Jon Kyl

Mr. KYL

Mr. KYL. Mr. President, let me briefly describe what this amendment does. Then I will discuss it in further detail later. In summary, this amendment establishes five conditions for the assistance that is to be provided to Russia for destruction of its chemical weapons, the so-called Nunn-Lugar funding. Very briefly, this resolution is called for because the funding that we have provided to Russia to date does not appear to be adequately supported by the Government of Russia for its part of its own chemical weapons destruction program. If one could view this in the nature of matching funds, I think it is easy to understand. We have provided a great deal of money, of Nunn-Lugar funding, to Russia, much of it for destruction of their chemical weapons. They have not reciprocated by allocating or spending any of their own money for the destruction of their chemical weapons. In addition, they have not ratified the Chemical Weapons Convention. They have not complied with the terms of the so-called Wyoming Memoranda, which is one of the methods by which we exchange information about our chemical stocks in furtherance of an agreement to destroy them. They have backed out of the bilateral destruction agreement, which was our bilateral agreement to destroy our mutual stocks of chemical weapons. They have not advanced a penny toward the development of the facilities for the destruction of their weapons that are currently being designed with U.S. Government money. In effect, they have not shown any willingness to join us in the destruction of those weapons which pose the most threat to the United States and other people around the world. As a result, partially in conformance with the terms of the chemical weapons treaty, which was earlier adopted, and in conformance with S. 495, which had other specific requirements, and consistent with requirements that the House of Representatives placed on the House- passed version of the defense authorization bill, we provide five specific requirements that the Russian Government will have to meet in order to receive this funding. First, that they show reasonable progress toward implementation of the 1990 Bilateral Destruction Agreement; second, that resolution of outstanding compliance issues related to the Wyoming Memorandum of Understanding and the BDA, that be resolved--at least that there be progress toward that; third, a full and accurate Russian accounting of its own CW program, as required by those previously mentioned agreements; fourth, Russian ratification of the Chemical Weapons Convention; and, fifth, bilateral agreement to cap the United States CW destruction assistance and Russian commitment to pay for a portion of their part of their own CW destruction costs. As I said, these are reasonable requirements to be attached to U.S. taxpayer dollars going to the country of Russia for the destruction of their chemical weapons. I will discuss it in further detail later, but it seems to me to be more than reasonable for us to attach these conditions. If we do not, then additional taxpayer money is going to be sent to Russia with no indication whatsoever that Russia will ever support the program funded with U.S. taxpayer dollars to support their chemical weapons destruction program. Perhaps most important, the most that it appears right now that Russia is inclined to do is to destroy those old chemical weapons that pose an environmental concern to Russia with United States dollars at the same time that they are using Russian dollars to continue a covert development and production program of new chemical weapons. So it makes no sense for us to be spending U.S. taxpayer dollars to help them destroy the stocks of the old environmentally unsafe weapons that they would like to get rid of anyway, at the same time they are using their money to develop new chemical weapons and produce those new chemical weapons that could someday be used against the United States--all in violation of the chemical weapons treaty, I might add. So that is the nature of the first amendment. Amendment No. 605 (Purpose: To ensure the President and Congress receive unencumbered advice from the directors of the national laboratories, the members of the Nuclear Weapons Council, and the commander of the United States Strategic Command regarding the safety, security, and reliability of the United States nuclear weapons stockpile)

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

Mr. KYL. Mr. President, the first amendment at the desk is amendment No. 607.

Mr. KYL. Mr. President, I have two amendments that I would like to lay down. Both are at the desk. Amendment No. 607 (Purpose: To impose a limitation on the use of Cooperative Threat Reduction funds for destruction of chemical weapons)

Mr. KYL. Mr. President, the purpose of this amendment--and this is really a very simple amendment that I think specific language will be worked out on with members of the committee and hopefully could be included as part of the managers' amendment--is simply to ensure that the President of the United States receives direct and objective and unencumbered advice regarding the safety and reliability and security of the U.S. nuclear force from the directors of the national laboratories and the members of the Nuclear Weapons Council. Just one bit of background here. Both the national laboratories and the Nuclear Weapons Council are supposed to give the President advice about the safety, reliability, and security of our nuclear force. For them to be able to do that in an objective way, they obviously need to tell it as it is, ``tell it like it is,'' without any fear that they are not adhering to any party line with respect to those issues. This, in effect, extends the Goldwater-Nichols-like protection that has previously been provided to members of the armed services, the Joint Chiefs, for example, to the lab directors and the members of the Nuclear Weapons Council so they can give the President unvarnished, objective, accurate information, and that information can also come to the Congress, all for the purpose of enabling us to set proper national policy with respect to our nuclear weapons. Mr. President, I will have more to say about this later. As I said, I hope the amendment can be worked on and included as part of the managers' amendment. We will discuss this amendment further later. Mr. GRASSLEY addressed the Chair.

Mr. KYL

Mr. KYL. Mr. President, hard-working American families have not seen significant net tax relief since Ronald Reagan's first year in office as President. That was 16 years ago, in 1981. Since then, their tax burden has gone in just one direction--up. Higher payroll taxes, higher taxes on gasoline and Social Security, higher taxes on capital gains and air travel. If you manage to save something for your child's education, the earnings are even taxed. It is no wonder, then, that the typical American family feels overwhelmed: it now pays more in taxes than it does for food, clothing, and shelter combined. That is wrong, and it has got to change. It is about to change. Mr. President, there has really been a sea of change in Washington's approach to taxing in recent years. Remember that it was not so long ago, in 1993 to be exact, that President Clinton pushed through the largest tax increase in the Nation's history. Everyone in the country felt the bite of the Clinton gas-tax increase. Retirees even saw their Social Security benefits taxed more. The debate back then was not whether to raise taxes, but how much to raise them. Two years ago, after Republicans gained control of both Houses of Congress, the debate changed dramatically. The question no longer was whether to raise taxes, or even whether to cut taxes. The question was how much to cut them. The debate has changed so much that President Clinton, who initiated that record-setting tax increase 4 years ago, and who vetoed tax relief just 2 years ago, now tries to claim the tax- cutting mantra as his own. We began last year to make some incremental progress in offering tax relief. The adoption tax credit, for example, was enacted, as was an increase in the Social Security earnings limitation and new tax incentives for the purchase of long-term health insurance. That was after President Clinton vetoed a far more substantial tax-cut package in December 1995. The bill before us today takes yet another step in the right direction. When signed into law, it will provide more tax relief than any other bill in 16 years. And three-quarters of the total relief provided by the bill will go to families with annual income of less than $75,000. Again, that is families with income under $75,000 a year that would benefit most. Make no mistake, it provides nowhere near the level of relief that American families need. The net tax cut of between $77 billion and $85 billion over 5 years represents just 1 percent of the amount that the Treasury would otherwise collect over that period. But given the constraints on tax relief that President Clinton imposed in this year's budget agreement, it is probably the most we can do. It is, in my view, merely a downpayment on the amount of tax relief that we will continue to seek next year and the years after that. Mr. President, I opposed the budget agreement a few weeks ago, in large part because it so severely restricted the amount of tax relief that we could provide this year. I believed that we should have held out for a better deal for the taxpayers, but a majority of both Houses disagreed, and therefore we have to find a way to live within the constraints the deal imposed. I must say, however, that I believe the Finance Committee has done a good job with the limited resources it had to work with. The bill includes a $500-per-child tax credit for families with children under the age of 17. The credit would become fully effective next year; it would be limited this year to $250 for every child under the age of 13. The bill also provides important help to parents who are struggling to find a way to pay for their children's college education. It offers a new $1,500 HOPE tax credit, new tax-preferred Education Savings Accounts, and something that the budget agreement did not contemplate, a new deduction for student-loan interest payments. These provisions alone--the education-related and child tax credits-- make up 82 percent of the tax relief provided by this bill--82 percent. An analysis by the accounting firm of Deloitte & Touche estimates that a married couple with two children and a household income of $35,000 a year would see its tax bill slashed by 40 percent--to $1,573 a year, down from $2,625 now. If one child were in college, the tax relief would rise to 78 percent. The bill does some other good things as well. It reduces the capital- gains tax rate to 10 percent for individuals in the 15 percent income- tax bracket, and 20 percent for other taxpayers. It provides a capital- gains exclusion for homeowners--up to $250,000 for single taxpayers, $500,000 for married couples. Given that more than half of all taxpayers reporting capital gains have incomes under $50,000--including many seniors who depend upon income from their life-long investments to support them in their golden years--we can be sure that the benefits of these capital-gains reductions will flow to middle America. And with history as a guide, we know that the Treasury will benefit from a capital-gains tax cut as well. Between 1978 and 1985, for example, the top marginal tax rate on capital gains was cut by almost 45 percent--from 35 percent to 20 percent--but total individual capital-gains tax receipts nearly tripled--from $9.1 to $26.5 billion annually. When capital-gains tax rates are too high, people need only hold onto their assets to avoid the tax indefinitely. No sale, no tax. But that means less investment, fewer new businesses, and new jobs, and--as historical records show--far less revenue to the Treasury than if capital-gains taxes were set at a lower level. Just as the Target store down the street does not lose money on weekend sales--because volume more than makes up for lower prices--lower capital-gains tax rates can encourage more economic activity, and in turn, produce more revenue for the Government. With that in mind, many of us believe that the capital-gains tax rate should have been cut deeper--some wanted an earlier effective date, too--but the die was cast against more capital-gains relief when the budget agreement passed earlier this month. Still, even the modest reduction in this bill will begin to unlock the sizable amount of assets currently locked up in the economy because of high tax rates. The American Council for Capital Formation estimates that it will lead to the creation of as many as 150,000 new jobs a year. The bill also enhances the ability of individuals to save for retirement in IRA accounts. More Americans would be allowed to save in traditional IRA's, including homemakers who have been precluded from participating merely because their spouses are active participants in employer-sponsored plans. Non-deductible contributions of up to $2,000 to new IRA plus accounts would be allowed for anyone; distributions from the accounts would occur on a tax-free basis.

Mr. KYL

Mr. KYL. Mr. President, as he has done numerous times over the past 10 years, Senator Bumpers again attacked the hardrock mining industry in the United States. This time, he chose to introduce an amendment to the Tax Reconciliation Bill to repeal the percentage depletion allowance. This allowance has been in the tax code for over 60 years and repeal would be an arbitrary tax increase on the industry. Repeal of the allowance is a tax increase. Mining companies cannot recover higher costs, including higher taxes, by raising prices because mineral prices are set by international commodity market. It should be noted that the mining industry already pays high average federal tax rates--32 percent per a GAO study--because of the corporate alternative minimum tax. In addition to the damage that would be done by this arbitrary tax increase, I would emphasize that this is not the way to reform the mining law. Although Senator Bumpers and I may not agree on the specific reforms necessary, we do both agree that a comprehensive, responsible reform is necessary. Along with my other Western colleagues, I would like to see reform that is environmentally sound and allows industry to thrive in a healthy and supportive atmosphere. A one-shot tax increase on the Senate floor is neither comprehensive nor responsible. Any reform of such an economically significant domestic industry should be done through the committee process where all parties have a chance to be heard and the issues can be dealt with in a thoughtful and meaningful manner. I voted against the Bumpers amendment today and I am pleased that it was defeated. broad base reform

Mr. KYL

Mr. KYL. Mr. President, I am going to move to waive the point of order. I wanted to indicate that this amendment has the support of sponsors, such as Senator Lott, Senator Domenici, Senator Roth, and others on our side. I hope we can do it.

Mr. KYL. I move to waive the point of order.

Mr. KYL. Mr. President, if I could have my colleagues' attention, this is amendment No. 468, designed to correct a technical corrections problem which ironically arose out of the Medicare Technical Act of 1994. To describe it, you have been going to your doctor for 50 years. He says you need something done. You say, ``OK, do it.'' He says, ``Wait a minute, aren't you 65 years old now?'' You say, ``Yes.'' And he says, ``I am sorry, I cannot treat you anymore.'' ``Why not?'' ``Well, I don't treat Medicare patients.'' ``You do not have to submit the bill to Medicare. I will not submit the bill to Medicare. Let me pay you like I always have.'' Sorry, HCFA says we cannot do that. Mr. President, this is very simple. It allows for those 9 percent of the physicians who do not treat Medicare patients to continue to treat their patients as they always have. Those parties do not make a claim to Medicare, Medicare does not pay it, they simply go ahead and pay the doctor like they always have. This is not what was intended in the 1994 act, but because of the way HCFA's regulations have interpreted it, we need to make this technical correction. I urge my colleagues to support the change.

Mr. KYL

Mr. KYL. Mr. President, I rise as the sponsor of the Senior Citizens Medicare Freedom to Contract Act. The act would provide a technical correction in the Medicare Technical Corrections Act of 1994 (42 USCS section 1395, et. seq.), which was signed into law in November 1995. The Medicare Technical Corrections Act of 1994 contained a subtle-- and, based on the Congressional Record, clearly unintended--change in statutory language. The Health Care Financing Administration [HCFA] interprets this change as expanding existing restrictions on private payments in Medicare cases in which claims are filed, to all cases involving Medicare enrolled individuals, regardless of whether a claim is filed. If HCFA imposes this interpretation through regulations reportedly now being drafted, HCFA would have the authority to completely prohibit Medicare enrolled who do not submit reimbursement claims to HCFA, and who do not have claims submitted on their behalf, and who are willing to pay their own bills in full--from paying non-Medicare physicians out of pocket for needed Medicare-covered services. Even without the regulations, the view of HCFA is clear. HCFA Administrator Bruce Vladek states that the ``law requires that physicians submit claims on behalf of beneficiaries. Violations of these requirements are subject to sanctions such as civil monetary penalties and exclusion from Medicare.'' Tom Ault, HCFA Director of Policy Development, has said that ``for doctors to implement private contracts is illegal.'' HCFA's Director of the Bureau of Policy, Kathleen Buto, states that: A physician can choose not to treat Medicare beneficiaries. However, once a physician renders services to a Medicare beneficiary, he or she is subject to Medicare's requirements and regulations, regardless of the physician's participation as a Medicare provider. A physician's failure to comply with the claim filing requirement violates Medicare law and subjects him or her to possible monetary penalties. Clearly, this change does not reflect the intent of the Congress. If HCFA's interpretation is imposed by regulation, the result will be that seniors not have the right to choose treatments for which they can afford to pay in full to a non-Medicare participating physician. This will occur due to the fact that many physicians and other providers are unwilling to participate in Medicare since Medicare reimbursement frequently covers only 70 to 75 percent of the actual cost of care. Under HCFA's proposed regulations, physicians and other providers, who do not participate in Medicare, would be prohibited from accepting private payments for their services. Congress clearly never intended this result. Nor does this change reflect the will of the American people. In a November 5, 1996, Wirthlin Worldwide Poll, 60 percent believe that Americans should be able to add their own money to Government payments in order to get unrationed health services. Surely, a law that made it illegal to supplement with private funds the amount received from Social Security would be met with disbelief and derision. But this is exactly what HCFA has threatened to do, thereby restricting health care choice for seniors. HCFA's policy would also end the practice of cost shifting, whereby doctors have an incentive to treat more Medicare patients who can't afford to supplement Medicare's low-reimbursement rate with funds from those who choose to pay out of pocket. To address this problem, senior citizens' medicare freedom to contract amendment simply states: ``[n]othing * * * shall prohibit a physician or other provider who does not provide items or services under the Medicare Program from entering into a private contract with a Medicare beneficiary for health services for which no claim for payment is submitted * * * section 1805(a)].'' Because the strategy for enactment has changed, the bill was not introduced in the 105th Congress. However, in the 104th Congress, this legislation was cosponsored by Senators Lott, Craig, Gregg, Cochran, Nunn, Helms, Faircloth, Bennett, Kempthorne, Mack, Murkowski, and Inhofe. This legislation is strongly supported by the American Medical Association, the Seniors Coalition, the National Right to Life Committee, and several other national health care organizations. Although this legislation has not yet been scored by the CBO, allowing seniors to pay for services rather than submitting claims to HCFA would plausibly be viewed by the CBO as a budgetary savings for purposes of the Byrd rule. Furthermore, this legislation calls for HCFA to report to Congress in 2002 regarding the impact of this legislation on Medicare. Mr. President, I urge my colleagues to support this technical clarification to the Medicare statute.

Mr. KYL

Mr. KYL. Mr. President, I thank my colleague for organizing this session this morning for us to talk about the importance of tax cuts and the activity that the Senate is about to engage in finally providing the tax cuts to the American people. Throughout my campaign in 1994, that was one of the central features of every meeting that I attended--people calling for tax cuts. I will get back to that in a moment. I was reminded, when the Senator from Nebraska was talking about being in North Platte, NE, this weekend and hearing from his constituents there, that I flew over North Platte, NE yesterday. That is what the pilot of the airplane said, and it reminded me that I had just been to a meeting in Colorado where people from all over the country were saying the same thing. Nebraska is my State of birth, and I literally flew right over the area where I was born. It does not matter whether you are from Kansas, Nebraska, or Wyoming, people around this country have galvanized around a couple of central thoughts these days, one of which is that the Government is taking too much of their money and they would like a little bit more freedom as to how they spend their own money. It is interesting that the announcement last week by the American Taxpayers Union, a group that identifies a day called Tax Freedom Day, the day that we finally begin working for ourselves and our families rather than the Government, that day has now been moved back. It was April 29 back when I entered the Congress. It is now May 9. What that means is that the average family has to work until May 9 to pay the Federal Government everything it owes, and after that it can begin paying the State governments and other governments and eventually begin working for itself. It is high time, Mr. President, that the Congress initiate the action and that the President support the action to reduce taxes for hard- working American families. I think we find that throughout the country, whatever State we are from, that is what our constituents are telling us. Now, we had tax cuts in 1981 and in 1986, but we had big tax increases in 1990 and 1993. Those two tax increases were ostensibly for the purpose of balancing the Federal budget. What we found is that the tax increases did not help to balance the Federal budget at all. What has really helped to move us toward a balanced budget are two things. One, a robust economy producing wealth, producing jobs, and producing revenues to the Treasury, and also a Congress that has been more willing to hold the line on spending. Through a combination of those two things we can achieve a balanced budget, and that is what the budget agreement was all about. Unfortunately, we are not spending enough of that revenue generated by a robust economy on the tax relief that should be provided to American families. As a result, the budget agreement only provides for $85 billion over a period of 5 years in tax relief to American families, not nearly enough to do the job we should be doing. That represents about 1 percent of the $8.6 trillion that will be coming into the Federal Treasury during this 5-year period. So, clearly, we could use more of the increase in revenues to offset the tax burden on the American family. But at least the negotiators who put this together in the Finance Committee, which has put together a good package of tax relief for American families, has recognized that a thriving economy is one of the keys to not only continued economic growth but also getting rid of the deficit, that the economy producing wealth also translates in revenues to the Treasury that will enable us to achieve a balanced budget. What they have also recognized is it will enable us to provide tax relief. Now, there is another aspect of good news in this, Mr. President. Not only does a thriving economy bring in more revenue and therefore enable us to balance the budget and provide tax relief, but that very tax relief helps to fuel the economy to grow even more, produce even more jobs, produce even more wealth, and therefore more revenues to the Treasury. So, it is a very positive and constructive cycle--tax relief can assist the economy to continue to thrive to produce more wealth to produce more revenue to the Treasury. Therefore, we ought to consider that this is just the beginning of tax relief. For those of us who have been preaching this for a long time, I think we should at least get a little bit of credit for the theory that has resulted in the good situation that we are in right now, and that perhaps those who said no, the only way you can have a balanced budget is by raising taxes, will now acknowledge that those of us who have been proposing cutting taxes have had something to say for these last several years. The original budget agreement here that we are trying to implement calls for $85 billion in tax relief over a 5-year period. That is not enough to do everything that everyone would like. As a matter of fact, the original Republican plan called for a reduction in capital gains taxes, estate tax relief, $500 per child tax credit, and some educational and IRA benefits to American taxpayers. That would cost about $188 billion over the 5-year period if you do not count increased revenues that would be produced as a result of capital gains reductions. So you can see from a program that would theoretically cost the Treasury $188 billion, trying to squeeze all of that into $85 billion is going to mean that this tax relief is not as robust as we would like it to be, and that is a fact. But I do compliment the Finance Committee for making the most out of the $85 billion it was provided. I think, as we will see as this is debated on the floor this week, the benefits to the American taxpayers, as the Senator from Nebraska has pointed out, are significant. Most of them go to working families. There are some that go to the risk-takers in our society, but after all, if there is not some reward for risk- taking in our economy, people are not going to take risks, they will not make those investments that eventually produce the great companies that hire the people that produce the wealth and end up creating revenues for the Treasury. So it is a combination of providing most of the tax relief for American working families and, in addition to that, some reward for the risk-takers in our society. The American Council for Capital Formation has estimated that the capital gains relief that is provided for in our bill would reduce the cost of capital by at least 8 percent. What that would do is permit the creation of 150,000 new jobs each and every year. So that is one of the benefits of this capital gains reduction we are talking about, Mr. President. It is to enable capital to be more efficiently used in our economy. Instead of having $7 trillion in pent-up assets that nobody wants to sell or dispose of because they will have to pay a big tax on it of 28 percent, if we reduce that to 20 percent for higher bracket taxpayers and 10 percent for lower bracket taxpayers, that is an incentive for them to finally sell that asset that they have been holding on to, and by that sale we actually not only help to put the money into more productive enterprises but also eventually create more revenue to the Treasury as a result of the tax that is paid every time one of those assets sells. A lot of economists today will criticize the current capital gains policy because what it has done is to tie up capital in older industries, in businesses that were created a long time ago. People do not want to sell when they have to pay the capital gains tax on it and invest it in a more contemporary kind of business. But America has led the world in enterprise, in new businesses--in our high tech computer industry, for example--and if we are going to continue to maintain that lead, we need to have the capital to invest in these new and emerging industries. The only way that will be possible is if there is an incentive for people to get rid of the investment in the older industry or business and invest that in one of the new emerging businesses. Interestingly enough, this American Council for Capital Formation notes that the cost of capital would be reduced by 8 percent, which would create new jobs. It will also help the Treasury. It should be noted, between 1978 and 1985, the top margin of tax rate on capital gains was cut by almost 45 percent--it went from 35 percent down to 20 percent--but total individual capital gains receipts tripled, from $9.1 billion to $26.5 billion annually. Obviously, a capital gains tax cut is a winner for investors, for job seekers, as well as for the U.S. Treasury. That is why we believe that the capital gains components of tax relief, as the Senator from Nebraska pointed out, has to be one of the critical components and will benefit all American families as well as the U.S. Treasury. We have talked about the other aspects of this tax proposal, my colleagues have, but I wanted to specifically single out the capital gains tax because it does not help just the wealthy, as some folks say, but will provide benefits to all taxpayers in this country and all workers. One last word, Mr. President. I have sponsored the bill to repeal the estate tax, or the so-called death tax. My bill has more cosponsors than any of the other bills relating to the estate tax in the Senate and, likewise, the corresponding bill in the House. The Senator from Nebraska, the Senator from Kansas, and the Senator from Wyoming have all been very supportive because of the impact on farms and small businesses in their States. It is the same throughout the country. We need to do something about this. Unfortunately, because of the original budget agreement limiting the tax cuts to only $85 billion over the 5-year period, or 1 percent of tax revenues, the administration made sure that there wasn't too much tax relief in the agreement. The Senate leaders were trying to push for more, but because there was an agreement we are not going to be able to do everything we should. All we are going to be able to do on estate tax relief is very, very modest relief. I regret that. All of us do. Basically, what we are doing is raising the exemption from $600,000 up to a million dollars over a 10- or 11-year period. Inflation alone will mean that not even this legislation will keep pace with inflation. So that is totally inadequate. In order for us to do what we do in the other areas, I guess we are going to have to be willing to accept that. What it means, Mr. President, is that there is still going to be a big incentive for those people concerned about the estate tax to come in with a second round of reforms, beginning next year. As a result of an amendment I was able to get passed in the budget, and which stayed in the budget, we are not precluded from offering additional tax relief beginning next year. One of the first things I am going to do--and I think my colleagues will support me on this--is get additional estate tax relief beyond that which is agreed to in this bill. We all recognize that it is totally inadequate in this bill. We support the tax relief, but we don't, for a minute, contend that it is adequate. So those are the two points I wanted to make--first, that the capital gains relief in this legislation will be enormously beneficial to working families, to the risk-takers in our society, and even to the Treasury, which will enable us to continue to be on a track to balance the Federal budget. Second, this whole package is just the beginning. We begin the process of reducing the tax burden on working Americans, but even beginning next year we will have proposals to continue that process. It is the right thing to do. It is what our constituents asked us to do, and for future generations it is the only thing we can do to fully comply with our obligation to leave this country a better place than we found it. I thank the Senator from Wyoming for the time.

Mr. KYL

Mr. KYL. Mr. President, I rise in the strongest possible opposition to the Torricelli amendment. My grandmother used to say there are some things that are better not to know, and that is the case with certain highly classified information that is important to the national security of American citizens. One of those things is how much money is spent on our intelligence activities, information which is very useful to our opponents, and not particularly useful to the average American taxpayer. The public's right to know, as has been pointed out by the distinguished chairman of the Intelligence Committee, is adequately protected by our elected representatives. That is why we have special provisions of law, Mr. President, that call for certain Members of Congress only--not every Member of Congress, but only certain Members of Congress--to be apprised of certain operations and certain details of our intelligence operations. For example, in an operation such as that which nabbed the terrorist Mir Aimal Kansi just last Saturday, it was known to only a handful of our elected representatives because that is what the law provides. The American people did not need to know that, and, indeed, it would have jeopardized American lives, the people who were involved in this operation, had there been more widespread knowledge. There is a reason why this information is not public. The irony is, Mr. President, that revealing the top-line number, the aggregate amount we spend on intelligence, would be of very little use to the average American debating whether or not it is the proper number, but it means a great deal to clever potential adversaries who do trend analysis and extrapolation from year to year to see whether or not there are changes and who try to determine whether or not we have, therefore, made certain commitments to our intelligence that would be of interest to. So on the one hand it doesn't help the average American much. On the other hand, it could easily help opponents a great deal. Unfortunately, there is no way for us to defend that budget. If the top line is $10 billion, or $100 billion, or $50 billion, just hypothetically, whatever number, somebody might say, ``I don't think that is a good number.'' How do you defend that number without getting into all of the sensitive, classified information that comprises the budget? So it is not a good idea. No other friend or ally of the United States reveals the amount that it spends on intelligence. It would set a terrible, terrible precedent, Mr. President, because right after the aggregate budget was revealed, everybody would realize that, to the average American, that doesn't say much and so the calls would be very quick for more information. ``You gave us the top line; how about the categories on which it is spent?" This is a slippery slope, Mr. President. Reveal the first number and it will be just a matter of minutes before there will be a call to reveal more information. As a matter of fact, our colleague from New Jersey, in effect, just did that by saying that ``in the area of defense spending we have determined that we need complete access to information,'' to use his quotation. And the defense budget is known. Yes, the defense budget is known, but there is still much about defense that is highly classified. That is the way it needs to be. Another argument of our friend from New Jersey is that there have been leaks and there is no reason to continue to withhold the information. Of course, the proper policy when there are leaks is to find them. They can be very damaging to our national security. The answer is not to, therefore, let all the information out. The object is to try to prevent those leaks from causing more harm. In conclusion, Mr. President, if this is such a good idea, one wonders why previous Presidents haven't done it. They have the authority and power to do it, and they have not done it because they know full well that it is not the right thing to do. I just suggest that it would be highly, highly dangerous to the national security interests of the United States, to the lives of Americans who literally put their lives on the line to work operations that are very dangerous that the public never hears about, because, obviously, they can't, or it would compromise the sources and methods by which we obtain information. It would be very dangerous to these people if our potential adversaries could soon begin to pick apart the budget and learn what kind of capabilities we have to use against them. I urge, in the strongest possible terms, that we vote against the Torricelli amendment and urge my colleagues, when we have that vote, to do so.

Mr. KYL

Mr. KYL. I thank the Chair.

Mr. KYL

Mr. KYL. Mr. President, I wish to follow up on some comments that my colleague from Colorado made. First, however, I should like to address a subject briefly which has relevance to one of the bills we will be taking up, if not today, then later this week, and that is the intelligence authorization bill. This is a bill which should not have a great deal of controversy surrounding it. It provides for the funding of the intelligence agencies of the United States and the substantive policy that governs our intelligence activities, but it is especially relevant and propitious, I think, that we take up that bill this week following the news accounts of the arrest and incarceration of a man whose name is Kanzi, ostensibly from Pakistan, who is the alleged perpetrator of a violent crime against employees of the CIA a few years ago here in the Washington, DC, area. The reason I bring this up now is to make two points. One, we frequently hear the stories when things go wrong in law enforcement and in particular in operations involving our intelligence agencies. We try to learn from those lessons, but there have been bitter experiences with which we have had to deal. What we do not hear so much about are the many, many successes that go unreported, frequently because they involve law enforcement or intelligence activities that simply cannot be disclosed publicly. They involve classified material, sources, and methods of collection of information which we simply cannot discuss or we would be compromising those sources and methods. So these stories are not told, and it is too bad because I think the American people, in order to support our law enforcement and intelligence agencies, need to appreciate the work that they do and the danger that they frequently face and the many times in which by their actions American lives are saved and yet we do not even know about it. In this case, the details will have to come out later. We have been briefed, and certainly there is a very fine story to be told here. But the details will have to come out later. What we can say at this point is that this will be found to be yet another example of where American law enforcement officials played a key role in bringing to justice a terrorist, a person who at least allegedly has committed a heinous crime and hopefully, as a result of that information coming out, we will be supportive of agencies such as the FBI, such as the CIA, the DIA, and the other agencies, some of which we will be discussing in the intelligence authorization bill a little bit later. The second point is that we will find, track down, take into our jurisdiction, and prosecute terrorists. They can run, but they cannot hide. And they should note that we do not rest until we bring these people to justice. If you look at the number of terrorist incidents over the last several years, in many, many cases we have found and we have gained jurisdiction over and in some cases already prosecuted the people who have perpetrated heinous crimes against society in general and frequently against Americans. We will continue to be successful in doing that and in protecting American people if we are able to adequately fund and provide proper policies to guide our law enforcement agencies. So when we take that bill up later, I hope that my colleagues will be supportive and the American people will appreciate the continued necessity of providing that kind of support. In the end it is what will preserve our democracy as well as peace around the world.

Mr. KYL

Mr. KYL. Mr. President, I wish to briefly address the same subject my colleague from Colorado addressed, and that is the proposition that Americans are finally going to get some tax relief. The biggest tax relief, as a matter of fact, in 16 years is about to be brought to the Senate floor for debate. It is uncertain yet precisely what some of the details are, but the Ways and Means Committee of the House of Representatives has put a plan on the table, the Finance Committee in the Senate has put a plan on the table, and the members of that committee are working through the details of that bill. We do know the general outline so far, and I think we can talk about that and begin to lay the groundwork for debate in this Chamber on that historic tax cut for American working families. I think that is the first lesson to be learned here. I really deeply regret that some people at the White House are already beginning to take political pot shots at this very worthwhile, bipartisan tax relief to be provided to American families. It is the same old political rhetoric that it is a tax cut for the rich. That just does not fit this proposed tax cut. Most of the tax cuts are for average working families, and all of the tax cuts are good for the economy of this country. As a matter of fact, under the proposal that the Senate Finance Committee began considering yesterday, three-fourths of all of the tax relief goes to families making less than $75,000 a year and that is not an atypical, two-parent working family in America today. So with three-fourths of the benefits going to that income level, it is hardly to be characterized as a tax cut for the rich. As a matter of fact, 83 percent of this proposed tax relief is in the form of relief to families with children, the $500 per child tax credit and the educational tax credit and other relief for families struggling to send their kids to school; 83 percent of the relief is of those two components. So let us not begin this important debate with some political demagoguery about tax cuts for the rich, especially, Mr. President, since the relief here, though historic, is quite modest in total amount--less than 1 percent of the budget--because the negotiators, under pressure from the White House to keep the tax cut small, agreed to a net of only $85 billion in tax cuts over a 5-year period. Now, the Republican plan that was introduced at the beginning of this year provided for $188 billion in relief and, frankly, that was not enough for many of us who felt it should have gone further, but at least it was enough to provide meaningful relief in terms of the $500 per child tax credit, meaningful IRA relief, some capital gains relief, estate tax relief, and education relief. These are critical to the American economy and to American families. The $85 billion that is available to accommodate these five areas is not going to provide adequate relief in any of them but at least it will provide a start. I am a little disappointed in those who are already attacking it as if it is too much for us to afford. It was negotiated and agreed to by the White House. Therefore, I hope that we will get some support because here in this body there is already bipartisan support for it. It involves, as I said, a phased-in $500- per-child tax credit for families with kids. It involves two different kinds of IRA tax relief. There is the $2,000 homemaker IRA relief for families which do not have a pension for the homemaker. My wife always wondered why she could not fund an IRA the same way that I could fund an IRA. She worked just as hard as I did, even though she did not have a wage-paying job. And we also have a backloaded IRA relief provided in this package, so even in families where there is a pension, that doesn't preclude them from the spouse having an IRA and being able to save for future years. We also provide capital gains tax relief, not as much as we would like, but it ought to be enough to at least stimulate key parts of our economy so we can continue to grow and provide jobs for all Americans families. And, as I mentioned before, the educational component of this as well rounds out the relief. The one area where we did not get very much relief is in the death tax that my colleague from Colorado talked about. I think the answer there is simply this is not enough. Phasing in an exemption up to $1 million over an 11-year period is totally inadequate. But I think what this will do is simply sharpen our interest in continuing to engage in that debate and ensure that there will be greater relief from the death tax in future years. Obviously, it simply cannot all be accommodated within the $85 billion that was agreed to. So I think as we begin this debate we should do so on a positive note, on a constructive note, determining how we can work together to provide meaningful tax relief to American families. If we do that, we will succeed in helping the very people who need help in our society by ensuring continued economic growth and by making good on our promise to the American people for historic tax relief, the first in 16 years. I yield the floor. Mr. Byrd addressed the Chair.

Mr. KYL

Mr. KYL. Mr. President, during the recent Senate debate over the Chemical Weapons Convention, a great deal of discussion centered on the proper role of arms control agreements. I recommend the Washington Times op-ed by Sven Kraemer, who served as Director of Arms Control at the National Security Council during the Reagan administration to anyone interested in the subject. I ask that it be printed in the Record. The op-ed follows: [From the Washington Times, May 11, 1997] Illusory Game of Arms Control (By Sven Kraemer) ``They cry `peace,' but there is no peace.'' Jeremiah's lament about the false prophets of peace applies tragically to the false prophets of arms control who won Senate ratification of the proposed Chemical Weapons Convention (CWC) recently. They cry ``arms control,'' but there is no arms control. CWC supporters saw the CWC as an ``arms control'' talisman to ward off evil powers and ``to ban forever the scourge of chemical weapons from the face of the globe.'' They proclaimed it a global ban although the CWC is far from global in its list of banned chemical precursors and in the number of states likely to sign or to ratify it. They proclaimed it as ``arms control'' while admitting it cannot be effectively verified or enforced and it cannot stop, and even risks abetting, proliferation. Such false prophets and fatal flaws are tragically common to other ``arms control'' items on President Clinton's radical agenda headed for Senate review. These include proposed ``bans'' on nuclear testing, biological weapons, fissile materials and land mines, a START III ``framework'' that vitiates START II, and a Helsinki summit agreement setting new limits on missile defenses. They don't build foundations or bridges for arms control in the 21st century, but are more like bungee jumps. Counting on miracles, spectacle and concessions rather than effective measures to control and protect against arms, they miss both the opportunities and the obligations of serious arms control and responsible leadership. CWC supporters claimed years of political legitimacy for the CWC and declared that a ``no'' vote would destroy U.S. leadership, wrecking a long effort to establish high international arms control norms and placing the United States on the side of pariah states. But it is a ``yes'' vote that puts the United States on the side of pariahs. A ``no'' vote would have embarrassed a few officials, but would have marked a principled U.S. stand, supported by American public opinion, against a fatally flawed arms control approach that rewards pariahs and rogues, lowers already low arms control standards and seriously endangers our own security. next steps The required leadership won't come from the White House and its misguided Senate supporters. The task of critique, reinvention and leadership will come from the unprecedented coalition of courageous senators, former Cabinet-level officials, key businessmen, and leaders of some 40 citizens groups who joined in opposition to the CWC and who want serious arms control, serious defense, and serious protection of our citizens' rights. CWC funding and implementation legislation provide early opportunities for such leadership in correcting the treaty's fatal flaws. The extraordinary Kyl-Lott-Helms, et al. ``Chemical and Biological Weapons Threat Reduction Act'' passed by the Senate the week before the CWC vote, will be an excellent foundation for that effort. For the future, CWC opponents will be more dubious than ever about the administration's blizzards of misinformation and the next items on Mr. Clinton's radical agenda. Their concerns are backed by Luntz polls that show the American people to be overwhelmingly opposed to treaties like the CWC which cannot be effectively verified or enforced, which create costly and intrusive new U.N.-style international bureaucracies, and which endanger U.S. rights and weaken U.S. security. The administration and its Senate supporters have been put on notice. To silence such critics and undermine potential long-term opposition, Clinton CWC supporters have sought political cover by invoking George Bush and even Ronald Reagan for their efforts. A George Bush signature was presented as necessarily guaranteeing effective ``arms control,'' and the CWC was even declared a ``Reagan treaty.'' In the wake of the Senate vote, such claims require new review and rebuttal. The Bush signature guarantees nothing. Grave flaws were evident in the CWC when it was rushed to signature in the closing days of the Bush presidency in January 1993. In the four years since then, changed global conditions have turned these flaws into deadly gambles. Left standing, the CWC flaws, high-risk Clinton arms control and defense policies, and dangerous international developments (notably including severe proliferation problems fostered by Russian and Chinese violations which the Clinton administration rewards instead of engages) will be heading the United States into the bull's eye of disaster. three reagan lessons and legacies for the future The invocation of Ronald Reagan on behalf of the CWC and similar spurious arms control efforts is particularly ironic. Mr. Reagan's understanding of history and his approach to arms control are repudiated by the CWC's underlying assumptions, provisions and impact. Mr. Reagan often spoke of the historic reality that arms control agreements were routinely violated by dictators and rogues unfettered by the democratic hopes, principles and processes of the American people and their allies. He often spoke of the high cost paid in lives and treasure for trust in such agreements, including those from the 1970's, which were being systematically violated by the Soviet Union. His strategy of ``peace through strength'' won the Cold War in part because he redefined arms control in terms of its contribution to America's security, not as a matter of trust in a ``process'' or as an end in itself. dealing with dictators and rogues Enforcing compliance, ending proliferation: From the beginning of his presidency, Ronald Reagan's arms control approach rejected the prevalent lowest common denominator approach of his predecessors in negotiations with dictators and rogues, and focused instead on mastering the task of working with democratic allies effectively to constrain, deter and defend against such evil powers. This task is more important than ever in today's world as Iraq, Iran, North Korea, Libya, Syria and their chief suppliers in Moscow and Beijing routinely violate a wide range of anti-proliferation and other arms control agreements and as the Clinton administration fails to enforce these treaties or even to implement U.S. laws providing sanctions for such behavior. To start with, Mr. Reagan insisted that violations of existing treaties had to be exposed and corrected before new ones could be signed. And for chemical, biological and toxin weapons, the first two years of the Reagan presidency focused on assessing and reporting such violations and seeking correction, especially concerning Soviet Production and use. The Reagan compliance reports were unprecedented in accurately presenting the threat and in pressing the case for establishing higher norms for international arms control compliance. Thus, when he had Vice President George Bush table a preliminary draft CW Convention in April 1984, half of the press and diplomatic kit made available by the White House and the vice president provided detailed information on troublesome Soviet activities that had to be corrected before CW arms control could begin to be taken seriously. Mr. Reagan's CWC draft did not contain the ``poisons for peace'' language of the current CWC's Article XI which requires ``the fullest possible exchange of chemicals, equipment and information'' and which forbids ``the maintenance of restrictions.'' Nor did his CWC draft contain the other pro-proliferation clause, Article X, which declares that ``nothing in this Convention shall be interpreted as impeding the rights of States Parties to request and provide assistance bilaterally.'' effective verification, enforcement and insurance capabilities Mr. Reagan insisted that serious arms control treaties had to impose real, verifiable and enforceable restrictions, not the ``nuclear freeze''-type illusions demanded by the Soviet Union and favored by the self-styled U.S. ``arms control'' lobby. Thus, he proposed the ``zero option'' for Intermediate-Nuclear Forces in 1981 and a ``deep cuts'' Strategic Arms Reduction Treaty in 1982. And when a draft CW Convention was tabled in Geneva in 1984, Mr. Reagan insisted on an interagency and international work program focused on a long-term effort to try to develop such effective restrictions in the future. Reflecting this Reagan imperative, George Bush told the Geneva press: ``Let's try to use this as a beginning, a place to get a start on the negotiations.'' Mr. Reagan insisted that effective arms control required U.S. security capabilities in place to provide the insurance of high-confidence U.S. verification, enforcement and defense, and he required that such capabilities be certified for each arms control proposal by the U.S. intelligence community and the Joint Chiefs of Staff. For chemical weapons, he required enhanced intelligence, robust anti- chemical defenses, and a small residual stock of modern chemical weapons to provide enforcement and negotiation leverage until a period near the end of the final weapons destruction date. In addition to such U.S. insurance capabilities for specific arms control treaties, Mr. Reagan's Strategic Defense Initiative, introduced in March 1983 (a year before the draft CWC was tabled), provided for deterrence and defense based on protection rather than on his predecessors' dubious Cold War policy of Mutual Assured Destruction (MAD). The American people, and people around the world, were to share the benefits of the accelerated development and deployment of advanced U.S. theater and strategic defenses to be available against missiles--the delivery system of choice most threatening in the use of chemicals, toxins and other weapons of mass destruction. As late as 1992, George Bush and Boris Yeltsin agreed that at least a limited global anti-missile defense system (GPALS) would be important to security and stability. In contrast to the Reagan defense insurance policies, the United States is not only unilaterally eliminating its chemical stockpiles, a move other nations are not following, but the Clinton administration is cutting back several hundred million dollars in U.S. chemical defense investment, reducing its intelligence, dumbing down theater missile defenses, and further postponing the national missile defense deployments required to protect the American people against growing threats from rogues and from accidental launches. protecting u.s. constitutional rights and u.s. sovereignty Mr. Reagan's arms control policies insisted on assuring U.S. constitutional rights and protecting U.S. sovereignty. His CWC interagency work program reflected the requirement to study and to try to resolve the serious Fourth and Fifth Amendment dilemmas raised by extensive CWC reporting, regulatory and inspection requirements, which in the current CWC potentially affect the rights and budgetary and proprietary interests of up to 8,000 U.S. companies. Unlike the current CWC, Mr. Reagan's draft CWC of 1984 had the United States and other permanent members of the U.N. Security Council as five guaranteed members of the CWC Executive Council, and required a Preparatory Conference and other forums to operate by consensus, providing a U.S. voice and veto when CWC provisions and processes required amendment. As the Senate now reviews CW implementing legislation, funding requirements and other elements of the radical Clinton agenda, it should send its own veto on behalf of U.S. security and serious arms control. In the face of the globe's gathering storms, it is not too late ``to provide for the common defense'' and to prevent the historic tragedy now unfolding because of U.S. reliance on ``arms control'' illusions.

Mr. KYL

Mr. KYL. I ask unanimous consent that I be allowed to speak in morning business for up to 10 minutes under the time of Senator Coverdell.

Mr. KYL

Mr. KYL. Mr. President, I rise in support of Senate Concurrent Resolution 21, commemorating the 30th anniversary of the reunification of Jerusalem as the capital of Israel. It is an honor to be a cosponsor of this resolution, as it was to be a cosponsor of the 1995 Jerusalem Embassy Relocation Act. The 1995 act declared that the holy city should remain ``undivided'' and be ``recognized as the capital of the State of Israel.'' Mr. President, for 3,000 years there has been a continuous Jewish presence in the city of Jerusalem. No other city on Earth is the capital of the same country, inhabited by the same people, speaking the same language and worshipping the same God, for a span of three centuries as has been the case with Jerusalem. In 1948, the Arab legion conquered East Jerusalem, including the Old City, as part of the general Arab military offensive to prevent Israel from coming into being. Israel retained control over West Jerusalem. It is important to note, Mr. President, that when East Jerusalem was under Arab or Muslim rule, it never served as a capital city for the rulers. Between 1948 and 1967, when East Jerusalem was under Jordanian control, Jordan's capital remained in Amman. I would also note that during this time, the holy city was closed to other religions. Jews were prevented from visiting their holy places, all the synagogues in the Old City were razed and Jewish burial places were desecrated. In 1967, as Egypt and Syria moved again toward war against Israel, the Israeli Government urged King Hussein of Jordan to sit out the fighting and promised that the territories he controlled would be left alone if he did so. The King failed to heed the warning. He attacked Israel, and in the ensuing fighting lost East Jerusalem and the West Bank. When the holy city was reunified after the war, Israel, under Labor Party leadership at the time, declared that Jerusalem will remain undivided forever as Israel's capital and that all people will have free access to their holy places. All people of all faiths are welcome to worship in the holy city. Former Israeli Foreign Minister Shimon Peres said it this way: ``Jerusalem is closed politically and open religiously. This mean that it will remain unified, and only as Israel's capital, not two capitals. It will remain under Israeli sovereignty.'' I agree with Shimon Peres. Jerusalem is, and should remain, a united city--the capital of Israel. I urge the immediate adoption of this resolution. As the 1995 act did before, Senate Concurrent Resolution 21 will send a principled and constructive signal to all the parties in the Arab-Israeli negotiations that the United States recognizes Jerusalem as the capital of Israel.

Mr. KYL

Mr. KYL. Mr. President, I would like to announce for the information of the Senate and the public that S. 846, to amend the Federal Power Act to remove the jurisdiction of the Federal Energy Regulatory Commission to license projects on fresh waters in the State of Hawaii, has been added to the agenda of the Water and Power Subcommittee hearing scheduled for Tuesday, June 10 at 9:30 a.m.

Mr. KYL

Mr. KYL. Mr. President, I am pleased to have my colleague, Senator Phil Gramm, join me as an original cosponsor of the Senior Citizens Income Tax Relief Act. This legislation would give seniors relief from the Clinton Social Security tax increase of 1993. The recently passed Federal budget deal provides target levels for new spending and for modest tax relief. As Congress begins to write the bills to implement this budget blueprint, attention turns to the details. One of them is whether there will be sufficient room for tax relief for senior citizens. Millions of America's senior citizens depend on Social Security as a critical part of their retirement income. Having paid into the program throughout their working lives, retirees count on the Government to meet its obligations under the Social Security contract. For many, the security provided by this supplemental pension plan is the difference between a happy and healthy retirement and one marked by uncertainty and apprehension, particularly for the vast majority of seniors on fixed incomes. As part of his massive 1993 tax hike, President Clinton imposed a tax increase on senior citizens, subjecting to taxation up to 85 percent of the Social Security received by seniors with annual incomes of over $34,000 and couples with over $44,000 in annual income. This represents a 70-percent increase in the marginal tax rate for these seniors. Factor in the Government's Social Security earnings limitation, and a senior's marginal tax rate can reach 88 percent-- twice the rate paid by millionaires. An analysis of Government-provided figures on the 1993 Social Security tax increase finds that, by next year, America's seniors will have paid an extra $25 billion because of this tax hike, including $380 million from senior citizens in Arizona alone. Mr. President, I want to make an additional important point. Despite all the partisan demagoguery, the only attack on Social Security in recent years has come from the administration and the other party in the Omnibus Budget Reconciliation Act of 1993. Not one Republican supported this tax increase on Social Security benefits. At the Clinton administration's insistence, the amount of tax relief we will be able to provide will be severely limited. It will be difficult, then, to repeal the Social Security tax increase. This is why I offered an amendment to ensure that we are able to expand tax relief in the future, and why the first tax relief proposal I am introducing will repeal President Clinton's 1993 Social Security tax increase.

Mr. KYL

Mr. KYL. Mr. President, I am pleased to have my colleague, Senator Phil Gramm, join me as an original cosponsor of the Senior Citizens Income Tax Relief Act. This legislation would give seniors relief from the Clinton Social Security tax increase of 1993. The recently passed Federal budget deal provides target levels for new spending and for modest tax relief. As Congress begins to write the bills to implement this budget blueprint, attention turns to the details. One of them is whether there will be sufficient room for tax relief for senior citizens. Millions of America's senior citizens depend on Social Security as a critical part of their retirement income. Having paid into the program throughout their working lives, retirees count on the Government to meet its obligations under the Social Security contract. For many, the security provided by this supplemental pension plan is the difference between a happy and healthy retirement and one marked by uncertainty and apprehension, particularly for the vast majority of seniors on fixed incomes. As part of his massive 1993 tax hike, President Clinton imposed a tax increase on senior citizens, subjecting to taxation up to 85 percent of the Social Security received by seniors with annual incomes of over $34,000 and couples with over $44,000 in annual income. This represents a 70-percent increase in the marginal tax rate for these seniors. Factor in the Government's Social Security earnings limitation, and a senior's marginal tax rate can reach 88 percent-- twice the rate paid by millionaires. An analysis of Government-provided figures on the 1993 Social Security tax increase finds that, by next year, America's seniors will have paid an extra $25 billion because of this tax hike, including $380 million from senior citizens in Arizona alone. Mr. President, I want to make an additional important point. Despite all the partisan demagoguery, the only attack on Social Security in recent years has come from the administration and the other party in the Omnibus Budget Reconciliation Act of 1993. Not one Republican supported this tax increase on Social Security benefits. At the Clinton administration's insistence, the amount of tax relief we will be able to provide will be severely limited. It will be difficult, then, to repeal the Social Security tax increase. This is why I offered an amendment to ensure that we are able to expand tax relief in the future, and why the first tax relief proposal I am introducing will repeal President Clinton's 1993 Social Security tax increase.

Mr. KYL

Mr. KYL. Mr. President, let me say, as I did when this legislation originally came before the Senate a month ago, that I fully support the disaster relief that is being provided here. My heart goes not to the families that have lost their homes, their businesses, and their schools in the recent floods and snows. We have all seen the devastation on the evening news, in the newspapers. It is tragic, and we owe it to the people in the Midwest and elsewhere to put the full resources of the Federal Government behind the relief effort to help them get on their feet as soon as possible and restore some sense of normality to their lives. Mr. President, the relief in this bill is urgently needed. So are the provisions that would prevent another shutdown of the Federal Government this fall. It seems to me that we are taking the very responsible step of acting now to prevent another shutdown of the Government--something President Clinton says he, too, wants to prevent. Yet the President is threatening to veto the disaster relief, of all things, on account of the antishutdown provisions. Why would a President who says he opposes Government shutdowns threaten to veto a bill that would prevent Government shutdowns? I will tell you why. Recognizing how anxious Members of Congress were about being perceived as responsible for another Government shutdown last fall--recognizing that Congress would do just about anything to avoid another shutdown--the President was able to demand and win an additional $6.5 billion for his favorite programs. Majorities in the House and Senate went along. I did not. The threat of a shutdown proved to be a valuable part of the President's arsenal then, and it will be again unless we put a mechanism in place to keep the Government open while we continue to negotiate acceptable spending levels. There are other good things in this bill as well, including provisions to extend the expiration date of the San Carlos Apache Tribe Water Rights Settlement Act of 1992, and to ratify the agreement between the tribe, Phelps Dodge Corp., and the Secretary of the Interior for long-term water use. Yet, Mr. President, I find myself in the position of having to vote against this bill for the very same reason I did when it first came before this body last month: it is yet another in a long line of spending bills that merely add to the deficit. It is business as usual, and it comes at a time when we supposedly have reached agreement on a plan to eliminate deficits by the year 2002. It would be one thing if there were no other way to get aid to the flood victims except to borrow. But it is quite another thing when we ignore other options in order to keep spending on other programs. The Senator from Texas, Senator Gramm, offered an amendment that would have reduced spending across the board by a grand total of 1.9 percent. One point nine percent. That is less than 2 cents on the dollar in other programs to pay for this disaster relief and other spending. That is all it would have taken, yet there were only 38 of us in the Senate who voted for that amendment. Later today, we will be asked to vote on the so-called balanced budget agreement that our leadership struck with the White House. The ink on the budget agreement is not even dry. Yet the supplemental appropriations bill we are about to vote on would add $6.6 billion to the deficit over the next few years. It busts the budget agreement before the final vote is even taken. What does that say about the budget agreement, which does not even begin to reduce the deficit until the year 2001? Consider the deficits that are projected under that plan. The deficit this year is expected to total $67 billion. We are trying to get to a zero deficit--to balance--by the year 2002. But under the budget agreement, the deficit goes up, not down. It climbs 34 percent--to $90 billion next year--and then remains in that range for 2 more years. Only in the final 2 years of the 5-year plan--in 2001 and 2002--would the deficit drop dramatically. If anyone thinks that we are really going to be able to eliminate a $90 billion deficit in those final 2 years--when we cannot even find a way to pay for less than $7 billion in disaster relief in the bill before us today--they are mistaken. Mr. President, we all know that disasters can and will occur on a regular basis. Unfortunately, they will happen--floods, hurricanes, earthquakes, and the like. We know it, and we should plan for it. The Appropriations Committee acknowledged in its own report that the number of major disaster declarations in the 1992-1996 period has increased 54 percent. In other words, we had ample warning that something would occur somewhere. Had we prepared for the need for disaster assistance last fall, instead of using every extra dollar to meet President Clinton's demands for new spending, we would already have been able to respond to the emergency in the Midwest and elsewhere around the country. But by ignoring the potential for disasters last fall, we merely paved the way for adding to the deficit now when the need for relief takes precedence over budget concerns. Mr. President, this bill is more expensive than when it left the Senate a month ago. It is still not paid for. It busts the budget agreement that we will vote on this evening. We can and we must do better.

Mr. KYL

Mr. KYL. Madam President, the Senate once again has the opportunity to move beyond rhetoric and pass a bill that will really help working parents and their families. This afternoon's cloture motion represents the second time those of us who support the Family Friendly Workplace Act, S. 4, have worked to invoke cloture--to move this issue to a vote. And yet, the minority has blocked consideration of this measure despite S. 4's wide public support and bipartisan support here and in the House. The Family Friendly Workplace Act will help working parents balance the demands of having a family and holding down a job. Working parents, particularly women, are looking for more flexibility in their schedules and more time with their children. In fact, according to a recent Labor Department report, ``the number one issue women want to bring to the President's attention is the difficulty of balancing work and family obligations.'' And, according to Lynn Hayes, author of ``The Best Jobs in America for Parents,'' when working parents are asked what they desire most in a job, a majority answer ``flexibility in scheduling.'' Similarly, according to a study commissioned a few years ago by Arizona's Salt River project of the Southwest region, a majority of parents with children under 13 are willing to trade salary increases for flexible time, leave, and dependent-care benefits. There are other studies showing that Americans want flexibility in the workplace. In a work/family study conducted by Johnson & Johnson, for example, the company expected a need for child care to surface. Instead, ``the big issue that popped out was that of all the things that we would do as a corporation in support of parents, the biggest factor was that they wanted a flexible work schedule.'' And Federal employees, who already have this flexibility, support it in large numbers. As the parent of two children and grandparent of four, I have seen first hand how difficult it can be to effectively balance work and family responsibilities today. Parents are working just as hard or harder than ever before just to make ends meet without gaining additional time or money for their families. That's because our tax laws take too much of working parents' hard-earned dollars. It is also because our outdated labor laws make it impossible for many employees to work together with their employers to develop schedules that better respond to the demands of work and family. The problem was highlighted in a recent Newsweek cover story on the problem parents and their children encounter when parents do not have enough time to spend with their children. In the article, Kevin Dwyer, assistant director of the National Association of School Psychologists, cites research showing that, when parents do not have enough time to spend with their children, it leads to kids being ``more aggressive, more deviant and more oppositional.'' That brings us back to why passage of S. 4, the Family Friendly Workplace Act, is so important. S. 4 will give millions of working parents, and in particular an estimated 28.8 million women paid by the hour in the private sector, the flexibility to better juggle their responsibilities both as parents and employees. By updating the Fair Labor Standards Act of 1938, the Family Friendly Workplace Act will allow hourly wage workers and their employees to develop flexible work schedules. Under the FLSA, hourly workers in the private sector are not allowed to develop flexible work arrangements with their employers, even though public sector employees and salaried private sector employees can. In fact, as noted, Federal employees have been allowed to participate in flexible scheduling programs since 1978. It has worked well, and fully three-quarters of these employees report more time for their families and higher morale. Eight out of ten Federal workers surveyed by the General Accounting Office are pleased with the flexible scheduling option and want the program continued. The Family Friendly Workplace Act will extend such opportunities to the private sector by guaranteeing, upon agreement between employer and employee, specific flexible work options. First, it will allow hourly wage employees and their employers together to choose whether the employee will be compensated with time- and-a-half pay or, compensatory time-and-a-half time. Some families need additional income; some families need more time to juggle the demands of parenthood. Whereas current law provides many working parents with the opportunity only for extra pay, S. 4 provides a choice between increased pay or time. The Family Friendly Workplace Act also provides, if agreed to by both employer and employee, a way for employees to bank overtime hours (up to six weeks of paid time) so that, when needed, employees will have a way to take extended leave and still receive a paycheck. Allowing employees to bank overtime hours, and be paid for those hours, is preferable for most workers, since many employees cannot afford to take extended unpaid time off to take care of a sick child or other dependent. Moreover, under S. 4, at the end of the year, employers must cash out by paying the employee for the unused accumulated hours. The employee must also be able to cash out his or her accumulated leave within 30 days. S. 4 also allows employees to develop biweekly, or flextime schedules. For example, under current law an employer cannot allow an hourly wage employee to work 45 hours one week in exchange for 35 hours the next week so that the worker can attend, for example, a child's baseball game, a parent-teacher conference, or doctor's appointment. S. 4 will change this rigid interpretation of the FLSA. It will allow workers the ability to arrange biweekly work schedules--the employee could work any combination of 80 hours over two weeks, if agreed to by the employer. Someone could work a long week and then a short week to best fit the needs of his or her family. As a safeguard against abuse, S. 4 requires that any flexible work arrangement or banked overtime hours be agreed upon by both the employer and the employee, without coercion. Collective bargaining agreements would remain unaffected, and revised work schedules could be worked into a collective bargaining agreement. Madam President, the Family Friendly Workplace Act will update labor law to allow for increased flexibility in the workplace and to better reflect the needs of today's families. As we all know, today's parents are under a great deal of pressure--to provide for their children financially and provide the time needed to raise a healthy child, capable of contributing positively to society. We in Congress should respond by correcting the law, when possible and without mandate, to improve the ability of parents to provide for their children. I urge my colleagues in the Senate to vote to invoke cloture, pass S. 4, and send it to the President for signature.

Mr. KYL

Mr. KYL. Mr. President, I rise to speak for a few minutes today about the budget that passed the Senate a week-and-a-half ago--a budget that I opposed. In particular, I want to discuss what appears to have made it possible for congressional leaders and the White House to bridge their differences and produce a budget agreement that allegedly leads to balance by the year 2002. Mr. President, it seems to me that it was a projected $225 billion surge of revenue from a strong and growing economy--an extra $45 billion in each of the next 5 years--that helped bridge the gap. Without that additional revenue, which was identified by the Congressional Budget Office the night before the agreement was reached, no deal would have been possible. Of course, the negotiators did not reach balance by applying that revenue windfall to deficit reduction or tax relief, as you might expect. Most of it was used instead to accommodate higher levels of spending demanded by President Clinton and even some in Congress. In other words, balance would be achieved, but at a level of spending $45 billion higher per year than if all the additional revenue were applied to deficit reduction or tax relief alone. The fact that the budget deal enlarges Government is one reason why I voted against it. Still, the budget negotiators rightly identified a thriving economy as one of the keys to solving our Nation's chronic deficit problem. And unlike previous budget agreements, they looked to economic growth to provide the additional revenue, avoiding the trap of tax increases, which limit the economy's potential and, in turn, make it harder to eliminate the red ink. They even found a way to provide a limited amount of tax relief. But with the deal so dependent upon economic growth, and no significant changes in policy to prevent the already lengthy expansion from running its course within the next few years, many of us believe that it will be difficult, if not impossible, to ever realize the extra revenues that the budget agreement depends on to bring the budget into balance. As you know, Mr. President, the agreement itself provides no tax cuts--no family tax credit, capital gains relief, death-tax relief, or education tax credit. It merely establishes the overall size of the tax cut that Congress will begin writing in a few weeks. It permits a net tax cut of $85 billion over the next 5 years--a minuscule amount considering that the Treasury will collect an estimated $8.6 trillion over that time period. Considering that even the modest tax-cut package congressional leaders proposed earlier this year--a $500-per-child tax credit, a 50- percent cut in the capital-gains tax, estate-tax relief, and expanded Individual Retirement Accounts--will cost an estimated $188 billion, it is doubtful that Congress will be able to provide even that level of relief. It is more than twice the net tax cut allowed by the agreement. The limited amount of tax relief is another reason that I voted against the budget agreement. Rather than spread tax relief so thin that it does no one much good, some of us are now suggesting that we focus relief on just a few things that will do the most good for the economy overall--that is, on capital formation. After all, not one business can begin, not one company can expand, not one new job can be created, not one wage can be increased without the capital to start. With that in mind, the single best thing we could do would be to provide a deep reduction in the tax on capital gains. Ideally, the reduction should match that which was recommended by Democratic President John F. Kennedy as part of his economic growth plan in 1963-- a 70-percent exclusion for gains earned by individuals, and an alternative tax rate of 22 percent for corporations. Ironically, President Kennedy's plan, which I introduced this year as the Capital Gains Reform Act, S. 72, proposed even deeper capital-gains cuts than the Republican Congress passed a year-and-a-half ago. Capital-gains reform will help employers and employees. The American Council for Capital Formation estimates that a Kennedy-like plan would reduce the cost of capital by at least 8 percent, leading to as many as 150,000 new jobs a year. It will also help the Treasury. Between 1978 and 1985, the top marginal tax rate on capital gains was cut by almost 45 percent--from 35 percent to 20 percent--but total individual capital gains tax receipts nearly tripled--from $9.1 billion to $26.5 billion annually. That may come as a surprise to some people, but the fact is that when tax rates are too high, people merely hold on to their assets to avoid the tax altogether. No sale, no tax. But that means less investment, fewer new businesses and new jobs, and--as historical records show--far less revenue to the Treasury than if capital-gains taxes were set at a lower level. Research by experts at the National Bureau of Economic Research actually indicates that the maximizing capital-gains tax rate--that is, the rate that would bring in the most revenue to the Treasury--is somewhere between nine and 21 percent. The Capital Gains Reform Act, by virtue of the 70 percent exclusion, would set an effective top rate on capital gains earned by individuals at about 12 percent. President Clinton recognized the importance of lessening the capital- gains tax burden by proposing to eliminate the tax on most gains earned on the sale of a home. That is a step in the right direction, but if a capital-gains tax cut is good for homeowners, it should be good for others who save and invest as well. I believe we ought to follow the Kennedy model and provide a permanent, broad-based capital-gains tax cut. Mr. President, estate-tax relief is the second item that should be accommodated within the limited amount of tax relief available under the budget agreement. I have proposed that such death taxes be repealed outright, as recommended by both the Clinton-sponsored White House Conference on Small Business in 1995 and the Kemp tax-reform commission in 1996. The respected liberal Professor of Law at the University of Southern California, Edward J. McCaffrey, recently observed that polls and practices show that we like sin taxes, such as on alcohol and cigarettes. ``The estate tax,'' he went on to say, ``is an anti-sin, or a virtue, tax. It is a tax on work and savings without consumption, on thrift, on long-term savings.'' The estate or death tax thus discourages the very activity that is necessary to help our economy grow and prosper. The tax is particularly harmful to small businesses, including those owned by women and minorities. It is imposed on a family business when it is least able to afford the payment--upon the death of the person with the greatest practical and institutional knowledge of that business's operations. It should come as no surprise then that a 1993 study by Prince and Associates--a Stratford, CT consulting firm--found that 9 out of 10 family businesses that failed within 3 years of the principal owner's death attributed their companies' demise to trouble paying death taxes. In other words, instead of passing a hard-earned and successful business on to the next generation, many families have to sell the company in order to pay the death tax. The upward mobility of such families is stopped in its tracks. The proponents of this tax say they want to hinder concentrations of wealth. What the tax really hinders is new American success stories. The Heritage Foundation estimates that repeal will, over the next 9 years, spur $11 billion per year in extra output, lead to the creation of an average of 145,000 additional jobs, and increase personal income $8 billion a year over current projections. Mr. President, I know that my two bills--one providing a deep reduction in the capital gains tax, and the other eliminating death taxes--will probably not pass in their current form. The small amount of tax relief allowed by the budget agreement will not permit it if we are to provide child-tax credits, education credits, and other tax relief as well. But it is capital-gains and estate-tax reform that could help keep the economy on track, producing the revenues needed to bring the budget into balance. As President Kennedy put it, ``An economy hampered with high tax rates will never produce enough revenue to balance the budget, just as it will never produce enough output and enough jobs.'' Capital-gains and estate-tax relief should be at the top of the list when it comes time for Congress to write a tax bill in the coming weeks.