Jon Kyl

Mr. KYL

Mr. KYL. Mr. President, last week, I introduced legislation to enhance the economic security of older Americans and small businesses around the country. The bill, known as the Family Heritage Preservation Act, would repeal the onerous Federal estate and gift tax, and the tax on generation-skipping transfers. Fifteen Senators have joined me as cosponsors of this very important initiative. Mr. President, most Americans know the importance of planning ahead for retirement. Sometimes that means buying a less expensive car, wearing clothes a little longer, or foregoing a vacation or two. But by doing with a little less during one's working years, people know they can enjoy a better and more secure life during retirement, and maybe even leave their children and grandchildren a little better off when they are gone. Savings not only create more personal security, they help create new opportunities for others, too. Savings are really investments that help others create new jobs in the community. They make our country more competitive. And ultimately they make a citizen's retirement more secure by providing a return on the money invested during his or her working years. So how does the Government reward all of this thrift and careful planning? It imposes a hefty tax on the end result of such activity--up to 55 percent of a person's estate. The respected liberal professor of law at the University of Southern California, Edward J. McCaffrey, 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. There is no reason even a liberal populace need support it.'' At one time, the estate tax was required of only the wealthiest Americans. Now inflation, a nice house, and a good insurance policy can push people of even modest means into its grip. The estate tax is applied to all of the assets owned by an individual at the time of death. The tax rate, which starts at 37 percent, can quickly rise to a whopping 55 percent--the highest estate tax rate in the world. As detrimental as the tax is for couples, it is even more harmful to small businesses, including those owned by women and minorities. The tax 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' operations. It should come as no surprise then that a 1993 study by Prince and Associates--a Stratford, CT, research and 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 estate taxes; 6 out of 10 family owned businesses fail to make it to the second generation; 9 out of 10 never make it to the third generation. The estate tax is a major reason why. Think of what that means to women and minority-owned businesses. 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 estate tax. The upward mobility of such families is stopped in its tracks. The proponents of this tax always speak of the need to hinder ``concentrations of wealth.'' What the tax really hinders is new American success stories. With that in mind, the 1995 White House Conference on Small Business identified the estate tax as one of small business's top concerns. Delegates to the conference voted overwhelmingly to endorse its repeal. Obviously, there is a great deal of peril to small businesses when they fail to plan ahead for estate taxes. So many small business owners try to find legal means of avoiding the tax or preparing for it, but that, too, comes at a significant cost. Some people simply slow the growth of their businesses to limit their estate tax burden. Of course, that means less investment in our communities and fewer jobs created. Others divert money they would have spent on new equipment or new hires to insurance policies designed to cover estate tax costs. Still others spend millions on lawyers, accountants, and other advisors for estate tax planning purposes. But that leaves fewer resources to invest in the company, start up new businesses, hire additional people, or pay better wages. The inefficiencies surrounding the tax can best be illustrated by the findings of a 1994 study published in the Seton Hall Law Review. That study found that compliance costs totaled a whopping $7.5 billion in 1992, a year when the estate tax raised only $11 billion. The estate tax raises only about 1 percent of the Federal Government's annual revenue, but it consumes 8 percent of each year's private savings. That is about $15 billion sidelined from the Nation's economy. Economists calculate that if the money paid in estate taxes since 1971 had been invested instead, total savings in 1991 would have been $399 billion higher, the economy would have been $46 billion larger, and we would have 262,000 more jobs. Obviously, the income and payroll taxes that would have been paid on these gains would have topped the amount collected by the Government in estate taxes. There have been nine attempts to reform the estate tax during the last 50 years. Few would contend that it has been made any fairer or more efficient. The only thing that has really changed is that lobbyists and estate planners have gotten a little wealthier. Probably the best thing we could do is repeal the estate tax altogether. That is what I am proposing in the Family Heritage Preservation Act. Mr. President, the National Commission on Economic Growth and Tax Reform, which studied ways to make the Tax Code simpler, looked at the estate tax during the course of its deliberations just over a year ago. The Commission concluded that ``it makes little sense and is patently unfair to impose extra taxes on people who choose to pass their assets on to their children and grandchildren instead of spending them lavishly on themselves.'' It went on to endorse repeal of the estate tax. I invite my colleagues to cosponsor the Family Heritage Preservation Act.

Mr. KYL

Mr. KYL. Mr. President, I am pleased to join Senator Ashcroft as an original cosponsor of S. 4, the Family Friendly Workplace Act. S. 4 will update the Fair Labor Standards Act [FLSA] to better reflect the needs of today's workers. It will provide the kind of flexibility that workers and employers need in an age in which more and more of us are balancing roles as both parent and wage earner. The current FLSA does not provide enough flexibility. S. 4 will allow employers and employees together to decide whether the employee should receive overtime pay or compensatory time off for working more than a 40-hour workweek. Under current law, an employer cannot allow an employee to work 45 hours one week in exchange for 35 hours the next week so 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 2 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. 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 6 weeks of paid time--so that, when needed, employees will have a way to take extended leave and still have a paycheck. In contrast, President Clinton is proposing that Congress mandate to employers that an employee be granted extra--that is, unpaid--time off to attend to family needs. 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. In addition, the amount of time an employee could accumulate would be limited to 240 hours. Moreover, at the end of the year, employers must ``cash out'' by paying the employee for the unused accumulated hours--The employee must be able to ``cash out'' his or her accumulated leave within 30 days. Collective bargaining agreements would remain unaffected, but the revised work schedule could be worked into a collective bargaining agreement. Families today are looking for ways to better manage work and child- rearing. Without imposing additional Government mandates on employers, S. 4 will provide employers and employees the flexibility to better juggle the responsibilities of work and family. 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.'' And, 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.'' Mr. 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. Reforming both tax and labor law will go a long way toward improving the quality of life of the American family. In 1950, the average family paid one dollar in taxes to the Federal Government for every $50 earned. Today, it pays almost $1 out of every $3 earned. That is why I am introducing the Tax Limitation Amendment, a proposed amendment to the Constitution to require a two-thirds vote of the House and Senate to increase taxes--reducing taxes could be achieved by a simple majority--and why I support such initiatives as a $500 tax cut for families with children under 18. Today's increased tax burden has kept parents working more hours to keep more of their own hard-earned dollars. High taxes are more than a strain on our pocketbooks--they are allowing us to spend less time with our children, or with others who may be dependent upon us. In concert with tax relief, the hours that the Family Friendly Workplace Act can provide a working mother or father to spend with growing children will begin to remove some of the financial and scheduling headaches presented by so many jobs today. Once the public learns about the Family Friendly Workplace Act, and what it has to offer the American family, I believe there will be a groundswell of support that will be heard around the Capitol. I urge my colleagues in both the House and the Senate to quickly pass this bill and send it to the President, so that he will be given an early opportunity to, as he has said, ``pass a flex-time law that allows employees to take their overtime pay in money, or in time off, depending on what's better for their family.''

Mr. KYL

Mr. KYL. Mr. President, the third bill in this package is the Small Business Investment and Growth Act, which would ensure that small businesses do not pay a higher income tax rate than large corporations. Congressman Phil Crane of Illinois has promoted similar legislation in the House of Representatives. Mr. President, the 1990 and 1993 increases in the marginal income tax rates applicable to individuals put a tremendous strain on small businesses organized as S corporations, because they pay taxes at the individual rate. S corporations, facing 36 percent and 39.6 percent tax rates at the highest levels, are forced to compete against larger corporations, which pay a top rate of 34 percent. The bill I am introducing would establish 34 percent as the top rate that small businesses must pay. Taxable small business income would be limited to income from the trade or business of certain eligible small businesses, specifically excluding passive income. To benefit from the maximum 34 percent rate, businesses must reinvest their after-tax income into the business. The intent is to provide relief for those small businesses that invest income into their business operations, thereby creating new jobs. In fact, successful small manufacturers have been able to create three to four new jobs for every additional $100,000 they retain in the business.

Mr. KYL. Mr. President, the second in this series of bills is the Corporate Tax Equity Act, a bill designed to help U.S. businesses make larger capital expenditures and thereby enhance productivity growth and job creation by repealing the corporate Alternative Minimum Tax (AMT). Mr. President, the original intent of the AMT was to make it harder for large, profitable corporations to avoid paying any federal income tax. But the way to have accomplished that objective was not, in my view, to impose an AMT, but to identify and correct the provisions of law that allowed large companies to inappropriately lower their federal tax liabilities to begin with. Ironically, the primary shelters corporations were using to minimize their tax liability--that is, the accelerated depreciation and safe harbor leasing of the old Tax Code-- were being corrected at the time the AMT was enacted. I would point out that the AMT is not a tax, per se. As indicated in an April 3, 1996 report by the Congressional Research Service, the AMT is merely intended to serve as a prepayment of the regular corporate income tax, not a permanent increase in overall corporate tax liability. What that means in practical terms is that businesses are forced to make interest-free loans to the federal government under the guise of the AMT. Corporations pay a tax for which they are not liable, but which they are able to apply toward their future regular tax liability. I would also point out that most of the corporations paying the AMT are relatively small. The General Accounting Office, in a 1995 report on the issue, found that, in most years between 1987 and 1992, more than 70 percent of corporations paying the AMT had less than $10 million in assets. The AMT's effect on the economy, moreover, is disproportionate to the small amount of revenue raised, due in large part to its requirement that corporations calculate their tax liability under two separate but parallel income tax systems. Firms must calculate their AMT liability even if they end up paying the regular tax. At a minimum, that means that firms must maintain two sets of records for tax purposes. The compliance costs are substantial. In 1992, for example, while only about 28,000 corporations paid the AMT, more than 400,000 corporations filed the AMT form, and an even greater--but unknown-- number of firms performed the calculations needed to determine their AMT liability. A 1993 analysis by the Joint Committee on Taxation found that the AMT added 16.9 percent to a corporation's total cost of complying with federal income tax laws. Mr. President, repealing the corporate AMT would help free up badly needed capital to assist in business expansion and job creation. According to a study by DRI/McGraw-Hill, repeal of the AMT would, over the 1996-2005 time period, increase fixed investment by a total of 7.9 percent, raise Gross Domestic Product by 1.6 percent, and increase labor productivity by 1.6 percent. The study also projected repeal would produce an additional 100,000 jobs a year during the years 1998 to 2002.

Mr. KYL. Mr. President, today I am introducing the Retirement Protection Act Amendments of 1997, a bill that will make a small but very important change in the pension-related provisions of the 1994 Uruguay Round Agreements Act. Mr. President, the 1994 trade act made some very significant changes in pension law, including a modification in the interest rate used to calculate lump-sum distributions from defined benefit pension plans. The act required such plans to use the interest rate on 30-year Treasury securities, a rate that is proving too volatile for many retirement plans, particularly small plans. Bruce Tempkin, an actuary and small business pension specialist at Louis Kravitz & Associates, described the effect of the change this way: ``it is similar to taking out a variable-rate mortgage with no cap.'' You could find yourself getting ready to retire and expecting a lump-sum distribution of a given amount, but being told that you will actually get a third less because the government just mandated an interest-rate change. That is not only unfair, it discourages people from participating in private pension plans at the very time we need to be encouraging more such planning. Recognizing the problem created by the 1994 law, legislators included language in the Small Business Job Protection Act last year to delay the effective date of the change for plans adopted and in effect before December 8, 1995. While I supported that delay, it is, at best, only a temporary solution. The bill I am introducing today proposes a permanent solution. It would give plans a one-time option to choose a fixed interest rate between five percent and eight percent instead of the floating 30-year Treasury rate. That will make it easier for employers to plan for the required contributions, and for employers and employees alike to understand what their lump-sum benefits will ultimately be. Mr. President, I invite my colleagues to join me as cosponsors of this initiative. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. KYL. Mr. President, as I said at the beginning of my remarks, I am asking the Joint Tax Committee and the Institute for Policy Innovation to analyze the economic and revenue effects of this economic growth package. It is my intention that, if there is a revenue loss to the Treasury associated with it, the loss could at least partially be offset by reductions in corporate welfare spending. Mr. President, the Agenda for Economic Growth and Opportunity will help improve the standard of living for all Americans. It will help eliminate from the federal budget much of the largesse the government showers on a select group of business enterprises through corporate welfare. I invite my colleagues' support for this very important initiative.

Mr. KYL. Mr. President, the last in the series of bills that make up what I call the Agenda for Economic Growth and Opportunity is the Invest More in America Act, a bill that would allow small businesses to fully deduct the first $250,000 they invest in equipment in the year it is purchased. The bill is based on another recommendation made by the White House Conference on Small Business in 1995. Mr. President, Congress last year approved legislation to phase in an increase in the expensing limit to $25,000 by the year 2003. That is a step in the right direction, but it is not nearly enough. Businesses investing more than the annual expensing allowance must recover the cost of their investments over several years using the current depreciation system. Inflation, however, erodes the present value of their depreciation deductions taken in future years. Moreover, many businesses are required to make significant capital investments to comply with various government regulations, including environmental regulations, yet in many cases are unable to immediately expense such costs. The increased expensing allowance provided by the Invest More in America Act would spur additional investment in business assets and lead to increased productivity and more jobs.

Mr. KYL. Mr. President, I rise today to introduce the Voter Turnout Enhancement Study (VoTES) Commission Act, a bill designed to promote fiscal responsibility while helping to motivate more Americans to get to the polls on Election Day. Mr. President, there are far too many people who, for one reason or another, choose not to exercise their right to vote. Although the reasons for their non-participation are undoubtedly varied, I suspect that it comes down to a perception that the choices they will make on the ballot will not make enough of a difference. One person, explaining why she chose not to participate in last November's election, told the Tucson Citizen that ``it doesn't make any difference in my life who's president.'' This is a common enough sentiment that the election last fall posted one of the lowest voter turnout rates this century. The ``Motor Voter'' bill that President Clinton championed a few years ago as a way to get out the vote apparently had little effect, other than to impose additional costs and mandates on state and local governments and their taxpayers. Although the bill did help increase voter registration, it did little, if anything, to motivate people to get to the polls. Like the woman in Tucson, too many people did not believe they had enough of a stake in the outcome of the election to take the time to vote. Of course, people do have a stake in the outcome of every election. For one thing, the candidates chosen determine how much and for what purpose citizens are taxed. Most people I hear from say that is one area where the majority of those elected in the past failed to heed their concerns; they say their taxes are far too high. One survey, which was published in Reader's Digest last year, found that more than two-thirds of Americans felt their own taxes were ``too high.'' According to the poll, the maximum tax burden that Americans think a family of four should bear is 25 percent of its total income, even if the family's income is $200,000 per year. But the government takes far more than that. The average family-- whose income is not $200,000, but something far less than that--now pays nearly 40 percent of its income in taxes. That is more than it spends on food, clothing, and shelter combined. People around the country are reacting to that heavy burden. The new faces in the House and Senate in recent years have been those of people pledging to oppose tax increases and support tax cuts. President Clinton won reelection, promising to support tax cuts. In some cases, people around the country have also placed limits on how much their state governments can tax them. But advocates of tax cuts, and tax limits themselves, can only achieve their purpose if people are willing to go to the polls to support them. With that in mind, one way to demonstrate to people that their choices at the polls have a real effect on their lives would be to move the deadline for filing income tax returns to Election Day. That would give people a reason to vote by focusing their attention on the role of government--and how much it actually takes from them in taxes--on the day of the year that they have the greatest opportunity to influence change. Moving Tax Day to Election Day would probably result in more voter turnout and more change in Washington than anything else we could do. And of course, maximizing voter turnout is the best way to ensure that government officials heed the will of the people and make sound public policy. The bill I am introducing today would provide for a thoughtful and thorough analysis of a change in the tax-filing deadline from April to November, its potential effect on voter turnout, as well as any economic impact it might have. The bill explicitly requires that an independent commission conduct a cost-benefit analysis--a requirement that Congress would be wise to impose routinely on legislative initiatives to separate the good ideas from the bad, and save taxpayers a lot of money in the process. A number of other cost-limiting provisions have been included to protect taxpayers' interests. While just about every day of the year is celebrated by special interest groups around the country for the government largesse they receive, the taxpayers--the silent majority--have only one day of the year to focus on what that largesse means to them--how much it costs them--and that is Tax Day. I believe that it ought to coincide with Election Day. I invite my colleagues to join me as cosponsors of this initiative, and I ask unanimous consent that the text of the bill be printed in the Record.

Mr. KYL. Mr. President, I rise today to introduce a series of bills aimed at improving our Nation's rate of economic growth, encouraging investment in small businesses, enhancing wages of American workers, and making our country more competitive in the global economy. The bills make up what I will call the Agenda for Economic Growth and Opportunity. Mr. President, it was just over 34 years ago that President John F. Kennedy made the following observation in his State of the Union message--an observation that someone could just as easily make about today's economy. He said, ``America has enjoyed 22 months of uninterrupted economic recovery''. The current expansion, albeit one of the weakest this century, has gone on a little longer. ``But'', President Kennedy went on to say, ``recovery is not enough. If we are to prevail in the long run, we must expand the long-run strength of our economy. We must move along the path to a higher rate of economic growth''. Economic growth. Tracking it is the domain of economists and statisticians, but what does it mean for the average American family, and why should policy-makers be so concerned about the slow rate of economic growth during the last 4 years? Slow growth means fewer job opportunities for young Americans just entering the work force and for those people seeking to free themselves from the welfare rolls. It means stagnant wages and salaries, and fewer opportunities for career advancement for those who do have jobs. It means less investment in new plant and equipment, and new technology-- things needed to enhance workers' productivity and ensure that American businesses can remain competitive in the global marketplace. It means less revenue for the U.S. Treasury, compared to what we could collect with higher rates of economic growth, for the critical programs serving the American people. And it means that interest rates are higher than they need to be because national debt as a share of Gross Domestic Product is higher. As a result, we all pay more for such things as home mortgages, college loans, and car loans. For most of the 20th century, our Nation enjoyed very strong rates of economic growth and the dividends that came with it. The 1920s saw annual economic growth above 5 percent. In the 1950s, it was above 6 percent. Economic growth during the Kennedy and Johnson years averaged 4.8 percent annually. During the decade before President Clinton took office, the economy grew at an average rate of 3.2 percent a year, according to data supplied by the Joint Economic Committee. The Clinton years, by contrast, have seen the economy grow at an average rate of only about 2.3 percent. What that means is that, while we may not exactly be hurting as a Nation, we are not becoming much better off, either. And we are certainly not leaving much of a legacy for our children and grandchildren to meet the needs of tomorrow. So what do we do to enhance economic growth--to ensure that jobs are available for those who want them, that families can earn better wages, and that American business maintains a dominant role in the global economy? Those are, after all, the goals of the agenda I am laying out today--an agenda for economic growth and opportunity for all Americans, for those struggling to make ends meet today, and for our children when they enter the work force tomorrow. Let me answer then, beginning with another quotation from John Kennedy: ``[I]t is increasingly clear--to those in Government, business, and labor who are responsible for our economy's success--that our obsolete tax system exerts too heavy a drag on private purchasing power, profits, and employment. Designed to check inflation in earlier years, it now checks growth instead. It discourages extra effort and risk. It distorts use of resources. It invites recurrent recessions, depresses our Federal revenues, and causes chronic budget deficits.'' Mr. President, the agenda I am proposing attacks some of the most significant deficiencies in our Nation's Tax Code that are inhibiting savings and investment, and job creation--deficiencies that are preventing us from reaching our potential as a Nation. I do not make these proposals as a substitute for fundamental tax reform, which I believe is the ultimate solution to the problem. But fundamental tax reform is going to take some time to accomplish, maybe several years. What we need now are interim steps--things we can do quickly--to make sure our movement into the 21st century is based on the bedrock of a strong and growing economy. I believe these Tax Code changes will help strengthen the economy and, in turn, produce more revenue for the Federal Government to assist in deficit reduction. Still, I recognize that under existing budget rules which require static scoring of tax bills, there may be a need to find offsetting spending cuts. With that in mind, I am asking the Joint Committee on Taxation, as well as the respected Institute for Policy Innovation, to estimate the economic impact of these proposals, including the effect on federal revenues. Should the result of those analyses indicate that there will be some revenue loss--most likely because of rules requiring static scoring--my intention would be to propose some offsetting spending cuts. Mr. President, the cuts I would identify would come in so-called corporate welfare programs. In other words, in exchange for the targeted subsidies from corporate welfare programs, we would adopt broadly applicable tax incentives to support activities vetted by the free market. That is what free enterprise is all about.

Mr. KYL. Mr. President, the first of the five tax-related bills I am introducing is based upon President John Kennedy's own growth package from three decades ago. Like the Kennedy plan, the legislation would reduce the percentage of long-term capital gains included in individual income subject to tax to 30 percent. It would reduce the alternative tax on the capital gains of corporations to 22 percent. I would note that Democratic President John Kennedy's plan called for a deeper capital gains tax cut than the Republican-controlled Congress proposed last year. There was a reason that John Kennedy called for a significant cut in the capital gains tax. ``The present tax treatment of capital gains and losses is both inequitable and a barrier to economic growth'', the President said. ``The tax on capital gains directly affects investment decisions, the mobility and flow of risk capital from static to more dynamic situations, the ease or difficulty experienced by new ventures in obtaining capital, and thereby the strength and potential for growth of the economy.'' So, if we are concerned whether new jobs are being created, whether new technology is developed, whether workers have the tools they need to do a better, more efficient job, we should support measures that reduce the cost of capital to facilitate the achievement of all these things. Remember, for every employee, there is an employer who took risks, made investments, and created jobs. But that employer needed capital to start. Also remember that the capital gains tax represents a second tax on amounts saved and invested. As a result, individuals and businesses that save and invest end up paying more taxes over time than if all income is consumed and no saving takes place at all. To make matters even worse, the tax is applied to gains due solely to inflation. Mr. President, it may come as a surprise to some people, but experience shows that lower capital gains tax rates have a positive effect on federal revenues. The most impressive evidence, as noted in a recent report by the American Council for Capital Formation, can be found in the period from 1978 to 1985. During those years, the top marginal federal 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. Research by experts at the prestigious National Bureau of Economic Research indicates that the maximizing capital gains tax rate--that is, the rate that would bring in the most Treasury revenue--is somewhere between nine and 21 percent. The bill I am introducing today would set an effective top rate on capital gains earned by individuals, by virtue of the 70 percent exclusion, at 11.88 percent. Mr. President, 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. Capital gains reform will help the Treasury. A capital gains tax reduction would help unlock a sizable share of the estimated $7 trillion of capital that is left virtually unused because of high tax rates. More importantly, it will help the family that has a small plot of land it would like to sell, and the business that could expand, buy new equipment and create new jobs. And evidence shows that most of the benefits will go to Americans of modest means. A special U.S. Treasury study covering 1985 showed that nearly half of all capital gains that year were realized by taxpayers with wage and salary income of less than $50,000 a year. An update of the Treasury study by the Barents Group, a subsidiary of the public accounting firm of KPMG Peat Marwick, estimates that for 1995, middle- income wage and salary earners making $50,000 or less in inflation- adjusted dollars will continue to receive almost half of all capital gains. 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. I would support the President's proposal, but I would also ask, if a capital gains tax cut is good for homeowners, is it not also good policy to apply a tax cut to other kinds of gains that help create new businesses and new jobs? I believe John Kennedy's plan was far superior--far more beneficial for the Nation's economy--than the very limited one Bill Clinton has proposed. That is why I encourage the Senate to take up the Capital Gains Reform Act, which is based on the Kennedy plan, and which I am introducing today.

Mr. KYL. Mr. President, the fourth in the series of economic growth incentives is a bill to enhance the economic security of older Americans and small businesses around the country, a bill known as the Family Heritage Preservation Act. It would repeal the onerous Federal estate and gift tax, and the tax on generation-skipping transfers. A companion bill will be introduced in the House of Representatives by Congressman Chris Cox of California. Mr. President, most Americans know the importance of planning ahead for retirement. Sometimes that means buying a less expensive car, wearing clothes a little longer, or foregoing a vacation or two. But by doing with a little less during one's working years, people know they can enjoy a better and more secure life during retirement, and maybe even leave their children and grandchildren a little better off when they are gone. Savings not only create more personal security, they help create new opportunities for others, too. Savings are really investments that help others create new jobs in the community. They make our country more competitive. And ultimately they make a citizen's retirement more secure by providing a return on the money invested during his or her working years. So how does the government reward all of this thrift and careful planning? It imposes a hefty tax on the end result of such activity--up to 55 percent of a person's estate. The respected liberal Professor of Law at the University of Southern California, Edward J. McCaffrey, 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. There is no reason even a liberal populace need support it.'' At one time, the estate tax was required of only the wealthiest Americans. Now inflation, a nice house, and a good insurance policy can push people of even modest means into its grip. The estate tax is applied to all of the assets owned by an individual at the time of death. The tax rate, which starts at 37 percent, can quickly rise to a whopping 55 percent--the highest estate tax rate in the world. It is true that each person has a $600,000 exemption, but that does not provide as much relief as one might expect. Unless a couple goes through expensive estate planning so that trusts are written into their wills and at least $600,000 of the assets are owned by each spouse-- that is, not held jointly--the couple will end up with only one $600,000 exemption. Many people do not realize that literally every asset they own, including the face value of life insurance policies, all retirement plan assets, including Individual Retirement Accounts, is counted toward the $600,000 limit. As detrimental as the tax is for couples, it is even more harmful to small businesses, including those owned by women and minorities. The tax 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, Connecticut research and consulting firm--found that nine out of 10 family businesses that failed within three years of the principal owner's death attributed their companies' demise to trouble paying estate taxes. Six out of 10 family-owned businesses fail to make it to the second generation. Nine out of 10 never make it to the third generation. The estate tax is a major reason why. Think of what that means to women and minority-owned businesses. 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 estate 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. With that in mind, the 1995 White House Conference on Small Business identified the estate tax as one of small business's top concerns. Delegates to the conference voted overwhelming to endorse its repeal. Obviously, there is a great deal of peril to small businesses when they fail to plan ahead for estate taxes. So many small business owners try to find legal means of avoiding the tax or preparing for it, but that, too, comes at a significant cost. Some people simply slow the growth of their businesses to limit their estate tax burden. Of course, that means less investment in our communities and fewer jobs created. Others divert money they would have spent on new equipment or new hires to insurance policies designed to cover estate tax costs. Still others spend millions on lawyers, accountants, and other advisors for estate tax planning purposes. But that leaves fewer resources to invest in the company, start up new businesses, hire additional people, or pay better wages. The inefficiencies surrounding the tax can best be illustrated by the findings of a 1994 study published in the Seton Hall Law Review. That study found that compliance costs totalled a whopping $7.5 billion in 1992, a year when the estate tax raised only $11 billion. The estate tax raises only about one percent of the federal government's annual revenue, but it consumes eight percent of each year's private savings. That is about $15 billion sidelined from the Nation's economy. Economists calculate that if the money paid in estate taxes since 1971 had been invested instead, total savings in 1991 would have been $399 billion higher, the economy would have been $46 billion larger, and we would have 262,000 more jobs. Obviously, the income and payroll taxes that would have been paid on these gains would have topped the amount collected by the government in estate taxes. There have been nine attempts to reform the estate tax during the last 50 years. Few would contend that it has been made any fairer or more efficient. The only thing that has really changed is that lobbyists and estate planners have gotten a little wealthier. Probably the best thing we could do is repeal the estate tax altogether. That is what I am proposing in the Family Heritage Preservation Act. Mr. President, the National Commission on Economic Growth and Tax Reform, which studied ways to make the tax code simpler, looked at the estate tax during the course of its deliberations just over a year ago. The Commission concluded that ``[i]t makes little sense and is patently unfair to impose extra taxes on people who choose to pass their assets on to their children and grandchildren instead of spending them lavishly on themselves.'' It went on to endorse repeal of the estate tax.

Mr. KYL

Mr. KYL. Mr. President, to ensure that crime victims are treated with fairness, dignity, and respect, I rise to introduce, along with Senator Feinstein, a resolution proposing a constitutional amendment to establish and protect the rights of crime victims. This resolution is the product of extended discussions with Chairman Henry Hyde, Senators Hatch and Biden, the Department of Justice, the White House, law enforcement officials, major victims' rights groups, and such diverse scholars as Professors Larry Tribe and Paul Cassell. As a result of these discussions, the core values in the original amendment remain unchanged, but the language has been refined to better protect the interest of all parties. Each year, about 40 million Americans are victimized, first by criminals and a second time by a government that affords them no constitutional rights. The Victims' Rights Amendment is a constitutional amendment that will bring balance to the system by giving crime victims the rights to be informed, present, and heard at critical stages throughout their ordeal--the least the system owes to those it failed to protect. Need to protect crime victims' rights--scales of justice imbalanced Last Congress, the amendment was cosponsored by 29 Senators. Both the Republican and Democratic Party platforms called for a victims' rights amendment, as did Senator Dole and President Clinton in a Rose Garden ceremony in June 1996 and in his acceptance speech at the Democratic convention. This strong bipartisan support makes clear that the Victims' Rights Amendment is not a partisan issue, or some election-year gimmick. The idea stems from a 1982 President's Task Force on Victims of Crime, which concluded that ``the criminal justice system has lost its essential balance,'' and that constitutional protection of victims' rights was the only way to guarantee fair treatment of crime victims. Since then, grass-roots citizens' organizations around the country have pushed for amendments to their State constitutions. A majority of States have responded to the unjust treatment crime victims face, and have enacted constitutional amendments. But this patchwork of State constitutional amendments is inadequate. A Federal amendment would establish a basic floor of crime victims's rights--a floor below which States could not go. Victims of serious crimes need a constitutional amendment to protect their rights and restore balance to our justice system. Those accused of crime have many constitutionally protected rights: They have the right to due process; right to confront witnesses; right against self- incrimination; right to a jury trial; right to a speedy trial; right to a public trial; right to counsel; right to be free from unreasonable searches and seizures. Yet, despite rights for the accused, the U.S. Constitution, our highest law, has no protection for crime victims. The recognized symbol of justice is a figure holding a balanced set of scales, but in reality the scales are heavily weighted on the side of the accused. Our proposal will not deny or infringe any constitutional right of any person accused or convicted of a crime. But it will add to the body of rights we all enjoy as Americans. Crime victims have no constitutional rights. They are often treated as mere inconveniences, forced to view the process from the sidelines. Defendants can be present through their entire trial because they have a constitutional right to be there. But in many trials, crime victims are ordered to leave the courtroom. Victims often are not informed of critical proceedings, such as hearings to consider releasing a defendant on bail or allowing him to plea bargain to a reduced charge. Even when crime victims find out about these proceedings, they frequently have no opportunity to speak. rights in the amendment The amendment gives crime victims the rights: To be notified of the proceedings; To be heard at certain crucial stages in the process; To be notified of the offender's release or escape; To proceedings free from unreasonable delay; To an order of restitution; To have the safety of the victim considered in determining a release from custody; and To be notified of these rights. statistics As I noted earlier, each year about 40 million Americans are victims of serious crime. During 1995 there were 9.9 million crimes of violence, 6.4 million simple assaults, 2.0 million aggravated assaults, 1.3 million robberies, and 355,000 rapes or other types of sexual assault, according to the most recent statistics from the Department of Justice. The breakdown of social order and the crisis of crime which accompany it have swelled the ranks of criminals, and those who suffer at their hands, to proportions that astonish us, that break our hearts, and that demand collective action. And the process of detecting, prosecuting, and punishing criminals continues, in too many places in America, to ignore the rights of crime victims to fundamental justice. strong public support--twenty-nine states have constitutional amendments Since 1982 when the need for a constitutional amendment was first recognized by a President's Task Force on Victims of Crime, 29 states have passed similar measures--by an average popular vote of almost 80 percent. In 1996, eight states approved constitutional amendments--all by landslides. Connecticut: 78 percent. Indiana: 89 percent. Nevada: 74 percent. North Carolina: 78 percent. Oklahoma: 91 percent. Oregon: 57 percent. South Carolina: 89 percent. Virginia: 84 percent. Amending the Constitution is a big step, but a necessary one Amending the constitution is, of course, a big step--one which I do not take lightly--but, on this issue, it is a necessary one. As Thomas Jefferson once said: ``I am not an advocate for frequent changes in laws and constitutions, but laws and institutions must go hand in hand with the progress of the human mind. As that becomes more developed, more enlightened, as new discoveries are made, new truths discovered and manners and options change, with the change of circumstances, institutions must advance also to keep pace with the times.'' Who would be comfortable now if the right to free speech, or a free press, or to peaceably assemble, or any of our other rights were subject to the whims of changing legislative or court majorities: When the rights to vote were extended to all regardless of race, and to women, were they simply put into a statute? Who would dare stand before a crowd of people anywhere in our country and say that a defendant's rights to a lawyer, a speedy public trial, due process, to be informed of the charges, to confront witnesses, to remain silent, or any of the other constitutional protections are important, but don't need to be in the Constitution? Such a position would not stand. Yet that is precisely what critics of the Victims' Bill of Rights would tell crime victims. Victims of crime will never be treated fairly by a system that permits the defendant's constitutional rights always to trump the protections given to victims. Such a system forever would make victims second-class citizens. It is precisely because the Constitution is hard to change that basic rights for victims need to be protected in it. Support The amendment is supported by major national victims' rights groups: Parents of Murdered Children, Mothers Against Drunk Driving [MADD], the National Organization for Victim Assistance, the National Victim Center, and the National Victims' Constitutional Amendment Network, the Victim Assistance Legal Organization, the Doris Tate Crime Victims Bureau, Citizens for Law and Order, the National Coalition Against Sexual Assault, and the Law Enforcement Alliance of America. Conclusion In closing, I would like to thank Senator Dianne Feinstein for her hard work on this amendment and for her tireless efforts on behalf of crime victims. Mr. President, for far too long, the criminal justice system has ignored crime victims who deserve to be treated with fairness, dignity, and respect. Our criminal justice system will never be truly just as long as criminals have rights and victims have none. We need a new definition of justice--one that includes the victim. Mr. President, I ask unanimous consent that the text of the resolution be printed in the Record at the end of my statement. THE PRESIDING OFFICER. Without objection, it is so ordered. (See Exhibit 1)

Mr. KYL. Mr. President, I rise today to introduce the Balanced Budget/Spending Limitation Amendment, a resolution to amend the Constitution of the United States to require a balanced federal budget and to limit spending to 19 percent of Gross Domestic Product (GDP). Mr. President, few people realize it, but for the last 40 years, revenues to the U.S. Treasury have remained relatively steady as a share of national income. No matter whether economic times were good or bad, whether the nation was at peace or engaged in military conflict, or whether income tax rates were as high as 90 percent or as low as 28 percent, the total amount of revenue flowing to the U.S. Treasury has always amounted to about 19 percent of the nation's income. That is really quite remarkable. With history as a guide, it means that higher tax rates will not produce more revenue for the government proportionate to the size of the economy. Such rate increases merely slow down the rate of economic growth, and that is why tax increases never produce as much revenue as anticipated. At the family level, it means some people will work fewer hours to avoid being pushed into a higher tax bracket. Others will invest less, or invest in less productive ventures, in order to minimize their tax burdens. Still others, when hit by higher taxes, cut back on the goods or services they buy, and that means less work--and less taxable income--for someone else. In other words, changes in the tax code affect people's behavior. Lower tax rates stimulate the economy, resulting in more taxable income and transactions, and, in turn, more revenue to the Treasury. Higher taxes discourage work, production, savings, and investment, so revenues are always less than initially projected. Although tax cuts and tax rate increases may create temporary declines and surges in revenue, history proves that revenues always adjust at roughly the same percentage of GDP as people adjust their behavior to the new tax code. It is important for us to understand this phenomenon because it means that Congress cannot balance the federal budget by raising tax rates. If the goal is to balance the budget--and that is what a balanced budget amendment will require--the only way to succeed is to limit federal spending to the level of revenue that the economy is willing to bear. That happens to be 19 percent of GDP. That is what the Balanced Budget/Spending Limitation Act seeks to do in a very explicit way. Other versions of the balanced budget amendment would achieve the same objective, including the version of the amendment that is most likely to pass in the next few weeks. The problem is, without explicitly limiting spending and precluding tax rate increases, Congress might try to balance the budget by raising taxes. And as I have illustrated in prior remarks, that would not only be ineffective, it would be harmful to the economy. Higher taxes would mean that fewer jobs would be created; some people would lose their jobs. Wages would not grow as fast. Output would fall, or would grow only slowly. And in the end, spending would probably still outpace revenue, requiring another round of deficit reduction to meet the requirements of the balanced budget amendment. If balance were actually achieved, it could probably not be sustained for very long because high tax rates would slow the economy, resulting in lower revenues in future years. The advantage of the Balanced Budget/Spending Limitation Amendment is that it keeps our eye on the ball. It tells Congress to limit spending. And by linking spending to economic growth, it gives Congress a positive incentive to enact pro-growth economic policies. Only a healthy and growing economy--measured by GDP--would increase the dollar amount that Congress is allowed to spend, although always proportionate to the size of the economy. In other words, 19 percent of a larger GDP represents more revenue to the Treasury than 19 percent of a smaller GDP. I urge my colleagues to consider the advantages of the Balanced Budget/Spending Limitation Amendment and to join me as cosponsors of the initiative. In the event that a different version of the balanced budget amendment passes, I suggest we will have to consider a free- standing spending limitation amendment in the future if we are interested in promoting both fiscal responsibility and economic growth and opportunity for all Americans. Mr. President, I ask that the text of the amendment be reprinted in the Record.

Mr. KYL. Mr. President, I rise today on behalf of myself and 17 of my Senate colleagues to introduce the Tax Limitation Amendment, a proposed amendment to the Constitution to require a two-thirds vote of the House and Senate to increase taxes. Mr. President, on Election Day last year, by overwhelming majorities, voters from Florida to California approved initiatives aimed at limiting government's ability to raise taxes. Florida's Question One, which would require a two-thirds vote of the people to enact or raise any state taxes or fees, passed with 69.2 percent of the vote. Seventy percent of Nevada voters approved the Gibbons amendment, requiring a two-thirds majority vote of the state legislature to pass new taxes or tax hikes. South Dakotans easily approved an amendment requiring either a vote of the people or a two-thirds vote of the legislature for any state tax increase. And California voters tightened the restrictions in the most famous tax limitation of all, Proposition 13, so that now all taxes at the local level must be approved by a vote of the people. Of course, voters in my home state of Arizona overwhelmingly approved a state tax limit of their own in 1992. The Tax Limitation Amendment I am introducing would impose similar constraints on federal tax-raising authority. It would require a two- thirds majority vote of each house of Congress to pass any bill levying a new tax or increasing the rate or base of any existing tax. In short, any measure taking more out of the taxpayers' pockets would require a supermajority vote to pass. Congress could vote to waive the requirement in times of war, or when the United States is engaged in military conflict which causes an imminent and serious threat to national security. But any new taxes imposed under such a waiver could only remain in effect for a maximum of two years. Most Americans believe the federal government is already taxing them far too much. In 1950, the average family paid one dollar in taxes to the federal government out of every 50 dollars earned. Today, it pays almost one dollar out of every three dollars earned. Add state and local taxes to the mix, and the tax bite is closer to one out of every two-and-a-half dollars earned. I would note that the Tax Limitation Amendment would not affect Congress' ability to cut taxes. That could still be achieved by simple majority vote. It would, however, make it much harder to raise taxes, particularly if there is no broad-based, bipartisan support for the proposition in Congress or around the country. It would, for example, have prevented enactment of the tax hike of 1993, one of the largest in history, and one which even a majority of Senators did not support. Vice President Gore broke a 50 to 50 vote tie to secure its passage. The TLA would have prevented enactment of the Bush tax increase of 1990. Raising sufficient revenue to pay for government's essential operations is obviously a necessary part of governing, but raising tax rates is not necessarily the best way to raise revenue. And in any event, voters around the country seem to believe that raising taxes should only be done when there is broad support for the proposition. The TLA will ensure that no tax can be raised in the future without such consensus. I invite my colleagues to cosponsor the initiative, and I ask unanimous consent that the text of the amendment be reprinted in the Record.

Mr. KYL

Mr. KYL. Mr. President, on September 12, Secretary of State Warren Christopher personally asked the Senate majority leader to withdraw the Chemical Weapons Convention [CWC] from consideration by the Senate. The majority leader had scheduled a vote on the treaty on that day. Obviously the administration did not believe the Senate would ratify the agreement. As a result, we were not able to have the public debate that, I believe, would have shown why the treaty was in such trouble. Since the treaty could be resubmitted for consideration by the Senate, I believe it is important to submit for the Record a sampling of articles, editorials, and opinion editorials which outline the basis for the case against the CWC. The material follows: [From the New York Times, Sept. 13, 1996] A Treaty That Deserved to Die (By Jon Kyl) An extraordinary thing happened in the Senate yesterday. The proponents of the Chemical Weapons Convention surprisingly pulled the plug on their effort to obtain immediate Senate approval of the treaty's ratification. Last June, the advocates thought this treaty was all but ratified. They had won a commitment for it to be brought up for a vote in the last few weeks before the November elections. They assumed, not unreasonably, that the treaty would be seen as a motherhood and apple-pie proposition-- aiming as it does to ban these horrible weapons worldwide. By any political analysis, this calculation should have been right. But substantive analysis of the treaty's flaws proved to be more powerful than superficial political considerations. That such serious deliberation could occur reflects great credit on both the treaty's proponents and its opponents. In particular, its champions largely refrained from portraying themselves as the champions of the abolition of these weapons and casting the other side as ``pro-poison gas.'' The opponents, however, made clear that they too are in favor of the elimination of chemical weapons, including the American stockpile. By law, the destruction will take place with or without this convention. But they fear that under present circumstances the treaty will not accomplish its purpose and that it will do more harm than good. First, the convention will not include many dangerous chemical-weapons states, notably Iraq, North Korea, Libya and Syria, which will not become parties. Worse yet, American intelligence could not reliably detect militarily significant cheating in countries like Iran, Cuba, China and Russia that are likely to became parties to the treaty. Second, the convention would impose significant costs on the American taxpayer and new, substantial burdens on industries. It would, moreover, actually aggravate the current, serious problem of chemical weapons proliferation. This is true for several reasons. The treaty prohibits restrictions on trade in chemicals among its parties. It even requires them to transfer chemical technologies to other treaty members. In other words, if the United States and Iran were to ratify the convention, Teheran would have a powerful claim, under the treaty's Article XI, against American-led trade restrictions in the chemical field. This arrangement repeats the mistake made in the Nuclear Nonproliferation Treaty--the so-called Atoms for Peace initiative--under which ostensibly peaceful technology is provided to nations determined to divert it to proscribed military purposes. The treaty would also create a false sense of security, probably increasing the dangers from these weapons. And it will harm arms control and international law to enter into a convention that everyone knows is going to be unverifiable and ineffective. For all these reasons, the United States is better off having no treaty than a seriously defective one. This critique was sufficiently compelling that a number of leading proponents acknowledged the serious flaws. Although these advocates nonetheless content that the treaty was still worth having, more than a third of the Senate concluded that the convention was, at best, deeply flawed. At worst, it would exacerbate the problem it was trying to fix. As a result, the treaty's proponents realized that they were going to lose. Let us hope that the serious discussions we have had leading up to that decision will lead to bipartisan support for constructive, sensible arms control approaches for dealing with this scourge in the future.

Mr. KYL

Mr. KYL. Mr. President, to ensure that crime victims are treated with fairness, dignity, and respect, I rise--along with Senator Feinstein-- to introduce a joint resolution proposing a constitutional amendment to establish and protect the rights of crime victims. This joint resolution is the product of extended discussions with Senators Hatch and Biden, the Department of Justice, the White House, law enforcement, major victims' rights groups, and such diverse scholars as Professors Larry Tribe and Paul Cassell. This latest joint resolution is still a work in progress; Senator Feinstein and I anticipate modifications. We are introducing this new version to show the changes that have been made and to make clear that Senate Joint Resolution 52--which was introduced on April 22--has been superseded. We welcome suggestions on ways to improve the amendment and ask that comments refer to this new joint resolution. Three principal issues remain unresolved. First, whether there should be an effective remedy when crime victims are denied rights regarding sentences or pleas. Second, whether to include non-violent crimes-- other crimes--and if these crimes are included, whether they should be defined by Congress or by Congress and the states. Third, whether to have a right to a final disposition free from unreasonable delay or whether to limit this right to trial proceedings. The introduced version--and the most recent version--contain the core principles that crime victims should have: To be informed of the proceedings. To be heard at certain crucial stages in the process. To be notified of the offender's release or escape. To proceedings free from unreasonable delay. To an order of restitution. To have the safety of the victim considered in determining a release from custody. To be notified of these rights. The language describing these rights has changed--and we continue to welcome suggestions. But it is clear that these rights are necessary. They are the core of the amendment. In putting together a constitutional amendment, a broad consensus has to be reached to obtain two-thirds approval in the House and Senate and to ensure ratification by three-fourths of the States. In making changes, Senator Feinstein and I have tried to accommodate the concerns of those who work in the criminal justice system--including judges, prosecutors, police officers, corrections officials, and defense attorneys--while at the same time protecting fundamental rights for crime victims. Senator Feinstein and I will continue to work intensively with these groups, law professors, and other Members of Congress from both parties and both Houses over the ensuing months to craft the best amendment possible. We then intend to introduce the finished revised amendment at the beginning of the next Congress. We believe that we now are close to a version that can be voted on by the House and Senate. We welcome comments and input as we move forward. In closing, I would like to thank Senator Dianne Feinstein for her hard work on this amendment and for her tireless efforts on behalf of crime victims. Mr. President, for far too long, the criminal justice system has ignored crime victims who deserve to be treated with fairness, dignity, and respect. Our criminal justice system will never be truly just as long as criminals have rights and victims have none. We need a new definition of justice--one that includes the victim. Mr. President, I ask unanimous consent that the text of the joint resolution be printed in the Record.

Mr. KYL

Mr. KYL. Mr. President, today, we will pass legislation we hope will significantly reduce illegal immigration in this country. We could have passed this bill in the Senate last week. Unfortunately, partisan politics almost derailed efforts of the Congress, and particularly the efforts of the chairman of the Immigration Subcommittee, Alan Simpson, who, under extraordinary circumstances, has worked long and hard to produce a bipartisan, far- reaching immigration bill. That is because, in the end, the Clinton administration threatened to veto either the omnibus appropriations bill--and shut down the Federal Government--or a stand-alone immigration bill unless some of our reforms were deleted from title 5 of the immigration conference report. It is interesting that the immigration conference report, with title 5 intact, passed the House last week with bipartisan support by a vote of 305-123. Notwithstanding this strong support, in order to ensure passage of this historic immigration measure, important provisions of title 5 have been deleted. One of the most important provisions dropped from title 5 would have required that sponsors who bring their immigrant relatives into the United States earn 200 percent of poverty in order to bring in extended relatives or 140 percent of poverty when they sponsor their spouses or their minor children. Revised title 5 changed the income requirement for all sponsors to 125 percent of poverty. At that income level, the sponsor could already be participating in several welfare-related programs, including, but not limited to, food stamps, reduced school lunch, Medicaid for pregnant women and children under the age of 6, and the Women, Infants, and Children [WIC] program. In other words, the sponsors may well not be capable of supporting the immigrants they sponsor. Another provision that was removed from title 5 would have clarified the definition of ``public charge.'' Under the House-passed conference report, an immigrant could be deported--but would not necessarily be deported--if he or she received Federal public benefits for an aggregate of 12 months over a period of 7 years. That provision was dropped during Saturday's negotiations. The House-passed conference report would have required that public housing authorities verify the status of individuals who obtain public housing benefits. Individuals would have had 3 months to verify their status with a public housing authority or they would be required to vacate the unit. Revised title 5 will give an illegal alien 18 months to vacate the housing unit. In addition, revised title 5 will now give discretionary authority to public housing authorities to determine whether or not they will verify if someone in this country has a legal right to federally-assisted housing. This doesn't make sense to me since, in my home State of Arizona, officials of the Maricopa County Housing Authority alone estimate that 40 percent of the people receiving housing assistance in the county are illegal aliens. In Maricopa County, there are 1,334 section 8 units and 917 units available. There are over 6,500 individuals on the waiting list there. There are other provisions in title 5 that shouldn't have been dropped from the immigration conference report. It is my hope that in the future, partisan politics will play a smaller role than it did on Saturday in efforts to effectively reform our Nation's immigration laws. Having said that, I do believe it would be a great disservice to the people of Arizona and the rest of the Nation if this illegal immigration conference report were not to pass the Congress during the 104th Congress. In Arizona's Tucson sector alone, the U.S. Border Patrol has apprehended more than 300,000 illegal aliens this year. It is estimated that for every illegal immigrant arrested, four slip through undetected. These undetected entrants are costing Arizonans millions of dollars. In fact, the State of Arizona estimates that it spends over $200 million each year on the medical care, education, and incarceration of undocumented immigrants. That's about equal to what the State spends each year to run Arizona State University. With this immigration bill, we have the opportunity to lift this financial burden off the States by forcing the Federal Government to take responsibility for reducing illegal immigration, and to reimburse States for many of the illegal immigration-related costs they incur. Perhaps most importantly for Arizona, under the immigration conference report, our borders will be better secured. One of my amendments to the bill will increase the number of border patrol agents by 5,000 over 5 years, nearly doubling the current number of agents. An increased border patrol presence in Arizona will help cities and towns such as Nogales, Naco, and Douglas, which have experienced surges in illegal immigration and border-related crime. The immigration bill will also require that the security features on the border-crossing card be improved to counter fraud. There will be new monetary and civil penalties for illegal entry. In addition, every illegal immigration apprehended will be fingerprinted. Preinspection at foreign airports of passenger bound for the U.S. will be increased. The bill creates a mandatory, expedited removal process for aliens arriving without proper documentation, except if they have a credible fear of persecution in their home countries. Penalties for alien smugglers will be increased and deportation of criminal aliens will be expedited. In addition to beefing up our borders, the bill cracks down on those individuals who overstay their visas. Half of those who temporarily enter the country legally remain here illegally. The bill requires that an entry-exit control system be developed to track those individuals. Visas overstayers will also be ineligible to return to the U.S. for a number of years, depending on how long they overstayed their visas. The immigration bill also provides for mandatory detention of most deportable, criminal aliens and requires that those aliens be deported within 90 days. The bill also authorize $150 million for the costs of detaining and removing deportable or inadmissible aliens and increases the number of detention spaces to 9,000 by the end of 1997. Finally, this immigration bill will remove many of the incentives for illegal entry. The Immigration and Naturalization Service estimates that 10 percent of the workforce in Arizona is made up of illegal aliens. H.R. 2202 sets up three pilot projects, to be implemented in high illegal immigration States, that will determine the employment eligibility of workers and thereby reduce the number of illegal aliens trying to get U.S. jobs. While I may well vote against the omnibus bill to which this legislation is attached and while I am very disappointed about the last minute changes to the immigration part of the bill, I nevertheless believe that part of the omnibus bill should be passed. I am confident that this legislation is the keystone we will build upon in the future. hcfa

Mr. KYL

Mr. KYL. Mr. President, to ensure that crime victims are treated with fairness, dignity, and respect, I rise--along with Senator Feinstein-- to introduce a joint resolution proposing a constitutional amendment to establish and protect the rights of crime victims. This joint resolution is the product of extended discussions with Senators Hatch and Biden, the Department of Justice, the White House, law enforcement, major victims' rights groups, and such diverse scholars as Professors Larry Tribe and Paul Cassell. This latest joint resolution is still a work in progress; Senator Feinstein and I anticipate modifications. We are introducing this new version to show the changes that have been made and to make clear that Senate Joint Resolution 52--which was introduced on April 22--has been superseded. We welcome suggestions on ways to improve the amendment and ask that comments refer to this new joint resolution. Three principal issues remain unresolved. First, whether there should be an effective remedy when crime victims are denied rights regarding sentences or pleas. Second, whether to include non-violent crimes-- other crimes--and if these crimes are included, whether they should be defined by Congress or by Congress and the states. Third, whether to have a right to a final disposition free from unreasonable delay or whether to limit this right to trial proceedings. The introduced version--and the most recent version--contain the core principles that crime victims should have: To be informed of the proceedings. To be heard at certain crucial stages in the process. To be notified of the offender's release or escape. To proceedings free from unreasonable delay. To an order of restitution. To have the safety of the victim considered in determining a release from custody. To be notified of these rights. The language describing these rights has changed--and we continue to welcome suggestions. But it is clear that these rights are necessary. They are the core of the amendment. In putting together a constitutional amendment, a broad consensus has to be reached to obtain two-thirds approval in the House and Senate and to ensure ratification by three-fourths of the States. In making changes, Senator Feinstein and I have tried to accommodate the concerns of those who work in the criminal justice system--including judges, prosecutors, police officers, corrections officials, and defense attorneys--while at the same time protecting fundamental rights for crime victims. Senator Feinstein and I will continue to work intensively with these groups, law professors, and other Members of Congress from both parties and both Houses over the ensuing months to craft the best amendment possible. We then intend to introduce the finished revised amendment at the beginning of the next Congress. We believe that we now are close to a version that can be voted on by the House and Senate. We welcome comments and input as we move forward. In closing, I would like to thank Senator Dianne Feinstein for her hard work on this amendment and for her tireless efforts on behalf of crime victims. Mr. President, for far too long, the criminal justice system has ignored crime victims who deserve to be treated with fairness, dignity, and respect. Our criminal justice system will never be truly just as long as criminals have rights and victims have none. We need a new definition of justice--one that includes the victim. Mr. President, I ask unanimous consent that the text of the joint resolution be printed in the Record.

Mr. KYL

Mr. KYL. Mr. President, it is with great reluctance that I take the time of the Senate today to discuss an issue involving the telecommunication industry. The Federal Communications Commission--the funding of which we are now discussing--has gone far beyond congressional intent in an important area that was dealt with in the telecommunications law. The goal of telecommunications reform legislation, in my view, was to promote competition within and among the various telecommunications- related industries, for example, local and long distance telephone providers, cable television, wireless and satellite companies. It is not possible to achieve that reform if federal and state governments restrict competition by creating excessive regulation. While I agree that the State and Federal governments should retain some authority to protect consumers and the public interest, it is imperative that we remove as much other governmental regulation of the telecommunication industry as possible. Too much regulation will only hinder industry growth, and deny consumers and businesses the new services and products that telecommunication reform will provide. I believe less government regulation was the intent of Congress. In his testimony before the Senate Judiciary Committee, former Attorney General William P. Barr said ``the real danger to competition is that excessive, onerous regulation will prevent incumbent local exchange carriers from competing on a level playing field with new entrants. The Federal Communications Commission's recent rules purporting to implement the Telecommunications Act of 1996 highlight this danger.'' Mr. President, I have been informed of several problems with the FCC's new rulings. I wish to highlight a few. For example, to encourage new entrants into the local phone markets while the companies build their own networks, I believe that Congress wanted incumbent telephone companies to resell its services at wholesale rates to any new companies wishing to buy the services. Even though I had concerns at the time, I believed that Congress' intent was to encourage more competition within the local markets without penalizing those companies who have already spent large amounts of capital building a network. Instead, the FCC, an entity whose members are not elected by the public, has taken the liberty of dictating what happens in the local telephone markets. The FCC's new rules will allow resellers to bypass the wholesale rate defined by Congress and pay significantly lower prices for network parts that are already in place. If the FCC's new regulations are implemented, new entrants will be able to resell existing network components as a consumer service in the local market. The problem with that is that the new competitors will have little or no incentive to build their own networks. Existing companies will have no incentive to invest in network enhancements if their research and development can be used--without proper compensation--by any new entrant. As Mr. Barr said during the hearing on mergers and competition in the telecommunications industry, ``under the FCC's system, it makes no sense for any competitor to develop its own network. Instead of real competition that spurs investment, creates jobs, and improves services, the end result of the FCC's rules will be a scheme of contrived `Potemkin competition' in which so-called competitors merely rebrand services purchased below-cost from a severely handicapped incumbent LEC and create the false appearance of competition.'' Another example of the FCC's overreach is the manner in which it has determined prices for certain telecommunication services. Congress recognized that a one-size-fits-all price system is not conducive to all States. The environment in North Dakota is drastically different from New York. Therefore, Congress assigned State public utility commissions the task of determining reasonable rates for interconnection and unbundled elements. The law requires that the rates be cost-based and nondiscriminatory. It also allowed for the rates to include a reasonable profit. Instead, the FCC has mandated a cost system for States to follow when setting unbundled network element prices. The Commission also set default prices for certain network elements. I have been informed that, in many instances, these prices are far below cost and could place existing telephone companies at a disadvantage. Additionally, the rules will place less value on networks that have been built while eliminating any incentive for existing companies to expand existing networks. Clearly, as the 668 pages and 3,276 footnotes of the FCC's First Report and Order demonstrates, the Commission has gone far beyond the intent of Congress. I would ask that the chairman and ranking member of the Appropriations Committee to make note of the FCC's failure to abide by Congress' plan for telecommunications reform. I thank them for the opportunity to express my concerns. defense appropriations

Mr. KYL

Mr. KYL. Mr. President, I just wanted to take a moment to speak a few words about three of my colleagues in the House and Senate who are going to be retiring at the end of this year. I know many of us have spoken about our colleagues and there have been many fine words describing the attributes of those who have served here with such great distinction. It is very difficult to decide who you are going to talk about because there are so many fine people who have served here. I have chosen to talk about three people very briefly because, first of all, I know them quite well. I have worked with them. Second, because I think they exemplify the characteristics that American citizens would like to see in their public servants. Third, because in a way they are so different and yet they are all three so much alike in that the one word that describes each of the three of them is ``integrity.'' The reason I select these three people, one is from the House, one is a Democrat in the Senate, and one is a Republican in the Senate. My purpose for selecting these three people is, therefore, to illustrate that it does not matter which body you are in or which party you are in, you can serve the American people well if you have that characteristic of integrity and you can be respected by your peers as well. The three people I want to say a word about are Senator Hank Brown from Colorado, Senator Paul Simon from Illinois, and Representative Bob Walker from Pennsylvania, all three of whom will be leaving at the end of this session. As I said, one could talk about many others. I heard some great statements about our colleague Al Simpson. I think we all get a smile on our face when we think of the many stories he has told us--and Judge Heflin and so many others. Again, let me focus on these three. First, Senator Hank Brown from Colorado is leaving after one term in the Senate. I find it interesting that he says he is leaving because the decisions that he is making now, he says, are just not as objective as they were when he first came. He feels that his decisions are now more influenced by having been in this body. Mr. President, I think all of us here would say that if Hank Brown is concerned that he is not deciding things on an objective basis, it might say a great deal about the rest of us, because I am sure, Mr. President, you would agree there is not anybody in this body who tackles issues on a more objective basis than Hank Brown. He does not come with a great deal of bias. He certainly is not very partisan. He says what is right, what is wrong, what do I know about this and what should we do, and if he is the only one who takes that position, he takes the position because he thinks it is the right thing to do. When he thinks he has been, in effect, slightly corrupted by the institution in a political way, what does it say about all of the rest of us? I know we all hold ourselves up to his standard as being the standard for judging issues. I just want to compliment Senator Brown for being independent, for being smart, for being honest, for being wise, for having integrity, and finally, Mr. President, for his unfailing courtesy. I have never known Senator Brown not to be courteous to those around him regardless of party, regardless of circumstance. We will miss him in the U.S. Senate. Another person with the same unfailing courtesy and integrity is Senator Paul Simon from Illinois. Now, Paul Simon and I are of different political parties and certainly our philosophies differ a great deal, yet I think working with Senator Simon is a good example of how significant philosophical differences do not mean that you cannot work with each other and respect each other. He has been as courteous to me as any Member of this body, notwithstanding the fact we are of different political parties. In the tension-filled atmosphere we sometimes find ourselves in, I find that to be a comfortable refuge. I do not think anyone here is given more respect in either body than Senator Simon because of his integrity and his unfailing courtesy. I hope I have reciprocated in my dealings with him. He has also, I think, influenced us because when he speaks, we listen. He always has something important to say. That is especially so because we know that he approaches issues honestly. As I said, Mr. President, I will miss his company in this body. Finally, my colleague in the House, Bob Walker. I served with Representative Walker when I was a Member of the House. I worked with him on mutual matters of interest since I have been in this body. Like Hank Brown and Paul Simon, Bob Walker is a man of unquestionable integrity. He knows what he believes. He knows why he believes it. He acts upon those beliefs without undue influence by the forces around him. His actions have always been characterized by courage and by adherence to principle, which is somewhat in short supply in Washington on occasion. He, too, has had enormous influence on the legislation in this Congress, much of it behind the scenes, because people know him to be well-versed in the issues and to be very honest in his approach to them. I also want to say one last thing about Representative Walker. As much as anyone I have known, he represents an attitude about the future that I think we can all emulate. He has great confidence in the future of this country because he has great confidence in our ability to advance based upon the technology that is there for us to discover, and he has supported a great many projects as chairman of the Space, Science, Technology Committee in the House, because of his confidence and optimism in our future. Mostly, Bob Walker has been my personal friend, and I will miss him a great deal, as well. So, Mr. President, much has been said about a lot of the people who will be leaving this body and the House. I mention these three because I have worked closely with all of them. I respect them very much. In some respects, they epitomize the qualities that we respect as colleagues, and I know the American people respect. We will miss them and all of the others who will be retiring at the end of this year. I suggest the absence of a quorum.

Mr. KYL

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

Mr. KYL

Mr. KYL. Mr. President, before the distinguished acting majority leader speaks to this, I thank Senator Wyden for his bipartisan cooperation and make the point with all of the things we have to do here at the end of the session to finish the Nation's business, the assistant majority leader, the Senator from Oklahoma, is right in the middle of all of that, yet he has taken the time to personally be involved to improve this legislation. If we are able to craft an agreement here, it will be in no small part due to the ideas that he brought into the debate to ensure, for example, that the State control was preeminent and that some of the other protections that we have in here are here. Again, I want to thank him, as well as Senator Coats, for all of their contributions to this effort, too. It has gotten us much closer to the goal line than we otherwise would have been.

Mr. KYL. Senator Wyden and I want to take a few minutes right now to try to brief our colleagues, as well as our constituents and others, who have been interested in the issue on the status of the so-called gag rule amendment. That is not perhaps a very glamorous name for what we are talking about, so let me describe that briefly. Then we will try to provide a report, as I said, about the status of the negotiations and how we might try to conclude this matter. People have heard the distinguished majority leader speak on several occasions about the effort to resolve this question. I think we are very close to it and want to report that to our colleagues. First of all, what we are talking about is an assurance for physicians that they are able to communicate freely with their patients about their patients' health and about the medical care or treatment options that might be important for their patients' health. When these physicians are a part of a plan, like an HMO, for example, they are constrained in certain ways with respect to what the plan provides in the way of coverage and, therefore, in the way of treatment. So this issue has evolved. To what extent can the HMO limit the physicians in their communications with patients? Well, virtually no one wants to create that kind of a conflict, at least intentionally, because clearly the physician has an obligation to his patient, and we all want the patients to have the maximum degree of care. So we want to ensure that this communication is not inhibited. What we have been involved in over the last several days is trying to craft legislation that is not overly broad but still ensures that degree of protection. We have also tried to ensure that this is done to the maximum extent possible at the State level. We are not interested in some kind of a new Federal mandate or new Federal program here. But, of course, we do at least need to get the process started here so that the States who have not yet adopted statutes--and many have--but for those who have not done so yet, that there would be an incentive for them to provide the kind of protection for the kind of communication which we are talking about. We also want to ensure that there is a conscience clause provision here that enables physicians who, for moral or religious beliefs, do not want to get into certain discussions, that they would not have to do so, and, likewise, that a provider, an HMO or other kind of insurer that may have based its benefits on its beliefs, including religious beliefs, be protected as well. So these are not necessarily easy issues, but I think in terms of a general concept, there has not been a great deal of disagreement. But nevertheless, trying to put this all together at this time of the year has not been real easy. I want to thank several people for their involvement in this, in particular the majority leader, who has been most patient in waiting for us to try to get this resolved; the assistant majority leader, who has been personally involved in discussions on this to try to craft it in the right way; Senator Dan Coats, who has been involved; and several others who have expressed an interest and given their input. Senator Wyden and I have developed a series of drafts. Our most recent draft, we think, is a very good product which achieves this goal but with the minimum of difficulty. As we speak, even this draft is being revised to some extent to try to reflect the views of other Senators. I urge that anyone who has an interest in this issue and would like to give us their views, or who has heard about a particular version of this and would like to know what the actual most current version of it is, that they please communicate with us because we would be most pleased to share our ideas with them and to get their ideas as well. The majority leader would very much like to get this wrapped up. We would, too. Therefore, again, I thank those who have been involved. We stand ready to try to wrap it up if people will give us their views. But I think we have come to a point now where there are not very many issues that prevent us from doing this. I really urge any Senators who have an interest to help us bring this to conclusion. Under the previous agreement, at this time I yield the floor to Senator Wyden.

Mr. KYL

Mr. KYL. Mr. President, I ask unanimous consent that the Senator from South Carolina have whatever time he may consume for a tribute--about 4 minutes; that following his remarks, Senator Wyden and I speak as in morning business for a period not to exceed a total of 20 minutes.

Mr. KYL

Mr. KYL. I certainly join with the distinguished chairman of the Senate Armed Services Committee in that tribute to Senator Simpson. I think we will all miss his daily dose of wit. And I certainly share those sentiments.