[Congressional Record Volume 143, Number 91 (Wednesday, June 25, 1997)]
[Senate]
[Pages S6332-S6344]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   REVENUE RECONCILIATION ACT OF 1997

  Mr. ROTH addressed the Chair.
  The PRESIDING OFFICER. The Senator from Delaware is recognized.
  Mr. ROTH. Mr. President, I ask unanimous consent that the Senate now 
turn to the consideration of S. 949, the Tax Fairness Act.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  The clerk will report.
  The bill clerk read as follows:

       A bill (S. 949) to provide revenue reconciliation pursuant 
     to section 104(b) of the concurrent resolution on the budget 
     for fiscal year 1998.


[[Page S6333]]


  The Senate proceeded to consider the bill.


                         Privilege of the Floor

  Mr. ROTH. Mr. President, I ask unanimous consent that the following 
Finance Committee staff members be granted full floor access for the 
duration of floor consideration of S. 949, the Revenue Reconciliation 
Act of 1997.
  I include Mark Prater, Doug Fisher, Brig Gulya, Sam Olchyk, Rosemary 
Becchi, Tom Roesser, Joan Woodward, Julie James, Dennis Smith, and, in 
addition, I request full floor access for Ashley Miller and John Duncan 
of my personal staff.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. ROTH. Mr. President, earlier this month I read an article by Dana 
Mack, a mother and the author of a new book, ``The Assault on 
Parenthood: How Our Culture Undermines the Family.'' It was powerfully 
persuasive. Her thesis was that parents today love their families as 
much as, if not more than, ever--that today's parents are attentive and 
even more committed than those of an earlier generation but that they 
are pressed economically.
  In her studies, Ms. Mack discovered that the most serious challenges 
faced by parents today are economic challenges.
  Listen to her statistics. It costs the average American couple today 
twice--twice--the proportion of their yearly household income to pay 
the mortgage than it cost their parents; average Federal income payroll 
taxes rose from 2 percent of family earnings in 1950 to 24 percent in 
1990; health costs have skyrocketed in the past 20 years, sending 4 to 
5 million women to work for medical insurance alone.
  Consider these statistics along with the one that has been repeated 
often in the debate over real tax relief--that American families pay 
more in taxes than they do for food, clothing, and shelter combined--
and it becomes apparent how important this Taxpayer Relief Act of 1997 
is. Tax relief is no longer a partisan issue, and I was encouraged by 
the spirited cooperation that was exhibited in the Senate Finance 
Committee as we deliberated and then reported this bipartisan bill out 
of committee.
  Such a bipartisan effort allows me to stand on the floor and say 
without hype or hyperbole that today is, indeed, a historic day. It is 
historic because this proposal is truly bipartisan, and, as a 
consequence, Americans can look forward to their first significant tax 
cut in 16 years. It is historic because the Taxpayer Relief Act of 1997 
is part of a budget reconciliation that will lead our Nation to a 
balanced budget in 2002.
  And because of our efforts to ensure bipartisan cooperation, the 
Finance Committee bill we consider today contains a balanced and fair 
package of tax relief measures. It includes proposals important to both 
Democrats and Republicans, and it is structured to provide major tax 
relief--relief to America's hard working and overburdened families.
  There were three criteria that guided our work. We wanted tax relief 
for middle-income families, tax relief to promote education, and tax 
relief to stimulate economic growth, opportunity, and jobs.
  With these objectives in mind, we crafted a bill that includes a $500 
per child tax credit, and an increase in the exemption amount for 
purposes of the alternative minimum tax, a provision that will save 
millions of middle-income families from experiencing the headaches of 
AMT.
  We crafted a bill that contains tax measures to assist students and 
their parents in affording the cost of postsecondary education. These 
include the $1,500 Hope scholarship tax credit, a $2,500 student loan 
interest deduction, and a permanent extension of the tax-free treatment 
of employer-provided educational assistance.
  We also included the tax-free treatment of State-sponsored prepaid 
tuition assistance plans, a new education IRA serving both education 
and retirement needs, tax incentives for teacher training and school 
construction, and a repeal of the tax exempt bond cap.
  To promote savings, investment, and economic growth, we expanded 
IRA's. We did this by doubling the income limits on the tax deductible 
IRA so that more families can set up an IRA. We expanded the spousal 
IRA. For the first time, homemakers will be able to save up to $2,000 
annually regardless of their spouse's participation, in an employer 
pension plan. And we also created a new nondeductible IRA Plus account. 
A very important part of this IRA Plus is that it will allow penalty-
free withdrawals for first-time home purchases and periods of long-term 
unemployment. And to promote investment and jobs we included a capital 
gains tax cut, dropping the top rate to 20 percent. This will create 
new incentives for venture capital.
  For families, this bill offers relief from the estate tax, the tax 
that can rob a family of its farm or business when a father or mother 
passes away. To help these families, we raise the unified credit to $1 
million per estate by 2006, and we provide tax-free treatment for 
family-owned farms and businesses for up to $1 million.
  Each of these is an important step, Mr. President. The fact that 
these were included in a bipartisan proposal indicates that business as 
usual is changing in Washington. The Senate is willing to lay aside 
partisan politics to provide Americans with the kind of tax relief they 
need.
  As with any bipartisan effort, not everyone will be fully satisfied 
with this proposal. For my part, I would like to see greater tax 
relief, and I consider this the first in a series of steps that I hope 
will lead to deeper tax cuts and eventual long-term reform. But this 
bipartisan effort signals an important beginning, one which is built 
upon a foundation of principles we share, whether we be Republican or 
Democrat.

  Eighty-two percent of this tax relief is made up by our family tax 
cut and education assistance, priorities that we all share. As I have 
said, it represents the biggest tax cut in 16 years, tax relief that is 
focused on middle-income families.
  But beyond these major tax cuts, our proposal contains a number of 
important smaller items. These include the extension of certain 
expiring tax provisions. For example, we extend the R&D tax credit, a 
credit that helps our exporters compete in world markets to maintain 
our leading edge in several key industries.
  We make the orphan drug credit permanent and allow for contributions 
of full value of appreciated stock to charitable foundations. We also 
extend and expand the work opportunity tax credit to assist welfare 
recipients and others in getting jobs.
  The Taxpayer Relief Act of 1997 contains a package of measures to 
help the District of Columbia get on its feet, including a reduced 
capital gains tax rate and a first-time homebuyer tax credit. It 
contains a guaranteed and secure source of funding for Amtrak to enable 
our national rail passenger system to move to privatization. And it 
also has a measure allowing taxpayers to expense the cost of cleaning 
up brownfields, as well as several measures to help taxpayers who have 
been victims of floods in the Upper Midwest. And finally, we offer tax 
simplification in the pension, individual, foreign, and small business 
areas.
  Mr. President, this package includes several revenue raisers that 
partially offset the cost of the tax cut. The most prominent is an 
extension and improvement of the funding stream for our national 
aviation system and a 20-cent tax on cigarettes. Beyond these, we close 
loopholes in the foreign tax area, as well as in the area of corporate-
owned life insurance and tax shelter reporting.
  I wish to express my sincere appreciation for the spirit of 
bipartisanship that prevailed as we crafted this tax relief package. It 
has been a successful, productive experience because we have worked 
together, taking the recommendations and concerns of each member of the 
Finance Committee, as well as the recommendations of our colleagues 
outside of the committee, and we have put together a package that is 
workable, a package that will go a long ways toward offering relief, 
especially to America's overburdened middle class.
  Now, I realize that in the course of debating this proposal in the 
Chamber there will be those who stand against this bipartisan bill. In 
a partisan effort, there will be those who attack this tax relief bill. 
Before they begin their arguments, however, I want to put them on 
notice. I want them to understand that the lion's share of the

[[Page S6334]]

tax package--82 percent--goes for the family tax credit and the 
education package. Eighty-two percent is directed to middle-income 
families.
  I want them to understand that according to the Joint Committee on 
Taxation, at least three-quarters or 75 percent goes to families making 
$75,000 or less, and at least 90 percent goes to families making 
$100,000 or less.
  These are the facts, and they are understood on both sides of the 
aisle. They are understood by those who believe that the time has come 
to provide real, meaningful tax relief to hard-working families that 
have been overburdened for too long.
  They are understood by those who realize, as President Clinton has 
said, that the era of big Government is over and now Washington must 
promote an environment where the genius of enterprise and the market 
economy can sustain long-term economic growth and bring jobs and 
security to families everywhere.
  I began my remarks by quoting an article that highlights the economic 
strain placed on families today, and let me close by using three 
hypothetical Delaware families and show how the Taxpayer Relief Act of 
1997 will benefit each of them.
  Let's begin with a single mother whom we will call Judy Smith. Judy 
has two young children. She works as a legal secretary in Wilmington 
making $35,000 a year. Currently, she pays over $3,000 in Federal 
income taxes--over $3,000. Now, to put that into perspective, $3,000 is 
what her family of three will pay all year to buy the food they eat at 
home. In other words, Judy's paying the Federal Government what it 
costs to feed her family.
  Now, when the Taxpayer Relief Act of 1997 becomes law, Judy's taxes 
will be cut by $1,000--$500 for each child. A third of her Federal tax 
liability will be gone. And what can Judy do with that extra $1,000?
  I am sure she can think of a number of good uses, but if she wants--
again thanks to the Taxpayers Relief Act of 1997--Judy will be able to 
set up education IRA's for her two children.
  The second hypothetical family I want to introduce you to is a 
married couple, Jim and Julie Wilson. The Wilsons own a farm in Sussex 
County. They have three children. Jim works the farm and Julie is a 
homemaker. They earn $55,000 per year from their farm. Of that $55,000, 
they pay over $5,500 in Federal income taxes--fifty-five hundred 
dollars. That, Mr. President, is more than they will pay for all the 
food they consume at home during the year. After the Taxpayers Relief 
Act of 1997, however, the Wilson's taxes will be cut by $1,500--$500 
for each child. Julie Wilson will be able to set up a homemaker IRA to 
save for her retirement.
  If Delaware adopts a State-sponsored prepaid tuition plan, the 
Wilsons will be able to participate in the plan and save for their 
children's college education. Looking far ahead, if the farm prospers, 
Jim and Julie will be able to pass it on to their children free of the 
burden of the estate tax. All of these benefits to this middle-income 
family are contained in the Taxpayers Relief Act of 1997.
  Finally, Mr. President, let's look at a young two income couple. 
We'll call then John and Susan Jones. They live and work in Dover, DE. 
College graduates, John is a veterinarian and Susan is a physical 
therapist. They make $75,000 and have one young child. Under current 
law, the Jones family pays about $11,500 in Federal income taxes. After 
we pass the Taxpayers Relief Act of 1997, the Jones will be able to 
deduct a portion of the interest on their student loans. They will 
receive the $500 per child tax credit, and they will be able to set up 
IRA Plus accounts for themselves and an education IRA for their child.
  It is for families like these that we have created the Taxpayers 
Relief Act of 1997. It is because of its fairness that this bill 
received strong bipartisan support in committee. I believe the Finance 
Committee fairly reflects the Senate as a whole--as well as the broad 
interests and concerns of the constituents our Members represent. This 
is their package. It delivers to the American people what they asked us 
to do in the last election--a bipartisan and fair return of the fiscal 
dividend accruing from a balanced budget.
  I am grateful to all who worked so long as so well to draft this 
bill. I am grateful for Senator Moynihan's leadership, as well as for 
the other members of the committee who allowed bipartisan cooperation 
to prevail throughout the process. And again, Mr. President--as I did 
yesterday--I thank the professional capable staff of the Senate Finance 
Committee for their countless hours and lost sleep. This was, indeed, 
an heroic effort, and it is my honor to bring it to the floor.
  (Ms. COLLINS assumed the Chair.)
  Mr. BYRD. Madam President, will the Senator yield if he has completed 
his statement?
  Mr. ROTH. I will be happy to yield.
  Mr. BYRD. Will the Senator indicate what the plan is for the rest of 
the day and tomorrow?
  Mr. ROTH. It is my plan to continue for several hours this evening, 
probably until 9, 9:30, 10, come back in the morning around 9:30 and 
proceed throughout the day.
  Mr. BYRD. When you say your plan is to continue to about 9 or 9:30 
tonight--was that it?
  Mr. ROTH. That is my thought now, yes.
  Mr. BYRD. Will there be amendments called up?
  Mr. ROTH. Yes, amendments will be called up, but there will be no 
votes tonight. They will be held over until the morning.
  Mr. BYRD. What is the plan with regard to votes on tomorrow?
  Mr. ROTH. There will be votes, hopefully, throughout the day.
  Mr. BYRD. Beginning when?
  Mr. ROTH. The first vote, I think, I would say to my good friend from 
West Virginia, would start around 9:30.
  Mr. BYRD. Does the Senator plan to attempt to stack these votes this 
evening if amendments are called up?
  Mr. ROTH. Yes. It has been announced by the leader that there will be 
no more votes tonight, so if we complete debate on any amendment, it 
would be stacked in the morning.
  Mr. BYRD. I had not heard any announcement with regard to the modus 
operandi with respect to this bill, insofar as the evening is 
concerned, and actions on tomorrow.
  What I am concerned about is it appears to me we are going to get 
ourselves right back in the same situation that we were in today with 
stacked votes and only a couple of minutes for explanations and some 
Senators like myself really not knowing what is in the amendments.
  Mr. ROTH. I do not expect that many amendments to be raised tonight. 
I will say at most it will be one or two, and there will be time in the 
morning for the sponsors and opponents to review the pros and cons of 
the amendments.
  I would, of course, urge Members to bring their amendments to the 
floor.
  Mr. BYRD. I thought most Members were leaving when I saw them lined 
up for the vote. Does the Senator contemplate any point in time when 
all amendments will be presented to the Senate? Is there going to be a 
deadline of that, as to a time? I think in connection with the bill 
that was passed today, it seems to me that all amendments had to be 
offered before the close of business, or by the close of business, last 
evening. What is the plan in regard to this measure?
  Mr. ROTH. We do not have any plan at this time to say amendments have 
to be submitted by such and such a time. But, of course, as you know, 
there is a 20-hour limitation on reconciliation. So, hopefully, 
everybody will bring their amendments down early so they can be 
considered early and we can avoid the situation that we had of a lot of 
Senators bringing their amendments at the end.
  Mr. BYRD. How much time does the Senator plan to have between 
amendments on tomorrow for explanations of the stacked amendments?
  Mr. ROTH. I hadn't really considered that.
  Mr. BYRD. I am not trying to create problems for the Senator.
  Mr. ROTH. No, I understand. I would say we would give 5 minutes to a 
side.
  Mr. BYRD. Five minutes to a side?
  Mr. ROTH. Yes; 10 minutes.
  Mr. BYRD. That would be quite an improvement over what we have been 
seeing with only 2 minutes and so much noise in the Chamber it was 
difficult for Senators to hear what was being said in the 2 minutes.
  Mr. ROTH. I think the situation, of course, arose on the legislation 
we just passed upon because people did not

[[Page S6335]]

bring their amendments in until the last minute and then, under the 
rules, there is no more time. You know better than I, in a sense, 
giving 2 minutes goes beyond the rule.
  Mr. BYRD. Well, could we have a limitation on the number of 
amendments that will be called up this evening and stacked for tomorrow 
morning?
  Mr. ROTH. I suspect our real problem is going to be to get people 
down here to offer them. But I don't want to discourage anyone in the 
course, so I would prefer not to try to limit it, for that reason.
  Mr. BYRD. Yes. Does the Senator have any idea how much time is going 
to be--there is a total of 20 hours on the measure. Does the Senator 
have an idea how much time we will have of the 20 hours on tomorrow?
  Mr. ROTH. No, I can't really answer that.
  Going back to your question about tonight, if we could bring up six 
tonight, that would be a maximum and I would be pleased at that.

  Mr. BYRD. I realize the Senator is not in a position to make certain 
pronouncements that would be binding on others interested in the 
measure, but I am concerned lest we tomorrow find ourselves short of 
time; quite a number of votes that have been stacked, not much time for 
explaining those amendments and, in the final analysis, voting on the 
measures that we know very little, if anything, about. I am not talking 
about the Senator. He is on the committee. He knows what is in the 
amendments.
  Mr. ROTH. No. I appreciate what the Senator is saying.
  Mr. BYRD. I will probably have two amendments. One of my amendments--
I may offer an amendment that will attempt to extend the time on 
reconciliation measures. So I might say to the Senator, I want to be 
able to call up that amendment tomorrow, if I am able to develop one in 
the short amount of time that we have.
  I have another amendment that I have been working on, and I hope we 
could count on, say, 4 minutes equally divided between each amendment 
that is stacked, so we would get 2 minutes on a side. I find the 
explanations that are offered on amendments between votes are more 
edifying, in many instances, than the debates that went along earlier. 
Most Senators are able to capsule their remarks and focus more. But I 
really don't think a minute to a side is enough. I have seen some 
Senators cut off in the middle of sentences because the minute ran out. 
So, if we could say 4 minutes equally divided, would the Senator be 
agreeable to that?
  Mr. ROTH. I would certainly be agreeable at this stage, I would say 
to the distinguished Senator. Once we utilize the full time, it is 
something I might want to review from time to time. But I understand 
what the former majority leader is saying, and I appreciate his 
reasoning behind it.
  So, as far as the morning is concerned, I assure him there will be 4 
minutes equally divided on any amendment.
  Mr. BYRD. I believe that the rule with regard to reconciliation bills 
provides for 2 hours on any amendment.
  Mr. ROTH. I think that is correct.
  Mr. BYRD. And 1 hour on any amendment to an amendment. That being the 
case, if the Senators so chose, they could use up the 20 hours on 
several amendments.
  Mr. ROTH. That is correct. That is, I guess, part of the basic 
structure of the reconciliation. I think, to be candid, that was 
deliberately done at that time.
  Mr. BYRD. Circumstances have changed since that measure was written.
  Mr. ROTH. And we all learn from experience.
  Mr. BYRD. I had a lot to do with writing that in 1974.
  Mr. ROTH. You played a critical role.
  Mr. BYRD. Things were different then. If I could foresee what I now 
see, looking backward, I probably would have changed it a little bit. 
But, in any event, I thank the distinguished Senator. I didn't want to 
intrude on his time or impose on him, but I am just concerned, as I 
said today, and frustrated--without complaining about any individual. I 
don't find fault with any individual.
  Mr. ROTH. I fully understand.
  Mr. BYRD. Every individual is acting in good faith. With that 
understanding that we will have 4 minutes equally divided between each 
amendment and there is no deadline at this point in time drawn with 
regard to the offering of amendments, I will yield the floor.
  Mr. ROTH. I agree that on any amendments considered and stacked 
today, there will be 4 minutes prior to the votes tomorrow.
  Mr. BYRD. I thank the distinguished Senator.
  Mr. ROTH. I thank the Senator for the exchange.
  Mr. MOYNIHAN. Mr. President, as we begin the debate on the second of 
two budget reconciliation bills called for under the concurrent 
resolution on the budget for fiscal year 1998, I again want to commend 
and thank the chairman of the Finance Committee, Senator Roth, for the 
fine bipartisan manner in which he has led us this year. I look forward 
to that spirit of bipartisanship continuing today as we work toward the 
adoption of the tax bill by the full Senate.
  It is my belief, although it is not much shared just now in Congress 
or in the White House, that this is no time for tax cuts. Just 
yesterday, in a report released by Treasury Secretary Rubin, the 
International Monetary Fund, in its annual review of the U.S. economy, 
stated that the United States should delay tax cuts ``in order to 
achieve an earlier reduction in the budget deficit'' and strengthen the 
credibility of the balanced-budget pact between Congress and President 
Clinton.
  Were it up to this Senator, we would continue on the deficit 
reduction course begun in the Omnibus Budget Reconciliation Act of 
1993, which has had extraordinary results. The economy is in its best 
shape in 30 years. CBO projects that the deficit will be $67 billion 
for fiscal year 1997, far below original estimates. Inflation was just 
two-tenths of 1 percent in May--equivalent to an annual inflation rate 
of only 2 percent. The unemployment rate stands at 4.8 percent, its 
lowest in more than a quarter century, and the Wall Street Journal 
reported today that the measurement of consumer confidence in the 
economy is at a 28-year high.
  Given this success, we may well come to regret having enacted the tax 
cuts in this bill. Nevertheless, we do not have a majority in the 105th 
Congress. The congressional leadership and the President have agreed 
that there will be tax cuts this year. And so given that reality, I 
joined with other Democratic members of the Finance Committee in 
working with Chairman Roth--in a bipartisan mode--to help shape the 
bill now before us. The resulting legislation is not altogether what 
some of us would prefer, but even so it does include a number of 
redeeming provisions.
  I would particularly wish to commend and thank the chairman for the 
inclusion of the following provisions: Making permanent the single most 
successful tax incentive for education, the exclusion from income of 
employer-provided educational assistance under section 127. The Roth-
Moynihan bill to make 127 permanent now has over 50 cosponsors, 
including all 20 members of the Finance Committee; repealing the cap on 
issuance of section 501(c)(3) bonds for universities, colleges, and 
nonhospital health facilities; providing $2.3 billion in funding for 
Amtrak by allocating one-half cent per gallon of the Federal gasoline 
excise tax; and extending the fair-market value deductibility of gifts 
of appreciated property to private foundations.
  Mr. ROTH. Madam President, I say to my friends and colleagues, please 
come down and present your amendments. The bill is now open to 
amendment.
  Mr. BROWNBACK addressed the Chair.
  The PRESIDING OFFICER. The Senator from Kansas is recognized.
  Mr. BROWNBACK. Thank you very much, Madam President. I first want to 
congratulate the Senator from Delaware for an excellent bill he has put 
forward on an important topic. We are finally talking about tax cuts, 
something we should have been talking about for a long period of time, 
but we haven't since 1981. This is a great day. I think it is a great 
opening that we are finally doing something about the tax burden on the 
American people, where they are paying over 40 percent of their income 
in taxes. I congratulate the chairman of the Finance Committee for 
raising this.

[[Page S6336]]

  Madam President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. BROWNBACK. Madam President, I ask unanimous consent that the 
order for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BROWNBACK. Madam President, as I was stating briefly earlier, I 
want to recognize the work of the Finance Committee chairman, who is 
doing an extraordinary job and doing something we haven't done since 
1981, and that is cut taxes. We need to do this, we need to do it to 
stimulate the economy.
  Mr. ROTH. Will the Senator yield?
  Mr. BROWNBACK. Yes, I will.
  Mr. ROTH. Madam President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. BROWNBACK. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                             Point of Order

  Mr. BROWNBACK. Madam President, we have had some good discussions 
here. Looking at the overall tax cut bill that we have, which I think 
is very important that we do, I am congratulatory toward the chairman.
  I chair the District of Columbia Subcommittee. We have really been 
looking strong at what we need to do in the District of Columbia to 
make us a shining city. The chairman has done an extraordinary job of 
including things like zeroing out capital gains on real property in the 
District of Columbia, something I think we ought to look at nationwide, 
but let us try it here first.
  We also have in there a provision for new homeowners and new home 
buyers, a $5,000 tax credit provision in there for new home buyers in 
the District of Columbia to attract people back to Washington, DC, to 
make it a shining city.
  Unfortunately, there is one other provision, section 602, in the bill 
that creates an economic development corporation--requires the creation 
of an economic development corporation--in order to access some of the 
tax credits. I have great difficulty with this entity. It is something 
that would have to be created by the District of Columbia Committee. It 
is an entity that would have condemnation authority. It is an entity 
that would have a broad base of authority, appointed by the President. 
It is in effect going to be a department of commerce for the District 
of Columbia with a lot more authority and a lot more power.
  I do not think that survives the Byrd rule test, and I raise the 
point of order on section 602 of Senate bill 949 under the Revenue 
Reconciliation Act of 1997, the Byrd rule provision, because I believe 
these are extraneous. I think this is an ill-conceived concept even 
though I am very supportive of what the chairman has done overall for 
the District of Columbia. He is stepping up to solve the problem. But I 
do not think this provision is the way to go. I do raise a point of 
order under the Byrd rule to that particular provision, section 602.
  Mr. ROTH. Madam President, first, let me say that I appreciate the 
interest and concern expressed by my colleague from Kansas. I will and 
do hereby, under section 904 of the Budget Act, move to waive the point 
of order raised by him.
  I urge that in the meantime he might work with my staff to see if we 
can develop some alternative that meets his concern with the present 
language and see if we cannot develop something that will move this 
proposition ahead.
  Mr. BROWNBACK. Madam President, I will take those suggestions to 
heart and will see if we can work something out.
  Let me again say one more time, this chairman--anybody in Washington, 
DC, watching this should be thankful for what he has done in stepping 
up and solving a tough problem of how we do make this a shining city 
again. I applaud that effort and will work with his staff to see if we 
can resolve particular concerns that he has before a vote tomorrow.
  Mr. ROTH. I thank the Senator from Kansas.
  The PRESIDING OFFICER. The motion to waive is pending.
  Mr. ROTH. Madam President, I ask unanimous consent that it be set 
aside.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. ROTH. At this time it is my pleasure to call upon my 
distinguished colleague from the State of North Dakota.
  Mr. DORGAN. Madam President, I rise this evening to offer some 
amendments. I will do so and understand that they will be set aside for 
other business to be conducted after these amendments. I wanted to have 
an opportunity to discuss them, some of which I hope the chairman and 
ranking member will be able to support. Others I expect they will not.
  But I do so with great respect. And I say, as I begin this process, 
that I was very impressed that the chairman of the Finance Committee, 
the Senator from Delaware, clearly sought bipartisanship and sought a 
working relationship with all members of the committee as he 
constructed the piece of legislation that is now on the floor of the 
Senate. I, for one, applaud him for that.
  Some of the proposals in this piece of legislation I think are 
excellent proposals, I support them. Others, I would have written 
differently. And that is the purpose of offering some amendments. But 
generally speaking, I think the Senator from Delaware has done the 
Senate a service by saying, when the committee writes a bill, he wants 
to involve all members of the committee. Instead of, as is so often the 
case here in the Senate, having a political debate ending up with the 
worst of what each has to offer, reaching out and getting the best of 
what both sides have to offer on these issues makes a great deal of 
sense.
  So I begin by paying my compliments to the manner in which the 
Finance Committee wrote this bill. As I said, some parts of the bill I 
support very strongly. Other parts, I would have written differently 
and would like to change. That is the purpose for this discussion.


                            Motion To Refer

  Mr. DORGAN. Madam President, let me describe a motion to refer I 
intend to offer that I want to get a vote on as we proceed. It is a 
motion that would do the following:
  We are proposing, and Congress will likely allow to become law, a 
series of tax cuts. I support some of these proposals. I want to be 
certain, however, that the direction that we are heading is a direction 
that will not explode the deficit in the outyears.
  We are all familiar with the stories about the 1981 tax cut proposals 
and the discussion about the fiscal policy in which we then had less 
revenue but built up our military spending, double, and then 
entitlements continued to rise, and the result was we blew a real hole 
in the Federal deficit.
  I am going to propose a trigger, in essence. I will do it, however, 
in a different manner. I will do it with a motion to refer the bill 
back to the committee with instructions to report back with an 
amendment providing for a mechanism to temporarily suspend sections of 
the bill dealing with capital gains and the IRAs in any fiscal year 
after the year 2002 if two things occur:
  One, the Congressional Budget Office reports that the revenues lost 
due to the bill have exceeded the budget agreement's restrictions on 
tax cuts, and, two, the Department of the Treasury reports there has 
been a deficit in the previous fiscal year.
  My point is very simple. I would like us to have some safety 
mechanism in this piece of legislation that says, if where we are 
headed beyond the first 5 years results in additional Federal budget 
deficits, that then we could suspend temporarily a part of these tax 
changes so that we can get the budget back into balance.
  I have proposed it the way I have proposed it because I do not want 
us to discover that we are having budget deficits in the outyears 
simply because we are spending more money. That is not my purpose. But 
I do want to be in a circumstance here or have the Senate be in a 
situation that if the amount of tax cuts exceed the revenues that we 
had an agreement for in this piece of legislation, and if the Treasury 
Department reports that we had a deficit the previous year, that four 
sections of this tax cut would be temporarily suspended in order to get 
the budget back in balance.

[[Page S6337]]

  That will be one of my recommendations. I do that simply because I 
want us to be certain beyond the first 5 years that we maintain the 
fiscal discipline that I think is commendable and I think is necessary.
  We have, I think, achieved some things together in this Congress with 
a budget agreement, one which I voted for. I do not want to blow that 
apart in the sixth, seventh or eighth years out believing then, well, 
we balanced the budget for 5 years and then all of a sudden the budget 
is out of balance and in a deficit condition once again.
  So I send this motion to refer to the desk and ask for its 
consideration.
  The PRESIDING OFFICER. The clerk will report the motion to refer.
  The assistant legislative clerk read as follows:

       The Senator from North Dakota [Mr. Dorgan] moves to 
     refer the bill, S. 949, to the Committee on the Budget, 
     with instructions to report the bill back to the Senate 
     within 3 calendar days of session with an amendment 
     providing for a mechanism to sunset temporarily Sections 
     301, 302, 304 and 311 of the bill in any fiscal year after 
     fiscal year 2002, if (1) the Congressional Budget Office 
     reports that the revenues lost due to the bill have 
     exceeded the budget agreement's restrictions on tax cuts 
     and (2) the Department of the Treasury reports that there 
     has been a deficit in the previous fiscal year.

  Mr. DORGAN. Next, Madam President and the chairman of the committee, 
I intend to offer three amendments that are relatively small, targeted 
amendments that deal with the issue of disasters, natural disasters. 
Most of us recognize that we have spent a lot of time talking about 
disaster relief and issues affecting people dealing with flood 
disasters, earthquake disasters, tornadoes and fires and so on.
  We had a circumstance in our region of the country where the Red 
River had a massive flood, a 500-year flood. We had 90 percent of a 
community of 50,000 people who were displaced out of their homes, many 
hundreds of those homes--nearly 1,000 homes--have been totally and 
permanently destroyed.
  In many of those cases, all of their records were destroyed as well. 
People left with a half hour's notice and only the clothes they were 
wearing and lost everything. The Internal Revenue Service knowing that 
this happened the first week or so of April, second week of April, they 
said, ``We will allow an extension to file income tax returns.'' It is 
pretty clear people fleeing a flood and who have lost everything, 
including all of their records, will not be able to file tax returns on 
April 15.
  So the Internal Revenue Service said they would extend the tax filing 
deadline. I appreciate that. And it made a lot of sense because 
hundreds of those people, thousands of those people could not have 
complied, people in South Dakota, Minnesota, and North Dakota. The IRS 
said, ``We will consider a tax return timely filed if it's filed by the 
end of May.'' Then as this flood continued, they moved it to August, 
and that is where it is.
  The IRS said to those victims of that disaster, ``If you file by that 
date, there will be no penalty because we have moved the filing date,'' 
recognizing you could not possibly comply. But then the IRS said, ``But 
you are going to have to pay interest because we don't have the 
authority to waive the interest.'' The disaster victims have asked the 
question, ``Well, if it is considered timely filed, why are we being 
charged interest?'' And the Internal Revenue Service said, ``Well, 
you're being charged interest because we don't have the capability of 
waiving it.''
  The Treasury Secretary said he is sympathetic to my amendment, he 
will support it. I have talked to the majority on this, and I hope this 
will be one that--it will have an almost insignificant revenue 
consequence, but just makes sense. It gives the IRS the authority 
clearly to do what it wants to do and should do but does not now have 
the authority to do.
  Madam President, I ask unanimous consent to set aside the motion to 
refer.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 515

   (Purpose: To authorize the Secretary of the Treasury to abate the 
accrual of interest on income tax underpayments by taxpayers located in 
  Presidentially declared disaster areas if the Secretary extends the 
 time for filing returns and payment of tax (and waives any penalties 
   relating to the failure to so file or so pay) for such taxpayers)

  Mr. DORGAN. I offer the amendment and send it to the desk.
  The PRESIDING OFFICER. The clerk will report the amendment.
  The assistant legislative clerk read as follows:

       The Senator from North Dakota [Mr. Dorgan] proposes an 
     amendment numbered 515.

  Mr. DORGAN. Madam President, I ask unanimous consent that further 
reading of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       On page 211, between lines 5 and 6, insert the following:

     SECTION 724. ABATEMENT OF INTEREST ON UNDERPAYMENTS BY 
                   TAXPAYERS IN PRESIDENTIALLY DECLARED DISASTER 
                   AREAS.

       (a) In General.--Section 6404 (relating to abatements) is 
     amended by adding at the end the following:
       ``(h) Abatement of Interest on Underpayments by Taxpayers 
     in Presidentially Declared Disaster Areas.--
       ``(1) In general.--If the Secretary extends for any period 
     the time for filing income tax returns under section 6081 and 
     the time for paying income tax with respect to such returns 
     under section 6161 (and waives any penalties relating to the 
     failure to so file or so pay) for any taxpayer located in a 
     Presidentially declared disaster area, the Secretary shall 
     abate for such period the assessment of any interest 
     prescribed under section 6601 on such income tax.
       ``(2) Presidentially declared disaster area.--For purposes 
     of paragraph (1), the term `Presidentially declared disaster 
     area' means, with respect to any taxpayer, any area which the 
     President has determined warrants assistance by the Federal 
     Government under the Disaster Relief and Emergency Assistance 
     Act.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to disasters declared after December 31, 1996.

  Mr. DORGAN. Madam President, I will be brief on the next two 
amendments. They relate to the same issues. As I indicated, the first 
dealt with the waiver of interest, which I hope we can do. It will have 
almost insignificant consequence, but will be significant to the 
disaster's victims.
  The others, I have been visiting with the staff of the majority and 
the minority and other Members.
  One deals with the question of the use of IRAs by victims of the 
disaster who now find themselves with a need to invest in their home to 
repair it, but they do not have any money except that which is in an 
IRA, or the need to invest in a business that has been destroyed, and 
they have no resources except that which is in an IRA. I hope with the 
chairman that we can find a way to provide that opportunity. I am happy 
to provide a reasonable limit on it.

  I offer the amendment and hope we can visit about it in the ensuing 
hours prior to this bill's conclusion.
  Let me offer that amendment.


                           Amendment No. 516

(Purpose: To provide tax relief for taxpayers located in Presidentially 
            declared disaster areas, and for other purposes)

  Mr. DORGAN. I send the amendment to the desk and ask for its 
immediate consideration.
  The PRESIDING OFFICER. Without objection, the previous amendment will 
be set aside.
  The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from North Dakota [Mr. Dorgan] proposes an 
     amendment numbered 516.

  Mr. DORGAN. I ask unanimous consent that the reading of the amendment 
be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:
       On page 211, between lines 5 and 6, insert the following:

     SEC. 724. DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT ACCOUNTS 
                   MAY BE USED WITHOUT PENALTY TO REPLACE OR 
                   REPAIR PROPERTY DAMAGED IN PRESIDENTIALLY 
                   DECLARED DISASTER AREAS.

       (a) In General.--Section 72(t)(2) (relating to exceptions 
     to 10-percent additional tax on early distributions), as 
     amended by sections 203 and 303, is amended by adding at the 
     end the following new subparagraph:
       ``(G) Distributions for disaster-related expenses.--
     Distributions from an individual retirement plan which are 
     qualified disaster-related distributions.''.
       (b) Qualified Disaster-Related Distributions.--Section 
     72(t), as amended by sections 203 and 303, is amended by 
     adding at the end the following new paragraph:
       ``(9) Qualified disaster-related distributions.--For 
     purposes of paragraph (2)(E)--

[[Page S6338]]

       ``(A) In general.--The term `qualified disaster-related 
     distribution' means any payment or distribution received by 
     an individual to the extent that the payment or distribution 
     is used by such individual within 60 days of the payment or 
     distribution to pay for the repair or replacement of tangible 
     property which is disaster-damaged property. Such term shall 
     only include any payment or distribution which is made during 
     the 2-year period beginning on the date of the determination 
     referred to in subparagraph (C).
       ``(B) Disaster-damaged property.--The term `disaster-
     damaged property' means property--
       ``(i) which was located in a disaster area on the date of 
     the determination referred to in subparagraph (C), and
       ``(ii) which was destroyed or substantially damaged as a 
     result of the disaster occurring in such area.
       ``(C) Disaster area.--The term `disaster area' means an 
     area determined by the President to warrant assistance by the 
     Federal Government under the Robert T. Stafford Disaster 
     Relief and Emergency Assistance Act.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to payments and distributions after December 31, 
     1996, with respect to disasters occurring after such date.

     SEC. 725. ELIMINATION OF 10 PERCENT FLOOR FOR DISASTER 
                   LOSSES.

       (a) General Rule.--Section 165(h)(2)(A) (relating to net 
     casualty loss allowed only to the extent it exceeds 10 
     percent of adjusted gross income) is amended by striking 
     clauses (i) and (ii) and inserting the following new clauses:
       ``(i) the amount of the personal casualty gains for the 
     taxable year,
       ``(ii) the amount of the federally declared disaster losses 
     for the taxable year (or, if lesser, the net casualty loss), 
     plus
       ``(iii) the portion of the net casualty loss which is not 
     deductible under clause (ii) but only to the extent such 
     portion exceeds 10 percent of the adjusted gross income of 
     the individual.
       For purposes of the preceding sentence, the term `net 
     casualty loss' means the excess of personal casualty losses 
     for the taxable year over personal casualty gains.''.
       (b) Federally Declared Disaster Loss Defined.--Section 
     165(h)(3) (relating to treatment of casualty gains and 
     losses) is amended by adding at the end the following new 
     subparagraph:
       ``(C) Federally declared disaster loss.--The term 
     `federally declared disaster loss' means any personal 
     casualty loss attributable to a disaster occurring in an area 
     subsequently determined by the President of the United States 
     to warrant assistance by the Federal Government under the 
     Robert T. Stafford Disaster Relief and Emergency Assistance 
     Act.''.
       (c) Conforming Amendment.--The heading for section 
     165(h)(2) is amended by striking ``Net casualty loss'' and 
     inserting ``Net nondisaster casualty loss''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to losses attributable to disasters occurring 
     after December 31, 1996, including for purposes of 
     determining the portion of such losses allowable in taxable 
     years ending before such date pursuant to an election under 
     section 165(i) of the Internal Revenue Code of 1986.
       Strike section 751 of the bill.
       On page 239, strike lines 18 and 19.
       On page 239, lines 20, strike ``(5)'' and insert ``(4)''.
       On page 240, line 1, strike ``(6)'' and insert ``(5)''.

  Mr. DORGAN. Madam President, let me ask unanimous consent that 
amendment No. 516 be set aside.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 517

   (Purpose: To impose a lifetime cap of $1,000,000 on capital gains 
                               reduction)

  Mr. DORGAN. I offer one additional amendment this evening to be sent 
to the desk. Let me describe the amendment before I send it to the 
desk. It is an amendment that I wrote years ago, and I have offered it 
previously but feel that I want to offer it again on the issue of 
capital gains. I have long felt when we provide capital gains 
differential treatment that we should provide a lifetime limit on the 
amount of capital gains one is able to take at a preferred tax rate.
  I have proposed in the past, and will propose with this amendment, a 
$1 million lifetime limit on capital gains tax treatment per taxpayer. 
I will describe later, and we will have an opportunity tomorrow to 
discuss some of these issues, but I really feel that the Congress 
should address this with respect to capital gains.
  Let me make one additional point. There are some--and we can have a 
philosophical discussion about the tax situation--some that say, let us 
exempt income from investments which tend to favor those who invest. 
Why not say, let us exempt income from work and favor those who work, 
or maybe a balance between those who work and those who invest. But I 
have great difficulty believing that somehow investment has more merit 
than work.
  Let's index investment. Let's index the income from work. I want to 
have a discussion in the context of capital gains as to why do we 
always in Congress, when we talk about giving some break or cuts, why 
do we always talk about taxing work and exempting investment? It is not 
that I am opposing trying to provide encouragement to investment, but 
why not provide similar encouragement to work?
  I want to have that discussion on the issue of capital gains, and I 
send an amendment to the desk and ask for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from North Dakota [Mr. Dorgan] proposes an 
     amendment numbered 517.

  Mr. DORGAN. Madam President, I ask unanimous consent reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       On page 96, strike lines 11 through 16, and insert:
       ``(3) Adjusted net capital gain.--For purposes of this 
     subsection--
       ``(A) In general.--The term `adjusted net capital gain' 
     means net capital gain determined without regard to--
       ``(A) In general.--The term `adjusted net capital gain' 
     means net capital gain determined without regard to--
       ``(i) collectibles gain, and
       ``(ii) unrecaptured section 1250 gain.
       ``(B) $1,000,000 lifetime limitation.--
       ``(i) In general.--The adjusted net capital gain for any 
     taxable year shall not exceed $1,000,000, reduced by the 
     aggregate adjusted net capital gain for all prior taxable 
     years.
       ``(ii) Special rule for joint returns.--The amount of the 
     adjusted net capital gain taken into account under this 
     section on a joint return for any taxable year shall be 
     allocated equally between the spouses for purposes of 
     applying the limitation under clause (i) for any succeeding 
     taxable year.
       ``(C) Capital gains rate reduction not to apply to certain 
     taxpayers.--The adjusted net capital gain for any taxable 
     year in the case of any of the following taxpayers shall be 
     zero:
       ``(i) An individual with respect to whom a deduction under 
     section 151 is allowable to another taxpayer for a taxable 
     year beginning in the calendar year in which such 
     individual's taxable year begins.
       ``(ii) A married individual (within the meaning of section 
     7703) filing a separate return for the taxable year.
       ``(iii) An estate or trust.

  Mr. DORGAN. A final comment. I wanted to offer these amendments so we 
could begin discussing them. I hope a couple of them might be accepted 
and a couple of them we can have votes on, especially the issue of 
triggering the tax cuts beyond the first 5 years to make certain we are 
not once again experiencing a Federal deficit in the long term. I am 
very interested--and I will be here to talk tomorrow--about other 
issues with respect to an alternative that I think has great merit.
  Let me leave, as I began, to compliment the Senator from Delaware. 
There are a number of provisions in his piece of legislation I support 
and think have great merit. I hope some of the amendments that I offer 
and others offer that will improve the bill might be accepted, as well. 
If we can get the best of what both sides have to offer in this debate, 
the Congress will pass a tax bill that is worthy of consideration by 
the American people.
  Madam President, I yield the floor.


                           Amendment No. 518

   (Purpose: To repeal the depletion allowance available to hardrock 
  mining companies already enjoying substantial subsidies due to the 
             largesse associated with the 1872 mining law)

  The PRESIDING OFFICER. The Senator from Arkansas is recognized.
  Mr. BUMPERS. I send an amendment to the desk.
  The PRESIDING OFFICER. Without objection, the pending amendment is 
set aside.
  The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Arkansas [Mr. Bumpers], for himself, Mr. 
     Gregg, and Mr. Robb, proposes an amendment numbered 518.

  Mr. BUMPERS. Madam President, I ask unanimous consent the reading of 
the amendment be dispensed.
  The amendment is as follows:

       At the appropriate place in the bill add the following new 
     section:

     SEC.   . REPEAL OF DEPLETION ALLOWANCE FOR CERTAIN HARDROCK 
                   MINES.

       (a) In General.--The first sentence of section 611(a) of 
     the Internal Revenue Code of

[[Page S6339]]

     1986, 26 U.S.C. 611(a), is amended by inserting immediately 
     after ``mines'' the following: ``(except for hardrock mines 
     located on land subject to the general mining laws or on land 
     patented under the general mining laws unless such patented 
     land was acquired (subsequent to the date the patent was 
     issued), pursuant to an arms-length transaction prior to June 
     25, 1997)''.
       (b) Definitions.--Section 611 of the Internal Revenue Code 
     of 1986 is amended by redesignating subsection (c) as 
     subsection (d) and inserting after subsection (b) the 
     following new subsection:
       (c) Definitions.--For purposes of subsection (a), `general 
     mining laws' means those Acts which comprise chapters 2, 12A, 
     and 16, and sections 161 and 162 of title 30 of the United 
     States Code.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1996.

  Mr. BUMPERS. Madam President, this is the 9th consecutive year that I 
have tried my very best to do justice to the taxpayers of the United 
States. I have heard an awful lot of talk in the last 60 days by people 
on both sides of the aisle about the $135 billion in tax cuts for those 
long-suffering taxpayers. I do not intend to debate the merits of the 
tax cuts tonight.
  What I want to debate is the cynicism, the contradiction, the 
hypocrisy of talking about doing justice to the taxpayers on one hand 
by giving them a massive tax cut, and at the same time allow the 
biggest mining companies in the world to take billions of dollars worth 
of gold off land that belongs to the taxpayers of the United States and 
not pay one red cent for the privilege and then turn around and give 
these same mining companies an enormous tax break which they never did 
anything to deserve.
  In 1872, Ulysses Grant signed the famous mining law of 1872 that 
encouraged people to go West and stake 20-acre claims. The 1872 mining 
law is still firmly intact. There are now over 330,000 claims that have 
been legitimately filed that belong to people who went out and simply 
drove 4 stakes in the ground every 20 acres and then went down to the 
courthouse and filed their claim. In addition, there are approximately 
650 applications that have been filed with the Bureau of Land 
Management for patents on some of those claims which would permit the 
applicants to buy the land for $2.50 or $5 an acre.
  The people in the Senate do not pay much attention to this issue. 
They apparently pay little attention to the people watching C-SPAN 
because they are the ones who are getting the shaft.
  Madam President, can you imagine this scenario. Newmont Mining Co., 
one of the biggest mining companies in the world, has a gold mine in 
Nevada. They pay the owners of the land on which that gold mine is 
situated an 18 percent gross royalty for the gold they take off that 
land. However, when they mine on public, taxpayer-owned land, they do 
not pay one red cent to the taxpayers of this country.
  And you wonder why the people of this country are cynical. You wonder 
why the words ``corporate welfare'' were used so generously around here 
when we were looking for offsets for this massive tax cut, and this 
bill comes back to us from the Finance Committee with not a word about 
corporate welfare.
  Do you know what else these mining companies do? They find somebody 
that has a bunch of claims that they think have some potential, and 
they buy the claims and then they mine it. Then they go to the Bureau 
of Land Management and say, ``We have commercial gold or silver on this 
land and we want to buy it, and we will give you the princely sum of 
either $2.50 an acre or $5 an acre.''
  Do you know what Bruce Babbitt, the Secretary of Interior, has to do? 
He has to, by law, give them a deed to that land. Here is what has 
happened just in the past several years.
  Barrick Gold Co. paid the U.S. taxpayers $9,000. Do you know what 
they got for that? They got almost 2,000 acres in Nevada with 11 
billion dollars worth of gold on it. It belongs to the taxpayers of the 
United States. Do you know what the taxpayers are going to get for that 
$11 billion? Zip, zero, nothing. No royalty, no severance tax, no 
reclamation fee, and then they take a 15 percent depletion allowance on 
the gold they take out. We not only give it to them for $2.50 an acre 
or $5 an acre, we give them a depletion allowance for mining what they 
never paid for.
  In 1995, Faxe Kalk, a Danish company, bought land in Idaho containing 
1 billion dollars' worth of travertine. Do you know what they paid the 
taxpayers of the United States for this land containing the $1 billion 
in minerals? They paid $275.
  There is an application pending at the Bureau of Land Management 
right now by the Stillwater Mining Co. for about 2,000 acres of Forest 
Service land in Montana. Stillwater will pay a maximum of $10,000 for 
that land. What do you think lies under that 2,000 acres of land? This 
is their figure, not mine: 38 billion dollars worth of palladium and 
platinum--$38 billion. Do you know who that belongs to? It belongs to 
the taxpayers of the United States. Do you know what the taxpayers of 
the United States are going to get in exchange for their $38 billion? 
You guessed it--the shaft. Nothing, not a penny. And people stand up 
and defend this thing as though it is some kind of a righteous cause.

  These mining companies do not mind paying private property owners a 
royalty. They pay the States a royalty when they mine on State lands. 
They also pay the states a severance tax. It is only when the land 
belongs to the taxpayers of the United States that they object.
  When you hear people in the coffee shops in your hometown talk about 
Government being sold off to the highest bidder, you cannot find a 
better case of it. The Halls of Congress and the Senate office 
buildings have been so full of lobbyists since I announced I was going 
to try to do away with the depletion allowance for companies mining on 
public land, you could not stir them with a stick. I can hardly get 
down the hall from my office because the Finance Committee office is 
between my office and the elevator.
  So what I am saying, Madam President, let's at least have the courage 
to tell the taxpayers of this country that we are not going to give the 
mining companies, after we give them lands for $5 an acre, a 15 percent 
depletion allowance to mine minerals they never paid for.
  When the oil companies buy a lease in the ocean, when the coal 
companies buy a lease on lands in the West, when the natural gas 
companies explore for gas on Federal lands, any time they find it, they 
pay a royalty for the interest in the minerals. They take a depletion 
allowance and they are entitled to a depletion allowance because, by 
definition, if you are depleting a capital asset, that is a legitimate 
thing to do when you paid for it in the first place. The oil and gas 
companies deplete oil and gas, and they have a right to do it. They 
paid a handsome price for it, and they are depleting an asset they paid 
for. These people paid nothing.
  What have the taxpayers gotten out of this besides not 1 red cent in 
royalties? Well, for openers, they have gotten 557,000 abandoned mine 
sites, 57 of which are on the Superfund list. The Mineral Policy Center 
says that the estimated cost of cleaning up the mess that these mining 
companies have left us is between $31 billion and $72 billion.
  I hate to be repetitive, but just to emphasize the point, let me go 
through it again. The mining companies give the taxpayers $5 an acre 
for gold. They take billions of dollars worth of gold off the land. 
They pay the taxpayers no royalty at all, they get a 15 percent 
depletion allowance; and then they leave an unmitigated environmental 
disaster, which is going to cost the taxpayers of this Nation between 
$31 billion and $72 billion to clean up.
  Madam President, I have announced that I would not seek reelection, 
and in deliberating on that decision, I got to thinking about debates, 
what would be debated, what would be said, who would say it, and how 
would you respond. And I thought, how would you respond to an 
accusation that you voted for allowing the gold and silver and 
palladium and platinum mining companies to continue raping and 
pillaging the taxpayers of this country--all the time you are talking 
about a big tax cut for the taxpayers because they deserve it? And how 
are you going to pay for the tax cut? You are going to pay for the 
lion's share of it by cutting Medicare by $115 billion. You can put any 
face on it you want. I didn't vote for it. I have no intention of 
voting for it. Take $115 billion off Medicare and that, in turn, will 
come off of services for the elderly, part of the most vulnerable in 
our society, and then you ask

[[Page S6340]]

your opponent, did you vote for that? Yes, I voted for that. Well, this 
$115 billion that you cut in Medicare, what did you do with it? We gave 
it away in tax cuts to the wealthiest people in America. You didn't put 
it on the deficit? No, we didn't put it on the deficit. You are going 
to balance the budget by cutting taxes? Isn't that the same old line 
you gave us back in 1981 that gave us a $5.3 trillion debt? Then what 
if somebody said, how about those mining companies? I have heard 
Senator Bumpers, and I have read in the paper some of the things he 
said--for 9 years--about how the mining companies take billions of 
dollars worth of gold off of what is or was Federal lands, and they pay 
nothing for it, isn't that true? It is true. Nobody will deny it. And 
they don't pay 1 red cent. It gives corporate welfare a bad name.
  The Western Senators, which have gold mines in their States on 
Federal lands, ask what if you bought a mining claim from some nester 
that staked out 500 acres, and the mining companies pay him handsomely 
for it, aren't they entitled to a depletion? Now, that is a neat way to 
avoid the issue. It also makes this point. When you buy 500-acre 
claims, for example, from some old nester that has been sitting on them 
for 10 years, they not only pay him a handsome price for it, they pay 
him a royalty, or what we call residual, an override. Now, they are 
willing to pay State's royalties, they are willing to pay private 
owner's royalties, and when they buy this land from some old nester 
that staked it 10 or 20 years ago, they are willing to pay him a 
royalty. It is only if the words ``U.S.'' are on it anyplace that they 
don't want to pay a penny in royalty.
  The questions I ask every year, and the questions that never get 
answered, are: Why are you willing to do this to the taxpayers? Why are 
you willing to pay a royalty of 18 percent on private lands in Nevada? 
Why are you willing to pay an average of 5 percent on all private lands 
in the United States? Why are you willing to pay the States a severance 
tax? Why are you willing to pay the States a royalty on their lands? 
But when it comes to lands that belong to the taxpayers of the United 
States, you are not willing to pay 1 red cent? Everybody falls silent 
when you pose those questions.
  (Mr. BROWNBACK assumed the Chair.)
  Mr. BUMPERS. Well, Mr. President, all but the freshman who just came 
in here this year have heard this debate before. A lot of people here 
have heard this debate in spades over the years. The problem is 
identical to what it was 9 years ago when I brought it up the first 
time. It is the most egregious, outrageous scam being perpetrated on 
the people of this country.
  I have only got a year and a half left here, but I promise you, I am 
going to bring this up until the last day I am in the U.S. Senate. I am 
immensely offended by it. I cannot believe my colleagues have allowed 
it to continue. We have made one or two little modest gains--very 
modest gains. But the mining companies are fighting like saber-toothed 
tigers--they are standing in the hallways, they are in the committee 
rooms, they are all over the place--to protect the greatest sweetheart 
piece of corporate welfare in the history of mankind.
  I yield the floor.
  Mr. MURKOWSKI addressed the Chair.
  The PRESIDING OFFICER. The Senator from Alaska is recognized.
  Mr. MURKOWSKI. Mr. President, I thank the Chair. I have listened to 
my good friend from Arkansas embellish one of his favorite subjects, 
and that, of course, is the American mining industry as we know it 
today.
  I think it is fair to say that we have had, with the minority, a 
continuing, ongoing effort to try and bring about changes in our mining 
law--meaningful changes that are supported by the industry, meaningful 
changes that are supported by the minority. Unfortunately, we haven't 
been able to generate a resolve of many of these issues. But I think it 
is fair to say that the attack today proposed by my friend from 
Arkansas is not just an attack on the percentage depletion allowance, 
but, in reality, it is an attack on the American mining industry as we 
know it today.
  Now, I don't know about my friend from Arkansas coming over here, but 
I didn't run into anybody in the Halls. I didn't run into any 
lobbyists. Nobody has talked to me. I venture to say that if you walk 
out now, you won't run into any either.
  What we are looking at here is a matter of equity for an industry 
that is very important to our Nation, to our security interests, who 
must compete in a worldwide marketplace. We are either competitive or 
we are not.
  For the information of my friend from Arkansas, the value, in 1995, 
of the combined contribution of the mineral industry to Arkansas was 
$744 million. So when he says ``they don't pay one red cent,'' well, 
they contributed $744 million to the economy of Arkansas. In Alabama, 
it is $2 billion; in Arizona, it is $9 billion; in Texas, it is $7 
billion; in New York, it is $8.3 billion. So when you say they don't 
pay anything, let's look at the working men and women in the mining 
industry today, and let's look a little more closely at reality.
  What is proposed by my friend from Arkansas--and he is right, it is a 
punative proposal, as he has been working at it for 9 years and he is 
committed until the day he leaves to work on it. I admire that spirit. 
But he is not telling you the whole story. There was a proposal by the 
administration earlier this year to do away with percentage depletion 
for this industry. And the important thing, Mr. President--and I would 
like my friend from Arkansas to acknowledge the reality of it--it was 
rejected by both the Finance Committee in the Senate and the House Ways 
and Means Committee, and it should also be rejected by the full Senate.
  When you strip away the rhetoric--and there is lots of it around 
here--on this matter, the issue boils down to one simple question: 
whether this body wants to go on record now in support of a nearly $700 
million tax increase on the domestic mining industry. We talk about tax 
bills, we talk about tax breaks, we talk about stimulating how much 
more earnings the average family member can make and take home and 
save. But this proposal by my friend from Arkansas would tax America's 
mining industry an additional $700 million--and this is a domestic 
industry, mind you. Well, I think it is fair to say--and I think most 
of you would agree--that the Treasury will never see anywhere near $700 
million from this proposal, because this latest assault on the industry 
will simply speed up one thing--the departure of the mining industry 
from our shores.
  This is a worldwide market. You compete or you don't compete. Now, 
the continuing decline of this industry is reflected on the chart I 
have on my left. As my colleagues can see, jobs in this industry have 
been declining dramatically. Let's look at it. Metals make up the gold, 
silver, lead, and zinc production. The others are in iron ore and 
copper. In 1980, we had 98,000 jobs; today, we have 51,000 jobs. This 
is the gold, silver, lead, and zinc. That is not to assume we are not 
using as much gold, silver, lead, and zinc. We are. We are importing it 
from other countries. Why? Because we are not as competitive in the 
world marketplace.
  Iron ore. In 1980, we had 21,000 workers. In 1995, we had 9,000. 
Where has the industry gone? It has gone to South America, South 
Africa. That is the reality we live under. Now, does my friend simply 
want to tax this industry another $700 million and drive it offshore? 
That is what is going to happen, make no mistake about it.
  The copper industry. In 1980, 30,000 jobs; today, 15,000 jobs in the 
United States It isn't that we don't have the minerals. We are not 
competitive in an international marketplace. My friend from Arkansas 
simply ignores that reality. He never mentions it. It is always they 
are getting a free ride. He doesn't mention the jobs that are created 
in each State or the contribution associated with what that prosperity 
means to the families.

  I think it is important to point these things out. These are accurate 
figures. This is the condition of the industry today. It competes 
worldwide. The jobs, Mr. President, that have disappeared are good-
paying jobs. Make no mistake about it, these are not the MacDonalds 
minimum-wage jobs. The average yearly wage for miners is nearly 
$46,000, one of the highest wage levels of any segment of America's 
workers. That doesn't include the benefits provided for these workers.

[[Page S6341]]

  What does the Senator from Arkansas propose to do with these workers 
if you tax the industry that much more? Are these people going to be 
retrained? They are going to be out of a job. They are going to be on 
welfare. You know where these jobs are going to go. They are going to 
go to Latin America, Canada, Indonesia, the Philippines, and Central 
Asia.
  For example, gold mining exploration budgets have been dipping in the 
United States from a high of $149 million in 1992 to $120 million in 
1996. But at the same time spending in Central and South America has 
increased more than five times--from $28 million in 1992 to $145 
million last year. These are investments that could have and should 
have been made in the United States but for the hostile environment 
that this industry, which is a basic industry in the United States, 
faces at home.
  If this tax increase is approved, we will merely hasten the further 
decline of this domestic industry, for instead of using capital to 
invest in exploration and development in new sites in the United 
States, the mining industry will be forced to abandon new projects at 
home. It will have to close marginally profitable mines with the loss 
of hundreds, if not thousands of permanent good-paying jobs.
  Mr. President, the underlying predicate of this amendment, I think, 
is fatally flawed for it assumes that mining operations on Federal 
lands are cost-free. That is what my friend from Arkansas said. He said 
``not one red cent'' did they pay for it. Nothing is further from the 
truth. Mining operations on Federal lands are not cost-free. It is a 
myth that patenting of land under the Mining Act of 1872 is somehow an 
easy event; that it simply is as easy perhaps as going out and writing 
a check to the Federal Government. That is not reality.
  The reality is that the exploration process leading to the discovery 
of valuable mineral deposits can cost several hundreds of thousands of 
dollars per claim just for the drilling, the sampling, and the expense 
associated with proving up that claim.
  I also note that in some cases mineral patent applications can 
contain as many as 500 claims per application, and the cost of 
processing a single claim can run $35,000 to $40,000 to $45,000. 
Multiply that by 400 or 500 claims. What do you have? You have $19 
million in costs merely for processing claims. So when the Senator from 
Arkansas says they are not ``paying one red cent,'' that is not 
reality.
  Moreover, the time required to explore land and permit it before 
mining begins has increased dramatically, with a concomitant increase 
in the cost of mining. The average time for simply permitting new 
mines, as my friend from Arkansas is well aware, on Federal land has 
increased from 1 year to 3 to 5 years. And over the course of the last 
4 years it has averaged close to 5 years.
  Where is it going to be in another few years? At some point in time 
you are going to overload this. They are not going to be competitive in 
the domestic market. Where are they going? They will go where they have 
to go to survive, and that unfortunately is outside the United States.
  Once the companies have passed all of the hurdles, a company then 
faces the daunting capital costs that are associated with bringing a 
modern mine on line.

  This isn't like the chicken industry. This is an industry that is 
volatile relative to costs. Costs are not necessarily controllable in 
the mining industry because you run into different types of production 
exposure. Some of it is very, very deep. Some of it can have water in 
the mines. There are many, many unknowns associated with that. And the 
biggest risk is that you develop a mine and you have no assurance that 
your price is going to stay stable. The price fluctuates dramatically. 
But you have made a tremendous capital investment, and you are risking 
this capital relative to your belief that you can operate an efficient 
mine, an efficient operation, and control costs. But the unknowns are 
very, very high.
  In my own State, we recently opened a mine called the Fort Knox Mine 
which began operations outside Fairbanks. The company invested nearly 
$375 million in capital before a single ounce of gold had been mined, 
or refined, on that project.
  So they don't pay a red cent. They put up $375 million in advance on 
the supposition that they would be able to generate a reasonable 
return. Now the price of gold has dropped to a point where their 
margins are within a couple of dollars. That is the reality associated 
with that kind of a business.
  I think my colleagues will agree that there is no free ride when it 
comes to the cost of exploration, acquisition, development, and 
processing in the industry--whether on Federal or private land. Yet, 
the amendment before us assumes little or no costs to the industry when 
mining on Federal land.
  Mr. President, the rationale for the percentage depletion allowance 
is it recognizes the unique nature of resource depletion by providing a 
realistic and practical method for the creation of funding necessary to 
replace the diminished resource.
  Moreover, percentage depletion reflects reality. This is a reality 
unlike in the chicken business. It is a reality that when the mines are 
exhausted, the companies must replace the depleted deposits of mineral 
resources, which are more difficult and in many cases more expensive to 
develop. These new deposits, because of lower grade ores, could create 
more difficulty in mining and development. They could be more expensive 
to operate.
  So where do you go after you deplete your mine and when the economics 
are that you can't generate a recovery? You go find a new one to stay 
in business, and hopefully it will be of the quality of the last one. 
But you have no guarantee.
  Hence, the justification for the percentage depletion allowance, as 
it responds to the unique nature of mineral deposits, provides for 
realistic and practical methods of reflecting the decreasing value of a 
mine as the mine is depleted. That is what it is all about. It helps 
companies maintain the capital necessary to make future investments for 
replacement of mineral resources.
  I would also note that minerals are commodities whose prices are set, 
as I said, by the world marketplace. With an increase in mining costs 
with the repeal of the percentage depletion allowance, what are you 
going to do? You can't pass it on to the purchasers in the form of 
higher selling prices. You either absorb it and take a loss and 
ultimately if your losses are too high, you go out of business.
  Mr. President, I would also point out that mining companies commonly 
package mining rights from a variety of sources into a single 
operation. For example, a large open-pit mining operation may include 
private property acquired through homestead laws, patent and mining 
claims, unpatented claims, States lands, and so forth.
  The repeal of percentage depletion--as proposed by my friend from 
Arkansas--from those mining rights which originate with the mining law 
of 1872 would require a complex system, so complex that we would have 
to track every single shovel of ore on the mining site. In other words, 
some of it would be from lands that originated through private 
property, homestead laws, unpatented claims, State lands. How do you 
sort that out? What will likely be the result is that the depletion 
allowance would apply to a shovel of ore from one location but not a 
shovel of ore from an identical ore body 10 feet away.

  That is simply absurd. But that is the solution that is suggested in 
this amendment.
  Mr. President, I think there is no doubt that percentage depletion 
for minerals in mines on Federal lands is clearly appropriate tax 
policy. But I would suggest to all of my colleagues that this amendment 
is not about depletion on lands obtained under the Mining Act of 1872. 
As I indicated in my opening statement, this amendment is about the act 
itself. This is really just another attempt to gain leverage on the 
industry by attacking the depletion allowance.
  Remember, Mr. President, by adopting the proposal in the amendment of 
the Senator from Arkansas, we would be going on record as supporting 
nearly a $700 million tax increase on America's domestic mining 
industry.
  I can categorically state, Mr. President, that the U.S. mining 
industry agrees, they agree with the Senator from Arkansas, that the 
mining law of 1872 is substantially due for an overhaul. And we have 
passed reforms, ultimately to see them vetoed by the

[[Page S6342]]

President. But I continue to work to see that this law is reformed. I 
continue to work with my friend from Arkansas and my colleagues on the 
other side to accomplish such a result, and we have been doing it for 
the last several years. The industry has supported the concept of a 5-
percent net proceeds royalty, a fair market value for land--a fair 
market value for land--a permanent maintenance fee, and the earmarking 
of revenues generated from mineral production on Federal lands to 
create and fund abandoned mines and cleanup programs.
  These are the things that are mentioned by my friend from Arkansas. 
He is concerned about abandoned claims and the cleanup. We provide for 
that in our proposed legislation. The Senator from Arkansas makes quite 
a point of the wide variance in royalties. What he doesn't point out is 
that the royalty agreements on private lands are just that. They are 
agreements. Those agreements are made between two parties. The 
determination of what the costs are to be allocated out is something 
that the Senator from Arkansas doesn't look into. He just simply says, 
``Well, there is a 10-percent royalty here. There is an 11-percent 
royalty here. And the 5-percent royalty is not applicable.'' You have 
to go into what the royalty consists of. A 5-percent net proceeds 
royalty is fair. It is one that I support. A number of my colleagues 
basically support substantial changes in the 1872 mining law which we 
are attempting to address and hope to have before this body yet this 
year.
  There are a couple of other interesting things, Mr. President. The 
administration has never sought to develop compromise legislation that 
reforms the 1872 law while offering the U.S. mining industry the 
economic ability to develop Federal mineral assets. That is a fact. 
This amendment, as with the administration's identical budget proposal, 
is clearly designed to bring the industry to its knees by putting a 
$700 million tax on the industry. Remember, as we reflect on the 
merits, that this matter has been studied and gone into in great detail 
by both the House and the Senate--the Senate Finance Committee and the 
House Ways and Means Committee. Both have said, no, this increased tax 
on the mining industry of $700 million is not justifiable.
  So it is acknowledged we want to overhaul the 1872 mining law, but 
that is not what we are debating today.
  What we are debating today in this amendment is an amendment that 
would simply kill the domestic mining industry in this country, make no 
mistake about it. As you look at the merits of an adequate royalty, it 
has to be based on consideration of comparisons that are real. Just 
what is the negotiated in and out of a higher royalty figure does not 
necessarily represent the return to the Government agency. This is 
modeled exactly after the royalty program that is currently operating 
in one of the most prosperous States for mining, and that is the State 
of Nevada.
  My colleagues from Nevada I see are on the floor. I am sure that they 
will point that out.
  So, in conclusion, let us recognize where we are on this. This is a 
$700 million tax proposal on our mining industry, our domestic 
industry.
  One final point I would like to bring up is the matter of 
germaneness. This amendment is not germane. This amendment does not 
belong on this bill. At the appropriate time a point of order will be 
made. I urge my colleagues not to support a waiver of the point of 
order.
  Mr. President, I yield the floor.
  Mr. BRYAN addressed the Chair.
  The PRESIDING OFFICER. Who yields time to the Senator from Nevada?
  Mr. BRYAN. I say to the distinguished chairman of the Finance 
Committee, I would be happy to yield.
  Mr. ROTH. Mr. President, I ask unanimous consent that the following 
list of staff members of the Joint Committee on Taxation be granted 
full floor access for the duration of S. 949 and that the list be 
printed in the Record.
  It should be noted that these staff members will not be in the 
Chamber all at the same time but will rotate on and off as needed. 
There is a long list, and I will just submit it.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The list is as follows:

                      Joint Committee on Taxation

       Steven Arwin.
       Tom Barthold.
       Ben Hartley.
       Harold Hirsch.
       Ken Kies.
       Kent Killelea.
       Roberta Mann.
       Laurie Mathews.
       Alysa McDaniel.
       Joe Mikrut.
       John Navaratil.
       Joe Nega.
       Judy Owens.
       Cecily Rock.
       Bernard Schmitt.
       Mary Schmitt.
       Carolyn Smith.
       Maxine Terry.
       Mel Thomas.
       Barry Wold.

  Mr. BUMPERS addressed the Chair.
  The PRESIDING OFFICER. The Senator from Arkansas.
  Mr. BUMPERS. Mr. President, I wonder if we might possibly get a time 
agreement here. I have talked to the chief opponents of my amendment. 
We have two Senators from Nevada here, and as I understand it there are 
a couple more besides Senator Craig of Idaho, and Senator Murkowski has 
just finished his statement. I was just wondering--we have an hour 
each, but I was just wondering if we could, since this is in the 
evening if they could--I don't know of anybody else on my side. Senator 
Gregg is my chief cosponsor, and he is not going to be here this 
evening. I wonder if we could allow people to come in and speak as long 
as they want to tonight with the understanding we will have 20 minutes 
equally divided in the morning on the vote.
  How does that sound?
  Mr. MURKOWSKI. I think we have a number of Senators on our side we 
want to accommodate so why not let them speak as long as they want.
  Mr. BUMPERS. Let them speak as long as they want with the 
understanding we will have a 20-minute time agreement equally divided 
tomorrow morning. I make that request.
  Mr. DURBIN. Mr. President, reserving the right to object.
  The PRESIDING OFFICER. The Senator from Illinois.
  Mr. DURBIN. I have an amendment which I would like to offer this 
evening. I want to accommodate the Members who wish to speak on this 
issue, but I would like to have some understanding we would have an 
opportunity. I would need 15 or 20 minutes to offer my amendment this 
evening.
  Mr. REID. Will the Senator yield?
  Mr. DURBIN. I would be happy to yield.
  Mr. REID. I think the Senator from Nevada would like probably 10 
minutes?
  Mr. BRYAN. At most, 10 minutes.
  Mr. REID. Ten minutes.
  Mr. CRAIG. No more than 10 minutes. That could conclude at least for 
this evening debate on this issue.
  Mr. REID. We will visit during Senator Bryan's statement and we may 
be able to cut that down a little bit and decide what procedure we are 
going to follow.
  During the time Senator Bryan is speaking, we will get together and 
try to accommodate the Senator from Illinois.
  Mr. DURBIN. I thank the Senator.
  Mr. MURKOWSKI. Mr. President, if I may, I ask unanimous consent to 
have printed in the Record an article from the Wall Street Journal 
called ``Gold Mining Firms Act to Meet Price-Slump Challenge,'' which I 
think makes my point to the increasing of difficulty in meeting 
production costs with the declining price of minerals in the world 
marketplace today.
  There being no objection, the article was ordered to be printed in 
the Record, as follows:

Gold-Mining Firms Act To Meet Price-Slump Challenge--They Reduce Costs, 
            Scratch New Mines, With No Quick Relief in Sight

                  (By Mark Heinzl and Aaron Lucchetti)

       Gold companies are hunkering down, struggling to weather 
     one of the most prolonged slumps in gold prices in years.
       Mining companies are slashing costs and tearing up plans 
     for new mines as the price of the precious metal continues to 
     slide to three-year lows. Just since November the price of 
     gold futures traded on the New York Mercantile Exchange's 
     Comex division has plunged to $353.40 an ounce from above 
     $380. The skidding price is enough to turn many high-cost 
     mines into money-losing duds and spoils the economics of many 
     planned projects.
       ``No question, if prices stay at this range, you will see 
     fewer new gold mines,'' says

[[Page S6343]]

     Dennis Wheeler, chairman and chief executive officer of Coeur 
     D'Alene Mines Corp. in Coeur D'Alene, Idaho.
       Many analysts believe gold prices will linger at current 
     levels or lower for several months. Gold prices have been 
     pushed downward by slumping investment demand and the fear of 
     increasing supplies from central banks. In Europe, central 
     banks have been pressured to sell their gold reserves in an 
     effort to meet debt requirements for European monetary union 
     in 1999.


                         Outlook for Investment

       Unless the stock market experiences a hefty correction or 
     inflation rears its head, gold investment demand probably 
     will remain low as investors turn to financial investments 
     with higher returns.
       ``It would take a very substantial market correction of 
     about 15% to turn things around for gold,'' says William 
     O'Neill, chief futures strategist for Merrill Lynch & Co. The 
     price could bottom out at between $330 and $350 an ounce, 
     before turning slightly upward, analysts say. The decline in 
     the mineral's price has sent investors in gold-mining stocks 
     running for cover. The Toronto Stock Exchange's gold-stock 
     index has dropped 8.5% since mid-November. Last year 
     investors were focused on gold companies with potential 
     discoveries of new deposits; this year ``we will see the 
     market start to reward companies that have cash flow, 
     production and reserve value,'' says Victor Flores, a gold-
     fund manager with United Services Advisers Inc., a San 
     Antonio mutual fund company.


                         Write-Down on Project

       An early casualty of gold's weakness is the Casa Berardi 
     mine in Quebec. One of its owners, Toronto-based TVX Gold 
     Inc., recently announced plans to shutter the mine, which 
     eats up more than $350 an ounce in cash operating costs. The 
     company said it will take an undetermined write-down on the 
     project.
       At five of the 22 largest U.S. mines, cash costs to produce 
     gold are at or above $347.30 an ounce, the 39-month low that 
     gold touched last week. At current prices ``most mines are 
     keeping their head above water, but the others will have to 
     take cost-cutting measures, from stopping low-grade 
     production to shutting the mine down,'' says John L. Dobra, 
     an economist at the University of Nevada-Reno.


                      ``challenging times'' ahead

       About 10%-15% of the world's gold mining could be postponed 
     if prices stay at current levels for a sustained period, says 
     Jeffrey M. Christian, managing director of CPM Group, an 
     industry consultant. World-wide, gold is produced at an 
     average cash cost of $257 an ounce, says Gold Fields Mineral 
     Services Ltd., a London industry research consultant. 
     However, the total cost including capital expenditures comes 
     to $315 an ounce, only about $40 an ounce lower than the 
     current commodity price.
       ``Every company is looking very carefully'' at cutting 
     costs, says Leanne Baker, gold analyst for Salomon Brothers 
     Inc. Companies are expected to reduce spending in 
     exploration, administration and low-grade gold mining, which 
     has a higher cost of production, analysts say.
       Coeur D'Alene Mines has recently laid off 4% of its staff, 
     halted all charitable donations and sold the company jet in 
     an effort to make up lost profits. ``We anticipate more 
     challenging times ahead,'' says Mr. Wheeler, its chief 
     executive.
       Pegasus Gold Inc., a Spokane, Wash., gold concern that 
     mines about 570,000 ounces a year, has also taken steps to 
     survive in the new lower price range. The company recently 
     announced it would reduce its exploration budget by about 
     20%, freeze senior-management salaries and delay construction 
     on new gold projects in Montana and Chile until 1998.
       ``We looked at the current gold market and our cost 
     structure, and we just needed to reduce spending,'' says John 
     Pearson, director of investor relations for Pegasus. Mr. 
     Pearson says the construction delay will shift about $100 
     million in capital spending to 1998, when the company will 
     reassess the market. ``Right now, the whole gold market is a 
     negative environment; investor sentiment is weak,'' he says.
       Lower gold prices have also hurt Echo Bay Mines Ltd., a 
     Denver company struggling to increase its gold reserves and 
     production. The company recently took a charge of $77 million 
     after ripping up plans to develop its big Alaska gold 
     project, Alaska-Juneau, and also canceled common-share 
     dividend payments to conserve cash after a string of 
     quarterly losses. Gold's recent nose-dive ``made the 
     economics that much more difficult'' for the project, says 
     Echo Bay's chief financial officer, Peter Cheesbrough.
       While marginal projects and mines fall by the wayside, the 
     price slide is also heating up the competition between mining 
     companies for exceptional, higher-grade gold projects. Lower 
     prices are expected to heighten the gold industry's 
     consolidation. ``We'll continue to see merger mania,'' 
     predicts CPM Group's Mr. Christian.
       Placer Dome Inc., a Vancouver, British Columbia, gold 
     miner, is offering $4.5 billion in stock in a battle against 
     Toronto-based Barrick Gold Corp. The price: Bre-X Minerals 
     Ltd. of Calgary, Alberta, and its Indonesian Busang gold 
     deposit. Bre-X says Busang could produce as much as four 
     million ounces of gold a year at cash operating costs below 
     $100 an ounce, compared with Placer Dome's cash costs of 
     about $240 an ounce.
       With Busang, Placer Dome could ``rid themselves of their 
     higher-cost, more risky mines,'' says Marc Cohen, a gold 
     mining analyst at PaineWebber Inc. Indeed, if Placer Dome 
     gets the Indonesian mine, the company says smaller projects 
     in Mexico, Costa Rica or Australia could be shelved, 
     especially if prices stay weak.
       The deals have been getting bigger. Homestake Mining Co., 
     San Francisco, and Newmount Mining Corp., Denver, both 
     recently offered more than $2 billion in stock to acquire 
     Santa Fe Pacific Gold Corp., which analysts say has a solid 
     production and exploration profile.
       Meanwhile, low gold prices are hurting most companies' 
     results, especially relatively unhedged producers such as 
     Echo Bay and Homestake, analysts say. Hedging involves using 
     derivatives such as options and futures to lock in future 
     revenue from gold.
       Some companies were blind-sided by gold's fall. Montreal-
     based Cambior Inc. dropped its overall hedge position in 1996 
     to roughly one year's worth of production from the company's 
     more traditional level of two years, says Henry Roy, 
     Cambior's chief financial officer. Cambior's remaining hedge 
     position leaves about 50% of the 500,000 ounces in annual 
     output hedged at nearly $440 an ounce.

  The PRESIDING OFFICER. The Senator from Nevada.
  The Senator from Alaska is yielding to the Senator from Nevada such 
time as he might consume?
  Mr. ROTH. Mr. President, I would be willing to informally agree that 
tomorrow there be 20 minutes equally divided prior to a vote.
  Mr. REID. On this amendment.
  Mr. ROTH. On this amendment.
  Mr. BUMPERS. The distinguished floor manager is just suggesting to 
proceed as we were with the understanding there be 20 minutes equally 
divided tomorrow morning on this amendment.
  That is essentially my unanimous consent request.
  Mr. REID. Reserving the right to object, I would rather that Senator 
Bryan proceed. That would give us an opportunity to speak and take 
about 10 minutes and then we would be happy to consider the unanimous 
consent request.
  Mr. BUMPERS. Will the Senator repeat that?
  Mr. REID. Senator Bryan is going to speak for approximately 10 
minutes. During that time, we have some procedural things we would like 
to discuss before we enter into a unanimous-consent agreement, because 
it may not be this amendment we will be debating. It may be a second 
degree.
  Mr. BUMPERS. I understand you may offer a second-degree amendment 
this evening, and I certainly have no objection to that. I need to be 
gone from here for about an hour, and that is one of the reasons, I do 
not mind telling you, I am trying to get an agreement here so I will 
feel free to leave the floor for an hour. Perhaps we ought to just keep 
going here.
  Mr. REID. Yes. I say to my friend from Arkansas, we will be real 
quick, and as soon as Senator Bryan finishes we will work something out 
with the Senator.
  The PRESIDING OFFICER. Who yields time?
  Mr. BRYAN. Will the distinguished Senator from Alaska yield the 
Senator from Nevada 10 minutes? I believe I can do it in a shorter 
time.
  The PRESIDING OFFICER. The Senator from Nevada is recognized.
  Mr. MURKOWSKI. We are not keeping time, I would advise my friend from 
Nevada. So I have yielded the floor.
  Mr. BRYAN. I thank the Senator.
  The PRESIDING OFFICER. The Senator from Nevada.
  Mr. BRYAN. I thank the distinguished Senator from Alaska, and I very 
much appreciate his statement, which I think effectively deals with the 
amendment that our friend from Arkansas has offered.
  Let me preface my comments while the distinguished Senator from 
Arkansas is in the Chamber that he noted that at the end of this 
Congress he will not be a candidate for reelection and this will 
represent his last Congress as a Member of this body. I must say that I 
regret the decision of the Senator from Arkansas. He has a 
distinguished record of public service in his own State as Governor and 
as a Member of this body. I have been pleased to share common cause 
with him on many, many issues which I believe in his public policy 
pronouncements are correct for the country, and he, indeed, has been a 
visionary in some of the things he wishes to do.
  I do not quarrel for one moment with his sincerity. I know the depth 
of his conviction and I know them to be deeply entertained. I believe, 
however, that

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the Senator's zeal for this issue has obscured some of the facts that I 
think important for us to understand before we follow the course of 
action that he would suggest to us.
  First, I want to point out the importance of this industry to my own 
State and to correct what is oftentimes, because of an oversimplified 
presentation, an impression that is given that the industry pays no 
taxes. We hear this continuously in the course of the debate on the 
mining law of 1872.
  According to the National Mining Association, the industry, coal and 
hard rock, paid more than $600 million in Federal taxes in 1995. The 
General Accounting Office issued a report recently --this is not a 
publication that emanates from the mining industry but a General 
Accounting Office report--that indicates the average tax rate for the 
mining industry from 1987 to 1992 was 35 percent. Now, that is compared 
with 23 percent for the automobile industry, 19 percent for the 
chemical industry, and 33 percent for the transportation industry. In 
Nevada alone, the gold mining industry paid more than $141 million in 
State and local taxes in 1995, including $32.7 million in property 
taxes.
  So let no one who is listening to this argument be misled that the 
industry pays no taxes, that it is given a free ride. That simply is 
not true. The industry pays a substantial amount of taxes at the 
Federal level, at the State level, and at the local level.
  This issue really is not about the depletion allowance. This is 
really the stalking horse for an issue which we have been debating for 
some years, and that is the mining law of 1872. There is no 
disagreement among Members that the mining law of 1872 needs to be 
updated and modernized. The industry recognizes that and is in 
agreement, and my colleague from Arkansas recognizes that. And there 
is, indeed, fundamental agreement on the general areas that need to be 
updated.

  Let me just refresh my colleagues' memories and identify the issues. 
The industry acknowledges that a royalty needs to be paid, and they are 
prepared to pay a 5 percent net proceeds royalty.
  Now, there is a difference as to how much the industry should pay, 
but there is a recognition on behalf of the industry that a net 
proceeds royalty tax is appropriate and the industry is prepared to pay 
that.
  Second, there is a recognition that the mining law of 1872 needs to 
be changed, and those who gain access pursuant to the law of 1872 need 
to pay a fair market value for the surface estate, in addition to the 
royalty which I have just indicated. That is a second area of 
agreement, the fair market value.
  Third, there is a fundamental recognition, if entry is gained as it 
is under the mining law of 1872 and there is no longer utilization of 
the land for that purpose, of the possibility of revert, allowing the 
Secretary of the Interior to revoke the authority and to reenter the 
lands at his discretion.
  There is a recognition of the need to pay a permanent maintenance fee 
for every claim that is held on Federal lands, and that fee needs to be 
made permanent; that an abandoned mines land fund should be 
established, and that as part of that a reclamation requirement be 
imposed as well.

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