Connie Mack

Mr. MACK

Mr. MACK. Mr. President, I rise to state my views on the elimination of the marriage penalty. Before 1969, the federal income tax treated married couples like partnerships, in which husbands and wives shared their incomes equally. This practice was called income-splitting. It was ended in 1969, creating what is commonly known as the marriage penalty--the extra taxes couples have to pay because they are married rather than single. According to the Congressional Budget Office, about 21 million couples now pay these penalties, which average about $1,400 per couple. This unfair treatment of married couples is fundamentally wrong. The tax code ought to treat married couples no worse than it treats single people. It ought to recognize that marriages are partnerships in which husbands and wives share their incomes equally for the good of their families. Until it does this, the tax code is punishing the most important institution our society has. This amendment is explicitly pro-family. It is a direct way of letting families keep more of their hard-earned money, which can be used for child-care, taking care of a sick parent, education expenses or whatever else the family wants to do with it. It sends a message to the American people that marriage should be a welcome occasion, not just another excuse for higher taxes. Mr. President, I encourage my colleagues to support this amendment to eliminate the marriage penalty.

Mr. MACK

Mr. MACK. Mr. President, I rise today to honor John Gibson and Jacob ``J.J.'' Chestnut, the officers who gave their lives Friday in the line of duty. For Members of the Senate, I would remind them that John Gibson was one of the individuals who was a part of our security detail on our most recent retreat. Yesterday morning, after an early morning run, I stopped by the Capitol where people had placed flowers at the steps, and I talked with a young officer who told me how proud he was of J.J. J.J. was the kind of person who, after 20 years of service in the military, took under his wing the new men and women who were coming into the Capitol Hill Police Force service and to help them on a personal basis, giving them tips about the kinds of things to which they needed to pay attention with their training, the kinds of things they ought to try to accomplish when they are dealing with our constituents when they come into the Capitol. Many times, I am sure, we forget the difficulty of the duty that they have, on the one hand to be trained to the extent to react the way they reacted on Friday, unselfishly, putting themselves in harm's way so that others may survive, but at the same time having the responsibility of treating our constituents, our friends, our neighbors, when they come to the Capitol, with such graciousness. It is a really difficult job, and I just want to express to the members of the Capitol Hill Police Force, all of those who participate in providing security, our deep appreciation for what they do on a day-to-day basis. Each day we come to work, we pass these officers. As the majority leader said, some of them we know by name, others we have become friends with. I particularly remember C.J. Martin over at the Delaware entrance in the Russell Building, how each morning we would discuss some very personal things about our lives, the kinds of common bonds, if you will, that we shared. And so, while I didn't know J.J. Chestnut and John Gibson to the degree that I have known other members of the police force here, I know that they were very special people. Again, listening to that young officer talk about how J.J. would stand at that door, erect in that military stance, with great pride, frankly, in the job that he performed, and the reaction that he had, again, with the people as they came in, we don't take what they do for granted, and we want them to know that we are concerned about them and we are concerned about their families. I had the opportunity on Friday evening to visit the families of J.J. Chestnut and John Gibson and to express to them our deep concern and our love for them, wanting them to know that we cherish their fathers, their husbands, that they mean a great deal to us, that we will do what we can to comfort them, that we won't forget them, that we will remember the families. While the officers are the ones who lost their lives, now it is a tough and difficult time for the families. Each one of us, I know, has had the experience of losing someone close to us and we can feel the pain of the tragedy that took place, and we want those families to know that we have not forgotten them and that we will do what we can over the years to see that they are not forgotten. Friday, in talking with the young sons of ``Gibson,'' as they refer to him, I can only imagine the hurt and pain that those boys 14 and 15 years old must be feeling. I say to all of us, regardless of the role that we play in the Senate or in the House, we are all one big family. In a sense, there are many families within the family. There is the family of officers and the special grief that they must be experiencing today, as they are required to carry out their duties at a moment in which their minds and hearts must be focused on their lost officers and their families. So I ask everyone, if they would, during this day and the next several days, to pray for those families--for comfort, for love, and for hope. Again, I can remember a particular time in which my younger brother passed away. I was so angry about his loss; people would come up to me and say, ``Connie, time will take care, time will heal,'' and I was so angry I said, ``I don't want it to be healed. I don't want time to take care of it. I am angry.'' But I hope that the families, especially the children, will deal with those feelings inside, that they will share those thoughts to get them out so they don't carry around that hurt and that pain. We want them to know that we truly love them, that we will miss their fathers, their husbands, and we will try to make the Senate and House and the Capitol a place in which they can be proud. I yield the floor.

Mr. MACK

Mr. MACK. Mr. President, I rise today to speak on the pending legislation, H.R. 1151, the Credit Union Membership Access Act. My comments will be addressed to the overall bill as well as the individual amendments that have been offered or will be offered. On May 11, 1933, during the 73rd Congress, the Federal Credit Union Act was introduced. I have an interesting connection to this legislation. The Federal Credit Union Act was introduced by Senator Morris Sheppard of Texas. Senator Sheppard was my grandfather. I happen to be standing at the desk that he used while he was in the Senate. The impetus for Federal legislation was the fact that in 1933, commercial banks had little interest in consumer lending. Simply stated, the small borrower was not a desired customer of commercial banks 65 years ago. Additionally, America was a country comprised of very large employers. It made sense for these large groups of individuals with a common bond, to join together to form credit unions to meet their credit needs. So back in the 1930s, when credit unions were formed, credit union members were typically groups of city workers, postal employees, and employees of the telephone company. Over the next 60 years, however, we saw the number of large companies decline, and today, most people work for very small companies. In fact, in my state of Florida, 99% of all businesses have less than 1000 employees. Additionally, 97% of all companies in Florida employ fewer than 100 people. Since 1933, when my grandfather introduced the Federal Credit Union Act, the world has fundamentally changed. The credit unions of today are different from those of times past. I might also add, so are commercial banks. Today, commercial banks aggressively try to entice individuals of all incomes to do business with their financial institutions. They have aggressively reached out to consumers. To make my point, all one has to do is look at the mail you receive and realize how many credit card applications you have received. There is an aggressive outreach on the part of commercial banks to be engaged in lending to the average consumer today. The credit unions of today are different from those of times past. Now there are multibillion-dollar credit unions that in many cases dwarf the size of thousands of commercial banks and thrifts. Some of these multi-billion dollar credit unions have hundreds of employee groups and are located in multiple States. In many of these instances, these large credit unions cannot be differentiated from commercial banks--they offer home equity loans, have large credit card portfolios, loan money to small businesses, offer safe deposit boxes, and sell mutual funds. In fact, a credit union in Alaska even serves as a Federal Reserve depository. Mr. President, Congress has always supported credit unions. I, too, strongly believe there is a role for credit unions. By trying to improve this bill, no one, including me, is attempting to eliminate the credit union charter. Small, community based credit unions are vital to our communities because they provide individuals access to credit. Credit unions have played a very important role in extending credit to people who need financial help. However, in spite of my support of the credit union charter, I remain troubled by several provisions in the Senate Banking Committee passed bill that is before us today. I must admit, the bill we are debating today is far better than the bill the Senate Banking Committee received from the House. With the addition of caps on commercial lending and by including the Department of Treasury's prompt corrective action language, we will be able to ensure the safety and soundness of the healthy Credit Union Share Insurance Fund. I am pleased with this progress, but much more progress must be made if I am to support this bill in the end. My overriding apprehension about the pending legislation deals with the issue of fairness. Most credit unions pay their members higher interest rates on checking and savings accounts and offer lower interest rates on mortgages, student loans, and credit cards than most commercial banks. Credit unions on average, charge lower fees and require lower minimum deposits. There is one simple reason for this capacity of credit unions to pay higher rates and charge lower fees: they are exempt from federal income taxes. This is an unfair competitive advantage. During the Senate Banking Committee's discussion on this bill, the committee adopted a provision that directs the Department of Treasury to conduct a study of the differences between credit unions and other federally insured depository institutions with respect to the enforcement of all financial laws and regulations. Treasury will also compare the impact of all Federal laws, including Federal tax laws, as they are applied to credit unions and other federally insured depository institutions. This study will identify the regulatory and tax advantages credit unions have over banks, and suggest ways Congress can address these differences. This study will be a start, but by no means will it level the playing field. Upon completion of the study, I hope the Senate will hold hearings on how to reduce the inequities which exist among federally insured depository institutions. As I stated earlier, the Senate bill is far better than the House passed bill, but I still have some real concerns regarding provisions in the legislation. Specifically, my primary problem is the inclusion of language similar to the Community Reinvestment Act (CRA). Imposing the same onerous burdens on credit unions would help to level the playing field; however, I do not support the Community Reinvestment Act as it has evolved, and I oppose subjecting credit unions to these requirements. In fact, I would prefer to see the entire Community Reinvestment Act repealed. Because of CRA, banks are now often forced to make unsound and risky loans in economically disadvantaged areas. If they do not make these high risk investments, they are accused of discrimination. I strongly believe that most of these allegations are false. In contrast to banks, credit unions, by their nature, already lend to their members. It is ludicrous to impose CRA on credit unions. Think about it for a moment. Credit unions were established for individuals with a common bond. It makes no sense whatsoever that the institution in which you are a member would turn around and discriminate against you. It just doesn't make sense. In a letter to the National Credit Union Administration (NCUA), I asked several questions as to whether or not there have been any meritorious discrimination complaints against credit unions. In his response, the chairman stated there was no evidence of credit unions being guilty of discriminating against their members. Given the credit union chief regulator's response, I think it makes no sense to impose the burdens of CRA on credit unions. Therefore, I encourage my colleagues to support the amendment of Senator Phil Gramm to delete these onerous provisions from the bill. What looks harmless today will quickly evolve to burdensome, costly, and unnecessary regulations in the future. The same concern with CRA is also addressed by Senator Shelby's amendment to exempt banks with less than $250 million in assets from the Community Reinvestment Act. I strongly support the amendment of Senator Shelby now, just as I did in the Banking Committee's markup. Be assured that exempting small banks from CRA is not about opening the door to allow them to discriminate. Not only is discrimination wrong, it is illegal. Fair lending laws like the Fair Housing Act, the Equal Credit Opportunity Act, and the Home Mortgage Disclosure Act are still the law of the land. I believe these laws protect the American people, and as I mentioned, laws such as CRA are an unnecessary burden on business. My final concern with this legislation deals with the large increase in the number of commercial loans that credit unions are making. I support the Hagel-Bennett amendment because it accomplishes two things. First, it limits the amount credit unions can lend to their members for small commercial ventures, such as agriculture or small business start ups. Again, the reason we are tightening commercial lending is not because we are trying to vent some distrust with respect to how credit unions make their loans. But from my experience, having been in the business of commercial lending for almost 16 years, these are two very complicated and risky areas of lending. As I say, I support the Hagel-Bennett amendment, because it accomplishes two things: Well-managed, well-capitalized credit unions can lend up to 7 percent of their capital; exempts from the 7 percent cap credit unions which were chartered for the purpose of commercial lending. Second, the Hagel-Bennett amendment addresses the manner in which credit unions make commercial loans. Many credit union loan officers are not trained to evaluate commercial loans. The Hagel-Bennett amendment requires credit union employees who make or administer commercial loans to have at least 2 years of experience in the area of commercial lending. This provision is already part of the NCUA's regulations on member business loans, and the Hagel-Bennett amendment merely codifies this regulation. Be aware that much of what I am saying is the result of my experience as a member of the Senate Banking Committee when the Resolution Trust Corporation was established to bail out the savings and loan industry. I believe that if we do not take precautions now, such as those outlined in the Hagel-Bennett amendment, we could be looking at significant losses and exposure to the taxpayers in the future. In closing, I stress my support of the vital role credit unions play in today's financial services marketplace. Do not mistake my desire to improve this legislation with an agenda to end credit unions. I strongly feel that credit unions should exist. There are 268 credit unions in my State of Florida, with just under 3\1/2\ million members. My goal today is to ensure that every credit union is a viable, safe and sound institution, one unburdened by unnecessary regulatory requirements. Mr. President, I cannot support H.R. 1151 in its present form. I hope that my colleagues will support both the Gramm and Hagel-Bennett amendments which ensure the safety and soundness of credit unions. I also urge my colleagues to support the Shelby amendment which will level the playing field between commercial banks and credit unions. Thank you. Mr. President, I yield the floor. I suggest the absence of a quorum.

Mr. MACK

Mr. MACK. Mr. President, southwest Florida is one of the fastest growing areas in the country. Not surprisingly it is also my understanding that RSW is the third fastest growing airport in the United States. Additionally, I am told RSW has experienced an average annual growth of 9.2 percent over the past ten years. Due to this unprecedented growth, RSW has embarked upon a major expansion program which includes construction of a new terminal and runway. This project is one of the State of Florida's most important airport projects and it has received substantial funding from the State. Moreover, the Federal Aviation Administration has provided discretionary funding for this worthy project due, in no small part, to the support of the distinguished Chairman of the Transportation Appropriations Subcommittee, Senator Shelby, and his subcommittee over the past two years through the prior Transportation Appropriations bills. I very much appreciate the support of the Senator for RSW and its expansion project. Additionally, as the Senator may be aware, earlier this year RSW submitted a request for a Letter of Intent to the FAA in order to support their expansion project from the agency. Over the course of the last several years, recognizing the budget constraints which the FAA must operate under, RSW officials have worked hard to significantly reduce the federal share of this project by more than 30 percent. I believe the Chairman of the Subcommittee can appreciate the efforts of RSW, in working with the FAA, to craft a plan which meets the needs of the airport yet substantially cuts costs in an effort to remain within the FAA's anticipated budget constraints. I feel confident this is the type of cooperation from a project which the FAA should consider for priority LOI consideration.

Mr. MACK. I thank my colleague from Alabama for his past commitment and support of the Southwest Florida International Airport (RSW) and look forward to continue working with him in the future. Keep Helicopters Out of Wilderness

Mr. MACK

Mr. MACK. Mr. President, I rise today to recognize and congratulate Katrina Ruiz and Marco Caknesella of Miami, Florida. Katrina and Marco were selected as national finalists in the 1998 Do the Write Thing Challenge Program sponsored by the National Campaign to Stop Violence. The National Campaign to Stop Violence is a coalition of businesses and nonprofit organizations who have joined together in an effort to work with young people to end youth violence in America. Katrina, Marco and hundreds of other middle school students in Miami took part in the Do the Write Thing Challenge Program this year. The Do the Write Thing Challenge Program asks middle school students in 12 cities across the United States to provide a written commitment to reducing violence in their lives by submitting a written answer to the question ``What can I do about the violence in my life?'' It is always a pleasure to hear about programs, like the Do the Write Thing Challenge Program, which encourage young people to begin to think about the ways that they, as individuals, can have an impact upon the problems which confront their community. I am confident that Katrina, Marco and the thousands of other young people across the nation who participated in the program will set a positive example for their peers as they fulfill their written commitment to reduce violence in their own lives. I commend Katrina Ruiz and Marco Caknesella for their selection for this high honor and wish them all the best for their continued success.

Mr. MACK

Mr. MACK. Mr. President, I rise today to again address the ongoing situation in my home state of Florida. As I mentioned earlier this month on the Senate floor, devastating wildfires have ravaged Florida, imp;acting all of our 67 counties since May 24, 1998. Since this crisis began, more than 2,000 separate fires to date have been identified and more than 500,000 acres have been burned. The massive campaign which has been undertaken to contain these fires is encouraging. Firefighters from across the country have been part of this effort. On behalf of the state of Florida and its people, I would like to thank all of the states, communities, and families that have committed resources to these efforts. Today, I join with the Florida Congressional delegation in support of H. Con. Res. 298. This resolution expresses our condolences to the people of the state of Florida who have suffered throughout this ordeal; and commends the important and heroic efforts of the firefighters, as well as the numerous federal, state, and community entities aiding in the struggle to contain and extinguish the fires. I appreciate the work of my Senate colleagues who have enabled us to bring this resolution to the floor quickly. I hope this swift action by Congress will help bring attention to the continuing efforts of government and community leaders, and will help lift the spirits of those closely engaged in this battle. I thank the chair and I yield the floor.

Mr. MACK

Mr. MACK. Madam President, the Chairman of the Committee on Banking, Housing and Urban Affairs is entirely correct. On June 30, 1998, HUD issued three important regulations. For all these regulations, HUD waived the sixty-day comment period. Specifically, these rules would: first, establish requirements relating to physical conditions and inspections and would apply to a wide variety of HUD rental assistance and mortgage insurance programs; second, establish uniform financial reporting standards for HUD housing programs; and third, establish a new Public Housing Assessment System. Despite the enormous impact of these proposed rules, HUD has waived the sixty-day public comment period as provided by HUD's own regulations (24 CFR 10.1), often referred to as ``Part 10.'' Previously, HUD attempted to repeal, as a practical matter, its Part 10 regulations related to notice and comment rulemaking. At that time, members of the Senate joined together in a bipartisan manner to enact legislation to safeguard public notice and comment in HUD's rulemaking process. It is essential that HUD maintain an adequate period of time for the public to review, analyze and comment upon proposed changes in HUD's policies and procedures. Congress established the notice and comment rulemaking procedure in order to allow the public to provide adequate input so as to avoid potential confusion in the development of new rules. Given the importance of the proposed rules at issue, a more extensive period of time for public review and comment is warranted.

Mr. MACK

Mr. MACK. The Chairman is correct. The City of Gainesville has a long history of taking care of its own problems with local resources. In this case the City has already committed resources to the development of this plan and remain commits to a financial partnership. I am pleased, Mr. Chairman, that you agree with me on the importance of this project and are willing to work with Senator Graham and the City of Gainesville to explore a more specific source of funding for this project in the up coming Conference with the other body. It is my understanding that this is correct?

Mr. MACK. Mr. Chairman, I would like to engage in a colloquy with you concerning a very important project in the State of Florida, known as the Sweetwater Branch/Payne's Prairie Stormwater Protection Initiative.

Mr. MACK. Yes, it has. The City has brought together and obtained the support of Alachua County, the St. Johns Water Management District, and the Florida Department of Environmental Protection for the purpose of providing a solution to this problem. The City of Gainesville is to be commended for bringing together so many various interests and impact parties to address this problem. This City needs help. They have devised a preliminary plan with a relatively low cost which could ameliorate and potentially resolve the situation, but because the project is beyond the scope of the City's jurisdiction, it seems to fall between the cracks of any one federal program at this time.

Mr. MACK. Thank you, Mr. Chairman for your consideration. I am confidant that we can work together to provide funding for this project through the Environmental Protection Agency. drinking water state revolving loan fund money

Mr. MACK. Mr. President, I rise in support of the Nickles amendment. At the outset, I want to say to the chairman of the VA-HUD Subcommittee, both to Senator Bond and Senator Mikulski, that I congratulate them for their effort in putting together what is generally a good and balanced HUD appropriations bill. As chairman of the HUD's authorizing subcommittee, I appreciate the difficulty of funding the most important parts of HUD's mission, while also addressing the critical need of the Department to reform its management and operations. I especially appreciate Senator Bond's cooperation in helping ensure the effective implementation of the section 8 ``mark-to-market'' program we enacted last year. However, on the issue of FHA loan limits, Senator Bond and I disagree. I am concerned that the Appropriations Committee did not consider the views of the authorizing committee. This is a major policy change that is being implemented through the appropriations process despite evidence gathered in hearings that would indicate that the change is ill-advised. Last month, the Housing Opportunity and Community Development Subcommittee held two days of oversight hearings on FHA. The Subcommittee heard extensive testimony from HUD, GAO, the HUD Inspector General and outside witnesses on the programs, operations and mission of FHA, and on proposals for reform. I heard little testimony at those hearings that made a compelling case to raise the FHA loan limit. As chairman of the authorizing subcommittee, I would not have recommended an increase in the loan limits. This bill does not contain the Administration's initial proposal for raising the loan limits--a proposal I strongly oppose. However, the proposal contained in the bill does focus attention away from the traditional mission of FHA of serving low- and moderate-income families and first-time home buyers. Further, it covers up some of the fundamental problems in the FHA single-family insurance program that jeopardize its long-term stability. This proposal would result in targeting FHA, in part, to households well above median income, the vast majority of whom are already homeowners. An increase in the maximum mortgage amount would do little to help the households that FHA is intended to serve, namely moderate income families who for one reason or another do not have access to the conventional mortgage market. Mr. President, Senator Nickles, I think, did a good job of arguing his position, and the points that Senator Sarbanes raised is one of the central areas of debate. I would like to focus my attention on some other aspects of FHA. I want to focus the bulk of my comments now on a series of management problems in FHA which should be corrected before FHA expands its program and assumes further risks. At a Housing Subcommittee hearing in May, we heard testimony concerning serious material weaknesses in internal controls, financial systems and resource management that make the Department vulnerable to waste, fraud and mismanagement. Although HUD is in the process of a major management reform program, the ultimate success of that effort is questionable. FHA, with about $400 billion of insurance-in-force and a portfolio of 6.7 million single-family loans, is HUD's largest, most visible--and most vulnerable--program area. Many of the material weaknesses identified and described by the HUD Inspector General, the General Accounting Office and others, involve FHA programs. Further, these problems have been identified in each independent audit of FHA conducted since fiscal year 1991. First, FHA's staffing resources have significantly declined over the past several years. Furthermore, the majority of staffing reductions that have already occurred or are planned under HUD's 2020 Management Reform come out of FHA's single-family operations. FHA's staffing resources have declined during a period where its insured portfolio has continued to increase. In 1992, FHA's staff was about 6,800, but today, its staff is down to around 4,100. This is equivalent to a 40 percent reduction. This raises concerns about the quality of skilled staff that remain at FHA today, since many senior staff have left the Department. Replacing this staff is problematic, since unlike private entities, FHA does not have the authority to hire staff or the ability to quickly invest more resources in automated tools or staff training when its business increase. Second, FHA has serious weaknesses with its accounting and financial management systems. The main problems with its information system is that the systems are not linked and integrated or configured to meet all financial reporting requirements. Also, data quality problems exist in its default monitoring system. Although these problems have been recognized for several years. The HUD Inspector General has found that ``resources needed to develop state-of-the-art systems are lacking'' because of budgetary constraints or the lack of prioritizing these matters. FHA's accounting and financial management systems will also be affected by the so-called ``Year 2000'' or ``Y2K'' problem. FHA has 19 critical systems that OMB has mandated to be Y2K compliant by March 1999. However, only two systems have been programmed to address Y2K, and neither has been certified as Y2K compliant. The GAO recently warned that failure to address the Y2K problem could result in system failures that would interrupt the processing of applications for mortgage insurance and the payment of mortgage insurance claims. Third, data integrity problems with its default monitoring system has affected FHA's ability to effectively monitor the performance of its mortgagees. FHA also lacks an effective underwriting system that can predict which borrowers pose the greatest risk. Identifying and managing risk is absolutely critical to the long-term soundness of FHA. While FHA's single-family insurance fund currently exceeds its capital reserve requirement, there have been recent indications of potential problems in the FHA program. If these problems are not corrected, then FHA faces financial instability. For example, FHA defaults are serveral times higher than either the VA or the conventional mortgage market. During fiscal year 1997 claim payments for FHA-insured loans, especially for adjustable rate mortgages, were far higher than expected. The inventory of single-family properties owned by HUD increased by about 30 percent to more than 30,000. We have also heard and seen evidence that the geographic concentration of mortgage defaults, and FHA's inability to manage and monitor its portfolio, have damaged neighborhoods and permitted families to purchase homes that are either substandard or unafforable. In addition, Fannie Mae and Freddie Mac have recently introduced lower down payment mortgage products that may attract some of FHA's lower-risk borrowers, leaving FHA with more of the high-risk market. There is no denying that the FHA single-family insurance program has been a success. More than 24 million households have used FHA since its creation in 1934. FHA has traditionally been a preferred tool for homeownership by young families and first-time homebuyers and by lower income and minority households who for many reasons have not been served well by the conventional marketplace. And, thanks to reforms begun under Secretary Jack Kemp, FHA has made significant strides toward financial stability. I have a strong interest in ensuring that FHA take all of the necessary steps to ensure that it continues to serve the people and communities the program is intended to serve and will ultimately make the program more financially stable. However,I question whether it is prudent for any business, let alone one ultimately subsidized by the taxpayer, to expand its operations while attempting to deal with serious management problems. And on the basis of this concern alone, an increase in FHA loan limits would not be prudent. Mr. President, I yield the floor. Mrs. BOXER, Mr. President, I take the floor to stand in opposition to the amendment that would strike the raise in the ceiling on the Federal Housing Administration loan limit. I believe the raise in the ceiling is critical for high cost real estate market areas, and I urge my colleagues to vote no on this amendment. This bill raises the ceiling on FHA loans from 75 percent of the Freddie Mac conforming loan limit, which is about $170,000, to 87 percent of the conforming loan limit, or about $197,000. This is particularly good for my state, where the cost of housing is so high, especially in Los Angeles and San Francisco. FHA loans encourages lenders to make mortgage credit available in areas and to borrowers who may not otherwise qualify for conventional loans on affordable terms, such as first-time home buyers. Raising the loan limit will help those who have not been able to get conventional loans because of small credit blemishes or a lack of a large cash downpayment. These are the gaps in homeownership that FHA now fills, across income levels, and home prices. This is a modest proposal, and one that helps consumers residing in high-cost areas of the country who are currently locked out of housing because the FHA maximum of $170,362 is less than the average cost of housing. The cost of housing is so high in the Bay Area, that Bridge Housing Corporation rarely uses FHA. Carol Galante, the president of Bridge, one of the largest non-profit housing developers in the country, says she rarely can use FHA insurance because the loan limits are so far below the median home price for Northern California. Raising the FHA loan limit will enable FHA to reach more borrowers and more communities which are not currently being served by the private mortgage industry. The raise in the FHA loan limit as provided for in this bill will help between 125,000 and 175,000 worthy American families, including 16,500 to 23,100 California families, to have access to homeownership over the next 5 years. In the 15 highest cost U.S. housing markets, the homeownership rate is only 58%. That is more than 7 percentage points below the national average, and in these markets, FHA is the only credit program not available to moderate-income households. Thus, in places like New York, Boston, Los Angeles, and San Francisco, over 7% of families are systematically denied access to homeownership. This increase in the loan limit will allow 18 counties in California to raise their loan limits. The increase in the loan limit will generate revenues of about $80 million a year. FHA has never called upon the taxpayers for a bailout, and certainly will not under this proposal. Ms. MIKULSKI addressed the Chair.

Mr. MACK

Mr. MACK. I would like to join my colleagues in agreement that appropriate action to meet the needs of farmers in disaster-stricken areas throughout the nation should be taken in conference. wildlife services division of APHIS aerial safety study

Mr. MACK

Mr. MACK. Mr. President, I rise to introduce the Defense Jobs and Trade Promotion Act of 1998. This bill 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 22 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 bill I am introducing today will repeal 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 1998. This bill 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 22 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 bill I am introducing today will repeal 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 today to make a few remarks on the extraordinary efforts which are currently taking place in my home state of Florida. For over a month now, as I am sure we are all well aware, devastating wildfires have ravaged Florida, impacting all of our 67 counties. Since this crisis began, more than 2,000 separate fires to date have been identified and more than 500,000 acres of state and federal land have been burned. While these facts are certainly overwhelming, I think it is important that we take a moment to recognize the heroic campaign which has been undertaken to contain these fires. Last week I had the opportunity to tour the fire ravaged area of Volusia County, and I met with firefighters and emergency officials on the front line of what has been a constant battle. I was simply overwhelmed by the determination of these men and women who have undertaken the challenge of extinguishing these fires. These brave individuals are working 16 to 18 hours a day in extreme temperatures and the harshest of conditions. Tragically, these fires have consumed over 367 homes and 33 businesses. It is, however, thanks to the efforts of these individuals that losses have remained at this level. These dedicated professionals, who have put their lives on the line fighting the wildfires, represent the tremendous support which Florida has received by our fellow Americans. Not since Hurricane Andrew in 1992 have we seen an outpouring of human kindness and supplies from around the country to help Florida fight a natural disaster of this magnitude. It is disasters like this which bring the American people together and makes our country one giant community. To date, 44 states, from as far away as California and Alaska, are involved in this effort. Through an outstanding coordinated effort on the part of local, state and federal agencies, countless numbers of people are working behind the scenes, including the Red Cross, the Salvation Army and private citizens. I have remained in close contact with state and federal emergency officials, and I am confident all that can be done is being done. What Florida really needs is rain. While the situation still remains quite volatile, the weather patterns do offer some hope and relief to the devastated areas. Over the past few days several rainstorms have offered some relief, however much more is still needed to completely extinguish the fires. I know all of my colleagues join me in letting the firefighters, emergency officials and residents battling these fires know they are in our thoughts and prayers as they continue the fight to extinguish these fires.

Mr. MACK

Mr. MACK. Mr. President, I want to make some brief comments to commend the work of Senator Specter with regard to the inclusion of language in the bill to improve public safety on college and university campuses. I am an original cosponsor of the legislation Senator Specter introduced on May 20, 1998, the Campus Crime Disclosure Act. My involvement in this important legislation began earlier this year, when I met with the Clery family of Palm City, Florida. Their personal tragedy, whereby Howard and Connie Clery's daughter Jeanne was brutally murdered in her college dormitory in 1998 at Lehigh University, saddened me. Since her death, her family has kept her memory alive by working to provide parents and students with more and better information about crimes occurring on college campuses. The result is the important changes to federal law which we are considering here today. These changes include a modification to the Department of Education's definition of a ``college campus''. This definition will now include sidewalks and other areas adjacent to schools but not owned by the school. The Department had previously interpreted the term ``campus'' to exclude these areas. I, like Senator Specter, believe this is an incorrect interpretation. The result was that schools were not reporting crimes that had taken place on a sidewalk used by students to get to class. This legislation will correct that problem. Furthermore, the legislation sets up a stronger but flexible enforcement mechanism which provides that the Department can fine schools that are not complying with federal reporting laws dealing with campus security. Congress has given the Secretary of Education enforcement discretion when a school is found to be in non-compliance after a public hearing is conducted. Mr. President, I am pleased that we are taking these important steps to ensure safer campuses for college students. I appreciate the fine work of the Chairman, Mr. Jeffords, in including these important provisions. I commend the work of the Clery's in increasing the public's awareness about campus crime, although I realize that this day must be bitter-sweet. I look forward to continuing to work with them in the future.

Mr. MACK

Mr. MACK. Mr. President, first I commend Finance Committee Chairman Roth, and my Finance Committee colleagues Senator Kerrey of Nebraska and Senator Grassley, for their invaluable contributions to this important step in cleaning up the IRS. The IRS reform bill that we are about to pass would never have seen the light of day were it not for the efforts of the IRS restructuring commission and the determined leadership of Chairman Roth, who presided over the first meaningful IRS oversight hearings that this body has had in decades. The IRS reform bill is a landmark achievement, a shot across the bow to the IRS letting them know that ``business as usual'' will no longer be tolerated. But this bill--although it contains the largest assortment of taxpayer rights ever enacted into law, and reforms the IRS with such important innovations as the new Treasury Inspector General for Tax Administration--is only the first step in a continuing process to curb the abuses of the IRS. More important than the new taxpayer rights, more important than the procedural and structural reforms, is the process that we used to fashion this bill. Simply stated, the oversight power of the Congress is the single most powerful tool that we have to root out the abuses and injustices that have become ingrained in the corrupted culture of the IRS. I strongly support the concept of regular oversight hearings of the full Finance Committee to make sure that past mistakes are corrected, that past misconduct is punished, and that the attitude and modus operandi at the IRS are changed permanently. The corrupt culture of the IRS can change only if the old regime at the IRS is completely swept away. I am encouraged by the recent announcement of a high-level resignation at the Service, in an office which seemed to be a black hole for disciplinary investigations completed against IRS officials. But one change in office is not enough. Our oversight hearings exposed a rogue agency that was literally out of control. We heard testimony that armed agents use SWAT-team tactics to raid businesses, that IRS officials callously ignored the life-threatening health problems of a taxpayer, that a sexual harasser was promoted to be national director of Equal Employment Opportunity, and that statistics of property seizures were used to evaluate the performance of IRS employees. Most incredible but all-too-believable was the story of one of my constituents, an IRS employee who blew the whistle on a renegade special agent with a drinking and substance abuse problem. This renegade agent had fabricated allegations of political corruption against several public officials, including the former Majority Leader of this body. This renegade was protected instead of punished by his supervisors, and the IRS employees with the courage and public spirit to report the misconduct ended up being the targets of retaliation. In this instance, as in most of the horror stories brought before the Finance Committee, the misconduct could not have occurred without the encouragement or acquiescence of IRS management. Yet, we were told that one of the IRS managers responsible for this cover-up and retaliation was still on the job. Congress cannot let up on the IRS. We must follow through on the misconduct exposed by the bright spotlight of our oversight hearings. I am calling on Commissioner Rossotti to testify again before the Finance Committee, prior to the end of this legislative session, to bring us up to date on the disciplinary actions taken as a result of our hearings. Has the member of IRS management who covered up the scheme to frame Senator Howard Baker been fired? Have the IRS employees responsible for the abuses of power recounted to the Finance Committee been identified and terminated? Have the members of IRS management who condoned such behavior, or who ignored it through complete incompetence, been found and disciplined? We cannot fall into the trap of thinking that things are fixed at the IRS just because this reform bill will soon become law. The Senate has an obligation to continue its vigilance over the actions of the IRS, to follow through on the abuses that have been exposed and root out those that perpetuate. Experience has shown conclusively that the IRS cannot be trusted to police itself. This IRS reform bill is a step in the right direction. The comprehensive taxpayer bill of rights section is of the most value to taxpayers, although it is my belief that these provisions could have gone further to strengthen the rights of our taxpayers. Unfortunately, under our rules, overly aggressive and abusive IRS collections activity is apparently built into the budget baseline, and can only be redressed by raising new taxes as an offset. Any system that requires us to raise taxes to replace money that the IRS picks from the pockets of our taxpayers is a system that is broken and needs fixing. I am particularly pleased that the provisions of my Taxpayer Confidentiality Act are included in the conference report. These provisions afford uniform confidentiality protection to taxpayers for the tax advice they receive from federally authorized tax practitioners in noncriminal matters before the IRS and during subsequent court proceedings. Under current law, communications between taxpayers and lawyers concerning tax advice can often be protected from disclosure to the IRS by the common law attorney-client privilege, but communications with other federally-authorized tax practitioners--certified public accountants, enrolled agents, enrolled actuaries, and attorneys providing advice in the role of a tax practitioner--are not protected. The new tax practitioner-client privilege eliminates this unfair penalty imposed on taxpayers based on their choice of tax advisor. I am concerned, though, about an amendment to this provision that was inserted at the 11th hour while the bill was in conference. The amendment was meant to target written promotional and solicitation materials used by the peddlers of corporate tax shelters, but appears to me to be vague and unfortunately employs an ambiguous definition of tax shelter that some argue could be read to include all tax planning. I discussed the problems inherent in this last-minute attempt to create an exception for the marketing of corporate tax shelters in meetings and discussions with the Majority Leader, Chairman Roth, their counterparts in the House, and the Speaker. It was agreed that the language would be clarified to alleviate these concerns and ensure that the amendment does not cover routine tax advice and normal tax planning designed to minimize a corporation's federal tax liability. The language of the conference report, however, could be interpreted in a manner which does not fully reflect our understanding and thus undermines the intended benefit to taxpayers. Our oversight hearings have given us ample reason not to trust the IRS to interpret this exception to the new privilege in a narrow manner. Nor can taxpayers rely on timely clarification through judicial interpretations, as these will be many years in the making. This is an item we will have to address at the soonest possible instance, in the next tax bill. One excuse we often hear from apologists for the IRS is that our tax laws are too complicated, and that this is the source of the tensions between taxpayers and the Service. I cannot accept this as the reason why armed raids are conducted on the homes and businesses of peaceful citizens, or why laws and internal IRS rules are broken with gusto and impunity. But it is true that the complexity of the code is a drain on the resources of our taxpayers, and is one of the reasons I support tax reform. In this regard, it is a big relief to all taxpayers, big and small, young and old, that the provisions of my Capital Gains Simplification Act have been incorporated in the IRS reform bill. Restoring the 12-month holding period for long-term capital gains will dramatically reduce tax compliance costs, lessen the punitive lock-in effect on capital, and yield additional federal revenues in the first 2 years. There is one final point I would like to make concerning the IRS reform bill, as one of the primary advocates of the Sense of the Senate Resolution and the moratorium on Notice 98-11 regulations. Notice 98- 35, issued by Treasury to announce its intention to withdraw the proposed and temporary regulations issued under Notice 98-11, has raised some concern for high-tech industries. For instance, Notice 98- 35 does not make clear the grandfather rules for licenses--it is important that this be clarified, as the income of many high tech businesses comes from royalties tied to licensing agreements. Also, the asset test described in Notice 98-35 may put high tech businesses at a disadvantage--as the assets of high tech business consists mainly of intangible assets, which the Notice does not adequately take into account. It is my hope that the Treasury Department will clarify these and other issues unique to high tech businesses. Mr. President, final passage of the IRS reform bill is an important step in the on-going process of reining in the IRS. Let no defender of the status quo at the Service be mistaken on this point: This is the beginning, not the end, of our reform efforts.

Mr. MACK

Mr. MACK. Mr. President, there is much discussion in the news about the slow progress of the Middle East Peace Process. Unfortunately, much of the criticism is pointed at Israel's Prime Minister Benyamin Netanyahu. I was pleased to read, however, the Jerusalem Post's editorial of July 6 titled ``The Missing Summit'' which correctly identifies Arafat's failure to revise the PLO Covenant as a major obstacle to peace. The editorial reads as follows: The summer heat tends to slow everything down, even diplomacy. In the absence of real movement in the peace process, talk of summits is proliferating. Prime Minister Binyamin Netanyahu has unsuccessfully pushed for a ``Madrid 2'' international conference, France and Egypt have a proposal, and yesterday Egyptian President Hosni Mubarak, Jordan's King Hussein, and Palestinian Authority Chairman Yasser Arafat met in Cairo. However, the only summit missing is the one that is most necessary--between Netanyahu and Arafat. When Mubarak, Hussein, and Arafat last met in September, they could hardly have expected that by now there would still be no deal on the much-anticipated second redeployment. Much of the blame for delay has fallen on Netanyahu's doorstep, and indeed Netanyahu seems to be a master at drawing matters out. Next to Arafat, however, Netanyahu's delaying skills seem almost amateur. In the current stalemate, one of the main issues in contention is Israel's demand that the Palestinians amend the PLO Covenant to erase its multiple calls for Israel's destruction. Arafat's promise to do so is as old as the Oslo process itself. The Oslo era officially began with an exchange of letters between prime minister Yitzhak Rabin and Arafat, days before the signing of the Declaration of Principles on the White House lawn. Arafat's September 9, 1993 letter to Rabin states the Covenant's denials of Israel's right to exist ``are now inoperative'' and that he pledges to ``submit to the Palestinian National Council for formal approval the necessary changes in regard to the Palestinian Covenant.'' At that time, amending the Covenant seemed imminent. It is now almost six years later, and Arafat's commitment is yet to be implemented. In April 1996, the Peres government attempted to negotiate a formula to resolve the issue, but the resolution actually passed by the PNC again made no specific amendment to the Covenant. Then in January 1997, as part of the Hebron Accords, Arafat again committed to ``complete the process'' of amending the Covenant. Since then, Arafat has sent letters to President Bill Clinton and Prime Minister Tony Blair retroactively listing the articles of the Covenant that were supposedly canceled by the 1996 PNC resolution. But this, too, can only be taken as a statement of intentions, since the Covenant states that it can only be amended by a two-thirds vote of the PNC, and numerous PLO officials have stated that it has been ``frozen,'' not amended. Now Netanyahu is seen to be delaying matters by demanding that the Palestinians finally carry out a commitment that is a foundation stone of the entire process. Since the beginning of the Oslo process, Israel has-- despite fits and starts, internal division, and even the assassination of the prime minister--demonstrated its commitment to the process by transferring territorial control to the Palestinians. Even under Netanyahu, this process continued with the redeployment in Hebron, and now a major further redeployment is on the table. In this context, it is not unreasonable to characterize the situation as Netanyahu did to the diplomatic corps on Friday: ``The issue is not what Israel is prepared to give--it is prepared to give considerably--but it is the Palestinians' unwillingness to give anything of substance.'' In the Gaza Strip on Friday, the Palestinian Police cut off Israeli settlements after the IDF refused passage on an Israeli security road to a convoy led by a Palestinian minister. The standoff, which could have broken out into a full-fledged shooting war, was a reminder of how dangerous the current situation is. But the lesson is not just that Israel has an interest in resolving the existing impasse, but that the Palestinians do as well. Now that Clinton has returned from China and the end of the Knesset summer session approaches, the fate of the redeployment package will be determined. So far, the United States has not rejected Israel's concerns regarding the package on the table, but it has not subjected the Palestinians to the same public pressure that Israel has been under. The sticking point is no longer the size of the redeployment, since creative solutions can be found for the territory surrounding the Israeli settlements that will be isolated by the withdrawal. The more significant question is whether Arafat will be pressed to deliver something much less tangible than what Israel is delivering, but no less necessary for the ultimate success of the peace process. Amending the Covenant is such a fundamental building block, as is an end to the long boycott by Arafat of direct negotiations with Netanyahu. Mr. President, the Palestinian Authority has promised since 1993 to change the PLO Covenant so that the Israeli people can be confident in the Palestinian regime's acceptance of the existence of the State of Israel. To this day, this most basic and vital action has not been done. As the Jerusalem Post correctly points out, the U.S. Government has ``. . . not subjected the Palestinians to the same public pressure that Israel has been under.'' The Palestinian Authority must formally and officially amend the Covenant. Until they do so, United States influence should be focused on this failed Palestinian promise.

Mr. MACK

Mr. MACK. Mr. President, in the last two appropriations acts, the Congress provided enhanced section 8 tenant-based subsidies to low- income residents of certain multifamily housing properties whose owners have elected to prepay their FHA-insured mortgages. These enhanced vouchers were provided to protect residents from displacement from their homes. I understand, however, that the Department of Housing and Urban Development (HUD) has interpreted the appropriations language so that previously assisted residents would pay an amount based on the same amount of rent on the date of prepayment regardless of a change in their adjusted income. In other words, HUD would require previously assisted residents to no longer base their rent contribution as a percentage of income. This policy interpretation will likely force a section 8 assisted resident to pay a higher percentage of their income in rent if their income decreased and potentially result in displacement. Mr. President, HUD's interpretation seems contrary to the intent of the appropriations language and the statutory requirements under section 8 or other rental assistance programs. I would like to ask the Chairman of the VA, HUD Appropriations Subcommittee if HUD has correctly interpreted the intent of the appropriations language.

Mr. MACK. I appreciate the Senator's response and his leadership in protecting low-income families. exception rents for rural areas

Mr. MACK. I thank my colleague for his assistance.

Mr. MACK. I thank my colleague from Iowa for raising this issue. The five percent waiver is a national limit, and the Secretary should exercise his authority in waiving this limitation for areas such as the upper Midwest.

Mr. MACK. Mr. President, the ``mark-to-market'' program that was enacted last year in the VA/HUD appropriations act was expected to be implemented by late October of this year. While I applaud the efforts of the Secretary of Housing and Urban Development (HUD) in preparing the implementation of the law, I am still concerned about its progress and ability to meet the October deadline. I am concerned about the President's failure after 9 months to nominate a Director of the Office of Multifamily Housing Assisted Restructuring and that interim regulations have not yet been published. I, however, would like to focus on the fact that HUD has not begun the process for selecting participating administrative entities (PAE). Without them, the program will not work. In the original mark-to-market legislation that passed the Senate as part of the Balanced Budget Act of 1997, State and local housing finance agencies (HFA) that had qualified under the mark-to-market demonstration and FHA risk-sharing programs would automatically qualify as PAEs. The Banking Committee felt strongly that HFAs not only were the best entities to administer mark-to-market, but it also had concerns about HUD's ability to select qualified entities in a timely and objective manner.