Jim Saxton

Mr. SAXTON

Mr. SAXTON. If the gentleman will yield, it is implicit in this the chairman of the Committee on Science, the gentleman from Pennsylvania, will support our effort to bring H.R. 1175 to the floor.

Mr. SAXTON. That is correct.

Mr. SAXTON. If the gentleman will yield, that is essentially correct. I think it is important that we make this move today. I once again appreciate the fact that you are willing to meet us at the appropriate target with regard to funding. I would just point out that during the debate under an open rule as I understand it when H.R. 1175 comes to the floor, that will give us the opportunity to debate the issues that the gentleman from New Jersey [Mr. Pallone] just spoke about and that are also of concern to me, namely, the Sea Grant Fellows Program, the Marine Advisory Service Program, as well as provisions that are in H.R. 1175 that relate recommendations made by the National Academy of Sciences which help to streamline the program. There may be some other issues involved under that open rule as well. With that having been said, we agree to accept the Weldon amendment today.

Mr. SAXTON. Mr. Chairman, I thank the gentleman for yielding. Mr. Chairman, first let me express my appreciation for the movement that the gentleman has shown relative to the level of funding. I do appreciate that. However, I must also say that it is somewhat disingenuous to characterize this amendment as a deauthorizing amendment. The gentleman knows full well that this program ran out of its authorization time at the beginning of this year and, just like the Endangered Species Act and many other laws which are currently ongoing without an authorization bill, this one is as well. So I think it is a mischaracterization of this process to say that this amendment deauthorizes the act. What we are trying to do is to put in place a policy statement, through the process that we have been engaged in on a bipartisan basis together, to bring an appropriate bill to the floor. So, once again, I appreciate what the gentleman has done but I strongly disagree with his position.

Mr. SAXTON. Mr. Chairman, will the gentleman yield?

Mr. SAXTON. Mr. Chairman, earlier this year Chairman Don Young of the Committee on Resources introduced legislation to reauthorize the sea- grant program. The Committee on Resources is the primary committee of jurisdiction for the program and has reported the bill to the House. The Committee on Science received a secondary referral on the bill and has also reported the measure. The Committee on Resources agreed in good faith to let the bill we are now considering come to the floor before having worked out a compromise with the Committee on Science on the NOAA provisions over which we share jurisdiction. Unfortunately, the Committee on Science has refused to negotiate on sea grant. Mr. Chairman, as I said, unfortunately the Committee on Science has not negotiated on sea grant. This bill includes the Committee on Science's version of sea grant, not the version reported by the committee with primary jurisdiction. Therefore, I am offering an amendment to strike the sea-grant provisions from the bill. This will allow H.R. 1175, the bill Chairman Young introduced earlier this year, which has been acted on by both committees of jurisdiction and is now in a position to come to the floor. The national sea-grant college program is a network of over 300 colleges, universities, secondary, and elementary schools and research institutions throughout the country focused on the wise use of marine resources. For nearly 30 years, the sea-grant program has played an essential role in helping our Nation to utilize more fully its vast publicly owned marine coastal and Great Lakes resources which are vital to the lives of Americans living in the rapidly growing population areas along the coastal areas. This bill is modeled after the land-grant college concept. Sea grant uses high-quality, competitive merit-reviewed science to address critical marine resources issues and dismantles the results of that work through its education and advisory service activities. Federal funding for sea grant is highly leveraged. Nearly half of the total program cost is derived from non-Federal sources. H.R. 2405 guts sea grant. H.R. 1175, the bill reported by the Natural Resources Committee, which has primary jurisdiction over sea grant, does not gut the program. Quite to the contrary, it improves it. H.R. 1175 makes significant improvements in sea grant by streamlining the proposal review process, reducing administrative costs, capping the total program costs below services level, and clarifying Federal and university roles in the program. H.R. 1175 is also consistent with the House-passed Commerce appropriations bill which we might add makes appropriations consistent with our bill, H.R. 1175 should be the bill that the House considers. If Members believe, as I do, that the long- term viability of our Nation's marine resources should be maintained for future generations, then I urge they will vote for this amendment. Perfecting Amendment Offered by Mr. Weldon of Pennsylvania

Mr. SAXTON. Mr. Chairman, I offer one additional amendment.

Mr. SAXTON. Mr. Chairman, I understand that Chairman Walker has also agreed to this amendment. Like the first amendment, this amendment adds the Committee on Resources to the distribution list for a report, this time on NOAA laboratories. NOAA's labs are used for the support of its resource management activities, including fisheries research, and the Committee on Resources would benefit very much from this information.

Mr. SAXTON. Mr. Chairman, if the gentleman will yield, I apologize for that unfortunate use of the word uncontroversial. I certainly did not mean to represent the position of the minority in this matter.

Mr. SAXTON. Mr. Chairman, I understand that the gentleman from Pennsylvania [Mr. Walker], chairman of the committee, has agreed to accept this amendment. It merely adds the Committee on Resources, which shares jurisdiction over the National Oceanic and Atmospheric Administration to the distribution list of a report on NOAA Program terminations authorized by H.R. 2405. On this list there are several programs with resources jurisdictions.

Mr. SAXTON. Mr. Chairman, I offer an amendment.

Mr. SAXTON. Mr. Chairman, I ask unanimous consent to withdraw my original amendment.

Mr. SAXTON. Mr. Chairman, I would like to get a clarification in the from of a parliamentary inquiry here. My understanding of the situation before the last vote that was just taken was that I had an amendment pending to which the gentleman from Pennsylvania [Mr. Weldon] had an amendment.

Mr. SAXTON. That is correct, inasmuch as his amendment was an amendment to my amendment.

Mr. SAXTON

Mr. SAXTON. Mr. Speaker, I would like to bring to your attention an excellent article by Stuart Anderson, policy director of the Alexis de Tocqueville Institution. His article in Investor's Business Daily on September 28, 1995, ``Beware Politically Correct Investing,'' explains why the Federal Government should not require or encourage pension funds to make investments based on criteria other than the risk- adjusted rate of return of an investment. This is an important and particularly timely article considering the Clinton administration's current efforts to conscript private pensions assets into so-called economically targeted investments, which are better described as politically targeted investments. The Alexis de Tocqueville Institution employed data provided by Morningstar, Inc. that compared the annualized returns of 13 ``socially conscious'' mutual funds that invested in growth funds to the universe of growth funds. The result was that, ``Over 3-, 5- and 15-year growth periods, the average growth fund always outperformed the average socially conscious growth fund.'' This new report supports the conclusions of a previous report by the Republican staff of the Joint Economic Committee [JEC]. The JEC report, entitled ``The Economics of ETIs: Sacrificing Returns for Political Goals,'' showed how the investment underperformance caused by ETIs would cost an average of $43,298 per private pension plan participant after 30 years. These findings highlight the need for Congress to keep overzealous political appointees in check. In this case, the concern is Labor Secretary Reich's vocal advocacy of ETI's, even given their dismal record. If ETI's underperform non-ETI's, as numerous private studies have shown, then what possible rationale is there to support their implementation? One possible conclusion is that ETI advocates are more interested in the politically driven projects financed by ETI's than in protecting the pension savings of millions of Americans. It is simply not possible to reconcile two fundamentally conflicting goals assigned to pension plans by Secretary Reich. Traditionally, pensions have had but one goal: to maximize risk-adjusted rates of return. Secretary Reich, however, has added a second goal to pension plans: to utilize pension assets to achieve some political benefit for persons other than the pension beneficiaries. The Labor Secretary's desire to push such a risky political investment strategy, however, flies in the face of his duty to serve as a trustworthy guardian of the nation's pension system, safeguarding it from, among other things, unnecessary risk of pension losses. But ETIs are not the first time that Secretary Rich has required Congressional oversight. [[Page E 1939]] Earlier this year, Secretary Reich attempted to politicize the long- standing non-partisan status of the Bureau of Labor Statistics as part of his Central Oversight Group [COG]. Despite a public and unambiguous promise to the Congress that no such actions were being taken and that no memos on the subject existed, internal DOL memos surfaced that showed otherwise. At best, Secretary Reich was misleading about his efforts to politicize the Department of Labor in furtherance of a liberal welfare agenda. In order to strengthen and protect America's pension system, the House of Representatives recently passed a measure that would shut down the Department of Labor's clearinghouse to ecounrage ETIs. Moreover, it would make ETIs off limits for private pension funds. We want to encourage pension funds to make investments that would earn the greatest returns for pensioners. The government should not be encouraging social experiments, particularly ones that, as this article demonstrates, have already proven to produce a lower return on investment. I include the full text of the article by Stuart Anderson and recommend my colleagues read the analysis in it. Beware Politically Correct Investing (By Stuart Anderson) President Clinton says he wants to protect current and future retirees from Congress' assault on Medicare. But the administration is itself undermining public- and private- sector retirement plans. It is encouraging pension funds to undertake socially conscious investing--a proven loser for the workers such funds are meant to benefit. In the past, the concept has been criticized even by Clinton Treasury official Alicia Munnell, now a nominee to the Council of Economic Advisers. A 1983 study by Munnell, then with the Federal Reserve Bank of Boston, looked at public-employee pension funds, which are exempt from ERISA requirements. She found that state ``pension fund managers failed to exact appropriate returns on very standardized investments, in the presence of obvious benchmarks, once they focused on social considerations.'' She found that annual returns were about two percentage points lower for ``social'' investments, a number confirmed by at least two more recent studies. An analysis by the Alexis de Tocqueville Institution shows that private funds also lose on ``social investing.'' Employing data provided by Morningstar Inc., we compared the annualized returns of 13 ``socially conscious'' mutual funds that invested in growth stocks to the returns of all other growth mutuals. Over three-, five- and 15-year periods, the average growth fund always outperformed the average socially conscious growth fund. Socially conscious funds typically do not invest in defense contractors, tobacco companies or industries at odds with environmental groups. Of the 13 funds, only Dreyfus Third Century possessed a 15- year track record, and it performed far lower than the average growth fund that did not set social criteria. A $10,000 investment in Dreyfus Third Century would have resulted in $48,759 after 15 years. Meanwhile, the same $10,000 invested in the average ``non-social'' growth fund would have produced $74,934, or $22,000 more for the investor. Despite its obvious failings, the Clinton administration has encouraged socially conscious investing. In June 1994, the California Public Employees' Retirement System added how a company treats its employees to its list of criteria for choosing which companies to invest in Labor Secretary Robert Reich said: ``That is a big deal. It's really the first time an institutional investor has explicitly pointed to employer practices as important to its analysis of company performance.'' Public pension funds are often defined benefit plans--ones that provide a fixed guaranteed rate. Any shortfall in return forces state and municipal taxpayers to make up the difference. Reich's support for CalPERS' policy could hurt taxpayers around the nation. Reich is not a lone wolf on this issue. Arkansas Gov. Bill Clinton supported a requirement that pension funds direct 5% to 10% of assets to Economically Targeted Investments. And Reich hasn't stopped at cheerleading. Federal law--the Employee Retirement Income Security Act-- requires a private pension fund manager to ``discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries.'' ERISA names the Labor Department to police this requirement. But last year, Reich issued an interpretive bulletin that would allow private pension funds to pick investments ``selected for their economic benefits apart from their investment return to the employee benefit plan.'' In other words, private funds could engage in what are called Economically Targeted Investments--ones in public housing or local infrastructure that have a social or community aim. The administration also decided to set up a clearinghouse to promote ETIs to private pension funds. Rep. James Saxton, R-N.J., vice chairman of Congress' Joint Economic Committee, has taken the point against this Clinton policy. He led the House to pass a bill to shut down the clearinghouse and put ETIs off limits to private pension funds. Instead of encouraging private pension funds to act more like public pension funds, the federal government should consider extending ERISA's reach to public pension funds. In the words of Nucor Corp. CEO Ken Iverson. ``The proper role of institutional investors is to watch out first for their investments not to get involved in social programs.''

Mr. SAXTON

Mr. SAXTON. Madam Speaker, as vice chairman of the Joint Economic Committee, I rise today to thank and wish the best of luck to Juanita Morgan, or Nita, as all her friends call her. I have had the great pleasure of working with Nita, who after 16 years of loyal and dedicated service, is leaving the Joint Economic Committee to join the private sector. During her tenure with the committee, Nita has worked in a variety of [[Page H 9677]] professional and administrative roles including planning hearings, producing studies, and generally making the trains run on time. Nita has worked with a number of JEC members including our distinguished majority leader, Mr. Armey, Senator Roth, Congressman ``Bud'' Brown, and many others. Over the years Nita has impressed all of us with her dedication, creativity, and professionalism. Nita has worked on the most successful JEC projects from the formation of what would become the Reagan Economic Revolution to the New Republican Renaissance. Nita Morgan will be sorely missed. But we do wish her nothing but the best in her new position with the Business Leadership Council. Nita, good luck and godspeed.

Mr. SAXTON

Mr. SAXTON. Mr. Speaker, I ask unanimous consent that my name be withdrawn as a cosponsor of H.R. 497.

Mr. SAXTON

Mr. SAXTON. Mr. Chairman, I rise in support of H.R. 39, the Magnuson Fishery Conservation and Management Act, and ask to revise and extend my remarks. Congress enacted the Magnuson Act and created the 200-mile fishery conservation zone--now called the exclusive economic zone--in direct response to a dramatic rise in foreign fishing off the coasts of the United States in the early 1970s. One undisputed success of the Magnuson Act has been the virtual elimination of foreign fishing within the exclusive economic zone. According to some environmental groups, the Magnuson Act succeeded in getting rid of foreign overfishing only to replace it with domestic overfishing. Our fisheries resources are facing an acknowledged crisis. The National Marine Fisheries Service reports that some of the Nation's most historically important fisheries are in serious decline, including several key species of Northeast groundfish, many Pacific coast salmon runs, and Gulf of Mexico shrimp. During this year's reauthorization, the Magnuson Act must provide a framework for the recovery of diminished stocks. One of the issues that will have to be addressed is ``overfishing.'' The original Magnuson Act did not define overfishing and the time has come to do so. Our fisheries resources are too valuable to squander away. The Magnuson Act in its current draft is not perfect, but it is comprehensive and does address the problems I mentioned. One area that I may offer an amendment on is in the definition of bycatch. Recreational fishermen are concerned that the bill's definition of bycatch and the new language regarding this definition will cause the ``catch and release'' fisheries to be closed down by regional councils. I may offer an amendment to make clear that ``catch and release'' fisheries cannot be eliminated by regional management councils to minimize bycatch. In closing, I compliment the chairman of the Resources Committee, Don Young, and the ranking minority member of the Subcommittee on Fisheries, Wildlife and Oceans, which I chair, Gerry Studds, for their bipartisanship during the drafting process of this bill.

Mr. SAXTON

Mr. SAXTON. Mr. Chairman, I move to strike the requisite number of words. [[Page H 8759]] Mr. Chairman, I would say to the subcommittee chairman, the gentleman from Illinois [Mr. Fawell], do not be so distraught over this amendment because whether it passes or not, it has no effect, because the bill does not do what the proponents claim that the perception is. I would just like to make the observation that the opponents of this bill are very clearly anxious to avoid the key issue, the underperformance of ETI's. That is what this bill is all about, and this amendment has nothing whatsoever to do with the issues that are of concern to those of us who have worked so hard for a year to get this bill in the place that it is today. All of the amendments from the other side, those to come, seem destined to distract attention away from the fact that ETI assets offer lower yields and more risk. That is what this is all about. The bill has nothing whatsoever to do with foreign investment or domestic investment. Would anybody who is watching this debate think that those of us on this side of the aisle would be foolish enough to restrict domestic investment? Do they think that you would be foolish enough to read the language and really think that is true? It is fallacious, and your amendment is fallacious, as well, and you know it. Frankly, I am a little bit surprised that we are having this debate here today. Let me talk a little bit about how fallacious your amendment is. The amendment starts with the assumption that an ETI investment and alternative investments offer exactly, that is your words, the same risk-adjusted return. I would suspect that you would agree with me that at some point you cannot determine what is exactly the same rate of return and exactly the same risk. The Nobel laureate James M. Buchanan, in his book ``Cost and Choices,'' makes that very point. There is no such thing in the world of economics as exactly the same rate of return and exactly the same risk, so this amendment on its face begins with an assumption that is not possible, according to the learned James Buchanan. I would also point out that your argument is fallacious for another reason, and that is that the charts we have before us talk about the outflow of capital beginning in 1989 and continuing into years beyond 1995. Why, this bill was not even thought of until 1994. Yet beginning in 1989, 5 full years earlier than the bill was conceived, you claim that somehow the perception was created 5 years before the bill was conceived that made all this happen. Mr. Chairman, it is an attempt to confuse. This amendment has nothing to do whatsoever with the main issues that we are talking about here today, the protection of the rate of return and the minimization of risk in private pension plans. I would make one other point, and that is that as I look at these charts, 1989 and 1990 were certainly watershed years. We had the largest tax increase that year in the history of our country. Then we had another one that trumped it in 1993, making it more difficult to do business in this country, making it more difficult, with the votes of all of my colleagues over there, to make a profit in this country. My, it is not strange that pension fund managers would invest off shore. Is it not strange? So I say to the gentleman on the other side of the aisle, he is not fooling anyone. This has nothing to do with the substance of the bill. The bill does not speak to this in any way. The bill does not restrict domestic investment in any way. No one would be foolish enough to advance such a notion, except perhaps the author of this amendment. So I guess I would plead with the gentleman from the other side of the aisle, please, let us get on with the business of the day. If the gentleman wants to talk about whether or not the rate of return in ETI's is less, it is 2 percent less or 3 percent less or whatever it is, or how much it hurts private pension plans, that is fine. We can talk about that. That is what this bill is about. Or if the gentleman wants to talk about how much additional risk is created by virtue of investing in socially motivated risky investments, we can talk about that. Mr. Chairman, this amendment has nothing to do with the substance of this bill whatsoever. It is an attempt, and I think a poorly disguised attempt, to cloud the issue.

Mr. SAXTON. Mr. Chairman, I thank the gentleman for yielding time to me. First let me say that the gentleman from Texas, Mr. Steve Stockman, has been a tremendous help on this bill. His name should have appeared as a cosponsor, and did not through some oversight. But I want to thank him and make known that he has been a tremendous help on the bill. Let me just say, Mr. Chairman, that this bill does three things: It negates the interpretive bulletin that has been talked about so much here today; it does away with the clearinghouse that was created by the Clinton-Reich effort; and it stops other Federal spending on efforts to move forward with this flawed concept. In other words, it returns the situation to the status that it enjoyed exactly during the Bush and Reagan administrations. Nothing has been changed with the law, nothing has been changed with the administration. It just rolls back what was done by Secretary Reich and President Clinton. We have heard a lot about issues that have very little to do with this bill today. We have heard about the flow of capital to foreign countries, which we will talk a little bit more about later. We have heard about political motives. We have heard about cutting job training and other programs. My goodness, we even heard about the B-2. These issues have little, if anything, to do with the substance of what this administration has done. There are two issues that are of importance in this entire debate. One is, what does it do to the rate of return on investments made with private pension moneys, the moneys of America's workers? The rate of return is something we all need to pay a great deal of attention to. It is our responsibility, if the overwhelming weight of evidence shows clearly that the rate of return significantly diminished in those pension funds that engage in ETI's. Alicia Munnell, who is with the Department of Labor and has been nominated to be a member of the Council of Economic Advisers in the administration, concludes that a 2-percentage point difference will be felt by pension funds that invest in ETI's. Olivia Mitchell of the Wharton School concludes exactly the same thing. Some academics that dealt in the world of finance, Mar & Nofziger-Lowe, conclude that as much as 210 basis points or 2.1 percent less in returns can be expected in ETI's, so there is no debate, in my opinion at least, about the effect in investing in these socially risk investments. The other issue is whether or not this increases risk. I think it was best summed up in a recent article in Business Week by Alina Burgh, President Clinton's top pension regulator, when she admitted ``The ambitious nature of this project is difficult because it is a radical notion.'' It is a radical notion, as it is pursued by this administration. That is why I think, without exception, Members of this House should vote to say, ``Stop and look at this situation, roll back the interpretive bulletin.'' The pension community backs our bill. The Committee of Investment and Employee Benefits Assets, people who know and deal in these issues every day, and which represents 164 corporate pension plan sponsors who are responsible for investing and management of $900 million in ERISA-governed pension assets on behalf of 12 million participants, back this bill. The Association of Private Pension Funds and Welfare Plans, the APPWP, say, ``We share Representative Saxton's opinion and yours''-- this is addressed to Mr. Fawell--``that ERISA's fiduciary standards will not be interpreted in a manner that will allow the value of benefits of plan participants and beneficiaries to be jeopardized.'' We do not want to jeopardize other people's money. They have saved it for their retirement: The factory worker, the clerk in the department store, the person that delivers parcels. All these folks are concerned, and we should be as well. Vote to support this bill.

Mr. SAXTON. Mr. Chairman, I would just point out very quickly that as the last speaker indicated, ETI's have been around for quite some time in the context of an investor, a pension fund manager coming to the Department of Labor during the Bush or Clinton administration and requesting an advisory opinion on an ETI. What is different in this administration is that $1 million has been spent to create a group to promote ETI's; people have traveled around the country making speeches promoting ETI's, and in fact, people who are here to regulate pension funds and pension fund managers have knocked on people's doors and said gee, we think as regulators it would be a great idea for you to do ETI's. That, Mr. Chairman, is very, very different.

Mr. SAXTON. I just want to state for the record the previous speaker was in error in stating that George Bush, when he was President, created a clearinghouse for the purposes of promoting economically targeted investments. The fact of the matter is he did not. It was created pursuant to the election of Bill Clinton and the appointment of Robert Reich, and never under the Bush administration.

Mr. SAXTON. Mr. Chairman, will the gentleman yield?

Mr. SAXTON. Mr. Chairman, let me first commend the gentleman for his tireless efforts in bringing this bill to the floor. It is certainly something worthy of debate today. Let me say at the outset that while I certainly acknowledge and respect the differences we have in terms of the differences with our Democrat friends on this issue, this debate is certainly one that is worthy of taking place, and certainly is not, as one of the previous speakers mentioned, a waste of time. This debate is about workers' savings, workers' savings for their retirement years. It is about $3.5 trillion in savings that more than 36 million American workers put aside each day in the hope that it will be there, in the belief it will be there when they retire. That 36 million, I might remind the gentleman from the other side of the aisle, there are 80,000 of those 36 million in each of our districts, and they are counting on us to do the right thing. It is about factory workers, factory workers who sit in the lunchroom each day and talk about their plans for retirement and their retirement fund. It is about a clerk in a department store who goes home and talks with his or her spouse in the evening about what they are going to do when they retire and about their retirement fund. It is about the parcel delivery person who works hard all day and hustles around town in that little brown truck, and goes home at night to think about what he or she is going to do with his or her retirement fund when the time comes. And it is about the Clinton administration's plans to enter into an investment scheme which will severely erode the pension funds of these people. They are our friends and our constituents, and we have a duty here today to vote to protect their pension funds. A waste of time? I do not think so. As a matter of fact, I think it would be a good use of time for Secretary Reich to write each of my 80,000 worker constituents a letter and say, ``We have put into place policy that could cost your pension fund as much as, yes, $43,200-some- odd dollars,'' whatever the number is. I think that would be a good use of time for Secretary Reich to do that. They call it, here in Washington, DC, ETI's. That is a fancy beltway term. It means the use of Americans' retirement savings to make some risky social investments, causing pension funds to fail or earn less. We do not claim they earn less. Your Secretary of the Treasury claims they earn less. As a matter of fact, Alicia Munnell from the Department of the Treasury says that pension funds that invest in ETI's historically earned 2 percent less than pension funds that have not invested in these risky social investments. That means, according to our calculations, based on her assumptions and her figures, that over 10 years these pension funds would lose $90 billion and over 20 years $520 billion, and over 30 years $2.2 trillion in losses. Tell the factory worker, tell the clerk in the department store, tell the folks that hustle around delivering parcels that this is what it means to their pension funds. On an individual basis, look what it means to the individual as we project into the out years. We see a real gap, a difference between what they would have earned on their returns if they had been invested correctly and what they will if they are invested under Secretary Reich's plan. Yes, at the end of 30 years the worker who is now 35 years old and retires when he is 65 years old would have $43,000-plus less, a loss, in his pension fund or her pension fund because of this foolishness that is being carried out by the Clinton administration and the Secretary of the Treasury. Experience proves that the Clinton administration is on the wrong track, and I believe that we should stand together to look at some of those experiences as to why this is wrong. For example, the Kansas Public Employees Retirement System, known as KPERS, has lost over $390 million in that State due to social investing. KPERS lost $65 million in one investment alone, the Home Savings Association. When that company went bankrupt, due to political pressure KPERS went further and invested an additional $8 million in a local company, Christopher Steel. That company is now abandoned and the investment is a complete loss. Similar disasters have been seen all over the country, including in States like Connecticut, Alaska, Missouri, and Minnesota, and others that we could go on and name. In Arkansas in 1985 President Clinton signed into law language which said this: ``The State of Arkansas shall seek to invest not less than 5 percent nor more than 10 percent of their portfolio in socially related investments.'' This was a target that was intended to mandate the investment of these funds, not to permit it. As I say to my friends on the other side of the aisle, ERISA clearly states that pension funds must be invested solely and exclusively for the exclusive purpose of providing benefits to the participants and the beneficiaries. It says nothing about social investments. This is precisely why ERISA does not say fiduciaries must make decisions primarily. It does not say primarily in the interest or almost entirely to provide benefits for participants and beneficiaries. It says solely and exclusively. I am at a loss to know what parts of the words ``solely and exclusively'' the Clinton Labor Department does not understand.

Mr. SAXTON. Mr. Chairman, I rise in opposition to the amendment. Mr. Chairman, I would once again make the observation that the opponents of the bill are extremely anxious to avoid the real issues here and, of course, those issues are the underperformance of ETI's. ETI's simply do not have the kind of return that pension plans that invest in non-ETI's have. This administration has people residing in it who are in responsible places who know these issues, who claim that, as we do, that the ETI-type investments generally promote or have associated with them rates of return that are approximately 2 percent less than non-ETI types of pension fund investments. So all of the amendments from the other side to date have been designed to detract attention away from the fact that ETI assets offer lower yields and more risk than normal investments. Thus ETI's are especially inappropriate for pension fund investments. I hesitate, but I guess somebody ought to point out here that in addition to that, the major thrust of our bill is to take away from the Department of Labor the authority, or the position that they are currently in, to advocate for any type of investment. That is what the clearinghouse is all about. It is set up to advocate for a special class of investments. This amendment would advocate for another special class of investments. Let me just point out that I think any responsible pension fund manager in the United States of America, given two investments that look like they are approximately of equal caliber, one being domestic and one being foreign, I would certainly hope that any responsible person finding themselves in that position, with American workers' money entrusted to them, would make the domestic investment. But we are certainly not going to accept an investment that once again puts in the lap of the Department of Labor the responsibility of advocating for this new special type of investment. Let me point out also that it is also the responsibility of the pension fund manager, pursuant to the ERISA law, to act solely and completely in the best interest of the participants in the pension plan. Most pension fund investors, as you have seen by your own charts and by your own data that you have brought out, from time to time find it necessary to diversify and on some occasions they make investments in foreign types of investments that happen to have a rate of return that they believe is in the best interest of the participants in the plan. So it is not in the purview of the Department of Labor to intervene in these instances. It is in the purview of the responsibility of the pension fund manager to make those kinds of decisions. That is part of the free enterprise system and it is not for Secretary Reich or his employees or anybody else to meddle in those types of decisions. Your amendment, sir, gives Secretary Reich not only the right but the responsibility to carry out those kinds of incentives. The second point I would like to make with regard to the position that you present has to do with the net flow of capital into and out of the United States. I pointed this out before. This publication which is put out by Council [[Page H 8769]] of Economic Advisors called Economic Indicators points out very clearly that there is a net flow of $151 billion in the most recent year reported, 1994, into the United States of America. It has been so increasingly over the last 5 or 6 years, bottoming out with only $7 billion in 1991 and once again we are back up to $151 billion. So the fact of the matter is that the net flow of assets, of capital assets, is into the United States, not out of the United States as the gentleman would try to confuse some members of the public by bringing forth this amendment. I think that once again these amendments are a series of amendments which are designed to divert attention away from the real issues here. The real issues are in keeping with the intent and the literal language of the ERISA law which requires pension fund managers to act solely and completely for the best benefit of the participants in the pension plan. The underperformance of ETI's by virtue of a full 2 percent and the additional risk posed by ETI's and the decisions thereby made by pension fund managers with regard to ETI's are certainly not in keeping with the spirit or the letter of the law.