Paul Sarbanes

Mr. SARBANES

Mr. SARBANES. Madam President, I rise in support of S. 1228, the Iran Oil Sanctions Act of 1995. This bill would put sanctions on foreign companies that invest in Iran and thereby help that country develop its oil and gas resources. The increased revenue from such enhanced oil production augments Iran's ability to fund its development of nuclear weapons and its support for international terrorism. Since the Iranian Revolution in 1979, American administrations with bipartisan congressional support have used economic sanctions to hinder Iran's support for international terrorism and to make it harder for that country to get materials and revenues to strengthen its nuclear and conventional weapons programs. Earlier this year, just prior to the Banking Committee's March 16 hearing on our country's economic relations with Iran, the committee learned that then existing restrictions on such relations did not prohibit the Conoco Co. from signing a contract with Iran to develop a huge offshore oil field in the Persian Gulf. The Clinton administration immediately announced that while Conoco's actions were not illegal, they were ``inconsistent with our policy of brining pressure on Iran, both politically and economically to change its unacceptable behavior.'' The President then on March 15 issued an Executive order prohibiting United States persons from entering into contracts for the financing or the overall supervision and management of the petroleum resources of Iran. On May 8, President Clinton issued another Executive order that imposed significant new economic sanctions on Iran, including a prohibition on trading in goods or services of Iranian origin, a ban on exports to Iran, and a ban on new investment or bank loans to Iran. The new prohibitions applied to U.S. persons, wherever they may be, including the foreign branches of U.S. entities. The Clinton administration also urged other countries to support United States efforts to pressure Iran economically and persuaded our G7 allies to avoid any collaboration with Iran that might help that country develop a nuclear weapons capability. A number of foreign corporations, however, are supporting Iran's efforts to increase its oil and gas production. S. 1228 seeks to persuade such companies from assisting Iran as the latter uses its oil and gas revenues to fund behavior harmful to the international community. At the Banking Committee's October 11 hearing on S. 1228, Under Secretary of State Tarnoff told the committee that ``a straight line links Iran's oil income and its ability to sponsor terrorism, build weapons of mass destruction, and acquire sophisticated armaments.'' He also told us that the administration was making great efforts to persuade other nations to cooperate with our embargo of Iran. He expressed concerns, however, that we not enact legislation that would make it more difficult to get that cooperation. Chairman D'Amato assured Under Secretary Tarnoff that he wanted to work with the administration in crafting legislation that would persuade foreign companies to cooperate with our embargo of Iran. Prior to the December 12 committee markup of S. 1228, Chairman D'Amato, Senator Boxer, myself, and other members of the committee worked with the administration to develop a bill the administration could endorse. Agreement was reached and on December 12, the committee adopted a substitute version of S. 1228 that President Clinton supports. It does not target trade but rather new investment contracts that enhance Iran's ability to produce oil and gas. The bill also provides the President the necessary flexibility to determine the best mix of sanctions in a particular case, and to waive the imposition--or continued imposition--of sanctions when he determines it is important to the national interest to do so. In using these authorities, the President is directed to consider factors such as the significance of an investment, the prospects for cooperation with other governments, U.S. international commitments, and the effect of sanctions on U.S. economic interests and regional policies. Finally, S. 1228 authorizes the Secretary of State to provide advisory opinions on whether a proposed activity would be covered to avoid unnecessary uncertainty on the part of companies and friction with allies. This bill was reported out of committee by a vote of 15-0. It is a bill I support because it will make it more difficult for Iran to fund its efforts to develop weapons of mass destruction and its support for international terrorism. I urge its enactment.

Mr. SARBANES

Mr. SARBANES. Mr. President, as we are all well aware, the country is experiencing the second partial shutdown of the Federal Government this year. Last November, 800,000 very dedicated men and women were prohibited from coming to work, were called nonessential and had to endure 6 long days full of stress and uncertainty. Now, with Christmas just a week away, I regret we find ourselves in the same situation. While the current shutdown affects fewer Federal employees, some 280,000, their concerns and fears are no less real than they were 4 weeks ago. It is outrageous that Federal employees, many of whom are Marylanders, continue to be the unwilling victims of the ongoing budget battle between the congressional leadership and the administration. How are people who live from paycheck to paycheck going to meet their mortgage payments or tuition payments for their kids who are in school? Yesterday, Mr. President, the Washington Post published an editorial which, in my view, clearly articulates the harmful effects of a shutdown on our work force. We have a national interest in having a first-rate Federal service. You do not want a second-rate Federal service. But, if you continue in effect to assault people, keep them in this state of agitation and anxiety and fear and apprehension, you are well on your way to bringing about a second-rate service. People have other opportunities. Good people have other opportunities and will leave to take them. Good people will not come in because they do not want to live in this environment and for that we will all suffer. At some point I hope people will reach the conclusion that Federal employees have a reasonable role and place in the workings of our system and they ought to be treated with a measure of dignity. It is important that we consider seriously the implications of a shutdown, not only on the daily operations of the Federal Government, but on the long-term performance and perception of civil servants and the public service they provide. I ask that the text of the article be printed in the Record. The article follows: [From the Washington Post, Dec. 17, 1995] A Shutdown's Other Costs There is more to the stalemate of the government than the failure of the President and the GOP to agree on a seven-year balanced-budget plan. The furloughing of federal employees exacts a terrible cost from a valuable work force. Nothing can be more demoralizing to the men and women who look out for the nation's veterans, hunt cures to deadly diseases, keep our air and water clean, send out the Social Security checks and otherwise serve the nation in ways most of us don't think about, than to be told that despite their fidelity and contribution, they are really ``nonessential.'' That insult, being added to all the other guff federal workers catch in the halls of Congress, on talk shows and from television comics, comes as an undeserved kick in the teeth from their own government. Federal employees have every right to feel as if they are the real pawns in this sorry mess. One day they are proud and productive members of the federal government, protecting the health and safety of the nation; the next day they are handed a slip of paper and sent home with no idea when they will be paid. That is no way to motivate a work force, let alone demonstrate respect for it. The daily payroll cost for the furlough of employees is no small matter--even if employees are paid retroactively for their days out of work. But there are consequences of the cavalier treatment of the federal work force that will be felt long after the government is back in business. A government that is in gridlock--worse yet, shuttered-- does little to bolster a political system already losing the public's confidence. It downright debilitates its own work force. As a furloughed federal economist said during the last interruption, ``Can you imagine a Fortune 500 company operating like this? If they had a dispute between their board of directors and their president, and they sent everybody home?'' And in addition to the effect on morale, can such interruption be supposed to be a help to the work they do? In an open letter to federal employees, President Clinton and Vice President Gore signaled their recognition of the shabby treatment afforded the federal work force: ``you remain good people caught in what Churchill called the `worst system of government devised by the wit of man, except for all the others,' '' they wrote. Good people--and they are-- should not be made to pay for the failures of their leaders. Getting federal employees out of the middle and back on the job is the way to respect them.

Mr. SARBANES

Mr. SARBANES. I ask that 5 minutes be yielded to me.

Mr. SARBANES. Mr. President, I understand that a colloquy was entered into earlier, which I believe misstates the legal status of a provision in this bill. May I inquire of the Democratic manager, who determines the validity of a claim submitted under section 604(a) relating to Iraq claims?

Mr. SARBANES. I thank the Senator.

Mr. SARBANES. Mr. President, let me say that the way this situation developed is, the Senator from North Carolina, the chairman of the Senate Foreign Relations Committee, reported from the committee a reorganization bill on a 10-8 vote, a straight party-line vote. There was no bipartisanship on that issue. He then sought to bring that bill up on the floor and was not able to get 60 votes in order to invoke cloture. Now, pushing the other side to invoke cloture is not a tactic strange or unfamiliar to the distinguished Senator from North Carolina. He is one of its more avid practitioners here in the Senate. So I am not moved by the fact that his measure, in effect, was blocked because they were unable to produce the 60-vote margin. They tried to do it and fell short on two occasions. Not having been able to get his way on this important substantive matter about which there were great divisions, a lot of strong feelings, and a lot of differing views about what was appropriate, the Senator from North Carolina proceeded to take the ambassadorial nominees hostage. He shut down the work of the Senate Foreign Relations Committee, of which he is the chairman, holding up such important matters as the START II treaty and the Chemical Weapons Convention. In other words, because he could not get his way on a substantive matter, he then refused for 4 months to allow the committee to carry out its functions and responsibilities. We were not able to do any business--no legislation, no nominations, no treaties. This is hostage- taking par excellence. Then we are being told, you have to negotiate. The United States says to the world, if you take our people hostage we will not negotiate under those circumstances. We will not be coerced that way. Now, I have never, in the time I have served here, encountered anything comparable to what has occurred in this instance, in terms of grinding the whole range of work to a halt--particularly by the chairman of a committee, which, after all, carries with it certain important responsibilities. I remember the former chairman of the committee was on the floor when the Middle East Peace Facilitation Act was being subjected to this very tactic to which I made reference. It was like a rolling snowball. Anything that came along, the Senator from North Carolina encompassed within his rolling snowball and sought to hold hostage in order to increase his leverage to get his way on the reorganization measure. So we encountered this with respect to the Middle East Peace Facilitation Act, in addition to holding the ambassadors hostage, in addition to these treaties that were left to languish, in addition to whatever legislation was in the committee. In fact, at that time the former chairman of the committee, the distinguished Senator from Rhode Island, said, ``I absolutely agree it is inappropriate to link MEPFA to the State Department legislation. I do not recall in the years I have been in the Senate, 35, or as chairman of the committee, any similar action being taken.'' I then said, ``Will the chairman yield on that point? When did the former chairman, if I may say, the very distinguished former chairman, go on the Foreign Relations Committee?'' Mr. Pell said, ``I think it was 1964.'' And I asked, ``So the Senator has been on it more than three decades?'' And Senator Pell said, ``Correct.'' And I inquired, ``Has my colleague ever seen anything comparable to what is now taking place?'' Senator Pell said, ``No, and that is the point that bothers me.'' I said, ``I thank the Senator,'' and Senator Pell went on to say: I think we should deal with the question of extension of MEPFA on its merits and the merits clearly lie with the quick passage of the short-term extension. We should not, as Senator Kerry noted, trifle with the peace process for the sake of reorganizing our bureaucracy. We should pass the MEPFA now with no linkage. In this regard, I am particularly struck by the words of the Senator from Maryland. I know I am correct in saying I am the only former Foreign Service officer in the Senate. Because the Foreign Service was only created in 1926 under the Rogers Act, I think I am the only Foreign Service officer ever to have served in the Senate. I would also point out this linkage that is being created by the chairman of the committee not only sets a bad precedent but is a linkage that should never have been made in the first instance. It has not been done in the past, and it would be a great sin to move this way now. Now, I agree completely with those remarks of the distinguished Senator from Rhode Island. The Senator from North Carolina, unable to get the votes to invoke cloture--a process, as I indicated earlier, he has used himself repeatedly on the floor of the Senate--then decided to use that bill as leverage. He was saying, in effect, ``I will take every other aspect of business of the committee hostage. No ambassadors, no treaties, no legislation, no Middle East Peace Facilitation Act. You will have to come to terms with me on this reorganization.'' Now, looking at the national interests of the United States, the fact of the matter is that ambassadors and treaties, which are important to our Nation's interests and upon which we should have been acting, were delayed over the controversy with respect to this legislation. Now, I understand the Senator wants his reorganization bill. A number of us disagree with that. Fine, I am ready to fight out that issue on that legislation. But, to change the pressures, to increase the leverage, he decided instead to do a hostage-taking action, which is exactly what occurred here. Over the past 6 months there has been a long and growing list of ambassadorial nominees--currently 19--who had their hearings and were ready to be reported. Many of them had their hearings in July and have been waiting since then--it is now December--to be approved by the Senate. Meanwhile, the countries to which they would go have no American ambassadors on the scene, no heads of mission, no one coordinating the American presence in that country. Now, most of these ambassadors were career members of the Foreign Service, people who have committed themselves to serving our Nation in these very important ways. Mr. President, 15 of the 19 are career officers. They included nominees for a number of major posts, including Malaysia, Cambodia, Thailand, Indonesia, Pakistan, Oman, Lebanon, and South Africa. Our former distinguished colleague, Jim Sasser, was nominated to go to China. Our relationships with all these countries have been suffering because we have no U.S. ambassadors there. Why are the ambassadors not there? Not because questions are being raised about a particular ambassador and his or her qualifications, which of course is a legitimate reason. If someone is holding up an ambassador on the floor of the Senate because they do not think that person is qualified, or because of some other difficulty directly related to the nominee, that is a fight that ought to be fought with respect to that ambassador. None of that has happened here. No one was asserting that any of these ambassadors had any deficiency. They were all being held as a pressure tactic on the reorganization bill. Hundreds of Foreign Service officers recommended for promotion were also being held up. These are career people. They have committed themselves to the Foreign Service. There is an established process by which they move forward within the Foreign Service. The promotion list comes to the Senate and we act on it. Yet all of them were being held up. Obviously, this is an unfair situation to the individual nominees, who have absolutely nothing to do with the reorganization proposal by the Senator from North Carolina. In addition to being unfair to the nominees and their families, it is contrary to the interests of the United States. We need to have our ambassadors out there in the field promoting U.S. interests such as human rights, conflict resolution, antiterrorism, counternarcotics cooperation, and increasing U.S. exports. We need them there to respond to incidents before they become crises, to assist U.S. tourists and business people, to promote U.S. goodwill, and to spread American values and ideals. The fact that they are not there and have not been there for a number of months causes friction in our diplomatic relations and erodes and undercuts the ability of the United States to influence developments around the world. Mr. President, I am further concerned because I think that taking people hostage this way is yet another attack on the career Foreign Service, which is extremely unfortunate. In fact, we received a letter back in August from the American Academy of Diplomacy with respect to the ambassadors that were being held up. Let me just quote that letter, which was written to Chairman Helms of the Senate Foreign Relations Committee: Dear Mr. Chairman: The Academy has noted, according to press reports of August 2, that following a deadlock in the Senate on the State Department authorization bill, a hold would be placed on 17 ambassadorial nominations and that committee action was being canceled or postponed on 22 other nominations subject to Senate confirmation. The Academy has taken no position on the authorization bill which is currently in contention. But it does not believe the country's larger interests are served by linking action on that bill to the ambassadorial nomination process. Doing so would have the United States without appropriate representation in these countries at a time of dramatic, historic global change. We believe that decisions on America's diplomatic representation abroad, including both the timing of such action and the qualifications of those nominated, should be made strictly on the basis of our interests in the country involved. Frankly, I think this willingness to make pawns out of ambassadorial nominees, most of whom, as I indicated, are career people, is a denigration of the career service. I am increasingly concerned about the extent to which that is taking place and is engaged in by some of my colleagues. At an earlier time, the Senator from Texas asserted that he favored deep cuts in spending for diplomatic activities to curb the department's alleged penchant for ``building marble palaces and renting long coats and high hats.'' Such an attack on our professionals is extremely unfair. They in fact are risking their lives. Some are losing their lives. Yet, we have Members of this body who attack them for supposedly wearing long coats and high hats and living in marble houses. Ambassador Robert Frasure, who had so much to do with moving the efforts toward peace forward in the Balkans, lost his life in Bosnia. As the State Department spokesman put it, when Ambassador Frasure was killed ``he was riding in an armored personnel carrier and wearing a flak jacket, not striped pants.'' Ambassador Frasure's widow wrote a very moving letter to the Washington Post, in the course of which she said, in defense of her husband--it should have never been necessary for her to have to defend him--but in the course of which she said: Our diplomats are some of the finest, bravest, most courageous people I have ever met. In the past 10 years alone, my husband and I mourned the death of seven of our friends and Embassy colleagues. She then listed them, and went on to comment about the remarks about long coats and high hats and marble palaces: I am outraged also because I remember the dangers as well as the many hardships our family endured in Bob's 20-year career. That is from a very moving letter by Katharina Frasure, the widow of ambassador Robert Frasure who came to his untimely and much-grieved death in Bosnia. In fact, over the past 25 years more American ambassadors than generals have been killed in the line of duty. So I think we ought to treat the Foreign Service with a greater measure of respect. Holding up ambassadors for reasons unrelated to their qualifications or their mission is not the way we ought to be doing business here. And I regret that these able men and women were held hostage in order to increase the pressure and the leverage with respect to an unrelated piece of legislation. In addition to the ambassadors, he also held hostage some very important treaties--the START II treaty and the Chemical Weapons Convention. We passed amendments and resolutions right here on the Senate floor expressing our desire to see these treaties ratified and implemented at the earliest possible date. As Spurgeon Keeney, the head of the Arms Control Association, recently wrote: Failure to complete Senate action promptly could delay for years the entry into force of these agreements with great disadvantage to U.S. security. U.S. security is being disadvantaged by this holdup. The START II treaty, from all testimony and from all analysis, clearly serves our national interest. It is a very important measure in terms of reducing the nuclear arsenal, and bringing the nuclear danger under greater control. Yet, that treaty has been held up over this reorganization issue. Let me turn to the substance of this bill. I understand that the distinguished Senator from Massachusetts, Senator Kerry, labored under a very difficult assignment and under very trying circumstances. He has received a lot of unfair criticism, much of it from the other side. He was praised today, but along the way he was sharply criticized, which I think was very unfair to him. The authorization levels in this legislation, in my judgment, impose such deep cuts in administrative expenses that we run the risk of having, as the American Foreign Service Association said, ``hollowed- out agencies''. They argued in a letter to the members of the committee that actually what was happening was a shift from streamlining agencies to hollowing-out agencies. And they then make the point, and I quote: It makes little sense to AFSA that at a time when American leadership and ideas are needed and welcomed throughout the world, we would undercut our ability to operate abroad. Lack of adequate funds and staff to actively represent its national interests abroad send the wrong message. The costs of fighting totalitarianism during World War II and the Cold War were extremely high. Having won those wars, we cannot now afford to turn our back on the world or sacrifice our hard- fought victories by failing to adequately fund diplomacy--our country's first, most cost effective, and least risky line of defense in these dangerous times. The amount authorized here for diplomatic and consular programs at the State Department is $30 million below the level in the Commerce- Justice-State appropriations conference report, $60 million below the administration's request. These are funds needed to assist American travelers abroad, to process visas, to keep open consulates, conduct diplomatic affairs. Funding for salaries and expenses at USIA is also cut drastically. The same is true at the Arms Control and Disarmament Agency and at the Agency for International Development. In my view, the cuts being proposed here are excessive and will result in impeding our ability to carry out U.S. foreign policy effectively overseas. I agree with the American Foreign Service Association's assessment that these cuts will lead to hollowed out agencies at the very time, with the end of the cold war, that there is an opportunity for the skillful and effective use of diplomacy. At the very time when American leadership and ideas are needed and welcomed throughout the world, we would undercut our ability to operate abroad. I think this is an important issue. People get up on the floor and they make speeches about America's leadership in the world. Then they fail to provide the wherewithal, or the resources with which to exercise that leadership. Many seem to think that leadership only exists in the military sphere, not recognizing the important accomplishments that can be done in the political and diplomatic sphere, and the interaction between the political and diplomatic sphere and the military sphere. In addition to these funding levels, which I think are a very basic failing with this legislation, there are other substantive provisions that remain deeply troubling. One section requires massive RIF's by USIA and AID in 1996 and 1997; in one instance by more than 50 percent. That, in effect, would finish the Agency. There has been no study of consequence to support the effort to abolish these agencies that is at all comparable with the studies that were made in establishing the agencies to begin with. If one goes back and looks at the process of analysis that was made when the decision was made to establish these agencies, and the rationale that was given--much of which I think remains valid, but if you want to argue that, fine--but there is no comparable counterpresentation to support eliminating the agencies. Actually, there was a commission that recommended AID be eliminated, and now the head of that commission is in favor of keeping it, particularly on the basis of the very significant reforms that have been made at AID under its present administrator, Brian Atwood. This legislation places onerous new conditions on our participation in the United Nations. It requires the withholding of 20 percent of our contributions to the United Nations, 50 percent of our contributions for assessed peacekeeping, and 100 percent of our contributions for voluntary peacekeeping, until an extensive list of certifications is made. The United States, unfortunately--I regret to say this--is now the largest deadbeat at the United Nations in terms of meeting its obligations. Yet we repeatedly turn to the United Nations in order to accomplish important objectives, in Cambodia, Angola, El Salvador, and on and on around the world. We should not forget that the United Nations cannot take any significant action if the United States does not concur with it because we can simply veto it in the Security Council. There is a also very troubling provision in section 604 relating to Iraqi claims. This is a complicated issue. It has been the source of intensive negotiations, but it has very serious national implications. Briefly, the situation is as follows. When Iraq invaded Kuwait, the United States froze all Iraq's assets in United States banks. The number of claims on those assets from U.S. veterans and business people far exceeds the amount of the frozen funds. Yet there is a provision in this legislation to allow a small group of claimants to come in and get 100 percent of their money, leaving less available for the veterans and other businesses who have equally valid claims. There will not be enough money left to go around for the rest of these people. The Bankers Association for Foreign Trade wrote, calling the amended language ``bad public policy.'' They oppose it ``not only because it would give preference to a small, select group of unsecured creditors as against others similarly situated. More importantly, it would inevitably increase the cost of trade finance for U.S. exporters relative to their foreign competitors.'' I close by again expressing my respects to the Senator from Massachusetts for his hard work. I think the managers' amendment is an improvement to the bill itself. I do not for a moment contest that. But I still think that overall, this legislation is heading in the wrong direction. It may be less bad, and a lot of very skillful work was done by the Senator from Massachusetts to bring that about. It was an assignment, in effect, handed to him, to which I think he responded with great skill. But I do not think that this legislation warrants our support. There is every expectation when it goes to conference it will only get worse. The House bill with which it will be conferenced includes a whole host of objectionable provisions. So, in closing, I have a number of letters, some of which I will have printed in the Record. I ask unanimous consent to have them printed in the Record at the conclusion of my remarks.

Mr. SARBANES. The various private voluntary organizations that are engaged in overseas development, Bread for the World, Oxfam, InterAction, and other similar groups, all indicate their opposition to this legislation. I urge my colleagues to oppose it. I yield the floor. Exhibit 1 Oxfam America Urges Rejection of S. 908 As a privately funded development agency, Oxfam America supports self-help projects to combat hunger and poverty in 31 countries of Asia, Africa, Latin America and the Caribbean. At the same time we believe it is very important that the US Agency for International Development maintain its ability to offer significant support for poverty alleviation, basic infrastructure, demining and health programs which are beyond the financial capacity of non-governmental organizations and which can determine the long-term success of smaller NGO efforts like those of our local partner organizations. For these reasons Oxfam America is seriously concerned that under S. 908, the State Department authorization bill, USAID will share a five-year budget cut of $935 million with the State Department's other two independent agencies. Although we understand that this budget formula was devised as an alternative to a mandated merging of the three independent agencies, we fear that such cuts, on top of current year reductions, will destroy the US commitment to offer a meaningful level of fundamental development assistance to the poorest countries. Further, we are aware that passage of S. 908 will result in conference with H.R. 1561--a bill which incorporates a foreign aid authorization for the first time since 1985. We understand that in addition to a 30 percent across-the-board cut in development assistance, H.R. 1561 includes many regressive foreign aid authorization measures. With passage of S. 908, the Senate would therefore face compromise with such provisions without ever having debated and passed its own foreign aid authorization legislation. From Oxfam America's perspective, S. 908 poses an unacceptable threat to the United States' ability to significantly reduce hunger, misery and human underdevelopment as the 21st century dawns. Oxfam America urges senators to vote against the passage of

Mr. SARBANES. I listened with a great deal of interest to the Senator from North Carolina. First of all, let me say that in the last 6 months of the Bush administration we confirmed 63 ambassadorial nominees. The Senator said there were 12 that were not confirmed. So that would be 63 out of 75, which is 84 percent. The Senator has allowed no ambassadors to be confirmed--not 10 percent, not 20 percent, not 40 percent, not 60 percent, not 80 percent, not 84 percent. None. None at all. Some of the nominees that were not confirmed at the end of the Bush administration were not ambassadorial nominees, but nominees to commissions and boards. In any event, the Senator said there were 12 that were not confirmed. Sixty-three were confirmed over the last 6 months of the Bush administration, 84 percent. The Senator from North Carolina has held everyone hostage. He will not allow any of them to go through, even though we have very important national interests with respect thereto. The Senator was given two votes in the Senate in trying to get to his reorganization bill--votes of 54 to 45. The Senate refused to invoke cloture and to go to that legislation. Having been thwarted in that sense, the Senator then set out on his hostage strategy and held up the ambassadors and held up the treaties, in my view putting at risk very important national security interests. Mr. President, I ask unanimous consent to have printed in the Record a column from the Arms Control Association newsletter following my remarks.

Mr. SARBANES. Mr. President, in that newsletter it says: Prompt Senate approval of START II--the treaty that would reduce the Russian strategic threat to the United States from some 8,000 to 3,500 nuclear warheads--is becoming increasingly doubtful despite overwhelming bipartisan congressional support. Senator Jesse Helms (R-NC), asserting his power as chairman of the Senate Foreign Relations Committee, is holding this important treaty, as well as the Chemical Weapons Convention, hostage to passage of unrelated legislation. Failure to complete Senate action promptly could delay for years the entry into force of these agreements with great disadvantage to U.S. security. And I underscore that concluding phrase ``with great disadvantage to U.S. security.'' Finally, I say to my colleague from North Carolina that, as chairman of the committee, it seems to me, the Senator has certain responsibilities. To hold the balance of the work of a committee hostage because the Senator has not been able to get his way on a particular piece of legislation is not a very efficient way to carry out the work of the committee. Obviously, it was a tactic used to heighten pressure, in a sense, a coercive tactic. And I very much regret that it occurred. I yield the floor. Exhibit 1 [From Arms Control Today, Oct. 1995] Holding U.S. Security Hostage (By Spurgeon M. Keeny, Jr.) Prompt Senate approval of START II--the treaty that would reduce the Russian strategic threat to the United States from some 8,000 to 3,500 nuclear warheads--is becoming increasingly doubtful despite overwhelming bipartisan congressional support. Senator Jesse Helms (R-NC), asserting his power as chairman of the Senate Foreign Relations Committee, is holding this important treaty, as well as the Chemical Weapons Convention (CWC), hostage to passage of unrelated legislation. Failure to complete Senate action promptly could delay for years the entry into force of these agreements with great disadvantage to U.S. security. By refusing to schedule any meetings, Helms has stopped all action before his committee in an effort to force the administration to accept his plan to integrate into the State Department three independent agencies, the Arms Control and Disarmament Agency (ACDA), the Agency for International Development and the U.S. Information Agency. Senate approval of START II, which Helms has not opposed, could be obtained with little or no opposition as soon as a formal committee markup of the resolution of approval can be scheduled. But until Helms relents, the United States cannot demonstrate to Russia and the world its support for reductions in strategic nuclear forces. The multilateral CWC, which will ban development, production and stockpiling of chemical warfare agents as well as their use, may require a final hearing to resolve some questions. But, under the able leadership of Senator Richard Lugar (R-IN), the necessary resolution of approval should be easily obtained. Because many countries are awaiting U.S. ratification, Senate inaction prevents the early entry into force of this agreement, which universally bans possession and use of the ``poor man's nuclear weapon.'' Senator Helms is reportedly willing to reduce the ransom to only two of the three threatened agencies with the choice left to the administration. The White House has properly declined to bargain with hostage-takers and vowed not to yield on this issue. However, the longer this standoff lasts, the less likely any action will occur in time to influence favorable Russian action on either treaty. The prospects for START II ratification in the Russian Parliament are much more precarious than in the U.S. Senate, notwithstanding Helms' maneuvering. A narrow window of opportunity for action appears to exist for the next month or two before the Russian Parliament adjourns to prepare for mid-December elections. While the makeup of the next Parliament cannot be predicted, it may well be even more nationalistic and more hostile than the present body to proposed NATO expansion, military action against the Bosnian Serbs and reduced U.S. economic support. President Boris Yeltsin has strongly endorsed START II, subject only to the condition that the ABM Treaty remain in force. Although members of the Russian Parliament have attacked the agreement as biased against Russia, support for the agreement from the Russian military has helped counter much of the criticism. The military recognizes that it does not need and cannot afford its current strategic force structure and appreciates the value of maintaining strategic parity with the United States. Faced with a more nationalistic Parliament and U.S. endorsement of a national ABM system, the Russian military cannot be expected to carry the torch for START II into the post-Yeltsin era. Delay invites unanticipated, disruptive events to intervene. Progress on a comprehensive test ban was interrupted by external events in the Eisenhower, Kennedy and Carter administrations. START I was signed by President George Bush in July 1991, but entry into force was delayed until December 1994. START II, signed by Bush in January 1993, has been delayed first by the problem of resolving the nuclear status of Belarus, Kazakhstan and Ukraine, and now by the actions of a single cantankerous senator. A future Russian Parliament may be the next barrier. But Russia's uncertain future is all the more reason to move promptly to pin down these gains for U.S. and international security before unanticipated events make START II's entry into force impossible. These truly bipartisan treaties, which were negotiated and signed by former President Bush and nurtured by the Clinton administration, must not be casually sacrificed as hostages in guerilla political warfare. The Senate Republican leadership has a clear obligation to persuade Helms to release them without further delay so the Senate can perform its constitutional role in foreign policy. If the Republican leadership acquiesces in this exhibition of irresponsible personal politics, it will not only have relinquished its deserved share of credit for the treaties, but it will have to accept responsibility for this blow to U.S. security.

Mr. SARBANES

Mr. SARBANES. Mr. President, I rise today in opposition to the conference report on the VA, HUD-independent agencies appropriations bill for fiscal your 1996. While this agreement is an improvement over the bill that passed the Senate earlier this fall, it still fails to provide adequately for a number of programs which are essential to the fulfillment of many of our national priorities. First, the agreement before us today represents a major step backwards for the environment. This legislation proposes to cut the budget for the Environmental Protection Agency by $1.7 billion, fully 21 percent below the levels enacted in fiscal year 1995. This would significantly undermine the agency's ability to administer and enforce environmental laws and perform its critical mission of protecting public health and the environment. Although most of the harmful House riders in the bill have been stricken, language with similar intent remains in the conference report, including language which would attempt to undermine the Community right to Know Act of 1986. Under this conference report, Maryland alone, would lose over $14 million in funding required for substantial upgrades to long outdated sewage treatment facilities--projects which will have a direct impact on the water quality of the Chesapeake Bay, our coastal beaches and bays, and other local waters. Provisions in the underlying measure would cut EPA's enforcement and compliance assurance by 25 percent which would severely impact upon the agency's ability to inspect industrial and Federal facilities in Maryland and prosecute violations. Mr. President, it is my view that this bill unfairly singles our EPA to bear a disproportionate share of the deficit reduction burden. It will not just decrease the rate of increases, but will also severely reduce EPA's funding. I am also very concerned that this legislation would terminate funding for the national service program. Signed into law on September 21, 1993, the National Service Act has helped to renew the ethic of civic responsibility and the spirit of community service while also providing critical assistance to needy communities throughout the Nation. The measure has encouraged and provided the opportunity for thousands of Americans to give of themselves for the greater good while earning money to further their education. In my view, the legislation effectively merges education and service, two critical components of a healthy society. Eliminating funding for this successful program reneges on our commitment and our responsibility to provide leadership and opportunity in national service. AmeriCorps, the centerpiece of the national service program, is not one large Federal program, but a network of locally developed and locally managed service corps which gives thousands of young people the opportunity to serve their country while improving their own lives and those of their neighbors. Moreover, the initial investment we have made has encouraged increased private sector involvement in community service programs, including AmeriCorps. It is my view that those who participate in national service represent the best of our Nation. At a time when we, as a society, are searching for ways in which to strengthen our families and our communities, it would be foolhardy to abandon the national service initiative. AmeriCorps volunteers are taking part in the oldest and best of America's traditions--the spirit of service--and they deserve our support. Mr. President, this legislation also includes large cuts in Federal housing programs. The VA-HUD appropriations conference report before us contains significant reductions in public housing modernization, public housing operating subsidies, severely distressed public housing programs, homeless assistance programs, incremental housing assistance, programs for distressed multifamily housing, and salaries and expenses. The funding levels for housing programs included in this bill are inadequate given the housing needs of low-income Americans and the community development needs of our Nation's communities. There is no evidence that the number of homeless people in our society is declining. In fact, available evidence suggests that the number of homeless families with children are increasing. Waiting lists for public and assisted housing remain years long in many places around the country. Too many of our neighborhoods are plagued with vacant homes, aging and decaying infrastructure, and high levels of social distress. HUD's programs, which are being cut severely in this conference report, address these important national needs. The funding cuts included in this bill will make it that much harder to resolve some of HUD's problems and may, in fact, exacerbate these problems. HUD will need sufficient funds to rebuild the management capacity of the troubled public housing authorities, tear down and replace the aging stock, and address the housing needs of those who currently live in the buildings. Likewise, in order to address the embedded losses in the insured multifamily housing portfolio, the Federal Government should invest resources now in order to save money in the future. If the Federal Government walks away from its longstanding involvement in these buildings, there will be negative consequences for the residents, for the buildings, and for the surrounding neighborhood. Finally, I am concerned that this bill provides nearly $55 million less than the funding level requested by the administration for staffing and management resources--even though HUD currently has severe staffing shortages. I am deeply concerned that these cuts will harm HUD's ability to meet its mission and, at the same time, resolve some of the management problems that confront them. Significant cuts in staffing and management resources in advance of restructuring the Department's programs and reducing its workload are, at best, unwise when HUD employees are attempting to manage Government commitments of nearly $1 trillion on behalf of American taxpayers. Mr. President, with respect to funding for the Department of Veterans Affairs, while I am pleased that the conference report eliminated a provision that would have limited the service-connected compensation paid to certain incompetent veterans who have no dependents, I remain deeply concerned about the overall funding levels provided in this legislation for veterans programs. Although this measure provides an increase in funding for VA medical care above the fiscal year 1995 level, the $400 million increase does not come close to the level necessary to provide current services. Put simply, this would translate into a drastic cutback in services provided by VA and substantially fewer veterans being treated. We owe a considerable debt to our Nation's veterans and, in my view, the medical care funding in this measure reflects an abandonment of the Federal Government's commitment to them. I also am concerned with the appropriation in the conference report for the general operating expenses [GOE] account which funds the administration of all VA benefits other than medical care, such as compensation, pension, and educational assistance. The funding level for GOE in this measure represents a reduction of more than $42 million from fiscal year 1995. This decrease in funding will seriously impair VA's ability to make progress in reducing the current backlog of pending claims and, in fact, may result in a reversal of the progress the VA has made already in this important area. Finally, I note the discontinuation of the U.S. Court of Veterans Appeals pro bono representation program. For the past several years, this program has fulfilled a critical need, providing representation for hundreds of veterans who have appealed the denial of their benefit claims to the Court of Veterans Appeals, and who otherwise would have been without counsel. The elimination of this program would be a severe loss, leaving low-income veterans, the majority of all veterans who file appeals, to handle their cases without legal assistance. Mr. President, it is clear that the conference report before us fails to provide adequate funding for many programs critical to the future of our Nation and the health and well-being of its citizenry. I would urge my colleagues to join me in opposition to this legislation.

Mr. SARBANES

Mr. SARBANES. Mr. President, today I am introducing legislation, together with my colleague, Senator Mikulski, to help address a serious pollution problem--acidic runoff from abandoned coal mines--which continues to degrade the water quality of our Nation's rivers and streams. My legislation would provide States with increased flexibility to utilize their allocations under the Abandoned Mine Reclamation Fund for environmental remediation activities. Abandoned mine drainage is the unfortunate legacy of coal mining in the years before environmental laws were enacted requiring coal companies to reclaim mined land. After the coal was extracted, the land was left riddled with coal waste, known as gob piles, and pock-marked with holes. The mining activity also unearthed sulfur compounds and metals such as aluminum, manganese and iron. When exposed to the elements, the sulfur compounds produce sulfuric acid which in turn leaches metal loads into the streams, poisoning the water and killing fish and plant life. There are in excess of 7,600 miles of streams in 11 States that are adversely affected by abandoned mine drainage. In the Appalachian region, which suffers the most serious mine drainage problems, the acidic runoff has left a major segment of our Nation's river, the Potomac River, virtually devoid of life. Much of the North Branch of the Potomac, from its headwaters near Kempton, MD, to the Jennings Randolph Lake, is biologically dead. Nearly 700 miles of the North Branch's streams are currently incapable of supporting fish and other aquatic life because of the drainage. Along this stretch of the Potomac there are over 4,000 acres of abandoned mine lands, including the worst offender, Kempton Mines, which discharges approximately 3 million gallons of abandoned mine drainage each day. The Surface Mining Control and Reclamation Act of 1977 [SMCRA] established a regulatory program for current mining activities requiring land reclamation and control of acid drainage at active mine sites to assure that today's mines do not become tomorrow's abandoned mines. It also established an abandoned mine land reclamation [AML] fund, paid for by a fee imposed on current mining production, to address problems caused by abandoned coal mines. Current law and regulations require that priority be placed on alleviating public health and safety problems posed by abandoned mine lands. However, States are authorized to set aside up to 10 percent of their allocations under the AML fund annually into a special account for addressing adverse environmental effects caused by abandoned mine acid drainage. These funds are insufficient to clean up the acid mine drainage problems. My bill would provide greater flexibility for States to use existing abandoned mine reclamation funds for acid mine drainage, as well as health and safety problems. Specifically, it would increase from 10 to 30 percent, or $1 million, whichever is greater, the portion of a State's AML funds that could be set aside for addressing environmental problems caused by acid drainage. Mr. President, great progress has been made in restoring the health of America's rivers in the 3 decades since President Lyndon Johnson vowed to make the Potomac a national model for restoring the Nation's waters. Today, much of the Potomac is a haven for fish and wildlife and provides tremendous recreational and economic opportunities. However, the North Branch of the Potomac remains in marked contrast to these improvements. The States of Maryland and West Virginia and the Interstate Commission on the Potomac River Basin have been working together in a cooperative effort to restore the North Branch's health, thereby improving the quality of life and opening new opportunities for economic development, tourism and outdoor recreation. Unfortunately, the job cannot be accomplished without the assistance made available under this legislation. The North Branch of the Potomac is only one of many areas that could greatly benefit from improved environmental conditions made possible by this measure. I urge my colleagues to join me in supporting this bill in order to provide States with the flexibility and additional resources needed to better address environmental problems associated with acid mine drainage. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. SARBANES

Mr. SARBANES. Mr. President, today I am introducing legislation, together with my colleague, Senator Mikulski, to help address a serious pollution problem--acidic runoff from abandoned coal mines--which continues to degrade the water quality of our Nation's rivers and streams. My legislation would provide States with increased flexibility to utilize their allocations under the Abandoned Mine Reclamation Fund for environmental remediation activities. Abandoned mine drainage is the unfortunate legacy of coal mining in the years before environmental laws were enacted requiring coal companies to reclaim mined land. After the coal was extracted, the land was left riddled with coal waste, known as gob piles, and pock-marked with holes. The mining activity also unearthed sulfur compounds and metals such as aluminum, manganese and iron. When exposed to the elements, the sulfur compounds produce sulfuric acid which in turn leaches metal loads into the streams, poisoning the water and killing fish and plant life. There are in excess of 7,600 miles of streams in 11 States that are adversely affected by abandoned mine drainage. In the Appalachian region, which suffers the most serious mine drainage problems, the acidic runoff has left a major segment of our Nation's river, the Potomac River, virtually devoid of life. Much of the North Branch of the Potomac, from its headwaters near Kempton, MD, to the Jennings Randolph Lake, is biologically dead. Nearly 700 miles of the North Branch's streams are currently incapable of supporting fish and other aquatic life because of the drainage. Along this stretch of the Potomac there are over 4,000 acres of abandoned mine lands, including the worst offender, Kempton Mines, which discharges approximately 3 million gallons of abandoned mine drainage each day. The Surface Mining Control and Reclamation Act of 1977 [SMCRA] established a regulatory program for current mining activities requiring land reclamation and control of acid drainage at active mine sites to assure that today's mines do not become tomorrow's abandoned mines. It also established an abandoned mine land reclamation [AML] fund, paid for by a fee imposed on current mining production, to address problems caused by abandoned coal mines. Current law and regulations require that priority be placed on alleviating public health and safety problems posed by abandoned mine lands. However, States are authorized to set aside up to 10 percent of their allocations under the AML fund annually into a special account for addressing adverse environmental effects caused by abandoned mine acid drainage. These funds are insufficient to clean up the acid mine drainage problems. My bill would provide greater flexibility for States to use existing abandoned mine reclamation funds for acid mine drainage, as well as health and safety problems. Specifically, it would increase from 10 to 30 percent, or $1 million, whichever is greater, the portion of a State's AML funds that could be set aside for addressing environmental problems caused by acid drainage. Mr. President, great progress has been made in restoring the health of America's rivers in the 3 decades since President Lyndon Johnson vowed to make the Potomac a national model for restoring the Nation's waters. Today, much of the Potomac is a haven for fish and wildlife and provides tremendous recreational and economic opportunities. However, the North Branch of the Potomac remains in marked contrast to these improvements. The States of Maryland and West Virginia and the Interstate Commission on the Potomac River Basin have been working together in a cooperative effort to restore the North Branch's health, thereby improving the quality of life and opening new opportunities for economic development, tourism and outdoor recreation. Unfortunately, the job cannot be accomplished without the assistance made available under this legislation. The North Branch of the Potomac is only one of many areas that could greatly benefit from improved environmental conditions made possible by this measure. I urge my colleagues to join me in supporting this bill in order to provide States with the flexibility and additional resources needed to better address environmental problems associated with acid mine drainage. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. SARBANES

Mr. SARBANES. Mr. President, just 3 weeks ago, the warring parties in Bosnia initialed a peace agreement in Dayton, OH. That announcement marked the first real hope for an end to the tragic conflict in the Balkans which has left hundreds of thousands dead or injured and produced over a million refugees. It was only with the dedication and persistence of U.S. negotiators present in Dayton that this accord was brought to fruition. While everyone seems to agree that the administration deserves a great deal of credit for the success at the bargaining table, some question whether the United States should send troops to monitor and implement the agreement. This is obviously a very serious question, and we have an obligation in this Chamber to think through the implications of that decision. The question arises, what are the United States national interests that are at stake in Bosnia? The President addressed that issue in his speech to the Nation on November 27. At that time, he made the case as to why this agreement serves America's interests, reflects American values, and requires American leadership. There are many arguments that can be made about the ways that this agreement serves U.S. interests. For instance, that it will prevent the war from spreading in a way that might lead to a much more costly and dangerous American involvement; that it will return peace and stability to a continent that is key to our economic and military security; and that it reflects the United States moral and humanitarian interest in seeing an end to the bloodshed and violence. All of these are very important considerations which should be weighed heavily. Furthermore, choices are not always a matter of what is the best theoretical option but what are the courses of action available to us at any particular moment in time. Right now, we have to decide between backing the peace agreement, which we were instrumental in developing with the undertaking of a U.S. military presence, or not taking part in the NATO endeavor, which would mean no NATO endeavor and the breakdown of the peace agreement. Viewing it from that perspective, I come to the conclusion that the risks of missing this opportunity for peace are greater, significantly greater than the risks of implementing it, although that course certainly has its dangers. Let me discuss briefly the potential consequences of not carrying through on the peace agreement. First, I think the administration is correct in the view that without a commitment of American troops as part of a NATO force, the peace agreement will not stand. Having helped the parties to reach this point, the United States would completely undermine their confidence in the agreement and their commitment to implement it if we do not participate. Should this happen, United States troops might well be called upon to evacuate United Nations protection forces in Bosnia, under much more dangerous circumstances than our troops will face under this agreement. Second, it could seriously erode America's diplomatic strength. Our success at conflict resolution is due not just to the skill and determination of our negotiators but also to the perception that the United States has the ability and the will to back up the agreements it makes. This is not to say that the U.S. must contribute forces to every peace agreement it helps to negotiate. But in this instance, the U.S. undertaking was a major reason the agreement was reached. Our decision on Bosnia, therefore, could have long-lasting implications for the future of American leadership. It would be a major blow to U.S. world leadership if our failure to participate in this instance undermined our ability to move the world in a peaceful direction in other crises that might arise. Third, it is imperative that a very clear distinction be made between this operation and Operation Desert Storm, to which analogies have been drawn. Let us remember that in the Iraqi situation the question was whether to go to war--whether to undertake a military operation to drive the Iraqi Army out of Kuwait. Here we are talking about helping to implement a peace at the invitation of all the parties to the conflict. That is not to say there are no dangers involved, nor that the mission will be easy. But there is a major difference between going in to fight a war and going in to implement a peace. Finally, Mr. President, the choices before us are difficult ones. We have no assurances that, even with the participation of U.S. troops, the peace in Bosnia will be successful in the long run. But it is clear now that without our participation there will be no peace. The parties to the peace accord have made it plain that their confidence in a fair and evenhanded implementation of the agreement depends largely on American leadership and on American participation in the peacekeeping force. Mr. President, consistent with our values and interests, we should exercise our leadership by supporting this opportunity for peace. Mrs. HUTCHISON addressed the Chair.

Mr. SARBANES

Mr. SARBANES. Mr. President, I rise today in strong opposition to the conference report on the Commerce, Justice, and the State Department appropriations bill for fiscal 1996. While this agreement is an improvement in some respects over the bill that passed the Senate earlier this fall--most notably in the funding for the Economic Development Administration--it still fails to provide adequately for many programs which are absolutely essential to promoting economic and business development, investing in research and development and protecting American consumers. I want to underscore some of the most egregious provisions in this conference agreement. First, this bill proposes to eliminate the President's Community Policing Program, one of the most successful and popular anticrime initiatives ever enacted. Communities throughout the Nation have already benefited enormously from the Federal resources made available under this program. There are today over 25,000 new police officers on the street battling violence and drug-related crime. In my own State of Maryland, 365 new officers are on the beat in urban and rural communities creating a new sense of security and adding to the quality of life for all of our residents. The conference agreement's proposal to replace this program with a block grant program would defeat the entire premise of community policing by shifting money [[Page S 18160]] away from providing new police officers to communities in need. Lumping COPS grants in with other law enforcement and prevention programs would instead allow States to use the money for numerous other intentions ranging from prosecutors to housing code inspectors. Second, the conference agreement has proposed to significantly reduce funding in important programs and laboratory upgrades for the National Institute of Standards and Technology. I would zero out the Advanced Technology Program which assists businesses large and small in developing high-risk/high-impact technologies for the 21st century. The ATP is fast becoming a key mechanism accelerating the pace of commercial technology development. In its first 5 years of operation, ATP has already shown tremendous potential for enhancing economic growth--especially during this time of intensifying investor pressure to cut costs and spend limited research funds. Even though ATP is relatively new, it is already helping researchers in 38 States. The conference agreement would eliminate not only future grant initiatives, but also suspend funds for projects already in progress. This program has truly been a success and must be continued. I am also particularly concerned about the rescission of $75 million in prior year unobligated balances and reduction of $10 million in the fiscal 1996 request for the modernization of NIST's 35-year-old laboratory facilities in Gaithersburg and Boulder, CO. Without these funds, NIST will be unable to proceed with its construction of the much needed Advanced Technology laboratory, the centerpiece of NIST's upgrade and construction program. As the only Federal laboratory whose explicit mission is developing scientific standards and providing technical support for U.S. industry's competitiveness objectives, NIST must have modern infrastructure--the laboratories, equipment, instrumentation, and support--in order to maintain a viable scientific research program and to keep our Nation on the cutting edge of science and technology as we move into the 21st century. Third, Mr. President, I am deeply concerned about the funding level for the Legal Services Corporation in this conference agreement. The agreement would provide significantly less funding than provided in the Senate bill, which would have reduced substantially the funding for legal services from the fiscal year 1995 level of $400 million. For more than two decades, the Legal Services Corporation has been at the forefront of our efforts to give real meaning to the words emblazoned in stone above the portals of the Supreme Court: ``Equal Justice Under Law.'' The Legal Services program has provided critically needed services to millions of poor, elderly, and disabled citizens who otherwise would not have access to the American legal system and the protection it affords the many basic rights we enjoy in this country. Maryland's Legal Aid Bureau, which receives by far the largest portion of its total funding from the Legal Services Corporation, has done an outstanding job of representing Maryland citizens living in poverty. With the funding received from LSC, the 13 legal aid offices located throughout Maryland provide general legal services to approximately 19,000 families and individuals annually, assisting Marylanders in such routine legal matters as consumer problems, housing issues, domestic and family cases, and applying for and appealing the denial of public benefits. I am very concerned that the significant reduction in funding in this conference report for legal services would seriously impair the ability of legal services organizations like Maryland Legal Aid to provide these vital services. Fourth, the conference report cuts $43 million from the administration's fiscal 1996 budget request, funding that is absolutely essential for the Bureau to gear up for the 2000 census. These cuts would seriously endanger the Census Bureau's ability to collect and process periodic economic data. This data is essential for businesses and policy makers to understand what is happening in the economy. A recent editorial in the Washington Post underscores the importance of this funding for the Census and I ask unanimous consent that it be printed in the Record immediately following my statement. For these and other reasons I urge my colleagues to join me in rejecting this legislation.

Mr. SARBANES

Mr. SARBANES. Mr. President, I rise today to pay tribute to Dr. Thomas E. Bellavance as he retires as the president of Salisbury State University. In 1980, when the Board of Trustees of State Universities and Colleges unanimously selected Dr. Bellavance to be the new president of Salisbury State College, Thom arrived on campus with [[Page S 18247]] a specific mission: to provide, as he expressed it, ``an education of the whole person within the context of a value-oriented curriculum--an education that is not merely training in a specialty, but a matter of nurturing individuals to be civil, articulate, and productive members of society.'' For the past 15 years, Dr. Bellavance has focused on his vision, transforming the institution from a small State college, primarily attended by students from Maryland's Eastern Shore, to a highly- respected regional university that is nationally recognized as one of the best among American colleges and universities. During Dr. Bellavance's tenure, applications for admission have more than doubled and average SAT scores have increased from 848 to 1085. When faced with the reality of difficult economic times, Dr. Bellavance sought private funding, establishing three endowed schools, the Franklin P. Perdue School of Business, the Richard A. Henson School of Science and Technology, and the Charles R. and Martha N. Fulton School of Liberal Arts. Also established were scholarships for deserving students, and a foundation strongly supported by the community. University assets have dramatically increased from $32,261 in 1980 to over $16 million. Today over $800,000 is available to assist students with financing their education. In his pursuit of academic excellence, Thom Bellavance has helped create a true academic community--a community of scholars with an abundance of opportunities to learn and grow and a strong sense of family among the students, faculty, and administrators. In the process, he has earned the love and respect of the entire university community. In a nation which believes that a person's merit and talent should take them as far as they can go, we are indeed fortunate to have educators like my friend, Thom Bellavance, who have fostered a path which allows our young people to maximize their potential. When this happens, we gain a person who contributes to society at a higher level. This is best exemplified by the fact that Salisbury State students contributed over 300,000 hours of community service in the 1993-94 calendar year. On the occasion of his retirement, I join with the Salisbury State University community in saluting Dr. Bellavance and expressing deep appreciation for his exceptional leadership. As stated in a proclamation recently presented to Dr. Bellavance by the University Forum, ``He leaves Salisbury State University immeasurably better than he found it.'' Mr. President, I know that you and all of our colleagues will join me in wishing Dr. Thomas Bellavance the very best in the years ahead.

Mr. SARBANES

Mr. SARBANES. A New York Times editorial last week stated: The securities bill that Congress is about to pass addresses a nagging problem, frivolous lawsuits by investors against corporations, but in such cavalier fashion that it may end up sheltering some forms of fraud against investors. President Clinton should veto the bill and demand at least two fixes to protect truly defrauded investors.'' Citing the failure to extend the statute of limitations and to restore aiding and abetting liability, the Times warned that ``provisions threaten to shut off valid suits'' and suggested that ``a well-targeted veto might force this bill back on the right track.'' No publication has editorialized more strongly against this bill than Money magazine. For 4 months in a row, Money magazine has devoted editorial columns to this bill. In September 1995, Money magazine warned ``Congress aims at lawyers and ends up shooting [[Page S 17939]] small investors in the back.'' In October, they urged ``Let's stop this Congress from helping crooks cheat investors like you.'' In November, they were hopeful that ``Your 1,000 letters of protest may stop this Congress from jeopardizing investors.'' This month they stated: . . . the new bill jeopardizes small investors in several ways. . . . The bill helps executives get away with lying. . . . Investors who sue and lose could be forced to pay the winner's court costs. . . . Even accountants who okay fraudulent books will get protection. Investors around the country agree with Money magazine's analysis that this bill hurts investors and are voicing their opposition. The National Council of Individual Investors, an independent membership organization of individual investors, has written to the President to ``express opposition to the recent draft report,'' saying, ``The draft conference report fails to treat the American investor fairly.'' The labor movement has said, ``This bill tips the scales of justice in favor of the companies and at the expense of stockholders and pension plans.'' The Fraternal Order of Police wrote the President urging him ``to reject a bill which would make it less risky for white collar criminals to steal from police pension funds * * *.'' A coalition of consumer groups, including the Consumer Federation of America, Consumers Union, USPIRG, and Public Citizens also oppose this bill. But perhaps most telling about this bill is the opposition of hundreds and hundreds of State and local government officials. The National League of Cities, the National Association of Counties, and the Government Finance Officers Association all oppose this legislation. Keep in mind that State and local investors issue securities--State and local governments raise money through bond issues. As issuers of securities, it is asserted by the supporters of this legislation, they would stand to benefit from the bill. Why, then, do they oppose it? Because they also purchase securities as well. They invest taxpayers' money and retirees' money in securities and sometimes are victimized by unscrupulous brokers. Orange County, CA, lost over $2 billion in leveraged derivative investments. In my own State of Maryland, Charles County lost nearly $3 million in derivatives. Orange County is currently suing the brokers who sold it these securities. When such scandals occur again, and they will, this bill will make it harder for taxpayers to bring securities fraud actions and recover losses. Let me quote further from the letter of these government officials who are seeking meaningful remedies in case they are defrauded: The following are the major concerns State and local government have with the latest ``draft conference report'': Despite changes in the safe harbor provision relating to forward-looking statements, there are still loopholes in that provision that would allow false predictions to be made and that will shield a company from liability. Aiders and abettors of fraud would still remain immune from civil liability and would not have to pay back fraud victims for the losses they suffer. The ``draft conference report'' maintains the short three- year statute of limitations that will allow a wrongdoer who can conceal his fraud to be completely let off the hook. Eleven State attorneys general wrote to express their opposition. They said, ``If enacted, this legislation would severely curtail our efforts to fight securities fraud and to recover damages for our citizens if any of our State or local funds suffer losses due to fraud.'' They went on to say, ``This is unwise public policy in light of rising securities fraud and substantial losses suffered by States and public institutions from high-risk derivatives investments.'' The American Bar Association and the Association of the Bar of the City of New York oppose this bill as well. When this measure originally came to the Senate floor, I received a communication from the securities commissioner of the State of Maryland, Robert McDonald. I expect that most Senators received similar letters from their State securities commissioners. In that letter, Commissioner McDonald opposed the bill, writing: Our financial markets depend not so much on money as on public confidence. The confidence that investors have in the American financial marketplace will be shattered if they believe that they have little recourse against those who have committed securities fraud. Now, the managers of this bill in their conference report state at the outset, The overriding purpose of our Nation's securities laws is to protect investors and to maintain confidence in the securities markets, so that our national savings, capital formation, and investment may grow for the benefit of all Americans. So, they pick up the first part of Commissioner McDonald's statement about ``our financial markets depend not so much on money as on public confidence,'' but the supporters of this bill ignore the second part of Commissioner McDonald's warning that the confidence of investors will be shattered ``if they believe they have little recourse against those who have [committed] securities fraud.'' The editors of Money magazine wrote, ``this bill will undermine the public's confidence in our financial markets. And without that confidence, this country is nowhere.'' By making it harder for investors to bring legitimate securities fraud suits, by reducing investors' recoveries when they win securities fraud suits, by consistently hurting investors and helping corporate insiders and their accountants and attorneys--in other words, by going way beyond anything necessary to deal with the frivolous lawsuits--this bill will end up rewarding con artists and punishing America's individual investors, pension funds, and local governments. For all of the reasons I have described, I oppose this legislation and I urge my colleagues to vote against this bill. Exhibit 1 [From the New York Times, Nov. 30, 1995] Overdrawn Securities Reform The securities bill that Congress is about to pass addresses a nagging problem, frivolous lawsuits by investors against corporations, but in such cavalier fashion that it may end up sheltering some forms of fraud against investors. President Clinton should veto the bill and demand at least two fixes to protect truly defrauded investors. The bill seeks with good reason to protect corporate officials who issue honest but unintentionally optimistic predictions of corporate profitability. In some past cases, opportunistic shareholders have waited for a company's stock price to fall, then sued on the grounds that their money- losing investments were based on fraudulent misrepresentations of the company's financial prospects. Their game was to use these ``strike'' suits to threaten companies with explosively expensive litigation in the cynical attempt to win lucrative settlements. Such suits are a real, if infrequent, problem that can discourage responsible management from issuing information that investors ought to know. The bill would stymie these suits in part by immunizing predictions of corporate profitability that are accompanied by descriptions of important factors--like pending government regulatory action--that could cause financial predictions to prove false. But the language is ambiguous, leading critics to charge that it would protect corporate officials who knowingly issue false information. The President should ask Congress for clarification. Some provisions of the bill would protect investors by, for example, requiring accountants to report suspected fraud. But other provisions threaten to shut off valid suits. The bill would prevent private litigants from going after lawyers and accountants for inattention that allows corporate fraud. Worse, the bill limits the authority of the Securities and Exchange Commission to use accountants and others for aiding fraud. The bill would also provide a short statute of limitation that could easily run out before investors discover they have been victimized. Mr. Clinton should demand that Congress extend the statue of limitations so that investors will have time to file suit after they discover fraud. He should also demand that the bill restore the S.E.C.'s full authority to use accountants who contribute to corporate fraud. So far, Mr. Clinton has been curiously restrained. A well-targeted veto might force this bill back on the right track.

Mr. SARBANES. Mr. President, later today the Senate will vote on the final version of the securities litigation bill which has been brought back from conference. Supporters of the bill argue that it is a balanced response to a widespread problem; namely, frivolous securities litigation. What should be clear to all Senators, however, is that this bill is not--is not--a balanced response to that problem. This legislation will affect far more than frivolous suits. When the arguments are made for the legislation, the examples that are always cited are examples of frivolous suits. And I do not know of any difference in here, that we ought to find ways to get at those and that those are an abuse of the system. But this bill goes way beyond that. This bill will make it more difficult for investors to bring and recover damages in legitimate fraud actions--legitimate fraud actions. As the editors of Money magazine concluded, this legislation hurts investors. In fact, the December editorial of Money magazine warns, ``Now only Clinton can stop Congress from hurting small investors like you.'' At every stage of the legislative process, this bill has been amended to make it more difficult for investors to bring legitimate suits. As it has moved through the process, provisions favorable to investors have been taken out. Balanced provisions in the legislation have been made harmful to investors. Individual investors, local governments and pension plans all will be hurt by this legislation. All will find it more difficult to bring fraud actions and to recover full damages as a result of the measure now before the Senate. That is why this bill is opposed by a broad coalition of regulators, State and local government officials, labor unions, consumer groups and investor organizations, and by literally dozens and dozens of editorials in major newspapers and magazines across the country. I want to review just some of the areas in which this negative trend took place in the course of the legislative consideration of this legislation. First, the statute of limitations. The process of hurting investors began in the Banking Committee when it deleted the extension of the statute of limitations. The bill originally introduced by Senators Domenici and Dodd, who have had a keen interest in this matter, Senate bill 240, that original bill as introduced by them extended the statute of limitations for security fraud suits--that is, the period of time available to investors to discover that they have been defrauded and to file a claim. This was in fact the one clearly proinvestor provision in that bill introduced by Senators Domenici and Dodd. It responded to the experts in this area--the Federal and State securities regulators--all of whom agree that the current statute of limitations is too short to protect investors. For over 40 years, courts held that the statute of limitations for private rights of action under section 10(b) of the Securities Exchange Act of 1934, the principal antifraud provision of the Federal securities laws, was the statute of limitations determined by applicable State law. While these statutes varied from State to State, they generally afforded securities fraud victims sufficient time to discover that they had been defrauded and sufficient time to bring suit. In 1991, in the Lampf case, the Supreme Court significantly shortened the period of time in which investors may bring securities fraud actions. By a 5-to-4 vote--in other words, a very closely divided Supreme Court--the Court held that the applicable statute of limitations is 1 year after the plaintiff knew of the violation and in no event more than 3 years after the violation occurred. These time periods are shorter than the statute of limitations for private securities actions which existed under the law of 31 of the 50 States. Regulators have testified unanimously that this shorter period does not allow individual investors adequate time to discover and pursue violations of securities law. Testifying before the Banking Committee in 1991, SEC Chairman Richard Breeden stated, and I quote, The timeframes set forth in the [Supreme] Court's decision is unrealistically short and will do undue damage to the ability of private litigants to sue. Chairman Breeden pointed out that in many cases, and I quote, ``events only come to light years after the original distribution of securities and the cases could well mean that by the time investors discover they have a case, they are already barred from the courthouse.'' In other words, if the perpetrator of the wrong can conceal it long enough under this very shortened statute of limitations, the victim will have no remedy. The FDIC and the States securities regulators joined the SEC in favor of overturning the Lampf decision. What happened to this provision that was in the legislation as originally introduced by Senators Domenici and Dodd? It disappeared when the Banking Committee met to consider this bill. Despite the fact that all the securities regulators recommended it, despite the fact that Senators Domenici and Dodd had included it in their original bill, despite the fact that the Banking Committee had approved this provision before in 1991, despite the fact that it was the one clearly proinvestor provision in the bill, the provision was dropped. Let me make clear that the statute of limitations issue has nothing to do with frivolous cases. The current statute of limitations keeps worthy cases from the courthouse. Both Republican SEC chairmen and Democratic SEC chairmen have told us that the statute of limitations imposed by the Supreme Court in 1991 is too short. It allows con artists to perpetrate frauds, and it prevents defrauded investors from seeking restitution. When the statute of limitations provision disappeared from the bill, the bill moved down the path of being an unbalanced effort. At that point, the bill began to tilt away from individual investors, away from pension funds and county treasurers, in favor of corporate insiders and the attorneys and accountants who advise them. When the Banking Committee dropped the lengthening of the statute [[Page S 17937]] of limitations provision, it went beyond deterring frivolous lawsuits and began hurting investors. I want to underscore that because that is the basic point that must be understood about this conference report. Again and again it goes beyond deterring frivolous lawsuits and hurts investors. Let me turn now to another example of this proposition, that is, the aiding and abetting issue. Failure to include the extension of the statute of limitations removed the balance from this bill and tilted it toward corporate wrongdoers. The Banking Committee could have added some balance to the bill by restoring the ability of investors to sue the accountants and attorneys who aid and abet securities fraud. This was recommended by the SEC, the State securities regulators, and various bar associations. Again, however, the committee hurt investors by leaving this key provision out of the bill. Prior to 1994, courts in every circuit in the country had recognized the ability of investors to sue aiders and abettors of securities frauds. Most courts required that an investor show that a securities fraud was committed, that the aider and abettor gave substantial assistance to the fraud, and that the aider and abettor intended to deceive investors or behaved recklessly toward the fraud. In other words, the investor had to show that the aider and abettor either intended to deceive the investors or behaved recklessly toward the fraud. Aiding and abetting liability was most often asserted against lawyers, accountants, appraisers, and other professionals whose assistance is often crucial to perpetrating a fraud. In 1994, in the Central Bank of Denver case, the Supreme Court eliminated the right of investors to sue aiders and abettors of securities fraud. Writing for the four dissenters--this was another 5- to-4 opinion--Justice Stevens criticized the five-member majority for ``reach[ing] out to overturn a most considerable body of precedent.'' While the issue was not directly before the Court, Justice Stevens warned that the decision would also eliminate the SEC's ability to pursue aiders and abettors of securities fraud; in other words, not only a private cause of action, but the SEC's ability as well. One of the lead sponsors of this legislation, Senator Dodd, stated at a Securities Subcommittee hearing in May 1994, and I quote: Aiding and abetting liability has been critically important in deterring individuals from assisting possible fraudulent acts by others. Testifying at that hearing, the Chairman of the SEC stressed the importance of restoring aiding and abetting liability for private investors, and I quote: Persons who knowingly or recklessly assist the perpetration of a fraud may be insulated from liability to private parties if they act behind the scenes and do not themselves make statements directly or indirectly that are relied upon by investors. Because this is conduct that should be deterred, Congress should enact legislation to restore aiding and abetting liability in private actions. The North American Securities Administrators Association, the Association of States Securities Regulators, and the Association of the Bar of the City of New York also endorsed restoration of aiding and abetting liability in private actions. This bill, unfortunately, restores only the SEC's ability to go after aiders and abettors of violations of the securities laws and then only in part--only in part. The provision in the bill is limited to violations of section 10(b) of the Securities Exchange Act and to defendants who act knowingly. It ignores the recommendation made by the SEC, the States securities regulators and the bar association that aiding and abetting liability be fully restored for the SEC and private litigants as well. By ignoring the needs of individual investors, the committee further tilted this bill toward the corporate insiders and their professional advisers who abuse the investor. The effort in the Banking Committee, which I have alluded to with respect to the statute of limitation and the aiders and abettors provision, which tilted this bill away from the investor, that effort was continued in the conference committee. Consider what happened in the conference committee to the provision that directly addresses the filing of frivolous cases. Rule 11 of the Federal Rules of Civil Procedure is the principal sanction against the filing of frivolous lawsuits in the Federal courts. Rule 11 requires all cases filed in the Federal courts to be based on reasonable legal arguments and supported by facts. That is the requirement of rule 11. The case is to be based on reasonable legal arguments and supported by facts. As passed by the Senate, this bill required the courts to include specific findings in securities class actions regarding compliance by all parties and attorneys with rule 11(b) of the Federal Rules of Civil Procedure. That is the way the Senate passed it. If a court found the violation of rule 11 by either the plaintiff or the defendant, the court was required to impose sanctions. That provision was balanced. The sanctions would have applied equally to plaintiffs and to defendants. It was intended as a deterrent to frivolous cases, and it might well have worked in an efficacious manner. What happened to this balanced provision, between plaintiffs and defendants, in conference? The balance was removed so that it now applies more harshly to investors than the corporate insiders. The Senate bill had contained a presumption that the appropriate sanction for failure of the complaint or the responsive pleading or motion to comply with rule 11 was an award of reasonable attorneys' fees and other expenses incurred as a direct result of the violation. That was the presumption: An award of reasonable attorneys' fees and other expenses incurred as a direct result of a violation. That applied, in the bill passed by the Senate, both to the plaintiff and to the defendant. The conference changed this presumption so that it no longer applies equally to plaintiffs and defendants. Under the conference provision now before us, if the defendant substantially violates rule 11, he pays only reasonable attorneys' fees and other expenses incurred as a direct result of the violation; namely, the provision that was in the Senate- passed bill. But now under the conference-reported measure, if the plaintiff substantially violates rule 11, he pays all attorneys' fees incurred in the action, not just those resulting from the violation. Disparate treatment. The bill, as sent out of the Senate, had balanced treatment with respect to plaintiffs and defendants. Now we have this disparate treatment, and there is no justification for it. Its true purpose, I think, is to scare investors from bringing meritorious fraud suits. When the conference removed the balance from this provision, it was not deterring frivolous lawsuits, it was hurting investors. The conference further hurt investors by changing the pleading standard provision of the bill. Pleading standard refers to what an investor must show in order to initiate a securities fraud lawsuit. The bill reported by the Senate Banking Committee codified the pleading standard adopted by the U.S. Court of Appeals for the Second Circuit. This standard says investors who seek to file securities fraud cases must ``specifically allege facts giving rise to a strong inference that the defendant acted with a required state of mind.'' This standard, it should be noted, is more stringent than the Federal Rules of Civil Procedure and is the minority view among the circuit courts. Nevertheless, that was the standard adopted by the Banking Committee. When the bill came to the Senate floor, the Senate adopted an amendment to this provision offered by the distinguished Senator from Pennsylvania, Senator Specter. Senator Specter's amendment codified into the legislation additional second circuit holdings clarifying the standard they had earlier enunciated. These additional holdings state that a plaintiff may meet the pleading standard by alleging facts showing the defendant had motive and opportunity to commit fraud, or constituting strong circumstantial evidence of state of mind. In other words, the second circuit laid down this standard and then had subsequent opinions that elaborated upon it and developed it, and Senator Specter said that if you are going to include the second circuit standard as initially enunciated, you should also include the further holdings by the second circuit clarifying this standard. This, I think, was the one proinvestor amendment adopted on the Senate [[Page S 17938]] floor. What happened to this amendment in conference? It disappeared. It was dropped from the legislation. This is part of this process that I have been outlining here of now you see it, now you don't. Of course, the person who bears the brunt of that is the investor. The draft conference report deleted the Specter amendment, leaving investors without the protection of the additional second circuit holdings. Once again, a proinvestor provision that would have provided some balance to the bill was removed. Let me turn briefly to the proportionate liability provisions of the bill, which reduce the amount of damages that defrauded investors can recover from people who have participated in committing the fraud. This provision is not targeted at frivolous suits and never has been. It affects even legitimate securities fraud suits and, therefore, is harmful to all investors. The conference found a way, though, to tilt the legislation even further away from the investor and toward the corporate insider. The legislation changes the rule for liability for securities fraud from joint and several liability to proportionate liability. Under the current rule of joint and several liability, all fraud participants are liable for the entire amount of the victim's damages--both fraud participants who intended to mislead investors and fraud participants whose conduct was reckless. The rationale for this in the law, which has been the traditional holding over the years, is that a fraud cannot succeed without the assistance of each participant, so each wrongdoer is held equally liable. Let me just observe that the recklessness standard for liability is a very demanding standard, and it is one usually applied to a company's professional advisers, such as accountants, attorneys, and underwriters. The bill limits joint and several liability under the Federal securities law to certain defendants, specifically excluding defendants whose conduct was reckless. The bill, thus, reduces the accountability of accountants and attorneys whose conduct is found to be reckless. This change will hurt investors in cases where the principal framer of the fraud is bankrupt, has fled, or otherwise cannot pay investors damages. In those cases, the innocent victims of fraud will be denied full recovery of their damages. Unfortunately, this provision became even worse in conference for the investors. The bill passed by the Senate did nothing to disturb liability under the securities law for reckless conduct. The conference, however, added language that could call liability for reckless conduct into question. The language of the conference report could be read as inviting the courts to eliminate all liability for reckless conduct under the securities fraud provisions. The conference further added language that could be read as applying the new proportionate liability rules not just to suits brought under the antifraud provisions of the Securities and Exchange Act of 1934, as under the bill passed by the Senate, but to suits brought under the Securities Act of 1933, as well. So the conference, again, took this bill down the path of reducing protections and remedies for investors and providing an additional sheltered area for those who practice corporate fraud and abuse. In the areas, then, of the statute of limitations, aiding and abetting liability, rule 11 sanctions, pleading standards, and proportional liability, this legislation before us hurts the investor, and it has been made significantly worse by the actions in the conference. Before I conclude the discussion of the substance of the bill, let me now turn to the so-called safe harbor provision, and I underscore ``so- called.'' This bill creates a statutory exemption from liability for forward-looking statements. Forward-looking statements are broadly defined in the bill to include both oral and written statements. Examples include projections of financial items such as revenues and income for the quarter or for the year, estimates of dividends to be paid to shareholders, and statements of future economic performance, such as sales trends and development of new products. In short, forward-looking statements include precisely the type of information that is important to investors deciding whether to purchase a particular stock. The SEC currently has a safe harbor regulation for forward-looking statements that protects specified forward-looking statements that were made in documents filed with the SEC. As originally introduced, the bill could have allowed the SEC to continue its effort to conduct a comprehensive review of safe harbor regulations. However, the committee abandoned this approach in favor of enacting a statutory safe harbor. I am aware of the letter that the chairman read from the SEC about the safe harbor provision, but I remain concerned that the safe harbor provision before us today will, for the first time, provide protection for fraudulent statements under the Federal securities laws. For the first time, fraudulent statements will receive protection under the Federal securities laws. The American Bar Association wrote the President last week that the safe harbor ``has been transformed not simply into a shelter for the reckless, but for the intentional wrongdoer as well.'' Projections by corporate insiders will be protected no matter how unreasonable, no matter how misleading, no matter how fraudulent, if accompanied by boilerplate, cautionary language. Let me just take a moment to explain this. It is claimed by its supporters that this draft codified the legal doctrine applied by the courts known as bespeaks caution. Now, as I understand it, all courts that have applied this doctrine have required that projections be accompanied by disclaimers specifically tailored to the projections. The courts have not accepted boilerplate disclaimers. They have required that the projections be accompanied by disclaimers specifically tailored to the projections. If companies want to immunize their projections, they must alert investors to the specific risks affecting those projections. The bill before the Senate today does not include this requirement of specific cautionary language to alert investors. The Association of the Bar of the City of New York warned of this provision: The proposed statutory language, while superficially appearing to track the concepts and standards of the leading cases in this field, in fact radically departs from them and could immunize artfully packaged and intentional misstatements and omissions of known facts. That letter was signed for the bar association by Stephen Friedman, a former SEC Commissioner. Under this bill, fraud artists will be able to shield themselves from liability simply by accompanying their fraudulent statements with general cautions that actual results may differ. I predict that this provision will come back to haunt us in the years to come. Because this bill hurts investors, because it makes it harder for defrauded investors to bring suits, because it makes it harder for defrauded investors to recover losses, dozens and dozens of newspapers around the country have expressed their opposition. From the Bangor Daily News to the Miami Herald, from the Minneapolis Star Tribune to the San Francisco Chronicle, editorial pages have argued this bill is a bad deal for investors and urged a Presidential veto. The headline of the Wisconsin State Journal editorial sums up the argument nicely: ``The Securities Reform Act goes too far.'' I ask unanimous consent to have printed at the end of my remarks some sampling of these editorial comments.

Mr. SARBANES

Mr. SARBANES. The costs accumulate. But the fact is--and people must understand this--that in order to give tax breaks to very wealthy people, draconian cuts are being made in these programs to help children. So there is a direct tradeoff that has to be understood. In other words, these cuts are happening to child care, to feeding programs, education programs, and others, in order to accumulate a pot of money with which to give tax breaks to wealthy people. If you did not give the tax breaks, you would not have to make the cuts, is that not correct?

Mr. SARBANES. I listened very carefully to the Senator from Massachusetts with respect to the impact of this reconciliation bill on children. Is it not the case that if the tax break provisions of this reconciliation were not in this package--in other words, this $250 billion worth of tax breaks for the very wealthy--these drastic cuts with respect to these programs for children would not have to be made, is that not correct?

Mr. SARBANES

Mr. SARBANES. Mr. President, first, I commend the distinguished Senator from Nebraska, the ranking member on the Budget Committee, for his very fine leadership throughout this budget debate. We are deeply appreciative to him for his extraordinary efforts. Mr. President, the basic fact is that drastic cuts are being made in Medicare, Medicaid, basic health programs, in nutrition programs to nourish our young people, school lunch, school breakfast, food stamps, in educational programs which make it possible for young people to go to college, and in environmental programs to protect clean air and clean water. These deep cuts are necessitated by the burning mania on the part of the Republicans, as part of the budget package, to give tax breaks to wealthy people. Make no mistake about it, that is the connection. If the tax breaks were not in this package, these drastic cuts would be ameliorated to a significant degree. Then you could argue about reducing the deficit and how you go about doing it in terms of spending cuts. But the problem is compounded in this package because there is a burning mania on the other side to give tax breaks to wealthy people. Kevin Phillips, 2 days ago, in an interview on the radio said: Under the camouflage of deficit reduction and cuts like those in Medicare and Medicaid, the new budget includes dozens of new and enlarged tax breaks, loopholes, and corporate welfare programs. The tax cuts for ordinary Americans are peanuts, but the special deals are big stuff. And he goes on to say: It is doubly impolitic to drive the budget deficit down to zero by cutting medical, educational, and entitlement programs while corporate and upper-bracket tax breaks continue to soar. That is what is happening here. We are hearing talk about, ``Oh, we are going to protect the next generation and our children.'' What about the children today, who are going to be sent into the next generation stunted because the nutrition programs have been cut, the health programs have been cut, the education programs have been cut? What about young men and women who will not get the chance for a college education because of the cutbacks contained in this package, at the very same time that people at the upper-income brackets are getting large and significant tax breaks? There is obviously a hidden agenda contained in this budget package. The Speaker of the House let it out of the bag a few days ago when, speaking to a group, he said: Now let me talk about Medicare. We don't get rid of it in round 1, because we don't think that would be politically smart. We don't get rid of it in round 1, because we don't think that would be politically smart. So, it is going to come in round 2 and in round 3. They assert they are protecting Medicare and right here is evidence that it is the beginning of the end of Medicare. We have Republican leaders who boast about the fact that they opposed Medicare when it was put into place, and then they try to make us believe they are out to protect Medicare. Medicare is being cut deeply, again to give these tax breaks. The fact of the matter is--and this is my judgment--part of this hidden agenda is a major shift of benefits, economic benefits in this country, from ordinary people, from middle-income people to the very wealthy. If you assert this the other side says, ``Oh, it is class warfare.'' The class warfare is being waged by those who are reaping the benefits disproportionately in this society. [[Page S 17288]] They say, ``Oh, don't do class warfare.'' In the meantime, the statistics show--and listen to these statistics----

Mr. SARBANES. Will the ranking member yield me 2 additional minutes?

Mr. SARBANES. Listen to these statistics. Federal Reserve figures from 1989, the most recently available, show that the richest 1 percent of American households, with net worth of at least $2.3 million each, have nearly 40 percent of the Nation's wealth--1 percent of American households, 40 percent of the Nation's wealth. The top 20 percent of American households worth $180,000 or more, have 80 percent of the country's wealth--80 percent. The income statistics are equally skewed. The lowest-earning 20 percent of Americans earn 5.7 percent of the after-tax income. The top 20 percent of American households have 55 percent of the after-tax income. The United States is now the most unequal industrialized country, in terms of income and wealth, and we are growing more unequal faster than the other industrialized countries. And this package is going to intensify that trend. Make no mistake about it, that is what this package will do. It is shifting benefits from lower-income and working people to the upper end of the scale. People on Medicare, earning $15,000 a year, are going to suffer in order to give a tax break to the very wealthy. I urge the rejection of this package.

Mr. SARBANES

Mr. SARBANES. In our consideration; is that not the leader's view?

Mr. SARBANES. Mr. President, will the Senator yield?

Mr. SARBANES. Mr. President, I want to put this in the Record. The Government private forecast, fourth quarter to fourth quarter, on GDP growth for 1995 was 2.5 percent. The CBO forecast was 1.3 percent, which fell way short of what the actual growth has been over that period of time. Mr. SPECTER addressed the Chair.