Phil Gramm

Mr. GRAMM

Mr. GRAMM. Mr. President, I know it is kind of late tonight and everybody is eager to go home, and I know we are dealing with a farm bill, an agriculture appropriations bill. I also know that this amendment is cloaked in the garb of being a sense-of-the-Senate resolution and sense-of-the-Senate resolutions tend to be viewed as relatively insignificant. I want to argue that this is not insignificant, that this amendment is not based on any scientific study. We should not be making a major energy policy decision in America tonight at 7:30 as we debate the agriculture appropriations bill. I want to argue that we should table this amendment. Let me explain why. First of all, we all have trouble pronouncing it. MTBE is an ether derivative that EPA has certified lowers the amount of pollution generated when an internal combustion engine burns gasoline. This ether derivative makes gasoline burn more thoroughly. As a result, it is the dominant oxygenate used in reformulated gasoline all over America. It has been a major contributor toward improving the environment in those areas of the country where there is both a high concentration of automobiles and people. We have had relatively limited scientific analysis of this problem, other than a clear finding that California's underground storage tanks are leaking gasoline into the ground. If there are holes in these tanks, it seems the obvious solution to the problem is to fix those underground tanks. When gasoline leaches into the ground, the gasoline and all of its components start to leach through the soil. What has been found, and what our dear colleague from California is referring to, is the discovery that this ether derivative, in areas surrounding leaking underground storage tanks, is starting to show up in ground water and in wells. Ultimately, if these leaks are not fixed, all the other components that make up gasoline will be found in ground water. Here are the problems: No. 1, compared to MTBE, ethanol is in very limited supply, and our Nation's capacity to produce more of it is substantially limited from year to year. No. 2, ethanol has several problems that MTBE does not. Let me state two. One, it tends to vaporize at a much lower pressure. We are going to create a problem because ethanol vaporizes more rapidly than MTBE and could in itself create another environmental problem. Two, Distributors have a very difficult time getting it into various parts of the country. It is quite competitive where it is produced, but it is very difficult to transport. If this should be implemented, the result of these two problems would be a spike in gasoline prices. Ethanol is a wonderful derivative, and I am not arguing one against the other. I am trying to explain that if you remove the dominant derivative and attempt to ban it, you force the substitution of another derivative which has a fixed supply from year to year based on agricultural production levels. You are going to produce shortages that will be exacerbated by the fact that ethanol tends to degrade in a pipeline. I urge my colleagues to not get into a long debate on a subject that few Members are qualified to debate. Fortunately, the distinguished chairman of the Environment Committee is here, a man respected by people on both sides of the aisle, who opposes this amendment. I will let him explain why. To sum up, here is the problem. We have leaking underground tanks. We need to fix the leaks in the underground tanks. It is bad to go around pouring gasoline, no matter what additives are in it, into the ground. Rather than California fixing its leaking underground tanks, we are being called on by the Senator from California to take a major step in going on record by encouraging Administrator Browner to ban MTBE, which she has the power to do. This is not a trivial, throw away sense-of-the-Senate resolution. We are, by taking this position, in essence, encouraging the Administrator to take action that would produce gasoline shortages in over half the country, that would spike gasoline prices, that would create a new environmental problem because of vaporizing ethanol. Why are we doing it? Because we have leaking underground tanks. Let's fix the tanks. If the Senate were asking support for programs to do something about the leaking tanks, that would be one thing. But to ban a gasoline additive, which is the dominant additive in producing clean air in America because you have holes in tanks that are not being fixed in California is a policy which I think is totally irresponsible. This is not a decision that should be made by the Senate on a farm bill at 7:30 tonight. I urge my colleagues, when the motion is made to table this amendment, to vote to table it. Not because Members are not concerned about leaking underground tanks and about MTBE in potential underground water or drinking water, because I think we ought to be concerned.

Mr. GRAMM. Let me finish and I am happy to yield. I think we ought to be concerned. But the Committee on Environment and Public Works is holding hearings; they are working with Administrator Browner; they are trying to come up with a comprehensive policy in committee. This is an area that is very complicated. I don't think there is anybody here, without reading it off a piece of paper, who can pronounce the ether derivative that is MTBE, much less understand its chemical makeup and its advantages in clean air and its disadvantages if you spill it in a creek. So I do not doubt the Senator from California is well intended, trying to do something that she thinks sends a good signal. But we are not talking about signals. We are talking about the energy policy of a nation that is dependent on energy. This is not a good policy to decide on the floor when the committee of jurisdiction is working on this problem right now on a bipartisan basis. So I urge my colleagues to not support this amendment, and in tabling it, simply refer it to the committee of jurisdiction. Let's get a comprehensive look at it; let the committee decide how to deal with this problem. Might I say, I am from one of the ten largest corn-growing States in the Union. I hope my colleagues from farm States are not going to jump onto bad science, bad environmental policy, and disastrous economic policy in the name of trying to ban the use of MTBE, which receives no Government subsidy, in favor of ethanol, which is already highly subsidized. I hope we will not get into this deal, ``I am going to support it because I have corn in my State.'' I have corn in my State and I have oil in my State. I am glad the Lord put one there and we brought the other there to grow it. But the point is, this is a serious issue that deserves more attention than it is going to get tonight in a sense-of-the-Senate resolution. I hope my colleagues will vote to table this amendment and give the committee an opportunity to do something about it.

Mr. GRAMM. Mr. President, let me first say I admit I have not read the study, as probably 98 other Members of the Senate tonight have not read it, which is the reason we ought to have the committee of jurisdiction look at it. Second, when we are talking about something leaking into ground water from tanks, my point is that this is a problem with tanks. We do not have this problem in Texas. We have gone to great lengths to try to deal with underground tanks that leak. We have required the tanks to be dug up in every old filling station in the State. I think the Senator has raised a legitimate problem about leaking and underground water sources. But the point is we need to fix the tanks. I know of no study that suggests that fixing tanks does not solve the problem. In any case, I want to conclude so Senator Chafee and others can speak. But I want to remind my colleagues that the EPA has the power to act in this area. I urge my colleagues not to put the Senate on record, on a subject that we have relatively little knowledge about, on a farm bill, when we are talking about a policy that has profound environmental impact, including the potential for more air pollution because of the higher vapor pressure for ethanol as compared to MTBE; second, shortages of gasoline potentially in huge quantities of the country because of, one, eliminating the dominant oxygenate in fuels from consideration; and, second, the problem of transporting the alternative to MTBE; and, finally, the potential spike in gasoline prices that could occur. This is simply a policy we ought to be dealing with in a systematic way. I am delighted the chairman of the committee is dealing with it because it is a serious problem. I yield the floor. Several Senators addressed the Chair.

Mr. GRAMM

Mr. GRAMM. I am happy to yield to the Senator.

Mr. GRAMM. I am happy to yield to the Senator.

Mr. GRAMM. Mr. President, there are some other figures I think we need to look at in deciding what we should be doing. I want to raise these. I know people are going to object to the fact that someone would actually try to raise concerns about the actual numbers we are talking about in American agriculture, when we are engaged in a debate about trying to outbid each other and spending money. This is from the Economic Research Service of the U.S. Department of Agriculture. This is their agricultural outlook, just published in July of this year on page 55. Let me tell my colleagues why this is important, and then I will go through the numbers. Why this is important is, we are basically pointing fingers back and forth saying we are not doing enough for American agriculture and that we ought to spend $10.7 billion or we ought to spend, in the House, $12.9 billion. I will go over a few figures which stand out to me in that somehow what is being shown in the actual numbers about agriculture and what is being debated on the floor of the Senate are two entirely different things. Facts are persistent things. In listening, especially to our colleagues on the Democrat side of the aisle, one would assume that farm assets are falling right through the floor. One would assume we are virtually back in the Depression and the Dust Bowl and that USDA initial estimates for 1999 would be falling dramatically. Anybody who is listening to this debate would believe that is true. Well, it is not true. In fact, in 1998, the preliminary number is that the total value of farm assets was $1,124,700,000,000. The initial estimate by USDA--this is the Clinton administration--is that farm assets at the end of this year will be $1,140,300,000,000. So while we are talking about the world coming to an end in agriculture, we have to junk the farm program and go back to letting Government dictate farm prices and engage in artificial scarcity and pay farmers not to plant and basically turn agriculture into one giant cooperative on the Soviet style plan because of the collapse in American agriculture. The reality is that we are projecting farm assets to rise this year and not fall. In fact, last year was a terrible year in agriculture. We had a huge farm payment at the end of the year as part of our emergency spending. What do you think happened to farm assets last year? They went up, not down. They rose from $1,088,800,000,000 to $1,124,000,000,000. Something about this picture doesn't fit. Let me go on. What do you think is happening to financial assets held by American farmers and ranchers? If you listen to all this doomsday scenario from our Democrat colleagues about how we have to junk the farm program and go back to a Government-run program, you would think farmers and ranchers are having to sell off financial assets, cash in their retirement, withdraw money out of the bank, close down their IRAs to try to stay in agriculture. Facts are persistent things. In fact, we are projecting that financial assets held by American agriculture will actually rise this year from $50 billion to $51 billion. Now, what do you think is happening to farm debt? You listen to all of this doomsday discussion about how we have to junk the farm program and have an American commissar of agriculture who has to go in and say: You cut back production by 20 percent; you plant this crop; you plant that crop; we will guarantee your prices. We will have artificial scarcity, and then we will make all this work through Government edict. What is the justification for all these program proposals? The justification, you would think, would be that farm debt is exploding; right? We are having a crisis? Does anybody listening to this debate believe that farm debt in America is not exploding? You would never believe it wasn't exploding. You would think farmers are going deeper and deeper and deeper into debt. You would be wrong. In fact, the USDA estimate is that farm debt will actually decline in 1999, and it will decline from $170.4 billion to $169.1 billion. What would you think would be happening to real estate debt? In listening to our Democrat colleagues talk about how we have to have the Government take over agriculture and go back to a program where you basically work off Government edicts because of a collapse in agriculture, you would think real estate debt is rising. People are having to borrow money against their land. They are having massive foreclosures. Could anybody listening to this debate not believe that real estate debt was exploding in America? They couldn't. They would know it had to be happening. But facts are persistent things. The fact is that real estate debt is actually declining in America. The projection by USDA is that the amount of real estate debt that farmers and ranchers have will decline from $87.6 billion to $86.7 billion. Could anybody listen to this debate and not believe that non-real estate debt that farmers have is exploding? That is not possible. You listen to this debate, you have to conclude that every farmer in America is going deeper and deeper and deeper into debt. They are borrowing money. They are losing money. There is a catastrophe, a crisis, and we have to have Government take over agriculture. But astounding as it is, when you look at the numbers, non-real estate debt in agriculture is actually projected to decline in 1999 from $82.8 billion to $82.4 billion. Finally, there could be no doubt about it, listening to this debate. Equity in farms and ranches in America has to be plummeting. There is no way that you can have all these catastrophes we have heard about, leading us to the argument that we need to spend in excess of $10 billion right now in agriculture, and we need to junk our whole export production-based farm system to go back to a program that we couldn't make work in a simpler era when the Government basically ran agriculture. No one could doubt, not one person who listened to this debate, if you did a survey, not one person in 1,000 would have any doubt that farm equity, the equity of farmers and ranchers, what they own, has to be declining as a result of this agricultural crisis. But it is not so. In fact, equity, by the U.S. Department of Agriculture, is projected to not only rise but to rise substantially in 1999, to rise from $954.3 billion to $971.2 billion. How can farm equity be rising when we have a crisis of such magnitude that we are debating having the Government take over American agriculture? Well, the reality is, it is rising. Let me mention two other figures. Could anybody listening to this debate believe that the debt-to-equity ratio in American agriculture is actually declining in 1999 or that equity is rising and debt is falling? Could you believe that, listening to this debate? You probably could not, but it is. And in terms of debt-to-assets, it is also declining from a ratio of 15.2 to a ratio of 14.8. Now, the reason I went through all these numbers is, we should not be having this debate right now. This has turned into a political bidding contest where we are literally bidding to see who can spend more money. We need to know what is going to happen in terms of this year's harvest, and we need to know what farm income is when the harvest is in, before we set out a program to spend billions and billions of dollars to, A, be sure we are helping the people who need help and, B, be sure that the program makes sense. There are some things we should be doing. We should be working to open world markets. Part of Freedom to Farm was a commitment to change trade policy. We ought to be debating trade today. We ought to be talking about how we can get the President to go ahead and finish the negotiations with China on WTO accession, so that they would have to lower their trade barriers against American agriculture. We should be debating taxes today. We committed to a program of letting farmers not only income average but to set aside a certain amount of income for a 5-year period, so that when times are good, they can set aside money so they have it when times are bad. We ought to be talking about risk management and what we can do to deal with it. We ought to be talking about regulatory reform, where regulations are having a heavier and heavier burden on American agriculture. But we are not. What we are doing is talking about spending vast sums of money when we have no documentation of the exact magnitude of our problem or the distribution of that problem. Now, I know the vote is going to be on, and I know we are going to have it this afternoon. I know we are going to have an opportunity to spend $10.7 billion to junk the American farm program and go back to supply management. I know we are going to have a vote on spending $6.9 billion to keep the current system and just allocate $6.9 billion to be given away if and when, later on, the administration gets around to allocating it. But surely there must be some question raised when average farm income for the last 5 years has been $46.7 billion. The projection by USDA is that farm income will be $43.8 billion, and the adoption of either one of these amendments will produce farm income far above the average of the last 5 years. Why is that a problem? It is a problem because if I am right that this explosion of technology in agriculture, which is growing twice as fast in terms of technological advances as the whole economy, if this is going to mean that for 20 years we are going to tend to have downward pressure on agriculture prices because of expansion in production and lower cost of production, to be in essence subsidizing and encouraging people to come into agriculture, or stay in it if they are inefficient, we are working counter to what we know has to happen for agricultural prosperity to occur. The reason I went to the trouble to come over here and raise all these unpleasant facts in the midst of a debate about giving money is that there is one other figure that just is extraordinary to me. What would you think is happening to the amount of land being rented by American farmers? Prices are falling. We had prices falling last year, and we had an emergency spending bill. What would you think would be happening to cash rents? Well, everything I know about economics and about agriculture would tell me that, knowing what happened last year with prices declining and knowing the projections for this year, cash rents would have gone down. Everything you know would suggest that. But, in reality, cash rents are up--up--so that farmers are spending more money renting land in 1999 than they did in 1998. What does that suggest? Well, it suggests that what we did in 1998 actually pulled in more production, not less, and that we actually contributed to this problem by what we did in 1998. The world is not going to come to an end if we spend $10.7 billion or $6.9 billion. Every penny of it is going to be added to the deficit. That is money that is not going to go to reduce debt, or fix Medicare, or pay for Social Security. We have all heard and used all those arguments--mostly when it benefited our side of the argument. But please consider what is going to happen if we continue with these programs where the net impact is to bring more resources into an industry that is having a technological explosion, which is expanding supply, where we are producing more pork with fewer pigs, more poultry with fewer chickens--what is going to happen if we continue for 3 or 4 more years the kind of program we had last year, which apparently--and I simply raise the concern because nobody has mentioned it--what is going to happen if we are paying so much money that we are actually encouraging more production rather than compensating people partially for their losses. The adoption of either one of these amendments will mean that farm income next year will be above the average for the last 5 years. Now, I would like farm income to be high. But the point is, I am afraid we are overriding the natural adjustment mechanism whereby, as people can produce more and more product with fewer inputs, what tends to happen is, they put fewer inputs into the industry. If I am right about this technology change, we are, with either one of these dollar figures, planting a seed that is going to destroy American agriculture as we know it because we are going to end up exacerbating oversupply and driving prices further and further down, and then we are going to have no choice except to let an awful lot of people go broke or to have the Government come in and say: OK, you produce at 50 percent of your capacity, and you produce at 50 percent of your capacity. I just wish we were having somebody look at these kinds of problems before we got into this bidding war in the midst of an Agriculture appropriation bill. I wish we could wait until the fall and know what the losses were. None of this money will be available until October 1. Then we can come up with a reasonable program to try to compensate for some of these losses. But to simply be making up numbers in the billions is very dangerous and irresponsible, and we could end up really hurting the most efficient farmers and ranchers. I thank my colleagues for giving me all this time. I yield the floor. Mr. BYRD addressed the Chair.

Mr. GRAMM. I am happy to yield.

Mr. GRAMM. Mr. President, I did not come over this morning to get into a political debate about farm policy. But the issue is so important that I thought there were some things that need to be said that I do not believe have been said. I would like to preface my remarks by saying that, to the best of my knowledge, my State is the biggest beneficiary of American farm programs, not on any kind of per capita basis but because we have a lot of farmers and ranchers. I am very concerned about the drought in some parts of the country, which we have a long tradition of responding to and dealing with. That tradition has been based on documenting the drought, documenting the loss, and then compensating people who lose. It has not been based on anticipating a loss, estimating it, appropriating money on a widely discretionary basis and allowing bureaucrats to give out literally billions of dollars. That has never been the policy in the past. I do not think we ought to undertake it today. So before I get into the text of what I wanted to talk about, let me make it clear there are many areas of the country that are suffering from drought. We have a long tradition, an established program. I have been supportive of that program and I intend to continue to be. What I want to talk about is not the drought. What I want to talk about is what is happening in agriculture and my concern that we are partially misreading what is happening. I want to talk about farm prices, and I want to talk about the two remedies that have been proposed and that are currently before the Senate, and I want to voice my concern about both of them. I do not want to get into a political debate about farm policy, but I want to make the point that I believe we are drifting far afield from any kind of rational farm policy in America in what we are doing. Maybe some would view it as an unkind judgment, but in my opinion we are engaged now in a political bidding contest where we simply are seeing figures made up on both sides of the aisle, I would say, where we are competing to show our compassion and competing to show our compassion with somebody else's money. I would be moved into thinking this was pure compassion if we were debating giving our own money. But since we are debating giving the taxpayers' money, it is hard to be compassionate with somebody else's money. Having said that, I see this farm problem a little bit differently than most of my colleagues. Since I do not think this point has been made in the debate, I want to make it. First of all, it is clear, and I think everybody is in agreement on this, that American agriculture has been affected by the Asian financial crisis and that the demand for American farm products from Asia has fallen off by 40 percent. The demand for farm products is what economists call ``inelastic.'' That is, when the price changes, it doesn't have an immediate, instantaneous or substantial impact on production. So this decline in the demand for products in Asia has had a substantial impact on price. Obviously, we are all hopeful that Asia is going to recover from its financial crisis and that they are going to be back in the market and that this part of the factors that are driving down farm prices will go away over time. That is the basic logic of the proposal that has been offered by Senator Cochran. It basically is that as the Asian financial crisis is solved, as Asians get used to, once again, consuming American farm products--the best rice, the best meat, the best cotton; as they get used to the joys of wearing cotton underwear made of American cotton--they are going to buy a lot more of it and everything is going to come back and prices are going to be good again. To the extent that thesis is correct, the right thing to do is to adopt the Cochran substitute. The Democrat substitute is really based on the logic that there are no markets. Our Democrat colleagues do not largely believe in markets and do not, by and large, believe in the basic principles of economics. They would rather the Government make the price of farm products. So it is not surprising that their substitute has grown from $9.9 billion to $10.7 billion, 50 percent bigger than Senator Cochran, but they would basically begin to take steps to go back to the old supply management program where the Government would be the setter of prices and where we would, in essence, take American agriculture ultimately under this program out of the world market. The problem with that, besides having a substantial impact on the state of the American economy, is that primarily, while there are many farm State Senators, there are relatively few farm district Members of the House. If we go back to supply management, given the apportionment of representation in the House, we will never set prices that will be high enough to produce prosperity in rural America. So I know all of the rhetoric, going back to the 1920s, much of which has very leftist roots, would lead many of our Democrat colleagues to believe if we could get Government to manage agriculture, we could make it great. The problem is--and I say this as a person representing an agricultural State, a State that produces most farm products, the only State in the Union that produces both cane and beet sugar, a State that is in virtually every kind of agriculture that you can name--the plain truth is that agriculture does not have enough political clout, day in and day out, to get the Government to set prices high enough that we will ever have true prosperity in rural America. That is why I am never supporting going back to the Government managing agriculture. The only chance we have to make rural America not just a good place to live--because it is the best place to live. When I ultimately leave Washington--and I hope to be here as long as Strom Thurmond, which would give me another 40 years--I do not ever plan to live in a town that has a stoplight again. I prefer rural America. I think it is the best place to live. I want to make it one of the best places to make a living, which is why I was for Freedom to Farm and why the underlying philosophy of the Cochran program is superior. It does not appeal to people who want Government to manage things, who believe that Government can do it better. But the plain truth is, without being unkind, there is only one place in the world where socialism still has dedicated adherents, and that is on the floor of the Senate and the floor of the House of Representatives. Everywhere else in the world it has been rejected. But here it still has dedicated adherents, people who believe if we just let Government run things-- health care, agriculture, whatever--that it would go better. I do not believe that is true. But I want to go beyond simply pointing out the superiority of the Cochran approach to the Democrat substitute. I want to raise a question about both because there is another force at work that nobody is talking about, and with which we are going to have to come to grips. Frankly, in representing a farm State, it is something about which I worry. It is a blessing that creates a problem. The blessing is that while America is in the midst of a technological explosion, technology in agriculture is growing twice as fast as technology in the economy as a whole. Productivity per farm worker is growing twice as fast as the productivity of the worker in the economy as a whole. So there is an underlying factor which is driving down farm prices which has nothing to do with the Asian financial crisis. That underlying factor is the explosion of farm technology. Farm technology, by driving down the cost of production, is driving down the cost of farm products by increasing supply. Let me give an example of it. We have fewer chickens in America today than we had 10 years ago. Yet we are producing more poultry. We have fewer pigs today and yet we are producing more pork. How is that possible? Because of a technological revolution that is occurring in American agriculture. As I look at agriculture and as I look at the use of sensors, as I look at the use of new technology, nobody can know the future but it seems to me, looking at it--the only way we can see the future is by looking to the past. Looking at the recent past, it seems to me we are probably on the edge of an explosion of technology driven by biotechnology, driven by sensing devices, driven by the communication age where we are probably looking at a 20-year period where the natural trend in farm prices, independent of the Asian financial crisis, will be down. Please do not believe because I say this that I want the trend to be down. But I think if we are going to set out a long-term policy, we have to understand the world at which we are looking. I believe these technological changes, which are partially responsible now for declining farm prices, are probably not going to go away. One of the things I think that is hidden--I will get to these figures in a moment--is that while farm prices are down, so are farm costs. So this is leading some people to look at farm prices and define a financial crisis which is clearly there but not to the degree that the price of the final product alone would show. Let me note that we had a recent estimate come out by USDA of net farm income. Let me also remind my Democrat colleagues that the Clinton administration runs the Department of Agriculture, not the Republican majority in Congress. The Clinton administration is now forecasting 1999 farm income to be $43.8 billion. Farm income in 1998 was $44.1 billion. So that is three-tenths of $1 billion below last year. If you look at the last 8 years, from 1990 through 1998, average farm income has been $45.7 billion. We are looking at an income level that is basically $1.9 billion below that level. If you look at the last 5 years of average farm income, it has been $46.7 billion. So in looking at that number, we are looking at an income level there where we are about $2.9 billion below that level. Part of the story that is not being told in this debate, as we sort of jockey back and forth as to who can tell the grimmest tale in agriculture, is that the current farm program is doing a lot for American agriculture. Last year, the American farm program, in dealing with a decline in prices, put into American agricultural $12.2 billion of income. Under the existing programs that are in place, through guaranteed minimum prices, and other programs, we are looking already, without any legislative action, because of the way the current law is written, at the taxpayer paying $16.6 billion of payments to farmers. Or, in other words, when the Department of Agriculture estimates that net farm income next year is $43.8 billion, 39 percent of that estimate is made up of payments that are being made under the existing farm program. Especially when our Democrat colleagues get up and talk about the sky falling, they completely leave out of the story that under existing programs we have guaranteed minimum prices, through our loan program, that will mean $16.6 billion of payments from the Federal Treasury to the American farmer without any legislative action whatsoever by the Congress. So I guess the first question that I pose is, that if farm income today is $2.9 billion below the average of the last 5 years, and if the income for the last 5 years has been the highest level of income in the modern era, Why are we talking about $10.7 billion of new payments to American agriculture? From where did the $10.7 billion come? And $10.7 billion added to the level of farm income today would put average farm income substantially above the average for the last 5 years, substantially above the average for the last 8 years, and substantially above the average of farm income in the modern era of America. From where did the $10.7 billion come? It seems to me that the $10.7 billion figure is simply a political figure. It started out fairly low at the beginning of the year. It has gotten bigger every month. I now understand that in the House, Democrats are asking for $12.9 billion. So what is happening is we are in a bidding contest. Let me also say that in terms of the $6.9 billion that has been proposed on our side of the aisle, I do not see the logic of that number, either. It seems to me that since we have a loan program which in some cases has yet to be triggered because we have not harvested the crops, so that we do not know, in the final analysis, the extent of the drought or the impact of the bumper crop that is being produced in some parts of the country --we know the impact on price for corn and wheat and cotton and soybeans; we have a guaranteed minimum price--the logical thing to do would be to not get involved in a political bidding game but to simply allow the crop to be harvested, assess the drought damage, and decide how much to do and how to target it to the people who have actually lost money instead of a giant effort to simply throw money at the problem. I am sure all of my colleagues are aware that from the disaster assistance for agriculture last year, still some of those programs have yet to be spent by the Clinton administration. So rather than getting in a bidding contest, it seems to me, with all due respect, that what we ought to be doing is waiting until our crops are harvested and assess what farm income is, compare it to a norm for the recent historic period, and then decide what we want to do to try to make a correction, see to the extent to which programs that are now in effect have an impact on farm income, and then figure out what the gap is compared to the norm, and then decide who lost money, and then see what we might do about it. But with $10.7 billion, if you spent the money by giving it to farmers, you would drive incomes far above the national norm, you would be overcompensating, in some cases, several times; and in reality, much of this money goes to a bureaucracy in Washington and not to the farmer. So I am sorry that we have gotten into this debate, which ultimately had to come when we brought up Ag appropriations because we are going to have an election on the first Tuesday after the first Monday of next year. So we are engaged in this political bidding contest for the support of American agriculture. I do not see how these kinds of numbers can be justified, especially when we do not know what farm income is going to be. Let me also say that this appropriations bill does not even go into effect until October 1. Not one penny that would be spent by the adoption of either one of these amendments will be available to farmers until October 1, and given the record of the Clinton administration, it is highly probable that most of this money won't even be distributed until next year. My point is, why don't we wait until we have the actual data, until we know who actually lost money, and make a rational decision. Another point I would like to make----

Mr. GRAMM. I am happy to yield. I thought we were going back and forth but if the Senator would like to speak.

Mr. GRAMM

Mr. GRAMM. Mr. President, I rise today to recognize Rear Admiral (Select) Barry Costello, United States Navy, for the excellent job he has done as the Director of Senate Liaison for the Navy. I want to recognize Admiral Costello for his many achievements and commend him for the exemplary service he has provided to the Senate, to the Navy, and to our great nation. Barry Costello is a sailor's sailor who has distinguished himself through his seamanship, tactical acumen, and inspiring leadership. He has served on some of our country's finest warships, including command of the destroyer U.S.S. Elliot (DD 967). Prior to coming to the Senate, he commanded the prestigious ``Little Beavers'' of Destroyer Squadron 23, following in the footsteps of Admiral Arleigh ``Thirty-One Knot'' Burke, who famously led the ``Little Beavers'' to a decisive victory over Japanese forces in the Battle of Cape Saint George in 1943. In March 1997, Admiral Costello took the helm of the Navy's Senate Liaison Office. His integrity, enthusiasm, and foresight have earned the admiration of all members of the Senate who have worked with him, and it is not an exaggeration to say that through his service to the Senate, Barry Costello has helped to ensure that our Navy remains the best trained, best equipped, and best prepared naval force in the world. Mr. President, Rear Admiral (Select) Barry Costello exemplifies what is best in the Navy and in America. The Senate, the Navy and the American people are indebted to him for his many years of distinguished service. As he departs for his first assignment as a flag officer, I know that my colleagues wish Barry, his wife LuAnne, and their sons Aidan and Brendan the very best. I have a feeling we will work with Barry again in another more important role for our Navy and our nation.

Mr. GRAMM

Mr. GRAMM. Mr. President, I move to reconsider the vote.

Mr. GRAMM. We are all aware Congress has provided substantial funds for Pell grants.

Mr. GRAMM. Mr. President, you would have had to have just come in on a turnip truck not to realize this Congress is a major funder of Pell grants. We provide substantial funding in Pell grants in guaranteed student loans. What we have before us is not another assistance program, not another program that is trying to single out every interest group in America and give them something, but instead we have a tax bill that is aimed at letting working Americans keep more of what they earn so they can help send their children to college. I hope we might see an amendment such as this withdrawn and not have to vote on it. I yield the remainder of my time.

Mr. GRAMM. Mr. President, I move to reconsider the vote.

Mr. GRAMM

Mr. GRAMM. I will be through before that. Senator Kennedy may want to start making his way over here. Mr. President, we are about to wrap up the debate on this amendment. I think sometimes it is easy to get carried away and get in the business of trying to look at people's motives. I would like, in my concluding comments, to try to set this whole thing in perspective. I wonder sometimes if our Democrat colleagues do not just rediscover every once in a while how progressive--and that is the term that was made up by the people who wanted the Tax Code to be highly skewed, where higher income people paid the great preponderance of taxes in America. We are today talking about cutting income taxes. Our dear colleague from Minnesota points out that if you make less than $30,000, you are going to get less than $100 of income tax cuts in this bill. But what our colleague fails to recognize is that 50 percent of Americans pay only 4.3 percent of the income taxes; 32 percent of American families pay no income taxes whatsoever. So I know it makes for a good sound bite to say 32 percent of Americans will get no income tax cut if you cut taxes across the board by 10 percent, but they do not get a tax cut because they do not pay income taxes. Tax cuts are for taxpayers. The people who will get a tax cut under this bill get no food stamps. Is that an outrage? People who will get a tax cut under this bill do not qualify for Medicaid. Is that an outrage that they do not qualify for Medicaid? People who will get a tax cut under this bill do not qualify for Aid to Families with Dependent Children. Is anyone outraged about that? I am not, because AFDC, food stamps, Medicaid are not for everybody; they are for poor people. Tax cuts are for taxpayers. So when our colleagues stand up and say the top one-quarter of the taxpayers in America will get 60 percent of the tax cut under this bill, don't forget that the top 25 percent of income earners in America today pay 81.3 percent of all the taxes. Why would anybody be shocked that a group of people who pay 81.3 percent of the taxes might get 60 percent of the tax cut? In fact, what our dear colleague from Michigan was pointing out is that the Roth bill is, from the point of view of the existing Tax Code, putting a heavier burden on higher income people. My amendment does not do that. Now, some of our colleagues, a few minutes ago, suggested that I was offering the House bill. The House tax cut bill is 457 pages long. The tax cut I am offering is 46 pages long. This is a very simple tax cut. At the end of my comments, I will go over what it does and does not do. It is true that the top 1 percent will get more tax cut than the bottom 50 percent. The top 1 percent of income earners in America earn 16 cents of every dollar earned, but they pay 32.3 percent of the taxes. The bottom 50 percent pay only 4.3 percent of the taxes. So if you are giving a tax cut, people who pay taxes get it. If you are giving welfare or Medicaid, people who are poor get it. I don't know why that comes as a shock to our Democrat colleagues. Our dear friend from South Carolina said the rich get it all. Well, the plain truth is that the average family in America making $50,000 a year, they are rich, according to the Senator from South Carolina. But the average family making $50,000 a year will get $624 in a tax cut by the 10-percent across-the-board tax. How is it that only rich people are getting the tax cut? Well, you have to remember that when the Democrats, in 1993, raised taxes, they defined ``rich'' as anybody making over $25,000 a year when they taxed people earning $25,000 a year on their Social Security benefits. I hope people are not confused when they hear the Senator from South Carolina say under the Gramm amendment rich people get it all. I hope they understand that rich people are people over $25,000 a year. When Senator Hollings was saying, yes, he voted to raise taxes on Social Security, that was on rich people who made over $25,000 a year. Don't forget the code when we are talking about these things. There are a lot of people on the Democrat side of the aisle who say hold off on the tax cut. Well, I don't find that unappealing. Just to level with people, if we could stop the spending spree that is underway and hold off on the tax cut and have an election--I believe we are going to have a Republican President; I think I know who it is; I believe we are going to have a Republican majority in both Houses of Congress--I think we could do a better job 2 years from now. So when Senator Levin says hold off on the tax cut, why do I not end up supporting his position? Well, the problem is, this is the Congressional Budget Office analysis of President Clinton's budget. He is proposing to spend $1.033 trillion, not only every penny of the surplus, but he is having to plunder Social Security for 3 out of the 10 years. So while our colleagues are saying don't cut taxes, what they are not telling is that the President has proposed spending every penny of the non-Social Security surplus, plus part of the Social Security surplus. We are already $21 billion over the budget this year. I would be willing to wait when we had a President who I think would support a better tax package, but under President Clinton's budget, we will have spent every penny of the surplus before we can elect a new President. So that is why we have to act now. The second thing is about how large this tax cut is, how outrageous, how obscene. If you want to spend all the money, any tax cut is obscene. If you don't want a tax cut, all tax cuts are for rich people, all tax increases are on rich people. So most people, at least in that language, don't have a stake in it. But the problem is, all tax increases are on working people and our tax cut is for working people. The question is, Is it too big? When Bill Clinton became President, Government was taking in taxes, 17.8 cents out of every dollar earned by every American. Because of the massive tax increase in 1993 and because people, as incomes have gone up, have moved into higher brackets, Government is now taking a peacetime record 20.6 percent of the economy in Federal taxes. Now, if we took all $1 trillion of the non-Social Security surplus and gave it back to the American worker in tax cuts--and I remind Senators, we are giving less than $800 billion because we are keeping $200 billion for Medicare and for emergencies--if we gave it all back, the tax burden, at 18.8 percent of every dollar earned, would still be substantially higher than it was the day Bill Clinton became President. So even if you adopt our tax cut and even if the President signed it, when he left office and when this tax cut was fully implemented, he could say: Taxes were substantially higher when I left than when I came--even though supposedly we are talking about a huge tax cut. Now, finally, if you take the arithmetic and you say: How big is this tax cut relative to the level of taxes we are collecting, over a 10- year period, the tax cut is a whopping 3.5 percent. Over a 10-year period, if we adopt our tax cut, we are reducing revenues by 3.5 percent. How can the President say this tax cut endangers the American economy? In fact, the day before yesterday he was saying it endangers women's health care; if we let working people keep more of the money they earn, it is going to hurt women's health. I don't know, if this debate goes on another day or two, he may say that infantile paralysis will be back, that polio will suddenly descend on America. If you let people keep more of what they earn, it could happen. The bubonic plague could come back. The point is, we are talking about 3.5-percent tax cuts over 10 years. Why are we doing this? We are doing it because we are going to collect $3 trillion in taxes over the next 10 years above the level we are going to spend. We are taking $2 trillion and putting it away so when we get a President that has the courage to fix Social Security--we do not have such a President today, I am sad to say, but when we get one, we will have the money and we will be ready to do it. Then out of the trillion that is left, we are saying, let us give eight-tenths of it back in tax cuts and let us keep two-tenths of it for Medicare and for any emergencies we might have. Our colleagues say, if you give these tax cuts, the money is gone forever. That is interesting because we raise taxes round here all the time. But yet when they spend this money on $1.033 trillion of new programs, it is as if we can snap our fingers and have it back. The truth is, you can always get money back that you give to the American public in tax cuts. If we start 81 new programs, which is what President Clinton wants to do, we will never be able to get that money back. We will never be able to end those programs. That is what the debate is about. I see that one of my colleagues who had asked to speak before, came and waited for others to speak, has come back. How much time do I have at this point?

Mr. GRAMM. I yield that Senator 5 minutes of my time, and then I will sum up with the last minute.

Mr. GRAMM. Mr. President, how much time do I have?

Mr. GRAMM. Mr. President, I have worked up an example that I think tells the story here at the end of the debate. The question is, If we have a simple tax cut that cuts taxes across the board by 10 percent, eliminates the marriage penalty, repeals the death tax, indexes capital gains taxes, and gives a full deduction for health insurance, what will it mean to your family? Obviously, it is easy to take how much taxes you pay and then take the 10 percent. Here is an example. Take this couple Senator Hutchison talked about, where you have a teacher and a football coach and they are married. Together, they make $70,000 a year. Now, I know there are some people on the other side of the aisle who are going to say they are rich. They have two children, and they might have one of them in college. If they have both of them in college, they are among the most financially stressed people in America. But what would happen under this bill is that the 10 percent tax cut would mean that this family--a coach and a teacher, making $70,000 a year--would get an $800 tax cut; actually, it would be an $809 tax cut because of the 10 percent across-the-board cut; they would get a $1,400 tax cut from the marriage penalty elimination, meaning, in total, they would get $2,200 in tax cuts. That is roughly, I think, what working middle America is about. Mr. President, I yield all my time back.

Mr. GRAMM. Mr. President, in Ronald Reagan's own words, I want to take our Democrat colleagues down memory lane. They have such fond memories of what President Clinton has done, and I would like to tell the rest of the story. It is true that Bill Clinton was elected President. It is true that he came to Washington and proposed the largest tax increase in American history. It is true that not one Republican voted for that tax increase. It is true that it passed by one vote. It is true that the largest tax increase in American history now bears heavily on working Americans. Everything else they said is not true. Let me try to explain why. They quote people saying harsh things about the Clinton program. Let me tell you the rest of the program. The rest of the program was a massive stimulus program where the Clinton administration proposed spending $17 billion, in 1993 alone, on everything from ice skating rink warming huts in Connecticut to alpine slides in Puerto Rico. I had harsh things to say about it, and I am proud of that. I am very proud that Republicans, who were in the minority, killed that bill with a filibuster. Bill Clinton didn't just propose the largest tax increase in American history, he proposed having Government take over and run the health care system, collectivizing American medicine, forcing everybody into a Government-run health care collective, which was a giant HMO run by the Government. It would have meant Government taking over one-eighth of the American economy. I said it would be a disaster. I am proud that I helped lead the effort to kill it, and I am proud that it is dead where it belongs. That is the Clinton program. The point is, we were able to defeat every part of it, except the tax increase. Now, when the Republican majority showed up in Washington, DC, in January of 1995, they received this budget from President Clinton. On page 2 of this budget, President Clinton outlines what his budget was. It had a deficit for fiscal year 1995 of $192 billion, and then the next year $196 billion, $213 billion, $196 billion, $197 billion, and $194 billion. That was the Clinton budget. But we elected a Republican majority in Congress. What happened? With that Republican majority in Congress, we were not able to pass every bit of our Contract With America, but we reformed welfare, we cut spending, we stopped the runaway spending freight train of Bill Clinton. And under a Republican majority, while Clinton's deficits looked like this, the real deficit started to fall and turn into a surplus which is indicated on the chart. The question is, Who led, who followed, and who got out of the way? I believe that the Republican Congress led, the Democrats in Congress followed, and Bill Clinton got out of the way. So if we are going to tell the history of what happened in the Clinton era, let's not just remember his tax increase, let's remember his stimulus package, which we killed. The Democrat majority could not get 60 votes, and it died. Clinton was heartbroken, but it died. And we defeated the Clinton health care bill. It would have taken over one- eighth of the American economy, and Americans were so shocked at the Clinton program that they elected the first Republican majority since the 1950s. When we took over, things changed. With the same old Bill Clinton who was here in 1995, when the deficit was $200 billion, what changed was the Republican majority. I just say to the American people, give us a Republican President, and we will again control spending, and we will let working people have more of what they earn. Mr. President, I yield Senator Hagel 5 minutes off the amendment.

Mr. GRAMM. I yield 5 minutes to the distinguished Senator from Texas.

Mr. GRAMM. Mr. President, I ask unanimous consent that the Gramm amendment, No. 1405, be temporarily set aside in order for Senator Kennedy to offer a motion relative to prescription drugs. I further ask consent that following the debate time on that motion, the Senate then proceed to a vote on or in relation to the Gramm amendment, No. 1405, to be followed by a vote on or in relation to the Kennedy motion. I ask unanimous consent that no other amendments be in order to the amendment prior to the vote. I further ask consent that there be 2 minutes equally divided prior to each vote.

Mr. GRAMM. Mr. President, it is my understanding that the Democrat side of the aisle has completed their run of speakers. They have a little time left. I have a little bit more. But it would be my intention, if it suits everybody else, to go ahead and try to answer all of these points that have been made, and try to deviate from my background as a schoolteacher and not take all day, and then go ahead and yield back my time if they would yield back theirs, and then we will set my vote aside and let Senator Kennedy offer his amendment, if that will suit everybody on time. The only thing I want to be sure of is--since I want to be sure I get to answer every point that has been made--I would like to be the last speaker on my substitute. So if that works with everybody, I am happy about it; if not, we can do it another way. Mr. MOYNIHAN addressed the Chair.

Mr. GRAMM. Mr. President, I want to take a little time off the bill to answer all this stuff, but first I want to give Senator Grams an opportunity to speak for 5 minutes.

Mr. GRAMM. I am yielding time off the amendment. I will ask for time off the bill to answer the points that have been raised.

Mr. GRAMM. This amendment is substantially more focused than the House tax bill.