Tom Harkin

Mr. HARKIN

Mr. HARKIN. I just want to finish a few remarks, and then I will yield the floor. Is that the desire of the Senator from South Dakota?

Mr. HARKIN. I would like to ask that question of my colleague from North Dakota and ask him to respond to that question.

Mr. HARKIN. The Senator is right on the mark again. I said a couple of years ago, when that so-called Freedom to Farm bill passed, it was a triumph of ideology over experience--the experience of thousands of years; the experience we have had in our own country since the 1930s. Yet there was this ideology that said, no, we have to get the Government out of everything; no price supports. But I submit to my friend from South Dakota that the so-called Freedom to Farm bill probably is working just as it was intended. During high-price years, like we had when the Freedom to Farm passed, it offers large- scale farmers the ability to take advantage of opportunities that they might see in the marketplace. Now, does it help the smaller farmers a little bit? Sure, but only because those payments were high in the first years. As the Senator pointed out, those initial payments are coming down, so the large-scale farmer, better able to weather 1 or 2 or 3 years of low prices, is left to sail on through. The smaller farmer is left to go broke, and that is what Freedom to Farm was intended to do. I swear, the idea was to get fewer farmers out there, to structure it differently. I am going to yield the floor momentarily, but I have to tell my friend a story that happened to me back in David Stockman's time. We always remember David Stockman first as the head of OMB under President Reagan. I remember having a meeting with him at that time, talking about farm bills, and they were after agriculture. I used to have debates with David Stockman on the floor of the House on agriculture. He was always for this so-called getting the Government out of agriculture and everything. I remember, he sat at a table one time, and he said to me at the time, I think I was a Congressman then, he said, ``Congressman Harkin, you know as well as I do, if you have two farmers out there and they both have such-and-such land, they both have two tractors, they both have two combines, they both have two barns, they both have two this and that,'' he said, ``you know as well as I do, one farmer could do it all.'' I said, ``Really? One farmer can do it all? Is that right? How so? How can one farmer?'' ``Well, one farmer can buy out the other farmer and get all that machinery and get bigger equipment and hire someone to work for him and get it all done.'' I said, ``How is that one farmer going to buy out the other farmer? If you have those two farms, what is going to cause one of the farms to go under?'' ``Well, recurring low prices.'' We talked. I will give him one benefit, he was honest about it. He said, ``With these recurring low prices, the little farmer will have to get out. The bigger farmer will buy him up.'' And his point was it would be more efficient to do it that way, more efficient. I said, ``How do you measure efficiency? How do you measure efficiency? Do you measure it in terms of the local businesses that now will go under in the local community because that farmer has gone out of business? Do you measure it in the local education system, where now kids have to go 30, 40 miles a day to go to school, and they have a hard time getting teachers to teach in these rural areas? Do you measure efficiency in terms of the lost production? If you had two tractors before and you only have one now, what does that mean in Detroit and places like that where people are working in manufacturing?'' So I always challenged him to define efficiency, not just by looking at the individual farm itself, but looking at the community at large; what was more efficient? I had always believed, and I do today believe that the most efficient, in terms of our Nation, in terms of our country, in terms of our consumers--the most efficient form of agriculture is one that is diverse, dispersed, and one that encompasses many family farmers owning their land and working their own land. I have maintained that for the last 25 years and I maintain it today. I think a lot of the problems we are having today have to do with the crisis we had in the 1980s that kicked a lot of farmers off their land, and we are having the same crisis today up in the northern plains area. As I said, those who want to stick with that so-called Freedom to Farm--I suppose maybe they have the votes. I don't know. But we are going to have some amendments on this floor today and tomorrow, as long as we have to take, on this ag appropriations bill, to get some changes made to put that safety net back under our family farmers and to provide them with the support they need during these tough times. We can do nothing less, not just for them, but for our country. I yield the floor.

Mr. HARKIN. The Senator from South Dakota has put his finger on it. I visited the old Soviet Union on a couple of occasions before it disintegrated, went out and visited some of these big farms, some of the most inefficient, awful operations you have ever seen, and then I visited later just when they were breaking up the large farms. What I heard time and time again was that was probably one of the biggest mistakes they ever made in the Soviet Union--collectivizing the farms. And now in Russia, what they have decided--and I have met on more than one occasion with a couple of their agriculture ministers--is the best thing to do is return the land to the people, give them private ownership of that land and to disburse it as much as possible. What they have found, lo and behold, is they are getting better products and better production for their people. Right on target. And yet we seem to be going in the other direction. We seem to be doing what the Soviet Union did. Now, it is not State collectivization, but it is monopoly practices. That is the same kind of vertical integration.

Mr. HARKIN. I am going to ask that same question of our colleague from North Dakota, because I believe he can answer it better. I just wanted to point out that last year the average North Dakota wheat farmer suffered a loss of $23,000. My figures show, at least right now, that the income of the North Dakota farmer--I could be corrected by my colleague from North Dakota--this year their income will be, for a family of four, below the poverty level. Their income actually will be below what we have designated as the poverty level in this country. So I guess the question of the Senator from Minnesota was, What has brought this about? Was that the question? Why has North Dakota, now, I think for 2 consecutive years of low wheat and barley prices--what has brought this about? I ask the same question of my colleague from North Dakota.

Mr. HARKIN. I thank my friend, because we hear a lot about that: ``Wouldn't it be better to have a few large farmers out there rather than all these family farmers?'' There are a lot of ways to answer that question. First, a strong, healthy rural America is better in terms of the impact of unemployment in our cities, where people from farms are forced off, they come into the cities. It causes more urban congestion and all of the expenses that causes for people who live in our larger cities. You can look at it that way. Secondly, you can look at it from the standpoint of a stable, safe food supply. Why do I say that? Because it has been my experience that a family farmer who lives on that land, owns that land, and the children are raised there, and they go to the local schools, and they have a stake in their community--they are some of the best stewards we have for our land. So if you want to take care of the land for future generations and you want to protect the soil and the water, it is better to have a family farm system of agriculture than these big corporate conglomerates that maybe just hire someone or rent it out. It is like in housing. If you want people to take care of their houses, make them homeowners. That is why I have always been in favor of housing subsidies and getting more housing for low-income people. They will take care of it. They have a stake in it. They have equity in it. That is true with our family farmers, too. As long as they own the land and work it and have their families there, they have a stake in it. Lastly, just from the standpoint of price, if you have more farmers out there producing more beef, pork, poultry, corn, wheat, and beans, you are going to have a more competitive situation out there. As we all know, competition gives you the best price. I never could understand people who believe in a free enterprise system and who believe in this concept of competition and giving us the best products at the lowest possible price, then supporting policies that do just the opposite in agriculture and squeeze them out by setting up a few large, vertically integrated entities that have everything from the production of the grain, to the feeding of the livestock, to the slaughtering of the livestock, to the packaging, right to the time it gets to your counter. I can't understand people who think that somehow these kinds of monopolistic prices are going to be the best deal for our consumers. They just aren't. We know it, and we can prove it.

Mr. HARKIN. I am delighted to yield to my colleague from Minnesota.

Mr. HARKIN. Mr. President, again, a parliamentary inquiry. I guess we have before us now the sense-of-the-Senate resolution that was proposed a little while ago by the minority leader, Senator Daschle?

Mr. HARKIN

Mr. HARKIN. Mr. President, I yield the floor. Amendment No. 3127, as modified

Mr. HARKIN. Mr. President, first I thank our leader, Senator Daschle, for really taking the bit here and moving ahead aggressively to answer a real concern and a real need that we have in rural America. Well, I would go beyond that--a crisis in rural America. Senator Daschle has always been the leader in recognizing and understanding what is happening in our farm economy. This time is no exception, so I thank Senator Daschle personally for his leadership in this effort. I thank the managers of the bill, both Senator Cochran and Senator Bumpers, for working with us on the language. I understand that we have the language worked out in an agreed form on the sense-of-the-Senate resolution. I am happy that we can come to a good resolution on that, and I guess that is what we will be voting on here at 5:15. I hope it gets an overwhelming vote because it will send a strong signal, I think, to rural America that we do, indeed, recognize there is a crisis, a crisis of immense proportions, as it does say the total farm debt for 1998 is expected to reach $172 billion, the highest level since 1985. And so the sense of the Senate is just that. We recognize there is the problem. Now, the amendment that Senator Daschle has just laid down then takes that recognition of the problem and begins to do something about it. By taking the caps off the loan rate and by extending for 6 months the period of the loan, it will at least give our farmers a little bit more, a little bit more in what they can get for their crop this fall, and then give them the ability to market it in a more orderly fashion over the next 15 months. I have to say at the outset that this amendment is a modest amendment, I mean a very modest amendment. I know that many farmers and others in rural America will look at this and say, gee, this is not nearly enough. This doesn't come anywhere near the cost of production; it doesn't come anywhere near what I need. Well, I recognize that. It should be more. I think I heard Senator Daschle say that, too. But we have to face the reality of the situation. I am just hopeful that this very modest amendment to raise the loan rate and put it back where it was under the 1990 farm bill will get overwhelming support. If we cannot even do this, if we cannot even give our farming sector this much support in an emergency situation, well, then I guess what we are going to do is say, well, we recognize there is a problem out there, but we are not going to do anything about it. We are just going to leave you farmers out there to take the brunt of El Nino and take the brunt of floods and take the brunt of low prices and take the brunt of the Southeast Asian economic collapse and this Government, this representative Government of yours cannot do anything about it. I hope we do not say that. I hope we say two things: I hope we say, yes, there is a crisis out there. And then I hope we follow it up by saying, yes, we are going to do something about it. We are going to lift the caps on the loan rate and at least give a few pennies--a few, a little bit--to farmers to hopefully get them through the crisis they are facing this fall. And again, Mr. President, it is a crisis. It is a problem of having the safety net there. I am hopeful we can repair that safety net with just a few modest proposals we have. I understand the vote is set at 5:15. Is that the idea?

Mr. HARKIN

Mr. HARKIN. I say to my friend from Arkansas, once again, without going further, I don't know why that went down $1.1 million. A lot of times these agencies dip into reserve funds to pay salaries and benefits and things like that. I don't know why they dipped in the reserve funds. I just say that even $6.8 million for the State of Arkansas, with $3.8 million per year, is more than enough for the reserve fund. And, secondly, I say that in the worst case scenario that the Federal Government still is the guarantor. And, lastly, I just point out that unless one is totally pessimistic about the economy over the next 2 or 3 or 4 years, saying that everything is just going to go down the tubes, that we are going to have plenty of money in this reserve fund, even with this amendment. (Mr. HUTCHINSON assumed the chair.)

Mr. HARKIN. Not only do they get the 16-percent guarantee, they get a $7.5 billion subsidy from the taxpayers of this country. So I think the Senator is absolutely right. If they want to be private sector, let's put it out for bid. Some years ago, as the Senator remembers, we put the WIC Program out, the Women's Infants and Children's feeding program out for competitive bidding, good old free enterprise competitive bidding, and we have saved billions of dollars for the taxpayers of this country and improved the program. I think the Senator is right on target on this. If there is so much money floating around here, let's put it out for bid. Let's put it out for good old free enterprise, competitive bidding.

Mr. HARKIN. Mr. President, I ask unanimous consent that an intern in my office, Michael Pratt, and Lloyd Horwich, a detailee from the Department of Education, be given floor privileges during the duration of the debate on the Higher Education Act.

Mr. HARKIN. Thank you, very much.

Mr. HARKIN. I thought you said there was another amendment?

Mr. HARKIN. Reserving the right to object, I now have been waiting at least 4 hours since I came on the floor. It was my understanding--just my understanding, I didn't consult with the manager of the bill--but it is my understanding I was to come right after the disposal of Senator Bingaman's amendment.

Mr. HARKIN. Mr. President, the amendment I just sent to the desk really can be called the Tax Reduction for College Students Amendment, because that is exactly what it is. So all Senators who are interested in cutting taxes, I say listen up because this is your amendment because that is what this amendment does. It cuts taxes, and it cuts taxes for college students. Let me explain. First of all, I would like to say the legislation we are considering today, the Higher Education Amendments of 1998, is a strong bill. There are many positive features of this legislation. I want to commend Senators Jeffords, Kennedy, Coats, and Dodd for putting together a strong bipartisan bill. However, I believe that this amendment I am offering will do more to strengthen it even further. So the amendment is simple. It cuts the tax which has become known as origination and insurance fees. But a tax by any other name is still a tax. That is what it is. This amendment cuts this tax, this student tax, by 25 percent. In other words, it cuts it from 4 percent to 3 percent for students with Federally subsidized guaranteed and direct student loans. It is paid for by eliminating or reducing excessive government subsidies paid to the student loan middlemen--the guaranty agencies. My amendment eliminates the 1-percent insurance fee paid by students on the subsidized Federal family education loans, and reduces the origination fee on subsidized direct loans by one point. The net result is that all students with subsidized loans will have these taxes cut to 3 percent. In real terms it means up to an additional $171.25 while a student is in school. Sam Barr, from the University of Northern Iowa, wrote, I have been in the financial aid profession since 1985. . . . Over the years, I have had the opportunity to meet with and counsel hundreds of students regarding loans. Many of these students have expressed concern regarding the fact that they received less money than they borrowed, and were very upset that they had to pay back the fees--with interest [even though they didn't get anything.] Currently students pay the following taxes on their loans. Students with direct loans pay a 4-percent origination fee. Students with guaranteed loans pay a 3-percent origination fee, and a 1-percent insurance fee. In some cases, guaranty agencies currently waive a part or all of the insurance tax for some students with guaranteed loans. For example, the Iowa agency waived half of the fee for students with guaranteed loans. California and Pennsylvania waived the entire 1- percent insurance fee. So I have to ask, Mr. President, if some agencies are currently waiving the insurance fee on a selective basis, we really must question whether this revenue is really needed by the agencies. Second, this benefit should be available to students on an equitable basis in all States and in both loan programs. Unfortunately, Federal law does not provide a similar break for students with direct loans. As a result, in my State of Iowa, more than half of the students that attend direct loan schools cannot receive this cut. In other words, Iowa waves half of the fee. So that brings it down to 3\1/2\ percent. That is for guaranteed loans, but half of the students in Iowa go into the Direct Loan Program. They have to pay the full 4 percent. That is simply not fair. So my amendment provides an equitable distribution of the tax cut by providing relief for all students with subsidized guaranteed and direct loans instead of just a select few. It creates a level playing field between the two programs by cutting the combined student loan tax by 25 percent. The amendment will also ensure that all agencies will operate in the most efficient manner possible. Mr. President, this insurance fee has been a part of the Guaranteed Student Loan Program since its inception. However, over the years additional subsidies were added to support the guaranty agencies. As a result, these agencies have accumulated huge reserves, currently in excess of $2.4 billion. So what we are doing is recalling about half of that money. But agencies will continue to hold over $1 billion in reserves needed to reimburse lenders for defaulted student loans. In addition, the excessive subsidies have enabled agencies to pay lavish salaries in the past. At one point, a CEO of U.S.A. Group, the Nation's largest guaranty agency, was paid over $1 million in salary and benefits. To be sure, the Department of Education has cracked down on this practice and has established a compensation ceiling to prevent agencies from using Federal funds to pay exorbitant salaries. However, it is clear that generous subsidies enabled this to occur. The Senate bill has revamped the guaranty agency subsidies. Even with my amendment, these agencies will continue to be paid handsomely for their work and will receive in excess of $4.5 billion over the next 5 years. So if you have heard from some of your guaranty agencies that the Harkin amendment is going to break them and cause them to go bankrupt, this chart will prove otherwise. Over the next 5 years, if you add up their fees, collections, investment income, and prevention fees, it adds up to almost $4.6 billion that they are going to get over the next 5 years. Without my amendment, they are going to get probably about double that, about $8 billion over the next 5 years. So this is quite sufficient to take care of any problems that they might have--$4.58 billion. Mr. President, I am fully aware of the opposition to this amendment. The guaranty agencies are obviously opposed to it. Critics have called it a thinly veiled attempt to destabilize the Guaranteed Loan Program to force schools to enter a Direct Loan Program. But how could that be true? For example, in Iowa, as I said, in my home State, the State has waived half the fee. Students under the Guaranteed Loan Program pay 3\1/2\ percent. Under the Direct Loan Program, they pay 4 percent. These kinds of anomalies occur in a lot of States. All I am saying is make them both the same; make them both 3 percent. That is what my amendment does. As I have stated in committee repeatedly in the past, I have supported the two loan programs. The competition of the Direct Loan Program has led to dramatic improvements in the Guaranteed Loan Program, and I think the result has been very positive for our students when we have both of these programs. But they are uneven and they are unfair. Now, opponents also allege my amendment would cause individual agencies to become insolvent, thereby jeopardizing the payment of default claims by lenders. Absolute nonsense. In 1992, in the aftermath of the failure of the Higher Education Assistance Foundation, the law was changed to make it clear that default claims would be paid by the Federal Government in the event of the insolvency of an agency--period. Well, Mr. President, over the past 17 years, since the inception, in 1981, of this program, the lender subsidy has declined dramatically, from about $1.9 billion in fiscal year 1982 to less than $300 million last year. Unfortunately, students have not seen a commensurate reduction in the student loan tax. In fact, students are actually paying more. Revenues from the program, the origination fees, have more than doubled. In 1982, when it started, revenues were $292 million; last year, they were $629 million. So students are paying more. The President's fiscal year 1999 budget proposed phasing out the fee for the neediest students over the next few years. I wish we could do that this year. However, I recognize that elimination of the tax probably does not seem possible at this time. So this amendment takes the first step with a 25-percent cut in the tax for the neediest students. Last year, we provided a significant boost to the Pell grant. We raised the maximum grant by $300 million to $3,000 per student. This effort received strong bipartisan support. My amendment will have a similar impact for students. It puts more money in their pockets to pay their educational expenses. This chart shows that. What this amendment does is it basically says that over a 4-year period the reduction in the tax will mean a savings of about $171.25 per student. Now, to those of you who don't think that is much money, that buys a lot of textbooks for a student going to college. It buys a lot of textbooks. These students, the neediest of students need every penny they can get to pay tuition and buy their books in school. Again, they are frustrated when they go in and borrow the money and they pay the fee, and they get less money than what they borrowed. And then when they pay it back, they even have to pay interest on the money they never got. Very unfair. Well, my amendment has the support of virtually every major higher education group, and I have a number of letters in support of this amendment. I ask unanimous consent, first of all, that a list of organizations supporting the amendment be printed in the Record.

Mr. HARKIN. I have several letters here--one from the Secretary of Education, Richard Riley, in support of this amendment; one from the American Council on Education in support of the amendment; one from a consortium including U.S. PIRG, United States Student Association, the Education Trust, and the National Association of Graduate Professional Students in support of this amendment, and, lastly, one from the National Association of Student Financial Aid Administrators in support of the amendment.

Mr. HARKIN. I will be delighted to yield.

Mr. HARKIN. Lastly, I just say to my friend from Arkansas, who now has assumed the chair, that there was some mention made that this amendment was a direct threat to the Guaranteed Loan Program and a way of tilting it toward the Direct Loan Program. And, again, I say that nothing could be further from the facts here, because my amendment takes a cut of 25 percent in both the Guaranteed Loan Program and in the Direct Loan Program. It puts them both at 3 percent. So it makes the playing field absolutely level. It does not give one a benefit over the other. Mr. President, I yield the floor. Mr. REED addressed the Chair.

Mr. HARKIN. That is exactly right, these huge, high interest rates.

Mr. HARKIN. I thank Senator Kennedy for those comments in support of this amendment. The Senator is absolutely right. This came in at a time when there was extremely high interest rates, used as an insurance policy. And then for some reason it just continued on and on and on and on. Again, as I pointed out, we have reduced some of the subsidies over the intervening years, but for some reason this student tax continued on. There is absolutely no reason for it today, and, as the Senator from Massachusetts pointed out and as this chart clearly shows, even with my amendment, over the next 5 years they are going to get $4.6 billion that they really don't even need. But they have it. Do they need twice that much? Do they need $8 billion? I don't think so. So let's give our students a little bit of a tax break. Everybody is always talking about giving people tax cuts around here. Here is one you can vote for. Here is one that has an immediate impact right now. That means these students going to college this fall will have an extra amount of money to buy that textbook or to pay their tuition costs. For some people, $171 may not sound like a lot of money. But for a low- income student, families working hard trying to get their kids into college and through college, that is a lot of money. And it is money that is not needed by these guaranty agencies. It is just not needed. They get plenty of money, $4.5 billion. So I hope the Senate will support this very modest amendment. It is not cutting the whole thing. It is just cutting it by 25 percent. I think our students deserve that tax cut. I am a product of student loans when I went to college. Neither one of my parents went to college. They didn't have any money, so I had to borrow money to go to college. But in those days we had the National Defense Education Act which came in under the Eisenhower administration. We borrowed the money. We never had to pay any interest on it all the time we were in school, never had to pay any interest on it when we were in the military. Finally, when I got through law school, I had to start paying back the loans and the interest started accruing on it. I always thought what was good for our generation ought to be good for the present generation. I don't know why it shouldn't be that way. This is one step we can take to tell at least the neediest students today that they deserve to have a tax break and they deserve to have a little bit more money to buy their textbooks. So I urge the adoption of the amendment.

Mr. HARKIN. I wonder if the Senator will yield for a little colloquy on that issue to try to get something straightened out.

Mr. HARKIN

Mr. HARKIN. Mr. President, I want to make a few comments in favor of the bill and its swift passage. I just want to point out again what the bill accomplishes. What this legislation will do is to establish that the automatic sanctions under the Nuclear Proliferation Prevention Act of 1994 will not include a prohibition against credit, credit guarantees or other financial assistance provided by the Department of Agriculture to support the purchase of food or other ag commodities. Again, this bill does not deal with the underlying purposes and operation of the Nuclear Proliferation Prevention Act of 1994. It only deals with the question of whether the automatic sanctions will include USDA credit guarantees or other financial assistance for the purchase of food and ag commodities. My views in this regard are similar to what Hubert Humphrey, a former Member of this body, once said when he wanted to extend more food sales to the then-Soviet Union--which, of course, was our enemy in the cold war--and someone was taking him to task for that. Senator Humphrey replied that he was in favor of selling them anything that they couldn't fire back. That is essentially my perspective, too. We ought to be willing to sell food with credit guarantees not only for our own purposes here in this country but because a lot of people whose economic circumstances are marginal in other countries need this food for their basic subsistence. Finally, it is important that the Senate not have the misimpression that this legislation is going to solve what is shaping up to be a very serious crisis in rural America and on our farms. We need to pass this legislation. It will help, but it should not delude us into thinking that now this is going to cure our low wheat prices or corn prices or solve the farm income problem. With respect to U.S. ag exports, I would point out the net impact of U.S. trade sanctions in six markets--Cuba, Iran, Iraq, North Korea, Libya, and Sudan--amounts to only 1 percent of the total U.S. ag exports. Those six countries purchased only about 2 percent--I ask unanimous consent for 30 seconds.

Mr. HARKIN. Those six countries purchased only about 2 percent of the total world ag imports in 1996. When India and Pakistan were added, the result was only 3.2 percent of the total world ag trade subject to U.S. sanctions. That is simply not enough to have caused the tremendous drop we have recently seen in wheat and other commodity prices. So, yes, we need to pass this bill, but we need to come back in this body and do something to help solve the low ag prices that are hurting our farmers all over America. This bill alone won't do it.