T. Gorton

Mr. GORTON

Mr. GORTON. Mr. President, I am here to cheer the announcement by the Ford Motor Company that it will voluntarily improve the fuel economy of its fleet of sport utility vehicles by 25 percent over a period of 5 years. At a time when gas prices are skyrocketing and sales of SUVs are increasing, this announcement couldn't come at a better time. Ford's decision to make SUVs more fuel efficient is welcome news. I have long said that the industry has existing technology to allow cars to go farther on a gallon of gas and to save consumers money at the gas pump. Ford has set an example that other auto manufacturers should follow immediately. I am anxiously awaiting a response from the remaining two of the big three and hope they will join Ford in its pursuit of cleaner, more efficient vehicles. I hope the manufacturers, now having pledged to improve fuel efficiency, will join me in my efforts to study an increase in corporate average fuel economy standards. As my colleagues know, I have long been an advocate of raising CAFE standards and scored a breakthrough victory earlier this year that paves the way for the Department of Transportation and the National Academy of Sciences, once again, to study fuel efficiency standards and their relationship to such issues as vehicle safety and to recommend the findings to Congress by July 1, 2001. I look forward to working with the automotive industry to ensure that this study is fair and balanced. Many constituents and colleagues are surprised to learn of my advocacy for CAFE standards. My motivation is a simple one and is based on the success of the original CAFE standards statutes. I have never been swayed by doomsday predictions from automakers that claim they would be forced to manufacture a fleet of subcompact cars if we allowed the Department of Transportation to study and impose an increase in CAFE standards. We have come a long way from absolute opposition to a study of the issue to today's major announcement by the Ford Motor Company that will be of tremendous benefit to consumers who want cleaner, more efficient SUVs. This announcement reaffirms my faith in the ability of American automobile manufacturers to produce fuel- efficient vehicles that are the envy of the world. The debate over raising CAFE standards has come a long way, and I look forward to continuing this debate when Congress returns from its August recess.

Mr. GORTON

Mr. GORTON. Mr. President, today I am extremely pleased to co-sponsor the Electric Power Industry Tax Modernization Act. This legislation, when enacted, will contribute to a more reliable and efficient electric power industry that will provide benefits for all Americans connected to the interstate power grid. I have been working for three years to resolve the tax problems for consumer-owned municipal utilities, those that are often referred to as Public Power. Nearly half the citizens of my state are served by Public Power. These problems are due to outdated tax statutes that were written in a different era-an era where the emerging competition in the wholesale electricity market was not envisioned. The negative effects of these outdated tax provisions have impacted not only consumers of Public Power, but also tens of millions of other customers. Public Power is often prevented from sharing the use of their transmission systems solely due to these tax provisions. These outdated tax provisions are negatively impacting the reliability of entire regions of our nation, adding stress to an already stressed system. In addition to Public Power, other types of utilities are prevented from adapting to this new era of emerging competition by other constraints in this outdated area of the tax law. All of these uncertainties have led to a condition where investment has slowed in this critical area of the economy, just as we need more investment to assure sufficient power plants and transmission lines to feed a growing economy that is increasingly dependent on reliable and affordable electricity. This compromise bill includes the essence of my legislation, S. 386, The Bond Fairness and Protection Act that I introduced last year with Senator Kerrey from Nebraska, a bill that includes an additional 32 co- sponsors in the Senate. This legislative language will allow Public Power to move into the future with certainty, and protects the millions of American citizens who hold current investments in Public Power debt. The bill also includes legislative language that resolves conflicts for investor-owned utilities. These changes are also needed to solve problems in other parts of the outdated tax code as it pertains to electricity. The new provisions will also help contribute to a more reliable and orderly electricity system in our nation. I look forward to gaining additional support for this bill among the other members of the Senate, and I look forward to the Finance Committee's consideration of this legislation in September. As soon as this legislation can be enacted, American electricity consumers will begin to enjoy a more certain and reliable future regarding their electricity needs.

Mr. GORTON

Mr. GORTON. Mr. President, today I am extremely pleased to co-sponsor the Electric Power Industry Tax Modernization Act. This legislation, when enacted, will contribute to a more reliable and efficient electric power industry that will provide benefits for all Americans connected to the interstate power grid. I have been working for three years to resolve the tax problems for consumer-owned municipal utilities, those that are often referred to as Public Power. Nearly half the citizens of my state are served by Public Power. These problems are due to outdated tax statutes that were written in a different era-an era where the emerging competition in the wholesale electricity market was not envisioned. The negative effects of these outdated tax provisions have impacted not only consumers of Public Power, but also tens of millions of other customers. Public Power is often prevented from sharing the use of their transmission systems solely due to these tax provisions. These outdated tax provisions are negatively impacting the reliability of entire regions of our nation, adding stress to an already stressed system. In addition to Public Power, other types of utilities are prevented from adapting to this new era of emerging competition by other constraints in this outdated area of the tax law. All of these uncertainties have led to a condition where investment has slowed in this critical area of the economy, just as we need more investment to assure sufficient power plants and transmission lines to feed a growing economy that is increasingly dependent on reliable and affordable electricity. This compromise bill includes the essence of my legislation, S. 386, The Bond Fairness and Protection Act that I introduced last year with Senator Kerrey from Nebraska, a bill that includes an additional 32 co- sponsors in the Senate. This legislative language will allow Public Power to move into the future with certainty, and protects the millions of American citizens who hold current investments in Public Power debt. The bill also includes legislative language that resolves conflicts for investor-owned utilities. These changes are also needed to solve problems in other parts of the outdated tax code as it pertains to electricity. The new provisions will also help contribute to a more reliable and orderly electricity system in our nation. I look forward to gaining additional support for this bill among the other members of the Senate, and I look forward to the Finance Committee's consideration of this legislation in September. As soon as this legislation can be enacted, American electricity consumers will begin to enjoy a more certain and reliable future regarding their electricity needs.

Mr. GORTON

Mr. GORTON. Mr. President, I believe the Senator from Ohio will yield to me, and I ask unanimous consent to be recognized for a few remarks in morning business.

Mr. GORTON

Mr. GORTON. Mr. President, all last week I deferred coming to the floor to speak about my friend, Paul Coverdell, on the ground that it might be easier to do so this week. It is not. It is not, but it is vitally important to memorialize such a friend. Every Monday evening or Tuesday morning, Paul Coverdell and I sat at the end of the table during leadership meetings in the majority leader's office, with an opportunity to comment on all of the issues that came before that group. Frequently, however, at the end of the table, we would exchange whispered remarks on some of the other people or subject matter, either present or not present. Paul Coverdell had a wonderful sense of humor, there and elsewhere: Dry, gentle, always to the point. It was a delightful pleasure to share those moments, sometimes stressful, sometimes marvelously relaxed, with such a man. If you sought advice on a matter of vitally important public policy, Paul Coverdell was one of the first you would seek out. You knew that anything he would discuss with you would be filled with wisdom and common sense, and that stacking your remarks against his would focus and sharpen your own thoughts and your own ideas. It hardly mattered what the subject was--education, taxes, national security, a dozen others; the advice was always good and always relevant. If you then sought tactics or advice on how to accomplish a shared goal, Paul Coverdell was a man whom you sought out. Particularly if there were an individual in your own party, or in the other party, whom you might be reluctant, for one reason or another, to approach, you could ask Paul Coverdell to do it for you, and he would. There was no task, there was no detail that was too small for him, none that he thought was beneath him, if it was constructive, if it would help the cause in the long term. One way in which you can determine individuals' reactions to other individuals is in a group. At the Republican conference meeting immediately before the Fourth of July recess, Paul Coverdell, as the Secretary of the conference, presented us a little plastic note card, the top of which read ``Republican Policy.'' I no longer remember the particular subject, but I do remember that first one or two people said, ``I don't agree with point 3.'' Pretty soon, everyone was piling on. Finally, one of our colleagues wrote across the top of this, ``One Republican's Policy,'' and handed it back to Paul Coverdell, who just went back to perfect his message. Whom you tease, you generally love. That in many respects was an expression of the love and respect his Republican colleagues had for Paul Coverdell. Paul Coverdell made us all proud of our profession, a profession often criticized, in fact a profession rarely praised. When a State sends a Paul Coverdell to the Senate, it is proof positive that our system works. And when the Senate of the United States listens to and respects and follows a Paul Coverdell, that, too, is proof that our system works. When, as was my privilege, you come to know and be befriended by a Paul Coverdell, you are especially privileged and especially honored. I was so privileged. I was so honored. I will not know his like again.

Mr. GORTON

Mr. GORTON. Mr. President, it is my purpose to join with the Senator from Arizona today in introducing this sense-of-the-Senate resolution. Each of us has thought long and hard about this proposed measure, as it goes to the heart of our air transport system in the United States. I believe I speak for the Senator from Arizona as well as for myself in saying this merger seems quite obviously to be beneficial both to United Airlines and to U.S. Airways. Public policy, however, does not concern itself primarily with the benefits to the companies involved in the competitive field. Public policy should concern itself with consumer interests and with the interests of the millions of Americans who use these airlines to fly from one place to another across the United States and for that matter overseas. A merger of these two airlines would create by far the largest single airline in the United States. Inevitably, it seems to me that would lead to two more mergers, at the very least involving the other four of the largest six airlines in the United States. In fact, it would be almost impossible to mount a logical and rational defense against such mergers as those airlines would complain with real justification that they were no longer competitive with the giant created by a United-U.S. Airways merger. From our perspective, we need to consider what the ultimate outcome of this merger would be and the impact it would have on airline passengers all across the United States. There would be a significant increase in the number of hubs overwhelmingly dominated by a single airline. There would be, in my view, a sharp decrease in the competition for airline travel in many cities across the United States. There would certainly be the legitimate desire on the part of the remaining airlines to maximize their profits. That exists at the present time. But these three mergers would vastly increase the ability of the airlines to do so in what would be distinctly a less competitive market. I have attended hearings on this subject. I have had meetings with the CEOs of both airlines seeking to merge and with some of those who have apprehensions about that merger. I may say there are a number of ways in which my mind was changed by those meetings. My first reaction to the proposal was that the creation of one new entrant--D.C. Airlines--was little more than a sham. The hearings and my meetings indicated to me that I was almost certainly wrong in that respect, and that the proposed new owner and manager of D.C. Airlines did intend to be a real airline to provide real service. But even if we grant the potential success of that airline, the net effect on competition overall would be highly negative on the part of this merger. I join with the chairman of the Commerce Committee in this resolution. I do not think in the ultimate analysis that this merger is in the public interest. I believe it would lessen competition among domestic airlines. I think it would not improve the way in which the airline passengers are treated, and probably, at least in the short term and perhaps in the long term, would exacerbate an already troublesome situation. I believe we would end up with three major airlines flying roughly 80 percent of all the passengers on domestic flights in the United States, and that the net result, by a significant margin from such a merger, would not be in the public interest. I hope this resolution becomes more formalized than it is just by the introduction by these two Members. I suspect the chairman of the Commerce Committee will bring it up in the Commerce Committee. I hope it is here for consideration by the entire Senate promptly, and it will be considered by the regulatory authorities that are dealing with the proposed merger at the present time.

Mr. GORTON

Mr. GORTON. Mr. President, let's paint a picture, or set the stage, for this debate. Most of the research and development and manufacture of prescription drugs goes on here in the United States, in a highly constructive fashion. Drug companies, and their research and development staffs, here in this country experiment and work, literally for years, to develop new and effective prescription drugs. They are magnificently successful in that quest. And at least one of the reasons we are debating this issue today is that they are so successful that every year the share of our health care dollar that goes to prescription drugs increases because we now have conditions that can be treated by prescriptions that previously required hospitalization, if indeed they could be treated at all. The process of taking an idea through its basic and applied research, its testing and its development to licensing by the Food and Drug Administration is long and arduous and is aimed both at safety and effectiveness. During that period of time, these companies spend a great deal of money with no return. It is clear, both to the proponents and opponents of both the first- and second-degree amendments, that these companies are entitled to recoup those long and large costs of research and development. They are not only allowed, properly, to recoup the costs of those drugs that are actually brought to market, but the cost of all of the dead-end streets they run into with some of this research and development. To that point, there is agreement. We are also dealing with a business, as any other in the United States, that spends a good deal of its time and effort in developing new products. Even at the early stage, there are some factors that favor the pharmaceutical industry because of its importance to the United States. It, as other companies, is entitled to a research and development tax credit, but it, unlike most other industries, also benefits hugely from research conducted by the National Institutes of Health, as the primary sponsor of this amendment well knows. So approximately half of all of these research and development costs are already underwritten by the taxpayers of the United States, either through tax credits or through our direct appropriations to the National Institutes of Health. It is at this point that the wonderful line from ``Alice in Wonderland'' comes to mind, and the situation becomes ``curiouser and curiouser.'' At the point at which these pharmaceutical products have been licensed, the actual manufacturing cost for that pill is, generally speaking, not very high. And so much of the price structure is to cover the research and development, the very large advertising costs to which the Senator from North Dakota referred, other marketing costs, the lobbying those companies do in the Congress, and a reasonable and, I may say, in most cases generous profit. But these U.S.-based, often U.S.-owned, pharmaceutical manufacturing companies consistently charge their American customers--not the individual patient in this case but the huge regional drugstore chains as well as individual pharmacies--far higher prices than they charge for the identical product overseas or across our northern and southern borders. One would think in a normal market that prices would be nondiscriminatory or, if anything, the manufacturers would be grateful enough for the tremendous aid and assistance they receive from the taxpayers of the United States perhaps to give at least a small price break to American purchasers. But, no, as has been pointed out, they charge Americans pretty close to twice as much as they charge anyone else. These wholesale prices, obviously, are reflected in retail prices for the drugs. My experience in the State of Washington is very much similar to that outlined both by the Senator from Vermont and the Senator from North Dakota. We ran a little test; we went up to Canada, priced identical drugs in the State of Washington and in British Columbia, and found a 62-percent difference. In other words, it was way less expensive to buy them in Canada. So busloads of Americans go from Seattle and other parts of the State of Washington across the border to buy drugs and bring them back. Why, one asks oneself, would American companies do this? Why would they discriminate against Americans? They say: There is a simple answer to that. The Canadian Government, the Mexican Government, the Government of the United Kingdom, fix the prices of drugs. They want their citizens to get these pharmaceutical products less expensively than Americans do. So they, by government fiat, set the prices. And so we sell them, the drugs, for a lower price for a simple reason: We have already manufactured and sold lots of them in the United States. And when you go from the ten-millionth pill to the twenty-millionth pill, it doesn't cost you very much to manufacture those new pills, so we can still make a profit, even though we are selling them at half price in other countries. Gee, isn't that unfair? Yes, I guess so, but that is the way the world is. Now, that particular argument that price-fixing countries do much better for their consumers than a free market does in the United States is really a two-edged sword. It is one heck of an argument for price fixing in the United States. The junior Senator from Minnesota, a couple weeks ago, put up a proposal that would do exactly that, fix the price of drugs in the United States. This is a point at which I agree with the drug companies. They say: You fix prices and you will dry up research and development. I am not sure how far down we look for the validity of that argument, given the great excess of advertising costs over research and development costs, but let us assume that it is totally and completely valid as an argument. Then under those circumstances, we shouldn't be fixing prices here in the United States. But that doesn't mean we should continue to allow Americans to suffer the immense discrimination that goes on consistently year after year, product after product in this country. When I discovered the extent of this problem, basically out of a cover story in Time magazine--I believe it was last November--it seemed to me, as a former State attorney general who for an extended period of time was in charge of consumer protection, fine, you just tell them by law to stop discriminating. Don't charge Americans any more than you are willing to charge Canadians or Italians or citizens of the United Kingdom. That is price fixing, the companies say. That is a terrible thing. Well, it is not price fixing to say you don't discriminate. If you can't make a profit at a given price, you don't have to sell the drug in Canada or in any other place. But they have a lot of money to spend trying to sell that bill of goods to people. So we discovered--again, I think this was as a result of my history as a State attorney general--that we have a statute in the United States that prevents price discrimination. It is called the Robinson-Patman Act. It was passed in 1936. It was a sweeping antidiscrimination bill. It prevents price discrimination in the sale of any commodity in interstate commerce, with certain exceptions for actual cost savings from quantity sales and the like. So we said, fine, and the bill we introduced just said interstate and foreign commerce, with respect to prescription drugs. It is interesting; the drug companies paid no attention to that distinction at all, and they still use these millions of dollars to say it is price fixing. Well, if so, then we have fixed the price of every commodity in the United States for 64 years, which I think surprises most people who believe in and have benefited from the truly free economy in the United States. The argument that this is price fixing is fraudulent--purely and totally fraudulent. But I am not wedded or married to one solution to this problem of excessive prices imposed on American consumers for their prescription drugs because while we ban importation by law--by custom at least--we have permitted for an extended period of time American citizens to cross our borders--northern or southern or, for that matter, across the ocean to Europe--and to return to the United States with a 3-month supply of any prescription drug they are using, without being bothered by any of the governmental agencies of the United States. Both of my other Senate colleagues in this regard have pointed out that that happens in their State, and I have already pointed out that it happens in mine. So the Senator from Vermont and the Senator from North Dakota came up with the idea that if an individual can do it for himself or herself, why not let our pharmacists do it and bring these prescription drugs back to the United States, which are often manufactured in the United States and then shipped north or south of the border--bring them back and offer them for sale, presumably at a lower price. I am sure the Senator from Vermont doesn't mind my saying, in a sense, this solution is truly bizarre--that somehow or another it should be less expensive for a pharmacist to buy from a middleman than it should be from a manufacturer in the first place, and then have to ship the product across a national border twice in order to get the lower price. But the bizarre nature of the proposal is a simple and direct result of the outrageous discrimination that is practiced in the first place, and nothing else. So the Senator from Vermont has written a bill and proposed an amendment to allow the retail seller, or the wholesaler, to engage in this reimportation. But concerned as he and the FDA are about making sure you get the real thing, most of the words in his amendment have to do with the safety of the product, of making certain you are getting what it is that you thought you purchased. In fact, it doesn't allow this reimportation unless the Secretary of Health and Human Services promulgates regulations permitting that reimportation that meet necessary safeguards. OK, that is where we are at this point. And then, instead of simply opposing the proposal, my good friend from Mississippi puts up a second-degree amendment that says the Secretary has to certify to Congress that it would pose no risk to public health and safety and will result in a significant reduction in the cost. It is either absolutely unnecessary, because we are talking about something the Secretary has already done, and the price part of it is unnecessary because if there isn't a significant savings in the price, nobody is going to go up and buy them in the first place or it is an attempt--and I regret to say this--to kill the amendment of the Senator from Vermont in its entirety and see to it that it doesn't happen. The drug companies and their sponsors are not really wanting to justify the situation that exists in the United States today because it can't be justified, so they use an argument for safety that is already far more adequately covered by the amendment proposed by the Senator from Vermont in any event. Now we are able to deal with this issue as part of this appropriations bill, of course, because the House of Representatives did. So it is properly before us. But the other matter that I find extraordinarily odd with respect to the second-degree amendment is just this: The distinguished chairman of the subcommittee, the manager of the bill, knows perfectly well that individuals can go across our borders and come back with a 3-month supply of prescription drugs. If he and the Senator from Wisconsin are so concerned about safety that they have to pile on with a second-degree amendment, why aren't they banning totally and completely personal reimportation? The Senator from Vermont isn't even touching that subject in his amendment. I wish he did. The House of Representatives did. He is setting up a way for reimportation to take place at the wholesale level, where safety is far more protected than it is with respect to these individual purchases. But the individual purchases have not created a great problem. If they had, people would stop engaging in those policies. Whatever else we may say about Canadians, they are not in the business of poisoning their own citizens. This reimportation can take place with perfect safety under the amendment as proposed by the Senator from Vermont, and anything added to it is simply an attempt to kill it and to maintain the status quo. Let me go back to the stage I have set and simply say this: The status quo is American manufacturers using American taxpayers' money to produce products in the United States of America, which they then sell at prices that discriminate outrageously against American purchasers. That is really all there is on the stage today--discrimination by American companies against American purchasers, in spite of the support of American taxpayers. The first-degree amendment takes at least a modest step toward curing that situation. The second-degree amendment is designed to keep it in place forever. I have one final point, Mr. President. I agree with each of the Senators who have previously spoken on the desirability and the importance of a Medicare drug benefit. There is some debate over to whom it should apply, how much it should cost. But Medicare covers about 40 million Americans. We have 250 million Americans altogether. None of the rest of them will be helped at all by even the most generous Medicare drug benefit. All of them will be helped by this amendment, to the extent that it is actually effective, because it will in fact end up lowering the price of prescription drugs in the United States of America. That is why the first-degree amendment should be adopted and the second-degree amendment that attempts to gut it should be rejected.

Mr. GORTON

Mr. GORTON. Mr. President, I ask unanimous consent that Ben Noble of Senator Leahy's staff be accorded floor privileges during the remainder of the consideration of this bill.

Mr. GORTON

Mr. GORTON. Yes.

Mr. GORTON. I would be happy to oblige the Senator.

Mr. GORTON. I ask unanimous consent that the Lieberman amendment be postponed and be put last on the list.

Mr. GORTON. I move to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. GORTON. Mr. President, in a very short period of time now, we can adopt two amendments that have now been agreed to. Amendment No. 3811

Mr. GORTON. Mr. President, I ask unanimous consent we now proceed to consider the Lieberman amendment No. 3811.

Mr. GORTON. Mr. President, the amendment has now been agreed to by all sides. We yield back all time.

Mr. GORTON. Mr. President, I ask unanimous consent that we now proceed to the Bingaman amendment No. 3887.

Mr. GORTON. Mr. President, an agreement has been reached on this amendment, which requires a modification. I send the modification to the Bingaman amendment to the desk and ask unanimous consent that it be so modified.

Mr. GORTON. Mr. President, I ask unanimous consent that the votes in the next series be limited to 10 minutes each.

Mr. GORTON. Mr. President, I send a modification to the Reed amendment to the desk, and ask unanimous consent that it be immediately considered.

Mr. GORTON. Mr. President, what is the order of business? It is 9:45.

Mr. GORTON. Mr. President, Senator Reed and I have come to an accommodation, and we have a modification to his amendment. First, I ask unanimous consent that the yeas and nays on the Reed amendment be vitiated.

Mr. GORTON. Mr. President, this modification does make an increase in the appropriation to the amount in the House bill. It has been a pleasure to work with Mr. Reed toward a cause in which he believes and in a way which is fiscally responsible.

Mr. GORTON. I yield back my time.

Mr. GORTON. Mr. President, I ask unanimous consent that two amendments that were inadvertently omitted from the managers' package last night be adopted at this time. I send them to the desk.

Mr. GORTON. Mr. President, I ask unanimous consent that reading of the amendments be dispensed with.