[Congressional Record Volume 145, Number 165 (Friday, November 19, 1999)]
[Senate]
[Pages S14960-S14971]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                             DAIRY COMPACTS

  Mr. LOTT. We do need to have a colloquy now, before we begin the 
final debate on this very important work incentives legislation on the 
matter of dairy and the dairy language in the appropriations bill. 
There is no use at this point of me going back and recounting all that 
has gone on in us reaching the point where we are in the language in 
this bill.
  There are a lot of Senators on both sides of the aisle who believe 
that the Northeast Dairy Compact should have been included. There are 
Senators who think that portions of the bill H.R. 1402, known as the 1-
A, should have been included. There are other Senators who believe 
equally as strongly that neither of those should have been included in 
this bill. I must say, I am in that group.
  I do not think what we have come up with on dairy is where we should 
leave it. It was something that was laboriously worked out. I tried my 
very best to find some way that we could come up with something that 
was in the best interests of dairy, the consumers, something that was 
acceptable to Senator Grams, Senator Jeffords, Senator Kohl, Senator 
Wellstone, and Senator Feingold, but there was no way to find a 
solution with which all sides could be content. Regardless of how this 
agreement was reached, we are here, and it will be in law. But I do not 
think we should leave it on this line.

  I do not think compacts are the answer, personally. I believe it very 
strongly. I do not think that trying to expand it--more compacts--and 
have the kinds of controls you have now by the Government, or will have 
in this by the Government, is the answer.
  So I find myself philosophically very sympathetic to Senator Grams 
and Senator Kohl and Senator Domenici and Senator Fitzgerald, but I 
also know of the position of the Senate on this issue, and Senator 
Jeffords and Senator Leahy were able to produce a majority of the 
Senate, although neither side could produce a 60-vote margin to break a 
filibuster.
  So all I want to say today is that while this legislation, I believe, 
is going to pass, we should not stop at this point. We should look for 
a better way to do this. We should look for a way to get away from 
compacts and a way to get away from the type of Government controls we 
now have.
  Do I have a magic solution? Can I guarantee by the first week in 
February this will be resolved? No. I have been wrangling around with 
this for 20 years, as the Senator in the Chair, who was chairman of the 
Agriculture Committee, tried mightily and could not find the solution.
  But I am committed here today to work with those who believe we 
should not be doing this to find a way to do it better. I know the 
Senators on the other side will fight tenaciously against that, but I 
want the Record to reflect my true feelings on this and reflect my 
commitment that we are not going to leave it on this line.
  I yield the floor.
  Mr. DASCHLE addressed the Chair.
  The PRESIDING OFFICER. The distinguished Democratic leader is 
recognized.
  Mr. DASCHLE. Mr. President, I associate myself with the remarks made 
by the distinguished majority leader. He noted that this is a matter of 
great import to many Senators, including those from the Northeast. They 
have made their position known, and I respect that position.
  I have also indicated to them personally, and I have said publicly, 
that I do not support compacts. I do not support the Northeast Dairy 
Compact. I do not believe it is good economic policy. I think the 
process that allowed the Northeast Dairy Compact in H.R. 1402 to be 
inserted in the budget process was flawed and wrong and unfair. This 
isn't the way we ought to deal with complex and extraordinarily 
important economic policy affecting not hundreds or thousands but 
millions of rural Americans.
  I oppose compacts in any form, but I especially oppose them when they 
are

[[Page S14961]]

loaded into a bill without the opportunity of a good debate, without 
the opportunity of votes, without the opportunity of amendment.
  We will come back to this issue. We must revisit this question. We 
must find a way by which to assure that all views are taken into 
account, and all sections of the country are treated fairly.
  In this case, the two Senators from Wisconsin in particular, and the 
Senators from Minnesota, Wellstone and Grams, were not treated fairly. 
I do not fault anybody. These things happen. Senator Lott and I have to 
deal with a lot of different challenges and issues. He and I have 
admitted that we wished this could have been done differently. Those 
four Senators were not treated fairly. I applaud them for coming to the 
floor to express themselves, and to say in as emphatic a way as they 
can, as eloquently as they have, how important this matter is to them 
and how determined they are to see it resolved.
  My hat is off to them. I thank them. I also thank them for their 
cooperation in working with us to come up with a way to resolve this. 
It is one thing to throw things and to stomp up and down and to cause 
all kinds of havoc. Anyone can do that. But it takes courage, it takes 
character, it takes class to say, look, in spite of the fact that we 
were not treated fairly, we are going to work with you to assure that 
people in other circumstances will be treated more fairly. I thank them 
for that.
  Again, I appreciate the majority leader's comments in acknowledging 
the unfairness of this and ensuring that we will deal with it 
appropriately at a later date.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Indiana is recognized.
  Mr. LUGAR. Mr. President, I enter this colloquy because I want to 
give a little bit of historical perspective, as chairman of the 
Agriculture Committee.
  Mr. LOTT. Will the Senator yield briefly.
  Mr. LUGAR. Yes.
  Mr. LOTT. I ask unanimous consent that this colloquy extend for not 
to exceed 10 more minutes.
  The PRESIDING OFFICER. Is there objection?
  Mr. MOYNIHAN. Mr. President, it may take a little longer. We are in 
an accommodating mode, thanks to our colleagues.
  Mr. REID. If I could say to the majority leader, we have a number of 
people, Senator Lugar, Senator Gramm, Senator Byrd, who----
  Mr. LOTT. I think it would help if I withdraw that and urge my 
colleagues, be profound but succinct.
  The PRESIDING OFFICER. The distinguished Senator from Indiana has the 
floor.
  Mr. LUGAR. The history of this situation goes back to the farm bill 
of 1996. At that time, the dairy provisions were the final issue to be 
compromised. At that time, the House and the Senate agreed upon a New 
England dairy compact for 2 years. The 2 years were to end September 
30, 1998. During that time, the USDA was charged with the need to 
reform the entire dairy system and reduce the number of the 
arrangements for pricing from roughly 38 to 13.

  USDA acted this year. The Secretary promulgated some reforms that 
moved toward more of a market system. Likewise, the Secretary did not 
make further comment about the compacts because, under the law, they 
were supposed to be gone at this point. Obviously, they have not 
disappeared. A similar legislative predicament last year gave a wedge 
for the compacts to continue for another year in New England. 
Obviously, as the leaders have described it, that situation has 
occurred once again.
  Let me say, as chairman of the Agriculture Committee, we would like 
to reclaim the issue. It is in our jurisdiction. It is not in the 
jurisdiction of the people who worked this out. They had no right to do 
this. They have been widely condemned for doing it. There has been no 
debate on the compacts in our committee or on the floor, except for the 
ag bill. And they should have been gone by September 30, 1998, under 
those provisions. Likewise, although the House did decide to disagree 
with the Secretary of Agriculture, the Senate did not. The Senate did 
not have debate on this and, the fact is, the leadership of the 
committee wrote to commend our Secretary of Agriculture in a bipartisan 
way.
  Let me reassure the distinguished Senators from Wisconsin and 
Minnesota that the Agriculture Committee of the Senate will be eager to 
take up legislation that deals definitively with this situation. It 
will require a majority of the committee and a majority of this body 
and, likewise, some cooperation from the House. But that is the proper 
way to proceed. A suggestion has been made that we ought to be heard as 
a Senate. I suggest that that is the way we will follow.
  We will entertain legislation with regard to these issues at the 
earliest possible time and ask for the support of Senators who are here 
on the floor involved in this colloquy to help us in that quest.
  I thank the Chair.
  The PRESIDING OFFICER. The distinguished Senator from Nevada is 
recognized.
  Mr. REID. Mr. President, I yield to the Senator from West Virginia.
  Mr. BYRD. Mr. President, as ranking member of the Senate 
Appropriations Committee, let me say a few words. I would like to say 
more about this man from Wisconsin but time constraints will not allow 
me to do that.
  He is the Stonewall Jackson of Wisconsin. He stands like a stone 
wall. If I had the voice of Jove, I would shout from the ends of the 
earth. Yet I would not be able to move this man, Herb Kohl, when he 
takes a determined stand. He has been talking with me time and time 
again about this issue that is so important to him and the people of 
Wisconsin. He has been absolutely indefatigable; he has been 
unshakable, and I salute him. He has stood up for the people of 
Wisconsin. That is what I like about him. He stands for principle. He 
stands for his people.
  I have been criticized many times for standing for my people in West 
Virginia. Who sends me here? They do. The distinguished Senator from 
Wisconsin feels the same way. He is courteous; he doesn't talk very 
much or very loud; but he always listens. Always, when I have had a 
problem affecting my State in particular, he has listened. I sat down 
in his office with him and talked with him. So I listen to him. I 
salute him. The people of Wisconsin have a real treasure in Herb Kohl, 
and I have a real treasure in Herb Kohl as a friend. I want him to know 
that at any future time when this issue comes up, he knows the number 
of my office, the number on my telephone. I will be glad to see him, 
talk with him, and help him in his fight.
  The PRESIDING OFFICER. The distinguished Senator from Minnesota is 
recognized.
  Mr. GRAMS. Mr. President, I come to the floor today stunned by the 
addition of harmful dairy provisions in the final appropriations bill. 
This omnibus bill contains another extension of the Northeast Dairy 
Compact for 24 months--which I consider the most brazen attempt in my 
memory as a member of Congress to steal and move an industry from one 
region of the country to another. This economic power grab is 
alternatively characterized as a matter of states' rights, a way to 
guarantee a fresh supply of milk to local consumers, a means to ensure 
lower-priced milk to consumers, and a means to help the small family 
farmer survive. All of these arguments are false--a thinly veiled 
disguise to cover the truth, which is that this is an unvarnished 
economic power grab of major proportions.
  But first, I would like to explain what dairy compacts are, and 
explain why they are so destructive to the heart of dairy production in 
America and the Upper Midwest. The Northeast Dairy Compact raises the 
price of Class I fluid milk above the prevailing federal milk marketing 
order price within the participating states, and, I might add, above 
what the market would pay. Milk processors have to pay the higher price 
for the raw milk they process, and this higher price is passed along to 
the consumer at the grocery store. With higher prices, consumption goes 
down, and children are the biggest losers. I don't argue against a fair 
price or honest price--for any dairy farmer in Minnesota or Vermont or 
any other state. But I cannot support price- fixing schemes that 
legislatively transfer market share.

[[Page S14962]]

  The Northeast Compact was authorized in 1996 during consideration of 
the larger Federal Agriculture Improvement and Reform (FAIR) Act. This 
controversial issue was inserted in the conference committee, avoiding 
a separate vote, after the measure had been overwhelmingly defeated on 
the floor. While most of the FAIR Act was designed to help farmers 
compete in world markets and reduce government involvement in 
agriculture, the Northeast Interstate Dairy Compact established a 
regional price-fixing cartel within our very own country. The Northeast 
Dairy Compact has harmed dairy farmers in Minnesota, and this kind of 
unfair subsidy should be terminated. We should not be passing laws that 
will have such a harmful impact on any American. This compact does.
  When this issue came to the fore, compacts were roundly condemned in 
the major newspapers of the compact region. The New York Times, Boston 
Herald, the Connecticut Post, and the Hartford Courant all weighed in 
against the cartel, in addition to publications such as USA Today and 
the Washington Post.
  Again, compacts were hardly consensus legislation to begin with. The 
House refused to put the provision in its broader farm bill. And I must 
reiterate, the Senate voted on the floor to strip the Compact language 
from its bill. Despite these defeats, the compact provision was slipped 
into the bill in conference and signed by the President. The Compact 
legislation could not withstand the scrutiny of a fair debate on the 
floor, and had to be muscled in at the last minute in conference, just 
as we've seen with this attempted extension today. Knowing that this 
scheme was a bad idea from the start, Congress limited the life of the 
compact, and that is why compact proponents asked for an extension and 
could only achieve an extension sneaked into an omnibus bill as we are 
about to head out of town for the session.
  Retail prices of milk jumped immediately after the higher Compact 
price was implemented. As predicted, the milk produced in New England 
increased by four times the national rate of increase in a six-month 
period following Compact implementation. The surplus milk was converted 
into milk powder, leading to a 60% increase in milk powder production. 
That surplus directly harms dairy farmers in Minnesota and Wisconsin, 
driving down prices and demand in the Midwest.
  Soon after implementation, the Northeast Compact had to begin 
reimbursing school food service programs for the increases in cost 
caused by the milk price hikes; an admission that prices have gone up 
and consumers are being affected. However, low-income families that 
need milk in their diet are not being reimbursed by the Compact for 
their increased costs. Milk is a food staple, and one of the healthiest 
foods we have. Are we going to permit the extension of this milk tax 
that hits low- income citizens hardest? Are we going to continue a food 
tax on the group of citizens who spend the highest percentage of their 
income on food? What's next, a special tax on bread, eggs, ground beef, 
or potatoes? But that won't happen--Why? Because it would be unfair, 
just as this compact cartel is unfair. Consider the low-income families 
with small children and the elderly on fixed incomes in your state and 
ask if this is the population you want bearing the brunt of this 
regressive milk tax.

  Despite all of the discrediting information about dairy compacts, 
members continue to contemplate extending for the second time this bad 
policy that was initially only to be ``temporary'' assistance to 
Northeast producers. Everyone who truly understands this issue admits 
that compacts are harmful for consumers and for American agriculture, 
but somehow we can't muster the political will to say no to the 
entrenched interests that support the compact. Thus, we keep hitting 
the snooze button--preferring to ``temporarily'' extend bad policy 
rather than addressing it on a policy basis. What is even more 
egregious is other regions of the country are promoting compacts for 
themselves to tap into these goodies at the expense of other regions of 
the country such as the Upper Midwest. And again would force consumers 
to pay unfair high prices for milk.
  This is really Economics 101. If you artificially raise the price 
received for a commodity, you can count on more being produced. Where 
does the excess go? It goes into areas where there isn't a floor price, 
and that excess production depresses the price that producers in my 
state receive. It's really not that hard to understand, despite the 
sentimental arguments that compact supporters use to cloud the real 
issues at play in this debate. Again, we are trying to knock down or 
reduce trade barriers around the world to open markets and give our 
farmers a level playing field to compete, but would erect these same 
barriers to trade inside our own borders that will not allow dairy 
farmers in the Midwest to fairly compete.
  As I said earlier, I must address some of these urban myths about the 
benefits of compacts, myths that are so often repeated around here by 
colleagues that they have become difficult to distinguish from the 
truth. One of these claims is that compacts are somehow a matter of 
``states' rights,'' and that compacts make an important contribution 
toward devolving power back to the states.
  The fact is that regulation of interstate commerce is a power 
specifically delegated to Congress in Article I, Section 8 of the 
Constitution, which states that Congress shall have power ``to regulate 
commerce with foreign nations, and among the several states, and with 
the Indian tribes.''
  Regulation of interstate commerce was one of the chief reasons our 
country's founders abandoned the Articles of Confederation and moved to 
adopt the Constitution. I consider it one of the great ironies of this 
debate when I hear colleagues claim that the dairy compact issue boils 
down to ``states' rights.''
  Professor Burt Neuborne, a constitutional law professor at the New 
York University School of Law, in testimony before a subcommittee of 
the House Judiciary Committee, noted that the chief motive for the 
Founding Fathers' decision to abandon the Articles of Confederation in 
favor of the Constitution was to foster a free market of trade within 
the United States. Under the weaker Articles of Confederation that 
entrusted commerce powers in the states, states enacted price controls 
to protect high-cost producers from competition from other regions of 
the country. The Constitution corrected this problem by empowering 
Congress to regulate interstate commerce. According to Professor 
Neuborne,

       At the close of the Revolution, the thirteen original 
     states experimented with a loose confederation that delegated 
     power over foreign affairs to a national government, but 
     retained power over virtually everything else at the state 
     and local level. The lack of a national power to regulate 
     interstate Commerce led to the eruption of a series of trade 
     wars, pitting states and regions against one another in a 
     mutually destructive spiral . . .

  United States Supreme Court Justice Robert H. Jackson, reviewing 
the history of the Commerce Clause in a 1949 opinion, stated that:

       The sole purpose for which Virginia initiated the movement 
     which ultimately produced the Constitution was 'to take into 
     consideration the trade of the United States; to examine the 
     relative situations of trade of said States; to consider how 
     far a uniform system in their commercial regulations may be 
     necessary to their common interest and their permanent 
     harmony' and for that purpose the General Assembly of 
     Virginia in January of 1786 named commissioners and proposed 
     their meeting with those from other states. The desire of the 
     Forefathers to federalize regulation of foreign and 
     interstate commerce stands in sharp contrast to their jealous 
     preservation of the state's power over its internal affairs. 
     No other federal power was so universally assumed to be 
     necessary, no other state power was so readily relinquished. 
     [As Madison] indicated, ``want of a general power over 
     Commerce led to an exercise of this power separately, by the 
     states, (which) not only proved abortive, but engendered 
     rival, conflicting, and angry regulations.''

  Continuing to quote again from Professor Neuborne,

       James Madison noted that the single most important 
     achievement of the Constitutional Convention was to rescue 
     the nation from a continuation of the parochial trade wars 
     that had marred the first ten years of its existence and 
     threatened its future permanent harmony. . .. Congress should 
     reflect on the fact that Madison's understanding of the 
     relationship between economic protectionism and the erosion 
     of political unity was brilliantly prescient. One of the 
     Founders' enduring insights was that regional economic 
     protectionism is ultimately corrosive of national political 
     unity. To prevent economic

[[Page S14963]]

     regionalism, the Founders imposed a constitutional 
     prohibition on state and regional efforts to discriminate 
     against goods and services produced elsewhere in the nation. 
     To tamper with that constitutional prohibition is to tamper 
     with the mainspring of the nation's political and economic 
     fabric.

  Professor Neuborne's research on the topic of interstate compacts, 
which originate under Congress' grant of power in Article I, Section 
10, revealed that prior to the Northeast Regional Dairy Compact, 
Congress had never granted the compact power to enable states to engage 
in economic protectionism. Two hundred ninety-nine times before, the 
compact power had been used for a constitutionally legitimate purpose. 
Only now, with the advent of the dairy compact, has Congress ever 
contorted the meaning of Article I, Section 10 as an opportunity to set 
up a protectionist, multi-state cartel, in direct conflict with the 
Commerce Clause of the Constitution.
  The Supreme Court has repeatedly ruled that by granting to Congress 
the power to regulate interstate commerce via Article I, Section 8, the 
Constitution carries with it a negative implication precluding the 
states from engaging in protectionist schemes that favor local economic 
interests at the expense of national competitors.
  Mr. President, are we not in fact returning to the very types of 
behavior that the Constitution was in large part designed to remedy? 
Are we really willing to pit region against region, and create 
protectionist regimes, under the guise of dairy compacts, even within 
our own country?
  The next pro-compact argument I would like to address is the claim 
that the compact is necessary to guarantee an ``adequate supply of 
fresh, locally produced milk'' to consumers. As I have said before, I 
believe the constant refrain that compact supporters are merely trying 
to guarantee an ``adequate supply of fresh, locally produced milk'' is 
a calculated deception designed to mislead consumers into believing 
that without this legislation, there may not be a consistent supply of 
milk in the grocer's dairy case. This is simply false our nation 
produces three times more milk than it consumes as a beverage. And I 
should note that Minnesota farmers have not come to the federal 
government asking for pricing advantages so they can grow oranges or 
lemons and guarantee Minnesota consumers a quote ``adequate supply of 
fresh, locally produced citrus.'' Minnesota farmers want to produce 
what they produce best, which are dairy products, and they can deliver 
them to the consumer much cheaper, too.

  In fact, some compact supporters have the audacity to claim that 
without a compact, the region would pay more for milk as high shipping 
costs for imported milk was factored into the price. This is also 
false. If local producers can sell a product for less than their 
competitors, then they would have no need of a compact. They could keep 
their markets by beating the price of the competition. But the truth 
is, high quality milk can be trucked into New England at the peak of 
freshness and at less cost than it can be produced in most New England 
states.
  Compact supporters also claim that the compacts are necessary to save 
the small, family dairy farm. Interestingly enough, according to USDA 
figures, the average dairy herd size is 85 head in Vermont, while in 
Minnesota it's 57 head. This means that herd sizes in Vermont are 
almost 50% larger than those in Minnesota. So much for the idea that 
the compact is protecting dairy producers from competing against large, 
Midwestern dairy farmers. This is just one of the distortions that I 
have had to deal with in this dairy debate, and I'm tired of the hard-
working dairy farmers in Minnesota being labeled as, quote, ``corporate 
dairy farmers.'' The average Minnesota dairy farmer grazes a 57-head 
herd on 160 acres. I know Minnesota dairy farmers don't want to 
consolidate into larger and larger operations; they just want a level 
playing field where they can earn enough to support their families and 
continue to do something they love to do. I would ask my opponents to 
please not cloak the dairy cartels with the mantle of supposedly 
helping the little guy against encroaching agribusiness conglomerates. 
The hard evidence shows that on average, the wealthy, large producers 
are not, I repeat, not, in the Midwest, and the rich will only get 
richer if a compact extension gets rammed through the Senate.
  Mr. President, not only are certain members of this Congress trying 
to impose expensive dairy compacts on the American consumer, but they 
are also trying to strong-arm through milk marketing order changes that 
adversely impact both Upper Midwest producers in the dairy heartland of 
America and low-income consumers. I also want to review how we have 
arrived at this point today where Congress is trying not only through 
compacts but through the milk marketing order system, to blatantly 
seize market share from dairy producers in one area of the country and 
give it to producers in another. This bill not only hits Midwest 
producers once, but twice.
  The current milk marketing system requires processors to pay higher 
minimum prices for fluid milk the further the region is located from 
Eau Claire, Wisconsin. To reform this antiquated, Depression-era method 
for supplying milk to consumers, which basically picks winners and 
losers in the dairy industry, Congress, through the 1996 FAIR Act, 
required USDA to significantly reduce the number of milk marketing 
orders, and transition to a more market-oriented system of milk 
distribution. After many months of study and having received comments 
from hundreds of market participants, USDA proposed Options 1-A and 1-
B. The Option 1-A proposal made minimal changes to the old marketing 
order pricing system, while Option 1-B contained some basic free market 
reforms and modernizations of the system. The Upper Midwest did not 
like what it saw in 1-B, actually, and liked the compromise even less, 
but it was a small step in the right direction, and we supported it as 
a compromise.
  The compromise came after the USDA received testimony concerning the 
two alternatives, and, as I said previously, the final rule takes steps 
toward simplifying and modernizing the milk marketing order system. As 
an Option 1-B supporter, I hoped for a proposal closer to 1-B, but 
accepted the need for compromise and, again, supported it. 
Implementation of the new compromise orders has unfortunately been 
postponed by a lawsuit in federal court.
  Option 1-A is basically no reform, and would ignore the direction of 
Congress in the FAIR Act. It would increase prices for consumers, 
affecting most the low-income consumers that spend a high percentage of 
their wages on food. Option 1-A also keeps in place a regionally 
discriminatory milk pricing system that benefits producers in some 
parts of the country at the expense of dairy farmers in other regions, 
much like compacts. Again, it's a government program that picks winners 
and losers, not allowing the market to set the prices. It is opposed by 
free market taxpayer advocacy groups, consumer groups, regional 
producer groups, and processor groups, and it does nothing to protect 
the nation's supply of fresh fluid milk. Our nation produces an 
abundance of milk that is sufficient to supply consumers' needs.

  Secretary Glickman, writing about the final rule, said that:

       USDA's own analysis shows that nationally, dairy farmers 
     will realize virtually the same cash receipts under the new, 
     fairer plan as they do now, and when aggregated, the all-milk 
     price will remain essentially unchanged from that under the 
     existing program, which virtually all sides agree sorely 
     needs changing[.]

Moreover, Agriculture Committee Chairman Lugar said that the final 
compromise rule ``is a good first step toward a policy that places the 
nation's dairy industry in a position to better meet the challenges of 
the global markets of the new century[.]''
  What we also need to ask ourselves is why are we considering these 
controversial issues without going through the committee process, with 
full hearings and testimony? The Agriculture Committee has jurisdiction 
over milk marketing orders; nonetheless, we are here today trying to 
circumvent that jurisdiction.
  Again, the final rule is a compromise, not the best for either 1A or 
1B advocates but a middle ground. We should not rush to reverse a 
process that took months to complete in order to replace it with 1A. 
Adoption of 1A would in effect maintain the status quo that, again, 
heavily favors some dairy farms at the expense of others. And please

[[Page S14964]]

don't look at this debate as a mere balance sheet of who wins and who 
loses, or count votes that way. Remember that the Upper Midwest has 
been at a price disadvantage for more than sixty years, and this reform 
was only a modest, and, in fact, inadequate, attempt to correct the 
unfairness. Compacts are bad enough, but retaining these failed dairy 
policies of the past on top of that is incomprehensible.
  Currently 85% of the milk produced in the Midwest goes into 
manufacturing. When other regions of the country receive higher Class I 
differentials, the excess production spills into Midwestern markets and 
lowers the prices that our producers receive. Artificially inflated 
prices will always, always, always increase production. You can count 
on it like the sun rising in the morning. And by artificially inflating 
milk prices in areas of the country that are not particularly suitable 
to dairy production, Congress is literally trying to micro-manage where 
America's milk will be produced, and to take away dairy markets from 
the Upper Midwest.
  No other product receives the same kind of discriminatory pricing 
treatment that milk does in our country. The Upper Midwest can produce 
milk for a third less than some regions of the country. Why should the 
family farmers in the Upper Midwest not be allowed to benefit from the 
comparative advantage they have in milk production?
  Some will claim that the compromise reform will cost the dairy 
farmers across the country $200 million. This is not true. Actually, 
according to a USDA study, net farm income will be higher under the 
compromise rule in comparison to the status quo. And the Food and 
Agricultural Policy Research Institute at Iowa State, an agricultural 
policy research group, concluded that 60% of the nation's dairy farmers 
would receive more income under the USDA plan.
  Some supporters of H.R. 1402 (the legislation upon which these 
provisions now before us are based) also make the same argument as 
dairy compact proponents that if we do not implement H.R. 1402 then 
milk will be produced by agribusiness, or that further farm 
consolidations will occur. Going back to the USDA figures, North 
Carolina, whose congressional delegation has argued strenuously for the 
reversion to Option 1A, has an almost 20% larger per head average dairy 
farm size than my home state of Minnesota. Of course, Minnesota is part 
of one of the regions of the country that the opposition tries to 
demonize as the center of corporate dairy farming. Proof that this is 
not a battle between, quote, ``small family dairy farms'' and large 
Midwestern dairy farms only gets more striking. New York, a state that 
has also seen significant political support for H.R. 1402, has an 
average herd size per dairy farm that is 37% larger than Minnesota's. 
Georgia's average herd size is 72% larger than Minnesota's, and 
Florida's average herd size is four times larger than my home state's. 
Like the dairy compact argument, so much for the idea that we are 
saving the family farmer through passage of H.R. 1402.

  As an aside, because of the blatant unfairness of the system, and 
because the efforts of Upper Midwesterners to compromise in good faith 
have been ignored, forcing us to fight these last minute riders and 
strong-arm tactics, I have recently introduced legislation to totally 
deregulate the milk marketing order system, effective upon the date of 
enactment. This milk marketing order system is a relic from the past. 
It's a byzantine arrangement of complicated pricing formulas that looks 
like something conceived in 1980s Eastern Europe. It's time to tear 
this entire decaying, outdated infrastructure down, and start anew with 
an even playing field on which all producers can compete. That's what 
my legislation does, and I ask my colleagues who believe in fair trade 
and a fair shake for hard working farmers to sign on as cosponsors.
  Mr. President, the dairy compact and the other dairy provisions 
attached to this legislation are anti-competitive, anti-consumer, 
unprincipled, and an affront to the family dairy farmers in my state. 
To be candid, I'm thoroughly disgusted by this entire turn of events. 
We have sacrificed any basic sense of fairness during this process. 
These provisions have been added at the last minute, behind closed 
doors because they won't survive the scrutiny of public debate. Because 
of the blatant injustice that is being done to Minnesota farmers, I am 
committed to joining my Upper Midwest colleagues in doing all I can do 
to ensure that this legislation does not reach the President's desk.
  Mr. President, I would now like to read several newspaper editorials 
that have been written across the country in opposition to dairy 
compacts and H.R. 1402.
  To begin, from the March 15, 1997 edition of The New York Times:

       Agriculture Secretary Dan Glickman blundered last year when 
     he approved a dairy cartel in the Northeast that would jack 
     up consumer prices by perhaps 25 percent. . . . The Dairy 
     cartel, also called a compact, would control the production 
     and distribution of milk in New England, raising its price by 
     between 13 and 35 cents a gallon. That would pump money into 
     the bank accounts of the region's 3,600 dairy farmers by 
     pushing prices back up to last year's sky-high levels. But it 
     would hit 13 million consumers in Maine, Vermont, New 
     Hampshire, Connecticut and Rhode Island with an added cost of 
     up to $100 million. Poor parents, who spend about twice as 
     much of their income on food as do non-poor families, would 
     suffer the most. Food stamps would buy less milk and other 
     dairy products. High milk prices would also raise the cost of 
     national, state and local nutrition programs. With Washington 
     cutting money for welfare, food stamps and other poverty 
     programs, this is no time to impose needless costs on the 
     poor. It will be hard for Mr. Glickman to admit he erred when 
     he approved the cartel. But it would be even harder on 
     parents to pay more for their children's milk.

  From the March 2, 1998 USA Today:

       Imagine being a widget maker in Georgia or New Hampshire 
     with a federal guarantee that assures you a higher price for 
     your product than widget makers in Wisconsin or Iowa. Sounds 
     incredible, huh?
       Imagine being a cattle raiser in Florida or Oregon with a 
     guaranteed price for your beef that's better than what 
     ranchers in Texas or Nebraska can get. Impossible? Yes--but 
     only because you're producing widgets or hamburger. If you're 
     in the milk industry, it's business as usual.
       Pressured by the dairy industry, the government maintains a 
     Depression-era formula that makes some cows (and their 
     owners) more equal than others, depending on where they live. 
     Millions of consumers and taxpayers pay the price; higher 
     milk costs for themselves, higher taxes for government-bought 
     milk for schools and other programs. . . .
       Apologists for government control claim the program is 
     necessary to keep farmers in business and assure a supply of 
     milk. The number of dairy cows plunged from 23.6 million in 
     1940 to 9.4 million in 1996; farms with dairy cows dropped 
     from 4.7 million in 1940 to 155,300 in 1992. But the milk 
     produced per cow has nearly quadrupled. U.S. milk 
     production is up from 109 billion pounds in 1940 to a 
     projected 162 billion pounds in 2000, despite a 60% 
     reduction in the number of cows. And while sales of 
     cheese, cream and speciality products like eggnog and 
     yogurt are up, U.S. demand for liquid milk has been 
     essentially flat for more than 20 years.
       Yet dairy farmers continue to get special privileges, 
     eluding even the 1996 ``Freedom to Farm'' law that committed 
     the government to phasing out price supports and market 
     manipulation for corn, soybeans, wheat and other commodities. 
     . . . Aggressive dairy lobbies in state capitals from 
     Louisiana to New York are pressing to form or enlarge new 
     regional compacts that permit even more manipulation of milk 
     prices at the consumer's expense--adding up to 15 or 20 cents 
     a gallon. That's on top of the indefensible marketing orders, 
     which inflate retail milk prices by at least $1.5 billion a 
     year for a program that isn't needed. Congress abolished 
     ``welfare as we know it'' for mothers and children. Welfare 
     for cows and dairy farmers should end as well.

  The next editorial shows that though the compacts are ostensibly put 
in place to help small dairy farms, they have failed to do so, and 
exist as subsidies to large New England operations. Following are 
excerpts from a July 19, 1999 Boston Globe editorial:

       Dairy farming in New England, especially in Massachusetts 
     has been a chancy proposition for small, family-run 
     operation. . . . Congress, which must soon decide whether to 
     extend the system's enabling legislation, should modify it to 
     focus more closely on smaller farms rather than lavishing 
     money on larger operations that are fully capable of 
     competing in a tough economic environment. Congress should 
     also resist the temptation to expand the system to other 
     parts of the country. . . .
       The rescue effort now in place is a federally sanctioned 
     system of mandated price supports, which amount to about 14 
     cents a gallon. In Massachusetts this generates $40 million 
     annually, but only $2 million goes to Massachusetts farmers, 
     with most of the balance going to Vermont farms, many of 
     which are larger and have lower costs. Massachusetts's 
     agriculture commissioner, Jay Healy, has proposed limiting 
     the subsidy to a fixed level of production, about 1.5 million 
     gallons of milk annually, which is typical for smaller farms.


[[Page S14965]]


  Concluding with an excerpt from the editorial, it says:

       Even the New England system provides more subsidies than 
     are needed to achieve its objective. The funds that now go to 
     larger farms would be more effective if they were used to 
     increase small-farmer subsidies, typically $3,000 to $4,000 
     per farm.

  Now, I must disagree with the editorialist's assessment that the 
subsidies should be continued, but I find it very significant that even 
in New England they recognize that since the subsidy does not 
specifically target the smaller farms, it disproportionately helps the 
larger operations because the subsidy is based upon the volume 
produced. It should not be surprising that efforts to cap the subsidy 
to a fixed level of production have been successfully resisted by the 
large dairy farms in New England.
  The next editorial I will read is from the April 27, 1999 edition of 
the Houston Chronicle:

       The Texas House of Representatives recently approved a bill 
     that seeks to raise milk prices and deprive Texans of the 
     benefits of competition. The Senate need not reflect long 
     before rejecting it. House Bill 2000 would require Texas to 
     join the Southern Dairy Compact, which sets the minimum price 
     for milk paid to producers in its member states. The minimum 
     price inevitably would be higher than the price Texans pay in 
     a competitive market.

  I should note at this point that Congress has not in fact authorized 
the Southern Dairy Compact, and if common sense, prevails, it won't. 
Congress has arbitrarily chosen New England consumers to pay the milk 
tax, and New England producers to receive it.
  Again continuing with the Houston Chronicle article:

       Texas dairy farmers are producing all the milk that Texas 
     families and dairy product manufacturers need and more. There 
     is no reason why state government should make families pay 
     more for the milk, ice cream and other dairy products they 
     buy. The state purpose of House Bill 2000 is to preserve 
     family dairy farms and ensure a supply of fresh milk. But 
     history shows that milk price controls heighten the financial 
     advantage enjoyed by the largest producers without sustaining 
     uneconomical small farms.
       Furthermore, anyone who thinks Texas needs added government 
     regulation to provide a reliable milk supply has not seen the 
     dairy cases at the supermarket that are filled to overflowing 
     with milk and dairy products of every description. Why change 
     a system that provides ample supply and variety at the lowest 
     possible price? Adding Texas to the Southern Dairy Compact 
     would do little to help Texas milk producers, but it would 
     deprive Texas dairy product manufacturers of an advantage 
     they enjoy over competitors in state where the price of milk 
     is controlled.
       This bill is bad for consumers, bad for manufacturers and 
     bad for the taxpayers who pay for or subsidize milk consumed 
     by schoolchildren, prisoners, patients in public hospitals 
     and food stamp recipients. Few bills could provide more 
     reason to reject them than the authors of House Bill 2000 
     have provided.

  The next editorial is from the June 15, 1999 edition of the 
Philadelphia Inquirer:

       In 1996, Congress revamped federal farm laws, intending to 
     ratchet down government's intrusion in agriculture. But a 
     bill now pending would use that law to create regional 
     cartels that would set artificially high prices for milk. 
     Pennsylvania consumers should be lobbying lawmakers against 
     this move. Despite the fact that the state's outdated milk-
     board system already sets minimum milk prices--but no 
     maximum--the legislature last week allowed Pennsylvania to 
     join the cartel known as the Northeast Interstate Dairy 
     Compact.
       Consumers here who consistently pay more for milk than in 
     neighboring states should wince at the prospect of a regional 
     price-fixing body imposing still higher prices. Here's how it 
     works: Congress established the Northeast compact under the 
     1996 act, an agreement among six New England states to prop 
     up milk prices in an effort to save small dairy farms. When 
     milk prices on the open market fall below a ceratin target 
     price, the compact states tack a surcharge onto milk. The 
     extra revenue is passed back to farmers; the higher milk 
     price gets passed along to consumers.
       The compact is set to expire October 1, but a bill 
     introduced in April would make it permanent and expand it to 
     include six more states, including Pennsylvania. What's 
     worse, the bill also would establish a Southern Dairy 
     Compact, which could include up to 15 more states. Already 
     the Northeast compact has raised milk prices by almost 20 
     cents a gallon since its inception. By federal and state law, 
     the compact could raise milk prices in Pennsylvania by about 
     70 cents a gallon, consumer groups warn. The logic behind the 
     original legislation, to save small dairy farms, had some 
     appeal. Dairy farms nationwide have been going out of 
     business, usually because they are acquired by larger 
     producers, at an average rate of 5.1% a year in the 1990s, 
     experts say.
       But that doesn't prove the compact would protect small 
     farmers; it may hurt them. Larger dairy farms which produce 
     the most milk reap the most benefit in subsidies from the 
     compact. Alarmed by the potential harm both to middle-class 
     consumers and low-income families, various groups are 
     protesting the new bill. Nutrition and consumer groups, 
     government-spending watchdogs and milk processors and 
     retailers all have lined up against the concept. Congress 
     should reject this attempt to extend the counterproductive 
     intrusion on the workings of the free market. Let the milk 
     cartel die.

  The following editorial is from the January 5, 1999 issue of Newsday:

       Despite a few new consumer protections that made the deal 
     acceptable to the Democratic Assembly, the state should not 
     have allowed New York's dairy farmers to join a regional milk 
     cartel. This sour stuff will keep the wholesale price of milk 
     artificially high, forcing processors and retailers to pass 
     the cost on to consumers. The hit will fall hardest on the 
     poorest parents who buy milk for their children. And it's not 
     clear now much it will help the small farm owners most in 
     need.
       Besides, there are other ways to help dairy farmers that 
     wouldn't necessarily push up milk prices in markets. The 
     state, for instance, could cut or subsidize a variety of 
     taxes about which farmers have complained. Meanwhile, 
     wholesale milk prices are at a record high, easing some 
     pressure on farmers. Entrance into the Northeast Interstate 
     Dairy Compact would tie New York's farmers into a New England 
     cartel designed to keep prices higher when they otherwise 
     would collapse. Rather than benefit from lower prices, 
     consumers would pay the higher ones when wholesale prices 
     soar. And the law's cap on retail prices is so high that, 
     barring severe inflation, it won't ever be reached. Schools 
     are protected but not other nonprofits. Now, there's only 
     one way to stop this deal. Congress has to approve it. It 
     shouldn't.''

  This next editorial is from the April 4, 1999 edition of The Atlanta 
Journal-Constitution:

       Since the federal Freedom to Farm Act was passed in 1996, 
     the U.S. government has been trying to wean the nation's 
     farmers, including the dairy industry, from government price 
     supports and other subsidies that interfere with the workings 
     of the free market. Unfortunately, the dairy industry is 
     trying to undo that progress by pressuring Congress and 
     states such as Georgia to approve interstate dairy compacts. 
     If the industry succeeds in that lobbying campaign, consumers 
     will have to pay higher prices for a basic food commodity 
     essential for good health.
       The compacts, if approved would essentially establish legal 
     cartels for dairy farmers and allow the cartels to set milk 
     prices higher than the market would otherwise allow. In 
     Georgia, dairy farmers have rammed through the recent session 
     of the General Assembly a bill allowing them to join the 
     Southern Dairy Compact. The same bill was passed a year ago 
     by the General Assembly but was vetoed by Gov. Zell Miller, 
     who noted that it might be unconstitutional and would 
     certainly raise costs for consumers. The decision whether to 
     sign the latest bill rests with Miller's successor, Roy 
     Barnes.
       Barnes was elected last year in part by portraying himself 
     as a consumers' advocate. If he honors the philosophy, he too 
     should recognize the dairy compact as nothing more than a 
     back-door tax increase and veto it accordingly. Government 
     should not use its power to guarantee any business or 
     industry a profit.
       A dairy compact already exists in New England. After it was 
     enacted in 1997, the price of milk rose from $2.54 and 
     fluctuated to a high of $3.21 a gallon. Milk prices there 
     initially jumped about 20 cents a gallon, enough to generate 
     an additional $46.7 million for dairy farmers in less than 
     two years. Not surprisingly, New England dairy farmers see 
     the compact as a safety net designed to prevent their profits 
     from dropping too dramatically.
       Those who actually pay higher prices, however, see it as 
     little more than a special-interest tax increase that will 
     only hurt consumers, particularly the poor, the elderly and 
     those on fixed incomes. Milk prices go up and down monthly 
     all over the country, but when prices drop significantly in 
     the spring and fall, they only drop slightly in dairy compact 
     states. The savings to the consumer is lost so the dairy 
     farmer can keep a high return on the product.
       ``It socialism. It's a controlled economy,'' said John 
     Schnittker, an economist with Public Voice for Food and 
     Health Policy. ``Compacts are a really bad deal for 
     consumers. They add about 22 cents a gallon to today's milk 
     price. And they keep paying high prices when prices all over 
     drop.' Nine southern states besides Georgia have already 
     approved creation of a Southern Dairy Compact to mimic the 
     protectionism found in New England. However, that and other 
     proposed compacts must still be approved by Congress, which 
     also has to decide whether to renew the New England Dairy 
     Compact.''
       Congress should reject both these proposals as unnecessary, 
     counterproductive intrusions on the workings of the free 
     market. However, if Barnes signs the Georgia law and Congress 
     approves the Southern compact, Georgia consumers are stuck. 
     The state can

[[Page S14966]]

     withdraw from the compact only through passage of another law 
     by Congress and then only after a one-year waiting period. 
     Approval of dairy compacts in the South would not suspend the 
     law of supply and demand. It would only distort it. Some 
     economists predict that as a result of higher prices, dairy 
     compacts would reduce milk consumption by 8 percent 
     nationwide. Those most vulnerable would be families with 
     young children, who in many cases are already struggling to 
     make ends meet.
       Georgia's dairy industry is going through a painful 
     consolidation. The state lost 117 dairy farms over the past 
     four years, and farmers warn that without government 
     protection, more and more milk will have to be imported from 
     other states. However, dairy farms in neighboring states have 
     also been disappearing; the trend toward consolidation is 
     nationwide. Furthermore, milk from Alabama or Tennessee 
     tastes the same as Georgia milk, and today's technology 
     allows quick transport to prevent milk products from 
     spoiling.
       Free enterprise, competition and the open market have been 
     the economic pillars of the United States' economy for more 
     than 200 years. Every experiment at subsidizing an industry 
     has proven to be a failure, particularly in agriculture. Gov. 
     Roy Barnes should protect Georgia consumers and families by 
     vetoing that state's entry into the Southern Dairy 
     Compact. And Congress should dismiss the entire concept as 
     an unnecessary infringement on free enterprise.

  I also want to share with my colleagues some editorials concerning 
the milk marketing order system.
  This editorial is from The Dallas Morning News, dated September 14, 
1999. It says:

       Minnesota Gov. Jesse Ventura wants Beaumont, Texas to be 
     the center of the dairy universe instead of Eau Claire, 
     Wisconsin. Mr. Ventura knows that there are no dairy cows in 
     Beaumont. Nevertheless, his logic is faultless. That's 
     because federal farm policy dictates that the farther a dairy 
     farmer lives from Eau Claire, the more milk processors must 
     pay him for his milk. Minnesota profits little from the 
     arrangement because it borders Wisconsin. But it is 1,200 
     miles from Beaumont. So making Beaumont the new Eau Claire 
     makes sense for Minnesota's hard-pressed dairy farmers.
       In truth, Mr. Ventura favors a free market in agriculture. 
     His facetious advocacy for Beaumont is designed to focus 
     public attention on absurd federal dairy policies, which 
     punish efficient producers and gouge consumers. The United 
     States needs to abandon the Depression-era thinking that led 
     it to calculate milk prices based largely on dairy farms' 
     proximity to Eau Claire. Times have changed; U.S. 
     agricultural policy remains mired in the 1930s.
       Unfortunately, Congress seems poised to revoke the few 
     tentative reforms that it passed in 1996 and to expand and 
     give extended life to a program that would create consumer-
     antagonistic milk cartels in sections of the country. A 
     simplified milk-pricing system is supposed to go into effect 
     on October 1. And federal price supports are supposed to end 
     on Dec. 31. But a key congressional committee has approved a 
     bill that would stifle both of these reforms. Another 
     congressional committee is expected to vote soon on a bill 
     that would expand a milk cartel of six northeastern states to 
     as many as 27 states; if Congress does nothing, the cartel 
     would disappear on October 1.
       Congress should leave the reforms in place and let the milk 
     cartel ride into the sunset. Monkeying with the free marked 
     has raised prices for consumers and hasn't kept marginal 
     dairy farms from going bankrupt.

  This next editorial is from the July 29, 1999 Chicago Tribune:

       The U.S. justifiably accuses Europe of protectionism when 
     it comes to beef and bananas. But when lamb and milk are on 
     the menu, the accuser stands accused. The Clinton 
     administration just slapped tariffs on lamb imports from 
     Australia and New Zealand to protect U.S. sheep producers. 
     That's outrageous and makes a mockery of the case the U.S. is 
     trying to build that phasing out agricultural subsidies must 
     be a priority when the next round of World Trade Organization 
     negotiations is launched in Seattle this November.
       But as outrageous as the lamb tariffs are, they pale in 
     comparison to the mischief currently afoot in Congress to 
     extend and expand what can only be called domestic 
     protectionism in milk pricing. Who needs the rest of the 
     world for a trade war? If some in Congress have their way, 
     we'll soon have our very own All-American trade war, pitting 
     the Midwest against the Northeast and the South while 
     needlessly raising milk prices for consumers.
       The facts are these: As part of the 1996 Federal 
     Agriculture Improvement and Reform (FAIR) Act, the decades-
     old milk price support program was to be phased out over 
     three years and the Department of Agriculture was ordered by 
     Congress to reform its unfathomable pricing system. The farm 
     bill also created a ``temporary'' milk cartel among six New 
     England states--which account for all of 3 percent of U.S. 
     milk production--to keep less expensive milk out of that 
     region. The rationale was that small family-owned dairy farms 
     in those states needed an adjustment period to prepare them 
     for free-market competition come October 1999 when the cartel 
     would expire.
       Now there is an effort in Congress to roll back the USDA 
     pricing reforms, to extend the life of the New England cartel 
     beyond October and expand it to include six other states, 
     including New York and Pennsylvania. And 15 southern states 
     say that, in order to compete with their brethren to the 
     north, well, they're going to need a cartel of their own. 
     Follow the map west to see where this is headed. There are 
     about 9,000 dairy farmers in America--40,000 of them are in 
     the upper Midwest and, at some point, why shouldn't they have 
     a cartel too? And, of course, the West will need one to 
     compete with all the others. Don't do it, Congress. The FAIR 
     Act properly and at long last got Washington out of the 
     milk business. Let the market work.''

  This editorial is from the April 3, 1999 edition of the Boston 
Herald:

       The federal government is reorganizing its milk cartels, 
     and that made news this week. Every bit of attention that can 
     be focused on this absurd system of price controls ought to 
     be considered help, no matter how small, toward eventual 
     abolition. The Agriculture Department has a new set of price-
     setting formulas, which it estimates will reduce the national 
     average price by 2 cent a gallon, and is consolidating 
     regional cartels to make 11 cover the country instead of the 
     previous 31.
       Nothing fundamental will change. The ``marketing order'' 
     regions are protected markets for farmers--all dairies in one 
     must pay the same government-dictated price to farmers. It is 
     illegal to ship milk from one region to another. Nothing else 
     in the economy is sold like this--not even essentials like 
     gasoline or shoes. The effect is to keep prices higher than 
     they would be otherwise and transfer wealth from families 
     with children to dairy farmers. The farmers, the productivity 
     of whose cows just keeps increasing, argue in essence they 
     ought not to be driven out of business by economic forces.
       If we accepted that as a principle, we'd be subsidizing 
     manufacturers of gas lamps and buggy whips.

  This editorial is from the July 17, 1999 edition of The Kansas City 
Star:

       In 1996, Congress ordered the administration to simplify 
     the pricing of milk. That's easy enough: Stop regulating it. 
     But this is the farm sector, and a free market in milk is 
     somehow inconceivable. Instead, milk prices are calculated 
     from rules and equations filling several volumes of the Code 
     of Federal Regulations.
       The administration's proposed reform would reduce the 
     number of regions for which the price of wholesale milk is 
     regulated from 33 to 11. Fine, but it would also perpetuate 
     the loopy, Depression-era notion that the price of milk 
     should be based in part on its distance from Eau Claire, 
     Wisconsin. Under current policy, producers farther away from 
     this supposed heart of the dairy region generally receives 
     higher premiums, or ``differentials.''
       The administration called for slightly lower differentials 
     for beverage milk in many regions, but in Congress even this 
     minuscule step toward rationality is being swept aside. The 
     House Agriculture committee has substituted a measure that 
     essentially maintains the status quo. Similar moves are afoot 
     in the Senate.
       Worse, some dairy supporters are working to reauthorize and 
     expand the Northeast Interstate Dairy Compact, a regional 
     milk cartel, and allow a similar grouping for Southern 
     states. Missouri's legislature, by the way, has already voted 
     to join a Southern compact, even though it would result in 
     higher prices for consumers. The Consumer Federation of 
     American reports that the Northeast Compact raised retail 
     milk prices an average of 15 cents a gallon over two years.
       Kansas lawmakers gave tentative approval to participation 
     in a compact but would have to act again to make the decision 
     final. Dairy producers concerned about the long view should 
     be worried. Critics point out that the higher milk 
     differentials endorsed by the House Agriculture Committee may 
     well lead to lower revenue for many producers. This is 
     because the higher prices will encourage more production, 
     driving down the ``base'' milk prices and negating the higher 
     differential.
       The worse idea in this developing stew is the prospect of 
     dairy-compact proliferation. A compact works like an internal 
     tariff. Because the cartel prohibits sales above an agreed-
     upon floor price, producers within the region are protect 
     from would-be-outside competitors. Opponents point out that 
     more regional compacts--and the higher prices they support--
     will breed excessive production, creating surplus dairy 
     products that will be dumped in the markets of other regions. 
     This will prompt other states to demand similar protection, 
     promoting the spread of dairy compacts.
       Ultimately, as in the 1980s, political pressure will build 
     to liquidate the dairy surplus in a huge, multibillion-dollar 
     buyout of cheese, milk powder and even entire herds . . . 
     Congress should permit the Northeast Compact to ``sunset,'' 
     or expire, which will occur if the lawmakers simply do 
     nothing. In fact, doing nothing to the administration's 
     proposal seems the best choice in this case, or more 
     properly, the least bad. Perhaps some day Washington will 
     debate real price simplification, as in ditching dairy 
     socialism and letting prices fluctuate according to supply 
     and demand.


[[Page S14967]]


  This editorial is from the September 14, 1999 edition of the San 
Antonio Express-News:

       During the Depression, when it was impractical to truck 
     milk long distances from dairy farms to processing plants, 
     Congress devised a system of price supports that flattened 
     the price farmers--and consumers--paid for milk. That system, 
     still in place, pays dairy farmers more for milk the farther 
     they are from Eau Claire, Wisconsin, the ``center,'' said 
     Congress in the 1930s, of the dairy industry.
       While refrigerated trucks and modern dairy farms make the 
     system arcane, Congress preserved it until 1996, when it 
     ordered the Agriculture Department to phase it out. Price 
     supports are scheduled to end December 31. However, Congress 
     is toying with keeping them and adding to the mess by 
     creating a new dairy compact.
       There already is a Northeast compact, designed to help 
     family farms. However, it helps large dairy farms more than 
     small ones and adds from 50 cents to $1 to the price of a 
     gallon of milk. This not only negatively impacts families, 
     but also child nutrition programs. The Northeast dairy 
     compact also was supposed to die December 31, but some 
     members of Congress now want to create a Southern compact . . 
     . Let the dairy price supports expire and don't create a new 
     Southern dairy compact.

  This editorial is from the September 20th edition of the Florida 
Time-Union:

       There is a good lesson to learn as reformers in Congress 
     continue efforts to end milk subsidies. The lesson is that a 
     government handout, once in place, is as close to having 
     eternal life as anything on earth. Millions of consumers 
     would benefit from the end of dairy price supports and milk 
     marketing orders, but hundreds of wellheeled milk magnates 
     would have a little taken off the bottom line, perhaps.
       Every product that contains any milk costs more because of 
     them. Like most subsidies, it involves a double cost: higher 
     taxes and higher prices. Even those who are lactose 
     intolerant are injured by the subsidies. For example, 
     taxpayers get hit hard when they buy milk for the Women, 
     Infants and Children program and school lunches.
       People with food stamps get hurt because they pay more for 
     milk and therefore have less for other staples. The 
     industry's lobbyists stalk the halls of Congress carrying 
     tales of woe about the diminishing number of dairy cows. Yet, 
     they rarely talk about the nearly four-fold increase in milk 
     from each cow that occurred between 1940 and 1996.
       The federal government got into the dairy business in 1933. 
     Citizens Against Government Waste notes that the excuse was 
     to relieve the existing national economic emergency by 
     increasing agricultural purchasing power.
       Call Washington: The Great Depression has ended.
       Price supports and marketing orders are part of a . . . 
     system rivaling anything devised in the old Kremlin's central 
     planning office. They cut off the dairy farmer from the 
     realities of the market, causing overproduction and waste, 
     with the government trying to clean up its mess by buying 
     huge stockpiles of cheese or even entire dairy herds. Price 
     supports are winding down because of the 1996 Farm Bill, but 
     marketing orders remain.
       Clinging to the days when long-distance refrigeration was a 
     potential problem, the order include differential pricing 
     based on how far manufacturing plants are from Eau Claire, 
     Wisconsin, which makes that hamlet the center of the dairy 
     universe for no logical reason. That translates into 35 cents 
     more per gallon of milk for Florida residents, Citizens 
     Against Government Waste says. Parents can do the math.
       Lobbyists succeeded in muddying the 1996 bill. Congress 
     should now revisit the law and improve on the improvements. 
     There simply is no rational reason for the federal government 
     to set the price of milk. End the milk tax.

  This one is from the September 24, 1999 of the Christian Science 
Monitor:

       No one can dispute the difficulties many family farms face 
     today, problems farmers have struggled with this entire 
     century. For many, farming is more than just earning a 
     living, it's a way of life and a connection with the land. 
     The nation, too, has a stake in preserving farms. But at what 
     price? It's mistake to argue that agriculture can be 
     insulated from shifting market forces forever. Government can 
     help  farmers adjust but not always survive.
       This week saw Congress swing backward in its own mandate to 
     update a federal system of setting milk prices that currently 
     props up many dairy farms. It's not a minor issue: Dairy 
     sales make up roughly 10 percent of American farm income. The 
     House voted Wednesday to block the Agriculture Department 
     (USDA) from modernizing the 1937 pricing system in which 
     dairy farmers get higher prices for raw milk the farther they 
     live from Eau Claire, Wisconsin. (Then considered the 
     ``center'' of dairy farming). The idea back then was to 
     ensure fresh milk supplies nationwide. But with modern 
     refrigeration and transportation, it's obsolete.
       A 1996 law handed USDA the job of devising and implementing 
     a new system since Congress, representing competing 
     interests, couldn't get it done. The 1937 system expires 
     October 1. While the USDA plan is more market-friendly, it's 
     only a first step. It simplifies pricing and narrows 
     disparities between efficient Midwestern farmers and less-
     efficient ones elsewhere that can get up to $3 more per 100 
     pounds of milk. But in doing so, it would remove a $200 
     million, consumer-paid subsidy, potentially driving many 
     Northeastern and Southern dairy farmers out of business.
       The House scrapped the Eau Claire system, but left in place 
     pricing that hurts consumers, who pay artificially high 
     prices for milk. The Senate shouldn't follow suit; if it 
     does, the President should veto the bill. Meanwhile, 
     Vermont's senators are spearheading an effort to renew the 
     federally authorized Northeast Dairy Compact, which is 
     expiring. Separate from the USDA pricing system, the compact 
     allows regional officials to set higher prices for milk. Some 
     Southern senators want a similar cartel.
       Yet all this price-fixing has failed to halt the decline of 
     inefficient dairy farms. Between 1992 and 1998, the number of 
     dairy farms fell about 5 percent a year to 91,508. Price-
     fixing only drags out the difficult process at consumer 
     expense.

  This editorial is from the April 29, 1999 of the Cincinnati Enquirer:

       Three years ago, Congress busted its bib-overall buttons 
     with pride after it planted a few seeds of agricultural 
     reform in the Freedom to Farm Act. Problem is, nobody's 
     remembered to water them since. That neglect is placing a 
     huge economic burden on farmers, says Representative John 
     Boehner.
       The bill, co-written by Mr. Boehner, began to phase out 
     some farm subsidies over seven years to create a free-market 
     structure for agriculture that reflected America's economic 
     reality. So far, so good. But the other part of the deal, Mr. 
     Boehner points out, was the federal government was supposed 
     to help farmers through the transition by opening new markets 
     for their goods, cutting estate taxes and easing the 
     regulatory burden on farmers.
       What's happened? Nothing, of course. President Clinton has 
     made some occasional noises about the need to ``tear down 
     barriers, open markets and expand trade,'' but administration 
     officials conveniently forgot that part--and Congress hasn't 
     been exactly diligent in reminding them. In fact, the White 
     House only made matters worse--notably with a new set of 
     costly federal environmental mandates on farmers announced 
     last month. . . .
       On Tuesday, Mr. Boehner sounded the alarm on legislative 
     efforts to renew one interstate price-fixing dairy compact 
     and to create a new one. Such deals ``are bad for consumers, 
     bad for farmers and bad for the future of American 
     agriculture,'' he said. It would be another step backward 
     from free-market reform--a troubling turn of events. And so 
     the Freedom to Farm Act itself has been left to take the rap 
     for farmers' woes--low prices resulting from a record 
     harvest, coupled with overseas financial crises. The news is 
     terrible: Kansas farm income plunged 72 percent last year, 
     the Kansas Farm Management Association announced Tuesday.
       ``Farmers today are having a tough time, and Washington's 
     inaction on this forgotten side of Freedom to Farm is making 
     it even tougher,'' says Mr. Boehner, who's virtually alone in 
     criticizing this federal foul-up. ``It is fundamentally wrong 
     for the Clinton administration to make Freedom to Farm the 
     scapegoat for its own failure to deliver on its promises to 
     farmers.''
       He says Mr. Clinton ought to help Congress with trade, 
     estate-tax and regulatory relief legislation instead of 
     throwing up roadblocks and imposing new sets of rules on 
     farmers. Mr. Boehner is right, and his colleagues should join 
     him in putting the pressure on the White House. As reforms 
     go, Freedom to Farm was pretty tame, a watered-down 
     compromise that left a lot of pet projects intact.
       But it did manage to break federal precedent, by starting 
     to reverse 60 years of Depression-era subsidies and controls 
     that made little sense once America recovered from economic 
     devastation. Now, those modest gains are in danger from a 
     rule-happy, control-freak administration, enabled by a 
     complacent Congress. . . .

  Finally, the last editorial I'm going to read is from Wednesday's 
edition of the Washington Post. It says:

       This is a Congress that began with lofty discussions of 
     saving Social Security, modernizing Medicare, etc. But all 
     legislatures come back to the fundamentals in the end. Among 
     the few issues that remained as the two chambers were 
     completing their work--right up there with U.N. dues and 
     Third World debt relief--was milk price supports.
       Somewhere in the final mega-bills will be provisions 
     allowing New England to maintain a dairy compact that keeps 
     milk prices artificially high, and abandoning a modest reform 
     that Congress itself virtuously ordered a few years ago 
     reducing such supports elsewhere in the country. 
     These provisions are brought to you by people who in other 
     contexts present themselves as foes of government 
     regulation. But they like it well enough when it produces 
     what they want--extorting higher prices for milk, for 
     example.
       In the Freedom to Farm Act of 1996, while reducing supports 
     for other crops, Congress called for a study of the milk 
     marketing order system, which props up prices at the checkout 
     counter. The study produced a recommendation that the system 
     be preserved

[[Page S14968]]

     but eased. Even that seems too much for the milk folks in 
     Congress. Though the issue was still in play, it appeared 
     last night they would succeed in keeping the old system 
     intact. It's just like the emergency aid they've doled out to 
     producers of other crops in the past two years, repealing by 
     another name the reduced supports in Freedom to Farm. 
     Meanwhile, the New England compact, which was due to expire, 
     will be allowed to remain in effect for two more years.
       The result will be to transfer hundreds of millions of 
     dollars from consumers to inefficient producers who couldn't 
     otherwise compete. By definition, most of the benefit will go 
     to larger producers. The impact will be disproportionately 
     felt by lower-income consumers. It will be evident inside 
     government feeding programs as well, including that for low-
     income women, infants and children; the available dollars 
     will buy less. It's a fitting testament to the instincts of a 
     Congress that, from the standpoint of the public interest, 
     can't go home soon enough.

  Mr. President, the editorial boards have got it right this time, and 
now is the time to end these distortions and fundamental unfairness in 
dairy markets before it gets worse.
  Mr. President, I wanted to take a moment to thank the majority leader 
and the Democratic leader for taking the time to work with us. I 
appreciated all their help and support in working with my colleagues, 
Senators Kohl, Wellstone, and Feingold. We don't see eye to eye on 
every issue, but on something as important to our States as this, I 
appreciated the opportunity to work with them.
  I want to say that any Senator who has one ounce of support for the 
capital market, the free market system, they could not support this 
part of the dairy provisions. The Northeast Dairy Compact and the bill, 
H.R. 1402, is unacceptable. I am not happy with this bill, but I am 
glad the majority leader has recognized the problem and has offered to 
work with us in the months ahead. I appreciate that. When we look at 
Freedom to Farm--the bill that passed--it says we should compete in the 
open marketplace, go head to head. The best person and the best farmer 
who can be competitive is going to win.
  Now, we should not be pitting our dairy farmers one against the other 
through an unfair, archaic Government program. Let our dairy farmers 
compete head to head in the marketplace, but let's not have Government 
pick winners and losers. I have worked closely with Senator Jeffords 
from Vermont. I told him, after we had a vote on the floor dealing with 
the Northeast Dairy Compact, I wasn't satisfied with that, as well, and 
we needed to get together and work out something where our dairy 
farmers are not put at a disadvantage, one against the other.
  Again, I appreciate all the efforts that have been put into this. I 
look forward to working with all our colleagues next year to try to 
bring some kind of fairness to this dairy program, as we have done with 
other farmers. We should not leave dairy unanswered. I thank everybody 
for their help, and I look forward to working with colleagues to make 
sure we can work out a fair bill that will satisfy everybody when it 
comes to dairy.
  I yield the floor.
  The PRESIDING OFFICER. The distinguished Senator from Texas is 
recognized.
  Mr. GRAMM. Mr. President, what we have before us is not the answer to 
our prayers, but it is what we call in politics ``consensus.''
  Margaret Thatcher said of consensus:

       To me, consensus seems to be the process of abandoning all 
     beliefs, principles, values, and policies in search of 
     something in which no one believes.

  Well, I would like to say to our dear colleagues, Senator Kohl and 
Senator Grams, that I do not support dairy compacts. There are two 
sides to every issue, and I know we have people on both sides. In this 
case, however, at least in my mind, there is a right side and a wrong 
side. Dairy compacts would make a Soviet commissar blush. The idea of 
allowing a regional group of producers to conspire, with Government 
support, and set prices is an absolute outrage. We ought to be ashamed 
of it, especially having passed Freedom to Farm.
  I share the outrage of my two colleagues. I just want to say to Rod 
Grams and Herb Kohl, on this issue, not only did they fight for their 
States but for every consumer across this country. Senator Byrd, if the 
great general had been from Wisconsin it would have been a much shorter 
war, from a historians point of view, and that would have meant a much 
better outcome from a humanitarian's point of view. In any case, we 
have had people here who stood up and fought for what they believed in, 
what was right for their States. In this body we still honor those 
people. I commend both Senator Kohl and Senator Grams.
  The PRESIDING OFFICER. The Senator from Nevada.
  Mr. REID. Mr. President, I have had the good fortune, in the past 
several days, to work to resolve many issues. We have made some 
progress. I want to say that what we have seen in the last few days 
could not be a better illustration of what politics and Government is 
all about. I say that in a positive fashion. We have had people from 
the State of Wisconsin and the State of Minnesota fighting for what 
they believe is right. The Constitution was developed to protect the 
minority, not the majority. The majority can always protect themselves.
  The Constitution is set up, especially through the Senate, to always 
protect the minority. That is what they were doing, protecting 
themselves. They, in effect, didn't get a fair deal in this omnibus 
bill.
  About the Senator from Wisconsin, there have been a number of things 
said, especially by the Senator from West Virginia. I underscore and 
applaud that. We have to make sure the other Senator from Wisconsin is 
also recognized. They have both been stalwarts in this battle.
  I direct everybody's attention to yesterday's Congressional Record. 
On page S14794, there was a statement made by Senator Kohl. If anyone 
is ever concerned about what the free enterprise system is all about, 
read what Senator Kohl said yesterday on the Senate floor. That is what 
this debate has been all about--about the free enterprise system in 
this great country of ours.
  In effect, what the Senators from Wisconsin have been fighting about 
is whether or not the free enterprise system is going to be 
circumvented by a cartel, a deal that has been, in effect, condoned, 
underlined, and set forth by the Federal Government. It should not be. 
So I direct everyone's attention to this. I appreciate very much the 
cooperation of the Senators from Wisconsin and especially the Senator 
from Minnesota, Mr. Wellstone. He has fought long and hard, and he has 
been on this floor for the last several days. To my friends from 
Minnesota and Wisconsin, I appreciate their recognizing that they have 
rights. They have done everything they could to protect their rights 
under the Constitution.
  The PRESIDING OFFICER. The Senator from Minnesota is recognized.
  Mr. WELLSTONE. Mr. President, I am going to defer to Senator Kohl, 
and I will follow him and Senator Feingold. I have literally 30 
seconds.
  I yield to Senator Kohl.
  Mr. KOHL. Mr. President, I sincerely thank all of my colleagues who 
have spoken up this afternoon. It has been remarkable to hear Senators 
from both sides of the aisle express themselves in such a heartwarming 
way, and I think in such a fair and clear way with respect to this 
country of ours and how our economy works and how it is intended to 
work.
  It is remarkable to me that all these leaders have made clear that 
while we are passing dairy legislation this afternoon, it is of 
necessity, and not because they and we believe in the specifics of that 
legislation. It is heartwarming for me to know that when we come back 
next year, we apparently have common agreement on both sides of the 
aisle that we are going to work together to come up with dairy 
legislation that more clearly and fairly represents the interests not 
only of the different parts of our country in terms of our States and 
regions but more clearly represents the real intentions of our 
Constitution with respect to how this economy is supposed to work and 
how the free enterprise system is supposed to work.
  It has been a long, hard fight for myself, Senator Feingold, Senator 
Wellstone, Senator Grams, and others. Certainly, what happened here 
this afternoon, in my opinion, justifies that fight and leaves me 
feeling very good about my colleagues on both sides of the aisle and 
feeling very optimistic about the things we can look forward to next 
year.

[[Page S14969]]

  I yield the floor.
  The PRESIDING OFFICER. The distinguished Senator from Wisconsin is 
recognized.
  Mr. FEINGOLD. Mr. President, I thank all the people that have 
participated in the colloquy for their kind words about our effort and 
for coming to the floor to say it. My primary purpose in rising at this 
point is to praise my senior colleague, Senator Kohl.
  The words that have been said about many in this effort are true. But 
I want everyone to know that this was not an effort that he initiated a 
week ago, or 2 weeks ago, or 2 years ago. Every single day since I have 
been in the Senate I have found working with Senator Kohl on this 
critical issue to be one of the best opportunities to work with another 
Senator together for our State. This has been certainly the most 
dramatic example. But it is an example also of the tenaciousness that 
Senator Kohl has on behalf of our dairy farmers.
  Both he and I spent our entire youth in Wisconsin. He and I both know 
that in 1950 there were 150,000 dairy farms in this Wisconsin. Now 
there are less than 23,000. Over that time you begin to realize that 
some of the old dairy policies maybe once worked but now, frankly, are 
absurd. The notion of having this difference between the class I milk 
across the country based on issues that refrigeration and 
transportation that stopped existing decades ago makes no sense. The 
idea of a dairy cartel in one part of the country and a system that is 
supposed to be based on national economy and free enterprise is also 
ridiculous.
  We know this Congress asked that the Department of Agriculture take a 
look at these issues, and said: What do you think we ought to do? They 
came back with a conclusion to narrow those differentials and get rid 
of the compact. Over 90 percent of the producers in the country said 
that is the right idea. That is why Senator Kohl and I fought so hard, 
because it wasn't just our idea. It wasn't just Wisconsin. It was a 
national consensus.
  Unfortunately, I think this Congress has very inappropriately 
overturned that. And Senator Kohl and I will not give up until we have 
had the opportunity to reverse this unfortunate decision.
  But I want to join with my senior colleague in thanking everyone for 
their courtesies on this. We obviously could have taken this to an even 
greater extent, and we realize the issues that are involved in that. 
This is a very important issue to not only Wisconsin, but to Minnesota, 
and to other States. We certainly will be back early next year to 
continue the battle.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Minnesota is recognized.
  Mr. WELLSTONE. Mr. President, first of all, I also would like to 
thank all of my colleagues. I appreciate their comments.
  I think the only thing I say that might be a little different is I 
remain pretty skeptical, to be honest. I am glad to hear what my 
colleagues have said. I think that is real progress. We are talking 
about working together. I think we are very committed--I say this to 
Senator Kohl, to Senator Feingold, and to Senator Grams--to making sure 
that working together leads to a product. We have to change what we 
have right now because the compact blocking the milk marketing order 
reform has a disastrous impact on our dairy farms.
  I come from a State where we lose about three dairy farms a day. I 
appreciate the comments that have been made. I know the Senators who 
have made them have made them in good faith. That gives me confidence. 
On the other hand, given what has happened, permit me to be skeptical 
until we see the product. The proof is in the pudding.
  Finally, since my colleague from Texas mentioned the Freedom to Farm 
bill--what some of us call the ``freedom to fail'' bill --I think dairy 
is part, just part of it. We have to write a new farm bill. We have a 
failed farm policy. We have to change this. We are going to press hard 
to do so.
  Thank you very much. I yield the floor.
  Mr. JEFFORDS. Mr. President, I must set the record straight with 
regard to the Northeast Interstate Dairy Compact. Rarely in all my 
years in Congress have I witnessed such ill-considered comment and 
media hysteria as has occurred over the Dairy Compact in these last few 
days.
  I recognize that my Senate colleagues from the Midwest are, very 
understandably, raising the dairy issue to a new level of concern and I 
welcome the opportunity to respond to their call for productive changes 
in our dairy policy. As for my media friends, I appreciate the 
heightened scrutiny of our dairy policy, because we in the northeast 
share a common concern with our Midwestern Senate colleagues over the 
current state of our nation's dairy policy.
  To my Senate colleagues from the Midwest: I have worked on the dairy 
issue for all of my twenty-four years in the Congress. More than most, 
I appreciate the complexity and difficulty of this issue. There is 
nothing I would like more than to join with you in common cause to 
improve our nation's dairy policy.
  But let us be frank with each other. The key issue that has divided 
us in all my time here, and which continues to divide us, is your 
insistence that the Midwest should somehow be seen as the source of our 
nation's supply of fluid, or beverage, milk.
  This insistence has been and still remains simply contrary to the 
overwhelming will of this Congress. And this is not just an issue that 
divides the northeast and the Midwest; this is an issue that divides 
the Midwest from the rest of the country.
  The universal constituencies of every member of Congress, from every 
region including your own, demand a local supply of fluid milk. This is 
not a free market issue, not merely an issue of the best interests of 
dairy farmers.
  The real issue is the very nature of our basic food supply and so 
extends way beyond the mere interest of a single constituent group. 
Regionally and on behalf of the nation as a whole, the Congress simply 
will not yield to the destruction of our local supplies of fresh, 
wholesome drinking milk, and the inevitable result of the consumption 
of reconstituted milk.
  For now and for the foreseeable future, our nation's dairy policy 
will be based on the maintenance of local, regional supplies of fluid 
milk. You must recognize that we cannot compromise on this issue.
  This fact must and will define our national policy. The Midwest will 
never be called upon to provide the supply of fluid milk for the rest 
of the country.
  And so I call upon my Senate colleagues from the Midwest to look 
elsewhere than to reformation of the fluid marketplace for a solution 
to the problems your dairy industry faces. I make this call in the 
spirit of cooperation and with a positive spirit.
  To my media friends: I welcome this opportunity to respond to the 
specifics of the various misstatements and misinformation contained in 
the most recent descriptions of the Dairy Compact. Before doing so, I 
would like first to highlight for you a simple and incontrovertible 
fact about the Dairy Compact:
  Twenty-five of our fifty states have now passed dairy compact 
legislation patterned after the original compact language first adopted 
by the Vermont legislature in 1987. This means that twenty-five 
legislatures and twenty-five governors (more, if you count the number 
of governors who have supported the bill over the years) have committed 
their active support to this unique legislation.
  With this important fact in the background, I would like to respond 
to the charges and assertions that have recently been raised against 
the Dairy Compact.
  For purposes of this discussion, I will address directly the 
substance of the editorial that appeared yesterday in the Wall Street 
Journal. To summarize the editorial, the Dairy Compact is a ``price 
fixing cartel'' which benefits ``inefficient'' Vermont dairy farmers 
unfairly at the expense of their more efficient Upper Midwest 
counterparts.
  To compound this misery, the Compact unduly burdens milk consumers in 
the northeast, particularly the most vulnerable ``poor children'', ``to 
the tune of 20 cents a gallon.''
  Now I would like first generally to ask this body: Who in their right 
mind would support such a clearly wrongheaded policy as so 
characterized by the Wall Street Journal? Who could support any measure 
which pits a relatively small number of farmers

[[Page S14970]]

against a vastly greater constituency of consumers, and which 
disadvantages our most vulnerable citizens?
  Certainly not the twenty-five state legislatures and governors which 
have adopted Compact legislation. And certainly not the 40 Senators and 
over 160 House Members who co-sponsored legislation to approve Compact 
legislation here in the Congress.
  Certainly not the Compact's bi-partisan supporters in the Congress 
and around the country, who represent the country's most rural and most 
urban constituencies. And such an initiative could never have been 
embraced simultaneously by our nation's most divergent regions--the 
northeast and the deep south.
  Just look at the list of co-sponsors here in the Senate. Senator 
Jesse Helms joins Senator Ted Kennedy. Senator Schumer from New York is 
a co-sponsor along with Senator Thurmond from South Carolina. Need I 
say more about the diversity of support for the Compact?
  And so I call upon the media to look at the Compact with a fresh 
gaze. If you will do so, I think you will find that the reason for this 
unusual if not truly unique support for the Compact is really quite 
simple: The Compact manages to respond simultaneously to all of the 
divergent interests at play in today's dairy marketplace.
  The Compact does not just respond to the needs of dairy farmers. 
Consumers, processors, retailers, as well as farmers, all find their 
place in the regulatory process created by the Compact.
  Because the consumer ultimately pays, the consumer controls the 
decision as to whether the price should be raised. Perhaps most 
importantly, because the Compact is made up of individual sovereign 
states, the sovereign right of each state to control its own regulatory 
fate is ultimately protected by the Compact.
  In short, the Compact truly promotes the public interest. Let me see 
if I can further advance the discussion by clearing up at least some of 
the cloud of confusion which the Journal and others have cast around 
the Compact.
  Let's begin with the claim that the Compact is a ``price-fixing 
cartel''. Along with the Journal, the Washington Post also yesterday 
referred to the Compact as a ``cartel'' in an editorial. And our 
supposed ``newspaper of record'', The New York Times, has repeatedly 
described the Compact as a cartel in its coverage of the Compact.
  For the benefit of all these erudite commentators whose stock in 
trade is the precise use of the English language, let's consider the 
dictionary definition of a cartel. Webster's dictionary defines 
``cartel'' as follows

       (1) a written agreement between belligerent nations; (2) a 
     combination of independent commercial enterprises designed to 
     limit competition; (3) a combination of political groups for 
     common action.

  The definition contained in the Random House dictionary similarly 
describes a ``cartel'' as:

       (1) an international syndicate, combine, or trust generally 
     formed to regulate prices and output in some field of 
     business; (2) a written agreement between belligerents, esp. 
     for the exchange of prisoners; (3) (in French or Belgian 
     politics) a group acting as a unit toward a common goal; (4) 
     a written challenge to a duel.

  Notwithstanding use of this term by our most respected media 
commentators, it becomes quickly obvious that the Compact in no way 
shape or form resembles such a ``cartel.''
  Indeed, were I to challenge these commentators to a duel in writing, 
that absurd challenge would actually be a more accurate use of the term 
cartel than is their use of the term to describe the Compact.
  I guess our political commentators have now tilted so far away in 
their zeal to embrace the so-called free market that they recognize no 
role for the government in regulating the marketplace. Or, I guess, 
they simply no longer trust the government.
  Even so, is their distrust of government so great that they cannot 
give even simple recognition to the simple distinction between 
businesses price-fixing for private gain and states regulating in the 
public interest?
  Such regulation in the public interest, which provides the basis for 
the Compact, is central to our system of government. Even the most 
ardent free-marketeers recognize the need for the government to play at 
least some role in the policing of the marketplace in the public 
interest.
  The basic function of the Compact is this: To determine whether the 
price received by dairy farmers must be adjusted in the public 
interest. Not solely in the interest of farmers, but in the public 
interest of all those who participate in the fluid milk marketplace--
processors, wholesalers, retailers and consumers, including low-income 
consumers.
  Adjustment may mean an increase in price, or simply stability in 
price. Presently, the Compact provides for both some increase in price 
as well as price stability.
  I will address the various concerns raised by the increase in price 
in a minute, but first I would like to address the issue of price 
stability, because it brings home the fact that the Compact serves the 
larger public interest, of which farmers comprise only one part.
  Various stories have alluded to the problem of erratic wholesale 
prices and their adverse impact on consumers.
  Indeed, nobody really benefits, other than retailers, from an 
increasingly market-driven farm price for milk. This is an issue 
addressed by the Compact. The Compact, in the public interest, provides 
for price stability, to the benefit of all market participants. (Even 
retailers.)
  Now about the increase in price resulting from operation of the 
Compact in New England. Here are some simple numbers. Over the last two 
years, the Compact has raised the price of farm milk by no more than 
ten cents per gallon. No more than ten cents. Not twenty cents, as we 
have heard over and over and over and over. As they say, you could look 
it up, so let me repeat: Ten cents. Period.
  And that is just the impact on the farm price. What of the impact on 
consumer prices. You can look this up, as well. If you do so, you will 
find that prices in New England are actually lower than in the 
corresponding New York City market, where the Compact is not in place.
  And what of the impact on ``poor children''? Under current operation 
of the Compact, the WIC program and the School Lunch Program are both 
exempt. There is no impact on participants in these programs. Let me 
repeat: No impact on participants in the WIC and School Lunch programs. 
Period.
  In conclusion, let me again speak directly to my troubled colleagues 
from the Upper Midwest.
  As we look to the new millennium and our future, I wish my Midwestern 
colleagues again to understand that I will strive to work with them in 
common purpose. Our farmers from the northeast and Midwest are so 
similar. They are among the yeoman farmers who built this country so 
proud. We must be responsive to their common plight. Surely we should 
be able to reason together based on those issues we share in common 
rather than continue to dispute over issues which divide us.
  In all the recent discussion about the Dairy Compact, one key fact 
seems to have gotten overlooked. Twenty-five of our fifty states have 
now passed dairy compact legislation. One-half of the states have 
embraced the Compact idea.
  This means that twenty-five state legislatures and twenty-five 
governors (more, if you count the number of governors who have 
supported the bill over the years) have adopted the Compact approach as 
the best way to solve the dairy issue we all find so vexing.
  I call upon my colleagues, especially those Members on my side of the 
aisle, to give due deference to the rights of the states to assist the 
Congress in defining policy. The states have spoken and are telling us 
that the free marketplace does not work with dairy pricing. We should 
listen to their wise counsel.
  These Interstate Compacts are not all about dairy policy, but about 
the rights of states to work together under the compact clause of the 
constitution. It's a states right issue that deserves to be heard and 
understood. I hope my colleagues will take the time to understand the 
law and the purpose of this important state initiative.
  I fully believe that those Members who have today spoken against them 
may see Dairy Compacts in a new light if they will view them from the 
perspective of the states which have adopted them. Instead of seeing 
cartels, they will see a regulatory framework that operates in the 
public interest. Instead of seeing a system of price

[[Page S14971]]

supports that works only for dairy farmers, they will see a regulatory 
mechanism that benefits all the citizens of the states--consumers, 
processors and farmers, alike.
  This is the way our federalist system is supposed to work--the states 
talk and we listen. As an issue of states rights, I urge the Judiciary 
Committee to take this issue up when next we consider it.

                          ____________________