[Congressional Record Volume 145, Number 8 (Tuesday, January 19, 1999)]
[Senate]
[Pages S467-S476]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
FEDERAL EMPLOYEES GROUP LONG-TERM CARE INSURANCE ACT OF 1999
Ms. MIKULSKI. Mr. President, I rise today to introduce the ``Federal
Employees Group Long-Term Care Insurance Act of 1999''. This important
legislation will provide long-term care insurance to federal employees
and retirees. It will also create a model for other employers to use in
providing long-term care insurance for their
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workers. I am proud that this legislation is part of the Democratic
agenda for long term care--which includes the $1,000 tax credit for
families who are paying the costs of long-term care.
Since my first days in Congress, I have been fighting to help people
afford the burdens of long-term care. Ten years ago, I introduced
legislation to change the cruel rules that forced elderly couples to go
bankrupt before they could get any help in paying for nursing home
care. Because of my legislation, AARP tells me that we've kept over six
hundred thousand people out of poverty and stopped liens on family
farms.
I also fought for higher quality standards for nursing homes. Through
the Older American Act funded senior centers, I've made it easier for
seniors to get the information and referrals they need to make good
choices about long-term care. Those same centers offer case managers to
help families navigate the dizzying array of choices when faced with
choosing long term care for a family member.
These are important steps. But unfortunately, we haven't made much
progress in the last few years. We've been stymied by bipartisan
bickering, shutdowns and inaction.
Meanwhile, the costs of long-term care have exploded. Nursing home
costs are projected to increase from $40,000 today to $97,000 by 2030.
This will only get worse since the number of senior citizens will
double over the next thirty years. Families are being forced to chose
between sending a child to college or paying for a nursing home for a
parent.
Families desperately need help to help themselves and meet their
family responsibilities.
This bill is a down payment on making long term care available for
all Americans. Let me tell you what my legislation will do:
It will enable federal workers and retirees to purchase long-term
care insurance.
It will provide help to those who practice self-help by offering
employees the option to better prepare for their retirement and the
potential need for long-term care.
It will enable federal employees to pay at group discounted rates.
The purchasing power of the federal workforce will empower them to get
the best deal.
Federal employees would pay the entire premium for their long-term
care insurance, but that premium will be 15% to 20% less than they
would pay individually on the open market. This is a good deal for
federal workers--and for taxpayers.
I'm starting with federal employees for two reasons. First, as our
nation's largest employer, the federal government can be a model for
employers around the country. By offering long-term care insurance to
its employees, the federal government can set the example for other
employers whose workforce will be facing the same long-term care needs.
We can use the lessons learned to help other employers to offer this
option to their workers.
I have a second reason for starting with our federal employees. I am
a strong supporter of our federal employees. I am proud that so many of
them live, work, and retire in Maryland. They work hard in the service
of our country. And I work hard for them. Whether it's fighting for
fair COLAs, against disruptive and harmful shutdowns of the federal
government, or to prevent unwise schemes to privatize important
services our federal workforce provide, they can count on me.
Promise made should be promises kept. Federal retirees made a
commitment to devote their careers to public service. In return, our
government made certain promises to them.
One important promise made was the promise of health insurance. We
promised our federal workers and their families that they would have
health insurance while they were working and during their retirement.
The lack of long-term care for federal workers has been a big gap in
this important promise to our federal workers. My legislation will
close that gap and provide our federal workers and retirees with
comprehensive health insurance.
I am proud that Senator Sarbanes and Senator Robb join me in
introducing this bill, and that our colleague Congressman Cummings has
introduced this legislation in the House. I hope that we will soon be
joined by a bipartisan group of Senators who care about helping
American families to cope with the costs of long term care.
Mr. President, long term care requires long term solutions. My
legislation is part of the solution. It is an important step forward in
helping all Americans to prepare for the challenges of aging.
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. 57
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 ``Federal Employees Group
Long-Term Care Insurance Act of 1999''.
SEC. 2. LONG-TERM CARE INSURANCE.
Subpart G of part III of title 5, United States Code, is
amended by adding at the end the following new chapter:
``Chapter 90--Long-Term Care Insurance
``Sec.
``9001. Definitions
``9002. Contracting authority.
``9003. Minimum standards for contractors.
``9004. Long-term care benefits.
``9005. Financing.
``9006. Preemption.
``9007. Studies, reports, and audits.
``9008. Claims for benefits.
``9009. Jurisdiction of courts.
``9010. Regulations.
``9011. Authorization of appropriations.
``Sec. 9001. Definitions
``For the purpose of this chapter, the term--
``(1) `annuitant' means an individual referred to in
section 8901(3);
``(2) `employee' means an individual referred to in
subparagraphs (A) through (D), and (F) through (I) of section
8901(1); but does not include an employee excluded by
regulation of the Office under section 9011;
``(3) `Office' means the Office of Personnel Management;
``(4) `other eligible individual' means the spouse, former
spouse, parent or parent-in-law of an employee or annuitant,
or other individual specified by the Office;
``(5) `qualified carrier' means an insurer licensed to do
business in each of the States and meeting the requirements
of a qualified insurer in each of the States;
``(6) `qualified contract' means a contract meeting the
conditions prescribed in section 9002; and
``(7) `State' means a State or territory or possession of
the United States, and includes the District of Columbia.
``Sec. 9002. Contracting authority
``(a) The Office may, without regard to section 3709 of the
Revised Statutes (41 U.S.C. 5) or any other statute requiring
competitive bidding, purchase from 1 or more qualified
carriers a policy or policies of group long-term care
insurance to provide benefits as specified by this chapter.
The Office shall ensure that each resulting contract is
awarded on the basis of contractor qualifications, price, and
reasonable competition to the maximum extent practicable.
``(b) The Office may design a benefits package or packages
and negotiate final offerings with qualified carriers.
``(c) Each contract shall be for a uniform term of 5 years,
unless terminated earlier by the Office.
``(d) Premium rates charged under a contract entered into
under this section shall reasonably reflect the cost of the
benefits provided under that contract as determined by the
Office.
``(e) The coverage and benefits made available to
individuals under a contract entered into under this section
are guaranteed to be renewable and may not be canceled by the
carrier except for nonpayment of premium.
``(f) The Office may withdraw an offering under this
section based on open season participation rates, the
composition of the risk pool, or both.
``Sec. 9003. Minimum standards for contractors
``At the minimum, to be a qualified carrier under this
chapter, a company shall--
``(1) be licensed as an insurance company and approved to
issue group long-term care insurance in all States and to do
business in each of the States; and
``(2) be in compliance with the requirements imposed on
issuers of qualified long-term care contracts by section
4980C of the Internal Revenue Code of 1986.
``Sec. 9004. Long-term care benefits
``The benefits provided under this chapter shall be long-
term care benefits which, at a minimum, shall be compliant
with the most recent standards recommended by the National
Association of Insurance Commissioners.
``Sec. 9005. Financing
``(a) The amount necessary to pay the premium for
enrollment of an enrolled employee shall be withheld from the
pay of each enrolled employee.
``(b) Except as provided under subsection (d), the amount
necessary to pay the premium for enrollment of an enrolled
annuitant shall be withheld from the annuity of each enrolled
annuitant.
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``(c) The amount necessary to pay the premium for
enrollment of a spouse may be withheld from pay or annuity,
as appropriate.
``(d) An employee, annuitant, or other eligible individual,
whose pay or annuity is insufficient to cover the withholding
required for enrollment, shall, at the discretion of the
Office, pay the premium for enrollment directly to the
carrier.
``(e) Each carrier participating in the program established
under chapter shall maintain the funds related to this
program separate and apart from funds related to other
contracts and other lines of business.
``(f) The costs of the Office in adjudicating a claims
dispute under section 9008, including costs related to an
inquiry not culminating in a dispute, shall be reimbursed by
the carrier involved in the dispute or inquiry. Such funds
shall be available to the Office for the administration of
this chapter.
``Sec. 9006. Preemption
``This chapter shall supersede and preempt any State or
local law which is determined by the Office to be
inconsistent with--
``(1) the provisions of this chapter; or
``(2) after consultation with the National Association of
Insurance Commissioners, the efficient provision of a
nationwide long-term care insurance program for Federal
employees.
``Sec. 9007. Studies, reports, and audits
``(a) Each qualified carrier entering into a contract under
this chapter shall--
``(1) furnish such reasonable reports as the Office
determines to be necessary to enable the carrier to carry out
the functions under this chapter; and
``(2) permit the Office and representatives of the General
Accounting Office to examine such records of the carrier as
may be necessary to carry out the purposes of this chapter.
``(b) Each Federal agency shall keep such records, make
such certifications, and furnish the Office, the carrier, or
both, with such information and reports as the Office may
require.
``Sec. 9008. Claims for benefits
``(a) A claim for benefits under this chapter shall be
filed within 4 years after the date on which the reimbursable
cost was incurred or the service was provided.
``(b) The Office shall adjudicate a claims dispute arising
under this chapter and shall require the contractor to pay
for any benefit or provide any service the Office determines
appropriate under the applicable contract.
``(c)(1) Except as provided under paragraph (2), benefits
payable under this chapter for any reimbursable cost incurred
or service provided are secondary to any other benefit
payable for such cost or service. No payment may be made
where there is no legal obligation for such payment.
``(2)(A) Benefits payable under the programs described
under subparagraph (B) shall be secondary to benefits payable
under this chapter.
``(B) The programs referred to under subparagraph (A) are--
``(i) the program of medical assistance under title XIX of
the Social Security Act (42 U.S.C. 1396); and
``(ii) any other Federal or State programs that the Office
may specify in regulations that provide health benefit
coverage designed to be secondary to other insurance
coverage.
``Sec. 9009. Jurisdiction of courts
``A claimant under this chapter may file suit against the
carrier of the long-term care insurance policy covering such
claimant in the district courts of the United States, after
exhausting all available administrative remedies.
``Sec. 9010. Regulations
``(a) The Office shall prescribe regulations necessary to
carry out this chapter.
``(b) The regulations of the Office may prescribe the time
at which and the conditions under which an eligible
individual may enroll in the program established under this
chapter.
``(c) The Office may not exclude--
``(1) an employee or group of employees solely on the basis
of the hazardous nature of employment; or
``(2) an employee who is occupying a position on a part-
time career employment basis, as defined in section 3401(2).
``(d) The regulations of the Office shall provide for the
beginning and ending dates of coverage of employees,
annuitants, former spouses, and other eligible individuals
under this chapter, and any requirements for continuation or
conversion of coverage.
``Sec. 9011. Authorization of appropriations
``There are authorized to be appropriated such sums as may
be necessary for the purposes of carrying out sections 9002
and 9010.''.
SEC. 3. EFFECTIVE DATE.
The amendments made by this Act shall take effect on the
date of enactment of this Act, except that no coverage may be
effective until the first day of the first applicable pay
period in October, which occurs more than 1 year after the
date of enactment of this Act.
______
By Ms. COLLINS (for herself, Mr. Durbin, and Mr. Jeffords):
S. 58. A bill to amend the Communications Act of 1934 to improve
protections against telephone service ``slamming'' and provide
protections against telephone billing ``cramming'', to provide the
Federal Trade Commission jurisdiction over unfair and deceptive trade
practices of telecommunications carriers, and for other purposes; to
the Committee on Commerce, Science, and Transportation.
telephone service fraud prevention and enforcement act of 1999
Ms. COLLINS. Mr. President, I rise today to introduce the ``Telephone
Services Fraud Prevention and Enforcement Act of 1999.'' I am pleased
to have Senators Dick Durbin and Jim Jeffords as cosponsors of this
legislation. This bill is designed to curtail two telephone-related
fraudulent practices: slamming--the unauthorized change of a consumer's
long distance telephone service provider--and cramming--the billing of
unauthorized charges on a consumer's telephone bill. This comprehensive
bill is needed to ensure that consumers are adequately protected
against these unfair practices.
Mr. President, telephone slamming and cramming are widespread
problems, affecting consumers across the country. Nationwide, slamming
is the number one telephone-related complaint to the Federal
Communications Commission, and the number of such complaints has grown
steadily over the past few years. In 1998, in fact, the FCC received
more than 20,000 slamming complaints, a 900 percent increase over the
number of complaints received in 1993. For fiscal year 1998 (from
October 1, 1997 through September 1, 1998), telephone slamming was the
number one complaint made by Maine consumers to the FCC's National Call
Center. Since there is still no central repository for slamming
complaints, the actual incidents of slamming are undoubtedly far more
numerous. Estimates from phone companies indicated that perhaps as many
as one million Americans were slammed last year alone.
Cramming complaints also remain at unacceptably high levels. In 1998,
the FCC's National Call Center received over 15,000 cramming complaints
from consumers, making it the 12th most common complaint received by
the FCC. In addition, the Federal Trade Commission received over 6,000
cramming complaints from consumers in 1998, making it the FTC's 5th
most common complaint. As with slamming, there is no central repository
for cramming complaints, so the actual number of such complaints is
probably much higher than those documented by the federal government.
In late 1997, the Senate Permanent Subcommittee on Investigations,
which I chair, began an extensive investigation into telephone-related
fraud against consumers. The story of telephone services fraud, I soon
discovered, is a great deal more than just an aggregate number of
complaints. On February 18, 1998, I chaired a field hearing on slamming
in Portland, Maine, where I heard first-hand from consumers about the
problems they experienced when their long distance service was changed
without their permission. Their sense of violation was evident.
Witnesses used words such as ``stealing,'' ``criminal,'' and ``break-
in'' to describe the practices used by unscrupulous telephone companies
to boost profits by bouncing unsuspecting customers from carrier to
carrier without their permission or even their knowledge.
One witness, for example, Pamela Corrigan from West Farmington,
Maine, testified that she was sent an unsolicited mailing, which looked
like any other letter in the stacks of junk mail that we all receive
every day. This ``junk mail,'' however, was not what it appeared to be.
This so-called ``welcome package'' automatically signed her up for a
new long distance service unless she returned a card rejecting the
change. She was amazed and appalled that it was possible for a company
to take over her long distance service simply because she did not
respond that she did not want their service.
Building on this record, my Subcommittee held a second slamming
hearing on April 23, 1998, in Washington, DC. This hearing exposed how
certain fraudulent long distance switchless resellers (companies with
no telephone equipment of their own that buy access to larger telephone
companies' long distance lines and then ``resell'' that access to
consumers) are responsible for a large proportion of the intentional
slamming incidents. These
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electronic bandits use deceptive marketing practices and often outright
fraud to switch consumers' long distance service. The Subcommittee also
learned how under current industry practices, many companies reap huge
profits by taking advantage of consumers in such a fashion.
At my Subcommittee's April 1998 hearing, we examined a case study of
telephone services fraud. A man named Daniel Fletcher fraudulently
operated as a long distance reseller, using at least eight different
company names. In these various guises, Fletcher slammed thousands of
consumers, billing them for a total of at least $20 million in long
distance charges. The impunity with which Mr. Fletcher deliberately
slammed consumers for so long demonstrates the need to establish strong
consumer protections to deter intentional slamming.
On July 23, 1998, I convened a hearing in Washington to explore the
emerging problem of telephone cramming. At that hearing, we learned how
cramming is a growing consumer fraud and how companies are using
telephone bills to rip-off consumers by slipping unauthorized charges
onto their statements without their consent and without proper notice.
The National Consumers League testified that cramming has skyrocketed
to first place among the more than 50 categories of telemarketing scams
reported to its hotline. The FCC testified that it is relying on the
telephone industry to voluntarily implement procedures to stop
cramming. However, it was evident from the testimony that unless we
establish a clear statutory and regulatory scheme and insist upon
rigorous enforcement of these rules, cramming will continue to be a
problem for consumers.
In May 1998, the Senate passed a strong anti-slamming bill by a
unanimous vote. This bill contained strong consumer protection
provisions and mandated aggressive enforcement by the FCC and other
federal agencies. Unfortunately, the House retreated significantly from
this strong anti-slamming legislation and sent us, at the very end of
the legislative session, a bill significantly weaker than the one which
passed the Senate--indeed, a bill so weak that it would provide
consumers with less protection than they enjoy today, by preempting the
important role states play in enforcing consumer anti-fraud
protections. Last fall, in the final days of the session, the Congress
was unable to agree to an acceptable compromise bill in the limited
amount of time available to it.
I was pleased to see, however, that the FCC finally took action in
December of last year to curb slamming. Among other measures, the FCC
eliminated the ``welcome package'' as a verification method. This
method was abused by many long distance carriers, facilitating
widespread slamming. I urged the FCC last year to prohibit this
practice, and I am glad to see that the Commission promulgated
regulations banning the welcome package.
The FCC also made positive changes to the consumer liability rules,
absolving consumers in certain circumstances from paying companies that
slammed them. This provision is designed to take the profit out of
slamming, to prevent this scam in the first place. I am pleased to see
that the Commission adopted this principle which was a major finding of
the Subcommittee's investigation of telephone slamming.
The FCC anti-slamming regulations are a step in the right direction,
but we need to do more to protect consumers from these fraudulent
activities. Today, to increase consumers protections, I am introducing
a comprehensive telephone-related anti-fraud bill that will address
both the slamming and cramming problems. I want to take this
opportunity to explain several provisions in my bill, which is designed
to increase consumer protections and to strengthen the enforcement
tools available to federal and state regulators.
First, the bill enhances the states' ability to enact regulations and
take enforcement actions against slamming and cramming. As the
Subcommittee's investigation has revealed, the states have been
admirably aggressive in taking enforcement action against companies
that engage in telephone-related fraud. For example, in February 1998,
the Florida Public Service Commission proposed a $500,000 fine against
a company called Minimum Rate Pricing for slamming subscribers. The
FCC, in contrast, fined the same company only $80,000. In the Fletcher
case mentioned previously, the State of Florida fined one
Fletcher company $860,000, while the FCC originally fined one of them
only $80,000. I am glad to say that since my subcommittee's
investigation, the FCC has significantly increased its enforcement
efforts, particularly against Mr. Fletcher.
For the most part, however, the states have been, and remain, the
first line of defense against companies that repeatedly slam or cram
consumers. This bill protects the states' ability to continue to fight
those illegal practices. Specifically, this bill allows the states to
impose tough requirements to protect consumers from those companies who
continue to slam or cram American consumers. Moreover, states will be
able to continue to obtain refunds for consumers who have been harmed
by such fraudulent practices.
Second, this bill makes it clear that telephone companies that
continue to slam or cram consumers will be subject to tough civil
penalties. The bill will create new civil penalties for cramming, and
authorize the imposition of stiff penalties by the FCC on those
companies who violate FCC regulations against slamming or cramming. The
FCC is currently authorized to assess forfeiture penalties of no more
than $110,000 for each violation, for a total forfeiture not to exceed
$1.1 million for a continuing violation. This bill sends a clear
message to the FCC, however, that forfeiture penalties against
companies that engage in telephone-related fraud should be large enough
to deter such practices. These and other penalties the FCC will be
authorized to impose ought to ensure that telephone companies follow
proper procedures and refrain from slamming and cramming. If they break
the rules by trying to cheat consumers, they will pay a steep price.
But prevention is better than punishment, and any effective
enforcement program designed to reduce or eliminate telephone-related
fraud must take the financial incentive for fraud away from companies
who engage in these practices. The new FCC regulations go a long way to
protecting consumers by absolving them from paying any charges for 30
days after they are slammed and by allowing consumers to pay their
previously authorized carrier for telephone calls made in the period
during which the slamming company fraudulently seized their long
distance telephone service. Unfortunately, this FCC regulation does not
apply to consumers who did not notice that they were slammed and
consequently paid this long distance bill to the unauthorized carrier.
The Commission apparently does not have the authority to mandate this
requirement. My bill would change the law to allow all consumers to get
refunds from unauthorized carriers. Under this plan, all consumers will
be treated equally. The bill will also require telephone billing agents
to make it clear to consumers that their telephone service will not be
terminated when consumers dispute unauthorized charges that are crammed
onto their telephone bills.
Finally, the bill will protect a consumer's right to a ``freeze
option.'' This provision makes it clear that consumers have the right
to stop slammers from changing their long distance service without
their authorization. By invoking the freeze option, consumers can
retain control over their telephone service by prohibiting any change
in a consumers choice of telephone service provider, unless that change
is expressly authorized by the consumer. This provision, I should also
note, does not in any way prevent the FCC from regulating the marketing
practices of telephone companies that use the freeze option in an
unfair or deceptive manner. The Commission will be fully empowered to
guarantee that consumers' right to protect their choice of local or
long distance telephone service is not abridged or diminished. In sum,
this language should increase consumers' right to prevent unauthorized
changes in their telephone service.
This bill will go a long way to provide strong consumer protection
against telephone-related fraud. It preserves the important role states
play in protecting consumers and enforcing tough sanctions against
unscrupulous
[[Page S474]]
carriers; it authorizes tough federal civil penalties against those
companies that continue to slam and cram consumers; and it protects
consumers' right to a freeze option so that they--and not the telephone
companies--have control over their long distance services.
Mr. President, this bill will provide the federal government and the
states with the statutory tools to fight the practices of slamming and
cramming and to end the systematic defrauding of countless thousands of
consumers every year. I urge my colleagues to join me in the fight
against telephone-related fraud by supporting this bill.
______
By Mr. THOMPSON (for himself, Mr. Breaux, and Mr. Lott):
S. 59. A bill to provide Government wide accounting of regulatory
costs and benefits, and for other purposes; to the Committee on
Governmental Affairs..6
REGULATORY RIGHT TO KNOW ACT OF 1999
Mr. THOMPSON. Mr. President, today I am introducing the ``Regulatory
Right-to-Know Act of 1999.'' I am pleased that Senator Breaux and
Majority Leader Lott have joined me in this effort. Our goals are to
promote the public's right to know about the benefits and costs of
regulatory programs; to increase the accountability of government to
the people it serves; and ultimately, to improve the quality of our
regulatory programs. This legislation will help us assess what benefits
our regulatory programs are delivering, at what cost, and help us
understand what we need to do to improve them.
By any measure, the burdens of Federal regulation are enormous. By
some estimates, Federal regulation costs about $700 billion per year,
or $7,000 for the average American household. I hear concerns about
unnecessary regulatory burdens and red tape from people all across the
country and from all walks of life--small business owners, governors
and local officials, farmers, corporate leaders, government reformers,
school board members and parents.
There is strong public support for sensible regulations that can help
ensure cleaner water, quality products, safer workplaces, reliable
economic markets, and the like. But there is substantial evidence that
the current regulatory system is missing important opportunities to
deliver greater benefits at less cost. The depth of this problem is not
appreciated fully because the costs of regulation are not as apparent
as other costs of government, such as taxes, and the benefits of
regulation often are diffuse. The bottom line is that the American
people deserve better results from the vast resources and time spent on
regulation. We've got to be smarter.
We often spend a lot of time debating on-budget programs, but we are
just breaking ground on creating a system to scrutinize Federal
regulation. This legislation does not change any regulatory standards;
it simply will provide better information to help us answer some
important questions: How much do regulatory programs cost each year?
Are we spending the right amount, particularly compared to on-budget
spending and private initiatives? Are we setting sensible priorities
among different regulatory programs? As the Office of Management and
Budget stated in its first ``Report to Congress on the Costs and
Benefits of Federal Regulations'':
[R]egulations (like other instruments of government policy)
have enormous potential for both good and harm. . . . The
only way we know how to distinguish between the regulations
that do good and those that cause harm is through careful
assessment and evaluation of their benefits and costs. Such
analysis can also often be used to redesign harmful
regulations so they produce more good than harm and redesign
good regulations so they produce even more net benefits.
There is broad support for making our government more open,
efficient, and accountable. This legislation continues the efforts of
my precedessors. Regulatory accounting was a part of a regulatory
reform bill that unanimously passed out of the Governmental Affairs
Committee in 1995 when Bill Roth was our chairman. In 1996, when Ted
Stevens became our chairman, he passed a one-time regulatory accounting
amendment on the Omnibus Appropriations Act. I supported Senator
Stevens' effort when it passed again in 1997, and I sponsored a similar
measure last year, with the support of Senators Lott, Breaux, Robb and
Shelby. There also is a broad bipartisan coalition in the House that
supports regulatory accounting.
This legislation will continue the requirement that OMB report to
Congress on the costs and benefits of regulatory programs, which began
with the Stevens amendment. This legislation also adds to previous
initiatives in several respects. First, it will finally make regulatory
accounting a permanent statutory requirement. Regulatory accounting
will become a regular exercise to help ensure that regulatory programs
are cost-effective, sensible, and fair. Second, this legislation will
require OMB to provide a more complete picture of the regulatory
system, including the incremental costs and benefits of particular
programs and regulations, as well as an analysis of regulatory impacts
on small business, governments, the private sector, wages and economic
growth. OMB also will look back at the annual regulatory costs and
benefits for the preceding 4 fiscal years, building on information
generated under the Stevens amendment. Finally, this legislation will
help ensure that OMB provides better information as time goes on.
Requirements for OMB guidelines and independent peer review should
improve future regulatory accounting reports.
Government has an obligation to think carefully and be accountable
for requirements that impose costs on people and limit their freedom.
We should pull together to contribute to the success of responsible
government programs the public values, while enhancing the economic
security and well-being of our families and communities.
Mr. President, I ask unanimous consent that a copy of the Regulatory
Right-to-Know Act of 1999 be printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 59
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 ``Regulatory Right-to-Know Act
of 1999''.
SEC. 2. PURPOSES.
The purposes of this Act are to--
(1) promote the public right-to-know about the costs and
benefits of Federal regulatory programs and rules;
(2) increase Government accountability; and
(3) improve the quality of Federal regulatory programs and
rules.
SEC. 3. DEFINITIONS.
In this Act:
(1) In general.--Except as otherwise provided in this
section, the definitions under section 551 of title 5, United
States Code, shall apply to this Act.
(2) Benefit.--The term ``benefit'' means the reasonably
identifiable significant favorable effects, quantifiable and
nonquantifiable, including social, health, safety,
environmental, economic, and distributional effects, that are
expected to result from implementation of, or compliance
with, a rule.
(3) Cost.--The term ``cost'' means the reasonably
identifiable significant adverse effects, quantifiable and
nonquantifiable, including social, health, safety,
environmental, economic, and distributional effects, that are
expected to result from implementation of, or compliance
with, a rule.
(4) Director.--The term ``Director'' means the Director of
the Office of Management and Budget, acting through the
Administrator of the Office of Information and Regulatory
Affairs.
(5) Major rule.--The term ``major rule'' means any rule as
that term is defined under section 804(2) of title 5, United
States Code.
(6) Program element.--The term ``program element'' means a
rule or related set of rules.
SEC. 4. ACCOUNTING STATEMENT.
(a) In General.--Not later than February 5, 2001, and each
year thereafter, the President, acting through the Director
of the Office of Management and Budget, shall prepare and
submit to Congress, with the budget of the United States
Government submitted under section 1105 of title 31, United
States Code, an accounting statement and associated report
containing--
(1) an estimate of the total annual costs and benefits of
Federal regulatory programs, including rules and paperwork--
(A) in the aggregate;
(B) by agency, agency program, and program element; and
(C) by major rule;
(2) an analysis of direct and indirect impacts of Federal
rules on Federal, State, local, and tribal government, the
private sector, small business, wages, and economic growth;
and
(3) recommendations to reform inefficient or ineffective
regulatory programs or program elements.
(b) Benefits and Costs.--To the extent feasible, the
Director shall quantify the net benefits or net costs under
subsection (a)(1).
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(c) Years Covered by Accounting Statement.--Each accounting
statement submitted under this Act shall cover, at a minimum,
the costs and corresponding benefits for each of the 4 fiscal
years preceding the year in which the report is submitted.
The statement may cover any year preceding such years for the
purpose of revising previous estimates.
SEC. 5. NOTICE AND COMMENT.
(a) In General.--Before submitting a statement and report
to Congress under section 4, the Director of the Office of
Management and Budget shall--
(1) provide public notice and an opportunity to comment on
the statement and report; and
(2) consult with the Comptroller General of the United
States on the statement and report.
(b) Appendix.--After consideration of the comments, the
Director shall incorporate an appendix to the report
addressing the public comments and peer review comments under
section 7.
SEC. 6. GUIDANCE FROM THE OFFICE OF MANAGEMENT AND BUDGET.
(a) In General.--Not later than 180 days after the date of
enactment of this Act, the Director of the Office of
Management and Budget, in consultation with the Council of
Economic Advisors, shall issue guidelines to agencies to
standardize--
(1) most plausible measures of costs and benefits; and
(2) the format of information provided for accounting
statements.
(b) Review.--The Director shall review submissions from the
agencies to ensure consistency with the guidelines under this
section.
SEC. 7. PEER REVIEW.
(a) In General.--The Director of the Office of Management
and Budget shall arrange for a nationally recognized public
policy research organization with expertise in regulatory
analysis and regulatory accounting to provide independent and
external peer review of the guidelines and each accounting
statement and associated report under this Act before such
guidelines, statements, and reports are made final.
(b) Written Comments.--The peer review under this section
shall provide written comments to the Director in a timely
manner. The Director shall use the peer review comments in
preparing the final guidelines, statements, and associated
reports.
(c) FACA.--Peer review under this section shall not be
subject to the Federal Advisory Committee Act (5 U.S.C.
App.).
Mr. BREAUX. Mr. President, I am pleased to introduce the Regulatory
Right to Know Act of 1999 with my colleague, Senator Thompson. This
important piece of legislation will make the regulatory system more
understandable and accountable to the American people.
The Regulatory Right to Know Act of 1999 is similar to an amendment
that was attached to the Fiscal Year 1999 Treasury, Postal
Appropriations bill and which the Senate unanimously passed on July 29,
1998. It is also similar to the two Stevens' Amendments passed with a
large majority of support in the Senate in 1996 and 1997. All of these
amendments required the Office of Management and Budget to prepare an
accounting statement and report on the annual costs and benefits of
federal regulatory programs. Obviously, Congress is on record in
support of having more information about the federal regulatory system.
The Regulatory Right to Know Act of 1999 simply makes this
requirement permanent and requires OMB to submit a yearly report to
Congress on the total costs and benefits of federal regulations. Costs
and benefits include those that are both quantifiable and non-
quantifiable. OMB must present both an analysis of the impacts of
regulations on Federal, State, local and tribal governments, the
private sector, small businesses, wages and economic growth, as well as
recommendations for reforming wasteful or outdated regulations. Lastly,
our bill provides the public with an opportunity to comment on the
draft report before it is submitted to Congress.
Our bill does not do a number of things. It does not require that any
regulations or programs be eliminated because the benefits do not
outweigh the costs. It does not impose an unworkable burden on the OMB
because much of the needed information is already available. And, our
bill doesn't undermine the need for regulations protecting public
health, worker safety, food quality or environmental preservation.
Some studies have estimated the total cost of federal regulations to
be almost $700 billion annually. On average, regulations cost every
household in America approximately $7,000 per year. As the people who
bear the cost of federal regulatory programs, America's citizens have a
right to know what they are getting for their $7,000. Taxpayers are
able to track how the government spends its tax dollars through the
budget process. The same openness should apply to the federal
regulatory system. Congress also needs the accounting statements
provided by our bill in order to make better, more informed, and more
efficient decisions. For these reasons. I urge all of my colleagues to
support the Regulatory Right to Know Act of 1999.
______
By Mr. GRASSLEY:
S. 60. A bill to amend the Internal Revenue Code of 1986 to provide
equitable treatment for contributions by employees to pension plans; to
the Committee on Finance.
ENHANCED SAVINGS OPPORTUNITIES ACT
Mr. GRASSLEY. Mr. President, I rise today to introduce legislation
that lifts the unfair limits on how much people can save in their
employer's pension plan. I have been an advocate of increasing the
amount of public education we provide to people on the importance of
saving for retirement. However, we also must take more tangible action
that will help workers achieve a more secure retirement.
The legislation I am introducing today amends two provisions in the
Internal Revenue Code which discourage workers and employers from
putting money into pension plans. One of the most burdensome provisions
in the Internal Revenue Code is the 25 percent limitation contained
within section 415(c). Under 415(c), total contributions by employer
and employee into a defined contribution (DC) plan are limited to 25
percent of compensation or $30,000 for each participant, whichever is
less. That limitation applies to all employees. If the total additions
into a DC plan exceed the lesser of 25 percent or $30,000, the excess
money will be subject to income taxes and a penalty in some cases.
The second tax code provision affected by this legislation is section
404(a)(3). This section regulates the amount of retirement plan
contributions an employer can deduct for tax purposes. We need this
change because those deduction limits are impacted by how much the
employee puts into the retirement plan. If we are successful in
changing 415(c), we run the risk of more employers bumping into the 15%
deduction limit--we don't want that to happen.
To illustrate the need for elimination of the 25 percent limit let me
use an example. Bill works for a medium size company in my home state
of Iowa. His employer sponsors a 401(k) plan and a profit sharing plan
to help employees save for retirement. Bill makes $25,000 a year and
elects to put in 10 percent of his compensation into the 401(k) plan,
which amounts to $2,500 per year. His employer will match the first 5
percent of his compensation, which comes out to be $1,250, into the
401(k) plan. Therefore, the total 401(k) contribution into Bill's
account in this year is $3,750. In this same year Bill' s employer
determines to set aside a sufficient amount of his profits to the
profit sharing plan which results in an allocation to Bill's account in
the profit sharing plan the sum of $3,205. This brings the total
contribution into Bill's retirement plan this year up to $6,955.
Unfortunately, because of the 25 percent of compensation limitation
only $6,250 can be put into Bill's account for the year. The amount
intended for Bill's account exceeds that limitation by $705. Hence, the
profit sharing plan administrator must reduce the amount intended for
allocation to Bill's account by $705 in order to avoid a penalty. Bill
is unlikely to be able to save $705, a significant amount that would
otherwise be yielding a tax deferred income which would increase the
benefit Bill will receive at retirement. Bill's retirement saving is
shortchanged by $705 plus the tax-deferred earnings it would have
generated.
Now let's look at Irene. Irene works for the same company, but she
makes $45,000 a year. She also puts in 10 percent of her compensation
into the 401(k) plan, and her employer matches five percent of her
salary into the account. That brings the combined contribution of Irene
and her employer up to $6,750. She would also receive a contribution of
$3,205 from the profit sharing plan. This brings the total contribution
into Irene's pension plan for that year to $9,955. She is also subject
to the 25 percent limit, but for Irene, her limit would not be reached
until
[[Page S476]]
$11,200. She is able to put in her 10 percent, receive the five percent
match and receive the full amount from the profit share because her
amount doesn't exceed the limit.
Despite the fact that Bill and Irene have the same discipline to add
to their pension plans and save for their retirements, Bill is
penalized by the 25 percent limitation. By lifting the 25 percent
limit, we can provide a higher threshold of savings for those who need
it most.
Permitting additional contributions to DC plans will help those
working now, particularly women, to ``catch up'' on their retirement
savings goals. Women are more likely to live out the last years of
their retirement in poverty for a number of reasons. Women have longer
lifespans, they are more likely to leave the workforce to raise
children or care for elderly parents, are more likely to have to use
assets to pay for long-term care for an ill spouse, and traditionally
make less money than their male counterparts. Anyone who has delayed
saving for retirement will get a much needed boost to their retirement
savings strategy if the 25 percent limit is eliminated for employees.
Not only does this proposal help individual employees save for
retirement but it also helps the many businesses, both small and large
which are affected by 415(c). First, the 25 percent limitation causes
equity concerns within businesses. Low and mid-salary workers do not
feel as if the Code treats them equitably, when their higher-paid
supervisor is permitted to save more in dollar terms in a tax-qualified
pension plan.
Second, one of the primary reasons businesses offer pension plans is
to reduce turnover and retain employees. Employers often supplement
their 401(k) plans with generous matches or a profit-sharing plan to
keep people on the job. The 415(c) limitation inhibits their ability to
do that, particularly for the lower-paid workers who are unfairly
affected.
Third, this legislation will ease the administrative burdens
connected with the 25 percent limitation. Dollar limits are easier to
track than percentage limits.
Finally, I want to placate any concerns that repealing the 25 percent
limit will serve as a windfall for high-paid employees. The Code
contains other limitations which provide protection against abuse.
First, the Code limits the amount an employee can defer to a 401(k)
plan. Under section 402(g) of the Code, workers can only defer up to
$10,000 of compensation into a 401(k) plan in 1998. In addition, plans
still must meet strict non-discrimination rules that ensure that
benefits provided to highly-compensated employees are not overly
generous.
The value to society of this proposal, if enacted, is undeniable.
Increased savings in qualified retirement plans can prevent leakage,
meaning the money is less likely to be spent, or cashed out as might
happen in a savings account or even an IRA.
There will be those out there who recognize that this bill does not
address the impact of the 415 limit for all of the plans that are
subject to it. I have included language that would provide relief to
401(k) plans and 403(b) plans, for example. Plans authorized by section
457 of the Code--used by state and local governments and non-profit
organizations have not been specifically addressed. I want to assure
organizations who sponsor 457 plans that I support ultimate conformity
for all plans affected by the 415(c) percentage limitation. Over the
next couple of weeks, I hope to work with these organizations to
identify the changes that are necessary to achieve equity and
simplicity for their employees. In the mean time, this is a positive
step toward enhancing the retirement savings opportunities of working
Americans.
We have begun to educate all Americans about the importance of saving
for retirement, but if we educate and then do not give them the tools
to allow people to practically apply that knowledge, we have failed in
our ultimate goal to increase national savings. Let's help Americans
succeed in saving for retirement. In helping them achieve their
retirement goals, they help us to achieve our goal as policymakers of
improving the quality of life for Americans.
I want to thank an Iowa company, IPSCO, in Camanche, Iowa, and its
many employees for bringing this issue to the forefront. I would also
ask unanimous consent that a letter supporting this legislation from
the Profit Sharing Council of America be printed in the Record.
There being no objection, the letter was ordered to be printed in the
Record, as follows:
Profit Sharing/401(k)
Council of America,
Chicago, IL, January 19, 1999.
Hon. Charles E. Grassley,
U.S. Senate,
Washington, DC.
Dear Chairman Grassley: On behalf of the 1,200 Profit
Sharing/401(k) Council of America members who sponsor
employer-provided retirement plans, I am pleased to announce
our strong support of The Enhanced Savings Opportunity Act,
introduced today, that would repeal the IRC section 415(c) 25
percent of compensation limit currently imposed on employees
participating in defined contribution plans. That limitation
caps the combined employee and employer contribution into a
401(k) account to 25 percent of an employee's earnings. The
25 percent limitation has significantly reduced the ability
of lower-paid employees, specifically intermittent workers,
from taking full advantage of defined contribution retirement
programs. Most companies limit the percentage of pay that an
employee can contribute to their 401(k) plan to even less
than 25 percent in order to insure compliance with 415(c).
The legislation will promote a conducive environment for
expanding the savings opportunities in employer-provided
retirement programs by removing one of the impediments that
prevents employees, especially lower-paid employees, from
taking full advantage of profit sharing, 401(k), and other
defined contribution programs.
The Enhanced Savings Opportunity Act will permit employees
who leave and reenter the workforce, many of whom are women,
to make larger contributions when they are working, in effect
allowing them to ``catch up'' their contributions. All low-
paid employees will now be allowed to defer up to $10,000 of
their wages into a 401(k) plan. Also, companies will be
permitted to make more generous matching and profit sharing
contributions to their employees, especially their lower-paid
employees.
We continue to benefit from your strong leadership in
support of employer-provided retirement plans and again
commend you for this new proposed legislation.
Sincerely,
David L. Wray,
President.
REGISTRATION OF MASS MAILINGS
The filing date for 1998 fourth quarter mass mailings is January 25,
1999. If your office did no mass mailings during this period, pleased
submit a form that states ``none.''
Mass mailing registrations, or negative reports, should be submitted
to the Senate Office of Public Records, 232 Hart Building, Washington,
D.C. 20510-7116.
The Public Records office will be open from 8:00 to 6:00 p.m. on the
filing date to accept these filings. For further information, please
contact the Public Records office at (202) 224-0322.
____________________