Tom Harkin

Mr. HARKIN

Mr. HARKIN. I thank the Senator.

Mr. HARKIN. This says, ``The President and Congress should encourage the Federal Reserve to lower interest rates.'' It didn't say we should have them consider it. That time has passed. I might have agreed with the Senator from New Mexico a year ago, that they should consider it. Now the time is critical. If the Federal Open Market Committee doesn't act next week, they don't meet again until November. That is why it is so crucial that we, as policymakers, send a strong signal, not that they should consider reducing interest rates, but they ought to do it. We ought to back up what we know is right, back up what the Business Roundtable and almost every economist is saying that we have to do. Is that interfering with the Fed? Not at all. But it is telling them what we, as policymakers, believe and feel they should do at their next meeting, and that is to promptly reduce interest rates. I thank the Senator from New Mexico.

Mr. HARKIN. Maybe we could reach an agreement on language here.

Mr. HARKIN. I thank the President. As David Wisk, chief economist of Standard & Poor's DRI, has complained, ``They have got to come around. I'm not sure what it will take.'' Let me repeat that. As David Wisk, chief economist of Standard & Poor's DRI, said, ``They''--the Federal Reserve--``have got to come around. I'm not sure what it will take.'' I thought one of the things it might take is for the Senate of the United States to clearly express itself to the members of the Federal Open Market Committee to lower interest rates now. There are increasing signs of a possible recession. Thirty-year Treasury bond rates have sunk to record lows and are now below the short-term Federal funds rate. This is a drastic warning signal. Again, I would point to the chart here ``30-year Bonds'' now lower than the Federal funds rate. That should scare us all. That should point to what we have to do in terms of lowering our short-term interest rates. Wholesale prices slid a steep 0.4 percent in August. In fact, for the first 8 months of this year producer prices have fallen at a 1.4-percent annual rate, compared with a 1.2-percent rise in 1997. Again, I have talked about our farmers at great length and about what is happening to them and what is happening to our commodity prices. I would start to wrap up my comments again just by saying that if someone voted because they don't want to lower interest rates, that is fine. While I think they are wrong, I will be glad to debate that, if we could ever get a debate on this issue in the Senate; no one seems to want to debate that issue. Do we say somehow we can't express ourselves in telling the Federal Open Market Committee that they should lower interest rates--our language said promptly reduce interest rates--that somehow we can't say that because the Fed is independent, because the Fed is so sacrosanct that we can't touch it, that somehow we have to couch it in weak terms such as the Fed should only ``consider'' lowering interest rates? Why do we have to beg the Federal Open Market Committee to do something? Does the Congress of the United States work for the Federal Reserve System? Are they our bosses? Are they the ones who pull the strings and tell us what we can and cannot do? We seem very reluctant in even expressing our views, because somehow it would politicize the Fed. We were not politicizing the Fed; that would take legislation. This was a sense-of-the-Congress, a non-binding resolution. I hope that the members of the Federal Open Market Committee will promptly reduce interest rates six days from today. Unfortunately, as the Christian Science Monitor recently reported, there are members of the Fed Open Market Committee who still believe we should worry about an acceleration in inflation. I am just hopeful that Mr. Greenspan and others do not take this vote as a vote that they should not reduce interest rates. A number of Senators said to me, ``Well, that's what they are going to do anyway.'' Well, I am not so certain. I hope they will. They should have reduced interest rates two years ago when I took to the floor at that time and started calling on the Fed to do that because there were drastic signs in our economy, that there was little inflation in the economy, that there was no reason for them not to reduce interest rates at that time to help our farmers and our working families out there. I just hope it is not too late. I just hope that the Federal Reserve does not misinterpret this vote. One of the reasons that I objected to the Senator from New Mexico bringing up this other sense of the Senate that would just ask them to consider lowering interest rates is that I personally believe it is beneath our dignity and our responsibility and rights as Senators to go hat in hand to the Federal Reserve and sort of beg them to do something when we ought to be able to stand on our own two feet and tell them what we believe they should do. I yield the floor. Mr. GRAHAM addressed the Chair.

Mr. HARKIN

Mr. HARKIN. Mr. President, as the second largest economy, Japan's poor economic situation is going to have a very significant effect on our economy and the economies of most other countries. Again I quote Fred Bergsten, a very respected expert in international economics. He urges that ``the United States and European Union should globalize the strategy of cutting their own interest rates. This would encourage capital reflows to the crisis countries, reduce their debt burdens and improve their competitive position by promoting a stronger yen. It would also ensure continued world growth and help prevent further stock market declines.'' Mr. Bergsten went on to note the fact that the 30-year bond interest rate is below the Fed funds rate and urged a cut in this rate by a full percentage point. Chairman Greenspan recently said that the U.S. can't ``remain an oasis of prosperity'' in ``a world that is experiencing greatly increased stress.'' Again, this statement does appear to be a significant and positive shift in the views of the Chairman of the Fed. However, I am concerned that there are members of the Federal Open Market Committee who both refuse to consider the global economy when determining monetary policy and are still worried that low unemployment will automatically trigger inflation. The financial crisis in Asia, Latin America, Russia and many other areas of the world poses a serious threat to our economy and, to date, the United States has not established the appropriate monetary policy to minimize it. The FOMC, through its control of the federal funds rate, has the ability to take decisive action against the economic problems that face us. Many economists note that devalued currencies in several countries will not only reduce the rate of inflation but also sharply increase our trade deficit, eliminating many jobs and slowing growth in the process. Worldwide commodity prices are at their lowest level in decades. With regard to our record trade deficit, on September 18, the Christian Science Monitor reports that ``So far this year, the trade deficit in goods and services is running at a record annual rate of $185 billion, 68 percent higher than last year's record deficit of $110 billion. America's deficit with Pacific Rim countries hit $87.8 billion in the first seven months--42 percent above the imbalance for the period in 1997.'' The September 7 issue of Insight Magazine, says that ``Santa Claus is coming to America, only his goods are making the early trip by sea rather than sleigh--in huge freighters filled to capacity.'' What will this mean for the U.S. economy? Most importantly, it means a significant loss of jobs, perhaps as much as 1.1 million. In fact, Wilbur Ross, the senior managing editor of the Rothschild Investment Group, believes that ``the loss of American jobs due to decreased domestic production for export will outweigh any short term benefits of lower prices.'' Experts on balance-of-trade issues say nearly every major industry will be affected: automotive, steel, electronics, appliances, machinery, textiles and apparel. Mr. President, lower interest rates would allow people in other countries to buy out goods, and, in turn, reduce the risk of Americans losing their jobs. Lower interest rates are also needed to help our farmers. Worldwide commodity prices are at their lowest level in decades. The price of farm commodities are connected to this problem, and we know what is happening to farm commodities in our country. I was just recently in the Midwest, and I can tell you that corn, beans, wheat and all the attendant crops are at their lowest prices in years. They are falling dramatically. Livestock prices are also going down. We are seeing average hog prices this year at their lowest level since 1974 and, again, no indication that they are going to go up. This is an idea of what is happening to corn prices. We can see how they are dropping in the Midwest. I have shown these charts before in discussing the need for some legislation on agriculture. Basically, what this chart shows, and all the other charts indicate, is corn, soybeans, wheat, cattle hogs--all the commodities we have in the farm sector--are drastically dropping, and dropping very rapidly. Wayne Angell, a former Federal Reserve Governor appointed by President Reagan, and one of the last experts in farm economy to sit on the Federal Reserve Board, I might add, said on September 9, ``The Federal Reserve should cut interest rates to stem declines in the prices of key commodities.'' Angell goes on to say that, ``If commodity prices continue to fall unchecked, the U.S. economy risks a fall in the prices of hard assets, such as real estate, with potentially severe risks to the economy.'' He said that on September 10. He is right, we are already seeing this. We are seeing this happen in the Midwest. Already we are seeing a softening of land prices, and perhaps it could lead to a downward spiral. I and many others in this body are working on solutions to fix the problems in the ag sector, like increasing loan rates, providing storage payments to farmers, helping those who have suffered disasters, helping to do something about the Federal Crop Insurance Program. One of the best things the Federal Reserve can do for farmers is lower interest rates. There are direct effects. For example, a 1-percent reduction in interest rates means the average farmer in Iowa will save $1,400 in interest payments on their land each year. In addition to reductions in land payments, lower interest rates means farmers will be able to receive a much-needed break in the prices they pay for new machinery, fertilizer and seeds. It means that farmers' incomes will increase and the negative effect on the rural economy will be somewhat reduced. Again, for example, a 1-percent reduction in interest rates means a typical 950-acre grain farm in Iowa will see an increase of about $2,500 in income a year. But the indirect effects of lower interest rates, as I mentioned, are even more important. We need the engine of the U.S. economy working at full speed to help the world economy to recover. Lowering interest rates will help restore worldwide markets for our agricultural goods. As I have said many times in the past, lower interest rates amount to a badly needed tax break for hard-working families. Mr. President, the U.S. economy is the only large, healthy economic engine in the world, and if our economy does slow (and our growth increased just 1.6 percent in the last quarter compared to 5.5 percent in the first quarter), it will be exceedingly difficult for the worldwide economy to recover. The chance of a long, deep, worldwide economic recession is, unfortunately, very possible. There are already increasing signs of a possible recession in the U.S. economy. For example, 30-year Treasury bond rates have sunk to record lows and are now below the short-term Federal funds rate. This is indeed a yellow warning light that the U.S. economy could be headed for a significant decline. Again, this chart shows that. The 30-year Treasury bond rates are now lower than the short-term Federal funds rate. That sends a very powerful signal that we could be headed for a very, very steep decline. Wholesale prices slid a steep 0.4 percent just in August alone. For the first 8 months of the year, producer prices have fallen at a 1.4 percent annual rate, compared with a 1.2 percent rise for all of 1997. Nobel laureate Milt Friedman, with whom I do not very often agree on economics, called this a ``significant decline.'' And former Fed Vice Chairman Alan Blinder, says: If you ask about the prospect of deflation and you restrict your attention to goods, the answer is yes, and in fact we've had some. So, Mr. President, we are already seeing troubling deflationary signs in our own economy. Action must be taken now. The fall in the U.S. stock market, another flashing warning signal, will clearly have its own impact on what is referred to as the ``wealth effect.'' To describe the troubling nature of this situation, I would like to quote an article from the September 14 issue of Time magazine. The article pointed out that: A slumping stock market can certainly add to the drag on a slowing economy, through the so-called wealth effect. In a rising market, economists estimate that for every dollar of increased wealth, consumers spend an additional 4 cents. And, they often stop spending that money when their stock gains erode. If $2 trillion has been lost from investors' pockets over the past couple of months, then at 4 cents on the dollar we could expect an $80 billion drop in annual consumer spending, or about 1% of the total U.S. economy. While that alone is not enough to stop the economy from growing . . . it could combine with the global currency crisis to tip the U.S. into recession later this year or in early 1999. The article in Time goes on to say that: . . . a persistent stock market decline can also hurt the economy by making companies more cautious about expansion and hiring. That usually means layoffs or plant closings, which ripple through our economy as laid-off people cut spending. Mr. President, I ask unanimous consent that this article from Time be printed in the Record.

Mr. HARKIN. I object. Mr. President, I suggest the absence of a quorum.

Mr. HARKIN. One argument against lowering interest rates is that our unemployment levels are already low. Some say that our current rate of unemployment at 4.5 percent is too low, companies cannot find workers and will be forced to pay more, hurting their profits, hurting the economy. Businesses have surprised many economists by creating multiple ways to improve efficiency. Of course, more can and should be done. I believe there is room for additional job growth. Companies have also been effective at finding new employees who were not actively looking for work and were, therefore, not counted as unemployed. We need economic growth to continue in order to improve wages, to bring still more people into the labor force, to give those working part time the chance to work full time, and to provide opportunity for those on welfare, and for those who have entered the workforce at the bottom rung, to start moving up the ladder. With only those looking for work counted as unemployed, there are still millions of others not counted as unemployed who could be brought into the workforce. As difficult as it may be to find workers now, this will be viewed as a small problem compared to a serious economic downturn, a recession, and deflation. Again, if inflation should start to accelerate we can always apply the brakes and whatever inflation may have occurred can be reduced. But to forever limit our growth to a preset limit blocks Americans from the opportunity of reaching their full potential. If we do move to deflation, if we go into a serious recession at this point, without America's strength, the world's economy could sink to Depression-era levels. For the sake of our farmers and our small business owners, for hard- working Americans, and the rest of our economy, and for countries around the world, I sincerely hope that Chairman Greenspan and the Federal Open Market Committee do not misjudge the current economic indicators in the U.S. and worldwide economies. While I am pleased that Chairman Greenspan recently hinted at a possible rate cut, I am afraid the Federal Open Market Committee may have already misjudged the ominous economic signs that are out there. I only hope it is not too late. That is why, Mr. President, the Senate must send a clear signal to the Federal Reserve: Lower interest rates now. The Fed must show that it has as much concern for the jobs of American workers as it has for the interests of U.S. investors throughout the world. An immediate cut in interest rates will give our economy the boost it needs to maintain its strength during the next year as the fragile nature of many economies throughout the world recovers. So, Mr. President, that is what we need--for this Senate to send a clear signal that we have looked at the economy, we have listened to our constituents, we have been out in our States; we see it, we feel it, we know it. Things are declining --I can tell you that--in the farm sector and in rural America. We know what is happening worldwide. Now is the time for the Fed to act for a significant cut in interest rates. Mr. President, I yield the floor. Mr. GRASSLEY addressed the Chair.

Mr. HARKIN. Mr. President, tomorrow I will be laying down a Sense of the Congress amendment calling on the Federal Reserve to lower interest rates as a preemptive strike against a recession in 1999. This is a very crucial issue coming at this point in time. I am going to take some time to speak about it and lay out why it is necessary for us, I believe, to take this kind of action and to express ourselves. The amendment I will be offering on behalf of myself and Senators Dorgan, Conrad, Wellstone, Kerrey, and Bryan will urge the Federal Open Market Committee to promptly reduce short-term interest rates as a preemptive strike against a recession in 1999. One week from today, the Federal Open Market Committee will meet to vote on interest rate policy. That is why it is crucial that the Senate send a clear message to the Fed: ``Lower interest rates now.'' Mr. President, if we want to significantly decrease the number of bankruptcies in this country, one of the best ways to accomplish this important goal is to reduce the risk of people losing their jobs. With the chance of deflation and a recession rising, we need to lower interest rates. Over 2 years ago, against the conventional wisdom of the time, I took to the floor of the Senate to speak and to openly put a hold on Chairman Alan Greenspan's renomination to the Federal Reserve Board until we had a debate on U.S. monetary policy. One of the reasons I did this was to ensure that we had a significant debate on the Fed's focus only on inflation to the exclusion of other factors. I believed then, and I believe now, that it is wrong for the Fed to maintain high real interest rates without any significant signs of inflation threatening our country. I believed at the time, and I continue to believe, that we should lower interest rates, allow the economy to grow, and to provide a maximum level of employment. Specifically, I said at the time that I thought our economy could grow at least at a rate of 3.5 percent a year for a number of consecutive years, with an expansion of the labor force and improved productivity. I also argued that we could at the same time have an unemployment rate of 4.5 percent a year without triggering a significant level of inflation. That is what I said 2 years ago. At the time, many economists and economic writers took me to task on this, openly questioning my views. Many of these economists believed in a theory--an economic theory-- which called NAIRU, which stands for the ``nonaccelerating inflationary rate of unemployment.'' I will get to that and what it means in just a moment. But a couple of years ago, advocates of NAIRU, believed that if the unemployment rate fell below a certain rate--at that time it was somewhere between 5.5 and 6 percent--if the unemployment rate went below that level, employers would have to significantly raise wages and salaries igniting a 1970s style of inflation. And these economic theorists believed that the Fed should raise interest rates as a preemptive strike against inflation. In other words, if unemployment ever fell to that level, regardless of anything else, these economic theorists under this theory believed that the Fed should raise interest rates right away to preempt any inflation from occurring. That is what the Fed has done in the past. They have raised interest rates to a very high level. But look where we are today. The unemployment rate currently is at 4.5 percent. It has been below 5 percent for nearly a year and a half, and it has been under 6 percent for 4 years. And there is no inflation. Our gross domestic product was 3.8 percent last year and 5.5 percent during the first quarter of this year. During this time, inflation hasn't gone up. In fact, it has gone down. The rate has decreased to its lowest level since the 1960s during the past 2 years. To Chairman Greenspan's credit, he has recently distanced himself from the view that there should be a preemptive increase in interest rates, simply because of NAIRU. He has, through his actions at the Fed, allowed our economy to grow and unemployment to fall without raising interest rates. So unemployment has fallen from 6, to 5.5, to 5, to 4.5 percent. Under NAIRU, this would have triggered automatic increases in interest rates, but under Mr. Greenspan they have not. And I applaud him for that. Unfortunately, many on the Federal Open Market Committee have continued to push for higher interest rates even as the signs of an economic slowdown in the United States continue. While they have not succeeded in raising interest rates, they represent a major obstacle against lowering interest rates, an action which is becoming increasingly needed. Real interest rates are at a historical high. Although the Federal Open Market Committee has not directly raised interest rates since March of 1997, real interest rates are rising. In fact, real interest rates are at historically high levels, the highest in 9 years, because inflation has continued to fall while the Federal Reserve has failed to lower the Federal funds rate. The chart that I have here points that out. This chart shows, for example, the real Federal funds rate. That is the market rate less the CPI percentage. As we can see, it has been, for a short period--from 1996 to 1997--going up, and last year and this year has gone up. Actually, this tick, it would be going up here again over the last few weeks. So we have about 4 percent real Federal funds rate right now. In fact, even Chairman Greenspan noted during his Humphrey-Hawkins testimony on February 24 of this year: Statistically it is a fact that real interest rates are higher now than they have been on the average of the post- World War II period. That is a quote from Mr. Greenspan. It is a fact that real interest rates are higher now than they have been on the average of the post- World War II period. I ask why--why are real interest rates so high? There is no inflation; no signs of inflation. In fact, the economy is slowing down a little bit. We see some recessionary signs. Yet we still have these high interest rates. The high interest rate policy that is being imposed by the Federal Reserve, I have always said, is really a stealth tax on hard-working American families, and I believe it is a contributing factor to the near collapse of several economies worldwide. It is time for the FOMC, the Federal Open Market Committee, to provide a significant and immediate cut in interest rates as a preemptive strike against a recession in 1999. Interest rates have a significant impact on virtually every family in America, on every producer, business and family farmer in this country. I believe lower interest rates have been needed for a long time, but now quick action is truly crucial for our country's well-being. The economic signs, not only in the U.S. economy but in economies worldwide, demand swift and appropriate action to counteract the problems that lie ahead. I can only say that I believe we have waited too long. Just as inflation can spiral, and spiral out of control, so can deflation spiral out of control. I hope that because the Federal Reserve would not act a little sooner, that we have not reached a point where we are now in a deflationary spiral, and that even more drastic action may have to be taken. But I do believe that significant action has to be taken right now to lower these interest rates. Don't just take my word for it. Here is a quote from Mr. Jerry Jasinowski, the President of the National Association of Manufacturers, and Earnest Deavenport, the CEO of Eastman Chemical Company. On September 8th they said: The current volatility in world financial markets and its threat to global growth . . . could lead to recessions throughout the developing world and Eastern Europe, as well as a slowdown in the United States. Here is what they said on this chart, on September 8: We recommend a significant loosening of monetary policy. Specifically, the Federal funds and the discount rates should be reduced by 50 basis points as soon as possible.'' That is what they said on September 8. Or we can listen to Mr. John Smith, President of General Motors. On September 15th he said, here it is on this chart here: The question is whether the Fed will wait until the recession is imported and then act, or act now. GM believes it should act now. That is the President of General Motors on September 15, just last week. Or, James Glassman at the American Enterprise Institute, he has written several op-eds in the Washington Post calling on the Fed to lower interest rates. Again he said recently: The most important step right now is for the Federal Reserve to cut interest rates. That would pump more money into the system, encouraging businesses to borrow and consumers to spend. It would also temporarily weaken the dollar, thus helping the currencies of countries in dire economic straits. I could go on all day quoting business leaders, economists, editorial writers and others calling on the Federal Reserve to lower interest rates. From the Business Roundtable to the U.S. Chamber of Commerce, to the Economic Policy Institute and progressive economist Jamie Galbraith at the University of Texas, from the chairman of the Joint Economic Committee, to Robert Samuelson at the Washington Post, and Stephen Roach at the New York Times, the message to the Fed is clear: Lower interest rates now. The Fed's policy needs to be reversed and interest rates significantly lowered or our growing economy is likely to quickly sink, perhaps into a very serious recession. So, what we need is to lower interest rates as a preemptive strike against these ominous economic signs. If we do not do this soon, we will see our hopes for higher wages, more jobs, and the end of Federal deficits dashed on the rocks of recession and rising unemployment. We could be driven by deflation rather than fearing inflation. With deflation, people delay major purposes because they know it is going to be cheaper later on. The last time, of course, that we saw significant deflation was in the Great Depression of the 1930s, but it used to happen regularly in the last century. How bad can it get? From 1929 to 1933, wages fell by 25 percent; wholesale prices fell by 30 percent; farm commodities fell by 51 percent. And with the shrinking economy, unemployment increased from 5.3 percent to 36.3 percent. Prices were cheaper, but with no money coming in, most people could not benefit at all. Today, the signs of increasing global deflation are widespread. The problems in the U.S. economy are greatly exacerbated by the enormous difficulties in many Asian Pacific nations, Russia, Latin America and Mexico. As former Assistant Secretary of the Treasury C. Fred Bergsten wrote in the Washington Post on September 20th: The Asian economic crisis is much deeper, much more pervasive and likely to last much longer than anyone imagined. Economies that had grown 6 to 8 percent annually for two decades are declining by like or greater amounts, a swing of Depression-era magnitude with incalculable political and social consequences. The contagion has already spread far beyond Asia, engulfing Russia and much of Latin America, and could do so even more violently in the days ahead. We now face a truly global crisis, which has already hit the United States hard and will do so with increasing force. The fall in the Canadian and Australian dollars, two countries largely dependent on agriculture and mining is a demonstration of the worldwide impact of the deflationary trend in commodities. A far more severe threat is the long-term economic paralysis of the Japanese economy which has turned into a significant recession. Some predict that a bailout of the Japanese banks could cost as much as 20 percent of Japan's entire GDP. That is much larger than our savings and loan crises back in the 1980s. Some estimate that the bad loans of Japanese banks may be about $1 trillion. It is unfortunately clear that the Japanese government is not moving quickly enough to resolve the difficulties in their financial sector. The Japanese have already seen their wholesale prices decline in 5 of the last 6 years. To further illustrate this point, I would like to quote an article in September 14 Wall Street Journal which I found very troubling. It says: News that Japan has fallen into its longest economic contraction in 5 decades has led some economists and government officials to suggest that the country has nudged closer to a viscous spiral of falling prices, falling employment and falling output that would damage its economy even further. Mr. President, I ask for unanimous consent that this entire article be printed in the Record.

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

Mr. HARKIN. Mr. President, I just want to respond a little bit to my colleague from Iowa by again pointing out to Senators that while we do respect the independence of the Fed, as we say, some argue that it is not even appropriate to debate monetary policy or to send signals to the Fed. I say to my colleague from Iowa, as William Jackson at the Congressional Research Service writes in the report to Congress, Constitutional authority to regulate the value of money, and by implication, to determine monetary policy, rests with Congress, article I, section 8 of the Constitution. This authority has been largely delegated to the Federal Reserve by the Federal Reserve Act, as amended. Nonetheless, the Fed, as a creature of law, may have its policies dictated as well as its structure changed by Congress. Since the 1930s, Congress has generally declined from doing either. But in the past 25 years, Congress has occasionally legislated more Fed accountability, with an aim towards influencing policy. And Congress has periodically enacted nonbinding language to express its monetary policy preferences to the Fed, with the implication that more structural changes could be forthcoming in the absence of policy response by Fed officials. Again, I think it is not only our right but our duty as Senators to debate monetary policy and to give our thoughts and guidance and direction to the Fed. The Federal Reserve, I keep reminding people, is nowhere mentioned in the Constitution of the United States. It is not a separate branch of government. It is not something that is under executive powers enumerated in the Constitution. The Constitution gave Congress the power to coin money and regulate the value thereof. Of course, we don't want to do that. I would hate to see us do that. So we delegate it. We set up the Federal Reserve with the Federal Reserve Act. We amended it many times to do that. And it has worked well. But it still means that as policymakers we have a right and, I think, an obligation to send guidance and direction to the Fed about what is happening in the economy and what they ought to do. The last time the Senate debated a sense of the Congress calling on the Federal Reserve to lower interest rates was on December 19, 1982. It passed by a vote of 93 to nothing here in the Senate. Ninety-three to nothing the Senate passed a sense-of-the-Senate resolution asking the Fed to lower interest rates. Again, given all of the recent support for interest rate cuts in the business community by economists, editorial boards, and political leaders on both sides of the aisle, I see no reason why the Senate should not vote unanimously, again, urging the Fed to lower interest rates to stem what I and others--not only myself but a lot of others, from conservative to more liberal economists all over America--are saying: there are ominous signs of a possible recession in the U.S. economy. As I said, even the Chairman of the Fed himself, Chairman Greenspan, has moved in this direction recently. He said encouraging things about the need to perhaps cut interest rates. But I am fearful that the rest of the Federal Open Market Committee hasn't gotten the word yet. I think we need to send them the word that what we see as policymakers in our daily lives, what we see in our States, what we see in terms of the issues that we deal with in the Senate, that we see an economy that is going down from a 5.5 percent growth rate last quarter down to 1.6 percent next quarter. We see rapidly falling commodity prices, especially in the farm sector. We see wages beginning to stagnate. We see the 30-year Treasury bonds now lower than the Federal funds rate. There are some very ominous signs out there. This amendment is designed to simply exercise not only our right but, I believe, our obligation as Senators to debate this situation. Of course, if Senators don't agree that is what is happening--that indeed there may be a recession out there, that there are some signs of falling commodity prices, for example, and of worldwide recession--I guess people can debate that. Obviously, if Senators feel the other way, they obviously should not vote for a sense-of-the-Congress amendment like this. But I hope that Senators who feel that they shouldn't vote against it because Congress has no right telling the Fed what to do--I would just say look at the history. I will have more to say tomorrow about the many times Congress has passed some legislation, or sense-of-the-Senate, or sense-of-the- Congress resolution giving guidance and direction to the Fed. I hope that we will exercise not only our right but I believe our obligation to do so. I yield the floor. Mr. GRASSLEY addressed the Chair.

Mr. HARKIN

Mr. HARKIN. Mr. President, first, let me commend my friend and colleague, Senator Kennedy, for his long-time commitment and leadership on this issue, among many others, but especially on this issue. So many people are now working in America and earning at least a raise from the minimum wage of what we had a few years ago of $5.15 because of the hard work and effort and leadership of Senator Kennedy. As Senator Kennedy knows, this is an issue of basic fairness about whether those Americans who work hard, who have helped our Nation grow to a period of very significant economic prosperity, should, indeed, receive some of the benefits of this prosperity. I was in Iowa on Friday. I visited the Tri-State Food Bank in Sioux City, IA. Now, the unemployment rate in Sioux City and the surrounding areas is about 2 percent--literally almost no unemployment. The economy is growing; people are working. It is some of the best times people in that area have ever had from what they tell me and from what all the indicators are. Yet, the director of the Tri-State Food Bank Mr. Ron Swanson informed me that they are getting more demand for food from the food bank than they have ever had before. Now they are concerned about the winter and whether or not they will have the food necessary. I said, with all these people working, why is it that people are coming to the food bank? Earlier, I visited the food bank in Des Moines and Karen Ford told me the same thing. That in this time of economic prosperity and growth and low unemployment, the demand for the commodities and the food from the food banks is higher than ever. As I was told in Sioux City on Friday, you have a lot of people who have come off of welfare in the so-called Welfare-to-Work Program. They are making minimum wage, they are feeding their families, clothing their kids, sending their kids to school, paying rent, they are getting food stamps. But their food stamps are running out before the end of the month so they have to go to the food bank to get USDA commodities of rice, USDA canned pears and canned peaches, USDA flour, plus the donations that churches, schools and the businesses in that area donate to the food bank. Now, these are not people that are shirking. These are not people that are just out on the streets. These are people that go to work every day trying to provide for their families. Yet they have to go to the food bank before the end of the month because the food stamps run out. These are people making the minimum wage--$5.15 an hour. It is not right in this country when in this time of economic prosperity when millionaires are created every day and we have billionaires like we have never seen before, that people who work and go to work every day can't even get enough food to last until the end of the month. That is what this is about. That is what this whole debate and this vote is about. For the life of me, I can't understand why anyone would vote against raising the minimum wage just the modest amount that Senator Kennedy is proposing. I had my staff calculate up for me what the minimum wage would be if it had increased at the same rate that CEO salaries, chief executive office salaries, had gone up on average since 1960. If the minimum wage had increased at the same rate as CEO average salaries since 1960, the minimum wage today--are you ready for this--would be $41 an hour. Now, that tells you about the spread. That tells you what is happening in our society. Fewer and fewer people making more and more money, getting all the wealth, more and more people shoved to the bottom who make the minimum wage, who get food stamps, and then have to go to the food bank to get food to last them until the end of the month. It is not right. It is not right in this country that those conditions have to exist. They tell us, well, if you raise the minimum wage there will be unemployment, people will be out of work. How many times do we have to hear this nonsense? We know it is not true. We have the facts, we have the data. It is absolutely not true. For example, in Iowa about 5 years ago, Iowa raised their minimum wage more than the national minimum wage. What we heard at that time from the Republicans in Iowa was, oh my gosh, it will cost us all these jobs, people will leave Iowa. They will go to other States where there is a lower minimum wage. In 1989, Iowa raised their minimum wage. By 1996, the Iowa minimum wage was forty cents more than the Federal minimum wage. Guess what happened? Nobody left. People worked. Jobs didn't leave. Businesses didn't leave. In fact, we had one of the greatest periods of job growth and business growth in the State of Iowa when we had a higher minimum wage than the Federal minimum wage. Now the Federal minimum wage has caught up to Iowa. I think that points out the fallacy of the argument that if you raise the minimum wage, businesses are going to go out of business and they will leave. We proved in Iowa that is not so because we had a higher minimum wage than the Federal. This is the time for us to stand up and be counted for what is fair and right in our society. I thank Senator Kennedy. Mr. KENNEDY addressed the Chair.

Mr. HARKIN. If the Senator will yield me the 10 seconds--I have 10 seconds, Mr. President--there is a lot of talk in this town these days about morality and immorality. This has to do with morality. This has to do with what is moral in this society and to stick up for people who are low-income and are going hungry.

Mr. HARKIN. I thank the Senator from Massachusetts for yielding this time. Privilege of the Floor

Mr. HARKIN. Mr. President, I ask unanimous consent privilege be granted to Yvonne Byrne of my staff for the duration of the debate on this bill.

Mr. HARKIN

Mr. HARKIN. Mr. President, recently we have seen growing concerns around the country about the environmental problems associated with livestock, dairy and poultry production. Continued reports of manure spills, evidence of water pollution from manure runoff, and ongoing complaints about odor and air pollution are creating increasing pressure on the livestock and poultry industry. Last year, I introduced the Animal Agriculture Reform Act, the first legislation of its kind to call for national environmental standards for animal feeding operations. Just this week, the U.S. Environmental Protection Agency and the U.S. Department of Agriculture announced what they call a Draft Unified National Strategy for Animal Feeding Operations. That is a big title, but what it boils down to is a comprehensive, national plan for tackling the environmental problems of the livestock and poultry industry. The Administration's Strategy looks a lot like my bill, so I think it is a good start. The Strategy calls for mandatory nutrient management plans for larger operations and restrictions on manure application to protect the environment--those provisions are at the heart of my bill and also are the focus of the EPA/USDA Strategy. However, the Administration's plan is only a strategy and it must be implemented. We will still see manure spills, runoff and threatened waterways around the country until we have better management and better controls at animal feeding operations. One of the keys to getting this job done, and to helping producers comply with EPA regulations, is finding solutions rather than imposing sanctions. That is why today I am introducing a bill that would provide a 25 percent tax credit to livestock producers to purchase equipment for new and innovative ways to process and use manure. The aim of my bill is to help producers help themselves when it comes to manure management, particularly in circumstances where too much manure is generated to be safely applied to land. The tax credit would cover equipment that allows farmers to carefully apply only as much manure as their crops need, and equipment that processes manure for safer handling, better nutrient value, or alternative uses like energy generation. This is the kind of equipment that producers need to comply more easily with nutrient management plans, move manure more economically to areas where crop land is available, or adopt alternative uses for manure. The bottom line as I see it is that livestock, dairy and poultry producers in this country are going to face limits on manure application. These limits are going to have a serious effect on some operations, and particularly in certain regions of the country. Of course, there are all kinds of operations that make up our livestock, dairy and poultry industry, and each producer needs an environmental solution that makes sense for that individual operation. Some producers have enough land to apply all of their manure. For these producers, up to date facilities and careful management should be sufficient. For other producers, simple composting or efficient solid liquid separation may be the solution, so that solids can be transported more economically for off-site land application. In still other situations, particularly for very large operations or in regions with intensive production, we may need to adopt more advanced technology. I believe that the bill I am introducing today is just a first step along the way to making the adoption of better technologies, whether low-tech composting or high-tech processing, more affordable for any size producer. I want to thank the National Pork Producers Council for its support of this tax credit initiative. The National Pork Producers have been far in front of the crowd in engaging policy makers at the national level and in working with pork producers to address environmental problems. I look forward to continuing to work with them on these issues. Let me be clear that I want the livestock industry to thrive in both Iowa and across the United States. But for our industry to flourish, we need to get our environmental house in order. I do believe that we can have both a healthy livestock industry and a sound environment, and I hope that the Congress will act quickly to enact this tax credit to help producers get the tools they need to reach this goal. Mr. President, I ask unanimous consent that the bill and a letter of endorsement from the NPPC be printed in the Record.

Mr. HARKIN

Mr. HARKIN. Mr. President, recently we have seen growing concerns around the country about the environmental problems associated with livestock, dairy and poultry production. Continued reports of manure spills, evidence of water pollution from manure runoff, and ongoing complaints about odor and air pollution are creating increasing pressure on the livestock and poultry industry. Last year, I introduced the Animal Agriculture Reform Act, the first legislation of its kind to call for national environmental standards for animal feeding operations. Just this week, the U.S. Environmental Protection Agency and the U.S. Department of Agriculture announced what they call a Draft Unified National Strategy for Animal Feeding Operations. That is a big title, but what it boils down to is a comprehensive, national plan for tackling the environmental problems of the livestock and poultry industry. The Administration's Strategy looks a lot like my bill, so I think it is a good start. The Strategy calls for mandatory nutrient management plans for larger operations and restrictions on manure application to protect the environment--those provisions are at the heart of my bill and also are the focus of the EPA/USDA Strategy. However, the Administration's plan is only a strategy and it must be implemented. We will still see manure spills, runoff and threatened waterways around the country until we have better management and better controls at animal feeding operations. One of the keys to getting this job done, and to helping producers comply with EPA regulations, is finding solutions rather than imposing sanctions. That is why today I am introducing a bill that would provide a 25 percent tax credit to livestock producers to purchase equipment for new and innovative ways to process and use manure. The aim of my bill is to help producers help themselves when it comes to manure management, particularly in circumstances where too much manure is generated to be safely applied to land. The tax credit would cover equipment that allows farmers to carefully apply only as much manure as their crops need, and equipment that processes manure for safer handling, better nutrient value, or alternative uses like energy generation. This is the kind of equipment that producers need to comply more easily with nutrient management plans, move manure more economically to areas where crop land is available, or adopt alternative uses for manure. The bottom line as I see it is that livestock, dairy and poultry producers in this country are going to face limits on manure application. These limits are going to have a serious effect on some operations, and particularly in certain regions of the country. Of course, there are all kinds of operations that make up our livestock, dairy and poultry industry, and each producer needs an environmental solution that makes sense for that individual operation. Some producers have enough land to apply all of their manure. For these producers, up to date facilities and careful management should be sufficient. For other producers, simple composting or efficient solid liquid separation may be the solution, so that solids can be transported more economically for off-site land application. In still other situations, particularly for very large operations or in regions with intensive production, we may need to adopt more advanced technology. I believe that the bill I am introducing today is just a first step along the way to making the adoption of better technologies, whether low-tech composting or high-tech processing, more affordable for any size producer. I want to thank the National Pork Producers Council for its support of this tax credit initiative. The National Pork Producers have been far in front of the crowd in engaging policy makers at the national level and in working with pork producers to address environmental problems. I look forward to continuing to work with them on these issues. Let me be clear that I want the livestock industry to thrive in both Iowa and across the United States. But for our industry to flourish, we need to get our environmental house in order. I do believe that we can have both a healthy livestock industry and a sound environment, and I hope that the Congress will act quickly to enact this tax credit to help producers get the tools they need to reach this goal. Mr. President, I ask unanimous consent that the bill and a letter of endorsement from the NPPC be printed in the Record.

Mr. HARKIN

Mr. HARKIN. Mr. President, I am pleased to introduce, along with my colleague, Senator Snowe, the ``Early Hearing Loss Detection, Diagnosis, and Intervention Act of 1998.'' The Early Hearing Loss Act would help States establish programs to detect and diagnose hearing loss in every newborn child and to promote appropriate treatment and intervention for newborns with hearing loss. The Act also would fund research by the National Institutes of Health to determine the best detection, diagnostic, treatment and intervention techniques and technologies. Every year, about 12,000 children in the United States are born with a hearing impairment. Most of them will not be diagnosed as hearing imparied until after their second birthday. The consequences of not detecting early hearing impairment are significant, but easily avoidable. Late detection means that crucial years of stimulating the brain's hearing centers are lost. It may delay speech and language development. Delayed language development can retard a child's educational progress, minimize his or her socialization skills, and as a result, destroy his or her self-esteem and confidence. On top of all that, many children are diagnosed incorrectly as having behavioral or cognitive problems, simply because of their undetected hearing loss. In 1988, the Commission on Education of the Deaf reported to Congress that early detection, diagnosis, and treatment were essential to improving the status of education for people who are deaf in the United States. This Act is our opportunity to finally implement that common- sense recommendation. Mr. President, this Act would help states develop programs that many of them already are working on; it would not impose a single federal mandate. Eight states already have mandatory testing programs; nine others have legislation pending to establish such programs. Other states have achieved universal newborn testing voluntarily. These programs can work; they deserve federal help. One of the highlights of my Congressional career, indeed, of my life, has been working on policies and laws to ensure that people with disabilities have an equal opportunity to succeed in our society. This is especially meaningful to me, because my brother Frank became deaf as a child. I watched Frank grow up, and I saw how few options and support services were available for people who were deaf. I remember the frustrations and challenges Frank faced, and I told myself early on that I would do all I could to break down the barriers in our society that prevented people who were deaf from reaching their potential. By supporting early screening, diagnosis, and treatment programs, this Act would go a long way toward accomplishing that goal. I would like to thank Senator Snowe for her hard work and support of this Act, and I hope our colleagues will join us in this worthy effort.

Mr. HARKIN

Mr. HARKIN. I yield for a question.

Mr. HARKIN. I yield the floor.

Mr. HARKIN. I agree with the Senator, this is a matter of accountability. Senators should have the right to speak, but they should also have the right to cast their vote one way or the other, up or down, on the amendment. So I am hopeful that there would not be a tabling motion, that in fact we would be able to vote up or down on the package of amendments that I will soon be offering on behalf of Senator Daschle and the Senator from Minnesota, the Senator from North Dakota, and several others. But they should have the right to vote on that up or down. I think our constituents, as the Senator pointed out, they have the right. We have the obligation. They have the right to demand that we vote up or down on whether we are going to take some meaningful steps to alleviate the situation in agriculture. Amendment No. 3580 (Purpose: To provide emergency assistance to agricultural producers)

Mr. HARKIN. Mr. President, I will soon be sending an amendment forward, but I thought I would speak on it before I do. Then I will yield to my colleague from North Dakota, who I know wants to speak, and my colleague from Minnesota. But I would like to take just a few minutes again to talk about the grave economic situation in rural America. I just remind my colleagues in the Senate, that the Senate voted unanimously in July on my resolution describing the terrible conditions in agriculture and calling for immediate action by Congress and the administration. That passed the Senate unanimously. Unfortunately, a little bit later, when the Senate had a chance to pass a measure to provide some assistance, we did not manage to assemble the necessary votes. That was in late July before we left for the August recess. I am, however, encouraged by some information I have become aware of that attitudes toward what we proposed in July may have changed. So I am hopeful that today we will be able to pass this critically important legislation to provide emergency farm income assistance to farm families. I see no reason why we cannot pass it in the bipartisan tradition that has customarily been the hallmark of agricultural legislation. If there was any doubt about the seriousness of the situation and the need for taking action in July, there can be no doubt today that the situation has worsened and that the urgency of the need for a response has increased. Mr. President, I used these charts last week. Unfortunately, they are still valid this week. But I just want to point out that since we first debated this in July, on July 17, when there seemed to be some sense on the Senate floor that we were not really in a crisis situation in agriculture, that since July 17, we have had a 21-percent decline in the corn price--we used central Illinois as an indicator--and the prices keep on dropping. As a matter of fact, I point out that just late last week the Department of Agriculture revised their crop estimates for corn, and we are going to have even more corn than we thought we were going to have. So we see that about every time a new estimate comes out, we get closer and closer to 10 billion bushels of corn; and that drives the market price down. The same thing happened with the soybean price. We had an equivalent 21-percent decline in the prices. Again, they are still down there. Since July 16, when we passed here the version of our agricultural appropriations bill: Dodge City, KS, wheat down 20 percent; north central Iowa corn down 26 percent; southern Iowa/Minnesota market hogs down 11.6 percent. In fact, in hogs we are looking at the lowest prices for hogs since 1974--almost 25 years. Billings, MT, feed barley down 20 percent. Kansas City hard red winter wheat down 13 percent. As I understand it, it is still going down. We can see what has happened since we passed the farm bill. You see what happened. We had a couple years here of increasing prices, exports were going out, customers overseas, the Asian economy was booming. So we passed the 1996 so-called Freedom to Farm bill, but then everything just started going to pot. Look at what our prices have done since then. We are on a constant decline and a sharp decline in commodity prices since that period of time, all in corn and in soybeans and in wheat. All three of them, ever since the 1996 farm bill, keeps coming down. That little red line indicates just what happened in the last several weeks. So if there ever was any doubt in anyone's mind of the crisis in July, there can be no doubt any longer. And prices, unfortunately, are certain to fall even more at harvest. We are facing the reality of a very serious economic hardship, all around the Nation. And let me just underscore this: This is not the fault of farmers. We have a world situation where large supplies of commodities have combined with weakened demand to drive these commodity prices lower. In just the past 2 years, the farm-level prices for corn, wheat and soybeans have declined an average of over 50 percent in 2 years; and cattle prices, 20 percent below their level earlier in the decade. As I said, hog prices are at their lowest level since 1974. On top of that, many regions--North Dakota, parts of Minnesota, Oklahoma, Texas, Louisiana--several regions, we have had bad weather and/or crop disease that have devastated farmers. Thirty-two of 50 States suffered declines in personal farm income between 1996 and now. USDA price estimates are that the lower corn and soybean prices will cause a loss in farm income of $1.4 billion in Iowa alone this year. Such a loss would threaten up to 26,000 jobs in my State. Nationally, USDA now predicts a precipitous drop in farm income of $11 billion this year. That loss of farm income could result in a loss of over 207,000 jobs. Farm debt is at the highest level since the mid-1980s in the depths of the farm crisis at that time. So, Mr. President, use whatever yardstick of measurement you want. By any measurement, we are spiraling into a deepening crisis in agriculture that must be stopped--and stopped now--before it gets any worse. So today what we are proposing is a package that has four main elements. No. 1, we propose to remove the caps on loan rates that were put into effect in the 1996 farm bill and to allow the Secretary of Agriculture to extend the loans from 9 months to 15 months. The way that loan rate would work is that you would take the average price over the last 5 years, drop out the high and the low, take the average, and 85 percent of that would be the loan rate. No. 2, we propose to ensure that enough money is available for indemnity compensation to farmers who have suffered losses from weather and disease. No. 3, we propose to provide the Secretary of Agriculture the authority to make storage payments on wheat and feed grains in order to encourage producers to place surplus commodities under loan when the Secretary determines that such action is appropriate to respond to problems in the transportation and marketing systems caused by large supplies. No. 4, we are reiterating our commitment to livestock price reporting and to the labeling of imported beef and lamb. Parts of this were passed before, but we do not know if that bill is ever going to see the light of day. So we are offering it again on the Interior appropriations. For example, on the livestock reporting and the labeling of imported beef and lamb, those two were passed before. Indemnity compensation was passed before, but at much too low a level. We now know that the losses are much higher than what we anticipated in July. We believe we have crafted a responsible and modest package to respond to the deepening crisis in rural America. We are not proposing any radical change to the 1996 farm bill. We are not changing any fundamental principles of the 1996 farm bill, which was to give farmers new planning flexibility and freedom. We are not touching that aspect of the 1996 bill. We are simply modifying something that is already in the bill. Loan rates are part of the 1996 legislation. It is just at that time the wisdom of the Congress--I voted oppositely--was to put caps on the loan rates and to freeze them at the 1996 level. All we would simply do is modify that and lift the caps for the loan rates--use the existing law but just take the caps off, but use the existing law--which would allow the Secretary to extend the loan periods and to make storage payments. Again, we are not introducing new features. We are simply taking the caps off these loan rates. Our amendment focuses on the level of the loan that these farmers can take out on commodities after harvest, using their crops as collateral. The loan allows the farmer to pay bills, retain the crop while waiting for improved marketing opportunities. We always heard about Freedom to Farm that allows families the flexibility to plant, but what the farmer this year doesn't have is the flexibility to market. Because of the need to pay bills, the farmer most often this fall will have to dump the grain on the market at the lowest possible price. What extending the loan rates and raising the caps means--the farmer can take that loan out, and if the Secretary determines that they should make storage payments, they get storage payments also and the farmer can take the grant--the loan rate that he has--pay the bills, and then he can market his grain, market his grain when he feels is the right time, not just when he is forced to dump it on the market this fall. We all hope, of course, that next year grain prices might recover, the Asian economy might get better, and prices might come up. If so, I want the farmer to reap the benefits of that, and not just the large grain companies. The formula, as I said, has been around for a long time. I mentioned the formula; I don't need to go through that again. I will give a couple of examples. The 1996 farm bill set as a cap on the loan rate $1.89 a bushel; if the cap were removed, the loan rate would be about $2.17 for the 1998 corn crop--modest, very modest, but it would really help. In the case of wheat, the loan rate capped at $2.58 a bushel; removing the cap put it at $3.16 a bushel--still much too low for a real market price for wheat but, again, a modest increase that would help our wheat farmers. In addition, as I said, our amendment would allow the Secretary to extend the loan for an additional 6 months--from 9 to 15 months--again, to give the farmers some more marketing flexibility. Let me say a word about giving the Secretary the ability to make storage payments. The purpose of the storage payments is to facilitate orderly marketing, to alleviate burdens on commodity transportation and marketing systems. As we have seen in recent months, large supplies of commodities place a huge stress on the transportation system and on the entire commodity marketing and merchandising system. If farmers place some of this surplus grain into storage rather than dumping it into the market at harvest time, there will be some relief from the pressures on the grain transportation and marketing system. Again, keep in mind that we are making this discretionary with the Secretary. He can look at the situation as it develops. If it looks like we will have a lot of grain sitting on the railroad sidings with a backup in cars and we won't be able to get our grain out to market and the prices keep going down, he could then extend some storage payments to farmers. Again, we are not changing any of the planting flexibility of the 1996 bill or anything like that. Now, I will just close on this note and say there seems to be some misconception that our amendment involves ``Government intrusion'' into the business of farmers--that we are going to put the Government back in farming. Nothing could be more mistaken. In fact, we are enhancing the ability of farmers to market their commodities when it is most advantageous for them to do so. I know the old refrain about keeping the Government out of agriculture, giving the farmers more freedom. That is what we are doing. We are giving them more freedom in our amendment, more freedom to be able to market their crops. Again, this is a modest approach, one that shouldn't cause any real discomfort among those who so strongly adhere to the 1996 farm bill and who believe that we shouldn't make any changes in it. I happen to be one of those who did not vote for the 1996 farm bill. I thought it was a good farm bill for when the export demand is high; when there is a lot of money overseas, it is fine; but when those markets disappear, as they always do cyclically, the farmer is left holding the bag. There is no safety net for farmers. President Clinton said at the time he signed the farm bill that he was doing so but he recognized that the safety net was taken away and we would have to come back and modify it at some future time. Well, now is the time to take the loan rate caps off and to send a strong message to farmers that we, indeed, recognize the disaster that is taking place out there. I spent the weekend in my State of Iowa. I had a meeting with a farm advisory committee. There are some people on the committee who are bankers, farmers, commodities dealers, and they stated, to a person, if something is not done this fall, it will be too late next spring. It will be too late to save a lot of farmers. It will be too late to do something about the spiraling down and the economic effects that this will have on all of our businesses in rural America come next year if we don't do something right now. I see a lot of my colleagues on the floor who would like to speak, so I send my amendment to the desk on behalf of Senator Daschle, myself, Senator Johnson, Senator Kerrey, Senator Conrad, Senator Baucus, Senator Dorgan, and Senator Wellstone, and ask for its immediate consideration.

Mr. HARKIN. I ask unanimous consent reading of the amendment be dispensed with.

Mr. HARKIN

Mr. HARKIN. No. Obviously, if someone came in with the purpose of working for me and doing a good job for constituents that I represent in the State of Iowa and is willing to do the job, is dedicated to that job but also wanted, for example, to organize an employee's group for day care, or for minorities rights, or whatever, absolutely I would hire that person. I would do it in a minute. But that example begs the question, how can employer determine a prospective employee's thoughts, intent, or motives? Subsequently, arbitrarily deny employment to someone because they suspect they had ulterior motives. This is bad legislation that deserves to be defeated. We should be concerned with ensuring fairness and equity for the workers rather than further tilting the scales in favor of unscrupulous employers. Mr. KENNEDY addressed the Chair.

Mr. HARKIN

Mr. HARKIN. Mr. President, today I am introducing legislation for myself and Senator Johnson providing farmers with the opinion of receiving a refund from taxes paid in the past 10 years for their current operating losses. Congressman John Tanner of Tennessee is introducing an identical measure in the House. Farmers are suffering huge losses through no fault of their own. No other business has less control of the price they can receive for what thy produce. Farmers cannot control the world's weather or the World economy. But, those factors determine the price of corn, soybeans and wheat. The Freedom to Farm bill passed in 1997 sharply reduced the farmer's safety net. And, now, farm prices are crashing to levels not seen in decades, to levels never seen before if we adjust for inflation. Many farmers are going to have a very difficult time being able to acquire the funds needed to plant their crops in the coming year or maintain their annual operations. Many farmers could lose the farms that have been in their families for generations. And, the economic difficulty is far broader. It is already having a terrible ripple effect on the economies of rural areas. Layoffs are starting to occur at agricultural equipment manufacturers and in stores in small towns. But, we are just at the beginning stages of what could become a very severe downtown in rural America. A number of Senators and I are proposing a series of modifications in agricultural programs to help alleviate the problem. But, I believe the Congress should also pass a provision broadening existing law allowing farmers to recover taxes paid in the past to cover their net operating losses. Under existing law, businesses including farmers can be reimbursed for their business losses by receiving a rebate for taxes paid in the prior 2 years, 3 years in cases where there was a natural disaster. Now we are facing a large economic disaster that can really sink rural America. There are widely supported proposals to allow farmers to invest some of their profits for up to 5 years without being taxed till the money is used in poor years, effectively a type of income averaging. That is fine. But, what is more desperately needed at this time is more immediate assistance. I propose that family farmers be allowed the option to get a rebate from the taxes that they paid over the past 10 years covering up to $200,000 in operating losses rather than the two years allowed under current law. Many farmers cannot receive a rebate for their operating losses because they were not able to make any taxable profits in the last few years. The benefit would only go to farmers whose families are actively engaged in farming and whose business activity is mostly farming. The amount of the rebate would be dependent on the amount of the loss and the tax rate paid by the farmer for the paid taxes that are being restored. The provision would cover losses occurring in 1998 or 1999. If the measure passed this year, farmers would be able to calculate their loss early next year and quickly receive a rebate from the IRS for the taxes paid in earlier years. This proposal provides a significant amount of relief when it is needed early next year. It will help many farmers acquire some of the funds they need to plant. Current law already allows a few taxpayers in certain circumstances to go back and recover taxes that they paid for 10 years. I believe that it should be broadened to cover farmers in this difficult time. In fact, there is a precedent in the 1997 Taxpayer Relief Act in which Amtrak was allowed to use net operating losses of their predecessor railroads from over 25 years in the past. I urge that when the Congress considers a tax bill, this provision be considered and passed.

Mr. HARKIN

Mr. HARKIN. Mr. President, today I am introducing legislation for myself and Senator Johnson providing farmers with the opinion of receiving a refund from taxes paid in the past 10 years for their current operating losses. Congressman John Tanner of Tennessee is introducing an identical measure in the House. Farmers are suffering huge losses through no fault of their own. No other business has less control of the price they can receive for what thy produce. Farmers cannot control the world's weather or the World economy. But, those factors determine the price of corn, soybeans and wheat. The Freedom to Farm bill passed in 1997 sharply reduced the farmer's safety net. And, now, farm prices are crashing to levels not seen in decades, to levels never seen before if we adjust for inflation. Many farmers are going to have a very difficult time being able to acquire the funds needed to plant their crops in the coming year or maintain their annual operations. Many farmers could lose the farms that have been in their families for generations. And, the economic difficulty is far broader. It is already having a terrible ripple effect on the economies of rural areas. Layoffs are starting to occur at agricultural equipment manufacturers and in stores in small towns. But, we are just at the beginning stages of what could become a very severe downtown in rural America. A number of Senators and I are proposing a series of modifications in agricultural programs to help alleviate the problem. But, I believe the Congress should also pass a provision broadening existing law allowing farmers to recover taxes paid in the past to cover their net operating losses. Under existing law, businesses including farmers can be reimbursed for their business losses by receiving a rebate for taxes paid in the prior 2 years, 3 years in cases where there was a natural disaster. Now we are facing a large economic disaster that can really sink rural America. There are widely supported proposals to allow farmers to invest some of their profits for up to 5 years without being taxed till the money is used in poor years, effectively a type of income averaging. That is fine. But, what is more desperately needed at this time is more immediate assistance. I propose that family farmers be allowed the option to get a rebate from the taxes that they paid over the past 10 years covering up to $200,000 in operating losses rather than the two years allowed under current law. Many farmers cannot receive a rebate for their operating losses because they were not able to make any taxable profits in the last few years. The benefit would only go to farmers whose families are actively engaged in farming and whose business activity is mostly farming. The amount of the rebate would be dependent on the amount of the loss and the tax rate paid by the farmer for the paid taxes that are being restored. The provision would cover losses occurring in 1998 or 1999. If the measure passed this year, farmers would be able to calculate their loss early next year and quickly receive a rebate from the IRS for the taxes paid in earlier years. This proposal provides a significant amount of relief when it is needed early next year. It will help many farmers acquire some of the funds they need to plant. Current law already allows a few taxpayers in certain circumstances to go back and recover taxes that they paid for 10 years. I believe that it should be broadened to cover farmers in this difficult time. In fact, there is a precedent in the 1997 Taxpayer Relief Act in which Amtrak was allowed to use net operating losses of their predecessor railroads from over 25 years in the past. I urge that when the Congress considers a tax bill, this provision be considered and passed.