Connie Mack

Mr. MACK

Mr. MACK. I thank the Chair. Mr. President, I am pleased to be joined by Senator Frist, Senator Jeffords, and Senator Collins, and others, as we offer this amendment to provide cancer patients with coverage of health insurance benefits when they participate in approved clinical trials. Many health plans will not pay for the cost of routine patient care if patients want to participate in a clinical trial. As a result, beneficiaries with cancer are denied access to these trials of promising new therapies because these therapies are deemed ``experimental'' by most health plans and, therefore, not qualified for coverage. This means many cancer patients have two choices when they have exhausted all traditional therapies: either pay the cost of participating in a clinical trial themselves or go without additional treatment. For all but the most wealthy patients, it is cost prohibitive to take part in a clinical trial. This amendment will help ensure that a patient's decision about whether or not to participate in a clinical trial is based upon science and not cost. Clinical trials are one of the most effective ways of determining which treatments are beneficial. Yet cancer researchers have told me they have had difficulty enrolling the required number of patients to participate in the clinical trials they are conducting. Scientists have identified noncoverage by private insurers, as well as Medicare, as one of the primary reasons why patients do not participate in clinical trials. For example, approximately 2 percent of cancer patients are participating in clinical trials. This amendment will help scientists recruit cancer patients who wish to participate in clinical trials by breaking down the financial barriers which may preclude most patients from participating. Clinical trials are one of the most effective techniques for assessing the effectiveness of a scientific and medical intervention. Many of my Senate colleagues have joined with me in a bipartisan effort to double biomedical research funding through the National Institutes of Health. Last year, Congress appropriated $15.6 billion for NIH. This represented a $2 billion increase, the largest increase in NIH history. At a time when American researchers are making such tremendous progress in scientific areas such as cancer genetics and biology, it is essential that this knowledge be translated into new therapies through well-designed clinical trials. This amendment is a natural extension of the historic effort to double funding for medical research in our country. When my brother, Michael, was diagnosed with cancer, there were only three basic forms of treatment--surgery, radiation, and chemotherapy. Today, scientists are revolutionizing the treatment of cancer by developing many new weapons to kill cancer, including gene therapy and immunotherapy. On a personal note again, every time I get into these discussions, and every time I see the new efforts that are being pursued, and the successes that have been developed, I cannot help but think if Michael's melanoma had been discovered or if he had found the disease much later in his life, when these new procedures--gene therapy and immunotherapy were available--and if he had been able to participate in a clinical trial, which he attempted to do throughout his treatment many years ago, his life may have been saved. This amendment will help scientists continue the unprecedented progress being made to find new methods of treatment. Coverage of cancer clinical trials is a bipartisan issue. Earlier this year, for example, Senator Rockefeller and I introduced legislation to provide for Medicare coverage of cancer clinical trials. I am pleased to say that 36 additional Senators, from both sides of the aisle, have cosponsored this legislation. I look forward to working with my colleagues to pass this important legislation during the 106th Congress. The reason Senator Rockefeller and I targeted our legislation to cancer is the same reason we have targeted this amendment to cancer today--there is a legitimate debate about what the true cost may be. Senator Rockefeller and I believe the cost will be insignificant. And we have the studies to prove that. However, there are legitimate concerns with respect to cost which have been raised. Both the amendment we offer today and the Rockefeller-Mack legislation, call for a study and report to Congress in 2005 on the cost implications of covering cancer clinical trials. I support comprehensive coverage of clinical trials. But, at this time, we need more information before we go further. This amendment will help provide the information we need to make a better informed decision. During markup of S. 326, the Senate Committee on Health, Education, Labor, and Pensions considered an amendment offered by my friend and colleague, Senator Dodd, to provide clinical trial coverage. Since then, my colleagues and I have more thoroughly studied this amendment. We have examined what barriers exist that impede enrollment in clinical trials. We looked into the cost implications. We considered the best way to define the term ``routine patient costs.'' Let me first highlight the many similarities in our amendment and the amendment which Senator Dodd offered during committee consideration. Our amendment requires plans to provide coverage of routine patient costs. I will get back to that term in a few minutes. Our amendments ensures that health plans are not required to pay for costs of items and services that are reasonably expected to be paid for by the sponsors of a clinical trial. This includes tests or measurements conducted primarily for the purpose of a clinical trial. Our amendment permits plans to require clinical trial participants to use in-network providers, if they are available. If coverage is provided by a nonparticipating provider, payment would be at the same rate the plan would pay for comparable services to a participating provider. Our amendment is limited to those health plans over which Congress has sole and exclusive jurisdiction. Our amendment is limited to only the highest-quality clinical trials. These include trials approved and funded by the National Institutes of Health, the Department of Veterans Affairs, and the Department of Defense. Only those trials which have undergone the rigors of peer-review will be considered. Our legislation differs with Senator Dodd's proposal in three ways. The first difference is how to best define the term ``routine patient cost.'' In researching this issue, we have found that there is not a generally accepted definition of the term, ``routine patient cost'' associated with participation in a clinical trial. The Balanced Budget Act required the Institute of Medicine to conduct a study on the issue of cancer clinical trial coverage, including the definition of routine patient costs. This study is due in September, and it will likely help us to better define this highly technical term. There are other experts who have opinions on how to define the term ``routine patient cost.'' We believe it is best to leave this task to patients, employers, health plans and those with true expertise in the field of clinical trials. It is essential to remember that protocols for clinical trials vary widely, and routine patient costs for clinical trials also vary. Scientific researchers have indicated that developing one standard for determining routine patient costs will be a daunting task. I don't believe Congress is best qualified to make this important scientific determination. Therefore, our amendment provides for a negotiated rulemaking process to establish a time-limited committee charged with developing standards relating to the coverage of routine patient costs for patients participating in clinical trials. This way, organizations representing cancer patients, health care practitioners, hospitals, employers, manufacturers of drugs and medical devices, medical economists and others will be involved in the process of defining routine patient costs with respect to clinical trials. By May, this committee is required to develop standards for routine patient costs for individuals who are participating in those trials. If the committee is unable to reach a consensus, then the Secretary must develop these standards and publish a rule by June 30, in the year 2000. In either case, coverage for these benefits would begin for plans beginning on, or after, January 1, 2001. We believe that a negotiated rulemaking process is the best way for organizations representing all who are affected to collectively determine what costs should be considered in ``routine patient costs.'' These decisions will have a major effect of the cost of covering clinical trials. I will just underscore that again. These decisions will have a major effect on the cost of covering clinical trials. Under the Democratic bill, these organizations can only submit a comment to the Secretary, who has broad authority to determine what constitutes routine patient costs. However, those comments could be rejected out-of-hand by the Secretary. By contrast, the negotiated rulemaking process ensures that all who have an interest in the outcome have a seat at the negotiating table to make the decision. We believe it is essential that cancer patients have an opportunity to be involved in establishing standards for routine patient costs, and a negotiated rulemaking procedure affords them that opportunity. Second, as I mentioned earlier, our amendment differs from the Dodd amendment in that it is limited to cancer clinical trials. There are more clinical trials involving cancer than perhaps any other disease. This targeted approach will not only provide a needed benefit to a large patient population, but it will also provide significant information for the study and report called for in this amendment. Finally, our amendment includes a study and report to Congress on the costs to health plans and any impact on health insurance premiums. Senator Dodd's amendment did not include this study and report, which I believe is extremely important. Congress can then use this important information to determine if they wish to expand coverage for patients with other diseases. Like most of my colleagues, I am very concerned about the ever- increasing costs of health insurance. According to the Congressional Budget Office, our amendment will result in an increase in health insurance premiums of less than one-tenth of one percent. The Dodd proposal would cost five times that amount. I have met with thousands of cancer patients throughout Florida and the rest of the United States, patients desperately wanting to participate in clinical trials when traditional therapies are no longer beneficial. Let me conclude my comments here today by relating an experience which puts a human face on why this issue is so important. As my colleagues may know, I frequently visit the National Institutes of Health to meet with scientific reserchers so I may gain a better understanding of the many advances which are taking place to detect and treat cancer and other diseases. Over the years, I have been fortunate to get to know Dr. Steven Rosenberg, a world-renowned scientist and oncologist who is an expert in the field of melanoma research and treatment. I first met Dr. Rosenberg after reading his book, ``The Transformed Cell.''

Mr. MACK. I ask for 2 additional minutes.

Mr. MACK. Mr. President, I am not sure I need 5 minutes. I could not help but listen very closely to my colleagues on the other side of the aisle with respect to the issue of clinical trials and the idea of targeting clinical trials to cancer. One could draw the conclusion from what they had to say either they never heard of the idea of targeting clinical trials to cancer or there was some confusion. I remind my colleagues on the other side of the aisle who have supported a clinical trial expansion of the Medicare program that is limited to only cancer --let me say that again. The clinical trial legislation that Senator Rockefeller and I introduced earlier this year is limited to cancer only; just as this amendment is limited to cancer: Senator Feinstein, Senator Sarbanes, Senator Johnson, Senator Bingaman, Senator Kerry, Senator Leahy, Senator Kerrey, Senator Schumer, Senator Akaka, Senator Murray, Senator Breaux, Senator Mikulski, Senator Conrad, Senator Wellstone, Senator Moynihan, Senator Inouye, Senator Graham, Senator Harkin, Senator Kennedy, Senator Boxer, Senator Durbin, Senator Robb, Senator Biden, Senator Dodd, and Senator Hollings. I submit that one of the reasons we have this not only in this amendment but also in the Medicare approach is because there is truly a concern about what the true cost of clinical trials is. As I said in my earlier comment, Senator Rockefeller and I happen to believe the cost is quite small. In fact, there are arguments out there that Medicare is already picking up the cost of those clinical trials. We have limited it to cancer because we, in fact, believe we can develop information that will allow us to expand it.

Mr. MACK. If the Senator would wait. What I have found, as I have listened to this debate now for 4 days, is the term ``compartmentalization'' comes back into my mind: The ability on the other side of the aisle to think of one procedure, one amendment, one concept at a time, as if it has no influence or no effect on the cost of health care and what it might do to those individuals who could lose their health care coverage because of increased costs. It is very reasonable to ask the question: What does it cost; how do you define certain aspects of the clinical trial that is going to take place? I will be glad to yield.

Mr. MACK. Can I inquire who is going to use that minute?

Mr. MACK. I believe the Senator from Florida has been graciously given 1 minute by Senator Kennedy.

Mr. MACK. First of all, the impression created that HMOs or most HMOs cover all clinical trials is inaccurate. There is a second component to this thing. ERISA plans versus the plans that we have control over may be confusing the issue as well. In addition, though, I think it is important to focus. Again, this discussion has come down to a discussion about cost. I happen to agree with the Senator from Connecticut about the data that we have from those two health organizations. But I think he knows as well that there are those out there who make claims that the cost of the clinical trials would be substantially higher than that--from OMB, CBO, the administration. So the point is that there is a legitimate debate about the cost of clinical trials. I am saying I think, before we go to the full extent of comprehensive coverage, we ought to fully understand what we are getting ourselves involved in. With that, I yield the floor. Mr. DODD addressed the Chair.

Mr. MACK

Mr. MACK. Thank you, Mr. President. I thank Senator Frist for yielding me time. I also appreciate greatly the comments made with respect to the clinical trials. Again, I look forward to continuing to work with him in the future on this issue. Mr. President, I want to respond to one provision of the amendment offered last night by my friend from Connecticut, Senator Dodd. This provision goes to a concern that has been raised by patients throughout our country--the issue of health coverage for patients who are participating in clinical trials. As Members of the United States Senate, we must seek legislative solutions to a wide array of public policy issues. These issues include health policy, as we are doing today. They include tax policy, economic policy, foreign policy, and education policy. The list is quite expansive. Frequently, we find ourselves divided on issues of the day. However, I can think of no issue which better unites Republicans and Democrats, conservatives and liberals, as the issue of biomedical research. In addition to Senator Dodd, we are fortunate to have many, many leaders in the Senate on this important issue. Senator Specter and Senator Harkin are leading the historic bipartisan effort to double funding for the National Institutes of Health. Senator Jeffords, Senator First, Senator Kennedy, and Senator Mikulski have worked hard in their committee to authorize and oversee the activities of the HIH. Any many more of my colleagues have each contributed in their own way to help make funding for HIH the national priority it is today. As I said, few issues unite the Senate like medical research. One of the highlights during my 17 years as a Member of the Senate and House of Representatives has been to meet the scientists who are revolutionizing the way man fights disease, and to improve our quality of life. It doesn't matter if they are a young bench scientist or a Nobel Laureate, their mission remains the same--to find ways to detect and treat diseases. Today, there is a level of commitment and enthusiasm to this monumental endeavor that I've never seen before. Today, researchers dare to use the word, ``cure.'' That wasn't the case very long ago. As we work to make sure that scientists have the necessary resources to continue their remarkable progress, we must also address the ethical, legal and social implications of biomedical research. Science is moving faster than public policy can keep pace. It's as though science is on the Concorde, and Congress stalled at Kitty Hawk trying to get off the ground. There are very difficult, complex scientific issues which require Congressional action, but these issues also require thoughtful and careful deliberation. For example, Congress has been working for many years to ensure that health plans do not discriminate against people because of their genetic information. As a cancer survivor, I know how important it is to have confidence in knowing that a genetic test will be used for information, not discrimination. I've been part of a bipartisan effort to resolve this issue, starting with legislation introduced by our former colleague, Senator Mark Hatfield. Genetic nondiscrimination is a very complex issue with wide-ranging ramifications. There have been many questions to answer. Congress has struggled with how best to define medical and scientific terms. We have examined the impact of our actions on the cost and availability of health insurance. Frequently, we have determined that much more information was needed before deciding the best approach. We have addressed the issue of genetic nondiscrimination with thoughtful deliberation, and I believe the Congress must take the same thoughtful, deliberative approach when it comes to coverage of clinical trials. There are many questions to be answered. What are the cost implications? How will this new benefit impact the availability of health insurance? What impact will coverage of clinical trials have on health insurance premiums? How will it impact small business owners, who are struggling to provide health insurance for their employees? What is the best approach to defining medical and scientific terms, such as ``routine patient costs''?--becasue that definition will determine what the underlying costs of this effort will be. These are very important questions, involving very complex issues, with very significant implications. Mr. President, I support comprehensive coverage of clinical trials. But, as this time, we need more information before we go that far. Later today, or tomorrow, I will be introducing an amendment, along with Senator Frist, Senator Jeffords, Senator Collins, and others, which will help provide patients, scientists, lawmakers, employers, health plans and others with answers to the many questions associated with health insurance coverage for clinical trials. I will outline our approach at that time. Mr. President, medical research is a bipartisan issue. We all agree that the basic scientific research funded by the National Institutes of Health must be translated into new forms of treatment through well- designed clinical trials. Earlier this year, Senator Rockfeller and I introduced legislation to provide Medicare coverage for cancer clinical trials. I am pleased to say that a bipartisan group of 36 Senators have cosponsored this bill. Senator Snowe and others have introduced legislation to provide coverage through private health plans. We may approach the issue in different ways, but we all agree that the Senate must address the issue of clinical trial coverage, and we must do so now. Mr. President, I look forward to discussing my amendment later in the debate. I yield the floor.

Mr. MACK

Mr. MACK. Mr. President, I oppose this travel amendment in the strongest possible terms. This is the wrong language at the wrong time. It represents a fundamental change in our Cuba policy--a change without proper consideration. The Foreign Relations Committee has not considered this language; in fact, nobody has seen this language until it was introduced this afternoon. We should not rush this language through. We should not do this. This is a half-baked approach, which makes for weak policy; it is not a mature effort to craft serious policy. Fidel responds to our positive gestures with arrests, oppression, and crackdown. This effort is misguided and must be tabled. Mr. McCONNELL addressed the Chair.

Mr. MACK

Mr. MACK. Mr. President, I ask unanimous consent that I be able to address the Senate as if in morning business for up to 15 minutes.

Mr. MACK. I thank the Chair.

Mr. MACK

Mr. MACK. Mr. President, proponents of the quota legislation to be considered later today have spoken with vigor and passion regarding the ``injury'' that was suffered by domestic steel companies and the threat imports pose to the workers at those companies. However, I am compelled to rise today to respond to many of the assertions raised regarding the steel industry specifically, and more generally I think it is important to speak to several other factors related to the bill. First, there are economic benefits all Americans enjoy as a result of lowering trade barriers; second, the harmful message a quota bill would send to our trading partners; and, third, the inappropriateness of Congress singling out a specific industry for special treatment. The first point I would like to make is that the import surge is over. According to the Department of Commerce, imports have returned to their traditional levels. In fact, overall steel imports in the first 4 months of 1999 were below the ``pre-import'' surge level. Moreover, even with the import surge of 1998, U.S. steel producers reported profits of over $1 billion. Furthermore, in reviewing data provided by the Steel Manufacturers Association, I was surprised to find that U.S. steel production has increased over the last 10 years. The 1998 steel output of 107.6 million tons was 10 percent greater than 1990 and the highest for any year since 1981. Additionally, I was interested to discover that since 1987, imports as a percentage of domestic consumption have remained constant at around 20 percent. Again, according to this data, no ground has been lost despite protestations to the contrary. Some have argued that the financial ill health of several specific companies such as Bethlehem Steel Corporation, Weirton Steel Corporation, Laclede Steel Company, Acme Metals Incorporated, and Geneva Steel Company are the direct result of last year's import surge. However, the fact is that many of the integrated steel mills have a history of declining financial health evident well in advance of the Asian crisis and the 1998 import surge. This is reflected in their stock performance which, without exception, shows a pronounced decline in the value of the stock over the last 5 years. Again, it has nothing to do with the surge in imports. Noting the declining employment figures in the steel industry, proponents of the quota bill suggest that the United States is losing market share, but the fact is imports have not led to a decrease in market share. U.S. steel production in traditional integrated mills has remained fairly flat. Import competition has merely forced U.S. steel to become more efficient. The growth in domestic production that has allowed U.S. steel to retain its domestic share has been almost exclusively a result of our Nation's mini-mills which now account for almost 50 percent of domestic steel production. Mini-mills use an innovative production technique to recycle scrapped steel. These highly efficient and environmentally friendly producers are transforming the steel industry, and I think here it is worth noting that the association of mini-mills is neutral with regard to the proposed quota legislation. Finally in this area, some argue our foreign competitors are playing by a different set of rules. This is exactly what our current antidumping laws are intended to address. The steel industry has shown itself to be intimately familiar with and more than willing to take advantage of these laws. Even though steel accounts for only 5 percent of our imports, the industry has generated 46 percent of the unfair- trade complaints brought before the U.S. International Trade Commission during the last 2 decades. Our current laws provide appropriate protection for all industries. They should not be circumvented in order to provide extraordinary protection for a single industry. All too often we hear complaints of lost jobs and invariably the blame is laid on trade. This allegation has gone unanswered for far too long. Trade has given us far more jobs than would otherwise be available. The fact is that the size of the trade sector has grown steadily during the last 50 years. As a share of the economy, trade doubled between 1950 and 1980, and it has doubled again between 1980 and 1998. Not surprisingly, employment has expanded from 99 million in 1980 to 133 million today. And, the unemployment rate has fallen to 4.2 percent, the lowest level in 30 years. Far from harming our economy, trade has been a major contributing factor to our growth and our prosperity. Real GDP is now 64 percent greater than it was in 1980 and we have experienced only 9 months of recession during the last 16 years. Moreover, our growth rate is now the highest and our unemployment rate the lowest among the G-7 nations. Trade makes it possible for us to focus on the production of the things we do best, and thereby produce a larger output and enjoy a higher standard of living. For goods and services that we produce cheaply, we can expand our output and sell abroad at attractive prices. And for things we do poorly, we can acquire them more economically from foreign producers. Thus, trade promotes prosperity. We have fought for open markets both through GATT and now the WTO. And we have been engaged in this fight, this battle for almost 50 years. For some time, we have told the world that economic freedom and a market economy are key ingredients of prosperity. The steel quota bill undermines this message. Let me make four points with respect to the message. A quota bill would send the wrong message to the European Union. A quota bill would send the wrong message to the former Communist countries seeking to establish market economies. A quota bill would send the wrong message to investors. And a quota bill would send the wrong message to our trading partners. Let me just touch lightly on each of those. With respect to the European Union, we are currently in the midst of a trade dispute with the EU regarding their restrictions on both bananas and beef. The steel quota bill undercuts our position on these issues. How can we complain about the restrictions of others while we ourselves are erecting trade barriers? With respect to the leaders of the former communist countries, this bill says when we think it is convenient, it is all right to substitute political manipulation for markets. I can assure you, the leaders of the former communist countries are watching. If a prosperous America with a low unemployment rate is willing to bail out troubled firms, how can we expect them to refrain from such action. With respect to investors, while much of the world has been in recession, investment flowed into the United States and the U.S. economy remained strong. In no small degree, this confidence of investors was due to the openness of our economy and our reliance on markets rather than politics. Again, with respect to our trading partners, our trading partners-- most of which have lower and slower rates of growth and higher unemployment--are unlikely to stand idly by while we impose trade barriers. Retaliation and escalation of trade barriers are likely side- effects. Finally, it bears mentioning that it is a serious mistake for Congress to play favorites. This is precisely what is involved here. This bill imposes a tax on steel-users in order to subsidize steel- producers. A substantial share of the U.S. steel industry refines raw steel into finished and specialty goods. The U.S. steel industry is therefore a major purchaser of imported steel. Higher steel prices which will surely accompany import quotas will increase the cost of refined steel and make these products less competitive than would otherwise be the case. Moreover, this bill would treat the steel industry different than other industries. Steel is not the only industry that has been adversely affected by currency devaluations and weak demand due to the Asian crisis and recession in several parts of the world. The sales of many firms were affected as the result of these factors. Why should this industry be singled out for special treatment? In conclusion, I want to stress that the legislation we will be considering later today proposes that the Congress intervene in the market, risk a trade war, and endanger the future health of our economy in order to insulate a segment of out steel industry from competition. I maintain there is already sufficient legislation on the books to protect industries against unfair competitive practices. Quotas and trade barriers are the wrong path. The world has already gone down this ``trade war'' road once before with the Smoot-Hawley Law of 1930. Let's not make that same mistake again. Additionally, I should note that Chairman Greenspan recently has sounded the dangers of protectionism. He now believes that rising protectionism is the single most dangerous threat to our future growth and prosperity. I share his concern. Make no mistake about it--important principles are at stake here. We should be reducing trade barriers rather than increasing them. We have no business playing favorites. As our recent High-Tech Summit indicated, trade in both goods and ideas has made an enormous contribution to our prosperity. We must not allow this misguided effort to assist some at the expense of others and endanger American prosperity. With that, I yield the floor, Mr. President. Mr. GRAMM addressed the Chair.

Mr. MACK

Mr. MACK. Mr. President, I want to engage the distinguished Senator from new Mexico and the distinguished Senator from Nevada, managers of the pending bill, in a colloquy.

Mr. MACK. I thank the Senator. Florida International University in my State of Florida has done a truly remarkable job of working with the Department of Energy in carrying out critically important environmental research and development of deactivation and decommissioning environmental technologies. More specifically, FIU's Hemispheric Center for Environmental Technology (HCET) has a proud history of partnering with DOE through its Environmental Management program to form a true `center of excellence' in these areas and the President's fiscal year 2000 budget request for the EM program assumes full funding for continuation of this impressive partnership.

Mr. MACK. I yield to my colleague from Florida. Senator GRAHAM. I echo the comments of the Senator from Florida about the FIU Hemispheric Center for Environmental Technology and reinforce the importance of the FIU Center in assisting the Department of Energy in deactivation and decommissioning of some of the most strategically important DOE sites in the Nation, including Fernald, Chicago, Albuquerque, Richland, and Oak Ridge facilities. I am proud of the role that HCET plays in these efforts.

Mr. MACK. I thank my colleague from Florida. It is my understanding that the President's budget contains sufficient funding ($5,000,000) to fully fund the current working agreement between Florida International University and the Department of Energy. Is that the Chairman's understanding?

Mr. MACK. I thank the Chairman. I specifically request that, as the distinguished senior Senator from New Mexico and the chairman of the Energy and Water Development Subcommittee continues to shepherd this legislation through the Senate and conference with the House, he would make every possible effort to provide the full budget request for the DOE's Environmental Management program and protect the full funding contained therein for the DOE-Florida International University partnership.

Mr. MACK. I thank the distinguished Senators from New Mexico and Nevada for their commitment and leadership on this important legislation.

Mr. MACK

Mr. MACK. Mr. President, today I am introducing legislation to remedy a problem in the way the U.S. taxes the foreign operations of U.S. electric and gas utilities. With the 1992 passage of the National Energy Policy Act, Congress gave a green light to U.S. utilities wishing to do business abroad, lifting a long-standing prohibition. U.S. utilities were allowed to compete for the foreign business opportunities created by the privatization of national utilities and the need for the construction of facilities to meet increased energy demands abroad. Since 1992, U.S. utility companies have made significant investments in utility operations in the United Kingdom, Australia, Eastern Europe, the Far East and South America. These investments in foreign utilities have created domestic jobs in the fields of design, architecture, engineering, construction, and heavy equipment manufacturing. They also allow U.S. utilities an opportunity to diversify and grow. Unfortunately, the Internal Revenue Code penalizes these investments by subjecting them to double-taxation. U.S. companies with foreign operations receive tax credits for a portion of the taxes they pay to foreign countries, to reduce the double-taxation that would otherwise result from the U.S. policy of taxing worldwide income. The size of these foreign tax credits are affected by a number of factors, as U.S. tax laws recalculate the amount of foreign income that is recognized for tax credit purposes. Section 864 of the tax code allocates deductible interest expenses between the U.S. and foreign operations based on the relative book values of assets located in the U.S. and abroad. By ignoring business realities and the peculiar circumstances of U.S. utilities, this allocation rule overtaxes them. Because U.S. utilities were until recently prevented from operating abroad, their foreign plants and equipment have been recently-acquired and consequently have not been much depreciated, in contrast to their domestic assets which are in most cases fully-depreciated. Thus, a disproportionate amount of interest expenses are allocated to foreign income, reducing the foreign income base that is recognized for U.S. tax purposes thus the size of the corresponding foreign tax credits. The allocation rules increase the double-taxation of foreign income by reducing foreign tax credits, thereby increasing domestic taxation. The unfairness of this result is magnified by the fact that the interest expenses--which are the reason the foreign tax credit shrinks--are usually associated with domestically-regulated debt, which is tied to domestic production and is not as fungible as the tax code assumes. The result of this economically-irrational taxation scheme is a very high effective tax rate on certain foreign investment and a loss of U.S. foreign tax credits. Rather than face this double-tax penalty, some U.S. utilities have actually chosen not to invest overseas and others have pulled back from their initial investments. One solution to this problem is found in the legislation that I am introducing today. This remedy is to exempt from the interest allocation rules of Section 864 the debt associated with a U.S. utility's furnishing and sale of electricity or natural gas in the United States. This proposed rule is similar to the rule governing ``non-recourse'' debt, which is not subjected to foreign allocation. In both cases, lenders look to specific cash flows for repayment and specific assets as collateral. These loans are thus distinguishable from the typical risks of general credit lending transactions. The specific cash flow aspect of non-recourse financing is a critical element of the non-recourse debt exception, and logic requires that the same tax treatment should be given to analogous utility debt. Thus, my bill would exempt from allocation to foreign source income the interest on debt incurred in the trade or business of furnishing or selling electricity or natural gas in the United States. The current situation is a very real problem that must be remedied, and I urge my colleagues to support the solution I am proposing. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. MACK

Mr. MACK. Mr. President, I rise today to speak on behalf of the Work Incentives Improvement Act of 1999. This bill was introduced by Senator Jeffords and co-sponsored by 77 members. The primary purpose of this legislation is to expand the availability of health care coverage under the Social Security Act for working individuals with disabilities. This bill establishes a Ticket to Work and Self-Sufficiency Program in the Social Security Administration to make available meaningful work opportunities for the disabled. Some months ago, in Florida, I met a woman who does not have the use of her arms. This woman is an accomplished artist who uses her feet to create beautiful works of art. She spoke with me about the difficulty she has had over the years obtaining health insurance for routine medical care and asked me to support this bill. It is with her in mind and the many other talented, hard-working disabled Americans that I support this act which will make it possible for them to obtain health coverage and lead productive working lives. This bill allows states to offer Medicaid coverage to workers with disabilities beyond what is currently available to them under the Balanced Budget Act of 1997. It creates two new optional eligibility categories and allows states to offer buy-ins for the working disabled so that they can maintain health care coverage, work, and have as much independence as their disability allows. One option permits states to offer a Medicaid buy-in to people with disabilities who work and have an earned income above 250% of poverty with specified levels for assets, resources and unearned income set by the state in which they reside. This is important to many of the disabled who have income or assets that exceed the current level and have an earned income that has exceeded $500 per month during the past year. The state can and should impose a sliding scale of cost-sharing of the premium, up to 100% of the premium, based on the income of the individual. This will allow many of the disabled who simply cannot get health insurance because they have income or assets above a certain level, to obtain health coverage. With the passage of this legislation, a person with disabilities who may be an artist, computer programmer or run a telephone answering service can now be successful at work and have no fear of being unable to obtain health coverage. The second option allows states that elect to participate in the first option to also cover people who have a severe impairment but can lose eligibility for Supplemental Security Income or Social Security Disability Insurance because of medical improvement. In certain cases, the only reason a person improves is because they receive medical treatment. This bill prevents a person from losing their health care coverage when their health improves due to medical treatment. The state can allow this type of person to buy into the state Medicaid program at a premium set by the state. This is a blessing to persons with disabling conditions which are amenable to treatment such as rheumatoid arthritis, Crohn's disease, depression, or sickle cell anemia. It allows people who can work to work and receive treatment for what may be a chronic disease and have no fear of losing their health coverage. An additional benefit of this bill provides for the continuation of Medicare coverage for working individuals with disabilities. An extended period of eligibility will allow people who receive Social Security Disability Insurance (SSDI) to continue to receive Part A Medicare coverage without payment for up to six years after returning to work. At present, disabled people may receive Medicare coverage for nine months followed by 36 months of extended eligibility but after that, they have to pay the Part A premium in full. Often, people returning to work following a period of coverage by SSDI, work part time so they are ineligible for health insurance or they cannot obtain insurance through their employer or from the private market. This bill would permit them to receive Part A coverage and have coverage they could not otherwise obtain. I join with my colleagues in support of this legislation to help the disabled help themselves.

Mr. MACK

Mr. MACK. Mr. President, today I am introducing legislation to remedy a problem in the way the U.S. taxes the foreign operations of U.S. electric and gas utilities. With the 1992 passage of the National Energy Policy Act, Congress gave a green light to U.S. utilities wishing to do business abroad, lifting a long-standing prohibition. U.S. utilities were allowed to compete for the foreign business opportunities created by the privatization of national utilities and the need for the construction of facilities to meet increased energy demands abroad. Since 1992, U.S. utility companies have made significant investments in utility operations in the United Kingdom, Australia, Eastern Europe, the Far East and South America. These investments in foreign utilities have created domestic jobs in the fields of design, architecture, engineering, construction, and heavy equipment manufacturing. They also allow U.S. utilities an opportunity to diversify and grow. Unfortunately, the Internal Revenue Code penalizes these investments by subjecting them to double-taxation. U.S. companies with foreign operations receive tax credits for a portion of the taxes they pay to foreign countries, to reduce the double-taxation that would otherwise result from the U.S. policy of taxing worldwide income. The size of these foreign tax credits are affected by a number of factors, as U.S. tax laws recalculate the amount of foreign income that is recognized for tax credit purposes. Section 864 of the tax code allocates deductible interest expenses between the U.S. and foreign operations based on the relative book values of assets located in the U.S. and abroad. By ignoring business realities and the peculiar circumstances of U.S. utilities, this allocation rule overtaxes them. Because U.S. utilities were until recently prevented from operating abroad, their foreign plants and equipment have been recently-acquired and consequently have not been much depreciated, in contrast to their domestic assets which are in most cases fully-depreciated. Thus, a disproportionate amount of interest expenses are allocated to foreign income, reducing the foreign income base that is recognized for U.S. tax purposes thus the size of the corresponding foreign tax credits. The allocation rules increase the double-taxation of foreign income by reducing foreign tax credits, thereby increasing domestic taxation. The unfairness of this result is magnified by the fact that the interest expenses--which are the reason the foreign tax credit shrinks--are usually associated with domestically-regulated debt, which is tied to domestic production and is not as fungible as the tax code assumes. The result of this economically-irrational taxation scheme is a very high effective tax rate on certain foreign investment and a loss of U.S. foreign tax credits. Rather than face this double-tax penalty, some U.S. utilities have actually chosen not to invest overseas and others have pulled back from their initial investments. One solution to this problem is found in the legislation that I am introducing today. This remedy is to exempt from the interest allocation rules of Section 864 the debt associated with a U.S. utility's furnishing and sale of electricity or natural gas in the United States. This proposed rule is similar to the rule governing ``non-recourse'' debt, which is not subjected to foreign allocation. In both cases, lenders look to specific cash flows for repayment and specific assets as collateral. These loans are thus distinguishable from the typical risks of general credit lending transactions. The specific cash flow aspect of non-recourse financing is a critical element of the non-recourse debt exception, and logic requires that the same tax treatment should be given to analogous utility debt. Thus, my bill would exempt from allocation to foreign source income the interest on debt incurred in the trade or business of furnishing or selling electricity or natural gas in the United States. The current situation is a very real problem that must be remedied, and I urge my colleagues to support the solution I am proposing. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. MACK

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

Mr. MACK

Mr. MACK. Mr. President, I rise today in support of additional funds to be made available for Air Force Research, Development, Test and Evaluation in the Fiscal Year 2000 Department of Defense Authorization measure to be used to complete development of a state-of-the-art 3 dimensional optical imaging and tracking instrumentation data system. The 3 Data System is a laser radar system that provides high fidelity time, space, positioning information (TSPI) on test articles during flight. The instrumentation can be applied to air, ground, and sea targets. Additionally, it will provide the potential capability for over-the-horizon tracking from an airborne platform or pedestal mounted ground platform. It includes a multi-object tracking capability that will allow simultaneous tracking of up to 20 targets throughout their profile. The system will enable testing of advanced smart weapon systems; force-on-force exercises where multiple aircraft and ground vehicle tracking is involved; over water scoring of large footprint autonomous guided and unguided munitions; and enable an improvement to existing aging radar presently in service. It is mobile and can support testing at other major ranges and locations in support of other Service's requirements. The Air Force has identified the 3-Data System as having high military value as it will enable the effective evaluation of the performance of advanced weapon systems to be utilized in future conflicts. The Air Force has informed me that precision engagement is one of the emerging operational concepts in Joint Vision 2010. The 3- Data system would provide a capability to effectively evaluate the performance of advanced precision guided munitions and smart weapons prior to their use in a wartime environment. It would also directly support ongoing activities abroad through Quick Reaction Tasking that may require a multiple object tracking device to evaluate engagement profiles. This requirement is documented through 46th Test Wing strategic planning initiatives, developmental program test plans, and munitions strategic planning roadmaps. The Air Force is presently attempting to meet this requirement through existing radar systems and optical tracking systems which cannot track multiple objects to the fidelity levels required and which require extensive post-mission data reduction times. This system will provide the capability to effectively track multiple targets simultaneously. Mr. President, I thank the Committee for their willingness to support this amendment. The 3-Data System will play a important role in enabling the Air Force to evaluate the capabilities and limitations of multiple smart weapons and their delivery systems during their develpoment. amendment no. 415 (Purpose: To amend a per purchase dollar limitation of funding assistance for procurement of equipment for the National Guard for drug interdiction and counter-drug activities so as to apply the limitation to each item of equipment procured) In title III, at the end of subtitle D, add the following:

Mr. MACK

Mr. MACK. Mr. President, I rise to introduce the Defense Jobs and Trade Promotion Act of 1999. This bill, cosponsored by Senator Feinstein and 16 of our colleagues, will eliminate a provision of tax law which discriminates against United States exporters of defense products. Other nations have systems of taxation which rely less on corporate income taxes and more on value-added taxes. By rebating the value-added taxes for products that are exported, these nations lower the costs of their exports and provide their companies a competitive advantage that is not based on quality, ingenuity, or resources but rather on tax policy. In an attempt to level the playing field, our tax code allows U.S. companies to establish Foreign Sales Corporations (FSCs) through which U.S.-manufactured products may be exported. A portion of the profits from FSC sales are exempted from corporate income taxes, to mitigate the advantage that other countries give their exporters through value- added tax rebates. But the tax benefits of a FSC are cut in half for defense exporters. This 50% limitation is the result of a compromise enacted 23 years ago as part of the predecessor to the FSC provisions. This compromise was not based on policy considerations, but instead merely split the difference between members who believed that the U.S. defense industry was so dominant in world markets that the foreign tax advantages were inconsequential, and members who believed that all U.S. exporters should be treated equally. Today, U.S. defense manufacturers face intense competition from foreign businesses. With the sharp decline in the defense budget over the past decade, exports of defense products play a prominent role in maintaining a viable U.S. defense industrial base. It makes no sense to allow differences in international tax systems to stand as an obstacle to exports of U.S. defense products. We must level the international playing field for U.S. defense product manufacturers. The fifty percent exclusion for sales of defense products makes even less sense when one considers that the sale of every defense product to a foreign government requires the determination of both the President and the Congress that the sale will strengthen the security of the United States and promote world peace. This is more than a matter of fair treatment for all U.S. exporters. National security is enhanced when our allies use U.S.-manufactured military equipment, because of its compatibility with equipment used by our armed forces. The Department of Defense supports repeal of this provision. In an August 26, 1998 letter, Deputy Secretary of Defense John Hamre wrote Treasury Secretary Rubin about the FSC. Hamre wrote, ``The Department of Defense (DoD) supports extending the full benefits of the FSC exemption to defense exporters * * * [P]utting defense and non-defense companies on the same footing would encourage defense exports that would promote standardization and interoperability of equipment among our allies. It also could result in a decrease in the cost of defense products to the Department of Defense.'' The bill we are introducing today supports the DoD recommendation. It repeals the provision of the Foreign Sales Corporation laws that discriminates against U.S. defense product manufacturers, enhancing both the competitiveness of U.S. companies in world markets and our national security. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. MACK

Mr. MACK. Mr. President, I rise to introduce the Defense Jobs and Trade Promotion Act of 1999. This bill, cosponsored by Senator Feinstein and 16 of our colleagues, will eliminate a provision of tax law which discriminates against United States exporters of defense products. Other nations have systems of taxation which rely less on corporate income taxes and more on value-added taxes. By rebating the value-added taxes for products that are exported, these nations lower the costs of their exports and provide their companies a competitive advantage that is not based on quality, ingenuity, or resources but rather on tax policy. In an attempt to level the playing field, our tax code allows U.S. companies to establish Foreign Sales Corporations (FSCs) through which U.S.-manufactured products may be exported. A portion of the profits from FSC sales are exempted from corporate income taxes, to mitigate the advantage that other countries give their exporters through value- added tax rebates. But the tax benefits of a FSC are cut in half for defense exporters. This 50% limitation is the result of a compromise enacted 23 years ago as part of the predecessor to the FSC provisions. This compromise was not based on policy considerations, but instead merely split the difference between members who believed that the U.S. defense industry was so dominant in world markets that the foreign tax advantages were inconsequential, and members who believed that all U.S. exporters should be treated equally. Today, U.S. defense manufacturers face intense competition from foreign businesses. With the sharp decline in the defense budget over the past decade, exports of defense products play a prominent role in maintaining a viable U.S. defense industrial base. It makes no sense to allow differences in international tax systems to stand as an obstacle to exports of U.S. defense products. We must level the international playing field for U.S. defense product manufacturers. The fifty percent exclusion for sales of defense products makes even less sense when one considers that the sale of every defense product to a foreign government requires the determination of both the President and the Congress that the sale will strengthen the security of the United States and promote world peace. This is more than a matter of fair treatment for all U.S. exporters. National security is enhanced when our allies use U.S.-manufactured military equipment, because of its compatibility with equipment used by our armed forces. The Department of Defense supports repeal of this provision. In an August 26, 1998 letter, Deputy Secretary of Defense John Hamre wrote Treasury Secretary Rubin about the FSC. Hamre wrote, ``The Department of Defense (DoD) supports extending the full benefits of the FSC exemption to defense exporters * * * [P]utting defense and non-defense companies on the same footing would encourage defense exports that would promote standardization and interoperability of equipment among our allies. It also could result in a decrease in the cost of defense products to the Department of Defense.'' The bill we are introducing today supports the DoD recommendation. It repeals the provision of the Foreign Sales Corporation laws that discriminates against U.S. defense product manufacturers, enhancing both the competitiveness of U.S. companies in world markets and our national security. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.