[Congressional Record Volume 144, Number 15 (Wednesday, February 25, 1998)]
[Senate]
[Pages S1003-S1014]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. HUTCHINSON (for himself, Mr. Brownback, Mr. Nickles, Mr. 
        Domenici, Mr. Abraham, Mr. Coverdell, Mr. Smith of New 
        Hampshire, Mr. Inhofe, Mr. Allard, Mr. Ashcroft, Mr. Sessions, 
        Mr. Craig, Mr. Gregg, Mr. DeWine, Mr. Coats, Mr. Lott, Mr. 
        Mack, Mr. Santorum, Mr. Shelby, Mr. Grams, Mr. Gramm, Mr. 
        Murkowski, Mrs. Hutchison, Mr. Smith of Oregon, Mr. Burns, and 
        Mr. Faircloth):
  S. 1673. A bill to terminate the Internal Revenue Code of 1986; to 
the Committee on Finance.


                      the tax code termination act

  Mr. HUTCHINSON. Mr. President, I join Senator Brownback in the 
introduction of the Tax Code Termination

[[Page S1004]]

Act today and will explain a little bit about our motivation and our 
rationale for what I think will prove to be very historic legislation. 
I heard it said that a tax form is a lot like a laundry list, either 
way you are going to lose your shirt; and a lot of folks have lost 
their shirts dealing with this code right here, the Tax Code that we 
believe needs to be terminated, needs to be eliminated, needs to be 
pushed over the cliff, giving us a clean slate to start over again.
  Today's laundry list of tax provisions which now comprise 480 
separate tax forms, requiring an additional 280 supplemental, 
explanatory pamphlets, is causing taxpayers to not only lose their 
shirts but to lose their patience. So what we have here is only the 
beginning. Because, in addition to this, there are the tax forms and 
there are the 280 supplemental explanatory pamphlets that accompany and 
explain and try to make rational, try to make understandable, what to 
most is incomprehensible.
  Taxpayers are frustrated that they must spend a combined total of 5.4 
billion hours complying with the provisions of this Tax Code--5.4 
billion hours. That's just a number to most people. Most people can't 
conceive of the number ``billion'' or exactly what that means. It is 
the equivalent of 20 hours a year for every man, woman, and child in 
America to comply with this Tax Code. A family of four will spend the 
equivalent of 2 work weeks, just for Tax Code compliance. I think you 
begin to understand how expensive it is, what a drag it is upon the 
American economy, and how much wasted time there is for productive 
Americans who could be using that time in better ways.
  The American people are troubled that mere compliance with tax laws 
is costing the economy over $157 billion a year, and they find it 
absolutely incredible that the Federal Government itself spends $13.7 
billion per year enforcing this code, enforcing the tax laws. Yet, in 
spite of the fact that we are spending, on the Federal level, $13.7 
billion enforcing the tax laws, one out of every four calls to the IRS 
will get a wrong answer. The Internal Revenue Service itself doesn't 
understand this Tax Code that we are asked to operate under.
  Unfortunately for taxpayers, and even for overburdened IRS employees, 
the Tax Code continues to grow and become more Byzantine every year. As 
the chart to my right shows, the number of words comprising the Tax 
Code grew from 235,000 words back in 1964, to almost 800,000 words in 
1994. That is an increase of over 300 percent. This complexity has led 
to a veritable cottage industry of high-priced lobbyists. In fact, it 
is interesting, as you look at the chart, to see the parallel between 
the increase in lobbyists--in 1964, about 10,000, between 10,000 and 
20,000--to almost 70,000 lobbyists that we have in Washington, DC now. 
So as we have seen the explosion in the words of the Tax Code, we have 
likewise seen an explosion in the number of the lobbyists up here who 
are lobbying on behalf of one particular provision or another that 
benefits their particular special interest.
  Even the Taxpayer Relief Act of 1997, which I supported because of 
the sizable substantive real tax cuts that it provided to middle-income 
families, continues the trend to complexity of the Tax Code. This act 
added several new forms and resulted in over 830 changes to the Tax 
Code. So it is no coincidence, when the Taxpayer Relief Act was signed 
into law last year--a bill that I voted for that provided the first tax 
cut in 16 years--but when it was signed into law, H&R Block, the 
national preparation service, saw their stock jump 20 percent. Since 
then it has increased 50 percent; to a great extent, I think, because 
of what we did here in Congress in the passage of a bill that further 
complicated an already overcomplicated Tax Code.
  Worse yet, as this chart indicates, the marginal tax rate for typical 
families with a child in college varies widely under the current Tax 
Code. As it was pointed out by two economists for the American 
Enterprise Institute, for typical families with incomes between $10,000 
and $120,000, the marginal tax rates bear a strong resemblance to the 
New York City skyline. If you use your imagination, you can see the 
skyline of New York City in this chart.
  The results of this system are unacceptable. Taxpayers making between 
$11,000 and $30,000 should not pay higher marginal tax rates than those 
earning between $30,000 and $40,000. Likewise, taxpayers making between 
$80,000 and $100,000 should not pay higher marginal tax rates than 
those earning above $120,000. It is fundamentally unfair. Yet, while we 
in Washington debate the merits in the flat tax, the tiered progressive 
tax, the national retail sales tax, the modified flat tax, the VAT tax, 
all the various tax proposals that have been presented to Congress with 
all their various advocates and all their pros and cons, the New York 
City skyline tax continues unfettered.
  Today, I am glad to join Senator Brownback in the introduction of 
legislation that will force this Congress to address this inequality. 
Like a city block that has fallen into disrepair well beyond the 
patchwork repairs of urban developers, our legislation would level the 
current skyline tax and leave a clean slate on which to build a new, 
fairer, and simpler Tax Code. It is not enough for us to continue to 
tinker with this Tax Code. It is not enough for us to merely pass IRS 
reform legislation, though I support that and I will support further 
legislation to protect the rights of American taxpayers. But all of 
that is really incremental. All of that is really just nibbling around 
the edges. We must be much more fundamental in our approach to 
comprehensive tax reform, and it begins with establishing a sunset 
date, a date certain in which the American people can with certainty 
understand and realize that the unfairness and undue complexity and 
Byzantine nature of the current Tax Code will be eliminated once and 
for all.
  Many have claimed that this national movement to terminate the Tax 
Code is irresponsible, in spite of the fact that millions of Americans 
have joined this movement. Hundreds of thousands have already signed 
petitions, called, e-mailed, written letters to their Representatives 
demanding that we terminate this Tax Code or ``scrap the code,'' as 
some have said, or ``explode the code,'' as others have even more 
graphically expressed themselves.
  There are those who would say that in spite of that, that the move to 
terminate the existing Tax Code is an act that is irresponsible. These 
critics have warned that the Government cannot just scrap its Tax Code 
without knowing how it is going to be replaced. I believe what these 
critics fail to realize, is that almost every major spending program of 
the U.S. Government terminates every 5 or 6 years. Part of the wisdom 
of how we operate in this Congress is that when we establish a spending 
program it is for a certain period of time with a termination date, a 
sunset date; and subsequent to that termination date, it follows that 
there will be a debate and there will either be reauthorization or the 
termination of that program. Whether it's Head Start, whether it's the 
school lunch program, the student loan program, or the Intermodal 
Surface Transportation Efficiency Act, ISTEA legislation, which we are 
going to right now on the reauthorization--all of them expire, all of 
them terminate, and must be reauthorized. So, far from being 
irresponsible, this termination process forces Congress to reconsider 
the effectiveness and efficiency of these major spending programs 
before they can be replaced.
  In short, the Tax Code Termination Act places Federal taxes on the 
same footing as Federal spending. It will allow us to clean the slate, 
and on that clean slate, Congress will be able to write a smaller, 
simpler, fairer Tax Code for the American people. In the end, the Tax 
Code will be taken to the cleaners and the taxpayers will get to keep 
their shirts.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1673

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Tax Code Termination Act''.

     SEC. 2. TERMINATION OF INTERNAL REVENUE CODE OF 1986.

       (a) In General.--No tax shall be imposed by the Internal 
     Revenue Code of 1986--

[[Page S1005]]

       (1) for any taxable year beginning after December 31, 2001, 
     and
       (2) in the case of any tax not imposed on the basis of a 
     taxable year, on any taxable event or for any period after 
     December 31, 2001.
       (b) Exception.--Subsection (a) shall not apply to taxes 
     imposed by--
       (1) chapter 2 of such Code (relating to tax on self-
     employment income),
       (2) chapter 21 of such Code (relating to Federal Insurance 
     Contributions Act), and
       (3) chapter 22 of such Code (relating to Railroad 
     Retirement Tax Act).

     SEC. 3. NEW FEDERAL TAX SYSTEM.

       (a) Structure.--The Congress hereby declares that any new 
     Federal tax system should be a simple and fair system that--
       (1) applies a low rate to all Americans,
       (2) provides tax relief for working Americans,
       (3) protects the rights of taxpayers and reduces tax 
     collection abuses,
       (4) eliminates the bias against savings and investment,
       (5) promotes economic growth and job creation, and
       (6) does not penalize marriage or families.
       (b) Timing of Implementation.--In order to ensure an easy 
     transition and effective implementation, the Congress hereby 
     declares that any new Federal tax system should be approved 
     by Congress in its final form not later than July 4, 2001.

  Mr. BROWNBACK. Mr. President, I rise today to make a few remarks on 
our current Tax Code and the Tax Code Termination Act which Senator 
Hutchinson from Arkansas and I are introducing today, along with 24 
cosponsors here in the Senate and the entire Senate leadership.
  We just held a press conference on this topic, and Senator 
Hutchinson, I believe, will be joining me shortly to talk about this 
provision.
  Mr. President, with this bill we will pull the current Tax Code up by 
its roots. And that is no small feat. This is a Tax Code that has roots 
that are down deep in the soil. I think they are hooked into bedrock. 
Some people believe they are there and cannot be pulled up. But they 
can, and they need to be for us to create another American century.
  We heard last fall, when the Senate Finance Committee held its 
hearings on IRS reviews, a horror across the country as people stood up 
to say that is what happened to them--``Let me tell you what happened 
to me''-- with the IRS abuses that have to be changed. But underlying 
the IRS is the Internal Revenue Code. The Internal Revenue Service 
complies with the Revenue Code. The Tax Code of this land has nearly 3 
million words. These are words that govern our lives. They are words 
that micromanage our economic and personal decisions. These are the 
words of Washington causing us to do certain things, or not to do 
certain things. There is too much social manipulation involved in the 
Tax Code.
  One of the leading ways that Washington uses to manipulate people's 
lives is the tax policy that we have. There are three basic ways. One 
is by regulation; another one is by subsidy. You can either regulate 
something to stop it, or you can subsidize something to try to grow it, 
or tax it, or to try to create an exception for somebody to try to fit 
their lives into it so they can get this economic treat at the end, or 
tax it here to stop people from doing something, to the point that our 
Tax Code now is more about social manipulation than it is about raising 
revenue for the Federal Government.
  To prove that point, you can just look at the cost of compliance with 
this Tax Code--this 2.8-million-word Tax Code that is backed up by 10 
million words of regulation. It costs over $150 billion a year just to 
comply with this Tax Code. That is before a single cent is paid on 
taxes. It costs over $150 billion a year to comply with this Code.
  To give people an idea about how much that is, basically, if we took 
every car made in America and drove them into the ocean, that would be 
about the equivalent of what takes place with this. That is how much 
economic activity we are talking about; not that we should begrudge 
those people who make their livelihood by figuring taxes. They are 
good, honest, hard-working Americans. We shouldn't have so many people 
involved in that, and we shouldn't have a Tax Code that requires so 
much that people live in fear of it.
  I want another American century. I want it for my children who are 
11, 9 and 7. And I think we have the time and the moment in history now 
to start creating, to build that next American century. I don't think 
you can do it with this Tax Code which micromanages economic and 
personal decisions out of Washington. Let people in Kansas decide how 
to invest their money and decide how to take care of their families 
instead of taking all their money from them. They can make better 
decisions than people in Washington. It is a fundamental premise upon 
which I have run, and there are a lot of people associated with this 
body that have run on that--that people make better personal decisions 
than, as in a lot of times, the Government forces them to make through 
the Tax Code.
  We need to get back to a Tax Code that is fairer, simpler, flatter, 
and, I might add as well, freer as far as allowing more freedom to the 
average American to be able to make their own personal decisions--
making the decisions about what is best for them.
  The bill that Senator Hutchinson and I am introducing is to sunset 
the current Tax Code. It does not say what we should go to from this 
point. There are a lot of options that are out there. You can look at a 
national tax. You can look at a consumption-based tax. You can look at 
a national sales tax. You can look at some sort of tax simplification, 
although I have to say when I go around Kansas talking about tax 
simplification, they say, ``I get that joke. You tried that one on us 
before and it didn't simplify anything.'' But there are options, I 
think some of which we can still consider, that are out there.
  By this bill, we are not saying which options should be taken. We are 
simply saying by this bill, let us start the great national debate 
about what sort of tax system we ought to go to and do away with this 
one; let us drive a stake through heart of this one; let us salt the 
soil around where the plant grew up so it cannot grow back again; and 
let us debate what other sorts of systems can we go to.
  It is a very similar proposal that we made when we started to balance 
the budget 3 years ago. We said at that point in time, let us balance 
the budget within 7 years. There are lots of different plans out there 
on how to balance the budget. We did not identify at the outset that 
this is the way we are going to do it or that is the way. We say, by 
this date we will have balanced the budget. Let us start the great 
national debate about how we get there. It is the same thing we are 
doing here. We are saying by the end of the year 2001--we hopefully 
will have a balanced budget this year--by the year of 2001, let's have 
a new Tax Code and let's start the great national debate.

  Should it be a national tax? Should it be a sales tax? Should it be a 
simplified system? Should it be another option that is yet to be 
identified? And let us have that out there aggressively being talked 
about. We do not do anything to Social Security or Medicare chapters 
within the Tax Code; we leave those alone. That is a debate for another 
day in another arena. But, otherwise, let us have this great debate 
talking about what we are going to replace this onerous, complex 
burdensome, system with.
  The Tax Code has had its place in history. This Tax Code has. Now 
let's make it history. Americans are ``taxed to the max.'' I believe 
that we need to start the clock on the Tax Code and start the process 
of providing Americans with that flatter, simpler, fairer, freer Tax 
Code system based upon which they can make a lot more of their economic 
decisions.
  I think it is fundamental for us to create this next American century 
by having a different system than the onerous one we have today which 
people cannot understand--that regularly each year Money magazine will 
send a hypothetical taxpayer to 50 different accountants and get 50 
different answers; or, you can ask an IRS agent. Call five of them up 
on the same question, and you will get five different answers. It is 
not that these people are not intelligent; it is that the Tax Code is 
unintelligible.
  I have to admit that I went to law school. I have to ask forgiveness 
for that of a lot of people. I took every tax course, except one, that 
I could in law school. This Tax Code is unintelligible. My tax law 
professor, the Dean of the Kansas University School of Law, had the 
case for driving a stake through and giving capital punishment to this

[[Page S1006]]

Tax Code, because he says, ``Look; I have spent 20 years studying this 
thing, and it still doesn't make sense, and it is still something that 
is far too burdensome, and people don't understand it, nor is it free 
of the American people.''
  You have to wonder why we have evolved such a system. But it is 
because we have taken into this Code far more the notion of behavior 
modification than we have of raising revenue for the Federal 
Government--that behavior modification that seems now to drive more of 
our tax policy than for what we need to raise revenue for the Federal 
Government. It comes from both the left and from the right.
  So, Mr. President, as the current Tax Code is anti-American and anti-
government, it needs to go the way of history. Let's start this great 
national debate about which way we need to go. Let's involve all the 
people across this great land on what they think we need to do.
  I might add one other point. A number of people are concerned, who 
say, ``OK; if you accept this Tax Code, I have made decisions based on 
this Tax Code, and some of these are 15-year or 20-year decisions.'' 
They involve depreciation schedules; they involve investment decisions; 
they involve any number of factors. I think we will probably have to 
put in place substantial transition mechanisms similar to what we did 
on the farm bill when we changed the farm bill and we had a 7-year 
transition period. When we go into trade agreements, a lot of times we 
have 10- to 15-year transition periods, so that people that have made 
decisions based on this Tax Code are allowed the opportunity to say, 
``OK; I have a transition time period that I need to get to something 
else.'' So they need not fear that they are going to be driven into 
some sort of economic chaos or that the country will by changing the 
Tax Code. We need to have a long and appropriate period for transition 
so we do not create that economic difficulty or chaos.
  This needs to be a very thoughtful and a very learned debate. And 
that is why Senator Hutchinson and I have introduced this bill, along 
with 24 cosponsors, that simply says sunset it by the end of the year 
2001 so we can have plenty of time to talk about a different system to 
go to. And it is time. I would love to give to my children in the next 
millennium, as they go into it, a Tax Code where they don't have to 
worry, regarding every decision they make, what are its tax 
implications. But, rather, they just have a certain level of burden 
that is fair, that is low, that is appropriate, and that is one that 
they can feel is a system that leads to some justice.
  I am delighted we introduced this bill and I am delighted to join Tim 
Hutchinson in this effort to sunset the Tax Code, and I encourage all 
of my colleagues to join me in this effort and on this bill to sunset 
the Tax Code.
  To reiterate, this is a tax code that the annals of history will 
record as one of the most onerous burdens ever faced by the American 
people. Our bill aims to make this code history, and by moving our 
legislation we will take the first steps in sunsetting a tax code that 
has become a method by which policy makers have confiscated family 
income and attempted to redistribute it for the sake of big government. 
This must come to an end.
  I am convinced that we cannot have another American Century with this 
tax code. It is anti-family and anti-growth. It cannot be saved--it 
must be scrapped.
  Americans demand tax reform, we have promised tax reform, and now is 
time to deliver on that promise to the American people. Some, of 
course, will argue that we have to be careful about any radical changes 
to our tax laws.
  I agree.
  I believe that we must carefully weigh alternative plans, debate the 
macro and micro effects of each, and then arrive at a thoughtful and 
reasoned solution that is equitable and just. However, as it should be 
clear to anyone, what we now have in place is neither just nor 
equitable. If, as is often said, our tax code is fair why are the 
defenders so quiet? Let's have the debate.
  The bottom line is this: The tax code we now have in place punishes 
good investment decisions and distorts the labor market as well as our 
rates of national savings. It manipulates behavior by adding incentives 
to do one thing while punishing those who do something else.
  A quick look at some of the inadequacies in our code should make the 
case for reform clear. For example if your are a chronic gambler you 
can deduct your gambling losses. But if you are a homeowner who made an 
unlucky investment and the value of your home declined you have no 
recourse to the tax code because you cannot claim a deduction for a 
capital loss. The question is: why can someone deduct a loss associated 
with a bad game of blackjack but not a loss associated with their 
primary residence in which they were the unfortunate victim rather than 
a willing participant?

  The code is full of inconsistencies like the one I just mentioned. 
Sure, we could try and fix these problems within our tax code--and we 
should--but the fact of the matter is our tax code is riddled with 
these inconsistencies which leads me to the conclusion that we cannot 
reform our code, we must get rid of it.
  The bill I am sponsoring today will move us in the direction of 
making some of these basic changes.
  We must move to a tax system where individuals are not punished for 
their investments and where the national rate of savings is not 
distorted through unintended consequences. It is often argued that the 
federal government has an economic obligation to correct for market 
externalities where the marginal social cost exceeds the marginal 
social benefit. Unfortunately, the government has become a marginal 
externality and in so doing has created deadweight economic loss 
through policies which distort economic behaviour and shift incentives 
away from savings and investment. Economically this just doesn't make 
sense. In fact, I challenge anyone within hearing to find ten credible 
economists who will defend our current tax code. A tax system should 
not discriminate against the only component of our national income that 
provides for future economic growth--Investment. But ours does.
  Some will disagree. But this is the precise issue upon which we must 
focus our debate. We must decide where we want the tax to be imposed; 
and further, we must fully understand what effect the imposition of the 
tax will have on the health of the economy.
  However this debate takes shape we should have as our goal a tax 
system that does not distort behaviour and create deadweight loss, 
rather we must have as our goal a pro-growth tax system that encourages 
growth and increases in our national rate of savings--the true vehicle 
to long-run sustainable growth. We should have as our model something 
that is simpler, fairer and yes, flatter.
  The Hutchinson-Brownback Tax Code Elimination Act will start the 
great national debate on how best to change our tax code in favor of 
one that is more equitable to all taxpayers and less complicated for 
everyone. Also, our bill will enable this debate to take place outside 
of the realm of petty demagoguery because it protects the important 
funding mechanisms for Social Security and Medicare. I believe that we 
have a commitment to ensure that we have a full, honest and open 
debate--our bill will give the Senate that opportunity.
  I look forward to this important and historic debate as we prepare 
for the millennium and to a new century that I hope will provide the 
American people with a renewed sense of the American dream, with a 
renewed sense of what it means to be an American and what it means to 
live in America.
  And now as we begin this process we should keep one other thing in 
mind: America is watching.
                                 ______
                                 
      By Mr. FAIRCLOTH:
  S. 1674. A bill to establish the Commission on Legal Reform; to the 
Committee on the Judiciary.


                THE LEGAL REFORM COMMISSION ACT OF 1998

  Mr. FAIRCLOTH. Mr. President, I rise to introduce a bill to create a 
national commission of nonlawyers--nonlawyers, to study legal reform. 
Nonlawyers, just regular people with a 2-year mandate to offer common 
sense proposals to reform the legal system. While I stand here, the 
Association of Trial Lawyers of America are holding their winter 
convention. It is not a week of hard work on behalf of the American 
people. No, they are at the Grand Wailea Resort & Spa, in Maui, HI. 
They

[[Page S1007]]

are spending a week in the sun learning how to sue more people for more 
things. They are learning how to throw more American workers out of a 
job. They are learning how to take a 40 percent share of more lawsuits 
against small businesses. They are learning how to run the cost of 
doing business through the roof.
  I have not been to this resort but I am sure that it is not a bare-
bones rooming house. First-class flights to a five-star resort--that's 
what you get, and can afford, when you sue people for a living and take 
40 percent of it.
  Let me say a few words about my legal reform commission. This will 
not be a typical Washington commission; it will be made up entirely of 
nonlawyers. The legal system is overrun with abuses and we need 
fundamental reform. I want to see what a panel of average Americans who 
are not lawyers trained to split legal hairs, but think in common 
sense, will do with legal reform. We have heard all the stories about 
the $2.8 million award against the lady who spilled the McDonald's 
coffee. We have heard about a $4 million verdict because a BMW 
automobile was repainted. These are well known because they are 
outrageous. The coffee verdict was cut to $480,000 and the BMW verdict 
was reduced to $50,000. But the fact that millions of dollars were 
awarded and hundreds of thousands of dollars upheld in these outrageous 
cases simply highlights the problem.
  Let me mention a few cases that did not get the same attention. A 
Pennsylvania man was fixing his barn roof and tried to get an extra 
lift by putting his ladder on top of a pile of frozen manure. When the 
manure thawed, the man fell and he sued the ladder manufacturer. Why? 
Because the ladder company did not warn him that manure would not 
withstand the weight of a ladder. Crazy? Sure, but a jury found the 
ladder maker negligent and awarded the man $330,000. This is the out-
of-control, ridiculous problem that we are facing.

  A teenager in New Hampshire tried to slam dunk--I think that is where 
you push the ball through the hoop--a basketball. He lost two teeth 
when he hit the net. He sued the net manufacturer. The company was 
forced to settle the case for $50,000 because they were afraid of a 
tort system run out of control.
  These are the types of things that we simply have to stop. With these 
kinds of lawsuits and 40 percent of it, you can afford to be in Hawaii.
  A lumberjack was killed when a 4,000-pound redwood tree fell on him. 
It was a tragedy, of course, but was it a lawsuit? His family sued the 
hard-hat maker. The trial lawyer argued that the hard hat was defective 
because it could not prevent damage from a 4,000-pound falling redwood 
tree.
  Can you imagine how thick a hat would have to be to stand up under a 
4,000-pound falling redwood tree? You couldn't put it on your head. You 
couldn't stand up with it on. But the company wound up paying $650,000 
in a ludicrous suit. A hard hat was never intended to protect you from 
a falling redwood tree. More of the same type of thing.
  I assume some of the people who are vacationing in Hawaii received 40 
percent of the $650,000.
  A Texas man who had a blood alcohol level of .09 more than 8 hours 
after he caused an accident--8 hours; in other words, he was .09 8 
hours later, so he could have been way above that when he had the 
accident--claimed that the road caused his crash and sued the design 
firm for negligence. Here is a man falling down drunk 8 hours after the 
wreck and he sues the highway design firm that designed the road. This 
was despite the fact that he was speeding and ignored the detour sign. 
The 15-employee firm spent $200,000 to defend itself and was forced to 
finally give him $35,000. So the small design firm was out $235,000 
because a drunk ignored a detour sign and was speeding.
  Not only are these facts--and the pattern--outrageous, but the 
lawyers profit from their behavior. They take anywhere from 25 to 
usually over 40 percent of the recovery. It is totally a system out of 
control: greedy lawyers exploiting the law and their own clients for 
personal gain.
  The tort system costs the people of this country more than $150 
billion annually. That is more than 2 percent of our entire economy. It 
is a huge waste, and it is going to have to stop if we hope to compete 
in a global economy.
  Mr. President, I want to see what a panel of average intelligent 
Americans will come up with, people with common sense who can look 
through the facade of these lawsuits. That is why I am introducing the 
Legal Reform Commission of 1998. And they start out with a big plus. 
There is no way they can do worse than what we already have.
                                 ______
                                 
      By Mr. SHELBY (for himself and Mr. Bond);
  S. 1675. A bill to establish a Congressional Office of Regulatory 
Analysis; to the Committee on Governmental Affairs.


          the congressional office of regulatory analysis act

  Mr. SHELBY. Mr. President, I rise today to introduce the 
Congressional Office of Regulatory Analysis Act. This legislation would 
establish a small, professional office within the legislative branch 
charged with analyzing the potential impacts of Federal rules and 
regulations.

  In April 1996, Congress passed and the President signed the Small 
Business Regulatory Enforcement Fairness Act. Included in this 
legislation was a provision known as the Congressional Review Act or 
CRA which established an expedited process for Congress to review and 
disapprove Federal agency regulations. Under the CRA, agencies are 
required to send their final regulations to Congress 60 days before 
they take effect, and they can be overturned by a joint resolution of 
disapproval that is signed by the President. At the time of enactment, 
this law was hailed as a way to rein in agencies and prevent the 
implementation of costly regulations with few practical benefits.
  The legislation that I am introducing would give Congress the tools 
to fully implement the CRA and reduce the regulatory drain on our 
economy. Under current law, the potential impacts of new regulations 
are not systematically evaluated--a fact that I think would come as a 
surprise to most of our constituents. The Office of Information and 
Regulatory Affairs within OMB reviews regulations only to ensure that 
they conform to Administration policies and current law and that they 
do not interfere with the actions of other Federal agencies. However, 
this office has performed these minimal calculations on only a small 
fraction of the new rules promulgated in recent years. In addition, the 
General Accounting Office (GAO) was given some additional 
responsibilities under the CRA. GAO must now submit to Congress a 
checklist citing which reports an agency has or has not completed when 
developing a new rule. These reports are often incomplete or 
nonexistent, and Congress has little recourse for obtaining factual 
information in these instances.
  For these reasons, I believe that a Congressional Office of 
Regulatory Analysis (CORA) is essential to allowing Congress to fulfill 
its oversight obligations. At present, Congress does not have any 
resources for objectively evaluating the potential costs and benefits 
of new regulations. CORA can provide those resources. While the 
executive branch has thousands of employees devoted solely to creating 
and enforcing regulations, Congress has few means of effectively 
overseeing those rules. Our committee staffs are already stretched to 
their limits, and they cannot possibly study and evaluate each and 
every regulation that comes out. We need a professional staff that is 
charged with analyzing regulations and providing Congress with its 
findings. By gaining access to this valuable information, Congress will 
then be able to decide whether or not to pursue further action under 
the CRA.
  Specifically, CORA would analyze both the monetary and non-monetary 
effects of all new major regulations. Non-major rules would be 
evaluated at the request of committees or individual Members of 
Congress. In addition to providing information on costs and benefits, 
which are very important, CORA's analyses would also explore possible 
alternative approaches to achieving the same goals as the proposed 
regulation at a lower cost. Finally, this office would issue an annual 
report on the total cost of Federal regulations to the United States 
economy.
  I believe that anything which costs the average American family 
$6,800 per

[[Page S1008]]

year warrants very careful Congressional examination. Without the 
objective information that CORA can provide, oversight cannot properly 
be carried out.
  Senator Bond, the chairman of the Small Business Committee, has 
joined me as a cosponsor of this legislation. I urge the rest of my 
colleagues to join us in establishing this office in order to ensure 
that future regulations do not place unnecessary burdens on the 
American public.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1675

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Congressional Office of 
     Regulatory Analysis Act''.

     SEC. 2. FINDINGS AND PURPOSES.

       (a) Findings.--Congress finds that--
       (1) Federal regulations can have a positive impact in 
     protecting the environment and the health and safety of all 
     Americans; however, uncontrolled increases in the costs that 
     regulations place on the economy cannot be sustained;
       (2) the legislative branch has a responsibility to see that 
     the laws it passes are properly implemented by the executive 
     branch;
       (3) effective implementation of chapter 8 of title 5 of the 
     United States Code (relating to congressional review of 
     agency rulemaking) is essential to controlling the regulatory 
     burden that the Government places on the economy; and
       (4) in order for the legislative branch to fulfill its 
     responsibilities under chapter 8 of title 5, United States 
     Code, it must have accurate and reliable information on which 
     to base its decisions.
       (b) Purpose.--The purpose of this Act is to establish a 
     congressional office to provide Congress with independent, 
     timely, and reasoned analyses of existing and anticipated 
     Federal rules and regulations, including--
       (1) assessments of the need for, and effectiveness of, 
     existing and anticipated Federal rules and regulations in 
     meeting the mandates of underlying statutes;
       (2) statements of the existing and projected economic and 
     noneconomic impacts, including the impacts of reporting 
     requirements, of such rules and regulations; and
       (3) separate assessments of the effects of existing and 
     anticipated regulations on segments of the public, such as 
     geographic regions and small entities.

     SEC. 3. ESTABLISHMENT OF OFFICE.

       (a) Establishment.--
       (1) In general.--There is established a Congressional 
     Office of Regulatory Analysis (hereafter in this Act referred 
     to as the ``Office''). The Office shall be headed by a 
     Director.
       (2) Appointment.--The Director shall be appointed by the 
     Majority Leader of the Senate and the Speaker of the House of 
     Representatives without regard to political affiliation and 
     solely on the basis of the Director's ability to perform the 
     duties of the Office.
       (3) Term.--The term of office of the Director shall be 4 
     years, but no Director shall be permitted to serve more than 
     3 terms. Any individual appointed as Director to fill a 
     vacancy prior to the expiration of a term shall serve only 
     for the unexpired portion of that term. An individual serving 
     as Director at the expiration of that term may continue to 
     serve until the individual's successor is appointed.
       (4) Removal.--The Director may be removed by a concurrent 
     resolution of Congress.
       (5) Compensation.--The Director shall receive compensation 
     at a per annum gross rate equal to the rate of basic pay for 
     a position at level III of the Executive Schedule under 
     section 5314 of title 5, United States Code.
       (b) Personnel.--The Director shall appoint and fix the 
     compensation of such personnel as may be necessary to carry 
     out the duties and functions of the Office. All personnel of 
     the Office shall be appointed without regard to political 
     affiliation and solely on the basis of their fitness to 
     perform their duties. The Director may prescribe the duties 
     and responsibilities of the personnel of the Office, and 
     delegate authority to perform any of the duties, powers, and 
     functions of the Office or the Director. For purposes of pay 
     (other than pay of the Director) and employment benefits, 
     rights, and privileges, all personnel of the Office shall be 
     treated as if they were employees of the Senate.
       (c) Experts and Consultants.--In carrying out the duties 
     and functions of the Office, the Director may procure the 
     temporary (not to exceed one year) or intermittent services 
     of experts or consultants or organizations thereof by 
     contract as independent contractors, or, in the case of 
     individual experts or consultants, by employment at rates of 
     pay not in excess of the daily equivalent of the highest rate 
     of basic pay under the General Schedule of section 5332 of 
     title 5, United States Code.
       (d) Relationship to Executive Branch.--
       (1) In general.--The Director is authorized to secure 
     information, data, estimates, and statistics directly from 
     the various departments, agencies, and establishments of the 
     executive branch of Government, including the Office of 
     Management and Budget, and the regulatory agencies and 
     commissions of the Government. All such departments, 
     agencies, establishments, and regulatory agencies and 
     commissions shall promptly furnish the Director any available 
     material which the Director determines to be necessary in the 
     performance of the Director's duties and functions (other 
     than material the disclosure of which would be a violation of 
     law).
       (2) Services.--Upon agreement with the head of any such 
     department, agency, establishment, or regulatory agency or 
     commission--
       (A) the Director may use the services, facilities, and 
     personnel with or without reimbursement of such department, 
     agency, establishment, or commission; and
       (B) the head of each such department, agency, 
     establishment, or regulatory agency or commission is 
     authorized to provide the Office such services, facilities, 
     and personnel.
       (e) Relationship to Other Agencies of Congress.--In 
     carrying out the duties and functions of the Office, and for 
     the purpose of coordinating the operations of the Office with 
     those of other congressional agencies with a view to 
     utilizing most effectively the information, services and 
     capabilities of all such agencies in carrying out the various 
     responsibilities assigned to each, the Director is authorized 
     to obtain information, data, estimates, and statistics 
     developed by the General Accounting Office, Congressional 
     Budget Office, and the Library of Congress, and (upon 
     agreement with them) to utilize their services, facilities, 
     and personnel with or without reimbursement. The Comptroller 
     General, the Director of the Congressional Budget Office, and 
     the Librarian of Congress are authorized to provide the 
     Office with the information, data, estimates, and statistics, 
     and the services, facilities, and personnel, referred to in 
     the preceding sentence.
       (f) Appropriations.--There are authorized to be 
     appropriated to the Office for fiscal years 1998 through 2006 
     such sums as may be necessary to enable the Office to carry 
     out its duties and functions.

     SEC. 4. RESPONSIBILITIES.

       (a) Transfer of Functions Under Chapter 8 From GAO to 
     Office.--
       (1) Director's authority.--Section 801 of title 5, United 
     States Code, is amended by striking ``Comptroller General'' 
     each place it occurs and inserting ``Director of the 
     Office''; and
       (2) Definition.--Section 804 is amended by adding at the 
     end the following:
       ``(4) The term `Director of the Office' means the Director 
     of the Congressional Office of Regulatory Affairs established 
     under section 3 of the Congressional Office of Regulatory 
     Analysis Act.''.
       (3) Major rules.--
       (A) Regulatory impact analysis.--In addition to the 
     assessment of an agency's compliance with the procedural 
     steps for major rules described under section 801(a)(2)(A) of 
     title 5, United States Code, the Office shall conduct its own 
     regulatory impact analysis of such major rules. The analysis 
     shall include--
       (i) a description of the potential benefits of the rule, 
     including any beneficial effects that cannot be quantified in 
     monetary terms and the identification of those likely to 
     receive the benefits;
       (ii) a description of the potential costs of the rule, 
     including any adverse effects that cannot be quantified in 
     monetary terms and the identification of those likely to bear 
     the costs;
       (iii) a determination of the potential net benefits of the 
     rule, including an evaluation of effects that cannot be 
     quantified in monetary terms;
       (iv) a description of alternative approaches that could 
     achieve the same regulatory goal at a lower cost, together 
     with an analysis of the potential benefit and costs and a 
     brief explanation of the legal reasons why such alternatives, 
     if proposed, could not be adopted; and
       (v) a summary of how these results differ, if at all, from 
     the results that the promulgating agency received when 
     conducting similar analyses.
       (B) Time for report to committees.--Section 801(a)(2)(A) of 
     title 5, United States Code, is amended by striking ``15'' 
     and inserting ``45''.
       (4) Nonmajor rules.--The Office shall conduct a regulatory 
     impact analysis, in accordance with paragraph (3)(A), of any 
     nonmajor rule, as defined in section 804(3) of title 5, 
     United States Code, when requested to do so by a committee of 
     the Senate or House of Representatives, or individual Senator 
     or Representative.
       (5) Priorities.--
       (A) Assignment.--To ensure that analyses of the most 
     significant regulations occur, the Office shall give first 
     priority to, and is required to conduct analyses of, all 
     major rules, as defined in section 804(2) of title 5, United 
     States Code. Secondary priority shall be assigned to requests 
     from committees of the Senate and the House of 
     Representatives. Tertiary priority shall be assigned to 
     requests from individual Senators and Representatives.
       (B) Discretion to director of office.--The Director of the 
     Office shall have the discretion to assign priority among the 
     secondary and tertiary requests.

[[Page S1009]]

       (b) Transfer of Certain Functions Under the Unfunded 
     Mandates Reform Act of 1995 From CBO to Office.--
       (1) Cost of regulations.--Section 103 of the Unfunded 
     Mandates Reform Act of 1995 (2 U.S.C. 1511) is amended--
       (A) in subsection (b), by striking ``the Director'' and 
     inserting ``the Director of the Congressional Office of 
     Regulatory Analysis''; and
       (B) in subsection (c), by inserting after ``Budget Office'' 
     the following: ``or the Director of the Congressional Office 
     of Regulatory Analysis''.
       (2) Assistance to the congressional office of regulatory 
     analysis.--Section 206 of the Unfunded Mandates Reform Act of 
     1995 (2 U.S.C. 1536) is amended--
       (A) by amending the section heading to read as follows: 
     ``sec. 206. assistance to the congressional office of 
     regulatory analysis.''; and
       (B) in paragraph (2), by striking ``the Director of the 
     Congressional Budget Office'' and inserting ``the Director of 
     the Congressional Office of Regulatory Analysis''.
       (c) Other Reports.--In addition to the regulatory impact 
     analyses of major and nonmajor rules described under 
     subsection (a), the Office shall issue an annual report on an 
     estimate of the total cost of Federal regulations on the 
     United States economy.

     SEC. 5. EFFECTIVE DATE.

       This Act and the amendments made by this Act shall take 
     effect 180 days after the date of enactment of this Act.

  Mr. BOND. Mr. President, I rise today to join my distinguished 
colleague from Alabama Senator Richard Shelby in sponsoring legislation 
to restore Congressional accountability to the regulatory process and 
improve the likelihood that Federal agencies will be more accountable 
to the voters for their rulemaking actions. The authority Congress has 
delegated to these agencies is the source of their power to issue 
rules, regulations, guidelines and the like. While this delegation of 
authority to Federal bureaucracies may be a necessary evil until we can 
make more progress to reduce the size and scope of government's 
expanded role in our daily lives, this unfortunate regulatory state of 
affairs calls for increased oversight and renewed involvement by the 
elected officials who pass the legislation that empowers the 
bureaucracy.
  The size of the regulatory burden is staggering. According to a study 
for the Small Business Administration by Thomas D. Hopkins, an Adjunct 
Fellow of the Center for the Study of American Business in St. Louis, 
the direct, annual cost of regulatory compliance in 1997 was $688 
billion--which is approximately $6,875 each year for a family of four. 
At the same time Congress exercises fiscal restraint in order to 
achieve a balanced budget, we must also be vigilant to ensure that the 
Federal government does not impose additional ``hidden taxes'' in the 
form of regulatory costs on American citizens.
  As Chairman of the Senate Committee on Small Business, I have worked 
especially hard to reduce the burden imposed by government regulations 
on our nation's small businesses. In 1996, legislation I authored was 
enacted as an important step in our efforts to reduce red tape and 
increase fairness in the treatment of small businesses by Federal 
agencies. Enactment of this law was a victory for small business and 
for the consumers and workers who rely on small businesses for goods, 
services and jobs. Because the Small Business Regulatory Enforcement 
Fairness Act offers such great potential for improving the regulatory 
landscape, we refer to it as the ``Red Tape Reduction Act.''
  The bill Senator Shelby and I are introducing today builds on the 
work initiated by the Red Tape Reduction Act. Specifically, Subtitle E 
of that important law, known as the Congressional Review Act (CRA), 
enhances the ability of Congress to serve as a backstop against 
excessive regulations. Senators Nickles and Reid sponsored the CRA 
portion of the Red Tape Reduction Act to provide a new process for 
Congress to review and disapprove new regulations and to make sure 
regulators are not exceeding or ignoring the Congressional intent of 
statutory law.
  Despite strong support for the CRA, Congress thus far has been 
hesitant to use the streamlined procedures for reviewing a regulation 
provided under the CRA. In fact, since enactment of the Congressional 
Review Act, more than 7,400 new regulations have been issued--on 
average 25-30 per day. While many of these rules are routine and others 
certainly would have survived Congressional scrutiny, the fact remains 
that more than 110 major final rules have been issued, each having an 
annual affect on the economy of $100 million or more.
  In the 104th Congress, one of two resolutions of disapproval 
introduced in the Senate reached the floor for a vote and was defeated. 
In the 105th Congress, only one resolution of disapproval has been 
introduced in the Senate. Consequently, Congress has been criticized 
for not fulfilling its role under the CRA. The fact is that, without a 
separate, reliable, source of in-depth analysis of these new rules, 
Congress has been limited in its ability to exercise its new authority 
over these rules. With Federal regulations costing our constituents 
$688 billion last year, and proposed and final rules accounting for 
more than 68,000 pages in the Federal Register in 1997 alone, it is 
time for Congress to take aggressive steps to ensure that the 
regulations flowing from Congressionally-passed legislation are fairly 
and reasonably fulfilling the purposes Congress intended.
  To provide Congress with the information needed to review new 
regulations and access whether a resolution of disapproval under the 
CRA should be considered. Senator Shelby and I are today introducing 
legislation to create a Congressional Office of Regulatory Analysis 
(CORA). CORA would provide an objective source of regulatory analysis 
to assist Congress in its review of new regulations. This small office 
will provide the missing information required by Congress to utilize 
better the potential oversight powers provided under the CRA.
  Patterned after the Congressional Budget Office, but on a smaller 
scale, CORA would be a professional, nonpartisan office, using 
available information to analyze major and non-major regulations. The 
sponsor of the companion bill in the other body estimates the cost of 
such an office at $5 million, comparable to the Office of Management 
and Budget's Office of Information and Regulatory Affairs (OIRA). 
Consistent with the limited resources available to CORA, the bill 
places first priority on analysis of major rules, second priority on 
non-major rules recommended for analysis by a Congressional Committee, 
and third priority on non-major rules recommended for review by 
individual Members of Congress.
  The bill we introduce today also would consolidate within CORA 
certain activities assigned to the Congressional Budget Office under 
the Unfunded Mandates Reform Act of 1995 and the Governmental 
Accounting Office under the Congressional Review Act. This would 
provide Congress with one office, dedicated to the analysis of 
regulations and their costs. Finally, the bill instructs CORA to 
provide an annual report on the estimated total cost of regulations--a 
valuable piece of information the Administration failed to provide 
adequately despite Congress requiring such a regulatory accounting.
  With regulation expanding, Congress must re-take the reigns of 
accountability and good governance. CORA provides an essential tool in 
that effort and is consistent with the advances made by Congress in 
passing the Red Tape Reduction Act, the Congressional Review Act, and 
Unfunded Mandates Reform Act. I urge all my colleagues to review this 
legislation and join in our efforts to ensure that Congress has the 
information it needs to fulfill its responsibilities under the 
Congressional Review Act and the Constitution.
                                 ______
                                 
      By Ms. MOSELEY-BRAUN:
  S. 1676. A bill to amend section 507 of the Omnibus Parks and Public 
Land Management Act of 1996 to provide additional funding for the 
preservation and restoration of historic buildings and structures at 
historically black colleges and universities, and for other purposes; 
to the Committee on Energy and Natural Resources.


        historically black colleges and universities legislation

  Ms. MOSELEY-BRAUN. Mr. President, today I am pleased to introduce 
legislation to protect and preserve some of our Nation's most important 
historic landmarks that are at risk of being lost forever. I speak of 
buildings located on the campuses of our Nation's 103 historically 
black colleges and universities. Like so much of our infrastructure, 
many of the buildings that make up these schools are literally falling 
down.

[[Page S1010]]

  Our Nation's HBCUs have promoted academic excellence for over 130 
years. They have produced some of our Nation's most distinguished 
leaders, including Dr. Martin Luther King, Jr., Thurgood Marshall, our 
former colleague Harris Wofford, and many current Members of Congress. 
These schools have distinguished themselves in the field of higher 
education over the years by maintaining the highest academic standards 
while increasing educational opportunities for economically- and 
socially-disadvantaged Americans, including tens of thousands of 
African-Americans.
  Although they represent only three percent of all U.S. institutions 
of higher education, HBCUs graduate 33 percent of all African-Americans 
with bachelor's degrees and 43 percent of all African-Americans who go 
on to earn their Ph.D.'s.
  Nonetheless, in order to meet the educational needs of these 
promising individuals, these schools have had to keep their tuition and 
fees well below those at comparable institutions. The average tuition 
and fees charged by private historically black colleges and 
universities, for example, is less than half the average charged by 
private colleges nationwide.
  HBCUs have also had to keep their costs low in order to increase 
financial aid for their students, who are disproportionately more 
dependent on financial aid than students at other U.S. colleges. A 
study by the United Negro College Fund found that 90 percent of 
students at private historically black colleges and universities 
require financial aid, compared with 65 percent of private college 
students nationally. The study also found that nearly one-half of these 
students come from families earning less than $25,000.
  Given that historically black colleges and universities have found it 
increasingly difficult to support student aid, it should not be 
surprising that they are unable to restore and preserve the historic 
landmarks that sit on their campuses.
  According to a new report being released today by the U.S. General 
Accounting Office, $755 million are needed to restore and preserve 712 
historic structures on the campuses of historically black colleges and 
universities. 323 of these structures are already on the National 
Register of Historic Places. The others are either eligible for the 
National Register on the basis of State historic preservation officers' 
surveys or are considered historic by the colleges and universities.
  Some HBCUs have large numbers of historic properties. Talladega 
College, for example, has 32 properties on the Historic Register and 
one additional properties eligible for the Historic Register. The 
college needs $13,239,000 in order to restore and preserve these 
facilities.
  One of these buildings is Swayne Hall, Talladega's first building. 
Swayne Hall, which is on the National Register, was built with slave 
labor in 1852 for the Talladega Baptist Male High School, and later was 
used to house Federal prisoners during the Civil War. Two of the slaves 
who helped build Swayne Hall later went on to found Talladega College. 
Swayne Hall now houses three floors of classrooms and offices, and 
needs $1.5 million worth of repairs and refurbishment.
  Congress authorized $29 million under the Omnibus Parks and Public 
Lands Management Act of 1996 to fund restoration of certain historic 
buildings on HBCU campuses, including Swayne Hall. Last year, $4 
million was appropriated for this purpose. In addition, Congress has 
provided $4.3 million over the years to the National Park Service to 
restore other historic properties on the campuses of HBCUs.
  Those actions, while helpful, do not come close to addressing the 
needs of HBCUs around the country. The legislation I am introducing 
today will meet those needs. It authorizes the Secretary of the 
Interior to award $377.5 million to HBCUs to restore and preserve their 
historic properties. The bill preserves the matching ratio that 
currently exists, so that when these Federal funds are matched, dollar-
for-dollar, HBCUs will have the funds to restore and preserve all their 
historic structures.
  This legislation will help protect the national treasures found on 
the campuses of our historically black colleges and universities, and 
will ensure that these schools can continue to provide a quality 
education in the 21st century. I urge all of my colleagues to cosponsor 
this important legislation.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1676

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

     SECTION 1. ADDITIONAL FUNDING FOR BUILDINGS AND STRUCTURES AT 
                   HISTORICALLY BLACK COLLEGES AND UNIVERSITIES.

       Section 507 of the Omnibus Parks and Public Land Management 
     Act of 1996 (16 U.S.C. 470a note; 110 Stat. 4156) is amended 
     by striking subsection (d) and inserting the following:
       ``(d) Funding.--
       ``(1) Authorization of additional appropriations to the 
     historic preservation fund.--In addition to other funds 
     covered into the Historic Preservation Fund under section 108 
     of the National Historic Preservation Act (16 U.S.C. 470f) or 
     under any other law, there is authorized to be appropriated 
     to the Historic Preservation Fund $377,500,000 for fiscal 
     years beginning after fiscal year 1998.
       ``(2) Availability to carry out this section.--For fiscal 
     years beginning after fiscal year 1998, $377,500,000 shall be 
     made available pursuant to section 108 of the National 
     Historic Preservation Act (16 U.S.C. 470f) to carry out this 
     section.''.
                                 ______
                                 
      By Mr. CHAFEE (for himself, Mr. Kempthorne, Mr. Baucus, Mr. Bond, 
        Mr. Reid, Mr. Moynihan, Mr. Lieberman, Mr. Warner, Mr. Smith of 
        New Hampshire, Mrs. Boxer, Mr. Sessions, Mr. Allard, Mr. 
        Graham, Mr. Wyden, Mr. Lautenberg, Mr. Hutchinson, Mr. Thomas, 
        Mr. Reed, Mr. Faircloth, Mr. Jeffords, Mr. Breaux, Mr. Stevens, 
        and Mr. Cochran):
  S. 1677. A bill to reauthorize the North American Wetlands 
Conservation Act and the Partnerships for Wildlife Act; to the 
Committee on Environment and Public Works.


  THE NORTH AMERICAN WETLANDS CONSERVATION ACT REAUTHORIZATION ACT OF 
                                  1998

  Mr. CHAFEE. Mr. President, I am proud to introduce a bill to 
reauthorize the North American Wetlands Conservation Act (NAWCA), a law 
that has played a major role in conservation of wetland habitats across 
this continent. I am joined by many members of the Committee on 
Environment and Public Works.

  This tremendous showing of bipartisan support is nothing less than a 
celebration of one of the great success stories in wildlife 
conservation. This is a story about the recovery of more than 30 
species of ducks, geese, and other waterfowl and migratory birds from 
their lowest population numbers just 12 years ago, to some of their 
highest population numbers this year.
  To appreciate why NAWCA is such a success, it is necessary to review 
its background. In the early 1980s populations of duck and other 
waterfowl plummeted precipitously. The numbers were stark: between the 
1970s and 1985, breeding populations of ducks dropped an average of 31 
percent, with some species declining by as much as 61 percent. This 
decline was due to several factors, including over-hunting, loss of 
habitat, and an extended drought in many parts of the country.
  In 1986, the U.S. and Canada worked cooperatively to develop the 
North American Waterfowl Management Plan. Mexico joined the Plan in 
1994, so that the entire continent now participates in this effort. The 
Plan established ambitious goals and innovative strategies for 
conserving waterfowl habitat. Under the leadership of former Senator 
George Mitchell of Maine, Congress provided a funding mechanism for the 
Plan when it passed the North American Wetlands Conservation Act in 
1989.
  I believe that NAWCA has been successful for three reasons. First, 
NAWCA focuses on the real key to wildlife conservation: the habitat 
itself. Populations of birds and other wildlife will fluctuate 
naturally over time, but if the habitat is not there, the species don't 
have a chance. Under NAWCA, approximately 3.7 million acres of wetlands 
and associated wetlands have been acquired, enhanced or restored.
  Second, the law sets up voluntary partnerships, without the heavy 
hand of government regulations. These partnerships involve federal, 
state and

[[Page S1011]]

local government agencies, businesses, conservation organizations, and 
private individuals. Under NAWCA, funding has been provided for about 
260 projects, with more than 700 partners--across 45 states--plus 
Mexico and Canada.
  Third, NAWCA leverages federal dollars with state, local and private 
dollars. Since its passage, the Act has provided more than $200 million 
in Federal funds, that have been matched by more than $420 million in 
state and private funds.
  The benefits of NAWCA and other wetlands protection programs --
combined with a few years of heavy rainfall--have been enormous. 
Populations of ducks and other waterfowl have, in large measure, 
rebounded to the levels of the 1970s. Every year since 1995 has been 
billed as a ``banner year,'' and each year the numbers are even greater 
than the previous one. This past year's fall migration totaled 92 
million ducks, the highest since 1972, and surveys counted 42 million 
breeding ducks, the highest level since the surveys began in 1955.
  Also, wetlands losses, while still occurring, have declined 
dramatically: the rate of loss has slowed by 60 percent below that 
experienced in the 1970s and 1980s. This is a result of regulatory 
protections under the Clean Water Act and, perhaps even more, voluntary 
programs like NAWCA and the Wetlands Reserve Program in the Farm Bill.
  But our conservation successes are no reason for complacency. More 
can and should be done. Each year, good projects must be turned down 
because there is not enough funding. In addition, abundant rainfall has 
helped the waterfowl populations rebound, but it is up to us to 
maintain these population increases when the rainfall abates. Lastly, 
the pressure to develop wetlands continues to grow each year. By the 
year 2020, more than half the U.S. population will live in coastal 
plains. Laws like NAWCA will become ever more important in protecting 
these areas.
  Support for NAWCA has always crossed party lines. In 1996, 78 
Senators signed a letter supporting the North American Wetlands 
Conservation Act. The need for a healthy environment is a need that 
transcends politics. With support for laws like NAWCA, we can meet 
today's challenges and protect the environment for the benefit of our 
children, and future generations after them.
  The bill we are introducing also reauthorizes the Partnerships for 
Wildlife Act. This law was first enacted in 1992 to encourage 
partnerships among the Service, state agencies, and private 
organizations and individuals to undertake projects to conserve non-
game wildlife species. It is modeled after NAWCA, and is the only 
Federal grants program for the sole purpose of benefiting non-game 
species--species that are not hunted, fished, or trapped. Projects 
funded under the Act have covered numerous species across 40 States, 
and have entailed management programs, research, education and 
outreach. Since 1994, Federal funding for grants has totaled $4.2 
million. States leverage each Federal dollar with one State dollar and 
one additional private-sector dollar.
  The bill would reauthorize the North American Wetlands Conservation 
Act through the year 2003, at a level of $30 million per year. It would 
also reauthorize the Partnerships for Wildlife Act through the year 
2003, at a level of $6.25 million per year. These amounts are the same 
in the current laws, which expire at the end of 1998.
  I urge my colleagues to fully support this bill. Thank you, Mr. 
President.
                                 ______
                                 
      By Mr. FEINGOLD (for himself and Mr. Hollings):
  S. 1678. A bill to amend the Balanced Budget and Emergency Deficit 
Control Act of 1985 to extend and clarify the pay-as-you-go 
requirements regarding the Social Security trust funds; to the 
Committee on the Budget and the Committee on Governmental Affairs, 
jointly, pursuant to the order of August 4, 1977, as modified by the 
order of April 11, 1986, with instructions that if one Committee 
reports, the other Committee have thirty days to report or be 
discharged.


         THE SOCIAL SECURITY TRUST FUND PROTECTION ACT OF 1998

  Mr. FEINGOLD. Mr. President, I am pleased to join my good friend, the 
Senator from South Carolina (Mr. Hollings) in offering the Social 
Security Trust Fund Protection Act of 1998, legislation extending our 
current PAYGO budget rules, and clarifying that Congress may not use 
so-called budget surpluses to pay for tax cuts or new spending when 
those surpluses are really Social Security Trust Fund balances.
  Mr. President, it gives me particular pleasure to join with Senator 
Hollings in offering this bill. Both in this body and in the Budget 
Committee, he has been a consistent voice for fiscal prudence in this 
body.
  Mr. President, fiscal prudence is popular in theory, but often less 
attractive in practice. Senator Hollings has taken tough positions, 
even when those positions may not have been politically attractive. 
That is the true measure of commitment to honest and prudent budgeting, 
and I am proud to join him in this effort today. I am also pleased to 
be introducing a measure which is similar in many respects to a measure 
introduced in the other body by Congressman Minge, who has an 
outstanding record of working in a bipartisan manner to bring fiscal 
discipline to the budget.
  The Minge bill, too, seeks to prevent the irresponsible use of Social 
Security Trust Fund balances, and I very much look forward to working 
with the Congressman to advance these proposed budget rules.
  Mr. President, we are entering a budget era of transition. For 
decades, Congress and the White House ran up huge deficits, producing a 
mounting national debt. For the past few years, we have worked to bring 
down those deficits. Those efforts have paid off, in large part, and we 
are now about to consider something Congress has not seen in 30 years--
a unified budget submitted by the President that actually reaches 
balance.
  Mr. President, if we can work together to pass a balanced unified 
budget this year that will be a notable accomplishment, and it deserves 
to be highlighted. But, Mr. President, even if we do pass a balanced 
unified budget this year, that is not the end of our work. Balancing 
the unified budget isn't a touchdown. It's more like first and ten at 
mid-field. It's not a bad place to be, but we still have a way to go.
  But, Mr. President, some act as if the goal posts are really on the 
50; that all we have to do is balance the unified budget and we've 
scored a touchdown. They want to declare victory once the unified 
budget is in balance, and use any projected unified budget surpluses 
for increased spending or tax cuts. Just last week, a member of this 
body was reported to have complained about needing to find offsets for 
tax cuts. The implied intention of that member was to support a large 
tax cut without also cutting enough spending to fully pay for the tax 
cut. Instead, the unspoken intention of this member was to rely on a 
projected surplus in the unified budget as an offset.
  Mr. President, that would be a grave mistake. As the President 
cautioned us during his State of the Union address, we should not touch 
the unified budget surplus. In fact, that admonition may have been just 
as important as the achievement of proposing the first balanced unified 
budget in 30 years.
  Mr. President, while I strongly agree with the President's comments, 
I approach this matter from a different perspective. There are many of 
us who do not view the unified budget as the appropriate measure of our 
Nation's budget.
  In particular, I want to acknowledge my fellow Budget Committee 
colleagues, Senators Hollings and Conrad, for their consistent warnings 
to the body on this very issue.
  Mr. President, as I have noted before, the unified budget is not the 
budget which should guide our policy decisions. The projected surpluses 
in the unified budget are not real. In fact, far from surpluses, what 
we really have are continuing on-budget deficits, masked by Social 
Security revenues. The distinction is absolutely fundamental. As I have 
noted before, the very word ``surplus'' connotes some extra amount or 
bonus. One dictionary defines ``surplus'' as: ``something more than or 
in excess of what is needed or required.''
  Mr. President, the projected unified budget surplus is not ``more 
than or in excess of what is needed or required.''

[[Page S1012]]

Those funds are needed. They were raised by the Social Security system, 
specifically in anticipation of commitments to future Social Security 
beneficiaries. Mr. President, let me just note that the problem of 
using Social Security trust fund balances to mask the real budget 
deficit is not a partisan issue.
  Both political parties have used this accounting gimmick--here in 
Congress and in the White House. But it must stop, and this legislation 
can help us stop it.
  Mr. President, budget rules cannot by themselves reduce the deficit, 
but they can protect what has been achieved and guard against abuse. 
The PAYGO rule governing entitlements and taxes, along with the 
discretionary spending caps, have kept Congress disciplined and on 
track. The bill we are introducing today ensures the PAYGO rule 
continues to require new entitlement spending or tax cuts are fully 
paid for.

  Our bill clarifies current PAYGO procedures to remove any doubt that 
tax cuts or increased spending must continue to be offset. It extends 
the PAYGO rule, which currently covers legislation enacted through 
2002, until we are no longer using Social Security to mask the deficit. 
Under our bill, Congress could not use a so-called surplus until it is 
real, namely when the budget runs a surplus without using Social 
Security Trust Funds.
  Mr. President, earlier I said we are in a budget era of transition. 
With some hard work this year, we can leave the years of unified budget 
deficits behind us. And with some more work, we can move toward real 
budget balances without using Social Security revenues. Mr. President, 
that must be our highest priority.
  If Congress does not begin to rid itself of its addiction to Social 
Security trust fund balances, we will put the benefits of future 
retirees at serious risk. Fortunately, Mr. President, we are within 
reach of the goal of balancing the budget without using the Social 
Security trust funds. If we stay the course, and continue the tough, 
sometimes unpopular work of reducing the deficit, we can give this 
Nation an honest budget, one that is truly balanced. And the time to 
act is now.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1678

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Social Security Trust Fund 
     Protection Act of 1998''.

     SEC. 2. EXTENSION AND MODIFICATION OF PAY-AS-YOU-GO 
                   REQUIREMENT.

       (a) Extension.--(1) Section 252(a) of the Balanced Budget 
     and Emergency Deficit Control Act of 1985 is amended by 
     striking ``enacted before October 1, 2002,'' both places it 
     appears.
       (2) Section 275(b) of the Balanced Budget and Emergency 
     Deficit Control Act of 1985 is amended by striking the last 
     sentence.
       (b) Modification.--(1) Section 250(c) of the Balanced 
     Budget and Emergency Deficit Control Act of 1985 is amended 
     by adding at the end the following new paragraph:
       ``(20) The term `budget increase' means, for purposes of 
     section 252, an increase in direct spending outlays or a 
     decrease in receipts relative to the baseline, and the term 
     `budget decrease' means, for purposes of section 252, a 
     decrease in direct spending outlays or an increase in 
     receipts relative to the baseline.''.
       (2) Section 252(a) of the Balanced Budget and Emergency 
     Deficit Control Act of 1985 is amended--
       (A) by striking ``increases the deficit'' and inserting 
     ``results in a net budget increase''; and
       (B) by inserting before the period the following: ``except 
     to the extent that the total budget surplus exceeds the 
     social security surplus''.
       (3) Section 252(b)(1) of the Balanced Budget and Emergency 
     Deficit Control Act of 1985 is amended--
       (A) in its side heading by inserting ``and amount'' after 
     ``Timing''; and
       (B) by striking ``net deficit increase'' and inserting 
     ``net budget increase'' and by adding at the end the 
     following new sentence: ``The requirement of the preceding 
     sentence shall apply for any fiscal year only to the extent 
     that the surplus, if any, before the sequestration required 
     by this section in the total budget (which, notwithstanding 
     section 710 of the Social Security Act, includes both on-
     budget and off-budget Government accounts) is less than the 
     combined surplus for that year in the Federal Old-Age and 
     Survivors Insurance Trust Fund and the Federal Disability 
     Insurance Trust Fund.''.
       (4) Section 252(b)(2) of the Balanced Budget and Emergency 
     Deficit Control Act of 1985 is amended--
       (A) in its side heading by striking ``deficit increase'' 
     and inserting ``net budget increase'';
       (B) by striking ``deficit increase or decrease'' the first 
     place it appears and inserting ``any net budget increase''; 
     and
       (C) by striking ``any net deficit increase or decrease in 
     the current year resulting from''.
       (5) The side heading of section 252(c) of the Balanced 
     Budget and Emergency Deficit Control Act of 1985 is amended 
     by striking ``Deficit Increase'' and inserting ``Net Budget 
     Increase''.
                                 ______
                                 
      By Mr. DORGAN (for himself, Mr. Johnson, Mr. Conrad, and Mr. 
        Daschle):
  S. 1680. A bill to amend title XVIII of the Social Security Act to 
clarify that licensed pharmacists are not subject to the surety bond 
requirements under the medicare program; to the Committee on Finance.


         Providing Parity for Licensed Pharmacists Legislation

  Mr. DORGAN. Mr. President, I am introducing today legislation that 
will exempt licensed pharmacists from the Medicare surety bond 
requirement imposed by the Balanced Budget Act of 1997 for suppliers of 
durable medical equipment (DME). I am pleased to be joined in offering 
this legislation by Senators Johnson, Conrad, and Daschle.
  Let me say right off that I understand and generally support the 
rationale behind the surety bond requirement. This will be an important 
new tool for the Health Care Financing Administration to prevent 
Medicare fraud and abuse by raising the threshold for participating in 
Medicare and thereby helping to ensure that only legitimate medical 
suppliers participate. I am sure we have all heard the horror stories 
about some of the scams uncovered by the HHS Office of Inspector 
General, in which businesses with no employees and no actual physical 
location were billing Medicare for unneeded services and supplies. It 
was these kinds of ``fly-by-night'' operations that the surety bond is 
intended to weed out, and I certainly support this goal.
  I do not, however, think it makes sense to apply this requirement to 
pharmacists, who are already licensed and heavily regulated by the 
states, and I do not believe that was Congress' intention. Pharmacists 
are highly skilled health care providers who are licensed by the 
states, and the pharmacies they operate are also licensed and regularly 
inspected by state boards of pharmacy. Clearly, pharmacists are not the 
kind of fly-by-night business owners the surety bond was aimed at.
  Congress already exempted physicians and other health care 
practitioners from the surety bond requirement, but HCFA has determined 
that this exemption does not extend to pharmacists since they do not 
typically bill Medicare for the services they provide. My legislation 
would simply ensure that pharmacists receive the same treatment as 
other licensed health care practitioners for purposes of the DME surety 
bond requirement.
  Without this legislation, older Americans stand to lose access to 
needed durable medical equipment and prescription drugs. Pharmacies are 
reputable and convenient providers of medical equipment, and in many 
rural areas, they are the only local medical suppliers. In addition, 
since HCFA now requires that prescription drugs covered by Medicare be 
purchased from a pharmacy, driving pharmacies out of Medicare will 
reduce patient access not only to medical equipment but also to 
prescription drugs.
  Pharmacies dropping out of the Medicare program is not an 
unjustifiable fear; it may be an economic reality. For the vast 
majority of pharmacies, providing durable medical equipment constitutes 
less than 10 percent of their total business. Yet, they provide this 
service for the convenience of their Medicare customers. If required to 
purchase even the minimum surety bond of $50,000, pharmacists have told 
me they will be forced to drop out of the Medicare program because it 
would actually cost them money to participate. For instance, in an 
informal survey of North Dakota pharmacists, 75 percent did less than 
$5,000 in business annually as a Medicare supplier, and not 
coincidentally, 70 percent said they would have to drop out of Medicare 
if they must purchase a surety bond.

[[Page S1013]]

  I am pleased to have worked with and have the support of the National 
Community Pharmacists Association, the American Pharmaceutical 
Association, the North Dakota Pharmaceutical Association, and many 
individual pharmacists. I ask unanimous consent that letters of support 
from these organizations be included in the Record.
  I hope my colleagues will join me in supporting this common-sense 
bill and acting on it promptly before Medicare beneficiaries lose 
access to dependable suppliers of medical equipment.
  I ask unanimous consent that the full text of the bill be printed in 
the Record.

                                S. 1680

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

     SECTION. 1. EXEMPTION OF LICENSED PHARMACISTS FROM SURETY 
                   BOND REQUIREMENTS.

       (a) In General.--The last sentence of section 1834(a)(16) 
     of the Social Security Act (42 U.S.C. 1395m(a)(16)) (as added 
     by section 4312(c) of the Balanced Budget Act of 1997 (Public 
     Law 105-33; 111 Stat. 387)) is amended by inserting before 
     the period at the end the following: ``, except that the 
     Secretary may not impose a surety bond described in 
     subparagraph (B) of that sentence on suppliers that are 
     licensed pharmacies for which the person signing the supplier 
     application is a licensed pharmacist under State law who has 
     the authority to bind the business entity''.
       (b) Effective Date.--The amendment made by subsection (a) 
     takes effect as if included in the enactment of the Balanced 
     Budget Act of 1997 (Public Law 105-33; 111 Stat. 251).
                                                                    ____

                                                National Community


                                      Pharmacists Association,

                                Alexandria, VA, December 16, 1997.
     Hon. Byron L. Dorgan,
     Hart Senate Office Building,
     Washington, DC.
       Dear Senator Dorgan: We are especially appreciative of your 
     initiative to amend the recently enacted Medicare Provider 
     Surety Bond program to exempt licensed pharmacists who supply 
     Medicare beneficiaries with covered products. We have worked 
     closely with Stephanie Mohl and the North Dakota Pharmacist 
     Association and look forward to a sensible solution that will 
     assure continued access for Medicare beneficiaries and is 
     consistent with the exemption for other licensed health care 
     providers.
       If appropriate we can target your legislation in early 
     March at our 30th Annual Legislative Conference.
           Warm Regards,
                                             John M. Rector, Esq.,
          Senior Vice President of Government Affairs and General 
     Counsel.
                                                                    ____



                          American Pharmaceutical Association,

                                 Washington, DC, January 28, 1998.
     Hon. Byron L. Dorgan,
     U.S. Senate,
     Washington, DC.
       Dear Senator Dorgan: The American Pharmaceutical 
     Association (APhA), the national professional society of 
     pharmacists, would like to express its support for your 
     legislation to exempt pharmacists from the surety bond 
     requirement for Medicare suppliers of durable medical 
     equipment. APhA, the first established and largest 
     association of pharmacists in the United States, has a 
     membership of more than 50,000 practicing pharmacists, 
     pharmaceutical scientists, and pharmacy students. This 
     requirement will have serious consequences for both 
     pharmacists and their patients as many pharmacies who bill 
     Medicare for less than the required $50,000 bond amount will 
     be unable to continue supplying beneficiaries with much 
     needed durable medical equipment. In addition, the bonding 
     requirement would impose a regulation upon a health care 
     profession that is already licensed and regulated by State 
     Boards of Pharmacy.
       APhA appreciates the work you and your staff have expended 
     to exempt pharmacists from this additional regulation. As you 
     know, congressional conferees specifically indicated in 
     report language for the Balanced Budget Act of 1997 that they 
     did not intend for this regulation to be imposed upon health 
     care professionals. Unfortunately, the proposed rules issued 
     by the Health Care Financing Administration (HCFA) do not 
     reflect this intent. APhA believes that your legislation is 
     an important first step towards realizing the intentions of 
     the Conferees.
       Please feel free to contact Lisa Geiger of my staff should 
     you require any assistance from APhA and its members. Again, 
     thank you for your work on this important issue for the 
     profession of pharmacy.
           Sincerely,
                                                     John A. Gans,
     PharmD, Executive Vice President.
                                                                    ____

                                                      North Dakota


                                   Pharmaceutical Association,

                                   Bismarck, ND, January 26, 1998.
     Hon. Byron Dorgan,
     U.S. Senate, Hart Senate Office Building, Washington, DC.
       Dear Senator Dorgan: This letter is to inform you of the 
     strong support of the North Dakota Pharmaceutical Association 
     for the introduction of legislation to exempt pharmacists and 
     certain other licensed health care providers from the DMEPOS 
     Surety Bond requirement. This requirement is a result of the 
     Balanced Budget Act of 1997. The exemption for licensed 
     pharmacists will place them in the same position as 
     physicians and other practitioners who are currently exempted 
     from the requirement.
       Now that HCFA has published the rules notice for Medicare 
     DME suppliers, we can see that our members are faced with a 
     very difficult situation. In the proposed rules, HCFA 
     estimates that the minimum $50,000 bond will cost 
     approximately $788--an amount greater than we had originally 
     heard from the bonding companies. In the proposed rules HCFA 
     estimated that Medicare accounts for approximately 40% of the 
     average supplier's revenue and that for most suppliers the 
     additional costs of the bond would be outweighed by the 
     benefits gained by continuing to be a supplier. A survey of 
     our members showed that these figures certainly do not apply 
     to the pharmacists of North Dakota who act as suppliers. 
     Approximately 75% of pharmacists responding to the survey did 
     less than $5,000 business annually as a Medicare supplier. 
     Less than 5% indicated doing more than $25,000 in Medicare 
     business. When asked if they would continue providing 
     Medicare supplies if bond costs were $400-500, almost 70% 
     indicated that they would drop out of the Medicare program.
       The bonding requirement will drive a number of pharmacies 
     out of the Medicare supplier business. Those who stay will 
     essentially be paying a bonding fee that exceeds their 
     revenue from the Medicare program. In North Dakota rural 
     areas, the local pharmacy is a supplier that can be relied 
     upon to obtain supplies for Medicare eligible patients. While 
     provision of these supplies is not even a profitable portion 
     of pharmacists' business under the present circumstances, it 
     is an important service that they provide to their patients 
     and community. The surety bond requirement will cause 
     patients to lose access to a local supplier with the ability 
     to assist them in a place and manner that is most convenient. 
     Quality of health care outcomes for these patients will 
     suffer.
       We feel that you are taking the right approach with 
     legislation to exempt pharmacists from the DME supplier 
     surety bond requirement on the same basis as other licensed 
     health care practitioners. The pharmacists of North Dakota 
     are personally licensed and regulated by the State Board of 
     Pharmacy. The Board also licenses the pharmacy facilities 
     where they practice. These licensure provisions along with 
     other requirements for insurance and state accountability 
     insure that pharmacists doing business as Medicare suppliers 
     are already sufficiently screened and regulated.
       Our Association feels that legislation to exempt 
     pharmacists from surety bond requirements is very significant 
     to our profession and we will support your efforts to the 
     fullest. More significantly it will preserve high quality 
     local access service to Medicare beneficiaries in all rural 
     areas and under served areas of our country. This action will 
     be a benefit for Medicare patients at a time when our 
     population is aging and access to services must be 
     maintained. Please let us know what additional actions we can 
     take to assist you on this issue. Thank you for all the 
     efforts that you make on behalf of pharmacy and for the 
     patients we serve.
           Sincerely,
                                                     Galen Jordre,
                                  R.Ph., Executive Vice President.

  Mr. JOHNSON. Mr. President, today I am pleased to join my colleagues 
from North Dakota, Senators Dorgan and Conrad, and our distinguished 
Minority Leader and my friend from South Dakota, Senator Daschle, in 
introducing this legislation which will clarify that licensed 
pharmacies are not included, nor were they ever intended to be 
included, in the surety bond requirements imposed on certain health 
care providers under the Balanced Budget Act of 1997. At a time when we 
are properly addressing the rise in fraud and abuse of the Medicare 
system, we must also be cognizant of the impact some of these efforts 
will have on the intended beneficiaries of Medicare. This 
misapplication of the surety bond requirement is one such circumstance, 
and I urge my colleagues to join us in clarifying that licensed 
pharmacies were not intended to be in the scope of the surety bond 
requirement.
  While the vast majority of health care providers are honest and do 
their best to comply with Medicare rules, repeated studies have found a 
great amount of Medicare fraud within the national system--some 
estimates would place the cost to the American taxpayers at an 
incredible $24 billion per year. These are dollars that could be used 
to better compensate honest health care providers, or expand Medicare 
coverage. I have always been supportive of, and will continue to 
strongly support, these efforts to crack down on fraud and abuse. We 
must continue our efforts in that regard.
  As part of the effort to curb fraud and abuse in the Medicare system, 
last year Congress enacted a $50,000 surety

[[Page S1014]]

bond requirement for home health agencies, Durable Medical Equipment 
(DME) providers, rehabilitation services providers and ambulance 
services. The law was aimed at fly-by-night home health agencies and 
DME providers who abuse the system, and not small rural pharmacies. 
Unfortunately, these pharmacies have been caught up in this broadly 
written provision of last year's budget reconciliation.
  Under the definitions incorporated in this surety bond provision, all 
pharmacies are considered to be DME providers if even a small portion 
of their business is DME-related. Thus, they must obtain a minimum 
$50,000 surety bond regardless of how much or how little of their 
business consists of providing durable medical equipment to Medicare 
beneficiaries.
  The surety bond requirement is intended to ensure that the federal 
government will have recourse in the event of fraud. Many of the 
perpetrators of fraud and abuse are fly-by-night organizations that can 
quickly disappear. Many rural pharmacies, however, only offer DME as a 
service to their Medicare patients. It is not a major profit center for 
them, and many will stop providing this service rather than undergo the 
expense of obtaining a minimum $50,000 bond. Rural Medicare patients 
would then have greater difficulty in obtaining needed DME.
  The surety bond requirement attacks fraud indirectly, by mandating 
financial accountability. Pharmacies engaging in fraud will still be 
liable for their actions. This bill would clarify that the federal 
surety bond requirement does not apply to licensed pharmacies. It 
allows states to enforce their own licensing requirements, which can 
include surety bonds if states feel it necessary.
  Mr. President, while we must continue our efforts to root out the 
fraud and abuse that is plaguing our Medicare system, this important 
clarification will help ensure that our efforts are appropriately 
targeted and do not have the unintended consequence of denying critical 
services to Medicare beneficiaries, and I urge my colleagues to support 
our efforts and to support this bill.
  Mr. DASCHLE. Mr. President, it is my pleasure today to join my 
colleagues, Senator Dorgan, Senator Conrad and Senator Johnson, in 
introducing legislation to clarify that licensed pharmacists are not 
subject to a surety bond requirement under the Medicare program. This 
bill will help ensure continued access to durable medical equipment 
(DME) in rural areas for those covered by Medicare.
  The Balanced Budget Act of 1997 requires that all DME suppliers 
purchase a surety to qualify for a supplier number. The minimum amount 
for the bond is $50,000. The Health Care Financing Administration has 
estimated that these bonds will cost about $788 per year for each 
supplier. Many South Dakota pharmacists do not take in sufficient 
revenue from Medicare DME sales to support the purchase of a bond. 
Therefore, the surety bond requirement in the Balanced Budget Act could 
severely compromise the availability of services for Medicare patients 
in rural areas.
  The surety bond requirement was established as an important way to 
combat Medicare fraud and abuse. I remain in strong support of efforts 
to combat fraud and abuse, because they are crucial to protecting and 
strengthening the Medicare program. Because the ultimate aim of fraud 
and abuse measures is to improve Medicare, they should be applied in 
ways that are consistent with the goal of quality health care and 
should not jeopardize access to necessary services and supplies.
  This legislation retains the surety bond requirement for many DME 
suppliers, but it exempts licensed pharmacists. This policy is not only 
logical in terms of fairness to these pharmacists; it is the right 
thing to do for the beneficiaries who depend on their services.
  I urge my colleagues to join me in support of this amendment to title 
XVIII of the Social Security Act. It will lift an unreasonable burden 
from small pharmacists without jeopardizing fraud and abuse prevention 
efforts, and it will enable pharmacists to continue to provide quality 
health care services in their local communities.

                          ____________________