Tom Harkin

Mr. HARKIN

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

Mr. HARKIN. Mr. President, I have an amendment which I send to the desk and ask for its immediate consideration.

Mr. HARKIN. Mr. President, parliamentary inquiry. What is the floor situation right now? Is the bill open for amendments?

Mr. HARKIN. I appreciate my chairman's comments on this. I know that the law was changed last year; Commerce put these provisions in there. Let me respond by saying that I think the GAO report points out that these are ephemeral, at best. It does say that you have to, if I could just have the chairman's attention, have the savings, the restructuring savings for DOD just has to be projected by at least 2-to-1. Then here is what the GAO said about estimating these savings. It said: Restructuring savings, on the other hand, are not recorded in a contractor's accounting records. Therefore, neither the amount nor the nature of the savings can be determined by reviewing the accounting records. Consequently, savings have to be estimated. For example, Northrop-Grumman's estimated 5- year savings from closing the Grumman corporate headquarters of about $215 million, of which about $100 million represents the labor and fringe costs that would be avoided over the 5- year period by laying off approximately 250 workers. These savings are, therefore, an estimate of a cost avoidance over the 5 years, the cost of the additional people that would have been needed had the headquarters not been closed. The savings from restructuring activities we examined were generally in the form of such future cost avoidances. The initial estimate of restructuring savings is simple in concept because it makes the critical assumption that everything else, except for the restructuring, is the same after a business combination as before. Because things are never the same, it is difficult to precisely identify actual savings several years after the initial estimate is prepared. Basically, what they are saying is, all of this money is fungible. I know the chairman says that we put a provision in there saying they can't use any of this money to pay bonuses. Fine. But they can go ahead and pay big bonuses and they can shift the cost over somewhere else, and we pay for closing an office and laying off 250 workers, which is a cost avoidance. So this money is all fungible. The GAO says there is no accounting principle that they can look to to determine that. So these are projected savings, not actual. I say to my friend from Alaska, the distinguished chairman, projected savings, well, I can tell you, any defense industry that is going to merge is going to show you that the savings to the taxpayers is much more than 2-to-1 over the amount of money we are going to give them for merging. That is an absolute because they are going to be able to show those kinds of savings. That is not the point. The point is, they are going to merge because it is in their best business interest to do so. Last week, Northrop-Grumman stock went up $21.12 a share. That is a lot of money. The stockholders or shareholders are happy about this. They have the money to go ahead and merge. This is in their best business interest to do so. If the taxpayers get savings out of it, fine, I am all for it. We should get savings out of it. But why should we pay them to do something that they are going to do anyway? Let us get the savings. Let it be 2-to-1. I hope it is 3-to-1, or 4-to-1, or 5-to-1. But we don't have to give them this money to do it. So that is in response to what the chairman just said. Yes, they have to project that the savings will exceed the allowed costs--that is the money we give them--by a factor of 2-to-1. Believe me, they are going to show that without any problem whatsoever. But if they can't, there is another loophole because if the projected savings to DOD exceeded the costs allowed, the secretary can determine if the business combination will result in the preservation of a critical capability. So there is another loophole if, in fact, they can't meet that test. Believe me they will meet that test. My bottom line is still this: These defense contractors are merging because it is in their best business interest to do so. It is not in our best interest, I don't think--not all the time--because I think we are destroying a lot of competition that was out there. But there is no reason for the taxpayers to subsidize it. That is what this amendment does. It simply stops it. I yield the floor.

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

Mr. HARKIN. Mr. President, I will take just a few minutes here to describe my amendment and what it does. I appreciate the chairman's willingness to set aside his amendment to take up this one. Mr. President, this is an amendment similar to one that I offered a year ago to get the Government out of the business of paying defense contractors for exercising their own best business judgment in merging together to form larger corporations, because that is what we are doing right now. Even though defense contractors want to merge--it is in their own best business interest to do so--taxpayers are coming in and subsidizing it. This is new. We have never done this before. Prior to July 1993, the Department of Defense had a longstanding practice of not permitting defense contractors to charge restructuring costs to flexibly priced contracts that were transferred from one contractor to another as a result of a business combination. That was the longstanding policy of DOD. The rationale for this practice was that DOD should not have to pay increased costs merely because one contractor is combining with another contractor. That statement comes right out of a recent GAO report. But in July 1993, DOD changed its longstanding practice and uniformly began permitting defense contractors to charge restructuring costs to the taxpayers of this country. How did this come about? Did it come about because Congress passed a law permitting it? No. Was there ever any debate on the Senate floor about it? None whatsoever. Was there ever one hearing held on it? No, there was not one hearing held on it. What happened was that in 1993, then Undersecretary of Defense, Mr. John Deutch by name, was Undersecretary for Procurement. He decided, single-handedly, to change the longstanding policy and made this change. We raised the point at the time, I and others, that this was a change in the Federal Acquisition Regulations, [FAR]. To get a change like this in FAR, there was a process and procedure that one had to go through. It had to be published in the Federal Register. There had to be hearings on it. Congress had to act on it. None of that took place. When we raised the point that regulations were not followed in changing the FAR, Mr. Deutch testified that in fact this was not a change in FAR, this was simply an explanation of existing law, that indeed the Department of Defense or any Federal agency had the authority to pay for the costs of mergers and acquisitions. So to get out from underneath violating the law, which I believe is what Mr. Deutch did at that time in terms of not going through the normal process, he then said, well, this really was not a change in FAR, it was simply an explanation of what was existing law. That raised all kinds of questions, as I pointed out last year in the debate. If this had been existing law for all these years, then it does not just affect the Department of Defense. It affects every agency of Government. That means that if hospitals merge, if they have Government contracts, can now come in and say, we want help for our mergers and acquisitions. This could go back years and years. People could come back from 20 years ago and say, Oh, well, we didn't know that that was existing law, so now we need to be reimbursed for the mergers we made in the past. So we are hung up on the twin horns of this sort of dilemma. On the one hand, if it was indeed a change in FAR, then Mr. Deutch and the Department of Defense did not go through proper procedures to accomplish that. If, on the other hand, it was not a change in FAR, then we have opened a Pandora's box for providing for taxpayer funding for any merger or combination for any company that has any Government contract. But I want to point out this is the Department of Defense, DOD, funding bill. And, you know, some of my colleagues argue that we are tight for money in this bill. We tried last week to transfer some money out of DOD to pay for veterans. We were told we did not have enough money in DOD for that. Now we have a subsidy the likes of which we have never seen in this country. I call it the ``money for nothing'' subsidy because that is exactly what the taxpayers are getting. Let us look at the mergers and acquisitions that we have had. Just last week Lockheed Martin announced it would purchase Northrop Grumman for an estimated $11.6 billion. Well, besides a nice stock boost for Northrop Grumman, which closed up 21.12 cents on the stock market when the merger was announced, these merging companies are also eligible to receive millions of dollars from the American taxpayers just for doing what is in their own best business interest. So that is why I am offering this amendment, a commonsense amendment to prevent these large and profitable companies from receiving taxpayer subsidies simply for merging. I am not saying they cannot merge. I am simply saying that the taxpayer should not fund it. For the life of me, I cannot see the wisdom in paying these profitable companies for merging when they are doing it in their own best business interest, when they are making a lot of money on the stock market, and we are paying them with money that we just do not have. I thought we were trying to balance the budget. Again, this is not money for any goods that we are going to receive at all. I just think that if these companies want to merge, fine--I know the Department of Defense has been urging them to merge for savings to the taxpayers, possible savings to the taxpayers. I do not know whether that is true or not. There may be some savings, but I do not think that has all been documented in terms of real savings. But even if there are savings to the taxpayers, the fact is, these companies are making a lot of money by merging. These companies would not merge if it was not in their best business interests to do so. There is no one at the Defense Department holding a hammer over their heads saying, Lockheed, you must merge with Northrop Grumman. There is no one holding a hammer over the head of Boeing saying, You must merge with McDonnell Douglas. They are doing it because it is increasing their profits, increasing their bottom line for their stockholders. Otherwise they would never do it. These mergers, aside from making more money for the companies, are in fact decreasing the amount of competition that we have out there now for Government procurements. But now they say that, well, these mergers are going to save us money. Let me read a couple of passages from a recent DOD inspector general report, dated June 28, 1996. On page 9-- let me read it in its full context: Contractors' [meaning defense contractors] are submitting cost proposals for activities called concentration, transition, economic planning, and other terms that do not immediately suggest restructuring and make the cost issues difficult for the Government to review, administer, and resolve. On page 10 of the same IG's report--this is still the DOD inspector general's report--they said that: One contractor's restructuring proposal projected savings over 10 years. But the contractor's projections are highly speculative since the volume of Government business is not guaranteed. The same contractor also proposed savings based on ``synergies in the work force''-- How about that one? a term that is not defined in the existing procurement regulations, and is difficult at best to substantiate and evaluate. Not my words, this is the DOD inspector general's words. On page 16 the same IG report: Amortization based on the projection of extended savings can almost make a marginal acquisition appear attractive by spreading costs over a long period, and comparing them to the projected savings to determine savings. In all cases, amorti- zation periods were selected for arbitrary reasons. . . . According to a GAO study of one business combination, they said: The net cost reduction certified by DOD represents less than 15 percent of the savings projected to the DOD 2 years earlier when they sought support for the proposed partnership. So DOD said, here is the proposed savings. GAO did the study of it and said the cost reduction was less than 15 percent of the proposed savings. So, I believe, Mr. President, this practice is clearly an abuse of taxpayers' money. We never passed it in the Congress. I believe that if this had ever come up for a vote in the Senate to say that we are now going to pay for mergers and acquisitions for these companies who are going to make these huge profits, I do not think it ever would have passed. If these companies are merging for business reasons, why do they need a handout from the taxpayers? If they are not being ordered to do so by the Government--and they certainly are not; encouraged, yes, not ordered to do so--but if they are good, the mergers will happen anyway, and the taxpayers will receive any savings without paying anything out. I know that is the point that is going to be made. We know that we can see some savings being made by these mergers. Fine. That is a great savings for the taxpayer if that is happening. But there is no reason we should have to pay for these mergers, because the companies are making much higher profits, much more money than they were before. So, therefore, we should not have to pay for them. Lawrence Korb, former Under Secretary of Defense, pointed out that defense contracting is still a profitable business. Over the past year, Lockheed Martin stock increased 48 percent in value, Northrop Grumman stock is up 50 percent, and McDonnell Douglas went up a whopping 80 percent last year. That is fine. That is good. But then why do we have to come in and give taxpayers' money to them to merge? You do not have to take it from me but from a very conservative think tank, the Cato Institute, which said, ``The costs associated by mergers should not be absorbed by Federal taxpayers. This is an egregious example of unwarranted corporate welfare in our budget.'' Taxpayers for Common Sense said, ``It is time for the Pentagon to drop this ridiculous money-for-nothing policy.'' The Project on Government Oversight said, ``The new policy is unneeded, establishes inappropriate government intervention in the economy, promotes layoffs of high-wage jobs, pays for excessive CEO salaries, and is likely to cost the government billions of dollars.'' Mr. President, it is time for the Pentagon to drop this ridiculous money-for-nothing policy. This policy is unneeded, it allows inappropriate Government intervention in the economy, and is likely to cost more because it will limit competition. Mr. President, the GAO recently pointed out that in the last round of mergers and acquisitions they found the following: One, GAO was unable to account for savings for the Federal Government due to DOD's subsidies for mergers; second, the GAO reported that the mergers have led to the layoff of 15,000 workers, with an additional 4,000 expected. GAO also offered no evidence that the subsidy had resulted in any savings that would not have been achieved without Federal payments. There is another effect that we have not factored in here: 15,000 hard-working blue-color Americans lost their jobs, most of them good union people, making pretty good wages--15,000 of them out of work. I suppose they belong to unions like the machinists and a lot of other good unions, making good money. Fifteen thousand laid off because of these mergers and acquisitions. How many went on food stamps? How many drew unemployment compensation? That is another cost to the taxpayers that was not picked up by these merger and acquisition costs or factored into the studies. Mr. John Deutch, in 1993, made a big mistake. We should not compound that mistake. Already, we have paid out $179 million to pay for mergers and acquisitions. There is pending right now on the books about $817 million that we can see. That is not counting the upcoming Boeing- McDonnell Douglas merger. How many more hundreds of millions of dollars will that add? My amendment, Mr. President, says simply that all of those that we have--and I want to make sure the managers of the bill understand this--all of those with which we have contractual arrangements, obviously have to be paid. What my amendment says is that those that have not been contractually made, we will not pay for these mergers or acquisitions. So if we have made the contracts, I guess we have to live up to it. But my amendment says none in the future. It is time to stop this ridiculous policy of paying highly profitable companies to do what is in their own best interests and which they would do anyway even if there were no Government subsidy. I yield the floor.

Mr. HARKIN

Mr. HARKIN. Reserving the right to object. Mr. President, what is the order? I thought the order of business was the Wellstone amendment.

Mr. HARKIN. Mr. President, I appreciate my colleague, my friend from Minnesota for offering this amendment. I join with him, as he said, in offering it. He has laid out the case for veterans. We have shortchanged them. I heard someone ask earlier: ``This is the defense bill, this is defense authorization. Later on there will be a veterans bill we can deal with. We deal with veterans later. Why does it belong here?'' It belongs here because, Mr. President, I submit you cannot defend this country unless we first defend our veterans, and that is what the Senator from Minnesota is saying in this amendment. He is right, we have given the Pentagon $2.6 billion more than they even asked for and, at the same time, turned around and cut our veterans health care program by $400 million. What kind of signal does that send to our young men and women in uniform today about their prospects in the future for having their health care needs taken care of if, in fact, they should find themselves in an enclave like those veterans found in Vietnam or the gulf war or Korea or World War II. Mr. President, there may be those who say if we take this $400 million out of defense, it is going to really hurt our readiness; we can't afford to cut our defense budget for something like this. I would like to take some time to refute that argument and to say, in fact, the military budget that we have today is far too bloated to meet the threats or potential threats that confront our country at this time. No one disputes that the cold war is over, but some in this body would like to continue funding the Department of Defense as if it never ended. I know the world is still a dangerous place, but we must ask ourselves, is our current defense budget justified by the dangers faced by the United States? I don't believe they are justified. The fact is, military spending is so high that it can be lowered without endangering national security. Even with the elimination of the Soviet Union, defense spending is still much larger than cold war spending levels. And what is all this money for? What enemy are we going to fight? Is it Cuba who spends less than 1 percent on its military budget? Or Libya, Iraq, Iran or North Korea or Syria? Or are we just going to spend $268 billion next year simply to have a large military? So let's look at some of the figures and take a comparison. U.S. military spending right now is three times--and look at this chart--our U.S. military spending. Here is the pie chart showing in billions of dollars the amount of money spent by various countries on defense. The United States spends three times more than China, India, Pakistan, Russia, and Vietnam all combined. It is more than double all of our NATO Allies combined. It is larger than the military budgets of the countries with the seven largest standing armies. Most important, the United States will spend nearly twice what all of our potential enemies spend on defense all combined. So if you add up all of our potential enemies, we will spend twice what they will spend on defense, all of them combined. Some have pointed out we should continue high levels of military spending because we don't know what our potential enemies are. A threat could come from anywhere. Let's assume this is true, for argument's sake. Let's break the world down by countries then, and see what we are talking about in terms of potential threats. Let us break it down by continents. What if every nation on the most powerful continent besides North America ganged up on the United States? By this, I mean all of Europe. Let us say that all of Europe-- Germany and France and Spain and Great Britain and Italy and all these countries that are our friends--what if they all ganged up on us? Very remote, but if they did, we still outspend this potential threat by a great deal, by almost $60 billion. You might say that is ridiculous, in Europe we have our allies, they are in NATO. They are not going to attack us. OK. What if every power in Africa joined in? Here is Africa down here, remote possibility, but they are only spending about $14 billion a year. In fact, if you add up all the military expenses of all of Europe, Africa, and South America, combined--let us say that all of the countries of Europe, South America, and Africa all combined together to attack us--we still spend more in defense than all of those three continents all put together. So I ask again, why are we spending so much money? This is the world. We are spending more than all of these continents all put together. There is another aspect to our defense. As it stands right now, such a large portion of our discretionary budget goes for defense that we are actually endangering our national security. Our citizens are threatened, the life and health of our country is threatened. Every extra dollar we spend on defense that we do not need to is a dollar less for education, for putting police on the streets, for stopping the drug epidemic, and feeding hungry children. In fact, the amount of discretionary funding spent on defense totals over 50 percent of the discretionary budget. That means that the portion of the total budget that we actually decide on where it goes overwhelmingly goes for defense. For every dollar that we spend out of this body, over 50 cents goes to defense--not education, not health care, not breakfast feeding for kids in schools, not for flood victims, but for the military. Here again is a pie chart. Look at it. This is our discretionary dollar that we spend. So 51.5 cents for military; all the rest for everything else. Justice gets 4 cents; housing assistance gets 3 cents; health gets 4.8 cents, transportation 2.7 cents. You wonder why our highways are going to pot and with potholes? You wonder why our railroads are deficient? Here is energy, less than 1 penny; education, 6 cents; 51.5 cents for the military. Six cents on education. You wonder why our schools are crumbling? You wonder why we are not getting the best possible teachers? Well, we are only spending that much money in education. Natural resources and environment, 4 cents. So I think this really graphically shows where our money goes. Over half for defense; less than half for everything else that goes to make us a strong nation. Some who argue for increased defense spending point out the defense spending has gone down from 1985. I heard that argument early today. A Senator on the floor said, ``Oh, my gosh, the defense budget has been cut by something like 30 percent since 1985.'' OK. Why do you use 1985? Why do we start with 1985, when 1985 was the peak of military spending, the buildup during the Reagan years? So, yes, you can measure it from 1985. Why don't we measure it from 1980? Let us take the height of the cold war, 1980, when we faced the Soviet Union. Well, our spending today is just about the same, actually maybe just a little bit more than it was in 1980. Yes, we have come down from 1985. But I submit, Mr. President, those who say that we have cut our defense spending are using an arbitrary point. They are using the point at which we had the highest military spending since the war. I say what we ought to use is a baseline like 1980 or 1970. And if we look at those base years, we get a much different level. So why are we comparing today's spending levels to 1985? The world today is not the world of 1980 or 1985 or 1990. We should be discussing the defense budget in terms of today's threats, that is, unless we plan to take the United States Army and our defense back in time to 1985 and have them fight the Soviet Union. But we will not do that because there is no Soviet Union. Why does it matter so much what we spent in 1985 when the Soviet Union was a threat? We should look at today's threats and potential threats, match our spending to meet them, not the threats of 1985. Aside from all that, the Wellstone amendment seeks, as we know, to shift $400 million out of $268 billion. We are saying, take $400 million, shift it over to veterans health care. As the Senator pointed out, we have $2.6 billion more than what the Pentagon asked for. Will we really harm our readiness if we take $400 million out for veterans health? I submit not. Why are we giving the Defense Department more money when they cannot even keep track of the money they have already spent and they are wasting billions on buying equipment they do not need? Mr. President, in February of this year, I released a General Accounting Office report requested by myself, Congressman DeFazio, Senator Durbin, and Congresswoman Maloney. This study revealed that over half of the Department of Defense inventory of procured items is overstock; in other words, waste. Of the $67 billion of goods in DOD warehouses, the GAO estimates that $41 billion is unneeded. What do you mean by unneeded? By unneeded, this means the military would never need or use the items even during wartime. Let me repeat that. Of the $67 billion in goods in DOD warehouses, GAO estimated that $41 billion is unneeded even in wartime. That is not all. Again, here is the inventory. This is what this chart shows. Total inventory is $67 billion. About $41 billion, or 61 percent, of it is in excess of what is needed for operational requirements or for reserve requirements. The needed inventory is about $25.8 billion. So we have all this waste out there that we do not need, and yet you would think it would end. But, it never seems to end. It just continues going on and on and on. The GAO identified more than $1.1 billion worth of goods--11,000 different items--for which there is a 100-year supply. Imagine that. Do we expect our Army to fight with something 100 years from now that was built today? Bring back the horse cavalry. Maybe that is what today's Army needs, what we used 100 years ago. So 100 years, with 11,000 different items, totaling $1.1 billion. But that is not all. The GAO also uncovered millions of dollars in DOD inventory items for which there is more than a 20-year supply. Yet, the Pentagon continues to buy more. The justification by the Pentagon for not canceling many of these orders actually border on the bizarre. Some were not canceled because termination ``was not cost-effective'' for any purchase less than $10,000. Other items are automatically ordered without review or regard to need. The computer just keeps ordering them. As a result, we do not just have warehouses of waste, I call them arsenals of bureaucracy. What we have is Sergeant Bilko manning the warehouse, Beetle Bailey running procurement, and Gomer Pyle checking the list twice. This photo here shows just one item that was uncovered called a direct linear valve used on a hydraulic pump used on aircraft carriers. The Pentagon has more than a 20-year supply on this item. Although only 8 of those in stock were needed, an additional 66 were on order in 1995. Only 8 were needed, but an additional 66 were ordered. Again, we asked why the Navy did not cancel the order. Well, they said, termination was not ``cost-effective for any purchase less than $10,000.'' So if it costs less than $10,000, it is cheaper for the taxpayers to buy it. Please, someone, make sense of that for me. If it costs less than $10,000, keep buying it, keep stocking it because it costs more to cancel it. Try selling that to your constituents back home. Here is another one. This is a circuit board, aircraft circuit board. In 1995, 10 were on order. The only problem was that the Navy had 27 of these, but only 2 were needed for operational and wartime reserve. That is not the last of it. This is a 1972 state-of-the-art electronic item. So we asked, why did they keep ordering them? Well, according to the item manager, the Navy supply system computer automatically ordered the item and no one bothered to review the order. But not to worry. After the 10 new assemblies of these circuit boards-- at more than $1,000 each--were delivered in May, they were automatically routed for disposal. What does that mean? They ordered them; they came in; someone stamped them, shoved them out the backdoor to throw away. So do not tell me that taking $400 million for veterans health care is going to somehow hurt our readiness or hurt our ability to defend this country from any threats that exist today or any potential threats in the foreseeable future. But what this $400 million will mean is that those veterans who put themselves in harm's way, who were there to sacrifice life and limb for their country, who were in the gulf war or in Haiti or in Bosnia, Vietnam, Korea, World War II, or even peacetime--I do not mean just to focus on our veterans who were in wartime. What is that saying? It is not just those who are in battle, but those who support those in battle, our peacetime army, our peacetime military. My brother was a SAC pilot in the Strategic Air Command for 5 years carrying nuclear weapons. None were ever dropped, but this was our front line of defense. This is what kept the Soviet bear in check. So these, too, these veterans also have to be responded to in terms of their health care needs. So I am talking about all veterans, not just those who have been in actual war but those who were willing, if the orders came, to fight and to perhaps die for their country. I believe we have an absolute obligation to support our troops not only in time of battle but also at home when the battle ends. I believe we have a special obligation to those in our Armed Forces who were disabled in the service of our country. Veterans programs too often suffer inadequate funding and misguided policies. As Senator Wellstone pointed out, our veterans population is aging rapidly, and the hospital system is stretched to its limits. The proposed cuts to the VA budget, which is already inadequate for the medical needs of veterans, is an unacceptable way to try to balance the budget. These cuts will have a drastic and severe effect on the health of our Nation's veterans, especially those veterans who were disabled in the service of our country. So what our amendment seeks to do is to alleviate these unfair cuts in the veterans discretionary funding by transferring $400 million from the Department of Defense budget to VA. We can do it. The money is there. If the Department of Defense will just cut down a little bit on their waste and inefficiencies, if we will begin to gear our thinking towards the threats of today and tomorrow instead of what the world was like 10 and 20 years ago, if we do that, there is plenty of money in the defense budget to make sure that we meet our obligation to our veterans. I do not think this Senate should do anything less than that. This amendment should be adopted overwhelmingly to send a strong signal not only to our veterans but to those who are serving today that when their time of need comes and they need health care through the veterans system, that this country will stand behind them when they are veterans just as it stands behind them when they are serving in active duty. Mr. President, I yield the floor. How much time do we have remaining?

Mr. HARKIN. I thank the Senator from Minnesota. How much time do I have, Mr. President?

Mr. HARKIN

Mr. HARKIN. Mr. President, Disraeli once described the youth of a nation as, the trustees of posterity. I interpret that to mean that the future promise of any country can be directly measured by the present prospects of its young people. Whatever we invest today in promoting and protecting our youth will bring a high return in the future. For that reason, I am pleased that the Senate has taken some first steps to address the growing problem of uninsured children. I have to say I am still astounded by the fact that this great Nation could allow 10 million children to go without health insurance. Just think about it. At a time when the economy is sound and unemployment is at a 23-year low, one in seven of America's children lack a basic protection that every one of us enjoys. Uninsured children are less likely to be fully immunized against preventable illnesses, or to receive care for chronic conditions and injuries. And usually whatever care they receive takes place in a hospital emergency room--one of the most expensive settings possible. As we consider how best to extend health insurance coverage to this important segment of the population, I want to call my colleagues' attention to one aspect of this problem that is often overlooked. I am speaking about the oral health of children. For some reason, many of us often fail to realize that oral health is an integral part of a person's overall health. Tooth decay and serious infections are just some of the chronic health problems that can result when oral health is ignored. At the same time, there is a strong relationship between oral health and other medical conditions that manifest symptoms in the mouth. Regular dental check-ups, or example, provide an early warning system for diabetes, certain forms of cancer, and immune disorders like AIDS. According to the U.S. Public Health Service, dental and oral diseases may well be the most prevalent--and preventable--conditions affecting children. And while we have seen improvement overall, certain groups of children continue to suffer more than their share of oral health problems, primarily because of their limited access to oral health services. Poor children--usually minority, migrant, and many in rural communities--are the ones most seriously affected. You might ask ``doesn't Medicaid help these children?'' It should, if they happen to be eligible. But while Medicaid accounts for about 80 percent of public funds spent for oral health, only about 1 percent of Medicaid funds are spent on dental care. And as we have heard, many of the uninsured children are in working poor families that are just above the Medicaid cut-off for eligibility. These children have no protection whatsoever. The sad irony is that dental care embodies the very qualities that make for a good health care system. Unlike medical coverage, which is triggered by illness, dental coverage emphasizes prevention. How important is that? According to the National Institute of Dental Research, every dollar spent on preventive dental care saves $4 in treatment costs. And dental coverage favors primary care over more expensive specialized treatment. Regular checkups mean your local dentist can catch and treat problems before they require a specialist. One recent study found that persons with dental coverage are almost twice as likely to visit a dentist, and more than 70 percent of those covered by insurance have annual checkups and receive preventive care. All of which is to say, dental coverage for children is not only good social policy; it is good economic policy as well. If we truly want to extend basic health protection to our children, I urge my colleagues to include dental health coverage in any final legislation we send to the President.

Mr. HARKIN

Mr. HARKIN. Mr. President, I suggest that we follow the normal rules. If the Senator wants to speak, we can go back and forth. That would be fine with this Senator.

Mr. HARKIN

Mr. HARKIN. Mr. President, I rise in support of the Wellstone amendment. This School Breakfast Program has been one of the best in this country. Already we have kids getting school lunches, but they don't get the school breakfast. I say that if you ever want to see a clean plate, you go to a school breakfast program. These kids come in, they are hungry, there is not a drop of food left when they put those trays back into the hopper. The school lunch may be a little different. If you really want to have an impact on early childhood education and getting these kids to learn, this is the place to put the money. It was wrong to take it out of welfare reform. I tried at that time to put the money in, and we could not do it. It was wrong for this to be taken out in the welfare reform to save that kind of money. It does not save money. It ruins lives because we are not providing the money for the outreach program for the school breakfast startups and for the summer feeding program. This is a small amount of money. I think out of this whole defense thing we could at least authorize the Secretary of Defense to transfer a measly $5 million to get this job done.

Mr. HARKIN. How much?

Mr. HARKIN. How much time, Mr. President?

Mr. HARKIN

Mr. HARKIN. Mr. President, I offer an amendment with Senator Richard Durbin regarding some much needed reforms in the way the Department of Defense manages its inventory of goods, as well as its financial management systems. Our amendment modifies some very useful language that is included in the Senate Armed Services Committee version of the Defense Authorization bill. I first would like to applaud the members of the Armed Services Committee for including provisions in the bill that moves the DOD toward better management of its finances and inventories. These provisions are important steps toward fixing some critical problems. We believe that our amendment adds a few simple improvements to the committee provisions. One element of our amendment requires that the DOD take actions to ensure that its comptrollers are adequately trained. Afterall, the comptroller is the key technical expert who overseas and manages the day-to-day financial operations. For example, the comptroller of the Pacific Fleet, billeted for a Navy captain, is responsible for the financial management and financial reporting of an annual budget of about $5 billion, comparable in size to a Fortune 500 corporation. Earlier this year, I released a General Accounting Office report, entitled ``Financial Management: Opportunities to Improve Experience and Training of Key Navy Comptrollers.'' The GAO report states that the Navy's financial and accounting systems have been substantially hampered by the fact that the Navy has no specific career path for financial officers, has inadequate financial management and accounting education standards for comptroller jobs, and has a policy of rotating officers too often through key accounting positions. In the report, GAO pointed to these personnel practices as one cause of GAO findings of misstatements in almost all of the Navy's major accounts. The GAO report recommended that the Secretary of Defense ensure that the following steps are taken by the Navy, all of which are applicable to the other Armed Services: Identify which key military comptroller positions can be converted to civilian status in order to gain greater continuity, technical competency, and cost savings. For those comptroller positions identified for conversion to civilian status, ensure that those positions are filled by individuals who possess both the proper education and experience. For those comptroller positions that should remain in military billets, establish a career path in the financial management and ensures that military officers are prepared, both in terms of education and experience, for comptrollership responsibilities. This year, I also released, along with Senator Durbin, Congressman Peter DeFazio and Congresswoman Maloney, a second GAO report that addressed some critical problems with the DOD's inventory practices. ``Defense Logistics: Much of the Inventory Exceeds Current Needs'' detailed billions of dollars in unneeded supplies and equipment within the DOD's inventory. Although DOD has made some progress in reducing the overstock in its inventory, much more needs to be done. This is especially true in its overstock of spare parts and hardware items. I agree with the committee's attempt to institutionalize best commercial practices in the management of DOD's inventory, especially for the inventory of spare parts. Our amendment simply requires the DOD to implement pilot programs when needed. It also clarifies the definition of best commercial practices to include the so-called prime vendor arrangements which have proven very successful.

Mr. HARKIN

Mr. HARKIN. I move to waive the point of order and ask for the yeas and nays.

Mr. HARKIN. Mr. President, in this morning's paper, researchers were able to identify a gene that plays a role in Parkinson's disease. We need more funds for biomedical research. What this amendment says, on behalf of Senators D'Amato, Specter, Mack, and myself, is that we take the excess savings that will come in because of the capital gains tax cut. Half of that will go for deficit reduction; the other half will go to NIH for biomedical research. I yield the remainder of my time first to Senator D'Amato and then Senator Specter.

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

Mr. HARKIN. I send my amendment to the desk.

Mr. HARKIN

Mr. HARKIN. Mr. President, are we in morning business?

Mr. HARKIN. Therefore, a Senator may only yield for a question; is that correct?

Mr. HARKIN. Mr. President, parliamentary inquiry.

Mr. HARKIN. Further parliamentary inquiry. Under the rules of the Senate, under the rules of which we are debating this bill, if someone is recognized, since there is no time limit, can that Senator yield time to other Senators for purposes other than asking a question?

Mr. HARKIN

Mr. HARKIN. Mr. President, I would like to submit for the Record some of the many letters I have received in support of Senator D'Amato's and my amendment to S. 947, the Balanced Budget Act of 1997, to create a medical research fund. These letters show the widespread grassroots support for this amendment which would expand support for medical research above and beyond what is currently being done at the National Institutes of Health [NIH]. The people behind these letters understand what many recent studies have demonstrated--that investments in medical research can both save lives and lower Medicare costs through the development of more cost- effective treatments and by delaying the onset of illness. They understand that while health care spending devours nearly $1 trillion annually, the United States devotes less than 2 percent of its total health care budget to health research. These letters are from people that understand the importance of increased funding for biomedical research. I ask unanimous consent that these letters in support of the medical research amendment be submitted for the Record.

Mr. HARKIN. The pending legislation provides $3 billion to establish a Welfare-To-Work Program and specifies the activities for which the funding may be used. The list of allowable activities does not allow assistance for education or training activities with the exception of on-the-job-training.