[Congressional Record Volume 143, Number 91 (Wednesday, June 25, 1997)]
[Senate]
[Pages S6344-S6356]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   REVENUE RECONCILIATION ACT OF 1997

  The Senate continued with the consideration of the bill.
  The PRESIDING OFFICER. The Senator from Nevada is recognized.


                           Amendment No. 518

  Mr. BRYAN. Mr. President, as I have indicated, there is broad 
agreement within the industry that the mining law of 1872 needs to be 
updated. There is agreement in those areas that have been identified 
as: 5 percent net proceeds royalty; the fair market value of the 
surface estate; that a reverter provision be provided so that in the 
event the property is no longer used for mining purposes, the Secretary 
of the Interior would have the right to reclaim the land for public 
purposes; that there be a reclamation requirement and a permanent 
maintenance fee as part of that reclamation. So, there is a broad 
agreement that the mining law of 1872 needs to be reformed.
  In the context of this debate, the issue is not whether the mining 
law of 1872 should remain inviolate, unchanged and sacrosanct, it is a 
question of how it needs to be updated to reflect the realities of the 
latter part of the 20th century. In that respect, the mining industry 
has been engaged in a dialog, now, for the better part of the last 
decade. There is obviously disagreement as to the specifics. I am 
hopeful, before my colleague, the distinguished senior Senator from 
Arkansas, retires from this body, that we can indeed have an agreement 
on these issues and produce a piece of legislation that all of us can 
embrace.
  Let me speak specifically to the provisions that are contained in the 
proposal of the Senator from Arkansas. He would, in effect, repeal the 
percentage depletion allowance as it has existed in the code, in one 
form or another, since 1913. A percentage depletion allowance is not, 
as the senior Senator from Arkansas suggests, a giveaway to the mining 
industry. Rather, it is a longstanding tax policy that recognizes the 
unique nature of the mining industry.
  Congress has long recognized that the principal capital asset of a 
mineral producer is its mineral reserves, the ore body itself. These 
mineral reserves are classified as wasting assets. As the minerals are 
produced or sold, the mineral deposit from which they are taken is 
gradually exhausted. Indeed, that is the history of every mining 
exploration in the history of my own State. These ore bodies are not 
inexhaustible; they last for a finite period of time, and the tax law 
reflects the reality of those circumstances.
  That was first recognized in 1913, when the Congress allowed a 
portion of the value of these assets or reserves to be deducted from 
taxable income to allow producers to replace that ore body, their 
wasting asset. So depletion is similar to the depreciation allowance 
for the use of physical properties. It is an allowance that allows an 
investor in natural resources to recover his capital outlay in the 
mineral through a depletion allowance to producers to simply level the 
playing field between those classes of taxpayers. So, although it is 
unique, its underlying premise, its principle is the same: to recognize 
that the asset is not inexhaustible, that it has a finite lifespan, and 
the Tax Code reflects that circumstance.

[[Page S6345]]

  The capital investment necessary for modern mining is astronomical. 
It is not unusual to anticipate capital expenditures that will exceed 
$1 billion when opening a new mine. So the notion that somehow this 
land is turned over and immediately the next day the entrant is able to 
extract a large body of ore and make fantastic profits with no outlay, 
either in terms of ultimate tax liability or expenditures, simply is 
divorced from reality. Many explorations prove unsuccessful; that is, 
the quality of the reserves are simply unsustainable in terms of their 
economic feasibility. And that is a reality.
  Many claims turn out to be unsuccessful because the mineral is not 
identified and cannot be located for purposes other than exploration. 
So the risks here in a mining operation are enormous. The Bumpers 
amendment would repeal the percentage depletion allowance for only 
those minerals obtained from land granted under the 1872 mining law. I 
think therein lies the true nature of the Bumpers amendment. This has 
little or nothing to do with tax reform. It seeks to punish the mining 
industry because Congress has been unable to reach an agreement on 
reforming the mining law of 1872. And that is patently unfair.
  We recognize that reform needs to occur. The dialog continues. As I 
have indicated, I am hopeful that in this Congress it will be possible 
for us to achieve an agreement with respect to that reform.
  Moreover, as the Senator from Alaska pointed out earlier, this 
industry is part, as other parts of our economy are, of a global 
competition. For us to remain competitive in America it will be very 
important for us not to impose a tax system that is viewed as so 
punitive as to discourage mineral exploration in its entirety.
  I speak with some personal knowledge of the situation because, in my 
own State, we have gone through a series of mining booms. The origin of 
Nevada's history--born, as it was, during the Civil War--is a result of 
the first great mineral discovery in our State, the Comstock Lode, in 
1859. That discovery, which brought thousands of people into what is 
now Nevada, laid the predicate for Nevada's admission to statehood. The 
mining industry was such an important part of the early economy in 
Nevada that the first attempt at statehood failed because of the way 
the State Constitution, as then proposed, contemplated the imposition 
of the tax on mining. So our heritage is linked to this industry, and 
the taxable implications are something that all of us in Nevada are 
very mindful of.

  That mining boom lasted for a period of roughly 25 years. By the end 
of the century, the ore bodies having been depleted in the Comstock 
Lode, Nevada's mining industry was in a pronounced state of recession. 
It was resurrected ever so briefly during the period of World War I, 
and then declined at the end of that war. The modern period really 
began about 10 or 15 years ago, with the technology that makes it 
possible to recover microscopic particles of gold, so small, so minute 
that they are undetected by the human eye.
  So this is an industry which has had a series of cyclical ups and 
downs. The suggestion of recklessly imposing this new tax structure is 
something that apprehends great fear for all of us in Nevada because of 
the sensitive nature of the industry and its transitory nature, based 
upon market circumstances as well as the ability to continue to locate 
new bodies of ore.
  For Nevada and for America, it has been a good industry. It employs 
about 120,000 people in America. In my own State, it employs 15,000. 
And, as has been pointed out by the Senator from Alaska, if one looks 
at the pay scale of major industries in America, the average salary in 
mining is close to $46,000 a year, and in the context of the debate 
that we had earlier today about Medicare and Medicaid, and coverage of 
hospital and physician services, most mining companies provide a full 
range of insurance coverage for their employees and their dependents. 
So they have been good citizens with us in Nevada. And they have 
contributed immeasurably to the prosperity that we enjoy in Nevada.
  In point of fact, Nevada produces more in the way of gold than any 
other State in the country. Indeed, if we were a separate country, we 
would rank internationally somewhere among fourth, fifth and sixth in 
terms of production worldwide. So this is a major industry with 
enormous significance to my State, that pays good money to good people. 
We are not going to allow that industry to be devastated by an 
improvident, zealous attack on the industry and the failure to properly 
consider what the impact of this would be.
  Let me, by way of a concluding comment, indicate what kind of an 
administrative nightmare this provision would be. As I indicated a 
moment ago, this change would apply only with respect to those minerals 
that are recovered under public lands, under lands which were entered 
pursuant to the provision of the mining law of 1872. That suggests that 
a mining operation is finitely defined and that an operation that 
derives its origin from entry under the mining law of 1872 is a 
separate and distinct and discrete operation from that part of the 
operation in which the mining company may have acquired title to the 
property through private sale.
  Indeed, if you look at the mining operations that currently exist in 
my own State, and if you look at the source of title or occupancy of 
those lands, you will find as many as five or six different derivative 
sources for the occupation and/or title or patent to those claims. So 
it would be an administrative nightmare in allocating this new system 
of taxation to a single operator on a single mine who is mining bodies 
of ore through different areas within a fairly confined area of a few 
of those acres. So it is totally impractical.
  I hope my colleagues recognize that this is not the sort of thing we 
should do without giving due deliberation to the broader issue which 
will be discussed during this Congress and I hope will be resolved, and 
that is to deal with the update of the mining law of 1872. That is what 
this debate ought to be about, rather than a punitive approach which is 
taken in the proposed Bumpers amendment.
  I hope, at the appropriate time, my colleagues will join us in 
rejecting this proposal and allow us to continue the debate with 
respect to reform during the course of this Congress.
  I yield the floor.
  Mr. CRAIG addressed the Chair.
  The PRESIDING OFFICER (Mr. Enzi). The Senator from Idaho.
  Mr. REID. Will my friend from Idaho yield for a minute?
  Mr. CRAIG. I yield.
  Mr. REID. Senator Bumpers is off the floor, but he asked if I would 
propound a unanimous consent request on his behalf. First of all, I 
suggest that the unanimous consent request will be that at the time 
debate is completed in the morning, a point of order will be raised 
against this amendment on the basis of germaneness.
  Mr. CRAIG. Will the Senator from Nevada withhold for a moment? Staff 
has, I believe, comprised that unanimous consent request and will 
provide it to you.
  Mr. REID. The one thing I ask, because he has been so patient here, 
is that the Senator from Illinois--he has been waiting here for several 
hours while we worked our situation out --would it be appropriate that 
he be allowed, as part of the unanimous consent request, to offer the 
next amendment?
  Mr. CRAIG. We have to check with the floor managers.
  Mr. President, while that is going on, let me reclaim my time and 
discuss the Bumpers amendment for a few moments.
  The PRESIDING OFFICER. The Senator from Idaho.
  Mr. CRAIG. Mr. President, I join the Senator from Alaska and the two 
Senators from Nevada in our commitment and belief that the 1872 mining 
law deserves to be reformed. These four Senators have worked for the 
last 4 to 5 years to bring responsible and sensitive reform to this 
old, but very important, law, a law that has served our country well on 
public lands that allows an individual to go forth to explore, to 
discover and to develop the mineral wealth of our country.
  It is also important to recognize that this is a public resource, and 
there needs to be an appropriate balancing act in the effective 
utilization of a public resource and a return to the taxpayer of the 
value of that resource.
  Because the 1872 mining law was really intended at a very early time 
in our

[[Page S6346]]

country's history to be a development law that allowed growth and 
development primarily in the public lands of Western States, I, a 
Western Senator, along with the Senator from Alaska and the two 
Senators from Nevada as Western Senators, saw a need, along with a good 
many others of our colleagues, to provide good reform to this old law 
to allow the mining industry to go forth, to assure there would be a 
right to discover, a right to develop, but to do all of that in the 
context of sound environmental policy and, for the first time, to 
propose a royalty on hard-rock mining; also, to recognize that there 
was a surface value that is no longer there and an absolute sense of a 
need to develop western lands. So, therefore, there ought to be a 
market value placed on the surface rights that one gained as they 
gained title through the patenting process which allowed that public 
resource to go to private utilization.
  But for 4 years, this administration has literally refused us the 
right to do that. This Senate passed mining law reform. It was in the 
budget reconciliation 2 years ago, and the President vetoed it. So for 
the Senator from Arkansas to stand on the floor this evening and say 
there has been no meaningful mining law reform isn't quite true. There 
has been a very aggressive effort on the part of this Senator; the 
Senator from Alaska, the chairman of the Energy and Natural Resources 
Committee; the Senator from Louisiana, now retired, Senator Johnston, 
who was the chairman of that committee; and, of course, the Senators 
from Nevada who understand the importance of mining, as I do, because 
it is a critical part of their economic base and the resource 
development in their State.
  The Senator from Arkansas has another vision of mining. It is called 
no-mining. For some reason, he believes that this is a source of wealth 
to the Treasury of this country, and when he sees millions of dollars 
invested, somehow he immediately equates that as millions of dollars 
returned to the Treasury, when the fact is that while money can be 
returned to the Treasury, it takes an average of $400 million to 
develop an operating mine today, to make sure it is in compliance with 
the Clean Air Act and the Clean Water Act, to make sure it meets the 
NEPA requirements, to make sure it is operated in a sound environmental 
way, while returning a profit to the company and to the investors that 
put up the nearly $400 million for that development.
  Unlike other kinds of resources, minerals are not sold in Little Rock 
at a Little Rock value or Boise, ID, at a Boise value. They are sold in 
Little Rock or in Boise based on a world value, a world market, because 
gold and silver and iron, zinc and lead, and all of those kinds of 
things that make up the fundamental base of the industrial society that 
we enjoy are traded in a world environment.

  When that price slips, so it slips at the mine. A mine that one year 
can be very profitable, the next year can be very unprofitable and can 
lose money. That has been and is the history of mining in our country. 
You talk about striking it rich, that happens in mining, but I also 
know a lot of miners who struck it poor.
  A mining company in our State just a year ago called me and said they 
wanted me to know that they were shutting down a major mining operation 
in one of the counties in the State of Idaho. Why? After they had 
invested millions of dollars, their exploration didn't pan out to be 
quite what they thought it ought to be. Their drilling didn't determine 
the projections of the ore body that existed. So they were shutting it 
down and walking away and writing off millions and millions of dollars 
of cost in the development of a mill and a plant and a site and all of 
those necessary tools to bring that mineral out of the ground to the 
smelter in a refined way.
  I say nothing new on the floor of the Senate tonight. I only bring 
current the 200-plus-year history of the mining industry of our Nation.
  But reform is necessary, and this Senator, along with the Senator 
from Alaska--the two Senators from Nevada have just authored a new 
mining law reform approach. We sat down with the Senator from Arkansas 
and his staff to try to see if we could not build a bipartisan 
compromise. That hasn't happened yet, and we want that to happen. We 
believe in the reform.
  But what the amendment of the Senator from Arkansas proposes tonight 
is not constructive. It doesn't add to the overall effort to build 
strong mining law for this country that allows continued development in 
an environmentally sound way, to build the resource and the wealth base 
of our Nation and to assure a domestic supply of minerals and metals.
  It does quite the opposite. It goes directly at mining industries in 
this country, and it could very well render them marginal and, in some 
instances, less than profitable. When that happens, the mining industry 
doesn't stay around. It very quickly closes its doors and the average 
job of $46,000 a year goes wanting, and that mining industry goes to 
Peru or to Chile or to Colombia or to Ecuador or to Mexico to build the 
wealth base of those countries and to deny us the $100 billion industry 
that we have here.
  I don't think that makes good sense. I never have. And I can't 
understand the thinking of the Senator from Arkansas in that regard, 
other than he just appears to have it out for the mining industry.
  In my State, it is an important industry. Nationwide, it is tens of 
thousands of very high-paying jobs, and there is no question that this 
industry contributes a great deal to our country and hundreds of 
millions of dollars to the economy on an annualized basis.
  The mining industry already pays taxes. Somehow, because they are 
able to patent public resources and then develop them, the Senator from 
Arkansas suggests they pay nothing, they ``get a free ride.'' That one 
example on the bottom line of the chart of the Senator from Arkansas is 
an Idaho-based operation. There may be a billion dollar's worth of 
reserves in the ground, but that operation isn't operating today. They 
are not functioning, and the reason they are not is that they are not 
current in the economy of the marketplace. They may have invested 
millions of dollars, and they may have paid the Federal Government 
through the process of the $2.50 an acre surface value in the patenting 
process, but they are not returning any money today, and their mine 
sits idle. That is not unusual. That is the way the mining industry 
works. That is the way it has always worked. My guess is it won't 
change.
  The mining industry already pays an average in Federal taxes at 32 
percent, according to the General Accounting Office. Because of the 
corporate alternative minimum tax, they currently pay a very high rate. 
But the Senator from Arkansas says, ``Whoop, that's not good enough, 
stick them again 8 to 10 percent.'' So we get them up to 42 percent. 
Why do you want to pay 42 percent on your income flow if you can move 
across the border and pay less? That is exactly what has happened. The 
Senator from Alaska and the Senators from Nevada spoke very clearly 
about that in their past statements. The exodus out of this country of 
the mining industry and the jobs and the expertise and the engineering 
that flows with it is a tragedy to which we shouldn't contribute.
  So I hope that Senators will recognize that we shouldn't be 
legislating more in relation to this tax bill that we have before us. 
This comes outside of the agreement. We have worked very hard, and, I 
must say, the chairman and the ranking minority member of the Finance 
Committee have done what I think is an excellent job in working to stay 
inside an agreement that the leadership of the Senate and the House and 
the President struck as it related to revenue and tax relief.
  Tax relief ought to be creating jobs, it ought to be promoting 
economic development, it ought to be growing our economy instead of 
shrinking it, instead of destroying thousands of jobs that I believe 
this kind of legislation and the Bumpers amendment would accomplish.
  I have before me a chart that talks about the combined direct and 
indirect contribution of the metals mining industry to the economy of 
the individual States of this Nation. I could go through that, but here 
is the bottom line, Mr. President.
  The bottom line is $134,378,000,000 a year. Is that in the pocket of 
some mining executive? Absolutely not. It is in the work force of 
Caterpillar equipment in Illinois. It is spread across the country in 
the supplies and the direct and indirect services that provide for

[[Page S6347]]

the mining industry. It is in the chemical industry of Delaware.
  I am amazed, but I look down here and see that in Connecticut alone 
is $1,792,000,000--Connecticut--directly attributable to the mining 
industry of the country. I did not know there was a mine in 
Connecticut. Well, there probably is not, but there are major corporate 
headquarters and there are suppliers, and those suppliers create jobs.
  Of course, when you have a broad-based industry like metals and 
mining, all States benefit. Literally every State in the Nation has 
nearly $100 million or more in value of directly associated or related 
jobs to the metal and the mineral industry of our country.
  That is why we should not be stepping forward in some form to destroy 
it. We ought to be promoting it. Most importantly, the Senator from 
Arkansas ought to be working with the Senators from Nevada and from 
Idaho and from Alaska to get reform that we all want so that the mining 
industry of the country can know the ground on which it operates and 
the law to which it must comply. That is what we ought to be about.
  So I hope that tomorrow when we vote on the Bumpers amendment, we can 
vote it down, recognizing that when we deal with reform in the mining 
industry, let us deal with it in a comprehensive way in the appropriate 
authorizing committee with the hearings that are necessary to make sure 
that what we do fits so that we do not wound an industry that has 
provided for us well and that continues to employ tens of thousands of 
people across our country and provide well over $100 billion annually 
to the wealth base of this country. That is the issue.
  I yield the floor.
  Mr. REID addressed the Chair.
  The PRESIDING OFFICER. The Senator from Nevada.
  Mr. REID. I ask through the Chair to the manager of the bill, is the 
unanimous-consent request now ready to be propounded?
  Mr. ROTH. No. We are still waiting for clearance on the Democratic 
side.
  Mr. REID. Mr. President, the chairman of the Energy and Water 
Committee entered into the Record this evening a news article that was 
printed earlier this year in the Wall Street Journal. The news article 
says a great deal about the debate that is taking place here tonight.
  We can talk about all the jobs that mining produces--and there are 
over 100,000 of them in the United States alone--we can talk about all 
the direct and indirect income that it generates for States, but the 
most important thing that I think brings this in proper perspective is 
to look at what is happening to mining today.
  ``Gold-Mining Firms Act to Meet Price-Slump Challenge.''
  The price of gold has dropped precipitously. The price of gold is 
low. As indicated in this article, ``[Mining Companies] Reduce Costs, 
Scratch New Mines, With No Quick Relief in Sight.''
  The article says, among other things:

       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. . .[the prices] plunged to $353.40 
     an ounce . . . The skidding price is enough to turn many 
     high-cost mines into money-losing duds and spoils the 
     economics of many planned projects.

  Dennis Wheeler, chairman and chief executive officer of Coeur D'Alene 
Mines, which is headquartered in Coeur D'Alene, ID, says, ``No 
question, * * * you will see fewer new gold mines.''
  This is a quote from this article.

       Gold prices have been pushed downward by slumping 
     investment demand and the fear of increasing supplies from 
     central banks.

                           *   *   *   *   *

       At [least] five of the 22 largest U.S. mines, cash costs to 
     produce gold are at or above $347.30 an ounce. . .

  What this means, Mr. President, is that the cost of gold is not 
enough to meet the costs of producing the gold. That is why in Nevada 
you have seen companies laying off people. That is why you have seen 
mines going out of business. At this stage they have been the small 
operations, but the big ones are going to come unless something happens 
to raise the price of gold or to cut costs, or both.

       Coeur D'Alene Mines has recently laid off 4% of its staff, 
     halted all charitable donations, and [as Mr. Wheeler said] . 
     . . ``We anticipate more challenging times ahead.''

  And that, Mr. President, is an understatement.
  Pegasus Gold is a substantial company based in Spokane, WA. They have 
operations in the State of Nevada. They mine over half a million ounces 
of gold a year. But they have taken steps to survive in the new lower 
price range, or trying to survive.

       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 . . .

  Echo Bay Mines, a Denver-based company has operations in the State of 
Nevada, among other places. Lower gold prices have also hurt Echo Bay, 
causing its gold reserves to go down.

       The company recently took a charge of $77 million after 
     ripping up plans to develop its big Alaska gold project [in] 
     Alaska-Juneau . . .

  Now, I say, Mr. President, this is only a little example. So $77 
million they spent before they turned a single spade of dirt.
  A little operation outside the town of Searchlight, NV, where I was 
born, still maintain my residence--that operation took about $100 
million before they could do any mining. It is a relatively small 
operation.
  Echo Bay:

       . . . also canceled common-share dividend payments to 
     conserve cash after a string of quarterly losses.

  Many, many gold companies are suffering the same fate as the few of 
these that I have referred to out of this article.
  Gold mining companies are having real difficulty. As has been 
indicated already on the floor, the General Accounting Office has 
indicated that gold companies now--the mining industry now--is paying 
about a 32 percent effective tax rate. Now, if this goes up, as 
indicated by my friend from Idaho, they will be out of business in a 
large scale.
  This amendment, Mr. President, would create an administrative 
nightmare for the Department of the Interior. For example, the origin 
of the claims and lands currently being mined, they could not be 
tracked, or if they could it would be extremely difficult. Often these 
claims have been owned and conveyed at arm's-length transactions.
  How do you go back and effectuate this depletion allowance that he 
wants to dispose of? Many properties are obtained through a variety of 
ways other than the 1872 mining law. Remember, they have been mining in 
the State of Nevada since the 1840's. Many claims were filed prior to 
the 1872 mining law.
  Mining companies often put together their operation from private 
property acquired through laws, both State and Federal.
  How would we keep track of ore on a property that has several 
different property origins? The depletion allowance would apply to a 
shovel of ore for one location but not to a shovel of ore identical to 
that just 10 feet away.
  In principle, there is little difference between allowing mineral 
producers a depletion allowance and allowing a manufacturer to 
depreciate a plant and equipment.
  In the process of manufacturing, the manufacture's equipment requires 
replacement.
  Therefore, a depletion allowance for mineral producers a simply 
levels the playing field between these classes of taxpayers.
  Again this amendment unfairly targets the western mining industry.
  This amendment is an attempt to do mining law reform, and this is not 
the place or time for such an effort.
  If this Congress wants to rewrite the current mining law then it 
should begin in the Energy and Natural Resources Committee, not on the 
Senate floor tonight.
  The Bumpers amendment proposes to eliminate the percentage depletion 
for non-fuel minerals.
  This amendment to eliminate Percentage Depletion is an ill-conceived 
and ill-advised attempt to circumvent congressional efforts to reform 
current mining law.
  The U.S. mining industry has long agreed that the mining law is due 
for an overhaul.
  Serious efforts to accomplish such a result have taken place over the 
past several years.
  Legislation has reached the President's desk that would have, among

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other things, imposed significant royalties on minerals produced from 
new mines developed on Federal lands.
  The administration has never sought to develop compromise legislation 
that reforms the mining law.
  This amendment is simply another attempt to attack the industry on 
yet another front.
  The capital investment necessary for modern mining is astronomical.
  It is not unusual to anticipate capital expenditures well in excess 
of $1 billion when opening a new mine.
  With the repeal of the investment tax credit, the extension of 
depreciable lives, and the imposition of the alternative minimum tax, 
the tax burden on the U.S. mining industry is significant and 
burdensome.
  The most recent GAO report on the subject indicates that the mining 
industry is currently paying a 32 percent effective tax rate.
  It is estimated by the State of Nevada that this proposal would 
result in the following: 2,300 jobs; $220 million in economic output; 
and $68 million loss in household earnings.
  The PRESIDING OFFICER. The Senator's time and the opposition's time 
has expired.
  Mr. REID. There is no time. There is no time.
  The PRESIDING OFFICER. On a reconciliation bill there is an hour.
  Mr. REID. Oh, all time is gone? That is fine.
  Senator Bumpers left anticipating that there would be a unanimous-
consent request entered. I certainly want to do that before I leave 
today, if at all possible.
  Mr. ROTH. Mr. President, I ask unanimous consent that at 9:30 a.m., 
on Thursday, there be an additional 20 minutes for debate equally 
divided between Senator Murkowski and Senator Bumpers, and immediately 
following that debate time, Senator Murkowski be recognized to raise a 
point of order against the Bumpers amendment; and further, immediately 
following a motion to waive, the Senate proceed to a vote in relation 
to the Bumpers amendment; to be immediately followed by 20 minutes of 
debate equally divided in the usual form prior to a vote on or in 
relation to the Dorgan amendment No. 517; to be followed by 10 minutes 
of debate equally divided in the usual form on the Dorgan motion to 
refer, with Senator Roth being recognized to raise a point of order 
against the Dorgan motion to refer; and, further, immediately following 
a motion to waive, the Senate proceed to a vote in relation to the 
Dorgan amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                         Privilege of the Floor

  Mr. DURBIN. I ask unanimous consent that Anne Marie Murphy of my 
staff be accorded floor privileges during the consideration of S. 949.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 519

[Purpose: To increase the deduction for health insurance costs of self-
    employed individuals, and to increase the excise tax on tobacco 
                               products]

  Mr. DURBIN. Mr. President, I would like to present an amendment for 
floor consideration.
  The PRESIDING OFFICER. Without objection, the pending amendment is 
set aside.
  The clerk will report.
  The bill clerk read as follows:

       The Senator from Illinois [Mr. Durbin], for himself, Mr. 
     Dorgan, Mr. Daschle, and Mr. Harkin, proposes an amendment 
     numbered 519.

  Mr. DURBIN. 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 267, between lines 15 and 16, insert the following:

     SEC. 780. DEDUCTION FOR HEALTH INSURANCE COSTS OF SELF-
                   EMPLOYED INDIVIDUALS INCREASED.

       (a) In General.--Section 162(l)(1) (relating to special 
     rules for health insurance costs of self-employed 
     individuals) is amended to read as follows:
       ``(1) Allowance of deduction.--In the case of an individual 
     who is an employee within the meaning of section 401(c)(1), 
     there shall be allowed as a deduction under this section an 
     amount equal to the amount paid during the taxable year for 
     insurance which constitutes medical care for the taxpayer, 
     the taxpayer's spouse, and dependents.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     1996.
       On page 337, beginning with line 14, strike all through 
     page 339, line 15, and insert the following:
       (a) Cigarettes.--Subsection (b) of section 5701 is 
     amended--
       (1) by striking ``$12 per thousand ($10 per thousand on 
     cigarettes removed during 1991 or 1992)'' in paragraph (1) 
     and inserting ``$27.50 per thousand'', and
       (2) by striking ``$25.20 per thousand ($21 per thousand on 
     cigarettes removed during 1991 or 1992)'' in paragraph (2) 
     and inserting ``$57.75 per thousand''.
       (b) Cigars.--Subsection (a) of section 5701 is amended--
       (1) by striking ``$1.125 cents per thousand (93.75 cents 
     per thousand on cigars removed during 1991 or 1992)'' in 
     paragraph (1) and inserting ``$2.531 cents per thousand'', 
     and
       (2) by striking ``equal to'' and all that follows in 
     paragraph (2) and inserting ``equal to 28.6875 percent of the 
     price for which sold but not more than $67.50 per thousand.''
       (c) Cigarette Papers.--Subsection (c) of section 5701 is 
     amended by striking ``0.75 cent (0.625 cent on cigarette 
     papers removed during 1991 and 1992)'' and inserting ``1.69 
     cents''.
       (d) Cigarette Tubes.--Subsection (d) of section 5701 is 
     amended by striking ``1.5 cents (1.25 cents on cigarette 
     tubes removed during 1991 or 1992)'' and inserting ``3.38 
     cents''.
       (e) Smokeless Tobacco.--Subsection (e) of section 5701 is 
     amended--
       (1) by striking ``36 cents (30 cents on snuff removed 
     during 1991 and 1992)'' in paragraph (1) and inserting 
     ``$1.9933 cents'', and
       (2) by striking ``12 cents (10 cents on chewing tobacco 
     removed during 1991 or 1992)'' in paragraph (2) and inserting 
     ``75.33 cents''.
       (f) Pipe Tobacco.--Subsection (f) of section 5701 is 
     amended by striking ``67.5 cents (56.25 cents on pipe tobacco 
     removed during 1991 or 1992)'' and inserting ``$1.5188 
     cents''.
       (g) Imposition of Excise Tax on Manufacture or Importation 
     of Roll-Your-Own Tobacco.--
       (1) In general.--Section 5701 (relating to rate of tax) is 
     amended by redesignating subsection (g) as subsection (h) and 
     by inserting after subsection (f) the following new 
     subsection:
       ``(g) Roll-Your-Own Tobacco.--On roll-your-own tobacco, 
     manufactured in or imported into the United States, there 
     shall be imposed a tax of 81 cents per pound (and a 
     proportionate tax at the like rate on all fractional parts of 
     a pound).''

  Mr. DURBIN. Mr. President, simply put, this amendment which I have 
offered asks that we move toward more equitable tax treatment for the 
self-employed with respect to the deductibility of their health 
insurance premiums within this budget process. I believe this issue 
enjoys wide support among my colleagues in the Senate.
  I would like to draw my colleagues' attention to a letter which has 
been sent to the Senate Finance Committee signed by over half of the 
membership of this body. A total of 53 Senators have urged that there 
be movement in this legislation toward the equitable treatment for the 
self-employed with respect to the deductibility of health insurance 
premiums.
  Today, I would like to reaffirm our commitment to helping the self-
employed afford health insurance and receive parity with their 
corporate competitors who can already deduct 100 percent of their 
health insurance premiums by passing this amendment.
  Let me say at the outset, the term ``self-employed'' is a term of art 
used in the Tax Code but for those who are following the progress of 
this debate, they may be interested in the people who fall into the 
category of the self-employed. Those would include, of course, 
entrepreneurs, small business people, family farmers and the like. It 
is the fastest growing segment of the American economy.
  More and more people are starting businesses. More and more people 
aspire to own their own businesses. More and more women are getting 
involved in entrepreneurial endeavors. So this amendment addresses a 
problem which exists and one which can only become worse as more people 
get into self-employment categories and still do not enjoy the same 
positive tax treatment as corporations and their employees.
  There are over 23 million self-employed in the United States today. 
Unfortunately, over 5 million of these people have no health insurance. 
The rate is higher for self-employed people than the rate for salaried 
and waged workers. On the average, salaried and waged workers have only 
16.8 percent of their membership uninsured, as against 25 percent of 
the self-employed that are uninsured.
  The simple fact of the matter is there is a 50 percent higher 
likelihood that a person is uninsured--without health insurance--if 
they are self-employed, as opposed to being a salaried employee.

[[Page S6349]]

 Not only are the self-employed less likely to have health insurance, 
but those that do pay on the average 30 percent more for their health 
insurance premiums. They do not have access to group health insurance. 
They pay some of the highest rates in the Nation.
  For those who follow closely the National Federation of Independent 
Businesses, which as I understand it is the largest organization of 
small businesses in America, they might be interested to know that when 
their membership was surveyed nationwide last year and asked their No. 
1 issue for Washington, it was not capital gains; their No. 1 issue was 
the cost of health insurance. When I traveled across Chicago last year 
and met many entrepreneurs and small business people, I asked them the 
challenges they face, and time again they said, it is such a great 
concern to us and to our families that once having left the protection 
of a group health insurance plan and having moved into self-employment, 
into small business, or in many cases to family farms, they found 
themselves unable to afford health insurance.
  I can recall a telephone call to my congressional office, when I 
served in the House. A woman called when she heard of my interest in 
this issue and said, ``I want to tell you my family story.'' It is one 
that is repeated many times on farms across America. She said, ``I was 
at home as a farm wife raising our children, raising the family. Then I 
decided I had to go to work in town.'' She said to me, 
``Congressman''--I was a Congressman--``Congressman, the reason I work 
is because the salary I earn pays for two things: Day care for my 
children, which otherwise I would take care of at home, and the 
premiums for health insurance for our farm family.'' That story is 
repeated many times over, across the United States, where people are 
struggling to come up with the resources to be able to afford health 
insurance.
  Currently, the self-employed in America may only take a tax deduction 
of 40 percent for the cost of health insurance premiums. However, 
corporations and their employees enjoy a full 100 percent 
deductibility. This is not fair.
  I once asked some of the older Members of the House who had been 
around during many, many years of debate on tax bills why this 
disparity existed, why would we take one group of Americans working for 
businesses and give them full deductibility of health insurance, and 
say to self-employed people, you can only deduct 40 percent. I was 
certain there had to be some rationale behind this dichotomy. I spoke 
to Sam Gibbons, now retired Congressman from Florida, who served on the 
House Ways and Means Committee for many years. He said there is no good 
explanation for it. It came about sometime after World War II when 
corporations and unions asked for this advantage and it was given to 
them. The self-employed did not speak out. Health insurance was not a 
major issue, and as a consequence this dichotomy, this divergence in 
the deductibility of health insurance became enshrined in law.
  Scheduled increases in current law for the deduction of the self-
employed will slowly, slowly increase from the current level to 45 
percent by 2002. We are talking about waiting 5 years for it to go up 5 
percent more for deductibility, and then even by 2006, almost 10 years 
from now, under current law the deductibility for self-employment will 
only be 80 percent--never reaching 100 percent deductibility of a 
corporation or big business. That is a very long time for self-employed 
people to wait.
  We should make progress on this issue on increasing deductibility 
this year within this budget package. Farmers and many other hard-
working, self-employed individuals, including many women who recently 
started small businesses in record numbers, deserve help in this area, 
sooner rather than later.
  You might take into consideration this fact: Of the 10 million 
uninsured children in America today, 1.3 million of them live in 
families where there is at least one parent who is self-employed. These 
children comprise approximately 13 percent of all uninsured children. 
So for these families, for the breadwinners who own the small 
businesses, for the family farmers and for their children, this is a 
very critical amendment.
  Now, the obvious question to be asked of myself and others who come 
to the floor with changes in the Tax Code is this: How are you going to 
pay for it? How will you provide the resources to offset the cost of 
giving this new deduction to the self-employed? I will tell you, 
upfront, we raise the tobacco tax, the Federal tobacco tax.
  The current cigarette tax is 24 cents per package. The current tax on 
smokeless tobacco is about 2.7 cents, for snuff; and 2.3 cents for a 
pouch of chewing tobacco. This bill increases the cigarette tax by 20 
cents per pack to 44 cents. That is the bill that comes out of the 
Senate Finance Committee. It increases the tax on smokeless tobacco 
products by the same 83 percent. That will raise the tax to around 5 
cents for snuff, 4.2 cents for chewing tobacco.

  The amendment I offer to provide the deductibility, full 
deductibility for health premiums for the self-employed, is paid for by 
adding about 10 cents to the tax on cigarettes, about 10 cents, a tax--
maybe a fraction higher that might be necessary to make certain that it 
meets this budgetary requirement. Ten cents, 10 pennies for a person 
buying a package of tobacco.
  What will we buy as a Nation for these 10 pennies? We will buy 
protection for millions of Americans who today do not have it, health 
insurance that they can afford, giving them fair treatment under the 
Tax Code, saying to people who buy tobacco products you will pay a few 
pennies more for those products. We, as a Nation, will see great 
benefit coming to many families and many children across America.
  We are waiting for a formal revenue estimate from the Joint Tax 
Committee. We have been in negotiation with them. We are told that the 
amount of the tax on a package of cigarettes may be slightly over 10 
cents, but we are in this range of between 10 and 11 cents.
  What happens when you raise the price of a package of cigarettes, as 
this bill does, by 20 cents already? Fewer children buy them. As you 
make tobacco products more expensive, kids stay away. Now, isn't that a 
good idea? Don't we all agree that to have 3,000 children start smoking 
for the first time every day in the United States is a bad idea? 
Shouldn't we discourage this addiction of our children? I think we all 
agree on that. I think even the tobacco companies have come to 
acknowledge that they are a major part of the problem that we have 
today in addiction to nicotine and tobacco.
  In addition to taking care of a lot of children who are uninsured and 
a lot of self-employed and their families by increasing the tax on 
tobacco products slightly, by 10 cents or a few fractions beyond that, 
we will discourage children from using tobacco products. Is that a 
critical problem in our country? I think we all know that it is. 
Teenage smoking in America has risen by nearly 50 percent since 1991.
  I will close with just a few brief remarks about the sales tax and 
just say to my colleagues it would be foolish, foolish, for us to 
ignore the reality that tobacco taxes are going to increase. We have 
asked for a survey of State existing tobacco taxes as of today. What 
are the taxes in each State imposed by those States and their 
legislatures on tobacco products? I say to my friends and colleagues if 
you will take a look here, you will see that more and more State 
legislatures are dramatically increasing tobacco taxes as a source of 
revenue.
  For example, let me give you a few. In the State of Hawaii, the State 
cigarette tax will go from 60 cents to 80 cents in just a few weeks. In 
the State of Maine, the cigarette tax is going to double from 37 cents 
to 74 cents by the end of the year. In the State of Alaska, the tax 
rate on cigarettes and tobacco products will move from 29 cents to $1 
dollar by the end of the year. In the State of Utah, from 26\1/2\ cents 
to 51.5 cents. State legislatures understand this is a good source of 
revenue. The Senate Finance Committee understood that when it added a 
20-cent tobacco tax.
  So I ask my colleagues to seriously consider a very minor increase of 
about 10 cents a pack to tobacco and measure it against what we will 
win as a Nation. We had this long debate a few years ago about 
universal health care. I certainly believe in it and subscribe to it. 
We did not finish that debate with a work product that achieved 
results. I hope with this amendment,

[[Page S6350]]

though, we can move forward on the path toward moving more people into 
the protection of health insurance. The 5 million uninsured self-
employed people deserve that type of protection. Those self-employed 
and their children will benefit greatly from this amendment.
  I know that this may be a tough amendment for the Senate Finance 
Committee. I have watched the course of this debate over the last 
couple of days and it is clear that they do not always warm up to 
suggestions of change. Maybe this time there might be an exception. 
Maybe with the bipartisan support of some 53 Senators, the members of 
the Senate Finance Committee, the leadership, might consider this 
amendment. It is one which would greatly enhance the tax package which 
they offered.
  I yield back the floor and offer my amendment.


                           Amendment No. 520

   (Purpose: To provide for children's health insurance initiatives)

  The PRESIDING OFFICER. The Senator from Delaware.
  Mr. ROTH. Mr. President, I now send to the desk the amendment that 
was reported out by the Finance Committee regarding the children's 
health insurance initiative. This amendment provides $8 billion over 5 
years for children's health insurance coverage.
  The PRESIDING OFFICER. The clerk will report.
  The bill clerk read as follows:

       The Senator from Delaware [Mr. Roth] proposes an amendment 
     numbered 520.

  Mr. ROTH. Mr. President, I ask unanimous consent reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The text of the amendment is printed in today's Record under 
``Amendments Submitted.'')


                 Amendment No. 521 to Amendment No. 520

         (Purpose: To improve the children's health initiative)

  Mr. ROTH. I now send to the desk a second-degree amendment pursuant 
to the order of the Senate agreed to today which incorporates the 
provisions of the Roth and Chafee amendments on the children's health 
initiative.
  The PRESIDING OFFICER. The clerk will report the amendment.
  The bill clerk read as follows:

       The Senator from Delaware [Mr. Roth] proposes an amendment 
     numbered 521 to amendment No. 520.

  Mr. ROTH. I ask unanimous consent that the reading of the amendment 
be dispensed.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The text of the amendment is printed in today's Record under 
``Amendments Submitted.'')
  Mr. ROTH. I ask the Chair this question: Do I understand correctly 
that the second-degree amendment which I offer is by virtue of today's 
order of the Senate considered adopted?
  The PRESIDING OFFICER. The Senator is correct.
  Mr. ROTH. Mr. President, I ask unanimous consent to lay it aside.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 519

  Mr. DURBIN. Mr. President, might I inquire of the chairman of the 
Senate Finance Committee, can we reach some agreement about debate that 
will be allowed on my amendment tomorrow when it is considered?
  Mr. ROTH. I have to tell my good friend, no, we cannot agree at this 
time.
  Mr. DURBIN. So under the rules would the amendment automatically be 
considered tomorrow or subject to any debate?
  Mr. ROTH. It could come up tomorrow but we cannot limit debate at the 
present time.
  Mr. DURBIN. My current understanding, I have 43 minutes left on the 
debate on this amendment and the opposition has 59 minutes as we have 
concluded debate this evening?
  The PRESIDING OFFICER. The Senator is correct.
  Mr. FORD. Would the chairman give me a couple of minutes to make a 
statement as it relates to the Durbin amendment?
  Mr. ROTH. Two minutes?
  Mr. FORD. Two minutes.
  Mr. President, no one here in the Chamber is opposed to helping 
children. We have tried our best over the years, and we are trying our 
best now. It seems like every time you want some money you go to 
tobacco. We have had Senators from the other side of the aisle that 
voted against tax on tobacco or any other excise tax because they 
thought that was the prerogative of the State, and the Senator from 
Illinois just laid out how much additional tax is going on. So we have 
a negotiated agreement that people are getting something they never 
thought they would be able to get. We have to get that through 
Congress.
  Now, if we had 10 cents from this committee, and 20 cents there, and 
43 cents tomorrow, we have killed the agreement and there is no way the 
income can equal the projection because with a dollar additional on a 
pack of cigarettes we lose 20 percent of production and have a 20 
percent reduction.
  We are trying to get in this package reduction of teen smoking or 
underage smoking. We have a criteria there if they do not do it, they 
pay more money. Yet we are putting it where they cannot do that.
  I say to my friends, I am from a tobacco State, absolutely, and I 
plead guilty to that. I am going to represent them the best I can, but 
pile on, pile on, pile on--you are not going to have any money left. 
The States won't be able to get any money and their budgets will be 
behind, our projections will not reach that total, we will be behind, 
so everybody piles on tobacco.
  I hope you will take a step back with all these crocodile tears I see 
around here. I understand those. But there is some point where we have 
to meet reality, and reality is do you want to complete a job that is 
started or do you want to do something that will unbalance this budget 
within a very short period of time.
  I thank the Chair, and I thank the Senator for allowing me the time.
  The PRESIDING OFFICER. The Chair recognizes the Senator from 
Illinois.
  The PRESIDING OFFICER. Who yields time?
  Mr. ROTH. How long would the Senator from Illinois like?
  Ms. MOSELEY-BRAUN. Five minutes.
  Mr. ROTH. I yield 5 minutes to the distinguished Senator from 
Illinois.
  Ms. MOSELEY-BRAUN. Mr. President, I am the first woman in history to 
serve on the Senate Finance Committee, and I have been just delighted 
to work with the chairman and his staff and my ranking member, Senator 
Moynihan. They have been accommodating, they have been supportive and 
they have listened. And I have to say that this was the third occasion 
that I have had to work on a tax bill. While the tax bill did not 
result as I would have written it, at the same time, I can think of no 
better group with which to work than the members of the Senate Finance 
Committee and, particularly, its leadership.
  Mr. President, I want to share a few preliminary thoughts about the 
tax bill. I intend to file an expanded statement at a later time. At 
the outset, I want to say that I intend to vote for this bill. It was 
worked on by the committee. We worked hard on behalf of the goals of 
achieving a balanced budget. We worked hard on behalf of achieving an 
opportunity for the American people to focus their resources in the 
most productive way for our economy as a whole.
  When I came to Congress, my over-arching goal was to create a more 
fiscally responsible environment, a better fiscal environment for our 
children. We needed to reverse the trend to borrow, to pay for things 
now, at the cost of having our children pay back our debts and 
foreclosing their options and opportunities. Even though it caused some 
consternation, I supported a balanced budget amendment precisely 
because I believe that we have an obligation to prepare and to make it 
easier for our children than our parents left it for us. I believed 
that we had to ensure that we do not leave our children in greater debt 
than our parents left to us.
  So my main focus in coming here to Congress was to focus in on 
getting some order about our fiscal house, reducing the deficit, and 
actually beginning to create the framework in which our economy can go 
forward, and the strength that not having this burden of debt would 
have given it. For that reason, I also took the position that it was 
not time yet for us to go into providing

[[Page S6351]]

for tax cuts, that we needed to restrain our desire to cut taxes until 
such time as our fiscal house was in order. Deficit reduction should 
have been our goal as a matter not only of our fiscal responsibility, 
but of generational fairness. And so I started off with that 
proposition from the very beginning.
  In 1993, the first year I was here in the Senate, I voted for the 
budget that President Clinton submitted that began the path toward 
deficit reduction. Since that bill, which was very controversial at the 
time--I remember people calling it the ``biggest tax increase in 
history,'' even though it only increased taxes on the very top wage 
earners or top income earners in our country. It was very controversial 
at the time. In fact, in the election that followed, a number of people 
lost office because people thought they had sent our country on the 
wrong fiscal path.
  However, that bill has proved, I think, over time, to be the jump-
start that this economy needed in order to give rise not only to the 
booming stock market and booming economy that we have seen, but the 
deficit reduction that we have seen. Since the time of that vote, the 
deficit has gone from about $290 billion--almost $300 billion--to $65 
billion this year. Now, without a tax cut, we could have retired our 
debt entirely before the year 2002. While it is a fact that some of the 
economists argue that we don't need to worry about deficits and we 
don't need to retire our debt, at the same time, I think there is an 
expectation from the American people that we would do everything we 
could to get that done in as timely a fashion as possible. Reducing the 
deficit would have had the effect of lowering interest rates and would 
enable us to provide even larger tax cuts, once we have paid all our 
bills. But that is not the case at this time. There is consensus for 
cutting taxes this year--a budget deal that explicitly tailored the 
amounts of net tax cut and outlays with some specific parameters.

  So since there is consensus on the tax cut that came out of the 
Budget Committee, and that is the direction we have been ordered to 
take in the Finance Committee, I believed that the tax cut given should 
be targeted to provide the maximum benefit to relieve families of the 
tax burden that they have to carry. Unfortunately, this bill only 
partially meets that goal.
  The problem, as I see it, and my one sadness about what we have seen 
here, is that this tax bill is not progressive. To make the bill 
progressive, the distribution of the tax cuts should allow the largest 
portion of the tax cut to go to the greatest number of families. This 
is simply community fairness. Unfortunately, this bill still allocates 
the largest amount of the tax cut to the fewest number of Americans 
instead of the other way around.
  This bill allows some 22 million American families to receive almost 
$40 billion in tax cuts, while 88 million families receive only about 
$20 billion from this tax cut. The average tax cut that will be 
received by families making less than $17,000 a year will be about $12. 
Families with incomes of less than $33,000 a year will receive an 
average of $64 from this tax cut. Families with incomes of less than 
$55,000 will receive an average $274 from this tax cut. Families 
earning less than $94,000 will receive an average of $583 from this tax 
cut. However, if you go beyond that, families with incomes above 
$94,000 will receive an average of $1,789 from this tax cut.
  In short, Mr. President, the 22 million Americans making over 
$100,000 will receive 65 percent of the tax cut here, while the 88 
million people earning under $100,000 will receive about 34 percent of 
the tax cut.
  Now, there is no question that tax cuts are always popular. Many of 
the tax cuts which give rise to this result are popular, particularly 
the estate tax, capital gains reduction, and IRA expansion. But it 
seems to me that just based on sheer numbers, working class people 
should have fared better. Even though we tried to remedy some of these 
issues, we were not successful. Senator Rockefeller and I, for example, 
tried to remedy the effect of the $500-per-child tax credit; 
nonetheless, a majority of the working poor will be excluded from the 
largest part of this bill.
  Well, Mr. President, I have taken up my 2 minutes. I thank the 
chairman for his indulgence. I want to point out that, as we direct 
these issues of tax policy, we should be mindful that, if we really 
care about family values, about our total community, we need to have 
tax fairness as a guiding principle in our deliberations, with the 
greatest benefit going to the greatest number. It seems to me that what 
ought not to guide our deliberation is just what sounds good or what is 
politically popular or easy to do. We could have done a better job with 
this tax bill. I know the chairman tried and the ranking member tried; 
we all tried. This bill is a better bill than the House bill by a long 
shot. But, at the same time, I hope as we go into conference, we will 
be mindful that there are an awful lot of working people and families 
out there who need our help, and we have an opportunity and an 
obligation to give it to them.
  Thank you, Mr. President. I thank the chairman for his indulgence.
  I yield the floor.
  Mr. JEFFORDS addressed the Chair.
  The PRESIDING OFFICER. The Senator from Vermont is recognized.
  Mr. JEFFORDS. Mr. President, I ask unanimous consent that the pending 
amendment be temporarily laid aside.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 522

 (Purpose: To provide for a trust fund for District of Columbia school 
                              renovations)

  Mr. JEFFORDS. Mr. President, I send an amendment to the desk and ask 
for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Vermont [Mr. Jeffords] proposes an 
     amendment numbered 522.

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

       Beginning on page 168, line 8, strike all through page 174, 
     line 19, and insert the following:

     ``SEC. 1400B. TRUST FUND FOR DC SCHOOLS.

       ``(a) Creation of Fund.--There is established in the 
     Treasury of the United States a trust fund to be known as the 
     `Trust Fund for DC Schools', consisting of such amounts as 
     may be appropriated or credited to the Fund as provided in 
     this section.
       ``(b) Transfer to Trust Fund of Amounts Equivalent to 
     Certain Taxes.--
       ``(1) In General.--There are hereby appropriated to the 
     Trust Fund for DC Schools amounts equivalent to the revenues 
     received in the Treasury from the applicable percentage of 
     the income taxes imposed by this chapter after December 31, 
     1997, and before January 1, 2003, on individual taxpayers 
     during their residency in the District of Columbia.
       ``(2) Applicable percentage.--For purposes of paragraph 
     (1), the term `applicable percentage' means the percentage 
     necessary, as determined by the Secretary, to result in 
     revenues equal to the net losses in revenues to the Treasury 
     that would have occurred during the period beginning after 
     December 31, 1997, and before January 1, 2003, if the section 
     identified as section 1400B of the Internal Revenue Code of 
     1986 as added by section 601 of S. 949, 105th Congress, as 
     reported by the Committee on Finance of the Senate, had been 
     enacted.
       ``(3) Transfer of amounts.--The amounts appropriated by 
     paragraph (1) shall be transferred at least monthly from the 
     general fund of the Treasury to the Trust Fund for DC Schools 
     on the basis of estimates made by the Secretary of the 
     amounts referred to in such paragraph. Proper adjustments 
     shall be made in the amounts subsequently transferred to the 
     extent prior estimates were in excess of or less than the 
     amounts required to be transferred.
       ``(c) Expenditures From Fund.--
       ``(1) In general.--Amounts in the Trust Fund for DC Schools 
     shall be available, without fiscal year limitation, in an 
     amount not to exceed $70,000,000 for the period beginning 
     after December 31, 1997, and ending before January 1, 2008, 
     for qualified service expenses with respect to State or local 
     bonds issued by the District of Columbia to finance the 
     construction, rehabilitation, and repair of schools under the 
     jurisdiction of the government of the District of Columbia.
       ``(2) Qualified service expenses.--The term `qualified 
     service expenses' means expenses incurred after December 31, 
     1997, and certified by the District of Columbia Control Board 
     as meeting the requirements of paragraph (1) after giving 60-
     day notice of any proposed certification to the Subcommittees 
     on the District of Columbia of the Committees on 
     Appropriations of the House of Representatives and the 
     Senate.
       ``(d) Report.--It shall be the duty of the Secretary to 
     hold the Trust Fund for DC Schools and to report to the 
     Congress each year on the financial condition and the results 
     of the operations of such Fund during the preceding fiscal 
     year and on its expected condition and operations during the 
     next fiscal year. Such report shall be printed as a

[[Page S6352]]

     House document of the session of the Congress to which the 
     report is made.
       ``(e) Investment.--
       ``(1) In general.--It shall be the duty of the Secretary to 
     invest such portion of the Trust Fund for DC Schools as is 
     not, in the Secretary's judgment, required to meet current 
     withdrawals. Such investments may be made only in interest-
     bearing obligations of the United States. For such purpose, 
     such obligations may be acquired--
       ``(A) on original issue at the issue price, or
       ``(B) by purchase of outstanding obligations at the market 
     price.
       ``(2) Sale of obligations.--Any obligation acquired by the 
     Trust Fund for DC Schools may be sold by the Secretary at the 
     market price.
       ``(3) Interest on certain proceeds.--The interest on, and 
     the proceeds from the sale or redemption of, any obligations 
     held in the Trust Fund for DC Schools shall be credited to 
     and form a part of the Trust Fund for DC Schools.''

  Mr. JEFFORDS. Mr. President, this is a scaled-down, in fact, a way 
scaled-down version of an amendment that I offered in the Finance 
Committee markup. It failed on a very close vote, with the full amount 
of close to $900 million. This is an attempt to ensure that this next 
winter we do not have the kinds of emergencies we have faced with the 
inability to finance the school repairs necessary to keep the DC 
schools open.
  This amendment is to the provisions in the bill dealing with the 
District of Columbia. What this will do--hopefully, if accepted--is 
also place in the hands of those at the conference an amendment to help 
in the most critical area this city faces, and that is the decreasing 
capacity of its schools to even stand up, to keep the kids out of rain, 
and to protect the boilers from blowing up, and everything else.
  It is a modest start of only $70 million, but it will open a path, 
hopefully, that may be utilized in case these emergencies continue to 
increase. What it strikes is a provision in the bill that is only a $75 
million provision.
  The provision that is in the bill attempts to set up some sort of tax 
credit system for businesses and people in the District of Columbia 
interested in having assistance in developing businesses. That is all 
very fine. I point out and emphasize again and again that that 
provision is in the House bill. So if mine does pass, it still will be 
in the committee of conference, and the members, then, will have a 
choice of whether they desire to try and protect the city schools from 
shutting down, or whether they prefer to use this provision with 
respect to tax credits.
  Let me give you the dimensions of the school problems in this city. 
First, very briefly, we have, for better or worse, one of the worst 
school systems in this country--and this is the Nation's Capital. I 
remind all of my colleagues that we have accepted responsibility for 
those schools. We have basically replaced the city council with the 
control board. We have replaced the school board with the board of 
trustees. We have given authority to the control board to basically run 
the city. Yet, the capacity of the city to do anything about its 
schools is greatly limited. Although they have substantial revenues, 
those revenues are critical and important to just keeping the schools 
open. They have $2 billion in necessary code repairs in order to make 
these schools up to code.
  Each year, we have had emergency appropriations to try and handle 
this situation. Those emergency appropriations have been in the terms 
of $20 million, $30 million, $40 million, $50 million a year. This is 
in an attempt to find a way to take care of those problems through the 
appropriations process in its normal form.
  I point out that these tax breaks that are included, which I will 
strike, really do nothing to bring middle-class families back to the 
District. The only thing that will bring families back to the District 
is a school system that will provide them with schools in which their 
children will learn something. We have one of the worst records, as far 
as our students go, of any city in the country. Without that, all the 
other things we try to do here will not bring back the middle-class 
families, unless we take care of the school system.
  I point out that Andrew Brimmer, chairman of the DC Control Board, 
says that the impact of the tax break provisions in this bill will do 
little or nothing. We must improve the schools and public safety. Let's 
get real in the efforts to help the city. Every week I travel the DC 
schools I see leaky faucets and roofs, broken boilers, and I could go 
on. The boilers are going to be the critical problem this next year. 
They are likely to shut the schools down in the middle of winter unless 
we do something. The students are suffering every day.
  All my amendment will do is allow the committee of conference to have 
another option, along with the one I am striking, in order to be able 
to take care of some of the emergency repairs for the schools. So, Mr. 
President, I also point out what has been lost and how we have 
hamstrung this city to do anything about it. The District has lost more 
than 200,000 residents since 1970; 200,000 people have moved out. And 
50,000 have moved out in this decade alone. The only way to stem this 
tide is to improve the District services.
  There is a time and a place for tax breaks. Again, this is just 
putting another option on the table. But you don't offer tax breaks to 
attract residents back to a city where the schools are collapsing 
around them. That is like giving free popcorn to keep people in the 
seats in a burning theater.
  This isn't going to work. It is important that we do something about 
it.
  So, Mr. President, I want to make sure that we have an opportunity to 
give a seat to that conference committee for the kids in this city so 
that they may have a chance to see their schools restored to the point 
where this city can be proud of them and proud of their school system.
  Mr. President, I reserve the remainder of my time.
  Mr. ROTH. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. ROTH. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. ROTH. Mr. President, the pending amendment is not germane to the 
provisions of the reconciliation measure. I therefore raise a point of 
order against the amendment under section 305(b)(2) of the Budget Act.
  The PRESIDING OFFICER. Until the time has been used or yielded back, 
the point of order is not in order.
  Mr. JEFFORDS. Mr. President, I am not clear on the situation. The 
point of order does not lie at this time?
  The PRESIDING OFFICER. The point of order is not in order until all 
time has been used or yielded back.
  Mr. ROTH. Mr. President, I withdraw the point of order and ask that 
the matter be laid aside.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. ROTH. I now yield 5 minutes to the distinguished Senator from 
Wyoming.
  The PRESIDING OFFICER. The Senator from Wyoming.
  Mr. THOMAS. Mr. President, I thank the chairman for the time.


                           Amendment No. 518

  Mr. THOMAS. Mr. President, I wanted to talk very briefly about an 
issue that is before the body with regard to an amendment on mining law 
reform.
  First, let me just say very briefly that I am delighted that this 
debate is going on. I am delighted that we are talking about tax relief 
for the first time really seriously in 10 years. We are going to hear a 
lot about different kinds of details. We will hear a lot of different 
views, and that is healthy. That is the way it ought to be.
  There are many here who do not support tax relief. I understand that. 
It is a legitimate point of view--not one I share--of those who do not 
want tax relief but would rather have more Government spending. We have 
not had tax relief since the early 1980's. It is time we do that.
  I certainly want to congratulate the chairman of the Finance 
Committee for bringing this package forward. It is time that we gave 
some relief to working families, and relieve people who are paying 
taxes and allow families to keep more of their own money. That is what 
it is all about.
  We hear people say, ``Well, there shouldn't be tax relief because we 
need to balance the budget.'' Their notion is that you have to balance 
the budget and continue to spend more. But what we ought to be doing is 
controlling

[[Page S6353]]

spending. And that is part of what this package does.
  We heard earlier in the evening debate about mining. I wanted to talk 
just a bit about two aspects of that. One is there is an amendment, of 
course, which would eliminate the depletion allowance for hard-rock 
mining. However, in the presentation we heard more about the mining law 
of 1872 than we did about the depletion.
  Let me tell you that we would have a revised mining law of 1872 if we 
could get some of those who constantly complain about it to agree to 
something. I have been here in the House, and now in the Senate for 2 
years. We have had this every year. We have been very close to having a 
decision. But the very folks who complain the most about not revising 
it are the ones who never find anything to agree to.
  I can tell you that there has been agreement on the idea of having 
royalties from the users, from the producers, and from nearly everyone 
here. There has been agreement on the idea of paying marketplace price 
for the land, or in fact not taking title to the land. That could well 
be done. And I would suggest that those who complain the most about 
change are the ones that cause it not to happen.
  I simply want to say that when you want to start talking about 
depletion allowance and talking about the fact that the minerals are 
there and free, I want to tell you that they are not free. They are not 
doing you much good unless there is a substantial kind of investment to 
extract those minerals--probably as much as $400,000 or $500,000 to be 
able to do it at all.
  The value of the resource is not there unless someone has an 
incentive to invest the money to do the mining. And then, of course, 
the idea is to create jobs. The idea is to create jobs. Some 2,300 jobs 
in Nevada--high-paying jobs in the neighborhood of $50,000 a year as 
compared to $25,000 as a national average. These are the kind of jobs 
that are there. With tremendous investment in these kinds of jobs there 
is revenue. There are taxes, and there is payment. We ought to 
encourage that rather than discourage it.
  The suggestion was made that somehow mining goes on and there is no 
reclamation of land. That is not true. There were in earlier years a 
lack of reclamation laws but there are not now. There are tons of laws 
that cause reclamation.
  So, Mr. President, I do not want to go on forever. But I do want to 
tell you that mining is one of the basic industries in this country--
that minerals are relatively valueless unless there is someone willing 
to make the investment to extract them. They create some of the 
highest-paying jobs in this country. They generate local taxes. They 
generate taxes through wages. And they are very much part of our 
economy--an economy that tends to be forced out of this country by 
continuing to raise taxes.
  I suspect this issue is not a proper one to have there. But it is one 
we are talking about, and voting on in the morning.
  I urge my associates here in the Senate to vote against the Bumpers 
proposal.
  Mr. President, I yield the floor.
  Mr. ALLARD addressed the Chair.
  The PRESIDING OFFICER. The Senator from Colorado.
  Mr. ALLARD. Mr. President, first of all, are we in a quorum call?
  The PRESIDING OFFICER. We are not in a quorum call. But we are in 
controlled time. The Senator from Delaware controls time.
  Mr. ALLARD. Mr. President, I ask the Senator from Delaware for 
permission to go ahead and make some comments, a general floor 
statement, and then I would like to introduce an amendment.
  Mr. ROTH. I yield the Senator 10 minutes.
  Mr. ALLARD. I thank the Senator. I would like to, Mr. President, 
compliment the chairman for his hard work on this particular piece of 
legislation.
  Mr. President, this week I am confident that the Senate will approve 
the largest tax cut since the Reagan tax cuts of 1981. And it is about 
time.
  In the 16 years since the last tax cut, Congress has enacted two 
major tax increases--one in 1990, and the other in 1993.
  Mr. President, it is time for a change. It is time to put American 
families ahead of Washington, DC's insatiable appetite for more 
Government spending.
  Taxes are now higher than they have ever been. Taxes constitute one-
third of the economy. And Tax Freedom Day--the day to which the average 
American works to pay the combined Federal, State, and local tax 
burden--and that date is May 9. It is the latest it has ever been.
  Mr. President, I view this tax cut as a downpayment. My long-term 
objective is to ensure that no American family pays more than 25 
percent of its income in taxes.
  A balanced Federal budget, and a reasonable level of taxation should 
be the twin objectives of Congress as we enter the next century.
  I invite all of my colleagues to support this tax cut and to help 
ensure that the bridge to the 21st century does not become a giant toll 
bridge.
  Today I would like to focus on what I call the growth tax. This is 
typically referred to as the capital gains tax, a term which liberals 
often use derisively to help create the impression that only the rich 
pay the growth tax.
  In fact, as you may know, Mr. President, nearly all Americans own 
capital, and they experience a tax on that capital when they sell a 
house or when they sell stocks or a small business or a farm or a 
ranch.
  Under our current Tax Code, gains on capital investment are taxed at 
a 28-percent Federal rate, and often an additional 5 percent or more in 
State taxes comes in on top of that. This is the growth tax, and this 
is among the highest growth tax of any major industrial nation.
  The real growth tax is often much higher than 28 percent. This is 
because our Tax Code does not protect Americans from taxation on 
capital gains that result only from inflation. This means, for example, 
that an investment held for 10 years where up to one-third of the gain 
can be due to inflation, taxes are due even on this.
  This is clearly one of the most unfair aspects of this tax. 
Government policies contribute to inflation, and Government then turns 
around and taxes its citizens on that inflation.
  For this reason, Mr. President, I intend to fight very hard to see 
that indexing is included in our growth tax cut. The House bill wisely 
includes this provision--and I commend Chairman Bill Archer for this. 
The Senate bill, unfortunately, does not yet have indexing. Hopefully, 
by the end of the week, it will.

  Some have dismissed indexing as too costly for this tax bill. But for 
me this is an issue of fundamental fairness. It is wrong for the 
Federal Government to tax its citizens on inflation.
  It is not too costly not to include indexing. Indexing simply means 
that Americans would be permitted to disregard any gains due solely to 
inflation, and then pay taxes only on real gains.
  Mr. President, let's take a look at how this capital gains growth tax 
hits ordinary working Americans beginning with their home.
  The Tax Code generally allows gains on a personal residence to be 
deferred as long as the proceeds are used to purchase another larger 
home. However, many Americans eventually pay capital gains on their 
home, particularly as they get older and find that their residence has 
appreciated substantially in value.
  Our tax bill deals with this issue by exempting all but the very rich 
from any taxation on gains from their principal residence. This is a 
long overdue reform.
  Next, let's look at financial investments. Stocks are a frequent 
source of capital gains taxes, and stock ownership today is more 
widespread than ever before. Stock ownership has doubled in the last 7 
years to the point where 43 percent of all adult Americans own stocks.
  Obviously, with those numbers, Mr. President, it is spread throughout 
society. Today, half of the investors are women and half are noncollege 
graduates.
  Stocks are typically held for retirement, education expenses, and 
other long-term goals. This is precisely the type of savings and 
investment that we need in our economy. Investments foster business 
expansion, and job creation. Capital is the lifeblood of a free

[[Page S6354]]

market economy. Clearly you cannot have capitalism without capital. And 
our Tax Code should encourage capital investment.
  Mr. President, I cannot leave this topic without talking about small 
business owners and farmers.
  There is no clearer area where the growth tax makes no sense. 
Millions of American families put their lives into building small 
businesses and farms. Often those businesses or farms are sold to 
finance a decent retirement. But this can occur only after Uncle Sam 
gets his cut of 28 percent of all the gains. Often, over half of these 
gains are due only to inflation. It is no wonder that millions of our 
most ambitious citizens have lost faith in our tax system.
  Fortunately, Mr. President, tax relief is on the way. This bill 
lowers the growth tax from 28 to 20 percent for most families, and 
those in the lowest tax bracket would pay only 10 percent. This tax cut 
would help make life easier for millions of Americans, and it will help 
our economy to grow and create new jobs.
  To those Americans who own a home, who save for retirement or who own 
a small business or farm, I say that next time a liberal says that 
capital gains are only for the rich, remember, he is thinking of you.


                           Amendment No. 523

[Purpose: To strike the extension of the Temporary Federal Unemployment 
                                Surtax]

  Mr. ALLARD. Mr. President, I now would like to 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 Colorado [Mr. Allard] proposes an 
     amendment numbered 523.

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

       On page 397, strike section 881.

  Mr. ALLARD. This amendment would strike section 881 of the tax bill.
  This section extends the so-called temporary unemployment surtax on 
small business and other employers through the year 2007. The House tax 
bill does not include this provision. The Senate bill, unfortunately, 
does. I rise to support the House position on this matter.
  The description of this provision put out by the committee notes that 
in 1976 Congress passed a temporary surtax of .2 percent of taxable 
wages to be added to the unemployment tax rate.
  I would suggest that at a minimum, if we are going to keep extending 
this tax, we ought to be honest with the American worker and small 
business owners and stop calling this a temporary tax. Enough is 
enough.
  Between 1970 and 1990, there have been three unemployment tax rate 
increases and three wage base increases. These have resulted in a 
dramatic increase in the unemployment tax burden. There is no reason to 
continue this temporary surtax when we have the lowest unemployment in 
a quarter century and a full trust fund. This is no more than an 
additional and unfair general revenue raising.
  The reason for the unemployment surtax no longer exists. The 
temporary surtax was put in place in 1976 in order to repay borrowing 
of the Federal unemployment trust fund from the general fund of the 
Treasury. Even though the borrowings were repaid in May 1987, Congress 
has continued to extend the surtax in tax bill after tax bill. As of 
today, all the States' reservoirs now have surpluses.
  Since 1987, the surtax has been used solely to raise revenue to pay 
for tax packages. The tax takes money out of the private economy for no 
valid reason.
  I have two concerns with this surtax. First, the Federal Government 
is breaking its commitment to employers and to workers that this added 
tax would be temporary. Clearly, it is not temporary, and if this 
provision remains in the bill and is enacted, the tax will have been in 
place for 30 years. This is not the way Government should do business.
  The second problem I have is that we should not be imposing 
unnecessary payroll taxes. Payroll taxes cost jobs. Because small 
businesses are generally labor intensive, payroll taxes, which are a 
tax on labor, strike small businesses particularly hard. Payroll taxes 
are paid whether there is a profit or a loss.
  I would note that high payroll taxes in Europe, particularly in 
Germany, is one of the principal reasons that unemployment is so high. 
This should be a warning to us to work steadily to limit the payroll 
tax on U.S. businesses.
  Mr. President, I understand that there is some concern about my 
amendment, so I will withdraw this amendment and urge the Senate to 
agree to the House position on this issue.
  There are a number of Senators, and I can assure you there are many 
thousands of small businesses, that would like to see this provision 
out of the bill, but before I withdraw my amendment, I would like to 
make an inquiry to the distinguished chairman of the Finance Committee, 
Senator Roth. In light of the fact that this tax was to be a temporary 
tax, would the chairman consider either removing the provision in 
conference or modifying it to at least terminate the tax more quickly 
than proposed in the bill?
  Mr. ROTH. I am happy to answer the question raised by the 
distinguished Senator. I understand the concerns he has expressed. I 
understand the impact it has on small business. I say to him that this 
is an aspect of our proposal that was recommended by the 
administration, but I will certainly, in going into conference with the 
House Members, keep in mind the concern the Senator has expressed and 
look at this matter very carefully.
  Mr. ALLARD. I thank the chairman for his sincerity and real concern 
about the surtax, and I would just, in conclusion, reflect on some of 
my own experiences with the surtax. When it was first applied in 1976, 
I was just basically starting out in my small business. I had just been 
in business 4 or 5 years. I had not been in business long enough to 
have to pay any unemployment compensation, never had to have any 
turnover in my business, but every dime counted in that new business. 
And when that surtax was imposed on that small business that I was 
starting at the time, it did have an impact.
  I do not believe we can continue to disregard the impact that these 
unemployment taxes have on small businesses, particularly the small 
businesses that are just starting out. We need to encourage people to 
go in business for themselves. We need to encourage people to someday 
think in terms of being their own boss and being self-sufficient. These 
types of tax provisions do have a disproportionate impact on small 
businesses, particularly those just starting out.
  With that, I yield back the remainder of my time.
  I thank the Senator.
  The PRESIDING OFFICER. The amendment is withdrawn.
  The amendment (No. 523) was withdrawn.
  The PRESIDING OFFICER. The Senator from Delaware.
  Mr. ROTH. Mr. President, I yield the distinguished Senator from 
Montana 10 minutes.
  The PRESIDING OFFICER. The Senator from Montana.


                           Amendment No. 518

  Mr. BURNS. I thank the Senator. I thank the Chair.
  Earlier this evening an amendment was offered to do away with the 
depletion allowance on mining. It seems every year we have to go 
through this process really explaining what the National Mining Act is 
all about.
  Yes, we have been awfully close to coming up with some kind of 
agreement for reform of the act. We have been so close that everybody 
agreed, but one would get the feeling--although it seemed like it fell 
apart, I get the distinct feeling that those who would reform the act 
or be the reformers want the issue rather than the results. I am always 
reminded of John Adams when he come back to the Congress and was asked 
about an issue. He said duty is ours; results are reserved to God.
  Let us look at the intent of the Mining Act. It is as true today as 
it was in the days it was written. This act has been around about 120 
or 125 years. I would say to anybody who lives in this country and owns 
property, even though it may be his private home in an urban area, the 
ownership of his

[[Page S6355]]

own home, which means land ownership or property ownership, which has 
been one of the cornerstones of America, the building of America and 
the freedom of us as a people, has been the result of a land tenure 
act. It was a way that we moved all the lands in this United States of 
America into private ownership.
  That is what the Mining Act was all about. We have had only two, I 
think, maybe three, major land tenure acts. One of them was the 
Homestead Act, and that was a result of the Louisiana Purchase, where 
you were deeded 160 acres of land, and if you proved it up to be 
viable, then they gave you ownership of that land. And ever since then, 
it has changed hands many times, but it has allowed us to own property, 
land, and real estate. It has been the cornerstone of our economy.
  In mining, it was a little bit different, but yet it was a land 
tenure act. It was a deal struck by this Government that owned millions 
of acres of land telling a miner that if you go out and you find a 
mineral, whether it be precious metals or trace minerals or whatever, 
and it has value and you prove it up to be a viable enterprise, we will 
guarantee you the surface of that land and access to that deposit. You 
invest your money, and if there is nothing there, we do not as a 
government owe you anything and you can go merrily on the way, and the 
land belongs and stays in the ownership of the Government of the United 
States of America.
  I think I would be laughed out of this building if I went down to 
appropriations and said I have a government agency that wants to 
explore for silver or gold or platinum or palladium or anything else 
and asked for an appropriation of $20 million to explore and to prove 
up a claim. That is risking a lot of taxpayers' money. I would be told, 
why, this is the craziest thing we have ever heard. Taxpayers didn't 
give us the money for such a cockamamy idea of going out and exploring 
for that mineral.
  So what did we do? We struck a deal. You invest, Mr. Miner, your 
money, your time, your equipment. If you find it, that's good. If you 
do not, then the Government is not out anything. But we guaranteed 
access and we guaranteed surface rights if a mineral or precious metal 
was found.
  The National Mining Act was never an environmental act. It does not 
exempt mining companies from the environmental laws that are in place 
both by the State and the Federal Government. They are not exempt of 
that--clean air, clean water. They are required to reclaim it after the 
mine has been mined out. All it was, was to guarantee Americans access 
to a precious metal or mineral. Yet, those who would want to change it 
say that is no longer important.

  We could have settled on royalties, could have settled on land price, 
could have settled on all of that. But the reformers refused to accept 
it. So I say, before we do too much changing, let's really understand 
what the law is all about, because it works today as it did whenever 
the law was made the law of the land. It seems like there are a lot of 
folks who do not understand that. They did not understand the Homestead 
Act either. This country eats, provides food for its families, cheaper 
than any other society in the world as a percentage of your paycheck 
going solely for food for your family. That was done because American 
agriculture owns the land. It is their farm. They make it produce. It 
is as competitive as selling shoes or watermelons. It does not make any 
difference. But all of that was the result of a land tenure act called 
the Homestead Act.
  Why do we have to turn around and explain this every time this issue 
comes up? Yet, there are those who would like to twist and turn and not 
really represent the act for what it really is and why it was designed 
that way. They say gold miners get rich on gold. Where is it used, for 
jewelry? No, not really. We wouldn't even have a space program if we 
didn't have gold and silver, because there is as much of it used in 
electronics as there is in jewelry.
  The only platinum or palladium mine is found in Montana. It is the 
only one in this country. It is one of three in the whole world. If you 
didn't have palladium, you wouldn't have catalytic converters to 
protect our air. Yet, there would be those who would say maybe it is 
not a necessity--until we look at the manufacturing and our science and 
our technologies, of what these trace minerals and these other minerals 
are really worth to this country.
  Do we want to get as dependent on our precious metals and minerals as 
we are on oil? We are almost 51 percent dependent on oil from offshore. 
Is that energy policy? Does that give us energy security? I don't think 
so.
  So we have to be very, very cautious whenever we start talking about 
a subject and a law that a lot of people say, ``Well, they're ripping 
off the Government.'' What's just the opposite is true. Because that 
mine provides jobs; it provides a tax base in many counties. In the 
West, that is the only thing they have. It provides public safety and 
roads and schools. It is the backbone of that county's economy. Yet, 
there are those who say tourism is growing and it is taking over and we 
don't need mining anymore. I don't know of anybody who wants to stand 
around and flip hamburgers for $4.25 an hour, or whatever it is, when 
you could probably get a better job producing something, producing 
wealth for this country. It just doesn't make a lot of sense.
  Those of us who come out of, let's say, natural resources or 
agriculture, I guess we look at it a little bit different. But you look 
at it different when you come up through those ranks, as some of us in 
this room have done, including the Presiding Officer who is in the 
chair tonight. It doesn't hurt to have a little dirt under your 
fingernails so you understand what makes things go in this country. All 
new wealth, all new wealth produced in this country comes from either 
the renewable resource of the Earth and, sometimes, some of it from the 
finite resources that are found in this Earth. That is where new wealth 
is produced. It is produced nowhere else. Every one of us chase the 
dollar around. But, especially in the renewables, that is the real 
worth of a nation. And those renewables were produced on private land 
ownership where people took care of it, managed their resources and 
made a community and a State and a nation grow.
  So, when we start talking about the national mining act and how it 
should be changed, let's be very cautious and remember why it was 
passed in the first place. Why it was passed in the first place--mining 
is very, very risky. I can't go to Appropriations and appropriate money 
just to go out and scratch around the hills and try to find a gold 
nugget, because it just will not happen.
  So I will oppose the Bumpers amendment tomorrow. I think there will 
be a point of order raised on it anyway. But, nonetheless, let's not 
forget just exactly the reason the mining act was passed and why it 
works today, just like it did when it was passed 120 years ago.
  Mr. President, I yield the floor.


                       electric utility industry

  Mr. MURKOWSKI. Mr. President, the utility industry is undergoing 
drastic change as a result of deregulation.
  I know that municipal utilities are concerned about the tax-exempt 
status of their outstanding debt if they enter the competitive market. 
I also know that investor-owned utilities are concerned about municipal 
utilities using their tax-exempt debt and their tax-exempt status to 
gain an unfair competitive advantage. In addition, there are a host of 
issues relating to how electric cooperatives will fare in the emerging 
competitive marketplace.
  I believe that we need to re-examine the Tax Code to determine how 
best to ensure a level playing field in the era of electricity 
deregulation and competition.
  Because of the importance of this issue to consumers, investors, the 
electric power industry, and to our economy, as I told Treasury 
Secretary Rubin in an April 22 letter, I believe this is a matter for 
Congress, not the IRS, to decide.
  Mr. ROTH. How does the chairman of the Energy Committee suggest we 
proceed?
  Mr. MURKOWSKI. Mr. President, I have asked the Joint Committee on 
Taxation to prepare a complete analysis of tax provisions relevant to 
the electric utility industry. Once this report has been prepared, I 
believe our committees should hold hearings and make recommendations 
once we have

[[Page S6356]]

had a chance to thoroughly examine these issues.
  Mr. ROTH. Mr. President, I agree with the suggestion of the chairman 
of the Energy Committee.
  Mr. MURKOWSKI. Mr. President, I thank the chairman of the Finance 
Committee and I look forward to working with him.

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