Orrin Hatch

Mr. HATCH

Mr. HATCH. Mr. President, on behalf of myself, Senator Baucus, and 18 other of our colleagues, I rise today to introduce the Railroad Retirement and Survivors' Improvement Act of 2001. This bill represents an important opportunity in the 65-year history of the Railroad Retirement system. Rail labor and rail management, working together, developed a proposal that would build on the system's strengths to modernize Railroad Retirement to provide better, more secure benefits at a lower cost to employers and employees. This proposal was further refined as a result of extensive discussions last year between rail labor and management and the congressional committees of jurisdiction. The bill we are introducing today builds on our efforts in the 106th Congress to reform the Railroad Retirement system. Last year, the predecessor to this bill, H.R. 4844, passed the House by a vote of 391- 25, and received similar bipartisan support in the Senate. Eighty senators signed a letter urging quick passage of the legislation, and on September 28, 2000, it was favorably reported by the Finance Committee. H.R. 4844 was placed on the Senate legislative calendar, but unfortunately, this is where the bill remained. Despite an overwhelming majority of Members in both houses in support of the bill, time ran out and the 106th Congress adjourned without this bill being brought up on the Senate floor. Both rail labor and rail management have come to the Congress to seek changes to their pension plan because Railroad Retirement is a unique system. It is the only private industry pension plan established in statute and administered by the federal government. As such, any changes in Railroad Retirement can be made only through legislative action. Historically, such legislation has reflected negotiated agreement by management and labor with the Congress followed by congressional consideration and enactment of necessary statutory changes. The legislation we introduce today continues this practice and embodies the reform principles agreed to by rail management and the vast majority of rail labor this past year. Some may ask, why reform the Railroad Retirement system at this time? Railroad Retirement has served railroad workers, their families, and their surviving spouses well for 65 years. Its roots reach back to the struggle to find answers to the hardships that resulted from the Great Depression of the 1930s. Today, the Railroad Retirement system is fiscally strong, providing benefit payments to more than 673,000 retirees and other beneficiaries. The most recent report to Congress by the Railroad Retirement Board's chief actuary, which addressed the 2000-2073 period, indicated that no cash-flow problems are expected to arise over that period. This strength, combined with the willingness of rail labor and rail management to work together constructively, provides an opportunity to address a number of concerns about Railroad Retirement that have developed in recent years. First, Railroad Retirement is very costly, both to employers and employees. It has two components: Tier I, which is largely equivalent to Social Security, and Tier II, which provides additional benefits and is similar to a private, defined benefit pension plan. Tier I and Tier II are funded primarily through payroll taxes on employers and employees--15.3 percent combined for Tier I, including Medicare, and 21 percent for Tier II. Together, these payroll taxes make up a staggering 36.3 percent of taxable payroll, a figure substantially higher than the cost other industries face to provide retirement benefits to their employees. This high cost represents a major financial burden to both employees and employers. Perhaps worse still, it constitutes a major disincentive for employers to hire new employees under Railroad Retirement. A second factor that led to the development of this legislation is the adequacy of the Railroad Retirement benefit structure. One special area of concern among retirees has been the widow's and widower's benefit under the Tier II portion of Railroad Retirement. Indeed, this was the subject of a 1998 hearing by the Ground Transportation Subcommittee of the House Transportation and Infrastructure Committee. That hearing was a spur to rail management and rail labor to engage in discussions about a broad range of issues affecting the system. Let me explain the reasons why this bill has the strong support of railroad retirees, railroad management, and the great majority of rail labor. First, it provides for increased responsibility by the railroad industry for the financial health of Railroad Retirement. Under current law, if changes in tax rates or benefits are needed to assure the financial health of the system, Congress is required to pass new legislation. The bill being introduced today would make Tier II tax rates more responsive to actual financing needs by establishing an automatic tax adjustment schedule. Under this statutory schedule, payroll taxes would be raised or lowered automatically, without any further action by Congress, depending on the level of funds available to pay Railroad Retirement benefits. The schedule is designed to maintain a minimum balance of 4 years of benefit payments and a maximum balance of 6 years. The four year minimum reserve balance represents a higher balance than has existed in the Railroad Retirement Account (RRA) for most of the past 40 years. Rail employers have agreed to bear entirely any tax schedule increases--employees and employers would share any tax decreases that might occur. Employees would have the option of seeking congressional action to convert any planned decrease in the employee tax rate to a benefit increase, and management has agreed to support such action. Second, the bill provides for greater flexibility in the investment of Railroad Retirement assets. This investment provision would apply only to Tier II, the portion of the program that is similar to a private pension plan and is funded entirely from industry sources. Tier I, the portion that is similar to Social Security and is linked to the Social Security system, would not be affected. Currently, investment of RRA assets is limited by law to U.S. Government securities. Actuarial projections for the RRA assume an annual return of 6 percent on investments. Between 1985 and 1998, the average annual return on RRA investments was unusually high at 9.12 percent, but this still lagged far behind the average annual return to large multi-employer pension plans of 15.17 percent over the same period. The differential in returns between RRA investments and private pension plan investment portfolios contributes significantly to the high cost of funding the benefits provided from the RRA. This bill would provide the authority for the industry assets in the RRA to be invested in a diversified investment portfolio, as are the assets of private sector retirement plans. In the process of developing this proposal, concerns were raised by some Members of Congress that this aspect of the legislation could result in government intrusion into the equity markets. While the funds that would be invested are, in effect, railroad industry pension funds which, through historical circumstance, have been maintained in a government account, we have included a provision to draw a bright line distinction from current investment practice. The Congressional Committees of jurisdiction worked with labor and management last year to create a new structure that separates the new investment activity from the Railroad Retirement Account. This structure has been included in the legislation we introduce today. It would establish a new Railroad Retirement Investment Trust (RRIT), whose exclusive purpose would be the investment of RRA assets entrusted to it by the Railroad Retirement Board (RRB). The RRIT would not be an agency or instrumentality of the federal government. RRA assets would be transferred to the RRIT for investment and from the RRIT to a centralized disbursement agent that would pay the various components of the aggregate railroad retirement benefit in a single check to beneficiaries. The RRIT would have seven trustees chosen by the Railroad Retirement Board: three representing labor, three representing management and one representing the public interest. Trustees of the RRIT would be required to have experience and expertise in the management of financial investments and pension plans, and would be subject to fiduciary standards similar to those required by ERISA. The RRIT trustees would set investment guidelines for the prudent management of the assets entrusted to it, and select outside investment advisors and managers to implement its policies. Earnings on RRIT investments would be available only for the purpose of paying Railroad Retirement benefits and necessary expenses of the RRIT. I believe that these measures will allow for increased returns on the industry's pension plan while building an effective firewall between the government and the private markets. Third, this legislation would improve benefits for retirees and their families. In particular, it would resolve the concern regarding the benefit for widows and widowers under Tier II. Under current law, while the retired employee is alive, the couple receives a Tier II benefit equal to 145 percent of the retiree's benefit--the retiree's benefit plus a spousal benefit of 45 percent of the retiree's benefit. When the retiree dies, the spouse is left with a Tier II benefit of 50 percent of the retiree's benefit--a reduction of almost two-thirds. Under this bill, the surviving spouse would receive a Tier II benefit equal to that received by the retiree, preventing such a drastic reduction in survivor income. Also of key importance is a reduction in the current early retirement age of 62 with 30 years of service to age 60 with 30 years of service. This would return the age at which a railroad employee can retire with full benefits to what it was prior to 1984. It is significant that rail labor and rail management have agreed to revise their national collective bargaining agreement to conform the age of eligibility for retiree health benefits to 60, if this legislation is passed. There are also two other benefit improvements: the vesting requirement would be lowered from 10 to 5 years, a change which would align Railroad Retirement with current private industry pension practices; and the bill would also eliminate an arbitrary cap on Tier II benefits, known as the ``Railroad Retirement Maximum'', which can result in retirees and their spouses having their earned benefits substantially reduced. Fourth, Tier II payroll tax rates would be reduced for employers. Railroad employers currently pay 16.1 percent of taxable payroll into the RRA, which, as I have mentioned, is a rate substantially higher than other industries' pension contributions. The reduction of employer taxes would be phased in over the first 3 years following enactment of the bill. Employee tax rates would continue at the current 4.9 percent. Further tax reductions for employers and tax reductions for employees would be possible as provided under the tax adjustment mechanism I have already described. In addition, the supplemental annuity tax, a 26.5 cents-per-hour tax paid entirely by rail employers, would be eliminated. Supplemental annuity benefits would continue to be paid to eligible beneficiaries. The legislation being introduced today is nearly identical to the legislation that was reported last year by the Senate Finance Committee, with the exception of updated effective dates. I am concerned that certain aspects of this bill have been undeservedly criticized since it was first introduced last year, and I believe it is important to put these criticisms to rest in order to avoid any further misconceptions. First, the legislation's budget impact has been mischaracterized and overstated. Under current scoring rules, CBO is required to treat the initial purchase of private securities by the Railroad Retirement Investment Trust as a government ``outflow.'' These private securities would become an asset of the RRIT, but would not be scored as a corresponding government ``inflow'' under current budget scoring rules, a decision which, I am told, the CBO characterized as a ``close call.'' CBO further indicated that some budget experts believe that OMB's long- standing practice under ``Circular A-11'' may be ``ill-suited to purchases of financial assets that the government acquires as a way of preserving, or enhancing, the value of cash balances,'' and that they ``may consider a different budget treatment in the future.'' Simply put, even if the estimated $14.8 billion acquisition of private securities is scored as an initial outlay, the assets received in return would produce on-budget revenues in the form of interest, dividends and capital gains. Over time, these revenues will contribute to increasing future surpluses and reducing debt service. In fact, CBO estimated that after the third year under the Railroad Retirement and Survivors' Improvement Act, the program would add to the surplus in every succeeding year in ever-increasing amounts. Second, some have expressed concern that the transfer of federal income taxes on railroad retirement benefits into the Railroad Retirement trust fund is a Government subsidy. In fact, railroad retirees, concerned about the future of Railroad Retirement, agreed in 1983 to the taxation of their benefits and the dedication of the proceeds to Railroad Retirement as a form of benefit cut to help support the long-term solvency of the program. If benefits had been cut in the conventional way, there would be no question as to whether this would be considered a subsidy. Third, critics' claims that this legislation relies on Social Security funds or makes any changes to Social Security reflect a total misunderstanding of the relationship between Railroad Retirement and Social Security. Since 1950 there has been a financial interchange mechanism between Railroad Retirement and the Social Security system that ensures that neither system is advantaged or disadvantaged by which system covers a worker. The current bill would make no changes to this interchange process or to Social Security. As in the past, these Tier I funds would be available to pay benefits, would be considered assets of the Railroad Retirement program, and would be limited to investments in federal government securities. Railroad Retirement has always been a bipartisan concern. I hope that many more of our colleagues will join us in taking this opportunity to improve Railroad Retirement and the lives of its more than 673,000 beneficiaries, and that we act early to ensure that there is plenty of time in this session to accomplish this important task.

Mr. HATCH

Mr. HATCH. Mr. President, I rise today on behalf of myself and Senators Baucus, Ensign, Torricelli, Schumer, Murkowski, and Breaux, to introduce legislation to permanently extend the exclusion from Subpart F for active financing income earned on business operations overseas. This legislation permits American financial services firms doing business abroad to continue to defer U.S. tax on their earnings from their foreign financial services operations until such earnings are returned to the U.S. parent company. The permanent extension of this provision is particularly important in today's global marketplace. Over the last few years the financial services industry has seen technological and global changes that have altered the very nature of the way these corporations do business, both here and abroad. The U.S. financial industry is a worldwide leader and plays a pivotal role in maintaining confidence in the international marketplace. It is essential that our tax laws adapt to the fast-paced and ever-changing business environment of today. Let me outline exactly why this bill is needed. Regulated U.S. financial institutions with operations overseas need to retain earnings in foreign subsidiaries in order to meet ever-expanding capital requirements. Unfortunately, if the tax provision this bill seeks to permanently extend is allowed to expire at the end of this year, as is scheduled under the current law, those earnings will be subject to current U.S. taxation. Obviously, current taxation makes it more costly for a growing overseas business to meet those capital requirements, an impediment that is not in place for most foreign-based competitors. Congress recognized this fact as long ago as the early 1960s, when the Kennedy Administration proposed the imposition of current taxation for all overseas income of U.S.-based corporations. Counsel for the Joint Committee on Taxation testified at that time that Congress could not constitutionally tax shareholders on the unremitted earnings of foreign subsidiaries except in cases where such tax was necessary to prevent the evasion or avoidance of tax. In cutting back the scope of the President's proposal, the House Ways and Means Committee stated, in part, ``to impose the U.S. tax currently on U.S. shareholders of American-owned businesses operating abroad would put such firms at a disadvantage with other firms located in the same areas not subject to U.S. tax.'' Forty years later, those words still ring true. The competition abroad for U.S. banks, for example, is no longer the Chases, Bankers Trusts, and Bank of Americas of the world. They are now Deutschebank, ABN Amro, HSBC, and Societe Generale. These foreign-based financial institutions are big players in the worldwide arena operating, usually, under home-country tax regimes that generally do not tax currently their active financial income earned outside their home countries. The bill we are introducing today would provide a consistent, equitable, and stable international tax regime for this important component of our economy. A permanent extension of this provision would provide American companies much-needed stability. Our current ``on- again, off-again'' habit of annual extension limits the ability of U.S.-based firms to compete fully in the marketplace and interferes with their decision making and long-term planning. The activities that give rise to this income are long-range in nature, not easily or inexpensively stopped and started on a year-to-year basis. Permanency is the only thing that makes sense when it comes to this kind of tax policy. This legislation will give U.S.-based financial services companies consistency and stability. The permanent extension of this exclusion from Subpart F provides tax rules that will ensure that the U.S. financial services industry is on an equal competitive footing with their foreign-based competitors and, just as importantly, provides tax treatment that is consistent with the tax treatment accorded most other U.S. companies. The world has changed rapidly over the past few years. Like it or not, we live and compete in a global economy. In many respects, our Tax Code is outdated and represents the world as it was in the 1960s or 1970s, or in some cases, even before. If we close our eyes to these facts, we risk losing our worldwide leadership. The legislation we are introducing today will not solve all of our tax problems, nor even all of the tax problems of U.S. companies trying to compete internationally. It will, however, solve one very important problem. And this would be a start from which we can build. I urge my colleagues to support this important bill and ask that the text of the bill be printed in the Record.

Mr. HATCH. Mr. President, I rise today to introduce the Housing Bond and Credit Modernization and Fairness Act of 2001. I am joined in this effort by Senators Breaux, Jeffords, Allard, Lincoln, and Snowe. This legislation will bring about important adjustments in two of the most important and popular federal affordable housing programs that have been enacted, Housing Bonds, or single family Mortgage Revenue Bonds, MRBs, as they are commonly known, and the Low Income Housing Tax Credit. Identical legislation was recently introduced in the House by Congressmen Amo Houghton and Richard Neal. These programs are popular because they are state-administered, federal tax incentives to encourage private investment in first-time homebuyer mortgages for low and moderate-income families and privately developed and owned apartments for low-income renters. The changes proposed by this legislation were endorsed by the National Governors Association at its recent meeting. The Governors know how important the Housing Bond and Housing Tax Credit programs are in efforts to meet the housing needs of low and moderate-income families. The bill is also supported by the National Council of State Housing Agencies. Last year more than 80 members of this Body cosponsored legislation that was included in last year's Community Renewal Tax Relief Act of 2000, which was signed into law by President Clinton. That legislation adjusted for past inflation in the operating levels of the Housing Tax Credit and MRB programs. Specifically, the Act increased the per capita low-income housing tax credit cap as well as the State-volume limits on tax-exempt private activity bonds, under which the MRB program falls. However, even with these long overdue changes, many people who are qualified to receive housing assistance under these programs cannot get it. The reason is that a few obsolete provisions in the programs stand in the way. The legislation we are introducing today will modernize these programs and remove these barriers. Specifically, the bill includes three changes. First, the bill would repeal the so-called Ten-Year Rule. This rule, which was enacted in 1988, prevents states from using mortgage payments received ten years after the original Mortgage Revenue Bond was issued to make new mortgage loans to additional qualified purchasers. A recent report by Merrill Lynch states, ``The Ten-Year Rule, to a large extent, offsets gains from the volume cap increase.'' Between 1998 and 2002, this rule will result in the loss of over $8.5 billion in mortgage authority, denying over 100,000 qualified lower income homebuyers affordable MRB-financed mortgages. Each year, the Ten-Year Rule will keep tens of thousands of additional qualified lower income homebuyers from getting an affordable MRB-financed mortgage, including many in my home State of Utah. Second, the bill would replace the current-law unworkable limit on the price of the homes these MRB mortgages can finance with a simple limit that works. Let me explain. Current law limits the price of homes purchased with MRB-financed mortgages to 90 percent of the average area home price. States have the option of determining their own purchase price limits or of relying on Treasury-published safe harbor limits. Most states rely on the Treasury limits because it is costly, burdensome, and often impossible to collect accurate and comprehensive sales price data. The problem is that, like many states, the Treasury Department does not have access to reliable and comprehensive sales price data. This has especially been a problem for states, such as Utah, with many rural areas. In fact, Treasury last issued safe harbor limits in 1994, based on 1993 data. Home prices have risen approximately 30 percent in the past eight years, and in some areas of the country by a much higher percentage. This means that the MRB program simply cannot work in many parts of many states because qualified buyers cannot find homes priced below the outdated limits. To have an outdated and unworkable requirement that holds back the families that this program is designed to help is poor public policy that cries out for remedy. The bill we are introducing today would allow States to determine purchase price limits without reliance on nonexisting sales price data. It does this by limiting the purchase price to three and a half times the MRB qualifying income limit. In the 106th Congress, I joined my friend and colleague from Arkansas, Senator Lincoln, in introducing this provision as a stand-alone bill. Finally, the bill would make Housing Tax Credit apartment production more viable in many very low income, and especially rural, areas by allowing the use of the greater of area or statewide median incomes for determining qualifying income and rent levels. This is how income and rent levels are determined under the very successful multifamily bond program. Current law requires States to use area median income to determine eligible incomes of Housing Tax Credit tenants. In many very low income areas, median incomes are simply too low to generate sufficient rents to make these housing projects feasible. Data from HUD show that current income limits inhibit Housing Tax Credit development in as many as 1,700 of the 2,364 non-metropolitan counties across the country. The Housing Tax Credit and the MRB programs work and they are important to each State. The Congress recognized this last year by making the important adjustments in the operating levels of these programs to compensate for past inflation. More than 80 senators joined us in this effort by cosponsoring the legislation. This was a vital first step in improving the ability of these programs to meet the affordable housing needs of millions of Americans. Now, we must finish the job by correcting the problems in the programs that limit their effectiveness in delivering this affordable housing. For those of you that cosponsored these bills last year, and those of our colleagues who are new to the Senate, I am asking you to join this bipartisan effort of Senators from both rural and urban States to see that these important provisions are enacted this year. I ask unanimous consent that the text of the bill be printed in the Record. There being no objeciton, the bill was ordered to be printed in the Record, as follows:

Mr. HATCH

Mr. HATCH. Mr. President, I rise today to introduce the Housing Bond and Credit Modernization and Fairness Act of 2001. I am joined in this effort by Senators Breaux, Jeffords, Allard, Lincoln, and Snowe. This legislation will bring about important adjustments in two of the most important and popular federal affordable housing programs that have been enacted, Housing Bonds, or single family Mortgage Revenue Bonds, MRBs, as they are commonly known, and the Low Income Housing Tax Credit. Identical legislation was recently introduced in the House by Congressmen Amo Houghton and Richard Neal. These programs are popular because they are state-administered, federal tax incentives to encourage private investment in first-time homebuyer mortgages for low and moderate-income families and privately developed and owned apartments for low-income renters. The changes proposed by this legislation were endorsed by the National Governors Association at its recent meeting. The Governors know how important the Housing Bond and Housing Tax Credit programs are in efforts to meet the housing needs of low and moderate-income families. The bill is also supported by the National Council of State Housing Agencies. Last year more than 80 members of this Body cosponsored legislation that was included in last year's Community Renewal Tax Relief Act of 2000, which was signed into law by President Clinton. That legislation adjusted for past inflation in the operating levels of the Housing Tax Credit and MRB programs. Specifically, the Act increased the per capita low-income housing tax credit cap as well as the State-volume limits on tax-exempt private activity bonds, under which the MRB program falls. However, even with these long overdue changes, many people who are qualified to receive housing assistance under these programs cannot get it. The reason is that a few obsolete provisions in the programs stand in the way. The legislation we are introducing today will modernize these programs and remove these barriers. Specifically, the bill includes three changes. First, the bill would repeal the so-called Ten-Year Rule. This rule, which was enacted in 1988, prevents states from using mortgage payments received ten years after the original Mortgage Revenue Bond was issued to make new mortgage loans to additional qualified purchasers. A recent report by Merrill Lynch states, ``The Ten-Year Rule, to a large extent, offsets gains from the volume cap increase.'' Between 1998 and 2002, this rule will result in the loss of over $8.5 billion in mortgage authority, denying over 100,000 qualified lower income homebuyers affordable MRB-financed mortgages. Each year, the Ten-Year Rule will keep tens of thousands of additional qualified lower income homebuyers from getting an affordable MRB-financed mortgage, including many in my home State of Utah. Second, the bill would replace the current-law unworkable limit on the price of the homes these MRB mortgages can finance with a simple limit that works. Let me explain. Current law limits the price of homes purchased with MRB-financed mortgages to 90 percent of the average area home price. States have the option of determining their own purchase price limits or of relying on Treasury-published safe harbor limits. Most states rely on the Treasury limits because it is costly, burdensome, and often impossible to collect accurate and comprehensive sales price data. The problem is that, like many states, the Treasury Department does not have access to reliable and comprehensive sales price data. This has especially been a problem for states, such as Utah, with many rural areas. In fact, Treasury last issued safe harbor limits in 1994, based on 1993 data. Home prices have risen approximately 30 percent in the past eight years, and in some areas of the country by a much higher percentage. This means that the MRB program simply cannot work in many parts of many states because qualified buyers cannot find homes priced below the outdated limits. To have an outdated and unworkable requirement that holds back the families that this program is designed to help is poor public policy that cries out for remedy. The bill we are introducing today would allow States to determine purchase price limits without reliance on nonexisting sales price data. It does this by limiting the purchase price to three and a half times the MRB qualifying income limit. In the 106th Congress, I joined my friend and colleague from Arkansas, Senator Lincoln, in introducing this provision as a stand-alone bill. Finally, the bill would make Housing Tax Credit apartment production more viable in many very low income, and especially rural, areas by allowing the use of the greater of area or statewide median incomes for determining qualifying income and rent levels. This is how income and rent levels are determined under the very successful multifamily bond program. Current law requires States to use area median income to determine eligible incomes of Housing Tax Credit tenants. In many very low income areas, median incomes are simply too low to generate sufficient rents to make these housing projects feasible. Data from HUD show that current income limits inhibit Housing Tax Credit development in as many as 1,700 of the 2,364 non-metropolitan counties across the country. The Housing Tax Credit and the MRB programs work and they are important to each State. The Congress recognized this last year by making the important adjustments in the operating levels of these programs to compensate for past inflation. More than 80 senators joined us in this effort by cosponsoring the legislation. This was a vital first step in improving the ability of these programs to meet the affordable housing needs of millions of Americans. Now, we must finish the job by correcting the problems in the programs that limit their effectiveness in delivering this affordable housing. For those of you that cosponsored these bills last year, and those of our colleagues who are new to the Senate, I am asking you to join this bipartisan effort of Senators from both rural and urban States to see that these important provisions are enacted this year. I ask unanimous consent that the text of the bill be printed in the Record. There being no objeciton, the bill was ordered to be printed in the Record, as follows:

Mr. HATCH

Mr. HATCH. Mr. President, after two weeks of floor consideration, we are now approaching the final vote on the campaign finance reform legislation. I have taken the floor on several occasions over the past two weeks to express my serious concerns with the various provisions of the bill. Given my concerns, and the failure of this body to vote to correct some of the problems, I will be voting against final passage of this well-intended, but seriously flawed legislation. The one silver lining in the legislation that will likely pass this evening is a provision I authored that passed, which will give expedited judicial review by the Supreme Court of challenges to the constitutionality of the legislation. All of us, supporters and opponents alike, stand to gain by a prompt and definite determination of the constitutionality of many of the bill's controversial provisions. Because the harm these provisions will cause is serious and irreparable, it is imperative that we afford the Supreme Court the opportunity to pass on the constitutionality of this legislation as soon as possible. Let me say again that I commend and respect the authors of this legislation for their attempts to address a troubling and unfortunate public perception about our political system. However, we also must respect the freedom of speech granted to every American by our Constitution. While the bill may alter or change our system of campaign finance, I think it will do little in actually reform it or making it better. In fact, McCain-Feingold, if passed and enacted into law, will, in my opinion, exacerbate the very problems that it seeks to solve. The primary provision of McCain-Feingold essentially bans soft money by making it unlawful for national political party committees and federal candidates to solicit or receive any funds not subject to the hard money limitations of the Federal Election Campaign Act. It also nationalizes the state party structure by subjecting state parties to the regulations of the Federal Election Commission when candidates for federal office appear on the general ballot. The net result of this soft money restriction on parties will be to emasculate the present two-party system and to increase the power and influence of the special interests. Ironically, special interest power and influence is exactly what the bill's sponsors purport is wrong with American politics today. Even more importantly, the party soft money ban is an infringement on the rights of free speech and free association protected by the Constitution's First Amendment. It appears to violate several decisions of the U.S. Supreme Court, particularly the holding of he seminal case of Buckley v. Valeo. The ban will severely weaken the ability of parties to engage in electoral advocacy. Yet, political parties have the same First Amendment rights as any other group. The restrictions on political party speech, without any specific showing of a potential for corruption or other necessity for doing so, and not on the speech of other associations and individuals not only infringes the First Amendment, but it also violates the principle of equal protection of the laws that the Due Process Clause of the Fifth Amendment guarantees. The other main provision of the bill is the so-called Snowe-Jeffords provision. Under current law the only electoral speech that may constitutionally be regulated is so-called ``express'' advocacy, that is, speech that expressly advocates the election or defeat of a candidate. All other political speech is termed ``issue'' advocacy, which the government can almost never abridge. Snowe-Jeffords blurs the distinction between the two categories of speech by creating a catch-all third termed ``electioneering communications.'' Merely ``referring to a clearly identified candidate'' magically turns heretofore protected issue advocacy into regulated electioneering communication. This part of the McCain- Feingold would coerce disclosure of donors' identities, and this disclosure would destroy the right to free association recognized in various Supreme Court cases. Snowe-Jeffords also completely bans corporate and union political ``electioneering communication'' speech. Again, this term sweeps in issue advocacy, which Congress may not ban, unless they meet the strict scrutiny standards prescribed by the Supreme Court, which in my opinion Congress has failed to do. Government has no business and no interest in banning the opinions of business or labor. They are already prohibited, and I bet most Americans do not know this, from directly contributing to candidates. This is important because the possibility of bribery, and even the appearance of a quid pro quo, is already ameliorated by law. Therefore, no justification exists for censoring the opinions of corporations and labor unions that this provision mandates. It too violates the Constitution's free speech requirements. I believe there is also an equal protection problem in that the media is exempted from Snowe-Jeffords. Now, let me say that I love the media, as I do any institution that brings knowledge to the American people. But the media should not have more rights to free speech than any other group, and McCain-Feingold gives the media a monopoly. Some Americans feel that the media is already all-powerful. Personally, I think this is an exaggeration. But if this bill passes, they very well might be. I have often said that I am an advocate of Oliver Wendell Holmes' view of free speech as a competition in the market place of ideas. The remedy of the wealthy and powerful buying speech is not censorship. This is not the American way. The remedy is more speech. We Americans have always banded together and pooled our money to compete. Joining is the American way. Banning is not. Let's have competition, no censorship. I do admit that a problem exists within our system of government. That problem, the real problem, is that people feel detached and disassociated from their government. They feel that others, whomever they are, the rich, the special interests, labor, business, just not them--have more access to their leaders and more influence with them. The American people want more. They want more access, more accountability, more of a say in the decisions that effect their daily lives. I suggest that the solution is not making it more difficult for people to get involved in politics. It's not shutting down the parties, which represent the most accessible means for most people to engage in political activity. Real finance reform will only come when the size of the federal is reduced. Until that happens, there will be a powerful incentive for special interests to seek a piece of the federal pie. Real campaign finance reform is passing a tax cut so that the people will be able to spend their own money instead of big government spending their money on behalf of special interests. That is what I have fought for in my 25 years of public service in the Senate. My esteemed colleagues from Arizona and Wisconsin have spent countless hours doing what they believe is the right thing. their efforts are laudable. I sincerely applaud them for the work that they have put into this debate. However, I must vigorously disagree with their solution. More speech--not less--is the answer. I believe that the correct way to solve the problem is to lift the limits on contributions; increase disclosure, and stiffen the penalties. Unfortunately, my attempts to increase disclosures by corporations and labor unions were defeated, probably because of the pressures by the same special interest labor unions, that the authors of this legislation wanted to address. But today, instead of advocating these policies, I must oppose the McCain-Feingold bill. I must attempt to turn the so-called ``reform movement'' away from the very dangerous path down which it is now proceeding. Hopefully, at some point, we can discuss some real, and I must say Constitutional alternatives. Let me focus on Title I of McCain-Feingold and describe why I believe the bill is likely to have constitutional challenges. Title I of the McCain-Feingold is labeled ``Reduction of Special Interest Influence.'' Indeed, this is the primary intent of the entire bill--to diminish the ``influence'' of so-called ``special interest groups.'' While I cannot fault the bill's supporters for their genuine efforts, I do not believe that the bill effectively solves the problem that it seeks to. Indeed, passage of McCain-Feingold will increase the influence of special interests, and it will do so by effectively ruining the political parties. I will not support McCain-Feingold, in part, because it, in my opinion, unconstitutionally suppresses the voices of the political parties. In its effort to regulate ``soft money,'' McCain-Feingold has two dramatic adverse effects on political party activity. First, it dramatically limits the issue advocacy, legislative, and organizational activities of political parties. Second, it imposes federal election law limits on the state and local activities of national political parties. It is important to recall the U.S. Supreme Court's comment in Colorado Republican Party that ``[w]e are not aware of any special dangers of corruption associated with political parties. . . .'' Political parties are merely the People associating with others who share their values to advance issues, legislation, and candidates that further those values. When they do these things, they are just doing their historic job as good citizens. The notion that they are somehow corrupt for doing so is both strange and constitutionally infirm. Let me first describe the beneficial role of political parties in American democracy. I don't need to tell any of my fellow Senators what political parties do or how they do it. Nor do I need to tell them that the focus of political parties is to win elections. They also already know how the parties go about winning elections. For the most part the parties do it by spending money. They spend their money--their own money--to promote their views and convince others of them. They fund activities like voter registration drives, get out the vote activities, and advertising. Political parties have many beneficial effects on American democracy. The Senate recognized their importance when it passed the FECA in the mid-1970s and expressed its desire to strengthen political parties. The Committee Report accompanying FECA observed then that ``a vigorous party system is vital to American politics.'' It was true then, and it remains true today. The Committee Report noted that parties perform ``crucial functions in the election apart from fund-raising.'' In our country, while one man has one vote, inevitably citizens will gather to pool their votes into blocks. It has always been this way, and it will continue to be so regardless of whatever legislation we pass. The problem with these interest groups or voting blocks is that they focus on their own very narrow issues and not on what is best for the country at large. James Madison identified these groups as ``factions.'' He noted in The Federalist 10 that there are no means of controlling the ``evils of faction that are consistent with liberty. The only way to eliminate faction is to eliminate liberty, which is worse than the disease'' of faction. Madison's celebrated solution to the problem presented by factions-- embodied in the Constitution--was to create a system that pitted interest groups against each other and so as to bring the best ideas to the top. The sheer size of the new republic--and its subsequent growth--expanded the number of participants in public debate. As a result, regional and other interest groups balance each other out to an extent. Political parties continue this process of moderation. Parties moderate special interests because they must appeal to the entire nation. You will recall that the goal of parties is to win elections. They can only do this by laying out broad policy platforms that will appeal to wide groups of people. They offer a broad and encompassing vision of gover- nance. Party leadership has to craft a message that will allow its candidates to win election in all 50 states. Contrast the role of parties to special-interest groups, which only want to pursue their specific goals. Their leadership is not seeking to win elections in states throughout the union, but typically only the passage of a narrow set of legislation. Allow me to add that I am not disparaging these special interest groups. They play an extremely crucial role in our democracy as well. They are not the problem, as they are essential to our democracy. They heighten the public's and Congress' awareness of key issues. They have a role to play, but so do the political parties. I do not want to favor one over the other, and that is what McCain-Feingold will do. No soft money for political parties, but unlimited amounts to special interest groups. However, political parties are not just about electing candidates, particularly federal ones. Political parties constitute a vital way by which citizens come together around issues and values expressed in the planks of their party platforms--at all levels of government. Parties advocate these issues in the public forum in addition to lobbying for legislation and engaging in efforts to elect candidates. Parties are just as focused on the promotion of issues as are ideological corporations, such as the National Right to Life Committee or The Christian Coalition of America, and labor unions, such as the American Federation of Labor and Congress of Industrial Organizations, although with a broader spectrum of issues. McCain-Feingold ignores this reality and treats political parties as simply federal candidate election machines. Now, the big point the supporters of McCain-Feingold make in support of the soft money party ban is that large contributions to political parties create undue influence or an appearance of impropriety. This is not even a gross exaggeration. It is simply wrong. Philip Morris, the largest donor to the Republican National Committee during the 1998 cycle, gave approximately $2 million in soft money, but this represented less than 1 percent of the total that the Republican National Committee raised. Similarly, the Communication Workers of America, the Democrat's largest soft money donor, gave $1.5 million to the Democratic National Committee, but this too represented less than 1 percent of its total. It doesn't make sense to conclude that an entity that contributes less than 1 percent of a party's funding could have any significant effect on the party's policies. The parties must keep in mind the goals of the other interests to which they also have to appeal. A more likely explanation for the largesse is that the donors to both parties support the policies they already espouse. I would also like to note that whatever influence a large donation made to a political party gives the donor, and, yes, I am pragmatic enough to realize that it does grant the donor a certain amount of access, the effect of donations is diluted among all of the party's elected officials, the 200 plus Senators and Representatives in either party. Also, because soft money donors cannot direct to which candidate or race their money should flow, they sometimes support losers. I make these points to demonstrate that soft money donations are greatly diluted and do not pose the same ``appearance of corruption'' that direct contributions to candidates do. Importantly, the Supreme Court has clearly stated that First Amendment rights can only be regulated where there is corruption or an appearance of corruption. As is apparent, McCain-Feingold will dramatically weaken political parties. In the last election cycle, the Democratic Party raised $243 million in soft money--fully 47 percent of its total. The Republican Party raised $244, 35 percent of its total. Under McCain-Feingold, the parties would lose this important source of funding, and this shortfall could not be filled by simply wishing into existence more hard money. It doesn't take a Fields Award winner in math to determine that this kind of reduction will dramatically hinder the parties' ability to effectively deliver their messages. Such a ban would accordingly weaken the ability of parties to participate in the public debate, while simultaneously enhancing the relative power of special interest to dominate that debate. I believe that McCain-Feingold will effectively end the system of two-party government that we now know. And this system has brought remarkable stability to the United States. Political parties already complain that interest group spending threatens to marginalize parties as interest groups increasingly control the agenda, crowd out political party commentary, and confuse the electorate. A ban on political party soft money would exacerbate this situation. Voters would have a less clear idea of the party agenda, and parties would find it more difficult to translate election returns into public mandate. Effective government would suffer. Parties fill a vital role in our political system. In the Information Age, narrow, specialized interest groups have an easier time of forming and organizing themselves. In times like these, we need to maintain the party system rather than weaken it, as McCain-Feingold will do. Let me highlight why McCain-Feingold is unconstitutional as it relates to political parties. Let me begin by asking a question, ``if individuals and narrow interest groups enjoy the basic First Amendment freedom to discuss issues and the position of candidates on those issues, how can political parties, which have wide bases of interests that are necessarily tempered and diffused, be deprived of the right to engage in such issue advocacy?'' My answer is simply that they should not be deprived of their rights. I note at the outset of this analysis that political speech and association are at the heart of the First Amendment protections. As the United States Supreme Court declared in Buckley, ``the constitutional guarantee, of the First Amendment, has its fullest and most urgent application precisely to the conduct of campaigns for political office. The Court has also stated that free expression in connection with elections is ``at the core of our electoral process and of the First Amendment freedoms. ``[Williams v. Rhodes, 393 U.S. 23, 32 (1968).] Thus, as the Supreme Court noted, ``there is practically universal agreement that a major purpose of [the First] Amendment was to protect the free discussion of governmental affairs, . . . of course includ[ing] discussions of candidates.'' [Mills v. Alabama, 384 U.S. 214, 218 (1966).] Efforts by Congress, the FEC, and state election commissions to regulate issue advocacy have been repeatedly and consistently rebuffed by the Federal courts as violations of the First Amendment right to free speech. No fewer the two dozen court decisions have made clear that interest-group advertising or pamphleteering that does not expressly advocate the election or defeat of a candidate cannot, consistent with the First Amendment, be subject to contribution or expenditure limits, or even reporting limits. Yet this is exactly what McCain-Feingold seeks to do. In Buckley v. Valeo, the Supreme Court ruled that restrictions on political giving and spending interfere with political debate. Such restrictions survive under the First Amendment only if justified by a compelling government interest in preventing corruption or the appearance of corruption. Those restrictions must also be narrowly drawn to achieve that interest. Soft money cannot, under current law, be used by political parties to expressly advocate the election or defeat of a candidate. Rather, it is used in large part for issue advocacy, which the Supreme Court and numerous lower courts have helped may not be regulated. Thus, McCain-Feingold inhibits the ability of political parties to engage in issue advocacy by restricting the resources available to them. Thus, it infringes on the political parties' right to free speech. However, proponents of abolishing ``soft money'' argue that this is simply a ``contribution limit.'' The fallacy of that argument, of course, is that the Supreme Court has justified contribution limits only on the ground that large contributions directly to candidates create the reality or appearance of quid pro quo corruption. Soft money contributions are not contributions to candidates: Indeed, the proposed ban on soft money contributions cannot be justified on the theory that political parties corrupt federal candidates, which the Supreme Court has already rejected. In Colorado Republican v. FEC, Fed. Election Comm, the FEC took the position that independent, uncoordinated expenditures by political parties ought to be treated as contributions to the benefitted candidate. Such treatment would have resulted in allowing individuals, candidates, and political action committees to spend unlimited amounts of money on independent expenditures to advocate the election of a candidate, while limiting the amount a political party could spend for the same purpose. The Supreme Court disagreed with the FEC, noting that ``[w]e are not aware of any special dangers of corruption associated with political parties'' and, after observing that individuals could contribute more money to political parties, $20,000, than to candidates, $1,000, and PACs $5,000, and that the ``FECA permits unregulated `soft money' contributions to a party for certain activities,'' the Court concluded that the ``opportunity for corruption posed by these greater opportunities for contributions is, at best, attenuated.'' The Court continued in this vein with respect to the FEC's proposed ban on political party independent expenditures, which has direct application to McCain-Feingold ban on soft money contributions. [R]ather than indicating a special fear of the corruptive influence of political parties, the legislative history [of the Act] demonstrates Congress' general desire to enhance what was seen as an important and legitimate role for political parties in American elections. . . . We therefore believe that this Court's prior case law controls the outcome here. We do not see how a Constitution that grants to individuals, candidates, and ordinary political committees the right to make unlimited independent expenditures could deny the same right to political parties. The concurring justices also found little, if any, opportunity for party corruption of candidates because of their very nature and structure. The Supreme Court found in the MCFL case that the prohibitions on corporate contributions and expenditures could not be constitutionally applied to non-profit ideological corporations which do not serve as a conduit for business purposes. Fed. Election Comm. v. Mass. Citizens for Life, Inc., 479 U.S. 238 (1986) Similarly, political parties similarly pose no risk of corruption because people give money to parties precisely because they support what the political party stands for. A contribution to a political party is for the purpose of enhancing advocacy of the issues the party represents. Any individual unhappy with the use of the money may simply quit contributing and leave the political party. In sum, the threat of corruption cannot justify a limit on issue advocacy and, even if it could, political parties pose no threat of corruption to their candidates. In sum, in Colorado Republican Fed. Election Comm., the Supreme Court found that, just as independent expenditures of interest groups pose no danger of corrupting candidates, neither do those of political parties. A second constitutional infirmity with McCain-Feingold results from the proposed unequal treatment of political party speech in relation to speech of other entities. Whereas non-party group may use funds that it collects from its members to engage in issue advocacy, McCain-Feingold would extensively regulate and burden political party issue advocacy. The final constitutional defect of McCain-Feingold's soft money ban on political parties is its insult to the federalist system. Under a provision of the bill, state and local parties are directly affected by the party soft money ban as a result of the bill's exceedingly broad definition of ``federal election activity'', which governs political party expenditures if even a single federal candidate appears on the general election ballot, no matter how many state and local candidates also appear on the ballot. In simpler terms, under McCain-Feingold, in those even numbered years in which typically federal congressional elections occur, state and local parties may only use federally regulated hard money for: Any voter registration within 120 days of the election; All voter identification, get-out-the-vote or ``generic campaign activity'' before the election. The bill defines ``generic campaign activity'' as ``an activity that promotes a political party and does not promote a candidate.'' Thus, it would even include yard signs that say ``vote Democrat'' or ``support the GOP.'' Any TV, radio, newspaper, magazine, billboard, mass mailing, telephone bank, leafleting or other ``public communication'' that mentions a candidate for federal office--whether or not it also mentions a candidate for state or local office. The entire salary of any state, district or local party employee who spends 25% or more of the employer's compensated time in a single month on any of the above activities or any ``activities in connection with a Federal election'': This constitutes an unprecedented federalization of the most basic party-building functions engaged in by state and local party committees. Forty-five states hold elections for state and local candidates only during the even numbered years that federal elections occur. The only states that do not are Virginia, Kentucky, Louisiana, New Jersey, and Mississippi. Consequently, for these forty-five states, state and local party mechanisms become entirely federalized and subject to federal regulatory authority. Imposition of federal contribution limits on national parties would improperly arrogate authority over state campaign financing decisions to the federal government. Again, recognizing that a prohibition of soft money donations to national party committees alone would be wholly ineffective, McCain- Feingold seeks to impose soft money restrictions on state parties as well, even though state party activity is thoroughly regulated by state campaign finance laws. The money spent on elections has consistently increased over the years, and no one believes that McCain-Feingold is going to reverse this trend. Rather than stop soft money, the bill will simply divert it into other channels, ones that are more opaque, less accountable, and represent narrower interests than do the national parties. What do you suppose the result of this bill will be? In a recent New York Times article, entitled, ``Big Donors Unfazed by Prospect of Soft Money Limits,'' dated March 24, it was reported that if Congress banned party soft money, most big donors would evade the ban by writing big checks to advocacy groups allied with candidates and the national parties as a way to get their pet projects and issues before the public. The problem with such a result is that these non-party groups are completely unregulated, as they should be. We cannot constitutionally compel them to disclose their activities, and so citizens will have no way of knowing who is actually behind the efforts. This is a perverse and unintended effect of McCain-Feingold. Money will be more hidden, and people will feel less responsible for their democracy, as they have no control over these groups as they do over the parties. Despite the fact that it is unintended, it is nevertheless practically inevitable. It is important to remember, that soft money donations to political parties do not go unregulated, as Bobby Birtchfield noted in the Senate Rules Committee hearings on Campaign Finance last year. First, both receipts and disbursements of soft money by political parties are currently reported to the FEC, and are available on the Internet. Second, much of the activity financed by soft money is regulated by state election law. Finally, political parties cannot use the soft money they raise--nor can candidates--to advocate the election or defeat of a candidate for federal office. Let me conclude with wholeheartedly agreeing with these observations of Alan Reynolds of the Manhattan Institute. I quote. On the face of it, the McCain-Feingold obsession with ``soft money'' looks fishy. Soft money accounts for less than 16 percent of federal campaign expenditures according to Common Cause. And campaign expenditures do not even include some of the most important ways of influencing policy, such as lobbying and issue ads. Lobbying cost $2.7 billion in 1997-98, according to the Center for Respective Politics (CRP), while Common Cause counted soft money collections of merely $193 million during those years. Lobbyists would be wise to lobby for a ban on soft money, because they would then have even more clout and more money. Everyone in Washington knows who the most politically influential interest groups are, and most of them do not even appear on lists of top soft money donors. Fortune asks lawmakers and congressional staffers to name the most politically powerful organizations. In 1999, the top 10 were the AARP (American Association of Retired Persons), the NRA (National Rifle Association), the National Federation of Independent Business, the American Israel Public Affairs Committee, the AFL-CIO, the Association of Trial Lawyers, the Chamber of Commerce, the National Right to Life Committee, the National Education Association and the National Restaurant Association. What gives most of these groups political clout is not contributions to political parties, but old-fashioned lobbying, public policy advertising, and in some cases (such as AARP, the NRA and the AFL-CIO) the ability to influence a large number of members' votes.--Alan Reynolds, ``The Economics of Campaign Finance Reform,'' The Washington Times, March 22, 2001. I believe, no, I know, that we are not a corrupt body. The United States Senate is made up of fine and exemplary men and women, with whom I am proud to associate. I also know that Americans are able to discern the truth of political matters, and that more speech, not less, will allow them to make the most informed decision. Finally, I know that the American people should be able to give money in support of whatever cause they choose. Whether it's a group of 10,000 or a single person, their right to speak should be unfettered. I urge my colleagues to vote against this bill.

Mr. HATCH

Mr. HATCH. Mr. President, I rise today on behalf of myself and Senators Baucus, Ensign, Torricelli, Schumer, Murkowski, and Breaux, to introduce legislation to permanently extend the exclusion from Subpart F for active financing income earned on business operations overseas. This legislation permits American financial services firms doing business abroad to continue to defer U.S. tax on their earnings from their foreign financial services operations until such earnings are returned to the U.S. parent company. The permanent extension of this provision is particularly important in today's global marketplace. Over the last few years the financial services industry has seen technological and global changes that have altered the very nature of the way these corporations do business, both here and abroad. The U.S. financial industry is a worldwide leader and plays a pivotal role in maintaining confidence in the international marketplace. It is essential that our tax laws adapt to the fast-paced and ever-changing business environment of today. Let me outline exactly why this bill is needed. Regulated U.S. financial institutions with operations overseas need to retain earnings in foreign subsidiaries in order to meet ever-expanding capital requirements. Unfortunately, if the tax provision this bill seeks to permanently extend is allowed to expire at the end of this year, as is scheduled under the current law, those earnings will be subject to current U.S. taxation. Obviously, current taxation makes it more costly for a growing overseas business to meet those capital requirements, an impediment that is not in place for most foreign-based competitors. Congress recognized this fact as long ago as the early 1960s, when the Kennedy Administration proposed the imposition of current taxation for all overseas income of U.S.-based corporations. Counsel for the Joint Committee on Taxation testified at that time that Congress could not constitutionally tax shareholders on the unremitted earnings of foreign subsidiaries except in cases where such tax was necessary to prevent the evasion or avoidance of tax. In cutting back the scope of the President's proposal, the House Ways and Means Committee stated, in part, ``to impose the U.S. tax currently on U.S. shareholders of American-owned businesses operating abroad would put such firms at a disadvantage with other firms located in the same areas not subject to U.S. tax.'' Forty years later, those words still ring true. The competition abroad for U.S. banks, for example, is no longer the Chases, Bankers Trusts, and Bank of Americas of the world. They are now Deutschebank, ABN Amro, HSBC, and Societe Generale. These foreign-based financial institutions are big players in the worldwide arena operating, usually, under home-country tax regimes that generally do not tax currently their active financial income earned outside their home countries. The bill we are introducing today would provide a consistent, equitable, and stable international tax regime for this important component of our economy. A permanent extension of this provision would provide American companies much-needed stability. Our current ``on- again, off-again'' habit of annual extension limits the ability of U.S.-based firms to compete fully in the marketplace and interferes with their decision making and long-term planning. The activities that give rise to this income are long-range in nature, not easily or inexpensively stopped and started on a year-to-year basis. Permanency is the only thing that makes sense when it comes to this kind of tax policy. This legislation will give U.S.-based financial services companies consistency and stability. The permanent extension of this exclusion from Subpart F provides tax rules that will ensure that the U.S. financial services industry is on an equal competitive footing with their foreign-based competitors and, just as importantly, provides tax treatment that is consistent with the tax treatment accorded most other U.S. companies. The world has changed rapidly over the past few years. Like it or not, we live and compete in a global economy. In many respects, our Tax Code is outdated and represents the world as it was in the 1960s or 1970s, or in some cases, even before. If we close our eyes to these facts, we risk losing our worldwide leadership. The legislation we are introducing today will not solve all of our tax problems, nor even all of the tax problems of U.S. companies trying to compete internationally. It will, however, solve one very important problem. And this would be a start from which we can build. I urge my colleagues to support this important bill and ask that the text of the bill be printed in the Record.

Mr. HATCH

Mr. HATCH. Mr. President, I am offering an amendment that will provide for expedited judicial review of the provisions of the McCain- Feingold Bipartisan Campaign Finance Reform Act of 2001. Without this amendment, American citizens and public interest groups, among others, will be subject to controversial, unworkable, and in my mind, likely unconstitutional provisions that infringe free speech rights protected by the first amendment. Supporters of the bill should welcome this amendment as well. All of us, supporters and opponents alike, stand go gain by a prompt and definite determination of the constitutionality of many of the bill's controversial provisions. For those who oppose the bill, these controversial provisions pose imminent danger not only to individuals' rights to free speech, but also to our cherished two party system. Because the harm these provisions will cause is serious and irreparable, it is imperative that we afford the Supreme Court the opportunity to pass on the constitutionality of this legislation as soon as possible. The way the amendment works is simple, and I believe it should be noncontroversial. Those who challenge the constitutionality of the legislation must bring their case in the district court of the District of Columbia. Furthermore, only those who can show cognizable harm under the legislation will be permitted to bring a case. The district court, of course, has the authority to consolidate all the challenges brought against the legislation. To make certain that the district court considers the case promptly, my amendment directs the court to ``expedite to the greatest possible extent the disposition of [the] matter.'' My amendment also provides for an expedited appeal of the district court's ruling to the Supreme Court. The hearing of this appeal by the Supreme Court, however, follows the customary procedures for a writ of certiorari--that is, the Supreme Court has the discretion whether or not to review the case. If the Supreme Court declines to review the ruling, then the district court's ruling would stand. Now some may complain that with this approach we are bypassing the Circuit Courts of Appeal. To them I say this: Such a procedure is not unprecedented. Indeed, the Supreme Court's own rules allow for such a procedure when it is authorized by law or when the case is of such imperative public importance as to justify deviation from normal appellate practice. I think we can all agree that the issues presented by this legislation meet that threshold. I hope that my colleagues--whether they support or oppose the underlying legislation--will support my amendment. It is in all of our interests to have the prompt, authoritative, and final resolution of these issues that an expedited appeal will provide.

Mr. HATCH

Mr. HATCH. Mr. President, as my colleagues in this body are aware, unlike contributions to a candidate's campaign, expenditures of money to influence public opinion has been accorded nearly ironclad first amendment protection by the U.S. Supreme Court. In fact, I know those who would argue it is absolutely ironclad. The reason for this protection is simple to understand. Freedom of speech is one of the bedrock protections guaranteed for our citizens under the Constitution of the United States. Nowhere is the role of free speech more important than in the context of the elections we hold to determine the leaders of our representative democracy. As the Supreme Court stated in Buckley: Discussion of public issues and debate on the qualifications of candidates are integral to the operation of the system of government established by our Constitution. The First Amendment affords the broadest protection to such political expression in order to assure the unfettered interchange of ideas. . . . Obviously, we would have no democracy at all if government were allowed to silence people's voices during an election. I have spoken before more generally on some of the constitutional limits on our efforts to regulate campaigns. Today I rise to speak more specifically about the limitations on expenditures. Under our Constitution, a person simply cannot be barred from speaking the words ``vote for Joe Smith.'' Under our Constitution, a person simply cannot be barred by speaking the words ``lower my taxes.'' Under our Constitution, a person cannot be simply barred from speaking the words ``provide our seniors with a prescription drug benefit.'' The right to speak any of these phrases at any time is protected as a core fundamental right under the first amendment. It is especially important to our democracy that we protect a person's right to speak these phrases during an electoral campaign because it is through elections that the fundamental issues of our democracy are most thoroughly defined. It is through elections that the leaders of our democracy are put in place to carry out the people's will. Not only does a person have a right to speak out during a campaign regarding candidates and issues, a person also has a right to speak out in an effective manner. The right to speak would have little meaning if the government could place crippling controls on the means by which a person was permitted to communicate his or her message. For instance, the right to speak would have little meaning if a person was required to speak in an empty room with no one listening. Accordingly, the Supreme Court has consistently ruled that Congress may not burden a person's constitutional right to express his or her opinion during an electoral campaign. And to effectuate these rulings, the Court has consistently held that Congress may not burden a person's right to expend money to ensure that his or her opinion reaches the broadest possible audience. In Buckley, the Supreme Court made a fundamental distinction that has survived to this day, a distinction that must inform our discussion of campaign finance, and a distinction that continues to place significant limitations on what reforms are permissible under the strictures of the first amendment of the U.S. Constitution. With respect to expenditures, the Court has said this: A restriction on the amount of money a person or group can spend on political communication during a campaign necessarily reduces the quantity of expression by restricting the number of issues discussed, the depth of their exploration, and the size of the audience reached. . . . The expenditure limitations contained in the Act represents substantial rather than merely theoretical restraints on the quantity and diversity of political speech. The . . . ceiling on spending . . . would appear to exclude all citizens and groups . . . from any significant use of the most effective modes of communication. As recently as last year, in the case of Nixon v. Shrink Missouri Government PAC--and that is a 2000 case--the Court reaffirmed its holding in Buckley, quoting extensively from the Buckley opinion and reiterating that expenditure restrictions must be viewed as ``direct restraints on speech,'' irreconcilable with the first amendment. As I said before, the McCain-Feingold legislation is well intentioned in its effort to remove the influence of big money from our electoral process. However, several provisions of the proposed legislation are simply irreconcilable with the first amendment of the U.S. Constitution. It is not Congress' role to pass unconstitutional legislation and stand by while that legislation is struck down by the courts. The provision of the McCain-Feingold legislation that unconstitutionally burdens free speech is section 201, the so-called Snowe-Jeffords amendment. That is what the current DeWine amendment seeks to address. Snowe-Jeffords is designed to address what many have characterized as a loophole in the campaign finance laws that allows third parties prior to an election to fund advertisements which relate exclusively to an issue and refrain from the expressly urging to vote for or against a particular candidate. Recent experience has shown that such speech may effectively advance the prospects of one candidate over another, even though it refrains from express advocacy of the candidate. I applaud my colleagues for their ingenuity in seeking to address this avenue by which money, unregulated by our electoral laws, may play a role in our elections. You can call a dog a hog and it still remains a dog. I think trying to say their amendment and this particular clause in this bill is not violative of the first amendment free speech rights fits the description of trying to call a dog a hog. Still, it remains a dog. The problem I have with this portion of the legislation is that issue advocacy prior to an election simply cannot be viewed as a loophole in the election laws that we must endeavor to close with appropriate legislation. Viewed through the lens of the first amendment, this issue advocacy is exactly the type of speech that must be accorded the ultimate protection of the first amendment. The Supreme Court has consistently refused to sanction disclosure requirements on issue advocacy, unless the communication in question directly advocates for or against a particular candidate. Look, issue advocacy generally is used against us Republicans. There is not much doubt about that. That is where the money is. It is used against both from time to time, but really against us. I remember back in 1982 there was tremendous issue advocacy against me by the trade union movement. It was very difficult to put up with some of the ads used against us, both in print and otherwise. But it was a free speech right, and I would fight to my death to defend those rights of free speech. The Snowe-Jeffords amendment seeks to redraw the line between protected issue advocacy and nonprotected express advocacy of a candidate in order to regulate a larger chunk of public speech prior to an election. Section 201 of the proposed legislation broadens the Federal Election Commission Act's regulatory scope to include any individual or group that expends at least $10,000 a year on electioneering communications. Now that is free speech. Let's go further. Electioneering communications are defined as any communications in the electorate within 60 days before a general election that ``refers to a clearly identified candidate''--regardless of whether such communication urges a vote for or against that candidate. The problem with this line-drawing exercise is that the Supreme Court has already done it. In Buckley v. Valeo the Supreme Court defines what types of issue advocacy could, consistent with the Constitution, be made subject to FECA's regulatory requirements. The Court found that only communications that expressly advocated for or against a specific candidate were subject to regulation. The Snowe-Jeffords amendment invades the constitutionally protected territory of pure issue advocacy. In fact, that invasion is the sole purpose of the provision. It may well be true that third parties are, in fact, able to influence the electorate for or against the candidate by running independent issue advertisements, uncoordinated with a candidate's campaign, in the weeks leading up to the election. That phenomenon does not manifest a flaw in the regulatory scheme established by our current campaign finance laws. For better or for worse, that phenomenon manifests the free interchange of ideas in an open society. Such issue advocacy is free speech, protected by the first amendment, and accordingly, the McCain-Feingold legislation is unconstitutional. In Snowe-Jeffords, those provisions are fatally overinclusive. They try to sweep away our first amendment political speech. The Supreme Court has been more than clear on this. What the authors are attempting to do is understandable, it is well intentioned, but unfortunately it is unconstitutional. That is one reason I have to stand here today and speak out for the amendment of the distinguished Senator from Ohio. I believe he is right in his motion to strike. I believe he is right. I believe we ought to support him, and I hope our colleagues will. I yield the floor.

Mr. HATCH

Mr. HATCH. Mr. President, how much time remains?

Mr. HATCH. I yield 15 minutes to the Senator from Kentucky.

Mr. HATCH. I ask unanimous consent that following that, Senator Feingold be given the floor and I will give him 5 minutes as well.

Mr. HATCH. Senator Biden would like to speak in favor of the amendment. As a courtesy, I am certainly going to yield some time to the Senator. Senator Reed, who also wants to speak in favor, I will yield him 5 minutes.

Mr. HATCH. I yield whatever time the Senator needs.

Mr. HATCH. Madam President, I rise this afternoon to address, as I have in prior years, the Constitutional Amendment to limit campaign contributions and expenditures that my colleague from South Carolina has once again brought to the Senate floor. Two election cycles have come and gone since this amendment was first debated in this chamber. And, unfortunately, these last two elections have shown that money remains as big--or an even bigger--part of our campaigns as it was when this Amendment was first introduced. I know that most in this body deplore the role of money in the electoral process. And, Mr. President, I believe that the debate in this chamber over the last week has plainly shown that each of us would vote in favor of a solution that would, in a fair, even-handed, and constitutional way, reduce the role of money in campaigns. But as I noted in the debate over this same amendment in 1997, there is a right way of reforming our system of campaign finance. And, there are wrong ways. While I certainly sympathize with the sentiments that have motivated my colleagues to introduce this proposal, I submit that circumscribing the First Amendment of our Constitution is simply the wrong way to address campaign finance reform. I also think the McCain-Feingold bill in fringes upon the First Amendment, and that is what the distinguished Senator from South Carolina is trying to resolve with his amendment, which would be the only way, it seems to me, of resolving this matter in a way that ultimately the people who are supporting the McCain- Feingold bill would like to do. The proposal we are debating today would amend the Constitution to allow Congress and the States to set any ``reasonable'' limits on (1) campaign contributions made to a candidate and (2) expenditures in support or opposition to a candidate made by the candidate or on behalf of the candidate. Why do I oppose this amendment? For the first time in the history of this Republic this amendment would put an express limitation on one of the bulwark protections that has defined and strengthened this great nation for over two centuries-- the First Amendment of the United States Constitution. And perversely, we would not be seeking to limit this important safeguard of our liberty in order to eliminate speech that is on the margin of the First Amendment protection. We would not be seeking to eliminate speech that deeply offends the majority of our citizens, such as the so-called speech involved in the desecration of our national symbols. We would not be seeking to eliminate speech that malevolently capitalizes on the unhealthy historical divisions within our society, such as racially motivated ``hate speech.'' We would not be seeking to eliminate speech that insidiously corrupts the morals of our children, such as pornography. No. Ironically, the first category of speech singled out for regulation by this proposal is the category of speech that is universally recognized as being at the core of the First Amendment protection: the right to engage in unfettered debate about political issues. What the supporters of today's proposal often fail to emphasize is that the money involved in electoral campaigns does not end up in the pockets of the candidates. And it is not thrown into some black hole. The money spent by campaigns, or by third parties in an effort to influence campaigns, is directed toward one simple aim: to express a particular message. Money may be spent by a candidate to take out a newspaper advertisement setting forth his or her positions on the issues. Money may be spent by an interest group on a television advertisement to publicize the voting record of an incumbent. Money may be spent by a concerned individual to fund a study on how certain legislation would affect similarly situated people. In each case, the goal is the same: to educate and/or influence the electorate with respect to political issues. Supporters of today's proposal believe that there is too much of this political debate. As a result, supporters of this proposal would curtail the First Amendment to allow Congress and the state legislatures to place limits on the amount of political debate that will be allowed in connection with an election. If this amendment passes, will a person still be allowed to say, ``Vote against Senator X''? Yes, they will. Will that person be able to print a handbill that says ``Vote against Senator X''? Only if the government decides that such an expenditure is ``reasonable.'' Will that person be able to take out an advertisement in a local newspaper that says, ``Vote against Senator X''? Only if the Government decides that such an expenditure is reasonable. How is Congress to decide whether such expenditures are reasonable? The proposal we are debating today is silent on that subject. I would note, however, that Senator X would be one of the lawmakers responsible for deciding whether, and under what circumstances, such expenditures would be allowed. In effect, today's proposal would allow Congress and the state legislatures to censor speech for just about any reason, as long as they could establish that their censorship was ``reasonable.'' The free speech rights of all Americans would be subject to the vagaries and passions of fleeting majorities. If there was anything our Founding Fathers really were concerned about and alarmed about, that is a pure majoritarian type of rule in the country. The Hollings Amendment would change the very nature of our constitutional democratic form of government. By limiting robust political debate, the amendment would tilt the scales sharply in favor of incumbents, who benefit from limitations on debate because of their higher name recognition and their ability to direct governmental benefits to their home districts. Such advantages would only be magnified by permitting incumbents to decide what type of political speech is ``reasonable'' in connection with the efforts by challengers to unseat them. I would like to take a couple of minutes to explain in greater depth what the dangers of this Constitutional amendment are: Let me start with the importance of the first amendment to free elections. The very purpose of the First Amendment's free speech clause is to ensure that the people's elected officials effectively and genuinely represent the public. The Founders of our country certainly understood the link between free elections and liberty. Representative government--with the consent of the people registered in periodic elections--was--to these leaders of our new nation--the primary protection of natural or fundamental rights. As Thomas Jefferson put it in the Declaration of Independence, to secure rights ``Governments are instituted among Men'' and must derive ``their just Powers from the Consent of the Governed.'' The nexus between free elections and free speech was equally understood. As Jefferson said: Were it left to me to decide whether we should have a government without newspapers, or newspapers without government, I should not hesitate a moment to prefer the latter. [Letter from Thomas Jefferson to Edward Carrington (January 16, 1787), reprinted in 5 The Founder's Constitution 122 (P. Kurland & R. Lerner ed., 1987)]. Without free speech, there can be no government based on consent because such consent can never be truly informed. Obviously, we would have no democracy at all if the government were allowed to silence people's voices during an election. It is especially important to our democracy that we protect a person's right to speak freely during an electoral campaign--because it is through elections that the fundamental issues of our democracy are most thoroughly debated, and it is through our elections that the leaders of our democracy are put in place to carry out the people's will. No. 2, the amendment will overturn the Buckley case. The Supreme Court of the United States recognized this fundamental principle of democracy in the 1976 case of Buckley v. Valeo. In that case, the Court held: Discussion of public issues and debate on the qualifications of candidates are integral to the operation of the system of government established by our Constitution. The First Amendment affords the broadest protection to such political expression in order to assure the unfettered interchange of ideas. . . [Buckley v. Valeo, 424 U.S. at 14]. Moreover, the Court in Buckley recognized that free speech is meaningless unless it is effective. During a campaign, not only does a person have the right to speak out on candidates and issues, a person also has the right to speak out in a manner that will be heard. The right to speak would have little meaning if the government could place crippling controls on the means by which a person was permitted to communicate his message. For instance, the right to speak would have little meaning if a person was required to speak in an empty room with no one listening. And in today's society, the right to speak would have little meaning if a person were required to forego television, radio, and other forms of mass media, and was instead forced to go door to door to impart his message solely by word of mouth. Accordingly, the Supreme Court in Buckley v. Valeo, and in a string of subsequent cases, has consistently ruled that campaign contributions and expenditures are constitutionally protected forms of speech, and that regulation of campaign contributions and expenditures must be restrained by the prohibitions of the First Amendment. The Buckley Court made a distinction between campaign contributions and campaign expenditures. The Court found that the free speech concerns inherent in campaign contributions are less than in campaign expenditures because contributions convey only a generalized expression of support. But expenditures are another matter. These are given higher First Amendment protection because they are direct expressions of speech. In the words of the Buckley Court: A restriction on the amount of money a person or group can spend necessarily reduces the quantity of expression by restricting the number of issues discussed, the depth of their exploration, and the size of the audience reached. This is because virtually every means of communicating in today's mass society requires the expenditure of money. [424 U.S. at 19-20]. The Hollings Amendment's allowance of restrictions on expenditures by Congress and state legislatures would impose direct and substantial restraints on the quantity of political speech. It would permit significant limitations on both individuals and groups from spending money to disseminate their own ideas as to which candidate should be supported and what cause is just. The Supreme Court noted that such restrictions on expenditures, even if ``neutral as to the ideas expressed, limit political expression at the core of our electoral process and of the First Amendment freedoms.'' [Buckley at 39]. Indeed, under the Hollings proposal, even candidates could be restricted from engaging in protected First Amendment expression. Justice Brandeis observed, in Whitney v. California, [274 U.S. 357, 375 (1927)], that in our republic, ``public discussion is a political duty,'' and that duty will be circumscribed where a candidate is prevented from spending his or her own money to spread the electoral message. That a candidate has a First Amendment right to engage in public issues and advocate particular positions was considered by the Buckley Court to be of: particular importance . . . candidates [must] have the unfettered opportunity to make their views known so that the electorate may intelligently evaluate the candidates' personal qualities and their positions on vital public issues before choosing among them on election day. 424 U.S. at 53. Campaign finance reform should not be at the expense of free speech. This amendment--in trying to reduce the costs of political campaigns-- could cost us so much more. It could cost us our heritage of political liberty. Groups as diverse as the ACLU and the Heritage Foundation have united in their opposition to this constitutional amendment. The ACLU calls the amendment a ``recipe for repression'' and the Heritage Foundation characterizes it as an abridgement of our ``fundamental liberty.'' Mr. President, there are some who may believe that the First Amendment is inconsistent with campaign finance reform. I strongly disagree. In fact, just the opposite is true. It is impossible to have healthy campaigns in a healthy democracy without freedom of speech as it is currently protected by our First Amendment. That is why I oppose the Hollings Amendment. No. 3, the amendment will blur the distinction between express and issue advocacy. This proposed constitutional amendment is so broad that it would also blur the distinction between express advocacy and issue advocacy. The Supreme Court in Buckley held that any campaign finance limitations apply only to ``communications that in express terms advocate the election or defeat of a clearly identified candidate for federal office.'' [Buckley, 424 U.S. at 44]. Communications without these electoral advocacy terms have subsequently been classified by courts as ``issue advocacy'' entitled to full First Amendment strict scrutiny protection. This constitutional amendment is drafted in a such a manner that pure issue advocacy will be swept up in regulation. In fact, the Amendment is so broad that it would allow regulation of political speech, even if such speech doesn't refer to a particular candidate. If a statement implies that a candidate is for or against an issue, that speech could fall under expenditure limits authorized by this provision. This is a compete reversal of the ``bright line'' test established by the Supreme Court that protects issue advocacy from regulation unless it uses words that expressly advocate the election or defeat of a clearly identified candidate. It is also a complete reversal of the view now encompassed in law that government has no real interest in restricting the free flow of speech and ideas. Now, supporters of this constitutional amendment may tell us that they are all for ending the distinction imposed by Buckley between express advocacy and issue advocacy and that it is in practice unworkable. Well, they are in part right. Sometimes it is a hard line to draw. But this ``bright line'' test does have the great benefit that if error exists, it falls on the side of free speech. Look, nothing in this world is perfect, particularly in the world of campaigns and politics. So if we err, if we make mistakes, doesn't make sense to create a system where the mistake results in the over- protection of a fundamental constitutional right? If we believe that the distinction between issue and express advocacy is unworkable, then the solution is to protect both under the strictest of safeguards. Each, in my view, should have the highest First Amendment protection--and I believe that this is the direction that the Supreme Court will eventually take. I believe the adoption of this constitutional amendment is wrong. Amending the Constitution should not be done lightly. And amending the First Amendment should only be done for the most compelling, exigent reasons. These reasons are not present. If S.J. Res. 4 were ratified, pre-existing first amendment jurisprudence would be overturned and Congress and the States would have unprecedented, sweeping and undefined authority to restrict speech currently protected by the first amendment. This constitutional amendment places State and Federal campaign finance law beyond the reach of first amendment jurisprudence. All that Congress and the States would have to demonstrate to the Court is that their laws restricting political speech were ``reasonable.'' No longer would Congress have to demonstrate a ``compelling interest'' in order to infringe on our citizens first amendment liberties. If S.J. Res. 4 is adopted, Congress and State legislatures could easily distort the political process. Indeed, the ACLU, not an institution that I always agree with, in reflecting on a nearly identical proposed constitutional amendment in 1997, noted that incumbents could pass laws virtually guaranteeing their reelection. I quote: Congress and state governments could pass new laws that operate to the detriment of dark-horse and third party candidates. For example, with the intention of creating a ``level playing field'' Congress could establish equal contribution and expenditure limits that would ultimately operate to the benefit of incumbents who generally have a higher name recognition than their opponents, and who are often able to do more with less funding. Thus, rather than assure fair and free elections, the proposal would enable those in power to perpetuate their own power and incumbency advantage to the disadvantage of those who would challenge the status quo. Moreover, ratification of this constitutional amendment could very well destroy the freedom of the press. Let me quote the ACLU again: [The Amendment] would also give Congress and every state legislature the power, heretofore denied by the First Amendment, to regulate the most protected function of the press--editorializing. Print outlets such as newspapers and magazines, broadcasters, Internet publishers and cable operators would be vulnerable to severe regulation of editorial content by the government. A candidate-centered editorial, as well as op-ed articles or commentary printed at the publisher's expense are most certainly expenditures in support of or in opposition to particular political candidates. The amendment, as its words make apparent, would authorize Congress to set reasonable limits on the expenditures by the media during campaigns, when not strictly reporting the news. Such a result would be intolerable in a society that cherishes the free press. Let me point out again that the proposed amendment appears to reach not only expenditures by candidates but also independent expenditures by individual citizens and groups. These independent expenditures are the very type of speech that the first amendment was designed to protect. Madam President, I am sure the authors of this amendment are very sincere and that they mean well by the amendment. I have no doubt about that. I know my colleague from South Carolina, and he is a good man and a fine Senator. I think he probably believes that no Congress of the United States would go beyond certain reasonable limits and neither would any State legislature. But what guarantees do we have, should this amendment pass, that a bunch of radicals would not be able to take control of the House and Senate or respective State legislatures? And if they do, how are we going to be assured that the Supreme Court will set things right if this amendment passes and becomes part of the Constitution? I would hope that people elected to the Congress would never act inappropriately. I would hope that people elected to State legislatures would never act inappropriately or that they would not act so as to take away basic fundamental rights of people. But if this amendment passes, there is no guarantee that we will not someday have that type of radicalness that will take over in some States first and then ultimately perhaps even in the Congress. There is a wide disparity of beliefs sometimes between the far left and the far right over what are fundamental rights. I have to tell you, if either of them really got control, under this amendment it could be a real mess. Plus, this amendment basically, it seems to me, makes it very difficult for those who are challenging incumbents to be able to make a challenge that really the first amendment anticipates they should be permitted to make. I have talked long enough. For reasons I have set forth this afternoon, it is my view that adoption and ratification of this amendment would fundamentally change our constitutional Republic. The censorship power of government would inalterably be enlarged. Free speech and free elections would be endangered. As sincerely brought as this amendment is, I still believe it is a very dangerous amendment in the overall scope of things. Perhaps if we had 100 people exactly like the distinguished Senator from South Carolina, this amendment would work just as well as could be. But I do not think we can always rely on that. I am concerned about that. Plus, I do not think that you should take away rights that really are speech rights when it comes to elections. In contrast, of course, I am the author of the constitutional amendment to permit Congress to ban the physical desecration of our flag. A number of times this Congress has passed legislation, with overwhelming support, to stop that, but each time it has been declared unconstitutional. Frankly, I do not believe that urinating on our flag or desecrating our flag by somebody defecating on it or by burning it, that that is what you would call speech, but that is what the Supreme Court has said. In that case, we do need a constitutional amendment. Unlike the Hollings amendment, the flag amendment would not affect the first amendment. Some have suggested that my opposition to the Hollings amendment is inconsistent with my strong support for the flag protection amendment. Nothing could be further from the truth. Unlike the Hollings amendment, the flag protection amendment simply restores the first amendment to what it meant before two recent 5-to-4 Supreme Court decisions. Before the 1989 Texas v. Johnson case and the 1990 United States v. Eichman decision, the U.S. Supreme Court and numerous state supreme courts had upheld laws punishing flag desecration as compatible with both the letter and the spirit of the first amendment. Such laws had been on the books for most of this country's 200-year history. The flag protection amendment respects the difference between pure political speech and physical acts. It is extremely narrow, allowing Congress only the power ``to prohibit the physical desecration of the flag of the United States.'' Any law passed pursuant to the amendment could extend no further than a ban on acts of physical desecration, and would not affect anyone's ability to participate in the political process. Unlike political contributions, the physical ruination of a flag adds nothing to political discourse. Whether good or bad, the reality of modern American politics is that money is essential to advocacy. Broadcasting a message--whether in print, on television or radio, or even over the Internet--costs money. A constitutional amendment prohibiting political donations would undeniably restrict people's ability to convince others of their point of view. But lighting fire to the flag is different. It is not an essential part of any message. In fact, often the audience for such demonstrations does not understand what policy or idea that motivated the burner to burn. The flag protection amendment leaves untouched everyone's right to articulate-- and advocate publicly for--their point of view. In sum, passage of the flag amendment would overturn two Supreme Court decisions: Johnson and Eichman. It would leave the Constitution exactly intact as it was understood prior to 1989. It would do nothing else. In contrast, the Hollings amendment would be a radical alteration of Americans' fundamental right to participate in the democratic process. Let me end with this. The McCain-Feingold bill is defective inasmuch as it does provide a means whereby you can limit the free speech rights of people with regard to soft money. I do think probably the Supreme Court would uphold the Hagel approach to it, although I question whether even a cap on soft money to the tune of $60,000 per individual would be upheld by the Supreme Court; but it could be. Probably my friend from South Carolina feels the same way, that without a constitutional amendment change, it is just a matter of time until McCain-Feingold will be overturned. I believe it will be overturned, should it pass in its current form. And one reason it will be overturned is because of the limitation of real speech rights. Frankly, Buckley v. Valeo, I don't think is wrong. With that, I hope my colleagues will vote against this amendment, as well intentioned as it is. I yield the floor. Mr. SESSIONS addressed the Chair.

Mr. HATCH

Mr. HATCH. Madam President, I ask unanimous consent that Stuart Nash of my staff be granted the privilege of the floor during the duration of the debate on campaign finance reform.

Mr. HATCH

Mr. HATCH. Mr. President, I ask unanimous consent that the Committee on Armed Services be authorized to meet during the session of the Senate on Monday, March 26, 2001, at 4:30 p.m., in closed session to receive a briefing from the Department of Defense on Taiwan's current request for purchases or defense articles and defense services from the U.S.

Mr. HATCH

Mr. HATCH. Mr. President, I ask that we proceed with the vote.

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

Mr. HATCH. I suggest the absence of a quorum.

Mr. HATCH. I ask for the yeas and nays.

Mr. HATCH. I yield back the time.

Mr. HATCH. Mr. President, I always enjoy listening to my colleague from South Carolina. I disagree with him that all we do in the Senate is go out and raise money. I think Senators work very hard. I have to admit that we generally don't have to vote on Monday until after 5 o'clock in the evening. There is a reason for that, because Senators are returning. Not all of us live in close proximity to the District of Columbia. I know this. When I go to Utah, my time isn't spent raising money. Most of my time is spent going to town meetings, meeting with people in my offices, and working with staff and others who do the job that we have to do. I think most Senators around here, including the distinguished Senator from South Carolina, spend inordinate hours here during the week. I generally get to the office around 6 a.m. I don't know many days when I am home before 7 or 8 o'clock at night. The days are completely filled meeting with people. Yes, you have to raise money. But everybody has to do that. That is part of the process. It is not a bad part of the process. There are just a few who do it illegally. If that is the sole thing that you do, then you are selling your vote for money. But I don't know of one Senator in this body who has ever sold his or her vote for money. I believe there is no question that money does talk in the sense that groups support you and support Senators around here. Generally the groups that have donated to my campaigns do that because they agree with my position. Certainly, I am happy to have their help, because you do have to raise enough money to run. But the Senator is right in one respect; that is, it is costing a fortune to run for the U.S. Senate now. The average Senate race is at least $4 million. That makes it very difficult for incumbents. But if we pass the McCain-Feingold bill, it makes it even worse in some respects, especially if you do not increase the limits. Those limits were set back in 1974, I believe, and just by the rate of inflation, the limits should be raised no less than three times, and probably as much as five or six times. The cost of elections have gone up dramatically. Back in 1976, a couple of years after the rules were set, when I ran for Senate, I have to say that my opponent spent in hard dollars somewhere around $570,000. I raised in hard dollars about $569,000, if I recall it correctly. It cost me more money to raise it than it did to spend it, because I had to use direct mail because nobody knew who I was. I had to win that race by out-working and out-performing the incumbent. But today, if I was to try to do the same thing, I wouldn't even consider it, because I would have to start at least $1 million, or $2 million. I would have to have a lot more support than I have today. It is going up every year. It is not a bad thing to have to raise money. I am a perfect illustration that it isn't money that always talks because I bet that I did not spend over $100,000 in real terms in that race back in 1976. My opponent, who I think took me for granted, and made a terrible mistake in doing that, he had at least $600,000, it seemed to me, in actual dollars to spend, plus he had the support of all kinds of soft money groups that came into the State and assisted him as well. So it was really a lot more money than that. The worst race I had was in 1982, when the mayor of Salt Lake, who is a wonderful person, and a good man, ran against me. It was a very tight race. I raised close to $4 million in that race. He admitted he raised probably at least $2.3 million, if I recall it correctly. But that was only part of the story. The trade union money came into that State. According to sources, they had as many as 100 dues-paid political operatives operating there in Utah, who spent all kinds of money trying to assist my opponent in defeating me, something that Republicans just do not have on their side. When we get out the vote, we have to raise the money ourselves, we have to spend it ourselves. We do not have outside groups doing it for us. In the case of Democrats, at least in that race--and I think in many other races--the get-out-the-vote money, the advertising money, a lot of other things come from the trade unions. I think that is their right. They believed in my opponent. He had voted virtually a straight union line for them, and they supported him. I can't say I disagreed with their right to do that. In our worries about having to raise all this money, we don't want to throw out the baby with the bath water. We don't want to infringe upon first amendment rights or freedoms. In relation to this particular constitutional amendment, however, let me conclude with this simple observation. Free speech and free elections are one and the same. This constitutional amendment involves speech no matter how you write it, because Buckley v. Valeo said that money in politics is a form of speech. This constitutional amendment would hurt free speech by giving Congress--535 Members of Congress--and the respective State legislatures--they call it ``the States'' but it is really, in effect, the State legislatures--too much power to change the Supreme Court cases that protect free speech. Make no mistake about it, this amendment, if it would pass, would do away with Buckley v. Valeo and would send us down that road of allowing State legislatures to determine just what can or cannot be spent in political campaigns, and allow the Congress of the United States to determine what can or cannot be spent in political campaigns. I suspect that is going to create a system that is a lot worse than our current system. Because if you ban soft money for the two parties-- where you would want the money to be spent; where it is accountable; where they have to be accountable--they have to explain what they are doing--you can look at it and see whether you want to support the parties or not--if you take the soft money away from them, and leave it in the hands of everybody else in society, then basically what you are doing is, I think, stultifying the electoral process and certainly the party process, which all of us ought to be encouraging. Because under our current rules, the parties have to disclose the moneys that they receive. Under our current rules, many of the outside groups do not have to disclose the soft moneys they use in political campaigns. And some of them use them in reprehensible ways. This amendment says that Congress shall have power to set reasonable limits on the amount of contributions that may be accepted by, and the amount of expenditures that may be made by, in support of, or in opposition to, a candidate for nomination for election to, or for election to, Federal office. The same language for the State legislatures. In essence, this would overrule Buckley v. Valeo. If you got the wrong people in Congress, this could mess up the whole process. But if you do not think Congress is capable of doing it, think of what the State legislatures might be willing to do in certain States that have completely different viewpoints from say my State of Utah. So one of the things our Founding Fathers were most concerned about was absolute majoritarian control of our country. They were absolutely concerned that a straight majority control could lead to mob control similar to what happened in the French Revolution that occurred later. They were concerned about that. So they set up checks and balances. They set up the Senate as a check and balance, in a sense, because in the Senate every State has equal rights with suffrage. It is not proportional. Every State, no matter how large or small, has two Senators. Wyoming with 700,000 citizens has the same number of Senators as California with now approaching 33, 34 million citizens. They did that to have these checks and balances so that there would be no way that one side or majoritarian group would run away with the process. This amendment would allow them to do so. We have 5 minutes left. I see the distinguished chairman here. I yield the remainder of my time to the distinguished Senator from Kentucky.

Mr. HATCH. Mr. President, I yield 4 minutes to the Senator from South Carolina.

Mr. HATCH

Mr. HATCH. Mr. President, I hope we will not take the whole 30 minutes. I understand some of our colleagues need to make some special appointments. I will try to be brief. I hope all of my colleagues will support this modest, straightforward amendment. We are here this week and next, debating so-called campaign finance reform. I do not understand how anyone can purport to favor any reform of our current system without being willing to offer the most basic right of fairness to the hard-working men and women of this country. Let's be clear about what we are talking about. We are talking about letting workers who pay dues and fees to labor organizations be informed about what portions of the money they pay to unions are being spent on political activities. In my view, that is basic fairness. Is there some big secret here? Is there some reason workers should not be told how their money is being spent? The hypocrisy of the opposition is quite extraordinary. The underlying bill severely limits the ability of political parties to engage in the types of activities that this amendment simply asks unions to inform their members about. How can someone on the one hand argue for a restriction on these activities by parties and then secure a free pass and not even disclose the same information by others? This is simply remarkable. Then we hear the argument that this simple disclosure requirement is too burdensome. Give me a break. During these weeks in March and April when hard-working Americans are hovering over their tax forms, how can anyone call this straight-forward disclosure requirement on the unions too onerous? What is going on? Labor organizations collect dues and fees from American workers. Can anyone tell me they are not already keeping track of this money? If this disclosure amendment is too onerous, that suggests to me there might be an even bigger issue of accountability on how and where this money is being spent. I trust my colleagues will remember these arguments about ``onerous burdens'' when we are trying to do regulatory reform. The issue in this simple amendment is, do America's hard-working men and women have the right to know whether and how the dues and fees they pay are being used for political activities, or don't they? It is that simple. This ought to be the most basic of worker rights and protections. I hope my colleagues cast their votes in favor of the right of American workers to know how their money is being spent. Finally, let me emphasize, this amendment does not require the consent of employees. It simply requires disclosure. That is all, pure and simple, disclosure to the hard-working teachers, janitors, electricians, carpenters, and others on what the union leadership is actually spending these workers' hard earned money. It doesn't seem to me to be much of a burden or requirement. It seems to me if we are interested in having true campaign finance reform, this is one of the basic reforms. I reserve the remainder of my time.

Mr. HATCH. Mr. President, every public company with shareholders is mandated to send financial disclosures to every shareholder--every public company. This is not a burden, it is done so they know how their money is spent. Labor union financial disclosures--you would think they were already giving disclosures to their members, but they are not at all. The labor union financial disclosures only go to the Department of Labor and not to a single union member. And for union men to get those disclosures, they have to show cause. That is how bad it is, and that is how one sided it is. I have heard these arguments that the Hatch amendment does not go far enough. Some are trying to avoid disclosure of corporate and union political expenditures to shareholders and union members on the grounds that the Hatch amendment doesn't make ideological groups, such as NRA, Sierra Club, and other nonprofit advocacy groups disclose their donors or expenditures. In response to that, I first note that it is a clever ruse to try and change the argument from disclosing expenditures to disclosing donors. As a constitutional matter, disclosure of expenditures is fundamentally different than disclosure of donors, supporters, or members. Disclosure of expenditures implicates no one's freedom of association. Senator Hatch understands that and this is why he limited his amendment to disclosure of expenditures only. Moreover, the Hatch amendment limits disclosure of expenditures to only corporations and unions, and makes sure that such disclosure only goes to union members and shareholders, not the general public. He does not apply disclosure of political expenditures to ideological groups such as the Sierra Club or the NRA because people who join or contribute to those groups know what those groups advocate. This is not always so with corporations and unions. Moreover, Federal law mandates certain democratic procedures for the governance of public companies under the Securities and Exchange Act and the labor laws. Federal law does not mandate the internal governance of ideological groups. Under securities law and labor law Congress has set up a regime that imposed fiduciary duties on union and corporate leaders to members and shareholders and the Hatch amendment helps ensure those duties are fulfilled by shedding light on an area of corporate and union activity that supporters of McCain-Feingold are intent on keeping in the dark. Thus, my amendment is merely seeking to improve the flow of information in federally regulated entities that Congress has already decided should function as democratic institutions. And we all know that transparency is good for any democracy. But supporters of McCain- Feingold are strangely opposed to more transparency and improved democracy in labor unions--that I think flies in the face of the rights of workers. The argument that the requirements of my disclosure amendment are too vague--this is my favorite argument. Supporters of McCain-Feingold say that the descriptions in the Hatch amendment of activity that must be disclosed are too vague and thus unfair. The Hatch amendment requires corporations and unions to disclose expenditures for ``political activity'' which is defined as: Voter registration; Voter identification or get-out-the-vote activity; A public communication that refers to a clearly identified candidate for Federal office that expressly advocates support for or opposition to a candidate for Federal office; and Disbursements for TV, radio, print ads, or polling for any of the above. Now that doesn't seem that unclear to me, but it is too vague for supporters of McCain-Feingold. I find that fascinating. It is fascinating because when I read McCain-Feingold, which they think is perfectly fine, I see that it requires State and local party committees to not only report, but to pay for entirely with hard money, the following in even numbered years: ``generic campaign activity'' which is defined as ``an activity that promotes a political party and does not promote a candidate or non-federal candidate. Although it is far from clear to me, it must be perfectly clear to supporters of McCain-Feingold what constitutes ``an activity that promotes a political party'' since they are not complaining about vagueness in the underlying bill. Under S. 27, State parties must report and use hard money for A public communication that refers to a clearly identified candidate for federal office . . . that promotes or supports a candidate for that office, or attacks or opposes a candidate for that office. Again, I find it interesting that no one is complaining about how vague this provision is. It does not say how to figure out when an ad ``promotes or supports'' or attacks or opposes'' a candidate. McCain- Feingold doesn't even say who is supposed to figure that out. But this is just fine. Only the Hatch amendment is too vague. I think it is pretty clear what is going on here. Let's be clear about what my amendment does. It requires unions and corporation to disclose their political expenditures. It does not require the disclosure of any contributors or the name of a single union member or shareholder. By focusing solely on disclosure of expenditures, the Hatch amendment avoids the constitutional infirmities of Snowe-Jeffords and other legislation that requires disclosure of donors to advocacy groups. Merely disclosing an organization's political expenditures implicates no one's free association rights. Moreover, this amendment is narrowly tailored insofar as it requires disclosure of union political expenditures only to union members and fee payers and disclosure of corporate political expenditures only to corporate shareholders. So it is not even disclosure of expenditures to the general public. It simply ensures that shareholders and union members will have clear, understandable information about how their agents--union officials and corporate executives--are using the money they entrust to them. Under existing law, neither shareholders nor union members get such information. Why should they not have it, it is their money. Why can't they see how it is being spent. Let's examine the arguments being used by proponents of McCain- Feingold against this amendment: First, it is not fair because only unions engage in the types of political activity covered: Many have said only unions and no corporations do GOTV activity, voter identification, voter registration, leafletting, phone bank, volunteer recruitment and training, and myriad of other party building activities that would have to be disclosed under this legislation. Thus, they say the amendment is not balanced. They are right that no corporation does these basic party building activities the way unions do them for Democrats. Corporations give PAC contributions, which are already subject to limits and fully disclosed under existing law. They also give soft money contributions to political parties that are fully disclosed under existing law and will be eliminated under McCain-Feingold. Corporations also run some issues ads around election time, that will be banned for 60 days before a general election or 30 days before a primary, as will union issue ads. So McCain-Feingold already pretty well takes care of what corporations do, but does not touch the key things that unions do for Democrats--the groundgame. On our side, no corporations do or ever will do the kind of GOTV, and other groundgame activities unions do for Democrats. But all Democrats support banning party soft money, which is the only resource Republicans have to counter the massive groundgame unions do for Democrats. Without soft money, the Democrats ground game will go on thanks to their unions allies, but the Republican counter to the unions groundgame is eviscerated. This amendment wouldn't stop or otherwise hinder the unions ground game, it would just bring it out into the light of day and disclose to union members who pay for it. But no, we can't do that, it's not fair to attach that to McCain-Feingold. That would not be fair and balanced. But disarming the GOP in the face of the union groundgame is fair to supporters of McCain-Feingold? Second, disclosure under this amendment would discourage participation through GOTV activity and voter registration and other activities these entities do. This argument only makes sense if we assume that when union members or corporate shareholders learn about the political activities unions and corporations engage in that they will be outraged and rise up using the mechanisms of corporate and union democracy to oust the union and corporate officials using their money for GOTV and other political activities. To this I can only say that if union members and corporate shareholders would react in this way, so what. They have a right to pass judgment on how their money is spent and if they disagree to ensure that it is used for purposes with which they agree. Why keep them in the dark about how much of their money is used for various kinds of political activity? If unions are the happy, democratic institutions Democrats claim, what do union leaders have to fear from sunlight? The only other argument for saying that disclosure of expenditures would diminish such activity is that it is overly burdensome. This argument has little merit. We just passed a law last year that requires even the puniest section 527 organization to disclose any ``expenditure'' for any purpose in excess of $200. No one claimed it was too great a burden for them. These groups are managing and they do not have nearly the resources of the AFL-CIO, Teamsters, NEA, and other unions. Unions and corporation would just do what section 527 groups already do, and what political parties already do--hire an extra accountant and maybe a lawyer. That is not too much when you are the Teamsters and you take in over $300,000,000 a year. If opponents of this amendment were truly concerned about voter turnout, voter education, and voter participation, they would rail against the fact that McCain-Feingold requires the national as well as State and local political parties to use 100 percent hard money, thereby eliminating most of the resources available to our parties for their GOTV, voter identification, voter registration, and other activities that increase participation and turnout. How is mere disclosure of union and corporate political activity more damaging to voter participation and education than elimination of over one-third of the resources our parties have to do this? Maybe gutting the parties isn't so bad because Democrats know that unions will carry the water for them on all of these groundgame activities while McCain-Feingold will ensure that the Republican Party cannot match the unions' effort. This is a one-sided bill that basically is not fair, and it is certainly not fair to union men and women. These workers deserve to know for just what their union dues are being spent. All we are asking for is disclosure, something in this computer age they can do with ease if they want to, something in this computer age they ought to do because it is essential, something in this computer age they must do because it is not fair not to. To try to cloud the issue by saying we should disclose the donors--that is not the issue. The issue is expenditures, expenditures, expenditures; and the issue, the real issue, if we really want to do something about campaign finance reform, is disclosure, disclosure, disclosure. That is all I am asking for. I reserve the remainder of time.