Judd Gregg

Mr. GREGG

Mr. GREGG. I yield the floor and make a point of order that a quorum is not present.

Mr. GREGG. Mr. President, I ask unanimous consent that no second degree amendments be in order relative to the amendment which I just offered.

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 President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. GREGG. Mr. President, I make a point of order that a quorum is not present.

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

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

Mr. GREGG

Mr. GREGG. Mr. President, I would like to congratulate the students of Gorham High School of Gorham, NH, who participated in the ``We the People . . . The Citizen and the Constitution'' national finals. I commend these exceptional young people in their impressive performance against 50 other classes from around the Nation. These students demonstrated great knowledge of the principles of American constitutional development. The distinguished members of the team representing New Hampshire are: David Arsenault, Jan Bindas-Tenney, Melissa Borowski, Alyssa Breton, Mike Burrill, Kevin Carpenter, Todd Davis, Rebecca Evans, Brad Fillion, Cyndy Gibson, Patrick Gilligan, Sean Griffith, Reid Hartman, Sarah King, Michelle Leveille, Monica McKenzie, Ashley Thompson, Michael Toth, Julie Washburn, Tuuli Winter, and Melanie Wolf. I also would like to recognize their teacher Mike Brosnan, their district coordinator Ray Kneeland, and their state coordinator Holly Belson. These three people dedicated much time and effort to help the team make it to the national finals. This competition, which is organized by the Center for Civic Education, attracts over 1,200 students and tests their comprehension of the Constitution and Bill of Rights. Also, the students must be able to relate these ideals to contemporary issues before simulated congressional committees composed of constitutional lawyers, journalists, and scholars. The students of Gorham did an exceptional job demonstrating all of these important skills. Their dedication to our Nation's founding ideals is impressive and should serve as an example to any young person who is interested in the U.S. Government and its laws. The ``We the People . . . The Citizen and the Constitution'' Program provides an excellent educational experience for students. These young people gain extensive knowledge of the Constitution and the active role it plays in all of our lives. I wish the best of luck to the students of Gorham High School in their future endeavors.

Mr. GREGG

Mr. GREGG. Mr. President, I join the Senator from Nebraska and the Senator from North Carolina and the Senator from Delaware and the Senator from Minnesota in endorsing this really excellent effort that has been developed through a great deal of negotiation between the Senators from North Carolina and Delaware, the Secretary of State, the Ambassador to the United Nations, the Senator from Minnesota, and the majority leader. This effort was not easy. There were a lot of disagreements as to how we should address the U.N. arrearages issue. I am speaking from the perspective of the Appropriations Committee, where I chair the subcommittee with jurisdiction over the funding of the United Nations. From my viewpoint, I and I think many of my colleagues were not really willing to simply give carte blanche to the United Nations again. The fact is that the United Nations has, regrettably, been fiscally mismanaged. That mismanagement has meant that American tax dollars have been wasted. That is not right. We as a Senate have an obligation to make sure that the tax dollars that are sent to us out of the hard earnings of our constituents are effectively spent. This proposal includes in it conditions that will require the United Nations to finally straighten out its fiscal house. Today, you really can't tell where a dollar goes that is sent to the United Nations. More importantly, there is a distinct sense that when a dollar goes to the United Nations today, a great deal is misspent on patronage, on promised services that are not delivered, on programs that don't work, and on agencies which have an excessive amount of personnel. So we are requiring, under this proposal, that the United Nations put in very basic accounting procedures, that they actually be able to tell us where the dollars go, that they have a personnel policy that is accountable, a system of accounting for the programmatic activity they undertake. More importantly, we are requiring and putting in conditions that allow us to determine that their procedures and structures work well, from a GAO auditing of their procedures. In addition, we have seen the other conditions outlined by the Senator from Delaware and, I am sure, will be outlined by other Senators here, which will make the United Nations fee system, or payment system, or dues system more reflective of the burdens of other nations, as well as the United States. We pay a disproportionate amount of the cost for peacekeeping and for the fees at the United Nations and the dues of the United Nations. We are not talking about dramatic reduction in either our commitment to the United Nations, in peacekeeping, or in our commitment to the area of dues. But we are talking about bringing it more in line with the fact that other nations, since the initiation of the United Nations, have risen in their economic capability to bear some of this burden. That is reflective in this amendment. So this is a good amendment. It is an amendment that brought together the various parties. And, believe me, when we started the negotiations, we were a long way apart. There wasn't much expectation that an agreement would be reached. But through the good counsel of the Senator from North Carolina, the Senator from Minnesota, the majority leader, and through the hard effort of the Secretary of State and the Ambassador to the United Nations, we have reached an accommodation and agreement. It is a positive one, one that will help the United Nations be a stronger institution that people can have confidence in, especially as to how and where it spends the dollars sent to it. So it is a positive step forward to have these conditions in this bill. I, as an appropriator, would have a lot of problems passing any appropriation that didn't follow the outline set forth by this committee and set forth in the work of Senator Helms and Senator Biden. I yield the balance of my time. Mr. GRAMS addressed the Chair.

Mr. GREGG

Mr. GREGG. Mr. President, on behalf of the leader I ask unanimous consent that the routine requests through the morning hour be granted and the Senate be in a period of morning business until the hour of 2 p.m., with Senators permitted to speak up to 5 minutes with the following exceptions: Senator Gregg, 10 minutes; Senator Grams, 10 minutes; Senator Thomas, 30 minutes; Senator Lott or his designee, 10 minutes; Senator Daschle or his designee, 60 minutes.

Mr. GREGG

Mr. GREGG. Mr. President, I am extremely pleased to rise to introduce the Retirement Income, Security, and Savings Act of 1997. Mr. President, this bill represents the culmination of literally months of work by the Republican Retirement Security Task Force, which I chair. It embodies a collection of policies which would, if enacted, do a tremendous amount for a critical national need--to increase retirement saving and ultimately, therefore, retirement income for all Americans. It has become almost axiomatic to state that America is in dire need of a qualitative increase in its level of retirement saving. None of the three legs of the metaphorical retirement stool--Social Security, employer-provided pensions, and individual saving--are saving an adequate amount for 21st century retirement needs. Social Security is not really a savings program at all, but is rather funded on a pay-as- you-go basis, the surplus loaned to the Government, to be paid back from general revenues at a future date. Employer-provided pensions only reach half of the working population, and there are problems of underfunding facing even the portion that are covered. And, as a general rule, only a few Americans are putting away sufficient saving on their own initiative to meet their future retirement income needs. I would like to take a few moments to describe the current details with respect to retirement income in America, and then how our package addresses those needs. Only then, I believe, can my colleagues fully appreciate the quality and importance of the policy recommendations that we are making. The typical retired American today receives retirement income from a variety of sources. On average, 41.7 percent comes from Social Security, 20.5 percent from asset income, 20.1 percent from pensions, 14.8 percent is annually earned, and the remaining 3 percent comes from a variety of other sources, including welfare programs such as SSI and unemployment compensation. I would stress that this is only an average picture. The reality varies greatly from American to American. We need to look at the oldest of Americans to see the future of an aging nation. Americans currently 80 and older receive 52.6 percent of their income from Social Security, whereas their pensions provide proportionally less--down to 15.3 percent. And, of course, they are less able to earn money at this age, thus earnings make up only 3.9 percent of their income. I describe this situation because it dramatizes our future. Americans continue to have longer and longer life expectancies. The population aged 80 and older is growing faster than any other age group, proportionally. This are group currently receives inadequate pension and individual savings income, and has needed to rely more heavily on Social Security. The plain fact is that as America grows older, this group of Americans simply must have access to more in the areas of pension coverage and personal savings if they are to maintain a dignified standard of living. The current national picture is also not equitable with regard to the treatment of women. Currently, women are almost twice as likely as men to live in poverty in their retirement years--a 15.7 percent poverty rate versus an 8.9 percent poverty rate for men. For women who are widowed or divorced, the picture is worse still--widows suffer a poverty rate of 21.5 percent, divorcees 29.1 percent. Thus, the task force placed high priority on including provisions designed to help women generate saving in their own name. Also of note are the discrepancies in income sources between high- income and low-income Americans. Among elderly Americans in the lowest quintile, Social Security constitutes 82.6 percent of their income. Their next biggest source is public assistance--SSI, unemployment compensation, and other such sources--which make up 9.1 percent of their income stream. Thus, poorest Americans would benefit the most from expansions of existing pension coverage. Mr. President, it is, therefore, essential that this Nation pursue policies that increase pension and individual savings in the private sector. One added reason for this is the plight of Social Security. Thus far, Congress has not been willing to address Social Security's enormous unfunded liability. Under current practices, we will continue to pour the annual Social Security surplus into current Government consumption. We have no method to pay for Social Security's trillions in unfunded liability other than the promise of future Government taxation. Although few are willing to admit it, it is clear from the projections that Social Security in the 21st century will not be able to deliver as large a share of the income of retired Americans as it does today. That is simply not possible when the projected worker-to- collector ratios for the program will hit only 2 to 1 within a generation. When the program is brought into balance, as it must be, what will happen to the millions of Americans who rely on Social Security for the majority of their retirement income? The answer, Mr. President, depends on how successful we are in providing for retirement income via other means. Our task force approached these problems in as objective a fashion as we could. We decided early on that the problem was one of inadequate saving, instead of one of inadequate regulation, or inequitable distribution. Indeed, many existing regulations and distribution requirements have actually worked against the aim of expanded pension coverage, because they deter employers from providing it. The result is that many small business owners do not believe that they can afford to offer pension coverage. Mr. President, we must begin to make it easier--in fact, we must begin to make it attractive--for employers to offer pensions. There is a single common theme that runs through the Republican approach to retirement security: Retirement income comes from retirement saving. It comes from nowhere else. Everything in our package aims at generating additional retirement saving in a reasonably direct way. Government must do more to encourage saving, and in many ways this is best done by doing less to discourage it. We have produced a package that would make it easier for additional retirement saving to occur, by facilitating saving via a broad variety of measures. That is not to say that we did not identify areas of the law where there were simply technical adjustments to be made. Often there are absurd regulatory inconsistencies in our pension structures. We penalize employers who do not properly fund pension plans, but on the other hand, we prevent others from funding the full amount of liabilities that they know are coming. Or we will treat employer contributions one way, but the contributions of the self-employed another way. There is a host of confusing, sometimes inconsistent, regulations in effect. We did our best to identify and to rectify such problems and inconsistencies in existing law. This package seeks to increase saving through individual savings incentives, through employer funding of pension plans, through simplification, through expanded portability, through defined contribution plans, and through defined benefit plans. We attempted to increase savings on every front. We cast our net wide. Thus, we have a package that is a veritable smorgasbord of reforms, more than Congress could possibly enact this year. But we have produced a host of proposals that are each candidates for at least partial inclusion in budget reconciliation, and I believe that Congress would do well to favorably consider them. Because we attempted to approach our task with this specific policy objective in mind--increasing savings--we did not set ourselves up to oppose every idea that originated in another place. The centerpiece proposals of our package--full IRA deductibility for every American, the WISE women's equity package, and the new SAFE defined benefit plan--are not included in the package of pension proposals offered by the minority party. But we did not reject some good technical corrections merely because they have appeared in the work of others. I believe that there is a basis for Congress to review the proposals offered separately by Republicans, and by Democrats, and to pursue many initiatives on which there is a broad area of common ground. I would like to thank Majority Leader Lott for convening the task force and for selecting me to be its chairman. I also wish to thank Senator Larry Craig for his helpful coordination of the various Republican task force efforts. I wish to thank each of the members of the Senate Republican Retirement Security Task Force--Senators Bond, Collins, Hutchison, Jeffords, Murkowski, Roberts, Santorum, Faircloth-- but most especially Finance Committee Chairman Senator William Roth, whose work was absolutely instrumental to this drafting effort. I would like to single out Doug Fisher of Senator Roth's staff for the technical advice and assistance that he provided to me and to my staff at every stage of this process. It would be appropriate at this point to say a word of appreciation to Senator Graham of Florida as well, for his parallel work in fashioning a bipartisan package of pension reforms that I understand will be introduced later this week. Our Republican task force has communicated in open and good faith with his bipartisan group, and there have been times when we have found ourselves working on overlapping ground. Senator Graham and his staff have made important and original contributions to a bipartisan effort to promote retirement security, and I believe that we can work with Senator Graham and others in this coalition, throughout the reconciliation process and beyond, to pursue reforms of common interest. Let me now turn to the specific provisions of our legislation. Title I would establish a fully deductible IRA for every American. The IRA is becoming a cornerstone of national retirement policy, and the Federal Government should not deter anyone from participating by limiting or eliminating the tax deductibility of the option. We endorse the Roth/Breaux schedule of phasing out the limits on IRA deductibility by 2001, and of indexing the contribution limits for inflation. We would also create the option of the back-loaded IRA--in which contributions are taxed when they are made, instead of upon withdrawal--in order to mitigate the revenue implications in the near- term. Stimulating personal saving--making it attractive for every American to adopt the habit of contributing to an IRA each year--is an important first step toward meeting tomorrow's retirement income needs. Title II is the WISE bill introduced earlier this year. Already this important piece of legislation has 25 co-sponsors. These women's equity initiatives include a strengthening of the homemaker IRA, permitting a homemaker to make a fully deductible IRA contribution, regardless of whether his or her spouse receives an employer-provided pension. In addition, we would permit individuals who take maternity or paternity leave to make catch-up contributions to their 401-(k) or similar plans for the time missed from work. And--the most creative part of our legislation--we would permit individuals who are absent from pension plan participation for an extended period to raise a child--to make additional contributions upon return, and to catch up for up to 18 years of absence. The WISE legislation is extremely popular, and I do not need to describe it at length here. However, I would say that it recognizes an important principle too frequently unrecognized in our pension law: That individuals do not have the same opportunities to save at every stage of their lives. Frequently, the financial pressures of raising a child prevent parents from attending to their own retirement saving. WISE attempts to give some flexibility, to permit individuals to put away more money when, at last, they have the surplus income to do so. Title III of our bill is targeted at expanding pension coverage in small business. This, Mr. President, is a title of our legislation that is just as vital as the first two, for a number of important reasons. First, it is those individuals who work for small businesses who are most likely to lack pension coverage. Second, we felt it was very important in this legislation to do something to make defined benefit plans more attractive to employers. The task force concluded that removing impediments to defined contribution saving was extremely important, but we could not stop there: We needed to pursue parallel methods with respect to establishing pension coverage for individuals who do not have discretionary income to put into retirement savings. Title III of our legislation begins with the SAFE plan--a fully portable, fully funded, defined benefit plan designed for small business. This legislation attempts to make defined benefit plans a more realistic option for small businesses, just as the SIMPLE plan did last year for defined contribution plans. Because SAFE is a method of creating a defined benefit plan without running into the problems with funding and complex regulation that have deterred small businesses from offering other defined benefit plans, it is good for employers. And because it offers a defined benefit funded by the employer, rather than dependent upon employee contributions, it is good for lower income employees. In essence, the way SAFE works is this: An employer can choose to establish a SAFE plan that accrues at either a 1-percent, a 2-percent, or a 3-percent rate. What this means is that for every year the employee works, they get either 1 percent, 2 percent, or 3 percent of their salary as their defined benefit upon retirement. If, for example, the employee works for 25 years in a plan that accrues at 3 percent, then their retirement benefit will be 75 percent of working income. Everyone in the plan accrues at the same rate. So the employer can make a choice: If they fund at the lower rate--say, 1 percent--then they will diminish the size of their own pension benefits as well as that of their employees. By treating all employees equally, across the board, SAFE bypasses the need for complex nondiscrimination requirements. Fair treatment is assured by the basic construction of the plan. SAFE plans are fully funded by the employer. The employer must fund the benefits such that, when a 5 percent interest rate is assumed, enough will be present at time of retirement to pay the defined benefit. If the employer is able to do better, in managing the plan, then that 5 percent interest rate, then the extra goes back into the pension benefits. Annually, the plan is monitored to ensure that the employer has kept pace with that 5 percent rate. If not, then the employer must make a makeup contribution at year's end. So, in all events, the pension benefits are protected. It is annually assured that the promised benefits are fully funded, and it is also possible that the beneficiary will receive more. Moreover, because each individual's pension benefit is fully funded in advance by a defined amount, it is fully portable--the benefit can travel with the employee easily when they switch jobs. The SAFE plan gives a small business owner the opportunity to create a simple defined benefit plan that has the potential to provide large pension benefits--for both the employees and the employer. Because of that potential and its resulting incentive, and because of the protection from messy discrimination rules, SAFE plans will be an attractive alternative for small businesses. And by creating this alternative, we increase the opportunities for lower income individuals to receive defined benefit pension coverage that they might not be able to fund via a defined contribution system. It will take too much of the Senate's time to list every aspect of our comprehensive legislation, but I invite Senators to review this and other provisions we have created to make pensions more attractive to small business owners in title III of the bill. Title IV contains assorted measures to ensure pension portability. This is essential in a mobile society such as ours, in which pension coverage is lowest among short-tenured young workers, moving from job to job. We do not generate retirement saving if these pension benefits simply turn into a cash-out every time one changes jobs. Our legislation would protect plans that accept rollovers from disqualification, and also specifically facilitate rollovers between a large variety of plans--government plans, nonprofit plans, and others. Title V of the legislation deals with pension security. We felt it was important to highlight our finding that pension managers have an obligation to comply with the intent of ERISA, which directs that they manage these plans with an eye solely toward maximizing the accumulation of pension assets, not pursuing an external purpose, whether social, political, or any other. Accordingly, we would eliminate the promotion of the Department of Labor's Economically Targeted Investments Program. The last thing that we want, Mr. president, is for pension managers to feel pressured into investing in any vehicles that they do not believe meet the best interests of future pension beneficiaries. To the extent that these economically targeted investments produce healthy, sound investments, they do not need promotion by the Department of Labor. To the extent that they do not, pension managers should not invest in them. Also in title V, Mr. President, is an important provision that gradually increases the current limitation on full employer funding of pension liabilities. Right now, employers may fund for no more than 150 percent of current liability, even when they may know that future liabilities are accruing and must be funded. This is short-sighted policy by the Federal Government, undertaken solely to protect the Federal balance sheet, by limiting the tax deductibility of pension contributions. I would argue that this existing policy, in the long run, does not even protect the Federal balance sheet, because ultimately, these liabilities must be funded, and the deduction therefore taken. It is better to permit employers to invest the money now, and to let that investment compound to meet future liabilities, rather than to forbid them from doing so, and thereby force them to make a larger contribution later--and then claim an even larger deduction. We must take a far-sighted approach to funding pensions, and not discourage proper pension funding simply because we are looking at a short-term budget window here in the Federal Government. Our provision would gradually increase the 150 percent limit, by 5 percent every 2 years. Finally, title VI deals with another vital area of pension reform-- pension simplification. In this title, Mr. President, Senators will find a host of changes that eliminate existing inconsistencies within law and regulation, as well as facilitating the use of electronic technology to replace cumbersome paperwork. I would draw the attention of the Senate to one particular provision here that would exempt Government plans from existing nondiscrimination rules. These nondiscrimination rules, Mr. President, were not designed for Government plans, and it has proved very vexatious to determine how to apply them in cases when the employer is a government body. I believe that many Senators have probably heard from administrators of State government retirement plans regarding the need to make this exemption permanent, and our bill would do so. This is one provision, Mr. President, that I believe we should seek to include in budget reconciliation this year. Mr. President, I am very proud to introduce this legislation. Tax law in this area is complicated and dry--I have become too familiar with that these last months--but it is imperative that we shoulder the burden of reforming it to make it work more simply, and more effectively, to encourage greater retirement income saving. I have worked long and hard to create this legislation, and I believe that it represents a good comprehensive effort to enhance the future retirement security of millions of Americans. I thank the rest of the task force, and the majority leader, for this opportunity to lead in this important work, and I commend this legislation to the Senate for its favorable consideration.

Mr. GREGG

Mr. GREGG. Mr. President, I rise today to announce the introduction of the Claremont Commission Act, which I am introducing, along with Senators Bob Smith, Torricelli, and Johnson. We chose this day because it is the anniversary of the historic event that prompted the introduction of this legislation. Two years ago on this very day, a concerned citizen from Newport, NH, Mr. Frank McConnell, stood up at a town meeting in Claremont, NH, and asked an insightful and thought-provoking question of Speaker Gingrich and President Clinton: What are they going to do about reforming our campaign financing system? The two leaders, who were attending the meeting, promised to create a bipartisan commission to study campaign finance reform and then shook hands on the agreement. That handshake was a famous and short-lived moment of solidarity and bipartisanship. At this time, sadly, no such commission has been created. The bill that I introduce today is a renewed effort to keep the promise made on that famous day 2 years ago. The Claremont Commission Act was introduced in a bipartisan manner to create an objective commission to look at the issues surrounding the reform of our Nation's campaign finance system. This legislation directs the commission to take important goals into consideration when making recommendations to the Congress with regard to reform legislation. These goals include: limiting the influence of money in Federal elections; increasing voter participation, creating a more equitable electoral system for both challengers and incumbents; and removing the negative aspects of financing of Federal elections. I believe that these are important goals to consider when Congress moves to make actual changes to our campaign financing laws. The Claremont Commission Act specifically asks the commission to consider and respond to more than 14 questions regarding the most important issues surrounding the campaign finance reform debate. I am especially pleased that the issues of soft money contributions, independent expenditures, and the role of unions will be addressed. In particular, the role of unions and their use of mandatory union dues to make donations to political campaigns is of concern to me. The commission will address the serious issues surrounding how unions finance their political activities, as well as the considerable influence that these organizations wield over the outcome of elections. I am pleased that the creation of this commission can begin to address concerns, as well as other Members of Congress' questions regarding soft money contributions and independent expenditures. The political infighting that has occurred over the years regarding the financing of our Federal elections will not cease unless a middle ground can be established. I believe that the Claremont Commission Act, by establishing a mechanism for a dispassionate analysis by a group of experts, can provide that middle ground. Hopefully, this bill will allow us to address the concerns of all Americans who have a growing sense of cynicism over our ability to resolve important campaign financing problems. In closing, I urge my colleagues to take a serious look at this legislation and consider the merits of commissioning a bipartisan recommendation regarding campaign finance reform.

Mr. GREGG

Mr. GREGG. Mr. President, I am extremely pleased to rise to introduce the Retirement Income, Security, and Savings Act of 1997. Mr. President, this bill represents the culmination of literally months of work by the Republican Retirement Security Task Force, which I chair. It embodies a collection of policies which would, if enacted, do a tremendous amount for a critical national need--to increase retirement saving and ultimately, therefore, retirement income for all Americans. It has become almost axiomatic to state that America is in dire need of a qualitative increase in its level of retirement saving. None of the three legs of the metaphorical retirement stool--Social Security, employer-provided pensions, and individual saving--are saving an adequate amount for 21st century retirement needs. Social Security is not really a savings program at all, but is rather funded on a pay-as- you-go basis, the surplus loaned to the Government, to be paid back from general revenues at a future date. Employer-provided pensions only reach half of the working population, and there are problems of underfunding facing even the portion that are covered. And, as a general rule, only a few Americans are putting away sufficient saving on their own initiative to meet their future retirement income needs. I would like to take a few moments to describe the current details with respect to retirement income in America, and then how our package addresses those needs. Only then, I believe, can my colleagues fully appreciate the quality and importance of the policy recommendations that we are making. The typical retired American today receives retirement income from a variety of sources. On average, 41.7 percent comes from Social Security, 20.5 percent from asset income, 20.1 percent from pensions, 14.8 percent is annually earned, and the remaining 3 percent comes from a variety of other sources, including welfare programs such as SSI and unemployment compensation. I would stress that this is only an average picture. The reality varies greatly from American to American. We need to look at the oldest of Americans to see the future of an aging nation. Americans currently 80 and older receive 52.6 percent of their income from Social Security, whereas their pensions provide proportionally less--down to 15.3 percent. And, of course, they are less able to earn money at this age, thus earnings make up only 3.9 percent of their income. I describe this situation because it dramatizes our future. Americans continue to have longer and longer life expectancies. The population aged 80 and older is growing faster than any other age group, proportionally. This are group currently receives inadequate pension and individual savings income, and has needed to rely more heavily on Social Security. The plain fact is that as America grows older, this group of Americans simply must have access to more in the areas of pension coverage and personal savings if they are to maintain a dignified standard of living. The current national picture is also not equitable with regard to the treatment of women. Currently, women are almost twice as likely as men to live in poverty in their retirement years--a 15.7 percent poverty rate versus an 8.9 percent poverty rate for men. For women who are widowed or divorced, the picture is worse still--widows suffer a poverty rate of 21.5 percent, divorcees 29.1 percent. Thus, the task force placed high priority on including provisions designed to help women generate saving in their own name. Also of note are the discrepancies in income sources between high- income and low-income Americans. Among elderly Americans in the lowest quintile, Social Security constitutes 82.6 percent of their income. Their next biggest source is public assistance--SSI, unemployment compensation, and other such sources--which make up 9.1 percent of their income stream. Thus, poorest Americans would benefit the most from expansions of existing pension coverage. Mr. President, it is, therefore, essential that this Nation pursue policies that increase pension and individual savings in the private sector. One added reason for this is the plight of Social Security. Thus far, Congress has not been willing to address Social Security's enormous unfunded liability. Under current practices, we will continue to pour the annual Social Security surplus into current Government consumption. We have no method to pay for Social Security's trillions in unfunded liability other than the promise of future Government taxation. Although few are willing to admit it, it is clear from the projections that Social Security in the 21st century will not be able to deliver as large a share of the income of retired Americans as it does today. That is simply not possible when the projected worker-to- collector ratios for the program will hit only 2 to 1 within a generation. When the program is brought into balance, as it must be, what will happen to the millions of Americans who rely on Social Security for the majority of their retirement income? The answer, Mr. President, depends on how successful we are in providing for retirement income via other means. Our task force approached these problems in as objective a fashion as we could. We decided early on that the problem was one of inadequate saving, instead of one of inadequate regulation, or inequitable distribution. Indeed, many existing regulations and distribution requirements have actually worked against the aim of expanded pension coverage, because they deter employers from providing it. The result is that many small business owners do not believe that they can afford to offer pension coverage. Mr. President, we must begin to make it easier--in fact, we must begin to make it attractive--for employers to offer pensions. There is a single common theme that runs through the Republican approach to retirement security: Retirement income comes from retirement saving. It comes from nowhere else. Everything in our package aims at generating additional retirement saving in a reasonably direct way. Government must do more to encourage saving, and in many ways this is best done by doing less to discourage it. We have produced a package that would make it easier for additional retirement saving to occur, by facilitating saving via a broad variety of measures. That is not to say that we did not identify areas of the law where there were simply technical adjustments to be made. Often there are absurd regulatory inconsistencies in our pension structures. We penalize employers who do not properly fund pension plans, but on the other hand, we prevent others from funding the full amount of liabilities that they know are coming. Or we will treat employer contributions one way, but the contributions of the self-employed another way. There is a host of confusing, sometimes inconsistent, regulations in effect. We did our best to identify and to rectify such problems and inconsistencies in existing law. This package seeks to increase saving through individual savings incentives, through employer funding of pension plans, through simplification, through expanded portability, through defined contribution plans, and through defined benefit plans. We attempted to increase savings on every front. We cast our net wide. Thus, we have a package that is a veritable smorgasbord of reforms, more than Congress could possibly enact this year. But we have produced a host of proposals that are each candidates for at least partial inclusion in budget reconciliation, and I believe that Congress would do well to favorably consider them. Because we attempted to approach our task with this specific policy objective in mind--increasing savings--we did not set ourselves up to oppose every idea that originated in another place. The centerpiece proposals of our package--full IRA deductibility for every American, the WISE women's equity package, and the new SAFE defined benefit plan--are not included in the package of pension proposals offered by the minority party. But we did not reject some good technical corrections merely because they have appeared in the work of others. I believe that there is a basis for Congress to review the proposals offered separately by Republicans, and by Democrats, and to pursue many initiatives on which there is a broad area of common ground. I would like to thank Majority Leader Lott for convening the task force and for selecting me to be its chairman. I also wish to thank Senator Larry Craig for his helpful coordination of the various Republican task force efforts. I wish to thank each of the members of the Senate Republican Retirement Security Task Force--Senators Bond, Collins, Hutchison, Jeffords, Murkowski, Roberts, Santorum, Faircloth-- but most especially Finance Committee Chairman Senator William Roth, whose work was absolutely instrumental to this drafting effort. I would like to single out Doug Fisher of Senator Roth's staff for the technical advice and assistance that he provided to me and to my staff at every stage of this process. It would be appropriate at this point to say a word of appreciation to Senator Graham of Florida as well, for his parallel work in fashioning a bipartisan package of pension reforms that I understand will be introduced later this week. Our Republican task force has communicated in open and good faith with his bipartisan group, and there have been times when we have found ourselves working on overlapping ground. Senator Graham and his staff have made important and original contributions to a bipartisan effort to promote retirement security, and I believe that we can work with Senator Graham and others in this coalition, throughout the reconciliation process and beyond, to pursue reforms of common interest. Let me now turn to the specific provisions of our legislation. Title I would establish a fully deductible IRA for every American. The IRA is becoming a cornerstone of national retirement policy, and the Federal Government should not deter anyone from participating by limiting or eliminating the tax deductibility of the option. We endorse the Roth/Breaux schedule of phasing out the limits on IRA deductibility by 2001, and of indexing the contribution limits for inflation. We would also create the option of the back-loaded IRA--in which contributions are taxed when they are made, instead of upon withdrawal--in order to mitigate the revenue implications in the near- term. Stimulating personal saving--making it attractive for every American to adopt the habit of contributing to an IRA each year--is an important first step toward meeting tomorrow's retirement income needs. Title II is the WISE bill introduced earlier this year. Already this important piece of legislation has 25 co-sponsors. These women's equity initiatives include a strengthening of the homemaker IRA, permitting a homemaker to make a fully deductible IRA contribution, regardless of whether his or her spouse receives an employer-provided pension. In addition, we would permit individuals who take maternity or paternity leave to make catch-up contributions to their 401-(k) or similar plans for the time missed from work. And--the most creative part of our legislation--we would permit individuals who are absent from pension plan participation for an extended period to raise a child--to make additional contributions upon return, and to catch up for up to 18 years of absence. The WISE legislation is extremely popular, and I do not need to describe it at length here. However, I would say that it recognizes an important principle too frequently unrecognized in our pension law: That individuals do not have the same opportunities to save at every stage of their lives. Frequently, the financial pressures of raising a child prevent parents from attending to their own retirement saving. WISE attempts to give some flexibility, to permit individuals to put away more money when, at last, they have the surplus income to do so. Title III of our bill is targeted at expanding pension coverage in small business. This, Mr. President, is a title of our legislation that is just as vital as the first two, for a number of important reasons. First, it is those individuals who work for small businesses who are most likely to lack pension coverage. Second, we felt it was very important in this legislation to do something to make defined benefit plans more attractive to employers. The task force concluded that removing impediments to defined contribution saving was extremely important, but we could not stop there: We needed to pursue parallel methods with respect to establishing pension coverage for individuals who do not have discretionary income to put into retirement savings. Title III of our legislation begins with the SAFE plan--a fully portable, fully funded, defined benefit plan designed for small business. This legislation attempts to make defined benefit plans a more realistic option for small businesses, just as the SIMPLE plan did last year for defined contribution plans. Because SAFE is a method of creating a defined benefit plan without running into the problems with funding and complex regulation that have deterred small businesses from offering other defined benefit plans, it is good for employers. And because it offers a defined benefit funded by the employer, rather than dependent upon employee contributions, it is good for lower income employees. In essence, the way SAFE works is this: An employer can choose to establish a SAFE plan that accrues at either a 1-percent, a 2-percent, or a 3-percent rate. What this means is that for every year the employee works, they get either 1 percent, 2 percent, or 3 percent of their salary as their defined benefit upon retirement. If, for example, the employee works for 25 years in a plan that accrues at 3 percent, then their retirement benefit will be 75 percent of working income. Everyone in the plan accrues at the same rate. So the employer can make a choice: If they fund at the lower rate--say, 1 percent--then they will diminish the size of their own pension benefits as well as that of their employees. By treating all employees equally, across the board, SAFE bypasses the need for complex nondiscrimination requirements. Fair treatment is assured by the basic construction of the plan. SAFE plans are fully funded by the employer. The employer must fund the benefits such that, when a 5 percent interest rate is assumed, enough will be present at time of retirement to pay the defined benefit. If the employer is able to do better, in managing the plan, then that 5 percent interest rate, then the extra goes back into the pension benefits. Annually, the plan is monitored to ensure that the employer has kept pace with that 5 percent rate. If not, then the employer must make a makeup contribution at year's end. So, in all events, the pension benefits are protected. It is annually assured that the promised benefits are fully funded, and it is also possible that the beneficiary will receive more. Moreover, because each individual's pension benefit is fully funded in advance by a defined amount, it is fully portable--the benefit can travel with the employee easily when they switch jobs. The SAFE plan gives a small business owner the opportunity to create a simple defined benefit plan that has the potential to provide large pension benefits--for both the employees and the employer. Because of that potential and its resulting incentive, and because of the protection from messy discrimination rules, SAFE plans will be an attractive alternative for small businesses. And by creating this alternative, we increase the opportunities for lower income individuals to receive defined benefit pension coverage that they might not be able to fund via a defined contribution system. It will take too much of the Senate's time to list every aspect of our comprehensive legislation, but I invite Senators to review this and other provisions we have created to make pensions more attractive to small business owners in title III of the bill. Title IV contains assorted measures to ensure pension portability. This is essential in a mobile society such as ours, in which pension coverage is lowest among short-tenured young workers, moving from job to job. We do not generate retirement saving if these pension benefits simply turn into a cash-out every time one changes jobs. Our legislation would protect plans that accept rollovers from disqualification, and also specifically facilitate rollovers between a large variety of plans--government plans, nonprofit plans, and others. Title V of the legislation deals with pension security. We felt it was important to highlight our finding that pension managers have an obligation to comply with the intent of ERISA, which directs that they manage these plans with an eye solely toward maximizing the accumulation of pension assets, not pursuing an external purpose, whether social, political, or any other. Accordingly, we would eliminate the promotion of the Department of Labor's Economically Targeted Investments Program. The last thing that we want, Mr. president, is for pension managers to feel pressured into investing in any vehicles that they do not believe meet the best interests of future pension beneficiaries. To the extent that these economically targeted investments produce healthy, sound investments, they do not need promotion by the Department of Labor. To the extent that they do not, pension managers should not invest in them. Also in title V, Mr. President, is an important provision that gradually increases the current limitation on full employer funding of pension liabilities. Right now, employers may fund for no more than 150 percent of current liability, even when they may know that future liabilities are accruing and must be funded. This is short-sighted policy by the Federal Government, undertaken solely to protect the Federal balance sheet, by limiting the tax deductibility of pension contributions. I would argue that this existing policy, in the long run, does not even protect the Federal balance sheet, because ultimately, these liabilities must be funded, and the deduction therefore taken. It is better to permit employers to invest the money now, and to let that investment compound to meet future liabilities, rather than to forbid them from doing so, and thereby force them to make a larger contribution later--and then claim an even larger deduction. We must take a far-sighted approach to funding pensions, and not discourage proper pension funding simply because we are looking at a short-term budget window here in the Federal Government. Our provision would gradually increase the 150 percent limit, by 5 percent every 2 years. Finally, title VI deals with another vital area of pension reform-- pension simplification. In this title, Mr. President, Senators will find a host of changes that eliminate existing inconsistencies within law and regulation, as well as facilitating the use of electronic technology to replace cumbersome paperwork. I would draw the attention of the Senate to one particular provision here that would exempt Government plans from existing nondiscrimination rules. These nondiscrimination rules, Mr. President, were not designed for Government plans, and it has proved very vexatious to determine how to apply them in cases when the employer is a government body. I believe that many Senators have probably heard from administrators of State government retirement plans regarding the need to make this exemption permanent, and our bill would do so. This is one provision, Mr. President, that I believe we should seek to include in budget reconciliation this year. Mr. President, I am very proud to introduce this legislation. Tax law in this area is complicated and dry--I have become too familiar with that these last months--but it is imperative that we shoulder the burden of reforming it to make it work more simply, and more effectively, to encourage greater retirement income saving. I have worked long and hard to create this legislation, and I believe that it represents a good comprehensive effort to enhance the future retirement security of millions of Americans. I thank the rest of the task force, and the majority leader, for this opportunity to lead in this important work, and I commend this legislation to the Senate for its favorable consideration.

Mr. GREGG. Mr. President, I rise today to announce the introduction of the Claremont Commission Act, which I am introducing, along with Senators Bob Smith, Torricelli, and Johnson. We chose this day because it is the anniversary of the historic event that prompted the introduction of this legislation. Two years ago on this very day, a concerned citizen from Newport, NH, Mr. Frank McConnell, stood up at a town meeting in Claremont, NH, and asked an insightful and thought-provoking question of Speaker Gingrich and President Clinton: What are they going to do about reforming our campaign financing system? The two leaders, who were attending the meeting, promised to create a bipartisan commission to study campaign finance reform and then shook hands on the agreement. That handshake was a famous and short-lived moment of solidarity and bipartisanship. At this time, sadly, no such commission has been created. The bill that I introduce today is a renewed effort to keep the promise made on that famous day 2 years ago. The Claremont Commission Act was introduced in a bipartisan manner to create an objective commission to look at the issues surrounding the reform of our Nation's campaign finance system. This legislation directs the commission to take important goals into consideration when making recommendations to the Congress with regard to reform legislation. These goals include: limiting the influence of money in Federal elections; increasing voter participation, creating a more equitable electoral system for both challengers and incumbents; and removing the negative aspects of financing of Federal elections. I believe that these are important goals to consider when Congress moves to make actual changes to our campaign financing laws. The Claremont Commission Act specifically asks the commission to consider and respond to more than 14 questions regarding the most important issues surrounding the campaign finance reform debate. I am especially pleased that the issues of soft money contributions, independent expenditures, and the role of unions will be addressed. In particular, the role of unions and their use of mandatory union dues to make donations to political campaigns is of concern to me. The commission will address the serious issues surrounding how unions finance their political activities, as well as the considerable influence that these organizations wield over the outcome of elections. I am pleased that the creation of this commission can begin to address concerns, as well as other Members of Congress' questions regarding soft money contributions and independent expenditures. The political infighting that has occurred over the years regarding the financing of our Federal elections will not cease unless a middle ground can be established. I believe that the Claremont Commission Act, by establishing a mechanism for a dispassionate analysis by a group of experts, can provide that middle ground. Hopefully, this bill will allow us to address the concerns of all Americans who have a growing sense of cynicism over our ability to resolve important campaign financing problems. In closing, I urge my colleagues to take a serious look at this legislation and consider the merits of commissioning a bipartisan recommendation regarding campaign finance reform.

Mr. GREGG

Mr. GREGG. Madam President, I wanted to talk a little bit about the agreement which we are about to reach, it appears, relative to the United Nations and how we are going to pay our arrears. I chair the Committee on Commerce, State, and Justice, which has jurisdiction over the appropriations that go to the United Nations. At the behest of the majority leader, Senator Lott, and at the request of the Secretary of State, Madeleine Albright, myself and Senator Helms and Senator Grams and our staffs have been meeting assiduously with Ambassador Richardson's staff, and the staff of Secretary Albright. We have made considerable progress. In fact, we believe we have reached an agreement as to how to handle these arrearages. The basic theme of this agreement is that we are going to ask the United Nations to be a better place. We are not going to ask them to do things which are unreasonable. We are not going to ask them to do things which are political. We are just going to ask them to do a better job of handling our money. And to assure that, we are going to set certain benchmarks. So, we are going to commit to the United Nations; we are basically going to give them what amounts to, in my opinion, an irrevocable letter of credit that we will pay the arrearages as we see them. The number that we agreed on I believe is significant, and I believe it will be agreeable to the people at the United Nations But, in exchange for paying those arrearages--and we are going to do it over a period of time--we are going to ask that the United Nations run a better shop, that it be more efficient, that it use those dollars more efficiently and that it make sure that it handles those dollars the way American taxpayers expect us to handle the dollars that they pay us. Because for every dollar spent at the United Nations today, 25 cents comes from the American taxpayer. It is very hard today to go back to the people in New Hampshire, my good people who have just been rated so highly as the great place to live by Money magazine--it is very hard to go back to them and say, ``Well, we are going to give the United Nations this amount of money for our dues but we are not sure where the money is spent, how it is spent, who it is spent on, or whether, when it is spent, it goes to where they say it is going to go.'' To try to correct that, we are asking that the United Nations meet certain very definable, enforceable benchmarks. The Senator from Minnesota, who I notice is on the floor, Senator Grams, has been a major player in defining those benchmarks, and of course the Senator from North Carolina, Senator Helms, chairman of the Foreign Relations Committee, has been a force of immense proportions on defining those benchmarks. But agreement appears to have been reached, at least between ourselves and the administration. It is an agreement which is fair and which gives the United Nations the dollars which they feel they deserve. But, in exchange for those dollars, it does require that the United Nations be responsible with the management of those dollars and the management of additional dollars that we will be giving them in the foreseeable future. This agreement, I believe, will be included in the foreign relations bill, the authorization bill for foreign affairs, foreign relations, which is going to be coming through--the State Department authorization. It will be marked up later this week. I just want to express my appreciation for all the people who worked so hard on this. We worked on it for about, I guess, now, almost 4 months. Fairly aggressive negotiations have occurred. I think it is good we have reached an agreement and it is positive for the process and it will immensely improve the operation of the United Nations, should the United Nations decide to go along with proposals that we have made. I presume they will because they are reasonable proposals. Madam President, I yield the remainder of my time.

Mr. GREGG

Mr. GREGG. Madam President, today the State of New Hampshire and a number of communities in the State of New Hampshire were afforded a singular and appropriate honor. The city of Nashua, my hometown, where I was born, raised, and went to school, was rated the best place in America in which to live. The city of Manchester and the city of Portsmouth were rated the sixth and fifth best places in the country in which to live. That means the State of New Hampshire, which is a small State--and to paraphrase Daniel Webster, a small State but there are those of us who love it--received the designation of having three of its major communities within the State identified as the best places to live of the top 10 in the country. In fact, only one other State, Florida, was able to put three communities in the top 10. And, of course, Florida is about 6 or 7 times the size of New Hampshire in population. In addition, no other State was able to put two of its communities in the top five, and New Hampshire has the first community and the fifth community in Nashua and Portsmouth. Those of us who live in New Hampshire and have enjoyed the fruits of being part of that wonderful community, understand that this is not an award which is received as a result of luck, but it is an award which is received as a result of a lot of hard work and, more important, a lot of community spirit. We are a State where people still care about their neighbors. We are a State where we care about how we deal with each other. And, as a result, we have built communities where crime is low, where education is extremely strong, where our health care is rated the best in the country, where our mental health care is rated the best in the country, where we are rated best in the country for caring for troubled children, and where we still maintain a State which has no sales or income tax and delivers effective and efficient and first-class community services to our citizens. And our citizens get involved. It is a State of voluntarism, a State where people understand if they are going to make their community work well they have to take the time to be involved in the local community activities whether it is the local Babe Ruth League or baseball team, or whether it happens to be the arts community or whether it is just the process of cleaning up the main street on cleanup day. So I rise to congratulate my fellow citizens of New Hampshire, to especially congratulate the cities of Manchester, Portsmouth, and Nashua, and with a unique emphasis on Nashua in that it was rated No. 1 and that it is my hometown, where I was born and raised and went to school, and I am very proud that they have done so well. I congratulate all of those who make New Hampshire such a fine place to live.

Mr. GREGG

Mr. GREGG. Madam President, for the information of all Members and on behalf of the leader, today, from 12 p.m. to 2 p.m., the Senate will be in a period of morning business. It is the leader's hope that the Senate will be able to consider S. 419, the Birth Defects Prevention Act. Again, this bill is noncontroversial and the Senate should be able to complete action on this important matter in no more than 30 minutes. In addition, it is the leader's hope that we will be able to consider some of the available executive nominations on today's Executive Calendar. The leader also hopes the Senate will be allowed to consider these items as we are fast approaching the July recess. In addition, the leader wishes to put all Senators on notice that there is much work to do between now and the start of the adjournment, and that Senators should be prepared to be present and working during the next couple of weeks. And the leader further thanks his colleagues for their attention.

Mr. GREGG

Mr. GREGG. Unless the Democratic leader wishes to go forward, I will proceed with my morning business.

Mr. GREGG

Mr. GREGG. Mr. President, I introduce, with Senators Ford, Hagel, and Graham a sliding-scale capital gains proposal, the Long-Term Investment Act of 1997. Given the sobering demographics associated with the impending aging of the baby-boom generation, it is more important than ever that laws enacted by Congress promote long-term capital investment and savings by all Americans. Central to this objective is a reduction in the current capital gains tax rate on long-term investments. A capital gains reduction was agreed to in principle in the budget agreement. We have a proposal that we believe embodies a fundamental change in tax policy at less cost. Over the next 10 years, S. 2 will cost $129 billion, while Gregg/Ford will cost $45 billion. We have developed a plan that would encourage long-term investments through a sliding-scale capital gains rate reduction. The plan would encourage individuals to hold assets over a number of years, allowing no reduction in the current rate on assets held for less than 1 year, with increasingly larger deductions to a maximum 50 percent reduction for investments held more than 8 years. This sliding-scale plan encourages investments that will benefit long-term savings and capital--such as providing for a child's education or retirement income. The bill also rewards the small business owner and entrepreneurs as it will allow for a significant reduction in capital gains taxation that benefits those individuals who invest in the economy through the creation of small businesses and jobs. By rewarding long-term investment in businesses and job creation and discouraging the quick fix that so often is associated with speculation on Wall Street, we will be placing our Tax Code and job base on a more solid ground. The Gregg/Ford sliding-scale reduction on capital gains taxation hinges on balancing two important goals--the promotion of savings and long-term investment through a significant capital gains cut, while also recognizing our current fiscal restraints. The recent budget agreement reached between the President and Congress calls for a net tax cut of $85 billion and a gross tax cut of $135 billion over 5 years. The details of how this tax package should be put together will be worked out by the appropriate committees in the House of Representatives and the Senate. The Clinton administration has indicated that it is for a capital gains rate reduction, but not in favor of a rate that dips below 20 percent. I believe that this bill is a consensus building bill that both sides can and will agree upon in the not-too-distant future. I ask unanimous consent that the bill be printed in the Record.

Mr. GREGG

Mr. GREGG. Mr. President, I rise today in memory of Nancy Jean Coutu, a Peace Corps volunteer who was murdered by native tribesmen on April 9, 1996, while serving as a Peace Corps volunteer in Madagascar. Nancy was a young woman whose life was dedicated to helping others. She was born and raised in New Hampshire and attended the University of New Hampshire. She was full of joy and giving and her desire to help others is what brought her to join the Peace Corps in 1994. She spent almost 2 years living in the village of Baraketa where she helped the villagers build a school and rebuild a small hospital. She also pursued her interest in the environment by studying the local ecology. Her tragic death was a shock to everyone who knew and loved her, including the people of Madagascar whose government posthumously awarded her a knighthood for her work in their country. Nancy's family and friends have chosen to honor her memory by creating a memorial to her on a beautiful maple-shaded knoll in Elm Brook Park in West Hopkinton, NH. During the summers of 1992 and 1993, while a student at the University of New Hampshire, Nancy worked as a park ranger at Elm Brook. There she spent many hours working to expand her knowledge and interest in the environment and to share her love of nature with visitors to the park. On Sunday, June 15, 1997, the memorial, with its large granite stone and plaque, and an oil painting of Nancy done by her mother, will be dedicated. In addition, because she was particularly interested in helping the handicapped to enjoy the many experiences offered by the outdoors, the park's wheelchair accessible elevated wildlife viewing observation deck, fishing platform, and nature trail will also be dedicated to Nancy. Nancy Coutu set a shining example of what can be accomplished through public service and voluntarism and I would like to join with her family, friends, and all those whose lives she touched with her love, in commending her for her courage and willingness to give of herself in order to make life better for others.

Mr. GREGG

Mr. GREGG. Mr. President, I introduce, with Senators Ford, Hagel, and Graham a sliding-scale capital gains proposal, the Long-Term Investment Act of 1997. Given the sobering demographics associated with the impending aging of the baby-boom generation, it is more important than ever that laws enacted by Congress promote long-term capital investment and savings by all Americans. Central to this objective is a reduction in the current capital gains tax rate on long-term investments. A capital gains reduction was agreed to in principle in the budget agreement. We have a proposal that we believe embodies a fundamental change in tax policy at less cost. Over the next 10 years, S. 2 will cost $129 billion, while Gregg/Ford will cost $45 billion. We have developed a plan that would encourage long-term investments through a sliding-scale capital gains rate reduction. The plan would encourage individuals to hold assets over a number of years, allowing no reduction in the current rate on assets held for less than 1 year, with increasingly larger deductions to a maximum 50 percent reduction for investments held more than 8 years. This sliding-scale plan encourages investments that will benefit long-term savings and capital--such as providing for a child's education or retirement income. The bill also rewards the small business owner and entrepreneurs as it will allow for a significant reduction in capital gains taxation that benefits those individuals who invest in the economy through the creation of small businesses and jobs. By rewarding long-term investment in businesses and job creation and discouraging the quick fix that so often is associated with speculation on Wall Street, we will be placing our Tax Code and job base on a more solid ground. The Gregg/Ford sliding-scale reduction on capital gains taxation hinges on balancing two important goals--the promotion of savings and long-term investment through a significant capital gains cut, while also recognizing our current fiscal restraints. The recent budget agreement reached between the President and Congress calls for a net tax cut of $85 billion and a gross tax cut of $135 billion over 5 years. The details of how this tax package should be put together will be worked out by the appropriate committees in the House of Representatives and the Senate. The Clinton administration has indicated that it is for a capital gains rate reduction, but not in favor of a rate that dips below 20 percent. I believe that this bill is a consensus building bill that both sides can and will agree upon in the not-too-distant future. I ask unanimous consent that the bill be printed in the Record.

Mr. GREGG

Mr. GREGG. Ten minutes.

Mr. GREGG. Mr. President, I rise again to recall some of the comments I made earlier, but also to address a couple of other issues that have been raised here. First off, I think it is good that the Senator from Massachusetts has finally admitted--I suspect maybe over the active opposition of his colleague from Utah--that this is a mandated program. He calls it a ``capped mandated program,'' I call it an unfunded mandated program, but the fact is, we finally got it out in the open. This is a brand new major entitlement, and it is a mandated entitlement. There is nothing discretionary about this, nothing at all discretionary about this. As I said earlier, if this is discretionary, this has the same relationship of being discretionary as my golf game has to Tiger Woods'. The simple fact is, it has no relationship to discretionary. Let's talk about a couple specific events that occurred relative to the States that get stuck with this program, because they are all going to get stuck with this program. Under section 2802, States lose almost all flexibility in designing health care programs for kids--almost all flexibility. Under section 2802, programs like the one we have in New Hampshire, which I described earlier which is covering in its demonstration period up to 50 percent of the kids we are trying to target without additional public costs, and we will get to the 100 percent as we develop a plan under the proposal in this budget agreement, which gives us the additional money to do that, but that plan will be wiped out. And there are 33 other States in this country that have initiatives going forward to address these targeted youth, targeted children, which programs would be put at dramatic risk, if not be wiped out. I suggest the interpretation of the amendment of the Senator from Utah is inconsistent with the amendment's language itself. The amendment states very clearly--very clearly--that States must comply with the Medicaid criteria for supplying health care, and almost in every State, these initiatives that are going forward do not comply exactly with the Medicaid criteria as for insurance purposes. So flexibility is denied. Not only does that happen, as I mentioned earlier, this amendment is just the ultimate in the Federal Government coming in and taking over an entire sector of health care. It is a nationalization of health care for, basically, kids and, thus, creating a tremendous movement from the private sector to the public sector with costs, as kids will move out of private-sector coverage on to public coverage. Not only does that occur, but this amendment specifically states that waivers are rejected now. I have to tell you, as a former Governor, it is hard to get waivers, but one of the good things that this President has done is that he has loosened up the waiver process, and Secretary Shalala has been receptive to States that come forward with ideas relative to Medicaid and have asked for waivers. I suspect Utah and I suspect Massachusetts--I know Massachusetts, and I know New Hampshire and New Mexico have all participated in this waiver process to try to deliver better health care using imaginative and creative ideas that the State health agencies develop. But do you know what this amendment says? It says, ``Tough luck, States. From here on out, we give no waivers at all''--the ultimate regulatory dictatorial action; the ultimate excess of the Federal regulatory structure. This is a power grab, pure and simple, an attempt to move the issue of how you finance health care for kids in America to the Federal level and, as a result, it is an outrageous--an outrageous--new mandated program. It is nice we finally have an admission of that after all the denial we heard earlier, which I found incredible, but finally we have an admission that this is a mandated program. The practical effect of creating this program will be it is going to cost an additional $20 billion on top of the $16 billion already in the budget for this targeted population which can be taken care of, as so appropriately presented by the Senator from Texas, with the $16 billion, which obviously can be taken care of because the President signed on to it and it is his No. 1 priority. This is such an insult to the President to bring this forward in this manner, because they are essentially saying the President didn't know what he was talking about when he said he could take care of this problem with $16 billion. They are saying we need $36 billion to do it. The reason they need $36 billion, and $36 billion is an extraordinarily low estimate, is because they have a nationalization plan. That is what they are planning, they are planning to have all the kids today who are in working families who have low incomes but who happen to be covered by health insurance moving off that private sector on to the public sector. There will be a stampede of employers essentially saying, ``We're no longer going to cover you, you have to be covered by the public sector.'' That is why the price is going up. That is why they need all this extra money. It is not going to give any child any more coverage of any significant nature. All it is going to do is allow the Federal Government to take over the program and allow the taxpayers to pick up a large percentage of the costs which is presently being picked up by the employer. It is truly an outrage for us--after we have been down this road for the last 40 years of seeing Federal programs that have not worked when the Federal Government has federalized them, programs where the States have been delivering services, and suddenly the Federal Government comes in and federalizes it and we see they do not work, and in an attempt to address that just a year ago, we tried to reverse the situation with welfare, for example, and move the programs back to the States--for us to have proposed before us a program which says essentially the Federal Government knows best, States are going to be written out of the process, and we are going to create a huge new cost to the taxpayers of this country so that some bureaucrats here in Washington can control the definition of how kids are delivered health care and in the process wipe out the coverage that is occurring in the private sector and the capacity of States to have flexibility, it is just a public policy initiative which is totally inconsistent with what has been the flow of events in this country from a standpoint of knowing what works and what does not work in the last few years. We have this one other issue that keeps being thrown in our face: We have a choice between tobacco and children. That is not the choice. The choice is between whether or not we want to nationalize health care or whether we want to let the States continue to participate in the process. There is no choice on coverage here. The President has demanded, and we have put in because we believe it is appropriate, $16 billion to cover kids, to cover the targeted population. That is a fait accompli; it is done. The extra $20 billion demanded in this amendment, which is going to be paid for by a tobacco tax increase, has nothing to do with coverage. What it has to do with is federalization, nationalization of a program. So this does not have anything to do with a choice between kids and tobacco. The kids have already won. We have already in this bill taken care of that issue. Now, if the other side were honest about this, they would allow us to divide the question. They would allow us to divide the question, and let's have a vote on the tobacco tax increase, independent of this brand new major entitlement. But they are not going to let us divide the question. I will move to divide the question. It will be objected to. I am happy to have an up-or-down vote on tobacco tax increases. As Governor, I increased tobacco taxes. I do think it is an area we should leave to the States, because I do think it is a revenue source most States like to use. I know my State of New Hampshire right now has another tobacco tax proposal on the table to pay for kindergarten. If this goes through, I suspect the projected income from that tax increase to pay for the kindergarten program will be severely restrained. These two have been joined together in order for somebody to have a nice little phrase they can put on television at night, but it has no relationship to reality, substance or the manner in which this bill is structured and the way it will deliver services, because we have, in the bipartisan budget agreement--well, the President has in the bipartisan budget agreement, with the support of the leadership of the Congress, committed to caring for these kids and making sure they have insurance. All this plan does is create a brand new huge bureaucracy which is going to, once again, federalize the system, write the States out of the process, eliminate the private sector effort in the area and give a Federal bureaucracy new lateral control over an element of the economy or an area of the economy where the States are making progress and where with the underlying budget proposal problem will be generally solved. So it is about as misdirected a proposal as I have seen in recent times, probably not since the Clinton health care plan have I seen a more misdirected proposal, and I believe that was appropriately rejected and I hope this proposal will be appropriately rejected. I yield back my time.

Mr. GREGG. Mr. President, I rise in opposition to the proposal that has been brought forward by the Senator from Utah and the Senator from Massachusetts. I oppose it on a variety of different levels, and let me talk about them. First off, let us go back to where we stand here. We have before us a budget agreement, a bipartisan budget agreement that was worked out in negotiations, extensive negotiations, between the White House, the Republican leadership of the House and Senate, and the Democratic leadership of the House and Senate, at least relative to the Budget Committee, and that agreement included in it language to address the issue of uncovered children who are of a low income. Let us define the size of this issue for a second because there has been a lot of misrepresentation on this so far on this floor. There are about 9.8 million kids who it is believed do not have insurance, or about 13.8 percent of the child population of the country. Of that group, 3.7 million are qualified to be covered by Medicaid. In other words, under the law that we presently have, they really do have insurance; they just have not been brought in under Medicaid. So we do not need a new law to cover those kids. And of that number, that 9.8, we have reduced it now by 3.7 and you are down to 6.1. Of that 6.1 that is left, about 2.9 million are over 200 percent of poverty--over 200 percent of poverty--which means that the family has an income of some ability and for some reason they are not using that income to cover those children. So the number of kids that are under 200 percent of poverty who are uncovered by Medicaid is really 3.2 million. So that is the population we are talking about. Now, in this bill, the bipartisan agreement that was reached, approximately $16 billion was set aside to cover children of low income who are not covered. That is a very significant commitment and certainly more than enough money to pick up 2.9 million children--to pick up the 3.2 million children who are uncovered today and to also make sure that in the Medicaid accounts we can pick up those children who are covered today under Medicaid but have not been brought in under Medicaid. So this bill as it is proposed, as it was brought forward, the bipartisan agreement as it was brought forward already had in it a very substantial commitment to children who do not have health insurance who are in low-income families. What else would you expect? Essentially, one of the great insults of this amendment, one of the great insults of this amendment is it is saying that the President of the United States, who reached this agreement on this budget, does not care about children, does not care about uninsured children. Essentially, that is what one of the underlying tones of this amendment is. Or I suspect some of the authors of this amendment feel this way anyway, that the Republicans do not care about uncovered children, which I would argue is totally inaccurate and inappropriate but maybe from a partisan standpoint is a point made. It is ironic that one of the elements of this proposal is a representation that the bipartisan budget package, which has in it $16 billion specifically directed at children who are not presently receiving health care insurance and who are in low-income families, is not enough, that the President did not know what he was doing; that he does not care; therefore, we have to have this brand new layer placed on top of the package. It really is a position which is hard to defend just on its face. But on the face of its indefensibility let us go into the substance of it because the substance of this proposal is totally indefensible. There has been a representation made that this is a discretionary program. If this is a discretionary program, my golf game is the same as Tiger Woods'. They are about as closely related. The fact is that this is not a discretionary program or anywhere near in the ballpark of discretionary programs. This is a mandatory unfunded mandate on the States. It is a mandatory program on the Federal Government. It is a program which is grossly underestimated in its cost because of the impact it will have on the marketplace in taking kids who are already in the private-sector insurance realm and moving them onto the public- sector realm. It is a classic big Government solution to a problem which ironically the bipartisan budget agreement has addressed not only with dollars but with initiatives to try to give the States the creativity to take this issue on and which the States are today actually taking on and resolving. And I will get into that in a second. But let us go back to this complete red herring, that this is some sort of discretionary program. Now, the proposal as it comes to us is in vague terms so we have to go back to the bill that was introduced by the Senators who are the authors of this agreement in order to find the underlying language which defines the program. That bill is not included but it is obviously assumed, and if you go back to section 2802 of that bill, this sets up the new entitlement. In the bill in this section a State must--it does not say ``may.'' ``May'' is a discretionary word. ``Shall'' is not a discretionary word. It says, ``The States shall guarantee issuance of Medicaid level benefits to all eligible children.'' And not only do they say ``shall,'' they cover that ``shall'' with all sorts of restrictions; 39 times in this bill the States are told what to do. They shall do this, they shall do that, they shall do this. Every time it says that, every time it says that in the bill, it is a mandate, and every time it says it in the bill it is a major cost. Section 2803 is where the shalls begin. Now, not only are the folks who drafted this bill not satisfied with creating a mandate on the States--and I will get into the unfunded aspect in a second--not only are they unsatisfied with creating a mandate on the States, they decided let's create a new mandate. Let's do it the old-fashioned way. Let's not only mandate what the States have to do. Let's mandate the private sector at the same time. This bill includes a private-sector mandate that says essentially, depending on how a State defines its Medicaid eligibility rules, every private employer in the State must supply health care benefits at the same level as Medicaid to children. Wow. This is a big-time, old-fashioned Government proposal. This is right out of the old 1960's school of Lyndon Johnson, how you make Government gigantic and how you make Government not work, I would point out, because one of the things we found out is that when we create one of these massive new entitlements that absorbs a whole area of activity under Federal control--and this entitlement does exactly that, basically giving unbelievable authority to HHS, eliminating waivers for Medicaid, grandfathering the HHS regulatory structure. When you do that, what happens is that you create major Federal programs which fail. Why do they fail? Because all the knowledge does not happen to come out of Washington. And what is happening in the States today is that you are seeing a tremendous amount of creative initiative to try to cover these kids who need to be covered. There is no argument about coverage here. The bipartisan budget agreement states there will be coverage. The argument is about whether or not you are going to do it with a massive new federally dominated, directed, controlled and managed program or whether you are going to do it by allowing the States the flexibility of initiating programs and addressing the issue of the concerns of these kids. This bill creates a brandnew, major Federal entitlement. It is not only a Federal entitlement in the classic sense of an entitlement on the States; as I mentioned, it is an entitlement that forces the private employer to take action, and that is a mandate, an unfunded mandate. Of course, the first action which this Congress took when the Republicans took control of it was to say that we were not going to create unfunded mandates anymore. At least, if we were, we were going to require a supermajority. So this bill should be subject to a supermajority if it ever came up for a vote. But whether it is or not, it undermines the intent, which was to stop putting mandates on the States that are unfunded. Now, why is this unfunded? Because, of course, there is this dollar figure that is attached to this. It is an additional $20 billion which is paid for by the cigarette tax--which is not the issue I am addressing, the cigarette tax. It is unfunded because of the way it is structured. It guarantees that the cost of this health care package will exceed the amount of money that is in the proposal--guarantees it. All we need to do is look at history. All we need to do is look at the CBO estimations of what would happen if you applied Medicaid coverage to a full group, to this targeted population. We know that the practical effect of that will be to exceed $20 billion by who knows how much, but it will be a heck of a lot. So what you have created is an unfunded mandate. You have created a cap that says, all right, States, the Federal Government will require you to pay this money. We know it is not enough money, but we are going to require you to pay it. Then when we go over the amount of money that we are going to put into the package, well, you have to pay it yourself. You have to pay the difference. Unfunded mandate. And some will say, well, that cannot be. Why would that be any different? If that is the case, doesn't the present budget agreement understate the amount of money that is necessary to cover these children? Well, the difference here is in the insidiousness of this agreement, of this proposal in its ability to draw people into a Federal program. Because the way this proposal is drafted, it absolutely guarantees for all intents and purposes that people will be moving out of private-sector coverage and into the public-sector coverage, that a lot of children who are today being covered by their employers, by their parents' employers are going to end up moving over to be covered by the Government. Why is that? Because it is requiring a one-size-fits-all health care package be applied to all children, all children who fall in this income category, but, even more importantly, under the way this bill is drafted and interpreted, applying that same package could be required upon all employers within a State. So you are going to have a dramatic, what is known as woodwork effect, where people move from the private sector coverage into the public sector coverage. It is just going to be overwhelming. What employer in their right mind is going to say, ``OK, I am going to continue covering this parent's children,'' when the employer is already paying a huge tax burden and the Government is being told that they must cover this child if this child is not covered by the employer. Very few will be so altruistic. For all intents and purposes, what we are doing is federalizing the health care system--nationalizing the health care system, not federalizing; this is no Federal program, this is a national program--nationalizing the health care system for all children, for all intents and purposes, who fall into this category, the majority of whom, today--the majority of whom, today, are covered by private-sector insurance. So, the open-ended cost of this program is absolutely staggering--staggering. And the concept that the costs will be controlled to $20 billion is absurd on its face, equal in absurdity only to the claim that this is some sort of discretionary program. How does our bipartisan budget agreement, which the President has signed on to and which tries to address these children's concerns, approach this issue? Essentially, what it does is acknowledge the fact that in the States there are some things going on that are working. Take my State of New Hampshire, for example. There are 33 States, I believe, that are pursuing this type of approach. Recognizing we have a targeted uncovered population that needs to be covered, we have set up this program called Healthy Kids. This is a partnership between the private-sector insurers and the State. In fact, at the present time it is hardly costing the State anything because it has gotten the private- sector insurers to come in and cover these children. In the targeted area where they are doing the demonstration program, 50 percent of the kids who would fall into the uninsured categories which this bill alleges it is trying to cover are being covered at essentially no additional cost to the taxpayer--50 percent. It is a darned successful program. It would not be able to continue under this bill. All 33 States that have initiated creative programs to address children's health insurance would have their programs wiped out because we in Washington have decided to take over the issue, to nationalize the issue with this proposal put forward by our colleagues. So, a program which is insuring 50 percent of these kids at no cost to the taxpayers will be replaced by a program that will draw a whole new group of kids out of the private sector into the public sector to be covered and will, in the process, drive up costs dramatically and increase the taxpayers' costs dramatically, and, I would point out, for that 50 percent of the kids who presently have coverage under the Healthy Kids Program, will have almost no impact on their quality of health care. So, what our bipartisan budget proposal puts forward--not ours, the one put forward by the President and the leadership of the Senate and the House--is to allow these types of initiatives to proceed; not with as much flexibility as I like, and I may offer an amendment to give these States more flexibility, but with a heck of a lot more flexibility than is proposed by this straitjacket of mandated unfunded mandates in this bill that is the underlying essence of this proposal. So, why not let the States try to do it? Why not say to the States: All right, there is a population out there that is not covered. See what sort of programs you can come up with to cover them and meet these limited criteria, criteria that they have to be covered under a certain health care structure. It is working, working in 33 States, but it will not work after this bill is passed. Let me read part of a letter I received from the deputy commissioner of health and human services in New Hampshire, who is a professional. She is not a political appointee. She is a professional. She was looking at this question of how we address these kids who are in need, and thinking of the Healthy Kids programs that we have in New Hampshire and evaluating the various programs. Here is what she stated was the core of the need, in the way the Congress should approach this issue. She says: Consideration must be given to balancing the financial incentives provided in the States to implement health care expansion while retaining sufficient flexibility for innovation. There are multiple [multiple, a word which appears to have escaped the concept of this bill] multiple strategies to extend health care coverage to the uninsured, including preventive, catastrophic coverage options. Please recognize the efforts that are currently underway in many States across this Nation and their value in promoting our common goal, extending health care to those that currently have none. Basically, what she is saying is what I suspect every administrator of health care at every State agency of health and human services would say if you asked them. It is their goal to cover the kids who are not covered. What the bipartisan budget agreement does is fund that ability. What the proposal before us does is deny that ability, relative to flexibility at the State level, and to take out of the hands of the States the ability to manage this issue in any way, shape or manner, and to nationalize the health care delivery of--essentially all children who fall within this income category, but potentially even a dramatically larger group of people, if the bill is applied to private employers, as I happen to believe it will end up being under its present language. So, this bill--which is brought forward to us as some sort of proposal that is a discretionary program just meant to help kids who do not have coverage--will, in my opinion, have the practical effect of not only not accomplishing its goal, because it is certainly not discretionary--and I do not think it is going to help any more kids than would be helped under the bipartisan budget agreement structure as is proposed--but it would create a massive new entitlement, a massive new unfunded mandate, a massive new federally directed regulatory structure, and would essentially emasculate the private sector's efforts to respond to this area, and private insurance as it presently covers these children. I can't think of any program which would be more counterproductive and, put in the context of the history of other nationalization efforts, will be less successful than that. I mean, essentially we have been down this road. We have been down this road and we found this type of approach to solving national problems does not work. Having the Federal Government come in and take things over does not work. This budget agreement attempts to address this issue constructively. It funds, at the level of $16 billion, children who do not have health insurance coverage, yet it leaves some modicum of flexibility with the States to address the issue. So, I find this proposal to be not only not compelling, but to be extraordinarily counterproductive to its underlying goal, which is to obtain fiscal responsibility and to cover children who do not have health insurance. I yield the floor.

Mr. GREGG. I yield myself such time as I may consume off the underlying bill.

Mr. GREGG. How much time remains?