Cass Ballenger

Mr. BALLENGER

Mr. BALLENGER. Mr. Speaker, I want to share with my colleagues news of the AFL-CIO's recent convention where the highest officials of the AFL-CIO, under newly elected union president John Sweeney, levied a $35 million tax increase on the rank and file men and women of our Nation's unions. This $35 million tax is being used to support an orchestrated, and highly political campaign to divide our Nation along class and income lines. Needless to say, Mr. Speaker, the American people, especially the rank and file of our Nation's labor unions, will not allow Mr. Sweeney and the other liberal union bosses to turn back the clock on this Congress' pledge of fundamental change. We will continue our efforts to respond to the people of this great country. We will make the Federal Government smaller, more efficient and more user friendly. We will fight the bureaucrats here in Washington who refuse to let parents and families decide what should be taught in schools. And we will cut wasteful Federal spending so we can put more money back in to the pockets of working families. Despite the rhetoric of the liberal, elite union leaders, I believe the working men and women of the AFL-CIO, will continue to reject the old-style liberal policies of Mr. Sweeney and the Clinton administration, and support of vision of a stronger, more prosperous America.

Mr. BALLENGER

Mr. BALLENGER. Mr. Speaker, recently Bill Clinton submitted the details of his fiscal year 1997 budget. I think it is safe to call this new budget adventures in fantasyland. The adventure begins with the illusion of serious Medicare reform. Not real Medicare reform, mind you, just empty rhetoric and fake concern. Then, we'll proceed to fictitious welfare reform where all we get are vetoes and a lot of hot air. After that, we'll travel to the tax cut mirage where tax relief seems almost within grasp, then disappears the closer we get. Mr. Speaker, the American people now the drill by now. They have a President unwilling to keep his promises, one who hides behind politics to avoid making the tough choices. This new budget is not a serious attempt to end big government. Really, it is just an image, a fantasy, another broken promise.

Mr. BALLENGER

Mr. BALLENGER. Mr. Speaker, today I am joined by Mr. Goodling and Mr. Fawell in the introduction of legislation to eliminate the disincentive under the Fair Labor Standards Act for employers to provide bonuses to hourly paid employees. Presently, the FLSA requires that certain payments to a nonexempt employee--such as commissions, gainsharing, incentive, and performance contingent bonuses--must be included in the employee's regular hourly rate of pay for the purposes of calculating overtime pay. It is becoming more common for companies to link pay to performance as they look for innovative ways to improve employee performance. More employers are awarding one-time payments to individual employees or to groups of employees in addition to regular wage increases. Employers have found that rewarding employees for high quality work improves their performance and the ability of the company to compete. If a company's profits exceed a certain level, employees are able to receive a proportionate piece of the profits. Unfortunately, many employers who choose to operate such pay systems can be burdened with unpredictable and complex overtime liabilities. Under current law, an employer who wants to give an employee a bonus must divide the payment by the number of hours worked by the employee during the pay period that the bonus is meant to cover and add this amount to the employee's regular hourly rate of pay. This adjusted hourly rate must then be used to calculate time-and-a-half overtime pay for the pay period. Employers can easily provide additional compensation to executive, administrative, or professional employees who are exempt under the FLSA without having to recalculate rates of pay. Some employers who provide discretionary bonuses do not realize that these payments should be incorporated into overtime pay. One company ran afoul of the FLSA when they gave their employees bonuses based on each employee's contribution to the company's success. The bonus program distributed over $300,000 to 400 employees. The amount of each employee's bonus was based on his or her attendance record, the amount of overtime worked, and the quality and quantity of work produced. When the company was targeted for an audit, the Department of Labor cited it for not including the bonuses in the employees' regular rate for the purpose of calculating each employee's overtime pay rate. Consequently, the company was required to pay over $12,000 in back overtime pay to their employees. The company thought it was being a good employer by enabling its employees to reap the profits of the company and by paying wages that were far above the minimum. These types of actions taken by the Department of Labor are especially surprising in view of Labor Secretary Reich's exhortations to businesses to distribute a greater share of their earnings among their workers. This legislation will eliminate the confusion regarding the definition of regular rate and remove disincentives in the FLSA to rewarding employee productivity. The definition of regular rate should have the meaning that employers and employees expect it to mean--the hourly rate or salary that is agreed upon between the employer and the employee. Thus, employers will know that they can provide additional rewards and incentives to their nonexempt employees without having to fear being penalized by the Department of Labor regulators for being too generous.

Mr. BALLENGER

Mr. BALLENGER. Mr. Speaker, President Clinton, in his recent State of the Union Address proposed another Federal education program to provide merit based scholarships to the top 5 percent of high school graduates. This despite the fact that there are already 47 scholarship and fellowship programs operated by the Federal Government. In fact, President Bush's Presidential Access Scholarship Program--a merit based program--is still on the books. This highlights an important point. The Education Committee has discovered over 760 Federal education programs spanning 39 separate agencies, departments, and commissions. Many of these programs were designed to meet the exact same goals--yet each has its own application process and regulations. So why does President Clinton propose one more education program-- program 761? Is it to improve the education of our children or merely to make us feel like we are educating our children by spending money and creating programs? This is a critical question we must answer--the education of our children is at stake.

Mr. BALLENGER

Mr. BALLENGER. Mr. Speaker, working Americans have suffered under the proregulation, protax policies of the Clinton administration. In 1993, Bill Clinton enacted the largest tax increase in history. Since then, average working Americans have had to deal with higher taxes on one hand, and stagnant wages on the other. Under President Reagan family income increased, the economy grew, and economic confidence soared. Today, the Clinton administration is overjoyed if growth is over 2 percent in a year. That's simply not getting the job done. We need faster economic growth and the way we do that is by easing the burden of Government. We need to cut taxes for families and cut repetitive and burdensome regulation on small business. Mr. Speaker, later today we will vote on H.R. 994. This bill will help create a cheaper and more effective regulatory system and let small businesses do what they do so well--create jobs and grow the American economy.

Mr. BALLENGER

Mr. BALLENGER. Mr. Speaker, the Clinton crunch is upon us. No, this is not a new kind of cereal. It does not go snap, crackle, and pop if you pour whitewater--or should I say milk--over it. No, Mr. Speaker, the Clinton crunch is a disease that infects middle- class America. Its symptoms? Higher taxes and stagnant wages. Its cause? The policies of the Clinton administration. The cure? Lower taxes and a balanced budget. Mr. Speaker, it is true, the Clinton crunch is upon us. Luckily, there is still hope for middle-class America. But we must act soon. We must cut taxes and we must balance the budget. Unfortunately, the current occupant of the White House does not seem that interested in cutting taxes or balancing the budget. In fact, he would rather feed the Clinton crunch with higher taxes and more Washington spending. Mr. Speaker, the differences could not be clearer. Bill Clinton wants higher taxes and higher spending. House Republicans want lower taxes and less spending. Which do you think is the cure for the Clinton crunch?

Mr. BALLENGER

Mr. BALLENGER. Mr. Speaker, President Clinton has now been in the White House 3 years, 1 month, and 1 week. Under his watch, the national debt has gone up, taxes have gone up, and wages have remained stagnant. What is up should be down and what is down should be up. Some economists now predict that the economy is on the verge of a recession. I hope that they are wrong, but let's not fool ourselves. The Clinton administration has pursued economic and tax policies that slow growth and stifle commercial activity. High taxes discourage risk- takers from expanding businesses, hiring new employees, or from starting new businesses. Since Clinton took over as President, economic growth has been anemic and clearly has not matched the expansion we saw under President Reagan. Americans are rightly concerned about a looming economic crunch caused by the antigrowth and pro-tax policies of the Clinton administration.

Mr. BALLENGER

Mr. BALLENGER. Mr. Speaker, last week President Clinton said this was the end of the era of big government. And this week, the President says that he established a record of remarkable consistency. Mr. Speaker, let's review the facts. President Clinton is responsible for the largest tax increase in American history. He tried to take over one-seventh of the U.S. economy by socializing the Nation's health care system. Last year, the President submitted four budget plans, none of which balanced, all of which had $200 billion deficits as far as the eye could see. And only until very recently has the President submitted a balanced budget, but even that puts off the tough choices for future politicians and spends $326 billion more on failed Washington programs. If this is the end of big government, I must be in political fantasyland. Mr. Speaker, let's cut through the double-speak see that, in reality, Bill Clinton has become big government's little buddy. Mr. Speaker, I submit the following for the Record: [From the Washington Post, Jan. 31, 1996] Clinton Says Record Shows ``Remarkable Consistency'' (By Ann Devroy and John F. Harris) President Clinton said yesterday his declaration last week that the era of big government is over was not a departure from the philosophy he brought to the White House three years ago and said he will show voters this year that he has compiled a record of ``remarkable consistency.'' Clinton's comments came in an Oval Office interview a week after a State of the Union address in which he embraced many of the limited-government themes sounded by congressional Republicans. Despite his advocacy of a federal overhaul of health care earlier in his administration and recurrent charges by his critics that he has moved across the political spectrum with the polls, Clinton said his basic approach to the presidency has not changed. ``I believe I've given the American people a coherent view of the world,'' he said, adding: ``Just because I'm not for big government doesn't mean I think we should have a weak government or that there's nothing for government to do.'' Clinton said that while he hopes other Democrats share this vision, he will not make recapturing Congress for the Democrats a primary goal of his 1996 campaign. Such an appeal based solely on party, he said, would be ``self-defeating.'' On welfare reform, Clinton said he has not given up hope that a compromise bill acceptable to him will be approved this year. But he set a new price for his signature on a welfare system overhaul, asserting that the Senate proposal he indicated he would support last fall will have to be changed for him to support it now. He called on Republicans to send him a revised bill that would contain fewer cuts in funding for food stamps, provide child care for welfare recipients who work and preserve current protections for disabled children. One of Clinton's major campaign pledges in 1992 was to replace welfare ``as we know it,'' but he must reconcile that with his veto of a Republican welfare plan earlier this year because it was too hard on children. Since the veto, Republicans have been debating among themselves how to revive the issue. One alternative they have discussed is to agree to unite behind the Senate version, which was adamantly opposed by House Republicans. That way, some Republicans argue, Clinton would have to sign the bill--as he earlier indicated he would do--hereby angering liberals in his party, who think the Senate bill amounts to an abandonment of the party's traditional commitment to the needy. Clinton's comments yesterday appear to add a new hurdle to getting any version of welfare overhaul through Congress this year. Some argue it is an academic discussion anyway, because Republicans have deep disagreements over whether to try for a deal, how to proceed and whether a more limited measure like the Senate version could make it through the House. In the interview and later talking to reporters, Clinton said any new version sent him should ``at least reflect'' understandings on improvements reached between him and congressional Republicans during their marathon balanced- budget talks at the end of 1995. ``We reached an understanding,'' Clinton said, that ``we should do more'' on child care funding, food stamp proposals, funding that covers Social Security disability payments to children and provisions affecting the children of legal immigrants. Republicans disputed Clinton's description of the talks and his call for using them as a basis for new legislation. Tony Blankley, spokesman for House Speaker Newt Gingrich (R-Ga.), said the welfare discussions were in the context of Republicans taking less than real reform in order to get more of a real balanced budget. Without the balanced budget, he said, the equation doesn't hold up. ``It's not going to happen,'' he said of legislation rewritten to reflect the president's newest specifications. Adding new requirements now to the one version he did embrace ``offers a flavor of the kind of two-step he did in the Oval Office last month,'' moving the goal posts as the game proceeded, Blankley said. Administration officials are vague on what precisely Clinton and the Republicans reached understandings about. But one senior official said Republicans agreed to add back about $4 billion of the $26 billion in cuts they proposed for food stamps, and were no longer seeking to make the program a block grant. On child care, they did not object to adding $2 billion in spending and to allowing women who work 20 hours a week to meet the work requirement to keep benefits. On Social Security disability payments, the Republicans, officials said, did not object to loosening requirements to allow more traditionally disabled recipients to retain their benefits, while removing alcoholics and others. The two sides also ``threw out a number of ideas'' on how to loosen the GOP requirement that legal immigrants not be eligible for most welfare benefits, an official said. Clinton was relaxed and voluble for most of the interview, becoming more intense only when defending himself when asked if he has been inconsistent in his approach to government. He was joined in the Oval Office by a handful of senior aides, including senior adviser George Stephanopoulos, press secretary Michael McCurry and communications director Don Baer, none of whom joined the discussion. Regarding the 1996 campaign, Clinton said he has gotten a good reception to the conciliatory tone of his State of the Union speech and said seeking common ground with Republicans would be part of his election-year message. But asked if he would ask voters to give him a Democratic Congress to help accomplish second-term goals, Clinton said, ``The American people don't think it's the president's business to tell them what ought to happen in the congressional elections.'' Presidents have been only modestly successful in recent elections in getting voters to link their presidential votes to congressional votes by party. George Bush, when he was elected in 1988, saw his party lose seats in Congress, as did Clinton in his 1992 election. But the reelections of Richard M. Nixon and Ronald Reagan, in 1972 and 1984, saw their Republican Party make double-digit gains in congressional seats. ``The evidence that the president's been successful making that kind of argument to the American people is not very heavy,'' Clinton said. He added, ``I think it ought to be obvious to people that Speaker Gingrich would like to have a Republican president and it's obvious to people that I would like to have more Democrats in the Congress, but I think what the American people want to know is: What are these people saying, how's it going to affect me, and then I'll make a decision about how I'm going to vote.'' The president said he would ``make my case'' about what he wants to do in a second term. ``I hope it will embrace a lot of the people that are running for Congress in my party. But to tie the two things together I think would probably be self-defeating.'' Asked about his changes in governing philosophy since he took office and to reconcile his first speech to Congress in 1993 with his State of the Union address last week, the president flushed and rejected the premise that the different themes showed a different philosophy. In 1993, he began his speech by saying, ``Tonight I want to talk to you about what government can do because I believe government must do more,'' and went on to outline a ``package of jobs investments of over $30 billion to put people to work now, to create half a million jobs: jobs to rebuild our highways and airports, to renovate housing, to bring new life to rural communities.'' Last week, he twice proclaimed, ``The era of big government is over.'' Clinton said the two speeches are inconsistent ``only if you have that kind of selective quotes.'' ``I've worked very hard to work out a coherent philosophy that is different from either just letting the market run the world and America, or pretending that the government can solve all the problems,'' he said. ``I have worked on it very hard for years and years and I believe that there's a remarkable consistency in what we have done.''

Mr. BALLENGER

Mr. BALLENGER. Mr. Speaker, the pregame analysis about Tuesday night's State of the Union Address was completely on target. All the pundits and talking heads agreed that President Clinton would come to Capitol Hill and make a centrist-sounding, middle-of-the-road, warm and fuzzy speech. This time the pundits got it right. The President was his usual split-the-difference self: not too liberal, not too conservative. But there are things that even he missed. Like reality. He said that the era of big government was over. Well, he is right. But not because of anything Bill Clinton has done. In fact, the President has become big government's little buddy. Just this month he vetoed the first major overhaul of the welfare state in a generation. And last year he vetoed the first balanced budget to reach a President's desk since 1969. Mr. Speaker, if this truly is the end of big government, it is only because Republicans in Congress have had the courage to stop Washington liberalism and say ``no'' to Washington spending.

Mr. BALLENGER

Mr. BALLENGER. Mr. Speaker, here is a quote from the White House yesterday. ``But he''--meaning President Clinton--``will certainly acknowledge that tax relief, as he has been fighting for as President, is something that remains very important.'' Mr. Speaker, let me point out that Clinton is now in the fourth year of his Presidency. If he has been fighting for tax relief, why don't the taxpayers have it? Is it because in his first year as President, he pushed the largest tax increase in history on the backs of the American people? Is it because when a middle-class, family tax relief bill was laid on his desk, he vetoed it? Or is it because he didn't even start talking about tax cuts until Republicans became the majority in Congress? Mr. Speaker, all the above help point out that Bill Clinton is a say- anything, do-nothing liberal President. He claims to be for the people, but his actions show that his policies are higher taxes, bigger government, and more spending.

Mr. BALLENGER

Mr. BALLENGER. Mr. Speaker, the President seems to think that House Republicans are keeping the Government shut down. I must say, as a House Republican that is news to me. You see the Government's front door has got a big old deadbolt on it. Republicans managed to open the door when we passed the Balanced Budget Act of 1995. President Clinton slammed the door shut and locked it tight when he vetoed the Balanced Budget Act. Now, Mr. Speaker, here is my keychain. None of my keys will open the Government. I checked around with some of my colleagues. None of their keys will open the Government either. As it turns out, when the President vetoed the Balanced Budget Act, he did not just shut the door, he changed the lock. Mr. Speaker, we do not hold the keys. The President does. There is only one way the Government is going to open back up, and that is when the President of the United States agrees to a plan that balances the budget in 7 years and uses honest numbers.

Mr. BALLENGER

Mr. BALLENGER. Mr. Speaker, this is an e-mail I received: I am a Federal Government worker who will probably be furloughed Monday. I think this is a small price to pay if your really do balance the budget. As far as I am concerned the budget should be balanced this year rather than in 7 years. Do not cave in to Clinton and the Democrats. Just remember, the last time we were furloughed in November nobody noticed except Federal employees, the press and Democratic politicians. Most Federal workers are Democrats. The longer the Government is closed, the more pressure will be brought by furloughed workers and their unions on the Democrats in Congress, their representatives, to end the stalemate and override Clinton's veto. If you show backbone and refuse to cave, Clinton and the Democrats will give you everything you want. If you show fear--of polls and otherwise--and cave in to their demands, you will lose the respect of the people who elected you. Hold firm for the good of the country.

Mr. BALLENGER

Mr. BALLENGER. Mr. Speaker, there is no longer any doubt in my mind that President Clinton is the most powerful man in the world. Did you see what happened yesterday? The President came out to give a speech to the press, going on and on about how distraught he was over those evil Republicans who are insisting we actually balance the budget. While he was talking, in direct reaction to his speech, the stock market dropped 50 points, it dropped 50 points in 10 minutes, just like that, bam, a 50-point drop. Do you know why? Because every investor in the country was scared to death the President was actually being honest for once and would continue to block a real balanced budget. You see, America, that is the problem. There is only one person standing between the American people and a balanced budget, and unfortunately it happens to be the one man who can make the stock market drop 50 points in 10 minutes. It happens to be Bill Clinton.

Mr. BALLENGER

Mr. BALLENGER. Mr. Speaker, on December 13, 1995, I was unavoidably detained and missed rollcall vote No. 851, the adoption of House Resolution 297, a rule to permit the House to adopt, by a simple majority, rules for certain legislation on the same day that they are reported by the Rules Committee. Had I been present for vote No. 851, I would have voted ``aye.''

Mr. BALLENGER

Mr. BALLENGER. Mr. Speaker, opponents of the Republican effort to balance the budget have made a number of attempts to frighten the American people. It began with medi-scare, continued with edu-scare, and now it culminates with union-scare. The Washington based leadership of the AFL-CIO intends to spend $22 million on a campaign that attacks Republican efforts to balance the budget. Their campaign, however, is not based on the facts of the Republican plan to balance the budget, but rather on a series of lies, half-truths, and distortions. The interesting part of this campaign is that the $22 million is being financed by dues, fees, fines, and other special assessments on the hardworking men and women who are members of the AFL-CIO and their affiliate unions. Moreover, it is also important to note that this money is not being spent to further the interests of the union members, but rather is being spent to advance the political interests and agenda of the AFL-CIO's newly elected leadership. I wonder if the men and women who are paying for this campaign would support the use of their $22 million, if they were aware that it was being used to advance purely political objectives that stand in the way of a balanced Federal budget and brighter future for all Americans.

Mr. BALLENGER

Mr. BALLENGER. Mr. Speaker, Monday the President vetoed and VA-HUD appropriations bill. No doubt one of the reasons behind this veto was the elimination of funding for his pet program, AmeriCorps. Most of us have served as volunteers in our local communities and never thought of being paid in the process. The AmeriCorps National Service Program is the Democrat initiative for paying people to volunteer. During the 1993 debate on the program, a senior Democrat Senator declared ``Congress will not, and should not fund a program if it is unsuccessful. I do not believe it will happen but if it does I would favor cutting the program.'' I, and many others, question the success of AmeriCorps. After 3 years, the program has developed an average cost per volunteer between $26,000 and $31,000. And, one-fourth of AmeriCorps so-called volunteers don't work in their communities-- they work in Government or Government funded agencies. In my opinion, this program runs contrary to the idea of selflessly giving of ones time and talents for the betterment of the greater community. We agree with the Senior Democrat Senator who said that if a program's unsuccessful to its original goal, eliminate it. Unfortunately, it seems that President Clinton prefers to continue supporting this wasteful program.

Mr. BALLENGER

Mr. BALLENGER. Mr. Speaker, this morning our national debt stands at 4 trillion, 988 billion, 438 million, 854 thousand, 514 dollars and 79 cents. All this year, Republicans have devoted tremendous effort and energy to doing something about this debt. We have passionately advocated balancing the budget and doing the right thing for America. Everybody in America knows that balancing the budget is sane and responsible. The debt that previous Congresses have saddled on our Nation is a form of bondage. And our children and our grandchildren will pay for our failed governmental experiments. And what has been the response from the President? Last week, he vetoed the first balanced budget in a generation. And today, he is at least negotiating a balanced budget with the Congress. But does anyone here believe that if there were no Republican majority that Bill Clinton would be negotiating a balanced budget? The answer is clearly, ``no.'' Mr. Speaker, let us end the excuses and balance our budget.

Mr. BALLENGER

Mr. BALLENGER. Mr. Speaker, it is with pleasure that I join my colleagues, Mr. Rohrabacher of California and Mr. Payne of Virginia, in introducing the ESOP Promotion Act of 1995. Ever since my arrival in the Congress in 1986, I have tried to assist the promotion and improvement of employee stock ownership plans, or ESOP's. It is my personal belief that ESOP's and employee ownership are excellent arrangements for a free enterprise, capitalist economy. The ESOP provides a method for current owners of stock to sell, at fair market value, their stock to a trust that holds the stock for eventual distribution to employees upon their death, disability, or retirement. Mankind has never known a better economic system that one with private property, and a market that is established by competition. And there is no better way to preserve that system than to ensure that those who work responsibily in the system have an opportunity to own-- to have an equity stake in the product of their labor, be it manufacturing, professional services, financial services, or any other business endeavor. Since Congress first codified the employee stock ownership plan approach, which permits the contribution of employer stock to a trust for employees and permits borrowed funds using the credit of the corporation, the amount of stock acquired by employee-owned companies in America has grown significantly. All of us I assume have read about the big name companies that are employee-owned, such as Avis, United Airlines, and Weirton, but just like American business, most of the approximately 10,000 employee-owned companies are not publicly traded on stock exchanges, but are privately held. I know ESOP's first hand, as my family's business utilized an ESOP for transferring much of the family's stakehold to those who had contributed so much to our business' success--the employees. I believe that employee ownership, properly managed, creates a win- win situation for all involved--including America and our economic system as we increase competitiveness with employee ownership, and as we provide more opportunity for ownership for those who frankly would not have much of a chance at all to acquire stock ownership. Following my remarks is a synopsis of this year's bill. Generally, the bill reflects my, and many of my colleagues, longstanding goal to permit subchapter S corporations to sponsor ESOP's as a one section. The bill would reinstate a provision of law that was repealed in 1989 which permitted an ESOP corporate sponsor to pay the estate tax of an estate that transfers stock to an ESOP. Also, for those corporations that have deducted dividends paid on ESOP stock, and who did so before the issuance of IRS regs, which were retroactive on these companies and subjected them to the alternative minimum tax, the bill would clarify, for that group of companies, there would be no AMT on the ESOP dividends. Also, with the advent of providing stock directly to employees under a variety of schemes, such as stock options, the bill would clarify that employees with that stock, acquired under a plan conditioned on employment, could sell that stock to an ESOP and take the same treatment for their proceeds as an owner-founder selling to an ESOP, or outside investors. And the bill would under limited circumstances permit a deduction for stock transferred to an ESOP from a charitable remainder trust. Finally, my bill corrects a glitch in the 1989 law that denies the availability of the ESOP lender interest exclusion for ESOP's that are known as employee-owned co-ops, where the stock is voted one person-one vote as opposed to proportional voting based on share ownership. Mr. Speaker, I am aware that H.R. 2491, the Balanced Budget of 1995, vetoed by the President, had a provision added by the other body that repealed this particular ESOP incentive, the ESOP lender interest exclusion. Certainly, I and the other original drafter of the 1995 ESOP Promotion Act will make adjustments in our bill, or any section of our bill that might be affected by a provision in a budget bill that becomes law. I close by urging my colleagues to join with us and demonstrate their support for ESOP's and employee ownership by cosponsoring this legislation. Since 1989, the House has shown strong support for ESOP's, and I think it is important to confirm this support in this Congress. We should not let the position of the other body on one ESOP provision leave the impression with the American people that this Congress is abandoning the over 20 years of strong congressional support for ESOP's and employee ownership. I appreciate the opportunity to explain the ESOP Promotion Act of 1995, and ask that the synopsis be included in the Record at this point. Synopsis of ESOP Promotion Act of 1995 Section 1: Names legislation ESOP Promotion Act of 1995. Section 2: Under current law, corporations that operate under the tax law referred to as Subchapter S cannot sponsor an ESOP. There are hundreds of thousands of Subchapter S corporations; most are small, closely-held, businesses employing millions of people. There is no justification to deny employee ownership through ESOP's to this class of corporations. The proposed legislation would permit Subchapter S corporations to sponsor an ESOP. Because there is no corporate tax on income of these S corporations, the proposal would subject that share of the corporation's taxable income assignable to the ESOP's share of the income to a tax equal to the corporate tax. Section 3: From 1984 until 1989, an estate with shares of certain closely-held corporations could transfer stock in the corporation to the corporation's ESOP, and the ESOP would assume the estate tax liability on the value of the transferred stock. The Tax Act of 1989 repealed this law. The proposed legislation would restore this incentive for stock to be transferred to an ESOP. Section 4: The tax laws of 1984 and 1986 permitted dividends paid on ESOP stock to be tax deductible. Until 1989, these ESOP dividends were not subject to the corporate Alternative Minimum Tax, or AMT. In the tax bill of 1989, Congress altered the complex calculations utilized to figure the AMT. When the IRS issued regulations implementing the new formulas, on March 15, 1991, IRS retroactively deemed ESOP dividends to be subject to the corporate AMT. The proposed legislation would clarify that the IRS position is an incorrect interpretation of the law, and that ESOP dividends are not subect to the corporate AMT, if the ESOP was established before the IRS issued its retroactive regulation. Section 5: Current law does not permit holders of stock in a closely-held corporation who acquired the stock as a condition of employment, from a plan, other than an ERISA plan, to sell that stock to an ESOP and receive a deferral of the tax on the gain. [[Page E 2325]] (Known as a Section 1042 ESOP transaction.) Any other shareholder, including outside investors, are eligible for the special 1042 deferral. The proposed legislation would end the different treatment for shares acquired from a compensation arrangement as a condition of employment compared to stock acquired otherwise. This Section would also clarify that those who hold 25 percent, or more, of voting stock of a corporation, or a similar amount of stock as measured by corporate value, are not eligible to participate in an ESOP established with stock acquired in a 1042 transaction. Current law applies this restriction to any class of stock. Section 6: The 1989 tax law had a technical glitch that inadvertently repealed the availability of one ESOP tax advantage for certain ESOPs which have employees vote on a one-person, one-vote basis as compared to the traditional one-share, one-vote basis. The glitch occurs because current code section 133, as amended in 1989 does not reference to code section 409(e)(5), as is the case in other relevant ESOP laws. Section 7: Current law does not permit an estate tax deduction for closely-held shares transferred to an ESOP from a charitable remainder trust even though such a deduction is permitted for transfers to charity. The proposal, in limited circumstances would permit such a deduction.

Mr. BALLENGER

Mr. BALLENGER. Mr. Speaker, remember back when Speaker Jim Wright had to resign from Congress due to his ethics problems? Remember when the Democratic whip, Tony Coelho, had to resign from Congress due to his ethics problems? Back in 1989 the Democrats held Newt Gingrich responsible for Wright and Coelho and vowed to get even with him, saying they would destroy Gingrich if it is the last thing we do. Well, we have to give the Democrats credit for trying to do just that. Majority whip Bill Alexander filed 467 ethics charges against Speaker Gingrich in 1989. All charges were resolved. This year the Democrats filed 65 charges against Speaker Gingrich and all but 1 has been resolved by the nonpartisan Committee on Standards of Official Conduct. The last charge involves a complex Tax Code which an outside counsel will look at. Mr. Speaker, it is time to quit all these ridiculous character assassinations and get down to the legislative business at hand and work on balancing the budget.

Mr. BALLENGER

Mr. BALLENGER. Mr. Speaker it has now been 18 days since the President promised in writing to sign a balanced budget bill into law by the end of this year. The Republicans have sent a balanced budget bill to the President--it is right now sitting on this desk just waiting to be signed. The Republican balanced budget plan is good for the economy and good for the American people. Our bill will not only stimulate the economy, providing more job opportunities for all, but protects programs older Americans depend on like Medicare and Medicaid. Our bill also increases spending over 7 years in programs like student loans and the earned income tax credit, which many young people depend on. Mr. Speaker, the President should sign the Republican balanced budget bill. If he does not like our plan then he should provide his own, using honest CBO numbers, and bring it to the bargaining table so that negotiations can begin. How much longer will we have to wait.

Mr. BALLENGER

Mr. BALLENGER. Mr. Speaker, I am no great defender of the Washington press corps, but let me share this quote from this week's Newsweek magazine: Unfortunately, the White House isn't yet truly bargaining. President Clinton has endorsed a balanced budget but has flagrantly misrepresented the GOP budget. He say it would ``destroy'' Medicare. This is an absurd description of a program whose spending would grow 62 percent by 2002. He says that ``deep'' education cuts would ``undermine'' schools. But the budget barely touches the largest education program-- guaranteed college loans--and all Federal aid to public schools provides only 7 percent of their spending. Newsweek is absolutely right. The President has only paid lipservice to balancing the budget. While he tries to portray the Republican budget as draconian and mean-spirited, he offers no plan of his own. Instead of lipservice, the President should sign the balanced budget that is now sitting on his desk.

Mr. BALLENGER

Mr. BALLENGER. Mr. Speaker, last week the Republican leadership here in Congress sent a letter to the President asking for specifics on exactly how the Clinton administration would balance the budget in 7 years as they agreed to do on November 19. This is what the administration sent back--a set of talking points. No specifics, no numbers. In his talking points, the President had the unmitigated gall to ask that Congress provide a legislative plan. Well excuse me, but it seems we have already passed the Balanced Budget Act of 1995. In that we spell out exactly how we will balance the budget in 7 years, including numbers, amounts, and specifics. Mr. Speaker, it is understandable that the Clinton administration would have a problem with specifics. It already had huge problem keeping promises. The President totally lacks any plan to balance the budget with honest numbers. Without a plan, really, all they can do is provide talking points, and, of course, more hot air.

Mr. BALLENGER

Mr. BALLENGER. Mr. Speaker, yesterday the Oval Office went from the block in the middle of the road to the light at the end of the tunnel. Yesterday, President Clinton agreed with the Republican majority to balance the budget in 7 years using honest scoring numbers. What Republicans promised the American people last year is one step closer to becoming reality. This is truly a day to celebrate. American families are the winners in the balanced budget debate. Families will see lower interest rates, saving them money on car loans, home mortgages, and student loans. A balanced budget will mean a stronger economy with more job opportunities. A balanced budget will give our children and grandchildren hope for the future, allowing them to live the American dream and not the American debt. Promises made, promises kept. That's what the Republican majority is all about. I'm glad President Clinton finally came on board. Balancing the budget is the right thing to do for our children's future.

Mr. BALLENGER

Mr. BALLENGER. Mr. Speaker, options, options, options. That is all the President is left with these days. We all know he does not have any solutions of his own. He chose one of those options. He shut down the Government. He chose poorly. He did not want to talk about it, but let me outline what his other option was. He could have agreed, in principle, to the idea that we should balance the budget in 7 years. He could have sat down and worked with Republicans to pass a balanced budget. But the President chose a different option. He chose to shut down the Government, because it made him look decisive--something that has not happened during his entire tenure as President. Mr. Speaker, Republicans are simply trying to do what the American people have asked us to do--balance the budget. I wish the President would join us and end the Democrat legacy of passing the buck on to future generations.

Mr. BALLENGER

Mr. BALLENGER. Mr. Speaker, President Bill Clinton has willfully misled the American public on his plans for the future of America. During his campaign for President, he said he would support a balanced budget in 5 years. Two years later, he refuses to even consider balancing the budget in seven years. He said he would end welfare as we know it. Now he says he will veto a bill that ends welfare as we know it. He said he supported tax relief for the American family. But his first budget raised taxes on American families. Mr. Speaker, President Clinton is to truth what Abraham Lincoln was to lying. The American people should not believe a word he says, because many [[Page H 13040]] times Bill Clinton does not believe the words he is saying. As President Clinton continues to refuse to open the Government, I urge the American people to focus on these facts. Republicans are going to keep their promises and offer a real balanced budget. Bill Clinton is going to break his promises and fight any balanced budget.