[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.
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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
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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.
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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
[[Page S6344]]
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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