Congressional Record, Volume 145 Issue 30 (Thursday, February 25, 1999)

[Congressional Record Volume 145, Number 30 (Thursday, February 25, 1999)]
[Senate]
[Pages S2008-S2033]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

By Mr. JEFFORDS:
S. 466. A bill to provide that ``Know Your Customer'' regulations
proposed by the Federal banking agencies may not take effect unless
such regulations are specifically authorized by a subsequent Act of
Congress, to require a comprehensive study and report to the Congress
on various economic and privacy issues raised by the proposed
regulations, and for other purposes; to the Committee on Banking,
Housing, and Urban Affairs.

the financial institutions privacy act of 1999

Mr. JEFFORDS. Mr. President, I rise today to introduce the ``American
Financial Institutions Privacy Act of 1999.'' This legislation will
delay the implementation of the ``Know Your Customer'' regulations
proposed by the federal banking agencies. Additionally, this
legislation would require these agencies to perform a comprehensive
study, to be submitted to Congress in 180 days, on the privacy, freedom
of association and economic issues implicated by these regulations.
Only with Congressional authorization will these regulations be allowed
to take effect.
These regulations mandate that banks identify each customer, find out
the normal source and use of his or her funds and then watch
transactions in the account to see if they deviate from ``normal'' and
``expected'' patterns. If the unexpected transactions seem
``suspicious'' banks are required under current law to report them to
the Suspicious Activity Reporting System, a federal database that can
be searched by the Internal Revenue Service, bank regulators, the FBI
and other federal agencies.
Mr. President, I have heard from my constituents expressing great
concern over the privacy implications of these regulations, and I think
a resolution recently adopted by the Vermont House best expresses the
concerns of Vermonters. The resolution states,

[[Page S2009]]

``. . .the regulation will result in a substantial invasion of privacy
and an illegal search in violation of innocent customers' rights. . .
.'' I will include a complete copy of this resolution in the Record.
The stated purpose behind these rules is to guard the banking system
against harm from those who would launder money from drugs and other
criminal activities. This is an admirable goal and one that is
important in our continuing battle against crime. However, these
regulations have moved beyond just a tool used to combat crime and into
the realm where the government needs to know all of your personal,
financial information. This is an unacceptable change.
Mr. President, the study is a necessary part of this legislation and
will give Congress the factual basis to evaluate the effects of this
regulation on people's privacy and freedom of association, as well as
its economic implications. These facts will allow Congress to properly
evaluate the regulations and reach a final determination on the
regulation's ultimate fate. The study will also give the federal
banking agencies time to consider clarifications to the regulations, or
rescind them.
I would encourage all of my colleagues to join me as cosponsors of
the American Financial Institutions Privacy Act of 1999 and help stop
this privacy infringement on all Americans.
Mr. President, I ask unanimous consent that the text of the
resolution be printed in the Record.
There being no objection, the resolution was ordered to be printed in
the Record, as follows:

State of Vermont--J.R.H. 35

Whereas, the Federal Deposit Insurance Corporation (FDIC),
the Office of the Comptroller of the Currency (OCC), the
Office of Thrift Supervision (OTS) and the Federal Reserve
have proposed to issue a new regulation requiring banks to
develop and maintain ``Know Your Customer'' programs, and
Whereas, as proposed, the regulation would require each
bank to develop a program designed to determine the identity
of its customers, determine its customers' sources of funds,
determine the normal and expected transactions of its
customers, monitor account activity for transactions that are
inconsistent with those normal and expected transactions, and
report any transactions of its customers that are suspicious,
and
Whereas, in order to carry out the proposed regulation,
banks will be forced to probe into the legitimate activities
of its customers and into the sensitive private affairs of
its customers, and
Whereas, the proposed ``Know Your Customer'' program would
substantially change the relationship between banks and their
customers, and
Whereas, the regulation will result in a substantial
invasion of privacy and an illegal search in violation of
innocent customers' rights under the constitutions of both
the United States and Vermont, and
Whereas, the proposed regulation is clearly beyond the
scope of authority granted the agencies by Congress, now
therefore be it
Resolved by the Senate and the House of Representatives:
That the FDIC should not be allowed to issue this ``Know
Your Customer'' regulation, and be it further
Resolved: That the Secretary of State be directed to send a
copy of this resolution to the Federal Deposit Insurance
Corporation, the Office of the Comptroller of Currency, the
Office of Thrift Supervision, the Federal Reserve, the
banking committee of the United States House of
Representatives, the banking committee of the United States
Senate and Vermont's congressional delegation.
Which was read and, in the Speaker's discretion, placed on
the Calendar for action tomorrow under Rule 52.
______

By Mr. VOINOVICH (for himself, Mr. Thompson, Mr. Lieberman, and
Mr. Durbin):
S. 468. A bill to improve the effectiveness and performance of
Federal financial assistance programs, simplify Federal financial
assistance application and reporting requirements, and improve the
delivery of services to the public; to the Committee on Governmental
Affairs.
Mr. VOINOVICH. Mr. President, today I am pleased to introduce the
``Federal Financial Assistance Management Improvement Act of 1999'',
legislation that was championed in the previous Congress by my friend
and predecessor, Senator John Glenn. As a Governor, I supported this
bill as an important step toward detangling the web of duplicative
federal grants available to States, localities and community
organizations. As a Senator, I am pleased to pick it up where Senator
Glenn left off. I would also like to thank Senator Thompson, Senator
Lieberman and Senator Durbin for joining me as original cosponsors of
this bill.
Scores of programs, often administered by the same federal agency,
have similar purposes but are subject to different application and
reporting requirements. This unnecessary duplication of effort wastes
time, paper, and does nothing to improve program performance for the
benefit of our constituents. The Federal Financial Assistance
Management Improvement Act is intended to streamline the grant
application process, allowing those who serve their communities to
focus on the job at hand--not on page after page of paperwork. The
legislation directs federal agencies to simplify and coordinate the
application requirements of related programs. The result, I hope, will
be service to the public which is better, faster and more effective
than before.
In other words, today in this country, if you want to apply for
Federal assistance, every agency has a different form. If you have to
report on what you are doing with that Federal assistance, every agency
has a different form. We want to make those forms uniform across the
board, which we know will relieve a lot of pressure and paperwork on
the folks who are involved in these programs.
Another important component of this bill is the requirement that
agencies develop a process to allow State and local governments and
non-profit organizations to apply for and report on the use of funds
electronically. Using the Internet as a substitute for cumbersome
paperwork is a welcome innovation in the way the federal government
does business, and I am pleased that the Federal Financial Assistance
Management Improvement Act is leading the effort.
We need to bring technology into the Federal Government and allow
people to do the same thing that they do when they are dealing with the
private sector.
This bill was crafted in the last Congress by Senator Glenn after
bipartisan, bicameral negotiations with the Administration, and while I
was sorry that it was not enacted before the end of the 105th Congress,
I am pleased to be able to introduce it today. The legislation is
supported by the National Governors' Association and others in the
State and local government and non-profit community because of the real
potential it has to reduce red tape and improve services to our
communities. I urge all my colleagues to support this important
legislation.
Mr. President, I ask unanimous consent that the text of the bill and
a letter of support from State and local government organizations be
printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

S. 468

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 Financial Assistance
Management Improvement Act of 1999''.

SEC. 2. FINDINGS.

The Congress finds that--
(1) there are over 600 different Federal financial
assistance programs to implement domestic policy;
(2) while the assistance described in paragraph (1) has
been directed at critical problems, some Federal
administrative requirements may be duplicative, burdensome or
conflicting, thus impeding cost-effective delivery of
services at the local level;
(3) the Nation's State, local, and tribal governments and
private, nonprofit organizations are dealing with
increasingly complex problems which require the delivery and
coordination of many kinds of services; and
(4) streamlining and simplification of Federal financial
assistance administrative procedures and reporting
requirements will improve the delivery of services to the
public.

SEC. 3. PURPOSES.

The purposes of this Act are to--
(1) improve the effectiveness and performance of Federal
financial assistance programs;
(2) simplify Federal financial assistance application and
reporting requirements;
(3) improve the delivery of services to the public; and
(4) facilitate greater coordination among those responsible
for delivering such services.

SEC. 4. DEFINITIONS.

In this Act:
(1) Director.--The term ``Director'' means the Director of
the Office of Management and Budget.
(2) Federal agency.--The term ``Federal agency'' means any
agency as defined under section 551(1) of title 5, United
States Code.

[[Page S2010]]

(3) Federal financial assistance.--The term ``Federal
financial assistance'' has the same meaning as defined in
section 7501(a)(5) of title 31, United States Code, under
which Federal financial assistance is provided, directly or
indirectly, to a non-Federal entity.
(4) Local government.--The term ``local government'' means
a political subdivision of a State that is a unit of general
local government (as defined under section 7501(a)(11) of
title 31, United States Code);
(5) Non-federal entity.--The term ``non-Federal entity''
means a State, local government, or nonprofit organization.
(6) Nonprofit organization.--The term ``nonprofit
organization'' means any corporation, trust, association,
cooperative, or other organization that--
(A) is operated primarily for scientific, educational,
service, charitable, or similar purposes in the public
interest;
(B) is not organized primarily for profit; and
(C) uses net proceeds to maintain, improve, or expand the
operations of the organization.
(7) State.--The term ``State'' means any State of the
United States, the District of Columbia, the Commonwealth of
Puerto Rico, the Virgin Islands, Guam, American Samoa, the
Commonwealth of the Northern Mariana Islands, and the Trust
Territory of the Pacific Islands, and any instrumentality
thereof, any multi-State, regional, or interstate entity
which has governmental functions, and any Indian Tribal
Government.
(8) Tribal government.--The term ``tribal government''
means an Indian tribe, as that term is defined in section
7501(a)(9) of title 31, United States Code.
(9) Uniform administrative rule.--The term ``uniform
administrative rule'' means a Government-wide uniform rule
for any generally applicable requirement established to
achieve national policy objectives that applies to multiple
Federal financial assistance programs across Federal
agencies.

SEC. 5. DUTIES OF FEDERAL AGENCIES.

(a) In General.--Not later than 18 months after the date of
enactment of this Act, each Federal agency shall develop and
implement a plan that--
(1) streamlines and simplifies the application,
administrative, and reporting procedures for Federal
financial assistance programs administered by the agency;
(2) demonstrates active participation in the interagency
process under section 6(a)(2);
(3) demonstrates appropriate agency use, or plans for use,
of the common application and reporting system developed
under section 6(a)(1);
(4) designates a lead agency official for carrying out the
responsibilities of the agency under this Act;
(5) allows applicants to electronically apply for, and
report on the use of, funds from the Federal financial
assistance program administered by the agency;
(6) ensures recipients of Federal financial assistance
provide timely, complete, and high quality information in
response to Federal reporting requirements; and
(7) establishes specific annual goals and objectives to
further the purposes of this Act and measure annual
performance in achieving those goals and objectives, which
may be done as part of the agency's annual planning
responsibilities under the Government Performance and Results
Act of 1993 (Public Law 103-62; 107 Stat. 285).
(b) Extension.--If one or more agencies are unable to
comply with the requirements of subsection (a), the Director
shall report to the Committee on Governmental Affairs of the
Senate and the Committee on Government Reform of the House of
Representatives the reasons for noncompliance. After
consultation with such committees, the Director may extend
the period for plan development and implementation for each
noncompliant agency for up to 12 months.
(c) Comment and Consultation on Agency Plans.--
(1) Comment.--Each agency shall publish the plan developed
under subsection (a) in the Federal Register and shall
receive public comment of the plan through the Federal
Register and other means (including electronic means). To the
maximum extent practicable, each Federal agency shall hold
public forums on the plan.
(2) Consultation.--The lead official designated under
subsection (a)(4) shall consult with representatives of non-
Federal entities during development and implementation of the
plan. Consultation with representatives of State, local, and
tribal governments shall be in accordance with section 204 of
the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1534).
(d) Submission of Plan.--Each Federal agency shall submit
the plan developed under subsection (a) to the Director and
Congress and report annually thereafter on the implementation
of the plan and performance of the agency in meeting the
goals and objectives specified under subsection (a)(7). Such
report may be included as part of any of the general
management reports required under law.

SEC. 6. DUTIES OF THE DIRECTOR.

(a) In General.--The Director, in consultation with agency
heads, and representatives of non-Federal entities, shall
direct, coordinate, and assist Federal agencies in
establishing--
(1) a common application and reporting system, including--
(A) a common application or set of common applications,
wherein a non-Federal entity can apply for Federal financial
assistance from multiple Federal financial assistance
programs that serve similar purposes and are administered by
different Federal agencies;
(B) a common system, including electronic processes,
wherein a non-Federal entity can apply for, manage, and
report on the use of funding from multiple Federal financial
assistance programs that serve similar purposes and are
administered by different Federal agencies; and
(C) uniform administrative rules for Federal financial
assistance programs across different Federal agencies; and
(2) an interagency process for addressing--
(A) ways to streamline and simplify Federal financial
assistance administrative procedures and reporting
requirements for non-Federal entities;
(B) improved interagency and intergovernmental coordination
of information collection and sharing of data pertaining to
Federal financial assistance programs, including appropriate
information sharing consistent with section 552a of title 5,
United States Code; and
(C) improvements in the timeliness, completeness, and
quality of information received by Federal agencies from
recipients of Federal financial assistance.
(b) Lead Agency and Working Groups.--The Director may
designate a lead agency to assist the Director in carrying
out the responsibilities under this section. The Director may
use interagency working groups to assist in carrying out such
responsibilities.
(c) Review of Plans and Reports.--Upon the request of the
Director, agencies shall submit to the Director, for the
Director's review, information and other reporting regarding
agency implementation of this Act.
(d) Exemptions.--The Director may exempt any Federal agency
or Federal financial assistance program from the requirements
of this Act if the Director determines that the Federal
agency does not have a significant number of Federal
financial assistance programs. The Director shall maintain a
list of exempted agencies which shall be available to the
public through the Office of Management and Budget's Internet
site.

SEC. 7. EVALUATION.

(a) In General.--The Director (or the lead agency
designated under section 6(b)) shall contract with the
National Academy of Public Administration to evaluate the
effectiveness of this Act. Not later than 4 years after the
date of enactment of this Act, the evaluation shall be
submitted to the lead agency, the Director, and Congress. The
evaluation shall be performed with input from State, local,
and tribal governments, and nonprofit organizations.
(b) Contents.--The evaluation under subsection (a) shall--
(1) assess the effectiveness of this Act in meeting the
purposes of this Act and make specific recommendations to
further the implementation of this Act;
(2) evaluate actual performance of each agency in achieving
the goals and objectives stated in agency plans; and
(3) assess the level of coordination among the Director,
Federal agencies, State, local, and tribal governments, and
nonprofit organizations in implementing this Act.

SEC. 8. COLLECTION OF INFORMATION.

Nothing in this Act shall be construed to prevent the
Director or any Federal agency from gathering, or to exempt
any recipient of Federal financial assistance from providing,
information that is required for review of the financial
integrity or quality of services of an activity assisted by a
Federal financial assistance program.

SEC. 9. JUDICIAL REVIEW.

There shall be no judicial review of compliance or
noncompliance with any of the provisions of this Act. No
provision of this Act shall be construed to create any right
or benefit, substantive or procedural, enforceable by any
administrative or judicial action.

SEC. 10. STATUTORY REQUIREMENTS.

Nothing in this Act shall be construed as a means to
deviate from the statutory requirements relating to
applicable Federal financial assistance programs.

SEC. 11. EFFECTIVE DATE AND SUNSET.

This Act shall take effect on the date of enactment of this
Act and shall cease to be effective 5 years after such date
of enactment.
____

Mr. THOMPSON. Mr. President, I am pleased to support the Federal
Financial Assistance Management Improvement Act of 1999. As a strong
believer in our federalist system of government, I am pleased to be an
original cosponsor of this legislation, which will cut red tape and
waste in Federal grant and other assistance programs that impact State
and local government, as well as nonprofit organizations. It is fitting
that my good friend from Ohio, George Voinovich, is now providing
leadership on this effort in the Senate. As a governor and Chairman of
the National Governors' Association, George Voinovich strongly
supported this bill from outside Congress. While we reported the bill
out of the Governmental Affairs Committee and passed it through the
Senate last year, unfortunately it did not become law. It's time to get
the job done.
This legislation will improve the performance of Federal grant and
other

[[Page S2011]]

assistance programs by streamlining their application, administration,
and reporting requirements for grant recipients--including State, local
and tribal governments and nonprofit organizations. The Federal
agencies, with guidance from the Office of Management and Budget, would
develop plans within 18 months to streamline application,
administrative and reporting requirements, develop uniform applications
for related programs, develop and expand the use of electronic
applications and reporting via the Internet, demonstrate interagency
coordination in simplifying requirements for cross-cutting programs,
and set annual goals to further the purposes of the Act.
Agencies would then consult with outside parties in developing their
plans. The agencies would submit their plans and annual reports to the
Director of OMB and to Congress, and they could be made a part of other
management reports required under law. In addition to overseeing and
coordinating agency activities, OMB would develop more common rules to
cut across programs and would develop a release form to allow grant
information to be shared across programs.
This legislation has been endorsed by many organizations representing
our State and local government partners, including the National
Governors' Association, the National Conference of State Legislatures,
the National League of Cities, the Council of State Governments, and
the National Association of Counties. It is a good government, common
sense initiative. Let's pull together and pass this bill into law.
______

By Mr. BREAUX (for himself, Mr. Conrad, Mr. Burns, and Mr.
Baucus):
S. 469. A bill to encourage the timely development of a more cost
effective United States commercial space transportation industry, and
for other purposes; to the Committee on Commerce, Science, and
Transportation.

commercial space transportation cost reduction act

Council of State Governments, International City/County
Management Association, National Association of
Counties, National Conference of State Legislatures,
National Governors' Association, National League of
Cities, U.S. Conference of Mayors,
February 24, 1999.
Hon. Fred Thompson,
Hon. George V. Voinovich,
Hon. Joseph I. Lieberman,
Hon. Richard J. Durbin,
U.S. Senate,
Washington, DC
Dear Senators Thompson, Lieberman, Voinovich, and Durbin:
On behalf of the elected leaders of the respective
organizations of Governors, legislators, mayors, county
officials, and city managers, we are pleased that you will be
introducing the Federal Financial Assistance Management
Improvement Act. This bill was passed by the Senate last year
and has the strong support of all our organizations.
The bill would require the Office of Management and Budget
(OMB) to reevaluate its array of over 75 crosscutting
regulations that govern all funds going to state and local
governments. We support a requirement that OMB establish lead
agencies to develop uniform common rules for crosscutting
regulations, base data information for multiple grants to the
same state or local government, and electronic filing of most
intergovernmental paperwork.
We greatly appreciate your leadership for these reforms and
urge all Senators to support passage of your bill.
Sincerely,
Governor Thomas R. Carper, State of Delaware, Chairman,
National Governors' Association; Representative Dan
Blue, North Carolina State House of Representatives and
President, National Conference of State Legislatures;
Commissioner Betty Lou Ward, Wake County, North
Carolina, President, National Association of Counties;
Mayor Deedee Corradini, Salt Lake City, Utah,
President, The U.S. Conference of Mayors; Bryce (Bill)
Stuart, City Manager, Winston-Salem, North Carolina,
President, International City/County Management
Association; Mayor Clarence Anthony, South Bay,
Florida, President, National League of Cities; Senator
Kenneth McClintock, Puerto Rico Senate, Chairman,
Council of State Governments.
Mr. BREAUX. I take the time today, Mr. President and my colleagues,
to introduce a bill which I happen to think addresses a very important
issue that this Nation is facing; and that is the question of trying to
devise a system where the United States can continue to be the world's
leader in the space launch business.
Every day, every month, more and more satellites around the world are
being put into service. I daresay that most people really do not follow
the details of how this is accomplished, but I do know that over the
last several months people in this country have heard a great deal
about Chinese rockets, Ukrainian rockets, Russian rockets and all the
problems that they have been involved with related to the U.S.
aerospace industry.
One may wonder, why would a U.S. company have to use a Ukraine launch
vehicle or a Chinese launch vehicle or a Russian launch vehicle or a
European launch vehicle in order to launch a U.S. satellite to serve
the technological and communications needs of the world. The reason is
not that hard to figure out when you look at the fact that these
countries that I just mentioned are not countries that are under the
same economic obligations that we are. Many of those are not free
market economies. Many are still government-run economies. Many of
those countries have governments that have put a great deal of money in
their launch industries and are now able to provide those launch
vehicles for use at a cutrate or subsidized price.
I do not think that is particularly good for our country to have to
buy space transportation on a Ukraine rocket to launch a U.S.
satellite. When those rockets malfunction, then we are in a problem
area trying to tell them based on our technological expertise why the
failure happened. Our companies could get into trouble because of the
risk that they are sharing with them technology that could be used for
military purposes.
So I, for one, do not think I would want to drive a Ukrainian car let
alone ride in a Ukrainian rocket. But that is what is happening because
of a situation where we do not have enough access in the private
industry to U.S.-built space transportation vehicles that can launch
U.S.-built satellites for communications purposes.
We have learned that one of the reasons is the fact that there is
inadequate private sector funding for U.S. companies to engage in
building space transportation vehicles for this purpose. It is, of
course, a high-risk business. This is much more risky than building a
ship or building a car or building just about anything else. A lot can
go wrong. So it is a high risk. And there is inadequate funding in the
private sector.
To solve this problem, what do you do? Do you make the Government
take it over? Do you make the Government own the launch vehicles and
make the Government pay for the building of the launch vehicles? In our
society the answer is no. But I think that the legislation that I am
introducing today, along with Senator Conrad Burns of Montana, sets up
a program which would be a loan guarantee program where the U.S.
Government can pattern in the space transportation industry what we
have done very successfully in the shipbuilding industry under what is
known as a Title XI shipbuilding loan guarantee program, where the
Federal Government comes to a qualified builder who is having a
difficult time getting adequate financing because of the nature of the
industry, and that the Federal Government will be in a position to
guarantee the loan to a company which company would go out into the
private market and borrow the money but have the loan guaranteed by the
Federal Government. Under that scenario, we have built literally
hundreds and hundreds of vessels, probably thousands, through the Title
XI loan guarantee program.
What I am proposing in the ``Commercial Space Transportation Cost
Reduction Act of 1999'' is to set up a loan guarantee program which
would be patterned after the Title XI Shipyard Loan Guarantee Program.
We would vest the Secretary of Transportation in our Government with
the administrative responsibilities for the program operations. The
legislation would initially provide up to $500 million of funding for
the loan guarantee program. That would represent the possibility of
generating up to $5 billion in loans for U.S. space transportation
companies to engage other U.S. companies and U.S. workers in building
space transportation vehicles for use in our society.
I ask unanimous consent for 2 additional minutes.

[[Page S2012]]

The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. BREAUX. And by having that type of a system, I think that we
would give our private companies the ability to compete with all of
these other companies in countries which have their governments
supporting them in these areas.
We have had a number of Senators who have expressed an interest in
participating with us in this legislation. Let me just mention Senator
Lott, Senator Bacchus, Senator Bingaman, Senator Graham of Florida and
Senator Landrieu of Louisiana. I hope--and now that the bill has been
introduced, that the Commerce Committee can have some hearings on it--
that we can continue to improve it and move forward with establishing
something that will allow the private sector of the United States to
continue to be, and even increase the ability to be, the world leader
in space transportion. In particular, the ability to launch our
satellites with our vehicles and not have to rent space from the
Russians or from the Chinese or from the Ukrainians or from any other
part of the world. This is a vitally important industry, and the United
States should be the technological leader now and for the future.
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. 469

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title.--This Act may be cited as the ``Commercial
Space Transportation Cost Reduction Act''.
(b) Table of Contents.--The table of contents of this Act
is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Purposes.
Sec. 4. Definitions.

TITLE 1--INCREASING THE AVAILABILITY OF PRIVATE SECTOR FINANCING FOR
THE UNITED STATES COMMERCIAL SPACE TRANSPORTATION INDUSTRY THROUGH A
LOAN GUARANTEE PROGRAM

Sec. 101. United States Commercial Space Transportation Vehicle
Industry Program.
Sec. 102. Functions of the Secretary of the Department of
Transportation.
Sec. 103. Space Transportation Loan Guarantee Fund.
Sec. 104. Authorization of Secretary to Guarantee Obligations.
Sec. 105. Eligibility for Guarantee.
Sec. 106. Defaults.

SEC. 2. FINDINGS.

Congress makes the following findings:
(1) The United States commercial space transportation
vehicle industry is an essential part of the national economy
and opportunities for U.S. commercial providers are growing
as international markets expand.
(2) The development of the U.S. commercial space
transportation vehicle industry is consistent with the
national security interests and foreign policy interests of
the United States.
(3) United States trading partners have been able to lower
their commercial space transportation prices aggressively
either through direct cash payments for commercially targeted
product development or with indirect benefits derived from
nonmarket economy status.
(4) Because United States incentives for space
transportation vehicle development have historically focused
on civil and military rather than commercial use, U.S. launch
costs have remained comparatively high, and U.S. launch
technology has not been commercially focused.
(5) As a result, the U.S. share of the world commercial
market has decreased from nearly 100% twenty years ago to
approximately 47% in 1998.
(6) In order to avoid undue reliance on foreign space
transportation services, the U.S. must strive to have
sufficient domestic capacity as well as the highest quality
and the lowest cost per service provided.
(7) A successful high quality, lower cost U.S. commercial
space transportation industry should also lead to substantial
U.S. taxpayer savings through collateral lower U.S.
government costs for its space access requirements.
(8) The key to maintaining United States leadership in the
world market is not another massive government program, but
rather provision of just enough government support on an
incremental and timely basis to enable the more cost
effective U.S. private sector to build lower-cost space
transportation vehicles.
(9) Private sector companies across the United States are
already attempting to develop a variety of lower-cost space
transportation vehicles, but lack of sufficient private
financing, particularly in the early stages of
development, has proven to be a major obstacle, an
obstacle our trading partners have removed by providing
direct access to government funding.
(10) Given the strengths and creativity of private industry
in the United States, a more effective alternative to the
approach of our trading partners is for the U.S. government
to provide limited incentives, including loan guarantees
which would help qualifying U.S. private-sector companies
secure otherwise unavailable private ``bridge'' financing for
the critical developmental stages of the project, while at
the same time keeping government involvement at a minimum.

SEC. 3. PURPOSES.

Therefore the purposes of this Act are--
(1) to ensure availability of otherwise unavailable private
sector ``bridge'' financing for U.S. private sector
development of commercial space transportation vehicles with
launch costs significantly below current levels;
(2) and, as a result--
(A) to avoid undue reliance on foreign space transportation
services;
(B) to reduce substantially United States Government space
transportation expenditures;
(C) to increase the international competitiveness of the
United States space industry;
(D) to encourage the growth of space-related commerce in
the United States and internationally; and
(E) to increase the number of high-value jobs in the United
States space-related industries.

SEC. 4. DEFINITIONS.

In this Act:
(1) Total capital requirement.--The term ``total capital
requirement'' of a United States commercial space
transportation provider means the aggregate, as determined by
the Secretary, of all Cash Requirements paid or to be paid by
or on the account of the Obligor prior to the achievement by
the Obligor of positive cash flow generation. For the
purposes of this definition, the term ``Cash Requirements''
shall include all cash expended or invested by the Obligor
(including but not limited to design, development, testing
and evaluation (DDT&E)), construction, reconstruction,
reconditioning, placing into operation, working capital,
interest expense and initial operating and marketing expenses
in connection with space transportation prior to the
achievement of positive cash flow generation from ongoing
operations.
(2) Loan.--The term ``loan'' means an obligation.
(3) Obligee.--The term ``obligee'' means the holder of an
obligation.
(4) Obligor.--The term ``obligor'' means any party
primarily liable for payment of the principal of or interest
on any obligation.
(5) Obligation.--The term ``obligation'' means any note,
bond, debenture, or other evidence of indebtedness issued for
one of the purposes specified in section 105(a) of this Act.
(6) Secretary.--The term ``Secretary'' means the Secretary
of the United States Department of Transportation.
(7) Space launch site.--The term ``space launch site''
means a location from which a launch or landing takes place
and includes all facilities located on, or components of, a
launch or landing site which are necessary to conduct a
launch, whether on land, sea, in the earth's atmosphere, or
beyond the earth's atmosphere.
(8) Space transportation vehicle.--The term ``space
transportation vehicle'' includes all types of vehicles,
whether in existence or under design, development,
construction, reconstruction or reconditioning; constructed
in the United States by United States commercial space
transportation vehicle providers as defined below and owned
by those commercial providers, for the purpose of operating
in, or transporting a payload to, from, or within, outer
space, or in suborbital trajectory, and includes any
component of such vehicle not specifically designed or
adapted for a payload.
(9) State.--The term ``State'' means each of the several
States of the Union, the District of Columbia, the
Commonwealth of Puerto Rico, the Virgin Islands, Guam,
American Samoa, the Commonwealth of the Northern Mariana
Islands, and any other commonwealth, territory, or
possession of the United States.
(10) United states commercial provider.--The term ``United
States commercial provider'' means a commercial provider,
organized under the laws of the United States or of a State,
which is--
(A) more than 50 percent owned by United States nationals;
or
(B) a subsidiary of a foreign company and the Secretary of
Transportation finds that--
(i) such subsidiary has in the past evidenced a substantial
commitment to the United States market through--
(I) investments in the United States in long-term research,
development, and manufacturing (including the manufacture of
major components and subassemblies); and
(II) significant contributions to employment in the United
States; and
(ii) the country or countries in which such foreign company
is incorporated or organized, and, if appropriate, in which
it principally conducts its business, affords reciprocal
treatment to companies described in subparagraph (A)
comparable to that afforded to such foreign company's
subsidiary in the United States, as evidenced by--

[[Page S2013]]

(I) providing comparable opportunities for companies
described in subparagraph (A) to participate in Government
sponsored research and development similar to that authorized
under this Act;
(II) providing no barriers, to companies described in
subparagraph (A) with respect to local investment
opportunities, that are not provided to foreign companies in
the United States; and
(III) providing adequate and effective protection for the
intellectual property rights of companies described in
subparagraph (A).
(II) Small business.--For the purposes of this Act, a
``small business'' is a commercial provider as defined by the
Secretary according to criteria established in consultation
with the commercial space transportation vehicle industry and
professional associations.
(12) United states commercial space transportation vehicle
provider.--The term ``United States commercial space
transportation vehicle provider'' means a United States
commercial provider engaged in designing, developing,
producing, or operating commercial space transportation
vehicles.
(13) United states commercial space transportation vehicle
industry.--The term ``United States commercial space
transportation vehicle industry'' means the collection of
United States commercial providers of space transportation
vehicles.
(14) Cost to the government.--``Cost to the Government''
means the Risk Rate multiplied by the amount of the guarantee
issued by the Secretary. The Cost to the Government reduces
the amount of the Fund until such time as part or all of the
guarantee has been retired as described in Section 103 of the
Act.
(15) Risk rate.--``Risk Rate'' means the percentage applies
to a guarantee of an entity assigned to a specific Risk
Category by the Secretary and used in calculating the Cost to
the Government of the guarantee.
(16) Risk category.--``Risk Category'' means the category
into which the Secretary assigns an entity applying for a
guarantee based on the risk factors identified in Section
104(f). The Risk Category is assigned for the purpose of
arriving at a Risk Rate in the calculation of the Cost to the
Government.
(17) Fund.--The ``Fund'' means the amount appropriated
under the Act as described under Section 103 of the Act.

TITLE 1--INCREASING THE AVAILABILITY OF PRIVATE SECTOR FINANCING FOR
THE UNITED STATES COMMERCIAL SPACE TRANSPORTATION VEHICLE INDUSTRY
THROUGH A LOAN GUARANTEE PROGRAM

SEC. 101. UNITED STATES COMMERCIAL SPACE TRANSPORTATION
VEHICLE INDUSTRY LOAN GUARANTEE PROGRAM.

(a) Establishment of Program.--There shall be a United
States Commercial Space Transportation Vehicle Industry Loan
Guarantee program to provide loan guarantees to support the
private development of multiple qualified United States
commercial space transportation vehicle providers with launch
costs significantly below current levels.
(b) Administration of Program.--The program shall be
carried out by the Secretary of Transportation under a
streamlined application process pursuant to the terms of this
Section and any regulations that may be promulgated
hereunder, in consultation with other U.S. Government
officials, and private sector representatives, as necessary,
to ensure fair, effective and timely program administration.
(c) Scope of Program.--
(1) Temporary Government Support.--The United States
Commercial Space Transportation Vehicle Industry Loan
Guarantee program is intended to provide loan guarantees to
support financing of qualified commercial space
transportation vehicle development ventures during their
startup phases and is not intended as a permanent source of
financing for such ventures. Applications for guarantees
under this program must include specific plans for the timely
transition from guaranteed financing to standalone private
sector financing as soon as the venture becomes commercially
viable.
(2) Exclusion of space launch sites.--The program does not
provide for loan guarantees pertaining to the construction,
reconstruction, or reconditioning of space launch sites.
(3) Exclusion of evolved expendable launch vehicle
program.--The United States Commercial Space Transportation
Vehicle Industry Loan Guarantee program shall not remove,
restrict, or replace funding provided by the Department of
Defense to commercial providers participating in the Evolved
Expendable Launch Vehicle (EELV) program. Commercial
providers already receiving Department of Defense funding for
the development of specific expendable launch vehicles under
the Evolved Expendable Launch Vehicle program shall not be
eligible to apply for loan guarantees pertaining to this same
program, under the United States Commercial Space
Transportation Vehicle Industry Loan Guarantee program.
(4) Small business set aside.--Depending upon the number of
applications, not less than ten percent and up to 20 percent
of the loan guarantee fund shall be set aside for small
businesses as defined by the Secretary. In no event shall a
single commercial provider be the sole beneficiary of loan
guarantees available under this Act.
(5) Competition encouraged on initiatives attempting to
meet unique u.s. government specifications.--When possible
and economically feasible, in order to allow U.S. taxpayers
to receive the benefits and disciplines of private sector
competition, the Secretary shall administer the loan
guarantee program to permit the participation of multiple
United States space transportation vehicle commercial
providers that are targeting unique U.S. government
specifications.
(6) Nondisclosure of confidential materials.--Materials
that are submitted by a United States commercial space
transportation vehicle provider to the Secretary in
connection with an application submitted under the United
States Commercial Space Transportation Vehicle Industry Loan
Guarantee program and deemed by the commercial provider to be
confidential, and that contain trade secrets or proprietary
commercial, financial, or technical information of a kind not
customarily disclosed to the public, shall not be disclosed
by the Secretary to persons other than Government officers,
employees or contractors notwithstanding any other provision
of law.
(d) Sunset.--This Act shall sunset 10 years from date of
enactment.

SEC. 102. FUNCTIONS OF THE SECRETARY OF TRANSPORTATION.

The Secretary shall carry out the following functions--
(a) Consultation.--Consultation, to the extent deemed
necessary for effective implementation of the Act with
appropriate federal agencies, Congressional, and space
transportation industry representatives, and members of the
risk management industry concerning--
(1) assessments of international competition, potential
markets for space transportation vehicles, and availability
of private investment captial;
(2) recommendations of commercial entities, partnerships,
joint ventures, or consortia regarding effective
implementation of the loan guarantee program; and,
(3) recommendations on how to make U.S. government space
access requirements more compatible with U.S. commercial
space transportation assets.
(b) Program Management.--Management of the loan guarantee
program consistent with the purposes of this Act.

SEC. 103. AUTHORIZATION OF APPROPRIATION OF FUNDS.

(a) The Act authorizes an annual appropriation of the sum
of $400,000,000 to be deposited in a Fund to be used by the
Secretary for the purpose of carrying out the provisions of
the Act. The Fund will be reduced by the Cost to the
Government (as defined) of each loan guarantee extended by
the Secretary as further described in Section 104(f). As an
Obligor releases its government guarantees on the schedule
agreed to up front with the Secretary, this Cost to the
Government shall be reduced or eliminated, thus replenishing
the Fund for new guarantees.

SEC. 104. AUTHORIZATION OF SECRETARY TO GUARANTEE OBLIGATIONS

(a) Principal and Interest.--The Secretary is authorized to
guarantee, and to enter into commitments to guarantee, the
payment of the interest on, and the unpaid balance of the
principal of, any obligation which is eligible to be
guaranteed under this Act. A guarantee, or commitment to
guarantee, made by the Secretary under this Act shall cover
100 percent of the amount of the principal and interest of
the obligation.
(b) Security Interest.--No obligation shall be guaranteed
under this Act unless the obligor conveys or agrees to convey
to the Secretary a security interest such as the Secretary
may reasonably require to protect the interests of the United
States.
(c) Private Insurance.--If the Secretary determines that
other potential measures, as described in this Act, are not
sufficient to provide adequate security, the Secretary, as a
condition of processing or approving an application for
guarantee of an obligation, may require that the obligor
obtain private insurance with respect to a portion of the
government's risk of default by the obligor on the
obligation, including both the amount of the obligation still
outstanding and the accrued interest. Such private insurance
may be funded from the proceeds of any obligation guaranteed
under this Act. If the obligor fails to renew such private
insurance on a timely basis, the Secretary may take such
action as deemed necessary, with regard to seizure of
security interest conveyed by the obligor or the assessment
of additional fees to the obligor, to ensure that the
appropriate insurance renewal is obtained without delay.
(d) Pledge of United States.--The full faith and credit of
the United States is pledged to the payment of all guarantees
made under this Act with respect to both principal and
interest, including interest, as may be provided for in the
guarantee, accruing between the date of default under a
guaranteed obligation and the payment in full of the
guarantee.
(e) Proof of Obligations.--Any guarantee, or commitment to
guarantee, made by the Secretary under this Act shall be
conclusive evidence of the eligibility of the obligations for
such guarantee, and the validity of any guarntee, or
commitment to guarantee, so made shall be incontestable.
Notwithstanding an assumption of an obligation by the
Secretary under section 106 (a) or (b) of this Act, the
validity of the guarantee of an obligation made by the
Secretary under this Act is unaffected and the guarntee
remains in full force and effect.
(f) Determination of Estimated Benefit and Cost to
Government for Loan Guarantee Program.--

[[Page S2014]]

(1) The Secretary shall in consultation with the private
risk management industry and consistent with the Federal
Credit Reform Act of 1990 (2 U.S.C. 661a et seq.)--
(A) establish in accordance with this subsection a system
of risk categories for obligations guaranteed under this Act,
that categoriezes the relative risk of guarantees made under
this Act with respect to the risk factors set forth in
paragraph (3); and
(B) determine for each of the risk categories a risk rate
equivalent to the cost of obligations in the category,
expressed as a percentage of the amount guaranteed under this
Act for obligations in the category.
(2) Before making a guarantee under this section for an
obligation, the Secretary shall apply the risk factors set
forth in paragraph (3) to place the obligation in a risk
category established under paragraph (1)(A).
(3) The risk factors referred to in paragraphs (1) and (2)
are the following:
(A) The technological feasibility of the proposed venture
and the magnitude of its projected overall space launch cost
reduction;
(B) The period for which an obligation is to be guaranteed,
such period not exceeding 12 years;
(C) The amount of obligations which are guaranteed or to be
guaranteed, in relation to the Total Capital Requirement of
the proposed venture;
(D) The financial condition of the applicant;
(E) The availability of private financing, including
guarantees (other than the guarantees issued pursuant to this
Act) and private insurance, for the proposed venture;
(F) The projected commercial and government utilization of
each space transportation vehicle or other article to be
financed by debt guaranteed pursuant to this Act (including
any contracts, letters of intent, or other expressions of
agreement under which the applicant will provide launch
services using a space transportation vehicle or other
article financed by debt guaranteed pursuant to this Act);
(G) The adequacy of collateral provided in exchange for a
guarantee issued pursuant to this act;
(H) The management and operating experience of the
applicant;
(I) Commercial viability of the business plan for the
venture of the Obligor;
(J) The extent of private equity capital in the project;
(K) The applicant's plans for achieving a transition from
Government-guaranteed financing to private financing;
(L) The likelihood that the venture would serve an
identifiable national interest;
(M) The likelihood that the successful completion of the
project would result in savings that would offset anticipated
Government expenditures for space-related activities;
(N) The likelihood that the project will open new markets
or result in the development of significant new technologies;
(O) other relevant criteria; and
(4) The amount of appropriated funds required by the
Federal Credit Reform Act of 1990 in advance of the
Secretary's issuance of a guarantee of an obligation, or a
commitment to guarantee an obligation, may be provided, in
whole or in part, by a non-Federal source and deposited by
the Secretary in the financing account established under the
Federal Credit Reform Act of 1990 for obligation guarantees
issued by the Secretary. These non-Federal source funds may
be in lieu of or combined with Federal funds appropriated for
the purpose of satisfying the requirements of the Federal
Credit Reform Act of 1990. The non-Federal source funds
deposited into that financing account shall be held and
applied by the Secretary in accordance with the provisions of
the Federal Credit Reform Act of 1990, in the same manner as
that legislation controls the use and disposition of
Federally appropriated funds. Non-Federal source funds must
be paid to the Secretary in cash prior to the issuance of any
guarantee or commitment to guarantee an obligation. The
payment of said non-Federal source funds shall not, in any
way, relive any entity from its responsibility to meet any
other provision of this Act or its implementing regulations
relating to the application for, issuance of, or
administration of a guarantee of an obligation.
(5) In this subsection, the term ``cost'' has the meaning
given that term in the Federal Credit Reform Act of 1990 (2
U.S.C. 661a).

SEC. 105. ELIGIBILITY FOR GUARANTEE

(a) Purpose of Obligations.--Pursuant to the authority
granted under section 104(a) of this Act, the Secretary, upon
such terms as he shall prescribe, consistent with the
provisions and purpose of the Act, may guarantee or make a
commitment to guarantee, payment of the principal of and
interest on an obligation for the purpose of--
(1) Financing the Total Capital Requirement, as defined, of
the DDT&E, construction, reconstruction, reconditioning,
placing into operation, working capital, interest expense,
and initial operating and marketing expenses in connection
with space transportation vehicles with launch costs
significantly below current levels.
(2) Financing the purchase, reconstruction, or
reconditioning of space transportation vehicles to achieve
launch costs significantly below current levels for which
obligations were guaranteed under this Act that, under the
provisions of section 106 of this Act are space
transportation vehicles for which obligations were
accelerated and paid and that have been repossessed by the
Secretary or sold at foreclosure instituted by the Secretary.
(b) Contents of Obligations.--
Obligations guaranteed under this Act--
(1) shall have an obligor approved by the Secretary as
responsible and possessing or having the ability to obtain
the technical capability, experience, financial resources,
and other qualifications necessary to the adequate
development, operation and maintenance of the space
transportation vehicle or space transportation vehicles which
serve as security for the guarantee of the Secretary;
(2) subject to the provisions of subsection (c)(1) of this
section, shall be in an aggregate principal amount which does
not exceed 80 per centum of the total Capital Requirement, as
determined by the Secretary, of the space transportation
vehicle which is used as security for the guarantee of the
Secretary;
(3) shall have maturity dates satisfactory to the Secretary
but, subject to the provisions of paragraph (2) of subsection
(c) of this section, not to exceed twelve years from the date
of the issuance of the guarantee.
(4) shall provide for payments by the obligor satisfactory
to the Secretary;
(5) shall provide, or a related agreement shall provide
that the space transportation vehicle shall meet such safety,
reliability, and performance standards as are necessary for
U.S. commercial licensing; and
(6) shall provide that the space transportation vehicle
provider guarantee to the United States Government, launch
services at the targeted significantly reduced launch cost or
the prevailing commercial launch cost, which ever is lower.
(c) Security.--
(1) The security for the guarantee of an obligation by the
Secretary under this Act may relate to more than one space
transportation vehicle and may consist of any combination of
types of security. The aggregate principal amount of
obligations which have more than one space transportation
vehicle as security for the guarantee of the Secretary under
this Act may equal, but not exceed, the sum of the principal
amount of obligations permissible with respect to each space
transportation vehicle.
(2) If the security for the guarantee of an obligation by
the Secretary under this Act relates to more than one space
transportation vehicle, such obligation may have the latest
maturity date permissible under subsection (b) of this
section with respect to any of such space transportation
vehicles: Provided, that the Secretary may require such
payments of principal, prior to maturity, with respect to all
related obligations as he deems necessary in order to
maintain adequate security for the guarantee.
(d) Restrictions.--
(1) Restriction on used space transportation vehicles.--No
commitment to guarantee, or guarantee of an obligation may be
made by the Secretary under this Act for the purchase of a
used space transportation vehicle unless--
(A) the used space transportation vehicle will be
reconstructed or reconditioned in the United States and will
contribute to the development of the United States commercial
space transportation vehicle industry; and
(B) the reconstruction or reconditioning of the used space
transportation vehicle will result in a magnitude of
projected space transportation cost reduction comparable to
that which development of new space transportation vehicles
would be required to project, in order to be eligible for
guarantee of obligations.
(e) Application and Administrative Fees.--
(1) The Secretary may assess a fee for applications for
loan guarantees submitted under this Act and/or a fee for
administration of an obligation under this Act.
(2) Application fees under this subsection shall be
assessed and collected at the time a U.S. commercial space
transportation vehicle provider submits an application for
loan guarantees under this Act. Administrative fees under
this section shall be assessed and collected not later than
the date of issuance of the debt guaranteed pursuant to this
Act.
(3) Administrative fees collected under this subsection
shall not exceed one-eighth of one percent of the guaranteed
amount of the face value of the debt covered by the
guarantee.
(4) A fee paid under this subsection is generally not
refundable. However, an obligor shall receive credit for the
amount paid for the remaining term of the guaranteed
obligation if the obligation is refinanced and guaranteed
under this Act after such refinancing.
(5) A fee paid under this subsection shall be included in
the amount of the actual cost of the obligation guaranteed
under this Act and is eligible to be financed under this Act.
(6) There are authorized to be appropriated such sums as
may be necessary for salaries and expenses to carry out the
responsibilities under this title.
(f) Additional Requirements.--Obligations guaranteed under
this Act and agreements relating thereto shall contain such
other provisions with respect to the protection of the
financial security interests of the United States as the
Secretary may, in his or her discretion, prescribe.

SEC. 106. DEFAULTS.

(a) Rights of Obligee.--In the event of a default, which
has continued for thirty days, in any payment by the obligor
of principal or interest due under an obligation guaranteed
under this Act, the obligee or his agent shall have the right
to demand (unless the Secretary shall, upon such terms as may
be provided in the obligation or related agreements, prior to
that demand, have assumed

[[Page S2015]]

the obligor's rights and duties under the obligation and
agreements and shall have made any payments in default), at
or before the expiration of such period as may be specified
in the guarantee or related agreements, but not later than
ninety days from the date of such default, payment by the
Secretary of the unpaid principal amount of such obligation
and of the unpaid interest thereon to the date of payment.
Within such period as may be specified in the guarantee or
related agreements, but not later than thirty days from the
date of such demand, the Secretary shall promptly pay to the
obligee or his agent the unpaid principal amount of said
obligation and unpaid interest thereon to the date of
payment: Provided, That the Secretary shall not be required
to make such payment if prior to the expiration of said
period he shall find that there was no default by the
obligor in the payment of principal or interest or that
such default has been remedied prior to any such demand.
(b) Notice of Default.--In the event of a default under a
mortgage, loan agreement, or other security agreement between
the obligor and the Secretary, the Secretary may upon such
terms as may be provided in the obligation or related
agreement, either:
(1) assume the obligor's rights and duties under the
agreement, make any payment in default, and notify the
obligee or the obligee's agent of the default and the
assumption by the Secretary; or
(2) notify the obligee or the obligee's agent of the
default, and the obligee or the obligee's agent shall have
the right to demand at or before the expiration of such
period as may be specified in the guarantee or related
agreements, but not later than 60 days from the date of such
notice, payment by the Secretary of the unpaid principal
amount of said obligation and of the unpaid interest thereon.
Within such period as may be specified in the guarantee or
related agreements, but not later than 30 days from the date
of such demand, the Secretary shall promptly pay to the
obligee or the obligee's agent the unpaid principal amount of
said obligation and unpaid interest thereon to the date of
payment.
(c) To Complete, Sell or Operate Property.--In the event of
any payment or assumption by the Secretary under subsection
(a) or (b) of this section, the Secretary shall have all
rights in any security held by him relating to his guarantee
of such obligations as are conferred upon him under any
security agreement with the obligor. Notwithstanding any
other provision of law relating to the acquisition, handling,
or disposal of property by the United States, the Secretary
shall have the right, in his discretion, to complete,
recondition, reconstruct, renovate, repair, maintain,
operate, charter, or sell any property acquired by him
pursuant to a security agreement with the obligor. The terms
of the sale shall be as approved by the Secretary.
(d) Actions Against Obligor.--In the event of a default
under any guaranteed obligation or any related agreement, the
Secretary shall take such action against the obligor or any
other parties liable thereunder that, in his discretion, may
be required to protect the interests of the United States.
Any suit may be brought in the name of the United States or
in the name of the obligee and the obligee shall make
available to the United States all records and evidence
necessary to prosecute any such suit. The Secretary shall
have the right, in his discretion, to accept a conveyance of
Act to and possession of property from the obligor or other
parties liable to the Secretary, and may purchase the
property for an amount not greater than the unpaid principal
amount of such obligation and interest thereon. In the event
that the Secretary shall receive through the sale of property
an amount of cash in excess of the unpaid principal amount of
the obligation and unpaid interest on the obligation and the
expenses of collection of those amounts, the Secretary shall
pay the excess to the obligor.
______

By Mr. CHAFEE (for himself, Mr. Moynihan, Mr. Warner, Mr. Bond,
Mr. Graham, and Mr. Gorton):
S. 470. A bill to amend the Internal Revenue Code of 1986 to allow
tax-exempt private activity bonds to be issued for highway
infrastructure construction; to the Committee on Finance.

the highway innovation and cost savings act

Mr. CHAFEE. Mr. President today, I am introducing legislation which
will allow the private sector to take a more active role in building
and operating our nation's highway infrastructure. The Highway
innovation and Cost Savings Act will allow the private sector to gain
access to tax-exempt bond financing for a limited number of highway
projects. I am pleased that my distinguished colleagues, Senators
Moynihan, Warner, Bond, Graham, and Gorton have agreed to join me in
this effort.
In the United States, highway and bridge infrastructure is the
responsibility of the government. Governments build, own, and operate
public highways, roads and bridges. In many other countries, however,
the private sector, and private capital, construct and operate
important facilities. These countries have found that increasing the
private sector's role in major highway transportation projects offers
opportunities for construction cost savings and more efficient
operation. They also open the door for new construction techniques and
technologies.
It is incumbent upon us to look at new and innovative ways to make
the most of limited resources to address significant needs. To help
meet the nation's infrastructure needs, we must take advantage of
private sector resources by opening up avenues for the private sector
to take the lead in designing, constructing, financing and operating
highway facilities.
A substantial barrier to private sector participation in the
provision of highway infrastructure is the cost of capital. Under
current Federal tax law, highways built and operated by the government
can be financed using tax exempt debt, but those built and operated by
the private sector, or those with substantial private sector
participation, cannot. As a result, public/private partnerships in the
provision of highway facilities are unlikely to materialize, despite
the potential efficiencies in design, construction, and operation
offered by such arrangements.
To increase the amount of private sector participation in the
provision of highway infrastructure, the tax code's bias against
private sector participation must be addressed.
The Highway Innovation and Cost Savings Act creates a pilot program
aimed at encouraging the private sector to help meet the transportation
infrastructure needs for the 21st Century. It makes tax exempt
financing available for a total of 15 highway privatization projects.
The total face value of bonds that can be issued under this program is
limited to 15 billion dollars.
The fifteen projects authorized under the program will be selected by
the Secretary of Transportation, in consultation with the Secretary of
Treasury. To qualify under this program, projects selected must: serve
the general public; assist in evaluating the potential of the private
sector's participation in the provision, maintenance, and operation of
the highway infrastructure of the United States; be on publicly-owned
rights-of-way; revert to public ownership; and, come from a state's 20-
year transportation plan. These criteria ensure that the projects
selected meet a state or locality's broad transportation goals.
This proposal was included in the Senate's version of last year's
transportation reauthorization bill. Unfortunately, it was dropped
during the conference with the House.
The bonds issued under this pilot program will be subject to the
rules and regulations governing private activity bonds. Moreover, the
bonds issued under the program will not count against a state's tax
exempt volume cap.
This legislation has been endorsed by Project America, a coalition
dedicated to improving our nation's infrastructure, the American
Consulting Engineers Council, the Bond Market Association, the American
Road and Transportation Builders Association, the Institute of
Transportation Engineers, and the ITS America.
I hope that this bill can be one in a series of new approaches to
meeting our substantial transportation infrastructure needs and will be
one of the approaches that will help us find more efficient methods to
design and to build the nation's transportation infrastructure.
I encourage my colleagues to join me as cosponsors of this important
initiative.
Mr. President, I ask unanimous consent that the text and a
description of the bill be printed into the Record.
There being no objection, the items were ordered to be printed in the
Record, as follows:

S. 470

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 ``Highway Innovation and Cost
Savings Act''.

SEC. 2. TAX-EXEMPT FINANCING OF QUALIFIED HIGHWAY
INFRASTRUCTURE CONSTRUCTION.

(a) Treatment as Exempt Facility Bond.--A bond described in
subsection (b) shall be treated as described in section
141(e)(1)(A) of the Internal Revenue Code of

[[Page S2016]]

1986, except that section 146 of such Code shall not apply to
such bond.
(b) Bond Described.--
(1) In general.--A bond is described in this subsection if
such bond is issued after the date of enactment of this Act
as part of an issue--
(A) 95 percent or more of the net proceeds of which are to
be used to provide a qualified highway infrastructure
project, and
(B) to which there has been allocated a portion of the
allocation to the project under paragraph (2)(C)(ii) which is
equal to the aggregate face amount of bonds to be issued as
part of such issue.
(2) Qualified highway infrastructure projects.--
(A) In general.--For purposes of paragraph (1), the term
``qualified highway infrastructure project'' means a
project--
(i) for the construction or reconstruction of a highway,
and
(ii) designated under subparagraph (B) as an eligible pilot
project.
(B) Eligible pilot project.--
(i) In general.--The Secretary of Transportation, in
consultation with the Secretary of the Treasury, shall select
not more than 15 highway infrastructure projects to be pilot
projects eligible for tax-exempt financing.
(ii) Eligibility criteria.--In determining the criteria
necessary for the eligibility of pilot projects, the
Secretary of Transportation shall include the following:

(I) The project must serve the general public.
(II) The project is necessary to evaluate the potential of
the private sector's participation in the provision,
maintenance, and operation of the highway infrastructure of
the United States.
(III) The project must be located on publicly-owned rights-
of-way.
(IV) The project must be publicly owned or the ownership of
the highway constructed or reconstructed under the project
must revert to the public.
(V) The project must be consistent with a transportation
plan developed pursuant to section 134(g) or 135(e) of title
23, United States Code.

(C) Aggregate face amount of tax-exempt financing.--
(i) In general.--The aggregate face amount of bonds issued
pursuant to this section shall not exceed $15,000,000,000,
determined without regard to any bond the proceeds of which
are used exclusively to refund (other than to advance refund)
a bond issued pursuant to this section (or a bond which is a
part of a series of refundings of a bond so issued) if the
amount of the refunding bond does not exceed the outstanding
amount of the refunded bond.
(ii) Allocation.--The Secretary of Transportation, in
consultation with the Secretary of the Treasury, shall
allocate the amount described in clause (i) among the
eligible pilot projects designated under subparagraph (B),
based on the extent to which--

(I) the projects use new technologies, construction
techniques, or innovative cost controls that result in
savings in building or operating the projects, and
(II) the projects address local, regional, or national
transportation needs.

(iii) Reallocation.--If any portion of an allocation under
clause (ii) is unused on the date which is 3 years after such
allocation, the Secretary of Transportation, in consultation
with the Secretary of the Treasury, may reallocate such
portion among the remaining eligible pilot projects.
____

Summary of Highway Innovation and Cost Savings Act

The U.S. Department of Transportation estimates a
substantial shortfall in funding for meeting our highway and
bridge infrastructure needs, even with the increased
investment levels under TEA 21. Closing the gap will require
full access to private capital as well as government
resources.
Existing tax laws discourage private investment in highway
infrastructure by making lower cost tax-exempt financing
unavailable for projects involving private equity investment
and private sector management and operating contracts.
Today, U.S. companies, which have invested billions of
dollars in foreign infrastructure projects, have participated
in only a few such projects in the United States. This pilot
program will demonstrate the benefits of bringing the full
resources of the private sector to bear on solving our own
nation's transportation needs for the 21st century.
Increasing the private-sector's role in major highway
transportation projects offers opportunities for construction
cost savings and more efficient operation, as well as opening
the door for new construction techniques and technologies.
A substantial barrier to private-sector participation in
the provision of highway infrastructure is the cost of
capital. Under current Federal tax law, highways built and
operated by government can be financed using tax exempt
financing but those built and operated by the private sector
cannot. As a result, public/private partnerships in the
provision of highway facilities are unlikely to materialize,
despite the potential efficiencies in design, construction,
and operation offered by such arrangements.
To increase the amount of private-sector participation in
the provision of highway infrastructure, the tax code's bias
against private-sector participation must be addressed, or
the benefits that the private-sector can bring to
infrastructure development will never be fully realized.
Highways, bridges, and tunnels are the only major category
of public infrastructure investment where projects involving
private participation (commonly referred to as private-
activity bonds) are denied access to tax-exempt debt
financing. See Attachment.

pilot program under hicsa

Tax-exempt financing for up to 15 projects is made
available under this pilot program. The aggregate amount of
bonds issued under this program is limited to $15 billion.
Pilot projects are to be selected by the Secretary of
Transportation, in consultation with the Secretary of the
Treasury, based on the following criteria: the project must
serve the general public; the project must be necessary to
evaluate the potential of the private sector's participation
in the provision of highway transportation infrastructure;
the project must be located on a publicly-owned right-of-way;
the project must be publicly owned or the ownership of the
project must revert to the public; and the project must be
consistent with transportation plans developed under Title 23
U.S.C.
Benefits resulting from the private sector participation
include those resulting from using alternative procurement
methodologies (including design-build and design and design-
built-operate-maintain contracting), shortening construction
schedules, reducing carrying costs, transferring greater
construction and operating risk to the private sector, and
obtaining from contractors long-term warranties and operating
guaranties.
Private investors and operators are encouraged under this
program to achieve efficiencies in design, construction, and
operation by affording them a share in the project's net
returns.
Projects will be subject to applicable environmental
requirements, prevailing state design and construction
standards and applicable state and local labor laws similar
to any other transportation facility financed with tax-exempt
bonds.
In the absence of this program, state and local governments
could still build these projects with conventional tax-exempt
financing, but at greater cost, on delayed time schedules,
without contribution of private equity capital and without
transferring to the private sector long term operating and
maintenance risk.

TAX-EXEMPT BONDS FOR INFRASTRUCTURE
------------------------------------------------------------------------
Private
Governmental activity
only bonds
------------------------------------------------------------------------
Facility:
Airport................................... Yes Yes
Docks, Ports.............................. Yes Yes
Highways & Bridges........................ Yes No
Mass Transit.............................. Yes Yes
High Speed Rail........................... Yes Yes
Water Facilities.......................... Yes Yes
Sewage Facilities......................... Yes Yes
Solid Waste Facilities.................... Yes Yes
Hazardous Waste........................... Yes Yes
------------------------------------------------------------------------

Mr. GRAHAM. Mr. President, I am pleased to join my colleagues to
introduce the Highway Innovation and Cost Savings Act of 1999. As you
know, last year on June 9, President Clinton signed into law, the
Transportation Equity Act of 1998. TEA 21 established many new
programs, and a new budget treatment for highways. Throughout the
debate on TEA 21, I always focused on one goal: to be able to promise
my constituents that by 2003, the last year of TEA 21, our roads and
bridges would be in better shape than they are today. In 1991, when
ISTEA passed, I was not able to make that pledge, because I knew that
the United States Department of Transportation had already estimated
that the level of funding in the ISTEA bill would not close the gap
between highway needs and money to meet those needs.
TEA 21 was a landmark piece of legislation. TEA 21 established a new
budget category for funding the highway program which calls for funding
levels each year to match the intake of gas taxes the year prior. This
will be the first year we test the philosophy that we can commit to
spending user fees exclusively to keep up the system. Unfortunately,
this amount of funding is still not enough to maintain the quality of
roads in Florida or any other state. Traditional grant programs will
not be able to ever meet the infrastructure needs of the nation. We
must look at innovative solutions to our congestion problems. We need
to use innovative methods to finance construction projects. We need to
get the private sector involved in transportation improvements.
The distinguished Chairman of the Environment and Public Works
Committee and I worked very hard to develop and implement an innovative
financing program called transportation Infrastructure Finance and
Innovation Act (TIFIA). TIFIA was incorporated into TEA 21 and is now
being implemented by the United States Department of Transportation.
The program

[[Page S2017]]

will extend federal credit to major, high cost transportation projects
so as to enhance the project's ability to acquire private credit. The
TIFIA program authorizes $530 million to be extended in federal credit
over six years. The $530 million can be used to leverage up to $10.6
billion in private loans and lines of credit. The TIFIA program offers
the sponsors of major transportation projects a means to amplify
federal resources up to twenty times. The objectives of the program are
to stimulate additional nonfederal investment in our Nation's
infrastructure, and encourage private sector participation in
transportation projects.
Mr. President, I am very excited about the prospects for the TIFIA
program. I believe that Congress must continue to look for new and
innovative ways to meet our nation's infrastructure needs. I believe
the bill we are introducing today, the Highway Innovation and Cost
Savings Act of 1999 (HICSA), will be another tool in the financing
toolbox. HICSA creates a pilot program which allows tax-exempt
financing for up to 15 transportation projects. The amount of bonds
issued under the pilot will be limited to $15 billion. The projects for
the pilot will be selected by the Secretary on Transportation based on
numerous criteria.
HICSA will encourage more private sector investment in highway and
bridge construction by making lower cost, tax-exempt financing
available. Under current law, other forms of public infrastructure,
such as airports and seaports, are eligible for tax-exempt debt
financing for projects with private capital. Highway, bridge, and
tunnel projects are not eligible for this type of financing. Increasing
the private sector's role in major highway projects will not only help
to close the needs gap, but will also open the door for new cost saving
techniques in construction and the use of new technologies.
U.S. companies continually invest billions of dollars in foreign
infrastructure projects, but have only participated in only a few
projects in the United States. Why should American companies feel the
need to invest their money overseas, when the United States is in such
desperate need of funds for roads. American companies want to invest in
American infrastructure. HICSA will demonstrate the benefits of private
sector involvement in infrastructure projects, and will finally
establish the private sector as an honored partner in building the road
to the 21st century.
Mr. President, I want to be able to travel to Florida and tell my
constituents that in 2003, their roads and bridges will be in better
shape than they are today. I believe with the combination of TEA 21
traditional grant funding, new programs like TIFIA, and clearing
hurdles in the tax code with HICSA, we will be well on our way. I look
forward to working with my colleagues on the Senate Finance Committee
to pass this much needed legislation.
______

By Mr. GRASSLEY (for himself, Mr. Baucus, Mr. Jeffords, Ms.
Collins, Mr. Cochran, and Mr. Abraham):
S. 471. A bill to amend the Internal Revenue Code of 1986 to
eliminate the 60-month limit on student loan interest deductions; to
the Committee on Finance.

LEGISLATION TO EXPAND THE TAX DEDUCTION FOR STUDENT LOAN INTEREST

Mr. GRASSLEY. Mr. President, today I am introducing legislation to
expand the tax deduction for student loan interest. Senators Baucus,
Jeffords, Collins, Cochran and Abraham are joining me in introducing
this legislation.
Under the Tax Reform Act of 1986, the tax deduction for student loan
interest was eliminated. This action, done in the name of fiscal
responsibility, blatantly disregarded the duty we have to the education
of our nation's students. This struck me and many of my colleagues as
wrong. Since 1987, I have spearheaded the bipartisan effort to
reinstate the tax deduction for student loan interest. In 1992, we
succeeded in passing the legislation to reinstate the deduction, only
to have it vetoed as part of a larger bill with tax increases. Finally,
after ten long years, our determination and perseverance paid off.
Under the Taxpayer Relief Act of 1997, we succeeded in reinstating the
deduction. In our success, we sent a clear message to students and
their families across the country that the Congress of the United
States understands the financial hardships they face, and that we are
willing to assist them in easing those hardships so they can receive
the education they need.
In 1997 we took steps in the right direction, and did what had to be
done. Regrettably, due to fiscal constraints, we were not able to go as
far as we wanted to go. The nation was still in a fiscal crisis at that
time. In order to control costs, we were forced to limit the
deductibility of student loan interest to only sixty loan payments,
which is equivalent to five years plus time spent in forbearance or
deferment.
This restriction hurts some of the most needy borrowers. Many of
these borrowers are students who, due to limited means, have borrowed
most heavily. The restriction discriminates against those who have the
highest debt loads and lowest incomes. It makes the American dream
harder to achieve for those struggling to pull themselves up--for those
who started with less. It is unjust.
Today, our situation is vastly different. In these times of economic
vitality and budget surplus, we have a responsibility to do what we
were unable to do before. Student debt is rising to alarming levels,
and additional relief must be provided. We must eliminate the sixty
month restriction on the deductibility of student loan interest and
show that the United States Congress stands behind all of our nation's
students in their endeavors to better themselves.
Eliminating the sixty payment restriction will bring needed relief to
some of the most deserving borrowers. The restriction weighs heavily on
those who, despite lower pay, have decided to dedicate themselves to a
career in public service. We will be rewarding civic virtue as we
provide relief to these admirable citizens.
Additionally, eliminating this restriction will eliminate difficult
and costly reporting requirements that are currently required for both
borrowers and lenders. In supporting our nation's students, we will
also be cutting costly bureaucracy.
Currently, to claim the deduction, the taxpayer must have an adjusted
gross income of $40,000 or less, or $60,000 for married couples. The
amount of the deduction is gradually phased out for those with incomes
between $40,000 and $55,000, or $60,000 and $75,000 for married
couples. Additionally, the deduction itself was phased in at $1000, and
will cap out at $2500 in 2002.
Many in our country are suffering from excessive student debt. More
can and must be done to help them. In this time of economic plenty, it
is our duty to invest in our students' education. Doing so is an
investment in America's future. To maintain competitiveness in the
global marketplace, America must have a well-educated workforce. By
eliminating the sixty payment restriction on the deductibility of
student loan interest we recommit ourselves to education and to
maintaining the position of this country at the pinnacle of the free
world.
The administration supports this direction as well. In his 2000
budget, President Clinton has proposed to eliminate the sixty payment
restriction on the deductibility of student loan interest, starting
after 1999. Our legislation takes a more fair and inclusive approach by
including payments between 1997 and 1999, which the administration
leaves out.
I urge members to join us in this effort to relieve the excessive
burdens on those trying to better themselves and their families through
education by expanding the tax deduction for student loan interest
payments.
______

By Mr. GRASSLEY (for himself, Mr. Reid, Mr. Conrad, Mr. Hollings,
Mr. Johnson, Mr. Durbin, Ms. Collins, Mr. Daschle, and Mr.
Dorgan):
S. 472. A bill to amend title XVIII of the Social Security Act to
provide certain Medicare beneficiaries with an exemption to the
financial limitations imposed on physical, speech-language pathology,
and occupational therapy services under part B of the Medicare program,
and for other purposes; to the Committee on Finance.

The Medicare Rehabilitation benefit improvement act of 1999

Mr. GRASSLEY. Mr. President, I rise today to introduce the Medicare
Rehabilitation Benefit Improvement Act of

[[Page S2018]]

1999 with my colleague, Senator Reid. This legislation will enable
seniors to receive medically necessary rehabilitative services based on
their condition and health and not on arbitrary payment limits. We
introduced similar legislation last Congress.
The Balanced Budget Act (BBA) of 1997 is a very important
accomplishment and one that I am proud to say I supported. However, in
our rush to save the Medicare Trust Fund from bankruptcy, Congress
neglected to thoroughly evaluate the impact the new payment limits on
rehabilitative services would have on Medicare beneficiaries.
The BBA included a $1500 cap on occupational, physical and speech-
language pathology therapy services received outside a hospital
setting. This provision became effective January 1, 1999, and after
just 31 days of implementation, an estimated one in four beneficiaries
had exhausted half of their yearly benefit. According to a recent
study, these limitations on services will harm almost 13 percent or
750,000 of Medicare beneficiaries because these individuals will exceed
the cap. While many seniors will not need services that would cause
them to exceed the $1500 cap, others, like stroke victims and patients
with Parkinson's disease, will likely need services beyond what the
arbitrary caps will cover. Unfortunately, it is those beneficiaries who
need rehabilitative care the most who will be penalized by being forced
to pay the entire cost for these services outside of a hospital
setting.
The bill I am introducing would establish certain exceptions to the
$1500 cap, for beneficiaries who have medical needs that require more
intensive treatment than this benefit limit would allow. The Secretary
of the Department of Health and Human Services would be required to
implement the exceptions, and providers would be required to
demonstrate medical necessity based on the criteria outlined in the
bill. In essence, the bill attempts to accomplish the primary goal of
the $1500 cap, budgetary savings, but without harming the Medicare
beneficiary. Payment is based on the patient's condition and not on an
arbitrary monetary amount. Help us provide access to services for those
beneficiaries who will need these services or risk further
complications, establish a system that makes sense, and still achieve
the budget savings sought from the BBA without reducing Medicare
benefits.
Please join me and my colleagues in passing this legislation.
Mr. President, I ask unanimous consent that the text of the bill and
additional materials be printed in the Record.

S. 472

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 ``Medicare Rehabilitation
Benefit Improvement Act of 1999''.

SEC. 2. PURPOSES.

The purposes of this Act are as follows:
(1) To provide certain medicare beneficiaries with an
exemption to the financial limitations imposed on physical,
speech-language pathology, and occupational therapy services
under section 1833(g) of the Social Security Act (42 U.S.C.
1395l(g)).
(2) To direct the Secretary of Health and Human Services to
conduct a study on the implementation of such exemption and
to submit a report to Congress that includes recommendations
regarding alternatives to such financial limitations.

SEC. 3. ESTABLISHMENT OF EXEMPTION TO CAP ON PHYSICAL,
SPEECH-LANGUAGE PATHOLOGY, AND OCCUPATIONAL
THERAPY SERVICES.

(a) In General.--Section 1833(g) of the Social Security Act
(42 U.S.C. 1395l(g)) is amended by adding at the end the
following:
``(4)(A) The limitations in this subsection shall not apply
to an individual described in subparagraph (B).
``(B) An individual described in this subparagraph is an
individual that meets any of the following criteria:
``(i) The individual has received services described in
paragraph (1) or (3) in a calendar year and is subsequently
diagnosed with an illness, injury, or disability that
requires the provision in such year of additional such
services that are medically necessary.
``(ii) The individual has a diagnosis that requires the
provision of services described in paragraph (1) or (3) and
an additional diagnosis or incident that exacerbates the
individual's condition, thereby requiring the provision of
additional such services.
``(iii) The individual will require hospitalization if the
individual does not receive the services described in
paragraph (1) or (3).
``(iv) The individual meets other criteria that the
Secretary determines are appropriate.
``(C) Nothing in this paragraph shall be construed as
affecting any requirement for, or limitation on, payment
under this title (other than the financial limitation under
this subsection).
``(D) Any service that is covered under this title by
reason of this paragraph shall be subject to the same
reasonable and necessary requirement under section 1862(a)(1)
that is applicable to the services described in paragraph (1)
or (3) that are covered under this title without regard to
this paragraph.''.
(b) Conforming Amendments.--Paragraphs (1) and (3) of
section 1833(g) of the Social Security Act (42 U.S.C.
1395l(g)) are each amended by striking ``In the case'' and
inserting ``Subject to paragraph (4), in the case''.
(c) Effective Date.--The amendments made by this section
shall apply to services provided on or after the date of
enactment of this Act.

SEC. 4. STUDY AND REPORT TO CONGRESS.

(a) Study.--The Secretary of Health and Human Services
shall conduct a study on the amendments to section 1833(g) of
the Social Security Act (42 U.S.C. 1395l(g)) made by section
3 of this Act, including a study of--
(1) the number of medicare beneficiaries that receive
exemptions under paragraph (4) of such section (as added by
section 3);
(2) the diagnoses of such beneficiaries;
(3) the types of physical, speech-language pathology, and
occupational therapy services that are covered under the
medicare program because of such exemptions;
(4) the settings in which such services are provided; and
(5) the number of medicare beneficiaries that reach the
financial limitation under section 1833(g) of the Social
Security Act in a year (without regard to the amendments to
such section made by section 3 of this Act) and subsequently
receive physical, speech-language pathology, or occupational
therapy services in such year at an outpatient hospital
department.
(b) Report.--Not later than 2 years after the date of
enactment of this Act, the Secretary of Health and Human
Services shall submit a detailed report to Congress on the
study conducted pursuant to paragraph (1), and shall include
in the report recommendations regarding alternatives to the
financial limitations on physical, speech-language pathology,
and occupational therapy services under section 1833(g) of
the Social Security Act and any other recommendations
determined appropriate by the Secretary. Such report shall be
included in the report required to be submitted to Congress
pursuant to section 4541(d)(2) of the Balanced Budget Act of
1997 (42 U.S.C. 1395l note).
____

Medicare Rehabilitation Benefit Improvement Act of 1999--Summary

This bill will provide certain Medicare beneficiaries with
an exemption based on medical necessity to the financial
limitation imposed on physical, speech-language pathology,
and occupational therapy services under part B of the
Medicare program. It will also direct the Secretary of Health
and Human Services (HHS) to conduct a study on the
implementation of such an exemption, and then submit a report
to Congress that includes recommendations regarding
alternatives to such financial limitations.
The Balanced Budget Act (BBA) of 1997 imposed a $1500 cap
on all therapy effective January 1, 1999. There is a combined
$1500 cap for physical and speech-language pathology and a
separate $1500 cap on occupational therapy services received
outside a hospital setting. An estimated 750,000
beneficiaries will reach the cap this year. These patients
may be victims of stroke, brain-injury, or other serious
conditions requiring additional services.
This bill establishes certain criteria in order for
Medicare beneficiaries to be eligible for an exemption from
the $1500 cap and allows the Secretary of HHS to establish
additional criteria if necessary. The criteria include:
(1) the beneficiary must be diagnosed with an illness,
injury, or disability that requires additional physical,
speech-language pathology, or occupational therapy services
that are medically necessary in a calender year, or
(2) the beneficiary has a diagnosis that requires such
therapy services and has an additional diagnosis or incident
that exacerbates his/her condition (ie: diabetes), which
would require more services, or
(3) the beneficiary will require hospitalization if he/she
does not receive the necessary therapy services, or
(4) the beneficiary meets other requirements determined by
the Secretary of HHS.
The bill also requires the Secretary of HHS to conduct a
study and to report to Congress two years after the date of
enactment of this Act. This study will include:
(1) the number of Medicare beneficiaries that receive
exemptions to the cap;
(2) the diagnoses of the beneficiaries;
(3) the types of therapy services that are covered due to
such exemptions;
(4) the settings in which services are provided; and
(5) the number of beneficiaries that reach the $1500 cap.
____

American Speech-Language-

Hearing Association,

Rockville, MD, February 19, 1999.
Hon. Charles E. Grassley,
Chairman, U.S. Senate Special Committee on Aging, Washington,
DC
Dear Chairman Grassley: The American Speech-Language-
Hearing Association

[[Page S2019]]

(ASHA) is pleased to support the ``Medicare Rehabilitation
Benefit Improvement Act of 1999.'' ASHA is the professional
and scientific organization of more than 96,000 speech-
language pathologists, audiologists, and speech, language,
hearing scientists. Our members provide services in a number
of practice settings, including hospitals, clinics, private
practice, and home health agencies.
There is a clear need for exemptions from the Medicare
financial limitations for beneficiaries receiving outpatient
rehabilitation services. Since the provision went into effect
on January 1, 1999, ASHA has received numerous calls and
letters of concern from our members regarding the problems
created by the financial limitation. Patients are actually
refusing medically necessary treatment for fear that they may
have a more acute episode or injury later in the year and
want to keep their $1500 ``banked'' for such a possibility.
Essentially, the cap's arbitrary limit is indirectly forcing
patients to inappropriately ration needed care that we
believe will ultimately cost the Medicare program more.
A patient who requires both speech-language pathology
services and physical therapy services is placed in a true
dilemma. If the patient who has suffered a stroke chooses to
receive speech-language pathology services, the patient may
not have sufficient funding for physical therapy at the
conclusion of the speech-language pathology treatment.
Conversely, the patient who selects physical therapy may not
have adequate funding for the speech-language pathology
services. A third situation arises when the patient receives
both rehabilitation services concurrently and the programs
for both are inadequate because the financial limitation is
not sufficient for receipt of both health care services.
I am enclosing a copy of a letter addressed to Congress
that ASHA received early this year from a family member whose
mother is receiving speech-language pathology services for a
swallowing disorder. Ms. Carol Eller McCaffrey of Lawrence,
Kansas, begins her letter with:
``I am the daughter of an 87-year-old woman whose brain
stem stroke left her unable to swallow or speak well and
weakened her right side, and whose quality of life will
suffer greatly with $1500 Medicare cap.
``The new cap will all but completely discontinue . . .
treatment thus requiring increased hydration through an
alternative feeding tube which we have left intact for these
emergencies. Taking away the very important . . . therapy
causes the need for more nursing care. Also, her quality of
life is `down the tubes' when mother is unable to eat and
drink comfortably.''
This is but one example of the problems that arise because
of the arbitrary Medicare financial limitation. As 1999
progresses, there will undoubtedly be more examples of
difficulties caused by the cap unless legislation such as
yours can restore reasonable benefits in the program.
The members of the American Speech-Language-Hearing
Association are committed to improving the health and safety
of those who suffer communication and related disorders. Your
legislation will make it possible for more Americans to
receive the care they need. ASHA commends you for your
efforts to seek a remedy to the cap that ensures patient
access to medically-needed services through the ``Medicare
Rehabilitation Benefit Improvement Act of 1999.''
Sincerely,
Donna Geffner,
President.
____

January 1, 1999.
Honorable Congressional Leaders: I am not a professional in
the medical world nor am I very knowledgeable about the
logistics of medicare. I am the daughter of an 87 year old
woman whose brain stem stroke left her unable to swallow or
speak well and weakened her right side and whose quality of
life will suffer greatly with the $1500.00 medicare gap.
With them help of our speech and physical therapists,
Mother has come a long way. Although she still doesn't speak
well, she eats normal food in the dining room with fellow
residents. Mother has a problem with thin liquids that causes
choking and probable aspiration. A new treatment called Deep
Pharyngeal Neuromuscular Stimulation (DPNS) is being taught;
our speech therapist has treated Mom with DPNS, resulting in
a 90% improvement. In my mother's case, the problem is that
several months after treatment, the benefits wear off.
Periodically, Mother needs another round of DPNS.
The new cap will all but completely discontinue this
treatment thus requiring increased hydration through an
alternative feeding tube which we have left intact for these
emergencies. Taking away the very important DPNS therapy
causes the need for more nursing care. Also, her life quality
of life is ``down the tubes'' when mother is unable to eat
and drink comfortably.
Mom also needs continual assertive physical therapy to keep
her strength up but the guidelines, even before the medical
cap, require a decrease in her function to qualify for
treatment. So, periodically, as Mother weakens, therapists
have to start over. This seems backwards to me. I thought
that as a nation, we were making great strides in the care of
our elderly and disabled. In my opinion, the recent medicare
cap is a huge backslide. Does the left hand of the government
know what the right hand is doing? And look who's suffering?
Obviously those making the rules have not had personal
experiences in this area.
The paperwork for all medical personnel is already
overwhelming. Our professionals are spending more time with
paper than with patients! All this, I presume, to try and
thwart cheaters. I feel the cheaters are the minority and it
all comes down to punishing the patients.
You are smart people. Come up with a reasonable way to deal
with this situation without losing sight of what is truly
important--the patients.
Private pay is exorbitant--Have you checked? There is no
way normal families can take up where medicare leaves off.
Please, rethink this decision to cap medicare part B
benefits. It is, after all, this particular generation who
have supported the US Government through thick and thin.
Don't let them down, visit nursing home/ care facilities.
Speak with hard working, caring therapists and the red,
white, and blue Americans who need your help. It is in your
own best interests * * * you'll be there yourself one day.
Sincerely,
Carol Eller McCaffrey.
____

American Physical

Therapy Association,

Alexandria, VA, February 22, 1999.
Hon. Charles Grassley,
Chairman, Senate Special Committee on Aging, Washington, DC.
Chairman Grassley: On behalf of the more than 74,000
members of the American Physical Therapy Association (APTA)
and the patients our members serve, I am writing to express
our strong support and appreciation for your leadership in
introducing the ``Medicare Rehabilitation Benefit Improvement
Act of 1999.''
As you know, section 4541(c) of the Balanced Budget Act of
1997 imposes annual caps of $1,500 per beneficiary on all
outpatient rehabilitation services except those furnished in
a hospital outpatient department. The new law has been
interpreted to establish two separate limits--$1,500 cap for
physical therapy and speech-language pathology services and a
separate $1,500 cap for occupational therapy services. These
limits are effective for services rendered on or after
January 1, 1999.
APTA maintains concern with the impact this limitation on
services will have on Medicare beneficiaries who require
physical therapy treatment. Senior citizens and disabled
citizens eligible for Medicare benefits suffering from a
range of conditions including stroke, hip fracture,
Parkinson's Disease, cerebral palsy and other serious
conditions that require extensive rehabilitation may not be
able to access the care they require to resume normal
activities of daily living due to the present limitation on
coverage. Enactment of your legislation provides the
Secretary of the U.S. Department of Health and Human Services
the authority to establish exceptions to the present $1,500
cap for patients with conditions that would likely exceed
such a limitation on coverage. APTA applauds the inclusion of
this provision.
APTA maintains concern that the $1,500 cap is completely
arbitrary and bears no relation to the medical condition of
the patient nor the health outcomes of the rehabilitation
services. There exists absolutely no medical or empirical
justification for such a cap. The caps are by definition
completely insensitive to patients with chronic injuries and
illness or who have multiple episodes of care in a given
calendar year. Enactment of your legislation would provide
relief from the $1,500 annual cap for Medicare beneficiaries
who experience multiple episodes of care in a given calendar
year for services that are deemed medically necessary. APTA
applauds the inclusion of this provision.
APTA maintains concern that the $1,500 cap dramatically
reduces Medicare beneficiaries' choice of care giver. Under
the present statute, beneficiaries who have exceeded their
cap in need of additional rehabilitation services are
restricted from receiving care from facilities other than
outpatient hospital departments. This restriction is a
notable step backward in Congress' efforts to expand access
to care, especially in rural and urban underserved
communities. Enactment of your legislation would better
ensure access to a wide range of community settings in which
Medicare beneficiaries could receive care, to include
rehabilitation agencies, Comprehensive Outpatient
Rehabilitation Facilities, and physical therapy private
practices. APTA applauds the inclusion of this provision.
Lastly, APTA continues to object to the inclusion of
physical therapy and speech-language pathology under the same
$1,500 cap. Confusion has surrounded the interpretation of
how the $1,500 cap is to be applied. As the Medicare Policy
Advisory Committee (MedPAC) reported to Congress in its July
1998 report, 70 percent of outpatient therapy expenditures
under the program are for physical therapy services, while 21
percent are for occupational therapy, and 9 percent for
speech therapy. The combination of physical therapy and
speech therapy has no rational basis. Speech therapy is a
distinct and separate benefit provided under the Medicare
program and should not be included as a part of the physical
therapy benefit. While your legislation does not clarify this
issue, APTA is hopeful that Congress will address this issue
with common sense clarifications as it considers Medicare
revisions this year. APTA will continue to work with you to
achieve this end.

[[Page S2020]]

Physical therapists across Iowa and the nation applaud your
leadership on this important issue. Passage of the Medicare
Rehabilitation Benefit Improvement Act of 1999 can ensure
that patients in need of outpatient physical therapy services
receive appropriate care in the setting of their choice
without the fear of exceeding their coverage. APTA stands
ready to assist you in any way to ensure that swift enactment
of this important legislation.
Sincerely,
Nancy Garland, Esq.,
Director of Government Affairs.
____

American Health Care Association,

Washington, DC, February 24, 1999.
Hon. Charles Grassley,
Dirksen Senate Office Building,
Washington, DC.
Dear Senator Grassley: On behalf of the American Health
Care Association, long term care providers, and those for
whom we provide care, I'm writing you to commend you on your
leadership in introducing legislation designed to protect
America's most frail and elderly from the adverse effects of
arbitrary caps on certain medical services.
One of the provisions contained in the 1997 Balanced Budget
Act (BBA) has the potential to harm senior citizens who rely
on Medicare for their health care needs. Congress changed
Medicare by imposing arbitrary annual limits of $1500 for
outpatient rehabilitation services. This includes a $1500 cap
on occupational therapy and a $1500 cap on physical therapy
and speech-language-pathology combined. Arbitrary caps do not
reflect the real rehabilitation needs of Medicare
beneficiaries and target the sickest and most vulnerable.
Your efforts will protect senior citizens suffering from
common medical conditions such as stroke and hip fractures.
These seniors may not be able to obtain the rehabilitative
care they require to resume normal activities of daily living
because the $1500 limits are too low to pay for the services
which responsible medical practice deem necessary.
Once again, thank you for taking the lead to redress the
problem posed by these arbitrary caps. On behalf of the
American Health Care Association, we commend you and stand
eager to assist you in your efforts.
Sinceerely,
Bruce Yarwood,
Legislative Counsel.
____

The American Occupational

Therapy Association, Inc.,

Bethesda, MD, February 23, 1999.
Hon. Charles Grassley,
Chairman, Special Committee on Aging, U.S. Senate,
Washington, DC.
Dear Chairman Grassley: On behalf of the 60,000 members of
the American Occupational Therapy Assn., I would like to
commend and thank you for your leadership in introducing the
Medicare Rehabilitation Benefit Improvement Act of 1999.
The financial limitation on outpatient rehabilitation,
including occupational therapy, imposed by the Balanced
Budget Act of 1997 was, in AOTA's view, a misguided attempt
to constrain Medicare costs which is having a harmful effect
on patient care. The payment limitation interposes government
between a patient and a health care provider; it restricts
patient choice, and could have the unintended consequence of
exacerbating patient conditions causing Medicare cost
increases.
Your bill will allow for patients such as those with
multiple injuries, illnesses or disabilities; those with more
than one incident of need in a year and, through the
Secretary's authority to establish criteria, those whose
diagnosis or condition requires extensive therapy to receive
the treatment which the Medicare coverage criteria guarantees
them.
AOTA has been very concerned that individuals with
condition such as severe strokes, spinal card injury,
traumatic brain injury, extensive fractures, severe burns, or
diseases such as Parkinson's or multiple sclerosis will be
restricted in their access to needed occupational therapy
before the rehabilitation process is completed. Your bill
will allow for these and other individuals to have access to
appropriate care.
Your efforts will move policy forward and establish some
necessary protections for Medicare beneficiaries. AOTA
appreciates your efforts to ameliorate the impacts of this
unwise policy.
We look forward to working with you as the bill moves
through the legislative process. Please contact me if I can
be of further assistance.
Sincerely,
Christina A. Metzler,
Director, Federal Affairs Department.
____

National Association of

Rehabilitation Agencies,

Reston, VA, February 23, 1999.
Charles E. Grassley,
Chairman, Senate Special Committee on Aging, U.S. Senate,
Washington, DC.
Dear Chairman Grassley: The National Association of
Rehabilitation Agencies (``NARA'') strongly endorses the
Medicare Rehabilitation Benefit Improvement Act of 1999 and
applauds your initiative in introducing this important
legislation. NARA represents over 225 Medicare-certified
rehabilitation agencies which provide physicial therapy,
speech-language pathology, and occupational therapy services
to hundreds of thousands of Medicare beneficiaries annually.
The $1500 financial limitation on outpatient rehabilitation
services, as established by the Balanced Budget Act of 1997,
constitutes an arbitrary limit on the amount of services
which a Medicare enrollee may receive. The caps bear no
relation to the patient's medical need for rehabilitation
services nor the beneficial health outcomes which would flow
from the provision of such services. The most pernicious
aspect of the limitations is that they will deprive Medicare
patients who are most in need of rehabilitation--e.g. stroke
victims and those suffering from traumatic brain injury--of
the very care they require.
You legislation is a workable and realistic solution to
many of the patient care and access problems caused by the
$1500 limitations. NARA's members are deeply appreciative of
the time and effort which you and your staff have expended in
developing the Medicare Rehabilitation Benefit Improvement
Act of 1999. NARA pledges to work with you to ensure that
this critical proposal becomes law.
Sincerely,
Larry Fronheiser,
President.
____

Private Practice Section, American Physicial Therapy
Association,
Washington, DC, February 23, 1999.
Charles E. Grassley,
Chairman, Senate Special Committee on Aging, U.S. Senate,
Washington, DC.
Dear Chairman Grassley: The Private Practice Section of the
American Physical Therapy Association has carefully reviewed
your proposed legislation, the Medicare Rehabilitation
Benefit Improvement Act of 1999, and is pleased to express
its support for this legislation.
The membership of the Private Practice Section is comprised
of physical therapists in independent practice who, for many
years, have been subject to a financial limitation on the
amount which Medicare will pay for their services furnished
to any Medicare beneficiary. As a result, the Section's
members understand all too well the harmful effects which the
arbitrary $1500 caps will have on Medicare beneficiaries who
require outpatient rehabilitation services. Your proposal is
a sensible and practical approach to protecting those
patients.
Your legislation is entirely consistent with the Private
Practice Section's goals and objectives for ensuring that
Medicare beneficiaries have access to all necessary
rehabilitation services. Accordingly, we are pleased to
proffer our commitment to help secure its enactment.
That you for your leadership on this essential piece of
legislation.
Sincerely,
Lisa Wade,
Chief Executive Officer.
____

National Association for the

Support of Long Term Care,

Alexandria, VA, February 24, 1999.
Hon. Charles E. Grassley,
U.S. Senate,
Washington, DC.
Dear Mr. Chairman: On behalf of the National Association
for the Support of Long Term Care (NASL), we applaud your
leadership and your colleagues who have joined you in the
introduction of legislation entitled the ``Medicare
Rehabilitation Benefit Improvement Act of 1999.'' You have
developed a rational, good policy that will help
beneficiaries who would otherwise be limited in their
availability of rehabilitation services.
The National Association for the Support of Long Term Care
(NASL) is an organization that represents over 150 providers
offering services in the long term care setting. We work
daily with patients who need rehabilitation services and this
limitation is hurting seniors access to services. There are
seniors in America who are already reaching the cap and they
need additional services that are medically necessary. These
are seniors who have had strokes. These are seniors who have
Parkinson's disease. These are seniors who have had hip
replacements and an additional illness. Senator Grassley, we
want to thank you for helping these patients get services
that are medically necessary.
We are ready to help you share information about the
adverse effects of this cut in benefits that was enacted in
the BBA in 1997. We are certain that this was not the intent
of the law--and now that it is implemented, seniors will be
denied care. Your legislation will go a long way to ensure
that the most disadvantaged and ill seniors will get the care
that they need. The stroke patient that needs speech-language
pathology to learn how to swallow will get care. The
Parkinson's patient who is learning how to walk with an
exacerbating illness will get physical therapy in order to
improve.
Again, we applaud your leadership and strongly support this
legislation. Please feel free to call on us for support and
help.
Sincerely yours,
Peter Clendenin.
____

Easter Seals,

Office of Public Affairs,

Washington, DC, February 25, 1999.
Hon. Charles E. Grassley,
Chairman, Senate Special Committee on Aging, Washington, DC.
Dear Mr. Chairman: Easter Seals is very pleased to support
the introduction of the ``Medicare Rehabilitation Benefit
Improvement Act of 1999.'' This legislation begins to
eliminate damaging limitations on needed

[[Page S2021]]

therapy services for Medicare beneficiaries. Easter Seals is
committed to assisting you and your colleagues to improve and
enact this critical measure.
Easter Seals is dedicated to assisting children and adults
with disabilities to live with equality, dignity, and
independence. Each year, Easter Seals 106-affiliate network
serves more than one million people nationally. Thousands of
Medicare beneficiaries and their families rely on Easter
Seals for community-based physical therapy, occupational
therapy, and speech-language pathology services. Without such
services, these beneficiaries would experience diminished
health, function, and quality of life.
Current Medicare policy limiting payment for outpatient
medical rehabilitation services to $1,500 for occupational
therapy and $1,5000 for physical therapy and speech-language
pathology services combined is out-of-step with the real
medical needs of a significant share of Medicare
beneficiaries. It will cause beneficiaries with serious
medical needs resulting from illness, injury, and disability,
including stroke, traumatic brain injuries, total joint
replacement, and other serious conditions, to forfeit needed
care or seek such care in less cost-effective, often
inappropriate institutional settings.
For many Easter Seals Medicare clients the impact of
current policy is devastating. One client's situation, if
constrained by a $1,500 cap, illustrates this point.
Eighty-four-year old Richard H. lived independently with
his wife when, on February 27, 1997, he experienced a serious
stroke. Prior to the stroke he had high blood pressure, heart
disease, and diabetes. The stroke paralyzed his left side,
seriously impaired his vision, and left him very depressed.
Physical therapy helped him learn to move independently and
to walk safely again. Occupational therapy retrained him in
the tasks of daily living, including preparing food,
toileting, and home safety. Speech and swallowing therapy
eliminated his choking on food, which presented a high risk
of aspiration pneumonia. This therapy, combined with much
determination and effort by Richard and his wife, has enabled
him to resume living independently at home.
The doctors, therapists and family agree that without this
full course of medical rehabilitation, Richard would now be
helpless, severely depressed, and confined to a very
expensive nursing home for care. The current Medicare policy
limiting medical rehabilitation therapy services under the
$1,500 cap, with no exemptions, would have deprived Richard
of 62% of his needed rehabilitation treatment.
Easter Seals believes that the ``Medicare Rehabilitation
Benefit Improvement Act of 1999'' is a necessary, timely, and
thoughtful approach to correcting serious problems for
Medicare beneficiaries requiring comprehensive services.
Easter Seals will work with you and your Senate colleagues to
refine this legislation, as appropriate, and promote its
enactment into law.
Thank you very much for your commitment to assuring
Medicare beneficiaries the services that they need to live
healthy, productive lives.
Sincerely,
Randall L. Rutta,
Vice President, Government Relations.

Mr. REID. Mr. President, I rise in strong support of the ``Medicare
Rehabilitation Benefit Improvement Act of 1999''. This legislation is
designed to protect our sickest, most vulnerable seniors from the
adverse effects of arbitrary limits on crucial rehabilitative services.
The Balanced Budget Act of 1997 (BBA) created annual caps for two
categories of therapy provided to beneficiaries under Medicare Part B:
a $1500 annual cap on physical therapy and speech language combined;
and a separate cap for occupational therapy. These arbitrary limits on
rehabilitation therapy were hastily included in the BBA without the
benefit of Congressional hearings or thorough review by the Health Care
Financing Administration. As a result, the $1500 limits bear no
relation to the medical condition of the patient, or the health
outcomes of the rehabilitative services.
The $1500 caps would create serious access and quality problems for
Medicare's oldest and sickest beneficiaries. Senior citizens who suffer
from common conditions such as stroke, hip fracture, and coronary
artery disease, will not be able to obtain the rehabilitative services
they need to resume normal activities of daily living. A stroke patient
typically requires more than $3,000 in physical therapy alone.
Rehabilitation therapy for a patient suffering from Multiple Sclerosis
or ALS costs even more. Without access to outpatient therapy, patients
must remain in institutional settings longer, be transferred to a
higher cost hospital facility, or in some cases, just go without
necessary services.
Coverage for rehabilitative therapy should be based on medically
necessary treatment, not arbitrary spending limits that ignore a
patient's clinical needs. During the 105th Congress, I joined with
Senator Grassley to introduce legislation that would correct this
problem. The ``Medicare Rehabilitation Benefit Improvement Act of
1999'' builds on our effort to ensure that all Medicare beneficiaries
have access to the crucial therapy services they need.
Our bill establishes criteria by which Medicare beneficiaries would
be eligible for an exemption from the $1500 cap. According to our bill,
any beneficiary who would require hospitalization if he did not receive
the necessary therapy services would be allowed to exceed the cap.
Beneficiaries suffering from a diagnosis that requires therapy services
and has an additional diagnosis that exacerbates this condition would
also be eligible for therapy services above the $1500 limit. In
addition, any beneficiary that is diagnosed with an illness, injury, or
disability that requires additional physical, speech-language
pathology, or occupational therapy services that are medically
necessary will receive the therapy services he or she requires.
Finally, our bill gives the Department of Health and Human Services
Secretary the flexibility to establish additional criteria if
necessary.
The $1500 therapy caps penalize our most frail and elderly citizens.
Not only does allowing our seniors to have access to critical
outpatient therapy services makes sense, it is the right thing to do. I
urge you to join me in protecting Medicare's most vulnerable
beneficiaries by supporting the ``Medicare Rehabilitation Benefit
Improvement Act of 1999''.
______

By Mr. SCHUMER (for himself and Mr. Moynihan):
S. 473. A bill to amend the Internal Revenue Code of 1986 to make
higher education more affordable by providing a full tax deduction for
higher education expenses and interest on student loans; to the
Committee on Finance.
______

make college affordable act

By Mr. SCHUMER:
S. 474. A bill to amend the Internal Revenue Code of 1986 to provide
a deduction for contributions to education individual retirement
accounts, and for other purposes; to the Committee on Finance.
______

save for college act

By Mr. SCHUMER:
S. 475. A bill to amend the Higher Education Act of 1965 to increase
the amount of loan forgiveness for teachers; to the Committee on
Health, Education, Labor, and Pensions.
______

teachers loan forgiveness act

By Mr. SCHUMER:
S. 476. A bill to enhance and protect retirement savings; to the
Committee on Finance.
______

comprehensive pension and security retirement act

By Mr. SCHUMER:
S. 477. A bill to enhance competition among airlines and reduce
airfares, and for other purposes; to the Committee on Commerce,
Science, and Transportation.
______

airline competition act of 1999

By Mr. SCHUMER:
S. 478. A bill to amend the Internal Revenue Code of 1986 to provide
a credit for the purchase of a principal residence within an
empowerment zone or enterprise community by a first-time homebuyer, to
the Committee on Finance.
______

empowering communities legislation

By Mr. SCHUMER:
S. 479. A bill to amend title XXVII of the Public Health Service Act
and other laws to assure the rights of enrollees under managed care
plans; to the Committee on Health, Education, Labor, and Pensions.
______

equity in women's health act

By Mr. SCHUMER:
S. 480. A bill to amend the Truth in Lending Act to protect consumers
from certain unreasonable practices of creditors which result in higher
fees or rates of interest for credit card holders, and for other
purposes; to the Committee on Banking, Housing, and Urban Affairs.
______

credit card consumer protection act of 1999

By Mr. SHUMER:

[[Page S2022]]

S. 481. A bill to increase penalties and strengthen enforcement of
environmental crimes, and for other purposes; to the Committee on the
Judiciary.

the environmental crimes act

Mr. SCHUMER. Mr. President, today I am introducing my first bills as
a United States Senator. I said over the last year that the picture
that I want to keep at the forefront of my mind is that of families
sitting around their kitchen table paying their bills, planning for
retirement, affording a home, paying for college for their children,
and discussing the quality of their local schools.
Today I am introducing my first bills for those families at the
kitchen table. And let me tell you a little bit about these families.
They are the same in Brooklyn and Buffalo, Mt. Vernon and Massapequa,
Syracuse and Setauket.
They are living in a time of both overwhelming promise and
overwhelming challenge.
The promise--the upside--is that America remains indisputably the
preeminent economy in the world. The challenge--the downside--is that
for most families there is a great deal of uncertainty about the
future. They are concerned that forces beyond their control--rising
college costs, inferior schools, struggling communities--put them
behind the eight-ball.
Their concern isn't so much that the U.S. economy will turn sour.
It's that they, or their town, or their children may be washed aside in
the economic tide. The families of Upstate New York have lived that
reality for six years.
The nine bills that I am introducing today are designed to help
families deal and thrive with the changing times of a global,
competitive economy.
I am introducing two bills to make college affordable for working
families. The Make College Affordable Act, which I am honored to
introduce with Senator Moynihan, makes all college tuition tax
deductible for families with less than $140,000 in income.
The Save for College Act allows families to contribute up to $2,000
per year in an education IRA that is tax-free when the money goes in
and tax-free when it comes out so long as it is spent on college costs.
Families earning up to $200,000 are eligible for the IRAs.
Let me make two points about these bills. Since 1980, the cost of
attending college has increased at more than twice the rate of
inflation and has risen even faster than health care. At the same time,
the necessity of a college education is greater now than at any time in
our history.
If our country is to remain economically strong and if we want
families to be able to get ahead, then college--whether it's SUNY or
NYU--must not put families in the poorhouse.
The Teachers Loan Forgiveness Act will recruit new, high quality
professionals to teaching by forgiving all student loans for public and
private school teachers.
It is expensive to become a teacher. The pay is low. And we wonder
why there is a shortage of young, eager, qualified teachers to educate
our children. We must make the teaching profession more financially
attractive to put excellence in the classrooms.
The Comprehensive Pension & Security Retirement Act makes all
pensions portable. If you lose a job, if you take time off to raise a
child, if you change jobs--your pension will stay with you and grow.
Pension portability and reform is the most important retirement
security issue next to Social Security.
Specifically for Upstate New York, with Senator Moynihan I am
introducing the Airline Competition Act of 1999 to end predatory
pricing and to direct the Transportation Department to grant take-off
and landing slots to underserved airports within a 500 mile radius of
New York. Monopolistic airfares in Rochester, Syracuse and Buffalo are
slowly strangling the economy of Upstate and the Southern Tier. I
believe the days of sky-high airfares to these cites are numbered.
To rebuild struggling neighborhoods through homeownership I am
introducing legislation to offer a $2,000 tax credit to first time
homebuyers in Enterprise Zones and Empowerment Communities. In New
York, that includes the South Bronx, Harlem, and parts of Albany,
Schenectady, Troy, Buffalo, Kingston, Newburgh, and Rochester.
Because women pay more for health care than men, the Equity in
Women's Health Act bars any health plan from discriminating on the
basis of gender or sexual orientation through their coverage options.
It also requires each health plan to include a short prospectus to
describe exactly what they will and will not cover.
To protect consumers, the Credit Card Consumer Protection Act of 1999
closes loopholes in existing law that allows credit card companies to
offer low teaser rates that increase dramatically unbeknownst to the
cardholder.
And last, the Environmental Crimes Act increases fines and penalties
for criminally negligent polluters and it also trains new personnel to
investigate environmental crimes.
These are not all--but some of my priorities for the year. As I have
said many times, my passion is legislating in ways that make people's
lives better. With the impeachment over, I am anxious to get started on
the issues that matter to New Yorkers and all Americans.
______

By Mr. ABRAHAM (for himself, Mr. Lott, Mr. Ashcroft, Mr. Helms,
Mr. Inhofe, Mr. Bunning, Mr. DeWine, Mr. Cochran, and Mr.
Mack):
S. 482. A bill to amend the Internal Revenue Code of 1986 to repeal
the increase in the tax on the Social Security benefits; to the
Committee on Finance.

legislation to repeal the tax on social security

Mr. ABRAHAM. Mr. President, I rise now in conjunction with the
distinguished majority leader, Mr. Lott, and with the distinguished
Senator from Missouri, Mr. Ashcroft, to introduce legislation which
will repeal the 1993 increase in the tax on Social Security benefits.
As my colleagues are aware, senior citizens pay Federal taxes on a
portion of their Social Security benefits if they receive additional
income from savings or from work. Before 1993, seniors paid taxes on
half their Social Security benefits if their combined income, as it is
described--which means their adjusted gross income and one-half the
amount of the Social Security benefits they receive--exceeded $25,000
for individuals or $32,000 for couples.
Soon after coming into office, however, the new administration
increased this tax on these middle-income retirees as part of the 1993
tax bill. For individuals now, after that, with combined incomes
exceeding $34,000, and couples with combined incomes exceeding $44,000,
the tax increase on the percentage of their Social Security benefits
subject to taxation went from 50 percent to 85 percent. This provision
increased taxes for nearly one-quarter of Social Security recipients.
It in large part produced an increase of 7.5 percent in the tax burden
on America's seniors, a tax increase that was more than double the 3.5
percent that the rest of that legislation imposed on other Americans.
This tax increase is unfair. It penalizes senior citizens, and it
penalizes them for exactly the wrong reason--for saving to achieve
security in their retirement. It also unfairly punishes seniors who
have the capacity and choose to continue to work.
We are engaged, as you know, in an important debate here in Congress,
the debate over the future of our Social Security system. Republicans
have joined with Democrats in pledging to set aside the entire Social
Security trust fund surplus over the next 15 years, to shore up that
system, to make certain it is available for the senior citizens both of
today and tomorrow.
At such a time, with dire warnings of impending bankruptcies still
ringing in our ears, it seems the last thing the Federal Government
should be doing is to discourage people from work and saving for their
retirement.
Wise Americans have always saved for their retirement. They have
sought to be independent in their old age by working hard and by
putting aside a portion of their income. Yet the 1993 tax increase
proposed by the President and ultimately passed into law by the
Congress changed the rules for these wise savers. After plans and
investment decisions had already been made, this proposal came in and
declared that savings and hard work would be taxed significantly more
heavily than they had been before.

[[Page S2023]]

As we work to shore up Social Security, we must not allow the Federal
Government to punish people for working and saving. We must not allow
the Federal Government to tell people they might as well not save for
retirement, that they must depend solely on Social Security benefits
for their well-being once they retire.
What is more, we should not forget that the projected Federal budget
surplus over the next 10 years alone is slated to reach approximately
$2.565 trillion. We have agreed, wisely in my view, to save the bulk of
this surplus to shore up Social Security. But surely, at a time when we
foresee at least $787 billion in surpluses in addition to those
earmarked for Social Security, the Federal Government can afford, in my
judgment, to give seniors and those planning for their retirement the
kind of tax relief they need to prepare for their futures and to keep
our economy strong.
That means, in my view, that we must repeal this onerous tax hike for
the sake of our seniors and for the sake of our economy as a whole.
Discouraging savings has always been a recipe for economic disaster
because it reduces the amount of money available for investment in new
jobs and a growing economy.
Now is the time to reduce the extent to which Washington discourages
savings. It is time to repeal this tax hike so we may increase savings,
investment, and the financial security of our senior citizens.
Mr. President, this legislation has a simple purpose: It repeals the
1993 ill-considered Social Security tax hike returning our seniors to
the position they were in prior to 1993.
It restores a modicum of fairness to our Byzantine tax structure and
to our dealings with senior citizens. It is important legislation for
our seniors, for our Social Security system and for the future of our
Nation, and I urge my colleagues' strong support.
In short, Mr. President, I think we should do everything possible to
make it feasible for seniors, both today and especially in the future,
to be able to live in retirement in a comfortable way and to not solely
depend on the Social Security system. We know the burdens that system
will take.
By discouraging savings during people's working years, by
discouraging people from continuing to work after they reach retirement
age, we are actually, I think, undermining our chances of providing the
kind of long-term income security that Americans deserve in their old
age.
For that reason, we should, in my judgment, repeal this tax hike. We
should make that a priority this year, and we should then couple that
action with other action aimed at shoring up the Social Security system
so it not only works for today's seniors, but for the seniors of our
future as well.
______

By Ms. SNOWE (for herself, Mr. Graham, and Mr. Voinovich):
S. 483. A bill to amend the Congressional Budget and Impoundment
Control Act of 1974 to limit consideration of nonemergency matters in
emergency legislation and permit matter that is extraneous to
emergencies to be stricken as provided in the Byrd rule; to the
Committee on the Budget and the Committee on Govermental Affairs,
jointly, pursuant to the order of August 4, 1977, with instructions
that if one committee reports, the other committee have thirty days to
report or be discharged.

surplus protection act of 1999

Ms. SNOWE. Mr. President, I rise today, along with my friend and
colleague from Florida, Senator Graham, to introduce the ``Surplus
Protection Act of 1999''--legislation that will reform the budget
process by tightening the manner in which emergency spending
legislation is considered in the Senate. Not only will these reforms
ensure that there is greater accountability in the emergency spending
process, but they will also ensure that the unified budget surplus we
now enjoy will be protected from spending raids that are designed to
circumvent the normal budget process--and that could undercut our
ability to utilize the surplus for strengthening Social Security.
Mr. President, as my colleagues are aware, last year the federal
government enjoyed its first balanced budget since 1969. To be precise,
the federal government actually achieved a unified budget surplus of
$70 billion in fiscal year 1998. According to the Congressional Budget
Office (CBO), this surplus will not be a one time occurrence; rather,
unified budget surpluses will continue to accrue during the next 10
years if CBO's projections for economic growth, federal revenues, and
federal spending hold true.
While the surplus is welcome news after decades of annual deficits
and burgeoning debt, we must never forget how easily this valuable
national asset can be squandered if we fail to be vigilant in
protecting it. For too long, the federal government treated the budget
like a credit card with an unlimited spending limit, and such bad
habits--even if broken for a few years--can quickly return, especially
when there is a surplus just burning a hole in the pocket of Congress
and the President!
Therefore, in an effort to ensure the surplus is protected from
future spending raids, we are offering legislation today that will
crack down on arguably the most insidious manner in which budgetary
spending limits and protections can be circumvented: the emergency
spending designation. In light of the $21.4 billion in emergency
spending that was contained in last year's omnibus bill, the need to
provide safeguards against the abuse of this provision--and the
squandering of the surplus--could not be more clear.
Mr. President, the emergency spending designation was created for a
very important reason. If a sudden, urgent, unforeseen, and temporary
event occurs, the strict spending limits imposed in the budget
resolution can be exceeded through the designation of that event as an
``emergency.'' This exception is understandable when considering that
the hands of Congress and the Administration should not be tied when
the pressing needs of our nation override the need for strict budget
discipline.
For instance, recent earthquakes in California, floods in the
Midwest, hurricanes in the South, and ice storms in the Northeast--
which were devastating to my home state of Maine--are all examples of
natural disasters that warranted the emergency designation because they
were completely unexpected and unforseen, and could not have been
addressed in a timely manner through the regular budget process. By the
same token, the tragic bombing in Oklahoma City is an example of an
unexpected and unforeseeable event that also warranted emergency
treatment.
Yet even as the emergency designation is necessary and warranted for
these and other unexpected disasters, it can also be used as a major
loophole by those who wish to circumvent the normal budget or
legislative process. Rather than restricting the use of the emergency
designation to only those bills or items that are truly unforseen and
urgent, some may use this designation to either fund programs or
projects that are debatable as to their emergency nature, while others
may use emergency bills to push through unrelated legislation or
spending programs without the normal level of scrutiny provided in the
normal legislative process.
For example, the omnibus bill adopted at the close of the 105th
Congress contained $21.4 billion in emergency spending that came
directly out of the surplus. While some of the provisions in that
package undoubtedly deserved the emergency designation, several items
were either debatably an ``emergency'' or were an outright effort to
circumvent the regular budget process. Specifically, the $2 billion in
emergency funding for our three-year-old mission in Bosnia was hardly
unexpected and should have been included in the President's budget at
the beginning of the year. It should not have be designated an
``emergency'' simply to avoid the budget caps that ensure fiscal
restraint.

Ultimately, regardless of the manner in which the emergency
designation can be misused--whether it is to fund a military operation
that has been ongoing for years, or to fast-track a piece of
legislation that has no relationship to the emergency in question--it
is a practice that we must stop.
The legislation we are offering today will do just that.
Specifically, the bill establishes three new rules to ensure that bills
or individual provisions receiving the emergency designation are
subject to careful--but reasonable--scrutiny.

[[Page S2024]]

The first provision--which is patterned after the ``Byrd Rule'' that
applies to reconciliation bills--will ensure that non-emergency items
will not be attached to emergency spending bills by creating a point of
order for striking these provisions. Simply put, because emergency
spending bills are often put on a ``fast-track'' to ensure rapid
consideration, we should not allow non-emergency spending or
legislative riders to be attached to these bills in an effort to avoid
the normal, deliberative legislative process. To waive this
restriction, an affirmative vote by three-fifths of the members of the
Senate would be required--a level that will be easily achieved for a
true emergency.
The second provision--which is also patterned after the Byrd Rule--
will ensure that the validity of any item that is designated as an
emergency--in either an emergency spending bill or a non-emergency
bill--can be challenged by the members of the Senate. The bottom line
is that just because an item placed in a bill is given the emergency
designation does not mean it deserves that designation--and this point
of order will ensure that members agree that the designation is
warranted.
As outlined earlier, the omnibus bill adopted at the close of the
105th Congress contained a variety of provisions that were debatable
``emergencies''--in particular, the funding for troops in Bosnia,
because this cost was hardly unforeseen, sudden, or temporary. This
point of order will ensure that such provisions do not avoid budget
scrutiny, and that the surplus is protected for Social Security
accordingly.
The final provision will ensure that any legislation that contains
emergency spending will require a three-fifths vote for final passage.
Because members may feel compelled to act quickly on bills that contain
even a single item designated as an emergency, this provision will
ensure that such bills do not slide through the regular legislative
process without full consideration and without more than simple
majority support. While the previous two points of order will prevent
improper abuse of the emergency designation, this requirement will
serve as a final safeguard in the process.
Mr. President, the bottom line is that although the emergency
designation is a vitally important means of ensuring the unexpected
needs of our nation can be addressed, it can also become a loophole
that subverts budget discipline, drains our new-found surplus, and
potentially impacts our ability to strengthen the Social Security
program. But with proper safeguards put in place, we can ensure that
this potential loophole is closed while still ensuring legitimate
emergencies are addressed.
The legislation I am offering today along with Senator Graham
provides such thoughtful and reasonable safeguards, so I urge that my
colleagues support the ``Surplus Protection Act of 1999.''
Mr. GRAHAM. Mr. President, earlier today our colleague, Senator Snowe
of the State of Maine, introduced legislation, of which both I and
Senator Voinovich of the State of Ohio are the cosponsors, relating to
reforms in the emergency appropriations law. Mr. President, I would
like to discuss the rationale for this legislation.
Mr. President, we received some good news just a few months ago. We
learned that after 5 years of fiscal austerity and economic growth, we
had transformed a $290-billion annual deficit into the first budget
surplus in more than a generation.
I am dedicated to strengthening the Nation's long-term economic
prospects through prudent fiscal policy. The discipline that helped us
to create favorable economic, fiscal, demographic, and political
conditions to address the long-term Social Security and Medicare
deficits that will accompany the aging of our population will be fully
required if we are to meet these challenges. These deficits threaten to
undo the hard work and fiscal discipline of recent years, as well as to
undermine our potential for future economic growth.
But that success, the success that we had in converting a $290-
billion annual deficit into this year's surplus, did not give to
Congress a license to return to the free-spending ways of the past.
That absence of license is especially true since over 100 percent of
the surplus was the result of surpluses in the Social Security trust
fund.
I say over 100 percent because the only surplus we had is Social
Security, and a portion of that surplus is still being applied to the
deficit that is being run in the general accounts, a deficit which will
continue for the next 2 to 3 years. We owe it to our children and our
grandchildren to save this Social Security-generated surplus until
Social Security's long-term solvency is assured.
As you know, what we have been doing for the last 30 years is asking
our grandchildren to pay our credit card bill. Now what we are saying
to our grandchildren is that we are going to give them a secure Social
Security system that will last for our generation, for their parents'
generation, and for their generation--to the year 2075.
Unfortunately, both the last legislative action of the 105th Congress
and the first legislative action passed by the Senate in the 106th
Congress have made a mockery of our promise to our grandchildren. Last
night the Senate passed a military pay bill without simultaneously
approving a way to fund it, an action that, if not corrected in the
conference committee, could subtract as much as $17 billion from our
children's and grandchildren's chances of having a secure Social
Security system.
I wish I could say that last night's vote was an aberration, nothing
more than a momentary lapse of judgment, an inadvertent mistake in the
haste to turn from impeachment to legislation. Sadly, I cannot make
that claim. It is the second time in less than 4 months that we have
proven ourselves willing to sacrifice future generations' well-being on
the altar of immediate expediency.
In the waning hours of last fall's budget negotiations, mid-October
1998, we passed a $532-billion omnibus appropriations bill. Included in
that $532 billion was $21.4 billion in so-called emergency spending.
Since that $21.4 billion could be approved without having to find an
offsetting funding source, those $21.4 billion came directly out of the
surplus.
Some of you who might have been making speeches to the effect that we
were going to have an $80-billion surplus at the end of the last fiscal
year therefore had to strike out ``80'' and insert ``59'' as the amount
of surplus we would have, because that was the figure that remained
after we had paid out of the Social Security surplus for $21.4 billion
in emergencies.
That action would have been possibly more palatable had all of that
$21.4 billion been allocated to true emergencies, to those kinds of
incidents which in the past Congress has recognized as being
appropriate to not require an offset in spending or increase in
revenue. While some of the $21.4 billion was used to fund what have
traditionally been accepted as emergencies, defined as necessary
expenditures for sudden, urgent, or unforeseen temporary needs, much of
the $21.4 billion was not. Let me give some examples.
The Y2K computer problem, the problem that at the turn of the
millennium our computers might be rendered inoperative because of the
failure to account for the new century, received $3.35 billion of the
$21.4 billion. It is hard to argue that it took us until October of
1998, and then under urgent duress circumstances, to wake up to the
fact that the millennium was coming and that there might be a problem
with our computers. In fact, here in the Senate, our colleagues in the
House of Representatives and in the executive branch, as well as in the
private sector community and State and local governments, had been
aware of and working on this problem long before October of 1998.
Another smaller example of a nonemergency emergency was $100 million
that was appropriated for a new visitors center here at the Capitol. A
new visitors center has been under consideration for a decade or more--
hardly an emergency that just came to our attention in October of 1998.
These expenditures might have been desirable, might have been
appropriate, but to label them ``emergency,'' and therefore remove them
from the fiscal discipline requiring offsetting spending or additional
revenue to support them, threatens to undermine the safeguards that we
have built in to protect our Social Security surplus.

[[Page S2025]]

This budgetary sleight-of-hand was also used to increase funding for
projects that had already been funded through the traditional
appropriations process. For example, after previously allocating $270.5
billion to the Department of Defense in the emergency appropriations
provision without any offsetting spending reductions or revenue
increases, Congress provided an additional $8.3 billion in
``emergency'' defense spending in the omnibus appropriations bill.
That is not all. Because these pseudoemergency spending provisions
were included in an omnibus appropriations conference report--that is,
a bill that was the result of reconciliation of differences between the
Senate and the House--then, under the normal rules governing a
conference report, that legislation was not subject to amendment.
Therefore, there could be no motion made that would have removed,
reduced, or otherwise modified the provisions that were labeled as
``emergency appropriations.''
Members of the Congress were left with an unpalatable choice: Shut
down the Government in mid-October of 1998 by failure to pass this
significant appropriations bill that covered approximately one-third of
the Federal budget, or steal from our children's and grandchildren's
Social Security surplus. Mr. President, that is not a choice; that is a
national disgrace. It is vital that we institute an emergency spending
process that responds expeditiously to true emergencies without
maintaining this open door to abuse. We must establish procedural
safeguards to deter future Congresses from misusing the emergency
spending procedures. We should not attach, as an example, any emergency
spending to nonemergency legislation.
We should not designate emergency spending measures that do not meet
our own definition of an emergency.
Mr. President, as I indicated earlier, I am pleased to join with
Senator Olympia Snowe of Maine in introducing legislation that will
protect our newly won budget surplus from false emergency budgetary
alarms. Senators Snowe, Voinovich and I are introducing the Surplus
Protection Act to amend the Congressional Budget and Impoundment
Control Act of 1974. This will limit consideration of nonemergency
matters in emergency legislation.
Specifically, we propose the following three reforms: First, to
create a point of order, similar to the Byrd rule which currently
exists, that prevents nonemergency items from being included in
emergency spending. This will enable Members to challenge the validity
of any individual item that is designated an emergency without
defeating the entire emergency spending bill.
Second, we would require a 60-vote supermajority in the Senate for
passage of any bill that contains emergency spending, whether it is
designated an emergency spending bill or not. This will encourage
Congress to either pay for supplemental appropriations or make certain
that they do, in fact, represent a true emergency, as that term has
been defined.
And third, to make all proposed emergency spending subject to a 60-
vote point of order in the Senate. This rule will help to prevent
nonemergency items from ever being included in emergency legislation by
providing a forum in which they can be appropriately challenged on the
Senate floor.
Even if passed, our legislation would not be the total cure for
Congress' apparent addiction to emergency spending. In the short term,
it is vital that we immediately replenish the surplus with the funds
that were ``borrowed'' last fall.
Let me repeat that, Mr. President. We have a challenge before us in
the next few weeks to recoup to the Social Security surplus those funds
that were improvidently labeled as emergency spending and thus became
the means by which the Social Security surplus was raided last October.
We will face that challenge when we deal with the budget resolution and
subsequent appropriations bills.
The day after the passage of the Omnibus Appropriations Act on
October 21, 1998, I wrote the President and asked that the Federal
Government commit itself to restoring funding for the nontraditional
``emergency'' items which were included in that omnibus legislation. I
must state with disappointment that I have not yet received a response.
So, in January, I again wrote to the President and made the same
request for a commitment to fiscal discipline. Once again, I have not
received a response.
On January 18, 1999, Roll Call published an opinion piece which I had
written in which I asked the President to address this subject in his
State of the Union Address. Mr. President, he did not.
Fortunately, the U.S. Constitution says that the Congress need not
wait for the President. We can and must take steps necessary to restore
the budget surplus to its previous levels, and we must do that now,
before the urge to spend the surplus becomes a full-fledged addiction.
We must also realistically fund existing emergency accounts. While
the Congress cannot anticipate the precise nature or cost of future
emergencies, we do know that emergencies will occur. For instance,
Congress prospectively budgets an annual amount not to exceed $320
million in emergency funding for the Federal Emergency Management
Agency disaster relief fund. That is the good news. Now the bad news.
Over the past 12 years, the average emergency outlays from the
Federal Emergency Management Agency disaster relief fund have exceeded
by $1.7 billion per year. What we have consistently done is underfund
the account based on 12 years of experience, so that we have mandated
that we are going to have unfunded emergencies. It would be as if
homeowners consistently underinsured their homes or the contents of
their homes, knowing that when the disaster struck, they were not going
to have sufficient funds to rebuild or to recoup their losses.
If we are to save the surplus of Social Security, Congress should
stop systematically underfunding the emergency accounts and, thus,
shifting anticipated emergency spending off budget. We should require
emergency accounts to be funded through the normal appropriations
process based on our historical experience.
Mr. President, I join Senator Snowe in the hopes that our colleagues
will support this important legislation. It is vital that we assure
that we do not misuse our emergency spending powers. The next Congress
that leaves the door wide open to raids on the surplus will be the one
that passes on more debt and a less secure future for our children and
our grandchildren.
______

By Mr. CAMPBELL:
S. 484. A bill to provide for the granting of refugee status in the
United States to nationals of certain foreign countries in which
American Vietnam War POW/MIAs or American Korean War POW/MIAs may be
present, if those nationals assist in the return to the United States
of those POW/MIAs alive; to the Committee on the Judiciary.

the bring them home alive act of 1999

Mr. CAMPBELL. Mr. President, I am pleased to introduce the Bring Them
Home Alive Act of 1999. This bill would persuade foreign nationals to
take the bold steps needed to return any possibly surviving American
POW/MIAs home alive. I am pleased to be joined today by Senators Gregg
and Helms as original cosponsors.
With the passage of the Soldiers', Sailors', Airmen's, and Marines'
Bill of Rights Act of 1999, the Senate this week has made great strides
in providing for the men and women of our armed forces. I am continuing
this effort today.
This bill would grant asylum in the United States to foreign
nationals who personally deliver a living American POW/MIA from either
the Vietnam War or the Korean War to the United States. Citizens of
Vietnam, Cambodia, Laos, China, or any of the states of the former
Soviet Union who deliver living American POW/MIAs from the Vietnam War
would be granted asylum here. Similarly, citizens of North Korea,
China, or any of the states of the former Soviet Union who deliver
living American POW/MIAs from the Korean War would also be granted
asylum. Of course, that foreign national's immediate family, including
their spouse and children, would also be granted asylum in the U.S.
since their safety, and even their lives, would most likely

[[Page S2026]]

be imperiled by such a daring rescue of surviving American POW/MIAs.
While some may doubt that any American POW/MIAs from these two wars
remain alive, official U.S. policy distinctly recognizes the
possibility that U.S. POW/MIAs from the Vietnam War could still be
alive and held captive in Indochina. As the Defense Department's
current position states:

Although we have thus far been unable to prove that
Americans are still being held against their will, the
information available to us precludes ruling out that
possibility. Actions to investigate live-sighting reports
receive and will continue to receive necessary priority and
resources based on the assumption that at least some
Americans are still held captive. Should any report prove
true, we will take appropriate action to ensure the return of
those involved.

The bill I am introducing today supports this official position and
enables the possibility of bringing any surviving U.S. servicemen home
alive.
Since the fall of South Vietnam in 1975, there have been reports of
live sightings of American POW/MIAs being held in Indochina. While the
majority of these live-sightings have been resolved over the years, and
have decreased in recent years, the possibility of Americans still
being held remains. Two Russian translations of Vietnamese documents
were discovered in Soviet archives in 1993 which contain detailed
statistics indicating that approximately twice as many American POWs
were being held by Vietnam in late 1972 than were actually ever
returned to the United States.

Furthermore, the Senate Select Committee on POW/MIA Affairs' final
report in 1993 concluded that about 100 U.S. POWs that were expected to
be returned by Vietnam were never returned and that at least some of
them may still be alive and held captive in Indochina.
It is also possible that American POW/MIAs are still being held in
North Korea. A few years ago a 1996 Defense Department internal report
was uncovered that concluded that between 10-15 POW/MIAs may still be
alive and held against their will in North Korea.
The Bring Them Home Alive Act includes the states of the former
Soviet Union, for just cause. Longstanding rumors that American POW/
MIAs from both the Vietnam War and the Korean War were transferred to
the Soviet Union were recently reinforced by the memoirs of recently
deceased Soviet General Dmitri Volkogonov. As reported in a January 12,
1999, Washington Times article, Gen. Volkogonov wrote of seeing a
secret KGB document from the 1960s outlining a plan to transfer U.S.
POWs being held in Vietnam to the Soviet Union. The goal of this secret
KGB plan was ``to bring knowledgeable Americans to the Soviet Union for
intelligence (gathering) purposes.'' During a Congressional Delegation
visit to Russia late last year, Russian General Sergeyev tacitly
confirmed the existence of this document. While some officials contend
this plan was never carried out, this is far from certain. In addition,
the cumulative weight of compelling circumstantial evidence supports
the assertion that American POWs were also transferred to the Soviet
Union during the Korean War.
Finally, a key section of this bill would help spread news of the
Bring Them Home Alive Act around the world. This is needed to help make
sure that the key foreign nationals who need to hear about this act, do
so. My bill calls on the International Broadcasting Bureau to use its
assets, including Worldnet Television and its Internet sites, to spread
the news. The bill also calls on Radio Free Europe and Radio Free Asia
to participate.
If this bill leads to even one long-held POW/MIA being returned home
to America alive, this effort will be well worth it, 10,000 times over.
Even though it has been many years since these two wars ended, they
have not ended for any Americans who may have been left behind and are
still alive. As long as there remains even the remotest possibility
that there may be any surviving POWs, we owe it to our Soldiers,
Sailors, Airmen and Marines, and their families, to do everything
possible to bring them home alive. This is the least we can do after
all they have sacrificed.
Key groups involved in Veterans and POW/MIA issues have endorsed this
legislation, including the National Vietnam & Gulf War Veterans
Coalition, the VietNow National POW/MIA Committee, and the Coalition of
Families of Korean and Cold War POW/MIAs. Naturally, I welcome any
additional endorsements that any of the other important organizations
involved in POW/MIA related issues may wish to provide.
Mr. President, I ask unanimous consent that the text of the Bring
Them Home Alive Act of 1999, the Washington Times article, and the
letters of endorsement be included in the Record. I urge my colleagues
to support passage of this important legislation.
There being no objection, the material was ordered to be printed in
the Record, as follows:

S. 484

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 ``Bring Them Home Alive Act of
1999''.

SEC. 2. AMERICAN VIETNAM WAR POW/MIA ASYLUM PROGRAM.

(a) Asylum for Eligible Aliens.--Notwithstanding any other
provision of law, the Attorney General shall grant refugee
status in the United States to any alien described in
subsection (b), upon the application of that alien.
(b) Eligibility.--Refugee status shall be granted under
subsection (a) to--
(1) any alien who--
(A) is a national of Vietnam, Cambodia, Laos, China, or any
of the independent states of the former Soviet Union; and
(B) personally delivers into the custody of the United
States Government a living American Vietnam War POW/MIA; and
(2) any parent, spouse, or child of an alien described in
paragraph (1).
(c) Definitions.--In this section:
(1) American Vietnam War POW/MIA.--
(A) In general.--Except as provided in subparagraph (B),
the term ``American Vietnam War POW/MIA'' means an
individual--
(i) who is a member of a uniformed service (within the
meaning of section 101(3) of title 37, United States Code) in
a missing status (as defined in section 551(2) of such title
and this subsection) as a result of the Vietnam War; or
(ii) who is an employee (as defined in section 5561(2) of
title 5, United States Code) in a missing status (as defined
in section 5561(5) of such title) as a result of the Vietnam
War.
(B) Exclusion.--Such term does not include an individual
with respect to whom it is officially determined under
section 552(c) of title 37, United States Code, that such
individual is officially absent from such individual's post
of duty without authority.
(2) Missing Status.--The term ``missing status'', with
respect to the Vietnam War, means the status of an individual
as a result of the Vietnam War if immediately before that
status began the individual--
(A) was performing service in Vietnam; or
(B) was performing service in Southeast Asia in direct
support of military operations in Vietnam.
(3) Vietnam War.--The term ``Vietnam War'' means the
conflict in Southeast Asia during the period that began on
February 28, 1961, and ended on May 7, 1975.

SEC. 3. AMERICAN KOREAN WAR POW/MIA ASYLUM PROGRAM.

(a) Asylum for Eligible Aliens.--Notwithstanding any other
provision of law, the Attorney General shall grant refugee
status in the United States to any alien described in
subsection (b), upon the application of that alien.
(b) Eligibility.--Refugee status shall be granted under
subsection (a) to--
(1) any alien--
(A) who is a national of North Korea, China, or any of the
independent states of the former Soviet Union; and
(B) who personally delivers into the custody of the United
States Government a living American Korean War POW/MIA; and
(2) any parent, spouse, or child of an alien described in
paragraph (1).
(c) Definitions.--In this section:
(1) American Korean War POW/MIA.--
(A) In general.--Except as provided in subparagraph (B),
the term ``American Korean War POW/MIA'' means an
individual--
(i) who is a member of a uniformed service (within the
meaning of section 101(3) of title 37, United States Code) in
a missing status (as defined in section 551(2) of such title
and this subsection) as a result of the Korean War; or
(ii) who is an employee (as defined in section 5561(2) of
title 5, United States Code) in a missing status (as defined
in section 5561(5) of such title) as a result of the Korean
War.
(B) Exclusion.--Such term does not include an individual
with respect to whom it is officially determined under
section 552(c) of title 37, United States Code, that such
individual is officially absent from such individual's post
of duty without authority.
(2) Korean War.--The term ``Korean War'' means the conflict
on the Korean peninsula during the period that began on June
27, 1950, and ended January 31, 1955.
(3) Missing Status.--The term ``missing status'', with
respect to the Korean War, means the status of an individual
as a result of the Korean War if immediately before that
status began the individual--
(A) was performing service in the Korean peninsula; or

[[Page S2027]]

(B) was performing service in Asia in direct support of
military operations in the Korean peninsula.

SEC. 4. BROADCASTING INFORMATION ON THE ``BRING THEM HOME
ALIVE'' PROGRAM.

(a) Requirement.--
(1) In general.--The International Broadcasting Bureau
shall broadcast, through WORLDNET Television and Film Service
and Radio or otherwise, information that promotes the ``Bring
Them Home Alive'' refugee program under this Act to foreign
countries covered by paragraph (2).
(2) Covered countries.--The foreign countries covered by
paragraph (1) are--
(A) Vietnam, Cambodia, Laos, China, and North Korea; and
(B) Russia and the other independent states of the former
Soviet Union.
(b) Level of Programming.--The International Broadcasting
Bureau shall broadcast--
(1) at least 20 hours of the programming described in
subsection (a)(1) during the 10-day period that begins on the
date of enactment of this Act; and
(2) at least 10 hours of the programming described in
subsection (a)(1) in each calendar quarter during the period
beginning with the first calendar quarter that begins after
the date of enactment of this Act and ending five years after
the date of enactment of this Act.
(c) Availability of Information on the Internet.--
International Broadcasting Bureau shall ensure that
information regarding the ``Bring Them Home Alive'' refugee
program under this Act is readily available on the World Wide
Web sites of the Bureau.
(d) Sense of Congress.--It is the sense of Congress that
RFE/RL, Incorporated, Radio Free Asia, and any other
recipient of Federal grants that engages in international
broadcasting to the countries covered by subsection (a)(2)
should broadcast information similar to the information
required to be broadcast by subsection (a)(1).
(e) Definition.--The term ``International Broadcasting
Bureau'' means the International Broadcasting Bureau of the
United States Information Agency or, on and after the
effective date of title XIII of the Foreign Affairs Reform
and Restructuring Act of 1998 (as contained in division G of
Public Law 105-277), the International Broadcasting Bureau of
the Broadcasting Board of Governors.

SEC. 5. INDEPENDENT STATES OF THE FORMER SOVIET UNION
DEFINED.

In this Act, the term ``independent states of the former
Soviet Union'' has the meaning given the term in section 3 of
the FREEDOM Support Act (22 U.S.C. 5801).
____

[From the Washington Times, Jan. 12, 1999]

State Department Accused of Stifling POW-MIA Probe--Weldon Says Russian
Lawmaker Told Him of U.S. Effort

(By Bill Gertz)

A Russian parliamentarian who worked on prisoner-of-war
issues claims the State Department discouraged Moscow from
pursuing the fate of missing Americans, according to a senior
member of Congress.
Rep. Curt Weldon said he is upset by the claim of the Duma
member who told him about the State Department comments
during a meeting in Moscow last month.
``During a conversation, the official told me `I can tell
you, we were told by your government, your State Department,
not to pursue these issues,' '' Mr. Weldon, Pennsylvania
Republican, said in an interview.
The statement bolsters private criticism by some Pentagon
officials that the State Department is refusing to press the
Russian government to investigate cases of missing Americans.
Pentagon officials told The Washington Times last month
that Secretary of State Madeleine K. Albright delayed for
months contacting senior Russian officials about a secret KGB
plan to transport ``knowledgeable Americans'' to the Soviet
Union during the late 1960s for intelligence purposes.
Mrs. Albright also failed to raise the issue directly with
Russian Foreign Minister Yevgeny Primakov, who is now prime
minister, during several meetings. Mr. Primakov would have
had direct knowledge of the secret plan while he was director
of Russian intelligence in the early 1990s.
Mr. Weldon said he is investigating the claim and has
written to Mrs. Albright asking for an explanation.
The Russian official was not identified by name, but Mr.
Weldon said the official had worked on the U.S.-Russian Joint
Commission on POWs headed by retired Russian Gen. Dmitri
Volkogonov. The Duma members told Mr. Weldon about the
problem in a private meeting.
``His accusation is quite disturbing in light of the
administration's initial reluctance to aggressively pursue
the matter with the Russian government,'' Mr. Weldon states
in a Jan. 6 letter to Mrs. Albright, ``I urge that you
investigate this charge and inform me of your findings.''
Ann Johnson, a State Department spokeswoman, said the
matter was ``looked into,'' but no one in the State
Department relayed such a message to any Duma members.
Asked if Mrs. Albright would raise the issue of the POW
document during her upcoming meetings with Russian officials
in Moscow, Miss Johnson said the agenda has not been set.
``We do look forward to getting a look at the results of the
Russian investigation of this matter, as Prime Minister
Primakov promised Vice President [Al] Gore in Kuala Lumpur in
November,'' she said.
Gen. Volkogonov, who died in December 1995, disclosed in a
memoir published in September that he had uncovered the
secret plan by the KGB intelligence service during the late
1960s ``to bring knowledgeable Americans to the Soviet Union
for intelligence purposes.''
After the plan was disclosed by The Times in November,
White House spokesmen initially said President Clinton would
not raise the issue in meetings with Mr. Primakov set for
late November in Kuala Lumpur, Malaysia. Later, the White
House reversed its position and said the president would
bring up the issue if talks at the POW commission in Moscow
failed to resolve the matter.
After Mr. Clinton canceled his trip to Malaysia because of
the crisis with Iraq, Mr. Gore raised the issue with Mr.
Primakov.
Mr. Clinton said in a letter to a POW activist last month
that he is ``very concerned'' about the Russian plan ``given
that American personnel were held as POWs in Southeast Asia
during this same period.'' He promised to ``press'' the
Russians to provide answers.
The president stated in a Dec. 18 letter to Delores Alfond,
chairman of the National Alliance of Families, that his
administration is trying to find out about the authors of the
KGB plan, whether it was carried out, and ``the names of any
Americans who were transferred.'' If the plan was not carried
out, ``we have requested documentation that convincingly
proves this point,'' he said.
Mr. Weldon said in his letter to Mrs. Albright that he was
encouraged by the administration's discussions, ``but I
remain deeply disappointed that you deferred pursuit of this
matter for so long after it first came to your attention.''
``With hundreds of U.S. POW-MIAs still unaccounted for, we
must aggressively pursue all evidence which might help us
determine their fate,'' he said. ``The United States has no
basis on which to turn its back on information which may lead
us to closure on the POW issue. Nor should we fear
repercussions from the Russian government, as it will not
suffer the reputation of its predecessor's excesses, but may
actually enhance its own reputation by fully disclosing the
fact.''
Mr. Weldon said that Mrs. Albright should investigate the
Duma official's charge and ``reaffirm the strong U.S.
commitment to leave no stone unturned in the effort to
determine the fate of all U.S. POWs.''
____

VietNow National Headquarters,

Rockford, IL, February 18, 1999.
Hon. Ben Nighthorse Campbell,
Senate Russell Office Building,
Washington, DC.
Dear Senator Campbell: I wanted to write and thank you and
Larry Vigil for your efforts to bring our ``Live'' POWs home.
Sir, there is overwhelming evidence that living American POWs
were left behind and in enemy hands at the conclusion of the
U.S. involvement in both the Vietnam and Korean Wars. There
is reason to believe that some of these fellow Americans are
still alive. Your approach to gain their release, as outlined
in your bill titled ``The Bring Them Home Alive Act of
1999'', is viable and provides incentive for those who may be
able to secure our POWs release to do so.
I have written my two senators, Boxer and Feinstein, with a
request that they join your effort and cosponsor your bill. A
copy of my letters to them is enclosed for your review and
file. In addition, I have sent information regarding your
bill to each VietNow chapter POW/MIA chairman and various
other POW/MIA organizations and individual activists. I have
encouraged these people to contact their respective U.S.
Senators and to urge them to also cosponsor this bill.
Thank you for caring about our ``Live'' POWs and taking a
positive step to gain their release!
Sincerely,
Rich Teague, Chairman.
____

National Vietnam & Gulf

War Veterans Coalition,

Washington, DC, February 17, 1999.
Re the Bring Them Home Alive Act of 1999.

Hon. Ben Nighthorse Campbell,
U.S. Senate, Washington, DC.

(Attention of Larry Vigil).

Dear Senator Campbell: The National Vietnam & Gulf War
Veteran's Coalition is a federation of 101 Vietnam and Gulf
War veteran support organizations that work together on ten
(10) goals. One of the most important goals of our Coalition
is the return of any living missing American servicemen in
Southeast Asia.
Your legislative initiative of introducing the ``Bring Them
Home Alive Act of 1999'' is the right bill at the right time.
This bill will grant asylum or refugee status to any foreign
national that helps bring out a live American prisoner of war
(POW) from the Vietnam War. This applies to nationals of
Vietnam, Cambodia, Laos, North Korea, China and the former
states of the Soviet Union. It would also grant asylum or
refugee status to the rescuer's family.
Passing this legislation is the least we can do for any
Soldier, Sailor, Airman or Marine that may still be held as a
POW. As long as there remains even the remotest possibility
that there may be surviving POWs we owe this to them to bring
them home.
In conclusion, our National Vietnam & Gulf War Veterans
Coalition hereby endorses the ``Bring Them Home Alive Act of
1999''

[[Page S2028]]

and will utilize our resources to secure passage of this
legislation as our promised legislative effort in this
session of Congress.
Sincerely yours,
J. Thomas Burch, Jr.,
Chairman.
______

By Mr. McCAIN:
S. 485. A bill to provide for the disposition of unoccupied and
substandard multifamily housing projects owned by the Secretary of
Housing and Urban Development; to the Committee on Banking, Housing,
and Urban Affairs.

urban homestead act

Mr. McCAIN. Mr. President, today I introduce the Urban Homestead act,
a bill designed to reform the way in which the Department of Housing
and Urban Development (HUD) disposes of unoccupied and substandard
housing stock.
In summary, the Urban Homestead Act would require HUD, every six
months, to publish in the National Register a complete listing of all
single, and multi-family housing stock that has been in the
Department's inventory for at least six months. Further, HUD is
required to publish a complete listing of all substandard housing stock
in the same manner. Locally based community development corporations
would then be allowed to petition HUD for possession of these
properties. HUD would be required to transfer the properties to the CDC
free of cost.
There are few more obnoxious examples of government inefficiency and
ineffectiveness than that of HUD's inability to address the housing
needs of low-income families. HUD is notorious for its bloated
bureaucracy and malfeasance in administering our nations public housing
assistance programs. Nowhere is this ineptitude more glaringly obvious
than in HUD's disposition of housing stock.
In our nation's inner cities, there are thousands of quiet heroes,
struggling against and conquering near-insurmountable obstacles in
efforts to revitalize their communities. They are winning the battle
one house, one street, one neighborhood at a time.
These organizations are as unique as the communities and
neighborhoods in which they work their magic. It is their ability to
adapt to the local demands of their neighborhoods which is the key to
their success. However, one challenge which is the same, regardless of
what community they are operating in, is the vacant house. These
abandoned houses play host to all types of criminal activity. They are
crack houses, centers of gang activities, and prostitution. You name
it. The abandoned house has become a symbol of urban blight.
I ask my colleagues, who do you think is to blame for this outrage? A
slum lord, or an absentee owner, perhaps a greedy land speculator? In
some instances, this may be the case. But a principal culprit
responsible for kneecapping the efforts of these neighborhood heroes is
non-other-than the Department of Housing and Urban Development. Many of
these homes are the product of FHA foreclosures. They are the product
of lax lending habits and pathetic administration of the HUD property
disposition program.
Well, Mr. President, it is my intention to put HUD out of the
slumlord business. The legislation I introduce today sends a very
simple message to HUD. They have six months to get a property on the
market and sold. If they fail to get the job done, they're going to
have to turn the property over to a CDC and they'll get the job done
for them.
By channeling these properties into the hands of CDCs providing home
ownership opportunities to low-income families, we will be
accomplishing several important objectives. First, we will be placing a
valuable resource into the hands of not-for-profits who may otherwise
lack the capital resources to purchase the housing stock. Secondly, we
get the property back in circulation. In doing so, it ceases to be a
center for criminal activity and a symbol of blight. Finally, and most
important, these organizations will use this housing stock to do what
HUD has failed to accomplish. They will provide low-income families a
piece of the American dream--a chance at home ownership.
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. 485

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 ``Urban Homestead Act of
1999''.

SEC. 2. DEFINITIONS.

In this Act:
(1) Community development corporation.--The term
``community development corporation'' means a nonprofit
organization whose primary purpose is to promote community
development by providing housing opportunities to low-income
families.
(2) Low-income families.--The term ``low-income families''
has the same meaning as in section 3(b) of the United States
Housing Act of 1937 (42 U.S.C. 1437a(b)).
(3) Multifamily housing project.--The term ``multifamily
housing project'' has the same meaning as in section 203 of
the Housing and Community Development Amendments of 1978 (12
U.S.C. 1701z-11).
(4) Secretary.--The term ``Secretary'' means the Secretary
of Housing and Urban Development.
(5) Severe physical problems.--A dwelling unit shall be
considered to have ``severe physical problems'' if such
unit--
(A) lacks hot or cold piped water, a flush toilet, or both
a bathtub and a shower in the unit, for the exclusive use of
that unit;
(B) on not less than 3 separate occasions, during the
preceding winter months was uncomfortably cold for a period
of more than 6 consecutive hours due to a malfunction of the
heating system for the unit;
(C) has no functioning electrical service, exposed wiring,
any room in which there is not a functioning electrical
outlet, or has experienced not less than 3 blown fuses or
tripped circuit breakers during the preceding 90-day period;
(D) is accessible through a public hallway in which there
are no working light fixtures, loose or missing steps or
railings, and no elevator; or
(E) has severe maintenance problems, including water leaks
involving the roof, windows, doors, basement, or pipes or
plumbing fixtures, holes or open cracks in walls or ceilings,
severe paint peeling or broken plaster, and signs of rodent
infestation.
(6) Single family residence.--The term ``single family
residence'' means a 1- to 4-family dwelling that is held by
the Secretary.
(7) Substandard multifamily housing project.--A multifamily
housing project is ``substandard'' if not less than 25
percent of the dwelling units of the project have severe
physical problems.
(8) Unit of general local government.--The term ``unit of
general local government'' has the same meaning as in section
102(a) of the Housing and Community Development Act of 1974
(42 U.S.C. 5302).
(9) Unoccupied multifamily housing project.--The term
``unoccupied multifamily housing project'' means a
multifamily housing project that the Secretary certifies in
writing is not inhabited.

SEC. 3. DISPOSITION OF UNOCCUPIED AND SUBSTANDARD PUBLIC
HOUSING.

(a) Publication in Federal Register.--
(1) In general.--Subject to paragraph (2), beginning 6
months after the date of enactment of this Act, and every 6
months thereafter, the Secretary shall publish in the Federal
Register a list of each unoccupied multifamily housing
project, substandard multifamily housing project, and other
residential property that is owned by the Secretary.
(2) Exception for certain projects and properties.--
(A) Projects.--A project described in paragraph (1) shall
not be included in a list published under paragraph (1) if
less than 6 months have elapsed since the later of--
(i) the date on which the project was acquired by the
Secretary; or
(ii) the date on which the project was determined to be
unoccupied or substandard.
(B) Properties.--A property described in paragraph (1)
shall not be included in a list published under paragraph (1)
if less than 6 months have elapsed since the date on which
the property was acquired by the Secretary.
(b) Transfer of Ownership to Community Development
Corporations.--Notwithstanding section 203 of the Housing and
Community Development Amendments of 1978 (12 U.S.C. 1701z-11)
or any other provision of Federal law pertaining to the
disposition of property, upon the written request of a
community development corporation, the Secretary shall
transfer to the community development corporation ownership
of any unoccupied multifamily housing project, substandard
multifamily housing project, or other residential property
owned by the Secretary, if the project or property is--
(1) located in the same unit of general local government as
the community development corporation; and
(2) included in the most recent list published by the
Secretary under subsection (a).
(c) Satisfaction of indebtedness.--Prior to any transfer of
ownership under subsection (b), the Secretary shall satisfy
any indebtedness incurred in connection with the project or
residence at issue, either by--
(1) cancellation of the indebtedness; or
(2) reimbursing the community development corporation to
which the project or residence is transferred for the amount
of the indebtedness.

[[Page S2029]]

SEC. 4. EXEMPTION FROM PROPERTY DISPOSITION REQUIREMENTS.

No provision of the Multifamily Housing Property
Disposition Reform Act of 1994, or any amendment made by that
Act, shall apply to the disposition of property under this
Act.

SEC. 5. TENANT LEASES.

This Act shall not affect the terms or the enforceability
of any contract or lease entered into before the date of
enactment of this Act.

SEC. 6. PROCEDURES.

Not later than 6 months after the date of enactment of this
Act, the Secretary shall establish, by rule, regulation, or
order, such procedures as may be necessary to carry out this
Act.
______

By Mr. ASHCROFT (for himself, Mr. DeWine, Mr. Bond, and Mr.
Enzi):
S. 486. A bill to provide for the punishment of methamphetamine
laboratory operators, provide additional resources to combat
methamphetamine production, trafficking, and abuse in the United
States, and for other purposes, to be Committee on the Judiciary.

determined and full engagement against the threat of meth (``defeat
meth'') act

Mr. ASHCROFT. Mr. President, we live in a time of unparalleled
prosperity. The stock market continually hits new highs, while
unemployment and gasoline plunge to record lows. This prosperity brings
many blessings, chief among them material comfort. But sometimes
prosperity can mask problems as well as solve them. As Francis Bacon
said, ``Prosperity is not without many fears and distastes; and
adversity is not without comforts and hopes.'' Prosperity can breed
apathy and complacency, weakening a society's ability to respond to the
challenges facing it. And as for adversity, it is only when people
realize the true extent of their challenges that they can overcome
them.
One of the greatest challenges we face is drugs, especially the
recent rise in the production and use of methamphetamines. Despite the
continued challenge drugs present, we have not heard enough about this
problem recently. This administration has chosen not to make it a
priority. A few years ago, Democrat Representative Charles Rangel
lamented this administration's inaction on the drug war: ``I've been in
Congress over two decades, and I have never, never, never found any
administration that's been so silent on this great challenge to the
American people.'' Former Drug Czar William Bennett agrees, having
testified before our colleagues in the House of Representatives that:
``The Clinton Administration has been AWOL in the war on drugs.'' We
have gone from an era of ``just say no'' to an era of ``I didn't
inhale,'' and the numbers concerning youth drug use show that these
contrasting messages make a difference.
While the financial numbers continue to move in the right direction,
the numbers concerning youth direction have gone in the wrong
direction. In 1998, the percentage of 12th graders who had tried
illegal drugs was a shocking 54%--133% of the level in 1992. This
figure, which had decreased during the 1980s, increased in the 1990s.
Similarly, in 1998, the reported illicit drug use by 12th graders in
the last 30 days was more than 177% of the level seven years earlier.
What is particularly alarming is the drastic increase in the use of
heavy drugs by teenagers. In 1998, the percentage of 12th graders who
used cocaine in the last 30 days was 178% of the level in 1992.
Moreover, the percentage of heroin use was 250% of the 1992 level. The
plain facts are that drug use among our nation's youth is far too
common and becoming more so. Our nation appears to be sliding backward
from the strides we made in the 1980s.
The increases in drug use among our children are alarming. Our
children are our greatest asset and they are at great risk from drugs.
They are the most vulnerable members of our society. And, more than any
other group, young people face the highest risk of being lost to drugs
forever.
The more than half of the nation's high school seniors who have
already tried drugs run much greater risks of future drug use than
their peers. According to the National Household Survey on Drug Abuse,
those who do not try drugs by their mid-twenties are unlikely ever to
use drugs. Protecting our children from drugs is the best way to stop
adults from using drugs.
The challenge before us--protecting our children from drugs--becomes
ever more difficult in a society plagued by divorce, single-parent
households, diffuse communities, and the never-ending beat of ``live
for today'' messages coming from our culture. Every one of these
factors makes it harder to impart the right messages to the next
generation and to keep our children off drugs.
Protecting our children from drugs is more difficult than ever. In
the last few years, a new enemy has emerged to join the other, more
familiar, threats of cocaine, heroin, and marijuana. That new threat is
methamphetamine or ``meth,'' a dangerous, addictive substance that is
ruining lives and weakening communities across this great land. Meth is
to the 1990s what cocaine was to the 1980s and heroin was to the 1970s.
And the problem is growing exponentially, in both Missouri and the
nation at large. In 1992, DEA agents seized 2 clandestine meth labs in
the State of Missouri. By 1994, there were 14 seizures. That was
serious enough. However, in 1997, they seized 421 labs.
Meth ensnares our children, endangers us all, and causes users to
commit other crimes. In 1998, the percentage of 12th graders who used
meth was double the 1992 level. Meth-related emergency room incidents
are up 63 percent over that same period. The National Institute of
Justice released a report just a couple of months ago that showed meth
use among adult arrestees and detainees has risen to alarming levels
across the country.

Meth is one of the most serious drug problems in our nation--and, in
states like Missouri--it remains the most serious problem. Just ask the
McClelland family in Kansas City. Their 11-year-old daughter was
bludgeoned to death by a family friend who was high on meth. Her
murderer admitted to beating her in the head repeatedly with a claw
hammer after she resisted his sexual advances.
This is not an isolated incident. Meth kills. Law enforcement
officers in Missouri refer to it as a triple threat. It can kill the
user; it can make the user kill and, in many cases, even its production
can kill.
Meth labs have been called toxic time bombs because volatile
chemicals are mixed in the manufacturing process. There have been
dozens of lab explosions. There are also numerous cases of meth abusers
booby-trapping their abandoned labs, resulting in serious injuries to
law enforcement agents. Even when not booby trapped, abandoned labs are
like toxic waste dumps. Clean up is both dangerous and expensive.
Meth production poses a unique challenge to law enforcement because
of the difficulties in effective interdiction. Although some meth comes
in the United States from Mexico, much of it is home produced from
readily-available materials. It can be manufactured in clandestine labs
and even in the kitchen of a moving RV--a literal moving target for law
enforcement. Meth also can be manufactured in batches large or small.
Law enforcement officials in Missouri have told me that as we have
poured more resources into the fight against meth, some meth cooks have
resorted to smaller and smaller batches to reduce the chances of
detection. Other law enforcement officers report meth operations that
contract out the various steps in the manufacturing process to
different sites to reduce the chances of detection.
Meth also has some unique attributes which appeal to users. Smoking
meth produces a high that lasts 8 to 24 hours. Cocaine, in contrast,
produces a high that lasts for 20 to 30 minutes. Meth appeals not only
to those looking for an extended high. It appeals to vanity as well.
Meth suppresses appetite and is enticing to young adults trying to lose
weight.
While meth is different from other drugs in some ways--more
dangerous, more difficult to police--at its core, it is the same as
other narcotics in that it imposes costs. According to Bill Bennett,
the use of drugs ``makes every other social problem much worse.''
Meth contributes to a host of societal ills--violence, unemployment,
homelessness, family breakup. I have heard too many stories of
neglected children all but abandoned in a home turned into a meth lab.
There are enough threats to our children that we do not need meth
adding to our burden.

[[Page S2030]]

I want to fight the scourge of meth because of the violence it
causes. I want to fight meth because of the costs it imposes, on
society and on families, on taxpayers and on communities. But there is
another factor that motivates my opposition to meth: I want to fight
meth because its use and production is wrong. And too few people are
willing to stand up these days and call drugs wrong.
This laissez faire attitude leads to too much permissiveness on the
subject of drugs. And permissiveness on drugs imposes terrible moral
and psychic costs on America's youth.
In fact, much of our current predicament stems for the permissive
attitudes that emerged from the 1960s. The decay of enforcement that
began in the 1960s helped to cause the problems of the succeeding
decades.
Make no mistake. Enforcement is an extremely effective tool in
diminishing drug use. During the 1960s and 1970s, the period coinciding
with the dawn of this country's second great drug crisis, incarceration
rates plummeted from 90 per 1,000 arrests in 1960 to only 19 per 1,000
arrests by 1980. Laws are what protects society from anarchy. And when
we choose not to enforce our laws, our laws lose their effectiveness,
and the bulwark against anarchy withers.
While our society too often tends towards laxness, we also have a
history of responding to challenges. America has never faced a problem
that has proven too great for us to meet or too big for us to tackle.
The meth challenge, while daunting, is no exception. If we make a
determined and full engagement in our war against meth, we will win. We
will defeat meth.
In my four years in the United States Senate, I have fought the
growth of meth trafficking. In the last Congress, I introduced the
``Trafficking Penalties Enhancement Act'' to provide more severe
penalties for manufacturing, trafficking, or importing meth. That
legislation, which was signed into law last fall, increases prison
terms for meth possession to a 10-year minimum for possession of 50
grams of meth or more, and a 5-year minimum for 5 grams or more. That
law also made more meth crimes eligible for the death penalty in
situations in which a murder is committed in conjunction with the meth
offense. In light of the triple threat nature of meth, the availability
of the death penalty is particularly relevant and appropriate.
In order to protect residents of public housing, I worked with my
colleague from Missouri, Senator Bond, to place a ``one strike and your
out,'' lifetime ban from public housing premises for individuals who
manufacture or produce methamphetamine.
I also worked to set up a regional High-Intensity Drug Trafficking
Area (or HIDTA) that covers Missouri. More recently, I organized a
bipartisan effort by the Missouri congressional delegation that led to
increased funding for anti-meth initiatives, including resources for
law enforcement and lab cleanup. These steps are all important. When I
talked with representatives of Missouri law enforcement earlier this
week, they underscored that these programs are having a positive effect
in the fight against meth. But winning the battle against meth once and
for all will take continued hard work and effort.

Mr. President, today I rise to take the next step in the fight
against meth, the Determined and Full Engagement Against the Threat of
Meth Act, or the ``DeFEAT Meth Act'' for short.
My anti-methamphetamine legislation will have five main components.
First, the bill directs the U.S. Sentencing Commission to adjust its
guidelines to increase penalties for meth crimes. In the last Congress
we were able to raise the mandatory minimum sentences for meth
trafficking crimes involving over 5 grams. This provision complements
last year's legislation by increasing penalties for meth crimes that do
not come under the mandatory minimums, and adding a special sentencing
enhancement for meth crimes that endanger human life. This provision
completes the process of imposing appropriate and severe penalties on
those who wish to tear apart the very fabric of our society by
distributing meth.
Second, my legislation will provide law enforcement officers with
more resources for combating meth. Specifically, it is time to
authorize more funding for the Drug Enforcement Administration's meth
initiative. This funding is essential. In order to stop the spread of
meth, the DEA needs to hire more agents, and provide additional
training for state and local law enforcement officers. These agents
will participate in the DEA's comprehensive plan for targeting and
investigating meth trafficking, production and abuse. The DEA also
needs to provide additional support for local law enforcement. When law
enforcement busts a meth lab, they are taking over the equivalent of a
toxic waste dump. The serious and unique problems cleanup problems
created by meth demand a serious and unique response.
Third, we need to educate our children about the dangers of meth.
While DEA interdiction is vital, we also need to educate parents,
teachers, and children--who may not yet be familiar with the dangers of
meth--about the size of the threat. We should authorize new funding for
programs to educate parents and teachers of the dangers of
methamphetamine. Missouri law enforcement officers estimate that as
many as 10% of high-school students know the recipe for meth. We must
make sure that 100% of them know that meth is a recipe for disaster.
Fourth, we need to recognize that, more than any other narcotic, meth
can be made all too easily, in home grown laboratories, with readily-
available chemicals. To counteract this problem, we must ensure that
the list of banned precursor chemicals used to make meth is kept up to
date. It seems that when a precursor chemical is added to the list,
meth cooks figure out how to manufacture meth with a new unlisted
chemical. We must remain vigilant in the battle against meth. After
consulting with people on the front line--in the crime labs in
Missouri--we have proposed adding two new precursor chemicals: red
phosphorous and sodium dichromate.
Finally, the bill amends the federal drug paraphernalia statute to
cover meth. The current law covers paraphernalia used to ingest a
number of specific drugs including marijuana and cocaine. It does not
cover meth. There is no basis for this differential treatment, and the
bill adds meth to the statute.
This comprehensive plan is an essential step in the war against meth.
While no plan will not stop the spread of meth overnight, we must
continue the long process of stopping this onslaught. Defeating meth
will be a struggle that takes place in schools, in communities, in
churches, within families. We must teach the next generation the danger
of drugs and give them alternatives to the easy short term answers that
drugs provide.
Meth presents us with a formidable challenge. We have overcome other
challenges in the past and we can conquer this one as well. In fact,
the history of America is one of meeting challenges and surpassing
people's highest expectations. Meth is no exception. All we need to
succeed is to marshal our will and channel the great indomitable
American spirit. The experience of the past few years demonstrates that
you cannot win the war on drugs with a half-hearted effort. However,
experience also shows that we can win if we commit to a determined and
full engagement against the threat of drugs. This bill provides full
engagement. With it, we will meet the meth challenge and we will defeat
it.
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. 486

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 ``Determined and Full
Engagement Against the Threat of Methamphetamine'' or
``Defeat Meth'' Act of 1999.

SEC. 2. ENHANCED PUNISHMENT OF METHAMPHETAMINE LABORATORY
OPERATORS.

(a) Federal Sentencing Guidelines.--
(1) In general.--Pursuant to its authority under section
994(p) of title 28, United States Code, the United States
Sentencing Commission shall amend the Federal sentencing
guidelines in accordance with paragraph (2) with respect to
any offense relating to the manufacture, attempt to
manufacture, or conspiracy to manufacture amphetamine or
methamphetamine in violation of--

[[Page S2031]]

(A) the Controlled Substances Act (21 U.S.C. 801 et seq.);
(B) the Controlled Substances Import and Export Act (21
U.S.C. 951 et seq.); or
(C) the Maritime Drug Law Enforcement Act (46 U.S.C. App.
1901 et seq.).
(2) Requirements.--In carrying out this paragraph, the
United States Sentencing Commission shall, with respect to
each offense described in paragraph (1)--
(A) increase the base offense level for the offense--
(i) by not less than 3 offense levels above the applicable
level in effect on the date of enactment of this Act; or
(ii) if the resulting base offense level after an increase
under clause (i) would be less than level 27, to not less
than level 27; or
(B) if the offense created a substantial risk of danger to
the health and safety of another person (including any
Federal, State, or local law enforcement officer lawfully
present at the location of the offense), increase the base
offense level for the offense--
(i) by not less than 6 offense levels above the applicable
level in effect on the date of enactment of this Act; or
(ii) if the resulting base offense level after an increase
under clause (i) would be less than level 30, to not less
than level 30.
(3) Emergency authority to sentencing commission.--The
United States Sentencing Commission shall promulgate
amendments pursuant to this subsection as soon as practicable
after the date of enactment of this Act in accordance with
the procedure set forth in section 21(a) of the Sentencing
Act of 1987 (Public Law 100-182), as though the authority
under that Act had not expired.
(b) Effective Date.--The amendments made pursuant to this
section shall apply with respect to any offense occurring on
or after the date that is 60 days after the date of enactment
of this Act.

SEC. 3. INCREASED RESOURCES FOR LAW ENFORCEMENT.

(a) Authorization of DEA Funds To Combat
Methamphetamines.--
(1) Purpose.--From amounts made available to carry out this
subsection, the Administrator of the Drug Enforcement
Administration shall implement a comprehensive approach for
targeting and investigating methamphetamine production,
trafficking, and abuse to combat the trafficking of
methamphetamine in areas designated by the Director of
National Drug Control Policy as high intensity drug
trafficking areas, which approach shall include--
(A) training local law enforcement agents in the detection
and destruction of clandestine methamphetamine laboratories,
and the prosecution of any offense relating to the
manufacture, attempt to manufacture, or conspiracy to
manufacture methamphetamine in violation of the Controlled
Substances Act (21 U.S.C. 801 et seq.), the Controlled
Substances Import and Export Act (21 U.S.C. 951 et seq.), the
Maritime Drug Law Enforcement Act (46 U.S.C. App. 1901 et
seq.), or applicable State law;
(B) investigating and assisting in the prosecution of
methamphetamine traffickers, establishing a national
clandestine laboratory computer database, reducing the
availability of precursor chemicals being diverted to
clandestine laboratories in the United States and abroad, and
cleaning up the hazardous waste generated by seized
clandestine laboratories; and
(C) allocating agents to States with the highest rates of
clandestine laboratory closures during the most recent 5
fiscal years.
(2) Authorization of appropriations.--There are authorized
to be appropriated to carry out this subsection--
(A) $30,000,000 for fiscal year 2000; and
(B) such sums as may be necessary for each of fiscal years
2001 through 2004.
(b) High Intensity Drug Trafficking Areas.--
(1) In general.--From amounts made available to carry out
this subsection, the Director of National Drug Control Policy
shall combat the trafficking of methamphetamine in areas
designated by the Director of National Drug Control Policy as
high intensity drug trafficking areas, including the hiring
of new laboratory technicians in rural communities.
(2) Authorization of appropriations.--There are authorized
to be appropriated to carry out this subsection--
(A) $25,000,000 for fiscal year 2000; and
(B) such sums as may be necessary for each of fiscal years
2001 through 2004.
(c) Expanding Methamphetamine Abuse Prevention Efforts.--
(1) Prevention programs and activities.--
(A) In general.--From amounts made available to carry out
this subsection, the Director of National Drug Control Policy
shall--
(i) carry out community-based prevention programs that are
focused on those populations within the community that are
most at-risk for methamphetamine abuse and addiction;
(ii) assist local government entities to conduct
appropriate methamphetamine prevention activities;
(iii) train and educate State and local law enforcement
officials on the signs of methamphetamine abuse and addiction
and the options for treatment and prevention;
(iv) carry out planning, administration, and educational
activities related to the prevention of methamphetamine abuse
and addiction;
(v) monitor and evaluate methamphetamine prevention
activities, and report and disseminate resulting information
to the public; and
(vi) carry out targeted pilot programs with evaluation
components to encourage innovation and experimentation with
new methodologies.
(B) Priority.--In carrying out this paragraph, the Director
of National Drug Control Policy shall give priority to
assisting rural and urban areas that are experiencing a high
rate or rapid increases in methamphetamine abuse and
addiction.
(C) Analyses and evaluation.--
(i) In general.--Of the amount made available to carry out
this subsection in each fiscal year, not less than $500,000
shall be used by the Director of National Drug Control
Policy, in consultation with the heads of other departments
and agencies of the Federal Government--

(I) to support and conduct periodic analyses and
evaluations of effective prevention programs for
methamphetamine abuse and addiction; and
(II) for the development of appropriate strategies for
disseminating information about and implementing those
programs.

(ii) Annual reports.--The Director shall annually submit to
Congress a report on results of the analyses and evaluations
under clause (i) during the preceding 12-month period.
(2) Authorization of appropriations.--There are authorized
to be appropriated to carry out this subsection--
(A) $25,000,000 for fiscal year 2000; and
(B) such sums as may be necessary for each of fiscal years
2001 through 2004.

SEC. 4. PRECURSOR CHEMICALS.

Section 102(35) of the Controlled Substances Act (21 U.S.C.
802(35)) is amended--
(1) by inserting ``, or immediate precursor,'' after
``chemical)''; and
(2) by adding at the end the following:
``(K) Red phosphorous.
``(L) Sodium dichromate.''.

SEC. 5. METHAMPHETAMINE PARAPHERNALIA.

Section 422(d) of the Controlled Substances Act (21 U.S.C.
863(d)) is amended by inserting ``methamphetamines,'' after
``PCP,''.
______

By Mr. GRAMS (for himself and Mr. Ashcroft):
S. 487. A bill to amend the Internal Revenue Code of 1986 to provide
additional retirement savings opportunities for small employers,
including self-employed individual; to the Committee on Finance.

Smaller employer egg act

______

By Mr. GRAMS:
S. 488. A bill to amend the Internal Revenue Code of 1986 to repeal
the taxation of social security benefits; to the Committee on Finance.

repeal of social security tax

______

By Mr. GRAMS:
S. 489. A bill to provide an automatic tax rebate when the Federal
tax burden grows faster than the personal income of working Americans,
and for other purposes; to the Committee on Finance.

national tax rebate act of 1999

______

By Mr. GRAMS:
S. 490. A bill to amend the Internal Revenue Code of 1986 to provide
that the conducting of certain games of chance shall not be treated as
an unrelated trade or business; to the Committee on Finance.

Federal unrelated business income tax legislation

Mr. GRAMS. Mr. President, at the beginning of this session, I, along
with Senator Roth and others, introduced S. 3, the Tax Cuts for All
Americans Act, which calls for a 10 percent across-the-board tax cut on
the federal income taxes of hard-working Americans.
If enacted, this will be the largest middle-class tax relief since
President Ronald Reagan's 1981 tax cuts. I believe this legislation is
imperative for our economic security and growth in the new millennium.
I will address this issue more fully later this week.
But today I also rise to introduce four bills representing some other
tax relief priorities on which I hope we can also focus in this
Congress. These bills will help reform our tax system and will help to
terminate some unfair and unjust tax provisions in the Tax Code, again,
with the aim and the goal of allowing working Americans to keep a
little bit more of their own money rather than sending it to
Washington.
Mr. President, the first bill I am introducing today, the National
Tax Rebate Act, requires the Government to refund taxes collected to
taxpayers when Federal revenue grows faster than the income of working
Americans.
The rationale for this legislation is simple: and that is, the
Federal Government's taxes should not grow faster than working
Americans' income. Our

[[Page S2032]]

growing tax burden should not reduce the standard of living that we
work hard to achieve. This legislation will ensure that it does not.
Eighteen of the last 19 Democrat-controlled Congresses passed tax
increases. President Clinton's whopping $241 billion tax increase in
1993 was the largest tax hike we have had. We had only two Federal
personal income tax rates at that time. They were 15 and 28 percent,
those under President Ronald Reagan.
Today, after President Clinton has been in office for 6 years, we
have five Federal tax brackets. The top one has reached nearly 40
percent. More hard-working, middle-income families have been pushed
into higher tax brackets because of an unfair tax system. So we have
gone from two brackets of 15 percent and 28 percent to now five tax
brackets, the highest being nearly 40 percent. No wonder Washington's
income is growing and growing much faster than the income of the
taxpayers. That is one reason why we have a surplus in Washington
today, because incomes have gone up for Americans, and Washington has
taken a larger share of that in the form of taxes.
Thanks to our exceptionally strong economy, more Americans are
working today, and are earning more than ever before as a result.
Government data show that real median family income is now at a near-
historic high and per capita income is at a record $19,241.
We should not be here penalizing those who work long and hard to
achieve the American dream of higher earnings and better jobs by
slapping higher taxes on them.
Unfortunately, a large share of the newly earned income of hard-
working Americans has not been spent on family priorities but siphoned
off by Washington.
The progressive Federal tax system created by Washington allows
Federal Government income to grow faster by taking a larger bite from
any newly earned income increases. That is because it pushes us into
one of these higher tax brackets.
According to Scott Hodge, a leading economist at Citizens for a Sound
Economy, total personal income since 1993 has grown by an average of
5.2 percent a year, while Federal taxes have grown by 7.9 percent a
year--so taxes have grown 52 percent faster than personal income
growth.
In fiscal year 1998 alone, federal taxes grew 70 percent faster than
personal income.
Mr. President, this is not justifiable. Uncle Sam's income should by
no means grow faster than the income of the people who earn it.
While broad-based tax relief for every American, such as S.3, would
certainly correct the unfairness of the tax system, we need a mechanism
that ensures Washington's income will never grow faster than the income
of taxpayers.
This is all my legislation does. It limits federal taxes by
prohibiting the growth rate of federal revenues collected for any
fiscal year from exceeding the average growth rate of personal income
of working Americans.
Set a guidepost. Set a marker as to how fast Washington should grow
in the money it collects and spends.
It requires a two-thirds vote of both the House and the Senate to
waive this limit. Whenever Washington's tax revenues grow faster than
the personal income of working Americans, an automatic national tax
rebate will be triggered as a result.
The federal government must refund taxpayers the excessive taxes pro
rata based on liability reported on federal income tax annual returns
filed in the previous tax year.
The national tax rebate is not a new idea. A number of states, such
as Florida and Missouri, have either statutory laws or constitutional
amendments requiring state governments to give back tax money if the
revenue exceeds these limits.
My own State of Minnesota is currently deciding how best to refund
excess tax collection to Minnesota taxpayers.
If it works at the state level, there is no excuse for the federal
government not to adopt a similar mechanism.
By passing this simple tax limitation and rebate legislation,
taxpayers will be fully protected and better represented in Washington.
Mr. President, this piece of legislation would repeal taxation of our
senior citizens' Social Security benefits.
As you know, Mr. President, Social Security benefits were exempt from
the federal income tax since the creation of the program.
They were never taxed by the Federal Government. Retirement benefits
shouldn't be.
But as Social Security encountered a financial crisis in early 1980s,
Congress began taxing Social Security benefits, and thus causing
financial hardship to many seniors.
The amount of taxable benefits was the lesser of one-half of Social
Security cash benefits or one-half of the excess of the taxpayer's
provisional income over the thresholds of $25,000 per single person and
$32,000 for couples.
In 1993, when President Clinton needed more money to fund his new
spending programs, he increased the taxable proportion of Social
Security benefits from 50 to 85 percent for Social Security recipients
whose threshold incomes exceed $34,000 for singles and $44,000 for
couples.
These two tax increases have seriously injured a significant number
of senior citizens. In fact, a quarter of recipients are affected by
this provision, creating enormous financial hardship for them as well.
I believe taxation on Social Security benefits is wrong and unfair
because Social Security benefits are earned benefits for many senior
citizens. Federal income tax is paid when Social Security contributions
are made to the program. Taxing Social Security benefits is clearly
double taxation.
In other words, those benefits are paid when the money is put into
Social Security, and now the government wants to tax them again as it
takes the money out.
In addition, Congress never intended to tax Social Security benefits
when it first established the program. In fact, for half a century
Social Security benefits were exempted from federal taxes.
Millions of senior citizens who planned for their retirement based on
their understanding of the Social Security law were penalized. As the
tax rate continues to grow, the incomes of more and more senior
citizens are falling along with their standard of living.
This tax hurts seniors who choose or must work after retirement to
maintain their standard of living or to pay for costly health insurance
premiums, medical care, prescriptions and many other expenses which
increase in retirement years.
It also discourages today's workers to save and invest for the
future. It won't help protect Social Security for our children and
grandchildren.
I believe this is not acceptable.
Repealing all taxation on Social Security benefits would reverse this
trend, and help responsible senior citizens. The federal government has
entered into a sacred covenant with the American people to provide
retirement benefits once contribution commitments are made.
It is the government's contractual duty to honor that commitment. The
government cannot and should not change the covenant without consent of
the people whom these changes would affect.
Mr. GRAMS. Mr. President, this bill deals with a relatively smaller
tax matter. This bill calls for exemption of additional charitable
gambling activities from the Federal unrelated business income tax
(UBIT).
As you know, Mr. President, the fundamental difference between
charitable gambling and regular gambling is where and how the profit is
spent.
Most of the income derived from charitable gambling games is spent in
communities to fund charitable activities such as the Boy and Girl
Scouts, Head Start, and many city and school programs that help local
residents and students.
In my State alone of Minnesota, more than 1,500 local charities
conduct a variety of games such as bingo and pull tabs, and in doing so
contribute some $75 million per year to their local communities.
Beneficiaries include youth recreation and education, as well as
organizations serving the sick and disabled, and many other community
programs, as well.
My state leads the nation in charitable non-profit gaming, but some
35 other states are involved in similar activities.
In 1978, President Carter signed into law a bill that classified
bingo income as related business income.

[[Page S2033]]

As a result, this charitable game is not subject to the Federal UBIT.
But the law did not include other forms of charitable gambling.
Consequently, the income of these charitable gambling games is taxed
under the UBIT.
Taxes take a big bite out of charitable gambling income and seriously
undermine the ability of nonprofit organizations to provide charitable
assistance.
Now, while the IRS has not collected UBIT on these charities as they
anticipate Congressional action, without my legislation, the IRS could
begin collections in the near future. My legislation would remove this
uncertainty as charities attempt to go on with their good works.
This legislation is not controversial. It should have bipartisan
support. In the last Congress I introduced a similar bill with Senator
Wellstone which the Senate adopted. I hope we can pass it again in the
106th Congress.
The last bill I am introducing today would provide a tax incentive
for small business employers to set up pension plans for their workers.
Working Americans' retirement security is based on Social Security,
private pensions, and personal savings. But even though Social Security
is fast approaching a financial crisis, our national savings rate
remains among the lowest, and many workers do not have company pension
plans to help make up the Retirement Benefits.
Despite recent congressional action to improve private pension plans,
the complexity of qualification requirements under current law and the
administrative expenses associated with setting up retirement plans,
including the SIMPLE plan, remain significant impediments to widespread
implementation of employer-based retirement systems, especially for
small business.
This is particularly true for small employers with less than I 00
employees, for whom the resulting benefits do not outweigh the
administrative costs.
Consequently, only 42% of individuals employed by small businesses
now participate in an employer-sponsored plan, as opposed to 78% of
those who work for larger businesses.
To address this problem, I am introducing the Small Employer Nest Egg
Act of 1999. This legislation will create a new retirement option for
small business owners with 100 or fewer employees.
It would allow the same level of benefits both to employers and
employees as larger employers who maintain traditional qualified plans.
Upon retirement or separation of service, employees would receive I00%
of their pension account value.
To offset the high costs associated with starting a pension plan, my
proposal calls for a tax cut equal to 50% of the administrative and
retirement education expenses incurred for the first five years of a
plan's operation.
Mr. President, small businesses are the lifeblood of our communities,
providing millions of jobs nationwide. Small business owners want to
help their employees save for their retirement.
Yet, because of the costs, many are unable to do so and, also,
because of the rigid Government policies and, again, the administrative
costs that go with it.
This legislation, I believe, will help millions of workers begin
building their retirement security. I urge the support of my colleagues
for the four bills I have offered today.

____________________