[Congressional Record Volume 143, Number 48 (Tuesday, April 22, 1997)]
[Senate]
[Pages S3402-S3408]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  LABOR LAW CHANGES BY EXECUTIVE ORDER

  Mr. COVERDELL. Mr. President, as many of us in the Congress and in 
the country began to realize last week, the President and the 
administration are endeavoring to change 60 years of labor law by edict 
or decree. I spoke on the floor and reminded the administration we do 
not govern by decree in America. We have three branches. A major and 
fundamental change in labor law must be legislated. The President can 
sign or veto it, but he cannot write law. That is not a function of the 
Presidency.
  I will probably visit some of these documents in a bit, but published 
reports show that labor leaders and the administration wrote the law 
that would essentially squeeze out all nonunion subcontractors and 
employees from doing work on Federal contracts. It is a lot more 
complicated than that, but that is the bottom line. So this law was 
written somewhere in the offices of these labor leaders. It is the 
fundamental construction of what the administration purports will be an 
Executive order, bypassing the legislative branch and writing law in a 
very narrow confine.

  You know, our forefathers were very careful in the construction of 
this Government to assure proper airing, thorough venting, debate on 
all sides. It is not easy to pass laws in America. It is not meant to 
be easy. The very thing for which this system was constructed was to 
prevent the very thing we are seeing from the administration.
  I would like to begin our discussion on this by sharing with the 
Senate several letters that I have received from folks back home with 
regard to this.
  Here is a letter dated March 13, 1997, from Large & Gilbert, 
certified public accountants. They are located in Macon, GA. It says:

       Dear President Clinton: I am writing this letter to express 
     my outrage regarding comments made by Vice President Gore in 
     a speech to the AFL-CIO in Los Angeles on February 18, 1997. 
     Vice President Gore announced the Administration's plans to 
     change the nation's federal procurement policy through an 
     Executive Order that would encourage union-only project labor 
     agreements.
       An Executive Order encouraging union-only PLAs would 
     immediately implement an anti-competitive, protectionist, and 
     discriminatory policy that goes against the basic principles 
     of free market, open competition, and equal opportunity upon 
     which the country was founded.
       Greater use of union-only PLAs will threaten job 
     opportunities for the vast majority of America's workers. 
     Union-only agreements discourage bidding by open shop, or 
     merit shop, contractors and limit employment opportunities 
     for workers who do not wish to be represented by a union. 
     Union workers are less than 15 percent of America's work 
     force. This kind of union-favoring tactic discriminates 
     against the majority of American workers who choose not to 
     join a union.
       PLAs add significantly to the cost of construction 
     projects, because union labor costs are generally 10 to 20 
     percent higher than merit shop. Competitive bidding on public 
     projects is in the best interest of all taxpayers because it 
     ensures contracts are awarded based on who will do the best 
     work at the best price, regardless of labor affiliation.

  And I might add that Georgia is one of about half the States that is 
a right-to-work State.

       At a time of strict budgetary constraints, PLAs are 
     certainly a step in the wrong direction.

[[Page S3403]]

       Vice President Gore stated, ``If you want to do business 
     with the federal government, you'd better. . .respect civil, 
     [no one would take offense with that] human [no one would be 
     offended by that] and [here is the kicker] union rights.''

  In other words, if you want to do business with the Federal 
Government, the Vice President said, you better be in a union, you 
better point your direction toward a union or union membership or a 
union contract.

       Unions do not have the basic right to preferential 
     treatment.

  That is what this gentlemen said. The union does not have the basic 
right to preferential treatment. They have equal access, but they do 
not have preferential access.

       Every American has the right to make a living and have 
     equal access to federal work, regardless of organizational 
     membership.

  How right he is.

       No one's tax dollars should be spent to support 
     discriminatory federal policies [or Federal policies that 
     select who among the bidders would have the most opportunity 
     to get the work].

  He goes on to say:

       Americans should at a minimum be guaranteed federal 
     policies that support equal opportunity and free enterprises 
     at the most basic level. Every American deserves the 
     opportunity to compete, win and execute work based on merit--
     not because of race, gender, union affiliation, or any other 
     discriminatory factor. It is not the role of the federal 
     government to put our taxpayer dollars toward guaranteeing 
     work for the unions or to help them increase their market 
     share and membership.
       Vice President Gore's blanket statement promising a 
     presidential veto of any legislation the unions find 
     objectionable, without any consideration of improvements to 
     workplace opportunities, is an outrage. Americans would be 
     better served by an Administration that supports efforts to 
     improve fair, flexible and equal workplace opportunities that 
     will help make companies and workers more competitive.
       America has always been a leader for the rest of the world 
     in the areas of a free market and equal opportunity, and this 
     has always been a point of pride for our country. Please take 
     the contents of this letter into account before making any 
     Executive Order that would jeopardize the American peoples 
     belief in our country, and the principles upon which it 
     stands.

  That is Thomas K. Savage of Large & Gilbert, an accounting firm in 
Macon, GA.
  Some of these letters are very interesting and deserve a standing in 
the Record.

  This is a letter from W.S. Nielsen Co., Inc. Skylight Systems, 
Alpharetta, GA, writing to the President. He says:

       Dear Mr. President: Our small family owned business has 
     grown over the last sixteen years to where it directly 
     supports over 15 families.

  That is not a big company. It is awful big to the 15 families, I 
might point out, though.

       We have worked hard to train all our staff to be the best 
     and safest in our field. Ours is a dangerous business. Our 
     staff has earned an excellent reputation with our customers, 
     many of whom work on federal and state construction projects.
       Your signing an executive order to use union-only project 
     labor agreements is not fair to the families associated with 
     our company. You are depriving them of work that their tax 
     dollars are paying for and depriving fellow taxpayers of 
     highly skilled craftsmen.
       Our employees believe that Americans should be guaranteed 
     federal policy that support equal opportunity and free 
     enterprise. They have earned the right to compete on a level 
     field for any work they are qualified for. A union-only 
     agreement has been earned in all the cheap ways to the 
     detriment of all involved.
       All of us strongly urge you to cease your plans to issue 
     the proposed executive order.

  Mr. President, we have been joined by the chairman of the Labor 
Committee, Senator Jeffords of Vermont. I would like to yield up to 10 
minutes to the Senator for comment on this matter.
  The PRESIDING OFFICER. The Senator from Vermont.
  Mr. JEFFORDS. Mr. President, I rise to raise my concerns also as 
expressed by the Senator from Georgia. I rise to express my continuing 
and growing concerns regarding the efforts of President Clinton and his 
administration to bypass Congress and impose the ultimate in top-down 
union organizing--union organizing by the President of the United 
States--on Federal construction projects. I am speaking, of course, of 
the widely circulated draft of a proposed Executive order that would 
result in most, if not all, federally funded construction being 
performed under a union project labor agreement.
  A project labor agreement would deter a major portion of the 
contractor universe--open shop or nonunion contractors--from bidding on 
construction work paid for by American taxpayers. Because the project 
labor agreement adopted pursuant to the proposed Executive order would 
require a contractor to enter into an agreement with a labor union as a 
condition of bidding on the Federal project, most open shop 
contractors, unwilling to impose a union on themselves and their 
employees, simply would not submit a bid. Thus, the union-only project 
labor agreement not only eliminates open competition for Federal 
contracts, an anticompetitive effect that would result in increased 
costs of Federal construction to the taxpayers, but also discourages 
open shop contractors from bidding on work that they are paying for 
with their own tax dollars.
  In addition to its anticompetitive impact, the proposed Executive 
order also would deprive nonunion workers of jobs in Federal 
construction, again jobs paid for out of those workers' wallets. Union 
agreements invariably require job seekers to obtain work through a 
union hiring hall. Hiring hall referral traditions favor longstanding 
union members. Others, such as the nonunion workers of the open shop 
contractor, would find themselves at the end of the referral line. This 
Executive order would penalize the overwhelming majority--majority--of 
construction workers in this country, who have not chosen to be union 
members.

  The proposed Executive order clearly is an effort by the 
administration to set national labor policy, a job that is delegated to 
the Congress by the Constitution--by the Constitution--of the United 
States and not to the President. The wisdom of this delegation of 
policymaking to the legislative process by the drafters of the 
Constitution is proven in the matter before us. The proposed Executive 
order raises many more questions than it answers, questions, I note, 
that, if subjected to the debate and factfinding of the legislative 
process, could be resolved.
  For example, what is the effect of the Employee Retirement Income 
Security Act, the ERISA, on a project labor agreement's provision that 
would require an open shop contractor to participate in a union pension 
plan? The contractor likely covers its employees in another plan, and 
the contractor's employees probably would receive no benefits from the 
union pension plan because they would not be vested before the 
completion of the federally funded project.
  Another example of a question best addressed by congressional review 
is whether the anticompetitive and overly restrictive provisions of the 
proposed order violate the spirit, if not the letter, of the Federal 
Acquisition Reform Act of 1996, just recently passed.
  The proposed Executive order, however, raises even more fundamental 
questions regarding the continued vitality of our national labor policy 
that provides for Federal Government neutrality in matters of labor-
management relations, a longstanding policy. This neutrality has been 
at the core of the national policy since the passage of the Wagner Act 
back in 1935. The administration, without the benefit of studied review 
and debate inherent in the legislative process, would reverse this 
policy and ignore the over 60 years--over 60 years--of its fine tuning 
by Congress and the courts. The administration's approach, that of 
lawmaking by Executive fiat, would answer these, and other questions 
posed by the Executive order, by litigation, not legislation.
  I expressed my strong support for S. 606, a bill introduced by 
Senator Hutchinson, that would prevent the exclusion of nonunion 
contractors from federally funded construction. I note that I am a 
cosponsor of this bill and look forward to its deliberation in the 
manner established by the Constitution.
  I urge my colleagues to take note of what is going on. This is a 
gross example of the abuse of the authority of the President through 
the Executive order. He tried this before. The courts knocked it down 
with respect to striker replacement. Here they come again with another 
proposal.

  This is extremely important for contractors, for the Nation, and for 
the taxpayer. I yield the floor.
  Mr. COVERDELL. Mr. President, I thank Senator Jeffords for his 
comments and extensive work in this

[[Page S3404]]

arena. I want to compliment him on the statement he made last week, a 
very thorough description and outline of this circumstance. I think the 
Senator has done the debate a great service. The letter of you and your 
colleagues on the Labor and Human Resources Committee that was sent to 
the President was a noteworthy contribution to the debate.
  I will read one more letter for the Record, Peachtree Interior 
Builders, another letter dated March 27, to the President:

       The purpose of this letter is to voice my opposition to 
     your proposed Executive order to require Federal agencies to 
     use union-only project labor agreements on Federal 
     construction projects. This order would eliminate the 
     possibility of thousands of contractors like myself from 
     bidding on Federal projects. As a contractor and a taxpayer I 
     would expect a level playing field on government contracts so 
     everyone would have the opportunity to compete, win, and 
     execute work based on merit. The 50 families that derive all 
     or part of their livelihood from this company should be given 
     the opportunity to compete on any government project, 
     regardless of their union affiliation, race, gender, or any 
     other discriminatory factor.

  Mr. President, I think it is somewhat useful to try to put this 
debate in context. I go back to Tuesday, February 18, of this year, 
when the Office of the Vice President issued a press release. It says: 
``For immediate release, Tuesday, February 18, 1997.''
  Vice President Gore Sends Message to Businesses.
  ``Record of Labor Relations and Employment Practice Counts in 
Contracting.
  ``In remarks to the AFL-CIO Executive Council, Vice President Gore 
today pledged that the Federal Government will change its rules''--now 
that is a key sentence--``will change its rules on Federal contracting 
to take into account businesses' record of labor relations on 
employment practices and policies.''
  So, the Vice President, speaking to the AFL-CIO Council says, ``The 
Federal Government is going to change its rules.'' What he did not say 
was the President is going to change the rules arbitrarily, by decree, 
by edict, by fiat, as the Senator from Vermont said. To change the 
labor rules, which have been a condition of law for the last 60 years, 
requires a legislative act and not a decree.
  He goes on to say, ``How you treat your employees and how you treat 
unions counts with us. If you want to do business with the Federal 
Government you'd better maintain a safe workplace,''--everyone would 
agree with that--``respect civil, human''--everybody agrees with 
that,--``and union rights.''
  Well, that is not the law. You are not obligated to join a union in 
the United States.
  ``The Vice President said the old rules,'' what he means is the old 
law ``allowed Federal contractors to get reimbursed for the costs of 
trying to persuade employees not to join unions and fighting unfair 
labor practices allegations. `But today we are going to start changing 
the rules because they're just plain wrong.' ''
  They may be, they may not be. But the way you change the law is in 
the legislative branch. You do not do it because of your own opinion.
  Shortly thereafter, on March 10, about 4 weeks later, lo and behold, 
John Sweeney, president of the AFL-CIO, issues a press statement that 
says ``Sweeney Blasts Avondale''--that is a shipbuilding company.

       In the four years since Avondale Shipyard workers won a 
     union election, management has waged a . . . campaign of 
     firings, discriminatory layoffs and legal challenges.

  In other words, they have been in a battle.

       Today, AFL-CIO President John Sweeney met with the workers 
     at the New Orleans shipyard and calls on Avondale management 
     to end its attack. He will remind Avondale, which receives 
     Federal funds, that two weeks ago Vice President Gore said 
     companies doing business with the government must respect . . 
     . union rights.

  So the Vice President makes his statement. They have said they will 
change the rules. I am here to tell you, ``You better pay attention to 
me'' is what John Sweeney is saying.
  We have been joined by the senior Senator from Texas who wants to 
speak on this matter. I yield up to 10 minutes to the Senator from 
Texas.
  Mr. GRAMM. Mr. President, let me first congratulate our distinguished 
colleague from Georgia for his leadership on this issue. I came over 
today to speak on this subject because I think this is a very serious 
matter. It behooves us, and it is in the interests of the American 
people on issues like this, to speak before the President acts, rather 
than to wait for the action to occur and then complain about it.
  I want to be very emphatic today on this issue because I think this 
is a fundamentally important issue. First of all, the Constitution is 
very clear in article 1 that Congress shall have the power to make law. 
Now, granted, within the parameters prescribed by law, the President 
has the ability, through Executive power, to implement those laws, and 
has from time to time used Executive orders to implement the laws 
passed by Congress and enacted by the President's signature.
  Many of you will recall that 2 years ago the President attempted to 
put into operation by Executive order a provision that had already been 
rejected by Congress. Though it is a very important issue, the 
principle is what I want to deal with today.
  Basically, Congress had refused to pass a law that said that if 
workers refuse to work, the employer could not hire other workers to 
take their place. I never viewed that issue as a labor-management 
issue. I always viewed it as a freedom issue, as I believe most 
Americans do. Simply stated, I have a right, if I do not want to work 
for you, to quit. If I want to stop supplying my labor, or in concert 
with others, stop supplying my labor, I have a right to strike. But you 
have rights, too. One of those rights is hiring somebody else who is 
willing to work.
  After an extended debate, the Congress refused to enact a law denying 
employers the right to hire other people when their current workers 
refuse to work and a strike drags on and on. The President, by 
Executive order, tried to do what Congress had refused to do, by 
mandating that companies not be permitted to replace striking workers. 
The courts properly stepped in and said that the President had 
overstepped his bounds and had no authority to make such law by 
Executive order. In fact, Congress had already refused on exactly that 
same subject to take legislative action.
  If we can believe what the Vice President has said in a speech before 
the AFL-CIO, it appears that the President is about to do the same 
thing again. Now, he is going to try to do it a little bit differently. 
He is going to allow the individual Federal departments and agencies to 
take action if they choose. The net result is that through Executive 
order, the President is going to be violating the constitutional powers 
of Congress. This Executive order has been alluded to before, but what 
it boils down to is this: If the President goes ahead with his 
Executive order, he is going to be saying that in order to bid on a 
contract, a company is going to have to hire union workers.
  Now, 89.1 percent of all private workers in America are not members 
of unions. So what this Executive order would do is say to almost 90 
percent of American workers in the private sector of the economy, ``You 
can't work on a Federal Government contract. You are precluded because 
you are not part of a privileged group empowered by the President to 
have rights beyond anybody else's rights. That is, you are not a member 
of a labor union.''
  Now, Mr. President, if the President's Executive order and 
new regulations went forward we would mandate union representation of 
all workers on all Government projects. We would mandate that all 
workers on all Government construction projects be hired out of union 
halls. We would require that all workers on Government construction 
projects pay union dues. We would eliminate competition. Mr. President, 
89.1 percent of all American workers would be precluded from working on 
contracts funded by their tax dollars. Finally, we would impose on 
contractors doing work for the Federal Government union rules, 
including restrictive rules that limit the ability of workers to carry 
out their functions officially. So the first thing the President's 
order would do is say to 89 percent of all workers in America, ``You 
can't do work for the Federal Government on contracts.''

  Second, if the current contractors switched and required mandatory 
union membership by their workers, the President's proposed Executive

[[Page S3405]]

order, in one swoop, would increase the number of people who are 
members of unions by at least 13 million members. Let me repeat that: 
If the President's Executive order is put into place and it stands, and 
if existing contractors, rather than lose their livelihoods and 
businesses, employers would be forced to say OK, we will pay tribute 
and force our workers to join unions whether they want to join and pay 
dues for services they do not want or not. That one action alone would 
mandate at least 13 million people to pay tribute and earnings to 
organizations they have chosen not to join.
  That does not sound like America to me. I have a right to join a 
union. I have always supported that right. But I also have a right not 
to join a union. And I ought to have a right not to join a union and 
still do contract work for the Federal Government, which is run in 
small part by my taxes.
  As my final point, if the President puts this Executive order and new 
regulations into effect, and we are then forced to pay union scale on 
every construction project undertaken on behalf of the taxpayers, it 
will add 17 to 21 percent to the cost of Federal projects, according to 
the General Accounting Office, which is the accounting arm of the 
Congress and the Federal Government. The President's Executive order 
and new regulations would add $42 billion of additional expenses on the 
backs of the American taxpayers.
  So what the President proposes to do by Executive order, in summary, 
is deem 89.8 percent of Americans ineligible to work on Government 
contracts. And at least 13 million Americans, if they choose to work on 
Government contracts, would be forced into involuntary union 
membership. Finally, the taxpayer would be forced to pay union wage 
levels higher than the level typically paid in the private sector and 
often above the level paid to many people who are paying the taxes that 
fund the project.
  Now, I wanted to make two points today, and then I will yield the 
floor. First, this is a terrible Executive order. This seems to be 
little more than political payoff. Those are strong words to say on the 
floor of the U.S. Senate, but it is hard to find any other 
justification or any other rationalization for barring almost 90 
percent of American workers from working on contracts for their 
Government, mandating that at least 13 million people join a union they 
do no want to join, and paying an additional $42 billion per year in 
new labor costs. If that does not give the appearance of a political 
payoff, I would like to know what does. It is hard to think of any 
other explanation.
  Second, and probably the most important point that I want to make, is 
that sometimes things occur between branches of Government that create 
ill feeling and hinder the ability to engage in bipartisanship. They 
make it more difficult for us to do our job. If the President follows 
through with his Executive order, it will seriously jeopardize 
bipartisanship cooperation in this Congress. There is no way we could 
let this stand and little possibility that we could act as if nothing 
had changed when our very powers prescribed in article I of the 
Constitution are being usurped by the President. It difficult to 
imagine us acting as though we simply disagree with each other and then 
go on working together hand-in-hand doing whatever we might be doing. 
There is little chance of that happening.
  Our message today is a warning to the President: Mr. President, don't 
do this. This is wrong for America. If you do this, it is going to be 
very difficult for us to work together.
  I yield the floor.
  Mr. COVERDELL. Mr. President, I thank the Senator from Texas, Mr. 
President. I am going to yield to the Senator from North Carolina for 
up to 10 minutes. I thank him personally for his extended work and 
contributions in the formulation of the Right to Work Act, which has 
now been introduced. He has a long, long record in this arena. I 
welcome him to the floor.
  The PRESIDING OFFICER. The Senator from North Carolina is recognized.
  Mr. FAIRCLOTH. Mr. President, I am here today to join the Senator 
from Georgia in letting the American people know what a costly and 
dangerous paragraph the President of this country has proposed on 
behalf of the labor unions, its bosses. What I am referring to is the 
President's Executive order, first announced to great applause by Vice 
President Gore before a recent gathering of union bosses. It would 
force all contractors doing business with the Federal Government to be 
unionized. To be specific, Clinton has issued an Executive order in 
draft form--he hasn't issued the order--which would require that 
anybody that sells goods to the Federal Government become a party to a 
labor agreement--in plain language, become a unionized closed-shop 
company. These agreements are nothing more than a clever device 
proposed and written by the union bosses that all contractors would 
have to be unionized if you do business with the Federal Government.
  Now, this is a union-only mandate for anyone who sells to the Federal 
Government. But that isn't as far as it goes--not by a long way. These 
agreements would force the contractor to have a union, but, in turn, it 
would force anybody he buys from to have a union. Anybody that sold him 
a pencil would have to be a union contractor, if it were going to be 
used in Government business. So 13 million people, as Senator Gramm 
said, would be forced to join unions. But I think it would run a lot 
more than that because this thing goes to the ultimate end of who would 
have to join the union. Big fleas have little fleas upon their backs to 
bite them, and little fleas have lesser fleas. So this would go down to 
the ultimate end of who would have to join a union to comply with this 
proposed order.
  Now, Sweeney, president of the AFL-CIO, said, ``In any given year, 
Federal contracts total as much as $200 billion, and Federal 
contractors employ one-fifth of the Nation's work force.'' And with 
great glee, he says, ``If properly implemented . . .''--referring to 
President Clinton's order--``. . . it would affect hundreds of billions 
of dollars every year.'' What he could have said and didn't say, but 
was thinking, is: Think of the money that it will bring into the unions 
and how much more money we will have to play with.
  What we are talking about is the President, by the stroke of a pen, 
changing the laws of this country. Government contracts have always 
been awarded on the basis of the low bidder and the company that was 
capable of doing the job. Unions have never held a special claim to 
Government contracts. But, under this, everybody else would be excluded 
and the unions would be totally in charge.
  What we are saying is that all of the $200 billion the Federal 
Government spends would go to 20 percent of the work force, or probably 
a much smaller percentage than that; probably closer to 10 percent of 
the work force in this country is unionized. And to the other 85 to 90 
percent, we would say: Tough luck, you simply don't qualify. You pay 
the taxes and keep working, but any Government contracts will go to 
union members only.
  Now, the General Accounting Office has said that union labor will run 
the price of a contract up 20 percent or more. I think they, very 
simply, underestimated the amount. That is certainly a low figure, that 
20 percent of the cost will be added to every Federal contract because 
of this requirement.
  I am troubled by the fact that no committee of Congress has had the 
opportunity to review proposed language. There have been no hearings. 
None of the millions and millions--13 million-plus--of American workers 
who are going to be affected by this mandate have had an opportunity--
or their representatives--to be heard on it. The President has shown no 
interest in the American people or in what they think. He is simply 
putting a proposal up as a payback to the unions. It is just simply 
that. He has not submitted it to Congress, and from what it would 
appear, he doesn't plan to. If he wants to do it, this is the place he 
needs to do it--bring it before the Congress and then see what happens 
to it. It would pass through the normal checks and balances between the 
Congress and the administration. The Congress is bypassed and this 
would impose unions on businesses across the country, without the 
American people or the Congress having anything to say about it.
  As the Senator from Georgia has so eloquently stated, in America, we 
didn't elect a President to rule by decree. My State of North Carolina 
is a right-to-work State. I am sure that nonunion employees in North 
Carolina would be forced to become unionized

[[Page S3406]]

because of what the President has done. They would have to join a 
union. I understand that the checks and balances may be inconvenient to 
the President. He would rather do it by decree. But that system has 
served us well--the system of checks and balances--for over 200 years. 
The proposed Executive order is a payback to the labor union bosses, 
who spent hundreds of millions of dollars on behalf of the President in 
last year's election, and who do not want to subject their plans for 
American workers and employers to congressional scrutiny. They know it 
would lose in the Congress.

  I am opposed to compulsory unionism. No worker should be forced to 
join a union, and no employer should be forced by the Federal 
Government to be unionized as a condition of doing business with the 
Federal Government--particularly, not by an Executive decree that has 
never seen the light of day in the Congress of the United States, or 
given the Members of the Congress an opportunity to oppose it or to 
speak on it.
  Mr. President, I yield the floor.
  Mr. COATS addressed the Chair.
  The PRESIDING OFFICER. The Senator from Indiana is recognized.
  Mr. COATS. Mr. President, I yield myself 10 minutes from the time 
controlled by the Senator from Georgia.
  The PRESIDING OFFICER. The Senator is recognized.
  Mr. COATS. Mr. President, I appreciate the efforts of the Senator 
from Georgia in bringing to light an important issue that this Congress 
clearly needs to examine and examine quickly.
  Two basic problems exist with the President's attempt to unilaterally 
overturn a 50-year-old law. The first is that it usurps the very 
function of the legislative branch, and appears to be a payoff, a 
payoff to a special interest group--big labor.
  The President, knowing that he can't secure the support of a majority 
of the Congress, simply decides to bypass the Congress. I think it is a 
pure usurpation of the role of the legislative branch. Second, it will 
cost the taxpayers hundreds of millions of dollars, if not billions, in 
additional expenses. To mandate that each agency seeking to contract 
with the Government needs to get big labor's seal of approval before 
making a contract award clearly is going to add substantial cost to 
Federal construction and to Federal contracting.
  If the Clinton administration wants to change the laws governing the 
awards of Federal contracts, it ought to have the courage to send the 
legislative changes to this Congress for consideration. If then it can 
make the case to the American people that the changes are justified, so 
be it. But it is simply unacceptable for the President to cut a deal 
with a special interest group that has been supportive of him 
politically, with such a deal having tremendous ramifications for the 
American economy and, arguably, circumventing the law. We simply cannot 
allow this kind of power grab to go unchecked.

                            inheritance tax

  Mr. President, I also want to bring to the attention of the Senate an 
item that I found this morning in the Washington Post. I got up 
thinking it was going to be a good morning, poured myself a cup of 
coffee, got out the Post and the Washington Times, and was thumbing 
through and happened to come across a headline that certainly grabbed 
my attention. The Post article, written by Clay Chandler says, 
``Treasury Official Slams Estate Tax Rollback Effort. Changes Sought as 
Part of Budget Pact.'' Deputy Treasury Secretary Larry Summers, senior 
member of the Clinton administration, and someone whom the Post says is 
clearly becoming one of the key players in the President's economic 
agenda, and certainly in the budget discussions, has indicated that the 
efforts to roll back the inheritance tax as part of this year's budget 
agreement is ``motivated by selfishness.'' He goes on to say, ``When it 
comes to the estate tax, there is no case other than selfishness'' for 
providing relief to families from this death tax. Further, he asserts 
that the evidence put forth in support of repealing the burdensome tax 
``is about as bad as it gets.''
  Mr. President, I would like to review for the Senate the evidence 
that currently exists about the effect of this so-called inheritance or 
death tax and let the Members of the Senate and the public decide 
whether or not this is ``as bad as it gets'' or is ``selfishness'' on 
the part of the American people.
  Currently the death tax would take as much as 55 to 60 percent of a 
small business owner's assets at death. Whether you are a farmer who 
has worked for years to build an estate, a small businessman, or an 
individual who has worked successfully and achieved some success and 
self-reliance and prudence in terms of how you use your money, or are 
someone who has planned for the future, upon death the family will find 
itself in a very unseemly situation, one that requires, immediately 
after the funeral, that the family move right on down to the IRS office 
to try to figure out how to deal with the extraordinarily difficult 
problem; that is, the Federal inheritance tax, or the so-called death 
tax.
  It is particularly difficult for those who have run a farm, those who 
have run a small business, those individuals who have paid a great 
price, and at great sacrifice, to accumulate some degree of wealth, to 
pass it on to the family. Clearly, the situation that exists today is 
that in many cases the farm or the business has to be sold instead of 
passed on through the family from generation after generation just to 
garner the funds necessary to pay the estate tax. When you are paying a 
55 percent to 60 percent rate, it usually forces the sale of a 
particular business.
  The White House Conference on Small Business indicated that 70 
percent of all family businesses do not survive through the second 
generation, and 87 percent do not make it to a third generation. The 
reason for this is pretty simple. The primary cause of the demise of 
family farms and businesses after the death of a founder and the 
founder's spouse is the death tax.
  When a tax can take more than half of the current valuation of the 
assets--many of these assets are invested in machinery, in buildings, 
in land, and in farm equipment, and the tax is more than half of that 
total valuation--very few families have the liquid assets available to 
pay the immediate tax and, therefore, have to liquidate the farm, have 
to sell off acreage, sell the entire farm, sell off the business, or 
sell ownership in the business, and it can't be passed on to the 
family.
  Recently the U.S. Department of Agriculture estimated that between 
the years 1992 and 2002, more than 500,000 farmers will retire and that 
95 percent of these farms are sole proprietorships, or family 
partnerships, and that every one of these estates, unless they are 
under a very low threshold, are subject to death taxes.
  On average, 75 percent of the farms in America today consist of 
nonliquid assets, such as I mentioned--real estate and farm equipment--
making payment of the death tax extraordinarily difficult to achieve 
without liquidating capital.

  For small business owners, 33 percent report that they expect all or 
part of their businesses will be liquidated when death taxes come due.
  Among a survey of black-owner enterprises, nearly one-third say their 
heirs will have to sell the business to pay the death tax, and more 
than 80 percent report that they do not have sufficient assets to pay 
the death tax.
  If that wasn't bad enough, look at the average cost of just paying 
those taxes. The average family business spends nearly $20,000 in legal 
fees, $12,000 in accounting fees, and $11,000 for other advisers in 
order to do the paperwork and the processing to compute the tax and to 
sell the necessary assets to pay the death tax.
  Mr. President, the point here is not how many examples we can give of 
``bad and selfish'' evidence that Mr. Summers cited. I don't think any 
of this could be categorized as ``bad and selfish'' evidence. That 
doesn't serve the point to castigate Mr. Summers. The bottom line is 
that the Congress owes it to all Americans, and particularly the 
American farmer and the American small business men and women and their 
families, to get relief from the current estate tax, which is a 
perverse tax that goes against the very things that we want Americans 
to strive for. We want Americans to be self-reliant. We want them to 
save and to invest. We want them to build up their businesses and their 
farms. We want them to be prudent. We want

[[Page S3407]]

them to be self-reliant. And we want them to have the ability to pass 
that farm on to the next generation and the next generation.
  I have a very close friend who runs a farm in western Kansas. It is a 
typical farm that you find in the West with thousands and thousands of 
acres because of the sparse amount of rainfall--raising hogs and 
cattle, a great investment in equipment and land, barely making it from 
year to year, depending on the weather. Some years are better than 
others. When this individual dies--and their farm has been in the 
family now for two generations--his son's dream has been to continue 
the farm within the family. Yet, my friend is faced with what farmers 
and business men and women all across this country are faced with: The 
reality that, upon the death of he and his spouse, most of the farm 
will have to be sold or liquidated in order to pay the taxes. It is a 
double form of taxation because the earnings from that farm have been 
taxed on a year-to-year basis.
  So it is a governmental grab.
  Is it selfish to want hard-working Americans to be able to keep the 
assets they have accumulated through their ability or good fortune, 
hard work and dedication? Is it selfish to say that they can't pass 
that on to their family but they are better off giving it to the 
Government so that Government can make better use of that money than 
the family to continue the business or continue the farm?
  I think we have all heard the horror stories about how $1 comes into 
Washington, comes into the Government, and suddenly disappears. We 
can't trace where it goes. Of the money which goes into fighting 
poverty, 65 percent never makes it to the people who are the 
recipients, who are at or below the poverty line. It gets eaten up in 
bureaucracy. It gets eaten up in other special designations.
  So, Mr. President, the American dream is not to die and pass 
everything you have worked so hard--Mr. President, I ask unanimous 
consent for 3 additional minutes.
  Mr. COVERDELL. Mr. President, I yield 3 additional minutes to the 
Senator from Indiana.
  Mr. COATS. Mr. President, I thank the distinguished Senator.
  The PRESIDING OFFICER. The Senator is recognized for 3 additional 
minutes.
  Mr. COATS. Mr. President, the American dream has been to be prudent, 
to save, to try to make life better for your children and your 
grandchildren than it has been for you. The current inheritance tax 
system takes away that American dream--the dream that one generation 
can build upon the success of another to build a better life for 
themselves and their children.

  The current tax sends a message that the Government will take away 
what you have earned and not allow you to pass it on. That is a 
disincentive to work hard. It is a disincentive to be successful, a 
disincentive to pursue the American dream because when you die the 
fruits of your labors will be taken away from you and away from your 
family and given to the Government. This is selfish?
  Mr. Summers, who speaks for the President and the Vice President, 
says this ``is about as bad as it gets;'' that it is about as selfish 
as it gets; that it is selfish to want to retain the fruits of your 
labors; that it is unselfish to give it to the Government, which in 
many instances wastes the money that you have worked so hard for.
  The President campaigned on repeal of the exemption for the estate 
tax, and Senator Dole when he was running for President on his proposal 
to lower the estate tax. Now that we are debating this in the budget, 
Mr. Summers comes along and says it is a selfish thing to want to do. I 
don't think it selfish, Mr. President, to allow the American taxpayers 
to keep the fruits of their hard-earned labors and not to have it taxed 
away to the point where they have to sell their farms, to sell their 
businesses, or to sell their assets just to pay the tax to the 
Government.
  Mr. President, I am a proud a cosponsor of legislation--in fact, four 
pieces of legislation--that call for repeal or at least reduction in 
the amount of estate tax to counter the efforts that are currently 
underway to eliminate even the exemption. I am pleased, and I hope that 
the Congress will hold firm on this issue as we go through our budget 
negotiations.
  I would like to, in closing, invite Mr. Summers to visit some mom and 
pop businesses in Indiana that are hard hit by this devastating tax. I 
would like them to visit some farms of some friends of mine who want to 
pass it on to their children and grandchildren but have to liquidate 
the farm in order to pay the estate tax. Come out to Indiana and tell 
the family that is forced to sell the farm or the business that has 
been in the family for more than 100 years that they are being selfish 
for wanting to keep that farm in the family and not to turn that money 
over to the Government.
  Mr. President, the Federal Tax Code is the only part of this debate 
that can truly be labeled selfish. The Government has no right to take 
unjustly the fruits of its citizens' labors.
  I hope the President and the Vice President will quickly disavow the 
statement made today, or reported today in the Washington Post, by Mr. 
Summers when he calls it selfish on the part of the American people to 
try to retain the business of a farm that they have worked so hard to 
acquire.
  Mr. President, I yield the floor. I thank the Senator from Georgia.
  The PRESIDING OFFICER. The Senator from Georgia.
  Mr. COVERDELL. Mr. President, I yield the remainder of my time to the 
Senator from Oklahoma, the assistant majority leader.
  The PRESIDING OFFICER. The Senator from Oklahoma is recognized.
  Mr. NICKLES. Mr. President, I want to compliment my colleague from 
Georgia for his managing this past hour. I hope that my colleagues have 
had a chance to listen very clearly.
  I would also like to compliment my colleague from Indiana on his very 
forceful statement denouncing the statement that was in the paper 
today, reported to be made by Mr. Summers, Deputy Assistant Secretary 
of the Treasury, when he said that those who want to cut inheritance 
taxes are wanting to do so for greedy individuals. I just totally 
disagree. I am one of those individuals who wants to reduce the 
inheritance tax, and I don't think I am trying to do it for greedy 
individuals. I think the tax is unfair. It is too high.
  The Senator from Indiana mentioned the fact that farmers and ranchers 
worked hard in their lifetime to build up a ranch, farm, or estate, and 
find that Uncle Sam is taking 39 percent, maybe 45 percent, or 55 
percent of that estate. I think it is too high. It is higher even than 
the income tax.
  If you have a taxable estate of $1 million and you are at the 39 
percent tax bracket, that is too much. Why should the Government be 
entitled to take 39 percent of a farm or ranch that has a value of $1.6 
million--there is a $600,000 exemption and a $1 million estate--why 
should Uncle Sam be entitled to take 40 percent, or, if you have a 
taxable estate of $3 million, maybe two or three restaurants or 
businesses that you put together and the taxable estate is $3 million, 
why should Uncle Sam be entitled to take over half?
  Mr. Summers may think you are being greedy because you don't want to 
lose half of what you have built and worked all your life to 
accumulate, and you want to pass it on to your children. He thinks 
maybe you are trying to be greedy because you want to keep it in the 
family. Mr. Summers is wrong.
  I concur with my colleague from Indiana. I hope that the 
administration will denounce, renounce, or disassociate themselves from 
his remarks because trying to reduce the inheritance tax is not being 
greedy.
  I tell my colleagues that this is one Senator who is going to be very 
energetic in trying to make sure, when that tax bill comes up this 
year, that we are going to have estate tax relief.
  I hope we will cut estate taxes for everybody. I hope we will 
increase the exemption because I do not think the Federal Government 
should be entitled to take part of the property that people have worked 
their lifetime to pass on to their children. I do not think Uncle Sam 
should be entitled to take 40 or 50 or 55 percent.
  Mr. President, I am not sure what time remains of Senator Coverdell's 
time, but I ask unanimous consent to speak as if in morning business 
for 10 minutes.
  The PRESIDING OFFICER (Mr. Coats). Is there objection? The Chair

[[Page S3408]]

hears none, and it is so ordered. The Senator from Oklahoma is 
recognized to speak as if in morning business for 10 minutes.

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