Bob Graham

Mr. GRAHAM

Mr. GRAHAM. Mr. President, today, on the Friday before Christmas, the Senate will vote on dramatic, sweeping changes in our welfare system. Unfortunately, in a pre-holiday perversion of the legislative process, the U. S. Senate will vote on this major conference report without the opportunity for thoughtful review. As of last evening, Members of the Senate did not even have printed copies of the legislation. So, for starters, we yearn for more information about exactly what is contained in this major piece of legislation, touted as a centerpiece of the majority's legislative package for 1995. But, as we prepare to vote under these challenging circumstances, I want to state clearly my objections, based on what I do know about this ill-advised so-called reform. Some have made the curious claim that this welfare reform conference report is a marked improvement from that which came before the Senate before the Thanksgiving recess. However, it is clear to me that the product that has come from the conference committee is a step backwards, and therefore, I will oppose the legislation as reported from conference. Much of what I will say today, I relayed earlier in my statement on the reconciliation conference report. Further, I make this statement knowing that the President has made clear his opposition to this legislation, and has issued a statement announcing his intention to veto the measure in its present form. I support welfare reform. I want to see Congress pass a welfare reform measure, and I want the President to sign welfare reform legislation into law. My support for sweeping change in our Nation's welfare system is a matter of record. As recently as September 19, 1995, I joined 86 of my colleagues in supporting the Work Opportunity Act of 1995. I voted in support of this bill, even though I had reservations, to keep the welfare reform effort alive in this Congress. Unfortunately, the conference agreement is worse than the Senate version of the bill we considered 3 months ago. My consideration of the conference report focuses on three concerns. First, will it work? Welfare reform, when it is executed well, works. Florida is proud of two successful welfare pilot projects, the largest in America in instituting a ``time limited benefit.'' Florida, in fact, has been one of the pioneers in the ``two-years-and-you-are-out'' approach. I visited Pensacola to observe one of Florida's pilot programs. Earlier this year, President Clinton met with some of the participants, and he touted the program. These pilots are succeeding because there is a front-end investment in the lives of those affected by the program change. Whether it is day care, job training, temporary transportation assistance, or health care, the welfare recipient is given a hand up instead of a hand out. One of the lessons learned from these pilot projects is that transitional support is needed to move people from welfare to work. My concern is that the legislation before us would jeopardize these successful experimental efforts, and would fail to provide adequate transitional support to meet the goals of the legislation. Second, is this conference report fair to States? The formula to allocate funds to the States continues welfare as we knew it. It treats poor children differently, depending upon which State they reside in. The conference formula says that if your State spent a lot in the old days, and thus built incentives to keep people on welfare, you will be given a leg up on every other State under welfare block grants in the future. The formula, titled against growth States, is flawed if not rigged. High-growth States like Florida would be set up to fail. Third, how would the reform proposal treat legal immigrants and what effect would the immigrant provisions have on States with large immigrant populations? The city of Miami had more legal immigrants admitted last year than 20 States combined. Thus, the prohibitions and timetable on certain benefits would shift to Miami costs that once were shared by the Federal Government. The State of Florida does not set America's foreign policy, nor its immigration policy. The State of Florida did not negotiate with Cuba to accept 20,000 legal immigrants per year. But the State is now being told the following: we are going to stick you with hundreds of millions of dollars in costs for legal and illegal immigration, even though you have no control over these foreign policy decisions that affect immigration. Today, I join the President in his commitment to pass welfare legislation. We should be honest with the American people and not call something reform which is in reality is an abdication of our responsibility for providing a sensible framework for moving people from welfare to work. It is my hope that when the President vetoes the welfare conference report and the question of welfare reform is reopened, that the concerns I have outlined today will be addressed.

Mr. GRAHAM

Mr. GRAHAM. I thank my colleague, Senator Lautenberg. Mr. President, I recently received a letter from Catherine and Crosby Dawkins of Jacksonville, FL. The letter read in part: We cannot see any compelling reason for risking the lives of United States servicemen in a centuries old dispute, even though we grieve for the plight of the women and children. If European countries believe the conflict will spread, they should take action. Mr. President, like many of us, I have received hundreds, possibly thousands of communiques similar to this--deep felt concerns about the risk of American soldiers in Bosnia. These thoughtful letters deserve a response. I take this opportunity to address not only my colleagues in the Senate but also my fellow citizens of Florida who have been so generous and so thoughtful in their letters. Mr. President, this raises an issue of the United States military troops in Bosnia, a fundamental question of what are the options of the United States in this post-cold-war era? For half a century, the United States knew with clarity and with national unity what its objectives were. Its objectives were to suppress the totalitarianism of Nazism. The goal was to restrain the imperial impulses of the Soviet Union. Now the United States is charting a new course of action. We have essentially limited options. One of those options, Mr. President, in the post-cold-war era is to stand on the sideline, to essentially be an observer of the world, as we were for much of our Nation's history. The second option is to be the world's defender, to be prepared to intervene in every conflict. The third option is to carefully assess our interest and, when a situation begs our involvement, to work within our capabilities to build international coalitions to respond to the conflict. I strongly feel that that third option is the option which is most appropriate and most applicable to the situation that we face tonight in Bosnia. In assessing the question as to whether our interests in Bosnia are sufficient to beg our involvement, I suggest that our interests do require our involvement. This is not a complete list, but I believe a compelling list of those reasons. The United States has a deep interest in human rights. One of the things that distinguishes our country from those nations which preceded it is that we believe that the purpose of government is to protect and advance the rights of individuals. We found that not only to be a guiding principle in our domestic policy but also in our foreign policy. One of the great initial disputes in this Nation was over the question of whether the United States should become involved in the French Revolution. Many said that the United States should stand apart, that we were too small to be effective, and too distant to be effective. Thomas Jefferson said we meant those words in the Declaration of Independence not just to stand for Americans, or for English colonialists, but they were universal principles of human rights, and that we had not only been given by God certain inalienable rights but also by God, responsibilities to defend those rights wherever they were in jeopardy. That principle of America's special role in the world that from the very beginning of our Nation has so shaped our culture, is at risk tonight. We also have some more immediate interests. We have an interest in preserving the international coalition which we know as NATO, a coalition which has served us well in terms of deterring the Soviet Union and which, in all likelihood, will serve us well in the unknown, uncharted future into which we move in the post-cold-war era. If we were to retreat from our commitments to NATO on this, the eve of the signing of the peace agreements in Paris, I think that institution would be forever shattered. We also have the opportunity by acting tonight to avoid the potential of this horrendous strife, which has taken a quarter of a million lives, rendered 3 million people as refugees, from spreading--spreading first throughout the former Yugoslavia and then throughout the Balkans and then, as we have seen twice in this century, throughout Europe. We have a deep stake in avoiding having to do what this country has done twice in this century, and that is send American men and women, not as peacekeepers, but as combatants in a war in Europe. Finally, I think we have a strong interest in demonstrating to the people of the world that our concern for human rights is not limited to people who look like us, attend the same religious institutions as we do, have our same cultural background. There is today an emerging fundamentalism within the Islamic religion. That fundamentalism is receiving support and reassurance from what they see Western Europeans have done, including the United States of America, in Bosnia today. I believe it is important that we, by our actions now, indicate that we are prepared to stand for the cause of human rights, and protect them wherever our interests indicate that it is appropriate to do so; that we, by so doing, will send a signal that we are prepared to support the responsible elements of the Islamic religion and Islamic nations. Mr. President, I conclude by citing what we heard just a few hours ago in the House Chamber, the statement made by the Prime Minister of Israel, Shimon Peres. Mr. President, less than 24 hours ago, Shimon Peres addressed the Congress and the American people on the need for American leadership in the 21st century. He said: Even in this very day, as Bosnia reels in agony, you offered a compass and a lamp to a confused situation like in the Middle East. Nobody else was able or was ready to do it. . . America, in my judgment, cannot escape what history has laid on your shoulders . . . You cannot escape that which America alone can do. America alone can keep the world free and assist nations to assume the responsibility for their own fate. Mr. President, that is what is at stake in the decision that we will make this evening.

Mr. GRAHAM

Mr. GRAHAM. Mr. President, I would like to take this opportunity to speak on the conference agreement regarding the structure of and funding for the Community Relations Service. The appropriations level for the Conflict Resolution Program of the Community Relations Service [CRS] of the U.S. Department of Justice in this bill--$5.3 million--would have a catastrophic impact on the agency's conflict resolution mandate. CRS is vital to this Nation's ability to continue to make progress in improving race relations. The important work of CRS is essential to preventing and resolving the day-to-day racial conflicts in the communities we represent. Without an effective CRS, racial tensions and conflicts will disrupt the economy and tear at the social fabric of the hometowns across Florida and elsewhere. Over the past 3 years CRS has shifted resources from headquarters administration to field conciliation, leaving CRS with no buffer of administrative staff. Due to a series of budget reductions over the years, the CRS conflict resolution budget is almost all salaries and expenses at this point. Because this program does not operate large scale grant, contract, training, or other operations that could offset the impact on personnel, this funding reduction will lead to the necessity to lay off almost 65 percent of the conflict resolution staff. At this funding level, CRS would only be able to staff its 15 offices around the country with 2 or 3 conciliators in each office. Florida's regional office is in Atlanta and covers 7 other states in the region. With these drastic cuts, these people cannot begin to provide the racial conflict resolution services that Florida needs. And even with this modest staffing level of 2 to 3 conciliators in most offices, the ability of the agency to sustain independent administrative and management operations would be seriously undermined. We must recognize what this loss of service will mean to the people of this country. Without the full funding of $10.6 million CRS, the country will be without a vital service that no one other than CRS can provide. Further, I am opposed to the transfer of the Cuban-Haitian Resettlement Program from the Community Relations Service to the Immigration and Naturalization Service. INS is, in large part, an enforcement agency whose mission is not that of administering resettlement activities such as the Cuban-Haitian program. I am also concerned that the Cuban-Haitian program would be lost in such a large organization as INS which has scores of priorities. At CRS, the Cuban-Haitian program is one of two missions that complement each other successfully: conflict resolution and Cuban/ Haitian resettlement. The Cuban-Haitian Program has been successfully administered by CRS for 15 years. CRS has successfully implemented the outplacement operations of Cubans and Haitians from Guantanamo and the resettlement programs for unaccompanied alien minors. The resettlement program has been indispensable to our Defense Department's Atlantic Command in managing the Cuban-Haitian programs at Guantanamo and in Panama. CRS has helped to resettle over 17,000 migrants as part of DoD's Operation Sea Signal. The conflict resolution program works hand in hand with communities throughout the country to gain receptivity to the influx of refugees and entrants under the Cuban/Haitian program and has smoothed the way for an orderly resettlement process. CRS resettlement efforts directly support local communities by reducing and preventing strain on local public services and preventing potential community tensions. Both missions of CRS, Cuban-Haitian resettlement and the Conflict Resolution Program should remain as a separate division within the Department of Justice. Should the Senate have another opportunity to consider the Commerce, Justice bill, I would encourage my colleagues to support the CRS language in the Senate-passed bill.

Mr. GRAHAM

Mr. GRAHAM. Mr. President, it is ironic that we are having this debate today. This debate coincides with the last month of the existence of the Resolution Trust Corporation. The Resolution Trust Corporation was a congressionally created corporation to deal with the second largest financial crisis in the history of the United States of America, second only to the Great Depression. That crisis, of course, was the savings and loan debacle. That debacle was not an accident. It had very specific origins. It had identifiable causes. And, sad to say, Mr. President, many of those origins, many of those causes emanated from this Chamber. It was this Chamber which in early 1980 passed ill-considered legislation that, among other things, dramatically increased the level of Federal guarantee of savings and loans accounts, without making appropriate adjustments to the premiums we paid to support those guarantees, and made other changes which facilitated the ability of those who wished to gain by plundering these institutions of trust the opportunity to do so. As a consequence of those actions, which started here, we had one of the great financial crises and one of the most expensive financial crises in our Nation's history. As I say, Mr. President, it is ironic that we recognize this month, December 1995, as the last month of the Resolution Trust Corporation's efforts to try to extricate ourselves from that crisis, and in this month we now take up legislation which I believe has the potential of laying the groundwork for another great financial crisis in America. Another irony, Mr. President, is that there has been no time in our Nation's history when our stockmarkets were more in public favor. Recently, for the [[Page S 17989]] first time in their history, the Dow Jones passed the 5000 mark and continues to grow beyond that. The reason for the strength of our stock market is fundamentally the confidence that the investing American has in our stockmarkets. That is an asset of our free enterprise system, Mr. President, that we need to guard zealously. Mr. President, I am afraid that the action that we are being asked to take today moves away from that close guarding of the confidence of the American investor in the American stock market. Let me just mention a few areas of particular concern to me. I am concerned about the provision that will make it easier, will almost provide immunization for oral and written statements of expectation as to corporate activity. The whole purpose of this legislation--and I think a legitimate purpose, Mr. President--was to eliminate frivolous lawsuits, to eliminate a practice in which firms were subjected to litigation, not with the expectation of a jury or other judicial verdict indicating that the company had behaved in an inappropriate way, but in order to be able to negotiate a settlement based on that settlement being less expensive than the cost of defense and the adverse effect which the litigation would have on the image of the corporation. But this legislation goes far beyond what is required in order to sort out the frivolous from the serious. And one of the best examples of that is what has happened in this so-called safe harbor provision. When this left the Senate it contained some protections. It contained a protection that stated that statements which were knowingly made with the expectation, purpose, and actual intent of misleading investors would not secure the benefits of the safe harbor. As hard as it is to believe, Mr. President, that provision has been eliminated from the legislation as it now comes back from the conference committee. Mr. President, there are other examples of where the conference committee has taken action that has made this bill less protective of investors without adding to the benefit of sorting out the frivolous from the serious litigation. I am concerned, Mr. President, about the fact that we have continued to have the unreasonably short statute of limitations of 3 years, a period of time in which for many of these real cases of fraud and abuse they would not even be known, much less be known in time to do the necessary investigation prior to the bringing of litigation. Mr. President, we have made it extremely difficult, after an award is granted, after it has been determined that, in fact, there was fraudulent activity and a judgment is entered on behalf of the plaintiff, we made it very difficult for the plaintiff to be able to recover, particularly, as is frequently the case, when one or more of the major parties turns out to be insolvent. So, Mr. President, in the spirit of attempting to achieve one very focused objective, we have engaged in broad-scale amputation of the ability of private litigants to maintain the integrity of our securities law. And we do this, Mr. President, at the same time we are about to take up a conference report which will freeze the budget of the Securities and Exchange Commission. So both of the arms which are used in order to contain fraudulent activities in the securities sector, private litigation and the Securities Exchange Commission, are about to be severely restrained. So, Mr. President, for those reasons, I urge my colleagues to defeat this conference report in hopes that we will then focus on legislation that will accomplish this narrow objective.

Mr. GRAHAM. Would you like----

Mr. GRAHAM. Mr. President, I ask unanimous consent to have printed in the Record statements made by one of my constituents, Mr. F.K. Glasbrenner of Longwood, FL, a resolution by the Florida Association of Counties, and an editorial from the Miami Herald, all of which bemoan the inadequacies of this legislation to achieve the purpose stated.

Mr. GRAHAM. Thank you. Mr. BRYAN addressed the Chair.

Mr. GRAHAM

Mr. GRAHAM. I would ask the Senator to refer to 318, paragraph B. Thank you, Madam President.

Mr. GRAHAM. Please refer to the bottom line, page 17, No. 2. Does this provision relate exclusively to Medicaid, or does it apply to other forms of health care?

Mr. GRAHAM. Does this provision relate exclusively to the Federal, or does it apply to State antitrust law?

Mr. GRAHAM. Madam President, I would like to ask if the Senator from Arizona would please respond to a question. I hope they could be answered ``yes'' or ``no''.

Mr. GRAHAM. Thank you, Madam President. As I read the front cover of the document which has just been presented to us, Balanced Budget Act of 1995, Part 1 of 2--Part 2 apparently has not yet arrived--the question arises, why will I vote against this proposition? It is not, Madam President, because I am opposed to a balanced budget. I am, in fact, strongly supportive of a balanced budget, and every occasion I have had an opportunity to advance that cause I have done so. I frankly commend the Republicans for having presented us an alternative which purports to achieve that goal of balanced budget because it will provide a significant point of debate and dialog as to how to achieve that goal. However, Madam President, I do not feel that this legislation presented tonight will accomplish the objective of balanced budget for two primary reasons. One, just as in foreign policy, I do not believe this Nation can achieve an important long-term domestic policy goal unless that goal is broadly shared, unless there is bipartisan support. The fact is, there is no bipartisan support for this provision. There has been no attempt to secure bipartisan support. No Democrats were sanctioned into the conferences which led to the production of this legislation. No Democratic ideas were solicited for inclusion. Second, this will not achieve the goal of a balanced budget over the next 7 years because it is fundamentally unfair and will soon be seen to be unfair by the American people and rejected. I am going to concentrate my comments on fairness on only one section of this multihundred-page bill, Part 1 of 2, goes to 966 pages. That is the sections that relate to Medicaid. First, the statement is made that this legislation reduces Medicaid spending by $163 billion over the next 7 years. Madam President, that is not true. In fact, this legislation reduces Medicaid spending by almost $400 billion over the next 7 years. What is the difference? The difference is because this legislation removes virtually all of the current requirements on States to make a significant contribution towards the health of their poor, their disabled and their frail elderly. Second, this allows for future manipulation of the Medicaid Program. We worked hard in this Senate to eliminate the abuses that had become so rampant in the disproportionate share hospital program. This legislation allows all those abuses to return. This legislation, in fact, rewards those very States that have been the principal abusers of the disproportionate share program. Madam President, for those and many other reasons that we will find in these 966 pages, this proposal fails to meet the duel test of bipartisanship and fairness necessary for its sustained achievement of the goal of the balanced budget. Madam President, we are here debating a bill that nobody has received. Even for those who may have a copy, it would be impossible for them to have possibly read the legislation from cover to cover. And yet, this is one of the most significant bills to come before the Congress. This is a bill that makes up to $1 trillion in reductions to our Nation's budget--including $256 billion in Medicare reductions and $163.5 billion in Medicaid reductions--over the next 7 years. I rise today to speak to the best of my knowledge about some of the provisions in this bill. Of course, the ``best of my knowledge'' is limited by the amount of information we have managed to obtain, some of which our office has had to get from lobbyists who always seem to get such materials before the rest of the Congress. [[Page S 17318]] Due to time limitations, I will focus on the massive reductions or $420 billion in Federal cuts that will be made in this bill to our Nation's Medicare and Medicaid programs which are integral parts of our Nation's health infrastructure. medicaid cuts even higher due to state-federal combination The first point that has been neglected about this budget deal are that the real Medicaid reductions are more in the neighborhood of $400 billion over the next 7 years. Part of this figure comes from the $163.5 billion in Federal reductions to Medicaid. However, an often overlooked but just as significant provision is the language in the bill that guts the matching rate requirements of States. This reduction will have the effect of reducing another $200-plus billion in State funding over the next 7 years to the Medicaid program. How does this work? At present, States such as New York have to match a Federal Medicaid dollar with a State Medicaid dollar. No longer. According to the revised State matching requirements, New York would be allowed to match a Federal Medicaid dollar with just 67 cents--a 33- percent reduction. The effect of the change to the matching rates across the Nation will be a $200-plus billion reduction in State funding to Medicaid. Moreover, the conference agreement eliminates two provisions in the Senate bill that were agreed to unanimously in the Senate Finance Committee. These amendments would have continued to prohibit the gaming of the Medicaid System through the use of provider taxes and prohibited States from supplanting current State health expenditures with Medicaid dollars. The conference committee agreement encourages States to go back to the days of fictitious accounting and gaming that in the past effectively raided the Medicaid Program. The effect of this policy under a block grant is not to raid the Federal treasury but to make the State matching rate illusory at best. In fact, the conference report effectively makes Medicaid a general revenue sharing program. It is no wonder that some of our Nation's Governors are clamoring and cheerleading the destruction of the Medicaid Program. I have a warning for them, or more accurately, a proverb for them. The proverb goes as follows: ``Fish see the worm not the hook.'' The Governors who are anxious to gobble up these block grants and illusory matching rates will feel took in the future when their economies stumble, when an epidemic strikes, when a nature disaster hits, when inflation creeps up again, or when their populations grow. Nation's Low-Income Elderly At Risk Another often misunderstood provision of this legislation is the impact that it will have on our Nation's low-income elderly. Let me emphasize that the Republican bill repeals the current law guarantee of payment of the Medicare Part B premiums on behalf of elderly Americans with income below the poverty level--$622 per month for an individual. Although the Speaker of the House claims the bill ``provides that senior citizens at the poverty level and below have all of their Part B premium paid for by the taxpayers--100 percent,'' the fact is that, no poor senior citizen has a guarantee to any coverage or assistance whatsoever. States would be asked to set aside a certain percentage of their program spending each year to pay for Medicare premiums, deductibles, and coinsurance on behalf of low-income elderly. However, this set- aside will be sufficient to cover only about 44 percent of the costs of Part B premiums for those now eligible by the year 2002. Nursing Home--Liens of Family Homes Another provision that was unanimously agreed to in the Senate Finance Committee was a provision that protected spouses having liens placed against their home or family farm. Incredibly, this provision was also dropped by the conference committee. As a result, the conference agreement repeals current law protections against the use of liens and expressly authorizes States to impose liens on the home or family farm of a beneficiary, even when the spouse is still living in it. unfairness of medicaid cuts and formula Finally, I want to raise some policy questions that the bill creates. First what is the policy justification for $163.5 billion in Medicaid reductions? This provides for just a 1.9 percent increase in Medicaid spending per person over the seven year period and is far less than the 7.1 percent the Congressional Budget Office projects private sector spending to increase. Second, what is the policy justification for arriving at the Medicaid formula in the bill? Can anybody possibly explain how the fiscal year 1996 State-by-State allocations are arrived at? Dollar figures are stated in law. How were those numbers arrived at? Clearly, one impact is to reward those States that have extremely high share of disproportionate share in the past. Some of those States abused the Medicaid Program and will be rewarded for that abuse in the new Medicaid formula. At one point, the Senate Finance Committee staff had proposed that States with excessive disproportionate share payments would lose those excess payments. The Senate Finance Committee voted to cap those payments at 12 percent. That provision was deleted, and instead, States are now rewarded for their excesses and--in some cases--their abuse. These States will have those funds permanently cemented in their base allocation and allowed to increase them well into the future. What is the policy rationale for this? Whatever the rationale, the effect is to apportion funding in a manner that is fundamentally unfair to those States that did not scam the Medicaid disproportionate share program, those States that are growing and those States that have been efficient in the past. In Florida's case, we have a larger population than either Pennsylvania and Ohio and an elderly population that is 40.7 percent greater than Pennsylvania and 79.2 percent greater than Ohio, yet will receive less money over the next 7 years from Medicaid than either of those two States. Florida has 5.4 percent of the Nation's population, 8 percent of the Nation's elderly population but will receive just 4.2 percent of the overall Federal Medicaid allocation between fiscal year 1996 and 2002. If Florida were to just receive its population share of money, it would receive $42.7 billion instead of the $33.0 billion allowed in this bill, a $9.7 billion disparity or loss to Florida over the 7-year period. other problems For all these reasons and for numerous others--such as the conference committee's level of Medicare cuts on our Nation's elderly and the danger and exposure that Medicare beneficiaries will be subjected to due to watered down emergency care managed care standards, I cannot and will not support this legislation. I would like to turn the Senate's attention from Medicaid and Medicare for a moment to another important issue before the Senate tonight. Madam President, when the Senate votes on the reconciliation bill shortly, there will be one important issue which risks being lost in the enormity of the Medicare cutting, Medicaid gutting, tax cutting, and budget balancing package. That issue is welfare reform. The effrontery of burying such a monumentally important matter in the middle of a massive Medicare, Medicaid, Tax Code, and budget overhaul speaks for itself. The welfare reform component of this reconciliation bill deserves strict scrutiny instead of token consideration. My support for sweeping change in our Nation's welfare system is a matter of record, and as recently as September 19, 1995, I joined with 86 of my colleagues in supporting the Work Opportunity Act of 1995, Senate bill 1120. I voted in support of this bill, even though I had serious reservations, in order to keep the welfare reform effort in this Congress alive. Unfortunately, the conference agreement moves welfare reform in the opposite direction. The pending legislation is worse than what we had to consider 2 months ago. Madam President, I support welfare reform. I want to see Congress pass a welfare reform measure, and I want to [[Page S 17319]] see the President sign welfare reform legislation. But this bill deserves neither. Welfare reform, when it is done well, works and works well. Florida boasts of two very successful welfare pilot projects, the largest in America in instituting a ``time limited benefit.'' Florida, in fact, has been one of the pioneers in the ``two years and you are out'' approach that is mirrored in the pending legislation. But, Madam President, these pilots are succeeding because there is a front-end investment in the lives of those affected by the program change. Whether it is day care, job training, temporary transportation assistance, or health care, the welfare recipient is given a hand up instead of a hand out. I visited the program in Pensacola, FL. Earlier this year President Clinton met some of the participants that I met, and he touted the program. Madam President, the conference agreement before the Senate, as it pertains to welfare reform, is a mixture of good news and bad news. The good news is that the conference agreement no longer treat education as welfare. We have Congressman Clay Shaw and others to thank for that improvement. Thankfully, the welfare reform legislation no longer kicks legal immigrants who pay taxes and are eligible for Federal student loans or grants, out of school. This change assures 21,000 students in universities, colleges, and community colleges in Florida that they can continue to study and train in order to provide for their families and enhance our Nation's productivity. Further, the conference agreement renounces the previous position of the Senate where deeming would occur past the date of citizenship. That provision appeared unconstitutional on its face, and fortunately, it was dropped. But, Madam President, I am sorry to report that there is an overwhelming amount of bad news emerging from the conference on welfare reform. First, the formula to allocate funds to the States continues welfare as we knew it. It treats poor children differently, depending upon which State they live in. The conference formula says that if your State spent a lot in the old days, and thus built incentives to keep people on welfare, you will be given a leg up on every other State under block grants. That is how it is possible, for example, that the State of Michigan would be given $217 million more, each year, than the State of Florida, which has a population that is 4.5 million greater than Michigan's population. The conclusion is simple: the formula adopted by the conferees is flawed, if not rigged. The conferees had an option: adopt a fair share allocation which treats children the same regardless of their ZIP codes. I offered such an amendment 2 months ago. Instead, the conferees chose to reward the big spenders who got us in this mess in the first place. If parents rewarded bad behavior of their children like this, we would be a nation of reform schools. Madam President, another glaring disappointment in the conference agreement before the Senate is the retreat on a commitment to funding child care. The Senate voted for a $3 billion increase over 5 years and now we see that the conference agreement proposes $3 billion over 7 years. That may sound like an innocuous accounting change until you look at the impact on the States. That change means for Florida less child care money next year, I repeat, less money next year, than it had this year. Keep in mind that Florida is expected to more than double in one year its population of welfare recipients in the work force. The conference agreement short-changes Florida $18 million in child care funds from the amount that passed the Senate in September. That is movement backward, not forward. When you take the faulty funding formula for the block grants, and combine them with the paltry child care allocations, you get the growing sense that Florida has been set up to fail. Madam President, it did not have to be this way. If government were run like a business, you would have had by now a debate about a business plan. In effect, you would have identified outcomes to be achieved, and then identified the means necessary to achieve those outcomes. Just in the area of child care alone, in order to meet the job requirements of the conference agreement for the first 5 years after enactment, Florida would need approximately $800 million in child care funding. The conference agreement gives Florida $509 million. That $291 million shortfall means that tens of thousands of children can not get child care, and therefore, their mothers or fathers can't go to work. But the Congress wasn't interested in outcome and resource analysis. The Congress didn't want to do a business plan. The Congress wanted to cut tens of billions of dollars out of welfare and shift those burdens to the States. I will highlight a few more disappointments. The Senate placed $878 million in a growth fund to assist States which experience caseload increases, and thus, cost increases. The conference agreement reduces that about 10 percent. I mentioned earlier that there was good news in the conference agreement as it pertains to legal immigrants and access to Federal assistance to higher educational programs. But even that good news has a new catch. The conferees have set up a new class system now in the Stafford loans program. Now legal immigrant applicants must have a sponsor or other citizen cosign the loans. No debate on this change. No hearings. A brand new provision written in conference. So I am left to believe that the conferees felt that only the better off of the legal immigrant communities are eligible for a Federal loan program, even though they all pay taxes like citizens pay taxes. So much for the American dream. The city of Miami had more legal immigrants admitted last year than 20 States combined did. Thus the prohibitions and timetables on certain benefits will shift to Miami costs that once were shared or born by the Federal Government. The State of Florida does not set immigration policy. The State of Florida did not negotiate a 20,000 legal immigrants per year agreement between Cuba and the United States. But the State of Florida is now being told the following: first, we are going to cheat you on the block grant, and give States like New York more than four times what you get. Second, we are going to cut child care for your State, and leave you $300 million below what you need to achieve the work participation rates that we intend to grade you on. Finally, we are going to stick you with hundreds of millions of dollars in costs for legal and illegal immigration, even though you have no control over those policies. How is that for fairness? How is that for reasonableness? Madam President, I am disappointed with the direction the welfare reform measure went after it left the Senate. It has taken a turn for the worse. For the State of Florida, a State which did not have a high welfare benefit check and thus did not contribute as greatly to the welfare culture as those States who now reap windfalls for having created the problem, the conference agreement is not acceptable. I urge the President to veto this bill and for both sides to begin to work together immediately toward reaching a consensus plan on balancing the Nation's budget. There is another way.

Mr. GRAHAM. Madam President, I object.

Mr. GRAHAM

Mr. GRAHAM. Mr. President, I believe under the previous order, it is now in order to offer a third motion to instruct conferees.

Mr. GRAHAM. Mr. President, has all time expired on the motion to instruct that was offered by the Senator from West Virginia?

Mr. GRAHAM. Mr. President, I control 20 minutes. The Senator from South Carolina controls 20 minutes. I defer to the Senator from South Carolina.

Mr. GRAHAM. Mr. President, could the President inform us as to how much time remains on this motion to instruct?

Mr. GRAHAM. What Mr. Van de Water said is that the policy of the Congressional Budget Office and the Office of Management and Budget is not to score savings when the law would have incorporated those savings in any event. The reason the Congressional Budget Office historically does not score an updated cost-of-living assumption alone, out of the context of all of the other economic factors which influence the ultimate Federal deficit or surplus--the size of the deficit, the size of the surplus-- is that to do so would create a very dangerous temptation. What would that temptation be? The temptation would be for a Member of Congress to look at all the factors such as are listed on this chart that go into arriving at an overall assessment of the Federal Government's fiscal condition. Suppose, for instance, if you focused on the issue of inflation and because of the change in inflation rates between the time that the original budget resolution was passed until the time that the debate was taking place--in this case, on the 27th of October--if the movement of inflation had been such that it had increased revenues or had suppressed outlays, then we might say, let us change the inflation adjustment factor and take the benefit that would give us in terms of additional expenditures because of higher revenues or additional moneys being available because of we have repressed our expenditures. But what if the other had occurred? Suppose, in fact, inflation had increased and therefore had caused us to have to spend more money on things like the national debt and had reduced our revenues because higher inflation had resulted in less economic activity? Which Senator would come forward then to offer an amendment to say, ``Let us come up with some additional spending cuts, let us find a source of taxation in order to counterbalance what has happened in the area of inflation''? The fact is, there would be very, very few who would do so. So, instead, by being able to pick and choose which factors happen to benefit the position that one wished to advocate, you would do exactly as the Senator from South Carolina has suggested we have been doing for the better part of the last two decades, and that is creating the smoke, looking into the fraudulent mirror that gives us the false sense we are making progress in reducing the deficit but actually contributes to higher and higher deficits, higher and higher national debt. So, how does the Congressional Budget Office deal with this issue? The Congressional Budget Office says they will only revise the baseline if they take into account all factors, not just cherry picking those that happen to have a beneficial effect. Let me quote, again, from the letter from Mr. Van de Water. At the request of the budget committees, CBO [the Congressional Budget Office] has from time to time, updated the baseline to reflect recent economic and technical developments. In such circumstances, however, we insist on incorporating all relevant new information, not just selected items such as COLA's [cost-of-living adjustments]. Did the Roth amendment take into account all economic changes and technical developments during the 8 months since the economic baseline had been established? You see all the factors that primarily influenced that economic baseline. Does the amendment take into account the fact that interest rates have actually been higher than assumed in the baseline, which results in higher outlays? No. Does the amendment take into account the fact that the Federal Government be required to make an additional $20 billion in payments resulting from adverse court decisions in the banking area? No. No, the Roth amendment only takes into account a portion of the inflation factor--namely, cost of living. Furthermore, the amendment only takes into account the cost of living as it relates to outlays rather than both outlays and revenues. And, moreover, it relates only to certain outlays, those within the Finance Committee's jurisdiction. Mr. President, this is the most compelling detail in the devil's brew. If we had followed the Congressional Budget Office precedent and taken into account all factors, we would not have had a $13 billion savings to use to finance these new spending items in the Roth amendment. No. In fact, we would not have had any savings at all. The economic reality is that the baseline assumptions were too optimistic. Let me quote again from Mr. Van de Water's memo. In this instance, if we were to include all of the information in our August baseline, plus the actual 1996 cost of living, our estimate of the year 2002 deficit would have been higher, not lower. It would have been a higher deficit, Mr. President, not a lower deficit. An economic update would show a higher deficit, and we count the update as saving money. I call it a raid on the Federal accounts. And since the Roth legislative language calls for the money to come from $12 out of every $13 from the Social Security payments, Mr. Senator from South Carolina, I call it a raid on the Social Security trust fund. Some may argue that this macroanalysis proves too much and that the Roth amendment deals only with Finance Committee programs. Let us look narrowly and see if there has been a raid, looking only at Finance Committee programs. The Roth amendment takes into account only outlays impacted by a lower 2.6 cost of living. The Social Security fund will spend fewer dollars to meet its obligations to the Social Security beneficiaries at a 2.6 cost-of-living adjustment. It would have had a 3.1-percent cost- of-living adjustment. True, but there are other ramifications to that lower cost of living. For example, many workers' salaries are tied to the same consumer price index that is the basis of our cost of living. If those salaries rise by only 2.6 percent rather than 3.1 percent, what happens to the payroll taxes withheld from their checks? They will be lower than the economic baseline projected, and, as a result, less money will flow into the Social Security trust fund. Does the Roth amendment take these lower revenues into account? Mr. President, sadly, no. It only takes credit for lower outlays and does not recognize the effect of lower receipts into the Social Security trust fund. Just what would be the impact of an updated economic assumption on the Social Security trust fund? Outlays are reduced by $18 billion--$12 billion by the COLA reduction and $6 billion from [[Page S 16964]] other changes. But, Mr. President, revenues are down by $62 billion as a result of economic changes such as the lower amount of payroll taxes coming into the Social Security trust fund. Thus, the net effect to the Social Security trust fund of the $18 billion of lower outlays but the $62 billion in lower revenue to the Social Security trust fund is a decrease of $44 billion in the status of the Social Security trust fund over the 7 years from that which had originally been estimated under the budget resolution. So, Mr. President, we are diverting $12 billion from the Social Security trust fund in order to finance additional spending while the trust fund will actually have $44 billion less than originally projected. That, Mr. President, is a raid on the Social Security trust fund. I find it quite ironic that Congress would be so concerned about the Social Security trust fund that we would attach a rider to the debt ceiling extension legislation which would preclude the Secretary of the Treasury from using Social Security and other trust funds as a form of cash management during this period in which we are about to reach our legal spending level. Why would we be so concerned that we would put the ability of the Federal Government to meet its financial obligations at risk but then we would so freely raid the very same trust fund to pay for additional spending, additional spending unrelated to Social Security obligations? We cannot have it both ways. We cannot say, on the one hand, that we want to be the great defenders of the Social Security trust fund, but, on the other hand, raid the Social Security trust fund. We cannot say, on the one hand, that these COLA modifications merely reflect reality and that it would have happened anyway, and then it is not real savings but just funny money and cannot be used to offset real spending. If it is a real cut, on the other hand, then it constitutes a diversion of funds and a raid on the Social Security trust fund. You cannot have it both ways, Mr. President. Either conclusion--either that it is phony money to support real spending or that it is a raid on the Social Security trust fund, real money to support real spending--either one of those conclusions justifies jettisoning the Roth amendment as the basis of paying for an additional $12 billion in new spending unrelated to Social Security obligations. Therefore, I urge my colleagues to adopt the motion offered by the Senator from South Carolina and myself to instruct the conferees not to include the $12 billion in Social Security cuts contained in the Roth Finance Committee amendment. Thank you, Mr. President. I reserve the remainder of my time. Exhibit 1 Memorandum To: Sue Nelson. From: Paul Van de Water, Assistant Director of CBO in the Budget Analysis Division. Subject: Taking account of the actual COLA. The budget resolution baseline assumes a 3.1-percent cost- of-living adjustment for Social Security and other federal programs in January 1996. The actual COLA will be 2.6 percent. Two clear precedents apply in this situation. CBO and OMB do not score savings for legislating a COLA that would happen anyway under current law. This rule was applied to veterans compensation in 1991 and to Food Stamps in 1992. At the request of the Budget Committees, CBO has from time to time updated the baseline to reflect recent economic and technical developments. In such circumstances, however, we insist on incorporating all relevant new information, not just selected items, such as COLAs. In this instance, if we were to include all the information in our August baseline plus the actual 1996 COLA, our estimate of the 2002 deficit using the discretionary spending amounts specified in the budget resolution would be higher, not lower.

Mr. GRAHAM. Mr. President, I wish to commend my colleague from South Carolina, who has been toiling in these vineyards with the goal of achieving a balanced budget for many years and has given us the background, the historical context in which a very serious event occurred on October 27. Let me recall for the Senate what happened that night. You may remember we had been in session for many hours that day. That was the day in which we cast some 40 individual votes. We had been waiting to receive the final amendment that would encapsulate a number of revisions to the Finance Committee's section of the reconciliation bill. After having requested for the better part of 36 hours the legislative language of those revisions and the impact which they would have, finally, at approximately 6:25 in the evening, we received version 1 and, at 9:45, received version 2 of what came to be known as the Roth amendment. So, just prior to the Senate's final vote on the reconciliation legislation, Senator Roth submitted an amendment which adds the following components. It modified certain Medicare provisions, it changed nursing home standards, and, the most significant provision from an economic standpoint, it reallocated the Medicaid funding formula. Those modifications had a total cost of approximately $13 billion. The motion which I have offered goes to the budget offset, which was offered in the amendment of Senator Roth, as the basis of paying for the modifications in his amendment. The amendment of Senator Roth directed that all outlay programs within the jurisdiction of the Finance Committee use a cost-of-living adjustment rate of 2.6 percent rather than the 3.1 percent cost of living, which had been estimated several months earlier in the budget resolution. Let me quote the language of the amendment by Senator Roth as it relates to the methods of paying for the additional spending in his amendment. ``Notwithstanding any other provision of law''--I say to my colleague, Senator Hollings: Notwithstanding any other provision of law, in the case of any program within the jurisdiction of the Committee on Finance of the U.S. Senate which is adjusted for any increase in the Consumer Price Index for all urban wage earners and clerical workers [[Page S 16963]] [CPI-W] for the United States city average for all items, any such adjustment which takes effect during the fiscal year 1996 shall be equal to 2.6 percent. That amendment raised several questions. One of those questions is just exactly what programs is this provision intended to affect. Application of the 2.6 percent rate would impact a number of outlay programs, including railroad retirement benefits and supplemental Social Security income. But, by far, the lion's share of the impact would be on one program. Mr. President, you guessed it, that program is Social Security. Approximately $12 of every $13 affected by this amendment, or $12 billion of the $13 billion in savings, comes from one program: Social Security. Some have stated this is not a raid on the Social Security trust fund; instead, it merely recognizes the economic reality that the cost- of-living adjustment will be 2.6 percent rather than the 3.1 percent upon which the budget was predicated when we passed the original budget resolution last spring. As a result of this lower actual cost of living, the Federal Government will pay out less in numerous outlay programs, including Social Security. At first that seems to be a plausible argument. But like so many things, the devil is in the details. And here is what the devil says. The devil says that there is no real money being saved by legislating at this lower rate. That is why the Congressional Budget Office stated that the Congressional Budget Office and the Office of Management and Budget do not score savings for a cost of living that would have happened anyway under current law. Mr. President, I ask unanimous consent that immediately after my remarks, a memorandum from Mr. Paul Van de Water, Assistant Director of the Congressional Budget Office in the Budget Analysis Division, be printed in the Record.

Mr. GRAHAM. Mr. President, I believe under the previous order I have 20 minutes?

Mr. GRAHAM. Mr. President, will the Senator yield for a question?

Mr. GRAHAM. Mr. President, I suggest the absence of a quorum.

Mr. GRAHAM. We will reserve our time, Mr. President.

Mr. GRAHAM. Mr. President, I just ask this question in closing. Here is what the motion says. Who wishes to disagree with these propositions: That we will honor section 13301 of the Budget Enforcement Act of 1990 which states that thou shalt not commingle the trust fund of Social Security with general Federal spending. Who disagrees with that proposition that we should honor that commitment made in 1990? Who disagrees with the proposition that we should not include in any conference report any language that violates section 13301 of the Budget Enforcement Act? Who disagrees that we should not include any language that violates that principle of sanctity of the Social Security trust fund? [[Page S 16967]] And who disagrees with the proposition, therefore, that we should not include $12 billion in Social Security cuts that were included as an offset for on-budget spending in the Finance Committee amendment? That is what we are being asked to vote on: To honor, to not include and, therefore, to not violate our trust. This is a motion that ought to be adopted unanimously by voice vote. I cannot believe that Members of the Senate are going to vote against a motion that effectively says we will dishonor our commitment to maintain the integrity of the Social Security trust fund, that we will include language that is contrary to the spirit and intent and very language that we committed ourselves to in 1990 and, therefore, that we should consummate that disavowal by raiding the Social Security trust fund of $12 billion to support spending unrelated to Social Security obligations. Those are the questions: To honor, to violate, to include, to maintain our sense of honor and responsibility to the Social Security trust fund. I urge, Mr. President, my colleagues' adoption of this motion to instruct our conferees and that our conferees follow our admonition as they proceed in the conference committee on the reconciliation legislation. Thank you, Mr. President. Exhibit 1 Mr. Graham. Mr. President, I am directing my attention to section 7482 of the legislation, which begins on page 45 and states: ``Cost-of-Living Adjustments During Fiscal Year 1996. ``Notwithstanding any other provision of law, in the case of any program within the jurisdiction of the Committee on Finance of the United States Senate which is adjusted for any increase in the consumer price index for all urban wage earners and clerical workers (CPI-W) for the United States city average of all items, any such adjustment which takes effect during fiscal year 1996 shall be equal to 2.6 percent'' It is to that section, Mr. President, that I direct the point of order. I raise the point of order under section 310(d) of the Congressional Budget Act of 1974 against the pending amendment because it counts $12 billion in cuts to Social Security which is off budget to offset spending in the amendment. The Presiding Officer. Does the Senator from New Mexico wish to be heard on this point of order? Mr. Domenici. I want to say the dollar numbers being referred to are actual. That is all I want to say.

Mr. GRAHAM. Mr. President, to close the motion to instruct, I want to say how much I admire the Senator from Michigan. In the several opportunities I have had to discuss with him issues from foreign policy to issues of our national fiscal future, he always approaches the question with a learned background and with thoughtful analysis. I think that is in the tradition of the U.S. Senate and, frankly, that is what the American people would like to have us do: To have a reasoned dialog. We may disagree, but at least we will be disagreeing on a set of facts that are reasonable and we will be expressing the basis of our disagreement in a manner that the American people can understand and evaluate. I commend him for his contribution to the Senate level of discussion. Mr. President, the debate on the motion to instruct is not the debate on whether you are for or against the balanced budget amendment or whether you are for or against the goal of a balanced budget at an early date. I share those goals. I voted for the balanced budget amendment. I voted for a provision in the balanced budget amendment that would define what constitutes balance as not including the use of the Social Security surpluses to that end, and I have voted for a plan, along with over 75 percent of my Democratic colleagues, that would have achieved that objective and would have done so before the year 2005. What I think is significant about the direction of this motion is that it goes to an unusual use of the Social Security trust fund. It is not like the kind of cash management uses of the trust fund that have been used under both Republican and Democratic Secretaries of Treasury in time of need where, in every instance, the Social Security trust fund has been fully reimbursed after the moment of crisis has passed. It is not like efforts that have resulted in a reduction in the outlays of Social Security where the money stayed in the Social Security trust fund and, therefore, contributed to a larger surplus and greater long- term solvency. What is unusual about this Roth amendment is it first cuts Social Security outlays by $12 billion and then shifts them and uses those outlays to support different spending, spending unrelated to Social Security. I will ask to have printed in the Record the statement of the chairman of the Budget Committee when he was asked if this is what, in fact, is intended, and his response was: ``I want to say that the dollar numbers being referred to''--that is the $12 billion being removed from the Social Security trust fund--``are actual. That is all I want to say.'' That is the quotation from the chairman of the Budget Committee. I ask unanimous consent that that portion of the Congressional Record of October 27 be printed in the Record immediately after my remarks.