Byron Dorgan

Mr. DORGAN

Mr. DORGAN. Mr. President, I have sought recognition, because I intend to offer a couple of amendments to the pending legislation. I would like to discuss the underlying bill just a bit more, and then also offer the amendments and discuss the amendments. I spoke earlier today about this legislation, which is called the Financial Services Modernization Act of 1999, and said then that I am probably part of a very small minority in this Chamber, but I feel very strongly that this is exactly the wrong bill at exactly the wrong time. It misses all the lessons of the past and, in my judgment, it creates definitions and moves in directions that will be counterproductive to our financial future. What does this bill do? It would permit common ownership of banks, insurance, and securities companies, and to a significant degree commercial firms as well. It will permit bank holding companies, affiliates, and bank subsidiaries to engage in a smorgasbord of expanded financial activities, including insurance and securities underwriting, and merchant banking all under the same roof. This bill will also, in my judgment, raise the likelihood of future massive taxpayer bailouts. It will fuel the consolidation and mergers in the banking and financial services industry at the expense of customers, farm businesses, family farmers, and others, and in some instances I think it inappropriately limits the ability of the banking and thrift institution regulators from monitoring activities between such institutions and their insurance or securities affiliates and subsidiaries raising significant safety and soundness consumer protection concerns. This morning I described what is happening in the financial services sector by showing a chart of big bank mergers just in the last year. You couldn't help but to have picked up a daily paper at some point last year and read a headline about another bank deciding to combine or merge with another large bank. April 6, Citicorp decided it was going to grab up Travelers Group and have a $698 billion combined asset corporation--not exactly a mom and pop, but two big very successful companies decide they want to get hitched. NationsBank apparently fell in love with BankAmerica. Bank One decided it wanted to be related to First Chicago, and Wells Fargo likes NorWest. So we have merger after merger, buyout after buyout, and the big banks get bigger. We already have a circumstance in this free market economy of ours in which you ought to have easy entry and easy exit into the marketplace and the right to make money and to lose money. We already have a circumstance in banking called ``too big to fail.'' If you are big enough, the ordinary market rules don't apply to you. You have the old Federal Reserve Board out there. And the Fed says we have a list of banks that are ``too big to fail,'' meaning they have become so big that if they were to fail and made some pretty dumb decisions, lose a lot of money, that their failure would be so catastrophic and such a shock to the economic system in this country that we couldn't possibly let that happen. So we have a list of banks at the Federal Reserve Board. That list says these banks are ``too big to fail''--no-fault capitalism. But the list is growing. That list of ``too big to fail'' banks in America is growing because the big banks are getting bigger, and this record-breaking orgy of mergers in our country moves now at an accelerated rate unabated. In the context of all of this--it is not just with banks but all financial services companies--at a time when banks, investment banks, underwriters of securities, insurance, and others are showing very handsome profits in our country, we are told, ``You know, what is really wrong here with America is we need to modernize this system. The lack of modernization is hurting us. In fact, some U.S. banks are able to do things overseas they can't do here. What a shame. It is awful to hold them back,'' we are told. ``So let us modernize.'' In ranching parlance, this would be like if the horse gets out of the barn, you decide, ``Let's find out where the horse is and build a new barn around the horse.'' That is what this is all about. Where I grew up we raised horses. When a horse got out of the barn, you know what we did. We went and chased the horse, caught the horse, and brought the horse back to the barn. That is not rocket science. I didn't have to take a lot of school courses to teach me that. You go bring the horse back. But now, what they have decided is no. We will just decide, all right, the horses are out of the barn, and in the way things are supposed to work, in a manner that preserves safety and soundness of our banks, in a manner that preserves separation of certain kinds of activities--some that are inherently risky as opposed to those that require safety and soundness--things have happened. We are persuaded to get rid of all of the old rules, and we will rewrite them in a way that circumstances and activities have been happening in our country. We'll say those who have done it, OK, that is where you are, a new day, we will call it modernization. We will just say it is just fine. Well, it is not fine with me. It is interesting that we live in 1999, now in the month of May, having experienced this remarkable economy. I am one who, with all of my colleagues, would say what a remarkable opportunity, to live in an economy that has virtually no inflation, has virtually full employment, seems to have economic growth that continues unabated, and whose stock market continues to set new records--23 days, another 1,000 points. You get the feeling, gee, the stock market is like one of those slot machines that pays off every time you pull the handle. Every time you put a quarter in you get a return back beyond what you put in. There are people who have begun to invest in this economy of ours through mutual funds, and in the markets and so on who apparently believe there is only one direction for our economy and only one direction for our markets, and that is up, and single digit returns are not sufficient. Returns are now expected of 15, 20, 25, 30 percent a year. Of course, that will not continue. We want a country with the twin economic goals of stable prices, full employment, and economic opportunity and growth. But we have been through periods in this country where when you sit down and add things up somehow the answer doesn't seem correct. This isn't all going to continue. One day in one way there will be adjustments. Companies selling 300 and 400 times earnings, we think that is going to continue? I don't think so. What has happened in recent years in this country, despite all of the good news, is a series of economic activities by firms that 20 and 40 years ago would never have thought of engaging in those activities, and those activities which really represent kind of a new form of gambling by firms that should not be involved in gambling represents now an acceptable kind of behavior. Let me give you some examples of some of it. I started this morning. But I am going to read a bit more, because I think it is important for everybody to understand and hear this. I mentioned ``too big to fail''--big banks that have become so big that our Government says they can't be allowed to fail. Of course, we continue then every day to see more mergers to allow more banks to join that ``too big to fail'' list. It is not just the banks. I want to read the story again of Long Term Capital Management in an article from the Wall Street Journal last fall, because I think it is illustrative of not just what is happening at this moment in this chapter of our history but also what happened in 1994 with the massive losses across our country in derivatives described in this Fortune article, ``The Risk That Won't Go Away,'' ``Financial derivatives tightening their grip on the world economy, and no one knows how to control them.'' Derivatives, unregulated hedge funds, banks, holding companies that now fuse and merge, banks underwriting securities, insurance--is all of that a cause for concern? Let me read a couple of things and see whether perhaps this can be interpreted in a manner differently than those who have drafted the current legislation. It is not a secret that I have said I think this current bill, the underlying bill, financial modernization for 1999, is a terrible bill. I don't mean disrespect to either the chairman of the committee or the ranking member of the committee. I don't mean any disrespect to them. This is moving this country in the wrong direction. This is terrible legislation to be considering at this point. Long Term Capital Management is a private company; big investors, all rich. You have to be rich to invest in Long Term Capital Management. You have to be smart. A smart operator with lots of money formed a private company called Long Term Capital Management and began betting. I will describe the bets in a moment. It was Aug. 21, [last year] a sultry Friday, and nearly half the partners at Long-Term Capital Management LP were out of the office. Inside, the associates that day logged on to their computer and they saw something that began to strike some fear in their hearts: U.S. Treasuries were skyrocketing, throwing their relationship to other securities out of whack. The Dow Jones Industrial Average was swooning--by noon, down 283 points. The European bond market was in shambles. LTCM's [Long-Term Capital Management, this hedge firm, their] bets were blowing up, and no one could do anything about it. By 11 a.m. [in the morning] the fund had lost $150 million in a wager [they made] on the prices of two telecommunication stocks engaged in a takeover. Then, a single bet tied to the U.S. bond market lost $100 million. Another $100 million evaporated [the next hour] in a similar trade in Britain. By day's end [this private hedge company] LTCM had hemorrhaged half a billion dollars. Its equity had sunk to $3.1 billion-- down a third for the year. This is the Wall Street Journal's recount of the story: Partners scrambled out of their offices and onto the trading floor as associates stared at their screens in disbelief. Making frantic phone calls around the globe, they reached John Meriwether, the fund's founder, at a dinner in Beijing. He boarded the next plane to the U.S. Eric Rosenfeld, a top lieutenant, called in from Sun Valley, Idaho, where he was settling in for a vacation. He left his wife and children behind and made an all-night trip back to Greenwich. Then the brass assembled the next morning. It is 7 o'clock now, 7 a.m. on Sunday. One after another, LTCM's partners, calling in from Tokyo and London, reported that their market had dried up. There were no buyers, no sellers. It was all but impossible to maneuver out of large trading bets [that they had.] They had seen nothing like it. The carnage that weekend set off events unprecedented in the world of high finance, culminating with a $3.625 billion bailout funded by a consortium of 14 Wall Street banks and engineered by the Federal Reserve [Board.] LTCM lost more than 90 percent of its assets by the time it was bailed out, and the markets were roiled for weeks. Longer term, it forced many of the world's most sophisticated institutional investors to redefine the ways they manage risk and triggered calls for tougher regulation of hedge funds, those freewheeling investment pools that cater to the wealthy. Here is a company that lost $3.6 billion. What happened? It gets bailed out in a consortium of banks investing at the behest of the Federal Reserve Board at meetings arranged by the Federal Reserve Board. We will hear a bit more about this case because it relates to an amendment I will be offering. In an industry populated by sharp money managers, LTCM had the most renowned of all--including Nobel Prize winners Robert Merton and Myron Scholes. But in the end, it wasn't all rocket science. It was about smart marketing-appealing to a wealthy clientele who wanted to be able to say their money was being managed by a passel of Ph.D.s. And it was about massive borrowing, up to $50 for every dollar invested. Long- Term Capital Management was, ultimately, like a supermarket-- a high-volume, low-margin business, trying to eke out small profits from thousands of individual transactions. ``Myron once told me they are sucking up nickels from all over the world,'' says Merton Miller, a University of Chicago business professor and himself a Nobel Prize winner in economics. Continuing the quote: ``But because they are so leveraged, that amounts to a lot of money.'' All of which helps to explain how so many geniuses, sometimes overcoming divisions within their ranks, got it so wrong. And all the while, vanity, greed and a cult of personality blinded some of the world's most reputable financial institutions, from Wall Street stalwarts to Swiss banks, to the pitfalls inherent in such a strategy. The reason I offer this is to say we are now talking today on the floor of the Senate about a strategy that says we want to ignore the lessons of history. We want to ignore the fact that in the go-go 1920s, everybody was making money at about everything, and banks decided to fuse their activities and be involved not just in banking, but also in underwriting securities and a range of other very risky enterprises. We are going to ignore those lessons we learned during that period. When studies were done to determine what happened in the 1920s, one of the things they discovered was what you expect. If you have something called banks whose perception of safety and soundness is at the root of their stability and viability, when banks are fusing their activities with inherently risky activities--underwriting securities, for example--ultimately those kinds of risks, those bets that exist, overcome the perception and the reality of safety and soundness, and people begin getting worried and nervous and pulling their money out of banks and we have bank failures. So the Congress in the 1930s passed a bill called Glass-Steagall which said: Learn the lessons; my gosh, let us not put activities together with banks that are so inherently risky. We should separate them forever. So we did. And we prohibited certain kinds of investment and acquisition by banks and required that certain enterprises do business and compete in their own sphere. Banks were prohibited from being involved in most of the securities issues, underwriting securities and insurance and more. Over the years that served this country pretty well. Banks have made the case in recent years--and they are right about this--everybody else has wanted to invade their territory. Everybody now wants to be a bank. If you are selling cars, you want to finance the cars; you want to be a bank. Everybody wants to create some sort of homogenized one-stop station where people can buy their insurance, buy their home, finance it. So banks say people are intruding on their turf and the only conceivable way we can compete is if we can compete on their turf as well. They want Glass-Steagall repealed. Guess what? Here it is. The bill that sits on the floor of the Senate today repeals Glass-Steagall. It forgets apparently 60 or 70 years of history. It will all be all right. Don't you see, the economy is growing, unemployment is down, inflation is down, the stock market is up. Don't you understand, Senator Dorgan? I guess not. Maybe I am hopelessly old fashioned. I think it is a fundamental mistake to decide to repeal Glass-Steagall and allow banks and all of the other financial industries to merge into a giant smorgasbord of financial services. Those who were around to vote to bail out the failed savings and loan industry, $500 billion of the taxpayers' money, are they going to want to be around 10 or 15 years from now when we see bailouts of hedge funds putting banks at risk? Or how about the banks not just bailing out a hedge fund but banks having the ownership of the hedge funds? That is what we have now. This bailout of Long Term Capital Management says we have significant investments by some of the largest banks in these hedge funds. Or how about derivatives? I am not an expert in this area, but I wonder how many Members of this body know about derivatives. How many know that banks in this country are trading in derivatives--not for customers, but in their own proprietary accounts? They could just as well set up a bingo parlor in their lobby. They could just as well decide to have a casino somewhere in their lobby. The kind of betting and wagering that is going on in proprietary trading of derivatives in an institution whose assets are guaranteed by the taxpayers of this country is just wrong. Someday somebody is going to wake up and say: Why didn't we understand that? Why didn't we understand the consequences of hundreds of billions of dollars or, yes, even trillions of dollars of wagers out there with deposits at risk? Why didn't we understand that did not make any sense? I wrote an article about this in 1994 that was published in the Washington Monthly. At that point there were $35 trillion in derivatives being traded. Now it is $70 trillion. It is hard for me to even say the number; $70 trillion in derivatives. Does anybody here know the exposure that exists in the largest banks of proprietary trading on derivatives? I will bet not. Does anybody understand what this bill does in these areas? It says: Hedge funds, we don't want to manage those; let them go, let them do what they will. How about derivatives? It doesn't do anything. This is a GAO report from May, 1994. It is 5 years ago: ``Financial Derivatives, Actions Needed To Protect The Financial System.'' That report has been available for 5 years to all of the Members of Congress. If this legislation really was a modernization bill for financial institutions, you would have a solution to this issue in it. It would include my amendment that says no institution whose deposits are guaranteed by the American taxpayer will trade derivatives in their proprietary accounts--none of them. We will not allow gambling in the bank lobby. But of course the bill does not have that, so I will offer the amendment and it will be defeated because it is not in vogue, it is not in fashion. This bill moves in the other direction. It says, not only are things not wrong, don't be alarmed by hedge funds and derivatives; it says, let's just do more of what we have been doing that has caused some of this alarm. As I mentioned, the piece of legislation before us repeals provisions of the Glass-Steagall Act that restrict the ability of banks and security underwriters to affiliate with one another. The bill repeals provisions in the Bank Holding Company Act by allowing a new category of financial holding company. This structure allows for a wide range of financial services to be affiliated, including commercial banking, securities underwriting, and merchant banking. And the new financial holding companies, by the way, may engage in the following: Lending and other traditional banking activities, insurance underwriting and agency activities, provide financial investment and economic advisory services, issue instruments representing interests in pooling of assets that a bank may own directly, securities underwriting and dealing, and mutual fund distribution, merchant banking. I think most listening to me understand my concern and deep reservations about the direction we are heading. What about timing? This bill almost came to the floor of the Senate last year. I was one of those who objected, and as a result the legislation was not enacted. In fact, some of the folks who bring it to the floor today also objected because of some other issues. But it is now on the floor. It is in a different form than was passed out by the committee last year. But what about timing? It seems to me the past experiences we have had with banking and financial conglomerates in this country in this century, whose collapse has led to the adoption of the very financial protection laws they seek to repeal today, ought to be a cautionary note to those of us in Congress and to the American people. It seems to me the recent experiences we had with a nearly $500-billion bailout of a collapsed savings and loan industry ought to have some consequences, at least in terms of awareness of those in Congress who had to go through that experience. It seems to me the question marks that hang over the international marketplace and the international economy ought to give pause to some-- a very difficult collapsed economy in some parts of Asia, a Russian economy that has virtually collapsed, economic problems in other parts of the world, a description in the country of Japan of the keiretsu-- the circumstances in a market system in Japan where a keiretsu allows the combining of virtually all economic activities into four or five firms that work together as partners to accomplish ends; you put the bank and the manufacturer all together. What has happened as a result of that Japanese experience? Would we want to trade our economy for the Japanese economy? I don't think so. One would think that would give some folks pause. Or how about the red flags that ought to have been flying for all of us with respect to the regulators' recent experiences dealing with excessive risk-taking in our system? Does it give anybody pause that on a Sunday night some of the smartest folks, the folks who were viewed as geniuses in New York, who put together this hedge fund, they had to be bailed out by the Federal Reserve Board running some folks across the street to convene an emergency meeting and then sitting there, apparently convening a group in which substantial numbers of large banks ante up billions of dollars to bail out a private firm? Is that a red flag for anybody? It suggests a conflict of interest for the Federal Reserve Board, of course, because they regulate the very banks that were incentivized to ante up money to bail out a private firm in order to avoid some sort of economic catastrophe, an economic catastrophe for the country. That is why the Fed was involved--because this private firm, too, was too big to fail. Does that raise any red flags with anybody? It does with me. Or we are told, if we do not do this, it is going to be a disadvantage. To whom? Are the banks doing well in this country? You are darned right they are doing well, making lots of money. Security underwriting firms, merchant banking firms, are we doing well? America's corporations, are they doing well? Sure. Look at the stock market. Look at the profit reports. When we pass this bill, everybody in this Chamber knows what is going to happen. The first thing that is going to happen is, we are going to have more and more and more mergers because this turns on the green light at the intersection. It says if you all want to get together and just get into one big financial swamp here and have a smorgasbord of financial services, then buy each other up, that's just fine. This orgy of mergers we have already seen will simply accelerate. Will that be good for this country? Of course not. Those who preach the loudest about the free market system do the least to protect it. I guarantee it is true. It has been true ever since I came to the Congress. Those who bellow the loudest about the free market do the very least in this country to protect it. We are going to have a fight a little later this year about antitrust enforcement. One way to be sure the free market remains free, open to fair, competitive competition, is to make sure you enforce your antitrust laws against cartels and monopolies. Interestingly enough, those, again, who talk a lot about the free market are the least likely to be supportive of aggressive antitrust enforcement, to make sure the market is free, open, and competitive. This is a highly complicated issue. I know there are big stakes all around. We have the biggest economic interests in the country working very hard to see their interests are served versus other interests. I understand all that, and I understand my view is not the prevailing view. George Gobel once said: ``Did you ever think the world was a tuxedo and you were a pair of brown shoes?'' I feel like George Gobel on this issue. I understand this bill is on the floor, and it is going to get passed by the Congress. People do not want to entertain this notion, that, gee, there might be some inherent risk out here. This is a case, as I said earlier, of deciding this is where the industry has decided it wants to go, so let's go ahead and put a lodge up so we can accommodate all their interests and where they want to be. We have been through this before. Where they want to be is not necessarily where this country ought to have them. This country ought to be concerned about safety and soundness of its financial institutions first and foremost. That does not fit--it has never fit-- with the understanding that you can merge the interests of banks and other financial and economic activities that are risky. When you put things together that require safety and soundness with enterprises that have an inherent high risk, you are begging for trouble, and this country will get it. Our banks say to us, ``Well, others have done it; you can do it in other countries.'' Do you want to trade our economy for any other country at the moment? I don't think so. What they are doing in other countries is not the litmus test for what we decide as Americans to do to strengthen our economy, and this bill, in my judgment, if passed, will represent a giant step backward for our economy. Let me ask one additional question. With all of the debate that I have heard since this legislation came to the floor of the Senate, do you know I have not heard anything about whether or why or if this bill is good for people. Nothing. I wonder if anybody can describe one single thing in this legislation that will be helpful to ordinary folks? This morning, I talked about the fact we have banks and credit card companies that are saying to their customers these days--it is 1999, so things have changed. I wonder what my grandmother would think if she heard me say there are banks and credit card companies saying to customers: If you pay off your bill every month, we are going to penalize you. Isn't that Byzantine--we are going to penalize you for paying off your bill. In the old days, you got penalized for not paying your bill. No, the way you make money is for people to carry over a balance and charge a high interest rate. People who use a credit card to purchase every month and pay the full bill off every month are not very good customers; credit card companies do not want those folks around. I read some examples this morning of companies that say, ``Well, you people, if you're going to pay off your bill like that, shame on you, we're going to charge you a service charge.'' Shame on them. What has financial service come to with this sort of behavior? Another point. We have a circumstance in this country where --we are going to have a bankruptcy bill later this year, and we will have this discussion later--credit cards, of course, are distributed to everybody in America. I have a 12-year-old son. His name is Brendon. He is a great young guy, a wonderful baseball player. He is a great soccer player. He is a good student. For his benefit, I should say a great student, but he is a good student. I can describe how wonderful he is in a thousand different ways, but he is only 12. He received a letter in the mail one day from the Diners Club. The Diners Club said: Brendon Dorgan, we want to send you a preapproved Diners Club credit card. So my 12-year-old son appreciates Diners Club. I am sure he has an appetite to spend money. I see it from time to time. It is normally not on big purchases. Normally it is something sweet or something that fizzes at the 7-Eleven, but my son does not need a Diners Club card. Why would a 12-year-old get a Diners Club card? Why would Diners Club send my son a card? Because they send everybody a card. I assume it was a mistake, he got on the wrong list someplace. They send cards to college kids who have no income and no jobs and say, here is a preapproved bunch of credit for you; here is a card. It is just like a check. You go spend the money. We don't care you don't have a job. We don't care you don't have an income. Here is our card. Take it, please. That is what is going on in our country today--penalizing people for paying their bills, sending credit cards to 12-year-old kids, sending credit cards to people who have no income or no job. Why, my grandmother would be mortified to think that is the ethic we think makes sense in this kind of an economy. We cannot correct all of that in this discussion, but we can correct a couple things. I described not my son's credit card solicitation; I described derivatives traded on proprietary accounts in banks. I described potential regulation of risky hedge funds. Those are two big issues and very complicated issues. We can correct that. I intend to offer two amendments. I will send the first amendment to the desk and then ask that it be set aside by consent, and then I will send to the desk the second one and describe it. The committee chairman and ranking member will then proceed with the bill. They have other amendments I know they are going to have to consider today. I know they want to move ahead and finish whatever business they have with this legislation. My hope of hopes is enough Members of the Senate will take a look at this bill in final form and say this is a terrible bill, a terrible idea coming at a terrible time, and enough Members would vote against it to say: This is not modernization, this is a huge step back in time, and a huge pit in which we have lost the lessons that we learned earlier in this century. I do not have great hope that will happen, but, who knows, lightening strikes and perhaps at the end of this day, Members of the Senate will say: You know, this wasn't such a good idea after all. Amendment No. 312 (Purpose: To prohibit insured depository institutions and credit unions from engaging in certain activities involving derivative financial instruments)

Mr. DORGAN. Mr. President, the first amendment that I send to the desk is an amendment dealing with derivatives. I ask for its immediate consideration.

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

Mr. DORGAN

Mr. DORGAN. I say the worst possible position is to not be able to win and not be able to talk.

Mr. DORGAN. I will provide all three amendments to the chairman immediately and will be available all morning so I will not hold up his bill.

Mr. DORGAN. Mr. President, we are debating a piece of legislation in the Senate that is called the Financial Services Modernization Act of 1999. I come today with the confession I am probably hopelessly old fashioned on this issue. For those who have a vision of re-landscaping the financial system in this country with different parts operating with each other in different ways and saying that represents modernization, then I am just hopelessly old fashioned, and there is probably nothing that can be said or done that will march me towards the future. I want to sound a warning call today about this legislation. I think this legislation is just fundamentally terrible. I hear all these words about the industry remaking itself--banks, security firms and insurance companies, and that we'd better catch up and put a fence around where they are or at least build a pasture in the vicinity of where they are grazing. What a terrible idea. What is it that sparks this need to modernize our financial system? And what does modernization mean? This chart shows bank mergers in 1998, in just 1 year, last year, the top 10 bank mergers. We have discovered all these corporations have fallen in love and decided to get married. Citicorp, with an insurance company--that is a big one-- $698 billion in combined assets; NationsBank--BankAmerica, $570 million; and the list goes on. This is a massive concentration through mergers. Is it good for the consumers? I don't think so. Better service, lower prices, lower fees? I don't think so. Bigger profits? You bet. What about the banking industry concentration? The chart shows the number of banks with 25 percent of the domestic deposits. In 1984, 42 of the biggest banks had 25 percent of the biggest deposits. Now only six banks have the biggest deposits. That is a massive concentration. I didn't bring the chart out about profits, but it will show --this is an industry that says it needs to be modernized--banks have record- breaking profits, security firms have very healthy profits, and most insurance companies are doing just fine. Why is there a need to modernize them? So we must ask the question, what about the customer? What impact on the economy will all of this so-called modernization have? It is interesting to me that the bill brought to the floor that says, ``Let's modernize this,'' is a piece of legislation that doesn't do anything about a couple of areas which I think pose very serious problems. I want to mention a couple of these problems because I want to offer a couple of amendments on them. I begin by reading an article that appeared in the Wall Street Journal, November 16, 1998. This is a harbinger of things to come, just as something I will read that happened in 1994 is a harbinger of things to come, especially as we move in this direction of modernization. It was Aug. 21, a sultry Friday, and nearly half the partners at Long-Term Capital Management LP [that's LTCM, a company] were out of the office. Outside the fund's glass- and-granite headquarters, a fountain languidly streamed over a copper osprey clawing its prey. Inside, the associates logged on to their computers and saw something deeply disturbing: U.S. Treasurys were skyrocketing, throwing their relationship to other securities out of whack. The Dow Jones Industrial Average was swooning-- by noon, down 283 points. The European bond market was in shambles. LTCM's biggest bets were blowing up, and no one could do anything about it. This was a private hedge funding. By 11 a.m., the [hedge] fund had lost $150 million in a wager on the prices of two telecommunications stocks involved in a takeover. Then, a single bet tied to the U.S. bond market lost $100 million [by the same company]. Another $100 million evaporated in a similar trade in Britain. By day's end, LTCM [this hedge fund in New York] had hemorrhaged half a billion dollars. Its equity had sunk to $3.1 billion--down a third for the year. This company had made bets over $1 trillion. Now, what happened? They lost their silk shirts. But of course, they were saved because a Federal Reserve Board official decided we can't lose a hedge fund like this; it would be catastrophic to the marketplace. So on Sunday night they convened a meeting with an official of the Federal Reserve Board, and a group of banks came in as a result of that meeting and used bank funds to shore up a private hedge fund that was capitalized in the Caymen Islands for the purpose, I assume, of avoiding taxes. Bets of over $1 trillion in hedges--they could have set up a casino in their lobby, in my judgment, the way they were doing business. But they got bailed out. This was massive exposure. The exposure on the hedge fund was such that the failure of the hedge fund would have had a significant impact on the market. And so we modernize our banking system. This is unregulated. This isn't a bank; it is an unregulated hedge fund, except the banks have massive quantities of money in the hedge fund now in order to bail it out. What does modernization say about this? Nothing, nothing. It says let's pretend this doesn't exist, this isn't a problem, let's not deal with it. So we will modernize our financial institutions and we will say about this problem--nothing? Don't worry about it? I find it fascinating that about 70 years ago in this country we had examples of institutions the futures of which rested on not just safety and soundness of the institutions themselves but the perception of safety and soundness, that is, banks. Those institutions, the future success and stability of which is only guaranteed by the perception that they are safe and sound, were allowed, 70 years ago, to combine with other kinds of risk enterprises--notably securities underwriting and some other activities--and that was going to be all right. That was back in the Roaring Twenties when we had this go-go economy and the stock market was shooting up like a Roman candle and banks got involved in securities and all of a sudden everybody was doing well and everybody was making massive amounts of money and the country was delirious about it. Then the house of cards started to fall. As investigations began and bank failures occurred and bank holidays were declared, from that rubble came a description of a future that would separate banking institutions from inherently risky enterprises. A piece of legislation called the Glass-Steagall Act was written, saying maybe we should learn from this, that we should not fuse inherently risky enterprises with institutions whose perception of safety and soundness is the only thing that can guarantee their future success. So we created circumstances that prevented certain institutions like banks from being involved in other activities such as securities underwriting. Over the years that has all changed. Banks have said, because everybody else has decided they want to intrude into our business--and that is right, a whole lot of folks now set themselves up in a lobby someplace and say we are appearing to be like a bank or want to behave like a bank--the banks say if that is the case, we want to get into their business. So now we have the kind of initiative here in the Congress that says: Let's forget the lessons of the past; let's believe the 1920s did not happen; let's not worry about Glass-Steagall. In fact, let's repeal Glass-Steagall; let's decide we can merge once again or fuse together banking enterprises and more risky enterprises, and we can go down the road just as happy as clams and everything will be just great. And of course it will not. I mentioned hedge funds--talk about risk. How about derivatives? Incidentally, those who vote for this bill will remember this at some point in the future when we have the next catastrophic event that goes with the risks in derivatives. Fortune magazine wrote an article, ``The Risk That Won't Go Away; Financial Derivatives Are Tightening Their Grip on the World Economy and No One Knows How to Control Them.'' Somewhere around $70- to $80 trillion in derivatives. I wrote an article in 1994 for the Washington Monthly magazine and derivatives at that point were $35 trillion. You know something, today in this country banks are trading derivatives on their own proprietary accounts. They could just as well put a roulette wheel in the lobby. They could just as well call it a casino. Banks ought not be trading derivatives on their proprietary accounts. I have an amendment to prohibit that. I don't suppose it would get more than a handful of votes, but I intend to offer it. Is it part of financial modernization to say this sort of nonsense ought to stop; that banks ought not be able to trade derivatives on their own proprietary accounts because that is inherently gambling? It does not fit with what we know to be the fundamental nature of banking and the requirement of the perception of safety and soundness of these institutions. Does anybody here think this makes any sense, that we have banks involved in derivatives, trading on their own proprietary accounts? Does anybody think it makes any sense to have hedge funds out there with trillions of dollars of derivatives, losing billions of dollars and then being bailed out by a Federal Reserve-led bailout because their failure would be so catastrophic to the rest of the market that we cannot allow them to fail? And as banks get bigger, of course, we also have another doctrine. The doctrine in banking at the Federal Reserve Board is called, ``too big to fail.'' Remember that term, ``too big to fail.'' It means at a certain level, banks get too big to fail. They cannot be allowed to fail because the consequence on the economy is catastrophic and therefore these banks are too big to fail. Virtually every single merger you read about in the newspapers these days means we simply have more banks that are too big to fail. That is no-fault capitalism; too big to fail. Does anybody care about that? Does the Fed? Apparently not. Of course the Fed has an inherent conflict of interest. I think, if the Congress were thinking very clearly about the Federal Reserve Board, they would decide immediately that the Federal Reserve Board is not the locus of supervision of banks. The Federal Reserve Board is in charge of monetary policy. It is fundamentally a conflict of interest to be listening to the Fed about what is good for banks when they are involved in running the monetary policy of this country. If the Federal Reserve Board were, in my judgment, doing what it ought to be doing, it would be leading the charge, saying we need to regulate risky hedge funds because banks are involved in substantial risk on these hedge funds. Apparently hedge funds have become too big to fail. Then there needs to be some regulation. The Fed, if it were thinking, would say we need to deal with derivatives, and that bank trading on proprietary accounts in derivatives is absurd and ought not happen. Some will remember in 1994 the collapse in the derivative area. You might remember the stories. ``Piper's Managers' Losses May Total $700 Million.'' ``Corporation After Corporation Had to Write Off Huge Losses Because They Were Involved in the Casino Game on Derivatives.'' ``Bankers Trust Thrives on Pitching Derivatives But Climate Is Shifting.'' ``Losses By P&G May Clinch Plan to Change.'' The point is, we have massive amounts of risk in all of these areas. The bill brought to the floor today does nothing to address these risks, nothing at all, but goes ahead and creates new risks by saying we will fuse and merge the opportunities for inherently risky economic activity to be combined with banking which requires the perception of safety and soundness. We have all these folks here who know a lot more about this than I do, I must admit, who say: Except we are creating firewalls. We have subsidiaries, we have affiliates, we have firewalls. They have everything except common sense; everything, apparently, except a primer on history. I just wish, before people would vote for this bill, they would be forced to read just a bit of the financial history of this country to understand how consequential this decision is going to be. I, obviously, am in a minority here. We have people who dressed in their best suits and they just think this is the greatest piece of legislation that has ever been given to Congress. We have choruses of folks standing outside this Chamber who spent their lifetimes working to get this done, to say: Would you just forget all that nonsense back in the 1930s about bank failures and Glass-Steagall and the requirement to separate risk from banking enterprises; just forget all that. Time has moved on. Let's understand that. Change with the times. We have folks outside who have worked on this very hard and who very much want this to happen. We have a lot of folks in here who are very compliant to say: Absolutely, let me be the lead singer. And here we are. We have this bill, which I will bet, in 5, 10, 15 years from now, we will be back thinking of this bill like we thought of the bill passed in the late 1970s and early 1980s, in which this Congress unhitched the savings and loans so some sleepy little Texas institution could gather brokered deposits from all around America and, like a giant rocket, become a huge enterprise. And guess what. With all the speculation in the S&Ls and brokered deposits and all the things that went with it that this Congress allowed, what did it cost the American taxpayer to bail out that bunch of failures? What did it cost? Hundreds of billions of dollars. I will bet one day somebody is going to look back at this and they are going to say: How on Earth could we have thought it made sense to allow the banking industry to concentrate, through merger and acquisition, to become bigger and bigger and bigger; far more firms in the category of too big to fail? How did we think that was going to help this country? Then to decide we shall fuse it with inherently risky enterprises, how did we think that was going to avoid the lessons of the past? Then the one question that bothers me, I guess, is--I understand what is in this for banks. I understand what is in it for the security firms. I understand what is in it for all the enterprises. What is in this for the American people? What is in it for the American people? Higher charges, higher fees? Do you know that some banks these days are charging people to see their money? We know that because we pay fees, obviously, to access our money at bank machines. But credit card companies, most of them through banks, are charging people who pay their bills on time because you cannot make money off somebody who wants to pay their bill every month. If you have a credit card balance--incidentally, you need a credit card these days, because it is pretty hard to do business in cash in some places. You know with all the bills, everybody wants to use credit cards. Many businesses want you to use credit cards. So you use credit cards, then you pay off the entire balance at the end of every month because you don't want to pay the interest. Some companies have decided you should be penalized for paying off your whole balance. Isn't that interesting? You talk about turning logic on its head, suggesting we don't make money on people who pay off their credit card balance every month, so let us decide that our approach to banking is to say those who pay their credit card bill off every month shall be penalized. Turning logic on its head? I think so. As I said when I started, I am likely to be branded as hopelessly old fashioned on these issues, and I accept that. I suspect that some day in some way others will scratch their heads and say, ``I wish we had been a bit more old fashioned in the way we assessed risk and the way we read history and the way we evaluated what would have made sense going forward in modernizing our financial institutions.'' Oh, there is a way to modernize them all right, but it is not to be a parrot and say because the industry has moved in this direction, we must now move in this direction and catch them and circle them to say it is fine that you are here now. That is not the appropriate way to address the fundamental challenges we have in the financial services industry. I am not anti-bank, anti-security or anti-insurance. All of them play a constructive role and important role in this country. But this country will be better served with aggressive antitrust enforcement, with, in my judgment, fewer mergers, with fewer companies moving in to the ``too big to fail'' category of the Federal Reserve Board, with less concentration. This country will be better served if we have tighter controls, not firewalls that allow these companies to come together and do inherently risky things adjacent to banking enterprises, but to decide the lessons of the 1930s are indelible transcendental lessons we ought to learn and ought to remember. Mr. President, I have more to say, but I understand my time is about to expire.

Mr. DORGAN. Mr. President, at some point, I will have three amendments to offer, two of them on hedge funds and one of them on derivatives. I understand the Senator from Texas is in line and has the opportunity to offer two amendments. My hope is to offer my first derivative amendment following the Senator from Texas. I understand the Senator from Texas indicates he wants to try to finish the bill this evening. I understand managing the bill is difficult and he wants to get through these things. I will not speak at great length on my amendments. I appreciate the Senator's courtesy this morning in allowing me to make an opening statement. If he intends to finish the bill tonight, I will be here. He said if we have amendments to bring them over. I will be here. If the Senator wants my amendments, I will offer them and that will give us a chance to talk about them and deal with them.

Mr. DORGAN

Mr. DORGAN. Mr. President, I would like to take this opportunity to join all Americans in expressing my profound relief at the safe return of Sergeant Andrew Ramirez, Sergeant Christopher Stone, and Specialist Steven Gonzales from captivity in the Federal Republic of Yugoslavia. I was necessarily absent from the Senate this morning in order to attend a technology conference in my home State of North Dakota. Had I been present, I would have gladly joined 92 of my colleagues in commending the Reverend Jesse Jackson, and the delegation of religious and political leaders he led, for their instrumental efforts in securing the release of these three Americans. A grateful nation owes them its gratitude.

Mr. DORGAN

Mr. DORGAN. I ask unanimous consent that privilege of the floor be granted to Anthony Blaylock, a member of my staff, during the pendency of S.J. Res. 20.

Mr. DORGAN

Mr. DORGAN. Mr. President, 10 years ago the U.S. Supreme Court in a 5-4 decision struck down a Texas flag protection statute on the grounds that burning an American flag was ``speech'' and therefore protected under the First Amendment of the Constitution. I disagreed with the Court's decision then and I still do. I don't believe that the act of desecrating a flag is an act of speech. I believe that our flag, as our national symbol, can and should be protected by law. In the intervening years since the Supreme Court decision I have twice supported federal legislation that would make flag desecration illegal, and on two occasions I voted against amendments to the Constitution to do the same. I voted that way because, while I believe that flag desecration is despicable conduct that should be prohibited by law, I also believe that amending our Constitution is a step that should be taken only rarely and then only as a last resort. In the past year I have once again reviewed in detail nearly all of the legal opinions and written materials published by Constitutional scholars and courts on all sides of this issue. I pledged to the supporters of the Constitutional amendment that I would re-evaluate whether a Constitutional amendment is necessary to resolve this issue. From my review I have concluded that there remains a way to protect our flag without having to alter the Constitution of the United States. I am joining with Senators Bennett, McConnell and Conrad today to introduce legislation that I believe accomplishes that goal. The bill we introduce today protects the flag but does so without altering the Constitution and a number of respected Constitutional scholars tell us they believe this type of statute will be upheld by the U.S. Supreme Court. This statute protects the flag by criminalizing flag desecration when the purpose is to, and the person doing it knows, it is likely to lead to violence. Supporters of a Constitutional amendment will be disappointed I know by my decision to support this statutory remedy to protect the flag rather than support an amendment to the U.S. Constitution. I know they are impatient to correct a decision by the Supreme Court that they and I believe was wrong. I have wrestled with this issue for so long and I wish I were not, with my decision, disappointing those, including many of my friends, who passionately believe that we must amend the Constitution to protect the flag. But in the end I know that our country will be better served reserving our attempts to alter the Constitution only for those things that are ``extraordinary occasions'' as outlined by President James Madison, one of the authors of the Constitution, and only in circumstances when it is the only remedy for something that must be done. More than 11,000 Constitutional amendments have been proposed since our Constitution was ratified. However, since the ratification of the Bill of Rights in 1791 only 17 amendments have been enacted. These 17 include three reconstruction era amendments that abolished slavery, and gave African-Americans the right to vote. The amendments included giving women the right to vote, limiting Presidents to two terms, and establishing an order of succession in case of a President's death or departure from office. The last time Congress considered and passed a new Constitutional amendment was when it changed the voting age to 18, more than a quarter of a century ago. All of these matters were of such scope they required a Constitutional amendment to be accomplished. But protecting the American flag can be accomplished without amending the Constitution, and that is a critically important point. Constitutional scholars, including those at the Congressional Research Service, the research arm of Congress, and Duke University's Professor William Alstyne, have concluded that this statute passes Constitutional muster, because it recognizes that the same standard that already applies to other forms of speech applies to burning the flag as well. This is the same standard which makes it illegal to falsely cry ``fire'' in a crowded theater. Reckless speech that is likely to cause violence is not protected under the ``fighting words'' standard, long recognized by the Supreme Court of the United States. I believe that future generations--and our founding fathers--would agree that it's worth the effort for us to find a way to protect our flag without having to wonder about the unintended consequences of altering our Constitution. Mr. President, I yield the floor.

Mr. DORGAN. Mr. President, I rise today as a cosponsor of the legislation that my colleagues, Senator McConnell, Senator Bennett, Senator Conrad and I have jointly introduced--a piece of legislation called the Flag Protection Act. This, at its roots, is about the Constitution. Some will say the Constitution is an easy issue. A decade ago, the U.S. Supreme Court struck down a Texas statute, a statute which provided criminal sanctions for the burning of an American flag. The Supreme Court said, no, the desecration of a flag is an expression of speech. That fellow in Texas had a constitutional right to do that. That was a 5-4 decision of the Supreme Court. I disagreed with that decision. I think the Supreme Court was wrong. But immediately--and for 10 years--there was an effort to amend the Constitution to overturn the Supreme Court's decision and allow a statute to be deemed constitutional that would prohibit the desecration of the American flag. I have voted on two occasions against a constitutional amendment to prohibit flag desecration. Those who say it is an easy vote say it is just an amendment amending the Constitution. Let's just do it and protect the flag. It might be easy for them; it is not easy for me. Then there are those who say we should never amend the Constitution, that you have a right to desecrate the flag. They too say this is an easy choice. Let's just make that choice. This decision has been just as difficult. I have agonized about this issue. There are many, many Americans, over many, many years, who have shed their blood to nurture this country's liberties and freedoms. The burning of an American flag is a disgusting act, one that I personally do not think is protected under the first amendment of the Constitution. The question is, however, what do you do to remedy this situation? Do you amend the Constitution, or is there a way to craft a statute saying flag desecration is wrong in a manner that the Supreme Court would say, yes, this statute will meet the test? I believe there is. I have believed all along there is. I pledged to some folks back in my home State that I would review this, reanalyze it again. I have done that over and over. I have read everything that has been written by virtually all of the scholars on both sides of this issue. I conclude, once again, that our country is better served by reserving our attempts to alter the U.S. Constitution for those things that are extraordinary occasions, as one of the authors of the Constitution, James Madison discussed. Then the Constitution should be amended only in circumstances when it is the only remedy. Some 12 or 13 years ago, I went to Philadelphia in the summertime for the 200th birthday of the writing of the U.S. Constitution. I have told my colleagues this before, but I want to say it again, because it describes how I feel for the Constitution. Two hundred years previously, 55 white men marched into the assembly room in Independence Hall, a room that is substantially smaller than this Chamber. Those 55 men wrote a Constitution for this country. Walking down the cobbled streets of Philadelphia, someone asked Benjamin Franklin, one of the 55, what they were doing. He said, we are writing a Constitution, if you can keep it. Two hundred years after the writing of that Constitution, 55 of us were privileged to go back into the very same room. The chair where George Washington presided still sits in the front of the room. Mason sat over here, Madison, Ben Franklin. I was one of the 55 chosen, men, women, minorities. I come from a town of 300 people, a high school class of 9. I got goose bumps sitting in this room where they wrote the Constitution of the United States. I have never forgotten that day, thinking that I am in the room where the historic figures of our country created the framework for governance in our country. That day is always etched in my memory when we debate the questions of whether we should amend the Constitution of the United States. There have been 11,000 proposals to change America's Constitution. Outside of the first 10, the Bill of Rights, only 17 amendments have changed our Constitution in the more than two centuries of history in this country. Now we have a proposal during these past 10 years to change the Constitution. Is it a serious proposal about a serious issue? Yes, it is. Our flag is important. So is our Constitution. It seems to me, as I said, our country is better served if there is a way to address the issue of flag desecration by passing a statute that will meet the test of the Supreme Court, to do that rather than alter our U.S. Constitution. The piece of legislation we have introduced today has been reviewed by a number of constitutional experts, the Congressional Research Service and elsewhere, and they indicate they feel it does meet the test. It would be upheld by the Supreme Court. To be able to enact a statute of this type and avoid altering the Constitution makes eminent good sense to me. I think future generations and our Founding Fathers would agree that it is worth the effort for us to find a way to protect our flag without having to wonder about the unintended consequences of altering this significant area of our Constitution that guarantees and preserves important rights for the citizens of our country. Mr. President, I know that many who have invested a great amount of time and effort to enact a constitutional amendment will be sorely disappointed by my decision and, perhaps, Senator Conrad's decision and others, to not support a constitutional amendment on flag desecration. I know they are impatient to correct a decision by the Supreme Court that they and I believe was wrong. I have wrestled with this issue for so long. I wish I were not, with my decision, disappointing so many, including some of my friends who passionately believe we must amend the Constitution to protect the flag. But as I sift through all of the material and think about the history of our country and think about this constitutional framework of our government and all of the appetite that exists here and elsewhere to change this Constitution for 100 different reasons and 100 different ways, I think our country is better served by patience and by a thoughtful effort to correct a problem short of altering our country's Constitution. For that reason, I join my colleagues today, two Republicans and two Democrats, to offer a piece of legislation that would serve, instead of altering our Constitution, as an effort to protect our American flag. Mr. President, I ask that my written statement be printed in the Record.

Mr. DORGAN

Mr. DORGAN. Mr. President, 10 years ago the U.S. Supreme Court in a 5-4 decision struck down a Texas flag protection statute on the grounds that burning an American flag was ``speech'' and therefore protected under the First Amendment of the Constitution. I disagreed with the Court's decision then and I still do. I don't believe that the act of desecrating a flag is an act of speech. I believe that our flag, as our national symbol, can and should be protected by law. In the intervening years since the Supreme Court decision I have twice supported federal legislation that would make flag desecration illegal, and on two occasions I voted against amendments to the Constitution to do the same. I voted that way because, while I believe that flag desecration is despicable conduct that should be prohibited by law, I also believe that amending our Constitution is a step that should be taken only rarely and then only as a last resort. In the past year I have once again reviewed in detail nearly all of the legal opinions and written materials published by Constitutional scholars and courts on all sides of this issue. I pledged to the supporters of the Constitutional amendment that I would re-evaluate whether a Constitutional amendment is necessary to resolve this issue. From my review I have concluded that there remains a way to protect our flag without having to alter the Constitution of the United States. I am joining with Senators Bennett, McConnell and Conrad today to introduce legislation that I believe accomplishes that goal. The bill we introduce today protects the flag but does so without altering the Constitution and a number of respected Constitutional scholars tell us they believe this type of statute will be upheld by the U.S. Supreme Court. This statute protects the flag by criminalizing flag desecration when the purpose is to, and the person doing it knows, it is likely to lead to violence. Supporters of a Constitutional amendment will be disappointed I know by my decision to support this statutory remedy to protect the flag rather than support an amendment to the U.S. Constitution. I know they are impatient to correct a decision by the Supreme Court that they and I believe was wrong. I have wrestled with this issue for so long and I wish I were not, with my decision, disappointing those, including many of my friends, who passionately believe that we must amend the Constitution to protect the flag. But in the end I know that our country will be better served reserving our attempts to alter the Constitution only for those things that are ``extraordinary occasions'' as outlined by President James Madison, one of the authors of the Constitution, and only in circumstances when it is the only remedy for something that must be done. More than 11,000 Constitutional amendments have been proposed since our Constitution was ratified. However, since the ratification of the Bill of Rights in 1791 only 17 amendments have been enacted. These 17 include three reconstruction era amendments that abolished slavery, and gave African-Americans the right to vote. The amendments included giving women the right to vote, limiting Presidents to two terms, and establishing an order of succession in case of a President's death or departure from office. The last time Congress considered and passed a new Constitutional amendment was when it changed the voting age to 18, more than a quarter of a century ago. All of these matters were of such scope they required a Constitutional amendment to be accomplished. But protecting the American flag can be accomplished without amending the Constitution, and that is a critically important point. Constitutional scholars, including those at the Congressional Research Service, the research arm of Congress, and Duke University's Professor William Alstyne, have concluded that this statute passes Constitutional muster, because it recognizes that the same standard that already applies to other forms of speech applies to burning the flag as well. This is the same standard which makes it illegal to falsely cry ``fire'' in a crowded theater. Reckless speech that is likely to cause violence is not protected under the ``fighting words'' standard, long recognized by the Supreme Court of the United States. I believe that future generations--and our founding fathers--would agree that it's worth the effort for us to find a way to protect our flag without having to wonder about the unintended consequences of altering our Constitution. Mr. President, I yield the floor.

Mr. DORGAN. Mr. President, I rise today as a cosponsor of the legislation that my colleagues, Senator McConnell, Senator Bennett, Senator Conrad and I have jointly introduced--a piece of legislation called the Flag Protection Act. This, at its roots, is about the Constitution. Some will say the Constitution is an easy issue. A decade ago, the U.S. Supreme Court struck down a Texas statute, a statute which provided criminal sanctions for the burning of an American flag. The Supreme Court said, no, the desecration of a flag is an expression of speech. That fellow in Texas had a constitutional right to do that. That was a 5-4 decision of the Supreme Court. I disagreed with that decision. I think the Supreme Court was wrong. But immediately--and for 10 years--there was an effort to amend the Constitution to overturn the Supreme Court's decision and allow a statute to be deemed constitutional that would prohibit the desecration of the American flag. I have voted on two occasions against a constitutional amendment to prohibit flag desecration. Those who say it is an easy vote say it is just an amendment amending the Constitution. Let's just do it and protect the flag. It might be easy for them; it is not easy for me. Then there are those who say we should never amend the Constitution, that you have a right to desecrate the flag. They too say this is an easy choice. Let's just make that choice. This decision has been just as difficult. I have agonized about this issue. There are many, many Americans, over many, many years, who have shed their blood to nurture this country's liberties and freedoms. The burning of an American flag is a disgusting act, one that I personally do not think is protected under the first amendment of the Constitution. The question is, however, what do you do to remedy this situation? Do you amend the Constitution, or is there a way to craft a statute saying flag desecration is wrong in a manner that the Supreme Court would say, yes, this statute will meet the test? I believe there is. I have believed all along there is. I pledged to some folks back in my home State that I would review this, reanalyze it again. I have done that over and over. I have read everything that has been written by virtually all of the scholars on both sides of this issue. I conclude, once again, that our country is better served by reserving our attempts to alter the U.S. Constitution for those things that are extraordinary occasions, as one of the authors of the Constitution, James Madison discussed. Then the Constitution should be amended only in circumstances when it is the only remedy. Some 12 or 13 years ago, I went to Philadelphia in the summertime for the 200th birthday of the writing of the U.S. Constitution. I have told my colleagues this before, but I want to say it again, because it describes how I feel for the Constitution. Two hundred years previously, 55 white men marched into the assembly room in Independence Hall, a room that is substantially smaller than this Chamber. Those 55 men wrote a Constitution for this country. Walking down the cobbled streets of Philadelphia, someone asked Benjamin Franklin, one of the 55, what they were doing. He said, we are writing a Constitution, if you can keep it. Two hundred years after the writing of that Constitution, 55 of us were privileged to go back into the very same room. The chair where George Washington presided still sits in the front of the room. Mason sat over here, Madison, Ben Franklin. I was one of the 55 chosen, men, women, minorities. I come from a town of 300 people, a high school class of 9. I got goose bumps sitting in this room where they wrote the Constitution of the United States. I have never forgotten that day, thinking that I am in the room where the historic figures of our country created the framework for governance in our country. That day is always etched in my memory when we debate the questions of whether we should amend the Constitution of the United States. There have been 11,000 proposals to change America's Constitution. Outside of the first 10, the Bill of Rights, only 17 amendments have changed our Constitution in the more than two centuries of history in this country. Now we have a proposal during these past 10 years to change the Constitution. Is it a serious proposal about a serious issue? Yes, it is. Our flag is important. So is our Constitution. It seems to me, as I said, our country is better served if there is a way to address the issue of flag desecration by passing a statute that will meet the test of the Supreme Court, to do that rather than alter our U.S. Constitution. The piece of legislation we have introduced today has been reviewed by a number of constitutional experts, the Congressional Research Service and elsewhere, and they indicate they feel it does meet the test. It would be upheld by the Supreme Court. To be able to enact a statute of this type and avoid altering the Constitution makes eminent good sense to me. I think future generations and our Founding Fathers would agree that it is worth the effort for us to find a way to protect our flag without having to wonder about the unintended consequences of altering this significant area of our Constitution that guarantees and preserves important rights for the citizens of our country. Mr. President, I know that many who have invested a great amount of time and effort to enact a constitutional amendment will be sorely disappointed by my decision and, perhaps, Senator Conrad's decision and others, to not support a constitutional amendment on flag desecration. I know they are impatient to correct a decision by the Supreme Court that they and I believe was wrong. I have wrestled with this issue for so long. I wish I were not, with my decision, disappointing so many, including some of my friends who passionately believe we must amend the Constitution to protect the flag. But as I sift through all of the material and think about the history of our country and think about this constitutional framework of our government and all of the appetite that exists here and elsewhere to change this Constitution for 100 different reasons and 100 different ways, I think our country is better served by patience and by a thoughtful effort to correct a problem short of altering our country's Constitution. For that reason, I join my colleagues today, two Republicans and two Democrats, to offer a piece of legislation that would serve, instead of altering our Constitution, as an effort to protect our American flag. Mr. President, I ask that my written statement be printed in the Record.

Mr. DORGAN

Mr. DORGAN. Mr. President, I am introducing legislation Wednesday to improve the safety of the nation's food supply, by increasing educational efforts for food processors and handlers and the frequency of inspections for some of them. The bill also establishes new mechanisms for identifying food processors and handlers who originate contaminated food in order to improve federal recall and food safety law enforcement action. Farmers produce high quality products and expect them to reach the consumer with the same high quality standards observed. Farmers and consumers both have an interest in assuring the unquestioned safety of our food. The new global economy is another reason for strengthening the nations' food safety laws. With the new global economy, we have food moving around the world without much understanding of where its coming from, who produced it, and under what conditions. I think it calls for a much more rigorous food inspections, not only for the safety of consumers, but to safeguard the reputation of the products our farmers produce. Another important feature of the bill is new authority for inspection of food and food products at the border as they enter the United States from foreign countries, and in some cases inspections at food processing plants located in foreign countries. A similar bill will be introduced shortly in the U.S. House by Representative Frank Pallone (D-NJ), underscoring the urban-rural, producer-consumer nature of the new drive for improved food safety laws.

Mr. DORGAN

Mr. DORGAN. Mr. President, I am introducing legislation Wednesday to improve the safety of the nation's food supply, by increasing educational efforts for food processors and handlers and the frequency of inspections for some of them. The bill also establishes new mechanisms for identifying food processors and handlers who originate contaminated food in order to improve federal recall and food safety law enforcement action. Farmers produce high quality products and expect them to reach the consumer with the same high quality standards observed. Farmers and consumers both have an interest in assuring the unquestioned safety of our food. The new global economy is another reason for strengthening the nations' food safety laws. With the new global economy, we have food moving around the world without much understanding of where its coming from, who produced it, and under what conditions. I think it calls for a much more rigorous food inspections, not only for the safety of consumers, but to safeguard the reputation of the products our farmers produce. Another important feature of the bill is new authority for inspection of food and food products at the border as they enter the United States from foreign countries, and in some cases inspections at food processing plants located in foreign countries. A similar bill will be introduced shortly in the U.S. House by Representative Frank Pallone (D-NJ), underscoring the urban-rural, producer-consumer nature of the new drive for improved food safety laws.

Mr. DORGAN

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

Mr. DORGAN

Mr. DORGAN. Mr. President, I know there has been discussion about the agenda here in the Senate, what the Senate will take up, what it will consider, what it will debate in the coming days and weeks and months. I hear very little discussion about the need to respond to the farm crisis in the rural parts of our country. I have, on half dozen occasions now, brought to the floor of the Senate a chart that shows our entire country with those counties blocked out in red that are losing population. What it shows is a large part of the middle of our country is being depopulated. We have a serious and abiding farm crisis. That depopulation in the middle part of America stems in large part from a farm economy that means family farmers are not making a living and all too often are having to leave the farm. We keep hearing that it is a global economy. If it is a global economy, then why on earth do we have so many people hungry in the rest of the world? We are told 500 to 600 million people go to bed with an ache in their belly every night because they did not have enough to eat. Then in the same global economy, with so many hungry people, a farmer somewhere in Cando, ND, or Regent, ND, today loads up a truckload of wheat and takes it to the county elevator and is told that the food has no value. That is not a global economy that seems to work, in my judgment. This chart shows what is happening in the heartland of our country. Most of it is because of the urgency of the economic crisis facing family farmers. These red counties are the counties which have lost more than 10 percent of their population. Many of them have lost far more. My home county [Hettinger] is right up in here. It has lost almost half of its population in the last 25 years. The middle part of America is being depopulated. We have a farm program that doesn't work. We have natural disasters that affect these family farmers. We have crop diseases. A GAO study I just released last week shows that in North Dakota a crop disease called scab or vomitoxin has cost our farmers $200 million a year in lost income. They say 750 farmers have lost their farms because of just that one crop disease, the worst crop disease in a century in my home State. Natural disasters, crop diseases; how about trade? How about telling our family farmers to compete in the global economy with the Europeans subsidizing their farmers in multiples of what we are while we try to help our farmers open foreign markets. You compete in the international marketplace with one hand tied behind your back. Or how about international trade that says, why don't we have the Canadians dump tens of thousands of semi-truckloads of their grain, their durum wheat and their spring wheat into our marketplace in conditions of unfair trade, driving down our prices. That is all right, and we will sit by and do nothing about it. That is not a fair circumstance for our farmers. Japan, China; how many in this Chamber know that currently the tariff on American beef going into Japan is 45 percent, a 45-percent tariff? If we imposed that on anybody, we would be considered a massive failure. China says maybe they will decrease their tariff on American beef going into China. It is now 42.5 percent. Our farmers deserve better trade policies than they are getting from this Government of ours. Our Government cannot do much about natural disasters except respond to them with a helping hand at a time when people need help. It can do something about trade policy that is unfair to our producers. And certainly, this administration and this Congress, especially this Congress, ought to do something about a farm bill that shortchanges American farmers. The current farm bill we have is a wonderful bill if you are Cargill or Continental or some large grain trading company. If you are one of the behemoths, one of the giant agrifactories in America, you have to like the current circumstance. You have low prices at which you can buy the grain. Then you can put it in your plant, apply some air to it, and you can puff it up. Now you can call it puffed wheat and put it on the grocery store shelf. And while you are paying less for the grain, you can increase your prices. That is exactly what is happening, and that is exactly what was announced last week. Grain prices for family farmers are collapsed. Cereal manufacturers are saying, we want to increase cereal prices 2.5 percent. You talk about a disconnection. You talk about short-circuiting the economic system. That is a short-circuit. The question for this Congress is, Do we care? I do. Do enough others care to want to save family farmers? Or is America's food production destined to go to the giant agrifactories that farm America from California to Maine with nary a person in sight--no farm lights, no yard lights out there illuminating where a family lives and does its work--because there won't be families on the farm? Or does this country, does this Congress, as many other countries, believe that a broad network of family producers on America's farms and ranches represents the best economic system? Do we believe in the Jeffersonian model that Thomas Jefferson talked about: That which keeps America free is broad-based economic ownership, because economic freedom relates to political freedom? Do we really believe in broad-based economic ownership? If so, let's start to manifest that belief in farm policy. Let's decide that current farm policy is a bankrupt policy. The bill that was passed, the current farm bill that was passed that pulls the rug out from under family farmers says, when prices collapsed, do not bank on us for help--when that bill was passed, without my vote in this Congress, there was feasting and rejoicing and celebrating here in this town by the largest agribusinesses because they thought they had just won the lottery. What a wonderful deal for them. Someday we will have lower grain prices, they thought, and we will buy this grain from family farmers cheap, and then eventually the family farmers will be gone. They will take over the farms and farm all of our country. They will put that grain in plants and will make substantial money off of it. That is exactly what happened at the expense of family farmers. The question before this Congress is: Are we going to have the will to do what is necessary to repair the hole in the safety net for family farmers? Do we care whether there are family farmers left in our country? Wheat prices have fallen 53 percent. Let me show a chart which demonstrates what has happened to wheat prices. I ask any American, I ask any Member of the Senate, how would you feel if this was what was happening to your paycheck? How well would you do if this was what your income looked like? That is what the income looks like on our farms. On America's farms, they see Depression-era prices in constant dollars, but their expenses keep going up. Try to buy a tractor or a combine, fertilizer, seed, fuel, at today's prices. See if you get a bargain. But then sell the grain that comes from the sweat and the labor, from driving the tractor, planting the seeds in the spring, tending that crop through the year and at harvesting in the fall. Try to sell that crop, and see what they tell you. Then it is not so much a circumstance where they say, well, times have changed and things cost more. They say, your product that you worked so hard to create is worth less, worth less or worthless. This country can do better than that. If we don't do better than that, we won't have any farmers left. We need to decide that by the Memorial Day break or by the July 4 break at the very latest, we need to do something to repair this safety net. The first step is obvious. I just spoke over in the Appropriations Committee hearing. We have an emergency bill which provides for the first spring planting loans. That emergency bill was passed many weeks ago here in the Senate and now, of course, awaits action on the Kosovo emergency question. But the climate doesn't wait. The spring doesn't wait. Spring planting is needed to move ahead now. Yet the loans that many farmers need to get into the field for the spring, to buy the fuel and buy the seed, those loans are not available because we haven't passed that emergency supplemental dealing with those emergency loans. That is the first step. That ought to be done immediately. The second step is, between now and the Memorial Day break or the July 4 break, we ought to do something to put in place a fair price plan for family farmers. We ought to have the good sense to do that. There is nothing wrong with making a U-turn when you discover where you are headed is the wrong direction. The current farm bill is the wrong direction. It seemed right at the time for a lot of folks who voted for it. As I said, I didn't. For those who voted for it when farm prices were better, it seemed like it was the right thing to do. But it was the wrong thing to do. Now that farm prices have collapsed, the question is, Do we have a safety net left in this country for family farmers to try to get them across those price valleys? The answer is no. But we can repair and provide a safety net for family farmers if this Congress and this country believes it is important to have a broad-based network of family farm ownership across this country. I believe that very strongly, and I hope my colleagues who support family farming will feel the same way. Now, Mr. President, last week, when I came to the floor of the Senate, I held up a newspaper that I got on an airplane in Minneapolis. This paper said: ``Cargill Profits From Decline in Farm Prices; 53 percent jump in earnings.'' I don't know Cargill. It is a big agrifactory. ``Cargill Profits From Decline in Farm Prices.'' As do all of the big economic interests. This was in the same newspaper: ``General Mills to Boost Cereal Prices 2.5 Percent.'' There is a decline in farm prices, farm prices have collapsed, but cereal manufacturers are going to increase the price of breakfast food 2.5 percent. I think the consumers and farmers are both victimized, and they have a right to ask what on Earth is going on in this country. Farmers are being shortchanged and consumers are being overcharged. What on Earth is happening and when is somebody going to do something about it? On the same day in that newspaper, these two stories tell of the sad, sad events that now confront our family farmers: collapsed prices and a circumstance where all of those who take their product and use it, turn it into cereal for store shelves, those who haul it, those who trade it, and those who add value to that product are making record profits, increasing prices, and are doing fine. But family farmers, of course, are going broke. This Congress must decide, and decide quickly. I and others will be coming to the floor repeatedly to ask this question: Why is it when people talk about family values they only refer to cultural values? Why is the family not valued as an economic unit in this country? Why aren't family economics important? The family farm, the family business--that is an economic unit that is important to this country, and our public policy ought to reflect that. It is long past the time when Congress ought to address this farm crisis in a serious and thoughtful way. Mr. President, I yield the floor. Mr. MURKOWSKI addressed the Chair.

Mr. DORGAN

Mr. DORGAN. Mr. President, I would like to just briefly mention a couple of issues this morning. First, I would like to comment on some of the statements made this weekend, especially by the Senate majority leader, but by others as well, dealing with the issue of Social Security. This weekend, on a Sunday talk show, our colleague, Senator Lott, indicated that he felt that the issue of Social Security reform was dead for this Congress. Vice President Gore this morning expressed the fervent hope that this is not the case. I would join the Vice President in saying that it is not good public policy for our country to give up on the important task of reforming Social Security. The Social Security program has been a critically important program for our country. It has made life so much better for so many older Americans for so long. The problems of our Social Security system are born of success--not failure. The success is that people are living longer and better lives in our country. At the start of this century, you were expected, on average, to live to be 48 years old. Now, at the end of the century, you are expected to live on average to about 78 years of age--a 30-year increase in life expectancy. For a lot of reasons--better nutrition, breathtaking breakthroughs in medical science, better medical facilities--a whole series of things contribute to the success. But the result of the success is that people are living longer, and that puts strains on the Social Security system. But we ought not shrink from the challenge of those strains. We can solve this issue. We can make Social Security solvent for at least the next 75 years and beyond. Let's not at this point decide that the 106th Congress cannot deal with the Social Security challenge. Of course we can. President Clinton and Vice President Gore made a proposal at the start of this Congress. Just as a starting point, they put forward a proposal to let us sink our teeth into this issue, and make it a priority. I know there is a lot of controversy about how you might reform and change and improve the solvency of the Social Security system for the long term. But I think the best way to approach this--I agree with Vice President Gore--is for both parties to resolve that this shall be a priority; we, together, should decide to save Social Security in this Congress. I ask the majority leader here in the Senate and others to agree with President Clinton and Vice President Gore that this ought to be job No. 1 for this Congress. Let us together reform the Social Security program, and make the changes that are necessary to extend its solvency for the long term into the future. Again, while we do it, let me remind those who listen to this debate that the problems confronted by the Social Security system are not problems of a program that doesn't work. It works, and works well. They are problems resulting from longer and better lives for many older Americans in this country.

Mr. DORGAN

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

Mr. DORGAN

Mr. DORGAN. Mr. President, I would like to talk just for a moment about the horrible tragedy that occurred in Littleton, CO, last week. I am a North Dakotan. I have been a North Dakotan all of my life. I did, however, leave our State to go to graduate school in Colorado. Following graduate school, I worked in Colorado, and worked, in fact, in Littleton, CO. It is a nice community, a suburb of Denver. Last week, I was, along with all other Americans, horrified to see the pictures on television of the school shooting at Columbine High School that took the lives of so many innocent young boys and girls, and also a teacher. And I asked myself, what is causing this? What is at the root of this kind of violence? The Littleton, CO, shooting is just the latest in a series of school shootings. Unfortunately, there have been many others in the last several years. I can't watch the television set without getting tears in my eyes. Moments ago, I was turning on a television set and I saw the funeral for a very brave teacher who died that day in that school in Colorado. We ask ourselves over and over and over again, what has changed? What is causing all of this? On Friday, I met with a high school assembly in North Dakota. We talked at great length about these issues. This morning I spent all morning at a youth detention facility called Oak Hill and talked to young folks at that facility from 12 years old on up, young people who had committed violent crimes and who are now committed to that detention facility not more than an hour from this Capitol Building. I don't have any better answers perhaps than anyone else in America about these issues. I have some thoughts about some of it. Obviously, first, it all starts at home. There isn't a substitute for good parenting. One of the young boys this morning at the Oak Hill Detention Center, who has been involved in drugs and violent crime, said he only had one parent. He said his parent checked on him from time to time but he said, ``Checking in on young folks from time to time isn't enough.'' Another part of the problem is drugs and the accessibility of drugs. In addition, a country with 220 to 240 million guns, and with seemingly easy accessibility to guns by children, makes parenting more difficult. How about the violence children are exposed to every day? By the time children graduate from high school they will spend about 12,000 hours in a classroom and about 20,000 hours in front of a television set. Study after study after study, year after year after year shows that the steady diet of violence seen by our young people on television affects their behavior. Does it turn them into murderers? No. Does it affect their behavior? Yes, of course it does. Corporations spend $200 billion a year in this country advertising in the media. Yet when we are suggesting through studies that the steady diet of violence offered to our young children on television is hurting them, the same people will say, ``Gee, the media has no influence on our children.'' If that is the case, why is $200 billion a year spent advertising tennis shoes, jerseys, and more? If it doesn't work, why do we see it used so extensively? Of course the media has an enormous influence. Last week, while these shootings at school were taking place, as horrifying as it was for everyone in America to watch SWAT teams move into the building and young children run from the building in panic, one of the networks broke for a commercial. The commercial break was to encourage us to watch a new program called ``Mr. Murder.'' I thought to myself, I guess that says a lot, doesn't it? We are watching these children at this high school under siege by young gunmen, and then there is an advertisement for the new program, ``Mr. Murder.'' Is a murder program on television causing these murders in the school? That is not my allegation at all. Does it hurt our children? The pop culture of increasingly violent television, increasingly violent movies--or how about increasingly violent lyrics in music? There is a man in Minot, ND, whose young boy put a bullet through his brain. When he found his son, he was lying on his bed with his earphones connected to a compact disk that was playing over and over and over and over again lyrics to a Marilyn Manson song saying the way to end all of this ``is with a bullet in your head.'' For 3 months, he obsessed on this kind of music, and then his father found him lying on his bed with a bullet in his head. The teacher of a young boy named Mitchell, who killed 4 of his classmates and 1 teacher and wounded 10 others, testified before the Senate Commerce Committee last June. She talked about 13-year-old Mitchell. She was Mitchell's teacher, taught Mitchell English. He was always respectful, she said, saying ``Yes, ma'am,'' ``No, ma'am.'' She never saw him exhibit anger. After the killings, she said the classmates had a discussion. They discovered Mitchell had been obsessing on an entirely new kind of music--Bone Thugs and TuPac. And she told us the lyrics that Mitchell had been listening to in ``Crept and We Came'' by Bone Thugs: Cockin the 9 and ready to aim Pullin the Trigger To blow out your brains Bone got a gang Man we crept and we came. This song has about 40 murder images, like ``puttin them in the ground and pumpin the gun.'' That is what Mitchell was listening to. ``Body Rott,'' by Bone Thugs. Or here are the lyrics from ``I Ain't Mad at Ya'' by TuPac. I can see us after school We'd bomb on the first [blank blank] With the wrong [blank] on. And from ``2 of Amerikas Most Wanted:'' Picture perfect, I paint a perfect picture. Bomb the hoochies with precision . . . Ain't nuttin but a gangsta party. These lyrics are from Mitchell's teacher who wanted us to know what he was listening to. Is this part of the culture? Does this hurt our children? Is it easy to parent with these kinds of images, these kinds of thoughts coming from our television set, from compact disks? Should we think through all of this--not just at the surface with parenting, drugs, and guns-- but also the issue of pop culture? If $200 billion is spent advertising in the media because it influences behavior, should we as parents and should we as legislators start understanding that the media then has a profound impact on children as well. Should we understand when the media pumps images--thousands and thousands and thousands of images--of murder that tell our young children the way adults solve their problems is to kill someone, to stab someone, to murder someone? That is the way adults solve their problems, according to television programs. Yes, it is fiction, but how do children know that? Yes, you can say parents should do a better job of seeing what their children are watching, but it is very hard. I have a lot more to say about this but I know colleagues are waiting. I am sure I join all of my colleagues in saying we are heartbroken by what is happening in this country and what happened in Littleton, CO. My thoughts and prayers go to all of those families and friends who lost loved ones. I watched the images of the funerals today in Littleton, and I want to be part of anything any of us can do to try to find reasons and try to develop policies to see if we can't steer all of us in a more constructive direction. In the meantime, my thoughts and prayers are with all of those in Colorado and around this country who today grieve for those young children and the teacher who lost their lives. I yield the floor.

Mr. DORGAN

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

Mr. DORGAN

Mr. DORGAN. Mr. President, I appreciate the Senator yielding for a question. I wanted to note that for, I guess, the seventh year now that I have been here in the Senate, the one consistent voice on this issue has been the Senator from South Carolina. I find it interesting, and I wonder if he sees the same irony as I do, that the very people that now bring us the notion of a lockbox, because they are worried about the Social Security trust fund, were just a few years ago on the floor of the Senate ridiculing the Senator from South Carolina, myself, my colleague from North Dakota, and others, because we said what you want to do with a constitutional amendment to require a balanced budget is to put a provision in the Constitution that says Social Security revenues must be counted not as part of a trust fund, but as part of the ordinary operating revenues of the Federal budget. In other words, they wanted to put in the Constitution the misuse of the Social Security trust funds and decide that you have a budget surplus only when you have used the Social Security trust funds to get there. So we said no; if you are going to do something in the Constitution about a constitutional amendment to balance the budget, let's at least be honest with the trust funds and say the budget is only balanced when you have not misused Social Security trust funds. I should have brought the charts. I was thinking about bringing the charts over to read all of the comments that were made on the floor of the Senate about our position at that point. They have three stages of denial: First, we are not misusing the Social Security trust funds. Second, they said but if we are misusing them, we promise to stop. If we promise to stop, we can't do it for the first 8 years. We will promise to stop 12 years from now. Those were the three stages of denial when we debated the issue of a constitutional amendment. But I just find it interesting that those who now say they are the protectors are the ones who are building a lockbox and are the very, very same interests who are on the floor of the Senate saying we should amend the Constitution in a manner that provides that Social Security revenues will be treated like all other revenues of government. It is no protection at all, and they would cement that in the Constitution of the United States. When we objected, they said: You are wrong; this is exactly what we want to do. Now we have this little pirouette on this floor when they come back and say we are the ones who want to protect Social Security. I just wanted to ask the question if the Senator from South Carolina sees the same irony here, although this amendment doesn't do what it is advertised to do. The Senator from South Carolina is absolutely correct; the rhetoric in support of this amendment is directly in contradiction to the kind of things we heard from that side of the aisle just 3 to 4 years ago.

Mr. DORGAN. I wonder, will the Senator yield?

Mr. DORGAN

Mr. DORGAN. Mr. President, I want to talk just for a moment about agriculture and the challenge facing agriculture. On Saturday, I was in an airplane and opened up a newspaper to an interesting article. I have spoken about agriculture and family farmers during the past weeks. I have talked about what is happening in our part of the country with the depopulation of middle America, rural communities drying up--shriveling like prunes, people moving out--not moving in, Main Street businesses boarding up, family farmers going broke, and nobody seemingly caring very much. The business section of the Minneapolis Tribune had two fascinating stories on the front page. They respond in a kind of perverse way to what is happening, both in this Chamber and also around the country with respect to the policy dealing with family farmers. The first article: ``Cargill Profits from Decline in Farm Prices; 53 percent jump in earnings expected.'' Cargill is a large company and has always done quite well, I believe. It is a privately held company. It purchases agricultural products and is involved in a wide range of activities adding value to agricultural products. ``Cargill Profits from Decline in Farm Prices.'' Is that unusual? No. Big agribusinesses all too often are profiting from the misery of America's family farmers. Family farmers on the one side go broke; while Cargill sees a 53 percent jump in earnings. Cargill, incidentally, wants now to marry up with Continental Grain. Cargill and Continental want to get married, merge, and become bigger, with more market power. In the question of market power, it is reasonable to ask, who wins and who loses? Family farmers all too often lose, and those with the most market power win. ``Cargill Profits from the Decline in Farm Prices.'' You could wipe out the name ``Cargill'' and include any number of agribusinesses. I am not picking on Cargill; they just happened to be in this paper on Saturday. Let's go to the article on the bottom of the front page. Family farmers are going broke because commodity prices have collapsed. The price of wheat has collapsed. The article states, ``General Mills to boost cereal prices 2.5 percent'': General Mills, Inc., the maker of Cheerios, Wheaties and Lucky Charms, is raising cereal prices an average of 2.5 percent. One might ask the question, in terms of public policy, What is going on in this country when the folks who gas up the tractor in the spring, borrow money to buy seed, fertilizer, plant the crop, harvest the wheat, sell it in the market, and then go broke because they are told that the wheat they produced from their fields has no value? But the people who buy that wheat and turn it into Cheerios or Wheaties or Lucky Charms, even though the prices of commodities have collapsed and they are paying the farmer less--in fact, so little that family farmers are going broke in record numbers--they say they need to boost cereal prices that people pay at the grocery store. I woke up this morning and I ate a bowl of cereal. I will not advertise which cereal it was, but I ate a bowl of cereal. I looked at the box, after I had seen this in the paper on Saturday, and I read the label about what is in this cereal I am eating. I will tell you what is in the cereal--grain. So this company buys it from farmers, pays them a pittance, and then they puff it or crisp it or shred it. Once they have it all puffed and labeled as Puffed Wheat or Shredded Wheat, the process is all done. They have added the air to the grain or they have shredded it with a knife, then they put it on the grocery store shelf and charge a fortune for it. Buy a box of cereal at the grocery store and ask yourself whether you like that price. Now, they say it is not enough. While farmers are going broke, they say they need to boost cereal prices. Talk about a disconnection and evidence that the market system does not work in agriculture. There must surely be a golden rule here, the one that says--those who have the gold make the rules--there must be a golden rule here that says cereal manufacturers can increase prices with impunity while family farmers go broke because they are selling their grain at the elevator and are told that their food has no value. I mentioned last week an auction sale by a farm wife in North Dakota. She wrote a letter and said they were forced to sell out. She said her 17-year-old son would not even come down, he stayed in bed during the day of the auction sale and refused to come down to witness the auction sale of this farm because he was heartbroken. It was breaking his heart. It was breaking his heart that they were having to sell their farm. He wanted to farm. This is all about human misery, failure--and it is not their fault. It is not the family farmers' fault that commodity prices have collapsed at the same time we have a hungry world. Hundreds of millions of people go to bed with an ache in their belly every night because they do not have enough to eat, while our farmers are told their product has no value. And when companies take the farmers product and turn it into cereal by puffing it, then they send it to the grocery store, they say it not only has value, in fact, they are announcing a price increase. Yet, they have received record profits and now want to increase cereal prices. I want to put up a chart that shows the average annual return on equity for the major cereal manufacturers, 1993 to 1997: 29 percent, 24 percent, 25 percent, 22 percent. Our family farmers are going broke raising the products that go into these cereals; and the largest corporations that make cereal are making very substantial returns on their equity. There is something wrong with that economic system. Some say, ``Well, that's just the way it works. The big get bigger and the small get phased out.'' If this country decides it is worth losing family farmers, it will have lost something of great value to our country. Some in this Chamber think having only giant agrifactories around in the future is fine. They will buy up farms from coast to coast. Only having large farms in America is not fine with me. This country will have taken a giant step backwards, unless we fundamentally change the farm law this year and provide a decent safety net for family farmers. We do it for another segment in our economy. We provide a safety net for workers with a minimum wage. Family farmers were told, under the current farm bill--about 3 years ago--``We're going to pull the safety net out from under you.'' And then, of course, prices collapsed, and the result is family farmers have no effective safety net. I just say that when you look at what is going on in the business page of the newspaper, ``Cargill profits from decline in farm prices'' and ``General Mills to boost cereal prices''--I do not mean to single out these two companies, they are doing what economic clout and power allows them to do--but it is unfair to family farmers. We have asked for substantial investigations by the Justice Department about the concentration of economic power and what it is doing to the family-sized farm. I hope the Justice Department will move, and move aggressively, on these issues. But more importantly, this Congress needs to decide, in the next few weeks, whether it wants family farmers left in this country. And if it does, we have to do a U- turn on farm policy and reconnect a decent safety net for family-sized farms. I know what some people say, ``Well, all this is wonderful, but it's boring and it's not very important.'' It is critically important to families out there struggling to make a living. Will Rogers said, many years ago, ``You know, if on one day all the lawyers on Wall Street failed to show up for lunch, it wouldn't mean a thing for this country. But if one day all the cows in our country failed to show up to be milked, that would be a problem.'' What he was trying to describe was a difference between those who move paper around in America and those who produce real products on the farm, that are of real value and contribute to feeding our country. That admonition by Will Rogers is just as important today. I hope the Justice Department will take a look at the Cargill- Continental merger with a critical eye, to say, why do we need corporations in this system, already too large, to get bigger? Why do we need them to impose their economic will on small producers? Why do we need to give them more economic clout to do that? I hope the Justice Department will look at market concentration in meat packing and in a whole range of other areas, because those are the kinds of things that are undermining the foundation of America's family farms. A number of us will speak at greater length on these issue in the coming days, because we must convince this Congress that we have a responsibility to develop a farm program that works, one that tells family farmers: ``You matter to our future. And we want you to be able to make a decent living if you work hard on the family farm.''

Mr. DORGAN

Mr. DORGAN. Mr. President, last Thursday was tax filing day, and we had a number of my colleagues come to the floor of the Senate and talk about taxes. I have yet to meet anybody who likes taxes. I know taxes pay for the cost of civilization. I know we would not have the kind of country we have in this country without taxes. I know that the ability to drive on good roads, to have a police force, to have a fire department, to have a Defense Department, to have safe food through food inspectors, to be able to control our borders--all of those things require the payment of taxes. But our tax system has become enormously complicated, and it ought to change. I authored, about a year and a half ago, a proposal called the Fair and Simple Shortcut Tax Plan; it is called the FASST Plan. You want to file your tax return with minimum bother? You want to avoid having to file an income tax return at all? Then this is a plan that will work for you. It was not too many years ago that the American people, by and large, did not have to file an income tax return because only a small percentage of the American people paid income taxes. About 6 percent of the American people had a requirement to file a tax return. The rest of the people did not. For those who had to file, they had a very thin instruction booklet, just a couple of pages. Now we have an instruction booklet with our income tax return that looks very much like a J.C. Penney's catalog. We have moved dramatically in the wrong direction with a highly complicated federal income tax system. Taxpayers are spending more than 3 billion hours at a cost of some $75 billion in trying to comply with our federal income tax laws every year; and it need not be that way. We have had people come to the floor of the Senate to say, ``I have a better idea. Let's abolish the whole federal income tax.'' I would like to know what they want to put in its place before abolishing it. Others say, ``Let's have a flat tax so that the person making $30,000 a year can pay the same tax rate as Ross Perot or Donald Trump pay.'' I do not happen to share that belief. Still some others say, ``Let's have a national sales tax; get rid of the income tax and put a national sales tax on everything.'' I don't know how much you would like to buy a home and discover you have to pay a 35 percent sales tax on the value of the home. Or if that is the first thing you would exempt, how much higher would the national sales tax rate increase in order to get the required money to make the difference? My point is, it sounds great to say, ``Let's abolish the income tax,'' but I want to know what you want to do in place of it. Some would say--and some have offered plans here in the Senate and the House--``Let's have a different tax system. Let's have one that taxes work. You go out and work for a living? We want you to pay a tax. But if, on the other hand, you get your income from capital gains, dividends or interest, you don't pay a tax. Let's tax only activities from work; and let's exempt investments.'' I guess that sounds pretty good, if all your income comes from investment. Guess who would pay taxes and be exempt under that kind of scheme. The wealthiest folks would be exempt and the working people would pay the taxes. That is a tax on work. My point is, let's take a look at seeing if we can't change the current system in a way that benefits at least a fair number of the American people. Here is what I propose we do. More than 30 countries have some kind of income tax system in which most of the taxpayers, or many of the taxpayers, do not have a requirement to file an income tax return. Here is how I would propose we do it. Everyone who signs in at work for a job fills out a W-4 form. It says, My name is so and so. My Social Security number is x, y, and Z. I'm claiming this many allowances. And I am married, filing jointly, or whatever that information would conclude; and therefore your employer calculates how much income tax shall be withheld from your weekly or monthly wage. I propose an approach where we would put a couple of extra lines on the W-4 form, and for a lot of Americans--perhaps 60 to 70 million Americans--with a few extra checkmarks on the W-4 form, their withholding at work will become their exact tax liability for the year. They would have no requirement to file a tax return--no return to be filed at all--therefore, no trips to the post office on April 15 and no worry about major audits. What is your wage? and based on what you checked on your W-4 form, what kind of withholding is necessary. Let me give you an example of how we would do that. Families earning up to $100,000 in annual wages--$50,000 for singles--and up to $5,000 in capital gains, dividends and other non-wage income--$2,500 for singles--may elect this tax return-free filing system at work. This other income would be tax free. When they sign in at work, they would simply fill out a slightly modified W-4 form that allows them to have their employers withhold their exact tax obligation computed by using a table provided by the IRS, and they would pay a single low tax rate of 15 percent on their wages. They would still be allowed their standard deduction, their personal exemptions, a deduction for home mortgage interest and property taxes paid, and their child tax credits. Those would be the couple of extra boxes checked on the W-4 form. But by and large, this would radically simplify income tax filing for 60 to 70 million Americans to say to them, check these extra boxes, you, therefore, do not have to file an April 15 tax return. You have a flat 15-percent tax rate on wages, and your other income, up to $5,000 for married, filing jointly, is totally exempt from any income tax obligation. This system makes a great deal of sense in my judgment, and, as I indicated, anywhere from 60 to 70 million Americans will be able to decide if they want to use this system and, therefore, not be required to file any income tax return at all on April 15. The reason I am describing this system today is the discussion last week on tax day was interesting. I do not quarrel with those who say we ought to change the current tax system. Yes, we should. The first step would be to dramatically simplify the responsibility for filing income tax returns for the bulk of the American people. I am saying that the majority of taxpayers could avoid having to file any income tax return at all on April 15, could avoid all of the problems of getting paperwork together, and could stop worrying about a subsequent major audit. They could avoid all of that with the Fair and Simple Shortcut Tax plan. My proposal allows every taxpayer, if they want, to compute and file their tax returns under the old system. You could get your tax return and your catalog size instructions, and you can go through it and you can labor and agonize and sweat and talk to accountants if you want. That is your choice. You will have the choice. But the second choice and I believe much more appealing for most Americans is to access the return-free income tax system with a single 15-percent rate, with the abolition of both the marriage tax penalty and the Alternative Minimum Tax under this system, with up to $5,000 of capital gains, dividends and interest income completely tax free. We can do this. We can do it easily, and we can do it now. More than 30 countries have some kind of approach like this. This is better tailored to our system, but some 30 countries already have some form of a tax return free system. This country can do that for the 60 to 70 million Americans it would relieve of having to file an annual federal income tax return. As we debate and discuss the tax system in this Congress, it is important for us to listen to all of the ideas that exist, and there are plenty, some wonderful, some crackpot, some workable, some unworkable. This, in my judgment, is a system that can be implemented almost immediately, is eminently workable, and will address the first roadblock that exists in our current income tax system--that is, complexity. It can eliminate all of the complexities all at once for up to 60 to 70 million American people. That makes a great deal of sense. I will be visiting with a number of my colleagues about it, and we are going to introduce it as a formal plan very soon. I hope that some of my colleagues will consider it favorably. Mr. President, I yield the floor. Mr. MURKOWSKI addressed the Chair.