Christopher Dodd

Mr. DODD

Mr. DODD. Mr. President, every single major investigation done by the U.S. Congress over the last 20 years that I can find in resolutions that had to come before this body had termination dates in them, primarily because of the very reason the minority leader has raised the issue today--they become open ended, they become political, it becomes a fishing expedition. That is why the wisdom of our colleagues historically has said, ``Look, we will let you run, but you do not run indefinitely. You have to finish up your work. If you do not, we know what you do.'' They did not say ``Republicans,'' they did not say ``Democrats.'' They said, ``All of you.'' We will put a termination date on here so you come back to the full body and report and get it over with. Otherwise, these things go on indefinitely. With all respect to my colleague from New York, his proposal is just that--to go on indefinitely with another half million dollars. I inquire of the minority leader whether or not he was aware that, in fact, there were termination requirements in every single major hearing by this Congress?

Mr. DODD. Further, I inquire of the minority leader--he made the point earlier about other investigations that have been done by Congress. I asked our staff to compile a list of the most prominent of those hearings, Watergate being the one that most people probably recall the best, with the Church committee, going back to 1975. Some Members may recall that committee's work. Billy Carter and Libya--we have probably forgotten about that, but that got a lot of attention-- ABSCAM; Iran-Contra; HUD; POW-MIA. I just inquire, in every single one, I do not know if the minority leader was aware, but every single one of these hearings there was a termination date. I do not know if the minority leader was aware of that. I ask unanimous consent, Mr. President, that this list be printed in the Record for the purpose of people looking at it.

Mr. DODD

Mr. DODD. Mr. President, I am pleased to join with the distinguished Senator from New Mexico and a bipartisan group of my colleagues in cosponsoring this Senate resolution designating October 13-19 as National Character Counts Week. This morning, like every morning before it and every morning to come, young Americans are headed off to learn their three R's--reading, writing, and arithmetic--in our Nation's schools. But as we know, the school day involves more than just the transmission of facts or the relaying of concepts. It's also about character. In the best classrooms in America our children are given the opportunity to learn and practice basic character traits such as sharing, cooperation, and respect. The Character Counts initiative calls on all Americans to embrace the development of six attributes--trustworthiness, respect, responsibility, fairness, caring, citizenship--as a fundamental aspect of our children's education and as a critically important means of strengthening our Nation. The lessons our young people learn as children are the ones that will stay with them the rest of their lives. As Eleanor Roosevelt once said: ``Character building begins in our infancy, and continues until death.'' We live in a time when teenage pregnancy and juvenile crime are spiraling out of control. A recent poll suggests that two-thirds of Americans believe most people can't be trusted, half say most people would cheat others if they could and in the end are only looking out for themselves. These statistics and the seeming erosion in the basic norms of civility, even among our Nation's children, are ample evidence of the need for programs that promote character development. No one would argue that Character Counts is a panacea for these complex problems. First and foremost, we need better education, stronger families, and healthy doses of individual responsibility. Clearly the primary obligation for the building of our children's values and belief systems lies with our Nation's families. There is only so much government can do. But, with parents being forced to spend more and more time out of the house, our Nation's schools can and should play a positive role in helping to build character among America's children. There is nothing inappropriate or heavy-handed about teaching character in our schools. These programs don't impose morality or any one group's world view. These programs teach honesty, courage, respect, responsibility, caring, citizenship, and loyalty, attributes that I believe all Americans agree upon. These principles transcend religion, race, philosophy, and even political affiliation. For those Americans who share the goal of energizing our democracy and strengthening our Nation's character these initiatives are simply common sense. What's more, these programs garner tangible benefits. In Connecticut, the Southwest Elementary School in Torrington implemented a character education program in September and has already seen positive results from its students. Attendance is up, students are more respectful toward their teachers and school administrators are convinced that Character Counts is responsible. The school engages parents in the effort, who along with educators and the students themselves, love the program. While character education may not be a magical solution to all America's problems, it represents a positive effort to make a real difference in our children's lives. Character development programs for our children strengthen our lives, our communities, and our Nation as a whole. I commend my friend and colleague from New Mexico for all of his work in this area. And I invite all my colleagues from both sides of the aisle to join us in supporting character education as a vital means of molding better individuals, strengthening families, and creating a responsible American citizenry.

Mr. DODD

Mr. DODD. Mr. President, I rise today in strong opposition to the private school voucher plan included in the conference report on the D.C. appropriations bill. At a time when our public education system is suffering under the weight of draconian cuts in Federal education programs, diverting precious resources to private and parochial schools is the wrong message to send to our Nation's children. This year alone, the Congress has already cut $3.1 billion from education programs--the largest cut in education funding in American history. This is money that would help children learn new skills, raise test scores, provide money for college education, and prevent violence and drug use in our schools. We should not be taking scarce Federal funds away from public school students. Instead we should take this opportunity to reaffirm our commitment to reforming our public education system, which educates 88 percent of American students. But, this bill would tell our public schools and the vast majority of our Nation's children: ``We can't improve our public schools, so let's not even try.'' Well, I reject that argument. Our universal public education system is one of the very cornerstones of our Nation, our democracy, and our culture. And this voucher proposal would fundamentally undermine this ideal by spending Federal taxpayer dollars for students to attend private and religious schools that are unaccountable to the public. Instituting a voucher system in Washington, DC, would also seriously harm most of Washington's low- to moderate-income families, who depend on public schools for their children's education. Supporters claim that these vouchers will allow D.C. schoolchildren to attend better schools. But the fact of the matter is, the vast majority of children in Washington, particularly those who are the poorest and who need the most help, will remain in public schools. For thousands of students and their parents, Federal resources that are desperately needed to repair D.C.'s ailing schools, provide counselors to deal with the many social problems that face Washington's young people, and equip teachers with the tools they need to educate their students will be diverted to the few who are lucky to attend private and parochial schools. Supporters claim that this voucher proposal will give parents a choice on where their children go to school. But, in fact, these vouchers will not fully open the doors to private education, because private and parochial schools will be under no obligation to accept all applicants. Private schools will pick and choose the best students; and the ones with the lowest test scores, the ones with learning disabilities and discipline problems, and the ones for whom a $1,500 to $3,000 voucher will not begin to pay the, on average, $10,000 tuition for private schools in the District will be the ones left behind. In addition, these proposals raise serious constitutional questions about using Federal money to pay tuition at religious schools. No Federal or State court has ever upheld the use of vouchers for parochial schools, and I seriously doubt that this bill will be any different. Supporters claim that if this proposal passes, Washington DC, would serve as an important testing ground for the voucher program. But why test a program that doesn't work and that the American people don't want? Considering the fact that Federal resources are already strained, we shouldn't be using the District of Columbia appropriations bill to waste taxpayer money on bad ideas. Washington, DC, residents, like those in California, Colorado, and Oregon have voted down vouchers in various ballot initiatives. Electoral rejection of these programs may be due in large part to the fact that private school vouchers don't live up to their advanced billing. In Milwaukee, where the voucher program has been in place for 5 years, test scores of students, who utilized vouchers, failed to improve. I understand the importance and relevance of private and parochial education. I am a product of St. Thomas the Apostle, a Jesuit boys school. And, I am very proud that my parents made the decision to send me there. But, I am also aware that when making that decision they weren't expecting to be subsidized by the Federal Government. They understood the importance of our public education system and that the Federal Government should do all it can to support our public schools. I have long believed that education should be made our No. 1 priority in Congress. A strong education is critical to forming productive, thoughtful, and tolerant citizens. I have fought to reform our public schools in the past, and I will continue to do so in the future. However, I strongly believe that sending taxpayer dollars to private and parochial institutions will drain already meager Federal resources and undermine serious educational reform efforts. I hope my colleagues will join me in opposing private school vouchers and work to support a bill that provides real school improvement for the District of Columbia's schools.

Mr. DODD

Mr. DODD. Mr. President, I would like to share with my colleagues my deep sense of regret over the decision by Felix Rohatyn to withdraw his name from consideration as a nominee to the position of Vice Chairman of the Federal Reserve's Board of Governors. My disappointment is based upon two factors: The first is that the Nation has lost an opportunity to benefit from the services of someone who not only has deep insights into the how the American economy functions, but someone who also has decades of practical economic experience both in the public and private sector. Mr. Rohatyn is justifiably celebrated for his successful efforts that brought New York City from the edge of bankruptcy onto sound financial ground. He did so through a combination of public and private action that resulted in downsizing the Nation's fourth largest government, thus creating the foundation that has allowed New York City to achieve a balanced budget for every year for most of the past two decades. Felix Rohatyn has also achieved great success in the private sector as the managing partner of the investment banking firm of Lazard Freres. Few people in the Nation can claim to have a better understanding of our capital markets and be able to back up those claims with the cold, hard proof of continued profitable returns for the company that he runs. But it is the manner in which, and the basis upon which, Mr. Rohatyn was prompted to withdraw his candidacy for this important position that prompts me to take the floor today. I fully respect--indeed, I encourage--the right of my colleagues to form and express their personal opinions about Presidential nominees. But that respect is diminished when that opposition takes a form that precludes a nominee from even getting a fair and open hearing before the Senate. That respect is diminished when instead of confronting a nominee during the hearing process and allowing that nominee to respond directly to his or her critics, leaked staff reports and innuendo are used to derail a nominee's chances. But we must go beyond the manner in which these objections were raised to examine the objections themselves, for they portend a slavish devotion to an economic orthodoxy that is out of place in our system of Government. I could understand active opposition to a nominee if he or she had been an advocate of Marxist economic thought or believed that isolationism was a cure for America's economic ills or was an advocate for some other discredited economic theory. But it appears that Mr. Rohatyn simply failed to meet some arbitrary litmus test as to who is or isn't a strong advocate for ending ``the era of big Government.'' Mr. Rohatyn's sin? He proposed that the U.S. Government make investments in the infrastructure of the Nation. That radical thought places Mr. Rohatyn squarely in the camp of such noted American rebels as Daniel Webster, Henry Clay, Theodore Roosevelt, and most notorious of all, Dwight Eisenhower. Mr. Rohatyn also has the heretical notion that it is possible for the American economy to grow, without risking inflation, at a faster rate than the puny 2.5 percent per year that some--I repeat, some-- economists believe is the maximum safe rate of growth. It is amazing to me that some of my colleagues can become so wedded to specific static numbers in the field of economics, as if the numbers themselves were some sort of Rosetta Stone that could unlock the secret of economic prosperity. Some people must believe that understanding the economy is as easy as calibrating the atomic clock or measuring the snowfall at National Airport. In fact it is the philosophy and methodology that underlies these otherwise meaningless statistics that is of critical importance. On that score, Felix Rohatyn is extremely well qualified to serve on the Federal Reserve Board. The Federal Reserve is supposed to be an arena in which varying economic ideas can be debated, free from the constraints and pressures of the political arena. In that sense, it mirrors our greatest democratic institutions; if a diversity of opinion wasn't desired, there would be no need to have a Vice Chairman, or a Board of Governors. If monolithic thought were the intent, we would simply a single Director at the Federal Reserve, whose edicts would be carved onto marble tablets and then disseminated throughout the land. Mr. President, Mr. Rohatyn's credentials are virtually unquestioned. The chairman of the Senate Banking Committee recently stated that he thought the Mr. Rohatyn did ``an excellent job in New York,'' referring to his rescue of that city from bankruptcy. Mr. Rohatyn's colleagues on Wall Street said: ``Most people on Wall Street have great respect for Rohatyn and his financial skills. He is a guy who is not at all soft on inflation, so [we] don't know where those rumors to the contrary came from.'' The Financial Times said ``there are not many U.S. bankers worth listening to. Rohatyn is the exception.'' The Washington Post stated, in an editorial entitled, Playing Games with the Fed, that ``* * * the elected branches in recent years have pretty well given up on the broad management of the economy. They mainly add to the problem, which is then left to the Fed to resolve. They ought not compound the burden they create by spreading to the Fed their own doctrinal quarrel.'' Some may view the withdrawal of Mr. Rohatyn from consideration as a victory of sorts. But by depriving the Nation of the benefits of Felix Rohatyn's talents and by imposing an ideological straightjacket on Federal Reserve Board nominees, those who are rejoicing today may find that theirs is a Pyhrric victory indeed.

Mr. DODD

Mr. DODD. Mr. President, I rise today to discuss my vote against the continuing resolution on Friday, January 26. The CR under which the Government is now operating is the ninth continuing resolution for fiscal 1996. That is four more CR's for 1 fiscal year than we have ever passed before. And we can be sure, come March 15, that we will be traveling down this road again. This CR continues a dangerous and chaotic policy of haphazardly appropriating funds, while leaving State and local governments, Federal employees, and millions of Americans who depend on the Federal Government uncertain of the future. This uncertainty can be traced in large part to the fact that months into fiscal 1996, the Republican controlled Congress has yet to complete work on all 13 appropriations bills. This congressional foot dragging has brought us to the point we're at today: With a CR that is nothing more than a cynical attempt, by those who held the Government hostage and then didn't get their way, to dismantle critically important Federal programs in a piecemeal and indiscriminate fashion. Let me be clear on one point: I am absolutely committed to balancing the budget. In 1981, I was one of six Senators to vote against President Reagan's budget, which I may add got us into this mess in the first place. I cosponsored the Gramm-Rudman Deficit Reduction Act and just last October, I was 1 of 19 Senators to vote for the Simon-Conrad bill that would balance the budget in 7 years with CBO numbers. More important, after the havoc wreaked by the Republicans during the last Government shutdown, I am committed to seeing the Government stay open and Federal employees at their desks. Continuing resolutions, Government shutdowns, and legislative blackmail are simply no way to run the Federal Government. The majority party says we must balance the budget to protect our children from inheriting a crushing debt. Yet at the same time we hear this rhetoric, the majority is passing a CR that directly harms our children's future by eliminating $3.1 billion from education programs-- the largest cut in education funding in American history. Education is not alone. This CR would cut back funding by 25 percent for the Cops on the Beat Program, summer jobs programs for disadvantaged youth, and environmental cleanup. How can this Congress claim it is protecting children at the same time it is cutting money to keep communities safe and our water and air clean? The majority party came into Washington with the slogan ``Promises Made, Promises Kept.'' Well if their promises were to shut down the Government, eliminate money for education and the environment, cut Medicare and Medicaid, raise taxes on working families, and now hamstring the Federal Government's efforts to maintain its responsibilities and obligations, then I suppose they have kept their promises. I am hopeful that at some point in the future we will take our cue from President Clinton's State of the Union call for reconciliation by reaching a bipartisan agreement on how to balance the budget. Until then, this Government will stumble from CR to CR while millions of Americans suffer.

Mr. DODD

Mr. DODD. Mr. President, I would like to take a moment to honor one of the many--and I might add that there are far too many--colleagues of mine who have announced they will be leaving us at the close of this session. Senator William Sebastian Cohen announced his retirement recently, and I would like to pay tribute to this close friend of mine. Early on in his career in the Senate, in 1978, Time magazine called Senator Cohen ``one of the GOP's brightest new stars.'' Well, Senator Cohen isn't exactly new anymore, Mr. President, but he remains one of the brightest stars in his party. It is a shame to see him leave when he seems in many ways more brilliant than ever. Senator Cohen became the senior Senator from Maine at a very early age, and it was a title that he carried with determination and distinction. He quickly established himself as a leader on foreign policy issues, playing a key role in shaping the foreign policy that prepared America for the gulf war and the new world order of the 1990's. Early on in his Senate career, the temperate young Senator from Maine opposed adoption of the SALT II Treaty out of concern that it failed to take a hard enough stand against the Soviets. He was simultaneously an unyielding advocate for a strong national defense. His stance proved that one did not have to be an extreme and ardent conservative to have a patriotic belief in the importance of protecting our country's security. He continued to serve as a distinguished leader on foreign policy issues, employing intelligence and forethought that often put him ahead of the curve. He spoke out strongly against Saddam Hussein's stockpile of chemical weapons long before August of 1990. He also advocated redesigning our Navy to employ a greater number of smaller ships, with the massive sealift capability that the post-cold war world requires. Our Nation's shining success in the gulf war was due to a great many factors, but any attempt to take account of all those factors must note the shifts in our Nation's defense strategy during the 1980s in which Senator Cohen played a large part. On domestic issues, Senator Cohen has taken a careful, reasoned approach. He has refused to sit beholden to any one ideology or dogma, instead showing an unwavering commitment to the interests of his constituents. He opposed a large dam project in Maine that threatened the environment of that beautiful State, and he pushed hard to relax stringent Social Security disability requirements. Many have called Senator Cohen a persistent moderate in his own party. Well, Mr. President, if being a party moderate means recognizing the fact that, where possible, the Government should try to help out folks who need a hand, or having the courage to speak out against those who would, out of misplaced zeal and foolhardy arrogance, undermine our Constitution, then I say we need more of it. Mr. President, Senator Cohen and I came to the Senate only 2 years apart. Over the years, I have come to count him as a close friend, and I am sure we will remain close even after he leaves here. But I will still miss him, and I will always be grateful for his loyal service to this Chamber.

Mr. DODD

Mr. DODD. Mr. President, today marks a truly historic moment in our Nation's history. Today we raise our voices in affirmation of peace and security not just for our generation, but for generations to come. Today we embark on a voyage toward sustained peace and nucelar stability. The START II Treaty is the single most comprehensive weapons reduction measure in modern history. It will forever end the continued proliferation of our nuclear stockpile and limit the level of those weapons to a fixed and verifiable number. I can think of no greater solution to the nuclear dilemma than that which is before us today. As a matter of history, let me remind my colleagues that this treaty is a product of strong bipartisan effort spanning three administrations, both Republican and Democratic. And as a member of the Senate Foreign Relations Committee, I am humbled to stand here this day and participate in this important event. Finally, we must remember that today's action in no way reduces our national strength or resolve. Our vigilance remains strong, and our commitment to peace even stronger. This is the dawning of a new chapter in American strategic strength and peace, and I urge my colleagues to join me in supporting this historic measure.

Mr. DODD

Mr. DODD. I thank the Senator very much. Let me begin by thanking our colleague from Massachusetts as well as my colleague from Maine, Senator Snowe, and our colleague from Vermont, Senator Jeffords, Senator Simon of Illinois, and others, who have been the prime movers of this amendment. I commend them for it. My colleague from Pennsylvania suggests this amendment is meaningless and that everybody is for increases in education. Well, if that is the case, this amendment ought to be adopted by voice vote. But instead what we are doing here with this CR is nibbling and nibbling away at education. So in 49 days when we come back to another continuing resolution this becomes the floor for the next continuing resolution. We have viewed continuing resolutions as a procedure used to delay any final action until a broader solution could be reached on spending matters. That is how they have been used historically. This year we are seeing a whole new use of the continuing resolution. It is now becoming a vehicle by which we make policy decisions on a piecemeal basis. Even though there is broad agreement at the leadership level of each of our parties to protect education from cuts, these continuing resolutions are cutting education. That is what this effort is, despite the fact that 75 to 80 percent of the American public have told us from one end of this country to the other, we want you to balance this budget, we want you to do it in 7 years; and, we also hope you understand that we need to grow in this country. Our economic growth levels are too low. If we are going to grow as a Nation in the next 7 to 10 years, one of the critical ingredients is going to be education. My colleague from Pennsylvania talks about the status of his parents and the difficulty as immigrants coming to this country. His story is an ennobling one, and one that could be told by millions of American families. The problem in the fall of 1996 is that opportunity will be limited for millions of American students. In higher education, where an awful lot of institutions now have tuitions of $20,000 a year and more, financial aid is more important than ever. Even public institutions cost thousands of dollars. And yet, institutions are telling us, ``We cannot plan. We cannot process applications for student aid or student loans because you in Washington can't get your act together. We don't know what you are going to do on Pell grants or work study. We don't know what you are going to do on student loans.'' And each of these institutions represents hundreds or thousands of students who do not know how they are going to pay for college next year, because of our delay. I mention higher education. It is also true at the elementary and secondary level. School boards all across America are looking to this debate today and saying, ``What message are you sending us? How do we plan for the next school year? What do we tell our teachers, aides and workers on contract? What do we do to our local tax base?'' We should not be going through this process here. It is one thing to hold Federal workers hostage to our inaction. Now we are holding middle-class, working families and their children hostage because we cannot get our work done. This is an abuse of our privilege here. We want to send a different message today with this amendment. Instead of cuts, we should be talking in terms of restoring education funding levels to at least the 1995 levels. We do have to deal with the larger budget question for the next 7 years and education must be a part of this. But cutting education for the next 49-days sends all the wrong signals on certainty of funding. Washington has got to grow up. We have to learn how to get our business done. Education is no area in which to play games. It is too critically important for the well-being of this Nation and for families who are planning for the education of their children. So, Mr. President, I sincerely hope that on this one issue, despite what other differences we have in other areas--because my colleague from Pennsylvania has said over and over again it is not in debate whether or not we ought to be doing in education--let us send the other body the signal this afternoon that we agree with our colleague from Pennsylvania and that we are going to take education off the table here, not for these 49 days, but also down the road. We can send that message by voting for the amendment offered by the Senator from Massachusetts.

Mr. DODD

Mr. DODD. Mr. President, never has the noble spirit of voluntarism been more important than it is today. And nowhere in the Nation is the spirit of self-reliance and gritty determination a more integral part of life than it is in New England. Voluntarism and self- reliance came together in 1896, when the citizens of Enfield, CT, formed the volunteer Enfield Fire Department, and they are alive and well in the department's service today. And so it is my pleasure to offer my commendation to the brave men and women of the Enfied Volunteer Fire Department who have served and protected Enfield for 100 years. At a time when our society is seeking real role models for our children, we can with confidence point to our Nation's volunteer firefighters as true heroes. The galant members of the Enfield Volunteer Fire Department, both past and present, have selflessly devoted themselves, day in and day out, to saving the lives and livelihoods of their neighbors. Without these dedicated individuals, the community of Enfield would be at a tremendous loss. No matter what is required of them, Enfield's volunteer firefighters stand ready to help. Whether responding to an emergency, or preventing emergencies from happening in the first place, all the department's activities are executed with the highest caliber of professionalism. Indeed, the firefighters make a difference every day, conducting safety lessons in schools and throughout the community to teach kids and others about fire prevention. Mr. President, the men and women of the Enfield Fire Department have faithfully served and protected Enfield, contributing tens of thousands of hours, for a century. Those who served yesterday, serve today, and will serve tomorrow, are truly a tribute to the State of Connecticut. I am proud of the work done by these fine citizens, and as they celebrate their centennial, wish them another hundred years of valiant duty.

Mr. DODD

Mr. DODD. Mr. President, just reading the last paragraph: More broadly, Mr. Clinton speaks of future injustices that he believes the bill might create but has little to say about the real and substantial injustices that present law is creating. Overriding his veto will end an egregious misuse of securities laws in ways that harm both companies and shareholders. That is the thrust of all of this. The present system is fatally flawed and broken. It is costing billions of dollars each year to maintain the present system. That we all know. As I said yesterday, if in the pleading standards--which we adopted, by the way, and the administration last June endorsed the language in the bill, calling them sensible and workable--we adopted the language as recommended by the Judicial Conference, not proponents or opponents of the legislation, but the Judicial Conference, who represents the Federal judiciary, the judges in this country. They recommended the language we included in the bill. Therefore, I am mystified why one would object to the language that the judges who sit and preside over these matters have recommended. Rule 11 is a very simple matter. Rule 11 exists in order to penalize the attorneys who bring frivolous lawsuits. We put some teeth in it. If you bring a frivolous lawsuit and you cause a defendant tremendous economic harm through attorney's fees, as we saw in one case where a $15,000 contract that one company entered into cost them $7 million in legal fees, that the case was thrown out of court. The people who pay that $7 million are usually not the chief executive officers of those companies, but the employees, shareholders, investors, and others who bear the financial burden. It is estimated that some $32 billion each year is put in play as a result of these strike suits. We hoped that we would be able to have a Presidential signature confirming the bipartisan effort in this area. Mr. President, it is with a deep sense of regret that I am on the opposite side of my President on this issue. But I believe that the override is the proper course to follow here. For those reasons, I urge my colleagues to continue to support this legislation, as many have over the last 4 years, in committee votes, votes here on the floor of the U.S. Senate and, of course, in the conference report, as well, that has come back from the House and the Senate after the negotiations. This is a very important issue, Mr. President. It sends a very important signal. We have these new startup, high-technology companies that represent, I think, the future of employment for this country for the 21st century. These companies where a stock fluctuates a few points and there is complaint filed against them, covering millions of dollars in settlement fees, is something that ought to be changed. We have put together a good, strong bill that I think addresses the major concerns that people raised over the years about this issue. I am pleased so many of my colleagues--almost 70 of them here, as well as in excess of 300 in the House--have supported this effort. I regret, again, that the President decided to veto the legislation. We can correct that this morning by overriding this veto, adopting this legislation, and getting about the other business of this body. Mr. President, I withhold the remainder of my time.

Mr. DODD. Mr. President, I thank my colleague from New York. Let me start where I did yesterday, Mr. President. It is no great pleasure that I stand here this morning urging my colleagues to override President Clinton's veto of this bill. This is not something that I sought or welcome at all. I regret that it has come to this, particularly since about 98 percent of this legislation the President endorsed. It is on about 2 percent, on technical points, over 11 words--there are 12,000 words, roughly, in this legislation, and 11 words out of the 12,000, we were informed after all the negotiations, would be a problem. Therefore, I regret deeply that we are in this situation, after 4 years, 12 congressional hearings, over 100 witnesses, 5,000 pages of testimony, and committee reports, and truly a bipartisan effort, going back to 1991. It has come down to a pleading standards disappointment and a disagreement over rule 11. Consider all of the other things that have been accomplished with this legislation dealing with proportionate liability and safe harbor, the lead plaintiff issues--they were all major, major efforts that involved a tremendous amount of work. I will point out, as my colleague from New York has, this morning's lead editorial in the Washington Post. I ask unanimous consent that it be printed at this point in the Record.

Mr. DODD

Mr. DODD. I thank my colleague from New York. Mr. President, let me just address the Senate on the children's issues and the child care issues and try to put this in perspective. As most of my colleagues know, I have spent a lot of time, along with many others, on the issue of child care, and I just want to put it straight. When we passed out the Senate version of this bill on child care, we had provided $8 billion for child care over 5 years. This conference report has $7 billion for child care over 5 years. It is a $1 billion reduction over that 5-year period. And so it is a cut in the child care funds. But almost as egregious as the cut in the child care funds is the elimination of the health and safety standards, something that we fought very hard on over these years. Now, to eliminate health and safety standards where young children are being cared for, whatever other views you have, you do not do it. You do not take away the basic health and safety standards for child care in this country. So the money is one thing. That is a cut of $1 billion. But to put these children all day long in a situation where they are not safe and they are not healthy, getting the proper kind of care is just wrong-headed and for that reason alone this bill ought to be rejected.

Mr. DODD

Mr. DODD. Mr. President, let me describe what the three words are so my colleagues know what we are talking about. The words that we had in the bill were ``specifically allege facts giving rise to a strong inference of fraud.'' That was the language we had--``specifically allege facts giving rise to a strong inference of fraud.'' What the Judicial Conference recommended was that we change that language to ``state with particularity facts giving rise to a strong inference of fraud.'' So the change went from ``specifically allege'' to ``state with particularity.'' That is the change that occurred from the language that was applauded in June by the administration and in its statement of policy as to where it stood on the bill and what was adopted in the conference report. The change occurred without a great debate or a thunder and lightning storm or a conference in which the sides were in contentious argument. This recommendation of the Judicial Conference was accepted as something the conferees felt made sense. So we did what the judges asked us to do, which is, I thought, how you normally proceed. You ask people who will be sitting on these matters to give us their recommendations--they are not Democrats, Republicans, named in a partisan debate--but merely their recommendations to the conference report.

Mr. DODD. If I could complete my whole comment because I want to get to the Specter amendment.

Mr. DODD. In the conference between the House and the Senate.

Mr. DODD. If I may regain the floor, maybe my colleague was not at the same conference meeting I was, but I certainly recall a lot of thunder and lightning in the meeting about statements being made about what was in the bill.

Mr. DODD. If this were the decision of my colleague from Maryland to have vetoed this bill, he would have vetoed the bill, but he would not have vetoed the bill on the basis of pleadings. He would have vetoed the bill because he fundamentally disagrees with the legislation. I respect that. But I was talking about the administration's position when it comes to the veto. The administration's position in June, when it came to the pleadings, was ``to support the pleading standards that were included in the bill'' that came out of the Banking Committee. When we went to conference there were no comments made by the administration that they disagreed at all with the change of language of ``specifically allege'' to ``state with particularity.'' That is the point in the veto message. I expect my colleagues have much more fundamental disagreements with the bill than the President, but we are talking about the Presidential veto. The judges, I might point out, did not request out of thin air that the language be changed. The requested change in the language of the statute, we were told, was to conform with the language of rule 9(b) of the Federal Rules of Civil Procedure, which governs how attorneys should draft fraud complaints. Mr. President, there is absolutely no substantive difference between the phrase ``specifically allege'' and the phrase ``state with particularity.'' The only difference, and the reason that the Federal judges wanted the change, is that ``particularity'' already has a meaning under law and ``specifically allege'' does not. Therefore, this change would produce a clearer, more consistent standard in the pleadings section of the legislation. I also note, Mr. President, in April of this year the Chairman of the Securities and Exchange Commission, Arthur Levitt, urged the Banking Committee to adopt--and I quote from the testimony before the committee--``the second circuit pleading requirement that plaintiffs plead with particularity''--he said--``facts that give rise to strong inference of fraudulent intent by the defendant.'' I think it is particularly distressing, Mr. President, that the administration has reversed course on the pleading standards based on this technical change requested by the impartial Judicial Conference of the United States. A final note, if I can, regarding this particular section, on the legislative history to which the White House has objected. The White House has endorsed the pleading standards for the same language in the Banking Committee report on S. 240. Neither bill codifies the entire case law of the second circuit, as the administration says it wishes it did, and that is one of the reasons it has expressed its objection. The White House has also raised the issue of the Specter amendment, which was added to S. 240 several days after the administration endorsed the pleading standards in the bill that came to the floor of the U.S. Senate. Now, our good friend from Pennsylvania, I gather, has already addressed this issue on the floor of the Senate earlier today and, of course, at the time he offered the amendment and at the time we adopted the conference report. As he claimed, his amendment would codify guidance on how plaintiffs who establish the strong inference of fraud. The difference was not over the issues of ``state with particularity'' or ``specifically allege'' wording, but rather, how do you establish the strong inference of fraud? Unfortunately, because the Specter amendment failed to include key guidance from the second circuit, it would have had the effect of totally undermining the pleading standards that we were seeking to establish and that have been supported by both the Securities and Exchange Commission and the White House in its earlier statements. Let me go into this, if I may. First, I want to read to my colleagues, if I can, a memorandum sent to the President of the United States from Prof. Joseph Grundfest of the Stanford Law School and previously a Commissioner with the Securities and Exchange Commission, on the subject of pleadings standards and pending securities reform legislation. He is one of the most knowledgeable people in this particular area: The pleading standard articulated by the Second Circuit Court of Appeals is intended simply to require the plaintiff to allege facts sufficient to give rise to a strong inference of motive to defraud. Plaintiffs must do more than make bald assertions as to motive, but are not required to develop the entire case in the pleadings. While this standard differs from the standard applied in some more lenient circuits, particularly the Ninth Circuit, it has not resulted in over- deterrence in the Second Circuit or in excessive dismissals. Indeed, the Second Circuit remains one of the most active in the country for 10b-5 claims. As I read the securities litigation conference report, the pleading standard is faithful to the Second Circuit's test. Indeed, I concur with the decision to eliminate the Specter amendment language, which was an incomplete and inaccurate codification of case law in the circuit. As is stated in a recent Harvard Law Review article, codification of a uniform pleading standard in 10b-5 cases would eliminate the current confusion among circuits. The Second Circuit standard is among the most thoroughly tested, and it also balances deterrence of unjustified claims with the need to retain a strong private right of action. Indeed, the Second Circuit is widely respected for its legal sophistication and acumen in matters relating to securities and business litigation. The fact that the Second Circuit evolved the strong inference standard is therefore worthy of particular deference and respect. In short, I support the pleading provision of the conference report. Mr. President, I ask unanimous consent the memorandum from Professor Grundfest at Standford Law School be printed in the Record at this point.

Mr. DODD. I would suggest this is not a unique event. It is common to have back and forth, and so forth, at meetings. Rather than having Members sit, staff does this. I know the Senator from Maryland, having chaired committees and conferences, knows it is not uncommon in these meetings to have staffs work back and forth to try to resolve matters without Members sitting there. It is not unique. Is that a unique occurrence?

Mr. DODD. Mr. President, our colleague from Pennsylvania, when he offered his amendment on the floor of the Senate, said that what he wanted to do was to take the guidance from the second circuit and codify that as well. With all due respect to my colleague from Pennsylvania, the language of his amendment did not really cover all of the guidance. His amendment stated that ``strong inference of fraudulent intent for purposes of paragraph 1, a strong inference that the defendant acted with the required state of mind, may be required, either, A, by alleging facts to show that the defendant had both motive and opportunity to commit fraud or, B, by alleging facts that constitute strong circumstantial evidence of conscious misbehavior or recklessness by the defendant.'' What is my problem with that? The problem with it is that is not the guidance. He omits what Judge Newman has included as his guidance, and the guidance that was not included in the amendment says, for part B, ``where motive is not apparent.'' Where motive is apparent, you do not have to make any allegations of a lot of circumstances. If you have a clear motive, you do not have to worry about the circumstances or the alleged strong facts. Where you do not have motive, apparently, and that can be a case where it is hard to get at that motive, then you are going to allege circumstances. There Judge Newman says, ``Where motive is not apparent, it is still possible to plead scienter by identifying circumstances indicating conscious behavior by the defendant, though the strength of the circumstantial allegations must be correspondingly greater.'' Greater. The Specter amendment did not distinguish at all between the circumstances in part A or part B of his amendment, and therefore did not really follow the guidance of the second circuit. So that is the reason that amendment was taken out. You could have gone in, I suppose, and said why did you not include the other language here? The problem was, in a sense, by codifying guidance you get into an area where you can get some differences of opinion on this. And arguably it could have, I suppose, gone back and included all of it, but the decision was to take it out on the assumption that courts will look to the guidance. We have established the standard clearly. We have clearly established the standard of alleging facts with particularity, showing a strong inference of motive. Then the guidance of the court would be followed. But the suggestion that the standard and--the guidance, rather, was included in the Specter amendment, omits--omits that where a motive is not apparent, the strength of circumstantial allegations must be correspondingly greater. That was omitted. And that is the reason that, with all due respect to the administration, they are, I think, hanging their hat on the wrong issue here. We have met the second circuit standard here, as indicated by the memorandum from Judge Grundfest, Professor Grundfest at Stanford. We have met that standard. We have left out the guidance. That does not mean you disregard it. But if you are going to follow the guidance, as Senator Specter suggested, then the guidance must include, in part B, that you have circumstantial allegations that are correspondingly greater than they would be if the motive was apparent. So that is the first issue and frankly it is a marginal issue, I would say. It has some importance. I do not disregard it. But to suggest somehow this bill ought to be vetoed over that, I think is not correct. I am not going to dwell at length on the rule 11 issues, except to make the following applications. The intent and application of the rule 11 provisions of the conference report are identical to the rule 11 provisions from S. 240 that the administration states in the veto message that it now has difficulty with. In fact, the only difference in the configuration of this provision in S. 240 is the Senate adopted a sanction for rule 11 that allowed a victim of a violation to collect the legal fees and costs incurred as a direct result of the violation. The conference report simply makes clear that it was our intent, that a substantial violation, a substantial violation in the initial complaint could trigger sanctions that included all attorney's fees and costs for the entire action. That was our intent anyway. If you file a complaint that does not meet--that would fall under rule 11, and I will not read all four areas where a motion or a complaint would be deficient in terms of rule 11-- but, if you have initiated a complaint and at the end of the action the judge goes back and says that complaint that you brought--and these have to be substantial violations--did not meet that standard, it is logical that it would have to apply to the entire proceeding. If you brought a frivolous lawsuit, initiated a frivolous lawsuit, then all of the costs come thereafter. You do not apply that same standard with motions, obviously, assuming the complaint does not violate rule 11. But if a defense lawyer brings a motion that is frivolous, then the costs associated with that, obviously would have to be borne by the defense lawyers as well, regarding that motion. So, logic would indicate that there is a difference here.

Mr. DODD. I will be glad to yield.

Mr. DODD. Yes, they would be. My point was this: if--Let us assume for a second that the initial complaint is a frivolous complaint. The initiation of the action, what begins it, violates rule 11, is a substantial violation of rule 11, and then at the end of that case the judge finds that there was a substantial violation of that, then the costs associated with that entire case, because the initiation of the action was wrong. Whereas, if a defense lawyer, in the process of handling the case, files a motion that violates rule 11, then the costs associated with that motion, as I understand it, would then be borne by the defense counsel incurring plaintiff's attorney's fees.

Mr. DODD. Oh, absolutely there is. Absolutely there is. The costs associated are a direct result of the complaint. If you have initiated the complaint here, and all the costs then come after, that is the action that initiated the activity, it seems to me. That is the reason. That was certainly--for those of us who were working on it, that was the intent. At any rate, that is why. And then of course thereafter there is a balance. But there is a distinction, obviously. If you start an action and you violate rule 11 here--and for the sake of discussion you have brought an action which, to pick out in the first instance here, let us say No. 1, under rule 11, ``under circumstance that is not being presented for any improper purpose such as to harass or cause unnecessary delay or needless increased costs''--let us say ``to harass.'' You violated paragraph 1 of rule 11. The sole purpose of your lawsuit was to harass. That is what you would have to be found guilty of. So you filed a complaint for sole purpose to harass a defendant. That is the reason you brought the action. If the court finds in fact that was the reason, I think the attorney who brought the action not for good cause but solely to harass a defendant, and incurred costs thereafter that the defendant had to pay to defend an action brought solely to harass the defendant--yes, I do think that attorney should have to pay the cost of that entire case, if the sole purpose was to harass the defendant.

Mr. DODD. No. I do not know.

Mr. DODD. Let me finish my thought, if I can. Let me tell you what the change is.