Phil Gramm

Mr. GRAMM

Mr. GRAMM. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. GRAMM

Mr. GRAMM. Mr. President, could we have order. This is a very important issue for people.

Mr. GRAMM. If it is dealt with, that clears the tree.

Mr. GRAMM

Mr. GRAMM. Madam President, I thank you. I thank my colleague for yielding. I would like to say that I think comments made today are living proof of the old adage that no good deed ever goes unpunished. The plain truth is that we have had numerous hearings on the issue of private property and takings. Our colleague from Utah has been a leader in this effort. We are considering this bill today because he has continually tried to accommodate people who oppose the underlying amendment that he has so effectively championed. The issue before us today is not an issue of technicalities. It is not an issue of whether or not a certain number of mayors or Governors or locally elected officials think one thing or think another. The issue before us is, are we going to effectively enforce the Constitution of the United States? What an incredible paradox it is that if we had similar legislation before the Senate to enforce our first amendment rights to freedom of religion, freedom of speech, freedom of the press, freedom of the right to assemble, and to address the Government about our grievances, we would have 100 Members of the Senate here demanding that the Senator's bill be adopted. If the Senator from Utah was simply trying to guarantee our freedom of speech and religion by setting out a clear course where ordinary people could have a day in court in determining whether their first amendment rights had been respected or abused, we would have 100 Members of the Senate supporting this bill. The real issue before us is that there are many Members of the Senate, many Governors, many locally elected officials who do not support our fifth amendment rights. The fifth amendment to the Constitution says, ``Nor shall private property be taken for public use without just compensation.'' We all know, and it is the reason that this amendment is before us, that every day in America private property is being taken without just compensation. We all know in the name of endangered species, in the name of wetlands, in the name of numerous other public purposes, private property rights are being trampled on and people are finding their property taken or dramatically reduced in value because of some public objective. The opposition to this amendment is not based on technicalities. The opposition to this amendment is not based on some letter signed by some local officials or some State legislators. The opposition to this amendment is based on the fact that there are many in the country and many in the Congress who would like the fifth amendment guarantees of protecting private property to be gone. These guarantees stood up very well until the Depression era when the Supreme Court basically started to rule against private property. The Supreme Court and the lower courts have now moved back toward recognizing and respecting the fifth amendment. But the problem is that a lot of ordinary people have trouble getting their day in court. They often find themselves shuffling between the district court and the Court of Claims trying to uphold their rights. So what does the bill before us do? It sets out a very simple process whereby people who believe that their private property rights have been trampled on can go into Federal court and have their day in court and have a decision made. I believe that private property is at least as important as the right of freedom of religion and speech. Our Founding Fathers understood that if your property is not secure, your right to freedom of religion and your right to freedom of speech can be abridged. Our Founding Fathers understood that private property is not only a human right; it is the basic human right. It is a foundation right of the American Republic. And, more important, it has been a foundation right of every great civilization in history. Will Durant, in talking about Rome and the rise of Rome says, ``Never was there a day when private property did not exist in Rome.'' The foundation of ancient Athens was private property, and the respect for private property. It cannot be a happy day in America when private property rights are trampled upon. Those who oppose the fifth amendment say, ``If you made the Government pay people when we took their property for these good purposes, then we wouldn't be able to take their property for these good purposes.'' They say, ``Surely it is worth it to protect the wetlands and endangered species and thousands of other objectives to be able to take people's property. And if we had to compensate them, we couldn't promote these public purposes.'' I would just conclude by making two points. No. 1, why should the property owner, and the property owner alone, be forced to bear the cost of promoting these public objectives? And, second, when the Founding Fathers wrote, ``Nor shall private property be taken for public use without just compensation,'' is it not clear that they were not just talking about taking your property to build a road across, they were talking about Government action that profoundly lowered the value of land in use or exchange? So, this is not a debate about technicalities. It is not a debate about letters signed by local officials or State officials. It is a debate about the Constitution and about the fifth amendment. Those who believe in private property, those who support private property rights, will vote for this amendment. And those who do not support private property, those who believe that public purpose is more important than private property and that taking property without compensation to promote some public good--as they would define it--will vote ``no'' on this amendment. Many will try to confuse the voter about what the issue is. The issue is the fifth amendment. The issue is whether or not we respect private property and private property rights in America. I respect private property and private property rights in America. That is why I am for the pending bill. I hope my colleagues will vote ``yes.'' I yield the floor.

Mr. GRAMM

Mr. GRAMM. I thank the Senator and I thank the Chair. I yield the floor.

Mr. GRAMM. Mr. President, I would like to thank Senator Jeffords for his leadership in bringing the important Higher Education Act Amendments bill to the floor of the Senate. The bill reflects a great deal of hard work and difficult compromises on a number of issues, particularly with regard to the FFELP, the Federal Family Education Loan Program. However, there remains an issue of importance to my home state of Texas regarding state secondary markets that I and my colleague from Texas, Senator Hutchison, are concerned about. While I understand that you did not include a provision in the bill addressing this issue, I would nevertheless ask that you and the other members of the Committee continue to review the matter and seek an acceptable provision to address it. As you know, each state is authorized to designate one state secondary market that may also act as an eligible lender under the FFELP. For most states, which have only one state secondary market, this is not a concern. However, Texas and several other states have multiple state secondary markets. The multiple secondary markets in these states are the only state secondary markets in the country that are not considered under the law to be either eligible lenders or eligible holders of student loans. Rather, these secondary markets must go through the costly and burdensome exercise of utilizing an eligible lender bank trustee in order to effectively hold and originate loans. This is inconsistent with the intent of the FFELP--to ensure maximum access to student loan capital, and does not appear to meet any significant policy objective of the FFELP. Particularly at a time when lender yields and the number of lenders under the FFELP are declining, it is becoming increasingly important that these multiple secondary markets have the same ability to add capital to the student loan system as the secondary markets in single-market states now have. Moreover, if the multiple secondary markets in Texas and other states were granted eligible lender status, it is my understanding that there would be virtually no change in the level or type of government regulation and oversight that these multiple secondary markets would be subject to. In Texas, this regulatory oversight includes a variety of state and federal agencies, including the Internal Revenue Service, the Securities and Exchange Commission, the state guarantee agency, the state attorney general, the state bond review agency, state auditors, private bond rating companies, private auditors, municipal governments, and individual boards of directors and corporate officers. While the exact type of regulation of multiple secondary markets varies somewhat from state-to-state, my understanding is that the granting of eligible lender status would again not reduce or otherwise change that oversight. Thank you very much for your willingness to continue to consider this issue, and I look forward to working with you in this regard.

Mr. GRAMM

Mr. GRAMM. Mr. President, I rise today to join my colleague from Indiana in urging the Senate to move forward on the Africa trade bill. Who among us has not stood on the floor of the Senate when we voted on foreign aid and watched hundreds of millions of dollars spent by our government, knowing that this money was probably not going to be used in the end to help people, but instead would likely have a net product that was either crony capitalism or socialism, who among us has watched such a vote and not wished for an alternative? We have an alternative today. That alternative is trade. The wonderful thing about trade is that it makes people equal in free transactions of buyers and sellers, producers and consumers. It creates jobs and opportunities, and we benefit together with those who are engaged in trade with us. What we have in the Africa trade bill is a very modest proposal. The bill would allow the President, in those cases where a country in Sub- Saharan Africa has taken steps toward establishing a market-based economy, where a country is not engaged in a violation of human rights, and where a country is not engaged in activities contrary to the U.S. national security and foreign policy interests, to expand our markets and increase out trade with that country. I think it is clear that there are business opportunities in Africa. I would like to see us as leaders in the effort to expand our mutual business relations. But the bottom line is we are dealing with countries that are hopelessly poor, and where poverty is a crushing presence in everyday life. We have an opportunity by expanding trade to help lift that weight of poverty, promote free enterprise, democracy, and the things that we believe in here at home, the things that we want people around the world to benefit from. There are those who will oppose this bill because it will mean that people in Africa will be producing textiles to sell in the United States. First of all, we must understand that today we do not have limits on textile imports from any of the countries in this region of Africa except two. Second, I think it is important to note, as Senator Lugar mentioned, that currently all of Sub-Saharan Africa sells to us less than two-thirds of 1 percent of all the textiles we import. The International Trade Commission has estimated that under the best of circumstances, where this region of Africa experienced as much investment in producing textiles as possible, their degree of exports could never exceed, in the period of time we are talking about under this bill, about 3 percent of our textile import market. Here is the question: Is it worth it to us to open up trade, and in the process bring goods into our country that our consumers can choose to buy or not buy if they believe that those goods are better or cheaper, and in the process make it possible for 750 million of our fellow human beings on this planet to have some of the opportunities we have? Quite frankly, while the President went to Africa, gave a lot of speeches, did a lot of photo-ops, he has done far too little to push the passage of the Africa trade bill. Most of the opponents of this bill are in the President's party. My basic position is this: I am tired of giving away foreign aid that does not work, that does not help anybody. We have an opportunity to let people produce products to sell on the world market. The worst thing that could happen to us from the provisions of this bill is that some poor working family in America would have lower priced textile products, could buy a shirt that is cheaper, or a shirt that they wanted more. It seems to me that we ought not to allow greedy special interests who are already ripping off the American consumer--as we are paying more than the world market prices for textiles every single day in every store in America--we ought to be ashamed of ourselves to let a small number of special interest groups prevent a very modest bill from passing, a bill that could literally represent a turning point for 750 million human beings on this planet. So I feel strongly about this bill. I think it is outrageous that we are not moving ahead on it. It does so little already that there can be no good objection to taking this very modest step. I remind my colleagues that under the current agreements we have under the World Trade Organization, in the year 2005 all these textile quotas are coming off anyway. So all we are trying to do with this bill is help this continent, which is so poor, which has so much hopelessness, get a head start in producing textiles. We can help them lift themselves out of their grinding poverty. There are some who will say, ``OK; great. Let's let them. Let's make them use American cloth, and let's make them use American thread.'' The problem is that the costs in this competitive industry are such that you cannot ship all of this thread and fabric to Africa and have products produced there, and bring them back here to compete with products from those who are doing the same thing in Mexico for virtually no transportation costs. So I urge my colleagues, when we are talking about nothing in terms of impact on our domestic textile market, when at worst we as American consumers will benefit, let us take this opportunity to try to open up trade with Africa, to let people enjoy the one system we know works-- trade, economic growth, economic freedom. I hope we will move ahead on this bill. It is going to be my goal, if we cannot get this bill to the floor through the committee, to offer it as an amendment on some other bill. I want us to vote on Africa trade, and move ahead.

Mr. GRAMM

Mr. GRAMM. Mr. President, I rise in support of the conference report on IRS reform. What I would like to do is very briefly give a summary of the two philosophical approaches that were initially embodied in the debate, why I believe we chose the better of the two, and then I will outline the few issues in the bill that I feel very strongly about. First of all, when we started learning of IRS abuses--something that most of our offices heard about from constituents from the very beginning of our congressional service--and then when we saw it in its rawest form in testimony before the Finance Committee, I think there were two basic approaches or responses people had. I think one view was that people at the IRS had become insensitive, that there was something wrong with them, and that what we needed was a massive effort to try to sensitize people in the IRS. I have to say, that is the administration's initial viewpoint. It was as if they thought we could solve the problem simply by hiring every sociologist in the country and have them sit down individually with IRS employees and encourage them to be good people. My own view, and the view that I believe dominates this bill, was a view that by and large, with a few notable exceptions, there was nothing wrong with people who work with the IRS. They are ordinary people. They have families. They own dogs. They are pretty much like us. The problem is, as the ancient Greeks observed, power corrupts. In the Internal Revenue Service, you have an agency of government that has tremendous power. As compared to the criminal justice system, for example, the IRS in its dealings with us on tax matters is literally the police, the investigator, the prosecutor, the judge, and the jury. And as a result of the fact that the IRS has so much unchecked power, that created an environment in which abuse occurred. What bothered me most in listening to the testimony was not that you had people do bad things. We know that even good people sometimes do bad things. We know smart people sometimes do dumb things. But what alarmed me about the testimony over and over was the fact that nothing bad happened to bad people, that when people did bad things in the IRS, they were seldom, if ever, punished. And when people did good things like trying to raise the level of awareness in the IRS that abuses were occurring, often bad things happened to them. That convinced me and, I believe, convinced the majority of the members of the Finance Committee, and ultimately the majority of Members of both Houses of Congress, that the system needed changing, that we had a system that reinforced bad behavior, and what we, of course, want is a system that reinforces good behavior. I don't know what we are going to get from the oversight board we have established. I hope it will be productive. I certainly am supportive of it. I am not sure how well that approach will work, but there is a secondary approach in the bill that I am convinced will work, and that is an approach that really aims to curb this unbridled power. The first change we made in the bill, which I think is vitally important, is we shift the burden of proof from the individual taxpayer to the Internal Revenue Service. We do that not only on income taxes, but we do it on estate taxes. I believe this is a very important change. Now, critics of this change said that only the taxpayer knows the facts, only the taxpayer has real access to the records, and so if you shift the burden of proof, the taxpayer will have an incentive to destroy records. I think we came up with an excellent compromise in this area, and that compromise is that if taxpayers keep records that a prudent person could be expected to keep, if they turn those records over to the Internal Revenue Service on a timely basis, at that point the burden of proof shifts. I believe that this is a vitally important provision. It is a provision of the bill that basically guarantees honest taxpayers the same rights that criminals have in the criminal justice system. I think this is a major step in the right direction. The next change that I believe will change the relationship between the tax collector and the taxpayer is a provision that is basically a version of loser-pay. This is an important principle, it seems to me. I would personally like to see it throughout our legal system. I have always been amazed that the British had the best legal system in the world and one of the poorest health care systems in the world, but we are interested in adopting their health care system and not their legal system. But the brilliance of their system, which actually dates back to ancient Greece, is that if you bring a lawsuit and lose, you have to pay the costs--costs incurred by the court, costs incurred by the defendant in defending their rights. Now, we have a variant of that in this bill, and I think it is a very important provision. What this bill says is, if you are audited by the Internal Revenue Service, and you end up in a running dispute with them, and in the process you are forced to hire attorneys and to hire accountants to defend yourself, at the end of the process, if it is found that you did not violate the law, then the Internal Revenue Service is liable for the costs you incurred in hiring lawyers and accountants and defending yourself. I believe that by shifting the burden of proof and expanding the loser pays concept, that the rights of the taxpayer--the honest taxpayer--will be strengthened because it will change the behavior of the Internal Revenue Service. In a related provision, we have language in the bill where, if you offer to settle with the Internal Revenue Service and offer to make a payment to them and they refuse to accept that payment, and instead they take the taxpayer to court, if at the end of the day the court rules that you owe the amount you offered, or less--not counting interest and penalties that might have been imposed by the Internal Revenue Service in the interim--then the IRS again becomes liable for payment of the cost of legal and accounting expenses incurred from the point that you made the offer to settle until the final judgment was reached in the court of law. It seems to me that is another vitally important change. The third and, I believe, final major section of the bill has to do with the flexibility of the Internal Revenue Service hiring people. Under our current system, basically, you have to be in the Internal Revenue Service for 25 years to have a major supervisory, decision- making post. One of the things we have done in this bill is waive a number of the general procedures under civil service. We are allowing the Internal Revenue Service to go outside the system and bring in private expertise--some on a permanent basis, some on a temporary basis--and in the process, we are bringing in new people with private experience, many of whom will go back into the private sector. The net result, I believe, will be a more efficient and basically a more balanced Internal Revenue Service. Finally, related to this third issue is the whole issue of people who violate the law and people who behave in ways that you can, under no circumstance, justify, nor should you ever tolerate in a government agency--or any other entity, for that matter. What we have done in this bill is not only given the new IRS chief flexibility in hiring new people from the outside, including very highly skilled and highly compensated individuals, but we have also given the Internal Revenue Service Director the ability to fire people--to fire people for a list of violations, and in the process strengthen his power to hold the agency accountable to the taxpayer. So I want to congratulate Senator Roth for his leadership on this bill. The major provisions of the bill relating to the burden of proof and to the loser-pay provision were provisions that the chairman insisted on and made part of this bill. They are dramatic changes. I want to congratulate Senator Moynihan as well as Senator Kerrey and Senator Grassley who served on the commission whose recommendations we built on in developing this legislation and did adopt many of its proposals. I think we have put together a good bill that will shift the burden of proof, that will force the IRS to pay when it is wrong, that enhances the ability to hire and fire--hire on the basis of competence, fire on the basis of incompetence, and on the basis of illegal or reprehensible behavior. I think it is a good bill. I simply want to say this: Anybody who sat through all those hearings that we had in Finance--and I did--had to be convinced that the time had come for a fundamental change in the relationship between the taxpayer in this country and the agency that is charged with collecting taxes. We needed substantial changes that enhanced the power and standing of the taxpayer and that diminished the unbridled power of the Internal Revenue Service. I believe this bill achieves those goals. Nobody claims this solves every problem in the country. Nobody claims this makes our Tax Code any more decipherable. Nobody would claim that every problem is solved. But this is a major step forward. I am strongly in favor of this bill, and I hope we can follow this bill next year with an effort to reform the Tax Code, to make it simpler and fairer. I think everyone believes that would be an improvement. The trick, obviously, is to make it happen. But I congratulate those that have been involved in the bill. I am proud to support it. I think it is certainly one of the highlights of this Congress and recent years, and I am glad to have been a small part of it. I yield the floor. Mr. KERREY addressed the Chair.

Mr. GRAMM

Mr. GRAMM. Mr. President, I thank our colleague from Missouri for yielding. Mr. President, it is certainly true that Congress has terminated many science programs in the recent past. In fact, in 1965 we were investing 5.7 cents out of every dollar spent by the Federal Government in non- defense research in science and technology. But as a result of political decisions that have been made for more than 30 years, we are now investing only 1.9 cents out of every dollar of government spending in science and technology research for the future. You have to ask the question when so many of our colleagues are so quick to point out that they are not antiscience--and I believe them-- how is it that the science budget in the budget of the U.S. Government, a budget which has exploded since 1965--``exploded'' is the only word for it--how is it that as the total budget has grown in leaps and bounds, our commitment to invest in science and technology and to invest in the future has declined from 5.7 percent of the Federal budget to 1.9 percent? I submit, Mr. President, that our colleagues, Members of the House and Senate, are not antiscience. Their problem, however, is that they are constantly forced to choose in the process of spending the taxpayers' money between spending that money on programs that have big constituencies in the next election and investing that money in science and technology in the future that really has a constituency in the next generation. The problem with maintaining science and technology spending is that the value only comes in the future, whereas by spending money on programs with big political constituencies, the benefits politically come in the next election. The next election now is only a few months away. It is not that Congress doesn't value investment in science and technology that would develop new products and new technologies, new know-how, and a scientific base that can create jobs in the 21st century and perhaps yield a capacity to heal some dreaded disease. It is that the benefits of such spending don't appear between now and November 3rd. They come to fruition over long periods of time as a result of the accumulation of scientific knowledge. Our problem, then, is not that Congress is antiscience, but that Congress invests in the next election rather than the next generation. The amendment we have before us is an old amendment. We have debated this subject on many occasions. This is just the latest version of a long debate. But basically what the amendment before us proposes that we do is to cut the Nation's premier science project, and to use the money to invest in two programs that have very large and vocal constituencies. Both of these programs are good programs. They both are obviously very desirable. But the point is that we have a very limited science budget now. It has been reduced from 5.7 percent of our budget in 1965 to 1.9 percent today, and this latest effort to reduce it further comes at the very time when we are beginning to get interest in the country in an initiative to double our expenditure on science and technology and research, because we believe investment in the future is critically important if we are going to continue to lead the world in science and technology job creation. I think this amendment is simply a movement in the wrong direction. I do not doubt the sincerity of our colleague from Arkansas. He has offered this amendment, it is my understanding, for 8 years. It seems we have debated it for a longer period of time than that. I remind my colleagues that we have killed science projects. We killed the SSC. We have cut science expenditures in real dollar terms in virtually every area of the Federal budget. But the question is, Have we benefited as a nation from doing that? We killed the premier scientific project in the world when we killed the SSC, which was high- energy physics aimed at understanding the fundamental building blocks of nature. And while understanding atomic physics does not sound very sexy in Congress, I remind my colleagues that 40 percent of the GNP of our country is now based on scientific research that has occurred mostly in America since the 1920s and where high-energy physics has yielded products from the computer to the television. So the point is that when America was investing in those programs, they were going to yield benefits 10 or 20 or 30 years in the future. They have always been politically disadvantaged. I would simply like to conclude by reminding my colleagues, we have an enormous Federal budget. We are spending a lot of money on programs that have big, powerful, political constituencies, and in a sense, politics is about listening and responding to those constituencies. But I remind my colleague that there is another constituency, and that constituency is called the future. America has invested more money in science than any country in the history of the world, and in my opinion, there are two principal things that are responsible for the unique achievements of America. One is we have had a country with broad-based opportunities so ordinary people could do extraordinary things, and the other has been an investment in and a commitment to science. I think we are moving away from that commitment. I think we have already moved too far. I wish we were here today debating cutting other programs to invest in science and technology in the future, but we are here talking about terminating the premier scientific project in America which we have undertaken with many nations around the world. I hope and trust this amendment will be defeated, and it should be defeated. This amendment will not lower federal spending by a nickel. This amendment simply reduces money going to the space station and to science and technology and to the future. So for that reason, I oppose the amendment. I yield the floor.

Mr. GRAMM

Mr. GRAMM. I thought it was pretty clear myself.

Mr. GRAMM. Mr. President, I see Senator Byrd in the Chamber, and I want to stop. I do congratulate Senator Byrd on the Supreme Court ruling on the line-item veto. Senator Byrd had taken the position all along that the Court would strike down the line-item veto. I think what it says to those of us who are concerned about the line-item veto and concerned about spending is that we need to amend the Constitution, that we need a balanced budget amendment to the Constitution. I think it is our obligation now to go back and try to get that amendment to the Constitution passed. But I congratulate Senator Byrd. He is the greatest scholar in the Senate. He is guardian of this institution, more than any other person who has served here during my adult lifetime. His position was vindicated in the Court today, and I want to get out of the way and let Senator Byrd talk about it. I yield the floor. Mr. WARNER addressed the Chair.

Mr. GRAMM. Mr. President, let me conclude by saying I had not mentioned to the Senator, and I want to make it clear that so far as I know he was unaware prior to making that statement that one of the universities in America that is over this quota is Purdue University. Right now, they are six slots over the quota, which means that if this quota ends up being rigidly enforced, there will be 24 young men and women who wanted to go to Purdue who will not be able to attend because the Navy says they want them to go somewhere else.

Mr. GRAMM. I would be happy to yield.

Mr. GRAMM. Mr. President, I rise to alert my colleagues to a problem that I am trying to find a solution to. In the big scheme of things, I guess you might say this is not an overwhelming problem. But given that we are talking about the leadership of the Navy in the future, I think it is of enough significance that attention ought to be focused on it. In addition, I believe it is indicative of a problem within our military that I am seeing over and over again throughout the various branches of the armed services. I wanted to bring it to the attention of my colleagues today. We currently give Navy ROTC scholarships to the best and brightest students in America. Students from all over the country compete for these scholarships. I know many of my colleagues are probably not familiar with how the system works, but I want to try to explain it because you have to understand it to understand the problem that I am raising today. How the process works is, individual students apply to the Navy for an ROTC scholarship. They are evaluated on a nationwide basis. The Navy picks people who have technical skills in an academic capacity, people who the Navy believes will make outstanding naval officers. I think it is fair to say that Navy ROTC scholarships are among the most competed for scholarships in America. They carry great prestige. They also carry a commitment to pay tuition fees and expenses at the college or university that scholarship recipients attend. So they are important monetarily. They are important because they represent a highly prized scholarship, and they are important because they end up funding the future leaders of America's Navy. We are in the midst of a Pentagon effort to change policy with regard to Navy ROTC scholarships. The new policy is basically a movement toward limiting the number of individuals who can get a Navy ROTC scholarship and still go to the college or university of their choice. There are 69 colleges and universities in 68 programs in America that participate in the Navy ROTC program. How it works is, young men and women win the scholarship. They then must accept the scholarship. Then they submit the names of the five colleges or universities that they choose in order. And then the Navy, based on whether or not other students previously accepted it, decided to attend those universities, tells them where they can apply. This has produced a new policy, which is that several of our programs find themselves with two or three times as many students who have won the NROTC scholarship who want to attend that university. But what is happening is, they are now being told under this policy in the Navy that they won the scholarship, they won it based on merit, they have chosen to attend a college or university that participates in the program, but because 25 other people chose that college or university before they did, that the Navy has made a value judgment that we don't need more than 25 people to attend VMI on an NROTC scholarship, or to attend Texas A&M under an NROTC scholarship. This problem is further compounded by the fact that there is no logic to the distribution of these programs. For example, my guess is that in Texas we probably have 200 kids a year who win NROTC scholarships. We have four NROTC scholarship programs. And if these caps of 25 each are enforced, it would mean that half of the kids in our State who win NROTC scholarships would have to go to another State, to another school, in order to be able to receive the scholarship that they choose. Compare this to very small States where they might actually have 2 or 3 recipients but at their college or university they have 25 slots where people can choose that school. This produces a terrible inequity. It creates an especially difficult problem for schools that are high on the list of people who win these scholarships. In fact, in an internal memo, the Navy has said that one of the reasons they want to set these caps is that they have estimated that if they allowed people who win the scholarships to choose the school they would attend, 250 people would attend MIT and 250 recipients would attend Texas A&M University. My question is, What is the problem? My question is, Why has the Navy decided that they are going to try to limit the ability of people who win NROTC scholarships to choose the college or university they attend that participates in the program? We, under this new rule, at Texas A&M will probably have three times as many kids from our State who want to attend Texas A&M who have won an NROTC scholarship. And the Navy is going to tell them that, because 25 people chose Texas A&M before they did, they can't attend Texas A&M. Or, all over the country there are going to be tobacco kids who win an NROTC scholarship who want to go to MIT, or who want to go to Notre Dame, another very popular program in the NROTC program, and they are going to be told that they can't attend those schools because the Navy has decided to set a quota to require them to go to schools that they don't want to attend. Why are the quotas being imposed? This is the most incredible part of this quota policy. It shows you what you get into when the Navy tires of recruiting warriors, when the Navy tires of recruiting people who crush tires, when the Navy tires of recruiting people who keep Ivan back from the gate, and when we are socially engineering in the military services of this country. What is the logic of this? One supposed logic of it is racial diversity. Here is the interesting paradox that I want my colleagues to understand. I just pick out Texas A&M because I am from Texas A&M. At Texas A&M, we train and commission with NROTC 60 percent more Hispanic graduates who go into the Navy than the NROTC program does on average. But yet we are being discriminated against in students who want to come to Texas A&M in the name of racial diversity? How does that make any sense? The second reason for limiting the ability of students to choose to attend a school is because of tuition costs. Of those schools that are now above the cap: MIT, $24,265 a year; University of Colorado, $11,502 a year; University of Southern California, $21,832 a year; University of Notre Dame, $21,027 a year; Texas A&M University, $2,594 a year. So we have a policy in the Navy that discriminates against students who want to go to Texas A&M when we have 60 percent more Hispanics commissioned in the Navy out of Texas A&M than the average NROTC scholarship. And, yet, the argument for these quotas is racial diversity. The second argument is high tuition costs. Yet, of all schools in the country that are over this new quota in terms of students wanting to enroll at them, Texas A&M has a tuition which, on overage, is one-tenth the level of other schools that are overenrolled. So I alert my colleagues to the fact that we have a major problem with the NROTC program. Now, what I believe we need to do is the following. I believe that we need to change the policy. We say we have a nationwide competition, we pick the best and the brightest, and then we say to the best and the brightest that they have the right to choose. I believe we ought to have a policy with regard to NROTC scholarships that if a young man or woman wins a NROTC scholarship based on national competition and they want to go to VMI, they should have the right to go to VMI. And if they are admitted, they ought to be able to enroll at VMI. The fact that 25 other students have chosen VMI should make no difference. I do not think it is right to make students who win national scholarships go to colleges that are not their first, or even their second, choice. Finally, another amazing thing in this Navy memo, they are talking about how they are concerned about people applying for scholarships. In the 1992-1993 academic year, we had 7,667 students in America, high school seniors, apply for NROTC scholarships. Today, we have only 5,037 applying. Why is that? Why have we had a dramatic drop in the number of young students--young men and young women--who have applied for NROTC scholarships? The reason is the Navy is not letting them go to the school of their choice. When you win one of the most prestigious scholarships in the country and you don't even end up getting your second choice as a school to go to, obviously that dampens the willingness of people to apply. I do not think quotas ought to be used in choosing where children go to school in America. This is a national program. They use national tests. They have national standards. When someone wins an NROTC scholarship, the fact that we say to people in my State that half of the kids in Texas who win an NROTC scholarship have to go outside Texas in order to get the scholarship, and when three times as many want to go to Texas A&M than we allow to go to Texas A&M because we have a quota that says A&M can only allow 25 to enroll, even though 75 may choose Texas A&M as their first choice, that is fundamentally wrong. The interesting paradox is that the argument for the quota--racial diversity and holding down costs--clearly does not apply to Texas A&M, because we commission 60 percent more Hispanics than the NROTC program in general does, and our tuition costs are one-tenth the level of other schools that are over the limit in terms of the ability of people to attend those schools.

Mr. GRAMM

Mr. GRAMM. I have completed my remarks. I thank my colleagues.

Mr. GRAMM. Then I will continue. Basically, the problem I am trying to deal with is the following problem.

Mr. GRAMM. Yes.

Mr. GRAMM. Mr. President, this amendment is a very important amendment, at least to this Senator. I would like to very briefly outline the problem I am trying to deal with. I have narrowed the solution to this problem so we might get a place holder in the bill. Then, our conferees can fix the Nation's problem in conference. We cannot get an agreement on a final solution now. I think my colleagues, when they hear my argument, will agree to my amendment. I simply want a place holder, so this problem can be fixed in every school in every State in the Union. Mr. President, what is happening is that the Navy is engaged in setting quotas in allowing students to attend colleges and universities under Naval ROTC scholarship programs. It is interesting, because the quotas are very similar to the problem we have with having more facilities than we have military personnel and functions. This is really very similar to the whole base closing crisis that we have faced. The basic problem is we have 69 colleges and universities that participate in the Navy ROTC scholarship program. Many of these schools are schools that do not have large numbers of students who would like to attend them. Historically, the selection process, which has not changed, is a process whereby young men and women, the best and the brightest in America, apply for a Navy ROTC scholarship. Here is how the system works, here is the change that has been made, here is the problem, and here is my proposed beginning of a solution. I hope my colleagues on both sides of the aisle will take this amendment. Under our current program, a young man or woman who graduated from high school in America, who has excellent SAT scores, extremely high grades, and who has taken a strong scientific curriculum in high school, can apply for a scholarship through the Navy ROTC scholarship program. The selection is made by the Navy on a national basis. For example, for this coming year, 206 young men and women from my State have been selected by the Navy to receive a Navy ROTC scholarship--206. Now, the way the Navy ROTC scholarship program worked prior to the implementation of quotas was that a young man or woman received a Navy ROTC scholarship and then chose to attend one of the 69 colleges that participated in the program. As the Navy has reduced the number of people participating in the ROTC scholarship program, rather than evaluating university programs and shutting down those programs that enroll literally two or three students per year, what the Navy is doing is setting a scholarship cap on each university's Navy ROTC program. The Navy ROTC scholarship programs that has been historically popular have been the program at MIT, the program at Notre Dame, the program at Purdue, the program at Texas A&M. The Navy has said, if we let students choose, 250 students would go to MIT and 250 students would go to Texas A&M. Now, I fail to see the problem. Here is the point--by setting a cap of 25 students who can attend any one of the participating colleges, what happens in my State is two things. No. 1, we have 206 young men and women who have just won a Navy ROTC scholarship, one of the biggest things ever to happen to them in their lives.

Mr. GRAMM. Mr. President, I ask unanimous consent that the reading of the amendment be dispensed with.

Mr. GRAMM. Mr. President, I send an amendment to the desk and ask for its immediate consideration.

Mr. GRAMM

Mr. GRAMM. Perhaps the same force is on this side on this issue. Who knows.

Mr. GRAMM. Will the Senator yield?

Mr. GRAMM. I guess I ought to remind my colleagues that David was not alone on that battlefield either.

Mr. GRAMM. Mr. President, we always love it when someone has something nice to say about us, but I am especially grateful when one as thoughtful as the Senator from Kentucky has something nice to say, especially when it is about me. I have been grateful to the Senator from Kentucky for his leadership on many, many tough issues and his comments today, therefore, are doubly appreciated. I thank him for his comments. I have a little housekeeping before I speak. This has been cleared on both sides. I ask unanimous consent that the Senate continue consideration of S. 1415 for debate only until the hour of 4 p.m. today.

Mr. GRAMM. Mr. President, I believe that we are reaching the final hours of the debate, and rather than try to go back and replow ground that we have now plowed over and over again--in fact, we have been on this bill since May 18. Looking at my watch with the date on it, unless I missed a month that has 30 days instead of 31, today is the 17th of June. We have, for a month, debated this issue. Quite frankly, I would like to say as we enter the final hours of the debate, I am proud of this debate. I am very proud of the Senate. When Jefferson came home from France, where he had been minister to France, as many of my colleagues will recall, while the Constitution was being written, he went to Mount Vernon to visit with General Washington. They were discussing the Constitution and Jefferson said to Washington, ``What is the Senate for if the House of Representatives is to be the body that represents the people, if it is to be the people's House, if it is to be the legislative body?'' ``What is the Senate for?'' Jefferson asked. Washington, who, of course, was a southerner, had poured his tea out of the cup into his saucer to cool, and he explained to Jefferson that the cup would be like the House of Representatives; it would be caught up in the passions of the moment--with Members elected every 2 years--and that passions would flare and the House would justifiably respond to those passions. But the Senate would be the saucer, where the tea would cool before it was consumed. That was the purpose of the Senate, and I think the Senate's rules, which obviously have evolved from that constitutional system, have in this case, as they have on many occasions, served the public well. I believe this bill will die today. I believe that we will see the bill sent back to committee. Now, another bill on the same subject, within the parameters of reason and responsibility and limited government and within the budget might come alive another day. But I believe that this bill will justifiably come to a legislative end today. I believe that the system has worked well. This bill, in many ways, reminds me of another bill--the Clinton health care bill. I remember that debate vividly; I was very much involved in it. I remember the President was talking about this bill that ``the public wanted,'' that it was unstoppable. Even those who were offering substitutes for it were adopting its basic principle. It looked as if it were 200 feet tall, and no one was willing to come forward and even say they were against it. But like the mighty Goliath of old, when someone did step forward with a few small stones and flung the first stone, the giant tumbled. Probably a better analogy would be when someone took a very small pin and just pricked its belly and it went boom; it was a lot of hot air. The American people were never for the government taking over and running the health care system. And in reality, the American people were never for this bill. Had we been forced to vote on this bill the first day it came to the Senate, it no doubt would have passed by an overwhelming margin. Had we been forced to vote on this bill the first week it came to the Senate, at the end of that debate, it would have passed by a smaller margin. Each day, support for this bill--or fear of it, depending on your perspective--has declined dramatically. Today, it is my hope and my opinion that the bill will be taken from the floor because, in the final analysis, there never was any support for this bill. I don't know where this bill came from. I don't know whether it was a focus group conducted by the Democratic National Committee, or whether it was a poll. But the bottom line is, the bill never had any real support from the American people. In reality, this bill was always a giant bait and switch. The bait was the tobacco companies. We have heard our colleagues justifiably try, convict, and hang or lynch-- depending on your perspective--the tobacco companies, and justifiably so in many cases. But while our colleagues sought to get us to focus on these tobacco companies, the reality of their bill, if you read it, is that it does not impose a penny of taxes on the tobacco companies. In reality, it has an extraordinary provision, and that extraordinary provision is that it makes it illegal for the tobacco companies to not pass through every penny of taxes to the consumer. So in reality, while the proponents of this bill were forever trying to divert our attention to the tobacco companies--and facts are persistent things--the reality of this bill is that it doesn't tax tobacco companies. The reality of this bill is that it basically taxes blue-collar workers, because smoking--obviously, with many exceptions when you count people, but a very small number of exceptions when you look at averages--smoking in America is basically a blue-collar phenomenon. So our colleagues have vilified the tobacco companies and they created sympathy in the country. It must be like the old story of this tiger who comes out of the forest and eats people in the village, so they send to the provincial capital for a great warrior to come forward. He comes forth and pulls out his sword and dances around. The tiger comes out, and instead of killing the tiger, which would produce a tremendous eruption of applause, he starts beating the tiger with the side of his sword. Finally, the people become so outraged, they stone the warrior. In a very strange way, the proponents of this bill have so overdone it that they have created some sympathy, as the polls show very clearly, for the tobacco companies--one of the most incredible reversals of public opinion that I, as somewhat of a minor student of it, have observed. But the reality is that with all the talk of the tobacco companies, they pay none of the tax. The tax is borne by blue-collar Americans. The stubborn facts are that 34 percent of the taxes that will be collected by this bill will be paid for by Americans who make less than $15,000 a year; 47.1 percent of the taxes will be paid for by Americans who make less than $22,000 a year; 59.1 percent of the taxes will be paid for by Americans who make less than $30,000 a year. So no matter how many times the proponents of this bill vilify the tobacco companies, the cold reality which the American people, as we debated this issue for a month, came to understand was that with all of the things that the tobacco companies did, were verbally convicted of, and punished for right here on the floor of the Senate, was that they weren't being taxed; we were taxing blue-collar Americans. That is the first thing that Americans came to understand as we debated this bill for a month. The second thing they came to understand was the incredible amount of money that was going to be raised in these taxes, and not only the burden that would impose--a massive burden--but how that money was going to be largely squandered. I remind my colleagues that, for example, in my State, we have 3.1 million Texans who smoke. Under this bill, if those 3.1 million Texans--we have 3,137,723 people in my State who smoke--would have continued to smoke a pack of cigarettes a day after the passage of this bill, given the estimate that this bill, in the end, when you figure everything in, would have driven up the price by $2.78 a pack, they would have paid an additional $1,015 a year in Federal taxes. Now, I remind my colleagues that 34 percent of that tax would have been paid for by people that made $15,000 or less. So we were talking about a confiscatory tax on blue-collar America. The American people, over a month, despite all the efforts to confuse the subject, came to understand that point. That is a major reason why this bill is about to come to the end of its legislative life. The second thing the American people came to understand was how money was squandered in this bill, how in this bill we were ratifying agreements where plaintiffs' attorneys were going to earn $92,000 an hour, how in this bill we were providing money for smoker cessation for Native Americans who live on or near Indian reservations. If they smoke at the same rate the general public does, we would be spending $39,000 per beneficiary, with the goal of trying to promote the cessation of smoking--$39,000 a person. They came to realize that under the provisions of the bill related to tobacco growers, one of those provisions would have ended up paying tobacco growers an incredible $22,297.29 an acre, and they could still own the land and still grow the tobacco. People came to realize that this program literally gave tens of billions of dollars to various advocacy groups that would be advocating many things other than just smoking. So in the end, the American people came to see this bill as having relatively little to do with teenage smoking and everything to do with taxing and spending, but doing so at a grander scale than anything we have seen in government in a long time. I would have to say that I know it is popular now for people who are covering the debate and discussing it to talk about ads that the tobacco companies have run. But I would like to give a dissenting view. I do not believe that this bill is going to come to a legislative end today because tobacco companies have run ads against it. I think in the end that the American people never bought into the idea that this bill was going to have any substantial impact on teenage smoking. I think the American people never bought into the idea that this was anything other than a tax-and-spend bill, and the more they knew about the bill, the more conviction they had in that basic belief. So despite the master work of spend and manipulation, which the White House, and I say admiringly, has and can engage in, despite an effort by all of the groups who supported the bill, and those groups ultimately came down to groups that wanted the money, despite all of that effort, in the end the Dicky Flatts of the world, the people who do the work and pay the taxes and pull the wagon, listen to our President, listen to the advocates of this bill, heard its high and noble stated objectives, but in reality in the end, after a month of debate, they finally saw this bill for what it really is--an effort to take money away from blue-collar workers and to have the government spend it, and spend it in a way that is obscene. There is no other word for it than that. The level of spending in this bill and the way the money is thrown around is almost beyond imagination, and in the end the American people recognized it. So I don't know that you can ever pat anybody on the back when you end up not doing a bad thing. I guess part of any legislative process is to try to do good things and to try to stop bad things from happening. And when you defeat a bad bill, you have done a good thing. But I think in the end this bill failed because the American people rejected it. And it was an amazing thing. Maybe there is a lesson for all of us in this. It was exactly like the Clinton health bill. In Washington it looked like everybody in the world was for this bill. In Washington it looked as if this bill was totally and completely irresistable. But yet when you get outside of Washington, back in America, the public either was totally disinterested in this issue or they were against it. So in the end the American people knew more than we knew, and as a result, for the good of the Nation, this bill is going to die. Let me conclude, because I know my dear colleague from Delaware is here, and I want to maintain his friendship, which I value and treasure. I would like to make the following point. I do believe there are things we can do to deal with teenage smoking. I think we have to start by holding teenagers accountable for what they do. I think there are ways that we can tighten up the law to penalize people who knowingly sell tobacco products to teenagers and knowingly sell alcohol to teenagers and sell illegal drugs to teenagers. I think there are many things we can do. But the focus ought to be on the problem, which is teenage smoking. I also believe that a fundamental premise of this bill is false; that is, that people are not responsible for what they do, that somehow somebody smokes and it is the tobacco company that made them smoke. I used to, as this debate was underway, love to tease my 85-year-old mother, that she had not smoked for 70 years because she wanted to, that it was this Joe Camel that made her smoke. She hardly knew who Joe Camel was. But she had a telling point, which was my first indication that in the end this bill probably was not going to make it. Her point was a simple question, which the proponents of this bill tried their best--and they were very talented--but they could never answer the question. Her point was: ``If I am the victim, if the tobacco companies have conspired to force me to smoke and I am still doing it at 85, how come you are raising my taxes? If I am the victim, how come I am being punished?'' In the end, that was the question that not only was not answered, but could not be answered. I want to congratulate our colleagues who were leaders on this issue. I don't think anybody ever questioned their sincerity. I especially want to say about Senator McCain, that under very difficult circumstances with his dearest friends in opposition on an issue where there were very, very strong emotional feelings on both sides of the debate, I especially want to congratulate Senator McCain for the way he was able to separate issues from personalities. He was a person who was asked to do a hard job; and that is to get the best bill he could out of committee. He did that. But when the bill got to the floor and we got a chance to look at it, the basic conclusion was the best bill that could be gotten out of committee was not good enough. So basically that is where we are. We will see a vote on a point of order. And the point of order is not a trivial matter. The point of order that we will vote on today is a point of order that has to do with the fact that this bill circumvents the balanced budget agreement. This bill raises spending above the limits that we set out in the budget. This bill would bust the budget, bust the spending caps, and violate all of the fiscal restraints that we have imposed. So Members of the Senate will be asked in the vote--and I assume that the minority leader will move to waive the Budget Act. There will be a point of order that makes the point of order that this bill violates the budget, violates the spending caps, and would violate the balanced budget amendment. Then I assume that the minority leader, or someone, will move to waive that point of order. In doing so, they are saying, pass the tobacco bill even if it means busting the budget agreement. I hope and believe that enough of our colleagues will vote ``no'' on that so that we can sustain the Budget Act. The bill would then go back to the Commerce Committee. If all of these problems can be fixed, if a consensus could be built, there would be nothing to prevent this issue in another form, with another bill, with another approach, from coming to the floor of the Senate. But if we send the bill back by sustaining the point of order, we are saying that this approach in this bill is not good enough. I hope that is what we will do. I thank the Senator. Mr. BIDEN addressed the Chair.