Rod Grams

Mr. GRAMS

Mr. GRAMS. Mr. President, I ask unanimous consent that there now be a period of morning business with Senators permitted to speak for up to 5 minutes each.

Mr. GRAMS

Mr. GRAMS. Mr. President, I now ask unanimous consent that the Senate proceed to the immediate consideration of Senate Resolution 287, submitted earlier by Senators Lott and Daschle.

Mr. GRAMS

Mr. GRAMS. I now ask for its second reading and would object to my own request.

Mr. GRAMS. Mr. President, I understand that H.R. 4257 has arrived from the House, and I ask now for its first reading.

Mr. GRAMS

Mr. GRAMS. Mr. President, I ask unanimous consent that the resolution be agreed to, the preamble be agreed to, the motion to reconsider be laid upon the table, and that any statements relating to the resolution appear in the Record.

Mr. GRAMS

Mr. GRAMS. Mr. President, I ask unanimous consent that when the Senate completes its business today, it stand in recess until 9:30 a.m. on Tuesday, October 6. I further ask that the time for the two leaders be reserved.

Mr. GRAMS. Mr. President, I ask unanimous consent that there be a period for the transaction of morning business until 10 a.m., with Senators permitted to speak therein for up to 5 minutes each, with the following exceptions: Senator DeWine for 10 minutes.

Mr. GRAMS

Mr. GRAMS. Mr. President, our Nation's Social Security system, forged in a much simpler time and patched and plugged over the years to keep it relevant, has been a godsend for millions of Americans over the program's 63-year history. It doesn't provide a life of luxury, but Social Security offers senior citizens a little bit of certainty during what is often a very tough time. I have friends and family members who depend on that monthly check from Social Security, and I am grateful that it is there for them and would never do anything to take it away. But that is not to say we can't do something better, or we should not try to improve a system that will not be able to provide that certainty for retirees in the future. As a product of the 1930s, it is clear that the Social Security system is a system that was best suited for yesterday, not tomorrow. Social Security's pay-as-you-go structure fails to meet the challenge of a sharp demographic change that is now underway in this country. With fewer and fewer workers supporting each retiree, the program is soon to go broke, or it will be too costly for our children and grandchildren to support, thus creating financial hardship for millions of baby boomers and leaving nothing for future generations. In the meantime, Social Security is shortchanging today's workers, denying them the opportunity to expand their personal wealth and control their own financial destinies. The coming Social Security crisis is real, and it will shatter our economy and destroy the ability of our children to achieve the American dream. The question is, why? Because the only way to save the current system is to raise taxes by more than double, reduce benefits as much as one-third, while raising the age of eligibility to retire as high as 70 years old. These solutions are unacceptable for the workers of the future. If you offered this to somebody, why would they want to pay more, get less, and wait longer for retirement? To be honest with our families, we have no choice but to pursue real reform of Social Security. Mr. President, the sooner we act, the easier and less costly our choices will be and the more secure our children's future will be. With a strong sense of responsibility, I rise today to introduce legislation that I believe will offer the best solution to avoiding the crisis ahead and preserving Social Security, while providing improved retirement security for every working American as we now approach the 21st century. Mr. President, during the past six decades, whenever a Social Security crisis would arise, Washington's approach was to tinker with the system by either increasing the payroll tax or reducing benefits. When the tinkering was done, the politicians would slap themselves on the back and claim that Social Security will be solvent for another 50 to 75 years. That has happened more than 50 times--always at the expense of the American workers, who found themselves with higher taxes or lower benefits. But this is obviously the wrong approach. If it had worked before, we would not be where we are today. Social Security, as you will remember, started off taking only one- half of 1 percent of your income. It is now at 13 percent. One-eighth of everything you make goes into a system that, right now, can't promise you that you are going to get the benefits that you expect. Unlike any previous crisis, the magnitude of the current situation makes a traditional bailout impossible. Again, under an optimistic scenario, it would require a payroll tax increase of at least 50 percent or a one-third cut in benefits just to keep Social Security from bankruptcy. Under a more realistic ``high-cost'' projection, paying promised Social Security benefits would require the current 12.4 percent payroll tax to be more than doubled to 26 percent. If you include the additional tax to save Medicare, the total payroll tax would have to increase to an astonishing 46 percent, and even a tax hike that massive would be only a temporary fix. The total tax--income and payroll--could reach as high as nearly 80 percent for young Americans who enter the workforce today. Payroll tax hikes at this rate will heavily burden working Americans who are already struggling to make ends meet. They will rob our children of their financial future, and demolish our economy. Reducing benefits is not an acceptable solution. Low-income families are increasingly dependent on Social Security; in 1994, Social Security benefits accounted for 92% of the total income received by elderly Americans living alone, beneath the poverty line. A one-third benefit reduction will throw more elderly and disadvantaged Americans into poverty, and cast those already mired in poverty into further desperation. Again, those benefit cuts could be much deeper under more realistic scenarios. We must abandon the traditional approach to fixing the Social Security system. We must expand our thinking--explore new opportunities to fundamentally change the way we think about Social Security--resolve the problems once and for all and offer the American people nothing less than peace of mind when they retire. The best solution to avoiding the imminent crisis is to move from Social Security's pay-as-you-go system to a personalized retirement program that is fully funded and offers retirement security to every American. This is not a new idea. Sixty years ago, during debate in this chamber over creation of the Social Security system, Democratic Senator Bennett Clark proposed just such a plan. It passed the Congress overwhelmingly but was pulled out in conference with the promise it would be done the next year. Again, back in the 1930's, Democratic Senator Bennett proposed a plan for personal accounts for retirement. It passed the Congress overwhelmingly but it was pulled out in conference again with the promise that it would be done the next year. That promise was never kept by the few who advocated a government-financed and run program. During each past crisis, similar proposals of personal retirement accounts have been discussed--yet never implemented. Today, there are a number of plans that have been introduced by my colleagues from both aisles, favoring diverting anywhere from 1 to 4 percent of the Social Security payroll tax to set up a system of market-based personal retirement accounts. My colleagues are to be commended, Mr. President, and this is a move in the right direction. However, if a market-based personal retirement system works so well, and is the right things to do as proven by countries like Britain, Chile, Australia and others, we should take full advantage of it by accelerating the wealth building for retirement security and expediting the transition from a PAYGO system to a fully funded system. Mr. President, this is precisely the reason I am introducing my reform plan. My legislation, the ``Personal Security and Wealth in Retirement Act,'' is based on six fundamental principles, principles that must guide Congress in any effort we undertake to ensure retirement security. The primary principle is to protect current and future beneficiaries, including disadvantaged and disabled adults or children, who choose to stay within the traditional Social Security system. The government must guarantee their benefits. There should be no change that reduces their benefits, and no retirement age increase. Let me say that again: a guarantee of no change in benefits or age of retirement for those who wish to stay within the traditional Social Security system. We must do no less. I emphasize this principle not so much because we want to gain the support of seniors, nor to neutralize their opposition to Social Security reform, but because of the sacred covenant the federal government has entered into with the American people to provide their retirement benefits. It's our contractual duty to honor that commitment. It would be wrong to let current or future beneficiaries bear the burden of the government's failure to make the changes needed in a system that cannot handle the demographic changes that will begin to create huge cracks in our existing program. The second principle my plan upholds is that Social Security reform must give the American people freedom of choice in pursuing retirement security. The purpose of Social Security is to provide a basic level of benefits for everyone in case of misfortune. And so if social insurance is a safety net to catch those who fall, it does not make sense to penalize those who are quite able to stand on their own two feet. The third principle is to preserve a safety net for disadvantaged Americans, so no covered person is forced to live in poverty. My fourth principle is that reform should make every American better off, and certainly no worse off, in their retirement than they are under the current system. It should enable workers to build personal retirement savings, improve the rate of return on their savings, increase capital ownership, and pass on their savings, as part of their estate, to their children. The fifth principle is to replace the current pay-as-you-go financing scheme, in which today's workers support today's retirees, with a fully funded program. In other words, one generation will pay for its own retirement and not rely on the second and third generation to pay for it. Social Security's pay-as-you-go feature is the program's fundamental flaw because it leaves the system vulnerable to changing demographics, thus creating enormous financial burdens for our children and grandchildren. Moving to a fully funded system will not only reduce inequality among generations, it will greatly increase our nation's savings and investment rates, and therefore prosperity. The sixth principle is that any reform of the current system must not increase the tax burden of the American people. The taxpayers are already giving up an historic 40 percent in federal, state, and local taxes out of every paycheck they earn. Hiking taxes yet again in the name of fixing Social Security would be unfair and unjust to working Americans, and would only pave the way for additional, future tax increases. Mr. President, with the above-mentioned principles as its foundation, the plan I bring before the Senate today is designed to achieve the goal of providing better and improved retirement benefits for all Americans. The proposal I will outline here is carefully designed to produce a highly appealing retirement option by maximizing the freedom and prosperity of working people. I have consulted seniors, farmers, small business owners, as well as large employers. I have made a number of revisions in accordance with their views. Now, Mr. President, allow me to present the highlights of the plan and explain how it works. The first component of the ``Personal Security and Wealth in Retirement Act'' upholds our primary principle by allowing people to remain in the current Social Security program if they so choose. In fact, my plan clearly stipulates that it is the right of workers to do so, and that they will be protected. The government will guarantee the promised benefits for those who elect to stay within the traditional system. Many of the existing reform proposals include components to increase the retirement age to anywhere from 67 to 70, and/or mandate a reduction in promised benefits. The polls show that 75 percent of the American people oppose the age increase. That is hardly a surprise; the American people already work too hard. It is not fair to raise the retirement age and force them to extend their work careers. You cannot promise one thing and then do another. Nor is it right to reduce their benefits. Such an irresponsible approach would serve only to throw more elderly Americans who increasingly depend on Social Security into poverty, and increase the hardship dramatically on those who are already suffering under poverty. That is why my plan explicitly protects those who choose to stay within the current system against an age increase or benefit reduction of any kind--again, those who choose to stay within the current system are explicitly protected. The key provision of my plan is to allow workers to set up a market- based, fully personalized retirement account, or PRA. Currently, workers and their employers pay a 12.4 percent FICA tax into the Old- Age/Survivor and Disability Insurance Trust Funds. Under my plan, we will allow workers to divert 10 percent out of their 12.4 percent FICA tax, within the covered earnings, into their PRAs and use the remaining 2.4 percent to finance transition costs. The responsibility for payment of taxes will be equally divided between employers and employees. When the transition is complete, the 2.4 percent will be eliminated as tax relief, because under a market-based retirement system, a savings investment of 10 percent will itself provide a generous retirement. In fact, with the 2.4 percent tax cut, workers would be paying 20 percent less into the fully funded system and they could still expect at least twice as much in benefits as they receive under Social Security. So our plan would actually cost less and it would provide more--much different from the current system. Under this plan, workers would enjoy maximum freedom to control their funds and the resources for their own retirement security. Workers would have at least the freedom to design their own retirement plan, investing in stocks, equities, bonds, T-bills, or any combination of these or other approved financial instruments with approved investment firms and financial institutions. A worker could even have their funds placed in a traditional savings account, if they would choose. There is no doubt that a market-based retirement system will generate much better returns than the traditional Social Security system we have today. Government data show that almost all workers in two-earner families receive real returns from their Social Security of approximately only 1 percent--a 1-percent or less return on their investments, with some actually receiving even negative returns. The return reaches 2 percent only for a family with two low-income working spouses. And these returns under Social Security will only diminish further in the future with benefit reductions and the raises in retirement age. Compare that to the performance of the market where, over the 70-year period from 1926 to 1996, the average annual nominal return was 10.89 percent. And if you adjust that for inflation, that is still an average annual rate of return of 7.56 percent. So in over 70 years of the market there has been an average annual return of 7.56 percent. You couple that with Social Security now promising 1 percent or less in returns. It is much sounder, much better benefits for those under the new PRA system. PRAs will put the power of compound interest to work in providing benefits for everyone, and under my plan the average annual benefits for two average-income, full-time working spouses could reach over $200,000. Compare that to $33,000 under today's Social Security. For one spouse earning an average income, the benefit could be $140,000. Meanwhile, you provide under Social Security only about $29,000. Low- income families also do better under my plan. The current Social Security program would provide $18,000 in annual benefits, but under this legislation their benefits could reach as high as $100,000. Now, this isn't a fantasy; it can be achieved, and the proof can be found right here in America. Consider the employees of Galveston County, TX. They opted out of Social Security back in 1981 to set up a private retirement plan, an option on which the Federal Government long ago has shut the door. And here is what they have been able to achieve in Galveston County. Under Social Security, the death benefit is only $253, while under the Galveston plan the average death benefit is $75,000, and the maximum benefit can reach $150,000. What a difference --$253 under Social Security and up to $150,000 in Galveston County, TX. The disability benefit from Social Security is $1,280 per month, but in Galveston County, TX, for its employees, disability benefits are $2,749--more than double the disability benefits for their employees in Galveston County, TX, than under Social Security. The maximum Social Security retirement benefit is $1,280 per month, but in Galveston County the average monthly retirement benefit for its employees is $4,790 a month--four times, nearly four times greater under the personal retirement plan than under Social Security--$1,280 per month under Social Security, and Galveston County, with their personal retirement accounts, $4,790 a month. To their great credit, some in Washington have recognized the power of the markets. Their solution, however, has been to suggest we let the Federal Government invest the Social Security trust funds for the American people, or at least allow the Federal Government to invest a portion of it. While appreciating the distance that my colleagues have come in reaching this point, I strongly believe that Government investment of the Social Security funds is dangerous and that it could seriously disrupt a market that is performing so well. Even Federal Reserve Chairman Greenspan agrees that this is an unworkable idea, and in a recent hearing of the Senate Banking Committee he said: No, I think it's very dangerous. . . I don't know of any way that you can essentially insulate Government decision makers from having access to what will amount to very large investments in American private industry. He also said: I know there are those who believe it can be insulated from the political process. They go a long way to try to do that. I have been around long enough to realize that that is just not credible and not possible. Somewhere along the line that breach will be broken. That was Chairman Greenspan. Studies reveal that the current Social Security system discriminates against divorced women. If a woman gets married, stays home to care for her children, and divorces in less than 10 years, she doesn't get any benefits from Social Security. As a result, women in general receive lower benefits than men do. Poverty rates are twice as high among elderly women as among elderly men--13.6 percent versus 6.2 percent. Imagine supporting a retirement system that puts many of our parents into poverty--not security but into poverty. My plan recognizes the need to have some form of protection built into the system to protect nonworking spouses as well, usually women, and especially in the event of divorce, and we propose to allow couples to treat the worker's retirement account as community property so divorced women would be able to share in the retirement benefits. Research shows that a 10-percent savings contribution rate would benefit women more than a partly personalized two-tiered system. And that is true even for poor women who move in and out of the job market. Critics of a personalized fully funded retirement system often cite Social Security's survivor and disability benefits as a key reason to defend the status quo, but, of course, they often omit the many restrictions that go along with these benefits as well. The fully funded retirement system I am outlining could provide better disability benefits than the current Social Security system offers, and again I will refer back to Galveston County, TX, as a great example. Under my plan, for example, when a worker dies, his family would inherit all of the funds accumulated in his PRA. The savings would not disappear into the black hole of the Social Security trust fund. The system would also provide, in addition to the retirement savings, a survivors benefit package. So imagine, Mr. President, right now--and I use my father as an example. When he died at the age of 61, there were no benefits at all from Social Security. So for the whole time that he paid into the system, he got $253 as a death benefit. But under our plan, all the money that he had accumulated in his personal retirement account would become a part of his estate tax free and go to his heirs--not to the Government but to the family. His heirs would benefit from his investment into his retirement account. Also, the system, as I said, would also provide, in addition to the retirement savings, a survivors benefit package. Let me share a personal note here to prove that point. Under my legislation, retirement dollars stay right where they belong, and that is with the family that faithfully collected them, not with the Government. The Social Security disability insurance trust fund is most imperiled. Currently, workers pay 1.7 percent of their FICA tax for disability insurance. But the DI trust fund will be exhausted in the year 2019. GAO believes the program now to be outdated and that it doesn't reflect today's realities. So my plan requires that fund that manages the PRAs to use part of their annual contribution or yield to buy both life and disability insurance, supplementing their accumulated funds to at least match the promised Social Security survivors and disability benefits. By requiring retirement funds to purchase life and disability insurance for workers, all workers in each individual fund would be treated as a common pool for underwriting purposes and the insurance would be purchased as a group policy; not by individual workers, but by the investment firms or financial institutions, thus avoiding insurance policy underwriting discrimination while providing the largest amount of benefits at the lowest possible costs. Mr. President, another special feature in this plan is to allow PRAs to be established early on in life, before a child is even out of diapers. The idea is that when a child is born and given a Social Security number, his or her parents, even grandparents, should be able to put money into that child's retirement account and to allow compound interest to work. Mr. President, $1,000 deposited for a newborn could grow to nearly $200,000 by the time that child retires. That would not be a bad start. So, if you put $1,000 into his account when the child is born, by the time he or she would retire, that would add an additional $200,000 to that account. Not a bad start, and again it shows the power of compound interest. In fact, when Albert Einstein was once asked what is the most powerful force on Earth, he answered without delay; he said, ``compound interest.'' To supply maximum flexibility and allow workers to tailor their insurance and retirement package according to their needs and financial ability, the Personal Security and Wealth in Retirement Act allows workers to invest up to 20 percent of after-tax income to make additional voluntary contributions to their PRAs. So those who want to look ahead and even maybe plan for an early retirement, they can put even more money away, up to 20 percent of their income. That way, funds will be accumulated faster, making early retirement possible. And, since this would be an after-tax contribution within the current income limit, it would not provide a tax shelter for the rich. I do not know about you, but I am hard-pressed to think of a better way to encourage savings, to allow workers to better control their retirement finances. One of the key components and most important parts of my plan is to ensure that a safety net will be there at all times for disadvantaged and unfortunate individuals. This can be done without any Government guarantees of investments or overly strict regulation of investment options. Under this legislation, a safety net would be set up and would be involved with a guaranteed minimum level: 150 percent of the poverty level. When a worker retires, if his or her PRA fails to provide the minimum retirement benefits, and for whatever reason, the Government then would make up the difference. It would fill the glass to the top. The same applies to survivor and disability benefits. If a worker dies or becomes disabled and his or her PRA doesn't accumulate sufficient funds in order to provide the minimum survivor and disability benefits, the Government would match those shortfalls. The simple safety net is necessary, and the minimum benefit would guarantee that no one, no one in our society would be left impoverished in retirement while still allowing workers to enjoy the freedom and prosperity achievable under a marketed-based retirement system. Some of my colleagues may be concerned about the Government financing this type of subsidy. Since the likely performance of the personalized retirement system would be far better than today's, Government spending for this minimum benefit is likely to be quite modest. In fact, the reform overall would probably allow us to reduce Government income assistance spending by far more than we would spend subsidizing the minimum benefit. Let me say that again. If this would work out and allow the Government to help subsidize the minimum benefit, to make sure no one retires into poverty--in fact retirement benefits would be 150 percent of poverty--that would reduce Government income assistance spending by far more than we would spend to subsidize the minimum benefit. Because workers would retire with far higher benefits through the personalized retirement system, they would need less Government assistance than they need today. So, again, there would be savings in the system that would help to pay for this subsidy. Unlike all other existing proposals, workers under my legislation could retire at any time. So, again, unlike all the other existing plans that are out there, workers under my proposal could retire any time they choose and withdraw funds from their PRAs as long as the minimum retirement benefit could be guaranteed by the account. So what we are doing is giving control of not only the fund, but also the future plans of the retired individual. When he wants to retire, rather than the Government saying you have to retire at 65, under my plan you could retire at 55 if you had the money set aside to meet those minimum benefits. Or if you wanted to continue working, you could stop paying into the account and you could work until you are 75 and invest in other avenues or other financial instruments. Once workers reach the minimum retirement benefit level they can continue to contribute to the PRAs, but they would not be required to do so. They could then choose to retire, continue working and invest that portion of income in other accounts, or they could just plain choose to spend their money as they wanted to. The rationale for this is simple. When workers accumulate enough funds for their retirement, they are no longer in danger of becoming a burden on society and they should therefore be allowed to retire at any age they choose without the Government telling them when. Why should the Government tell you when you can retire or penalize those who choose to continue working or retire even earlier? Over time, early retirements will surely reduce the ratio of workers per beneficiaries. But because this is a fully funded system, demographic changes will have no effect--they will have no effect--on the solvency of the system. A generation would pay for its own retirement. It will not be held hostage to the next generation. And the word ``independence'' fits right here. Under this plan, workers could use the accumulated funds upon retirement to buy an annuity paying promised benefits for the rest of the worker's life. Annuities would be structured to provide benefits not just over the worker's life, but also over the life of their spouse. Unlike today, widows would not have to live in poverty. The benefits would not be reduced when one or the other would die. Or the workers could make regular, periodic withdrawals or a lump sum withdrawal of the money not needed to buy the annuity to provide the minimum benefits. The bottom line is that these withdrawal options would allow workers to basically sit down, to design their own retirement income so they will not be forced to buy an annuity when the market is temporarily down upon their retirement. And what is more, all the withdrawals will be tax free and smart retirement planning will help maximize the benefits. One of the major criticisms of a market-based personal retirement account system is that it inherently is volatile, and again subject to the whims of investors, exposing a worker's retirement income to unnecessary risks. My plan has specifically addressed this concern by requiring the approved investment firms and financial institutions that would be there to manage personal retirement accounts to have insurance against any investment loss. By approximating the role of the FDIC, we ensure that every PRA would generate a minimum rate of return of at least 2.5 percent to provide no less than the minimum retirement benefits. Regardless of the ups and downs of the markets, workers would still do better under this system than under the current Social Security system. So even under the minimum benefit of 2.5 percent minimum, that is still better than the current system of Social Security today paying 1 percent or even less. This is another safety net built into the plan to give the American people peace of mind when it comes to their retirement investment. Further, to reduce risks to a worker's PRA, my legislation also requires that rules, regulations and restrictions similar to those governing IRA's would apply to personal retirement accounts as well. PRA's must be properly structured and they must follow strict, sensible guidelines set forth by the independent Federal board that will be set up to oversee the system. To choose qualified investment firms and financial institutions that will be there to manage the PRAs, the oversight board would be responsible for examining the credibility and ability of the companies and approve them as PRA managers accordingly. As workers choose the new worker retirement system, this legislation requires the Government to issue also what we call recognition bonds. That is, to help compensate them for past taxes that they have already paid into Social Security so that you would not lose any money that you have already paid into the existing Social Security system. The bonds would be credited with real interest for workers over the age of 50. The bonds for workers below 50 and above 30 would be credited with an inflation adjustment. So since younger workers would benefit most from the reform, workers under the age of 30 would not get recognition bonds. Another important element of the plan is to ensure that a worker's PRA remains his or her private property, and also that the holder has the right, as I have said before, to pass it on. So it becomes part of the estate for their family or heirs, not for the Government. When he or she dies, the remaining funds would be transferred to any person or persons designated by the holder. Their heirs would not pay any estate tax on the inheritance as well. So, Mr. President, a major legitimate concern about PRAs is the transition cost. Obviously, this is the most difficult part of every PRA plan. Every PRA plan has had to struggle with this. Social Security, however, has accumulated to date over $20 trillion in unfunded liabilities. So, in other words, we have made promises-- Congress, the Government--has made promises to Americans saying we are going to pay X amount of benefits to retirees. If you put that into dollars--we have underfunded; we have made promises but with no money to back it up yet--$20 trillion in unfunded liabilities. The transition from the current system to a personal and fully funded retirement system will also be costly. However, my point is we should not focus too much on this issue at the expense of resolving the coming Social Security crisis because if we do not make the tough choices, the trust fund is going to go broke. So we have $20 trillion in unfunded liabilities. The estimates are, to transition to a personal retirement account system would take maybe about $13 trillion. We believe it is going to be a less costly, more secure future and providing better benefits if we step up to the plate and make the decisions we need to make. No matter how much we pay for the transition, it is still much cheaper to finance the transition than it is to watch Social Security go broke, because once our plan is fully solvent, Social Security will still be facing some of the biggest problems or even greater problems in funding. Having said that, Mr. President, we should also be sensible about the transition costs. We shouldn't increase the overall tax burden or incur huge debt to finance the transition. Again, we shouldn't be out there increasing the overall tax burden. We shouldn't be out there building a huge debt to finance this transition. And since the unfunded liability is enormous, we need to find some innovative ways to help pay for them, not through tax hikes, not to burden Americans with more taxes, but to find innovative ways to help make the transition. As you know, when a family faces financial trouble, every member of the family pitches in. It first cuts its spending, it won't go to the movies, or it might not eat out as often as it has and will delay purchasing big household items. The Government needs to take the same type of approach. A family, when it is facing a financial crisis, needs to pitch in and make financial sacrifices to make it through. The Government has to do the same thing. My plan proposes to help cut Government spending to help finance the transition. We require capping mandatory Government spending by allowing only new spending for new beneficiaries who meet the same criteria for benefits under the law. This would prohibit the expansion of these programs during the transition, but it would still cover those entitled to the current benefits. In addition, we propose a 5-percent across-the-board budget cut for every Federal agency, plus a 15-percent reduction in Government overhead. Mr. President, in the long run, my plan will balance itself because as workers opt for the personalized retirement system, they will receive fewer benefits from the old Social Security system as a result. Again, remember the statement made by the President and many others, and that statement is: Save Social Security first. That takes money, not just good intentions; not slogans, but actual action. Since the plan is designed to spread its transition costs across generations, the system will start off relatively slowly. It will grow over time and, therefore, offer other financial mechanisms that will be needed, particularly during the start-off period. One of these mechanisms is to ask workers who opt out of the Social Security system to continue to pay, as I said before, the 2.4 percent of their FICA tax to help with the transition. Right now, we pay 12.4 percent of income into Social Security. Under this plan, 2.4 percent would go to transition costs. The other 10 percent would go into the individual retirement fund. The plan also proposes using the majority of the general revenue budget surplus, again with the notion, ``Save Social Security first.'' If there is a surplus, the majority of our budget surplus should go to helping reduce the transition costs of Social Security. To cover a portion of the transition deficit, we would sell the $700 billion in Government bonds that have accumulated in the Social Security trust fund. If we still fall short in financing the gap, my plan calls for issuing new Government bonds to the public in order to help raise money. This would be done over a period of time, and, again, this stretches the financing of the transition over generations, not one generation having to pay for the mistakes the system has made, but many generations will have to help cover the costs. These bonds would not involve new Government debt. This is important--no new debt. We are not talking about issuing new bonds to create new debt but to, in other words, put into focus the $20 trillion in unfunded liability. What we are doing is saying we are now going to recognize that and put into place bonds that are going to help cover this. Again, this is not new debt but only explicit recognition of the implicit debt that the Government already owes through the unfunded liabilities of Social Security. These are the promises that we have already made, and they need to be paid for. It is the cost of hanging on to this system too long, and it will cost even more if we wait. Mr. President, the advocates of the status quo are using the recent stock market adjustment in an attempt to scare the American people away from a market-based retirement system. In my view, it is highly improper to use market cycles as the reason to deny exploring a viable solution to the coming Social Security crisis. Historical data recognizes market cycles, and the long-term prospects for the stock market have always been bullish. William Shipman, one of the country's leading pension management experts, has studied the worst performances of the market. He finds that in the past 70 years--and this includes the period of the Great Depression--on only 10 occasions have stocks fallen by 18 percent in 1 quarter or 14 percent in 1 month or 8 percent in 1 day. Even if the market would drop 89 percent on the day that a worker entered retirement, that worker would still have more in their retirement account than they would have available under Social Security. If you look at the numbers, Mr. President, again, even if the market would happen to drop 89 percent of its value in just 1 day, and it happened to be on the day the worker retired, the worker would still have more in their retirement account than they would have available under Social Security. That would be a worst-case scenario. We know that better planning and looking ahead would mean the worker would lose very little, if any, no matter how the market cycle would go with good financial planning. So the scare tactics that many are using are just that, scare tactics in order to help support their current Social Security system. We need to give the American people the information they need so they can make a very educated choice. We don't need scare tactics from either side. We need just to lay out the information, show them the truth, and then allow Americans to help us make this change. Let me repeat, even if the market dropped 89 percent on the day a worker entered retirement, that worker would still have more in their retirement account than they would have available under Social Security. Mr. President, there are also many safeguards in this plan that a worker would not have to draw retirement money on that day, that there could be moneys taken out so he could wait a while or also do many things leading up to his retirement so he wouldn't have to worry what was going to happen on that last day. There are many choices and options to maximize retirement benefits, but many are going to use any fluctuations in the market to try to scare people. Again, we need to just give the American people the information they need to help them make the choice. As you know, our entire economy is based on a capitalistic market. If the market drops at this rate, even Social Security won't be immune from any downturn. We will have to borrow against future workers to pay any benefits. A market-based retirement plan is a long-term investment, not short-term speculation, and that is a key distinction that I urge all my colleagues to acknowledge in considering this plan. The market-based retirement plan is a long-term investment, not a short-term speculation. When you are in it for 40 years, you can ride out those cycles, but, again, over the last 70 years the market has paid 7.56 percent in interest, not the 1 percent or less than we now see in Social Security. The entire debate over how to reform Social Security boils down to a few simple questions: Do you trust the Government to provide retirement security, or would you rather rely on yourself and would you rather have more control over your own resources? Do you want the Government to be your financial adviser? Is it necessarily true that what is good for Washington is good for you? I don't think so. To me and many Americans, the choice is very clear. In conclusion, I turn to the words of President Franklin D. Roosevelt on June 8, 1934, and that is the day he proposed to Congress the establishment of the Federal Social Security system. He wrote this: This seeking for a greater measure of welfare and happiness does not indicate a change in values. It is rather a return to values lost in the course of our economic development and expansion. Mr. President, 63 years later, after six decades of economic development and expansion that dwarf what the world had known in 1934, we began to stray from the values that helped found this great Nation. We have strayed from the words of President Franklin Roosevelt as he signed Social Security into law. In 1998, Americans choose to turn, not to the Government to provide that ``greater measure of welfare and happiness,'' but to the individual, to ourselves; not to look to Washington, but to look to our families. The Government cannot be there to provide the ``greater measure of welfare and happiness.'' Mr. President, the Personal Security and Wealth in Retirement Act acknowledges that to achieve the fullest measure of security and individual liberty, the individual must be free from the inherent constraints of Government. It restores those values from which we have drifted, and it offers every American the opportunity to achieve real personal wealth--not with the Government telling you what you are going to get in retirement, not with the Government telling you you have to retire, not with the Government telling you what benefits that you are going to get--but America will be offered the opportunity to achieve real personal wealth and the dignity and the freedom and the security that it affords in retirement. Thank you very much, Mr. President. Mr. GRAMS addressed the Chair.

Mr. GRAMS

Mr. GRAMS. Mr. President, I ask unanimous consent that the Senate now proceed to the consideration of calendar No. 590, H.R. 2675.

Mr. GRAMS

Mr. GRAMS. Mr. President, I rise today having learned of last night's unanimous consent request on S. 1677--The Wetlands and Wildlife Conservation Act of 1998. As you know, S. 1677 reauthorizes the North American Wetlands Conservation Act (NAWCA) for the next five years. Mr. President, over its eight year history NAWCA has been a lynchpin in our nations efforts to preserve habitat and protect wildlife. NAWCA has been a very good program for wildlife, for conservation, and for American taxpayers. For every one dollar of federal money, the program obtains on average a match of another two dollars from private partners. According to Ducks Unlimited, over 550 projects nationwide have been initiated with NAWCA funding. In 1996, 76.9 million individuals took part in wildlife-associated activities, creating over $100 billion in expenditures for our economy. Additionally, in 1996, over 40 million sportsmen and women spent over $70 billion in recreational expenditures and millions more Americans spent billions in non-sport activities associated with wildlife. My home state of Minnesota, in particular, has benefited from NAWCA. Over its eight-year life, NAWCA funding of $18.4 million has stimulated private partners to contribute over $25 million more to habitat projects. In 1996, 1.6 million Minnesotans participated in wildlife- associated activities, creating $3.6 billion in expenditures throughout the state. But beyond the economic benefits NAWCA provides are the important environmental aspects to the program. The decline in duck, geese, and other waterfowl populations in the early 1980s created the catalyst for the program. By protecting nearly 3.7 million acres of habitat since its creation, NAWCA has helped restore waterfowl populations to their highest level in half a century. In fact, state and federal surveys this past year counted 42 million breeding ducks, the highest level since surveys began in 1955, according to the U.S. Department of the Interior. I was proud to join my colleagues this past April in cosponsoring S. 1677. I am even more proud to come to the floor today knowing the bill has passed the United States Senate and will continue to protect habitat and wildlife well into the future.

Mr. GRAMS

Mr. GRAMS. Thank you very much. I want to compliment the Senator from Oklahoma. I think yesterday's hearing was very, very important, and what the chiefs had to say regarding the defense of this country, and the money that is being spent or not being spent and how important it is. I really appreciate the Senator bringing this to the floor and helping all of us understand the problems that we are facing. I rise today briefly to express my continued disappointment at the political maneuvering which has resulted in an extension----

Mr. GRAMS. Yes. Sorry. I ask unanimous consent that I be allowed to speak out of order.

Mr. GRAMS

Mr. GRAMS. Mr. President, just briefly, today, as you know, marks the end of the fiscal year for Washington, the fiscal year of 1998; tomorrow will be the first day of fiscal year 1999. This turn of the calendar, like any new year, is an appropriate time to review the accomplishments of the previous year and also to set goals for the next year. What a year it has been. Last year, we passed significant tax relief--including a $500 per-child tax credit that will soon take effect. In addition, for the first time since 1969, we passed and abided by a balanced budget. It has not been easy. It has not gone without temptations. There have been spirited attempts to spend taxpayer dollars and drag us into an even larger deficit, blowing one spending cap at a time. This remains a difficult task even today-- Congress is pushing to complete legislative work on all 13 appropriations bills by this time. But to date, the President has signed only one into law, and only two others are on their way to him. The reason for the delay is that by habit, Washington loosely interchanges the act of deciding how much to spend with that of ``spending much.'' To my dismay, many colleagues and the President's Administration have used this end of the fiscal year and the near end of the Congressional session to push for their election-year political agendas. The result? Again is political blackmail: if you do not give me this, I will shut the government down and blame you for being heartless and ineffective. This delay has also put off important consideration of overdue tax relief for hard-working American families. In fact, the entire tax bill recently passed by the other legislative body is now in jeopardy because Washington cannot decide on how best to spend taxpayers' money for political agendas. Now, let me be clear on my position. A tax cut is not spending. Only in Washington's bookkeeping do we consider a cut in revenue to be spending. Mr. President, are we going to allow another Government shutdown--a situation where everybody loses? I certainly hope we don't. In the past few months, I have asked both the Senate majority leader and the Senate minority leader several times to honor the commitment they made during the consideration of last year's disaster relief legislation to support a bill I introduced called the ``Good Government Amendment,'' which would create an automatic continuing resolution to avoid a Government shutdown. But so far, it has been to no avail. We do have a system that allows the Government to operate through October 9. But what happens if that agreement, that continuing resolution allowing the spending to go on, is not extended and the threat of a shutdown could cost the taxpayers billions more in new spending in order to close this year? With the end of the fiscal year upon us and just a few days left in this session, don't you think we need a contingency plan, some mechanism to avoid the end-of-session battles that often result in more Government spending? There are essential functions and services of the Federal Government we must continue, regardless of our differences in budget priorities. Our constituents deserve assurances that the Federal services they expect will not be bogged down by politics. They should also expect that Washington is trying to find ways to spend their money wisely and not wastefully. The rest should be returned in the form of tax relief. Mr. President, despite a shrinking Federal deficit, total taxation is at an all-time high. The tax relief Congress enacted last year doesn't go nearly far enough; it returns to the taxpayers only one cent for every dollar they send to Washington. By the way, taxes on the average American family are at the highest level in history--even higher than during World War II. The average family will pay about 40 percent of everything they make in taxes to Federal, State and local governments. I urge my colleagues to review CBO's August Economic and Budget Outlook, which shows precisely where revenues will come from in the next ten years. The data indicates that the greatest share of the projected budget surplus comes directly from income taxes paid by the taxpayers, not through the FICA taxes, or Social Security. In 1998, individual income, corporate, and estate taxes consist of 80 percent of total tax revenue growth, while the share of FICA tax is about 20 percent of that growth. General tax revenues are expected to grow by $723 billion, or 60 percent, over the next 10 years. What I am saying is that the taxpayers generated the surplus, outside of the money earmarked for Social Security, and we ought to return at least a portion of it to them. If we don't return at least some of the surplus to the taxpayers--and soon--Washington will spend it all, leaving nothing for tax relief or the vitally important task of preserving Social Security. Such spending will only enlarge the Government, and if we enlarge the Govenment today, it will make it even more expensive to support in the future. The tax relief proposal now making its way through Congress will help farmers and small business owners to pass their legacies to their children. It would reduce self-employed medical costs, and it would correct the injustice of the marriage penalty tax. My problem with this proposal, however, is that it just doesn't go far enough. I think most Americans, if given the facts, would agree, looking at their own pocketbooks and their own tax statements, that tax cuts are needed. Mr. President, some in the Senate juxtapose tax relief with Social Security reform. They suggest to the American people that they are mutually exclusive choices. They say you can't have one with the other. If you have tax cuts, we are not going to save for Social Security and protect it; or if we protect Social Security, we can't have tax relief. That is not true. That is not the case. To be sure, Washington has been guilty of mishandling the Social Security system. Since 1983, Washington has raided more than $700 billion from the trust funds for non-Social Security programs, and Congress voted for the spending. In the next 5 years, the Federal Government will raid another $600 billion from the Social Security trust funds, as well. Now I hear some who come to the floor and say they won't vote to use Social Security trust funds to give tax relief. I ask, why their change of heart today? They voted for most, if not all, of the spending bills in the last 15 years which have used Social Security to make up the difference of revenues versus outlays. In other words, they are willing to take Social Security surpluses and put it into higher Federal spending, but they are not willing to take excess income revenues and put it into tax relief for average Americans. I just note that no one raised the issue of saving Social Security when those spending initiatives were on the table. No one juxtaposed spending with Social Security. That was because Washington was spending other people's money. But once the tables are turned and the Senate is asked to pass tax relief for America's hard-working taxpayers--meaning that Washington gets a little less--suddenly, we face gridlock and are in a quandary. Again, Washington says it just can't afford to let Americans have some of their money back; Washington needs it to satisfy its spending appetite. I always ask Americans, ``Did Washington ever call you and ask how are you going to get by with less money if we raise your taxes? How are you going to continue to provide for your families?'' And they say, ``No, they never call and ask that.'' They just pass it and take it. So American families have to then learn how to do more with less, or get by without. Mr. President, despite the rhetoric of saving Social Security, few have come up with a concrete plan to actually save it. The problem is that, by law, the Social Security surplus has to be put into Treasury securities. That means Washington can legally use the money to fund its non-Social Security pet programs. They take the money out of the trust fund, put it into the General Treasury, and then spend it. Ask anybody how are they going to take any money out of the Social Security trust funds? How are they going to redeem any of those notes or Treasury bills in the trust fund? They are going to have to go to the American people and ask for more money in taxes in order to retire the debts. In other words, the money Americans have already saved for their retirement future has been spent by the Government, and the Government is now going to come back to you and say you have to pay again in order to satisfy the needs. So these assets are essentially nothing more than Treasury IOUs, redeemable only by cutting spending, raising taxes, or borrowing from the public. Unless we change the law, Washington will continue to use Social Security until it goes broke. Mr. President, I am going to introduce legislation next week that will help shift retirement decisions back to those who know retirees' needs the best, and that is the retirees themselves. On the last day of the fiscal year, we can be proud of the Balanced Budget Act that Congress enacted and upheld over the course of the past year. But we must also be prepared for the upcoming year, as well. A Government shutdown is looming again--a testament to politics in an election year more than sound debate over budget policy. I truly hope that this political chicanery does not make tax relief, and ultimately the hard-working American taxpayers, the losers in this inside-the- beltway game of politics. I yield the floor. Mr. CRAIG addressed the Chair.

Mr. GRAMS. I thank the Senator.

Mr. GRAMS

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

Mr. GRAMS. Mr. President, I rise today to express my continued disappointment at the political maneuvering which has resulted in an extension of the Northeast Dairy Compact--an example of legislation driven by regional politics. I wish to register strong protest to the extension and ask that my colleagues join me and those in the Upper Midwest who must once again speak out against patently unfair, anti-American, anticompetitive policy. This is an archaic Federal dairy policy that penalizes farmers in the Upper Midwest, while giving benefits to farmers in other parts of the country in the dairy industry. The expected Agriculture appropriations conference report will include House language which underhandedly extends the Northeast Interstate Dairy Compact. Under the 1996 Food and Agriculture Improvement and Reform Act, commonly known as the FAIR Act, federal milk marketing order reform would go into effect in April, 1999. However, the conference committee has now adopted the House Agriculture Appropriations Committee bill language which delays the implementation date for Federal milk marketing order reform until October, 1999--6 months later. Not only does this delay long overdue marketing reforms, it also extends the Northeast Dairy Compact, which is not set to expire until the Federal milk marketing orders go into effect. Mr. President, USDA did not request a delay of the milk marketing order reforms. The real purpose of the House language is simply to extend the Northeast Dairy Compact. That this extension is even being considered leads me to believe there are some who remain unaware of the notorious history of the Northeast Dairy Compact's creation and its negative impact on consumers and all dairy farmers--with the notable exception of the largest dairy industries within the compact region. The 1996 FAIR Act included substantive reforms for dairy policy. It set the stage for greater market-orientation in dairy policy, including reform of the archaic Federal milk marketing orders. Yet, despite a strong vote by the Senate to strip the Northeast Interstate Dairy Compact from its version of the FAIR Act, and the deliberate exclusion of any Compact language from the House version of the bill, a Northeast Interstate Dairy Compact provision was slipped into the conference report. This language, however, does call for the compact to be terminated upon completion of the Federal milk marketing order reform process, again, set in April of 1999. It is imperative that the Northeast Interstate Dairy Compact sunset as was intended, and that no new compacts are created. Dairy farmers have not seen positive benefits as a result of the compact and consumers have been hurt by higher prices. It is estimated that consumers in the compact region of the Northeast have an increased annual cost of almost $50 million due to the compact. Not surprisingly, milk consumption in the compact area has dropped as a result. The only real winners have been the largest industrial dairies of the Upper Northeast. It is really no surprise. Just consider it: if the compact pays a premium per hundredweight of milk, and large industrial dairies are able to produce, let's say 15 to 20 times more than the ``typical'' traditional dairy farm that the compact was supposedly going to protect, who do you suppose wins? It certainly isn't the traditional dairy farm. They are still put at a competitive disadvantage, thanks to regional politics, and so are dairies outside the compact region. The artificial price increase stimulates overproduction and it floods the rest of the market in other parts of the country, and in other markets as well, including milk for cheese. Basically, all the principles of market forces, including pricing based on supply and demand and producers effectively determining profit and loss through efficiency, have now been replaced by artificial pricing. If any other industry tried to fix prices in this manner, I believe they would be hauled into court. Let me show this chart. The questions contained on the chart, which of these is actual Federal policy? Looking at the four questions: All computers should be price-adjusted according to their distance from Seattle. All oranges should be price-adjusted according to their distance from Florida. All country music should be price-adjusted according to its distance from Nashville. All milk should be price-adjusted according to its distance from Eau Claire. All of these are foolish. But this is Federal policy. The last one, ``All milk should be price-adjusted according to its distance from Eau Claire,'' WI, might have made sense back in the 1930s when it was instituted, because of transportation and refrigeration, in order to encourage dairy production in other parts of the country. The Midwest, really, is the heart of the dairy industry in this country. So they set up these laws, but these laws are now archaic, outdated. They no longer need to be on the books. All they do is penalize the farmers in the Midwest who get the lowest prices for their milk and reward farmers further away from Madison or Eau Claire, WI, who receive more money for dairy products, despite the new and improved transportation and refrigeration in this country. This may have served a purpose in the 1930s, but it is outdated when we come into this century. What it does is have the government picking winners and losers when it comes to dairy. They have their foot on the neck of dairy farmers in the Midwest while granting dairy farmers in other parts of the country more money. All we are asking for is fairness in this policy. Should computers be priced according to their distance from Seattle? No. Should oranges be priced according to their distance from Florida? They are not. Is all country music priced according to its distance from Nashville? No, that is ridiculous. And the same should be true for dairy--Should all milk be priced according to its distance from Eau Claire? No. USDA's own data show that milk production has increased substantially in the Compact region of the Northeast. In fact, the increase in production has been so great that the Compact Commission has started to withhold money from farmers, in anticipation of being required to reimburse the Commodity Credit Corporation for increased purchases of surplus dairy products. But the creation of the Northeast Interstate Dairy Compact, we have done a disservice to traditional dairy farmers in the Compact region, consumers within the Compact region, and all dairy producers nation- wide who have been forced to pay the price of this anti-competitive measure. The higher milk prices in the Compact region are cause for alarm, but these consequences were easily foreseeable. What is outrageous is the idea of another extension of this anti-competitive effort. As far as I'm concerned, this is it--the last straw. There will be no more extensions. The Northeast Dairy Compact has had its day. It has failed. It is being kept alive for another six months by a life-support system of favors and big business. I believe it's time to put fairness first and put the Senate on notice. The Upper Midwest has waited long enough for substantive reform--basic fairness. I will continue to make this point during the next Congress, no matter how long it takes to get the message across. Special protection benefits and anti-competitive measures make competitors worried, and rightly so. The Northeast Interstate Dairy Compact has spurred a movement in the Southeast to create a similar Compact. In fact, earlier this year the groundwork was laid for a national patchwork of regional compacts. Roughly half the country had either passed enabling compact legislation, was debating such legislation, or was a part of the Northeast Interstate Dairy Compact. Can you imagine in the time when we are trying to knock down trade barriers with other countries around the world to have greater access to markets, to help export our products, especially in agriculture, that we, here in our own country, would put up trade barriers between portions of the country? Clearly, the writing is on the wall. As far as dairy policy is concerned, we're at a pivotal juncture. We must either decide to support a national system or regionalize. A national patchwork of compacts would render the Federal Milk Marketing Order reforms meaningless. It would essentially kill any hope for real federal reform. Interstate commerce in the milk industry would be a confusing maze. To extend the Compact ignores the mandate of the 1996 FAIR Act itself. Further, attempts to accomplish this regional protectionism through an annual appropriations bill is also particularly offensive. Certainly, it is difficult to have the courage to bypass a quick-fix in favor of a long-range view. But that's where real leadership comes into play. Let's be advocates for the traditional dairy farmers, not just the mega-dairies, and maintain the integrity of the legislative process by standing up to policy making behind closed doors. An extension of the Northeast Dairy Compact does not belong in important Agriculture Appropriations legislation. What is required next is a complete overhaul of this antiquated and just plain unfair dairy policy. Again, established back in the 1930s, it has long outlived its usefulness. It is counterproductive, anti-American and unfair. Let's give all dairy farmers in all areas of the country the ability to compete on a level playing field. I close with a quote from the Chicago Tribune. The quote says: More compacts [like the Northeast Interstate Dairy Compact] will only mean higher milk prices for even more consumers and more lost market opportunities for the Midwest. . . . How could Washington approve this throw back to Depression-era economics when other farm subsidies . . . are being phased out? Back-room deals and pork barrel politics, that's how [it is done.] I suggest the absence of a quorum.

Mr. GRAMS

Mr. GRAMS. Mr. President, today I am introducing a private bill addressing an inequity faced by a now dissolved Minnesota company, Norwood Manufacturing, Incorporated. Norwood entered into contract with the United States Post Office to produce mail pallets according to Postal Service specifications. After producing the pallets, the Post Office canceled the contract, indicating the pallets did not meet the intended use, even though Norwood met the specifications requirement in the contract. Genuine issues of material fact surround the question of whether the Post Office canceled the contract for cause, convenience, or possibly in bad faith. Surprisingly, Norwood was denied its plea to be heard in court. Summary judgment was awarded to the Post Office, and an appeal of this decision was denied. At this point, all avenues of relief have been exhausted, including my efforts in 1995 to request a Congressional Reference from the Judiciary Committee, back to the Claims Court for review. In my view, an injustice has occurred since usual legal relief has been precluded in the history of this case. I believe compensation by the United States is owed to Norwood. There is precedent for reimbursing companies which abide by contracts which either include errors, or when specifications change after a contract is signed and the company is not made aware of these changes. The Postal Service made an error, and it should have reimbursed this company, as is normal practice.

Mr. GRAMS

Mr. GRAMS. Mr. President, today I am introducing a private bill addressing an inequity faced by a now dissolved Minnesota company, Norwood Manufacturing, Incorporated. Norwood entered into contract with the United States Post Office to produce mail pallets according to Postal Service specifications. After producing the pallets, the Post Office canceled the contract, indicating the pallets did not meet the intended use, even though Norwood met the specifications requirement in the contract. Genuine issues of material fact surround the question of whether the Post Office canceled the contract for cause, convenience, or possibly in bad faith. Surprisingly, Norwood was denied its plea to be heard in court. Summary judgment was awarded to the Post Office, and an appeal of this decision was denied. At this point, all avenues of relief have been exhausted, including my efforts in 1995 to request a Congressional Reference from the Judiciary Committee, back to the Claims Court for review. In my view, an injustice has occurred since usual legal relief has been precluded in the history of this case. I believe compensation by the United States is owed to Norwood. There is precedent for reimbursing companies which abide by contracts which either include errors, or when specifications change after a contract is signed and the company is not made aware of these changes. The Postal Service made an error, and it should have reimbursed this company, as is normal practice.

Mr. GRAMS

Mr. GRAMS. Mr. President, I rise today to introduce a bill which takes an important step toward improving the nation's federal crop insurance program--the ``Crop Insurance Reform Act.'' Over the last year, we have witnessed devastating circumstances come together to create a crisis atmosphere for many of our nation's farmers. I know that in my own state of Minnesota, multiple years of wet weather and crop disease--especially scab--coupled with rising production costs and plummeting commodity prices is wiping out family farms in record numbers. With the increased opportunities that accompany Freedom to Farm come increased risks. We've seen this first hand. Freedom to Farm can work, but a necessary component of it is an adequate crop insurance program. This component has been missing so far. One of the promises made during debate of the 1996 Farm Bill was that Congress would address the need for better crop insurance. We must not let another growing season pass without having instituted a new, effective crop insurance program. This overhaul is a major undertaking, but instituting a program of comprehensive reform must be a priority upon our return in January. And, we must start the debate now so that we can have the best system in place in time. The bill I'm introducing today is a first step. It is the result of months of work from my Minnesota Crop Insurance Work Group. The Work Group consists of various commodity groups, farm organizations, rural lenders, and agriculture economists. We have also worked closely with USDA's Farm Service and Risk Management Agencies. But it was my primary intention to assemble a committee of farmers and lenders--people who know the situation and have seen the problems first hand. The Crop Insurance Reform Act is designed to address the coverage decision a farmer must make at the initial stages of purchasing crop insurance. This bill allows more options for producers to choose from when making risk-management decisions. It essentially provides farmers with an enhanced coverage product at a more affordable price. Currently, producer premium subsidies range from nearly 42% at the 100% price election for 65% coverage, to only 13% at the 100% price election for 85% coverage. Producers continue to stress that, although the Risk Management Agency has recently provided better product options, the subsidy levels at the higher ends of coverage make them cost prohibitive. This bill will put in place a flat subsidy level of 29% across the 100% price election and at all levels of coverage. This will adjust the producer premiums to make better coverage more affordable. When farmers are armed with the necessary risk management tools, everybody saves. The government saves in ad hoc disaster payments, arguably the most expensive way to address any kind of financial crisis. But more importantly, the family farmer saves. This bill is just the beginning of reform. Over the next few months, I will continue to work with my Crop Insurance Work Group, and my colleagues, Senators Lugar and Roberts, to craft a comprehensive program which directly benefits producers and protects the taxpayers.

Mr. GRAMS

Mr. GRAMS. I ask unanimous consent to speak as in morning business for up to 5 minutes.

Mr. GRAMS

Mr. GRAMS. Mr. President, I rise today to pay tribute to Muriel Humphrey Brown, who was the widow of the late Senator and Vice President Hubert Humphrey and known to many throughout my state as Minnesota's ``First Lady.'' Mrs. Humphrey Brown passed away on Sunday at the age of 86. Throughout her life, she remained steadfast in her dedication to family and her interest in politics. In her last public appearance, just 5 days before her death, she was on hand to congratulate her son, Skip Humphrey, for winning the Minnesota DFL gubernatorial primary. Many of my colleagues knew her, respected her, and join me in offering our heartfelt condolences to her husband, Max Brown, her sons Hubert, Doug and Bob, her daughter Nancy, and the entire Humphrey family. Muriel Humphrey Brown was born on February 20, 1912, in Huron, SD. After marrying Hubert Humphrey, she became a devoted mother and enthusiastically took on the role of a political wife. She played an active part in her husband's numerous campaigns. After Hubert's death in 1978, Muriel was appointed to his Senate seat, the same Senate seat that I am proud to hold today. By finishing out her late-husband's term, Muriel Humphrey Brown became Minnesota's first and only female U.S. Senator and just the 12th woman to serve in the U.S. Senate. In fact, she was the only woman serving in the Senate at that time. In carrying out her husband's Senate term, Muriel Humphrey Brown was an inspiration to women throughout Minnesota as she accepted the call to public service even in her time of great personal loss. Rather than being known simply as the wife of the most popular politician in Minnesota, Muriel left her own mark on those issues of public policy about which she felt so strongly. Her calm and gentle manner did not mute her passionate voice on behalf of social programs, labor issues, and the mentally disabled. She once described her term in the Senate as, ``the most challenging thing I have ever done in my whole life.'' In 1979, she married Max Brown and lived the rest of her life out of the political spotlight. Her devotion to family and public service is truly an inspiration to all Minnesotans, and I am proud to say that her legacy will remain. It is a special honor for me to hold the Senate seat she once held, in the Chamber where she served with such grace, dignity, and honor. Thank you very much, Mr. President. I yield the floor.

Mr. GRAMS

Mr. GRAMS. I thank the Senator from Hawaii. I did talk to him and ask if it was all right.

Mr. GRAMS. Mr. President, I ask unanimous consent I be allowed to speak as in morning business for up to 5 minutes.

Mr. GRAMS

Mr. GRAMS. Accordingly then, it is my view that the FFIEC should delay implementing any changes to its Uniform Policy for Classification of Consumer Installment Credit Based on Delinquency Status until it is clear whether and in what final form the bankruptcy reform is enacted.

Mr. GRAMS. Mr. President, on July 6th, the Federal Financial Institutions Examination Council (FFIEC), published for public comment in the Federal Register, its proposed changes to its Uniform Policy for Classification of Consumer Installment Credit Based on Delinquency Status. FFEIC is on the verge of adopting the changes in the proposals, with or without modifications based on the public input they received. I would like to ask my distinguished colleague, the Senator from Iowa whether the bankruptcy reform legislation currently before the Senate would significantly affect the agency's policy guidelines? My concern is that shortly after the FFIEC's new guidelines are adopted, it will have to rewrite them, according to the new bankruptcy reform legislation.