Pete Domenici

Mr. DOMENICI

Mr. DOMENICI. Mr. President, I wonder if I might have 1 minute.

Mr. DOMENICI. Mr. President, I rise to congratulate the Senator from Michigan. I believe the time for this bill and this change in the quotas has come and he has had the courage and the intelligence to see it and to bring us a bill that will truly enhance our productivity and our capacity to man the kind of high-tech programs that this country so desperately needs to stay up front. Already in many parts of the country there are not the skilled workers necessary for many of these jobs. This bill won't take care of all of that, but it is a recognition that a small portion of it ought to take place as provided for in this legislation. I yield the floor.

Mr. DOMENICI

Mr. DOMENICI. Mr. President, I regret that I have to take a few moments and keep the distinguished Senator here, but I don't know whether I will get a chance to talk about the India nuclear blast if I don't do it today. I will be as brief as I can. Yesterday, two committees of the Senate held hearings on India's recent underground nuclear tests. It is my understanding that those committees, particularly the Select Committee on Intelligence, which heard testimony from CIA Director Tenet, are most interested in why the United States had no advance warning of India's plan. I think the Senate needs to be very careful as it reviews the India situation not to kill the messenger. The simple fact is that covert nuclear operations are extremely difficult and sometimes impossible to detect. Even before its tests, we knew a great deal about India's nuclear weapons program. We were cognizant of the readiness of their weapons, that because their test site had been prepared for tests in 1995, they could test on very short notice, and that the newly elected party had campaigned on a platform that included the development of nuclear weapons--all signs that should have made this week's tests less surprising. Yet, we were caught off guard. But I do not think that it is entirely the responsibility of our intelligence agencies. Since the fall of the Soviet Union, U.S. policymakers have been subject to two sets of pressures, both of which have led us to consider reducing our nuclear stockpile to the lowest possible levels and have reduced our vigilance. One of those pressures comes from an anti-nuclear movement which feels a moral imperative to abolish nuclear weapons. Everyone knows that we would like to abolish nuclear weapons, but what is going on in the world indicates that that will not occur just because the United States decides to do so. The second pressure comes from our military, and it is felt largely in the authorization and appropriations process in the Congress. Today, the emphasis in the Pentagon is on readiness, warfighting capability and nuclear weapons, and the strategic command which is responsible for their use has taken a second-class status to those branches of the service interested in tanks, planes, ships and troop readiness. As a result, we are seeing a diminution of the strategic command within the Pentagon and across policymakers in the Congress, as well as the administration, and a failure to recognize how attractive and important nuclear weapons are. It takes the actions of an India to remind us that for a nation that perceives itself as threatened, wants to threaten, demonstrate its technical prowess or simply wants to join the elite nuclear club, nuclear weapons are extremely attractive. That is a deplorable situation, but it is a fact. Unfortunately, in taking the actions it has of the last 2 days, India has destabilized an already precariously balanced region of the world. Although Pakistan and China were previously aware of India's nuclear capability, India's demonstrated willingness to further develop and demonstrate those capabilities is, by its nature, threatening to Pakistan and China. In turn, China and Pakistan, but Pakistan in particular, may also take steps to demonstrate their nuclear willingness. The United States is correct to impose sanctions on India and to prepare to do so on Pakistan if they test. I hope that Pakistan will recognize by evaluating the situation in Russia that superpower status built on economic prowess is significantly more desirable than superpower status achieved through nuclear weapons at the expense of economic prowess. Regardless of the achievements of the high-level U.S. delegation dispatched to Pakistan yesterday, it is obvious that there could be under consideration by both Pakistan and China the effect of nuclear weapons in the hands of India, which might force both countries to proceed with nuclear weapons. We learned about India's tests first through a press announcement and then through our seismic monitors. India could just as well have tested their devices thousands of miles offshore on ships or drone planes. We would certainly have registered the tests, but we might never have known who tested. That was the situation in 1978 when a device exploded in the Indian Ocean and it took us many years to determine whose it was. Incidentally, although today our satellites can detect atmospheric nuclear explosions, there has been some consideration of not replacing that capability when our current systems reach the end of their true lifetimes. This is just one symptom of our lax policy and declining attention to the threat of nuclear weapons. Until they are disproved, and by that I mean something more than reassurances from the Indian Government which has already demonstrated a willingness to be misleading about these issues, we need to consider the possibility that India cooperated with other countries in conducting these tests. We currently assume that all the devices that were detonated were Indian, that all the technicians on the site were Indian, and that the data has not been shared with other nations, but we cannot base our final analysis on assumptions. India's tests cast a long shadow over the ratification of the Comprehensive Test Ban Treaty. To date, Chairman Helms, chairman of the Senate Committee on Foreign Relations which has jurisdiction over all treaties, has indicated he is not in a hurry to report the Comprehensive Test Ban Treaty. I know some in arms control may have been frustrated by his position. Today, I think they are fortunate that the treaty will not be considered in the near future. In light of the event which occurred in India, we need some time and, obviously, we need to think through the application of resources to the information necessary to make sure the test ban treaty can be carried out. India's willingness to test reminds us that global nuclear capabilities will not remain static if the United States agrees to lock in its nuclear capabilities pursuant to a test ban. In the coming decades, other countries, whether they are signatories to the treaty or not, may develop nuclear capabilities and, given time, may even develop significant threatening nuclear capabilities, which is not the case at this point. The United States nuclear posture is not established in response to the threat posed by a single country, but also considers threats that may be posed by strategic alliances. We need to recognize that the nuclear buildup we now expect to occur on the Pakistan-India border and that may spread to China could one day not be directed against one another, but there could be alliances which put America's future in jeopardy. More so, we need to recognize that the nuclear arsenal of the United States, one that we maintain today and will maintain into the indefinite future, has to be able to respond to all potential scenarios that might unfold in an uncertain and changing world. That means at a minimum, our weapons must be safe and reliable, not just theoretically so. We must have confidence in them as our tools of foreign policy and military policy. That requires our potential adversaries, whether they are our current adversaries or our current allies, be aware of our formidable scientific skills and our willingness to direct them toward the maintenance of our stockpile. While there is some uncertainty, and my skepticism can be expected to continue to demand improvements, I am reasonably confident that the United States has the scientific ability to maintain our stockpile if we make that a priority. That requires that we make it a priority today, even though current focus is more on conventional warfighting capabilities, and we make it a priority into the future. Everyone should understand that the United States has made a commitment that we will not test nuclear weapons. So we are not going to have any underground tests or any other kinds of tests. That means our scientists have to be capable of telling us that our stockpile is secure, safe and trustworthy. That requires that we pay attention to what is needed to do that. The reason for the explosions in India is to make sure they can say, ``We now know how to build a bona fide weapon, and that it will work.'' If they did not do the testing, they would be acting theoretically, they would be basing it on science, on modeling, on previous data about other weapons and weapons they might try to duplicate. But the only way to be sure and to have it right is to do tests. We have done those. We are not doing them anymore. But everybody in this body and in the House and in the White House have to be concerned that if we have them, they have to be trustworthy. And to do that, we may have to spend a little bit of money on science and technology to make sure that without testing that they are valid. We are not building any new nuclear weapons. We have committed to that. We have not for some time; and for the foreseeable future we will not. Our nuclear posture cannot be based exclusively on our dedication to maintaining our own stockpile so it can respond to any potential threat; we must also work to understand and then reduce that threat. India's ability to conduct five tests without our previous knowledge, even though we should have been on alert for them, demonstrates how easy it is for a nation to develop such a capability. So while I began my remarks by saying that the focus of our frustration should not be on our intelligence agencies alone, that they were unable to provide us advanced warning of India's plans, I also believe that in the future we must improve by an order of magnitude our ability to understand the nuclear threats we face. We are considering entering into discussions on a new round of arms control agreements that would, for the first time, limit the number of nuclear warheads in the United States and Russia. We need to approach the notion of counting warheads and of entering into limits with a single country with great skepticism. Our inability to monitor India's nuclear activities should make it clear that we are far from having the ability to monitor a warhead limitation treaty now and for some time to come. Mr. President, I yield the floor.

Mr. DOMENICI

Mr. DOMENICI. Mr. President, I ask unanimous consent that the Committee on the Judiciary be authorized to meet during the session of the Senate on Wednesday, May 13, 1998, at 10:30 a.m. in room 226 of the Senate Dirksen Office Building to hold a hearing on ``Tobacco Litigation: Is it Constitutional?''

Mr. DOMENICI. Mr. President, I ask unanimous consent on behalf of the Governmental Affairs Subcommittee on International Security, Proliferation, and Federal Services to meet on Wednesday, May 13, 1998 at 2:00 p.m. for a hearing on ``S. 1710, The Retirement Coverage Error Correction Act of 1998.''

Mr. DOMENICI. Mr. President, I ask unanimous consent that the Subcommittee on Financial Institutions and Regulatory Relief of the Committee on Banking, Housing, and Urban Affairs be authorized to meet during the session of the Senate on Wednesday, May 13, 1998, to conduct an oversight and reauthorization hearing on the Community Development Financial Institutions Fund (CDFI) Program.

Mr. DOMENICI. Mr. President, I ask unanimous consent that the Committee on Labor and Human Resources be authorized to meet in executive session during the session of the Senate on Wednesday, May 13, 1998, at 9:30 a.m.

Mr. DOMENICI. Mr. President, I ask unanimous consent that the Subcommittee on near Eastern and South Asian Affairs be authorized to meet during the session of the Senate on Wednesday, May 13, 1998, at 2:00 p.m. to hold a hearing.

Mr. DOMENICI. Mr. President, I ask unanimous consent that the Communications Subcommittee of the Senate Committee on Commerce, Science, and Transportation be authorized to meet on Wednesday, May 13, 1998, at 9:30 a.m. on Federal Communications Commission Oversight: Wireless Bureau.

Mr. DOMENICI. Mr. President, I ask unanimous consent that the Committee on Energy and Natural Resources be granted permission to meet during the session of the Senate on Wednesday, May 13, for purposes of conducting a Full Committee business meeting which is scheduled to begin at 9:30 a.m. The purpose of this business meeting is to consider pending calendar business.

Mr. DOMENICI. Mr. President, I ask unanimous consent that the Committee on Foreign Relations be authorized to meet during the session of the Senate on Wednesday, May 13, 1998, at 10:00 a.m. to hold a hearing.

Mr. DOMENICI

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

Mr. DOMENICI

Mr. DOMENICI. Mr. President, I ask unanimous consent that at 2 o'clock, the Senate begin consideration of S. 1260 under the consent agreement.

Mr. DOMENICI. I yield the floor. Mr. REID addressed the Chair.

Mr. DOMENICI

Mr. DOMENICI. Mr. President, I ask unanimous consent that there now be a period for the transaction of morning business until the hour of 2 p.m. today, with Senators permitted to speak for up to 10 minutes each.

Mr. DOMENICI

Mr. DOMENICI. Mr. President, I will not use that amount of time. I just want to say how pleased I am that today we are going to close the loop and make sure that the small group of entrepreneurial plaintiff lawyers who were taking advantage of our securities laws are now going to follow a uniform law in the States and in the Federal courts. It was in 1990 that Senator Sanford of North Carolina, who passed away just recently, and I introduced the first legislation on this issue. We did so because we found that a small group of plaintiff's lawyers were engaged in the business of finding meritless lawsuits to file, but since they were class action lawsuits, they would have to get settled. We found a trend across the country where they settled all these cases rather than have jury trials. A small cadre of lawyers became rich, and, as far as we can find out, very few stockholders benefited. We passed the first bill to tighten up the rules in the Federal court system in 1995. It is the only bill where we overrode President Clinton's veto. And tonight I think we will pass, by an even more overwhelming number, the culmination of this effort. The bill will keep plaintiffs' lawyers from picking State courts to do what we have precluded them from doing in the Federal courts. This bill will stop them from doing what we know they already are doing--they look for a sympathetic state forum where they can get these lawsuits filed. This is legislation that helps the high-tech companies that get started in America. We have testimony that the Intel company--that great American company--had they faced one of these kinds of suits when they were in their infancy, they are almost certain that they would not exist today. We do not know how many other companies now do not exist because they faced these kinds of lawsuits. But essentially we are doing an exciting thing for growth, prosperity, and we are harming and hurting no one with legitimate complaints against corporations for fraud, misrepresentation, and malfeasance. As I said, I rise today in strong support of S. 1260, the ``Securities Litigation Reform Uniform Standards Act of 1998'' and I want to commend the Majority Leader for bringing this bill to the floor this week. Few issues are more important to the high-tech community and the efficient operation of our capital markets than securities fraud lawsuit reform. I am pleased to serve as an original co-sponsor of this legislation with Senators D'Amato, Dodd, and Gramm--a bill to provide one set of rules to govern securities fraud class actions. As I said previously, this bill completes the work I began more than 6 years ago with Senator Sanford of North Carolina. Back in the early 1990's, Senator Sanford and I noticed that a small group of entrepreneurial plaintiffs' lawyers were taking advantage of our securities laws and the federal rules related to class action lawsuits to file frivolous and abusive claims against high-technology companies in Federal courts. Often these lawsuits were based simply on the fact that a company's stock price had fallen, without any real evidence of fraud. Senator Sanford and I realized a long time ago that stock price volatility-- common in high tech stocks--simply is not stock fraud. But, because it was so expensive and time consuming to fight these lawsuits, many companies settled even when they knew they had done nothing wrong. The money used to pay for these frivolous lawsuits could have been used for research and development or to create new, high- paying jobs. So, we introduced a bill to make some changes to the securities fraud class action system. Of course, since we were up against the plaintiffs' lawyers, the bill didn't go anywhere for awhile. After Senator Sanford left the Senate, the senior Senator from Connecticut, Senator Dodd, and I continued to work hard on this issue. In 1995, with tremendous help from Chairman D'Amato and Senator Gramm, we passed a law. The Private Securities Litigation Reform Act of 1995 passed Congress in an overwhelmingly bipartisan way--over President Clinton's veto of the bill. And since enactment of the Reform Act, we have seen great changes in the conduct of plaintiffs' class action lawyers in federal court. Because of more stringent pleading requirements, plaintiffs' lawyers no longer ``race to the courthouse'' to be the first to file securities class actions. Because of the new rules, we no longer have ``professional plaintiffs''--investors who buy a few shares of stock and then serve as named plaintiffs in multiple securities class actions. Other rules make it difficult for plaintiffs' lawyers to file lawsuits to force companies into settlement rather than face the expensive and time consuming ``fishing expedition'' discovery process. Now, it looks like our new law has worked too well. Entrepreneurial trial lawyers have begun filing similar claims in State court instead of federal court to avoid the new law's safeguards against frivolous and abusive lawsuits. Instead of one set of rules, we now have 51--one for the Federal system and 50 different ones in the States. According to the Securities and Exchange Commission, this migration of claims from Federal court to State court ``may be the most significant development in securities litigation'' since the passage of the new law in 1995. In fact, prior to passage of the new law in 1995, State courts rarely served as the forum for securities fraud lawsuits. Now, more than 25 percent of all securities class actions are brought in State court. A recent Price Waterhouse study found that the average number of State court class actions filed in 1996--the first year after the new law-- grew 335 percent over the 1991-1995 average. In 1997, State court filings were 150 percent greater than the 1991-1995 average. So, there has been an unprecedented increase in State securities fraud class actions. In fact, trial lawyers have testified to Congress that they have an obligation to file securities fraud lawsuits in State court if it provides a more attractive forum for their clients. Imagine that--plaintiffs' lawyers admit that they are attempting to avoid federal law. These State court lawsuits also have prevented high-tech companies from taking advantage of one of the most significant reforms in the 1995 law--the safe harbor for predictive statements. Under the 1995 law, companies which make forward-looking statements are exempt from lawsuits based on those statements if they meet certain requirements. Companies are reluctant to use the safe harbor and make predictive statements because they fear that such statements could be used against them in State court. This fear chills the free flow of important information to investors--certainly not a result we intended when we passed the new law. So today, the Senate will vote to create one set of rules for securities fraud cases. One uniform set of rules is critical for our high-technology community and our capital markets. Without this legislation, the productivity of the fastest growing segment of our economy--high tech--will continue to be hamstrung by abusive, lawyer-driven lawsuits. Rather than spend their resources on R&D or creating new jobs, high-tech companies will continue to be forced to spend massive sums fending off frivolous lawsuits. When I first worked on this issue, executives at Intel Corporation told me that if they had been hit with a frivolous securities lawsuit early in the company's history, they likely never would have invented the microchip. We should not let that happen to the next generation of Intels. This bill also is important to our markets. Our capital markets are the envy of the world, and by definition are national in scope. Information provided by companies to the markets is directed to investors across the United States and throughout the world. Under the Commerce Clause of the U.S. Constitution, Congress has the authority to regulate in areas affecting ``interstate commerce.'' I cannot imagine a more classic example of what constitutes ``interstate commerce'' than the purchase and sale of securities over a national exchange. Not only does Congress have the authority to regulate in this area, it clearly is necessary and appropriate. Right now, in an environment where there are 50 different sets of rules, companies must take into account the most onerous State liability rules and tailor their conduct accordingly. If the liability rules in one State make it easier for entrepreneurial lawyers to bring frivolous lawsuits, that affects companies and the information available to investors in all other States. One uniform set of rules will eliminate that problem. Mr. President, I again want to commend my colleagues for their work on this important bill. I understand that this is a bi-partisan bill which has the support of the SEC and at least 40 Senators. I think by the end of the day, many, many more Senators will join us in supporting this bill. Thank you, Mr. President.

Mr. DOMENICI

Mr. DOMENICI. Mr. President, advanced technologies drive a significant part of our nation's economic strength. Our economy and our wonderful standard of living depend on a constant influx of new technologies, processes, and products from our industries. Many countries can provide labor at lower costs than the United States. As any new product matures, competitors using overseas labor can frequently find a way to undercut our production prices. We maintain our lead by constantly improving our products through encouragement of innovation. The majority of new products require industrial research and development to reach the market stage. I want to encourage that research and development to create new products to ensure that our factories stay busy and that our workforce stays fully employed at high salaried jobs. I want more of our large multi-national companies to select the United States as the location for their R&D. R&D done here creates American jobs. And frequently the benefits of R&D in one area apply in another area; I want those spin-off benefits in this country, too. The federal government has used the Research Tax Credit to encourage companies to perform research. But many studies document that the present form of this Tax Credit is not providing as much stimulation to industrial R&D as it could. Today, I introduce legislation to improve the Research Tax Credit. The single most important change I'm proposing in the Research Tax Credit is to make it permanent. The credit has never been permanent, since Congress created it in 1981. Many studies point out that the temporary nature of the Credit has prevented companies from building careful research strategies. A recent study by Coopers and Lybrand claimed a $41 billion stimulus for the economy by 2010, with $13 billion added to the economy's productive capacity by 2010. Many of my Senate colleagues have endorsed legislation that includes this critical action, more than twenty at last count. My legislative proposal goes further. The current Credit references a company's research intensity back to their level in the 1984-88 time period. That time period is too outdated to meet today's dynamic market conditions. Many companies now are operating in dramatically different markets, many with totally new product lines. My legislation allows a company to choose a four year period in the last ten years that best matches their own needs. This allows companies to tailor and optimize research strategies to match current market conditions. The current approach has a provision that severely restricts the ability of many start-up companies to benefit from the full impact of the Credit. Recent analysis shows that 5 out of 6 start-up companies receive reduced benefits because of a provision that limits their allowable increase in research expenditures to half of their current expenditures. I'm concerned when start-up companies aren't receiving full benefit from this Credit. These are just the companies that tend to drive the innovative cycle in this country, they are the ones that frequently bring out the newest leading-edge products. My legislation allows start up companies for their first ten years to take full credit for their increases in research costs. My legislation addresses several other shortcomings in the current Credit. Now there is a Basic Research Credit'' allowed, but rarely used. It is defined to include only research with ``no commercial interest.'' Now, I don't know too many companies that want to support-- much less admit to their stockholders that they are supporting-- research with no commercial interest. The idea of this clause was to encourage support of long term research; the kind that benefits far more than just the next product improvement. This is the kind of research that can enable a whole new product or service. We need to encourage this long term research. My legislation adds an incentive for this type of research by including any research that is done for a consortium of U.S. companies or any research that is destined for open literature publication. These two additions will include a lot more long term research that has future product applications. I've also allowed this credit to apply to research done in national labs, so companies can select the best source of research for any particular project. And finally my legislation recognizes the importance of encouraging companies to use research capabilities wherever they exist in the country, whether in other businesses, universities, or national labs. The current credit disallows 35% of all expenses invested in research performed under an external contract--my legislation allows all such expenses to apply towards the Credit. This should encourage creation of partnerships, where different partners can leverage their individual strengths. These partnerships enable our companies to perform research more efficiently, that can further strengthen our economy. In summary, Mr. President, this proposed Bill significantly strengthens incentives for private companies to undertake search that leads to new processes, new services, and new products. The result is stronger companies that are better positioned for global competition. Those stronger companies will hire more people at higher salaries with real benefits to our national economy and workforce.

Mr. DOMENICI

Mr. DOMENICI. Mr. President, advanced technologies drive a significant part of our nation's economic strength. Our economy and our wonderful standard of living depend on a constant influx of new technologies, processes, and products from our industries. Many countries can provide labor at lower costs than the United States. As any new product matures, competitors using overseas labor can frequently find a way to undercut our production prices. We maintain our lead by constantly improving our products through encouragement of innovation. The majority of new products require industrial research and development to reach the market stage. I want to encourage that research and development to create new products to ensure that our factories stay busy and that our workforce stays fully employed at high salaried jobs. I want more of our large multi-national companies to select the United States as the location for their R&D. R&D done here creates American jobs. And frequently the benefits of R&D in one area apply in another area; I want those spin-off benefits in this country, too. The federal government has used the Research Tax Credit to encourage companies to perform research. But many studies document that the present form of this Tax Credit is not providing as much stimulation to industrial R&D as it could. Today, I introduce legislation to improve the Research Tax Credit. The single most important change I'm proposing in the Research Tax Credit is to make it permanent. The credit has never been permanent, since Congress created it in 1981. Many studies point out that the temporary nature of the Credit has prevented companies from building careful research strategies. A recent study by Coopers and Lybrand claimed a $41 billion stimulus for the economy by 2010, with $13 billion added to the economy's productive capacity by 2010. Many of my Senate colleagues have endorsed legislation that includes this critical action, more than twenty at last count. My legislative proposal goes further. The current Credit references a company's research intensity back to their level in the 1984-88 time period. That time period is too outdated to meet today's dynamic market conditions. Many companies now are operating in dramatically different markets, many with totally new product lines. My legislation allows a company to choose a four year period in the last ten years that best matches their own needs. This allows companies to tailor and optimize research strategies to match current market conditions. The current approach has a provision that severely restricts the ability of many start-up companies to benefit from the full impact of the Credit. Recent analysis shows that 5 out of 6 start-up companies receive reduced benefits because of a provision that limits their allowable increase in research expenditures to half of their current expenditures. I'm concerned when start-up companies aren't receiving full benefit from this Credit. These are just the companies that tend to drive the innovative cycle in this country, they are the ones that frequently bring out the newest leading-edge products. My legislation allows start up companies for their first ten years to take full credit for their increases in research costs. My legislation addresses several other shortcomings in the current Credit. Now there is a Basic Research Credit'' allowed, but rarely used. It is defined to include only research with ``no commercial interest.'' Now, I don't know too many companies that want to support-- much less admit to their stockholders that they are supporting-- research with no commercial interest. The idea of this clause was to encourage support of long term research; the kind that benefits far more than just the next product improvement. This is the kind of research that can enable a whole new product or service. We need to encourage this long term research. My legislation adds an incentive for this type of research by including any research that is done for a consortium of U.S. companies or any research that is destined for open literature publication. These two additions will include a lot more long term research that has future product applications. I've also allowed this credit to apply to research done in national labs, so companies can select the best source of research for any particular project. And finally my legislation recognizes the importance of encouraging companies to use research capabilities wherever they exist in the country, whether in other businesses, universities, or national labs. The current credit disallows 35% of all expenses invested in research performed under an external contract--my legislation allows all such expenses to apply towards the Credit. This should encourage creation of partnerships, where different partners can leverage their individual strengths. These partnerships enable our companies to perform research more efficiently, that can further strengthen our economy. In summary, Mr. President, this proposed Bill significantly strengthens incentives for private companies to undertake search that leads to new processes, new services, and new products. The result is stronger companies that are better positioned for global competition. Those stronger companies will hire more people at higher salaries with real benefits to our national economy and workforce.

Mr. DOMENICI

Mr. DOMENICI. Do we have a time certain to vote, or when the time expires?

Mr. DOMENICI. Mr. President, I say to the Senator from Indiana, what does he think about this? Does he want 5 minutes himself if I get 5?

Mr. DOMENICI. Will the Senator give me 2 minutes, and that will be enough.

Mr. DOMENICI. I thank Senator Gramm. I did not really think my few words would be this controversial, but I want to share with the Senate a concern. It is not just about this bill. But it seems to me that every day or so we are talking about an approach here in the U.S. Senate which essentially wipes out last year's budget agreement. The cornerstone to last year's budget agreement was the caps we placed on discretionary spending, both defense and domestic. That means, written in the law are numbers that we said we will not violate; that we will not exceed this level of spending. Everybody who is getting anything from Government would like to turn those discretionary programs into mandatory programs, so they are not subject to the caps. Everybody would like to have a guarantee that their program is going to get funded. That is what we call an entitlement or a mandatory program. We are talking about that in this bill. We are talking about that in the tobacco bill in a very big way. What is happening now is that we are absolutely breaking the agreement we made, which was so solemn, about getting our budget under control. Every time the budget bites and it squeals a little because a decision is tough, we find a way to avoid it and spend the money in another way. It is money nonetheless, and it is adding to the size of Government nonetheless. Frankly, I do not agree with Senator Gramm's position on this bill in terms of the food stamps provisions. But I, frankly, do not believe we ought to shut our eyes to a tendency that could become a very big stream. We are forgetting about appropriated accounts and caps, understandings and agreements, and finding brand new ways to fund programs that will be on automatic pilot. I submit to you, from the taxpayers' standpoint, there is absolutely no difference. If you are using a dollar of taxpayers' money to break the caps that we agreed upon or if you are spending a dollar for a new entitlement program, it is the same effect. I hate to make this statement on this bill because I am not necessarily saying the bill should go down to defeat. But I want to warn the Senate--and I am going to warn the Senate on every bill that circumvents the caps--that this is not the way we got to balance. This is not what we promised the American people and the marketplace in terms of where we were going as a Congress, and I plan to call that to everyone's attention on a regular basis. I yield the floor and thank the Senator for time.

Mr. DOMENICI. I don't have any time, but I ask if somebody will give me a couple minutes.

Mr. DOMENICI

Mr. DOMENICI. Mr. President, I have two amendments that I understand are going to be acceptable, but they are being drafted in a manner to comply with the wishes of the committee. I will refer to the two. Then I understand that, in due course, the chairman and ranking member will be introducing amendments and mine will go in as one of their en bloc amendments, but I will have spoken to two of them for just a minute, and then for a couple of minutes on the overall bill. The first one of my amendments is cosponsored by Senator D'Amato and Senator McCain and anybody else who would like to join. I welcome them cosponsoring it. The IRS already provides forms and instructions in the Spanish language. I commend them for that. Obviously, we are now being told that, while the Hispanic population in America is very large, it will soon be the largest minority by far. And by middle of the next century, one out of every four Americans will be of Hispanic origin-- which will be the largest by far. This first amendment, that is currently sponsored by Senators D'Amato and McCain, would have the telephone help line mandated to provide communications in Spanish to those who can more easily communicate in Spanish. I indicated that we already have forms in Spanish. I am for English- plus, in America, which is English--clearly, we should all learn, but I think that instead of talking about English only, we should talk about plusing it up with other languages. That would mean that English and Spanish would be very much appreciated and used in many parts of the country as we educate our young people. That is one of the amendments. I understand neither the floor manager nor the minority opposes this amendment. Again, I ask if anyone would like to join in cosponsoring that amendment. It is going to be offered by the floor manager as one of the en bloc amendments in the not-too- distant future here on the floor. Second, I don't know how many Senators have participated in making enough of their own telephone calls these days to find that large institutions have an automated system when you call. Let's say you want to call, I say to the occupant of the Chair, Sears and Roebuck. Understand, it used to be 25 years ago you would call up and say, ``I'd like the sporting department.'' They would say, ``Just a moment, sir.'' And the next person answering would be somebody in the sporting department. If you made that phone call today, the answering voice would likely be a recording. ``If you want somebody in the merchandising, punch 1. If you want somebody in''--this area-- ``punch 2.'' And when they get on, they say, ``If you are looking for this department''--or that department--``punch 4.'' The IRS has a similar system. If you want information on withholding press 1; If you want information about filing separately press two; If you want information about the new child credit press three. Too often, unfortunately, there isn't a number to press for the question you want answered. My amendment would correct that problem. I am told as of yesterday in the State of New Mexico, my home State, if you are trying to get a voice to respond to you, believe it or not, in the State of New Mexico, if you want a voice to answer you at the IRS, it now takes 45 minutes for that event to occur. That means you are going through telephones one after the other: Punch this one, then you wait and you tell them what you want; punch another one. All this amendment says is, if you are going to have these automated lines with press 1, press 2, press 3, you have to have one early on in the numbering system that says, ``Press if you want to speak to a person who can either answer your question or direct you to a person who can.'' I think the American people calling the IRS would be thrilled to death if sooner, rather than later, it did not take you 45 minutes of going through the press 1, press 3, press 28, and you could press something that would give you a live IRS person to talk to you. That is the second amendment. It is obvious to me that this bill is telling the IRS how to manage things, but it is pretty obvious that those of us who have constituents and go home and ask our office staff what the constituents are saying, they are saying the kind of things that I am telling Senators right now really bug them. They lose hope when they are 35 minutes on the line and haven't gotten a person yet, so they hang up. I don't think we want that. That isn't good government. I am hopeful that the new management and the person in charge, who is a manager and businessman, will not see this as trying to micromanage, but sees it is obviously as something they ought to be doing. I don't want to take a chance and not put it in this bill and, in 4 years, when we have oversight, find we are still where we are. These two amendments, in addition to those other provisions crafted by the committee make up a good bill. The Committee incorporated a number of the recommendations that came from our State as I went through my offices asking what kind of things were not working in dealing with the IRS. Having said that, I would like to speak for a few moments on the bill. 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. Yet 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; reinstatment of a checks and balances system so that the IRS will no longer be the judge, jury and excutioner; 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 of bypassing the tax professional and visiting the taxpayer at work or at dinner ``aggressive collection'' techniques, my constituents called it harrassment. 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 appproval 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 1 year after a return is timely filed, then interest and penalities 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 isn't 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 penalites 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 abuses. 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 (90 days in the case of life insurance) 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, who would review the taxpayer's information, verify that a balance is due, and affirm that a lien, levy, or seizure is appropriate under the circumstances. The bill requires the IRS to provide an accounting and receipt to a taxpayer including the amount credited to the taxpayer's account when the IRS seizes and sells the taxpayer's property. It seemed ironic that an agency that requires a receipt if a taxpayer is claiming a $5 business lunch wouldn't provide a receipt to a taxpyaer when it seized and sold all of a taxpayer's earthly belongings. 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 acountants and other tax practioners. 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. The bill makes it easier for a taxpayer to settle his or her liability with the IRS. 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 constitutents who are left in an IRS twilight zone because the IRS lost their file. I know of one constitutent 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 in 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 1980s. It is historically interesting to note, and perhaps prophetic, that the IRS lobbyied 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 five years latter, 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 U.S. 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 two 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 Albuqueruque, but the only phone number for the IRS is the toll free number that is too frequently busy. If you didn't know the IRS building in Albuquerque existed, you wouldn't find a clue of its location in the telephone book. We experienced a lot of complaints about the IRS toll free numbers. I am glad that an amendment that I authored to this bill includes a provision requiring that automated phone lines include the option to talk to a real, knowledgable person who can answer the taxpayers' questions. This would be an option in addition to merely listening to a recorded message. I am pleased that the Senate was willing to accept a Domenici amendment, cosponsored by Mr. D'Amato and Mr. McCain that requires IRS helplines 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 ``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. The last point I would like to make is that I was going to offer an amendment to provide for a biennial budget and appropriations cycle because if Congress took this step, it would give us more time to do adequate and more aggressive oversight. If we had biennial budgeting the Finance Committee would have more time to focus on keeping an eye on the IRS. Senator Moynihan is a distinguished student of history and he told the Senate that the IRS was created in 1862, but it wasn't until 1997 that the full Finance Committee exercised its oversight jurisdiction. Other committees could, likewise, exercise better oversight of all federal agencies if we had biennial budgeting. We would have better run programs and an opportunity for a truly more efficient federal government. The Majority Leader has agreed to schedule time for the Senate to debate this bill in the near future. I am pleased that we were able to reach that agreement. Thank you Mr. President. I yield the floor. Mr. GRAHAM addressed the Chair.

Mr. DOMENICI

Mr. DOMENICI. Mr. President, I rise today to say a few words about my amendment to the Workforce Investment Partnership Act of 1998 and to make a few comments about the overall bill. Simply put, my amendment allows consortia applying for a Tech-Prep the additional option of using the money to locate high schools at Community Colleges. The Tech-Prep section already seeks to create consortia of local schools, post-secondary schools, and employers to form a cohesive link between the entities. My amendment merely goes one step further and simplifies the process by allowing grants to be used for the placement of high schools at community colleges. The idea is not without precedence, in fact the Middle College Consortium is a national network of twenty two high schools located on college campuses. Mr. President, I think the fundamental question becomes what is education? I believe education is far more than books, classrooms, and teachers, it is about learning and preparing for life. I want to mention several points I have heard from students and employers that reinforce my belief. A high school student stated to me that often he and his classmates are simply bored in class and that creative learning concepts must be put forth. Amazingly, an employer stated that only one in forty applicants were qualified for even an entry level position. All of us, businesses and individuals are paying taxes and I think it is only fair that we expect some kind of return in terms of our schools producing qualified graduates. Is there a one size fits all solution? Of course not, because not everyone wants to pursue the same career path. However, my amendment enables those desiring to pursue a vocationally based career yet another option and tool to help ensure their success. I am very pleased that an integral part of a Tech-Prep Program is a focus on math, science, reading, writing, communications, economics, and work-place skills. Also Tech-Prep Programs integrate the academic and vocational instruction with work-based learning. My amendment ensures this by requiring a consortium to contain a business partner. Industry will have the opportunity to take an active role in ensuring graduating students possess the tools and knowledge that they will need to succeed in the local workforce. The business partner will also act as a gateway for student and teacher internships and also provide students a head start in obtaining a job. Mr. President, there is one point I want to make absolutely clear: student attendance at a high school at a Community College will be voluntary. However, many high school students have already decided to pursue a vocationally based career and are even now taking those kind of classes. My amendment is aimed at those students in an effort to ensure they will succeed. Community Colleges often have more resources, like vocational facilities and business partnerships, than a traditional high school. Students choosing to participate will become acquainted with the instructors, facilities, and application process for admission, and a natural path to at least a two year degree will be created. Mr. President, my amendment is about creating yet another option so our children will be empowered with every available resource to succeed. Now I would like to make a few remarks about the Workforce Investment Partnership Act of 1998. First, I would like to compliment Senators Jeffords, DeWine, Kennedy, and Wellstone for all of their work on this bill. Second, I am very pleased the Senate will shortly vote on this very important piece of legislation to reform the Federal job training and education related programs. Like many Federal programs, current job training and education related programs are a maze of overlapping and duplicative programs. The bill incorporates close to 70 programs under three titles: Adult Education, Vocational Education, and Job Training. The streamlining of the current voc-ed programs into a manageable system will allow for the delivery services in the most effective manner possible. By delivering services in the most effective manner we can accomplish two important things: a prepared workforce and a business community that is confident in the workforce. I believe one of the keys to the bill is the transfer of power from Washington to the individual states. States will have the flexibility, authority, and means to design a vocational educational system that best meets the needs of the state because decisions will be made by state officials and not Washington. By eliminating multiple Federal requirements and mandatory set-asides, states obtain that flexibility. States will also have the option to submit a unified plan or a single State plan for all of the education and training programs incorporated in the bill. Again, this is another example of providing states with the ability to design programs that best meet their needs. The Bill also greatly simplifies the process for individuals seeking to obtain voc-ed services through a ``no wrong door'' approach. This ``one-stop customer service system'' will allow individuals to receive comprehensive information about the availability, eligibility, and quality of the programs at one location or via a computer network. Mr. President, I also want to say how pleased I am that Senator DeWine's amendment will reauthorize the Rehabilitation Act of 1973. As my colleagues are aware, the Rehabilitation Act is our country's primary Federally funded job training program for disabled individuals. I believe the reauthorization takes on even greater importance since the authorization for the act expired in September of 1997. Among other things the reauthorization will: link the Rehabilitation Act and the Workforce Investment Partnership Act of 1998; streamline current vocational rehabilitation systems to increase efficiency and access; and improve the delivery of services to individuals with disabilities by providing more choice and a greater number of quality jobs. Again Mr. President, the changes I have just mentioned create more options and allow for the best possible delivery of services. And that is exactly what my amendment and the overall bill are all about: creating more options and providing for the best possible delivery of services.