Jay Rockefeller

Mr. ROCKEFELLER

Mr. ROCKEFELLER. Mr. President, I am pleased to introduce a bill to reform the way Medicare administers its health benefits. Under current law, Medicare is not allowed sufficient flexibility to award contracts to administer Medicare benefits based on performance, skill and expertise, or competition. This bill is long overdue and follows up on an oversight hearing I held as chairman of the Medicare subcommittee a few years ago. When Medicare was enacted 30 years ago, private health insurance companies were awarded the task of administering the program. GAO recently testified before the Finance Committee that when Medicare was enacted ``legislation essentially delegated many day-to-day administrative decisions to private insurers, to further lessen the risk of undue Federal interference and to better ensure that Medicare would treat its beneficiaries no differently than the private insured.'' Under my legislation, important administrative functions would still be performed by private sector companies but the pool of eligible companies would be broadened. Medicare would also have the opportunity to take advantage of private sector initiatives to improve customer service, lower administrative costs, and improve operational efficiency. Mr. President, there is bipartisan recognition that funding for Medicare's administrative operations is currently inadequate. Funding for contractors has actually declined over the last several years. When adjusted for inflation, Medicare's contractor budget actually declined by 37 percent over the last 6 years. The Finance Committee, on which I serve, has heard testimony from the General Accounting Office, the HHS Office of Inspector General, and others in support of higher spending for Medicare administrative services. Increased spending on payment safeguard activities can actually save the Medicare Program money. According to the GAO, every dollar spent on Medicare safeguard activities returns at least $11 to the Medicare Program. But, Mr. President, before we spend additional money on program administration we need to make sure that the Health Care Financing Administration [HCFA] has the ability to spend its contractor funds wisely and to enter into contracts with the most efficient entities. The legislation I am introducing today replaces outdated Medicare law and gives HCFA the tools to take full advantage of innovations and efficiencies in the private sector when it comes to utilization review, detecting fraud and abuse, and processing claims. No longer would all Medicare contractors be required to perform all Medicare administrative activities. This legislation would permit the Secretary of HHS to selectively contract with any agency or organization that is capable of carrying out specific administrative functions, such as fraud and abuse detection, customer service, or utilization review. Under current law, Medicare is restricted to contracting with health insurance companies. In the private sector, many large employers selectively contract with companies that specialize in, and have expertise in, utilization review or in adjudicating claims. The Medicare Program should not be prohibited from making similar competitive decisions. This flexibility will not only increase competition but it will enhance contractor performance by allowing Medicare to contract with entities who excel in a specific function. Under current law, Medicare is forced to pay the costs of terminating a Medicare administrative contract even if the contract is terminated for cause, including poor performance, outright fraud, or even if the contract merely expires. Medicare is the only Federal program required to pay for these extraordinary termination costs. This is inconsistent with the Federal contracting authority and should be changed immediately. Mr. President, my legislation would change current law that automatically renews Medicare's administrative contracts every year. More important, the decision on the awarding administrative contracts for part A would be given to HCFA while preserving a provider's right to choose its own fiscal intermediary. Because most hospitals have nominated the national Blue Cross-Blue Shield Association as their fiscal intermediary, when a State Blue Cross-Blue Shield plan leaves the Medicare Program the national Blue Cross-Blue Shield Association chooses which State Blue Cross-Blue Shield plan becomes the fiscal intermediary for the hospitals in that State. Under my legislation, new contractors would be awarded contracts using the same competitive requirements that apply throughout the Federal Government. Hospital and nursing homes would still be able to choose their fiscal intermediary every 5 years from a list of at least 3 approved contractors. This freedom of choice keeps pressure on contractors to continuously improve customer service to beneficiaries and health care providers. HCFA would also be allowed to monitor and respond to instances when a health insurance company is processing claims or auditing costs reports of health care providers that it owns. As the distinction between providers and insurers becomes blurred, a serious conflict of interest could emerge in these types of situations and HCFA must have the ability to safeguard the Medicare Trust Fund from these types of conflicts of interest. Just as Medicare has reformed its payments to doctors and hospitals over the past decade, and is considering changes to the way it pays health maintenance organizations, it is time to consider alternative ways to pay contractors. Current Medicare law that requires cost-based reimbursement is inconsistent with payment performance incentives and competitive bidding. Mr. President, I believe my legislation updates current Medicare law and is long overdue. This bill would equip the Health Care Financing Administration with the tools to move the Medicare Program into the next century. I ask unanimous consent that a copy of the legislative proposal be printed in the Record.

Mr. ROCKEFELLER

Mr. ROCKEFELLER. Mr. President, unfortunately, because of a lack of time yesterday, I was unable to give my entire statement regarding Senator Breaux's partnership amendment. I feel strongly on this issue and would like to have my entire statement on the importance of maintenance of effort submitted for the record. I know that earlier today, a modification was accepted on this issue. While I strongly preferred adoption of the Breaux amendment, I am glad to see some, meaningful progress on this key point. Anyone who argues for welfare reform talks a lot about responsibility. This Senator does, too. Welfare should not be a hand- out for people in search of a free lunch and a way to avoid work. Welfare reform should change the rules to turn government help into something that steps in for just as long as it takes to get a job or back into the workforce. But welfare is also about the responsibility of states and the Federal Government to be honest partners. States and the Federal Government have always shared the responsibility for the poorest families and children who exist everywhere in America. Unfortunately, the bill before the Senate is an invitation to States to back out of their end of that responsibility. When that happens, when States are released from their financial role in welfare, some tragic results may be in sight. One reason debating welfare reform is so frustrating is that we find ourselves immersed in terms and language that do not exactly roll off the tongue. It is also a topic where it is far too tempting to simplify life, and attempt to divide the country between good people and bad people. But we all know that is not how life works. And we should know and acknowledge on this Senate floor that a welfare reform bill should deal honestly with the realities of America--not just the stereotypes or the examples that do offend all of us. I say that because this amendment raises an issue that does not leap into a sound-bite. It tries to preserve a concept called ``maintenance of effort'' that is clumsy in wording but very clear when it comes to responsibility for welfare's future. The purpose of this amendment is to continue a genuine division of labor among the states and the Federal Government for poor families and children. It tries to prevent an abdication by State governments from their role in keeping a safety net under children and deserving parents. A welfare reform bill should free up states from needless bureaucracy and micro managing, no question about it. But welfare reform should not egg on states to back out of their commitment to their poor families and children. This amendment is the answer. It very clearly says to states, ``you keep your end of the bargain, and the Federal Government will keep its end.'' [[Page S 13539]] As a former Governor, I sincerely doubt that the Governors who might like the welfare bill before us just the way it is--- which frees them from the obligation they have always had--would ever propose the same deal when they help communities in their States. Matching requirements, cost-sharing, burden-sharing, whatever you want to call it--this is a basic part of making sure that responsibility is spread around for government's functions. The majority leader introduced some modifications to the Republican welfare package just before the recess, and one involves the claim that he added a ``maintenance-of-effort" provision. It is very weak, too weak--we can and we must do better. The majority leader's so-called compromise lasts for exactly 3 years, and asks States to put 75 percent of a portion of their AFDC spending in 1994 back into their future welfare reform system. In fact, the Dole provision adds up to asking all states to invest $10 billion a year for just the first 3 years, with no basic matching requirements whatsoever for the last 2 years on this bill. This leaves a gaping hole in the state's share if compared to the current arrangement across the country. The result could be that $30 billion disappears from the safety net for families and children. What is worse is the cleverness attempted in how a state's share is calculated. The Dole bill would allow states to ``count'' State spending on a whole bunch of programs simply mentioned in this bill-- states would be able to get credit essentially for their spending on food stamps, SSI, and other programs that help low-income people toward meeting the requirement; that means that money for programs not specifically directed to financing basic welfare for children could easily count towards the so-called ``maintenance of effort.'' Again, this is an invitation to States to back out of keeping up their basic, historical responsibility for children. Remember, it is the children who are two out of every three people who get basic welfare. It will be the children who will be hurt when states back out of their spending on welfare because Congress passed a bill that invites them to do just that. Our amendment does not ask States to raise a penny more for welfare. Federal-state partnerships and matching arrangements are common sense-- they promote accountability, and they are used to finance Medicaid, highways, clean water efforts, and education programs. And on this topic of welfare, here is a bill that now says Uncle Sam will write the billion dollar checks, but Governors can write all rules. If that means backing out of the States' responsibility for poor families and children, be our guest. Right now, State revenues represent about 45 percent of the resources spent in America on welfare. If the Federal Government is about to send almost $17 billion a year to States in a block grant with tremendous flexibility, we should ask States to contribute their fair share. This is the way to promote fiscal accountability and responsibility. Mr. President, we should simply correct this part of the bill with the Breaux amendment--an amendment that requires States to maintain their historical responsibility for millions of children and families. The stakes are high and serious. We know that when children are abandoned, the future of the rest of America is dimmed. In other words, there are real consequences to rejecting this amendment. Without States maintaining this investment, there will not be enough money--not nearly enough--for child care for parents to move to work or for the job placement and training that some parents need to get into real jobs. A few years from now, we will be on this floor wondering how a bill packaged with such bold promises of change and reform resulted in so little--and perhaps we will be here trying to repair the damage of backing the country out of an honest, direct commitment to children. The Breaux amendment calls for the preservation of a solid, honest Federal-State partnership for the long-term. We must change the welfare system and the rules. We are all ready to be tougher about who gets welfare. That means giving States much greater flexibility. But it is irresponsible to send checks to states accompanied with an invitation to back out of their own commitment to families and children. Personally, I believe that taxpayers are willing to help feed and shelter the children who are not the ones to blame for their parents' unemployment or poverty. Surveys even show that 71 percent of Americans believe needy families should get benefits as long as they work. Time and time again, it is clear that work and responsibility are what the public cares about. They are not asking us to solve problems with slogans and gimmicks. Real reform is what we should deliver. Let us be serious about welfare reform, let us be honest, and let us deal in the real world of America. We should make some necessary changes to the Dole bill to ensure that every parent who can work, does. We should keep needy children in our hearts, and keep compassion for them in this bill. And we should preserve the basic idea that states must do their part. This should be a bipartisan amendment, and it deserves support. This is exactly when and where the political rhetoric should be put aside, and where the bill should be changed to continue into the future a true partnership between states and the Federal Government that will help determine what kind of country we will be.

Mr. ROCKEFELLER

Mr. ROCKEFELLER. I hope urgently that colleagues on this side of the aisle, and as many colleagues as possible on the other side of the aisle, will support the very important Breaux amendment. I thank the Chair.

Mr. ROCKEFELLER. I thank the Chair. I wish we could solve all of our problems with a button; it would make it a lot better. What interests me about this amendment, Mr. President, in a sense, it may be the most important amendment we are making to this bill and yet it has such an awkward title, maintenance of effort, that vast numbers of folks who might be listening or watching do not know what we are talking about. The Breaux amendment has to pass if welfare reform is going to work. It absolutely has to pass. A welfare reform bill with this name should free up States to do all kinds of things with new flexibility, without micromanagement from the Government. But welfare reform should not encourage States, or in fact even egg them on, to back out of their commitment to poor children. If you look around now at State legislatures, what is it they are discussing? Their woes with Medicaid and the temptation--believe me, if they are not required to participate in welfare reform, a number of them will not. They simply will not. To me, the Breaux amendment is the answer. It very clearly says to the States, you keep your end of the bargain, and we at the Federal level are going to keep our end of the bargain, just as we have always done on both sides. Again, speaking as a former Governor, I sincerely doubt that Governors who like the welfare reform bill before us just exactly the way it is without the Breaux amendment, for example, would ever propose that kind of a relationship in some of their dealings with local communities or counties in terms of matching grants. In fact, that is part of what money is for, is to leverage more out of other people. You say, ``Here is a certain amount. You put up some more, and together we can do this. But if you do not participate, we cannot.'' And it is human nature in State and local government, just as it is at any level. The majority leader made some modifications to the Republican welfare package just before the recess. And one of them involves the claim that he added a maintenance-of-effort provision. It is not, in fact, that. It is very weak. And we can and must pass the Breaux amendment, in this Senator's judgment, and not accept the majority leader's modification. In the first place, the majority leader's modification only lasts for 3 years. We are talking about a lot longer period than that before we come back to this subject in a major way. And it asks States to put 75 percent of a portion of their AFDC spending back in 1994 back into their future welfare reform system. In fact, the Dole provision adds up to only asking all States to invest a grand total of $10 billion a year just for the first 3 years, with no basic matching requirement whatsoever for the last 2 years on this bill. So it is a fraud. This leaves a gaping hole in the State's share, if compared to the current arrangement across the country. So $30 billion could and possibly will disappear from this country's safety net for families and children. What is worse to me, almost more cynical, is the clever attempt in how a State's share is calculated under the Dole modification. The Dole bill would allow States to count, so to speak, State spending on a whole variety of programs simply mentioned in this bill but not pertinent. For example, States would be able to get credit, essentially, for their spending on food stamps, SSI, other programs that help low-income people towards meeting their requirement. That means that money for programs not specifically directed to financing basic welfare for children could easily count towards the so-called maintenance of effort. Again, this is a flatout invitation for States to back out of keeping their basic historical responsibility to children. And remember, two out of every three people that we are talking about in this country on welfare are children.

Mr. ROCKEFELLER

Mr. ROCKEFELLER. I thank my ranking member. Amendments Nos. 2491 and 2492, en bloc, to Amendment No. 2280

Mr. ROCKEFELLER. Mr. President, pursuant to the unanimous consent, I send two amendments, en bloc, to the desk and ask they be read and the pending amendment be laid aside.

Mr. ROCKEFELLER. Mr. President, I ask unanimous consent that reading of the amendments be dispensed with.

Mr. ROCKEFELLER. I thank the Senator from New York. I ask unanimous consent to lay the amendments aside.

Mr. ROCKEFELLER

Mr. ROCKEFELLER. I thank the Presiding Officer. Mr. President, I urge the Senate to improve the welfare reform bill before us by voting for this very important amendment known as ``Work First.'' Before the August recess, it was a relief that the majority leader agreed to wait until September for us to debate welfare reform so we have some time. This is not a subject where we should pretend that legislating is like ordering fast-food. Welfare reform is about very serious issues--the budgets for the States we represent and how many billions of dollars will be spent or cut from those budgets; the rules qualifying families for assistance or denying them assistance; the safety net for children, and whether it will survive; and other difficult questions about taxpayers' dollars, people's lives, and yes, values. The Senate should take the time to produce legislation that justifies the word ``reform'' next to the word ``welfare.'' I hope that the recess provided time for each Senator to reflect on these [[Page S 12691]] major questions that we have to answer when we act on welfare reform. I hope we will do that with our heads and our hearts. I hope we will think about the stakes involved in welfare reform, for the people we represent, for our States, and for children. For a long time, I assumed welfare reform would be one of history's endeavors that both Democrats and Republicans in the Senate would produce together. After all, we presumably want changes in the welfare system to take root and bring about real, long-lasting results that most Americans expect from all of us. And let me be clear, the Congress and President should deliver on welfare reform. It has been 7 years since we enacted any kind of significant change to the welfare system. We know it is time to attack the problems with welfare again, with much more emphasis on personal responsibility and on work. This is our chance, but with an obligation to deal with realities. When I think of what West Virginians expect from welfare reform, the answers are in this amendment, the Work First plan. It does something Democrats sometimes have a hard time doing. We want to bury the past. Out with the confusing name for welfare assistance, AFDC. Out with welfare's invitation to some people to live on the dole forever, while their fellow citizens struggle to make ends meet by working and scrimping. Out with the excuses for not working when you can work. Simply put, Work First ends welfare as we know it, and creates a new but temporary assistance program for parents with children. A fundamental change will be made from the first day: Work First requires parents to sign a tough contract--a Parental Empowerment Contract--in order to get benefits. This way, every parent will know from the beginning that the rules and expectations are completely different. Work First will require work from every able-bodied parent, but also offer job placement, training when necessary, and child care so that the work requirement can be met in the real world. Work First is tough, but fair. We expect parents to work, but we also expect America to still be a place that protects its children--the majority of our population that gets help through welfare spending, and who are getting forgotten and ignored in the political halls and talk shows where welfare is debated. As any parent knows, children need decent shelter, clothing and food, and Work First includes the mechanism--through vouchers--to care for some of these needs. We should not be punishing innocent children because of their parent's irresponsibility or bad luck. Work First also retains the partnership between the Federal Government and States. The country as a whole has a stake in the future of each and every child regardless of where a poor child is born--in the hollows of West Virginia or the neighborhoods of Houston, Chicago, or Kansas City. Also, simply converting welfare spending into 50 or more block grants for the States is not exactly real reform. I can completely understand why some Governors in office for the next few years are eager for the money. I was a Governor for 8 years, but I also remember what happened in my State when the block grants created by Congress in the early 1980's stopped keeping up with need, by design. That is when Governors have to find other programs to cut or raise local taxes or just watch people and small children show up on the grates. Having been a Governor, I want to see a welfare reform bill pass that gives States a lot of flexibility. But I also think some basic principles should hold in every State. The entire country should take on the same challenge to promote work, responsibility, and protect children. This alternative before the Senate, Work First, is tough where Americans say they want welfare to be tough. Actually, back in 1982, when I was Governor, I struck a tough, but fair deal with many of the adults getting welfare in West Virginia. With our high unemployment then, I said if you cannot get a paying job but still need a welfare check, fine, work for that check. The term is ``workfare.'' West Virginia's experience is also a reminder that we do not have to demonize everyone on welfare. Many of the West Virginians in my State's workfare program said they liked the approach. They hated having to resort to welfare, and with something productive to do--from cleaning streets to jobs in government offices--they felt better about themselves. Again, let us be sure we remember that a lot of people are on welfare out of desperation. If they can get the basics--certain skills, some information, some child care--they are going to work. I know it is tempting to just pretend that everything will get better if we just send a check, with no-strings attached, to Governors. It would be nice to pretend that Governors will just take care of it. It is not that easy. I do not think we should talk down to Americans about what it takes to get real results from welfare reform. Poor mothers and fathers need child care just as much as the middle class. Think about it--we put parents in jail for leaving their children alone at home. Some poor Americans simply have to get more education and job skills, too, so they qualify for jobs that earn a decent living for the rest of their lives. And when it is time to cut off the parents, it is not right to pretend children do not exist. There are differences between the majority leader's bill before the Senate and this Work First amendment. Differences with real, human consequences. Differences in how honest we are willing to be about what it will take to deliver on the promises and the political rhetoric of welfare reform. Americans are not exactly crusading for block grants as the prescription for welfare. They are expecting more than just a different place to send the money. We are here to think about the kind of country we can be and should be. We are here to be honest about what it will take to move millions of poor Americans from welfare to independence. And I think we are here to regard every child in this country as important as the next one, no matter what State he or she happens to grow up in. The Democratic plan, Work First, has some essential elements, including honesty about what it takes to achieve real change in the welfare system and how to keep children from being the ones punished. I hope it will get a serious look from everyone in this body over the next days or however long it takes us to finish this legislative debate on welfare. If there is a middle-ground, let us find it and work out our differences. And I urge every Governor to take a close look at these issues again--and think about the next 10 to 20 years in our States, not just the next couple of years. If welfare reform turns out to be Congress' slick, painless way to slash the Federal budget and leave States holding the bag, we are leaving some painful work for our successors and for the people in our States. We still have a chance to pass a bill to be proud of and one that is honest about welfare, poverty, parental responsibility and other values, what it takes to work, and the children, who are two out of three people on welfare. That is what should determine our votes and action before reporting to Americans that we have passed a bill that actually reforms welfare.

Mr. ROCKEFELLER

Mr. ROCKEFELLER. Mr. President, I ask unanimous consent that the full text of the AMT Depreciation Relief Act of 1995, S. 1160, as introduced on August 10, 1995, be printed in the Record. The text of the bill follows:

Mr. ROCKEFELLER

Mr. ROCKEFELLER. Mr. President, today, I am introducing a bill to provide relief to small, non-coal producing companies that are experiencing difficulty in meeting their financial obligations under the 1992 Coal Industry Retiree Health Benefit Act. I want to see this bill enacted into law so a group of small companies will get the help needed to preserve and pay for the health care coverage of their former workers. These companies want to make sure miners' health care benefits are protected, just as I do. But they need some help to do it. I will talk more about why I think it is so important that the Senate act on this legislation, but first, I think it's equally important for everyone to understand what brought me to this place. The context for the introduction of a bill is important, and in this case, the context is the history of the coal fields. So, first some background before I discuss my proposal for small company relief: Almost 50 years ago, the President of the United States, Harry S. Truman, ended a national coal strike that had forced him to seize the mines. That action established a unique relationship between the Federal government, miners and operators in the coal industry. In that 1946 strike, health care was a central issue. And coal miners' health care benefits remain central to labor relations in the coal industry today. Through the years since that 1946 strike, coal miners and their families have traded or foregone other benefits to preserve the decent health care benefits upon which they depend because illness and injury are so endemic to coal mining. In fact, the health program that exists for current and retired miners today derives from the one established when President Truman seized the mines. In the 1950's, a grand compact was reached between labor and management in the coal industry. In return for health and pension security, labor agreed to mechanization of the mines, which led to the elimination of 300,000 jobs in Appalachia alone. This leads to today's situation, because it is largely the retirees of that vast industrial restructuring whose health care was in jeopardy before passage of the 1992 Coal Industry Retiree Health Benefit Act, now simply known as the Coal Act. Those coal miners created the might of modern industrial America. They fueled our Nation's economic progress. In 1992, when Congress passed the Coal Industry Retiree Health Benefit Act, we told those miners that their tremendous contributions and sacrifices mattered and the promises made to them will be kept. We must not forsake that promise now or ever. The urgent need for legislation to protect miners' health care benefits became increasingly clear during the fall of 1989, when another coal strike broke out, where health care benefits were, once again, a central issue. In that year, I introduced my first bill to prevent collapse of the trust funds that provide health care for retired coal miners. The dwindling base of contributors resulting from bankruptcies and the failure of some companies to keep paying into the funds, along with exploding health care inflation, put the health trust funds in jeopardy. Then-Secretary of Labor Elizabeth Dole appointed a mediator to assist in settlement of the strike. When the settlement was reached, she announced appointment of a commission to recommend a long- term solution to the crisis of the health trust funds. That Commission became known as the Coal Commission. Secretary Dole explained that during negotiation of the settlement of that strike, which involved a single company, ``it became clear to all parties involved that the issue of health care benefits for retirees affects the entire industry.'' ``A comprehensive, industry wide solution is desperately needed,'' Secretary Dole then said. Secretary Dole's Coal Commission submitted its final report in November, 1990. The Commission observed that health benefits are an emotional subject in the coal industry, not only because coal miners have been promised and guaranteed health care benefits for life, but also because coal miners in their labor contracts have traded lower pensions over the years for better health care benefits. The Commission said it firmly believes that the retired miners are entitled to the health care benefits that were promised and guaranteed them and that such commitments must be honored. To quote from that 1990 report-- Retired coal miners have legitimate expectations of health care benefits for life; that was the promise they received during their working lives and that is how they planned their retirement years. That commitment should be honored. The Coal Commission also considered the fairest way to ensure that the health fund did not collapse. They recommended that companies that employed miners, current signatories and former signatories alike, share the costs of providing benefits to miners whose employers went out of business. And, in the words of the Dole Commission, the best way to finance the health benefits promised miners was the ``imposition of a statutory obligation to contribute on current and past signatories, mechanisms to prevent future dumping of retiree health obligations''. [[Page S 12278]] Collective bargaining cannot work when companies are not around to bargain because they are bankrupt or have walked away from their responsibilities, sometimes through legal loopholes created by dozens of conflicting court decisions. Moreover, the orphan retirees whose last employers were gone faced the prospect that when the collective- bargaining agreement expired in 1993, no one would have been responsible for their health care. The miners' health program's shrinking funding base and spiraling costs made continuation of the old program unworkable. The task Congress and the administration had in 1992 when we passed the Coal Act was to do the best we could to assign responsibility for funding the health program, recognizing that there was not then, nor is there now, a perfect solution. And so, in 1992, Congress met its national responsibility to protect miners' health benefits. I was proud to author that legislation, the Coal Industry Retiree Health Benefit Act, or the Coal Act. It was attached to the Energy Policy Act of 1992. I worked on that legislation with an outstanding group of Members whose invaluable contributions were essential to securing passage of the Act--my esteemed colleagues Senators Byrd and Ford, Senators Specter, Wallop, and others from the Finance and Energy Committees. The Coal Act would not have become law without their work and without strong bipartisan cooperation. We did our work and miners' benefits were saved. That makes me enormously proud. Those miners today, on average, are 73 years old. Most worked in the mines for 20, 30, 40 years, or more. Every day many rode a rail car a mile underground, stooped in a crawlspace 4 feet high with ice cold water up to their knees, and made their mines productive and their employers rich. For them, the legacy of that work is black lung disease, asthma, cancer, back pain, and chronic respiratory disease. Their health benefits remain a matter of life and death. The Coal Act protected their benefits into the future. But in the 104th Congress, some want to take away the health care security of miners. I don't intend to let that happen. But there are big mining companies still looking for a way to walk from the promise made to these miners nearly 50 years ago. These companies have spent millions to oppose the implementation of the Coal Act. So far, they have not succeeded in robbing miners of the health security the Coal Act provides. But this year, they are at it again, seeking what amounts to nothing more than a tax break for a select group of special interest companies. If they succeed, the health benefits of 30,000 West Virginia miners, widows, and orphans will be in jeopardy. Thousands of people like them in other States will face the same peril. If those people lose their health care coverage, we will have a disastrous health care crisis in West Virginia, with miners and widows being forced to sell their homes to pay for the medication and treatment they now receive. Retirees in every State will be in the same desperate straits, and the other coal States where most miners have retired would all face the same health care tragedy. We must remember that the promise of coal miners' health is not just another entitlement program. These benefits have been earned by a lifetime in the mines--a lifetime of deferred wages as the price paid for health care coverage. Some big companies who are, or were, in the coal business, and who can afford to pay for these benefits, continue to say they do not want to meet their responsibilities. And I am sad to have to report that there are bills in both the Senate and the House which seek to amend the Coal Act and let these companies walk away from their commitment to miners. Some Members of Congress are supporting a bill to let big coal companies abandon retired miners. Some would like to see such a bill included in this year's budget reconciliation bill, hiding the fate of more than 92,000 retired miners and their dependents as a tiny provision in a massive bill. If Congress is not careful, a cut in coal miners' health benefits may be snuck through in the bill needed to make sure the Federal Government can operate. What's especially troubling is how many of these companies are using exaggerated claims of a huge surplus in the health fund to bolster their contention that there is sufficient money with which to give them a tax break. The problem is the big surplus which they project is not supported by the independent actuarial analysis commissioned (by the fund's trustees) to review the financial health of the fund. The Ernst and Young analysis, conducted by Guy King, a former chief actuary at HCFA, advises Congress to be very cautious about any changes to the Act which expend the fund's reserves. Guy King's report said that the most likely scenario is there will be a $39 million deficit in the health funds in the year 2003. The General Accounting Office told Congress on May 25, 1995, that ``it now appears that annual deficits--instead of surpluses--are likely to occur, which would erode the current surplus over time.'' That means that there's not a lot of extra money, available to help pay for this proposed tax break. This tells me we have to be very, very thoughtful about doing anything which would destabilize the health fund--which a big tax break would most certainly do. While we are seeing all the efforts of the millions- and billion- dollar mining conglomerates who are looking to the courts and to legal fine print for a way out of keeping their promise to retired coal miners and their widows--these companies are certainly not focused on how smaller businesses are affected by the Act. These large companies are hoping Congress will give them a big tax break, but small businesses in financial need would not be helped under their plans to amend the Coal Act. I think that's wrong. The Coal Act ensures retired miners and their dependents will receive the health benefits they were promised. That's what it was intended to do. And it's working. But over the last year or two, as I have monitored the implementation of the Act, I have been hearing from and meeting with small companies who are very troubled. They tell me it is difficult for a number of them to do what is required under the provisions of the Coal Act. They tell me that they need some relief. As you know, the Coal Act requires small and large businesses to contribute to the miners' health funds on behalf of their former employees. But that requirement may be more doable for large companies than it is for small ones. While holding small businesses legitimately responsible for the health benefits of their former workers is fair, the burden of making those payments may be difficult for some. That's why I am introducing a bill which would amend the Coal Act to help small, non-coal producing businesses make their premium payments under the Act. I think this legislation is a way we can provide some relief to small companies, who are no longer in the coal business, and yet still maintain the stable financing structure of the Act. It doesn't make sense to me to bankrupt a viable small company because it cannot meet its full premium obligations under the Act, especially if the company has an ability to make payments consistently over time. I want to make it easier for these small businesses, which create jobs in West Virginia, Pennsylvania, Ohio, and across the Nation, to stay in business and make reasonable premium payments under the Act. An important point to underscore: the financial condition of the fund is not such that forgiving the health care liability assigned any one group of companies under the Act is possible. Miners' benefits would be at risk. What I think we can do is limit, or cap, the liability of small, non-coal producing companies in a way which provides meaningful assistance. That is what my bill attempts to do. Again, it's not perfect, but it offers relief that could make a real difference to small companies. The group of small, non-coal producing companies which I have been working with committed themselves to a long process in which we sat down and together figured out a way that small companies could get help while miners' benefits are protected. We struggled with the numbers, and we struggled with the constraints--practical, political, some philosophical. [[Page S 12279]] Keeping in mind our shared goal of protecting miners benefits and doing something concrete to help small companies--something which could actually be signed into law--together, we negotiated the piece of legislation I am introducing today. This is not necessarily the only way to provide a group of small companies with targeted relief from their obligations under the Coal Act. Others may suggest different approaches. But I firmly believe that this approach is one which can pass, and be signed into law, if we keep this relief package directed at the small companies most in need of financial assistance. I am working on one or two other minor adjustments to the Act, one of particular interest to West Virginia, which I also hope to have ready for the Senate's consideration in the near future. Another word of caution: If companies with an ability to pay, but with a desire to avoid their responsibilities, want to use a small company relief package as momentum for their efforts, it could be that we go another year or many years without small company relief. I, for one, do not want a bunch of big companies with the ability and obligation to keep promises to miners to get in the way of small company relief along the lines of what I have proposed here. I hope my colleagues don't either. One thing I do know, if efforts to pile on some mega-tax break or relief for companies that do not need or deserve it are successfully attached to this proposal in the legislative process, I will not be able to recommend to the President that he sign such a bill. I cannot support anything that puts miners' health benefits at risk. I hope we can avoid that scenario. The small company relief bill which I am introducing is enactable. It will go a long way to helping meet the needs of the small companies which I have been working with--and they are a cross-section of small companies from all over the country. This is the product of many, many, months of negotiations. I have consulted with Rich Trumka, the President of the United Mine Workers of America [UMW] about this package. He agrees that there may be a need to address the needs of small companies that truly can't afford to pay. The members of the Bituminous Coal Operators Association [BCOA] also understand my strong desire to see this type of relief enacted this year, and they know what is in this bill and why. With those two disparate interests in agreement that it is appropriate for me to pursue small company relief, I am confident that we can actually make this small company relief a reality this year. All parties--the small companies, the BCOA, and the UMW--agree that we cannot know today, with any precision, the exact dollar impact of these provisions on the long-term financial health of the fund. As the financial impact comes into better focus, under no circumstances will we move ahead with this amendment if it would cause the fund surplus to fall below a level that protects the benefits. A sacred promise was made to coal miners, their widows and dependents, and Congress took historic, bipartisan action in 1992 to keep that promise. These guaranteed health benefits cannot be sold off or traded away. But small companies can get some meaningful relief to help them meet their obligations under the 1992 Coal Act without jeopardizing miners' health benefits through the bill I am submitting today. I urge my colleagues to carefully consider this legislation, and to work with me in enacting and achieving its objective. Mr. President, I ask unanimous consent that the complete text of the Small Non-Coal Producing Company Relief Act of 1995 be printed in the Record.

Mr. ROCKEFELLER. Mr. President, today I am introducing a relatively modest tax measure that could provide significant relief to capital intensive industries that show little to no profits and pay income taxes under the Alternative Minimum Tax [AMT]. This will eliminate a disincentive in tax policy towards key investment in industries that are vital to the country's economic competitiveness, job base, and industrial strength. This is one of the ways to help the employers, workers, and families in my state of West Virginia. As a tax measure designed to enhance the competitiveness of industries that range from steel, to paper and wood products, autos, chemicals, and mining, this bill will result in a cost in the form of less revenue collected. But I am introducing the AMT Depreciation Relief Act of 1995 to serve as a practical, affordable option to consider along with the versions of AMT reform that have already passed the House and have been introduced earlier this year in the Senate. And I believe this bill addresses a real problem that Congress must work together to overcome. Many manufacturers want to see a complete repeal of the AMT. Some especially want reform to address the problems which result from being effectively stuck in AMT status, such as the accumulation of credits and past investments in plants and equipment modernization, which I think merit serious attention. This bill focuses specifically on the problem of the way the AMT treats the depreciation of assets, which is a root cause of why many companies remain stuck in AMT status. If and when a resolution is worked out to deal with the problem in the way depreciation is calculated, we will go a long way to getting companies out of AMT status, with the result that then they would be able to use their accumulated credits. [[Page S 12255]] As my colleagues know, the corporate AMT was created in the 1986 Tax Act in response to the problem raised when companies would report profits to stockholders, but then claim losses to the IRS. However, the subsequent action taken in this area as part of that historic effort to ``simplify'' the code had the unintended consequence of penalizing low- profit, capital-intensive companies, because the AMT treats depreciation as an adjustment (or increase in income). As Tom Usher, the chairman and CEO of USX explained to the House Ways and Means Committee in January 1995: ``under the AMT, most steel making assets are subject to a 15-year capital cost recovery period and a 150-percent declining balance method, compared to 7 years and 200 percent under the regular tax.'' What that means is that compared to other countries, after 5 years, a U.S. steelmaker under AMT recovers only 37 percent on its investment in new plant and equipment, versus the recovery for companies in other countries, that include 58 percent in Japan, 81 percent in Germany, 90 percent in Korea, and 100 percent in Brazil. What it comes down to is that under the regular tax system, depreciation adjustments are designed to encourage investment. However, the AMT has had the unintended consequence of, if anything, discouraging investment in new plants and equipment. This is precisely the wrong signal to send to our Nation's capital intensive industries. At its heart, this is an issue for how well our companies can compete on the world stage. For years, I have focused on how trade laws are used to ensure that our domestic industries can compete with unfairly sold imports. However, the present AMT policies have created a situation which hinders that competitive position. The fix I am suggesting would eliminate depreciation as a adjustment under the alternative minimum tax. Quite simply, that means that depreciation for companies in an AMT status would be treated in precisely the same way as for companies in a regular tax status. This is a simple, two-page, bill. It proposes a modest change in the tax code that will have a very beneficial impact on the bottom line of some of America's most important industries and employers. I am looking forward to bipartisan support for this change, and hope it can be made quickly. I urge my colleagues to join me as cosponsors.

Mr. ROCKEFELLER

Mr. ROCKEFELLER. Mr. President: I rise today to salute a true Renaissance man, a great light in both national and West Virginia history: former Congressman Ken Hechler. Having recently celebrated the 50th anniversary of the World War II crossing of the Ludendorff Bridge at Remagen, Germany, it is fitting now to honor this combat historian and decorated officer who enshrined his memories of the victory in our hearts forever. However, heroism was not only his to behold and chronicle. Winning five battle stars and a Bronze Star in the European theater of the war, Ken Hechler is a hero of the West Virginia people. A dedicated servant of the United States in time of war and peace, he left both a Princeton teaching career and his talented pen to serve under Presidents Roosevelt and Truman as researcher and speechwriter, then joined the Stevenson campaign. Serving in Congress from 1959 to 1977, Congressman Hechler was, in a short time, heralded for his integrity and noted by many as one of the most effective and insightful Members in the House. It should be noted that, although born in New York, in adopting West Virginia as his new native State, he demonstrated that he was very wise as well. Ken Hechler gave voice to the voiceless among his West Virginia constituents. Fighting tirelessly for the rights of impoverished miners in the Appalachian coal fields, he decried the terrible conditions in the mines, calling them criminal. He struggled for mine safety legislation, unwilling to appease others unwilling to work toward change. After the Farmington and other mine disasters, arising from the tears of miners' widows, he helped enact the Mine Safety and Health Act of 1969. His criticism of the mining conditions did not end there, however, as he became a strong advocate of environmental protection, railing against rampant pollution in West Virginia and strengthening legislation to improve air quality in the Nation. He crusaded against strip mining, helped protect wilderness areas, and in perhaps his greatest achievement, saved West Virginia's New River, the oldest river in North America, from a proposed dam project. With a profound sense of history, love of honor, and independence of thought, Congressman Hechler throughout his career inspired many with his character and endeavors. After leaving Congress, he resumed teaching at Marshall University, served twice as a delegate to the Democratic National Convention, and began to write again. In 1984, he was elected secretary of state of West Virginia, a position he still holds today. It is not often that we have the opportunity to laud such a great public figure as Ken Hechler. A consummate politician, he has been a consummate citizen as well. West Virginia is grateful to Dr. Hechler: he has kept hope in the hearts of the downtrodden and toiled for election reform for the public interest. The needs, financial and emotional, of his electorate were foremost in his social conscience. A true maverick, his life of selfless service is legend. (At the request of Mr. Daschle, the following statement was ordered to be printed in the Record:)

Mr. ROCKEFELLER

Mr. ROCKEFELLER. Mr. President, I am today introducing legislation that would provide statutory authorization for a program carried out by the Court of Veterans Appeals, pursuant to authority in appropriations acts, under which claimants before the court who would otherwise seek to prosecute their appeal without legal representation receive assistance in gaining such representation. I am pleased to be joined in introducing this bill by my good friend and fellow member of the Committee on Veterans' Affairs, Senator Akaka. Mr. President, the Court of Veterans Appeals pro se program was first set up in 1992 pursuant to an authorization in Public Law 102-229, the Fiscal Year 1992 Dire Emergency Supplemental Appropriations Act. The program has been continued by subsequent appropriations acts, but has never been otherwise authorized. The legislation we are introducing today would provide statutory authorization, thereby demonstrating the value of this program. Mr. President, pursuant to the initial authorization in Public Law 102-229, the court transferred $950,000 to the Legal Services Corporation, which in turn made two types of grants in fiscal year 1993. The first grant, a so-called A grant, was given to a consortium-- made up of the American Legion, the Disabled American Veterans, the National Veterans Legal Services Project, and the Paralyzed Veterans of America--for the purposes of evaluating cases brought to the court by pro se claimants and recruiting and training volunteer attorneys to represent these individuals. The consortium is overseen by an advisory committee and has three operational components--one that conducts outreach to recruit volunteer attorneys to represent claimants before the court; one that provides an educational course for those attorneys who agree to represent claimants; and one that evaluates cases and assigns them to the volunteer attorneys. The second type of grant, the so-called B grants, were given to four organizations--the Disabled American Veterans, jointly to the National Veterans Legal Services Project and the Paralyzed Veterans of America, and Swords to Plowshares--to allow those organizations to expand existing programs to provide pro bono legal representation to veterans. This structure of the two types of grants continues, and the court was authorized in subsequent appropriations acts to transfer $790,000 in each of fiscal years 1994 and 1995. Mr. President, by all accounts, this program has been a significant success. In testimony for the Committee on Veterans' Affairs' March 9, 1995, hearing on the fiscal year 1996 budget for veterans programs, the court's chief judge, Frank Q. Nebeker, made the following points about the program: [F]ully two-thirds of eligible appellants who were pro se when filing appeals in the first two years of the Program's operation received some form of legal assistance. . . . [D]uring these first two years . . . , while only 19% of appellants were represented at the time of filing a notice of appeal to the Court, 42% were represented at case termination as a result of the Program's placement of cases with attorneys. . . . [R]ecruitment of volunteer attorneys has been highly successful. Through the end of calendar year 1994, 342 volunteer attorneys have been recruited and are participating in the Program. . . . Nearly 300 attorneys have received training in veterans law, either through the Program's day-long training sessions (261 attorneys) or through video training tapes (37 individuals or law firms). Of the 159 volunteer attorneys who have completed cases, over 80% have expressed willingness to take another case, and 51 appellants have already received representation by repeat pro bono attorneys. In FY 1994 the Program provided nearly $4.00 worth of volunteer-attorney services for every $1.00 of federal money spent on the Program. In its annual report for 1994, the program discussed the impact of representation on a claimant's chance of success before the court, noting that of the 203 decisions made by the court through September 1994 in cases in which representation was provided through the program, nearly 80 percent were settled, reversed, or remanded to the Board of Veterans' Appeals. On the other hand, of the 272 pro se cases completed by the court where the eligibility requirements for the program were not met and pro bono representation not provided, only 14 cases resulted in a remand to the Board. Clearly, the opportunity to have qualified legal representation is a great benefit to claimants coming before the court, and the program has been instrumental in helping claimants secure such representation. Mr. President, the bill we are introducing would amend chapter 72 of title 38, United States Code, the chapter relating to the Court of Veterans Appeals, by adding a new section 7287 which would authorize the court to provide funds to nonprofit organizations in order to allow such organizations to provide funding to appropriate entities to carry out a program to assist pro se claimants to secure representation. All of the provisions in the proposed new section are derived from the language in Public Law 102-229 and are intended to function in the same way, with the court having flexibility in how any available funds are used to support a program. Of course, in light of how well the existing program has functioned, I would anticipate that that effort would continue as long as appropriate. However, there is nothing in the proposed legislation which would mandate such a result, and I anticipate that the court will use whatever funding is provided in future appropriations acts in the way that will ensure that the greatest number of eligible claimants receive representation. Mr. President, I look forward to working with the committee's chairman, Senator Simpson, and the other members of the committee on this legislation. I ask unanimous consent that the text of the bill be printed in the Record.

Mr. ROCKEFELLER

Mr. ROCKEFELLER. Mr. President, I rise in strong opposition to this hostile amendment that tries to weaken and retreat from the important work of the Appalachian Regional Commission. It is with great pride that I join the senior Senator of West Virginia in explaining to my colleagues why this amendment should be rejected. Senators listening to this debate may think this is an amendment that deserves the votes of every Senator representing a State other than the 13 States which comprise the Appalachian region. I hope our case will be heard so that this will not be the conclusion of our colleagues. The people of every State have a stake in the economic strength of the rest of the country. When floods ravage the Midwest or the gulf States; when a major defense installation or space center is located in a State like Texas or Alabama; when payments are made to farmers in Minnesota or Wisconsin for dairy support, for crop losses, and for basic support; when billions are spent to shore up S&L institutions in certain States; when special aid is given to cities or to California after its riots or earthquakes; when research labs get special funds in New Mexico or Massachusetts--when any of this support and assistance is extended, it is the country's way of investing in each region and in the futures of Americans everywhere. The Appalachian Regional Commission is the Nation's effort to help a part of this country overcome tremendous barriers. In many parts of the region, major progress has been achieved. But the ARC's job is not finished, and the agency should not be abolished until it is. Whenever the Senate considers appropriations bills or other budget measures, the question is whether the spending proposed is a sound investment in the Nation or another form of waste. In this case, the answer is that the funding in this bill is a vital investment. The bill's architects already made the required cut so that the Appalachian States are doing our share of deficit reduction. Digging deeper is mean-spirited, and it's a foolish way to abandon the progress made by ARC over recent years that should be continued. If we can't finish the basic links to economic development and growth, like water and road systems, my State and the region cannot make the contributions we want to or build the life our people deserve. The ARC's partnership with West Virginia and the Appalachian region should not be severed. We need to finish the economic development being built on top of the foundation being laid by the ARC--and that's essential in our States for more growth, more jobs, and more hope for our people. As a former Governor, an now as a U.S. Senator from West Virginia, I know--vividly--the value of the ARC and how it improves the lives of many hard-working citizens. Whether the funding is used for new water and sewer systems, physician recruitment, adult literacy programs, or the Appalachian Corridor highways, it has made the difference in West Virginia, Kentucky, Virginia, and the other Appalachian States. The highways are the most visible and best known investments made by the ARC for the people of Appalachia. As of today, over two-thirds of the ARC highway system have been completed. But if this amendment to cut ARC so severely prevails, the job will not be completed. What a waste of taxpayers' money to pull out before a road system is finished. At this very moment, some of these highways are called highways halfway to nowhere, because they are just that--half built, and only halfway to their destination. The job has to be completed, so these highways become highways the whole way to somewhere. And that somewhere is called jobs and prosperity that will benefit the rest of the country, too. Appalachia simply wants to be connected to our national grid of highways. Parts of the region weren't lucky enough to come out as flat land, so the job takes longer and costs more. But it is essential is giving the people and families in this part of the United States of America a shot--a chance to be rewarded for a work ethic and commitment with real economic opportunity and a decent quality of life. I won't speak for my colleagues from other Appalachian States, but West Virginia was not exactly the winner in the original Interstate Highway System. And Senators here represent many States that were. As a result, areas of my State have suffered, economically and in human terms. Without roads, people are shut off from jobs. That's obvious. But without roads, people also can't get decent health care. Dropping out of school is easier sometimes than taking a 2-hour bus ride because the roads aren't there. The structure of the ARC makes it more efficient and effective than many other agencies. The ARC is a working, true partnership between Federal, State, and local governments. This structure expects responsibility from citizens and local leaders, Federal funding is designed to leverage State and local money for any activity. According to the ARC, throughout its lifetime, it has contributed less than half of the total amount of project funds. Administrative costs have accounted for less than 4 percent of total costs over ARC's lifetime. Long before it was fashionable, ARC used a from-the-bottom-up approach to addressing local needs rather than a top-down, one-size- fits-all mandate of the type that has become all too familiar to citizens dealing with Federal agencies. It works, too. I urge everyone in this body to keep a promise made to a region that has been short-shrifted. Each region is unique. Solutions have to differ, depending on our circumstances. When it comes to Appalachia, a small agency called the Appalachian Regional Commission should finish its work. Slashing the support for such a targeted, effective commitment to a region that was excluded from economic progress for so long will only create more problems and more costs that should be avoided. I urge my colleagues to vote against an amendment that asks the Senate to give up on an investment that will benefit all Americans. cuts to arc appropriations

Mr. ROCKEFELLER

Mr. ROCKEFELLER. Mr. President, I wish I could rise only to spend these few moments celebrating a very important birthday of Medicare. It is the way 37 million Americans get their basic health protection. Medicare is turning 30 years old this Sunday. For three decades, Americans have been able to rely on health care benefits in their later years thanks to something called Medicare. Medicare was not born overnight. It had a long gestation period, ever since President Roosevelt shared his vision in the 1930's of a nation which guaranteed both financial security to its citizens and also health care security. As we all know, changing anything to do with health care does not happen overnight. It certainly did not happen over the last 2 years of nights or days. And it is hard to do. From the 1930's to 1965, which is a long period in this Nation's history, when President Johnson in fact signed the Medicare bill into law, special interests, parts of the medical community--sadly, large parts of the medical community--and plenty of politicians did everything they could to keep the dream of Medicare from becoming a reality. Today, however, we have to do more than celebrate Medicare's birthday. The question is whether Medicare will be there for seniors and their families for the next 30 years. Now, I do not mean to say that Medicare is going to cease to exist. Obviously, it is going to be there in some form. But when I look at a budget resolution that takes $270 billion over 7 years from Medicare and just happens by coincidence to give away $245 billion in tax cuts over that same period, unspecified tax cuts, the alarm bells tend to go off. Medicare was not enacted to be a piggy bank for tax cuts. Medicare is in fact a sacred part of America's vision and America's promise. I think of Geno Maynard, Sue Lemaster, and John and Betty Shumate. My colleagues obviously do not know who these fine West Virginians are but every Senator represents thousands of people like them. Geno Maynard is 78 years old and lives in Kenova, WV. Sue Lemaster is 83 years old and lives in Follansbee. She is on oxygen all the time. John and Betty Shumate live in Beckley. That is in the coal fields of West Virginia. They are four of about one-third of West Virginians who depend on Medicare for their health. They all recently told me when I visited them in their homes that they are very worried. I did not tell them to be worried. They are worried. They are scared. The annual income of the average Medicare recipient in West Virginia is less than $11,000--$10,700, to be precise. That is not much money. That is their income from everything they get--Social Security, black lung, whatever it might be, any investments left over, and probably not much of that--$10,700. So they are very worried because cutting Medicare by $270 billion sounds suspiciously to them like they are going to have to pay more for less, and I think they may be right. This is a very big worry for these four West Virginians as they quite flatly told me because they do not have any more money to spend on health care. Yes, they could sell their house. West Virginia has high ownership of houses. They could sell their house. I think that is sort of an unreasonable thing to require to get health care in this country when people have worked over the course of their lives. And then, of course, on average, seniors already spend 21 percent of their incomes on health care expenses. That is three times more than the rest of us. They spend money on benefits that are not covered by Medicare, the largest of which, of course, is prescription drugs. And that does not include eyeglasses and hearing aids and Medigap policies to cover Medicare's cost-share requirements, which can be very hefty. Mr. President, I would love to have, quite frankly, as a member of the Senate Finance Committee and someone who ranks on the Medicare Subcommittee, I would love to have more details on exactly what the Republican budget will mean for these poor West Virginians. I do not think that is unreasonable. We are talking about a lot of money--$270 billion. I can tell my people that a budget has passed that will cut $270 billion from Medicare, but what does that tell them? That simply gets them, naturally, scared. But where? In what form? I can tell them that the Republican budget will cut another $182 billion from Medicaid, which hard-working families rely on as the last resort to get into a nursing home. People think of Medicaid often as just representing poor people. You know, not everybody gets to be born a Rockefeller so there are a lot of poor people. A lot of them cannot help it. Some of them could, but most of them cannot. And when they have to go into a nursing home and they do not have any family around, guess who pays 7 percent of the cost of that in West Virginia? Medicaid. So these cuts are potentially devastating. And as seniors think about them in the raw number, the aggregate number, their imaginations run wild. They sort of think of the worst-case scenario. I do not know whether there is a worst-case scenario or not, but I ought to know. I ought to know as a U.S. Senator on the Finance Committee. I ought to know that. I care about health care. I can tell them that the experts agree that a total of $450 billion in health care cuts will have to mean less benefits at a higher cost and lower payments to providers and, incidentally, cost-shifting right onto business. And I can show them that the same budget just happens to put $245 billion into tax cuts. And if you did not have, let us say, all those tax cuts to whomever they are going to go, that would leave really a very small cut for Medicare or maybe a cut for Medicare and a cut for Medicaid, but it would be much, much smaller. And, incidentally, the Republican budget has increased funding for defense. But until we get more details on where and how these savings are going to be run out of Medicare, this Senator is sort of helpless as to how to give the people I represent any help, any sense [[Page S 10777]] of a roadmap for their own personal futures. There is no shortage of packaging around the Republican budget. It is the content I am trying to get hold of. My colleagues on the other side of the aisle argue that they are only trying to strengthen Medicare, saving the program, as they put it. Give me a break. First of all, I watched the very same Senators vote against previous budget packages that included careful steps to keep Medicare strong and keep Medicare affordable. They voted no. Now they are saying, ``Cut.'' Second, taking $270 billion from Medicare while handing out $245 billion in tax cuts does not exactly sound like a way to shore up the Medicare trust fund. I can try on that, but I cannot get very far. So we have until the year 2002 before the Medicare trust fund is insolvent. We know that. We say that. And we ought to be doing something about that. We should spend our time here working out responsible steps that put every last dime of Medicare savings into that trust fund. You know, the effect of the $270 billion cut on Medicare--people might say, ``Well, that is going to save Medicare.'' Well, there is an argument, Mr. President, as to whether it extends the life of the Medicare trust fund by 3 years, 4 years or 5 years, but not 6, 7, or 8. The optimists hope for 5, the pessimists for 3, but no more. And that is not exactly saving Medicare. So, the Republican budget is designed to raid, not save, the Medicare Program. I believe that. I firmly, fully believe that. Medicare's money is going to be used to finance tax cuts for the wealthy. It is that simple. I am not amused by that. We have been through that before. That is what the 1980's were all about. Our country did not prosper. In fact, this is not a very amusing subject in any way, shape or form. It has nothing to do with assuring long-term solvency of the trust fund. It has nothing to do with making sure the Medicare Program continues to provide high-quality health care for our country's senior citizens and the disabled. It has everything to do with a Republican contract on America. That is what it is called, Republican Contract With America, and Republican promises to balance the budget in 7 years and hand out tax cuts to the rich. Do you think that is political? Maybe it is. But it also happens to be the truth. Mr. President, I have introduced a bill to set up a Medicare commission to make recommendations on how to guarantee, in fact, the long-term solvency of the Medicare trust fund. Decisions on the future of the Medicare Program should be made outside of partisan debate on how to balance the budget. What does a 7-year, arbitrarily picked 7-year balance-the-budget exercise have to do with the future of the Medicare Program? Virtually nothing except in this case everything because they are using Medicare to do that. The budget resolution puts the Medicare Program into a financial straitjacket that does not take into account the health care needs of seniors or the disabled. It ignores the heavy reliance of rural hospitals on the Medicare Program. Mr. President, there is not a hospital in the State of West Virginia that I can think of that does not depend on Medicare and Medicaid for between 65 to 75 percent of its revenue stream. I cannot think of a single hospital at this moment in West Virginia where something other than Medicare and Medicaid is contributing more than 30 percent or 35 percent or 20 percent or 25 percent to the revenues of the hospital. So you mess around with Medicare and Medicaid, you are messing around with the solvency of hospitals, and particularly rural hospitals. So what will happen, of course, is that small, rural hospitals will have to shut their doors. My hospital administrators do not speculate on that. They know that. And they can tell you which ones they will be. And it just so happens that one-half of all of the seniors in West Virginia live in rural areas where these hospitals are. Now, Mr. President, I assume that in September the Finance Committee will get around to submitting its reconciliation plan to the Budget Committee. That means in less than 60 days--in less than 60 days--the Finance Committee will probably have to vote on a plan to take $450 billion from two health care programs that care for the elderly, the poor, poor children, many pregnant women, and the disabled, a plan we have not seen yet. Just read the newspapers. This is, in my judgment, a deliberate strategy to push each and every budget-related bill up against deadlines to threaten the shutdown of the Federal Government, to put pressure on the President and the hope that the fireworks will drown out what it really means to something called ``real people'' in West Virginia and other parts of this great country. And those real people include 37 million folks on Medicare. I just read--not that I am on the mailing list--an interesting memo from a Republican pollster that tells his audience that seniors are ``PAC oriented'' and ``susceptible to following one very dominant person's lead.'' I guess this is the kind of advice that leads to all kinds of delays in the budget process and the packaging around Medicare that we are most definitely seeing. So I have joined with all the Democrats on the Senate Finance Committee and all the Democrats on the Senate Budget Committee in a letter to the majority leader asking for a copy of the Republican secret plan to cut Medicare by $270 billion, and to have this before the August recess. Is that an extraordinary or somehow terribly unfair request? That will give us at least a few weeks to discuss the biggest cuts in Medicare's history with something called our constituents, about whom we presume to care. We need to know what seniors and their families, who count on Medicare to pay their medical care bills, think about these changes and how they will be affected. We have to know that. We have an obligation to know that. It would be a travesty for this contract to enact major massive changes to the Medicare program and not to be able to share any details with seniors, with their families, before the Senate is asked to vote on it. Then, if all this comes to a reconciliation bill, it is my understanding, and the Parliamentarian can correct me if I am wrong, that we will have a total of 20 hours of debate on the floor of the Senate--20 hours, no more--to discuss thousands of things in the reconciliation bill. I think that is what some people on the other side of the aisle want. Mr. President, the solvency of the Medicare trust funds is too important to be left to politics as usual. The Republican suggestion that the Democrats are uninterested in doing what is necessary to put Medicare on sound financial footing does not ring true to me. Going back to the days of President Roosevelt, it was Republicans in Congress who voted against its creation, and it is now Republicans in this country who pose a real threat to Medicare's future. They will keep on saying they are saving Medicare, but raiding Medicare is what they are doing, and that is no way to rescue Medicare. There is nothing partisan about the West Virginians who turn to Medicare when they retire. I have no idea of the politics of the four people that I mentioned. I have no idea if they are Republicans or Democrats or Independents or unregistered. It makes no difference. I represent them for whatever and whoever they are. In this case, they are older, they are scared and they are human beings. My job is to represent them in the Senate, the only place I can, and that means preserving the meaning and promise of Medicare. I think, generally speaking, although sometimes some of my colleagues from the other side will tease me, I do not consider myself a particularly partisan Senator. But on this matter, the $450 billion of cuts in Medicare and Medicaid, with $245 billion of tax cuts available for who knows who, I am partisan and I am mad, and I am mad on behalf of my people from West Virginia, which is not the richest State in the country. Nobody in West Virginia gets anything without working hard. Everybody has to fight, and the least they deserve is some truth and some leveling from their Congress. So I close by saying I hope in this week that Medicare turns 30 that we will be reminded what Medicare's future means to something called the dignity, something called the peace of [[Page S 10778]] mind and something called the quality of life for many millions of older Americans. I thank the President and yield the floor. Mr. McCONNELL addressed the Chair.

Mr. ROCKEFELLER

Mr. ROCKEFELLER. Mr. President, I ask that I be allowed to speak as in morning business.

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

Mr. ROCKEFELLER

Mr. ROCKEFELLER. Mr. President, when I think of my senior colleague from West Virginia, there are really two qualities that come to mind. One is his constancy of purpose and secondly is his devotion to the people of West Virginia. I have always felt that if a person in public life follows his moral compass, he or she will do what is, in fact, right. Senator Byrd knows instinctively what is right for the people of West Virginia as well as for the people of our country. And for my colleagues who have not had the pleasure of being in West Virginia when Senator Byrd is there, either campaigning for office or just simply talking with his constituents, it is a truly remarkable experience to watch him communicate with them. It is a bond that I have never seen before between any person and a group of people. He reminisces, he talks about the future. Yes, he talks about Roman history. But what he does is he brings people to him and makes them important as if they count in a State where every day is a fight for survival and makes [[Page S 10756]] them feel that in him they have a champion who will never let them down. On that I will close, because he never will let them down. There is nothing that he will not do to help the people of West Virginia while staying constant to his responsibilities to the people of the United States of America. I am extremely proud to be his junior colleague. It is interesting that he noted this one time, I think not to me but to a newspaper, that I have never referred to Senator Byrd as ``Bob'' or ``Robert.'' I have only referred to him in the 10 years we have served together, and before that when I was Governor, as ``Senator Byrd,'' or ``Senator.'' And quite often, ``sir.'' And I have found that that has served me well. But more importantly, I have found that that came very naturally. It is simply an intuitive feeling of respect on my part for what, as Senator Dole said, a poor boy from West Virginia can do to help so many. Mr. BYRD addressed the Chair.

Mr. ROCKEFELLER

Mr. ROCKEFELLER. Mr. President, I rise today to honor Frank Gaylord, the sculptor of the Korean War Veterans Memorial which will be formally dedicated and unveiled this Thursday, July 27. It will be located adjacent to the Lincoln Memorial and commemorate 5.7 million Americans who often feel forgotten. These men and women fought valiantly to defend Korea from Communist forces during the Korean War which lasted from 1950-1953. This memorial will surely be Frank Gaylord's masterpiece and gain enormous acclaim. The acclaim, however, is not what Gaylord, a Clarksburg, WV native, seeks. He sculpted this memorial because he is truly a patriot. A World War II veteran himself, he knows about the joy, agony, and countless other emotions soldiers feel every day. I, like many of my colleagues, can only imagine what it would be like to be a soldier in a heated war. Gaylord knows these emotions, and coupled with his artistic talent, has used them to create a moving memorial which will do much to make Korean War veterans more remembered and less forgotten. The memorial has three parts. The first part consists of 19 soldiers which Gaylord sculpted, who represent the Army, Navy, Air Force, and Marines. Since the Korean war was the first time U.S. Armed Forces combat units were fully integrated, the statues are ethnically diverse and remind us of our own Nation's strengths. The second part of the memorial is an enormous granite mural which has the faces of over 2,400 support personnel etched into it. The third part is a pool of remembrance which pays homage to all of the soldiers who were killed, captured, or wounded. Also, along the side of the entrance to the memorial is a slab of smoothed granite which recognizes each of the 22 nations which fought Communist aggression in Korea more than 40 years ago. In 1950, the United States sent troops to Korea to defend South Korea. Three years later, on July 27, 1953, they emerged victorious. The Korean war veterans who fought are rarely mentioned along side those from other wars, such as World War II and Viet Nam. Many who did not serve in Korea or have family who served there either do not know much about the war or do not remember it. However, thanks to the dedicated work, time, and talents of Frank Gaylord and other U.S. veterans, this memorial will generate a lasting image of the bravery and honor of Korean war veterans. No longer shall the courageous men and women of the Korean war feel forgotten. Their sacrifices are now officially recognized as this week we dedicate this incredibly impressive Korean War Veterans Memorial.

Mr. ROCKEFELLER

Mr. ROCKEFELLER. Mr. President, I rise today to honor the 5.7 million service men and women who served our Nation during the Korean war. All too often, these individuals have been America's forgotten soldiers, having fought and died in what has been called the forgotten war. With the dedication of the National Korean War Memorial on July 27, here in Washington, DC, the memory of the supreme effort that so many made will now be honored by future generations. Though we will never be able to express in mere words or stone the greatness of the deeds performed by our veterans in that war, the memorial will at least keep fresh the memories of our fathers and mothers, husbands and wives, and brothers and sisters who made the greatest of all sacrifices in that far-off land. Today, over 37,000 veterans from the Korean war reside in West Virginia. One of those 37,000 is my friend Edmund Reel. I want to tell you his story because his experiences and actions speak far more eloquently about him and his fellow veterans than I could hope to. Edmund is from Moorefield, WV, where he is a retired command sergeant major after 28 years of service. He devotes all of his free time to major veterans' groups, helping his former comrades in arms. Edmund arrived in Korea on August 25, 1950. Serving in Company M of the 8th Regiment of the 1st Cavalry, he saw action from Taegu to the Yalu. On November 1, he was captured by the Chinese. For the next 34 months, Edmund was a prisoner of war. Shuffled between North Korean and Chinese prison camps, he was subject to torture, hard labor, starvation, and constant beatings. Edmund remembers that one time, during a particularly brutal winter day, he was forced to stand on a hill for hours with a heavy rock above his head. During a day of hard labor, he fell in a deep hole, fracturing his back. North Korean officers offered him medical care if he would convert to communism and be used as a propaganda tool. Edmund refused. Though his body was broken, his will would never be. Despite his injury, Edmund was forced to continue hard labor, cutting logs and building bomb shelters. Many of Edmund's buddies never got out of those prison camps. He saw them die, as many as 35 a day, from starvation and sickness. On August 24, 1953, Edmund was released and was soon headed home to the States and West Virginia. His story is just one of many that make up the history of the American experience in Korea. He, like so many others, was sent to that distant country, joining with other soldiers from other allied nations in fighting a common, merciless aggressor. They knew the justness of their cause, democracy against totalitarianism. The debt we owe to our Korean war veterans, like the veterans of other wars, is immeasurable. The memories of those young soldiers, sailors, and airmen who gave, in the words of Abraham Lincoln, that ``last full measure of devotion,'' remain etched in our minds. Places such as Heartbreak Ridge, Inchon, and Chipyong-ni will forever be hallowed ground where Americans gave their lives for freedom. They sacrificed so that a people they did not even know might remain free. In doing so, they ennobled themselves and our Nation. Those living and dead of the Korean war will always serve as examples of true Americans.

Mr. ROCKEFELLER

Mr. ROCKEFELLER. Mr. President, I rise today to congratulate and commend the counties of Mercer, Monroe, McDowell, Summers, Raleigh, and Wyoming in West Virginia and their commitment to participating in a parental involvement program called, Teachers Involving Parents Successfully [TIPS]. This program seeks to promote teachers working more closely with parents to help the children learn and succeed in school. Too often, we forget that the condition of children's lives and their future prospects largely reflects the well-being of their families. When family support is strong, stable, and loving, children have a sound basis for becoming caring and competent adults. In contrast, when parents are unable to give children the attention and support they need in the home and for school, children are less likely to achieve their full potential. As a result, many of our Nation's gravest social problems stem from problems in our families. However, Mr. President, there is genuine reason for hope and optimism. In my home State of West Virginia, under the leadership of local education officials, a new program is changing the lives of children and their families. Its development and expansion of community-based family support provides parents with the knowledge, skills, and support they need to work with their children and the school system. Its success has been achieved through a collaborative effort among State and Federal programs, including chapter I and other programs targeted for at-risk students, and private sector efforts in the community. Each month, 2,000 special education guides are distributed, as well as news releases, public service announcements, and radio reminders that focus the community on the need for parental involvement. Teacher training and support materials have also been provided to every school in a successful effort to coordinate teacher, parent, and child activity both inside and outside of school. When I was chairman of the bipartisan National Commission on Children, we urged individuals and the country as a whole to reaffirm a commitment to forming and supporting strong, stable families as the best environment for raising children. The West Virginia TIPS Program is an extension of that goal, and its success is a tribute to those counties that have worked so hard to insure its development. The parents, children, and teachers in these counties are providing new opportunities for children and families. Their commitment to make a difference has ensured the success of the family, which is the best strategy for helping our children. They deserve our support and best wishes for continued success.

Mr. ROCKEFELLER

Mr. ROCKEFELLER. Mr. President, I ask unanimous consent that I be allowed to speak for 10 minutes.

Mr. ROCKEFELLER. Mr. President, I rise to explain why I strongly believe the Senate should reject the budget plan before us. The hard-working families and senior citizens of America had better hold onto their wallets. The budget before us is the equivalent of a stick-up. It may as well carry a script that says ``put your hands up, and hand it over.'' This is a budget that robs you of your tax credit if you are a family working, not on welfare, and struggling to make ends meet and raise your children. It will steal your plans to get a student loan if you are a middle-class family or high school student counting on college to get ahead. It raids $270 billion [[Page S 9394]] from the Medicare trust fund and beats up Medicaid. It will slash spending for veterans programs and lead to closings of VA hospitals and clinics. If you are already having problems paying your Medicare premiums, buying prescription drugs, or getting decent health care, more trouble lies ahead with this budget. If the only way you can get health care for your children or long-term care for your older parents is through Medicaid, sorry, this budget has to take that away from you. If you rely on VA for your health care, watch out, that will soon begin to disappear. This budget is packaged as the bold, courageous plan to balance the budget. It is bold, alright. It has the audacity to cut education, eliminate student loans, kill off part of the earned income tax credit, and raid the Medicare trust fund--but it bags $245 billion for more tax breaks for Americans who are already well-off. Mr. President, this is a budget that should be sent to the penitentiary. It is a felony against the people I represent, West Virginia families, senior citizens, students, veterans, and everyone else. It is a direct assault on the basic promise made for years and even decades when it comes to education, student loans, Medicare, veterans benefits, and the tools that create jobs and growth in this country. It is a crime against the basic principles of fairness and shared responsibility that any budget--a family budget or the Federal Government's budget--should be based on. It is not as though this is the only way to balance the budget. In fact, I voted for a very different way to get to the same bottomline. To eliminate the Federal deficit and the red ink. To crack down on excessive spending, including the tax breaks that are growing faster than inflation. Just about every Senator on this side of the aisle voted for the Conrad or the Bradley alternatives, because they spread the burden of balancing the budget so it does not crush something as basic as student loans or school lunches or a tax credit for the families with the most to lose. After what we saw happen to this country and my State of West Virginia back in the 1980's, I never thought I would see the day again when the Senate agrees to a budget that steals from the middle-class to give tax breaks to Wall Street and wealthy citizens. Once again, we're told that trickle-down economics will do its magic, and to wait for the jobs to grow and the prosperity to spring up. As Governor of West Virginia, I did that already. I watched the country sit on its hands as our foreign competitors took over industries and took our jobs. I watched the tax breaks feed a mania for mergers and junk bonds, leaving our people high and dry. My State has been climbing out of that rut of the 1980's when voodoo economics did its terrible damage. West Virginians want to work, no matter how little they have. Our workers and our industries want to be the best, and we are moving into the markets of competitors like Asian countries as this country gets tougher in demanding open markets and fair trade. Our families want good schools and a chance for West Virginia's high school graduates to go to college. As I have traveled around my State in recent weeks, it is not just senior citizens who have shared their worries about the plan to cut Medicare by $270 billion or Medicaid by $180 billion. The administrators of some of our hospitals talk about being forced to close their doors. Families wonder how a grandparent can stay in the nursing home. Physicians worry about children not coming in for checkups. Veterans worry about the country's willingness to continue to honor its commitments to those who served in time of peril. This budget is out to disarm us economically. Maybe some of my colleagues have a hard time figuring out what the Departments of Education or Commerce do. For families who think education is what counts, it is not so difficult. For the businesses in West Virginia that count on the Government to enforce our trade laws, help them export, and stay on top of technologies that turn into products, it is not so difficult. Take a company called Touchstone Research Laboratory, a two-person operation 15 years ago that now hires 40 people with $3 million annual sales. The two-person team, who worked themselves to the bone in the 1980's to get the company going, say that it was when the Federal Government--through the Economic Development Administration--helped our State build a research park near Wheeling, that things finally picked up. With that footing, they could turn to something called the United States and Foreign Commercial Service office in West Virginia, run by the Department of Commerce, for advice on how to do business abroad and sell their terrific, high-tech products. That led to contracts, jobs, and profits that this small business believes never would have happened without a Department of Commerce whose mission is creating jobs and opportunity. The steel plants in West Virginia, and their workers, might not exist today if there had not been a cop on the trade beat when foreign countries were dumping their steel inside our borders. Again, trade enforcement done out of a Department of Commerce with a very real mission. Mr. President, I know the proponents of this budget plan before us are very proud of their work and their dedication to balancing the budget. But this is the wrong way to achieve the right goal. And it is not the only way. If West Virginians and our fellow Americans succeed in rebelling against this highway robbery--against hard-working families and seniors, young people with dreams, and even our businesses--we can get to work to balance the budget in the way that it should be done. I fear for my State and for the country if this budget ever becomes reality. At this point, I will vote against it, and do everything I can to replace it with a course that stands up for the values of work, of education, of opportunity, and of fairness.

Mr. ROCKEFELLER

Mr. ROCKEFELLER. Mr. President, today, I joined a large number of my Senate colleagues in voting for S. 240, the Private Securities Litigation Reform Act of 1995. The 70-to-29 vote for this bill in its revised form demonstrated strong bipartisan commitment to repairing and changing the country's securities litigation system. Like any effort to change the status quo, especially through legislation that must win a majority of support from diverse corners, this final product cannot be called perfect. Compromises and tough judgment calls had to be made throughout the process of grappling with a very complex set of issues posed by securities and the legal system. After much consultation and reflection, today I felt the vote for a more rational, less costly, and improved system was a vote for this bill. This bill's fundamental purpose is to reduce and deter frivolous and meritless lawsuits in the securities area. The idea is by no means just to protect potential defendants. the need for legislation is based on the costs and problems created by the current system for investors when they cannot get helpful information on investment opportunities; for working Americans when the legal costs of the current system saps jobs, capital, and growth; and for participants like accountants who are at risk of liability that's far beyond their fault. In other words, repairing the system is designed to resolve problems that are hurting small and large investors, workers and our communities, and specific people professionally involved in securities. Thirty-one years ago I went to Emmons, WV, to be a VISTA worker because I wanted to make some small difference in the lives of other people. I quickly learned that West Virginians are people who value hard work, and are ready to earn their fair share of what society has to offer. But there were not enough jobs in Emmons, or in many other places in West Virginia. After deciding to make public service my career and West Virginia my permanent home, I also made creating long-term, well-paying jobs for West Virginians one of my main goals. Three decades later, it is still my focus. Almost everything I do for West Virginia must be weighed against that goal of creating the opportunity for West Virginians to earn a living, and, through work, to achieve the quality of life they seek. And when West Virginians are able to earn a decent living, and are able perhaps to invest a few dollars for their futures through savings or investment, I want to make sure that they are treated fairly and are protected. It was for both of these reasons--protecting the small companies in West Virginia that create quality jobs and protect wage-earner investors--that I have sponsored the current legislation regarding securities litigation. The bill I sponsored would go a long way toward curtailing what I believe is an epidemic of frivolous securities fraud lawsuits that are brought by a small cadre of lawyers against often small and start-up companies, and against their lawyers and accountants who may have little to do with the operation of the company. The stated purpose of S. 240, as introduced last January, was to facilitate the ability of companies to gather capital for investment, the underlying theory being that frivolous lawsuits against corporations make it very difficult to do so. While American securities markets have been very successful, the Banking Committee, after extensive hearings, reported that class action suits, as well as the fear of being sued in a class action by professional plaintiffs has the capital formation markets in terror. From this flows the need to come to a better balance between protecting the rights of investors and the standards of recovery. In my view, this is an appropriate goal. When I was asked to cosponsor S. 240 in January, I carefully analyzed its provisions to make sure that it struck a fair balance, and I came to the conclusion that it did. Regarding frivolous lawsuits, the bill contained many important provisions to assure that meritless lawsuits can be dealt with in an expeditious and less costly way. And there were several important protections for investors as well, including a 1-year extension of the statute of limitations for securities suits, the creation of a self-disciplinary auditor oversight board to assure truthfulness of securities statements; and encouragement of alternative dispute resolution for both plaintiffs and defendants, rather than resorting to lengthy and costly litigation in the courts. Unfortunately, several of these investor protection provisions have been deleted from the bill. The Banking Committee's action was not one-sided, however, and the bill contains a number of valuable provisions, and changes, to help deter frivolous lawsuits. A review of these changes reveals that the Committee did: Lower the pleading requirements, somewhat, to a standard set by the leading Federal circuit. Eliminate an onerous ``loser pays'' provision, but replaced it with a mandatory requirement that judges review pleadings in these cases under Federal Rule 11, which will most often mean that investor-plaintiffs, but not defendants, may be punished. Judges already have this responsibility under Rule 11, and it should be equally applied to plaintiffs and defendants--An amendment by Senator Bingaman has now made this provision more balanced. Eliminate an investor-plaintiff ``steering committee'' to manage the securities class action, but replaced it with a troublesome lead plaintiff provision which will likely result in large institutional investors--to the exclusion of small investors--controlling class actions--An amendment by the Senator Boxer, which would have corrected this shortcoming was defeated during earlier consideration of the bill. Eliminate a dollar threshold to be the named plaintiff. Partially restore SEC enforcement against those who aid and abet the commission of a fraud by another, but failed to restore a private right of action. Other changes included in the committee bill include: Expanding the protections of the legislation to include the 1933 Securities Act. Creating a legislative safe harbor for forward-looking economic statements about a company, thus ending an ongoing rulemaking on this subject by the SEC. An extension of the proportional liability protections. Providing that investors with the largest financial interest, will control securities class action suits. Eliminating the loser pays provision, as stated earlier, and replacing it with a provision with a strong presumption of fee-shifting against investors only. During the Senate's floor consideration of the legislation over the past week, a number of amendments were proposed by some of my colleagues from the Banking Committee. I strongly supported a number of these initiatives, and want to review each of them. statute of limitations amendment In 1991, the Supreme Court decided in the Lampf versus Gilbertson case to establish a uniform statute of limitations applicable to implied private actions under the Securities Exchange Act of 1934. Before this decision, Federal courts had followed the statute of limitations in the applicable State. The timeframe established was consistent with that for express causes of action for false statements, misrepresentation, and manipulation under the 1934 Act: One year from the date of discovery of the violation or discovery of the facts constituting the violation, or 3 years from the date of the violation. In 1991, an extension of this statute of limitations was proposed as part of the FDIC Improvement Act. Its supporters sought to change the statute of limitations to 2 years after the plaintiff knew of the securities violation, but in no event more than 5 years after the violation occurred. This provision was dropped because of the argument that it should only be enacted as part of a bill with further reform of the securities litigation system, as we are now doing. The extension of the statute of limitations was part of both the Domenici/Dodd bill from the 103d Congress, and the original version of S. 240 this year that I cosponsored. The original S. 240 also provided that a violation that should have been discovered through the exercise of reasonable diligence would fall under the 2-year category. An amendment rejected by the Senate would have returned the statute of limitation provision to that which was in the original version of S. 240. In the committee markup, the statute of limitation provision was taken out, returning to a shorter 1-year/3-year provision. A good number of our colleagues believed that this provision was harmful to business in that it would establish, at least de facto, a 5- year statute of limitation; that 3 years is a reasonable cap because after that, cases become stale and more difficult to defend; that a 1- year minimum is enough time to get a suit ready; that there are other adequate remedies including State actions, blue sky laws, and occasionally awarding of disgorgement funds by the SEC; and that the amendment would invite claim speculation--allowing investors to sit back and see if they turn a profit before suing. There were persuasive arguments put forth by supporters, as well. For example, the Senator from Nevada [Mr. Bryan] argued that: The bill as reported has a statute of limitations that is shorter than that in 31 states. Thirteen States also allow tolling of the statute until fraud is discovered. Under current law, it is too easy for a claim to be barred through no fault of the investor, especially because fraud is difficult to detect. I supported the amendment because I did not believe that it would adversely impact capital formation, and thus job creation. aiding and abetting amendment Prior to 1994, courts in every circuit supported the right of investors to sue those who aid and abet securities fraud. This right arose from common law, but was not specifically provided for in Federal securities statutes. For primarily this reason, the Supreme Court--in 1994--eliminated the right of investors to sue aiders and abettors of fraud. The Senator from Connecticut [Mr. Dodd] upon whose advice I depend heavily in this matter, as well as the SEC, the administration, and even the Supreme Court, has expressed the belief that the private right of action to pursue those who aid and abet should be replaced by statute. At the Committee hearing, Senator Dodd said, ``This is conduct that must be deterred, and Congress should enact legislation to restore aiding and abetting liability in private actions.'' The SEC testified before the Banking Committee strongly in favor of restoring this investor right because of its deterrent effect on fraudulent behavior. Otherwise, those who knowingly or recklessly assist in a fraud will be shielded. However, the committee failed to restore the private right of action, but did empower the SEC to bring aid and abet actions, although not authorizing any additional resources for the SEC to undertake this added responsibility. In my opinion, protecting aiding and abetting has nothing to do with capital formation, since it is not applicable to the primary investment company. I thus supported an amendment, offered by the Senator from Nevada [Mr. Bryan] which sought to restore this important right of investors to seek redress only against those who knowingly or recklessly provide substantial assistance to another who commits fraud. Safe Harbor For Forward-Looking Statements Amendment The term ``forward-looking statements'' is broadly defined in S. 240 to include financial projections on items such as revenues, income, and dividends, as well as statements of future economic performance required in documents filed with the SEC. As with any attempt to foresee the future, such statements always have an element of risk to them, and prudent investors must be careful in relying on them. Up until 1979, the SEC prohibited disclosure of such forward-looking information because it felt that this information was unreliable, and it feared that investors would place too much emphasis on these materials. After extensive review, the SEC adopted a safe harbor regulation for forward-looking statements in 1979. This regulation-- known as rule 175--offers protection for specified forward-looking statements when made in documents filed with the SEC. The theory for the safe harbor was to encourage voluntary disclosure by companies to the SEC. To sustain a fraud suit, a plaintiff/investor needed to show that the forward-looking information lacked a reasonable basis and was not made in good faith. The effectiveness of this regulation has been widely criticized, and as recently as May 19, 1995, SEC Chairman Arthur Levitt acknowledged ``a need for a stronger safe harbor than currently exists.'' In fact, the SEC is currently conducting a rulemaking on its safe harbor regulation. The original S. 240 bill required the SEC to consider adopting rules or making recommendations for expanding the safe harbor. This idea was strongly endorsed by SEC Chairman Levitt, among others. However, the Banking Committee abandoned this approach in favor of enacting a statutory safe harbor provision. Many have argued that the SEC is in the best position. Many have argued that the SEC is in the best position to tailor rules for this issue. The SEC will be able to closely monitor the effects of any new policy and quickly modify it if need be. The SEC also has the advantage of having already examined this problem in great detail. More important, however, is the way the committee did this. Under the committee version of S. 240, a forward-looking statement can only be the basis for fraud finding if the investor-plaintiff can prove that the statement is knowingly made with the expectation, purpose, and actual intent of misleading investors. Expectation, purpose, and actual intent are to be treated as separate elements, each of which must be proven independently. This is an extremely difficult standard to meet--an amendment adopted by voice vote removed the ``expectation'' requirement. Any safe harbor provision, whether statutory or by regulation, places a greater burden on the investor to uncover fraudulent misrepresentations. However, in order to encourage companies to file information with the SEC, most believe it is important to have some safe harbor provision. Because I believed that the committee's changes to S. 240 might make it more difficult for investors to prove that forward-looking statements should be liable for fraud--and thus that the SEC promulgated rule currently is a much better standard and that the Congress should leave this to the SEC--I supported the amendment to return this provision to the original S. 240 version. That amendment failed, and the Senator from Maryland, Mr. Sarbanes, proposed an amendment to modify the standard for recovery for fraudulent forward looking statements to require a showing that it was made with actual knowledge it was false or actual intent of misleading. This was what I believed was a reasonable middle-ground standard between what all agreed to be an ineffective current rule on safe harbor--reasonable basis/good faith--and the stringent actual intent standard inserted in the bill by the committee. Unfortunately, this amendment was tabled. proportional liability amendment Under current law, each defendant who conspires to commit a securities violation is joint and severally liable, and thus can be held accountable for 100 percent of damages found by a court. Most agree that this unfairly treats defendants who have only a small percentage of responsibility. As originally introduced, S. 240 provided for joint and several liability to be maintained only for primary wrongdoers, knowing violators, and those controlling knowing violators. As the bill reported by the committee, only knowing violators are held joint and severally liable. Knowing securities fraud is defined in the bill to exclude reckless violators, whose liability would be reduced to proportional liability. Additionally, if the judgment is uncollectible, proportionally liable defendants can be held to pay an additional 50 percent of their share, and can be made to pay the uncollectible share to investors with net worth less than $200,000 and who have lost more 10 percent of their net worth. Under the 50 percent provision, a defendant could be liable for up to 150 percent of their proportional share. The bill's proportionality provision is an improvement over current law, but may not fully protect investors when a judgment is uncollectible from a primary defendant. An exception was carved out so that those who have invested more than 10 percent of their net worth might still recover at least some portion of the damages even from the non-primary defendant. An amendment proposed by Senators Bryan and Shelby would have allowed for full reallocation of uncollectible shares among culpable defendants, while maintaining a system of proportionality as contained in the committee bill, to protect minimally responsible defendants, who are usually the accountants and attorneys, but at the same time would have been, I believe, fairer to victims of investment fraud. I supported this important amendment because I believed that it was a vast improvement over the current system of joint and several liability, but also as a stronger protection for investors. To conclude, Mr. President, I am disappointed that the managers supporting S. 240 rejected the amendments offered that I voted for. Perhaps some further enlightenment and discussion will inspire the conferees to incorporate some of them to ensure the balance that I think the legal system also calls for. Because the current system and its problems should not be left alone, I still came to the conclusion that a vote for the bill was in the interests of the people I represent and the country. Most of us may not be aware of the way the securities litigation system ultimately affects jobs, economic growth, and opportunity. The proponents of this bill have reminded us of these very real-life and serious effects. Today, I felt it was time to support action to revise and change the system so that it's more about common sense than a proliferation of lawyers and legal costs.