Bob Graham

Mr. GRAHAM

Mr. GRAHAM. Madam President, before I offer my amendment, I would like to make a few comments relative to this legislation. When I approach a piece of legislation, I like to do so by asking some basic questions, the first of which is: What is the problem? What is it that we do not like about the status quo that has caused us to propose some alteration of the status quo? In this case, that diagnosis has been very consistent, clear, and trumpeting, and it is that we have too many frivolous lawsuits that relate to securities fraud. I cite as my evidence of that an ad which appeared on page A7 of today's Washington Post, under the headlines, ``Who Profits? `A Coterie of Lawyers'.'' This ad was in support of S. 240, and it was placed by ``America Needs More Investors, Not More Lawsuits,'' under the sponsorship of American Business Conference and American Electronics Association. What did the proponents of this legislation say was the reason that we have S. 240 before us this evening? Quoting from the ad: Specialized securities lawyers win big bucks by filing meritless lawsuits against many of America's most promising companies. The securities lawyers profit handsomely, but Americans with money in stocks, pensions and mutual funds are the losers in the deal. This is what editorial writers across the Nation are saying about securities lawsuit abuse: And then the ad quotes a number of newspapers which have taken a position in support of this legislation. It happens that the first of those newspapers is from my State, the Tampa Tribune, June 25, 1995: The situation now is that all investors are paying the costs of settling lawsuits that should never have been filed. . . . [T]he time has come to pull the legal leeches off the backs of corporations that have done no wrong. That is from the Tampa Tribune. The next is from the Rocky Mountain News: . . . the nogoodniks suffer at the same rate as the straight-shooters. Meanwhile, who profits? A coterie of lawyers with stock charts and fill-in-the-blanks fraud complaints. That is the January 18, 1995, Rocky Mountain News. The Chicago Tribune of March 29 of this year: . . . groundless lawsuits by shareholders alleging fraud . . . are often merely a way of extorting settlements from corporations whose stock prices have dropped. Madam President, I ask unanimous consent the totality of the ad from today's Washington Post be printed in the Record immediately following my remarks.

Mr. GRAHAM

Mr. GRAHAM. I am not impugning anyone's integrity. I am suggesting that I believe that where the United States sends organizations to a foreign country to serve as objective election observers, that both in terms of their objectivity as election observers and in the spirit that partisan politics end at the Nation's boundaries, that it would be appropriate to defer observations on the election until after the election has taken place. There is a suspicion raised that the purpose of issuing a report on an election 24 hours before it commences is to either influence the election in that country or to influence domestic politics within the United States. I do not think that the process of American political party involvement is advanced by issuing a report of 300 pages on the morning before the election. That is my judgment. I would not recommend that that be done. Others may have different assessments as to the propriety of doing so, and I would not state that my values on this are biblical or absolute, but they are my values. Mr. President, after having gotten off the plane and responding to that series of reporters' questions, we then went to a series of sessions in which we were briefed as to what we might expect on election day and some of the preparation for this election. Let me say, this election is one that originally was supposed to have taken place in February or March of this year, coincident with the completion of the term of all of the members of the lower house of the Haitian Parliament and approximately half of the members of the Haitian Senate. Because of a variety of difficulties in getting the election organized, it was postponed several times and finally took place last Sunday. There will be a runoff election towards the end of July in those races where there was not a majority of the vote secured by any candidate. I think it is important--and I say this not in an attempt to create an unduly positive sense of the atmosphere, environment, but the reality of conducting an election in Haiti. First, you are dealing with a nation that has a very high proportion of its population that is illiterate. Because of that, the ballots that were printed were some of the more complex ballots that I have ever seen. They were multicolored, in order to depict the parties by being able to fully illustrate the party symbols. If it was a rooster, it was a red rooster, with all of the coloration of the rooster. They also had pictures of all of the candidates for the Senate. And in the first voting precinct that I visited in Cite Soleil, one of the large slum areas in Port-au-Prince, there were 29 candidates for the Senate from that particular district, two of whom would be elected. There were 29 pictures of each of those candidates for the Senate. These are logistically difficult steps to take in order to assure that people, many of whom cannot read and write, would be able to cast an informed ballot. We are also dealing with a country which has had only two elections within a whole generation. People do not have much experience--those people who are running the election, those people who are participating in the election. Basic electoral infrastructure is largely missing. Highways are extremely substandard. Telephone and other means of communication are often nonexistent. So those are some of the practical circumstances under which an election was held. Many of the shortcomings which were cited by the Senator from Arizona and the Senator from Georgia were the result of an attempt to increase the democracy of the elections. They may have been attempts which exceeded the capability of those responsible for administering the election. As an example, a decision was made that no precinct would have more than 400 registered voters. The theory was that they did not want to overburden the people who were at the precinct and had the responsibility for managing by having an excessive number of voters at each precinct. The number 400 was selected as a manageable number. The problem with that was that they ended up with over 12,000 precincts in order to have everybody in a precinct with no precinct more than 400. Even more than that, because of the attempt to allow as many people a chance to register as possible, registration did not close until a few days before last Sunday's election. So you had many people who registered late, who were assigned to one of these precincts with no more than 400 people, where they did not have the time or the logistical capability to get the ballots printed out to those precincts that were created in order to accommodate the late registrants. Probably, in retrospect--and maybe this will be a lesson to be applied at the runoff election next month and at the Presidential election at the end of the year--they will close the registration books earlier to assure that there is an adequate amount of time to process all of the registered people and get the materials to those precincts. That is an example of the kind of circumstance which started from a good motive, to get as many people registered and participate as possible, which ended causing the kinds of problems that have been cited. I talked to IRI--International Republican Institute--people who were actually out in the field in the precincts and small towns. I talked to OAS representatives in Port-au-Prince, and to others who were observing the election. I asked, ``Is there any evidence that these problems were intended to benefit a party or a set of candidates?'' The answer was, from all sources, ``no.'' The problems, the shortfalls, were as a result of incompetence, maybe an overreaching in terms of the desire to extend the election to all of the people, and to the kind of basic circumstances that are the atmosphere, the environment for any election in a country like Haiti. But there was no evidence that those were intended to serve partisan political advantage. As some have said, we are going to have an early opportunity to see whether some of the lessons learned last Sunday will be applied, because there are going to be a second round of elections in just a matter of 4 weeks. It will be the opportunity for those responsible for the electoral process to [[Page S 9148]] incorporate some of those lessons that have been learned, in seeing that the next round of elections are more orderly. Let me just recite some of the vignettes that stick in my mind of this election. In 1987, there were elections scheduled in Haiti, and as people lined up at 6 o'clock in the morning to vote, the Tontons Macoutes came by with machine guns and slaughtered people in the voting lines. You would think that kind of circumstance that occurred less than a decade ago would create a sense of anxiety and apprehension for people to go out and vote on a Sunday morning in 1995. That was not the case. People were, in fact, joyful in their attitudes. They were enthusiastic about the opportunity to vote. At 6 o'clock in the morning in Cite Soleil--the same place people were being shot down 8 years ago--40 people were standing in line waiting to be able to be the first to vote at that particular precinct. It was an exciting exhilarating experience to see people who wanted so much to participate in democracy. I was particularly impressed with the number of young people. I just read an article about the low participation in American elections by our youngest voters. In Haiti, the youngest voters seem to be the most participating. I made a point, through a translator, of asking a number of these young people why they were doing this. Why was this 18-year- old out on a Sunday morning standing in line to vote? The answer was, ``This is my country, this is my future. It is important to me and my country that democracy work.'' That is exactly the kind of spirit that will drive this country into a better future, the kind of spirit that will begin to eradicate those circumstances that have made holding an election in June 1995 so difficult. So, Mr. President, as I said, I will be submitting a fuller report at a later time, but I wanted to put in context what is happening in this country. I do not intend to be naive or Pollyannaish about the difficulties, including the difficulties of this election. But I believe that we, as Americans, can take pride in what we have accomplished, taking a country which a year ago was under one of the most brutal dictatorships in modern history in the Western Hemisphere, where bodies where showing up every morning butchered as a result of the previous night's brutality by agents of a military dictatorship; and now we have people standing upright, prideful of their country, optimistic of their personal future, desirous of being a part of the future of their nation and seeing democracy as the means by which that future would be achieved. I think we should take some pride in that and that we will be able to look back, I hope, at this experience last Sunday as an important step in what will be a long path toward the emergence of Haiti as a fully committed, operative democracy with an economy that provides opportunity and a future for its people and a government which respects the rights and dignity of each individual citizen of Haiti. (Ms. SNOWE assumed the chair.)

Mr. GRAHAM. It seems to me that it would have--and this is just my assessment, this is my editorial judgment--that it would have been more appropriate to have made such an assessment after the election had taken place as opposed to the morning prior to the election taking place. And it would have been more appropriate to have deferred to what has been the tradition of American politics, which is that partisan politics end at the Nation's boundaries. The reality is----

Mr. GRAHAM. Because the document was approximately 300 pages long, assessing an election that was 24 hours yet before it was to commence.

Mr. GRAHAM. You do not have the document in your hand.

Mr. GRAHAM

Mr. GRAHAM. Mr. President, It is my distinct honor to introduce, with my colleagues, Senators Robb, Warner, kassebaum, Heflin, Inouye, and Shelby, the George Washington Commemorative Coin Act of 1995. On December 14, 1799, the United States lost its most honored patriot, a living embodiment of the ideals of the American Revolution. Unlike his contemporaries, many Americans today do not understand President Washington's importance, and while his reputation as America's greatest hero has remained for the most part intact, it seems that each generation knows less about George Washington than the previous one. The George Washington Commemorative Coin Act of 1995 will focus public attention on the significance of our first President and the legacy he left behind. This legislation would authorize the Secretary of the Treasury to mint 100,000 gold coins in 1999, commemorating the 200th anniversary of Washington's death. The sale of these coins will cover costs that the Federal Government will incur in the minting of the coin and will provide a $35 surcharge which will be transferred to Mount Vernon. The George Washington Commemorative Coin Act was recommended by the Citizens Commemorative Advisory Committee in its initial report to Congress last November, and was drafted with the assistance of the U.S. Mint. Mount Vernon has the distinction of being the beloved home of our first President as well as our Nation's oldest and foremost historic preservation project. The proceeds from the sale of the coin will be added to Mount Vernon's endowment for the preservation of George Washington's home and the continuation of Mount Vernon's efforts to educate the American public about his life and accomplishments. Mr. President, I urge my colleagues to join me in supporting the George Washington Commemorative Coin Act of 1995, thus ensuring that future generations have a full understanding of the importance of our Nation's first President. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. GRAHAM

Mr. GRAHAM. Mr. President, I would like to add my voice of commendation to the chairman of the committee and the ranking member for the manner in which they have presented this bill and given us an opportunity to understand its contents and debate its principal provisions. It had been my full expectation that I would support this legislation. I was well aware of the legislation that had been introduced last year by the then chairman, the Senator from South Carolina. I was publicly, positively supportive of that legislation. I, frankly, therefore, state with regret that I will not be able to support the legislation that is before us in the form this afternoon. The debate we are having now on an amendment relative to a provision of the legislation having to do with the relationship between the providers of cable television product and the purchasers of that product is, to me, illustrative of a concern, a process that seems to have been too much operative in the development of this legislation and in its consideration. That is a process which essentially says that the Congress, as the elected representatives of the people, serve the role of ratifiers of private agreements developed among the parties who will be affected by this legislation. Reference was made earlier to the model of President Truman and a railroad strike that occurred after World War II. He initially had proposed a congressionally mandated solution. Then the parties decided that maybe they could go back to the bargaining table and arrive at a resolution. I think that is an appropriate manner for the resolution of a labor-management dispute. But we are not here talking about a labor- management or other commercial controversy. We are talking about one of the most fundamental aspects of a democratic society, and that is control of ideas and their dissemination. That is a role in which any democratic government has a key responsibility. It has been a fundamental part of this Nation since the adoption of the first amendment to the Constitution, which guarantees freedom of press and freedom of speech. So we here are not talking as ratifiers of some private agreement as to how ideas would be made available to the American people. We are here as the representatives of the American people, to try to structure a process of communications law that will best serve the interests and the values of the American people today and, in a highly dynamic era, into the future. I started my consideration of this legislation from a basic economic premise of support of the marketplace as the best allocator of resources. While Governor of Florida, I actively supported the deregulation of a number [[Page S8451]] of our industries. I supported the delicensure of professions where I felt licensure was not serving an adequate public purpose. Thus, I started with a presumption of support of appropriate opening up to the marketplace as the regulator for access, quality and cost of the communications industry. I, regretfully, find two principal defects in the way in which we have implemented that movement towards the marketplace. First, I do not believe that this legislation adequately creates the free, robust, competitive marketplace to which we can, with confidence turn in lieu of our tradition of regulation as a means of assuring open, quality, affordable communications in this Nation. I would just cite two examples of provisions which I think undercut that confidence that we will have a free market that will be the means by which we will achieve desirable public ends. First, as it relates to cable television, we saw from 1984 until 1992 a period in which the Congress had denied to States and local governments their traditional role of providing some regulation for cable television. What we saw was not only an escalation of cost of cable TV, but in many communities an escalation of arrogance, as the cable TV companies did not provide what consumers considered to be an adequate level of service. In some areas, parts of the city which had the affluent neighborhoods were wired for cable TV, while those areas of the city that did not have adequate income base to meet the economic needs of the cable TV system were denied any service at all. Beginning in 1992 there was a process of partial reregulation. We have seen significant benefits by that. We have seen a reduction in the cost of cable TV for most American families. At the same time we have seen a cable TV industry which is at an all-time high in terms of its economic prosperity. Yet, part of this legislation is going to be to roll back the progress that was made just 3 years ago in terms of providing some control, even though that control would fall away when it was established that there was in fact a competitive marketplace where people had options and choices and could use the marketplace as the means of assuring access, quality, and cost control. That provision is now out of this legislation. I think with it also has flown a significant amount of the rationale of allowing the marketplace to provide the alternative to regulation. In this case we have neither an open marketplace nor do we have any meaningful regulation. I might say that I have had a number of contacts in our office from representatives of the cable TV industry, and they are very candid in their statements. Their statements are that they want to have this period of no regulation while they still are in a monopolistic position--that is, without effective competition within their market area--so that they can build up their cash position to be in a better position to compete with the regional phone companies at such time that the regional phone companies get into the cable TV business. That is a statement that they are not being clandestine or secret about. They are telling us that they are going to use this remaining period of monopoly as a means of raising rates in order to be in a strengthened position when they are in a competitive market. I think we will find it very difficult to explain to our citizens why we tolerated what I think is a basic abuse of the free enterprise system. Second, as an example of where this legislation fails to assure that there will be, in fact, an open, competitive marketplace before we trade in regulation as a means of assuring the public access quality and cost control is the issue of the role of the Department of Justice as it relates to the entry of regional telephone companies into long distance. In the legislation that was before us last year, the Department of Justice continued to have a role in terms of evaluating specific proposals to determine if they met basic standards of antitrust before they could go forward. That provision has now been eliminated. So we are going to have companies going into the long-distance business by meeting a checklist supervised by an agency that has not had the kind of background and tradition of ferreting out anticompetitive schemes as has the Department of Justice. I believe that we are going to see the potential--when a person moves into a new neighborhood and calls the telephone company and asks to have their local service connected, then they are asked what long distance they want, there will be the potential of the local concern to tout, or otherwise steer, the local service customers to that same firm's long-distance service. That would be very much in the economic interest of the local service to do. To provide sanctions and protections against exactly that type of situation, we ought to have the Department of Justice playing a role in making that judgment as to whether there is in fact a free and open market before we trade in our regulation that has provided consumers some protection. So I think, first, this legislation fails to meet the basic premise upon which it is based; that is, that we will have meaningful competition as a substitute for regulation in the communications area. Second, I believe that we cannot use the analogy that I have heard on the floor over the past few days of commercial products as a direct parallel to the service of communications. The reality is that ideas are not like shirts or shoes or hamburgers or other products where there clearly have been benefits by having an unfettered, free market. Thomas Jefferson once observed that, having to make choice between free government and free speech or freedom of the press, he would take free speech and freedom of the press because, if you did not have those fundamentals, you would not have a free government for long. And if you lost the free government but you still had people who could have the freedom to speak and the freedom to communicate ideas, you would build eventually a base for a restoration of free government. This issue is as fundamental as our basic precepts of democracy and what is required for a functioning democracy. I am very concerned about the effect of the concentration of power within this legislation, a concentration of power which I do not believe is necessary in order to accomplish the objectives of a greater role of the marketplace in the allocation of communications technology. Why do we have to lift totally the number of television stations that an individual entity can own in order to get the benefits of technological innovation in telephones or in television or video or other services? I believe that this legislation is being used as a means by which to accomplish other ends, which are to concentrate power in an area that is critical to a democratic society. I have little doubt that, if this legislation is passed in its current form, within a few years from this afternoon we will see a handful of firms control the large majority of television stations in the United States. It frankly frightens me to see that kind of power turned over to a few hands. I do not see what benefit the consumers are going to receive by that. I believe that will be the inevitable result of this legislation. I do not see what purpose in the general thrust of this legislation is advanced by that kind of an open invitation to concentration of power and control over the access to ideas in our democratic society. So I believe that this legislation had a worthy goal to bring modernity, a recognition of the changes in technology, to give us a chance for a greater access to the benefits of a rapidly changing telecommunications industry but that we have fallen short of those goals by failure to assure that there will be a functioning free market before we drop the protections of even minimal regulations such as those that are available today for cable TV customers, and we have allowed the general goal to be held out under which was buried efforts to concentrate economic power which has the potential to damage our democratic society. So it is, Mr. President, with a sense of disappointment that I announce my inability to support this legislation in its current form. I hope that by stating the basis of my opposition, that might contribute to further reforms before this legislation is finally adopted, finally resubmitted to us out of a conference committee, so that we will have legislation that can draw the kind of broader support for change, I believe, as fundamental--I would say as Thank you, Mr. President.

Mr. GRAHAM

Mr. GRAHAM. Will the Senator yield?

Mr. GRAHAM. Well, I am not certain if they have issued an order or not. My information is that the legislation goes into effect on January 1, 1996. I am not certain if that is the threshold that brings a State into the category of those which will still be allowed to exercise some degree of State regulation over dialing parity.

Mr. GRAHAM. Thank you.

Mr. GRAHAM. I briefly had an opportunity to look at the amendment. I asked for a copy to review it in more detail. Let me ask a question from the perspective of my State. The recent Florida legislature of this spring passed an interLATA dialing parity bill. That legislation goes into effect on January 1, 1996. What effect will this amendment have on my State's ability to adopt dialing parity?

Mr. GRAHAM

Mr. GRAHAM. Mr. President, I would like to ask if the Senator from South Dakota will yield 1 minute of his time to me.

Mr. GRAHAM. I move to lay that motion on the table. The motion to lay on the table was agreed to. Mr. PRESSLER adressed the Chair.

Mr. GRAHAM. Mr. President, this is not an issue of censorship or excessive Government intrusion. This is essentially an issue of empowerment. We are empowering the parents of children to make an intelligent choice, which the children by their immaturity often are unable to make. Who better to ask in our society to be responsible for what comes into the minds of young people than those who love them the most and have the responsibility for their nurturing and upbringing? I believe that we ought to be encouraging responsibility beyond just the pure dictates of the marketplace from many aspects of our society. I am very pleased that three Federal agencies --the Department of Defense, Amtrak, and the Postal Service--have joined together to establish some standards that will not place Federal advertising into programs that are excessively violent. I hope that would be a standard of social responsibility that other sponsors would look to and that we would allow parents to exercise that responsibility by empowering them to control what their children see.

Mr. GRAHAM. Mr. President, I ask unanimous consent to be listed as a cosponsor of the Conrad-Lieberman amendment.

Mr. GRAHAM

Mr. GRAHAM. Will the Senator from New Mexico yield for a question or yield time to the Senator from Pennsylvania?

Mr. GRAHAM. Will the Senator from Pennsylvania yield for a question?

Mr. GRAHAM. Will the Senator from New Mexico yield for a question?

Mr. GRAHAM. Will the Senator from Pennsylvania yield for a question?

Mr. GRAHAM. Mr. President, I wish to add my voice in support of the amendment to be offered by the Senator from North Dakota. I believe it speaks to two important principles in this debate. One, there has been an assumption that there is a single path to the heaven of a balanced budget; if we did not ride on the chariot that has been provided to us by the Republican leadership that we could not get to that destination. Senator Conrad has clearly outlined that there are alternative means of reaching the goal of a balanced budget. And we stand second to no Member of this body in terms of our commitment and the length of our commitment toward the goal of a balanced budget. Second, I believe we will not reach a balanced budget with the Republican plan, and we will not because it fails to meet a fundamental requirement and that is the requirement of fairness; the requirement that all Americans be asked to contribute to the balancing of the budget in an evenhanded manner. The wheels and wings of this chariot of the Republican leadership for a balanced budget will fall off before we reach the year 2002 because the American people will object. They will reject the proposal to reach that balanced budget which attempts to do so primarily by reducing the already meager capability of the poorest and the oldest of Americans. The most dramatic example of that is in the area of health care. We have beaten upon our respective breasts about how we are holding down entitlements. Here is what we are doing. According to the Congressional Budget Office, overall health care expenditures are projected to increase by over 7 percent per capita between now and the year 2002. This budget would restrain Medicare, the program for our oldest Americans, by less than 6 percent, and 1.5 percent for our poorest Americans. That is unfair. That plan will not reach the year 2002. Senator Conrad's plan will. I urge its adoption.

Mr. GRAHAM

Mr. GRAHAM. Thank you, Mr. President. I quoted a moment ago from the Prospective Payment Review Commission, and I do so again from their March 1959 report, which states: Medicare and the private sector account for approximately equal shares of hospital spending, 40 percent and 39 percent in 1992. Consequently, every percentage point of Medicare cost increase not reimbursed by the Medicare payment increase will, all else equal, translate into a percentage point of additional revenue needed from the private sector. So we are facing the prospect by carving out these two programs-- Medicare and Medicaid--and treating them as if they were in isolation from the rest of the health care system. We are about to construct a system in which there will be significant cost shifting to the private sector resulting in increased costs for private employers, private individuals, for the providers of health care services because they will be underfunded. Mr. President, I believe in the importance of reaching the goal of a balanced Federal budget, and I believe that the date of 2002, while difficult, is not an unreasonable standard. I would go further by saying that we should have as our goal reaching, as soon after the year 2002 as possible--and I would suggest 2005 or 2006 --a balanced Federal budget which does not depend upon the masking of the Social Security surplus in order to reach a balanced budget. But we must do so in a pattern which will be politically and publicly supportable and sustainable over the next 10 years that will be required in order to reach a balanced Federal budget without relying on Social Security. It is my considered judgment that the impact that this approach on Medicare and Medicaid, as has been suggested, will have on the beneficiaries, particularly the old and the young, on providers, on States, and on the private sector, will be so severe that it will not be sustainable and that we will face the prospect of losing this opportunity to achieve that goal of a balanced Federal budget. So I urge the adoption of the amendment which is before the Senate at the present time, which I think brings reasonableness to this process. And I urge the Senate's serious consideration of a comprehensive amendment which will be offered later this week which will achieve the goals of a balanced Federal budget without relying on these savage cuts in Medicare and Medicaid. Thank you Mr. President. Mr. BENNETT addressed the Chair.

Mr. GRAHAM. I know the Senator just yielded the floor. Would he retake the floor for the purpose of a question?

Mr. GRAHAM. I would like the Senator from Utah to take the floor for the purposes of a question.

Mr. GRAHAM. I thank the Chair. I appreciate the generosity of my colleague from Nebraska, the ranking member of the Budget Committee. According to the Prospective Payment Review Commission, a commission established by Congress to consistently analyze Medicare programs, the commission states and I quote: The ability to use cost shifting to fill the revenue gap where Medicare cost increases exceed payment increases varies across hospitals. Facilities that treat a large share of Medicare, Medicaid and the uninsured patients have a lesser ability to cost shift to the private sector. In view of growing price competition in the marketplace, these facilities will face a greater risk of declining margins, which eventually could threaten their financial viability and their ability to care for Medicare beneficiaries. Mr. President, it is not surprising in my State, which has the largest proportion of persons over the age of 65 in the country, that there are some 87 hospitals in our State where the Medicare patient days exceed 60 percent of total patient days, which is to say that in States like mine and particularly in rural areas such as those represented by the Senator from Nebraska, the risk of a serious collapse of the health care system, not just for Medicaid and Medicare recipients but for the total population, is a very real one, a collapse because those facilities are so dependent upon the Medicare and Medicaid patient that, if the Federal Government does not provide adequate resources with which to at least pay the costs of provision of direct services, those institutions will face the prospect of either a sharp decline in the quality of service for their Medicare beneficiaries or closure. (Mr. KYL assumed the chair.)

Mr. GRAHAM. Another area at risk is State government. We are proposing to take the Medicaid Program, the program that delivers services for indigent Americans, take the current formula of distribution of funds, convert that into 50 block grants--51 block grants, actually, since the District of Columbia will also participate--and direct the money to those 51 political entities. There is a suggestion of an annual cost-of-living increase but no increase based on demographic changes. What are the consequences of that? According to the CBO baseline study, currently the Medicaid Program is providing a 7 percent increase per capita for Medicaid beneficiaries. That, I might say, compares to a 7.2 percent increase in spending per capita in the private health care system. Medicaid today is slightly below, on a per capita basis, the rate of increase of the private sector, in spite of the fact that Medicaid is treating some of the most vulnerable of our population, including children at risk and the elderly at risk. Under the proposal that we are debating, the increase per capita will not be 7 percent, Mr. President, but it will be 1.4 percent as against a projected continued 7.2 percent in the private sector. That is the consequence of a system which purports to create greater flexibility to the States by giving them only a constrained 5 percent increase with no recognition of the tremendous demographic shifts in States States such as mine which have a fast-growing population, particularly a fast-growing population of older Americans. This is a prescription for disaster for the beneficiaries affected and for the State governments which will be asked to pick up a bigger and bigger share of paying these costs. Another area which will be adversely affected will be children. It is projected that 5 to 7 million children currently lack insurance coverage and unless States can find a way to make up that difference, there will be either a denial of health insurance coverage for those young Americans or another major cost shift, an unfunded mandate directed at the States to pick up a cost which in the past has been a shared responsibility through Medicaid of the States and the National Government.