Spencer Abraham

Mr. ABRAHAM

Mr. ABRAHAM. Mr. President, now that the Taxpayer Relief Act of 1997 has passed the Senate, I wanted to take a few moments to discuss several of the more important votes that took place. The first of these was the Daschle amendment. This amendment constituted a comprehensive substitute to the Finance Committee plan, but I believe it failed to live up to the spirit of the budget agreement between congressional leadership and the Clinton administration. The Daschle substitute would have provided only $68.5 billion in net tax cuts to the American people--not the $85 billion called for in the budget agreement. An $85 billion tax cut represented less than 1 percent of the total tax burden over the next 5 years, yet the Daschle substitute would have reduced that relief by almost 20 percent. The Daschle amendment reduced the $500 per child tax credit to $350. It excluded millions of tax-paying families with teenage children from receiving any tax relief at all, including as many as 50,000 families in Michigan. And it drastically reduced the capital gains tax relief for seniors and small businessmen. For these reasons, I opposed it. There were several amendments targeted at the Finance Committee's $500 per child tax credit. The Kerry amendment would have made the child tax credit refundable against FICA tax payments. To pay for refundability, the amendment would have reduced the income levels at which the credit is phased-out. Mr. President, I support making the family tax cuts in this legislation broader to include lower-income families, but I oppose taking tax relief away from middle-class families to do so. The Kerry amendment would have eliminated the $500 credit for millions of middle- class families who pay almost 40 percent of their income in taxes while redirecting that relief towards families with no income tax burden and actually receive money from the Federal Government. A similar amendment, offered by Senator Landrieu, would have permitted families receiving payments under the earned income credit to also receive full $500 per child tax credits. Senator Landrieu would have offset these new payments by reducing the allowable family income from $110,000 to $75,000. Once again, this amendment would have taken relief away from taxpaying families. While I support giving tax relief to families of all incomes, it is not right to take tax relief away from families earning as little as $75,000 to make it possible. An amendment which I supported was offered by Senator Gramm to provide the full $500 per child tax credit to parents of children ages 13 to 17. Under the Finance bill, the full child credit would only go to those parents who deposit it into a qualified tuition savings plan for their children. For those parents who are unable to afford such a plan, or whose children do not go to college, they would only qualify for a reduced tax credit. I disagree with this approach, and supported the Gramm amendment. The whole purpose of the $500 per child credit is to let families keep more of what they earn so they can spend that money on their priorities, not the Federal Governments. In Michigan, thousands of families have children who choose not to go to college. I do not believe they should be penalized for making that choice. Senator Jeffords offered an amendment to make the existing dependent care tax deduction refundable. I support making childcare available to more parents, but I am concerned that the Jeffords amendment would create a bias against small, neighborhood child care givers and towards large, accredited facilities. Specifically, the Jeffords amendment would give families a larger tax credit for sending their children to an accredited facility than if they chose a smaller, unaccredited caregiver. I believe this is a poorly thought out provision which create an unjustified intrusion by the Federal Government into the child care decisions of parents. Rather than allow parents to make their own child care decisions free from a biased tax code, this amendment would have placed parents in a position of losing part of their tax credit just because they chose the neighbor they know and trust, rather than the stranger working at the large, accredited child care center. For that reason, I opposed the amendment. Another amendment I opposed was the Kennedy amendment to raise the cigarette excise tax by an additional 23 cents. Senator Kennedy's intention was to use the $12 billion raised by this tax to provide additional funding for children's health insurance. Mr. President, I support the underlying bill's provision to ensure that deserving children get adequate funding to meet the health insurance challenge. The Finance Committee bill, as amended by the Senate, would spend $24 billion over the next 5 years, or about $1,600 per child to address this issue. Senator Kennedy's amendment would provide an additional $12 billion over 5 years for health insurance coverage. Mr. President, I believe it is incumbent upon Senator Kennedy and other supporters of this higher level of funding to demonstrate how these sums could be effectively spent to combat a problem that the Clinton administration has agreed could be solved with a lower funding level. In my opinion, Senator Kennedy failed to make that case, and for that reason I opposed the Kennedy amendment. One amendment which I supported was offered by Senator Durbin to provide the self-employed with the ability to deduct 100 percent of their health insurance costs. I believe the current policy toward self- employed Americans is unfair and discriminatory and I supported the Durbin amendment in an effort to ensure that this issue was addressed by the conference committee. While the Durbin amendment failed on a point of order, a subsequent Nickles amendment to provide 100 percent deductibility by the year 2007 was adopted and will likely be made part of the bill sent to the President. I supported that amendment as well, and look forward to seeing this provision made law. A final effort which I supported was the McCain point of order against the creation of an intercity passenger rail fund. My vote in support of Senator McCain should not be interpreted as a vote against Amtrak. Instead, I opposed this fund because it is designed to skirt the existing budget process and create a bias for Amtrak funding and against other Federal programs, such as veterans' programs, community health centers, and other essential services. In my opinion, the proponents of the Amtrak fund have failed to demonstrate why Amtrak funding should be given a special place of prominence among all other federal programs. Next year, the Federal Government will take in $1.7 trillion in tax revenues. If Amtrak funding is a priority, I am confident that sufficient money can be found in the budget without resorting to tax increases.

Mr. ABRAHAM

Mr. ABRAHAM. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. ABRAHAM

Mr. ABRAHAM. Mr. President, I rise today to talk about the emerging budget surplus and what Congress should do about it. According to recent Congressional Budget Office and Office of Management and Budget estimates, the fiscal 1997 budget deficit could be smaller than $50 billion. The reason: Robust economic growth continues to boost tax receipts beyond projections. As a result, the deficit is declining rapidly and the budget could be balanced by the year 2000 or earlier. Further, if the President signs a tax bill that includes a deep cut in the capital gains tax, a budget surplus could emerge next year. Economist Larry Kudlow predicts that cutting the top capital gains tax rate to 20 percent could produce a $90 billion revenue windfall next year, assuming only 15 percent of investors realize their stock market gains from 3 years ago. The question we face is this: Should future budget surpluses--if they materialize--be used to retire the national debt, increase Government spending, or further reduce taxes? Our colleague, Representative Mark Neumann of Wisconsin, has offered The National Debt Repayment Act which proposes to use budget surpluses primarily to retire the national debt. This legislation would earmark two-thirds of any surpluses to debt reduction and only one-third to tax reduction. The plan attempts to build budget surpluses in future years by limiting the growth of Government spending at 1 percentage point lower than the growth of tax revenues. Although well-intentioned, the bill contains several problems. First, it would have the practical effect of locking-in high tax rates on the American people. Under the plan, Congress would have to maintain a tax burden that is higher than is necessary to pay for current Government spending. In fact, as economist Bruce Bartlett points out, ``(the Neumann) plan actually implies a stiff tax increase. Revenues as a share of gross domestic product would rise from 19.9 percent next year to 20.8 percent in 2002,'' producing one of the highest tax burdens in U.S. history. Further, because the plan calls for revenue growth to outrace spending growth, Congress will have the perverse incentive to keep taxes high. Second, the bill does nothing to reduce the size of the Federal Government. It is designed to generate budget surpluses, but does nothing about the actual levels of either Government spending or revenues. As long as tax revenues are growing, Government spending can grow too. Third, the bill would preclude significant tax rate reductions and fundamental tax reforms in the future. In my view, any budget surplus would be far better spent by cutting taxes that are most burdensome and stifling to economic growth. Enacting pro-growth tax reforms and increasing the size of the economy would make it easier to carry the debt burden. Fourth, in effect, the bill would keep taxes on Americans unnecessarily high primarily to retire debt held by foreign interests. According to the Treasury Department, foreign and international investors owned $1,199.1 billion of the total $3,451.7 billion in privately held public debt in 1997. In contrast, U.S. individuals owned only $355.4 billion. By my lights, we ought to use any budget surpluses to provide relief to American taxpayers before making advanced debt payments to foreign central bankers and other investors in China, Japan and Germany. Overall, the bill is based on misconceptions of the true economic impact of the debt. According to most economists, the figure that really counts is not the total debt per se, but rather debt's size relative to the overall economy. As the Wall Street Journal recently noted, the debt as a share of GDP ``was as high as 111 percent in 1946, after we'd run up a debt to defeat Hitler--a cause worth some debt.'' But because of the post-war economic boom--boosted in the 1960's by President John F. Kennedy's tax rate reductions--the debt fell back to 24 percent of GDP in 1974. The Journal goes on to note that the debt ``rose again with the great inflation and spendthrift Congresses of the past two decades, but it stabilized at 50 percent of GDP in 1995 and is projected to decline slowly . . .'' Furthermore, the economic benefits of running budget surplus are not at all clear. It is worth nothing that Great Britain ran budget surpluses in 1988, 1989, and 1990 equivalent to 1.5 percent of GDP-- equivalent to a U.S. surplus of $100 billion--yet British interest rates increased. Mr. President, to ensure that we return higher-than-expected revenues to the taxpayer, I have introduced the Economic Growth Dividend Protection Act (S. 800). Under my bill, if tax revenues received by the Treasury in the next 5 years exceed those projected under the budget agreement, the revenues will be made available for tax cuts first. If the Congress fails to pass tax cuts, then the surplus is reserved for deficit reduction--not new Government spending. In summary, Mr. President, we should reduce the burden of the national debt. But setting in stone today a policy to run huge budget surpluses well into the next century is a recipe for higher taxes and slower economic growth. In my view, the best way to reduce the debt burden is to run a balanced Federal budget with firm controls on Government spending and to cut taxes that hinder economic growth. In the event that Congress does cut tax rates and overhaul the tax system, we could then decide to use any resulting tax revenue surplus to pay down the debt. I ask unanimous consent that several articles on this subject that appeared in the Wall Street Journal, Washington Post, and Washington Times be printed in the Record.

Mr. ABRAHAM

Mr. ABRAHAM. Featured in the story is discussion of a gentleman named Larry Niec. Larry's 1,000-acre farm is depicted here with a caption that reads in part: ``strewn with pieces of once-sturdy buildings, like his roofless dairy barn and severed silo. Six of his cows were killed during the storm.'' Obviously, a very difficult time in the farm season for him and for his neighbors. And I do not want to read from the entire article now. It is included in the Record. As I say, the devastation was incredible. Mr. Niec, of course, being a hardy soul, as depicted in the headline of the story, noted that the tornado damage, while spectacular, is no more harmful than the droughts, fluctuating milk prices, bad crops, and so on, which the farmers learn to live with in their day-in and day-out existence. When friends asked Larry how he stood the stress, he told them that it isn't much different from any other day. He said, ``We're going to suffer, but we know how to suffer.'' I met Larry yesterday and he, indeed, is somebody who will persevere. As I said, the cost and the damage is so considerable that we need some help for these folks as well. Of course, under the current system, they will be entitled to the assistance of the U.S. Department of Agriculture and through the Small Business Administration. But it is my fervent view that the communities of Thetford and Vienna Townships deserve to be designated, as some of the others have, as an official disaster, to receive a broader range of support that they deserve and should be available to them. Without going into all of the details, I can only say, if you drive down any of the roads, whether it is Center Road or Genesee Road or Bray Road in Thetford Township, as I did yesterday, and you see the decapitated silos with huge chunks of cement strewn everywhere and trees in which semitruck trailers ended up after they were hurled into the air, and if you see the huge openings that have been driven through the fields and the forest lands, you know if this area doesn't qualify as a disaster area, I don't know what would, Mr. President. The damage was not just of public property; it is to private property, also. Happily, it wasn't more serious, but definitely it deserves our attention. For that reason, today I will be writing our Governor, as well as the Federal Emergency Management Agency authorities, to ask that the designation be expanded to include this community. I hope they will respond as they have responded already. I wish to make it clear that I don't know of any reason not to, nor in any way am I criticizing actions today. We are moving piece by piece through the process. I hope they will respond to this as well and help us to make sure that these people--they may be small in numbers, as I say, but the people who live there are just as real as the folks in all the other communities. So I intend to work very hard to make sure all the relief possible is made available to them. Mr. President, I thank you and yield the floor at this time.

Mr. ABRAHAM. Mr. President, on July 2, a series of high-wind storms raged through my State of Michigan. They struck in numerous communities ranging from Chesaning, a small city in Saginaw County, to Thetford and Vienna Townships in Genesee County to Holly, MI, and Oakland County, to parts of the city of Detroit to the small communities of Highland Park and Hamtramck in Wayne County, and then ultimately across to Lake St. Clair passing through several of the communities on the east side of our State, including Grosse Pointe Farms and Grosse Pointe. In their wake, they left enormous damage, destruction and the loss of human life. Already--and I give great compliment to both our State as well as our Federal emergency services--we have had great assistance in trying to address the problems left behind by this storm. The folks from FEMA, the Federal Emergency Management Agency, were quickly on the scene to give advice and counsel to our State authorities, and then to assess the damage for purposes of determining what Federal assistance might be provided. Our own State government, under the leadership of John Engler, was quick to act through its emergency services to assist the various communities affected. And I am happy to report that by and large we have had a remarkable public response, not just through the government agencies, but also through the volunteer efforts of people in communities throughout our State who have risen to the challenge of addressing this serious disaster and crisis. In the aftermath, we have moved forward in seeking the designation of a disaster area for a number of the communities that were struck by these storms. Just last Friday afternoon, the President declared parts of Wayne, Oakland, and Macomb Counties as disaster areas, as well as part of Saginaw County. And we are delighted by that news. At the same time, I just yesterday morning visited an area that has not yet had such a designation made regarding it. That is the area outside of the city of Flint, MI, Thetford Township. And in visiting Thetford Township yesterday, I could not help but immediately conclude that we need to expand the designation of disaster areas to include this township and the neighboring township of Vienna Township in Genesee County. According to the National Weather Service, three tornadoes hit this area during the storm. These communities are small. The population of Thetford Township is roughly 8,000 to 9,000 people. Almost all of them are in one form or another in the business of agriculture. Many of them are family farmers. This township--approximately 36 square miles--is almost exclusively farmland north of the city of Flint. Just to put it in perspective what transpired there, one individual was killed, a variety of livestock were likewise lost, two huge steel power lines were down, feed bins were overturned, barns were obliterated, silos were decapitated. I visited a number of these farms yesterday and was amazed that more people weren't hurt, because the devastation and damage was incredible. It looked, as I reported in my last remarks about the storms, like a Hollywood movie set, except this was not acting, this was real, and families affected were not actors and actresses, but real people in our State. So I pledged yesterday that I would come back today and not only talk about this, but work to try to secure for these tiny communities the designation as disaster areas that has been afforded much larger communities throughout the State who likewise are deserving of such designation being affected by the storms. Again, I want to thank the President. I want to thank FEMA for their rapid response to our requests last week. And I say that I do not think there is going to be any cost involved in expanding the designation to include Thetford and Vienna Townships, but the injuries and the damage done there are every bit as real and every bit as serious to those tiny communities as was the case in larger ones. Interestingly, although wholly unconnected with my visit yesterday, in the Detroit Free Press a story about these communities ran entitled ``Hardy Farmers Weather the Storm; Despite Damage, They're Rebounding.'' I ask unanimous consent that that article be printed in the Record.

Mr. ABRAHAM

Mr. ABRAHAM. Mr. President, I ask unanimous consent that a member of my staff, Dan Senor, be granted floor privileges as I make the brief remarks I am about to embark on.

Mr. ABRAHAM

Mr. ABRAHAM. Mr. President, recently, the Senate considered historic changes to preserve Medicare for future generations. I think it is important to outline my views in detail on a few of the key votes cast regarding these issues. I believe, as legislators, a chief concern must be protecting Medicare solvency for the long term. The Medicare Program is in a crisis situation. As reported in the most recent Medicare trustees report, the hospital insurance trust fund will be bankrupt by the year 2001. Hence, immediate action must be taken to save this vital program. The change contained in the bill would bring Medicare's eligibility age in line with the Social Security's eligibility age and would do it over a long period of time. Importantly, the increased eligibility age does not begin to phase in until 2003 and then increases slowly over 24 years. In essence, this position will not be fully in place for 30 years. This means that the full 2-year increase would only apply to individuals currently 36 years old and younger. This was, for me, a close question. However, as noted, this provision will not begin to be phased in for 6 years. For that reason--to launch a process that can lead to a positive, permanent solution--I voted in support, but with significant hesitations. If, in the next several years, my concerns can be alleviated, I will continue to support the proposal. If not, I will withdraw my support well in advance of 2003. Especially relevant will be the findings of the Medicare Reform Commission, created by this legislation, on how best to maintain the long-term solvency of this program. Specifically, will the Commission support an increase in the Medicare eligibility age? If the report rejects this idea I would withdraw my support. In addition, well before any change in age, we need to fully address how the health care needs of low-income seniors between the ages of 65 to 67, will be met once this provision is implemented. Failure to do so would also be grounds for rejecting the proposal. And finally, we must develop ways by which middle-income seniors will be able to purchase and maintain their insurance under such a provision. This may be through medical savings accounts or other means, but we must ensure that viable alternatives are available to all seniors. If, in the next 2 to 3 years, these concerns are not addressed, or the Medicare Commission disagrees with our actions, I will withdraw my support for increasing the eligibility age. Another long-term reform proposal debated concerns the bill's plan to means test Medicare part B premiums. Currently, seniors pay 25 percent of their part B premium while the Federal Government pays 75 percent of their premium. The bill would require seniors with incomes starting at $50,000--for a single senior--to pay a larger percent of this premium, with seniors making $100,000 a year required to pay the entire portion of their premium--up to $2,160 a year. Senator Kennedy offered an amendment to strike the means testing of premiums that was included in the Medicare bill. I supported the effort to strike this provision. Unlike the eligibility age issue, the means testing proposal would have immediate effect. I was concerned that before such a fundamental change took place, the issue should be reviewed and the consequences closely examined. We have not had hearings on this issue and I believe that hearings and closer review are necessary before a change of this magnitude is made to the Medicare Program. Further, I do not believe we should consider a proposal such as means testing until we have other viable alternatives in place such as medical savings accounts, to give middle-income seniors a way to better afford their Medicare and health services. In my judgment, to immediately implement the proposal in the bill would unfairly pull the rug out from under middle-income seniors without adequate notice or the provision of a legitimate option. This isn't fair. To me, a $50,000 income isn't wealthy. Moreover, many seniors who would have their premiums dramatically increased have carefully prepared and planned their retirements. Their incomes may already be committed to maintaining the mortgage and upkeep of a home, support of relatives, or saving for special nursing home care and so on. To change the rules this substantially and in the middle of the game, with no time for adjustment is wrong.

Mr. ABRAHAM

Mr. ABRAHAM. Mr. President, I rise today to offer my support as a cosponsor to Senate Concurrent Resolution 19. This resolution recommends the return of, or compensation for, foreign properties that were wrongly confiscated in formerly Communist countries and by certain foreign financial institutions. I join my colleagues on the Helsinki Commission in calling for restitution to the many victims who have suffered property losses at the hands of Communist and Fascist dictatorships. These victims had their property confiscated solely because of their religion, national or social origin, or expression of opposition to the regimes in power. In fact, many churches, synagogues, and mosques were destroyed and/or confiscated by these repressive regimes. Private property ownership is one of the key hallmarks of a free society, as are the freedom to practice one's own religion, express one's own social or national traditions, and speak against one's government. Violation of these freedoms, and disrespect for these concepts, is a glaring signal that a country is ignoring democratic norms and violating international law. Even more egregious is the fact that some financial institutions cooperated with these repressive regimes in converting to their own personal use those financial assets belonging to Holocaust victims, and their heirs and assigns. This is a clear violation of these institutions' fiduciary duty to their customers. We must not sit idly by while they enjoy their ill-gotten gains. In this new and welcome period of transition for many of the formerly Communist countries in Central and Eastern Europe, it is my sincere hope that victims of confiscation will be sought out and compensated. Further, to expedite the compensation process, I fully support the elimination of any citizenship or residency requirement in order for those victims to make property claims.

Mr. ABRAHAM

Mr. ABRAHAM. Mr. President, I rise today to offer my support as a cosponsor to Senate Concurrent Resolution 29. This resolution recommends the integration of Estonia, Latvia and Lithuania into the North Atlantic Treaty Organization. Ever since the disintegration of the Soviet Union, there has been talk of expanding NATO membership to include countries of Central Europe and the former Baltic Republics. These Baltic countries are continually striving to transform their political and economic institutions in accordance with democratic ideals and free market principles. We have seen remarkable achievements in this respect, from countries that have endured many years of communist occupation. I believe that expanding NATO to include Latvia, Lithuania, and Estonia would benefit bi-lateral trade and investment through a stable security environment. Furthermore, these countries have made great strides in the areas of human rights, civil liberties and the rule of law, and have also actively participated in the Partnership for Peace. They should be rewarded for these efforts. Most importantly however, enlargement of NATO to include these Baltic States would secure a principal gain of the cold war by strengthening new free markets and democracies in the region. Latvia, Lithuania and Estonia are all working very hard to satisfy the prerequisites of entry into NATO. As such, I am supportive of all efforts to integrate them in the membership of that organization as soon as the process permits.

Mr. ABRAHAM

Mr. ABRAHAM. May I ask how much time is left on the other side?

Mr. ABRAHAM. Mr. President, I want to be very explicit about both my position on the issue of prisoners working as well as what the intent of this amendment is that I am a cosponsor of. First of all, I believe prisoners should work. I am not for a no work policy. I support many of the ideas that are embraced by the Senator from Texas in his previous efforts to expand the type of work that prisoners do. Second, this amendment is not a prisoners-don't-work amendment. The only conditions where prisoners stop working would be if the Federal Prison Industries are operating at an uncompetitively high level of price for the products that they produce. If that is true, then what it means is that the taxpayers are subsidizing the work of the Federal Prison Industries by allowing that operation to basically function at an above-market cost. If that is true, then the Senator from Texas should be on our side with respect to this amendment because it would mean that not only are the taxpayers paying for the costs of running prisons and the incarceration, it would mean they are also paying extra for these products that are manufactured in the prisons. They are paying both through the front door and through the back door. If our goal here is to not have the taxpayers continue to subsidize at such a significant level the efforts and activities of those in prison, it would seem to me the direction we are seeking to move makes a lot of sense because it will drive down the cost to the taxpayers of the goods and services produced by the Federal Prison Industries or by others who would compete with them. In fact, if we are going to go ahead and subsidize the work done in the prisons, at least we ought to take a step of subsidizing work that doesn't compete with that performed already by people in the private sector in this country. All we are asking for with this amendment is a level playing field to allow manufacturers to compete with the Federal Prison Industries for Government contracts. I think it would be incongruous for us to go in a direction in which we would continue to subsidize, through taxpayer moneys, products that are overpriced. It just does not make sense. We talk here all the time about trying to save money. This is one way that we would, I think, generate the kind of lower cost of Government that we all profess to support. My point is very simple. I am not opposed to the broad concepts that the Senator from Texas has outlined. I am very comfortable with them. I think prisoners should work. I think we should find ways to make the industries in the prisons focus on areas that do not compete with the private sector in our States. But what really is very hard for me to explain to my constituents is why they should send their tax dollars to Washington to then be spent in support of the Federal Prison Industries to buy the goods and the services of the prison industries, to then put them out of jobs. That seems to me to be the least sensible course for us to take. So I strongly support this amendment. I have no trouble with the notion of getting more facts, but I think that really is just an effort to delay this. I think we may have another speaker here, so I am going to yield the floor. I appreciate the efforts of those who are pressing for the Levin amendment.

Mr. ABRAHAM. I thank the Chair. This amendment that Senator Levin and myself, Senator Kempthorne and others offered will not end work in prisons. It will not prevent prisoners from, through rehabilitation, learning skills. It just levels the playing field to allow private companies to compete with prison labor for these contracts that are now exclusively given to Federal Prison Industries offered at a significant cost to the taxpayers from what would exist if we had a level playing field in competition. The taxpayers should not have to pay extra for these materials and products supplied through Federal Prison Industries.

Mr. ABRAHAM

Mr. ABRAHAM. Mr. President, I thank my colleague and friend who brings us, I think, a wise amendment tonight, which I am happy to cosponsor. This is a pretty simple amendment, really. It does not say that anybody should get a preference over the Prison Industries, but simply that those who are in the private sector, who create jobs for people, who play by the rules and work hard, ought to have the same opportunity to bid on Federal contracts that the Federal Prison Industries themselves enjoy. As my colleague from Michigan, Senator Levin, has indicated, we have numerous examples that suggest that, right now, the Federal taxpayers are not getting their money's worth when Federal agencies purchase office equipment, because the Prison Industries' costs are greater than would be the case if the private sector were involved. Moreover, of course, it is our view that if competition was injected into the system, the cost would go down, even though it is conceivable that the Prison Industries would continue to be the contractor chosen for the production and provision of such furnishings. In my State, Mr. President, we have a lot of people in this industry. I have spoken with them in the plants in which they work--not just the people who run the plants, but the people working on the floor making the finest furniture in the world. They have an interesting take on the way we do business. They say: Doesn't it seem unusual that we should work hard, 40 hours a week, and sometimes more, to produce a high- quality piece of furniture, and that we should have a certain amount of the money we earn for that hard work sent to Washington to pay taxes, or sent to Lansing, or wherever, and then that we should see those tax dollars go to the Federal Government to be used, at least in part, to support the development of an industry that competes with us and prevents us from having the opportunity to create better paying jobs and more jobs? That doesn't make sense to them, Mr. President, and it doesn't make sense to me. It seems that we ought to pride ourselves here on providing our taxpayers the most efficient Government possible. That ought to mean that when we purchase equipment and furniture for the Federal departments and agencies, we get the best bargain possible and that we at least make sure that folks who work hard and play by the rules in the furniture industry, or any other industry, have the opportunity to benefit from the Federal contracts that are let to purchase furniture and other sorts of items that help us in the Federal agencies and departments. To me, this is just pure common sense. So for that reason I support this amendment. I think all we are asking for here is a level playing field--no special preference, no exclusion of the private sector from the bidding process. If the furniture made by the Federal Prison Industries is the best deal, then that is who ought to be doing the work. But if it is not, then the taxpayers deserve the best deal. As to a broader point, I just want to say this. I believe that people in prisons should work. This is in no way, or should it be in any way, interpreted as an amendment designed to suggest that those who are doing hard time should stop doing hard time or that those who are learning trades and skills ought to be in any way prevented from doing so. But it seems to me that what makes sense is for the Prison Industries to focus primarily on providing services, and so on, in areas where they aren't competing with American workers and American jobs in the private sector. I think, at a minimum, we should level the playing field so that that can occur. For those reasons, I am happy to support this amendment as a cosponsor. I look forward to the continuation of this debate tomorrow on the floor as well. Under the previous order, I yield the floor back to the Senator from Michigan.

Mr. ABRAHAM

Mr. ABRAHAM. Mr. President, late on Wednesday, July 2, the State of Michigan was the recipient of an uninvited guest for the holiday weekend: Namely, a series of intense thunderstorms which ripped through the south-central and south-eastern portions of our State. Heavy rains, accompanied by 13 confirmed tornado touchdowns, and powerful straight line winds in excess of 70 to 100 miles per hour caused extensive damage, injury and some deaths in our State. I have had the chance since then to tour a number of the damaged sites in our State, and I know that Senator Levin has likewise been visiting some of these communities. I can attest to the level of destruction which has taken place in Michigan. Just to put some statistics to the descriptions, all told we had 13 people who were killed as a result of the storms, approximately 117 others as of this morning who were injured, and some 1,482 people are homeless today as a result of the storm. Public damage estimates at this point are now close to $135 million, and are expected to rise. To put it in even a more personal perspective, in Grosse Pointe Farms, MI, winds in excess of 75 miles per hour caused the collapse of an occupied picnic pavilion gazebo. It actually swept the gazebo across the park, lifted it and those in it through a fence and into Lake St. Clair. Five people, including several very young children, were killed as a result. In Wayne and Macomb, Counties, flooding caused by the intense rainfalls resulted in nearly 52 million dollars' worth of damage to the public water and sewer systems. In the city of Detroit, the headquarters of Focus:HOPE, a volunteer organization that feeds over 50,000 people a month in Michigan, sustained $10 million in damages when a tornado tore the roof off several of its buildings and blew out dozens of windows. In the city of Hamtramck, another community I visited, the scene was reminiscent of a Hollywood set, with cars up- ended, houses destroyed, and roofs ripped off buildings. It was an incredible act of nature which, at one point, left approximately 325,000 people in our State without power. I appear today, really, just to give the Senate an update. Michigan is a resilient place and the people in all of these communities have risen to this challenge. People have been volunteering, helping neighbors, and coming from all over our State to lend a hand in places such as Chesaning, a city in Saginaw County, and in Genesee, Wayne, Macomb and Oakland Counties. I am very proud of those people, Mr. President. I appear today to thank all of those who have stepped up to this challenge. Government officials, led by our Governor John Engler, Detroit Mayor Dennis Archer, Mayor Kozaren of Hamtramck, Mayor Danaher of Grosse Pointe Farms, Supervisor Kirsh of Washington Township, Supervisor DePalma of Groveland Township, Supervisor Walls of Springfield Township, Mayor Jester of East Lansing, Supervisor Miesle of Cohoctah Township, Supervisor Kingsley of Conway Township, Supervisor Wendling of Maple Grove Township, Village President Mahoney of Chesaning and numerous other local officials have pulled together the State and local resource teams to get out and help distressed folks. The Michigan State emergency personnel, the State police, and FEMA have already begun the public damage assessments and they have been stalwarts in addressing these problems. I want to commend them, but I especially want to commend the volunteers from all over our State who have joined together to provide these first few days the kind of neighbor-to-neighbor help that truly makes the difference when crises of this type occur. Our office is very actively involved, along with the other congressional offices, in trying to provide assistance. We have made it clear to those in need, if there is anything we can do we will be there to help. We also intend to continue the efforts to work with our State and with FEMA to provide whatever assistance we can, and if a decision to seek Federal aid is made, certainly I urge the President to move quickly to approve it. My wife, today, in fact, is in the State working with the Red Cross in a number of the shelters that have been provided. People from our staff and other congressional staffs, I know, are likewise performing various volunteer services. So, Mr. President, I want to send a heartfelt thanks to those in our State who have donated their time and energy. To the families of those who have lost loved ones, we send our prayers and condolences. And to the many others who have been affected by this, we want you to know that people are committed to working to do everything we can to return things to normal and to overcome this tragedy. It was an incredible storm, but Michigan is an incredible State, and I know we will successfully rebuild and put things back on track in a very short period of time. I yield the floor.

Mr. ABRAHAM

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

Mr. ABRAHAM. I yield to the Senator from Minnesota to comment further on this legislation.

Mr. ABRAHAM. This amendment is offered on behalf of myself, Senator Brownback, Senator Enzi, Senator Inhofe, Senator Grams, and Senator Sessions. At this time our Nation's tax rate is the highest percentage of the national income it has ever been in history. As we all know in this Chamber, our national debt is too high. Recently it was discovered by the Congressional Budget Office that they had underestimated the revenues coming into our system by some $225 billion, and we promptly spent a very substantial amount of those dollars on new Federal programs. This amendment is very simple. It says if the revenues which are received by the Treasury in the next 5 years exceed those that are projected, we ought to have a lockbox and those dollars ought to either be spent on tax cuts or on reducing the deficit, and not new Federal spending. Mr. President, a coalition of taxpayer groups including the National Taxpayer's Union, the National Tax Limitation Committee, Empower America, Americans for Hope, Growth and Opportunity, and others have endorsed my bill to require that any tax revenue windfall be used for tax cuts or deficit reduction, not new government spending. I ask unanimous consent that a statement by Al Cors, Jr., of the National Taxpayer's Union be entered in the Record immediately following my remarks:

Mr. ABRAHAM. Mr. President, I ask unanimous consent that my op-ed article in today's Journal of Commerce on the economic growth dividend protection amendment be printed at this point in the Record.

Mr. ABRAHAM. Mr. President, I move to waive the Budget Act with respect to this amendment. Mr. President, I ask for the yeas and nays.

Mr. ABRAHAM. Mr. President, I was wondering if Senator Nickles and I could engage the chairman of the Finance Committee in a colloquy regarding the proposed tax on the domestic portion of international journeys [DPIJ]. As I understand the new tax, it will impose a new 10- percent tax on domestic legs of international flights. This tax hurts domestic carriers because they typically have domestic stopovers on their international flights, whereas international carriers have more direct flights without stopovers in the United States. Since flights without stopovers are not subject to the new 10-percent tax, the net result is a competitive disadvantage for domestic carriers.

Mr. ABRAHAM. Mr. President, I call up my amendment No. 538. The OFFICER. The clerk will report.

Mr. ABRAHAM

Mr. ABRAHAM. Mr. President, I have spoken previously about the problems associated with the Treasury Department's use of the concept called family economic income in assessing the distributional impact of the Taxpayer Relief Act. Under this controversial approach, the Treasury Department artificially inflates income by adding to it the value of fringe benefits, retirement benefits, unrealized capital gains, and the imputed rent on homes. The effect of this is to make middle-income wage earners appear to be richer than they really are. So if you get a tax cut under the Taxpayer Relief Act, the Treasury Department classifies you as ``rich.'' Under normal methods of measuring income used by the Joint Committee on Taxation, the CBO, and most private sector forecasters, this tax cut overwhelming by benefits middle-class families. Under this bill, 75 percent of the tax cut goes to people making $75,000 or less. And 82 percent of the tax relief goes directly to families with children. Those are the facts. Mr. President, I ask unanimous consent that a study by economist Bruce Bartlett, which debunks the Treasury's use of this flawed concept, be printed in the Record.

Mr. ABRAHAM. Mr. President, on behalf of the majority, I yield myself such time as I may need to speak to the bill and, really, as well, to this amendment. I think the bill that the Finance Committee has brought us today is a very good bill. I look forward to supporting it against some of the amendments that would seek to undercut the basic thrust and to see it to final passage. Obviously, this bill doesn't reflect what any single Member of the Senate would have drafted had they total control over the legislation and the agenda here. It reflects, as so many speakers have indicated, a strong bipartisan effort--something we have talked a lot about in this Chamber over the years, but do not always deliver--a strong bipartisan effort to find common ground behind a sensible strategy for providing tax relief for the working families of our country who pay taxes, a chance for those families to keep more of what they earn. So, to that end, I am here to speak on behalf of the legislation. Mr. President, tax cuts are long overdue. In 1992, President Clinton, while running for election, promised a tax cut. Unfortunately, in 1993, that tax cut was replaced by the largest tax hike in American history. Today, we stand 16 years away from the last tax cut for the working families of our country. Four tax increases have transpired since Americans last received tax relief. Today, Federal taxes are consuming 21 percent of our Nation's gross domestic product, or our country's national income. Mr. President, that is more than at any time in the past 200 years. Let me put that in perspective because I think the argument that we have heard here for so long is that Americans don't need a tax cut. Well, Mr. President, they do. Not during World War II, not during the Vietnam war, not during the Depression or during any time in the last 200 years of our country's history have taxes consumed such a high percentage of the American income. And for that reason, this legislation must pass, must be signed into law, and must provide relief for the American people. Today, in our country, taken together, Federal, State, and local taxes cost the typical American family more--more, Mr. President--than food, clothing, and shelter combined. Food, clothing, and shelter typically cost approximately 28 percent of a families income; taxes take up to 38 percent. To me, that is simply too much. After several tries and one veto from President Clinton, Congress is working this week to give hard-working American families fair and overdue tax relief. I would like to speak about some of the provisions in this legislation, Mr. President, that I think are especially noteworthy, which will help taxpayers through all stages of their lives. Children will benefit from a $500-per-child tax credit that will increase their family's ability to care for them and plan for their futures. Teens and young adults will be helped by sensible, targeted education tax breaks that will help finance their schooling. Those who have finished their educations will benefit from progrowth tax cuts, including the capital gains tax cut, that will stimulate economic expansion and provide more good jobs at good wages. Americans working to start small businesses also will benefit from the flood of new venture capital that will result from cutting capital gains taxes. Those looking toward retirement will benefit from expanded individual retirement accounts, IRA coverage, including the new full spousal IRA, and from the capital gains tax cut. More than 40 percent of American families own stocks directly or indirectly, Mr. President. American seniors currently constitute 12 percent of the population and realize 30 percent of America's capital gains. Americans considering their legacy to their children--especially small family business owners and farmers--will benefit from a substantial cut in the effective death tax. All Americans will benefit from a cleaner environment, thanks to this bill. Urban families, in particular, too often must live near contaminated sites because the owners of those properties have abandoned them and no one else can afford to clean them up. That is why I worked with a number of other Members of this Chamber to include in this bill a provision allowing those who clean up these environmentally contaminated brownfield sites to expense their cleanup costs on an accelerated basis. This will not only encourage business to clean up and put to productive use areas that now contaminate our cities, but it will also create unlimited numbers of potential job opportunities for people who, today, are searching for a chance to get on the economic ladder. I want to focus on that for another minute, Mr. President, because I believe this part of the legislation, which hasn't received as much attention as some of the other sections, really is very pivotal to the future of this country. We can address environmental problems and we can address the problems that we see in too many economically distressed areas, in terms of trying to generate opportunities, because of those brownfields provisions that have been included in this legislation. Mr. President, this tax bill that we offer today, this tax relief plan, is fair. As the Senator from Washington indicated just a few moments ago, 75 percent of the tax relief provided in this plan goes to those families who make $75,000 of income or less. Now, obviously, a lot of people can use statistics to make their argument, and we do on the Senate floor. But one thing that is irrefutable, Mr. President, is that if you are making $75,000 or less, you are going to receive 75 percent of the tax cuts in this legislation. Now, obviously, there are ways people can argue to get around it, and I will comment on some of those, perhaps, in a minute here. But unless people want to now call those in the $75,000 income category the richest Americans and the wealthy Americans, then, Mr. President, this tax bill clearly is one aimed at providing fairness to working middle-class families. Let me talk about what this means to my State of Michigan for just a moment. Under our tax proposal, the family tax relief provisions will provide over $3 billion of tax relief for working families in my State, thanks to the $500-per-child tax credit. That means that literally hundreds of thousands of Michigan children, over the next 5 years, are going to be receiving a $500 tax credit on an annual basis, Mr. President. That means more dollars available for young families to help feed and clothe and advance their children's learning. In addition, families in my State will be receiving $1.3 billion over the next 5 years from this tax relief plan in order to help finance college education. Mr. President, the average American family should not have to go bankrupt, nor should a college graduate have to be in debt for decades just to be able to have a degree of higher learning. Yet, that is too often the choice confronting American families these days. Mr. President, our bill, in my State alone, will provide over a billion dollars of support to those working families. In addition, we have incentives for the creation of new jobs and opportunities-- approximately $69 million in capital gains tax relief, approximately $124 million in terms of IRA expansions for the families in my State, a substantial increase in order to stimulate the kinds of job opportunities that we want for our citizens. Michigan is a State with a lot of small businesses, and a lot of family owned farms, Mr. President. Every time I travel back in the State and talk to those in the small business or the farming community, I am told time after time, ``You have to do something to make it possible for us to keep the family business and the family farm in the family,'' because when the family that is running the business or the farm--when the last member of that family passes away, the death taxes are so much, they have to sell the property, or they have to sell the business in order to pay the taxes, and their children will not be able to inherit their rightful claim. This legislation addresses that very effectively, as well. So for my State, Mr. President, it means a great deal. There are a variety of additional tax incentives for Michigan. When they are all added up, it results in over $3 billion in tax relief over the next 5 years for the folks that I represent, the folks in my State, who are paying the bills, playing by the rules, and sending their tax dollars to Washington. It is a bipartisan piece of legislation. I was extraordinarily impressed by the fact that the Finance Committee was able to come together and pass this legislation on an 18- to-2 vote. That indicates the extent to which our tax cut plan makes sense. So for all of those reasons, Mr. President, I am proud to come here today in support of this legislation. I want to just comment on one or two of the points made in opposition during recent speeches that have taken place here. The first is the argument that, somehow, 70 percent of the benefits go to the upper income groups in this country. Well, as the Senator from Washington already indicated, that only works if you impute income to the families of this country for everything from fringe benefits to unrealized capital gains to even the imputed rent on a home that you own. As the Senator from Washington said, that is fine if you are going to live on the street. Then you can take credit for those imputed rental dollars. If you are staying in the house, you can't. To use that kind of calculation to try to make this tax bill seem less fair, to me, Mr. President, is going way beyond the limit. I mean, the fact is, if we are going to start thinking about these sorts of things as income, it will only be a matter of time before somebody stands up in the Senate and wants to tax that income. Pretty soon, we will be asking people to pay taxes on the imputed rent of the house they own. That is a precedent we don't want to start here. The fact is, if you can't spend it, you can't be treated as having earned it. Mr. President, the bottom line is that that argument does not hold water; nor does the argument that suggests that we should not pass this tax bill because the median income of working families has not changed during the last 20 years. The facts are, Mr. President, that it has not been stagnant. The average income of families in this country have changed dramatically over the last 20 years. Unfortunately, they have gone down; then they went up, and now they have been coming back down again. The interesting correlation between those changes, Mr. President, is what we have done in Washington. In the late 1970's, the average median income went down, when we had high tax policies coming out of Washington. Following the 1981 tax cuts that gave working American families a chance to keep more of what they earned, median incomes went up and stayed up, and they kept going up for about 8 years. And then we started the tax policies again, first in 1990, then 1993 and, yes, those incomes have come down. If anything, that argues for cutting taxes, as we are attempting to do today. For all of these reasons, Mr. President, I think the bill brought by the Senate Finance Committee deserves our support. I look forward to working with members of that committee as we finish our work here today. I compliment them on both sides of the aisle for a job well done. This is not an easy task. I especially thank Chairman Roth for his leadership. I think it is a great package, and I look forward to supporting it. I yield the floor. Mr. CONRAD addressed the Chair.

Mr. ABRAHAM

Mr. ABRAHAM. Mr. President, I take this opportunity in morning business to talk briefly about an issue that I know a number of Members on both sides of the aisle care very much about. Yesterday in the House of Representatives a resolution which would have opposed or ended America's most-favored-nation status relationship with the People's Republic of China was defeated. But in the wake of that defeat, I think we still have an obligation to examine closely the policies of the Chinese Government and to not simply criticize those policies in word but also act with respect to those policies indeed. To that end, I urge my colleagues to begin the examination process of what, separate from acting in the context of most-favored-nation status, we might do as a matter of American policy. The concerns that many of us have with respect to human rights abuses in China, ranging from coercive family planning practices to religious persecution, to the events that occurred in Tiananmen Square just a few years ago, combined with a variety of other things, such as the activities in this country of certain Chinese companies that operate under the auspices of the People's Liberation Army--most recently the incidence in which AK-47 assault rifles were on their way to street gangs in Los Angeles, and happily that was prevented from occurring-- but a variety of actions that I think demand a response from this country that goes beyond rhetoric. To that end, I recently introduced legislation here in the Senate, the China Sanctions and Human Rights Advancement Act. I ask my colleagues to take a look at that legislation. Now that it is clear that the most-favored-nation status debate is over for this year, I think we should be looking at other options. I believe this legislation embodies a variety of very targeted responses to the things that have gone on in the People's Republic of China that Americans are concerned about. It would, among other things, deny visas to those high-ranking Government officials who have engaged in some of the policies and practices that we deplore. It would upon the United States to vote ``no'' with respect to votes on loans to China by international multilateral development banks so that we will not have American taxpayers subsidizing the Chinese Government. It would identify those Chinese companies who are operating in this country and take specific sanctions against those who have been identified as having engaged in inappropriate and illegal activities. It would attempt to deal in a very specific way with the issues of the proliferation of weapons technologies that has gone on between the Government of China and nations such as Iran. It has a wide array of components to it. I ask that all Members who are concerned about the actions of the Chinese Government look at this legislation. This Senator is anxious to look at other ideas, because I think a response is warranted beyond the MFN debate itself. Mr. President, with that I yield the floor. I suggest the absence of a quorum.

Mr. ABRAHAM

Mr. ABRAHAM. Mr. President, I rise to speak today on Senate bill 364, the Biomaterials Access Assurance Act, which I am proud to cosponsor. I have long been a proponent for civil justice reform and other legislative measures relating to product liability. As an original cosponsor of product liability reform legislation (S. 648), I have long supported the biomaterials liability reform provisions contained in it. I am also pleased to cosponsor those provisions as a separate measure, although in my view we need both general product liability reforms and biomaterials liability reforms. This Nation's tort system is in dire need of repair. To maintain the status quo is not only costing consumers millions of dollars each year but also many lives will be lost if change does not occur soon. The Biomaterials Access Assurance Act approaches the subject of tort reform from a different perspective--the perspective of millions of Americans who face life-threatening diseases. These are the people who have the most to gain and everything to lose if Congress refuses to listen to their pleas. The purpose of this act is straightforward. S. 364 attempts to gain a foothold on our legal system's slippery slope by shielding companies who supply raw materials to manufacturers of life-saving medical devices. The Biomaterials Access Assurance Act will prevent the impending shortage of biomaterials suppliers by permitting these companies to be quickly dismissed from a lawsuit provided they had no part in the manufacture or selling of a device and all contractual specifications had been met. Currently it is common practice for suppliers to be dragged into costly litigation even though these companies are not involved in the creation or marketing of a product. In fact, in almost every case thus far, biomaterials suppliers are not found liable in these type of lawsuits. S. 364 squashes illegitimate attempts for windfall profits and more importantly, ensures these life-saving medical devices will be in abundant supply. Right now, the escalating expense suppliers unfairly incur defending their product continues to drive many out of the U.S. market. As a result, it is becoming increasingly more difficult for manufacturers of medical devices to find biomaterials suppliers with the raw materials necessary to produce their products. Replacement heart valves, pacemakers, and brain shunts are but a small selection of the devices which rely on raw material suppliers. My colleague from Arizona, Senator McCain, mentioned in an earlier statement that 13 biomaterial supply companies have been driven out of business due to concerns about the risk of unwarranted litigation. Sadly, the people whose lives depend on these raw materials for survival are the ones who will pay the ultimate price. Unfortunately a family living in my home State of Michigan illustrates my point. Recently Mr. And Mrs. Traxler of Fremont, MI, told me of their family's desperate need to find help for their young daughter, Sarah. The parents explained to me when Sarah was 2 months old she experienced a traumatic brain injury. As a result of the injury, Sarah now requires a shunt that drains fluid away from her brain. The shunt will need replacing soon and her parents are deeply worried that if medical manufacturers are forced into bankruptcy, the shunts keeping Sarah alive will no longer be available. In their letter, Sarah's parents explain, ``Because of the recent lawsuits involving breast implants and other medical devices, many biomaterials manufacturers have discontinued supplying the raw materials used to make medical devices. Because the sale of these raw materials represent such a small percentage of their total revenues, they do not feel it is worth the risk of having to defend themselves in court and they have discontinued supplying these materials to medical device manufacturers.'' This is a sad commentary on the state of this Nation's legal system. Clearly, reform is needed and must be implemented soon to help protect the life of Sarah Traxler and countless others like her. For this reason, I ask my colleagues many of whom are parents themselves, to support this critical legislation.