John McCain

Mr. McCAIN

Mr. McCAIN. Will the Senator from Kentucky yield again for a question?

Mr. McCAIN. Will the Senator yield for a question?

Mr. McCAIN. According to the parliamentary exchange that I heard between you and the President, the Senator from Utah still can offer an amendment; is that correct?

Mr. McCAIN. I thank the Senator for his response.

Mr. McCAIN. I want to tell the Senator that the Senator from Montana and the Senator from Utah and I and the Senator from Wisconsin are in agreement that an amendment by Senator Bennett and Senator Conrad would be in order, unless the Senator from Wisconsin has additional comments about the pending amendment, but that it is also proper and appropriate to continue the debate until finished on the pending amendment and that, of course, we would like to make sure that any unanimous consent agreement we are in agreement with. I hope the Democratic leader would also agree with that approach to the pending business because I am not in any way in disagreement with the view of the Senator from Kentucky that we need to move forward with the process.

Mr. McCAIN. Reserving the right to object----

Mr. McCAIN. By the brains?

Mr. McCAIN. Mr. President, I reserve the right to object. I will not object. I think it is important that we move forward. I think there are Senators on the floor who want to propose amendments and who want to debate. I want to say--perhaps this is the only time in this entire debate the Senator from Kentucky and I are in total agreement--that we should allow an amendment by Senator Bennett and Senator Burns, even if I am not in agreement with that amendment. I think it is very destructive of the entire proposition with which we began this debate, and that is that we would allow amendments and votes. I do not object.

Mr. McCAIN. Reserving the right to object.

Mr. McCAIN. Could I prevail one more time on the Senator from Kentucky to yield for a question?

Mr. McCAIN. Mr. President, I regret that I cannot support this amendment at this time. I want to make it clear why. The amendment would essentially restore all of the provisions of S. 26, which is the original McCain-Feingold legislation to this bill. I still support those provisions and strongly believe that most, if not all, should be enacted into law. Now is not the time to do so. My good friend, Russ Feingold, and I spent much time debating as to how we could move forward on the subject of campaign finance reform. We, along with many others who have supported this effort for many years, came to the conclusion that some reform is better than no reform. Unfortunately, if this amendment is adopted, a political point will be made, but reform will be doomed, and the sponsors of this present amendment are very well aware of that. We all know there are 52 votes for S. 26. We all know that. We went through a long period of debate and amending. We know there are 52 votes. Tell me where the additional 8 votes are for S. 26, and I will be the first to sign on and support this. I ask my dear friends who just propounded what is basically McCain- Feingold, where are the votes? I think the answer is obvious. What we have tried to do in proposing a ban on soft money and a codification of that is to start a process which has succeeded in this great deliberative body over many years with amendments and disposal of amendments, up or down, and improving the bill but letting the Senate work its will. We have already picked up one additional vote. I am told there are other Members on this side of the aisle who are considering supporting this legislation. But it is also clear that those same people who are leaning towards supporting would not vote for S. 26 in its entirety because of their strongly held--although I don't agree, I respect their views--view that the independent campaign aspect of the original McCain-Feingold has constitutional difficulties associated with it. We know the facts. We need 60 votes to prevail, and 52, while a majority, is not enough and will not be until the rules of the Senate are changed where 51 votes are necessary for passage. For some time, I hoped that my colleagues who oppose reform would allow a majority in both bodies to prevail and do what the vast majority of the American public desires. But the opponents of reform, defenders of the status quo, won't cede their rights. I have learned from previous debates on other matters not to let the perfect be the enemy of the good. The bill before the Senate represents a modest step but a very important step forward. I want to emphasize that point again. If we can pass the underlying bill, we will have made an extremely important and vitally needed step forward. There is no observer of this issue of campaign finance reform who does not disagree that banning of soft money would have an important and salutary effect on the evils and ills of the present campaign finance system. There is no objective observer, whether they are for or against campaign finance reform, who would deny that the single act about allowing soft money would have a significant effect on the present system. Do I personally desire that a more comprehensive bill be passed into law? Yes. In my 16 years in the Congress, I have learned to be a realist. Simply put, if this amendment is accepted, campaign finance reform will be dead. There will be no reform this year and most likely next year. During that period, I am sure that more loopholes in the current system will be found and exploited. Public cynicism will have grown and, unfortunately, nothing will have changed except the same political points will have been made once again and, undoubtedly, more and more money will be awash in our political process. The New York Times had it right on 14 October. Let me quote: An important but little-noticed boost was given to campaign finance reform in the Senate this week. Sam Brownback of Kansas became the eighth Republican to break with his party's leadership and support the McCain-Feingold soft-money ban, scheduled for debate today. There are now 53 votes to choke off a Republican-led filibuster and pass the bill, only seven votes short of what is needed. The pressure is mounting on other Republicans to support reform. But amid these favorable developments, a move by Robert Torricelli and some other Democratic supporters of reform could undercut the cause. The risk is posed by a Democratic attempt to block Senators John McCain and Russell Feingold from advancing a stripped- down version of their reform legislation. The new McCain- Feingold bill would omit a section preventing independent groups from raising unlimited money for sham campaign ads two months before an election. Some Republicans say that because that section threatens free speech, they cannot go along with the central objective of reform, which is to ban unlimited donations to campaigns waged by political parties. Shrinking the bill to a simple soft-money ban for parties has paid off. Senator Brownback is on board and other Senate Republicans may follow. Mr. Torricelli and the Democratic Senate leader, Tom Daschle, are nonetheless determined today to scrap the new McCain-Feingold bill and substitute the original bill, with the limits on independent groups. This is a serious tactical mistake that raises questions about the Democrats' commitment to campaign finance reform. They ought to know that the bill they are pushing does not have the votes to break a filibuster, whereas the revised McCain-Feingold bill has a chance of getting them. It would be especially grievous if their move played into the destructive tactics of Senator Mitch McConnell of Kentucky and other Republican foes of reform. Mr. McConnell might even try to deliver enough votes for the Democratic move, allowing it to pass because in the end the bill in that form will surely die. Some Democrats, noting that the House passed its broader Shays-Meehan reform last month, warn that a narrower bill in the Senate will not survive either. But Mr. Brownback's courageous move makes it worth a try. Mr. President, I think the New York Times has it right. I think we should determine that this would be viewed by many as a cynical ploy which would assure the failure of campaign finance reform. I believe we need to vote down this amendment, return to what has given those who have been laboring on this issue for many years, some optimism, and to go back to a process where there are amendments on the specific issues. If we correctly debate and amend this issue, each one of those provisions of the original provisions of McCain-Feingold will be brought up for consideration, voted, and the body will work its will. It is abundantly clear that if this amendment is adopted, it is the end of campaign finance reform. Have no doubt about the effect of this amendment. No one should have any doubt about the effect of this amendment. I hope that is well understood by Americans all over this country who have committed themselves, people such as ``Granny D,'' who yesterday visited with me and Senator Feingold. She has walked across this country. People have committed themselves to reforming this system. People such as her all over America deserve better than what is being done with this amendment. I yield the floor.

Mr. McCAIN. If an amendment in the nature of a substitute were to be offered, how many votes would be needed to affirmatively adopt the amendment?

Mr. McCAIN. I am asking, if an amendment in the nature of a substitute----

Mr. McCAIN. Mr. President, I thank the Senator from Maine. She has been a stalwart and steadfast advocate, ally, and friend in this very difficult effort. I know that not only the people of Maine but the people of Arizona are very appreciative of everything she has done in this effort. She lends credibility and grace to the debate. I thank her very much for everything she has done. I want to talk for a few minutes about an organization called the Committee for Economic Development. It is an independent research and policy organization of some 250 business leaders and educators. It is nonprofit, nonpartisan, and nonpolitical. The interesting thing about the Committee for Economic Development is that they are composed preliminarily of business leaders in America, mainly from major corporations, some smaller, and many educators. It has an incredibly illustrious membership. This organization took a very bold step not too long ago; that is, a group of chief executive officers of major corporations decided they would stand up and reject soft money contributions to American political campaigns, whether they be Republican or Democrat. I am sure that was not an easy decision on their part. I am sure there have been significant pressures brought to bear against many of them as individuals and as corporations. They issued a very interesting statement by the Research and Policy Committee, the Committee for Economic Development. It is entitled, ``Investing in the People's Business: A Business Proposal for Campaign Finance Reform.'' Chapter IV is entitled: ``Recommendations for Reform.'' It says, Our recommendations are also informed by our belief in certain basic principles that should govern a system of campaign finance regulation. The five principles listed below reflect the objectives we regard as most important, which should form the basis for evaluating regulatory reform proposals. (1) Regulation should protect free speech and promote an informed citizenry. The First Amendment and the principles it embodies guarantee freedom of speech and expression and thus protect the cornerstone of our political system: full and robust political debate. The courts have acknowledged the link between political finance and the First Amendment in ruling that the financing of political expression is a protected form of political speech under the First Amendment. Campaign finance laws must recognize these constitutional considerations and uphold the principles of free speech. It is especially important to protect and promote the political speech that takes place in election campaigns, the purpose of which is to provide American citizens with the knowledge needed to make informed decisions on Election Day. (2) Regulation should protect the political system from corruption or the appearance of corruption. The regulations governing campaign finance should promote public confidence in the political process and ensure that the integrity of the electoral system is maintained. It is therefore essential that the system guard against corruption or the appearance of corruption in the financing of political campaigns. A system of political finance that fulfills this objective helps to ensure that elected officials are responsive to broad public interests and the desires of their constituencies. (3) Regulation should ensure public accountability. A goal of the campaign finance system should be full transparency of the funding of campaigns for public office, supported by the public's right to know. Elections allow citizen to hold candidates and elected officials accountable for their views and actions. If the major participants in political campaigns are to be held accountable, the public must have full and timely information about their campaigns. I might add, Mr. President, one of the first amendments I proposed yesterday, which was adopted, concerned full and complete disclosure and using the Internet as part of that capability to do so. Any system of campaign finance must therefore ensure full public disclosure of the sources of campaign funding, the activities undertaken with it, and the amounts raised and spent. Disclosure not only provides the electorate with the information it needs but also helps curtail excesses and promote full public scrutiny of financial transactions. (4) Regulation should encourage public participation in the political system. The strength of a democracy depends upon the political participation of its citizens. Citizens should be encouraged not only to vote but to participate in the process in other ways. Campaign finance rules should not discourage citizens from seeking elective office, associating with others, volunteering their skills and time, or participating in the financing of campaigns. Such participation enhances the legitimacy of the representative process and thereby strengthens popular support for the political system. (5) Regulation should promote electoral competition. The essence of democracy lies in competitive elections that offer voters a choice of candidates. Competition stimulates public interest in election campaigns, induces greater numbers of citizens to learn about the candidates, gives more meaning to elections, and encourages people to vote. It is an essential element in promoting the vitality and quality of political life. The regulation of campaign funding should therefore promote competitive elections by ensuring that candidates have an opportunity to obtain the resources needed to share their views with voters. Mr. President, one reason I quote that is I think it is a very important statement as to what our goals should be in political campaigns. It lays out the basis for the first recommendation of the Committee for Economic Development. Their first recommendation is eliminate soft money. We believe that, as a general principle, funds used to promote political candidacies should be subject to the requirements and restrictions of federal law on campaign finance. Soft money is the most egregious example of campaign financing that violates this principle. No reform is more urgently needed than the elimination of soft money. Some business leaders have already taken action to help remedy this problem by refusing to participate in the soft money system. Most businesses in America do not give unregulated soft money funds to the political parties. Others, including such industry leaders as General Motors, AlliedSignal, and Monsanto, have recently declared that they will no longer make such contributions. They have been joined by dozens of corporate executives, who recognize the dangers to our system of government created by this type of fundraising.\49\ CED supports these voluntary efforts to reduce soft money and lauds the leadership shown by these members of the business community. We urge other business leaders, labor unions, and individual citizens to follow this lead and voluntarily work to reduce the supply of soft money funds. There are ample opportunities for members of the business community to express their support for candidates or party organizations, either as individuals or through PACs. We encourage participation in the process in these ways. But there is no need for members of the business community, labor unions, or others to supplement these opportunities with soft money contributions. Participation in the soft money practices of the national party committees fuels the demand for soft dollars and spurs the arms race mentality that now characterizes party fundraising at the national level. Voluntary efforts alone, however, will not solve the soft money problem. Potential donors will still face pressure from elected officials and national party leaders to make soft money contributions. We therefore believe that a legislative remedy is needed to end soft money. Specifically, we recommend that Congress prohibit national party committees, their officers or staff, and any organizations or entities established or controlled by national party committees or their personnel, from soliciting, receiving, or directing any contributions, donations, or transfers of funds that are not subject to the limitations, prohibitions, and public disclosure requirements of federal law. These committees and individuals should also be prohibited from spending any funds that are not subject to such restrictions and requirements. Similar prohibitions should be applied to federal officeholders, candidates, and their agents or staffs. In addition, federal officeholders or candidates should be prohibited from raising or spending soft money through personal PACs or so-called ``leadership PACs.'' (An exemption, however, would be made for federal officeholders running for state or local office who are raising monies allowable under the relevant state law-- e.g., a U.S. senator running as a candidate in a gubernatorial election.) In short, national party committees, including the national congressional campaign committees, and federal politicians would not be allowed to raise and spend monies from unrestricted sources in unlimited amounts. We believe that this reform will greatly reduce the unregulated party money that is now flowing through the system. This reform also would significantly simplify the rules governing party finance. National party committees would be allowed to raise only hard money. National party committees would no longer be able to raise or use corporate or labor union treasury funds or unlimited gifts from individuals and PACs. Their revenues would have to come from limited voluntary contributions from individuals, PACs, or other federally registered political committees, such as candidate campaign committees. There would no longer be a need for separate types of bank accounts or complex allocation rules for the financing of different types of party activity. Taking national party committees, federal officeholders and candidates, and their agents and staffs out of the business of raising and spending soft money will change the relationship between donors and federal politicians. It will reduce both the incentive for donors to give in exchange for access and the pressure to give that is created by solicitations from national party leaders or elected officeholders. It will also prevent federal candidates from raising unlimited funds that can be used by party committees to benefit indirectly their own bids for office. We believe that this reform will substantially alter the incentive structure that encourages soft money contributions. As a result, we expect the vast majority of this pool of funds, especially much of the money donated by the business community, to dry up. Most of this money came into the system only during the last two presidential cycles, largely in response to the aggressive fundraising practices of the national party committees. These donors are unlikely to aggressively seek out other means of pouring money into the system. We recognize, however, that this recommendation could be circumvented. Federal officeholders and candidates could still engage in soft money fundraising by shifting their activities to the state level. Federal officials could help their respective state parties raise funds that are not subject to federal limits, and the state parties could in turn use these monies to finance activities, such as voter registration and turnout drives, that influence federal elections in their state. Such activities would diminish the benefits of reforms adopted at the national level. We have carefully considered the proposal to close this ``loophole'' by extending federal regulation to any state party activities that might influence the outcome of a federal election and are financed by contributions not permitted by federal law. But we are very troubled by the prospect of using federal rules to govern state party political finance, especially when these committees are acting in conformance with the laws adopted by the people of their states. Such an approach raises troublesome issues regarding the principle of federalism and the scope of Congress's authority to legislate in this area. Accordingly, we conclude that this issue is most appropriately handled by the states. We therefore urge state legislatures to pass any legislation necessary to ensure that state party committees cannot finance their activities from unrestricted or undisclosed sources of funding. We recognize that a ban on soft money will have a significant effect on the resources available to national party committees and may diminish their role in the electoral process. Soft money represents a substantial share of party revenues and is used to finance many of the costs directly related to the parties' activities, ranging from staff salaries and overhead expenses to voter registration and mobilization efforts. The loss of soft money is likely to reduce such party activities and would require that parties pay more of their administrative and political services costs from funds they raise under federal limits. This, in turn, may lead to a reduction in the amounts of money available for candidate support or voter turnout efforts. Since parties are the only source of private funding (other than personal contributions or loans) that favors challengers, a significant reduction in party resources is likely to decrease the resources available to challengers. It is also likely to reduce the amounts available for voter identification and turnout programs. We believe that these party activities play a valuable role in enhancing the competitiveness of elections and encouraging citizen participation. To partially compensate for this loss, we recommend a change in the rules limiting individual contributions to federal candidates and political committees. Under current law, individuals are limited to an annual total of $25,000 for all contributions made to federal candidates, PACs, and party committees. We propose that Congress establish two separate aggregate limits for individuals. The first would limit the total amount contributed by an individual to federal candidates and PACs to $25,000 annually. The second, separate ceiling would limit the total amount contributed by an individual to national party committees to $25,000 annually. This change will allow parties to raise more regulated money from individuals than is permissible under current federal law. Mr. President, how did we get to where we are in this soft money? I think probably one of the best depictions of it is also in chapter 3 of the CED's report. I quote: Efforts to regulate the flow of campaign money often produce unintended and unforeseen consequences. Candidates and their staffs, as well as party committees and interest groups, have responded to regulation with imaginative innovations, producing new financial practices unanticipated by lawmakers. The law has also been interpreted by the courts and administrative agencies in unexpected ways, producing new directives that also have encouraged new financial strategies. Both these developments have dramatically increased the flow of money in federal elections and significantly undermined the effectiveness of our federal campaign finance laws. Soft money was not recognized as a form of party finance under the original provisions of FECA. In fact, FECA contained only one narrow exception to the party contribution limits. Parties could receive contributions in unlimited amounts from unlimited sources for ``building funds'' established to pay for new buildings or headquarters structures. Outside of this ``bricks and mortar'' provision, all monies received by parties were subject to federal limits. By 1980, the year of the second presidential election conducted under FECA, these tough prohibitions on party receipts and expenditures had begun to erode, and the door had been opened to unregulated party financial activity. This occurred as a result of problems experienced in the 1976 election and administrative decisions of the Federal Election Commission (FEC) that altered the kinds of money parties could raise. In the 1976 election, party leaders quickly recognized that the activities they traditionally financed in conjunction with national elections were significantly hindered by the new system of public financing and spending limits for presidential campaigns. Under the new law, expenditures by a party to help the presidential ticket might be considered in- kind contributions to the candidate or election-related expenditures that were no longer allowed. Parties therefore looked to the presidential campaigns to fund much of the paraphernalia used in traditional volunteer activities, such as signs, bumper stickers, and buttons, as well as voter registration and turnout activities. But the presidential campaigns, now faced with limited funds and wanting to maximize the resources available for television advertising, did not allocate substantial amounts to these other activities that parties considered important. As a result, party leaders appealed to Congress after the election to change the law so that they could finance volunteer and party-building activities without risking a violation of the law. Congress responded to these concerns and in 1979 amended FECA to exempt very specific, narrowly defined party activities from the definitions of ``expenditure'' and ``contribution'' contained in the Act. Thus, parties were allowed to spend unlimited amounts on grassroots, party- building activities and generic party activities such as voter registration and turnout drives. They were also permitted to spend unlimited amounts on such traditional campaign materials as bumper stickers, buttons, and slate cards. But the Congress did not change the rules on party fundraising: the monies spent on these activities had to come from ``hard money'' donations subject to federal contribution limits. Congress also specified that none of these unlimited expenditures could pay for mass public communications, such as direct mail or television advertising. At the same time that Congress was making these changes in the law, party officials were asking the FEC to decide another set of issues related to general party activities. The parties argued that their organizations were involved not only in federal but also in non-federal election activity, such as supporting candidates in state-level races and building party support at the state and local level. Furthermore, many generic party activities, such as voter registration and turnout drives, are conducted to help both federal and non-federal candidates. The parties therefore contended that the finance rules should recognize the non- federal role of party organizations and allow parties to partially finance their political activity with monies subject only to state laws. The FEC responded to these questions with a series of ruling that recognized the non-federal role of state and national party organizations. These rulings allowed parties to finance a share of their activities with money raised under state law if they maintained separate accounts for federal and non-federal funds. Subsequent rules established complex allocation formulas that determined the shares of particular expenditures that had to be allocated to federal and non-federal accounts. Thus was born the distinction between ``hard'' and ``soft'' money. Hard (federal) money is subject to federal contribution limits and is the only type of funding that can be used to support federal candidates directly. All contributions to federal candidates, coordinated expenditures, or independent expenditures made in federal contests must use hard money. Soft (non-federal) money is exempt from federal limits and can be used to finance general party activities, including such activities as voter registration drives, even though these activities may indirectly influence federal elections, for example, by encouraging more party members to vote. The FEC's decisions essentially freed parties to engage in unlimited fundraising as long as they abided by the technical requirements of the law. They could now raise (and spend) monies obtained from sources that were banned from participating in federal elections or from individuals and PACs that had already donated the legal maximum. These changes in the rules thus gave parties a strong incentive to raise soft money. the growth of soft money Parties quickly adapted to the new regulatory environment. At first, soft money was primarily raised in presidential election years for use on voter registration and turnout operations. But the parties soon expanded the role of soft money by expanding the range of activities that could be paid for with these funds. They also began to raise soft money more aggressively, soliciting ever larger sums. Since 1980, soft money has grown rapidly. In 1980, the Republican and Democratic national party committees spent a total of about $19 million in soft money, with the Republicans disbursing $15 million and the Democrats $4 million. Much the same pattern existed in 1984. By 1988, however, the amount of soft money had more than doubled to $45 million, shared about equally between the two major parties. By 1992, soft money had almost doubled again to $80 million, with the Republicans spending $47 million to the Democrats' $33 million. Yet the soft money raised in those elections pales in comparison to that raised in 1996 and 1998. In the Presidential election cycle of 1996 the two major parties raised $262 million in soft money, more than three times the amount garnered only four years earlier. (See Figure 5.) The Republican committees solicited more than $138 million and the Democratic committees $124 million. In contrast, hard money increased much more slowly. Democratic hard money increased by 59 percent over 1992, and Republican funds by 71 percent. Similarly, soft money fundraising in 1998 was up dramatically over the previous off-year election cycle of 1994. As of 20 days after the election, the national party committees had raised $201 million in soft money, close to twice the $107 million they had raised in the entire 1994 election cycle. The Republicans had raised $111.3 million, compared with $52.5 million in 1994, an increase of 112 percent; the Democrats had raised $89.4 million, 82 percent more than the $49.1 million four years earlier. The share of total party funds represented by soft money has also increased substantially. In 1992, for example, soft money constituted 26 percent of the receipts of all three Democratic national party committees. By 1998 the soft-money share had risen to 37 percent. For the three Republican national party committees, the proportion rose from 20 percent to 29 percent during the same six years. the sources of soft money Soft money has grown rapidly because both parties have been increasingly successful in soliciting large soft money gifts. Since at least 1988, both parties have had organized programs to recruit large donors. In 1992, for example, the DNC and RNC raised a total of $63 million in soft money, about 30 percent of which came from contributors of $100,000 or more. The parties have also been successful in soliciting major contributions from corporations and, primarily in the Democratic Party, labor unions. The parties have thus succeeded in gaining access to contributions from sources and in amounts that were prohibited by the campaign finance reforms of the 1970s. According to an analysis by the FEC, the parties have raised an increasingly large number of contributions in this manner. During the 1992 election cycle, the national party committees' soft money accounts accepted at least 381 individual contributions in excess of $20,000 (the annual federal party contribution limit) and about 11,000 contributions from sources that are prohibited from giving in federal elections, particularly corporations and labor unions. By the 1996 election cycle, these figures had more than doubled. The national party committees received nearly 1,000 individual contributions of more than $20,000 and approximately 27,000 contributions from sources prohibited from giving hard money. The business community is by far the most important source of soft money, as shown in Table 5 (page 26). According to one independent analysis, businesses provided $55.9 million of the $102.2 million in soft money received by national party committees during the 1994 election cycle. In 1998, these organizations had donated more than $105 million of the more than $200 million received through October. The vast majority of this money came from corporations rather than trade associations or other incorporated organizations. These figures do not, of course, include individual contributions made by members of the business community. A substantial share of this money came from large contributions. In 1998 at least 218 corporations donated more than $100,000, compared with 96 that gave this amount in 1994. Sixteen corporations gave $500,000 or more, whereas only four gave at this level four years earlier. Further evidence of the role of business contributions in the growth of soft money is found in a 1997 analysis conducted by the Los Angeles Times, which found that soft money donations made by the 544 largest public and private U.S. companies had more than tripled between 1992 and 1996, growing from $16 million to $51 million. In comparison, the contributions made by PACs, maintained by these companies rose only from $43 million to $52 million. The largest soft money donors tend to be companies or industries that are heavily regulated by the federal government or those whose profits can be dramatically affected by government policy. For example, according to the Center for Responsive Politics' analysis of 1996 donors: ``Tobacco companies and their executives, who have faced concerted federal efforts to strengthen the regulations governing tobacco sales and advertising, as well as the possibility of congressional action to settle ongoing lawsuits, gave a total of $6.83 million in 1996, with $5.77 million donated to the Republicans and $1.06 million to the Democrats. This group was led by Philip Morris, which donated the most soft money of all contributors in 1996, giving a total of about $3 million, $2.52 million of which went to the Republicans. RJR Nabisco gave a total of $1.44 million, with $1.18 million going to the Republicans.'' There is a study by Professor Kathleen Jamieson of the Annenberg School at the University of Pennsylvania, in which she describes not only the political contributions of the tobacco companies but the amount of lobbying fees which, according to her, is the most in the history of American politics. I will be reading that and inserting it in the Record at the proper time. It goes on to list a number of the large contributions. Finally, the effects of soft money on the political system. This is the view, of course, of the CED: The rise of soft money has greatly increased the flow of money in national elections and has turned party fundraising into a frenetic and never ending chase for large contributions. As the range of party activities financed with soft money has increased, party organizations have engaged in more aggressive and directed efforts to raise soft dollars. The parties therefore have sought ever larger amounts from soft money donors and have pursued new sources of soft money contributions, especially among members of the business community. One of the primary ways parties obtain very large contributions is by providing donors with access to federal elected officials. The most highly publicized and controversial example of the access and privilege afforded soft money donors is the use of the White House during the 1996 election cycle as a venue for dinners and other events with President Clinton. While money was not raised at these events, they were clearly designed to reward past soft money donors and stimulate future contributions. Published reports of these sessions sparked a controversy that raised serious questions as to whether access to the White House was for sale and fueled public cynicism about the influence enjoyed by wealthy contributors. Further examination of the Democratic Party's public disclosure reports revealed that the Democratic National Committee had deposited at least $3 million in illegal or questionable contributions into their soft money accounts. The Democratic Party's 1996 fundraising activities, however, are only one example of the consequences of unrestricted party fundraising. In recent years, both major parties have offered soft money donors access to elected leaders in exchange for contributions. White House officials and congressional leaders have been asked to appear at party soft money fund-raisers, participate in party-sponsored policy briefings, attend weekend retreats with donors, and play a role in other small group meetings. Elected officials have even been recruited by the party committees to solicit soft money donations from potential contributors, especially from their own financial supporters and others with whom they have relationships. Federal officeholders have thus assisted their parties in raising funds for issue advocacy advertising, voter registration, election day turnout drives, and other activities that directly benefit their own campaigns for office. They have also participated in fundraising efforts directed at donors whose interests are directly influenced by federal policy decisions. Such activities place undue pressure on potential donors. Businesses, in particular, are induced to contribute to keep up with their competitors or ensure their own access to lawmakers. Given the size and source of most soft money contributions, the public cannot help but believe that these donors enjoy special influence and receive special favors. The suspicion of corruption deepens public cynicism and diminishes public confidence in government. More important, these activities raise the likelihood of actual corruption. Indeed, we believe it is only a matter of time before another major scandal develops within the soft money system. Mr. President, I have often said that the scandal in Washington in 1996 was not Monica Lewinsky. The scandal in Washington was a debasement of virtually every institution of government carried out by the Clinton administration when the Lincoln Bedroom was rented out, when access to the President--I think it was Mr. Chung who said the White House is like the subway: You have to put in money in order to open the gates. I have a memo that is a public document. It is a memo from the Democratic National Committee to the White House that lists activities to be coordinated with the White House by the DNC for $100,000 givers and says--I think it is the third or fourth item on the list--seats on official trade missions. That was the scandal in Washington, and the ongoing scandal, of course, is the failure of the Attorney General to pursue these very well documented allegations. I do agree with the CED when they say at the end: ``Indeed, we believe it is only a matter of time before another major scandal develops within the soft money system.'' That is what we are trying to prevent. We had a spirited debate yesterday about this issue, and I tried to point out that I think these huge amounts of money have made decent and good people do things they should not otherwise do. That is an example which should be cited in these scandals I just described in the 1996 Clinton-Gore campaign. We have to try to restrain the system. I am fully aware it will never be completely the kind of system we want it to be, but I also will at a later time, because I have been talking a long time, chronicle that throughout American history we have had cycles. We have had cycles where the system has been cleaned up, as Teddy Roosevelt was able to do in 1907. I continue to quote extensively from him and read him as he talks about the corrupting influence of the robber barons at the turn of the century. Then we had, of course, the scandals of 1974 which caused us to clean up again. And if we succeed in cleaning up this system 10, 15, or 20 years from now, we will be back--maybe not me, maybe not Russ Feingold, maybe not Senator McConnell or Senator Bennett, but there will be others who will be back because we know that money in politics flows like water through cracks. What I read was how we had gone in the 1970s from a virtual nonexistence of the so-called soft money to the point where we are now awash in it. Sooner or later we will clean this up, and then sooner or later, unfortunately, it will need cleaning up again. That is why legislatures do not go into session and adjourn permanently. In 1986, we cleaned up the Tax Code. We did a good job. We took 3 million Americans off the tax rolls, something I think overall, despite some flaws associated with it, was a good bill. We need to clean up the Tax Code again. It is now 44,000 pages long. We need to change it from the cornucopia of good deals for special interests and a chamber of horrors for average American citizens. Why should a lower- or middle-income American have to go to an accountant to fill out their tax return? Why is it that it is 44,000 pages long? Why is it that we cannot break the grip of the teachers unions to reform education? Why is it we cannot come together reasonably and give patients who are members of HMOs decent, reasoned, balanced rights? Why is it that we cannot restructure the military so we can meet the challenges of the future we face in the next century? Events around the world have, again, amply demonstrated, such as in Pakistan, we ought to be able to cope with some very serious challenges in the next century in the military, but we cannot restructure it. It takes 2 months to get 24 Apache helicopters from Germany to Albania. They train and crash two, and we never use them in the conflict. We need to move forward on this issue. We need to do it, and I hope the sponsors of the amendment that is presently under consideration will recognize this is the same amendment which stalled us out last time. I believe we can make progress by moving forward with an amending process which requires votes which requires debate. I believe we can do that. I commend to my colleagues, particularly on my side of the aisle, who are involved with the business community, this little booklet. Major executives, major corporations in America have become sick and tired of being sick and tired. I cannot tell how many of them have told me--and I am sure they have told my colleagues privately--they are tired of the phone calls, they are tired of being dunned, they are tired of being called upon to give to both parties. Senator McConnell said yesterday, in response to the comment that the major corporations now give to both parties, they have a right to be duplicitous. I do not deny him that right to be duplicitous. I hope we could arrange a system where they do not feel they have to be duplicitous. That is what this object is all about. Mr. President, I thank my colleagues for their patience and I yield the floor. Mr. McCONNELL addressed the Chair.

Mr. McCAIN. Will the Senator from Kentucky yield to me? First of all, I believe we should move forward and have amendments. I would like to discuss it with all of us discussing it, go into a quorum call in a second, if we might. First of all, I would like to frame a parliamentary inquiry very quickly. Mr. President, if an amendment in the nature of a substitute were to be offered, how many votes would be needed to affirmatively adopt the amendment?

Mr. McCAIN. My point is, a little parliamentary tactic was played early yesterday which did not start things off in the manner which we had sort of hoped it would--that a rule was adopted that now requires 67 votes. But as most parliamentary tactics, it can be negated by a simple substitute amendment that could be propounded by any Senator, which amendment, in the form of a substitute, would then negate the rule change, which then would bring us back to the position that we are of 60 votes. So I say to my friend from Kentucky, when we agree to further amendments or we agree to his unanimous consent request--which none of us has seen, which the Senator did not take the time to show me--we have to be a little bit careful and cautious as to what we agree to. So I want to move forward. I want to move forward with amendments. I will be glad to go into a quorum call and sit down with all of the Senators present on the floor and see if we can't work something out.

Mr. McCAIN

Mr. McCAIN. Mr. President, I regret that I must vote against this conference report. Once again, I have the unpleasant task of speaking before my colleagues about unacceptably high funding levels of parochial projects throughout this bill. In addition, the conferees have included several legislative provisions that were not in either bill, nor were these initiatives considered by either the House or Senate before they were summarily added to this bill. Therefore, despite the fact that the bill contains funding for many purposes which I strongly support, I oppose its passage because of these objectionable provisions. This bill, in total, contains more than $700 million in low-priority, wasteful, and unnecessary spending. This is an unacceptable waste of the taxpayers' hard-earned money, and I will not be a party to Congress' pork-barrel spending habits. I very much regret having to oppose a bill that contains critical funding for programs for our Nation's veterans. I would like to point out that I actively supported adding $3 billion for veterans medical health care in this year's appropriations bill. I cosponsored several amendments introduced in the Senate, including the Wellstone amendment, which would have provided an additional $3 billion above the President's VA budget request. Although the Wellstone amendment failed, the amendment proposed by Senators Byrd and Bond, which I also supported, passed overwhelmingly, increasing the total amount of VA funding to $1.7 billion above the President's request. I commend the conferees for keeping the $1.7 billion for essential health care programs for veterans in the conference report. This represents the largest annual increase since the Department of Veterans Affairs was created. Although I sincerely welcome this increase, I will continue to do all in my power to find additional money in the budget to fund veterans health care at an amount that will guarantee a higher, sustainable level of quality health care for all veterans. It is important to note that the level of earmarks and set-asides in the Veterans Affairs section of this conference report is down from previous years. The total value of specific earmarks in the Veterans Affairs section of the VA-HUD conference report is $31.3 million, about one third of the amount that was inserted in this section of the Senate- approved VA-HUD appropriations funding measure. Certain provisions in this section, however, illustrate that Congress still does not have its priorities in order. For example, it is disturbing to me and many other Senators who stood on the floor of this body to fight for additional funding for veterans benefits to learn that the conferees have agreed to direct some of the critical dollars from veterans health care to fund wasteful projects like the ``mothballing'' of four historic buildings in Dayton, Ohio. There are other notable examples of unnecessary items included in the conference report. An especially troublesome expense, neither budgeted for nor requested by the Administration for the past eight years, is a provision that directs the Department of Veterans Affairs to continue the eight-year-old demonstration project involving the Clarksburg, West Virginia VAMC and the Ruby Memorial Hospital at West Virginia University. Several years ago, the VA-HUD appropriations bill contained a plus-up of $2 million to the Clarksburg VAMC that ended up on the Administration's line-item veto list--even the Administration concluded that this was truly wasteful. Like the transportation and military construction funding bills, the VA-HUD funding bill also includes many construction project additions to the President's budget request. For example, the VA-HUD appropriations conference report adds $1 million for the advance planning and design of the Lebanon VAMC renovation of patient care units and other enhancements for extended care programs. An additional $500,000 was provided for planning national cemeteries in Atlanta, Georgia; Pittsburgh, Pennsylvania; Miami, Florida; and Sacramento, California. Although all of these areas likely are deserving of veterans cemeteries, I just wonder how many other national cemetery projects in other states were leapfrogged to ensure that these states received the VA's highest priority. This bill directs VA to award a contract for design, architectural, and engineering services in this month for a new National Cemetery in Lawton (Oklahoma City/Fort Sill), Oklahoma and also directs the President's fiscal year 2001 budget to include construction funds for a new National Cemetery in Oklahoma. This is an amazing feat, since this appropriations bill is supposed to provide single-year appropriations, yet is attempting to direct next year's funding, too. The bill also directs the VA to reprogram $11.5 million originally appropriated in fiscal year 1998 to renovate Building 9 at the VAMC in Waco, Texas, to instead be used for renovation and construction of a joint venture cardiovascular institute at the Olin E. Teague VAMC in Temple, Texas. This unusual procedure is outside of the established reprogramming process--unfortunately, it sends the message to the VA that the money can be reprogrammed ``as long as the money stays in Texas.'' Other VA construction projects--outside the President's original budget request--include: $3.9 million to convert unfinished space into research laboratories at the ambulatory care addition of the Harry S. Truman VAMC in Columbia, Missouri; $3 million for renovations of the research building at the Bronx VAMC in Bronx, New York (next door to the prestigious Mount Sinai Hospital); and $500,000 for preparation of the satellite site to expand the National Cemetery at Salisbury, North Carolina. Some final egregious examples of unrequested, additional spending include the following: the VA is directed to provide $1 million to the National Technology Transfer Center to establish a pilot program to assess, market, and license medical technologies researched in VA facilities; $750,000 is provided to continue the VA's participation with the Alaska Federal Health Care Access Network; and Marshall County, Mississippi, Hardin County Tennessee and Letcher County, Kentucky were inserted ahead of other remote areas to become federally funded Community Health Care Centers to provide outpatient primary and preventive health care services to veterans in their home communities. These areas appear to have been added ahead of higher priority communities because their interests were well-represented in the Appropriations Conference. I am encouraged by the increase in veterans health care funding, and if this title of the bill had been separately presented to the Senate, I would have wholeheartedly supported it, despite the earmarks and set- asides it contains. This title of the bill contains the funding for many programs vital in meeting the housing needs of our nation and for the revitalization and development of our communities. Many of the programs administered by HUD help our nation's families purchase their homes, assist low- income families obtain affordable housing, combat discrimination in the housing market, assist in rehabilitating neighborhoods and help our nation's most vulnerable--the elderly, disabled and disadvantaged--have access to safe and affordable housing. When the Senate debated this bill, I highlighted for my colleagues numerous funding earmarks for specific housing proposals and set asides contained in the Senate version of this bill. Unfortunately, I find myself coming to the floor today to again highlight the numerous budgetary violations which remain or were added to this conference report. The list of projects which received priority billing is quite long but I will highlight a few of the more egregious violations. $3,000,000,000 to Olympic Regional Development Authority, New York for upgrades at Mt. Van Hoevenberg Sports Complex. New language inserted in conference providing $15,000,000 for urban empowerment zones. $1,000,000 to the Salt Lake City Organizing Committee for housing infrastructure improvements for the Olympics and Paraolympics. $1,000,000 to Syracuse University in New York for rehabilitation and community redevelopment of the Marshall Street Area. Directive language to the Secretary requiring the continuation of providing interest reduction payment in accordance with the existing authorization schedule for Darlinton Manor Apartments, 100-Unit project located at 606 North 5th Street, Bozeman, Montana, which will continue as affordable housing pursuant to a use agreement with the state of Montana. In addition to the numerous budgetary violations which this report contains, I am also concerned about the legislative initiatives which have suddenly appeared during conference which were not contained in the Senate or House appropriation bills. The intent of this legislative language is certainly laudable--providing safe, quality and affordable housing for seniors and the disabled is and must remain a priority for our nation. However, we cannot and should not be passing comprehensive legislation which makes substantial changes to the housing system without allowing both chambers of Congress to debate and provide valuable input to such an important proposal. Certainly, an issue as important as meeting the housing needs of our most vulnerable population, deserves thoughtful deliberation and careful review through the established legislative process and should not be attached at the last moment to a funding conference report. This is not the manner in which we should be implementing meaningful reform intended to benefit the citizens of our nation. After reviewing the sections funding the Environmental Protection Agency, I find that the conferees continued to run rampant in their pork-barrelling in this section of the bill. There are few areas in this final conference report that clearly indicate the level of parochial actions than those targeted in EPA's budget. Just last month, the Senate passed a bill providing funding for environmental protection programs, which included $207 million in unrequested and low-priority earmarks. However, the number of earmarks has seriously inflated in the conference report by $73 million to a new grand pork total of $280 million. I understand that we have critical needs around our country dealing with leaking underground storage tanks, water and wastewater infrastructure, air pollution, pesticide abatement, and other important environmental issues. Many of the projects identified in this conference report are no doubt critical to many communities who are forced to deal with these serious environmental threats. I do not question their merit at all. I do question the process by which the appropriators have made decisions that prioritize certain projects over many others across our nation in such a blatant and provincial manner. For example, $1 million is earmarked for the Animal Waste Management Consortium that will benefit the University of Missouri, Iowa State University, North Carolina State University, Michigan State University, Oklahoma State University, and Purdue University to deal with animal waste management. Again, this may very well be important, but there is little background provided in the report to explain the national priority interest of earmarking a million dollars to deal with animal waste management in six specific states. EPA has an established process by which the agency administers grant and loan programs that are supposed to be awarded on a competitive and priority basis. However, these guidelines are simply thrown out the window when the conferees direct the agency through earmarks and directive language to give priority consideration to various states and projects rather than undergoing a competitive review. Despite stated budget constraints, the conferees found a way to include an additional $68 million more in wastewater infrastructure funding than previously agreed to by both houses for locale-specific earmarks. I know first-hand that many of my constituents in Arizona have a great need to improve their water and wastewater systems, but they will be forced to wait in line while other projects are given priority treatment through this conference report. Clearly, no title of the bill was left unsullied by pork-barrel spending. For the Federal Emergency Management Agency (FEMA), there is $10 million available to the State of California for pilot projects to demonstrate seismic retrofit technology. For the National Aeronautics and Space Administration (NASA), this Report also includes earmarks of money for locality-specific projects such as $3 million for the Adler Planetarium in Chicago, Illinois, $14 million for infrastructure needs at the University of Missouri, Columbia, and $10 million for the Regional Application Center in Cayuga County, New York. For example, the National Science Foundation (NSF), there is $60 million for the Plant Genome Research Program. When will this outrageous pork-barrel spending stop? The conferees have also included legislative initiatives that were clearly out of scope of the conference. The bill includes a general provision authorizing NASA to carry out a new program to demonstrate the commercial feasibility and economic viability of private business operations involved in the International Space Station. This provision has not had the benefit of consideration in any hearings or public and private industry discussions. It would seem logical for private sector views to be considered if we hope to attract them to this venture. The bill also shifts the way NASA will operate both the space station and the space shuttle program. We have already heard from some small companies that this program will put NASA and use of the shuttle for commercial payloads in direct competition. We do not want to stifle the creativity and ingenuity of these small launch companies, nor should we rely upon NASA to provide all the answers to our space problems, especially in the area of commercialization of space. I think NASA has enough problems with the space station, including the fact that it is two years behind schedule and $9 billion over budget. Finally, the conferees have included two provisions related to commercial space launch indemnification extensions and insurance and indemnification for experimental vehicles. Neither of these provisions were included in either of the appropriations bills and they clearly fall within the jurisdiction of the appropriate authorizing committees. The appropriators should abide by the rules and procedures of the Senate and refrain from usurping the power of the authorizing committees, in fact, the rest of the Senate, by including these legislative provisions in a conference report written behind closed doors. I am gravely disappointed that I am unable to vote for this conference report. This measure contains funding for many critical programs which help provide important resources to our communities. It includes vitally important funding to fulfill our obligation to our nation's veterans, those who fought for the peace and security we enjoy today. Included in this bill is funding for section 202 housing which I know most, if not all, of my colleagues would agree helps meet the needs of America's seniors by ensuring they have homes which are safe, affordable and accommodates the demands of aging. Also included is valuable funding for section 811 which helps disabled individuals have an opportunity to live independently as part of a community in quality and reasonably priced homes. Because of the egregious amount of pork-barrel spending in this bill and the addition of legislative provisions clearly outside the scope of the conference, I must oppose its passage. I regret doing so because of the many important and worthy programs included in the conference agreement, but I cannot endorse the continued waste of taxpayer dollars on special-interest programs, nor can I acquiesce in bypassing the normal authorizing process for legislative initiatives. Mr, President, the full list of the objectional provisions is on my Senate website. high production volume chemical testing

Mr. McCAIN

Mr. McCAIN. I say to my friend from Kentucky, either the Senator from Kentucky did not listen to what I said or doesn't care about what I said.

Mr. McCAIN

Mr. McCAIN. Mr. President, we must take swift action to remedy a serious safety consequence which resulted upon enactment of H.R. 2084, the Fiscal Year 2000 Transportation Appropriations Bill, P.L. 106-69 . Signed into law last Saturday, section 338 of this law prevents the Federal Highway Administration (FHWA) from expending any funds for motor carrier safety activities. Although the new law allows the Secretary to transfer the safety functions elsewhere, which has already occurred, there are some safety activities solely vested in FHWA and the Secretary is precluded by law from permitting any other entity to carry out those duties. In particular, the Department's safety enforcement program has nearly come to a halt as a result of the Appropriators' language. We must restore the Department's ability to fully enforce our federal motor carrier safety regulations. Specifically, we need to restore the department's authority to assess civil penalties when safety violations have been identified. Currently, the Department can continue to carry out inspections, but in most cases has no authority to require a carrier to take corrective action. This is like a police officer pulling a driver over for speeding, but not being able to write a ticket. Last Mother's Day, 22 people lost their lives when a charter bus ran off the road and crashed. After the accident, the Federal Highway Administration imposed the maximum fine against the company that it is statutorily authorized to assess. If we do not act, the fine will be held in abeyance. How can this be justified? I hope the Appropriators are finally the full consequences of this provision which was opposed by the authorizing Committees of jurisdiction. The DOT Inspector General has repeatedly stated that strong enforcement with meaningful sanctions is needed at the Office of Motor Carriers. As long as this provision is allowed to stand, there will be no fines assessed against violators and efforts to strengthen Federal enforcement of motor carrier safety laws will be rendered meaningless. Mr. President, the Senate Commerce Committee has been working to improve truck safety. Many serious safety gaps have been identified and I believe we need to transfer authority for safety to a separate Motor Carrier Safety Administration. But, we need to act responsibly. We need to allow the authorization process to proceed. We need to put drivers and passengers ahead of unreviewed, unexamined quick-fix gimmicks that have resulted in very disturbing and likely unintended consequences. Last year, a similar attempt was made by the House Appropriations Committee to strip FHWA from its authority over motor carrier safety matters. As Chairman of the Senate Committee on Commerce, Science, and Transportation, which has jurisdiction over most federal transportation safety policies, including motor carrier and passenger vehicle safety, I opposed this proposal, in part because it had never been considered by the authorizing committees of jurisdiction. The provision was ultimately not enacted and I pledged that I would work to address motor carrier safety concerns in this Congress. I have lived up to this commitment. At my request, the Inspector General of the Department of Transportation conducted a comprehensive analysis of federal motor carrier safety activities. Serious safety gaps have been identified, and as such, the authorizing Committees of jurisdiction have been working to move legislation to improve motor carrier safety. The Commerce Committee held a hearing on my specific safety proposal and we expect to mark up that measure during the next Executive session. Indeed, we are working to move legislation through the regular legislative process. Public safety could be seriously jeopardized if Congress does not take quick action to restore federal motor carrier safety enforcement activities. I am aware safety improvements are necessary. I am working to pass those needed improvements. But halting motor carrier enforcement activities is clearly not in the interest of truck and bus safety. Mr. President, we cannot allow the destruction of the Federal government's motor carrier safety enforcement program. I fully support passage of H.R. 3036 to restore the Department's truck safety enforcement programs. I urge my colleague to support this much needed bill.

Mr. McCAIN

Mr. McCAIN. Mr. President, I rise today on behalf of myself, Senator Campbell and Senator Inouye to introduce the Indian Tribal Government Unemployment Compensation Act Tax Relief Amendments of 1999. This bill would correct a serious oversight in the way the Internal Revenue Code treats Indian tribal governments for unemployment tax purposes under the unique, State-Federal program authorized by the Federal Unemployment Tax Act (FUTA). It would clarify existing tax statutes so that tribal governments are treated just as State and local units of governments are treated for unemployment tax purposes. It is well-settled that tribal governments are not taxable entities under the Federal Tax Code because of their governmental status. But in recent years, both the Internal Revenue service and the U.S. Department of Labor have begun to advance an interpretation of FUTA that is particularly burdensome to Indian tribal governments. The IRS has begun to insist on collecting the Federal portion of the FUTA tax from tribal governmental employers. The IRS rationale is that because the FUTA statute expressly exempts charitable organizations and all State and local units of government from paying the Federal portion of the FUTA tax, but does not expressly mention tribal governments, it must collect the Federal portion of the tax from tribal employers. The Labor Department, for its part, several years ago issued an opinion declaring that State unemployment funds may not treat tribal government employers like other governmental units and accord them ``reimburser'' status. The Department's rationale was that FUTA statute does not expressly authorize tribal governments to participate on a reimbursable basis, and so State Unemployment Funds were prohibited from allowing them to do so. The Congressional Research Service conducted a study at my request in the early 1990s which revealed that FUTA was being applied to tribal government employers differently throughout our Nation. Some were allowed to participate, even as reimbursers. Others were denied participation but charged the full tax without getting any benefit whatsoever. The recent actions by the IRS and the Labor Department have only served to make the application of FUTA to tribal government employers even more confusing, contradictory, and unfair. FUTA involves a joint Federal-State taxation system that levies two taxes on most employers: an 0.8 percent unemployment tax and a State unemployment tax ranging up to more than 9 percent of a portion of an employer's payroll. Since its enactment in the 1930s, FUTA has treated foreign, Federal, State, and local government employers differently from private commercial business employers. It exempts all foreign, Federal, State, and local government employers from the 0.8 percent Federal FUTA tax. It exempts foreign and Federal government employers from State unemployment programs and allows State and local government employers to pay lower State unemployment taxes as reimbursers. FUTA also treats income tax-exempt charitable organizations the same as State and local governments. All other private sector employers pay both the Federal and State FUTA tax rates. The FUTA statute does not expressly include tribal government employers within the definition of governmental employers. This legislation will expressly authorize tribal governments, like State and local units of government and charitable organizations, to contribute to a State fund on a reimbursable basis for unemployment benefits actually paid out. Private sector employers typically must pay an unemployment tax in advance. The rationale for reimburser status is that governmental employers, like tribes and States, have a far more stable employment environment than that of the private sector, and that governmental revenue should not be committed to such purposes in advance of when the obligation to pay arises. Let me be clear, this bill would ensure that tribes participate in the unemployment compensation system. Some now do not do so. Their participation would be on the same terms as other governments. Tribal government employers would pay for every dime that is paid out in benefits to workers they lay off. But the bill would clarify the law to ensure that tribal government employers do not pay more than what is paid, a ``reimburser'' status long accorded all other governmental employers and tax-exempt organization employers. The bill I am introducing today would permanently resolve this matter across the Nation for every Indian tribal government. Unless this problem is resolved, many former tribal government employees will continue to be denied benefits by State unemployment funds and many tribal government employers will be charged at much higher rates than are all other governmental and tax-exempt employers. I believe tribal governments should be treated no differently than all other governments under our tax code, and that Indian and non-Indian workers who are separated from tribal governmental employment should be included within our Nation's comprehensive unemployment benefit system. This bill will go a long way toward ensuring mandatory participation by tribal governments on a fair and equitable basis in the Federal-State unemployment fund system. I can think of nothing more fair than the approach clarified in this bill. I urge my colleagues to support this legislation. Mr. President, the Joint Committee on Taxation, through the Congressional Budget Office, estimates the cost of this bill to be minimal, about ten million dollars over a ten-year period. The cost to implement these provisions in the first few years will eventually be offset over the ten-year period, resulting in a negligible effect on the Federal treasury. I ask unanimous consent that the text of the legislation, as well as a September 27, 1999 letter from the Joint Committee on Taxation providing the revenue estimate on this bill, be printed in the Record.

Mr. McCAIN

Mr. McCAIN. Mr. President, I rise today on behalf of myself, Senator Campbell and Senator Inouye to introduce the Indian Tribal Government Unemployment Compensation Act Tax Relief Amendments of 1999. This bill would correct a serious oversight in the way the Internal Revenue Code treats Indian tribal governments for unemployment tax purposes under the unique, State-Federal program authorized by the Federal Unemployment Tax Act (FUTA). It would clarify existing tax statutes so that tribal governments are treated just as State and local units of governments are treated for unemployment tax purposes. It is well-settled that tribal governments are not taxable entities under the Federal Tax Code because of their governmental status. But in recent years, both the Internal Revenue service and the U.S. Department of Labor have begun to advance an interpretation of FUTA that is particularly burdensome to Indian tribal governments. The IRS has begun to insist on collecting the Federal portion of the FUTA tax from tribal governmental employers. The IRS rationale is that because the FUTA statute expressly exempts charitable organizations and all State and local units of government from paying the Federal portion of the FUTA tax, but does not expressly mention tribal governments, it must collect the Federal portion of the tax from tribal employers. The Labor Department, for its part, several years ago issued an opinion declaring that State unemployment funds may not treat tribal government employers like other governmental units and accord them ``reimburser'' status. The Department's rationale was that FUTA statute does not expressly authorize tribal governments to participate on a reimbursable basis, and so State Unemployment Funds were prohibited from allowing them to do so. The Congressional Research Service conducted a study at my request in the early 1990s which revealed that FUTA was being applied to tribal government employers differently throughout our Nation. Some were allowed to participate, even as reimbursers. Others were denied participation but charged the full tax without getting any benefit whatsoever. The recent actions by the IRS and the Labor Department have only served to make the application of FUTA to tribal government employers even more confusing, contradictory, and unfair. FUTA involves a joint Federal-State taxation system that levies two taxes on most employers: an 0.8 percent unemployment tax and a State unemployment tax ranging up to more than 9 percent of a portion of an employer's payroll. Since its enactment in the 1930s, FUTA has treated foreign, Federal, State, and local government employers differently from private commercial business employers. It exempts all foreign, Federal, State, and local government employers from the 0.8 percent Federal FUTA tax. It exempts foreign and Federal government employers from State unemployment programs and allows State and local government employers to pay lower State unemployment taxes as reimbursers. FUTA also treats income tax-exempt charitable organizations the same as State and local governments. All other private sector employers pay both the Federal and State FUTA tax rates. The FUTA statute does not expressly include tribal government employers within the definition of governmental employers. This legislation will expressly authorize tribal governments, like State and local units of government and charitable organizations, to contribute to a State fund on a reimbursable basis for unemployment benefits actually paid out. Private sector employers typically must pay an unemployment tax in advance. The rationale for reimburser status is that governmental employers, like tribes and States, have a far more stable employment environment than that of the private sector, and that governmental revenue should not be committed to such purposes in advance of when the obligation to pay arises. Let me be clear, this bill would ensure that tribes participate in the unemployment compensation system. Some now do not do so. Their participation would be on the same terms as other governments. Tribal government employers would pay for every dime that is paid out in benefits to workers they lay off. But the bill would clarify the law to ensure that tribal government employers do not pay more than what is paid, a ``reimburser'' status long accorded all other governmental employers and tax-exempt organization employers. The bill I am introducing today would permanently resolve this matter across the Nation for every Indian tribal government. Unless this problem is resolved, many former tribal government employees will continue to be denied benefits by State unemployment funds and many tribal government employers will be charged at much higher rates than are all other governmental and tax-exempt employers. I believe tribal governments should be treated no differently than all other governments under our tax code, and that Indian and non-Indian workers who are separated from tribal governmental employment should be included within our Nation's comprehensive unemployment benefit system. This bill will go a long way toward ensuring mandatory participation by tribal governments on a fair and equitable basis in the Federal-State unemployment fund system. I can think of nothing more fair than the approach clarified in this bill. I urge my colleagues to support this legislation. Mr. President, the Joint Committee on Taxation, through the Congressional Budget Office, estimates the cost of this bill to be minimal, about ten million dollars over a ten-year period. The cost to implement these provisions in the first few years will eventually be offset over the ten-year period, resulting in a negligible effect on the Federal treasury. I ask unanimous consent that the text of the legislation, as well as a September 27, 1999 letter from the Joint Committee on Taxation providing the revenue estimate on this bill, be printed in the Record.

Mr. McCAIN

Mr. McCAIN. I yielded my time. I do not wish to speak on the pending legislation.

Mr. McCAIN. The unanimous consent agreement said I had 5 minutes. I yielded those 5 minutes.

Mr. McCAIN. Mr. President, I yield my time.

Mr. McCAIN

Mr. McCAIN. Mr. President, I yield the floor.