[Congressional Record Volume 143, Number 68 (Wednesday, May 21, 1997)]
[Extensions of Remarks]
[Pages E1009-E1010]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         CONCURRENT RESOLUTION ON THE BUDGET, FISCAL YEAR 1998

                                 ______
                                 

                               speech of

                          HON. JOSE E. SERRANO

                              of new york

                    in the house of representatives

                         Tuesday, May 20, 1997

       The House in Committee of the Whole House on the State of 
     the Union had under consideration the concurrent resolution 
     (H. Con. Res. 84) establishing the Congressional budget for 
     the U.S. Government for the fiscal year 1998 and setting 
     forth appropriate budgetary levels for fiscal years 1999, 
     2000, 2001, and 2002.

  Mr. SERRANO. Mr. Chairman, Governor Rossello has proposed an economic 
growth incentive for Puerto Rico that would encourage U.S. companies to 
stay and expand on the island. This program has been endorsed by the 
President and has received bipartisan support in Congress. Senators 
D'Amato and Moynihan have introduced legislation in the Senate to 
implement this proposal. It is a priority of most of the Hispanic 
Members of Congress. This has the unified support of the public and 
private sectors in Puerto Rico. This job creation incentive should be 
included in legislation being considered this year to spur economic 
growth for the Nation as a whole.
  Puerto Rico has paid a very high price this decade to fund 
legislation which expanded existing economic incentives or created new 
ones from which it will not benefit. In the 1993 budget bill, for 
example, business operations in Puerto Rico saw a net tax increase of 
almost $4 billion, while individuals and businesses on the mainland 
enjoyed $25 billion in new or expanded tax benefits.
  In 1996, Congress again increased taxes on commerce in Puerto Rico by 
$11 billion while reducing taxes on mainland businesses and individuals 
by $30 billion. The 1996 changes are especially harmful to economic 
growth in Puerto Rico. In effect, Congress eliminated altogether the 
Federal economic incentives that help attract companies to the island. 
Sections 936 and 30A of the Internal Revenue Code will continue for ten 
years but at a significantly reduced level and only for companies and 
lines of business that were already on the island on October 13, 1995.
  As a result of these changes, Puerto Rico now has no Federal economic 
incentives to attract new business. Further, companies subject to the 
10-year phase out may not, without losing all of their incentives, 
introduce new lines of business.
  The 1996 tax bill enacted a number of special tax incentives for 
small businesses and tax credits for both small and large companies. 
The 1996 small business tax credits were intended to help companies 
offset an increase in the minimum wage. Ironically, while employers in 
Puerto Rico are subject to the minimum wage, they also saw the 
elimination of their Federal economic incentives.
  These changes present the Government of Puerto Rico with a serious 
threat to its goal of expanding private sector employment while 
reducing the size and cost of both Government and welfare. Without any 
economic incentives for new job creation or investment, it will be 
difficult to stop employers from leaving the island for foreign 
locations.
  Moreover, without any incentives, the Puerto Rican economy, where per 
capita income is less than 30 percent of the United States mainland, 
and where unemployment is two to three times the average in the States, 
cannot possibly catchup; it can only fall further behind, with 
implications for state and Federal balanced budget goals.
  The D'Amato-Moynihan bill would modify the wage credit in section 30A 
to: (1) Apply to new business; (2) eliminate the ``cap'' limitations 
that were put in place last year; and (3) remain in effect until Puerto 
Rico increases its economic performance. These modifications would be 
made without reducing in any way the economic incentives that apply to 
existing business operations in Puerto Rico that are being phased out.
  There are compelling reasons to act now.
  Most importantly, we should not wait until there are visible declines 
in the Puerto Rican economy. These job creation incentives take time to 
generate results, and Puerto Rico needs results now. Deferring this 
program until all incentives for existing operations terminate is like 
playing Russian roulette with the 4 million Americans in Puerto Rico.
  As time goes by the cost of providing new economic incentives for 
Puerto Rico will increase, especially as the negative impact of the 
1996 tax law changes are felt. It will be far less expensive to keep 
companies in Puerto Rico by acting now, rather than to try and get them 
back after they leave.
  Moreover, should Congress and the President agree on a long-term 
budget plan this year, it is unlikely that a major budget or tax 
vehicle will be considered for some time to come. As a result, this may 
be the last best opportunity to act.
  It is in the national interest to establish these economic growth 
incentives for Puerto Rico this year.

[[Page E1010]]



                       SENATE COMMITTEE MEETINGS

  Title IV of Senate Resolution 4, agreed to by the Senate on February 
4, 1977, calls for establishment of a system for a computerized 
schedule of all meetings and hearings of Senate committees, 
subcommittees, joint committees, and committees of conference. This 
title requires all such committees to notify the Office of the Senate 
Daily Digest--designated by the Rules Committee--of the time, place, 
and purpose of the meetings, when scheduled, and any cancellations or 
changes in the meetings as they occur.
  As an additional procedure along with the computerization of this 
information, the Office of the Senate Daily Digest will prepare this 
information for printing in the Extensions of Remarks section of the 
Congressional Record on Monday and Wednesday of each week.
  Meetings scheduled for Thursday, May 22, 1997, may be found in the 
Daily Digest of today's Record.

                           MEETINGS SCHEDULED


                                 JUNE 3
     9:30 a.m.
       Commerce, Science, and Transportation
       Communications Subcommittee
         To resume hearings to examine the Federal Communications 
           Commission implementation of the Telecommunications Act 
           of 1996, focusing on efforts to implement universal 
           telephone service reform and FCC proposals to assess 
           new per-minute fees on Internet service providers.
                                                            SR-253


                                 JUNE 4
     9:00 a.m.
       Judiciary
         To hold oversight hearings on the Federal Bureau of 
           Investigation, Department of Justice.
                                                            SD-226
     9:30 a.m.
       Environment and Public Works
         To hold hearings on the nomination of Michael J. 
           Armstrong, of Colorado, to be an Associate Director of 
           the Federal Emergency Management Agency.
                                                            SD-406
       Small Business
         To hold hearings to examine small business perspectives 
           on mandates, paperwork, and regulation.
                                                           SR-428A
     10:00 a.m.
       Appropriations
       Defense Subcommittee
         To hold hearings on proposed budget estimates for fiscal 
           year 1998 for the Department of Defense.
                                                            SD-192


                                 JUNE 5
     9:00 a.m.
       Agriculture, Nutrition, and Forestry
         To hold hearings to examine instances of contaminated 
           strawberries in school lunches.
                                                            SR-332
     10:00 a.m.
       Appropriations
       Legislative Branch Subcommittee
         To hold hearings on proposed budget estimates for fiscal 
           year 1998 for the Library of Congress, General 
           Accounting Office, and the Government Printing Office.
                                                    S-128, Capitol


                                JUNE 10
     9:30 a.m.
       Energy and Natural Resources
       Water and Power Subcommittee
         To hold hearings on miscellaneous water and power 
           measures, including S. 439, H.R. 651, H.R. 652, S. 725, 
           S. 736, S. 744, and S. 538.
                                                            SD-366
     10:00 a.m.
       Appropriations
       Legislative Branch Subcommittee
         To hold hearings on proposed budget estimates for fiscal 
           year 1998 for the offices of the Secretary of the 
           Senate, Senate Sergeant at Arms, and the Architect of 
           the Capitol.
                                                    S-128, Capitol


                                JUNE 11
     9:30 a.m.
       Energy and Natural Resources
         To hold oversight hearings on the State-side of the Land 
           and Water Conservation Fund.
                                                            SD-366
     10:00 a.m.
       Appropriations
       Defense Subcommittee
         To hold hearings on proposed budget estimates for fiscal 
           year 1998 for the Department of Defense.
                                                            SD-192


                                JUNE 12
     9:30 a.m.
       Energy and Natural Resources
         To resume a workshop to examine competitive change in the 
           electric power industry, focusing on the benefits and 
           risks of restructuring to consumers and communities.
                                                            SH-216


                                JUNE 16
     2:00 p.m.
       Special on Aging
         To hold hearings to examine the problem of pension 
           miscalculations, focusing on methods for educating 
           people on the steps they can take to protect themselves 
           and their pension benefits.
                                                            SD-628


                                JULY 23
     9:00 a.m.
       Finance
       International Trade Subcommittee
         To hold hearings with the Caucus on International 
           Narcotics Control on the threat to U.S. trade and 
           finance from drug trafficking and international 
           organized crime.
                                                            SD-215


                                JULY 30
     9:00 a.m.
       Finance
       International Trade Subcommittee
         To resume hearings with the Caucus on International 
           Narcotics Control on the threat to U.S. trade and 
           finance from drug trafficking and international 
           organized crime.
                                                            SD-215


                             POSTPONEMENTS


                                 MAY 22
     2:00 p.m.
       Governmental Affairs
       International Security, Proliferation and Federal Services 
           Subcommittee
         To hold hearings to examine Russian case studies on 
           proliferation.
                                                            SD-342