Kent Conrad

Mr. CONRAD

Mr. CONRAD. Mr. President, I rise today to express my strong support for the Byrd-Hagel resolution regarding global climate change. I was an original cosponsor of this bipartisan resolution, and I believe it sends an important, commonsense message that we cannot enter into a treaty that requires the United States to limit its emissions of greenhouse gases without requiring developing countries to also agree to limitations on their emissions. Such a proposal would not make environmental sense and it certainly would not make sense for our Nation's economy. This resolution is very simple. It says that a treaty will not be ratified by the U.S. Senate if it does not include both developed and developing countries in binding timetables and emission limitations. It seems to me that the only way the world will be able to stabilize the concentration of greenhouse gases in the atmosphere is if every nation participates in a meaningful way in limiting its emissions. The resolution does not say that all countries must make identical emission reductions; only that they must be participants in limiting greenhouse gas emissions in the same timeframe as the developed world. Mr. President, I fear that a treaty that requires us to place significant restrictions on our economy will only lead to a flight of jobs and capital from this country to nations that do not face greenhouse gas emissions limitations. That could be a potential disaster for our Nation's economy, for its workers, and for our long-term economic stability and growth. So the Byrd resolution also requires the administration to develop a detailed analysis of the potential financial costs and other impacts on our economy. That is not an unreasonable request. We would clearly need to know the potential consequences of any treaty on our Nation's economy before the Senate could be asked to ratify such a treaty. Mr. President, the U.S. Senate has a constitutional duty to advise and consent on treaties negotiated by the administration with other nations. This is a responsibility I take very seriously, and I know every other Member of this body considers it one of our most important duties. I hope the administration will listen carefully to the debate on this resolution, and pay close attention to the guidance provided in the Byrd-Hagel resolution as it negotiates with other nations in preparation for a final meeting in December in Kyoto, Japan. Mr. President, I thank the Chair and yield the floor.

Mr. CONRAD

Mr. CONRAD. Mr. President, the Agriculture appropriations bill just approved by the Senate includes funds for many important programs, and I deeply appreciate the work of Chairman Cochran and Senator Bumpers in putting together this bill. While I appreciate their good work, I deeply regret that funds are not included to provide the final Federal matching funds for several Cooperative State Research, Education, and Extension Service buildings, including one at North Dakota State University, for which State and local matching funds have been provided. I believe this is especially unfortunate because of unique circumstances faced by NDSU in their attempt to complete this important project. The Agriculture Appropriations Subcommittee provided an initial planning grant for this building in fiscal year 1992. After that, the subcommittee provided $1.65 million in the fiscal year 1994 bill as a down payment on the Federal share of this $10 million facility. Unfortunately the House Agriculture Appropriations Subcommittee indicated in its fiscal year 1996 report that the committee would no longer provide Federal funding for these buildings if the projects did not have their state and local matching funds in hand by the time Congress prepared the appropriations bills the following year for fiscal year 1997. Mr. President, this decision created a serious problem for North Dakota because our State legislature only meets every other year. That meant North Dakota State University did not even have an opportunity to seek the State matching funds between the time the House subcommittee issued its notice in the summer of 1995 to provide no additional funding and the time the fiscal year 1997 appropriations bill was considered last summer. The first time our State legislature met following the House subcommittee's decision was January 1997, at which time the legislature provided the State match for this building. In other words, the State provided its share of funds for this building at the first opportunity they had following the announcement by the House subcommittee. This facility is extremely important because the existing facilities at NDSU were constructed in the 1960's and do not meet USDA standards, causing animal health and production research to be curtailed. The new facility would allow expanded research into fighting anti-biotic resistant viruses, enhancing reproductive efficiency in farm animals, developing safer, more effective pharmaceuticals, improving meat animal research to improve food quality, and other important areas of research. Mr. President, it is my strong desire that we are able to find a responsible solution to this situation. I believe terminating Federal funding for this building is premature, and I will continue to work with NDSU, USDA, and my colleagues in the House and Senate to see that this building is completed. I yield the floor.

Mr. CONRAD

Mr. CONRAD. Mr. President, I offer today with my colleague from North Dakota, Senator Dorgan, an amendment that would prevent unintended discrimination against Grand Forks AFB personnel as the Defense Department provides compensation for personal property losses incurred as a result of this spring's unprecedented flooding in the Red River Valley. This legislation has been requested by Air Force Secretary Sheila E. Widnall, Air Force Chief of Staff Gen. Ronald R. Fogleman, and the Commander in Chief of the U.S. Transportation Command, Gen. Walter Kross, with the support of Gen. Howell Estes, Commander in Chief of the U.S. Space Command. As my colleagues are aware, last week I offered this amendment to the fiscal year 1998 Defense authorization bill with Senators Dorgan, Wellstone, Johnson, and Daschle. It was accepted by the Armed Services Committee, but I look forward to its inclusion in the fiscal year 1998 Defense appropriations bill before us as well. This will ensure that both defense measures passed by the Senate this year are in agreement that disaster relief must be provided to personnel on an equitable basis. As I have discussed on the Senate floor on several occasions, Mr. President, this winter and spring were the most severe in my State's history, culminating in a 500-year flood. Damages to property stretched into the billions, and the disruption to families and the community was incalculable. Confronted with a disaster of almost Biblical proportions, the able men and women of Grand Forks AFB helped fight the flood. They manned ``sandbag central,'' helped evacuate the city of Grand Forks, and provided shelter, food, and comfort to thousands of flood refugees. Many Air Force officers and enlisted personnel worked tirelessly, even as their homes were washed away, resulting in almost total personal property losses. Fortunately, current law allows the Defense Department to provide personal property compensation to personnel once personal insurance and any other Federal assistance has been exhausted. Separate compensation from the military is appropriate, Mr. President, in light of the fact that servicemembers, their families, and their property have been put in harm's way as a result of assignment orders. Those residing in Grand Forks AFB housing are currently able to benefit from this assistance. Unfortunately, Mr. President, we have a catch 22 problem. The families that suffered the most--those living off-base in the city of Grand Forks because of on-base housing shortages--are getting no help. This is because existing law prevents ``Federal agencies from paying claims for losses incident to service which occurs at residences not provided by the United States,'' to quote an Air Force analysis. Mr. President, the men and women of Grand Forks AFB were there when their country needed them. The amendment I have offered here again today would ensure that their country does not allow them to endure unfair and unintended discrimination in their hour of need. It would waive the provision that prevents them from receiving assistance. This action would be consistent with earlier legislation passed in 1992 on behalf of Homestead AFB personnel living off-base who had suffered as a result of Hurricane Andrew. On behalf of the more than 700 Air Force families living in the city of Grand Forks when the levees broke, I would like to extend my thanks again to the Senate and the able leadership of the Armed Services Committee for passing this amendment last week. Today, sincere thanks should also go to the distinguished leadership of the Defense Appropriations Subcommittee, to Chairman Stevens and Senator Inouye, for their willingness to work with Senator Dorgan and myself to bring the authorization and appropriations measures into agreement on this important matter. Before closing, Mr. President, I would like to recognize again the exemplary work of everyone at Grand Forks AFB during this spring's flooding. In accepting thousands of flood refugees at the worst of the disaster, the base provided warm, safe housing for countless families. They also provided something else, something even more important--a sense of hope that has helped preserve Grand Forks' sense of community. At a time when nearly the entire city was submerged by the rising floodwaters and its most historic areas burned, the importance of this cannot be overstated. Again, Mr. President, let me thank the committee and the Senate for their careful consideration of this amendment, which will ensure that all Air Force personnel in the flooded area are treated equitably. I look forward to its approval as part of the fiscal year 1998 Defense appropriations bill, retention in conference, and passage into law.

Mr. CONRAD

Mr. CONRAD. I am happy to respond to my colleague from Michigan. It is my understanding that the way this program works, first of all, all personal insurance benefits have to be exhausted, then all other Federal program benefits have to be exhausted, that is, if there is any eligibility for FEMA benefits, those have to be exhausted before this program is available to be administered by the Air Force. As I say, that is my understanding of how the program works. I think that is a reasonable way for it to work because obviously we do not want to be expending Federal dollars where private insurance covers the loss or where other Federal programs cover the loss. The concern that the Air Force has had is they face circumstances here in both North Dakota and Minnesota, by the way, where Air Force base personnel were forced to live off base because of a housing shortage on the base. And those personnel were subjected to this devastating series of circumstances, some of them in North Dakota, some of them in Minnesota. And the Air Force would very much like to be able to compensate them for personal property losses over and above what the insurance will cover, over and above what other Federal programs will cover.

Mr. CONRAD. Mr. President, the amendment that I am offering today is intended to prevent unintended discrimination against personnel at the Grand Forks Air Force Base as the Air Force provides compensation for damages suffered by personnel as a result of this spring's unprecedented flooding. I am joined in this amendment by Senators Dorgan, Wellstone, Johnson, and Daschle. This is an amendment that has been requested by the U.S. Air Force, specifically by Air Force Secretary Sheila Widnall; General Fogleman, the Chief of Staff of the Air Force; and Gen. Walter Kross, the commander in chief of the U.S. Transportation Command. By way of background, Mr. President, North Dakota and Minnesota, as the distinguished occupant of the chair knows well, have suffered from one of the worst winters and spring in our history. The flood that caused the evacuation of both Grand Forks and East Grand Forks was a 500-year flood and caused literally billions of dollars of damage. This picture shows some of the remnants of what we dealt with in that devastating flood. As I have indicated before, if you went up and down the streets of Grand Forks and East Grand Forks immediately after the flood, what you saw was stacks and stacks of everybody's personal property. All of the carpeting, all of the clothing, all of the draperies and appliances, whether it was washers or dryers or refrigerators, they were all out on the curb. You could see what everybody had, because of this devastating flood. In the midst of the flood, of course, we also had this incredible fire break out in downtown Grand Forks. Here you can see a picture of some military personnel helping out as the firefighters fought this devastating fire and, of course, the flood simultaneously. This last picture shows one of the neighborhoods just a few blocks from where the fire hit, and you can see these cars and trucks inundated with water in a neighborhood that was especially hard hit. Well, Mr. President, the point is, we suffered one of the worst floods ever, worst in 500 years. In the face of this, there was great assistance from Air Force base personnel. And they themselves experienced great devastation. Those that did not live on the base, who were forced to live off base because of a housing shortage on the base, are now faced with a Catch-22, because current law allows the Defense Department to provide compensation for personal property losses of up to $100,000 as long as the housing that those Air Force personnel were occupying are Government owned. Unfortunately, about 700 families lived in housing that was off the base in the area most devastated but do not live in Government-owned housing. And their personal property losses can be dealt with by other Government programs, but to the extent they do not cover them, these people are left in the remarkable situation of not being covered. The people on the base, where frankly there was not flooding, they are covered. But the people who are off base who did experience enormous losses are not covered. That is why the top Air Force personnel have asked that we offer this amendment and that we ask our colleagues to pass it so that military personnel are not discriminated against in this very odd way. Mr. President, I say, many of these individuals who were helping to fight the flood and helping to fight the fire were doing it when their own homes were being destroyed. This was truly an act of courage and heroism by these Air Force personnel. And now they find themselves in a circumstance in which those that were on base, they can be helped by an existing Federal program, but those who are off base in the area that was actually hit by the devastating floods cannot be helped. That does not make sense. It is not fair. And we have a chance to correct it. The amendment that I have offered today will, No. 1, waive the discriminatory provision for the purposes of the recent disaster. No. 2, it does not require any new money. I want to make that point very clear. This can be accommodated, according to the Air Force, out of existing programs. And there is sufficient money there to address this circumstance. It does not require any new money. The Air Force put the potential liability at $4 million--not billion. We often talk on the floor here of billions of dollars. But this is a very small item, $4 million. And it would be consistent with earlier actions taken by the Congress after Hurricane Andrew in 1992 on behalf of Homestead Air Force Base personnel living off the base. I again would like to emphasize that this provision has been explicitly requested by General Kross, the Commander in Chief of the U.S. Transportation Command; it has also been requested by General Fogleman, the Chief of Staff of the U.S. Air Force, and by the Air Force Secretary, Secretary Widnall. I hope that my colleagues will see fit to approve this amendment. It is a relatively minor matter in the scheme of things around here. But it will make a significant difference in the lives of these Air Force personnel who were really courageous and heroic in the face of these disasters, and they deserve to be covered just as those who were on base are already covered. I thank the Chair and yield the floor. Mr. President, I suggest the absence of a quorum.

Mr. CONRAD. I thank the Chair.

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

Mr. CONRAD. I thank the Chair. Mr. President, I send an amendment to the desk.

Mr. CONRAD. Mr. President, I ask unanimous consent to set aside the amendments that are currently pending so the amendment that I am offering can be considered.

Mr. CONRAD. Mr. President, I rise in support of the amendment offered by my friend from New Mexico, Senator Bingaman, which would cut the $118 million added to the bill for the space-based laser [SBL] program. As my colleagues are aware, I have long supported development of a national missile defense system to protect our Nation from the threat of a limited accidental or unauthorized ICBM launch from an established nuclear power, and from the threat of attack from a rogue state, such as North Korea, Libya, and Iraq. To ensure that our NMD program makes good fiscal and national security sense, I believe that the system we develop must meet the common sense criteria of affordability, compatibility with our arms control treaties, and utilization of existing technology. These key tests provide a reliable guide for developing an affordable, responsible, and reliable means of countering the limited threat we will face early in the next century. Although sometime in the next century we may do the NMD and theater missile defense missions from space, I do not believe that this is the time to invest $118 million in the SBL. This money would be much better spent if invested in promising missile defense systems we are very close to having today, such as the Minuteman-based NMD option, and the Airborne Laser TMD program of the U.S. Air Force. I also do not believe we need to start a funding stream that would obligate us to spend more than $1 billion over the next 7 years to field only a single SBL demonstrator satellite. With the Minuteman and ABL systems becoming available, there is simply no reason to put us on a slippery slope toward an unnecessary operational SBL deployment that will surely cost tens of billions of dollars. In addition to failing the affordability test, pressing forward with the SBL today represents a clear threat to arms control. As my colleagues may be aware, the ABM Treaty explicitly prohibits space-based missile defense systems, and the Russians have stated clearly their belief that development of such a capability by the United States would lead to a renewed arms race. It is true that the $118 million in question would go toward development of a demonstrator SBL satellite, and that the ABM Treaty permits development of missile defense systems that would not be treaty compliant if operationally deployed. Nevertheless, development of such a capability would logically increase the likelihood of deployment of space weapons before they are necessary or wise. In light of the near- term, treaty-friendly NMD and TMD capability offered by the Minuteman and ABL systems, we would needlessly be putting our Nation on course to violate the ABM Treaty and re-ignite the arms race. Finally, Mr. President, aggressive SBL development today fails the third key test I outlined earlier--utilization of existing technology. Although the SBL would leverage research done on the ABL, the SBL is still new, untested technology. We know much more about how lasers perform in our atmosphere than in space. We have also never deployed weapons in space. Because of these considerations, we could expect costs to grow, testing and deployment schedules to slip, and reliability to be highly questionable. I hope my colleagues would agree that the ABL is a much better investment in laser-based missile defense systems. It will provide the same boost-phase intercept capability as the SBL nearer- term, at a lower cost, and without endangering our arms control agreements. Before closing, Mr. President, I would also note on the subject of technology that even if we were to construct an SBL capability, its satellites would be too massive for any existing U.S. booster rocket to loft into orbit. The one American rocket that could have gotten the job done--the Saturn V that sent the Apollo astronauts to the Moon--was retired over two decades ago. As it stands, the only alternative to investing millions or billions more in a new heavy booster would be using Russian's Proton rocket. The fact that the SBL represents a clear threat to the ABM Treaty leads me to believe that our Russian friends would be far from eager to help us in this regard. Mr. President, the SBL is a fascinating technology, and I commend the committee for their interest in what could several decades from now be the right answer to our missile defense needs. However, this is not the time for the SBL. The Minuteman and ABL systems are not only near-term, but meet the commonsense criteria of affordability, compatibility with our arms control agreements, and utilization of existing technology to an extent the SBL simply cannot. For this reason, I support the Bingaman amendment striking funding for the SBL, and urge my colleagues to support its adoption.

Mr. CONRAD. I move to lay that motion on the table. The motion to lay on the table was agreed to. Mrs. MURRAY addressed the Chair.

Mr. CONRAD. Mr. President, I thank my colleagues. I especially want to thank the ranking member, Senator Levin, from Michigan for his assistance. And I also thank very much the chairman of our committee, Senator Thurmond of South Carolina. I thank them both for their support. I think this is a matter of equity for our Armed Forces personnel. I know they will very much appreciate this assistance.

Mr. CONRAD. I want to, if I can, thank my colleague from Michigan, to say then that this is consistent with what we did after Hurricane Andrew with respect to Homestead Air Force Base personnel, and that the top Air Force officials have been in frequent contact with me on this matter. They think it is a matter of equitable treatment for their forces and that it is important that we take this action. I very much hope that my colleagues will see fit to honor the call of our top Air Force leadership and pass this amendment. I thank the Chair. And I thank my colleague from Michigan. Mr. LEVIN addressed the Chair.

Mr. CONRAD

Mr. CONRAD. I yield myself such time as I might consume.

Mr. CONRAD. We have heard from our friends on the other side with respect this question about imputed income in charts that have been used. I would just ask the Senator from North Dakota if he is aware, if you take imputed income out--take it out--it does not change this chart an iota, it does not change it at all; not a whit? It would change the income amounts for each of these categories, it does not change the relationships at all. The reality is, if you compare these two plans, the top 20 percent of the income groups in the United States under the Finance Committee plan gets 65 percent of the benefits. Under the Democratic plan, they get 20 percent of the benefits. The fourth quintile gets 21 percent of the benefits under the Democratic plan and gets 32 percent of the benefits under the plan out of the Finance Committee. You take imputed income, put it aside, you don't want to use that, although it has always been used here as the measurement for distribution under Republicans and under Democrats. That's the way it has been done. I happen to agree, you ought to leave imputed income out of it. But if you take the cash income, this is the same distribution that you get on these two plans. You have five quintiles, and those five quintiles bear the same relationship. What changes is the income categories attached to each. That is a fact. The relationship between the quintiles does not change. Under the plan that is being advocated by our friends on the other side, the biggest benefits go to the wealthiest among us. It is undeniable. That is the case. They want to quote Joint Tax. Let's talk about what is wrong with the Joint Tax proposal. Rather than assess the effect of the tax cuts when fully implemented, Joint Tax tables, cited by our friends on the other side of the aisle, cover only the years up to 2002. I ask my colleague from North Dakota if he is aware, as a result, the Joint Tax Committee's tables ignore 94 percent of the combined $82 billion of capital gains tax changes, estate tax changes and IRA tax cuts contained in the Roth bill. Is the Senator from North Dakota aware?

Mr. CONRAD. I ask if the Senator from North Dakota will yield to me for a question?

Mr. CONRAD. So much time as he shall consume.

Mr. CONRAD. That was the agreement.

Mr. CONRAD. Mr. President, I yield such time as the Senator from North Dakota will consume.

Mr. CONRAD. Mr. President, I rise as a member of the Finance Committee who voted to send this bill to the floor, and to speak about its merits and demerits and about the alternative that is being offered by the Democratic leader. Mr. President, I voted to send this bill to the floor because I thought that we should have a chance to improve it here on the floor of the U.S. Senate. As I indicated in the committee, I don't believe the distribution of the benefits in the bill that was done in the Finance Committee is fair. I find it very difficult to justify the distribution of the benefits in the bill that has come out of the committee. Hopefully, we will improve it here on the floor of the Senate. This is our first chance to improve it, with the comprehensive alternative being offered by the Democratic leader. I have just heard several on the other side say that, under this bill, 75 percent of the benefits go to those earning under $75,000. That is just not the case. They have entirely left out payroll taxes in the calculation. Seventy-three percent of the American people pay more in payroll taxes than they pay in income taxes. But they only want to construct the distribution table that deals with income taxes. They don't want to talk about payroll taxes, despite the fact that 73 percent of the American people pay more in payroll taxes than they pay in income taxes. What kind of a comparison is that? Second, they are only dealing with the first 5 years of the major components of this bill that favor the wealthiest among us. This bill is back-end loaded with respect to the benefits from those provisions. So what they are doing is comparing only a part of the package and they are leaving out the part of the package that has the disproportionate share of the benefits going to the wealthiest among us. Mr. President, this is not a package just for the next 5 years. This is a package that creates permanent law. If we are going to be honest with the American people about the distribution of the benefits, we can't just look at the first 5 years. Mr. President, I think we have to review a bit of history as to why we are here today. How is it that we can be talking about tax reductions after we have been through a period of deficits that are out of control? Mr. President, I believe we are here because Democrats made some very tough choices in 1993. As a result, as you can see from this chart, the unified budget deficit has fallen dramatically from $290 billion in 1992 to $67 billion this year. I might add that this is a projection of the deficit this year. But that is the best evidence that we have of what the deficit will be this year. So let's remind ourselves how we got here. We got here because Democrats passed an economic plan that has led to a dramatic reduction in our deficit. This, again, is the unified budget deficit. That counts all income and all outgo. Let me just go to the next chart to show people a little different way of looking at it. The line I just showed is the same as this blue line on the chart that I titled ``the real budget deficit'' that shows that there is really more deficit reduction that is needed for true balance. The point is when you talk about the unified budget deficit, the blue line--you can see it has come down just dramatically. But you see this red line right above it. That represents the true budget deficit because that counts the Social Security surpluses that are being used to mask the real size of the deficit. One can see that, although this is called a balanced budget plan-- and, in fact, on the unified deficit you get to a balance in 2002--if you look at the Social Security surpluses, what you find is that in the year 2002 you have a $109 billion budget deficit. In fact, all of the documents disclose that there is a $109 billion budget deficit in the year 2002. I say this to try to be objective about what is happening here. There is no question we have made dramatic progress on reducing the unified budget deficit. It is also, I think, undeniable that more needs to be done. That has to be thought of as we evaluate this entire budget package. Mr. President, because the Democrats did vote for a dramatic economic plan in 1993, we did get the deficit going down on either measure. Whether we are looking at the so-called unified deficit, or whether we are counting Social Security surpluses, on either count the deficits have gone down dramatically. That has kicked off one of the strongest economic recoveries in our history with 12 million new jobs since 1993--a peacetime record. We have seen the unemployment rate go down to the lowest level since 1973--a dramatic improvement in unemployment. The inflation rate is under 3 percent since 1993. You can see dramatic improvements in the inflation rate of this country as a result of the economic plan that was put in place in 1993. Not only do we see dramatic improvement on new jobs and dramatic improvement on unemployment, the inflation level at its lowest level in 31 years, but we also see real business fixed investment growing at a 9-percent annual rate for the last 4 years. In fact, it is by far the best rate of real business fixed investment in about 20 years. Mr. President, the fact is that the economic plan passed in 1993 has worked and has worked extraordinarily well. If we look at the 10-year period from 1992 to 2002, the savings from the 1993 deficit reduction plan will total in that 10-year period $2 trillion. The budget plan we have before us now in that same time period-- because it is only effective the last 5 years and it is a much smaller package--will contribute $200 billion to deficit reduction, about one- tenth as much as was provided by the savings from the 1993 deficit reduction plan. Mr. President, the fact is this economic plan works and has worked extraordinarily well. It is the reason that today we are able to consider tax reductions. Mr. President, when we consider tax reductions, it seems to me that we ought to apply four tests: First of all, does the tax reduction fairly distribute the benefits? Second, does the plan keep the deficit under control for the long run, or do we blow a hole in the deficit after making all of the progress that we have made since 1993? Third, it seems to me the test should be, do the tax reductions promote educational opportunities? Fourth, will the tax cuts benefit the economy and promote higher economic growth? Again, I go back to the 1993 plan. The fact that deficits were really reduced by either measure has meant lower interest rates, has meant stronger investment, has meant greater economic growth, and has meant an incredible resurgence in the U.S. economy. In fact, today the United States is rated the most competitive economy in the world. Mr. President, when we look at the plans before us with respect to how to cut taxes, we can start to evaluate how they rate on the four tests that I have applied. The first test: The fairness of the distribution of the benefit. Mr. President, I direct your attention to this chart, the Democratic alternative versus the plan out of committee. For the top 1 percent, the yellow shows the plan out of the Finance Committee, the red shows the Democratic alternative. Under the plan out of the Finance Committee, the top 1 percent get 13 percent of the benefits. Interestingly enough, under that plan, the bottom 60 percent get about 13 percent of the benefits. It does not strike me as a fair distribution of the benefits. The alternative before us, the Democratic plan, shows a much more fair distribution of the benefits. The Democratic plan has the top 1 percent of the income earners in the country getting 1.4 percent of the benefits. The bottom 60 percent get 46 percent of the benefits. Again, I would say it is a far more fair distribution of the benefits of the tax plan than under the committee alternative. This is a little different way of looking at it. This looks at the American economy in terms of the top 20 percent of the income earners in our country and the benefits that they get. This is the plan out of committee, the yellow bar. The red bar is the Democratic alternative. You can see under the plan out of committee that the top 20 percent of the income earners in our country get 65 percent of the benefits. Under the Democratic alternative, they get about 21 percent of the benefits. In the next quintile, the committee alternative gives them 32 percent of the benefits, the Democratic plan gives them 21 percent. Again, Mr. President, I think it is clear that the Democratic plan provides a more fair distribution of the benefits when we start cutting taxes. One of the key reasons for the differences between the distribution of the plan is because the Democratic alternative makes the child care credit effective against payroll taxes. The reason for that, as I indicated in my opening, is 73 percent of the American people pay more in payroll taxes than they pay in income taxes. In fact, payroll taxes have been going up dramatically since 1950. This chart shows from 1950 to 1996. Here is what has happened to individual income taxes in terms of a percentage of tax receipts. Here is what has happened to payroll taxes. Individual income taxes have stayed about flat in terms of their percentage of our tax receipts. Payroll taxes have jumped dramatically. Mr. President, this chart shows who is paying the tax bill and how the distribution has changed over the years. This shows from 1960 to 1996. Individual income taxes, you can see, 44 percent. Now they are at 45 percent. Payroll taxes were providing 16 percent of the revenue base in the country in 1960. Now they have gone up to 35 percent--35 percent of the tax receipts in the country are coming from payroll taxes; regressive payroll taxes. Corporate income taxes: Their share has changed dramatically as well. In 1960, they provided 23 percent of our receipts. They are now down to 12 percent. And excise taxes have gone from 17 percent in 1960 down to 8 percent. Mr. President, this I believe is one of the real flaws in the bill before us. Because the child care credit does not credit against payroll taxes, even though 73 percent of the people in this country pay more in payroll taxes, people at the lower end of the income scale don't get the benefit of the so-called child tax credit. In fact, this chart shows in the lowest 20 percent of income earners in this country, 99.5 percent of them are ineligible for the child tax credit under the committee proposal. Nearly 100 percent of the lowest 20 percent of the income earners in our country aren't eligible. In the next 20 percent, nearly 90 percent of them are ineligible for the credit. Mr. President, how is that fair? How is it fair that we have a tax credit for children but 40 percent of the people in America don't get the benefit of it because it is not refundable? I would remind my Republican colleagues that in the Contract With America they made it refundable against the payroll tax and in the initial draft of this bill they made it refundable against the payroll tax. They were right. They have made a change that is a mistake, in my judgment, in terms of fair distribution of the past tax. That goes to the question of distribution. The second question is, Does this plan blow a hole in the deficit in the outyears? This chart shows the outyear costs of what we call backloading. That is, certain tax types with certain tax plans explode in terms of their cost in the second 5 years of this 10-year plan. Mr. President, this chart shows what happens to the IRAs that are included in this plan, the alternative minimum tax, and the capital gains tax cuts. In the first 5 years they cost $12 billion. But look at what happens in the second 5 years. The cost mushrooms to $84 billion, seven times as much in the second 5 years. If I had a chart that showed what happens in the next 10 years, you would see these things explode, even further endangering the fiscal responsibility that we have taken on since 1993 in the effort to dramatically reduce the budget deficit. Mr. President, I think that is a mistake. If we look at some of the elements of the backloading, we look at the alternative minimum tax, and you can see in the first 5 years there is no cost. Then it takes off like a scalded cat. In fact, in the second 5 years that costs $15 billion. No cost the first 5 years, $15 billion the second 5 years. But it is not just the AMT tax that has that characteristic. We see the same thing with capital gains. The capital gains provision goes from $3 billion in the first 5 years to $24 billion in the second 5 years. It explodes. I think we have to ask ourselves, does that make sense? Does that endanger the deficit reduction that we have worked so hard to achieve? The IRA proposal is even more dramatic. It costs $9 billion in the first 5 years; it costs $45 billion in the second 5 years. I think all of us would like to do these things. The question is, what do we lose? What happens if, because we have taken this kind of approach, the deficit reduction is in danger? I say to my colleagues the best tax cut is the tax cut we get from the lower interest rates by having deficit reduction. The very best tool for economic growth is getting the deficit down, which lowers interest rates, which helps spark investment, which helps spark the economic growth that has made such a dramatic difference in this country since the 1993 economic plan was approved. The other test I apply that I think is a commonsense test is, are we promoting educational opportunity? I say the Senate package certainly has very good measures with respect to encouraging education, but I think the Democratic alternative is better. According to Citizens for Tax Justice, the top family income levels receive the largest education credit per family under the committee bill. Over 43 percent of families would be eligible for only a small part of the credit and an estimated 30 percent of American families under the committee bill have insufficient tax liability to receive any benefit from the HOPE credit. The Democratic alternative addresses that shortcoming. Finally, it seems to me we should look to the economic incentives of the competing proposals. The Democratic alternative targets tax cuts to small businesses, farmers, and those who take risks in investing in small startup companies. I believe that is where we should target the benefits. A recent Congressional Budget Office study found that 89 percent of tax returns reporting capital gains in 1993 had gains of $10,000 or less with the average gain being $2,000. By contrast, the 3 percent of returns showing gains of $200,000 or more accounted for 62 percent of the total value of capital gains. It seems to me this is clearly a case where greater targeting to small business, small farmers makes good sense. We can get more bang for the buck by targeting these dollars than by giving them to those who are at the top of the income ladder, the very wealthiest among us, those who need it the least of all. The Democratic alternative provides nearly twice as deep a capital gains tax cut for owners of small and startup businesses. Most small businesses and farms will enjoy a 14- percent rate under the Democratic alternative rather than the 20- percent rate in the committee bill. That is because 75 percent of small businesses and farmers are proprietorships, partnerships or S corporations that will have much better and stronger benefit under the Democratic alternative. Mr. President, I conclude by saying there is no question that the chairman of the Finance Committee treated us fairly in the Finance Committee. He was as fair as one could ever ask a chairman to be. I have commended him publicly. I have thanked him privately as well. He conducted himself as a real gentleman. I want to say that again publicly here today. The question is not whether or not we worked together in the Finance Committee. The question is whether we could do better with an alternative. I sincerely believe the Democratic alternative offered by Senator Daschle earlier today is better. It is more fair in its distribution. It protects the future by making certain we do not blow a hole in the deficit in the out years. It provides more targeted education benefits to all of the American people so that we make certain no one is left behind. And it is better for long-term economic growth because it focuses the dollars on those small businesses and those farms that are really at the heart of the American entrepreneurial revolution. I end as I began. In 1993, many of us took a stand with respect to a plan to reduce the deficit. Our friends on the other side of the aisle said that the plan would not reduce the deficit, that it would increase unemployment and that it could crater the economy. They were wrong. The facts are clear. That plan dramatically reduced the deficit, reduced unemployment, and we have seen dramatically increased economic growth, dramatically increased business investment. That plan worked. Now, today, we have another choice to make on an alternative of tax relief. The question is, who will benefit? Are we going to give the lion's share of the benefits to the wealthiest among us, or are we going to seek to spread the benefits more broadly throughout the American society? I do not think there is any question but that the Democratic alternative is a more fair distribution of the benefits. I hope my colleagues could support it. I thank the Chair and yield the floor. Mr. DOMENICI addressed the Chair.

Mr. CONRAD

Mr. CONRAD. Mr. President, I am pleased to be a cosponsor of Senator Frist's budget process amendment. The Frist amendment seeks to establish a more stringent enforcement mechanism for the bipartisan budget agreement. I think it's important for Congress and the President to continue working after enactment of this year's two reconciliation bills to ensure that at least the unified budget is balanced in 2002 and years thereafter. The amendment would also require the President to submit budgets each year which do not cause a unified deficit in fiscal year 2002 or any year thereafter. Specifically, the Frist amendment would establish a 60-vote point of order against any resolution or bill--including the budget resolution-- that provides or would cause a deficit in fiscal year 2002 or any year thereafter. I think such a point of order will help Congress and the President remain vigilant about the deficit, particularly in years after 2002. Frankly, I would have supported much more ambitious deficit reduction efforts this year. I would like to see the federal budget moving towards true balance--that is without counting the Social Security surpluses. I believe that is the real way to balance the budget. But I also must acknowledge that the President and the bipartisan congressional leadership did not seek to balance the budget without counting Social Security. The bipartisan budget agreement balances only the unified budget. I don't believe we've truly balanced the budget with enactment of this year's reconciliation bills. But perhaps at least we have taken a modest step in the right direction. One of the reasons I support the Frist amendment is that I am concerned about whether this bipartisan budget deal will accomplish its intended goal--balance of the unified deficit within five years. When I first became aware of the details of the 1997 budget agreement, I viewed it largely as a missed opportunity. In my view, the budget was not truly balanced. It only claimed balance by using Social Security trust fund surpluses. In fact, in the year 2002 the real deficit will probably still be over $100 billion. In addition, under this bipartisan budget deal the deficit is larger for the next three years than it is this year. This year's deficit is currently projected to be about $67 billion. The deficits for 1998-2000 will range from $80 billion to $100 billion. Of most concern to me, budget negotiators failed to correct the upward bias that currently exists in the Consumer Price Index. There is overwhelming evidence that the Consumer Price Index, currently used to adjust tax brackets and various spending programs for inflation, overstates the actual change in the cost-of-living in the United States. The budget deal should have corrected this mistake which will add nearly $1 trillion to our national debt over the next 12 years. Some of the economic assumptions underlying the budget deal are highly suspect. CBO's last minute revenue adjustment of $45 billion per year may be credible for the years 1997 and 1998. Its credibility for the period 1999-2007 is unclear. In addition, the balanced budget fiscal dividend assumed in the budget agreement is based on the theory that lower interest rates will result from balancing the budget with a credible deficit reduction plan and path. The real debate with regard to the Federal Reserve's interest rate policy right now is whether the Fed will raise, not lower, interest rates in the next few months, particularly since this proposal contains dramatically less savings-- only $200 billion--than other proposals offered this year. Finally, I am concerned that enactment of the tax package before the Senate will blow the progress we have made on reducing the deficit. Over the longer term, I am concerned that since many of the tax cuts are back-end loaded, they will explode in the outyears. The individual alternative minimum tax relief provisions are a perfect example. These provisions don't take effect until 2001. The cost over 1998-2002 is $350 million. The cost over 10 years is $15 billion, a 4000-percent increase. By 2007, the AMT provisions will cost the Treasury $6 billion per year. Another example involves the Individual Retirement Account provisions in the Senate's tax bill. I know there is strong support for providing incentives for people to save. But the various IRA provisions in the Senate tax bill, particularly the new back loaded IRAs, have serious deficit implications. The IRA proposals lose about $9 billion over 1998 to 2002. Over the second five years the revenue loss is $36 billion. These types of back-end loaded tax cuts may prevent our nation from achieving long-term fiscal balance. For all these reasons, I support careful monitoring of the federal budget deficit in 2002 and years thereafter. I believe a 60-vote point of order will force Congress and the President to immediately get back on track if our fiscal situation changes dramatically and the unified budget deficit begins to rise in 2002 and years thereafter. If we can at least maintain unified balance of the budget, then perhaps Congress and the President will have the courage to move toward truly balancing the budget. We can perhaps then achieve the kinds of structural changes in entitlements that will put our nation on a sustainable fiscal course over the long term, as we prepare our nation and our economy for the retirement of the baby boom generation around the year 2012. Mr. LEVIN addressed the Chair.

Mr. CONRAD

Mr. CONRAD. Mr. President, I make a point of order that section 5822 of the bill violates section 313(b)(1)(D) of the Budget Act.

Mr. CONRAD

Mr. CONRAD. Mr. President, I rise today to pay tribute to the exhaustive and exemplary disaster assistance efforts of those at Cavalier Air Station, near Cavalier, ND. As my colleagues are aware, my State has suffered the worst winter and spring of its history. A record eight blizzards dropped over 100 inches of snow on North Dakota, and brought with them sub-zero temperatures well into the month of April. The worst and final blizzard--Hannah--coated the State in ice, knocked out power for much of the State, and made the snowmelt that followed much worse. The flood that followed was a 500-year flood, driving thousands from their homes and farms all along the Red River. Livestock losses were in the hundreds of thousands, economic losses in the billions, and the disruption to the lives of those affected were incalculable. In the face of this, everyone in North Dakota pulled together, including the able men and women of our Armed Forces stationed in my State. The outstanding snow removal efforts of the National Guard and Air Force personnel from the Minot and Grand Forks bases were well documented, and brought the Secretary of the Air Force, Dr. Sheila E. Widnall, to North Dakota in February to say a personal ``thank you.'' The accommodation of thousands of flood refugees at Grand Forks AFB-- which helped preserve a sense of hope and community for Grand Forks-- also made for unforgettable images on CNN and front pages of newspapers across the Nation. This exemplary assistance will be long remembered, but it is also important that the exceptional contributions of the men and women of another Air Force installation in North Dakota are not forgotten. Mr. President, that facility is Cavalier Air Station. For those of my colleagues who are not familiar with Cavalier, this phased array radar base was constructed during the 1970's as part of the Safeguard ABM system. The motto of Cavalier's unit--the 10th Space Warning Squadron-- is ``instant to watchful instant.'' For 20 years this has meant providing early warning of nuclear attack for the Pentagon and tracking millions of bits of deadly space junk in Earth orbit for NASA, but this year this motto had new meaning. As the commander of the installation, Lt. Col. Donald T. Kidd, described to me, this spring this unit of 33 people--28 active duty Air Force and 5 civilians employed by the Department of Defense-- contributed over 900 hours of around-the-clock labor to monitoring and fighting the rising flood waters in the northern Red River Valley. They filled and stockpiled sandbags, deployed them around threatened homes, evacuated threatened city offices in Pembina, and watched the leves for leaks. They carried sandbags hundreds of yards in Drayton when there were not enough hands to simply pass them down a line, and built a dike around the entire town of Neche. At the station itself, they provided safe refuge for families forced to flee their homes and farms, giving shelter to over 100 people during the worst of the flooding. Many of the 70 civilian employees who work at the station under contract with the ITT Corp. also were there when their communities needed them, making important contributions to disaster relief. And all the while, Mr. President, the men and women of Cavalier Air Station continued their critical mission, on top of preparing for the year's most important inspection. I am pleased to inform my colleagues that the 10th Space Warning Squadron passed this inspection with flying colors, taking home some of the highest marks in the U.S. Space Command. Colonel Kidd wanted the efforts of everyone in the 10th Space Warning Squadron recognized, writing in a letter to me that ``I can't begin to tell how proud I am of each and every one of them.'' On behalf of the U.S. Senate and all in North Dakota who benefited from their tireless labor, allow me to extend my most sincere thanks to everyone at Cavalier Air Station. I and countless North Dakotans are thankful for your efforts, and glad that you were there. Every one of you went beyond the call of duty, proving yet again that Cavalier Air Station is part of ``Team North Dakota.'' Again, sincere thanks. You have made a State grateful, and your Nation proud.

Mr. CONRAD

Mr. CONRAD. That is the case.

Mr. CONRAD. Yes. I would be happy to yield for that purpose. Amendment No. 500 (Purpose: To require that any benefits package offered under the block grant option for the children's health initiative includes hearing and visions services)