Kit Bond

Mr. BOND

Mr. BOND. Thank you, Mr. President.

Mr. BOND

Mr. BOND. Mr. President, I wish to announce that the Committee on Small Business will hold a hearing on ``The President's Fiscal Year 2000 Budget Request for the Small Business Administration.'' The hearing will be held on Tuesday, March 6, 1999, beginning at 10:00 a.m. in room 428A of the Russell Senate Office Building. The hearing will be broadcast live on the Internet from our homepage address: http://www.senate.gov/sbc For further information, please contact Paul Cooksey at 224-5175.

Mr. BOND

Mr. BOND. Mr. President, the purpose of this bill is simple and clear. The only thing the bill does is to repeal the highway sanction provisions in the Clean Air Act. I want to start by saying that I know what the so-called environmental community is going to say. Actually, they have already said it. I recall a press release that said, ``Another smoggy stealth attack is in the works,'' and ``sharpening the dirty-air knives.'' Well, that sounds fancy and exciting, but it is just flat wrong. Mr. President, I ask you, where is the common sense? I do not want dirty air. And I do not think anybody in this room, in this body, wants dirty air. But any attempt to change the status quo gets some spinmeisters at work. Let me explain where there is a real problem. There is a provision in the Clean Air Act that allows the EPA Administrator, with the approval of the Secretary of Transportation, to halt highway funding for a nonattainment area. For instance, if a State does not have an approved clean air plan, after a certain period of time sanctions apply, and those sanctions include halting highway funding. Now, transit funding can continue and bike path money can go forward. There is also a ``safety'' exemption where the Secretary of Transportation determines that a ``project is an improvement in safety to resolve a demonstrated safety problem and likely will result in a significant reduction in, or avoidance of, accidents.'' I have several problems with that provision. First, highway funding is a matter of safety. We dedicate transportation funds to specific improvement programs, like railroad crossings and programs on drunk driving. But highway safety is also an issue when it comes to road conditions. In my own State of Missouri, I can tell you that highway fatality rates are higher than the national average because roads are more dangerous. In the period 1992 to 1996, 5,279 people died on Missouri highways. Nationally, Federal Highways estimates that road conditions are a factor in about 30 percent of traffic fatalities. Well, I believe that figure is higher in Missouri, because I have been on the narrow two-lane roads and have seen the white crosses where people have died. Highway improvements, such as wider lanes and shoulders, adding or improving medians, and upgrading roads from two lanes to four lanes can reduce traffic fatalities and accidents. The Secretary can grant exemptions from the current law to allow a project to go forward, but he can also deny them. I have a problem with the Government, the Federal Government, micromanaging a State's transportation plan. The law also says the State will have to submit data to justify that the ``principal purpose of the project is an improvement in safety.'' Tell that to the grandmother who has lost her granddaughter on a stretch of highway. She will never go to the prom, because she was killed on that highway. I would argue that highway construction and improvements are almost always a matter of safety and that to have to seek an exemption is an unnecessary and inappropriate delay. Any further delay imposed by the Federal Government on highway projects which are necessary for safety is unacceptable. Second, taking away or imposing any kind of delay on highway funding does nothing to improve air quality or to reduce congestion. According to the American Association of State Highway and Transportation Officials, ``Congestion damages air quality, increases travel times, costs an estimated $43 billion annually in delays in the country's 50 largest urban areas, and generates additional delay costs in rural and suburban areas.'' Some will argue, ``If you build it, they will come.'' That normally applies to baseball diamonds, but they are talking about highways. I am not denying that there is some truth to that, but congestion already exists. They are already there. People in our State and rural Missouri are driving, and they are driving on narrow highways because they have to. There are no trolleys; there are no regularly scheduled buses. Halting or delaying funds to address the problem is inappropriate. I think the cliche, ``Pay now or pay more later,'' is appropriate. What we would be ``paying'' for is potentially the loss of life, loss of economic opportunities, and the loss of convenience for the traveling public. Isn't this an issue of quality of life? I think so. Third, the Highway Trust Fund is supported by highway users for highway construction and maintenance. It is a dedicated tax for a dedicated purpose. The people of Missouri are paying highway fund taxes and not getting a full dollar back for their highways. And to take away some of the money that they have put in because of totally unrelated concerns is inappropriate as a punitive sanction. The 105th Congress spent the entire Congress, almost, working on a transportation policy. One of the most contentious debates we had at the time and the significant outcomes of that debate was the issue of the trust fund. The Congress finally agreed to and the President signed into law what I refer to as the Bond-Chafee provision which says that the money goes in as the money comes out the next year for transportation and programs authorized by law. Included in TEA-21--highway dollars being spent on--is $8.1 billion over 6 years for the Congestion Mitigation and Air Quality Improvement Program. This is money dedicated to helping States and local governments meet the requirements of the Clean Air Act. Under current law, CMAQ--as it is called--funding will continue without interruption, but highway construction could be halted or face a delay. Using a ``dedicated tax for a dedicated purpose'' as a hammer in this instance is, I believe, inappropriate and unfair. I do not view this legislation as an attack on the Clean Air Act. It is a matter of common sense. Some may ask, if they do not already know, what precipitated the introduction of this legislation. I contemplated introducing this bill in the past but had other matters that were more important. But on November 8, 1998, the San Francisco-based Sierra Club filed suit in the District of Columbia District Court against the EPA to force the EPA to mandate sanctions not just on St. Louis and the nonattainment area but on the entire State of Missouri and to make these sanctions retroactive. That action, I believe, is irresponsible and extreme. The EPA itself chose not to impose sanctions on the St Louis area or the State of Missouri because the State and the nonattainment area are doing everything that is necessary to come into compliance. The St. Louis area has adopted an inspection/maintenance program. They have instituted a plan to reduce volatile organic compound emissions by at least 15 percent. They have opted into EPA's reformulated gasoline program. And the St. Louis Regional Clean Air Partnership has been formed to encourage voluntary actions. In these circumstances, the Sierra Club lawsuit is purely punitive and purely unwarranted, but it is possible as long as we have this legislation on the books. I do not personally know one Member of the Senate who fought for highway funding for his or her State's highway needs who would support actions to take that funding away, especially in a frivolous lawsuit by a group with a different agenda, with different priorities than the citizens of the State who are paying in the money. If this provision of law is left in place, what is happening in Missouri could happen elsewhere. Highway sanctions are in place for Helena, MT, and a situation is developing in Atlanta, GA, which has been brought to my attention. There are those who say you can count the number of times highway sanctions have been imposed on one hand, but that still is too many. I disagree with the linking of highway funds and clean air attainment. We must address both. Quality of life requires both clear air and safe highways. I am dedicated to both. I hope we can have hearings and move on this measure in the near future.

Mr. BOND

Mr. BOND. Mr. President, the purpose of this bill is simple and clear. The only thing the bill does is to repeal the highway sanction provisions in the Clean Air Act. I want to start by saying that I know what the so-called environmental community is going to say. Actually, they have already said it. I recall a press release that said, ``Another smoggy stealth attack is in the works,'' and ``sharpening the dirty-air knives.'' Well, that sounds fancy and exciting, but it is just flat wrong. Mr. President, I ask you, where is the common sense? I do not want dirty air. And I do not think anybody in this room, in this body, wants dirty air. But any attempt to change the status quo gets some spinmeisters at work. Let me explain where there is a real problem. There is a provision in the Clean Air Act that allows the EPA Administrator, with the approval of the Secretary of Transportation, to halt highway funding for a nonattainment area. For instance, if a State does not have an approved clean air plan, after a certain period of time sanctions apply, and those sanctions include halting highway funding. Now, transit funding can continue and bike path money can go forward. There is also a ``safety'' exemption where the Secretary of Transportation determines that a ``project is an improvement in safety to resolve a demonstrated safety problem and likely will result in a significant reduction in, or avoidance of, accidents.'' I have several problems with that provision. First, highway funding is a matter of safety. We dedicate transportation funds to specific improvement programs, like railroad crossings and programs on drunk driving. But highway safety is also an issue when it comes to road conditions. In my own State of Missouri, I can tell you that highway fatality rates are higher than the national average because roads are more dangerous. In the period 1992 to 1996, 5,279 people died on Missouri highways. Nationally, Federal Highways estimates that road conditions are a factor in about 30 percent of traffic fatalities. Well, I believe that figure is higher in Missouri, because I have been on the narrow two-lane roads and have seen the white crosses where people have died. Highway improvements, such as wider lanes and shoulders, adding or improving medians, and upgrading roads from two lanes to four lanes can reduce traffic fatalities and accidents. The Secretary can grant exemptions from the current law to allow a project to go forward, but he can also deny them. I have a problem with the Government, the Federal Government, micromanaging a State's transportation plan. The law also says the State will have to submit data to justify that the ``principal purpose of the project is an improvement in safety.'' Tell that to the grandmother who has lost her granddaughter on a stretch of highway. She will never go to the prom, because she was killed on that highway. I would argue that highway construction and improvements are almost always a matter of safety and that to have to seek an exemption is an unnecessary and inappropriate delay. Any further delay imposed by the Federal Government on highway projects which are necessary for safety is unacceptable. Second, taking away or imposing any kind of delay on highway funding does nothing to improve air quality or to reduce congestion. According to the American Association of State Highway and Transportation Officials, ``Congestion damages air quality, increases travel times, costs an estimated $43 billion annually in delays in the country's 50 largest urban areas, and generates additional delay costs in rural and suburban areas.'' Some will argue, ``If you build it, they will come.'' That normally applies to baseball diamonds, but they are talking about highways. I am not denying that there is some truth to that, but congestion already exists. They are already there. People in our State and rural Missouri are driving, and they are driving on narrow highways because they have to. There are no trolleys; there are no regularly scheduled buses. Halting or delaying funds to address the problem is inappropriate. I think the cliche, ``Pay now or pay more later,'' is appropriate. What we would be ``paying'' for is potentially the loss of life, loss of economic opportunities, and the loss of convenience for the traveling public. Isn't this an issue of quality of life? I think so. Third, the Highway Trust Fund is supported by highway users for highway construction and maintenance. It is a dedicated tax for a dedicated purpose. The people of Missouri are paying highway fund taxes and not getting a full dollar back for their highways. And to take away some of the money that they have put in because of totally unrelated concerns is inappropriate as a punitive sanction. The 105th Congress spent the entire Congress, almost, working on a transportation policy. One of the most contentious debates we had at the time and the significant outcomes of that debate was the issue of the trust fund. The Congress finally agreed to and the President signed into law what I refer to as the Bond-Chafee provision which says that the money goes in as the money comes out the next year for transportation and programs authorized by law. Included in TEA-21--highway dollars being spent on--is $8.1 billion over 6 years for the Congestion Mitigation and Air Quality Improvement Program. This is money dedicated to helping States and local governments meet the requirements of the Clean Air Act. Under current law, CMAQ--as it is called--funding will continue without interruption, but highway construction could be halted or face a delay. Using a ``dedicated tax for a dedicated purpose'' as a hammer in this instance is, I believe, inappropriate and unfair. I do not view this legislation as an attack on the Clean Air Act. It is a matter of common sense. Some may ask, if they do not already know, what precipitated the introduction of this legislation. I contemplated introducing this bill in the past but had other matters that were more important. But on November 8, 1998, the San Francisco-based Sierra Club filed suit in the District of Columbia District Court against the EPA to force the EPA to mandate sanctions not just on St. Louis and the nonattainment area but on the entire State of Missouri and to make these sanctions retroactive. That action, I believe, is irresponsible and extreme. The EPA itself chose not to impose sanctions on the St Louis area or the State of Missouri because the State and the nonattainment area are doing everything that is necessary to come into compliance. The St. Louis area has adopted an inspection/maintenance program. They have instituted a plan to reduce volatile organic compound emissions by at least 15 percent. They have opted into EPA's reformulated gasoline program. And the St. Louis Regional Clean Air Partnership has been formed to encourage voluntary actions. In these circumstances, the Sierra Club lawsuit is purely punitive and purely unwarranted, but it is possible as long as we have this legislation on the books. I do not personally know one Member of the Senate who fought for highway funding for his or her State's highway needs who would support actions to take that funding away, especially in a frivolous lawsuit by a group with a different agenda, with different priorities than the citizens of the State who are paying in the money. If this provision of law is left in place, what is happening in Missouri could happen elsewhere. Highway sanctions are in place for Helena, MT, and a situation is developing in Atlanta, GA, which has been brought to my attention. There are those who say you can count the number of times highway sanctions have been imposed on one hand, but that still is too many. I disagree with the linking of highway funds and clean air attainment. We must address both. Quality of life requires both clear air and safe highways. I am dedicated to both. I hope we can have hearings and move on this measure in the near future.

Mr. BOND

Mr. BOND. I ask for the yeas and nays.

Mr. BOND. Mr. President, have the yeas and nays been ordered?

Mr. BOND. Mr. President, if there are no colleagues who wish to speak on the Y2K bill, I ask unanimous consent that time continue to be charged against me on S. 314 but that I may be permitted to speak up to 5 minutes as in morning business to introduce a piece of legislation.

Mr. BOND. I ask unanimous consent that the Senator from Kentucky, Senator Bunning, be added as a cosponsor to the bill.

Mr. BOND. Mr. President, I thank the ranking member, once again. His work on this measure, as so many others, and the work of his staff has been essential to assuring a product that meets the needs of small business and also deals with legitimate concerns which were raised initially by the SBA and others, and we are grateful to him for that effort. I thank him for his strong leadership and the very compelling case he makes. Obviously, all the members of the Small Business Committee believe very strongly that small business needs some help, and we would love to have more people talking about the Y2K problem, but I should advise my colleagues, and those who are watching, that there is, as we speak, a hearing going on in the Y2K Committee where Senator Dodd and Senator Bennett are exploring some of the other issues. This is really ``Y2K Day'' in the Senate because, as I stated in the opening, when we finish the vote on this measure--which I hope will be overwhelming in favor of it--there will be a confidential hearing regarding the Y2K issue in room S-407, and at 2:15 p.m., we will begin consideration of a resolution to fund this special committee dealing with the Y2K issues. I noticed on one of the morning television shows that we are getting some good coverage and discussion in the media about the Y2K problem, and today certainly the Senate has explored in many, many different aspects how we can help smooth the transition to January 1, 2000, and beyond, when computers, if they are not fixed, might think that it is 1900 all over again. Mr. President, we invite Members who want to come down to speak on this issue to do so. We hope they will have some time. We have 20 minutes more. And after, I may use some time on another matter, but I want to find out if there are other Members who wish to address the Y2K problem first. I yield the floor.

Mr. BOND. Mr. President, I thank you very much. I will begin, although my colleague and my cosponsor on this measure is on his way over. Let me begin the discussion of this measure. I thank my colleagues, Senators Bennett and Dodd, particularly for the work of the Special Committee on the Year 2000 Technology Problem communicating to both the government agencies and the private sector about the seriousness of the year 2000 computer problem. I look forward to their presentations to the Senate today on the potential economic and national security concerns that this problem raises. I also thank Senators Bennett and Dodd, and particularly my ranking member, Senator Kerry, the ranking member of the Small Business Committee, for their cooperation and valuable assistance in the drafting of this important piece of legislation. As my colleagues on the Committee on Small Business and the Special Committee on the Year 2000 Technology Problem know very well, the year 2000 computer problems may potentially cause great economic hardships and disruptions to numerous Americans and to numerous sectors of our economy. I am very pleased that the Senate has decided to make this problem one of its top priorities and has scheduled discussions on this topic early in the legislative session this year. It is commendable that the Senate is taking action on this problem quickly, and that we are taking action before the calamity happens, instead of after it occurs, which could otherwise be the case. It is imperative that we move quickly on this measure. And I hope that we can work with our colleagues in the House to pass it and send it to the President, because by definition, since this is 1999, the year 2000 problem grows closer every day with the coming of the end of this calendar year. The bill before us is an important step toward ensuring the continuing viability of many small businesses after December 31, 1999. The bill will establish a loan guarantee program to be administered by the Small Business Administration that will provide small businesses with capital to correct their Year 2000 computer problems and provide relief from economic injuries sustained as a result of Y2K computer problems. Last year I introduced a similar bill that the Committee on Small Business adopted by an 18-0 vote and that the full Senate approved by unanimous consent. Unfortunately, the House of Representatives did not act on the legislation prior to adjournment. I reintroduced the bill this year because the consequences of Congress not taking action to assist small businesses with their Y2K problems are too severe to ignore. My colleagues on the Committee on Small Business unanimously approved this legislation once again and I sincerely hope that we can pass this bill, and as I said earlier, that the House of Representatives will act on this legislation promptly. The problem that awaits this country, and indeed the entire world, at the end of this year is that many computers and processors in automated systems will fail because such systems will not recognize the Year 2000. Small businesses that are dependent upon computer technology, either indirectly or directly, could face failures that could jeopardize their economic futures. In fact, a small business is at risk if it uses any computers in its business, if it has customized software, if it is conducting e-commerce, if it accepts credit card payments, if it uses a service bureau for its payroll, if it depends on a data bank for information, if it has automated equipment for communicating with its sales or service force or if it has automated manufacturing equipment. Last June, the Committee on Small Business, which I chair, held hearings on the effect the Y2K problem will have on small businesses. The outlook is not good--in fact it is poor at best, particularly for the smallest business. The Committee received testimony that the entities most at risk from Y2K failures are small and medium-sized companies, not larger companies. Two major reasons for this anomaly is that many small companies have not begun to realize how much of a problem Y2K failures could be for them, and many may not have the access to capital to cure such problems before they cause disastrous results. A study on Small Business and the Y2K Problem sponsored by Wells Fargo Bank and the NFIB found that an estimated 4.75 million small employers are potentially subject subject to the Y2K problem. The committee has also received alarming statistics on the number of small businesses that could potentially face business failure or prolonged inactivity due to the Year 2000 computer problem. The Gartner Group, an international information technology consulting firm, has estimated that between 50% and 60% of small companies worldwide would experience at least one mission critical failure as a result of Y2K computer problems. The committee has also received information indicating that approximately 750,000 small businesses may either shut down due to the Y2K problem or be severely crippled if they do not take action to cure their Y2K problems. Such failures and business inactivity affect not only the employees and owners of small businesses, but also their creditors, suppliers and customers. Lenders will face significant losses if their small business borrowers either go out of business or have a sustained period in which they cannot operate. Most importantly, however, is the fact that up to 7.5 million families may face the loss of paychecks for a sustained period of time if small businesses do not remedy their Y2K problems. Given these facts, it is easy to forecast that there will be severe economic consequences if small businesses do not become Y2K compliant in time and there are only 10 months to go. Indeed the countdown is on. A good example of how small businesses are dramatically affected by the Y2K problem is the experience of Lloyd Davis, the owner of Golden Plains Agricultural Technologies, Inc., a farm equipment manufacturer in Colby, Kansas. Like many small business owners, Mr. Davis' business depends on trailing an international information technology consulting firm, has estimated that between 50% and 60% of small companies worldwide would experience at least one mission critical failure as a result of Y2K computer problems. The Committee has also received information indicating that approximately 750,000 small businesses may either shut down due to the Y2K problem or be severely crippled if they do not take action to cure their Y2K problems. Such failures and business inactivity affect not only the employees and owners of small businesses but also their creditors, suppliers and customers. Lenders will face significant losses if their small business borrowers either go out of business or have a sustained period in which they cannot operate. Most importantly, however, is the fact that up to 7.5 million families may face the loss of paychecks for a sustained period of time if small businesses do not remedy their Y2K problems. Given these facts, it is easy to forecast that there will be severe economic consequences if small businesses do not become Y2K compliant in time and there are only 10 months to go. Indeed the countdown is on. A good example of how small businesses are dramatically affected by the Y2K problem is the experience of Lloyd Davis, the owner of Golden Fields Agricultural Technologies, Inc., a farm equipment manufacturer in Colby, Kansas. Like many small business owners, Mr. Davis' business depends on trailing technology purchased over the years, including 386 computers running custom software. Mr. Davis uses his equipment to run his entire business, including handling the company's payroll, inventory control, and maintenance of large databases on his customers and their specific needs. In addition, Golden Fields has a web site and sells the farm equipment it manufactures over the internet. Unlike many small business owners, however, Mr. Davis is aware of the Y2K problem and tested his equipment to see if it could handle the Year 2000. His tests confirmed his fear--the equipment and software could not process the year 2000 date and would not work properly after December 31, 1999. That is when Mr. Davis' problems began. Golden Fields had to purchase an upgraded software package. That cost $16,000. Of course, the upgraded software would not run on 386 computers, so Golden Fields had to upgrade to new hardware. Golden Fields had a computer on each of its 11 employees' desks, so that each employee could access the program that essentially ran the company and assist filling the internet orders the company received. Replacing all the hardware would have cost Golden Fields $55,000. Therefore Golden Fields needed to expend $71,000 just to put itself in the same position it was in before the Y2K problem. Like many small business owners facing a large expenditure, Mr. Davis went to his bank to obtain a loan to pay for the necessary upgrades. Because Golden Fields was not already Y2K compliant, his bank refused him a loan because it had rated his company's existing loans as ``high- risk.'' Golden Fields was clearly caught in a Catch-22 situation. Nevertheless, Mr. Davis scrambled to save his company. He decided to lease the new hardware instead of purchasing it, but he will pay a price that ultimately will be more expensive than conventional financing. Moreover, instead of replacing 11 computers, Golden Fields only replaced six at a cost of approximately $23,000. Golden Fields will be less efficient as a result. The experience of Mr. Davis and Golden Fields has been and will continue to be repeated across the country as small businesses realize the impact the Y2K problem will have on their business. A recent survey conducted by Arthur Andersen's Enterprise Group on behalf of National Small Business United indicates that, like Golden Fields, many small businesses will incur significant costs to become Y2K compliant and are very concerned about it. The survey found that to become Y2K compliant, 29% of small businesses will purchase additional hardware, 24% will replace existing hardware and 17% will need to convert their entire computer system. When then asked their most difficult challenge relating to their information technology, more than 54% of the businesses surveyed cited ``affording the cost.'' Congress must ensure that these businesses do not have the same trouble obtaining financing for their Y2K corrections as Mr. Davis and Golden Fields Agricultural Technologies. Moreover, Congress must deal with the concerns that have recently been raised that there may be a ``credit crunch'' this year with businesses, especially small businesses, unable to obtain financing for any purposes if they are not Y2K compliant. In addition to the costs involved, there is abundant evidence that small businesses are, to date, generally unprepared for, and in certain circumstances, unaware of the Y2K problem. The NFIB's most recent survey indicates that 40 percent of small businesses don't plan on taking action or do not believe the problem is serious enough to worry about. In addition, the Gartner Group has estimated that only 5 percent of small companies worldwide had repaired their Y2K computer problems as of the third quarter of 1998. The Small Business Year 2000 Readiness Act that the Senate is considering today will serve the dual purpose of providing small businesses with the means to continue operating successfully after January 1, 2000, and making lenders and small firms more aware of the dangers that lie ahead. The act requires the Small Business Administration to establish a limited-term loan program whereby SBA guarantees the principal amount of a loan made by a private lender to assist small businesses in correcting Year 2000 computer problems. The problem will also provide working capital loans to small businesses that incur substantial economic injury suffered as a direct result of its own Y2K computer problems or some other entity's Y2K computer problems. Each lender that participates in the SBA's 7(a) business loan program is eligible to participate in the Y2K loan program. This includes more than 6,000 lenders located across the country. To ensure that the SBA can roll out the loan program promptly, the act permits a lender to process Y2K loans pursuant to any of the procedures that the SBA has already authorized for that lender. Moreover, to assist small business that may have difficulty sustaining sufficient cash flows while developing Y2K solutions, the loan program will permit flexible financing terms so small businesses are able to service the new debt with available cash flow. For example, under certain circumstances, a borrower may defer principal payments for up to a year. Once the Y2K problem is behind us, the act provides that the loan program will sunset. To assure that the loan program is made available to those small businesses that need it and to increase awareness of the Y2K problem, the legislation requires that SBA market this program aggressively to all eligible lenders. Awareness of this loan program's availability is of paramount importance. Financial institutions are currently required by federal banking regulators to contact their customers to ensure that they are Y2K compliant. The existence of a loan program designed to finance Y2K corrections will give financial institutions a specific solution to offer small companies that may not be eligible for additional private capital and will focus the attention of financial institutions and, in turn, their small business customers to the Y2K problem. To increase awareness of this program, I have already contacted the governor of each State to make them aware of the potential availability of the program. Moreover, so that we can state that we directed our best efforts to mitigating the Year 2000 problem, I am seeking to find other ways that the Federal government can assist State efforts to help small businesses become Y2K compliant. The Small Business Year 2000 Readiness Act is a necessary step to ensure that the economic health of this country is not marred by a substantial number of small business failures following January 1, 2000, and that small businesses continue to be the fastest growing segment of our economy in the Year 2000 and beyond. Mr. President, I thank the Chair, and I yield to my good friend and distinguished colleague from Massachusetts, the ranking member of the Small Business Committee.

Mr. BOND

Mr. BOND. Mr. President, this morning the Senate will begin consideration of S. 314, a bill providing small business loans regarding the year 2000 computer problems. Under a previous order, there will be 1 hour for debate on the bill equally divided between Senators Bond and Kerry of Massachusetts with no amendments in order to be followed by a vote on passage of the bill at 10:30 a.m. Following that vote, the Senate will recess to allow Members to attend a confidential hearing regarding the Y2K issue in room S. 407 of the Capitol. At 2:15 p.m., under a previous order, the Senate will begin consideration of S. Res. 7, a resolution to fund a special committee dealing with the Y2K issue. There will be 3 hours for debate on the resolution with no amendments or motions in order. A vote will occur on adoption of the resolution upon the expiration or yielding back of the time, which we anticipate to be approximately 5:15 p.m. I thank my colleagues for their attention.

Mr. BOND

Mr. BOND. Mr. President, I thank the Chaplain for the most wonderful words of guidance.

Mr. BOND

Mr. BOND. Mr. President, the direct check for education doesn't block grant education funds; it doesn't affect title I or include vocational education, special education, or Eisenhower Professional Development; it just says send the money directly back to the school districts, eliminating the time spent reviewing grant applications and the paperwork burden. It replaces a cumbersome and costly process with a resource of flexible funding. Do we need 100,000 new teachers? In many small school districts, they figure it comes out to about .16 students for their entire district, or .1. How do you hire .16 teachers? Some districts may need to use that money to pay more so they can keep good teachers. This would allow them to do it. Some of my colleagues say you will take power away from the States and the States ought to be running it. I say the State regulations can still stay in effect, but the accountability is going to be at the local level. We have school boards that we elect to take care of our educational needs and to make sure that our children get a quality education. I have a really radical proposal: Let's go back to the old system where school boards are responsible through the superintendents and principals and teachers and allow them to use the good ideas. We have lots of good ideas up here, and we ought to offer those voluntarily and say: Here is a good idea; do you want to try it? The President just came up with a whole new series of standard things he wants to do for every school district in the Nation. They may well be good ideas. If you were a school superintendent, they might be just the thing to do. Let's suggest to them that these are things they might want to require. They may have a different way of going about it. I am willing to take the chance on putting that money in the hands of the people, the local educators who know our kids, know kids' names, and know their problems. I believe Ed-Flex is a tremendous step in the right direction. I urge that we pass it without amendment. If we do start amending it, I am going to give my colleagues an opportunity to vote on sending the money directly back to the schools. Let's be radical, and let's do something that can make a difference. Mr. President, I thank the Chair. Mr. CRAIG addressed the Chair.

Mr. BOND. Mr. President, I thank the Chair, and I thank my colleague from Tennessee for his great leadership. Mr. President, I rise in strong support of Ed-Flex because it gives States and local officials in 12 States now greater freedom from regulation in the use of Federal education dollars. We need to expand that. This is moving in the right direction. It is not all the way there. They should be encouraging innovation, creativity, and flexibility on the local level in regard to education. We should not be handcuffing teachers, principals, and others from trying to do what is right for the kids in their schools. I think expanding Ed-Flex is a step in the right direction of putting our Nation's children first and not the red tape and bureaucracy. Ed-Flex is a step in the right direction because it moves in the direction of putting decisionmaking back where it belongs, on the local and State level. It proposes consolidating funding and removing the strings that Washington has put on. My colleague from Rhode Island has talked about his meetings with local educators in Rhode Island. Over the last 2 years, I have met with principals, teachers, superintendents, parents, and school board members in every section of my State. It is amazing what they tell me when I ask them about how our Federal programs are helping them. They say, ``They are burying us in red tape. We have to hire people to write grant applications, and to try to play `Mother May I' with the Federal Government. We are taking away time from our task, which should be educating our children and providing them with a quality education.'' They say that too many of them--if they fight and finally get a competitive grant for 3 years, that grant runs out and then they are faced with taking away money from their basic programs of providing quality education to fund a Federal program that was stuffed down their throats. At our best count, we have about 763 Federal education programs. I challenge every single one of my colleagues to go back home and ask the educators: Do you really need 763 different Federal prescriptions? Are they really helping you educate your children? I can tell you that the response from my State is overwhelming, and I believe it will be from your States as well. When we think about the tremendous waste in time and bureaucracy with 4,500 people in the DOE, the bureaucracy overseeing them, and 13,000 at the State bureaucracies, those are dollars that are not going to the classrooms. Who is accountable for education? Are we as a Congress? I don't think so. I don't think anybody elected us to a national school board. Ed-Flex is moving away from the concept that we have come to Washington to be a national school board. I say to you, to the President, and I say to the Secretary of Education: If you want to run local education, run for the school board, or be a superintendent or a principal. Now, I hope we can pass this bill cleanly out of here and send it on to the President, get it signed. Let's expand on this program. I will tell you one thing for sure. If they start adding amendments to it, I have something called a ``Direct Check for Education.'' Direct check for education would put the money directly in the schools, not on the basis of a complicated formula, but on the basis of average daily attendance. I have explained that program to school districts throughout my State. I have a sampling of letters from school superintendents. I ask unanimous consent that these may be printed in the Record.

Mr. BOND

Mr. BOND. Mr. Chief Justice, my colleagues, I do not intend to give a comprehensive statement, nor do I intend to use all of the time allotted. But I feel it is very important to answer some of the points that have been raised. And let me deal with just a few of those. When I spoke to you in a previous session here, I mentioned the cover story, and said that while the cover story was not impeachable--the cover story which was admitted by counsel for the White House--it is a framework and a context in which we judge other actions. Objection has been made by my friends primarily on this side of the aisle that on occasion we have cited evidence where the President may not have been truthful, and we may have raised other arguments that go beyond the boundaries of the articles of impeachment as grounds for impeachment. Let me hasten to add that I hope that no one would vote for a conviction on anything other than the items set forth in article I and the items set forth in article II. If there are other activities that may bear upon or indicate a pattern of conduct, that is one thing. But we must make our decision on the basis of that which has been presented to us by the House. On the other side, we have heard some very spirited and enthusiastic attacks on the independent counsel and on the House managers and even on the Paula Jones case itself. Let me make just a few points. No. 1, we threw Judge Alcee Hastings out of office as a judge for lying in a grand jury proceeding where he was not convicted. The objective is not to say that you can only commit perjury when a case is won or someone is convicted. No. 2, the independent counsel got into this because the attorney general felt that there were grounds to pursue the potential violations of law by the President in the Monica Lewinsky case. And a three-judge court agreed, and the independent counsel was assigned to pursue this. Whatever you may think about what the House did, or what the Paula Jones attorneys did, or what the independent counsel did, that is not the question before us. That can be addressed, as some of my colleagues said, if there are investigations by the Department of Justice on improper activities by the OIC. Let that proceed in its own realm. We are here to judge on the evidence before us. As I said, we have a cover story. We have a cover story that was utilized regularly throughout by this President and by Monica Lewinsky. Objection has been made that, while we have the clear testimony that William Jefferson Clinton never said you should lie, he never said expressly you should file a false affidavit. Well, of course, he didn't. Of course, he didn't. He is a very sophisticated, very able lawyer. And, if you are concocting a scheme to obstruct justice, you don't tell somebody who is to be part of that scheme with you that you should lie under oath, that you should file a false affidavit because those people might just get called to testify under oath at some point, as they were in this case. But Mr. Clinton didn't have to do that, because Monica Lewinsky understood very clearly that she was to stay with the cover story until she was told not to. She filed the false affidavit that he sought. He and his counsel used it in the deposition. Why was it filed? To keep him from having to testify truthfully in the deposition. Was he surprised by it? I do not believe it has one iota of credibility to say that after he went out and procured that false affidavit, he didn't know that his attorney was going to use it, and he was not going to rely on it. He got her to do the felonious deed of filing a false affidavit so he could avoid the danger of having to lie himself in a deposition. Mr. Clinton didn't engage in a conspiracy with his lawyer, Mr. Bennett. We hear about the one-man conspiracy. No. He foisted that on his attorney. And Mr. Bennett, when he found out about the falsity of that affidavit, had to do what no attorney ever wants to do--he had to write a letter to the judge, and say, ``Disregard it. Disregard it. I was part, inadvertently, of a scheme to defraud the court.'' And you notice he is not in the case any longer. He could not be part of that. We know that Mr. Clinton enlisted his loyal secretary to violate the law to go pick up gifts, and she and Monica Lewinsky, once again, committed felonies to continue the story to protect the President. And the gifts wound up under Betty Currie's bed. Mr. Clinton went to Betty Currie on a Sunday and 2 days later and told her things that he hoped she would say before the grand jury. He told his other subordinates things that he hoped they would say. He even trashed her when it appeared that she might be a hostile witness. Ladies and gentlemen of the Senate, I suggest to you that when you have this clear-cut evidence of a scheme carried out with direct evidence, testimony of Monica Lewinsky and others, Betty Currie and his subordinates, an Audrain County jury would not have any trouble finding him guilty of tampering with a witness or obstructing justice.

Mr. BOND

Mr. BOND. On Friday, February 12, 1999, I voted to convict President William Jefferson Clinton on both counts of the Impeachment Articles brought by the United States House of Representatives charging that he committed perjury and obstruction of justice. My reasons follow. Background On January 16, 1998, at the request of the United States Attorney General Janet Reno, the three judges of the United States Court of Appeals for the District of Columbia Circuit expanded the previously entered Order authorizing the Office of Independent Counsel Kenneth W. Starr to look into certain matters relating to a lawsuit brought against President William Jefferson Clinton by former Arkansas state employee Paula Jones alleging sexual harassment. Pursuant to that Order, Ms. Jones' attorneys issued subpoenas for evidence and deposed Mr. Clinton and others seeking information on a pattern of conduct that might be relevant to the issues in the Jones case. The President denied in a deposition in the Jones case and in a forceful statement to the American public that he had sexual relations with ``that woman,'' referring to Monica Lewinsky. Subsequently, however, Ms. Lewinsky turned over a stained blue dress that she had worn in an encounter with the President; a scientific examination revealed that the DNA on the dress was President Clinton's DNA. The Office of Independent Counsel convened a federal grand jury to look into the matter and deposed Mr. Clinton in The White House on August 17, 1998, about his participation in the Jones lawsuit. The Office of Independent Counsel then referred the matters developed in the investigation to the United States House of Representatives, which on December 19, 1998, voted two Articles of Impeachment against Mr. Clinton alleging that he committed perjury before the federal grand jury in four instances and that on seven occasions he had obstructed justice by tampering with witnesses and evidence in the Jones case proceedings. For the sake of brevity, I shall only cover several of the allegations and evaluate the evidence supporting them. allegations Counsel for the President has admitted that there was an inappropriate relationship between the President and Ms. Lewinsky and that they had concocted a cover story to conceal their relationship and activities. On December 17, 1997, at approximately 2 a.m., Mr. Clinton telephoned Ms. Lewinsky after he learned that she had been summoned for a deposition in the Jones case. According to this testimony he called to tell her of the death of the brother of Mr. Clinton's secretary. Ms. Lewinsky states that he told her about the death of the brother, but that he also reminded her of their cover story and notified her that she was included on the witness list in the Jones case. According to Ms. Lewinsky's testimony, Mr. Clinton further stated that they might be able to avoid her testimony if she executed an affidavit. Although Mr. Clinton had also reminded Ms. Lewinsky of her cover story, the White House Counsel made much of the fact that Ms. Lewinsky said that the President did not tell her to file a false affidavit and did not link the cover story to the need to file an affidavit. I do not believe it is at all inconsistent with a scheme or out of the ordinary to note that the President would not make such a connection. As an experienced attorney, the President would know he would be in grave danger if he ever explicitly asked anyone to file a false affidavit or to lie under oath. To paraphrase a statement made during the trial by Vernon Jordan, ``He is no fool.'' He would have known that such a statement could be revealed by subsequent judicial inquiry. Mr. Clinton did not have to tell Ms. Lewinsky expressly to execute a false affidavit. She knew that in the absence of contrary instructions she was to continue to follow their story. She was referred by the President's best-friend Vernon Jordan to an attorney who drafted the affidavit for her. The President, through Mr. Jordan, was kept advised of the progress of the affidavit. During the time that Mr. Jordan was serving as liaison between the attorney and the President in the procuring of the affidavit, he was also pursuing a job search for Ms. Lewinsky, which he admitted was under his control. The President's lawyer was presented the affidavit and offered it into the evidence when the President was summoned before federal judge Susan Webber Wright to participate in the deposition on January 17, 1998, by the Jones attorneys. The President's attorney, Mr. Bennett, referred to the deposition in evidence and stated that it showed that there ``is absolutely no sex of any kind in any manner, shape or form'' with Mr. Clinton. Mr. Bennett further stated, ``In preparation of the witness for this deposition, the witness (Mr. Clinton) is fully aware of Ms. Lewinsky's affidavit, for I have not told him a single thing he doesn't know * * * '' (Clinton deposition transcript, Evidentiary Record, Vol. XIV, at p. 23.) Although the videotape of the deposition showed the President looking in the direction of the attorney when the affidavit was presented, Mr. Clinton subsequently stated that he was not paying attention and had no knowledge of the representations made by his attorney about the affidavit. I believe that to be totally incredible. The President had known that Ms. Lewinsky would be a prime subject of the deposition and he had asked Ms. Lewinsky to file an affidavit and took steps to be kept advised of the progress of that affidavit. Subsequent events showed that his attorney, Mr. Bennett did not at the time know the falsity of the affidavit and that Mr. Clinton was apparently the only one at the deposition who was fully aware of the fraud that was being perpetrated on the court. When Mr. Bennett later learned the falsity of the affidavit, he did what any attorney hates to do and that is to advise the court that he provided false information. He asked that the affidavit and his characterization of it be disregarded. I believe Mr. Clinton encouraged the execution of a false affidavit, secured job assistance to help prevent truthful testimony, and allowed his attorney to make false statements as alleged in Article II, paragraphs 1, 4, and 5. When Mr. Clinton testified before the federal grand jury on August 17, 1998, he was asked: A. If he misled Judge Wright in some way then you would have corrected the record and said, excuse me Mr. Bennett, I think the judge is getting a mis-impression by what you are saying? A. . . . I wasn't even paying much attention to this conversation. Q. Do you believe, Mr. President, that you have an obligation to make sure that the presiding federal judge was on board and had the correct facts? A. I don't believe I ever even focused on what Mr. Bennett said in the exact words he did until I started reading this transcript carefully for this deposition.--(Deposition of President Clinton, page 30, lines 2-5.) I therefore believe he provided perjurious, false and misleading testimony to the Federal grand jury concerning statements he allowed his attorney to make to a federal judge as alleged in Article I, paragraph 3. On December 28, 1997, the President met in his White House office with Ms. Lewinsky and exchanged gifts. During the course of the conversation Ms. Lewinsky raised the question of what to do with other gifts he had provided her and which had been subpoenaed by the attorneys for Paula Jones. According to Ms. Lewinsky, he made no definitive statement about the gifts. Very shortly thereafter, according to Ms. Lewinsky's testimony, Mr. Clinton's personal secretary Bettie Currie initiated a series of telephone conversations, in which in effect Ms. Currie communicated to Ms. Lewinsky that she understood from the President that Ms. Lewinsky had something for her. Pursuant to those telephone calls Ms. Currie picked up gifts from Ms. Lewinsky and took them back to Ms. Currie's apartment where she stored them under her bed. During the course of proceedings in the Senate, Ms. Lewinsky was asked in a deposition about these telephone calls and expanded upon her testimony about them. A prior statement by Ms. Currie that Ms. Lewinsky had actually initiated the call was recanted by Ms. Currie, and I believe the testimony of Ms. Lewinsky is credible. By hiding the gifts rather than presenting them to the Jones attorneys pursuant to the subpoena Ms. Lewinsky committed a felonious act and, if Ms. Currie had knowledge of the subpoena, she also committed a felonious act of concealing materials covered by a valid subpoena. Mr. Clinton, by orchestrating, facilitating, and encouraging the suppression of evidence under subpoena, also committed a felonious act. I, therefore, believe that the charge in Article II, paragraph 3, of the Impeachment Articles is proven. During the course of his deposition by the Jones attorneys, President Clinton continued to rely on his cover story and on the perjurious affidavit submitted by Ms. Lewinsky. During that deposition he referred repeatedly to Ms. Currie as one who would corroborate the cover story which he and Ms. Lewinsky had devised. Immediately after his testimony on Saturday, January 17, 1998, he called Ms. Currie and summoned her to come into his office on a Sunday, January 18, 1998. There he stated five rhetorical questions to Ms. Currie: (1) ``I was never really alone with her . . . right?''; (2) ``You were always there when Monica was there . . . right?''; (3) Monica came to see me and I never touched her right . . . right?''; (4) ``She wanted to have sex with me and I can't do that . . . ?''; (5) ``You could see and hear everything . . . right?'' Each of these statements supported the position taken by the President in the Jones deposition, but each one of these statements was false. The President was transmitting to Ms. Currie what he wanted her to say should she be called as a witness in this case. For good measure, he even went back to her a couple of days later and walked her through the statements again. It is uncontroverted that he made those statements, but he attempted to justify them on the basis that he was trying to refresh his memory. His statements to Ms. Currie on January 18, 1998, and several days later constituted relating a false and misleading account of relevant events to influence corruptly the testimony of a witness in a federal civil rights action as alleged in Article II, paragraph 6, of the Impeachment proceedings. Subsequently, he also made statements to his subordinates including Sidney Blumenthal, John Podesta, and Erskin Bowles. The statements he made to them were also known by him to be false and were designed to provide misleading information through them which could be and subsequently was transmitted under oath in the judicial proceedings by the subordinates. His statements to his subordinates on January 21, 23, and 26, 1998, were false and misleading statements to potential witnesses in a federal grand jury proceeding to influence corruptly the testimony of those witnesses as alleged in Article II, section 7, of the Articles of Impeachment. At his federal grand jury testimony on August 17, 1998, Mr. Clinton falsely and corruptly denied he had attempted to influence the testimony of witnesses and impede the discovery of evidence in civil rights actions as set out in the analysis above. Thus, the committed the acts as charged in Article I, paragraph 4, the count charging perjury. (See Clinton grand jury transcript at 107-08, Evidentiary Record, Vol. III, Part 1 of 2, pp. 559-60.) I believe that the evidence presented on the above charges was clear and convincing that the President engaged in a continuing scheme to fabricate and establish in federal court proceedings a false story about his relationship with Ms. Lewinsky and that through circumstantial evidence, the direct testimony of Ms. Lewinsky, Ms. Currie, Mr. Blumenthal, and others, plus the corroborating evidence, he was shown to have committed the acts charged. The totality of his actions can be judged in the success with which he maintained his cover story. Had it not been for the DNA on the stained dress, there is little likelihood that the false cover story would have been exposed for the lie that it was. In perpetrating that false and misleading story Mr. Clinton tampered with witnesses, obstructing justice in the civil rights lawsuit brought against him by Paula Jones. He also falsely misrepresented these acts in testimony before the grand jury August 17, 1998. High Crimes and Misdemeanors Having resolved in my mind the question that clear and convincing evidence shows that William Jefferson Clinton obstructed justice and committed perjury before a grand jury, the next issue is whether these activities rise to the level of offenses for which removal from office is the appropriate remedy. Defenders of the President have said that no one would press charges in a case like this, that it was not grave enough to merit a criminal proceeding, and that it certainly was not sufficient to warrant removing the President from office. With respect to the seriousness of the offense, it is worthy of note that during the year 1997, 182 people were sentenced by federal judges for perjury and another 144 were sentenced for obstruction and witness tampering. These prosecutions were brought by Clinton Administration appointees and in many instances in front of Clinton-appointed judges. The case of Dr. Barbara Battaglia is particularly compelling. In a law suit brought by a patient of a Veterans Administration hospital alleging sexual harassment, Dr. Battaglia was asked in a deposition if she had had consensual sex with the plaintiff. Her answer to that question was a simple, ``No.'' When that denial was shown to be a lie, she was convicted of a felony and sentenced to house arrest with an electronic monitoring device. She has lost her ability to practice medicine and also her ability to utilize her law degree to practice law. The serious nature of these offenses is particularly clear when considered in the context of the proceedings. The United States Supreme Court had ruled unanimously that Mr. Clinton, as President, had to answer the lawsuit filed by Paula Jones. A federal judge was assigned to the suit and presided over the deposition in which Mr. Clinton testified and at which time he and his lawyer presented the false affidavit. It is totally inconsistent within the context of this case and the sound functioning of the judicial system to say that the Supreme Court meant that Mr. Clinton should respond to these charges but he was not bound to respond truthfully. His actions in procuring and using false affidavits, causing the hiding of subpoenaed evidence, and tampering with a potential witness by giving false information to use in any testimony effectively denied the plaintiff the civil rights the Supreme Court ruled she had. To say that the acts are not grave, not high- crimes, and not a threat to the judicial system, is untenable. No lawyer could make such a statement in open court and not be subjected to the loss of a license to practice law. Likewise, his lies to a grand jury from his White House office were a serious challenge to the administration of justice. Moreover, the debates of the authors of the Constitution showed that they considered obstructing justice would warrant the President's impeachment and conviction. George Mason asked if the President could advise someone to commit a crime and then before an indictment or conviction use the power of a pardon to stop inquiry and prevent detection. James Madison responded that, ``If the President be connected, in any suspicious manner, with any person, and there be grounds to believe he will shelter him, the House of Representatives can impeach him.'' (See Elliott, Debates on the Adoption of the Federal Constitution, at 498.) Another argument has also been made by the White House counsel and supporters of the President that to remove the President from office on impeachment would be to nullify the election. This argument suggests that impeachment is never an appropriate remedy, provided the President is popular and the country is enjoying good times. The Office of the Presidency is not so brittle that it would be gravely damaged by removing the current President or any other President. The Founding Fathers certainly did not envision that impeachment could only apply to an unpopular President or one who was leading the country in hard- times. At the height of a Cold War with United States forces engaged in Vietnam, impeachment proceedings against President Richard M. Nixon forced him to leave office. The country was not wounded, it did not lose its way; Vice President Gerald Ford assumed the Presidency and continued the course of government. In this case, Vice President Al Gore would assume office and would be expected to continue the policies of the Clinton Administration. The United States Senate in recent years did not shirk from driving from office a colleague accused of obstructing justice in a sexual harassment case. No one objected that we had ``nullified'' the votes of the citizens of his state. Some of my colleagues have argued that the President has been so strong and forceful in foreign policy and conducted such wise relations with other nations that we could not afford to lose him. That argument, too, smacks of a referendum on the President's conduct of office, not a judgment on his wrongful acts. If we were to judge impeachment on the basis of the policies of the President, then impeachment could always be expected to be purely a partisan matter turning on the approval or disapproval of formulation or implementation of policy by the President. The framers rightfully dismissed any option that the proper or improper administration of the regular powers of the President would be involved in a decision on impeachment, either positively or negatively. In addition, we have the precedents set by the removal by the Senate of judges who have been found to have committed perjury. During my tenure in the Senate we have twice removed judges for committing perjury because of the serious adverse impact jerjury has on our judicial system. If a judge is removable for committing the significant act of perjury, can the one who appoints the judge be held to a lower standard? The President not only appoints the judges, he appoints the Attorney General, the United States Attorneys, and the Supreme Court Justices. Certainly we should impose no lower standard on the person with the ultimate responsibility for the proper administration of justice than on those he appoints. Conclusion It is precisely in good times, with the President high in the polls, that it is incumbent upon the Senate to exercise very thoroughly and carefully the responsibility under the Constitution to make the difficult decision on whether the President has committed high-crimes and misdemeanors warranting his removal from office. If we are to have a government of laws and not of men and not of public opinion polls, then we must judge the President on the evidence presented to us. I believe that the acts that he committed constitute high-crimes and misdemeanors warranting his conviction. I should note that the Senate made a serious mistake in beginning the proceedings by limiting the ability of the House Managers to call witnesses. The absence of witnesses to testify to the acts alleged as the basis of impeachment charges significantly impeded the progress toward resolving the allegations against the President. I trust that the Senate will not make the same mistake in future impeachment proceedings.

Mr. BOND

Mr. BOND. Mr. President, February 27 is the 150th anniversary of the founding of William Jewell College, a small liberal arts college in Liberty, Missouri, and one of the oldest four-year colleges west of the Mississippi River. William Jewell's reputation is far larger than its size. Because of the quality of its academic programs and facilities, and the breadth of its student and public service activities, Jewell is recognized as a preeminent liberal arts college in the Midwest. Jewell is classified among the nation's top 162 liberal arts colleges by the Carnegie Foundation for the Advancement of Teaching. Jewell has been recognized in the prestigious ``National Liberal Arts'' category in the ``America's Best Colleges'' edition of U.S. News & World Report. Affiliated with the Baptist church since its founding, the college places a strong emphasis on Christian values, character development, and public service. Jewell is listed regularly in the Templeton Foundation's Honor Roll of Character-Building Colleges. The institution has awarded more than 14,000 baccalaureate degrees since its founding. While most of its students are from Missouri, the school attracts students from nearly half of the 50 states and more than a dozen foreign countries. Alumni accomplishments at the highest levels of business, industry, government and the professions figure prominently in maintaining Jewell's reputation as a preeminent liberal arts college. And the college is frequently referred to as the ``Campus of Achievement'' due to the high percentage of Jewell students appearing in annual ``Who's Who'' directories. And, on a personal note, Jewell graduates are certainly overrepresented on my Senate staff in terms of their percentage of the Missouri population! While the school has a right to be proud of its achievements, what sets it apart from other colleges are the opportunities it offers all of its students, and the larger Kansas City community. William Jewell's Fine Arts Program, now in its 34th season, is a regional and national treasure, having presented Luciano Pavarotti's American recital debut in 1973. Each year, the Fine Arts Program brings to Kansas City venues internationally acclaimed orchestras, ensembles, dance troupes, plays, musicals, and individual performers. International programs in England, Japan, Australia, India and Ecuador give students the opportunity to travel widely and study at some of the world's great centers of learning. The recently endowed Pryor Leadership Studies program is a unique curriculum of course work, activities and lectures which actively promote personal, vocational and civic leadership development. And a Service Learning certificate program, sustained by its own endowment, encourages formal involvement in community service activities, along with national and international outreach, and mission trips. It is a credit to her faculty, administration, board, alumni, and students that William Jewell has been able to maintain high academic standards through the years, and to serve so well the Kansas City community, the State of Missouri, and the entire nation. I offer the entire William Jewell community a heartfelt congratulations on their first 150 years!

Mr. BOND

Mr. BOND. Mr. President, Senate Standing Rule XXVI requires each committee to adopt rules to govern the procedures of the Committee and to publish those rules in the Congressional Record not later than March 1 of the first year of each Congress. On February 5, 1999, the Committee on Small Business held a business meeting during which the members of the Committee unanimously adopted rules to govern the procedures of the Committee. Consistent with Standing Rule XXVI, today I am submitting for printing in the Congressional Record a copy of the Rules of the Senate Committee on Small Business. The rules follow: Rules of the Committee on Small Business (As adopted in executive session February 5, 1999) 1. general All applicable provisions of the Standing Rules of the Senate and of the Legislative Reorganization Act of 1946, as amended, shall govern the Committee. 2. meeting and quorums (a) The regular meeting day of the Committee shall be the first Wednesday of each month unless otherwise directed by the Chairman. All other meetings may be called by the Chairman as he deems necessary, on 3 days notice where practicable. If at least three Members of the Committee desire the Chairman to call a special meeting, they may file in the office of the Committee a written request therefor, addressed to the Chairman. Immediately thereafter, the Clerk of the Committee shall notify the Chairman of such request. If within 3 calendar days after the filing of such request, the Chairman fails to call the requested special meeting, which is to be held within 7 calendar days after the filing of such request, a majority of the Committee Members may file in the Office of the Committee their written notice that a special Committee meeting will be held, specifying the date, hour and place thereof, and the Committee shall meet at that time and place. Immediately upon the filing of such notice, the Clerk of the Committee shall notify all Committee Members that such special meeting will be held and inform them of its date, hour and place. If the Chairman is not present at any regular, additional or special meeting, the Ranking Majority Member present shall preside. (b)(1) A majority of the Members of the Committee shall constitute a quorum for reporting any legislative measure or nomination. (2) One-third of the Members of the Committee shall constitute a quorum for the transaction of routine business, provided that one Minority Member is present. The term ``routine business'' includes, but is not limited to, the consideration of legislation pending before the Committee and any amendments thereto, and voting on such amendments. 132 Congressional Record Sec. 3231 (daily edition March 21, 1986) (3) In hearings, whether in public or closed session, a quorum for the asking of testimony, including sworn testimony, shall consist of one Member of the Committee. (c) Proxies will be permitted in voting upon the business of the Committee by Members who are unable to be present. To be valid, proxies must be signed and assign the right to vote to one of the Members who will be present. Proxies shall in no case be counted for establishing a quorum. (d) It shall not be in order for the Committee to consider any amendment in the first degree proposed to any measure under consideration by the Committee unless thirty written copies of such amendment have been delivered to the office of the Committee at least 24 hours prior to the meeting. This subsection may be waived by the Chairman or by a majority vote of the members of the Committee. 3. hearings (a)(1) The Chairman of the Committee may initiate a hearing of the Committee on his authority or upon his approval of a request by any Member of the Committee. Written notice of all hearings shall be given, as far in advance as practicable, to Members of the Committee. (2) Hearings of the Committee shall not be scheduled outside the District of Columbia unless specifically authorized by the Chairman and the Ranking Minority Member or by consent of a majority of the Committee. Such consent may be given informally, without a meeting. (b)(1) Any Member of the Committee shall be empowered to administer the oath of any witness testifying as to fact if a quorum be present as specified in Rule 2(b). (2) Interrogation of witnesses at hearings shall be conducted on behalf of the Committee by Members of the Committee or such Committee staff as is authorized by the Chairman or Ranking Minority Member. (3) Witnesses appearing before the Committee shall file with the Clerk of the Committee a written statement of the prepared testimony at least two business days in advance of the hearing at which the witness is to appear unless this requirement is waived by the Chairman and the Ranking Minority Member. (c) Witnesses may be subpoenaed by the Chairman with the agreement of the Ranking Minority Member or by consent of a majority of the Members of the Committee. Such consent may be given informally, without a meeting. Subpoenas shall be issued by the Chairman or by any Member of the Committee designated by him. A subpoena for the attendance of a witness shall state briefly the purpose of the hearing and the matter or matters to which the witness is expected to testify. A subpoena for the production of memoranda, documents and records shall identify the papers required to be produced with as much particularity as is practicable. (d) Any witness summoned to a public or closed hearing may be accompanied by counsel of his own choosing, who shall be permitted while the witness is testifying to advise him of his legal rights. (e) No confidential testimony taken, or confidential material presented to the Committee, or any report of the proceedings of a closed hearing, or confidential testimony or material submitted voluntarily or pursuant to a subpoena, shall be made public, either in whole or in part or by way of summary, unless authorized by a majority of the Members of the Committee. 4. subcommittees The Committee shall not have standing subcommittees. 5. Amendment of rules The foregoing rules may be added to, modified or amended; provided, however, that not less than a majority of the entire Membership so determine at a regular meeting with due notice, or at a meeting specifically called for that purpose.

Mr. BOND

Mr. BOND. Mr. Chief Justice, reserving the right to object. May I inquire of the majority leader if that Saturday time schedule gives both parties adequate time to prepare for the presentation of the evidence? Have both sides agreed that they will be prepared?

Mr. BOND

Mr. BOND. I ask for 1 more minute?

Mr. BOND. Mr. President, I thank my colleague from Georgia. I have just a few brief thoughts on this budget that has been submitted to us. The President's budget says we are going to have about a $4 trillion surplus over the next 15 years. He has said, and we agree, that we should fix Social Security first. We are going to do that. He believes that we ought to set 62 percent of the surplus aside for fixing Social Security. Again, we agree, because that is about what Social Security receipts are provided. But when we got his budget message and when we heard his State of the Union, we didn't see a fix to Social Security. We saw new gimmicks, financial gimmicks, borrowing more money. And under this plan that he has presented, while we are supposedly running these surpluses that will amount to $4 trillion, we are going to have to raise the debt ceiling within a couple of years because he is issuing more bonds. We are going to borrow our way into solvency for Social Security. Nobody has explained yet how that is going to work. But it is clear that he has not proposed any responsible reform of the Social Security system to make sure it is there. We in Congress are going to have to develop a plan. I believe we will. It is going to take some of the surplus, 62 percent. I think that we must do that because we owe that not only to those who are retired now and those who are about to retire, but to the baby boomers and others coming along who want to see retirement security. So we have 38 percent. What do we do with the remaining 38 percent of the surplus? I have spent a lot of time. I traveled around the State of Missouri many, many days listening to and talking with people, telling them: We finally got that budget deficit monster slain. What should we do with the surplus we are going to start running? And they had two very strong ideas. They said, No. 1, pay off the debt. We started to pay off the debt. If it hadn't been for the President's having invested some $20-plus billion in spending last year, we would have paid off $20 billion more. Frankly, around this place there is nothing quite so tempting as an unspent surplus. If you don't return it to the taxpayers, it is going to get spent. We already have a historically high tax rate as part of our gross domestic product, the highest it has been since the end of World War II. And we are continuing to take more and more money. We need to have tax relief. That is the other thing that the people of Missouri say: We want tax relief; lower, simpler, flatter taxes. Small businesses spend 5 percent of what they take in just figuring out how much they are going to have to pay in taxes. That is before they pay taxes. It is too complicated. It is too high. It discourages economic activity. Those who made fun of the capital gains tax relief and objected to it now have to admit that reducing capital gains brought more economic activity and brought a tremendous increase in capital gains revenue. If we give families and small businesses the opportunity to keep some of their money, do you know what? They can spend it better than we can in Washington, and that is what I propose we do. But the President is not content with a $4 trillion surplus. He wants to increase Federal Government revenues by raising taxes. And on top of that, he is going to spend it all, he is going to spend more of it, he is going to spend $100 billion in new spending. He busts the cap. He even raids the tobacco settlements from the States because he has so many good ideas on how to spend it. Mr. President, I do not believe the people of America want those good ideas. It is unbelievable, $4 trillion in surplus yet every dollar of it spent, then more taxes are added. This is a classic example of the Federal ``Father Knows Best,'' requiring the States, localities, and most of all the families, the working men and women in America, to play ``Mother May I?'' Let's take a look at education, something I think is a top priority, and the President says it is a top priority, too. It is about that point where we diverge 180 degrees. The President wants to be your local school superintendent. Do you know, we have over 763 Federal education programs. The system is not working now. We have too much Federal bureaucracy, too much Federal red tape. Yesterday the President told the school board members who were in town from school boards all across the country, he said, ``Listen to what they are saying in the schools.'' I have. Do you know what they are saying? Do you know what educators and the administrators and school board members are saying? ``We have too much Federal regulation and dictates. We spend too much time on misplaced Federal priorities.'' That is why I want, and I think my colleagues want, to return dollars directly to the classroom. Do not run it through the bureaucracy in Washington, DC. Don't even run it through the State bureaucracies. It is the school districts that have to make the decisions. They are the ones that know the kids' names. They are the ones that know the strengths of the kids. They are the ones that know the challenges they face. Let them make the decisions and take the Federal handcuffs off of local educators.

Mr. BOND

Mr. BOND. Mr. President, I rise today to introduce the Small Business Investment Improvement Act of 1999. I am pleased to announce that two of my colleagues from the Committee on Small Business, Senator Kerry and Senator Lieberman, have joined as principal cosponsors. This is an important bill for one simple reason: it makes more investment capital available to small businesses that are seeking to grow and hire new employees. In 1958, Congress created the SBIC Program to assist small business owners obtain investment capital. Forty years later, small businesses continue to experience difficulty in obtaining investment capital from banks and traditional investment sources. Although investment capital is readily available to large businesses from traditional Wall Street investment firms, small businesses seeking investments in the range of $500,000-$2.5 million have to look elsewhere. SBICs are frequently the only sources of investment capital for growing small businesses. In 1992 and 1996, the Committee on Small Business worked closely with the Small Business Administration to correct earlier deficiencies in the law in order to ensure the future of the program. Today, the SBIC Program is expanding rapidly in an effort to meet the growing demands of small business owners for debt and equity investment capital. Last year, the Committee on Small Business approved a bill similar to the bill being introduced today. Today's bill includes two technical changes in the SBIC program. The first change removes a requirement that at least 50 percent of the annual program level of the approved participating securities under the SBIC Program be reserved for funding with SBICs having private capital of not more than $20 million. The requirement has become obsolete following SBA's imposition of its leverage commitment process and Congressional approval for SBA to issue five year commitments for SBIC leverage. The second technical change requires SBA to issue SBIC guarantees and trust certificates at periodic intervals of not less than 12 months. The current requirement is six months. This change will give maximum flexibility for SBA and the SBIC industry to negotiate the placement of certificates that fund leverage and obtain the lowest possible interest rate. The Small Business Investment Improvement Act of 1999 clarifies the rules for the determination of an eligible small business or small enterprise that is not required to pay Federal income tax at the corporate level, but that is required to pass income through to its shareholders or partners by using a specified formula to compute its after-tax income. This provision is intended to permit ``pass through'' enterprises to be treated the same as enterprises that pay Federal taxes for purposes of SBA size standard determinations. The bill would also make a relatively small change in the operation of the program. This change, however, would help smaller, small businesses to be more attractive to investors. SBICs would be permitted to accept royalty payments contingent on future performance from companies in which they invest as a form of equity return for their investment. SBA already permits SBICs to receive warrants from small businesses, which give the investing SBIC the right to acquire a portion of the equity of the small business. By pledging royalties or warrants, the small business is able to reduce the interest that would otherwise be payable by the small business to the SBIC. Importantly, the royalty feature provides the smaller, small business with an incentive to attract SBIC investments when the return may otherwise be insufficient to attract venture capital. Lastly, the bill increases the program authorization levels to fund Participating Securities. In Fiscal Year 1999, the authorization level would increase from $800 million to $1.2 billion; in Fiscal Year 2000, it would increase from $900 million to $1.5 billion. The two increases have become necessary as the demand in the SBIC program was growing at a rapid rate. Higher authorization levels are necessary if the SBIC Program is going to meet the demand for investment capital from the small business community. Mr. President, this is a sound legislative proposal, which has the support of many of my colleagues on the Committee on Small Business. It is my hope we will be able to conduct a committee markup of this bill in the near future. I ask unanimous consent that the full text of the bill be printed in the Record.

Mr. BOND

Mr. BOND. Mr. President, small businesses today face enormous burdens when it comes to taxes. Each year they pay a growing portion of their revenues on income, employment, and excise taxes. Yet even before they write the tax check, they spend more than 5% of their revenues just to comply with the tax laws. These revenues are spent on accountants, bookkeepers, and lawyers to sort out the countless pages of tax laws, regulations, forms, instructions, rulings, and other guidance published by the IRS. In addition, small business owners must dedicate valuable time and energy on day-to-day recordkeeping and other compliance requirements, all of which keep them from doing what they do best-- running their business. As the Chairman of the Committee on Small Business, I have heard from small business owners in Missouri and across this country that they are more than willing to pay their fair share of taxes. But what they object to is paying high tax bills and vast amounts for professional tax assistance only to end up the victim of an unfair tax code. Mr. President, I rise today to introduce legislation that will eliminate two major sources of that unfairness and provide a level playing field for the millions of men and women who work exceedingly hard to make their small enterprises a success. These bills are common- sense measures that respond to the calls from small businesses for tax fairness and simplicity. My first bill, the ``Self-Employed Health Insurance Fairness Act of 1999,'' will end one of the most glaring inequities that has existed in our tax law--the deductibility of health-insurance costs for the self- employed. For nearly five years, I have been working to see that the self-employed receive equal treatment when it comes to the deductibility of health insurance. During the 105th Congress, we made substantial progress. First, in the Taxpayer Relief Act of 1997, we broke through the long-standing cap on the deduction to provide 100% deductibility. Then, last Fall, we passed legislation that will speed up the date that self-employed persons can fully deduct their health-insurance costs to 2003. We also significantly increased the deductible amounts in the intervening years over the prior law. While I strongly supported these improvements, the self-employed still cannot wait four more years for 100% deductibility when their large corporate competitors have long been able to deduct such costs in full. With the self-employed able to deduct only 60% of their health- insurance costs today, it comes as no surprise that nearly a quarter of the self-employed still do not have health insurance. In fact, five million Americans live in families headed by a self-employed individual and have no health insurance. And those families include 1.3 million children who lack adequate health-insurance coverage. Mr. President, it is time to finish the job once and for all in this Congress. My bill will increase the deductibility of health insurance for the self-employed to 100% beginning this year. A full deduction will make health insurance more affordable to the self-employed and help them and their families get the health insurance coverage that they need and deserve. The ``Self-Employed Health Insurance Fairness Act'' also corrects another inequity in the tax law affecting the self-employed who try to provide health insurance for themselves, their families, and their employees. Under current law, the self-employed lose all of the health- insurance deduction if they are eligible to participate in another health-insurance plan--whether or not they actually participate. This provision affects self-employed individuals like Steve Hagan in my hometown of Mexico, Missouri. Mr. Hagan is a financial planner who runs his own small business. Although he has a group medical plan for his employees, Mr. Hagan cannot deduct the cost of covering himself or his family simply because his wife is eligible for health insurance through her employer. The inequity is clear. Why should he be able to deduct the insurance costs for his employees but not for himself and his family? What if the insurance available through his wife's employer does not meet the needs of their family? Besides being patently unfair, this is also an enormous trap for the unwary. Imagine the small business owner who learns that she can now deduct 60% of her health-insurance costs this year, and with the extra deduction, she can finally afford a group medical plan for herself and her employees. Then later in the year, her husband gets a new job that offers health insurance. Suddenly, her self-employed health-insurance deduction is gone, and she is left with two choices. She can bear the entire cost of her family's coverage, or terminate the insurance coverage for all her employees. The tax code should not force small business owners into this kind of ``no win'' situation when they try to provide insurance coverage for their employees and themselves. My bill eliminates this problem by clarifying that the self-employed health-insurance deduction is limited only if the self-employed person actually participates in a subsidized health insurance plan offered by a spouse's employer or through a second job. It's simply a matter of fairness, and a step we need to take now. The second bill that I introduce today is the ``Independent Contractor Simplification and Relief Act of 1999.'' This bill will provide clear rules and relief for entrepreneurs seeking to be treated as independent contractors and for businesses needing to use independent contractors. As the Chairman of the Small Business Committee, I have heard from countless small business owners who are caught in the environment of fear and confusion that now surrounds the classification of workers. This situation is stifling the entrepreneurial spirit of many small business owners who find that they do not have the flexibility to conduct their businesses in a manner that makes the best economic sense and that serves their personal and family goals. The root of this problem is found in the IRS' test for determining whether a worker is an independent contractor or an employee. Over the past three decades, the IRS has relied on a 20-factor test based on the common law to make this determination. On first blush, a 20-factor test sounds like a reasonable approach--if a taxpayer demonstrates a majority of the factors, he is an independent contractor. Not surprisingly, the IRS' test is not that simple. It is a complex set of extremely subjective criteria with no clear weight assigned to any of the factors. As a result, small business taxpayers are not able to predict which of the 20 factors will be most important to a particular IRS agent, and finding a certain number of these factors in any given case does not guarantee the outcome. To make matters worse, the IRS' determination inevitably occurs two or three years after the parties have determined in good faith that they have an independent-contractor relationship. And the consequences can be devastating. The business recipient of the services is forced to reclassify the independent contractor as an employee and must pay the payroll taxes the IRS says should have been collected in the prior years. Interest and penalties are also piled on. The result for many small businesses is a tax bill that bankrupts the company. But that's not the end of the story. The IRS then goes after the service provider, who is now classified as an employee, and disallows a portion of her business expenses--again resulting in additional taxes, interest and penalties. Mr. President, all of us in this body recognize that the IRS is charged with the duty of collecting Federal revenues and enforcing the tax laws. The problem in this case is that the IRS is using a procedure that is patently unfair and subjective. And the result is that businesses must spend thousands of dollars on lawyers and accountants to try to satisfy the IRS' procedures, but with no certainty that the conclusions will be respected. That's no way for businesses to operate in today's rapidly changing economy. For its part, the IRS has adopted a worker classification training manual, which according to the agency is an ``attempt to identify, simplify, and clarify the relevant facts that should be evaluated in order to accurately determine worker classification * * *.'' There can be no more compelling reason for immediate action on this issue. The IRS' training manual is more than 150 pages. If it takes that many pages to teach revenue agents how to ``simplify and clarify'' this small business tax issue, I think we can be sure how simple and clear it is going to seem to taxpayers who try to figure it out on their own. The ``Independent Contractor Simplification and Relief Act'' is based on the provisions of my Home-Based Business Fairness Act, which I introduced at the start of the 105th Congress. My bill removes the need for so many pages of instruction on the 20-factor test by establishing clear rules for classifying workers based on objective criteria. Under these criteria, if there is a written agreement between the parties, and if an individual demonstrates economic independence and independence with respect to the workplace, he will be treated as an independent contractor rather than an employee. And the service recipient will not be treated as an employer. In addition, individuals who perform services through their own corporation or limited liability company will also qualify as independent contractors as long as there is a written agreement and the individuals provide for their own benefits. The safe harbor is simple, straightforward, and final. To take advantage of it, payments above $600 per year to an individual service provider must be reported to the IRS, just as is required under current law. This will help ensure that taxes properly due to the Treasury will continue to be collected. Mr. President, the IRS contends that there are millions of independent contractors who should be classified as employees, which costs the Federal government billions of dollars a year. This assertion is plainly incorrect. Classification of a worker has no cost to the government. What costs the government are taxpayers who do not pay their taxes. My bill has three requirements that I believe will improve compliance among independent contractors using the new rules I propose. First, there must be a written agreement between the parties--this will put the independent contractor on notice at the beginning that he is responsible for his own tax payments. Second, the new rules will not apply if the service recipient does not comply with the reporting requirements and issue 1099s to individuals who perform services. Third, an independent contractor operating through his own corporation or limited liability company must file all required income and employment tax returns in order to be protected under the bill. In the last Congress, concerns were raised that permitting individuals who provide their services through their own corporation or limited liability company to qualify as independent contractors would lead to abusive situations at the expense of workers who should be treated as employees. To prevent this option from being abused, I have added language that limits the number of former employees that a service recipient may engage as independent contractors under the incorporation option. This limit will protect against misuse of the incorporation option while still allowing individuals to start their own businesses and have a former employer as one of their initial clients. Another major concern of many businesses and independent contractors is the issue of reclassification. My bill provides relief to these taxpayers when the IRS determines that a worker was misclassified. Under my bill, if the business and the independent contractor have a written agreement, if the applicable reporting requirements were met, and if there was a reasonable basis for the parties to believe that the worker is an independent contractor, then an IRS reclassification will only apply prospectively. This provision gives important peace of mind to small businesses that act in good faith by removing the unpredictable threat of retroactive reclassification and substantial interest and penalties. A final provision of this legislation, Mr. President, is the repeal of section 1706 of the 1986 Tax Reform Act. This section affects businesses that engage technical service providers, such as engineers, designers, drafters, computer programmers, and systems analysts. In certain cases, Section 1706 precludes these businesses from applying the reclassification protections under section 530 of the Revenue Act of 1978. When section 1706 was enacted, its proponents argued that technical service workers were less compliant in paying their taxes. Later examination of this issue by the Treasury Department found that technical service workers are in fact more likely to pay their taxes than most other types of independent contractors. This revelation underscores the need to repeal section 1706 and level the playing field for individuals in these professions. In the last two Congresses, proposals to repeal section 1706 enjoyed wide bipartisan support. The bill I introduce today is designed to level the playing field for individuals in these professions by providing the businesses that engage them with the same protections that businesses using other types of independent contractors have enjoyed for more than 20 years. Mr. President, the bills I introduce today are common-sense measures that answer small business' urgent plea for fairness and simplicity in the tax law. As we work toward the day when the entire tax law is based on these principles, we can make a difference today by enacting these two bills. Entrepreneurs have waited too long--let's get the job done! Mr. President, I ask unanimous consent to include in the Record a copy of each bill and a description of its provisions.

Mr. BOND

Mr. BOND. Mr. President, I rise today to introduce the Small Business Investment Improvement Act of 1999. I am pleased to announce that two of my colleagues from the Committee on Small Business, Senator Kerry and Senator Lieberman, have joined as principal cosponsors. This is an important bill for one simple reason: it makes more investment capital available to small businesses that are seeking to grow and hire new employees. In 1958, Congress created the SBIC Program to assist small business owners obtain investment capital. Forty years later, small businesses continue to experience difficulty in obtaining investment capital from banks and traditional investment sources. Although investment capital is readily available to large businesses from traditional Wall Street investment firms, small businesses seeking investments in the range of $500,000-$2.5 million have to look elsewhere. SBICs are frequently the only sources of investment capital for growing small businesses. In 1992 and 1996, the Committee on Small Business worked closely with the Small Business Administration to correct earlier deficiencies in the law in order to ensure the future of the program. Today, the SBIC Program is expanding rapidly in an effort to meet the growing demands of small business owners for debt and equity investment capital. Last year, the Committee on Small Business approved a bill similar to the bill being introduced today. Today's bill includes two technical changes in the SBIC program. The first change removes a requirement that at least 50 percent of the annual program level of the approved participating securities under the SBIC Program be reserved for funding with SBICs having private capital of not more than $20 million. The requirement has become obsolete following SBA's imposition of its leverage commitment process and Congressional approval for SBA to issue five year commitments for SBIC leverage. The second technical change requires SBA to issue SBIC guarantees and trust certificates at periodic intervals of not less than 12 months. The current requirement is six months. This change will give maximum flexibility for SBA and the SBIC industry to negotiate the placement of certificates that fund leverage and obtain the lowest possible interest rate. The Small Business Investment Improvement Act of 1999 clarifies the rules for the determination of an eligible small business or small enterprise that is not required to pay Federal income tax at the corporate level, but that is required to pass income through to its shareholders or partners by using a specified formula to compute its after-tax income. This provision is intended to permit ``pass through'' enterprises to be treated the same as enterprises that pay Federal taxes for purposes of SBA size standard determinations. The bill would also make a relatively small change in the operation of the program. This change, however, would help smaller, small businesses to be more attractive to investors. SBICs would be permitted to accept royalty payments contingent on future performance from companies in which they invest as a form of equity return for their investment. SBA already permits SBICs to receive warrants from small businesses, which give the investing SBIC the right to acquire a portion of the equity of the small business. By pledging royalties or warrants, the small business is able to reduce the interest that would otherwise be payable by the small business to the SBIC. Importantly, the royalty feature provides the smaller, small business with an incentive to attract SBIC investments when the return may otherwise be insufficient to attract venture capital. Lastly, the bill increases the program authorization levels to fund Participating Securities. In Fiscal Year 1999, the authorization level would increase from $800 million to $1.2 billion; in Fiscal Year 2000, it would increase from $900 million to $1.5 billion. The two increases have become necessary as the demand in the SBIC program was growing at a rapid rate. Higher authorization levels are necessary if the SBIC Program is going to meet the demand for investment capital from the small business community. Mr. President, this is a sound legislative proposal, which has the support of many of my colleagues on the Committee on Small Business. It is my hope we will be able to conduct a committee markup of this bill in the near future. I ask unanimous consent that the full text of the bill be printed in the Record.

Mr. BOND

Mr. BOND. Mr. President, I wish to announce that the Committee on Small Business will hold its Organizational Meeting for the 106th Congress on Friday, February 5, 1999, which will begin at 9 a.m. in room 428A of the Russell Senate Office Building. Immediately following the organizational meeting, we will turn to official committee business including: (1) marking up and reporting out S. 314, Small Business Year 2000 Readiness Act; (2) marking up and reporting out of the Small Business Investment Company Technical Corrections Act of 1999; and (3) taking up the nomination of Phyllis Fong to be inspector general of the Small Business Administration. For further information, please contact Emilia DiSanto or Paul Cooksey at 224-5175.