[Congressional Record Volume 143, Number 140 (Thursday, October 9, 1997)]
[House]
[Pages H8825-H8831]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               SCHOOLS AND EDUCATION IN A STATE OF CRISIS

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 7, 1997, the gentleman from New York [Mr. Owens) is recognized 
for 60 minutes as the designee of the minority leader.
  Mr. OWENS. Mr. Speaker, I want to address two major issues tonight. 
They are related in the long run. One is, schools and education are 
still in a state of crisis despite the fact that the American people 
have indicated that education is one of their number-one priorities, 
probably the number-one priority by the majority of the American 
people.
  This first year of the 105th Congress session of Congress is coming 
to a close, and we are not dealing with the crisis. We have done 
nothing which really addresses the crisis in the manner that it 
requires. Certainly, the crisis in our inner-city schools, where most 
of the African American children attend school, where the poorest 
Americans attend school in the inner-city schools and crisis in the 
rural schools is not being addressed. We are still going backwards in 
New York City, for example, in terms of addressing the education 
crisis. So I want to talk about that.
  I also want to talk about an issue that would seem unrelated, but it 
is related, and that is the present preoccupation concern with the 
Internal Revenue Service. The Internal Revenue Service is important. I 
said before that people who are part of a care majority, liberals, 
progressives, whatever you want to call them, people who care about 
campaign finance reform and they really want it, there are a number of 
different elements, what you might call the caring majority. The people 
want to see an American system that operates fairly, democracy that is 
not distorted by big-money contributions.
  All of those are part of the caring majority. The caring majority, in 
general, neglects revenue, neglects issues related to revenue. So the 
IRS and the taxpayer concern issues are likely not to get that kind of 
attention from that side of the aisle, this side of the aisle, that it 
deserves. And I would like to see that not happen.
  I would like to see my colleagues pay close attention to the debate 
that is shaping up on the IRS, Internal Revenue Service, and to take 
that debate and discuss it at a new level. Let us not talk about how to 
beat up on IRS clerks and the agents. Let us talk about broad policies 
that are handed down from the very top, from Congress and from the 
White House, policy direction which leads to situations where large 
amounts of money that should be collected from corporations, those 
amounts are not collected.
  It leads to situations where we have to beat up on middle-class 
taxpayers in order to get the kind of revenue that is expected because 
the IRS is being directed not to spend too much of its time or to wade 
into the complex situations presented by corporate financing.
  I am particularly concerned about section 531 to 535 of the Internal 
Revenue Code. I have talked about that before. That is the section 
which prohibits corporations from buying their own stock except under 
certain conditions. Stock buy-backs are big business nowadays, multi-
billion-dollar business. Yet, there is a section in the Code that 
nobody wants to explain to me why it is not being enforced.
  I have talked to quite a number of important people in the tax 
structure and have not been able to find out. If they were to collect 
that revenue, that is one of the areas where, if that bit of corporate 
welfare was ended, that is one of the areas where we gain additional 
funding to deal with some of the problems related to school 
construction and other problems that require money and education.
  In other words, I do not really think we have a real problem with no 
money for school construction. Yes, I do think it is a problem. I think 
we lack the will to deal with school construction to spend the money 
that is necessary. We could get it if we wanted to, but we throw up a 
roadblock with the fact that there is no money. And, of course, the 
same problem is occurring at the local level and at the State level.
  The argument is made that there is just not enough money to provide 
decent education. We are wasting money in many different ways. And not 
until the full wrath of public opinion and the wrath of the voters and 
not until the common sense of the voters comes down harder on public 
officials have to make these decisions, we have an understanding that 
we cannot just talk about education, we have to put some real dollars 
behind the effort to reform education and make it adequate for people 
at every level of our society.
  Let me start by talking about schools first and education, because 
they were on the agenda of this Congress this week. They were on our 
agenda right up until the very last minute today. In fact, I think our 
last vote taken today on a bill was on passage of the D.C. 
appropriations bill. And that contest, that vote, it was a very close 
vote.

  It was a situation where the time had to be broken by the Speaker of 
the House, it was that close, where many of us felt the House of 
Representatives had gone far in the direction of extreme control of 
local government and extreme control of decision-making that should be 
taking place at the local level.
  We were shocked to see that the Republican majority which has 
consistently emphasized local control, local decision-making, which has 
made a great deal out of ending mandates by the Federal Government on 
local government, we were quite shocked to see to what extent the 
Republican majority in the House is willing to go with respect to 
mandating local control of Washington, D.C., going right into the 
school system and telling them what they have to do in terms of how to 
take care of their ongoing problem.
  There is a very serious problem in the education in D.C. The District 
of

[[Page H8826]]

Columbia spends more than $9,000 per child and has some of the worst 
education in the Nation. The problem has to be addressed. The people of 
the District of Columbia made a decision last year. Little more than a 
year ago, I think, they made a decision, had a referendum on whether or 
not they wanted vouchers, and they voted that they did not want 
vouchers as part of their solution to the school problem. We had local 
citizens involved in seeking a solution to a problem, and they rejected 
one possible approach.
  The D.C. voters said, ``No, we do not want vouchers.'' On the other 
hand, D.C. voters decided they would like to try an experiment with 
charter schools. The charter schools are a good alternative to 
vouchers, even among those people who insist that we have to have 
vouchers, for the purpose of shaking up the public school system, the 
bureaucracy, we need vouchers in order to provide competition for the 
public school system; to show innovative approaches, we need vouchers 
to provide an alternative.
  Well, charter schools provide an alternative, and the residents of 
the District of Columbia voted, ``We want the charter school 
alternative. We do not want vouchers.'' Yet, here we worked until late 
this afternoon pressing to push, the majority was pushing, and they 
finally won by one vote a solution on the people of D.C., which 
requires that they experiment with the voucher program for the next 5 
years.
  Now, I hope that that does not prevail, because the other body has 
already acted on this matter. The President says he will not accept a 
bill, he will veto any bill that forces the people of the District of 
Columbia to experiment with vouchers. So I hope it does not prevail. 
But it did pass this House. So here we were in a situation where the 
majority party, which has pushed for maximum local control, was trying 
to force it down the throats of the people here.
  We had another problem today in our Committee on Education and the 
Workforce. I serve on the committee, and we had a Reading Excellence 
Act that was on the agenda for markup today. The Reading Excellence Act 
is designed to replace the President's proposal for America Reads.
  The President's proposal has great emphasis on volunteers being used 
to tutor young people, students, to read. And the Reading Excellence 
Act takes a different approach and moves in the direction of teaching 
teachers to teach reading better and have teachers do the coaching of 
the reading and having professional groups contracted to provide the 
tutorial services.
  Now, it is an interesting approach. There may be grounds for some 
kind of compromise. I hope so, because I would not like to see this 
first year of the 105th Congress end without doing something positive 
about the problem that clearly has been identified as a major problem.
  If children cannot read, they cannot advance in school, they are 
bound to fail. That is well established. Everybody agrees they must 
learn to read. So the emphasis on teaching students to read as soon as 
possible and as thoroughly as possible is an appropriate emphasis. It 
is a place where there is no debate.
  Surely, in an area where we do not have any debate, we ought to be 
able to go forward in this first year of the 105th Congress. Surely, we 
will not leave here with nothing being done in terms of a new Federal 
initiative when the President started the year with the State of the 
Union Address proposing an initiative, the America Reads was proposed. 
And now we have the Republican majority in the Committee on Education 
and the Workforce proposing the Reading Excellence Act.
  We did not get to it today because we were on another bill. But in 
that Reading Excellence Act, there was another one of those mandates to 
the local level. It even goes beyond the local government right into 
the classroom. There is a mandate that they must use the phonics 
method.
  Never before has the Federal Government gone so far in a matter that 
relates to education as this Reading Excellence Act proposes to go. 
That is to mandate, if you are going to get these funds and be a part 
of this program, phonics has to be used as a method of teaching 
reading.
  We are going to go right into the pedagogy instruction processes and 
we, the Federal Government, are going to put our finger on a method 
that has to be used. That is one of the serious drawbacks of the 
Reading Excellence Act.
  I hope some other features of that act can be combined with the 
President's America Reads program in the next 20 days or 15 days, 
whatever we have left here, that we do reach some agreement on some 
kind of program to push some new initiative in the area of teaching 
children to read.
  We did not get to the markup of that bill because we spent a lot of 
time on a bill to encourage expansion of charter schools, which was 
proposed by the majority. But I voted for it because I think it is a 
small step forward in the area of the Federal Government encouraging 
the development of charter schools. It is a small step forward.
  It is woefully inadequate. I hope that we come back next year and 
that we do something which is far more thorough with respect to charter 
schools. I worry about charter schools in several respects. The first 
is that we are playing around the edges of educational reform with this 
whole matter of charter schools.
  We have about 700 charter schools now and 86,000 traditional public 
schools. If we want to really experiment with charter schools, we have 
got to have enough charter schools in enough different situations to be 
able to really study whether they are of any relevance or not.
  We also cannot leave charter schools out there on the fringes so that 
elite groups only will be experimenting with charter schools. We need a 
greater variety of groups. We also cannot let charter schools become 
little pet projects of people who want to play around with education 
for a few years.
  Maybe it is parents, while their children are in a particular school, 
they want to have a charter school. But when that is over and their 
children graduate from that elementary school, the interest dies down 
and the school collapses. We have to safeguard against creating 
problems in education. We ought to have some kind of Federal 
encouragement of the States to develop sound systems for regulating and 
developing charter schools.
  There is a serious problem out there. If public funds are going to go 
to a group, they ought to be a stable group, ought to be a group that 
has some kind of promise of continuity, ought to be a group that is 
going to do a thorough job beyond just their individual or family 
interests.

                              {time}  2030

  So we cannot have charter schools that are set with just a handful of 
teachers and a handful of parents and their immediate interests taken 
care of, and that is all. We need a more soundly grounded effort where 
we have a board of directors of some kind of group that is going to 
continue and really build an educational institution.
  We should not waste funds on dilatory experience. That is one problem 
we are really going to have to come to grips with. The Federal 
Government cannot do it, but we can encourage States to do it by 
conditioning the funding of, Federal funding of charter schools for 
those States that take different approaches to the regulation of 
charter schools, to the development of accountability standards. They 
can take different approaches. We would not dictate the approaches, but 
take a sound approach to guaranteeing accountability, have a sound 
approach to guaranteeing longevity. Do not leave children to be 
victimized by dilatory experimentation.
  I think all of this happened in one day with respect to education, 
and it is altogether fitting and proper that we should be that 
preoccupied with education on the floor and in the committee. Education 
is a number one issue for the majority of people and that is the way it 
should be. Common sense dictates that we ought to be more concerned and 
involved.
  I do not think there can be too much discussion of education matters. 
I do think that we have to understand that no one person has the 
answers, and that the danger of fads and the danger of powerful people 
pushing through their particular remedies is always there, so we have 
to have the broadest possible participation and decisionmaking, and 
legislation ought to be based on some kind of set of fundamental 
principles.

[[Page H8827]]

  Reform, in my opinion, ought to go forward across the board where we 
have a lot of different components of the effort to reform our schools. 
Charter schools are just one component. Whole school reform is another. 
There are many different components that ought to be there so that we 
can have a good look at what works and what does not work, and as fast 
as possible move on to institutionalize those things that do work.
  Schools are very important back in New York. We have education in 
schools as a number one issue in the mayoral campaign. We have a great 
debate there as to what has happened to our schools and who is to 
blame. We had a situation where the schools were radically cut, the 
budget of the school system was radically cut under the present mayor, 
and now that it is an issue, there is an insistence that it was not 
really cut, that the cut did no damage, and that it is a figment of 
everybody's imagination that our schools are overcrowded.
  Mr. Speaker, 91,000 children in 1996 could not find a place to sit. I 
understand it went down to about 80,000 in 1997. When school opened, 
they were that short of places, decent places for children to sit. A 
desk of their own was not there for large numbers of young people, even 
in this election year, and strange things are happening to make the 
problem disappear before the eyes of the citizens of New York.
  There are efforts being made to keep one candidate out of schools. 
Ruth Messinger was not allowed to go into certain schools, or if she 
went into the schools, the press was not allowed to accompany her. That 
is unusual. In all previous mayoral campaigns, the schools have been 
open to candidates. We have had here in Washington in the last few days 
Members of Congress attend a school and go into the school to announce 
a program. The Republican majority went into a school just before they 
announced a new initiative on education.
  So the fact that the present mayor has maneuvered to ban his opponent 
from schools is very unusual. New York is, unfortunately, not up in 
arms about this, even in the city university system, at the college 
level where college students certainly are able to determine, make up 
their own minds about the truth or falsity of a situation with respect 
to candidates, and they certainly ought to have the benefit of the 
maximum open debate. However, certain colleges have refused to allow 
the mayor's opponent to speak there. So education is such a hard issue, 
until there are some oppressive, totalitarian tactics that are being 
developed to keep the issue at a certain level and to avoid confronting 
it fully.
  A few days ago we had a school in Harlem closed also because of the 
fact that it was a newly renovated building and the fumes were so 
strong in the building that they had to evacuate the students. Now, 
that is a building that used to be a dry cleaning plant, it is a 
building that was renovated to make it a school, and before it was 
purchased for renovation, the board of education was warned that it was 
on the site of a dry cleaning plant. Even after, as it progressed and 
they made some renovations, tests were done and the fumes were 
detected. They were warned again, but the bureaucracy pressed on.
  I do not want to place the blame on the mayor's office; the mayor's 
office certainly was not involved with this, it is bureaucracy that 
might be corrupt or may not be corrupt. It may be that somebody paid 
somebody off to guarantee that the test of the fumes was not anything 
alarming, and the children could be put in there. But now they are in 
there, and the tests show that the fumes are too strong to keep young 
children in the building. These are fumes that could very much affect 
the development of young people in various ways and they should not be 
subjected to this. But this is the bureaucracy.
  This is one of the reasons why in a school system as large as New 
York, no matter what we do, there is a need to have some way to shake 
up that bureaucracy. Competition is one way. Alternative schools, 
charter schools, some ways must be found to show them that we do not 
have to do business this way.
  We do not have to have situations where somebody in the bureaucracy 
for some reason allows a building which is unfit for habitation to be 
renovated, paid for by the board of education, and actually march 
youngsters in there and start having classes and then to have to 
evacuate. It is one more example of how a system of 1,100 schools and 
more than 1 million children and more than 60,000 teachers is kind of 
unimaginable, certainly in its present form, and something needs to 
happen to come to grips with the fact that time goes by, reforms come 
and go, and we still have these horrendous problems such as the 
occupation of a building that costs millions of dollars to renovate for 
children and they are exposed to deadly fumes.
  There is some good news in New York. On November 4 there is a 
referendum on the ballot which will deal with $2 billion for school 
construction. So maybe we will have the kind of school construction 
funds which will allow for the construction of new buildings, and we 
will not be renovating old dry cleaning plants in the first place. We 
will not be renovating some other sites that are undesirable that have 
been called to my attention, schools near dumps and schools in just 
other predicaments. With a $2 billion initiative for school 
construction, maybe New York City will be a part of the State which 
gets priority and we can eliminate more than 250 schools that still 
have furnaces that burn coal.

  There is a great deal of alarm about youngsters being exposed to dry 
cleaning fumes. Well, dry cleaning fumes are pretty pungent and can be 
identified easily, but when we have furnaces burning coal in an area, 
it spews its filth into the air, it pollutes the air all around, and we 
have come to accept it as almost normal, those little granules out 
there. The things that make up soot that poisons the lungs of young 
children and increases the asthma rate are not alarming enough people. 
The whole sense of urgency and emergency is not there when it comes to 
dealing with furnaces in schools that burn coal.
  In other words, there is a state of crisis certainly in big city 
schools, and I am not privy to the facts, but I am certain that New 
York is probably not the only city still with schools that burn coal in 
their furnaces. Asthma is a problem in a lot of other cities, as well 
as New York City, but we certainly are not moving with dispatch in New 
York to deal with something as obviously unhealthy as coal-burning 
furnaces in schools.
  I have also talked before about the fact that I think it is child 
neglect and child abuse to force children to eat lunch at 10 o'clock in 
the morning because schools are overcrowded and they have to have 
several different rounds of feeding in the cafeteria, and in order to 
feed all of the children in an overcrowded school they have to start 
feeding some lunch at 10 o'clock. Ten o'clock is when they have just 
had their breakfast, and some do not eat lunch until after 2 o'clock 
when they are getting ready to go home for supper. All of these things 
go on and on, and they are accepted as normal.
  My problem is, they are accepted as normal at the local level, and 
even in this mayoral campaign there does not seem to be much alarm 
about the fact that it continues this way. They accept it as normal at 
the national level. The school construction initiative, which made a 
lot of sense, has now been put on the back burner. Nothing will be done 
about it this year. Our only hope is that with the gentlewoman from New 
York [Mrs. Lowey] and the cosponsors of that bill growing every day, 
almost all the Democrats are now on the school construction initiative, 
we will have some action on school construction in the next half of the 
105th Congress.
  However, if we have a child in school, we know that they only live 
one life. Postponing these urgent matters is serious business. 
Postponing school reform or saying that we will get around to it and 
eventually in 5 or 10 years schools will be better, that is not enough. 
Our children go through the process only once, and in the African-
American communities across the country the anger and the frustration 
is moving toward panic.
  The panic results in a cry for vouchers in many cases, without really 
knowing the full story as to how vouchers are going to work. Anything 
that is offered becomes a cure when we are in desperate need of some 
relief, and parents see their children as going through a process that 
they will only

[[Page H8828]]

go through once, and nothing of any great momentum has developed to 
change the way public schools in our big cities are being administered. 
We have to have a greater sense of urgency and understand that there is 
an emergency that has to be addressed.
  America's concern for education is on target, but the sense of 
urgency is not great enough. We do not have at this point real momentum 
behind the Federal school construction initiative. I hope we will get 
it next year. We must work harder to bring some relief by having a 
Federal stimulus. The Federal Government cannot do it all. If we start 
it, the States are more likely to pick up on it and the local 
governments also.
  Budget cuts at the local level are still devastating schools. This 
year, an election year, the mayor of New York has put computers in 
junior high schools and restored some funds cut, but the budget cuts 
that were instituted a few years ago still have a devastating effect on 
schools. The devastating impact is still there because they encouraged 
the school system to cut its budget by laying off, encouraging the 
retirement of the most experienced principals and administrators and 
teachers.
  We have lost our most experienced principals, administrators and 
teachers as a result of the encouraging of those people to retire, 
because they are at the high end of the salary scale and we save money. 
When a teacher in the system for 20 years, 25 years, retires and a new 
teacher comes in, we save a lot of money. But in the process of saving 
money, we cut radically into the quality of education and 
administration.
  Money is always there. Money is a great roadblock to making even the 
most obvious kinds of changes. Education reform, a lot of controversial 
items are involved but some are not so controversial, and one is 
construction, and that requires money. The purchase of equipment for 
laboratories, the purchase of books, a number of education reform items 
are clear of any controversy.

                              {time}  2045

  They do not require debate. We know they are needed. Money is the 
obstacle. Which brings me to the second part of my discussion today. 
Money is the obstacle, and it has been always thrown up as a reason for 
not taking action.
  The reason we do not have a construction initiative is because in the 
process of the negotiation of the balanced budget, that was on the 
table, and the Republican majority decided they did not want to support 
it. The President, in the process of negotiation, he had to take some 
of his items off the table. He took off the school construction 
initiative.
  We do not have the money, we say. We give the impression to the 
American people that this is an almost bankrupt Nation and that we 
cannot afford to reform our schools. At the same time, there is a 
tremendous amount of waste. I want to go into a discussion of where all 
the waste is.
  Obviously, there is plenty of it in the military budget, still. The 
President vetoed some items that were sent to him recently in terms of 
military construction. There are a lot of items in that military budget 
that have not been vetoed and are not even being discussed.
  NATO is still our primary responsibility, while very prosperous 
nations in Europe do not shoulder their part of the burden.
  We still are spending far more for weapons systems than we need to 
spend. In an era when the cold war is no longer existing, there is no 
great sense of need for emergency development of weapons systems.
  There are a number of places where we could cut the budget, Mr. 
Speaker, but I am not going to talk about that tonight. I want to talk 
about the revenue side, and the fact that one area that we have been 
pursuing is the fact that corporate welfare takes many forms. One form 
of corporate welfare is the refusal of the IRS to enforce the Internal 
Revenue Code against corporations.
  Corporations enjoy corporate welfare in many ways. The list is very 
long. We have heard discussions of it. We have taken some steps to 
lower the amount of corporate welfare. There have been some reductions 
in the agricultural subsidies, there have been some reductions in the 
overseas advertising budgets for American products. There have been 
some reductions in a number of different items that were identified as 
corporate welfare 2 years ago. But there is still a great deal left to 
be done.
  In the area of reforming the Internal Revenue Service, we ought to 
take a hard look. The whole discussion and debate about the Internal 
Revenue Service should not go forward as a debate dominated by the 
right, by people who want to change the Tax Code in order to make it 
easier for people who are wealthy to hold on to more of their wealth, a 
greater percentage of their wealth than poor people do, or to take 
advantage of the marvelous economic system that we have and not pay 
back to that system.
  Corporations in particular, if they are not subjected to what 
Congress has decided in the Tax Code should be done in terms of 
taxation, then they are, in a way, being subsidized. Every time we 
refuse to carry out one of the items, one of the sections of the 
Internal Revenue Code Congress has put in there, we imbalance the whole 
situation, because each part of the Tax Code was put in to realize a 
certain amount of revenue.
  I am very concerned about an area that was identified by a friend of 
mine who works with an agency that prepares corporate taxes, that led 
me to inquire of the Internal Revenue Service why it was not being 
enforced. Sections 531 to 537 of the Internal Revenue Tax Code was 
called to my attention by a friend who noticed that large amounts of 
buy-backs of stock are underway by corporations. Some corporations have 
been buying back their stock for many years, and there has been an 
escalation in the number of big corporations that buy back their stock.
  The question was raised, and I have talked about it on the floor here 
before, as to why are they violating sections 531 to 537 of the 
Internal Revenue Tax Code, which says that you cannot do that except 
for certain specified reasons.
  This friend of mine did further research, and a staff member of mine 
helped to do research also, which identified that the buy-backs which 
are made in order to distribute them as stock options to the employees, 
buy-backs which are made in terms of specific things that are being 
done in that particular financial game plan, they are all legal and 
they are there.
  But then he subtracted those kinds of purposes for buying back stock 
from the non-stated purposes, and he had a big amount left. Billions of 
dollars have been bought back by corporations for no reason, other than 
that they are stockpiling their own wealth, which raises some serious 
questions.
  I guess Congress must have been concerned when they passed 531 to 
537, that section, they must have been concerned about the fact that 
when corporations buy back their own stock it does set up a situation 
where you could manipulate or seem to be manipulating the market, 
because they are in a position to sort of keep the prices up 
artificially by buying back their stock. But I do not want to go 
speculating. I am not an expert in taxes. That direction is not the 
direction I want to take tonight.
  I merely want to say that if it is on the books, if there is a clear 
prohibition against buying back stock, except for certain stated 
purposes, then why is it being allowed in such great amounts? Why is it 
escalating? If we want to get more revenue, then instead of the 
Internal Revenue Service pursuing middle class taxpayers with such 
fervor, instead of going overboard to guarantee that they squeeze every 
penny out of taxpayers who do not have the wherewithal to hire 
expensive tax lawyers and accountants, who get frightened by the fact 
that they got a letter from the IRS, instead of pursuing that course, 
which is reflected in the fact that over the years, since 1944, more 
and more of the tax burden has shifted from corporations to individuals 
and families.
  I have talked several times about the fact that families and 
individuals pay an inordinate amount of this burden of the income tax, 
up to about 44 percent. They used to pay somewhere down near 28 
percent, and the corporations paid the greatest percentage. Now 
corporations pay around 11 percent, and individuals are still up there 
and families

[[Page H8829]]

are still up at 44 percent. So it could be attributed to the way 
Congress has written the law. That is part of it. The laws have been 
written to favor corporations. There are laws, as we have noted before, 
which really amount to corporate welfare. Part of the Tax Code does 
that.
  There may be another factor. As we pursue the reform of IRS, as we 
pursue hearings related to what the Internal Revenue Service is doing 
to families and individuals, let us bear in mind that the question 
ought to be asked, what are they not doing to corporations? Why are 
they, in a very zealous manner, pursuing middle class taxpayers and 
families and individuals, while they are not pursuing certain 
clear aspects, certain clear items of the Tax Code with respect to 
corporations?

  I sent a letter to the commissioner of IRS, Mrs. Richardson at that 
time, and she has resigned since, I think, and I asked about the 
enforcement of sections 531 to 537 of the Internal Revenue Tax Code, 
and why is the section, called unreasonable accumulation of surplus 
provisions, why was that unreasonable accumulation of surplus section 
not being enforced.
  I never got an answer from the then commissioner of IRS. It was sent 
to one of her agents, who then sent it to his secretary. I got an 
answer finally from a person who identified themselves, it sounds as if 
they were a low-level clerk. They really had no title of any great 
significance.
  That is the kind of answer I got, and it was not a letter that I 
wrote alone, but there were 30 Members of Congress, 29 Members of 
Congress, who joined me. So 30 Members of Congress wrote a letter to 
the IRS requesting, and I read this letter before on this floor, 
requesting that we get an explanation as to why sections 531 to 537 of 
the Internal Revenue Tax Code were not being enforced.
  I got no letter back from the commissioner. I got an answer back from 
a low-level person who, in part of the letter, implied that it is too 
difficult to pursue these cases. That statement, that it is too 
difficult to pursue these cases, certainly runs parallel to a statement 
that I had heard made in one or two previous administrations. It was 
either the Nixon administration or the Reagan administration.
  A statement was leaked out that the word had come down from the White 
House to the Tax Commissioner at that time that they should stop 
wasting so much time pursuing corporations, that corporations had 
lawyers and accountants and it was very difficult to get them to pay 
their taxes properly, so revenue collection was lagging. In order to 
make sure revenue collections did not lag, they were being advised from 
the top to pursue middle class taxpayers more vigorously and leave 
corporations alone.
  The answer that I got sort of implied that that is pretty much the 
strategy that is used. If we are going to have hearings, then let us 
ask that question. If we are going to have hearings on reform, then let 
us include in the reform some kind of reporting system which tells us 
how many audits are being done of corporations, and in what ways; why 
is a provision like sections 531 to 537 not being pursued?
  It has a penalty built in, but it is not unlawful. In other words, if 
you do not follow sections 531 to 537, they are not going to put you in 
jail. However, if you are caught you pay a very stiff penalty.
  It is a very interesting part of the tax law. We know there are many 
provisions in the tax law which say if you do not comply, you go to 
jail. If you do not file, you are at risk of going to jail. There are a 
number of items that are pretty clear. You can be jailed if you do not 
do them. Yet, here is a provision which has no threat of jail, but it 
says if you are caught, you pay a penalty.
  The penalty is a very stiff penalty, 39 percent. If you are caught 
violating that section of the law and the amount of buy-backs is $1 
million, say, then 39 percent of $1 million is the penalty. That is in 
the law. It is clear. It used to be fuzzy as to what the target was. 
They said at one time it was written only for closely-held 
corporations, family corporations, but in 1984 they clarified that.
  There is a section in the law, in the revision of the Tax Code in 
1984 or 1987, 1984, Congress in the Revenue Act of 1984 amended the 
statute by adding section 532(c) which reads, ``The application of this 
part to a corporation shall be determined without regard to the number 
of shareholders of such corporation.'' So not small, closely-held 
corporations only, but all corporations are subject to sections 531 and 
537.
  If we are going to have hearings, the Committee on Ways and Means, 
and certainly I serve on the Committee on Government Reform and 
Oversight, and we are now having hearings on campaign finance reform, I 
hope we can go to some more productive hearings related to the IRS and 
the IRS's methods of targeting people for collection; why corporations 
are not being given the same kind of scrutiny that individuals and 
families are given; why are we letting corporate welfare take place by 
not enforcing the Tax Code?
  There are some good articles that have emerged over the last few 
weeks related to the IRS, and there is one I would like to quote from, 
here, related to what needs to happen at the IRS. This is written by a 
gentleman who used to be an IRS commissioner. His name is Fred 
Goldberg. He was IRS commissioner from 1989 to 1991.
  Mr. Goldberg agrees with me in one very important area. That is, 
``The buck stops at the top. When things go wrong in any organization, 
the temptation is to blame the workers. Don't. What's missing is top-
down focus on what we want from the IRS, and the expertise, continuity, 
and accountability to meet those expectations. That's why the 
restructuring commission recommended sweeping changes in IRS 
management, governance, and oversight. IRS commissioners now have no 
set term. Most serve for only a couple of years. They have neither the 
tenure nor the tools to build a management team and hold that team 
accountable. Give the commissioners a 5-year term and the power to 
reward employees who do the job and fire those who don't.''

                              {time}  2100

  Instead of wildly fluctuating budgets, give the IRS stable, long-term 
funding that will let them get the job done. Require coordinated, 
ongoing congressional oversight that focuses on broad strategic issues.
  I repeat, I am quoting from an article that appeared in Newsweek 
magazine, October 13, an item written by Fred Goldberg, a former 
commissioner of the IRS from 1989 to 1991. ``Require coordinated 
ongoing congressional oversight that focuses on broad strategic 
issues.'' I cannot emphasize that too much: Broad strategic issues.
  Yes, we ought to deal with the fact that people had their homes taken 
away from them. Mistakes have been made in arithmetic that have led to 
endless anguish. Papers were lost and records confused. All kinds of 
things have happened which require attention.
  But we need to focus on the broad strategic issues of what is the IRS 
here for and why should it be in the business of fervently pursuing 
middle-class taxpayers who are easy to pursue, while it neglects 
corporations that would yield a far bigger dividend if they were made 
to obey the law?
  Mr. Goldberg continues by saying, and I quote,

       Mind what you measure, because that is what you will get. 
     Congress and the administration talk a lot about fair and 
     reasonable treatment of taxpayers. But at present, the 
     primary IRS performance measures are limited to raw 
     enforcement data like how much money the agency claims 
     taxpayers owe after audits . . . Congress, the 
     administration, and senior IRS management make the rules. 
     When they start measuring and rewarding fair and reasonable 
     treatment of taxpayers, that is what we will get.

  In other words, I sent the letter asking the question about section 
531 to 537 to Commissioner Richardson. I got no answer from her. I got 
an answer from a low-level employee. I sent back another letter asking 
her to provide me with a better answer and please do it herself. I got 
no answer.
  I sent the letter to Secretary Rubin. In the structure of the Federal 
Government, the IRS is under the Secretary of the Treasury. The 
Secretary of the Treasury is under the President.
  Now, I am not going to blame the Democrats or the Republicans for 
what the IRS does, because despite the fact that this is a Federal 
agency, it is part of the executive branch of government, and the IRS 
commissioner does report to the Secretary of the Treasury. The 
Secretary of the Treasury does report

[[Page H8830]]

to the President. It is a huge institution of 100,000 employees, and 
only a handful of them are appointed through any political process.
  So the vast majority of IRS employees have been there through 
Democratic and Republican administrations. We cannot move them 
politically. It is not a political problem. There is a management 
problem, there is a philosophy problem, and there is a problem of 
administrative philosophy.
  Congress makes the laws, and the administration is supposed to 
enforce the laws. If there is a section 531 to 537 and nobody from the 
top is willing to even reply to Members of Congress who inquire as to 
why they are not enforcing it, then we have a problem.
  Do not blame the IRS clerks, do not blame the agents who are in that 
system who are going to respond to the pressure from the top. Ask the 
basic question: What is coming down from the top?
  Mr. Goldberg talks about how important it is to make any reform 
effort bipartisan. The IRS would be a fat political target, but we 
should not fall into partisan politics. In this present effort since we 
have focused a lot of attention, begun to focus a lot of attention, on 
the IRS, let us have a bipartisan effort to reform the IRS. Let us have 
a bipartisan effort on behalf of the average ordinary taxpayer out 
there who wants to be treated fairly.
  Let us have a bipartisan effort, because in the whole scheme of 
collecting revenue, which, again, as I said before, liberals and 
progressives, people who make up the ``Caring Majority,'' have 
traditionally ignored the revenue side of the fiscal operation of 
government. We have not paid attention enough to what happens in terms 
of how revenue is collected. We have only campaigned for improvements 
in expenditures. We have campaigned against waste. We campaigned in 
favor of setting new sets of priorities.
  The priority we set in education is constantly being pushed aside and 
frustrated by the claims being made that the Nation is too poor to 
afford expenditures for programs like education that are needed. The 
effort is being made to balance the budget as a top priority, and we 
cannot balance the budget unless we stop all new programs.
  The school construction initiative is considered a new program. That 
is one of the reasons why it is receiving such stiff opposition from 
the Republican Majority. No new programs unless we identify the source 
of the money we are going to get to pay for it.
  So, Mr. Speaker, that is why I am here. Being primarily concerned 
about education, I am here talking about revenue because we must wade 
into that side of the equation and prove that without unbalancing the 
budget, without affecting the present move toward a balanced budget, we 
could, in addition to cutting waste elsewhere, we could improve the 
revenue side without hurting the average American citizen out there. 
There is revenue to be collected by enforcing the Internal Revenue Code 
in a way which is impartial and does not back away from the enforcement 
of the Code with respect to corporations.
  We are going to have a new tax bill next year. Probably in this 105th 
Congress there will be a different kind of tax reform. Since I have 
been here, I have gone through the Reagan tax reform and gone through 
the Clinton tax improvements, reforms, and they all dealt with the ways 
we deal with the brackets and new deductions, and there are a number of 
things that have happened which most of the reformers are claiming are 
complicating the Tax Code even more.
  This kind of reform is being proposed to deal with some items that 
certainly should have been dealt with before. It is unthinkable that we 
have not had more oversight hearings on the Internal Revenue Service.
  During the 15 years that I have been here, I have served on the 
Committee on Government Reform and Oversight. It used to be called 
Government Operations Committee, but it has the same mission. Never has 
there been a thorough review of the Internal Revenue Service.
  We have dealt with a lot of issues which I consider trivial, but we 
have never dealt in a serious way with looking at the IRS and its major 
role in the life of every American and deciding that we want a first 
class agency administratively, we want the most modern equipment, we 
want procedures that are second to none. In a Nation which prides 
itself on the most advanced computers in the world and the most 
advanced business procedures, certainly the IRS should lead the way.
  The gentleman from Ohio [Mr. Portman] has an article in this week's 
Hill newspaper, the Wednesday, October 8, issue of Hill under the 
Opinion section. Mr. Portman talks about the fact that there will be 
new legislation proposed and it is called the IRS Restructuring and 
Reform Act of 1997. He is cosponsoring that with the gentleman from 
Maryland [Mr. Cardin], and Senators Bob Kerrey and Charles Grassley, 
one Democrat and one Republican in the Senate.

  They are sponsoring a bill which will deal with these very vital 
fundamental issues related to the administration of the IRS that is 
long overdue. They point out the fact that we recently had to pay a $4 
billion bill, if we want an example of government waste, we had to pay 
$4 billion for a failed computer modernization effort at the IRS. A 
failed computer modernization effort cost us $4 billion. They are going 
to have to redo it.
  The IRS requires that we file accurate returns, but they have never 
balanced their own books. We have an outrageous situation like this in 
Federal agencies, and recall that the CIA, Central Intelligence Agency, 
lost $4 billion in their petty cash fund. That was on the front pages 
of the New York Times and the Washington Post, yet most people just do 
not believe it happened. They reported it, and finally there was a 
statement made that the Agency had discovered, rediscovered, $4 billion 
that it did not know it had.
  So in big government agencies that do not have oversight, these kinds 
of problems would occur. It is up to Congress to take a more vigilant 
role in terms of oversight. In the process of exercising oversight, my 
point, as I come to a close here, is that we should do more than dwell 
on the clerical, administrative problems. They need to be resolved. We 
need the best information technology. We need customer service that 
flows out of the IRS that is the best in the world. We need to show 
that we have a great concern for the people who pay taxes at every 
level.
  There is no reason why we cannot get from the IRS service as good as 
we get from our local bank. After all, all taxes are local, and they 
come from ordinary people, and they deserve to be treated with great 
respect. All of that needs to be done.
  But, Mr. Speaker, we also need to address ourselves to the question 
of, what are the priorities and how is the Tax Code being uniformly 
enforced across the board? Who is the beneficiary of special treatment? 
Are we using the IRS, the Tax Code, for corporate welfare by choosing 
not to enforce certain portions? What corporations benefit, and how 
much? By choosing not to enforce certain portions, how are we placed in 
a situation where more pressure has to be applied on the middle-class 
taxpayer because we are not reaping, not collecting, the kind of 
revenue that was projected and predicted when Congress developed the 
codes in the IRS, in the Internal Revenue Code? All of that should be 
on the table.
  Why is it that over the years since 1944, the amount of taxes 
collected, the percentage of taxes collected from corporations, 
although corporations have been booming, we have had unparalleled 
prosperity, why is the percentage of the income tax burden that they 
bear, why has it gone down while the percentage of income tax burden 
borne by individuals and families has gone up?
  Why can the IRS give us some statistics without divulging 
individuals', and I am sure they can, categories? They can tell us 
exactly what kinds and how much revenue was produced in each section of 
the Code. There are ways to analyze without getting into individual 
discussions of corporations and individuals. All of that can be done, 
and it will give us a fairer system.
  The time we spend on the IRS will be far more productive. We will do 
more than give our constituents a joyful feeling that finally somebody 
is going after those guys. It is long overdue. But we should also get 
to the root of the matter. Why are they pursuing, relentlessly 
pursuing, the average taxpayer, the families and individuals,

[[Page H8831]]

when there is so much that they are not doing with respect to 
corporations?
  And when they do make the revenue collections, we can identify the 
fact that there is money available for the priorities that we have 
identified in education. We want to know where the money can come from. 
It can come from corporations paying their penalties for the violations 
of section 531 and 537. That section alone will produce all the money 
we need for school construction over the next 5 to 10 years. The two 
are very much related.
  Education is very important. The IRS review is very important. Both 
parties in a nonpartisan, bipartisan way should pursue both of these 
objectives, and I would certainly hope that we will spend part of the 
remaining weeks of the first year of the 105th Congress doing this. But 
in the 105th Congress in the second year, we will give our full 
attention to a bipartisan effort to collect the taxes that are not 
being collected in the corporate welfare and divert the money that we 
raise that way into the coffers for the improvement of the public 
schools across America, starting with a new school construction 
initiative.

                          ____________________