Peter Fitzgerald

Mr. FITZGERALD

Mr. FITZGERALD. Mr. President, at this time I would like to return to our discussion of the Abraham Lincoln Presidential Library, which is a project in the Interior conference committee report that we have been discussing from time to time throughout the day. I spoke earlier, for several hours, about concerns I have had with the language in the conference committee report. The language authorizes $50 million in Federal expenditures for the library in Springfield. It says that the purpose of those expenditures would be for the construction of the library, for planning, design, acquiring, and constructing the library. But it is interesting; the actual language in the authorization does not say who is getting the money. It says that the $50 million would be going to an entity that would be selected later. So the Senate and the House have a conference committee report before us with a $50 million authorization for the library in Springfield, IL, but we do not know to whom we are going to give the money. When I saw this language earlier on, when the authorizing bill came from the House to my Senate committee, I saw that as a problem. I saw it also as a problem that there was no requirement that the construction project be competitively bid. I thought, what if this money falls into the hands of a private entity? The entity in the bill could apparently be private or public. There is no restriction in the bill that it can only go to a public entity. There is no suggestion in the bill that the money has to go to the State of Illinois. I thought, we have to take care to make sure that we have protections in there for the taxpayer, so that this money cannot be spent improperly. Senator Durbin came in and spoke earlier. He said that he supports a bidding process with integrity, as do I. I appreciate Senator Durbin's support and the support I have had from all of my 99 colleagues in the Senate, where we have gone on record by passing legislation over to the House that says the Senate thinks it is a good idea that this $50 million authorization for the Lincoln Library in Springfield, IL, requires that the project be competitively bid in accordance with the comprehensive Federal competitive bid guidelines. I thank all my colleagues in the Senate for their support on that proposition. I talked to many of my colleagues in the last couple weeks about this issue, and every single one of them agreed: Isn't it a good idea that we restrict that money so it cannot be misused? After all, it is not even clear where the money is going. It is possible that the money would go to the State of Illinois. If it does go to the State of Illinois, I think that would be preferable to it being given to an individual or to a private corporation. I described earlier in the day how there is a private not-for-profit organization out there that has recently been organized known as the Abraham Lincoln Presidential Library Foundation, and that I do not think it would be a good idea to give the taxpayer's money to a private not-for-profit organization in which case it would be up to the board of directors of that corporation as to how the money would be handled. We would not have safeguards for the public. But I also pointed out that if the money went to the State of Illinois, and the State of Illinois directed the money to its Capital Development Board, there was a real problem. The State of Illinois has a procurement code that was amended a few years ago. It does, in general, seek to ensure competitive bidding. It is an improvement over old laws that the State of Illinois used to have. When I was in the State senate in Springfield, in 1997, I voted for the current State procurement law. But we pointed out that there is a loophole in there, and I regret that I missed that loophole. The loophole is that the Capital Development Board has a way to opt out of competitively bidding projects. It is a highly unusual and irregular loophole. A letter from the Capital Development Board to Senator Durbin stated that the project would have to be competitively bid because they would require it. They said they couldn't do things that were not competitively bid. That is nice they put that in their letter, but their letter is flatly contradicted by their statute. The statute that governs the Capital Development Board has a clear opt-out so that the State can just opt out of competitively biding this project. Fifty million dollars in taxpayer money is a lot of money. The one issue Senator Durbin mentioned concerned the attachment of Federal competitive bid guidelines to this project in Springfield, to make sure it was properly applied and that we didn't have political influence in the awarding of the many contracts that would be given out. There is, after all, $120 million of taxpayer money, when you include the State of Illinois money, the Federal money, the city of Springfield money, and any private money that is contributed to the project. That is a lot of money. You would think you would want careful safeguards in that law. It is hard for me to think of any reason anybody would oppose the strictest possible exceptions on how we spend taxpayer money to ensure that there is competitive bidding. Senator Durbin wondered how would it work if Federal requirements would apply; the State of Illinois wouldn't know how to handle it if Federal guidelines were applied. I don't think that is correct. As I pointed out to Senator Durbin, it is very clear the State contemplates that Federal guidelines will frequently be attached when the Federal Government gives money to the State of Illinois. If you get Federal money from somewhere or you get money from somebody, it is not unusual that strings are attached. Article 20 of the Illinois procurement code, source selection and contract formation, at 500/20-85, contemplates the attachment of Federal strings. Section 20-85, Federal requirements: A State agency receiving Federal aid funds, grants, or loans shall have authority to adopt its procedures, rules, project statements, drawings, maps, surveys, plans, specifications, contract terms, estimates, bid forms, bond forms, and other documents or practices, to comply with the regulations, policies, and procedures of the designated authority, administration, or department of the United States in order to remain eligible for such Federal aid funds, grants, or loans. Mr. President, I ask unanimous consent to print this statute in the Record.

Mr. FITZGERALD. Clearly, the State of Illinois contemplates that for many grants from the Federal Government, they will have to comply with the Federal Government's requirements. That is not unusual. The Federal Government has requirements for education money, for Medicaid money, and the like. For this project, I think it is reasonable. We don't want to unduly hamper it. But Federal competitive bidding, who would oppose that? I don't think Democrats would oppose it. I don't think Republicans would oppose it. Certainly no Democrat, no Republican in the Senate wished to go on record opposing it. It is a simple, safe precaution for the taxpayers. Again, this statute, which we have talked about on and off all day, conclusively demolishes the letters that are being put out by the Capital Development Board saying they must use competitive bidding and that there is no way competitive bidding won't be used. Let me reflect on that argument again. They are saying that clearly competitive bidding will be used. This project now is the focus of a lot of attention around the State of Illinois, and many people have said it will definitely be competitively bid. If that is the case, why such stiff opposition to attaching the Federal competitive bid guidelines? If they are going to bid it according to the book and there won't be any problems with the contracts, then why is anybody opposed? Why is it? I don't know. Clearly, the Office of the Governor of Illinois believed strongly enough that these guidelines, these restrictions, not be attached. Instead, they chose to go around the Senate and try to get the language snuck into a conference committee report, stripped of the competitive bidding language, and in a way so that it would be rolled into an $18 billion appropriations bill that is a must-pass bill. That conference committee report cannot be amended or recommitted. They went to a lot of trouble. In fact, they were practically doing anything and stopping at nothing to avoid the competitive bid guidelines which they are essentially saying they are going to do anyway. That doesn't make a lot of sense to me. Why the objection? Why the fierce fight over requiring Federal procurement laws be followed? Now, throughout the day, I have set the context in which this debate has been occurring. I believed it necessary because for those who aren't from the wonderful land of Lincoln, the great State of Illinois, they may not be fully familiar with the politics. Sometimes our politics have become famous. Chicago has famous political traditions. The State government probably hasn't been as well known as the city of Chicago's government. But I believed I needed to set the table, to lay the foundation and give the Senators from other States the context in which I was concerned that this money would be provided in a way that would permit unfettered discretion on the part of whoever might get this $50 million authorized appropriation. I read a number of articles into the Record this morning that talked about problems that have occurred in State government in Illinois, not just under Republican administrations but under both Republican and Democratic administrations, where, because of a lack of competitive bidding, because of lax, weak procurement laws that left too much to the subjective preferences of State officials on awarding contracts, we have had of a sad history of procurement problems in the State of Illinois. Hopefully, the State's new procurement law will cut down on future problems such as that. But as I have pointed out, it has a few loopholes that I hope will get cleaned up. We have talked about leases of buildings. We have talked about construction projects. We have highlighted a number of instances in which those leases at that time were not competitively bid, where there were a lot of questions about the amounts taxpayers were paying for the State to lease buildings. And certainly the people involved in leasing the properties to the State seem to be very involved in the political process, which raises a lot of questions in one's mind. I also talked about the hotel loan, which involved a loan to a politically connected developer to build the Springfield Renaissance Hotel. It was a $15 million loan from the State of Illinois. It appeared also, as we read some of those articles, that Federal money was involved in that, too, and that that loan was never repaid to the State of Illinois. Some payments were made. I don't know what the unpaid balance is today, but I think it is quite substantial. That developer still has that hotel, too. This hotel is very close, about a block and a half, maybe two blocks away, as we saw, from the proposed Abraham Lincoln Presidential Library. If the library is built and it becomes the wonderful attraction we hope it will be for citizens from all over the country to come and enjoy and learn about Abraham Lincoln in the hometown of Abraham Lincoln, certainly it will generate a lot of tourist revenue for the city of Springfield. I imagine the Springfield Renaissance Hotel would benefit from the projections of increased tourism. I hope that would be the case. I hope that perhaps at that time the hotel, the partnership that runs it, would think about whether they couldn't make more payments to the State on that $15 million taxpayer loan that goes back to the early 1980s. I know that State officials released personal guarantees and waived the State's right to foreclose on that hotel loan. It is clear there probably isn't much of a legally enforceable note anymore. You would have to wonder if those people would think about whether it wouldn't be a good idea for them, the right thing for them to do, to try to make payments when they could. They probably would argue that the notes are worthless now and that the State's rights as lender were waived while the loan was in default. It is kind of unusual. In fact, I have never really heard of a lender, when they have a bad loan, waive all their rights. It seems kind of odd to me. In any case, there is another episode in our State's recent history that I was very vocal on when I was in the State senate. That was on how riverboat licenses were given out. Back in about 1990, the State created 10 riverboat licenses. The first six of them were fairly site specific in their statute on where the river boat licenses had to go. That always raised questions because there were questions of whether in drawing up the statute the State was actually attempting to steer these riverboat licenses to certain individuals. It just so happened that an investor in the first riverboat license awarded under the Illinois gaming law was the very same individual, Mr. William Cellini, about whom we have read some articles, who got the hotel loan, didn't have to pay it back, had the leases of the State buildings, and has been involved in politics in Illinois for a long time. I would, if I could, like to continue on in an examination of what happened when the State didn't competitively bid the riverboat licenses, and I always believed they should have been competitively bid. You had licenses that turned out to be phenomenally lucrative. In some cases, very small investments made many people very rich, very quickly. There was always a question as to how the State determined who got the licenses. The people who wound up getting the first six licenses, which were fairly site-specific, tended to be people who were very much involved in State politics in Illinois. They were what I would call ``insiders'' in the State capitol. Of course, they always encouraged the perception that it was just a coincidence that these very lucrative licenses fell into their hands. And they got real rich, real quick. In fact, a riverboat was put up in Joliet, IL. I remember when I was in the State senate, that boat was called the Joliet Empress. We could not find out the financial results of these boats. It was an exception to the freedom of information laws in Springfield, and even though these boats got a license from the State, they didn't have to give out financial information to the public. But the Joliet Empress decided to do a public bond offering, as I recall. In order to do that public offering of its debt securities, it had to file a registration statement with the Securities and Exchange Commission. In the process of filing that statement, they disclosed their investors and disclosed some of the financial results of the riverboat. I am going to suggest that the original investment was somewhere in the neighborhood of $20 million. In the first 18 months, as I recall, the nine people who owned the riverboat took in something like $87 million in cash dividends. It kind of makes the Internet firms that we are reading about in the soaring NASDAQ index seem like nothing. This was really a bonanza for the people who wound up with these riverboat licenses. When I read on the floor of the Illinois State Senate how lucrative these licenses were, I thought it was wrong that the State wasn't competitively bidding those licenses. They were setting up a process by which people who wanted these licenses could go through the politicians who could give it to them on a no-bid basis. And in so doing, the State was leaving an awful lot of money on the table. In fact, they were literally lighting a match to millions of dollars they could have reaped had they auctioned off those licenses and created some kind of bidding process and not allowed political favoritism to ever be a question in the awarding of those licenses. In fact, there was a lot of opposition to ever competitively bidding those licenses. Certainly, the people who wound up owning or wanting the licenses never wanted those competitively bid. Instead, what happened, in order to raise revenue in the early 1990s, on a few occasions the State raised income taxes on everybody else. Mr. President, let me go, if I may, to a couple of articles that describe how the State gave out the no-bid riverboat licenses. Again, this is all in the context of examining what happens when State, Federal, or local government--any government at all--don't put restrictions on money they are giving out for contracts, or on benefits that they are giving out, when they don't make sure there is a competitive bidding process involved. Questions always arise as to whether there is political favoritism. This article is from the Chicago Sun-Times of February 26, 1993. The byline is by Ray Long. The headline is, ``Developer Hits Riverboat Jackpot; Stock Sale Windfall Steams Treasurer.'' I ask unanimous consent that this article from the Chicago Sun-Times be printed in the Record at this point.

Mr. FITZGERALD. Mr. President, there are a number of other articles that have been written over the years about how the State gave out the riverboat gambling licenses in Illinois. The record is replete with problems that the State had, or questions that were raised about how the licenses were awarded. They just happened to be awarded to people who seemed to be involved in the political process. That was something I was concerned about at the time. I was in the State senate at that time; this goes back to 1994. There is an article in the Chicago Sun-Times that discusses how I was seeking competitive bidding on those State riverboat licenses. This is an article from April 10, 1994, entitled, ``Riverboat Deal is Plum For Insiders,'' by Dennis Byrne of the Chicago Sun-Times: The agreement between Mayor Daley and Gov. Edgar to bring riverboat gambling to Chicago should make a lot of people happy: Chicago taxpayers and schoolchildren, who will benefit from the additional revenues, and the thousands of casino/ entertainment center employees. But the folks who should be the happiest are the well- connected insiders who are already raking it in from the state's 10 suburban and Downstate riverboats and who stand to make hundreds of millions more from the Chicago riverboats. That would be thanks to a little-noticed part of the agreement changing the law that bans owners of one riverboat license from having more than a 10 percent interest in a second. If approved by the Legislature, they could own a second license and up to a 10 percent interest in a third. So folks such as Eugene Heytow, chairman of the politically connected Amalgamated Trust & Savings Bank, where William Daley, the mayor's brother, once was president, could keep his stake in a riverboat in Galena while buying a chunk of one in Chicago. And William Cellini, a powerful friend of Edgar and former Gov. James R. Thompson, could buy into Chicago big-time while keeping his lucrative interest in the Alton Belle. So could Gayle Franzen, the Republican candidate for DuPage County Board chairman. And so on. You could argue that they should get a piece of the Chicago action because the state is changing the rules of the game, that when they invested in the suburban and Downstate boats they believed they wouldn't face any competitive risk from Chicago. However, it's not a very convincing argument in the face of the obscene profits that they have already harvested from their state-protected monopolies. State Sen. Peter G. Fitzgerald (R-Inverness), a banker, has calculated that the profits have been great enough to cover initial investments in only a matter of months--the kind of return that might make Hillary Rodham Clinton envious. In the case of the Alton Belle, a $20 million or so capital investment (and a paltry $85,000 for a state licensing fee) seeded a company that now has an estimated market value approaching a half billion dollars. Let me read that again. This is from Dennis Byrne, ``Riverboat Deal is Plum for Insiders.'' In the case of the Alton Belle, a $20 million or so capital investment--and a paltry $85,000 for a State licensing fee. The guys who got the riverboats gave the State $85,000. The State gave them a license and ceded a company that now has an estimated market value approaching $.5 billion. Not a bad deal if you are giving the $85,000 and they are giving you the license. It is worth, at that time they say, $.5 billion. What did the taxpayers get out of this with no competitive bidding? They had their income taxes raised during that time. For an initial outlay of just a couple hundred grand 2\1/2\ years ago, investors now would own tens of millions of dollars worth of stock. Cellini himself plucked $4.9 million when he sold some of his stock when the company went public, but still retains some $60 million worth of stock. And if they invest in Chicago boats? Using the city's figures, Fitzgerald calculates that annual net income on each boat could approach $50 million, and that the market value of each boat (at five times earnings) could exceed a quarter of a billion dollars. Thankfully, though, they'd have to sink more into the Chicago boats, because, unlike the license for suburban and Downstate boats, the city licenses would be competitively bid. Who gets the license will depend, in part, on how much the bidder is willing to give to the city in admission, franchise and other fees. Unfortunately, though, the state's 20 percent gaming tax on gross receipts will not be raised, for the Chicago or Downstate boats. Nor do we know if other municipalities that are granted new boats will be able to demand competitive bidding. Fitzgerald believes that even if the 20 percent state tax were raised significantly, to as high as 60 percent, the owners still would make a nice profit. So if we truly believe that the boats are a public good, maybe we should allow the public to rake off at least as much as some politically connected pals. Mr. President, I understand that the Presiding Officer has an obligation, so I will try to focus my remarks and enable the Presiding Officer to meet that obligation. We have introduced a number of articles on this point all during the day to lay the context in which my concerns were raised about this very large project in Springfield. I guess now we are down to the point where we have to ask the big question: Is the proposed Abraham Lincoln Library in Springfield, IL, another insider deal? I certainly hope it doesn't become one. This may or may not be now. We will not know until it is done. But we should do our very best to prevent it from becoming one. We have said if we don't have careful controls, the money could wind up in private hands. It wouldn't have to be competitively bid under the language in the conference report. If the money winds up in State hands, then under the language that passed out of the House in the conference report, and which the Senate has basically said they don't like because it doesn't have Federal competitive bidding in it, if the money went to a private entity and went to the State--we have seen the State without competitive bidding. I would hate to see the monument to ``Honest Abe'' discussed in one of these many articles that have been written by investigative reporters. Competitive bidding could be opted out if it were the Capital Development Board that were doing the project. As I pointed out, it is not unusual for the State to have to live within Federal competitive bid guidelines. This is not an unusual request. Then there is the State code. The State procurement code specifically contemplates the application of Federal guidelines such as these Federal competitive guidelines. Are there red flags on this project? I want to sum those up again. We talked earlier in the day about some of the red flags. We had the cost of the project increasing as the project has been talked about over the last few years. It started out as a proposed $40 million project in February of 1998. It went to a $60 million project 13 months later, in March of 1999. When I first came to the Senate, it was a $60 million project. Then one month after that, the next report said it was a $148 million project--up from the most recent $60 million estimate on advice from ``designers and fiscal advisers.'' That raised the red flag in my mind. I thought we had to bird-dog this project. After all, that is a big expenditure in any city, and it is certainly a big expenditure in the city of Springfield, our State capital. The estimated cost, adjusted for inflation, of our State capitol is only $70 million compared to the $148 million that we saw referred to there, and now the $120 million that they are talking about for this library. The cost of other buildings in Springfield: the Willard Ice Building is a $70 million building; the Prairie Capital Convention Center is a $60 million building. We are really talking about a very visible project in Springfield. We discussed the location as well of this library. We noted its proximity to the Springfield Ramada Renaissance Hotel. We talked at length about the history of the Springfield Renaissance Hotel. We noted that this project is intended to and will stimulate tourism, if it is done right, in the city of Springfield. That hotel stands to benefit from that. It would be nice if we could get some payments on that $15 million State loan from back in 1982 to build that. We have not yet noted, and I think we need to note, that Mr. Cellini, whom we have discussed, has been active in seeking to raise money for the private foundation that is connected to the library. Let me see if I can focus on that for one second and find a citation for you, Mr. President. There are newspaper articles, I believe, that suggest he has been out actively trying to raise money for the library. I would like to find that citation. Incidentally, I should also mention that the Ronald Reagan Presidential Library cost $65 million. It is a State Journal Register article from September 5, 1999, a little over a year ago: William Cellini reported to be heading private fundraising drive for the project. So we are beginning to connect this all back into some of the projects we have read about throughout the course of the day. These are connecting threads, and set against the backdrop of procurement history and controversy in Illinois, I think there is good reason for Congress to be careful with this project. I think it is reasonable to look at all these red flags and say, this $50 million in Federal money, we better make sure it is buttoned down; better be careful, we don't want to happen to this money what has sometimes happened in the past. We don't want this project ever to be the subject of one of these investigative reports in one of our State's fine newspapers. In light of the time restraints we are running up against tonight, the hour is late and I recognize that, I thank my colleagues again for all their support, for going on record in favor of competitive bidding in accordance with the Federal competitive bidding guidelines. I certainly hope the House will reconsider the position that has come out of the House in opposition for buttoning down this money and having tighter controls on it, to make sure that none of it winds up being involved in an insider deal, and that Springfield gets $120 million worth of value out of the $120 million that is intended to be spent on this monument for Abraham Lincoln. Some may wonder why I have sought to filibuster the Interior appropriations bill over this matter. They would note $50 million is a substantial amount, but as a percentage of the entire appropriations bill, it is relatively small in comparison. There are literally countless projects throughout the country that are contained in that bill. I believed it was important to come to the floor and to lay out this case because it goes to the very heart of the appropriations process in Washington. I understand those who oppose the competitive bidding will eventually have a good opportunity to move their bill and make sure the competitive bidding isn't in there. But I hope we are going to have illumination here. I think the people of Illinois can know who their government is and what it is about. I think that the people of this country may see, through the prism of Illinois, how serious and consequential the ethical foundations of their government can and must be. This issue of whether we make sure this money is competitively bid goes to the very heart of the appropriations process. We ought to take great care of the people's money. The people's money represents precious hours of hard work, sweat, and time away from family. The American people are fundamentally generous, and they will permit reasonable expenditures for the good of their country, their communities, and their State. However, Mr. President, don't abuse them. Do your best to make sure that there are sufficient safeguards so the people can know that their taxpayer dollars will not simply be trampled on by political insiders. That is what bothers me personally, eats at me--the people who oppose provisions such as this act, as though $50 million in taxpayer money is a quarter. How can we ever put too many controls on taxpayer money? Why would anyone not welcome even more stringent competitive bid rules? Why would anybody oppose that? I can't think of a good reason. The backdrop of problems we have had in the State of Illinois for a long time, which I illuminated today, and the legacy of insider dealing make me very reluctant to turn over this particular $120 million without doing everything I can to protect it. I thank all of those who have stayed with me tonight, and I yield the floor.

Mr. FITZGERALD

Mr. FITZGERALD. Mr. President, I ask unanimous consent that when the Senate completes its business today, it recess until the hour of 9:30 a.m., on Thursday, October 5. I further ask consent that on Thursday, immediately following the prayer, the Journal of proceedings be approved to date, the time for the two leaders be reserved for their use later in the day, and the Senate then resume consideration of H.J. Res. 110, the continuing resolution, under the previous order.

Mr. FITZGERALD

Mr. FITZGERALD. Mr. President, I would like to take this opportunity to engage the Chairman of the Treasury and General Government Appropriations Subcommittee in a brief colloquy.

Mr. FITZGERALD. My state has an emerging methamphetamine problem, which is an unmet need of the High Intensity Drug Trafficking Areas program. To tackle this problem successfully, Congress should provide funding in fiscal year 2001 to implement the expansion of the Chicago High Intensity Drug Trafficking Area to the Southern and Central Districts of Illinois. Over the last three years, seizures of methamphetamine laboratories in Illinois have increased by 925 percent. In 1999 alone, 246 methamphetamine laboratories were seized in Illinois (more than all previous years combined), and methamphetamine-related crime in the state is at an all-time high, according to the Illinois State Police. If this trend continues, Illinois can expect to see an exponential growth of methamphetamine activities in the next two or three years, similar to what has occurred in Kansas, Missouri, Arkansas, and Iowa. I recognize that the final version of the Treasury and General government Appropriations Act for fiscal year 2001 includes an additional $14,500,000 to expand existing HIDTAs or fund newly designated HIDTAs. I would like to ask the Chairman a question: is it your expectation that a portion of these funds will be used to implement the expansion of the Chicago HIDTA to the Southern and Central Districts of Illinois?

Mr. FITZGERALD

Mr. FITZGERALD. Mr. President, I rise today to speak in favor of granting permanent normal trade relations to the People's Republic of China. I support this move not only because of the tremendous economic benefits that will flow to the U.S. economy--and to my home state of Illinois--as a result of Chinese WTO membership; I also support PNTR because I believe that a China that is engaged with the international community--and which is reforming and privatizing its economy at home-- will be a more stable and a more democratic China, with improved human rights at home and a better relationship with its neighbor, Taiwan. PNTR will be an unqualified gain for both the United States and China; we must not allow this bill to fail. I first remind my fellow Senators of the many and impressive market openings that the Chinese agreed to as a condition for their entry into the World Trade Organization. The concessions won by U.S. negotiators are simply breathtaking: Average tariffs for U.S. agricultural products will drop from 22% to 17.5% by 2004. For beef, grapes, wine, poultry, and pork, average tariffs will fall from 31.5% to 14.5%. One in every three American acres that is planted is growing food for overseas markets. U.S. farm exports to China last year totaled $1 billion, making China the eighth largest market for American farmers. And China will account for nearly 40% of all future growth of U.S. farm exports. Also under the bilateral agreement, average tariffs for U.S. manufactured goods exported to China will fall from 24.6% to 9.4% by 2005. But even more important than the change in formal trade barriers are the many fundamental market-opening changes that China has agreed to. Under our 1979 agreement with the Chinese--the current foundation for U.S. trade with the China--many nontariff barriers block entry of U.S. goods into China. These barriers consist of import licensing requirements, registration and certification requirements, and arbitrary technical and sanitary standards. Further, U.S. manufacturers that operate in China often are required to transfer technology to Chinese companies, use local materials, and to export a portion of their products abroad. Finally, many of these requirements are unpublished and are imposed arbitrarily. It is difficult for U.S. companies to know what restrictions will apply to their activities. Under our Bilateral Agreement with the Chinese, China will publish its rules and make them available to U.S. companies. It will eliminate technology-transfer, local-content, and export requirements. And it will impose only safety and sanitary standards that are scientifically based. China has also agreed to impressive changes in many areas of business where U.S. companies currently are effectively excluded. For example, in the area of: Distribution rights: U.S. firms currently cannot run their own distribution networks in China. Under the bilateral agreement, U.S. companies for the first time will be allowed to deliver their goods directly to retailers in China. Retailing: Under the bilateral agreement, U.S. companies will be able to open their own stores in anywhere in China without restriction. U.S. companies will be able to maintain majority ownership of stores, and will be able to sell U.S. products. The U.S. retailing industry is without peer--one-fifth of the U.S. workers work in retailing, and Americans have perfected the trade. But if we don't enact PNTR and enter the Chinese retailing market, foreign firms--such as the French conglomerate Carrefour--will take our place. Telecommunications and high technology: Foreign companies are currently prohibited from supplying telecommunications service in China. But as a WTO member, China will join the Information Technology Agreement, and will eliminate all tariffs on computers, telecommunications equipment, and semiconductors. China will also become a party to the Basic Telecommunications Agreement, adopting cost-based pricing, interconnection rights, and creating an independent regulatory authority. Foreign companies will be allowed to provide e- mail, voice-mail, on-line information and data-base retrieval, electronic data interchange, and paging services. Foreign companies will be allowed to hold a 30% share in Chinese service suppliers, eventually going up to 50%. For cell-phone services, foreign companies' stake will be allowed to go from 25% to 49%. Finally, it bears emphasis that the significance of all these changes is magnified by the sheer size of the Chinese market. America is the world's largest exporter, and China will soon be the world's largest purchaser of consumer goods and services. In less than five years, China will have more than 230 million middle-income consumers, with retail sales exceeding $900 billion annually. Gaining access to this enormous market is critical to American business and the future health of the U.S. economy. PNTR will provide that access. The Institute for International Economics estimates that the increase in world export of goods to China that will result from China's entry to WTO will total $21.3 billion--and the immediate increase in U.S. exports to China will be $3.1 billion. Goldman Sachs has estimated that by 2005, passage of PNTR will increase U.S. exports to China by $13 billion. This is, quite simply, an opportunity that the United States must not pass up. I also wish to emphasize today the benefits of PNTR to my home State of Illinois. Exports to China from Illinois totaled $901 million in 1998, up 24% from 1993. China was the tenth largest export market for Illinois in 1998. And Illinois' exports to China are broadly diversified, covering almost every major product category. A few areas stand out: PNTR represents a tremendous opportunity for Illinois farmers. In 1997, Illinois exported $3.7 billion in agricultural goods, ranking third among all States. Soybeans: Illinois is one of America's principal producers of soybeans. Under the bilateral agreement, tariffs will be set at 3% for soybeans and 5% for soybean meal, with no quota limits. For soybean oil, quotas will be eliminated by 2006; the in-quota tariff (the only tariff that will remain after 2006) will be reduced to 9%. Soybean oil exports to China could double within five yeas after the United States enacts PNTR. Corn: Illinois is also one of this Nation's main corn-producing States. In 1998, China imported less than 250,000 metric tons of corn from all countries. But under the bilateral agreement, the quota on corn imported to China will immediately rise to 4.5 million metric tons, climbing to 7.2 million tons by 2004. Corn within the quota will be subject to only a 1% tariff. Corn exports to China could increase a hundred-fold by 2004. Beef and pork: Illinois is the fourth largest State in pork production. Frozen pork cuts and pork offal tariffs will fall from 20% to 12%. China's tariff on frozen beef cuts will drop from 45% to 12%, and chilled beef tariffs will go from 45% to 25% by 2004. There will be no quota, and China has agreed to accept all pork and beef from the United States that is certified as wholesome by the USDA. Fertilizers: All quotas on importation of fertilizer into China will be eliminated by 2002, and tariffs will decline from 6% to 4%. The insurance industry is not often discussed in the debate over PNTR, but it is important to my home State of Illinois. 140,000 jobs depend on the insurance industry in Illinois. And for all the talk we hear from opponents of PNTR about trade deficits and jobs lost as a result of trade, it is worth emphasizing that the U.S. actually has a trade surplus in global trade in services such as insurance. The bilateral agreement will help us widen that surplus. China's market currently is almost completely closed to foreign insurers; most consumers may choose only among a few state-run monopolies. The bilateral agreement will throw open the Chinese market for insurance and reinsurance. With 1.2 billion people, China represents the largest insurance market in the world--a market that is significantly underinsured at present. From 1993-98, however, growth in the Chinese insurance market averaged almost 30% a year. Under the WTO agreement, foreign insurers will be allowed to offer group, health, and pension lines of insurance, which represent about 85% of total premiums. China will also set clear licensing standards--with no economic-needs tests or quantitative limits on the number of licenses issued--and will allow foreign insurers to sell their products throughout the country, directly to Chinese consumers. The bilateral agreement will also serve as an excellent model for future WTO negotiations on insurance trade. Although only two U.S. insurance companies currently are allowed to sell any insurance in China, over 20 have recently set up offices there, and are poised to move quickly into the Chinese market. PNTR will be a boon to the U.S. insurance industry and will generate high-paying jobs here in America. Under the bilateral agreement, average tariffs on construction equipment will fall from 13.6% to 6.4%. China is an enormous potential growth market. According to the World Bank, China will need to spend an estimated $750 billion in new infrastructure over the next decade-- increasing demand for earth-moving equipment. Illinois firms are well- placed to compete for this booming market. But all of these benefits will not comes to the United States automatically. We must grant PNTR to China. Some opponents of PNTR have claimed that we need not give up annual review of China's NTR status, that China would join the WTO anyway. They are half right. China's accession to the WTO only requires a two-thirds vote of all members-- even a U.S. vote against China would not block their entry at this point. However, once China does enter the WTO, the United States will be required to comply with all WTO rules with regard to China in order to enjoy the benefits of Chinese membership in that organization. And the main WTO rule is that all members must extend equal and unconditional trading rights to each other. This means that we must extend Normal Trading Relations to China unconditionally. If we do not grant China PNTR before it enters the WTO, China would be able to challenge the U.S. refusal--and the United States would be required to invoke article XIII of the WTO agreement, suspending the application of WTO rules between itself and China. This would mean that every one of the WTO's other 135 members--who account for 90% of world trade--would be eligible for the benefit of Chinese WTO membership, but the United States would not. And this includes the benefits that stem from the U.S.-Chinese bilateral accession agreement. The concessions that China made to the United States, to secure our support for Chinese accession, would be available to all other WTO members, but not to the United States. We cannot let this happen--we cannot allow our trade competitors to eat our lunch in China. It bears emphasis that by granting PNTR, the United States gives up no trade protections. China already enjoys normal trade relations with the United States--our markets are already open to Chinese imports. The concessions that were made as a condition to Chinese entry to WTO were all made by the Chinese--the U.S. gave up nothing, and PNTR will not affect a single American tariff or other trade barrier. The only thing that the United States does give up by granting PNTR is the right to review China's NTR status annually. With this, we give up very little, for NTR review has not been an effective tool for influencing events in China. Congress has renewed China's NTR status every year since 1980. The Chinese no longer take the threat of review seriously-- particularly after NTR was again extended after the Tiananmen Square massacre in 1989. The NTR procedure was originally enacted as the Jackson-Vanik amendment to Trade Act of 1974. The official condition for extending NTR is that the country being reviewed allow free emigration from its territory. The process was originally set up to pressure the Soviet Union with regard to free emigration of Soviet Jews. In other words, annual NTR review is a procedure that was set up to deal with an issue that does not concern us with regard to China, and to control the behavior of a country that no longer exists. Having lost its credibility over the last twenty years, it is time for annual NTR review to be retired. But you need not take my word about the lack of leverage provided by annual review. Take the word of Fu Shenqui, a Chinese dissident who has been active in the human-rights movement in China since the 1979 Democracy Wall movement, and who has been imprisoned for his activism three separate times. Mr. Fu had this to say about the effectiveness of annual trade review: [T]he annual argument over NTR renewal exerts no genuine pressure on the Chinese Communists and performs absolutely no role in compelling them to improve the human rights situation. . . . [T]he improvement of the human rights situation and the advancement of democracy in China must mainly depend on the great mass of the Chinese people, in the process of economic modernization, gradually creating the popular citizen consciousness and democratic consciousness and struggling for them. It will not be achieved through the action of the U.S. Congress in debating Normal Trade Relations . . . Also consider the words of Bao Tong, a prominent Chinese dissident. In an interview with the Washington Post, May 11, 2000, Mr. Bao said simply: ``I appreciate the efforts of friends and colleagues to help our human rights situation, but it doesn't make sense to use trade as a lever. It just doesn't work.'' While annual review doesn't work, engagement does. Despite the failure of the annual NTR process, the United States does still have a means of adding liberalization and democratization in China. The United States can contribute to the reforms that have been building for the last twenty years by supporting the reform faction in the Beijing regime; by providing an example of democracy and rule of law to individual Chinese citizens; by getting the Chinese government involved in the international organizations and frameworks; and by aiding the process of private capital formation in China. And all of these things can be accomplished by enacting PNTR and supporting Chinese membership in the WTO. Zhu Rongji, the current Premier, is widely regarded as the most proreform leader in China. His group is friendly to the U.S., and they have bet their future on WTO and PNTR. After two decades of rapid growth, China's economy appears to be faltering--growth is down substantially in the last few years, and deflation has plagued the economy for over two years. The current leadership views WTO--and the reforms and market opening that it will entail--as a tool for reviving a flagging economy. WTO has been the mostly hotly debated topic in China since 1989. The reformers have agreed to adopt sweeping economic reforms in exchange for accession to the World Trade Organization. For the U.S. to reject this offer of increased openness and reform would deal a serious blow to the liberals in the Chinese government--and greatly strengthen the hand of the Communist hardliners. The W.T.O. accession agreement also offers the Chinese reformers political cover-- it would merge their domestic market reform agenda with international commitments and Chinese membership in a prestigious international body. China's opening would become not just one political faction's program, but the new role of China as a participant in the international system. The United States must seize this historic opportunity to establish friendly relations with China, and to consolidate the current atmosphere of openness and reform within that country. The Chinese liberals have done their part by negotiating the most ambitious market- liberalization agreement that nation has ever seen; now it is our turn to do our part. Again, it is worth hearing the views of these matters of those for whom China's future course is not just a theoretical concern. Martin Lee is the Chairman of the Democratic Party of Hong Kong. He emphasizes that ``the participation of China in the WTO would not only have economic and political benefits, but would also serve to bolster those in China who understand that the country must embrace the rule of law.'' Dai Quing is a Chinese investigative journalist and environmentalist and the winner of the 1992 Golden Pen for Freedom award given by the International Federation of Newspaper Publishers. Ms. Dai was recently imprisoned in China for 10 months on account of her writings. She nevertheless favors granting China PNTR She says: I have heard on the news that two of the groups I admire most in the U.S.--the AFL-CIO and the Sierra Club--are against granting permanent normal trade relations with China. . . . As a Chinese environmentalist and human-rights activist, I disagree with their position. . . . I believe that permanent normal trade status, with its implication of openness and fairness, is among the most powerful means of promoting freedom in China. Starting in 1978, the open-door policy completely changed the way China responded to the world. Today, PNTR is a powerful means to keep China's doors as open as possible. WTO membership and PNTR will not only keep China open to the West, but will improve conditions within that country. The market reforms that will come to China as a result of PNTR--both a requirements of WTO, and as necessary changes in the face of increased competition-- will help to directly liberalize Chinese society. These changes will include a much freer flow of information to China; as the economy advances, more information technology will fall into private hands, and the overall volume of communication will increase, making it much more difficult for the government to monitor and control its people. Also, market reforms will assist the growth of civil society and the democratization of China by reducing the dependence of individual Chinese on the state sector. Although private business's share of the Chinese economy is ever increasing, a majority of Chinese workers still work for some form of a collectively owned enterprise. These state workers are paid very little in actual wages; instead, they receive much of their compensation in the form of subsidized housing, health care, child care, food, clothing, and education. State workers' reliance on these government-provided benefits greatly increases the government's power over these individuals. Those who depend on the government for their necessities are generally loath to criticize it-- or to do anything that may incur its wrath and jeopardize their ability to simply get by. Increased private ownership and employment in China will break this cycle of dependence, and will do much to loosen the government's grip on its citizens. But again, you need not take my word for it. We have heard much talk about human rights from those opposed to PNTR with China. Let us also listen to those on the front lines in the fight for democracy and greater freedom in China: The China Democracy Party was founded two years ago in Zhejiang, China. Many of its members are currently imprisoned or under house arrest in China. The party has issued the following statement, which deserves the attention of all those concerned about political reform in China: The China Communist government is planted in state ownership. The very base for government power is in each and every state-owned company and farm. Bringing China into the international community will speed China's economic privatization and its development, thus [converting] state ownership into private ownership. This change will tremendously weaken the state ownership that the Communist government power basically relies on. The same point is made by prodemocracy leader Ren Wanding, who simply states: A free and private economy forms the base for a democratic . . . [WTO membership] will make China's government organs and legal system evolve toward democracy. Greater openness and trade for China will also increase China's communication with the outside world. This will not only introduce more Chinese to liberal ideas and principles, but will also increase international awareness of conditions within China. Again, as the China Democracy Party declares in its official statement: ``the closer the economic relationship between the United States and China, the more chances for the United States to politically influence China, the more chances to monitor human rights conditions in China, and [the] more effective the United States [will be] to push China to launch political reforms.'' And finally, the emergence of alternative power centers--especially private business--will fuel the growth of a civil society--of institutions and practices that are independent of political power. Civil society offers a check on government, and forms the bedrock of political democracy. As independent power centers become more important in China, the state will be forced to concede some power to them. This is the pattern that has led to democracy across East Asia--in South Korea, in Taiwan, and in the Philippines. Just as in these countries, market reforms and private sector growth can also be expected to lead to political liberalization in China. In this regard, it is worth considering the concerns of those who do not favor great openness and democracy in China. A story in the Washington Post, on March 13, 2000, notes that: China's security services, including the People's Liberation Army, are concerned, analysts say, that joining the WTO will mark another step toward privatizing China's economy and importing even more Western ideas about management and civil society--a headache for those whose job it is to ensure the longevity of the one-party Communist state. By voting for PNTR, we give the hardliners in China even more to worry about. We must pass this important legislation--not just for our own economic benefit, but to encourage and accelerate the reforms and openings that are currently taking place in China. We must not let this historic opportunity slip away. Some have also suggested that the grant of PNTR must be tempered by our concern for China's neighbor Taiwan. But the bill that we are voting on today--the House version of PNTR--already includes a provision asking that the WTO approve the accession of both China and Taiwan at the same WTO session. The United States must remain committed to that policy--of immediate Taiwanese membership in the World Trade Organization. It bears mention that Chen Shui-Ban, the recently elected President of Taiwan, also supports China's entry into the WTO club. In a March 22 interview with the Los Angeles Times, Mr. Chen stated: We would welcome the normalization of U.S.-China relations, just like we hope that cross-strait relations [will improve]. . . . We look forward to both the People's Republic of China's and Taiwan's accession to WTO. Few have more at stake in China's future course--and in its attitude toward its neighbors--than the Taiwanese. Their leaders support China PNTR. Finally, enacting PNTR will build on the edifice of free trade that the United States has been constructing for the last 50 years. This decade, in particular, has seen some impressive strides toward free trade, with the approval of the North American Free Trade Agreement in 1993 and the creation of the World Trade Organization in 1994. When those agreements were set in place, we heard dire warnings from the naysayers of trade, who predicted a giant sucking sound of good jobs and capital investment leaving this country. But we need no longer evaluate those predictions in the abstract. Since that time, the rest of the 1990s have elapsed, and we can see the product of the modern free-trade regime. Since the enactment of NAFTA and GATT, we have seen: More jobs: In the 1990s, total civilian employment in the United States has surged by 16 million jobs. Better jobs: Over 80% of the new jobs created since 1993 have been in industry/occupation categories that pay above-median wages. 65% are in the highest-paying third of job categories. Families are better off: Between 1993 and 1998, real average household income has grown between 9.9% and 11.7% for every quintile of the income distribution. For African-Americans, it has grown by 15%. For families in the lowest quintile, income rose at a 2.7% annual rate. Trade brings more and better jobs: Last year, international trade supported over 12 million American jobs. Exports to China alone supported over 200,000 American jobs directly, and tens of thousands more jobs indirectly. And these export-related jobs are better jobs, paying on average 17% more than non-export related jobs. The trade naysayers also warned that free trade would lead to capital flight from the United States--that as soon as we let down our trade barriers, all of our factories would relocate abroad and that new investments would follow them. It hasn't happened. Instead, our manufacturing base is thriving: Manufacturing output has gone up, not down: Since 1992, manufacturing output in the United States has risen by 42%. Domestic output of motor vehicles has shot up 51%, and domestic automobile employment has increased by 177,000 to almost 1 million. America remains the world's top exporter of manufactured goods. Among America's leading exports in 1998 were aircraft, computer equipment, telecommunications equipment, valves and transistors, passenger cars, and car parts. Direct investment in the United States is soaring: In the 1990s, the United States has been the world's largest recipient of foreign investment. In 1999, fixed nonresidential private investment in the United States exceeded $1 trillion. Low-wage countries are not siphoning away investment: From 1994-98, U.S. manufacturing investment in Mexico averaged $1.7 billion annually. But in 1997, U.S. investment in U.S. manufacturing totaled $192 billion. In 1998, 80% of U.S. investment in foreign manufacturing was in other high-wage countries. (The top five destinations were Great Britain, Canada, the Netherlands, Germany, and Singapore.) Rather than low wages, investors seek countries with economic stability, well- developed infrastructure, lucrative market potential, and skilled workers. We have nothing to fear from lower barriers to U.S. investment in underdeveloped countries such as China. Finally, it bears mention the trade also benefits American consumers. Free trade has reduced the prices that American consumers pay for everyday goods--saving the average American family of four as much as $3,000 a year. In the early 1990s, we might have doubted. But we rejected the counsel of the trade scaremongers, those who thought that the United States would not be able to compete in a free-trade world. And today we are better off for it--with more and better jobs, a stronger manufacturing base, and a better standard of living. It is time to build upon success, and enact the next item in the free trade agenda, by putting into law China PNTR. I have previously spoken on the floor of the Senate about the importance of this agreement to the U.S. economy, how it will help increase jobs in manufacturing and business activities here as we can more readily export goods to China. By joining the World Trade Organization and having the U.S. Government grant permanent normal trade relations to China, China will be forced to lower its tariffs on goods that it is importing from the United States. That will enable us to export more products to the world's largest market. This agreement is of particular importance to the State of Illinois, and that is because Illinois is a major exporting State. If Illinois were a freestanding nation, it would be one of the largest exporting nations in the entire world. Not only do we have a large agricultural economy--we are the third largest agricultural producer in the United States--but in addition, we have a diverse manufacturing base. It is hoped that after this agreement is implemented, we will be able to export more corn, more soybeans, more cattle, more beef production, as well as more pork production, to China. China, with 1.3 billion mouths to feed, is a potentially vast market for U.S. agricultural products. In addition, we have large manufacturing concerns in Illinois, such as Caterpillar based in Peoria, with factories all over the State of Illinois; John Deere based in the quad cities part of our State; and Motorola, one of the largest manufacturers of cell phones and other high-tech products. This agreement will benefit businesses such as those and thousands of other smaller businesses in Illinois that make products which they will be more easily able to export to China following this agreement. During this debate on PNTR, the economic reasons for voting in favor of this agreement have been thoroughly addressed. Opponents have argued that somehow this agreement will cause the United States to lose jobs. They made those same dire warnings in the early 1990s when we were considering the free trade agreement with Mexico and Canada that became known as NAFTA, as well as when we were going into the World Trade Organization. There were dire predictions of a giant sucking sound of jobs going across the border. Those predictions have not been borne out. In the intervening years, we have seen our economy grow dramatically. We have added 16 million jobs in the intervening years, and we continue to create jobs, high- paying jobs, at a very dramatic rate. Not only that, the most recent statistics show that more capital is being invested in the United States than anywhere else in the world right now. Of the capital that our manufacturers are investing in foreign countries, they are not, as predicted, investing it all in low-cost poorer underdeveloped countries, but, in fact, the largest recipients of U.S. capital, in recent years, have been advanced nations such as Great Britain, Germany, and the Netherlands. It turns out that our manufacturers, when they have wanted to invest abroad, have not only looked for low-cost--that certainly would be a plus--but they have looked for stable economies, with good infrastructures, and strong, skilled labor forces, as well as good market potential. So I think the opponents of the expansion of free trade have been mistaken when they predicted that it would hurt our jobs for us in this country and harm our economy. But there is one other side to this, in which the opponents say, even if they can see the economic argument in favor of free trade, they argue that we should vote against free trade with China for moral reasons. I wanted to take the floor to address those arguments because I disagree strongly with what they have said. Many opponents of permanent normal trade relations with China have suggested that by giving up the annual review of our trade status with China, we will lose any leverage we have to affect human rights conditions in that nation. But here, too, I believe the opponents of the agreement are wrong. First, the Chinese Communists no longer take the annual trade review process seriously. Congress has renewed that status every year since it was first granted in 1979. Whatever credibility the annual process of granting normal trade relations to China has had, that all evaporated when China was granted that status in 1989 following the Tiananmen Square massacre. While annual review does not work, engagement does. The most immediate effect of granting permanent normal trade relations to China will be to shore up the position of the reformers in the Chinese Government. Zhu Rongji, the current Premier, is widely regarded as the most pro-reform leader in China. Mr. Rongji has staked his career on the passage of this agreement and the future of permanent normal trade relations. China's impending WTO membership has been the most hotly debated topic in China since 1989. The current leadership has agreed to adopt sweeping economic reforms in exchange for Chinese accession to the WTO. Should we accept China into that body, these reforms will be cemented into place. They will become an international commitment, enforceable through the WTO's multilateral enforcement mechanism. But should the United States reject China's offer of increased openness, we would deal a serious blow to China's reformers and greatly strengthen the hand of Communist hard-liners. PNTR will also contribute to the development of a freer and more democratic society in China at the grassroots. The reforms accompanying China's WTO admission would accelerate the growth of the private sector in China and will make it possible for more Chinese to work for foreign companies. These changes are important for the progression of freedom in China. What most people do not think about in this debate is that at the current time most Chinese workers are employed by their Government. I think the figure is close to 70 percent. These workers are paid minimal wages, very low wages. Most of their compensation is in the form of housing, health care, and education. They have to work in order to get those benefits. But state workers' reliance on these benefits greatly increases the Chinese Government's control over them. Individuals who depend on the state for basic necessities are generally loath to criticize the Government or otherwise to incur its wrath. Increased private ownership, which will result from China's accession into the World Trade Organization, and increased employment by private companies--American, European, and companies from around the world-- doing business in China, employing Chinese workers in the private sector, will help break the Chinese people's cycle of dependence on the Government and will do much to loosen the Government's grip over its citizens. Moreover, the emergence of alternative power centers in China, through private enterprise and the accumulation of private property, will spur the growth of civil society in China, fostering institutions and practices that are beyond political control. Civil society offers a check on government and forms the bedrock of political democracy. As independent institutions become more important in China, the state will inevitably cede some power to them. This is the path that has led to democracy across Asia, in South Korea, in Taiwan, and in the Philippines. Members of the Senate need not take my word for this. As Federal Reserve Chairman Alan Greenspan recently noted: History has demonstrated that implicit in any removal of power from central planners and broadening of market mechanisms . . . is a more general spread of rights to individuals. Such a development will be a far stronger vehicle to foster other individual rights than any other alternative of which I am aware. Thus, I am making the argument that has not really been made too often in this whole debate: That not only is this agreement good for our economy, for our job creation, and for our business sector, but adoption of this agreement in the legislation we will vote on on Tuesday will be good for the Chinese people because it will ultimately breed more freedom within that country. Mr. President, I yield the floor.

Mr. FITZGERALD

Mr. FITZGERALD. Mr. President, I rise today to introduce legislation to double the limit on loan deficiency payments (LDP) and marketing loan gains. The hard work and ingenuity of America's farmers have made U.S. agriculture the pride of the nation. But farmers today face serious challenges. Record low commodity prices continue to besiege family throughout our great nation. For the past 3 years, American farmers have faced the lowest prices in recent memory. Prices have plummeted for almost every agricultural commodity--corn, soybeans, wheat and the list goes on. The bottom line is that many farmers throughout this Nation are having trouble making ends meet. Appropriately, Congress has responded with economic assistance to offset these hard times. However, while last year's assistance package included a much needed provision to expand limits on marketing loan gains and loan deficiency payments, this year's assistance package did not include such a provision. As we move into harvest time, prices have trended downward, and many now realize that loan deficiency payments per bushel may be quite large for many agricultural commodities. With the combination of high yields and high per bushel marketing gains, many farmers now realize that they could easily bump up against these payment limitations. Recognizing this impending problem, farm groups, including the American Farm Bureau Federation, have asked that these payment limitations be eased, but not removed. According to industry experts, a 700-acre corn farmer will exceed the $75,000 cap. For farmers who exceed this cap, their only recourse is to forego the much-needed income or use the bureaucracy-ridden commodity certificates program. Estimates project that the additional drying, shrinkage and storage costs that a accompany the commodity certificate program will cost farmers an additional $33.46 per acre of grain. Farmers can ill-afford this lost income during these hard economic times. Today, I am introducing legislation to solve this dilemma. The bill simply doubles the LDP limit from $75,000 to $150,000 for this crop year. This legislation is consistent with a provision that was included in last year's farm economic assistance package. Surprisingly, this provision may actually provide cost-savings to the federal government through staff time reduction. Anecdotally, Illinois Farm Service Agency employees report that it takes about two hours of staff time to complete a loan forfeiture using the commodity certificate process, while the loan deficiency payment process requires only 15 minutes. When the 1996 farm bill was written, no one could have foreseen our current situation of extremely low prices, and the $75,000 limit seemed appropriate. However, with the Asian market crash, unusually good weather, and exceptional crop yields, commodity prices have been driven to unforeseen lows, making a re-evaluation of the LDP cap appropriate and timely. This bill is good public policy and enjoys bipartisan support. I appreciate my colleagues--Senators Edwards, Ashcroft, and Durbin--who join me as sponsors of this legislation, and I encourage other Senators to co-sponsor this sorely-needed change in farm policy. Agriculture is critical to the economy of America, and is the Nation's largest employer. For farmers to prosper, our Nation must have economic policies that promote investment and growth in agricultural communities and agricultural States like my home State of Illinois. A healthy agricultural economy has ripple effects through many industries and is critical for the economic prosperity of both Illinois and America.

Mr. FITZGERALD

Mr. FITZGERALD. Mr. President, today I am introducing a resolution expressing the sense of the Senate that the International Red Cross and Red Crescent Movement should recognize and admit to full membership Israel's Magen David Adom Society with its emblem, the Red Shield of David. I thank Senators Lieberman, Hagel, Helms, and Lugar for joining me as original cosponsors of this important resolution. The International Red Cross and Red Crescent Movement is the largest humanitarian network in the world. The Movement has many components, including the International Committee of the Red Cross (the ICRC--the Swiss-based founding institution of the Movement that serves as a neutral intermediary in armed conflict areas) and the International Federation of Red Cross and Red Crescent Societies (the Federation, which groups together the Movement's 176 recognized national societies and coordinates international disaster relief and refugee assistance in non-conflict areas). The Red Shield of David has been in use and recognized de facto since 1930 as the distinctive emblem of the medical and first aid services of the Jewish population in Palestine and, after 1948, the state of Israel. Israel signed the Geneva Conventions in 1949. The new state of Israel therefore attempted to have the Red Shield of David recognized in the Geneva Conventions as an alternative to the red cross, the red crescent, and the red lion and sun. In a secret ballot, however, Israel's request was rejected, 22 to 21. The end result was that Israel's equivalent of the Red Cross, Magen David Adom (MDA), was relegated to non-voting observer status and thereby effectively excluded from the Movement. In rejecting the Red Shield of David, and excluding Israel's national society from the Movement, the 1949 diplomatic convention established the principle that only those already using an exceptional sign--that is, a non-Red Cross emblem--had the right to continue using it. All new national societies would have to adopt the Red Cross. However, the admission of 25 new Red Crescent societies since 1949 demonstrates the inconsistency with which this principle has been applied. Despite MDA's exclusion from the Movement, it has continuously played an active role in disaster assistance worldwide, recently helping to rescue trapped civilians following the 1999 earthquakes in Turkey and Greece. Israeli medical teams were also among the first to assist victims of severe flooding in Mozambique this year. ICRC officials have praised MDA for its ``life-saving work'' and report they have maintained ``excellent working relations'' with the MDA for decades. The existing Protocols of the Geneva Conventions provide for two different uses of the Movement emblem: ``protective,'' whcih is used for protective purposes in armed conflicts and requires the use of a single unique emblem, and ``indicative,'' which is used for identification purposes in non-conflict circumstances, and therefore allows for the existence of several emblems. Currently, negotiations are underway to add a possible third Protocol to the Geneva Conventions to create a new neutral emblem and allow for MDA recognition with its emblem. However, before these negotiations can translate into formal recognition, significant procedural hudles must be overcome, including super-majority votes of three bodies and ratification by member nations that could take years. Meanwhile, the American Red Cross has been pursuing other approaches that would allow for the recognition of MDA and its emblem without the introduction of a third Protocol. The resolution I am introducing today would help facilitate the negotiating process by putting the Senate on record in support of MDA recognition at a critical time in these negotiations. The House of Representatives passed a similar resolution on May 3, 2000. The Senate, however, last announced its support of recognition of MDA and its emblem over 12 years ago. Over the last six years, the United States Government has provided the ICRC and the Federation with $713 million. Once again, the United States Senate should urge the International Red Cross and Red Crescent Movement to recognize the Red Shield of David emblem and admit MDA for full membership in the Movement. I urge my colleagues to support this resolution to encourage the International Red Cross and Red Crescent Movement to recognize Israel's Magen David Adom society and its emblem, the Red Shield of David.

Mr. FITZGERALD

Mr. FITZGERALD. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. FITZGERALD

Mr. FITZGERALD. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. FITZGERALD

Mr. FITZGERALD. Mr. President, I ask unanimous consent to speak for 5 minutes as in morning business.

Mr. FITZGERALD. Mr. President, I rise today to deliver some remarks upon the death of our beloved colleague, Paul Coverdell. It is no exaggeration to say that the whole Senate is in a state of shock that we no longer have Paul with us. Just last week, Senator Coverdell was among us on the Senate floor debating legislation, visiting with us in the Cloakroom, speaking up in our weekly Republican conference. And now, only a short period later, he is no longer with us. To my knowledge, Paul never seemed to have had any health problems. He certainly seemed fine last week. My last remembrance of him is just how happy he was when we adjourned on Friday afternoon after we passed that landmark legislation repealing the death tax. I guess the fact that Paul is no longer with us reminds us all that we need to keep life in perspective. I first met Senator Coverdell when I was first campaigning for the Senate 2 or 3 years ago. From that first time I met him, I came away with a very powerful impression that he was a most sincere and decent and friendly person. In all my dealings with him in my year and a half in the Senate, that impression never changed. Paul was always in a good, cheerful mood. He was always positive and upbeat. I never once saw him raise his voice or get angry at anybody. He was unfailingly polite and courteous at all times and to everyone. He was the quintessential southern gentleman and a delight to know. In the Senate, we debate issues of great moment to our country: war and peace, the economy, education policy. I guess it is sometimes the little, personal, seemingly inconsequential gestures of friendship that one remembers. I used to sit next to Senator Coverdell every week in our Wednesday Republican luncheons. I got to know Paul that way, not only as a colleague but as a person. Every week Paul would gently rib me for eating my main course before I ate my salad. Week after week he would comment on that. I think finally he just concluded that that was a peculiar habit of midwesterners. I will always remember the smile and the twinkle in Paul Coverdell's eyes, and I won't easily forget him or my friendship with him. Paul, I am proud to have served with you. I am going to miss you. We are all going to miss you. You enriched this Senate, the State of Georgia, and the whole country by your service. Our thoughts and prayers are with you and your wonderful wife Nancy and your family. May God bless you and keep you.

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

Mr. FITZGERALD

Mr. FITZGERALD. Mr. President, I would like to take this opportunity to ask the Chairman of the Interior Appropriations Subcommittee about the Abraham Lincoln Presidential Library that is planned for construction in Springfield, Illinois. Currently, the Nation is without an institution that honors the legacy of one of our greatest Presidents, Abraham Lincoln. The Lincoln Library would serve as museum and interpretive center, allowing visitors and scholars to learn about the events that shaped Lincoln's life and the contributions that he made to the history of our country.

Mr. FITZGERALD

Mr. FITZGERALD. Mr. President, I join the efforts of my colleague from Michigan, Senator Abraham. I am a cosponsor of this amendment which would temporarily roll back or suspend the 18.3-cent-per-gallon Federal gas tax. When I was back home during the Fourth of July recess and was marching in all those parades, I had the exact same experience that Senator Abraham had. I was hearing from my constituents about the high price of gasoline. After returning to the Nation's Capitol, where we talk about so many other issues, from foreign policy to domestic concerns, we have heard very little discussion about what Washington can do to bring down the price of gasoline at the pumps. That is the issue on the minds of most American citizens. In the Midwest, in particular--in my State of Illinois, Senator Abraham's State of Michigan, other Midwestern States such as Ohio--the price has been much higher than the national average. Fortunately, in the last few weeks, in Illinois, it has begun to come down. But part of the reason it has begun to come down in the State of Illinois is because the Illinois Legislature took action. At the end of last month, the Illinois Legislature went into a special session and rolled back their approximately 10-cent-per-gallon, or 5-percent, sales tax on gasoline. They suspended it until the end of the year. That immediately brought a price reduction of 10 cents per gallon at the pump. But prices are still too high in Illinois. The average price in the city of Chicago is around $1.80 per gallon. That is, thankfully, down from the $2.13 a gallon that it was a few weeks back. But if Senators take the time to go back and look at their legislative correspondence to see what kind of mail they are receiving on this issue from their constituents from around their States, and talk to their constituents, they will see the amount and the type of suffering that people are enduring. When we introduced this amendment earlier as a freestanding bill, I read several letters from constituents in Illinois that explained the problems they are confronting now with the high cost of gasoline. We have letters from small business owners. I remember one business owner in particular from McHenry County, IL, who had 10 to 20 employees, depending on the time of the year. His small business was very dependent on transportation, and he was going broke with this high cost of gasoline. I had a community college student from Shelbyville, down in southern Illinois, write to me and say he was regretting the fact he had turned down offers from several of our State's 4-year universities because he thought that tuition was too high. Instead, he had decided to go to a community college. He thought he would save money and do 2 years at the community college. But now, because he had a long commute to his community college, it was making that community college unaffordable; he wished he had instead decided to go to one of the 4-year universities. He thinks it might have been cheaper for him. I read a letter from a family outside the Peoria area where the wife commuted 100 miles a day, round trip, to work, and the husband 55 miles. They estimated they had to drive the kids another 15 miles a day to their soccer games, their baseball games, their band events, and other school extracurricular activities. They were suffering greatly as a result of the high cost of gasoline. We have talked much in this Senate this past year about the high price of prescription drugs. We are trying to do something about that. I had a senior citizen write me and say: Because of the high cost of gasoline, I now can't afford to drive to the pharmacy to buy the prescription drugs I already can't afford. There is a lot of real suffering going on out there. We can sit around and wait and do nothing. I do believe eventually those prices will come down. They may not go back down to where they were a year and a half or 2 years ago, but they will come down because production is getting ramped up domestically. I visited an oil well in southern Illinois last week--in fact, several oil wells. All of a sudden some of these small stripper wells in southern Illinois, many of which were dormant 2 years ago when the price for a barrel of oil was between $8 and $10 a barrel; and they could not make money so many of those wells shut down--in fact, there are 32,000 oil wells in Illinois and 9,000 of them were shut down 2 years ago. And now, of those 9,000 wells, 7,000 have come back into production. That suggests to me, with that kind of activity, eventually that supply is going to be felt across the country, and it will lower prices at the pump. But it is going to take some time. In fact, it is going to take months. We do need to have a long-term policy to ensure an adequate national supply of oil and of gasoline. In the meantime, we need to provide some temporary relief. Senator Abraham and I and others, Senator Hutchison of Texas, have crafted this bill to provide temporary relief for the people who need it most: the small business owners who are going broke, the people who have long commutes to work, the senior citizens who cannot afford to drive to the pharmacy, the community college students who cannot afford the commute to their community college. There may be some arguments against this bill. I know there are some on the other side of the aisle who get up and vote against any tax relief. On the current measure, on the death tax, many have argued that we should not be giving that relief to higher income individuals, people with large estates. At least there is a colorable claim; that argument has some merit to it. I think it is rebuttable. But that same argument cannot be made with respect to the Federal gas tax. Of all the taxes in our enormous Tax Code, this tax is one of the most regressive and one of the most onerous for low- and middle-income people. They can least afford the high cost of gasoline. There are not a lot of other things the Federal Government can do to bring down the price of gasoline at the pump. In fact, the only direct instrument we have to affect prices at the pump is to lower or reduce that Federal gas tax. There are no other instruments. We don't have price controls in this country. We had them for a while in the 1970s. That created shortages and rationing, and Ronald Reagan ended the oil crisis by eliminating those price controls. We have a free market system. What happened is, the price of a barrel of oil got down to $8 to $10 a barrel. Production was cut back. Ultimately, we are now suffering from lack of an oil supply. It will come back in this country, but we need to provide relief for people. The argument cannot be made that this most benefits high-income individuals. I strongly emphasize that Senator Abraham has written this bill so that there is not one cent of revenue lost to the highway trust fund. That is a very important point. We should not hear objections that this is going to hurt road funding in this country. It will have no effect on it. The amount will be charged to the general fund. I thank my colleague from Michigan, Mr. Abraham, and I yield the floor so other of my colleagues may address this matter.

Mr. FITZGERALD. Mr. President, I ask consent to use my 10 minutes to speak on the underlying bill, the estate tax measure. I think there are a couple of issues that need greater attention in this debate over the Federal estate tax. We have an underlying bill sponsored by Senator Kyl that will gradually abolish the tax over the next 10 years. The Democrats offered a substitute that was just defeated. The Democrat substitute purported to raise an exemption that is now available in the code for family businesses and for family farms. There are two points I want to make. One goes to the issue of exactly how much revenue would be lost by abolishing the Federal death tax, or the inheritance tax as it is sometimes called. Last year, the Federal Government took in $24.8 billion in death taxes. If we were to abolish that amount, if we were to abolish that estate tax altogether, we would lose that $24.8 billion. What this debate has been ignoring is that right now when an estate is taxed, the assets passed to the next generation are given, for capital gains purposes, what tax lawyers call ``a stepped-up basis.'' That means any assets your heirs take after the estate tax has been assessed, if they were to sell those assets, they would pay zero in capital gains taxes. When the Federal Government takes in $24.8 billion in estate taxes, it is actually giving up a whole lot in Federal capital gains taxes. Senator Kyl's proposal abolishes the Federal inheritance tax, or the estate tax, over 10 years, but after the estate tax is gone, heirs who take assets inherited from a previous generation will still have to pay capital gains taxes. They will no longer get that so-called stepped-up basis for capital gains purposes. In other words, if you have a grandfather or a father or mother who bought a farm in 1960 for $100,000 and that farm is passed along to the next generation and the heirs take that farm and after their parents have died they decide to sell that farm, they will have to pay capital gains taxes on the difference between the sale price and the original purchase price of their parents. If in the year 2000 they sell that farm that cost $100,000 in 1960 for $1 million, they pay $180,000 in capital gains taxes--20 percent of their capital gain of $900,000. If they inherited that farm today and, say, their parents' estate had paid the estate tax, without Senator Kyl's bill, if they sold that farm for $1 million, they would pay zero in capital gains taxes. Senator Kyl's bill is switching from an estate tax rate to a capital gains tax rate. There isn't all this loss of revenue that the other side is talking about. Somebody on the other side of the aisle brought up the example of the Forbes 400 list and said this would be a $250 billion windfall for them. That ignores that once Senator Kyl's bill passes, heirs of the Forbes 400 would all have to pay gigantic capital gains taxes. I think actually when all is said and done, considering the jobs we will save, the family farms that will be allowed to stay in the families once we have abolished the death tax, family farmers are six times as likely as ordinary Americans to incur the Federal estate tax. That is because they have the classic ill-liquid estate. They may have huge assets in the value of that farmland. They worked all their lives, sweating and paying taxes on every year's income, and buying that farm with aftertax dollars. It may have taken their entire career in farming to finally pay off the mortgage on their farm and then when they die, the Federal Government is going to take 55 percent of that farm, taking away the fruits of their life labor. They cannot hand it down to the next generation; or the next generation, if they want to keep it, has to incur a huge amount of debt to pay off those Federal estate taxes. What Senator Kyl's bill does is change it so what activates the tax is no longer death. What will activate the tax is when somebody decides to sell a capital asset, such as a family farm or a family business. Then they will pay capital gains taxes. As in ordinary circumstances, when you sell a capital asset, you pay capital gains taxes. Selling would activate the tax. Death would no longer be a taxable event. Wouldn't that be better for everyone if that was the case? Now, the Democrats made very much of their counterproposal to expand the exemption available under 2057 of the Tax Code. There is a larger exemption for family farms and small businesses that is already in the Tax Code. The Democrats' proposal was to expand that to $4 million for a husband and $4 million for a wife so that potentially a couple could hand down an $8 million farm or $8 million family business. That sounds like a great idea. The only problem is, you have to look at section 2057. When you look at 2057, you realize it is 6 pages long. To be a qualifying family farm or a qualifying small business under section 2057, you have to go through 13 pages worth of hoops. There are innumerable cross-references to other sections in the code, some 64 cross-references just to section 2032A. That is why, as Senator Kyl pointed out, only 3 percent to 4 percent of family farms and small businesses in this country can actually qualify for this section 2057 exemption. It is very hard to qualify for it. In fact, recently, the tax section of the American Bar Association urged Congress to repeal section 2057 because it leaves too great a potential for lawyer malpractice. It is a very complicated provision of the code. It really only offers false hope. It is a mirage. The counterproposal on the other side of the aisle was really a sham. It offered no relief, no safe harbor. No small business, no family farm could have staked much hope on their counterproposal. Finally, I think it is important that we adopt Senator Kyl's measure because it would get rid of the Federal death tax. If you identify cancer in somebody's body, you don't go in and only take out part of it. You have to get it all so it does not grow back again. If we do not get it all, if we do not get this cancer in our Tax Code, there is always the possibility that a future Congress or administration will come back and try to grow it again. In fact, it was only a few years ago that President Clinton was talking about lowering the estate tax threshold so families who had over $200,000 would start incurring the estate tax. I compliment my colleague, Senator Kyl, and others who have worked so hard on this provision. For the State of Illinois, which is a major agricultural producer, the third largest ag State in the country, with some of the highest yielding land in the country, we have thousands of family farms and businesses that revolve around farms--all of rural Illinois outside the Chicago area. Nothing has contributed more to the sale of family farms than the estate tax. When the estate tax went in, back in 1916, keep in mind, we were just developing an income tax in this country. We were just developing a corporate system of taxation in this country. It was all different. The exemption in 1916, to keep pace with inflation, would have to be a $9 million exemption today. I think it is high time Congress act on this matter. We are simply switching, trading estate tax rates for less onerous capital gains tax rates, and giving the American people, the small businesses and the family farmers, the options to keep their family farms and their businesses within their families for another generation, to continue employing people and keeping our economy productive.

Mr. FITZGERALD

Mr. FITZGERALD. Mr. President, I ask unanimous consent to speak as in morning business for up to 15 minutes.

Mr. FITZGERALD. I yield the floor.

Mr. FITZGERALD

Mr. FITZGERALD. Mr. President, I was in the city of Chicago to announce the introduction of a bill today called the Federal Fuel Tax Relief Act of 2000. I was standing in Chicago on La Salle Street, in what is known as the Loop, the premier business district in downtown Chicago. I was at a gas station there. Behind me you could see the prices at the pump that that particular gas station in Chicago was advertising. Those gas prices were well over $2 a gallon. In fact, I think the price for the premium blend of fuel was up over $2.30 a gallon. Right now, we are in the midst of a very serious crisis in my part of the country with respect to gas prices. Prices throughout Illinois are at record highs. They are at record highs in Michigan, in Ohio, in other parts of the Midwest. I am afraid if we do not bring down the cost of gas at the pumps, we are going to be seeing shock waves throughout our entire Nation's economy. The bill I am introducing today is S. 2790. What it would do is bring immediate relief by lowering the cost of gas nationwide for 90 days by temporarily rolling back the 18.3-cent-per-gallon Federal gas tax. In the last couple of weeks, anybody who has been following the news anywhere in this country has seen nothing but nonstop coverage about the escalating price, the rising price of gasoline. The response at the State level and at the Federal level, amongst public officials, has been to find somebody to blame. Is it the OPEC nations? Is it the oil industry? Is it the administration? But no one is taking any action to actually bring down prices. We can argue about culpability later. What we need to do now is to lower prices at the pump or we are going to see losses of jobs and losses of economic productivity. We will see senior citizens who cannot even afford to drive to the pharmacy to buy the pharmaceuticals, for which they already are having a hard time paying. We are going to see college students who cannot afford to make the commute to their community colleges. We need to have a long-term plan to increase productivity of oil in this country to lessen our dependence on foreign sources of oil. There are a number of measures that have been introduced in recent weeks in the Congress. The administration last week sent over recommendations on what our long- term solution should be for this energy crunch. But in the meantime, there are countless families all across the country that may have to cancel summer vacations, families that have worked hard all year, but now all of a sudden, when it comes time for them to have a couple of weeks off to take their families on a vacation, they can't afford the cost of the vacation because the price of gasoline has gone up so much. There will be many who will criticize my proposal. There will be many who come up with arguments against it. Certainly many will bring up the point that the proceeds from the motor fuels tax goes into our Federal highway trust fund. This legislation would hold harmless the highway trust fund. It would require the Federal Government to make up any loss to the highway trust fund by taking money from the on-budget or non- Social Security surplus and indemnify that road fund. We all want to make sure we continue to improve and repair our roads in this country. But the fact remains, the only instrument that the Federal and State governments have to directly affect the price of gasoline at the pump is to lower the motor fuels tax. My State, I hope, is going to do its part. A couple of weeks back, I pointed out that Illinois has amongst the highest gas taxes in the country. In fact, in addition to a motor fuel tax that is 19 cents a gallon, the State of Illinois has a sales tax on motor fuel that is assessed on top of the Federal motor fuels tax. In other words, Illinois has what we would call a tax on a tax. That sales tax on gasoline in Illinois is a percentage tax, so, as the selling price of gasoline has gone from $1 to over $2 in Illinois, the State's take on its sales tax has been increasing dramatically. It has doubled its take under that sales tax. The Governor of Illinois and legislative leaders recently called a special session of our Illinois General Assembly, which will be convening in 2 days, to temporarily roll back or repeal that Illinois sales tax on gasoline. If they enact that legislation, that should take 10 cents off the price of every gallon of gas sold in Illinois. But the prices will still be too high. We need further relief. My State is not the only State that is suffering. States across the country, and particularly in the hard-hit Midwest, need relief. Like you, Mr. President, and my other colleagues in the Senate, all of us are in virtually constant contact with our constituents. We have an endless stream of letters, of faxes, of e-mails, of calls to our offices on a daily basis. We travel up and down our States. We march in parades. We are constantly talking to the constituents, whether it is in the grocery store, as I was doing over the weekend, or in parades that I was in recently. The No. 1 single issue that I have been hearing about is we have to do something to bring down prices at the pump. Let me share a few of the letters my office has received on this issue. I am going to try to just go through a few of them because we have gotten literally thousands. I think, to some of the people in Washington, the pain people are feeling out in the Midwest and around the country about the rising cost of gas sounds like some kind of theoretical abstraction. But I have to tell you, for real people who are trying to drive to work, who may have a long way to drive to work or get to school, or senior citizens on fixed incomes, or folks in lower income brackets--they are having a very tough time. I have had many people tell me they have canceled weekend vacations and they are planning to cancel summer vacations. Let me read parts of a few of these letters. This one is from a resident of Springfield, IL, who is a part-time driver for a senior services van service that runs vans for senior citizens to and from a senior citizens center. He says that the escalating gas prices are really hurting the transportation budget at the center. If we have to shut down the van service, it would be a tremendous loss for the seniors. This one from a senior citizen in southern Illinois says that now we cannot afford to drive to the pharmacy to purchase the drugs that we already cannot afford. A person from Rantoul, IL, says that gas prices in Illinois are too high. It costs me more than $87 a week to drive to and from work now that the prices have skyrocketed. I cannot afford this for much longer. A small business owner in the Chicago suburbs--small businesses are suffering. He says: I have had small business men and women in my office saying they have lost money for several months in a row and could have to shut down if this keeps up. The current fuel prices are killing my small business. I am a small business owner who employs 20 people from McHenry County and 10 people from Lake County. This increase in fuel is killing my profit line. If this does not stop, I do not know how much longer we can survive. This is an interesting letter from a community college administrator in central Illinois. This person pointed out that, unlike many colleges, his school is a commuter college and students drive anywhere from 20 to 60 miles. That is 40 to 120 miles round trip to attend college. Most of the students are trying to better themselves by working part time and going to school. Now with gasoline prices soaring, they are being forced to drop out. This individual from Danville, IL, after a lengthy letter explaining how, for his job, he had to drive, at the end he said if the prices raise much higher, he will have to dip into his son's and daughter's education fund just so he can keep driving back and forth to work. I have another letter from a community college student. He is from Sherman, IL. He describes in his letter how he turned down State full- time universities because of the cost and because he wanted to attend his community college. It would be more affordable. Now that he has started at his community college and is having to dig deep into his pocket just to pay for the price of gas to get to and from college, he is getting squeezed. He has a 30-mile distance to go just to get to his school. He said: Just to let you know, I am not a freeloader. I am currently holding down three jobs and working through the summer. I do not expect you to work a miracle, but maybe submit some form of legislation that would reduce the price or give a break to students furthering their education. A husband from western Illinois has to commute 100 miles a day to work. That is how it is in rural parts of the country, as the Presiding Officer knows in his largely rural State. The wife has to drive 55 miles to work, and then the kids have to go 15 miles for their various athletic events and the like. He says: We are probably more fortunate than most people, but if this keeps up, it will be hard to commute into work every day, and there is no public transportation or opportunity to car pool in our downstate Illinois region. We barely have highways. Finally, another letter from a retired senior citizen on fixed income said: It is extremely hard to get along with gasoline prices so high. I have curtailed driving to a bare minimum, only to the doctor, shopping, church, and as a volunteer to a community radio station where I broadcast a show every Saturday. I think we need to take action. It is time for Washington and Congress to stop playing the blame game. We can argue about who is culpable later. I support the Federal Trade Commission investigation. We need to find out if anybody has been colluding in the oil industry or anywhere else to fix prices, and if they have been, they ought to go to jail for a very long time. That investigation is going to take a while. It is going to take a while to put pressure on OPEC nations to loosen the taps and to increase production. It is going to take a while until we get incentives in the system for the small oil well drillers in the United States to boost their production. Once that is boosted, we could be getting as many as 500,000 more barrels of oil a day. We probably have to take a look at what kind of tax laws we have to give people incentives to keep drilling even when the price of oil is low, but we need to give people relief now. It is a compassionate move. It makes sense. Our country, the most prosperous country in the world, can afford to give some relief to taxpayers and consumers, and if we do not give that relief, we will probably pay for it later because there is going to be a slowdown in economic activity. It may start in the Midwest, but it is eventually going to send shock waves all across the country, and this country could go into a long slump because of it. I hope to get many Senators and Members of this body as cosponsors of this legislation. We had a test vote earlier in the year, in April, on temporarily lowering the Federal gas tax. At that time, the measure received only 43 votes. It needed over 50 to pass. That was 2 months ago, and in the intervening time, oil prices have continued to skyrocket. The price which was only theoretical 2 months ago is now real. It is upon us. We need to take action. I ask unanimous consent that the text of the bill be printed in the Record.

Mr. FITZGERALD

Mr. FITZGERALD. Mr. President, I was in the city of Chicago to announce the introduction of a bill today called the Federal Fuel Tax Relief Act of 2000. I was standing in Chicago on La Salle Street, in what is known as the Loop, the premier business district in downtown Chicago. I was at a gas station there. Behind me you could see the prices at the pump that that particular gas station in Chicago was advertising. Those gas prices were well over $2 a gallon. In fact, I think the price for the premium blend of fuel was up over $2.30 a gallon. Right now, we are in the midst of a very serious crisis in my part of the country with respect to gas prices. Prices throughout Illinois are at record highs. They are at record highs in Michigan, in Ohio, in other parts of the Midwest. I am afraid if we do not bring down the cost of gas at the pumps, we are going to be seeing shock waves throughout our entire Nation's economy. The bill I am introducing today is S. 2790. What it would do is bring immediate relief by lowering the cost of gas nationwide for 90 days by temporarily rolling back the 18.3-cent-per-gallon Federal gas tax. In the last couple of weeks, anybody who has been following the news anywhere in this country has seen nothing but nonstop coverage about the escalating price, the rising price of gasoline. The response at the State level and at the Federal level, amongst public officials, has been to find somebody to blame. Is it the OPEC nations? Is it the oil industry? Is it the administration? But no one is taking any action to actually bring down prices. We can argue about culpability later. What we need to do now is to lower prices at the pump or we are going to see losses of jobs and losses of economic productivity. We will see senior citizens who cannot even afford to drive to the pharmacy to buy the pharmaceuticals, for which they already are having a hard time paying. We are going to see college students who cannot afford to make the commute to their community colleges. We need to have a long-term plan to increase productivity of oil in this country to lessen our dependence on foreign sources of oil. There are a number of measures that have been introduced in recent weeks in the Congress. The administration last week sent over recommendations on what our long- term solution should be for this energy crunch. But in the meantime, there are countless families all across the country that may have to cancel summer vacations, families that have worked hard all year, but now all of a sudden, when it comes time for them to have a couple of weeks off to take their families on a vacation, they can't afford the cost of the vacation because the price of gasoline has gone up so much. There will be many who will criticize my proposal. There will be many who come up with arguments against it. Certainly many will bring up the point that the proceeds from the motor fuels tax goes into our Federal highway trust fund. This legislation would hold harmless the highway trust fund. It would require the Federal Government to make up any loss to the highway trust fund by taking money from the on-budget or non- Social Security surplus and indemnify that road fund. We all want to make sure we continue to improve and repair our roads in this country. But the fact remains, the only instrument that the Federal and State governments have to directly affect the price of gasoline at the pump is to lower the motor fuels tax. My State, I hope, is going to do its part. A couple of weeks back, I pointed out that Illinois has amongst the highest gas taxes in the country. In fact, in addition to a motor fuel tax that is 19 cents a gallon, the State of Illinois has a sales tax on motor fuel that is assessed on top of the Federal motor fuels tax. In other words, Illinois has what we would call a tax on a tax. That sales tax on gasoline in Illinois is a percentage tax, so, as the selling price of gasoline has gone from $1 to over $2 in Illinois, the State's take on its sales tax has been increasing dramatically. It has doubled its take under that sales tax. The Governor of Illinois and legislative leaders recently called a special session of our Illinois General Assembly, which will be convening in 2 days, to temporarily roll back or repeal that Illinois sales tax on gasoline. If they enact that legislation, that should take 10 cents off the price of every gallon of gas sold in Illinois. But the prices will still be too high. We need further relief. My State is not the only State that is suffering. States across the country, and particularly in the hard-hit Midwest, need relief. Like you, Mr. President, and my other colleagues in the Senate, all of us are in virtually constant contact with our constituents. We have an endless stream of letters, of faxes, of e-mails, of calls to our offices on a daily basis. We travel up and down our States. We march in parades. We are constantly talking to the constituents, whether it is in the grocery store, as I was doing over the weekend, or in parades that I was in recently. The No. 1 single issue that I have been hearing about is we have to do something to bring down prices at the pump. Let me share a few of the letters my office has received on this issue. I am going to try to just go through a few of them because we have gotten literally thousands. I think, to some of the people in Washington, the pain people are feeling out in the Midwest and around the country about the rising cost of gas sounds like some kind of theoretical abstraction. But I have to tell you, for real people who are trying to drive to work, who may have a long way to drive to work or get to school, or senior citizens on fixed incomes, or folks in lower income brackets--they are having a very tough time. I have had many people tell me they have canceled weekend vacations and they are planning to cancel summer vacations. Let me read parts of a few of these letters. This one is from a resident of Springfield, IL, who is a part-time driver for a senior services van service that runs vans for senior citizens to and from a senior citizens center. He says that the escalating gas prices are really hurting the transportation budget at the center. If we have to shut down the van service, it would be a tremendous loss for the seniors. This one from a senior citizen in southern Illinois says that now we cannot afford to drive to the pharmacy to purchase the drugs that we already cannot afford. A person from Rantoul, IL, says that gas prices in Illinois are too high. It costs me more than $87 a week to drive to and from work now that the prices have skyrocketed. I cannot afford this for much longer. A small business owner in the Chicago suburbs--small businesses are suffering. He says: I have had small business men and women in my office saying they have lost money for several months in a row and could have to shut down if this keeps up. The current fuel prices are killing my small business. I am a small business owner who employs 20 people from McHenry County and 10 people from Lake County. This increase in fuel is killing my profit line. If this does not stop, I do not know how much longer we can survive. This is an interesting letter from a community college administrator in central Illinois. This person pointed out that, unlike many colleges, his school is a commuter college and students drive anywhere from 20 to 60 miles. That is 40 to 120 miles round trip to attend college. Most of the students are trying to better themselves by working part time and going to school. Now with gasoline prices soaring, they are being forced to drop out. This individual from Danville, IL, after a lengthy letter explaining how, for his job, he had to drive, at the end he said if the prices raise much higher, he will have to dip into his son's and daughter's education fund just so he can keep driving back and forth to work. I have another letter from a community college student. He is from Sherman, IL. He describes in his letter how he turned down State full- time universities because of the cost and because he wanted to attend his community college. It would be more affordable. Now that he has started at his community college and is having to dig deep into his pocket just to pay for the price of gas to get to and from college, he is getting squeezed. He has a 30-mile distance to go just to get to his school. He said: Just to let you know, I am not a freeloader. I am currently holding down three jobs and working through the summer. I do not expect you to work a miracle, but maybe submit some form of legislation that would reduce the price or give a break to students furthering their education. A husband from western Illinois has to commute 100 miles a day to work. That is how it is in rural parts of the country, as the Presiding Officer knows in his largely rural State. The wife has to drive 55 miles to work, and then the kids have to go 15 miles for their various athletic events and the like. He says: We are probably more fortunate than most people, but if this keeps up, it will be hard to commute into work every day, and there is no public transportation or opportunity to car pool in our downstate Illinois region. We barely have highways. Finally, another letter from a retired senior citizen on fixed income said: It is extremely hard to get along with gasoline prices so high. I have curtailed driving to a bare minimum, only to the doctor, shopping, church, and as a volunteer to a community radio station where I broadcast a show every Saturday. I think we need to take action. It is time for Washington and Congress to stop playing the blame game. We can argue about who is culpable later. I support the Federal Trade Commission investigation. We need to find out if anybody has been colluding in the oil industry or anywhere else to fix prices, and if they have been, they ought to go to jail for a very long time. That investigation is going to take a while. It is going to take a while to put pressure on OPEC nations to loosen the taps and to increase production. It is going to take a while until we get incentives in the system for the small oil well drillers in the United States to boost their production. Once that is boosted, we could be getting as many as 500,000 more barrels of oil a day. We probably have to take a look at what kind of tax laws we have to give people incentives to keep drilling even when the price of oil is low, but we need to give people relief now. It is a compassionate move. It makes sense. Our country, the most prosperous country in the world, can afford to give some relief to taxpayers and consumers, and if we do not give that relief, we will probably pay for it later because there is going to be a slowdown in economic activity. It may start in the Midwest, but it is eventually going to send shock waves all across the country, and this country could go into a long slump because of it. I hope to get many Senators and Members of this body as cosponsors of this legislation. We had a test vote earlier in the year, in April, on temporarily lowering the Federal gas tax. At that time, the measure received only 43 votes. It needed over 50 to pass. That was 2 months ago, and in the intervening time, oil prices have continued to skyrocket. The price which was only theoretical 2 months ago is now real. It is upon us. We need to take action. I ask unanimous consent that the text of the bill be printed in the Record.

Mr. FITZGERALD

Mr. FITZGERALD. Mr. President, I rise today to introduce legislation to revitalize and streamline the federal program governing agricultural commodity warehouses. This legislation, entitled the ``Warehouse Improvement Act of 2000,'' will make U.S. agriculture more competitive in foreign markets through efficiencies and cost savings provided by today's computer technology and information management systems. The Warehouse Act was originally enacted in 1916, and was subsequently amended in 1919, 1923, and 1931. However, since that time, the authorizing legislation for this program has seen little change. At the same time, U.S. agriculture and our society has seen drastic changes since the early part of the 20th century. Computer technology has revolutionized our world and laptops and handheld computers have become almost commonplace. Now is the time for us to bring USDA's agricultural warehouse program out of the dark ages and into the information age. The U.S. Warehouse Act does not mandate participation by warehouse operators that it regulates; it simply offers those who apply and qualify for licenses an alternative to state regulation. Currently, warehouse licenses may be issued for the storage of cotton, grain, tobacco, wool, dry beans, nuts, syrup and cottonseed. According to the U.S. Department of Agriculture, 45.5 percent of the U.S. off-farm grain and rice storage capacity and 49.5 percent of the total cotton storage capacity is licensed under the Warehouse Act. In general, these paper warehouse receipts that are issued under the Warehouse Act are documents of title and represent ownership of the stored commodity. The Warehouse Improvement Act of 2000 will make this program more relevant to today's agricultural marketing system. The legislation would authorize and standardize electronic documents and allow their transfer from buyer to seller across state and international boundaries. This new paperless flow of agricultural commodities from farm gate to end-user would provide significant savings and efficiencies for farmers across the Nation. In 1992, the Congress directed the Secretary of Agriculture to establish electronic warehouse receipts for only the cotton industry. Since that time participation in the electronic-based program has grown to over half of the U.S. cotton crop. In 1996, for example, nearly 12 million bales of cotton, out of the total crop of approximately 19 million bales, were represented by electronic warehouse receipts. Recently, the cotton industry estimated that this electronic system saves them 5 to 15 dollars per bale, a savings of over $275 million per year. The legislation that I introduce today extends this electronic warehouse receipt program to all agricultural commodities covered by the U.S. Warehouse Act. This reduced paperwork, increased efficiency, and substantial time savings will certainly make U.S. agriculture more competitive in world markets, giving our U.S. farmers the upper hand. In the short year and a half I have served in the U.S. Senate, I have introduced two bills that have been delivered to the President's desk to help bring the United States Department of Agriculture into the information age. First, S. 1733, the Electronic Benefit Transfer Interoperability and portability Act of 2000, which improves the electronic benefits transfer system that has provided significant savings and efficiency to the food stamp program, was signed into law on February 11 of this year (P.L. 106-171). And second, S. 777, the Freedom to E-File Act, requires USDA to set up a system to allow farmers to file all USDA required paperwork over the internet. This legislation unanimously passed both the House and Senate recently and is currently awaiting the President's signature. The legislation I am introducing today follows these two pieces of legislation by requiring USDA to use computer technology and information management systems to better serve farmers and the American public. The Warehouse Improvement Act of 2000 is a positive step toward moving the Department of Agriculture from the computer technology ``dirt road'' to the information superhighway of the 21st century. It is common sense legislation and I look forward to working with my colleagues on this issue as the legislative session moves forward. I would also like to thank a number of the Senate Agriculture Committee staff who have worked tirelessly on this issue, including Michael Knipe and Bob White on Senator Lugar's staff and Terry Van Doren on my staff. They have worked to build consensus among the USDA and the agricultural industry to bring about these needed changes to improve the efficiency of our grain marketing system. In fact, this legislation enjoys the support of USDA, the Association of American Warehouse Control Officials, the National Grain and Feed Association, the American Far Bureau Federation, and various other commodity groups. I ask unanimous consent that the bill be printed in the Record following the conclusion of my remarks.

Mr. FITZGERALD

Mr. FITZGERALD. Mr. President, I rise today to introduce legislation to revitalize and streamline the federal program governing agricultural commodity warehouses. This legislation, entitled the ``Warehouse Improvement Act of 2000,'' will make U.S. agriculture more competitive in foreign markets through efficiencies and cost savings provided by today's computer technology and information management systems. The Warehouse Act was originally enacted in 1916, and was subsequently amended in 1919, 1923, and 1931. However, since that time, the authorizing legislation for this program has seen little change. At the same time, U.S. agriculture and our society has seen drastic changes since the early part of the 20th century. Computer technology has revolutionized our world and laptops and handheld computers have become almost commonplace. Now is the time for us to bring USDA's agricultural warehouse program out of the dark ages and into the information age. The U.S. Warehouse Act does not mandate participation by warehouse operators that it regulates; it simply offers those who apply and qualify for licenses an alternative to state regulation. Currently, warehouse licenses may be issued for the storage of cotton, grain, tobacco, wool, dry beans, nuts, syrup and cottonseed. According to the U.S. Department of Agriculture, 45.5 percent of the U.S. off-farm grain and rice storage capacity and 49.5 percent of the total cotton storage capacity is licensed under the Warehouse Act. In general, these paper warehouse receipts that are issued under the Warehouse Act are documents of title and represent ownership of the stored commodity. The Warehouse Improvement Act of 2000 will make this program more relevant to today's agricultural marketing system. The legislation would authorize and standardize electronic documents and allow their transfer from buyer to seller across state and international boundaries. This new paperless flow of agricultural commodities from farm gate to end-user would provide significant savings and efficiencies for farmers across the Nation. In 1992, the Congress directed the Secretary of Agriculture to establish electronic warehouse receipts for only the cotton industry. Since that time participation in the electronic-based program has grown to over half of the U.S. cotton crop. In 1996, for example, nearly 12 million bales of cotton, out of the total crop of approximately 19 million bales, were represented by electronic warehouse receipts. Recently, the cotton industry estimated that this electronic system saves them 5 to 15 dollars per bale, a savings of over $275 million per year. The legislation that I introduce today extends this electronic warehouse receipt program to all agricultural commodities covered by the U.S. Warehouse Act. This reduced paperwork, increased efficiency, and substantial time savings will certainly make U.S. agriculture more competitive in world markets, giving our U.S. farmers the upper hand. In the short year and a half I have served in the U.S. Senate, I have introduced two bills that have been delivered to the President's desk to help bring the United States Department of Agriculture into the information age. First, S. 1733, the Electronic Benefit Transfer Interoperability and portability Act of 2000, which improves the electronic benefits transfer system that has provided significant savings and efficiency to the food stamp program, was signed into law on February 11 of this year (P.L. 106-171). And second, S. 777, the Freedom to E-File Act, requires USDA to set up a system to allow farmers to file all USDA required paperwork over the internet. This legislation unanimously passed both the House and Senate recently and is currently awaiting the President's signature. The legislation I am introducing today follows these two pieces of legislation by requiring USDA to use computer technology and information management systems to better serve farmers and the American public. The Warehouse Improvement Act of 2000 is a positive step toward moving the Department of Agriculture from the computer technology ``dirt road'' to the information superhighway of the 21st century. It is common sense legislation and I look forward to working with my colleagues on this issue as the legislative session moves forward. I would also like to thank a number of the Senate Agriculture Committee staff who have worked tirelessly on this issue, including Michael Knipe and Bob White on Senator Lugar's staff and Terry Van Doren on my staff. They have worked to build consensus among the USDA and the agricultural industry to bring about these needed changes to improve the efficiency of our grain marketing system. In fact, this legislation enjoys the support of USDA, the Association of American Warehouse Control Officials, the National Grain and Feed Association, the American Far Bureau Federation, and various other commodity groups. I ask unanimous consent that the bill be printed in the Record following the conclusion of my remarks.

Mr. FITZGERALD

Mr. FITZGERALD. Mr. President, this is an amendment that corrects a flaw in Department of Defense procurement rules that has increased military costs and had a severe impact on this nation's arsenals. Recently implemented rules requires U.S. arsenals to overstate their true cost of supplying goods and services to the military. As a result, arsenals have been losing bids on contracts under competitive bidding procedures, even when use of an arsenal would lead to lower overall costs for the Department of Defense. This quirk in the rules has not only increased Department of Defense expenditures; it has also led to severe underutilization of the arsenals, threatening the viability of an invaluable national resource. Under Defense Working Capital Fund procurement rules, which were implemented in 1996, government-owned military suppliers are required to charge the military the full cost of any good or service that they supply to the Armed Forces. The idea behind these rules was to discourage overconsumption of goods and services by the military, and to promote cost transparency--to make it clear to the government how much it was paying to have a good or service supplied by a government- owned facility. Individual military departments were encouraged to seek the lowest price available for goods and services--and to allow private companies to compete with government-owned facilities for military contracts. Unfortunately, the DWCF rules also include a number of provisions that place domestic facilities at a substantial disadvantage to their private competitors. The domestic suppliers are required to include a number of items in their contract bids that are unrelated to their marginal cost of actually supplying a good or and service to the military. For example, suppliers are now required to bill their net capital investment costs in a given year to all of their customers in that year--even if the equipment that was purchased has no relation to the customers' contracts. More severe for the arsenals is the DWCF rules' treatment of reserve capacity. All U.S. arsenals are required to maintain excess capacity, in order to be able to ramp up production immediately in the event of a war or military crisis. This unused plant capacity is something that no private business would maintain--a private business would simply sell off or lease out its unused assets. And the costs of maintaining this capacity are substantial. But DWCF rules, as they presently exist, require the arsenals to include reserve capacity costs in their bids when they compete with private companies for military contracts. The results of this system have been predictable. Arsenals have repeatedly lost work to private companies, even when the true marginal cost of having the work performed by an arsenal is less than the price charged by a private contractor. Moreover, the United States government ends up paying for the arsenals' unused capacity anyway--either through higher costs on other arsenal contracts, or through accumulated operating deficits built up by the arsenals. Though the individual military department saves money when its purchasing agents buy from a private contractor instead of an arsenal, when those purchasing decisions are driven by avoidance of reserve capacity costs, the military as a whole loses. The government pays for reserve capacity anyway, and the military pays more to have the work done by a private company that the true marginal cost of having it done by an arsenal. These conclusions are confirmed by a 1999 Department of Defense report on the DWCF system. The Defense Working Capital Fund Task Force's Issue Paper emphasizes that under the current system, though immediate purchasers may pay a lower price, ``the DoD will ultimately pay twice for maintaining both the essential organic capability as well as contracting out'' for the good or service. The DWCF rules' overpricing of arsenal services not only ``encourage[] behavior that is not optimal for the military as a whole,'' it also leads to an increasing disparity between military and private suppliers that ``results in an increasing abandonment of DWCF services.'' For these reasons, I introduce the present amendment. This amendment provides for direct funding of unused plant-capacity costs at United States arsenals. By removing these reserve-capacity costs from arsenal bid prices, the amendment would allow arsenals to compete on an equal footing with private companies. And by allowing arsenal prices to reflect true marginal costs, it would not only bring more business to the arsenals; it would save money for the government. No longer would military purchasers be discouraged from using an arsenal when its actual marginal costs--those that would be charged by a private business--are less than the prices charged by a private contractor. And finally, direct funding would promote the goal of cost transparency-- the original goal of the DWCF system. Separately budgeting for reserve capacity--while also allowing arsenal prices to reflect the true costs of providing goods and services. Finally, I wish to emphasize that allowing the arsenals to fall into disuse would be a grave loss for the United States military. In my home state of Illinois, the Rock Island Arsenal has long been an important military resource. It is a proven, cost-effective producer of high- quality military equipment. It has also served as a valuable supplier of last resort, providing mission-critical parts and services to the Department of Defense when private contractors have lacked capacity or breached their contracts. The arsenal has been called on to provide M16 gun bolts when a private contractor defaulted on a contract. It has also produced mission-critical shims and pins for the Apache helicopter when outside suppliers were unable to meet the Army's deadline. The U.S. government acquired Rock Island, which lies in the Mississippi River between Illinois and Iowa, in 1804. The first U.S. military base on the island was Fort Armstrong, established in 1816. In 1862, Congress passed a law that established the Rock Island Arsenal. Construction of the first manufacturing buildings began in 1866 and finished with the last stone shop in 1893. In the late 1980s, the Department of Defense invested $222 million in Rock Island Arsenal's capabilities. The arsenal is now the Department of Defense's only general-purpose metal manufacturing facility, providing forging, sheet metal, and welding and heat treating operations that cover the entire range of technologically feasible processes. The Rock Island Arsenal also has a machine shop capable of specialized operations such as gear cutting, die sinking, and tool making; a paint shop certified to apply chemical agent resistant coatings to items as large as tanks; and a plating shop that can apply chrome, nickel, cadmium, and copper and can galvanize, parkerize, anodize, and apply oxide finishes. Direct budgeting of unused plant capacity will allow arsenals' bids to reflect their true marginal costs of production and service, thereby increasing efficient use of the arsenals, reducing costs for the Department of Defense as a whole, and preserving an invaluable military resource. amendment no. 3423 At the appropriate place, insert the following:

Mr. FITZGERALD

Mr. FITZGERALD. Mr. President, thank you very much. I take this opportunity to thank my colleagues on the Armed Services Committee, Chairman Warner, and also the ranking member, Senator Levin, for the amendment I offered, that they have accepted, I am told. My amendment addresses the situation with our Nation's military arsenals. We have the Rock Island arsenal in Rock Island, IL. It lies on an island in the Mississippi River between the border of Illinois and Iowa. The Rock Island Arsenal dates back to just about the time of the Civil War. It has been producing outstanding equipment, with outstanding personnel, to our Nation's military for well over 100 years. A few years ago, the military changed its procurement rules to require our Nation's arsenals, when they were bidding on a contract, to provide military hardware to our Army or Defense Department. It requires them to submit bids that not only include their marginal cost for producing the product but, in fact, requires them to add into their bid the entire overhead. This new policy which the Defense Department established a few years ago has actually been harming taxpayers. Why, someone might ask, has that been harming taxpayers? What has been happening, as our Nation's arsenals--and there are three in this country; in addition to one in Illinois, there is one in New York and also one in Arkansas--go to bid on projects to provide supplies to the military, and they have to not only state their cost of building those supplies, they also have to add in the cost of their overhead. That means in analyzing those bids, the military is always going to prefer the bid of the private contractor. In fact, our arsenals have been losing business from the U.S. Government. This has been harming taxpayers. The reason it has been harming the taxpayers is because once we pay the private contractor to build the weapon or perform on the contract, we are still paying to keep the arsenals open. So the taxpayers wind up paying twice for the project. For example, a few years ago the military requested a new Light Towed Howitzer. They wound up giving the bid to a British defense firm. The Rock Island Arsenal lost out on the bid. The Government paid the British defense firm to start on the contract, but meanwhile, the Government and the taxpayers are still paying to keep the arsenals open. My amendment is designed to correct this flaw which is wasting taxpayers' money. From now on, under this amendment, when domestic organic arsenals in this country bid on a military project, they will be able to state their incremental cost for building the product, if it is a Howitzer or other weapon for the military. This way, it will be more fair to the arsenals. They will be able to bid their actual cost and the playing field won't be tilted in favor of the private contractors. Actually, the Department of Defense convened a defense working capital fund task force a couple of years ago that noted that the taxpayers were being billed twice for these military contractors; that it didn't make any sense. In fact, that issue paper which came out on February 25, 1999, and was issued by the defense working capital fund task force, concluded that [T]he Department of Defense will ultimately pay twice for maintaining the essential organic capabilities as well as contracting out for the goods or services. It went on to say that these rules cause an artificial, a fictitious bookkeeping entry that overprices the arsenal services and not only encourages behavior that is not optimal for the military as a whole, but also leads to an increasing disparity between military and private suppliers that ``results in an increasing abandonment of arsenal services.'' Mr. President, I compliment the members of the Armed Services Committee and Chairman Warner and also the ranking member for accepting my amendment. We should be able to help our Nation's arsenals and particularly the Rock Island Arsenal in Rock Island, IL, as well as save the taxpayers of this Nation some of their hard-earned money.