Pete Domenici

Mr. DOMENICI

Mr. DOMENICI. Mr. President, I am the other Senator from New Mexico, so whatever has been said about the amendment, and who is for and who is against it, was not talking about my amendment. First, I don't have any amendments. I rise to congratulate the committee on an excellent bill. By authorizing this Higher Education Act, the Senate is making a downpayment on our Nation's future. Benjamin Franklin, in the very early days of our country, put it best when he said, ``An investment in knowledge always pays the best interest.'' Sometimes around here we are talking about interest rates as if they apply only to the economy and the like. So Benjamin Franklin, even many years ago, was talking about interest. He said, ``An investment in knowledge pays the best interest.'' I believe that is right. Building upon his statement and others, I say it is a simple fact that the future is prejudiced in favor of those who can read, write, and do math. A good education is a ticket to an opportunity to a secure economic future in the middle class of the United States. As the earning gap between brains and brawn grows even larger, almost no one doubts today the link between education and an individual's prospects for a good and substantial livelihood and a good life in America. That is what the Senate is doing today in improving the postsecondary education system of our country. Incidentally, I said ``improving'' because it is already the best in the world. There are no countries in the world that have a postsecondary education system that comes anywhere close to ours. So we are not here to be critical, we are here to offer improvements. In a nutshell, this bill improves the financial aid opportunities for students, creates a unified program to promote excellence in the teachers of our public schools, and streamlines the Higher Education Act by consolidating overlapping programs and eliminating unnecessary regulatory requirements. Before I make some specific comments on provisions in the bill, I will quickly talk about my home State of New Mexico. We are a small State. Approximately 100,000 students are enrolled in New Mexico's public colleges and universities, with about 53,000 enrolled in community colleges and about 47,000 in universities. However, the number of high school graduates is expected to increase during the next decade and members of the current workforce are expected to seek additional education during that period. Consequently, we must have a very high quality, low-cost college education available to a growing number of students. We must provide that regardless of income level, ethnic background, or place of residence. Students attending New Mexico institutions received more than $200 million in financial aid, counting grants and loans from all sources, during the 1995-1996 academic year. Thus, I believe that educational performance is a crucial element to our State's future. Speaking as a New Mexican, clearly, our state's future relies upon the capacity to prosper in this extremely competitive national- international economy and is directly related to the education we are able to give our young people. Our colleges and universities directly and indirectly contribute to the economic vitality of our country and our State as they produce graduates with considerable intellectual depth and breadth, workers whose skills allow them to meet the demands of their employers, and first-rate research that helps to expand the boundaries of our knowledge. Let me make a few comments about some provisions. Title II: I congratulate the committee for improving teacher quality. Focusing on the two areas they have with reference to teacher quality and recruitment of teachers for underserved areas, first, the bill seeks to improve student achievement, improving the quality of the current and future teaching force by improving preparation of prospective teachers and enhancing professional development of activities; second, it seeks to increase the number of students, especially minority students, who complete high-quality teacher preparation programs. Title III: the institutional aid title, creates a new grant program for tribal colleges--those are our Indian colleges, which obviously are severely underfunded and severely lacking in maximum professional qualities of their teachers--and the universities to strengthen services to Native American students. Student financial aid is given a huge boost through several changes which I believe are in compliance with the 5-year budget agreement we made last year, which annually increased maximum Pell grant levels to the following amounts: $5,000 for academic year 1999-2000; $5,200 for academic year 2000-2001; $5,400 for academic year 2001-2002; $5,600 for academic year 2002-2003; and eventually up to $5,800 for academic year 2003-2004. There are TRIO Programs that are given a boost through changes to the Student Assistance section under title IV which provides benefits to 700,000 students nationwide. Two-thirds of the participating students come from families where neither parent attended college and incomes are below $24,000. This bill reserves up to 2 percent of that program for the evaluation and dissemination of partnership grants. The new Dissemination/Partnership provision would encourage partnerships between TRIO programs and other community based organizations offering programs or activities serving at-risk students. The Federal Family Education Loan Program (FFEL) is stabilized in the following way. Student loan rates will be equal to the 91-day T-bill- plus-1.7-percent while students are in school, and plus-2.3-percent during repayment after graduation. The interest amount is capped at 8.25 percent and for PLUS loans, rates will be the 91-day-T-bill-plus- 3.1 percent, capped at 9 percent for borrowers and lenders. An innovative loan forgiveness program is also included for teachers. Thirty percent of a teacher's loans will be forgiven after the fourth and fifth complete years of teaching in a high-poverty school and 40 percent after the sixth complete year after meeting certain eligibility requirements. Finally, there is the creation of new part within Title V dedicated solely to supporting the needs of Hispanic Serving Institutions that is authorized at $45 million for fiscal year 1999. Mr. President, I believe we are taking an important step forward today by making an investment in our nation's future with the reauthorization of the Higher Education Act. I close by saying, frankly, I believe that we have a magnificent post-high-school education system because there is great competition. As a matter of fact, there is no question in my mind that if we had similar competition or even a little bit of it in our public school system, we would not have the education bills that we bring before the U.S. Congress which are so detailed and give so much direction and have so many hundreds of programs. Higher education is competitive. You can make your choice. It can be a private school, a public school. You can find the very best; you can find less than the very best. But everywhere you look, you will find an opportunity to get a good college education. That is because there are so many institutions that want to do this, love their work, and think they are part of America's future. I end tonight congratulating the committee, in particular the chairman, for the good bipartisan work that has been accomplished on this bill. I am glad, on a matter of this importance, we are not fighting in a partisan way here on the floor but tonight will approve this bill by an overwhelming bipartisan vote which means we support secondary education in America in a big way. It is our future. I yield the floor.

Mr. DOMENICI. I thank the distinguished Chairman for his consideration of this important matter. Mr. JEFFORDS addressed the Chair.

Mr. DOMENICI. Mr. President, I would like to raise the issue of Section 632 of Title VI of the Higher Education Act, the so called ``hold harmless'' provision as the Senate discusses this very important reauthorization of the Higher Education Act. It is my understanding that Section 632 was first enacted in the Higher Education Amendments of 1992 in order to prevent the Department of Education from funding new or expanding existing Title VI, International Education Programs unless existing Title VI programs were funded at their FY 1992 level. However, the bill before us removes the provision, so as to give the Secretary of Education greater flexability. The University of New Mexico's Latin American Institute has contacted me to raise its concerns about the removal of Section 632 from the Higher Education Act. I also understand the international programs at Ohio State and the U. of Michigan have contacted their respective Senators with similar concerns. However, I also understand the reauthorization of the Higher Education Act does not create any new programs within Title VI, so is it your understanding that since no new programs are created within Title VI that Section 632 is unnecessary?

Mr. DOMENICI

Mr. DOMENICI. Mr. President, I rise in strong support of the legislation before us today. This bill touches on matters of great importance to the future of American farmers as well as the direction of foreign policy for the United States. I agree with many of my colleagues who contend here today that this legislation signals an important first step in reevaluating our sanctions policy. Many of us would agree that we have overused and thereby deadened the sting of sanctions. In addition, unilateral sanctions only hurt U.S. producers, regardless of the sector, and essentially amount to a gift to our foreign competitors. I would also like to express my agreement with those who have suggested that agricultural sanctions in particular are an ineffective stick and cause substantial damage to already depressed agricultural markets. In a world market where the prices for agricultural commodities continue to decline and almost every major player heavily subsidizes its agricultural sector, curtailing U.S. farmers' access to significant portions of the global market through sanctions only serves to make a difficult situation worse. I would also like to emphasize the importance of allowing the free market to dictate agricultural production and sales. The wealth of nations--and this is a conscious choice of wording--is not attained by erecting barriers--either through tariffs or embargoes--to the export of our agricultural commodities. Our agricultural surplus must be allowed into markets where there is a demand. Pakistan is only one of those markets. If left in place, these sanctions will have a devastating immediate impact on American farmers. The pending sale of 15 million tons of wheat to Pakistan hangs in the balance. Our wheat farmers will shoulder the most immediate burden of misguided foreign policy unless we are willing today to take a small, but crucial step, in changing that policy. American farmers desperately need the remaining 10% of global markets that our current sanctions deny them. We already witnessed the impotence of embargoes in 1980. How often do we have to repeat our mistakes to learn? Between 1993 and 1996, the United States unilaterally imposed sanctions 61 times against 35 countries. The effectiveness of these sanctions in attaining specific foreign policy objectives would have to be evaluated on a case by case basis. However, what requires no detailed examination at all is that we have created a web of walls to U.S. exports that previously did not exist. We have erected, in essence, extensive non-tariff barriers to myriad U.S. exports. We have systematically carved out large pieces of the global market and made them inaccessible to U.S. producers. The competition should be overwhelmed with gratitude. We are doing more to bolster foreign producers of agricultural goods than their own governments could hope to achieve through subsidies. The focus of this legislation are the sanctions invoked in reaction to the nuclear tests carried out in India and Pakistan earlier this Spring. The 1994 Glenn amendment not only included agricultural commodities, it also shut off agricultural credit programs that enabled countries like Pakistan to import U.S. wheat and feed its citizens. In sanctioning Pakistan in this manner, we run the risk of further destabilizing the existing regime. I have already voiced my concern about the danger inherent in this approach. Hungry citizens and desperate regimes with nuclear weapons capability could be a formula for disaster. A further disaster must, however, be noted and has not been adequately emphasized in the discussion of this bill. Allowing international markets to be regulated by supply and demand for agricultural products--as well as other goods, services and capital--is an idea that dates back to the founding of this nation. The wealth of this nation can only be derived from a free market economy and unimpeded international trade. These artificial barriers will spell disaster for U.S. farmers in the immediate term, and they will eventually have negative ramifications for every sector in the U.S. economy. Mr. President, I am hopeful that this legislation will initiate further changes. It is essential to American farmers that we change the current policy. This is an important first step to removing the barriers we have created to allowing U.S. producers to compete and profit in global markets. The economic lessons published by Adam Smith in 1776 are as pertinent today as they were at this country's birth. U.S. sanctions will serve to crush the invisible hand and hinder our competitiveness. I believe we should keep this foremost in our mind as we evaluate our sanctions policies, MFN and fast track in the coming months.

Mr. DOMENICI

Mr. DOMENICI. Mr. President, there are more than 168 ways that this bill makes the IRS more service oriented, and taxpayer friendly. It cracks down on abuses highlighted in the hearings. It corrects some problems called to my attention by constituents. Chairman Roth and the Finance Committee should be commended for the fine job they did on this bill. Often when we pass legislation, I ask the question: Who cares? I can assure you that this is one piece of legislation that everyone cares about. No agency touches more Americans than the IRS. As I said before one out of two Americans said they would rather be mugged than be audited by the IRS. This bill should reverse that prevailing view. Among the key provisions the bill strives for better management; better use of technology; reinstatement of a checks and balances system so that the IRS will no longer be the judge, jury and executioner; discipline for rogue IRS agents; taxpayer protections including the right to a speedier resolution of a dispute with the IRS; fundamental due process and a long overdue reorganization. Hopefully, these reforms will change the environment and change the culture at the IRS. The bill prohibits the IRS from contacting taxpayers directly if they are represented by a lawyer or an accountant. The IRS called this practice by bypassing the tax professional and visiting the taxpayer at work or at dinner ``aggressive collection'' techniques, my constituents called it harassment. The bill attempts to make the IRS employees more accountable for their actions by putting their jobs on the line when they deal abusively with taxpayers. The bill requires the IRS to terminate an employee if any of the following conduct relating to the employees official duties is proven in a final administrative or judicial determination: Failure to obtain the required approval signatures on documents authorizing the seizure of a taxpayer's home, personal belongings, or business assets. Falsifying or destroying documents to conceal mistakes made by the employee with respect to a matter involving a taxpayer. Assault or battery on a taxpayer or other IRS employee. Under the bill, the IRS will no longer be allowed to send out tax bills with huge penalties compounded with interest and cascading penalties just because the IRS was years behind in its work. If the IRS does not provide a notice of additional taxes due, a deficiency, within 18 months after a return is timely filed, then interest and penalties will not start to be assessed and compounded until 21 days after demand for payment is made by the IRS. This excludes penalties for failure to file, failure to pay, and fraud. It is not fair for the IRS to wait years before contacting a taxpayer who honestly believes he has paid the correct amount, only to deliver to him years later a tax bill with interest and penalties that dwarfs the original underpayment. I had a constituent who was told he owed an additional dollar--one dollar--in taxes but owed more than $2,500 in penalties and interest! The IRS agent's response when asked about it was, ``Well, I guess we gotch ya good.'' Small businesses have been the target of some of the worst abusers. I will always remember the day a good friend, a restaurant owner in New Mexico called my office, justifiably hysterical. The IRS had just padlocked her restaurant. What was she to do? What could I do? This bill codifies the proposition that all men and women, even if they work for the IRS, shall follow fundamental due process requirements. Padlocks and raids should be a last resort under this bill. The bill requires the IRS to provide notice to taxpayers 30 days before the IRS files a notice of Federal tax lien, levies, or seizes a taxpayer's property. The bill gives taxpayers 30 days to request a hearing. No collection activity would be allowed until after the hearing. The bill requires IRS to notify taxpayers before the IRS contacts or summons customers, vendors, and neighbors and other third parties. The bill requires the IRS to implement a review process under which liens, levies, and seizures would be approved by a supervisor. The bill legislates common sense. It prohibits the IRS from seizing a personal residence to satisfy unpaid liabilities less than $5,000, and provides that a principal residence or business property should be seized as a last resort. In addition, the bill expands the attorney client privilege to accountants and other tax practitioners. Under this bill, the IRS could no longer insist that a taxpayer waive his rights. In particular, the IRS could no longer insist that a taxpayer waive the statute of limitations before the IRS would settle a case. The bill requires the IRS to provide taxpayers with a notice of their rights regarding the waiver of the statute of limitations on assessment. If the IRS cannot locate the taxpayer's file, the bill prohibits the IRS from rejecting the taxpayer's offer-in-compromise based upon doubt as to the taxpayer's liability. I have known constituents who are left in an IRS twilight zone because the IRS lost their file. I know of one constituent who had his file lost five times. Fortunately, he kept a copy of the file himself, and worked next door to a Kinko's copying center. This bill allows for a prevailing taxpayer to be reimbursed for his or her costs and attorney's fees if the IRS is found not to be substantially justified. The substantially justified standard is consistent with the little-guy-can-fight-the-federal-government-and-win philosophy. I am glad this standard is being expanded, and incorporated into this bill. Originally, the notion that a citizen should be able to recoup attorney's fees and costs when the Federal Government was not substantially justified was a concept in the Equal Access to Justice Act which I authored in the early 1980's. It is historically interesting to note, and perhaps prophetic, that the IRS lobbied very hard to be exempt from that law. In fact, the IRS was exempt when the bill was first enacted. When the Equal Access to Justice was reauthorized 5 years later, Senator Grassley and I worked to include the IRS. It was a big fight but Congress prevailed and got the IRS under the Equal Access to Justice Act's umbrella. The Federal Government with its deep pockets shouldn't be allowed to simply ``outlast'' the average American taxpayer. That isn't what our justice system is about. The bill also clarifies that attorney fees may be recovered in a civil action in which the United States is a party for unauthorized browsing or disclosure of taxpayer information. I have heard a lot about this abuse both from constituents and from the witnesses in the campaign finance investigation. If a taxpayer makes an offer to settle his or her tax bill and the IRS rejects it and the IRS ultimately obtains a judgment against the taxpayer in the amount equal to, or less than the amount of the taxpayer's statutory offer, the IRS must pay the taxpayer's fees and costs incurred from the date of the statutory offer. I am pleased this provision is included in this bill. The offer and settlement provisions are patterned after the securities litigation reform bill which Senator Dodd and I authored last Congress. I can't believe we have to pass a Federal statute to accomplish this next task but apparently we do. The bill requires all IRS notices and correspondence to include the name, phone number, and address of an IRS employee the taxpayer should contact regarding the notice. To the extent practicable and if advantageous to the taxpayer, one IRS employee should be assigned to handle a matter until resolved. In New Mexico, a notice can come from the Albuquerque, Dallas, Phoenix, or Ogden IRS center. Taxpayers are often left with no option but to contact my office asking for help in simply identifying who they should talk to at the IRS to settle their tax matter. The caseworkers are experts, but it would take them 2 days to track down the right IRS office so that the constituent could try and solve their problem. It was so commonly befuddling to constituents that my caseworkers asked that this identification provision be included in this bill. Movie stars, rock singers, and hermits like, and need unlisted phone numbers. The same is not true for Federal agencies. The bill also requires the IRS to publish their phone number in the phone book along with the address. We have a beautiful new IRS building in Albuquerque, but the only phone number for the IRS is the toll free number that is too frequently busy. If you did not know the IRS building in Albuquerque existed, you would not find a clue of its location in the telephone book. I am pleased that the Senate was willing to accept a Domenici amendment, cosponsored by Senators D'Amato, and McCain that requires IRS helpslines to include the capability for taxpayers to have their questions answered in Spanish. In addition, the bill establishes a toll free number for taxpayers to register complaints of misconduct by IRS employees and publish the number. The bill requires the IRS to place a priority on employee training and adequately fund employee training programs. The IRS is making progress. The accuracy of the advice that taxpayers received when they called the IRS was very bad. For example, in 1989, the advice was correct only 67 percent of the time. The accuracy has fortunately improved. Training is the key. The bill requires the Treasury to make matching grants for the development expansion or continuation of certain low-income taxpayer clinics. The bill requires at least one local taxpayer advocate in each state who has the authority to issue a ``Taxpayer Assistance Order'' when the taxpayer advocate believes it is appropriate. Mr. President, many, in fact most, IRS employees work very hard and do a good job. Perhaps the best way to reform the IRS is to reform the code to make it simpler. The doubling from $100 billion to $195 billion of the tax gap--the difference between the amount of taxes owed and the amount actually paid--is evidence that the system is breaking down. I am also pleased that the bill simplifies the capital gains holding period and makes it easier for taxpayers to calculate their capital gains.

Mr. DOMENICI

Mr. DOMENICI. Let me make a point to the Senate. If you do not table this, and you accept the proposal of the distinguished Senator from Washington, you have done two things--both of which are probably very, very bad for our country: One, you will kill this bill; secondly, you will dramatically cut veterans' benefits beyond anything anybody intended. Because to eliminate these technical corrections, you leave in place a law that is signed. The highway bill is signed into law, and it has a mistake in it. And the mistake dramatically cuts veterans' benefits beyond what was intended. So it may not be the intention of the sponsors, but you will accomplish two things, and I just stated them. And I believe that is the case. I yield the floor.

Mr. DOMENICI. Mr. President, would the Senator yield for 1 minute?

Mr. DOMENICI. I thank the Senator. Mr. MOYNIHAN addressed the Chair.

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

Mr. DOMENICI. I wonder if I might ask the floor manager a question.

Mr. DOMENICI. Is it not true that one of the technical corrections has to do with the fact that those who helped write the provisions of the law that attempted to rescind the general counsel's regulation expanding benefits for those who smoked while in the military, that in doing that, actually the drafter expanded that to reduce other benefits that were for veterans who were never even intended to be covered? That is one of the technical corrections, to return it to what it should be, rather than to have an expanded reduction in benefits that go to veterans. Is that not true?

Mr. DOMENICI

Mr. DOMENICI. Mr. President, Subtitle A of title IX of the conference report on H.R. 2676, the IRS Restructuring and Reform Act, contains a number of technical corrections to the Transportation Equity Act for the Twenty-first Century (TEA-21). This subtitle is essentially identical to H.R. 3978, which passed the House by voice vote but has been held up in the Senate due to objections chiefly over provisions concerning Veterans smoking benefits. Mr. President, I want to focus my remarks on the technical corrections to title VIII of TEA-21. This title of the transportation bill did two things. First, it provided roughly $17.5 billion in offsets to pay for the cost of the additional highway and transit spending in TEA-21. With respect to the offsets in TEA-21, the technical corrections in this conference report make a number of changes in the Veterans provisions which will provide a net $959 million increase in Veterans spending as a result of correcting a drafting errors in TEA-21. This technical corrections bill modifies provisions in TEA-21 that inadvertently labeled smoking an act of willful misconduct on the part of the veteran. Further, this bill reverses provisions included in TEA- 21 that extended the change in compensation law to include those people who are currently serving in the military or have recently left the service but are still within certain statutory presumptive periods where any illness is presumed to be service connected. The technical correction also clarifies that the grandfather clause will include those veterans who have filed a claim before the enactment date, not only those with adjudicated claims upon enactment. Finally, the corrections bill adds a new section which extends the GI bill reimbursement increase to a veteran's survivor and dependents. This rate increase was intended to be included in the original bill but was inadvertently left out. Second, TEA-21 established a rather elaborate regimen under our budget laws to ensure a minimum amount of discretionary funding would be set aside for highway and transit programs. The conference report on TEA-21 did not include an explanation of the budget process changes in title VIII and I did not have a chance to discuss these changes in detail when we considered the conference report on TEA-21. TEA-21's Highway and Transit ``Firewalls'' The Balanced Budget Act of 1997 extended through 2002 the spending limits, or caps, on spending provided in the annual appropriations process, what we call ``discretionary'' spending. The Balanced Budget Act also provided separate limits on defense, nondefense, and violent crime discretionary spending, which are frequently referred to as ``firewalls''. These separate spending limits, or firewalls, effectively segregate a specified amount of spending for defense and violent crime reduction. Highways and transit spending are considered nondefense discretionary spending and must compete with other programs under the nondefense discretionary cap. While the Balanced Budget Act made transportation spending a priority, there was a strong desire to provide a means to allow the taxes collected by the Highway Trust Fund to be made available for highway spending. The House-passed transportation bill took highways off-budget. The Senate developed a mechanism in the budget resolution to direct savings from reductions in direct spending programs to the Appropriations Committees to pay for increased transportation spending. Trying to find a mechanism to provide a guarantee for discretionary spending for highways without breaking the budget proved to be one of the more difficult tasks for the conferees on the transportation bill. We ended up with a complicated mechanism that kept highways and transit funding subject to the appropriations process, the budget process, and the discretionary caps. Subtitle A of Title VIII of TEA-21 amended the Balanced Budget and Emergency Deficit Control Act to establish new categories on highway and transit spending at outlay levels for certain programs in TEA-21. The Act also made reductions to the nondefense discretionary limits by an amount equal to OMB's estimate of base level of funding for these programs. These highway and transit categories are very similar to the current defense and violent crime categories in the Balanced Budget and Emergency Deficit Control Act with two notable exceptions. Unlike the defense or crime caps, TEA-21 amended section 250(c) of the Balanced Budget and Emergency Deficit Control Act to add a special rule that provides that any spending in excess of the highway and transit limits be charged to the nondefense discretionary or discretionary spending limits. Next, TEA-21 amended section 251(b)(1) of the Balanced Budget and Emergency Deficit Control Act to provide for two adjustment to the highway outlay limits and one adjustment for the transit outlay limit. One of our objectives in TEA-21 was to ensure that highway revenues would be spent. To meet this objective, the first adjustment ensures the highway outlay limit fluctuates with changes in gasoline tax levels. The highway spending levels and the outlay limits established by TEA-21 are based on the Congressional Budget Office's (CBO) February 1998 estimates of tax revenues to the highway trust fund. To the extent actual revenue levels are different than these 1998 estimated levels or the Office of Management and Budget's (OMB) updated estimates for the budget year is different than these levels, OMB is required to adjust highway obligation levels in TEA-21. Next, OMB is required to calculate the outlay changes that would result from the change in the obligation levels and adjust the highway outlay limits by that amount. A second concern was raised that purely technical changes in outlay estimates could cause the highway or transit outlay limits to be exceeded. The second adjustment TEA-21 added to section 251(b)(1) of the Balanced Budget and Emergency Deficit Control Act was to provide adjustments to the highway and transit outlay limits due to purely technical estimating changes. This was a challenge to draft because it is difficult to distinguish between changes in outlays for technical as compared to policy reasons. Under this second adjustment, OMB is required to estimate the outlays that would result from TEA-21 in its final sequester report this fall. Each year, as part of the President's budget submission, OMB is required to update its estimate of the outlays resulting from TEA-21 and adjust the outlay limits by any change in outlays due to technical re-estimates. On this technical adjustment for outlays, our intent is that OMB only adjust the outlay limits because of purely technical estimating changes. To the extent Congress makes changes in the appropriations process or takes other actions in legislation that effect the level of outlays for highways or transit, the resulting change in outlays should be absorbed by the respective limits and OMB should make no adjustments to those limits. Mr. President, section 251(b)(1)(D)(ii) is vague with respect to how OMB is to adjust the estimate it is required to make pursuant to clause (i) in this fall's final sequester report of the outlays resulting from TEA-21. Our intent is that OMB adjust this estimate of outlays by the adjustments it will make to the outlay limits pursuant to subparagraphs (B) (to align spending with revenues) and (C) (adjustments for technical outlay re-estimates). Mr. President, the highway and transit firewalls we established in TEA-21 was a compromise with the House and the Administration. I would have preferred a much simpler and much less rigid approach. I am particularly concerned, and share the concerns of the distinguished Chairman of the Appropriations Committee, that these new firewalls unnecessarily impinge on the appropriations process. Finally, I am troubled by the complexity of this mechanism and the reliance we have placed on OMB estimates, particularly with respect to the adjustments allowed for the outlay limits. In conclusion Mr. President, let me say this. Even with my reservations and concerns about our new discretionary firewalls and the outlay adjustments that will be made to them, I strongly support TEA- 21. The conference report is the culmination of over 14 months of effort by many members of the House and Senate. Our compromise allows for highway funds to once again be released to states and avoid delay in this year's construction season. Most importantly, TEA-21 provides increased funding for our nation's infrastructure while maintaining fiscal discipline and our balanced budget. I support this bill and am proud to have played an integral role in its development.

Mr. DOMENICI

Mr. DOMENICI. Mr. President, I would like to raise the issue of housing for the mentally ill as the Senate discusses this important VA- HUD-Independent Agencies Appropriations bill. I have worked for many years to focus attention on the serious diseases that are mental illnesses. These are devastating diseases that can leave a person significantly disabled and in need of a variety of services, including affordable housing. Mr. President, I recently met with representatives of a non-profit organization, Cornerstone, Inc., that has provided capital funding to construct quality housing for the seriously and chronically mentally ill who reside in the District of Columbia. This program began in 1994 when Congress directed that $5 million of funding previously for St. Elizabeth's Hospital be allocated for community-based housing. With $3 million of this funding, Cornerstone has leveraged other resources to a total of $15 million that has been used to construct over 300 units of housing for those with mental illness. Cornerstone is now into its final year of funding under the original program. Continuation of this program with another $5 million in capital funding would enable over 350 patients currently residing at St. Elizabeth's to be housed in affordable housing at significant savings over continued residence at the Hospital. Housing supported by Cornerstone, Inc., costs less than $40,000 per unit compared to an estimated cost of $100,000 per patient at St. Elizabeth's Hospital. This is the type of public-private partnership that can do so much to help our communities. Would the Chairman agree that it would be worthwhile for the Secretary of Housing and Urban Development to consider a proposal for continued funding of the Cornerstone, Inc. affordable housing program for the seriously and chronically mentally ill as the Department distributes its 1999 funding?

Mr. DOMENICI. I thank the distinguished Chairman for his consideration of this important matter. I join him in urging the Secretary of Housing and Urban Development to work with Cornerstone, Inc., on the continuation of an affordable housing program for the mentally ill in the Nation's Capital.

Mr. DOMENICI

Mr. DOMENICI. Mr. President, partnerships among our federal laboratories, universities, and industry provide important benefits to our nation. They help to create innovative new products and services that drive our economy and improve our quality of life. Today I introduce the DOE Partnership Amendment to the National Defense Authorization Bill for Fiscal Year 1999. This Amendment improves the capabilities at the DOE sites for effective partnerships and interactions with other federal agencies, with the private sector, and with universities. I have personally observed the positive impacts of well crafted partnerships. These partnerships enhance the ability of the laboratories and other contractor-operated facilities of the Department of Energy to accomplish their federal missions at the same time that the companies benefit through enhanced competitiveness from the technical resources available at these sites. I have also seen important successes achieved by other federal agencies and companies that utilized the resources of the national laboratories and other Department sites through contract research mechanisms. Contract research enables these sites to contribute their technical expertise in cases where the private sector can not supply a customer's needs. Partnerships and other interactions enable companies and other agencies to accomplish their own missions better, faster, and cheaper. I've seen spectacular examples where small businesses have been created around breakthrough technologies from the national laboratories and other contractor-operated sites of the DOE. But, at present, only the Department's Defense Programs has a specific program for small business partnerships and assistance. All programs of the Department have expertise that can be driving small business successes. Historically, in the United States, small businesses have often been the most innovative and the fastest to exploit new technical opportunities--all of the Department's programs should be open to the small business interactions that Defense Programs has so effectively utilized. I have been concerned that barriers to these partnerships and interactions continue to exist within the Department of Energy. In addition, the Department's laboratories and other sites need continuing encouragement to be fully receptive to partnership opportunities that meet both their own mission objectives and industry's goals. And finally, small business interactions should be encouraged across the Department of Energy, not only in Defense Programs. For these reasons, I introduced S. 1874 on March 27, 1998, the Department of Energy Small Business and Industry Partnership Enhancement Act of 1998, which was co-sponsored by Senators Thompson, Craig, Kempthorne, Bingaman, Reid, and Lieberman. The National Coalition for Advanced Manufacturing, or NACFAM, endorsed our actions with S. 1874, describing it as ``a crucial step in reducing barriers to cooperation between the national laboratories and private industry, higher education institutions, non-profit entities, and state and local governments.'' NACFAM also noted that this ``bill supports our shared conviction that collaborative R&D will further strengthen America's productivity growth and national security.'' Today I introduce, with Senator Bingaman as a co-sponsor, language for amendment of the National Defense Authorization Bill for Fiscal Year 1999 that accomplishes almost the same goals as S. 1874. This Amendment was developed through consultation with several of the co- sponsors, the Senate Energy and Natural Resources Committee, the Senate Committee on Armed Services, and the Department of Energy. This Amendment removes barriers to more effective utilization of all of the Department's contractor-operated facilities by industry, other federal agencies and universities. The Amendment covers all the Department's contractor-operated facilities--national laboratories and their other sites like Kansas City, Pantex, Hanford, Savannah River, or the Nevada Test Site. This Amendment also provides important encouragement to the contractor-operated sites to increase their partnerships and other interactions with universities and companies. And finally, it creates opportunities for small businesses to benefit from the technical resources available at all of the Department's contractor-operated facilities. This Amendment supplements the authority of the Atomic Energy Act, which limited the areas wherein the Department's facilities could provide research and other services, not in competition with the private sector, to only those mission areas undertaken in the earliest days of the AEC. My Amendment recognizes that the Department's responsibilities are far broader than the original AEC, and that all parts of the Department should be available to help on a contract basis wherever capabilities are not available from private industry. One barrier at the Department to contract research involves charges added by the Department to the cost of work accomplished by a site. At some laboratories, these charges now range up to 25%. This Amendment requires that charges to customers for research and other services at these facilities be fully recovered, and sharply limits addition of extra charges by the Department to only 3%. The Amendment further requires waiver of these extra charges for small business and non- profit entities and provides a process for the Secretary of Energy to continue any pre-existing waivers. The Amendment creates a five-year pilot program for external customers that enables facilities to examine their overhead rates and determine if an alternative lower rate serves to cover services actually used by these customers. For example, where companies or universities do not require secure facilities or do not utilize the extensive special nuclear material capabilities of the laboratories, then the customer will be charged an overhead rate that excludes security costs and environmental legacy costs. This pilot program will enable the Department and facilities to evaluate the impact of these lower overhead rates for one important class of external customers. The Department is required to report in 2003 on the interim results of this Pilot and to provide recommendations on possibly continuing this Pilot and even extending it to include other federal customers. The Amendment provides direct encouragement for expansion of partnerships and interactions with companies and universities by requiring that each facility be annually judged for success in expanding these interactions in ways that support each facility's missions. The Amendment requires that the external partnership and interaction program be considered in evaluating the annual contract performance at each site. And finally, the Amendment sets up a new Small Business Partnership Program in which all of the Department sites participate. This action will enable small businesses across the United States to better access and partner with any of the Department's contractor-owned facilities. A fund for such interactions up to 0.25 percent of the total site budget is available for these small business interactions. With these changes, Mr. President, the Department of Energy facilities will be better able to meet their critical national missions, while at the same time assisting other federal agencies, large and small businesses, and universities in better meeting their goals and missions.

Mr. DOMENICI. Mr. President, I rise to offer an amendment to provide $5 million for programs that will radically reduce space launch costs. I understand that this amendment has been accepted by the Chairman and Ranking Member, and I thank them for their cooperation in this regard. This amendment will provide support for further development of robust and cost-effective launch vehicles. One such program, the Scorpius Low Cost Launch Development Program, has met development goals on or under budget in every instance. Delays in the program have been a result of bureaucratic delays, rather than technical problems. This is a solid program, and it deserves our full support. In addition to a need for the U.S. to regain a competitive position in the international market for space launch, critical national security concerns can be addressed by reducing these costs. Achieving reduced launch costs is clearly in the national interest. From 1993 through 1997, the United States spent roughly $11 billion for unmanned space launches--well over $2 billion annually. Due to these unnecessary and exorbitant costs, we have lost the commercial space launch industry, which America pioneered, to overseas competitors. Moreover, the excessive costs of space launch in this country have induced current and past Presidents to allow satellite launches from China, Russia and France. It currently costs $10,000 to $12,000 a pound to launch a payload using U.S. rockets. In contrast, China charges $4,000 to $5,000 per pound. Thus, satellite companies can save up to $50 million by using foreign source to put their satellites into orbit. There is a further national security objective that demand cheaper space launch capability. Command and control elements of our military force increasingly rely on digital and satellite communications capability. These communications capabilities and global positioning systems require sufficient satellites for effective implementation. The U.S. can either pay exorbitant amounts to attain adequate communications capabilities or we can support low-cost launch programs now that will radically reduce the costs incurred later. I have been following closely the progress of Microcosm, a small California company, and its Scorpius program. This is an effort to lower space launch cost from the current level of over $7,000 per pound to low Earth orbit to under $1,000 per pound. If successful, the current launch cost for a 15,000 pound military communications satellite would drop from over $75 million to less than $15 million. The over $2 billion per year U.S. cost would drop to less than $255 million per year--for the same level of effort. The design of these systems is robust with a margin of two-to-one compared to current rockets with a near one-to-four factor, almost nothing. Its launch crew is comprised of 12 technicians, not the current hundreds, even thousands of engineers needed today. Those same 12 technicians, when not actually firing the rocket, would be assembling them. It is truly a simple design. Scorpius would be a bona fide ``launch on demand'' vehicle, able to lift off within 8 hours after the payload arrives at the launch site. Its short, squat design, though less elegant than present rockets, makes it oblivious to weather limitations, such as high wind. It would not require the extensive launch infrastructure, such as gantry, providing great flexibility of where it could be fixed. If desirable, Scorpius could even be sea-launched. Our military field commanders would be able to request and receive the satellite resources they need when and where they need them. Microcosm has already received 12 SBIR contracts for Scorpius totaling roughly $4 million. All SBIR contracts were awarded competitively. In Fiscal year 1997, Congress specifically funded Scorpius with the program receiving $7.5 million; in Fiscal Year 1998, Congress again specified Scorpius funding, this time at $10 million. The results have been impressive: 19 5,000 pound thrust engines built, each at a cost under $5,000-- establishing a benchmark cost per pound of thrust of less than $1, a significant improvement over current engines; 19 engines test-fired including 8 each for 200 seconds of continuous burn--the performance required to get a payload to LEO (low Earth orbit); the 5,000 pound thrust engine, with injector, completed and qualified for flight; design completed, including the Critical Design Review, for the 20,000 pound thrust engine; the entire avionics package completed and successfully qualified at Marshall Space Flight Center: Huntsville, Alabama; fuel and cryogenic tanks, with liners, designed and fabricated for the SR-1 sub-orbital vehicle; a new test stand, designed for engines up to 100,000 pounds of thrust; and technical spin-offs that could benefit non-Scorpius programs as well, such as the gas generator. The funding requested for Fiscal Year 1999 would yield similar results. With adequate funding in 1999, Microcosm could achieve the following: design, development and test Scorpius engines through 80,000 pounds of thrust; preliminary design and testing of the 320,000 pound thrust engine; test flights of the sub-orbital vehicles; and preliminary design of the light-lift orbital vehicle. The program has been subjected to many senior technical reviews by both government and industry experts. No significant technical problem has been identified. Low cost launch programs are a bargain. We have a simple choice. Either we will continue to fall behind in our competitive position for space launch costs and risk U.S. security through the transfer of sensitive technologies to be launched by other countries, or we can attain over 85% savings to taxpayers for space launch needs in the near future. These leap-frog technologies could make space launch truly affordable. With our support these efforts will recapture an American industry--and jobs--now lost to foreign countries. amendment no. 3029 (Purpose: To require efforts to continue to increase defense burdensharing by allies) At the end of subtitle D of title X, add the following:

Mr. DOMENICI

Mr. DOMENICI. Mr. President, the pending military construction appropriations bill provides $8.5 billion in new budget authority and $2.6 billion in new outlays for Military Construction and Family Housing programs for the Department of Defense for fiscal year 1999. When outlays from prior-year budget authority and other completed actions are taken into account, the outlays for the 1999 program total $9.1 billion. Compared to 1998 appropriations, this bill is $417 million lower in budget authority, and it is $477 million lower in outlays. This legislation provides for construction by the Department of Defense for U.S. military facilities throughout the world, and it provides for family housing for the active forces of each of the U.S. military services. Accordingly, it provides for important readiness and quality of life programs for our service men and women. The bill is within the revised section 302(b) allocation for the Military Construction Subcommittee. I commend the distinguished subcommittee Chairman, the Senator from Montana, for bringing this bill to the floor within the subcommittee's allocation. Because Congress has not yet passed the final 1999 congressional budget resolution, prior year outlays for this bill have not yet been revised to reflect Congress' override of President Clinton's Line Item Veto of 37 FY 1998 military construction projects. When this adjustment is made, outlays prior to 1999 will be revised upward by $112 million. It is my understanding that this necessary adjustment will be made when CBO revises its baseline for this legislation, which should be before this bill is reported back to the Senate from Conference with the House. The bill provides important increases over the President's request for 1999, and I urge the adoption of the bill. Mr. President, I ask unanimous consent that a table showing the relationship of the bill to the subcommittee's section 302(b) allocation be printed in the Record.

Mr. DOMENICI

Mr. DOMENICI. Mr. President, my support for this amendment must be qualified. I too am concerned about proliferation. However, I do not welcome the potentially negative consequences relying strictly on U.S. unilateral sanctions in this case. I strongly urge we combine sanctions with engagement. This engagement must be based on comprehensive, calculated non-proliferation policies. I believe that the proliferation of weapons of mass destruction poses an imminent threat to U.S. and international security. The geopolitical strings that contained states' individual aspirations of mass destruction capabilities have been severed. The emerging multipolar world--in which the U.S. is, without question, the dominant economic, military and cultural power--creates new threats and offers new opportunities. Capitalizing on opportunities requires U.S. leadership. No other nation has the wherewithal to facilitate the creation and implementation of thoughtful and deliberate strategies to counter threats to U.S. and international security. No other nation parallels the power the U.S. can bring to bear in creating a stable international order. There is no doubt that we live in an increasingly interdependent world. Most major problems--economic, environmental, military--cannot be handled by the U.S. alone, despite our dominant position. The proliferation of weapons of mass destruction is one such problem. This threat cannot be stemmed by unilateral U.S. actions. The dangers of weapons of mass destruction proliferation--whether by rogue nations or terrorist organizations--poses a threat to the U.S. military and U.S. civilians, as well as the future of humanity. In light of the changed global circumstances and the U.S. position as the global power, we urgently need to rethink antiquated doctrines of defense and provide a coherent approach to non-proliferation policies. Our nuclear reality has radically changed in the past weeks. Recent rumblings from the detonation of nuclear devices in Southeast Asia should awaken us to a few simple realities: our non-proliferation policies have failed; any country desirous of nuclear capability can attain it; and sanctions alone are an inadequate deterrent and potentially dangerous approach. Sanctions alone will not suffice in deterring would-be proliferators. When leaders of a country are willing to state that the people ``will eat grass'' in order to obtain weapons of mass destruction capability, this should be a sign of the relative impotence of U.S. unilateral attempts to alter their behavior. The Nuclear Non-Proliferation Treaty--the lynchpin of nuclear control--is under assault. North Korea, Iraq, India and Pakistan sent clear signals--nuclear proliferation is a threat now. How obvious do the warning signs have to be to evoke an effective response? The U.S. should be taking the lead in formulating national and multilateral efforts to contain proliferation. If not contained, the recent events in India and Pakistan will become a common occurrence in the world of the near future. As stated by Secretary of Defense William Cohen in recent defense Appropriation hearings, India's actions could set off a chain reaction--not solely of a fissile nature but nonetheless having similar cataclysmic ramifications. Without swift and multilateral intervention this chain reaction could easily lead to a nuclear arms race between India and Pakistan that would spillover into other countries' strategic calculations. More ominous is that Indian and Pakistani defiance will set the tone for other less developed states. It is clearly in the U.S. interest to prevent uncontrolled proliferation. A U.S. response proportionate to the threat would involve bringing all the policy tools we can bring to bear in reducing that threat. In sum, this requires a reasonable, consistent and aggressive non-proliferation strategy. I would like to take a minute to look at India as an example of the failures in U.S. non-proliferation policies. India's tests resulted from international and domestic concerns. The international issues point to problems in the form of lack of consistency in U.S. non- proliferation policies. First, India's strategic concerns are most succinctly formulated as follows: China, Pakistan, and the former's assistance to the latter. India has fought three wars in the last 50 years with Pakistan. These two states' relations with one another at their best are more perilous than U.S. relations with the Soviet Union were leading up to the Cuban Missile Crisis. Moreover, India enjoys front row seats to observe how the existing non-proliferation regimes fail to check China's transfer of controlled technologies to Pakistan as well as another potential enemy, Iran. If China enjoys unimpeded export of missile technologies to Pakistan, and Pakistan proceeds to demonstrate its missile capabilities, why should India refrain from flexing its nuclear muscle? Second, India has repeatedly indicated its frustration with lack of progress toward global nuclear disarmament. As my colleague, Senator Moynihan, former U.S. Ambassador to India, recently suggested, India rejects the discriminatory nature of the existing non-proliferation regimes. Perhaps due to their frustration with the lack of progress on disarmament, India believes that these tests would lend urgency to the process. The domestic dimension boils down to the nationalist and isolationist inclinations of the political leaders in India at present. The election manifesto of India's BJP states that it ``rejects the notion of nuclear apartheid and will actively oppose attempts to impose a hegemonistic nuclear regime.'' India will not have its matters of security or its exercise of the nuclear option dictated to it. Nor would any other sovereign state. While the world was generally appalled by India's actions, the reaction among Indians bordered on euphoria. Even though only four members of the BJP made the decision to test, that choice obviously enjoys widespread support. We witnessed similar domestic jubilation for Pakistan's response. I agree with my colleague, Senator Moynihan, who suggested that the U.S. should attempt to engage India and provide it with incentives to join international non-proliferation regimes. The current government in India only welcomes our sanctions. To approach the situation with India by invoking sanctions only plays into the aims of the strong nationalist and isolationist currents in that country. Invoking sanctions on Pakistan raises even more serious concerns. Pakistan is a poor and unstable country. Should our sanctions push it over the brink and induce a collapse--we would have nuclear weapons in the possession of a desperate regime. As Henry Kissinger astutely observed, non-democratic regimes often use external conflict to coalesce support in the face of domestic unrest. Our sanctions may only force Pakistan's hand. The U.S. should temper its sanctions with constructive engagement. And we should make the lifting of those sanctions contingent on India and Pakistan's willingness to negotiate their entry into non- proliferation regimes as is suggested in this amendment. A comprehensive and effective non-proliferation policy would include several elements. The recent call made by the five nuclear powers for these states to freeze their weapons development is a step in the right direction. The U.S. must ensure that these multilateral efforts get the sustained and clear commitment requisite to turn the tide of proliferation. Our objectives should be clear: First, we need to induce relations between India and Pakistan with the objective of preventing an arms race on the Subcontinent. We must convince them that their security is NOT enhanced by the weaponization or deployment of these devices. Second, we should capitalize on recent overtures made by these countries to negotiate their entry into numerous non-proliferation regimes. We should focus particular attention on a fissile materials cutoff agreement as well as India and Pakistan's commitment to cease testing. Third, the negotiations among the nuclear powers must take bold actions to address the discriminatory nature of the existing Nuclear Non-Proliferation Treaty. This reality was a longstanding and central reason for India remaining outside of the regime. We must assume that other nations recognize the discrimination codified in this regime, and we must begin to address it. The implementation of these policies will be anything but easy, but they are critical to international stability and security. To be successful, U.S. non-proliferation policy must utilize the full array of policy tools available; it must be consistent and aggressive; and it must take into account other nations' perspectives and cost-benefit calculations. Imposing sanctions and muddling through simply will not suffice. Meeting U.S. security needs in the 21st Century will require renewed commitment and more complex strategies than those that sufficed for the last several decades. Make no mistake about it though, these issues must be addressed now, and our commitment must be unwavering. I concur with Senator Moynihan in one other important respect. In the case of India, we should not be focusing on the intelligence failure, but rather the major failure in our statecraft, or lack thereof. Statecraft in the form of addressing these problems as a leader, as the dominant global power. If the U.S. does not step up to the plate, the new millenium will be characterized by nations--both hostile and friendly--being armed with weapons of mass destruction and the means to deliver those weapons to our doorstep. The 21st century will either witness widespread proliferation of mass destruction capabilities or the building of international norms and consensus to scale back incentives to acquiring costly and dangerous weaponry. The U.S. is the only country in a position to take a leaderhip role in defining the course and shape of the future international order. If we don't act now, the 21st Century will, indeed, be the era of weapons of mass destruction. Mr. President, I support the amendment currently before the Senate. However, this support is qualified. I do not assume that our condemnation and unilateral economic sanctions will be adequate to turn the tide. I support the provisions centered on reduing tensions between India and Pakistan, urging multilateral efforts to address proliferation threats and expressing the need for U.S. leadership. We must act now. We must be consistent and vigilant. And we must utilize all policy tools available to achieve our aims. Mr. GRAMM addressed the Chair.

Mr. DOMENICI

Mr. DOMENICI. Mr. President, I am very pleased that the Senate today has passed the National Drought Policy Act of 1998. I introduced the National Drought Policy Act of 1997 a year and a half ago in response to the devastating drought suffered in New Mexico and the rest of the Southwest in 1996. The Senate passed that legislation, and Representative Skeen introduced H.R. 3035. The time is indeed ripe to send this legislation now to the President, as once again the Southwest may face devastating drought conditions. The drought of 1996 was a natural disaster that cost $5 Billion in the Western United States. Already this year, drought conditions in Texas are parching farming and grazing lands that will cost an estimated $1.7 Billion in crop and livestock losses. Drought conditions are also being reported in areas throughout the South. And the summer of 1998 has not yet officially begun. Every region in the United States can be hit by these catastrophes. Yet, while drought is so pervasive and affects the economic and environmental well-being of the entire nation, the United States is poorly prepared to deal with serious drought emergencies. As a result of the hardships being suffered in every part of my state last year, I convened a special Multi-State Drought Task Force of federal, state, local, and tribal emergency management agencies to coordinate efforts to respond to the drought. The Task Force was ably headed up by the Federal Emergency Management Agency, and included every federal agency that has programs designed to deal with drought. Unfortunately, what the Task Force found was this: although the federal government has numerous drought related programs on the books, we have no integrated, coordinated system of implementing those programs. Drought victims in this nation do not know who to turn to for help, and when they finally do find help, it is too late and totally inadequate. The gradual nature of drought devastation underscores the need for drought management rather than drought response. This legislation will be the first step toward finally establishing a coherent, effective national drought policy. The House-passed bill only slightly modifies my original language which passed the Senate in November. The National Drought Policy Act of 1998 creates a commission comprised of representatives of those federal, state, local, and tribal agencies and organizations that are most involved with drought issues. S. 222 charges the commission with providing recommendations on a permanent and systematic Federal process to address this particular type of devastating natural disaster. Unfortunately, drought conditions are a way of life in my region of the country. But better planning on our part, and with the recommendations of the Drought Commission established by this legislation, may limit some of the damage. I look forward to the President's prompt signing of this important legislation.

Mr. DOMENICI

Mr. DOMENICI. Mr. President, I was necessarily absent this morning and I missed the vote on the Conference Report for H.R. 1882 the A+ Savings Account for Public and Private Schools. I am pleased that this bill was approved by the Senate by a vote of 59-36. This legislation has my wholehearted support. Several significant reforms in the bill are based, in part, on findings of a Senate Task Force on Education that I was privileged to be a part of. These include testing and merit pay incentives of teachers, and tax incentives for parents who save for their children's K-12 education needs. The President should look at the merits of this bill and sign it into law. It is time that the federal government stops enabling an entrenched education bureaucracy that resists every attempt at exponential change. New Mexicans, I believe, are ready to embrace such change, and this legislation is the vehicle to begin making our schools ready for the twenty-first century. I am pleased this bill includes a provision to provide incentive funds to states that establish periodic assessments of elementary and secondary school teachers, including a merit pay system to reward teachers based on merit and proven performance. The provision permits the use of federal education dollars to establish and administer these programs. Teacher testing and merit pay is an important philosophical shift. It is reasonable to expect teachers to know the subject matter they are responsible for imparting to our young people. The centerpiece of the bill is the establishment of tax-free savings accounts that can be used for qualified education expenses from kindergarten through twelfth grade. Main provisions in the bill, beyond the merit pay and block grant provisions, are: A+ Savings Accounts.--These accounts are similar to the current Education IRA for college tuition. Under this bill, the annual contribution limit will be increased from $500 to $2,000 a year. This gives millions of famlies the opportunity to save tax-free for their children's education. Extend employer-provided education benefits to 1 million employees-- The bill extends this popular provision that allows employees to accept employer-provided education assistance without having to declare it as income (up to $5,250 a year). The tax exclusion will apply to assistance for undergraduate courses. Allow 1 million students to benefit from tax-free state pre-paid tuition plans--Many states have established pre-paid tuition plans to make it more affordable to attend state colleges in the future, and to help families save for this important expenses. The bill goes a step beyond tax deferral of such savings as currently allowed--this bill makes such savings tax-free. (The New Mexico legislature is expected to consider a pre-paid tuition plan.) School Construction: Assists local governments in issuing tax-exempt bonds for school construction by increasing the small-issuer exception from $10 million to $15 million, provided that at least $10 million of the bonds are issued to finance public schools. Health Scholarships: Provides tax-free treatment for National Health Corps Scholarships. In addition, the conferees extended tax free treatment to Hebert Armed Forces Health Professions Scholarships. Student Improvement Incentive Awards: Allows State education agencies to make awards to public schools that demonstrate a high level of academic achievement. State Incentives for Teacher Testing and Merit Pay: Authorizes the Department of Education to provide awards to states that test their K- 12 teachers every three to five years in the subjects they teach and that have a merit pay program. Same Gender Schools and Classrooms: Allows federal funding for education reform projects that provide same-gender schools and classrooms, as long as comparable opportunities are afforded both sexes. Reading Excellence: Authorizes a literacy program that focuses on training teachers to teach reading using scientifically proven methods such as phonics. The President supports the program and $210 million was appropriated by Congress last year to establish a literacy program. Safer Schools: Includes language providing that weapons brought to school are admissible as evidence in any internal school disciplinary proceedings. I genuinely hope that the President will sign this bill.

Mr. DOMENICI

Mr. DOMENICI. Mr. President, I want to compliment the Chairman of the Armed Services Committee on his very skillful handling of this important legislation and for his statesmanlike approach to some serious and troubling budget issues in this year's defense budget. This year the defense budget is once again confronted with a serious mismatch between the DoD/OMB and the CBO estimates of the outlays needed to execute the programs in the budget. CBO's estimate was $3.7 billion higher than OMB and DoD's estimate. Becuase the President's proposed defense budget was right up against the discretionary spending caps adopted in the Bipartisan Budget Agreement, compensating for CBO scoring would require large reductions in manpower, procurement, or readiness, or all three. Cuts like that are simply not acceptable. Thanks in large part to the cooperation we received from the Chairman of the Armed Services Committee and of the Appropriations Committee, from CBO and from OMB, we were able to devise a solution to much of the problem. The solution has three parts: First, Congress would legislate policies recommended by the Administration to better manage cash in DoD's Working Capital Funds. This would lower fiscal year 1999 outlays by $1.3 billion. Second, Congress would agree to changes in two classified accounts in the Air Force budget that would lower 1999 outlays by $700 million. Third, Congress would enact asset sales amounting to roughly $700 million. The Chairmen of the Armed Services Committee and the Appropriations Committee have assured me that taken together these actions reduce the 1999 outlay shortage to manageable dimensions and help avoid the negative effect on readiness or modernization that was feared. Mr. President, I have reviewed the text of the 1999 Defense Authorization bill, and I believe we are within reach of the solution. However, I have a concern. The cash management provisions of DoD's Working Capital Funds contains a waiver clause for the Secretary of Defense that is very broad. I am concerned that some in the Department may find this waiver authority too tempting to resist and will use up the outlays intended to be left in the cash reserves of the Working Capital Funds. Unless there are truly extraordinary and compelling reasons that are not now apparent to us, I believe it would be a very serious mistake to use the available waiver authority. Doing so would certainly destroy the cooperation and trust that has been built up this year with the Defense Department and OMB as we worked together to address this outlay problem. Assuming there is no unwarranted use of the waiver authority granted in the amendment, I believe we can say we have bridged this problem this year. Next year, I very strongly hope we will receive more accurate outlay estimates from those who have in the past tended to underestimate them. It is unacceptable to receive such miscounts of outlays and then to be told that for Congress to adopt more accurate estimates, the readiness and modernization of our Armed Forces must be reduced. I hope this is the last time we are forced to address this issue.

Mr. DOMENICI

Mr. DOMENICI. Mr. President, I am pleased to introduce an old personal friend and a highly qualified individual as the nominee for the U.S. Ambassador to Spain. Ed Romero is not only a native New Mexican, he is a descendant of the Spanish colonists who first settled in New Mexico in 1598. Mr. Romero's personal biography represents both a commitment to his heritage and diligence as a upstanding citizen of this country. In the fulfillment of his duties as a New Mexican and an American, Mr. Romero headed several delegations to Mexico to forge the relationships necessary to expand business opportunities. He was also a member of the U.S. delegation to the Helsinki accords. Mr. Romero was the founder and Chief Executive Officer of Advanced Sciences, Inc. Mr. Romero also founded the Albuquerque Hispanic Chamber of Commerce and is currently on the Boards of several Hispanic and Latin American Business and Cultural Associations and Foundations. In his civic and community pursuits, he has been recognized by organizations as diverse as the National Kidney Foundation, New Mexico's Air National Guard and the New Mexico Anti-Defamation League. Mr. Romero has traveled extensively in Spain and speaks fluent Spanish. Mr. President, it is my pleasure and, indeed, an honor to introduce to the Senate an individual as distinguished and qualified for the position of Ambassador to Spain as Edward Romero. I believe his background and commitment will make him a gracious, competent and effective representative of the U.S. I fully support his nomination and respectfully ask my colleagues in the Senate for their careful consideration of Mr. Romero as the next U.S. Ambassador to Spain.

Mr. DOMENICI

Mr. DOMENICI. Mr. President, partnerships among our federal laboratories, universities, and industry provide important benefits to our nation. They help to create innovative new products and services that drive our economy and improve our quality of life. Today I submit the DOE Partnership Amendment to the National Defense Authorization Bill for Fiscal Year 1999. This Amendment improves the capabilities at the DOE sites for effective partnerships and interactions with other federal agencies, with the private sector, and with universities. I have personally observed the positive impacts of well crafted partnerships. These partnerships enhance the ability of the laboratories and other contractor-operated facilities of the Department of Energy to accomplish their federal missions at the same time that the companies benefit though enhanced competitiveness from the technical resources available at these sites. I have also seen important successes achieved by other federal agencies and companies that utilized the resources of the national laboratories and other Department sites through contract research mechanisms. Contract research enables these sites to contribute their technical expertise in cases where the private sector can not supply a customer's needs. Partnerships and other interactions enable companies and other agencies to accomplish their own missions better, faster, and cheaper. I've seen spectacular examples where small businesses have been created around breakthrough technologies from the national laboratories and other contractor-operated sites of the DOE. But, at present, only the Department's Defense Programs has a specific program for small business partnerships and assistance. All programs of the Department have expertise that can be driving small business successes. Historically, in the United States, small businesses have often been the most innovative and the fastest to exploit new technical opportunities--all of the Department's programs should be open to the small business interactions that Defense Programs has so effectively utilized. I have been concerned that barriers to these partnerships and interactions continue to exist within the Department of Energy. In addition, the Department's laboratories and other sites need continuing encouragement to be fully receptive to partnership opportunities that meet both their own mission objectives and industry's goals. And finally, small business interactions should be encouraged across the Department of Energy, not only in Defense Programs. For these reasons, I introduced S. 1874 on March 27, 1998, the Department of Energy Small Business and Industry Partnership Enhancement Act of 1998, which was co-sponsored by Senators Thompson, Craig, Kempthorne, Bingaman, Reid, and Lieberman. The National Coalition for Advanced Manufacturing, or NACFAM, endorsed our actions with S. 1874, describing it as ``a crucial step in reducing barriers to cooperation between the national laboratories and private industry, higher education institutions, non-profit entities, and state and local governments.'' NACFAM also noted that this ``bill supports our shared conviction that collaborative R&D will further strengthen America's productivity growth and national security.'' Today I submit, with Senator Bingaman as a co-sponsor, language for amendment of the National Defense Authorization Bill for Fiscal Year 1999 that accomplishes almost the same goals as S. 1874. This Amendment was developed through consultation with several of the co-sponsors, the Senate Energy and Natural Resources Committee, the Senate Committee on Armed Services, and the Department of Energy. This Amendment removes barriers to more effective utilization of all of the Department's contractor-operated facilities by industry, other federal agencies, and universities. The Amendment covers all the Department's contractor-operated facilities--national laboratories and their other sites like Kansas City, Pantex, Hanford, Savannah River, or the Nevada Test Site. This Amendment also provides important encouragement to the contractor-operated sites to increase their partnerships and other interactions with universities and companies. And finally, it creates opportunities for small businesses to benefit from the technical resources available at all of the Department's contractor-operated facilities. This Amendment supplements the authority of the Atomic Energy Act, which limited the areas wherein the Department's facilities could provide research and other services, not in competition with the private sector, to only those mission areas undertaken in the earliest days of the AEC. My Amendment recognizes that the Department's responsibilities are far broader than the original AEC, and that all parts of the Department should be available to help on a contract basis wherever capabilities are not available from private industry. One barrier at the Department to contract research involves charges added by the Department to the cost of work accomplished by a site. At some laboratories, these charges now range up to 25%. This Amendment requires that charges to customers for research and other services at these facilities be fully recovered, and sharply limits addition of extra charges by the Department to only 3%. The Amendment further requires waiver of these extra charges for small business and non- profit entities and provides a process for the Secretary of Energy to continue any pre-existing waivers. The Amendment creates a five-year pilot program for external customers that enables facilities to examine their overhead rates and determine if an alternative lower rate serves to cover services actually used by these customers. For example, where companies or universities do not require secure facilities or do not utilize the extensive special nuclear material capabilities of the laboratories, then the customer will be charged an overhead rate that excludes security costs and environmental legacy costs. This pilot program will enable the Department and facilities to evaluate the impact of these lower overhead rates for one important class of external customers. The Department is required to report in 2003 on the interim results of this Pilot and to provide recommendations on possibly continuing this Pilot and even extending it to include other federal customers. The Amendment provides direct encouragement for expansion of partnerships and interactions with companies and universities by requiring that each facility be annually judged for success in expanding these interactions in ways that support each facility's missions. The Amendment requires that the external partnership and interaction program be considered in evaluating the annual contract performance at each site. And finally, the Amendment sets up a new Small Business Partnership Program in which all of the Department sites participate. This action will enable small businesses across the United States to better access and partner with any of the Department's contractor-owned facilities. A fund for such interactions up to 0.25 percent of the total site budget is available for these small business interactions. With these changes, Mr. President, the Department of Energy facilities will be better able to meet their critical national missions, while at the same time assisting other federal agencies, large and small businesses, and universities in better meeting their goals and missions.

Mr. DOMENICI

Mr. DOMENICI. I thank Senator Jeffords for his cooperation.

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