Byron Dorgan

Mr. DORGAN

Mr. DORGAN. I ask unanimous consent to speak for 4 minutes as in morning business.

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 President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. DORGAN

Mr. DORGAN. Mr. President, one of the issues that we think is very important and needs to be addressed by this Congress is the issue of managed care. A number of us have, every day the Senate has been in session recently, brought to the floor stories of what is happening in health care in this country and examples why a Patients' Bill of Rights, which we would like to see the Congress enact, would be beneficial to the American people. Today I want to tell you about a man named Frank Wurzbacher of Alexandria, Kentucky. Fred received monthly injections of a drug called leupron as treatment for his prostate cancer. Under his retiree health plan, that treatment, which cost $500 per injection, was fully covered. When a different insurance company took over as the plan administrator, however, the new company notified Mr. Wurzbacher that his coverage for this treatment was reduced from 100 percent to only two-thirds of the total cost. In other words, rather than paying the full $500 for the shot, the company would pay only $320. At the time, Mr. Wurzbacher was a 66-year old retiree. He didn't have the extra $180 a month for the leupron injections, so he asked his physician what his alternatives were. The physician said the aggressiveness of the cancer suggested that the only other alternative was the removal of the patient's testicles. The surgery was approved. Mr. Wurzbacher had that surgery and then returned home from the hospital to find a letter from the insurance company notifying him that it had made a mistake and that his plan would, in fact, pay the full $500 for the monthly leupron injection. But by then, of course, it was too late; the surgery had been done. That should not have happened to Mr. Wurzbacher and would not happen if the Patients' Bill of Rights were law. Under the Patients' Bill of Rights, there would have been an appeal of the new plan administrator's decision and that appeal, perhaps, would have then disclosed that the coverage for leupron was in fact fully available. Mr. Wurzbacher would not have had to go through his operation. Of course, no one can turn back the clock, and Mr. Wurzbacher is just one more victim of decision- making by those who all too often see medical care as a function of dollars and cents and the bottom line, rather than as a function of saving someone's life. The Patients' Bill of Rights simply says that those 160 million Americans who are now herded into managed care organizations for their health care have certain rights. One of those rights ought to be the right to be told all of your medical options for the treatment of your disease, not just the cheapest option. You also ought to have a right to appeal an adverse decision that is made about your health care by your managed care plan. Such an appeal may very well have prevented the kind of tragedy that was visited on Frank Wurzbacher of Alexandria, KY. Mr. President, we hope very much that Republicans and Democrats together this year will agree that the issue of managed care and the issue of a Patients' Bill of Rights should be brought to the floor of the Senate and addressed not only in the Senate, but also by legislation enacted by Congress this year. We will continue to discuss on the floor of the Senate the stories of the problems people face, one by one across this country, with managed care when managed care organizations view health care as a function of someone's profit and loss statement. Let me conclude by describing, as I have on previous occasions, an interesting front-page story in the New York Times about a woman who had suffered a severe brain injury and was being transported by ambulance to a hospital. She had the presence of mind, as her brain was swelling from this injury, to tell the ambulance driver she wanted to be transported to the hospital farthest away. She said this because she knew that the closer hospital, which was affiliated with her health care plan, had a reputation for treating emergency room care as a function of the bottom line. She wanted to go to an emergency room in which someone looked at her and did what needed to be done in every circumstance, against all odds, to save her life. She was fearful enough of going to a hospital where she would be viewed as a function of someone else's bottom line that she wanted to be transported to the hospital farther away. That relates to this issue. Should health care that relates to a specific patient's condition be practiced in a doctor's office or a hospital, or should decisions about a patient's health care be made in an insurance office 2,400 miles away by some accountant? The American people understand what the answer to that question should be. The answer is embodied in a proposal called the Patients' Bill of Rights. That proposal has been introduced here in the Senate, and I hope very soon that we can bring a proposal of this type to the floor of the Senate and discuss these central questions about health care in this country. Mr. President, I yield the floor and suggest the absence of a quorum.

Mr. DORGAN

Mr. DORGAN. Let me associate myself with the remarks just made by the Senator from New York, and let me also say that the work that has been done by Senator Roth and Senator Moynihan to bring this legislation to the floor is work that will benefit all of America. I think this legislation has a great deal to commend it to the Congress and the American people. It is true that in recent hearings evidence of misconduct and mismanagement, and, yes, in some cases the abuse of taxpayers by the Internal Revenue Service by a few employees of the Internal Revenue Service, has cast a shadow over that organization. A recent speaker indicated, I believe it was Senator McCain, that he was certain--and I share that view--that by far the majority of the men and women who work in the Internal Revenue Service are good people who do good work and try to do the best job they can. But because of the abuse by some few agents in the Internal Revenue Service, we must take steps to make sure it never happens again. This piece of legislation brought to the floor of the Senate creates a nine-member oversight board. The purpose of that board and its duties is to oversee the administration, the management, the conduct, to provide some assistance and some guidance and some additional management, to make certain that we never again convene a hearing and hear of abuses by IRS agents of the American taxpayers. In short, this legislation, in many ways, is an attempt to restore credibility by restructuring the Internal Revenue Service and creating an oversight board. The two goals, it seems to me, are: One, to make the changes necessary to make certain that this behavior never again occurs, and to prevent this kind of taxpayer abuse from surfacing again, because we want to prevent it from ever happening again; No. 2, to enforce the tax laws so that the many citizens in America who pay their taxes will have some confidence that the few who try to avoid them will be required to meet their responsibility. Those are the two elements that are important here. The amendment offered by the Senator from Florida would strike from the nine-member oversight board the Treasury Secretary. I agree with the Senator from New York, who says that this board will not be a significant and important board unless it has as part of its membership the Secretary of the Treasury. Part of it is about accountability, but part of it is about whether or not this will be a significant oversight board. I believe very strongly that the membership on this board is going to contribute to the effective workings of the Internal Revenue Service, but it must include the Treasury Secretary. For all of the reasons I think that have been articulated by others who have spoken before, let me just again say that I hope we will defeat this amendment and I hope we will pass this underlying piece of legislation with a very significant vote today. I must say as well, I regret opposing an amendment offered by my friend from Florida, for whom I have the greatest respect. I know he supports the purpose of this bill, to give assurance to the American people that we have an agency that can do what we expect a tax collection agency ought to do, while at the same time protecting the rights of all the American people. I will vote against this amendment but will be pleased to vote for the underlying bill. Again, I commend Senator Roth and Senator Moynihan for the work they have done to bring this to the floor of the Senate. I yield back the remainder of my time.

Mr. DORGAN

Mr. DORGAN. I venture to say most Members of the Senate are not very familiar with this issue because the bill was brought to the floor and a mechanism to pay-for--it is brought to the floor this morning; I guess it was disclosed yesterday. As I looked at it, it seems to me it is exactly as the Senator from Nebraska described. But even more than that, it is a device by which you bring some money here and say this is really paid for but. In fact, the cost in the outyears is very substantial. It is just a timing issue, kind of a clever timing issue, but in my judgment not a very thoughtful way to do this bill.

Mr. DORGAN. Mr. President, I urge adoption of my amendment.

Mr. DORGAN. Mr. President, I ask unanimous consent that reading of the amendment be dispensed with.

Mr. DORGAN. Mr. President, I send an amendment to the desk and ask for its immediate consideration.

Mr. DORGAN. Mr. President, I rise to offer an amendment on behalf of myself and Senator Reid from Nevada. I believe the amendment has been worked out. Let me describe it briefly. As I describe this amendment, let me say that the issue that is addressed in this bill dealing with the behavior of the Internal Revenue Service is an important issue. Stories with respect to hearings that have been held here in recent months, stories of abuse and taxpayer harassment, are stories that reflect horrible mismanagement, in my judgment, at the Internal Revenue Service. This bill serves notice that that kind of behavior will not ever be tolerated at the Internal Revenue Service. This piece of legislation gives taxpayers some muscle to fight back when and if this occurs, and this piece of legislation makes some management changes at the Internal Revenue Service, some structural changes, to make sure the mismanagement does not occur again. Now, there is another issue, however, that is important and this issue has not been the subject of hearings. That is the issue of enforcement. You must have a tax system to collect the money to do the things we need to do as a country--provide for our common defense, to pay for roads, to pay for health research, to pay for food safety, to pay for environment protection. So who pays those taxes? What kind of agency collects them and who pays the taxes? We want to make sure our tax laws are enforced sufficiently so that some of the largest economic interests are not getting by paying zero taxes while the working families, who get out, go to work and work all day, and have a salary or a wage and have withholding taken out of their check, pay their taxes because they have no choice and no flexibility. A recent study done by the GAO says foreign-controlled corporations doing business in the United States and not paying taxes equal 73 percent of all foreign corporations doing business here. Let me say that another way. If you think of the brand names of foreign products that you purchase in this country, just the most common brand names of companies who sell billions of dollars' worth of products in this country, and make billions of dollars in net income in this country, you can be sure that some of those names you just thought of are part of this 73 percent who do business here, make money here, and pay no taxes here--none, none at all. Seventy-three percent of foreign- controlled corporations doing business in the United States pay zero in Federal income taxes. Now when they come here and compete against a U.S. corporation that does business only here and must pay taxes only here, they are engaged in unfair competition because they do business here tax free while our domestic business pays a tax to our country. This deals with tax enforcement. The reason I offer this amendment is I want to just describe in a moment how tax avoidance occurs in this area and why it is important to have an Internal Revenue Service that is making sure these corporations pay their fair share of taxes in this country as well. There have been a number of studies--a GAO study, a Treasury study, an IRS study, a study by two professors from Florida, Pak and Zdanowicz. Let me show Members what these studies have told us. Corporations, in this case foreign corporations doing business in this country, can simply inflate the cost of what they are selling to their U.S. subsidiary that they wholly own, and when they inflate the cost of the product they are selling to their wholly owned subsidiary, their subsidiary in the United States ends up doing a lot of business but ends up paying no taxes because they say they made no profits. Let me give you an example of pricing. Tweezers. A pair of tweezers for $218. You have been to a drugstore or a grocery store and bought tweezers. Did you pay that for tweezers? I don't think so. Tweezers are priced at $218 so that a foreign corporation can overcharge to the domestic subsidiary and, therefore, take all the profit out of that subsidiary and claim they made no profit in the United States. How about safety pins for $29 each? That is $29 for a safety pin. That is another way to price your profit out of the United States and show no income and pay no taxes to the United States. How about a toothbrush imported into the United States from France for $18 apiece? Has anybody here bought a toothbrush for $18 apiece lately? There is another way to do this, by the way, which is that corporations can have a foreign subsidiary in another country and they underprice their export to that foreign subsidiary, and that tends to move profits away from the United States as well. Let me tell you what they do there. How about a piano, selling a piano to a company in Brazil for $50? Or what about tractor tires, selling a tractor tire to France for $7.69? Do you think U.S. farmers are able to buy a tractor tire for $7.69? How about a bulldozer for $551? You all know what a bulldozer looks like. Do you think you can buy that for $551? How about a missile-rocket launcher for $58? That is the way you move income around and end up not paying income tax to the United States of America, when all the rest of the taxpayers here pay the tax. My point is very simple. How do you enforce what is called arms- length transactions between related corporations? Well, you take all their transactions and try to put them back together and measure whether they are priced in a way that would represent fair market prices. That is like taking two plates of spaghetti and trying to attach the ends of the spaghetti. It cannot be done. The result is billions and billions and billions of dollars--some estimates are over $40 billion a year--are lost to the U.S. Treasury through massive tax avoidance, while we are worried about whether people who go to work every day pay their taxes--and they do pay them because they don't have any flexibility; they can't get out of it and they can't overprice tweezers to $18 and tractor tires to $7.60. They pay their tax. I want the IRS to worry about enforcement of our tax laws with respect to those who are doing business here to the tune of tens of billions of dollars, earning income here to the tune of tens of billions of dollars, and paying zero to this country in taxes. American firms that do business here must pay taxes; so too should foreign companies. The amendment I offered is very simple. It simply requires the Internal Revenue Service Oversight Board that we are creating to conduct a study of whether the IRS has the resources needed to prevent the tax avoidance by these companies. In other words, do they have the resources to enforce in this area, No. 1; and No. 2, to analyze how much we are losing in this area of tax avoidance. It is, in my judgment, scandalous. I refer anybody who is interested to the study by Pak and Zdanowicz, released not long ago. They are two Florida doctors who say that the U.S. Government was cheated out of $42.6 billion in tax revenues in 1997. That is a huge area. I heard all this discussion on the floor about the IRS targeting low- income folks. That represents a different sort of enforcement. That deals with the earned-income tax credit. That is why that is happening. What about targeting the folks doing business here and not paying taxes here, who are earning billions of dollars every year in the United States in profits and using price transfers to price their income out of this country and shield it from the U.S. taxpayer? Shouldn't they have to pay income tax on their profit as well? My amendment requires the oversight board to do certain things and report back to Congress within a year. I hope that perhaps this will stimulate some activity to take a look at this area and to see if we can't get the taxes that are owed this country by foreign corporations doing business in this country, making a great deal of money and paying nothing--literally zero--in Federal income taxes. My understanding is that this amendment has been cleared on both sides and, if so, I would only need a voice vote.

Mr. DORGAN. If the Senator will yield, I think I understood the Senator to say you were not able to get any burden tables or distribution tables to determine who gets the benefit of this proposal. That is troublesome because when ideas are brought to the floor as late as this, you are unable to get information about who this is going to benefit and how.

Mr. DORGAN. Will the Senator yield?

Mr. DORGAN

Mr. DORGAN. That is exactly the case. I just hope that as we finish these comments now, we will all understand that there is work to do. When you see reports like this--reports that don't surprise us because we have been hearing it for some long while--we should understand that while part of this country is doing quite well and there is a lot of good economic news, there are also troubled spots in our economy that are causing enormous hurt and pain to people who don't deserve it. America's family farmers are wonderful people. They are the people in this country who work, who grow, who risk, who come together, neighbor to neighbor, to help each other. But they can't help each other when they go to the market and discover that the price of wheat is $3 or $3.30, or when they go to the field and discover that scab wiped out half the quantity of their grain, or when they go to the railroad and discover that the price to haul the wheat to market is vastly inflated, or when they go to the border up in Canada and discover unfair shipments of grain that undercut their prices, or when they say, I would like to sell my wheat to China, or my beef to China, but you can't get wheat or meat into China in any meaningful quantity because we don't have open markets overseas. It is not fair to put farmers in that position, and we should not. It seems to me that we have a responsibility to provide a basic safety net if we want to protect a network of family farmers to be present in this country's future. I think we ought to do that. I think it is a priority for us in this Congress, and I hope that a number of us can work together on a bipartisan basis to see that this occurs in the coming weeks and months. Madam President, I yield the floor.

Mr. DORGAN. I am happy to yield.

Mr. DORGAN. Madam President, Senator Conrad has raised the farm issue the last several days on the floor of the Senate, and I appreciate the comments he has made, as well as the comments of the Senator from Montana. This is not just about dollars and cents. And it is not just a lesson in economics. My great-grandmother homesteaded in North Dakota when her husband died. She took six kids and homesteaded on the prairie, pitched a tent, homesteaded 160 acres, and began to run a farm. It was a hard, tough life, I am sure. Farming is not easy. They live out in the country. They have a yard light burning at night. Farmers get up in the morning to do chores, and they work all day. If they have enough money to put in a spring crop and plant some seeds, they wonder whether the grasshoppers will come, whether crop disease will come, whether it will hail and wipe out their crop. Maybe none of that will happen and they will raise a crop and that crop will come out of the ground. Then they will combine it in the fall and they wonder, will there be a price so they can sell the crop at something more than it cost to produce. The answer, sadly, except for one year in the past 20 years has been no. There is no price for your crop above the full economic costs of production. You do what you love to do and you lose money. The article in the Wall Street Journal referenced today by Senator Conrad talks about these farmers who decide they can't do this anymore. They just quit. They have to quit. I had a banker call me about two hours ago and he said, ``You know we only call when there are real problems, and you know I have one of the most conservative banks in the state.'' He said, ``The fact is I am now turning away good farmers. Year after year after year I have given them operating loans to go into the field in the spring. I can't do it this year because they can't cash flow. And they will have to quit farming.'' He said, ``That is what is happening out here in rural America.'' One might ask, why does it matter? And some people in this Chamber think it doesn't matter who farms. Why does it matter that we have a family farmer out on the land? Well, you can have corporate agrifactories gassing up their big tractors and farming coast to coast and you won't have anybody living out in rural America. Is there a difference between having a network of family farms, and farm families that dot the landscape of this country, versus having corporate agrifactories that gather up land by the sections and the townships and the counties and then farm as far as the eye can see forever? Is there a difference? It seems to me there is a huge difference for this country. For social and economic reasons, this country ought to care about having a network of families out on the farms in this country being able, year after year, to produce food for this country. If we continue to go in the direction we are headed, we will see thousands and thousands of family farmers leaving the land. It is because we have a farm policy that says you can't make a living out there. It tells family farmers you can't make it. Then this country will have lost something significant. The seedbed of family values in this country that we hear so much about has always been the family farm. These values roll in from the seedbed of the family farm into small towns and into America's cities. We will lose something important in this country if we do not decide family farms are important and that we will do something to try to protect them. Some say in this Chamber, let farmers operate in the free market. Well, there is no free market. Do you think farmers can raise a cow and ship it to China? I think not. Can they raise a pig and sell it in China? I don't think so. Do you think farmers can compete against Canada, which sends unfairly subsidized durum into our markets? Can farmers compete against the European communities that subsidize their commodities at 8, 10, and even 12 times the level of U.S. subsidies in recent years in trying to get foreign markets for European wheat? Is that fair? Is that free? I don't think so. Yet, we tell our farmers, you just go ahead and operate in that marketplace. We will just call it free. What happens in this free marketplace? What happens is that the people who haul the grain make record profits. The people who process the grain make record profits. The people who trade the grain make record profits. The only people who suffer the losses year after year, sufficient so that they are now going out of business in record numbers, are the people who buy the tractors, get up in the morning and plant the seed in the ground, harvest the crop in the fall, and try to sell it. Those are the people who are losing money. You go to your grocery store and ask yourself a question. When the price of wheat was $4.50 or $5.50 a bushel and it plummeted to $3.30 a bushel, ask yourself what happened to the price of a loaf of bread in the grocery store. Did you see that price come down? I don't think so. How about when the price of beef plummeted? Did you go to the meat counter in your grocery store and see that the price of beef came down? I don't think so. What does it say about this economic system of ours when we say to the people who do the hard work, the people who wear the work clothes, and start the tractor, and plow the ground, and plant the seed, and harvest: ``You can't make any money. It is everybody else in this process who can make record profits. But if you grow the seed, you lose money.'' When they take that wheat into a processing plant and puff it up and sell it on the grocery store shelf as puffed wheat breakfast food, they can charge more for the puff than the farmer is going to get from the wheat. One suffers and goes out of business, and the other makes a record profit. If this Congress and this country doesn't start caring a bit about whether we have family farmers in our future, this country is going to lose something very important. When we talk about this subject around here, everybody talks about economics and dollars and cents. This isn't just about dollars and cents. This is not about knowing the cost of something. This is about knowing the value of something. We need to know the true value of family farmers in this country. I am enormously frustrated. This article in the Wall Street Journal chronicles what we see and what we know every day in the streets of North Dakota, in our small towns, and out on the country roads, and the same is true in Montana. We have heard it farmers who come to our meetings and stand up. One farmer comes to mind who came to a meeting of mine. He was a big, burly guy and had kind of a beard. It was not a long beard, but kind of a short beard. He had friendly eyes. He stood up. He was a tall fellow. He said, ``My granddad farmed, my dad farmed, and I have farmed for 23 years.'' And then his chin began to quiver. He got tears in his eyes, and he said, ``But I have to quit this year because I don't have the money to continue. I'm out of business.'' He was the third generation in the family to farm. He was going out of business because this country has a farm policy that says we are going to pull the safety net out from under family farmers. Now, we had better reconnect that safety net if this country cares about having a family farmer left in its future. Senator Conrad, myself, Senator Baucus, Senator Daschle, Senator Wellstone, and so many others on both sides of the aisle, care about the future of family farmers. We must, it seems to me, convince the rest of this Congress that this current approach is an approach that leads to failure. Let me read a paragraph in the Wall Street Journal article: The situation in Kittson County suggests that deregulation-- Which is the description of the current farm policy, which I voted against proudly-- is staying, and for a grim reason: Farmers are giving up. Nobody is organizing the type of protests that attracted national attention the last time so many farmers here were in trouble. That was in the mid-1980s debt crisis, when Randy Swenson would travel from his Kittson County farm to Fargo and Bismarck to join demonstrators demanding a federal bailout. Now, the 46-year-old grower is just quitting. I say to those out there on the family farm who have struggled, who risk everything in trying to make a living every single day--and I hope my colleagues will join me in this--that they ought not to give up hope. There are plenty of us in Congress who understand that family farming is a way of life that this country ought to nurture and protect and help in its future. I hope, as we proceed to discuss this in the coming weeks, that we can impress the need for a change upon those who were the architects of this farm program. The current program puts farmers into the marketplace, whatever that marketplace happens to be. There are those who think this is fine, because after all they think it is a free marketplace. I hope they come to understand that the marketplace is not free. It has never been free. We can't have farmers compete against unfair trade. We can't have farmers compete in a marketplace dominated by millers who want low prices in the marketplace and grocery manufacturers who want lower prices in the marketplace. We can't ask them to compete against scab disease that will wipe out the crop yield and crop quality. We can't ask them to compete against a railroad that will haul their grain to market but charge them 20 or 30 or 40 percent more than is justifiable. If somebody thinks that is a free marketplace, then somebody doesn't know what ``free'' or ``marketplace'' really means. We can do better than that. There are enough of us here to raise enough dust to require that we do better, so that in the coming days some of this policy can change to be helpful to family farmers.

Mr. DORGAN

Mr. DORGAN. Mr. President, I certainly would not object, but I ask the chairman if I might be able to speak for 8 minutes by unanimous consent following Senator Conrad.

Mr. DORGAN

Mr. DORGAN. Mr. President, the story that was just described by my colleague, Senator Conrad, is one that occurs all too often across this country in this new era of managed care. Every day we intend to describe the circumstances of managed care in this country that require us to bring a Patients' Bill of Rights to the floor. Every day we will discuss this issue on the floor of the Senate, hoping that we will be able to persuade those who schedule the Senate to bring the Patients' Bill of Rights to the Senate. Every person in this country seeking health care ought to have a right to know all of their options for treatment, not just the cheapest option for treatment. Everyone seeking health care in this country ought to have a right to show up in an emergency room and get necessary treatment for an emergency medical need. The list goes on. That is why we want to see a piece of legislation called the Patients' Bill of Rights brought to the floor of the Senate.

Mr. DORGAN

Mr. DORGAN. Mr. President, for the remaining moments I will speak on the subject of agriculture. I know it is probably something a lot of people do not think about or don't want to talk much about. Family farmers in my State are in trouble. At night when you fly across my State in a small airplane and look down, those family farmers have the brilliant yard lights that peek up at you. Each of these points of light represent a family living in the country, trying to make a living on the family farm. Recently there was an editorial cartoon in the Forum newspaper of Fargo, ND, showing a truckload of family farmers going down the road surrounded by a landscape of farm problems, including low prices, crop disease, and inadequate programs. The road sign in the cartoon stated, ``The point of no returns.'' Why? Here is what is happening to the price of wheat. We passed a new farm bill and the price of wheat goes down, and down. Wheat prices are down 42 percent since May of 1996, following the passage of the new farm law. The point is that the new farm law pulls the rug out from under family farmers in terms of a safety net and tells the farmers, ``Go to the marketplace to get your price.'' Then the marketplace has a pathetically low price, and farmers go broke. I had a farm meeting in Mandan, ND, and a fellow stood up. He was a big burly guy with a beard. He said his grandfather farmed, his dad farmed, and he has farmed for 23 years. His chin began to quiver, and he began to get tears in his eyes, and he said, ``I can't keep farming. I am forced to quit this year.'' We have all heard the stories. One by one. I suppose people say that is just one farmer. Yet ``one by one'' means that across this country, there are hundreds and thousands of farmers leaving farming. It is especially evident in my State. When farmers can't make a living and go out of business, it seems to me that is an enormous step backwards. Family farmers contribute something very important to this country. Family farmers have had to fight several things in my State recently. They had to fight the weather. We went through a winter in which we had 3 years' worth of snow in 3 months. We had seven blizzards, the last of which put nearly 2 feet of snow on the ground. It was the worst blizzard in 50 years. Farmers had to fight that. Then they had to fight low prices. Then they had to fight a crop disease known as fusarium head blight or scab which wiped out a quantity of their crop. And, then they have to fight a Congress and a farm policy which has been constructed by people in Congress who say it doesn't matter who farms. These folk think agrifactories are fine. They can farm as far as the largest tractor will go, until it runs out of gas, and that is fine with them. It is not fine with me. If we end up with a land of giant agrifactories farming America's farmland, we will have lost something forever in this country that is very important. As a matter of social and economic policy, we ought to fight with every fiber of our being to make sure we have a network of families living out on the farms in this country's future. I watched one day when somebody came in that door, breathless, and walked to the floor of the Senate on the supplemental appropriations bill and offered an amendment for $177 million to be added to star wars national missile defense system. They added $177 million that wasn't even asked for. But that wasn't a problem. It was accepted by consent. A total of $177 million was added early in the morning. That was OK with this body because it was for star wars. But somehow we don't have enough money to provide a decent wheat price for a family farmer who is struggling out there. I got a letter from a man and his wife who quit farming recently. The letter is from George and Karen Saxowsky, of Hebron, ND. I will read just a couple of paragraphs, since I have 2 more minutes. It describes for those who don't know about family farming what this family went through. She wrote a Christmas letter and described part of what they went through in the storms. She talked about the last blizzard. I will read a couple paragraphs: As the storm abated Sunday evening I could hear Glendon yelling and ran to see what was going on now, but couldn't find him. Here, they had found a cow laying on its side drowning in muck. Glendon was laying flat on his belly holding the cows head out of the muck while George was trying frantically to get the tractor down to him. I plowed through four foot deep snow to help--the first tractor got wet and quit. [All during the storm we had distributor caps in the oven drying out!] He got the Bobcat--it quit; he got the next tractor and we made it down there, tore a fence down, put chains on the cow and pulled her out. She died; as did a calf that had been buried in the snow someplace in the ten feet we pulled the cow and we didn't even see, until the snow melted enough, that it was under her; as did those two calves in the basement; as did a calf that had followed its mother to the water fountain, got stuck in the snow and froze to death standing up--we must have walked by that calf fifty times but with the blizzard didn't see it--they get snow covered really fast; as did the cow in the corral with a roof over her head with water and hay right beside her; as did--well, you get the picture. It continued for fourteen days after the storm, every day we lost at least one cow and/or calf. We took them to the vets for autopsies and what-not but it just seemed there was nothing we could do to save them. One day we made it to 5:00 without any dying and thought the curse was broken but by midnight we had lost a cow and a calf. It was a terrible, terrible time, but we lived through it--but not alone. Friends were there for us. On the Friday after the storm one called to tell us to get out of the house and come to town for a Fireman's Dance--we were just too exhausted and depressed--but he was really pushy (he did the same thing for us after last year's cow incident on I-94). We went and visited with other farmer-ranchers who were in the same boat--it really was so helpful and encouraging? We were really dreading the first snow of this winter. Long about October, George started talking about quitting farming--I took it as a mid-life crisis; a one time slide. But he kept talking--and then started making plans. We would put in a crop in '98 and quit in '99. I still thought `this- too-shall-pass' but he just go more serious. In November I started getting calls asking if I would like a job off the farm? I have to tell you, I was so flattered that they even considered me capable of doing what they needed; I had been self-employed for almost 25 years! I turned them down, but it did start the wheels turning. Then, there was an ad in the paper for a job in Hebron with benefits. We talked about it and I applied; they offered me the job and I took it. This was not easy, now we couldn't put a crop in this spring as the job is 40 hours a week including every other Saturday and George can't farm without me. The bottom line is: a 47 year old, 4th generation farmer in this 27th year of farming is quitting farming. This is why this farm couple is quitting farming. It is not just because of the storm and the dead cattle. It is about making a living and getting some return for their efforts. North Dakota farmers had a decline of $750 million in farm income in 1997. Low prices, crop disease, weather. Senator Conrad pointed out that 98 percent of the net income of farmers was washed away by this set of problems. And, there is one more problem that farmers face. They face a Congress that doesn't seem to care whether there are family farmers. The new farm program pulls the rug out from under our family farmers. They are told to go to the marketplace to get their price. When they go there, the big millers are there and the big grocery manufacturers are there, and the big grain traders are there. They all want lower prices, so they drive prices down so when family farmers go to the marketplace, they find pathetically low prices, well below their costs of production for grain. The fact is they lose money year after year because farm prices are consistently below the full economic costs of production. Then they suffer through crop disease on top of it all, and find out the crop insurance program doesn't work. When they turn to the safety net, they find that, no, that has been pulled away. When they ask what is the loan rate on a bushel of wheat, they find it is the lowest it has been in decades. So the question is: Is somebody here going to start to care about whether we have family farmers or not? Or is the priority here that you can waltz through these doors and offer a couple hundred million dollars for star wars, and get plenty of money for things like that; but when it comes to family farmers we don't have enough money for a decent support price to help them stay on the farm? Mr. President, I and others will be talking about this in the coming days. I hope, as we search for some solutions, this Congress will decide family farmers are worth finding solutions for, and that we will develop a better farm program, one that really works to provide protection for family farmers. 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 want to visit about a couple of things this morning. First, I want to talk about the highway bill that is in conference between the House and the Senate. It is now May 4, 1998. The highway bill, or a piece of legislation people commonly refer to as ISTEA (the Intermodal Surface Transportation Efficiency Act) was supposed to have been completed last year, but it was not. The highway bill was extended until May 1, and then the authorization for the highway bill expired. We are now on May 4 without highway legislation that is authorized, and the highway officials and Governors around the country are wondering, appropriately, what is going to happen to this highway bill? With what authority can I obligate money? What about the projects we have to do in our States to build roads and repair bridges? I don't blame State and local highway officials and others who are rightly furious with the Congress that it has not gotten its work done. It is a shame, in my judgment, that almost a year after the legislation should have been done, not only was the legislation not done, but we have already had an extension and that has expired. Now, here we are with no highway bill at all. I ask those who run this Congress and those who are convening the conference on the highway bill, let's decide to get this thing done. This isn't rocket science; it is building highways. We know how to do that. If the political will doesn't exist to do what is necessary to reach a compromise on a highway bill, then I suppose that those who run the Congress should say to the Governors and the highway commissioners, ``We can't be counted upon to do this work.'' I hope in the coming days people will understand the urgency of this. I come from the State of North Dakota, and we have a relatively short construction season. It is not fair to our States for this Congress not to do its work on time. We should do it, it ought to be done, and it ought to be done soon.

Mr. DORGAN

Mr. DORGAN. Mr. President, I came to the floor today to talk for just a moment about the tobacco legislation that is to be brought to the floor of the Senate. My understanding is that we will consider, in the next perhaps month, the tobacco legislation that was enacted by the Senate Commerce Committee, of which I am a member. The Senate Commerce Committee considered a comprehensive tobacco bill. We passed it, and the vote was 19 to 1. The legislation is controversial, to be sure, and the tobacco industry has now ratcheted up an enormous amount of money and energy directed at trying to kill the bill. I thought it would be interesting to read into the Record a few comments here and there dealing with the tobacco companies and why they are so interested in killing this tobacco legislation. We will see an enormous amount of money spent on advertising to try to kill this legislation. My colleague, Senator Conrad from North Dakota, chaired a task force on the issue of tobacco and created a piece of legislation. He has done a wonderful job, in my judgment, dealing this with issue, and the Senate could well take its cues from the work Senator Conrad has done. Incidentally, the Senate Commerce Committee took much from the legislation Senator Conrad introduced in the Congress. The reason we are concerned about the tobacco issue is the targeting of teenagers in this country to get them to smoke. I have said before on the floor that almost no one reaches age 30 and wonders, ``What more could I do to fulfill my life?'' and decides they should start smoking. Almost no one reaches majority age and says, ``Gee, what am I missing?'' and concludes what they have really missed is, they have not smoked and they need to start smoking cigarettes. The reason they don't arrive at that answer is that by that age, they know that cigarettes can kill you. Mr. President, 300,000 to 400,000 people a year die in this country from smoking and smoking-related causes, and the only future customers for tobacco are kids. The only conceivable future customers for cigarettes are children, and that is why many in this country, myself included, believe it is important for us to say to the tobacco industry, ``Never again shall you target America's children to addict them to tobacco, addict them to nicotine. We won't allow it.'' That is what the tobacco legislation is all about. What did the tobacco companies know, and when did they know it about the subject of nicotine? We are now hearing a lot of testimony and discussion about that. Tobacco companies have been at the forefront of nicotine research in the last several decades. In fact, the tobacco companies, since the early 1960s, claimed that nicotine was not addictive and anyone who smokes makes a free choice to smoke. By the 1960s, however, all of the reports we are now seeing, including confidential memoranda and data from a tobacco company, showed us they had developed a very sophisticated understanding of nicotine pharmacology and they knew very well that nicotine was pharmacologically addictive. The release of internal tobacco company documents makes it clear. They realize the impact and significance of nicotine. In 1963, a British American Tobacco document said: Nicotine is by far the most characteristic single constituent in tobacco, and the known physiological effects are positively correlated with smoker response. In 1969, a draft report to the Philip Morris board of directors said: In the past, we at R&D--that is research and development-- have said that we're not in the cigarette business, we're in the smoke business. It might be more pointed to observe that the cigarette is the vehicle of smoke, smoke is the vehicle of nicotine and nicotine is the agent of a pleasurable body response. In a memo from 1978, Brown & Williamson, signed by H.D. Steele says: Very few consumers are aware of the effects of nicotine, i.e., its addictive nature and that nicotine is a poison. That is a tobacco industry paper. There is little doubt if it were not for the nicotine in tobacco smoke, people would be less inclined to smoke than they are to blow bubbles or to light sparklers. M.A.H. Russell, 1974. 1983, Brown & Williamson: Nicotine is the addicting agent in cigarettes. 1983, Brown & Williamson: Raleigh and Belair smokers are addicted to smoking. . . . They smoke primarily to reduce negative feeling states rather than for pleasure. Given their low income, smoking represents a financial drain on family resources. Saving coupons for household items helps reduce guilt associated with smoking. How about the health effects of tobacco? What do the tobacco companies know about that? The vice president of a tobacco company, in 1963, said: At best, the probabilities are that some combination of constituents of smoke will be found conducive to the onset of cancer or to create an environment in which cancer is more likely to occur. That is ``at best,'' he says. That is a fellow who helps run a tobacco company. 1970, lung cancer experiments that were done by the general manager of research prepared for the managing director of Gallaher Electronic Telegraph: One of the striking features of the Auerbach experiment was that practically every dog which smoked suffered significantly from the effects of the smoke either in terms of severe irritation and bronchitis, pre-cancerous changes or cancer. A top research official for the American Tobacco Company, 1970: [W]e believe the Auerbach work proves beyond reasonable doubt that fresh whole cigarette smoke is carcinogenic to dog lungs and therefore it is highly likely that it is carcinogenic to human beings. [T]he results of the research would appear to us to remove the controversy regarding the causation of human lung cancer . . . How about tobacco companies targeting kids? 1981, Philip Morris, a report from a researcher to the Vice President of Research and Development at Philip Morris. He says: Today's teenager is tomorrow's potential regular customer, and the overwhelming majority of smokers first begin to smoke while in their teens. At least a part of the success of Marlboro Red during its most rapid growth period was because it became the brand of choice among teenagers who then stuck with it as they grew older. Teenage smokers. A memorandum from the tobacco industry: To improve our ability to forecast future trends, this report examines the demographics and smoking behavior of 14- 17 year old smokers. This is a company now that is doing detailed research on 14- to 17- year-old smokers. ``Forecasting future trends,'' that means ``they're our customers. We're interested in them. We want to keep them smoking.'' One company was concerned because their share of teenaged smokers declined while the share of teenagers who purchased a competitive brand increased. That concerned the company a great deal. Another tobacco industry statement: It is important to know as much as possible about teenage smoking patterns and attitudes. Today's teenager is tomorrow's potential regular customer. . . . it is during the teenage years that the initial brand choice is made. And that is the statement from a tobacco company. Now, the consequences of tobacco smoking are quite clear. Tobacco is a legal product, and in my judgment shall and will be legal in the future. But it is not a legal product for children. An industry that has record profits and has targeted children, because it believes that children are its future customers, is an industry that, in my judgment, is sadly out of touch with its responsibilities. The U.S. Senate and the Congress has a responsibility to take up the tobacco bill. We passed it out of the Senate Commerce Committee now nearly a month ago under the leadership of Senator McCain. I noted today in the newspapers that Senator McCain indicated that, I believe he said $50 to $100 million is to be spent by the tobacco industry to defeat efforts in Congress to pass a comprehensive tobacco bill. I hope the American people take note that this industry is the same industry which said tobacco is not addictive when in fact they knew it was addictive. They were saying we are not targeting children when in fact they were targeting children. I hope the American people understand, as well, that when the tobacco industry launches a massive effort to try to derail the efforts of the Congress to pass a comprehensive tobacco bill, the American people have the capability in this system of ours to make the difference. They can weigh in. They can make their views known about whether or not they believe this Congress shall pass a piece of legislation to stop this industry from targeting America's children and from trying to addict America's children to cigarettes. Mr. President, my colleague from North Dakota, Senator Conrad, is on the floor. I would like to yield to him as much time as he consumes to discuss another issue, and at the conclusion of his remarks, it is my intention to follow up on the issue he is going to discuss. Let me yield the time that he consumes to Senator Conrad.

Mr. DORGAN

Mr. DORGAN. Mr. President, the agenda for the Senate this week will be to discuss the bill that deals with the Internal Revenue Service. Among other things, this piece of legislation creates an Internal Revenue Service oversight board to help take a look at the management of various things with respect to the running of the IRS. I spoke last week about hearings on IRS misconduct and abuse. I indicated that, while I think the IRS has many good people who work very hard to collect the taxes that our laws require to be collected in this country, it is clear from the hearings that there have also been abuses that ought never be tolerated. I commend the Chairman for holding last week's hearings. We must use these hearings as the occasion to understand what went wrong and make sure it never goes wrong again. The American people don't ever deserve an IRS that is not fully accountable and an IRS that in some cases will harass and badger taxpayers in ways disclosed during the hearings last week. Let me just tackle one other aspect of the Internal Revenue Code and the behavior of the IRS. The IRS is required to collect the taxes needed to run the Government. Now the question is from whom does the IRS collect the amounts that are due? The people who go to work every day? The families that make a salary at work, and when they earn that salary, they have withholding taken out of their paychecks. Their taxes are sent to the U.S. Government. They don't have a choice. There is no flexibility. They work, they receive a paycheck, and they have withholding. But there are others doing business in America that are not quite so compliant. We need an IRS that cares about what they are doing as well and makes sure they pay their fair share of the tax load in this country. Let me give you an example. In a recent year, we had a study completed by the General Accounting Office (GAO), the investigative watchdog of Congress. One of the GAO's main findings was that 46 percent of the largest foreign-based multinational firms--that is, firms with over $100 million in assets--are transacting hundreds of billions of dollars of business in this country and paying zero in income taxes to our country. That is right--not 10 percent or 5 percent or 1 percent, they paid zero in income taxes to this country. Now how, you ask, would a company based overseas do business in America, do tens of billions of dollars' worth of business, earn billions of dollars' worth of profit and pay zero in taxes? I mentioned 46 percent of the largest companies with over $100 million in assets paid no taxes; 74 percent of all foreign-based corporations in the U.S. paid nothing, zero, in Federal income taxes. Let me say that again: 74 percent of all foreign-based corporations doing business in the United States paid zero in Federal income taxes to this country. How do they do it? Something called transfer pricing. It is not only the foreign-based corporations, incidentally, that have a problem here. Most corporations that are doing business all around the globe are finding ways to minimize their tax burden through transfer pricing. Of course, not all of them do that. Many corporations pay exactly what they owe and do the best job they can of accounting for it. But transfer pricing means that you overprice an import into the United States in order to inflate the cost of goods sold, and therefore reduce, if not wipe out, their profit here. Or the alternative would be to underprice something you are exporting to another country in order that your subsidiary in the other country earns a very large income which would be subject low or no taxes in the other country. Because you priced it so low as you exported it here in this country, you end up making no money. Let me give you an example of how this works. There are a couple of professors employed at Florida International University. Their names are Simon Pak and John Zdanowicz. I have met them. They have done a lot of interesting work on the issue of transfer pricing. It is a Byzantine, complicated area of tax law, so complicated that very few people pay any attention to it. Yet billions and billions of dollars of tax avoidance occur every single year. ``U.S. Government is Cheated out of $42.6 Billion in Tax Revenues in 1997, Study Reveals.'' Pak and Zdanowicz recently released a study showing a conservative estimate of tax loss during 1997 due to abnormal pricing in international trade was $42.6 billion. Let me give some examples. Tweezers--everybody knows what tweezers are. Tweezers are tiny little things you buy at the drugstore for $1, $2, or $3. Tweezers were imported from Switzerland at $218 each. Now, did somebody really pay $218 for a pair of tweezers? Sure--a U.S. subsidiary of a foreign-based corporation. The foreign-based corporation sells the tweezers at $218 apiece, and they are a controlled U.S. subsidiary. They can never, ever make a profit, if they so desire. So whatever that corporation decides to do in the United States, they control their pricing back and forth. They will do a lot of business, make a lot of profit, but by overpricing tweezers to the tune of $218 apiece, they will never pay an income tax to the U.S. Government. So they can come here and they can compete against a U.S. business that doesn't do business in 10 countries, just does business here, and when they make a profit, they must pay a tax. How about bulldozers? Everybody knows what a bulldozer is. You drive down the road and see a construction project, you can identify a bulldozer at first glance. It is one of the biggest things you will see. Bulldozers exported to Belize for $551. Does anybody know where you can buy a $551 bulldozer? Let me go through some of the rest of the examples. Safety razor blades, $13 a piece. Television antennas--everybody knows what a television antenna is--$1,738 from the United Kingdom. Venetian blinds--most everybody has priced venetian blinds at some point. This would be a company that sold venetian blinds abroad and sold them at a price that guarantees they can't make a profit here. They do it through controlled companies, so it is not real, just the way they price their transactions. Venetian blinds, 3 cents. How about a toothbrush for $18? Or better yet, a tractor tire shipped to France for $7.65? All of this represents tax avoidance in sophisticated swindles designed to prevent the U.S. Government from taxing a profit as they would do with a domestic corporation. The reason I mention all of this sophisticated tax avoidance that is that it is almost impossible to detect. When you have companies--a company wanting to do business in this country, in most cases it will be a large foreign-based corporation that creates a U.S. subsidiary. They will do business with their own subsidiary. And to try to construct their transactions back to some reasonable market prices is like trying to connect two plates of spaghetti together. It is impossible. Yet, that is what the IRS is attempting to do. It doesn't do very well; can't do very well. Enforcement here is abysmal. In fact, depending on who you ask, the tax avoidance per year is $40 billion, some say $25 billion, and some say $15 billion. There has been a study that says $4 billion and the IRS says only $1 billion. What is the truth? The truth is that it is far more than $1 billion or $4 billion that the IRS and Treasury are talking about. It is far closer to the numbers put together by Professors Pak and Zdanowicz. Well, I will speak more about the amendment at some point during this week when I offer it. The amendment I will offer is very simple. The amendment I will offer is to say the newly established IRS Oversight Board will review whether the IRS has the resources needed to prevent tax avoidance by companies using unlawful transfer pricing methods. In order to enable the board to carry out this duty, IRS shall conduct a study relating to its enforcement of transfer pricing abuses by multinational companies. Specifically, the IRS will review the effectiveness of current enforcement tools used by the IRS to ensure compliance under Section 482 of the Internal Revenue Code and determine the scope of nonpayment of U.S. taxes caused by both foreign and U.S.- based multinational firms operating in the United States. Then the Board will report back to Congress its findings on the IRS enforcement of transfer pricing abuses and make recommendations for improving IRS enforcement tools. I understand what the response to this is by corporations who are engaged in tax avoidance by transfer pricing. I understand what the response is by the Treasury Department and the Internal Revenue Service. Corporations will say: Well, none of this goes on, this doesn't happen. The Internal Revenue Service and the Treasury Department will say: It happens, but we have done such a great job there is very little tax avoidance. But, of course, neither is true. The fact is that we have a very serious problem in this area, one that needs to be corrected, and it will not be corrected with the current enforcement method used by the Internal Revenue Service and the Treasury Department. As we talk now about how to recast the Internal Revenue Service, develop new procedures, develop new protections for taxpayers, develop an IRS oversight board, I am asking that the Internal Revenue Service and the Treasury Department--especially at the direction of this new oversight board--take a fresh, new look at this issue and try to determine how we can do better. In America, when someone decides to begin to do business and risk their capital in order to hold themselves out to do business and earn a profit, when and if they earn that profit, they must pay an income tax. The reason for that is, we tax profits and we tax income in order to pay for our common defense, in order to build roads, and do a whole series of things in this country that we need to do together. But we have some who do business in this country that pay no taxes. I especially point to the foreign-based multinational firms. The GAO report says they come to this country and approximately 74 percent of them doing business here pay no U.S. income taxes. Those who are listening to this will be surprised to learn that the brand names they are well familiar with every single day, often the brand names on foreign products sold in the U.S., mean that someone has done a lot of business here, made a lot of profit here, and ended up paying zero in income taxes. In my judgment this means they are unfairly competing in this marketplace. U.S. businesses with whom they compete in this marketplace, if they are doing so only in the U.S., must pay a tax on their income, and so, too, should foreign-based corporations doing business in the United States through their subsidiaries. Madam President, with that, I yield the floor and I suggest the absence of a quorum.

Mr. DORGAN

Mr. DORGAN. Madam President, before I begin talking about an amendment I intend to offer on the piece of legislation we will consider this week dealing with the IRS, let me say that the Congress Daily this afternoon indicates the Senate majority leader says ``the compromise tobacco bill developed by Commerce Chairman McCain may not be the base bill considered by the Senate when it takes up the tobacco issue. . .'' I am quoting: When asked whether he plans to bring the McCain bill to the floor, Lott said: ``I am referring to a bill; it could be McCain, a version of McCain, it could be something else.'' Again, I was quoting. I would hope that Senator Lott, the majority leader, would understand that when the Senate Commerce Committee marks up a piece of legislation and passes it with only one dissenting vote, a piece of legislation that is embraced by Republicans and Democrats in the Senate Commerce Committee, that that would not be work that is discarded as we move to begin consideration of a comprehensive tobacco bill. There is a reason for a committee system in the Congress, and that is to work through committees to develop a proposal, and bring that proposal to the floor of the Senate. I would be very disappointed if the majority leader intends one way or the other to bring a piece of legislation to the floor which is vastly different than that which was passed out of the Senate Commerce Committee. Again, I know there is a tremendous amount of lobbying going on in this town and around the country by the tobacco industry to try to resist and fight this kind of tobacco legislation. I understand that and I understand why they are doing that. Literally hundreds of millions--billions of dollars, hundreds of billions of dollars are at stake. But we must, it seems to me, in discharging our responsibility, pass a comprehensive tobacco bill. A good start in doing that would be to take the piece of legislation that we have drafted and marked up in the Senate Commerce Committee and bring that to the floor of the U.S. Senate. In response, I think, to the aggressive initiative around this country by the tobacco industry, some are saying, ``Maybe we ought to back off. Maybe we ought to not be quite as aggressive.'' The fact is the origin of the tobacco legislation comes from our determination to see that this industry stops targeting America's children. And if someone thinks that they have not targeted America's children, then I say read the evidence. The Supreme Court has just ruled in a manner that requires thousands of pages of evidence to be disclosed. That evidence from the tobacco industry itself demonstrates that the only source of new smokers has been to addict America's children. Smoking is legal. Tobacco use is legal, and will remain legal in this country. But it is not legal and should not be legal to attempt to addict America's children. That is why a comprehensive tobacco bill needs to be brought to the floor of the Senate. I urge the majority leader in the strongest terms possible to use the process that we have started here in the Senate, bring to the floor the piece of legislation I and others, with the leadership of Senator McCain, have developed, and use that as a starting point on the Senate floor to deal with comprehensive tobacco legislation.

Mr. DORGAN

Mr. DORGAN. Madam President, I ask unanimous consent to speak for 10 minutes as in morning business.

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

Mr. DORGAN

Mr. DORGAN. Mr. President, my understanding is the 30 minutes that I am able to use under a previous unanimous consent agreement will bump up against the 12 o'clock time. I ask unanimous consent that the 12 o'clock time be modified so I may use the entire 30 minutes.