John Breaux

Mr. BREAUX

Mr. BREAUX. I thank the Chair. (The remarks of Mr. Breaux pertaining to the introduction of S. 2121 are located in today's Record under ``Statements on Introduced Bills and Joint Resolutions.'') Mr. DASCHLE addressed the Chair.

Mr. BREAUX

Mr. BREAUX. Are we on the bill or are we in morning business, Mr. President?

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 President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. BREAUX. I thank the Chair. I rise in support of the legislation and say to all of my colleagues, and to the American public as well, it is very good news that we are now at the point of not talking about it as much as we are actually trying to do something to fix the problem. The problem I speak of is the information that Congress and the Senate have received over the past several weeks regarding what I will argue are fundamental abuses within the Internal Revenue Service and how they treat many American citizens. The hearings the Finance Committee held really brought out some very disturbing facts and information about the interaction of the Internal Revenue Service with average Americans. We have a tax system in this country with which most people completely and totally comply. We have one of the highest rates of compliance of any free nation anywhere in the world. It is something of which we can be very proud. Also, it is interesting to note--and maybe people don't realize--that less than 2 percent of American taxpayers are audited each year, substantially less than 2 percent as a matter of fact, which means most Americans file their tax returns, pay what they owe during the year, and at the end of the year that is it in terms of their dealings with the Internal Revenue Service. But still, in all, it seems there is a very disturbing feeling by most Americans that the Internal Revenue Service, an agency of our own Government, is not only on their side but actually is against their basic interests in how they deal with their own Government. I know that for a fact. I even feel somewhat intimidated by calling the agency myself on behalf of a constituent. The response seems to come back: How dare you call us. We are the IRS and you have no business making an inquiry. The other story that goes around is people have pointed out one of the greatest lies ever told is: I'm from the Government and I'm here to help you. It is like someone who gets a letter from the Internal Revenue Service; generally it evokes a tremendous amount of fear from the average citizens in this country when they get such a letter. It is always the butt of so many evening television shows, jokes about people actually having a fear of their own Government and an actual fear of the agents of our own Government, who are Federal employees, who actually work for the citizens of this country. I think the hearings show this is a feeling among far too many people in this country. What we are doing is bringing legislation to the floor to try to correct some of those abuses and make it work more on behalf of American citizens instead of against American citizens. A couple of weeks ago, I was back in Louisiana and someone from my State said, ``What do you have coming up this week?'' I said, ``We are going to have more hearings on the Internal Revenue Service.'' And my constituent said in response, ``My God, you have had enough hearings. When are you going to do something about fixing the problem? We know there is a problem; when are you going to fix it? Are you going to spend the whole year talking about it? We got the message; there is a problem. The question is, What is Congress going to do to attempt to fix the problem?'' I am pleased to report that is why we are on the floor of the U.S. Senate today with legislation that has been reported out in a bipartisan fashion. Under the leadership of the distinguished chairman, Senator Roth, and the ranking Democrat, Senator Moynihan, we have brought this piece of legislation to the floor. I want to particularly commend Senator Kerrey from Nebraska, who has been on the floor this morning and yesterday outlining this legislation. He chaired a commission which really did a great deal of work prior to the Congress bringing up this legislative proposal. His work as commission chairman really was the genesis for bringing about this real effort to reform the Internal Revenue Service. Some would say, ``Just throw it out, scratch it, do away with it.'' That is all fine and good. I can give a great speech anywhere in the country talking about abolishing the IRS. But also, it is important to find out, what are you replacing it with? What type of agency do you have to collect the revenues to run the Government? I think people legitimately are concerned. They want the services of Government. They want the highway trust fund to work. They want the highway program to work. They want Medicare and they want the Medicaid programs to work. They want education to work. They want the services of Government, but in order to have that, you have to have some mechanism to collect taxes in a fair manner. We should do everything we can to make the system more fair and make it more simple than it is, but eventually we are going to have to have some agency that is going to participate in helping collect those taxes under a fair system. I think what we do today is to try to improve that system. We say we are going to make it work better, we are going to attempt to eliminate the abuses in the system and abuses by people who work for the Internal Revenue Service. I would like to concentrate just on one feature of the bill that is now before the Senate, and that is something that I have worked on hard--in fact, introduced a separate bill on, to create a National Taxpayer Advocate to help taxpayers when they have problems with the Internal Revenue Service. Back in 1996, in the Taxpayers' Bill of Rights, we established this Taxpayer Advocate. The concept was not very complicated. It was, when people have a problem with the Internal Revenue Service, they generally are at the mercy of the system. The Government has literally thousands of attorneys and tax attorneys and prosecutors to go after individuals, but the individual citizens don't have anyone to represent their interests in dealing with the Internal Revenue Service. The National Taxpayer Advocate concept was to have someone who was on the side of the taxpayers, to help the taxpayers put together what they need to show what they have done was entirely honest and appropriate. The National Taxpayer Advocate did establish this position of a Taxpayer Advocate Office, and the function was to assist the taxpayers in resolving their problems and to identify areas in which taxpayers have problems in dealings with IRS, and also propose any administrative changes that would help make the system more fair, and identify any legislative recommendations that we in Congress could institute to make it more fair and easier for the average taxpayer. The problem with the old law in 1996 was that the Taxpayer Advocate designated authority, under these assistance programs, to the local and regional resolution officers who worked for the Internal Revenue Service. This really undermined the independence of the Taxpayer Advocate. It is very important, if you are going to have people who help the taxpayer, that they should not be totally dictated to by the Internal Revenue Service itself. It was something that, while it had the right intention, did not work as it should. This legislation contains several very important changes. I am very pleased to report to our other colleagues that this legislation corrects some of the problems with the original Taxpayer Advocate Office. We are going to make it more independent, which it has to be in order to work. We are going to make it more accountable to the taxpayers of this country, who are the people they are there to serve, and make it easier for them to resolve disputes between the taxpayer and the Internal Revenue Service. The bill, in doing that, replaces the present law's problem resolution system with a system of local taxpayer advocates who report directly to the National Taxpayer Advocate Office and who will be employees of the Taxpayer Advocate Office, independent from the Internal Revenue Service's examination, collection, and appeals function. In other words, they will be working directly for the Taxpayer Advocate Office and will be independent of the IRS examination and collection offices and appeals office. The National Taxpayer Advocate has a responsibility to evaluate and take personnel actions with respect to any local taxpayer advocate or any employee in the Office of the National Taxpayer Advocate. And to further ensure their independence, the National Taxpayer Advocate may not have been an officer or employee of the Internal Revenue Service during the 2-year period ending with their appointment and will not be able to accept employment with the IRS for at least 5 years after ceasing to be the National Taxpayer Advocate. That means the people who are going to be running this office cannot just have come out of the Internal Revenue Service, where their loyalties would be legitimately questioned. And they have to agree they will not go to work for the Internal Revenue Service for at least 5 years after they leave this position. So what we are creating, I think, is a truly independent National Taxpayer Advocate Office, to be on the side of the taxpayer for a change instead of being on the side of the Government, saying they are going to represent the interests of the taxpayer. There is a conflict there. If you are going to have adequate representation for the individual taxpayer, the person cannot be an IRS employee; they have a different obligation of what they are trying to do. So this Taxpayer Advocate Office will not be able to be a previous IRS employee and not be able to go to work right after giving up the job as a National Taxpayer Advocate. I think that feature is very, very important, because if you were still an employee of the IRS directly under their responsibility, it simply would not work. If you just came out of the IRS, it would not work. And if you knew you were going to go to work for the IRS as soon as you finished the job as a National Taxpayer Advocate, then you would be looking over your shoulder to make sure you didn't make them mad or unhappy in what you did in representing America's taxpayers. That conflict has been eliminated by what we have in the legislation which is now before the Senate. The whole concept is to have a truly independent National Taxpayer Advocate whose one focus will be making sure that taxpayers have good representation, are fairly treated, and have someone, for a change, who is really on their side when they have a conflict with the Internal Revenue Service. It is interesting to note that we go further in this legislation and say that at the initial meeting with any taxpayers seeking assistance with the Office of Taxpayer Advocate, that the local taxpayer advocate is required to notify that taxpayer that they operate independently of the IRS office and that they report directly to Congress through the National Taxpayer Advocate. At the discretion of the local taxpayer advocate, he shall not disclose to any IRS employee any contact with or any information that they provide to the taxpayer. We are really trying to build some walls between the IRS and the Taxpayer Advocate and their work with the taxpayers, the American citizens of this country, to make sure that they, the taxpayers, know the person they are dealing with is independent, has their interests at heart, and doesn't have to go report to the Internal Revenue Service district director about what he or she has discussed or talked about with the taxpayer who is seeking assistance. In addition, each local office of the Taxpayer Advocate is to maintain separate phones, separate faxes, and other electronic communications access, and a separate post office address. We are really trying to make it as separate and independent as we possibly can, so that when the average person gets that letter talking about an audit or a question that they have, they know there will be someplace they can go without having to incur the expense of hiring outside CPAs or outside attorneys and pay them sometimes very high fees just to have someone help them with their problem. There will be someplace they can go, which will be independent of the IRS, which will have as their first, second, third, and last mission to help that taxpayer. They can be comfortable there will not be communication or sharing of information of their discussions with the Taxpayer Advocate with the Internal Revenue Service. I think this is a very important part of the bill that is before the Senate today. Other features in the bill are equally as important, certainly, and I think in the end will go a very long way to assuring the American taxpayers that they have a system that is not out to get them, that is not out to intimidate them, that is not out to embarrass them; that if they are honest taxpayers, they will be treated honestly and will be treated fairly and, if they have a problem, there will be someplace they can go to get honest information and help and assistance that is not directed by the Internal Revenue Service but is being directed by the Office of the Taxpayer Advocate. That is now part of this bill, and I think it is a very important part of it as well. With that, Mr. President, I yield the floor, as I see other Members who are waiting to speak. Mr. KERREY addressed the Chair.

Mr. BREAUX

Mr. BREAUX. Thank you.

Mr. BREAUX. Which Senator from Louisiana is he referring to?

Mr. BREAUX

Mr. BREAUX. Mr. President, it is always interesting in the morning to start your day by reading the newspapers. I did that as well this morning. I think that most of the things that we read are pretty accurate and pretty correct. But every now and then I think what we read, while it may be accurate and correct, doesn't tell the entire story. I think this morning, if you look at the papers around the city, most of the headlines that I saw were accurate in the sense that they talked about Social Security and the condition of Social Security. The stories in the press this morning dealt with that. That was all based on the recent Social Security report. It talked about the good news dealing with Social Security. I look at the headlines in the Washington Post, ``Forecast Brightens for Social Security.'' The Wall Street Journal headline was ``Economy gives Social Security a Reprieve.'' A New York Times article, ``Surging Economy is Lifting Social Security, U.S. finds.'' The headline in the USA Today was ``Social Security Wins Three-Year Reprieve.'' All of that is very accurate. All of it is very, very true. All of it is based on the Social Security trustees' annual report that they give to Congress and to the American people and to the President of the United States. If you just read those headlines, you will say, ``Well, things are really good in the area of Social Security.'' The good news, I think, was based on the fact that the trustees' report pointed out that the payroll tax that we pay every month will be able to cover Social Security benefits through the year 2013 as opposed to the early projections that the payroll tax is only going to be enough to pay for benefits through the year 2012. They say that when you combine the payroll tax and the interest paid on the reserves that are in the Social Security trust fund, that would be enough money to cover the benefits to retirees through the year 2021 instead of just through the year 2019. They further point out that it is good news that the Social Security trust fund, when you add everything up, will not be depleted until the year 2032 instead of the year 2029. All of that is good news. The President correctly spoke about the fact that we added 3 more years to the Social Security program because of the strength of the economy basically. But the reason I take the floor today is to point out ``the rest of the story,'' as the words go, in other areas, because there is another part of the story that didn't seem to get the attention that I think it should have gotten from the press, because the stories don't highlight the other trust fund that I think is equally important and was also released yesterday by the trustees' report. The other trust fund that I am referring to is the Medicare trust fund, the Medicare part A trust fund, which basically pays the expense of 38 million Americans going to the hospital to receive health care. But the story that is only sort of mentioned as a footnote is that not only have we not run a surplus in the Medicare trust fund since 1995, including deficit spending of $9.3 billion last year, they did not point out that the part A trust fund is going broke 2 years earlier than we had anticipated just this past January. What the report says is that instead of going broke in the year 2010, it is going to be depleted in the year 2008. And the numbers I just cited for Social Security, talking about 2032 and 2013, those are dates that are at least a little bit further out. But the report said that we are going to be going broke in the Medicare trust fund 2 years earlier than they had in January. I think that is incredibly significant. Prior to the balanced budget bill that we passed last year, the hospital insurance fund, which pays for Medicare hospital coverage, was estimated to become insolvent in the year 2001, just around the corner. So last Congress we struggled and did what I call the ``SOS'' approach, ``same old, same old,'' by essentially reducing reimbursements to doctors and hospitals. And particularly in addition to that, what we did to sort of save the program in Medicare was to transfer home health care from part A to part B, at least we transferred part of it. We transferred about 60 percent of it, which amounts to about $174 billion over the next 10 years. We just took it out of this column, which was having a lot of trouble being paid for by the payroll tax and moved it over to part B, which is 25 percent paid for by a premium, and then the 75 percent is paid for by the General Treasury of the country out of general revenues. So what we did, we put a Band-Aid on Medicare. We tried to save it from going busted in the year 2001 and we extended it out to the year 2008. It is interesting that the Congressional Budget Office earlier this year had said, well, we thought the trust fund was going to be solvent until the year 2010. But now we have this new report just out yesterday, brand new, overlooked generally by the press, in my opinion, that said the Medicare trust fund was going to be insolvent not in the year 2010, but that the trust fund will be depleted in the year 2008. So unlike Social Security, where people are saying it is getting better than we first thought, Medicare is getting worse, and it is getting worse more quickly than was originally anticipated even in January of this year. We look at the year 2021 as the key year in Social Security because that is the year when you add taxes and the interest in the trust fund. It will no longer be enough to cover Social Security benefits. That is the year we all talk about Social Security, that we are not going to have enough money to pay benefits--when you add money coming in plus the interest on that money, we are not going to have enough to pay the benefits in the year 2002. I want to tell my colleagues that we passed that point in Medicare a long time ago. Medicare is already passed the point where the money coming in and the interest on the money coming in is not enough to pay for the benefits. We passed that in 1995 when the accumulated taxes and interest in Medicare were no longer enough to pay the benefits of Medicare. So we are not talking the year 2021 as in Social Security. We are talking about we already passed that point when it comes to Medicare. That is how much more difficulty the Medicare system is in than the Social Security system. We have been running a deficit in the program since 1995. Last year, it was $8.3 billion more in benefits than we had in money coming in and the interest in the trust fund. It is obvious we cannot continue that. I would like to quote a couple of the other highlights from the report which I think are significant. The trustees' report says that to bring the health insurance Medicare part A trust fund into balance over the next 25 years under their intermediate assumptions would require either that outlays be further reduced by 18 percent, or that taxes be increased by 22 percent or some combination of the two over that period. That is, they say, ``the current HI payroll tax of 1.54 percent would have to be immediately raised to about 1.81 percent or the benefits reduced by a comparable amount.'' I haven't heard anyone in my State of Louisiana that I have the privilege of representing telling me to raise their payroll tax by 22 percent, and I have not heard a single person come in and say, ``Senator, would you please cut my benefits by 18 percent.'' More of what I hear is, ``Don't increase my taxes and don't decrease my benefits.'' But I will say to all of our colleagues that that is not an option. That is not an option. The report further says that prior to the Balanced Budget Act of last year, the part A expenditures were estimated to grow at an average rate of about 8 percent a year in Medicare. From 1998 to the year 2002, what we did last year in the balanced budget amendment reduces annual growth to an estimated average of 3 percent. Thereafter, however, expenditure growth is expected to return to the level of about 7-percent increases every year in Medicare costs. The report further says that ``the balanced budget provisions are estimated to substantially reduce the gap between income and expenditures over the next 5 years, but with a return to steadily increasing deficits in the year 2003 and later. After 2002, the gap between income and expenditures will widen steadily so that by the year 2007 there would be a $26 billion shortfall in that year alone.'' Those are very sobering statistics. Unfortunately, I think they are very accurate. I have long been very concerned that we in the Congress and the public have this sort of false sense of security that because every year I get my Medicare benefits and I still get the coverage I need, there really is not a problem; that the people who are talking about a problem are sort of like Chicken Little who ran around the country saying, ``The sky is falling. The sky is falling.'' It never fell, and they didn't believe Chicken Little any longer. I think people don't believe Congress anymore. If you look at the headlines I talked about, I think they miss the point about Medicare which is much more immediate. It is around the corner, good news and bad news. Good news that Social Security is in pretty decent shape. We made 3 more years extra out of the program. But the bad news and the very legitimate concern we should have is that Medicare is predicted to go insolvent even earlier than before, 2 years earlier than we had previously predicted. So I hope that more people will take a look at the trustees' report. It is a good report. It is a sobering report and one that every American, whether they are on Medicare or whether their parents are on Medicare or their grandparents are on Medicare, should take a look at and know that there must be a growing awareness among all people in our country that if we are going to continue to have the greatest system of health care for America's seniors, we have to start making decisions now and recommendations now if we are going to prevent what this report says is going to happen in the not too distant future. The trustees' report noted--I will conclude with this: More far-reaching measures will be needed to prevent the trust fund's depletion as the baby boom generation starts reaching age 65 and starts receiving their benefits. . . . In this regard, the work of the Bipartisan Commission will be of critical importance to the Administration, the Congress and the American public. I could not agree more. I commend this very sobering report to all Americans, because it, indeed, is a wake-up call as to what this Congress needs to be seriously considering in the very short period of time we have left. I yield the floor.

Mr. BREAUX

Mr. BREAUX. Mr. President, I ask unanimous consent to speak as if in morning business.

Mr. BREAUX

Mr. BREAUX. Mr. President, I rise today to introduce legislation allowing certain U.S. legal tender coins to be qualified investments for an individual retirement account (IRA). Congress excluded ``collectibles'', such as antiques, gold and silver bullion, and legal tender coinage, as appropriate for contribution to IRAs in 1981. The primary reason was the concern that individuals would get a tax break when they bought collectibles for their personal use. For example, a taxpayer might deduct the purchase of an antique rug for his/her living room as an IRA investment. Congress was also concerned about how the many different types of collectibles are valued. Over the years, however, certain coins and precious metals have been excluded from the definition of a collectible because they are independently valued investments that offer investors portfolio diversity and liquidity. For example, Congress excluded gold and silver U.S. American Eagles from the definition of collectibles in 1986, and the Taxpayer Relief Act of 1997 took the further step of excluding certain precious metals bullion. My legislation would exclude from the definition of collectibles only those U.S. legal tender coins which meet the following three standards: certification by a nationally-recognized grading service, traded on a nationally-recognized network, and held by a qualified trustee as described in the Internal Revenue Code. In other words, only investment quality coins that are independently valued and not held for personal use may be included in IRAs. There are several nationally-recognized, independent certification or grading services. Full-time professional graders (numismatists) examine each coin for authenticity and grade them according to established standards. Upon certification, the coin is sonically-sealed (preserved) to ensure that it remains in the same condition as when it was graded. Legal tender coins are then traded via two independent electronic networks--the Certified Coin Exchange and Certified CoinNet. These networks are independent of each other and have no financial interest in the legal tender coinage and precious metals markets. The networks function in precisely the same manner as the NASDAQ with a series of published ``bid'' and ``ask'' prices and last trades. The buys and sells are enforceable prices that must be honored as posted until updated. Mr. President, the liquidity provided through a bona fide national trading network, combined with published prices, make legal tender coinage a practical investment that offers investors diversification and liquidity. Investment in these tangible assets has become a safe and prudent course of action for both the small and large investor and should be given the same treatment under the law as other financial investments. I urge the Senate to enact this important legislation as soon as possible. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. BREAUX

Mr. BREAUX. Mr. President, I rise today to introduce legislation allowing certain U.S. legal tender coins to be qualified investments for an individual retirement account (IRA). Congress excluded ``collectibles'', such as antiques, gold and silver bullion, and legal tender coinage, as appropriate for contribution to IRAs in 1981. The primary reason was the concern that individuals would get a tax break when they bought collectibles for their personal use. For example, a taxpayer might deduct the purchase of an antique rug for his/her living room as an IRA investment. Congress was also concerned about how the many different types of collectibles are valued. Over the years, however, certain coins and precious metals have been excluded from the definition of a collectible because they are independently valued investments that offer investors portfolio diversity and liquidity. For example, Congress excluded gold and silver U.S. American Eagles from the definition of collectibles in 1986, and the Taxpayer Relief Act of 1997 took the further step of excluding certain precious metals bullion. My legislation would exclude from the definition of collectibles only those U.S. legal tender coins which meet the following three standards: certification by a nationally-recognized grading service, traded on a nationally-recognized network, and held by a qualified trustee as described in the Internal Revenue Code. In other words, only investment quality coins that are independently valued and not held for personal use may be included in IRAs. There are several nationally-recognized, independent certification or grading services. Full-time professional graders (numismatists) examine each coin for authenticity and grade them according to established standards. Upon certification, the coin is sonically-sealed (preserved) to ensure that it remains in the same condition as when it was graded. Legal tender coins are then traded via two independent electronic networks--the Certified Coin Exchange and Certified CoinNet. These networks are independent of each other and have no financial interest in the legal tender coinage and precious metals markets. The networks function in precisely the same manner as the NASDAQ with a series of published ``bid'' and ``ask'' prices and last trades. The buys and sells are enforceable prices that must be honored as posted until updated. Mr. President, the liquidity provided through a bona fide national trading network, combined with published prices, make legal tender coinage a practical investment that offers investors diversification and liquidity. Investment in these tangible assets has become a safe and prudent course of action for both the small and large investor and should be given the same treatment under the law as other financial investments. I urge the Senate to enact this important legislation as soon as possible. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. BREAUX

Mr. BREAUX. Mr. President, I would just, as we move toward a vote on this measure, make one other comment, and that is that it is very clear that there is a great deal of support for the current bill that is on the floor. And there is pretty much across-the-board opposition to the amendment that Senator Gorton is offering. And it is across the board in the sense that it is opposed by all segments of the industry. I want to have printed in the Record, and ask unanimous consent to do so, a letter addressed to myself in opposition to the Gorton amendment.

Mr. BREAUX. Thank you, Mr. President. I would imagine that all Members of the Senate who are vitally interested in this legislation must be here this morning to follow these very complicated, very detailed arguments. This, indeed, is incredibly complicated. It just always continues to amaze me how complicated some of these international shipping agreements can become. It is part of the reason why it took 4 years to put together this legislation. This is not something that just came to the floor overnight but is the result of 4 years of painful negotiating and compromise among people who ship packages and cargo, people who carry packages and cargo internationally. Mr. President, 96 percent of our cargoes carried internationally are on shipping vessels. It also has involved, to a large extent, the people who put together packages for people to ship in order to make it more efficient than it has been in the past. Like all other compromises that normally are reached, everybody doesn't get everything they want. I think this legislation is an example of what a true compromise is. This legislation clearly is incredibly important because it further deregulates the shipping industry and makes it more competitive than it has been in the past. But in reaching that compromise among all of the Senators who are involved, including Senator Gorton and Senator Kay Bailey Hutchison, who has done such a terrific job as the chairman of our subcommittee, Senator Lott's involvement, Senator Inouye's involvement--everybody on the committee has been deeply involved on this very complicated issue, like I said, for 4 years. Unfortunately, the amendment of the Senator from Washington is a killer amendment in the sense that if this amendment were to be adopted, the 4 years of hard work would go for naught. This bill would not be able to pass because the carefully crafted compromise would fall apart. As in most compromises, if you lose one part, you will lose the whole deal. So it is very, very important for all of us who want to see a shipping act adopted and signed into law to recognize that it is necessary this morning to defeat the amendment of the Senator from Washington. I know it is well intended. I do not in any way question his motives in offering it, but I think that on the facts, there is a strong difference of opinion. The non-vessel-operating common carriers, the so-called NVOCCs, are not actually in the business of carrying cargo at all. These organizations were formed in 1984 and recognized in 1984 in order to help very small shippers who would not ordinarily have enough cargo to fill an entire container, who would hire these NVOCCs to consolidate the cargo and put them in the container. But it is very, very clear that they are not a carrier, they don't own ships, they don't have the expense of having an entire shipping company at their disposal in building ships and operating ships and everything else. Yet under the Gorton amendment, they would want to be treated just like a shipper would be treated and yet not have any of the expenses of a common carrier. That is wrong. That is why it was not done. It is wrong to say they are going to get special treatment and be treated just like an international shipping company with all of their expenses because in fact they are not so. Yet the Gorton amendment would basically accord these intermediary companies, who actually do not perform any transportation function itself, the same contractual rights that an ocean carrier enjoys, without any of the expense, without any of the liability, without any of the responsibility. That is simply not right, and it is not correct. I submit that this is a hindrance to small business because the small NVOCCs could not do this. They do not have enough cargo to be able to provide these types of special deals. So the small NVOCCs would not be helped at all. What it would help basically is a large number of foreign NVOCCs, particularly from the European theater, who would be able to assimilate large enough amounts of cargo in order to participate under the Gorton amendment. This would not help small intermediaries at all. They simply do not have the capacity to benefit from it. Small NVOCCs, by virtue of the modest cargoes that they handle, as I have said, would not be able to take advantage of the Gorton amendment. Only the big, huge megacompanies out of Europe and foreign companies who are our competition would be able to participate. America's small businesses, I think, do not deserve this type of treatment. So I just conclude by saying, No. 1, it not fair to the small companies in America. It helps the larger ones basically in Europe; and that is not our responsibility. In addition to that, it is a killer amendment. The 4 years of hard work led by so many on this committee-- including Senator Gorton, who has been, I think, very helpful in putting this package together; we differ on this one amendment--but the whole thing would go down the drain, and we would not have the moderate reform of the Shipping Act that I think is so important. I hope at the appropriate time those who are managing the legislation, Senator Hutchison and others, will make a motion to table the Gorton amendment. I intend to support that motion to table and hope that in fact it is tabled and we can go along and proceed to final passage in an expedited fashion. Mr. President, we have been laboring long and hard over the past four years to reformulate, and further deregulate the ocean shipping industry. S. 414, the Ocean Shipping Reform Act, reflects an effort to compromise the sometimes dissimilar interests of the international ocean shipping industry, from the ocean carriers and shippers and shipping intermediaries to the interests of U.S. ports and port-related labor interests such as longshoremen and truckers. The effort to provide further deregulation has been difficult due to some of the unique characteristics of international liner shipping. Currently, every nation affords ocean liner shipping companies an exemption from the relevant antitrust or competition policies that regulate competition for domestic companies. Given the need to provide some regulatory oversight to protect against abuse of the grant of antitrust immunity, it has been difficult to balance the desire for further deregulation. However, I feel that we have reached a workable agreement which almost all parties can support. It is safe to say that our ocean shipping industry affects all of us in the United States as currently 96% of our international trade is carried on board ships, but very few of us fully understand the ocean shipping industry. International ocean shipping is an over half a trillion dollar annual industry that is inextricably linked to our fortunes in international trade. It is a unique industry, in that international maritime trade is regulated by more than just the policies of the United States, in fact, it is regulated by every nation capable of accepting vessels that are navigated on the seven seas. It is a complex industry to understand because of the multinational nature of the trade, and its regulation is different from any of our domestic transportation industries such as trucking, rail, or aviation. The ocean shipping industry provides the most open and pure form of trade in international transportation. For instance, trucks and railroads are only allowed to operate on a domestic basis, and foreign trucks and railroads are required to stop at border locations, with cargo for points further inland transported by U.S. firms. International aviation is subject to restrictions imposed as a result of bilateral trade agreements, that is, foreign airlines can only come into the United States if bilateral trade agreements provide access into the United States. However, international maritime trade is not restricted at all, and treaties of friendship, commerce, and navigation guarantee the right of vessels from anywhere in the world to deliver cargo to any point in the United States that is capable of accommodating the navigation of foreign vessels. The Federal Maritime Commission (``FMC'') is charged with regulating the international ocean shipping liner industry. The ocean shipping liner industry consists of those vessels that provide regularly scheduled services to U.S. ports from points abroad, in large part, the trade consists of containerized cargo that is capable of being moved on an international basis. The Federal Maritime Commission does not regulate the practices of ocean shipping vessels that are not on regularly scheduled services, such as vessels chartered to carry oil or chemicals, or bulk grain or coal carriers. One might ask why regulate the ocean liner industry, and not bulk shipping industry? The answer is that the ocean liner industry enjoys a worldwide exemption from the application of U.S. antitrust laws and foreign competition policies. Also, the ocean liner industry is required to provide a system of ``common carriage,'' that is, our law requires carriers to provide service to any importer or exporter on a fair, and non-discriminatory basis. The international ocean shipping liner industry is not a healthy industry, in general, it is riddled with trade distorting practices, chronic over-capacity, and fiercely competitive carriers. In fact, rates have plunged in the trans-pacific trade to the degree that importers and exporters are expressing concerns about the overall health of the shipping industry. The primary cause of liner shipping overcapacity is the presence of international policies designed to promote national-flag carriers and also to ensure strong shipbuilding capacity in the interest of national security. These policies include subsidies to purchase ships and to operate ships, tax advantages to lower costs, cargo reservation schemes, and national control of shipyards and shipping companies. This results in an industry which is not completely driven by economic objectives. For instance, one of the largest shipping companies in the world, China Overseas Shipping Company (``COSCO'') is operated by the government of China, much in the way the U.S. government controls the Navy, however, the government of China is not constrained by considerations that plague private sector companies. Historically, ocean shipping liner companies attempted to combat ``rate wars'' that had developed because of the situation of over- capacity by establishing shipping conferences to coordinate the practices and pricing policies of liner shipping companies. The first shipping conference was established in 1875, but it was not until 1916 that the U.S. government reviewed the conference system. The Alexander Committee (named after the then-Chairman of the House Committee on Merchant Marine and Fisheries) recommended continuing the conference system in order to avoid ruinous ``rate wars'' and trade instability, but also determined that conference practices should be regulated to ensure that their practices did not adversely impact shippers. All other maritime nations allow shipping conferences to exist immune from the application of antitrust or competition laws, and presently no nation is considering changes to their shipping regulatory policies. In the past, U.S. efforts to apply antitrust principles to the ocean shipping liner industry were met with great difficulty, since foreign governments objected to the application of U.S. antitrust laws to the business interests of their shipping companies, and to the exclusion of their own laws on competition policy. Many nations have enacted blocking statutes to expressly prevent the application of U.S. antitrust laws to the practices of their shipping companies. As a result of these blocking statutes, U.S. antitrust laws would only be able to reach U.S. companies and would destroy their ability to compete with foreign companies. With the difficulties in applying our antitrust laws, U.S. ocean shipping policy has endeavored to regulate ocean shipping practices to ensure both that the grant of antitrust immunity is not abused and that our regulatory structure does not contradict the regulatory practices of foreign nations. The current regulatory statute that governs the practices of the ocean liner shipping industry, is the Shipping Act of 1984. The Shipping Act of 1984 was enacted in response to changing trends in the ocean shipping industry. The advent of intermodalism and containerization of cargo drastically changed the face of ocean shipping, and nearly all liner operations are now containerized. Prior to the Shipping Act of 1984, uncertainty existed as to whether intermodal agreements were within the scope of antitrust immunity granted to carriers. In addition, carrier agreements were subject to lengthy regulatory scrutiny under a public interest-type of standard. Dissatisfaction with the regulatory structure led to hearings and legislative review in the late 1970s and early 1980s. In the wake of passage of legislation deregulating the trucking and railroad industry, deregulation of the ocean shipping industry was accomplished with the enactment of the Shipping Act of 1984. The Shipping Act of 1984 continues antitrust immunity for agreements unless the FMC seeks an injunction against any agreement it finds ``is likely, by a reduction of competition, to produce an unreasonable reduction in transportation service or an unreasonable increase in transportation cost.'' The Act also clarifies that agreements can be filed covering intermodal movements, thus allowing ocean carriers to more fully coordinate ocean shipping services with shore-side services and surface transportation. One can easily measure the success of this provision, in examining the number of railroad double stack services, a rail service that was actually pioneered by U.S.-flag shipping companies, that have promulgated since the enactment of the Shipping Act of 1984. The Shipping Act of 1984 attempts to harmonize the twin objectives of facilitating an efficient ocean transportation system while controlling the potential abuses and disadvantages inherent in the conference system. The Act maintains the requirement that all carriers publish tariffs and provide rates and services to all shippers without unjust discrimination, thus continuing the obligations of common carriage. In order to provide shippers with a means of limiting conference power, the Shipping Act of 1984 made three major changes: (1) it allowed shippers to utilize service contracts, but required the essential terms of the contract to be filed and allowed similarly situated shippers the right to enter similar contracts; (2) it allowed shippers the right to set up shippers associations, in order to allow collective cargo interests to negotiate service contracts; and (3) it mandated that all conference carriers had the right to act independently of the conference in pricing or service options upon ten days' notice to the conference. Amendments to the Merchant Marine Act, 1920, and the passage of the Foreign Shipping Practices Act of 1988, strengthened the FMC's oversight of foreign shipping practices and the practices of foreign governments that adversely impact conditions facing U.S. carriers and shippers in foreign trade. The FMC effectively utilized its trade authorities last year to challenge restrictive port practices in Japan, and after a tense showdown, convinced the Japanese to alter their practices that restrict the opportunity of carriers to operate their own marine terminals. The changes that will be required to be implemented under this agreement will save consumers of imports and exporters trading to Japan, millions of dollars, and the FMC deserves praise for hanging tough in what was undeniably a tense situation. Ten years later, after the enactment of the Shipping Act of 1984, we started anew on the process of providing a deregulated shipping environment to allow our shippers to become more competitive in international trade, and to provide more contractual flexibility to our ocean shipping companies. After four years of stops and starts, I think that we have reached a point where nearly all sectors of the maritime transportation community can get behind a common proposal for change. It has not been easy to balance the different interest involved in this legislation because of the competing differences of each of their needs, but I think that we have had each of the different sectors willing to give up a little of what they hoped to get in order to move the bill forward, and I would congratulate the private sector representatives for their willingness to compromise to move the process forward. The Ocean Shipping Reform Act moves forward to provide further deregulation to the ocean shipping industry, while at the same time, balancing the need for a degree of oversight given the continued provision of immunity from antitrust laws. The bill will not alter the structure of the FMC. The FMC is a small independent agency with an annual appropriation of $15 million which oversees over one half a trillion dollars of trade. It is important to note, that the agency's status of independence allows it to effectively fulfill its trade opening related functions without interference from other sorts of considerations. We had considered the possibility of merging the functions of the Federal Maritime Commission and the Surface Transportation Board, but ultimately concluded that the combination of the two agencies did not save the taxpayer anything because the agencies would have no real overlap of responsibility. One of the major problems in moving forward with legislative change in this area was the need to provide additional service contract flexibility and confidentiality, while balancing the need to continue oversight of contract practices to ensure against anti-competitive practices immunized from our antitrust laws. I think the contracting proposal embodied in S. 414 adequately balances these competing considerations. The bill transfers the requirements of providing service and price information to the private sector, and will allow the private sector to perform functions that had heretofore been provided by the government. The bill broadens the authority of the FMC to provide statutory exemptions, and reforms the licensing and bonding requirements for ocean shipping intermediaries. I have been contacted by Senators Lautenberg and Moynihan about their concerns for the freight forwarding community, and their desire to set mandatory or reasonable compensation for forwarding services provided under a shipping contract. While we were unable to provide a legal requirement for forwarder compensation, I would urge the FMC to continue to be vigilent to ensure that forwarders and forwarding expertise is not jeopardized in this new and more deregulated environment. The forwarding community provides valuable expertise to the shipping community and I will continue to monitor the impacts of this legislation to ensure that it does not adversely impact forwarders. Additionally, we were able to provide less stringent report guidance about what sort of activity should be monitored by the FMC to ensure against unjust discrimination against shipping intermediaries at the request of Senator Harkin, and I would like to thank him for his imput on this legislation. Importantly, the bill does not change the structure of the Federal Maritime Commission. The FMC is a small agency with a annual budget of about 14 million dollars. When you subtract penalties and fines collected over the past seven years, the annual cost of agency operations is less than $7 million. All told, the agency is a bargain to the U.S. taxpayer as it oversees the shipping practices of over $500 billion in maritime trade. Added benefit to the U.S. public accrues when the FMC is able to break down trade barriers that cost importers and exporters millions in additional costs, such as what recently occurred when the FMC challenged restrictive Japanese port practices. The FMC is an independent regulatory agency that is not accountable to the direction of the administration. Independency allows the FMC to maintain a more aggressive and objective posture when it comes to the consideration of eliminating foreign trade barriers. When we first assessed the issue of agency structure we considered appending the functions of the FMC to a new enlarged Surface Transportation Board (``STB''). However, the functions performed by the STB are quite different than the FMC functions that would remain after implementation of the deregulatory changes provided in S. 414 and the Congressional Budget Office did not estimate any savings through a merger approach. Additionally, the initial proposal to merge the functions of the FMC and the STB would have run afoul of the Appointments Clause of the Constitution. Ultimately, we decided to pursue solely the needed regulatory changes, and not needlessly alter the structure of the agency for no real purpose. S. 414 also provides some additional protection to longshoremen who work at U.S. ports. The concerns expressed by U.S. ports and port- related labor interests revolved around reductions in the transparency afforded to shipping contracts, and the potential abuse that could occur as a result of carrier antitrust immune contract actions. In order to address the concerns of longshoremen who have contracts for longshore and stevedoring services, S. 414 sets up a mechanism to allow the longshoremen to request information relevant to the enforcement of collective bargaining agreements. I would also like to thank Senators Hutchison, Lott and Gorton for their efforts on this bill. Additionally, the following staffers spent many hours meeting with the affected members of the shipping public and listening to their concerns about our proposal and I would like to personally thank Jim Sartucci, Carl Bentzel, Clyde Hart, and Jim Drewry of the Commerce Committee staff, Carl Biersack of Senator Lott's staff, Jeanne Bumpus of Senator Gorton's staff, Amy Henderson of Senator Hutchison's staff as well as my own staffers, Mark Ashby and Paul Deveau. It is my hope that our progress on ocean shipping will spill over to our efforts to implement the OECD Shipbuilding Trade Agreement, so we can move forward with another positive piece of legislation for the maritime industries. I yield the floor. Mr. GORTON addressed the Chair.

Mr. BREAUX. The letter basically says that: We understand that Senator Slade Gorton plans to offer an amendment . . . that would alter current law and allow non- vessel operating common carriers (NVOCCs) to offer confidential service contracts directly to the proprietary owners of the cargo. Some interests have argued that the retention of current law would disadvantage smaller volume shippers who might utilize [the non-vessel operating common carriers] in order to obtain competitive rates with larger volume shippers. They point out: However, the perceived benefits that smaller shippers might receive from the ability of NVOCCs to enter into service contracts with their customers is largely misunderstood. Under current law, NVOCCs are allowed to enter into service contracts with carriers and this can generate a significant cost savings that is passed onto shippers. This would not change under the latest version of S. 414. NVOCCs would however benefit from the provisions allowing confidentiality of certain terms in their contracts with carriers. Smaller volume shippers would also have the option to consolidate their cargoes by joining shippers associations who may then negotiate lower rates as larger volume shippers. The point is pretty clear that this group opposes the amendment of the Senator from Washington. I would like to list for the Record the ones who have signed this letter because it indeed is significant, and that is across-the-board opposition. It is signed by the American Association of Port Authorities; by American President Lines, Limited; by the Council of European and Japanese Shipowners' Associations; by the Crowley Maritime Corporation, a major shipping company; the International Longshoremen's Association; by The Chamber of Shipping of America; by The National Industrial Transportation League; by Sea-Land Service, one of the largest carriers in the world; by the Transportation Trades Department of the AFL-CIO. So whether you are talking about the workers who handle the cargo, or by the port authorities who have the cargo shipped through their ports, or by the ship carriers who are actually carrying the cargo, it is pretty unanimous agreement that this is not the right thing to do. Let us support the compromise. Everything in that compromise is a positive step forward. It may not be as much as some would want, but it is far better than the current law. It allows some more decontrol, allows some more deregulation, more competition. And that is good. But it is simply unfair to say to people who have no responsibility for owning ships or the expense of running ships that they are going to allow them to have the same advantages as a shipping company does. It simply would break the balance in this industry, which I think is very important to preserve. I think the bill is a good bill. It took 4 years to get us to this point. These compromises were not entered into behind the scenes, but were debated on a regular basis among all the active participants. This is a good bill. It should be passed. The Gorton amendment should be tabled.

Mr. BREAUX

Mr. BREAUX. Mr. President, I rise in opposition to the Gorton amendment, which would give non-vessel-operating common carriers, or NVOs, the right to offer service contracts to shippers--that is, the importers and exporters--just as do vessel-operating ocean common carriers. NVOs do not own or operate vessels. They are middlemen, who act as carriers in relation to their shipper customers, and who then act as shippers when they offer those cargoes to vessel-operating carriers for transport. NVOs were first legislatively recognized as a legal entity in the 1984 Shipping Act, in recognition that NVOs can provide specialized attention and service to small shippers whose minimal cargo volumes are not always worth the time and attention of large vessel-operating carriers. No other nation has legally recognized the concept of non-vessel-owner-common carriers. Originally, NVOs consolidated the cargoes of several shippers into a container and then took advantage of the full container rates offered by ocean carriers. There are thousands of NVOs doing business in the United States, all of whom are required to file their rates, to adhere to their rates, and to be bonded to establish their financial responsibility to their customers. It should be noted that S. 414 will reduce the cost of tariff filing by eliminating the requirement that the federal government collect and disseminate tariff information, and would replace this system with a requirement that tariff information be publicly available through a private sector resource, such as the internet or other private sector information system provider. This system has been working well for 14 years. There is no reason to change it. Small shippers--with only the occasional box or two of cargo to be transported--have come to depend on NVOs for the care and personal attention that a larger carrier cannot offer. But some NVOs have grown immeasurably in size, primarily those that are based in Europe, and are now competing directly for cargo with the major U.S. and foreign shipping lines. It is precisely these NVOs who are not satisfied with their current status, and insist that despite the fact that they have none of the expenses attendant to actually operating vessels, want to be treated like a vessel-operating common carrier in every respect. They want to offer service contracts to shippers and groups of shippers who can afford to promise large volumes of cargo in return for more favorable rates. It is not fair to the vessel-operating common carriers serving our trades, with their huge capital investments, that they be put on par with entities taking advantage of the fiction of current law calling them carriers. And it is especially not fair that the small ``mom and pop'' NVOs, who are not in a position to compete with some of the NVO giants that have emerged, may be swallowed up by them if the larger ones are allowed to offer service contracts. Small NVOs, by virtue of the modest cargoes they handle, will not be able to take advantage of the Gorton amendment; only the mega-companies will. America's small businesses do not deserve this treatment. This amendment is not about protecting the interests of small business, it is actually about treating large multinational forwarding companies the same way that we would ocean carriers. The end result would be to provide a disincentive to actually own and operate ships. Why actually own and operate ships if you could function in the same fashion as an ocean carrier without actually having to own or control any of the transportion functions or liabilities. Moreover, S. 414, as revised by the Hutchison, Lott, Breaux amendment, represents a delicately crafted compromise reflecting the interests of all sectors of the shipping industry, including vessel- and non-vessel-operating common carriers, as well as shipper, forwarder, port and labor interests. The resulting documents cannot be altered in a piecemeal fashion without upsetting that balance. No one in this compromise got exactly and completely what was wanted; everyone won a little and lost a little. That's what a compromise is. I urge my colleagues to vote against destroying several years of hard work to come up with a fair and viable revision of our shipping laws. I would like to thank my colleagues, Senators Hutchison, Lott and Gorton for all of the work that they have put into this measure, and I urge you to vote against the Gorton amendment. Mrs. HUTCHISON addressed the Chair.

Mr. BREAUX

Mr. BREAUX. Mr. President, I am pleased to join Senator Coverdell today in introducing the ``Federal Facilities Clean Water Compliance Act of 1998''. My primary reason for sponsoring the bill with the Senator from Georgia is to make the federal Clean Water Act equitable by requiring that it apply to and be enforced against the federal government. Currently, states, local governments and the private sector do not have immunity from the act's enforcement. By the same principle, the federal government should not be granted such immunity from the clean water statute and this bill provides that parity. The bill also provides that the federal government would be subject to all the same enforcement mechanisms that apply to states, local governments and the private sector under the Clean Water Act. Fairness, safety, public health and environmental protection all dictate that Federal agencies should be held to the same standards for water pollution prevention and control as apply to states, local governments and the private sector. Equity is ensured by the Coverdell-Breaux bill because all levels of government and the private sector would be treated the same under the Clean Water Act's enforcement programs. No one would be allowed immunity. To paraphrase a well-known adage, what's good for states, local governments and the private sector in terms of clean water should be good for the federal government. In addition to the provisions stated previously, the Coverdell-Breaux bill reflects the adage's fairness principle in another fashion. The bill would hold the federal government accountable to comply not only with its own clean water statute, but also with state and local clean water laws. Again, equity would be upheld. And, safety, public health and environmental protection would be strengthened. Other provisions are contained as well in the legislation which Senator Coverdell and I are introducing today. For example the EPA administrator, the Secretary of the Army and the Secretary of Transportation would be authorized to pursue administrative enforcement actions under the Clean Water Act against any non-complying federal agencies. It also includes provisions for federal employees' personal liability under the act's civil and criminal penalty provisions and a requirement that the federal government pay reasonable service charges when complying with clean water laws. Over the past 25 years, the United States has made dramatic advances in protecting the environment as a result of the Clean Water Act. We have all benefitted as a result. Today, I encourage other Senators to join Senator Coverdell and I as cosponsors of the bill to bring equity to the clean water program and to make possible the expansion of its public and private benefits.

Mr. BREAUX

Mr. BREAUX. Mr. President, I am pleased to join Senator Coverdell today in introducing the ``Federal Facilities Clean Water Compliance Act of 1998''. My primary reason for sponsoring the bill with the Senator from Georgia is to make the federal Clean Water Act equitable by requiring that it apply to and be enforced against the federal government. Currently, states, local governments and the private sector do not have immunity from the act's enforcement. By the same principle, the federal government should not be granted such immunity from the clean water statute and this bill provides that parity. The bill also provides that the federal government would be subject to all the same enforcement mechanisms that apply to states, local governments and the private sector under the Clean Water Act. Fairness, safety, public health and environmental protection all dictate that Federal agencies should be held to the same standards for water pollution prevention and control as apply to states, local governments and the private sector. Equity is ensured by the Coverdell-Breaux bill because all levels of government and the private sector would be treated the same under the Clean Water Act's enforcement programs. No one would be allowed immunity. To paraphrase a well-known adage, what's good for states, local governments and the private sector in terms of clean water should be good for the federal government. In addition to the provisions stated previously, the Coverdell-Breaux bill reflects the adage's fairness principle in another fashion. The bill would hold the federal government accountable to comply not only with its own clean water statute, but also with state and local clean water laws. Again, equity would be upheld. And, safety, public health and environmental protection would be strengthened. Other provisions are contained as well in the legislation which Senator Coverdell and I are introducing today. For example the EPA administrator, the Secretary of the Army and the Secretary of Transportation would be authorized to pursue administrative enforcement actions under the Clean Water Act against any non-complying federal agencies. It also includes provisions for federal employees' personal liability under the act's civil and criminal penalty provisions and a requirement that the federal government pay reasonable service charges when complying with clean water laws. Over the past 25 years, the United States has made dramatic advances in protecting the environment as a result of the Clean Water Act. We have all benefitted as a result. Today, I encourage other Senators to join Senator Coverdell and I as cosponsors of the bill to bring equity to the clean water program and to make possible the expansion of its public and private benefits.

Mr. BREAUX

Mr. BREAUX. I thank Senator Gregg for his unwavering leadership on this issue. It has been a pleasure to work with him over the past year. I also want to thank Chairman Roth for his leadership. Times have certainly changed since the days when no one would even talk about Social Security reform. Today, we have key members of the Senate presenting innovative ideas about how to address the looming liabilities of the Social Security program. I applaud Chairman Roth's efforts because he is moving this debate forward. This is critical because the motto must be ``sooner rather than later''. There is no better time to tackle entitlement reform than during good economic times. While SS's financing is projected to pay full benefits until 2029--the strain on the Federal budget will begin much earlier, only 10 years from now. The Social Security Advisory Council could not agree on an approach to reform Social Security; however, they all agreed that early action should be taken. This call has been echoed time and time again by the General Accounting Office, Alan Greenspan, Chairman of the Federal Reserve Board, as well as most other experts. The budget resolution already contains Sense of the Senate language regarding the budget surplus and Social Security reform. It reads as follows: ``Congress should use unified budget surpluses to reform Social Security for future generations . . .'' I support Chairman Roth's Sense of the Senate because it takes this language a step further. It suggests that individual accounts are the direction in which Social Security reform should move. I agree with this. The American people will hear again and again over the next several months about the financial instability of Social Security--about the promises made that we can no longer afford to keep. Americans will also hear about what is necessary to put Social Security on sound financial footing--the difficult sacrifices and the tough choices. This dialogue will only compound the already low level of confidence most Americans have in our nation's public retirement system. I adamantly believe we must do something to reverse this trend. We must provide some good news in the middle of this debate. If we include individual accounts within Social Security reform we are giving all Americans a new chance to provide substantial retirement savings for themselves--that is the good news. This Sense of the Senate does not dictate or even suggest how these individual accounts should be administered or that they be done independently of fundamental Social Security reform. Senator Gregg and I have our own ideas about how Social Security should be reformed and, specifically, how individual accounts should be set-up and administered. I look forward to our ideas being discussed and debated during the coming weeks and months, along with all the other ideas being put on the table. The Aging Committee, which I am pleased to serve as Ranking Member, is looking at this issue closely. I hope the Finance Committee will hold hearings as soon as May. In looking to Social Security reform we cannot lose sight of the larger budget picture and the difficult steps we have taken in this Congress to get our country's books in order. What we tried to do with the balanced budget--and what we should be trying to do with the surplus--is reduce this country's overall financial liabilities. As stated in the budget resolution, Social Security's unfunded liability stands at around $3 trillion. Obviously, Social Security is a large part of this country's debt and must be addressed. Again, it must be addressed sooner rather than later. In conclusion, I want to again thank Chairman Roth and Senator Gregg for their efforts in moving this debate forward.

Mr. BREAUX

Mr. BREAUX. I thank the Chair. I want to start off by commending both of the speakers who have previously spoken on this issue, especially Senator Moynihan. Social Security has always been referred to as the third rail of politics. I might add that Medicare is probably also a part of that third rail. The theory was that, if you touch it politically, you die. I mean, you can't talk about it because it has always been too controversial with all the groups and organizations around the country that, if you ever tried to change anything in the area of Social Security, people will kill you politically. We are running out of options in 1998. Unless some changes are made, the program is not going to be there. It is not going to exist. I commend Senator Moynihan for his courage and for his intelligence and for his long history of involvement in this particular area, talking about not just what the situation is today, but talking about the future, and is it going to be there for our children and our grandchildren? People who are in retirement programs today are in good shape from the standpoint of knowing the program is going to be there for the rest of their lives. What we are really talking about, however, is, is it going to be there for their children and grandchildren and future generations? This is not 1935. I mean, when the program was designed by President Roosevelt and Congress, in those days it was a program that really was targeted to what was happening at that time. I commend particularly the recommendations of the senior Senator from New York that we have a program that now establishes or allows people to establish individual accounts. That is very, very important. We invest the Social Security trust funds in Government securities. You know how much money we get for their investments? About 2.3 percent. That is not a good investment. We are only getting a 2.3 percent, on average, return from the Social Security investments. That does not make sense in 1998. When the stock market is increasing at a 15 percent rate of return, we should be allowing people to participate in something that will give them more money back than 2.3 percent which we get now for Social Security investments. The second thing that allows, as I understand it, is patterned after the thrift savings accounts which we have an opportunity to do as Federal employees. Every Federal employee, including myself as a Senator, and House Members, all Federal employees have an option of putting their retirement moneys into a high-risk plan or a moderate- risk plan or a low-risk plan with no risk at all but a lower return, in order to build up our savings. That is much better, in my opinion, than Social Security retirees have with the 2.3 percent return with regard to the Social Security retirement plan. Here is the problem. Social Security today is pay as you go. The problem is, we have fewer people paying and more people going. We have fewer people contributing the money and more and more people going into retirement. So we have a pay-as-you-go system, but there are fewer and fewer people paying and more and more people going. What do I mean by that? It is very simple. In 1950, there were 16.5 people paying for every one person going into retirement. Today, we have about three people paying for every one person going. In the year 2030, there are going to be only two people paying for every person going. We have 77 million baby boomers who are getting ready to go. They are going into retirement starting in 2010. The question is, do we have enough people paying for all of those people that are going? The answer is clearly no. So I very much congratulate the senior Senator from New York and Senator Kerrey from Nebraska for having the political courage to come to the floor and talk about this. One of my concerns is that it is voluntary. I think I would like to take it a step further and say you have to, if you are going to get a tax cut, you have to put it into an individual retirement account. I am concerned a lot of people may take the money, the dough, and not put it into a savings account. But we still have the obligation to take care of their retirement. I think we need to talk about that. I mean, I think you are right on target and are moving in the right direction. This is a major contribution to something that we spend too little time addressing.

Mr. BREAUX

Mr. BREAUX. Mr. President, I suggest the absence of a quorum.

Mr. BREAUX

Mr. BREAUX. Thank you, Mr. President, for this opportunity to discuss with you and my distinguished colleague from Louisiana, Senator Landrieu, our proposal to establish a nationally-level set-aside program from the federal highway trust fund to help states to finance certain types of nationaliy-significant intermodal projects, of which Louisiana has several. We appreciate your consideration of our proposal, Mr. President, to set aside $100 million for the fiscal years 1998-2003 for obligation by the Secretary for intermodal projects. We want to continue working closely with you and other members on its behalf when the Senate and House go to conference on the surface transportation bill. Congress acted wisely in the 1991 ISTEA by creating the National Highway System, NHS, which brought focus to intermodalism as part of the nation's surface transportation policy. In addition to the NHS account, funds from the Surface Transportation Program (STP) may be used by the states for intermodal projects. The use of NHS and STP funds for intermodal projects are left to the discretion of the states and intermodal projects are but one option available to them. I also hope that funds authorized for the Trade Corridor and Border Crossing Planning and Infrastructure Program in S. 1173 will be available for use on intermodal projects in port areas and for transportation systems which connect to ports. Equal emphasis needs to be given in this program to intermodal projects in states such as Louisiana, where the combination of ports, waterways, roads, rail and airports constitute some of the finest examples of intermodalism on a national and international scale. As helpful as these three programs have the potential to be under ISTEA II for nationally-significant intermodal projects, more funding is needed to help the states build them. For example, the New Orleans Regional Intermodal Project brings together in a matter of a few square miles major rail, water, air and highway transportation centers. This project is designed to increase the transportation efficiency of the entire metropolitan area, including the Parishes of Orleans, Jefferson, St. Tammany, St. Bernard, and St. Charles. The New Orleans Regional Intermodal Project represents a unique implementation program focused on closer integration of several highway, port, rail, and air facilities in the Earhart corridor, from the Tchoupitoulas port complex on the Mississippi River to the new Air/ Cargo facilities at New Orleans International Airport. This initiative is as important to the nation as it is to the New Orleans metropolitan area. Because of its geographic location, the area is the hub for several national cargo transportation systems. This relatively small area is the juncture point between several major north/south and east/west railroad lines; two major north/south and east/west interstate highways; a major international cargo and passenger airport; and two of the most significant waterway systems in the country, the Mississippi River and the Intracoastal Waterway. When one combines the services and impact of the intermodal complexes at Baton Rouge and the Port of South of Louisiana at LaPlace, each of which should be considered for this type of funding, with those of the New Orleans regional complex, then the order of magnitude and impact truly is one of international as well as national significance. In a similar manner, other Louisiana intermodal projects with national significance should be considered. These include: Much-needed improvements to Louisiana Highway 1, from the mammoth Port Fourchon area on the Gulf of Mexico to U.S. Highway 90, because of the major contribution this route is playing in the development of oil and gas fields in the Gulf; this intermodal complex is increasing the delivery of domestic energy supplies and strengthening national security by limiting national dependency on fuel imports; highways, waterways and pipelines make Port Fourchon one of the most important intermodal complexes in the nation today and Louisiana Highway 1 a major roadway which connects the Gulf of Mexico to other major intermodal systems via U.S. Highway 90; developments in the Central and Northwest Louisiana regions, which include the growing highway, port, rail, water and air complexes along the Red River, starting at the Caddo-Bossier Port, continuing to the Ports of Natchitoches and Alexandria, and finally linking with the Mississippi River; this link brings together goods and services from the Central and Midwestern United States to the water, rail, air and highway systems leading to and from the Mississippi River and its internationally-significant intermodal systems; Barksdale Air Force Base, located at the juncture of two major interstate systems in the Shreveport-Bossier City area of Louisiana, and home of the 8th Air Force, together with Ft. Polk, home of the Army's Joint Readiness Training Center, located at Leesville, Louisiana, are major military installations in the state. It is critical that strategic national defense installations such as these have the proper access and connections to transportation systems, including roads, rail and waterways, to respond effectively in time of need. An intermodal set- aside at the national level would be another means to help the states address the transportation system needs for these military installations. It is hoped, Mr. President, that the type of fund we envision could also be used to provide additional funding for critical projects such as extending Interstate 49 in Louisiana, from its current Southern terminus at Lafayette to New Orleans. An extension of I-49 from Lafayette to New Orleans is much-needed from a national perspective because of the benefits it would bring by linking goods and services from the Central and Midwestern United States to the New Orleans region's intermodal complexes. As important, the extension of I-49 from Lafayette to New Orleans would link the expanding energy industry at Port Fourchon and the trade from other ports along that route, such as the Ports of Iberia, West St. Mary, and Morgan City, to the New Orleans region's intermodal systems. Tying into that system, too, could be trade from the port at Abbeville, just south of Lafayette. I-49 also connects with Interstate 10, a major interstate corridor which runs from Florida to California. In Louisiana, I-10 westbound from Lafayette has ports which connect directly or indirectly to it, such as the major Port of Lake Charles, and those at Cameron and Mermentau. The full benefits of these surface transportation systems cannot be fully realized without an investment in the roadways and connectors that will allow true intermodalism. The Louisiana intermodal complexes and systems represent the best opportunity for this nation to leverage a small investment in infrastructure to gain major dividends in efficiency that will benefit our entire national economy.

Mr. BREAUX

Mr. BREAUX. Mr. President, last Friday, March 6, the newly appointed National Bipartisan Commission on the Future of Medicare held its first meeting. Chaired by myself and Congressman Bill Thomas, Administrative Chairman, the commission was established by last year's balanced budget agreement to thoroughly study and assess the entire program--top to bottom--and make specific recommendations to Congress and the Administration for fundamental Medicare reform. Our target deadline for getting these bipartisan, consensus recommendations in your hands is March 1, 1999. When I say consensus here, I mean that any recommendation we put forward will have received 11 votes--a super majority of the 17 commission members. I remain optimistic that our recommendations will receive an even higher level of support than that required under the statute. Every member of the commission recognizes how very important it is for us to succeed in coming up with something that can be passed by Congress and signed into law. I think we got the commission's work off to a very good start. We are just beginning what promises to be an exciting year as we come together to protect and preserve a program that we all agree has served us well over the last 33 years. But we also have to face the reality that if Medicare is to be there for another 33 years and beyond, we must look beyond the program's financial solvency and address issues like quality, equity, and efficiency as well. I ask unanimous consent that the text of my opening statement from the first commission meeting on March 6 be printed in the Record.

Mr. BREAUX

Mr. BREAUX. Mr. President, I rise today to introduce legislation to amend Title 28 of the U.S. Code to create two divisions in the Eastern Judicial District of Louisiana: a New Orleans Division, which would be comprised of Jefferson, Orleans, Plaquemines, Saint Bernard, Saint Charles, Saint John the Baptist, Saint Tammany, Tangipahoa, and Washington Parishes; and a Houma Division, which would be comprised of Terrebonnne, Lafourche, Saint James, and Assumption Parishes. It has long been recognized that there is a distinct need for a permanent United States District Court Judge in Houma, Louisiana. The Houma-Thibodaux metropolitan area is the fourth largest in Louisiana, and the area is growing by leaps and bounds, due in no small part to a revitalized oil and gas industry. With this increase in population and commercial activity, the number of court cases filed in the area will likewise grow. This inevitable increase in litigation will mean that an increasing number of people from the Houma-Thibodaux area will be forced to travel to New Orleans to appear in federal district court. This is a difficult, congested, and time-consuming trip. Also, many of the rural areas in the Eastern Judicial District have easier access to Houma than they do to New Orleans. Because of these factors, it makes sense to provide residents of the Houma-Thibodaux area and the surrounding, rural areas access to a federal district court closer to home. A brand new federal courthouse already exists for this very purpose. The George M. Arceneaux Federal Courthouse in Houma, Louisiana, was dedicated for use by the United States District Court for the Eastern District of Louisiana. Unfortunately, this new courthouse is not being used as originally intended. Judges have difficulty making the trip from New Orleans to Houma. As a result, Houma area residents must travel to New Orleans and the new courthouse remains severely under- used. It is for these reasons, Mr. President, that I offer this legislation today. I also want to note that the Assumption, Terrebonne, Lafourche, Saint James, and 29th Judicial District Court Bar Associations have all passed resolutions expressing their support for this legislation. Furthermore, the bill contains language to ensure that neither pending cases nor summoned, impaneled, or actually serving juries will be affected by the change. I urge my colleagues to join me in supporting the passage of this bill. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. BREAUX

Mr. BREAUX. Mr. President, I rise today to introduce legislation to amend Title 28 of the U.S. Code to create two divisions in the Eastern Judicial District of Louisiana: a New Orleans Division, which would be comprised of Jefferson, Orleans, Plaquemines, Saint Bernard, Saint Charles, Saint John the Baptist, Saint Tammany, Tangipahoa, and Washington Parishes; and a Houma Division, which would be comprised of Terrebonnne, Lafourche, Saint James, and Assumption Parishes. It has long been recognized that there is a distinct need for a permanent United States District Court Judge in Houma, Louisiana. The Houma-Thibodaux metropolitan area is the fourth largest in Louisiana, and the area is growing by leaps and bounds, due in no small part to a revitalized oil and gas industry. With this increase in population and commercial activity, the number of court cases filed in the area will likewise grow. This inevitable increase in litigation will mean that an increasing number of people from the Houma-Thibodaux area will be forced to travel to New Orleans to appear in federal district court. This is a difficult, congested, and time-consuming trip. Also, many of the rural areas in the Eastern Judicial District have easier access to Houma than they do to New Orleans. Because of these factors, it makes sense to provide residents of the Houma-Thibodaux area and the surrounding, rural areas access to a federal district court closer to home. A brand new federal courthouse already exists for this very purpose. The George M. Arceneaux Federal Courthouse in Houma, Louisiana, was dedicated for use by the United States District Court for the Eastern District of Louisiana. Unfortunately, this new courthouse is not being used as originally intended. Judges have difficulty making the trip from New Orleans to Houma. As a result, Houma area residents must travel to New Orleans and the new courthouse remains severely under- used. It is for these reasons, Mr. President, that I offer this legislation today. I also want to note that the Assumption, Terrebonne, Lafourche, Saint James, and 29th Judicial District Court Bar Associations have all passed resolutions expressing their support for this legislation. Furthermore, the bill contains language to ensure that neither pending cases nor summoned, impaneled, or actually serving juries will be affected by the change. I urge my colleagues to join me in supporting the passage of this bill. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. BREAUX

Mr. BREAUX. Mr. President, I thank the Senate for accepting the Bond- Breaux amendment to S. 1173. It has been my privilege to cosponsor the proposal with the Senator from Missouri, Senator Bond, and to continue our work together on wetlands-related issues. I express my deepest appreciation to the Majority Leader, Senator Lott, and to the Committee Chairman and Ranking Member, Senator Chafee and Senator Baucus, for their support. I also look forward to working with them on this issue as the intermodal surface transportation bill advances through Congress. The Bond-Breaux amendment proposes to establish a reasonable, responsible wetlands and natural habitat mitigation policy as part of the federal aid highway program. Our language says that mitigation banking shall be the preferred means, to the maximum extent practicable, to mitigate for wetlands or natural habitat which are affected as part of a federal-aid highway project and whose mitigation is paid for with federal funds. The amendment establishes three criteria which are to be met in order to use a mitigation bank: first, the affected wetlands or natural habitat are to be in a bank's service area; second, the bank has to have enough credits available to offset the impact; and third, the bank has to meet federally-approved standards. The Bond-Breaux amendment does not mandate the use of mitigation banks nor does it say they shall be the sole means or the only method used to mitigate for wetlands or natural habitat affected by a federal- aid highway project. Mitigation banks can offer advantages when built and operated responsibly, including achieving economies of scale and providing larger, higher-quality diverse habitat. Again, I'm pleased to join with Senator Bond in sponsoring the amendment, pleased that it has been accepted as part of S. 1173, and appreciative of the support extended for it by Senator Lott, Senator Chafee and Senator Baucus. Thank you, Mr. President.

Mr. BREAUX

Mr. BREAUX. Mr. President, I too am pleased to report on the successful efforts to prepare S. 414 for Senate passage. I would concur with the Majority Leader that the OECD Shipbuilding Agreement bill is badly needed and I believe it is long overdue. I am hopeful that the progress made on S. 414 would provide momentum to pass the OECD Shipbuilding Trade Agreement implementing legislation. At the end of the last session, we prepared a draft Senate floor manager's amendment to this bill and circulated it within the industry and to members of the Senate. That draft manager's amendment was helpful in moving S. 414 along, but it also continued to present some serious problems to various sectors of the maritime community. Accordingly, over the past several months, representatives of those affected maritime sectors have worked to find an acceptable solution and to resolve their differences. With the Commerce Committee staff's help and guidance, a package of modifications to that original manager's amendment have been agreed upon. The diverse segments of the industry--U.S. ocean carriers, foreign ocean carriers, shippers, labor, and the ports--are now in agreement on how to reform and reduce government's role in international ocean transportation. More importantly, all these industry sectors have agreed on meaningful deregulation of the ocean shipping industry to allow greater choice, flexibility, and competition in this transportation mode. Let me say that again. Mr. President, all these industry sectors are now in agreement. Although it is a delicate balance, it is still an agreement. This agreement will lead to greater efficiency in providing ocean transportation services to U.S. importers and exporters, and will benefit American consumers. U.S. importers and exporters will now, under the reforms of S. 414, be able to enter into more comprehensive and productive contractual relationships with ocean carriers. At the same time, S. 414 provides important protections for ports and labor which will safeguard their interests in a more deregulated environment.