Rod Grams

Mr. GRAMS

Mr. GRAMS. Will the Senator yield?

Mr. GRAMS

Mr. GRAMS. Mr. President, I yield back my remaining time, and I suggest the absence of a quorum.

Mr. GRAMS. Mr. President, I rise today to express my deep disappointment and frustration about the Senate's inaction to consider and pass the Government Shutdown Act. Mr. President, this week I sought to offer S. 547, the Government Shutdown Prevention Act, as an amendment to the Legislative Branch Appropriations. This amendment, originally sponsored by Senator McCain, would create an automatic procedure for a CR at the end of each fiscal year. The essence of the amendment is that we cannot and will not allow a Government shutdown, we will not allow disruption of the services we rely on from the Government, and we will simplify and facilitate the process of passing a continuing resolution. What issue is more relevant to the legislative branch than acting responsibly to keep the Government in business? This amendment would have ended the annual battle we have each year on what is included in a CR and at what level of spending. It would end the last-minute mischief of adding new pork and new spending into a CR because everybody wants to avoid a shutdown. So you are blackmailed into doing something you do not want to do. Unfortunately, I was unable to offer this amendment due to germaneness concerns and lack of leadership support. In May of 1997, during the debate on the Supplemental Appropriation bill--this was covering the flood disasters that occurred in Minnesota and the Dakotas of that year, and others around the country--Senators McCain and Hutchison offered this amendment, but later withdrew it based on a commitment made by both Senate majority and minority leaders that the Government Shutdown Prevention Act would be allowed to be considered as a separate measure in the near future. The leaders specifically promised a full debate on the legislation with one relevant amendment for each leader. Mr. President, I would remind my colleagues of the word of the Minority Leader at a news conference he held back on June 11, 1997. I am quoting here from a transcript of the news conference: Senator Rod Grams sent a letter to all leadership yesterday which offers a very simple, yet I think extraordinarily acceptable solution: strip out the legislation that is the source of the controversy. So back again to why the President vetoed the emergency supplemental, it was because of this very part. The minority leader went on to say: Have an up or down vote on the census, have an up or down vote on the CR, have an up or down vote on the disaster bill. I cannot think of anything more simple than that. I think it is the right thing to do. I have indicated to Senator Lott this morning that I think it is the right thing to do. In a news conference the following day, the Minority Leader repeated his support again: We would be willing to set a time certain for each of the pieces of legislation, very short time limits for debate ended. I think it is an excellent proposal, and I am hopeful that that is ultimately what we agree to. Mr. President, that was indeed what we ultimately agreed to. It has been over a year now since that debate ended. The Senate never had an opportunity to consider this as a separate measure, so I have chosen to again raise this as a non-controversial measure that will force the Congress to act responsibly to avoid a government shutdown, and also for those who made those promises to live up to their word. During last year's debate, some of my colleagues argued that since a budget agreement was reached between the White House and Congress, there was no need for this amendment anymore. I argued at the time that the budget agreement made the amendment even more crucial for a responsible government. And here we are again, with just a few weeks left in this session to consider 10 appropriations bills and all 13 conference reports. My major concerns were, and still are, that the many economic assumptions and spending priorities within the budget agreement make our budget and appropriation process uncertain. The current budget disagreements have again clearly proved my point. Mr. President, as you know, during this year's budget debate, some members are calling for more spending for their favorite programs. Others, like myself, prefer larger tax cuts and larger spending reductions. As a result, the House and the Senate have approved a budget resolution with significantly different tax and spending priorities. Those differences have prevented us from completing the budget resolution conference report, which is long overdue in accordance with our budgetary rules. It is possible that Congress may not be able to produce a budget this year at all, or finish the regular appropriations legislation before the fiscal year ends on September 30 of 1998. What would this mean, Mr. President? This means the American people will have once again been held hostage to a government shutdown simply because Congress and the White House, or the House and the Senate, do not agree on tax cuts and spending priorities, or seek to slow down the appropriations process by offering controversial or non-germane amendments. In 1995, we witnessed the longest federal government shutdown in history, which caused financial damages and inconvenience to millions of Americans simply because of disagreements between the Congress and the President in our budget process. That was a very costly shutdown. The shutdown disrupted the lives of hundreds of thousands of Americans. Some retirees and veterans could not promptly receive their social services, such as Medicare benefits. Families could not obtain passports, or visit national parks and museums. Millions of dollars were lost to small business owners and local communities. Federal employees were furloughed with a fear of not getting paid, although they were--at again, a loss to the taxpayer. Even our troops stationed overseas were affected by the shutdown. The interruption caused immeasurable financial damage to the American people and to this country, bottom line. The most serious damage done by the 27-day shutdown was that it shook the American people's confidence in their government and in their elected officials. Even today, we have not yet undone this damage. We need to restore the public's faith in its leaders by showing that we have learned from our mistakes. Passage of this good-government contingency plan will send a clear message to the American people that we will no longer allow them to be held hostage in budget disputes between Congress and the White House or among ourselves. We all have different philosophies and policies on budget priorities, and of course we will not always agree. But there are essential functions and services of the federal government we must continue regardless of our differences in budget priorities. More often, without a good-government contingency plan, the continuing resolution has become impossible as we argue over funding levels and whether pork project ``A'' or pork project ``B'' deserves our support. Debate on program funding is not based on merits but on political leverage. As a result, billions of the taxpayers' hard-earned dollars are wasted in this process. The virtue of this amendment is that it would allow us to debate issues about our spending policy and the merits of budget priorities while we continue to keep essential government functions operating. The American people will no longer be held hostage to a government shutdown. So, as I said earlier, there are still plenty of uncertainties involved in our budget and appropriations process, particularly this year. If we continue on our current course and the government again shuts down as it did three years ago, it will be another devastating blow to the American people, from senior citizens to disaster victims. We must ensure that a good-government contingency plan is in place to keep the government up and running in the event that a budget agreement is not reached. Mr. President, this good-government contingency plan is sound policy, I believe it is wise policy, and it is responsible policy. With a dwindling number of legislative days left in this Congress, I strongly believe that it is vitally important to immediately consider and pass this overdue measure to end the annual shutdown battle we face every year. This should be non-controversial legislation we can all support. I therefore strongly urge the Senate leadership to bring this legislation up for a full debate and vote as earlier agreed. Is there any time remaining?

Mr. GRAMS

Mr. GRAMS. Mr. President, I want to talk a little bit, as I mentioned earlier, on an amendment offered by Senator Shelby dealing with the CRA. I take a few moments today to rise in support of the amendment offered by the Senator from Alabama and urge my colleagues to support it as well. Senator Shelby's leadership on this issue is well-established and he should be commended for his perseverance, even in the face of fierce opposition by some of his colleagues and the Clinton administration. Mr. President, this amendment is a simple and appropriate step to removing an inappropriate and unnecessary burden from our Nation's small banks and thrifts. The amendment exempts small banks and thrifts, under $250 million in assets, from the grasp of the Community Reinvestment Act, or CRA. I am sure that some of my colleagues may come to the floor and argue that the Federal banking regulators have taken steps to remove the burdens from banks, and thus, this amendment is unnecessary. Although I commend the regulators for easing the burden of CRA, this contention does justify the appropriateness of the underlying arguement that government-mandated credit allocation is inappropriate. As we have seen most recently in Asia, when the government mandates that the private markets allocate their resources in set ways--capital in this case--the results can be disasterous. I think there are three arguments which must be considered regarding Senator Shelby's amendment. The first is, What was the justification for enactment of CRA in the first place? The Community Reinvestment Act was enacted in 1977 in response to rumors of redlining in the banking industry. The debate at that time shows that supporters felt there were three factors justifying enactment, and they are: first, that banks enjoy a semi- exclusive franchise--due in part to interstate banking restrictions and activity restrictions on competitors such as thrifts and credit unions; two, that the government limits competition within the banking sector by limiting interstate banking and limiting the acitivities of competitors such as credit unions and thrifts; and, third, that the Government restricts the cost of money to banks through interest rate caps on savings accounts and a prohibition on paying interest on demand deposits. If these three points, as the record shows, truly were the justification for imposing CRA on banks, the authors would certainly have to reconsider their action in light of the current environment facing banks. Banks no longer enjoy the limited competition they did in 1977. The Reigel-Neal Interstate Banking and Branching Efficiency Act of 1994 opened the doors to interstate banking, thus providing competition not only among banks within a state but with banks across the country as well. Also, the bill we are considering today will throw open the doors of competition to another set of competitors--credit unions--which will be able to add any group of individuals they choose, limited only by its size. Also, these two examples I have just explained do not take into account all of the non-bank financial services which have evolved and expanded since 1977--including money market accounts, mutual funds, and deposit-like insurance products. Banks also no longer enjoy protection against set costs which had been imposed through interest rate controls. The 1980 Depository Institutions Deregulation and Monetary Control Act of 1980 appropriately removed these price controls which inhibited competition. The second argument which must be considered when we discuss the Shelby amendment is the claim that the amendment will exempt 88% of the banks from coverage under the CRA. Although this percentage seems staggering--and may sway someone who feels that CRA is okay in some instances--a closer look reveals that opponents of the amendment are using sleight of hand to give the impression that this amendment will have a deeper impact than it truly will. Although it may be true that 88% of banks are exempted, in terms of the number that really counts-- that is, assets--the impact that this exemption will have is overstated. That is because less than 12% of bank assets are exempted. The approximately 8,100 banks exempted have $593 billion in assets, but that accounts for only 11.7% of bank assets in this country. These assets are only one-half-of-one percent, or $3 billion, more than the combined assets of the soon-to-be-completed Bank of America-- NationsBank merger. In other words, one bank in the country will soon have close to the same number of assets as the 8,100 banks which would be exempted under this amendment. When you realize that the overall impact of this amendment on the CRA is so small, you must question why it is being contested with such vigor. The third contention which must be contemplated in considering this amendment is whether it will have a negative impact on preventing discrimination. To listen to the critics of the amendment, one would believe that the amendment gives banks a ``get out of jail free'' card when it comes to discrimination. However, you must understand that this amendment in no way restricts the enforcement of the Fair Housing Act, the Equal Credit Opportunity Act, or the Home Mortgage Disclosure Act. These acts, designed to prevent discrimination, will remain unfettered in detering inappropriate practices of financial institutions. The amendment in no way weakens laws designed to protect individuals; instead, it removes the inappropriate policy of dictating where banks must operate. Mr. President, I realize that some in the credit union movement are concerned that adoption of the Shelby amendment may endanger swift enactment of this legislation. However, after contemplating the points raised, I do not understand how the President could consider vetoing a bill based on this appropriate and narrow relief and I do not understand how any of my colleagues can argue the doom and gloom scenarios they are painting about this amendment. So, again, Senator Shelby should be commended for his leadership and his amendment should be adopted, insisted on in conference, and signed into law by the President.

Mr. GRAMS

Mr. GRAMS. Mr. President, in my continuing series of statements on the troubled Social Security program, I have discussed the history of Social Security, the program's looming crisis, and the old-age insurance reform efforts undertaken by other nations. Today, I want to discuss an aspect of Social Security that often gets distorted in the reform debates going on throughout this great nation. It is the issue of how the current Social Security system puts women and minorities at a greater financial risk and disadvantage than other retirees face today. We must address the questions of how these Americans will fare under any reform of the current system, so we can empower them with the ability to have a more secure retirement future than that which Social Security promises today. First, it is essential to understand why these Americans were put at a disadvantage in a system supposedly established to help them. To do that, we must go back to the beginnings of the Social Security program. When Social Security was first enacted in the 1930s, the discriminative elements were inherently built into the system. Professor Edward Berkowitz of George Washington University has done excellent research on this subject. According to his studies, policy makers taking part in the first Social Security advisory council freely indulged in racial and sexual stereotypes. They made a widow's benefit equal to only three-quarters of the value of a single man's benefit. Their rationale for the decision was, according to one member, that a ``widow could look out for herself better than the man could.'' Douglas Brown, the chairman of the advisory council, even suggested that a single woman could adjust to a lower budget ``on account of the fact that she is used to doing her own housework whereas the single man has to go to a restaurant.'' Another example of Social Security's inherently discriminative nature is that domestic workers were not covered by Social Security when the program was set up. One early policy maker explained that it was difficult to collect contributions from the ``colored woman . . . who goes from house to house for a day's work here and a day's work there.'' Clearly, things were different then. At that time, most women stayed home, and only 6 people out of 10 reached age 65. Despite the fact that the Social Security program provided an opportunity to redistribute income from wealthier individuals to low- income retirees--an effort to help provide assistance to those less fortunate--the inequality of women and minorities was never adequately addressed. In fact, the disparity has grown under the current Social Security system. The profile of today's retiree is quite different than it was in the 1930s and continues to change. More women today are working outside the home, less than half of America's working women receive pensions today, life expectancy is increasing, while minority populations continue to grow in number. But our Social Security system has failed to make the needed adjustments. As a result, financial gender and racial gaps are growing larger for those retired or nearing retirement. Women and minorities are suffering under the current Social Security system. For women and minorities, average income continues to remain low. This means there is less money available to personally save for one's own retirement. Furthermore, payroll taxes have increased 36 times over the last 27 years, forcing families to squeeze more out of less take-home pay. According to the Heritage Foundation, today's payroll taxes consume as much of the family budget as do costs for housing, and nearly three times more than annual health care. So it is not surprising that growing numbers of women and minorities are becoming increasingly dependent upon their Social Security checks. If we are going to successfully raise their quality of life once they reach retirement age, we must begin to look outside the proverbial box today. Mr. President, I would like to begin by focusing on women, since they are disproportionately dependent upon Social Security. There are a number of factors that create this reliance. While we can rally around the idea that our Social Security system is supposedly ``gender neutral,'' issues such as income levels, years out of the workforce, and marital status all impact a woman's retirement security. At the forefront of the issue is the fact that women tend to outlive men, just as they have been doing for the past 500 years. With today's retirees beginning to collect benefits at age 65, it is not unlikely for a woman to spend nearly one-fourth of her life on Social Security. And because women statistically receive lower benefits than men, typically have fewer saving, and are less likely to have a pension, it means they are forced to live longer on less. We are finding that a retirement security system that was termed a success in the past threatens future female retirees the most. Over the past few decades, women have made great progress in the workplace. Today, there are more women working at higher-paying jobs. But according to the General Accounting Office, the labor force participation rate for women aged 25 to 34 remains at 75 percent, and only four-fifths that of men. Further complicating the issue is that when women do work, 25 percent work part-time. There are a variety of reasons for this, including the fact that women are more likely to take time off for family reasons. However, it leads to fewer opportunities for benefit coverage-- including pensions--and lower earnings, and ultimately, less reserve money to save for themselves and their future. Today, the average female retiree earns approximately $621 per month, compared to her male counterpart at $810 per month. The formula used to calculate benefits for women, as well as men, assumes the highest 35 years of earnings. Today, nearly 75 percent of women earn $25,000 or less. For those years an individual is out of work--for instance, taking time off to raise a family or care for an ailing loved one--the salary is counted as ``zero.'' In addition, any length of time less than 35 years of working count as ``zero'' earnings. As a result, the median number of years with ``zero'' earnings for workers turning 62 in 1993 was 15 years for women, compared to only 4 years for men. This means nearly half the years being considered in the benefit formula for women are counted as ``zero'' earnings years and the average salary for earning years is $25,000 or less. Currently, there are some advocating the benefits formula be raised to 38 years. While the number of working women continues to grow, the Social Security Administration's own projections reveal that only 30 percent of female retirees in 2020 will have 38 years of earnings--compared to about 60 percent of their male counterparts. This is extremely detrimental to unmarried women who either divorced before 10 years of marriage or never married, because their benefit calculations are exclusively dependent upon their own earnings calculations. And currently, the poverty rate for elderly divorced, separated, or never-married women is the highest of any group--nearly 30 percent. But marriage in and of itself doesn't always improve a woman's situation. In fact, 64 percent of all elderly women living in poverty are widows. This is because when a spouse dies, the widow's benefits are reduced by up to one-half. Meanwhile, statistics show that to live alone, a widow requires at least 75 percent of what it costs as a couple. Furthermore, if a widow has yet to reach age 65 when a spouse dies, and has no dependent children, she is not entitled to any survivor benefits. Thus, without private savings, the benefit reduction leaves most widows financially unprepared for retirement. Let me share with you the real story of two women. Susan of Colorado made an annual income of $20,000, and she paid the 12.4 percent payroll tax into the Social Security system from each of her paychecks while raising kids, sending them to schools, and seeing them married. But when Susan died at age 64, she left nothing from Social Security for her children. Joan of New York, a 46-year-old homemaker, never worked outside the home after being married, and instead chose to raise her children. Her husband was self-employed, and paid a 15.3 percent payroll tax into the Social Security and Medicare programs. When Joan's husband died of a heart attack at age 49, all she received from Social Security was $200 for his funeral. Since she has no skills to help her find a job, no savings, and gets no help from Social Security despite the thousands and thousands of dollars her family poured into the system, Joan is now helpless and suffering from depression. I then ask if the system is so harmful to women, why are there so many out there arguing against change? How can we sit back and hold women hostage to a program for nostalgia's sake? I would argue we cannot, and it is our job to ensure that every woman has an opportunity to live out her golden years in financial security. And I agree we must dispel the ``myths'' that threaten efforts to improve women's retirement security. One fact-based ``myth'' is that because women may feel less confident about their retirement security, we will be unable to change it for the better. First and foremost, it is critical to ensure that current and future beneficiaries remain unaffected by any change to the Social Security program if they choose to stay with the traditional system. We made a covenant with our older Americans and have a responsibility to protect them from any uncertainty during the transition from a pay-as-you-go system to a future funded one. But we also have a responsibility to future beneficiaries to clearly notify them that without dramatic change to the system, they will not receive adequate benefits from Social Security. They are more likely to see reductions in alternative means of savings as a result of the economic impact of the system going bankrupt. Because women are living longer than men, they are most likely to experience the hardship longer. As Members of Congress, we owe it to women to preserve and improve their retirement security. The next fact-based ``myth'' is that because women are less likely to take financial risks, their earnings may be less than their male counterparts under a market-based system. It is true, statistically, that women have historically invested more conservatively than men. Furthermore, women may have less invested in outside accounts than men. But it is interesting to note that according to the National Association of Investors Corporation, all-women investment clubs earn higher returns than all-men clubs do. Who says women cannot make financial decisions? Even under the most conservative investment strategies, such as super-safe U.S. Treasury Bonds, women fare better than they would under the current system. According to a recent Cato Institute study, if women retiring in 1981 were provided the opportunity to invest their savings in personal retirement accounts with earnings sharing, the average single woman could expect to receive 57.9 percent more in retirement benefits and the average female divorcee could expect 67.2 percent more. The average widow could expect 96.5 percent more, nearly double the benefits than under Social Security. The average wife could expect to receive 207.5 percent more than under the existing Social Security program. While the National Center for Women and Retirement Research has found women may feel less confident about making financial decisions, there is no reason to believe women lack the skills to understand the challenges and long-term benefits of investments. Pension experts agree that education is a critical factor in helping individuals make better investment choices, and the GAO has found evidence that investor education can help to alleviate the problem. So even though some advocates of the status quo argue men may fare ``better'' than women under a market-based system, I believe they are missing the point that both would fare better than they do under the current system. It appears as though some would prefer ``equality'' in misery than the potential for some ``inequality'' at a much higher standard of living for all. Furthermore, there is nothing to show that women retirees could not fare better than men, even though, statistically, they are not doing so now under the current system. One of the most troubling fact-based myths is that the current system protects women from running out of benefits before they die more than a personal retirement account would. The premise is that since women live longer than men do, they will need benefits longer. Under the current system, retirees are promised benefits until death, even though on average, they exhaust their contributions within the first five years of retirement. In a system of personal retirement accounts, benefits would be based upon one's own contributions, the age at which one retires, and the performance of their account. It is true that women, again, tend to outlive men. And yes, it is true that an independent study found women are more likely than men to spend a lump sum distribution from a defined contribution plan. However, that should not imply that women could not be trusted with a private savings account. In fact, that same study showed women are equally as likely as men to rollover lump sums from a defined benefit plan into an IRA, or to save and invest the money. We must also remember these studies are based upon the current situation, where these men and women anticipate uninterrupted benefits from Social Security. In the future, however, if the current system remains unchanged, a maximum of 75 percent of the current benefit level will be available to retirees. In other words, future retirees could expect to lose 25 percent of retirement benefits. Once the IOU's that now make up the Social Security trust fund begin being cashed in, the economy will suffer, employment rates may suffer, taxes may need to be raised, and the ability for an individual to prepare for the reduction in Social Security benefits will be significantly reduced. Mr. President, I would say to those arguing for the status quo that urging women to hold out for some future promise of benefits that are not likely to be there is folly. And in fact, holding out will likely leave women increasingly dependent upon their benefits at the same time those benefits are being reduced. But as I mentioned earlier, women are not the only individuals being misled by some in the debate. Race continues to be an important factor in determining the retirement security for some Americans. Retirement studies similar to those that focus on women have looked at minority workers, and I would like to briefly touch on the Hispanic and African- American populations. By all accounts, the Hispanic population is relatively youthful. However, as the Social Security system approaches insolvency and the rate of return on these workers' investments declines, Hispanics will be forced to bear a disproportionate share of that growing financial burden. The Census Bureau estimates that by the year 2050, Hispanics will make up nearly 25 percent of the work force, compared with only 11 percent last year. This will come at the same time tax rates, if the system stays the same, will need to be increased to cover the bankrupt trust fund. Some have estimated that the tax rate increase would have to be nearly 40 percent by then to cover benefit expenses--40 percent first for Social Security expenses. Such a tax burden promises to severely hamper the ability of young Hispanics to save for themselves. But what do all those numbers mean? The Heritage Foundation did a model of a Hispanic community. They assumed 50,000 people lived there-- all families of four made up of dual- income 30-year olds with two kids. By forcing these families to throw their payroll taxes into the Social Security system, the analysts estimated the community, as a whole, lost $12.8 billion in 1997 dollars over what it could have earned had they invested in a conservative portfolio. This small minority community, in effect, lost nearly half--this is just this small community--lost nearly half what the federal government spends on food stamps or education for this entire Nation! But if an Hispanic couple from that community were able to take the dollars they would be required to pay into the current Social Security system and instead invest them in a portfolio, the outcome would have been remarkably different. Under the current system, the couple could expect about $420,000 in exchange for a lifetime of contributions. But with a conservative portfolio comprised of 50 percent U.S. Treasury Bonds and 50 percent blue chip equities, that same couple could nearly double their benefit to $767,000 in today's dollars. Treasury Bonds alone would yield over $100,000 more in benefits. That means this family would have enough to convert their benefit to an annuity paying out exactly what Social Security promised and still have more than $200,000 left over for any expenses --long-term health care or even just passing along to their children--something impossible under today's Social Security system. The findings within the African-American community are similarly stunning. Like single Hispanic males, single African-American males have a lower life expectancy and are especially disadvantaged by the current Social Security system. Although the system aims to transfer funds to low-income individuals, these minorities are particularly hard hit. According to the Heritage Foundation, a low-income, African-American male born after 1959 can expect to receive less than 88 cents back on every dollar he contributes to the Social Security trust fund. This translates into a lifetime cash loss of some $13,377--a loss these individuals can hardly afford Not a gain on their investment, but an actual loss on their investment. If we allowed that same male to invest his Social Security taxes in T-bonds, he would receive a post-tax increase in his lifetime income of nearly $80,000. African-American women are similarly disadvantaged by the current system. Enabling a 21-year-old single mother to invest her payroll taxes into low-risk/low-yield government bonds, rather than the Social Security system, would more than double her rate of return. That means this woman could expect to get back $93,000 more, after taxes, than she would under the current system. And with a little risk, the numbers could even more than double. Mr. President, many solutions have been proposed to stave off the impending Social Security trust fund crisis: raising retirement ages, increasing payroll taxes, decreasing benefits--the list goes on. But we cannot forget that those choices will only exacerbate a problem that is already becoming progressively worse. Such proposals put at greatest risk those the system was aimed to help the most. When our Founding Fathers created this great Nation, they declared each American had the right to life, liberty, and the pursuit of happiness. If we continue on our present track with the current Social Security system, we are truly undermining those principles. Sentencing women and minorities to a retirement life of poverty is unfair. The threat of raising payroll taxes by nearly 40 percent to fund a bankrupt retirement system threatens to steal away our children's liberty. And turning our backs on the reforms we have the power to undertake-- reforms that will truly revive our ailing system--steals away every American's right to pursue happiness. Mr. President, rather than scaring women and minorities away from the options we have before us, let us give them the freedom that comes with personal retirement choices, the peace of mind that retirement security provides, and the ability to lead a better life in retirement than the one they are being promised today.

Mr. GRAMS

Mr. GRAMS. Mr. President, I want to make three separate statements, one dealing with Social Security, looking at the background and the history of the program as we move toward possible debate on change and reforms. Also, a statement supporting Senator Shelby on his amendment dealing with CRA and small banks. And also a brief statement on the Government Shutdown Prevention Act, which is aimed at trying to pass legislation that will prevent the Government from shutting down in the future even if Congress cannot reach an agreement on budget or appropriation matters.

Mr. GRAMS. I thank the Senator. Mr. President, I ask unanimous consent that I be allowed to speak for up to 45 minutes.

Mr. GRAMS

Mr. GRAMS. No, I am not. What I want to do is reduce the tax burden on families all across the board, but to start right away with what is the most unfair tax.

Mr. GRAMS. Yes, it did pass.

Mr. GRAMS. That was part of that legislation.

Mr. GRAMS. When my colleague says he hasn't run into those folks, I have, and I concur with what the other Senators said, that they have. I have had a number of couples come up to me, whether at airports or at meetings or at other times, and tell me exactly the same thing the other Senators have said. They have actually planned around this, whether they have delayed the marriage for a year--I even had one elderly gentleman tell me he called his wife from the accountant, he was 79 years old, and he said to his wife, ``I think we need to get a divorce.'' She was kind of shocked by it and she said, ``Why?'' And he said, ``Because we would be much better off if we were filing single.'' And then he went through the explanation. So this is not something that has gone by Americans, and especially families, and especially dual-income families. So I think there are many out there who are aware of this. When it comes to a difference of $3,500 a year, for those first years I think a lot of families are thinking very strongly about it. But just briefly, I want to wrap this up and give a couple of minutes to my other colleagues here. But I just think, when we look at the numbers, Washington created this ``unintended consequence'' within the Tax Code, that, as I mentioned, penalized some 21 million American couples to a tune of about $29 billion a year. I remember President Clinton saying at a news conference not too long ago that he agreed this was an unfair tax, but he also had to put in a qualifier, ``But Washington cannot do without money. This $29 billion is too important for Washington to give up.'' In other words, we are willing, bottom line, to impose an unfair tax on many of our American families just so Washington can have a few additional dollars--if you count $29 billion as a few additional dollars--to have that at the end of the year. According to the CBO, couples at the bottom end of the income scale who incur penalties paid in, on an average, nearly $800. When we talk about low income and we want go give them a tax break--they paid an additional $800 in taxes. That represented about 8 percent of their income. Repeal the penalty and those low-income families will immediately receive an 8-percent increase in their income. So my constituents have been very clear on this issue. As I mentioned, many have come and talked to me. Many have written letters. One wrote: This tax clearly penalizes those who marry and are trying to possibly raise a family by working two jobs just to make ends meet. Our tax laws need to give the proper incentives encouraging marriage and upholding its sacred institutions. Mr. President, I couldn't agree more. Also, we began to add some real reform last year with the passage of a $500-per-child tax credit. It is a small step, but in the right direction. This Congress should do everything in its power to promote family life, to return the family to its rightful place as the center of American society. Whether lawmakers intended it or not, Congress created the marriage penalty and it rests on Congress to take it back. I yield the floor.

Mr. GRAMS. I am not sure, but when you look at couples across the country who are unfairly paying $29 billion or 21 million couples across the country who are unfairly paying about $29 billion a year in taxes--if there are some discrepancies, we should look at all of it. But what we should not do is penalize those families who are paying an average of $1,400 a year more, just because of the way the codes are set up.

Mr. GRAMS. Mr. President, I rise this morning to support, in a small way, the efforts of my colleagues from Kansas and from Missouri, talking about how to abolish the marriage penalty and help instill American values into the U.S. Tax Code. I applaud them for their continual efforts to bring this issue to the floor, to continue to talk about the need for us to take a very hard look at this and hopefully create the means of eliminating this very unfair tax on American families. Since the founding days of this Nation, the family has always been considered to be the bedrock of American society, the first unit of Government. Strong families make strong communities, and strong communities are what has made a strong America. For generations, our ancestors built this country on that very foundation, and the Government respected that tradition by ensuring that its laws did not usurp the family role. Then how do we explain the existence of the marriage penalty, a piece of Government tax trickery that actually penalizes couples who choose to commit to a family through marriage? Let me read to you, this morning, from a study of the marriage penalty prepared by the National Center for Policy Analysis. Prior to 1948, the Tax Code made no distinction between married couples and individuals. In that year, Congress changed the law to allow income splitting. In effect, couples were taxed like two single taxpayers even if only one had earned income. The result was to sharply lower taxes for married couples. In short, a de facto subsidy for marriage was created. By 1969, the magnitude of this subsidy had grown to such an extent that it was possible for a single person to pay 40 percent more in taxes than a married couple with the same income. This led Congress to create, for married and unmarried people, separate tax schedules [that were] designed to reduce the subsidy to no more than 20 percent. An unintended consequence of the 1969 law change was to create a marriage penalty for the first time.

Mr. GRAMS. Go ahead.

Mr. GRAMS

Mr. GRAMS. Mr. President, I don't wish to interrupt the debate on this bill, but as no one desires to speak right now, I ask unanimous consent I be allowed to speak for up to 20 minutes as in morning business.

Mr. GRAMS. Thank you, Mr. President.

Mr. GRAMS

Mr. GRAMS. Mr. President, in my most recent statements before this Chamber about the Social Security system, I have taken time to discuss its history and the looming crisis, that it will shatter the retirement dreams of our hard-working Americans. Mr. President, in my most recent statements before this chamber about the Social Security system, I discussed its history and the looming crisis that will shatter the retirement dreams of hard-working Americans. Tonight, I would like to discuss Social Security from a different perspective, by turning our focus away from the coming crisis to look at the steps other nations have taken to improve their own retirement systems. I realize that it may be hard to look outside ourselves for possible solutions to the problems our Social Security system is facing--after all, we are a nation that is typically at the forefront of innovation. But if we set aside our pride, we can learn volumes about the viable international options before us. Retirement security programs throughout the world will face a serious challenge in the 21st century due to a massive demographic change that is now taking place. The World Bank recently warned that, across the globe, ``old-age systems are in serious financial trouble and are not sustainable in their present form.'' Europe, Japan, and the U.S. share the identical problem of postwar demographic shifts that cannot sustain massively expensive social welfare programs. How to meet this challenge is critical to providing retirement security while maintaining sustainable, global, economic growth. The crisis awaiting our Social Security system is nearly as serious as that faced by the European Union and Japan. What is equally serious is that, while many other countries have moved far ahead of us in taking steps to reform their old-age retirement systems, Congress has yet to focus on this problem. Some of the international efforts are extremely successful; those reforms may offer useful models as we explore solutions to our Social Security system. Currently, there are three basic models being implemented abroad that deserve our attention. The ``Latin American'' model primarily follows Chile's experience. The Organization for Economic Cooperation and Development model, or ``OECD,'' is underway in the United Kingdom, Australia, Switzerland, and Denmark. There is even a third model--the ``Notional Account" model--that has been adopted in countries such as Sweden, Italy, Latvia, China, and is on the verge of adoption in Poland. These models have differences, and the nations implementing them have differences as well--economic, political, and demographic. But they all share a common theme and were born out of the same fiscal crisis that is facing the United States within the next decade. Like the U.S., each of these countries has an aging population, and--before the reforms-- had an inability to meet the future retirement needs of their workforce. So in an effort to avoid economic devastation for their people and their nation as a whole, they undertook various reforms that are proving to be a win-win for both current and future retirees. How did they do it? And what lessons can we--as policy leaders--take from their experiences and apply here at home as we grapple with the shortcomings of our own retirement system? These are some of the questions I will address today in my remarks. The bottom line is that each nation faced the key challenges of taking care of those already retired or about to reach retirement age, ensuring that future retirees benefitted from the changes, and finding an affordable means of funding the transition from a pay-as-you-go government retirement system to a future financing mechanism. Mr. President, I'll begin with the Latin American model and in particular, focus on Chile's experiences. Back in the late 1970s, Chile realized that its publicly financed pay-as-you-go retirement system would soon be unable to meet its retirement promises. After a national debate and extensive outreach, the Chilean government approved a law to fully replace its system with a system of personalized Pension Savings Accounts by 1980. Nearly two decades later, pensions in Chile are between 50 to 100 percent higher than they were under the old government system. Real wages have increased, personal savings rates have nearly tripled, and the economy has grown at a rate nearly double what it had prior to the change. Under the Chilean plan, Pension Savings Accounts, or PSAs, were created to replace the old system and operate much like a mutual fund. Like the old government plan, PSAs were to provide workers with approximately 70 percent of their lifetime working income. That is where the similarities between Chile's old and improved retirement programs ends. When Chile created the PSA system, the existing system of having workers and employers pay social security taxes to the government was completely eliminated. Instead, workers began to make a mandatory contribution in the amount of 10 percent of their income to their own PSA. The old employer taxes were then available to workers in the form of higher wages. Through this evolution from the old, hidden labor tax on workers to the new PSA system, workers saw real gross wages increase by five percent. Furthermore, it reduced the cost of labor--and the economy prospered. Under the PSA system, a worker has great control over his or her retirement savings account. First, the worker has the ability to choose who will manage their fund from a pool of government-regulated companies known as ``AFPs.'' This provides the worker with the ability to move between managers, while maintaining protections from serious losses resulting from undiversified risk portfolios, theft, or fraud. The resulting competition between AFPs results in lower fees for workers, higher returns averaging 12 percent annually, and better service --something that rarely occurs with government plans. Second, each worker is empowered to ensure the level of retirement income they desire. Armed with a passbook and account statements, these workers have the information necessary to follow their earnings growth and decide how to adjust their tax-free voluntary contributions in order to yield a specific annual income upon their retirement. For example, the Chilean system was established to provide an annual income equivalent to 70 percent of lifetime income. However, under the PSA system, income is averaging 78 percent. Third, workers can choose from two payout options upon retirement. A worker can leave his or her funds in the PSA and take programmed withdrawals from the account with the only limitation based upon projected lifetime expectancy. Should the retiree die prior to exhausting the PSA fund, any excess amount is transferred to his or her estate. The other scenario allows a worker to use the PSA funds to purchase an annuity from a private insurance company. These annuities guarantee a monthly income as well, and is indexed for inflation. In the event of death, survivor benefits are provided to the workers' dependents. They build an estate for their heirs. And finally, PSA accounts are not automatically forfeited to the government in the case of premature death or disability of a worker. Under the Chilean system, the fund managers provide an insurance protection through private insurance companies. The fee is in addition to the 10 percent mandatory savings contribution, and ensures the PSA funds are not lost should a worker not reach full retirement age. Personal accounts have brought personal freedom to Chile's retirement system. Today, more than 93 percent of the workforce participates in the PSAs, which boast an accumulated investment fund of $30 billion. This is remarkable when you consider Chile is a developing nation of 14 million people with a GDP of $70 billion. Chile's success has paved the way for other Latin American countries such as Argentina, Peru, and Columbia and has sparked the momentum for reform in Mexico, Bolivia, and El Salvador. While individual accounts are proving successful in Latin America, the OECD model utilizes a ``group'' choice approach as a key element. Rather than allowing an individual to choose his or her own fund manager, the employer or union trustee chooses for the company or occupational group as a whole. This approach most likely developed from the fact that these reforms were politically easier to ``add-on'' to the existing government pay-as-you-go pension tier. Furthermore, reform leaders worked closely with union leaders when they began to implement the next tier of private plans, and then moved the reform sector by sector. The movement began during the 1980s in the United Kingdom. Since the end of World War II, the British had a basic, flat rate, non-means tested government pension for all who paid into the national insurance plan. By the 1970s, a new tier was added to bridge a gap between those covered by private pensions and those without them. This State Earnings Related Pension Scheme, or SERPS, promised--in exchange for a payroll tax--an earnings-based pension of 25 percent of the best 20 years of earnings, in addition to the Basic State Pension. However, like other nations, the government pension plan was facing bankruptcy and reform was critical to the future security of its workers and of the nation as a whole. Under the leadership of Social Security Secretary Peter Lilley, the British system evolved and began to enable individuals to choose the option of a new, self-financing private pension plan. Under the British plan, current retirees were protected, but current workers were given a choice of pension plans. Those workers had the option of either staying in the SERPS program or contracting out to a private fund. If a worker chose to remain within SERPS, they would receive a reduced pension amounting to 20 percent of their best 20 years of earnings. However, if a worker contracted out of the SERPS, they were given the opportunity to participate in an occupational pension plan, and were eventually allowed to take part in a new private, portable pension plan much like a 401(k). To pay for the plan, a worker who chooses to contract out receives a rebate equivalent to a portion of their payroll taxes. This rebate amounts to about 4.6 percent of earnings and must be invested in an approved plan. Additional contributions can be made--tax free--by employers and employees up to a combined total limit of 17.5 percent of the individual's income. As a safety net, companies are required to guarantee that workers who contract out will receive a pension at least equivalent to what they would have under SERPS, and are limited as to the amount that can be invested in the employer's own company. To address changing workforce trends and not hold workers captive to employer plans, the British government created the ``appropriate personal pension,'' or APP, plan which would be available to workers, as well as to the self-employed or unemployed. These fully portable plans are much like the employer plans, funded by the 4.6 percent rebate in payroll taxes, and are an alternative to the occupational plan or the SERPS. As an incentive, the British government offered an additional ``payroll tax rebate'' above the standard rebate during the APPs infancy. This made these fully portable APPs attractive options for younger workers. While there are many safeguards--including the ability for former SERPS workers to opt back into the government-run program--the success of the English system has been overwhelming. When the transformation began, analysts expected a participation rate of a half million workers, growing to 1.75 million over time. Today, nearly 73 percent of the workforce participates in private plans, boasting a total pool worth more than $1 trillion. The resulting economic growth and ability to control entitlement spending has analysts predicting the United Kingdom will pay off its national debt by 2030. In case any of my colleagues have forgotten, that is about the same time our Social Security trust fund is anticipated to go bankrupt. Similarly, Australia has found much success in transforming its government pay-as-you-go pension plan to a more self-directed plan. By the 1980s, its existing retirement plan offered a full pension for all Australians over age 69, although most qualified to begin drawing benefits by age 60 for women and 65 for men. Like its international neighbors, Australia was facing a future financial situation that threatened worker retirement security and Australia's standing in the global economy. As Australia began to review its options, three goals emerged. Whatever changes were made, the new system had to provide more benefits for future retirees than they would receive under the current plan; it had to increase national savings, and any new plan had to reduce budgetary pressures facing the system. By the mid-1980s, the Australian government instituted a mandatory savings plan called ``superannuation funds.'' In 1992, the program matured into a new Superannuation Guarantee that is still a work in progress. During the transformation process, the Australian government took key steps to change its course. First, it strengthened the income means- testing for the old age pension. In doing so, the government also added an asset test in the calculations process. This was critical since the dependence on Social Security had contributed to the decline in national savings. Second, the government made the new superannuation savings portable, and instituted a penalty for withdrawals before age 55. This provided new incentives for savings since workers could take their funds with them, and disincentives for spending one's nest egg prior to retirement. Third, the government took steps to build union investment into the savings program. Rather than giving workers wage increases, negotiators reached an agreement to provide a 3-percent contribution into a superannuation fund for all employees and called for such guarantees to be built into all future labor contracts. Fourth, the government expanded coverage of the superannuation fund to virtually all workers, and every employer is required to contribute a set amount to the fund on the employees' behalf. The required amount is currently 3 percent and will grow to 9 percent by 2002. Since the beginning of the Australian reform, additional changes have occurred. Today, workers have more choices between which superannuation fund their mandatory savings can be invested in. Additional tax relief has been provided for voluntary savings, but savings are not tax-free when invested. As Australia reviews its overall tax structure, however, there have been discussions about making contributions tax-free and deferring taxation until the funds are withdrawn. Another key issue was the total elimination of early withdrawal. Because a retirement safety net remains in place, the goal here was to eliminate a worker from ``double dipping''--collecting from the savings fund, then coming back to the government for a pension at age 65. The Australian reforms are considered a successful example of the OECD model. And as more initiatives are implemented, it will likely continue to prove profitable for future retirees ``down under.'' The final example I would like to touch upon is the ``notional account'' model--like the system in Sweden. Under this plan, workers receive a passbook that reflects their defined contributions and the interest being accumulated over time, but there are no real assets in the account. The fund is just a ``notion'' of what it would be if it were funded. In some respects, it might be compared to the Personal Earnings Benefit Statements U.S. workers receive from the Social Security Administration. The up-side is there is no transition cost for a nation to move from a government-run, pay-as-you-go system to a notional pay-as-you-go system. The downside is that the funds remain at risk, as do future retirees. The bottom line here is that reforms have to be real if we are going to see any long-term benefit for workers. Mr. President, it is clear that whatever the specifics, reforms are being implemented abroad that are proving to be a great success for both today's retirees and tomorrow's. I hope we have learned that we are not operating in a vacuum here--that there are real models out there for us to review and consider. For the United States to be successful in the reforms it undertakes to ensure retirement security, there are four key principles we must uphold. First, we must protect all current and near-term retirees. Our government made a promise to them, and we must ensure any transformation we pursue does not impact the decisions they have made for their golden years. Second, we must ensure that any proposal holds the promise of improved benefits--and greater retirement security--for future retirees. Today's younger generations have every right to be skeptical about government promises to revamp a system they expect to go bankrupt. They need to know there is a solution that provides retirement security for them. Third, any proposal should encourage personal choice by allowing individuals to establish personal retirement accounts. Fourth, the government must not turn to tax increases to fund our pursuit of retirement security. Finally, we must recognize that any change will require courage. We must admit to ourselves we have a system that is fine today but is a time bomb waiting to explode. The decisions ahead will not be easy; if they were, they would have been made already. But the debate must begin somewhere. On August 14, this nation will recognize the 63rd anniversary of Congress' approval of the Social Security system. It is my hope that we will mark the occasion by engaging in a national debate over how we can transform our ailing system into a vibrant retirement program for generations to come. I thank the Chair. I yield the floor.

Mr. GRAMS

Mr. GRAMS. Minnesotans were there at the dawn of the Space Age, and I look forward to the role our state will play as the next chapter of America's space history, the era of the International Space Station, is written. I believe the nation's space programs, such as the International Space Station, represent important investments in America's future. The scientific and technological benefits of this ambitious initiative are impressive and will produce a high rate of return on the American taxpayers' investment in aeronautical and space programs. Among these benefits, the space station will provide new insight into industrial research for air and water purification, waste management and recycling, computer technology, and environmental engineering. Most notable is the progress being made in the biomedical field. The promise of a long-term, zero gravity environment has scientists poised to conduct research into the development of cures for diabetes, cancer, emphysema, and immune system disorders. Moreover, the study and eventual findings of why astronauts who spend extended periods of time in space often experience weakening of their hearts and blood vessels may lead to the diagnosis and treatment of heart disease. It should also be noted that the International Space Station is supported by many of this nation's most prominent medical and research organizations, including the American Medical Association, the Multiple Sclerosis Association of America, the American Medical Woman's Association, Bristol-Myers Squibb, and Mount Sinai Medical Center. Clearly, the space station promises to make significant contributions to the study of medicine. Mr. President, the International Space Station will help to maintain U.S. leadership in space while promoting international cooperation. This international laboratory in orbit will bring American, Russian, European, Japanese, and Canadian astronauts together in search of a common goal: to develop further advances in science and technology that will benefit future generations. More importantly for the young people of America, the space station will inspire greater interest in our nation's space programs. With this in mind, I would like to commend some of the colleges and universities in my home state of Minnesota for their commitment to encouraging the involvement of our country's future leaders in our aeronautical and space industry. Mr. President, since 1989, NASA has administered the ``Space Grant'' program to enhance aerospace research and education in the United States. This program is an effective partnership among universities, the aerospace industry, and federal, state, and local governments that assists in the recruitment and training of professionals in aerospace science, engineering, and technology. In my home state, the Minnesota Space Grant Consortium is comprised of nine academic institutions along with the Minnesota Department of Transportation. Those nine institutions are: Augsburg College, Bemidji State University, Bethel College, College of St. Catherine, Fond du Lac Tribal and Community College, Macalester College, Normandale Community College, the University of Minnesota-Twin Cities, and the University of St. Thomas. For the last several years, these institutions have worked effectively together to promote aerospace science through fellowships and scholarships, the development of new courses in Physics and Geology, the establishment of a new Space Studies minor among the consortia members, and public lectures relating to space science and engineering. I met recently with Emily Eelkema, a native of Minneapolis and a senior at the University of Minnesota studying Aerospace Engineering. Emily is a participant in the NASA Academy on Aeronautics at the Dryden Flight Research Center in California, and was initially selected for this honor through the Minnesota Space Grant Consortium. Those selected for the NASA Academy are among the brightest students in the country and have expressed a deep interest in NASA aeronautical space research. I was extremely impressed by Emily's grasp of Dryden's flight research program and her life-long interest in aeronautics and space activities. I am encouraged to learn of her goals of becoming an astronaut and playing an important role in the design of a manned Mars mission. Her commitment to a career in this exciting field makes me optimistic about the future of our space program. Mr. President, the commemoration of ``Space Week'' would not be complete without paying tribute to a true American hero, our colleague Senator John Glenn. On October 29, Senator Glenn will embark on a second journey into space, this time aboard the Space Shuttle Discovery, as a Payload Specialist responsible for conducting space- based research on aging. His work may lead to further understanding by scientists about the process of aging, and help reduce the number of individuals requiring long-term medical care in their later years. Many deserving accolades have been placed upon Senator Glenn for his accomplishments throughout his career as a marine, the first American to orbit the Earth, and a United States Senator. I believe no commendation has captured the essence of John Glenn's commitment to public service than that bestowed upon him more than 35 years ago by President Kennedy during a visit to Cape Canaveral, Florida. Upon presentation of NASA's Distinguished Service Medal to Lt. Colonel Glenn, President Kennedy spoke of Glenn's historic orbital flight when he said, ``His performance was marked by his great professional knowledge, his skill as a test pilot, his unflinching courage, and his extraordinary ability to perform the most difficult tasks under conditions of great physical stress and personal danger. His performance in fulfillment of this most dangerous assignment reflects the highest credit upon himself and the United States.'' Mr. President, I encourage all Americans to reflect upon the benefits of our nation's space programs during this Space Week. As we approach the 21st century, Americans can share a sense of national pride as we move forward in our epic journey--a journey filled with uncertainty, yet with great promise--into the space frontier.

Mr. GRAMS. Mr. President, I rise today to commemorate ``Space Week'' and recognize the accomplishments of our nation's space programs over the course of forty years of NASA space exploration. As my colleagues may know, this month marks the 29th anniversary of the Apollo 11 launch on July 16, 1969 which began one of man's greatest voyages of exploration: the first flight to land a man on the moon. Like most Americans, I can recall my wonderment on July 20, 1969 when the lunar module Eagle landed on the moon. Soon thereafter, Commander Neil Armstrong descended from Eagle to the moon's surface and declared those memorable words, ``That's one small step for man, one giant leap for mankind.'' Since that historic moment, NASA and its private sector partners have guided this nation to the forefront of aeronautical excellence. Today, this nation's commitment to expanding the development of technology and learning more about our vast universe remains as strong as ever. My home state of Minnesota has earned a well-deserved reputation as a high-technology giant, making our job creators a perfect match with NASA. That NASA depends so heavily on the ingenuity and know-how of Minnesota's high-tech industries is a strong testament to the innovative spirit of our citizens. I am particularly impressed at Minnesota's contributions to the space shuttle program, and I had the unique opportunity to witness their work first-hand last November, when I toured NASA's Florida facilities and viewed the launch of the space shuttle Columbia. I ask that the names of the 31 Minnesota firms currently working under NASA's space shuttle program be printed in the Record. The names follow: 3M Company Industrial Chemical Product (St. Paul, Minnesota) ADC Telecommunications, Inc. (Minneapolis, Minnesota) Arrow Electronics (Chanhassen, Minnesota) Computype (St. Paul, Minnesota) Control Data Systems, Inc. (Arden Hills, Minnesota) Despatch Industries (Minneapolis, Minnesota) Digi-Key Corporation (Thief River Falls, Minnesota) Donaldson Company (Minneapolis, Minnesota) Dotronix, Inc. (New Brighton, Minnesota) Graco, Inc. (Minneapolis, Minnesota) Interactive Technologies, Inc. (North St. Paul, Minnesota) Intercomp Company (Minneapolis, Minnesota) Kavouras Incorporated (Burnsville, Minnesota) Midwest Systems (Burnsville, Minnesota) Minnetech Labs, Inc. (Minneapolis, Minnesota) Northern Hydraulics, Inc. (Burnsville, Minnesota) Pacific Digital Products (Burnsville, Minnesota) Reality Interactive, Inc. (Eden Prairie, Minnesota) Research Incorporated (Minneapolis, Minnesota) Rosemount Aerospace, Inc. (Eagan, Minnesota) Rosemount, Inc. (Chanhassen, Minnesota) Sheldahl Incorporated (Northfield, Minnesota) Starkey Laboratories, Inc. (Eden Prairie, Minnesota) Telex Communications (Minneapolis, Minnesota) Tescom (Elk River, Minnesota) The Winsted Corporation (Minneapolis, Minnesota) Try Us Resources, Inc. (Minneapolis, Minnesota) TSI, Inc. (St. Paul, Minnesota) Twin Cities Digital (Burnsville, Minnesota) W.A. Charnstrom Company (Minneapolis, Minnesota) Zero (Minneapolis, Minnesota)

Mr. GRAMS

Mr. GRAMS. Mr. President, I ask unanimous consent to speak for 20 minutes.

Mr. GRAMS. Mr. President, first, I want to take a couple of minutes, Mr. President, to compliment my colleague from Kansas on what he is doing in talking about this marriage penalty and advocating more tax relief for American families. He has done a great job. I agree with him wholeheartedly, because when you look at the marriage penalty, bottom line, this is an unfair tax that has been imposed on something like 21 million couples in this country. It penalizes them for actually being married rather than encouraging and supporting the institution of marriage. We have a Tax Code that actually penalizes couples if they get married. A couple of months back, President Clinton was asked a question about the marriage penalty. I believe he admitted that it was unfair. Then he was asked, ``Why don't we get rid of it?'' The bottom line is that Government somehow cannot get along without this money. It is $29.1 billion a year, I believe. The Government can't get along without that money. Somehow families can get along without it, but the Government can't. Nobody calls up the families and says: If we have this unfair tax, are you able to get along without the money? Nobody calls the families. They just have to do more with less, or get along without it. The bottom line is that, in our Tax Code, somehow our Government is willing to collect taxes unfairly. I agree with the Senator from Kansas that families can make much better use of this money, as we have been advocating for so long, in reducing the taxes. I strongly support his efforts today in talking about the elimination of the marriage tax penalty. I just wanted to support him on that.

Mr. GRAMS

Mr. GRAMS. Mr. President, as the Senate continues its work on the spending bills for the next fiscal year, I rise today to speak about an issue that threatens the financial future of this nation: a disaster- in-the-making that jeopardizes our ability to fund any of the important discretionary spending programs we now debate, such as education or medical research. I rise to speak about the coming crisis of the Social Security program. In my last remarks on this subject before this Chamber, I discussed the history of the Social Security program. Specifically, I talked about how hastily Congress passed the Social Security Act, how poorly the program was designed, and how fallacious its finance mechanism was. A Social Security crisis was inevitable--and arrived in the late 1970's, when the program began running a deficit and Congress raised taxes to shore it up. President Carter claimed Social Security would remain solvent for another 50 years. Just five years later, Social Security was facing another near-term insolvency. That time, after again raising taxes, Congress claimed the system would remain viable for 75 years. Yet, here we are again. Mr. President, as with the previous two crises, the coming retirement crisis is real. All the socioeconomic data suggest it is approaching. Both the government and private sectors are projecting the future insolvency of the Social Security program. However, unlike the last two crises, the coming crisis will have a profound and devastating impact on our national economy, our society, and our culture unmatched by any we have faced since the founding of this Nation. Despite all the evidence to the contrary, some Washington politicians continue to sing the ``don't worry, be happy'' refrain. Social Security is not in crisis, they say--it is not broken and will not go bankrupt. All it needs are a ``few minor adjustments'' to fix its problems. Therefore, many of our constituents have only heard the good news and the happy talk: that Congress has balanced the budget for the first time in nearly 30 years and that the Congressional Budget Office projects surpluses growing to $140 billion within a decade. All of this good news is complemented by the fact that the Social Security Trust Fund boasts an asset balance that tops $600 billion and is expected to run surpluses for the next 13 years. And so the Social Security Administration passionately contends that Social Security benefits will always be there for everyone. Insisting that the Social Security crisis is not real--that we are in better financial shape today than ever before--is like telling the captain of the Titanic the waters are clear, with no threat of icebergs, and the ship should proceed full speed ahead. That is ``The Big Lie,'' Mr. President, and if we fall for that rhetoric, there is nothing but icebergs ahead for Social Security. For starters, the Social Security program's $20 trillion in unfunded liabilities have created an economic time bomb that threatens to shatter our economy. In addition, the declining rate of return of Social Security contributions means the system will be unable to meet the expectations of future retirees, who seek in retirement the same financial security they enjoyed in the workplace. Beginning in 2008, 74 million baby-boomers will become eligible for retirement and the system will begin to collapse. From that point on, we will have more retirees than ever before, and fewer workers paying into the system. And as medical advances continue to extend life expectancy, future retirees will be receiving benefits longer than was ever anticipated when the program was created. The problem begins with the fact that the current Social Security system is a ``pay-as-you-go'' entitlement program. The money a worker pays in today is used to support today's retirees--the government does not hold it for an individual worker until he or she retires--meaning there is no reserve waiting for future retirees. To put it real simply, there is no account in Washington, DC with anybody's name on it that has one dollar for your retirement. Not one dollar in Washington has been set aside. They rely on the workers today to collect the money from them to pay those on retirement today. When the program was originally conceived in 1935, this did not pose a threat. Back then, the average life expectancy for Americans had not yet reached age 65 and there were many more workers paying into the system than were taking out. To put this into perspective, before the ``baby boom'' generation was born, there were 100 workers for every retiree. But as these same baby boomers begin to retire, the funding support is projected to eventually drop to merely two workers per retiree--100 for every retiree 50 years ago and 2 workers for every retiree at the beginning of the next century. Furthermore, these future retirees are expected to live to more than 75 years of age. We have gone from a program where the average worker died before ever receiving their benefits, to a situation where retirees are living years after they have received all their contributions back from the program. In fact, the Congressional Research Service estimates today's average Social Security recipient receives back his or her lifetime contributions within the first three to five years of retirement. By the way, Mr. President, if we ran our households the way the government operates Social Security, we would never be allowed to finance a house, we could never send our kids to college with the help of a student loan, we could not even get a car loan; in fact, we could not function in the real world at all. If we ran our companies on a pay-as-you-go basis, there is a good possibility we would have been tossed in jail long ago. When there are fewer workers to support each retiree, it is obvious something has to give. When Congress attempted to address projected shortfalls in the past, the government's response meant either reduced benefits for retirees, higher payroll taxes on workers, or some combination of the two. For workers, that has amounted to 51 tax increases on income or income adjustments in just the last 25 to 30 years; 51 times the government has raised Social Security taxes, or adjusted the income on which those taxes were levied. So it comes as no surprise that similar proposals are finding their way into our debate again today. Unfortunately, this comes at a time when retirees are growing increasingly dependent upon Social Security benefits as their main source of income. This is in spite of the fact that Congress never intended Social Security to become a replacement for personal savings. Social Security was to be a supplement, not the major source of an individual's retirement dollars. According to a report by the Congressional Budget Office, though, workers have come to expect that, upon retirement, Social Security will provide them with income to replace a significant portion of their previous earnings. As proof of that, in 1996, Social Security made up approximately 40 percent of the cash income of the elderly. And as the number of workers covered by pensions continues to decrease and tax rates continue to complicate the ability of workers to save for their future and ensure their retirement security, dependency will surely grow. The Social Security Trust Fund's unfunded liability makes the long- term budgetary impact of America's changing demographics even more significant. The government's own data shows that the Trust Funds will begin to have cash shortfalls in less than 12 years. Beginning in 2010, Social Security will have to pay about $1 billion more than it will collect in taxes. There will be no surpluses in the Social Security fund. In the year 2015, that number will climb to $90 billion of deficits. In 2035, it will reach $1 trillion and in 2075, the annual shortfall will explode to a staggering $7.5 trillion per year. Even after being adjusted for inflation, the total unfunded liability is still staggering--at $20 trillion. On paper, the Trust Fund boasts more than $600 billion in assets. ``On paper'' is the key, however. For years, Congress has regularly raided the Trust Fund to pay for additional federal programs--a practice that continues unabated today. Unfortunately, as the baby- boomers begin to retire, the government IOUs will become due. Washington will either have to cut government spending, raise taxes, or borrow from the public to redeem those IOUs. Obviously, being unwilling--or unable--to control its own spending, Washington routinely chooses the latter two options. And so beginning by 2013, or maybe even earlier, taxpayers will be asked, yet again, to pay up as the IOUs are cashed in to fund retiree benefits. I agree with the majority of my Minnesota constituents that the government has no business raiding the Social Security Trust Fund to pay for its pet spending projects. The taxpayers have every right to be outraged that such a blatant abuse of the system is allowed to continue. All these factors lead to the conclusion that the Social Security Trust Fund will go broke by 2032 if we continue on our present course. If the economy takes a turn for the worse, or if the demographic assumptions are too optimistic, the Trust Fund could go bankrupt much sooner. And once the cash shortfalls begin, they quickly climb to staggering levels. Washington's fiscal mismanagement means it not only raises taxes, it also must borrow more from the public to cover the shortfall. Without a policy change, the CBO estimates the debt held by the public will balloon to nearly $80 trillion in 2050--from under $6 trillion today to $80 trillion in 2050. According to the General Accounting Office, the estimates are much worse. They say, it could top $158 trillion in debt and consuming nearly 200 percent of our national income. A national debt at this level would shatter our economy, and shatter our children's hopes of obtaining the American dream. Mr. President, we often hear those individuals who want to maintain the status quo argue that by increasing the payroll tax by ``just'' 2.2 percent--going from 12.4 to 14.6 percent--we can somehow fix the problem for another 75 years, but that is absolutely false. Based upon the Trustee's Report, the present value of the unfunded promise of future benefits totals more than $5 trillion--this is how much money we would have to collect and invest today to pay for the future retirees. To collect this much money, the federal government would be forced to impose a tax rate in excess of 100 percent on every American. This, of course, is assuming such funds would not be spent elsewhere in the interim and replaced with more IOUs, as we have done in the past. The Concord Coalition projects that, from now to 2040, the cost of Social Security will rise from 11 to 18 percent of workers' taxable income. Add in Medicare and Medicaid and the taxes on these three programs take 40 percent off our paychecks--not even counting our Federal or State or local taxes; just those three programs: Social Security, Medicare, and Medicaid, would be a 40 percent tax on your income. With federal, state, and local income taxes and other taxes, the tax burden will become too high for anyone to bear. These high tax rates will erase all growth in real after-tax worker earnings over the next half-century. When this occurs, the economy will be destroyed and a tax revolt from younger workers will certainly follow. Mr. President, the only good news is that these problems are down the road and not already upon us. Of course, it would be easier to put off these difficult decisions by waiting until the crisis has actually arrived before we begin repairing the damage. As members of Congress, however, it is our responsibility to address the situation now, before we pass this financial nightmare onto our children and grandchildren. That is why I am speaking on this issue today. Experts tell us that delaying action would require we take even more drastic measures in the future. Not only would such delays be costly, they would leave Americans with less time to prepare themselves for any adjustments to the program. When we consider that Social Security taxes consume approximately one-eighth of an average worker's lifetime income, there is a significant amount of money at stake for every individual. And that could grow, as we said, to one-fifth of all the money that an individual makes. While Congress cannot change future demographics or merely replace the IOUs it has left sitting in the Social Security Trust Fund, it does hold the power to offer retirement security to all Americans by improving the way the Social Security System will operate in the future. I firmly believe it can be done without breaking the government's covenant with current retirees or leaving those about to enter the program in fiscal limbo. But it will take an innovative approach that breaks from Social Security's ``government-knows-best'' roots. We must look to the ingenuity and competitive spirit of the private sector to improve and rejuvenate the program if we are to give future retirees any promise of retirement benefits. I have often heard today's workers lament they do not think Social Security will be there for them. Forty-six percent of all young people believe in UFOs, says a study by Third Millennium, while just 28 percent think they will ever see a Social Security check. So more kids believe in UFO's than Social Security. Still, it is not too late to change that course and prevent the coming Social Security crisis. As the national debate goes forward, Congress has the ability to empower workers with the tools to control their own future. If we can learn from our past mistakes and own up to the financial nightmare waiting down the road, we can transform Social Security from a program that threatens financial ruin to one that holds the promise of improved retirement security for generations to come. We have much work to do and no time to waste, so I urge my colleagues to join me as we begin the transformation.

Mr. GRAMS

Mr. GRAMS. Mr. President, yesterday, as we were debating the best way to help our farmers overcome low prices in the Upper Midwest, the Minority Leader appropriately called the IMF ``the single best tool available to provide economic stability in Asia, Russia and around the world.'' Unfortunately, he then went on to blame Republicans for opposition to IMF replenishment. As one who joined many of my Republican colleagues here in the Senate to actively promote the IMF replenishment and pass the full $18 billion here as part of the Supplemental, I would take issue with that statement. It was the Republican leadership in the Senate who worked with the Administration to pass the $18 billion along with a balanced reform package designed to make the IMF work more effectively. Yes, I have been disappointed that the House has still not acted on this matter. However, just yesterday, $3.4 billion was reported out of the Appropriations Committee's Foreign Operations Subcommittee, and there are positive statements that the full $18 billion may be included in the final Foreign Ops bill reported out of the full Committee next week. That was welcome news to those of us who strongly believe the IMF can play a positive role in addressing financial crises all over the world and restore important markets for US products. Now that new loans have been negotiated for Russia, the IMF's reserves are close to depletion. For the first time in many years, it has had to tap into its emergency fund. While I would have preferred the replenishment had been dealt with months ago, the logjam appears to have been broken. Of course, there is one complicating factor. The funds are attached to the Foreign Operations bill--the appropriations bill that has been stymied by an inability of the House and the White House to work out the Mexico City abortion language which is annually attached to this appropriations bill. While some may prefer not to have to fight controversial battles on appropriations bills, this is an issue that will not just go away. The sponsor is committed to bringing it up until it can be resolved to his satisfaction. Last year, a revised version, a substantial compromise, was attached to the State Department Reauthorization Conference Report and held up that report because of the veto threat of the President. That effort included a reorganization plan supported by the Administration that had been pursued for several years. That is still being held up, and the IMF funding will likely be held up as well until the Mexico City issue is settled. The latest Mexico City compromise was a good attempt at solving this dispute. If the President really wants the IMF replenishment, he should exercise the needed leadership to work out the Mexico City language with the House as soon as possible. My colleagues in the minority can do more to help us achieve the replenishment by urging the President to pursue a resolution of Mexico City before any other alternative. I ask the Minority Leader for this assistance. Thank you, Mr. President. I thank the Chair. I yield the floor. Mr. DASCHLE addressed the Chair.

Mr. GRAMS

Mr. GRAMS. Madam President, I wish to thank the Senator from Arkansas, Mr. Hutchinson and the Senator from Ohio, Mr. DeWine for their efforts to address the issue of FDA action on Chlorofluorocarbon (CFC) metered-dose inhalers (MDIs). I share their commitment to protecting the health and safety of the millions of Americans who rely daily on MDIs to treat asthma and other pulmonary conditions. Most of today's products rely on CFCs, which the nations of the world under the terms of the Montreal Protocol, have agreed to phase out. This phase out is due to the reported damage CFCs cause to the stratospheric ozone layer which protects us from excessive amounts of ultraviolet radiation. However, patients with asthma and other pulmonary conditions understandably are concerned about the possibility that one day they may no longer have access to their medications and whether it will come before adequate replacement medicines are available. I believe the resolution included in the appropriations legislation appropriately balances the need to establish a framework for the transition from CFC to non-CFC products promptly, so patients and physicians will understand the process and deal with it. Immediate action is needed so patients and care givers have the opportunity to consider and appropriately manage the impact of a transition from one safe and effective medication to another. With sufficient time to make such preparations, the important transition from CFC to non-CFC MDIs will work for the people who matter most--the patients. The resolution states the FDA shall issue a proposed rule no later than May 1, 1999. Although I would like to see the process move more quickly, I believe this is ample time for the FDA to take into account patient concerns and needs. The FDA has already been working on this issue for more than 15 months and has heard from thousand of interested individuals and groups. In March 1997, the FDA issued an advanced notice of proposed rulemaking which most parties agree was flawed, particularly in its tentative suggestion of a so-called ``therapeutic class'' transition from existing drugs to new products. The resolution clearly instructs FDA not to take this approach, but to consider alternatives. For example, one preferable approach would be to require an alternative be available for a particular active moiety before the agency could take a CFC-containing product off the market. The resolution recognizes the pharmaceutical industry has made a great deal of progress toward fulfilling the expectation of the Montreal Protocol--that there will be excellent non-CFC MDIs available to patients. Clearly, this is not a situation where we will be taking good medications from the market and leaving a void. Nothing could be further from the truth, but it's important for us not to send a signal to manufacturers who are doing the right thing in developing alternatives that we do not see the urgency of beginning this transition. The resolution my good friends from Arkansas and Ohio propose corrects that mis-impression and I thank them for clarifying it. The resolution expresses the expectation that the FDA, in consultation with the Environmental Protection Agency, will assess the impacts on the environment and patient health of a transition to CFC- free products. In doing this, the FDA must consult in the process with the many parties interested in this issue, which is as it should be. The information the FDA receives and develops from these discussions should be reflected in its proposed rule, along with information the agency has already received in the form of comments on its ANPR. I believe the intention of this resolution is clear--the FDA should continue this important dialogue after the proposed rule is issued. In this way, we can be assured a fair and balanced rule will emerge and move us away from the use of CFCs in a way which protects patients health and safety. In short, this resolution urges the FDA to get on with the business at hand--namely, publish a proposed rule which lays out a framework for the transition from CFC to non-CFC MDIs by no later than May 1, 1999. This framework should be developed in consultation with patients, care givers and others to ensure continued patient health and safety. The urgency of this action is dictated by the need to allow patients and care givers time to consider the ramifications of the transition and prepare for it. I want to thank the gentlemen from Arkansas and Ohio again for their leadership on this issue and their willingness to accommodate our concerns.

Mr. GRAMS

Mr. GRAMS. Just to briefly finish my statement today, I believe the Lugar amendment will help to establish procedures by which we can analyze the impact of these sanctions. That is first by whether they will accomplish the intended purpose, and second, the impact they have on U.S. international competitiveness and other foreign policy goals. This amendment is also flexible. The President can waive the provisions of this amendment in an emergency, and the amendment does not affect existing sanctions. It also does not apply to multilateral sanctions. I urge my colleagues to take a look at this, to support this amendment which will help us determine whether a particular unilateral sanction will work or whether we should pursue the problem in another way. If unilateral sanctions are imposed, we need to ensure they will work and they are initiated only as a last resort, and only after multilateral sanctions are pursued. Again, I thank Senator Lugar for his leadership on this important issue. For those of us concerned about the growing trend toward unilateral sanctions without analyzing whether they will work or how they will affect our farmers and workers, I think this is a no-brainer. This is an amendment that should have no opposition from this body. I yield the floor.