[Congressional Record Volume 143, Number 83 (Monday, June 16, 1997)]
[Senate]
[Pages S5694-S5702]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. BREAUX (for himself, Mr. Mack and Mr. Kerrey):
  S. 904. A bill to amend title XVIII of the Social Security Act to 
provide Medicare beneficiaries with choices, and for other purposes; to 
the Committee on Finance.


     THE COMPREHENSIVE MEDICARE REFORM AND IMPROVEMENT ACT OF 1997

  Mr. BREAUX. Mr. President, I rise for a moment or two to speak to a 
bill which Senator Mack and I are introducing today on the entire 
question of Medicare. So many people around the country have heard 
Congress and elected officials for a long period of time talk about how 
we need to reform the Medicare Program. The Medicare Program has been a 
wonderful program since 1965. It has assured our senior citizens they 
will have adequate health care in a period in their lives when health 
care is vitally important.
  We have all seen the studies and the reports which clearly point out 
that unless Congress fundamentally reforms this program, it is not 
going to be around for much longer. We clearly see a program that will 
be bankrupt, which is running out of money, and that has to be a 
tremendous concern not only to our Nation's seniors but also to their 
children and their grandchildren and to society at large. 
Unfortunately, every time Congress moves toward trying to reform 
Medicare, we do not do it. We have taken the same approach year in and 
year out with the thought of fixing Medicare with a Band-Aid type of 
approach instead of addressing the fundamental defects in the program. 
We have every year said we are going to fix it this year by reducing 
the reimbursement fees that doctors and hospitals get for treating 
Medicare patients.
  I said the other day, and others have made this comment, that before 
too long doctors and hospitals will refuse to take Medicare patients 
because their reimbursement rate from the Government will be less than 
it costs them to do business, that they will simply refuse to take 
Medicare patients any longer.
  That is already happening in my own family. My mother-in-law just a 
week ago informed us that after being diagnosed with an ailment of 
diabetes, in trying to go to a local physician in our State of 
Louisiana, they promptly informed her they do not take Medicare 
patients. I think that is something we all need to be very concerned 
about. We cannot continue to try to fix Medicare with a proposal that 
truly does not fix it.
  What we introduce today is a proposal to make an option available to 
Medicare recipients which is patterned on the Federal Employees Health 
Benefit Plan that every Member of the Senate and every Member of the 
House and all 9 million Federal employees have.
  It is a program which is fundamentally different than Medicare 
because, unlike Medicare, it is based on competition in the marketplace 
as opposed to arbitrary price fixing of Medicare services, which is the 
current system under Medicare based here in Washington.
  There was an interesting story in the Washington Post this morning 
which talked about how House and Senate committees are looking at 
bringing about reform to Medicare and Medicaid and basing that reform 
on the Federal health plan available to Members of Congress and other 
Federal employees. Unfortunately, while the Medicare proposals which 
are now pending in the House and the Senate will increase the range of 
options available to seniors, they lack the most important feature of 
the Federal Employees Health Benefit Plan. That is competition. 
Medicare is the only program that fails to deliver health care based on 
competition but does it based on arbitrary price fixing, which is no 
longer working. The proposals currently in both the House and the 
Senate plan would continue to base what we pay managed care programs on 
what we spend on the so-called fee-for-service, currently available 
under Medicare. And that is the

[[Page S5695]]

problem. There is not fundamental reform.

  I think most committees are to be commended. Our Finance Committee 
draft does recognize that there is a problem. But in trying to reduce 
the costs of Medicare by $115 billion, almost all of those savings come 
out of reducing payments to doctors and hospitals. I have said what the 
problem is there. Doctors and hospitals will begin to refuse to take 
Medicare patients. That, certainly, is not going to help anyone.
  So what we are recommending, Senator Mack and I, by our approach, is 
to introduce a test program over a 5-year period to try to 
fundamentally reform Medicare; to set up demonstration projects around 
the country to allow competitive bidding and negotiations to take part 
in the delivery of Medicare services to seniors in this country. We had 
an interesting report the other day in our Aging Committee that pointed 
out we are overpaying managed care programs under Medicare by almost $2 
billion a year more than it is costing them to treat the patients. That 
is because it is not based on competition, but rather on an arbitrary, 
bureaucratic program that is run out of a department here in 
Washington. I don't fault the program managers and the bureaucrats. 
That is how Congress set it up. But while it may have been a good idea 
in 1965, in 1997 it is no longer working. It is totally out of step 
with the way health care services need to be delivered in this country.
  So what the Breaux-Mack proposal says is that we are going to take a 
look at how the Federal employee plan works; we are going to do some 
demonstration projects around the country; we are going to take those 
results, and Congress will act on those results. We will not just let 
the study sit on a shelf somewhere in a library and not have anything 
happen with it, but rather we will have the Congress actually take 
those recommendations and act on those recommendations.
  We are convinced that with this new approach, Medicare beneficiaries 
will get more services. We start off with a basic standardized plan 
that in addition to what is now available to Medicare patients, also 
includes prescription drugs, which is incredibly important. We also 
guarantee this basic package will be available to all of the people we 
are proposing. But the fundamental difference is they will have more 
information about the plans, so the plans will be able to be compared 
for people to see which plan is the best. So we will create a situation 
where Medicare beneficiaries will have more services offered to them, 
more choices of which plan they would like to consider, more benefits 
under those plans, and we think we can clearly do it for less money 
than is being spent on the program right now.
  One of the features of our program is that it sets up an office of 
competition, much like the private plans that are available now to 
Federal employees. We think that an office of competition will be able 
to call for people to actually come in and submit proposals. Then, 
after they look at these proposals and make sure they meet the 
standardized package of benefits, they will begin to negotiate with 
these people who are offering these plans to our seniors in the United 
States.
  Competition is a wonderful thing. For the right to treat 38 million 
Medicare recipients, people will compete. They will say, ``Our plan is 
better than their plan. Our plan offers more than their plan. Our plan 
can do it at a better price.'' There will be a competitive world set up 
that is not now available to Medicare recipients.

  That is the fundamental problem, I think, that the House and Senate 
bills, and respective Finance and Ways and Means Committee bills, do 
not address. It still says we are going to continue to fix prices out 
of Washington for Medicare recipients. I think that every think tank we 
have talked to--and Senator Mack and I have met with liberal think 
tanks and conservative think tanks, and people who have spent a 
lifetime studying this problem. Generally, they all have come to the 
same conclusion--that greater competition in the marketplace will allow 
health providers to offer more services to senior citizens and do it at 
a better price.
  So we are going to introduce today legislation that does establish a 
Medicare reform package or proposals which we think represent 
fundamental reform in the system. We are not saying that all seniors 
have to move into this program immediately. No, we are saying we ought 
to have a demonstration project in 10 cities around the country and in 
rural areas around America, to see how it would work, do this test 
marketing for about a 5-year period, until we can get a great deal of 
information about what is happening out there when you try to reform 
this system, then take that information and bring it back to the 
Congress and have Congress act on that recommendation. We think that is 
something that makes a great deal of sense.
  I think it is a balanced way to proceed. We are not rushing into it. 
We are not telling seniors they have to do something overnight, but 
merely giving them the choice during this period of time. I think that 
is what seniors really want. They want the choice. They want more 
information. They want a better benefit package. And all of us want, 
bottom line, to see that this program is going to be around for when we 
move into it, when our children move into it, when the baby-boomer 
generation we hear so much talk about is ready to participate in the 
program.
  We clearly cannot continue down the same path that we have continued 
on for so many years, since 1965. We think the Breaux-Mack proposal is 
a realistic alternative. It merits bipartisan support, and we hope both 
committees ultimately will bring to the floor a type of program based 
on what myself and Senator Mack will be introducing in the Congress 
today.
                                 ______
                                 
      By Mr. McCAIN (for himself and Mr. Hollings):
  S. 905. A bill to establish a national physical fitness and sports 
foundation to carry out activities to support and supplement the 
mission of the President's Council on Physical Fitness and Sports, and 
for other purposes; to the Committee on Commerce, Science, and 
Transportation.


                the sports foundation establishment act

  Mr. McCAIN. Mr. President, I am pleased to introduce, along with 
Senator Hollings, the National Physical Fitness and Sports Foundation 
Establishment Act. This bill would create a charitable, not-for-profit 
foundation to raise funds from the private sector to support the 
activities of the President's Council on Physical Fitness.
  The President's Council presently relies on Federal appropriations to 
support its activities. In each of the last 2 fiscal years, the 
President's Council has received appropriations of approximately $1 
million. Future appropriations for the Mr. President's Council are at 
risk as we strive to balance the Federal budget.
  The foundation created by this bill would raise private funds to 
sustain the President's Council on Physical Fitness. To facilitate 
fundraising, the foundation is permitted to offer the use of the seal 
of the President's Council for promotional purposes in exchange for 
sponsorship funds. The bill does not authorize the expenditure of 
Federal funds.
  The primary goal of the President's Council is to foster programs 
that encourage people of all ages to participate regularly in sports 
and physical activities. The President's Council focuses on grassroots, 
community-based programs. Perhaps the Council's most well known 
activity is the President's Challenge Physical Fitness Awards Program 
which is administered by teachers and youth programs across the 
country.
  We should act to preserve the President's Council. Its activities are 
particularly important because our Nation's children are becoming 
increasingly less physically fit even as we learn that physical fitness 
in one's youth is important to living a healthy life during adulthood.
                                 ______
                                 
      By Mr. D'AMATO (for himself, Mr. Moynihan, Mr. Chafee, Mr. 
        Breaux, Mr. Hatch, and Mr. Graham):

  S. 906. A bill to amend the Internal Revenue Code of 1986 to extend 
the economic activity credit for Puerto Rico, and for other purposes; 
to the Committee on Finance.


    THE PUERTO RICO ECONOMIC ACTIVITY CREDIT IMPROVEMENT ACT OF 1997

  Mr. D'AMATO. Mr. President, I rise today to join Senator Chafee, 
Senator

[[Page S5696]]

Moynihan, Senator Breaux, Senator Hatch, and Senator Bob Graham in 
introducing legislation that will induce investment and create 
employment in Puerto Rico. Puerto Ricans have been U.S. citizens since 
1917. Since World War I an estimated 200,000 Puerto Ricans have served 
in the U.S. Armed Forces. Yet, the Puerto Rican unemployment rate is 
more than twice the national average, its annual per capita income is 
less than half the national average, and well over 50 percent of its 
population live below the poverty line. We as a Congress must take 
action to bring Puerto Rico's economy up to the levels that we expect 
for all Americans.
  Under current law, section 30A of the Internal Revenue Code provides 
a targeted wage credit to companies during business in Puerto Rico 
based upon the compensation paid to their employees. It does not allow 
new business starts and the credit terminates in 2006. As a result, 
existing companies have little incentive to make new investments or 
replace depreciating plant and equipment. Job losses will occur as 
existing plants are shut down and these activities may be transferred 
to foreign locations. Net job growth can only occur if new firms start 
up and if expanding firms replace job losses. Manufacturing accounts 
for more than 40 percent of Puerto Ricos gross domestic product.
  This legislation expands section 30A to provide an employer tax 
credit for employees located in Puerto Rico that will also cover new 
businesses. This credit is based upon the compensation to their 
employees. The credit will only remain until economic conditions 
improve within Puerto Rico including an unemployment rate not to exceed 
150 percent of the U.S. average, per capita income is at least 66 
percent of the national average, and that the poverty level does not 
exceed 30 percent. The economic conditions for the tax incentives to 
end are modest but achieve significant economic progress for the people 
of Puerto Rico.
  This legislation serves U.S. fiscal interests. Without spurring job 
creation in Puerto Rico, the United States will be paying unemployment 
and welfare benefits to people that have a strong work ethic and 
impressive job skills. Puerto Rico has a labor force of 1.3 million 
people. Of this total approximately 190,000 are available for 
employment. We must do everything possible to help facilitate 
employment for these people.
  Even though Puerto Rico is located 1,600 miles southeast of New York 
City, the people of New York have a direct interest in the Puerto Rican 
economy. Puerto Rican subsidiaries of mainland companies purchase 
approximately $195 million per year worth of supplies and services from 
New York. Corporations headquartered in New York State that have 
invested in Puerto Rico employ over 39,000 persons in New York. If 
corporations are drawn to other regions where there are tax incentives, 
New York State will not only lose jobs but also significant amounts of 
income from goods and services.
  Mr. President, this legislation is a powerful economic development 
initative that is vital to Puerto Rico because of the many hurdles the 
people face in their struggle for development. The island faces much 
higher transportation costs than most States; an infrastructure which 
still needs billions in investment to bring it up to acceptable 
standards and it is faced with competition within the Caribbean and 
other locations which pay wages a fraction of Puerto Rico's.
  Mr. President, I urge my colleagues on both sides of the aisle to 
join us in cosponsoring this important legislation.
  Mr. President, I ask unanimous consent that the complete text 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. 906

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

     SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

       (a) Short Title.--This Act may be cited as the ``Puerto 
     Rico Economic Activity Credit Improvement Act of 1997''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.

     SEC. 2. MODIFICATIONS OF PUERTO RICO ECONOMIC ACTIVITY 
                   CREDIT.

       (a) Corporations Eligible To Claim Credit.--Section 
     30A(a)(2) (defining qualified domestic corporation) is 
     amended to read as follows:
       ``(2) Qualified domestic corporation.--For purposes of 
     paragraph (1)--
       ``(A) In general.--A domestic corporation shall be treated 
     as a qualified domestic corporation for a taxable year if it 
     is actively conducting within Puerto Rico during the taxable 
     year--
       ``(i) a line of business with respect to which the domestic 
     corporation is an existing credit claimant under section 
     936(j)(9), or
       ``(ii) an eligible line of business not described in clause 
     (i).
       ``(B) Limitation to lines of business.--A domestic 
     corporation shall be treated as a qualified domestic 
     corporation under subparagraph (A) only with respect to the 
     lines of business described in subparagraph (A) which it is 
     actively conducting in Puerto Rico during the taxable year.
       ``(C) Exception for corporations electing reduced credit.--
     A domestic corporation shall not be treated as a qualified 
     corporation if such corporation (or any predecessor) had an 
     election in effect under section 936(a)(4)(B)(iii) for any 
     taxable year beginning after December 31, 1996.''
       (b) Application on Separate Line of Business Basis; 
     Eligible Line of Business.--Section 30A is amended by 
     redesignating subsection (g) as subsection (h) and by 
     inserting after subsection (f) the following new subsection:
       ``(g) Application on Line of Business Basis; Eligible Lines 
     of Business.--For purposes of this section--
       ``(1) Application to separate line of business.--
       ``(A) In general.--In determining the amount of the credit 
     under subsection (a), this section shall be applied 
     separately with respect to each substantial line of business 
     of the qualified domestic corporation.
       ``(B) Exceptions for existing credit claimant.--This 
     paragraph shall not apply to a substantial line of business 
     with respect to which the qualified domestic corporation is 
     an existing credit claimant under section 936(j)(9).
       ``(C) Allocation.--The Secretary shall prescribe rules 
     necessary to carry out the purposes of this paragraph, 
     including rules--
       ``(i) for the allocation of items of income, gain, 
     deduction, and loss for purposes of determining taxable 
     income under subsection (a), and
       ``(ii) for the allocation of wages, fringe benefit 
     expenses, and depreciation allowances for purposes of 
     applying the limitations under subsection (d).
       ``(2) Eligible line of business.--The term `eligible line 
     of business' means a substantial line of business in any of 
     the following trades or businesses:
       ``(A) Manufacturing.
       ``(B) Agriculture.
       ``(C) Forestry.
       ``(D) Fishing.
       ``(3) Substantial line of business.--For purposes of this 
     subsection, the determination of whether a line of business 
     is a substantial line of business shall be determined by 
     reference to 2-digit codes under the North American Industry 
     Classification System (62 Fed. Reg. 17288 et seq., formerly 
     known as `SIC codes').''
       (c) Repeal of Base Period Cap.--
       (1) In general.--Section 30A(a)(1) (relating to allowance 
     of credit) is amended by striking the last sentence.
       (2) Conforming amendment.--Section 30A(e)(1) is amended by 
     inserting ``but not including subsection (j)(3)(A)(ii) 
     thereof'' after ``thereunder''.
       (d) Application of Credit.--Section 30A(h) (relating to 
     applicability of section), as redesignated by subsection (b), 
     is amended to read as follows:
       ``(h) Application of Section.--
       ``(1) In general.--This section shall apply to taxable 
     years beginning after December 31, 1995, and before the 
     termination date.
       ``(2) Termination date.--For purposes of paragraph (1)--
       ``(A) In general.--The termination date is the first day of 
     the 4th calendar year following the close of the first period 
     for which a certification is issued by the Secretary under 
     subparagraph (B).
       ``(B) Certification.--
       ``(i) In general.--The Secretary shall issue a 
     certification under this subparagraph for the first 3-
     consecutive calendar year period beginning after December 31, 
     1997, for which the Secretary determines that Puerto Rico has 
     met the requirements of clause (ii) for each calendar year 
     within the period.
       ``(ii) Requirements.--The requirements of this clause are 
     met with respect to Puerto Rico for any calendar year if--

       ``(I) the average monthly rate of unemployment in Puerto 
     Rico does not exceed 150 percent of the average monthly rate 
     of unemployment for the United States for such year,
       ``(II) the per capita income of Puerto Rico is at least 66 
     percent of the per capita income of the United States, and
       ``(III) the poverty level within Puerto Rico does not 
     exceed 30 percent.''

       (e) Conforming Amendments.--
       (1) Section 30A(b) is amended by striking ``within a 
     possession'' each place it appears and inserting ``within 
     Puerto Rico''.
       (2) Section 30A(d) is amended by striking ``possession'' 
     each place it appears.

[[Page S5697]]

       (3) Section 30A(f) is amended to read as follows:
       ``(f) Definitions.--For purposes of this section--
       ``(1) Qualified income taxes.--The qualified income taxes 
     for any taxable year allocable to nonsheltered income shall 
     be determined in the same manner as under section 936(i)(3).
       ``(2) Qualified wages.--The qualified wages for any taxable 
     year shall be determined in the same manner as under section 
     936(i)(1).
       ``(3) Other terms.--Any term used in this section which is 
     also used in section 936 shall have the same meaning given 
     such term by section 936.''
       (f) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1997.

     SEC. 3. COMPARABLE TREATMENT FOR OTHER ECONOMIC ACTIVITY 
                   CREDIT.

       (a) Corporations Eligible To Claim Credit.--Section 
     936(j)(2)(A) (relating to economic activity credit) is 
     amended to read as follows:
       ``(A) Economic activity credit.--
       ``(i) In general.--In the case of a domestic corporation 
     which, during the taxable year, is actively conducting within 
     a possession other than Puerto Rico--

       ``(I) a line of business with respect to which the domestic 
     corporation is an existing credit claimant under paragraph 
     (9), or
       ``(II) an eligible line of business not described in 
     subclause (I),

     the credit determined under subsection (a)(1)(A) shall be 
     allowed for taxable years beginning after December 31, 1995, 
     and before January 1, 2002.
       ``(ii) Limitation to lines of business.--Clause (i) shall 
     only apply with respect to the lines of business described in 
     clause (i) which the domestic corporation is actively 
     conducting in a possession other than Puerto Rico during the 
     taxable year.
       ``(iii) Exception for corporations electing reduced 
     credit.--Clause (i) shall not apply to a domestic corporation 
     if such corporation (or any predecessor) had an election in 
     effect under subsection (a)(4)(B)(iii) for any taxable year 
     beginning after December 31, 1996.''
       (b) Application on Separate Line of Business Basis; 
     Eligible Line of Business.--
       (1) In general.--Section 936(j) is amended by adding at the 
     end the following new paragraph:
       ``(11) Application on line of business basis; eligible 
     lines of business.--For purposes of this section--
       ``(A) Application to separate line of business.--
       ``(i) In general.--In determining the amount of the credit 
     under subsection (a)(1)(A) for a corporation to which 
     paragraph (2)(A) applies, this section shall be applied 
     separately with respect to each substantial line of business 
     of the corporation.
       ``(ii) Exceptions for existing credit claimant.--This 
     paragraph shall not apply to a line of business with respect 
     to which the qualified domestic corporation is an existing 
     credit claimant under paragraph (9).
       ``(iii) Allocation.--The Secretary shall prescribe rules 
     necessary to carry out the purposes of this subparagraph, 
     including rules--

       ``(I) for the allocation of items of income, gain, 
     deduction, and loss for purposes of determining taxable 
     income under subsection (a)(1)(A), and
       ``(II) for the allocation of wages, fringe benefit 
     expenses, and depreciation allowances for purposes of 
     applying the limitations under subsection (a)(4)(A).

       ``(B) Eligible line of business.--For purposes of this 
     subsection, the term `eligible line of business' means a 
     substantial line of business in any of the following trades 
     or businesses:
       ``(i) Manufacturing.
       ``(ii) Agriculture.
       ``(iii) Forestry.
       ``(iv) Fishing.''
       (2) New lines of business.--Section 936(j)(9)(B) is amended 
     to read as follows:
       ``(B) New lines of business.--A corporation shall not be 
     treated as an existing credit claimant with respect to any 
     substantial new line of business which is added after October 
     13, 1995, unless such addition is pursuant to an acquisition 
     described in subparagraph (A)(ii).''
       (3) Separate lines of business.--Section 936(j), as amended 
     by paragraph (1), is amended by adding at the end the 
     following new paragraph:
       ``(12) Substantial line of business.--For purposes of this 
     subsection (other than paragraph (9)(B) thereof), the 
     determination of whether a line of business is a substantial 
     line of business shall be determined by reference to 2-digit 
     codes under the North American Industry Classification System 
     (62 Fed. Reg. 17288 et seq., formerly known as `SIC 
     codes').''
       (c) Repeal of Base Period Cap for Economic Activity 
     Credit.--
       (1) In general.--Section 936(j)(3) is amended to read as 
     follows:
       ``(3) Additional restricted reduced credit.--
       ``(A) In general.--In the case of an existing credit 
     claimant to which paragraph (2)(B) applies, the credit 
     determined under subsection (a)(1)(A) shall be allowed for 
     any taxable year beginning after December 31, 1997, and 
     before January 1, 2006, except that the aggregate amount of 
     taxable income taken into account under subsection (a)(1)(A) 
     for such taxable year shall not exceed the adjusted base 
     period income of such claimant.
       ``(B) Coordination with subsection (a)(4)(b).--The amount 
     of income described in subsection (a)(1)(A) which is taken 
     into account in applying subsection (a)(4)(B) shall be such 
     income as reduced under this paragraph.''
       (2) Conforming amendment.--Section 936(j)(2)(A), as amended 
     by subsection (a), is amended by striking ``2002'' and 
     inserting ``2006''.
       (d) Application of Credit.--
       (1) In general.--Section 936(j)(2)(A), as amended by this 
     section, is amended by striking ``January 1, 2006'' and 
     inserting ``the termination date''.
       (2) Special rules for applicable possessions.--Section 
     936(j)(8)(A) is amended to read as follows:
       ``(A) In general.--In the case of an applicable 
     possession--
       ``(i) this section (other than the preceding paragraphs of 
     this subsection) shall not apply for taxable years beginning 
     after December 31, 1995, and before January 1, 2006, with 
     respect to any substantial line of business actively 
     conducted in such possession by a domestic corporation which 
     is an existing credit claimant with respect to such line of 
     business, and
       ``(ii) this section (including this subsection) shall 
     apply--

       ``(I) with respect to any substantial line of business not 
     described in clause (i) for taxable years beginning after 
     December 31, 1997, and before the termination date, and
       ``(II) with respect to any substantial line of business 
     described in clause (i) for taxable years beginning after 
     December 31, 2006, and before the termination date.''

       (3) Termination date.--Section 936(j), as amended by 
     subsection (b), is amended by adding at the end the following 
     new paragraph.
       ``(13) Termination date.--For purposes of this subsection--
       ``(A) In general.--The termination date for any possession 
     other than Puerto Rico is the first day of the 4th calendar 
     year following the close of the first period for which a 
     certification is issued by the Secretary under subparagraph 
     (B).
       ``(B) Certification.--
       ``(i) In general.--The Secretary shall issue a 
     certification for a possession under this subparagraph for 
     the first 3-consecutive calendar year period beginning after 
     December 31, 1997, for which the Secretary determines that 
     the possession has met the requirements of clause (ii) for 
     each calendar year within the period.
       ``(ii) Requirements.--The requirements of this clause are 
     met with respect to a possession for any calendar year if--

       ``(I) the average monthly rate of unemployment in the 
     possession does not exceed 150 percent of the average monthly 
     rate of unemployment for the United States for such year,
       ``(II) the per capita income of the possession is at least 
     66 percent of the per capita income of the United States, and
       ``(III) the poverty level within the possession does not 
     exceed 30 percent.''

       (e) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years beginning after December 31, 1997.
       (2) New lines of business.--The amendment made by 
     subsection (b)(2) shall apply to taxable years beginning 
     after December 31, 1995.

  Mr. MOYNIHAN. Mr. President, today I am joining Senator D'Amato, 
along with Senators Chafee, Breaux, Hatch and Graham, in introducing 
bipartisan legislation to improve the existing tax credit for providing 
employment in Puerto Rico.
  Economic conditions in Puerto Rico are cause for serious concern. 
Over half of the population lives below the poverty line. Puerto Rico's 
average annual per capita income of approximately $7,500 is less than 
one-third the national average. Its average unemployment rate is well 
over twice the national average of 4.8 percent for May 1997.
  In recent years, Congress has twice imposed significant tax increases 
on companies doing business in Puerto Rico, first in 1993 and again in 
1996. While it is unclear to what extent those tax changes will result 
in employer relocation or lost jobs, they undoubtedly have increased 
the vulnerability of the economy of Puerto Rico. Exacerbating this 
economic uncertainty, the tax changes are being phased in at the same 
time that Puerto Rico faces increased economic competition from low-
wage Caribbean countries and from Mexico.
  This legislation would respond to these serious problems by building 
on the temporary wage credit that is currently provided in the Internal 
Revenue Code. Employers generally would be eligible for a tax credit 
equal to 60 percent of wages and fringe benefit expenses for employees 
located in Puerto Rico. New as well as existing employers would be 
rewarded for providing local jobs. The credit would remain in effect 
until the attainment of specific

[[Page S5698]]

economic goals in Puerto Rico, which would trigger an automatic 
phaseout of the credit.
  I believe this investment in the long-term economic health and well-
being of Puerto Rico is imperative. It is our obligation to the people 
of Puerto Rico, who are U.S. citizens but not represented in the 
Senate, to take note and address the very serious plight of their 
economy.
  Mr. GRAHAM. Mr. President, I would like to join with my distinguished 
colleague, Senator Moynihan, the ranking member of the Finance 
Committee, along with both Republicans and Democrats on the Finance 
Committee to seek a restoration of job creation and economic growth 
incentives for U.S. businesses in Puerto Rico.
  Last year's tax legislation eliminated the longstanding incentive 
that applied in Puerto Rico: section 936. Efforts were made to replace 
section 936 with a new wage credit provision in section 30A, but even 
that provision is scheduled to expire. The legislation enacted did not 
provide for any tax benefits for new companies locating in Puerto Rico 
or existing companies expanding their operation on the island. The 
legislation we introduce today will make permanent wage credit benefits 
of section 30A to companies seeking to locate or expand their 
activities in Puerto Rico.
  Puerto Rico's economy is directly related to the economies of Florida 
and many other States. Most of the materials and many services used by 
manufacturing facilities in Puerto Rico are supplied from the States. 
Puerto Rico is also the center of economic activity for the entire 
strategic Caribbean region. Any downturn in the economy of Puerto Rico 
would have serious negative implications for the States that do 
significant business with the island as well as for the Caribbean Basin 
as a whole.
  The bill we introduce today would tie tax benefits directly to wages 
paid and investment made in Puerto Rico. It is targeted, efficient, and 
has the broad bipartisan support of the public and private sectors in 
Puerto Rico. It is a provision that we should act on now. We should not 
await a significant downturn in the Puerto Rico economy before taking 
action. It is clearly desirable and necessary to act this year if we 
are to increase economic conditions in Puerto Rico to levels consistent 
with those we should expect for all American citizens.
                                 ______
                                 
      By Mr. D'AMATO (for himself and Mr. Baucus):

  S. 907. A bill to amend the Revenue Act of 1987 to provide a 
permanent extension of the transition rule for certain publicly traded 
partnerships; to the Committee on Finance.


                          TAX CODE LEGISLATION

  Mr. D'AMATO. Mr. President, I rise today to join Senator Baucus in 
introducing legislation that will amend the Tax Code to provide a 
permanent extension of a grandfather provision contained in the Omnibus 
Budget Reconciliation Act of 1987. This 10 year grandfather provision 
was provided for publicly traded partnerships [PTP's] that were in 
existence as of December 17, 1987. A PTP is a partnership whose 
interests are traded on established securities exchanges or are readily 
tradable in secondary markets.
  Included in the Omnibus Budget Reconciliation Act of 1987 is section 
7704 of the Internal Revenue Code. The section provides that PTP's will 
generally be taxed as corporations; income or loss does not pass 
through to the partners. Section 7704 does not apply, however, to PTP's 
where 90 percent or more of their income is qualifying income, such as 
from interest, dividends, real estate, timber, oil, and gas. This 
exception applies regardless when the PTP was formed. Other PTP's in 
existence when section 7704 was enacted were grandfathered, but only 
for 10 years, through 1997. Our legislation would extend the 
grandfather provision permanently.
  The purpose of section 7704 according to the committee reports was 
intended to stop the long term erosion of the corporate tax base. There 
was a concern that much of corporate America would convert to PTP's 
resulting in a decline of corporate tax revenues.
  This purpose has been achieved because of the prospective application 
of that section. There were approximately 120 PTP's in existence in 
1987 and because of the legislation the number of PTP's did not 
snowball. Permanently grandfathering PTP's would not defeat the purpose 
of the 1987 legislation since the grandfather applies only to those 
PTP's that were in existence at the time of the 1987 legislation.
  Fairness to the owners of the PTP's that were grandfathered during 
the Omnibus Budget Reconciliation Act of 1987 is an important issue. 
The conversion from a corporation to a PTP was a costly and time-
consuming process. The companies that converted to PTP form relied on 
the expectation that they would be able to operate as partnerships as 
long as they wanted. The conversion process involved consultation with 
investment bankers, appraisals, planning by corporate finance, 
securities and tax lawyers, multiple filings with the Securities and 
Exchange Commission and State securities agencies, proxy statements and 
shareholder votes, et cetera. This process would not have been started 
or completed had there been any reasonable prospect that a change in 
the tax law would have applied retroactively or after a limited period 
of time. Failure to pass this legislation will be punishing PTPs that 
played by the rules.

  If the grandfather is not made permanent many of these same costs 
will be incurred once again. Grandfathered PTP's will be forced to 
convert to corporate form by January 1998. To do so will require 
lengthy planning, and the same investment banking advice, appraisals 
and attorney fees. The need for extensive, advance planning makes it 
essential that the matter be resolved this year. These PTP's relied on 
the law in effect before passage of the 1987 act and it is unreasonable 
and unfair to now force these PTP's to undergo this expensive, time 
consuming process to convert to corporate form. No public purpose will 
be served by such forced conversions.
  The loss of the grandfather will hurt PTP investors and employees of 
the companies. The value of PTP units will decline if the grandfather 
is not permanently implemented. Most of these investors are average, 
middle-class taxpayers who have invested in PTP units oftentimes 
through an individual retirement account, because of the desire for a 
safe, liquid investment. As PTP units decline in value, a company's 
ability to expand will be negatively affected and the employees will 
suffer.
  We do not achieve any tax policy goal by honoring the 10-year 
grandfather. That goal was fully achieved by making section 7704 apply 
prospectively. Instead, all we would accomplish by not making the 
grandfather provision permanent would be harm to these PTP's and their 
investors. The PTP's operate in all 50 States affecting many of our 
districts and include a wide variety of industries, from motels and 
restaurants to chemicals and financial advising. The most recent count 
indicates that there are well over 300,000 individual investors.
  Mr. President, I urge my colleagues on both sides of the aisle to 
join me and Senator Baucus in cosponsoring this important legislation.
  Mr. President, I ask unanimous consent that the complete text 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. 907

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

     SECTION 1. PERMANENT EXTENSION OF TRANSITION RULE FOR CERTAIN 
                   PUBLICLY TRADED PARTNERSHIPS.

       (a) In General.--Paragraph (1) of section 10211(c) of the 
     Revenue Act of 1987 (Public Law 100-203) is amended to read 
     as follows:
       ``(1) In general.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1987, except that such amendments shall not apply to any 
     existing partnership.''
       (b) Effective Date.--The amendment made by this section 
     shall take effect as if included in the provisions of section 
     10211 of the Revenue Act of 1987.

  Mr. BAUCUS. Mr. President, I am pleased to join with my colleague, 
Senator D'Amato, in introducing this legislation, which would 
permanently extend the 10-year grandfather for publicly traded 
partnerships [PTP's].
  PTP's were first created in the early 1980's for the purpose of 
combining the traditional limited partnership form with the ability to 
have the partnership units freely traded on established securities or 
secondary markets. When Congress enacted the Omnibus Budget 
Reconciliation Act of 1987, it included a

[[Page S5699]]

provision which reversed existing law at the time by requiring that 
PTP's would generally be treated as corporations for income tax 
purposes. The act completely exempted certain types of PTP's from the 
law, primarily those whose income is derived from resources such as 
timber, oil and gas, minerals, and real estate. PTP's which did not 
meet the criteria were given a 10-year transition period, after which 
they would no longer be exempted from the new requirements. This 
transition period, the grandfather, expires at the end of 1997. Our 
bill would extend it permanently.
  Mr. President, there is no public or tax policy reason for treating 
the grandfathered PTP's differently than those completely exempted from 
the law. All of the PTP's relied upon the law that was in effect when 
they were created. They are all similarly structured and deserve the 
same right to preserve their partnership status, regardless of the line 
of business in which they operate. There are only 27 of them remaining, 
and they are involved in a wide variety of industries, from motels and 
restaurants to chemicals, financial advising and macadamia nuts. They 
went through a costly and time-consuming process in order to convert 
from a corporation to a PTP in the first place, and will incur many of 
the same costs if they are now required to convert back to corporate 
form when the grandfather expires in January.
  More importantly, I am concerned about the effect that the loss of 
the grandfather will have on PTP investors. It is a virtual certainty 
that the value of PTP units will be adversely affected if the 
grandfather expires, reducing the value of the investor's holdings. 
Most of these investors are average, middle-class taxpayers, many of 
them elderly, who invested in PTP units because of their high yield. 
They are scattered throughout the country, and at last count numbered 
over 300,000. Many made this investment before the 1987 act was passed.
  There is no tax policy goal that will be achieved by allowing the 
grandfather to expire. That goal was fully achieved by making the law 
apply prospectively. All we accomplish is inflicting harm on these 
PTP's and their investors, without their having done anything illegal 
or improper when they were created. With this action, all remaining 
PTP's would be treated uniformly under the law. If the legislation is 
incorporated into this year's reconciliation bill, it will be as a 
revenue-neutral measure.
                                 ______
                                 
      By Mr. SMITH of Oregon (for himself and Mr. Wyden):
  S. 908. A bill to authorize the Secretary of the Interior to 
participate in a water conservation project with the Tumalo Irrigation 
District, OR; to the Committee on Energy and Natural Resources.


THE TUMALO IRRIGATION DISTRICT WATER CONSERVATION PROJECT AUTHORIZATION 
                                  ACT

  Mr. SMITH of Oregon. Mr. President, I am today introducing 
legislation to authorize financial assistance to the Tumalo Irrigation 
District for the construction of water system improvements for the 
purposes of efficient utilization of water and to increase water for 
in-stream flows in Tumalo Creek and the Deschutes River basin.
  The district will conserve approximately 40,000 acre feet of water 
per year upon completion of the project. This conservation will allow 
the diversions from the Deschutes River and Tumalo Creek to be reduced 
by about 32,000 acre-feet. This increased in-stream waterflow will 
improve water quality, fisheries, increase opportunities for 
recreation, and enhance fire protection with the possible installation 
of hydrants.
  This legislation also has the added benefit of local funding with 50 
percent coming from the district, State, and community. This project 
will be completed in phases with the recommended total appropriation at 
$15,000,000.
  I am proud of the district's work to improve in-stream flows. This is 
a positive solution to the inefficient and environmentally unsound 
system now in place. Oregon has long demonstrated its ability to 
identify innovative and progressive solutions, and I believe that this 
legislation will allow the Tumalo Irrigation District to proudly 
continue that tradition.
  Mr. President, I ask unanimous consent that a copy of the bill be 
inserted in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 908

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress Assembled, That this 
     Act may be cited as the ``Tumalo Irrigation District Water 
     Conservation Project Authorization Act''.
       Sec. 2. At the request of the Tumalo Irrigation District, 
     Oregon, the Secretary of the Interior may participate in the 
     design, planning, and construction of a comprehensive water 
     conservation project by the District. The federal share of 
     the costs of such project may not exceed 50 percent.
       Sec. 3. There are authorized to be appropriated to the 
     Secretary of the Interior, plus or minus such amounts as may 
     be justified by reason of ordinary fluctuations of applicable 
     cost indexes, not to exceed $15,000,000 for the federal share 
     of costs related to the project.
                                 ______
                                 
      By Mr. McCAIN (for himself, Mr. Kerrey, and Mr. Hollings):

  S. 909. A bill to encourage and facilitate the creation of secure 
public networks for communication, commerce, education, medicine, and 
government; to the Committee on Commerce, Science, and Transportation.


                       Secure Public Networks Act

  Mr. KERREY. Mr. President, earlier, I sent to the desk a bill that I 
introduced on behalf of myself, Senator McCain of Arizona, Senator John 
Kerry of Massachusetts, and Senator Fritz Hollings of South Carolina. 
The bill is called the Secure Public Networks Act of 1997, and it 
establishes as a priority that we are going to try with our law to 
develop a mechanism whereby, in collaboration with the private sector, 
the U.S. Government can work to secure these public networks upon which 
our commerce depends, our Government operations depend, and 
increasingly our national security depends.
  Secure public networks are essential to the protection of personal 
privacy and the promotion of commerce on the Internet and other 
communications networks. Without trust in the system, the Internet will 
never reach its full potential as a new form of communications in 
commerce.
  I believe there is an urgent need to enact legislation this year 
which can promote the creation and use of new networks, provide the 
security American citizens require in their communications and balance 
America's compelling interest in commerce and public safety.
  Congress has been gridlocked for more than a year in the debate about 
the Nation's export policy for encryption products. Our Nation's policy 
on encryption is only a single piece of the puzzle, however. We need to 
ensure that the whole system of our public communications networks 
provides the security required.
  There are three large interests, as I see it, at stake in this entire 
debate. One of the reasons there is an urgency to develop new 
legislation and enact new legislation that the President will be able 
to sign this year is that unless these networks are secure, we risk all 
three.
  The first is in the area of commerce. The increasing amount of 
business that is being done on the network and the failure to be able 
to establish security on an international basis risks the full 
development potential of commercial networks.
  The second is in the area of Government operations itself. Not only 
are there concerns in the private sector but on the Government side, 
from the Internal Revenue Service even to the operations of schools, 
that we need to have a secure public network. Obviously, if we are 
going to develop fully the electronic filing system--and for 
colleagues' reference, less than 1 percent error rate occurs in 
electronic filing, where nearly a 25-percent filing rate occurs in 
paper filing, there is a potential for saving money.
  In addition to that, there is an increasing amount of education that 
is occurring on the network, once again offering a tremendous amount of 
savings for individuals who look for ways to leverage intellectual 
property and increase the efficiency of education. You need look no 
further than what is going on now in the area of education on the 
network, but it needs to be secure.

[[Page S5700]]

  In the area of law enforcement, again, there is an offensive and 
defensive capability, and I am addressing at this instance the 
defensive capability, our ability to be able to communicate, for 
national security reasons, and our ability to be able to communicate 
for law enforcement reasons and know those communications are secure is 
the first order of business of the Secure Public Networks Act of 1997.
  Our commercial interests, Mr. President, lie in maintaining American 
companies' leading position as producers of software and in the 
promotion of commerce on-line on the Internet. I do not believe we can 
fully achieve either of these objectives if the current law remains 
unchanged.
  Second, the American people should be able to have secure access to 
their Government, as I indicated before, not just with the IRS, but 
also a whole range of other services, including the Government job of 
educating our people. There is a tremendous requirement in every single 
operation of Government for the consumer of those services to know that 
their communication is secure, that there is no manipulation of the 
data, no transference of that data.
  And as I said, again, thirdly, there is a public safety interest in 
meeting the needs of law enforcement and national defense. Here a 
secure public network can provide both defensive and offensive 
security.
  Mr. President, the greatest threat to our citizens' privacy is very 
often described by some advocates of change as being the Government. 
They are afraid of the Government interfering with their privacy. But I 
urge my colleagues to consider what the marketplace sees out there, 
which is that increasingly it is the private-sector interests that are 
the greatest threat to the privacy of citizens.
  For example, the FBI reported last month that a hacker collected 
100,000 credit card numbers from an Internet provider and then 
attempted to sell these numbers for cash. This is a private-sector 
individual out there, obviously very skilled. These hackers and 
crackers are skilled way beyond my capacity to understand what they are 
doing, except to know that they have the ability to come in and steal 
information that has great value, to manipulate that data and do not 
just a little bit of mischief but put our commercial and our national 
security interests at risk.
  There was a story in the New York Times last week, Mr. President, 
that detailed the trauma and the horror faced in 1994 by a Texas woman 
who received a letter full of threatening sexual comments from an 
inmate in a Texas prison. She asked the question, ``How did this inmate 
get access to the information?'' and was surprised to discover that her 
personal life had become available as a result of a private-sector 
company's use of Texas inmates to do input into their data bases.
  There was another example in this same article about a 1993 employee 
at a car dealership in New Jersey using their company's access to 
credit information to open false accounts in their customers' names and 
charging up thousands of dollars of merchandise with the fraudulent 
cards.
  Another example, in 1995, a convicted child rapist, working in a 
Boston hospital, used a former fellow employee's password to access 
information on the hospital's patients. He found the phone numbers of 
young patients in the area, and then made obscene phone calls to girls 
as young as 8 years old.
  There are many other examples that one could give. The point that I 
am trying to make, Mr. President, is, as this debate unfolds, one of 
the things you will hear immediately is that this legislation is an 
attempt by Government to gain access over the privacy of individuals. 
That is simply not true. There is protection after protection after 
protection in this legislation guarding against that.
  This is an attempt to tighten up the security so that we know that a 
private individual, as I indicated here earlier with three or four 
examples, does not have the opportunity to either come in and intercept 
your communication or go into your data base and retrieve information 
that they will use against you or manipulate a data base so as to 
engage in fraudulent transactions that could cost not only the 
companies but could cost the individual substantial amounts of money.
  To provide privacy protection and help prevent abuse of public 
networks, the Secure Public Networks Act makes it illegal for a person 
to use encryption to commit a crime; to exceed lawful authority in 
decrypting data or communications; to break the encryption code of 
another for the purpose of violating privacy, security, and property 
rights; to steal intellectual property on a public communications 
network; and to misuse key recovery information.

  This act fully protects and strengthens the privacy rights of the 
individual without damaging the interest of public safety. Law 
enforcement will be granted access to key recovery information only if 
they have authority based on existing statute, rule or law. Audits will 
be performed by the Department of Justice which will ensure this 
process is not circumvented or abused, and I would expect these audits 
to be available to the appropriate congressional oversight committees.
  Both the Government and the private sector need to work together to 
create the infrastructure and technology that will give the users total 
confidence in the security of commercial transactions and personal 
communications. As the largest purchaser of computer software and 
hardware, the Federal Government can create important incentives to 
help the market fulfill this need.
  The idea here, Mr. President, is to say that the Federal law can 
provide incentives for market-based solutions. It will be for the most 
part the market that solves these problems and determines what kind of 
technology will be used in the solution of these problems. The Secure 
Public Networks Act of 1997, however, provides a framework and some 
standardization to make certain that we expedite that happening.
  This act also sets up a voluntary registration system for public key 
certificate authorities and key recovery agents which help build 
confidence in the secure public network. Since the Internet is 
international and online commerce will be worldwide, the United States 
alone cannot develop a secure public network on the scale necessary to 
address this technology. Our legislation therefore, Mr. President, 
calls on the President to continue consultations and negotiations with 
foreign countries to ensure secure public networks are built on a 
global scale.
  The Secure Public Networks Act creates an advisory panel with 
industry representatives to assist the Government in adapting policies 
to meet changing technology and changing commercial situations. This 
panel will also advise the Secretary of Commerce on the commercial 
situation American companies face overseas and recommend changes in 
U.S. policy to assist industry.
  The act also calls for additional Federal research to facilitate the 
creation of secure public networks and the cooperation and coordination 
of departments and agencies on both Federal and State levels to ensure 
the development of secure public networks.
  Mr. President, I believe the Secure Public Networks Act of 1997 will 
move our Nation closer to secure computer and telecommunications 
networks and help resolve the debate on encryption as well. The 
alternative to the rule of law in this dynamic area is chaos and 
anarchy, a condition which will prevent Internet-type networks from 
reaching their full potential and which will hurt the interests of 
industry, the interests of the public, and the interests of law 
enforcement and national security. Congress' duty to make laws to 
strengthen these networks is clear. I suggest we set a public goal of 
getting a bill to the President by October 1. I believe if we set a 
goal of this kind and stick to it, we will enable not only the market 
to develop, but it will enable us to provide the security needed for us 
to be able to move Government operations into the new paradigm of 
network activity.
                                 ______
                                 
      By Mr. FRIST:
  S. 910. A bill to authorize appropriations for carrying out the 
Earthquake Hazard Reduction Act of 1977 for fiscal years 1998 and 1999, 
and for other purposes; to the Committee on Commerce, Science, and 
Transportation.

[[Page S5701]]

 the 1998-99 reauthorization of the earthquake hazard reduction act of 
                                  1997

  Mr. FRIST. Mr. President, I rise today to offer the 1998-99 
Reauthorization of the Earthquake Hazard Reduction Act of 1977. This 
piece of legislation reauthorizes the agencies that are working to 
reduce earthquake hazards throughout the Nation. These four agencies: 
The Federal Emergency Management Agency [FEMA], which serves as the 
lead agency, the U.S. Geological Survey [USGS], National Science 
Foundation [NSF], and National Institute of Standards and Technology 
[NIST], each play a critical role in this important mission.
  This bill continues the funding for agency activities including 
research, hazard assessment, and public education, and moves these 
activities forward. It also builds upon the national seismic network, 
improving its capability, and forming the basis for a real-time seismic 
hazard warning system. A real-time warning system has the potential for 
saving lives by alerting people outside the immediate area of an 
impending seismic shock. Advance warning can be critical in preventing 
injury in many sectors of modern life, such as high-speed trail 
transportation.
  This reauthorization has an important provision which underscores our 
commitment to education. This bill would let NSF create and disseminate 
Earth science educational materials in a way that permits easy access 
by educators and the general public. Acknowledging that FEMA and NSF 
have both done an outstanding job in creating educational material, we 
are looking for continued cooperation of all the agencies, one of the 
hallmarks of the National Earthquake Hazard Reduction Program [NEHRP].
  Mr. President, I believe that the passage of this legislation will 
continue of the good work that these four agencies have been 
undertaking--work that saves property, but most importantly, saves 
American lives.
  I ask unanimous consent that the full text of this legislation be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 910

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

     SECTION 1. AUTHORIZATION OF APPROPRIATIONS.

       Section 12 of the Earthquake Hazards Reduction Act of 1977 
     (42 U.S.C. 7706) is amended--
       (1) in subsection (a)(7)--
       (A) by striking ``and'' after ``1995,''; and
       (B) by inserting before the period at the end the 
     following: ``, $19,228,000 for the fiscal year ending 
     September 30, 1998, and $19,804,000 for the fiscal year 
     ending September 30, 1999'';
       (2) in subsection (b)--
       (A) by striking ``and'' after ``September 30, 1995;''; and
       (B) by inserting before the period at the end the 
     following: ``; $51,142,000 for the fiscal year ending 
     September 30, 1998; and $52,676,000 for the fiscal year 
     ending September 30, 1999'';
       (3) in subsection (c)--
       (A) by striking ``and'' at the end of paragraph (1); and
       (B) by inserting before the period at the end the 
     following: ``, (3) $18,450,000 for engineering research and 
     $11,920,000 for geosciences research for the fiscal year 
     ending September 30, 1998, and (4) $19,000,000 for 
     engineering research and $12,280,000 for geosciences research 
     for the fiscal year ending September 30, 1999''; and
       (4) in the last sentence of subsection (d)--
       (A) by striking ``and'' after ``September 30, 1995,''; and
       (B) by inserting before the period at the end the 
     following: ``, $2,000,000 for the fiscal year ending 
     September 30, 1998, and $2,060,000 for the fiscal year ending 
     September 30, 1999''.

     SEC. 2. REAL-TIME SEISMIC HAZARD WARNING SYSTEM DEVELOPMENT 
                   AND PHASED DEPLOYMENT.

       (a) Automatic Seismic Warning System Development and Phased 
     Deployment.--
       (1) Definitions.--In this section:
       (A) Director.--The term ``Director'' means the Director of 
     the United States Geological Survey.
       (B) High-risk activity.--The term ``high-risk activity'' 
     means an activity that may be adversely affected by a 
     moderate to severe seismic event (as determined by the 
     Director). The term includes high-speed rail transportation.
       (C) Real-time seismic warning system.--The term ``real-time 
     seismic warning system'' means a system that issues warnings 
     in real-time from a network of seismic sensors to a set of 
     analysis processors, directly to receivers related to high-
     risk activities.
       (2) In general.--The Director shall conduct a program to 
     develop and deploy a real-time seismic warning system. The 
     Director may use funds made available to the Director 
     pursuant to this section to provide for a joint program with 
     an entity that the Director determines to be appropriate to 
     develop and deploy a real-time seismic warning system. The 
     Director may enter into such agreements or contracts as may 
     be necessary to carry out the program.
       (3) Upgrade of seismic sensors.--In carrying out a program 
     under paragraph (2), in order to increase the accuracy and 
     speed of seismic event analysis to provide for timely warning 
     signals, the Director shall provide for the upgrading of the 
     network of seismic sensors in existence at the time of the 
     establishment of the program to increase the capability of 
     the sensors--
       (A) to measure accurately large magnitude seismic events 
     (as determined by the Director); and
       (B) to acquire additional parametric data.
       (4) Development of communications and computation 
     infrastructure.--In carrying out a program under paragraph 
     (2), the Director shall develop a communications and 
     computation infrastructure that is necessary--
       (A) to process the data obtained from the upgraded seismic 
     sensor network referred to in paragraph (3); and
       (B) to provide for, and carry out, such communications 
     engineering and development as is necessary to facilitate--
       (i) the timely flow of data within a real-time seismic 
     hazard warning system; and
       (ii) the issuance of warnings to receivers related to high-
     risk activities.
       (5) Procurement of computer hardware and computer 
     software.--In carrying out a program under paragraph (2), the 
     Director shall procure such computer hardware and computer 
     software as may be necessary to carry out the program.
       (6) Reports on progress.--
       (A) In general.--Not later than 120 days after the date of 
     enactment of this Act, the Director shall prepare and submit 
     to Congress a report that contains a plan for implementing a 
     real-time seismic hazard warning system.
       (B) Additional reports.--Not later than 1 year after the 
     date on which the Director submits the report under 
     subparagraph (A), and annually thereafter, the Director shall 
     prepare and submit to Congress a report that summarizes the 
     progress of the Director in implementing the plan referred to 
     in subparagraph (A).
       (7) Authorization of appropriations.--In addition to the 
     amounts made available to the Director under section 12(b) of 
     the Earthquake Hazards Reduction Act of 1977 (42 U.S.C. 
     7706(b)), there are authorized to be appropriated to the 
     Department of the Interior, to be used by the Director to 
     carry out this section, $10,000,000 for each of fiscal years 
     1998 and 1999.
       (b) Earth Science Teaching Materials.--
       (1) Definitions.--In this subsection:
       (A) Local educational agency.--The term ``local educational 
     agency'' has the meaning given that term in section 14101 of 
     the Elementary and Secondary Education Act of 1965 (20 U.S.C. 
     8801).
       (B) School.--The term ``school'' means a nonprofit 
     institutional day or residential school that provides 
     education for any of the grades kindergarten through grade 
     12.
       (2) Teaching materials.--In a manner consistent with the 
     requirement under section 5(b)(4)(B) of the Earthquake 
     Hazards Reduction Act of 1977 (42 U.S.C. 7704(b)(4)(B)) and 
     subject to a merit based competitive process, the Director of 
     the National Science Foundation may use funds made available 
     to the Director under section 12(c) of such Act (42 U.S.C. 
     7706(c)) to develop, and make available to schools and local 
     educational agencies for use by schools, at a minimal cost, 
     earth science teaching materials that are designed to meet 
     the needs of elementary and secondary school teachers and 
     students.
       (c) Improved Seismic Hazard Assessment.--
       (1) In general.--As soon as practicable after the date of 
     enactment of this Act, the Director shall conduct a project 
     to improve the seismic hazard assessment of the seismic zone 
     in East Tennessee that is described in paragraph (2).
       (2) East tennessee seismic zone.--The seismic zone 
     described in this paragraph is the seismic zone located in 
     East Tennessee, that underlies the Oak Ridge National 
     Laboratory in Oak Ridge, Tennessee and the Watts Bar nuclear 
     plant that is operated by the Tennessee Valley Authority.
       (3) Reports.--
       (A) In general.--Not later than 1 year after the date of 
     enactment of this Act, and annually during the period of the 
     assessment, the Director shall prepare, and submit to 
     Congress a report on the findings of the assessment.
       (B) Final report.--Not later than 60 days after the date of 
     termination of the assessment conducted under this 
     subsection, the Director shall prepare and submit to Congress 
     a report concerning the findings of the assessment.
       (4) Authorization of appropriations.--In addition to the 
     amounts made available to the Director under section 12(b) of 
     the Earthquake Hazards Reduction Act of 1977 (42 U.S.C. 
     7706(b)), there are authorized to be appropriated to the 
     Department of the Interior, to be used by the Director to 
     carry out this section--
       (A) $700,000 for fiscal year 1998; and
       (B) $1,000,000 for fiscal year 1999.

[[Page S5702]]

                                 ______
                                 
      By Mr. TORRICELLI:
  S. 911. A bill to amend the Internal Revenue Code of 1986 to allow a 
credit against income tax to individuals who are active participants in 
neighborhood crime watch organizations which actively involve the 
community in the reduction of local crime; to the Committee on Finance.

            taking back our neighborhoods crime fighting act

  Mr. TORRICELLI. Mr. President, I rise today to introduce the Taking 
Back Our Neighborhoods Crime Fighting Act. This bill has already been 
introduced in the House by Representative Bob Filner, and I thank him 
for his efforts in crafting this innovative and exciting approach to 
neighborhood crime fighting.
  Mr. President, this is a very simple bill. Our legislation would 
provide a $50 tax credit to any American who actively participates in a 
Neighborhood Watch or other local crime fighting program. These local, 
citizen-run initiatives have proven extremely effective in reducing 
crime and restoring confidence in the safety of our local communities.
  Neighborhood Watch programs empower residents and bring neighbors 
together, creating a renewed sense of community, and common purpose. 
Working hand in hand with law enforcement, these groups are a vital 
part of the community policing which has been so successful in 
dramatically reducing crime over the last few years. It is no wonder 
that this tax credit proposal has received support from hundreds of 
public officials, including dozens of big city mayors, local sheriffs, 
police chiefs, and district attorneys.
  Mr. President, by providing this tax credit, we focus attention on 
the benefits of these local programs, and we reward those who already 
participate with a small token of appreciation. But more importantly, 
we also provide one more incentive to those who may have been reluctant 
to join a local group, or perhaps just didn't take the time to look 
into it. We hope that this additional incentive will create the final 
push needed to encourage everyone in our communities to join in the 
effort to stop crime and take back our streets.
  Even if people intend to go just a couple of times in order to 
qualify for the tax credit, I am certain that many of them will become 
active and lifelong participants once they are exposed to what 
Neighborhood Watch is all about.
  Mr. President, just a few months ago I traveled to a Newark townhouse 
and paid a visit to a courageous woman named Donna Cherry. Tired of the 
violence and the gunshots plaguing her neighborhood, Donna Cherry took 
matters into her own hands and formed a neighborhood watch organization 
to protect her community. Starting within her own townhouse complex, 
she and the group soon set their sights on surrounding areas. Members 
of the group patrol the streets, log and report suspicious activity, 
and plan youth conferences to educate local children about cooperation 
and making the right choices. By their actions--indeed simply by their 
visible presence on the streets of their community--these people 
undoubtedly deter crime.
  When I visited that neighborhood in March, I assured the group that 
the Federal Government would always stand behind efforts within 
communities to cooperate in the fight against crime--valiant efforts to 
save communities should not fail for lack of resources. We already 
provide indirect Federal funding for many of these groups, but funding 
is useless without the people to use it efficiently. Our bill will 
provide one more tool for community leaders like Donna Cherry to 
recruit new members and clean up our communities.
  Mr. President, I urge my colleagues to join me in supporting this 
economical and exciting bill to encourage local crime fighting. Every 
step we take towards encouraging citizen action is a step toward the 
reduction of crime in our communities. 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. 911

       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 ``Taking Back Our 
     Neighborhoods Crime Fighting Act''.

     SEC. 2. CREDIT FOR INDIVIDUALS WHO ARE ACTIVE PARTICIPANTS IN 
                   NEIGHBORHOOD CRIME WATCH ORGANIZATIONS WHICH 
                   ACTIVELY INVOLVE THE COMMUNITY IN THE REDUCTION 
                   OF LOCAL CRIME.

       (a) In General.--Subpart A of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 (relating to 
     nonrefundable personal credits) is amended by inserting after 
     section 23 the following new section:

     ``SEC. 24. ACTIVE PARTICIPANTS IN NEIGHBORHOOD CRIME WATCH 
                   ORGANIZATIONS WHICH ACTIVELY INVOLVE THE 
                   COMMUNITY IN THE REDUCTION OF LOCAL CRIME.

       ``(a) General Rule.--In the case of an individual who is an 
     active participant during the taxable year in a neighborhood 
     crime watch organization which actively involves the 
     community in the reduction of local crime, there shall be 
     allowed as a credit against the tax imposed by this chapter 
     for such taxable year the amount of $50.
       ``(b) Active Participant.--For purposes of subsection (a), 
     the term `active participant' means any individual who 
     attends during the taxable year at least 2 meetings of an 
     organization referred to in subsection (a) at which 
     instruction is given by a local law enforcement officer on 
     how individuals may best and lawfully--
       ``(1) protect themselves and their community against crime, 
     and
       ``(2) assist local law enforcement officials in preventing 
     crime.''
       (b) Clerical Amendment.--The table of sections for such 
     subpart A is amended by inserting after the item relating to 
     section 23 the following new item:

``Sec. 24 Active participants in neighborhood crime watch organizations 
              which actively involve the community in the reduction of 
              local crime.''

  (c) Effective Date.--The amendments made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.
                                 ______
                                 
      By Mr. BOND:
  S. 912. A bill to provide for certain military retirees and 
dependents a special medicare part B enrollment period during which the 
late enrollment penalty is waived and a special medigap open period 
during which no underwriting is permitted; to the Committee on Finance.


                      medicare part b legislation

  Mr. BOND. Mr. President, I rise today to introduce a measure that 
would provide for certain military retirees a special Medicare part B 
enrollment period during which the late enrollment penalty is waived.
  Major changes in the Department of Defense's [DOD] health care 
delivery system, including the introduction of a managed care program 
called TRICARE and the closing or downsizing of many military medical 
facilities, have hindered access to health care services for older 
military retirees, or those aged 65 and over. It is important to note 
that the TRICARE Program was designed for active duty and CHAMPUS 
eligible beneficiaries and the overall intent is for those aged 65 and 
older to receive their health care through the Medicare Program.
  Many of our country's military retirees moved close to bases in order 
to receive care from these facilities. Due to the fact that they had 
medical services available on base, before the implementation of 
TRICARE and base closures, many of these retirees did not sign up for 
medicare part B. Once their access was restricted, many elected to 
choose part B after the enrollment period expired and were therefore 
slapped with a penalty for signing up late. Others chose not to sign up 
at all because they were unable to afford the late enrollment penalty.
  Thus, waiving the part B penalty for those retirees who dedicated 
their lives to serving our country is a matter of justice. There was no 
way that military retirees could have anticipated the changes that have 
occurred within the DOD's health care delivery system.
  Further, these changes were completely out of their control.
  Mr. President, the Senate must act now. This measure rectifies the 
unfairness inherent in the Medicare part B penalty on certain military 
retirees and honors our Nation's commitment to those individuals who 
selflessly served our country through many years of military service. I 
look forward to the Senate's consideration of this proposal.

                          ____________________