Bob Graham

Mr. GRAHAM

Mr. GRAHAM. Mr. President, is there a set time for the recess?

Mr. GRAHAM

Mr. GRAHAM. Mr. President, we voted a few minutes ago to invoke cloture on the motion to proceed to the Internet Tax Freedom Act. I opposed that motion to proceed, as did the Senator from Wyoming, Senator Enzi, and a few others. I think it is incumbent upon us to state why we opposed it and why we did not oppose it. None of us who opposed the motion to proceed did so because we are antagonistic to high technology. None of us did it because we failed to appreciate the importance of the Internet system and the enormous contribution that it has made in disseminating information to peoples around the world. No one opposed it because we failed to understand the economic importance of this both in terms of the industry itself and how this information industry makes the rest of our economy more efficient and productive. And none of us did it because we are mired in the past, because we have some childhood addiction to the way things have always been. We understand that the world is moving at an increasingly rapid pace and that these technologies are an important engine of that progress. But why I believe we did oppose this motion to proceed was to slow down the consideration of a body whose whole purpose for being is to be a deliberative body on issues that are of importance to this Nation and its citizens. I believe there has been an effort maybe to minimalize the importance of this legislation, the Internet Freedom Tax Act, and to focus on it almost as a cliche: if you are for high technology you are for this bill. If you are opposed to high technology, you are opposed to this bill. That simplicity hides the real importance of this issue. To me, that importance can be described under two labels. The first label, Mr. President, is fundamental fairness. If I were to use an example that I suggested to the Senator from Wyoming, Senator Enzi, earlier today: if Main Street was divided and all the stores on the left side of Main Street were under a requirement to collect sales tax on each of their sales and all the stores on the right side of Main Street were exempt from that obligation to collect tax on exactly the same sales, we would say that is unfair. Why should the hardware store on the left side be required to collect sales tax and therefore increase the ultimate cost to its customers of the hammers and saws and nails that were purchased, but the hardware store on the right side be exempt and therefore have that competitive advantage? Everyone would immediately say, ``That's unfair. How could you tolerate such a situation?'' Well, we have essentially that situation today, Mr. President, as it relates to the sales that are made on both sides of Main Street where the sellers are required to collect State and local sales taxes, and remote sellers where you can pick up a catalog and order those same hammers and saws and nails and have them shipped to you by mail where there is no requirement of the seller to collect that sales tax. That creates a discriminatory situation in the marketplace. This bill has as a principal objective to avoid discrimination against Internet sales. Now the question is going to be, Discrimination relative to what? To whom? Is it discrimination relative to the Main Street hardware store or is it discrimination relative to the catalog sale hardware store? If it is the latter, then the Internet industry would be able to argue, ``We shouldn't have to pay any taxes either. We shouldn't have to collect taxes because the sales are made over the Internet any more than our catalog brethren are not required to collect taxes for sales made through the post office or through telephones.'' If, on the other hand, the question is discrimination against that Main Street hardware store, then the answer is the other way, that ``Yes, just as Main Street has to collect, you should have to collect.'' That issue of fairness then gets to the second issue of its effect on State and local governments. We in this Congress have had as one of our principal objectives to decentralize responsibility, to send more authority from Washington to the communities of America and support that principle. I am a Jeffersonian, and I believe the best government in general is that government which is closest to the people affected by a government's actions. But I understand, as we send more responsibility--whether it is in education or in health care or environmental protection or economic development--to our communities, that they are going to need a revenue base in which to carry out those responsibilities that we have just sent them. This issue of discrimination of Internet sales has the potential of driving a major hole into the revenue sources upon which many States and local governments depend in order to provide those very services. The most at-risk service will clearly be education, since it is the largest responsibility of State and local government in terms of its importance to our future and in terms of its use of State and local resources. So in my judgment, the most important education bill that we will debate in 1998 will be the Internet Tax Fairness Act because it has the greatest potential of fundamentally affecting what kind of education our children will receive in this and future generations. So our reason for slowing this train down was to be able to elevate what I believe to be some very fundamental issues and provide us an opportunity to try to work through them so that we do not inadvertently, in the rush to show our support for high technology, have some very negative unintended consequences. The good news, Mr. President, is those efforts have been underway for some time and I believe are close to bearing positive results. In the next couple of days, I anticipate there will be a meeting of many of us who were interested in this issue, from all points of view, to try to close the increasingly narrow gap that is necessary to have legislation that will achieve the desires of the sponsor, which is to give a pause and time and structure for thoughtful consideration of how the Internet transactions should be taxed for purposes of State and local government, as well as international transactions, and to allow the industry this brief period of moratorium from State and local taxes while a comprehensive set of policies is being developed. What those of us who have been concerned about the rush to final judgment of this act have been seeking is to assure that that study will look at all of the means by which commerce is being conducted in America today so that we will receive from this moratorium and study a thoughtful set of policies that will not have the effect of eroding concepts of fairness in the marketplace and capacity of State and local governments to carry out their important responsibilities, particularly the education of our children. So, Mr. President, those remarks are intended to de-escalate the emotion of this issue, elevate the importance of this to our Nation's future, particularly our future ability to prepare generations of Americans through quality education. And I express my appreciation to Senator Wyden, to Senator Enzi, and to others who have been interested in this and have invested a considerable amount of their time, experience, understanding, and intellect in reaching a resolution that will be in America's interest. I believe we are close, and I look forward to reaching our destination. I thank the Chair. Mr. ENZI addressed the Chair.

Mr. GRAHAM

Mr. GRAHAM. Mr. President, I understand that S. 2529 is at the desk, and I ask for its first reading.

Mr. GRAHAM. Mr. President, I now ask for its second reading, and I object on behalf of the Republican leader.

Mr. GRAHAM

Mr. GRAHAM. Mr. President, in light of that comment, I will therefore defer my comments until the appropriate day when this matter will be considered. I would like to alert the Senate that it will be my intention at the appropriate time to provide such a statement and a colloquy among Senators Domenici, Reid, Mack, and myself on the issue of funding for the Kissimmee River Restoration Project as part of the Everglades Restoration Project as it relates to that item within the energy and water appropriations conference committee. Mr. President, in light of the comments of the Chair, the uncertainty as to whether this bill will be before us today, I will conclude my comments with that information to the Senate and look forward to participating when this matter is before the Senate. Mr. HARKIN addressed the Chair.

Mr. GRAHAM

Mr. GRAHAM. Mr. President, fellow Senators. I rise today with my colleague, Senator Mack, to discuss the status of the Kissimmee River Restoration project in the state of Florida. This project is a land acquisition and canal backfilling project. it was authorized by Congress in the Water Resources Development Act of 1992. The state of Florida has spent approximately $95 million in land acquisition and restoration evaluation. The state of Florida has met all of the necessary schedule requirements defined in the Project Cooperation Agreement with the Corps to keep this project on schedule. To date, the state's expenditures far exceed the federal contribution--a situation that occurred by design. The state of Florida has front-loaded the land acquisition costs and the federal government is supposed to back-load construction costs.

Mr. GRAHAM. Today, I ask the Chair and Ranking Member of the Senate Energy and Water Appropriations Committee, Senators Domenici and Reid, of your intentions for the future of the Kissimmee project. Senator Mack and I remain committed to forward progress on the Kissimmee River restoration. We would like to work with the committee to identify potential reprogramming opportunities within the Army Corps budget that might allow forward progress on this project which is so critical to Everglades restoration. We would also like to work with the committee during the fiscal year 2000 appropriations process to ensure that the Kissimmee River restoration is funded at appropriate levels.

Mr. GRAHAM

Mr. GRAHAM. Mr. President, I appreciate those kinds words from my good friend from Oregon. I share the hope that we can arrive at a reasoned resolution of this matter. I will briefly state why I think this is such an important piece of legislation. First is fundamental fairness. We have a situation now in which remote commerce--that is, commerce that is not conducted through the traditional retail sales outlet--is effectively exempted from State sales taxes. The same sweater that one would buy at the local department store, subject to local and State sales taxes, is exempt from those taxes, for practical purposes, if it is purchased by a remote sale, either the traditional postal sales or by the newer electronic commerce. The U.S. Supreme Court has ruled that that degree of unfairness as to taxability of the form of sales is a decision which has been made by the Congress. It is, as Harvey Cox once observed, not to decide is to decide. Our decision not to authorize the States to impose a tax on the seller using a remote sales method has resulted in the inability of the States to impose that tax. Therefore, as we are looking at the issue of Internet sales, those of us who are concerned about this unfairness in the marketplace where our local merchants are required to collect the sales tax and, therefore, are subject to the competitive disadvantage of their remote sales brethren who are not--that this commission should study that issue. That is one of the concerns that those of us who have been negotiating on this matter want to see achieved. But there is really a larger issue at stake here, Mr. President. Many of our States, including my own, are very heavily dependent upon the sales tax as the means for financing their basic responsibilities, and the most basic responsibility of State government is education. In my State, some 35 to 40 percent of its tax collections, which are predominantly sales tax, are used to finance education. What is happening is that as the new forms of commerce, particularly electronic commerce, become more attractive and more available and more familiar, they are gathering a larger and larger share of all retail sales in the United States. If we adopt the policy that they should not be subject to tax, as we have adopted the policy by inaction that postal long distance sales should not be subject to tax, we are going to substantially erode the ability of State government to carry out its most fundamental responsibility, which is to educate the next generation of Americans. That is the fundamental issue which I think is at stake here. The idea of having a short pause so that we can arrive at a rational way to deal with all of these issues is appealing. I think the idea of this bill, as reported by the Finance Committee, to have a 2-year pause in any discriminatory taxation relative to Internet sales or charges to have access to the Internet, and during that period to have a commission that would look at all of this interrelated set of issues, is a proposition that I can support. I just want to be personally satisfied that, in fact, that is going to be the result and that the result will not be a skewed study that will exclude some of the most important aspects of this and which, by saying that we are going to treat Internet commerce the same way as we do other remote commerce, answers the question before it is asked, because we know how other forms of remote commerce are dealt with; i.e., they are exempt from State sales taxes. If we say the Internet shall be treated in an equivalent manner, we have preordained how it is going to be treated; i.e., exempt from State sales taxes, and we have further preordained that the States' fiscal capacity to carry out their important functions, particularly education, will be eroded. Mr. President, that is why I have had this degree of disagreement with some of my best friends and colleagues in this Chamber, the Senator from Oregon and the Senator from Arizona. I don't believe that we are that far apart in terms of finding the set of words and phrases that will carry out our joint intention, and I hope that between now and Tuesday we can achieve that goal and be able to have a consideration. I recognize that once this bill is up, there will be policy differences among the different parties. The National Governors' Association feels very strongly about this legislation as it impacts the ability of the States to meet their responsibilities, and those views deserve to get a proper airing. I also recognize that the House has already passed a companion bill to this but which is somewhat different from the bill that is before the Senate. So there will be a conference committee. There will be further reforms on this matter. My concerns are fairness in the marketplace and the ability of the States to be able to carry out their responsibilities, especially the responsibility which I think the American people feel is the principal national challenge today, which is to properly educate the next generation of Americans so that they will be able to compete in a world of electronic commerce. Mr. President, I appreciate the opportunity to have made those clarifying remarks and yield the floor. Mr. DORGAN addressed the Chair.

Mr. GRAHAM

Mr. GRAHAM. Mr. President, I object.

Mr. GRAHAM. I object.

Mr. GRAHAM

Mr. GRAHAM. Mr. President, I rise in support of the amendment proposed by Mr. Robb of which I am proud to be a cosponsor. This amendment addresses an issue of great importance to the State of Florida. Specifically, concern has been expressed about the weakening of the ``Perimeter Rule,'' and the availability of nonstop flights between smaller airports and Reagan National Airport. I have been in touch with representatives from Jacksonville, Ft. Meyers, West Palm Beach, and Fort Lauderdale. They are convinced that a substantial portion of the direct flights to National that operate out of these airports would eventually be eliminated because the airlines would choose the higher revenue options. A study done by the Washington Airports Task Force supports this opinion. The study shows that if the perimeter rule was essentially eliminated or weakened by allowing exemptions, economics will drive the airlines to take that airport's capacity away from markets within the perimeter and re-apply it to the higher value markets outside of the perimeter. That means that as many as 25 cities within the perimeter would be vulnerable to loss of some or all of their nonstop service to National. The study also shows that as many as 1.6 million air travelers in 93 congressional districts could be affected. This amendment assures that, for those communities that are served by small and medium hub airports that fall within the perimeter, travel options will not be reduced and consumers will not be subjected to increased travel delays. In addition, this legislation protects the level of service and choices for consumers in the State of Florida and throughout the country. I hope that you can support our efforts to ensure that the aviation service in our States are not threatened.

Mr. GRAHAM

Mr. GRAHAM. In my home State of Florida, I have seen the strain placed on the Judiciary due to the lack of judicial resources needed to fulfill its constitutional obligations. Will the Senator from Utah agree to review the Judicial Conference recommendations and the need for additional judges early next year?

Mr. GRAHAM. I thank Senator Hatch for his support and for his work in this area critical to the State of Florida and the Nation. I also thank the Administrative Office of the U.S. Courts for their assistance during this process. I look forward to working with all my Senate colleagues in considering this important issue in future. Mr. President, in our colloquy, Senator Hatch recognizes, as he has done on many previous occasions, the importance of a strong judiciary in order to meet our Government's responsibility of equal justice to all of its citizens, and indicates that it is his intention that the Judiciary Committee consider this urgent need for additional judicial resources early in the next Congress. So I will desist from offering an amendment at this time on this legislation to that effect, and look forward to working with Senator Hatch and the other members of the Judiciary Committee to see that this important responsibility of the Congress is discharged as quickly as possible. Thank you, Mr. President.

Mr. GRAHAM. As an example--I see we are joined by the Senator from Alabama. The middle district of his State happens to be the seventh busiest district in the country with a workload that is 176 percent of the standard which the Judicial Conference utilizes in assessing whether an additional Federal district judge is appropriate.

Mr. GRAHAM. I yield to the Senator from Alabama.

Mr. GRAHAM. Mr. President, I appreciate the comments of the Senator from Alabama who, from his long experience in a variety of significant legal positions, is very familiar with the basic principle of my remarks, which is the relationship between changing workload and demand on judicial resources. The Judicial Conference has proposed as a method of balancing that workload of judicial resources--a formula. That formula essentially takes the number of cases filed within a particular Federal district, weights those cases based on their complexity, and then divides that number by the number of judges currently assigned to the district. The standard for each Federal district judge is 430 weighted cases per year. When the caseload exceeds 430, that district is entitled to be reviewed for purposes of an additional judge. These judgeships are needed to help the Federal judiciary, a co-equal branch of our Government, to fulfill its constitutional obligations. It should be understood that Congress has not granted the Federal judiciary any additional Article III judges since 1990. During the previous three occasions on which Congress has authorized new Federal judgeships under the standards of the Judicial Conference, the cycle for such authorization has been six years. For instance, in September of 1976, the Judicial Conference recommended 106 permanent and 1 temporary Federal district judge. Congress considered that recommendation and, on October 20, 1978, approved 113 permanent and 4 temporary judges. That was done under a Senate which was in Democratic control. Mr. President, 6 years later, in September of 1982, the Judicial Conference recommended 43 permanent, 8 temporary, and 2 conversions from temporary to permanent. On July 10, 1984, a Republican Senate authorized 53 permanent, 8 temporary, and 2 temporary to permanent conversions. In 1990, June, the Judicial Conference recommended 47 permanent, 29 temporary, and various conversions. Then on December 1, 1990, a Democratic Senate approved 61 permanent and 13 temporary and various conversions. The point of this is that on a bipartisan basis, whether it was a Republican Senate or a Democratic Senate, every 6 years since 1978, the Congress has responded to the Judicial Conference's recommendation. It is also significant that in each one of those cases, the Congress actually approved more judges than the Judicial Conference had recommended. However, the last recommendation that was made was in March of 1997, following recommendations that were unheeded in September of 1992 and in September of 1994. There were recommendations made in March of 1996 to convert a temporary judge to a permanent judge and to convert a temporary extended to a permanent status. But there have been no new judgeships created since December 1, 1990. So we are now 2 years past the point which has been the standard for the creation of new Federal judgeships as recommended by the Judicial Conference. Mr. President, I submit that it is high time for us to respond to the need for more U.S. district court judges in accordance with the Judicial Conference's recommendation. Today, many of our district court judges are strained beyond capacity in trying to meet the increasing caseloads which they face. For example, in 1997, the Federal judiciary saw increases in both criminal and civil cases. The number of cases filed in the district courts increased by 24 percent. The most significant increases occurred in drug and immigration cases, particularly, as this chart will indicate, in many of our border States which are the front lines for drug and immigration litigation. This growth in Federal caseloads has been coupled with a growing trend by the Congress to federalize an increasing number of laws that have traditionally been considered State responsibilities. These new laws have opened our courts to more cases without the requisite judges to meet the demand. For that reason, it is essential that we take this opportunity to eliminate the disparity between resources and workload in the Federal judiciary by an expansion in the number of judges at the earliest possible time. I do not submit my word as being final in this matter. Let me quote the December of 1997 statement by the Chief Justice of the United States Supreme Court and the Chair of the Judicial Conference, The honorable William Rehnquist. This is what the Chief Justice had to say about the current status of our Federal judiciary: Fiscal year 1997 saw courts of appeals and bankruptcy filings at the highest rates in history. District courts also were very busy. In addition to a small increase in civil filings, there was a five percent increase in criminal cases in 1997, producing the largest federal criminal caseload in sixty years. The Chief Justice went on to say: Many factors have produced this upward spiral, including laws enacted by Congress that expand federal jurisdiction over crimes involving drugs and firearms, Supreme Court decisions, large class-action litigation, and changes in executive prosecution policies. I think our Chief Justice's statement is a strong message to the Congress, Mr. President. If I can illustrate what is happening on a national basis by reference to what is happening in my home State of Florida, I have seen the strain placed on the judiciary due to lack of adequate judicial resources needed to fulfill its constitutional obligations. Two of Florida's three districts are feeling the crushing pressure of this strain. These two districts have one of the highest caseloads per judge in the Nation. Under the Judicial Conference recommendation, Florida should receive six additional judgeships that include two additional judges in the southern district of Florida, three permanent judges in the middle district of Florida, and one temporary position in the middle district. In the southern district of Florida, the court's weighted filings stand at 590 per judgeship. This is in contrast to the average used by the Judicial Conference of 430. In the middle district, the story is even worse. This court's weighted filing is 809 filings per judgeship, which is 88 percent above the acceptable levels the Judicial Conference has established, and is the third highest number in the Nation. Mr. President, if I can make reference to this chart which indicates that as recently as 1990, the number of weighted cases in the middle district of Florida were 509 as against a national average of 448. At that time, the middle district was overburdened but not in a crisis situation. By 1993, the number had increased to 729, while the national average had dropped to 417. It is significant that there were additional judges added as a result of that December 1990 act of Congress, but it took a full 3 years before the effect of those additional judges had the consequence of reducing the average in the middle district of Florida to 575. No new judges have been added since that period, and currently, at the time of the preparation of this chart, the number was 812 weighted cases per judge in the middle district. I have heard that this figure may have now grown to 855. As a result of this, a significant case backlog has developed. Currently, the middle district has 1,200 criminal cases pending and over 6,000 cases pending on the civil side. In response to this growing backlog of civil cases, Florida's middle district chief judge, Elizabeth Kovachevich, was forced this summer to declare a state of emergency. She closed the Federal courthouses in Jacksonville and Orlando and reassigned these district judges to work with the Tampa district judges in an aggressive targeting and disposing of the oldest pending civil cases. While such innovative measures may be effective in the short term, Congress will need to find the long- term solution of providing adequate judicial resources. This increase in caseload is not only a problem for the Florida courts, but nationally. This chart, again, illustrates the number of States which the Judicial Conference has found additional judicial resources are required. The southern district of California is 100 percent above acceptable levels of the Judicial Conference; the district of Arizona, 83 percent above acceptable levels. As our friend and colleague from Alabama has already spoken, the middle district of Alabama is 76 percent over acceptable levels. The western district of North Carolina, 70 percent over acceptable levels. The caseload in all of these districts, and all the other districts the Judicial Conference has recommended for additional judgeships, only stand to get worse until Congress acts and acts with a sense of urgency. The U.S. Federal district courts are the first line of defense for most of our citizens involved in the Federal judicial system. Most Federal cases are disposed of at the district court level. But by not acting soon, we make it harder for thousands of crime victims and civil litigants in our district courts to receive the justice which they deserve. Mr. President, as I have indicated, I am prepared to offer my amendment to the bankruptcy bill to authorize additional Federal judgeships. Before proceeding, however, I would like to inquire as to the plans for consideration of this issue by the Judiciary Committee next year. I wonder if my distinguished colleague from the State of Utah, chairman of the Senate Committee on the Judiciary, which has oversight on these matters, could engage me in a discussion regarding this matter.

Mr. GRAHAM. Mr. President, today I rise to discuss the issue of the congressional response, or in this case, the lack of response to the need for additional Federal district court judges. We are facing an increasing disparity between the judicial resources available at many of our Federal district courts and the workload imposed upon those judges. The question might be asked, ``Why are you offering this amendment to a bankruptcy reform bill?'' It is interesting to note that the underlying legislation would create 18 new Federal bankruptcy judgeships. The basis of those 18 new Federal bankruptcy judgeships is that this legislation is created in response to additional workloads requiring that additional number of judges in order to discharge their responsibilities. I suggest that, similarly, we should apply the same rationale to our Federal district court judges, and that is--that as their workload increases, either because of demographic or economic or social circumstances, or because we add to their workload by expanding their jurisdiction, it is our commensurate responsibility to increase the number of Federal district judge positions. These judge positions are responsible for handling some of the most complex civil and criminal cases in our judiciary. In recognition of that, in March of 1997, the Judicial Conference of the United States, chaired by the Chief Justice of the U.S. Supreme Court, recommended the creation of 24 additional permanent and 12 additional temporary Federal district court positions. The Judicial Conference also recommended the establishment of 12 additional judges to the circuit courts of appeals. However, my remarks this afternoon are confined to the needs that exist with the U.S. district court judges.

Mr. GRAHAM. Mr. President, before proceeding with my remarks, I ask unanimous consent that Ms. Allison Morgan, of my staff, be granted floor privileges during the remaining consideration of the bankruptcy reform bill.

Mr. GRAHAM. Mr. President, I thank the Senator for his time. I ask the chairman, is it his assessment that a number of Federal district court jurisdictions face a growing disparity between resources and workload?

Mr. GRAHAM. I will yield to my friend and colleague from Nevada.

Mr. GRAHAM. Absolutely, I say to my friend. I am not proposing that this Congress insert its greater wisdom for that of the Judicial Conference. I am proposing that we accede to the wisdom of the Judicial Conference and where it, for instance, has recommended two additional permanent Federal judgeships in Nevada, that the Congress should sanction them. The reason for the recommendation of two additional judges in Nevada is that, of the 93 districts, including those in the 50 States plus the District of Columbia and Puerto Rico, of that number, the Nevada district ranks eighth in terms of caseload. Its caseload of 736 cases per judge is 171 percent of the stated standard that is used by the Judicial Conference to indicate that new judges are needed.

Mr. GRAHAM. I appreciate those very generous comments of the Senator. As my colleague knows, his State is not alone. This map indicates in blue those States that have been determined by the Judicial Conference, chaired by our chief justice, to require one or more additional Federal judges in order to keep pace with that particular judicial district's workload. The States of Alabama, California, Florida, New Mexico, North Carolina, Texas, Arizona, Colorado, Nevada, New York, Oregon and Virginia would all receive permanent additional judges under the Judicial Conference's report.

Mr. GRAHAM

Mr. GRAHAM. Mr. President, I rise today, along with Senator Grassley, to introduce legislation designed to protect our nation's families hard-earned savings and ensure quality long-term care. Our nation has achieved great strides in the 20th century in delivering quality health care and improving the standards of living of its citizens. Just last year Congress added preventive benefits to the Medicare program, thereby ensuring that Americans will have longer, more productive lives. In fact, thanks to these developments life expectancy has increased from 47 years in 1900 to 68 years in 1950, and has steadily increased to 76 years in 1991. These tremendous advances in medicine have also produced challenges because as more and more people live longer, chances increase that they will experience chronic illnesses and disability. A three-year stay in a nursing home can cost upwards of $125,000. As a result, nearly half of all nursing home residents who enter as privately-paying patients exhaust their personal savings and lose health insurance coverage during their stay. Medicaid becomes many retirees' last refuge of financial support. Another challenge facing America in the future will be the aging of the ``baby boomers.'' Unfortunately, many ``baby boomers'' are not planning for the future because they are preoccupied with more immediate concerns. This portion of our population represents more than half of all workers and are the parents of 75% of the nation's children under age 18. Child care, housing expenses and saving for their children's college education tend to dominate their budgets. Many Americans mistakenly believe that Medicare will pay for their long-term care needs. ``Baby boomers'' need to understand the limitations of government programs with regard to long-term care. In reality, this program primarily focuses on hospital stays and physician visits. Without adequate private insurance a significant number of retirees are likely to deplete their assets in order to receive essential long-term care. Insurance products are available to ensure that an individual's long- term care needs are met. However, current tax law establishes several obstacles to purchasing long-term care insurance. First, most Americans purchase health insurance through their employer. Over sixty-five percent of 235 million individuals, under age 65, purchase their health insurance through their employer or union. However, tax law prohibits an employer from offering employer subsidized long-term care insurance products through its employee benefits plans. Since the enactment of the Kennedy-Kassebaum legislation of 1996, purchasers of qualified long-term care insurance policies are permitted to deduct the premiums as part of their medical expenses. However, for taxpayers other than the self-employed, the tax code restricts the medical expense deduction to the portion of expenses exceeding 7.5 percent of their income--a threshold that bars the deduction for 95 percent of non-self employed people. Kennedy-Kassebaum also precluded employees from purchasing long term care insurance on a pre-tax basis through their employer. Specifically, the legislation prohibited the inclusion of long-term care insurance in employer-sponsored cafeteria plans and flexible spending accounts. Only if the employer actually pays for the insurance can the employee obtain the coverage on a tax-free basis, but few employers currently are willing to pay for the coverage. The result is that only a small percentage of purchasers of long-term care insurance can obtain the insurance on a pre-tax basis. Second, long-term care insurance paid directly by the taxpayer is only deductible if the individual both itemizes his or her deductions and already has deductible medical expenses in excess of 7.5 percent of their adjusted gross income. Suppose Mr. and Ms. Jones earn $40,000 per year and want to purchase long-term care insurance. Under current law, health and medical expenses are not deductible unless they exceed 7.5 percent of $40,000, which is $3,000. Suppose the premiums for long-term care insurance totaled $1,000. The Joneses would get no tax benefit from the deduction of the premiums unless they already had $2,000 in other qualified medical expenses, and would not get the full benefit of the deduction unless they had $3,000 in other qualified expenses. Even if they meet this threshold, the Joneses still will not benefit from the current deduction unless their total itemized deductions-- health and non-health--exceed the standard deduction, currently $6,900 for a married couple. It becomes clear that the current deduction for log-term care insurance premiums is not providing a very strong incentive to prepare for one's health retirement. A recent survey shows that premium deductibility was cited most frequently as the action that would make non-buyers more interested in long-term care insurance. Looking into the future, there are two key goals for retirement security: (1) saving enough money for retirement, and (2) protecting against life's uncertainties, including long-term care costs. An unanticipated nursing home stay can deplete hard-earned savings and threaten a family's financial future. This situation could be especially difficult for the surviving spouse of someone who has had a long-term care stay and depleted all of their retirement savings. The widow or widower can have many years left to live and no remaining retirement assets. A recent study by the American Council for Life Insurance indicates that long-term care insurance has the potential to significantly reduce future out-of-pocket and Medicaid expenditures for long-term care. If individuals are covered by long-term care insurance, they are less likely to become Medicaid beneficiaries, thus preserving the individual's savings and decreasing government spending. This would also reinforce Medicaid's intent of serving as a safety net for those who are most needy. With the provisions in this legislation, Americans can be more assured of a financially secure retirement.

Mr. GRAHAM

Mr. GRAHAM. I ask unanimous consent that Delia Lasanta, Luis Rivera, and Danielle Quintana of my staff and Susan Nisar of Senator D'Amato's staff be accorded floor privileges for the remainder of today's session.

Mr. GRAHAM. Mr. President, I rise to speak on this sense-of-the- Senate resolution with mixed feelings. I would have much preferred to be speaking tonight in behalf of legislation that would have provided for the first time in the 100-year relationship between the United States and Puerto Rico for a congressionally sanctioned plebiscite giving to the people of Puerto Rico the sense of confidence from respect that their voice would be heard as to their desires for their political future. Our colleagues in the House of Representatives passed such a plebiscite bill. Unfortunately, after months of hearings, we will not have the opportunity to present from the Energy and Natural Resources Committee to the full Senate such legislation. I commend Senator Murkowski who made a valiant effort to do so, including developing legislation which I think could have been the basis of a consensus on this matter and would have resulted in a favorable vote in the full Senate and the nucleus of a compromise with the House of Representatives. But the world goes on. The Governor of Puerto Rico has, with the concurrence of the Puerto Rican Congress, called for a referendum on the political future of Puerto Rico to be held on December 13. It is important that, as a minimal statement of our commitment to the principle of self-determination, we adopt this sense-of-the-Senate resolution and express our position in favor of that plebiscite and indicate that we will take its results with appropriate seriousness. We recognize, and the sense-of-the-Senate resolution proclaims, that the ultimate decision as to the political future of Puerto Rico will be made by this Congress, but by giving the degree of recognition to the Puerto Rican-called plebiscite on December 13 that this sense-of-the- Senate resolution will do; it will give additional standing, additional confidence, to the people of Puerto Rico that their vote on that day will have an important impact here as we decide what next steps to take relative to the political future of Puerto Rico. Mr. President, it is clear that we cannot continue with the status quo. A decision is going to have to be made, and I believe made soon, as to what the permanent political status of Puerto Rico will be. We have had this expedience throughout America's history. After the first 13 colonies, there was the Northwest Ordinance which laid out the basic principle by which future States would be carved out of the large territories of America and joined to the Original States. And that principle included the fact that those new States would join with equal dignity, with equal political rights and responsibilities to the Thirteen Original States. These have been basic tenets of our democracy which now we are called upon to make available to the people of Puerto Rico. My colleague, Senator Torricelli, in comments last week made the statement which I think summarizes the essence of the debate that we are having this evening, and that is, that Puerto Rico represents the unfinished business of American democracy. And it cannot be ignored-- unfinished business. We need to set about our task of completing that. And that task begins by a respectful listening to the desires of the almost 4 million U.S. citizens who live on the island of Puerto Rico. I remind my colleagues that we are not talking about 4 million people who are citizens of a foreign land. Every one of those 4 million people in Puerto Rico is a citizen of the United States of America. These are fellow citizens who have never been afforded the opportunity for a clear congressionally sanctioned expression of their opinion as to what their political future should be. The nearly 4 million U.S. citizens who reside in Puerto Rico are entitled to that opportunity. And this combination of a Puerto Rican congressionally called plebiscite with this degree of sanction by the U.S. Congress is as close as we can reach to that objective in 1998. The sense of the Senate is the very least that we can do to honor the request of our fellow U.S. citizens in Puerto Rico and send them a clear message that we are listening to their desires. The sense of the Senate, in conjunction with the House-passed bill, takes an important step in the right direction. I thank all of my colleagues who have cosponsored this resolution. I thank all of those who have been so active in the effort to secure a congressionally sanctioned plebiscite in Puerto Rico. I say to our fellow citizens in Puerto Rico, we admire your contribution for a century to the development of our land. We admire your patriotism in time of war and your great contributions in time of peace. We extend to you this statement of our respect. We urge your full participation in the plebiscite on December 13. We will be anxious to receive your statement of your desires for your political destiny. And then I hope that my colleagues here in this Chamber and our companion Chamber will hear with dignity what you have said and will move towards, with your direction, providing a permanent political status for the U.S. citizens on the island of Puerto Rico. Thank you, Mr. President. Mr. CRAIG addressed the Chair.