Daniel Moynihan

Mr. MOYNIHAN

Mr. MOYNIHAN. Mr. President, today we introduce a revised War Crimes Disclosure Act which Senators D'Amato, Dodd and I originally sponsored in the 104th Congress as a companion to a measure introduced by Representative Maloney. The measure is a simple one. It requires the disclosure of information under the Freedom of Information Act regarding individuals who participated in Nazi war crimes. This bill, which Senator DeWine has carefully crafted, builds on our original measure by expanding its scope to include information regarding stolen assets of the victims of Nazi war crimes, and by requiring a Governmentwide search of records to ensure the release of as many relevant documents as possible. A similar search for information regarding Nazi assets was recently conducted under the direction of Stuart Eizenstat, with significant results. Ideally, documents regarding Nazi war crimes would be made available to the public without further legislation and without having to go through the slow process involved in getting information through the Freedom of Information Act [FOIA]. Unfortunately, this is not the case. Researchers seeking information on Nazi war criminals are denied access to relevant materials in the possession of the United States Government, even when the disclosure of these documents no longer poses a threat to national security--if indeed such disclosure ever did. Perhaps the most important provision contained in the legislation is the balancing test. This requires that ``there shall be a presumption that the public interest in the release of Nazi war criminal records outweighs the damage to national security that might reasonably be expected to result from disclosure.'' The provision is in keeping with the report of the Commission on Protecting and Reducing Government Secrecy which recommended that such a balancing test be applied in all classification decisions. The Commission on Protecting and Reducing Government Secrecy was the second statutory examination of Government secrecy. I was honored to Chair the Commission; Representative Combest served as vice-chairman. Also serving on the Commission were John Deutch, Martin Faga, John Podesta, and Samuel Huntington. We presented our report to the President in March, and the congressional members of the Commission introduced legislation to implement the recommendations of the Commission in May. We have welcomed the many editorials and feature articles supporting our efforts as, in the words of the Sacramento Bee, a ``sensible, much- needed proposal for reforming runaway classification of secrets by the federal government.'' And Albany's Times Union assessment that our bill represents a ``bipartisan effort * * * to make more government documents accessible to the public and, in the process, make government more accountable.'' Our's is a report that, I believe, sets out a new framework for how to think about Government secrecy. Beginning with the concept that secrecy should be understood as a form of Government regulation. In the words of the German sociologist Max Weber, writing some eight decades ago: Every bureaucracy seeks to increase the superiority of the professionally informed by keeping their knowledge and intentions secret. Bureaucratic administration always tends to be an administration of ``secret sessions''; in so far as it can, it hides its knowledge and action from criticism. The pure interest of the bureaucracy in power, however, is efficacious far beyond those areas where purely functional interests make for secrecy. The concept of the ``official secret'' is the specific invention of bureaucracy, and nothing is so fanatically defended by the bureaucracy as this attitude, which cannot be substantially defended beyond these specifically qualified areas. What we traditionally think of in this country as regulation concerns how citizens are to behave. Whereas public regulation involves what the citizen may do, secrecy concerns what that citizen may know. And the citizen does not know what may not be known. As our Commission stated: ``Americans are familiar with the tendency to overregulate in other areas. What is different with secrecy is that the public cannot know the extent or the content of the regulation.'' Thus, secrecy in the ultimate mode of regulation; the citizen does not even know that he or she is being regulated. It is a parallel regulatory regime with a far greater potential for damage if it malfunctions. In our democracy, where the free exchange of ideas is so essential, it can be suffocating. We must develop what might be termed a competing ``culture of openness'' fully consistent with our interests in protecting national security, but in which power and authority are no longer derived primarily from one's ability to withhold information from others in Government and the public at large. The Nazi War Crimes Disclosure Act is in keeping with the work of the Commission on Protecting and Reducing Government Secrecy. With the passing of time it becomes ever more important to document Nazi war crimes, lest the enormity of those crimes be lost to history. The greater access which this legislation provides will add clarity to this important effort. I applaud those researchers who continue to pursue this important work. I would like to thank Representative Maloney for her original work on this subject in the House of Representatives and I would also thank Senator DeWine for joining me in this effort here in the Senate.

Mr. MOYNIHAN

Mr. MOYNIHAN. That has not happened yet.

Mr. MOYNIHAN. I thank the Chair.

Mr. MOYNIHAN. Of course.

Mr. MOYNIHAN. That hasn't happened yet.

Mr. MOYNIHAN. We held tightly.

Mr. MOYNIHAN. Madam President, will the distinguished chairman yield to me 3 minutes?

Mr. MOYNIHAN. There is no alternative when you have a huge budget deficit, sir.

Mr. MOYNIHAN. Madam President, I simply would wish to say that I have listened with great respect to the Senator from Maryland as regards the time sequenced in which the fast-track legislation went into effect and the foreign trade deficit began to grow. I say two things. The first is that the essentials of the fast-track negotiations have been in place since 1934. Nothing that discontinuous occurred in 1974. What simply was required was at that time the trade negotiations turned from tariffs on things--machines, iron ore, oil, whatever--to the question of the more complex but growing area of services, intellectual property, and matters like that. That is what impels us to give the President negotiating authority beyond the simple reduction of tariffs. The reciprocal trade agreements that began back in 1934 said the President may cut these tariffs up to 50 percent, and proclaim it after he has reached it to his satisfaction and agreement. The increase in the trade deficit corresponds precisely to the onset of enormous budgetary deficits by the Federal Government. It is elemental bookkeeping of economics--that unless you have a very high savings rate, which we do not have, you will finance a Federal deficit by borrowing from abroad, and that borrowing will take the form of imports. In economics this is a fixed equation. One side equals the other. And at just that moment, as the Senator from Maryland pointed out, deficits begin to grow, we have the second oil shock followed by the huge deficits of the 1980's. They are an equivalence which comes almost at a level of bookkeeping. They have to happen. Now, we have on point where our deficits are disappearing and we should have every reason in the world to think that trade deficit will disappear as well--it need not do--if our savings remain at the low level they are. But if they return to a normal level, which we hope they will, now that the deficit is not using them up, or now that more resources are available, that deficit will shrink dramatically, or we will have to write all the textbooks over again.

Mr. MOYNIHAN. Then you better rewrite your textbooks.

Mr. MOYNIHAN

Mr. MOYNIHAN. Mr. President, I rise with a measure of ebullience. By a solid majority of both sides of the aisle, we have just voted to do exactly what our revered chairman said ought to be done, and reported how in the past it has been done. The vote was 69 to 31. I think that augurs well. I would particularly like to note a fact about this legislation which has been little remarked, the fact that with great felicity and sense of historic importance, the chairman has given to the bill the title the Reciprocal Trade Agreements Act of 1997. The Reciprocal Trade Agreements Act, hearkening back almost two-thirds of a century to 1934 when Cordell Hull, a former member of the Finance Committee, as Secretary of State helped the Nation out of the ruin that had been brought about by the Smoot-Hawley Tariff Act of 1930, a tariff meant to raise living standards and do all the things that seem so easy if you don't think them through. If you were to make a list of five events that led to the Second World War and the horror of that war, that tariff bill of 1930 would be one of them. If there was a harbinger of the reemergence of the civilized world and the reinstitution of intelligent analysis of public policy, it was the Reciprocal Trade Agreements Act of 1934. I might like to take a preliminary effort to note that in 1934 the United States, in fact, did two things of note regarding legislation before the Senate today. We passed the Reciprocal Trade Agreements Act, and the President proposed and Congress agreed to our membership in the International Labor Organization, two parallel but distinct measures. We began opening our trade and in the same year, same Congress, moved to join the International Labor Organization for purposes not different than ones we have expounded in this legislation, which speaks directly to that issue. Now, the matter before the Senate is of the highest portent and urgency. Just yesterday in the Washington Post our--how do I say it? Has Bob Dole been gone long enough to be called fabled, legendary? Certainly vastly embraced by this institution on both sides of the aisle. Senator Dole, Republican candidate in the last election, wrote in yesterday's Post, ``the fate of fast-track legislation this fall may determine whether the President ever will negotiate another free trade agreement.'' He urged that we give the President this power, a power which every President since President Ford has had and which under the original Reciprocal Trade Agreements Act has been in place for two- thirds of a century. Since the fast-track authority lapsed, as it did 3 and one half years ago, the United States has effectively been reduced to the status of an observer as unprecedented new trading arrangements, bilateral and multilateral, have been put in place. The changes in trade and patterns and arrangements that you see very much correspond to the change in techniques of production, in modes of manufacture and in the information age of which we have heard so much. They reflect the technological underpinnings which have changed the economies of the developed world, are changing the developing world, and in consequence, change the economy. For example, as the chairman remarked, Mexico and Chile negotiated a free trade agreement in 1991 and now are engaged in talks to expand the scope of that agreement by the end of this year. On July 2 of this year, Canada's free trade agreement with Chile entered force, giving Canadian exports just that advantage, the 11-percent tariff advantage, that the chairman has spoken of. Remember, the pattern of Canadian production and exports is very like ours. We are in a competing world with them. We wish them every success. But there is no point in hindering our own ability to negotiate and trade in the same way. If I may remind the Senator, we have been here before. On March 4, 1974, President Nixon's Special Trade Representative, William D. Eberle, testified before the Finance Committee in support of the legislation that established the first fast-track procedures for non- tariff matters. He said, ``Without the fast-track authority, our trading partners will continue to negotiate but they will do so bilaterally and regionally, to the probable exclusion of the United States.'' Do not suppose that cannot happen again. The United States is at a position of unparalleled influence and importance in the world. That can produce an unparalleled resentment with consequences that will move through the generations to come. Do not be overconfident in a moment such as this, and certainly do not be fearful. We have nothing to fear from world trade. We gain from it. We have gained from it. And now I am confident with that resounding bipartisan vote, we will. Of course, in 1994 we created the World Trade Organization. It took us a long time. In the aftermath of World War II it had been understood we would have an international trade organization to correspond with the World Bank and the International Monetary Fund. That never came to pass. It came to grief, in point of fact, in the Finance Committee. The WTO, the World Trade Organization, is beginning negotiations on agricultural trade, protection of intellectual property. By intellectual property, think Silicon Valley, think Microsoft, think of all the innovations we have made in the world, and the innovators have the right to see their work protected. And, again, international trade in services, think banking, insurance, all those areas in which we have been particularly excluded in the developing world and which we can now negotiate. The Uruguay round of negotiations represented the first serious attempt to address barriers to American farm products, but a great deal needs to be done. The last area of economic activity which is freed from protection will always be farm matters. It is one of the great events of our age that the great agricultural States in this Nation have seen what trade can do for them and are supporting these measures. Agriculture is always protected, always subsidized, but in 1999, the World Trade Organization on that matter will begin and we ought to take these negotiations seriously. We ought to be part of them and now we will be. American farm exports in 1996 reached $60 billion in an overall global market estimated at something more than half a trillion. So we have something like 10 percent of that trade. This export sector alone represents about 1 million American jobs. A similar situation exists with respect to services trade, which was addressed for the first time in the Uruguay round, and the financial services, banking, insurance, securities, are scheduled to wrap up in December in an important round of talks. Another round will begin on January 1 of the year 2000 involving a full range of services, including such sectors as health care, motion pictures, and advertising, where American companies are among the strongest in the world. I don't think it would be in any way inappropriate to recall the remarks of President Jiang Zemin of the People's Republic of China just a few feet off the floor here a week ago, in which he described the formative experience of his college years when he watched the film ``Gone With the Wind.'' It is America that makes the movies for the world to see. Getting them in is a matter of negotiation. Now we can do it. I would like to make a point of particular importance to the matter before us. First of all, this is not a new authority, untested or untried. We have been with it for two-thirds of a century. The Smoot- Hawley Act, in which Congress, line by line, set more than 20,000 tariffs, resulted in an average tariff rate, by the estimate of the International Trade Commission, of 60 percent. The result was ruinous, not only to us, but to our trading partners. The British abandoned their free trade policy and went to empire preferences. The Japanese went to the Greater East Asian Co-Prosperity Sphere. In that year, Adolf Hitler became chancellor of Germany in a free election. Such was the degree of unemployment and seeming despair that the consequences of the First World War would never be over. Next came one of the largest trade events of the postwar period, the Kennedy round, which came about because of the Trade Expansion Act of 1962. I make the point, sir, that there were persons at that time, as now, concerned about the impact of expanding trade on American workers and American firms. As a condition of a Senate vote on giving the President the power to negotiate what became the Kennedy round--it was named for the President who began it--we had to negotiate a separate agreement, the Long-Term Cotton Textile Agreement, and three persons were sent to do this negotiation: W. Michael Blumenthal, Deputy Assistant Secretary of State; Hickman Price, Jr., an Assistant Secretary of Commerce; and myself, then an Assistant Secretary of Labor. We negotiated to limit surges of imports that might come about from drops in tariffs. It was meant to be a 5-year matter, as I recall. That was 35 years ago, and it's still in place. It was succeeded by the Multi-Fiber Agreement. We have not been unattending to the needs of our workers in these matters. To the contrary. We began Trade Adjustment Assistance in the 1970's. We have more Trade Adjustment Assistance in this legislation. We negotiate these matters with the interests of the American worker in mind, and the evidence is the standard of living we have achieved in this country, of which there is no equal. With that point, sir, I would like to call attention to a very special issue. We are asked by some to include in this legislation a requirement that trade agreements include provisions, in effect, statutory requirements, concerning labor and the environment. At first, it seems a good idea. Why not? But let me tell you why not, and if I can just presume on age at this point, which is getting to be a factor in my perspective. I have been there and it doesn't happen, it doesn't work. If you go to a developing country and say to them, ``We would like to enter into a trade arrangement whereby you will reduce your tariffs and barriers--non-tariff barriers--we will do the same, so we can have more trade,'' and at the same time, in the same setting, say, ``We want you to adopt higher environmental standards and higher labor standards,'' right or wrong, the negotiating partners will say, ``Oh, you want us to lower our tariff barriers and raise our costs.'' Well, they won't do it. ``You are asking that we be put at a double disadvantage. We put those tariffs in to protect ourselves against you, and our environmental and labor standards are those of a developing nation. Now you want to put us at a double disadvantage.'' It won't happen. There will be no such agreements. I can speak to this. I was Ambassador to India when our trade was at a very, very low level. The great anxiety of the Government of India was that we would somehow use trade in a way that would disrupt their internal affairs, which was never our intention, but it was a perception, and will be even more so now. That is why I point to the serendipity, if you would like, of the provisions in this bill. I made the point that the Reciprocal Trade Agreements Act--the original one-- was enacted in 1934, and the United States joined the International Labor Organization in 1934--a measure of great importance at that time. President Roosevelt was very firmly in favor of it, and Frances Perkins--and I talked to her about it--thought it was one of the central initiatives. They saw it as parallel to trade--parallel. Over the years, the International Labor Organization has developed a series of what are called the ILO Core Human Rights Conventions. There are a great many important conventions, but they tend to be on technical matters. These go right to the rights of working people. And there are not many. They are the Forced Labor Convention of 1930; Freedom of Association and Protection of the Right to Organize Convention of 1948; Right to Organize and Collective Bargaining Convention of 1949; Equal Remuneration Convention, equal pay for men and women, of 1951; Abolition of Forced Labor Convention of 1957. In 1991, I stood on the floor of this Senate, with Claiborne Pell, then chairman of the Foreign Relations Committee, and we called that up, and it passed the U.S. Senate unanimously. It is our law now because we chose to make it our law. We passed it. It is a treaty and we passed it as such. And then there was the Discrimination (Employment and Occupation) Convention of 1958, and the Minimum Age Convention--a child labor convention--of 1973. Now, in this bill before you is an extraordinary initiative. We fought for an initiative by the United States to promote respect for workers' rights by seeking to establish in the International Labor Organization a mechanism for the systematic examination of and reporting on the extent to which ILO members promote and enforce the freedom of a subsidization, the right to organize and bargain collectively, prohibition on the use of forced labor, prohibition on exploitive child labor, and a prohibition on discrimination in employment. We have never before made such a proposal. It has enormous possibilities. The ILO is the oldest of our international organizations. But it comes from an era when the idea of sending inspectors into a country to see whether that country was keeping an agreement would have been thought much too radical. That all changed in the aftermath of World War II. Just this moment, we are going through something of a crisis with Iraq over the right of American members of the inspection team from the International Atomic Energy Agency to look into Iraqi production of nuclear power and the possibility of nuclear weapons. That begins with the International Atomic Energy Agency, which is part of the United Nations system. You send inspectors in to see what they are doing. It is now a common practice over a whole range of international concerns. What we propose is that the International Labor Organization bundle, if you like, the core labor standards, and then set about an inspection system, to see to it how China is doing on prison labor, or child labor, or how the United States is doing--we will be looked into, too-- and how countries around the world have done. Now, this will take energy. I would like to think that, somewhere in the executive branch, someone is listening to this debate because these measures were proposed by the President. But it takes energy in the executive to get this done. Come to think of it, Alexander Hamilton's definition of good government was ``energy in the executive.'' I would like to think that our Trade Representative, our Department of Labor, our Department of Commerce, will be actively involved. I say the Department of Commerce because business is involved. The ILO is a tripartite group. Business has a vote, the U.S. Council for International Business, as does the AFL-CIO. They each have a vote, and the U.S. Government has two votes. This is a business-labor enterprise. We have been involved with it for a very long time. Herbert Hoover, as Secretary of Commerce under President Harding, sent delegates to the ILO conference in Geneva from the Chamber of Commerce and from the AFL- CIO. So we are addressing concerns about the environment and labor standards in their proper context and setting. If you want them, you have to do it there. If you only want not to have more open trade, you can try it in negotiations. But Mr. President, it won't work. The trading partners just will not agree. And if you want to take the time to find it out, very well, but for the moment, I think you will find that the overwhelming judgment of economists is that what we have here is a clean measure. That is the way to go. And this is what we now need to do--give the President fast-track authority, which will enable him to enter negotiations that will result in agreements, and with those agreements in place, we will go into the 21st century proud of what we began in the 20th. Mr. President, I again thank my chairman for the felicity with which he chose to give the name Reciprocal Trade Agreements Act of 1997 to this legislation. For the purpose of the Record, I ask unanimous consent that the description of the ILO Core Human Rights Conventions be printed in the Record at this time.

Mr. MOYNIHAN. Mr. President, I thank the generosity of my good friend and colleague on the Finance Committee, the Senator from Nevada. He is, as ever, generous and not without a certain wisdom because this debate could be going on for a long time. I yield the floor.

Mr. MOYNIHAN. Mr. President, without further comment, I yield the floor once again with a sense of ebullience. We are going to do this. We kept the faith. We followed the convictions and the experience of Presidents going all the way back to the 1930's. So I close simply by quoting again, Senator Dole in his fine op-ed piece in yesterday's Washington Post: The decision to give the President fast-track authority is urgent and must be made now. Very simply, passing fast track is the right thing to do. Our Nation's future prosperity, the good jobs that will provide a living for our children and grandchildren, will be created through international trade. Today it is more important than ever that the debate between advocates of free trade and protectionism is over. Global trade is a fact of life rather than a policy position. That is why we cannot cede leadership in developing markets to our competitors through inaction, thereby endangering America's economic future and abandoning our responsibility to lead as the sole remaining superpower. Mr. President, I thank the Chair for his courteous attention and I yield the floor.

Mr. MOYNIHAN

Mr. MOYNIHAN. Mr. President, I move to reconsider the vote.

Mr. MOYNIHAN

Mr. MOYNIHAN. I move to reconsider the vote.

Mr. MOYNIHAN. Mr. President, I ask for the yeas and nays on the nomination of Mr. Rossotti.

Mr. MOYNIHAN. Mr. President, I yield such time as he may require to my distinguished friend and colleague on the Finance Committee, the Senator from Louisiana.

Mr. MOYNIHAN

Mr. MOYNIHAN. Mr. President, there is now clear evidence that at least for the short run, both the economy and the budget have attained to a singular degree of stability. Consider the following facts: The current economic expansion is now in its seventh year and shows no sign of ending; the unemployment rate is below 5 percent for the first time in 24 years; the current official inflation rate, which may be--and almost certainly is--overstated, is about 2 percent; the deficit has been reduced from $290 billion in fiscal year 1992 to $23 billion in fiscal year 1997, or just three-tenths of 1 percent of our gross domestic product; the Congressional Budget Office projects that, under present law, the unified budget will have a surplus of $86 billion in the year 2007. I repeat that unfamiliar phrase--a surplus of $86 billion. The Congressional Budget Office also projects that, under present law, the debt held by the public will fall from about 50 percent of gross domestic product this year to about 30 percent by 2007. May I suggest to my colleagues that, for the first time in 20 years or more, such good economic news is upon us and was previously thought unattainable. Last week, at a Finance Committee hearing on his confirmation to be Treasury Assistant Secretary of Economic Policy, David Wilcox quoted a favorite economics professor of his at the Massachusetts Institute of Technology--and I have the honor to say, parenthetically, a long and good friend of mine--the distinguished Nobel laureate Robert Solow. As Wilcox recalls, Professor Solow said something as follows. . . . the most important thing economists have to communicate to the rest of the world is how effectively markets work. The most important thing that economists have to tell each other is the important ways in which markets sometimes don't work exactly right. One need not engage in a long discourse on the fundamental differences between Keynesian and classical macroeconomic theories, to realize that during the last recession and current expansion, the deficit has changed as economists would expect, or in any event would hope. Between fiscal 1989 and fiscal 1991, as the economy entered a recession, gross domestic product in nominal--which is to say money terms--grew at an average rate of 4.7 percent. Revenues to the Federal Government, however, only grew at an average rate of 3.2 percent, while outlays grew by 7.6 percent. Now this imbalance between the growth in revenues and outlays--which helped moderate the recession, as we learned through painful experience in the middle of the century--would ordinarily be welcomed were it not for the fact that, in 1989, the Federal Government's deficit was already 3.8 percent of GDP. As it were, the deficit reached 5.5 percent of GDP in 1991 and 1992. For the next 2 years, the economy slowly recovered from the recession. And then, in 1993, something extraordinary happened; we passed what I have since acknowledged to be the largest tax increase in history. We also limited the growth in spending. The results--quite contrary to those predicted by many who opposed the measure--are truly remarkable. Between 1993 and 1997, GDP increased at an average annual rate of 5.3 percent. Mr. President, that doubles in something like 13 or 14 years. To double your GDP every 14 years, that would quadruple in a generation, which is almost unimaginable. Real gross domestic product--that is adjusting for inflation--increased at an average annual rate of about 3.5 percent, compared to almost no real growth for the period from 1989 to 1991. With rapid, noninflationary growth, revenues increased at an average annual rate of 8.2 percent, while outlays grew at a modest 3.3 percent annual rate. For the fiscal year just ended, the comparison is even more striking. The economy grew by 5.9 percent, while revenues grew by 8.7 percent and outlays by a mere 2.7 percent. We have had no such experience in postwar periods. I don't know if we have ever had such an experience. Mr. President, may I suggest that while the revenues and outlays grew as one would expect during the various phases of a business cycle, it was only after a very great deal of effort, and not an inconsiderable amount of pain that we have brought the Federal budget into near balance--a deficit of $22.6 billion, a rather insubstantial three- tenths of 1 percent of GDP. But, sir, in the closing days of this first session of the 105th Congress, we can risk it all. Perhaps we should follow the admonition that Hippocrates bequeathed to the medical profession, which somehow translated it from Greek into Latin, in the passage of the Hippocratic oath: ``primum non nocere''--``first do no harm.'' Tax legislation for this session of the 105th Congress is and should be concluded. Mr. President, my remarks till now have focused on the short run and pleasant and unparalleled economic and budget circumstances in which we now find ourselves. But before we devote too much energy to tax cuts in the next session of the 105th Congress, we should be mindful of the following less-than-exuberant facts. First, the budget is not yet in surplus. Second, the Congressional Budget Office also projects that the deficit is likely to reappear after the year 2007 and that the debt held by the public as a percentage of gross domestic product is likely to increase as the baby boom generation begins to retire. Third, without the on-budget surpluses of the Social Security trust funds, the Congressional Budget Office still projects annual deficits of about $100 billion even after the budget is balanced in the year 2002. I make the point, Mr. President, as Senator Dole remarked yesterday on ``Meet The Press,'' in 1983 we made major changes in the Social Security System which have made it solvent and in surplus every year since then and for many years still to come. But that surplus is not saved in any conventional sense of the word; it is expended on other purposes that have nothing to do with social insurance, a matter which I know troubled Senator Dole when he was still our most revered colleague and majority leader. And, lastly, projected unified budget surpluses in the short run would rapidly disappear if the current expansion ends and the economy were to enter a recession. In that setting, Mr. President, I offer a resolution which I hope to call up at some point in the days remaining in the first session of the 105th Congress to express the sense of the Senate regarding the treatment of any future unified budget surpluses. Mr. CRAIG addressed the Chair.

Mr. MOYNIHAN

Mr. MOYNIHAN. Mr. President, for half of our century--52 years--one of the notable events in the life of New York City has been the annual dinner of the Alfred E. Smith Memorial Foundation, sponsored by the Archdiocese of New York, and presided over by the cardinal archbishop, most recently by His Eminence John Cardinal O'Connor. The foundation supports the hospitals of the archdiocese. The centerpiece, if you will, of the evening is the dinner speaker. Over the years, truly great men and women of our age have appeared in the ballroom of the Waldorf-Astoria Hotel. Kings, prime ministers-- Winston S. Churchill was the 1947 speaker, in the company of James V. Forrestall--and Presidents or Presidential candidates by the score. It fell to me to write the first draft of Averell Harriman's address when he was Governor of New York; it was, I do believe, a distinction he treasured ever after. And now we have had Buffalo's gift to the Nation, Timothy J. Russert. This year the speaker was Timothy J. Russert, Moderator of ``Meet The Press,'' which, come to think, is celebrating its 50th anniversary just now. Mr. Russert was by turns irreverent and riotous. But his purpose was profoundly serious and, if you will, reverent. It is something Al Smith would very much wish to have had said. We are just now in a phase of considerable self-congratulation about American society. A world away from the slums and factories that Smith, with his Tammany colleagues Robert F. Wagner and James A. Foley, along with Frances Perkins and, of course, Franklin D. Roosevelt helped transform. A world at once vastly improved, and grossly degraded. For in the course of resolving so many difficulties in our public life, we have seen a near- to-incomprehensible collapse in our family lives. As Mr. Russert states: At the turn of this century, just three short years from now, there will be seventy million children under the age of eighteen living in the United States. More than a third of them, one in three, nearly twenty-five million, will have been born into single parent households. This is the central challenge to American institutions in the generation to come. Doubly so in that Congress and the President have chosen to eliminate the Social Security Act provision for dependent children, a drop-dead date not 4 years away. Can anyone imagine Al Smith or his Industrial Commissioner Frances Perkins doing such a thing! One suspects that neither can Mr. Russert, but this is an unnecessary speculation. What is necessary is that his urgent and cogent words be read and absorbed as widely as possible. To this end, Mr. President, I ask unanimous consent that the full text of this year's address to the Al Smith dinner be printed in the Record.

Mr. MOYNIHAN. I yield the floor and suggest the absence of a quorum.

Mr. MOYNIHAN

Mr. MOYNIHAN. I yield the floor.

Mr. MOYNIHAN. Madam President, may I thank my dear chairman for saying there is no time like now. What a better moment to start addressing the Tax Code than that point which, nominally at least, we have a balanced budget and we are not driven by the exigencies of revenue as such. We can address the question of complexity, efficiency, and clarity. Simplicity--we are a republic. We are meant to be simple. Good people of Maine would like that, I think, and I think the people of Delaware would. In New York we are somewhat given to complexifying, but I think we might find a little simplicity refreshing. I yield the floor.

Mr. MOYNIHAN. Madam President, our revered chairman, in calling up this important nomination of Mr. Charles O. Rossotti, spoke at length of the problems we have encountered with the Internal Revenue Service and spoke of the need for public confidence in that agency and the manner in which our tax revenues are collected. He spoke of the determination of the Committee on Finance to see that this issue is addressed fully, comprehensively, and carefully. I would like to stand here and say that as this goes forward, there can be complete public confidence in the chairman of the Committee on Finance, Senator Roth, that it will be done in a nonpartisan way. I don't think I should use the word ``bipartisan,'' because I don't think there is a Republican method of collecting taxes fairly and efficiently or a Democratic method. It is something that we must do properly as a Nation. We do well to remind ourselves that we began as a Nation in protest against taxation we thought was improper and illegal and that this issue has never been far from our concerns, although not until recently has the Committee on Finance exercised its oversight jurisdiction. It is our duty to see what is going on in this large public agency, which was founded in 1862 on the occasion when the Federal Government imposed for the first time an income tax. And which, as the distinguished chairman said, has the organization and pattern of the industrial age, as yet but little responsive to the modes of management which have emerged in a postindustrial age with great efficacy and public response. I am here to state that there is complete support on this side of the aisle for the chairman's program. The particulars will emerge as we work at the facts, as we uncover them. We have our first hearing on the IRS restructuring legislation this Wednesday. Again, I will say this is not a bipartisan matter, it is a nonpartisan matter of central importance to the Federal Government. As the chairman indicated in his closing passage, the nomination of Charles Rossotti to be Commissioner of the Internal Revenue Service is an important measure of cooperation from the executive branch. The chairman noted that President Clinton has supported this. In particular, Secretary of the Treasury Rubin, much impressed by the work of the commission headed by a member of our committee, Senator Kerrey of Nebraska, and legislation introduced by him and another Member, Senator Grassley of Iowa, again in an across- the-aisle mode. It was Secretary Rubin who thought that the time had come to bring modern management modes into the IRS and, indeed, Madam President, Mr. Rossotti will be the first Commissioner not to be a tax lawyer in a half century, since World War II. This is not, as Everett Dirksen would have said, to slight the tax lawyers. They typically defend the public, the individuals against the Government, and their task grows steadily more rewarding as the tax code become steadily more incomprehensible. Still, we have brought the right man to do the job at this moment. I would like just to offer a brief comment, if I can have the indulgence of the Chair, about an article which appeared in the New York Times, whilst we were contemplating this second phase of the effort which the chairman began with those 3 days of dramatic and powerful testimony. And that is an article by Paul C. Light, a professor of public affairs and political science at the University of Minnesota's Hubert Humphrey Institute, in which Professor Light pointed out that whatever we do to restructure and simplify the Tax Code, we still have a problem of organization within the IRS itself. We still have to do something to reduce the multiple layers of bureaucracy which, and I quote Dr. Light, ``leaves no one accountable for how agents treat taxpayers.'' I think you would find this is a normal development of an agency in place over a very long time in which you have career public servants in a system which has gradations of compensation, and presumedly responsibility that go from General Service 3 to General Service 17, and then there are supergrades beyond that. You create this in a 19th-century mode. It is called civil service reform. And on this floor a century ago, 110 years ago, it was debated with great vigor. It meant to take the individuals in the public employ out of any area of political influence, political choice, patronage of jobs. But it easily results in what Professor Light calls layering--the GS- 5 on top of the GS-4, the GS-6 on top of the GS-5. And he gives this illustration, a very concise one. He said: Just imagine a bureaucracy that goes something like this: an agent-- The agent is the person who deals with the individual citizen-- an agent reports to a district group manager, who reports to a branch chief, who reports to an assistant chief of the division, who reports to the assistant district director, who reports to the assistant regional commissioner, who reports to the regional commissioner, who reports to the chief of staff to a deputy assistant commissioner, who reports to the deputy assistant commissioner, who reports to the assistant commissioner, who reports to the chief operating officer, who reports to the deputy commissioner, and so on. You haven't even reached the top of the layer. That is the kind of progression you will get over a century in an organization in which the internal incentives are to be promoted, as they should be. It is how Colin Powell went from being a member of the Pershing Rifles at City College in New York, where I began my education, to Chairman of the Joint Chiefs of Staff of the U.S. Armed Forces. And they encourage them. But there can be too much. It can separate accountability to the point where it cannot be found in the system. It has been remarked that the Catholic Church, which has been around for centuries, has managed all these years with just three layers of authority. You have Pope, bishop, and priest. There are some honorific; every so often a priest will be called a monsignor, but it is Pope, bishop, priest. And it is something to be thought about, as this whole subject is considered in the Congress. We spend too little time on organizational matters, too little time on how much we have spread out agencies. I have been witness, in my time in Government, to a number of sequences by which the Bureau of Public Roads in the Department of Commerce, a small effective agency known in the 1920's and 1930's for its very vigorous civil service that was mostly working on farmer market roads, and then comes some other legislation, the interstate highway program, and the next thing you know you have the Department of Transportation. I have seen small activities in the field of education. We had a commissioner of education, oh, going back a long way, and various able persons ran it. It was in the Department of Health, Education and Welfare. And don't you know, gradually it spun off and became the Department of Education. And there have been efforts in the other body to put an end to it. But by and large, these efforts are never successful. They take longer than you think. They are not very rewarding. You cannot put them in a newsletter. As a matter of fact, we don't have newsletters anymore. I do not want to speak with anything less than the fullest admiration of our colleagues in the House of Representatives, but when I came to this body each Senator had a certain amount of funds--we had the franking privilege, which went back to 1790, and enabled us to write persons, to send out mailings to our constituents. For my part, I represent some 18 million people. You cannot meet them, but you can write them. Or rather you could write them. The one thing from that great revolution we had across the way a few years ago is we abolished the one direct contact between Members of the Congress and the citizenry, which was the newsletter. The first one went out from Philadelphia in 1790, a gentleman from North Carolina, as I recall, telling his folks that there was not much going on just then, but he had hopes that there might be a tariff change which would improve the sales of our local product. By ``our local product'' he meant whiskey, corn whiskey, as against rum from the Caribbean. Indeed, it was an important source of revenue. And it kept the settlers across the Appalachians connected to the Atlantic coast as against the Ohio- Mississippi system which took them through French territory at the time. We have lost that direct contact. This agency ought not to lose its. I was impressed, if I may say, by Mr. Rossotti's response on this point. We were speaking of these matters during his hearing, and I raised this issue of layering. And afterward he wrote me a letter in which he said--and I will take the liberty of quoting as I do not see any other Senator seeking recognition just now--he said: Your comment about the ``layering'' that accumulates in many large organizations that are organized on traditional lines is getting at a very important point. Excessive layering often lies at the heart of many problems, especially the difficulty upper management faces in understanding accurately what actually goes on in the front lines. It can also slow down action to fix problems. Of course, I do not yet know enough about the specific facts at the IRS to know how this problem affects the IRS and what might be done about it. As I begin my assessment of the situation at the IRS, however, I will most certainly be thinking hard about this issue. If I may say, this is a promising response. We have had lots of nominations before our committee in the 21 years that you and I have served there together, sir. And without in any way disparaging any of my predecessors, this is the first evidence I have ever had of any of the nominees listening to anything that we said. Perhaps at most they keep an ear open, thinking that as soon as we stop talking, it is over, and ``I can get out of here and on with my job.'' But to get a letter like that back--well, Mr. Rossotti is a management specialist. He deals with modern systems. He has built an international firm for which people engage him to help them with the kinds of problems we have here. It is a good beginning. Now, sir, one last point. The employees of the Internal Revenue Service are well-paid public servants, but none of them makes a third of the salary of an average tax attorney. And the average tax attorney has to master this--what is it?--9,479 pages of the Internal Revenue Service. Look at it--9,479 pages. That speaks dereliction of our duty. We can't go on producing these. I take the liberty of displaying to the Senate and to our distinguished Presiding Officer the bill we adopted on July 31--820 pages added to the 9,479; 820 pages entitled Taxpayer Relief Act. What taxpayer relief will there be from having the IRS have to understand what is in here, as well as individual taxpayers? We better watch this. It is the way organizations can develop. It is a form of entropy. Energy goes down the system, complexity goes up and abuse takes place. We can attend to organizational matters as much as we want. We can certainly attend to abuse. But until we simplify the Tax Code as a multiyear effort, as one that is real, we will fail to address the heart of the problem. Remember the simplifiers that took over on the other side of the Capitol who said we will get rid of all these complexities? What did they do? They added 820 pages. That speaks to a systemic problem, and we are old enough and capable enough as a society to address them. I, for my part, am hugely pleased that we will. I want to thank again our chairman, without whom this would not be taking place, and thank Senator Kerrey of Nebraska and thank Secretary Rubin. This is a good beginning and a good note on which to start. I urge the confirmation of Mr. Rossotti, an extraordinarily able man. I do not know that political party has ever entered into the calculation of who ought to be the Commissioner of the Internal Revenue, but I do expect that by and large it has been a person who is of the same party as the President who nominates him. It is an interesting fact that this is not the case in this instance. I am sure we will have his cooperation, and I am sure you will know how to use it to the greatest public advantage. I ask unanimous consent to have the previously referred to material printed in the Record.

Mr. MOYNIHAN

Mr. MOYNIHAN. Mr. President, in an op-ed article in the New York Times on Tuesday, Richard Leone, who is the president of the 20th Century Fund, an eminent New York City institution, remarked, ``Last week, the House of Representatives took time out from beating up on the Internal Revenue Service to approve a fresh tax loophole.'' I have had occasion to comment that on July 31, when we voted 92 to 8 to approve an 820-page addition to the Internal Revenue Code, the only copy of the bill in this Chamber was in the possession of our most distinguished tax counsel, Mr. Giordano. Somewhat furtively, Members would come up and ask if they could just check whether their provision was in the bill. We might have charged for that service. We did not, in the public spirit of the occasion. But it was no way to legislate taxation. In that spirit, I simply want to say that neither, at this time and in this manner, ought we to be approving a new provision providing for expansion of IRA's that would cost us $4 billion over 10 years. That is in addition to the $38 billion in new IRA's which we passed on July 31. There was an education IRA, and I am happy to say a Roth IRA. Our distinguished chairman is to have the satisfaction, I hope it is, of seeing in bank windows around the country, ``Roth IRA available for purchase,'' which people will be wise to do. The tax legislation for this session of the 105th Congress is concluded. We will resume next year. I hope we don't resume with too much energy. It is a fact that we impose upon the Internal Revenue Service, and upon the citizenry much more than the Internal Revenue Service, incredibly complex measures which defy assessment in so many cases. And we do it while calling for the repeal of the Internal Revenue Code and the abolition of the IRS. Well, I can understand the calls that issue from the House of Representatives to abolish the IRS, because increasingly its task is impossible. But on the other hand, there is something called the Nation and it does require revenues. Even if they are reduced to that elemental proposition of delivering the mail and defending the coasts, that does require revenues. The choices are for us many and we shouldn't complexify them to the point of plain bafflement. The President has said he will veto this bill. Our President, in a letter to our distinguished majority leader of July 29, thanked the majority leader and, by reference, the others of us in conference on the Tax Relief Act of 1997, for the bipartisan way in which we were putting that legislation together, but he did say he would strongly oppose the measure of the Senator from Georgia. So, accordingly, that was taken out in conference in order for the whole bill to be approved. I ask unanimous consent that the President's letter be printed in the Record.

Mr. MOYNIHAN. And also having to do with the season of the year.