Paul Sarbanes

Mr. SARBANES

Mr. SARBANES. Mr. President, I thank the distinguished majority leader for his excellent presentation with respect to the state of our economy. He has described in very straightforward terms the serious economic problems we confront: weak economic growth, rising job losses, declining business investment, a falling stock market, eroding consumer confidence, and a deteriorating Federal Government fiscal position. Just this morning, the Wall Street Journal reported: What looked like a brief dip in economic activity a month ago looks increasingly like a protected slowdown. . . . The Federal Reserve said Tuesday that industrial production fell 0.3 percent in August from July, the first decline since December, when the recession was ending. The majority leader made a compelling case, in my view, for focusing the attention of the Congress and the President on the urgent economic challenges we confront at home, as well as the significant security and foreign policy challenges we confront abroad. I wish to take a few moments to focus briefly on a very pressing economic challenge that is before us right now and which ought to be addressed before the end of the year: the problem of the long-term unemployed and the need to extend unemployment insurance benefits. I urge the administration to submit to the Congress a proposal for the extension of unemployment insurance benefits. On September 9, the New York Times ran a front page story entitled, ``Long-Term Jobless Rose by 50 Percent Last Year.'' The article stated--and I now quote from it-- . . . the number of people who have been jobless for months has climbed to a level more typical of a deep downturn. Almost three million people nationwide have been out of work for at least 15 weeks, up more than 50 percent from a year ago. Half of them have not worked for at least 6 months. Another million Americans appear to have dropped out of the labor force in each of the past two years, no longer looking for work or counted as unemployed. . . . Many people who have not worked in months have begun spending retirement savings that were already diminished by the stock market's fall. Others are considering low-wage jobs at a fraction of their old pay. In either case, their stretches of unemployment could define their financial futures for years. It goes on to say: Many unemployed people . . . see little sign that companies will soon begin hiring in large numbers. And some are growing increasingly nervous because unemployment benefits that were extended . . . will expire soon. I want to make a very simple but important point in light of this rise in the long-term unemployed and the challenge that it presents. I strongly urge the administration to address it and to send the proposal to the Congress. We extended the unemployment compensation program earlier this year to provide an additional 13 weeks beyond the basic 26 weeks. But this program is scheduled to end on December 31 of this year, which means that someone who is then in the 27th week of their benefits at the end of 2002 could receive no further unemployment benefits. This program is scheduled to end at the very time when the number of long-term unemployed is not coming down, but is increasing. The projections on the unemployment front are not encouraging. The CBO predicts the unemployment rate will remain near 6 percent until the second half of next year. When we enacted the extension, it was at 5.7 percent. Unemployment is projected to stay high well into next year, while the extension is scheduled to expire on December 31 of this year. Now, in previous recessions--and it is important to note this--we extended the increase in the time period to collect unemployment benefits. Back in the recession of 1990-1991, unemployment benefits were extended five separate times. In fact, not only were they initially extended by 13 to 20 weeks but then the period was lengthened again to between 52 and 59 weeks. I am very frank to tell you I think we have to confront this situation. States are reporting larger increases in the exhaustion of unemployment benefits during this recession than during the last recession. So for those people who have been thrown out of work--and I am not going to go through the litany of it; much of it has hit the dot-com industry--they either have or are close to having exhausted their unemployment benefit payments. They are going to be in even deeper trouble once they cross that threshold and exhaust their unemployment benefit payments. I am not seeking anything that is out of the ordinary in terms of past experience, but I think these benefits must be extended. Let me make one final point. The temporary provision of additional Federal benefits to the unemployed, in the wake of economic downturns, has long served a dual purpose. Beyond providing needed income support to those whose spells of unemployment are lengthened by recessionary conditions, it is also very well designed to give the economy a boost. Unemployment benefits are quickly injected into the economy. Benefits can be paid immediately through the existing unemployment insurance system. They are targeted to areas where the downturn has hit the hardest. They go to areas with large concentrations of newly unemployed who qualify for benefits. They stimulate demand where it has deteriorated the most. They are very effective in boosting the economy. And, of course, they come to the rescue of people who have found themselves out of work and are under extreme stress in order to meet the financial demands of supporting themselves and often their family as well. So we need to extend unemployment benefits. We need to fill in the weaknesses in the system. We need to give the people who have lost their jobs, and are now confronting a very severe situation, some support in these trying circumstances. We have extended unemployment benefits before repeatedly. It has worked. It has been seen to work. We need to do so again. I very strongly urge the administration to face this challenge and to send to the Congress--promptly and immediately--a proposal with respect to unemployment insurance benefits that would help to assure that the millions of people across the country, who already have or may in the future exhaust their unemployment benefits, will not find themselves without any income support at the same time that they are confronting an economy in which job restoration is not taking place. If job restoration were taking place, and the economy was on the upswing, and one could reasonably say to people, well, opportunities are returning and, therefore, you can find work. But that is not what is happening. You have people facing an economy which is softening, as the Wall Street Journal reported just this morning, as they said, ``What looked like a brief dip in economic activity a month ago looks increasingly like a protracted slowdown. . . .'' We must at a minimum provide this assistance. I yield the floor.

Mr. SARBANES

Mr. SARBANES. Will the Senator yield for a question on that chart momentarily?

Mr. SARBANES

Mr. SARBANES. Madam, President, my amendment, No. 4554, would establish an Office of National Capital Region Coordination within a newly-created Department of Homeland Security. Joining me in offering this amendment are Senators Warner, Mikulski, and Allen. The September 11, 2001 terrorist attack on the Pentagon underscored the unique challenges the National Capital Region faces in emergency preparedness. A recent editorial in the Washington Post perhaps described the problem best: Sept. 11 laid bare the truth about the national capital region's preparedness for a major terrorist attack. That fateful day revealed that the area's 5 million residents, the federal government's far-flung operations and the varied state and local jurisdictions were ill-prepared for the kind of emergencies that could result from bioterrorism or other murderous terrorist strikes . . . . It will be no easy feat, converting a region containing three branches of the federal government, two states, and the District of Columbia, each with separate police forces and emergency plans--but all using the same roads and bridges--into a well-coordinated governmental operating complex . . . In no other area of the country must vital decisionmaking and coordination occur between an independent city, two States, seventeen distinct local and regional authorities, including more than a dozen local police and Federal protective forces, and numerous Federal agencies. In hearings before the Senate Appropriations Subcommittee on the District of Columbia, Senator Mary Landrieu, the Distinguished Chair of the Subcommittee, and virtually every witness highlighted the region's high risk for terrorism and the critical need for coordinated and timely communication between the Federal Government and the surrounding State and local jurisdictions. I want to commend Senator Landrieu for her leadership on this very important issue and for working to address the emergency preparedness funding needs of the District of Columbia and the Washington Metro system. Over the past year significant progress has been made on the State and local levels in emergency response protocols. The Metropolitan Washington Council of Governments, COG, the association representing the 17 major cities and counties in the region, should be commended for the strong partnerships and initiatives they have nurtured over the past twelve months, including the creation of the COG Ad Hoc Task Force on Homeland Security and the development of a Regional Emergency Response Plan. Similarly, at a summit meeting convened last month, the mayor of the District of Columbia and the Governors of Maryland and Virginia took a major step forward with the signing of an eight-point ``Commitments to Action'' to improve coordination. Unfortunately, the Office of Homeland Security, which helped convene the summit, is not a party to the agreement. What is still lacking, however, is the integration of the Federal Government's many and diverse protocols in the region with those of State and local authorities. This past August, a plan known as the Federal Emergency Decision and Notification Protocol was announced by the Administration, giving the directors of the Office of Personnel Management, the Federal Emergency Management Agency, and the General Services Administration the authority to release Federal employees in the area and around the country. However, as an August 17, 2002 article in the Washington Post notes, ``[left unclear by the plan is how Federal agencies execute the evacuation. Congress and the courts are independent of the President. Even Cabinet secretaries and senior agency directors have autonomy over their employees and buildings . . . .'' I commend to my colleagues the September 10, 2002 edition of the Washington Post which featured a story detailing the status of emergency planning in the area, noting the work yet to be done by the Federal Government. The unique and dominant Federal presence in this region obligates the Federal Government to become a fully cooperative partner in the region's efforts at emergency planning and preparedness. One of the key goals of a new Department of Homeland Security is to consolidate the components of the Federal Government playing an integral role in the protection of the homeland, both existing and yet- to-be-created, into one single entity whose purpose is to coordinate these components and facilitate their individual missions. In the National Capital Region, the many branches and agencies of the Federal Government similarly necessitate a single voice to aid and encourage the significant efforts already being undertaken by State, local, and regional authorities. It is with this goal in mind that my amendment proposes the creation of an office within a Department of Homeland Security that would provide such a voice. The Office of National Capital Region Coordination would establish a single Federal point of contact within a new Department of Homeland Security. This office would not only coordinate the activities of the Department affecting the Nation's Capital, but also act as a one-stop shop through which State, local, and regional authorities can look for meaningful access to the plans and preparedness activities of the numerous other Federal agencies and entities in the region. Likewise, this new office would become the vehicle used by the multitude of Federal entities in the area to receive vital information and input from the state, local, and regional level in the development of the Federal Government's planning efforts. In short, the Office of National Capital Region Coordination would ensure that the Federal Government takes a place at the table as this region makes unprecedented attempts to coordinate the work of its many State, local, and regional authorities. The need for such an office has been expressed and supported by many of the most important participants and stakeholders in the area's terrorism preparedness activities, including COG, WMATA, the Greater Washington Board of Trade, and the Potomac Electric Power Company, PEPCO. I ask that letters of support from these groups be printed in the Record immediately following my remarks.

Mr. SARBANES. A year has passed since the horrific attacks of September 11th, and as we debate the shape and form of a new Department of Homeland Security, the time has come for the Federal Government to fulfill its obligations to the National Capital Region and those dedicated to preserving its safety. I would urge my colleagues to support this important amendment. Pepco Holdings, Inc., Washington, DC, September 10, 2002. Hon. Joseph Lieberman, Chairman, Senate Committee on Government Affairs, U.S. Senate, Washington, DC. Dear Chairman Lieberman: As Chief Executive Officer of Pepco Holdings Inc., I am writing to express my strong and unequivocal support for Senator Paul Sarbanes' amendment to the National Homeland Security and Combating Terrorism Act of 2002. The proposed amendment would create within the Department of Homeland Security a National Capital Region Coordination Office. This office would have the responsibility of coordinating the response activities of the Federal, State, and local governments with that of the general public and the private sector. The District of Columbia is truly in a unique situation when it comes to Homeland Security. As our Nation's Capital, the District is home to more than 370,000 Federal workers and draws over 18 million visitors annually. At the same time, given the multi-jurisdictional nature of the Greater Washington Metropolitan area and the enormous Federal presence, there are distinct challenges facing this region's efforts to have a comprehensive and coordinated response to terrorism. For example, there are over a dozen separate local police departments in the greater Washington area. Overlaying this, there are another dozen Federal law enforcement agencies, each with their own jurisdiction and mandate. These departments have their own procedures and are developing their own contingency plans. Coordinating these efforts will not be an easy task and will require a dedicated office within the Department of Homeland Security. Unfortunately on September 11 we saw what can happen if the region fails to coordinate its response. On the afternoon of the attack the Federal government sent home its entire workforce early without notifying anyone on the local level. At the same time the Federal government was releasing hundreds of thousands of Federal employees and contractors to already grid-locked roads and packed Metro stations, Federal agencies were erecting security zones and blocking off streets around their facilities making the evacuation of the District even more difficult. Thankfully, there was no secondary attack after the Pentagon. But had there been one, this lack of coordination could have had disastrous results and I believe illustrated the need for a dedicated office within the Department. As the major provider of electricity to the District of Columbia as well as Prince George's and Montgomery counties in Maryland, Pepco has spent a significant amount of time and effort on security issues since September 11. The more I look at the unique challenges we face in this new environment, both as Chief Executive and a Washingtonian, the more I believe in the need for Senator Sarbanes' proposal. Thank you for your leadership on homeland security issues, and I trust that you will give the National Capital Region Coordination Office provision every consideration. Sincerely, John M. Derrick, Chairman, Chief Executive Officer.

Mr. SARBANES

Mr. SARBANES. Madam President, this past year, has been one of tragedy and challenge for the American people. Just a year ago, on September 11, 2001, we experienced a dawning national tragedy. Just as the workday was beginning--8:46 a.m. to be precise-- terrorists struck this country in a series of savage attacks. Over 3,000 were killed and many more were injured. Those attacks struck a vicious blow at every American everywhere. Over the past year we have labored with the highest degree of human spirit to address our grievous losses--as individuals, in our families, in our communities, and as a nation. At the same time, we have worked hard to deal with the challenges that confront us now and into the future. We are resolved to put an end to the scourge of terrorism and to bring its perpetrators to justice. Our response to terrorism must be committed and complex, for no simple solution or single action can accomplish our goal. We must engage in the broadest possible international effort, for we know that terrorists are not contained by national borders. As we move forward, we take our inspiration from the calm determination and steely resolve of the firefighters, police, emergency personnel, and airline passengers who responded to the attacks, and from the resilience of those who are rebuilding lives and families and communities. And we shall move forward, for we have families to care for, neighbors to look after, jobs that must be done, and civic obligations that must be met. The events of September 11, 2001, were tragic beyond measure, but our response to those events demonstrates the great strength of America and provides a new sense of what it means to be an American. The future of our Nation is ours to make. I yield the floor.

Mr. SARBANES

Mr. SARBANES. Madam President, I rise today to recognize The Enterprise Foundation as it celebrates its 20th year of building communities and improving low-income people's lives across America. Renowned developer James Rouse and his wife, Patty, launched Enterprise in 1982. Jim and Patty were inspired to start Enterprise by three women from the Church of the Saviour here in Washington. They asked Jim for help in turning two run-down, rat-infested buildings blighting their Adams Morgan neighborhood into affordable apartments for low-income residents of the area. With Jim and Patty's help and thousands of hours of volunteer time, the group achieved its goal. The buildings still provide a decent affordable home to low-income people in that community today. Jim and Patty founded Enterprise to help more community groups rebuild their neighborhoods. Today, Enterprise works through a network of more than 2,200 community-based organizations in more than 820 locations to provide affordable housing, safer streets, and access to jobs and quality childcare. Through these unsung heroes at the grassroots, Enterprise has invested nearly $4 billion to produce more than 132,000 homes affordable to low-income people. On any given day, more than 250,000 low-income people live in decent, affordable housing made possible in part by Enterprise. In addition, Enterprise's job training and placement programs have helped more than 32,000 hard-to-employ people qualify for work and retain employment. More than 4,500 children have benefited from Enterprise's childcare initiatives. President Clinton presented Jim with the Presidential Medal of Freedom in 1995. When Jim passed away a year later, Patty and the rest of Enterprise's leadership continued the work he began. That work goes on today. I have seen firsthand what Enterprise has achieved in many communities in my State. To cite just one example, Enterprise has been working since the early 1990s with the residents of Sandtown-Winchester in Baltimore City on a comprehensive effort to reverse decades of disinvestment and decay. After more than a decade, Sandtown is showing signs of a turnaround. The median income in the community increased by 50 percent during the 1990s, according to the Census. Median home sale prices rose 376 percent during that time, according to Johns Hopkins University's Institute for Policy Studies. In the parts of this 72-block community where Enterprise has been most active, crime is down and elementary school students are going better. More work remains, in Sandtown and in countless other low-income areas around the country. True to Jim Rouse's vision, Enterprise will not rest until all low-income Americans have the opportunity for fit and affordable housing and to move up and out of poverty into the mainstream of American life. I ask that we pay tribute to Mr. Rouse's legacy and to the profound impact that The Enterprise Foundation has had, and continues to have, on the lives of low-income Americans building better lives for themselves, their families and their communities.

Mr. SARBANES

Mr. SARBANES. Mr. President, I rise to urge my colleagues to join me in opposition to the motion before us, on passage of the conference report on H.R. 3009, the Andean Trade Preference Expansion Act. During the Senate's consideration of this act, the bill's managers stripped H.R. 3009 of the language approved by the House and offered a substitute amendment comprising three measures reported by the Finance Committee. The first, H.R. 3009, is indeed the Andean Trade Preference Expansion Act. But the amendment added as well two other major trade- related bills. The second measure, H.R. 3005, would grant the President fast-track authority for certain proposed trade negotiations, and also, retroactively, for other negotiations already underway. And the third, S. 1209, would reauthorize the Trade Adjustment Assistance and NAFTA Transitional Adjustment Assistance programs. H.R. 3009 thereby became a legislative vehicle for linking together three independent measures, all trade-related to be sure but each with its own focus and provisions. Let me say first that I am troubled by this procedural maneuvering. The three measures, each with far-reaching and very different ramifications, were considered independently of one another in committee. In my view they should have been considered separately on the floor of the Senate; each should have been amended and voted up or down on its own merits. Linked together, each measure became a hostage to the other two, a procedure which in my view ill served the American people. I am particularly concerned by the linking of trade promotion authority with trade adjustment assistance. TAA addresses specific problems which Congress has defined. In contrast, trade promotion authority is very broad, potentially reaching into areas we cannot even identify. In fact the term is a euphemism. What we have before us is the procedure known more precisely and accurately as ``fast-track,'' a procedure that radically redefines and limits the authority granted to Congress in article II, section 8 of the Constitution ``to regulate commerce with foreign nations.'' It is easily forgotten that ``fast-track'' is a relatively new innovation whose long-term consequences are as yet little understood. It dates back only to the Trade Act of 1974, and it lapsed in 1994. It differs fundamentally from the ``Proclamation Authority'' that Congress granted the President in the Reciprocal Trade Act of 1934, which gave the Executive power to set tariffs within limits and periods of time set by the Congress. Proclamation Authority did not grant to the President authority to negotiate trade agreements requiring changes in U.S. law, let alone limit the discretion of Congress to approve or reject such changes. In contrast, fast track authority does both. It greatly expands the latitude of the Executive to negotiate an agreement, while sharply restricting the latitude of the Congress to consider any implementing legislation that results from the negotiation. Fast track guarantees that the executive branch can write legislation implementing a trade agreement and have that legislation voted on, up or down, 90 days after it is submitted, with only 20 hours of debate and no opportunity for amendment. While vast change in U.S. law may be at stake, under fast-track procedures Congress becomes little more than a rubber stamp. In no other area of U.S. international negotiation and agreement are arguments for fast track made. All major U.S. tax, arms control, territorial, defense and other treaties are still accomplished through established constitutional procedures, fully respecting the role of the Congress. Proponents of fast track often argue that in the area of trade, however, the Executive will find it difficult if not impossible to negotiate agreements. This is certainly not the case. Fast-track procedures are relevant only to trade agreements that require Congress to make changes in existing U.S. law in order for the agreements to be implemented. Most trade agreements do not require legislative changes and are thus not subject to fast track consideration. Of the hundreds of agreements entered into between 1974-1994, when fast-track authority was in effect, only five have required fast track procedures: the GATT Tokyo Round of 1979, the United States-Israel Free Trade Agreement of 1985, the Canada-United States Free Trade Agreement of 1988; the North American Free Trade Agreement, NAFTA, of 1993, and the GATT Uruguay Round of 1994. In 1994, after just twenty years, fast track lapsed, and in 1997 the Congress declined to extend it. Yet since 1994 hundreds of trade agreements have been successfully negotiated and implemented. For example, in 2000 the office of the Trade Representative identified the following agreements, negotiated without fast track, as having ``truly historic importance'': The Information Technology, IT, Agreement, under which 40 countries eliminated import duties and other charges on IT products representing more than 90 percent of the telecommunications market; the Financial Services Agreement, which has helped U.S. service suppliers expand commercial operations and find new market opportunities around the world; the Basic Telecommunications Agreement, which opened up 95 percent of the world telecommunications market to competition; and the Bilateral agreement on China's WTO accession, which opened the largest economy in the world to American products and services. I could cite many other examples. During this period the Executive negotiated and then obtained Congressional approval of normalization of our trade relations with China, a new Caribbean Basin initiative bill, and the Africa Growth and Opportunity Act. Without any fast-track authority the previous administration negotiated major bilateral trade agreements with Jordan and Vietnam. The ground-breaking United States- Jordan agreement was submitted to and approved by Congress in January of last year. And although negotiated by the previous administration, the United States-Vietnam agreement was actually submitted to Congress by the current administration. It was approved in June of last year. Furthermore, in the absence of fast-track authority the current administration has found it possible and prudent to carry forward the negotiations for bilateral free trade agreements with Chile and Singapore which were initiated by its predecessor. The case of Chile is particularly instructive. In 1994 Chile declined an invitation to join NAFTA, citing the Administration's failure to obtain fast track authority. Six years later, however, Chile reconsidered its position and in 2000 entered into negotiations on a United States-Chile bilateral agreement. Negotiations since then have continued more or less on a monthly basis, and in a report dated April 1, 2002 and titled ``Chile: Political and Economic Conditions and U.S. Relations'', the Congressional Research Service concluded that ``Chile's trade policies and practices indicate that it is willing and able to conclude and live up to a broad bilateral FTA with the U.S., suggesting that this could be a comparatively easy trade agreement for the U.S. to conclude.'' In 1997, I opposed the previous administration's request. It was my view then, as it is my view now, that the arguments for fast track have been vastly overstated--they simply ignore our continuing success in concluding agreements that open foreign markets to U.S. exporters and benefit U.S. consumers. Chile and Singapore offer a case in point. The absence of fast track has not prevented negotiations with either, yet this legislation would apply the procedure retroactively. It is not clear why this should be necessary. Additionally, I want to remind my colleagues that in December of last year our colleagues in the House of Representatives approved H.R. 3005 by a single vote, 215-214. Writing in the Washington Post, David Broder called this a ``shaky victory on trade.'' He observed about that ``longtime supporters of liberal trade'' voted against fast track because ``trade agreements now go far beyond tariff reduction and involve tradeoffs on intellectual property rights, environmental standards, basic labor laws and other issues''--issues too important, in Broder's words, ``to delegate sweeping authority to any administration to negotiate them away.'' These are the concerns, he wrote, of ``people who are by no means protectionists.'' Indeed, these are the concerns of the American people, and it is for this reason that trade agreements affecting vital areas of social and economic policy should not be hurried through Congress using an expedited and restrictive procedure. Finally, not only do I disapprove of this measure as passed by the Senate, but I am deeply troubled by two very significant changes made to the legislation in conference. Whereas the Senate bill provided that employees whose factories move overseas would automatically qualify for health insurance, job training, and unemployment benefits, under the compromise, only workers whose companies relocate to countries that have a preferential trade agreement with the U.S. would be covered. Other workers would have to undergo a qualifying procedure through which the USTR must determine that the move was linked to trade. Additionally, during the Senate's consideration of the trade bill, Senators Dayton and Craig offered an amendment to the fast-track bill to allow Congress to consider provisions within trade agreements that weaken U.S. trade remedy laws. The amendment had the support of 61 Senators and was adopted by voice vote. Following passage of the trade bill, I joined many of my colleagues in urging the conferees to preserve the Dayton-Craig language. Under the compromise reached, however, this language was removed from the bill and replaced by non- binding language allowing members to simply express their objections to a particular trade provision. And as my colleagues are aware, over the weekend, our colleagues in the House approved the package that emerged from the conference by a margin of 215-212, a margin greater than that of last year's House vote by only two. It seems clear that the compromise before us is not a consensus on trade and I would urge my colleagues to oppose the conference report to H.R. 3009.

Mr. SARBANES

Mr. SARBANES. Mr. President, I simply thank the very able Senator from West Virginia for once again calling on the Senate to face these very fundamental questions that are involved and which he has been speaking to in the course of the day. I think it behooves all of our colleagues not only to have listened to the able Senator but to go back and read his remarks and to consider them carefully and thoughtfully as we address this major legislation. Now we are embarked, of course, on creating a new Department, but we need to be very careful in how we do it. We need to be very thorough in how we do it. We need to be very thoughtful in how we do it. I commend the chairman of the committee, the able Senator from Connecticut, because I think he has brought all of those qualities to this legislation that he has now brought forth in the Senate. There are very important questions involved here in terms of how the political system works and how the checks and balances work and what the allocation of powers is. Some say this is a fight over turf or over prerogatives. It is no such thing. This is trying to resolve the most basic questions about how our system of self-government is to work and what the balance is to be between the legislative and the executive branches; indeed, the judicial branch is drawn into this, as well. I hope as we address this legislation in the days to come, my colleagues keep in mind the analysis and the history which the Senator from West Virginia has brought to the floor today. I express my deep appreciation once again. He reminds us of the fundamental questions we confront and of the importance of rising to this occasion.

Mr. SARBANES

Mr. SARBANES. Mr. President, will the distinguished chairman yield for the purpose of a colloquy concerning a program of great importance to ensuring the continued health and safety of our nation's Armed Forces?

Mr. SARBANES. I thank the chairman for his continued efforts on behalf of our men and women in uniform, and I look forward to continuing to work closely with him on this vital project. chemical agent warning network

Mr. SARBANES. Mr. President, at present, the military lacks a process in which emerging medical technologies can be adapted and tested in real time emergency situations that replicate high velocity and surgical care settings. With the assistance of the Senator from Hawaii, Congress last year appropriated $2.5 million to begin development of a national test bed to implement the U.S. Army Medical Research and Materiel Command's ``Operating Room of the Future'' strategy to remedy this situation. This test bed, to be based at the University of Maryland Medical Center, aims to improve the performance of these emerging technologies and expedite their transfer to medical care in the battlefield. This will be done via testing new approaches to video- assisted coordination, synchronized communications, mobile computing options, telesurgery techniques and distance learning. While spearheaded by UMMC, this program is linked via a number of collaborations with both industry and the military. In its fiscal year 2003 Defense appropriations bill, the House has included $3 million of the $9 million necessary to continue work on the Operating Room of the Future initiative. The Senate bill directs the Secretary of Defense to consider the Operating Room of the Future for funding under the Defense Health Program's $50 million Peer Reviewed Medical Research Program. I am pleased that both bills contain language supportive of the Operating Room of the Future, and I respectfully request that the Chair work with his colleagues on the conference committee to ensure that the continued funding needs of this critical program are being met.

Mr. SARBANES

Mr. SARBANES. Mr. President, I want to take the floor for a moment or two to commend the able Senator from New Jersey for the statement that was just made about Social Security privatization, and for focusing on this absolutely outrageous statement made by the White House Press Secretary earlier this week. To terrify people with that kind of statement is absolutely irresponsible. I think it is very important that be put on the Record. I thank the Senator from New Jersey for the analysis and focus he is bringing to this issue of privatizing Social Security. It is an extraordinarily important issue. I agree with the Senator that it ought to be fully debated. The President and his advisers apparently have not abandoned their bad idea of privatizing Social Security. If that is the case, then we need to lay out in front of the country exactly what is involved. The biggest thing involved, in my judgment, is the very point which the able Senator from New Jersey was making just a few moments ago; that is, the question of the guaranteed benefit. Under the existing Social Security system, we seek to provide an assured benefit level in Social Security. So when someone stops working, and they start drawing their Social Security, they are told, you will get X amount of dollars per month in your Social Security check. In addition, of course, we also provide for a cost-of-living adjustment in that check. So the beneficiary, in planning their retirement, and their standard of living under retirement, knows that each month the Social Security check will come, and it will be in this amount--a guaranteed benefit-- and that they can count on that. The privatization, first of all, undercuts the guaranteed benefit concept, and carries with it the risk that your monthly benefit check may be far less. It also carries the risk it may be far more. But who knows? Who knows? Can you imagine the trauma of senior citizens all across the country if the amount of their Social Security check had been linked to the movement of the stock market in recent months? You would have some elderly person, for whom Social Security is their only source of income, reading stories about the drop in the Dow Jones and the Nasdaq and all the rest of it, thinking to themselves: How much is going to be in my next monthly check? How am I just going to get through the necessities of life if the amount of my Social Security check is going to drop, because of it now being tied to the movements in the market? Any responsible discussion about this has been that you would have an add-on over and above Social Security that might then be placed in the market, so at least you would guarantee to the person sort of the minimum retirement upon which they could absolutely plan and absolutely count. And that is what needs to be laid out and debated. The Senator from New Jersey has pinpointed that concern. I commend him for doing it. It is very important. People need to focus on this issue. We need to have this debate. We ought not to be in a situation where the White House Press Secretary can make the kind of statements he is making, seek to undercut confidence in the system, and then use that as an argument for some fundamental change which would jeopardize the guaranteed benefit aspect of the Social Security system which is an extremely important part of it. I thank the Senator for the excellent job he is doing in bringing this issue to the attention of the Nation. Mr. President, I suggest the absence of a quorum.

Mr. SARBANES

Mr. SARBANES. Yes, it would.

Mr. SARBANES

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

Mr. SARBANES

Mr. SARBANES. Mr. President, I ask unanimous consent to be able to proceed as if in morning business, with the time to be charged against the time that was allocated for debate on the pending amendment.

Mr. SARBANES

Mr. SARBANES. Mr. President, I thank the Senator from Vermont. I underscore again how important his contributions were. The Senate Judiciary Committee reported out a bill without opposition in the committee. That is something which accompanied this legislation. I yield 4 minutes to the Senator from South Dakota, and then it is my intention to go to the Senator from North Carolina.

Mr. SARBANES. Mr. President, I yield 6 minutes to the Senator from North Carolina.

Mr. SARBANES. Mr. President, I note that the Congress, in the Enhanced Review of Periodic Disclosures section in the Sarbanes-Oxley Act, provides for regular and systematic reviews by the Securities and Exchange Commission of the periodic reports filed by public companies that are listed on a national securities exchange or on Nasdaq. The section requires that there be some review of issuers' disclosures at least once every three years. The bill identifies factors which the Commission should consider in scheduling reviews, including the issuer's capitalization, stock price volatility and restatements of earnings. We expect the Commission to exercise its discretion to determine the appropriate level and scope of review for each company's reports in the furtherance of the protection of investors and the public interest.

Mr. SARBANES. So there is 1 hour on each side.

Mr. SARBANES. Madam President, I yield myself 10 minutes.

Mr. SARBANES. Madam President, I am very pleased that we are now considering the conference report on the Public Company Accounting Reform and Investor Protection Act of 2002. The Senate approved this legislation on July 15 on a 97-0 vote. Conferees were named promptly both here and in the House, and the conference committee immediately went to work. Agreement was reached yesterday in the early evening, about 7 o'clock, by the conference committee, and the House took up the conference report this morning and acted on it earlier in the day. The vote, I believe, was 422--3. The conference report has now come over to us, and obviously, under our procedures, it is our turn to proceed to consider it. This legislation establishes a carefully constructed statutory framework to deal with the numerous conflicts of interest that in recent years have undermined the integrity of our capital markets and betrayed the trust of millions of investors. I say to my colleagues that in every one of its central provisions, the conference report closely tracks or parallels the provisions in the Senate bill for which, as I indicated earlier, all the Members present at the time, 97 of us, voted only a short time ago. This legislation establishes a strong independent accounting oversight board, thereby bringing to an end the system of self- regulation in the accounting profession which, regrettably, has not only failed to protect investors, as we have seen in recent months, but which has in effect abused the confidence in the markets, whose integrity investors have taken almost as an article of faith. This legislation reflects the extraordinary efforts of many colleagues on both sides of the Capitol. I want especially to recognize and express my deep gratitude to Senators Dodd and Corzine who early on introduced legislation that in many respects serves as the basis for titles 1 and 2 of this legislation. On the House side, Congressman LaFalce introduced comprehensive legislation on which we drew. I also wish to acknowledge the many important contributions that my Republican colleague, Senator Enzi, made at every step in the process. Senator Enzi had legislation of his own, but in addition we worked very closely in the course of developing this legislation. Again and again I was struck by the thoughtfulness and reasonableness of his proposals for improving in the legislation. While in the end not all of them were included in the legislation, a significant number are, and I thank him very much for all his contributions. Before addressing the major provisions of the legislation, let me make very clear that it applies exclusively to public companies--that is, to companies registered with the Securities and Exchange Commission. It is not applicable to provide companies, who make up the vast majority of companies across the country. This legislation prohibits accounting firms from providing certain specified consulting services if they are also the auditors of the company. In our considered judgment, there are certain consulting services which inherently carry with them significant conflicts of interest. Auditors, in effect, find themselves in the position of auditing their own work. They may be acting as management of the company, for instance, on personnel matters when, as the outside auditor, they were supposed to be standing one step removed from the company as the outside auditor. This is the reasoning behind the prohibition. What has happened in recent years is that the fees earned from the consulting work have dwarfed the fees earned from the auditors, which inevitably leads to concerns that punches may be pulled on the audit to accommodate the significant and remunerative involvement on the consulting side. Certain enumerated consulting practices are therefore not allowed, with the exception that a case-by-case exemption can be obtained from the oversight board that this legislation establishes. The auditor can engage in the balance of consulting services with the pre-approval of the audit committee of the corporation. And of course an auditor can engage in whatever consulting services the firm and the corporation agree upon so long as the firm is not also acting as the corporation's auditor. The bill sets significantly higher standards for corporate responsibility governance. It requires public companies to have independent audit committees and also enhances the role of the audit committee, which will have responsibility for hiring and firing the auditors and setting their compensation. The legislation requires full and prompt disclosure of stock sales by company executives. Senator Carnahan added an important provision to the bill, requiring electronic filing with respect to such sales. That requirement would take effect in a year's time, to allow time for the necessary systems to be put in place; once in place it will assure prompt and accurate disclosure of these very significant transactions. The legislation places limits on loans by corporations to their executive officers. It sets certain requirements for disclosure with respect to special purpose entities, which were used by some corporations that have run into such serious difficulty in recent months. It seeks to address the statement of pro forma earnings, in order to assure a more complete and accurate picture of a public company's financial position. It also addresses the conflicts of interests that arise for stock analysts to whom investors look for impartial research-based advice about stocks. Unfortunately, many of these analysts are under pressure to promote stocks in which their broker-dealer firms may have an investment banking interest; on the one hand they are supposed to give unbiased advice to potential purchasers of stock, whether to buy or sell, but at the same time the firm of which they are a part is interested in developing a business relationship with the company on which the analyst is passing judgment. It has been sobering to discover that analysts have been formally recommending certain stocks to the investing public, while at the same time discussing them contemptuously among themselves. We have had too many demonstrations of this occurring. The legislation includes provisions to protect analysts against retaliation, in cases where a negative recommendation may invite retaliation. Furthermore, the bill authorizes significant increases in funding for the Securities and Exchange Commission, which for the first time in many years will give it something close to the funding resources it needs. There are also extensive criminal penalties contained in this legislation. These were initially included in legislation reported by the Judiciary Committee, which Senator Leahy offered as an amendment to the bill. The House then passed its own bill with respect to criminal penalties, a separate standing bill, which in many instances doubled or even tripled the penalties in the Leahy proposal as it came to the floor, and the Leahy proposals were further supplemented by an amendment from Senators Biden and Hatch and another from Senator Lott.

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

Mr. SARBANES. Madam President, parliamentary inquiry of the Chair: What is pending before the Senate?

Mr. SARBANES. Mr. President, we are down quite far in our time. Senator Dodd, who wishes to speak, is at a memorial service. I suggest if the other side could use some of its time, it would be helpful in balancing this out. I ask unanimous consent that while we are trying to work this out the time not be charged to either party, and I suggest the absence of a quorum.

Mr. SARBANES. I yield myself 4 additional minutes.