Samuel Nunn

Mr. NUNN

Mr. NUNN. Mr. President, today I want to recognize Gen. John Michael Loh for his 39 years of distinguished service to our Nation. General Loh has displayed exceptional leadership in a wide-ranging Air Force career that culminated as commander of the Air Combat Command. As a Georgian, I am proud to note that General Loh is a native of Macon, GA. General Loh graduated from the U.S. Air Force Academy as a distinguished graduate in 1960. Ultimately, he rose to command the 250,000 men and women of Air Combat Command General Loh is a highly decorated veteran of the Vietnam war. He flew over 200 combat missions in the F-4 at Da Nang Air Force Base, South Vietnam. Later, General Loh also served as a test pilot, helping usher in the technological improvements we see in today's advanced fighters. As the director of the F-16 System Program Office, he led the acquisition efforts that brought our country the world's best multirole fighter. His numerous military awards and decorations include the Distinguished Service Medal, Legion of Merit with Oak Leaf Cluster, the Distinguished Flying Cross, Meritorious Service Medal, and the Air Medal with seven Oak Leaf Clusters. General Loh has flown over 5,000 hours as a command pilot in the F- 16, A-7, F-4, and F-104 to mention just a few. He recently capped his career by flying our Nation's most sophisticated aircraft--the B-2 bomber. Perhaps his greatest feat, however, was in leading the successful merger of Strategic and Tactical Air Commands into Air Combat Command. In fact, the Air Force Association awarded him its highest military honor, the Hap Arnold Award, for his leadership of Air Combat Command and his national reputation for quality improvement. Vice President Gore singled out Air Combat Command as a shining example of reinventing government. Despite the significant changes in the Air Force and our military structure as a whole, General Loh leaves a command that performed brilliantly during and after the gulf war, and more recently, has responded quickly and effectively to contingency operations around the world. The United States is indebted to General Loh for his selfless and distinguished service. I offer my sincere thanks and appreciation for a job well done and wish General Loh and his wife, Barbara, continued success in the future.

Mr. NUNN

Mr. NUNN. I say to my friend from Delaware I have just taken the amendment to the desk, and it reflects all those changes that we worked out, and I would ask that the previous amendment not be called up but the one I just brought to the desk be called up.

Mr. NUNN. Mr. President, I am going to start with the explanation of the amendment which I hope we will be voting on this evening. If the majority leader would like to interrupt at any point in time, I know there will be other things that will be coming up, I will be glad to yield and I invite that. I am pleased to propose on behalf of myself, Senator Thurmond, Senator Biden, and Senator Warner, an amendment to address a significant gap in the law regarding the use of chemical and biological weapons of mass destruction in criminal terrorist activities. The Armed Forces have special capabilities to counter nuclear, biological, and chemical weapons. They are trained and equipped to detect, suppress, and contain these dangerous materials in hostile situations. Most of our law enforcement officials do not have anything like the capability that our military does in these unique circumstances. At the present time the statutory authority to use the Armed Forces in situations involving the criminal use of these weapons of mass destruction extends only to nuclear materials. In my opinion, chemical and biological attacks on the United States, terrorist attacks, are much more likely than nuclear, although all would be horrible. Section 831 of title 18, United States Code, permits the Armed Forces to assist in dealing with crimes involving nuclear materials when the Attorney General and the Secretary of Defense jointly determine that there is an emergency situation requiring military assistance. There is no similar authority to use the special expertise of the Armed Forces in circumstances involving the use of chemical and biological weapons of mass destruction. In the wake of the devastating bombing of the Federal building in Oklahoma City, with its tragic loss of life and disruption of governmental functions, I think it is appropriate to reexamine Federal counterterrorism capabilities, including the role of the Armed Forces. I would also add that the Tokyo chemical attack in the subway is the kind of situation that very well could happen, also, in this country. For more than 100 years, military participation in civilian law enforcement activities has been governed by the Posse Comitatus Act. The Act precludes military participation in the execution of laws except as expressly authorized by Congress. That landmark legislation was the result of congressional concern about increasing use of War era, particularly terms of enforcing the Reconstruction laws in the South in and suppressing labor activities in the North. There are about a dozen express statutory exceptions to the Posse Comitatus Act, which permit military participation in arrests, searches, and seizures. Some of the exceptions, such as the permissible use of the armed forces to protect the discoverer of guano islands, reflect historical anachronisms. Others, such as the authority to suppress domestic disorders when civilian officials cannot do so, have continuing relevance--as shown most recently in the 1992 Los Angeles riots. It is important to remember that the Act does not bar all military assistance to civilian law enforcement officials, even in the absence of a statutory exception. The Act has long been interpreted as not restricting use of the armed forces to prevent loss of life or wanton destruction of property in the event of sudden and unexpected circumstances. In addition, the Act has been interpreted to apply only to direct participation in civilian law enforcement activities--that is, arrest, search, and seizure. Indirect activities, such as the loan of equipment, have been viewed as not within the prohibition against using the armed forces to execute the law. Over the years, the administrative and judicial interpretation of the Act, however, created a number of gray areas, including issues involving the provision of export advice during investigations and the use of military equipment and facilities during ongoing law enforcement operations. During the late 1970's and early 1980's, I became concerned that the lack of clarity was inhibiting useful indirect assistance, particularly in counterdrug operations. I initiated legislation, which was enacted in 1981 as chapter 18 of title 10, United States Code, to clarify the rules governing military support to civilian law enforcement agencies. We not have, as a matter of fact, and have had since 1981 military ships in the Caribbean--and other places for that matter where we have heavy drug traffic--where the military, the Navy, has the right to intercept vessels, but the power of arrest is reserved for Coast Guard personnel that are on the Navy ships for that purpose. So we have been very careful about how we approach this matter. The administration has requested legislation that would permit direct military participation in specific law enforcement activities related to chemical and biological weapons of mass destruction, similar to the exception under current law that permits direct military participation in the enforcement of the laws concerning improper use of nuclear materials. We had a hearing under the auspices of Senator Hatch and Senator Biden. During that hearing it came to the attention of the committee-- and the Armed Forces Committee was also invited to participate in that hearing, and I was there--that, although the overall direction that the President was laying out seemed to me to make sense, I thought the statute that had been submitted was not properly drawn. It used the words ``technical assistance'' without defining that term properly; used the term ``disabling and disarming'' but precluded the power of arrest. In effect, I reached the conclusion that the military would be in a position where they were basically able to disable and disarm, which would include the use of force, and perhaps even the use of fatal force, but not have the power of arrest, which did not make sense. I think the ultimate depriving of civil liberties is when you kill someone. If you can kill them without arresting them you are not really protecting someone's civil liberties. So we decided to carefully reconstruct that statute to try to deal with chemical and biological weapons, and we worked diligently to do that, and are continuing to work on possible amendments in good faith with colleagues on both sides. Senator Hatch has participated in that. Senator Thurmond and I have worked hard on it. Senator Biden has participated, and others. Senator Dole and others have been involved in trying to make sure we know exactly what we are doing. I hope we can work it out this evening. But, if not, we will certainly have to vote on the matter at some point. In my judgment, Mr. President, the question of whether we should create a further exception for chemical and biological weapons should be addressed in light of the two enduring themes reflected in the history and practice of the Posse Comitatus Act and related statutes: First, the strong and traditional reluctance of the American people to permit any military intrusion into civilian affairs. Second, the concept that any exceptions to the Posse Comitatus Act should be narrowly drawn to meet specific needs that cannot be addressed by civilian law enforcement authorities and that pose a grave danger to the American people. As I previously mentioned, these issues were examined at a hearing before the Judiciary Committee on May 10, led by the chairman of the Committee, Senator Hatch, and the ranking minority member, Senator Biden. At their invitation, I participated in the hearing, and I am grateful for the courtesies extended to me. At the hearing, we heard from former Secretary of Defense Caspar Weinberger, and from current representatives of the Departments of Justice and Defense. During the hearing, five major themes emerged: First, we should be very cautious about establishing exceptions to the Posse Comitatus Act, which reflects enduring principles concerning historic separation between civilian and military functions in our democratic society. Second, exceptions to the Posse Comitatus Act should not be created for the purpose of using the armed forces to routinely supplement civilian law enforcement capabilities with respect to ongoing, continuous law enforcement problems. Third, exceptions may be appropriate when law enforcement officials do not possess the special capabilities of the Armed Forces in specific circumstances, such as the capability to counter chemical and biological weapons of mass destruction in a hostile situation. Fourth, any statute which authorizes military assistance should be narrowly drawn to address with specific criteria to ensure that the authority will be used only when senior officials, such as the Secretary of Defense and the Attorney General, determine that there is an emergency situation which can be effectively addressed only with the assistance of military forces. Fifth, any assistance which authorizes military assistance should not place artificial constraints on the actions military officials may take that might compromise their safety or the success of the operation. In other words, Mr. President, as a result of that hearing, I came to the conclusion that in this area we ought to set a very high threshold for participation by the military and define those terms very carefully. Once the military is involved and, for example, they have on chemical gear, they are in a very difficult situation. Law enforcement may not even be able to be on the scene because of the heavy presence of chemical or biological agents. Once that happens, we do not want to put our 19, 20-, 22-, 23-, 24- or 25-year-olds out there without having enough authority to go ahead and do the job. So we have tried to draft this authority with a very high threshold for any involvement of this military and to make that authority very limited, very carefully drawn. Once they are involved, then we want to give the military personnel authority to protect themselves and to take action as required by the circumstances, the very emergency type of circumstances we are describing. The amendment that Senator Thurmond, Senator Biden and I are sponsoring has been drafted to reflect the traditional purposes of the Posse Comitatus Act and the limited nature of the exceptions to the Act. Under the amendment, the Attorney General may request DoD assistance to enforce the prohibitions concerning biological and chemical weapons of mass destruction in an emergency situation. The Secretary of Defense may provide assistance if there is a joint determination by the Secretary of Defense and the Attorney General that there is [[Page S7770]] an emergency situation, and the Secretary of Defense determines that the provision of such assistance will not adversely affect military preparedness. Military assistance could be provided under the amendment only if the Attorney General and the Secretary of Defense jointly determine that each of the following five conditions is present: First, that the situation involves a biological or chemical weapon of mass destruction. Second, that the situation poses a serious threat to the interests of the United States. Third, that civilian law enforcement expertise is not readily available to counter the threat posed by the biological or chemical weapon of mass destruction involved. Fourth, that Department of Defense special capabilities and expertise are needed to counter the threat posed by the biological or chemical weapon of mass destruction involved. Fifth, that enforcement of the law would be seriously impaired if the DoD assistance were not provided. The types of assistance that could be provided during an emergency situation would involve operation of equipment to monitor, detect, contain, disable, or dispose of a biological or chemical weapon of mass destruction or elements of such a weapon. This includes the authority to search for and seize the weapons or elements of the weapons. This authority must be given. I do not know of any way to avoid that because what you have to do is stop the possibility or the probability in some cases of massive death of American people. The Attorney General and the Secretary of Defense would issue joint regulations defining the types of assistance that could be provided. The regulations would also describe the actions that Department of Defense personnel may take in circumstances incidental to the provision of assistance under this section, including the collection of evidence. This would not include the power of arrest except in exigent circumstances or as otherwise authorized by law. Now, that word ``exigent'' is one we are now considering, whether there are other words that would more precisely define the kind of circumstances we are talking about. The word ``exigent" though is used in criminal statutes and has been used over and over again, and that word is well known in law enforcement circumstances. Also, this provision is designed to address two important concerns. First is the general principle that types of assistance provided by the Department of Defense should consist primarily of operating equipment designed to deal with the chemical and biological agents involved and that the primary responsibility for arrest should reside in all circumstances with civilian officials where that is possible. As a law enforcement situation unfolds, however, military personnel must be able to deal with circumstances in which they may confront hostile opposition. I repeat, Mr. President, there can very well be circumstances, a subway, for instance, involving chemical agents, just like the situation in Tokyo, or a situation similar to that where chemical agents are present, where law enforcement people are not even able to go into the area, where the only people who can go into the area are the military personnel. In that situation, we do not want to put handcuffs on the military and say you are going into this dangerous situation but you cannot take steps necessary to protect not only your lives but the lives of the people who are in the area. In such circumstances, the safety of the military personnel involved, and the safety of others, and the law enforcement mission cannot be compromised by precluding the military from exercising the power they need, including the use of force. The amendment requires the Department of Defense to be reimbursed for assistance provided under this section in accordance with section 377 of title 10, the general statute governing reimbursement of the Department of Defense for law enforcement assistance. This means that if DOD does not get a training or operational benefit substantially equivalent to DOD training, the DOD must be reimbursed. Under the amendment, the functions of the Attorney General and the Secretary of Defense my be exercised, respectively, by the Deputy Attorney General and the Deputy Secretary of Defense, each of whom serves as the alter ego to the head of the Department concerned. These functions may be delegated to another official only if that official has been designated to exercise the general powers of the head of the agency. This would include, for example, an Under Secretary of Defense who has been designated to act for the Secretary in the absence of the Secretary and the Deputy. Mr. President, I will not go into more detail at this time, but the limitations set forth in this amendment are designed to address the appropriate allocation of resources and functions within the Federal Government and are designed to avoid providing a basis for excluding evidence or challenging an indictment. Current law contains offenses involving the unlawful use of nuclear and biological weapons. The amendment sets forth the administration's proposal for a similar offense concerning the unlawful use of chemical weapons which is not now on the books. Mr. President, this is a prudent and narrowly drafted amendment. It is consistent with the traditional separation of civilian and military functions and the exceptions for unusual and unique circumstances which require the special expertise of the Armed Forces to address serious threats to the national interest. I might add there is an amendment that is incorporated in this amendment as it now stands, or it will stand when it is sent to the desk, proposed by the Senator from Maine [Mr. Cohen], basically saying that the Government should take every step possible to get the law enforcement community in a position where we can in the future reduce the need for using military personnel. So we are not saying this is going to be here for all time. We are saying we need it now, and as the months go by and the years go by there would be the goal in this amendment to reduce the need to rely as much on the military as we must necessarily rely on them now in the chemical and biological area where they do have extensive training and equipment and are virtually the only ones who are able to deal with certain circumstances that could be enormously dangerous to the American people. Mr. President, I will be glad to yield the floor. I know the Senator from South Carolina, the cosponsor of this amendment, would like to be heard.

Mr. NUNN

Mr. NUNN. Mr. President, today I want to congratulate Command Sgt. Maj. William H. Acebes on the occasion of his retirement from the U.S. Army. Command Sergeant Major Acebes began his Army career 30 years ago when he completed basic training at Fort Polk, LA. I am pleased to note that he completed his advanced individual training in my home State of Georgia, at Fort Gordon. Since then, he has served in virtually every noncommissioned officer leadership position. Overseas, Command Sergeant Major Acebes has served numerous tours of duty with United States Forces in both Europe and Asia. In Germany he was assigned to the Berlin Brigade and later, to the 1st Battalion, 10th Special Forces Group (Forward) at Bad Toelz. During the Vietnam war, he served with the 173rd Airborne Brigade and was an advisor with the United States Army Military Assistance Command. His most recent overseas assignment was in South Korea, where he was the command sergeant major of the 2nd Infantry Division. Bill Acebes' stateside assignments have included serving as the first sergeant of Headquarters Company and the command sergeant major of the 1st Battalion (Ranger), 75th Ranger Regiment. Also, he served as the battalion command sergeant major for the 1st Battalion, 64th Armor Regiment, 2d Brigade, 24th Infantry Division, at Fort Stewart, Georgia. Since 1992, he has served as the U.S. Army Infantry Center Command Sergeant Major at Fort Benning, GA. During his 30-year Army career, Bill Acebes has received numerous awards and decorations in recognition of his exemplary service to the United States. These awards and decorations include the Legion of Merit, the Bronze Star, the Meritorious Service Medal, the Army Commendation Medal, the Army Achievement Medal, and the Vietnam Cross of Gallantry. I know of no soldier who sought more tough, demanding assignments than Bill Acebes. I also know of no soldier who has spent more time with the infantry--with infantry soldiers and families, than Bill Acebes. Whenever our country called, over a 30-year period, Command Sergeant Major Acebes answered. His leadership and talents will be missed. Mr. President, I ask our colleagues to join me in thanking Command Sergeant Major William H. Acebes for his distinguished service to the Army and people of the United States.

Mr. NUNN

Mr. NUNN. Mr. President, I strongly support today's NATO airstrikes in Bosnia. I am pleased that the United Nations finally permitted NATO to respond to the continued defiance of the U.N. mandates for Bosnia. I am also pleased to hear the preliminary reports that NATO strikes were carried out against a meaningful military target. There is certainly a risk that the Bosnian Serbs may retaliate against U.N. personnel. There is, however, even greater risk to U.N. personnel if the U.N. and NATO's credibility continues to erode. In addition to the terrible human suffering, I have been concerned about the loss of U.N. and NATO credibility that has taken place as the various warring parties, particularly the Bosnian Serbs, have ignored U.N. resolutions and international law. I hope today's strikes on the Bosnian Serb ammunition dumps at the military headquarters in Pale will serve notice to all sides that the United Nations and NATO can and will enforce the resolutions that have been approved by the U.N. Security Council. I am hopeful that these strikes will strengthen the resolve of the U.N. forces in the exclusion zone around Sarajevo where the United Nations has prohibited the use of heavy military equipment. This zone was designed to stop the indiscriminate shelling of the civilian population within the exclusion zone. If any side in this conflict ignores the U.N. ban on heavy weapons in this zone I would favor more strikes like today's strikes on Pale until all sides respect the U.N. ban on heavy weapons. I have long felt that any hope for peace in Bosnia requires the enforcement and expansion of the zone of exclusion. By expanding the areas where heavy weapons are prohibited, the U.N. could reduce civilian casualties, level the playing field between the warring parties, and lower the level of violence in the conflict, thus paving the way for a negotiated settlement.

Mr. NUNN

Mr. NUNN. Mr. President, on rollcall 229 I voted no. It was my intention to vote yes. It was a tabling motion. Therefore I ask unanimous consent that I be permitted to change my vote. This will in no way change the outcome of the vote.

Mr. NUNN

Mr. NUNN. Mr. President, first I want to commend my friend from New Mexico, Senator Domenici, and my friend from Nebraska, Senator Exon, for handling the management of this bill under very difficult circumstances. I have been in that place many times, and I know how difficult it is and what a challenge it is. Second, I would like to commend the Senator from New Mexico, Senator Domenici, for real leadership in putting on the table for all of us to both contemplate, vote on, and study in the future, and the American people to contemplate, all the untouchables that have not been in budget resolutions before. This is first time that I have seen all elements of spending on the table except Social Security. It is my view that will have to be on the table at some point in the future. But that one is not on the table today. I disagree with a number of the priorities in this resolution, and I have voted differently from my friend from New Mexico on a number of amendments because I do believe that we have not earned any tax dividend at this point. I do not believe we ought to have a tax dividend until we really get the budget under control. I think that is essential, and that is a priority. And I think that is what the American people want. I think moving to reduce taxes before we get spending under control, and before we really earn the dividend, is kind of like going on the wagon by starting off chug-a-lugging a bottle of whiskey. I do not think that is the way to proceed. However, having said that, I do think this budget is in the right direction. I think it moves in the right direction. I am going to vote for it for that reason, because it does move in the right direction. And moving in the right direction in terms of tackling entitlements, in terms of restraining growth and spending in those programs that have been clearly out of control, as difficult as that is going to be to do, I think the direction is enormously important. It is important for our children. It is important for our grandchildren. It is important for our economy. It is important to increase savings, and thereby investment and productivity, and thereby the real income of the American people over a period of time. Finally, I think that this direction is enormously important for the credibility of this Congress and the credibility of our Federal Government. So I commend my friend from New Mexico for real leadership, and I will vote for the final passage of this resolution. Like the Senator from Texas, I will be watching the conference very closely, perhaps from a slightly different perspective. Mr. President, again, I rise today to announce my support for the fiscal year 1996 budget resolution. I commend my good friends, Senator Pete Domenici and Senator Jim Exon, the chairman and ranking member of the Senate Budget Committee, for their floor management of this bill. Having been a member of the Senate Budget Committee and having worked with Senator Domenici on a 10-year balanced budget plan in our Center for Strategic and International Studies [CSIS] ``Strengthening of America Commission,'' I know how daunting a task it is to produce a plan to reach a balanced unified budget by 2002. I know that my friend Pete Domenici had to make many difficult decisions and fall back on many of his own priorities to forge a majority coalition on this bill. This type of leadership is often given sufficient recognition or praise. I have followed this debate closely. This is a historic moment. This resolution marks the first time the Senate Budget Committee has reported a budget resolution that in my view deals with all the elements on the spending side of the budget that must be addressed to have any hope of balancing the budget. I commend my friend from New Mexico for the courage and the leadership he has exhibited in crafting this resolution. The most significant improvement over past attempts to balance the budget is the Senate Budget Committee's inclusion of recommendations to restrain significantly the projected growth of Federal mandatory or entitlement spending, which now represents 50 cents of every dollar the Federal Government spends. For years, Congress and the executive branch have tried to achieve a balanced budget by cutting the defense and domestic discretionary programs that are appropriated by the Congress and signed by the President, and by raising taxes. At the same time these budget efforts time after time allowed the mandatory or entitlement programs, which are on autopilot, to grow faster than inflation, faster than discretionary programs were being cut, and faster than taxes could be raised. In the 1990 budget summit, half the savings came from cutting the defense budget. While large defense savings were possible due to the end of the cold war--and those savings which were made are still contributing to deficit reduction today--that kind of historic opportunity is a one-shot deal. That agreement predictably did not balance the budget because defense represented at that time 24 percent of the overall budget. As a result of that agreement, defense is only 18 percent of the budget today, and under this resolution it will fall to 14 percent by the end of the century. Over half the deficit reduction in the 1993 reconciliation bill came from tax increases. Once again, reductions in the growth of entitlements contributed only a small portion of the deficit reduction. Tax increases and defense cuts will never balance the budget as long as the entitlement programs remain unrestrained. These previous attempts, because they failed to address the largest and fastest growing part of the budget, were virtually doomed to fail. In my mind, our previous attempts to balance [[Page S7447]] the budget without seriously addressing the out of control growth of spending in entitlement programs were analogous to Bonnie and Clyde robbing parking meters. Mr. President, this budget resolution finally goes where the money is. Fifty percent of the deficit reduction in this plan comes from reducing the projected growth in spending--not the actual spending levels--in entitlement programs. Compared to CBO's baseline projections, it provides spending reductions totaling $1.3 trillion over the 7-year period ending in 2002. These reductions are achieved through reductions in two principal areas: entitlements and nondefense discretionary programs. This resolution recommends that entitlement spending growth be reduced by $650 billion, that nondefense discretionary spending be reduced $350 billion, and defense will be reduced by another $100 billion below CBO's baseline. Due to these reduced Federal expenditures, it is estimated that interest payments on the debt will be lessened by $200 billion. Mr. President, over the last few days, many of my colleagues have attempted to amend the resolution to correct what they believed to be flaws in this proposal. I share many of their concerns, and, if I had my way, I would make a number of changes, including: First, holding the defense budget stable over this period rather than having it continue to decline as called for in both this resolution and President Clinton's budget; Second, setting a goal of balancing the budget without using the surpluses from the Social Security Trust Fund, even if it takes 10 years rather than 7. Third, reducing some of the cuts from projected growth in the Medicare and Medicaid programs to make the required reforms more achievable and sustainable; Fourth, reducing the proposed cuts in Federal education programs to acknowledge that human capital is our most precious resource; Fifth, restoring some of the proposed reductions in the Earned Income Tax Credit, which is essential in helping low-income working people and in making work more attractive than welfare; Sixth, mitigating to some extent the proposed cuts to agriculture and veterans programs; and Seventh, keeping the National Service program alive and viable. This program is proving to be both an important and efficient way of delivering human services, and it is also serving as a catalyst for community service by thousands of American young people. Mr. President, I will continue to fight to address these priorities as this process continues and we debate the specific details in the reconciliation legislation that will carry out this plan. I also believe that tax expenditures should not be exempt from review as we legislate in the summer and fall. Balancing the budget requires shared sacrifice, and as we cut spending we should also review revenue-losing tax breaks which may not be justified. For these reasons I supported the Conrad alternative to the Committee-reported budget resolution. Notwithstanding these reservations, I will vote for the Domenici budget resolution. We will debate the details for months to come, and we could vote and debate forever in search of a perfect solution, but the general direction required is clear. If there was an easy way to balance the budget without cutting spending on popular programs, we would have done it long ago. But that is simply not possible. This plan gives the American people a realistic look at what it takes to balance the budget with spending cuts alone. I believe this resolution points us in the right direction. Mr. President, most of this debate has focused on specific elements of this plan, but what sometimes gets lost in the debate is the fact that the status quo is not painless either--in fact it is not even sustainable. We simply cannot continue to pile $200 to $300 billion in additional debt each year on our children and grandchildren. I also hope that I will also be able to support the conference report, but that depends on its content. I consider the House's action in beginning a $1.2 trillion budget cutting exercise by reducing taxes by over $300 billion over 7 years to be fiscally irresponsible. I am pleased that more than two-thirds of my colleagues voted to overwhelmingly defeat this tax cut in the Gramm amendment, which have made the tax cuts contained in the House passed Contract With America part of this resolution. The House approach is like an alcoholic promising to go on the wagon right after gulping one last bottle of whiskey. In this resolution, there is a reserve fund that makes the fiscal dividend resulting from enactment of a balanced budget plan available for tax cuts. This dividend was the focus of most of the proposed amendments to this resolution. In my view, the Senate should have adopted the Feingold amendment, which would have applied that dividend to deficit reduction and given us a cushion that would allow us to balance the budget even if the economy does not perform as well as CBO has projected. The budget resolution contains an invitation to use this fiscal dividend for tax reductions rather than applying it to deficit reduction. I oppose this part of the resolution and I voted against the amendment which strengthened this invitation from may to shall. The Senate will address this question again before any such tax cut passes. If the Senate is unwilling to apply this fiscal dividend to the deficit then I prefer using the dividend to ease the most severe impacts of the spending reductions Medicare, education, and programs for low-income working people, rather than for tax cuts. My votes on several amendments reflect this. But my first choice was to take a more conservative approach by applying the fiscal dividend to deficit reduction as proposed by the fiscally responsible path in the Feingold amendment. This budget resolution is tough medicine, and it will be very difficult to carry out some of the reductions called for. I suspect the reductions in the growth rate of spending in Medicaid and Medicare, education, agriculture and other areas that are required if we are to balance the budget will generate more and more opposition from substantial segments of America before the cuts are passed by Congress, and certainly before they are fully implemented. There is also a probability that in cutting projected spending by over $1 trillion dollars in a 7-year period Congress will inadvertently make some serious errors which will have to be corrected. For these reasons, I believe that reducing taxes by the amount produced in the fiscal dividend would be inequitable and premature until the spending cuts and restraints have been locked in. I would remind all of my colleagues who believe, as I do, that we should be balancing the budget without using the Social Security surplus, that leaving the fiscal dividend alone and applying it to deficit reduction, as we would have done if the Feingold amendment had been adopted, would also help move us toward the goal of a real balanced budget. Balancing only the unified budget by continuing to borrow the Social Security surplus simply postpones the day of pain when the general fund must repay the Social Security Trust Fund. The budget resolution before us balances the budget in 2002, including the Social Security surplus. But without that surplus, the deficit in 2002 would still be about $100 billion. While the exact size of the fiscal dividend would depend on what savings and enforcement provisions were enacted in a reconciliation bill, CBO's previous estimate of the fiscal dividend in 2002 was about $50 billion. If we had applied that to deficit reduction, we could have cut the deficit in 2002, excluding Social Security, in half, from about $100 billion to $50 billion. Today, the general fund already owes the Social Security Trust Fund $500 billion. By 2002, when we finally get the budget back in balance including using these Social Security surpluses, the general fund will owe the Social Security Trust Fund $1.1 trillion. When the baby boom generation starts retiring around the year 2015, just 20 years from today, we will owe the Social Security trust fund about $3 trillion. We all know that Congress and the President have to face up to the Social Security problem. We all know the Social Security system is not going to be the same for those who are in their 20s, 30s, and 40s today as it is for people who are already retired and receiving longer we avoid facing up to that problem, the worse the problem is going to be. Balancing the budget without the continued use of the Social Security surplus to finance other Government spending is an absolute necessary first step in that effort. Unfortunately, this budget resolution does not meet that test or even have that goal. Mr. President, in closing, I want to congratulate Senator Domenici for his leadership on this budget resolution. This budget resolution is but the first step of a long and difficult journey, but we are headed in the right direction--the direction that will bring our budget into balance.

Mr. NUNN

Mr. NUNN. I thank my friend from South Carolina. Mr. President, I rise in support of the Thurmond-McCain amendment to increase the defense spending levels in this budget resolution. For over 2 years, I have been expressing my concern that projected defense budgets are not sufficient from four standpoints: First, to maintain the current readiness of our forces; second, to provide the standard of living that military personnel and their families expect and deserve; third, supporting the force structure necessary to carry out the full range of missions that we expect our military forces to be able to perform; and fourth, to provide for the modernization that is the key to the future capability of those forces. The modernization of our forces, which is essential to future readiness, is an area of increasing concern, Mr. President, and this is an area where we are most deficient today. The men and women in the military continue to perform superbly every time they are called on, and we are calling on them all the time. We owe it to them to give them the support they need to do their job. We also have to ensure that the men and women who will be called on 5, 10, or 20 years from now will have the same advantages vis-a-vis their opponents that our forces have today, including the technological superiority that played such a key role in Operation Desert Storm and plays such a key role everywhere our forces are deployed today. While I am encouraged by the funding for readiness, military pay raises, and quality of life initiatives Secretary Perry has recommended in the President's budget, I think there are clearly insufficient funds going into modernizing the force. Modernization, for the most part, is delayed into the outyears under the current future years defense program. We all know how illusory these budget projections become 4 or 5 years down the road. Under the current budget, 1996 and 1997 will be the second and third straight years during which the Air Force will not purchase a single new fighter aircraft. The Air Force has no bomber program. Our leading standoff weapon program has been canceled, yet the budget, at this stage, contains no funds to replace that capability. The number of navy ships is not nearly enough to replace even a 300-ship Navy. and the Marine Corps is years away from having a replacement for its aging amphibious assault vehicles. It would not take long to list the Army's modernization programs, but it would take a long time to list the deficiencies in that program. The fiscal squeeze on the defense budget is already intense. As we seek to balance the budget, and properly so--especially if we try to enact tax cuts, which I think are ill-advised, and which I hope this body will vote against this afternoon--if we do that, however, the pressure is going to get more and more intense on the defense budget. This gives me even less confidence in the outyear funding predictions that show funds for defense modernization increasing. In my view, we need to increase the defense topline now particularly in the outyears, to restore the balance to our defense program. We also need to reinstate the firewalls. And I congratulate the chairman of the committee and the members of the Budget Committee for doing this in the resolution. That is enormously important to protect any defense increases we are able to achieve and to provide some stability in the defense budget. Firewalls have not and will not mean that defense cannot be cut. What it does mean is that these cuts will not be shifted to other programs, and that means that if there are defense cuts and the firewalls are in, then the cuts will go to deficit reduction. I believe that is appropriate, and I think that is the way that defense is best protected. We have been reducing the defense budget for a long time. The current builddown started during President Reagan's second term, even before the fall of the Berlin Wall, and continued, accelerated, throughout the Bush administration and the current administration. I believe the time has come to stabilize the defense budget as much as possible, since the defense budget has already made a greater contribution to deficit reduction than any other part of the budget; I might add, than all of the budget combined. In my judgment, the administration needs to restore some balance to the defense program but Congress' recent action are a good news/bad news story. The good news is that the House budget resolution provided an increase for the defense budget. This amendment would do the same in the Senate budget resolution. And the Senate budget resolution, unlike the House version, contains firewalls. But there has been bad news for defense as well. the senate resolution does not increase defense First, although there have been a lot of statements that the President's defense budget and Bottom-Up Review force structure are inadequate, this resolution as reported out by the Budget Committee contains no increase for defense above the levels proposed by the administration--in fact in the final 2 years it is lower than the administration's plan. And while the House version of this resolution does increase defense, the House voted earlier this year in their tax cut bill to pay for the tax cut largely by cutting discretionary spending, which includes defense, and the House did not include firewalls in either the tax cut bill which reduced the discretionary caps or in their budget resolution. So the House has put discretionary spending on the table to pay for cutting taxes, which certainly makes it more difficult to find the money to increase the defense budget. requirement that dod absorb the cost of contingencies Second, despite the frequent complaints about the cost of contingency operations and their effect on readiness, the defense supplemental enacted earlier this year required the Department of Defense to absorb almost the entire cost of these contingency operations--the very practice that had been criticized in the past. In fact, the House leadership wrote to the President earlier this year stating their intention that as a matter of policy all future supplementals would have to be offset. This resolution would essentially adopt that same approach by requiring 60 votes for any future emergency supplementals, instead of a majority vote as has been the case in the past. Of course this only applies to discretionary funding, since entitlement programs could continue to increase without even requiring votes, let alone supermajority votes. Mr. President, I have several concerns with the approach the Congress supplemental did not provide the net increase in defense spending for readiness that was requested by the Clinton Administration, despite the concerns many of my colleagues have expressed about readiness. The cost of these contingencies were made up almost entirely by cutting elsewhere in the defense budget, and those cuts came in modernization. So the scorecard so far in this new Congress is that the defense budget, as it now stands, counting the supplemental, is below what President Clinton had asked for. So to those in the Congress of the United States who are saying the Clinton defense budget is too low, and people on both side of the aisle are saying that, I say to them we are cutting below the President's budget, not in this resolution, but in the overall supplemental and that approach. I am also troubled by the impact that a policy of making DOD absorb the full cost of these contingencies could have on the defense budget and on defense management. It largely defeats the purpose of having supplementals, and I can already predict some of the problems we are going to have with this policy. I am not sure we have really thought through the impact of what we may be doing to the military with this 100 percent offset approach. Earlier this year, Gen. Gordon Sullivan, the Chief of Staff of the Army, told the Armed Services Committee that if the Congress adopts a policy of forcing the military to completely offset the costs of any contingency operation: * * * it is just going to destroy our training programs, our quality of life programs, and it is going to be difficult to manage the readiness of the force * * *. It is going to come out of reducing real property maintenance. We may have to furlough civilians, terminate termporary employees, curtail supply requests, park vehicles, reduce environmental compliance. It is going to have a major impact. General Sullivan said that in the event the military is told to assist a large-scale evacuation of U.N. personnel from Croatia: I just have to stop training, and I will have to move money around from elsewhere to keep that operation going since obviously what you expect me to do is to fight and win you wars. So, I will have to get the money from people who are not doing that to support it. Now that may sound like an exaggeration to some, but if you understand the laws that govern the defense budget, you will see why General Sullivan's comments are right on target. The cost of an operation, such as paying for the airlift to get there, the fuel, spare parts, and so on, must come out of the operating budget. The military does not have the authority to fund contingency costs by diverting funds from the procurement of weapons, or from research or military construction or military personnel accounts, even if they wanted to. And even within the operating budget, there are further constraints. A large portion of the operating account is civilian pay, so you cannot save money there without firing civilians. And you cannot cut really cut the money to operate the bases--you have to pay the light bill. So the areas General Sullivan is talking about--training, maintenance and repair of the buildings on our military bases--are the only areas where the military has the flexibility to change its plans halfway through the year. And in fact that is exactly what happened last year--money had to be diverted from training. In addition to my concerns about the financial impact on the Defense Department if this bill is viewed as a precedent, I also share the concerns expressed by my friend Senator Inouye about the long-term policy implications of telling the military any future contingency they are involved in is going to come out of their budget dollar for dollar. This is going to have an impact on their ability and their willingness to respond to situations like Haiti or Cuba, or especially a much more expensive operation like peace enforcement in Bosnia, in the future. In effect, we could have our funding and budgeting procedures dictating our foreign policy and our decisions on the use of force. I hope we do not set in concrete a policy of making the Defense Department absorb the costs of contingency operations, because if we are telling the Department of Defense that any time there is an emergency that comes up and they come over and request supplemental funds that they are going to have to provide a 100-percent offset, then we are going to change the nature of the responsiveness of the Department of Defense itself to the missions that may, indeed, be crucial to our Nation's security. If the Department of Defense is told that any unanticipated operation they undertake, either unilaterally or with NATO or the United Nations, is going to have to be completely offset within the defense budget, which means they are going to have to basically kill or substantially alter crucial defense programs in order to absorb those costs, then the result is going to be a very strong signal that the United States is not going to be as involved as we have been in world affairs, including commitments to our allies and commitments that we have voted for at the U.N. Security Council. modernization funds are the first to be cut The future readiness and future capability of the Defense Department requires modernization and it requires research and development, and those are the programs that were cut to fund the defense supplemental earlier this year, and those are the programs that will continue to be hurt by this policy of requiring complete offsets for contingency operations. Five or ten years from now, people will have a very serious problem with readiness if we continue to declare there is no emergency even when our forces are responding to the unanticipated events that we all know will take place somewhere in the world from time to time. This is why I am supporting this amendment to increase the defense topline number. We have cut the defense budget so much already that there is very little flexibility left to deal with the unexpected, even though we all know that the Defense Department always has to be ready for the unexpected--we expect them to be ready for the unexpected. And I am very concerned that as we struggle to live within these drastically reduced budgets without further reducing our military capability, the Congress will, acting in good faith to preserve readiness, make cuts that will cause great harm over the long term. You need look no further than the supplemental enacted earlier this spring to see the warning signs. What was cut to offset the cost of contingency operations? Basic science and technology research. Dual-use technology programs that are designed to better integrate our defense and civilian technology bases in order to get the Defense Department better technology at lower cost. In other words, programs that will pay off in the long term but seem easy to cut in the short term. Another example is environmental cleanup at military installations, which was cut by $300 million in the supplemental. Is this program as important to our combat capability as funding training and modernization? Of course not. But the reason that environmental cleanup costs are so high now is that for years these problems were ignored. And if we push them under the rug again, we are only going to wind up with an even bigger bill down the road. Conclusion In conclusion, Mr. President, so far we have seen a lot more talk than action about enhancing our national security and increasing the defense budget. Many of my colleagues share my concern that we have cut the defense budget too far, too fast and that we are mortgaging our future by sacrificing the capability of our forces 10 years down the road in order to fully fund current readiness. The Thurmond-McCain amendment represents real action to enhance our national defense while at the same time putting us on a path to a balanced budget, and I urge my colleagues to support it. I ask unanimous consent that a table showing real reductions in the defense budget be printed in the Record.

Mr. NUNN. Mr. President, I thank my colleague from South Carolina and my colleague from Arizona for sponsoring this amendment. I urge my colleagues to support the amendment.

Mr. NUNN

Mr. NUNN. Thirty seconds. We all know that someone has to face up to the Social Security problem. We all know the Social Security system is not going to be the same for those in their 20's, 30's, and 40's today. It cannot be. And the longer we avoid facing up to that problem, the worse the problem is going to be. Balancing the budget without the continued use of the Social Security surplus to finance other Government spending is an absolute necessary first step in that effort. I urge my colleagues to strike the reserve fund in this resolution and thereby apply these funds to the deficit. We must focus all of our efforts on creating a fiscal dividend before we refund it or consume it. I thank the Senator from Nebraska. I thank my colleagues. Ms. SNOWE addressed the Chair.

Mr. NUNN. I will complete in 30 seconds.

Mr. NUNN. Will the Senator yield me 1 more minute? I think I can complete in 1 more minute.

Mr. NUNN. Mr. President, I thank the Senator from Nebraska. Mr. President, I rise in support of the Feingold amendment of which I am a coauthor, to apply the $170 billion fiscal dividend to deficit reduction. The $170 billion set aside in this resolution for a later possible tax cut is certainly more responsible than the House approach beginning with a $1.2 trillion deficit exercise by cutting taxes. The House approach to me is like going on the wagon and beginning with chugalugging a bottle of whiskey. To me that is the analogy. The Senate approach is to set the money aside until after a reconciliation bill is enacted and then making it available for a tax cut at the discretion of the Budget and Finance Committees and, of course, Congress' later approval. Mr. President, I believe this fiscal dividend brought about by lower interest rates and higher economic growth will exist if we balance the budget by 2002. I do not think it is funny money, but I think it is very fragile. If we touch it by using it either for increased spending or tax cuts, I am afraid it may break. There is a strong probability that the spending slowdown in Medicaid, Medicare, education, agriculture, and other areas will generate more and more opposition from substantial segments of America before the cuts are passed by the Congress and certainly before they are fully implemented over a period of years. There is also a probability that in cutting projected spending by over $1 trillion in a 7-year period Congress will inadvertently make some serious errors which cause extreme hardship and which will have to be corrected. Mr. President, if my choice is to use the dividend, the $170 billion, for tax cuts or for easing the most severe impacts on Medicare, education and low-income working Americans, I believe the priority should be on easing the impact, and my votes reflect this. However, those are not the only two choices. In effect, until this amendment is voted on, we will have been choosing between either spending the $170 billion or refunding it. In either case, we will be spending and refunding before we have earned the dividend, in my view. If I have a choice, as we do on this amendment, however, of using the $170 billion, which has not yet been earned because we passed no reconciliation bill--and even when we pass one, we all know, looking at catastrophic insurance and others, when the public rises up in arms over some action by the Congress, it does not take us long to step back, and that may happen. I hope it does not, but it may happen in some of these cuts. I think the Feingold amendment is the responsible way to go because we will be putting this $170 billion on the deficit from the very beginning, and it will in effect be a contingency fund so that if we have to back up or some of the cuts do not work out as projected, we can still work on the goal in the year designated. If this amendment passes, there will be a small cushion, a small margin for error in economic assumptions or other assumptions in this plan to achieve a balanced budget by 2002. I would also remind all of my colleagues who believe, as I do, that we should be balancing the budget without using the Social Security surplus, leaving the fiscal dividend alone and applying it to deficit reduction, as we will do if this amendment passes, would help us move toward the goal of a real balanced budget in the operating accounts rather than simply a unified balance which we all know simply postpones the day of pain when the general fund has to start reimbursing the Social Security fund for the billions and billions of dollars owed. In fact, it will be trillions by the 2010-2013 range. Mr. President, I understand the analogy my friend from Colorado used about going on a diet and eating celery and carrots and getting thin. But I would remind my colleagues that when we get to 2002, if everything works out in this budget as planned, we will still have to borrow the Social Security [[Page S7208]] trust fund of $107 billion. And if we keep adding to the deficit, we will, under this resolution, at the time we get to 2002, instead of being slim and trim in a swimsuit, we are going to still owe to the people holding bonds and notes and Treasury bills all over this country something to the tune of about $6 trillion to $7 trillion. I believe the number is now about $4.9 trillion that is the national debt. So we will not be slim and trim. We will be bulging over our bathing suits, but we will simply stop in that year adding to the fat and the bulge. So I am not sure we are going to all want to put on our bathing suits in 2002 and show the bulges that have been building up for the last 40 years. Nevertheless, that would be a rather optimistic view. While the exact estimate would depend on what savings and enforcement provisions were enacted in the reconciliation bill, CBO's previous estimate of the fiscal dividend was about $350 billion in 2002. If we applied that to the deficit reduction, we could cut the real deficit, excluding Social Security, in half from about $100 billion to $50 billion in that year.

Mr. NUNN

Mr. NUNN. I think many times it was like we were the ``little four'' rather than the big four.

Mr. NUNN. Along with Congressman Bill Dickinson.

Mr. NUNN. I thank my friend from Virginia. I remember those days very well, and I will always cherish the memories. I have to say that while Les Aspin would consume that chair, my friend from Virginia was usually consuming the sofa.

Mr. NUNN. For health reasons, though.

Mr. NUNN

Mr. NUNN. Mr. President, I would just like to say to my friend from Idaho, I appreciate his remarks on the reasons for getting the budget under control and the historic nature of this undertaking. I, too, although I certainly do not agree with everything in the budget resolution and I have supported a number of amendments and will support others tomorrow, I, too, want to add my thanks and congratulations to Senator Domenici, the chairman of the Budget Committee, and others on the Budget Committee, Senator Exon and all who worked so long and hard, disagreeing often, but coming out with this budget resolution that at least is a beginning point in the debate for the road we must travel. It is my hope that I will be able to support this resolution in the final analysis. It will depend on what amendments are adopted or not adopted tomorrow. But I certainly hope that I will be able to support it. It is my hope that when it goes to conference, the conference will look carefully at what the Senate did today in turning down the very large tax cuts that were proposed by the Senator from Texas. All of us would like tax cuts, all of us would like to return that money to the American people because it is their money, but I think the public overwhelmingly that I represent wants us to get the budget under control and does not want us to take steps that will make that more and more difficult. We all know that there is going to be group after group coming here this summer that are going to be complaining about budget cuts, many of them with justification because they are going to be impacted. We all know that after that process starts, it is more likely there is going to be fallback in this regard. We all know that we need a reserve fund because we are going to have difficulties in implementation based on any historical examination. So it is my hope that when the conference takes place, that the message, by a strong vote from the U.S. Senate, to concentrate on deficit reduction and wait until we have really accomplished that before declaring a dividend I hope sinks in.

Mr. NUNN

Mr. NUNN. Mr. President, I am deeply saddened by the death of my close friend and colleague, Les Aspin. Many of us in this body have known Les for many, many, many years and worked very closely with him. Les Aspin devoted his life to public service. In his younger years, he served in the Senate on the staff of our former colleague, Senator William Proxmire. He also served as staff assistant to Walter Heller, the former Chairman of President Kennedy's Council of Economic Advisers and on the staff of Secretary of Defense Robert McNamara. Les Aspin was elected to the House of Representatives in 1970, and he immediately sought and was granted membership on the House Armed Services Committee on which he later served as chairman from 1985 through 1992. I had the great honor and privilege of working with Les since I came to the Senate in 1973. From 1987 through 1992, we served respectively as chairmen of the House and Senate Armed Services Committees. During that time, when our chairmanships overlapped, we developed a close personal and professional relationship, and we forged six National Defense Authorization Acts during that period. Mr. President, these years were marked by national defense challenges of great difficulty and complexity. In 1987, the cold war had begun to thaw, but barely so. There were many divisions in Congress on national defense issues, ranging from the size of the defense budget to the procurement of particular weapons systems to the appropriate course of national strategy. At a time when many sought substantial reductions in national defense commitments and programs, Les Aspin provided a voice for a strong national security and a sensible American foreign policy. As the former Soviet Union collapsed, many sought to rapidly dismantle our military establishment. Les Aspin recognized the continuing dangers facing the United States and successfully led the House of Representatives in support of a measured defense builddown, which was designed to maintain our military capacity in an era of defense reductions. Les was a particularly forceful advocate for defense conversion and retraining programs designed to assist military personnel, civilian workers, and the defense industry in adjusting to a new era with new challenges. Les was also both an originator and strong supporter in the House, and as Secretary of Defense, of the program [[Page S7233]] that is known as the Nunn-Lugar program that works for nuclear and chemical dismantlement in the former Soviet Union that has been so effective in helping denuclearize three former nuclear states and also helped in dismantling both chemical and nuclear weapons. We have a long way to go in that regard, but Les Aspin was on board when that ship was launched, which is probably our most important national security challenge--that is, nonproliferation in the breakup of the Soviet empire. During this entire period, I developed tremendous respect for the breadth of Les Aspin's knowledge and his devotion to the cause of national defense. Les was a brilliant analyst, but he was more than a scholar; he was an outstanding legislator and a master at putting together coalitions in the House of Representatives during a very tough period of time for national security. I will always treasure the memories of working with Les on the House- Senate conferences on the National Defense Authorization Act that were enacted during the period in which we chaired our respective committees. The challenge of crafting a conference agreement was always daunting in the contentious atmosphere of the cold war and post-cold- war eras. Each year, hundreds of language and funding differences divided the two Houses--and we were continually faced with the threat of a veto over controversial issues such as the ABM Treaty, abortion, and prerogatives of the executive branch. Les and I talked on the telephone and met very frequently, not just during conference but also in the months before we passed either the House or Senate bill. These meetings were quiet and unpublicized, but they enabled us to shape bills in both the House and the Senate which could be reconciled in conference and also signed into law by a Republican President. Much as I appreciated and admired Les Aspin's policy and legislative skills, what I enjoyed most about Les was his sense of humor. Frequently, when a conference point reached its most critical point, we could count on a story from Les to break the tension and produce a bipartisan compromise. Nobody loved a joke more than Les Aspin, and I can still see that big grin on his face laughing heartily in the middle of a conference right at a crucial moment, which gave us the kind of balance, the kind of sense of priorities to understand that it was our job to reconcile our differences and to come to conclusions in the interest of national security. He never lost sight of the serious policy issues that confronted us, but he never got personal in his fervent support for one position or another. Les Aspin served as Secretary of Defense during a particularly difficult time. I enjoyed working very closely with him and his staff during his tenure as Secretary of Defense. Lacking a cold war enemy and a national consensus on defense issues, Les was faced with the extraordinary challenges of managing a defense builddown while retaining essential military capabilities. The complex and new international circumstances surrounding events in places such as the former Yugoslavia, Somalia, and Haiti added to the complexity of his task. Throughout this period, he continued to work diligently toward building a new foundation for our defense needs in the 21st century. And as Secretary of Defense, he laid a foundation for the defense drawdown that hopefully will avoid the mistakes of the past. At least he did his part. During his years of service as a Member of the House Armed Services Committee and as Secretary of Defense, Les continually fought for a strong, well-equipped, and affordable national security. He was always on the cutting edge of national defense policy during both the cold war and during the post-cold-war builddown. His creative approaches to national strategy, acquisition policies, and defense budget matters have made a lasting and indelible contribution to this Nation's security. After his service as Secretary of Defense, he continued to serve our Nation as chairman of the President's Foreign Intelligence Advisory Board, as chairman to the Commission on Intelligence, and as a member of the Commission on Roles and Missions of the Armed Forces. It was in this capacity that I last talked to him on the telephone at length about some of the aspirations he had for changing our intelligence community. Les never lost his ardor or his commitment to public service. Mr. President, the Nation has lost a devoted public servant who contributed much and who had so much more to contribute to our national security. I have lost a valued friend and a real colleague, a friendship that I will cherish forever, and a man that I will miss very much. I thank the Chair.

Mr. NUNN

Mr. NUNN. Mr. President, it has come to my attention that Rear Adm. Patrick W. Drennon will be retiring from the Navy after some 33 years of honorable and distinguished service. He most recently served as the Director, Facilities and Engineering Division (N44) for the Deputy Chief of Naval Operations (Logistics), Washington, DC. In this capacity he has provided timely support and accurate information on Navy facility and engineering plans and programs to the Members of the Senate and our professional and personal staffs. Admiral Drennon was previously the Commander of Western Division, Naval Facilities Engineering Command [NAVFACENGCOM], headquartered in San Bruno, CA. This was following duty as Deputy Commander for Planning and Assistant Commander for Facilities and Real Estate at NAVFACENGCOM Headquarters in Alexandria, VA, and as Assistant for Civil Engineering (OP-04E) to the Deputy Chief of Naval Operations (Logistics), Washington, DC. His other duty assignments have included: Assistant Resident Officer in Charge of Construction in Key West, FL; Public Works Officer at the Naval Facility and the Navy Representative for Construction while on the staff of the Commander, U.S. Forces in the Azores; Operations Officer of Naval Mobile Construction Battalion One on two deployments to Vietnam; an instructor at the Civil Engineer Corps Officers School at Port Hueneme, CA; and an Exchange Officer with the Mediterranean Division, Corps of Engineers, Livorno, Italy. While working with the Corps' Mediterranean Division, he served as the program manager for the planning and design of King Khalid Military City, Saudi Arabia. Admiral Drennon also served in the Seabee Division, NAVFACENGCOM Headquarters; on the staff of the then-Director, Shore Activities Planning and Programming Division (OP-44) for the Chief of Naval Operations, Washington, DC; and as the Executive Officer of the Public Works Center and Resident Officer in Charge of Construction in San Diego, CA. His awards include the Legion of Merit, Bronze Star with Combat ``V'' and a Gold Star, the Meritorious Service Medal with a Gold Star, and the Navy Achievement Medal. Rear Admiral Drennon has become widely acknowledged as a leader and visionary in the Civil Engineer Corps. As a fellow Georgia Tech Yellow Jacket, I can say that this is no real surprise as Rear Admiral Dennon began his distinguished naval career upon his commissioning out of the NROTC Program at the Georgia Institute of Technology. Mr. President, over the past several years many communities have experienced great anxiety and turmoil as a result of the Department of Defense's base closure process. Rear Admiral Drennon has played a vital role in promoting effective communications and harmonious working relationships in the Navy's base realignment and closure implementation process. He has assisted local civic leaders throughout the country in working through many challenging situations associated with base closure and realignment actions. Rear Admiral Drennon has been equally recognized and appreciated by all who have come to know him. A man of Rear Admiral Drennon's talent and integrity is rare indeed, and while his honorable service will be genuinely missed, it gives me great pleasure today to recognize him before my colleagues and to wish him, his wife, Cheryl, and his family every success as he brings to a close a long and distinguished career in the U.S. Navy.

Mr. NUNN

Mr. NUNN. Mr. President, during this year 1995 we are commemorating many anniversaries of the last days of World War II--of terrible battles, of the liberation of concentration camps with their unspeakable crimes against humanity, and of the final victories--but I rise today to congratulate one of the great humanitarian organizations that was born in the ashes of that great war. CARE begins the celebration of its 50th year today, on the anniversary of the day when the first CARE package arrived in France. A coalition of organizations and individual Americans founded CARE--the Cooperative for American Remittances to Europe--on November 27, 1945, and the first CARE package was received in France on the following May 11. They set out to create a large and efficient distribution network, because they knew the huge scope of the needs in a Europe devastated by a long and destructive war. That package was the beginning of the largest person-to-person relief effort of this century--perhaps of any century. Millions of Americans sent more than 100 million CARE packages of food, clothing, medicine, and other relief supplies to war survivors in desperate need. CARE packages provided the first food some Holocaust victims received after being released from the camps. Later, CARE packages brought West Berliners their first food after the 1949 blockade. CARE was a unique American phenomenon--highly individual, extremely generous, idealistic and--against all odds--tremendously successful. Germans, Italians, and Japanese remember how stunned they were to receive gifts from people with whom they had been at war only a few months before. CARE packages not only eased the suffering of survivors trying to rebuild their lives and their countries, but helped to build the bridges between former enemies that made possible a more lasting peace. Every single American President has been involved in the relief effort since President Harry Truman who sent the first 100 CARE packages to the bombed-out town of Le Havre, France. American cities and towns had CARE package drives, businesses put up displays encouraging people to send CARE packages, Hollywood stars, including Bob Hope, Gregory Peck, Marlene Deitrich, Lauren Bacall, and Ingrid Bergman, joined in the effort that history. As Europe and Asia recovered from World War II, CARE adopted a new name--the Cooperative for Assistance and Relief Everywhere--and a new mission: to help the poorest of the world's poor. Today CARE helps 30 million people in more than 60 developing countries each year to improve their lives through comprehensive disaster relief programs as well as assistance for long-term, sustainable development projects in agriculture, the environment, health, nutrition, population, and small business. In the years since that first package, CARE packages have helped more than 1 billion people in 121 countries around the world, sending more than $7 billion worth of assistance. The countries Americans helped 50 years ago have become our political and economic partners and many are now partners as well in providing CARE packages to others in need. CARE has 11 international offices in Europe and Japan, and has twice been nominated for a Nobel Prize. The plain brown boxes stamped CARE have been a symbol of the best American spirit of generosity and hope to a hurting world for half a century. I am proud that CARE now is headquartered in Atlanta, GA, and proud of the wonderful work it has done throughout the world. This is an appropriate time for a new generation to learn about the real CARE package--not just goodies from home, but a package reflecting that same love and caring that reaches out in friendship to those in need. Mr. President, as CARE begins its 50th anniversary celebration, I would urge that new generations--and their mothers, fathers, grandmothers, and grandfathers who have been sending those plain brown boxes stamped CARE all these years--to join in the effort to change lives and send a real CARE package.

Mr. NUNN

Mr. NUNN. Mr. President, I am pleased to support the nomination of John M. Deutch to be the Director of Central Intelligence. The nomination of Dr. Deutch, who presently serves as the Deputy Secretary of Defense, has received the unanimous, bipartisan support of the Senate Select Committee on Intelligence. This strong support reflects Dr. Deutch's outstanding qualifications, including his first-rate performance as Deputy Secretary of Defense and Under Secretary of Defense for Acquisition. I have had the opportunity to work closely with Secretary Deutch, both in my prior capacity as chairman of the Armed Services Committee and in my current role as ranking minority member. He has made an outstanding contribution at the Department of Defense, and is well- qualified to serve as the Director of Central Intelligence. Secretary Deutch came to the Department of Defense following a long and distinguished academic and government career. His positions in academia included service as provost and institute professor at the Massachusetts Institute of Technology. His prior Government experience included service on the staff of the Office of the Secretary of Defense during the early [[Page S6273]] 1960's, and as Under Secretary of Energy during the late 1970's. In addition, he served on the Defense Science Board and on many other advisory boards over the years. In 1993, he was nominated by President Clinton and confirmed by the Senate to serve as the Under Secretary of Defense for Acquisition. When Bill Perry became the Secretary of Defense in 1994, Dr. Deutch was nominated and confirmed to his current position as Deputy Secretary of Defense. I have known Secretary Deutch personally for many years, including the periods of his service in the Department of Energy and during his tenure at MIT. His entire career--both in academia and in Government service--has been devoted to developing creative and thoughtful approaches to national defense and intelligence policy issues. Secretary Deutch has compiled as solid record in the Department of Defense as a strong manager. He has served the Nation well, not only in the management of internal Department of Defense functions, but also as the DOD official with primary responsibility for interface with the intelligence community. He knows how to solve problems, make clear decisions, and address pressing issues. On the Armed Services Committee, we have appreciated his breadth of knowledge, his candor, and his willingness to engage in dialog. He also has a good sense of humor, which he uses to put difficult issues in perspective--a quality that will be most useful in his new position. The intelligence community faces many difficult challenges in the post-cold war era, particularly in the aftermath of the Ames espionage matter. The Oklahoma City tragedy underscores the dangers of terrorism in the modern world. The tensions in the Persian Gulf and North Asia, as well as the problems faced by the States of the former Soviet Union, are but a few of the difficult challenges facing the intelligence community. John Deutch has the experience and background to take on these challenges. I strongly urge the Senate to confirm his nomination to be Director of Central Intelligence. Mr. KERREY addressed the Chair.

Mr. NUNN

Mr. NUNN. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. The PRESIDING OFFICER. Without objection, it is so ordered.

Mr. NUNN

Mr. NUNN. Mr. President, I think my friend from New Mexico has explained very well the current Tax Code and all of its problems and what it is doing to Americans' competitive position in the world and, most importantly, what it is doing to the real income of the American people. This bill that we are introducing today had its origin several years ago when the two of us, on a bipartisan basis, one Democrat and one Republican, had the privilege of chairing the CSIS Strengthening of America Commission. The plan that our Commission released a little over 2 years ago, and that Senator Domenici and I cochaired with a number of other people from around the country as key members of that panel, was just that. It was a plan to strengthen our Nation, to strengthen our country, to strengthen our people, to strengthen our economy, and to strengthen our competitive position in the world. That plan had three key elements. The first element was to get our fiscal house in order by embarking on a long-term plan to balance the budget. And we proposed that plan without using the Social Security surplus as we do today, without relying on any kind of dynamic scoring, without a constitutional amendment, and without a line-item veto. We proposed a plan that would lock in spending restraints first, before raising new revenues. We have a long way to go to implement that plan. The Senator from New Mexico and I have struggled in this Chamber for several years trying to get caps on entitlement programs, and I suspect he will be leading the charge again this year as chairman of the Budget Committee. The key to this part of our plan is controlling the growth of entitlement programs, as most of us who have studied it understand, but which neither Congress nor any administration, Democratic or Republican, has been prepared to do. The second element, which my friend from New Mexico and I are here to talk about today, and a very important part of this overall plan, was to completely replace the individual and corporate income Tax Code of this country and create in its place a tax code that promotes savings and investment, rather than discouraging savings and investment, as does our current Tax Code. The third element of our plan was an investment strategy that called for improved job training and apprenticeship programs to strengthen the workplace; national service; selected investments in infrastructure, including the so-called information highway; adequate funding for programs to help young children start school ready to learn, such as immunizations and Head Start; and a system of national educational standards. Some progress has already been made on many aspects of this third element of the Strengthening of America plan, thanks to the leadership of President Clinton, who has worked very hard on these areas, both before and since he became President. The Commission was not saying that Government alone can solve our Nation's problems. In the final analysis, only the American people-- working through their Government, but more importantly working in their own communities--can strengthen America. These three elements, however--balancing the budget, reforming the Federal Tax Code, and making the needed investments in our future--represent the action items for the federal government. Government cannot do it alone, but if Government does not do its part, we will never get our economic house in order. budget amendment did not pass the Congress this year, I believe the Congress will still undertake a serious statutory effort this year to begin to balance at least the unified Federal budget. I expect my colleague from New Mexico will be one of the real leaders in that effort. While that is a laudable goal, and I have supported the constitutional balanced budget amendment every time the Senate has voted on it, I still believe, and our Commission concluded, that we need to do more than that. We need to balance the budget excluding the Social Security surplus. The constitutional amendment we voted on earlier this year would have continued to use the Social Security surplus as an offset to the operating deficit in the rest of the budget, which means that this surplus would continue to be used to pay current bills rather than to prepare to pay for the retirement of the baby boom generation. As my colleague from Nebraska, Senator Kerrey, has made abundantly clear, we are facing--or rather, we are failing to face up to--a real crisis when the Social Security trust fund begins to run annual deficits instead of surpluses. The two most difficult tasks the Commission identified as the keys to putting our Nation's fiscal house in order--balancing the budget and reforming the Federal Tax Code--are still awaiting action. Today my colleague from New Mexico and I are introducing legislation that has been in the works for quite awhile. It has taken a good bit of time, more than we originally anticipated, because this legislation would implement the most revolutionary part of the Commission's plan, and that is the complete replacement of the current individual and corporate Federal income tax. The Time Has Come for Fundamental Reform The House of Representatives, as part of their Contract With America, has already passed and sent to the Senate a bill that proposes to change several components of the current Tax Code--additional child care tax credits; expanded IRA proposals; increased depreciation of investments; and a lower tax rate on capital gains--without attempting fundamental reform of the Tax Code. This is an incremental, business- as-usual approach. Senator Domenici and I, along with other people on the Strengthening Commission, concluded that tinkering with our Tax Code will not get the job done. Our fear is that incremental changes, however well intentioned, will complicate an already Byzantine Tax Code without yielding the increased savings and investment we all seek. Helping working families is a worthy goal, but without steady economic growth there is little that child care tax credits can do to help the middle class permanently raise its standard of living. Unlocking old capital is important, but it is crucial that we also create new savings and investment. My colleague from New Mexico and I believe there is a better way. Today, Senator Domenici and I are introducing, along with Senators Kerrey and Bennett, the USA Tax Act of 1995, a comprehensive tax reform proposal that we believe represents the best way to accomplish everything the other reform proposals--both the incremental approach the House has passed, as well as the other proposals to replace the current income tax--are trying to accomplish, and much more. We welcome debate, comments, suggestions, and constructive criticism on this legislation. Our tax system, Mr. President, needs more than a Band-Aid. It needs a transplant. If we are serious about our Nation's future, we have to scrap the current tax system and put in its place a system that will work for our people and for our country. Over the past 2 years, Senator Domenici and I and others have been working on the details of such a system, the USA Tax System that we are introducing today. We call it the USA Tax System because USA stands for unlimited savings allowance, which is the key, fundamental part of this proposal. We believe it represents a fundamental change in the way America taxes itself, the way America saves, and the way America invests. What do we mean by a tax system that works? We mean a system that encourages savings and investment. We mean a system that is perceived to be fair and is fair. We mean a system that is understandable. We mean a system that reduces the complexity of paying taxes for ordinary Americans by taking less time, fewer forms, and fewer dollars to comply with. We mean a system that is attuned to the international competitive realities and gives U.S. companies and their employees a chance to compete fairly in the global marketplace, which we do not have today. We mean a tax system that is fiscally responsible. There is no point in creating a system that increases the private sector component of the national savings with one hand, while further reducing the public sector component of national savings, by increasing the deficit, with the other hand. We do not intend to increase the deficit under this proposal. Our plan is intended to be revenue neutral. And I would say from the outset, if the official estimates indicate that this is not revenue neutral, one way or another that there will be adjustments made so that it will indeed be revenue neutral. When Senator Domenici and I began advocating our concept of a complete overhaul of the Tax Code 3 years ago, the prospect of fundamental reform appeared to be several years off at best. Today, however, the clock has moved up. It is clear that, while we are just beginning the process of debating how to change the Tax Code, there is already a broad consensus in this country and in this Congress that fundamental reform is necessary. In addition to our USA proposal, there are already two other proposals to completely replace the current income tax code being discussed--a flat tax and a national sales tax. In the coming months, all these proposals, and perhaps others as well, are likely to be discussed and examined. I am hopeful that as early as next year, Congress will attempt to enact one of these proposals. We welcome this debate, and we are introducing this legislation today to make sure that our proposal is fully included in this important national debate. The Importance of Saving Mr. President, we believe the central goal of any reform of our tax system should be to raise the level of national savings. We are proposing a tax system that we believe is smarter, and better for all taxpayers, because it removes the current bias in our Tax Code against the saving and investment that is the key to higher living standards. Higher savings, Mr. President, lead to more investment. More investment means that we have more productivity from American workers. The more productivity we have from our workers, the more competitive we are in the international arena. The more competitive we are in the international arena, the better jobs we have. The better jobs we have, the higher income we have as Americans. That is a very important chain. That is the bottom line. The bottom line, in other words, is what happens to the real income of the American people in the future. There is a direct connection between how much we save and the real income of American people. That is the direct connection that we have to make sure our country understands. If we cannot make that connection in the American mind, there is no point in talking about a fundamental reform of the tax system. If they do agree that this proposition is true, then I think there is a tremendous opportunity here to make the fundamental changes we are proposing. There is a direct connection between savings and higher real income for our people. That is the essence of our proposed USA Tax System. The national savings rate in the United States is lower than that of any of our major competitors. In the 1980's, our savings rate dropped to an average of 3.6 percent, half the level of the 1960's and 1970's, and far below the comparable figures of 10 percent in Germany and 18 percent in Japan. In the first 5 years of this decade, 1990 to 1994, the U.S. savings rate has fallen almost 50 percent from the already low levels of the 1980's, to just 2.1 percent. Without increased savings and investment, we cannot raise our long- term standard of living, meet our financial obligations, and build a better The United States cannot continue to be the major competitive force in the world if other countries continue outsaving us and outinvesting us. It simply cannot happen over a long period of time. That is fundamental. It is often said that the best way to increase national saving is to reduce the Federal budget deficit. I agree with that proposition. The Strengthening of America Commission concluded we needed to do just that, but that we needed to do more. We not only need to reduce the share of our national savings being soaked up by the Federal budget deficit--we also need more savings. And we believe our proposal can turn the Tax Code from a major roadblock to higher savings into an important tool to promote higher savings. I do not believe anybody could argue that the Tax Code is not used to encourage socially desirable behavior. Would anybody argue that the deductions for home mortgage interest and charitable contributions that have been in the Tax Code for decades do not encourage home ownership and donations to charities? Yet the current Tax Code not only fails to encourage private saving, which is vital to our future, it actually discourages it. Yet there is no doubt that future generations will not have the same level of entitlement benefits from the Government that we have today. Our present entitlement programs are not sustainable at their current growth rates. That means that Americans are going to have to save more, to take more personal responsibility for their own futures. That is why our Strengthening of America report contained a plan to both balance the budget by reforming entitlement programs and to reform the Tax Code to promote greater personal savings. We need to get the Tax Code working for us, not against us, to get people to once again adopt the mentality of savers who think about tomorrow as well as today. We need to start an education process in this country to make saving a national issue--not just a tax issue. People need to understand the fundamental importance of saving, both for their own future and for America's future. We literally and figuratively must save America. The heart of our proposal, Mr. President, is the unlimited savings allowance, or USA. That is why we call it the USA Tax System. In essence, it allows individuals a deduction for the portion of income they save, and allows businesses to expense their new investments when they make them rather than depreciating them over a long period of time. If Americans want to consume more, both now and in the future, then America must save more and invest more. These new deductions for savings and investment will provide the impetus for higher economic growth, higher productivity, higher paying jobs, and a higher living standard for all of us. I think a higher living standard for all Americans is the ultimate test of fairness. The USA Tax System is a Single Tax in Two Parts The USA proposal consists of a single, integrated tax in two parts: a progressive tax on individual incomes, and a low, flat rate tax on all businesses. These two parts are meant to work together. It is important that people not try to consider the two parts separately, because if they do they will not grasp the significance of the whole concept. It is a single tax levied in two places: at the business level where wealth is created and at the individual level where wealth is received. This proposal allows an unlimited deduction at the business level for capital investment and, more important, it permits all citizens an unlimited deduction for the amount of their annual income they save and invest. The USA Tax System directly and systematically addresses our saving and investment problem. To the individual, our system says, ``If you choose to defer some of your consumption in favor of saving income for your future and the future of your children, the Tax Code will not penalize you for doing so.'' And to the business enterprise, whether very small or very large, manufacturing, service, or agricultural, the USA Tax System says, ``If you choose to invest your profits in a new machine or a new process that will help you grow and put more people to work, the Tax Code will help you.'' The USA Tax System, by its very nature, would align the way we tax with our common desire to provide our children with a better tomorrow. Mr. President, I will not go into detail on the individual and business component. But there are other parts of the proposal that I think need some emphasis this morning. The Individual Tax Let me describe the key features of the individual part of our proposal first. The individual tax would function in a manner similar to that of the current income tax. From your gross income, you would make subtractions before you figure your tax, just as you do now. You would subtract personal exemptions, a new family living allowance, a new savings allowance, and a limited number of itemized deductions. Gross income would include wages, salaries, interest, dividends, earnings withdrawn from unincorporated businesses, proceeds from asset sales--basically the same concept of income we have today. First, the USA proposal contains a family living allowance that is similar to the current standard deduction except that it is in addition to any itemized deductions, not an alternative to itemized deductions. This family living allowance exempts the first dollars spent on consumption from taxation, because we know that people in low income brackets spend a higher proportion of their incomes on necessities than people in high income brackets. In addition to the family living allowance, you would have personal exemptions just as you do under current law. A family of four filing a joint return would have its first $17,600 of income exempt from taxation by adding this family living allowance to its four personal exemptions. The Unlimited Savings Allowance In addition to these deductions, there would be a new deduction for the amount of income that is saved called the unlimited savings allowance. We define savings in this proposal as net new savings. That is key. If you add to the national savings pool, you would deduct that money before you pay taxes. In other words, to make it simple, if someone makes $40,000 a year and saves $5,000, they would pay taxes on $35,000, instead of today paying taxes before the savings on the entire $40,000. That is fundamental. We encourage people to save. The unlimited savings allowance is similar to the IRA concept, but it is unlimited. It is not limited to $2,000 or any other dollar amount. It is not limited to saving for retirement. But it is for net new savings. We do not give a deduction for merely shifting savings around. That has always been one of the problems with the IRA. The unlimited savings allowance is fundamentally different from the current Tax Code, which penalizes savings. Under the present Tax Code, savings are taxed twice, once when you earn the income that you save, and again when you receive a return on those savings; consumption is taxed only once. The USA Tax System also reflects a fundamentally different philosophy in that we do not focus on where your income came from. We do not have different rates for wage income or dividends or capital gains. Under the USA Tax System, the point is not where the income comes from, it is what you do with it. The portion of your income you save, whether you are rich or poor, you do not pay tax on. The portion you spend, above the level for basic necessities, is subject to tax at progressive rates. The deduction for individual saving also permits a new perspective toward designing a business tax. Because our proposal defers taxes on individual saving until they are spent, we can eliminate enormous complexities in today's Tax Code. There is no reason to be concerned about people sheltering their savings in corporations, which creates a huge portion of the complexity in today's Tax Code. We do not need elaborate rules to force businesses to distribute sheltered saving. I am sure some people say that there is no proof that savings will respond to changes in the Tax Code, so how do we know your proposal will work? In response to that, I would say that first, you could just as easily argue is no happens in the real world, with complex interactions that will never be exactly repeated, not in a lab. Second, it misses the point to compare the USA proposal to the experience we had with individual retirement accounts in the early 1980's. With the IRA, you did not have to save more to get a deduction, you merely had to move your savings into an IRA. Since the Government was handing out tax deductions for moving savings from your right pocket to your left pocket, is it not surprising that those IRA provisions did not increase national savings. But there is a crucial difference between the unlimited savings allowance that Senator Domenici and I are proposing and the IRA's of the 1980's. Our proposal rewards true increases in savings and does not reward shifting assets from one type of account to another. Finally, I would say that a perfect world Tax Code would not affect people's economic decisions at all. But we all know we do not live in such a perfect world, and it is unlikely we ever will. We all know people do things sometimes that do not make a lot of sense, just to lower their taxes. To say that people do not respond to economic incentives simply flies in the face of everything we know about economics and human nature. What the Senator from New Mexico and I are saying is, recognizing that it is human nature to respond to incentives like tax deductions, let us give people an incentive to do the right thing, for our country and our economy, not the wrong thing. Other Deductions for Individuals In addition to the family living allowance, the personal exemptions and the savings allowance, we propose a limited number of additional itemized deductions. The higher the number of deductions, as we all know, the higher the marginal tax rates would have to be. So, there is a trade-off. We are proposing to retain a deduction for home mortgage interest and charitable deductions. We could have more deductions, of course, and certainly we welcome debate on which deductions people think should be added to, or subtracted from, our proposal--with one word of caution. The higher the number of deductions, the higher the rates will have to be to avoid increasing the deficit. There is a direct tradeoff between the number of deductions and the tax rate. Our proposal does have one such additional deduction which I feel very strongly about, and that is a deduction for tuition expenses for post-secondary education, whether it is college, trade or vocational school, or remedial education. We feel it is important that the tax system provide a deduction for investment in human capital that parallels the deductions on the business side for investments in physical capital, since both investments raise the productivity and real incomes of workers. The USA Tax System is Progressive The USA Tax System is a progressive tax. Our system will have three graduated rates. We are proposing a progressive system, not a flat tax. We do not believe it is necessary to abandon the principles of fairness and progressive taxation in order to get a simpler, more efficient, growth-oriented tax code. It is important to keep in mind that the graduated rates in the USA Tax System will not create the same disincentives on saving and growth as today's tax system, since taxes will be deferred on income that is saved and invested. There are four main elements that make the USA tax on individuals progressive. First, we have progressive rates. Second, we have a family living allowance that does not tax the first several thousand dollars of consumption for basic necessities. Third, we retain some progressive elements of the current code, such as an earned income tax credit-- which we increase--and the tax exempt status of food stamps and other safety-net benefits. Finally, we have a new payroll tax credit which I will discuss in a moment. We would apply progressive tax rates to the amount of income that is consumed, after subtracting the family living allowance, personal exemptions, and deductions for mortgage interest, charitable contributions, and education expenses. The tax rates in the USA system are not directly comparable to the rates in the current income Tax Code, however. I know people are going to find that a little hard to understand at first, but the reason why they are not comparable is very important, and that is our payroll tax credit. The Payroll Tax Credit Under the USA system, after you determine the amount of tax resulting from applying graduated rates to your taxable income, as I have just described, you would subtract from that income tax the amount withheld from your salary for the employee share of your Social Security payroll, or FICA, tax. We think that is a very important feature of the USA system that would reduce the regressive nature of the present payroll tax. The payroll tax, which is absolutely essential to fund Social Security, to fund Medicare, also has become the most regressive part of our Tax Code--the most regressive part of our Tax Code. It does not apply except to the first $60,000 of earnings. Higher income people do not pay it above that except a limited portion on Medicare. But low- income people, medium-income people, are paying a very large percentage of their overall taxes on FICA tax. In fact, there are literally millions of Americans today that pay more FICA tax than they do income tax. Our payroll tax credit would be refundable so that if you had more withheld in payroll taxes than you owed in taxes, as is the case for many people, the difference would be refunded to you. Therefore, people with earned income can, in effect, subtract 7.65 percent, the amount of pay withheld for the employee's share of the Social Security and Medicare payroll taxes, from our tax rates. It is very important for people to understand this. When you see a 20 percent tax rate or 19 percent or 27 percent tax rate under the USA proposal, the 7.65 percent credit has to be subtracted to get the real tax rate--a 20 percent rate under the USA system is, in effect, equal to a marginal rate of 12.35 percent under today's system after you take the payroll tax credit. The payroll tax is a perfect example of why fundamental tax reform is needed. As my colleague from New York, the ranking member of the Finance Committee, Senator Moynihan, has so frequently and eloquently pointed out, the payroll tax is a very regressive tax. It discourages hiring additional workers, especially lower wage workers. Nobody designed the system that way, of course. The payroll tax started out at a low rate, but that rate has grown considerably over the years. In the late 1960's and early 1970's, the payroll tax working people paid grew considerably to finance large cost of living increases for retirees that were enacted in years of high inflation. It was increased again in the 1980's, ostensibly to build up a surplus for the retirement of the baby boomers. Unfortunately, as Senator Moynihan has also pointed out, that is not what the surpluses are actually being used for. So we now find ourselves with a combined employer-employee payroll tax rate of 15.3 percent a very high rate that adds significantly to the cost of labor. The system was set up for one purpose--to provide income security in retirement--but it is actually hurting working people in ways that I am sure were never intended by the authors. Mr. President, our proposal does not abolish the payroll tax. It does not affect the operation of the Social Security system in any way. What it does do is to offset the unintended negative effects of the payroll tax by crediting the payroll tax against an individual's or business's tax liability under the USA tax. The employer would also get the 7.65 percent credit against their taxes --not a deduction, but a tax credit. Employees get a credit for the FICA taxes against the individual income tax, and employers get a credit for the employer share against the business tax. So the same amount of revenue will continue to be deposited in the Social Security trust fund. We do not affect that, but the payroll tax will be integrated into the income tax in a way that offsets its regressive nature. This is important for fairness purposes. It is also important so that we eliminate one of the major impediments to people with low skills being hired. Now employer has to look very, very carefully before they hire because they are not only paying for the minimum wage, or whatever the wage is, they are also paying another, in effect, 15.3 percent because of these very high payroll taxes that continue to go up. The Business Tax Mr. President, I will take just a moment on the business side of the Tax Code because I know that Senator Kerrey from Nebraska, who has been very involved in this concept for a long time and has been a major help to us, is on the floor and would like to speak. Let me make a few comments about the business tax. The second component of our new tax code is the business tax. The business tax would work like this: Under the USA Tax System the business would add up its sales receipts during the year, then add up the cost of the goods and services it purchased for use in its business. The cost of these business purchases would be subtracted from the sales receipts. The difference would be subject to a business tax at a flat rate of 11 percent. I am sure many people will ask, ``Why is the business rate so much lower than current law?'' The answer is that the two rates are really not comparable, because our tax would not be applied to corporate income as currently defined, but rather to a company's gross profits. It is a fundamentally different concept from what we have today, and it applies to all businesses, not just those that are incorporated. I think everyone who studies this business tax needs to understand we have a fundamentally broader base for the business tax so we are dramatically lowering the rate but we are producing the same amount of revenue. We are not lowering the overall proportion that businesses are paying. They are paying the same proportion. But we are able to lower the rate because we are greatly broadening the base, and that needs to be understood. It is important also to understand that under the USA Tax System, the cost of investment in plant and equipment and inventory would be fully deductible when spent. There would be no need for depreciation schedules. Investment would be deducted up front. Investment creates jobs. New plant and equipment creates productivity opportunities and that increases the income of our people. So that is the behavior we should be encouraging rather than discouraging. Investment in plant and equipment is what we need in this country, and yet the amortization of these investments over a long period of time under current law discourages businesses from investing as much as they would otherwise. The USA Tax Promotes U.S. Competitiveness Another very important feature is that our USA Tax System puts U.S. companies on the same footing with our competitors. The USA business tax is territorial--meaning it applies to all sales on U.S. soil no matter where the business is headquartered--and it is border adjustable. We want to encourage exports, and we do in this proposal. We exclude the proceeds from export sales from taxation by rebating the tax on goods exported for sale abroad. And when a company, foreign or U.S. owned, manufactures abroad and sells to the United States market, the company is, through the operations of a new import tax, taxed essentially the same as if the factory were located in the United States. That is border adjustability, the tax is rebated on exports and added to imports, which is exactly the situation American exporters to Europe and Japan face today. We believe our business tax will place American companies and workers on an equal and level playing field. This is no small matter, Mr. President. The share of our economic output that is exported, and the share of our national income that we spend on imports, have both doubled over the past 25 years. Yet the current U.S. Tax Code has not kept pace with the rapidly changing face of international competition. While our economy has shifted dramatically since this Tax Code was put into effect, our we have not made a comparable shift in our Tax Code. We have simply tinkered with it year in and year out. Our tax system is a holdover from another era, when international trade was a small component of our economy, when having a tax rule that applied to all American corporations equally was enough. But today American companies do not just compete with each other, they compete globally. And the U.S. Tax Code puts our companies at a disadvantage. Under the rules of the General Agreement on Tariffs and Trade, or GATT, certain types of taxes can be levied on imports and rebated on exports--border adjustability--while other types of taxes cannot. Our competitors in Europe and Japan have business taxes that can be rebated under GATT, while we do not. We believe the USA business tax is legal under the GATT, since it would work essentially the same way as European and Japanese value-added taxes, which are GATT-legal. Let me give a simple example of how our business tax applies to exports and imports. If a company has $2.5 million in sales, of which $500,000 are export sales, for purposes of the business tax its receipts would be only the $2 million it had in domestic sales, not $2.5 million. But it will not have to go through a lot of complicated calculations to allocate its production costs between its domestic and foreign sales. All domestic input costs will be deductible regardless of whether the sales are domestic or export sales. Under our proposal there will no longer be a tax incentive to move production overseas. Conversely, if the facilities used for the production of the $2 million in domestic sales are moved overseas and the $2 million of goods are imported into the United States, an 11 percent import tax of $220,000 will be collected on those goods. In order to comply with the requirements of the GATT, businesses would not deduct wages. This is a key point, and I know there will be concern about this. But there are two important things to remember. First, our rates are much lower--11 percent --than the rates currently imposed on corporate profits. The second thing that we need to remember is that under our proposal, the deduction for wages would be replaced by the credit for the employer's share of the Social Security payroll tax--which is 7.65 percent of its payroll--which is the other half of the credit that employees get under the individual tax that I have already described. Businesses would get a credit back on that tax up to the maximum Social Security wage. The USA Tax Is Designed to Be Deficit-Neutral Under our proposal, the individual and the corporate shares of our total revenue would remain the same. We are not trying to shift the tax burden from businesses to individuals, or vice versa. We are not trying to shift the burden from the rich to the poor, or from the poor to the rich. We are not looking for the fellow behind the tree to tax. We are designing this system to produce the same amount of revenue as the current Tax Code. It is not a proposal to cut taxes or raise taxes. Because of the comprehensive nature of our proposal, and the enormous workload the Joint Committee on Taxation has had this year, they were not able to perform an official revenue analysis or a distributional analysis of this proposal before we introduced it. It is our intention that this system retain the progressivity of the current system, and that it be revenue neutral compared to the current system. Should the official estimates indicate that the bill we have introduced fails to completely meet either of those goals, we intend to work with the Joint Committee to refine this proposal so that we meet both, because we think they are very important. The USA Tax Is Simpler and More Efficient The USA Tax System also makes great strides in making our Tax Code simpler and more economically efficient. The USA tax eliminates the need to calculate depreciation year after year, because investments are expensed immediately. We also eliminate the complicated, and in many cases counterproductive, alternative minimum tax, or AMT. The USA business tax puts debt and equity financing on an equal footing. We treat all forms of businesses the same--corporations, partnerships, and proprietorships. make to simplification is that no longer will people have any reason to seek out unproductive, economically wasteful tax shelters in order to cut their taxes. If you want to lower your taxes, put your money in savings where it can work for all of us--buy a CD, invest in a mutual fund. It might take a few minutes to do your net savings calculation once a year, but the net savings calculation should result more efficient use of our national income, as well as higher economic growth as saving and investment increase. In an economy with a gross domestic product of over $6 trillion, taxation will never be a completely simple affair. But because the USA Tax System eliminates the need for rules against sheltering income in corporations, and because it is based on cash rather than accrual accounting, it promises major advances in simplicity and clarity. Under the USA system, we believe whole volumes of Tax Code complications would fall away into welcome oblivion. The tax shelter industry would shrink and compliance costs would plummet. All income would be treated alike. The key is what they would do with their income. If it is reinvested, then the taxation on it would be deferred. It is not reinvested, if it is consumed, then ordinary tax rates would apply. Those rules would be the same for everyone; for the factory worker and for the investor. There would be no more need for fights over capital gains, investment tax credits, individual retirement accounts, and other targeted incentives for saving. The USA Tax System eliminates these issues because it offers a blanket deduction for personal saving and business investment. And under the USA system, taxpayers will not have to keep track of the basis of their newly purchased savings assets such as stocks and mutual funds, the way they do now, and most taxpayers will not have to worry about the basis of savings assets they already hold. Finally, the USA tax system will not take a whole new bureaucracy to administer. The USA Tax System is a Revolutionary Concept In a way, the USA Tax System could be described as simply taking the current tax system and adding a deduction for savings. That may be the major change most people would notice. But the USA Tax System represents a much more profound change in its effects than in its form. For any given level of income, those who save and invest more will pay lower taxes. The taxpayers in the top bracket would pay roughly the same total amount of taxes they do now. But within that bracket, there will be those who pay less and those who pay more. The same will hold true whether you are in a higher or a lower tax bracket. That is the essence of our proposal. Those who help our economy, help create jobs, and boost productivity by saving and investing, will pay less than their neighbors with similar incomes who do not. We are basically going to tax people on what they take out of the economy--above a tax free level for necessities--rather than what they put into the economy by working and saving. Our proposal represents a revolution in the philosophy of the income tax system. But we do not have to make major changes to the system already in place to administer the tax system to make our proposal work. By contrast, a consumption or expenditure tax, such as a value-added tax, would impose enormous administrative expenses on American businesses, without the progressivity, and without creating the same incentive to save and invest, that the USA Tax System has. The distinguished economist and former chairman of the Council of Economic Advisers, Murray Weidenbaum, very clearly summarized the benefits of moving to a tax system that, in his words ``puts the fiscal burden on what people take from society--the goods and services they consume--rather than on what they contribute by working and saving.'' Professor Weidenbaum argues that we need a Tax Code that promotes saving because saving is the seed corn for economic expansion. The money you save does not just sit there, it works for all of us by being invested. Increased savings and investment generates more production of goods and services, more employment, and a higher living standard for all of us. A tax system that exempts saving raises the same amount of revenue as the existing tax system, with far less damage to the economy. We get a faster growing economy with more people working, fewer people needing public assistance, and the increased revenues that come from a growing tax base instead of from raising tax rates. Conclusion Mr. President, this is a revolutionary concept. The advantages are, I think, very, very important to our country. The first advantage: This proposal will increase national savings by eliminating the bias in the current Tax Code against savings, without increasing the budget deficit. Increasing the pool of private savings will in turn allow increased investment at lower cost, which will increase the productivity of our workers. Second, it will level the international playing field for U.S. companies, and promote U.S. exports of domestically produced goods, by rebating the business tax on goods sold for export, and it will equalize the tax treatment of American-made and imported goods by having foreign companies pay their fair share of taxes, just as American exports are taxed when they are sold in foreign markets. Third, it will make our Tax Code more understandable and more efficient which will save, I believe, both millions of dollars and millions of hours preparing individual and business tax returns, and it will do so without sacrificing the principle of fairness in allocating the tax burden. Fourth, the USA tax credit for the employer share of payroll taxes will help create jobs for workers who might not otherwise be hired by reducing the current disincentive to hire low-skill workers that results from the regressive payroll tax which applies to the entire wage of lower paid workers but to only part of the wage of higher paid workers. Finally, we believe it will foster greater personal responsibility by clearly showing the costs and benefits of saving versus consuming. Today, Mr. President, every family in America, if they are saving money for a washing machine, an automobile, or a college education, has to pay taxes before they save. We would give the people in the lower and middle-income brackets who need to save, but who think they cannot afford to save--and who do not have any incentive to save under the current Tax Code, because any money they do save out of their after-tax income is taxed again when it earns interest or dividends--we would give them a way to save. I believe our proposal will help all American families save, and that as a result, all of us will be better off. The current tax system is broken and, in my opinion, it cannot be fixed. In a very real way, it has aided and abetted our irresponsible tendency to live beyond our means. Our current Tax Code must be abolished and replaced. We must being anew. The USA Tax System provides a way to eliminate the cynical complexities, the special subsidies, the crippling biases present in the current Code. By enacting real reform of the tax system, this Congress can take a giant step toward securing our future. Mr. President, I thank the Senator from New Mexico. Without his leadership there would have been no Strengthening America Commission, there would have been no tax proposal today. He has been a key player in this from the very beginning. He is a pleasure to work with. I look forward to working with him on this proposal, as well as on his important responsibilities on the other side of our national economic challenge, and that is getting our deficit under control, which also directly drains our savings. Mr. President, I yield the floor.

Mr. NUNN. Mr. President, I yield the remainder of our time.