Wayne Allard

Mr. ALLARD

Mr. ALLARD. I move to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. ALLARD. Mr. President, I would like to call up amendment 1940, the Gramm-Allard amendment.

Mr. ALLARD. Mr. President, I again thank the chairman of the Banking Committee for his willingness to work with both Senator Grams and myself. I think we had a very productive floor debate this morning about the transit needs of the different sectors of this Nation. I think Senator D'Amato has certainly showed his statesmanship this morning in recognition of the transit needs of the more rapidly growing regions of this Nation, much of which is occurring in the Western United States as well as in the Southern States. States like Colorado are experiencing extraordinary growth, and our citizens are certainly anxious to have a fair return on transit dollars. As the chairman knows, Senator Grams and I have filed and discussed an amendment that addresses new dollars that will flow into the New Starts and Fixed Guideway Modernization Programs. The chairman has agreed to accept some of the fixed guideway language that was included in our amendment. He has offered to work with us further in the conference committee. I now submit the revised language and urge its acceptance. I thank again Chairman D'Amato for his willingness to ensure high-growth areas that are experiencing problems of congestion and air quality nonattainment shall be recipients of Federal dollars for New Start projects. In addition, we will continue to work with him on the Fixed Guideway Modernization Program to see whether some of the high-growth cities can be eligible for funding on an accelerated basis. I thank the chairman.

Mr. ALLARD. Mr. President, I ask unanimous consent that reading of the amendment be dispensed with.

Mr. ALLARD

Mr. ALLARD. Mr. President, first of all, I would like to commend the chairman of the Banking Committee, Chairman D'Amato, for all of his hard work on the issue of mass transit and the authorization legislation. I have listened with interest to some of the comments both of my colleagues have made here on the floor, and what they say is true in many regards--that we have some real needs in urban metropolitan areas; we have real needs in regard to congestion; we have real needs in trying to deal with the problems of air pollution; we have real needs in trying to deal with the elderly and how they are going to get back and forth to meet their needs of everyday living. I have been working with Senator Rod Grams for an amendment on six guideways and the new-start amendment. All it is dealing with is new dollars that will be going to fix guideway systems. We are talking in this amendment about a third of the dollars that actually go into mass transit. The State that I come from, Colorado, maybe falls into the classification of a rural State, but the fact remains that many States like Colorado are experiencing tremendous growth. We are not having a rural problem; we are having urban problems. We are having problems with air pollution. We are having problems with congestion and how people are going to get back and forth to work in a timely manner. So those problems that many of the larger communities of our country have experienced for many years we are now beginning to experience while moving into a new century. People are looking to the West, and they are looking to the South to retire. They are becoming used to using a lot of these fixed guideway systems. So they are moving to States like Colorado. Maybe they are moving to Arizona, California, Florida, Southern States because it is warmer weather, it is a good place to retire. Consequently, many of the communities that were small are now experiencing growth problems and are experiencing traffic problems in trying to meet the needs of their citizens. I have many communities on the front range area of Colorado. That is the area that is just east of the Rockies. The Denver metro area runs all the way from Pueblo, CO, and Colorado Springs, there is a Denver metro area, then north to Boulder and Longmont and Fort Collins. This is an area that extends for about 120 miles. There is a lot of growth occurring in these areas. These communities are looking at ways of how they begin to move traffic off of roads where there is a lot of congestion and where they are dealing with some serious air pollution problems. They want to clean up the air in Colorado. We are privileged that we live in a beautiful State. We want to see it remain that way. If we can have a fair option, at least, of trying to tap in on some of the money for new fixed guideway systems and new starts, then it gives these communities an opportunity to begin to plan and to begin to become a part of the formula so that mass transit dollars can become available for those communities. As a member of the Banking Committee, I would like to recognize that the chairman has fought hard for more dollars for mass transit. Because of his effort, obviously, we are all going to benefit from it. I would also like to thank Rod Grams, who is also a member of the committee, who has been working with me, who is from Minnesota and who is cosponsoring my amendment, for fighting hard to try to get the committee and get the Senate to recognize that as we move into the next century things are changing, that there are States that are beginning to experience urban problems, and they need to have some solutions that may be available through new mass transit projects and need to have an opportunity to access these dollars. I have worked hard to see that Colorado and similar States get a fair return on their gas contributions to the highway trust fund. Now I am going to work hard to make sure that there is a fair return as far as mass transit dollars because we are moving into a new century. Many of these States that in the past have not had a need for these dollars now find the need to resolve some of their urban problems that are developing. These efforts, I think, become particularly important in the context of additional funding that appears to have been secured for mass transit. The obvious question is which States are going to get this additional money? Is the money going to be distributed under the same formulas in place up to now, or will there be a fair allocation of new funds? I would like to talk a little bit about the Allard-Grams amendment, which I think is a very straightforward amendment. It simply states that any new money in the Fixed Guideway Modernization Formula, and the New Starts Program, will go to new transit systems. We are only talking about a third of the mass transit dollars. This is not a minimum allocation amendment. It does not require any set allocation to any State. This amendment would specifically address two of the mass transit programs and requires that new funds go to new systems. All of these transit projects would have to meet the criteria that are currently in law for funding under these programs. Mass transit is funded with both gas tax funds and general funds. Currently, 2 cents of the gas tax is allocated to mass transit, and under the recently approved budget agreement that is going to rise to nearly 3 cents. Obviously, there is a lot at stake here for the future. Certain areas of the country have done very well under the current system, but some of the disparities, I think, are very striking. From 1992 through 1997, my State received only 50 percent of the return on its gas contributions to mass transit, and many States get far less. This current year, 1998, was actually the first year that my State did well in the program. While I am obviously hopeful that this will continue, it is very important to lay the groundwork to make this happen. The funding disparities are striking in some of the mass transit programs. One of the two programs that this amendment addresses is the Fixed Guideway Modernization Formula. Up to this point, 90 percent of the funds, that is, under current law, 90 percent of the funds have gone to 11 cities that are specifically designated in the formula. While the committee bill alters this somewhat, it ensures that the lion's share of the Fixed Guideway Modernization Formula funds will continue to go to 11 statutory cities. This is an authorization bill for the 21st century. It takes us through 2003. It is, therefore, very important to recognize that the urban growth in this country is occurring in the West and in the South. If Federal programs are going to be effective, they need to shift with the times, and the high-growth regions of the country are going to have the greatest justification for new mass transit dollars. The Allard- Grams amendment would afford the Senate the opportunity to look at how a portion of the mass transit money is being distributed. As noted, the amendment addresses the Fixed Guideway Modernization Formula and the New Starts Program. We selected these two programs because they have, up to this point, been funded entirely by gas tax revenues. These two programs combined constitute about one-third of the mass transit dollars--only one-third of the mass transit dollars. I make this point for a simple reason: This amendment is not an attempt to reallocate the entire mass transit funding system; this amendment is only a modest first step towards equity for those areas of the Nation that are experiencing the greatest degree of population growth. Even with the changes proposed by this amendment, a small number of cities will continue to do very well when it comes to mass transit funding. Our amendment simply requires that new money, money above the 1997 funding levels, will go to new transit systems. Old transit systems will continue to receive what they received in 1997. The difference is they will not continue with such a large, disproportionate share of new funding. The problem is most glaring in the Fixed Guideway Modernization Program. This formula program funds everything from underground rail to light rail to bus shuttles and even HOV lanes. While 45 cities currently receive some funding under the program, it has historically allocated 90 percent of funds to 11 cities. I would like to ask the Members of the Senate here to view a chart with me that demonstrates the unfairness of the formula up to now. This is under current law. In this formula, we have 11 statutory cities that are getting 90 percent of the dollars in the Fixed Guideway Modernization Formula. The other 34 cities are getting 10 percent. That is current law. I would like to recognize the chairman's efforts. Realizing that there is a problem there, he has tried to do something in this bill. We should not forget that all transit systems have modernization needs. In fact, when we refer to the 34 new systems we are speaking only in relative terms. Before any system even qualifies for Fixed Guideway Modernization Formula funds, it first must be in operation for at least 7 years. In our part of the country, that is getting out of the realm of a new system, if they have been there for 7 years. Many parts of the so-called new transit systems are even much older than that. Obviously, the 11 cities have the largest systems, and generally the oldest systems. One would expect them to get a large portion of the money. I concede that. However, I think most would agree with me that 90 percent is excessive. The committee bill does begin to address this past disparity. I bring up a chart to show where we are as far as the committee bill is concerned. Again, I compliment the committee and our chairman for his work in this regard. This is, again, the Fixed Guideway Modernization Formula and what happens at $1 billion of total funding. Eleven of the statutory cities in this one program, under the Fixed Guideway Modernization Formula, will get 83 percent of the dollars; 17 percent is then divided among these 34 other cities. Even with the committee bill, we see there is a split of 83 percent for the old and 17 percent for the new at the $1 billion funding level. If it is less than that, obviously the 11- cities' statutory amount is going to be protected and there will be even fewer dollars available for these 34 cities as we move below the $1 billion level. Let me explain how our amendment would change the way it is now, in the current bill. First, we leave the current Fixed Guideway Modernization Formula in place up to the 1997 funding level. So 90 percent of those funds would continue to go to the 11 statutory systems that receive these funds now. This would continue in each and every year; however, the amendment provides any amounts above the current funding levels would go to new systems.

Mr. ALLARD. With only one little modification I would make to that, as far as new starts are concerned. We are talking about new, the new part of the formula, where communities are trying to get started into mass transit. Because we see the solution for some of their community problems. Yes.

Mr. ALLARD. Will the Senator yield?

Mr. ALLARD. I appreciate your willingness to work with us on these issues. And like the Senator from New York, I am not inflexible; I want to recognize the problems we have in these areas and be sensitive to that. All I am asking is that the Senate and the chairman and everybody--and I believe you are doing this--think a little bit about what is happening demographically as we move into a new century, and what has happened to those populations in other parts of the country that are going to be facing some of these problems you have been dealing with for many years. In fact, people from my part of the country, I hope, would consult with people from your part of the country in dealing with these problems, because these are new problems for us. There is a tremendous amount of commitment from the local communities in Colorado. They are willing to make commitments to more than pay for their fair share of the mass transit programs. They are not looking for a lot of Federal dollars, but they would like to have a little bit of help. They are willing to commit a lot of local dollars to these programs, even despite the fact that, these are programs that are paid entirely by gas tax dollars. And so in a way, they feel that, well, we spent this money on these gas taxes with the use of our cars and trucks. They have been paying for these in some ways because they have been buying fuel for their vehicles. So they feel that they do not want to be left out of the system. I would just like to show what our amendment does, the Allard-Grams amendment on the fixed guideway. It actually changed the formula for 68 percent for 11 statutory cities and then 32 percent for the other 34. And there is some difference of opinion as to where that fair level is. But, like I said, we are willing to be sensitive to your needs. I appreciate the chairman's willingness to be sensitive to our needs. But I would like to explain the second part of our amendment which addresses the New Starts Program. Here our amendment, once again, addresses only new money, and we do not take any money from projects already receiving funds from fully funded grant agreements. And why is this amendment necessary? Well, Mr. President, one might assume that the term ``new starts'' means that money allocated through this program must go to new transit program projects. Actually, new starts are currently defined very broadly, and much of the money goes to additions on the same old systems that receive most of the fixed guideway money. And the Senator from New York pointed out those needs. Under the Allard-Grams amendment, all money above the 1997 funding level would be set aside for new projects. We define ``new projects'' as entirely new fixed guideway systems or additions to fixed guideway systems that have been in revenue operation for 15 years or less, which is different than current law which says that they have to be in operation at least 7 years. Again, this change would not greatly alter the current system, but it would set some important benchmarks for where we would be heading in the 21st century. As I noted earlier, the amendment would not alter the process for selecting worthwhile projects. Both Congress and the Federal Transit Administration would continue to determine which projects have merit and fund them accordingly, and which projects the local communities would be most willing to contribute to to make sure it happens from locally raised funds. Currently, there are dozens of potential new starts located in States throughout the Nation. Unless we more carefully earmark funds specifically for new systems, these projects will continue to wait for many years. Now, this amendment is an important change, and its impact grows with each year. Those older systems will continue to get a very generous allocation, in my view. However, the new systems in the fastest growing regions of the Nation will be able to claim a growing portion of the funds. Now, I have not moved my amendment at this time, and I am not going to at this time, because I want to continue to have this dialogue on the floor with the chairman of the Banking Committee. But there are some very important issues here that I think we need to begin to think about in getting this country ready to address problems that will be coming up in the next century. So I now yield to the Senator from Minnesota, Senator Grams, who is a cosponsor on this amendment with me. And I would like to recognize the contributions he has made both to the Senate and to this issue of transportation, particularly mass transit. Mr. GRAMS addressed the Chair.

Mr. ALLARD. I yield to the Senator from New York.

Mr. ALLARD

Mr. ALLARD. Mr. President, I would like to take a few minutes to congratulate my good friend, Senator Enzi, and the University of Wyoming's basketball team on their hard-fought overtime victory over my alma mater, Colorado State University. Senator Enzi and I have engaged in a friendly competition whenever our schools play each other. These two universities are located just an hour apart on the border of Colorado and Wyoming and have always had quite a rivalry between them. Earlier this year, Senator Enzi had the opportunity to praise the Rams as CSU defeated Wyoming on January 24, with the score of 53 to 46. But like most border wars, the tables have turned and now the pleasure is mine. Not only do I have the tremendous opportunity to talk about the Wyoming basketball team on the Senate floor, but I have a tremendous opportunity to wear the Wyoming tie here for a day while I talk about that great basketball team from the University of Wyoming. Last Saturday's game marked the 184th time over 88 years that these two teams have met when CSU went head to head with the University of Wyoming in yet another border war. To my dismay, the Rams were defeated in overtime, 69 to 64. It was a hard-fought victory where both teams played outstanding games. Although CSU outrebounded Wyoming and played a tough defensive game, the Cowboys' offense was the deciding factor. Wyoming should be commended for having a great season this year, with a record of 18 and 6. Coach Larry Shyatt should also be recognized for bringing this team to the best season they have had in 11 years. The Cowboys certainly cannot be labeled ``slowpokes,'' considering they have defeated top-ranking teams such as New Mexico and Utah. In fact, the Cowboys are now in third place in the Western Athletic Conference Mountain Division and will be competing for postseason tournament consideration in March. Wyoming will be given serious consideration as a WAC entry for the NCAA Tournament. I commend Wyoming's basketball team, their athletic department, and the University of Wyoming for a job well done. Although Wyoming won the most recent border war, I would be remiss if I did not congratulate at least the Rams' seniors and wish CSU the best of luck in their remaining games. I look forward to a strong WAC contingent in the NCAA tournament and hope that CSU will be there to represent the Western Athletic Conference as well. The University of Wyoming basketball team is to be commended for a great win against Colorado State University. I am excited about the competition in the WAC, typified by the longstanding rivalry between the border universities. Great job, to the University of Wyoming. I yield the remainder of my time.

Mr. ALLARD

Mr. ALLARD. Since we have a break in the pending business, I would like to ask unanimous consent that we go into morning business for 10 minutes.

Mr. ALLARD. I ask unanimous consent we proceed as in morning business.

Mr. ALLARD. Mr. President, are we in morning business?

Mr. ALLARD

Mr. ALLARD. Mr. President, I come to the floor today in support of HR 2631. Let there be no mistake, I support the line item veto, but, perhaps just as important, I support Congressional authority to override the veto if deemed necessary. In fact, one of the reasons that I support the line item veto is to make Members go on record in support of or against the vetoed items. I am willing to go on record and support this Resolution without hesitation. One such program is to fund the Army Strategic Mobility Program railhead project at Fort Carson. This project is recognized by the Department of the Army as a need for readiness and is included in the Administration's own Five Year Plan. To give a brief history, the current railhead at Fort Carson was built in the 1940's and includes several one-story wooden warehouse buildings that were built during the same period. Since then, the railhead has received no major improvements or overhaul. While the loading and storage capabilities were adequate for many years, they are no longer. Fort Carson is now home to two TIER I units, the 10th Special Forces and the 3rd Armored Cavalry Regiment. As you know, TIER I units must be able to deploy within 72 hours upon receiving notification. The current capabilities fall far short of this requirement. The Army Strategic Mobility Program requires that the railhead deliver 500 cars for a two day outload. The current railhead only allows for 314, well short of that required for the ASMP. The 3rd ACR is the only heavy cavalry unit in the Army's inventory, and as such it can be sent to any theater of operations. It is critical that this unit be able to meet its deployment requirements. Unfortunately, at this time it cannot due to the inadequacy of the Fort Carson railhead. Also, Fort Carson would serve as a major staging area for numerous National Guard and reserve units in time of war and the rail-loading and warehousing deficiencies could hamper those activities as well. Mr. President, when Congress granted the President the line item veto we did not make him the final voice on budget priorities. Congress has the Constitutional obligation to have the final say on all revenue and outlay matters. This is how I believe the system should work. The President vetoes projects and if the Congress disagrees, then two- thirds of the Members in each body must vote to override. Today, it is my belief that Congress will use its veto-override power to approve these projects which are in the Administration's Five Year Plan.

Mr. ALLARD

Mr. ALLARD. Mr. President, I ask unanimous consent that the Subcommittee on National Parks, Historic Preservation, and Recreation of the Committee on Energy and Natural Resources be granted permission to meet during the session of the Senate on Thursday, February 12, for purposes of conducting a subcommittee hearing which is scheduled to begin at 2:00 p.m. The purpose of this hearing is to receive testimony on S. 62, a bill to prohibit further extension or establishment of any national monument in Idaho without full public participation and an express Act of Congress, and for other purposes; S. 477, a bill to amend the Antiquities Act to require an Act of Congress and the consultation with the Governor and State legislature prior to the establishment by the President of national monuments in excess of 5,000 acres; S. 691, a bill to ensure that the public and the Congress have both the right and a reasonable opportunity to participate in decisions that affect the use and management of all public lands owned or controlled by the Government of the United States H.R. 901, an act to preserve the sovereignty of the United States over public lands and acquired lands owned by the United States, and to preserve State sovereignty and private property rights in non-Federal lands surrounding those public lands and acquired lands; and H.R. 1127, an act to amend the Antiquities Act regarding the establishment by the President of certain national monuments.

Mr. ALLARD. Mr. President, I ask unanimous consent that the Subcommittee on Aviation be authorized to meet on Thursday, February 12, 1998, at 2:00 p.m. on the Airport Improvement Program

Mr. ALLARD. Mr. President, I ask unanimous consent that the Committee on Small Business be authorized to meet during the session of the Senate for a hearing entitled ``IRS Reform: What Taxpayers Need Now.'' The hearing will be held on Thursday, February 12, 1998, and will begin at 9:30 a.m. in room 428A of the Russell Senate Office Building.

Mr. ALLARD. Mr. President, I ask unanimous consent that the Committee on Labor and Human Resources be authorized to meet for a hearing on Education of the Deaf Act during the session of the Senate on Thursday, February 12, 1998, at 10:00 a.m.

Mr. ALLARD. Mr. President, I ask unanimous consent that the Committee on the Judiciary, be authorized to hold an executive business meeting during the session on the Senate on Thursday, February 12, 1998, at 10:00 a.m. in room 226 of the Senate Dirksen Office Building.

Mr. ALLARD. Mr. President, I ask unanimous consent that the Senate Committee on Indian Affairs be authorized to meet during the session of the Senate on Thursday, February 12, 1998 at 9:30 a.m. in room 485 of the Russell Senate Building to conduct a hearing on the Indian provisions contained in the following Tobacco settlement legislation: S. 1414, S. 1415, and S. 1530.

Mr. ALLARD

Mr. ALLARD. Mr. President, I spent the month of January attending town meetings throughout the State of Colorado. That is one of the things, when I go back to my State, that I spend a lot of time doing-- visiting the counties and visiting with the people of Colorado. Over the years, we continue to have the issue of taxes brought up in the town meetings--probably more so now than at any time that I can recall since having town meetings. The American people simply want to have their tax system reformed, particularly those in Colorado. They want lower taxes, they want a simpler tax system, and they want less intrusive means of collecting those taxes. Last year, Congress enacted modest tax relief, but it was only a first step. It's time to move forward with more aggressive tax reform. Today, I am introducing legislation that will do four things: It will continue to reduce the capital gains tax to a top rate of 14 percent. It will restore the one-year holding period for capital gains treatment. It will index capital gains and, thereby, eliminate the taxation of gains that are due solely to inflation. And then, finally, it will eliminate the estate tax. These changes will provide important tax relief for families and businesses, and continue to ensure that our economy remains the most competitive in the world. Mr. President, the new year has certainly brought good news concerning the Federal budget. But let's be honest. The budget is balancing because of the hard work of the American people, not because of any bold action by the Federal Government. Economic performance in recent years has exceeded all expectations. The result is that the American people have been sending greater and greater amounts of their earnings to Washington. The budget is balancing because of an explosion in tax receipts, not because of any restraint in spending. In fact, the budget continues to grow at a healthy pace. Federal spending in 1998 is estimated to be 4.3 percent above the 1997 level--well in excess of inflation. Many would like this to continue. The President assured us in a previous State of the Union Address that, ``the era of big Government is over.'' But it is clear that he is now proposing a new era of big Government. I favor a different course. We should not squander the people's surplus on more Government. Instead, we should begin to pay down the debt and reform the tax system. We should put American families ahead of the insatiable appetite of Washington, DC, for more Government spending. Despite last year's budget bill, taxes remain higher than they have ever been. Tax freedom day--the day to which the average American works to pay the combined Federal, State, and local tax burden--is May 9, which is the latest it has ever been. A reduction in the Federal debt and a reasonable level of taxation should be the twin objectives of Congress as we enter the next century. Our job is to ensure that the bridge to the 21st century does not become a toll bridge. Mr. President, let me begin with a discussion of capital gains taxes. I call the capital gains tax the ``growth tax.'' Nearly all Americans own capital, and they experience a tax on that capital when they sell the stocks, or a small business, or a farm. Mr. President, let's look at how this capital gains, or growth tax, hits ordinary working Americans. Stock ownership has doubled in the last 7 years, to the point where 43 percent of all adult Americans own stock. Obviously, with those numbers, stock ownership is not just confined to the wealthy; it is spread throughout society. Today, half of the investors are women, and half are noncollege graduates. Stocks are typically held for retirement, education expenses, and other long- term goals. This is precisely the type of saving and investing that we need in our economy. Mr. President, I can't leave this topic without talking about small business owners and farmers. There is no clearer area where the ``growth tax'' makes no sense. Millions of American families put their lives into building small businesses and farms. Often, those businesses or farms are sold to finance a decent retirement. But this can only occur after Uncle Sam gets his cut of one-third or more of all the gains. Simply put, low taxation makes it less costly to take the risks that are critical in a capitalist economy. I am proposing that we enact a maximum capital gains tax of 14 percent, with those in the lowest tax bracket paying only 7 percent. Last year's reduction of the capital gains rate was a big plus, but it came with a price--the holding period required to qualify for the lower tax was extended from 12 months to 18 months. The holding period change is a poor attempt by the Government to micromanage the economy. This is the type of Government management that has so clearly failed in Asia. A market economy functions best when capital flows freely, unencumbered by Government distortions. The holding period for long-term capital gains treatment has been 12 months for years, and it should stay that way. Mr. President, an additional mistake that Congress made in last year's bill was a failure to include indexing. The real ``growth tax'' is often much higher than 20 percent. This is because our Tax Code does not protect Americans from taxation on capital gains that result from inflation. This is one of the most unfair aspects of the growth tax. Government policies contribute to inflation, and Government turns around and taxes its citizens on that inflation. For this reason, I fought hard to see that indexing was included last year. I offered an amendment to the tax bill that would have added indexing. The amendment was carefully structured to avoid any revenue loss. Obviously, I was disappointed with the defeat of this amendment. I presume that this was due largely to the President's opposition to indexing and his veto threat. Despite this, we got a strong vote, and I promised that I would be back. I have included indexing in this bill, and I fully intend to offer this at each opportunity. Some have dismissed indexing as ``too costly,'' but for me this is an issue of fundamental fairness. It is wrong for the Federal Government to tax citizens on inflation. Since I mentioned the issue of cost, let me make a few points on this. I have long maintained that a capital gains tax cut will increase revenue. In the short run, it encourages the sale of assets that would not otherwise occur. This obviously increases revenue. In the long run, a rate cut facilitates a higher level of economic growth. This also results in greater tax revenue. Unfortunately, during last year's tax debate, we continued to operate under revenue models that forecast a loss to the government from the capital gains rate cut. I hope we can soon put this notion to rest for good. It is already apparent that capital gains revenues will be coming into the Treasury at a considerably higher level than forecast last year when we were talking about capital gains. 1998 capital gains revenues could be as much as 50% higher than previously forecast. Even state governments will benefit from the rate cut. Earlier this month, analysts for the Colorado Legislature forecast that the capital gains tax changes would result in an additional $38 million this year for the Colorado state budget. Obviously, the impact at the federal level will be many times greater. estate tax elimination The final provision in this tax bill is the elimination of the estate tax. Frankly, the estate tax makes no sense. While the tax raises only 1 percent of federal revenues, it destroys family businesses and farms. The estate tax is double taxation. At the time of a person's death, much of their farm, business, and life savings has already been subjected to federal, state, and local tax. These same assets are taxed again under the estate tax. The estate tax fails to distinguish between cash and non-liquid assets. Family businesses are often asset-rich, and cash poor. But the value of all assets must be included in the taxable estate. This can force liquidations, and family businesses can see their livelihood eliminated in order to pay a tax of up to 55 percent. Yes. That is right--up to 55 percent. This practice threatens the stability of our families and communities while inhibiting growth and economic development. The National Center for Policy Analysis reports that a 1995 survey by Travis Research Associates found that 51 percent of family businesses would have difficulty surviving the estate tax, 14 percent of business owners said it would be impossible to survive, 30 percent said they would have to sell part or all of their business. This is supported by a 1995 Family Business Survey conducted by Matthew Greenwald and Associates which found that 33% of family businesses anticipate having to liquidate or sell part of their business to pay the estate tax. Recently, the accounting firm Price Waterhouse calculated the taxable components of 1995 estates. While 21% of assets were corporate stock and bonds, and another 21% were mutual fund assets, fully 32% of gross estates consisted of ``business assets'' such as stock in closely held businesses, interests in non-corporate businesses and farms, and interests in limited partnerships. In larger estates this portion rose to 55%. Clearly, a substantial portion of taxable estates consists of family businesses. The recent tax bill increased the estate tax exemption from $600,000 to $1 million. However, this is done very gradually and does not reach the $1 million level until 2006. The bill also increased the exemption amount for a qualified family owned business to $1.3 million. While both actions are a good first step, they barely compensate for the effects of inflation. The $600,000 exemption level was last set in 1987, just to keep pace with inflation the exemption should have risen to $850,000 by 1997. Incremental improvements help, but we need more substantial reform. It is time to eliminate this tax entirely. This action has been taken in countries such as Australia and Canada. Unfortunately, the United States retains what are arguably the highest estate taxes in the world. Among industrial nations, only Japan has a higher rate than the U.S. But Japan's 70% top rate applies only to inheritance of $16 million or more. The U.S. top rate of 55% kicks in on estates of $3 million or more. France, the United Kingdom, and Ireland all have top rates of 40%, and the average top rate of OECD countries is only 29%. Repeal of the estate tax would benefit the economy. George Mason University Professor Richard Wagner estimates that within seven years of elimination of the estate tax the output of the country would be increased by $79 billion per year, resulting in up to 228,000 new jobs. Under the current system, the energy that could go into greater productivity is expended by selling off businesses, dividing resources and preparing for the absorption of an estate by the government. Those businesses that survive the estate tax often do so by purchasing expensive insurance. A 1995 Gallup survey of family firms found that 23% of the owners of companies valued at over $10 million pay $50,000 or more per year in insurance premiums on policies designed to help them pay the eventual tax bill. The same survey found that family firms estimated they had spent on average over $33,000 on lawyers, accountants and financial planners in order to prepare for the estate tax. Ironically, the estate tax is often justified on the grounds that it helps to equalize wealth. But this effect is greatly exaggerated. A 1995 study published by the Rand Corporation found that for the very wealthiest Americans, only 7.5% of their wealth is attributable to inheritance--the other 92.5% is from earnings. Mr. President, it is time to repeal this outdated tax. We must insist that no more American families lose their business because of the estate tax. We must ensure that when a family is coping with all the inevitable costs of passing a business from one generation to the next, the Federal Government is not there as an added burden. Mr. President, it is my hope that by introducing this tax legislation and placing these proposals on the table we can begin to debate significant tax relief for 1998. Each of these changes: a lower capital gains rate, indexing, and repeal of the estate tax, are consistent with long-term tax reform. And each of them can be enacted this year.

Mr. ALLARD

Mr. ALLARD. My wife, Joan, and I are pleased to recognize that both Shirley and Sam are very close friends of ours. I had come to the floor to speak on another matter but I feel so fortunate to have been here at the time you are making these comments. You are right on the mark. He is a tremendous individual. He suffered in a way that many of us cannot imagine. Both Joan and I are so enthralled with his positive attitude--both Shirley and Sam--that it makes him stand out as a remarkable individual, remarkable Americans. I second your comments.

Mr. ALLARD. Will the Senator yield?

Mr. ALLARD

Mr. ALLARD. Mr. President, it is my understanding that I have 20 minutes of time set aside.

Mr. ALLARD. Mr. President, I yield the remainder of my time. I suggest the absence of a quorum.