Tim Hutchinson

Mr. HUTCHINSON

Mr. HUTCHINSON. Mr. President, like Senator Lott, our majority leader, I am most reluctant to offer this amendment in opposition to the sentiments of the chairman of the Finance Committee. Likewise, I have the utmost respect for my colleagues on the other side of the aisle. I want to respond to a couple of things they said, my colleague from Wisconsin and my colleague from New Jersey, who, to me, when they talk about this proposal being something radical, what I hear in response is the politics of fear. They say, ``Well, we're not going to have a code, we're not going to have a Tax Code.'' And then, ``We are not going to have the FDA, we're not going to have FAA, we're not going to have roads, we're not going to have Social Security.'' By the way, Social Security is omitted entirely from this bill. It is not even a factor. But we hear the politics of fear--the sky is falling. Let me assure my colleagues, there is nothing as certain as the Sun rising in the morning but that this Senate will have a Tax Code come 2002. I assure you that this Senate and this House will not allow this Government to go without revenue. My goodness, if you love this Tax Code so much and you like the loopholes and you like the deductions and you like the exemptions and you like the exclusions so much, then you can propose that we reenact this Tax Code in total just like it is, and there you go. You go back and defend that before the American people because that, I say to my colleagues, is exactly what this debate is all about: Do you defend the status quo, or do you want change? Senator Roth--and I love this man. I respect him like my father, and I think he has done marvelous work in so many areas in the IRS. But I pose only this question to him and to all others who disagree with this amendment: How long? The fear that we are not going to have it enacted--here is the time line: 4\1/2\ years of national debate, and if we can't get it done in 4\1/2\ years, then we can reenact this wonderful Tax Code that those on the other side or those who oppose this would like to defend. Four and a half years of national debate. Long enough--long enough--to wait for tax reform. July 1998, that is where we are now. Come November, we will have a congressional election; November 2000, we will have a Presidential election; July 4, 2002, we suggest in this amendment that we should have a new code approved; November 2002, more congressional elections before we finally reach December 31, 2002, the sunset date. I suggest that is long enough. Let's give the American people what they are demanding, and that is a Tax Code that is fairer and simpler and friendlier. Amendment No. 3249 (Purpose: To terminate the Internal Revenue Code of 1986)

Mr. HUTCHINSON. Mr. President, also, I have a letter from the National Federation of Independent Business in which they ``strongly urge your support of the Hutchinson-Brownback amendment. It is time to step forward and let the American people know that their elected leaders have the courage to change a system which is anti-work, anti- saving and anti-family. Now is the time to take action.'' I ask unanimous consent that this letter from the NFIB be printed in the Record.

Mr. HUTCHINSON. Mr. President, in accord with the majority leader's request that we move expeditiously, I will keep my remarks very brief. I want to read one statement from the American Conservative Union, a letter sent to all my colleagues, the last paragraph: We are pleased to support your legislation, and will watch closely for a clean up-or-down vote on the bill with a view to including it in our upcoming annual rating of the Congress. I ask unanimous consent that the letter be printed in the Record.

Mr. HUTCHINSON. Mr. President, I congratulate the Senator from Colorado for his leadership on this appropriations bill, his leadership on tax reform in this Congress, and his support for the provision sunsetting the Tax Code. The amendment I will be offering on behalf of myself and Senator Brownback would sunset the entire Tax Code, December 31, 2002. I appreciate so much the Senator from Colorado in his cosponsorship of the original legislation that was introduced, and his support of this very, very important concept. I also point out to my colleagues, with my appreciation, the various organizations that have endorsed the scrapping of the code, the sunsetting, the terminating of the existing Tax Code. The Americans for Hope, Growth and Opportunity, the National Taxpayers Union, the National Federation of Independent Business, the American Conservative Union, Americans for Tax Reform, and Citizens for a Sound Economy have all lent their support for what I think is an essential step for all of us who believe the existing Tax Code does not work for the American people, and that the first step in replacing it with something that is simpler and something that is more fair and something that is less of a burden upon the American people would be to set a date certain in which we terminate and sunset the existing Tax Code. Congress recently took an important step to protect the American people from an overarching IRS. In the House, and in the Senate under the leadership of the distinguished Finance Committee chairman, Senator Roth, Congress passed the Internal Revenue Service Restructuring and Reform Act. Under this legislation, the burden of proof has now been shifted to the IRS. A newly restructured IRS will now be overseen by an independent panel, and I commend the work of the Senate Finance Committee and Chairman Roth for bringing this proposal to fruition. But this legislation, which I firmly supported, must not be the end of protecting the American taxpayer. On April 2, 1998, the Senate expressed itself on the need for fundamental change in passing an amendment to the budget resolution, not only to restructure the IRS but also to terminate and sunset the Federal Tax Code by the end of 2001. We passed that sense-of-the-Senate resolution, and we have a list of all of those who voted for that sense-of-the-Senate resolution saying we should sunset, we should set a date certain, and we should terminate the existing Tax Code. I invite all my colleagues in the Senate to look at that list of those who voted, on both sides of the aisle, on a bipartisan basis, to sunset the Tax Code. The House took a bold stride beyond this sense of the Senate in passing the Tax Code Termination Act on June 17, 1998. Today, the Senate has the opportunity to do the same. The amendment I, along with Senator Brownback and all of our cosponsors, have offered to the Treasury-Postal appropriations bill, that we will be calling up soon, would eliminate the Tax Code by December 31, 2002. Originally, way back last year, the original bill introduced would have sunset it back in the year 2000. Then there was an agreement among all the cosponsors to move that to December 31, 2001, to respond to those who said that is not enough time and the new Congress would not have enough time to enact comprehensive tax reform. Now, in the spirit of being as responsible as possible, and responding to, I think, the misguided and flawed allegations of the administration concerning Tax Code termination, we have moved that date to December 31, 2002. That allows us 4\1/2\ years in order to write a new Tax Code. We say, in this amendment, that it should be in place July 4, prior to the sunset date. I know the Department of the Treasury, Mr. Rubin, has sent a letter out. Everybody, I am sure, will have seen this letter opposing this amendment, saying the President is going to veto this appropriations bill if the amendment is attached. It is not the first time that those kinds of threats have been made. It is, if you will read the letter, based upon misguided and flawed assumptions, making all kinds of assumptions as to what might be enacted or what might not be enacted at the time of the sunset date. So I believe what we are proposing is eminently responsible. So we need to join, I believe, the House of Representatives in passing this sunset date. It would allow the Social Security provisions, Medicare, and the Railroad Retirement Board to remain. But we would say the Congress, the President, the American people would replace the current Tax Code with a lean and honest system by no later than Independence Day, July 4, 2002. For too long, the American people have suffered under the chains of the oppressive regime we call our Federal Tax Code. It is just not enough to reform the IRS when the more fundamental problem is the Tax Code that we ask them to enforce. Each year, Americans spend over 5.4 billion hours slaving away to comply with tax provisions, the equivalent amount of time it takes to produce all of the cars in this country, all of the trucks in this country, to manufacture all of the airplanes in this country for a year. That is how much time we ask the American people to spend just trying to comply with complicated, arcane, and inexplicable tax provisions. A humble family of four will spend the equivalent of 2 weeks just for Tax Code compliance. Ironically, every year $13.7 billion of the money that taxpayers struggle to pay the Federal Government is spent enforcing tax laws, yet the IRS, the bureaucracy of 110,000 people in over 650 offices nationwide, provides misinformation one-fourth of the time taxpayers call to seek assistance. Not too long ago, Money magazine did, as they do every year, an interesting study. They found this: 45, the number of professional tax preparers who came up with different answers when asked by Money magazine, in 1997, to fill out a hypothetical family's 1996 tax return. That was the April 1997 edition of Money magazine. They found that 45 professional tax preparers, with the same information, came up with different answers on a hypothetical family's tax return. I think that is powerful evidence that we have a Tax Code that even the professionals cannot understand. They found also that the average hourly fee charged by professional tax preparers who came up with the 45 wrong answers is $81 an hour. That is what the American people are paying professional tax preparers who come up with the wrong answers time and time again. Mr. President, 6.4 million--that is the number of taxpayers who visited IRS customer service centers seeking answers to their tax questions in 1996. Over 6 million, according to the General Accounting Office, actually went to the IRS customer service centers seeking answers. Another figure, though, is 99 million, because it was 99 million taxpayers who called the IRS hotlines in 1996 seeking answers to questions about how they could comply with this complicated Tax Code; 99 million, one-fourth of them getting incorrect answers from the Internal Revenue Service. The Tax Code is not a stagnant creature. This code has mutated from its original form into an 800,000-word, 7,500-page monster preying on the American taxpayer. We in Congress are culpable for this feeding frenzy, for even in our attempts of incremental reform, even in our attempts to help the American taxpayer, we have made the Tax Code more complex. In 1997, Congress made serious attempts to ease the burdens of the American taxpayer. It was the first significant tax cut, I think, in 16 years. Yet, even in those efforts to provide tax relief, we unwittingly created new complications. I think everyone in this body would agree if we somehow could just start over and write a tax code, there is not one of us who would say, ``Write the Tax Code the way we have it now,'' because it has been a creation of these incremental changes made by special interest groups who had enough power to get that change enacted into law. We need to terminate, not complicate, the Tax Code. If you look at this chart, it says: The number of new sections in the Tax Code created by the 1997 Budget Act-- This was our Tax Relief Act--we created 285 new sections. The number of changes in the Tax Code accompanying the 1997 tax cut, 824, and the number of pages needed by the Research Institute of America to explain the changes in the tax law of 1997 was 3,132 pages. It was a lawyer's dream and tax accountant's dream when we passed that Tax Relief Act. While the American people were glad to receive some tax cuts --the $500-per-child tax cut, the change in the estate tax laws, change in the capital gains tax laws--the fact is, the great winners were the tax lawyers and the accountants--3,132 pages just to explain what we did in cutting taxes. The American people have called for this termination, this comprehensive reform of our tax laws. A recent poll that was conducted by the Americans for Hope, Growth and Opportunity discovered several things. In asking the question, ``Do you approve or disapprove of a new Federal law to abolish the current tax system and require that a new Federal tax system be approved by Congress by July 4, 2001, and that this new system should then take effect 6 months after that date?'' The response was 48.9 percent approved of that proposition, which we are going to be voting on, while only 24.1 percent disapproved. By a margin of 2 to 1, the American people are saying we ought to set a date certain. Six months prior to that date certain, we should have a new comprehensive fair tax system in place. The poll went ahead: ``Do you approve or disapprove of a new Federal law to abolish the current tax system and require that a new Federal tax system be approved by Congress July 4, 2002?'' Overwhelming support. They asked this question: ``If you knew that Congress passed a law to create a new Federal Tax Code with the following specific principles: apply one low tax rate to all Americans; provide tax relief for working Americans; protect the rights of taxpayers and reduce tax collection abuses; eliminate bias against savings and investment; promote economic growth and job creation; and not penalize marriage or families--do you believe it is possible that Congress could accomplish these goals?'' That was the question, and 57.3 percent of Americans answered yes, with 34.1 percent saying no, and 8.6 percent saying they did not know or refusing to answer. That is really quite remarkable, because what that response tells us is that the American people still have faith that their elected representatives can and should replace the current tax system with a simpler, fairer system. They think we can do it. Americans rapidly, though, I believe are reaching the level of outrage about this tax cut that would resemble even the kind of tax rebellion that occurred in the early days of this Republic in 1776. As an aside, I offer my own statistic. No official poll. No Gallup. No scientific sample. But I suggest this: That 100 percent of the people in this country and 100 Senators in this institution believe that an overhaul of the tax system is overdue and that it should occur. Mr. President, in the Senate today, we have three options before us-- and I can't find another--we have these three options confronting every Senator in this body: We can ignore the plight of the American taxpayer and do nothing. That is what we have done for far too long. We have done nothing. We have passed resolutions. We have passed sense of the Senates. We have made speeches, and we have debated. We have introduced bills, and we have even passed tax cuts that further complicated the Tax Code. But in the end, what we have really done about comprehensive tax reform is nothing. Tonight we have that option before us. We can continue to do nothing. We can vote down this amendment to the Treasury-Postal appropriations bill, or we can move to table it when it is offered, and we can go down the path of defending the status quo. I suspect there will be a lot of my colleagues who will make that choice tonight. Or we can implement incremental reforms and try our best to make repairs to a house built on shifting sand as we have almost every year for the last 12 years. In fact, one study found that since 1913, since the institution of the income tax, we have added about 100 pages to the Tax Code every year; on average, 100 pages are added to the Tax Code. We can continue to do that. We can continue to make small incremental changes in this complicated Tax Code and hope that somehow we are able to repair this house that is built on shifting sand. I do not believe that is a viable option. This is the third thing we can do: We can lay a solid foundation for a new house by voting for real reform, the termination of the current Tax Code. I believe the choice is clear. Secretary Rubin, President Clinton and other critics of this proposal will say that sunsetting is reckless. I suggest that when the opponents of this rise to oppose this amendment, that is what we are going to hear: ``This is a reckless proposal.'' We will hear it over and over. They have characterized it as irresponsible, reckless, certain to cause uncertainty. The President wants to pretend that sunsetting provisions are somehow unusual, somehow irresponsible. They are neither. He would have us believe they create paralyzing uncertainty, and yet if you will look at the sunset provisions that we have in law, all major spending legislation is sunsetted. We recently debated legislation to replace both the Higher Education Act and the Intermodal Surface Transportation Efficiency Act, the ISTEA bill, both of which expired this year due to sunset provisions included in the original legislation. All major spending legislation contains sunsetting provisions. Sunsetting forces Congress to periodically review the merits, effectiveness and efficiency of the programs it creates. Only then can these programs be continued. In testimony before Congress, Alan Greenspan expressed his support for the concept of sunsetting. He is the guru, many believe, of the unprecedented period of economic expansion, but he said he believed that everything in Government should face these sunset provisions. The President has said he believes sunsetting will cause instability. I believe we are going to hear that. He imagines that the current tax system is somehow stable. The truth is, the current Tax Code is riddled with uncertainty. The only certainty in this system is that it will become more complex through incremental reform and that special interests will thread their way through these special loopholes. To my colleagues who say this is going to create uncertainty, this is my response: If you believe that we need to get from where we are to a simpler, fairer tax system, there is no way, I suggest, to get from where we are to where we all want to be without some degree of uncertainty. You cannot replace this entire Tax Code, no matter how incremental you may do it, over a long period of time without there being certain uncertainties in markets or business planning or whatever. But I suggest what Senator Brownback and myself have proposed is the most rational way to get from where we are to comprehensive tax reform. Because we allow 4\1/2\ years, we set a date certain, we ensure that there are going to be proper oversight hearings by the Finance Committee, that all of the various proposals that have been submitted will have ample time for debate, and that the American people and the American business community will have adequate time to plan for the changes that will be enacted. I would assume that those changes would be phased in over a period of years as well. But what we have proposed is eminently responsible, not going to create uncertainty, and is not reckless. It is only those who want to defend the status quo, I believe, who throw out those kinds of arguments. I have a number of other points I would like to make, and perhaps as the debate goes on I will have an opportunity to do that. I know there are a number of others who are cosponsors of this legislation who will be wanting to seek recognition. Senator Warner has requested a period of time to discuss the Capitol security program and the new visitor center. I know that is something that is heavy on all of our minds today. And Senator Brownback is certainly willing to postpone his comments. At this point I yield the floor. Several Senators addressed the Chair.

Mr. HUTCHINSON. I move to waive the Budget Act for consideration of the Hutchinson-Brownback amendment and ask for the yeas and nays on the motion.

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

Mr. HUTCHINSON. No, I have never--I have never--endorsed or signed on to any measure, and to suggest that I favor a 30 percent national sales tax or any form of sales tax is absolutely a misrepresentation and a mischaracterization of my position.

Mr. HUTCHINSON. I respond to the Senator, the whole point in having the sunset date is to force us into a national debate to decide the very question he poses. If I might continue, to argue the debate on what the pros and cons are on a sales tax, flat tax, I would just say, you can't do worse than what we have. If you reach that point that you want to reenact this code, this amendment allows you to do that. I suggest that we can and we must do much better. And it would be putting the cart before the horse to say, ``This is what we must do.'' What we need to do is set the date forcing us to reach that consensus on what should replace the current code.

Mr. HUTCHINSON

Mr. HUTCHINSON. I thank the Chair. Mr. President, before I raise my concerns about this sense-of-the-Senate resolution, I pay my respects and my thanks to the Senator from Iowa for his leadership and his advocacy for agriculture, as well as the Senator from Kansas, who is presiding at this time, for his many years of service to agriculture and service to our country as a proponent and advocate for the agriculture community. I think that the intent of the sense-of-the- Senate resolution is admirable. It has many very laudable provisions. Certainly, I am a proponent of fast track. We need to give the President fast-track authority. I regret that President Clinton has expressed his unwillingness to pursue that aggressively in the House of Representatives, and I applaud the Speaker of the House for scheduling a vote in September on fast-track authority. I believe the votes are there to pass fast-track authority in the Senate, and I hope we have the opportunity to do that. I hope we have more than sense of the Senate. I hope we will, in fact, have the opportunity to give the President that negotiating authority, which I believe will be an important step in opening markets for the agriculture community. I am glad that we have a sense of the Senate that has that provision in it. I also applaud the provisions regarding sanctions reform. I believe very strongly that we misuse the sanctions tool. Sanctions is not a policy; sanctions is a tool, and it is a tool that we should not abandon. We have only three great tools: one is military, one is economic, and one is diplomatic. We need all three of them, and it would be a mistake for us to make a wholesale abandonment of the use of sanctions in dealing with other nations. It would make the use of military force a greater likelihood, and that would be a mistake. There is no doubt we need to reform sanctions laws in this country, and I am glad to be serving on the leader's bipartisan task force to bring about comprehensive reform of the sanctions laws. It is important, and the leader has said by September 1, we should try to produce comprehensive reform of the sanctions in this country. I don't know that we will make the September 1 deadline, but it is a mistake for us to prematurely begin to make those kinds of reforms incrementally. I think we should wait for a comprehensive approach to sanctions reform, but I am glad to support the sense of the Senate that advocates that we reform the sanctions. My concern about this resolution, nonbinding though it is, is that there is a provision included that would put us on record in support of extending most-favored-nation status to China. Next week, the House of Representatives will begin what I think will be a heated and intense debate on whether we should, once again, provide most-favored-nation trading status to the People's Republic of China. For the U.S. Senate, 1 week before the House begins its debate, to have, in a sense of the Senate, one little provision that says, ``Yes, we should extend MFN and, in fact, extend MFN permanently to China,'' would be a great mistake. I regret that the authors of the sense-of-the-Senate resolution saw fit to include that one provision which I think, more than any other provision in this resolution, becomes controversial. This week there was a headline in the Washington Post that said this: ``Chinese Resume Arrests.'' Mr. President, perhaps nothing is more prophetic or revealing about the lack of impact the President's recent trip will have on the future of democracy in China than this week's headlines announcing a multitude of new arrests of political dissidents in China. Less than 1 week after the President of the United States ended his tour of China, Chinese police arrested 10 prodemocracy advocates in China. I will read the first paragraph in that Post article, dated July 12, Beijing: Police detained 10 democracy advocates just one week after President Clinton ended a tour of China, during which he emphasized the benefits of freedom and the rule of law, and praised Chinese President Jiang Zemin as a man who could transform this nation into a modern democracy. The detainees included two cofounders of the opposition China Democratic Party, who tried to register it on June 25, the day Clinton began his nine-day visit. These people were arrested for one reason: They dared to start an opposition party to the Communist Party in China. For daring to say we will be an opposition voice, for daring to say we will dissent from the ruling political party in China, they were arrested. I asked an advocate of MFN today, a Member of the House of Representatives who is a proponent of MFN, ``Sir, what would it take for you to vote against normal trading status with China? What would they have to do? What abuse would they have to perpetrate in order for you to cast a vote against MFN?'' There was a thoughtful response, and I think a cause for pause. I ask all those who say we need to adopt a sense-of-the-Senate resolution today advocating MFN for China to ask themselves the question: What would it take? Is it forced abortion? Apparently not. So a nation that continues to practice taking women who are 7, 8 and 9 months pregnant against their will forcibly to a labor camp, putting them in a cell and forcing them against their will to have an abortion, if that is not enough to deny normal trading status or MFN, what does it take? China today continues to persecute religious minorities, whether they are Hindus, whether they are Buddhists or whether they are Evangelical Christians, they continue to incarcerate them, they continue to require registration, they continue to monitor the messages. If religious persecution is not enough to deny MFN for China, what does it take? What would they have to do? China continues to proliferate weapons of mass destruction. In committee testimony this week, officials of this Government admitted they cannot guarantee that China is not today continuing to proliferate. So if the proliferation of missiles and weapons technology is not enough to deny MFN, what does it take? What would it require that we say no to giving them normal trading status? For us to go on record in light of the ongoing abuses--what a thumb in the eye to the U.S. Senate and to the United States of America and to the President of this country, within 1 week of our President's visit, to round up those who dare to say, ``We would like to be an opposition political party,'' and who dare to call their political party the Democracy Party. They rounded them up and put them in jail. How ironic that the President would refer to, and I quote the President's words in his speech in China, what he called ``a steady breeze of freedom blowing through China.'' That gentle breeze has become a brittle wind chilling any hope for true freedom--freedom of speech, freedom of political expression, freedom of religion in this Communist nation. So while there were dazzling pictures and eloquent rhetoric about human rights, the President's tour of China was full of missed opportunities and mistakes that are sure to have a much more detrimental impact on human rights in China in the long run than the benefit of any short-term afterglow. I will not today itemize what I think were the missed opportunities during the President's trip to China. But there is one--there is one-- certainty, that on the heels of that trip, the Chinese Government once again cracked down on those who would make the mildest of political dissent and seek to register as a new political party. Any pretense that the government, the regime, that dominates China today is moving toward reform and democracy should have been dispelled by what they did this week. And for the U.S. Senate to say, we are going on record in favor of most-favored-nation status, in view of what they did, I think would be a great mistake. I would welcome the opportunity for the sponsors of this amendment to simply take the MFN provision out of this sense of the Senate; and I would wholeheartedly support it. But I think it is a mistake for us to go on that kind of record in view of what China has done in the wake of the President's recent trip in which he spoke so eloquently for freedom and for democracy. I add, to my colleagues in the Senate, that it was this week that the Communist government in China rebuked the U.S. Senate for our audacity in passing a resolution reaffirming our traditional support for Taiwan. I believe the President made mistakes in his trip to China, and I could enumerate them. But the greatest mistake was this: pinning our hopes for democratic reform in China to this regime. And the laudatory comments made about Jiang Zemin and the expression of the belief that he would be the leader to move in a transition from the current totalitarianism and repression to democracy and freedom, that hope was surely dashed in the actions of the Chinese Government this week. I ask my colleagues to think again. I ask my distinguished colleague from Iowa, whom I admire and respect so much, to rethink the inclusion of a pro-MFN statement in this sense-of-the-Senate resolution. I thank the Chair and yield the floor. Mr. WELLSTONE addressed the Chair.

Mr. HUTCHINSON

Mr. HUTCHINSON. That is my very concern--then we would force students into direct lending. We would force institutions to adopt that program whether they want to or not.

Mr. HUTCHINSON. If I might just conclude, we can stand here and debate and have a colloquy over the numbers you presented. I cannot and would not question the numbers you presented my colleagues, so I will not speak on the aggregate that you presented. But I will say that while you are dealing with the aggregate, you are not speaking to the specific circumstances and situations of guaranty foundations across the country. I only know in particular how it would impact the Arkansas Guaranty Foundation, which has served our State well, and I believe that the numbers in Arkansas reflect that it, in fact, could face insolvency in a matter of years should the Harkin amendment be adopted. And that is the basis of my very sincere and very strong opposition.

Mr. HUTCHINSON. If I might respond, if I understand what you have just read from the law, that while that ensures the fact the Federal Government is the ultimate guarantor, that that only occurs when the guaranty foundation, the guaranty agency, has faced solvency, and that is my very concern. Yes, while there may be an ultimate protection, before that ultimate protection is realized, the agencies that have served our students so well would, in fact, face insolvency. That is my concern for the State of Arkansas; that is my concern for the students of Arkansas.

Mr. HUTCHINSON. I would be delighted.

Mr. HUTCHINSON. I will be glad to yield. I will be delighted. Mr. Harkin addressed the Chair.

Mr. HUTCHINSON. I understand, though, that if the guaranty foundation is insolvent, if I heard you read the law correctly----

Mr. HUTCHINSON. Then I think it is certainly precarious for the foundation.

Mr. HUTCHINSON. Madam President, I rise in strong opposition to the Harkin amendment. I commend our chairman for the outstanding leadership on this legislation, but I have concerns on the impact of this legislation, what it would do to making student loans accessible to millions of our students. At the core of making higher education affordable and accessible are two programs we have heard much about: The Federal Family Education Loan Program, or FFEL Program, which, through public-private partnership, has successfully provided loans to millions of students since 1965. The second program is the Direct Student Loan Program, a program initiated by President Clinton, and a program I think designed to make the Department of Education the largest student lender in the country. In fact, there are currently 36 active State and private nonprofit guaranty agencies, including the Student Loan Guarantee Foundation of Arkansas. These guaranty foundations work closely with students, with families, with schools, and lenders to process loans, prevent loans from going into default, and pay claims on and collect on those loans that do default as a part of the traditional Guaranteed Student Loan Program, the FFEL Program. Over the past 33 years, FFELP student loan providers have reliably delivered more than 92 million loans totaling $245 billion. Two-thirds of all student loans are provided by the private sector via the FFEL Program. FFELP is cost effective for the Government, and the competitive environment spurs FFELP innovation and high-quality service. Reducing student loan original fees--which this amendment does not do--reducing student loan origination fees which are paid by students to the Department of Education, I believe, is a laudable goal, something we need to study and something we may do, but the amendment we are debating, the Harkin amendment, does not reduce the 3 percent origination fee paid by students in the Guaranteed Student Loan Program. Rather, it eliminates the 1 percent insurance program, also called the guaranty fee. It is interesting, when you are against something, you call it a tax. And this fee has tonight been called a tax. Suddenly, we are voting for a tax decrease, a tax cut. But this guaranty fee has, in fact, preceded even the nationalizing of this loan program. It goes all the way back to 1965. This was not enacted as a temporary measure because of economic conditions. The original fee, in fact, was, but we are not dealing with the original fee, we are dealing with the guaranty fee, the insurance premium fee. That is what the amendment would do this evening. That serves as the primary source of revenue to guarantors, intended to help offset the risk of default on student loans. Without the insurance premium coming in on the new guaranteed loans, guaranty agencies will have insufficient funds in their Federal reserve fund to pay lender claims on defaulted loans. Many of them will for sure. In fact, losing the 1 percent insurance fee equates to approximately 40 percent of revenue for the Student Loan Guaranty Foundation in my home State of Arkansas. I believe--I think I am correct in this--that of all the institutions of higher learning in Arkansas, there is only one currently using the direct lending program. All the rest have opted to continue in the FFEL Program, and we seriously jeopardize the guaranty foundation with the Harkin amendment; therefore, we jeopardize the accessibility of student loans to hundreds of thousands of students who are going to need those loans now and in the future. With less money in their reserve to process loans and pay lender claims on defaulted loans, the Arkansas guaranty agency could be forced out of business in less than 2 years. So I say to the competition, which has been lauded as being such a good thing, such a meritorious thing, it would be eliminated as the bias is made toward direct student lending, and the FFEL Program which has served my State so well would be jeopardized. Madam President, the Harkin amendment, I believe sincerely, is a wolf in sheep's clothing. It would essentially kill the guaranteed loan program by driving guaranty agencies out of business. If schools really wanted to be in the Direct Loan Program, then over 80 percent of them would not have chosen to remain in the guaranteed loan program, which I believe we threaten by this amendment. I urge my colleagues to support the loan program, which provides private capital and servicing for nearly two-thirds of all Federal student loans, and do so by opposing the Harkin amendment. I yield the floor.

Mr. HUTCHINSON. I will be glad to yield for a question. I am not sure I have the authority to yield for a colloquy.

Mr. HUTCHINSON. They have lost $1.1 million without the Harkin amendment in the reserve fund. So, Madam President, I would say, once again, my concern is for the students of Arkansas, that they have a competitive environment for student loans. I believe that will not continue if the Harkin amendment is adopted and that, in fact, the end result, intended or otherwise, will be to force institutions into direct student lending, which I do not think is in the best interest of the students of my State or this country. I yield the floor. Several Senators addressed the Chair.

Mr. HUTCHINSON. Without the Harkin amendment. With the Harkin amendment, it will be a considerable decrease in addition to that. Once again, I would say the projections are, within 2 years they would be insolvent, and the worst case scenario would become a reality in the State of Arkansas.

Mr. HUTCHINSON. That would be a drop of $1.1 million in less than a year.

Mr. HUTCHINSON. What was the number that you gave for----

Mr. HUTCHINSON. That is what I said.

Mr. HUTCHINSON. If I might just respond to that, the numbers we have indicate--and these are as of July 3, 1998--the cash reserve is $6.8 billion, which is considerably different from the numbers that you are presenting, and that, in fact, the information I have is that reserve would be jeopardized to a far more significant degree than what you have reflected.

Mr. HUTCHINSON

Mr. HUTCHINSON. Mr. President, I rise in strong support of the Internal Revenue Service Restructuring and Reform Act. I want to take this opportunity to commend Senator Roth for the outstanding work he has done on this legislation. As a new Senator, I was impressed with the hearings that Senator Roth conducted and which have galvanized this institution to move on something that was a compelling need. They were dramatic hearings not because they were highly choreographed or because there was sophisticated promotion; they were dramatic because of the impact and the gripping nature of the stories that were told to the committee and to the American people. I think our country and this institution owe a great debt of gratitude to the Senator from Delaware for the role that he has played in calling the attention of the American people to the abuses. It became evident during the course of both sets of hearings that these stories were not isolated incidents but were all too typical, as we found from the response of the American people in calling our offices all over Capitol Hill about similar incidents that had occurred. I want to take just a moment to praise my predecessor in the U.S. Senate, the former senior Senator from Arkansas, Senator Pryor. Senator Reid spoke of his role in taxpayer rights in the past. I think that the work Senator Pryor did as a Senator from Arkansas has helped to lay the groundwork for the step that we are taking as a body today. I want to express my appreciation on behalf of the people of Arkansas and on behalf of taxpayers across this country for Senator Pryor's unfailing efforts and untiring efforts to provide protections for the taxpayers of this country. And although the Taxpayer Bill of Rights was not the ultimate solution, and the Taxpayer Bill of Rights 2 was not signed into law, it helped to call our attention to it and to galvanize the American people to push for this action. I want to pay my highest regards to Senator Pryor, who I know is pleased with the action that the U.S. Senate is taking today. I think the protection provisions in this legislation will take a big step toward assuring the American people that we are still on their side and that the tax system of this country is not stacked against them. We should remind ourselves of the things that this does not do. It would be, I think, a shame if this legislation were to be the release on the pressure that has built up over the years to demand comprehensive tax reform. This is an essential step, and it moves the ball in the right direction. It does not simplify the code. The code is still a labyrinth of confusion, incomprehensible to many people, tax preparers, and to many in the IRS themselves. It does not provide the lower rates the American people deserve, and it does not eliminate inequities in the code, like the marriage penalty and the exorbitant estate tax rates. I know Senator Roth will continue to push for comprehensive tax reform for the taxpayers of this country. I believe that one way we can do that is to set a sunset date, a date certain in which this Tax Code will be eliminated and we will require ourselves to take action in providing comprehensive tax reform, a lower tax rate, a fairer Tax Code for the American people. We may disagree on that, but it is imperative that this be one more step in moving toward what is essential, which is comprehensive tax reform for the American people. I will conclude with a statement that President Clinton made during his recent trip to China, in which he addressed the students at Beijing University and spoke to them about the nature of freedom, about our heritage of freedom in this country. I believe that what he said--and said eloquently--applies to the ongoing debate about IRS reform and restructuring and making the Tax Code of this country fairer for the American people. He said: In America, we tend to view freedom as the freedom from Government abuse or from Government control. That is our heritage. Our founders came here to escape the monarchy in England. Then he said this: Sometimes freedom requires affirmative steps by Government. I simply say that this legislation, which Senator Roth has led the way on, is an affirmative step that this Government must take to ensure that the American people truly enjoy the fruits of freedom, which is our legacy and heritage. I yield the floor. Mr. BREAUX addressed the Chair.