Phil Gramm

Mr. GRAMM

Mr. GRAMM. I am happy to.

Mr. GRAMM. Mr. President, let me first thank our chairman for yielding. I would like to begin by congratulating some people and thanking them for their leadership. First of all, I want to thank Senator Domenici for his leadership. I have had the opportunity to serve with Senator Domenici now for 13 years. I have been on the same side as Senator Domenici. I have been on the opposite side of Senator Domenici. I have noticed that when we are together we generally win. I wish Senator Domenici could be right more often. But I want to congratulate him for his leadership. I don't have any doubt in my mind that Senator Domenici will go down as one of the great legislators of this era, and that I will always be proud to tell my grandchildren that I served with him. I want to congratulate him for his great work on this bill. I also want to congratulate Chairman Roth. This is the first full term that Senator Roth has been chairman. He became chairman in the middle of the last Congress. And I think he has done a terrific job in chairing the Finance Committee and in building bipartisanship to a level that I would not have thought beginning this process that we could have ever had on the tax bill. I want to congratulate Chairman Roth for his leadership, which I really think has been outstanding, having had the opportunity to be in committee, to be actively participating in the debate on the tax bill on the floor, and having had a chance to be in much of the conference. I think our colleagues ought to know, or at least hear someone say what a great job that Chairman Roth did. I also believe that our Democratic colleagues, especially Senator Moynihan, have made a great contribution to this bill. Whether you like the product, or whether you do not like anything else we do--it is as thick as this package that many like and many dislike--I think you have to clearly say that a tremendous amount of work has gone into the process. Let me begin by talking about what I believe in this bill is unambiguously positive, and what is clearly going to be greatly appreciated by the American people--some of it immediately, and some of it over time--as people come to understand it. I would like then to talk about the disappointments I have about some parts of the bill--opportunities lost, things done. And then I would like to conclude by simply talking about the future in the next 5 years as we try to implement what the Congress is clearly going to adopt, and then say a little bit about balancing the Federal budget. So I will try to do those things.

Mr. GRAMM

Mr. GRAMM. Mr. President, I ask for the yeas and nays.

Mr. GRAMM

Mr. GRAMM. Mr. President, I understand our Democratic colleagues have been out today to proudly unfurl the banner proclaiming ``redistribute the wealth.'' They have been looking at the tax cut that has passed the House and Senate, and they have discovered something that, to them, seems miraculous. I would like to take a few minutes this morning to address the issue. Our Democratic colleagues have discovered that the bottom 20 percent of all income earners in America do not get a tax cut under the tax bill that passed the U.S. Senate with 80 votes, and further that the top 20 percent of all income earners get a substantial tax cut. Our Democratic colleagues believe that this is grossly unfair and they want to do something about it. Well, let me first set the record straight. It is true that, in our tax bill--at least the version that passed the House--the bottom 20 percent of income earners in America do not get much of a tax cut. It is also true that the top 20 percent of income earners will get a substantial tax cut. But as Paul Harvey would say, let me tell you the rest of the story. The rest of the story is that, as a group, the bottom 20 percent of income earners in America pay no income taxes. The top 20 percent of income earners in America pay 78.9 percent of all the income taxes paid in America. So I do not understand why our Democratic colleagues are so shocked to learn that people who do not pay income taxes do not get an income tax cut when we are cutting income taxes. Nor can I understand why they are so shocked to learn that when 20 percent of the workers in America are paying 78.9 percent of all income taxes, it is that 20 percent which will benefit from a tax cut when we are talking about cutting income taxes. Now, what our colleagues on the left would like to do, in following the President's proposal, is to take the tax cuts away from a working couple, both of them working full time, making a total of $54,000 a year, and instead give it to people who do not pay any income taxes. Their argument is, if you are a working couple in America and you make a total of $54,000 year, then you are rich and, therefore, you ought not to get a tax cut. Our colleagues on the left believe that we ought to take away your tax cut and give it to people who pay no income taxes. I reject that. I reject it because it is not fair. It is not fair because a tax cut is for taxpayers. If you do not pay income taxes, then when we are cutting income taxes you should not expect to get a tax cut. Let me make it clear that I have voted for a lot of programs that provide benefits to people--over the past 15 years, we have substantially increased benefits to the very group that our Democratic colleagues have argued on behalf of here today. Let me just give you some figures. In 1981, the average payment that we were making to low- income workers--we actually give them money to work--was $285. Today, that figure has risen to $1,395. This is relevant because the last time we cut taxes on working families was in 1981. So our Democratic colleagues who have been out this morning talking about redistributing wealth say, look, we ought to take the tax cut away from families making $54,000 a year as a joint income, and we ought to raise this so called earned income tax credit. My point is that the last time working families who pay taxes got a tax cut, the earned income tax credit, on average, was just $285. Today the average beneficiary of this so-called earned income tax credit is getting $1,395. In other words, we have had almost a 500- percent increase in subsidies for low-income workers since the last penny of tax cuts was provided for people who actually pay income taxes in America. The best data we have on the refunded portion of the earned income tax credit and after-tax income of taxpaying families is the following: Since 1986, the paid out portion of what we call earned income tax credit, a direct Government subsidy to low-income workers-- which, by the way, I have supported--has risen by 860 percent since 1986. Do you know what has happened to the after-tax income of working, taxpaying families since 1986? It has fallen .2 percent--from $28,302 to $28,249. So, while this subsidy to low-income workers has exploded-- the paid-out portion has risen by 860 percent in the last 11 years--we have not had a tax cut in the last 11 years for taxpaying families, and during that time the after-tax income of working families has actually gone down. What we have heard all morning is that we should take money away from taxpayers and give more subsidies to people who are not paying income taxes. I believe that it is not unreasonable once every 16 years to have a bill that helps people who pay income taxes. What we are trying to do is to give a modest tax cut--$85 billion in a $7 trillion economy--and we are trying to give it to people who are actually paying income taxes. I can not think of a more reasonable proposition. Finally, let me say that we have this game going on where the White House wants to make everybody appear richer than they are so that in the process they can claim that it is only rich people who they would deny the tax cuts. Let me tell you how it works. According to the Joint Committee on Taxation and according to the Census Bureau, the top 20 percent of income earners have a threshold income of about $54,000 per family. But what the administration has done is they have inflated that income by over 70 percent. You think you are making $54,000 a year, but the administration says, ``Now, wait a minute. Do you not live in your own home? And you know, if you did not live in your own home, you could move out, live in a tent, and rent that house out.'' So they take what you could rent it for, and they add that to your income. They take unrealized gains, the cash buildup of your insurance policy, the value of your retirement program, private retirement programs, and they add all of that to your income. So your paycheck says, when you add yours and your wife's, that you made $54,000. You did not feel too rich, quite frankly, making $54,000. You are working hard to make ends meet. But the administration says your income is not $54,000. They say if you moved out of your house and rented it out, and if you looked at the buildup of your life insurance policy, if you looked at the internal buildup value of your retirement program, you would have found that actually your income was over $93,000, and that you are actually rich. Then they say, because you are rich, you do not deserve a tax cut so we are going to take it away and give it to someone who does not pay taxes. Let me make two more points because I see several of my colleagues here who want to speak. This whole debate pains me. I do not understand why, in America, anyone would try to pit people against each other based on their income. There is nothing more un-American, in my opinion, than trying to divide people up in classes based on how much money they make. We probably provide more generously than any society in history for people who are incapable of earning a living or people who are having trouble doing it. We are not debating those issues today. What we are debating is when we finally, for the first time in 16 years, can afford to give reductions in income taxes, should those reductions go to people who pay income taxes, or do we have to pay tribute every time we try to help working families who pay income taxes by taking part of their tax cut and giving it to people who are not paying income taxes? That is the real debate. Final point: If you are making $54,000 a year, husband and wife working, maybe somebody at the White House thinks you are rich. Maybe there are people in Congress who think you are rich. But basically we are talking about middle-class, working Americans struggling to make a mortgage payment, struggling to pay for food and shelter, struggling to try to lead a quality life. It is just outrageous and totally unacceptable for us to be talking about taking that working families' tax cut away to give more subsidies to people who are not paying income taxes. To me, that is what this whole issue is about. It never ceases to amaze me when we look at these polls to see that people believe that the President is right, and that, in fact, we are talking about redistributing wealth to the wealthy. The Tax Code in America is more progressive today than it was the day Ronald Reagan was elected President. Higher income Americans are paying a larger percentage of the tax--bearing more of the burden of taxes today than they were the day Ronald Reagan became President. Lower income Americans are bearing a lower share of the tax burden. For those who want to complain about payroll taxes, let us remember who made a proposal 3 years ago to almost double payroll taxes to pay for national health insurance. It sure was not me. I am happy to count myself among the number who killed that proposal. That proposal was made by the same President who today laments the burden of payroll taxes when in fact 3 years ago he wanted to almost double it. I do not like engaging in these kinds of debates, I do not think they are very productive. We should be talking about creating wealth rather than redistributing it. But since some of our colleagues spent an hour this morning talking about redistributing wealth, I felt obliged to come out and join others in trying to set the record straight. I yield the floor. Mr. KERREY addressed the Chair.

Mr. GRAMM

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

Mr. GRAMM

Mr. GRAMM. Madam President, I thank our distinguished chairman for yielding. I thank him for the leadership in this very difficult job. Having served on this subcommittee, I know how difficult it is, how many important issues are under his jurisdiction, and how difficult politically they are. So I want to begin by saying thank you to Senator Bond for the great job he has done. Senator Bumpers, every year, proposes that we kill the space station and every year we have a protracted debate on it. I think, now, Members understand the issue enough that the lines are pretty well drawn. So, today, I am not going to go into a lengthy speech. I know Senator Bumpers and I know the quality of his work, so I know he has made the best case he can make for his position. I would just like to remind my colleagues that in 1965, we were investing 5.7 cents out of every dollar spent by the Federal Government in science and technology in the future. We were investing 5.7 cents out of every dollar we spent in Washington by investing in the next generation, in investing in the science and the technology to build the scientific base of the country to give us the ability to construct new tools that were more effective and sharper than tools used by people in other parts of the world. We were able to develop new technology and new products that have made us the envy of the world and have allowed us to maintain the highest living standards on Earth. Whereas we were investing 5.7 cents out of every dollar in the Federal budget in nondefense R&D in 1965, we are now investing roughly 1.9 cents out of every dollar spent by the Federal Government in science and technology in the future. We have dramatically reduced the investment we are making in the future, and, basically, what we have done is succumbed to the siren song of investing more and more money in the next election, in programs that have a big political constituency, in programs that yield a return before the voter goes to vote in even numbered years on the first Tuesday after the first Monday in November, and we have systematically, since 1965, reduced the investment that we are making in the future, investment that we are making in the next generation. This ultimately comes down to a debate between investing in the next election and investing in the next generation. While I believe we have to run the space program efficiently, we have had dramatic reductions in its growth. I think when science investment is down to 1.9 percent of the nondefense R&D Federal budget, down from 5.7 percent in 1965, that we need to be alarmed about it. I have introduced legislation to set up a program within our existing budget to double expenditures on science and technology, to set out a 10-year goal of doubling the budget of the National Institutes of Health, doubling the budget for science and technology, because I believe that it is critical to the country's future. Let me also say that I take a back seat to no one in controlling spending, but this is about priorities. What programs do we spend the money we spend on? I say invest it in the next generation, not in the next election, and defeat the Bumpers amendment as we have done in the past. I thank the Chair.

Mr. GRAMM

Mr. GRAMM. Madam President, since 1986, we have had a policy called ``certification,'' whereby we stand in judgment of our neighbors as to whether they are in fact making the best effort they can make in helping us keep drugs out of our country and helping themselves prevent drugs from corrupting their country. In the case of Mexico, we have declared through a Presidential certification, since 1986, for 11 years, that Mexico is making a full- faith effort, and every year for 11 years we have suspected that it was not so. For the first 10 years of this process, I kept hoping things would get better, hoping for the best, voting to certify something that we suspected was not true but hoped that it would become true. This year, I decided that maybe we should try something different and deny certification. The President decided to move ahead with certification. The point I want to make is very simple: It can never be good public policy to put ourselves in a position where, in order to continue to work with our neighbors to try to keep drugs from coming into our country, we have to certify something that is not true. I think that, after 11 years, it has become clear that this process is not working. It puts us continually in a position of choosing whether to certify things that are not true. It seems to me that as a matter of national policy, just as well as a matter of personal policy, that can never be a good thing to do. I don't know whether certification was ever a good policy or not. But I think that after 11 years, we know it does not work. And I think setting the process aside for 2 years, giving us an opportunity to try to figure out what we are going to do in terms of a permanent policy, is the right thing to do. I agree with my colleague from Texas. If you want your neighbors to work with you, the worst thing you can do is slap them in the face. We are under a procedure now that does not work. I think it is time to change it. The proposal before us is simply to set it aside for 2 years to figure out what we are going to do permanently. I think it is a reasonable proposal. I hope my colleagues agree.

Mr. GRAMM

Mr. GRAMM. Mr. President, I want to speak about 10 minutes on the Levin amendment. I would certainly be willing to allow the Senator to maintain his right to the floor, but this is unusual procedure. The Senator doesn't have a right to control the floor. He has a right to speak, but he doesn't have a right to control the flow of debate for others. I am willing to accommodate him, but this is an unusual procedure. Being the accommodating person that I am, I am willing to do it. At some point, we might have to ask if the Senator is through speaking and let somebody else speak.

Mr. GRAMM

Mr. GRAMM. Mr. President, I ask for the yeas and nays.

Mr. GRAMM. Mr. President, we have a pending amendment, the Levin amendment, which I am strongly opposed to. Let me just basically state what I would like to do. I would like to set the issue in perspective. I am now working with the Federal Prison Industries to see if there might be a second-degree amendment they could support. I intend to try to work with Senator Levin and his staff to see if something can be worked out. But I am strongly opposed to this. Let me begin with Alexis de Tocqueville and work up to the Levin amendment. When Alexis de Tocqueville came to America, he came to America to study American prisons. He ended up writing a book about democracy in America, which turned out to be the greatest chronicle ever written of our great country. But one of the things Alexis de Tocqueville wrote in his other book about prisons was that we had the model prison system on the planet because we had a mandatory work requirement. As a result, prisoners all over America worked, generally, 12, 14, 16 hours a day. De Tocqueville noted that they worked hard, but that it probably made life bearable, and that it would have been worse had they sat idle in prisons. In fact, Mr. President, we had the model prison industry in the world until the Great Depression. During the Great Depression, we ended up in a period of great economic unen-lightenment, passing a series of bills that destroyed the greatest prison industry that the world has ever known. We passed the Hawes-Cooper bill in 1929, we passed the Sumners- Ashherst bill in 1935, and we passed the Walsh-Healey bill in 1936. Here is what these bills said. They said that nothing produced by prison labor can be transported across State lines without losing the protections otherwise afforded interstate commerce. They said nothing produced by prison labor can be transported across State lines to be sold in the marketplace, and they limited the use of prison labor. In other words, if you haven't figured it out yet, these three bills criminalized prison labor in America. As a result, today, we have the absurd situation that we have 1.1 million people in State and Federal prisons, almost all of them young men in the peak work period of their life and because of special interests--business and labor, I might add--we are forcing the American taxpayer to pay $22,000 a year to let someone sit idle in air conditioning watching color television in prison, while American workers break their backs working to pay to keep these people in prison. Now, the only thing under Federal law that we can ask the Federal prisoners to do is to make things to sell to the Federal Government. They can't produce things to sell in the marketplace. We spend more to keep somebody in prison than we would sending them to Harvard University. That is not even counting the cost of building the prison. Now, the Senator from Michigan would say that we are going to come in and disrupt the system whereby we force prisoners to work, to make furniture for the Government, or to make other things for the Defense Department. Now, if our colleague was really talking about procurement reform, I would be a supporter. If this were a normal debate about price competition, then I would have no objection to his amendment. But our colleague, with all the talk about competition, is not talking about removing restrictions that would let goods produced by prisoners be sold on the open market. What he is proposing is that we disrupt the Federal Prison Industries as they currently exist. Now, let me review for you, if I may very quickly, how the Federal Prison Industries system works. How the Federal Prison Industries works is basically that the Government goes out and gets bids on goods and establishes a market price, a fair procurement price. Then they have to go to the Federal Prison Industries and on the basis of an established price they have to give the prison system the right to produce these goods. Might I note that Federal Prison Industries has a procedure where, if the Defense Department or any other part of Government is not satisfied with the work they do, or with the price, they can appeal for a waiver. Let me read to you from a letter that is signed by the Assistant Attorney General who oversees the Federal Prisoner Work Program. Federal Prison Industries does not abuse its mandatory source status. If a customer feels that Federal Prison Industries cannot meet its delivery, price, or technical requirements, the customer may request [the customer is the Government] a waiver of the mandatory sourcing. Let me give you a concrete example because it is relevant to the Senator's amendment. If Federal prisoners are working to produce desks for the Government, and the Government is not satisfied with the price or with the quality, they can ask for a waiver so they don't have to buy the desk made by prison labor. Here are the facts. These waivers are processed quickly. It is an average of 4 days between the time the waiver is requested and when it is granted, or denied, and in 1996 Federal Prison Industries approved 90 percent of the requested waivers by Federal agencies. Mr. President, granted, this is not a price competitive system. If this were any other procedure, the Senator's amendment would make perfectly good sense. Let's have competitive bidding. Let's have it at the lowest possible price. But we have 1.1 million people in State and Federal prisons. Because of the power of organized labor and special interest business who are more worried about their profits and their benefits than they are about the taxpayer, we are in the absurd position that we have 1.1 million people in prison, all prime working age males, for all practical purposes, and they can't produce anything of value and sell it on the world market to help defray the cost of keeping them in prison. So the taxpayers pay $22,000 a year just to keep them in prison, not counting the cost of building the prison. The only work we are getting out of these people under this absurd situation is that we can force them to work through a work program to produce things like furniture for the Federal Government. The Senator comes along, and says, ``Let's eliminate that system, and let's have price competition.'' Well, the problem, as we all know, is that the money that is going to the prisoners is going to do things like pay for victims restitution, and court-ordered fines. This is the only productive employment we have for people in Federal prisons. This isn't a procurement issue. It is a criminal justice issue. We ought not to be dealing with this provision on this bill. Let me read for you from the same letter about what we know about people who work in prison versus those who do not work in prison. Findings demonstrate that inmates who work in Federal Prison Industries in comparison to similar inmates who do not have Federal prison industry experience have better institutional adjustment and after release are significantly more likely to be employed and significantly less likely to commit another crime. Also, as this letter, which I will put in the Record, demonstrates over and over again, this is a law enforcement and security issue. If we have all of these young males in prison, locked up, sitting idle, it is a powder keg ready to explode. The only productive source we have to put them to work, believing in the old Franklin adage, ``Idle hands are the devil's workshop,'' is making goods for the Government. If the Senator wants to try to refine the system, and work with Federal Prison Industries, I am willing to work to see if we can do a study and look. How competitive is the price? Could the system be improved? But the idea that we are going to destroy the last vestiges of work in prison for some individual special interest for private manufacturers of furniture, or private manufacturers of anything, simply neglects the fact that prison labor is an important part of running a prison. It is the important part of preserving order. It is the important part of vocational training. It is the important part of rehabilitation. It is dangerous to have 1.1 million young men sitting in prison with nothing to do. It is also breaking the back of American workers to pay for it. What we ought to be debating is not the Senator's amendment to kill what is left of the work requirement. What we ought to be debating is repealing these three Depression-era laws and putting 1.1 million prisoners to work, work them 10 hours a day, 6 days a week, and make them to go to school at night. That is what we ought to be doing. In fact, when I was chairman of the Commerce, State, Justice appropriations subcommittee, we passed a bill in the Senate to do exactly that. And then when all of the special interests got geared up it died in conference and never became law. So I think that this is a very dangerous amendment. This is something that ought to be dealt with by the Judiciary Committee. This is a criminal justice issue. If you want to argue this is a procurement issue, I can't argue against the Senator. If we were simply talking about procurement competitive bidding, it is obviously the way to go. But we have 1.1 million people in prison. They don't have anything to do. And to the extent that we can put them to work making desks or other furniture for the Federal Government, we are at least putting them to work. We are maintaining order in our prisons. We are saving money. We are paying money for victims restitution. We are paying money for court-ordered fines. So to act as if this is just another procurement issue, clearly it is not. Every time these people go to work, we have to count the tools when they leave to be sure they are not taking something that can become a weapon. We basically run it without much capital because we want to use as many people as we can because we are not able to have them produce things to sell on the market. We have elaborate procedures that we have to go through to see that they don't compete with private industry and to minimize their impact. All of these things drive up costs. But the point is when you have 1.1 million people in prison, State and Federal, even if it is a very inefficient system by which you have them work, you still benefit by having them work. They still benefit by working. So I think this is a very important issue and I would like to ask to have the opportunity to see if we can work something out. I have a new letter that just came over a minute ago from the Assistant Director of Industries, Education and Vocational Training in the Federal Bureau of Prisons. I ask unanimous consent that it be printed in the Record. Here is what it says, talking about the Levin amendment. `` * * * it would have a devastating effect on Federal Prison Industries, Inc. and on the ability of the Federal Prison Industries to support the mission of the Federal Bureau of Prisons.'' I concur with that judgment. I would like to have this put in the Record.

Mr. GRAMM. Let me read two paragraphs from this letter. On behalf of the National Victims Center and the 40 million Americans victimized by crime each year, I write to express our strong opposition to Senator Carl Levin's amendment . . . This amendment . . . will literally take away desperately needed funds for victims of crime who are trying to piece their lives back together in the aftermath of violence. In other words, the money earned by having prisoners work we are using in part to compensate victims. And the National Victims Center is opposed to the Levin amendment because they are concerned about the loss of restitution. Let me also remind my colleagues that working prisoners is critically important, and let me read you a couple of sentences from a letter we received from the Assistant Attorney General. Federal Prison Industries is the Bureau of Prisons' most important, efficient and cost-effective tool for managing inmates. It keeps inmates productively occupied and reduces inmate idleness and the violence and disruptive behavior associated with it. Thus, it is essential to the security of Federal prisons and the communities in which they are located and is essential to the safety of the Bureau of Prisons' staff and inmates. They go on to say that the findings are overwhelming that where we make prisoners work and where they acquire skills in working, the probability that they will get out of prison and go back and commit other crimes falls dramatically. I went through these numbers earlier today, but let me do it again. In the State of South Carolina, ably represented by the chairman of the Armed Services Committee, those prisoners who participate in work in prison industries have a probability of recommitting crimes that put them back in prison of 2 percent. Those who do not work in prison industries have a probability of ending up back in prison of 35 percent. Those numbers in Florida are an 11 percent recidivism rate, that is, probability of ending up back in prison again after they get out, for those who work in prison industries; 27 percent for those who do not. In Wisconsin, it is 11 percent versus 22 percent; in Kentucky, it is 36 versus 65 percent. So, basically, this is not an issue of procurement efficiency. This is an issue of whether or not we are going to end the last vestige of prison labor in America. We ought to be debating opening up to allow prison labor to produce component parts, to manufacture items that we are currently importing, to produce things without glutting local markets and driving down prices. We ought to have a goal of putting prisoners to work 10 hours a day, 6 days a week, with a goal of having them fund at least half of their cost of incarceration. That is what we ought to be debating. In fact, 2 years ago, we did debate it when I, as chairman of the subcommittee with jurisdiction over the appropriations for prisons, tried to make that change. And yet the same special interest groups, labor unions, and manufacturers, who today want to kill the last vestige of prison labor, said, ``no,'' let the average taxpayer spend $200 a year keeping people in prison but don't let the inmates work and produce anything of value and sell it. I think this is a ridiculous position to be in. I think it hurts our criminal justice system. I think it increases recidivism, where people get out of prison and they don't have the discipline of having worked, they don't have any skills, and they go out and recommit crimes. So, what the Levin amendment would do is say let's stop prison labor so there is then nothing left of a system that once had virtually every person in prison working. I think this is a bad amendment. I have offered a second-degree amendment to get the facts, and I reserve the remainder of my time.

Mr. GRAMM. Mr. President, I am not arguing that having real full- blown price competition would not make sense under virtually any other circumstance. But when we have literally a captive labor force at the State and Federal level of 1.1 million people, it would be absolutely suicidal from a societal point of view to limit the last work that these people are allowed to do in the name of price competition when, in fact, if we wanted to have price competition--in fact, let me say I would support the Senator's amendment, if he would add to it that we would repeal all of the provisions that limit the ability that we have and that the States have in selling things produced by prisoners. If we could allow prisoners to sell things on the open market subject to the restrictions that they not sell it locally and that they not glut the market, with that as a second-degree amendment, I would support this amendment. Because if we didn't depend solely on Government work to work prisoners, then I would see a broader extension for competition. But this is the only thing that Congress allows these people to do. What we are doing is just creating a hothouse for criminal behavior. These people sit idly in prison with nothing to do because our laws prevent them from working and then they get out and they commit more crimes. They impose havoc and death on our society, and then we put them back into prison. So, if I sound that I am emotional about this issue, I am. This is a very, very serious issue. So I would like to have a chance to work with the Senator. I would like to see if we could work out a second-degree amendment. But I intend to resist this amendment. If we can't work something out, we are going to have to have cloture on this amendment. Those are my rights as a Senator. Those are the rules of the Senate. And I intend to stand by my rights and abide by the rules of the Senate on this issue. It is a very important issue. I am not sure that Members have thought this thing through or know really anything about our problems with Federal prison labor and State prison labor. But fortunately, having been Justice Subcommittee chairman when I was on the Appropriations Committee, I know it all too well. I am adamantly opposed to this amendment. I yield the floor. Mr. LEVIN addressed the Chair.

Mr. GRAMM. I will withhold.

Mr. GRAMM. Mr. President, may we have order?

Mr. GRAMM. Mr. President, I ask unanimous consent to set aside that amendment temporarily so that I might offer a second-degree amendment to the Levin amendment.

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

Mr. GRAMM. Mr. President, I want to respond to Senator Levin's point. I think he gave a great argument for price competition, but we are not talking about price competition. Our dear colleague invokes the name of business people and what they want. But let me remind anybody who is objectively considering this debate, when I brought to the floor of the Senate legislation to repeal three Depression-era laws that force us to idle 1,100,000 prisoners who ought to be working 10 hours a day, 6 days a week, to help pay the $20 billion cost of keeping them in prison, American business and American labor were up in arms. They were up in arms because they do not want prisoners to work. I can tell you taxpayers want them to work. These special interest groups that represent business and the union bosses in Washington, DC, are against it, but the working people who are paying $20 billion a year in taxes to keep people in prison want these prisoners to work. If we held a national referendum on this issue, I believe by a 10-to-1 margin, Americans would say put these 1,100,000 basically young men to work, have them produce things, do it in a way that you don't glut the local market, do it to displace imports, do it to make component parts, but put them to work to help pay the cost of keeping them in jail and to acquire skills they can use when they get out. So I would be, No. 1, more convinced by our colleague from Michigan that these businesses are interested in competition if they weren't the same people who were up here saying don't let prisoners produce anything to sell in the marketplace. They don't want to compete. They have already stopped competition. What they are trying to do is stop the last prison inmate work being done in America, and this cannot be allowed to happen. In terms of displacing imports, if you try to that, as I did, you find that it is prohibited by law and treaty. As remarkable as it sounds to working Americans, it is criminal to make prisoners work to produce anything of value which can be sold in the marketplace. In the Depression, Congress passed a law that idled millions--well, it idled hundreds of thousands of prisoners then. It now idles 1,100,000 prisoners. I would be a strong supporter of a provision that sought to identify industries with high import penetration and allow prisoners to make those products. But I would virtually guarantee that the same people who are for this amendment would oppose that amendment. Because basically, there is strong opposition among groups that feel they might lose something to making people in prison work. It is very narrow in its perspective, it is very shortsighted, but it clearly is out there. As far as making prisoners work at 22 cents an hour, we are using the profits from this industry to pay victims' restitution, to pay court- ordered fines, and I think we have a right to make prisoners work. We are paying, after all, their room and board. We are paying $22,000 a year at the Federal level, not even counting building the prisons. I would make them work for nothing, 10 hours a day, 6 days a week if that is what it came down to. Actually it's more efficient to have a little incentive pay and have them volunteer to work. Let me go back to the central point of debate here, and let me read from the Office of Legislative Affairs of the Justice Department, Assistant Attorney General: The Federal Prison Industry is the Bureau of Prisons' most important, efficient and cost-effective tool for managing inmates. It keeps inmates productively occupied and reduces inmate idleness and the violence and disruptive behavior associated with it. Thus, it is essential to the security of Federal prisons and the communities in which they are located, and is essential to the safety of Bureau of Prison staffs and inmates. When we are talking about people and how they are affected, let me give you some statistics. In the State of South Carolina--our distinguished chairman here is from the State of South Carolina--for those prisoners who have worked in prison industry, the probability that when they get out they are going to commit a crime again and end up back in prison is 2 percent. For those who have not worked in prison industry it is 35 percent. In the State of Florida the recidivism rate, people coming back to prison who have worked in prison industries, is 11 percent; it is 26.7 percent for people who have not worked in prison, not acquired a work ethic, not acquired any skills. In Wisconsin it is 11 percent for people that worked in prison industries, it is 22 percent for those who did not. In Kentucky 36 percent come back to prison versus 65 percent who do not work in Federal Prison Industries. So, if we are talking about price competition let's have it. Let's amend this amendment and say that we are going to let prison labor work in any area, say, that has at least a 30-percent import penetration. That would include automobiles, it would include a lot of industries. And let's put 1.1 million people to work and let's set a goal: Within 10 years they are going to pay the full cost of being in prison by working. Let's turn our prisons into industrial parks. Let's have it so that industries are lining up to hire people when they are getting out of prison. That's what America needs. That's what we ought to be doing. Every year, I have a dear colleague who offers an amendment barring trade with countries that use prison labor. And every year I wonder why we can't make our prisoners work. They would benefit from it. We would benefit from it. But what we are talking about here is killing off the last vestige of prison labor. We don't let them produce anything that can be sold, we simply let them work and produce things for the Government. There is a variance between what our colleague says and at least what the Federal Prison Industries report in their published data. One of the things that I intend to do is offer a second-degree amendment to have a study, so we actually know the facts. But here is what they say: During fiscal year 1996 [the most recent year where we have complete data] Federal Prison Industries received more than $446 million worth of waiver requests. These are from agencies which did not want to buy things from prisons. They wanted a waiver to go out and buy it in the private sector of the economy. Ninety-two percent of these proposed waivers were granted, resulting in $410 million reallocation of Federal prison business to the private sector. The law clearly says that prison industries have to meet quality requirements, have to meet the price set by the Government as a competitive price. If there is a problem there, let's fix it. But we cannot claim we are for competition when we don't let prisoners, as a matter of law, produce something of value and sell it on the public market. I just simply say when, in South Carolina, making prisoners work contributes to a dramatic drop from 35 percent who go back to prison to 2 percent going back to prison, I think it is worth something making these people work. If we have them work and we pay victims' restitution, is that not of some value? If they acquire skills, is that not of some value? So, I would just like to conclude by saying what a great tragedy it is that here we are debating ending prison labor rather than debating expanding it. Component parts that are now made all around the world ought to be made in Federal and State prisons. We ought to be working these people 10 hours a day, providing them a little incentive pay so they can get little extras and using the rest of the money to pay for victim restitution, court ordered fines and to help pay the $20 billion a year the taxpayers are paying to keep people in prison. But, instead, we are debating a proposal to end prison labor for all practical purposes by taking away their Government business. When you are dealing with prisoners, as the Senator from South Carolina said, it is a completely different structure because you have to supervise what they are doing, you have security requirements, and as a matter of principle, the prison industry has to be operated inefficiently because we have hundreds of provisions that limit their ability to do anything, to be in any way competitive with the private sector. We require them to use the lowest technology, because we have far more workers than we have work, because of law that prevents people from working. So they are using, basically, hand labor because we are trying to work as many as we can. We could fix this by repealing existing laws. I would like to propound a parliamentary inquiry. Would it be in order for me to submit an amendment to the Levin amendment?

Mr. GRAMM. Mr. President, we have 1,100,000 people in prison. We have passed laws in Congress banning them from working to sell anything in the private sector. The last place we can force them to work in is to produce goods to be sold to the Government. The Levin amendment will end prison labor in America. It is violently opposed by the National Victims Center because the money we get from working prisoners goes to compensate victims. I yield the remainder of my time to the chairman of the Judiciary Committee. Mr. HATCH addressed the Chair.

Mr. GRAMM. Mr. President, I yield myself 10 minutes.

Mr. GRAMM. Mr. President, we have heard an interesting debate here about competition when there is no competition. I would like to remind my colleagues that prior to the Great Depression, we had the model prison labor system in America. Prior to the Great Depression, prisoners in America worked 10 hours a day 7 days a week. They paid for substantial parts of their incarceration by working. They produced goods and services that were sold, and people from all over the world came to look at our prison system to try to model theirs after it. In the Great Depression, special interest groups took control of this issue and in three bills, the Hawes-Cooper Act of 1929, the Sumners- Ashurst Act of 1935, and the Walsh-Healey Act of 1936, we, No. 1, removed the interstate commerce protections for prison-made goods; No. 2, made illegal the interstate transportation of goods produced by prison labor; and, finally, we prohibited the use of inmate labor. In other words, in the Great Depression we criminalized prison labor in America. As a result, we have the absurd situation that today we have 1,100,000 prisoners, State and Federal, most of whom are young men, physically vigorous, on whom we are spending $22,000 a year to keep, those who are in the Federal penitentiary, in the Federal penitentiary, and yet it is illegal for us to require them to work when the average taxpayer pays $200 a year for the cost of keeping them in prison. All these people who are talking about competition are the very people who oppose letting us have a system where prison labor works to produce something of value that can be sold to pay for their cost of incarceration. In fact, so much have we limited prison labor in America that the only thing Federal prisoners are allowed to do is to produce goods to sell to the Government, and, as a result, hundreds of thousands of them sit idle watching color television in air-conditioning while the back of working men and women in America is broken in paying for them to be in prison. We have an amendment that comes along now and says the only work requirement we have is producing things for the Government and let us end it. All of this business about competition would be believable if there were a proposal here to let prison labor compete in the marketplace, but that has already been eliminated. This is a final effort to end prison labor in America. Let me touch on a few of these issues. First of all, there is a big dispute about the facts here, a big dispute about the facts, which is why I have offered a second-degree amendment. If we listen to Senator Levin, we get the idea that everybody is unhappy with the products produced by prison labor, that they are noncompetitive in price, and that everybody would like to have an alternative. The facts are that during fiscal year 1996, Federal Prison Industries received more than $446 million in waiver requests. These are Government agencies that say we do not want to use prisonmade goods. We want to go into the private sector. Of those requests, 92 percent or $410 million were granted, and those contracts went into the private sector. And the average amount of time that it took to get those requests approved was 4 days. So something is wrong here. Either these figures from the Bureau of Prisons are wrong or Senator Levin is wrong. The problem is I have great confidence in both, and what I have done is offer an amendment to get the facts, to do a study that would involve the Bureau of Prisons and their work program and the Defense Department so that we can know exactly what the facts are. Here is how the system works. The current system works in that the Government uses prison labor where the Government agrees on the price and where Government is given the ability to not use prison labor by applying for a waiver, and in 92 percent of the cases that waiver was granted. What do we do with the money that comes from prison labor? One of the things we do is we pay for victim restitution. By making prisoners work, we earn money that goes to victim restitution. I ask unanimous consent that a letter opposing the Levin amendment from the National Victims Center be printed in the Record.

Mr. GRAMM. Mr. President, let me first say I appreciate our colleague from Idaho. I don't doubt what he says is true. But as a person who has now fought for 13 years to change laws that prohibit prison labor, let me assure you that special interest groups in America are not about to let that happen. What we are about to do here in the name of good government is to end what little prison labor we have left. It is true that it is inefficient to work prisoners. It is also true that we pay them virtually nothing. But with the money they get by working, they are able to pay restitution to victims, we are able to recoup some of our costs, and the bottom line is, whether we like it or we don't like it, we have 1,100,000 people in prison who basically have nothing to do because we have made it illegal for them to work. What this amendment is going to do is destroy the last Federal system where we are able to work prisoners in America. We hear all these horror stories, but the plain truth is the law requires that prisons do this competitively. We have a system where you can ask for waivers if you don't want to buy from prisons, and 92 percent of those waivers are granted. What we are seeing here is not any protest from the Defense Department. We are seeing those who want to end this system so that they can expand their businesses. Those are good and noble objectives, but we want to work prisoners and we want to have restitution to people who are victims of crime. So I urge my colleagues to vote down this amendment.

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

Mr. GRAMM. Mr. President, what this amendment does, very simply, is it mandates that the Federal Prison Industries, jointly with the Department of Defense, conduct a study of our whole procurement system, as it relates to Federal Prison Industries and the Defense Department, to look at how competitive the system is, how we can make it more competitive, how we can make it more efficient and, basically, ascertain the facts. If we listen to Senator Levin, prisons are noncompetitive, producing low-quality material at inflated prices. But yet, when we look at data provided by the Justice Department, in 92 percent of the cases where people have said we don't want to buy this product, they have granted the waiver to bypass Federal Prison Industries and buy in the private sector. Somewhere there is a disconnect over the facts. I always try to teach my children to argue about principles and theory, don't argue about facts. I don't know what the facts are. I know what the Bureau of Prisons says. I know what Senator Levin says. I have great respect for both, but they don't quite agree. One of the things the study would do is to allow us to look at it, to acquire information and to try to bring together all of the factors that we have to decide here. This is a tough issue. Let me say to Senator Levin that I don't think there is a Member of the Senate who has a stronger record in supporting competition, privatization, and price competitiveness than I. Maybe there is, but I don't think so. This is a criminal justice issue. It is not as if we have 1.1 million people here who can go off and do something else. We have them locked up in prison, and they are sitting there idle costing us $22,000 a year apiece to keep in prison. If we can have them work and get some value out of it in victim's restitution, in training, any assistance we get in paying for their incarceration, I view that as God's work and something that I want to do. Obviously, in any argument, there is another side to it, and the other side here is the people who would rather have the business that prisoners are doing. But I simply remind my colleagues, and we probably have overdebated this issue, but I remind my colleagues that we have 1.1 million people in prison. We are spending billions of dollars to keep them there, and because of our existing laws, they are basically in idleness. This is a dangerous situation, and I think when you are dealing with this kind of situation, you can't simply say we are not going to let them compete in any other area but we are going to make them compete for Government business. Government work is all they are allowed under law to do. So if we are going to change this, we better understand what we are doing, because I would hate to see a situation where, in South Carolina, people who are working in prison, only 2 percent of them come back to prison when they get out; 35 percent of them come back to prison who don't work. When we are talking about compassion and concern, remember these people who are coming back to prison are people who have killed people and robbed people and molested people. I think this is a very important issue. I think my amendment allows us to get the facts and make a rational decision. I hope my colleagues will support this amendment. I yield the floor. Mr. LEVIN addressed the Chair.

Mr. GRAMM

Mr. GRAMM. Mr. President, in response to what our colleague from New Hampshire has stated, it is a testament of the genius of small business that this wasn't a big scientific lab somewhere, this wasn't NASA with all of its billions; this was a small, independent business. I think we can all rejoice in that.

Mr. GRAMM

Mr. GRAMM. Mr. President, let me not miss this opportunity to join our chairman and ranking member in saying good things about our dear friend from Nebraska. I am glad I was over and got to hear part of his speech. Mr. President, I have waited until we got to a lull in consideration of amendments to come over today and talk about an issue which is very important to me and to my State. But I think more importantly it is very important to our national security, and it is very important to the American taxpayer who is intimately involved in all of these considerations as the ultimate payer for all that we undertake. I want to apologize in advance to my colleagues because I want to cover a series of issues here that are related to base closing and privatization. We have had a protracted debate in the House of Representatives, most of which I would have to say I believe is based on a view of the facts that do not comport with my view, and I think don't comport with the facts. I think it is very important at least to have on record at one place as we enter into the debate, which ultimately will occur in conference, on what this whole issue is about and what it is not about, because I want our colleagues to know that this is not a dispute among Senators that are simply representing the views and interests of their States. In my mind this is about a fundamental issue. I think when you cut through all of the rhetoric, when you separate out all of the random facts that are out there in the debate, that the ultimate issue is, do you believe in competition? Do you believe the taxpayer benefits from competition with a lower price? And do you believe that competition produces quality and excellence? If you do, you are for it. If you do not, you are against it. And it is my belief that these decisions about privatization ought to be made on that basis. Having thrown a bunch of ideas out there that to any listener not involved in this sounds to be random, let me go back to the beginning, back to the 1995 Base Closing Commission report, and then come forward to the present, to the House action and where we are today, and basically try to set this whole thing in the context of facts. So let me begin with the base closing report. As our colleagues are painfully aware--and especially if they represent a State as I do where bases have been closed--we adopted a bill establishing a commission to close military bases that were no longer needed. I was a principal cosponsor of that bill. I supported it. I have voted for each of the recommendations of the Base Closing Commission including the recommendations that closed five military bases in my State. I am committed to continuing the base closing process. I will be one of the Senators, assuming that Senator McCain and I can work out some language differences, who will be cosponsoring Senator McCain's amendment to reinstitute the Base Closing Commission. So I do not want anybody to be the least bit confused. I am in favor of closing military bases to reduce the overhead that we have which is literally starving national defense, and in the process threatens our modernization and threatens our ability to maintain the pay and benefits that have allowed us to recruit and retain the finest young men and women who have ever worn the uniform of this country. I intend, assuming that we can work out these minor language differences, to cosponsor the McCain amendment to reinstitute base closing, though it is very unpopular in my State, and very unpopular in the country. The bottom line is we have cut national defense spending by over a third, and we have closed only 18 percent of the military bases. We have a huge overhang from the cold war in the bureaucracy in Washington, around the world, and in our own country, which makes absolutely no sense. We have more nurses in Europe than we have combat infantry officers in Europe. We have a huge overhang of resources, facilities, production capacity, and bureaucracy that ultimately have to be pared down to meet the defense needs of the Nation. And while I am not happy about doing it, while I worry that more military bases in my State will be closed, I am for it because I think the national interest dictates it. I also believe it is a tragedy that cannot be avoided that the very communities whose support allowed us to operate military bases and facilities that won the cold war and tore down the Berlin Wall and liberated Eastern Europe and transformed the world are the very communities that end up being hurt by this process. But the alternative to this process is that we end up with a huge bureaucracy where we are spending our money to maintain facilities rather than to maintain defense. We have in terms of our ``tiger,'' so to speak, our military strength today, too little tooth and too much tail. That is what the Base Closing Commission is about. Having said all of that, let me go back to the Base Closing Commission Report of 1995. I want to talk about a base in my State. And then from that I want to discuss this whole issue because I have never heard a debate since I have been here that has been more confused on what the real issues are than this debate about privatization. Let me take you back to 1995. We are in the process of moving toward congressional and Presidential elections. The Base Closing Commission recommends, among other things, closing Kelly Air Force Base in San Antonio, TX, a huge facility with 14,000 employees. And they recommend two options. I want to read from the Base Closure Commission report, because one of the assertions that has been made in all this debate is that the President is trying to use politics to overcome the recommendation of the Base Closure Commission. There is only one problem with that assertion, and that is it is not true. Now, when the Base Closure Commission in 1995 closed Kelly, they had two recommendations as to what to do. One was consolidate the workload to other DOD depots or to private sector commercial activities as determined by the Defense Depot Maintenance Council. In other words, the recommendation was to close Kelly Air Force Base and then either transfer its functions to another depot or put them out for private bids, and if under the procedures established by the Defense Depot Maintenance Council it is cheaper to do it in the private sector than to transfer it to a depot, DOD could do it that way. Now, this is not me talking; this is not what I am in favor of. This is what was recommended by the Base Closure Commission. Now, it does get confusing after that. You have a base closed, a big maintenance facility in California, and you have a big maintenance facility in Texas closed, Kelly Air Force Base, and President Clinton is running for reelection. Obviously, people in California are not happy about the base closing. Obviously, people in Texas are not happy about it. So what do you expect the President to do? Do you expect him to go around and say this is great? What the President did, which I would have to say 9 out of 10 politicians would have done, including many people on my side of the aisle, is he went out of his way to say, well, look, all is not lost. Maybe we can privatize some of these functions in facilities that are currently at McClellan or currently at Kelly. In other words, the President, in campaigning, did what any politician would do. He took the options of the Base Closure Commission and wrapped them in as pretty a package as we could wrap them and led people to believe that he somehow was going to support ``privatizing these functions in place,'' which was a term that he used. Now, those who oppose competition based on price and quality have seized on what the President did during the campaign and claimed that somehow that violated the principles of the Base Closure Commission. It seems to me that as politicians we are all familiar, intimately familiar, practiced, in fact, in the skill of taking bad news and putting as pretty a face on it as you can. And what the President did all through the campaign in voter-rich California and Texas, two big States with huge electoral votes, is he talked about the potential for privatization. But I want to remind my colleagues that the President signed the Base Closure Commission report. We had some effort in my State to try to encourage the President not to sign the Base Closure Commission report. I am proud to say that I rejected it, refused to participate in it and thought the President had no choice, and in the end he did not. But to somehow assert, as has been done in the debate in the House and to some extent here, that the President has tampered with the process by trying to put a pretty face on a corpse is just not fair, and it misleads people about this whole debate. Now, let me outline what we are actually talking about. We are going to have a contract where maintenance work on the C-5 is put out for competition. If a private contractor can do it for less, it will be privatized to save the taxpayer money. Now, that private contractor can do the work anywhere they choose, and obviously one of the options that is going to be bid will be the option of using the C-5 hangar which exists at Kelly and nowhere else--it would cost $100 million to rebuild it somewhere else--and doing the work not with Government employees but with private employees. They will not get the contract if they cannot do it for less. So what is the issue here? Well, some people say the issue is DOD is not following the Base Closure Commission report because they are not closing Kelly Air Force Base. They are not closing McClellan Air Force Base. Well, look, we all want to take facts and try to use them to bolster our argument, but this is not true. No one is proposing that we not close Kelly Air Force Base. No one is proposing that we not close McClellan Air Force Base. There are a lot of people in San Antonio, there are a lot of people in Texas, there are a lot of people in California who would rather not close these bases, but there is no debate about it. The debate is about this: Should private industry have a right to compete for the work that will no longer be done by the Government at Kelly and McClellan? That is the question. So nobody is saying do not close the military bases. To listen to the debate in the House, you would think that is what is being proposed. Now, that brings me to the next point I want to make. All throughout the debate in the House of Representatives reference was made to a GAO study entitled ``Air Force Depot Maintenance: Privatization in Place Plans Are Costly While Excess Capacity Exists.'' Now, might I say that this is so typical of GAO work, because what happened is somebody asked GAO to do a study that in essence said, if your whole objective is to reduce Air Force overhead, would you want to consolidate or would you want to privatize? Nobody asked the question, if you want to save the taxpayer money, if you want to improve quality, what would you do? But to listen to the debate in the House of Representatives, where over and over again people held up this study, you would think that the General Accounting Office had concluded that having the Government do this work rather than having a public/private competition, where we would decide who does it based on who could do it better or cheaper, that GAO had looked at this option and had decided the Government could do it better. Now, when you actually look at their study, you find, in fact, that is not what the study looks at at all. What the study basically looks at is, if your objective is to reduce the level of overhead in depots, what you would want to do is consolidate. If your objective is to reduce the amount of excess capacity in private industry, as if that is our concern, you would want to consolidate into the depots. But when they get down to cost, all they can say is that ``Air Force planning has not progressed far enough to compare precisely the cost of privatization of depot workload in place with the cost of transferring the work to other unused depots.'' So, in other words, all the GAO study says is if the only options are to close Kelly and McClellan and transfer the work versus keeping them open, operating at the same cost, you ought to close them and transfer the work, especially if your sole objective is to reduce overhead. I do not disagree with a word this study says, but the problem is it does not have anything to do with the debate that is being conducted. The debate is not about excess capacity. The debate is about cost. The debate is about dollars and cents: Is it cheaper to have public/private competition, or is it cheaper to simply have the maintenance work done in Government depots? Interestingly enough, there was another study on this subject which was never referred to in the debate in the House, and this is a July 1995 study done by the Congressional Budget Office. I want to remind my colleagues this study was done before the Base Closure Commission report and was in no way colored by anybody trying to tilt the evidence in favor or against privatization. Now, the CBO study basically concludes, comparing the public sector, where the Government does maintenance work with Government employees, versus the private sector, that ``shifting depot work to the private sector might reasonably be expected to save $1 billion annually in the long run.'' In other words, you have two studies. One looks at whether or not to close a facility and shift the function, where those are the only two options--and which is not what we are debating at all. The other study tries to look at competition between the public sector and the private sector in doing this work, and--something that should not come as startling to an American--competition means lower prices and higher quality, and this study projects about $1 billion of savings from competition once you fully implement competition. Let me summarize then what the real issue here is about. The real issue here is not about closing two Air Force maintenance facilities. Nobody is arguing that these two bases should not be closed. But what is being argued, and being argued with some passion, is whether or not we ought to look at the least costly way of doing this work. Should we simply close these two military bases, which everyone supports, and shift the functions to other Air Force maintenance facilities, or should we put out this work for bids, and if it can be done cheaper in a Government depot, do it there, and if it can be done cheaper by the private sector, do it there? That is what the issue really is about, but you would never know it from the debate. The debate we hear really goes in two directions. One, we are talking about keeping bases open that the Base Closure Commission closed and that violates the agreement. Nobody is talking about keeping the bases open. They are going to be closed. We are going to bring down the flag. The military personnel are going to be shifted. Nobody is debating that option. The question is, should we allow a private contractor, who would come in and lease a facility that will belong in this case to the city of San Antonio, a C-5 hangar that does not exist anywhere else in America, should a private contractor be able to come in and lease that facility and compete with other private contractors and with the Government to maintain, for example, the C-5? That is the question. Obviously, if we have private competition, that is going to mean that our remaining depots are going to have to compete. I am not going to get into the business of trying to determine the intentions of our colleagues. I never try to impugn anybody's intentions. But let me talk specifically about that issue. I have proposed a compromise that I think makes sense. In this sort of supercharged environment where this has become one State versus another, we have not yet worked out a compromise, but I wanted to outline what my compromise is because I think in the future we are going to have to come to some conclusion here. My proposed compromise is the following thing. We have in this bill a requirement that 50 percent of our maintenance work be done in Government depots and no more than 50 percent be done by the private sector. This is an arbitrary provision. It ought to be repealed. We ought to make the decision based on defense needs and cost. But what has really happened here is that at the very time when defense spending is being cut, you might initially believe that, well, with defense having been cut by a third, we have all been forced to make tough decisions, and in the name of a strong national defense and in the name of the security of the United States, we are all forced to make decisions about cutting overhead and waste and protecting special interests, dropping that so that we can get the most return we can on our defense dollars. You might think that would happen. But I am sorry to say that I think there is every evidence that exactly the opposite has occurred, that what has happened with defense spending declining is that our defense facilities and the people who live in those communities and those who represent those communities have started to view defense like welfare or an entitlement, that somehow because you have a defense maintenance facility, for example, that you are entitled to the work and the fact that we have less of it makes you more entitled. So what we have seen in the House is sweeping language that would bar privatization and price competition for all practical purposes, forcing the Air Force to do something they do not want to do. The Secretary of Defense, the Secretary of the Air Force, the uniformed leadership, the Joint Chiefs of Staff, the people who are trying to preserve a strong defense desperately want the ability to engage in price competition. They understand we won the cold war because the private sector can do things well. So what they want to do, with the limited amount of money they have, is take a requirement and put it out for competitive bids and get the most return we can by having competitive bids. So that, if a depot in some State wants work, they have to prove they can do it cheaper than any other depot or than any other private sector person who might do that work. I have offered to our colleagues on the other side of this issue to sit down with them and define a level playing surface, so that we can be absolutely sure that this is going to be a fair competition. But, basically, what has happened, I am afraid, and I am unhappy to say, is that increasingly defense is being viewed as an entitlement or welfare program, where, as we have less of it, rather than spending our money more efficiently, there is a demand to protect the interests of individual communities and individual military facilities. If we follow this procedure, we are going to end up with a less effective military force, we are going to end up with less procurement of new equipment, we are going to end up with poorer pay and working conditions, we are going to end up with a military that does not represent the best and the brightest in our society. What my proposal has been is the following: Leave this division of public/private work in place, at least temporarily. I would have to say that logic dictates that we ought not to have any arbitrary division, that it ought to be done based on competition. But my proposal is the following, that within this arbitrary division set out in law, in our bill 50-50--no more than 50 percent can be contracted out--leave that provision in place, but add a provision that says that, if a private contractor using a level playing surface that takes into account all costs, where a bidder has to have a firm, fixed price and where you don't pay them if they have a cost overrun, they have to eat it, and where you impose a fine and other penalties on them if they don't meet quality requirements and a timetable, including disbarring them from doing defense work, then have a full and fair competition, however we want to define it. I would define it to include all costs, including retirement and overhead, and require the public and the private sector to have fixed-price contracts, and then make them live up to the contract. I am trying to work out a compromise and break this impasse that not only fractures the Senate and House but that threatens our national defense efficiency, in my opinion. What I am willing to say is, OK, stay with the 50-50 arbitrary division except in the cases where the savings are 10 percent or greater. In other words, begin with a presumption that it is worth 10 percent to have the Government do it, but if the private sector can do it for more than 10 percent less than what the Government can do it for, let the private sector have the contract. In other words, give a 10-percent bias toward the Government. If you really are concerned about efficiency, it seems to me that is more than a reasonable proposal. What it would say is that any time the Government in its depots can do the work within 10 percent of what the private sector can do it, we leave the existing restrictions in place. But in those cases where the savings are at least 10 percent or more, let the private sector have the opportunity to bid on it and, if they win the bid by that margin, let them have the work. That is, I believe, the ultimate solution to this problem. I don't think it makes sense economically. I think it is tilted toward Government procurement, Government provision of maintenance. But to try to reach a compromise, it is what I am in favor of. But let me make it clear, not only do I believe the position I have taken is right for America and right for the taxpayer, but the idea that companies in Texas or anywhere else don't have a right to bid on work and, if they can do it cheaper, get the contract is so alien to everything that I believe and everything that I believe is in the national interest that, if there is any provision in this final bill that stops competition, that precludes price competition to benefit the taxpayer, I am going to vigorously resist. Also, I might note that the President has said that he would veto the bill if such a provision were in it. I hope my colleagues, at the very time when we are all down here bemoaning the decline in defense spending and the threat it poses to our security, I hope we are not going to put ourselves in a position where we are defending special interests and the President is vetoing the bill because we are more concerned about the pork barrel and treating defense like welfare than we are concerned about providing for the national defense. Let me go to the final point. So confused has this issue become that we now have colleagues who are saying that they are not going to support another base closing commission because of what the President supposedly has done about the last one. Our chairman of the Defense Appropriations Subcommittee, Ted Stevens--we all know and admire him-- he is quoted in today's paper in the following way: ``Senator Ted Stevens, Alaska Republican, said there will be no further closure until Mr. Clinton backs off his plan to protect bases in California and Texas.'' Let me respond by saying, obviously the President, like any good parade leader, when the Base Closing Commission proposed one of the options being price competition, the President grabbed his baton and got out in front of the parade. He just thought it was a great idea and he thought that we would almost certainly do it. And he was for it. He was very much for it. Because people were getting ready to vote on whether to renew his contract or not. But it is not what he said that is important; it is what his administration did. The point is, they didn't do it. All they have said is that they want to follow the Base Closing Commission report where they would put out bids, and if the private sector can do the work on these closed military bases, or anywhere else, cheaper than the Government can do the work internally, they want to do it. So, are we going to base the public policy of the country on political posturing by a candidate for office during a contested Presidential election? The plain truth is, the President said over and over he was for privatization and he believed that contractors at these bases would win the competition. But he didn't change Government policy. He didn't say we are going to write the proposals so that they have to win. In fact, the Defense Department believes, our Secretary of Defense believes, the Secretary of the Air Force believes, the uniformed services believe, that we could save as much as 30 percent by having price competition. So, what a terrible confusion we find ourselves in, where we are talking about not moving forward with necessary policy because the President, taking the best provisions of the Base Closing Act from a political point of view and trying to hide behind them, somehow confuses people. We are going to let a contract on C-5 maintenance. If it can be done cheaper by the private sector, it will be done by the private sector. If it can't, it won't. Now, if it is cheaper to be done by the private sector--and I believe it will be substantially cheaper-- but if it is, do I expect the President to make a statement about it and say: I am delighted that a private contractor in California or Texas or Timbuktu has gotten this contract? Yes, I expect him to do that. But does that change the fact that the taxpayer has benefited? That defense has benefited? No. So, I urge my colleagues to go back and look at this issue. A final point and I will yield the floor. This is not, in my mind-- and I believe demonstrably it is not a fact--to say that this is a dispute between the Senators who represent Texas and California on one hand and the Senators who represent States that have Air Force depots on the other hand. In fact, I had the great privilege, as our distinguished chairman will remember, of serving on the Armed Services Committee for 6 years. Every day in every way on every issue, I supported privatization as a member of that committee. Now, granted, if the situation were reversed and we had closed a maintenance facility in some other State and we were moving it to Texas, my position would be more difficult than it is today, because the national interest and my State's little special interest would be at least partially on a different side. But I don't believe that my position would be any different than it is today. I cannot imagine that I would ever oppose price competition as a way of getting the largest return on our dollar. I hope, if the day ever comes that I have to go against something that I believe in as strongly as I believe in price competition, that maybe I'll get out of the way and let somebody else do this job. The point I want to make in concluding is this is not a dispute among States. Granted, everybody can look at this, this collage of facts and political posturing, and they can pick and choose what they want. They can take reports that do not have anything to do with price competition and say, ``You see, it's cheaper to let the Government do it and have no price competition.'' Anybody who has lived in America for more than a day would know this can't be right. But you can do that. You can take political posturing and make whatever you want to out of it. But, when you get down to the bottom line, this is a debate about price competition, are you for it or are you not for it? I'm for it. Let me say, I want to work something out. This ends up, in a sense, pitting me against some of the Members for whom I have the highest affection. There is no Senator I love more than the Senator from Georgia, Senator Coverdell, or Senator Inhofe from Oklahoma. I was instrumental, as chairman of the senatorial committee, I think, in helping to elect both of them. I want to work out an agreement where everybody can feel that we have a good national policy, and their interests are protected. If there is a legitimate concern about full and fair competition, if people are in any way concerned that the Air Force is going to tilt the competition to benefit private contractors at the expense of depots, which I don't believe because I think every pressure will be in the opposite direction, but the point is, if people are concerned about that, I am willing to sit down and work with them and come up with an ironclad system. I am willing to bring private accounting firms into the certification process to guarantee that it is a fair competition. I am willing to do whatever we have to do to safeguard the competitive process. But I am not willing to let what I perceive to be special interest treat defense spending as welfare and say this belongs to us, even if we can't do it better, even if we can't do it cheaper, that the fact that we have done it means that we ought to have it forever. We all have to resist that. We all have to represent our States. That is why we are elected. But we have to also look at the overriding national interest. I wanted to come down today and go over all these issues because someday, the Senate is going to have to reach a decision on this. I think as it stands now, this decision will be made in conference. I hope that we can, in conference, preserve the ability to have price competition. I am hoping that next year, we can sit down and work out an agreement where everybody believes and is confident, to the degree we can make people confident, that their individual interests are protected. But the issue here is not preventing base closures. We are going to close the bases. The flags are coming down. We are already moving people. Nobody is disputing that. Despite all the political rhetoric to the contrary, we are closing these bases. The question is: Should we use price competition to determine whether some of their functions go to other bases or whether they go to the private sector? And the Base Closing Commission recommended that we do that. So nobody is here trying to override the Base Closing Commission. What we are here trying to do is to implement the Base Closing Commission recommendations. We all, obviously, look at an array of facts, and we often try to take the facts that bolster our case. I think that is only human nature. But I believe that if a person gathers all the facts and cuts through all the irrelevant issues and gets to the bottom line on this issue, it is: Do we believe in competition? Do we believe that we can maximize the effectiveness of national defense by having public-private competition where the best provider at the lowest price wins? I believe we do. I believe that is the principle that most Members of the Senate and the House believe in. I wanted to take the time today--and I thank my colleagues for their forbearance in this lengthy speech--to at least get on the public record what one Member believes the facts to be. I yield the floor.