Phil Crane

Mr. CRANE

Mr. CRANE. Mr. Speaker, today I have the distinct honor of introducing the American Dream Restoration Act as the bill's principle sponsor. As 1 of 10 bills derived from the Contract With America, this legislation will enable American families to use more of their hard earned income to save, to invest, to pay for their children's education, to buy a home, to pay for medical expenses, or to use in whatever way they so desire. The American Dream Restoration Act is divided into three sections, and I would like to briefly explain each provision for my colleagues. The first section provides for a $500 per child tax credit for dependents under the age of 18. The full credit would be available to families with adjusted gross incomes under $200,000. The bill's second provision eliminates what is referred to as the marriage penalty. Under the current Internal Revenue Code, many married couples pay higher taxes than they would by filing two individual returns. In order to end this inequity, families currently subject to the marriage penalty would be entitled to a tax credit. The final provision of the bill is referred to as the American dream savings [ADS] account and would establish a new back-ended individual retirement account [IRA]. The ADS account would allow a nondeductible contributions of up to $4,000 for a married couple filing a joint return--$2,000 for an individual--beginning in 1996. Tax free distributions for first-time home purchases, education, medical expenses, and retirement would be allowed if the money is held in the account for at least 5 years. Mr. Speaker, it comes as no surprise to American taxpayers to find that when you combine their Federal, State, and local taxes, they are currently being taxed at all-time record high levels. Tax relief for American families is long overdue. With a new majority in Congress, we now have the opportunity to change direction. Indeed, we have a mandate from the voters to dramatically change direction. This is a mandate that no one can ignore. I look forward to working with my colleagues, both Democrats and Republicans, toward the goal of making the American Dream Restoration Act a reality. I would like to close this statement on a personal note. In the years that I have served in Congress, I have fought for tax relief, only to see it thwarted or reversed at a later date. I have been true to my philosophy of less spending and lower taxes, only to see the majority in Congress reject this philosophy year after year. I cannot possibly convey to my colleagues what it is like for me, after 25 years in which my political views have been the minority in the House of Representatives, to now have this opportunity to change the direction of Congress. Congress has been on a course that has been destroying the economic well-being of the family and it is absolutely critical that we change course. I am honored to serve in this Congress and play a part in the effort to make a change.

Mr. CRANE

Mr. CRANE. Mr. Speaker, remember that lame old excuse, ``the check is in the mail.'' In days gone by, those who heard it hoped and prayed it was true. For if it was, they knew that they would soon be getting their money. Not so today. As far too many people have found out, putting the check in the mail gives neither the sender nor the would-be recipient any assurance whatsoever that it will actually arrive at its intended destination. Or that it will get there in time to avoid late charges or black marks on one's credit rating. Over and over this past year, we heard stories about mail being dumped, burned or stashed by mail carriers or hidden away in warehouses by postal managers not wanting to admit how far behind their delivery efforts had fallen. At least a half dozen of these instances occurred in the Chicago area alone. On top of that, reports of slow mail delivery have been too numerous to mention. As a result, people have lost confidence in the Postal Service and remedies such as a new $7 million logo or a 3-cent increase in the cost of first class postage have done nothing to restore it. To be fair, the U.S. Postal Service [USPS] has made repeated efforts in recent months to improve the quality and timeliness of its service. But this is not the first time questions have been raised about the USPS's performance or that attempts to improve it have been made. To the contrary, there has been enough past efforts, the Postal Reorganization Act of 1970 being the most prominent, to suggest that a whole new approach is needed. Generally speaking, most USPS employees are conscientious, hard working individuals who want to do a good job. For the most part, the problem is not so much with them as it is with the system in which they operate. Put simply, that system lacks the incentives necessary to bring about the gains in productivity and customer service that are essential if the USPS is to live up to the public's expectations. For one thing, the USPS is insulated against competition in the delivery of first class mail which means customers need not be won over but can be taken for granted. For another, it is subsidized by the Federal Government, which means there is less pressure to be efficient. For a third, it does not have the bottom line incentives--such as the profit motive and profit-sharing arrangements--which make many private companies so productive. A quick look at the parcel delivery business bears out this assessment. Thirty years ago, most all parcels were delivered by the Postal Service. Today, competitors like FED-EX, UPS, and DHL handle a vast majority of packages shipped around the country, despite the built-in advantages enjoyed by the USPS. Also, the growing movement towards corporate competition in, or the privatization of, postal services in other countries reinforces that hypothesis. New Zealand, for instance, converted its postal service from a government department to a state owned but decontrolled corporation in the late 1980's and has watched it flourish ever since. Last year, Hol- is doing the same starting this month. Also, there has been considerable discussion in Great Britain about the possibility of privatizing parts of the Royal Mail and Parcelforce, a move favored by a number of its top managers. In this country, the objection to privatization has been that it would result--allegedly--in cream skimming by USPS competitors which would leave the USPS with the financially troublesome prospect of being left with only rural and bulk mail to deliver. However, the logic behind such an assumption not only does a disservice to the capabilities of USPS employees but it overlooks the significance of the telecommunications revolution now underway. What with the growing popularity of FAX machines, modems, internet, E-mail and the like, the truth of the matter is that the USPS is more likely to be left with rural and bulk mail to deliver if it doesn't go private than if it does. Only by keeping up with the times and the competition, which can best be done by operating in the same way as the competition, can be USPS hope to thrive in the future. Understandably, many USPS employees, fearing for their jobs, have certain reservations about going that route. Since change often breeds uncertainty and uncertainty is unsettling, such a reaction is only natural. However, change also brings opportunity and that would certainly be true if the USPS were to be converted into a private corporation. And it would be especially true if that corporation were to be an employee owned one. Not only would the new entity be able to explore new markets and develop new ways of doing business, both of which could benefit postal workers, but making it employee owned would give workers more control over their futures as well as a share of the profits. For all these reasons, I have decided to introduce once again legislation that would convert the U.S. Postal Service into a totally private, employee-owned corporation. As was the case with my previous bills to this effect, this measure calls for this transition to be implemented over a 5 year period, after which the USPS's current monopoly over the delivery of first class mail would end. However, there is one difference between this bill and my previous legislation. To make the prospects for the success of this new private sector corporation even more likely and attractive, the measure I am introducing today calls for the cost-free transfer of the assets held by the USPS to that corporation. Now only will that make the transition to private status easier to arrange, but it will speed the day when American taxpayers will no longer have to subsidize an operation that has been losing money as well as the mail. Given the clear need for more than just minor adjustments to our postal delivery system, I hope my colleagues will carefully consider this legislation and then give it their support by signing on as co- sponsors. If America is to be truly competitive in the forthcoming era of computers and telecommunications, we simply cannot afford a correspondence delivery system that is neither prompt nor reliable. Instead, we need a system that is state of the art and the best way to get it is make use of, by making the USPS a part of, the private sector.

Mr. CRANE

Mr. CRANE. Mr. Speaker, 80 years ago, the United States completed construction of one of the engineering marvels of its or any age, a multilock, 51-mile-long interoceanic ship canal across the Isthmus of Panama. Since then, this manmade waterway has served the maritime nations of the world almost without interruption, enabling them to ship their goods from the Atlantic to the Pacific and vice versa much faster and cheaper than would have otherwise been possible. Even with the advent of the supertanker and large container ships, the Panama Canal remains a vital link in world commerce through which 15 percent of America's trade, and 5 percent of the world's, passes. In fact, a number of ships today--Panamax vessels they are called--are being built to specifications that will enable them to just clear the canal when fully loaded. Credit for this outstanding operating record should go not only to those who have run the canal all these years but also to those who have provided security for it. For the 63 years prior to the signing of the Panama Canal Treaty of 1977 and during the 17 years since, the Armed Forces of the United States have stood watch over the canal from a series of military bases located in a 10-mile-wide strip of territory adjacent to the canal. From those bases, they have been in a position to deal effectively not only with immediate threats to the canal itself, but also with other problems that could have eroded hemispheric peace and security if left untended. An excellent example of the two combined came just a few weeks ago when Cuban refugees sent to Panama pending a determination of their status went on a rampage that had to be quelled by United States military personnel. The collapse of communism and the rise of the supertanker notwithstanding, there is good reason to believe that a smoothly operating, properly protected canal will be even more significant to the United States, Panama, Latin America and the rest of the world in the future. Several good reasons in fact. The conclusion of the NAFTA and the GATT agreements, not to mention the recent decision by the Summit of the Americas Conference in Miami to strive for an inter- American free trade zone by the year 2005, signal clearly a reduction in tariff and nontariff barriers throughout the region and the world. As they fall, the shipment of goods will inevitably rise as will the utility of the only vessel shortcut from the Atlantic to the Pacific and back. That being the case, the strategic significance of the Panama Canal, as one of the world's great maritime chokepoints, will continue to grow, a fact that will not be lost on terrorist groups or renegade nations determined to achieve their objectives by whatever means necessary. With the weapons they have, or can acquire, either might exert, or try to exert, leverage if there is even the slightest perception that the Canal is open to mischief as well as commerce. So long as United States military personnel can be stationed in Panama and respond to any attacks on, or threats against, the canal, no such perception should exist. But, under the terms of the Panama Canal Treaty of 1977, which is still in effect, the United States is scheduled to remove all its military personnel from Panama and turn over their bases to Panama by December 31, 1999. After that date, Panama will have the sole responsibility for not only operating but also defending the canal, a big task for a small nation. Unless, of course, an agreement is reached between the United States and Panama that will first, allow the United States to lease its military bases in Panama past the turn of the century, second, permit United States military forces to operate out of those bases, and third, enable the United States to guarantee the regular operation of the canal. The successful negotiation of such an agreement would be of particular benefit to Panama, as well as being of considerable assistance to the United States and the rest of the hemisphere. At present, some 6,000 jobs and $200-600 million in additional income for Panama are tied directly to the United States military establishment in what was formerly known as the Canal Zone. Remove that establishment and most of that money and those jobs will disappear, as will the prospect of lease payments that would otherwise result from the continued American use of its bases in the zone. Also lost would be an opportunity for Panama to forgo the cost of a military establishment, something it could safely do if the agreement provided that the United States would view an attack upon Panama in the same light as an attack upon itself. Compromised as well would be the possibility of a broader business understanding, under which the United States might lease the canal as well as its current military bases in exchange for such considerations as additional lease and/or dividend payments, trade concessions and/or an acceleration of prior U.S. treaty commitments. In short, Panama has even more to gain, relatively speaking, from a base rights/canal defense arrangement than does either the United States or its hemispheric neighbors, which may explain why public opinion polls taken there the past 2 years have consistently shown that at least two- thirds of those polled favor such an arrangement. Significantly, strong support for a 21st century base rights/canal defense agreement also exists in the United States. In fact, a nationwide poll taken last March demonstrated a level of support nearly as high in this country as has been evidenced in Panama. That being the case, one would think that serious negotiations to reach such an agreement would have gotten underway by now, especially since the time by which it should take effect is fast approaching. But, instead of moving forward to start these negotiations, governments in both the United States and Panama have been more inclined to hold back, preferring the other to take the lead. Understandable as that may be from the standpoint of national pride, the problem is time is of the essence if an agreement is to be reached before the impending United States withdrawal of its remaining military forces from Panama is, for all practical purposes, irreversible. Under terms of the 1977 Panama Canal Treaty, the United States departure from Panama must be complete by December 31, 1999 which means that, absent an understanding well before then, we must proceed with the systematic removal of our military forces and equipment before that time. Put simply, any further delay in opening negotiations, however well intended, not only dims their prospects but also the prospects for the continued safe and dependable operation of the canal itself. Under those circumstances, it seems to me that Congress is in a particularly good position--a unique position in fact--to address their problem and help get these important negotiations started. If it were to pass a resolution advising the President to enter into such negotiations, then the question of whether the President or the Government of Panama should be the first to call for talks would be moot. Neither would be in the position of having initiated the request for negotiations, meaning that the latter should then be able to proceed with dispatch. Inaction by Congress, on the other hand, promises no such advantages. At best, it is likely to mean opportunity delayed or diminished. At worst, it could result in opportunity denied. Not wishing to share responsibility for either outcome, I am introducing today a sense-of-Congress resolution calling upon the President to enter into negotiations for a base rights/canal defense agreement with Panama. Specifically, the resolution calls for an agreement that would allow our military forces to be stationed in Panama after the turn of the century and would give those forces the right to act independently in order to guarantee the security and assure the regular operation of the identical to House Concurrent Resolution 17, which I introduced in the 103d Congress and which was cosponsored by no less than 85 of my colleagues. The only significant differences is that the passage of time has made its enactment all the more imperative. That being the case, I urge my colleagues join me as soon as possible as cosponsors of this resolution. Without being too specific, it provides the direction necessary to bring about a canal security arrangement that is not only needed but in the best interests of all concerned.

Mr. CRANE

Mr. CRANE. Mr. Speaker, when I first ran for Congress in a 1969 special election, the overriding theme of my candidacy at that time and the theme of my candidacy ever since, centered on fiscal responsibility--less spending and lower taxes. Although I was not initially able to serve on a committee directly dealing with tax or budget issues, in the 94th Congress, 1975-1976, I was honored with an appointment to the Committee on Ways and Means, the committee with jurisdiction over all tax matters that came before Congress. I have served on that committee ever since. In the years prior to my service in Congress, it had become clear to me that lower taxes stimulate economic growth, and this was certainly the case with regard to the taxation of capital gains. From the day I began serving in Congress I have pushed to reduce the rate of tax on capital. In the time I have served on the committee, we have reduced the capital gains rate twice, only to see the rate hiked back up through the enactment of the Tax Reform Act of 1986. In 1989, we came close to again bringing the rate back down, actually passing a reduction in the House, only to see the legislation die in the Senate. Now, with a new Republican majority in Congress and the Republican Contract With America, we have another opportunity to reduce the capital gains rate. Over the years I have sponsored, cosponsored, and supported many different capital gains proposals. Indeed, I am an original cosponsor of the contract's capital gains proposal offered by my long-time colleague and good friend, the new chairman of the Ways and Means Committee, Bill Archer. In addition, to cosponsoring Chairman Archer's legislation, however, I wanted to again introduce my own legislation to this Congress, not only to highlight my long-standing commitment to this issue, but to raise the matter of the appropriate rate of taxation for capital gains. In the next months, the Ways and Means Committee will be holding a series of hearings that will include debate and discussion of a capital gains rate reduction. We will discuss indexation of capital gains-- something I believe is absolutely critical--the period of time which capital must be held to qualify, and we will discuss the rate at which capital gains ought to be taxed. Frankly, I would love to see capital gains taxes eliminated altogether. Moreover, I believe any reduction in the rate will be beneficial to all Americans. However, if your intention is to greatly stimulate capital investment while at the same time maximize revenues to the Treasury, experts suggest that the capital gains rate should be set somewhat between 12-15 percent. The legislation I am introducing today would provide for a maximum capital gains rate of 15 percent for all brackets except for those in the lowest bracket, where the rate would be 7.5 percent. I would be remiss in closing this statement without making some additional comments with regard to the benefits of reducing the capital gains rate. First, all Americans will benefit from a reduction in capital gains tax, not just the rich. It is flat out wrong to state that only rich people will benefit from such a tax cut. Indeed, the last time we seriously debated the issue in 1989, Treasury Department statistics showed that almost 75 percent of those families/individuals filing tax returns which reported capital gains had incomes of less than $50,000, hardly the rich. Moreover, when the capital gains rate is reduced, not only does money flow more freely between capital investments but more money is invested in capital. Both of these consequences are highly beneficial, and the net result of more investment is more jobs. The small businessman who is taking a risk starting a new business will find it easier to attract investors to share that risk because the penalty for success has been reduced. Moreover, because a larger pool of money will become available for capital investment due to a reduced capital gains tax rate, the cost of that capital to businesses will go down. Another point that must be mentioned concerns how the change in the capital gains rate affects revenues to the Treasury--not a small issue in our dire budgetary circumstances. Critics of capital gains rate reductions have always tried to suggest that a reduction in the capital gains rate will mean a reduction in revenue to the Treasury. Nothing could be further from the truth. In reality, the past two times we have reduced the capital gains rate, revenues to the Treasury attributed to capital gains have actually increased. This happens because of the consequences I just mentioned. When the capital assets. Thus, you have more capital gain transactions and it is the transaction which triggers the tax. Moreover, the economic growth generated by more available and cheaper capital creates jobs, which means more taxpayers. The vast majority of major industrialized countries in this world already know these benefits and their capital gains rates are significantly lower than the current rate in the United States. It is time that the United States got smart and caught up with the rest of the world. I look forward to a productive debate on the capital gains issue in the Ways and Means Committee and hope that our committee's capital gains initiative, in whatever final form it takes, passes both the House and the Senate and is signed into law by the President.