Daniel Moynihan

Mr. MOYNIHAN

Mr. MOYNIHAN. I am happy to yield to the Senator.

Mr. MOYNIHAN. Mr. President, this bill, H.R. 3448, the Small Business Protection Job Act of 1996, has two titles. Title I is Small Business and Other Tax Provisions. This was considered on June 12 by the Committee on Finance, which reported the bill unanimously with a committee amendment. Title II, Payment of Wages, contains the increase in the minimum wage we have been discussing. I want to address some of the more important provisions in the small business portion of the bill, and then make a more general point about the provision increasing the minimum wage. Section 1202 of this bill extends employer-provided educational assistance until December 31, 1996. That is for the remainder of this year. It also applies the provision to graduate education, which the House bill did not. At this point, about one-quarter of the employees sent to teaching institutions, institutions of higher learning, are, in fact, in graduate school, and the value of this program is particularly evident in the case of persons sent to do postgraduate work in highly technical areas. Employers recognize the abilities of the individuals, see the opportunities for bringing them to higher levels of productivity, and pay them more in the process. This measure, which is one of the least known but exceptionally rewarding features of our Tax Code was first enacted in 1978. We have never made it a permanent provision. We ought to do that. It ought to be one of the first businesses of the next Congress, because, absent the additional extension I will describe in a moment, it will have expired once again by the time the next Congress convenes. Employer- provided educational assistance is in this measure made retroactive, permitting employees to exclude from their income up to $5,250 in tuition paid for by their employers. In other words, it allows employers to send employees to college or graduate school tax free. I venture to say that the employer-provided educational assistance program is one of the most successful efforts ever undertaken by the Federal Government in this area. Some 800,000 employees benefit from this provision every year. And they benefit in the most auspicious of circumstances. An employer says, ``Will you go to graduate school and get an advanced degree in chemistry so we can put you in a higher position than you are now in? Then you will be in the higher position and earn more money and, in time, the Federal Government gets it back.'' So many of our job training programs have depended on hoping that in the aftermath of the training there will be a job. Here you have a situation where the employer already has the worker and the employee sees the opportunity to enlarge his or her situation, and to do so in a way that is optimal for all concerned. Now, 95 percent of the persons involved are pursuing a degree or certificate; 35 percent are enrolled in business and business-related fields, such as accounting, finance, marketing, and business administration; 12 percent are enrolled in health care-related curricula; another 18 percent are in engineering and other technical fields. I say, once again, this is a program that works. It administers itself. It has the least possible overlay of bureaucracy; it has none. There is no bureau of employer-provided education benefits in the Department of Education. There is nothing except individual contracts, employee and employer, with a great value added. I say again that it pays for itself. I am happy to say that the managers' amendment, which we expect will be adopted tomorrow, will provide for an extension through the end of 1997. So it would be a good thing if we would look to the next Congress to make this a permanent arrangement. Right now, almost a million employees do not know whether or not they owe income tax on the benefits--the educational tuition paid for them in the course of this previous year. We now do it retroactively. But this is something that can be made a permanent part of the Tax Code. I think the distinguished Presiding Officer would know that universities find this an exceptionally rewarding arrangement and, particularly, in the technical fields where serious job skill training takes place. I also mention that the Senate version of the expatriation tax proposal has been included in this bill. Earlier in this Congress, there was some question about whether the Finance Committee was going to address this matter, and we had rather a lively exchange on this floor to that effect. I said at the time that we would, and we have done it. This is a variation of a bill I first introduced in 1995 to address the problem presented when wealthy citizens renounce their U.S. citizenship and move abroad in order to escape taxation. Although expatriation to avoid taxes occurs infrequently, and it is not a seemly act, it does occur, and it is a genuine abuse. I would like to say for the Record that this is important, Mr. President. When the issue first arose in 1995, we had meant to move directly at that time. Then-chairman of the Finance Committee, Senator Bob Packwood of Oregon, and I said this is something to be dealt with directly. At that time, a number of legal scholars in the field of international law raised questions concerning the propriety under international law of restricting the rights of persons to leave the country of which they are a citizen. We took this seriously, as we were required to, and put off the legislation until we could satisfy ourselves--and the critics who had offered good faith comments--that we were doing something that would pass muster as not restricting the right of emigration. This bill does that, in our judgment, and does it very well indeed. One might think this is a small measure, and perhaps some have suggested it was. But this provision, the expatriation provision in the Senate bill, raises $1.57 billion over 10 years. The modified provision in managers' amendment that will be offered tomorrow increases that to a total of $1.71 billion, which suggests that what may have been a relatively rare event up until recently is gathering momentum, and we will now stop it. And stop it we ought. The idea of millionaires, multimillionaires, renouncing their citizenship and moving to the Bahamas is--well, it is not seemly. I need say no more. A final observation about the small business title of the bill. To pay for the small business tax relief provisions, which will cost approximately $17 billion, we are providing for a tax cut of $17 billion. We are phasing out section 936 of the Internal Revenue Code over 10 years. This measure, which dates from the 1920's, was originally intended to encourage American business to locate in the Philippines. For a generation now, it has been almost entirely a matter of Puerto Rican business activity, and has been very important to the economy of Puerto Rico. On the other hand, there comes a time when a measure of this sort has been in place long enough and it is recognized--not precipitously but with good notice--that the time has come to phase it out. The division of opinion on this question in Puerto Rico is probably associated with proponents of statehood and proponents of maintaining the commonwealth relationship. We have done our best to accommodate the people of Puerto Rico and their elected officials. They are not represented on the Senate floor. We have a profound responsibility to that possession which we obtained just short of 100 years ago in the aftermath of the Spanish-American War. I might add again, Mr. President, that this bill was reported from the Committee of Finance unanimously. It was bipartisan. It was the judgment of persons we found most persuasive that we should follow the shift we made in 1993 by encouraging the tax credit for actual job creation as against the depreciation of patents and other arrangements which had been possible under the earlier regime. I have been on the Senate floor for 20 years talking about this matter. I have tried to make it clear that the United States had an obligation not simply to the people of Puerto Rico but to the international community. Every President since Harry S. Truman has said that the people of Puerto Rico are free to remain a commonwealth--if they choose--to become a State, or to choose independence. And that option exists to this moment. But the time for this particular tax subsidy in this form seems now to have reached a point where we would say, ``All right, let us have done with it in the early 21st century.'' And this legislation does so. It is bipartisan. We hope it works. We have concerned ourselves solely, or I would like to think primarily, with what seems to be the best interests of Puerto Rico. And we have consulted with their elected representatives in this regard. I would particularly like to express my appreciation to Chairman Roth, who has been wholly cooperative in this matter and in particular in making the wage-based credit permanent for existing companies. I hope that at a later time we can work together to do more to provide incentives for new investment for Puerto Rico, not just for existing companies but for new companies as well, but that, too, is for the next Congress. I look forward to working with our committee and the Senate itself in this regard. I say once again that we must remain conscious of a very solemn responsibility to the people of Puerto Rico, who are not represented in this Chamber but who are American citizens, who have the right to be respected, whose rights are to be respected, and whose interests are to be advanced. This brings me to the minimum wage title of the bill, which after all is the reason we have taken the trouble to write a package of small business tax relief provisions. Many members of the majority, particularly in the other body, believe that an increase in the minimum wage would harm small businesses. Therefore they demanded offsetting tax relief for those businesses. Senators on our side did not feel any sweetener should be required in order to pass a long overdue increase in the minimum wage, but even so we tried to be accommodating. We worked on a bipartisan basis to craft a small business tax relief bill all Senators could support. Yet now we are told this is not enough. The price for passage of the minimum wage increase keeps going up. Tomorrow the Senate will vote on an amendment to exempt from the minimum wage businesses with less than $500,000 per year in sales; permit a subminimum wage of $4.25 per hour for newly hired workers; and delay the increase in the minimum wage for 6 months. I hope Senators will keep this minimum wage increase in perspective. Yes, an increase in the minimum wage will reduce demand for labor somewhat. But if you are looking for a painless time to do it, now is the time. The current economic expansion is in its 65th month. Unemployment is down to 5.3 percent. Two weeks ago, the Washington Post reported that serious labor shortages are developing around the United States, so much so that some fast-food franchises are paying substantial signing bonuses to new employees. So now is the time to phase in a higher minimum wage. Our expanding economy will easily adjust to it. When the Finance Committee took up this legislation 3 weeks ago, we understood that the small business provisions were necessary to get the minimum wage increase enacted. And we reported the bill unanimously. I hope the Senate will defeat the amendment of the Senator from Missouri tomorrow, and that we will then approve H.R. 3448 overwhelmingly and without further delay. Mr. President, I believe my time may have expired.

Mr. MOYNIHAN. This has been a consensus on both sides of the aisle for 60 years, including President Eisenhower, President Nixon and President Bush. We will see. Mr. President, I ask unanimous consent to speak, with the time to be allocated against the underlying bill, H.R. 3448, the Small Business Job Protection Act of 1996.

Mr. MOYNIHAN. Exactly. What I cannot understand--and I do not think the Senator from Maryland can help me--is that I thought this was all understood 50 years ago. Evidently not. We will find out tomorrow.

Mr. MOYNIHAN. If I may say to my friend from Maryland, for a century it has been a well-understood principle that with respect to labor legislation, its primary purpose is not to put at a disadvantage employers who will provide better wages and conditions. We have done this not only internally, but through the International Labor Organization. We had labor treaties to do just that. We had to deal with child labor in those terms so that the employer would not put 12- year-olds in coal mines, which we had, would not be at a disadvantage more than one who would.

Mr. MOYNIHAN. That is divided on each side.

Mr. MOYNIHAN. May I ask the Chair, we have only 2 hours of debate on this entire matter?

Mr. MOYNIHAN. Mr. President, there are 2 hours reserved for debate on the minimum wage aspect of this bill, is that not the case?

Mr. MOYNIHAN. Mr. President, I wanted for say how emphatically I support each of the statements we have just heard. It is embarrassing at this point in the 20th century that we have to go to this effort just to maintain the value of an economic guarantee that has been with us for 60 years. It is as if the 20th century did not happen on the other side of the aisle, or should not have. I hope the woman, the lady who wrote the Senator, will not have done so in vain. A beautiful letter and beautifully described.

Mr. MOYNIHAN

Mr. MOYNIHAN. Mr. President, I rise this evening in strong support of the resolution submitted by my distinguished colleagues, the chairman and the ranking member of the Foreign Relations Committee, Senators Helms and Pell. It is most appropriate that the United States Senate adopt a resolution expressing our outrage at the recent terrorist bombing in Saudi Arabia. I note, sir, that among the 19 Americans slain in the attack was Air Force Capt. Christopher J. Adams of Massapequa Park, NY. I know that all Senators join me in offering solace to his family, and to the families of the other victims. The United States and the community of civilized nations must never relax our efforts to bring the perpetrators of this cowardly act to justice. Our commitment to the rule of law requires no less. I thank the Chair and I ask that I be included as a cosponsor of the resolution.

Mr. MOYNIHAN

Mr. MOYNIHAN. Mr. President, today I join with the chairman of the Committee on Finance in introducing legislation to bring new clarity to the muddled language of U.S. trade policy. The unanimity of support for this legislation is demonstrated by the fact that each and every Member of the Finance Committee is an original cosponsor. Since the 18th century, the United States has pursued a policy of nondiscrimination among its trading partners. This policy has created considerable equality in the trading conditions we extend to the great majority of countries with which we trade. If the United States has normal trade relations with a country, that country receives treatment equal to most others under our trade laws. The legislation we introduce today is designed to call this policy of equal treatment what it is--normal trade relations. For it has become increasingly clear that the 18th century term used to describe this policy of equal treatment, the term that still prevails in our international agreements, our laws, and our usage, has served only to confuse. By confusing, it is complicating the conduct of American foreign trade policy. Much of international and American law would have one believe that there is a select handful of countries that are most favored. Not at all the case, so it is time to stop suggesting so. The legislation we introduce today states that it is the sense of the Congress that henceforth U.S. law should more clearly reflect the underlying principles of U.S. trade policy by substituting the term ``normal trade relations'' for the term ``most-favored-nation.'' In each instance in U.S. trade law where it is appropriate to make such a change, the legislation does so. To our trading partners, let me say that there is no intention to alter our international rights or obligations by virtue of this legislation. ``MFN'' is a term with a long history of application and interpretation. We mean no substantive change here. Our purpose is solely linguistic--to change the language, not the content, or our trade policy so that it is more comprehensible. I hope the Senate will have an opportunity to act on this legislation soon. I commend it to the attention of the Senate.

Mr. MOYNIHAN. Mr. President, I rise to join my friend and colleague Senator D'Amato in introducing a bill that will authorize a small but most significant addition to the National Park System by designating the Lower East Side Tenement Museum a national historic site. For 150 years New York City's Lower East Side has been the most vibrant, populous, and famous immigrant neighborhood in the Nation. From the first waves of Irish and German immigrants to Italians and Eastern European Jews to the Asian, Latin, and Caribbean immigrants arriving today, the Lower East Side has provided millions their first American home. For many of them that home was a brick tenement; six or so stories, no elevator, maybe no plumbing, maybe no windows, a business on the ground floor, and millions of our forbearers upstairs. The Nation has with great pride preserved log cabins, farm houses, and other symbols of our agrarian roots. We have reopened Ellis Island to commemorate and display the first stop for 12 million immigrants who arrived in New York City. Until now we have not preserved a sample of urban, working class life as part of the immigrant experience. For many of those who disembarked on Ellis Island the next stop was a tenement on the Lower East Side, such as the one at 97 Orchard Street. It is here that the Lower East Side Tenement Museum will show us what that next stop was like. The tenement at 97 Orchard was built in the 1860s, during the first phase of tenement construction. It provided housing for 20 families on a plot of land planned for a single family residence. Each floor had four three-room apartments, each of which had two windows in one of the rooms and none in the others. The privies were out back, as was the spigot that provided water for everyone. The public bathhouse was down the street. In 1900 this block was the most crowded per acre on earth. Conditions improved after the passage of the New York Tenement House Act of 1901, though the crowding remained. Two toilets were installed on each floor. A skylight was installed over the stairway and interior windows were cut in the walls to allow some light throughout each apartment. For the first time the ground floor became commercial space. In 1918 electricity was installed. Further improvements were mandated in 1935, but the owner chose to board the building up rather than follow the new regulations. It remained boarded up for 60 years until the idea of a museum took hold. The Tenement Museum will keep at least one apartment in the dilapidated condition in which it was found when reopened, to show visitors the process of urban archeology. Others will be restored to show how real families lived at different periods in the building's history. At a nearby site there will be interpretive programs to better explain the larger experience of gaining a foothold on America in the Lower East Side of New York. There are also plans for programmatic ties with Ellis Island and its precursor, Castle Clinton. And the Museum plans to play an active role in the immigrant community around it, further integrating the past and present immigrant experience on the Lower East Side. This bill designates the Tenement Museum a national historic site. It also authorizes the Secretary of the Interior to enter into cooperative agreements with the Museum. Such agreements could include technical or financial assistance to help restore, operate, maintain, or interpret the site. Agreements can also be made with the Statue of Liberty/Ellis Island and Castle Clinton to help with the interpretation of life as an immigrant. It will be a productive partnership. Mr. President, I believe the Tenement Museum provides an outstanding opportunity to preserve and present an important stage of the immigrant experience and the move for social change in our cities at the turn of the century. I know of no better place than 97 Orchard Street to do so, and no other place in the National Park System doing so already. I look forward to the realization of this grand idea, and I ask my colleagues for their support.

Mr. MOYNIHAN

Mr. MOYNIHAN. Mr. President, I recently introduced two bills to correct a serious misallocation of our limited resources under the present law rules that govern the issuance of tax-exempt bonds. My first bill, S. 1879, the Section 501(c)(3) Nonprofit Organizations Tax- Exempt Bond Reform Act of 1996, would increase funding for educational and research facilities at private colleges and universities by removing the arbitrary and injurious $150 million cap on the amount of tax-exempt bonds that can be issued on their behalf. The Senate has twice passed this measure as part of larger legislation that was vetoed for unrelated reasons. My second bill, S. 1880, the Stop Tax-exempt Arena Debt Issuance Act--or ``STADIA'' for short--would provide a particularly appropriate revenue offset for the first bill. This bill would end a tax subsidy that inures largely to the benefit of wealthy sports franchise owners, by eliminating tax-subsidized financing of professional sports facilities. This legislation is important in its own right, and would close a loophole that ultimately injures State and local governments and other issuers of tax exempt bonds, that provides an unintended federal subsidy--in fact, contravenes Congressional intent--and that contributes to the enrichment of persons who need no Federal assistance whatsoever. I chose to introduce S. 1880 with an immediate effective date for a number of reasons. Most importantly, Congress intended to eliminate the issuance of tax-exempt bonds to finance professional sports facilities as part of the Tax Reform Act of 1986. An immediate effective date is appropriate because the issuance of these bonds contravenes the clear and expressed intent of Congress. Also, an immediate effective date is necessary to prevent a rush to market. I have no doubt that bond market professionals would act very quickly to issue stadium bonds if provided a window of opportunity in which to do so. The potential for a rush to market would have a predictable impact on the revenue estimate for this measure. At the same time, I recognized that a few localities may have expended significant time and funds in planning and financing a professional sports facility, in reliance upon professional advice on their ability to issue tax-exempt bonds. Thus, in my introductory statement, I specifically requested comment regarding ``the need for equitable relief for stadiums already in the planning stages.'' In response to my request, several localities that had been planning to finance professional sports facilities with tax-exempt bonds have already come forward. They have provided the details necessary to craft appropriate ``binding contract'' type transitional relief. They have also informed me that, despite my clear statement that appropriate transition relief would be afforded, some proposed stadium deals could be delayed or called into question in reaction to the introduction of the bill. Let me emphasize that the mere introduction of the bill has caused this reaction. It is flattering that the mere introduction of a bill is given such credence by the bond markets. It is important to note, however, that at the time I introduced my bill to eliminate tax-exempt financing for professional sports facilities, 1,879 bills were on file in the Senate and 3,659 bills were on file in the House in this Congress. The vast majority of these bills have not and will not become law, including, in all likelihood, S. 1879 and S. 1880. The history of this Senator's efforts to remove the $150 million cap demonstrates this lesson well. The cap was first imposed under the Tax Reform Act of 1986, which President Reagan signed into law on October 22, 1986. I first introduced legislation to repeal this cap in 1987. Since then, legislation to remove the cap has been approved by the Finance Committee four times. Twice the legislation was passed by Congress, and both times President Bush vetoed the bills containing this measure for other reasons. Today, the cap remains in law. At all events, I have considered the circumstances of the localities that have contacted my office in response to my earlier request. I am told that time is of the essence with respect to several of these transactions. Accordingly, in an effort to respond expeditiously to this need, I am inserting into the Record language for a binding contract-type transition relief provision. This modification represents my best effort to draw an equitable line to distinguish between those projects that have progressed to a point where the bill should not cause a disruption, and those projects that should be subject to the bill if enacted. It is my intent that this language be included, as if introduced as part of the original bill, if and when the bill is adopted in committee or in floor action. Further, I will be certain to include this language when reintroducing this legislation in the 105th Congress. Mr. President, I ask that this language be printed in the Record. The material follows: (b) Effective Date.-- (1) In general.--The amendments made by this section shall apply to bonds issued on or after June 14, 1996. (2) Exception for construction, binding agreements, or approved projects.--The amendments made by this section shall not apply to bonds-- (A) the proceeds of which are used for-- (i) the construction or rehabilitation of a facility-- (I) if such construction or rehabilitation began before June 14, 1996, and was completed on or after such date, or (II) if a State or political subdivision thereof has entered into a binding contract before June 14, 1996, that requires the incurrence of significant expenditures for such construction or rehabilitation, and some of such expenditures are incurred on or after such date; or (ii) the acquisition of a facility pursuant to a binding contract entered into by a State or political subdivision thereof before June 14, 1996, and (B) which are the subject of an official action taken by relevant government officials before June 14, 1996-- (i) approving the issuance of such bonds, or (ii) approving the submission of the approval of such issuance to a voter referendum. (3) Exception for final bond resolutions.--The amendments made by this section shall not apply to bonds the proceeds of which are used for the construction or rehabilitation of a facility if a State or political subdivision thereof has adopted a final bond resolution before June 14, 1996, authorizing the issuance of such bonds. For this purpose, a final bond resolution means that all necessary governmental approvals for the issuance of such bonds have been completed. (4) Significant expenditures.--For purposes of paragraph (2)(A)(i)(II), the term ``significant expenditures'' means expenditures equal to or exceeding 10 percent of the reasonably anticipated cost of the construction or rehabilitation of the facility involved.

Mr. MOYNIHAN

Mr. MOYNIHAN. Mr. President, I rise to join my friend and colleague Senator D'Amato in introducing a bill that will authorize a small but most significant addition to the National Park System by designating the Lower East Side Tenement Museum a national historic site. For 150 years New York City's Lower East Side has been the most vibrant, populous, and famous immigrant neighborhood in the Nation. From the first waves of Irish and German immigrants to Italians and Eastern European Jews to the Asian, Latin, and Caribbean immigrants arriving today, the Lower East Side has provided millions their first American home. For many of them that home was a brick tenement; six or so stories, no elevator, maybe no plumbing, maybe no windows, a business on the ground floor, and millions of our forbearers upstairs. The Nation has with great pride preserved log cabins, farm houses, and other symbols of our agrarian roots. We have reopened Ellis Island to commemorate and display the first stop for 12 million immigrants who arrived in New York City. Until now we have not preserved a sample of urban, working class life as part of the immigrant experience. For many of those who disembarked on Ellis Island the next stop was a tenement on the Lower East Side, such as the one at 97 Orchard Street. It is here that the Lower East Side Tenement Museum will show us what that next stop was like. The tenement at 97 Orchard was built in the 1860s, during the first phase of tenement construction. It provided housing for 20 families on a plot of land planned for a single family residence. Each floor had four three-room apartments, each of which had two windows in one of the rooms and none in the others. The privies were out back, as was the spigot that provided water for everyone. The public bathhouse was down the street. In 1900 this block was the most crowded per acre on earth. Conditions improved after the passage of the New York Tenement House Act of 1901, though the crowding remained. Two toilets were installed on each floor. A skylight was installed over the stairway and interior windows were cut in the walls to allow some light throughout each apartment. For the first time the ground floor became commercial space. In 1918 electricity was installed. Further improvements were mandated in 1935, but the owner chose to board the building up rather than follow the new regulations. It remained boarded up for 60 years until the idea of a museum took hold. The Tenement Museum will keep at least one apartment in the dilapidated condition in which it was found when reopened, to show visitors the process of urban archeology. Others will be restored to show how real families lived at different periods in the building's history. At a nearby site there will be interpretive programs to better explain the larger experience of gaining a foothold on America in the Lower East Side of New York. There are also plans for programmatic ties with Ellis Island and its precursor, Castle Clinton. And the Museum plans to play an active role in the immigrant community around it, further integrating the past and present immigrant experience on the Lower East Side. This bill designates the Tenement Museum a national historic site. It also authorizes the Secretary of the Interior to enter into cooperative agreements with the Museum. Such agreements could include technical or financial assistance to help restore, operate, maintain, or interpret the site. Agreements can also be made with the Statue of Liberty/Ellis Island and Castle Clinton to help with the interpretation of life as an immigrant. It will be a productive partnership. Mr. President, I believe the Tenement Museum provides an outstanding opportunity to preserve and present an important stage of the immigrant experience and the move for social change in our cities at the turn of the century. I know of no better place than 97 Orchard Street to do so, and no other place in the National Park System doing so already. I look forward to the realization of this grand idea, and I ask my colleagues for their support.

Mr. MOYNIHAN

Mr. MOYNIHAN. Mr. President, today I join with the chairman of the Committee on Finance in introducing legislation to bring new clarity to the muddled language of U.S. trade policy. The unanimity of support for this legislation is demonstrated by the fact that each and every Member of the Finance Committee is an original cosponsor. Since the 18th century, the United States has pursued a policy of nondiscrimination among its trading partners. This policy has created considerable equality in the trading conditions we extend to the great majority of countries with which we trade. If the United States has normal trade relations with a country, that country receives treatment equal to most others under our trade laws. The legislation we introduce today is designed to call this policy of equal treatment what it is--normal trade relations. For it has become increasingly clear that the 18th century term used to describe this policy of equal treatment, the term that still prevails in our international agreements, our laws, and our usage, has served only to confuse. By confusing, it is complicating the conduct of American foreign trade policy. Much of international and American law would have one believe that there is a select handful of countries that are most favored. Not at all the case, so it is time to stop suggesting so. The legislation we introduce today states that it is the sense of the Congress that henceforth U.S. law should more clearly reflect the underlying principles of U.S. trade policy by substituting the term ``normal trade relations'' for the term ``most-favored-nation.'' In each instance in U.S. trade law where it is appropriate to make such a change, the legislation does so. To our trading partners, let me say that there is no intention to alter our international rights or obligations by virtue of this legislation. ``MFN'' is a term with a long history of application and interpretation. We mean no substantive change here. Our purpose is solely linguistic--to change the language, not the content, or our trade policy so that it is more comprehensible. I hope the Senate will have an opportunity to act on this legislation soon. I commend it to the attention of the Senate.

Mr. MOYNIHAN

Mr. MOYNIHAN. Mr. President, I rise in strong support of the nomination of Marcia E. Miller to become Commissioner of the International Trade Commission, a position for which she is manifestly well-qualified. I do so, Mr. President, without reservation, but with some regret: Ms. Miller has been an invaluable asset to the Finance Committee for nearly a decade. Ms. Miller started with the committee in January 1987. I take some credit for her long tenure: one of my first accomplishments when I became chairman of the Finance Committee in 1993 was persuading Ms. Miller to serve as our Chief Trade Counselor. And why? There was simply no better candidate. Ms. Miller has had a hand in drafting all of the major trade bills of the past decade, beginning with the comprehensive Omnibus Trade and Competitiveness Act of 1988. As Chief Trade Counselor, Marcia guided the Finance Committee expertly over difficult terrain: our sometimes contentious consideration of the North American Free-Trade Agreement implementing legislation, and our lengthy deliberations over the complex bill implementing the Uruguay round agreements and establishing the World Trade Organization. Over the past decade, she has grappled with the major trade issues before the Senate--issues such as trade with China, textile and apparel trade, and disputes with Japan. Significantly, I must add to this list the range of the trade laws administered by the International Trade Commission, which she will soon join--the antidumping and countervailing duty laws, safeguards actions against imports, as well as actions under section 337 of the Tariff Act of 1930 protecting against imports of products that infringe intellectual property rights. Unquestionably, Ms. Miller will bring to the International Trade Commission great expertise in the trade laws. And more. She will bring as well a powerful command of details, and unique skill in forging consensus among persons with widely divergent views. The International Trade Commission will now be the beneficiary of these skills, just at the Finance Committee was for so many years. Ms. Miller will be an important asset to the Commission. She will bring to the job sound judgment and clear-headed analysis, and she will, I am certain, ensure that the Commission functions as the Congress intended--as an independent fact-finding and adjudicative body free from political pressures. Mr. President, I urge my colleagues to join me in supporting Ms. Miller's nomination, in thanking her for her years of service to the committee and the Senate and in congratulating her and her family in this richly deserved honor.

Mr. MOYNIHAN. Mr. President, Raymond W. Kelly may be the most superbly qualified nominee ever nominated to head the enforcement operations of the Treasury Department. From 1992 to 1994, he served as Commissioner of the New York City Police Department, which with 38,000 officers is the world's largest police force. Over the course of his 32-year career with the NYPD, he served in every rank in 25 different commands. In 1993, he was widely praised for his work in investigating the bombing of the World Trade Center in lower Manhattan. At a recent event in New York, no less a skeptic than Dan Rather called Ray ``the best New York City Police Commissioner since Teddy Roosevelt.'' After leaving the NYPD, Commissioner Kelly served the United States as Director of the International Police Monitors of the Multinational Force in Haiti. He was charged with the difficult and delicate task of putting a stop to human rights abuses by the Haitian police. Upon leaving Haiti in 1995, Mr. Kelly was awarded a commendation by President Clinton for exceptionally meritorious service in Haiti. He was also awarded the Commander's Medal for Public Service by Gen. John Shalikashvili, Chairman of the Joint Chiefs of Staff. Earlier in life, Mr. Kelly served in the U.S. Marine Corps, including combat in Vietnam. He retired with the rank of colonel in the Marine Corps Reserve. He is also an attorney with law degrees from St. John's University and New York University. He earned his undergraduate degree from Manhattan College and his master of public administration degree from the Kennedy School at Harvard. I know Raymond Kelly as a very smart and very tough law enforcement officer. The Senate has acted wisely to confirm him. To Ray, to his wife Veronica, and to their sons James and Gregory, great good wishes and congratulations. nomination of marcia e. miller to be commissioner, international trade commission

Mr. MOYNIHAN

Mr. MOYNIHAN. Mr. President, I do so in the context of a commission created in the 103d Congress, the Commission on Protecting and Reducing Government Secrecy, which was established to review the whole pattern of the protection of the Nation's intelligence and defense secrets as we moved into a very different era from that from which we are clearly emerging. The present regime for protecting secrecy in our country was basically put in place in a very few days, weeks at most, in the aftermath of the declaration of war on Germany in 1917. The Espionage Act of 1917 was introduced in the first week of April, 1917, as the United States entered the First World War, and is still in place, though an amendment passed the following year known as the Sedition Act--largely a revision of section 3 of the Espionage Act--was subsequently repealed. In that same first week of April 1917, the Civil Service Commission presented to President Wilson a request for an Executive order on the question of the loyalty of Federal employees. Again, demonstrating a pattern, although one interrupted, that we see in our present situation--the arrangements put in place near the beginning of the century remain in place today. These are very considerable arrangements. Some 2,300,000 American civil servants have clearances for various levels of access to classified material. Some 850,000 persons in civilian employment in defense industries in the main are similarly cleared for classified material. The cost is very considerable, the issue is consequential. We did deal at great length with the problem of espionage in this country during the First World War. The Central Powers and the Allied Powers were very much contending for American support. It is a known fact that the German Ambassador to this country brought with him on one of his trips $150 million in Treasury bonds, the equivalent of $1 billion today, to use for just that purpose. And it had its consequences. During the 1930's, again, there were efforts of this kind from Hitler's Germany. Simultaneously, from the beginning of the establishment of the Communist Party in the United States, the Soviet Union had been involved in espionage activities, having as their most dramatic event the infiltration of the Manhattan Project. They successfully transferred to the Soviet Union the essential plans for the first atomic bomb. The Soviet Union had an atomic bomb about four years from the time that the United States did. It was almost, bolt for bolt, modeled on the original device tested at Alamogordo and the bomb that was dropped on Nagasaki, Japan. The details of this espionage effort are just emerging as the Venona transcripts are being released by the National Security Agency. We feel in our Commission that we have been something of a catalyst with regard to the Venona release, and with it we are beginning to see just how much the United States was up against and how necessary some of these measures were. We also begin to ask ourselves whether they are still necessary in the face of a very different international setting today. The Commission has a distinguished membership. I serve as Chairman; the Honorable Larry Combest, the chairman of the House Permanent Select Committee on Intelligence is Vice Chairman; the Honorable John Deutch was originally appointed when he was Deputy Secretary of Defense, and continues to serve on the Commission in his role as Director of Central Intelligence. We are finding, and I think the Senator from Connecticut will know this and will agree, that in the new world of electronic communication, the security of American encrypted messages is very much problematic, and the capacities of persons all over the world, for whatever reason, to break into the Pentagon files and intercept messages is almost difficult to comprehend for someone over the age of 30. We learned just yesterday in the New York Times that a 16-year-old British youth with a small computer in his bedroom in North London was intercepting messages from American agents in North Korea, and there are several criminal prosecutions going on in the United Kingdom of that kind. How to deal with this entirely new set of challenges is the reason for establishing such bodies as the Commission on Protecting and Reducing Government Secrecy--and I think that the commission proposed here to inquire into the nature of our military defense needs in the future, with a larger view than the quadrennial review--is wholly in order. I am honored to be a cosponsor of the amendment. I hope the work of the Commission on Protecting and Reducing Secrecy might be of some utility to this commission, as it begins its work. I thank the sponsors, and I yield the floor.

Mr. MOYNIHAN. I thank my friend.

Mr. MOYNIHAN. Mr. President, I rise briefly to associate myself most emphatically with the remarks of the Senator from Connecticut and the Senator from Indiana in regard to the National Defense Panel to review of our defense needs. I ask unanimous consent that I be made a cosponsor of that amendment.

Mr. MOYNIHAN

Mr. MOYNIHAN. Mr. President, I am very grateful to the Senator from Nevada. Might I close with just one line? In President Kennedy's proposal for the redevelopment of Pennsylvania Avenue, which we are talking about, he said the avenue ``should be lively, friendly, and inviting, as well as dignified and impressive.'' I think we can achieve that in the immediate environs of the White House. It is just the next challenge. Let us go forward and do it in good spirit and unity. I thank again the Senator from Nevada.

Mr. MOYNIHAN. I yield the floor.

Mr. MOYNIHAN. Mr. President, I rise in support of the measure of the Senator from Nevada. I would like to put it in a certain context. The first thing to know, if we are talking about our original plans, is that the L'Enfant plan connects what was termed the ``Congress' House'' with the ``President's House,'' at either end of Pennsylvania Avenue. It is the center of the plan. It is in a sense a diagram of the Constitution--the separation of powers in a unified Government. Pennsylvania Avenue, in that original plan, comes to the Capitol Grounds, stops at the west end, and then resumes at the east end. That is the present arrangement on Capitol Hill. The identical arrangement was to be found at the west end of the avenue. The avenue moved up to the Presidential grounds, then stopped and resumed further west. That was before the Treasury Building was built, and before any roads were built. The city, at that point, was still very much a marshland, with this magnificent plan still to be realized. I have been working for 35 years on the redevelopment of Pennsylvania Avenue, from the time President Kennedy, in his inaugural parade, looked to his left and to his right, south and north, at the avenue and found it was being abandoned. The center of the city, as the center of many cities, was just falling down. The city was moving out Wisconsin Avenue, out Connecticut Avenue. The Federal triangle was unfinished on the south side, which had begun under Andrew Mellon and President Hoover, following the McMillan plan of 1900, which gave us Union Station. It got the railroads off The Mall, for example. To the north, the Avenue was all but abandoned--two- and three-story buildings were empty, except for the occasional storefront selling firecrackers. President Kennedy proposed redevelopment of the avenue. A commission was established. Nathaniel Owings was Chairman. Presidents Johnson, Nixon, Ford, Carter, Reagan, Bush, and now President Clinton, have worked on it with great care. We are just about completed. The Ronald Reagan Building, now three-quarters completed, will finish the Federal triangle. That site, sir, was cleared in 1928. So you cannot say we have been in any great rush to do this. And now just as we finish the route to the White House, we have this security problem. I say to my friend from Nevada that President Clinton did a fine thing in establishing a committee headed by Roger Kennedy, who is the Director of the Park Service, an architectural historian of great talent. His works are incomparably intelligent. Orders From France, is but one example. The committee has come up with a plan, which would extend the park northward in the manner envisioned by L'Enfant. But it need not be a barrier to the movement of people and vehicles along the avenue. An underpass could be completed that would serve this purpose. It is just so important that we not define ourselves as a beleaguered, besieged nation. Suggestion has been made by the ranking member of the Governmental Affairs Committee, the distinguished Senator from Ohio, that we get rid of the pots and barriers around the Capitol. Fine. We could extend the Capitol park down the western side of the Russell Office Building, add to that whole park complex, do everything that is desired, without putting up what look like emergency barriers. That is not the message we want to send to ourselves and to the world. We can also do what is necessary for security at the White House without declaring us to be a nation under siege. We are not, and we should not say so. We are the most powerful nation on Earth. With equanimity and care we can take care of these difficulties. I hope we do.

Mr. MOYNIHAN

Mr. MOYNIHAN. Mr. President, this past Monday, the Washington Post reported that Justice Department attorneys have reached a settlement with lawyers representing the estate of Dr. Beatrice Braude concerning monetary damages equitably due for the wrongful dismissal of Dr. Braude from her Federal job in 1953 and subsequent blacklisting. The estate will receive $200,000 in damages. Family members have announced that the funds--which Congress must now appropriate--will be donated to Hunter College, the institution from which Dr. Braude received her bachelor's degree. This settlement stems from the enormously gratifying decision of U.S. Court of Federal Claims Judge Roger B. Andewelt on March 7, following a hearing last November, that the United States Information Agency (USIA) had wrongfully dismissed Dr. Braude and intentionally concealed the reason for her termination. He concluded that such actions constituted an equitable claim for which compensation is due. Dr. Braude's suit was made possible through legislation then-Senator Javits and I originally introduced in 1979 and which Senator D'Amato and I continued to press. When finally enacted, it lifted the statute of limitations, enabling the Court to hear Dr. Braude's case and hand down its decision. I know Senator D'Amato shares my gratification with the settlement announcement. With Judge Roger B. Andewelt's decision and this negotiated settlement, we have finally seen a measure of justice which brings back memories of an old and awful time. Dr. Braude, a linguist fluent in several languages, was dismissed from her position at the USIA in 1953 as a result of accusations of disloyalty to the United States. The accusations were old; 2 years earlier, the State Department's Loyalty Security Board had investigated and unanimously voted to dismiss them. The Board sent a letter to Dr. Braude stating ``there is no reasonable doubt as to your loyalty to the United States Government or as to your security risk to the Department of State.'' Dr. Braude was terminated 1 day after being praised for her work and informed that she probably would be promoted. USIA officials told that her that the termination was due to budgetary constraints. Congress had funded the USIA at a level 27 percent below the President's request. The Supplemental Appropriation Act of 1954 (Public Law 83-207) authorized a reduction in force commensurate to the budget cut. Fair enough. As Dr. Braude remarked years later, ``I never felt that I had a lien on a government job.'' But what Dr. Braude did not know is that she was selected for termination because of the old--and answered-- charges against her. And because she did not know the real reason for her dismissal, she was denied certain procedural rights (the right to request a hearing, for instance). The true reason for her dismissal was kept hidden from her. When she was unable, over the next several years, to secure employment anywhere else within the Federal Government--even in a typing pool despite a perfect score on the typing test--she became convinced that she had been blacklisted. She spent the next 30 years fighting to regain employment and restore her reputation. Though she succeeded in 1982 (at the age of 69) in securing a position in the CIA as a language instructor, she still had not been able to clear her name by the time of her death in 1988. The irony of the charges against Dr. Braude is that she was an anti-communist, having witnessed first-hand communist- sponsored terrorism in Europe while she was an assistant cultural affairs officer in Paris and, for a brief period, an exchange officer in Bonn during the late 1940's and early 1950's. Mr. President, I would like to review the charges against Dr. Braude because they are illustrative of that dark era and instructive to us even today. There were a total of four. First, she was briefly a member of the Washington Book Shop on Farragut Square that the Attorney General later labeled subversive. Second, she had been in contact with Mary Jane Keeney, a Communist Party activist employed at the United Nations. Third, she had been a member of the State Department unit of the Communist-dominated Federal Workers' Union. Fourth, she was an acquaintance of Judith Coplon. With regard to the first charge, Dr. Braude had indeed joined the Book Shop shortly after her arrival in Washington in 1943. She was eager to meet congenial new people and a friend recommended the Book Shop, which hosted music recitals in the evenings. I must express some sensitivity here: my F.B.I. records report that I was observed several times at a ``leftist musical review'' in suburban Hampstead while I was attending the London School of Economics on a Fulbright Fellowship. Dr. Braude was aware of the undercurrent of sympathy with the Russian cause at the Book Shop, but her membership paralleled a time of close U.S.-Soviet collaboration. She drifted away from the Book Shop in 1944 because of her distaste for the internal politics of other active members. Her membership at the Book Shop was only discovered when her name appeared on a list of delinquent dues. It appears that her most sinister crime while a member of the book shop was her failure to return a book on time. Dr. Braude met Mary Jane Keeney on behalf of a third woman who actively aided Nazi victims after the war and was anxious to send clothing to another woman in occupied Germany. Dr. Braude knew nothing of Keeney's political orientation and characterized the meeting as a transitory experience. With regard to the third charge, Dr. Braude, in response to an interrogatory from the State Department's Loyalty Security Board, argued that she belonged to an anti-Communist faction of the State Department unit of the Federal Workers' Union. Remember that the Loyalty Security Board investigated these charges and exonerated her. The fourth charge, which Dr. Braude certainly did not--or could not-- deny, was her friendship with Judith Coplon. Braude met Coplon in the summer of 1945 when both women attended a class Herbert Marcuse taught at American University. They saw each other infrequently thereafter. In May 1948, Coplon wrote to Braude, then stationed in Paris and living in a hotel on the Left Bank, to announce that she would be visiting shortly and needed a place to stay. Dr. Braude arranged for Coplon to stay at the hotel. Coplon stayed for 6 weeks, during which time Dr. Braude found her behavior very trying. The two parted on unfriendly terms. The friendship they had prior to parting was purely social. Mr. President, Judith Coplon was a spy. She worked in the Justice Department's Foreign Agents Registration Division, an office integral to the FBI's counterintelligence efforts. She was arrested early in 1949 while handing over notes on counterintelligence operations to Soviet citizen Valentine Gubitchev, a United Nations employee. Coplon was tried and convicted--there was no doubt of her guilt--but the conviction was overturned on a technicality. Gubitchev was also convicted but was allowed to return to the U.S.S.R. because of his quasi-diplomatic status. I bring all this up because, as I mentioned earlier, it is instructive. The world is a dangerous place. On July 11, 1995--6 days before the 50th anniversary of the first successful detonation of an atomic bomb--the National Security Agency released 49 of some 2,200 coded messages sent by the KGB and decrypted between 1943 and 1980. The decoded messages have been kept classified until now. They are known as the VENONA intercepts. The existence of a Soviet spy ring and the active involvement of American communists--fellow countrymen was the KGB code word for them-- has long been established. Of late, details have been flooding in from Moscow. But this is the first American archive to be opened. At the onset of the Cold War, in Edward Shils' memorable phrase, the American visage began to cloud over. Some saw conspiracy everywhere. Recall, that in 1951, Senator Joseph McCarthy published America's ``Retreat from Victory: The Story of George Catlett Marshall.'' Some denied any such possibility and accused the accusers. Loyalty oaths and background checks proliferated, and all information became Top Secret. A culture of secrecy took hold within the American government, whilst a hugely divisive debate raged in Congress and the press. We got through it. But the world remains a dangerous place, and it is just possible that we might learn something from the VENONA files. Had they been published in 1950, we might have been spared the soft-on- communism charge that distorted our politics for four decades. We might have been spared the anti-anti-communist stance that was no less unhelpful. The fact is, there were spies in this country and they did awful things--Coplon among them. But there were innocent people, too, like Dr. Braude, who were caught in a hall of mirrors. My involvement in Dr. Braude's case dates back to early 1979, when Dr. Braude came to me and my colleague at the time, Senator Javits, and asked us to introduce private relief legislation on her behalf. In 1974, after filing a Freedom of Information Act request and finally learning the true reason for her dismissal, she filed suit in the Court of Claims to clear her name and seek reinstatement and monetary damages for the time she was prevented from working for the Federal Government. The Court, however, dismissed her case on the grounds that the statute of limitations had expired. On March 5, 1979, Senator Javits and I together introduced a bill, S. 546, to waive the statute of limitations on Dr. Braude's case against the U.S. Government and to allow the Court of Claims to render judgment on her claim. The bill passed the Senate on January 30, 1980. Unfortunately, the House failed to take action on the bill before the 96th Congress adjourned. In 1988, and again in 1990, 1991, and 1993, Senator D'Amato and I re- introduced similar legislation on Dr. Braude's behalf. Our attempts met with repeated failure. Until at last, on September 21, 1993, we secured passage of Senate Resolution 102, which referred S. 840, the bill we introduced for the relief of the estate of Dr. Braude, to the Court of Claims for consideration as a congressional reference action. The measure compelled the Court to determine the facts underlying Dr. Braude's claim and to report back to Congress on its findings. The Court held a hearing on the case last November and Judge Andewelt issued his verdict in March. Forty-three years after her dismissal from the USIA and 8 years after her death, the Court found in favor of the estate of Dr. Braude. Senator D'Amato and I wish to express our profound admiration for Judge Andewelt's decision in which he absolved Dr. Beatrice Braude of the surreptitious charges of disloyalty with which she was never actually confronted. The Court declared that Dr. Braude ``cared about others deeply and was loyal to her friends, family and country.'' We are equally grateful to Christopher N. Sipes and William Livingston, Jr. of Covington & Burling, two of the many lawyers who have handled Dr. Braude's case on a pro bono basis over the years. Mr. Sipes quite properly remarked that the decision represents an important page in the annals of U.S. history: ``The Court of the United States has said it recognizes that this conduct is out of bounds. It tells the government it must acknowledge its wrongs and pay for them.'' Anthony Lewis wrote about Dr. Braude's case on March 15 in his regular New York Times column, Abroad at Home. He properly warns us that the cause of the injustice to Beatrice Braude and other loyalty victims--secret proceedings--is not ancient history. The anti-terrorism bill had a provision to allow for the deportation of aliens on secret evidence. It was stripped, fortunately, during floor consideration in the House. But the provision is likely to reappear in some fashion. We must remain vigilant. Now that the parties to the Braude case have reached an agreement on the monetary damages equitably due to Dr. Braude's estate, Senator D'Amato and I will be offering legislation soon to release the $200,000 to her estate. When that time comes, I hope that we will have the unqualified and unanimous support of our colleagues. Ann Kirchheimer, a friend--now 80--who carried on Dr. Braude's fight, recently commented that Dr. Braude's life following her dismissal from the USIA could have been taken from the opening lines of Franz Kafka's book, The Trial: ``Someone must have traduced Joseph K., for without having done anything wrong, he was arrested one fine morning.'' Indeed. What happened to Dr. Braude was a personal tragedy. But it was also part of a national tragedy, too. This nation lost, prematurely and unnecessarily, the exceptional services of a gifted and dedicated public servant. Stanley I. Kutler, a professor of constitutional history at the University of Wisconsin, estimates that Dr. Braude was one of about 1,500 Federal employees who were dismissed as security risks between 1953 and 1956. Another 6,000 resigned under the pressure of security and loyalty inquiries, according to Professor Kutler, who testified as an expert witness on Dr. Braude's behalf last November. It was, as I said earlier, an awful time. We had settled ``as on a darkling plain, Swept with confused alarm of struggle and flight, Where ignorant armies clash by night.'' It mustn't happen again. I ask unanimous consent that an article appearing in the June 17, 1996, issue of the Washington Post, ``$200,000 Repayment Agreement for Estate of McCarthy-Era Victim'', Mr. Lewis's March 15, 1996 column, ``Secrecy and Justice,'' from the New York Times, and a letter dated June 19, 1996 from Mr. Sipes to my legislative director, Gray Maxwell, be printed in the Congressional Record following my remarks.

Mr. MOYNIHAN

Mr. MOYNIHAN. Mr. President, I rise today to introduce two tax bills. The first, the section 501(c)(3) Nonprofit Organizations Tax-Exempt Bond Reform Act of 1996, has been introduced several times previously by this Senator, with several of my distinguished colleagues as cosponsors. It would undo what ought never have been done: the classification of bonds of private nonprofit higher education institutions and other nonprofit organizations as those of a private activity. I reintroduce this legislation today because of its critical importance, and because we have found a particularly appropriate offset: The Stop Tax-Exempt Arena Debt Issuance Act, which I introduce today for the first time. The Stop Tax-Exempt Arena Debt Issuance Act would close a gaping loophole. Recently, a spate of tax-exempt bonds have been issued to finance professional sports facilities, even though Congress acted to proscribe this practice in 1986. The bill would eliminate this tax- subsidized financing of professional sports facilities. Taken together, these two bills correct a serious misallocation of our limited resources under present law: a tax subsidy that inures largely to the benefit of wealthy sports franchise owners would be replaced with increased funding for educational and research facilities at private colleges and universities. Let me briefly describe the two measures: the section 501(c)(3) nonprofit organizations tax-exempt bond reform act of 1996 The first bill would remove the ``private activity'' label from the tax-exempt bonds of private, nonprofit higher education institutions and other organizations, and thereby eliminate the arbitrary $150 million cap on the amount of tax-exempt bonds that such an institution may have outstanding. The Tax Reform Act of 1986 imposed the ``private activity'' label on bonds issued on behalf of nonprofit institutions, collectively known as section 501(c)(3) organizations, obscuring the longstanding recognition in the Internal Revenue Code of the public purposes served by these private institutions. Prior to that time, the tax law historically had treated private nonprofit colleges and universities essentially the same as governmental entities. Governmental units and section 501(c)(3) organizations were both classified as ``exempt persons,'' and were afforded the benefits of tax-exempt bonds on the same basis. This was an explicit recognition in the Tax Code of the public purposes served by private nonprofit institutions of higher learning. The 1986 act's elimination of the ``exempt person'' category and the classification of section 501(c)(3) organizations' bonds as ``private activity'' bonds was a serious error. It has relegated private higher education institutions to a diminished, restricted status. Most significant among the restrictions imposed in the 1986 act was the $150 million limitation on the amount of bonds that any nonprofit institution--other than a hospital--may have outstanding. We were successful in 1986 in keeping other ``private activity'' bond strictures from being imposed on nonprofits--the minimum tax and statewide volume caps, for example. Now we must rectify our error, remove the ``private activity'' label, and restore equal access to tax-exempt financing. If we do not act soon, the vitality of our private institutions in higher education and research will be at risk. A distinguishing feature of American society is the singular degree to which we maintain an independent sector-- ``private universit[ies] in the public service,'' to paraphrase the motto of New York University. This is no longer so in most of the democratic world; it never was so in the rest. It is a treasure and a phenomenon that has clearly produced excellence--indeed, the envy of the world. We must insure the strength of the independent sector by restoring parity of treatment for tax-exempt finance. Otherwise, in 20 years, we will look up and find we have lost a unique feature of American democracy of inestimable value. The sciences are now capital intensive undertakings. The need for capital for university research facilities is acute and critical. In 1990, the National Science Foundation estimated that for every $1 spent for maintenance of university research facilities, an additional $4.25 was deferred. As for new construction, the Foundation reports that for every $1 spent, another $3.11 in needed new construction was deferred in 1990. The practical effect of the $150 million cap is to deny tax-exempt financing to large, private, research-oriented educational institutions most in need of capital to carry out their research mission. This will have a predictable, inevitable impact over a generation: the distribution of major research among the leading institutions in this country will profoundly change. If I may use an example from California: with this kind of differential in capital costs, we could look up one day and find Stanford to be still an institution of the greatest quality as an undergraduate teaching facility--with a fine law school and excellent liberal arts degree program--but with all the big science projects at Berkeley, the State institution. This is not hyperbole. Already, 31-private colleges and universities are at or near the $150 million cap, and foreclosed from using tax- exempt debt. A few years ago, as the $150 million cap was beginning to take effect, 19 of the universities that ranked in the top 50 in research undertaking were private institutions. Now, only 14 of those 19 private institutions remain in the top 50, and all but 1 are foreclosed from tax-exempt financing as a result of the $150 million per institution limit. This legislation will restore the status of private nonprofit institutions of higher learning, making their access to tax-exempt financing equal to that of their public counterparts. The legislation also reestablishes recognition in the Tax Code of the essential public purposes served by private nonprofit institutions. Mr. President, the capital needs of private universities merit the very serious attention of this body. The cost of these changes is modest, given their importance. The staff of the Joint Committee on Taxation has estimated the revenue loss previously at $308 million over 5 years. The Senate has twice passed legislation to reverse the $150 million bond cap mistake--in the Family Tax Fairness, Economic Growth, and Health Care Access Act of 1992 (H.R. 4210) and the Revenue Act of 1992 (H.R. 11)--only to have both bills vetoed by President Bush. We should correct this error before it is too late. If we do not, we will soon not recognize the higher education sector. The Stop Tax-exempt Arena Debt Issuance Act--A Bill to Correct the Treatment of Tax-exempt Financing of Professional Sports Facilities Mr. President, the second bill is an especially appropriate offset for the first bill and is an important piece of legislation in its own right. This legislation will close a big loophole, a loophole that ultimately injures State and local governments and other issuers of tax exempt bonds, that provides an unintended Federal subsidy (in fact, contravenes congressional intent), and that contributes to the enrichment of persons who need no Federal assistance whatsoever. I refer to the large number of professional sports facilities subsidized in recent years through the issuance of tax-exempt bonds. It seems that nearly every day, another professional sports franchise owner demands a new stadium, one subsidized by Federal, State and local taxpayers. Why do owners want new stadiums? Our existing stock of stadiums is not functionally obsolete. Many stadiums are new, and our older ones generally can and will continue to serve, and serve well, for the exhibition of professional sports for years to come. In fact many older, historic stadiums are beloved by fans. The reason for new stadiums is economics--the team owners' bottom line. The owner can generate more revenues with a new stadium replete with luxury skyboxes and other amenities. Building new professional sports facilities is fine by me. Let the new stadiums be built. But, please, do not ask the American taxpayer to pay for them. Prior to 1984, professional sports stadiums could be completely financed with tax-exempt, ``private activity'' bonds (or industrial development bonds as they were formerly known). In the Deficit Reduction Act of 1984, Congress stipulated that tax-exempt bond proceeds could not be used to finance the construction of luxury skyboxes. And in the Tax Reform Act of 1986, we fundamentally restructured the tax-exempt bond provisions of the Internal Revenue Code. As part of that effort, we repealed the ``private activity'' bond category for stadium bonds, intending to eliminate tax-exempt financing of professional sports facilities altogether. Unfortunately, Congress did not address the issue of whether stadium bonds could be issued as governmental bonds because that possibility was too remote to have occurred to us. And in our silence, a loophole was born. Innovative bond counsel have devised aggressive schemes to finance stadiums with tax-exempt, governmental purpose bonds. So this legislation is corrective. It will put an end to a practice we thought we had stopped in 1986. The history of the changes made by the 1986 act reveals why the use of tax-exempt financing for professional sports facilities is a loophole that should be closed. In May 1985, President Reagan issued a report recommending that tax-exempt bonds be limited to traditional governmental purposes. In December 1985, the House largely adopted the Reagan administration's recommendations for tax-exempt bond reform. The Senate was of course not inclined to go as far as the House. The 1986 act, as it emerged from conference, reflected a compromise between the House and Senate. We allowed States and local governments to continue to issue tax-exempt bonds for traditional governmental purposes, such as schools, roads, bridges. At the same time, we limited the issuance of tax-exempt bonds for private activities to a short list of projects with significant public benefits, even though carried out with private ownership. And we subjected private activity bonds to other significant limitations, chief among them being a unified, statewide volume limitation. Why did Congress make these changes? Why did the Reagan administration propose curtailing the use of tax-exempt bonds? We were all concerned with the large and increasing volume of tax-exempt bonds, including an increasing percentage of industrial development bonds that were being issued at that time to subsidize private business activities. The increasing proliferation of tax-exempt bonds led to a number of problems. First, it drove up interest costs. Larger interest costs drove up the cost of financing roads, bridges, and other items traditionally financed with tax-exempt bonds, and meant that State and local governments had to increase taxes or reduce services in order to pay for these improvements--or forego improvements. Second, the proliferation of tax-exempt bonds led to mounting revenue losses to the U.S. Treasury. The Congressional Research Service recently reported that from 1980 to 1985, the annual amount of foregone tax revenue from tax exempt bonds had risen 236 percent to $18.2 billion. Third, the use of taxpayer-subsidized financing for a rapidly growing number of private business activities resulted in an inefficient allocation of capital. Investment decisions were being made on the basis of which projects qualified for tax-exempt financing, rather than on the economic viability of the underlying project. Fourth, taxpayers were able to shield a growing amount of their investment income from income tax by purchasing tax-exempt bonds. We had become very concerned with a number of tax sheltering activities during the 1980's and the undermining effect such activities had on our tax system. So in 1986, we fundamentally restructured the tax exempt bond rules. And one of the things we did was prohibit the issuance of tax-exempt bonds to finance sports stadiums. Or so we thought. Once again, under a loophole in the law, professional sports team owners are financing newer and more luxurious stadiums with tax-exempt stadium bonds. Cities are promising new stadiums, with dozens of luxury skyboxes, to entice professional sports teams to relocate. Should the taxpayers in the team's current home town be forced to pay for the team's new stadium in a new city? The answer is unmistakably no. Mr. President, this is extraordinary. Particularly when compared to the limitations we place on private activity bonds, and these stadium bonds assuredly are private activity bonds in fact if not in name. Most States cannot issue more than $150 million of private activity bonds per year. However, no limit is imposed on the amount of bond financing that can be used to finance a professional sports facility. Where is the private activity bond prohibition against building luxury skyboxes with tax-exempt bond proceeds? Where is the private activity bond provision that subjects the interest on stadium bonds to the alternative minimum tax? Where are all of the other limitations on private activity bonds that we have judged are necessary? They apparently do not apply to these new stadium bonds. And the situation is also unfair when compared to the restrictions we impose on the ability of our private, nonprofit educational institutions to issue tax-exempt debt. New York University can only issue $150 million in tax-exempt debt to finance its facilities in Manhattan. Stanford, Boston College, University of Miami, Northwestern University, Emory, Georgetown, University of Pennsylvania--these are a few of the institutions that can no longer issue tax-exempt debt to finance their laboratories, classrooms, and other facilities that are essential to our private institutions of higher education. The Congressional Research Service issued a critical report late last month on the new stadium bonds, and concluded that the federal tax subsidy inherent in tax-exempt bond financing is not justified: Proponents argue that these stadium's economic benefits justify the subsidies. Economic analysis suggests this is not the case. One study found that a new stadium had no discernible impact on economic development in 27 of 30 metropolitan areas, and had a negative impact in the other three areas. The reason for this can be illustrated with the Baltimore football stadium proposal. Economic benefits were overstated by 236%, primarily because the reduced spending on other activities that enables people to attend stadium events was not netted against stadium spending. And no account was taken of losses incurred by foregoing more productive investments. The state's $177 million stadium investment is estimated to create 1,394 jobs at a cost of $127,000 per job. The cost per job generated by the state's Sunny Day Fund economic development program is estimated to be $6,250. The economic case against federal subsidy of stadiums is stronger. Almost all stadium spending is spending that would have been made on other activities within the United States, which means benefits to the Nation as a whole are near zero. The report continues by citing several problems caused by the change in treatment of tax-exempt bonds for stadiums made by the Tax Reform Act of 1986: It continues stadium financing as an open-ended matching grant for which the magnitude of the federal subsidy in any given year is determined without the input of federal officials and federal taxpayers; it virtually requires state- local governments to offer more favorable lease terms to its professional tenants; and it requires state-local governments to finance their subsidy with general revenue sources rather than benefit-type payments such as stadium-related user charges and rents. Finally, what makes the new spate of stadium bonds all the more egregious is the price that we paid to end this practice in the first place. The realities of the legislative process in 1986 required that we provide extraordinarily generous transition relief to those persons planning to build such facilities at that time. We wrote special rules that allowed the tax-exempt financing of ``virtually every stadium in the planning or gleam-in-the-eye stages,'' as described in the aforementioned Congressional Research Service report. First, we allowed all proposed sports stadiums with binding commitments to issue tax- exempt bonds, as they had planned. In addition, additional transitional relief was provided to allow the issuance of up to $2.7 billion in tax- exempt bonds for the construction and repair of 25 specifically described sports facilities that were too preliminary in their development to satisfy the transition rules. Mr. President, the legislation I am introducing will do what we intended to do, and thought we did, in 1986. This legislation makes clear that professional sports facilities may not be financed with tax- exempt bonds. There are a few technical issues on which I would like to solicit comments. First, the proposed effective date would be today. Perhaps it should be made effective on October 22, 1986, the day President Reagan signed the Tax Reform Act of 1986 into law and we prohibited the issuance of stadium bonds in the first place. After all, this bill is, in a sense, a ``technical correction.'' Nevertheless, I would like to consider the need for equitable relief for stadiums already in the planning stages. Second, a number of sports facilities that are not built for a professional sports franchise will be used for the occasional charitable or isolated sporting event. Thus, charitable or de minimis use exceptions to this legislation may be appropriate. Mr. President, these two bills, taken together, would correct a serious misallocation of our limited resources. Should we subsidize professional sports franchises and underwrite bidding wars among cities seeking (or fighting to keep) professional sports franchises, or should we act to prevent a significant decline in the ability of our nonprofit, private research universities to attract capital for classrooms and research facilities? To my mind, this is not a difficult choice. Mr. President, I ask unanimous consent that the two bills be printed in the Record, along with explanatory statements.