John Kerry

Mr. KERRY

Mr. KERRY. That revolution needed to be able to continue in its most creative form and, frankly, with the best upside possible for the people to whom we are all accountable, who are the consumers, the citizens, and the people who ultimately we want to have benefit from this. I think this legislation is very positive in that regard. I thank the chairman of the Commerce Committee, Senator McCain, for his leadership and his courtesy in letting the usually mostly abused and beleaguered minority take a dominant position at the outset of the debate. It is characteristic of him that he allowed us to do that. It is a very momentary glimpse of freedom we are not used to. We thank him for that. It is just whetting our appetite and only makes us work harder to have that dominant position forever. I thank the Chair.

Mr. KERRY. Will the Senator yield me 30 more seconds?

Mr. KERRY. Mr. President, I join my colleague from Oregon in expressing support for what we have achieved here. I begin by thanking Senator McCain, Senator Sarbanes, and Senator Hollings for their leadership. They helped to create the climate within which we were able to finally get together with the House leadership. But also I thank the distinguished Senator from Oregon. He is extraordinarily knowledgeable in this arena and very creative. And he works hard at it. He really has helped to shape the outcome of this in a significant way. I think he has done a very good job of outlining the tensions that existed here. Many of us thought, at the outset of this endeavor, that we could accomplish this quickly. We ran into, as he said, complications along the road. The key to many of us was that even as we provided the legal capacity for electronic signatures to take place and certain recordkeeping to take place, we did not want to diminish the rights of our citizens to have access to information about them, we did not want their ability to be able to make corrections to be diminished somehow. We did not want to diminish their right to know about themselves or about their own transactions in a way that would diminish their position in the marketplace. And that is a difficult thing. We worked through that. I think we are still going to be working through that for some time. But the important thing is that this phenomenon, this revolution that is taking place in America and across the globe in how we do business, needed to be----

Mr. KERRY. Mr. President, I promised I would not go in front of Senator Wyden. I yield to the Senator from Oregon.

Mr. KERRY

Mr. KERRY. Mr. President, I ask unanimous consent that the distinguished minority whip be permitted to proceed for a unanimous consent and that I then be accorded the floor immediately following.

Mr. KERRY. Mr. President, I thank the distinguished chairman for his very generous and appropriate gesture on behalf of Senator Lautenberg. Over the last months, I have had occasion to meet around the country with people who are concerned about transportation. To a person, they all voluntarily offer up the degree to which they are going to miss Senator Lautenberg who has been an extraordinary champion for public transportation and for aviation, as the chairman said. Most important, speaking parochially for a moment, it is not easy to champion the rail system in a country that has been dominated by automobiles and our love affair with autos and highways. In all his years here, Frank Lautenberg has been the single strongest advocate of making certain we have an alternative form of transportation. In the Northeast particularly, we will have an accelerated rail link between New York and Boston and ultimately Washington that is due almost solely to his persistent annual guarantee that the funding is there. That is an enormous legacy. We do not always get an opportunity in the Senate to have that kind of niche where your vision is singlehandedly implemented. Senator Lautenberg has done that with great commitment and great perseverance. I thank him on behalf of everybody in New England who depends on that system to get to work, to travel, to meet their families, and to enjoy affordable opportunity to travel.

Mr. KERRY

Mr. KERRY. Mr. President, the availability of capital and credit still remains one of the most significant impediments to small business creation and growth, and it is the Small Business Administration (SBA) that continues to effectively serve as the principal ``gap'' lender to our nation's 24 million small businesses. SBA's loan and investment programs are a bargain. For very little, taxpayers leverage their money to fuel the economy and help thousands of small businesses every year. In the 7(a) program, taxpayers spend $1.24 for every $100 loaned to small business owners. Well-known successes like Winnebago and Ben & Jerry's are examples of the program's effectiveness. In the 504 program, taxpayers don't spend a penny to lend or leverage investments because they are self-funded. Today we will vote on H.R. 2614, the Certified Development Company Program Improvements Act of 2000. This bill makes changes to the 504 Certified Development Company (CDC or 504 program) loan program that will greatly increase the opportunity for small businesses to build a facility, buy more equipment, or acquire a new building. These loans create a ripple effect that enables small business owners to expand their companies, hire more workers and ultimately improve the local economy. This bill also includes a manager's amendment with three provisions. One, it addresses prompt approval of applications from certified development companies (CDCs) to operate in multiple states. Two, it restores much of the shortfall in 7(a) funding for FY2000 by giving SBA the authority to reprogram unused funds. Three, it maintains continuity in the HUBZone program by grandfathering in existing HUBZone companies as zones are redefined when the Bureau of Labor Statistics releases its new data. Before I get into the details of this bill, I would like to spend a minute describing the 504 Certified Development Company (CDC) loan program. This program is mission-driven, designed to provide capital to growing small businesses and create jobs. The professionals who work at CDCs do much more than make loans--they better communities. They usually have a mixture of expertise, part economic development specialist and part lender. They know their communities, and they know how to package loans and help prospective borrowers get financing. In fact, if you were to talk to them, you would learn that many are former lenders from commercial banks who wanted to get out from behind a desk and get involved in their communities. Instead of turning away meritorious projects because they didn't fit the profile of a traditional borrower, using the 504 program they could put together a loan that spreads the risk among commercial lenders, CDCs, the state or local governments, and the small business owners. These loans jumpstart or complement the economic development in CDCs' communities. Specifically, the 504 program provides businesses with long-term, fixed-rated financing for major fixed assets, such as buildings and equipment. CDCs work with the SBA and private-sector lenders to provide financing to small businesses and ultimately contribute to the economic development of their communities or the regions they serve. There are about 290 CDCs nationwide, and each CDC covers a specific area. Each CDC's portfolio must create or retain one job for every $35,000 provided by the SBA. As I mentioned earlier, but will expand on here, proceeds from 504 loans must be used for fixed-asset projects. Projects range from land purchases and improvements--including existing buildings, grading, street improvements, utilities, parking lots and landscaping--to the construction of new facilities, or modernization, renovation or conversion of existing facilities, to the purchase of long-term machinery and equipment. The 504 Program cannot be used for working capital or inventory, consolidating or repaying debt, or refinancing. I strongly support SBA's 504 loan program. Since 1980, more than 25,000 businesses have received more than $20 billion in fixed-asset financing through the 504 program. In Massachusetts, over the last decade, small businesses got $318 million in 504 loans that created more than 10,000 jobs. The stories behind those numbers say a lot about how SBA's 504 loans help business owners and communities. In Fall River, owners Patricia Ladino and Russell Young developed a custom packing plans for scallops and shrimp that has grown from ten to 30 employees in just two short years and is in the process of another expansion that will add as many as 25 new jobs. In Danvers, there's the car dealership that used a 504 loan to grow a company over 15 years from 25 to 395 employees. In Berkshire County, the 504 program has helped support the growth of the plastics mold and tool industry. One good example of success in this area is the development of Starbase Technologies in Pittsfield which now employs 65 people. H.R. 2614 would build on that success by implementing the following. First, it will increase the maximum debenture size for Section 504 loans from $750,000 to $1 million, and the size of debentures for loans that meet special public policy goals from $1 million to $1,300,000. It has been 10 years since the Committee acted to increase the maximum guarantee amount in the 504 program. To keep pace with inflation, the maximum guarantee amount should be increased to approximately $1.25 million. However, consistent with my colleagues on the House Small Business Committee, I believe that a simple increase to $1 million is probably sufficient. H.R. 2614 also adds women-owned businesses to the current list of businesses eligible for the larger public policy loans with guarantees of up to $1.3 million. Currently, the higher guaranty is available for business district revitalization; expansion of exports; expansion of minority business development; rural development; enhanced economic competition; and, added just last year, veteran-owned businesses, with an emphasis on service-disabled veterans. This small legislative change was significant and long overdue. Throughout America's history, countless men and women have served our country and fought for its ideals as members of our armed services. However, when they return to civilian life, veterans have often encountered barriers to starting or expanding a business. Although there are a number of programs at the SBA to provide assistance, many of these are not specifically targeted at veterans. Making them eligible for the higher debenture should help to remedy some of the inequalities that our service men and women face upon their return to civilian life and provide greater opportunity for the 5.5 million businesses owned or operated by veterans. That change also should help the 104,000 service-disabled veterans within the business community. I originally introduced the provision to add women-owned businesses to the list of public policy goals in the 105th Congress as part of S. 2448, the Small Business Loan Enhancement Act. Though it eventually was included in and passed by the Senate as part of H.R. 3412, a comprehensive small business bill, it was never enacted. Unfortunately, the House received the bill too late to act before the 105th Congress adjourned. I am very pleased that the Committee continues to recognize the important role women-owned businesses play in the economy and is making this change to facilitate the expansion of this sector of our economy. Women-owned businesses are increasing in number, range, diversity and earning power. They constitute one-third of the 24 million small businesses in the United States, generate $3.6 trillion annually in revenues to the economy and range in industry from advertising agencies to manufacturing. Addressing the special needs of women-owned businesses serves not only these entrepreneurs, but also the economic strength of this nation as a whole. Since 1992, SBA has managed to increase access to capital for women and has worked in earnest to move women entrepreneurs away from expensive credit card financing to more affordable loans for financing their business ventures. While the percentage of 504 loans to women-owned businesses has increased nationwide from 4.2 percent in 1987 to 13 percent in 1999, and I applaud that, we need to increase lending opportunities to better reflect that 38 percent of all businesses are owned by women. By expanding the public policy goals of the 504 loan program to include women-owned businesses, we are ensuring that loans to eligible women business owners aren't capped at $1 million but are now available for as much as $1.3 million. According to Certified Development Company professionals, loan underwriters are conservative when it comes to approving loans for more than $750,000 and this directive would undoubtedly help eligible women business owners get the financing they need to expand their facilities and buy equipment as their businesses grow. H.R. 2614 also reauthorizes the fees currently levied on the borrower, the Certified Development Company, and the participating bank. The fees in the 504 program cover all its costs, resulting in a program that operates at no cost to the taxpayer. Without this legislation, the fees sunset on October 1, 2000. H.R. 2614 will continue them through October 1, 2003. Additionally, H.R. 2614 will grant permanent status to the Preferred Certified Lender Program before it sunsets at the end of fiscal year 2000. This program enables experienced CDCs to use streamlined procedures for loan making and liquidation, resulting in improved service to the small business borrower and reduced losses and liquidation costs. H.R. 2614 also makes the Loan Liquidation Pilot Program a permanent program. This gives qualified and experienced CDCs the ability to handle the liquidation of loans with only minimal involvement of the SBA. It is the goal of this liquidation program to increase the recovery rates of the 504 loan program, and to bring about a corresponding reduction in the fees charged to the borrowers and the lenders. Importantly, this bill includes Senator Wellstone's provision to authorize the program for three more years, making it a complete package. I believe it is better to act now on a bill that already has the House's blessing than to wait for the comprehensive reauthorization bill, H.R. 3843, to make its way to the President's desk. Taking this action now will enable the CDCs to plan for the year ahead, because they know that the program levels for fiscal years 2001 through 2003 are $4 billion, $5 billion and $6 billion. In addition to these changes, and as I mentioned earlier, this bill includes a manager's amendment. The first provision deals with long- pending applications from CDCs that are seeking to expand into multiple states. To address the problem, this provision establishes a one-time automatic approval of applications for multi-state operation that have been pending at SBA headquarters for 12 months or more. Unless SBA acts to approve or disapprove the applications, automatic approval would go into effect 21 days after the bill is signed by the President. While I urge the SBA to process applications in a timely manner, and while I understand the frustration of the applicants who have been waiting, I believe, in general, that it is in the best interest of the taxpayers for applicants and their proposals to be thoroughly screened, rather than blindly approved. This program, above all else, was designed to help small businesses, and I believe we should carefully review policy changes that are intended to expand a CDC's territory to make sure that the real goal--increasing access to the program for small businesses-- is achieved. The second provision gives the SBA the authority to reprogram unused funds to make up for the significant shortfall of appropriations for the 7(a) loan program. In its budget request for FY 2000, and again recently, the SBA estimated that the demand in this popular lending program would grow to a program level of $10.5 billion. Unfortunately, it was only appropriated enough to support a level of close to $9.8 billion. The Administration's estimate has proven to be more accurate than Congress anticipated, and the SBA needs additional funds to keep the program running throughout this fiscal year. This bill restores $500 million of the $700 million shortfall. I strongly support this provision and worked with Senator Bond to draft this legislation. I appreciate his cooperation and respectfully urge the appropriators in both the Senate and House to work with us. Lastly, Mr. President, this bill also includes a technical change to the Historically Underutilized Business Zone small business contracting program (HUBZone program) administered by the SBA. The HUBZone program is designed to provide contracting opportunities in economically distressed areas of this country. One of the criteria for this program is that a small business must be located in a qualified census tract or nonmetropolitan county based on unemployment statistics from the Department of Labor and the Department of the Census. As new data becomes available, there is a possibility that HUBZone firms would lose their eligibility, because the data could reflect that the census tract the firm is located in is technically no longer considered an economically depressed area. As ranking member of the Committee on Small Business and as a cosponsor of the original HUBZone law passed in 1997, I am concerned that when a particular area is no longer deemed HUBZone-eligible, small business owners in that area will lose the ability to bid on contracting opportunities under the program with little or no warning. This will be disruptive to the program and could discourage participation by qualified small businesses. Because it is better policy to provide both small firms and the SBA with some sort of warning before a firm is deemed ineligible, this amendment is intended to allow a HUBZone firm located in an economically depressed area that has been redesignated by either Bureau of Labor Statistics (BLS) or Census data, to remain eligible under the program for three additional years. Thus the firm is put on notice that contracting opportunities under the program may not be available in the future, and the business is given time to plan for this change. While I understand only a handful of firms were affected by a change in designated areas when new BLS data was released last year, I support the chairman's effort to ensure that no firm is taken by surprise this year. I am pleased that Senator Byrd and his staff worked together with my staff to come up with appropriate language for this amendment. In closing, I want to thank my colleagues for supporting this bill. If, as expected, it is enacted, they will have improved the business climate and taken a few more steps to ensure that small businesses have access to capital and expanded procurement opportunities.

Mr. KERRY

Mr. KERRY. Mr. President, my two colleagues, the Senator from Connecticut and the Senator from Rhode Island would like to take a moment to acknowledge our distinguished visiting Chaplain this morning. If they could just have a moment to do that.

Mr. KERRY

Mr. KERRY. Mr. President, I am very pleased to join Senator Moynihan in introducing the Broadband Internet Access Act of 2000. I commend the Senator from New York for his leadership on this issue, and I look forward to working with Senator Moynihan, Senator Rockefeller and others in this critical effort to ensure the rapid deployment of high- speed telecommunications services to all Americans. Mr. President, throughout the course of history, prosperity has flowed to those economies that had ready access to avenues of commerce. Throughout the middle ages and up until the mid-19th century, that meant ready proximity to a waterway. The great cities of Italy, England and France all lay on oceans or rivers. In North America, the early trading points on or near the Atlantic thrived and became New York, Boston, Philadelphia and Baltimore. Throughout this time, the primary way to ship goods was over water, and economies prospered along oceans or major inland waterways because of the paramount importance of access to commerce. With the industrial revolution came the advent of the railroad and this new way of getting goods to market. If your town was fortunate to be along one of many rail lines, then good economic times often lay ahead. If your town was not along the railroad, then you were at a serious economic disadvantage. We read today about the ``ghost towns'' of the old West--these were the towns left behind because the railroad passed them by. And even then, one hundred seventy years ago, we know that Americans did all they could to connect themselves to the networks--waterways, railroads--that delivered goods to market: along the Panhandle, the entire town of Ivanhoe, Oklahoma literally uprooted itself--picked up the church, the school, the buildings--and moved across the Texas border to be closer to the railroad lines. In many ways, that is precisely the challenge facing thousands of communities across the nation today: communities are rushing and hurrying--and too many are struggling and finding it enormously difficult--to get connected to the networks on which we conduct business in the New Economy. And, Mr. President, unless we are willing to countenance thousands of ghost towns across the landscape of the 21st century--ghost towns of inner city and rural America--we must work together to empower every community to meet that challenge. Mr. President, today, the major product in the United States is information. The ability to send and receive vast amounts of information, quickly and efficiently, often determines the success or failure of a company in our new information age. For this reason, companies are locating where they have high-speed access to this new avenue of commerce, and they are shying away from areas where such excess is either prohibitively expensive or unavailable. High-speed access is also providing new opportunities in terms of educating our children and caring for the sick. However, those opportunities are available only to those communities with efficient and affordable access to high-speed lines. Herein lies the problem. As would be expected, telecommunications companies are deploying advanced networks initially in areas where there are lots of attractive consumers, but are often taking their time to build-out elsewhere, such as in low-income urban and rural areas. That's why a downtown business consumer has a myriad of choices for high-speed access. And most residential consumers living in reasonable well-off urban and suburban areas also have a choice. However, many, many regions of our country still have little or no ability to obtain high-speed access to the Internet. According to the Massachusetts Technology Collaborative, of the 351 towns in Massachusetts, only 164 are wired to receive high-speed DSL Internet service, and only 145 are wired to receive high-speed cable modem service. Significantly, 151 towns have no DSL or cable modem option, only 56 kilobit dial-up Internet service. Moreover, this situation is not expected to change anytime soon. The Legg Mason Precursor groups estimates that even three or fours years down the road, half of America will have either one or zero broadband providers to choose from. We need to address this problem in order to ensure that no area is left behind--to ensure that all Americans are able to benefit from our new high-tech economy. Many telecommunications companies legitimately argue that deploying in certain areas makes little sense because the opportunity to recoup the investment is so small. It's time we listened and offered an economic incentive to change the equation. To this end, our bill establishes a generous 10 percent tax credit to all companies willing to deploy and offer 1.5 megabit high-speed Internet service in rural and low-income urban areas. We are advocating such an approach because we have heard from industry that this will provide a needed incentive to deploy in areas that are presently neglected. Significantly, this credit is open to all companies be they telephone or cable, wireline or wireless, MMDS or satellite. The bill is concerned only with encouraging widespread deployment, and is absolutely technology neutral. Mr. President, our legislation addresses not only the digital divide that exists today, but also looks to the future and to the next generation of high-speed services. The next generation of advanced services will require substantially higher transmission speeds like 4 megabits for one channel of standard television, 20 megabits for one channel of HDTV, and 10 to 100 megabits for Ethernet data. These transmission speeds can only be achieved with more advanced technology such as fiber optics, very high speed digital subscriber line, 50-home- node cable modems, and next-generation wireless. The services available at such speeds will truly revolutionize and improve our daily lives. However, according to economists from the American Enterprise Institute, at the current rate of deployment, such advanced technology will not achieve universal penetration until somewhere between 2030 and 2040. Furthermore, such delay may seriously undermine our global leadership in technology. Indeed, according to a recent report in the Wall Street Journal, the Japanese company NTT will start bringing optical fiber lines directly to homes in Tokyo and Osaka by the end of this year. Such networks will have capabilities of up to 10 megabits downstream--several times faster than most of the high- speed services offered today in America. Such Internet capability will transform American life in ways we can only imagine today. Children can download educational video in real time on nearly any subject. Adults can train for new jobs from their homes. Complex medical images such as MRIs and x-rays that today take several minutes to download can be transmitted in a matter of seconds. Telecommuting, business teleconferencing and personal communication will all rise to new levels. To accelerate the roll-out of such next-generation systems in the US, we propose to establish a 20 percent tax credit for companies that deploy systems capable of providing 22 megabit downstream/10 megabit upstream service to residential consumers everywhere and business consumers in low-income urban and rural areas. Such bits speeds will allow for different users in a home to simultaneously watch 3 different channels of digital television and utilize high-speed Ethernet- comparable Internet access. Mr. President, this measure is intended to begin the debate in the Senate on how best to address the growing digital divide and to accelerate the deployment of next-generation technologies across our nation. I want to thank Senator Moynihan for his extraordinary leadership on this issue and his staff for their continued hard work in crafting this bill. I also wish to commend Senators Rockefeller and Snowe for their work on tax credit legislation which we incorporate and expand on in this bill. Finally, I wish to extend my gratitude to all the members of industry who worked with us over these past few months in crafting this bill. Clearly, this is a very complex topic and we are continuing to work to find the right solution. I look forward to continuing our partnership and to passing meaningful legislation this year. The challenge today is extraordinary--its implications absolutely unmistakable for our country. Too often we talk about a digital divide in the United States as if it were unchangeable, as if it were a simple fact of life in this nation that some communities will be empowered by technology while others will be left behind. But this is a false choice--and we ought to be doing everything in our power as policy makers, working harmoniously with industry, to offer a new choice: every community connected to the new technology, every citizen provided with the tools to make the most of their own talents in the New Economy. Mr. President, The Broadband Internet Access Act of 2000 is not a panacea for every challenge before us in the New Economy; significant questions of education reform workforce development, and technology training must be resolved and reinvented before mere access to technology will allow full participation for every citizen in the Information Age. But Mr. President, I ask that--as we work in a bipartisan way to address those other vital areas of public policy-- we remember the lessons of our nation's economic history and take this absolutely critical first step towards meeting the most basic needs of any community--a connection to the New Economy.

Mr. KERRY

Mr. KERRY. Mr. President, I am very pleased to join Senator Moynihan in introducing the Broadband Internet Access Act of 2000. I commend the Senator from New York for his leadership on this issue, and I look forward to working with Senator Moynihan, Senator Rockefeller and others in this critical effort to ensure the rapid deployment of high- speed telecommunications services to all Americans. Mr. President, throughout the course of history, prosperity has flowed to those economies that had ready access to avenues of commerce. Throughout the middle ages and up until the mid-19th century, that meant ready proximity to a waterway. The great cities of Italy, England and France all lay on oceans or rivers. In North America, the early trading points on or near the Atlantic thrived and became New York, Boston, Philadelphia and Baltimore. Throughout this time, the primary way to ship goods was over water, and economies prospered along oceans or major inland waterways because of the paramount importance of access to commerce. With the industrial revolution came the advent of the railroad and this new way of getting goods to market. If your town was fortunate to be along one of many rail lines, then good economic times often lay ahead. If your town was not along the railroad, then you were at a serious economic disadvantage. We read today about the ``ghost towns'' of the old West--these were the towns left behind because the railroad passed them by. And even then, one hundred seventy years ago, we know that Americans did all they could to connect themselves to the networks--waterways, railroads--that delivered goods to market: along the Panhandle, the entire town of Ivanhoe, Oklahoma literally uprooted itself--picked up the church, the school, the buildings--and moved across the Texas border to be closer to the railroad lines. In many ways, that is precisely the challenge facing thousands of communities across the nation today: communities are rushing and hurrying--and too many are struggling and finding it enormously difficult--to get connected to the networks on which we conduct business in the New Economy. And, Mr. President, unless we are willing to countenance thousands of ghost towns across the landscape of the 21st century--ghost towns of inner city and rural America--we must work together to empower every community to meet that challenge. Mr. President, today, the major product in the United States is information. The ability to send and receive vast amounts of information, quickly and efficiently, often determines the success or failure of a company in our new information age. For this reason, companies are locating where they have high-speed access to this new avenue of commerce, and they are shying away from areas where such excess is either prohibitively expensive or unavailable. High-speed access is also providing new opportunities in terms of educating our children and caring for the sick. However, those opportunities are available only to those communities with efficient and affordable access to high-speed lines. Herein lies the problem. As would be expected, telecommunications companies are deploying advanced networks initially in areas where there are lots of attractive consumers, but are often taking their time to build-out elsewhere, such as in low-income urban and rural areas. That's why a downtown business consumer has a myriad of choices for high-speed access. And most residential consumers living in reasonable well-off urban and suburban areas also have a choice. However, many, many regions of our country still have little or no ability to obtain high-speed access to the Internet. According to the Massachusetts Technology Collaborative, of the 351 towns in Massachusetts, only 164 are wired to receive high-speed DSL Internet service, and only 145 are wired to receive high-speed cable modem service. Significantly, 151 towns have no DSL or cable modem option, only 56 kilobit dial-up Internet service. Moreover, this situation is not expected to change anytime soon. The Legg Mason Precursor groups estimates that even three or fours years down the road, half of America will have either one or zero broadband providers to choose from. We need to address this problem in order to ensure that no area is left behind--to ensure that all Americans are able to benefit from our new high-tech economy. Many telecommunications companies legitimately argue that deploying in certain areas makes little sense because the opportunity to recoup the investment is so small. It's time we listened and offered an economic incentive to change the equation. To this end, our bill establishes a generous 10 percent tax credit to all companies willing to deploy and offer 1.5 megabit high-speed Internet service in rural and low-income urban areas. We are advocating such an approach because we have heard from industry that this will provide a needed incentive to deploy in areas that are presently neglected. Significantly, this credit is open to all companies be they telephone or cable, wireline or wireless, MMDS or satellite. The bill is concerned only with encouraging widespread deployment, and is absolutely technology neutral. Mr. President, our legislation addresses not only the digital divide that exists today, but also looks to the future and to the next generation of high-speed services. The next generation of advanced services will require substantially higher transmission speeds like 4 megabits for one channel of standard television, 20 megabits for one channel of HDTV, and 10 to 100 megabits for Ethernet data. These transmission speeds can only be achieved with more advanced technology such as fiber optics, very high speed digital subscriber line, 50-home- node cable modems, and next-generation wireless. The services available at such speeds will truly revolutionize and improve our daily lives. However, according to economists from the American Enterprise Institute, at the current rate of deployment, such advanced technology will not achieve universal penetration until somewhere between 2030 and 2040. Furthermore, such delay may seriously undermine our global leadership in technology. Indeed, according to a recent report in the Wall Street Journal, the Japanese company NTT will start bringing optical fiber lines directly to homes in Tokyo and Osaka by the end of this year. Such networks will have capabilities of up to 10 megabits downstream--several times faster than most of the high- speed services offered today in America. Such Internet capability will transform American life in ways we can only imagine today. Children can download educational video in real time on nearly any subject. Adults can train for new jobs from their homes. Complex medical images such as MRIs and x-rays that today take several minutes to download can be transmitted in a matter of seconds. Telecommuting, business teleconferencing and personal communication will all rise to new levels. To accelerate the roll-out of such next-generation systems in the US, we propose to establish a 20 percent tax credit for companies that deploy systems capable of providing 22 megabit downstream/10 megabit upstream service to residential consumers everywhere and business consumers in low-income urban and rural areas. Such bits speeds will allow for different users in a home to simultaneously watch 3 different channels of digital television and utilize high-speed Ethernet- comparable Internet access. Mr. President, this measure is intended to begin the debate in the Senate on how best to address the growing digital divide and to accelerate the deployment of next-generation technologies across our nation. I want to thank Senator Moynihan for his extraordinary leadership on this issue and his staff for their continued hard work in crafting this bill. I also wish to commend Senators Rockefeller and Snowe for their work on tax credit legislation which we incorporate and expand on in this bill. Finally, I wish to extend my gratitude to all the members of industry who worked with us over these past few months in crafting this bill. Clearly, this is a very complex topic and we are continuing to work to find the right solution. I look forward to continuing our partnership and to passing meaningful legislation this year. The challenge today is extraordinary--its implications absolutely unmistakable for our country. Too often we talk about a digital divide in the United States as if it were unchangeable, as if it were a simple fact of life in this nation that some communities will be empowered by technology while others will be left behind. But this is a false choice--and we ought to be doing everything in our power as policy makers, working harmoniously with industry, to offer a new choice: every community connected to the new technology, every citizen provided with the tools to make the most of their own talents in the New Economy. Mr. President, The Broadband Internet Access Act of 2000 is not a panacea for every challenge before us in the New Economy; significant questions of education reform workforce development, and technology training must be resolved and reinvented before mere access to technology will allow full participation for every citizen in the Information Age. But Mr. President, I ask that--as we work in a bipartisan way to address those other vital areas of public policy-- we remember the lessons of our nation's economic history and take this absolutely critical first step towards meeting the most basic needs of any community--a connection to the New Economy.

Mr. KERRY

Mr. KERRY. Mr. President, I thank the chairman and ranking member for their courtesy and I appreciate the time of the Senate to be able to discuss an issue of extraordinary importance. It is an issue that is contained in this bill. It is a line item in this bill of some $85 million with respect to the issue of national missile defense. President Clinton has just returned from his first meeting with the new Russian President, Vladimir Putin, and arms control dominated their agenda, in particular, the plan of the United States to deploy a limited national defense system, which would require amending the 1972 ABM Treaty. Russia is still strongly opposed to changing that treaty, and I think we can all expect this will continue to be an issue of great discussion between the United States and Russia in the months and possibly years to come. As I said, in the Senate today, this defense bill authorizes funding for the construction of the national missile defense initial deployment facilities. Regretfully, we do not always have the time in the Senate to lay out policy considerations in a thorough, quiet, and thoughtful way, and I will try to do that this morning. The question of whether, when, and how the United States should deploy a defense against ballistic missiles is, in fact, complex--tremendously complex. I want to take some time today to walk through the issues that are involved in that debate and to lay bare the implications it will have for the national security of the United States. No American leader can dismiss an idea that might protect American citizens from a legitimate threat. If there is a real potential of a rogue nation, as we call them, firing a few missiles at any city in the United States, responsible leadership requires that we make our best, most thoughtful efforts to defend against that threat. The same is true of the potential threat of accidental launch. If ever either of these things happened, no leader could explain away not having chosen to defend against such a disaster when doing so made sense. The questions before us now are several. Does it make sense to deploy a national missile defense now, unilaterally, if the result might be to put America at even greater risk? Do we have more time to work with allies and others to find a mutually acceptable, nonthreatening way of proceeding? Have the threats to which we are responding been exaggerated, and are they more defined by politics than by genuine threat assessment and scientific fact? Have we sufficiently explored various technologies and architectures so we are proceeding in the most thoughtful and effective way? The President has set out four criteria on which he will base his decision to deploy an NMD: The status of the threat, the status and effectiveness of the proposed system's technology, the cost of the system, and the likely impact of deploying such a system on the overall strategic environment and U.S. arms control efforts in general. In my judgment, at this point in time none of these criteria are met to satisfaction. While the threat from developing missile programs has emerged more quickly than we expected, I do not believe it justifies a rush to action on the proposed defensive system, which is far from technologically sound and will probably not even provide the appropriate response to the threat as it continues to develop. More importantly, a unilateral decision of the United States to deploy an NMD system could undermine global strategic stability, damage our relationship with key allies in Europe and Asia, and weaken our continuing efforts to reduce the nuclear danger. Turning first to the issue of the threat that we face, this question deserves far greater scrutiny than it has thus far received. I hear a number of colleagues, the State Department, and others, saying: Oh, yes, the threat exists. Indeed, to some degree the threat does exist. But it is important for us to examine to what degree. Recently, the decades-long debate on the issue of deploying an NMD has taken on bipartisan relevance as the threat of a rogue ballistic missile program has increased. I want to be very clear. At this point, I support the deployment, in cooperation with our friends and allies, of a limited, effective National Missile Defense System aimed at containing the threat from small rogue ballistic missile programs or the odd, accidental, or unauthorized launch from a major power. But I do not believe the United States should attempt to unilaterally deploy a National Missile Defense System aimed at altering the strategic balance. We have made tremendous progress over the last two decades in reducing the threat from weapons of mass destruction through bilateral strategic reductions with Russia and multilateral arms control agreements such as the Chemical Weapons Convention. We simply cannot allow these efforts to be undermined in any way as we confront the emerging ballistic missile threat. Even as we have made progress with Russia on reducing our cold war arsenals, ballistic missile technology has spread, and the threat to the United States from rogue powers, so-called, has grown. The July 1998 Rumsfeld report found that the threat from developing ballistic missile states, especially North Korea, Iran, and Iraq, is developing faster than expected and could pose an imminent threat to the U.S. homeland in the next 5 years. That conclusion was reinforced just 1 month later when North Korea tested a three-stage Taepo Dong-1 missile, launching it over Japan and raising tensions in the region. While the missile's third stage failed, the test confirmed that North Korea's program for long-range missiles is advancing towards an ICBM capability that could ultimately--and I stress ultimately--threaten the United States, as surely as its shorter range missiles threaten our troops and our allies in the region today. A 1999 national intelligence estimate on the ballistic missile threat found that in addition to the continuing threat from Russia and China, the United States faces a developing threat from North Korea, Iran, and Iraq. In addition to the possibility that North Korea might convert the Taepo Dong-1 missile into an inaccurate ICBM capable of carrying a light payload to the United States, the report found that North Korea could weaponize the larger Taepo Dong-2 to deliver a crude nuclear weapon to American shores, and it could do so at any time, with little warning. The NIE also found that, in the next 15 years, Iran could test an ICBM capable of carrying a nuclear weapon to the United States--and certainly to our allies in Europe and the Middle East--and that Iraq may be able to do the same in a slightly longer time frame. The picture of the evolving threat to the United States from ballistic missile programs in hostile nations has changed minds in the Senate about the necessity of developing and testing a national missile defense. It has changed my mind about what might be appropriate to think about and to test and develop. If Americans in Alaska or Hawaii must face this threat, however uncertain, I do not believe someone in public life can responsibly tell them: We will not look at or take steps to protect you. But as we confront the technological challenges and the political ramifications of developing and deploying a national missile defense, we are compelled to take a closer look at the threat we are rushing to meet. I believe the missile threat from North Korea, Iran, and Iraq is real but not imminent, and that we confront today much greater, much more immediate dangers, from which national missile defense cannot and will not protect us. To begin, it is critical to note that both the Rumsfeld Commission and the National Intelligence Estimate adopted new standards for assessing the ballistic missile threat in response to political pressures from the Congress. The 1995 NIE was viciously criticized for underestimating the threat from rogue missile programs. Some in Congress accused the administration of deliberately downplaying the threat to undermine their call for a national missile defense. To get the answer that they were looking for, the Congress then established the Rumsfeld Commission to review the threat. Now, that commission was made up of some of the best minds in U.S. defense policy--both supporters and skeptics of national missile defense. I do not suggest the commission's report was somehow fixed. These are people who have devoted their lives in honorable service to their country. The report reflects no less than their best assessment of the threat. But in reaching the conclusions that have alarmed so many about the immediacy of the threat, we must responsibly take note of the fact that the commission did depart from the standards that we had traditionally used to measure the threat. First, the commission reduced the range of ballistic missiles that we consider to be a threat from missiles that can reach the continental United States to those that can only reach Hawaii and Alaska. I think this is a minor distinction because, as I said earlier, no responsible leader is going to suggest that you should leave Americans in Hawaii or Alaska exposed to attack. But certainly the only reason to hit Hawaii or Alaska, if you have very few weapons measured against other targets, is to wreak terror. And insomuch as that is the only reason, one has to factor that into the threat analysis in ways they did not. Secondly, it shortened the time period for considering a developing program to be a threat from the old standard which measured when a program could actually be deployed to a new standard of when it was simply tested. Again, I would be willing to concede this as a minor distinction because if a nation were to be intent on using one of these weapons, it might not wait to meet the stringent testing requirements that we usually try to meet before deploying a new system. It could just test a missile, see that it works, and make plans to use it. These changes are relatively minor, but they need to be acknowledged and factored into the overall discussion. But the third change which needs to be factored in is not insignificant because both the Rumsfeld Commission and the 1999 NIE abandoned the old standard of assessing the likelihood that a nation would use its missile capacity in favor of a new standard of whether a nation simply has the relevant capacity for a missile attack, with no analysis whatsoever of the other factors that go into a decision to actually put that capability to use. This is tremendously important because, as we know from the cold war, threat is more than simply a function of capability; it is a function of attention and other political and military considerations. Through diplomacy and deterrence, the United States can alter the intentions of nations that pursue ballistic missile programs and so alter the threat they pose to us. This is not simply wishful thinking. There are many examples today of nations who possess the technical capacity to attack the United States, but whom we do not consider a threat. India and Pakistan have made dramatic progress in developing medium-range ballistic missile programs. But the intelligence community does not consider India and Pakistan to pose a threat to U.S. interests. Their missile capacity alone does not translate into a threat because they do not hold aggressive intentions against us. Clearly, North Korea, Iran, and Iraq are hostile to us, and our ability to use diplomacy to reduce the threat they pose will be limited. But having the capacity to reach us and an animosity towards us does not automatically translate into the intention to use weapons of mass destruction against us. In the 40 years that we faced the former Soviet Union, with the raw capability to destroy each other, neither side resorted to using its arsenal of missiles. Why not? Because even in periods of intense animosity and tension, under the most unpredictable and isolated of regimes, political and military deterrence has a powerful determining effect on a nation's decision to use force. We have already seen this at work in our efforts to contain North Korea's nuclear and missile programs. We saw it at work in the gulf war when Saddam Hussein was deterred from using his weapons of mass destruction by the sure promise of a devastating response from the United States. During the summer of 1999, intelligence reports indicated that North Korea was preparing the first test-launch of the Taepo Dong-2. Regional tensions rose, as Japan, South Korea and the United States warned Pyongyang that it would face serious consequences if it went ahead with another long-range missile launch. The test was indefinitely delayed, for ``political reasons,'' which no doubt included U.S. military deterrence and the robust diplomatic efforts by the United States and its key allies in the region. Threatening to cut off nearly $1 billion of food assistance and KEDO funding to North Korea should the test go forward, while also holding out the possibility of easing economic sanctions if the test were called off, helped South Korea, Japan and the United States make the case to Pyongyang that its interests would be better served through restraint. An unprecedented dialogue between the United States and North Korea, initiated by former Secretary of Defense William Perry during the height of this crisis, continues today. It aims to verifiably freeze Pyongyang's missile programs and end 50 years of North Korea's economic isolation. Acknowledging that these political developments can have an important impact on the threat, the intelligence community, according to a May 19 article in the Los Angeles Times, will reflect in its forthcoming NIE that the threat from North Korea's missile program has eased since last fall. And if it has eased since last fall, indeed, we should be thinking about the urgency of decisions we make that may have a profound impact on the overall balance of power. In short, even as we remain clear-eyed about the threat these nations pose to American interests, we must not look at the danger as somehow preordained or unavoidable. In cooperation with our friends and allies, we must vigorously implore the tools of diplomacy to reduce the threat. We must redouble our efforts to stop the proliferation of these deadly weapons. We cannot just dismiss the importance of U.S. military deterrence. Only madmen, only the most profoundly detached madmen, bent on self- destruction, would launch a missile against U.S. soil, which obviously would invite the most swift and devastating response. One or two or three missiles fired by North Korea or Iraq would leave a clear address of who the sender was, and there is no question that the United States would have the ability to eliminate them from the face of this planet. All people would recognize that as an immediate and legitimate response. My second major concern about the current debate over the missile threat is that it does nothing to address equally dangerous but more immediate and more likely threats to U.S. interests. For one, U.S. troops and U.S. allies today confront the menace of theater ballistic missiles, capable of delivering chemical or biological weapons. We saw during the gulf war how important theater missile defense is to maintaining allied unity and enabling our troops to focus on their mission. We must continue to push this technology forward regardless of whether we deploy an NMD system. The American people also face the very real threat of terrorist attack. The 1999 State Department report on Patterns of Global Terrorism shows that while the threat of state-sponsored terrorism against the U.S. is declining, the threat from nonstate actors, who increasingly have access to chemical and biological weapons, and possibly even small nuclear devices, is growing. These terrorist groups are most likely to attack us covertly, quietly slipping explosives into a building, unleashing chemical weapons into a crowded subway, or sending a crude nuclear weapon into a busy harbor. An NMD system will not protect American citizens from any of these more immediate and more realistic threats. Finally, on the issue of the missile threat we are confronting, I remain deeply concerned about Russia's command and control over its nuclear forces. Russia has more than 6,000 strategic missiles armed with nuclear warheads. Maintaining these missiles on high alert significantly increases the threat of an accidental or an unauthorized launch. In 1995, the Russian military misidentified a U.S. weather rocket launched from Norway as a possible attack on the Russian Federation. With Russia's strategic forces already on high-alert, President Yelstin and his advisors had just minutes to decide whether to launch a retaliatory strike on the United States. And yet, in an effort to reassure Russia that the proposed missile defense will not prompt an American first strike, the administration seems to be encouraging Russia to, in fact, maintain its strategic forces on high alert to allow for a quick, annihilating counterattack that would overwhelm the proposed limited defense they are offering. In effect, in order to deploy the system the administration is currently defining, they are prepared to have Russia, maintain with a bad command-and-control system weapons on hair trigger or targeted in order to maintain the balance. In sum, the threat from rogue missile programs is neither as imminent nor is as mutable as some have argued. We have time to use the diplomatic tools at our disposal to try to alter the political calculation that any nation might make before it decided to use ballistic missile capacity. Moreover, the United States faces other, more immediate threats that will not be met by an NMD. To meet the full range of threats to our national security, we need to simultaneously address the emerging threat from the rogue ballistic missile program, maintain a vigorous defense against theater ballistic missiles and acts of terrorism, and avoid actions that would undermine the strategic stability we have fought so hard to establish. Let me speak for a moment now about the technology. In making his deployment decision, the President will also consider the technological readiness and effectiveness of the proposed system. Again, I have grave concerns that we are sacrificing careful technical development of this system to meet an artificial deadline, and, may I say, those concerns are shared by people far more expert than I am. Moreover, even if the proposed system were to work as planned, I am not convinced it would provide the most effective defense against a developing missile threat. Let's look for a moment at the system currently under consideration. The administration has proposed a limited system to protect all 50 States against small-scale attacks by ICBMs. In the simplest terms, this is a ground-based, hit-to-kill system. An interceptor fired from American soil must hit the incoming missile directly to destroy it. Most of the components of this system are already developed and are undergoing testing. It will be deployed in 3 phases and is to be completed by about 2010, if the decision to deploy is made this year. The completed system will include 200, 250 interceptors deployed in Alaska and North Dakota, to be complemented by a sophisticated array of upgraded early-warning radars and satellite- based launch detection and tracking systems. I have two fundamental questions about this proposed system: Will the technology work as intended, and is the system the most appropriate and effective defense against this defined threat? There are three components to consider in answering the first question: The technology's ability to function at the most basic level, its operational effectiveness against real world threats, and its reliability. I do not believe the compressed testing program and decision deadline permit us to come close to drawing definitive conclusions about those three fundamental elements of readiness. In a Deployment Readiness Review scheduled for late July of this year, the Pentagon will assess the system, largely on the results of three intercept tests. The first of these in October of 1999 was initially hailed as a success because the interceptor did hit the target, but then, on further examination, the Pentagon conceded that the interceptor had initially been confused, it had drifted off course, ultimately heading for the decoy balloon, and possibly striking the dummy warhead only by accident. That is test No. 1. The second test in January of 2000 failed because of a sensor coolant leak. The third test has not even taken place yet. The third test, initially planned for April 2000, was postponed until late June and has recently been postponed again. It is expected in early July, just a few weeks before the Pentagon review. To begin with, after two tests, neither satisfactory, it is still unclear whether the system will function at a basic level under the most favorable conditions. Even if the next test is a resounding success, I fail to see how that would be enough to convince people we have thoroughly vetted the potential problems of a system. On the second issue of whether the system will be operationally effective, we have very little information on which to proceed. We have not yet had an opportunity to test operational versions of the components in anything such as the environment they would face in a real defensive engagement. We are only guessing at this point how well the system would respond to targets launched from unanticipated locations or how it would perform over much greater distances and much higher speeds than those at which it has been tested. Finally, the question of reliability is best answered over time and extensive use of the system. Any program in its developing stages will run into technical glitches, and this program has been no different. That does not mean the system will not ever work properly, but it does mean we ought to take the time to find out, particularly before we do something that upsets the balance in the ways this may potentially do. That is one more reason to postpone the deployment decision, to give the President and the Pentagon the opportunity to conduct a thorough and rigorous testing program. This recommendation is not made in a vacuum. Two independent reviews have reached a similar conclusion about the risks of rushing to deployment. In February of 1998, a Pentagon panel led by former Air Force Chief of Staff Gen. Larry Welch, characterized the truncated testing program as a ``rush to failure.'' The panel's second report recommended delaying the decision to deploy until 2003 at the earliest to allow key program elements to be fully tested and proven. The concerns of the Welch Panel were reinforced by the release in February 2000 of a report by the Defense Department's office of operational test and evaluation (DOT&E). The Coyle report decried the undue pressure being applied to the national missile defense testing program and warned that rushing through testing to meet artificial decision deadlines has ``historically resulted in a negative effect on virtually every troubled DOD development program.'' The Report recommended that the Pentagon postpone its Deployment Readiness Review to allow for a thorough analysis and clear understanding of the results of the third intercept test (now scheduled for early July), which will be the first ``integrated systems'' test of all the components except the booster. The scientific community is concerned about more than the risks of a shortened testing program. The best scientific minds in America have begun to warn that even if the technology functions as planned, the system could be defeated by relatively simple countermeasures. The 1999 NIE that addressed the ballistic missile threat concluded that the same nations that are developing long-range ballistic missile systems could develop or buy countermeasure technologies by the time they are ready to deploy their missile systems. Just think, we could expend billions of dollars, we could upset the strategic balance, we could initiate a new arms race, and we could not even get a system that withstands remarkably simple, inexpensive countermeasures. Now, there is a stroke of brilliant strategic thinking. The proposed national missile defense is an exo-atmospheric system, meaning the interceptor is intended to hit the target after the boost phase when it has left the atmosphere and before reentry. An IBM releases its payload immediately after the boost phase. If that payload were to consist of more than simply one warhead, then an interceptor would have more than one target with which to contend after the boost phase. The Union of Concerned Scientists recently published a thorough technical analysis of three countermeasures that would be particularly well suited to overwhelming this kind of system, chemical and biological bomblets, antisimulation decoys, and warhead shrouds. North Korea, Iran, and Iraq are all believed to have programs capable of weaponizing chemical and biological weapons which are cheaper and easier to acquire than the most rudimentary nuclear warhead. The most effective means of delivering a CBW, a chemical-biological warfare warhead on a ballistic missile, is not to deploy one large warhead filled with the agent but to divide it up into as many as 100 submunitions, or bomblets. There are few technical barriers to weaponizing CBW this way, and it allows the agents to be dispersed over a large area, inflicting maximum casualties. Because the limited NMD system will not be able to intercept a missile before the bomblets are dispersed, it could quickly be overpowered by just three incoming missiles armed with bomblets--and that is assuming every interceptor hit its target. Just one missile carrying 100 targets would pose a formidable challenge to the system being designed with possibly devastating effects. The exo-atmospheric system is also vulnerable to missiles carrying nuclear warheads armed with decoys. Using antisimulation, an attacker would disguise the nuclear warhead to look like a decoy by placing it in a lightweight balloon and releasing it along with a large number of similar but empty balloons. Using simple technology to raise the temperature in all of the balloons, the attacker could make the balloon containing the warhead indistinguishable to infrared radar from the empty balloons, forcing the defensive system to shoot down every balloon in order to ensure that the warhead is destroyed. By deploying a large number of balloons, an attacker could easily overwhelm a limited national missile defense system. Alternately, by covering the warhead with a shroud cooled by liquid nitrogen, an attacker could reduce the warhead's infrared radiation by a factor of at least 1 million, making it incredibly difficult for the system's sensors to detect the warhead in time to hit it. I have only touched very cursorily on the simplest countermeasures that could be available to an attacker with ballistic missiles, but I believe this discussion raises serious questions about a major operational vulnerability in the proposed system and about whether this system is the best response to the threats we are most likely to face in the years ahead. I don't believe it is. There is a simpler, more sensible, less threatening, more manageable approach to missile defense that deserves greater consideration. Rather than pursuing the single-layer exo-atmospheric system, I believe we should focus our research efforts on developing a forward-deployed, boost phase intercept system. Such a system would build on the current technology of the Army's land-based theater high altitude air defense, THAAD, and the Navy's sea-based theaterwide defense system to provide forward-deployed defenses against both theater ballistic missile threats and long-range ballistic missile threats in their boost phase. The Navy already deploys the Aegis fleet air defense system. An upgraded version of this sea-based system could be stationed off the coast of North Korea or in the Mediterranean or in the Persian Gulf to shoot down an ICBM in its earliest and slowest stage. The ground-based THAAD system could be similarly adapted to meet the long-range and theater ballistic missile threats. Because these systems would target a missile in its boost phase, they would eliminate the current system's vulnerability to countermeasures. This approach could also be more narrowly targeted at specific threats and it could be used to extend ballistic missile protection to U.S. allies and to our troops in the field. As Dick Garwin, an expert on missile defense and a member of the Rumsfeld Commission has so aptly argued, the key advantage to the mobile forward-deployed missile defense system is that rather than having to create an impenetrable umbrella over the entire U.S. territory, it would only require us to put an impenetrable lid over the much smaller territory of an identified rogue nation or in a location where there is the potential for an accidental launch. A targeted system, by explicitly addressing specific threats, would be much less destabilizing than a system designed only to protect U.S. soil. It would reassure Russia that we do not intend to undermine its nuclear deterrent, and it would enable Russia and the United States to continue to reduce and to secure our remaining strategic arsenals. It would reassure U.S. allies that they will not be left vulnerable to missile threats and that they need not consider deploying nuclear deterrents of their own. In short, this alternative approach could do what the proposed national defense system will not do: It will make us safer. There are two major obstacles to deploying a boost phase system, but I believe both of those obstacles can and must be overcome. First, the technology is not yet there. The Navy's theaterwide defense system was designed to shoot down cruise missiles and other threats to U.S. warships. Without much faster intercept missiles than are currently available, the system would not be able to stop a high speed ICBM, even in the relatively slow boost phase. The THAAD system, which continues to face considerable challenges in its demonstration and testing phases, is also being designed to stop ballistic missiles, but it hasn't been tested yet against the kinds of high speeds of an ICBM. Which raises the second obstacle to deploying this system: the current interpretation of the ABM Treaty, as embodied in the 1997 demarcation agreements between Russia and the United States, does not allow us to test or deploy a theater ballistic missile system capable of shooting down an ICBM. I will address this issue a little more in a moment, but let me say that I am deeply disturbed by the notion that we should withdraw from the ABM Treaty and unilaterally deploy an ABM system, particularly the kind of system I have defined that may not do the job. In the long run, such a move would undermine U.S. security rather than advance it. It is possible--and I believe necessary--to reach an agreement with Russia on changes to the ABM Treaty that would allow us to deploy an effective limited defense system such as I have described. In fact, President Putin hinted quite openly at the potential for that kind of an agreement being reached. I commend the President for working hard to reach an agreement with Russia that will allow us both to deploy in an intelligent and mutual way that does not upset the balance. I want to briefly address the issue of cost, which I find to be the least problematic of the four criterion under consideration. Those who oppose the idea of a missile defense point to the fact that, in the last forty years, the United States has spent roughly $120 billion trying to develop an effective defense against ballistic missiles. And because this tremendous investment has still not yielded definitive results, they argue that we should abandon the effort before pouring additional resources into it. I disagree. I believe that we can certainly afford to devote a small portion of the Defense budget to develop a workable national missile defense. The projected cost of doing so varies--from roughly $4 billion to develop a boost-phase system that would build on existing defenses to an estimated $60 billion to deploy the three-phased ground-based system currently under consideration by the Administration. These estimates will probably be revised upward as we confront the inevitable technology challenges and delays. But, spread out over the next 5 to 10 years, I believe we can well afford this relatively modest investment in America's security, provided that our research efforts focus on developing a realistic response to the emerging threat. My only real concern about the cost of developing a national missile defense is in the perception that addressing this threat somehow makes us safe from the myriad other threats that we face. We must not allow the debate over NMD to hinder our cooperation with Russia, China, and our allies to stop the proliferation of WMD and ballistic missile technology. In particular, we must remain steadfast in our efforts to reduce the dangers posed by the enormous weapons arsenal of the former Soviet Union. Continued Russian cooperation with the expanded Comprehensive Threat Reduction programs will have a far greater impact on America's safety from weapons of mass destruction than deploying an NMD system. We must not sacrifice the one for the other. Let me go to the final of the four considerations the President has set forward because I believe that a unilateral decision to deploy a national missile defense system would have a disastrous effect on the international strategic and political environment. It could destabilize our already difficult relationships with Russia and China and undermine our allies' confidence in the reliability of the U.S. defensive commitment. It would jeopardize current hard fought arms control agreements, and it could erode more than 40 years of U.S. leadership on arms control. The administration clearly understands the dangers of a unilateral U.S. deployment. President Clinton was not able to reach agreement with the Russian President, but he has made progress in convincing the Russian leadership that the ballistic missile threat is real. To be clear, I don't support the administration's current proposal, but I do support its effort to work out with Russia this important issue. The next administration needs to complete that task, if we cannot do it in the next months. While simply declaring our intent to deploy a system does not constitute an abrogation of the ABM Treaty, it surely signals that the U.S. withdrawal from the treaty is imminent. Mr. President, the first casualty of such a declaration would be START II. Article 2 paragraph 2 of the Russian instrument of ratification gives Russia the right to withdraw from START II if the U.S. withdraws from or violates the 1972 ABM Treaty. Russia would also probably stop implementation of START I, as well as cooperation with our comprehensive threat reduction program. I don't have time at this moment to go through the full picture of the threat reduction problems. But suffice it to say that really the most immediate and urgent threat the United States faces are the numbers of weapons on Russian soil with a command and control system that is increasingly degraded, and the single highest priority of the United States now is keeping the comprehensive threat reduction program on target. To lose that by a unilateral statement of our intention to proceed would be one of the most dramatic losses of the last 40 to 50 years. So continued cooperation with Russia on these arms control programs is critical. Furthermore, no matter how transparent we are with Russia about the intent and capabilities of the proposed system, Russia's military leadership will interpret a unilateral deployment as a direct threat to their deterrence capacity. And while Russia doesn't have the economic strength today to significantly enhance its military capabilities, there are clear examples of Russia's capacity to wield formidable military power when it wants. We must not allow a unilateral NMD deployment to provoke the Russian people into setting aside the difficult but necessary tasks of democratization and economic reform in a vain effort to return to Russia's days of military glory. Finally, with regard to Russia, a unilateral deployment by the United States would jeopardize our cooperation on a whole range of significant issues. However imperfect it is, U.S.-Russian cooperation will continue to be important on matters from stopping Teheran's proliferation efforts and containing Iraq's weapons programs to promoting stability in the Balkans. While the impact of a limited U.S. system on Russian security considerations would be largely perceptual, at least as long as that system remains limited, its impact on China's strategic posture is real and immediate. China today has roughly 20-plus long-range missiles. The proposed system would undermine China's strategic deterrent as surely as it would contain the threat from North Korea. And that poses a problem because, unlike North Korea, China has the financial resources to build a much larger arsenal. The Pentagon believes it is likely that China will increase the number and sophistication of its long-range missiles just as part of its overall military modernization effort, regardless of what we do on NMD. But as with Russia, if an NMD decision is made without consultation with China, the leadership in Beijing will perceive the deployment as at least partially directed at them. And given the recent strain in U.S.-China relations and uncertainty in the Taiwan Strait, the vital U.S. national interest in maintaining stability in the Pacific would, in fact, be greatly undermined by such a decision made too rashly. Nobody understands the destabilizing effect of a unilateral U.S. NMD decision better than our allies in Europe and in the Pacific. The steps that Russia and China would take to address their insecurities about the U.S. system will make their neighbors less secure. And a new environment of competition and distrust will undermine regional stability by impeding cooperation on proliferation, drug trafficking, humanitarian crises, and all the other transnational problems we are confronting together. So I think it is critical that we find a way to deploy an NMD without sending even a hint of a message that the security of the American people is becoming decoupled from that of our allies. In Asia, both South Korea and Japan have the capability to deploy nuclear programs of their own. Neither has done so, in part, because both have great confidence in the integrity the U.S. security guarantees and in the U.S. nuclear umbrella that extends over them. They also believe that, while China does aspire to be a regional power, the threat it poses is best addressed through engagement and efforts to anchor China in the international community. Both of these assumptions would be undermined by a unilateral U.S. NMD deployment. First, our ironclad security guarantees will be perceived by the Japanese, by the South Koreans, and others, as somewhat rusty if we pursue a current NMD proposal to create a shield over the U.S. territory. U.S. cities would no longer be vulnerable to the same threats from North Korea that Seoul and Tokyo would continue to face. And so they would say: Well, there is a decoupling; we don't feel as safe as we did. Maybe now we have to make decisions to nuclearize ourselves in order to guarantee our own safety. China's response to a unilateral U.S. NMD will make it, at least in the short term, a far greater threat to regional stability than it poses today. If South Korea and Japan change their perceptions both of the threat they face and of U.S. willingness to protect them, they then could both be motivated to explore independent means of boosting their defenses. Then it becomes a world of greater tensions, not lesser tensions. It becomes a world of greater hair-trigger capacity, not greater safety-lock capacity. Our European allies have expressed the same concerns about decoupling as I have expressed about Asia. We certainly cannot dismiss the calculations that Great Britain, France, and Germany will make about the impact of the U.S. NMD system. But I believe their concerns hinge largely on the affect a unilateral decision would have on Russia, concerns that would be greatly ameliorated if we make the NMD decision with Russia's cooperation. Finally, much has been made of the impact a U.S. national missile defense system would have and what it would do to the international arms control regime. For all of the reasons I have just discussed, a unilateral decision would greatly damage U.S. security interests. I want to repeat that. It will, in fact, damage U.S. security interests. The history of unilateral steps in advancing strategic weapons shows a very clear pattern of sure response and escalation. In 1945, the United States exploded the first atomic bomb. The Soviets followed in 1949. In 1948, we unveiled the first nuclear-armed intercontinental bomber. The Soviets followed in 1955. In 1952, we exploded the first hydrogen bomb. The Soviets followed 1 year later. In 1957, the Soviets beat us, for the one time, and launched the first satellite into orbit and perfected the first ICBM. We followed suit within 12 months. In 1960, the United States fired the first submarine-launched ballistic missile. The Soviets followed in 1968. In 1964, we developed the first multiple warhead missile and reentry vehicle; we tested the first MIRV. The Soviets MIRVed in 1973, and so on, throughout the cold war, up until the point that we made a different decision--the ABM Treaty and reducing the level of nuclear weapons. The rationale for testing and deploying a missile defense is to make America and the world safer. It is to defend against a threat, however realistic, of a rogue state/terrorist launch of an ICBM, or an accidental launch. No one has been openly suggesting a public rationale at this time of a defense against any and all missiles, such as the original Star Wars envisioned, but some have not given up on that dream. It is, in fact, the intensity and tenacity of their continued advocacy for such a system that drives other people's fears of what the U.S. may be up to and which significantly complicates the test of selling even a limited and legitimately restrained architecture. Mr. President, in diplomacy--as in life--other nations and other people make policies based not only on real fears, or legitimate reactions to an advocacy/nonfriend's actions, but they also make choices based on perceived fears--on worst case scenarios defined to their leaders by experts. We do the same thing. The problem with unilaterally deployed defense architecture is that other nations may see intentions and long-term possibilities that negatively affect their sense of security, just as it did throughout the cold war. For instance, a system that today is limited, but exclusively controlled by us and exclusively within our technological capacity is a system that they perceive could be expanded and distributed at any time in the future to completely alter the balance of power--the balance of terror as we have thought of it. That may sound terrific to us and even be good for us for a short period of time--but every lesson of the arms race for the last 55 years shows that the advantage is short lived, the effect is simply to require everyone to build more weapons at extraordinary expense, and the advantage is inevitably wiped out with the world becoming a more dangerous place in the meantime. That is precisely why the ABM treaty was negotiated--to try to limit the unbridled competition, stabilize the balance and create a protocol by which both sides could confidently reduce weapons. The negotiation of the ABM Treaty put an end to this cycle of ratcheting up the strategic danger. After 20 years of trying to outdo each other--building an increasingly dangerous, increasingly unstable strategic environment in the process--we recognized that deploying strategic defenses, far from making us safer, would only invite a response and an escalation of the danger. There is no reason to believe that a unilateral move by the United States to alter the strategic balance would not have the same affect today as it had for forty years. At the very least, it would stop and probably reverse the progress we have made on strategic reductions. And it will reduce our capacity to cooperate with Russia on the single greatest threat we face, which are the ``loose nukes'' existing in the former Soviet Union. Under START I levels, both sides agree to reduce those arsenals to 6,500 warheads. Under START II, those levels come down to 3,500 warheads. And we are moving toward further reductions in our discussions on START III, down to 2,000 warheads. With every agreement, the American people are safer. A unilateral withdrawal from the ABM Treaty would stop this progress in its tracks. No NMD system under consideration can make us safe enough to justify such a reckless act. I strongly disagree with my colleagues who argue that the United States is no longer bound by our legal obligations under the ABM Treaty. No president has ever withdrawn us from the Treaty, and President Clinton has reaffirmed our commitment to it. We retain our obligations to the Treaty under international law, and those obligations continue to serve us well. It would never have been possible to negotiate reductions in U.S. and Soviet strategic forces without the ABM Treaty's limit on national missile defense. The Russians continue to underscore that linkage. And since, as I've already argued, Russia's strategic arsenal continues to pose a serious threat to the United States and her allies, we must not take steps-- including the unilateral withdrawal from the ABM Treaty--that will undermine our efforts to reduce and contain that threat. However, the strategic situation we confront today is worlds apart from the one we faced in 1972, and we must not artificially limit our options as we confront the emerging threats to our security. Under the forward-deployed boost-phase system I have described, the United States would need to seek Russian agreement to change the 1997 ABM Treaty Demarcation agreements, which establish the line between theater missile defense systems that are not limited by the Treaty and the strategic defenses the Treaty proscribes. In a nutshell, these agreements allow the United States to deploy and test the PAC-3, THAAD and Navy Theater-Wide TMD systems, but prohibit us from developing or testing capabilities that would enable these systems to shoot down ICBMs. As long as we are discussing ABM Treaty amendments with Russia, we should work with them to develop a new concept of strategic defense. A boost-phase intercept program would sweep away the line between theater and long-range missile defense. But by limiting the number of interceptors that could be deployed and working with Russia, China, and our allies, so that we move multilaterally, we can maximize the transparency of the system, we can strike the right balance between meeting new and emerging threats without abandoning the principles of strategic stability that have served us well for decades. The most important challenge for U.S. national security planners in the years ahead will be to work with our friends and allies to develop a defense against the threat that has been defined. But how we respond to that threat is critical. We must not rush into a politically driven decision on something as critical as this; on something that has the potential by any rational person's thinking to make us less secure--not more secure. I urge President Clinton to delay the deployment decision indefinitely. I believe, even while the threat we face is real and growing, that it is not imminent. We have the time. We need to take the time to develop and test the most effective defense, and we will need time to build international support for deploying a limited, effective system. I believe that support will be more forthcoming when we are seen to be responding to a changing security environment rather than simply buckling to political pressure. For 40 years, we have led international efforts to reduce and contain the danger from nuclear weapons. We can continue that leadership by exploiting our technological strengths to find a system that will extend that defense to our friends and allies but not abrogate the responsibilities of leadership with a hasty, shortsighted decision that will have lasting consequences. I hope in the days and months ahead my colleagues will join me in a thoughtful and probing analysis of these issues so we can together make the United States stronger and not simply make this an issue that falls prey to the political dialog in the year 2000. I thank my colleagues for their time. I yield the floor.

Mr. KERRY

Mr. KERRY. Absolutely.

Mr. KERRY. But I ask my colleague, if you understand their economic need, because they cannot maintain the warheads properly, and we are worried about accidental launch, how can you then want to prohibit the President of the United States from conceivably making us safer by wanting to mutually move to a level where we are both safer because we have a number of missiles that are able to be maintained properly and the balance of power is correct?

Mr. KERRY. And the Senator agrees that now START II has also been ratified by the Russian Duma.

Mr. KERRY. I thank the distinguished Senator. I want to follow up on what the Senator from Nebraska said, and I strongly support what the Senator from Nebraska is trying to achieve. I ask the Senator from Virginia if he will agree that START II was signed by the United States of America and was ratified.

Mr. KERRY. Will my colleague permit a question?

Mr. KERRY. Let me say to my friend, he talks about the law of the land. When you sign a treaty and the Senate has ratified it, it is the law of the land. Technically speaking, under international law, it is the law of the land when you sign it. When it is ratified, it is even more so the law of the land. I realize that technically speaking the SALT II does not, in effect, go into full effect until we pass on the codicils. But that is such a technicality in the context of what we are trying to achieve in the world. We are the leader of the free world. We used to be the most important force in the world for nonproliferation efforts. We used to make the most important efforts to try to encourage other countries to toe the line on nuclear weapons. If we are now going to suggest that having put into law and ratified a treaty, we are unwilling to reduce these levels of nuclear weapons at a time we know Russia is growing more and more unsafe in its capacity to maintain them, we are not acting in the interests of the American people and making them safer. I say respectfully to my friend from Virginia, in the next 6 months there is ample opportunity for any President to step in, a new President, and say: I do not want to continue these levels. But we have an opportunity here to make the law of the land on this bill in effect carry through properly. I strongly hope my colleagues will do so because it is the right thing to do. I thank the Senator from Nebraska.

Mr. KERRY. May I ask the distinguished Senator from Virginia, with all his years of experience--he has been on the inside of these negotiations; there is nobody with a stronger career with respect to this--can he really say to me, in this current climate, with the problems of the Russians in reducing and maintaining their current weapons, he can really envision the scenario which would require us to reverse a builddown to the 3,000 level?

Mr. KERRY. There was a reason, Mr. President. It is because the Russian Duma had not ratified. Everybody understood the rationale for that. But now they have ratified it. And the only restraint on our moving to a safer world is the fact that the Senate Foreign Relations chairman is unwilling to bring it to the floor.

Mr. KERRY. Mr. President, it is ironic that a Democrat would be here interpreting the words of the putative Republican nominee. But let me say to my colleague, he very clearly talked about unilateral reductions. His father, President Bush, also was supportive of and negotiated the policy of START II and wanted to move in that direction. Now START II takes us down to 3,000 warheads. I do not know anybody in the world of nuclear assessments--you look at the SIOPs. I think there are public targeting figures that do not violate classification. But I will be careful with this because I do not want to violate it. Let me just say that the Senator well knows that the SIOPs plans of the United States have a number of targets that are well taken care of by the current levels of START II, which is why the Joint Chiefs of Staff, the Pentagon, and everybody signed off on it. In today's world, in a non-cold-war world, the greatest threat is a rusty freighter hobbling its way into New York Harbor, or nearby, and has the potential to launch a cruise missile at us, or the greater threat is some group of terrorists assembling in New York the multiple parts of a nuclear weapon and holding us hostage, or, as we saw in Japan with the sarin gas attack, terrorists who want to cripple the community through chemical or biological warfare. Those threats chill me far more than the concept of reducing to 3,000 weapons over the course of the next years. It is going to happen. No matter what the Senator from Virginia says about the next quadrennial review, I am willing to bet my seat in the Senate that this country is going to move, together with others, to reduce the levels of weapons to at least 3,000. The debate today is not whether we ought to be at 3,000. The debate today is whether or not 1,000, 1,500, 2,200 to 2,500 are the appropriate levels. So why on Earth we would want to hobble the ability of the President of the United States to make this country safer by reducing to the level already agreed upon by Republican and Democrat negotiators alike is absolutely beyond me.

Mr. KERRY. I agree.

Mr. KERRY. I interpret what the candidate, George W. Bush, said somewhat differently, and I read his speech closely the other day. It was my understanding he said he is prepared to unilaterally reduce weapons no matter what the Russians do. He also wants to accompany that with a fairly robust national missile defense system. I again say to my colleague, I think the Senator from Nebraska is on target. Look, the former Soviet Union, what remains of it, Russia, has an extraordinarily weak command and control system. As a current member of the Intelligence Committee, and the Senator from Virginia shares that, we know full well that one of the greatest single threats to the United States of America today is threat reduction efforts. To suggest that the United States, that our citizens, are safer with more warheads and more active missiles being left in place, with an army that is not being paid, with command and control that is disintegrating and degrading, is a very hard thing for me to understand.

Mr. KERRY. I agree. I understand. The Senator is correct. The Russian Duma ratified START II with the understanding that they had to have the successor states to the ABM Treaty ultimately recognized by the United States, and there are a series of bilateral agreements they want us to ratify, and because the Senator from North Carolina, the chairman of the Foreign Relations Committee, is fundamentally opposed to these changes, we are stuck. But the larger interests of the United States of America are to make the world and this country safer. We decided, as a matter of policy, I say to the Senator from Virginia, that the world will be safer if we move to reduce weapons to the levels of START II. In fact, it is the policy of the United States of America now to engage in negotiations toward START III, but no one whom I know, who is rational at least--and I absolutely include the distinguished chairman of the Armed Services Committee as among the most rational and most thoughtful people on this subject--nobody is suggesting that we would not want to reduce from the level of 6,000- plus warheads and try to move in the direction of START II. I assume the Senator agrees.

Mr. KERRY

Mr. KERRY. Mr. President, women-owned businesses have scored a double victory today. President Clinton and a bi-partisan coalition of Senators have unveiled separate but complementary national policies to increase procurement opportunities for businesses owned by women. Though on its face Federal procurement may not sound like an important issue to the general public, or even a term that many recognize, it is one of the most lucrative, yet difficult, markets for small businesses to access, particularly those owned by women and under-represented minorities. For example, in 1999, women-owned businesses made up 38 percent of all businesses but received only 2.4 percent of the $189 billion in Federal prime contracts. We can do better. And, before we enact new laws, we should promote and enforce the ones we have. First, I want to offer my strong support and sincere compliments to President Clinton for signing an executive order today that reaffirms and strengthens the executive branch's commitment to meeting the five- percent procurement goal for women-owned businesses. His staff has worked for months with the Small Business Administration, SBA, the National Women's Business Council, the Women's Coalition for Access to Procurement, Women First, Women's Construction Owners and Executives, and the Women's Business Enterprise National Council to draft a feasible plan to help Federal agencies and departments increase the number of contracts awarded to businesses owned by women. Announcing that plan this afternoon is timely. Today I join my colleague Senator Bond to introduce a resolution that encourages the President to adopt a policy that reinforces and enforces a procurement law Congress passed in 1994. That law, the Federal Acquisition Streamlining Act, established a government-wide goal for all heads of Federal departments and agencies to award five percent of their prime and subcontracts to women-owned businesses. First, this resolution asks the President to adopt a policy that supports the law and encourages agencies and departments to meet the goal. Second, this resolution asks the President to reinforce the law by holding the heads of agencies and departments accountable for meeting the five-percent goal. I believe the President's executive order goes beyond the Senate's request and establishes a strong system within the Federal Government for increasing the number of contracts that go to women-owned businesses. I think it is very smart to hire an Assistant Administrator for Women's Procurement within the SBA's Office of Government Contracting. Increasing opportunities for women-owned businesses is a full-time job and devoting staff to this area is good use of resources. I also think it is good policy for the Assistant Administrator to evaluate the agencies' contracting records on a semi-annual basis. This has two benefits. One, it encourages the procurement offices to run their operations like good small businesses. If you ask, most business owners will tell you that a key to running a successful business is having a solid business plan and regularly measuring your costs against revenues and projecting adequate inventory or staff to meet the demands of your products or services. I think it is a very good idea for contracting officers to do the same. Two, this policy allows the SBA to work with an agency that is not meeting its goal midway through the year rather than finding out at the end of the year when it is too late. Lastly, I like the Administration's plan because it takes a holistic approach to procurement. Rather than just focusing on the agencies and departments, it requires the Assistant Administrator to organize training and development seminars that teach women entrepreneurs about the complex world of Federal procurement and the SBA's procurement programs. It will be much easier for women-owned businesses to compete for Federal contracts if they understand the process and how to find out about opportunities. I think it is important to note that while the government as a whole is not contracting as it should with women-owned firms, there are some outstanding exceptions. Some Federal agencies have taken the lead in working with women owned firms, and should be congratulated. According to the Federal Procurement Data System, the Department of Housing and Urban Development, the Consumer Product Safety Commission, the Federal Mine Safety & Health Review Commission, the Nuclear Regulatory Commission, and the Small Business Administration have all not only met the five percent goal, but have come in at around fifteen percent or better. That is three times the goal set by Congress. These Federal agencies know that working with women-owned firms is not simply an altruistic exercise. These firms are strong, dependable and do good work. These firms provide a solid service to their customer, and the Federal contracting officers know it. In total, 20 Federal agencies either met or exceeded the five percent goal. Therefore, we know that it is indeed possible for Government agencies to meet the five percent goal. With this resolution, it is our hope that agencies will work harder, following the examples of the agencies I discussed earlier, to contract with women-owned firms. I've supported many initiatives over the years to increase resources and opportunities for businesses owned by women. Most recently, I supported Senator Landrieu's legislation to re-authorize the National Women's Business Council for 3 years, and to increase the annual appropriation from $600,000 to $1 million. Part of that increase will be used to assist Federal agencies meet the five-percent procurement goal for women-owned businesses. The Council has provided great leadership in this area, making increased contracting opportunities a priority since it was created in 1988, and earned praise from Democrats and Republicans for two extensive procurement studies it published in 1998 and 1999. The first study tracked 11 years of Federal contracting so that we have measurable data, and the second study identified and analyzed public and private sector practices that have been successful in increasing contracting opportunities for women business owners. The additional resources will allow the Council to build on that study and put the information to good use, ultimately increasing competitive contracting opportunities for businesses owned by women. In addition to supporting reauthorization of the National Women's Business Council, last year I introduced the Women's Business Centers Sustainability Act of 1999. Now public law, that legislation is helping Centers address the funding constraints that have been making it increasingly difficult for them to sustain the level of services they provide after they graduate from the Women's Business Centers program and no longer receive federal matching funds. It is important to note that SBA requires Women's Business Centers to provide procurement training. As part of that bill, we passed an amendment addressing Federal procurement opportunities for women-owned small businesses. The amendment expressed the sense of the Senate that the General Accounting Office should conduct an audit on the federal procurement system for the preceding three years. Unlike the Council's previous studies and reports that focused on data and best practices, this report was to focus on why the agencies haven't met the congressionally mandated five-percent procurement goal for small businesses owned by women. Mr. President, the Federal agencies have begun to make progress since Congress enacted the five-percent procurement goal, but I want the contracting managers to remember that this goal is a minimum, not a maximum. Out of the more than 9 million businesses owned by women in this country, I believe that the Federal Government can find ones that are qualified and reliable, with good products and services, to fill their contracts if they make it a priority. I believe that the President's Executive Order establishes a strong system within the Federal Government for increasing the number of contracts that go to women-owned businesses, and I look forward to seeing the Federal departments and agencies meet the five-percent goal this year, as the Senate resolution emphasizes. I ask unanimous consent that this statement and a copy of the Executive Order be printed in the Record.

Mr. KERRY

Mr. KERRY. Mr. President, last night, the FTC released its report on Internet privacy. We are, all of us, in the midst of an Internet revolution in this country. It is extraordinary, when we think about it, to take note of the fact that the Internet has only been in existence about 6 or 7 years now. During that time, it has had a profound impact on everybody's life, particularly on business, and increasingly on consumer opportunity. I have tremendous respect for the work the FTC has done on this issue. Its monitoring of web sites and the convening of working groups have been very helpful in educating all of us on a very complicated new arena. The FTC plays an important role in oversight and regulating our economy, and I think it is fair to say that its Commissioners have navigated admirably through the complexity of the new economy. But--and here is the ``but,'' Mr. President--at this particular moment in time, I very respectfully disagree with the regulatory approach to Internet privacy proposed by the FTC. Let me be clear. Yes, consumers have a legitimate expectation of privacy on the Internet, and they will demand it, and I personally want that right of privacy protected. But I also believe that they want an Internet that is free and that gives them more choices rather than fewer. I believe that a regulatory approach mandated by in-depth, detailed congressional legislation at this particular point in time could actually harm consumers in the long run by limiting their choices on the Internet. On the Internet today, we can buy and sell anything. We can research everything from health information to sports scores to movie reviews. We can keep track of our stock portfolios, tomorrow's weather, and the news throughout the world. And we do most of that free of charge. The reason we can surf from page to page for free is because the Internet, like television, is supported by advertising--or is struggling to be supported by advertising. Obviously, access is by subscription in most cases; but the point is that advertising is increasingly growing. Business spent more than $1.9 billion to advertise on the web in 1998, with spending on electronic advertising expected to climb to $6.7 billion by 2001. It is this advertising that is the reason we don't have a subscription-based Internet--at least at this point in time. That would clearly limit a lot of people's online activities, and it would contribute to the so-called digital divide. Instead, we have an Internet that we can freely explore. It is my sense that people like this model of the Internet, and they understand that the banner ads they see on their screens are necessary in order to try to keep the Internet free. What I don't think people understand is that, at least for now, the model for Internet advertising is going to include ads that are narrowly targeted to particular customers. The jury is still out on whether a targeted model is going to work. Currently, the click-through rates--the average percentage of web surfers who click on any single banner ad have fallen below the 1-percent mark, compared with about 2 percent in 1998. Some see that as a sign that the advertising model on the Internet has failed. Others say the percentages are lower, but that is because more and more ads are being placed. What it tells me is that it is simply too soon for the Congress of the United States to step in and prevent that model from running its course. If, for the time being, we allow or acknowledge that the economy of the Internet calls for targeted advertising, we must also recognize that it won't attract customers if they believe their privacy is being violated. Finding the fine balance of permitting enough free flow of information to allow ads to work and protecting consumers' privacy is going to be critical if the Internet is going to reach its full potential. I believe that we in Congress have a role to play in finding that balance, although we should tread very lightly in doing so. In the past, I have argued that self-regulation was the best answer for consumers and the high-tech industry itself in relation to privacy. I hope we can continue to focus on self-regulation because Congress will, frankly, never be light-footed enough--nor fast-footed enough--to keep up with the technological changes that are taking place in the online world. However, poll after poll shows that consumers are anxious that their privacy is not being protected when they go on line. For example, a 1999 survey by the National Consumers League found 73 percent of online users are not comfortable providing credit card or financial information online and 70 percent are uncomfortable giving out personal information to businesses online. Moreover, due to privacy concerns, 42 percent of those who use the Internet are using it solely to gather information rather than to make purchases online. Likewise, a Business Week survey in March 2000 noted that concern over privacy on the Internet is rising. A clear majority--57 percent-- favor some sort of law regulating how personal information is collected and used. According to Business Week, regulation may become essential to the continued growth of e-commerce, since 41 percent of online shoppers say they are very concerned over the use of personal information, up from 31 percent two year ago. Perhaps more telling, among people who go online but have not shopped there, 63 percent are very concerned, up from 52 percent two years ago. In addition to it being too early in the process for Congress to embark on sweeping legislation, I believe there are still a number of fundamental questions that we need to answer. The first is whether there is a difference between privacy in the offline and online worlds. I think polls like that are the result of the failure, so far, of industry to take the necessary initiative to protect consumers' privacy. But we should not neglect to notice that industry is making progress. When the Federal Trade Commission testified before the Commerce Committee about this time last year, it cited studies showing that roughly two-thirds of some of the busiest Web sites had some form of disclosure of privacy policies. This year, the FTC reports that 90 percent of sites have disclosure policies. Likewise, last year the FTC found that only 10 percent of sites implemented the four core privacy principles of notice, choice, access and security. This year the FTC reports that figure at 20 percent. That is still not high enough, but this is a five-year-old industry. We've seen significant improvements without the need for intrusive congressional intervention. It is simply too soon to write off a market driven approach to privacy. Most of us don't think about it. But I want to make a point about the distinction between the offline and online world. When you go to the supermarket and you walk into any store and swish your card through the checkout scanner, that scanner has a record of precisely what you bought. In effect, today in the offline world, people are getting extraordinarily detailed information about what you are purchasing. The question, therefore, is to be asked: Is there some kind of preference about what happens at the supermarket, or any other kind of store, and is that somehow less protected than the choice you make online? Likewise, catalog companies compile and use offline information to make marketing decisions. These companies rent lists compiled by list brokers. The list brokers obtain marketing data and names from the public domain and governments, credit bureaus, financial institutions, credit card companies, retail establishments, and other catalogers and mass mailers. I have been collecting the catalogs that I have received just in the last few weeks from not one online purchase, and I have been targeted by about 50 catalogs just on the basis of offline purchases that have been made and not because of an online existence. Even in politics, off-line privacy protections may be less than those we are already seeing online. For example, we all know that campaigns can and do get voter registration lists from their states and can screen based on how often individuals vote. They will take this data and add names from magazines--Democrats could use the New Republic and Republicans might choose the National Review--and advocacy groups, and target all of them. With those combined lists, campaigns decide which potential voters to target for which mailings. The campaigns will also often share lists with each other and with party committees. All of this goes on offline. On the other hand, when I go to the shopping mall and I walk into a store and look at five different items, five sweaters, or five pairs of pants, whatever it may be, and I don't buy any of them, there is no record of them at all. But there is a record of that kind of traveling or perusal, if you will, with respect to the web. There are clearly questions that we have to resolve with respect to what kind of anonymity can be protected with respect to the online transaction. I just do not think this is the moment for us to legislate. I think we need to study the issue of access very significantly. There is a general agreement that consumers should have access to information that they provided to a web site. We still don't know whether it is necessary or proper to have consumers have access to all of the information that is gathered about an individual. Should consumers have access to click-stream data or so-called derived data by which a company uses compiled information to make a marketing decision about the consumer? And if we decide that consumers need some access for this type of information, is it technologically feasible? Will there be unforeseen or unintended consequences such as an increased risk of security breaches? Will there be less rather than more privacy due to the necessary coupling of names and data? Again, I don't believe we have the answers, and I don't believe we are in a position to regulate until we have thoroughly examined and experienced the work on those issues. I disagree with those who think that this is the time for heavy- handed legislation from the Congress. Nevertheless, I believe we can legislate the outlines of a structure in which we provide some consumer protections and in which we set certain goals with which we encourage the consumer to familiarize themselves while we encourage the companies to develop the technology and the capacity to do it. Clearly, opting in is a principle that most people believe ought to be maximized. Anonymity is a principle that most people believe can help cure most of the ills of targeted sales. For instance, you don't need to know if it is John Smith living on Myrtle Street. You simply need to know how many times a particular kind of purchase may have been made in a particular demographic. And it may be possible to maintain the anonymity and provide the kind of protection without major legislation. It seems to me that most companies will opt for that. In addition to that, we need to resolve the question of how much access an individual will have to their own information, and what rights they will have with respect to that. Finally, we need to deal with the question of enforcement, which will be particularly important. It is one that we need to examine further. I believe that there is much for us to examine. We should not, in a sense, intervene in a way that will have a negative impact on the extraordinary growth of the Internet, even as we protect privacy and establish some principles by which we should guide ourselves. I believe that the FTC proposal reaches too far in that regard. I hope my colleagues in the Senate will join me in an effort to embrace goals without the kind of detailed intrusion that has been suggested. I thank the Chair.