Rod Grams

Mr. GRAMS

Mr. GRAMS. Mr. President, I join with Senator Wellstone to speak about the urgent need for cleanup and fire threat reduction funding in northern Minnesota. I first want to thank Senator Gorton for his willingness to work with me on this crucial issue for our state. As many of my colleagues know, I've been working with my colleagues in the Senate, including Senator Wellstone, Senator Gorton and Senator Stevens, for months to ensure that this crucial funding would be available for the Superior and Chippewa National Forests. I've made my request repeatedly, in both letters and in conversations with the Appropriations Committee and the Senate Leadership. My colleagues on the Appropriations Committee gave me their assurance that the needs of Minnesota would be met. I just returned from hearing over five hours of testimony in northern Minnesota on last year's storm and its dramatic aftermath. Regardless of political affiliation or the specific interests of those testifying, everyone agreed that the most crucial need in northern Minnesota was the reduction of the tremendous amount of downed timber scattered across the Superior National Forest and the Boundary Waters Canoe Area Wilderness. Right now, there are over 450,000 forested acres in northern Minnesota upon which lie millions of broken, dead or dying trees. Right now, those downed trees pose a fire threat that the Forest Service cannot model. If they're not first burned in a catastrophic fire, many of those trees will become ridden with disease, creating another threat for nearby forested areas that weren't impacted by the storm. While much of the area most impacted by this storm lies within a federally designated wilderness area, the region is also known for its many homes and resorts and for the diversity of recreational activity it offers. Most importantly for those of us who represent the area is the protection of the lives and property of those who live in and visit this wonderful area of Minnesota. That's why I've insisted that there's an immediate need to reduce the threat of catastrophic fire and provide the Forest Service with the funding it needs to conduct cleanup and fire threat mitigation efforts. I want to take a moment to address the process through which we arrived at this point. As I said earlier, I've been working with the Appropriations Committee for a number of months to secure this important funding. I first wrote to Senator Stevens on March 15th seeking emergency funding in a supplemental appropriations bill for cleanup activities this year. I then wrote to Senator Gorton on April 12 asking that he include $9.249 million in emergency funding to address the pressing needs of the Superior and Chippewa National Forests. When the Agriculture Appropriations bill passed through the Appropriations Committee, I was pleased that my request had been approved and would soon be before the full Senate. And finally, when the Military Construction Conference Report was brought out of committee, we were successful in getting a $2 million down payment on the $9.249 million and a commitment that the remainder would soon follow in either the Interior bill or in the Agriculture bill. As I said earlier, the agreement reached today between Senators Gorton, Byrd, Wellstone and me fulfills the commitment I received almost two weeks ago. There have, however, been some suggestions that the funding we're discussing today had been approved in the House of Representatives and then stripped out by the Senate. However, the House has never passed a single dime in emergency funding for northern Minnesota. I would also like to address claims that the Senate had somehow stripped this money out and ignored the needs of northern Minnesota. I've been in almost constant contact over the past few months with the Senate Leadership and with the Appropriations Committee. I have been assured repeatedly that this money will be available for Minnesota and that the pressing needs in this region of my State would be met no later than on the Agriculture Appropriations bill and hopefully on this bill. I'm grateful that now those needs will be met, consistent with the previous assurances I had received. I would also like to mention that this is not the end, but the beginning of our efforts to ensure the safety and well-being of the people who live in or visit northeastern Minnesota. Reducing the threat of fire, protecting human life and property, and ensuring the continued economic viability of this region of our State should be our number one priority. I intend to see to it that those concerns are addressed by the Federal Government in the coming weeks, months, and years. To that end, I intend to secure, through an amendment I have already filed, additional funding of $6.947 million for blow-down recovery and fire threat reduction efforts in northern Minnesota for fiscal year 2001. As, again, Senator Wellstone mentioned, he is joining me on this amendment as well in support of this request. This money will provide the Forest Service in northern Minnesota with the funding they need in the coming fiscal year so that they can continue the cleanup efforts beyond October of this year. This is a massive cleanup effort that will cost millions of dollars and will continue for years past fiscal year 2001. I hope we can reach agreement with Senator Gorton and Senator Byrd to accept this important amendment as soon as possible. Again, I thank Senator Gorton, Senator Stevens, the staff of the Appropriations Committee, and Senator Wellstone for working with me for so many months to secure the funding needed to protect the lives and the property of the people of northern Minnesota. I yield the floor.

Mr. GRAMS

Mr. GRAMS. Mr. President, I rise this afternoon in strong support of the House legislation that would repeal the death tax for working Americans. I support this bill because death taxes are just basically, bottom line, anti-American, antifamily, antieconomic, and antijob growth. The death taxes are just plain unfair. They are unjust, and they must be eliminated. I know our friends on the other side of the aisle are just so enamored by being able to take some dollars from somebody so they can direct them to the causes they believe are the best. They want to direct where the money goes. They are saying we should take these dollars from these individuals or these families or these groups and bring it to Washington so we can decide in Washington how the money should be spent--not the individual who earned the money, not the trust funds that they might set up. They always throw around the names of Bill Gates, Donald Trump, and Leona Helmsley. I do not see anything wrong with what they have done and what they have contributed. But somehow if they want to direct or control their money, even after death, somehow my friends on the other side of the aisle have a problem with that. In fact, if I am not mistaken, I think Mr. Gates has already set up a huge trust fund of about $20 billion to be given to charitable causes. I hear over there that there would be a reduction in charitable giving. So somehow, if the Government took less of the money from you in taxes, you, in turn, would say: I have more money now, so I am going to give less to charity, or somehow, if the Government takes more from you in taxes, you are going to be more charitable with the little bit you have left. I think the real debate here is, again, fairness, equity, and who is going to control or direct the money. Are we going to listen and have it all directed from here; That somehow they know better how to spend the money? They want to generate, control, and grow more Government, that it is more efficient, can deliver better services, and is more fair to Americans. To me, this is nothing but greed on behalf of some politicians who want to control people. As I said, even after they are dead, they want to take even more money from them. But their estates give back just a ``little bit'' in taxes. I do not call 55 percent of everything you worked for, and managed to save, put away, a ``little bit.'' Fifty-five percent--give back a ``little bit.'' Or the heirs should be happy to get half of the estate that your family has worked for, for nothing. You have probably been a part of it. And then after death, the Government can come in and grab 55 percent, and you should be happy because you get what is left over. Don't say anything. Just sit there and be happy because the Federal Government, in all its wisdom, is going to direct those dollars to the best causes and, indirectly, somehow they are going to benefit you and every other American. There might be waste, fraud, and abuse going through the systems we have today, but if we only pump a little more money into it, or if we can only create more Government, somehow this is better than allowing an individual to decide how that money is going to be spent, what charities that individual wants to give to, what educational programs they want to support. But, no, somehow it is better if it comes to Washington. But as you know, the Federal death tax is similar to the income tax. It was first imposed as just a temporary measure to finance World War I. Ronald Reagan said: There is nothing more permanent than a temporary Government program. This is just a great example. The excise tax on the telephone--that was just repealed here a little while ago--imposed 100 years ago as a temporary tax is another great example. Here is a temporary tax to help finance World War I. It was temporary. But once people get their hands on the money, they somehow believe they have more of a right to your labor than you do, that somehow they have more of a right to the money that you have worked for or generated than you do. Why? When death taxes became permanent in 1916, estates under $9 million--that is in today's dollars--were not taxed at all. Death taxes later evolved to supposedly prevent the buildup of inherited wealth. The Government wanted to prevent the buildup of inherited wealth. This idea of social engineering has made the death taxes, which now range from 37 percent to 55 percent, substantially higher than any other Federal taxes. The lowest estate tax rate is almost as high as the highest income tax rate, which is now, thanks to President Bill Clinton and the Democratic bill passed in 1993, the highest income tax rate, 39.6 percent. Keep in mind the death taxes are levied on earnings and assets that have already been subject to income, payroll taxes, and other taxes at the Federal and State level. In other words, you have worked all your life. You have paid taxes up front on your income, on your profits. This is moneys that you have taken home after taxes, where you built an estate and somehow now they believe that you should pay just a ``little bit'' more--just a ``little bit''--and, oh, by the way, only on the most wealthy in this country. If you have a farmer with $1 million out there driving a 1975 pickup, and he happens to die unexpectedly, he is among those wealthy individuals that we talk about. Yes, they throw around the names of Bill Gates and Donald Trump, as if somehow they are bad people, but what they do is they try to camouflage the real reason for this bill, and that is, to get their hands on additional moneys. Despite the efforts by liberals, deaths taxes have failed to accomplish their stated purposes and instead have created inequality and injustice that hurts millions of Americans. Instead, this is one of the most expensive taxes imposed, and it does some of the most damage on the individuals who this money is taken from. In fact, I think there are studies out there that have said, if we eliminated the inheritance tax, the estate tax, the death tax, that it would almost be a wash to the Federal Treasury because it costs billions of dollars today to administer because of all the audits and everything that has to be done. It is costing billions of dollars to impose this tax. Then when we look at the damage it does to farms, to small businesses, to individuals, jobs that are lost, businesses that are lost, tax dollars that are lost, of course, in the process, the Government comes out probably a loser. There are many who would bet that if we could eliminate this death tax today, it would not affect the revenues and, in fact, we would probably have even larger economic growth; that the revenues to the Federal Treasury would be even larger because of it. It is a punitive, mean-spirited, unfair, unjust, antijob, antieconomic tax that the other side of the aisle seems to like to impose on Americans, successful Americans or Americans just trying to hang on to their farm or their small business. Let me give a few examples of how death taxes are hurting working Americans. My good friends on the other side of the aisle say they don't want to hear any more of these stories, but we have a lot of these stories because they affect millions of Americans every year. John Batey of Tennessee runs a 500-acre family farm that has been a part of the Batey family for about 192 years. John has spent all of his life on his family's farm and, as most other farmers, he plans to be a good steward of the land, to save and to build his assets and some day leave the farm to his children. After the death of his father 5 years ago and the death of his mother last June, John began to settle his parents' estate. As he was about to take over the family farm, the IRS sent him a death tax bill for a quarter of a million dollars, on a 500-acre farm in Tennessee, a quarter of a million dollar tax bite. The value of the farmland had increased significantly, but the death tax exemption has never been indexed. John had no choice but to sell some other assets. He also had to dip into their life savings and even borrow money to pay Uncle Sam. Now, when we talk about wanting to have a prescription drug benefit, everything else, what kind of a financial shape has it put this family in? It has taken them from being able to pay and make due for themselves and exposed them to financial ruin and the need possibly of having to come to the Government begging for help because we have taken all their money. Now they are in debt, have less of their assets, and their savings are gone so they can pay Uncle Sam this unfair, unjust death tax. Somehow the big spenders in Washington needed that money more than John and his family needed it for their own well-being. The story of Lee Ann Goddard Ferris, who testified during the Senate Finance Committee hearing, is another disheartening story. This isn't the Bill Gates of the world. This isn't Donald Trump, Leona Helmsley. This is Lee Ann Goddard Ferris. Her family owns a cattle ranch in Idaho which prospered through 60 years of hard work by her grandfather and father. By the way, they accumulated this after they paid the taxes on all of their income up to this point. In the fall of 1993, her father was accidentally killed when his clothing got caught in farm machinery. The unexpected death was devastating on the family, but so was the news from their attorney. Later on he told them: There is no way you can keep this place, absolutely no way. They said: Well, how can this be? We own the land. We have no debt. We lost my father, but now how are we going to lose the ranch? We don't have a mortgage on this place. According to Lee Ann, in her testimony before the Finance Committee: Our attorney proceeded to pencil out the estate taxes . . . and we all sat back in total shock. When their mother dies, the lawyer told the family, estate taxes will be $3.3 million. I know that is just a little bit, just giving back a little bit of what has been generated by Washington and this great economy, not by the hard work of millions and millions of Americans. You didn't do anything to create this economy. It all came out of here, out of Washington. You have benefited from it because of the benevolence and the wisdom out of Washington, not your hard work, not your brainpower, but Washington created this environment. We have heard this on the floor, that because Washington has done this, you have been the one who has taken advantage of it. So you should give back just a little bit to help, $3.3 million for a family in Idaho from a cattle ranch, just a little bit. According to Ferris, the family had to sell off a parcel of land. They did this so they could buy a $1 million life insurance policy for her mother in the event that she should suddenly die. That would pay off one-third of the estate tax. The question still is, How will they handle the remaining $2 million? They already had to sell some assets to go out and buy this huge insurance policy. That only takes care of 33 percent. Who will pay the remaining $2 million? Ferris says she doesn't know. When her mother passes away, they are going to have to figure out another way of paying the other $2 million. Will that be in the sale of more of their assets, selling off more of the farm, basically driving them off the land and putting them somewhere else? Timothy Scanlan, from my State of Minnesota, owns a family business. His family has built their business over the last 80 years. Their business has created many jobs. It has offered fine products. Again, they have paid taxes all their lives on everything. You are taxed to death the way it is now; the estate tax just finishes the job. They paid taxes, and they have never asked the Government for a handout. When his father and mother died a few years ago, the estates tax took nearly 60 percent of the value of his family business. Mr. Scanlan says: I am now trying to plan for the fourth generation to take over. As of today, it can't be done. We've worked so hard to create something good that we've created a company that has so much value that we would have to sell it in order to pay the taxes. Families, companies and farmers like us are a small minority working hard for generations only to have our government tax us out of our family business. This isn't Bill Gates. This isn't Donald Trump. This isn't Leona Helmsley. These are average Americans. There are many more stories such as these clearly showing that the death tax has hurt hard-working Americans the most. Not the rich; the rich can hire the lawyers. They can hire the estate planners to avoid all these taxes. We are not talking about tax relief for the wealthy, as some claim. I am not here trying to defend the wealthy. They are going to take care of themselves. It might cost them a couple million dollars to go out and hire people to set up the shelters they need. They will do that. Why are we doing this? Why are we costing millions of dollars in the private sector, billions of dollars in the public sector to try to levy an unfair, unjust, antieconomic tax that hurts millions of Americans? Realizing this injustice, the Republican-controlled Congress began to provide death tax relief in 1997 to farmers and small business owners by increasing the exemption from $600,000 to $1.2 million. When I talked about how increasing taxes of the Federal Government or eliminating the estate tax would almost be a wash, statistics show that about one-third of the surpluses we enjoy today are the direct result of the tax cuts in 1997. It means if we can reduce taxes, the economy grows. The economic pie gets bigger. The economic opportunities are better. The wages can improve. But, no, if you tax something, you get less of it. If that is what we want to do, continue to tax Americans into submission with these death taxes and having to break up or sell their businesses and farms, that is exactly what this unfair tax does. There are crocodile tears about how if we can only collect this money, how much good can we do with this. Washington can do so much good. Just let us collect this tax, just a little bit of it--by the way, 55 percent--let us collect it, and we will continue these great Government programs. In fact, we will even create some new ones to go along with them. Last year, we passed the Taxpayers Refund Act. For the first time ever, we voted to completely repeal the Federal death tax. Despite the fact that the President's own White House conference on small business made death tax repeal a top legislative priority, President Clinton vetoed this tax relief legislation. When I travel around the State of Minnesota, I talk to hundreds of farmers. The one thing they tell me would help them most is the repeal of the death tax. The average age of the majority of the farmers in Minnesota is 58. Within 10 years, there is going to be a tremendous shift of wealth of farmland and farm assets in Minnesota. Right now a lot of those assets are going to go to the Government, and it is going to drive the next generation off the farm because they won't be able to afford to do it. I don't know where those farm assets are going to end up, but, because of this unfair tax, the majority of farmers in Minnesota tell me that would be their No. 1 priority. If we want to help rural America, if we want to help rural Minnesota, rural Wisconsin, the best thing we could do is help these farmers by getting rid of this death tax to allow them to pass their assets from generation to generation. But again, despite the fact that the President's White House Conference on Small Business made the death tax repeal a top legislative priority, President Clinton vetoed this tax relief legislation. This is an administration that does not want to give one dime in tax relief--not one dime. In fact, the President's own bill that he submitted this year, which had a tax relief component included, would actually raise taxes this year by $9 billion. That is the President's version of tax relief. We will raise your taxes $9 billion this year. That is real tax relief. Here is another example of a President who doesn't want less taxes but more taxes. It is supported by our good friends on the other side of the aisle. Our Democratic colleagues insist that a cut in the death tax is a tax cut for the rich, and they ``can hardly justify a costly tax cut that benefits some of the wealthiest taxpayers.'' That is simply wrong. As I said earlier, it is the family farms and the small business owners whom the death tax particularly harms; it is not the rich. That is just cover, a smokescreen. That is the magician saying: Look at this hand, not at what I am doing here with this other hand. Concentrate on the super rich, but don't worry about the average middle-income taxpayer or small businesses. A typical family farm could be valued at several million dollars due to land appreciation and the expensive farm equipment needed. I have said so many times that a farmer can die and can be worth $2 million or $3 million, but it is all in assets, value, and equipment. He has probably never driven a new pickup in his life and has worn his gloves until he can't hold them anymore. Yet, when he dies, he is a millionaire who should ``give just a little bit back.'' Don't pass on the family farm; let Washington have it. Many farms may never even earn a penny of profit. When the head of the household dies, the family can't come up with the money for estate taxes. They don't have a quarter million dollars in cash-flow. Everything they have is normally invested in the farm, in the assets and equipment. But they have to come up with money to pay the estate tax, and that means they have to sell equipment or land--in other words, break up the family farm. This is the main reason we lose about 1,000 family farms each year in my State of Minnesota alone. They are driven out of business because of the estate tax. Are these rich people? No, they are hard-working Americans. I strongly believe Government policies should not punish those who have worked hard and been out there building up farms and businesses. There are many compelling reasons to end this unfair and unjust death tax: First, the American dream is to work hard and make life better for their children. Here, if you work hard and put everything into it, you break your back to do it, if you are successful, they are going to penalize you. You may have built a business from the ground up, brick by brick, acre by acre, founded on persistence and determination, but if you are successful, they are going to break you. Years of hard work eventually pay off. Their business thrives, farms prosper, and when the time comes to retire or leave the world, they are proud to pass something on to their children. But, wait, there is the tax man. By allowing them to build upon the success their parents and grandparents had achieved, they know they have given their children a good head start--again, until the tax collector steps in to demand Washington's share, taking up to 55 percent of the estate. As the witness said earlier in her testimony before the Finance Committee, her attorney said, ``There is no way you can continue to operate this farm because you have to pay the taxes.'' Once the Federal Government has finished taking its portion of the estate, few family businesses and farms can survive. Their heirs may be forced to sell off all or part of the business --again, just to satisfy the tax bill. All of the years of hard work poured into the creation of a piece of security for their family and their future evaporates. Oh, no, this is only for the rich, for the wealthiest. Again, that is a smokescreen to divert your attention, saying: Good, tax the rich people. But those ``rich'' people are many, many Americans--not a few but many average Americans. Newt Gingrich once said, ``You should not have to visit the undertaker and the tax man on the same day.'' I think Mr. Gingrich was right. Research shows that 70 percent of family businesses do not survive through the second generation. Eighty- seven percent don't make it through the third generation. The death tax is a major factor contributing to the demise of family businesses and, as I said earlier, family farms. Nine out of ten successors whose family-owned businesses failed within 3 years of the principal owner's death said it was trouble paying the estate taxes that contributed to the company's demise. I think Senator Burns earlier talked about the year after year after year of payments a family had to make to the Government--$14,000 a year, $15,000 a year, $17,000 a year, and their dad had died 13 years earlier. So they were still trying to make a profit and pay the bills and then pay the tax man over and above their other taxes. In fact, under the current tax system, it is cheaper to sell the family-owned business before death--cheaper to sell it before you die-- rather than pass the business on to one's heirs. That is what happens a lot of times. You can't afford to die, so you have to sell the business beforehand so you can pay less taxes, and you help your family more than by waiting until you die. No growing business can remain competitive in a tax regime that imposes tax rates as high as 55 percent upon the death of the founder or owner. Clearly, the Nation's estate tax laws penalize those who have worked the hardest to get ahead. Instead of encouraging family-owned businesses, the Federal Government has enacted tax policies that are a barrier to a better economy and better jobs. A good question would be: On what moral ground should the Federal death tax be allowed to continue to punish hard-working Americans? If a death tax is unfair on somebody with a $500,000 estate, or a $50,000 estate, or if it is unfair to somebody with a $2 million estate--and now our good friends on the other side of the aisle say we will even grow that to $10 million--if it is unfair to a $10 million estate, how can it become fair or morally right on anything above that? On what moral ground should the Federal death tax be allowed to continue? Revenue from death taxes accounts for about 1 percent of Federal tax receipts. But the real loss to the Federal Treasury could be much greater. It takes 65 cents to collect every dollar. Again, I told you it is a very expensive tax to go out and try to collect because of all of the auditing and everything that has to be done. So it takes 65 cents to collect a dollar. If we take in $20 billion a year, we have spent about $13 billion to collect it. It is an unfair tax, an immoral tax, which can drive these families out of business; and we lose even more revenue in lost jobs, lost productivity, not to mention the revenue loss from payroll, income, and other taxes when businesses are destroyed and those jobs are lost. The death tax provisions are so complicated that family-owned businesses must spend approximately $33,138 over 6.5 years on attorneys, accountants, and financial experts to assist in estate planning. Eliminating the estate tax would have a nominal impact on Washington's $1.8 trillion budget. When you look at the money we would save and the additional tax revenues, we could probably gain from the payroll and other taxes--and, again, this could be a wash--and we don't disrupt or destroy businesses, lives, and jobs. But by encouraging savings, investing, and the establishment of more family-run businesses, the economic benefits for average Americans would be tremendous. There are many average Americans out there losing their jobs every time one of these businesses has to close or have assets sold off. So it disrupts many people, not just the owners of the business, but many who rely on the business for a livelihood to support their families. Research shows that repeal of death taxes will create more than 275,000 jobs in the next 10 years. It will create 275,000 jobs if we can get rid of the death tax. We heard one claim that somehow there would be a reduction in charitable giving. So, somehow, if the Government takes less, you are not going to give as much to your favorite charity. I think if you had more money in your pocket at the end of the year, you might give more. Americans are the most charitable people in the world, giving tens of billions of dollars a year. But the Government wants to take some of that because the Government, again, can be more benevolent or charitable with your money. I wrote this point down, too. The Democrats said, ``We want to help.'' Who? How? By taking money from some people so they can decide how to disburse it to others, rather than letting the individuals who own the assets make the decisions on charitable giving, whether to their schools, or their alma mater, churches, groups in their community, the Boy Scouts. Billions of dollars a year are distributed this way in charitable giving. I don't think we need the Government to step in and say: No, we can do that better. Again, research shows that repeal of death taxes will create more than 275,000 jobs in the next 10 years; that it will increase the gross domestic product by more than $1 trillion; and it could increase capital stock by $1.7 trillion. It sounds to me as if there is another side of this argument --that getting rid of this unfair, unjust, and immoral tax would actually be an economic benefit to millions of Americans and to the Federal Government, for one. With such economic growth, Federal revenues would grow higher as well. Even Washington would benefit if we could get rid of this tax. But they can't see past the blinds. They say: No, we have to continue to penalize these people; we have to continue to take their money; we dare not to do that. Congress can and should help working Americans keep their family assets by eliminating the damaging estate tax. I strongly urge my colleagues to vote to repeal this tax. In the next few weeks, the Senate will be considering other important legislation to provide meaningful tax relief for working Americans, such as marriage penalty tax relief. I believe all of these efforts are critical to help ease the tax burden on American families against the marriage penalty. Why do they call it a penalty? It is an unfair tax because, if a couple decides to get married, the Government wants to take more money unfairly. It is unjust. The estate tax is not different. I know President Clinton said one time at a news conference a couple of years back, well, it might be an unfair tax but Washington needs the money--something in that respect. I am not quoting him word for word. But that was the gist of it; that somehow Washington needed the money even though it was unfair to take it, or it wasn't the right means of extracting more money from Americans, but somehow Washington needed it. Now we need even more because Washington can do better. I believe all of these efforts, however, are critical. If we can get rid of the death tax and help to ease or eliminate the marriage penalty tax, it would help ease the tax burden on American families. I again quote these numbers. It says here that research shows the repeal of the death tax will create more than 275,000 jobs in the next 10 years. It will increase our gross domestic product by more than $1 trillion. It will increase capital stock by $1.7 trillion. There would be a lot of financial advantages. I also hope in the second reconciliation legislation Congress can consider and pass tax relief for American seniors by repealing all of the taxes on their retirement benefits. Again, this administration and this President decided to increase taxes on the senior citizens receiving Social Security. They increased their taxes in 1993. That is another tax that I think we should repeal. We talk about seniors not having enough money; that they have to decide between meals and medicine. They have to do that because Washington has decided to take more of their money. We need to repeal that tax on our senior citizens as well. I challenge President Clinton to sign these tax relief measures into law so the American people can keep a little more of their own money for their own priorities and so they can make the decisions on how that should be done. Again, I strongly urge my colleagues to vote in support of repealing the estate tax--the death tax--along with these other taxes to give Americans the ability to keep a little more of their hard-earned money. I thank the President. I yield the floor.

Mr. GRAMS

Mr. GRAMS. Mr. President, I rise today to discuss the devastating storms of last week that are affecting much of northwestern Minnesota. We are experiencing some of the worst flash flooding in over 100 years. These storms dumped more than 7 inches of rain in the Moorhead, Minnesota and Fargo, North Dakota area in an eight-hour period, swamping hundreds of basements, and streets, and acres of farm land. This past weekend, I had the opportunity to see first hand the effects of the storm when I visited the communities of Ada, Borup, Perley, Hendrum, and Moorhead. Actually, I had originally planned before the storm on being in the area to celebrate the grand opening of the Ada Hospital following its destruction during the Floods of 1997. Just three short years ago, Ada was hit with the worst flooding in 500 years. They are still recovering from that flood. How do you explain floods like these? They don't just happen once in a while contrary to reports of 100 or even 500-year floods, they've been happening every year in northwestern Minnesota. Last year, Ada experienced severe hail storms and a Labor Day flood. In 1998, there were three floods in February, May and June. In 1997, of course, there was the huge flood in the Red River Valley. Swollen from the heavy rains, the Wild Rice River became a huge pool of water 25 miles wide and 30 miles long that flowed steadily overland through northwestern Minnesota, drowning millions of dollars worth of crops in its path. The pool developed as heavy runoff collected at higher elevations in Becker and Mahnomen counties, then flowed into the Red River Valley toward Ada. You have to realize that this land is very flat, dropping only about one foot per mile, so the water moves slowly, but causes severe crop damage. Several rivers converge and flood prevention measures have failed to funnel excess water into the Red River. I intend to work with representatives from the watershed districts, and the Army Corps of Engineers to see whether past flood control measures have resulted in what has become constant flooding in this area of northwest Minnesota and what can be done to alleviate this problem in the future. I saw fields with three or four feet of water that had been planted with wheat, soybeans, and sugar beets earlier this year. Now, these crops are all destroyed, and the stench of rotting crops has begun. Earlier this week, Governor Ventura declared this area a state of emergency so that federal, state and local emergency management officials can work together to assess the damage and see whether federal assistance will be required. As if this wasn't enough, eight counties in southeastern Minnesota were declared emergency areas and Governor Ventura has asked the federal government for money to help with their recovery following rainstorms of May 17th. I was happy to support the Governor's request and to learn that President Clinton has declared this region a disaster so that they are eligible for federal funding. This region of Minnesota received 5 to 7 inches of rain on May 17th, followed by another heavy storm May 31. Since then, even small rainfalls have resulted in overflows and drainage problems. It's too early to tell the extent of the damage in northwestern Minnesota. Preliminary estimates include damage to 430 houses, primarily in the Moorhead area, and $10 million damage to crops in Becker and Mahnomen counties. But losses will go much higher. The greatest crop damage appears to be in Clay and Norman counties. There, crops have been damaged or destroyed on more than 500 square miles of land, according to county officials. That could mean $50 million in lost crops, and half that again in out-of-pocket planting costs. Flooding remains a serious blow to farmers in Minnesota. There are about 300 commercial farmers left in Norman County in northwestern Minnesota. They've been losing 20 or 30 farms every year recently. It's too late to plant any cash crops in that part of the state. Some farmers will plant a ``cover crop'' to control erosion; others simply will try to control weeds and start planning for next year. As in every disaster that my state has faced, I've been inspired once again by the people of Minnesota, who rally together for their communities when tragedy strikes. It's during critical times such as these that we finally understand the importance of neighbor helping neighbor. At a time when we all too often fail to make the effort to get to know and appreciate our neighbors, Minnesotans in a great many of our communities have formed lasting bonds over this past week and found their civic spirit has been restored. Mr. President, I intend to work with Governor Ventura to examine the need for federal funding to help those Minnesotans devastated by this most recent flooding. I also want to work with the Governor, the Farm Services Administration, and the Department of Agriculture in anticipation of federal funding needs for farmers who have had severe crop losses. I stand together with my colleagues in the Minnesota delegation, and with our colleagues from North Dakota who are facing destruction in their states equal to our own. When disaster strikes, we are not Republicans or Democrats. We are representatives of the people, and we will do whatever we must to protect our citizens when their lives, homes and property are threatened.

Mr. GRAMS

Mr. GRAMS. Mr. President, I come to the floor today to discuss an issue that has become increasingly important to many in Congress. As an early sponsor of legislation to provide prescription drug coverage under Medicare, I am pleased there has been progress in reaching an agreement among many proposals to provide prescription drug benefits to seniors. Medicare recently celebrated its 35th anniversary. As with most things in life this program is now starting to show its age. Still being administered under a model developed in 1965, Medicare is quickly becoming antiquated and blind to the many advances in modern medicine. We all know prescription drugs play an increasingly important role in the health of our nation. There are countless examples of drugs which now allow us to live longer, more productive lives. Drugs to control blood pressure, lower cholesterol, or mitigate the effects of a stroke are a few which demonstrate the measurable impact research and development can have on improving our lives. Unfortunately, the Medicare program has not progressed as rapidly as medicine. To that end, I introduced the Medicare Ensuring Prescription Drugs for Seniors Act, or MEDS. My bill was an early attempt to heighten the debate surrounding prescription drugs, and at the same time provide a plan that would address the needs of the nearly one third of senior citizens in this country who currently lack any form of prescription coverage. We have all heard the frightening stories of the choices that many seniors are forced to make when it comes to paying for prescription drugs. Unfortunately, many of these stories have been politicized and used to stir the political cauldron over the past several months. But the reality is that decisions between food, shelter, and medicine are all too common among our neediest seniors. MEDS was introduced to help these people. My plan would add a prescription benefit under the already existing Part B of Medicare, without creating or adding any new overly bureaucratic component to the Medicare program. It works like this: The part B beneficiary would have the opportunity to access the benefit as long as they were Medicare eligible. Those with incomes below 135 percent of the nation's poverty level would be provided the benefit without a deductible and would only be responsible for a 25 percent co- payment for all approved medications. My bill also provides relief for seniors above the 135 percent income threshold who may face overwhelming drug costs because of the number of prescriptions they take or the relative costs of them, by paying for 75 percent of the costs after a $150 monthly deductible is met. Most importantly, this voluntary benefit does not have a treatment cap. Unlike both the President's plan and others currently being debated in Congress, MEDS covers all participating beneficiaries no matter what level of monthly or annual drug expenditure they incur and does not abandon seniors when they need help the most. The House of Representatives narrowly passed a prescription drug bill that subsidizes the insurance industry and attempts to ensure coverage in all areas of the country--a difficult if not impossible task. The biggest problem with this approach is that the insurance industry has stated that it wouldn't be able or willing to provide these types of ``stand alone'' policies no matter how much of a subsidy they receive. Trying to establish an enormously expensive and administratively difficult plan built on the mere hope that the insurance industry will change its mind, is simply too big a risk to take when it comes to our nations seniors. The House bill would establish a new outside agency through the Department of Health and Human Services to administer the plan. Not only will this compound the problem of administration, implementation and increasing federal bureaucracy, but it also actually delays benefits that will help our seniors today. There is no way a major new bureaucracy can be created and become effective in time to provide the help our seniors need now. At a minimum, based on similar initiatives in the past, it would take two years to gear up this kind of new government agency, which again, only duplicates existing federal bureaucracy and slows progress toward meaningful reform. It's important these facts are understood as we continue discussing emerging plans for a prescription drug benefit under Medicare. How a plan is structured could have dramatic consequences for future innovations in treatments which can enhance quality of life and in some cases save lives. If done right, we'll enable all senior citizens to access the best health care system in the world and receive the latest technology and treatment for their conditions--and do it in a way that is both responsible and expedient. MEDS accomplishes both of these goals. In closing Mr. President, let me say, as I have in the past, the challenge before us today is to enable Medicare to shape and adapt itself to reflect the realities of an ever changing health care system. After 35 years of endless tinkering, we have a real opportunity to make it more responsive, more helpful, and more attuned to the needs of current and future retirees and disabled persons in this country through the provision of a prescription drug benefit. This is a goal to which I am wholly committed.

Mr. GRAMS

Mr. GRAMS. Mr. President, I come to the floor to recognize the birthday of one of the most important programs known to the American people today: Medicare. Thirty-five years ago this week, the Medicare program was established in order to provide timely, quality health care coverage for America's retirees and the disabled. Today, the Medicare system still serves this country well, and I believe issues relating to its modernization, long-term solvency, and improvement should be among our top priorities in this legislative session. The Balanced Budget Act of 1997 had a tremendously detrimental effect on provider payments under Medicare and on the organizations that deliver daily care to our seniors. The provisions in the Balanced Budget Act (BBA) relating to Medicare were designed to gradually help control costs to the program. Instead, the result has been an affront to organizations fighting for their existence. As a Member of the Senate, I meet with people daily from Minnesota who come to detail their concerns, their frustrations, and the impact the BBA continues to have on their institutions. These are institutions serving all segments of the healthcare industry, including inpatient and outpatient hospital care, skilled nursing facilities, home health care and emergency medical services. Prior to the BBA, my state of Minnesota already experienced one of the lowest capitation, or reimbursement rates, in the country, so the BBA and additional reductions in Medicare payment strategies have taken an enormous toll in my state. In fact, the situation has become so dire for so many institutions, providers and patients that the Minnesota Attorney General and the Minnesota Senior Federation have filed a lawsuit against the Department of Health and Human Services in an effort to restructure payment schedules and capitation rates under Medicare Part C, or Medicare +Choice. As I was working on my statement for today, I glanced across my desk and came across an advertisement that I think is relevant. The advertisement reads: ``Where Will Our Patients Go?'' It cites a new study conducted by Ernst & Young showing that between 1998 and 2000, hospital operating margins in the United States declined from 5.5 percent to 2.6 percent, a reduction of more than 50 percent in 2000. During that same period, hospitals' operating margins on services to Medicare patients declined from 2.5 percent in 1998 to negative 0.5 percent in 2000. Negative 0.5 percent. Translation: every Medicare patient that walks through the door of our hospitals and clinics cannot continue down this path of payment reduction while continuing to provide timely, quality health care services to our seniors and the disabled. I raise these issues to emphasize the measurable consequences of legislative efforts to date, and to outline the challenges we face when attempting to add a prescription drug benefit onto an already ailing Medicare system. That is why during the budget process, I, along with Senator Abraham and several of our colleagues, sent a letter to the budget resolution conferees requesting that language be included in the final report ensuring that any Medicare reforms, including the addition of a prescription drug benefit, would not be implemented at the expense of the provider payment rates that are in drastic need of restoration. The simple fact is that Medicare does require reform. What form that will ultimately take is really the question. Clearly, Congress has taken steps to reinvigorate Medicare since passage of BBA including: the Balanced Budget Refinement Act, which in a broad sense returned funds to hospitals for outpatient services; the Hatch bill, which reduced the arbitrary caps on complicated cases in skilled nursing facilities; and the American Hospital Preservation Act, which currently addresses the other half of the hospital equation inpatient services. But these are only band-aids applied to a system that needs comprehensive reform or modernization, including a prescription drug benefit. As you know, the Bipartisan Commission to Reform Medicare, under the direction of Congressman Bill Thomas, and Senators Breaux and Frist, advocated dramatic reform in order to better position Medicare in the future and enhance the benefits offered under the program. Their plan relied heavily on the injection of private-sector competition in managing benefits. My sense is, whatever additional reforms we pursue in Congress need to incorporate this kind of private-sector approach. By allowing the private sector to compete for the business of Medicare beneficiaries, both the Medicare system and the beneficiaries under it would stand to benefit from greater choice and greater flexibility when it comes to meeting their health care needs. In fact, Senators Breaux and Senator Frist have recently drafted a new proposal: Breaux-Frist 2000, the Incremental Bipartisan Medicare Reform and Prescription Drug Proposal. The proposal calls for a new Medicare agency outside of the Health Care Financing Administration and the Department of Health and Human Services, which would administer the competitive relationship between traditional Medicare Fee for Service plans and private plans, and would include a prescription drug benefit. Is this ultimately the approach we should take? I do not know. However, I am committed to exploring efforts like these that place a premium on reform or modernization, while attempting to improve benefit levels for beneficiaries through private-sector competition. One of the important improvements that has received a lot of attention lately is the provision of a prescription drug benefit. I think most of us would agree that were Medicare to be developed today, it would include a benefit of this type. Now, I am not a pharmacologist, nor am I a medical doctor, so when I first introduced my own prescription drug plan for Medicare over a year ago, I was amazed at the discoveries that have taken place in this area. The most remarkable thing to me is that not only do many of these new, innovative products slow the rates of disease progression, but they often create measurable differences in the number of emergency room visits, expensive and invasive procedures, and even deaths. Prescription drugs today have an enormous financial impact in terms of reducing overall health care costs over the long term and should be incorporated into the Medicare system. To that end, I introduced the Medicare Ensuring Prescription Drugs for Seniors Act, or MEDS. My bill was an early attempt to heighten the debate surrounding prescription drugs, and at the same time provide a plan that would address the needs of the nearly one third of senior citizens in this country who currently lack any form of prescription coverage. We have all heard the frightening stories of the choices that many seniors are forced to make when it comes to paying for prescription drugs. Unfortunately, many of these stories have been used to stir the political cauldron over the past several months. But the reality is that making choices between food, shelter, and medicine is all too common among our neediest seniors. MEDS was introduced to help these people. My plan would add a prescription benefit under the already existing Part B of Medicare, without creating or adding any new overly bureaucratic component to the Medicare program. It works like this: The Part B beneficiary would have the opportunity to access the benefit as long as they were Medicare eligible. Those with incomes below 135 percent of the nation's poverty level would be provided the benefit without a deductible and would only be responsible for a 25 percent co- payment for all approved medications. I think the neediest American seniors who are Medicare eligible should be able to access the benefits of medical technology like everyone else, and while they will be responsible for 25 percent of the costs, I believe the benefit will reduce the necessity for tough decisions between food and medicine. Most important, MEDS has no benefit cap. This allows seniors to access the care they need when they need it, for as long as they need it. My bill also provides relief for seniors above the 135 percent threshold who may be facing overwhelming prescription drug costs because of the number of medications they take, or the relative expense of them, by paying for 75 percent of the costs after a $150 monthly deductible is met. A provision of this type, in addition to the fact that there is no cap on the benefit, is necessary for those who confront high monthly prescription costs. An important part of my plan is that it is not universal and will not displace anyone from the private insurance coverage that they currently have and probably prefer. Rather, it is offered to provide prescription coverage to those who really need it. Is MEDS perfect? Will it appeal to everyone? Maybe not. But it includes principles that I believe must be included in order for any prescription drug bill to hit its mark. In closing, Mr. President, let me say that the challenge before us today is to enable Medicare to shape and adapt itself to reflect the realities of an ever-changing health care system. After 35 years of endless tinkering, we have a real opportunity to make it more responsive, more helpful, and more attuned to the needs of current and future retirees and disabled persons in this country. I can think of no better birthday gift for a program that has served so many--and for the aging, baby-boom generation--than a reinvigorating shot in the arm to Medicare that will deliver it into the twenty-first century and keep it healthy for years to come. This is something to which I am wholly committed.

Mr. GRAMS

Mr. GRAMS. Mr. President, I rise today, on the 66th anniversary of the National Credit Union Act being signed into law by President Franklin D. Roosevelt, to salute the Nation's credit unions and acknowledge their important contributions. Prior to 1934, collective pools of employees gathered their assets to assist them in acquiring credit and improving their financial futures. The first credit union in the United States was established in 1909, as the only financial institution available to low-income workers who wanted to save their wages and receive short-term consumer loans. In the spring of 1925, the Minneapolis postal employees collectively began Minnesota's first credit union with 15 workers attending the initial meeting. Started with a total of $146.25 in assets, the Minneapolis Postal Employees Credit Union, now called the US Federal Credit Union, has survived through times of economic hardship such as the Depression of the 1930s and World War II. Today, the Federal Credit Union System has well over $300 billion in assets, and some 67 million Americans enjoy membership in credit unions nation-wide. Credit unions bring together people with common employers, ethnic backgrounds, or geographic areas. They have positively impacted economic growth in the United States by increasing Americans' access to credit through a system of cooperative organizations which have helped stabilize America's credit structure. The credit union philosophy of ``people helping people'' continues to provide many rural and economically depressed areas with the financial tools and confidence necessary for success. In my state of Minnesota, more than 195 credit unions not only provide mortgages, loans, and financial savings opportunities, but also bring their communities together to raise money for programs such as ``Credit Unions for Kids.'' This effort is a collaboration of credit unions and business partners benefitting 170 Children's Miracle Network-affiliated hospitals serving 14 million kids nation-wide. Minnesota credit unions also provide funds for the Minnesota Credit Union Foundation, a non-profit corporation organized to serve charitable, scientific and educational purposes with special emphasis on credit union-related activities. Funds are used to provide disaster relief efforts for credit union members, develop credit unions in emerging nations, and supply scholarships to educational training programs. Mr. President, as a member of a credit union myself, I would like to thank America's credit unions on this anniversary for their constant and continuous efforts to assist the men and women of their communities overcome life's financial obstacles and build a more secure future for themselves and their families.

Mr. GRAMS

Mr. GRAMS. Madam President, fifty-five years ago, the members of the United Nation's founding delegation met in San Francisco for the signing ceremony that created the U.N. There was great anticipation and a collective enthusiasm for this new, global institution. Delegates spoke of hope, of expectation, of the promise of peace. President Truman echoed the thoughts of those founding members when he told the delegates they had, ``created a great instrument for peace and security and human progress in the world.'' Fifty-five years later, the United Nations is struggling to meet its potential. As Chairman of the International Operations Subcommittee which has U.N. oversight responsibilities and having been appointed by the President to serve two terms as a Congressional Delegate to the U.N., I have focused significant attention on the United Nations. On the anniversary of the signing of the U.N. Charter, I think it is appropriate to take time for us all to reflect on that important institution. The U.N. is making headway in implementing reforms, and I believe that is due in a large part to the efforts of the U.S. Congress. According to GAO, the U.N. has made substantial progress in restructuring its leadership and operations. It has also created a performance-oriented human capital system. Unfortunately, however, there is no system in place within the U.N. to monitor and evaluate program results and impact. In other words, the U.N. undertakes numerous activities on social, economic, and political affairs, but the Secretariat cannot reliably assess whether these activities have made a difference in people's lives and whether they have improved situations in a measurable way. I look forward to working with the U.N. to make sure in the future it will not just believe it is contributing to positive change, it will know it is doing so. As Secretary-General Annan noted, ``a reformed United Nations will be a more relevant United Nations in the eyes of the world.'' In the area of peacekeeping, the U.N. is clearly in crisis because many countries, including the U.S., keep calling on the U.N. to take on missions it is not capable of fulfilling. The U.N. can play a useful role in building coalitions to address matters of international security, as we saw in the Persian Gulf War. Moreover, the U.N. has the ability to effectively conduct traditional peacekeeping operations, such as those in Cyprus and the Sinai Peninsula. Unlike NATO and other regional military forces, however, the U.N. is only successful when it takes on limited missions where a political settlement has already been reached, hostilities have ceased, and all parties agree to the U.N. peacekeeping role. The U.S. must be careful not to set up the U.N. for failure. We risk ruining the U.N.'s credibility if we insist on a more robust peace making role for U.N. forces. In Sierra Leone, a feel-good U.N. operation with no impact on keeping civilians safe and with ``peacekeepers'' held as hostages sounds a lot like a replay of U.N. forces in Bosnia. I had hoped the U.N. learned its lessons since that terrible time. As we celebrate the anniversary of the signing of the U.N. Charter, we should celebrate the success of the U.N. without turning a blind eye to its failings. We should recommit ourselves to making sure the U.N. continues to reform. We should make sure our nation doesn't push the U.N. to do more than it can do effectively. If we do nothing, and in fifty-five more years the United Nations collapses under its own weight, then we will have only ourselves to blame.

Mr. GRAMS

Mr. GRAMS. Mr. President, as hate-crimes legislation was recently debated and voted on by the United States Senate, I would like to briefly explain my vote on this issue. I believe that all victims of crime, and most certainly victims of violent crime, are deserving of special status. After due process has been afforded and guilt determined, perpetrators of crimes should be punished speedily for the peace of the community and to bring some measure of resolution for the victim. However, creating different classifications of victims, and rendering punishment based upon such classifications threatens the notion of ``Equal Justice Under Law,'' the principle that adorns the United States Supreme Court building and should suffuse our entire legal system. Violence itself, whether motivated by hate, revenge, greed, lust, envy, or some other evil motivation, threatens the peace of our communities and our citizens' sense of security. The Kennedy amendment would include minor crimes against property within the definition of hate crimes, but would not have included such heinous acts as the Oklahoma City federal building bombing, or the school shooting at Columbine High School, both of which left lasting, painful memories for the local communities in Oklahoma and Colorado, and even the Nation as a whole. Rather than focusing on the particular motivation of the criminal, Congress and the states should provide law enforcement officials the resources necessary to fully prosecute all crimes. The diligent enforcement of existing laws will serve as an effective deterrent against criminal acts motivated by bigotry and hate, or any other distasteful compulsion. A more comprehensive strategy than what is embodied in the Kennedy amendment is warranted in light of the fact that in 1998 there were 16,914 murders committed in the United States (an average of 46 every day), and of the 16,914, only thirteen were deemed to be hate crimes. I supported the Hatch amendment, which studies how extensive the hate crimes problem is and whether these heinous crimes are being fairly and aggressively prosecuted in the same manner as other similar crimes. I also welcome the Justice Department technical and financial assistance to states which need help in pursuing and identifying hate crimes. This is a far better role for the federal government than moving to federalize all state actions against hate crimes. The Kennedy amendment also raised concerns by experts about constitutionality. Ultimately, it threatened to create more problems in the criminal justice system than it purported to solve, and I consequently voted ``no'' on the amendment and yes on the more reasonable Hatch amendment. I pledge to my constituents that I will support aggressive state prosecution of hate crimes, and I will continue to work to maintain safe communities, including actively supporting legislation that furthers that end.

Mr. GRAMS

Mr. GRAMS. Mr. President, I will take a few minutes this morning to talk about an industry that is very important to the State of Minnesota, and that is our dairy industry. June is National Dairy Month, and I come to the floor today to pay tribute to the family farmers who rise early every morning to supply fresh milk to our Nation. We as consumers assume there will always be dairy products in our grocery stores, without considering the hard work that is a daily requirement to get them there. I grew up on a dairy farm myself, and I can remember those early morning milkings before going to school and again, of course, when I got home. I don't take for granted the hard work required of dairy farmers to make a living. Unfortunately, for Minnesota dairy producers, it is becoming harder and harder just to make a living. The dairy compact in New England, which sets a price floor for that region, is spurring overproduction that is spilling over into the Midwest and is depressing the price received by Minnesota farmers. Previously, I have come to the floor to address the false claims that dairy compacts somehow are necessary to ensure a consistent supply of milk to certain areas of the country, and also the assertion that dairy compacts save small family farms. Today, I want to turn to the claim that the overproduction that results from dairy compacts does not impact producers in noncompact regions of the country. It is basic economics that if you want more of a particular commodity produced, then you should subsidize its production. And it follows that if you want more milk produced, you set a floor price for it, and the volume of production will predictably expand. This may initially sound somewhat harmless, but the overproduction from dairy compact States has to go somewhere. It is currently going into noncompact markets for milk, cheese, butter, and powder, and that is mainly the Midwest. Dairy producers within the Northeast Compact currently receive a floor price of $16.94 per hundredweight for beverage milk, and you could never run enough ``Got Milk?'' commercials to increase beverage consumption in the Northeast Compact region sufficient to offset the excess production that results from this minimum price. So the consequence is that the excess flows into the markets traditionally served by noncompact producers--or, basically, dairy farmers in the Midwest--driving down the prices that our dairy farmers receive because of the oversupply of milk. To provide some context, upper Midwest dairy farmers largely produce for cheese markets. Approximately 86 percent of the milk produced in the Midwest goes into the production of cheese. I come from a State that has a comparatively small population and, thus, only a small portion of the milk produced by dairy farmers in Minnesota is consumed as a beverage. Our dairy farmers' livelihood depends on the income they receive in the cheese markets. The current price they receive is being, again, driven down, depressed by the influx of milk coming in from New England, again, because of the compact and the floor price for milk there that results from an artificially high compact price. Following implementation of the compact back in 1997, New England milk production and milk powder production has increased rapidly in response to these higher prices--just, again, basic economics. New England milk production actually rose more than three times the rate of growth in production in the United States as a whole. So dairy farmers in New England were producing milk at a rate three times faster in growth than the rest of the country. This increased production in New England, combined with falling milk consumption in the region due to the higher consumer prices--again, basic economics; you drive the price up, you get less purchases--set in place by the compact, again, resulted in regional surpluses that have been converted to milk powder. In fact, in the first year of the compact, New England powder production soared by 43 percent, which accounted for most of the increase in U.S. powder production during that year. The combination of increased production and lower milk consumption in the compact States due to higher prices, again, has created milk surpluses. That drives down milk prices for farmers outside of the New England compact. So it is directly hurting farmers in the Midwest. It also floods national markets with nonbeverage dairy products that compete with dairy products produced outside of the compact region. A January 1999 University of Missouri study found that higher milk production and less milk consumption in an expanded Northeast Dairy Compact and a new Southern Compact would cost farmers outside of those compact States a minimum of $310 million a year. So the dairy farmers who are having a hard time making a living right now would find their milk checks down $310 million a year. A May 1999 University of Wisconsin study found that the cost to farmers outside of the Northeast and proposed Southern Compact States would be at least $340 million a year. Again, these are tough times for Minnesota dairy farmers, and they cannot afford to lose that kind of income over and above what the compact States are already taking away from them. As I have said before, compacts are a zero-sum game, and all the income benefits that the large producers in New England derive come out of the pockets of consumers--low-income consumers, of course, are hit the hardest--and also producers in the noncompact regions. The mailbox price--actual income farmers get for their milk--was $1.87 per hundredweight higher in December of 1999 in the compact region than in Minnesota. The expansion of the compacts to the southern region of the country would put the cartels in half of the States, exponentially magnifying what happened in New England, making the problem worse than what it is today. New England has only 3 percent of the U.S. milk production, and the proposed Northeast and Southern Compacts would cover nearly 40 percent of U.S. milk production. The thought of how this unprecedented expansion of the cartel would affect producers in my State and how it would affect the prices consumers pay only increases my resolve to fight compact expansion and work for revocation of the current compact. It would be a tremendous cost to taxpayers in the form of higher costs for school lunch programs and other food nutrition programs. It could also lead to higher Government storage costs and maybe even another round of a dairy buyout program--a cost that could run into the millions, if not billions, of dollars. If you are concerned about returning some sanity to our dairy markets, then I ask you to join me as a cosponsor of the Dairy Fairness Act, S. 916, which repeals the Northeast Dairy Compact. Compact supporters can't win in an honest debate on the floor, so we are continually subjected to the end-of-the-session arm-twisting going on in conferences to keep this cartel alive. That is how the compact got started in the first place, when the 1996 farm bill was held hostage in committee until the compact was added. We need to work for a national dairy policy that is fair to all producers, not one that artificially expands production in one portion of the country, which directly impacts the price received in other areas of the country. Again, the notion that compacts don't adversely impact producers outside the region is another dairy myth that must be put to rest if our country is to move toward a national dairy policy, again, that is fair to all producers. As we celebrate National Dairy Month, I hope Congress will gain new resolve to create a dairy policy that is not based on ``robbing Peter to pay Paul,'' which is what is done when you cut through the rhetoric. It is the fundamental principle undergirding the concept of dairy compacts. I yield the floor.

Mr. GRAMS

Mr. GRAMS. Mr. President, Valley Forge, Gettysburg, Normandy, Pusan, Panama, and Kuwait are well-known names in our nation's history. I proudly rise to honor an American institution that has proven its unparalleled greatness time and again in battles such as these. I ask my colleagues to join me in recognizing today as the 225th anniversary of the U.S. Army. When the Second Continental Congress established the U.S. Army on June 14, 1775, it set forth an organization that has repeatedly faced adversity straight in the eye and never backed down. From fulfilling the promises of the Declaration of Independence to countering Saddam Hussein's aggression in Kuwait, the Army's dedication to our nation's bedrock values and its protection of our cherished freedoms has been exemplary. For more than two centuries, Army personnel have rallied to both defend our American shores and ensure the rights of citizens around the world. The role of a soldier has changed drastically over the Army's rich, 225-year history. Technological and political changes have altered the battlefield landscape, but the core principles the Army consistently upholds have not changed. Those principles were captured by General Douglas MacArthur in his 1962 address at West Point: Duty, honor, country: Those three hallowed words reverently dictate what you ought to be, what you can be, what you will be. They are your rallying point to build courage when courage seems to fail, to regain faith when there seems to be little cause for faith, to create hope when hope becomes forlorn. While many of the Army's accomplishments have been in battle, others have come during pivotal moments of peace. Since its inception, the Army has been instrumental in humanitarian and disaster relief efforts that have helped countless citizens in their greatest time of need. By helping tornado victims throughout the American Midwest or assisting in the flood-ravaged areas of Mozambique, Army personnel serve honorably. The Army has a long history of turning ordinary men and women into distinguished soldiers. Currently, there are about 480,000 soldiers on active duty, comprising the premier fighting force in the world. Whether it is the most senior Army general or the soldier standing guard at the North Korean border, the quality of our soldiers is unsurpassed. It is consistently proven that the investment we make in our military personnel today reaps the leaders of tomorrow. One of my highest priorities here in Congress is maintaining the strength of that important investment, because it is crucial to our future. At the very root of our national security is the well-being of our soldiers. This includes supplying the best technologically advanced equipment in the world and ensuring our Armed Forces are funded at levels that adequately compensate our dedicated servicemen and women. The dedication and sacrifices demonstrated by millions of Army veterans must never be forgotten, nor should their needs be neglected; honoring the commitments this nation has made to its veterans is vital. As we celebrate the Army's 225th anniversary today, I encourage all Americans to reflect on the blanket of freedoms we are blessed with, thanks to the sacrifices made by those who valiantly heed the call of duty by serving in the United States Army, both in war and peacetime. I am proud to join my colleagues in congratulating the Army on this impressive milestone.

Mr. GRAMS

Mr. GRAMS. Mr President, I would like to pay tribute today to Special Agent Donald (Dee) Levin on his retirement from the Federal Bureau of Investigation after 29 years of service. In 1967, shortly after graduating from the University of Minnesota, Dee joined the Marine Corps, where he served in Vietnam. Dee began his career with the FBI in 1971, starting out in the Indianapolis and Detroit offices before moving to Minnesota in 1980. Since then, he has worked in the Minneapolis field office as the technical coordinator. The FBI is a worldwide leader in crime investigation and crime solving. The respect commanded by the FBI is due in large part to the individual agents, like Dee, who serve with honor and integrity in their duty to make the United States a safer place to live. Dee will be very busy in his retirement. As new grandparents, Dee and his wife Judy look forward to spending time with their family and remaining active in their church, Galilee Lutheran. I admire Dee's dedication to the FBI and on behalf of all Minnesotans, I thank him for his service.

Mr. GRAMS

Mr. GRAMS. Mr. President, I thank Chairman Warner for his help and leadership in accepting my amendment to help our National Guard and Reserves. Without his steadfast support for our military personnel, the changes being endorsed in my amendment would not be possible. In an attempt to maintain a strong national defense despite budget cuts, the President has increasingly asked the Guard and Reserves to make up the difference. Work days contributed by reservists have risen from 1 million days in 1992, to over 13 million days last year. If you look at the Armed Forces personnel participating in the Bosnia and Kosovo operations, 33 percent are members of the Guard and Reserves in Bosnia and 22 percent in Kosovo. The National Guard can provide many of the same services as the active duty personnel at a fraction of the cost. But what impact does this have on Guardsmen, Reservists, and their families? I support the total force concept, but I don't believe we can afford to balance DoD's budget on the backs of our citizen soldiers and airmen. That's why I introduced this amendment to the Defense Authorization bill, along with Senators McCain, Allard, Sessions, Ashcroft, Warner, and Levin. My amendment addresses quality of life issues. It extends space required travel to the National Guard and Reserves for travel to duty stations both inside and outside of the United States. It also provides the same space available travel privileges for the Guard, Reserves, and dependents that the armed forces provides to retired military and their dependents. My amendment gives them the same priority status and billeting privileges as active duty personnel when traveling for monthly drills. It raises the annual reserve retirement point maximum, upon which retirement pensions are based, from 75 to 90. Finally, it will extend free legal services to Selected Reservists by Judge Advocate General officers for a time equal to twice the length of their last period of active duty service. I believe the dramatic increase in overseas active-duty assignments for reserve members merits the extension of military benefits for our Nation's citizen soldiers. It is only fair to close these disparities. This amendment would restore fairness to Guard and Reserve members, and it would strengthen our national defense and increase our military readiness by alleviating many of the recruitment and retention problems. These are difficult days, without clear and easy answers. But I'm glad that, as we often have during trying times, we're able to turn to the men and women of the National Guard and Reserves to help ease the way. We must not forget their sacrifices. For in the words of President Calvin Coolidge, ``the nation which forgets its defenders will itself be forgotten.''

Mr. GRAMS

Mr. GRAMS. Mr. President, I ask unanimous consent that following the official Senate photo, the Senate begin consideration of S. 2549, the Department of Defense authorization bill.

Mr. GRAMS. I thank the Chair.

Mr. GRAMS

Mr. GRAMS. Thank you very much, Mr. President. I thank my colleague from Wyoming for all his good work in trying to keep us focused on the issues about which we are concerned.

Mr. GRAMS

Mr. GRAMS. Mr. President, I want to take time today to again talk about what I think is one of the most important issues facing Americans this year, and probably in the next few years; that is, what is the future of Social Security? How are we going to make sure we have a safe and sound retirement system not only for those on retirement today and those about to retire, but also for our children and our grandchildren? I have held around the State of Minnesota more than 50 townhall meetings trying to outline the problems facing Social Security today, and a plan I have introduced called the Personal Security and Wealth in Retirement Act, which would move from a pay-as-you-go system to a fully-funded, market-based personal retirement accounts. When you look back at the last 65 years of Social Security, it has basically done the job we have asked it to do; that is, to provide retirement benefits for millions of Americans. But if you look ahead to the next 30 years, the system has problems. It is facing some real problems. It is being strained to the limit. In fact, there will not be enough dollars collected in the system to pay the benefits the Government has promised. If the Congress does nothing, Social Security benefits will have to be reduced as much as one-third or more over the next 25 years. The biggest risk to Social Security is to do nothing. And there are those who are willing to stick their heads in the sand maybe to get by another election and to ignore the problems facing Social Security. Let me go through some of these things very quickly. When Franklin Delano Roosevelt introduced Social Security in 1935, he had concerns that it would only be run by the Government. He wanted part of it to be private accounts. In fact, there was many Americans who were allowed to stay outside of Social Security. In fact, there have been a number of state and local governments over the years--as late as 1981--that saw this loophole, opted out of Social Security, and created their own personal retirement accounts. None of them, by the way, has failed; all have been successful. By that I mean they are paying better benefits to their retirees than Social Security is paying to our retirees today. President Roosevelt also said that there should be a three-legged stool for Americans' retirement: personal savings, pension, and Social Security. Social Security is just one of the legs. It was never meant to be the sole source of retirement benefits. But for millions of Americans today--when they are paying an average tax bill of nearly 40 percent of their wages in taxes, then they try to raise their family; buy food, clothing, shelter; put a little money away for vacations, and for education for their kids, et cetera--they do not have money left to save for their retirement. If you work for an employer that doesn't have a pension or 401(k), your only source of retirement is Social Security. Clearly, Social Security has stretched to its limit. Right now, 78 million baby boomers are ready to hit the system by the year 2008. The majority of Americans--nearly 90 percent--retire at the age of 62, not at 65. We are going to see baby boomers bumping into the system beginning as early as 2008. Social Security spending will exceed tax revenues by 2015. We hear about all of these surpluses in Social Security and the trust fund. But the truth is there is nothing in the trust fund but IOUs. Senator Fritz Hollings of South Carolina says there is no trust, and there are no funds in the Social Security trust funds. He is right. By 2015 there will be no more surpluses. In other words, if we are collecting $100 today and only spending $90, the other $10 is put into this trust fund. Of course, the Government borrows the surplus and spends it. By the year 2015, we will be bringing in $90 and paying out $100 or more. Where do we get the extra money? We are going to have to get it from the taxpayers. By 2015, taxes are going to have to be raised to cash in these IOUs in order to pay the benefits at that time. You hear a lot of Senators and others saying the system is solvent until 2037. That is only if we can raise taxes on workers to pay those benefits. That is the only way it can remain solvent. Congress is going to have to take action. The Social Security trust fund is going to be broke in 2037 unless we have the dollars to cash in those IOUs. The reason is our pay-as-you-go retirement system cannot meet the challenge of the demographic change. In 1940, there were about 100 working for every retiree. Today, there are a little over 2.5. By the year 2025, there will be fewer than 2. In 1940, with 100 people working, you only had to pay $10 a month to pay for a $1,000 benefit. Today, it is over $400. And we are going to ask our grandchildren to pay $500 or more in order to meet this obligation of retirement benefits. If you look over the next 75 years, it is going down like a rock. There is $21.6 trillion in unfunded liabilities. In other words, the benefits the Government has promised to pay--$21.6 trillion--are short of revenues we need to pay those benefits. How are we going to make them up? There are a couple of choices. We can raise taxes and tinker a little bit with the system. But you cannot tinker with $21.6 trillion deficit. They can cut benefits by a third of what retirees can expect to get. Or they can raise the retirement age. But that will not be enough to make up the $21.6 trillion in deficits over the next 75 years if we don't do make hard choice to save the system. My plan, the Personal Security and Wealth in Retirement Act, has a transitional cost as well. But it is the cost we have to pay anyway. It would cost about $13 trillion for us to make the transition to go from the Social Security system we know today to total personal retirement accounts. In other words, we are moving to a system where you have control over your retirement--not Washington--you decide when to retire, how much you want save and where you want to invest and how you want to control over your account. In reality, we have signed our name to a long-term contract that says we are going to guarantee retirement benefits for Americans forever. There is a cost because we have dug ourselves into a hole. Somehow we have to dig ourselves out. There is no free lunch. People around here can ignore it, but there is no free lunch. We are going to have to find a way to finance ourselves to reach our goals to have a safe, solid, and solvent Social Security system. The biggest risk is doing nothing at all. Social Security has a total unfunded liability of $21 trillion-plus. The trust fund has nothing but IOUs. Vice President Gore said let's pay down the debt and let's put the interest we save into the trust fund. But all he is talking about is adding more IOUs, not building assets in the Social Security trust funds. Instead, today, we have over $800 billion of IOUs, but in 15 years, he wants to have $3.5 trillion worth of IOUs--no real assets, but IOUs. Again, the only way you can get those IOUs cashed in is to go to the taxpayers and get more taxes from them. To keep paying Social Security benefits, we are going to probably have to look at least at doubling the FICA tax--the withholding tax-- within the near future; not 15.3 percent. By the year of 2025 or 2030, we could see our payroll tax rates increase to 25 percent to 30 percent of wages--nearly doubling the FICA tax in order to maintain the current benefits we promised. I ask many of our senior citizens at our town meetings to raise their hands if they think they have good retirement benefits from Social Security. If you talk about a $700 check a month, or a $680 check a month, or $1,100 a month, this is not good retirement. This is not the retirement I want. I don't think this is the retirement we want to leave to our children. But in order to maintain even that system, we are going to impose taxes on the next generation. If you have 25 percent in FICA taxes, then you add on the average Federal Government tax of 28 percent or 53 percent, and then add in Minnesota sales tax of 8.5 percent, you are at 62 percent. Then add in sales taxes, property and excise taxes--I mean every tax you can think of--our kids are going to be paying taxes that approach 70 percent of their income. Mr. President, is this the kind of future we want to leave our kids because we stick our head in the sand and do not want to face our problems? Why is Social Security a bad investment today? If a taxpayer retired in 1960, they probably got back all the money they paid in in 18 months. It was a tremendous return for the early retirees. Today, an average person retiring will get less than 2 percent return on his or her money paid into the system. Our minority population is actually getting a negative rate of return today. They are in fact subsidizing the rest of us. The markets have paid back nearly 11 percent, but when we filter out inflation, it is better than a 7 percent annual return in the market. What would any person rather have? If an investment counselor said: I can up a plan, but it will not pay very good, less than 2 percent, so anyone 50 or younger, by the time they retire, it will be a negative; or we can put taxpayers in a new plan paying 7, 8, 11, 12 percent, what will you do? There will not be many at the desk signing up for a plan paying zero or giving a negative return on the money. Mr. President, there is no Social Security account with your name on it. A lot of people don't realize that. After a lifetime of working, taxpayers think there is an account in Washington that has their name on it. There is not. You don't have one dollar set aside for your retirement today. The only thing you can hope, in our pay-as-you-go system, is that when you retire there are people working so we can deduct money from their check to pay your benefit. It is a pay-as-you- go system. The money we bring in the first of June will be paid out in benefits by the end of June. It is a pay-as-you-go system, with no accumulation of wealth, no real assets, no compounding of interest. By the way, we talk about these IOUs in the trust fund that will make the system solvent. In the President's own budget, he included this paragraph: These balances are available to finance future benefit payments and other trust fund expenditures. The IOUs are there to pay for the funds or payments to other expenditures, ``but only in a bookkeeping sense.'' In other words, they are not real. Members on the floor will say: We have the IOUs. That is great, ``but only in a bookkeeping sense.'' There is nothing there. You can place a million-dollar IOU in your checking account and see how many checks your banker allows to be written against the IOU. None, until you put money in the account. ``They are claims on the Treasury, that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures.'' Do we want to reduce Social Security benefits or cut education, transportation, or health care? If we don't make some hard choices now we will be faced with tougher decisions later. We have these IOUs because the government spent all the surplus in the Social Security Trust Funds. The first step to save Social Security is to stop the government spending Americans' retirement dollars for nothing but their retirement, to keep the dollars outside the hands of the big spenders in Washington and to make sure we set aside the surplus funds today. We have not done it in the past. It needs to be done. I have introduced a second lockbox that says if our estimates are wrong--best faith estimates on what we spend and what we bring in--if we are honest and do not want to spend a dime of Social Security, if the estimates are wrong and we overspend, we need to go back and lower everybody's budget across the board. Perhaps take a .003-percent reduction so we don't have to go into the trust fund, and we will not spend a dime of Social Security. Mr. President, I have six principles for saving Social Security. I began working on this 7 years ago. I introduced this plan 3 years ago. I said then it would be a major issue in this Presidential debate. It is. I am glad governor George W. Bush has announced his plan to allow at least some privatization for improving and saving the system. And Vice President Al Gore has made a statement--he doesn't want to do anything. He wants status quo, he wants to tinker with the system. That means, again, raise your taxes even more. We need to make sure we protect current and future beneficiaries. Anyone on Social Security, about to retire, or who wants to stay with it, should be able to so do. It is your option; we will guarantee those benefits. Don't be concerned about it. We will hear scare tactics that somehow this plan is not going to work, we are only going to rob the elderly, and we will not have a safe Social Security. That is hogwash. We will always guarantee those benefits. Allow freedom of choice. If you want to have a personal retirement account, you should have that option as well. The Government should not stand in your way and say, no, we are going to keep you locked up in a system that will pay you little or nothing on your return. Preserve the safety net. Again, I have heard the scare tactics that there are no safety nets in the PRAs. That is a lie. Under our plan we have the same safety nets as Social Security. We have survivors benefits, disability benefits, built into the program. It is the same thing, but our plan pays dividends and higher returns than Social Security. The bottom line is we have the same safety nets. Make Americans better off, not worse off. Today, nearly 20 percent of Americans, when they retire, retire into poverty, because Social Security is all they have--or very little else--and it is not enough to keep them off the poverty. Our system says when you retire you will have a minimum of 150 percent of poverty. Right now, the poverty for single individuals is about $8,400 a year. Our plan says you have to have at least $12,800 a year to retire. We make sure you don't retire into poverty. The people most affected are elderly women and widows. The Social Security system today discriminates against women. Again, we will hear stories that PRAs discriminate against women. That is not true. The current system is the culprit. Changing the system will improve retirement for millions of Americans today, including our elderly ladies. Create a fully funded system. Make sure if you have an option for private retirement accounts, you can do that. Most importantly, no tax increases, no tinkering with the system. I introduced my plan, the Personal Security and Wealth in Retirement Act, in the last Congress and the 106th. I will keep introducing this plan until we do something on it. How does the plan work for retirement options? Workers may divert 10 percent of their income into a personal retirement account to be managed by Government-approved but private investment companies, similar to 401(k)'s and IRAs and FDIC accounts. We make sure they are safe and sound. Somebody making $30,000 a year now pays $3,720 into Social Security. Our plan says $3,000 goes into a personal retirement account. At the end of the year, you don't just have a promise, you actually have a savings book that has $3,000 cash, plus interest. The other 2.4 percent, $720, goes into the SSA, Social Security Administration, to help fund part of the financing plan for those who want to stay on Social Security, to guarantee their benefits. Right now in personal retirement accounts, someone earning $36,000 a year pays in the maximum to Social Security, and receives $1,280 a month as a maximum benefit. Take just 10 percent of that income, put it into an average market account, you will have a benefit of $6,514 a month. That is a big difference, five times better under the private retirement account than what Social Security would pay. In addition, the safety nets are there for survivor and disability benefits. Don't let anybody say that somehow this isn't as good or better. Looking at the returns, people are talking about maybe 2 percent of your Social Security. After 40 years at 2 percent, you will have $171,000 in the account, plus reduced benefits from Social Security. So at least with partial reform plan, a citizen is better off and would have a little bit of reduced benefit from Social Security but will have $171,000 in the bank. Under my plan, you would have $855,000 based on a $36,000 income; $855,000 would have been put away for your retirement. The family with median income of $58,000, putting away 2 percent has $278,000 in the bank, and a reduced Social Security benefit. Again, better than what we have now. But you could have $1.4 million in a savings account in your name, cash, estate money, if you could put aside 10 percent of your salary. It is being done across the country. I discussed people in Galvaston, TX, with private retirement accounts who got the OK from Social Security to have their own retirement accounts in 1981. Social Security death benefits? My dad died at 61, we got $253. That is what Social Security offers. Galveston County that has their own private retirement accounts, receive an average $75,000 death benefit. Disability benefits for Social Security is $1,280; and Galveston, TX, is $2,749. What about retirement benefits? Social Security, a maximum on this average income is $1,280; Galveston County, nearly $4,800. By the way, Galveston has a conservative retirement plan, they invest very conservatively and they still pay those much better returns. One lady, by the way, named Wendy Cohill, her husband died at 44 of a heart attack. She was 42. She received $126,000 in death benefits plus what was in the account plus the survivors benefit that she used to pay to finish a college education. She was able to care for her family in her own home. If she would have had Social Security, she would have been under the poverty level. She said: Thank God, some wise men privatized Social Security here. If I had regular Social Security, I would be broke. The city of San Diego also has PRAs, a government employee, 35 years old, contributes 6 percent into the PRAs. After 35 years, they would receive a $3,000-per-month retirement benefit. Under Social Security, he would receive only $1,077 a month in benefits. I know the Senator from California said on the floor recently that personal retirement accounts are too risky and we cannot damage the foundation of Social Security. But last year, and I want to read this, the Senator from California--this is Senator Barbara Boxer along with Senator Dianne Feinstein and Senator Ted Kennedy, sent a letter to the President saying: ``Millions of our constituents will receive higher retirement benefits''--They are talking about the city of San Diego--``higher benefits from their current public pensions than they would under Social Security.'' In other words, they were telling the President to leave San Diego alone because the President's plan for saving Social Security included taking 1 percent, pooling the investments, but he also would take all these with private accounts off the table and put them all into Social Security. She did not like that. She says: Mr. President, millions of our constituents who will receive higher retirement benefits from their current public pensions than they would under Social Security, are appealing to their elected Representatives in Washington and we respectfully urge you to honor the original legislative intent underpinning the Social Security system-- That was to exclude these people from Social Security, exclude this provision from your reform and leave San Diego alone, they were saying. My question is, if the retirement accounts in San Diego are better than Social Security, why can't you and I enjoy a similar system? But if Social Security is better, as Senator Boxer, Senator Feinstein, and Senator Kennedy will support, then why don't they want the citizens who work for the city of San Diego to have that same benefit? A good question. I know I do not have much time left. Mr. President, how much time do I have remaining?

Mr. GRAMS. I will go through this quickly. I know we have others wanting to speak. As I said, this is not an experiment. This is being done around the world. Eleven countries now have privatized their retirement; 30 others are considering it. We like to think we are in the forefront of this. But when it comes to retirement benefits, we are behind the curve. Chile, 18 years ago, privatized their system because their system was much like ours. Franklin Delano Roosevelt and the brains in Washington did not create Social Security. It was modeled and copied from something that Otto Von Bismark put out in 1880. We adopted it almost exactly. So did Chile and just about every other country around the world. Chile, had the same problems or worse than what we are facing today. It went to bankrupt. They had to privatize their plan. By the way, 95 percent of the Chilean workers have opted into the personal retirement accounts. Their return last year was 11.3 percent. Ours, again, were less than 2 percent. British workers have chosen to go into PRAs. They have what they call their second tier Social Security, where they can opt from the Social Security System, like we have, into personal retirement accounts. In Britain, so far two-thirds of all British workers have opted into personal retirement accounts. They have enjoyed, over the past 5 years, a better than 10 percent return on their money. By the way, the pool of retirement in their retirement accounts in Britain exceeds $1.4 trillion. That is how much now they have put away in their accounts. That is more than the total GDP of Britain, and it is more than all other private investments in all the other European countries combined. So it shows you the power of private retirement accounts, and the accumulation of wealth. Many people say: I have worked for 30 years. I can't give up what I have paid into Social Security. We have a recognition bond. The Government knows exactly how much you have paid in. If you have paid in $20,000, if you paid in $40,000, if you paid in $90,000, we know. We would give you a recognition bond, plus interest upon retirement. Mr. President, we must take care of today's Social Security recipients. If an individual chooses to remain in the current system, we must guarantee their benefits. There is no increase in age of retirement, no cuts in benefits, no ifs, ands, or buts, and no raising of taxes. The plan preserves the safety net, as I said, for survivors benefits and disability benefits. Poverty, as I said, recognized that $8,240 a year--you have to have $12,400, so you would not retire into poverty, again, as nearly 20 percent of our Americans do. Funds that manage PRAs are required to buy the life and disability insurance to provide the safety nets I have talked about. For those who would come up short--and those would be very few--if you could not get $12,400 a year, we would come in and say we will fill your glass full so when you retire, you would retire with less than that. This is the only entitlement portion of our bill. Again, this is an important safety net of this system. Rules similar to those that apply to IRAs today would apply to PRAs. Also, a Federal personal retirement investment board would oversee it for safety and soundness to make sure your retirement funds are there, and are safe. Investment companies that manage PRAs would be required to have an insurance plan to pay at least a minimum of 2.5 percent. That would be a floor. Again, that is much better than Social Security, but at least it is a guarantee if something would go wrong you would at least have that as your investment. In addition, you decide when you want to retire. As I said, right now the Government controls your retirement. They tell you exactly how much they are going to take out of your check, they tell you exactly the day you can retire, and then they tell you what they are going to give you in benefits. In our plan, you have those controls. You make your retirement decisions. As soon as you can buy an annuity that will keep you 150 percent over poverty, you have met your requirement. You are not going to be a ward of the state. You ensured your future. You can stop. You can do what you want. You can arrange regular withdrawals, for the amounts that are above that requirement. To buy this minimum benefit, you would need about $125,000 in your account. If you are an average worker with earnings of $30,000, you would have $855,000 in your account, so you can use that other $750,000 any way you want. If you have a family, you could have $1.4 million. What are you going to do with the other $1.2 million. You can do whatever you want with that money; that is yours. You decide how you withdraw it. If you want to go to Europe? Write a check. Buy a new car? You can do it. Give it to your kid. You can do it. In divorce cases, PRAs are treated as common property. Upon death, PRAs go to heirs without estate taxes; no capital gains, so that at least you have created an estate, and this $1.2 million or $700,000 or whatever you had in your account is your money. Going back to Social Security, when you die, you get a $253 death benefit. Under this, you get a death benefit in our plan, a minimum, plus you would get what is left in your estate, whatever it might be. You can pass it on to your heirs, your spouse, your kids, your church-- wealth that you cannot pass on today because the Government takes all those benefits. Again, the bottom line is, no new taxes for this system. We do have a responsibility to bail ourselves out, but we are not taxing the system. Retirement income is going to be there whether you stay with Social Security, or if you choose to build a personal retirement account. You can decide the options, you decide how you want to invest it, and you decide when you want to retire. Let's make sure we give you choices. Just in concluding, despite our colleagues, our Democratic colleagues bashing Governor Bush's reform plan, its popularity is increasing among workers. I heard one say: I don't come out here and bash it. I want to study everything and I want to look over all of these plans. He hasn't even seen the Governor's plan. He doesn't really know what Vice President Al Gore has got. But yet he favors Al Gore over Governor Bush. Recent polls show most Americans support the idea of personal retirement accounts. In fact, if you are under 40 years old, more young people believe in UFOs than that they are going to get Social Security; 90-some percent of young people under 30 would opt into personal retirement accounts. I believe a national consensus can be reached on ways to save and strengthen Social Security. There will always be a retirement system in this country. What kind of system are we going to leave for our children and grandchildren? For many of us, if we are 50 years old, 55 years old, or older, we might have been condemned to the current system without time left in our working lives to change or take the option in the personal retirement accounts. We can tell our children and grandchildren we want to leave a 70-percent tax system for them, we want to leave them a plan that might guarantee they will get less benefits, pay more into it, and will have to wait longer to retire, or we can leave them an option for them to invest in their own retirement and have personal retirement accounts. The numbers show Americans overwhelmingly say: I am smart enough to handle my future. There are many in Washington who believe you are not smart enough; you may be smart enough to earn your money, but you are not smart enough to put it aside for your retirement and only Washington can step in and help you out. That's wrong. Our plan empower working Americans and offers better options and gives you control over your retirement. I thank the Chair. I yield the floor.

Mr. GRAMS

Mr. GRAMS. Mr. President, I ask unanimous consent that the Subcommittee on Administrative Oversight and the Courts be authorized to meet to conduct a hearing on Tuesday, June 6, 2000, at 11:00 a.m., in 226 Dirksen.

Mr. GRAMS. Mr. President, I ask unanimous consent that the Committee on Foreign Relations be authorized to meet on Tuesday, June 6, 2000, at 11:00 a.m.

Mr. GRAMS. Mr. President, I ask unanimous consent that the Committee on Environment and Public Works be authorized to meet on Tuesday, June 6, at 10:00 a.m., to conduct a hearing to receive testimony on S. 1311, to establish Region XI of the Environmental Protection Agency.

Mr. GRAMS

Mr. GRAMS. Mr. President, I want to briefly express my support for the crop insurance reform package that is being considered today, and the additional emergency assistance that was appended to the bill. This crop insurance reform is critically needed in the heartland of America. As the sponsor of the first crop insurance reform legislation introduced in the 105th and 106th Congress, I have worked hard on crop insurance reform and on keeping this issue at the forefront of congressional priorities, so it is gratifying to finally see this measure completed by conferees and the Congress. I worked with a committee of Minnesotans representing producers, lenders, agriculture economists, and other stakeholders to build a consensus on solutions to the current discontentment in rural America with the federal crop insurance program. I am pleased that the final bill contains the expansion of pilot programs I worked for, expansion of the dairy options pilot program that I cosponsored, and higher premium subsidies at the higher levels of coverage that was the critical portion of my original legislation. The premium subsidies will be crucial to help farmers manage their risk, and possibly reduce the need for ad hoc disaster assistance. Many producers believe that the current crop insurance program is too costly to take part in, and this reform measure should increase participation and thus spread risk more widely. I am also pleased that the crop insurance package includes an additional $7.1 billion in emergency aid to producers, which includes AMTA payments and oilseed producer assistance payments. This will hopefully give rural economies and farm families the financial boost they need until commodity prices start to rise again. While I have concerns about AMTA, this is the best way to quickly distribute these funds to farmers. I agree AMTA should be revisited in the next farm bill.

Mr. GRAMS

Mr. GRAMS. Mr. President, I rise today to promote awareness of missing children and honor those who work to search and rescue the thousands of children who disappear each year. As my colleagues may know, today is recognized as National Missing Children Day. In proclaiming the first National Missing Children Day in 1983, President Ronald Reagan noted, ``Our children are the Nation's most valuable and most vulnerable asset. They are our link to the future, our hope for a better life. Their protection and safety must be one of our highest priorities.'' Since that time, National Missing Children Day has been a reminder that we must strengthen our resolve to keep children safe. I believe that the Federal Government can help state and local law enforcement agencies reunite missing and runaway children with their families. In particular, the Missing, Exploited, and Runaway Children Protection Act enacted by Congress last year is an example of an effective federal and state partnership that reduces crime and prevents missing children cases. This law reauthorized the National Center for Missing and Exploited Children and the Runaway and Homeless Youth Program through fiscal year 2003 and provides local communities with the resources to find missing children and prevent child victimization. In my home state, the Jacob Wetterling Foundation and Missing Children Minnesota have worked effectively to locate missing children and raise public awareness about ways to prevent child abduction and sexual exploitation. Additionally, the Minnesota Association of Runaway Youth Services, comprising eighteen nonprofit agencies in Minnesota, has been instrumental in providing services to runaway and homeless youth and their families. Their efforts have been guided by the Runaway and Homeless Youth Program, which provides resources to community-based organizations to provide outreach, temporary shelter, and counseling each year to thousands of Minnesota's homeless young people. I am also working to secure federal funding to support the State of Minnesota's development of a statewide criminal justice information sharing system that would allow police, judges, and other criminal justice professionals to communicate quickly about the criminal histories of violent offenders. My proposal will help to provide local communities with the technology to identify criminals and protect our communities from sexual predators and violent offenders. As chairman of the Minnesota House Crime Prevention Committee, Representative Rich Stanek recently led the effort to pass ``Katie's Law''--legislation that will provide state funding for an integrated criminal justice system. I greatly appreciate Representative Stanek's dedication to improving the Minnesota criminal justice system and the opportunity to work with him on this very important public safety initiative. Mr. President, I again commend the numerous volunteers, organizations, businesses, state legislators, and government agencies who all work on a daily basis to find missing children. I look forward to our continued work together.

Mr. GRAMS

Mr. GRAMS. Thank you very much, Mr. President. I understand Senator Thomas is to control the time from 10 a.m. until 10:30 a.m. He will not be to the floor right away. I ask unanimous consent to have 15 minutes of additional time from Senator Thomas' time.

Mr. GRAMS

Mr. GRAMS. Thank you very much. Mr. President, I have a lot to go through in a very short period of time. But I wanted to come to the floor this morning to make a few remarks on a vitally important issue facing our Nation, which is how we are going to strengthen and save Social Security. But, first, I would like to commend George W. Bush for bringing Social Security reform to the forefront by proposing to allow workers to invest a portion of their Social Security payroll taxes in personal retirement accounts. I believe this is the best solution to the fast approaching insolvency of Social Security. Governor Bush's vision of courage and leadership is greatly appreciated by all of us who are concerned about saving this Nation's retirement programs, including the Senator from Pennsylvania, who is in the chair this morning, who has also worked very hard and tirelessly to find a way to save Social Security in the future. In contrast to the efforts by Governor Bush to explore solutions to fix our retirement system, his opponent, Vice President Al Gore, offers no workable plan and only politicizes the issue. He accuses Governor Bush of being too willing to take risks with the nation's retirement program. He also believes that younger workers should not be allowed to invest some of their payroll taxes because they would not be capable of managing their own investments. Besides the usual scare tactics, Vice President Gore has taken the same approach as President Clinton in dealing with Social Security problems--basically, they refuse to make hard choices and use double counting and other budget gimmicks to mask the threat to Social Security. Under current law, Social Security will begin running a deficit by 2015. The Clinton/Gore proposal would not extend this date by a single year. They simply put more IOUs in the Social Security trust fund which will significantly increase the national debt, and then claim they have saved Social Security. But their numbers simply do not add up. Between 2015 and 2036, the government will have to come up with $11.3 trillion from general revenues to make up the annual shortfall in the Social Security system. This is nearly three times the amount the government will save from paying down the publicly held debt during that period. Worse still, the Clinton/Gore plan does not trust the American people to manage their own money, and they instead propose government investment of Americans' Social Security surplus--this despite Vice President Gore's recent denial that their plan called for the government to invest payroll taxes in the stock market. ``We didn't really propose it. We talked about the idea,'' he said. Vice President Gore obviously has a short memory. He forgot their government investment proposal was included in their budgets for FY 1999, FY 2000 and FY 2001. I remember that when the Clinton administration first proposed the government investment scheme, I asked Federal Reserve Chairman Alan Greenspan whether we should allow the government to invest the Social Security Trust Funds in the markets, and whether or not this was the right approach. Here are his exact words: No, I think it's very dangerous . . . I don't know of any way that you can essentially insulate government decision- makers from having access to what will amount to very large investments in American private industry. . . . I am fearful that we are taking on a position here, at least in conjecture, that has very far-reaching, potential danger for a free American economy and a free American society. It is a wholly different phenomenon of having private investment in the market, where individuals own the stock and vote the claims on management (from) having government (doing so). I know there are those who believe it can be insulated from the political process, they go a long way to try to do that. I have been around long enough to realize that that is just not credible and not possible. Somewhere along the line, that breach will be broken. Mr. President, Chairman Greenspan was among the first to raise the issue of Social Security's unfunded liabilities and warned Congress a few years ago about the consequences if we fail to fix Social Security. Mr. President, we should never venture out onto what Chairman Greenspan calls ``a slippery slope of extraordinary magnitude.'' We must move from a pay-as-you-go system to a fully funded retirement system, which he supports. This is the only way to save Social Security. The recently released annual report of the Social Security Trust Fund's Board of Trustees shows it is even more urgent for us to find a solution to Social Security's approaching insolvency. The report shows some short-term improvement but continued long-term deterioration. The inflation-adjusted cumulative deficit between 2015 and 2075 is not projected to be $21.6 trillion, up nearly 7 percent from last year's projection. If the economy takes a turn for the worse, or if the demographic assumptions are too optimistic, the Trust Fund could go bankrupt much sooner. Clearly, Vice President Gore is just plain wrong about Social Security, about government investment, and the ability of working Americans to manage their own money. His use of scare tactics dodges the real issue: that we must solve the insolvency problem. Americans' retirement should be above politics, and we should have an honest debate on the best way to avoid the fast approaching Social Security crisis, and to ensure retirement security for all Americans. Mr. President, to achieve this goal, we must understand how we got here, what problems we are facing and what options we have to save our retirement system. Now, Mr. President, let us take a look back in time to see what we can learn and also what I believe is the best plan to achieve retirement security. Clearly, Vice President Al Gore is just plain wrong about Social Security, and I am glad that he and Governor Bush have framed the debate in what we are going to be talking about as far as Social Security over the next 5 months of a very important campaign and into the 107th Congress. I have been doing a series of town meetings in Minnesota, trying to outline the problems that we find with Social Security. Social Security has done the job we have asked it to do over the last 65 years; that is, to provide minimum retirement benefits to millions of Americans. But a public Social Security system was even questioned by Franklin Roosevelt back in 1935. He thought at one time during part of the debate that we should have included a private retirement account as part of the options. He even said when the Social Security program was created that he wanted the feature of a private sector component to build retirement income. It was not included. In fact, it was taken out in conference after being approved here on this Senate floor with the promise that a private investment concept would be brought back the next year to be debated as part of the Social Security program. That never happened. It was one of the first big lies dealing with Social Security. Why are we having problems today? Social Security is now a system being stretched to its limits. Seventy-eight million baby boomers will begin retiring in the year 2008. Social Security spending will exceed tax revenues by the year 2015. In other words, the surpluses we hear about today will not exist past 2015. In fact, at that time the system will be bringing in less money than the demand will be for those benefits, and the Social Security trust funds would go broke in 2037; that is, if we could turn the IOUs between now and the year 2015 into cash and be able to use them to supplement the system. Without it, the American taxpayer is going to be asked as early as 2015 to begin paying higher taxes to redeem those IOUs which exist today with the pay-as- you-go system. Why are we in trouble? Why is it being stretched to the limit? In 1940, there were about 100 workers for every person on retirement. You remember the old Ponzi system, the pyramid scheme, where you had a lot of people at the bottom and you could support a few at the top. That is the way the system was. It worked then because of the pyramid style of 100 workers and 1 retiree. Today there are about three workers for every retiree. By the year 2050, there will be about two workers for every retiree. So you can see the strain that we are going to put on the system. But what is the system? That system is going to be your children, your grandchildren, and your great-grandchildren. They are going to be put under a tremendous financial strain in order to support an outdated system. As I mentioned, right now we are in a surplus mode. But by the year 2015, we are going to begin accumulating deficits, and this is going to continue on a very downward pattern over the next 70 years. This is what we are going to accumulate. The Government is coming up short with more than a $20 trillion shortfall between the year 2015 and the year 2070. That means these are the benefits the Government has promised to pay and this is what we are going to come up with, and we will be short of revenues from the current FICA tax or withholding tax in order to pay these benefits. From where is this $20 trillion-plus going to come? As I said, it will come from paying back the IOUs that have already gone out. It is the American taxpayer who is going to see tax increases of at least twentyfold in order to do this. My plan, which is a totally funded retirement system, is going to cost--our estimate--at least $13 trillion, and it is going to take a little bit shorter curve in over to attain by the year 2050. We need to solve this problem, and we will be in the black in a system that will pay for itself by the year 2015. But if you look at the current system, in the year 2070, it is $20 trillion in debt, and it is heading downhill at an ever increasing rate. I am going through these a little fast because we don't have a lot of time this morning. But I will try to get in all of this information. The biggest risk we have facing Social Security today is doing nothing at all. Again, this is the way Vice President Al Gore has framed the debate. Let's do nothing. Let's just put our arms around this. Let's put a Band-Aid over the real problem dealing with Social Security or our retirement future. Let's put a Band-Aid over it and do nothing, despite the fact there is over $20 trillion in unfunded liabilities. The Social Security trust fund is nothing but IOUs. If this is how the system will remain solvent, I say why not write an IOU to yourself? Make it for $1 million; put it in your checking account. How many banks will allow you to write a check? Not one, until you redeem the IOU. To pay promised Social Security benefits, the payroll tax paid today, which is one-eighth of everything taxpayers make, will have to be increased by at least 50 percent or benefits will have to be reduced. We are leaving our kids and grandchildren a future of paying more for retirement, getting less, and they are talking of raising the retirement age further. Is that the kind of system we want to leave our children? I don't think so. Payroll taxes keep rising. Today, in the year 2000, 15.4 percent of your income is deducted in FICA taxes to pay for Social Security and Medicare. By the year 2030, that will be about 23 percent, according to low estimates; it will be about 28 percent according to even higher projections. Somewhere in between there is what we are going to see our children paying in FICA taxes. If they are paying nearly 30 percent in FICA taxes, and thrown on top of that is an average of 28-percent Federal taxes, we are now up to 48 percent. My home State of Minnesota has an 8\1/2\ percent State tax, so now we are 57 percent. Add in your sales tax, estate tax, property taxes, and everything, and our children are going to be paying taxes that could be in the range of 65 to 70 percent of their income. Again, is this the future we want to leave our children? Diminishing returns of Social Security is another problem. Right now, Social Security is paying less than a 2 percent return. If someone retired in 1950 or 1960, they got back all the money paid into Social Security within 18 months. Today's workers are getting back less than 2 percent on their investment. Many of the minority groups in our society are now getting a negative return. In other words, they are supporting Social Security with their dollars because they are receiving less because of life expectancy. For those today under 50 years old, when they retire they will actually receive a zero return or less, a negative return. I don't know how many people will stand in front of a window to invest their money when they are promising to pay you 2 percent and, in the future, less than 0 percent on the investment. I don't think many people want to do that. I compare this with the market return over the last 75 years. The markets have paid back better than 7 percent real return. This is after inflation adjusted. And this is 75 years, including the crash of 1929, the Great Depression and everything else. The markets have been a better source of revenue than what we can expect from Social Security in the future. There is no Social Security account with your name on it. I know a lot of people think: I have paid into Social Security all my working life; surely, there has to be an account in Washington in my name. There is not. There is not an account in your name. There is not one dollar set aside for your retirement. It is a pay-as-you-go system. All one can hope is when retiring there are people working yet so we can take money from their check and give it to you as a benefit in retirement. The money we collected the first of May will go out in benefits at the end of May. It is a pay-as-you-go system. No investments, no cash, no accumulation of wealth, no assets--nothing for your retirement, just the hope there will be workers. When they talk about solvency and Social Security until 2037, because of the IOUs, the President has actually had to put into his budget certain words so he is legally correct in dealing with the IOUs. The statement begins ``These [trust fund]''--and the Senator from South Carolina, Mr. Hollings, says there is no ``trust'' and there is no ``funds'' in trust funds. These [trust fund] balances are available to finance future benefit payments and other trust fund expenditures--but only in a bookkeeping sense. They are claims on the Treasury, that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures. In their own budget, they had to very clearly spell out that the IOUs we are talking about in the Social Security trust fund are nothing but paper. The Social Security lockbox is very important. The moneys we are taking in now, the surplus in Social Security, needs to be locked away. We need to save the Social Security trust fund dollars for Social Security and keep Washington's big spenders from using trust fund dollars for other Government functions. I introduced a Grams Social Security lockbox concept that takes care of this. The Grams lockbox offers a double lock on Social Security. It triggers an automatic reduction in all Government discretionary spending, including Congressional Members' pay, if any of the Social Security surplus is spent, returning it to the Social Security trust fund. In other words, in Washington, we are always at ``best guess'' estimates. We have an estimate on what our revenues will be, we have a best guess on estimates on what spending will be. My lockbox says we have promised not to take one dime from Social Security. If the estimates are off, even if only off a million dollars, all other spending would be reduced so Social Security would not pay one dime. Right now, any deficit spending has to come out of the surplus, and that is out of Social Security funds. If we are honest about not taking a dime out of Social Security, we should do that. My plan, the six principles for saving Social Security, protects current and future beneficiaries. Anyone on Social Security today or planning on retiring and staying with this system--that is your option--we guarantee protection of future benefits. That is a guarantee we have to make. Seniors today and those who want to retire should not be afraid of allowing their children or grandchildren to have options. We guarantee your benefits today. This is an agreement I believe the Government has made with you. Taxpayers have said: I will pay into the system, and I expect a retirement benefit in return. That is the agreement. I think we need to make sure that happens. Allow freedom of choice--your kids, your grandchildren to have the chance to have a private retirement account. Preserve the safety nets for disability and survivor benefits as the system today. Make sure that is included. Make Americans better off, not worse. My plan says you cannot retire with less than 150 percent of poverty. That is your income. Today, nearly 20 percent of Americans retire into poverty because Social Security is so low. The majority of those are women. Social Security is a system that discriminates against women. Create a fully funded system. And no tax increases in the future. The Grams plan, the Personal Security and Wealth in Retirement Act I introduced in September last year, and in the 105th Congress, my staff says, is the third rail of politics. Members cannot talk about retirement or Social Security or they will never get reelected. I thought it was so important we had to talk about it I said then it would become an important issue of this Presidential campaign. As I mentioned earlier, Governor Bush and Vice President Al Gore have now framed this debate and it will be an important part of the elections in 2000. Right now, 12.4 percent of workers' income goes into Social Security, one-eighth of everything they make. My plan says you can take 10 percent of your income and put that into a personal retirement account. That would be managed by Government-approved private investment companies. Safe and sound. We hear the scare tactics; we will invest your money and lose it. Some do better than others. They say you are too dumb to manage your own money. You don't know how to save for your future. Our plan says we have faith in you. Under Government-approved guidelines as those used in your IRAs and the FDIC account at your banks, provisions are made for safety. These plans are the same. Your retirement would be safe, sound, and secure. The only difference is it would accumulate and grow much faster, and taxpayers receive much better returns than Social Security. For those who say: I have paid into Social Security for so long, first, if your wage is $30,000, under Social Security today, $3,720 is put into the Social Security account. Under my plan, $3,000 goes into your account. A passbook shows assets of $3,000 plus interest at the end of the first year. The other $720 is part of our financing plan, to make sure there are benefits for those who stay in Social Security. The $720 goes into that system. Hopefully, that would be absolved in 20 years and would then be a tax cut. Ten percent of your salary would go into your account to begin to grow assets for you and your family. If you make an average of $36,000 a year, after your lifetime of work, $1,280 a month is your maximum benefit from Social Security. Take 10 percent, put it into an average return market account, and your retirement would be $6,514 a month, a much better return for your retirement than the $1,280. These are average returns, nothing spectacular, as we have seen in the markets as of late. Based on an income of $36,000--we have heard of everything from taking just 2 percent of the 12.4, maybe taking 6 percent or about half of the Social Security. My plan would put it all into private accounts, and these are what we could expect as the differences. After 20 years at 2 percent, you would only have $33,000 in a separate account. Under our plan, you would have, after 20 years, $168,000. But after a lifetime at an average income of $36,000, if you could take 10 percent of your wages and put it into a personal retirement account, you would have, not $171,000 but $855,000 cash money in an account for you and your family for your retirement benefits and part of your estate as well. That is for a single worker. An average family in the United States right now has an income of about $58,500. If we could take these same scenarios, after a lifetime of work, under 2 percent, you would set aside an additional $278,000 for your retirement--better than Social Security, granted, because this will be a supplement to that. But if you could put 10 percent away, you would have nearly $1.4 million put away for your retirement--$1.4 million put away for your retirement. That is after 40 years at 10 percent, with an average salary of $58,000 a year: $1.4 million on which you can retire. We look at Galveston County, TX. When Social Security was implemented in 1936, one part of the law said if you were a public worker and had a private retirement account, you did not have to go into Social Security. We have something like 5 million Americans who are public employees today who have their own private retirement accounts and are not in Social Security. Galveston County, TX, was one of those. They just entered in 1980, by the way, because an administrator found a loophole in the law. Of course, that was closed after Galveston County got out. But this is a comparison between Social Security and what Galveston County pays. They are very conservative, investing only in annuities, not necessarily in the market. This is what they paid: Social Security death benefit? My father passed away at 61 and received zero from Social Security, except for a $253 death benefit after a lifetime of work, investing in Social Security--$253. In Galveston County: A minimum death benefit of $7,500. Disability benefits under Social Security--maximum $1,280; for Galveston it is now $2,800 dollars. In retirement benefits per month: Social Security, $1,280 maximum; in Galveston, $4,790--much better returns. One lady's husband was 42; she was 44. He passed away suddenly from a heart attack. All she could say was, ``Thank God that some wise men privatized Social Security here. If I had had regular Social Security, I'd be broke.'' She would have been in poverty with her three children. After her husband died, Wendy Colehill was able to use her death benefit check of $126,000 to pay for his funeral and enter college. Under Social Security, she would have received $255. So she got a death benefit of $126,000 plus a survivors benefit to which Social Security never would have come close. She said, ``Thank God for Galveston.'' In San Diego, a 30-year-old employee who earns a salary of $30,000 for 35 years, contributing--in San Diego they only contribute 6 percent, not 12.4--6 percent, so they pay less than half into their retirement system than you do--would receive about $3,000 a month in their retirement compared to $1,077 under Social Security. They pay in less than half and get three times more. The difference between San Diego's system of PRAs and Social Security is more than three times better under their private plan. Even those who oppose PRAs--and there are many in this Senate who say, as Vice President Gore says, you just cannot handle your own retirement--agree that the system in San Diego is better. This is a letter written from Senators Barbara Boxer, Dianne Feinstein, and Ted Kennedy, among others, to President Clinton. Under the President's plan for privatizing any part of Social Security, he wanted to take all these employees and bring them into Social Security. Take Galveston County, San Diego, take all of them, and they would have had to become part of Social Security. But Senators Boxer, Feinstein, and Kennedy, among others, wrote to the President and said: Millions of our constituents will receive higher retirement benefits from their current public pensions than they would under Social Security. So they said leave San Diego alone. My question is, If Social Security is so much better, why don't the residents of San Diego, or the workers, get to enjoy that? But if private retirement accounts are better, why don't you and I get to enjoy the same thing as these three Senators speak of for San Diego? The United States trails other countries in saving its retirement system. For nearly 19 years Chile offered PRAs; 95 percent have opted into the system, and their average return last year was 11.3 percent. They have had much higher than that, but last year it averaged 11.3 percent. Among other countries that are going to private retirement accounts--and I am talking totally private retirement accounts--are Australia, Britain, Switzerland, and there are 11 others. Thirty countries today are considering doing that. We like to think we are ahead of the game on a lot of things here in the United States, which we are in most cases, but when it comes to Social Security, we are behind the curve of what other countries are doing. British workers chose PRAs with 10-percent returns. The question is, Who could blame them? Two out of three British workers are now enrolled in the second-tier; that is, private parts of their social security system. They chose to enroll in PRAs. British workers have enjoyed a 10-percent return on their pension investments over the last 5 years--a 10-percent return. I said our numbers are based on a conservative 7 percent. The pool of PRAs in Britain exceeds nearly $1.4 trillion today. That is how much they have accumulated in that account. That is larger than the entire economy of Britain, and it is larger than the private pensions of all other European countries combined. This is what the British workers have set away for their retirement. Say you are 45 year old. You say: I have worked 20 years; I paid into the system; How am I going to let that go? A lot of young people who are 45 say: If you just let me out of the system, you can keep everything I paid in. But we said, again, it is a contract with the Government. We need to have a recognition bond. This is a sample. But if you have paid in $47,000 or $91,000, we should recognize that in a bond--put that into your private account as seed money and pay you interest on it, due and payable when you reach the age of 65. If you choose to remain within the current system, the Government will guarantee your benefits--again, part of that contract. If you stay with Social Security, we are going to guarantee your benefits. If you are on retirement today, we are going to guarantee those benefits, preserve the safety net so no American will be retiring into poverty. Again, the poverty level today is $8,240 a year. That means in the United States, you would have to retire with at least $12,400 a year. This is again for a single individual. But you would not retire into poverty--providing safety and soundness. Again, they say this is risky. This is not risky. We have similar rules that apply to IRAs, and they would apply to the PRAs. A Federal Personal Retirement Investment Board, an independent agency, will oversee the PRAs. Investment companies that manage it would have to have an insurance plan to have survivors benefits, disability benefits, and also a floor that says you would never get less than 2.5 percent of your investment that year. By the way, you choose the company with which you want to put your money. If it is better somewhere else, you can move your money. Chile has 16 companies that do this with a population of under 20 million people. In our country, we would probably have 100 firms. Just look at the numbers of mutual funds you can choose from today. You also decide when to retire. This is an important part. Under the current system, the Government tells you how much you are going to pay into the system; the Government tells you when you are going to retire; you have no choice, and the Government tells you what you are going to get as a benefit. They determine everything. You have nothing to say about it. You are being led along like sheep into this system. Ours says when you reach this 150 percent of poverty, if you can buy an annuity that will pay you the rest of your life at that, you can stop paying into the system. You can retire at that time. I don't care if you are 40 years old. Once you have met that requirement, you can get out of this system. You will no longer be considered a ward of the State; you will have enough to provide for your retirement. Some choices: In divorce cases, PRAs are treated as community property. Upon death, a PRA benefit will go to the heirs without estate taxes. Think, if you had that $1.4 million in your account when you die--not like my father who got $253, but whatever you had accumulated in your account, up to $1.4 million or more, that would be your money that would go to your heirs without estate taxes, without capital gains. Workers could arrange PRAs for nonworking children. They could put $1,000 in their account, and when they reached the age of 65, it would be $250,000. There will be no new taxes for this system. Retirement income would be there for everybody, whether you stayed within Social Security or chose to build a personal retirement account. In Minnesota, workers can decide when to retire and which options work best for them. With PRA, average returns would be at least three to five times better. This is the system. I hope when we continue these debates, and when people hear these scare tactics, remember, that is all they are, rhetoric and scare tactics. We can develop a system that will be safe, sound, and will preserve better retirement benefits than we have today. We should have that chance for our children, just as other countries. When hearing this debate, set aside the rhetoric and scare tactics and look at the numbers. I hope we can continue this debate because this is a very important part of America's future. I yield the floor.

Mr. GRAMS

Mr. GRAMS. Mr. President, our nation's prosperity and continued success are directly related to the education of our citizens. As the price tag of higher education continues to rise, the importance of financial aid programs has never been greater. To recognize those who help students achieve their goal of a higher education and to promote the accessibility of higher education to everyone, May has been designated as National Scholarship Month. I would like to draw attention to one organization in particular that deserves accolades for its efforts to provide financial aid to students. The Minnesota-based Citizens' Scholarship Foundation of America (CSFA) is the nation's largest private sector scholarship and educational support organization. Since its founding in 1958, CSFA has distributed over $561 million to more than 572,000 students. Through more than 800 ``Dollars for Scholars'' chapters, the Foundation has established a grassroots network, with proven results. I applaud the Foundation's tireless efforts to increase private sponsorship of scholarships to our nation's youth. I also congratulate and thank the dozens of Minnesota companies, organizations, and foundations that work with CSFA to help ensure that a higher education is an affordable education. Additionally, I join in CSFA's challenge to the communities, organizations, businesses, and individuals that already sponsor scholarships to double the number of awards, and I invite others to establish scholarship programs this year. Mr. President, it is my hope that CSFA's leadership in the multitude of National Scholarship Month activities around the nation will broaden the support for private scholarship dollars and increase the level of participation. Today, I ask my colleagues to join me in celebrating the generosity of our nation's scholarship sponsors during this National Scholarship Month.