William Roth

Mr. ROTH

Mr. ROTH. Mr. President, I urge my colleagues to come down to debate this important piece of legislation. A number of individuals have indicated they want the opportunity to discuss this legislation, the restructuring of IRS. We do have an hour and a half available for any Senators who want to come down and give their comments with respect to this legislation. This is their opportunity, and I urge that they do so immediately. Mr. President, I suggest the absence of a quorum.

Mr. ROTH

Mr. ROTH. Mr. President, I ask unanimous consent that the Committee on Labor and Human Resources be authorized to meet for a hearing on ``SAFE KIDS Campaign'' during the session of the Senate on Tuesday, May 5, 1998, at 10:00 a.m.

Mr. ROTH. Mr. President, I ask unanimous consent that the Senate Committee on Commerce, Science, and Transportation be authorized to meet on Tuesday, May 5, 1998, at 9:30 a.m. on the nomination of Deborah Kilmer to be Assistant Secretary of Commerce.

Mr. ROTH. Mr. President, I wish to announce that the Committee on Small Business will hold a hearing entitled ``Nomination of Fred P. Hochberg to be Deputy Administrator of the SBA.'' The hearing will be held on Thursday, May 14, 1998, beginning at 9:30 a.m. in room 428A of the Russell Senate Office Building.

Mr. ROTH

Mr. ROTH. It is the hope of the manager that upon the passage of 3 p.m., we will move ahead with the managers' amendment.

Mr. ROTH. Mr. President, I ask unanimous consent that the Senate resume consideration of H.R. 2676 for debate only until 3 p.m.

Mr. ROTH. Mr. President, I didn't hear the distinguished Senator's request.

Mr. ROTH

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 President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. ROTH

Mr. ROTH. Mr. President, I ask unanimous consent that the following staff from the Joint Committee on Taxation be granted floor privileges during consideration of the IRS restructuring bill, H.R. 2676: Thomas A. Barthold, Lauralee A. Matthews, Alysa M. McDaniel, John F. Navratil, Joseph W. Nega, Judy K. Owens, Lindy L. Paull, Oren S. Penn, Cecily W. Rock, Melbert E. Schwarz, Carolyn E. Smith, Maxine B. Terry, Michael A. Udell, and Barry L. Wold. I further ask unanimous consent that Eric Thorson of the Finance Committee staff also be granted floor privileges during the consideration of this bill.

Mr. ROTH. I want to make it clear that it is the intent of the chairman to fully pay for both the first 5 years and the second 5 years.

Mr. ROTH. Mr. President, the need for this Internal Revenue Service restructuring legislation is clear. Last summer, the National Commission on Restructuring--following an extensive review of the IRS-- issued a report to revamp the agency. Last September, the Finance Committee held 3 days of hearings regarding practices and procedures of the Internal Revenue Service, which raised even more startling problems that have been festering within the IRS for years. Following these hearings, the agency's new Commissioner, Charles Rossotti, released a report that validated the concerns we raised, and he made a commitment to reform the Service. Likewise, in response to these hearings, the House considered and passed an IRS restructuring bill in November, and the Finance Committee began the new year with a series of five hearings on restructuring, which included testimony from past IRS Commissioners. Those restructuring hearings were followed with what can only be considered the most in-depth IRS oversight hearings ever, which concluded only last Friday. Throughout this extensive effort at oversight restructuring, my colleagues and I have been working on the legislation before us today. Our staffs have been meeting. There have been countless hours, late nights, and early mornings spent to develop a restructured bill that is strong, thorough, and workable. I appreciate these efforts. I also compliment the House on its swift action on the earlier version, and recognize the very effective leadership of Ways and Means Committee Chairman Bill Archer. Their efforts provided a solid foundation for restructuring the agency, and made it clear that Congress is ready to respond to the demands of the American people and reform the IRS. That, again, became clear when the Senate Finance Committee voted 20 to nothing in support of the legislation which we are about to consider--legislation that takes a major step toward changing the way that the IRS does business with the American people. I call this legislation a major step because it provides greater protections and reforms that were included in the House bill. It goes much further than the House bill, offering powerful provisions to correct the abuses and inefficiencies our extensive investigation and oversight efforts have uncovered. But I also want to refer to this effort as a step, because I believe reform of the IRS must be an ongoing process. It must be a process of continued vigilance, constructive hearings, and cooperation between Congress and the executive branch. But anyone who reads all this legislation proposes will realize that it is a strong product of a collective effort. If this legislation were a collegiate athlete, it would be considered a blue-chip recruit. While it is not perfect, it is ready to play and includes numerous provisions that strengthen taxpayer protections. It makes IRS employees more accountable, provides enhanced oversight, gives the Commissioner the tools necessary to bring the IRS into the next century, and offers greater due process to taxpayers who are trying to comply with our complex tax laws. The legislation pending before us today allows Commissioner Rossotti to eliminate the current national office, regional office, and the district office structure of the IRS. It gives him the authority to replace these antiquated management models with operating units that will directly serve particular groups of taxpayers, better meeting their needs and making the agency much more efficient and user friendly. Commissioner Rossotti should be complimented on his tremendous work and managerial skills. His plan to restructure the agency is as bold as it is necessary, and this legislation gives him the authority he needs to move forward. One of the major concerns we've listened to throughout our oversight initiative--a theme that repeated itself over and over again--was that the taxpayers who get caught in the IRS hall of mirrors have no place to turn that is truly independent and structured to represent their concerns. With this legislation, we require the agency to establish an independent Office of Appeals--one that may not be influenced by tax collection employees or auditors. Appeals officers will be made available in every state, and they will be better able to work with taxpayers who proceed through the appeals process. We heard a lot about the need for independence in our hearings. Agency employees themselves made it clear that there is no dependable and consistent mechanism in place to represent taxpayer interests. Just as this bill will give the appeals process greater independence, it will also make the Office of Taxpayer Advocate as well as local problem resolution officers more independent. In the future, the Secretary of Treasury, rather than the Commissioner will appoint the National Taxpayer Advocate. And the Taxpayer Advocate will be just that. Criteria to fill this position will include that the Advocate must not be an IRS employee two years before and five years after holding this position. In addition, this bill provides the Advocate with much greater discretion to issue an assistance order to help taxpayers. In an effort to ensure that independent review and accountability become part of the IRS culture--top to bottom--our legislation creates a nine- member IRS Oversight Board--a board composed of six experts from various professional fields in the private sector, the Commissioner, the Secretary of Treasury, and a representative of IRS employees. As we heard in our oversight hearings, one of the key elements missing in the current agency is a powerful influence independent enough from management and the senior executive corps that it can monitor and hold managers and executives accountable for their actions, and the actions of their employees. Under our legislation, the Oversight Board will have broad responsibility and will ensure that the IRS has procedures in place to carry out its mission. In order to help prevent the types of abuses disclosed in our Finance Committee hearings, the Board will have ``big picture'' authority over law enforcement and collection activities. While the Board may not intervene in particular taxpayer or employee cases, it will have access to information in order to help prevent the types of abuses that are brought to the Board's attention. If the Commissioner does not respond to issues raised by the Board, the Board may contact the chairmen of the tax writing committees. We discovered in our hours and hours of testimony from IRS employees, and in the countless letters we received, that part of the intimidating culture of the agency is sustained by the fact that they feel there are no independent protections for them if they report wrong-doing. I was most disturbed to find in our investigation that there is a dangerous kill-the-messenger syndrome within the agency. Over 50% of employees servicewide believe that management does not communicate honestly with the rank-and-file. Fifty-four percent were adamant that there is distrust between management and employees. When asked if there is adequate protection from retaliation against employees who report misconduct, 72% either disagreed, strongly disagreed, or did not care to comment. More than one in four indicated that they believe management fails to treat employees with respect. And 30% strongly disagree that, ``Disciplinary actions are applied fairly to employees.'' If we are to have an agency that the public trusts and that the employees are proud of, these statistics must change. In an effort to do this, our legislation eliminates the IRS Office of Chief Inspector. It transfers its full time equivalents to a new Treasury Inspector General for Tax Administration. There have been too many allegations that the current IRS Office of Chief Inspector does not have sufficient independence from the IRS to adequately fulfill its obligation. Likewise, the current Treasury Inspector General, which lacks resources and has experienced problems of its own, does not provide seamless oversight over the IRS. This change is one of the most important distinctions between the House bill and the Senate bill, and it is of critical importance. Our bill creates a new Treasury IG for Tax Administration which will have greater independence than the IRS Chief Inspector. This provision is supported by Commissioner Rossotti, and will create a structure where the new Treasury IG for Tax Administration will not allow oversight to fall through the cracks, and will provide a seamless check on how tax laws are being administered. This new Treasury IG for Tax Administration will provide independent investigations of alleged IRS employee misconduct without management interference. The new Treasury IG will also respond in a timely manner to requests to investigate or audit made by the Commissioner or the IRS Oversight Board. I believe that an intimidating edge now exists in the current management structure. The statistics I've just disclosed confirm that this is true. One of the problems is that the Commissioner does not have the kind of authority that is necessary to eliminate those managers who contaminate the culture of the agency. And the Commissioner does not have sufficient authority to hire those who will work toward making the kinds of changes that are necessary. This legislation gives the Commissioner the tools he needs to hire top-flight managers who are experts in their field. It gives him the wherewithal to transform the agency's workforce by providing bonuses and other incentives, and to sufficiently discipline employees whose inappropriate actions are a plague on the agency. As we have seen--even this past week--the Finance Committee has disclosed egregious conduct by IRS employees. We have received thousands of letters relating the same. They have come from taxpayers and agency employees, alike. The stories we have heard are outrageous, as is the fact that many of those who perpetrate these abuses do so without consequence. This will not stand. Our bill requires the IRS to terminate an employee if it is proven that the employee failed to obtain required authorization to seize a taxpayer's property, committed perjury material to a taxpayer's matter, or falsified or destroyed documents to conceal the employee's mistakes with respect to a taxpayer's case. This legislation allows terminations to take place if an IRS employee engages in abuses or egregious misconduct. Conditions for which an employee can be dismissed include, but are not limited to, assaulting or battering a taxpayer or other IRS employee, violating the civil rights of a taxpayer or other IRS employee, or breaking the law, regulations, or IRS policies for the purpose of retaliating or harassing a taxpayer or other IRS employee. Our legislation also allows an employee to be fired for willfully misusing section 6103 authority to conceal information from Congress. With this legislation, we show that we mean business. An environment that allows employees guilty of these kinds of behaviors to continue to work within the system is not acceptable to me, the Finance Committee, or to the American people. We have heard enough excuses. And Commissioner Rossotti agrees that enough is enough! One of the most troubling issues raised in our September hearings was the widespread use of enforcement statistics to evaluate front line IRS employees and their supervisors. Subsequent reports by the IRS Chief Inspector substantiated our findings that the agency was, in fact, illegally evaluating employees based on enforcement statistics. Then, in our hearings just last week, we heard that such evaluations continue. In my mind, Mr. President, this mocks Congress. It demonstrates that the IRS believes it is above the law. It is indicative of a culture that believes that if it will simply hold on long enough oversight and accountability will go away and the managers and executives who have made careers out of bending the law can get back to business as usual. The bill pending before us strengthens the law against this. It prohibits the use of enforcement statistics to evaluate any IRS employee, not merely front line collection employees and their supervisors. And the new Treasury IG would be required to report on whether the IRS is abiding by the law. Each of the measures I have outlined thus far demonstrates just how serious we are in our effort to change the Internal Revenue Service. Each will go a long way towards protecting the taxpayer and honest employees who are working to make the IRS a true service-oriented agency. But we don't stop here. We offer much more in the way of taxpayer protections. We shift the burden of proof to the IRS if the taxpayer maintains records, cooperates with the agency, and provides credible evidence to the court. In addition, the IRS will have the burden of providing a taxpayer's income if it uses arbitrary statistics to determine that income. This legislation also allows taxpayers to recover attorney fees and costs from the date the taxpayer rightfully appeals an audit, and it eliminates the $110 per hour cap on recoverable attorney fees. Taxpayers should not be forced to litigate if the IRS is unreasonable. In order to level the playing field, if the agency forces a taxpayer to litigate and go to trial, our bill allows a taxpayer to recover all attorney fees and costs from the time the taxpayer makes a qualified offer if the amount of the court judgment is equal to or less than the taxpayer's offer. Taxpayers should not have to foot the bill if the IRS is unreasonable. Beyond this, our legislation includes various provisions which allow taxpayers and third parties to recover against the IRS for civil damages. It also establishes procedures for third parties to have erroneous liens removed from their property. Another major taxpayer protection in this legislation is our provision to strengthen innocent spouse relief. This legislation overhauls the current innocent spouse relief which is wholly inadequate. We do this by limiting a spouse's tax liability to the proportion of his or her income reported on the tax return, or returns, in question. As a result of concerns raised by members of the Finance Committee, relief would not be available in cases of fraud, or if the IRS proves the taxpayer claiming innocent spouse relief had actual knowledge of an item giving rise to the tax liability. Some of the most tragic stories our committee heard concerned innocent spouses whose economic lives have been ruined by the unrelenting pursuit of IRS collections officers. What we propose here are needed changes--changes that will bring a semblance of sanity to the current system and protect honest spouses who, under no circumstances, should be held accountable for the liabilities of their former spouses just because they are easier to find or more vulnerable to intimidation. Many of the innocent spouses we listened to in our hearings--and many of the letters I have reviewed since--told us how they have been placed under terrible burdens because of interest and penalties that continue to grow as their cases age. Again, with this legislation, we do something about that. We make necessary and important changes to how penalties and interest are applied. In order to prevent IRS employees from arbitrarily using penalties as leverage against taxpayers, our legislation requires non- computer determined penalties to be approved by management. Furthermore, each notice to taxpayers which includes a penalty or interest must specify how the amount was calculated. Our legislation disallows the imposition of the failure-to-pay penalty while the taxpayer is in an installment agreement. It allows the taxpayer to designate deposits for each payroll period rather than using the first-in-first-out--``FIFO''--method that results in cascading penalties. Under this bill, if the IRS does not provide a notice of deficiency within one year after a return is timely filed, then interest and penalties will be suspended until 21 days after demand for payment. Of course, this increased protection--as all increased protections--are meant to protect honest taxpayers. We will not excuse those who evade their responsibility or cheat on their income tax returns. These protections exclude the failure to file, failure to pay, and penalties related to fraud. Increased protections for honest taxpayers will also affect due process. This was one of the glaring issues raised in our IRS hearings. Currently there is a woeful lack of protection in this area, particularly during collection activity, where the IRS is the judge and jury, and where some agency employees take a cavalier approach to issuing a notice of lien, levy, or seizure of a taxpayer's home, personal belongings, or business property. In order to ensure due process to taxpayers, our bill requires the IRS to provide 30-days notice to a taxpayer before it may issue a notice of lien, levy, or seizure. If the taxpayer requests a hearing, all collection activity must stop. If the taxpayer disputes the findings of the appeals officer, the taxpayer may petition the tax court for relief. Our legislation requires the IRS to implement a review process under which liens, levies, and seizures would be approved by a supervisor who would review the taxpayer's information, verify that a balance is due, and affirm that a lien, levy, or seizure is appropriate under the circumstances, including the amount due and the value of the asset. Failure to follow these procedures, under our legislation, would result in disciplinary action against the revenue officer and his or her supervisor. We also require the Treasury Inspector General to collect this information and annually report to the tax writing committees of Congress. On those occasions when the IRS makes seizures, the agency will be required to follow certain procedures and provide an accounting to the taxpayers. It is unbelievable that the IRS does not currently provide a receipt to taxpayers when their property is seized and sold. Revenue Officers have incredible discretion. As such, this bill requires the IRS to implement a uniform asset disposal system for sales of seized property to prevent revenue officers from conducting sales. It would prohibit the IRS from seizing real property used as a residence if the unpaid tax liability is less than $5,000. Also, a principal residence or business property would only be seized as a last resort. In the area of examination, our bill expands the attorney-client privilege to other tax practitioners to the extent such communications would be privileged between an attorney and his client. It limits IRS authority to require the production of computer source code and establishes a number of protections against the disclosure and improper use of trade secrets and confidential information of any computer software program or source code that comes into the possession of the IRS as part of an examination of a taxpayer. The legislation allows taxpayers to bring an action to quash all third-party summonses by informing the taxpayers of such summonses before the IRS contacts the third party. Beyond these important changes, this legislation introduces several other measures to protect the taxpayer. It is surprising how long some IRS cases remain open and how long some taxpayers remain in the crosshairs of the agency. This is accomplished when the IRS pressures taxpayers, often by threatening them, to waive the 10-year statute of limitations on collection. Mr. President, 10 years is long enough, and to protect these taxpayers, our bill would prohibit waivers of the collection statute. It would also make it easier for taxpayers, who dispute the amount of their tax liability or can't pay the full amount, to compromise with the IRS or enter into installment agreements. The legislation that we introduce today also provides taxpayers with an enhanced mechanism to appeal an audit, request early referral to appeals, and request alternative dispute resolution. It includes various routine requirements, including an explanation of the reason for denial of a refund and annual statement to taxpayers regarding the amount remaining on their installment agreement. The bill also requires IRS notices to include the name and phone number of an IRS employee the taxpayer should contact to resolve any issue on the notice. In order to protect innocent taxpayers who are improperly labeled as ``illegal tax protesters,'' this bill will, out and out, prohibit such designation. It will also take an important step towards helping Congress simplify the law by requiring the Joint Tax Committee to prepare a complexity analysis on tax legislation. As you can see, Mr. President, this is a very thorough, comprehensive piece of legislation. It is extremely important. There is no question that it is well worth the wait. When our hearing began last September, an agency employee made a complaint that lodged itself in my mind, one that I have not been able to forget. He said, ``If the true number of incidents of taxpayer abuse was ever known, the public would be appalled. If the public also knew the number of abuses covered up by the IRS, there would be a taxpayer revolt.'' What we bring with this important legislation is a new era of openness to an agency that for too long has been able to operate beyond the view of Congress. We bring a new era of accountability to an agency marked by a culture that protects even the most lawless employees from the consequences of their actions. We bring a new era of efficiency and modern management to an organizational structure that dates back to before the industrial age. We bring forward a promise of hope to honest taxpayers and valued employees who have waited too long. With this legislation, Commissioner Rossotti will be able to transform the IRS, provide accountability, and establish much-needed taxpayer protection. Americans, for the first time ever, will have a tax collection agency marked by a sincere dedication to service. Mr. President, I yield the floor. Mr. MOYNIHAN addressed the Chair.

Mr. ROTH. Will the Senator yield for a comment?

Mr. ROTH

Mr. ROTH. Mr. President, as well intentioned as the Warner amendment may be, I urge my colleagues to oppose it. To accept it would be inconsistent with the NATO Treaty. It would unnecessarily limit U.S. flexibility in pursuing further enlargement. It is constitutionally unnecessary. And, above all, it undercuts the tremendous gains for peace accomplished over the last decade in Central Europe and in our relationship with Russia. What this amendment proposes is an arbitrary freeze--or a pause--in the enlargement process. This, despite the fact that Article 10 of the Washington Treaty, the Alliance's founding charter, states clearly that membership is open to, and I quote, ``any other European state in a position to further the principles of this treaty and to contribute to the security of the North Atlantic area.'' Mr. President, we all agree that NATO is an unprecedented success in deterring conflict and promoting peace and stability. Toward these ends, NATO has been expanded three times in the past. To remain vital, relevant, and successful in the future, NATO must remain consistent with Article 10 and keep its doors open to those European democracies ready to bear the responsibilities and burdens of membership. NATO enlargement is a policy rooted in this principle and driven by moral imperatives, strategic self-interest, and objective criteria concerning military readiness and political and economic reform. Any proposal to freeze enlargement--whether it be permanent or temporary-- subordinates these factors to an arbitrary timeline. And it opens the door to other significantly adverse consequences for the United States and the Alliance: First, a freeze would reduce U.S. flexibility and leverage within NATO. It would unnecessarily undercut our ability--and the Alliance's ability--to respond to the inherent uncertainty of the future. Second, it would send an unfortunate, and even dangerous message to the reformist governments of Central Europe. They would suppose--and not incorrectly--that the United States is slamming the door shut concerning their possible accession into the Alliance. Do we really wish to send such a disillusioning message? Article 10 of the Washington Treaty was a source of hope to Central Europeans during Soviet oppression. The prospect of NATO membership remains an important incentive for democratic and economic reform. It has motivated the reconciliations between Germany and the Czech Republic, Germany and Poland, Romania and Hungary, Romania and Ukraine, as well as Italy and Slovenia, among others. Their unprecedented efforts to cooperate among themselves and to jointly consolidate peace and security in that region must be strengthened, not undercut. Third, a mandated pause created by this amendment would prompt a new dividing line in Europe. If Central European countries not invited into NATO conclude that the process of enlargement has not only stalled, but stopped, a key incentive behind the aforementioned regional cooperation, including their current participation in NATO's Partnership for Peace program, will be seriously undercut. Thus, a freeze on enlargement would impede, if not reverse, the remarkable development of European security around an Alliance-determined agenda. Fourth, Mr. President, an arbitrary freeze on NATO enlargement would harm Russia's historic reconciliation with NATO and the United States. A freeze would appear to give Moscow a veto over enlargement. It certainly would be interpreted as a victory--proof of their own legitimacy--by those who still advocate a Russian sphere of influence over its neighbors. Worse yet, it could lead others to draw the same conclusion. A freeze would undercut the basic principle that all of Europe's states have a right to choose their own security arrangements--a principle that must be one of the cornerstones of Russia's relationships with the United States and NATO. While I am sure the intentions behind this amendment are admirable, we must recognize that its consequences would be potentially disastrous. It would undercut U.S. leadership and influence within the Alliance. It would contradict the founding document of the Alliance. It would threaten the historic progress we have witnessed in Central Europe--progress from which we all benefit. And It would reject a principle fundamental to establishment of a constructive relationship with a democratic Russia. I suspect, Mr. President, that one false premise behind this amendment is that NATO enlargement has been a rushed process. Nothing could be farther from the truth. The velvet revolutions that restored democracy and independence to Poland, the Czech Republic, and Hungary took place in 1989. Nearly a decade will have passed before these three countries become NATO members in 1999. Moreover, the Senate has not rushed, and is not being rushed, into endorsing NATO enlargement. This chamber and its committees have been examining and promoting this initiative since 1993, if not earlier. Anyone concerned about the future enlargement process can be assured that the same careful study, debate, and oversight that has attended this past effort will attend those to come. Read the resolution of ratification carefully. It explicitly requires extensive consultation between the Senate and the President about any such initiative. It states that the ``United States will not support the admission of, or the invitation for admission of, any new NATO member, unless (I) the President consults with the Senate consistent with Article II, section 2, clause 2 of the Constitution of the United States (relating to the advice and consent of the Senate to the making of treaties); and (II) the prospective members can fulfill the obligations and responsibilities of membership, and its inclusion would serve the overall political and strategic interests of NATO and the United States.'' Before, I yield the floor, Mr. President, let me reiterate a key point to those who fear a rushed process of further NATO enlargement. The bottom line, is that further expansion of the Alliance will always be contingent on careful study, public debate, high-level consultations, political consensus, and the strategic interests of NATO and the United States. Any further expansion will also be contingent on Senate ratification--the difficult hurdle of securing 67 votes. For these and other reasons, I urge my colleagues to vote against any proposal that undercuts the founding document and basic principles of the NATO Alliance. The ratification of the accession of Poland, the Czech Republic, and Hungary to NATO will erase destabilizing lines, which are relics of the Cold War. This amendment portends only be a step toward new, divisive lines in Europe--and, that is something we should never accept. Mr. President, I reserve the remainder of my time. Mr. WARNER addressed the Chair.

Mr. ROTH. Mr. President, it would be a great mistake to condition the future of the NATO, a transatlantic military alliance of unparalleled success led by the United States, to actions and decisions of the European Union. The EU is a strictly European political-economic organization of which the United States is not a member and has no say. For this reason, it is with great regret that I stand in opposition to my good friend, the Senator from New York, and urge my colleagues to vote against this amendment. EU enlargement is highly desirable on its own merits. Indeed, the Resolution of Ratification specifically states it is the policy of the United States to encourage EU enlargement. However, as worthy as EU enlargement is, it should not be formally linked to NATO enlargement. Nor should EU membership serve as a condition for NATO aspirants. Let me emphasize three basic reasons: First, this amendment is inconsistent with the Washington Treaty. Article 10 of the Treaty states that membership in NATO is open to, and I quote, ``any European State in a position to further the principles of this treaty and to contribute to the security of the North Atlantic area.'' The North Atlantic Treaty makes no mention of the European Union. Moreover, several NATO member states are not EU members, including the United States, Canada, Turkey, Iceland and Norway. Are they any less effective members of the Alliance because they are not part of the EU? The answer is unambiguously NO. And what if Poland, Hungary, and the Czech Republic decide, as Norway has--a founding member of NATO-- that membership in the European Union in not in their interests? I point this out to highlight that this amendment establishes an arbitrary standard that is not necessarily a reflection of a NATO aspirant's state of economic and political well- being. Second, Mr President, by conditioning NATO membership on attainment of EU membership, this amendment would strip the Alliance of control over its own future--specifically its decisions over future membership--and transfer it over the European Union. The EU is not a transatlantic organization. It has no effective security or defense capability or policy for that matter. Let us not forget, it was a complete failure in the effort to end to the conflict in Bosnia. Do we really want the EU to have such significant influence over NATO? And, let us not over look the fact that this amendment could well suspend NATO enlargement indefinitely. EU enlargement is far from certain. It is far from clear when the EU will extend its membership to Poland, the Czech Republic and Hungary. It could be a decade, if not more for all we know. There are still significant political forces and economic interests within the EU deeply opposed to EU enlargement. Third, this amendment would undercut U.S. leadership of NATO by relegating the United States--and the United States Senate for that matter--to a second class tier of Alliance members. Why? because NATO members who are not in the European Union would be denied the same voice and authority over the future of the Alliance that this amendment would reserve for those NATO countries that are members of the European Union. In one fell swoop, this amendment would: impose an unprecedented restriction upon the Washington Treaty; transfer key decisions over NATO's future to the EU, an European institution that lacks an effective security policy; demote the United States to a new second- class tier of Alliance members; and, thereby weaken U.S. leadership of NATO. I am sure that these are not the intentions behind this amendment, but they would clearly be the consequences. My colleagues, we have no choice but to vote this amendment down.

Mr. ROTH

Mr. ROTH. Mr. President, on April 22, 1998, the Finance Committee filed Report 105-174 to accompany H.R. 2676. At the time the report was filed, the required Congressional Budget Office statement was not available. I ask that the Congressional Budget Office statement that I have recently received be printed in the Record. The material follows: U.S. Congress, Congressional Budget Office, Washington, DC, April 30, 1998. Hon. William V. Roth, Jr., Chairman, Committee on Finance, U.S. Senate, Washington, DC. Dear Mr. Chairman: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 2676, the Internal Revenue Service Restructuring and Reform Act of 1998. If you wish further details on this estimate, we will be pleased to provide them. The CBO staff contacts are John R. Righter (for federal costs), who can be reached at 226-2860, Marc Nicole (for the impact on state and local governments), who can be reached at 225-3220, and Matthew Eyles (for the impact on the private sector), who can be reached at 226- 2469. Sincerely, June E. O'Neill, Director. Enclosure.

Mr. ROTH

Mr. ROTH. Mr. President, I wish to express my strong opposition to this amendment and to urge my colleagues to vote this amendment down. Before I start Mr. President, I ask unanimous consent to have printed in the Record an article published today on this amendment in the Washington Times by David Gompert, who served as senior director for Europe and Eurasia on the National Security Council staff under President George Bush. This is a very insightful piece, and I intend to reiterate and elaborate on the sound points raised by David Gompert.

Mr. ROTH. I fully recognize that the sponsors of this amendment are motivated by the desire to preserve the vitality of NATO and the central priority of its collective defense mission. These are goals that I fully endorse. However, the motivations behind this amendment and its real and potential impact upon the Alliance are leagues apart. Mr. President, this amendment would do great damage to the Alliance and to the interests of the United States. First, it intends to unilaterally impose for the first time in the history of the Alliance new restrictions on NATO's roles and missions. And it would do so, in absence of serious consultations within the Alliance. Second, such a unilateral move by the Senate runs counter to the spirit and traditions of the Alliance. It would invite other allies to unilaterally impose their own restrictions and definitions on the terms of the Washington Treaty. We must not set the Alliance upon such a slippery and divisive slope. Third, by imposing such restrictions, this amendment would undercut the ability of the United States to prompt NATO to take actions necessary to protect and defend the interests of the North Atlantic community. Worse yet, the language of this amendment would undermine the ability of the United States to call NATO to action in defense of American security interests. Fourth, this chamber has repeatedly called upon our Allies to stop the decline of their defense establishments and do more to bear burdens of the Alliance. This amendment directly undercuts those efforts to attain more equitable burden-sharing within the Alliance and the transatlantic community. It would do by granting our European allies yet another excuse to not improve their defense forces. At its best this amendment in unnecessary to achieve the goals of its sponsors. At its worst, the amendment would undercut the Alliance's will and capability to defend the security interests of the North Atlantic community of democracies. This amendment is unnecessary to attain the goal of preventing the United States from being drawn into dangerous peace-keeping operations that the countries of Europe should handle on their own. The United States already reserves the right to veto any such initiative within or by the Alliance. Moreover, Article 5 of the Washington Treaty makes U.S. Participation in a NATO mission strictly a national decision. It is not an obligation. That has always been the case and will always remain the case in NATO. It is quite evident that not everyone in the Senate supports the decision of the United States to have NATO lead the effort to bring peace to the Balkans. Nonetheless, it was a national decision by the United States and the United States Congress to support the NATO mission in Bosnia. And, the fact is that this military operation is completely consistent with the Washington Treaty. We should not allow disagreements with the foreign policy of the executive branch, as serious as they may be, to prompt dangerous revisions or restrictions upon a treaty that has been an unprecedented success for the deterrence of aggression and the preservation of peace. Yet, that is exactly what this amendment would do. I understand that one key intent of the amendment is to express the opinion that the Alliance must remain first and foremost an institution of collective defense. That goal is already accomplished through the resolution of ratification. Just read it. Section 3.1.A of the resolution of ratification declares clearly that the ``core purpose of NATO must continue to be the collective defense of the territory of all NATO members.'' The resolution makes crystal clear that the Senate firmly believes that NATO's first priority must be the mission of collective defense. Unfortunately, this amendment is not only unnecessary, it is dangerous. By attempting to define and restrict the missions that NATO can and should undertake, it risks foreclosing the ability of the United States to seek NATO's assistance in confronting future threats to the transatlantic community of nations. Ironically, this amendment's current construction would not keep the United States from becoming engaged in any future ``Bosnia-type contingencies''--a core intent of its authors--because such contingencies as Bosnia can be defined as meeting its requirements. Indeed, the U.S. Congress has done just that by supporting our troops in Bosnia. But, this amendment, could serve as an excuse for our allies to avoid sharing the risks and burdens of such contingencies with the United States. In a world of rogue states with biological, chemical and nuclear weapons increasingly at their disposal, why would we, the United States Senate, want to undercut NATO's willingness and ability to defend the common interests of the North Atlantic community of democracies? Why would we, the United States Senate discard one of the best vehicles through which to prompt allied support for U.S. security interests? Some fifty years ago, the drafters of the Washington Treaty included provisions not only to provide for the territorial defense of the North Atlantic region, but also for the possibility of common action to protect other interests of the North Atlantic Community. It was the United States that insisted upon this provision--Article 4 of the Charter--and a construction of the Charter that would permit actions beyond the narrow scope of territorial defense. Secretary of State Dean Acheson spoke to this point clearly before the Treaty went into force in 1949, and I ask unanimous consent that an excerpt of a memorandum of his press conferences in which he spoke definitively on this point be printed in the Record.

Mr. ROTH. The fact is that the policy of the United States and the policy of NATO have always permitted actions by the Alliance that go beyond the narrow scope of territorial defense. Yet, this amendment clearly attempts to constrict the interpretation of the Washington treaty rendered by its founding fathers. And, let us not underestimate what kind of example passage of this amendment would set for our Allies. It would encourage our European Allies to impose their own unilateral reinterpretations or restrictions upon the Washington treaty. Imagine our reaction, if one of the parliaments or governments of our allies were to attach such conditions to NATO enlargement. How would we react, if for example, one ally were to prohibit the use of NATO-designated units against Saddam Hussein's regime in Iraq? Judging from recent events in the Persian Gulf, I imagine the reaction in this chamber would be one of complete outrage. Mr. President, we must also be aware of the message this amendment would send to our European Allies should the Senate make the profound mistake of accepting it. For years, the United States, and especially the United States Congress, has worked arduously to make our European Allies more outward looking in their security policies and to assume a greater share of the risks and burdens in addressing common challenges and threats. We have repeatedly called upon them to stop the decline of their defense establishments and to devote the resources that will enable them to better contribute to the transatlantic security. Yet this amendment, perhaps inadvertently, would signal that the business of NATO is only territorial defense, and no more. It would thereby eliminate any motivation for the Allies to field the forces necessary for post-Cold War missions. It would serve as an excuse to let the military establishments continue an over decade long decline. Worse, this amendment would infer that the United States views the Alliance as having limited value in the post-Cold War era. This is an important point made by David Gompert, and I fully agree. Passage of this amendment could be interpreted by our allies and the detractors of the Alliance that the United States no longer regards its vital interests as being best secured through the fabric of the transatlantic community and the NATO alliance. That would be a dangerously counterproductive message--a message that would ignore the lessons of two world wars and the Cold War. I just don't believe that our memory is so short. Mr. President, the Senate must reject this amendment. As I stated earlier, at its best, this amendment is redundant and unnecessary. At its worst, it is a radical and dangerous departure from the Washington Treaty of 1949 and the way in which the United States has over the years used the Alliance to advance our own national interests.

Mr. ROTH

Mr. ROTH. Mr. President, while I have great respect for the distinguished Senator from Texas, I strongly oppose this amendment and I urge my colleagues to oppose it. Last month, when we first addressed this amendment, I stated the reasons for my opposition. In the intervening time, nothing has changed my perspectives. Indeed, my opposition has only hardened. This opposition is based on four very clear and simple points: First, the establishment of a formal dispute resolution mechanism within the Alliance would undercut the authority of the North Atlantic Council, the Alliance's supreme decision-making body. Second, the proposal would change the focus of the Alliance from collective defense to dispute resolution. That would fundamentally transform the very culture of the Alliance, one that is now primarily derived from its mission of collective defense. Third, the establishment of a dispute resolution mechanism would introduce into NATO a dangerous catalyst for inter-Alliance tensions. It would serve as a magnet for disputes that exacerbate tensions within the Alliance. And fourth, by inviting and exacerbating tensions and disputes into the Alliance, this proposal would weaken the Alliance's ability to fulfill its core mission of collective defense. When it comes to formal dispute resolution, we should look toward the United Nations or the OSCE--an international organization in Europe dedicated to preventing, mediating and bringing an end to disputes between countries. But, I don't think that we want to transform NATO, the most successful military alliance in history, into another OSCE. I fear that this proposal implies that the NAC--and the Alliance--has failed in fostering cohesion among its European members over the last fifty years. I do not believe any of us would say that is true. Let us not forget that in its current form, NATO has proven itself to be a remarkable forum through which differences between Allies have been mitigated and managed. The clearest example of this influence is the alliance's positive contributions to relations between Turkey and Greece. This success is very much due to the trust this fostered through the Alliance's focus on war-fighting. We must be careful to not undercut this success. Yet that is exactly what this proposal would do. If the Alliance were to follow through on this proposal articulated by the good Senator from Texas, it would establish a new body possibly independent from the NAC. That is a major change to the Alliance. It will create a process that in no small way will distract members of the Alliance from the core mission of collective defense. It will serve as an incentive for them to use the Alliance as a means to pursue a laundry list of other matters--many of a strictly national, and not Allied, concern. That's how this proposal would invite tensions within the Alliance. That's how it would undercut its mission of collective defense. That mission requires cohesion and it requires focus. This amendment portends to undercut both. Moreover, offering this amendment implies that the United States regards Poland, Hungary, and the Czech Republic as unstable and more contentious than other members. I do not believe that is the sense of the Senate. As well intentioned this amendment may be, it contradicts its own objectives and would severely damage the vital interests of the Alliance. Therefore, I urge my colleagues to oppose this amendment. Mrs. HUTCHISON addressed the Chair.

Mr. ROTH

Mr. ROTH. Mr. President, I ask unanimous consent David Stephens of Senator Kyl's staff be permitted on the floor for the duration of the debate on NATO enlargement.

Mr. ROTH. Mr. President, as the Senate resumes consideration of the resolution of ratification for NATO enlargement, I would like to commend my colleagues for the debate that has occurred thus far. In the few days that the Senate has already dedicated to this important issue, and I speak before the debate today, some 21 Members of this Chamber have expressed their views. I have listened intently to their arguments and I have been impressed by the substantive dialog. This vote on NATO and its future is perhaps the most important foreign policy decision we will make since the end of the cold war. I appreciate the efforts my colleagues have dedicated to this matter. I have long felt that NATO enlargement is a policy whose time is past due. The case for NATO enlargement is indisputable. The accession of Poland, the Czech Republic and Hungary, the only three countries that are the focus of the resolution before us, will, without a doubt, strengthen the alliance. It will eliminate the stabilizing and immoral dividing lines imposed upon Europe by dictators of the past. It will consolidate peace and stability on that continent. A stable and peaceful Europe will benefit the entire transatlantic community, as well as Russia. I could elaborate on these points and other important benefits of NATO enlargement, but I have done that on many occasions in the past. Today, instead, I wish to address a number of arguments that I have heard made directly against this important policy. For example, in the course of our debate it has been incorrectly asserted that the Senate is rushing this important debate and that it remains inadequately prepared to address this issue. This is wrong. Few issues of national security have been as extensively examined by the Congress as well as the public. NATO enlargement has been the topic of countless editorials and opinion pieces in national and local papers. By one estimate, over 1,000 scholarly article opinion pieces and editorials on NATO enlargement have been published in leading journals since 1994. A quick count of editorials and opinion pieces in the New York Times found that it has run some 72 such articles over the past 3 years. A quick survey of the Washington Post found another 90 over the same period of time. In other words, these two nationally syndicated papers have published articles on NATO enlargement at a rate exceeding one every 10 days. This does not take into account the other important national, local journals. I might suggest that those who believe this issue has not been well vetted may not be reading the right papers. Either that or they have not been interested enough in the issue to be aware that a debate concerning this policy has been waged for 3 years. Over the last 2 years, some 15 States--including my first State, Delaware--have passed resolutions endorsing nuclear enlargement. Moreover, this policy has been endorsed by countless civic public policy, political, business, and veteran organizations. I point to a chart beside me, the number of organizations that have supported NATO enlargement. All of our outstanding veteran organizations, the AMVETS, the American Legion, the Veterans of Foreign Wars--just to mention a few--have all endorsed NATO enlargement. We could point to the many other organizations that have done exactly the same. Congress itself has been deeply engaged in NATO enlargement from the very beginning of this policy initiative. In fact, Congress has not only done its homework on this matter, Congress Has led the charge for NATO enlargement. I think that is particularly important to understand, that Congress has been in the lead on NATO enlargement. Its committees have examined in detail the military, intelligence, foreign policy and budgetary implications of this long overdue initiative. Since last July alone, thirteen hearings have been conducted on NATO enlargement by the Senate Committees on Foreign Relations, Armed Services, Appropriations, and Budget. The Senate NATO Observer Group, which I chair with Senator Joe Biden, has convened seventeen times with, among others, the President, the Secretaries of State and Defense, NATO's Secretary General, and the leaders of the three invitee countries. In support of these Congressional initiatives, the Congressional Research Service and the General Accounting Office have produced some 30 objective, non-partisan reports and countless memos on the subject of NATO enlargement. As I said when we began this debate, it is no surprise--indeed, for me, it is a matter of pride--that Congress has legislatively promoted NATO enlargement every year since 1994. Perhaps a good question is how can we ensure that all dimensions of U.S. national security policy benefit from this much public attention and endorsement. The second argument that one often hears falsely asserts that the extension of NATO membership to Poland, the Czech Republic, and Hungary will dilute the Alliance because their military capabilities do not match those of Allied nations. It is true that the militaries of these three countries must be modernized. They do not deny that. That is why these three countries have embarked on military modernization programs that involve regular increases in their defense budgets. And, these programs have been endorsed by NATO's political and military authorities. Earlier this year, I and a few members of the NATO Observer Group met with General Klaus Naumann, a highly respected German military officer who is Chairman of NATO's military committee. He stated that because Poland, the Czech Republic and Hungary are so committed to modernizing their militaries they may sooner rather than later find themselves better equipped and more technologically advanced than some of the current Allies. To see the level of contribution that these countries will make to the Alliance, we need only look at what they have done and are doing today. Already, they are enhancing the Alliance's military capabilities. They contributed forces to Operation Desert Storm. They have forces serving by the side of U.S. Forces as part of S-FOR in Bosnia. They were among the first to commit forces to stand by the United States in the recent stand-off against Saddam Hussein. NATO commanders, including those from the United States, have stated clearly that the admission of Poland, the Czech Republic, and Hungary will increase the capabilities of the Alliance. And this view is shared by some sixty retired four-star admirals and generals, including former Chiefs of the Joint Staff, former Supreme Allied Commanders of Europe, and numerous former Service Chiefs. Mr. President, the facts before us today, and the endorsements of these military leaders, can only leave one fully confident that the admission of Poland, the Czech Republic and Hungary into NATO will leave the Alliance stronger. We can be confident that these three democracies will not only be model members of the alliance but also pro-American Allies. A third argument that has been voiced by some of my colleagues falsely asserts that NATO enlargement threatens Russia, or that we should abandon this policy because Russia perceives it as threatening. The reality is that NATO is a defensive Alliance of democracies. Its decision-making process is consensual, and I find it hard to believe that any one of its members--all democracies--would ever advocate aggression. The fact is that NATO poses no immediate military threat to Russia. U.S. force deployments in Europe, arguably the Alliance's most mobile component, has been reduced by two-thirds since the Cold War. Allied force structures and defense budgets have declined steadily over the last decade. The Alliance has stated that it has no intention to permanently station foreign forces or deploy nuclear weapons on the territories of new member states. Where is the threat to Russia? Those who argue that NATO enlargement threatens Russia have also asserted that this policy directly contradicts efforts to reduce the risk of nuclear confrontation with Russia and to ensure that Russia's nuclear arsenal does not leak out to rogue states. The evidence however shows that this assertion is false. Since 1994, when NATO first announced its intentions to open its membership to the democracies of Central Europe, the risks of nuclear war have not increased, but been reduced. There is no evidence that NATO enlargement has hurt cooperation with Russia on nuclear matters. First, the actual number of Russian and American operational strategic nuclear weapons have continued to decline. In 1990, that number was about 24,000 warheads. Today, that number is in the vicinity of 14,000 warheads, and Moscow is dismantling its strategic nuclear forces at a rate faster than that required by the START I treaty. Second, the Russian government has again reiterated its commitment to ratify the START II treaty, which will further reduce these two strategic nuclear arsenals. Those who note that the Russian parliament, which has voiced its opposition to NATO enlargement and continues to block the ratification of START II, should recognize that the same Duma has blocked START II long before NATO enlargement was formally endorsed by the NAC. And, let me add that the Russian government has agreed to pursue a START III accord once START II enters force. Third, the Nunn-Lugar Threat Reduction Program continues to improve the Russian's control and security of their nuclear arsenal. Indeed, this program has been enthusiastically received by Russia. It stands out as one of the true success stories of Russian-American partnership in the post-cold-war era. Our policies toward Europe must focus on these objective strategic realities and must be structured to enhance economic, political, and military stability in all parts of Europe. That is exactly what NATO enlargement does. That is in our national interest and in Russia's national interest. For those who are still concerned about Russia's fear of NATO enlargement, let me share with you a recent poll conducted in Moscow. Earlier this year, a branch of the Gallup Organization, found that among respondents in Moscow: 53 percent said that Poland should be allowed to join NATO; 57 percent said that the Czech Republic should be allowed to join NATO; and 54 percent said that Hungary should be allowed to join NATO. These polling results are not surprising if one takes into account the fact that NATO enlargement is facilitating unprecedented reconciliation between Russia and its neighbors. The reconciliation now occurring between Warsaw and Moscow and Moscow and Kyev are positive developments for Russian citizens, and they understand this. They also understand that such developments would not be occurring with NATO enlargement. And, let us not forget the open and inclusive manner in which Nato and the West has approached Russia. The Alliance has extended the hand of partnership through the NATO-Russia Founding Act, and today Russian troops serve with NATO forces in Bosnia. The West has extended some $100 billion in assistance since 1991, to help Russia's democratic and economic reforms, and over $2 billion in weapon dismantlement and security assistance. On top of that, Russia has regularly been invited to participate in the G-7 or G-8 meetings. This is hardly--as some detractors might try to persuade--a policy of punishment and isolation. It is false and even misleading to assert that Russia is being surrounded by a ring of isolation. Rather, NATO's policies have been more like a strong magnet drawing Russia out of its historically self- imposed isolation into a growing web of political and military cooperation. Such cooperation holds out the prospect of an entirely new and constructive relationship with a reforming and democratic Russia. Mr. President, I hope that these three points have added clarity to the Senate's consideration of NATO membership. There are few policy initiatives as important as this one. There are few that stand to offer peace-living people throughout the transatlantic community and in Central and Eastern Europe so much hope--hope for greater stability, increased security, enhanced cooperation, and even a collective vision for the future. I encourage my colleagues to support NATO enlargement. History is being made, and for the sake of those who have long-awaited this moment, we must not keep it waiting. Mr. President, I yield the floor. Mr. President, I suggest the absence of a quorum.

Mr. ROTH

Mr. ROTH. First, let me express my gratitude and thanks to my colleague, the junior Senator from Delaware, for his effective leadership in this most important foreign affairs matter. He, of course, speaks as an expert, as one who is the ranking member of the Foreign Relations Committee and, of course, cochairs with me the Senate observer group. I just want to publicly acknowledge the strong leadership role he is playing in what I consider the most important foreign policy matter that will come before this Congress.

Mr. ROTH

Mr. ROTH. Mr. President, I rise to recognize Judge Gregory Sleet, who was confirmed by the Senate earlier today as a District Judge for Delaware. Unfortunately, I did not have an opportunity to personally greet him or his family when they came to the Capitol for his hearing before the Judiciary Committee just over a month ago. But today, it is my pleasure to congratulate Judge Sleet, his wife Mary and their two children on this achievement. Since 1994, Greg Sleet has served Delaware as our U.S. Attorney. From that post, he was appointed by Attorney General Janet Reno to serve as the Vice-Chair of her Advisory Committee. While his record of public service is impressive, so, too, is his previous work in the private sector. You see, Judge Sleet served Hercules Incorporated, an outstanding Delaware company, as legal counsel before becoming our U.S. Attorney. Having worked in the same capacity with Hercules some years earlier, I know first-hand that they hire only the sharpest young lawyers to handle their legal affairs. Mr. President, the Senate needed not even four months to complete our work on Judge Sleet's nomination. I thank Judiciary Committee Chairman Hatch for his efforts to review the nomination in such an expeditious manner. Such prompt action speaks to the quality of the nominee, and I am happy to again congratulate Judge Sleet on the occasion of his confirmation by the Senate.

Mr. ROTH

Mr. ROTH. Mr. President, I'm pleased that we are moving toward passage of this significant bill. The importance of giving American families the resources and means they need to educate their children must be above politics. Before I get into the specific benefits of the bill, let me remind my colleagues that with the exception of several school construction bond provisions--which were newly added this year--all of the concepts in this bill should be very familiar. Mr. President, these concepts should be familiar because we have already endorsed them. The base provisions in the bill--which include the increase in the maximum allowable contribution to an education IRA, the use of the IRA for elementary and secondary school expenses for public and private schools, the tax-free treatment of state sponsored prepaid tuition plans, and the extension of tax-free treatment for employer provided educational assistance--all received bipartisan support from the Senate as part of the Taxpayer Relief Act of 1997. Despite this Senate support, these provisions were dropped from the bill during conference negotiations. Because of opposition from the Administration, these particular elements failed to be included in the final version of the Taxpayer Relief Act of 1997. Today we will show our commitment to these provisions--and to enact what this body has already determined makes good sense for American families. Mr. President, it is important to note that this tax bill is not designed to answer all of the education-related issues that face this country. Those issues are too varied and complicated to be addressed by the federal government. They need to be solved at the state and local level--by schools, teachers, and parents working together. Instead, this bill is designed to build on the innovative concepts that have been introduced in the last few years. Our goal is to improve the tax code so that it provides the necessary incentives to help American families help their children. These are much needed tools. Over the past 15 years, tuition at a four year college has increased by 234%. The average student loan has increased by 367%. In contrast median household income rose only 82% during this period and the consumer price index rose only 74%. Our students--our families--need these resources to help them meet the costs and realize the opportunities of a quality education. The Senate recognized the importance of these provisions less than one year ago, voting in favor of them. I hope that my colleagues continue to recognize just how important they remain. The American people are counting on us. The various provisions of this bill are important measures that will aid our students and parents. The first major change in this bill increases the maximum education IRA contribution from $500 to $2,000. That increase is important on two levels. First, with the well-documented increase in education costs, it is essential that we provide American families with the resources to meet those costs. I have long argued that it is essential to change the savings habits of the American people, and there are few things more important than the education of their children. Not only will saving in this way increase our investment capital, it will increase American's education capital as well. Anything that thwarts either of these objectives is short-sighted. By using the tax code to encourage individual responsibility for paying for educational expenses, we all benefit. The expansion of the education IRA will result in greater opportunities for individuals to save for their children's education. Mr. President, the next major change that this bill makes to education IRAs is that it allows withdrawals for education expenses for elementary and secondary schools and for both private and public schools. As we recognized last year, it is a fundamental principle that a parent should have the right and the ability to make decisions about his or her child's education--to decide basic questions such as how the child should be educated and where the child should attend school. This bill recognizes that just like for secondary schools, we should not establish a priority system where some elementary and secondary schools are favored over others. We should not forget that it is the taxpayer who funds the education IRA--that it is the parent who puts his or her hard-earned money into the education IRA. Mr. President, it seems a matter of common sense, therefore, that the parent should be able to choose how to spend that money. Mr. President, another provision in this bill makes state-sponsored prepaid tuition plans tax-free, not simply tax-deferred. This is a significant distinction, because it allows students to withdraw the savings that accumulate in their pre-paid tuition accounts without paying any tax at all. It means that parents have the incentive to put money away today and their children have the full benefit of that money, without any tax, tomorrow. As I have already mentioned, forty-four states have pre-paid tuition plans in effect, and the other six are in the process of implementing such plans This means that every member of the Senate has parents and students back home who either benefit from this plan right now, or will benefit from this plan soon. Mr. President, the Coverdell bill also extends tax-free treatment of employer provided educational assistance for graduates and undergraduates through the year 2002. This particular program is a time-tested and widely used benefit for working students. Over one million workers across America receive tax- free employer provided education. This allows them to stay on the cutting edge of their careers. It benefits not only them, individually, but their employers and the economy as a whole. With the constant innovations and advancing technology of our society, it is vitally important that we continue this program. The various provisions that I have just described are all ones that members of this body approved last year. They made sense then. They certainly continue to make sense today. Mr. President, the Coverdell bill does even more than address the costs of attending school. In response to concerns from Members on both sides of the aisle, the Finance Committee agreed on some measures to provide targeted relief in the area of school construction. The first provision is directed at high growth school districts. It expands the tax-exempt bond rules for public/private partnerships set up for the construction, renovation, or restoration of public school facilities in these districts. In general, it allows states to issue tax-exempt bonds equal to $10 per state resident. Each state would be guaranteed a minimum allocation of at least $5 million of these tax- exempt bonds. In total, up to $600 million per year in new tax exempt bonds would be issued for these innovative school construction projects. This provision is important because it retains state and local flexibility. It does not impose a new bureaucracy on the states and it does not force the federal government to micro-manage school construction. Mr. President, there is a second bond provision in this bill. That provision is designed to simplify the issuance of bonds for school construction. Under current law, arbitrage profits earned on investments unrelated to the purpose of the borrowing must be rebated to the Federal government. However, there is an exception--generally referred to as the small issuer exception--which allows governments to issue up to $5 million of bonds without being subject to the arbitrage rebate requirement. We recently increased this limit to $10 million for governments that issue at least $5 million of public school bonds during the year. The provision in the Coverdell bill increases the small issuer exception to $15 million, provided that at least $10 million of the bonds are issued to finance public schools. Mr. President, it is clear that the Coverdell bill contains numerous important provisions for the American family. As I have said already, many of these measures are ones that the Senate passed last year. Anyone--students or parents--who is on the front line dealing with the costs of a quality education, must have been disappointed last year when we failed to give them all the tools that they needed. American families understand the need for these measures. They have now been waiting for a year. I am pleased today that we will, once again, address the needs of American families and students. I urge my colleagues to support the Coverdell bill. Mr. COVERDELL addressed the Chair.

Mr. ROTH

Mr. ROTH. Mr. President, I oppose the Levin amendment as it takes away the ability of parents to use educational IRAs to pay for K through 12 school expenses. It runs contrary to the whole purpose of the Coverdell bill, which is to allow parents greater resources to meet the educational needs of their young children. Instead, Senator Levin wants to take these resources and expand the lifetime learning credit from 20 percent to 50 percent for those teachers who participate in technology training. A 20 percent lifetime learning credit is already available to teachers for continuing education, just as it is for members of other professionals. Let me remind my colleagues that the Coverdell bill already contains a provision that allows teachers to receive tax-free technology training provided by their employer, the school. We all agree that it is vitally important for teachers to be proficient in the use of technology in the classroom, but this is not the way to do it. This amendment takes the resources of an expanded IRA from our families, our children, and creates a more distorted and complex learning credit. For these reasons, I oppose this amendment and urge my colleagues to vote against it.