Orrin Hatch

Mr. HATCH

Mr. HATCH. Mr. President, today I am proud to introduce the Home Office Deduction Act of 1997. I am joined today by my friends and colleagues, Senators Baucus, Allard, Bond, Lieberman, and Burns. This bill will clarify the definition of what is a ``principal place of business'' for purposes of section 280A of the Internal Revenue Code, which allows a deduction for an office in the home. This bill is designed to reverse the 1993 Supreme Court decision in Commissioner versus Soliman. When this decision was handed down, it effectively closed the door to legitimate home office deductions for hundreds of thousands of taxpayers. Moreover, the decision unfairly penalizes many small businesses simply because they operate from a home rather than from a store front, office building, or industrial park. Mr. President, until the Soliman decision, small business owners and professionals who dedicate a space in their homes to use for business activities were generally allowed to deduct the expenses of the home office if they met the following conditions: First, the space in the home was used solely and exclusively on a regular basis as an office; and second, the deduction claimed was not greater than the income earned by the business. Through the Soliman case, the Supreme Court has narrowed significantly the availability of this deduction by requiring that the home office be the principal business location of the taxpayer. This requirement that the home office be the principal business location has proven to be impossible to meet for many taxpayers with legitimate home office expenses. For example, under the Soliman decision, a self-employed plumber who generates business income by performing services in the homes of his customers would be denied a deduction for a home office. This is because, under the rules, his home office is not considered his principal place of business because the business income is generated in the homes of the customers and not in his home office. This is the case even though the home office is where he receives telephone messages, keeps his business records, plans his advertising, stores his tools and supplies, and fills out Federal tax forms. In fact, having a full-time employee in the office who keeps the books and sets up appointments would still not result in a home office deduction for the plumber. This is preposterous, Mr. President, and we need to correct it. My bill would rectify this result by allowing the home office to qualify as the principal place of business if the essential administrative or management activities of the business are performed there. The truly ironic effect of the Supreme Court's decision is that a taxpayer who rents office space outside of the home is allowed a full deduction, but one who tries to economize by working at home is penalized. This makes no sense to me. The Home Office Deduction Act of 1997 is designed to restore the deduction for home office expenses to pre-Soliman law. Rather than requiring taxpayers to meet the new criteria set out by the Court, the bill allows a home office to meet the definition of a ``principal place of business'' if it is the location where the essential administrative or management activities are conducted on a regular and systematic basis by the taxpayer. To avoid possible abuses, the bill requires that the taxpayer have no other location for the performance of these essential administrative or management activities. Mr. President, today's job market is rapidly changing. New technologies have been developed and continually improved that allow instant communication around the once expansive globe. There is even talk of virtual offices, which are equipped only with a telephone and a hookup for a portable computer. These mobile communications have revolutionized the definition of the traditional office. No longer is there a need to establish a business downtown. Employees are telecommuting by facsmile, modem, and telephone. Today, both a husband and a wife could work without leaving their home and the attention of their children. In this new age, redefining the deduction for home office expenses is vital. Our tax policy should not discriminate against home businesses simply because a taxpayer makes the choice, often based on economic or family considerations, to operate out of the home. In most cases, start-up businesses are very short on cash. Yet, for many, ultimate success depends on the ability to hold out for just a few more months. In these situations, even a relatively small tax deduction for the expenses of the home office can make a critical difference. It is important to note that some of America's fastest growing and most dynamic companies originated in the spare bedroom or the garage of the founder. Our tax policies should support those who dare to take risks. Many of tomorrow's jobs will come from entrepreneurs who are struggling to survive in a home-based business. Mr. President, the home office deduction is targeted at these small business men and women, entrepreneurs, and independent contractors who have no other place besides the home to perform the essential administrative or management activities of the business. The Soliman decision drastically reduced the effectiveness and fairness of this deduction and must be reversed. This legislation can also have an important effect on rural areas, such as in my home State of Utah. Many small business owners and professionals in the rural areas of Utah must spend a great deal of time on the road, meeting clients, customers, or patients. It is likely that many of my rural constituents will be unable to meet the requirements for the home office deduction under the Soliman decision. Mr. President, we must help these taxpayers, not hurt them, in their efforts to contribute to the economy and support their families. The Home Office Deduction Act of 1997 not only has strong bipartisan support in the Congress, but also has the support of the following organizations: The Alliance of Independent Store Owners and Professionals, the American Animal Hospital Association, the American Small Business Association, the American Society of Media Photographers, the American Society of Travel Agents, Americans for Financial Security, the Bureau of Wholesale Sales Representatives, Communicating for Agriculture, the Home Office & Business Opportunities Association of California, the Illinois Women's Economic Development Summit, the Manufacturers Agents National Association, the National Association for the Cottage Industry, the National Association of the Self-Employed, the National Association of Women Business Owners, the National Electrical Manufacturers Representatives Association, the National Federation of Independent Businesses, National Small Business United, the National Society of Public Accountants, the Promotional Products Association International, the Small Business Legislative Council. I urge my colleagues in the Senate to join us as cosponsors of this important legislation. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. HATCH

Mr. HATCH. Mr. President, today I am proud to introduce the Home Office Deduction Act of 1997. I am joined today by my friends and colleagues, Senators Baucus, Allard, Bond, Lieberman, and Burns. This bill will clarify the definition of what is a ``principal place of business'' for purposes of section 280A of the Internal Revenue Code, which allows a deduction for an office in the home. This bill is designed to reverse the 1993 Supreme Court decision in Commissioner versus Soliman. When this decision was handed down, it effectively closed the door to legitimate home office deductions for hundreds of thousands of taxpayers. Moreover, the decision unfairly penalizes many small businesses simply because they operate from a home rather than from a store front, office building, or industrial park. Mr. President, until the Soliman decision, small business owners and professionals who dedicate a space in their homes to use for business activities were generally allowed to deduct the expenses of the home office if they met the following conditions: First, the space in the home was used solely and exclusively on a regular basis as an office; and second, the deduction claimed was not greater than the income earned by the business. Through the Soliman case, the Supreme Court has narrowed significantly the availability of this deduction by requiring that the home office be the principal business location of the taxpayer. This requirement that the home office be the principal business location has proven to be impossible to meet for many taxpayers with legitimate home office expenses. For example, under the Soliman decision, a self-employed plumber who generates business income by performing services in the homes of his customers would be denied a deduction for a home office. This is because, under the rules, his home office is not considered his principal place of business because the business income is generated in the homes of the customers and not in his home office. This is the case even though the home office is where he receives telephone messages, keeps his business records, plans his advertising, stores his tools and supplies, and fills out Federal tax forms. In fact, having a full-time employee in the office who keeps the books and sets up appointments would still not result in a home office deduction for the plumber. This is preposterous, Mr. President, and we need to correct it. My bill would rectify this result by allowing the home office to qualify as the principal place of business if the essential administrative or management activities of the business are performed there. The truly ironic effect of the Supreme Court's decision is that a taxpayer who rents office space outside of the home is allowed a full deduction, but one who tries to economize by working at home is penalized. This makes no sense to me. The Home Office Deduction Act of 1997 is designed to restore the deduction for home office expenses to pre-Soliman law. Rather than requiring taxpayers to meet the new criteria set out by the Court, the bill allows a home office to meet the definition of a ``principal place of business'' if it is the location where the essential administrative or management activities are conducted on a regular and systematic basis by the taxpayer. To avoid possible abuses, the bill requires that the taxpayer have no other location for the performance of these essential administrative or management activities. Mr. President, today's job market is rapidly changing. New technologies have been developed and continually improved that allow instant communication around the once expansive globe. There is even talk of virtual offices, which are equipped only with a telephone and a hookup for a portable computer. These mobile communications have revolutionized the definition of the traditional office. No longer is there a need to establish a business downtown. Employees are telecommuting by facsmile, modem, and telephone. Today, both a husband and a wife could work without leaving their home and the attention of their children. In this new age, redefining the deduction for home office expenses is vital. Our tax policy should not discriminate against home businesses simply because a taxpayer makes the choice, often based on economic or family considerations, to operate out of the home. In most cases, start-up businesses are very short on cash. Yet, for many, ultimate success depends on the ability to hold out for just a few more months. In these situations, even a relatively small tax deduction for the expenses of the home office can make a critical difference. It is important to note that some of America's fastest growing and most dynamic companies originated in the spare bedroom or the garage of the founder. Our tax policies should support those who dare to take risks. Many of tomorrow's jobs will come from entrepreneurs who are struggling to survive in a home-based business. Mr. President, the home office deduction is targeted at these small business men and women, entrepreneurs, and independent contractors who have no other place besides the home to perform the essential administrative or management activities of the business. The Soliman decision drastically reduced the effectiveness and fairness of this deduction and must be reversed. This legislation can also have an important effect on rural areas, such as in my home State of Utah. Many small business owners and professionals in the rural areas of Utah must spend a great deal of time on the road, meeting clients, customers, or patients. It is likely that many of my rural constituents will be unable to meet the requirements for the home office deduction under the Soliman decision. Mr. President, we must help these taxpayers, not hurt them, in their efforts to contribute to the economy and support their families. The Home Office Deduction Act of 1997 not only has strong bipartisan support in the Congress, but also has the support of the following organizations: The Alliance of Independent Store Owners and Professionals, the American Animal Hospital Association, the American Small Business Association, the American Society of Media Photographers, the American Society of Travel Agents, Americans for Financial Security, the Bureau of Wholesale Sales Representatives, Communicating for Agriculture, the Home Office & Business Opportunities Association of California, the Illinois Women's Economic Development Summit, the Manufacturers Agents National Association, the National Association for the Cottage Industry, the National Association of the Self-Employed, the National Association of Women Business Owners, the National Electrical Manufacturers Representatives Association, the National Federation of Independent Businesses, National Small Business United, the National Society of Public Accountants, the Promotional Products Association International, the Small Business Legislative Council. I urge my colleagues in the Senate to join us as cosponsors of this important legislation. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. HATCH

Mr. HATCH. Mr. President, today I am proud to introduce a bill to make the current tax credit for increasing research activities permanent with my friend and colleague Max Baucus. We are also joined by Senators D'Amato, Abraham, Boxer, Bingaman, Moseley-Braun, Dorgan, Murray, DeWine, Conrad, Rockefeller. Companion legislation will be introduced today by Representatives Nancy Johnson and Robert Matsui in the House. The Small Business Job Protection Act of 1996 temporarily extended this tax credit until May 31, 1997, when it is set to expire. As the United States is shifting from an industrial based economy to an information and technology based economy, conducting research for tomorrow's products and methods is increasing in importance. In 1981, the Reagan administration and the Congress recognized this need, and the credit for increasing research and experimentation [R&E] activities was first enacted. Unfortunately, the credit has been victim to repeated short term extensions that included a break in the availability of the credit. Mr. President, this nation is the world's undisputed leader in technological innovation. American know-how has given our Nation benefits undreamed of a few years ago. Research and development by U.S. companies has led the way in delivering these benefits, which enhance U.S. competitiveness as well as the quality of life for everyone. And, as the pace of change in our world quickens, the role of research has taken on increased importance. Today, the credit is needed more than ever to keep up with our changing world. The R&E credit has played a key role in placing the United States ahead of its competition in developing and marketing new products. Studies of the credit indicate that the marginal effect of $1 of the R&E credit stimulates approximately $1 of additional private research and development spending over the short-run, and as much as $2 of extra investment in research over the long-run. Mr. President, the benefits of the R&E credit, though certainly very significant, have been limited by the fact that the credit has been temporary. In many fields, particularly pharmaceuticals and biotechnology, there are relatively long periods of development. The more uncertain the long-term future of the R&E credit is, the smaller the potential of the credit to stimulate increased research. This only makes sense, Mr. President. U.S. companies are managed by prudent business men and women. They evaluate their research and development investments by comparing the present value of the expected cash flow from the research over the life of the investment with the initial cash outlay. These estimates take into account the potential availability of tax credits. However, because of the uncertainty of a tax credit that has been allowed to continually expire, many decision makers do not count on the R&E credit as being available in the long-run. This, of course, means that fewer research projects will meet the threshold of viability and results in fewer dollars being spent on research in this country. In the business community, the development of new products, technologies, drugs, and ideas can result in either success or failure. Investments carry a risk. If a project has a high risk of failure, the R&E tax credit will help ease the cost of taking the chance to find the cure for killer diseases such as cancer, to build the next microchip, or the next generation of heart monitoring equipment that can save lives. If the project becomes a success, resulting in a new drug that can cure a disease or a new breakthrough technology, then what happens? Additional investment is made, workers are hired, new jobs are created and many Americans benefit from the initial research and experimentation. In this way, all Americans can benefit from the R&E tax credit. Mr. President, a small investment in R&E today produces dividends and rewards tomorrow. This tax credit is a credit for investment, for economic growth, and for creating new jobs. What if we don't act? As the Peat Marwick study confirms, the benefits of the R&E tax credit reach into the future. Failure to extend the credit beyond May 31, 1997, will weaken our Nation's ability to stay competitive in the future. It is important to note that while U.S. investment in research and development has generally grown since 1970, our international competitors have not stood still. Other nations, such as Japan and Germany are constantly knocking at the door trying to build the better car, the faster computer, or a more effective drug. Uncertainty, about the future of the credit will make firms hesitant to make long-term commitments and investments in the critical long-term research projects that really are the source of the breakthrough drugs and the new technologies. In fact, United States non-defense R&D, as a percentage of gross domestic product [GDP], has been relatively flat since 1985, while Japan's and Germany's have grown. Unlike a few years ago, it is now not always necessary for U.S. firms to perform their research activities within the boundaries of the United States. As more nations have joined the United States as high tech manufacturing centers, with educated work forces, multinational companies have found that moving manufacturing functions overseas is sometimes necessary to stay competitive. The same is often true with basic research activities. In fact, some of our major trading partners now provide generous tax incentives for research and development conducted in those nations. These incentives are more attractive than the R&E credit the United States provides, particularly when the temporary nature of our credit is considered. Therefore, Mr. President, we are at risk of having some of the R&D spending in the United States transferred overseas if we do not keep competitive. President Clinton, when campaigning for the Presidency in 1992, recognized the importance of stimulating private R&D investment and called for a permanent R&E credit. The 1993 tax bill had a 3-year extension. Last year, we extended the credit for only 1 year because of revenue constraints in the small business bill. The President's fiscal year 1998 budget contains another 1-year extension. These proposals for extensions are well and good, Mr. President, but they do nothing to give stability to risky, long-term research and experimentation investments. The certainty of the availability of the tax credit is now almost as important as the credit itself. It might well make the difference between a decision to undertake an expensive multiyear research project and a decision to forego such research. I hope this year we can put our support behind investment in research and make this credit permanent. Mr. President, my home State of Utah is home to a large number of innovative companies who invest a high percentage of their revenue in research and development activities. For example, between Salt Lake City and Provo lies the world's biggest stretch of software and computer engineering firms. This area, which was named ``Software Valley'' by Business Week, is second only to California's Silicon Valley as a thriving high technology commercial area. In addition, Utah is home to about 700 biotechnology and biomedical firms that employ nearly 9,000 workers. These companies were conceived in research and development and will not survive, much less grow, without continuously conducting R&D activities. In all, Mr. President, there are approximately 80,000 employees working in Utah's 1,400 plus and growing technology based companies. Research and development is the lifeblood of these firms, and hundreds of thousands more throughout the Nation that are like them. A permanent and effective tax incentive to increase research is essential to the long-term health of these businesses. I am aware, Mr. President, that not every company that incurs R&D expenditures in the United States can take advantage of the R&E credit. As the credit matures and business cycles change, the current credit can be out of reach for some companies. Thus, as part of the latest extension of the credit Congress enacted an elective alternative credit to broaden the reach of this incentive. However, Congress should continue to examine ways to improve it and to make the credit more effective in delivering incentives to increase R&D activity. In the meantime, however, it is important that this Congress send a strong signal that the current credit should not be allowed to expire. I urge my colleagues to show their support for the concept of a permanent R&E credit by cosponsoring this legislation and support the kind of research activities that will maintain American leadership in the technological developments that will lead us into the next century. I ask unanimous consent that the text of the bill be printed in the Record.

Mr. HATCH

Mr. HATCH. Mr. President, I support the joint resolution before us waiving certain provisions of the Trade Act of 1974 relating to the nomination of Ambassador Barshefsky to the position of United States Trade Representative. Let us make no mistake as to the quality of Ambassador Barshefsky's service. We are not simply endorsing her as an exception to the act. Rather, she could not be more deserving of confirmation. Let's examine her record. Her service has been marked by substantive accomplishments on an unprecedented scale. Over 200 trade agreements have been enacted, and she has been in the middle of the dispute process for the most difficult of all--the Chinese anti-piracy agreement--and more than 20 separate agreements with the Japanese in such areas as auto parts, telecommunications, government procurement, semiconductors, and medical equipment and technology. Many of her accomplishments have directly benefited my State of Utah which, despite its small size, is one of the Nation's leading exporters of technology and software. Like many other members of the Senate Finance Committee, I have been inundated by letters from hundreds of Barshefsky supporters. This outpouring of support underscores my own impression, as I expressed at the recent Finance Committee hearing, that she is a most qualified nominee for U.S. Trade Representative. But let me draw attention to one particular comment regarding her success in the Chinese trade negotiations. I refer to a statement from the Recording Industry Association of America, a sector that has been especially hard hit by Chinese intellectual property piracy. In his recent letter to me, RIAA chairman and CEO, Jay Berman, reported, ``I personally witnessed her negotiations with China in June, 1995, that led to the immediate closing of 15 pirate CD [compact disc] plants.'' She has been repeatedly credited with breakthroughs in other sectors as well. As my good friend from Delaware said only moments earlier, she has vastly expanded market access for American business--in Asia, Latin America, and Europe. More importantly, her work will be seen as an advent to still another American century, a century that will be marked by rising prosperity everywhere. Mr. ROTH addressed the Chair.

Mr. HATCH

Mr. HATCH. Mr. President, I am very honored to be able to turn to a man who has led the fight for the balanced budget amendment ever since he arrived at the Senate, the most senior Senator in the whole U.S. Senate, a person all look up to, who has been my mentor on this issue and so many others, and one of my dearest friends in this world, the distinguished Senator from South Carolina, Senator Strom Thurmond, for 5 minutes or whatever time he needs.

Mr. HATCH. Mr. President, I yield 10 minutes to the distinguished Senator from Texas.

Mr. HATCH. Mr. President, how much time does the Senator need?

Mr. HATCH. Mr. President, I yield 10 minutes to the Senator from Wyoming.

Mr. HATCH. Mr. President, I am delighted to have the relationship with our cosponsor on this amendment on the Democrat side, Senator Bryan from Nevada. He has fought a valiant battle here, and I appreciate the opportunity of working with him on this. We are still hoping that this vote will turn out all right at the end of the day. So I am more than delighted to yield 15 minutes to my distinguished friend and colleague. I thank him for his leadership on this matter.

Mr. HATCH. Mr. President, I thank my distinguished friend and colleague, and certainly for his kind remarks regarding me. I take those as a special feeling of friendship and love for the work he has done and the kindness he has shown to me. I want to personally express my appreciation for how hard he has worked on this amendment, how much it has meant to me and others on this side--very much--and, I think, to his colleagues who are voting with him on his side. I just want to personally express my gratitude to him for the good work he has done. I reserve the remainder of my time. Mr. LEAHY addressed the Chair.

Mr. HATCH. I have no objection. This is fine. I am happy to accommodate the minority on this.

Mr. HATCH. Mr. President, I have enjoyed listening to the distinguished Senator from Maryland. He has made these points before. Let me tell you something. It is easy to bring the deficit down when you pass the largest tax increase in history, and when you have just ended paying for the savings and loan crisis. In all honesty, that is what happened. But, we still have, for the next 4 years, the deficit going back up. Only in Washington, DC, when you talk about reducing the increase in the amount of money the deficit goes up, do you call it cutting the budget. The fact is that, under the best of circumstances, we have at least a $107 billion annual deficit. It is going up to $200 billion by the year 2002, by the budget the President submitted. So it is nice to talk in terms of how the deficit seems to be coming down for the last 4 years, after the largest tax increase in history, and the fact that the deficit was artificially high in 1992 because we got through paying for the debacle of the S&L crisis. I am not sure who to blame there. There is more than enough blame to go around for who created the debt, the question for today is who will vote to fix it? President Reagan's desire to have marginal tax rate reductions to spur economic growth proved to be the right policy. The marginal tax rate reductions in 1981, actually, according to many observers, resulted in an increase in revenues of over 40 percent during the additional years. At the lowest, it was 28 percent. Really, I think it was closer to 40 percent. But the real problem was that our friends of the more liberal persuasion kept spending, and President Reagan himself spent more on defense. So there is no question that all of that was what caused the high deficits, not the tax rate reductions. Having said all of that, we also know that automatic stabilizers are not what they claim to be. There are many reasons why we come out of recessions and why we haven't had deeper ones than we have had. Automatic stabilizers is probably a very minor part of that, according to most economists today. Today is the day of decision for Senate Joint Resolution 1, which proposes to amend the Constitution and provide for a means of getting us to a balanced budget. The sad reality is that if we do not adopt the balanced budget amendment to the Constitution, then the bridge to the 21st century is likely to be washed out with a flood of debt. The amendment we will vote on this afternoon is the bipartisan, bicameral consensus. Everybody knows it is the only one that has a chance of passing and the only chance we have of getting things under control. It is recommended to the American people by us for their deliberation and their State legislatures by Americans of good will who will have reached across party lines to do what is right for our country's future. Some have suggested that it is somehow inappropriate to suggest that we amend the Constitution to correct the Federal Government's borrowing and spending habits. I would like to emphasize. What is the Constitution for? It seems to me that it's primary purpose is to limit the Federal Government's power to act in ways destructive of the liberties of the people. And the most central power of Government, especially of the Congress, is the power of the purse. That should not seem like a new idea. Ever since the nobles of England forced King John to sign the Magna Carta at Runnymede, our constitutional history has been a series of actions to rein in the abuse of power of the purse to protect the freedoms of the people. That is what we want to do here because it is apparent. If you look at these last 28 years of budgets, all unbalanced, none of which has done the job, that have put us where we are, it wasn't just Reagan, Bush, Clinton, or Carter. It is 28 years of this. And, if you really want to stop things, yes, we have to have better Presidential leadership on the budget. But ultimately, the fiscal buck stops right here in Congress, and the Congress is the body that can't get its spending habits under control. For the first century and a half of our Nation's history our Nation-- it literally went without saying--the Government would only borrow in times of supreme emergency, and then would repay the debt in good times. That began to be abandoned in the 1930's and was entirely abandoned in the 1960's and 1970's. In 58 of the last 66 years, and for the last straight 28 years, the Federal Government has spent more money than it has taken in. Yet, we have these people coming to the floor saying, ``All we have to do is do it, and the President will sign it.'' Give me a break.

Mr. HATCH. I do not have the time to yield, or I would be happy to. Let me just finish my remarks. This pile of books illustrate the nearly three decades of unbroken deficits. Think of it. Nearly 30 years in an unbroken line, and 58 of the last 66 years during good times and bad times the Federal Government has simply spent money that it didn't have. And, frankly, it is our fault in Congress for allowing this condition to continue. Some question. ``Who has this hurt? We owe the money to ourselves. It has no effect.'' Right? Wrong. It has hurt average Americans by reducing their wealth and by reducing the Nation's economic sovereignty as we have relied on foreign creditors, and foreign creditors are starting to control our country. Because the Government is competing for money to borrow, it has driven up the interest rates making home mortgages, student loans, and automobile loans even more expensive. The Joint Economic Committee has estimated that the average family will save about $1,500 if we implemented a balanced budget amendment. Our debt has made it more difficult for small businesses to grow and to expand, and so has decreased the number of new jobs that we might have created. In these and many other ways, real wealth has been taken away from the American people and from the American families throughout this country. Who else does it hurt? Certainly our children and our grandchildren. A child born today enters life with about $20,000 of debt as his or her share of our $5.3 trillion national debt. It has been estimated that this same child will pay $200,000 in extra taxes just to pay the interest on the national debt over the lifetime of that child. In fact, that child will pay over $94,000 in extra taxes just to pay the interest on the national debt, up until that child's first 18 years are completed. These children did not get to vote on this debt and tax burden. They didn't vote on the spending programs that they will be paying for. Mr. President, I have called this ``fiscal child abuse,'' and that is exactly what it is. It is also taxation without representation in its purest form. The clear fact is that the Federal Government's debt habit is hurting current and future Americans. But in a way that avoids direct electoral accountability. By taking the easy course to borrowing, the Government can hand out Federal money without having to raise Federal money directly through taxes. Over the period of debt financing the Government has grown and has intruded itself into every area of life but has become even less and less accountable for the people. Some say, ``Let's just do it,'' meaning that we can balance the budget right now, if we will. We have tried all of that. Republicans, Democrats, and the White House have promised balanced budgets, and the debt just continued to go up. Democrats and Republicans promised balanced budgets, and the debt went up. We had recessions and wars, and the debt went up. We had peace and prosperity, and the debt went up. Since 1978, we passed no fewer than five major budgetary regimes to force us to balance the budget, and the debt went up. Just think about it. In the last Congress, we even passed a balanced budget. But the President vetoed it. And the debt went up again. We have tried promises. We have tried statutes. They don't work. Look at this stack of failed attempts of 28 straight years; 58 of the last 66 year of unbalanced budgets. ``Let's just do it'' just doesn't do it. That line may be great for selling sneakers, but it has not helped us to balance the budget. I will tell you that. We have a fundamental problem with the way our Government operates. We need a constitutional solution because that is what the Constitution is for--to fix basic problems of Government, and to limit the ability of Government to act in ways that are harmful to the people. It seems to me quite clear that to remedy this fundamental problem in our National Government that it is entirely appropriate to amend our basic charter to say to the Government, ``Stop spending our national inheritance.'' By limiting the Federal Government's ability to borrow and spend and spend away our American legacy, we will be protecting the liberties of all Americans. Mr. President, there is still time for Senators to reconsider their position. I hope that those who have shown that changing their minds is not out of character will think twice again and decide to vote the right way--in the way they promised their constituents, in the way they ran upon it, and in the way they were elected upon it. The balanced budget is the right thing to do for our children, our grandchildren, and for all Americans. I reserve the remainder of my time. Several Senators addressed the Chair.

Mr. HATCH. It is my understanding that the distinguished Senator from Texas would like to speak. I think he is on his way. As soon as he arrives, I would be happy to yield whatever time I have to him. I suggest the absence of a quorum.

Mr. HATCH. Mr. President, I yield 5 minutes to the distinguished Senator from Idaho.

Mr. HATCH

Mr. HATCH. I yield 1 minute to the distinguished Senator from Montana.

Mr. HATCH. Mr. President, I am disappointed with the Senate vote. I am disappointed for the American people, especially younger Americans, and our children and grandchildren. They were the ones who lost in this defeat. I hope our younger voters will take notice of who was on their side and who was not, the next time they vote. The sad reality is that the bridge to the 21st century is likely to be washed out in a flood of debt. I hope I am wrong and that we will now work to enact a real plan to get to a balanced budget. I hope that those who have killed the balanced budget amendment this time will actually work to balance the budget. But I must admit, I am not too hopeful that we will get to balance and stay there without the force of a constitutional requirement to do so. This year we will add another budget to this mounting stack of fiscal irresponsibility. When we began this Congress, less than 2 months ago there, were 68 Senators who had either previously voted for this amendment--the exact same amendment, or who had promised during their recent campaign to support it. I believed that we could count on them to keep their promises. Yet, only moments ago, only 66 votes were cast in favor of fiscal discipline. Those two missing votes are the difference between passing the balanced budget amendment and adding still more failed budgets to this pile of 28 straight years of deficits. As disappointed as I am, however, I am also very proud of my colleagues who stood up and were willing to vote to protect our children and grandchildren from worsening the crushing burden of debt that has already been loaded on their backs. Senate Joint Resolution 1 began this Congress with 62 cosponsors, Mr. President. That is an all- time high. We have now had two consecutive Congresses in which the Senate missed approving the balanced budget amendment by a single vote. There can be no doubt that support for this much-needed measure is growing. I am particularly proud of, and grateful to, the 11 courageous Democrats who did the right thing and voted for fiscal responsibility and accountability in spite of President Clinton's opposition. Among them, Senators Bryan, Graham, Robb, Moseley-Braun, Kohl, Breaux, and Baucus deserve special recognition as they are all original cosponsors of the balanced budget amendment. Let me also recognize Senator Biden, the former ranking member of the Judiciary Committee who also voted for the amendment, and Senators Harkin, Landrieu, and Cleland. As you can see, Mr. President, the balanced budget amendment is a bipartisan effort. The 11 courageous Democrats joined with all 55 Republicans in the Senate to support what we understand is necessary if the budget is to truly be brought into balance. Unfortunately for the American people, the 34 Democrats who voted against the balanced budget amendment were just enough to defeat it. Two years ago I stood here after a very similar vote and promised that we would not give up the fight for our children's future. This year we returned stronger than ever. And so I make the same promise again, we will be back! We will be back and we will continue to gain strength until we enact the balanced budget amendment and finally, after decades of excuses, broken promises, and more deficits, we will balance the budget. Mr. President, an effort such as the one we have been involved in over the past month requires the time, talent, and commitment of a large number of people. While I cannot name them all, I would like, at this time, to extend my gratitude to the Senators and staff who were so instrumental. Let me first thank our majority leader for his pivotal role. Senators Craig, Thurmond, and Domenici of course, have my admiration and thanks. I am also especially grateful to Senators Nickles, Coverdell, Mack, Grassley, Gramm, Snowe, Abraham, and Thomas. Last, but certainly not least, I would like to thank our new Republican colleagues: Senators Enzi, Hagel, Hutchinson, Allard, Collins, Sessions, Brownback, and Roberts. The energetic support of the newest Members of the Senate bodes well for the future prospects of the balanced budget amendment. Let me also thank Senator Leahy, the new ranking member on the Judiciary Committee and the minority floor manager during this debate, for his cooperation and courtesy. Finally, I would like to single out some of the staff members who worked so long and hard on this matter: Damon Tobias with Senator Craig; Bill Hoagland, Austin Smythe, and Jim Capretta of Senator Domenici's Budget Committee staff; Tom Geier with Senator Snowe; Bryan Reardon with Senator Abraham; Mitch Bainwol with Senator Mack; Doug Badger and Hazen Marshall of Senator Nickles's majority whip office; Kyle McSlarrow and Carl Parks with Senator Coverdell; Andy Vermilye with Senator Bryan; Russ Sullivan, Mike McGinn and Barbara Ramey with Senator Graham; and Rob Brazil with Senator Robb; and last but certainly not least, David Hoppe, Alison Carroll and Keith Hennessy in the majority leader's office. Let me also thank Bruce Cohen and Ed Pagano of Senator Leahy's Judiciary Committee staff. Last, Mr. President, I would like to thank the very special people who have worked with me on this issue: Manus Cooney, Sharon Prost, Shawn Bentley, Larry Block, Paul Larkin, Steve Tepp, Paul Joklik, Troy Dow, Eric Sampson, Jennifer Carrico, Allison Vinson, and Irosha Ratnasekera. Many staffers have worked long and hard in the most dedicated fashion, I thank them all for their devotion to duty and to our country.

Mr. HATCH. Mr. President, I thank my colleague for his excellent statement. I yield 1 minute to the distinguished Senator from Kansas.

Mr. HATCH. Mr. President, I yield a couple of minutes to the distinguished Senator from Idaho, who has led the fight for this amendment in the House, along with Congressman Stenholm and, of course, played a pivotal role in leading the fight for it each time we brought it up in the Senate as long as he has been here, Senator Craig.

Mr. HATCH. Madam President, I thank the Senator from Florida for his valiant fight on his side of the aisle to help make this a reality. We really appreciate him and honor him today. I yield 1 minute to the distinguished Senator from Mississippi.

Mr. HATCH. Madam President, in the last hour we have had 37 Senators for the balanced budget amendment who have spoken here on the floor. I think that sends about as powerful a message as we can. But I would like to end with our remaining time going to the distinguished chairman of the Budget Committee who deals with these matters all the time.

Mr. HATCH. Mr. President, I yield 1 or 2 minutes to the distinguished Senator from Maine.

Mr. HATCH

Mr. HATCH. Mr. President, I ask unanimous consent that the Subcommittee on Securities of the Committee on Banking, Housing, and Urban Affairs be authorized to meet during the session of the Senate on Tuesday, March 4, 1997, to conduct an oversight hearing on the SEC and FASB derivatives accounting rules and their impact on competitiveness and investor information.

Mr. HATCH. Mr. President, I ask unanimous consent that the Subcommittee on Superfund, Waste Control, and Risk Assessment be granted permission to conduct a hearing Tuesday, March 4, at 9:30 a.m., Hearing Room SD-406 on liability and resource issues associated with the cleanup and redevelopment of abandoned or underutilized industrial and commercial properties, and how legislation currently pending before the committee might affect these redevelopment efforts.

Mr. HATCH. Mr. President, I ask unanimous consent that the Committee on Foreign Relations be authorized to meet during the session of the Senate on Tuesday, March 4, 1997, at 4:45 pm to hold a business meeting.