 332 of title 28, United States 
     Code (including subsection (d) of such section relating to 
     making all necessary and appropriate orders for the effective 
     and expeditious administration of justice), shall apply with 
     respect to the administration of the division of the United 
     States Court of Appeals for the District of Columbia to 
     appoint independent counsels by the Circuit Judicial Council 
     for the District of Columbia.
       (2) Rules.--No later than 6 months after the date of 
     enactment of this Act, the Circuit Judicial Council for the 
     District of Columbia shall promulgate rules to--
       (A) govern practice and procedures before the division to 
     appoint independent counsels;
       (B) govern the procedure for the appointment of an 
     independent counsel by the division;
       (C) clarify procedures for judicial appellate review of 
     actions of the division; and
       (D) catalog and preserve independent counsel reports and 
     make public versions available upon request.

  Mr. LEAHY. Mr. President, the whole purpose of the independent 
counsel law--to get politics out of the process of investigating 
politically potent matters--has been severely undercut recently by 
partisan efforts to bully the Attorney General into appointing an 
independent counsel to investigate fundraising activities in the 1996 
Presidential campaign. In fact, some Republicans in Congress have 
threatened that if Janet Reno refuses to do what they want, she will be 
investigated and her job will be at stake.
  This marks a new low in the politicization of the independent counsel 
process. These threats demean our system of justice and, I fear, 
undermines public confidence in all branches of government.

[[Page S3214]]

  Continued politicization of the independent counsel process will be 
the death knell for this law. The American people already have 
legitimate questions about how much independent counsels cost, how long 
they take, and how this law is working. By last count, independent 
counsels have cost taxpayers a total of over $125 million. Whitewater 
counsel Ken Starr alone has already spent over $22 million. We still 
have an independent counsel investigating matters from the Reagan 
administration.
  Suspicions about the role of partisan politics in the selection of 
so-called independent counsels are already strong. A Reagan-appointed 
Chief Justice, who served in the Nixon administration, appointed a 
staunchly Republican judge to the selection panel that, after meeting 
in secret, appointed partisan Republican Kenneth Starr to investigate 
Whitewater.
  If the results of independent counsel investigations cannot be 
trusted because they are tainted by partisan politics, we will not be 
able to justify the costs of this law.
  That is why I am commending Senator Durbin for his work on this bill. 
It takes important steps to begin restoring public confidence in the 
process by which independent counsels are selected. Specifically, the 
bill sets term limits for the three judges who serve on the Special 
Division of the D.C. Circuit division that appoints the independent 
counsel. Under current law, these judges serve for 2-year terms. 
However, all of them are on at least their second 2-year term. The 
legislation would prohibit a judge, including the current panel, from 
serving more than 2-year terms.
  In addition, the bill would allow sunshine on the selection of 
independent counsels and the results of independent counsel 
investigations. What criteria does the Special Division use to select 
independent counsels? Do they look for trial experience, prosecutorial 
experience or political experience? The bill places the Special 
Division that selects independent counsels under the authority of the 
Circuit Judicial Council and requires that the Council promulgate 
within 6 months rules of practice for the Division. These rules would 
specify the procedure for selection of an independent counsel. This is 
important so everyone will know what qualifications the Special 
Division uses to evaluate candidates. Public procedures should also 
open up the process so that appropriate candidates know how to apply 
for independent counsel positions when openings occur. This is too 
important a process to be decided by political cronies over lunch.
  The bill would also require that the Court catalog and preserve 
independent counsel reports and make public versions available upon 
request.
  This bill is not a cure-all for the problems we have seen with the 
independent counsel law. But this is a good start.
  Mr. President, the whole purpose of the independent counsel law--to 
get politics out of the process of investigating politically potent 
matters--has been severely undercut recently by partisan efforts to 
bully the Attorney General into appointing an independent counsel to 
investigate fundraising activities in the 1996 Presidential campaign. 
In statement after statement by otherwise responsible Members of 
Congress, they tell her how she should use here discretion and how she 
should make up her mind, before she even has an opportunity to do so. 
Some Republicans in Congress have threatened that if Janet Reno refuses 
to do what they want, she will be investigated and her job will be at 
stake.
  Basically, the American people were asked last night to make this 
choice: Would they let the Speaker of the House, Mr. Gingrich, 
determine what the ethics rules should be, or would they rather allow 
the Attorney General of the United States, Janet Reno to follow the law 
and investigate whether crimes have occurred?
  Frankly, I am very confident in allowing Attorney General Reno to 
proceed. She has done a pretty darn good job so far. She calls them as 
she sees them and has been a very straightforward Attorney General.
  I hope that everybody, whether in this body or the other body, will 
stop trying to substitute their ethical standards and political 
judgment as to what should be done and allow the Attorney General, who 
sticks to a very strong ethical standard, to follow and enforce the 
law. I believe the statements seeking to intimidate the Attorney 
General mark a new low in the politicization of the independent counsel 
process.
                                 ______
                                 
      By Mr. GREGG:
  S. 583. A bill to change the date on which individual Federal income 
tax returns must be filed to the Nation's Tax Freedom Day, the day on 
which the country's citizens no longer work to pay taxes, and for other 
purposes; to the Committee on Finance.


               TAX FILING ON TAX FREEDOM DAY ACT OF 1997

  Mr. GREGG. Mr. President, this past weekend we had a weekend of 
firsts. Tiger Woods became the youngest PGA player to ever win the 
Masters and in doing so broke the all-time scoring record of 270 and 
established the largest margin of victory--12 shots--in the 
tournament's 61-year history.
  On April 14, 1997, the Tax Foundation announced another first, Tax 
Freedom Day this year will be on May 9.
  What is Tax Freedom Day? Tax Freedom Day is the day when the average 
American stops working for the Government and starts working for 
themselves. This year's record date for Tax Freedom Day of May 9 is 2 
days after last year's record of May 7 and up significantly since the 
Clinton administration took office in 1993.
  This year the average American will have to work a total of 128 days 
to pay his or her tax bill. That equates to 2 hours 49 minutes of each 
working day laboring to pay taxes. That's hard time any way you slice 
it.
  Over the years, April 15 has metamorphosized from being a trip to the 
dentist's office to being a major root canal without the novocaine.
  I rise today to introduce legislation that will change the date on 
which individuals file their Federal income tax returns from April 15 
to May 9, Tax Freedom Day.
  While this legislation does little to bring about a change in the 
amount of money paid by the average American wage earner, I believe 
that issue would be helped greatly with the enactment of a balanced 
budget with tax relief. It does ensure that your taxes won't be due 
until you free yourself from crushing Federal taxes.
  I ask unanimous consent that a copy of the bill be placed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 583

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Tax Filing On Tax Freedom 
     Day Act of 1997''.

     SEC. 2. TAX FILING ON TAX FREEDOM DAY.

       (a) In General.--Each year, in time to be included in the 
     instruction and information booklets that accompany the 
     year's individual income tax returns, the Secretary of the 
     Treasury (in this Act referred to as the ``Secretary'') shall 
     determine the year's Tax Freedom Day pursuant to subsection 
     (d).
       (b) Due Date for Taxes.--Notwithstanding any other 
     provision of law, Federal individual income tax returns for 
     each year shall be due on the date of the Tax Freedom Day in 
     the subsequent year (rather than April 15th).
       (c) Information Provided.--The Secretary shall include in 
     the instruction and information booklets a prominent section 
     that provides the following information with respect to the 
     Tax Freedom Day:
       (1) An explanation of Tax Freedom Day and what it 
     signifies.
       (2) A statement that Congress provided for Federal 
     individual income tax returns to be due on Tax Freedom Day to 
     emphasize how long the average citizen works to pay 
     government taxes.
       (3) During leap years, a note that the year's Tax Freedom 
     Day appears one calendar day earlier than normal.
       (4) A chart showing how the Tax Freedom Day's date has 
     changed over time.
       (5) Information on the State and Federal components of the 
     total tax burden, and how the Tax Freedom Day would differ on 
     a State-by-State basis.
       (d) Determination of Tax Freedom Day.--Each year, the 
     Secretary shall determine the Tax Freedom Day as follows:
       (1) Tax foundation.--By contacting and receiving the date 
     from the Tax Foundation (which has been determining and 
     publishing a Tax Freedom Day since 1973), in time to meet the 
     informational requirements of subsection (c), as long as the 
     Tax Foundation maintains its--
       (A) status as a non-profit, non-partisan research and 
     public education organization;
       (B) consistent method of analysis with respect to 
     determining Tax Freedom Day (unless a change results in a 
     demonstrably much more accurate determination); and

[[Page S3215]]

       (C) trademark on Tax Freedom Day.
       (2) Requirements not met.--If the Tax Foundation--
       (A) fails to maintain any of the requirements described in 
     paragraph (1), or
       (B) does not provide such information to the Secretary in a 
     timely manner after the Secretary's request for the 
     information,

     then the Secretary shall determine the year's Tax Freedom Day 
     in accordance with paragraph (3).
       (3) Determination by the secretary.--If either subparagraph 
     (A) or (B) of paragraph (2) are met, then the Secretary shall 
     determine the year's Tax Freedom Day--
       (A) by assuming that income is earned evenly throughout the 
     year and that individuals initially devote all of their 
     earnings to paying incomes taxes;
       (B) by calculating an effective tax rate for the nation, by 
     dividing the per capita income tax burden (including Federal, 
     State and local taxes) by per capita income (using the net 
     national product, a component of the national income product 
     accounts, as compiled annually by the Bureau of Economic 
     Analysis of the Department of Commerce);
       (C) by multiplying the effective tax rate determined in 
     subparagraph (B) by the number of days in the year; and
       (D) by ensuring that a consistent methodology is utilized 
     from year-to-year, and altering the existing methodology only 
     if the new methodology is demonstrably much more accurate.

     The resultant total shall signify the number of days the 
     average citizen devotes to paying taxes, and the 
     corresponding calendar day shall be the Tax Freedom Day.

     SEC. 3. EFFECTIVE DATE AND SECRETARIAL SUBMISSION.

       (a) Effective Date.--This Act shall take effect for taxable 
     years beginning after December 31, 1997.
       (b) Secretarial Submission.--Not later than 90 days after 
     the date of the enactment of this Act, the Secretary shall 
     submit to the appropriate committees of the Congress a 
     legislative proposal providing for such technical and 
     conforming amendments in the law as are required by the 
     provisions of this Act.
                                 ______
                                 
      By Mr. ABRAHAM:
  S. 584. A bill to amend the Internal Revenue Code of 1986 to change 
the time for filing income tax returns from April 15 to the first 
Tuesday in November, and for other purposes; to the Committee on 
Finance.


                    the TAXATION ACCOUNTABILITY ACT

  Mr. ABRAHAM. Mr. President, we made several reforms during the last 
Congress intended to put Members of this body in closer touch with the 
American people. Among those reforms were provisions applying to 
Members of Congress the same laws that apply to private businesses and 
citizens.
  Today I am introducing legislation that I believe will further 
strengthen the ties between Members and their constituents. In 
particular, Mr. President, I am concerned that, where, according to a 
USA Today poll from this March, 70 percent of the American people 
believe that they need a tax cut, many in Congress still refuse to give 
it to them.
  I am convinced, Mr. President, that some Members continue to oppose 
any limits on Federal tax funds because they are out of touch with the 
American people. That is why I am introducing the Taxation 
Accountability Act to tie the act of voting more closely with the act 
of taxpaying.
  Too many Members believe that the American people are not, and do not 
believe themselves to be, over-taxed. This is wrong, Mr. President, and 
we must put an end to this mistaken and dangerous belief. How? By 
making it possible for Americans to more effectively act on their 
convictions regarding proper levels of taxation. By moving tax day, now 
April 15, to coincide with election day.
  To begin with, Mr. President, most Americans are not even fully aware 
of the percentage of their income the government takes from them in the 
form of taxes. According to the National Taxpayer's Union, the average 
American family now pays almost 40 percent of its income in State, 
local, and Federal taxes. That is an all-time high.
  Yet, with almost 40 percent of their income going to taxes, mothers 
and fathers in America still are not going to the polls. Despite the 
huge investment they are making, voluntarily or involuntarily, in 
government in this country, this last Presidential election showed the 
lowest turnout in our history. Americans are not exercising their right 
to decide who shall represent them in deciding how that government 
shall be run--what it shall do and at what expense.
  Why are Americans so apathetic in the face of such staggering tax 
rates, Mr. President? Simple, most Americans simply do not know how 
high their taxes really are.
  Two years ago a Readers Digest poll asked Americans, ``What is the 
highest percentage of income that is fair for a family of four making 
$200,000 to pay in all taxes?'' The median response, regardless of 
whether the respondent was rich or poor, black or white, was 25 
percent.
  This estimate among Americans, that 25 percent is the limit of fair 
taxation, is borne out by a grassroots research poll conducted last 
March. That poll found that a majority of Americans would favor a 
constitutional amendment to prohibit Federal, State, and local taxes 
from taking ``a combined total of more than 25 percent of anyone's 
income in taxes.''
  Yet the Tax Foundation tells us that a dual-income family today pays 
an average of 38.4 percent of its income in taxes to State, local, and 
Federal governments.
  Why is it, Mr. President, that Americans, are not aware of so vital a 
figure as the percentage of their income that is taken away by the 
government in taxes?
  One reason is the significant extent to which the taxes they pay are 
hidden. Taxes on businesses eventually are paid by families. So are 
sales taxes. Taxes on the average loaf of bread equal 31 percent of the 
total cost. Taxes also represent 43 percent of the cost of a hotel 
room, 54 percent of the cost of a gallon of gas and 40 percent of the 
cost of an airline ticket.
  Another, and perhaps the most significant way taxes are hidden is 
withholding. Many taxpayers do not realize how much the government is 
taking from them because it takes their money before they ever see it. 
Only when they fill out their tax forms do most Americans have a chance 
to see the full enormity of the tax burden they bear. And then they 
have 7 months to cool off before election day rolls around.
  Combined, these factors keep Americans from realizing the extent of 
their tax burden, and acting on that realization. Information is 
crucial to effective voting. And just as crucial, in my view, is 
information that is timely. Only if people know the extent of their tax 
burden, and are made aware of it at a time when they can do something 
about it, will they act. Only if Americans are aware of what is at 
stake on election day will they vote on election day. And only if they 
vote, expressing their opinions on crucial issues like taxation, can 
they hold Members of Congress responsible for their actions.
  Mr. President, we are not likely to do away with withholding or 
repeal Federal taxes on bread and butter. But we can highlight the 
importance of voting by tieing the process of tax-filing more closely 
to the process of voting.
  To achieve this, Mr. President, I am proposing legislation that would 
move tax day, the day tax forms must be mailed to the Internal Revenue 
Service, to the first Tuesday after the first Monday in November--
election day. In this way our citizens will have fresh in their minds 
the substantive importance of voting at the same time they are to 
exercise their right to vote. Voter participation will increase as 
effective information increases, and thus so will the accountability of 
elected officials, as was intended by our Founders.
  There will be no cost to the Treasury because this bill moves the 
fiscal year into accord with the calendar year at the same time that it 
moves tax day. But there will be a significant impact on our form of 
government. Members of Congress will be put in closer touch with the 
people, to the vast improvement of democracy.
  I urge my colleagues to support this legislation as we attempt to 
foster responsible voter conduct and responsible government.
                                 ______
                                 
      By Mr. DORGAN (for himself, Mr. Daschle, Mr. Johnson, and Mr. 
        Wellstone):
  S. 585. A bill to amend the Internal Revenue Code of 1986 to 
authorize the Secretary of the Treasury to abate the accrual of 
interest on income tax underpayments by taxpayers located in 
Presidentially declared disaster areas if the Secretary extends the 
time for filing returns and payment of tax for such returns; to the 
Committee on Finance.


                     income tax relief legislation

  Mr. DORGAN. Mr. President, today I'm joined by Senators Daschle,

[[Page S3216]]

Wellstone, and Johnson in introducing legislation to provide much-
needed income tax relief for North and South Dakotans and others 
pummeled by the severe blizzards and flooding this spring in the Upper 
Midwest. This legislation builds upon the good work started by the 
Internal Revenue Service [IRS] last week.
  About a week ago, the Internal Revenue Service announced that 
taxpayers living in counties recently declared a disaster area by the 
President will be able to delay filing their Federal income tax returns 
until May 30, 1997, without facing a late filing or payment penalty. 
Clearly this is significant relief for those who may be prevented from 
filing their tax returns by the April 15, 1997 due date because of the 
recent blizzard and flooding in our part of the country.
  In its announcement, however, the IRS stated that it did not have the 
authority to waive any interest charges accruing on delayed payments 
made between April 15, 1997 and May 30, 1997. It makes no sense to 
impose interest charges for payments occurring after the original due 
date, when the IRS itself says--and I think properly so--that it will 
extend the time for filing income tax returns and payments by taxpayers 
located in a Presidentially-declared disaster area. In my opinion, the 
IRS's action properly suggests that income tax return filing and 
payments made before the new date should not be treated as late. It is 
just that simple, and our legislation reflects this point.
  Specifically, our legislation requires the IRS to abate the 
assessment of interest on underpayment by taxpayers in Presidentially-
declared disaster areas if the IRS acts to extend the period of time 
for filing income tax returns and paying income tax by taxpayers in 
such areas. The legislation would apply to all Presidentially-declared 
disasters announced after December 31, 1996.
  Once again, the IRS wisely and promptly granted an extension for 
North Dakotans and others to file their income tax returns due to 
flood-and snow-related emergencies without facing late filing and 
payment penalties. But the IRS has been prevented from doing more by 
statute. Our legislation remedies this problem in the case of IRS 
extensions due to Presidential disaster declarations.
  We intend to advance this proposal at the first available opportunity 
in the U.S. Senate. We urge our colleagues to support this important 
initiative to provide income tax relief for those affected by this 
year's weather-related disasters and for those living in disaster areas 
in the future.
  Mr. DASCHLE. Mr. President, I would like to commend Senator Dorgan on 
the introduction of legislation authorizing the Internal Revenue 
Service to waive interest on late payments of taxes in Presidentially-
declared disaster areas. The IRS currently has authority to waive 
penalties for late tax filings following natural disasters. Last week, 
it did so in the Dakotas and part of Minnesota in response to the 
severe flooding in the region. However, the IRS does not now have 
parallel authority for waiving interest in these circumstances.
  A number of South Dakotans have raised questions about the disparate 
treatment of penalties and interest. If taxpayers deserve more time to 
file and pay their taxes due to a natural disaster, why should they be 
charged 9 percent interest, a rate many would consider punitive, on 
these same taxes? Senator Dorgan's bill would address this apparent 
anomaly in our tax laws and help numerous flood victims who are too 
busy securing their homes, businesses, and communities to file on time. 
Some of these people have been physically prevented from obtaining tax 
forms by the rising flood waters.
  For this reason, I am pleased to cosponsor Senator Dorgan's 
legislation, and I thank him for his leadership on this pressing 
matter.
                                 ______
                                 
      By Mr. MOYNIHAN (for himself, Mr. Lautenberg, Mr. Lieberman, Mr. 
        Chafee, Mr. Smith of New Hampshire, Mrs. Boxer, Mr. Wyden, Mr. 
        Byrd, Mr. Kennedy, Mr. Inouye, Mr. Roth, Mr. Biden, Mr. Leahy, 
        Mr. Sarbanes, Mr. Dodd, Mr. D'Amato, Mr. Specter, Mr. Kerry, 
        Mr. Rockefeller, Ms. Mikulski, Mr. Jeffords, Mr. Akaka, Mrs. 
        Feinstein, Mr. Gregg, Ms. Moseley-Braun, Mrs. Murray, Ms. 
        Snowe, Mr. Santorum, Mr. Durbin, Mr. Torricelli, Mr. Reed, and 
        Ms. Collins):
  S. 586. A bill to reauthorize the Intermodal Surface Transportation 
Efficiency Act of 1991, and for other purposes; to the Committee on 
Environment and Public Works.


                 the istea reauthorization act of 1997

  Mr. MOYNIHAN. I rise with Senators Lautenberg and Lieberman and a 
distinguished group of my colleagues today to introduce the ISTEA 
Reauthorization Act of 1997. This bill is designed to reauthorize, with 
some modifications and improvements, the Intermodal Surface 
Transportation Efficiency Act of 1991. ISTEA is an innovative law that 
addresses the fundamental imbalance in national transportation 
investment, and in so doing, serves to promote intermodalism, improve 
mobility and access to jobs, protect the environment, empower local 
communities, and enhance transportation safety.
  ISTEA spurred the Federal Government and the States to invest their 
transportation dollars in whatever modes were most efficient for moving 
people and goods and to solicit the input of local communities in 
planning those investments. The result was a dramatic increase in 
investment in maintenance and rehabilitation of existing roads and 
bridges, in mass transit, and in creative approaches to our 
transportation needs, from bicycle and pedestrian paths to ferry boats.
  When I introduced the original ISTEA legislation in 1991, I had only 
four Senate cosponsors--Quentin Burdick of North Dakota, Steve Symms of 
Idaho, John Chafee of Rhode Island, and Frank Lautenberg of New Jersey. 
The bill I introduce today has broad bipartisan and grassroots support, 
with 31 Senate cosponsors from across the country joining me. We have 
learned a lot over the last 6 years.
  In 1991, my House counterpart Robert A. Roe of New Jersey, then 
chairman of the Public Works Committee, and I had hoped to develop a 
Federal highway bill that would mark the end of the era of interstate 
highway construction. That era had brought the nationwide, multilane, 
limited access highway system, as first envisioned at the General 
Motors Futurama exhibit at the 1939 World's Fair, and then advanced in 
1944 by President Roosevelt. The New York State Thruway was the 
system's first segment. In fact, the civil engineer who built it, 
Bertram Tallamy, left Albany in 1956 to start up the national program 
in Washington with funding from a dedicated tax proposed by President 
Eisenhower and approved by Congress that year.
  But by 1991 the interstate system was essentially done and Chairman 
Roe and I confronted the question, ``What now?''
  We developed three principles for the first highway bill to mark the 
post-interstate era. First, the primary objective was to improve 
efficiency of the transportation system we already had. Second, the 
time had come to turn the initiative in transportation matters back to 
the States and cities. Third, transit was to be an option for cities.
  I am proud to say we achieved our three principles and more.
  The Interstate Highway System left a big mark on American cities, 
where the majority of the funds were spent. I wrote in The Reporter in 
1960:

       It is not true, as is sometimes alleged, that the sponsors 
     of the interstate program ignored the consequences it would 
     have in the cities. Nor did they simply acquiesce in them. 
     They exulted in them . . . This rhapsody startled many of 
     those who have been concerned with the future of the American 
     city. To undertake a vast program of urban highway 
     construction with no thought for other forms of 
     transportation seemed lunatic.

  The results often were. American cities were cruelly split, their 
character and geography changed forever, with interstate highways 
running through once-thriving working class neighborhoods from Newark 
to Detroit to Miami. Homes and jobs were dispersed to the outlying 
suburbs and beyond. The wreckage was something to see. Some cities have 
used ISTEA funds to try to repair the damage where they could, using 
funds for transit--even bike and pedestrian paths--instead of more road 
building. Or with plans such as Boston's Central Artery, a project

[[Page S3217]]

that will reunite some of that city's most historic and colorful 
neighborhoods, separated for almost 40 years by an elevated highway.
  Today, I ask that we continue to build upon our success with ISTEA, 
changing it only as needed. The bill we introduce today retains the 
basic structure of ISTEA, which distributes funds primarily on needs 
balanced with such factors as historical shares, but updates outmoded 
formulas and streamlines the equity adjustment programs. The ISTEA 
Reauthorization Act of 1997 also increases flexibility for States by 
allowing them to use some of their transportation funding to support 
Amtrak. This is the first step this year in meeting our commitment to 
address Amtrak's long-term funding needs.

  The ISTEA Reauthorization Act of 1997 reauthorizes all the program 
categories of the original legislation--the National Highway System, 
the Interstate Maintenance Program, the Highway Bridge Rehabilitation 
and Replacement Program, the Congestion Mitigation and Air Quality 
Improvement Program, the Surface Transportation Program, the Interstate 
Highway Reimbursement Program, and the Transportation Enhancements 
Program--at a total funding level of $26 billion, which can be fully 
supported by the Highway Trust Fund.
  While the ISTEA Reauthorization Act increases funding for all the 
program categories, I want to mention three programs in more detail. 
The bill strengthens the Congestion Mitigation and Air Quality 
Improvement Program, funding it at $2 billion annually, with a portion 
of the authorized amount to be distributed on the basis of population 
residing in fine particulate non-attainment areas. The CMAQ program, 
which has allowed States and municipalities to find creative solutions 
to improving air quality and reducing traffic congestion, has been an 
ISTEA success story, resulting in impressive improvement in U.S. air 
quality over the last few years.
  The bill also increases funding for the Highway Bridge Rehabilitation 
and Replacement Program to $3.75 billion per year. The success of the 
Bridge Program is dramatic--in four years, there has been a 15 percent 
drop in deficient bridges--from 111,200 in 1990 to 94,800 in 1994. I 
believe broad consensus exists to strengthen this important program 
that has already done so much to preserve our existing bridge 
infrastructure.
  Finally, the ISTEA Reauthorization Act fully funds the Interstate 
Highway Reimbursement Program at $2 billion per year. The Federal-Aid 
Highway Act of 1956 provided for the Federal Government to fund the 
construction of the Interstate Highway System with a Federal-State 
share of 90-10. At that time a number of States had, at their own 
expense, already constructed a total of 10,859 miles of highways that 
later became part of the Interstate System.
  As a result, Congress tasked the Bureau of Public Roads with 
determining the cost of reimbursing States for those segments, and the 
Bureau arrived at a figure of $5 billion in 1957 dollars. ISTEA used 
that figure, adjusted to $30 billion in 1991 dollars, and established a 
15-year repayment schedule. The ISTEA Reauthorization Act retains this 
program, which is a matter of basic equity and provides urgently needed 
funds for those highways that are the oldest and among the most heavily 
used portions of the Interstate System.
  These programs are essentially, but I do hope that as Congress 
considers reauthorization of ISTEA, we can ask the question once again, 
``What now?''
  Congress must focus on increasing the U.S. investment in 
transportation infrastructure. The United States has watched our 
European and Asian competitors finance and build innovative 
transportation infrastructure that is the envy of the world. As the 
budget process gets underway this year, we will need innovative 
financing ideas to leverage scarce Federal dollars and address our 
chronic multi-billion dollar underinvestment in U.S. roads, bridges, 
rails, ports, and transit systems.
  We must also search for new technologies and innovations--like 
Magnetic-Levitation trains [maglev] and Intelligent Transportation 
Systems [ITS]--to solve our congestion and air quality problems without 
pouring ever more concrete. The railroad represents an early 19th 
century technology, the automobile an early 20th century technology; we 
need new modes of transportation for the next century.
  Today, maglev trains run in Bremen, but not in New York, where the 
maglev concept was first conceived in 1960 by a young Brookhaven 
scientist, James Powell, as he sat mired in traffic on the Bronx-
Whitestone Bridge. In truth, today most of the meager Federal 
transportation research and development resources are going for 
improvements in existing highways, and not into other modes such as 
rail and transit, where I suspect we can achieve much greater economic 
and environmental returns.
  As we determine the course for this bill, I also wish to address the 
so-called donor State issue. To distribute Federal transportation funds 
primarily upon the ability of each State to collect fuel taxes, as 
advocated by representatives of the donor States, would run counter to 
whole concept of federalism, which is based on collecting national 
resources to address national needs. When California has an earthquake, 
or Florida has a hurricane, or the Mississippi River floods its banks, 
the entire Nation addresses these needs, without considering whether 
the needed funds were raised in the affected States. Every other 
Federal program--from crop supports to water reclamation projects to 
airport improvement grants--distributes funds on the basis of need.

  For example, in response to the Savings & Loan crisis, the Resolution 
Trust Corp. was formed to help bail out depositors, but each State did 
not contribute according to the amount of dollars lost in that State. 
If such an approach had been taken, Texas alone would have faced costs 
of over $26 billion, while the cost to New York would have been only $3 
billion. Under our Federal system, which allocates national resources 
to meet national needs, the taxpayers of New York shouldered a 
significant portion of Texas's burden. The cosponsors of the ISTEA 
Reauthorization Act, most of them from donor States in the larger 
scheme of the balance of Federal payments, reject the idea that 
gasoline taxes should be distributed according to where they are 
collected.
  Furthermore, some of the highway bill proposals put forth this year, 
which distribute up to 60 percent of transportation funding on the 
basis of where the gas taxes were collected, thwart our national 
environmental efforts. These bills reward States with high gas 
consumption, and punish States that conserve fuel and invest in mass 
transit. Under these proposals, a State that invests in a new bus or 
rail line, or in other improvements that reduce traffic congestion and 
improve air quality, would receive less transportation money as gas 
consumption falls.
  As a Nation we have made clean air and reduced dependence on foreign 
oil two major priorities--these bills threaten to undo the progress we 
have made. In 1944, the United States exported oil. In 1956, we 
imported only 11.5 percent of consumption. Today, we import nearly 50 
percent of the oil we consume. It could be said that the biggest single 
effect of the Interstate Highway System has been in the field of 
American foreign policy. We are a nation that absolutely must have 
foreign oil, and must shape our defense and foreign policies 
accordingly. We must strive to keep that dependency to a minimum. The 
sponsors of the ISTEA Reauthorization Act of 1997 are committed to that 
goal.
  We are also committed to working with other Members, including our 
distinguished colleagues on the Transportation and Infrastructure 
Subcommittee, Senators Warner and Baucus, who have both put forth their 
own proposals for reauthorizing ISTEA. Each coalition's bill reflects, 
to a greater or lesser extent, the interests of its own member States 
and regions, and I am confident that all will ultimately contribute to 
a transportation bill that best serves the Nation.
  I ask unanimous consent that the text of the ISTEA Reauthorization 
Act of 1997 legislation be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 586

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``ISTEA 
     Reauthorization Act of 1997''.

[[Page S3218]]

       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Authorization of appropriations.
Sec. 4. National Highway System.
Sec. 5. Congestion mitigation and air quality improvement program.
Sec. 6. Surface transportation program.
Sec. 7. Bridge program.
Sec. 8. Minimum allocation.
Sec. 9. Reimbursement program.
Sec. 10. Apportionment adjustments.
Sec. 11. Research programs.
Sec. 12. Scenic byways program.
Sec. 13. Ferry boats and terminals.
Sec. 14. National recreational trails program.
Sec. 15. Transportation and land use initiative.
Sec. 16. Appalachian development highway system.

     SEC. 2. FINDINGS.

       Congress finds that--
       (1) the Intermodal Surface Transportation Efficiency Act of 
     1991 (Public Law 102-240) (referred to in this section as 
     ``ISTEA'') was the result of a bipartisan and multiregional 
     consensus to change transportation policy by giving States 
     and localities more flexibility in spending Federal funds 
     while still pursuing important national goals;
       (2) the Federal Government has an important role to play in 
     helping to fund transportation improvements and ensuring that 
     a national focus remains on national goals such as mobility, 
     connectivity and integrity of the transportation system, 
     safety, research, air quality, global and national economic 
     competitiveness, and improved quality of life;
       (3) this role as funding partner and policy-maker--
       (A) should nurture State and local flexibility in using 
     funds to solve problems creatively; and
       (B) should relieve the States of burdensome regulation and 
     review procedures that slow down project implementation 
     without adding value;
       (4)(A) the economic health of the United States and of the 
     metropolitan and rural areas in the United States depends 
     on--
       (i) a strong transit program funded above fiscal year 1997 
     levels; and
       (ii) dedicated support for intercity passenger rail; and
       (B) this Act should be accompanied by companion legislation 
     to provide for the needs described in subparagraph (A);
       (5) the funding programs authorized by ISTEA were visionary 
     and will continue to influence transportation into the 
     future;
       (6) the partnerships between the Federal Government and 
     State and local governments, and between the public and 
     private sectors, that were reaffirmed and strengthened by 
     ISTEA are helping to improve transportation investment and 
     transportation policy choices; and
       (7) it is in the interest of the United States as a whole 
     to--
       (A) reauthorize ISTEA in 1997 with refinements but without 
     significant changes, and without eliminating current funding 
     categories;
       (B) authorize the maximum feasible level of funding for 
     ISTEA programs;
       (C) allocate these funds among the States based primarily 
     on need, with adjustments to be considered to reflect--
       (i) system usage;
       (ii) system extent; and
       (iii) historic distribution patterns;
       (D) preserve and strengthen the partnerships among the 
     Federal Government, State governments, local governments, and 
     the private sector;
       (E) minimize prescriptive Federal regulation that is 
     unnecessary and eliminate regulatory duplication between the 
     Federal Government and State governments;
       (F) increase flexibility to address intermodal projects; 
     and
       (G) provide a separate adequately funded transit program.

     SEC. 3. AUTHORIZATION OF APPROPRIATIONS.

       (a) In General.--For the purpose of carrying out title 23, 
     United States Code, the following sums are authorized to be 
     appropriated out of the Highway Trust Fund (other than the 
     Mass Transit Account):
       (1) National highway system.--For the National Highway 
     System under section 103 of title 23, United States Code, 
     $5,600,000,000 for each of fiscal years 1998 through 2003.
       (2) Interstate maintenance program.--For the Interstate 
     maintenance program under section 119 of that title 
     $5,250,000,000 for each of fiscal years 1998 through 2003.
       (3) Surface transportation program.--For the surface 
     transportation program under section 133 of that title 
     $5,250,000,000 for each of fiscal years 1998 through 2003.
       (4) Bridge program.--For the highway bridge replacement and 
     rehabilitation program under section 144 of that title 
     $3,750,000,000 for each of fiscal years 1998 through 2003.
       (5) Congestion mitigation and air quality improvement 
     program.--For the congestion mitigation and air quality 
     improvement program under section 149 of that title 
     $2,000,000,000 for each of fiscal years 1998 through 2003.
       (6) Minimum allocation.--For the minimum allocation program 
     under section 157 of that title $830,000,000 for each of 
     fiscal years 1998 through 2003. Such sums shall not be 
     subject to subsection (a) or (f) of section 104 of title 23, 
     United States Code.
       (7) Apportionment adjustments.--For apportionment 
     adjustments under section 10 $470,000,000 for each of fiscal 
     years 1998 through 2003. Such sums shall not be subject to 
     subsection (a) or (f) of section 104 of title 23, United 
     States Code.
       (8) Interstate reimbursement program.--For reimbursement 
     for segments of the Interstate System constructed without 
     Federal assistance under section 160 of that title 
     $2,050,000,000 for each of fiscal years 1998 through 2003.
       (9) Federal lands highways program.--
       (A) Indian reservation roads.--For Indian reservation roads 
     under section 204 of that title $210,000,000 for each of 
     fiscal years 1998 through 2003.
       (B) Public lands highways.--For public lands highways under 
     section 204 of that title $215,000,000 for each of fiscal 
     years 1998 through 2003.
       (C) Parkways and park roads.--For parkways and park roads 
     under section 204 of that title $100,000,000 for each of 
     fiscal years 1998 through 2003.
       (10) FHWA highway safety programs.--For carrying out 
     section 402 of that title by the Federal Highway 
     Administration $25,000,000 for each of fiscal years 1998 
     through 2003.
       (11) FHWA highway safety research and development.--For 
     carrying out section 403 of that title by the Federal Highway 
     Administration $10,000,000 for each of fiscal years 1998 
     through 2003.
       (b) Limitation on Obligations.--Notwithstanding any other 
     provision of law, any limitation on obligations established 
     for any of fiscal years 1998 through 2003 for funds 
     apportioned or allocated from the Highway Trust Fund (other 
     than the Mass Transit Account) shall apply equally to all 
     such apportionments and allocations, except that no such 
     limitation shall apply to any allocation made under section 
     125 of title 23, United States Code, for emergency relief.

     SEC. 4. NATIONAL HIGHWAY SYSTEM.

       (a) In General.--Section 104(b) of title 23, United States 
     Code, is amended by striking paragraph (1) and inserting the 
     following:
       ``(1) National highway system.--For the National Highway 
     System, 1 percent to the Virgin Islands, Guam, American 
     Samoa, and the Commonwealth of the Northern Mariana Islands 
     and the remaining 99 percent apportioned as follows:
       ``(A) \1/3\ of the remaining apportionments in the ratio 
     that--
       ``(i) the total vehicle miles traveled on public highways 
     in each State; bears to
       ``(ii) the total vehicle miles traveled on public highways 
     in all States;
       ``(B) \1/3\ of the remaining apportionments in the ratio 
     that--
       ``(i) the total lane miles of public highways in each 
     State; bears to
       ``(ii) the total lane miles of public highways in all 
     States; and
       ``(C) \1/3\ of the remaining apportionments in equal 
     amounts to each State.''.
       (b) Set Aside for 4R Projects.--Section 118(c)(2)(A) of 
     title 23, United States Code, is amended in the first 
     sentence--
       (1) by striking ``1996, and'' and inserting ``1996,''; and
       (2) by inserting after ``1997'' the following: ``, and 
     $100,000,000 for each of fiscal years 1998 through 2003''.

     SEC. 5. CONGESTION MITIGATION AND AIR QUALITY IMPROVEMENT 
                   PROGRAM.

       (a) Adjustment for New Nonattainment Areas.--
       (1) Report.--Not later than April 1, 2000, the Secretary of 
     Transportation, in consultation with the Administrator of the 
     Environmental Protection Agency, shall--
       (A) prepare a report containing recommended adjustments to 
     the formula used to apportion funds for the congestion 
     mitigation and air quality improvement program under section 
     149 of title 23, United States Code, and the amount 
     apportioned for the program, to reflect changes, since the 
     enactment of the Intermodal Surface Transportation Efficiency 
     Act of 1991 (Public Law 102-240), in--
       (i) national ambient air quality standards under the Clean 
     Air Act (42 U.S.C. 7401 et seq.); and
       (ii) the emission control requirements that result from the 
     standards; and
       (B) submit the report to the Committee on Environment and 
     Public Works of the Senate and the Committee on 
     Transportation and Infrastructure of the House of 
     Representatives.
       (2) Adoption of new formula and apportionments.--
       (A) Effect of failure to adopt.--Notwithstanding any other 
     provision of law, if, by September 30, 2000, the 
     recommendations contained in the report described in 
     paragraph (1) have not been enacted into law, as proposed in 
     the report or as amended by Congress, the Secretary of 
     Transportation shall withhold 10 percent of the 
     apportionments otherwise required to be made under title 23, 
     United States Code, on October 1, 2000.
       (B) Effect of later adoption.--The Secretary shall 
     apportion the amount withheld under subparagraph (A) upon the 
     enactment of a law described in subparagraph (A).
       (b) Particulate Matter.--Section 104(b)(2) of title 23, 
     United States Code, is amended--
       (1) by redesignating subparagraphs (A) through (E) as 
     clauses (i) through (v), respectively, and indenting 
     appropriately;
       (2) by striking ``For the congestion mitigation and air 
     quality improvement program,

[[Page S3219]]

     in the ratio which'' and inserting the following:
       ``(A) In general.--For the congestion mitigation and air 
     quality improvement program in accordance with subparagraphs 
     (B) and (C).
       ``(B) Weighted nonattainment area population.--The 
     Secretary shall apportion 90 percent of the remainder of the 
     sums authorized to be appropriated for expenditure on the 
     program in the ratio that'';
       (3) in subparagraph (B) (as so designated)--
       (A) by striking ``such subpart.'' in clause (v) and all 
     that follows through ``the area was'' and inserting the 
     following: ``such subpart.
     If the area was''; and
       (B) in the sentence beginning with ``If the area'', by 
     striking ``paragraph'' and inserting ``subparagraph'';
       (4) by striking the sentence beginning with 
     ``Notwithstanding any provision'' and inserting the 
     following:
       ``(C) Particulate matter.--The Secretary shall apportion 10 
     percent of the remainder of the sums authorized to be 
     appropriated for expenditure on the program in the ratio 
     that--
       ``(i) the population of all areas that are nonattainment 
     under the Clean Air Act (42 U.S.C. 7401 et seq.) for 
     particulate matter with an aerodynamic diameter smaller than 
     or equal to 10 micrometers (known as `PM-10') in each State; 
     bears to
       ``(ii) the population of all such areas in all States.'';
       (5) in the next-to-last sentence, by striking 
     ``Notwithstanding'' and inserting the following:
       ``(D) Minimum apportionment.--Notwithstanding''; and
       (6) in the last sentence, by striking ``The Secretary'' and 
     inserting the following:
       ``(E) Determination of population.--In determining 
     population for the purpose of this paragraph, the 
     Secretary''.
       (c) Increased Flexibility.--The first sentence of section 
     149(b) of title 23, United States Code, is amended--
       (1) in paragraph (3), by striking ``or'' at the end;
       (2) in paragraph (4), by striking the period at the end and 
     inserting ``; or''; and
       (3) by adding at the end the following:
       ``(5) if the project or program will have air quality 
     benefits and consists of--
       ``(A) construction, reconstruction, or rehabilitation of, 
     or operational improvements for, intercity rail passenger 
     facilities (including facilities owned by the National 
     Railroad Passenger Corporation);
       ``(B) operation of intercity rail passenger trains; or
       ``(C) acquisition or remanufacture of rolling stock for 
     intercity rail passenger service;
     except that not more than 50 percent of the funds apportioned 
     to a State for a fiscal year under section 104(b)(2) may be 
     obligated for operations.''.

     SEC. 6. SURFACE TRANSPORTATION PROGRAM.

       (a) Apportionment Formula.--Section 104(b) of title 23, 
     United States Code, is amended by striking paragraph (3) and 
     inserting the following:
       ``(3) Surface transportation program.--
       ``(A) In general.--For the surface transportation program, 
     in the ratio that--
       ``(i) the total lane miles of public highways in each State 
     multiplied by the relative intensity of use of public 
     highways in the State; bears to
       ``(ii) the sum of--

       ``(I) the total lane miles of public highways in each 
     State; multiplied by
       ``(II) the relative intensity of use of public highways in 
     the State.

       ``(B) Determination of relative intensity of use.--For the 
     purpose of subparagraph (A), the relative intensity of use of 
     public highways in a State shall be determined by dividing--
       ``(i) the vehicle miles traveled on public highways in the 
     State per lane mile of public highways in the State during 
     the latest 1-year-period for which data are available; by
       ``(ii) the vehicle miles traveled on public highways in all 
     States per lane mile of public highways in all States during 
     that period.
       ``(C) Minimum apportionment.--Notwithstanding any other 
     provision of this paragraph, for each fiscal year, each State 
     shall receive an apportionment under this paragraph of not 
     less than \1/2\ of 1 percent of all funds apportioned under 
     this paragraph for the fiscal year.''.
       (b) Increased Flexibility.--Section 133(b) of title 23, 
     United States Code, is amended by adding at the end the 
     following:
       ``(12) Construction, reconstruction, and rehabilitation of, 
     and operational improvements for, intercity rail passenger 
     facilities (including facilities owned by the National 
     Railroad Passenger Corporation), operation of intercity rail 
     passenger trains, and acquisition or remanufacture of rolling 
     stock for intercity rail passenger service, except that not 
     more than 50 percent of the funds apportioned to a State for 
     a fiscal year under section 104(b)(3) may be obligated for 
     operations.''.
       (c) Allocation of Obligation Authority.--Section 133(f) of 
     title 23, United States Code, is amended by striking ``6-
     fiscal year period 1992 through 1997'' and inserting ``6-
     fiscal-year period 1998 through 2003''.

     SEC. 7. BRIDGE PROGRAM.

       (a) Minimum Apportionment.--Section 144(e) of title 23, 
     United States Code, is amended in the fifth sentence by 
     striking ``0.25'' and inserting ``0.5''.
       (b) Authorizations for Discretionary Program.--Section 
     144(g) of title 23, United States Code, is by striking 
     paragraph (1) and inserting the following:
       ``(1) Discretionary bridge program.--
       ``(A) In general.--For each of fiscal years 1998 through 
     2003, of the amounts authorized to be appropriated to carry 
     out this section, all but $100,000,000 in the case of each 
     such fiscal year shall be apportioned as provided in 
     subsection (e).
       ``(B) Reserved amount.--For each of fiscal years 1998 
     through 2003, of the $100,000,000 referred to in subparagraph 
     (A)--
       ``(i) $90,000,000 shall be allocated at the discretion of 
     the Secretary on the same date and in the same manner as 
     funds apportioned under subsection (e); and
       ``(ii) $10,000,000 shall be allocated by the Secretary in 
     accordance with section 1039 of the Intermodal Surface 
     Transportation Efficiency Act of 1991 (23 U.S.C. 144 note; 
     105 Stat. 1990).''.
       (c) Conforming Amendment.--Section 1039(e) of the 
     Intermodal Surface Transportation Efficiency Act of 1991 (23 
     U.S.C. 144 note; 105 Stat. 1991) is amended by striking 
     ``1992, 1993,'' and all that follows and inserting the 
     following: ``1998 through 2003, $1,500,000 shall be available 
     to the Secretary to carry out subsections (a) and (b), and 
     $8,500,000 shall be available to the Secretary to carry out 
     subsection (c). Such sums shall remain available until 
     expended.''.

     SEC. 8. MINIMUM ALLOCATION.

       Section 157 of title 23, United States Code, is amended--
       (1) in subsection (a)--
       (A) in paragraph (4), by striking the paragraph designation 
     and all that follows before ``on October 1'' and inserting 
     the following:
       ``(4) Fiscal years 1992-1997.--In each of fiscal years 1992 
     through 1997,''; and
       (B) by adding at the end the following:
       ``(5) Fiscal year 1998 and thereafter.--
       ``(A) Determination of amounts.--In fiscal year 1998 and 
     each fiscal year thereafter on October 1, or as soon as 
     practicable thereafter, the Secretary shall determine what 
     amount of funds would be required to ensure that a State's 
     percentage of the total apportionments in each such fiscal 
     year and allocations for the prior fiscal year for--
       ``(i) the National Highway System under section 103;
       ``(ii) the Interstate maintenance program under section 
     119;
       ``(iii) the surface transportation program under section 
     133;
       ``(iv) the bridge program under section 144;
       ``(v) the congestion mitigation and air quality improvement 
     program under section 149;
       ``(vi) grants for safety belts and motorcycle helmets under 
     section 153;
       ``(vii) the Interstate reimbursement program under section 
     160; and
       ``(viii) the scenic byways program under section 1047 of 
     the Intermodal Surface Transportation Efficiency Act of 1991 
     (23 U.S.C. 101 note; 105 Stat. 1996);

     is not less than 90 percent of the percentage that the 
     population of the State is of the population of the United 
     States.
       ``(B) Apportionment.--After determining the amounts of 
     funds under subparagraph (A), the Secretary shall apportion 
     the funds authorized to carry out this section to each State 
     in the ratio that the amount determined for the State under 
     subparagraph (A) bears to the total amount determined for all 
     States under subparagraph (A).'';
       (2) in subsection (b), by striking the last 2 sentences and 
     inserting the following: ``Funds apportioned under this 
     section shall be subject to any limitation on obligations 
     established for Federal-aid highways and highway safety 
     construction programs.''; and
       (3) by striking subsection (e) and inserting the following:
       ``(e) Definition of State.--Notwithstanding any other 
     provision of this title, in this section, the term `State' 
     means each of the 50 States.''.

     SEC. 9. REIMBURSEMENT PROGRAM.

       Section 160 of title 23, United States Code, is amended--
       (1) in subsection (a), by striking ``The Secretary shall 
     allocate to the States in each of fiscal years 1996 and 
     1997'' and inserting ``For any fiscal year for which funds 
     are authorized to carry out this section, the Secretary shall 
     allocate to the States''; and
       (2) in subsection (b), by striking ``each of fiscal years 
     1996 and 1997'' and inserting ``each fiscal year described in 
     subsection (a)''.

     SEC. 10. APPORTIONMENT ADJUSTMENTS.

       (a) Definition of State.--In this section, the term 
     ``State'' means each of the 50 States.
       (b) Density Adjustment.--
       (1) In general.--Subject to subsection (d), in the case of 
     any State eligible for a density adjustment under paragraph 
     (3), the amount of funds apportioned to the State for the 
     surface transportation program under section 133 of title 23, 
     United States Code, for each of fiscal years 1998 through 
     2003--
       (A) shall be increased as necessary to ensure that the 
     percentage obtained by dividing--
       (i) the total apportionments to the State for the fiscal 
     year for Federal-aid highways and highway safety construction 
     programs; by
       (ii) the total of all apportionments to all States for the 
     fiscal year for Federal-aid highways and highway safety 
     construction programs;
     is not less than the minimum percentage for the State 
     determined under paragraph (2); and

[[Page S3220]]

       (B) shall be increased as necessary to ensure that the 
     State receives an increased apportionment under subparagraph 
     (A) of not less than $5,000,000.
       (2) Minimum percentage.--The minimum percentage referred to 
     in paragraph (1)(A) for a State shall be equal to the State's 
     percentage of the total apportionments and allocations during 
     fiscal years 1992 through 1997 under title 23, United States 
     Code, the Intermodal Surface Transportation Efficiency Act of 
     1991 (Public Law 102-240), and the National Highway System 
     Designation Act of 1995 (Public Law 104-59), excluding 
     apportionments and allocations made for--
       (A) Interstate construction under section 104(b)(5)(A);
       (B) emergency relief under section 125;
       (C) the Federal lands highways program under section 204;
       (D) donor State bonus amounts under section 1013(c) of the 
     Intermodal Surface Transportation Efficiency Act of 1991 (23 
     U.S.C. 157 note; 105 Stat. 1940);
       (E) Kansas projects under section 1014(c) of the Intermodal 
     Surface Transportation Efficiency Act of 1991 (Public Law 
     102-240; 105 Stat. 1942);
       (F) hold harmless adjustments under section 1015(a) of the 
     Intermodal Surface Transportation Efficiency Act of 1991 (23 
     U.S.C. 104 note; 105 Stat. 1943);
       (G) 90 percent of payment adjustments under section 1015(b) 
     of the Intermodal Surface Transportation Efficiency Act of 
     1991 (23 U.S.C. 104 note; 105 Stat. 1944); and
       (H) demonstration projects under the Intermodal Surface 
     Transportation Efficiency Act of 1991 (Public Law 102-240).
       (3) Eligible states.--A State shall be eligible for a 
     density adjustment under this subsection if the State--
       (A) has a population density of less than 20 persons per 
     square mile or more than 450 persons per square mile; or
       (B) is an island State completely separated from the 
     continental United States by water.
       (c) Minimum Apportionment Adjustment.--Subject to 
     subsection (d), the amount of funds apportioned to a State 
     for the surface transportation program under section 133 for 
     each of fiscal years 1998 through 2003 shall be increased as 
     necessary to ensure that--
       (1) the sum of--
       (A) the total apportionments to the State for the fiscal 
     year; and
       (B) the total allocations, authorized by this Act, to the 
     State for the previous fiscal year;

     for Federal-aid highways and highway safety construction 
     programs (excluding apportionments and allocations for 
     emergency relief under section 125 and for Federal lands 
     highways under section 204); is not less than
       (2)(A) \1/2\ of 1 percent of the sum of--
       (i) the total of all apportionments described in paragraph 
     (1) to all States for the fiscal year; and
       (ii) the total of all allocations described in paragraph 
     (1) to all States for the previous fiscal year; or
       (B) 90 percent of the total of all apportionments described 
     in paragraph (1) to the State for fiscal year 1997.
       (d) Limitation on Apportionment Adjustments.--If the 
     amounts authorized to be appropriated for apportionment 
     adjustments under this section for a fiscal year are 
     insufficient to fund the increased apportionments required by 
     subsections (b) and (c) for the fiscal year, the increased 
     apportionment for each State shall be reduced 
     proportionately.

     SEC. 11. RESEARCH PROGRAMS.

       (a) Strategic Highway Research Program.--Section 
     307(b)(2)(B) of title 23, United States Code, is amended by 
     striking ``1994, 1995, 1996 and 1997'' and inserting ``1994 
     through 2003''.
       (b) Applied Research Program.--Section 307(e)(13) of title 
     23, United States Code, is amended in the first sentence by 
     striking ``1993, 1994, 1995, 1996, and 1997'' and inserting 
     ``1993 through 2003''.
       (c) Intelligent Transportation Systems.--Section 6058 of 
     the Intermodal Surface Transportation Efficiency Act of 1991 
     (23 U.S.C. 307 note; 105 Stat. 2191) is amended--
       (1) in subsection (a), by striking ``1997'' and inserting 
     ``2003''; and
       (2) in subsection (b), by striking ``1997'' and inserting 
     ``2003''.

     SEC. 12. SCENIC BYWAYS PROGRAM.

       Section 1047(d) of the Intermodal Surface Transportation 
     Efficiency Act of 1991 (23 U.S.C. 101 note; 105 Stat. 1996) 
     is amended by striking ``1995, 1996, and 1997'' and inserting 
     ``1995 through 2003''.

     SEC. 13. FERRY BOATS AND TERMINALS.

       Section 1064(c) of the Intermodal Surface Transportation 
     Efficiency Act of 1991 (23 U.S.C. 129 note; 105 Stat. 2005) 
     is amended by striking ``fiscal year 1997'' and inserting 
     ``each of fiscal years 1997 through 2003''.

     SEC. 14. NATIONAL RECREATIONAL TRAILS PROGRAM.

       Section 1302(d)(3) of the Intermodal Surface Transportation 
     Efficiency Act of 1991 (16 U.S.C. 1261(d)(3)) is amended by 
     striking ``shall not exceed'' and all that follows and 
     inserting ``shall not exceed $30,000,000 for each of fiscal 
     years 1992 through 2003.''.

     SEC. 15. TRANSPORTATION AND LAND USE INITIATIVE.

       (a) In General.--Chapter 3 of title 23, United States Code, 
     is amended by inserting after section 307 the following:

     ``Sec. 307A. Transportation and land use initiative

       ``(a) Establishment.--The Secretary shall establish a 
     comprehensive initiative to investigate, understand, and, in 
     cooperation with appropriate State, regional, and local 
     authorities, address the relationships between transportation 
     and land use.
       ``(b) Transportation and Land Use Research.--
       ``(1) In general.--The Secretary, in cooperation with 
     appropriate Federal, State, regional, and local agencies and 
     experts, including States and other entities eligible for 
     assistance under subsection (d), shall develop and carry out 
     a comprehensive research program to investigate and 
     understand the relationships between transportation, land 
     use, and the environment.
       ``(2) Funding.--For each of fiscal years 1998 through 2003, 
     of the sum deducted by the Secretary under section 104(a), 
     not less than $1,000,000 shall be made available to carry out 
     this subsection.
       ``(c) Transportation and Land Use Planning Grants.--
       ``(1) Applications.--The Secretary shall solicit 
     applications for transportation and land use planning grants 
     under this subsection from State, regional, and local 
     agencies, individually or in the form of consortia, to plan, 
     develop, implement, and monitor strategies to integrate 
     transportation and land use plans and practices.
       ``(2) Purposes.--The purposes of grants under this 
     subsection shall be--
       ``(A) to support initiatives to reduce the need for costly 
     future highway investments;
       ``(B) to provide access to jobs, services, recreational and 
     educational opportunities, and centers of trade, in a cost-
     effective and efficient manner;
       ``(C) to otherwise improve the efficiency of the 
     transportation system; and
       ``(D) to avoid, minimize, or mitigate the environmental 
     impacts of transportation projects.
       ``(3) Preferences.--In selecting recipients of grants under 
     this subsection, the Secretary shall give preference to 
     applicants that--
       ``(A) are agencies that have significant responsibilities 
     for transportation and land use; and
       ``(B) submit applications that--
       ``(i) demonstrate a commitment to public involvement; and
       ``(ii) demonstrate a meaningful commitment of non-Federal 
     resources to support the efforts of the project team.
       ``(4) Number.--For each fiscal year, the Secretary shall 
     make not more than 5 grants under this subsection.
       ``(5) Maximum amount.--A grant made under this subsection 
     for a fiscal year shall be in an amount not greater than 
     $1,000,000.
       ``(d) Transportation and Land Use Policy Grants.--
       ``(1) In general.--The Secretary may make transportation 
     and land use policy grants to State agencies, metropolitan 
     planning organizations, and local governments to--
       ``(A) recognize significant progress in integrating 
     transportation and land use plans and programs; and
       ``(B) further aid in the implementation of the programs.
       ``(2) Preferences.--In selecting recipients of grants under 
     this subsection, the Secretary shall give preference to 
     applicants that--
       ``(A) have instituted transportation processes, plans, and 
     programs that--
       ``(i) are coordinated with adopted State land use policies; 
     and
       ``(ii) are intended to reduce the need for costly future 
     highway investments through adopted State land use policies;
       ``(B) have instituted other policies to promote the 
     integration of land use and transportation, such as--
       ``(i) `green corridors' programs that limit access to major 
     highway corridors to areas targeted for efficient and compact 
     development;
       ``(ii) urban growth boundaries to guide metropolitan 
     expansion;
       ``(iii) State spending policies that target funds to areas 
     targeted for growth; and
       ``(iv) other such programs or policies as determined by the 
     Secretary; and
       ``(C) have adopted land use policies that include a 
     mechanism for assessing and avoiding, minimizing, or 
     mitigating potential impacts of transportation development 
     activities on the environment.
       ``(3) Use of grant funds.--Grants made under this 
     subsection shall be available for obligation for--
       ``(A) any project eligible for funding under this title or 
     title 49; and
       ``(B) any other activity relating to transportation and 
     land use that the Secretary determines appropriate, including 
     purchase of land or development easements and activities that 
     are necessary to implement--
       ``(i) transit-oriented development plans;
       ``(ii) traffic calming measures; or
       ``(iii) any other coordinated transportation and land use 
     policy.
       ``(4) Minimum amount.--A grant made under this subsection 
     for a fiscal year shall be in an amount not less than 
     $10,000,000.
       ``(e) Authorization of Appropriations.--There are 
     authorized to be appropriated out of the Highway Trust Fund 
     (other than the Mass Transit Account)--
       ``(1) to carry out subsection (c) $3,000,000 for each of 
     fiscal years 1998 through 2003; and
       ``(2) to carry out subsection (d) $50,000,000 for each of 
     fiscal years 1998 through 2003.''.
       (b) Conforming Amendment.--The analysis for chapter 3 of 
     title 23, United States Code, is amended by inserting after 
     the item relating to section 307 the following:


[[Page S3221]]


``307A. Transportation and land use initiative.''.

     SEC. 16. APPALACHIAN DEVELOPMENT HIGHWAY SYSTEM.

       (a) Authorization.--
       (1) In general.--There is authorized to be appropriated out 
     of the Highway Trust Fund (other than the Mass Transit 
     Account) for construction of the Appalachian development 
     highway system authorized by section 201 of the Appalachian 
     Regional Development Act of 1965 (40 U.S.C. App.) 
     $425,000,000 for each of fiscal years 1998 through 2003.
       (2) Transfer and administration of funds.--The Secretary of 
     Transportation shall transfer the funds made available by 
     paragraph (1) to the Appalachian Regional Commission, which 
     shall be responsible for the administration of the funds.
       (b) Federal Share.--The Federal share under this section 
     shall be 80 percent.
       (c) Delegation to States.--Subject to title 23, United 
     States Code, the Secretary of Transportation shall delegate 
     responsibility for completion of construction of each segment 
     of the Appalachian development highway system under this 
     section to the State in which the segment is located, upon 
     request of the State.
       (d) Advance Construction.--The Secretary of Transportation 
     may make available amounts authorized by this section in the 
     manner described in section 115(a) of title 23, United States 
     Code.
       (e) Contract Authority.--Funds authorized by this section 
     shall be available for obligation in the same manner as if 
     the funds were apportioned under chapter 1 of title 23, 
     United States Code, except that--
       (1) the Federal share of the cost of any construction under 
     this section shall be determined in accordance with 
     subsection (b); and
       (2) the funds shall remain available until expended.
       (f) Other State Funds.--Funds made available to a State 
     under this section shall not be considered in determining the 
     apportionments and allocations that any State shall be 
     entitled to receive, under title 23, United States Code, and 
     other law, of amounts in the Highway Trust Fund.
  Mrs. BOXER. Mr. President, it is an honor for me to join today with 
four of the giants of the first ISTEA--Senators Moynihan, Chafee, 
Lautenberg, and Lieberman to support the ISTEA Reauthorization Act, the 
reauthorization of the 1991 Intermodal Surface Transportation 
Efficiency Act. Their vision of how we should shape transportation in 
this country in the postinterstate era is why we are here today to 
carry that vision into the next century.
  The economic power of California and this Nation can only be 
unleashed if we invest in the means to get our workers to their jobs 
and our exports into international trade. This legislation not only 
will accomplish that vital goal but it will do so without leaving our 
environment in worst shape for generations to come.
  At this time, Senator Moynihan's bill best meets the goals that I 
have set for rewriting our surface transportation law. It is the best 
approach for California, which contributes more in Federal gas taxes 
than any other State. While this legislation is not what I will expect 
in a final bill, it is the best horse for California out of the 
starting gate.
  I look forward to working with colleagues in committee to add 
provisions important to my State, including adding my legislation to 
provide Federal investment in border infrastructure to relieve border 
choke points resulting from increased trade. Senator Moynihan knows 
this is a key issue for the border States.
  Let me tell you briefly why this bill is the best for California 
right now:
  First and foremost, this bill recognizes the responsibility that 
transportation bears to environmental protection by preserving the 
Congestion Mitigation and Air Quality Program. Nearly 26 million of 
California's 33 million residents live in an area that fails to meet 
one or more of the EPA's air quality standards. CMAQ must be preserved 
as a separate program targeted to those areas that need alternative 
transportation choices.
  The bill also anticipates the adoption of new standards that will 
increase CMAQ funding for new nonattainment areas while protecting the 
funding levels of current areas. In addition, the bill preserves 
funding for areas that are in maintenance status, a measure that I 
authored in the 1995 National Highway System Designation Act to help 
these areas continue their path toward improved air quality.
  Second, the bill uses up to date factors such as actual vehicle use 
and current population estimates in determining the highway funding 
categories. Those factors help raise California's share of funding. I 
will continue to work with my colleagues in the committee for a fairer 
share of the transportation funds for California, but this is a good 
start.
  Third, the bill continues the Bridge Rehabilitation and Repair 
Program. In 1994, after the Northridge disaster, my colleagues here 
supported my bill that permitted this program to fund seismic retrofit 
projects without needing some other kind of repair first. This program 
is unique in that it permits such funding for local bridges.
  Last, but not least, this bill carries the torch for the basic 
framework of ISTEA. I have heard from my local governments north to 
south in California that ISTEA works. Some change, yes. But the basic 
integrity of this law is sound. I agree with them, and I am proud to 
join the ``ISTEA works team.''
  Mr. LAUTENBERG. Mr. President, I am pleased to join with Senator 
Patrick Moynihan, Senator Joseph Lieberman, and 32 other Senators to 
introduce the ISTEA Reauthorization Act of 1997. This bill recognizes 
the success of the 1991 law, the Intermodal Surface Transportation 
Efficiency Act, by reauthorizing it with no major changes.
  Mr. President, 17 Governors endorsed a statement of principles for 
the next surface transportation law that strongly affirmed ISTEA's 
goals and effectiveness in ensuring a sound national transportation 
infrastructure. Included in those goals were these statements: Maintain 
the course set by ISTEA; reauthorize ISTEA with simplification and 
refinement but without significant changes; allocate funds to states 
primarily based on needs; retain the Federal Government's role as a key 
transportation partner to help fund highway, bridge, and transit 
projects and to assure that a national focus remains on mobility, 
connectivity, uniformity, integrity, safety, and research. Their 
message was, plain and simple, ISTEA works.
  Over the past few months, many others, from coast to coast, have 
sounded that message. Some are in the transportation business, others, 
such as mayors, county officials, and environmentalists are not. The 
drumbeat has sounded, that ISTEA works.
  I strongly support that message. ISTEA was bold and innovative, and 
changed the way we think and make decisions about transportation. It 
brought the public into the process. It requires sound planning. It 
promotes energy efficient transportation, research and development. It 
strengthens safety.
  It recognizes that the goal of a transportation system is how best to 
move goods and people, efficiently and effectively.
  Mr. President, ISTEA has worked across this Nation, as witnessed by 
the 32 cosponsors from 17 States. ISTEA has also worked for my home 
State of New Jersey. ISTEA could not have had a better laboratory than 
New Jersey. New Jersey is a corridor State, linking commerce and travel 
to the Northeast and the rest of the country. New Jersey has the 
highest vehicle density of any State in the United States. Thousands of 
heavy duty trucks, only half of which are not registered in New Jersey, 
use New Jersey's roads.
  It is a commuter State, heavily reliant on mass transit. New Jersey's 
transportation infrastructure is heavily used and is significantly 
older than many other State's. We as a State have had to be creative in 
finding ways to maintain the condition of the infrastructure, while 
improving mobility and promoting sound planning.
  Improving mobility reduces congestion, which in turn, improves air 
quality and makes our highways safer. This means that our time is not 
spent in long commutes to work or stuck in traffic. We need to remember 
why sensible transportation funding and planning is important. It's not 
to satisfy some special interest. It's to remember that sound 
transportation systems help cope with growing communities--our 
neighborhoods. Sound transportation systems help to improve mobility to 
transport freight and promote domestic and international commerce, 
making our economy more efficient and creating jobs--our businesses. 
Sound transportation systems help to improve air quality and protect 
the environment--our personal health. In short, transportation can, and 
should, help develop liveable communities and create a better way of 
life.

[[Page S3222]]

  Mr. President, ISTEA was the first step toward this goal. The ISTEA 
Reauthorization Act of 1997 is the next logical step to launch our 
Nation's transportation system into the 21st century.
  The bill we are introducing today recognizes that current levels of 
transportation investment fall short of needs, so it increases 
authorized transportation funding over 6 years and continues the 
emphasis on preservation and maintenance of transportation systems.

  The bill continues to support the scientifically proven link between 
transportation and air quality by bolstering the Congestion Mitigation 
and Air Quality Program.
  The bill supports allocating transportation funds based on need, by 
continuing the bridge program without any changes.
  The bill increases flexibility by making Amtrak eligible for certain 
highway funds, and maintains the flexibility for transit.
  And, the bill recognizes special needs of States with both low and 
high density populations, by providing additional funding.
  Mr. President, I would also like to comment on the effort to revise 
our national highway program to ensure that each State receives 
allocations based on a certain percentage of its gas tax contributions 
to the highway trust fund--the donor-donee issue. This is the wrong way 
to think about transportation funding. It is in the national interest 
to have a Federal transportation policy with national goals. That's how 
we promote interstate and international commerce, further economic 
productivity, protect the environment, and ensure safety. That's why 
decisions to allocate Federal transportation funding should be based on 
need, not on a State's contribution to the highway trust fund. We do 
not allocate airport improvement program funds based on the amount of 
ticket tax that is collected in each State. No Federal programs work 
that way.
  However, if we choose to approach the issue in that context, then we 
must first recognize each State's return on the Federal dollar for all 
Federal programs. New Jersey receives only 68 cents of return on the 
Federal dollar--second to last, just ahead of Connecticut. New 
Jerseyans collectively contribute $15 billion more in Federal payments 
than they receive--that's more than $1,800 per resident.
  Mr. President, if we were to adopt an across-the-board rule to 
require 95 percent return on Federal dollars, consider what would 
happen if we apply that test to other programs. New Jersey would then 
receive $169 million more for agriculture subsidies, $2.1 billion more 
of defense spending, and about $55 million more for child and family 
health services funding.
  Mr. President, national transportation funding should continue to be 
allocated based on national goals and State needs like other Federal 
programs.
  Mr. President, ISTEA has worked for our cities, our counties, our 
environment, and for economic development. Let us build on the success 
of the past and not turn the clock back on transportation progress.
  Mr. LEAHY. Mr. President, 6 years ago, thanks to the leadership of 
Senators Moynihan and C0hafee, this Nation made a fundamental change in 
the way that it allocates public investment in transportation. That 
change was based on the premises that local people understand local 
needs, that funding should be flexible, and that transportation should 
contribute to meeting national environmental and public health goals.
  I made a commitment to myself and to Vermonters that I would only 
sponsor legislation that embodies those three premises. Today I 
announce that I am proud to be an original cosponsor of the ISTEA 
Reauthorization Act of 1997, and I look forward to doing whatever I can 
to ensure that this progressive legislation makes it through the Senate 
and into law.
  This bill maintains and enhances our transportation commitments in 
ways that will benefit Vermonters. I fought hard to include the 
provision that will allow the State of Vermont the flexibility to use 
Federal funds for Amtrak service. Our small State has two successful 
Amtrak trains, both of which operate because of the leadership shown by 
Governor Dean and the legislature. If this provision passes it will 
mean that Amtrak service in Vermont can be maintained and possibly even 
expanded.
  This bill also protects transportation flexibility that has been so 
popular in Vermont. It maintains the recreational trails and scenic 
byways programs, and allows States to continue to use funds for bicycle 
transportation and pedestrian walkways. I will continue to fight for 
these programs in the coming months.
  Finally, this bill will bring more resources to Vermont. Out small 
State lies on a major north-south truck route. Much of this traffic 
passes through Vermont without stopping for fuel. Consequently, our 
roads get a lot of the wear and tear that goes along with commerce, 
without the accompanying gas tax receipts. This legislation provides 
Vermont with a major boost in highway funding, so that we can better 
maintain and repair our existing roads.
  In closing, Mr. President, I urge my colleagues who have not yet done 
so to join me and the bipartisan group of 32 other Senators who have 
committed themselves to the ISTEA reauthorization bill of 1997.
  Mr. LIEBERMAN. Mr. President, I'm delighted to join with Senator 
Moynihan and Senators Lautenberg, Chafee, Dodd, and numerous other 
colleagues to introduce the Intermodal Surface Transportation 
Efficiency Reauthorization Act of l997.
  As a member of the Environment and Public Works Committee, I was 
proud to have worked hard with Senator Moynihan and others to craft 
ISTEA in l991. Without a doubt, ISTEA was the most significant and 
innovative transportation legislation of a generation. It recognized 
that our Nation is now reaching a maturing system of transportation. 
With our Interstate system built, ISTEA moved us to also focus on 
maintenance, intermodalism, efficiency, funding flexibility, and 
environmental protection.
  So often today we hear complaints about laws and programs that don't 
work. ISTEA is a law that has worked and is working--very well. It's 
one area where we don't need to reinvent government--we did that in 
l991 when we adopted ISTEA. That's why Governors, mayors, county 
officials, guilders unions, environmental groups, planners, businessmen 
and women, and others are telling us to reauthorize the law with 
minimal change. That was the resounding message I heard in Connecticut 
at a forum yesterday from a broad range of interests.
  Let me spend a few minutes reviewing why ISTEA is so important.
  In a very unique way, ISTEA combines this country's long-standing 
commitment to our national priorities--a national system of 
transportation central to our economic growth and our commitment to 
protecting and enhancing our environment--with a new emphasis on 
responding to local conditions, priorities, and interests and involving 
the public in this decisionmaking process.
  The statement of policy that introduces ISTEA reminds us that the 
economic health of the country depends on access to an efficient 
transportation system. It reads as follows:

       It is the policy of the United States to develop a national 
     intermodal transportation system that is economically 
     efficient and environmentally sound, provides the foundation 
     for the nation to compete in the global economy and will move 
     people and goods in an efficient manner.

  ISTEA's commitment to a national transportation system includes 
dedicated sources of funding to preserve, restore, and rehabilitate our 
Interstate highways and bridges. In many areas of the country, like my 
own, our infrastructure is older and densely traveled. We need 
dedicated sources of funding for these programs to help ensure an 
efficient transportation system for our entire Nation.
  Second, ISTEA recognized that there is an inextricable link between 
transportation and the quality of our environment, particularly our air 
quality. Automobiles are a large contributor to our smog, carbon 
monoxide, and particulate matter pollution. As Americans drive more and 
more miles, the pollution control gains from cleaner cars get wiped 
out.
  The Congestion Mitigation and Air Quality Improvement Program is one 
of the most innovative programs created under ISTEA. It is providing $1

[[Page S3223]]

billion per year for projects to reduce air pollution. These funds are 
being used to help States restore air quality to healthy levels. This 
program is the opposite of the so-called unfunded mandates--it provides 
Federal funds to help meet the requirements of the Clean Air Act. In 
Connecticut where our air quality is so bad, this program provides an 
important source of funding to help us move toward clean air. Stamford, 
Greenwich, and Norwalk, for example, made innovative use of these 
funds. Our bill would substantially increase funding for this program.

  While recognizing these national priorities, ISTEA also makes nearly 
one-half of all funds available for State and local decisionmaking. The 
transportation needs of Connecticut are different from the needs of 
Montana, and this program allows each area to decide what's right for 
them, again, within the context of protecting a national transportation 
system. And for the first time, it allowed local decisionmakers to 
spend funds on either highways or transit. This leveling of the playing 
field between transit and highways is very important for many areas of 
the country, including my own.
  ISTEA also created a popular program known as Transportation 
Enhancements which provides a small amount of funding to mitigate some 
of the negative effects transportation has caused for our local 
communities. I heard yesterday at a forum in Connecticut how funds were 
used from this program to restore a recreational and open space 
corridor along the abandoned right of way of the former Farmington 
Canal and the Boston and Main Railroad. This project was selected as 
one of the Nation's 25 best enhancement projects. We've also used funds 
from this program to help restore some of our coastal wetlands, to 
protect and enhance the landscape of our famous Merritt Parkway and for 
the restoration of the Route 8 and Route 15 interchanges.
  We should also not forget the important process changes made by 
ISTEA. The law gave local decisionmakers and the public a much greater 
role in making the transportation decisions that so affect their 
communities. In Connecticut, mayors and other local elected officials 
strongly support this approach. In fact, I heard from mayors at a forum 
yesterday that ISTEA's planning provisions have led to greater 
cooperation between central cities and their suburban neighbors on a 
wide variety of issues--extending beyond transportation.
  Unfortunately, despite ISTEA's record of achievement, our efforts to 
reauthorize it will not be easy. ISTEA is under attack. A significant 
number of Senators already support proposals which would eliminate many 
of the fundamental bases of ISTEA, including much of our commitment to 
a national transportation system. Instead, these proposals would turn 
much of the program into essentially a block grant, where I'm concerned 
our national priorities for our transportation system would be lost. 
The funds would be distributed based on how much money each State is 
contributing to the Highway Trust Fund in gasoline taxes rather than 
looking to the Nation's infrastructure needs and also focusing funding 
on those systems that require preservation and enhancement. In short, 
these proposals would largely abandon the Federal role in 
transportation which is so essential to support national economic 
growth, global competitiveness, and the quality of life in our 
communities.
  I congratulate my friend and colleague Senator Moynihan and his staff 
for their outstanding work in putting this bill together. I look 
forward to working with him and my other colleagues as we move through 
this process.
  Mr. KENNEDY. Mr. President, I join in commending Senator Moynihan and 
the other bipartisan sponsors for their leadership on this important 
issue. The stakes are very high. The strength of our economy is 
directly tied to the quality of our transportation. This is no time to 
turn back the clock on ISTEA and its well-balanced commitment to seven 
key points: Highways; public transit; environmental protection; 
bikeways, recreational trails, and historic preservation; computerized 
traffic management; safety; and a strong voice for local communities in 
the allocation of funds.
  In all of these areas, ISTEA has worked well and deserves to be 
continued.
  This is our reply to the STEP 21 coalition and the Western coalition. 
Their proposals are blatant schemes to gerrymander the funding formula 
against our States and undermine other key aspects of ISTEA, and 
they're not acceptable.
  They say their States should get back from the Treasury in ISTEA 
funds what they pay into the Treasury in gas tax revenues. But that 
kind of tunnel vision is distorting this debate. It's wrong to focus 
narrowly just on transportation spending versus gas tax revenues. The 
only fair comparison is between overall Federal spending that goes into 
a State, and the overall Federal tax revenues that come from that 
State.
  By that standard, our States are donor States. We send more to 
Washington than we get back in return. The States complaining the 
loudest about not getting their fair share of Federal transportation 
dollars are huge net winners in the overall picture. They get back far 
more in Federal spending than they pay into the Treasury. And they're 
trying to grab even more through ISTEA. I say, they should keep their 
hands out of the ISTEA cookie jar.
  We have enormous transportation needs in our States, and those needs 
deserve strong Federal support. Working together, we intend to do all 
we can to chart a fair transportation course for the coming years. I 
look forward to that challenge and to our successful efforts together.
  Ms. MOSELEY-BRAUN. Mr. President, I am honored to join my colleague 
from New York, Senator Moynihan, and Senator Lautenberg, Senator 
Lieberman, and many others today to introduce the ISTEA Reauthorization 
Act of 1997. This law builds on the success of the last 6 years of 
ISTEA, and will guide more than $175 billion in Federal highway 
spending over the next 6 years.
  Few laws we enact this year will have as much of an immediate and 
significant affect on our economy than the ISTEA reauthorization bill. 
The transportation industry employs 12 million people, consumes 20 
percent of total household spending, and accounts for 11 percent of our 
Nation's total economic activity. Highways are the most important 
component of our transportation infrastructure, and their use is 
growing. Between 1984 and 1994, U.S. motor vehicle travel increased 
37.5 percent.
  Over the past 6 years, the Intermodal Surface Transportation and 
Efficiency Act has provided the basis for a strong Federal-State-local 
partnership to help the Nation meet its transportation needs. It has 
directed $157 billion into highways, mass transit, and related 
transportation priorities nationwide. It is one of the most successful 
intergovernmental partnerships in American history. Under ISTEA, we 
completed the system of Interstate and Defense Highways begun by 
President Eisenhower 40 years ago, defined the National Highway System 
that will help prioritize highway improvements for decades to come, and 
coordinated planning among different transportation modes.
  ISTEA has improved the capacity and overall condition of our 
transportation infrastructure. According to the U.S. Department of 
Transportation, our highways and bridges are in better shape than they 
were a few years ago. Our environment is in better condition too, 
thanks to ISTEA innovations like the congestion mitigation and air 
quality and transportation enhancement programs.
  Despite our success, we continue to face enormous challenges over the 
next 6 years to maintain and improve our highways and bridges. Over 
this time, it will cost an estimated $148.5 billion just to maintain 
the current physical conditions of our highways. Every year, we must 
renew 100,000 miles of highways in order to maintain current pavement 
conditions.
  My own State of Illinois will need several billion dollars to repair 
aging roads and bridges. According to some estimates, nearly 43 percent 
of Illinois roads need repair, and almost one-fourth of Illinois 
bridges are in substandard condition. Every year, Illinois motorists 
pay an estimated $1 billion

[[Page S3224]]

in vehicle wear and tear and other expenses associated with poor road 
conditions.
  In Chicago, the transportation hub of the Nation, the traffic flow on 
some of the major arterial highways has increased seven-fold since they 
were built in the 1950's and 1960's. According to a recent study, 
Chicago is the fifth most congested city in the Nation. The typical 
Chicago-area driver wastes 34 hours every year sitting still in traffic 
jams, and pays $470 a year in lost time and wasted fuel.
  In order to meet the transportation infrastructure needs of Illinois 
and the Nation, the Federal Government must continue to play a lead 
role in the ongoing partnership to improve America's highways. If there 
were ever a legislative case in point for the saying, ``If it's not 
broken, don't fix it,'' ISTEA is it.
  The ISTEA Reauthorization Act of 1997 is a simple bill. It builds on 
the success of the last 6 years. It does not represent a set of major 
policy changes. It provides a significant increase in funding over 
ISTEA levels, updates some of the funding formulas, and increases 
flexibility for States, all within the constructs defined by ISTEA. I 
hope the Environment and Public Works Committee will use this bill as 
the basis for its deliberations on ISTEA reauthorization, and I urge 
all of my colleagues to join us in sponsoring this important 
legislation.
  I want to point out that this legislation does not reauthorize the 
mass transit half of ISTEA. That job falls on the Banking Committee. I 
look forward to working with my colleagues on the committee and with 
others who have a strong interest in transit to ensure the next 6 years 
of transit policy also mirror the successful framework of transit 
policy defined by ISTEA.
  As we head into the 21st century, we must continue to maintain and 
improve America's transportation infrastructure. In the global economy, 
one of the things that makes our products competitive is our ability to 
move freight across the country cheaply and efficiently. The ISTEA 
Reauthorization Act of 1997 will accomplish that goal by continuing the 
success of ISTEA into the next 6 years.

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