Fritz Hollings

Mr. HOLLINGS

Mr. HOLLINGS. Madam President, I rise today to introduce legislation to present Reverend Joseph A. De Laine the Congressional Gold Medal in honor of his heroic sacrifices to desegregate our public schools. His crusade to break down barriers in education forever scarred his own life, but led to the landmark Brown v. Board of Education case in 1954. Eight years before Rosa Parks refused to move to the back of the bus, Rev. De Laine, a minister and principal, organized African-American parents to petition the Summerton, SC, school board for a bus and gasoline so their children would not have to walk 10 miles to attend a segregated school. A year later, in Briggs v. Elliott, the parents sued to end segregation. It was a case that as a young lawyer I watched Thurgood Marshall argue before the Supreme Court as one of the five cases collectively known as Brown v. Board of Education. For this Senator, their arguments helped to shape my view on racial matters. For his efforts, Rev. De Laine was subjected to a reign of domestic terrorism. He lost his job. He watched his church and home burn. He was charged with assault and battery with intent to kill after shots were fired at his home and he fired back to mark the car. He had to leave South Carolina forever; relocate to New York, where he started an AME Church, and he eventually retired in North Carolina. Not until the year 2000, 26 years after his death and 45 years after the incident in his home was Rev. De Laine cleared of all charges. Last month, I spoke to the 100 descendants of Briggs v. Elliott, and I ask unanimous consent that my remarks be printed in the Record, which show the bravery of Rev. De Laine during a troubled time in our Nation's past, and which point to the immeasurable benefits he has given our Nation.

Mr. HOLLINGS

Mr. HOLLINGS. Madam President, I rise today to introduce legislation to present Reverend Joseph A. De Laine the Congressional Gold Medal in honor of his heroic sacrifices to desegregate our public schools. His crusade to break down barriers in education forever scarred his own life, but led to the landmark Brown v. Board of Education case in 1954. Eight years before Rosa Parks refused to move to the back of the bus, Rev. De Laine, a minister and principal, organized African-American parents to petition the Summerton, SC, school board for a bus and gasoline so their children would not have to walk 10 miles to attend a segregated school. A year later, in Briggs v. Elliott, the parents sued to end segregation. It was a case that as a young lawyer I watched Thurgood Marshall argue before the Supreme Court as one of the five cases collectively known as Brown v. Board of Education. For this Senator, their arguments helped to shape my view on racial matters. For his efforts, Rev. De Laine was subjected to a reign of domestic terrorism. He lost his job. He watched his church and home burn. He was charged with assault and battery with intent to kill after shots were fired at his home and he fired back to mark the car. He had to leave South Carolina forever; relocate to New York, where he started an AME Church, and he eventually retired in North Carolina. Not until the year 2000, 26 years after his death and 45 years after the incident in his home was Rev. De Laine cleared of all charges. Last month, I spoke to the 100 descendants of Briggs v. Elliott, and I ask unanimous consent that my remarks be printed in the Record, which show the bravery of Rev. De Laine during a troubled time in our Nation's past, and which point to the immeasurable benefits he has given our Nation.

Mr. HOLLINGS

Mr. HOLLINGS. Mr. President, I rise today with my colleague Senator Gregg to introduce the Coastal and Estuarine Land Protection Act of 2002. I would like to thank our cosponsors, Senators Kerry, Snowe, Inouye, J. Reed, Breaux, Cleland, DeWine, Sarbanes, Biden, Kennedy, Mikulski, Cochran, Torricelli, Murray, and Landrieu for their support of this bill, which marks another important chapter of our thirty year effort to put coastal and ocean issues at the forefront of environmental policy. When I was Governor of South Carolina over 30 years ago, I experienced first hand the need for Federal direction and assistance to the States to enable them to effectively and sustainably manage coastal development. My experiences during a series of coastal hearings and continued research in the Senate led me to write the Coastal Zone Management Act of 1972, which provided clear policy objectives for states to establish coordinated coastal zone management programs to help balance coastal development with protection. Since the CZMA became law, 34 of the 35 coastal states have established approved programs to help preserve and utilize their precious resources, and the program has proven to be a successful partnership between the Federal government and our states. But we appear to need more tools to help States continue the job we started in 1972. In the year 2002, as our population grows, more and more people are moving to the coast to enjoy its beauty and recreational opportunities. In fact, by 2010, an estimated 60 percent of Americans will live along our coasts, which represent less than 17 percent of our land area. More than 3,000 people move to coastal areas everyday, and fourteen of the Nation's 20 largest cities are on the coast, and are five times more densely populated than the interior of the country. As these good folks move to take advantage of coastal living, we have to be careful that we don't destroy the natural resources and quality of life that draw them to our shores. Big changes are coming to all of our coastal counties, and we must make some careful and smart decisions if we want to keep the very resources we depend on. In particular, estuaries and wetlands have many unique attributes that make them important to both our natural resources and our economy. Estuaries, and the watersheds that flow into them, support fisheries and wildlife and contribute immensely to the coastal area economies. Wetlands are critical to many life cycles of organisms and help improve surface water quality by filtering our wastes. But these ecologically and economically important watersheds are also under the most threat from land development and conversion away from their natural state. The Forest Service's recently released Southern Forest Resource Assessment shows that coastal urbanization trends are particularly strong in the southeastern areas. In my state alone, the natural forests of the coastal plain are projected to decrease by 1.9 million acres in the next 40 years--a 35 percent loss of South Carolina's forests. These findings and future trends tell me that for the good of our coastal communities we need some fast, targeted action to protect ecologically important coastal areas most threatened with development or conversion. Now more than ever, the pressures of urbanization and pollution along our Nation's coasts threaten to impair watersheds, impact wildlife habitat and cause irreparable damage to the fragile coastal ecology. This year the Environmental Protection Agency rated the overall condition of our coastal waters as fair to poor, with 44 percent of estuarine areas impaired for human or aquatic life use. While some areas of the country are seeing some improvement as a result of control on industry, the experts predict that the more pristine areas like the Southeast, which as some of the best water quality in the Nation, will experience degradation of water quality due primarily to runoff of pollutants from rapid development in our coastal watersheds. This is very bad news for the shrimpers, oystermen, and recreational users who depend on these waters for their livelihood and quality of life. We see strong signals of what continuing down this path will bring us: sustained beach closings due to excess sewage drainage; shellfish bed closings and fish consumption advisories resulting from toxic runoff or bacteria; fish kills due to lack of oxygen from nutrient runoff; marine mammal diseases; and human health impacts. The National Research Council reports that over the next 20 years over 70 percent of our estuaries will experience more of these low oxygen, or ``eutrophic'' conditions, such as the Gulf ``Death Zone.'' If this trend continues, our coastal economies will suffer and perhaps never recover. I know in my state the economy would falter greatly from the lack of fishing, shrimping and tourism opportunities, and this is true up and down the Atlantic coast, which contains 37 percent of the Nation's estuarine areas. The good news is that there are ways we can make a difference, and we have some goods models we can turn to. I am proud to say my home state of South Carolina is a leader in this area. The past decade I have led an extensive cooperative conservation effort, bringing together the State of South Carolina, private landowners, groups like the Nature Conservancy, Ducks Unlimited and Federal partners like NOAA and the Fish and Wildlife Service to protect the ACE Basin. It is now the largest pristine estuarine reserve on the East Coast, a 350,000-acre area at the convergence of the Edisto, Ashepoo and Combahee Rivers, which comprises many ecologically important habitats that are home to many fish and bird species, including a number of endangered species. An outcome of these efforts is that the ACE Basin, already home to a National Wildlife Refuge, was declared a National Estuarine Research Reserve in 1992, and has been growing in size ever since. In building the ACE Basin, the partners worked creatively and in a coordinated manner, and we successfully obtained land acquisition funds through a variety of federal sources, including the Forest Legacy Program. What became clear, however, is that there is no federal program explicitly setting aside funding for conservation of coastal lands, where the needs are clearly the greatest. That is exactly what the Coastal and Estuarine Land Protection Act of 2002 will do. The bill, which is strongly supported by The Trust for Public Land, Coastal States Organization, The Nature Conservancy and Land Trust Alliance, amends the CZMA to authorize a competitively matching grant program in NOAA to enable states to permanently protect important coastal areas. Under this NOAA program, coastal states can compete for matching funds of up to 75 percent to acquire land or easements for the protection of endangered coastal areas that have considerable conservation, recreation, ecological, historical or aesthetic values threatened by development or conversion. The bill also provides funding for a regional watershed demonstration project that can be used as a model for future watershed-scale programs. The program is authorized at $60 million for fiscal year 2003 and beyond, with an additional $5 million for the regional watershed demonstration project. By establishing a plan for the preservation of our coastal areas, the Coastal and Estuarine Land Protection Act will build on the foundation laid down by the CZMA, all in stride with the changing times, growing number of people, and limited resources available today. When it comes to the environment, rules and regulations sometimes can't do it all. Sometimes cooperative actions work better and we can turn to models that encourage joint conservation projects among folks who all want the same thing, sustainable coasts. Partnership programs among federal government, state agencies, local governments, private landowners and non-profits, like the ACE Basin Project, work and we need to encourage these partnerships in all our coastal areas if we are to prevent degradation of our coastal resources. The good news is that we can make a difference today by providing the funding for land conservation partnerships provided for by Coastal and Estuarine Land Protection Act. I am proud to be a sponsor of this bill, which will not only improve the quality of the coastal areas and marine life it supports, but also sustain surrounding communities and their way of life.

Mr. HOLLINGS

Mr. HOLLINGS. Mr. President, I rise today with my colleague Senator Gregg to introduce the Coastal and Estuarine Land Protection Act of 2002. I would like to thank our cosponsors, Senators Kerry, Snowe, Inouye, J. Reed, Breaux, Cleland, DeWine, Sarbanes, Biden, Kennedy, Mikulski, Cochran, Torricelli, Murray, and Landrieu for their support of this bill, which marks another important chapter of our thirty year effort to put coastal and ocean issues at the forefront of environmental policy. When I was Governor of South Carolina over 30 years ago, I experienced first hand the need for Federal direction and assistance to the States to enable them to effectively and sustainably manage coastal development. My experiences during a series of coastal hearings and continued research in the Senate led me to write the Coastal Zone Management Act of 1972, which provided clear policy objectives for states to establish coordinated coastal zone management programs to help balance coastal development with protection. Since the CZMA became law, 34 of the 35 coastal states have established approved programs to help preserve and utilize their precious resources, and the program has proven to be a successful partnership between the Federal government and our states. But we appear to need more tools to help States continue the job we started in 1972. In the year 2002, as our population grows, more and more people are moving to the coast to enjoy its beauty and recreational opportunities. In fact, by 2010, an estimated 60 percent of Americans will live along our coasts, which represent less than 17 percent of our land area. More than 3,000 people move to coastal areas everyday, and fourteen of the Nation's 20 largest cities are on the coast, and are five times more densely populated than the interior of the country. As these good folks move to take advantage of coastal living, we have to be careful that we don't destroy the natural resources and quality of life that draw them to our shores. Big changes are coming to all of our coastal counties, and we must make some careful and smart decisions if we want to keep the very resources we depend on. In particular, estuaries and wetlands have many unique attributes that make them important to both our natural resources and our economy. Estuaries, and the watersheds that flow into them, support fisheries and wildlife and contribute immensely to the coastal area economies. Wetlands are critical to many life cycles of organisms and help improve surface water quality by filtering our wastes. But these ecologically and economically important watersheds are also under the most threat from land development and conversion away from their natural state. The Forest Service's recently released Southern Forest Resource Assessment shows that coastal urbanization trends are particularly strong in the southeastern areas. In my state alone, the natural forests of the coastal plain are projected to decrease by 1.9 million acres in the next 40 years--a 35 percent loss of South Carolina's forests. These findings and future trends tell me that for the good of our coastal communities we need some fast, targeted action to protect ecologically important coastal areas most threatened with development or conversion. Now more than ever, the pressures of urbanization and pollution along our Nation's coasts threaten to impair watersheds, impact wildlife habitat and cause irreparable damage to the fragile coastal ecology. This year the Environmental Protection Agency rated the overall condition of our coastal waters as fair to poor, with 44 percent of estuarine areas impaired for human or aquatic life use. While some areas of the country are seeing some improvement as a result of control on industry, the experts predict that the more pristine areas like the Southeast, which as some of the best water quality in the Nation, will experience degradation of water quality due primarily to runoff of pollutants from rapid development in our coastal watersheds. This is very bad news for the shrimpers, oystermen, and recreational users who depend on these waters for their livelihood and quality of life. We see strong signals of what continuing down this path will bring us: sustained beach closings due to excess sewage drainage; shellfish bed closings and fish consumption advisories resulting from toxic runoff or bacteria; fish kills due to lack of oxygen from nutrient runoff; marine mammal diseases; and human health impacts. The National Research Council reports that over the next 20 years over 70 percent of our estuaries will experience more of these low oxygen, or ``eutrophic'' conditions, such as the Gulf ``Death Zone.'' If this trend continues, our coastal economies will suffer and perhaps never recover. I know in my state the economy would falter greatly from the lack of fishing, shrimping and tourism opportunities, and this is true up and down the Atlantic coast, which contains 37 percent of the Nation's estuarine areas. The good news is that there are ways we can make a difference, and we have some goods models we can turn to. I am proud to say my home state of South Carolina is a leader in this area. The past decade I have led an extensive cooperative conservation effort, bringing together the State of South Carolina, private landowners, groups like the Nature Conservancy, Ducks Unlimited and Federal partners like NOAA and the Fish and Wildlife Service to protect the ACE Basin. It is now the largest pristine estuarine reserve on the East Coast, a 350,000-acre area at the convergence of the Edisto, Ashepoo and Combahee Rivers, which comprises many ecologically important habitats that are home to many fish and bird species, including a number of endangered species. An outcome of these efforts is that the ACE Basin, already home to a National Wildlife Refuge, was declared a National Estuarine Research Reserve in 1992, and has been growing in size ever since. In building the ACE Basin, the partners worked creatively and in a coordinated manner, and we successfully obtained land acquisition funds through a variety of federal sources, including the Forest Legacy Program. What became clear, however, is that there is no federal program explicitly setting aside funding for conservation of coastal lands, where the needs are clearly the greatest. That is exactly what the Coastal and Estuarine Land Protection Act of 2002 will do. The bill, which is strongly supported by The Trust for Public Land, Coastal States Organization, The Nature Conservancy and Land Trust Alliance, amends the CZMA to authorize a competitively matching grant program in NOAA to enable states to permanently protect important coastal areas. Under this NOAA program, coastal states can compete for matching funds of up to 75 percent to acquire land or easements for the protection of endangered coastal areas that have considerable conservation, recreation, ecological, historical or aesthetic values threatened by development or conversion. The bill also provides funding for a regional watershed demonstration project that can be used as a model for future watershed-scale programs. The program is authorized at $60 million for fiscal year 2003 and beyond, with an additional $5 million for the regional watershed demonstration project. By establishing a plan for the preservation of our coastal areas, the Coastal and Estuarine Land Protection Act will build on the foundation laid down by the CZMA, all in stride with the changing times, growing number of people, and limited resources available today. When it comes to the environment, rules and regulations sometimes can't do it all. Sometimes cooperative actions work better and we can turn to models that encourage joint conservation projects among folks who all want the same thing, sustainable coasts. Partnership programs among federal government, state agencies, local governments, private landowners and non-profits, like the ACE Basin Project, work and we need to encourage these partnerships in all our coastal areas if we are to prevent degradation of our coastal resources. The good news is that we can make a difference today by providing the funding for land conservation partnerships provided for by Coastal and Estuarine Land Protection Act. I am proud to be a sponsor of this bill, which will not only improve the quality of the coastal areas and marine life it supports, but also sustain surrounding communities and their way of life.

Mr. HOLLINGS

Mr. HOLLINGS. Mr. President, I wish to congratulate four Cheraw, SC, students who will be in Washington, DC tomorrow exhibiting their history projects as part of National History Day. These young historians were selected out of more than half a million from across America, and they are bringing with them months of research. They earned the trip by showing they are the best of the best, and our State and Nation are better off for their hard work. When young people, on their own, want to understand the fundamental principles and values of our democracy, they are more likely to vote. They are more likely to participate in public service. They are more likely to take seriously the civic commitment this nation needs in the new century. I wish the very best to Bryan Blair, whose exhibit is ``The Orangeburg Massacre: Revolution, Reaction, and Reform in South Carolina''; and to Meagan Linton, Mary Hudson, and Jordan Thomas, whose exhibit is: ``Tears of Sorrow or Tears of Joy: Reaction to the Assassination of Abraham Lincoln.''

Mr. HOLLINGS

Mr. HOLLINGS. Madam President, my colleagues who have heard me debate fast track trade negotiating authority in the last month may be surprised with what this senator from South Carolina is about to say. But I rise today wishing to scream my lungs out in favor of fast track that is the fast track of the University of South Carolina women's track and field team, who just won the NCAA title earlier this month. It only goes to show you that fast track is alive and well in my state, so long as it's the right fast track. I have followed Gamecock sports for more than seven decades. This day is particularly pleasing in that, as hard as this is to believe, it is the first time South Carolina was won a national championship ever, in any sport, women's or men's. I wish to congratulate the entire team of incredible athletes who worked hard all year to prepare for this. They won relays. They won individually. They set new records, piling up points with depth in several of the events. It was a real team effort, as it should be. I especially want to congratulate the Gamecock coach, Curtis Frye, who recruited all these talented women and turned the program into a true powerhouse. He was just named the women's track coach of the year, and us faithful will obviously expect him to win that title every year now. One last point, as the Gamecocks are showing their best ever performances on the field, they also are showing their best ever performances in the classroom. It is important that we have champions across the board, in academics and athletics, and I salute all University of South Carolina athletes who have improved their academic performance.

Mr. HOLLINGS

Mr. HOLLINGS. Mr. President, I want to pay tribute to an outstanding resident of South Carolina, Deborah A. Chambers. Ms. Chambers will soon complete her year as national president of the American Association of Nurse Anesthetists, AANA. I am pleased one of our state's own was tapped as the 2001-2002 president of this prestigious organization. The AANA represents 28,000 practicing Certified Registered Nurse Anesthetists. They administer more than 65 percent of the anesthetics given to patients each year in the United States. They provide anesthesia for all types of surgical cases and are the sole anesthesia provider in over two-thirds of rural hospitals. Debbie has been a nurse anesthetist since 1981. She received both her anesthesia training and master's degree at the Medical University of South Carolina, in Charleston. She has been a solo practitioner since 1993 at the Microsurgery Center in Anderson, as well as in both the Greenville Memorial Medical Center and the Saint Francis Bon Secours Hospital System in Greenville. She also was the Clinical Coordinator at the Medical University of South Carolina School of Nurse Anesthesia at Greenville Memorial Medical Center from 1988-2000. Even with her demanding schedule, she has continued to be active on pharmaceutical advisory panels to advance the practice of anesthesia. Debbie has held various leadership positions in the AANA, and has used her experience and knowledge to help others. I ask my colleagues to join me in saluting Deborah Chambers.

Mr. HOLLINGS

Mr. HOLLINGS. Congress designed the COPS program to meet the specific law enforcement needs of individual communities. This is true not only with the waiver of the local match, but in how communities can use COPS funding in general.

Mr. HOLLINGS. I would be happy to speak with my colleague from Louisiana on this important issue.

Mr. HOLLINGS. I certainly do agree. By giving the local jurisdiction ``buy-in'' to a grant, the local match adds an incentive for communities to use Federal funding effectively. A wide variety of grant programs have them. I also share in the Senator from Louisiana's concern that many of our communities may not be able to afford that match. Many grant programs provide waivers of the match in certain cases.

Mr. HOLLINGS. Yes. These funds will be administered in the same manner as other COPS grants funds regarding both the matching requirements and the waiver process.

Mr. HOLLINGS

Mr. HOLLINGS. Madam President, ``Argentina, a land that shopped itself to death.'' We have gone from the socialistic United Kingdom system of tax and spend and to the Argentina system of borrowing, spending and shopping to death. There it is. It is very interesting. When I talk of the financial dilemma we are in with a $400 billion trade deficit and we are going to run a nearly $400 billion fiscal deficit--I want to be here on September 30 and see where we are measuring up by September 30. We have an election in November. By October, we will have the figures. It will be nearly a $400 billion deficit. There isn't any question in my mind. So you have the fiscal weakness--the enfeeblement, more or less--of the economy on the one hand and the productivity on the other hand of not making anything anymore. I was very interested. That is why I brought this book to the Senate this morning. The favorite book in Washington today is Theodore Rex about Teddy Roosevelt. You will find the economic strength of the country on page 20. More than half of the world's cotton, corn, copper and oil flowed from the American cornucopia, and at least one-third of all the world's steel, iron, silver and gold. Can you imagine that? Here we just had to put in some restrictions on the import of steel. It is not more or less trade. It is more about McNamara and the World Bank. He went running around the world with the World Bank saying: Wait a minute. In order to become a nation state, you have to have the weapon of agriculture and the weapons of war. You have to have a 2-percent steel plant. I worked with a fellow named Willy Korpf when he brought to South Carolina, Beaumont, TX, down in Brazil, Saudi Arabia--he was building them in China a few years ago when he crashed in the Alps coming to his home. I dedicated his plant across the Rhine across from Strasbourg, France, and Kehl, Germany. But that 2-percent plant all around the world is an overproduction of steel. While they argue about steel--I have it in my backyard with NuCor, which doesn't have any legacy problems. It is the most productive steel plant in the entire world. Yet we are importing steel at less than cost on the dock right in front of the Customs house where I have my office in Charleston, SC, to furnish steel all over the Southeast from Brazil. That is the kind of situation we are in. After 100 years, Teddy Roosevelt--yes. Hamilton, Jefferson, Madison-- the Forefathers--were all protectionists. Here it is. They had it. This is what we have as a result of it. More than half the world's cotton, corn, copper, and oil flowed from the American cornucopia, and at least one third of all steel, iron, silver, and gold. . . . The excellence of her manufactured products guaranteed her dominance of world markets. Current advertisements in British magazines gave the impression that the typical Englishman woke to the ring of an Ingersoll alarm, shaved with a Gillette razor, combed his hair with Vaseline tonic, buttoned his Arrow shirt, hurried downstairs for Quaker Oats, California figs, and Maxwell House coffee, commuted in a Westinghouse tram (body by Fisher), rose to his office in an Otis elevator, and worked all day with his Waterman pen under the efficient glare of Edison lightbulbs. ``It only remains,'' one Fleet Street wag suggested, ``for [us] to take American coal to Newcastle.'' Behind the joke lay real concern: the United States was already supplying beer to Germany, pottery to Bohemia, and oranges to Valencia. We had a vote yesterday on a 50-percent tariff on importing oranges, and they are still bringing them in from Brazil. Further: As a result of this billowing surge in productivity, Wall Street was awash with foreign capital. Carnegie calculated that America could afford to buy the entire United Kingdom, and settle Britain's national debt in the bargain. For the first time in history, transatlantic money currents were thrusting more powerfully westward than east. Even the Bank of England had begun to borrow money on Wall Street. New York City seemed destined to replace London as the world's financial center. Wall Street is on its backside. Why? Because of the enfeeblement of the economy as we think of our strength. I emphasize that the security of the United States is like a three- legged stool. You have the one leg for the values as a nation, you have the second leg as the military strength, and your third leg as your economic strength. On values, we have the respect of the world for standing for individual freedom and democracy. There is no question whatsoever with respect to our military power. And with respect to our economic power, it has become fractured as a result of the conduct after World War II for the last 50 years, which worked. No one complains about the Marshall plan and the treating of foreign trade as foreign aid. But this is what has happened as a result. It has to stop. Two-thirds of the clothing we wear is imported; 88.5 percent of the shoes on the floor in the Senate are imported; over half of electric motors and portable electric hand tools; 71.8 percent of our aircraft engines and our gas turbines are imported; over a third of our motor vehicles are imported; over half of the office machines; 95.5 percent of consumer electronics--we hardly make those anymore--70 percent of the televisions; 86.7 percent of radio and television broadcasting equipment; over half of the photographic cameras, 80.8 percent; 82.8 percent of the luggage; 70.3 percent of the bicycles; and 84.8 percent of the toys. I hear constantly, ``high tech, high tech.'' Senator, you don't understand. We are going away from the smokestack industries and we are going high tech. Look here. Over half of the semiconductors are imported--we are not producing the semiconductors that we consume. We are importing the majority of what we consume, and the same thing is true with computers. We have a deficit in the balance of trade. I ask unanimous consent to have the list printed in the Record.

Mr. HOLLINGS. Madam President, you get an idea of America going out of business, but more than anything else, we ought to look at Saturday's business section of the Washington Post. In contrast to Teddy Roosevelt, and the beginning of the last century, let us define where we are today. An article is entitled ``Buying American? Maybe Not.'' I ask unanimous consent to have that printed in the Record.

Mr. HOLLINGS. Madam President, you can read there and see where they have not only cut $1.6 trillion from the revenues and wonder where the deficits come from, but they are insisting at this particular time to make permanent certain tax cuts, an additional $4 trillion. Of all things, our Commander in Chief, the President, says: And by the way, since we have a war on terrorism, we are going to have to run deficits. We have paid for every war that we have ever been in. I noted the other day, last Saturday: Sharon's Finance Ministry has revised the budget to deal with the slump and pay for the military effort, particularly the month-long offensive in the West Bank that ended last week. It includes raising by 1 percentage point the 17 percent value-added tax, levying higher taxes on diesel fuel and cigarettes and making cuts in the country's generous social welfare benefits. You don't find that back in the United States. Israel is serious about its war. But no. We continue with the economy. We think it is bouncing back because--why? It is not on account of production, and not on account of investment in the market today, but on account of ``Argentina, a land that shopped itself to death.'' I ask unanimous consent to have this printed in the Record.

Mr. HOLLINGS. Madam President, I will not read the entire article. It is very interesting. Let's imagine a typical American couple--we'll call them Bill and Betty Yankee--using a long weekend for an all- American vacation. Bill, an engineer at Niagara Mohawk Power Corp. in Upstate New York, and Betty, a clerk at Casual Corner, take their Jeep down to the Amoco station for a fill-up, pop a Dave Matthews album into the cassette player and head west. They drive all day, except for a quick lunch at Burger King, and stop for the night at a Holiday Inn outside Pittsburgh. In their room, Bill smokes a couple of Lucky Strikes and watches ``A Beautiful Mind'' on pay-per-view, while Betty curls up with a bottle of Snapple and the new Philip Roth novel she just received from the Literary Guild. The next day, they get some cash at a Mellon Bank ATM, fill the tank at a Shell station and drive all the way to Chicago. There they meet their daughter Barb, a copywriter at the Leo Burnett advertising agency, who proudly shows her parents the ad she has written for Taster's Choice coffee. Barb's husband, Bob, a reporter for the Chicago Sun-Times, is delighted with the Brooks Brothers necktie his in-laws brought him. It all sounds thoroughly American. However, just about every product and service that the Yankee family bought or used on this trip came from European-owned companies. The family Jeep is made by Germany's DaimlerChrysler. The Amoco station belongs to the British oil company BP and the Shell station to Royal Dutch Shell, an Anglo-Dutch combination. Burger King is owned by Britain's beverage giant Diageo, Holiday Inn by the big British hotel firm Six Continents. Mellon Bank is a subsidiary of the Royal Bank of Scotland. The Oscar- winning movie ``A Beautiful Mind'' was released by Universal Studios, a subsidiary of the French media colossus Vivendi Universal, which is also a major operator of pay-per- view television in the United States. Philip Roth's publisher, Houghton Mifflin, is another Vivendi subsidiary. The Literary Guild is part of the global empire of the German publishing giant Bertelsmann. Lucky Strikes are made by London-based British American Tobacco. Snapple is owned by Britain's Cadbury Schweppes. Taster's Choice coffee belongs to Nestle SA of Switzerland. It's fitting, in a way, that the Yankee family is constantly buying from European companies, because all four of the Yankees--like millions of other Americans today--are employed by European-owned firms. Niagara Mohawk is one of several American power utilities owned by Britain's National Grid. Both Brooks Brothers and the 1,000-store Casual Corner chain are part of an Italian conglomerate, Retail Brand Alliance. The Leo Burnett agency belongs to a French group, Publicis. Even a product as localized as the Chicago Sun- Times is owned by a company that is owned by the London media magnate Conrad Black. The entire article is in the Record. It is just ludicrous when you hear this talk about free trade, free trade, and global competition. I don't want to sound like Al Gore, but I know a little bit about global trade. I didn't invent it. But 40 years ago, as a Governor, I went to both Latin America and to Europe to seek industry, and today we have 125 German industries in South Carolina. I have not had much luck recently on carpetbagging New York, but I used to go up there regularly and move everything I could find up there down to South Carolina. But the opportunities now are in Europe and out in the Pacific rim. I called on Michelin exactly 40 years ago--well, 42, I guess--in late May or June of 1960. We have four Michelin French plants, their North American headquarters. So don't lecture us, who have lost 53,900 textile jobs, about globalization. The fact is, there is no such thing as free trade. Never has been. Never will be. In the earliest days----

Mr. HOLLINGS. Madam President, they have talked about surpluses, surpluses, surpluses. You will find in Time magazine this week, up on the right-hand side--I don't have my copy--where the deficit for 2001 was in excess of $500 billion. Let me repeat that. Look in Time magazine. We were talking about surpluses when we were cutting taxes last year. Time magazine alone reported, rather than a surplus we were running these horrendous deficits. Of course, the fiscal year has just begun. We have yet to distribute a lot of the emergency money. For example, I have been trying like the dickens to get the rail security money to start working on the tunnels going into New York. The money has been appropriated and voted during the emergency, but we are not really serious. We are not really serious about the so-called terrorism war. Here we are already running a $212 billion deficit and the increase to the debt already this fiscal year was right at almost $100 billion spent from Social Security trust funds. They are talking about how we could get into it, but this record that I am introducing is very significant because of what I pointed out. Let me have printed in the Record an article by Paul Krugman, ``The Great Evasion; Where Have All The Taxes Gone?'' I ask unanimous consent it be printed in the Record.

Mr. HOLLINGS. I am going to get through my thoughts here, and then I will be glad to yield. But I do not have it on the record, and I want to put this particular subject on the record as I see it and can remember it.

Mr. HOLLINGS. Madam President, I am indebted to the leadership for, last evening, late in the hour, having called up my amendment in the second degree, I think, to the Byrd amendment. What is the pending question before the Senate?

Mr. HOLLINGS. I thank the distinguished Chair. Madam President, I am still smiling because I was coming onto the elevator with some books, and the elevator operator said: My Lord, are you going to preach? I wish I had the talent to preach on this particular score because the real problem confronting our country is economic strength. There is no question in my mind that fast track is about the worst thing that we could possibly adopt. I have yet had the time to really get into a debate. I would not preach, but I would be delighted to get into a debate with respect to, actually, the need for a competitive trade policy, for the rebuilding of our economic strength, and the rebuilding of our manufacturing capacity. Somehow or other we have lost sight of the greatness of America. We think it is the 6th Fleet and the atom bomb. They do not count anymore in the halls of international and global relations and foreign diplomacy. What counts now is economic strength, that is the real battle and war we are in. They say: You are going to start a war. We have been in a very viable, competitive, reciprocal free trade, competitive free trade of which Cordell Hull spoke. What comes to mind, I was at a conference up in Chicago some years ago with Akio Morita, the chairman of the board of Sony. He was speaking about the Third World, the emerging nations. This is some years back. He was counseling the Third World countries that they had to develop a strong manufacturing sector in order to become a nation- state. He was talking along, and then he pointed at me, and then he said: By the way, Senator, the world power that loses its manufacturing capacity will cease to be a world power. That is what is on my mind this morning. It is not just manufacturing but, of course, our financial dilemma. There is no question in my mind that we have developed, not a tax-and-spend, but a borrow-and-spend society. I ask unanimous consent that the debt to the penny be printed in the Record.

Mr. HOLLINGS. Very good. I thank the distinguished Senator. Mr. President, what happened was, in our earliest days we had just won our freedom when the David Ricardo comparative advantage crowd in the mother country, Britain, corresponded with Alexander Hamilton and said: Now what you ought to do is trade with us what you produce best, and we will trade back with you what we produce best--free trade, free trade, Adam Smith, market forces, and everything else of that kind. Alexander Hamilton wrote a report on manufacturers. I have a copy of it now. There is one original copy over in the Library of Congress. But in a line, he told the Brits: Bug off. We are not going to remain your colony, importing all the manufactured goods and exporting to you our rice, our cotton, our indigo, our lumber, timber, and iron ore, and so forth. The second bill that passed this Congress in its history--the first bill being for the Seal of the United States--the second bill in the history of the Congress, that passed on July 4, 1789, was protectionism, a tariff bill of 50 percent on 60 articles. Protectionism was supported throughout the building of America during the 1800s--Lincoln with steel protectionism; protectionist Roosevelt with agricultural support prices, protective quotas and import quotas; Eisenhower in the middle 1950s with oil import quotas, protectionist Eisenhower. Those who built protected. After all, that is the oath we take, to preserve and protect. We have the FBI to protect us from enemies within, the Army to protect us from enemies without, Social Security to protect us from the ravages of old age, Medicare to protect us from ill health; the clean air, clean water--we have safety rules and everything. The fundamental job of Government is protection. Here we have the highest standard of living. All these Senators run around on the floor, they want the environment, they want safety, they want parental leave, and they want plant closing notice. Fine. We have them all on the books. But you can go down to Mexico for 58 cents an hour and none of that. And if your competition goes, you are going to have to leave. And that is what has been happening. But you have these folks on the floor of the Senate who are determined to wreck the economy. There never has been any such thing as free trade, and never will be. Almost like world peace: you strive for it. You strive for it, and it will not happen in my lifetime or your lifetime. More than anything else, all you have to do is just look at the books published by none other than the Office of the U.S. Trade Representative--``Foreign Trade Barriers.'' This one in 1992 had 267 pages. They are talking about, oh, the wonderful success of fast track, fast track; we are going to really bring down trade barriers, increase jobs. This one is for 2002: ``National Trade Estimate Report of Foreign Trade Barriers.'' This has gone up to 458 pages. It has gone up 200 pages. They are increasing the barriers. They are competing. Reciprocal free trade, reciprocal free trade, said Cordell Hull, to compete. So what happens is, we have the competition of the countries themselves. Let me explain just what all they do. They begin with import licensing. We do not have that. You have a tough time getting an import license into Japan or even into China or Korea. If you want to import textiles into Korea, you have to have a vote of the Korean textile authority. The ones over there with whom you are competing vote you out. You never get in. In banking, they talk about free trade, free trade. The day before yesterday, the Japanese lowered the yen. That is market manipulation. So with a lower yen, they can increase their exports. That is not free trade, free market, free market, free trade. They have inspection practices. Let's put it this way. If you want a 2002 Toyota in France, it is on the dock in Le Havre being inspected, and by January 1, 2003, you can get last year's model, 2002. The same with the CDs and VCRs, they put them up at a place in France. They have all of these inspection practices. They are all tricks of the trade. We just had a hearing on Enron. The lawyer had a memo there about all the tricks of the trade. They have such things as different snow when you go to sell ski equipment in Japan. And I have a paper company, West Virginia Pulp and Paper. They tried to emulate and mimic and produce cigarette paper. They worked on it for 2 years, got the exact duplicate of it and everything over there, and they still wouldn't let them bring that cigarette paper in. They said it was still different. What you have in essence is the fundamental practice. That is what has to be emphasized as I try to explain this. We operate in the free market, capitalistic market in the United States on price and quality. Not so in global competition. They couldn't care less about price. They try for a good price and try for quality, but it is below price, below the production cost. That Lexus I have that costs $35,000 in Charleston, SC, costs $45,000 to $50,000 in downtown Tokyo. All of the prices are less than cost. Can you understand why they fought so vigorously the idea of doing away with our dumping laws? We can easily prove they are selling as loss leaders. They are selling at less than cost in the United States of America, but that is the name of the game. As I said, the Japanese have already taken over a third of the automobile market, already a majority of the semiconductor, and a majority of the computer market. You can go right on down the list. Once they get market share, they will run the prices up. The competition is not with respect to productivity. We are constantly chastising the workers of the United States. You go to the Bureau of Labor Statistics or the economic section of the United Nations; they both agree that the most productive industrial worker in the world is the U.S. industrial worker. There is no question about their producing, but we are not in the competition. We are talking about quality and productivity. They are talking about dumping. That is why they fought right here to a tie vote with respect to trying to get that amendment. That is why the U.S. Trade Representative went to Doha and said: Don't worry about it. We will have a good conference because we are going to get rid of the dumping laws. That is exactly what they are saying. Now they have fast track, and they are ready to do it. They can get rid of the dumping laws. This is a fix on that. More than anything else, you have to understand the competition. The competition isn't with respect just to market share and countries. On the contrary, we have met the enemy, and it is us. I will never forget my good friend Bobby Kennedy who used to have this desk. He came into the limelight in America with a book called ``The Enemy Within.'' He was talking about Hoffa and organized labor. I can write that same book, ``The Enemy Within,'' about management. It is corporate executive America. They couldn't care less about it. I hope I can get an article here by Henry Kauffman. I had the article, but I don't know that I brought that over this morning because I didn't realize I was going to have this opportunity. He said way back that people in the olden days when you owned the horse, you were supposed to feed the horse while it was alive, and if the horse was dead, the owner was responsible to bury the horse. That is not the case with corporate executive America today. They just pass through, sometimes hostile takeovers and everything else of that kind. They are trying to get the stock up over a 3-year period, give them a golden parachute, and move on. They don't feel the obligation to stay. So what happens is, they have learned on the one hand that they can save tremendous money in cost with respect to producing offshore. Thirty percent of volume or sales is in your labor cost and manufacturing. And you can save as much as 20 percent of your sales cost by moving to an offshore low-wage country or down to Mexico. If you retain your executive office and your sales force but move your manufacturer offshore to a low-wage country, what you do is, if you have $500 million in sales, you can make $100 million before taxes or you can continue to work your own people and go broke. That is the job policy of corporate America, adopted in fast track by the Senate. That is what I am trying to bring home to those who are not thinking, including my farmer friends. Yes, I listed the different industrial articles. We have a deficit in the balance of trade in cotton. You can go right on down the agricultural commodities. Let China keep coming, and in 3 or 4 years we will have a deficit in the balance of trade in wheat. We have competition in durum wheat. That is why we have one friend here from North Dakota. But there is no question in my mind that what we have is just that, the enemy within. What do they do? They band together not to build, as we are responsible to build this country in the Senate, not to create jobs, as our primary responsibility to keep America economically strong and create jobs and job opportunities, but theirs is to export the jobs as fast as they can. They band together with the Business Roundtable, the National Association of Manufacturers, the conference board, but more particularly, the Chamber of Commerce. I saw that change come about with Tom Donahue when we went over there. That National Chamber of Commerce couldn't care less about main street America. They have no idea of creating jobs or opportunity or representing main street America. I could tell you now, I was in this before. I will never forget--I might as well identify myself as not antilabor, but certainly I am not ready to vote just labor's way. I am from a right-to-work State. I voted for that law. And more particularly, when we had a debate when Russell Long was chairman of the Finance Committee, I was the fellow who blocked labor law reform on eight occasions. We had eight votes up and down on cloture. I won on all eight votes. In years passed, I have received honors from the Chamber of Commerce. So I know from whence I come and speak. We have developed more industry than that Donahue. He came from a trucking outfit. They put him on a few boards. He has picked up here on trial lawyers and everything else like that. But what we have confronting us in the Senate is not weapons of mass destruction and Saddam. We have the U.S. Chamber of Commerce and weapons of class destruction. The greatness of America is when Henry Ford said: Look, I want that fellow who is producing the automobile to be able to buy it. He started Middle America, the industrial wage. They had benefits and health care and everything else of that kind. These are the jobs we are losing hand over fist. The first thing we brought out on debate on so-called free trade-- they would not even admit it from the Finance Committee--is not how we were going to create jobs. First, they added how are we going to take care of those who lost the jobs--"adjustment assistance,'' they call it. So we are not producing, and we are into a situation where you have limited time. I understand the time will run out this afternoon around 4 o'clock. They worked it into this particular situation. Yes, everybody wants to go home for the Memorial Day break. They always do it. When we adjourned before with GATT in November, we were going home for Thanksgiving. They always find a holiday and work it up and fix the vote. I ask unanimous consent to have printed in the Record at this particular point the article in the Washington Post, dated December 26, 1993.

Mr. HOLLINGS. Mr. President, you can find out that they gave a cultural center; President Clinton gave golf games; they gave--and this is all for NAFTA. That particular article was dated 1993. Anyway, it talks about how they fixed fast track and changed the votes on the House side. They do the same thing within the Finance Committee. You don't have any debate. Without fixing the votes, they cannot get cloture--they impress cloture upon you, I should say. You don't get time for debate. So what we have now is the executives, finally, not only moving their manufacturing, they are moving their executive offices to Bermuda. I don't think this amendment is up, but I had one with respect to the textiles. I wanted to try to compensate those who, in the last 3 years--1999, 2000, 2001--have lost their jobs, some 334,000. The cost of the amendment itself is about a billion dollars. We are trying to get them health care so they can continue and get some kind of training and adjustment assistance, having lost their jobs. We were told in NAFTA we were going to create jobs, and we lost 53,900 jobs. But not only are we losing the jobs, but they have the unmitigated gall--corporate America--to move offshore and not pay any taxes. They want that mother and father of that 18-year-old we recently lost in Afghanistan--they want that mama and daddy, who are working, to pay taxes. You can tell this society is on a binge. The President ran adds for 3 minutes, saying: Take your trips, go to Disney World, go and take a trip--and everything else like that. They don't want to pay for the war. Now we have corporate America AWOL from the terrorism war. They are all going overseas, down to Grenada, and over to Bermuda and everywhere else so they won't pay taxes. Never mind about leveling the playing field. You could not blame the other countries that don't have this high standard of living. Any one of the countries--in China, they are building their industrial capacity just right. Over in China, they say, look, in order to sell, you have to produce that Buick car. Wait a minute, they say after that, you have to move your research here. The most modern automobile research is in China. Of course, they have the outstanding engineers at a next-to-nothing cost. So now--I don't have the article here--they are moving Japan's futuristic research, cutting edge research, into China. So what you have is the competition of 1.3 billion producers in agriculture and industry, and we are hollering ``fast track, fast track,'' and we have to aid somebody. We have run out of gas, as I pointed out. Level the playing field? You cannot do it Washington's way, Mr. President. They tell me: Senator, don't worry about it, we have to retrain, re- educate. I will give you an example. Oneida, in South Carolina, makes clothes. They have 487 workers. The average age of those 487 workers was 47. So we will do it Washington's way and we will train those 487 workers, and tomorrow morning they are computer operators, expert computer operators. Mr. President, are you going to hire the 47-year- old computer operator or the 21-year-old? You are not going to take on the health costs of the 47-year-old. You are not going to take on the retirement costs of a 47-year-old. You are going to be hiring the 21- year-olds. When they have lost their jobs, they quit making payments on the automobile, and they quit making payments on their house. Some of them have lost their houses and everything else like that, with 53,900 in South Carolina alone, and 700,000 in the country. These are just the ones in the last couple of years we are trying to get at, as we did with the steelworkers, and we got a majority vote on that. That is what I had lined up. I was going to pay for it by closing the Bermuda tax loophole. It is a national disgrace. They talk about when they have an intelligence breach--and I never accused the President of knowing anything. I don't think it was passed on. That is obvious from what I am reading. There isn't any question that the fellow up in Minnesota wrote a memo--read Time magazine this week--a detailed memo on how they might fly into the World Trade Towers. I don't know why they keep getting the fellow from Phoenix, AZ. Get the one from Minnesota. He said they might fly into the World Trade Towers. Seaport security has languished in the House since before Christmas. Rail security has languished at the desk since before Christmas. They are not about to pay the bills or put on any taxes to pay for this war. They want another $4 trillion tax cut. This is one of those situations where we need just as much help. I wish I had the Senator from Maryland, Senator Mikulski, here to talk about building and fighting the war and everything else. I never heard anything more eloquent on behalf of the steelworkers. I support her. She is magnificent. I wish I had her here to describe the plight of these textile workers. They are just as important to our security. I will emphasize this: In 1961--and it is still on the books today-- there was a national security provision preventing the President from taking Executive action in trade, unless he proved first that the item in question was important to our national security. I went at that time to hearings, along with George Ball from the State Department, Freeman of the Department of Agriculture, Secretary of Labor Arthur Goldberg, Secretary of Commerce Luther Hodges, and we had Secretary of the Treasury Douglas Dillon. We had the hearings, and it is on the books of the United States of America that, next to steel, textiles is the second most important to our national security. So we are not just talking about a cheap price. America wasn't built on consumerism; America was built on building and creating jobs. For 100-some years, in Teddy Roosevelt's time when we had a strong America, we didn't even have the income tax. The tariffs and protectionism built this country, and under Eisenhower, Roosevelt, and other distinguished Presidents, we continued to build. This crowd has nothing but boast politics. They couldn't care less. Fast track--we will just vote it. The excuse will be I had to do it. It was either take it or leave it. It ought to be a shame to vote against the Constitution. Article I, section 8, not the President, not the U.S. Trade Representative, but the Congress of the United States shall regulate foreign commerce. Here I am begging to perform my own responsibility, and the vote is: You do not have the responsibility; we are going to do it, and you have to take it or leave it, up or down; you are not going to be in charge-- fast track. Mr. President, I reserve the remainder of my time. I yield the floor.

Mr. HOLLINGS

Mr. HOLLINGS. Madam President, I ask unanimous consent the order for the quorum call be dispensed with. The PRESIDING OFFICER. Without objection, it is so ordered.

Mr. HOLLINGS

Mr. HOLLINGS. Mr. President, when I was chairman of the Senate Budget Committee I worked closely with Henry Kaufman, who has, in my judgment, the most respected opinion on the economy. We can all benefit from his views, and I encourage my colleagues to read this speech that he gave last month to the Boston Economic Club, entitled ``The Fallout from Enron: Lessons and Consequences.'' I ask that the speech be printed in the Record. The speech follows. The Fallout From Enron: Lessons and Consequences--An Address by Henry Kaufman, President, Henry Kaufman & Co., Inc. to the Boston Economic Club, April 3, 2002 Today I would like to talk about an event that has rocked the financial community: the collapse of the Enron Corporation. Much has been said and written about Enron in recent weeks, but it seems to me that too little attention has been paid to either the underlying issues posed by the demise of the Enron Corporation, or to the likely consequences of this failure for financial markets. Not very long ago, Enron was widely heralded in the business and financial community for its spectacular growth, its innovative achievements, and its future potential. All of that changed suddenly and dramatically late last year. Since then, many pundits have pointed the finger of blame at Arthur Andersen. But it would be wrong to conclude that Enron's failure stemmed chiefly from the accounting shortcomings of its outside auditors. To be sure, Andersen probably was derelict in carrying out its responsibilities. No accounting firm should have the kind of intimate and conflicting relationship that Andersen had with Enron. Auditing and concurrent consulting arrangements with clients just don't mix, for they pose very real conflicts of interest that compromise objectivity and independence. Even so, I am not convinced that a complete dismantling of Arthur Andersen would serve the larger interests of all stakeholders. To be sure, any senior officers and managers at Andersen found to have compromised sound accounting standards should be fired. But from a social perspective the thousands of Andersen employees who were innocent of high-level misdeeds do not deserve to be displaced. The issue here is even more complicated. On the one hand, dismantling Andersen would push forward by a giant step the concentration in the accounting business that already is quite high. On the other hand, no business organization should be considered to be too-big-to-fail. Otherwise, competition, which should be the market equalizer, will be distorted. In addition to these considerations is the fact that focusing on Andersen simply deflects the spotlight away from the misdeeds of Enron itself. It offers Enron's officials and all the others involved in the Enron relationship, from the private sector to people in government, a convenient scapegoat, and increases the likelihood that we will fail to learn important lessons form the energy trader's debacle. That would be very unfortunate. The failure of Enron is a drama with many dimensions. It encapsulates a remarkable number of the kind of misbehaviors, shortcomings, and excesses that have plagued business and financial life in the last few decades. Even if we look back over financial crises in the half-century since World War II, it is difficult to find one with as many salient elements as the Enron failure. Consider, for example, the volatile decade of the 1970s. The calamities began in 1970, with the staggering collapse of the Penn Central Railroad. The Pennsy was derailed by its excessive short-term borrowing, mainly in the form of commercial paper, supported by weak earnings. Later on, the Hunt brothers succeeded in cornering the silver market, but financed their manipulations with heavy short-term borrowings. Many of their lenders used silver as collateral, which led to a massive sell-off in the silver market when the hunts exhausted their borrowing capacity. Then there were the oil crises of the 1970s, which set off a crippling around of defaults among key Latin American nations that had borrowed heavily from large money market banks. Because these banks had failed to exercise prudent credit judgment, the financial pressure of the oil shocks plunged debtors and creditors alike into serious trouble. The 1980s had its share of financial excesses. The decade's economic boom had been fed in large measure by the liberal lending policies of banks--especially savings and loan associations--and by the massive leveraging of many corporations through junk bond financing. These financial splurges later made it initially difficult to jumpstart the economic recovery in the early 1990s. As for the 1990s: the serious financial strains in Mexico and in several Asian countries, as well as the recent debt default of Argentina--all remain fresh in our memories. Then, as the decade drew to a close, the financial world was rocked by a financial debacle that threatened the very viability of key money market institutions. I am referring here, of course, to the dramatic fall of Long Term Capital Management in late 1998. Enron's collapse, however, did not pose a systemic risk to the financial system the way LTCM's failure did, although some of Enron's senior managers and creditors have suggested as much during their negotiations with government officials. To their credit, regulators and central bankers did not step in to rescue the faltering energy giant from its own misdeeds. Which brings us back to the lessons to be derived from the Enron case. It seems to me that Enron--by bringing together a range of issues and problems that have plagued the U.S. financial system for decades--raises a host of questions that we simply must address: How effectively do boards of directors discharge their responsibilities? What are the inadequacies of senior managers? Are lenders conducting effective due diligence? Are sell-side analysts objective in their analysis, or are they compromised? Should employees be permitted to invest a high portion of their pensions in the equity of the corporations that employ them? Is official oversight adequate? Can elected officials be objective in dealing with financial excesses given that they may be conflicted by contributions? Should the public accounting firm serve a client a both an auditor and a consultant? These vexing questions lie at the heart of the Enron debacle. To a large extent, they point to a fundamental problem that has been festering for some time, namely, the separation of corporate ownership and control. This problem has become more acute in recent decades because of structural changes in finance and investments. But this issue hardly is new. In fact, it is a symptom of advanced industrial capitalism, in which firms become too large to be owned and managed by individuals or even wealthy families. One of the most penetrating critiques of the concentration of corporate control appeared back in 1932, when Adolf Berle, a law professor and reformer, and economist Gardiner Means published their landmark book, The Modern Corporation and Private Property. As Berle and Means noted vividly: ``It has often been said that the owner of a horse is responsible. If the horse lives he must feed it. If the horse dies he must bury it. No such responsibility attaches to a share of stock. The owner is practically powerless through his own efforts to affect the underlying property. The spiritual values that formerly went with ownership have been separated from it. . . . [T]he responsibility and the substance which have been an integral part of ownership in the past are being transferred to a separate group in whose hands lies control.'' In the financial markets of the last few decades, this problem has become more acute with the rise of hostile takovers, leveraged buyouts, golden parachutes, green mail, and many other financial innovations that are associated with corporate control. Many corporate raiders have become instant celebrities. At the same time, there have been some significant changes in the role that senior managers play within the corporation. In recent years, many are given incentives that encourage them to strive to achieve near-term objectives through a variety of compensation schemes. Rarely is management actually penalized for failing to achieve their objectives. Their cash bonuses may be reduced, but they still are entitled to stock options. If the price of the company's stock is down, many firms in the past lowered the exercise price of the outstanding options. More recently, many corporations simply issue more options at the lower prevailing price level. The gatekeepers for many of the compensation awards are outside consultants who rarely exercise strong control over the compensation process. Very often they merely codify what others are doing in the industry. For their part, equity investors rarely are involved in the affairs of a corporation. Indeed, portfolio practices today have a short-term fuse. Portfolio performance is measured over very short-term horizons--monthly, quarterly, or at most yearly. Underperformance is penalized very quickly. Today, day trades and portfolio shifts based on the price momentum of the stock are commonplace. Institutional investors now hold a majority of outstanding stocks, but they rarely want to be involved in their portfolio companies. Instead, a novel but powerful alliance often exists between the highest bidder in a corporate takeover and many of its institutional shareholders. Thus, stockholders are largely temporarily holders of a certificate that legally is called ``equity.'' This is clearly demonstrated by the huge increase in the turnover of the stocks listed on the New York Stock Exchange. As shown in the accompanying Figure 1, the turnover of these stocks has escalated sharply over the last forty years--from an average of 20% from 1960 to 1980, to 75% times in the 1990s, with last year's average reaching 94%. Only a few large investors, such as Warren Buffett, truly are involved as stockholders. In today's financial marketplace, they are a rare breed. Because corporate control typically rests in the hands of senior managers, they and directors assume responsibilities that are difficult to fill in the current structure of the marketplace. Let me try to explain what I mean here by referring to the management of large financial institutions, where I spent a good part of my career. And much of what I have to say in this regard is applicable to the problems of Enron. I first realized the enormity of the challenge of managing large financial institutions when I joined Salomon's board following our merger with Phibro in 1981. The outside members of the board brought diverse business backgrounds to the table. With the exception of Maurice ``Hank'' Greenberg, none had strong first-hand experience in a major financial institution. How, then, could they possibly understand, among other things: the magnitude of risk taking at Salomon, the dynamics of the matched book of securities lending, the true extent to which the firm was leveraging its capital, the credit risk in a large heterogeneous book of assets, the effectiveness of operating management in enforcing trading disciplines, or the amount of capital that was allocated to the various activities of the firm and the rates of return on this capital on a risk-adjusted basis? Compounding the problem, the formal reports prepared for the board were neither comprehensive enough nor detailed enough to educate the outside directors about the diversity and complexity of our operations. Today, this problem is magnified as firms extend their global reach and their portfolio of activities. In recent years, quite a few major U.S. financial institutions have become truly international in scope. They underwrite, trade currencies, stocks, and bonds, and manage the portfolios and securities of industrial corporations and emerging nations. Some of the largest institutions contain in their holding company structures not only banks but also mutual funds, insurance companies, securities firms, finance companies, and real estate affiliates. The outside directors on the boards of such firms are at a major disadvantage when trying to assess the institution's performance. They must rely heavily on the veracity and competency of senior managers, who in turn are responsible for overseeing a dazzling array of intricate risks undertaken by specialized, lower-level personnel working throughout the firm's wide-flung units. Indeed the senior managers of large institutions are beholden to the veracity of middle managers, who themselves are highly motivated to take risks through a variety of profit compensation formulas. It is easy for gaps in management control to open up between these two groups. Unfortunately, the accounting profession has been of little help to outside board members. Few audit reports truly reflect a firm's range of risk taking. Reports on assets and liabilities would be far more meaningful if they were shown in gross terms instead of net figures. The off-balance-sheet activities most often cited in footnotes should be integrated into reports to reveal the total flow of activities and liabilities. Unfortunately, when the FASB proposes conservative accounting rules, operating managers generally oppose them. This is because such rules tend to reduce stated profits and encourage conservative lending and investing policies, thus infringing on the stated profits. But managers should recognize that such rules, over the long run, will strengthen their institution's credit quality. What often is missing for new directors is an intensive orientation program. Large financial institutions are very complex. As I noted earlier, they engage in a wide range of activities--traditional banking, underwriting and trading of securities, insurance, risk arbitrage, financial derivatives from the simple to the complex, and domestic and foreign transactions. The new directors should be given a detailed analysis of the institution's accounting procedures. They should be educated about exactly the kind of activities that Enron directors failed to appreciate: (1) transactions with affiliated companies, (2) transfer of assets/debts to special-purpose entities in order to achieve ``off balance sheet'' treatment; (3) related-party and insider transactions; (4) aggressive use of restructuring changes and acquisition reserves; and (5) aggressive derivative trading and use of exotic derivatives; and (6) aggressive revenue recognition policies. Directors of financial institutions also should be familiarized with their institution's quantitative risk analysis techniques. Indeed, the risk analysis group should be independent of the trading and underwriting department. It should be well compensated and have reporting responsibilities to the chief executive, to the chief operating officer, and to the board of directors itself. As part of the orientation process, new directors should be required to meet with members of the official supervisory agencies such as the Federal Reserve, the Comptroller of the Currency, and the Securities and Exchange Commission, all whom should explain what these agencies require from the institution. Legal counsel should also meet with new directors to explain their responsibilities and liabilities from a legal perspective. But this kind of orientation process alone is not enough to achieve effective board oversight. Board meetings should be allotted more time. Directors should be given more detailed information than highly sanitized and summarized financial information. Board expertise in accounting, quantitative risk analysis, and information technology will become more and more essential in our complex world of finance. To be sure, the primary task of boards is to define strategy and set policy, to represent the interests of the shareholders and creditors, not to operate the institution. But unless boards devote enough time to handle their responsibilities, the financial industry will suffer even more upheavals, forcing government to step in to clean up messes--and, increasingly, to regulate and control. I want to turn now to the question, ``Can sell-side research be objective?'' As many of you here know, when I was at Salomon I managed for many years a large research group that grew to more than 450 professionals by the time I left in 1988. In formulating my own forecasts over those many years, I was never urged to modify my views to confirm with the immediate underwriting or trading activities of the firm, and I know of no researcher in my department who was coerced to change his analytical conclusion. To be sure, there were occasional complaints from trading and underwriting desks because of one or another view I expressed publicly (usually in written form); but as head of research, I was in a unique position to fend off any criticism. I was a senior partner and a member of the firm's Executive Committee, where no member ever asked that research accommodate the underwriting or trading activity. In recent decades, however, the objectivity of sell-side research has been compromised more and more. One obvious result is that it is hard to find negative reports these days. Few, for instance, warned of the speculative bubble in the high tech industry. Many analysts wrote glowingly about companies with no earnings, high cash burn rates, and shares selling at high prices relative to sales volume and distant profit prospects. In place of rigorous analyses of firms and industries, one usually saw reports that parroted the views of corporate management and that of historical evaluation norms. And the scope of the problem is vast. Public attention is most focused on the role that sell-side analysts play in attracting new issues of securities. But very few, if any, seem concerned about the potential for the sell-side institution to front-run trading positions on the basis of soon-to-be-released research reports. The fact is, traders typically have many opportunities in their conversations with equity analysts to ferret out a change in the analyst's view or to learn of the timing of upcoming press releases. I believe that these problems facing the sell-side analyst can at best be mitigated. To begin with, my experience strongly suggests that the head of research should be a member of senior management. This would establish his authority to deal with research issues at the highest level. Of course, I agree with the suggestion that the relationship of the sell-side institution with the company being analyzed should be stated in the report in bold letters. But it would also be helpful if the analyst stated the performance of the company and the price movement of the stock since the last report, and drew explicit conclusions. The logical solution to this conflict is for sell-side institutions to provide no research reports to clients. Research would serve only an in-house function by providing analyses that would help the institution assess the merits of the securities it is underwriting and trading. Institutional investors and independent research firms would then fill the gap. This method presumably would lower the cost of research at sell-side firms, which in turn would lower trading and underwriting costs and offset a healthy portion of the increased research costs on the buy side. Let me also comment briefly on another matter raised by the Enron debacle. Should employees be required to limit their employee retirement investments in the stock of their company? Considering the losses suffered by the Enron employees, the tendency is to respond positively. There is, however, no simple quantitative rule that will be an equitable solution for all employees. They possess vast differences in ages, compensations, personal responsibilities, health, and person net worth. What government regulation can do justice to all of these factors? The alternative solution is for the employer to provide investment counseling where these characteristics are reviewed and discussed before the employee decides on the size of the investment to be made in the shares of the corporation. While many of the consequences of the Enron's demise already are manifest in the market, it seems to me that the most important one is really unpredictable. This is whether more ``Enrons'' will surface in the near future. If they do, market participants will pull away from equity markets and high yield bonds, because new doubts will be raised about the quality of earnings and the accuracy of other reported financial information. But already we can see other repercussions from Enron's fall quite clearly. In the securities industry, merger activity has slowed and--by the standards of recent years-- will remain at a low volume for the foreseeable future. No conglomerate that is on the brink of going below a credit rating of ``below investment trade'' will be able to gain ready access to funds for sometime to come. And while initial public offerings of stock are trickling into the market again, I think we have seen the end of the kind of huge speculative offerings that have been fairly common in recent years. Meanwhile, financial institutions, with lower near- term profit margins, will be encouraged to shed more overhead. Research analysts will be particularly vulnerable if institutions cannot use them to help market new issues and trading positions. For business corporations, financing costs are rising. This began last year when corporations issued a huge volume of bonds and reduced short-term debt, mainly outstanding commercial paper. In doing so, they paid off lower-cost debt and increased higher-cost debt. The financial problems of Enron and of a handful of other companies late last year has inspired commercial paper investors to become more discerning, thereby forcing corporate issuers to activate bank lines or new bond issuance to pay off maturing paper. The paper market is now virtually closed to all issuers below the top credit rating. The liquidation of outstanding commercial paper held by nonfinancial corporations has taken place on an unprecedented scale (see Figure 2). Since 2000, it has declined by $175 billion, or a remarkable 49%. This trend has reduced commercial paper to levels that were outstanding in 1997. Moreover, this $175 billion shift in borrowing probably has boosted corporate financing costs by anywhere from $6 billion to $8 billion. Financing costs probably also will rise, as banks raise their fees for back-up lines of credit, although these lines have an uncertain value. On the one hand, they do provide liquidity for the corporate issuer of paper when investors want their money. On the other hand, the runoff of paper tends to accelerate when market participants become aware of the utilization of the bank line. While creditors generally will increase their alertness to corporate credit quality as a result of Enron, credit rating agencies surely will intensify the scope of their work and the speed of their responsiveness to changing corporate credit conditions. Already, we hear of the likely issuance of corporate liquidity ratings by the ratings agencies. This closer scrutiny will occur on top of another year in which more corporate credit ratings will be lowered rather than raised. Yet another likely outcome from the Enron Episode is improved accounting standards. This will lower reported corporate profits in the short term, but the more conservative profit data will enhance investor confidence in the long run. Let us also hope that there may be an effort to put some of the off-balance-sheet financing onto the balance sheet. If so, the corporate debt data that I spoke about earlier will look worse--but again, the long-term effect for investors will be positive. Incidentally, two other costs not related to financing costs are likely to rise as a consequence of Enron's travails. These are audit fees and the cost of liability insurance for directors and officers. Of course, all of these costs could be more than offset through a sharp increase in corporate profits. I suspect that this is unlikely. Business does not have pricing power. Excess capacity is high here and around the world. Unfortunately, Enron unraveled at a time when the general financial condition of nonfinancial corporations was probably the worst--for the end of a recession and the start of a new economic recovery--for the entire post-World War II period. From 1995 to 2001, the equity position (retained earnings plus new issuance or minus retirement of stock) of non- financial corporations has contracted by $423 billion, while net debt has increased by $2.3 trillion in the same period. Indeed, this exceeded the debt-leveraging binge in the 1984- 90 period when net equity contracted by $457 billion and debt rose by $1.3 trillion. Due to time constraint, the chart can't be printed in the Record. (See table.) The combination of the cyclically weak financial position of corporations, moderate profit recovery, and closer scrutiny of corporate activity by management, auditors, creditors, rating agencies, and officially supervisory agencies will--in the near term--inhibit corporate activity, especially capital expenditures. Thus, once the current inventory restocking ends a few months from now, the economic recovery will moderate significantly. In short, there are likely to be some difficult adjustments in the near-term horizon, several of them a direct result of Enron's wayward ways. But all would be a modest price to pay for a return to more reasonable and responsible conduct in business and financial markets.

Mr. HOLLINGS

Mr. HOLLINGS. Mr. President, in accordance with rule V of the standing rules of the Senate, I hereby give notice of my intention to suspend rule 22 paragraph (2) for the purposes of offering amendment No. 3465. In accordance with rule V of the standing rules of the Senate, I hereby give notice of my intention to suspend rule 22 paragraph (2) for the purposes of offering amendment No. 3463.

Mr. HOLLINGS

Mr. HOLLINGS. Mr. President, for the Committee on Commerce, Science, and Transportation I report favorably the following nomination list which was printed in the Record on the date indicated, and ask unanimous consent, to save the expense of reprinting on the Executive Calendar that this nomination lie at the Secretary's desk for the information of Senators.