Rod Grams

Mr. GRAMS

Mr. GRAMS. Mr. President, first, I thank the Senator from Idaho for allowing me to break in here to give a 5-minute speech dealing also with what Senator Brownback is talking about, which is really the unfairness of the current Tax Code that we have. Mr. President, I am usually not one to quote poetry here on the Senate floor, but I rise today and ask my colleagues' indulgence as I broach a serious subject with a not-so-serious bit of rhyme. Abracadabra, thus we learn The more you create, the less you earn. The less you earn, the more you're given, The less you lead, the more you're driven, The more destroyed, the more they feed, The more you pay, the more they need, The more you earn, the less you keep, And now I lay me down to sleep. I pray the Lord my soul to take If the tax-collector hasn't got it before I wake. Mr. President, it was 1935 when poet Ogden Nash took up his pen to warn of the dangers of a tax system run amuck. Then, the federal tax rate topped out at less than 4 percent. Sixty-three years later, Washington now demands 28 percent of every paycheck; the additional burden of state and local taxes boosts the total tax load to nearly 40 percent of every worker's paycheck. I cannot say with certainty what sort of poem Mr. Nash might produce on the subject were he alive today, but it would not surprise me if it could not be repeated here on the Senate floor. There exists no other date the American people await with such dread as April 15, tax filing day. Rightfully so. Oppressive taxes, coupled with abuses the Internal Revenue Service routinely carries out upon taxpayers--abuses exposed during the recent hearings of the Senate Finance Committee--certainly highlight the reasons why. Yet, taxpayers face another annual event they should look upon with equal disdain, an event that reveals a great deal about the federal, state, and local tax burden working families are expected to bear: Tax Freedom Day. As it does every year, the nonpartisan Tax Foundation has calculated the date average American stops working just to pay their share of the tax burden and begin working for themselves and their families. In 1998, Tax Freedom Day falls on Sunday, May 10. That means taxpayers must work 129 days before they can count a single penny of their salary as their own--that is a full day later than 1997, and marks the latest-ever arrival of Tax Freedom Day. By the time Tax Freedom Day arrives, the American people will have spent the last 129 days imprisoned by their own tax system. And that is not the whole picture, because if the cost of complying with the tax system itself were included in the calculations, Tax Freedom Day would be pushed forward another 13 days. As proof of just how far we have traveled--in the wrong direction--Tax Freedom Day in 1925 arrived on February 6. Taxpayers are now working more than an entire week longer to pay off their taxes than they were when President Clinton first took office in 1993. Calculate the tax load in hours and minutes, instead of days, and Americans spend fully two hours and 50 minutes of each eight-hour workday laboring to pay their taxes. While May 10th marks the arrival of Tax Freedom Day for taxpayers in an average state, many Americans are forced to wait longer. My home state of Minnesota, for example, is the third highest-taxed state, and our taxpayers will not mark Tax Freedom Day until May 16, nearly a week later. If you live in Wisconsin or Connecticut, you will wait even longer. After 16 major tax increases over the past 30 years, the need for tax relief has never been more pressing. Congress and the President moved toward the taxpayers in 1997 by enacting the ``Taxpayer Relief Act'' with its $500 per-child tax credit. In 1998, Congress and the President can and must do more, beginning with fundamental reform of the entire tax system. Merely tinkering around the edges of the Internal Revenue Service won't reduce the burden on overtaxed Americans, though. Real reform means creating a more sensible way to pay for the services of government through a system that is flatter, simpler, fairer, and treats the taxpayers with respect. Meaningful tax relief--relief that leaves more dollars in the hands of working Americans to spend on child care, health insurance, clothing, and groceries--will quickly follow. Instead of serving as yet another occasion for tabulating the high cost of government, Tax Freedom Day must become a national call to action. How far will it go if the taxpayers do not step forward? To paraphrase Mr. Nash: Abracadabra, thus we say Just where is the ``freedom'' in Tax Freedom Day? I yield the floor. Mr. CRAIG addressed the Chair.

Mr. GRAMS

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

Mr. GRAMS. Mr. President, I want to say a couple words about the amendment and then also be joined by my colleague from Minnesota, Senator Wellstone, on this amendment. It is very simple. It applies to residents or individuals, or I should say victims who live in disaster areas, those areas that have been declared disaster areas by a Presidential decree, either through flooding or tornadoes or whatever mishap it might be. The basics of this amendment say that those people who have been granted an extension to file their income taxes, but under current law the IRS must still assess an interest payment on those taxes. This is adding insult to injury. These people who have no opportunity due to no fault of their own to file their taxes on time have been granted an extension period to get their taxes filed in good faith, and yet under current law we come back and say, well, that's fine and dandy, but we now have to assess you an interest on this. These individuals who are trying to rebuild and repair their lives need every dollar. Every dollar counts. So the basic part of this amendment is very simple. It is that also we would, along with granting them an extension in order to file their income taxes, make an exemption for interest on those tax payments as well. So I hope that the Senate will consider this and give it its full support. I would like now to defer to my colleague from Minnesota.

Mr. GRAMS. Mr. President, on rollcall vote 125, I was recorded as voting ``no.'' I voted ``aye.'' I ask unanimous consent the official Record be directed to accurately reflect my vote. This will in no way change the outcome of the vote.

Mr. GRAMS

Mr. GRAMS. Mr. President, I rise today to speak briefly about IRS reform and overall reform of the tax system. Paramilitary-style raids, attempted frame-ups, retaliation against whistle blowers, harassment of innocent individuals, all carried out by a Government agency oftentimes operating outside the bounds of the law and with seemingly limitless authority. A premise played out within the pages of the latest popular novel? Not exactly. These examples, unearthed during recent hearings here in the Senate, are taken directly from the playbook of the Internal Revenue Service. The hearings, and the abuses they highlighted, have focused the nation's attention on the ``IRS Restructuring and Reform Act'' that is now before the Senate. Included within the legislation are many good provisions that would protect taxpayer rights and restrict the power of the agency. Key provisions would limit interest and penalties on delinquent taxes and shift the burden of proof from the taxpayer to the IRS in tax disputes. Before I continue, Mr. President, I would like to take this opportunity to commend Senator Roth, the Chairman of the Finance Committee, for his tremendous efforts to reform the IRS and his leadership on tax relief. I also commend the Chairman for holding the series of oversight hearings that exposed the abuses upon taxpayers carried out by the IRS. All of us are greatly indebted to Senator Roth for that. He has done an outstanding job to formulate a sound and responsible IRS restructuring plan. If enacted, these reform provisions before us today would improve IRS service, make the agency more accountable, and provide better protections for the taxpayers. I fully agree with Senator Roth that the goal of IRS reform should be to make the IRS ``a service-oriented agency instead of a law-enforcement agency.'' Still, Mr. President, a fundamental question remains: can the IRS really be fixed by reform without scrapping the Tax Code? To answer this, we need to take a closer look into the problems with the IRS. The passage in 1913 of the 16th amendment to the Constitution granted Congress the power to impose an income tax. A tiny division of the Bureau of Internal Revenue Service was created to collect the taxes. Eighty-five years later, this division, now known as the IRS, has grown to become the most powerful agency in the entire Federal Government. The IRS today employs more investigative agents than the FBI and the CIA combined, and boasts a total workforce of more than 100,000. It is hard to believe, but more employees work at the IRS than in all but the 36 largest corporations in this country. The decisions its bureaucrats make daily affect every American who takes home a paycheck. The agency's job is to administer and enforce the Nation's tax laws and collect tax revenue for the Government. To ensure that all Americans pay their taxes, Congress has given the agency almost unlimited power--power that goes beyond the authority granted to any other agency in the Federal Government. By law, the IRS can audit individuals or businesses. It can impose penalties and impose a lien on a taxpayer's property or bank accounts, or seize them altogether. Average taxpayers and small business owners have few little administrative or legal remedies against such a powerful agency. Its unlimited power has made the IRS a wasteful, arrogant, incompetent, intrusive, and abusive agency. The IRS is driven by illegal quotas and collection goals. It has targeted the underprivileged for audits. It has mistreated hundreds of thousands of innocent taxpayers. Clearly, this is an agency out of control, an agency in need of a complete overhaul. But let us not forget how the IRS reached this troubled point. Congress deserves much of the blame for the present state of our hostile tax system, for it is Congress that created the IRS in the first place. Congress grants the IRS its unlimited power. Congress writes the complicated Tax Code that taxes Americans' income over and over and provides loopholes to thousands of special groups, making the Tax Code too complicated for even most attorneys and tax accountants to fully understand. Congress requires the IRS to squeeze more tax money out of the taxpayers so that Congress has more to spend. On top of that, Congress does not have time to fully exercise its IRS oversight responsibilities. Even while it talks reform, Congress is making the Tax Code ever more burdensome--since last year, Congress has added 185 new sections and 824 changes to the Tax Code. Most IRS employees are decent, hardworking people who face an impossible task: interpreting and applying the hundreds of thousands of pages of the Tax Code and its related regulations. A recent study shows that more than 8 million Americans each year receive incorrect bills or refunds due to IRS errors. Each year, Money magazine hires 50 professional tax preparers to calculate a return for a sample family. No two preparers have ever had the same result; answers can vary by thousands of dollars. It just shows that the Tax Code is confusing and arbitrary, and this in turn encourages waste, harassment, corruption and abuse. Tinkering with the system by merely restructuring the IRS will not solve its fundamental flaws. It is clear that the real problem with the IRS is not management, or administration, but the Tax Code on which all IRS decisions are based. This is such an ugly agency it is hard to make it pretty by reforms. We can replace the IRS management, we can improve its service, crack down on abuses, increase its efficiency, and reduce its waste, but the fundamental problems will not go away. Reorganizing the IRS without real reform of the Tax Code will send a false signal to the American people that once we restructure the IRS, all its problem will be solved and there will be no need to reform our tax system. Unfortunately, as the history books reveal, it is not that easy. We have tried to overhaul the IRS in the past, and somehow the agency always comes back more powerful and more abusive than ever before. At least two versions of a ``taxpayer bill of rights'' previously enacted into law have had little effect in taming the IRS. Even after last year's IRS abuse hearings, which resulted in promised reforms, the abuses continue. Mr. President, let me make this clear: it is vitally important that we continue our efforts to reform the IRS, and I strongly support Chairman Roth's work and his legislation. My point is that we should not let this debate delay or derail real tax reform--to delay us from carrying out the demands of the taxpayers to scrap the Tax Code and replace it with one that is simpler, flatter, fairer, and friendlier. This Chamber already passed a resolution to sunset the Tax Code. Now we should set a date to establish a new tax system. Once we have eliminated the Tax Code, there will be little, if any, need for the IRS and its playbook or its abuses. Thank you very much, Mr. President. I yield the floor. Mr. CONRAD addressed the Chair.

Mr. GRAMS

Mr. GRAMS. Mr. President, I rise today to pay tribute to a group of young Minnesotans whose hard work and dedication earned them the privilege of representing Minnesota at the 1998 ``We the People . . . The Citizen and the Constitution National Finals.'' Under the guidance of American Government teacher Barbara Hakala, this group of 30 students from Duluth Central High School tirelessly studied the history of our Constitution and the application of its principles in our time. The disciplined study demonstrated by these students helped them prevail in the Minnesota constitution competition, and for the second year in a row, Minnesota was represented in the ``We the People . . . The Citizen and the Constitution National Finals'' by a team from Duluth Central High School. Mr. President, I would like to offer my sincerest congratulations to these young Constitutional scholars and recognize each of them individually. They are: Jennifer Anderson, Nicholas Beck, Toby Bjorkman, Annalisa Eckman, Joy Eskola, April Fritch, Thomas Garrett, Jennifer Gilbertson, Alison Gray, Nicholas Hern, Susan Herrick, Amy Houghtaling, Brent Kaufer, Erin Louks, Anthony Luczak, Amanda Masi, Ilona Moore, Dennis Olson, Kristina Olson, Barbara Przylucki, Carrie Rau, Mikel Roe, Amber Sorensen, Amy Steen, Carrie Taylor, Dzung Truong, Brandon Vesel, Stephanie Walczak, Mai Lor Yang, and Eric Zimmerman. Once again Mr. President, I am pleased to report that Minnesota was represented by a fine group of young people at the ``We the People . . . The Citizen and the Constitution National Finals 1998.'' This group of students gives me, and all Minnesotans, a reason to be proud.

Mr. GRAMS

Mr. GRAMS. Mr. President, I just wanted to inform the Senate of my intentions today--later on, after this time for debate--to offer an amendment that would permanently exempt interest payments owed by disaster victims to the Internal Revenue Service. This is a very simple and straightforward amendment. The amendment is actually derived from the ``Disaster Victim Tax Extension Act,'' legislation I introduced on April 29, 1998 with Senators Coverdell, Frist, McCain, Hutchinson, Smith of Oregon, Graham of Florida, and D'Amato. As I stated in a Dear Colleague letter circulated on April 22, this amendment permanently exempts interest payments for disaster victims who reside in presidentially declared disaster areas and have been granted an extension for their tax filing. The reason for this amendment is very clear: Each year, our country is hit by natural disasters of all kinds--such as hurricanes, tornadoes, earthquakes, floods, and ice storms--causing extreme hardship for hundreds of thousands of Americans. This year, 15 states have already been hit by deadly disasters: Starting March 7, severe storms and flooding struck the state of Alabama, damaging nearly 1,200 homes, and the city of Elba in Coffee County was evacuated as a result of a levee failure. Three deaths were attributed to the floods and one person was reported missing. On February 9, twenty-seven California counties were wracked by severe storms. During the period of January 28 through February 6, a series of severe winter storms hit communities in Sussex County in Delaware. Also in February, three southern Florida counties were victimized by tornadoes and other violent weather. In February, six counties in Georgia were struck by tornadoes. On March 20, amid flood recovery efforts, tornadoes and windstorms tore through northeast Georgia, adding to the overall devastation. Tornadoes again touched down in west Georgia, metro Atlanta, and southeast Georgia on April 9. In February, Atlantic and Cape May counties in southern New Jersey were hit by the coastal storm that lashed the area. On April 16, six Tennessee counties were ravaged by deadly tornadoes and other violent weather. And, Mr. President, on March 29, seven counties in my own state of Minnesota were hit by deadly tornadoes, damaging thousands of homes and businesses along an 86-mile path carved through the communities of St. Peter, Comfrey, and Le Center. Just days after the March storm, I traveled to the disaster site in south-central Minnesota to witness the destruction and meet with the Minnesotans--families, farmers, and other business owners--forced to cope with this tragedy. Mr. President, I've never witnessed devastation on such a scale. I have heard of tornado-damaged areas being compared to ``war zones,'' but had no idea how close that was to the truth. This was indeed a war zone, and the Minnesotans I met with that Friday and Saturday were very much its innocent victims. Two of those victims tragically lost their lives. The property damage was widespread. Grain storage bins were leveled, the fronts of homes were sheared off, farm fields were choked with debris, making it impossible to plant, rows of telephone poles snapped, brick houses leveled, countless trees were downed at Gustavus Adolphus College, and the spire of its church was torn off, vehicles were scattered by the winds, some landing in farm fields, the historic Bell Tower of the courthouse in downtown Saint Peter was destroyed. I am told the March tornadoes were some of the largest and longest in Minnesota's history. It's hard to imagine, but the Comfrey and Saint Peter tornadoes were a mile and a quarter wide--2,200 yards. That is nearly twice as wide as any previous tornado to hit my state, and far larger than the average tornado, which is only 100 yards wide. The tornado that destroyed Comfrey created a damage zone of 77 square miles. Just how large is that? Larger than the entire city of San Francisco, which is contained within 75.2 square miles. The estimated total dollar value of insured losses caused by the south-central Minnesota tornadoes has reached $175 million, exceeding insured losses incurred in my state during the floods one year ago. Minnesotans have come together to clean up and begin the rebuilding, as we always do when our neighbors need help, and I'm impressed with their spirit in facing this disaster. Still, it's going to take many months, perhaps years, before life returns to normal in those towns caught in the tornadoes' paths. Minnesota's experience is, unfortunately, not unique. Deadly natural disasters occur every year. Lives are lost, homes are demolished, property is destroyed, businesses are ruined, and crops are wiped out. The survivors of these disasters need our help to get their feet back on the ground. Federal disaster assistance has been effective. In fact, almost all of the major disaster sites have been subsequently designated as presidentially declared disaster areas and are eligible to receive federal disaster assistance. However, there is one hurdle Congress must remove. Residents in presidentially declared disaster areas can often get an extension to file their tax returns. However, interest owed cannot be exempted by the IRS. The IRS charges an 8 percent interest rate for taxes owed, even if disaster victims get an extension for tax filing. So this is adding insult to injury. Exempting interest payments owed to the IRS requires congressional action. Many states, like Minnesota, immediately grant exemptions for interest payments on state taxes when disaster areas are declared. Although Congress has granted such federal waivers in the past, they must be done legislatively each time a disaster occurs, and appropriate vehicles are not always available. This creates one more uncertainty for disaster victims. My amendment would once and for all remove this barrier and give residents of presidentially declared disaster areas an interest payment exemption on any federal taxes owed. Under my amendment, the exemption is effective retroactively to tax year 1997, so that all of this year's disaster victims will be covered for their late filing. Mr. President, this may seem like a small matter, but for disaster survivors in Minnesota, Georgia, Alabama, California, Delaware, Florida, New Jersey, Tennessee, and every state devastated by events entirely and utterly out of their control, every dollar counts in their efforts to begin to repair and to rebuild their lives. I urge my colleagues to support this amendment to make sure that we put in place permanently an exemption so the IRS will not charge interest on taxes that are due and that are not paid on time because of extensions due to disasters. Again, it may seem like a small matter, but to those people who have experienced these disasters, it is a lot. I urge my colleagues to support this amendment. I will be sending this to the desk as soon as the chairman's time on his debate has been concluded. I thank you very much. Several Senators addressed the Chair.

Mr. GRAMS. Mr. President, I ask unanimous consent that I may talk about an amendment I plan on offering after the debate time has expired. I would like to explain a little about the amendment, if I may have the time.

Mr. GRAMS. I was asking unanimous consent to speak about an amendment. I am going to offer an amendment this afternoon following the time set aside for the debate.

Mr. GRAMS

Mr. GRAMS. Mr. President, I rise to remember the American workers who have suffered injuries or died while at the work places in my home state of Minnesota and across the country. As my colleagues may know, since 1989 the unions of the AFL-CIO have recognized April 28 as ``Worker Memorial Day'' to commemorate the millions of workplace injuries, illnesses and deaths that occur each year. In addition, many unions throughout the world now mark April 28 as an ``International Day of Mourning.'' In Minnesota, AFL-CIO affiliates commemorated Worker Memorial Day with a wide variety of events around the state. This past Tuesday at noon, members of Minneapolis and St. Paul building trades met near the State Capitol in St. Paul to remember workers who have been killed or injured in the job. A bell tolled once for each local construction worker who died in the past year of job-related causes. In Grand Forks, the Northern Valley Labor Council and the Grand Forks Building and Construction Trades Council placed Workers Memorial Day stickers on their clothing at work. Statewide, a ``Minnesota's Workforce Minute'' Message about Workers' Memorial Day aired several times over the 29 stations of Minnesota News Network's Lifestyle Network. Lastly, the Minnesota Department of Transportation and local unions in the Twin Cities and St. Cloud participated in a number of Worker Memorial Day activities including the broadcast of a Workers Memorial Day message from the Metro Division Engineer over the MnDOT Public address and radio communication systems. This message preceded the observance of a moment of silence at 2 p.m. Mr. President, this year also marks the 28th anniversary of the enactment of the Occupational Safety and Health Act. In 1970, President Nixon signed legislation which created the Occupational Safety and Health Administration (OSHA) to establish and enforce labor standards and the National Institute for Occupational Safety Health (NIOSH) to conduct research investigations. At the Department of Labor bill signing, President Nixon underscored the goal of this historic legislation. President Nixon noted how the bill's enactment, ``. . . Represents in its culmination the American system at its best: Democrats, Republicans, the House, the Senate, the White House, business, labor, all cooperating in a common goal--the saving of lives, the avoiding of injuries, making the places of work for 55 million Americans safer and more pleasant places.'' Mr. President, the goal of the Occupational Safety and Health Act is to prevent injuries, illnesses, and fatalities in the workplace. Through statistics provided by the Department of Labor it appears as though the intent of this Act has achieved some level of success. Unfortunately, these numbers are still too high. According to Bureau of Labor Statistics, there were over 6,000 workplace fatalities in 1996, the lowest level in five years. There were 6.2 million workplace injuries or illnesses among private sector firms with more than 11 or more employees, about 400,000 fewer than in 1995. In my home state alone, 92 Minnesotans lost their lives, and 138,000 suffered injuries or illnesses on the job in 1996. I have always supported employers and employees in their effort to create safe and healthy work places without cumbersome federal regulations. Workers are a business' most valuable asset and they deserve safe and healthy work places that will enable them to better perform their jobs. Safe working environments, achieved by restoring common sense and cooperation among workers, job providers and the federal government, result in smart business. I strongly believe we need to continue to promote better safety and public health standards. One way this can be accomplished is through comprehensive reform of the Federal regulatory process. For this reason, I am proud to be a cosponsor of S. 981, the ``Regulatory Improvement Act of 1997'' sponsored by Senator Carl Levin, one of the leading health, safety and environmental experts in the Senate. In my view, legislation such as the Regulatory Improvement Act of 1997 will ensure a more open and accountable regulatory process which will improve our health, safety and environmental protections while reducing the regulatory burden on those subject to those laws. It will not compromise health or safety protections. I recently wrote the Majority Leader urging that this legislation receive consideration on the Senate floor, and I am hopeful that we will have a debate on how to best ensure safe and healthy work places in the coming weeks. On each Workers Memorial Day, I urge my colleagues to remember those American workers who have lost their lives or were injured on the job. Congress, the Administration, labor and business, must work together as they did nearly 30 years ago, to ensure that there are adequate protections to prevent unnecessary injuries and fatalities in the future and improve the lives of all of our nation's workers.

Mr. GRAMS

Mr. GRAMS. Thank you very much. (The remarks of Mr. Grams pertaining to the introduction of S. 2004 are located in today's Record under ``Statements on Introduced Bills and Joint Resolutions.'')

Mr. GRAMS. I also ask unanimous consent that the Senator from Georgia, Senator Cleland, be allowed to speak following my remarks.

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

Mr. GRAMS. I yield the floor. Mr. CLELAND addressed the Chair.

Mr. GRAMS

Mr. GRAMS. Mr. President, I rise today to introduce legislation that would permanently exempt the interest payments owed by disaster victims to the Internal Revenue Service. Each year, our country is hit by a variety of natural disasters such as hurricanes, tornadoes, earthquakes, floods, and ice storms, all causing extreme hardship for hundreds of thousands of Americans. This year, 15 States have already been hit by deadly disasters. Starting on March 7, severe storms and flooding struck the State of Alabama, damaging nearly 1,200 homes, and the city of Elba in Coffee County was evacuated as a result of a levee failure. Three deaths were attributed to the floods and one person was reported missing. On February 9, 27 California counties were wracked by severe storms. During the period of January 28 through February 6, a series of severe winter storms hit communities in Sussex County of Delaware. Also in February, three southern Florida counties were victimized by tornadoes and other violent weather. In February, six counties in Georgia were struck by tornadoes. On March 20, amid flood recovery efforts, tornadoes and windstorms tore through northeast Georgia, adding to the overall devastation. Tornadoes again touched down in west Georgia, metro Atlanta, and southeast Georgia on April 9. In February, Atlantic and Cape May counties in southern New Jersey were hit by the coastal storm that lashed the area. On April 16, six Tennessee counties were ravaged by deadly tornadoes and other violent weather. And, Mr. President, on March 29, seven counties in my own State of Minnesota were hit by the deadly tornadoes, damaging thousands of homes and businesses along a 62-mile path carved through the communities of St. Peter, Comfrey, and Le Center. The storms claimed two lives. The estimated total dollar value of insured losses caused by the south-central Minnesota tornadoes has reached $175 million, exceeding insured losses incurred in my state during the floods of one year ago. The list goes on and on. But my point is: deadly natural disasters occur every year. Lives are lost, homes are demolished, property is destroyed, businesses are ruined, and crops are wiped out. The survivors of these disasters need our help to get their feet back on the ground. Federal disaster assistance has been effective. In fact, almost all of the major disaster sites have been subsequently designated as Presidentially declared disaster areas and are eligible to receive federal disaster assistance. However, there is one hurdle Congress still must remove. Residents in Presidentially declared disaster areas can often get an extension to file their income tax returns. However, interest owed cannot be exempted by the IRS. That requires Congressional action. In other words, we give them time, an extension to file their taxes, but at the same time we are saying, because you cannot because of circumstances beyond your control file, we are going to charge you interest on it. That is adding insult to injury. So many States, like Minnesota, immediately have granted exemptions for interest payments on State taxes when disaster areas are declared. Although Congress has granted such Federal waivers in the past, they must be done legislatively each time a disaster occurs, and appropriate vehicles are not always available. This creates one more uncertainty for victims of disaster. The legislation I am here to introduce today along with Senators Coverdell, Frist, McCain, Hutchinson, and Smith of Oregon, the bill called the Disaster Victim Tax Extension Act, would once and for all remove this barrier and it would give residents of Presidentially declared disaster areas an interest payment exemption on any Federal taxes owed. By the way, Mr. President, our legislation would be effective retroactively to tax year 1997. Mr. President, this may seem like a small matter, but for disaster survivors, every dollar counts. I urge my colleagues to support this legislation.

Mr. GRAMS

Mr. GRAMS. Mr. President, I rise today to introduce legislation that would permanently exempt the interest payments owed by disaster victims to the Internal Revenue Service. Each year, our country is hit by a variety of natural disasters such as hurricanes, tornadoes, earthquakes, floods, and ice storms, all causing extreme hardship for hundreds of thousands of Americans. This year, 15 States have already been hit by deadly disasters. Starting on March 7, severe storms and flooding struck the State of Alabama, damaging nearly 1,200 homes, and the city of Elba in Coffee County was evacuated as a result of a levee failure. Three deaths were attributed to the floods and one person was reported missing. On February 9, 27 California counties were wracked by severe storms. During the period of January 28 through February 6, a series of severe winter storms hit communities in Sussex County of Delaware. Also in February, three southern Florida counties were victimized by tornadoes and other violent weather. In February, six counties in Georgia were struck by tornadoes. On March 20, amid flood recovery efforts, tornadoes and windstorms tore through northeast Georgia, adding to the overall devastation. Tornadoes again touched down in west Georgia, metro Atlanta, and southeast Georgia on April 9. In February, Atlantic and Cape May counties in southern New Jersey were hit by the coastal storm that lashed the area. On April 16, six Tennessee counties were ravaged by deadly tornadoes and other violent weather. And, Mr. President, on March 29, seven counties in my own State of Minnesota were hit by the deadly tornadoes, damaging thousands of homes and businesses along a 62-mile path carved through the communities of St. Peter, Comfrey, and Le Center. The storms claimed two lives. The estimated total dollar value of insured losses caused by the south-central Minnesota tornadoes has reached $175 million, exceeding insured losses incurred in my state during the floods of one year ago. The list goes on and on. But my point is: deadly natural disasters occur every year. Lives are lost, homes are demolished, property is destroyed, businesses are ruined, and crops are wiped out. The survivors of these disasters need our help to get their feet back on the ground. Federal disaster assistance has been effective. In fact, almost all of the major disaster sites have been subsequently designated as Presidentially declared disaster areas and are eligible to receive federal disaster assistance. However, there is one hurdle Congress still must remove. Residents in Presidentially declared disaster areas can often get an extension to file their income tax returns. However, interest owed cannot be exempted by the IRS. That requires Congressional action. In other words, we give them time, an extension to file their taxes, but at the same time we are saying, because you cannot because of circumstances beyond your control file, we are going to charge you interest on it. That is adding insult to injury. So many States, like Minnesota, immediately have granted exemptions for interest payments on State taxes when disaster areas are declared. Although Congress has granted such Federal waivers in the past, they must be done legislatively each time a disaster occurs, and appropriate vehicles are not always available. This creates one more uncertainty for victims of disaster. The legislation I am here to introduce today along with Senators Coverdell, Frist, McCain, Hutchinson, and Smith of Oregon, the bill called the Disaster Victim Tax Extension Act, would once and for all remove this barrier and it would give residents of Presidentially declared disaster areas an interest payment exemption on any Federal taxes owed. By the way, Mr. President, our legislation would be effective retroactively to tax year 1997. Mr. President, this may seem like a small matter, but for disaster survivors, every dollar counts. I urge my colleagues to support this legislation.

Mr. GRAMS

Mr. GRAMS. Mr. President, last week, a Washington-based trade association, the Emergency Committee for American Trade (ECAT), released an important new study on how American companies with global operations increase the U.S. standard of living and strengthen the domestic economy. The study is entitled ``Global Investments, American Returns'' and I highly recommend it to every Member of the Senate I am proud that two of my state's most successful companies have contributed case studies to this compelling report. Cargill, Incorporated and 3M Company are examples of why America's economic future and an improved standard of living for all Americans depend upon our ability to operate, sell, invest and compete in the global marketplace. Cargill, Incorporated operates in some 72 countries as a marketer, processor and distributor of agricultural goods and services. The company has been so successful in selling to foreign markets that some of Cargill's fertilizer facilities operate 24 hours a day, 365 days a year. This allows the plants to achieve lower unit operating costs and thereby allows Cargill to deliver a more competitively priced product. If these plants served only the U.S. market, they would sit idle most of the year because fertilizers are required only during very short periods of growing seasons. Cargill's global presence helps generate demand for its fertilizers all year round by serving different parts of the world during different growing seasons. 3M Company produces a large and continually evolving range of technologies and products. For example, the company currently offers more than 900 varieties of tapes alone. More than 53 percent of the company's total sales are from outside the United States. 3M Company's success in operating abroad has meant growth here at home. Efficient foreign distribution, sales, and technical support, and research and development generate increased U.S. production and research and development here at home. For example, 3M's $2.6 billion in Asian- Pacific sales contributes more than $182 million to the company's annual research and development budget of $1 billion--much of which is spent in Minnesota. In addition, finished and semifinished goods that are manufactured in the United States and then exported help support overseas sales. Cargill and 3M Company are just two of the American companies profiled in Global Investments, American Returns. The study uses data and business cases to illustrate the importance of operating globally. For example, the study shows that: Global activities by American companies actually increase investments here at home rather than substitute for them. The global presence of U.S. firms helps to increase export sales and create additional purchases from U.S. suppliers. American companies with global operations account for most of the nation's research and development capital investments, and export sales. American companies with global operations also rely heavily upon U.S. suppliers. These companies purchase more than 90 percent of their supplies--amounting to $2.4 trillion annually--from American companies. American manufacturers with global operations pay higher wages than do purely domestically-focused firms. For production or blue-collar workers, the difference is 15 percent higher earnings. I urge all of my colleagues to review carefully ``Global Investments, American Returns.'' It is an important study that should guide America's tax and trade policies. I am especially pleased to learn that ECAT--and companies like Cargill and 3M that contributed to the report--will launch a trade education campaign to help spread the facts and dispel the misconceptions about trade and investment. I am proud that these Minnesota companies are a part of this effort. I ask that the Executive Summary of the study be printed in the Record. The Executive Summary follows: Executive Summary In public and private-sector debates over U.S. trade and investment policies, the role in the U.S. economy of Americans companies with global operations \1\ has often been misunderstood. Although there is no doubt that the United States plays an important role in the world economy, most Americans are unaware of the critical contributions that trade and foreign direct investment (FDI) of American companies with global operations make to the U.S. economy. To broaden public understanding of the positive role of these companies, this study expands upon the research in ECAT's previous Mainstay studies in two important ways. First, it focuses on the key issue of the U.S. standard of living. Second, it broadens the scope of the study to include all three major sectors of the economy: manufacturing, agriculture, and services. There are two key points in Mainstay III. First, by raising U.S. worker productivity, American companies with global operations help raise the U.S. standard of living. Second, because the U.S. and foreign activities of these companies tend to complement each other, the ability of these companies to help raise the U.S. standard of living depends crucially on their ability to undertake foreign direct investment abroad. Mainstay III is based upon analysis of the investments, research and development, exports, imports, and purchases from suppliers of American companies with global operations and many other data from 1977 through 1994. The primary data source is surveys of such companies conducted by the Bureau of Economic Analysis (BEA) within the U.S. Department of Commerce. The following sections summarize the major findings and conclusions of the study: 1. setting the stage: the world economy in which American companies with global operations compete American companies today operate in a world economy that is increasingly concentrated outside the United States and that is rapidly expanding its international linkages through FDI and international trade. The U.S. share of the global economy is shrinking. For decades, the U.S. economy has been growing more slowly than the rest of the world, such that the U.S. share of total world output has been declining. This share was approximately 50 percent in 1945, but is down to only 20 percent today. FDI and trade help U.S. integration into the global economy. American companies with global operations have helped integrate the United States more closely into the growing world economy. Average annual outflows of FDI from the United States quadrupled from the 1960s through the 1980s, and total trade as a share of U.S. output rose from 5.6 percent in 1945 to 24.7 percent in 1995. By participating in the world economy, American companies with global operations maintain a significant presence in the United States. Most employment is in the United States, not abroad. In 1977, U.S. parent companies accounted for 72.8 percent of total worldwide employment of American companies with global operations and by 1994, they accounted for 74.3 percent of the total. Profits earned by foreign affiliates are mostly repatriated. In 1989 (the most recent year for which these data are available), U.S. parents repatriated 72.8 percent of their foreign affiliates' net income. Most intermediate inputs are purchased from domestic suppliers, not foreign suppliers. From 1977 through 1994, more than 90 percent of all intermediate inputs purchased by U.S. parents came from American suppliers, not foreign suppliers. Overseas, American companies with global operations are located primarily in developed countries, and the sales from these operations are overwhelmingly in local markets. Most affiliate activity abroad is in developed--not developing--countries. In 1994, developed countries hosted nearly two-thirds of U.S. foreign affiliate employment and accounted for more than three-quarters of foreign affiliate assets and sales. Foreign affiliate sales are mostly abroad, not back to the United States. In 1994, only 10 percent of total U.S. affiliate sales went to the United States. The other 90 percent stayed abroad, and fully 67 percent of all sales were within the host countries of the foreign affiliates. ii. the importance of american companies with global operations to the u.s. standard of living: generating high productivity American companies with global operations contribute in several important ways to the U.S. standard of living, and this contribution is larger than that of purely domestic firms. Investment in Physical Capital. American companies with global operations undertake the majority--57 percent in most years--of total U.S. investment in physical capital in the manufacturing sector. Research and Development. American companies with global operations perform the majority--between 50 percent and 60 percent--of total U.S. research and development. Exports. American companies with global operations ship the large majority--between 60 percent and 75 percent--of total U.S. exports. Their foreign affiliates are important recipients of these exports; their share has increased to over 40 percent today. Imports. American companies with global operations also receive a sizable share of U.S. imports--roughly 30 percent. These imports benefit the U.S. economy in many ways, including giving U.S. companies access to foreign-produced capital goods and technologies. All these activities help increase U.S. productivity and thereby enhance the U.S. standard of living. iii. the importance of american companies with global operations to the u.s. standard of living: paying higher wages American companies with global operations pay their workers higher wages than those paid by comparable American companies without global operations. A study of 115,000 U.S. manufacturing plants indicated that U.S. parent plants pay comparable workers higher wages than purely domestic plants. Production workers receive an average of 6.9 percent less at comparable domestic plants employing more than 500 employees and 15.2 percent less at comparable domestic plants employing fewer than 500 employees. Non-production workers receive an average of 5.0 percent less at comparable domestic plants employing more than 500 employees and 9.5 percent less at comparable domestic plants employing fewer than 500 employees. These results control for possible wage differences attributable to variations across plants in age, industry, location, and size. In light of all these controls, it seems likely that these wage differences are attributable to workers at U.S. parents being more productive than workers at comparable domestic plants. iv. the importance of american companies with global operations to the u.s. standard of living: linkages to american suppliers In addition to directly raising the U.S. standard of living themselves, American companies with global operations may also raise the U.S. standard of living through their interactions with domestic U.S. suppliers. Evidence exists that companies benefit from being exposed to other dynamic, successful firms. Exposure to ``worldwide best practices''--whether those best practices are in the same country or abroad--tends to foster innovation, cost control, and other improvements that boost firm productivity. The very large amount of purchases of intermediate inputs from domestic suppliers by U.S. parents of American companies with global operations suggests the possibility that U.S. domestic suppliers have sufficient exposure to these high- productivity parents to realize some productivity gains. For the past 20 years, U.S. parents have purchased over 90 percent of their intermediate inputs--$2.4 trillion in 1994-- from domestic, not foreign, suppliers. v. how foreign direct investment abroad complements u.s parent activity and contributes to a high standard of living in the united states Because the U.S. and foreign activities of American companies with global operations tend to complement each other, the ability of these companies to raise the U.S. standard of living depends crucially upon their ability to undertake FDI abroad. Analysis of BEA data, academic research, and case studies of 10 major American companies demonstrates that U.S. FDI generally complements rather than substitutes for U.S. parent activity. Within American companies with global operations, affiliate expansion generally triggers in U.S. parents additional investment, research and development, trade, and input purchases from domestic suppliers. As stated earlier, these activities are key determinants of the U.S. standard of living. Restrictions on FDI that prevent U.S. companies from expanding abroad generally will reduce U.S. parent activity and thus, lower the U.S. standard of living. vi. conclusions and policy recommendations The United States must continue to strengthen the open system of global trade and investment in order to maximize the contributions of American companies with global operations to an improved standard of living for all Americans. To that end, U.S. trade and investment policies should take into account the following recommendations based on the research and findings in this study: The U.S. government should maintain its open trade and investment policies. Moreover, these policies should recognize the ways in which trade and foreign direct investment benefit the U.S. economy. The U.S. government should continue to negotiate aggressively for more open foreign markets and should persuade foreign governments to end restrictions on trade and investment. Removing these restrictions will create a ``win- win'' situation that benefits both foreign countries and the United States. The U.S. government should strive to continue to harmonize its international trade, investment, and tax policies. In the case of American companies with global operations, this harmonization should take into account the many ways that their foreign operations tend to complement their U.S. activities. Given that most services are inherently nontradable, firms in these industries must invest abroad to serve global markets. Accordingly, efforts to liberalize trade and investment should focus special attention on the unique needs of U.S. services industries.

Mr. GRAMS

Mr. GRAMS. Mr. President, Ronald Reagan once remarked that: They say the world has become too complex for simple answers. They are wrong. There are no easy answers, but there are simple answers. Mr. President, with the end of the Cold War and the dissolution of the Soviet empire, we must face the challenge of maintaining a zone of stability in Central Europe while preserving the freedom and independence of these democratic states. Enlarging NATO to include Poland, Hungary, and the Czech Republic is not an easy answer, but it is a simple answer. Most importantly, it is a simple answer that is in the best interest of the United States. This is not the first time that the Senate has considered the merits of NATO enlargement. NATO added new members on three other occasions, bringing Germany, Greece, Turkey, and Spain into the fold. With each addition, the military capability of NATO increased, and the stability of Europe was enhanced. I am confident that the inclusion of Poland, Hungary, and the Czech Republic in NATO will have the same effect. This round of NATO expansion, however, is significant in that these are the first candidates for NATO membership to be considered that were part of the Soviet bloc. Nearly a decade after the fall of the Berlin Wall, we have a chance to right the historical wrong of Yalta, and firmly anchor Poland, Hungary, and the Czech Republic in the West. While the accession of these three nations to full NATO membership should not be supported for moral reasons alone, our moral obligation to these countries should not be ignored. We must look at NATO expansion not just as a way to make up for past mistakes, but as a chance to secure the gains of freedom and democracy and ensure that they will never again be encroached. NATO expansion offers the United States a remarkable opportunity to be proactive in shaping the strategic landscape of Europe. That this opportunity is a result of peace, and not the spoils of war, is a tribute to the effectiveness of NATO over nearly 50 years. It is not a responsibility that we should take lightly; it is not a responsibility that we can shirk.

Mr. GRAMS

Mr. GRAMS. In conclusion, Mr. President, this Resolution of Ratification provides the Senate with a historic opportunity to shape the strategic landscape of Europe. At the end of the Cold War, there was a lot of discussion about the ``peace dividend''--the financial savings which would accrue from the end of the superpower rivalry between the U.S. and the Soviet Union. Well, the expansion of NATO reflects the true ``peace dividend''--the extension of a zone of security to codify the gains of freedom and democracy for three more nations and ensure that they will never again be encroached. Mr. President, the United States has a national security interest in assuring the stability of Central Europe. I am convinced that the best way to do that is to enlarge NATO to include Poland, Hungary, and the Czech Republic. As Czech President Vaclav Havel, a man who I respect and admire, has warned, ``If the West does not stabilize the East the East will destabilize the West.'' Mr. President, we have an obligation to our troops stationed in Europe and to future generations of Americans to do everything in our power to make sure it is the West which stabilizes the East and war will never again be precipitated by a power vacuum in Central Europe. Mr. President, I will cast my vote in favor of expanding NATO to include Poland, Hungary, and the Czech Republic, recognizing that this is one of the most important votes that I will take in the Senate. I urge my colleagues to do the same. I yield the floor. Mr. KYL addressed the Chair.

Mr. GRAMS

Mr. GRAMS. Mr. President, the pending business before the Senate is the Conference Report on H.R. 1757, the Foreign Affairs Reform and Restructuring Act. I take the other side of this issue. I strongly encourage my colleagues on both sides of the aisle to support passage of this important foreign policy initiative. As Chairman of the Subcommittee on International Organizations of the Foreign Relations Committee, I spent many hours along with my colleagues on the Committee and with the Clinton Administration crafting legislation which will strengthen America's leadership role in the international arena. This Conference Report is a true ``reform'' bill. H.R.1757 abolishes two federal agencies and reorganizes their essential functions into the Department of State. It brings long overdue reform to the United Nations. It prioritizes our international affairs expenditures and authorizes important foreign policy initiatives. In fact, the core reforms contained in this legislation were originally approved by the Senate by a vote of 90-5 on June 17, 1997. I think it is fair to say that this is one of the most far-reaching and comprehensive foreign affairs bills undertaken by the Congress. This reflects Congressional acknowledgment of the need to create a more effective foreign affairs apparatus, both at home and at the UN, in order to confront the post-Cold War challenges to U.S. peace and security. The pending legislation is the result of a good-faith effort to accommodate conflicting perspectives on how we, as a nation, should allocate our resources. There were tough, lengthy negotiations on this package. We had to reconcile competing interests, and as a result, no one can claim that the final product contains everything that they would wish. I will be the first to say that this bill does not contain all of the reforms I originally sought. I would have preferred much more in the way of reforms and budget discipline. But this is a good agreement; and in this case, we must not let the perfect be the enemy of the good. Now, let me say that I understand some on the other side of the aisle may vote against this bill, and the President has indicated his intention to veto it, because of a provision that contains a part of the so-called ``Mexico City'' language. Specifically, section 1816 of this bill would prohibit organizations that receive U.S. taxpayer dollars from lobbying to change abortion laws--either for or against-- overseas. Now, let me make clear some of the important initiatives that would not be enacted if this Conference Report is defeated. The President and the Secretary of State have indicated that payment of U.S. arrears to the United Nations is a top priority. This bill would authorize a three-year payment plan of $819 million, and an additional $107 million in debt reduction, to the United Nations and other international organizations in return for comprehensive management and fiscal reform of the United Nations. Rejection of this conference report would eliminate this funding and kill the management and fiscal reform measures. The President and the Secretary of State have agreed that a fundamental restructuring of U.S. foreign affairs agencies is long overdue. This bill eliminates the Arms Control and Disarmament Agency, and the U.S. Information Agency and folds their functions into the State Department, while still maintaining firewalls between the State Department and the essential broadcasting activities and public diplomacy of USIA. It also consolidates certain functions of the Agency for International Development into the State Department and grants the Secretary of State greater authority over foreign aid spending. Without the pending legislation, this reorganization cannot go forward. The Drug Czar, General McCaffrey, has agreed that keeping our children free from drugs is a top priority. This bill requires the State Department to develop and implement a comprehensive counternarcotics strategy. Without this bill, this important initiative will not go forward. The Secretary has been a tireless advocate for investment in the U.S. diplomatic infrastructure, citing examples of deplorable conditions of U.S. missions overseas, including ambassadors washing dishes in bathtubs, and outdated computer systems. This bill fully funds the capital investment fund and provides urgently needed resources for embassy construction in Berlin and Beijing. Containment of Saddam Hussein and support for a democratic movement in Iraq are essential to advancing democracy in the Gulf. This bill authorizes programs to assist a democratic Iraqi resistance, to create a Radio Free Iraq broadcast, and to reconstruct communities not under the control of Saddam Hussein. None of these programs will be authorized if this legislation is not enacted. Mr. President, this Conference Report lays out comprehensive and achievable reforms, both here at home in the nation's foreign affairs bureaucracy and in the United Nations. My visits to the U.N. as the U.S. Congressional Delegate to the U.N. General Assembly served to reinforce my commitment to salvage this organization. In this age, any organization burdened with a bloated bureaucracy and no mechanisms to control spending, will collapse under the weight of its own inefficiency. If we do not take a leadership role in reforming the U.N. now, a powerful, entrenched U.N. bureaucracy looking after its own short-term interests may condemn the U.N. to irrelevance as we move into the 21st Century. When Secretary of State Albright was serving as Ambassador to the U.N., she warned that ``poor management'' could be the U.N.'s ``Achilles' heel'' saying, `` I cannot justify to the taxpayers of my country some of the personnel arrangements, the sweetheart pension deals, the lack of accountability, the waste of resources, the duplication of effort and the lack of attention to the bottom line we often see around here.'' Well, Congress cannot justify these excesses to the American taxpayers either. That is why we have stepped forward with a bipartisan reform plan that will compel the United Nations to address these concerns. As I stated previously, the pending legislation provides a three-year payment of $819 million in arrears to the United Nations and $107 million in debt reduction that the U.N. owes that U.S. in conjunction with the achievement of specific benchmarks that will help enhance the vitality of the U.N. Mr. President, this bill also takes steps to address another concern of mine, and that is the move to ensure that survivors of torture will be treated with the compassion which they deserve. One provision that I authored prohibits the involuntary return of any person to a country in which there are substantial grounds for believing that he or she would be in danger of being subjected to torture. Another provision authorizes the U.S. to contribute $3 million in fiscal 1998 and another $3 million in fiscal year 1999 to the United Nations Voluntary Fund for Victims of Torture, ensuring that treatment centers in more than 50 countries will continue to receive support. The United States should take a leading role in encouraging the establishment of additional programs, both at home and abroad, for the treatment of torture survivors. My home state of Minnesota is fortunate to have the first comprehensive treatment center in the United States for survivors of torture. The Center for Victims of Torture has treated over 500 patients since it was established in 1985, and has enabled them to become productive members of our communities by overcoming the atrocities suffered in their countries of origin. We must continue to support treatment centers, like the one in Minnesota, which help those who cannot help themselves--survivors of torture. Dedicating more of our U.N. voluntary funds for this purpose will help provide this important service to more needy survivors. I strongly believe the U.N. is an important forum for debate between member states and a vehicle for joint action when warranted. It is not a world government. However, the U.N. must endorse reforms that provide transparency and accountability so it is embraced as an important world forum for discussion and for coordinating action to promote international peace and security, not as a world government. I firmly believe that this package will improve the U.N. and assist it in winning back public support in the United States. I urge my colleagues to support this important legislation. I commend the Chairman of the Foreign Relations Committee for his diligence and perseverance in achieving this comprehensive reform plan. Little has changed since the Senate approved this legislation last November by voice vote, and last July by a vote of 90-5. It certainly would be disappointing, and I believe short-sighted, now to reject reorganization, payment of U.N. arrears, and other key foreign policy initiatives because the President has decided that single-issue politics is more important than U.S. foreign policy interests. My colleagues should heed the warning of the Secretary of State that failure to pay the U.N. arrears would result in a ``shutdown for our national security policy.'' If this is the case, then it would be irresponsible to reject these funds because of opposition to the prohibition on U.S. aid recipients against lobbying foreign governments to change their abortion laws. Mr. President, this legislation advances key American foreign policy interests, and I hope that all of my colleagues will support its passage.

Mr. GRAMS. Mr. President, I also ask unanimous consent that I be able to speak as in morning business for up to 10 minutes.

Mr. GRAMS

Mr. GRAMS. Mr. President, I rise today to introduce legislation that seeks to restore fairness to the nation's dairy system--fairness that has long been missing, particularly in the Upper Midwest and especially in my home state of Minnesota. When Minnesotans are asked to name my state's leading industries, agriculture will certainly be at or near the top of most every list. Farming and farm-related business plays a critical role in Minnesota's economy. One out of every four Minnesota jobs is tied in some way to agriculture, and 25% of the state's economy is dependent upon farmers and agri-business, most of it focused in the dairy industry. What many people do not realize is that, despite those statistics, our state's dairy industry is in real trouble. Since dropping to number five in milk production--behind Wisconsin, California, Pennsylvania, and New York--Minnesota has been slowly but steadily losing its clout among the top dairy states in the nation. We have lost over 10,000 dairy farms in just the last decade, and today, dairy farms are drying up at a rate of about three every single day. Milk production has dropped significantly as a result--nearly 20% in the last decade. What makes this especially troubling is that much of the decline in Minnesota's dairy industry can be traced directly to farm policies mandated outside of Minnesota's control, in Washington. And the outdated federal milk marketing orders program is a serious part of our dairy problems. The Midwest is one of the best places in the country for dairy. It should be growing and expanding in the Midwest, but because of the Government's outdated policies and programs, it is hurting and killing the dairy industry in the Midwest. The milk marketing orders is yet another example of a well- intentioned scheme dreamed up by Washington bureaucrats that has gone seriously awry. Instead of helping Minnesotans, the milk orders actually hurt the state's economy and penalizing its taxpayers, while benefiting dairy farmers outside the Midwest. The problem can be traced back to 1937, when Congress enacted the ``Agricultural Marketing Agreement Act.'' The legislation was created to encourage the milk production near the nation's major population centers and set a minimum price paid to dairy farmers for Class I milk. That federal ``nudge'' was necessary in some instances, because without refrigerated trucks, fluid milk could not be transported over long distances. In 1985, as part of that year's farm bill, Congress expanded the milk orders program to aid the dairy industry outside the Midwest by increasing the minimum price for Class I milk based on a ridiculous formula. This basically helps producers outside the Upper Midwest, while making dairy production less profitable for producers inside the Upper Midwest region. That is not because of anything that the farmers are doing, their productivity, the land, the climate, whatever. The only reason for the decline, again, is because of an outdated Federal dairy policy. This process is unfair and archaic. Above all, it is opposite in every way to the free market. The Upper Midwest dairy industry, one of the most efficient in the world, is only asking for a fair shake in this process. And so, Mr. President, the legislation I introduce today will amend one of the most inequitable components of the Agricultural Marketing Act of 1937--the Class I milk price differentials. USDA is currently in the process of reforming its system of Federal Milk Marketing Orders. Unfortunately, the Class I differentials proposal released earlier this year was disappointing. Two options have been offered under the proposal. Option ``1A''--the status quo option-- is plainly unacceptable. Option ``1B'' does take a small step in the right direction, but it does not go far enough. However, a small step for reform is most certainly preferable to a step backward as ``1A'' would do. As short-term progress, I support Option ``1B'' because, as I have said, it is the only option USDA is currently considering that makes a move toward fairness in federal dairy policy. My bill would continue the reform beyond the small gains for equity that ``1B'' establishes. We cannot allow ourselves to become satisfied until we secure substantive federal dairy reform. Common sense would tell us that USDA's proposal of a small step toward market-policy is the compromise position for dairy reform. However, as you can imagine, there has been the typical, standard-fare outcry against any sort of reform--even the minimal reform that was offered in the form of Option ``1B.'' And surely that is little more than an acknowledgment on the part of USDA that equity and fairness really do matter in national dairy policy. USDA has explicitly expressed its preference for ``1B.'' However, my optimism is guarded, given the fact that ``the status quo option'' is being seriously considered as a measure of reform. It is all too likely that they may move us a step backward and call it reform. There is every reason to believe that USDA will succumb to the pressure of maintaining the unjustifiable status quo. So many constituencies have been built up around this antiquated dairy pricing policy, and now to try to put any fairness into the system we are going to have these outcries from across the country. So, in addition to the objective of shaping the policy debate beyond short-term fixes, I believe that we in the Upper Midwest must now proceed with progressive dairy reform in the event we once again, find ourselves standing alone in the name of justifiable, equitable, dairy policy. The Dairy Reform Act of 1998 establishes a uniform Class I price differential of $1.80 for each marketing area subject to an order. The newly proposed 11 Federal Milk Marketing Orders will remain in place to provide necessary over order premiums that would raise the $1.80 in some areas. This legislation directs us toward market-oriented reform because it removes the arbitrary, artificial price structure and its resulting interference with the market itself. As far as dairy policy is concerned, we're at a pivotal juncture. The groundwork is being laid for a national patchwork of regional compacts. Roughly half the country has either passed enabling compact legislation, is debating such legislation, or is involved in the Northeast Interstate Dairy Compact. We must either decide to support a national system, or regionalize. As I've said, USDA's Option ``1B'' is a small step in the right direction for dairy policy. The Dairy Reform Act brings us closer yet to substantive reform. The compact alternative, on the other hand, is not reform--it is retreat. It is anti-market and anti-consumer, by definition. There is no substantive, equity-based justification to support random Class I differentials. In fact, USDA's current federal marketing order system was deemed ``arbitrary and capricious'' by a Federal district court judge late last year. That is the fourth time that the courts have come out and said that the current dairy policies in this country are, again, arbitrary and capricious. So, bottom line, it means they are unfair, they are antimarket, they are anticonsumer. So, the case brought against USDA has been in the courts for 7 years, and the judge's ruling was no less than the fourth such proceeding in the history of the case. Given the outrageously drawn-out history of the case, the judge decided not to grant USDA's request to justify the pricing scheme. However, the ruling has been stayed now pending the appeal of the decision of the eighth circuit. After the courts have been cleared on the marketing order system, why is the USDA appealing? Why are they appealing to keep in place a system that the courts have ruled four times is basically unfair? Why don't they focus their efforts on changing the system, as the court has required, but, most important, changing the system to make sure that it is fair, that it does not discriminate against one part of the country over another, that it does not pick winners and losers, and it does not step on the necks of farmers in the Midwest? Under the current Federal order marketing system, the Government is picking winners and picking losers. This system of nonuniform differentials is inherently unfair, and I welcome debate of other dairy policy proposals for reform as well. Mr. President, finally, I just want to say the Dairy Reform Act of 1998 is simply a call to fairness, just fairness, in dairy policy. It is a statement in no uncertain terms that we who represent upper Midwest dairy farmers are going to fight for equitable reform, for market-driven policy. I urge my colleagues to take a look at it, to say what is fair. Why not have everybody on a level playing field? Why not give farmers all over the country the same opportunity for success or failure? Why not get consumers market-driven prices, rather than unfair Federal policies aimed at the Midwest? So, I urge my colleagues to give their support.

Mr. GRAMS

Mr. GRAMS. Mr. President, I rise today to introduce legislation that seeks to restore fairness to the nation's dairy system--fairness that has long been missing, particularly in the Upper Midwest and especially in my home state of Minnesota. When Minnesotans are asked to name my state's leading industries, agriculture will certainly be at or near the top of most every list. Farming and farm-related business plays a critical role in Minnesota's economy. One out of every four Minnesota jobs is tied in some way to agriculture, and 25% of the state's economy is dependent upon farmers and agri-business, most of it focused in the dairy industry. What many people do not realize is that, despite those statistics, our state's dairy industry is in real trouble. Since dropping to number five in milk production--behind Wisconsin, California, Pennsylvania, and New York--Minnesota has been slowly but steadily losing its clout among the top dairy states in the nation. We have lost over 10,000 dairy farms in just the last decade, and today, dairy farms are drying up at a rate of about three every single day. Milk production has dropped significantly as a result--nearly 20% in the last decade. What makes this especially troubling is that much of the decline in Minnesota's dairy industry can be traced directly to farm policies mandated outside of Minnesota's control, in Washington. And the outdated federal milk marketing orders program is a serious part of our dairy problems. The Midwest is one of the best places in the country for dairy. It should be growing and expanding in the Midwest, but because of the Government's outdated policies and programs, it is hurting and killing the dairy industry in the Midwest. The milk marketing orders is yet another example of a well- intentioned scheme dreamed up by Washington bureaucrats that has gone seriously awry. Instead of helping Minnesotans, the milk orders actually hurt the state's economy and penalizing its taxpayers, while benefiting dairy farmers outside the Midwest. The problem can be traced back to 1937, when Congress enacted the ``Agricultural Marketing Agreement Act.'' The legislation was created to encourage the milk production near the nation's major population centers and set a minimum price paid to dairy farmers for Class I milk. That federal ``nudge'' was necessary in some instances, because without refrigerated trucks, fluid milk could not be transported over long distances. In 1985, as part of that year's farm bill, Congress expanded the milk orders program to aid the dairy industry outside the Midwest by increasing the minimum price for Class I milk based on a ridiculous formula. This basically helps producers outside the Upper Midwest, while making dairy production less profitable for producers inside the Upper Midwest region. That is not because of anything that the farmers are doing, their productivity, the land, the climate, whatever. The only reason for the decline, again, is because of an outdated Federal dairy policy. This process is unfair and archaic. Above all, it is opposite in every way to the free market. The Upper Midwest dairy industry, one of the most efficient in the world, is only asking for a fair shake in this process. And so, Mr. President, the legislation I introduce today will amend one of the most inequitable components of the Agricultural Marketing Act of 1937--the Class I milk price differentials. USDA is currently in the process of reforming its system of Federal Milk Marketing Orders. Unfortunately, the Class I differentials proposal released earlier this year was disappointing. Two options have been offered under the proposal. Option ``1A''--the status quo option-- is plainly unacceptable. Option ``1B'' does take a small step in the right direction, but it does not go far enough. However, a small step for reform is most certainly preferable to a step backward as ``1A'' would do. As short-term progress, I support Option ``1B'' because, as I have said, it is the only option USDA is currently considering that makes a move toward fairness in federal dairy policy. My bill would continue the reform beyond the small gains for equity that ``1B'' establishes. We cannot allow ourselves to become satisfied until we secure substantive federal dairy reform. Common sense would tell us that USDA's proposal of a small step toward market-policy is the compromise position for dairy reform. However, as you can imagine, there has been the typical, standard-fare outcry against any sort of reform--even the minimal reform that was offered in the form of Option ``1B.'' And surely that is little more than an acknowledgment on the part of USDA that equity and fairness really do matter in national dairy policy. USDA has explicitly expressed its preference for ``1B.'' However, my optimism is guarded, given the fact that ``the status quo option'' is being seriously considered as a measure of reform. It is all too likely that they may move us a step backward and call it reform. There is every reason to believe that USDA will succumb to the pressure of maintaining the unjustifiable status quo. So many constituencies have been built up around this antiquated dairy pricing policy, and now to try to put any fairness into the system we are going to have these outcries from across the country. So, in addition to the objective of shaping the policy debate beyond short-term fixes, I believe that we in the Upper Midwest must now proceed with progressive dairy reform in the event we once again, find ourselves standing alone in the name of justifiable, equitable, dairy policy. The Dairy Reform Act of 1998 establishes a uniform Class I price differential of $1.80 for each marketing area subject to an order. The newly proposed 11 Federal Milk Marketing Orders will remain in place to provide necessary over order premiums that would raise the $1.80 in some areas. This legislation directs us toward market-oriented reform because it removes the arbitrary, artificial price structure and its resulting interference with the market itself. As far as dairy policy is concerned, we're at a pivotal juncture. The groundwork is being laid for a national patchwork of regional compacts. Roughly half the country has either passed enabling compact legislation, is debating such legislation, or is involved in the Northeast Interstate Dairy Compact. We must either decide to support a national system, or regionalize. As I've said, USDA's Option ``1B'' is a small step in the right direction for dairy policy. The Dairy Reform Act brings us closer yet to substantive reform. The compact alternative, on the other hand, is not reform--it is retreat. It is anti-market and anti-consumer, by definition. There is no substantive, equity-based justification to support random Class I differentials. In fact, USDA's current federal marketing order system was deemed ``arbitrary and capricious'' by a Federal district court judge late last year. That is the fourth time that the courts have come out and said that the current dairy policies in this country are, again, arbitrary and capricious. So, bottom line, it means they are unfair, they are antimarket, they are anticonsumer. So, the case brought against USDA has been in the courts for 7 years, and the judge's ruling was no less than the fourth such proceeding in the history of the case. Given the outrageously drawn-out history of the case, the judge decided not to grant USDA's request to justify the pricing scheme. However, the ruling has been stayed now pending the appeal of the decision of the eighth circuit. After the courts have been cleared on the marketing order system, why is the USDA appealing? Why are they appealing to keep in place a system that the courts have ruled four times is basically unfair? Why don't they focus their efforts on changing the system, as the court has required, but, most important, changing the system to make sure that it is fair, that it does not discriminate against one part of the country over another, that it does not pick winners and losers, and it does not step on the necks of farmers in the Midwest? Under the current Federal order marketing system, the Government is picking winners and picking losers. This system of nonuniform differentials is inherently unfair, and I welcome debate of other dairy policy proposals for reform as well. Mr. President, finally, I just want to say the Dairy Reform Act of 1998 is simply a call to fairness, just fairness, in dairy policy. It is a statement in no uncertain terms that we who represent upper Midwest dairy farmers are going to fight for equitable reform, for market-driven policy. I urge my colleagues to take a look at it, to say what is fair. Why not have everybody on a level playing field? Why not give farmers all over the country the same opportunity for success or failure? Why not get consumers market-driven prices, rather than unfair Federal policies aimed at the Midwest? So, I urge my colleagues to give their support.

Mr. GRAMS

Mr. GRAMS. Mr. President, I rise today to salute the work of the 3,072 county governments nationwide, and in particular, the work of the 87 counties in my home state of Minnesota. Counties are often an invisible, but extremely important part of our intergovernmental system. County officials in my home state have also taken leadership roles in their national organization, namely Commissioner Randy Johnson, who chairs the Hennepin County Board of Commissioners and serves as the President of the National Association of Counties (NACo), and his colleague, Hennepin County Commissioner Peter McLaughlin, who chairs NACo's Large Urban County Caucus which represents the interests of the nation's 100 largest counties. Counties can trace their roots to the English shire of a thousand years ago. Serving a dual function, the shire acted as the administrative arm of the national government as well as the citizen's local government. The structural form of the shire was adopted along the eastern seaboard of North America by the colonists and adapted to suit the diverse economic and geographic needs of each of the colonists. Traditionally, counties performed state-mandated duties which included assessment of property, record keeping such as property and vital statistics, maintenance of rural roads, and administration of election and judicial functions. Today, counties are moving rapidly into other areas, undertaking programs relating to consumer protection, economic development, employment training, planning and zoning, and water quality, to name just a few. This week, counties across the country are celebrating National County Government Week. This celebration is an annual event for counties. First held in 1991, the goal of National County Government Week is to raise public awareness and understanding about the roles and responsibilities of the nation's counties. There have been activities at the national, state and local levels this week. More than 1,000 counties annually participate in National County Government Week by holding a variety of programs and events. These include tours of county facilities, presentations in schools, meetings with business and community leaders, recognition programs for volunteers, briefings on environmental projects, and adoption of proclamations. There is a theme each year for National County Government Week. This year, the theme has been ``Creating Sustainable Communities.'' Counties are being encouraged during National County Government Week to make their communities more livable by engaging their citizens in a process that promotes job growth and environmental stewardship. I know that NACo has encouraged counties this week to hold a town meeting or launch a series of community-wide dialogues to solicit citizen participation to identify the community's most pressing issues and to establish a comprehensive vision for the future. NACo has also suggested that counties develop a public participation strategy to identify and solve local problems that bring local government officials, business leaders, and community representatives together. Counties have brought their citizens closer to their government by getting them to come to county facilities to learn about county services--or by going where the people are. Some counties this week held an open house at the county courthouse and administration building. They created displays by county departments showing what each department does. Employees were on hand to describe the services they provide and their responsibilities. Some counties focused on their county's history as well. Local historical societies and libraries put together presentations or displays to inform citizens about the county's history. Mr. President, I am pleased to rise today to support the efforts of our county governments throughout the country, and in particular, my home state of Minnesota. National County Government Week has been successful in attempting to raise public awareness of the good work of our nation's county governments and how they help improve the lives of their residents.

Mr. GRAMS

Mr. GRAMS. Mr. President, today, across our country, Americans are commemorating Earth Day, a day that is vitally important to all who serve in this chamber. As my colleagues know, Earth Day was first observed on April 22, 1970. Its purpose was--and remains--to make people across the country and internationally reflect on the splendor of our world, an opportunity to get people to think about the earth's many gifts we often take for granted. Earth Day is a day for us to sit in the grass, take a walk, listen to the birds, and observe wildlife. Earth Day is a day for all of us to reflect on our dependence on our natural resources and recognize the care with which we must respect and use our natural resources, recycling and replenishing them where possible. The New York Times, on the original Earth Day, ran a story which in part read, Conservatives were for it. Liberals were for it. Democrats, Republicans and independents were for it. So were the ins, the outs, the Executives and Legislative branches of government. The goals of Earth Day 1970 were goals upon which all of us agree. They're goals still shared across our country, regardless of age, gender, race, economic status, or religious background. They're shared by this Senator, as well. I consider myself a conservationist and an environmentalist. I think everyone who serves in the Senate does. No one among us is willing to accept the proposition that our children or grandchildren will ever have to endure dirty water or filthy skies. Our children deserve to live in a world that affords them the same, or better, environmental opportunities their parents enjoy today. Mr. President, I believe today, on Earth Day 1998, we must speak of our responsibilities--our responsibilities to the Earth, to one another, and to our nation. It is clearly our responsibility to protect our earth and ensure its health. Congress has a duty to see to it that we are cautious and conscientious stewards of our natural resources. Since the late 1960s, Congress has met this challenge by enacting what has amounted to a ``war on pollution.'' By engaging in this battle, Congress and an increasingly large federal bureaucracy have been successful in centralizing power, expanding regulations, saddling taxpayers with more debt, and leaving states and localities without the power to meet local environmental challenges with local environmental solutions. Local governments have the best ability to improve the environment--and the most incentive to protect their people as well. To be sure, this war on pollution has had its successes. The Clean Air Act and Clean Water Act have improved our environment in countless ways. This Congress, and many before it, have spent billions upon billions of dollars in environmental protection plans, conservation plans, superfund clean-ups, endangered species act protections, wetlands protections, and wildlife refuges just to name a few. Our urban landscapes are no longer polluted by the thick, black smoke of industrial smokestacks. Our lakes and rivers are no longer the dumping ground for toxic sludge. We're recycling newspapers, glass, and plastics in record numbers--this, in fact, is a priority in many Senate offices, including my own. Through efforts such as the Conservation Reserve Program, Congress is working in partnership with the American people to ensure our generation leaves behind a cleaner Earth than the one we inherited. Over the past few years, however, issues of environmental concern have moved away from the consensus required of prudent public policy making and increasingly toward the margins. Americans have enabled this shift because even though we've become more environmentally aware, in many cases we've failed to become more environmentally educated, resulting in extremes on both sides of many issues. This past year, a 14-year old student in Idaho used a simple experiment to prove this observation. In a story reported across the country, young Nathan Zohner entered a project in a local science fair warning people of the dangers of dihydrogen monoxide, or DHMO. He described DHMO as a substance potent enough to prompt sweating and vomiting, cause severe burns in its gaseous state, or even kill if accidentally inhaled. Further, he claimed, DHMO contributes to erosion, decreases the effectiveness of automobile brakes, and can be found in acid rain and cancerous tumors. Nathan then asked roughly 50 people to sign a petition demanding strict control or a complete banning of the chemical. Not surprisingly, 43 said yes, while five would not sign and two were neutral. What's surprising to many who hear of this story is that dihydrogen monoxide is merely water--a substance, Mr. President, we all know is completely safe when handled and consumed properly. Sadly, it took the efforts of a 14-year-old boy to point out the drastic lengths to which our society has taken the rhetoric of environmental protection. Americans today fear everything from drinking water to beef--and are spurred on by leaders who are often masters of fiction, whipping up doomsday scenarios prompted by our supposedly careless treatment of Mother Earth. Mr. President, Nathan Zohner's experiment only scratched the surface of the insanity of over-zealous regulation. Regulations today cost Americans over $700 billion each year. That amounts to almost $7,000 per household. Let me repeat that--regulations in our country cost every American household nearly $7,000 per year. That is outrageous and it ultimately has nothing to do with protecting the earth or being good stewards. It is the result of a centralized federal bureaucracy which must not only justify its existence, but expand its purpose and scope in order to feed its insatiable appetite for power. Let's review the process. Congress enacts legislation and the President signs it into law. Simple enough, but what happens next? Well, Executive Agencies such as the Environmental Protection Agency interpret what Congress meant and go on a rampage of issuing and enforcing regulations that often fly in the face of Congressional intent. In Congress, we protest that we didn't mean for that to happen, but rarely, if ever, are we able to reverse the process or rescind the regulation. We fail in our most basic role of oversight. And far too many times Congressional intent is thrown aside by these growing federal bureauracies and their own desires are then enforced. American businesses, workers, farmers, states, and localities are then forced to comply with the goals of the EPA's regulations and ordered to achieve those goals at the direction of the EPA as well. Too often, those being regulated aren't allowed to find unique and innovative means of compliance. They aren't allowed to tap into the same American ingenuity which, for the span of our nation's history, has provided workable solutions to achievable goals. They are approached by the federal government as adversaries, not as partners--and are therefore given a one-size-fits-all dictate by a government that most often either doesn't care or doesn't know any better. And millions of dollars are spent to do $10 worth of good. We all come to the floor and regularly recite polls and studies and intricate, numerical details. We often forget that real people and real jobs and real families mean a whole lot more than just the numbers behind the latest study. But one thing is certain: Americans do not expect that they should have to chose between environmental protections and their jobs or standard of living. When we do both, we can ensure a healthy environment and a strong economy and strong economic growth. According to a Wirthlin Worldwide Study conducted last August, only 11% of Americans consider themselves active environmentalists while 57% are sympathetic to environmental concerns. The same study found that 70% of Americans believe they should not have to choose between environmental quality and economic growth. Clearly, Americans want their leaders to work pro-actively towards a clean and healthy environment, but not to the extreme and certainly not at the cost of their safety, their jobs, or their individual freedoms. Mr. President, I suggest that on Earth Day we pledge to come together to improve our environment and strengthen our natural resources. I also suggest that we recognize both our failures and successes of the past. We must recognize that today, compliance with regulations is the rule--and that blatant attempts to pollute and circumvent regulations are the exception. With this in mind, I believe we must renew our nation's commitment to pragmatism. Government, on all levels, must do its part as watchdog while empowering those being regulated to develop unique and innovative means of compliance. At the same time, we must promote ideas that create public/private partnerships and encourage companies and individuals to take voluntary steps to protect our natural resources. Through education and awareness, we'll be able to approach environmental issues in a way that fosters compromises and ensures public policy is pursued in the best interests of all. It is time, Mr. President, that we commit ourselves to achieving real results through environmental initiatives. We must make sure that Superfund dollars go to clean-up, not to lawyers. We must actually restore endangered species and remove them from protections, rather than cordon off large areas of our Nation with little or no results. We must base our decisions on clear science with stated goals and flexible solutions. We must give our job creators more flexibility in meeting national standards as a means of eliminating the pervasive ``command and control'' approach that has infected so many Federal programs. And finally, the Federal Government needs to promote a better partnership between all levels of government, job-providers, environmental interest groups, and the taxpayers. With this in mind I believe that on this Earth Day we must collect the extremist rhetoric found on both sides of the environmental debate and flush it down the toilet--remember to flush twice, though, if it's a new, EPA-mandated low-flow toilet, or it might not be gone for good.