Don Nickles

Mr. NICKLES

Mr. NICKLES. Mr. President, I have always believed that economic freedom is a critical part of life, liberty, and the pursuit of happiness. Unfortunately, the Internal Revenue Code does not always promote or encourage economic freedom, and one area where this is strikingly clear is the confiscatory, anti-family, anti-growth estate tax. Most Americans work diligently throughout their lives to provide for their families and give their children and grandchildren a better future. This work often results in the accumulation of assets like homes, businesses, and farms; all acquired with hard work and bought with after-tax dollars. Unfortunately, those without high-paid lawyers and accountants realize too late that up to 55 percent of those assets could be confiscated by the Federal Government upon their death. Some people mistakenly believe estate taxes only affect the rich, but there are thousands of small businesses and farms throughout the country owned and operated by middle-income Americans that are affected by existing estate tax laws. These small businesses may appear to be economically significant on paper, but often they have little liquid assets to cover estate tax liabilities. Historically, these businesses have created most of the new jobs in this country and fueled the growth of the economy. The unfortunate result of high estate taxes is that families are frequently forced to sell off part of the family business to pay the taxes incurred by the deceased family member's estate. This liquidation of productive assets to finance tax liabilities is anti-family and anti-business. At the very least, families and businesses are forced to employ an army of expensive experts to avoid the worst estate taxes, a make-work exercise that exacerbates the inefficiency of the system. Mr. President, I believe it is patently unfair for the Federal Government to assume that it has the right to take an individual's hard-earned assets and redistribute them to others. If our goal as a society and a government is to encourage long-term, private savings and investment we cannot continue the policy of confiscating estates. With an average savings rate in the United States of 2.9 percent, which is lower than that of any other industrialized country, we should be encouraging individuals, families, and businesses to save and invest. Since 1987, a unified tax credit for gifts and estate transfers has effectively exempted $600,000 worth of assets from estate taxes. This basic exemption has increased modestly over the years, from $60,000 in the 1940's, 1950's and 1960's to $225,000 in 1982. Unfortunately, the current estate exemption of $600,000 has been greatly eroded by inflation. The legislation I am introducing today with the Senate majority leader, Senator Grassley, Senator Breaux, Senator Baucus, and others addresses the problems associated with the estate tax in a thoughtful, bipartisan manner. It is not the perfect solution to these problems, Mr. President, but it is a good first step. I believe that ultimately we must radically restructure the estate tax by reducing marginal rates, which now exceed 55 percent for estates larger than $3 million, and I believe we must strive to treat all types of family businesses equally. However, I recognize the budget constraints Congress is working under, and I believe it is important to move forward in a bipartisan manner. The legislation we are introducing today increases the estate tax exemption from $600,000 to $1,000,000, thus allowing more homeowners, farmers, and small businesses to keep their hard-earned wealth. Further, our bill would provide special relief for closely-held family businesses. We would allow estate-tax free transfers of up to $1.5 million in small business assets to qualified family members, and a 50 percent exclusion for up to $8.5 million in assets above that threshold, as long as the heirs continue to operate the business. The legislation we are introducing today makes simple pro-family, pro-business, and pro-economy changes to our tax code. It will allow more homeowners, farmers, and small businesses to keep their hard- earned wealth. I encourage my colleagues to join us as cosponsors of this bill.

Mr. NICKLES

Mr. NICKLES. Mr. President, I thank my friend and colleague, Senator Leahy from Vermont. We have done something rather unusual. We worked together in a very bipartisan fashion to do some good work, and we did it very quickly. It is not often that Congress passes legislation this quickly, and we did so. Also, I want to thank Senator Daschle and Senator Lott because we wanted to expedite this. We would like to get it to the President before he leaves the country today. This trial happens to start on the 31st of this month. I might mention that this is the third piece of legislation that we have passed that deals directly, or has had some impact, I guess, as a result of the Oklahoma City bombing. Last Congress, we passed legislation dealing with habeas corpus reform, one of the most significant improvements, I think, in our statutes dealing with criminal law in a long time. We wanted to have an end to endless appeals. I think the Oklahoma City tragedy gave us great momentum to make that happen. I remember several of the victims coming to testify, urging Congress to enact a crime bill, but also urging Congress to enact habeas reform because they wanted to see justice soon rather than later. We also passed legislation to allow closed-circuit TV so victims would not have to go all the way to Denver. I was disappointed the decision was made that the trial would be held in Denver. Originally, the judge said the people would have to attend to witness the trial. This trial could last for months. We passed legislation basically mandating that closed-circuit TV would be allowed in this case and, hopefully, other cases. Hopefully, we will not have other cases, but if we have another case that might be identical to this, the victims and their families would not have to travel several hundred miles just to be able to witness the trial. Finally, we passed this legislation, this important legislation, to allow victims and their families to be able to witness a trial and also, if they desire, to be able to testify during the sentencing phase. This would not have happened if we did not have bipartisan support. Again, I thank my colleagues for making it happen. I am delighted. On behalf of hundreds of Oklahoma City families who are directly impacted, we say thank you to both our colleagues in the House and the Senate for passing this legislation today. I yield the floor.

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

Mr. NICKLES. Mr. President, I ask unanimous consent that the bill be deemed read a third time and passed, and the motion to reconsider be laid upon the table, and that any statements relating to the bill appear at the appropriate place in the Record.

Mr. NICKLES. Mr. President, I ask unanimous consent that the Senate proceed to the immediate consideration of H.R. 924 just received from the House.

Mr. NICKLES

Mr. NICKLES. I thank my friend.

Mr. NICKLES. I will just tell my colleague, I have been charged with the responsibility of trying to make sure that we are ready to do that. It is my hope and expectation that we will be ready to do that--not tie this down to a particular timetable--but I hope that we will be able to do it in the not-too-distant future. Maybe we will be able to meet the timeframe as suggested by my colleague from Illinois. I am not ready to give a date. But you are saying for this year. I hope that will be the case.

Mr. NICKLES. Yes.

Mr. NICKLES. I will be happy to tell my colleague, if you are asking me what the effective date of the legislation will be, I am not sure. But I do think that we have an interest, and I would say a bipartisan interest, in trying to do some things together: Greater disclosure, trying to make sure that nobody is forced or compelled to contribute to any campaign against their will, maybe making some change in contribution limits, increasing individual limits, maybe reducing other limits. Possibly we can get a bipartisan coalition on that, and doing a few other things that we might be able to get agreement on. But the effective date, well, that would be one of the things we will have to wrestle with. That is a challenge. Some of those things for disclosure, I expect could be effective certainly for the 1998 election. If you changed individual contributions, which I am contemplating offering as one suggestion, whether that should be effective immediately or effective post the 1998 election is something we will have to discuss.

Mr. NICKLES

Mr. NICKLES. Mr. President, I understand there is a resolution at the desk and it is due for its second reading.

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

Mr. NICKLES. Mr. President, I object to further proceeding in this matter at this time.

Mr. NICKLES

Mr. NICKLES. Mr. President, I am pleased to join my friend and colleague from Missouri, Senator Bond, in the introduction of the Home- Based Business Fairness Act. I compliment Senator Bond for his leadership on these issues and all matters affecting small business as chairman of the Senate Committee on Small Business. The small, independent business is the engine which drives innovation, job creation, and increased economic activity in this country. I am proud to live in a country where any person can use talent, intelligence, and hard work to start a business. I believe these businesses are the foundation of our free enterprise economy, and the very essence of capitalism. There are 5 million independent contractors in America according to the Small Business Administration, and almost one-third of all companies use independent contractors to some degree. Further, the SBA estimates that more than 14 million individuals earn some income from home-based businesses, and some 300,000 women start home-based businesses every year. Unfortunately, Mr. President, the Internal Revenue Code does not always treat small businesses fairly, and it often acts to limit and repress the entrepreneurial spirit. The legislation we are introducing today is intended to address some of the Tax Code's inequities and remove the roadblocks to the creation of new small businesses. A perfect example of the Tax Code's bias against small business is the treatment of health insurance expenses. Corporations can currently deduct 100 percent of the health insurance costs of their employees. As recently as 2 years ago, self-employed individuals were only allowed to deduct 25 percent of their health insurance costs. Fortunately, the Health Insurance Portability and Accountability Act of 1996 increased this limit to 40 percent this year, with a scheduled increase to 80 percent by 2006. However, the bias against small business continues. Our legislation increases the deduction for health insurance cost for self-employed individuals to 100 percent beginning on January 1, 1997. For some small business taxpayers, the enemy has not been the IRS or the Congress, but the judiciary. A 1993 Supreme Court decision, Commissioner versus Soliman has been interpreted to require two new tests for the home-office deduction: First, the customers of a home business must physically visit the home office, and second, the taxpayer's business income must be generated within the home office itself--not from transactions that occur outside of the home office. This interpretation has effectively prevented millions of taxpayers from deducting valid, reasonable, and necessary business expenses. The Home-Based Business Fairness Act will permit taxpayers who perform their services outside the home but use their home office for essential billing and recordkeeping to qualify for the home-office deduction, provided they perform these activities on a regular, ongoing, and nonincidental basis in the home office and have no other location at which to perform these business activities. This section of the bill will be effective on January 1, 1997. Finally, Mr. President, our legislation addresses a major, continuing problem for the small business community. The problem is worker classification--independent contractor or employee. In a perfect world, this issue should be irrelevant. The relationship between a worker and a business would be strictly based on their individual needs, and the Government's only interest would be to collect the same amount of taxes regardless of the relationship. Unfortunately, however, this is not a perfect world. The complexity of the Tax Code and Congress' failure to provide adequate guidance to small businesses and their workers has resulted in a confusing mess. Left to their own devices, the Internal Revenue Service has adopted an aggressive, proemployee agenda. For the last 20 years, the classification of workers as contractors or employees has been controlled by a 20-factor common law test which attempts to define a business' control over a worker. This common law test is the bane of employers and workers across the country. The General Accounting Office has called the common law test unclear and subject to conflicting interpretations. Even the Treasury Department has testified that: Applying the common law test in employment tax issues does not yield clear, consistent, or even satisfactory answers, and reasonable persons may differ as to the correct classification. Beyond the 20-factor test, some businesses may avail themselves of a safe harbor enacted in 1978. The section 530 safe harbor prohibits the IRS from reclassifying workers as employees if the business had a reasonable basis for treatment of the workers as independent contractors, or if a past IRS audit did not dispute the workers' classification. Our bill creates a new worker classification safe harbor and provides limited relief from retroactive worker reclassification, two changes which will resolve many of the problems small businesses face with the IRS. Our bill does not repeal the 20-factor common law test, it does not repeal the section 530 safe harbor, and it does not affect other special worker classification situations such as statutory employees or direct sellers. Put simply, our bill will benefit those businesses and contractors who have not resolved their status with the IRS, while preserving current law for those who are satisfied with it. To summarize briefly, our legislation protects businesses and contractors who meet one of two tests. The first test measures a worker's economic risk and workplace independence, and requires the two parties to have a written contract and comply with all tax reporting requirements. Under the second test, a worker who conducts business through a corporation or a limited liability company, does not receive benefits from the service recipient, and has a written contract will be treated as an independent contractor. Our bill also protects businesses from retroactive reclassification of workers and the associated liability for back taxes, interest, and penalties, provided the business had a written contract with the workers, complied with all tax reporting requirements, and had a reasonable basis to treat the workers as contractors. Finally, our legislation repeals section 1706 of the Tax Reform Act of 1986 which precludes third-party technical service workers from the section 530 safe harbor, and it clarifies that compliance with a statutory or regulatory requirements will not be treated as evidence of control for the purpose of worker classification. Mr. President, the Tax Code reforms included in the Home-Based Business Fairness Act are commonsense solutions to the real problems faced by small businesses. With this bill, Senator Bond and I have tried to address those problems which we believe are most critical to the creation of new small businesses, new jobs, and new economic growth. I encourage my colleagues to give this legislation their thoughtful consideration and join us in this initiative.

Mr. NICKLES

Mr. NICKLES. I announce that the Senator from Montana [Mr. Burns] is necessarily absent.

Mr. NICKLES

Mr. NICKLES. Mr. President, thank you. I thank the Chaplain, again, for an outstanding opening prayer.

Mr. NICKLES

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

Mr. NICKLES. Mr. President, I rise today to support the resolution of Senator Lott calling for the Attorney General to appoint an independent counsel to investigate many of the allegations of illegal activity concerning the 1996 election cycle. This statement--I will read most of it--is very serious. It bothers me as a Senator to do this. I am not a big proponent of the independent counsel statute, but I think clearly it was written to avoid a conflict of interest between the Attorney General and covered persons, those persons being the President, the Vice President, and heads of national committees. I think we have seen evidence in the last 2 or 3 months that there probably is a conflict of interest between the Attorney General and the President and the Vice President and other high officials within the Clinton administration. In the New York Times there is an editorial that says: Disclosures about a Chinese plan to influence the election have taken the fund raising scandal to a new level of seriousness and clarity. Now it is clear that any citizen with a reasonable interest in the efficiency of the Federal investigative agencies and the integrity of the electoral process will want a full account of what went on. I agree with that. Recent news reports revealed conflicting accounts by President Clinton, the White House, and the FBI, concerning whether the President was made aware of intelligence information that the Chinese Government might be trying to influence the upcoming elections. The FBI believe they may attempt to funnel illegal donations into Presidential and congressional campaigns. The question whether the President was aware of this information and if not, why it was kept from the President, is just one of the numerous conflicts of interest pending before the Attorney General. It is an important issue to determine whether President Clinton was aware of the Chinese Government's intended illegal actions before he approved White House coffees, lunches, and dinners with individuals known to have close ties to the Chinese Government. Charlie Trie, Pauline Kanchanalak, and Johnny Chung were allowed frequent access into the White House to attend various functions and one-on-one meetings with the President. Mr. Chung came into the White House reportedly 49 times--and I have heard 51 times--and he donated over $366,000 that had to be returned. One of Mr. Chung's visits came only 1 day after he delivered a $50,000 check to Mrs. Clinton's Chief of Staff Maggie Williams in the White House. Mr. Chung brought six Chinese businessmen into the Oval Office to watch the President's radio address, one of which is the vice president of a Chinese company that trades weapons. They had their photos taken afterward. The White House was warned about handing over these pictures by the President's own NSC staff. They labeled Mr. Chung a ``hustler'' and warned that he might use the pictures to ``enhance his business.'' In spite of this, Mr. Chung also brought Chinese beer executives into the White House who evidently obtained their pictures with the President since it was reported that one of these pictures was featured on a billboard advertisement for the beer company. Pauline Kanchanalak visited the White House at least 26 times and donated approximately $250,000 to the DNC. On the day Ms. Kanchanalak brought some of her business clients to a White House coffee with the President, she donated $85,000 to the DNC and it was recorded that the donation was for ``coffee with the President of the United States.'' Ms. Kanchanalak has not been available to answer questions about any of this. She apparently left the country after congressional subpoenas were issued and there were news reports that documents were destroyed. Charlie Trie visited the White House up to 37 times and delivered $640,000 in checks and money orders to the President's legal defense fund. The money had to be returned since it was from unverifiable sources. About 1 month after Mr. Trie delivered the bulk of these checks, President Clinton expanded the number of members of the U.S.-Pacific Trade and Investment Policy Commission and Mr. Trie was appointed to that Commission. The White House denied any connection between the donations and the delivery of the money, but questions remain unanswered. Mr. Trie also arranged for Chinese arms merchant Wang Jun to attend a White House coffee with President Clinton. Wang Jun is a former officer of the Chinese People's Liberation Army and was chairman of a Chinese company suspected of trying to import illegal automatic weapons into the United States. Did the President know about the Chinese Government's plan before his reelection campaign and his legal defense fund accepted hundreds of thousand of dollars in illegal donations? Was the President aware of this information when he allowed a Chinese arms dealer and manufacturer into the White House? Was Mr. Trie's appointment to the Trade Commission related to his generous donations to help pay the President's legal expenses and to aid his reelection efforts? All of these examples show just how many conflicts of interest exist for the Attorney General and the Department of Justice to investigate these allegations. And that is just what they are at this point-- allegations. However, the independent counsel statute clearly provides under section 591(c)(1) and (d) of title 28, United States Code, that the Attorney General may invoke the independent counsel process when the Attorney General has received specific information from a credible source sufficient to constitute grounds to investigate whether a violation of any Federal criminal law, other than a Class B or C misdemeanor or infraction, may have been committed by any other person if such investigation or prosecution by the Department of Justice may result in a personal, financial, or political conflict of interest. The independent counsel statute is intended to allow the Attorney General to request the appointment of an independent counsel when this type of conflict of interest occurs involving those at the highest levels of our Government and top officers of the President's political party. I believe that Attorney General Reno has ample information and should therefore, invoke this provision of the statute to immediately request appointment of an independent counsel. Attorney General Reno testified before the Government Affairs Committee in favor of the reauthorization of the act. She testified that: The reason that I support the concept of an independent counsel with statutory independence is that there is an inherent conflict whenever senior Executive Branch officials are to be investigated by the Department and its appointed head, the Attorney General. The Attorney General serves at the pleasure of the President. . . . Section 591 (a) and (d) of the independent counsel law also contains a mandatory provision which requires the Attorney General to invoke the independent counsel process whenever the Attorney General has received specific information from a credible source sufficient to constitute grounds to investigate whether any Federal criminal law, other than a Class B or C misdemeanor or infraction, may have been violated by a covered person. There has been specific credible information publicly reported that officers and agents of the Democratic National Committee were acting under the direction of and pursuant to instructions given by the President, Vice President, and other top level officials in the White House and the Clinton-Gore reelection campaign. The President, Vice President, the Clinton-Gore Reelection Campaign chairman and treasurer are named in the statute as covered persons. If it is correct that certain officers and agents of the Democratic National Committee were acting under the direction of the reelection campaign and were in effect exercising authority for the campaign at the national level, then it is open to interpretation whether the chairman and top officers of the DNC would also be covered persons under the law. The law also provides a list of other covered persons which includes the Attorney General, certain top Justice Department officials, Cabinet Secretaries, and other top level administration officials. Any person working in the Executive Office of the President with a salary of $133,500 or above is also a covered person under the law. What this means is that if the Attorney General receives specific information from a credible source that any Federal criminal law, other than a Class B or C misdemeanor or infraction, may have been violated, Attorney General Reno must conduct a preliminary investigation and seek the appointment of an independent counsel if further investigation is warranted. There are numerous Federal laws that may apply to the allegations we have heard about and seen reported in the news: Title 18 of the United States Code, section 599 makes it unlawful for a candidate for Federal office to promise an appointment to any public or private position or employment in return for support of his candidacy. Section 600 makes it unlawful to promise employment, a contract, or other benefit in exchange for any political activity or support for a candidate or political party. Section 607 makes it unlawful for any person to solicit or receive any contribution intended to influence an election for Federal office in any [government] room or building. This is the tone that has been related to the President's fundraising coffers and also to the Vice President's phone calls. Section 641 makes it unlawful to convert Government property which includes telephones, copy machines, or Government computer records for ones own use. Section 201 makes it unlawful to give or offer a bribe to a public official in order to influence an official act. Section 205 makes it unlawful for a Government employee to act as an agent for anyone before a Federal agency on matters that the United States is a party or has a direct interest. Section 793 makes it unlawful to communicate national defense information to anyone not entitled to receive it. Section 794 makes it unlawful to communicate national defense information to a foreign government or representative of a foreign government. Section 219 prohibits a Federal Government official or employee from acting as foreign agent by delivering money actually derived from foreign countries. Sections 611-621 of the Foreign Agents Registration Act prohibit any person from acting in any capacity on behalf of a foreign government or foreign political party without registering with the Attorney General. Section 1905 makes it unlawful for a Federal employee to make an unauthorized disclosure of proprietary business information. Section 1956 is the money laundering statute. Section 1505 makes it unlawful to obstruct an agency or committee proceeding. All of these laws are subject to: Title 18, section 371, conspiracy statute which makes it unlawful to conspire to commit any offense against the United States; and sections 1341 and 1342, mail and wire fraud statutes which make it unlawful to use the mails, radio, or telephones in connection with any scheme to defraud or obtain money by false pretenses. Section 1001 false statements statute which makes it unlawful to make a false statement or use a document containing materially false statements in a matter before the executive branch and with some limitations, the judicial and legislative branches. The Federal election laws make it unlawful to: Solicit or accept political contributions from foreign nationals in section 441e; it makes it unlawful to knowingly accept a contribution made in the name of another person; section 441f; or makes it unlawful to solicit any contribution from persons with contracts with any government agency; section 441c. These are only a portion of the Federal laws that apply to the allegations currently under review. Recent news accounts of solicitations of campaign contributions by the Vice President, and possibly the President or senior White House staff, occurring in White House offices not used for residential purposes, or onboard Air Force One, may have violated Federal criminal laws prohibiting soliciting or receiving political contributions in any Government room or office or conversion of Government property to one's own use. There has been specific credible information publicly reported that the Cheyenne-Arapaho Indians of Oklahoma contributed $107,000 to the Clinton-Gore reelection campaign in order to meet with President Clinton to discuss the return of Federal lands. It also was reported that Clinton-Gore reelection campaign chief fundraiser Terrance McAuliffe may have offered a Government benefit of access in exchange for additional political support which may violate Federal law prohibiting the promise of a Government benefit in exchange for political activity or support. There has been specific credible information publicly reported that President Clinton, Vice President Gore, Deputy Chief of Staff Harold Ickes, and other covered White House and Clinton-Gore campaign officers coordinated the solicitation and expenditure of independent Democratic Party funds which may be in violation of the Federal election laws. It was further reported that Democratic party advertising and expenditures were directed toward the reelection effort which may have had the effect to render these funds subject to campaign finance limitations to which they otherwise were not subject. There has been specific credible information publicly reported that President Clinton met with Long Beach officials to advance a proposed contract between the city of Long Beach and the Chinese state-owned merchant fleet, the China Ocean Shipping Co., COSCO, to lease an abandoned United States Navy Station at Long Beach. It was also reported that individuals--Charlie Trie, Wang Jun, and Johnny Chung-- with business interests linked to the Chinese shipping company made campaign donations to the Democratic National Committee and visited the President at a White House coffee during the negotiations for this lease which may have violated Federal laws if any promise of a Government benefit was given in exchange for political activity or support or if a promise of money from a foreign government was given. Yesterday, the Wall Street Journal reported that oil financier Roger Tamraz, who had an outstanding international arrest warrant for allegedly embezzling $200 million from a Lebanese bank, attended a White House coffee, a White House dinner and reception, and viewed a movie with President Clinton. All of these visits were allowed in spite of warnings from the President's own National Security Counsel Asian specialist's recommendation that Mr. Tamraz should have no future meetings or future access to the White House. Mr. Tamraz met with the NSC specialist in an attempt to obtain support from the administration for a multibillion dollar oil pipeline from the Caspian Sea to Turkey that he was negotiating to build. He then tried to set meetings with Vice President Gore and President Clinton. The specialist's advice appears to have been followed until Mr. Tamraz made donations of $50,000 and then $100,000 to the Democratic National Committee. When the National Security Counsel determined that it was not in the best interest of the United States to support Mr. Tamraz's business proposal or for his return to the White House, he went to the Democratic National Committee. Mr. Tamraz is quoted as saying that he thought that ``through the DNC [he] could make a policy heard.'' DNC Chairman Don Fowler is reported to have personally called the White House's NSC specialist and asked her to drop her opposition to Mr. Tamraz meeting with President Clinton. Mr. Fowler apparently also managed to have the CIA send over a paper on Mr. Tamraz which Mr. Fowler said would show that Mr. Tamraz had helped the United States in the past. The requested meetings with the President did occur. It was reported that Mr. Tamraz had four meetings with President Clinton in spite of these warnings. What did Mr. Tamraz do to warrant such special access? We know that he donated at least $177,000 to the DNC and it was reported that he raised more money from other large donors. Why was a man with an international arrest warrant, accused of embezzling $200 million from a foreign bank, allowed into the White House to meet with the President? Why was this same man allowed to meet with President Clinton over the objections of his own National Security Council Asia specialist's warnings? Why was the chairman of the Democratic National Party involving himself in foreign policy issues? Why did he call the National Security Council to attempt to change a decision? How did the chairman of the Democratic National Committee obtain a copy of a paper on a donor from the CIA and have it sent to the National Security Council? On whose authority was this done? Was the President aware of his party chairman's actions and did he approve? If not, why did he continue to meet with this man? What was requested in these meetings and was any benefit provided to Mr. Tamraz as a result? There has been specific credible information publicly reported that a cocaine dealer convicted of transporting nearly 6,000 pounds of cocaine into this country, Jorge Cabrera, met with President Clinton in the White House. Eric Wynn, convicted of 13 counts of stock fraud which allegedly was to benefit the Bonano crime family, met with President Clinton. And a man alleged to have been associated with Russian organized crime, Gregori Loutchansky, also met with President Clinton. Mr. Yogesh Gandhi contributed $325,000 to the DNC and met with President Clinton to give him a World Peace Award although reports allege that he owed $10,000 in back taxes and filed divorce papers in court that he was a pauper and could not afford to pay the court's fees. Numerous other specific allegations surrounding John Huang and Webster Hubbell have been widely reported and raised questions about their activities in relation to Chinese interests. All of these questions need to be answered. They clearly present a conflict of interest for the Attorney General and the Department of Justice. And they do involve credible information concerning covered persons that may have violated Federal law. Mr. President, I urge the Attorney General to appoint a special counsel to investigate these charges. I think the law calls for it. I think it is very clear. I do not think it is close. So I urge the Attorney General to appoint an independent counsel immediately. I yield the floor and suggest the absence of a quorum.

Mr. NICKLES

Mr. NICKLES. Mr. President, I am pleased to join my friend and colleague from Missouri, Senator Bond, in the introduction of the Home- Based Business Fairness Act. I compliment Senator Bond for his leadership on these issues and all matters affecting small business as chairman of the Senate Committee on Small Business. The small, independent business is the engine which drives innovation, job creation, and increased economic activity in this country. I am proud to live in a country where any person can use talent, intelligence, and hard work to start a business. I believe these businesses are the foundation of our free enterprise economy, and the very essence of capitalism. There are 5 million independent contractors in America according to the Small Business Administration, and almost one-third of all companies use independent contractors to some degree. Further, the SBA estimates that more than 14 million individuals earn some income from home-based businesses, and some 300,000 women start home-based businesses every year. Unfortunately, Mr. President, the Internal Revenue Code does not always treat small businesses fairly, and it often acts to limit and repress the entrepreneurial spirit. The legislation we are introducing today is intended to address some of the Tax Code's inequities and remove the roadblocks to the creation of new small businesses. A perfect example of the Tax Code's bias against small business is the treatment of health insurance expenses. Corporations can currently deduct 100 percent of the health insurance costs of their employees. As recently as 2 years ago, self-employed individuals were only allowed to deduct 25 percent of their health insurance costs. Fortunately, the Health Insurance Portability and Accountability Act of 1996 increased this limit to 40 percent this year, with a scheduled increase to 80 percent by 2006. However, the bias against small business continues. Our legislation increases the deduction for health insurance cost for self-employed individuals to 100 percent beginning on January 1, 1997. For some small business taxpayers, the enemy has not been the IRS or the Congress, but the judiciary. A 1993 Supreme Court decision, Commissioner versus Soliman has been interpreted to require two new tests for the home-office deduction: First, the customers of a home business must physically visit the home office, and second, the taxpayer's business income must be generated within the home office itself--not from transactions that occur outside of the home office. This interpretation has effectively prevented millions of taxpayers from deducting valid, reasonable, and necessary business expenses. The Home-Based Business Fairness Act will permit taxpayers who perform their services outside the home but use their home office for essential billing and recordkeeping to qualify for the home-office deduction, provided they perform these activities on a regular, ongoing, and nonincidental basis in the home office and have no other location at which to perform these business activities. This section of the bill will be effective on January 1, 1997. Finally, Mr. President, our legislation addresses a major, continuing problem for the small business community. The problem is worker classification--independent contractor or employee. In a perfect world, this issue should be irrelevant. The relationship between a worker and a business would be strictly based on their individual needs, and the Government's only interest would be to collect the same amount of taxes regardless of the relationship. Unfortunately, however, this is not a perfect world. The complexity of the Tax Code and Congress' failure to provide adequate guidance to small businesses and their workers has resulted in a confusing mess. Left to their own devices, the Internal Revenue Service has adopted an aggressive, proemployee agenda. For the last 20 years, the classification of workers as contractors or employees has been controlled by a 20-factor common law test which attempts to define a business' control over a worker. This common law test is the bane of employers and workers across the country. The General Accounting Office has called the common law test unclear and subject to conflicting interpretations. Even the Treasury Department has testified that: Applying the common law test in employment tax issues does not yield clear, consistent, or even satisfactory answers, and reasonable persons may differ as to the correct classification. Beyond the 20-factor test, some businesses may avail themselves of a safe harbor enacted in 1978. The section 530 safe harbor prohibits the IRS from reclassifying workers as employees if the business had a reasonable basis for treatment of the workers as independent contractors, or if a past IRS audit did not dispute the workers' classification. Our bill creates a new worker classification safe harbor and provides limited relief from retroactive worker reclassification, two changes which will resolve many of the problems small businesses face with the IRS. Our bill does not repeal the 20-factor common law test, it does not repeal the section 530 safe harbor, and it does not affect other special worker classification situations such as statutory employees or direct sellers. Put simply, our bill will benefit those businesses and contractors who have not resolved their status with the IRS, while preserving current law for those who are satisfied with it. To summarize briefly, our legislation protects businesses and contractors who meet one of two tests. The first test measures a worker's economic risk and workplace independence, and requires the two parties to have a written contract and comply with all tax reporting requirements. Under the second test, a worker who conducts business through a corporation or a limited liability company, does not receive benefits from the service recipient, and has a written contract will be treated as an independent contractor. Our bill also protects businesses from retroactive reclassification of workers and the associated liability for back taxes, interest, and penalties, provided the business had a written contract with the workers, complied with all tax reporting requirements, and had a reasonable basis to treat the workers as contractors. Finally, our legislation repeals section 1706 of the Tax Reform Act of 1986 which precludes third-party technical service workers from the section 530 safe harbor, and it clarifies that compliance with a statutory or regulatory requirements will not be treated as evidence of control for the purpose of worker classification. Mr. President, the Tax Code reforms included in the Home-Based Business Fairness Act are commonsense solutions to the real problems faced by small businesses. With this bill, Senator Bond and I have tried to address those problems which we believe are most critical to the creation of new small businesses, new jobs, and new economic growth. I encourage my colleagues to give this legislation their thoughtful consideration and join us in this initiative.

Mr. NICKLES

Mr. NICKLES. Mr. President, today, following morning business, at 11:30, the Senate will resume consideration of Senate Joint Resolution 18, the Hollings resolution regarding the constitutional amendment on campaign funding. That debate will continue until 12:30 today, at which time the Senate will recess until the hour of 2:15 for the weekly policy conferences to meet. When the Senate reconvenes at 2:15, there will be an additional 30 minutes for closing remarks, followed by a rollcall vote on passage of Senate Joint Resolution 18. Therefore, Senators can anticipate the rollcall vote at approximately 2:45 today. Following that vote, the Senate will resume consideration of Senate Joint Resolution 22, the independent counsel resolution. We will be continuing discussions with the Democratic leader in the hope of reaching a consent agreement to allow us to complete action on this resolution. Also this week, it is possible that the Senate will consider a resolution regarding Mexico and their certification in the antidrug effort. In addition, the Senate may begin consideration of the nuclear waste legislation prior to our adjournment for the Easter recess. Again, I remind my colleagues that since this is the last week of session prior to the adjournment, I hope all Senators will continue to cooperate and adjust schedules accordingly as we attempt to schedule legislation and votes. I thank my colleagues.

Mr. NICKLES

Mr. NICKLES. Mr. President, if there is no further business to come before the Senate, I now ask unanimous consent the Senate stand in adjournment under the previous order.

Mr. NICKLES

Mr. NICKLES. I ask unanimous consent that the Senate stand in recess between the hours of 12:30 p.m. and 2:15 p.m. in order for the weekly party caucuses to meet.

Mr. NICKLES. Mr. President, I ask unanimous consent that when the Senate completes its business today it stand in adjournment until the hour of 10 a.m. on Tuesday, March 18. I further ask unanimous consent that on Tuesday immediately following the prayer, the routine requests be granted and there then be a period of morning business until the hour of 11:30 a.m, with Senators permitted to speak for up to 5 minutes each, with the following exceptions: Senator Bond, 15 minutes; Senator Moseley-Braun, 15 minutes; and Senator Campbell, 15 minutes. I further ask unanimous consent that at 11:30 a.m. the Senate resume consideration of Senate Joint Resolution 18 by previous order.

Mr. NICKLES

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

Mr. NICKLES

Mr. NICKLES. Mr. President, I understand that House Joint Resolution 58 has arrived from the House, and I now ask for its first reading.

Mr. NICKLES. I now ask for its second reading, and I object to my own request on behalf of the other side of the aisle.