Jim Saxton

Mr. SAXTON

Mr. SAXTON. Mr. Chairman, I move to strike the last word. I would like to thank my colleague from New Jersey for a very clear statement as to say how he feels about the current situation. As I was saying, Mr. Chairman, I would like to commend the gentleman from New Jersey for his very articulate recognition of the situation, and I might say that although we cannot accept his amendment, he does move in the right direction, and we appreciate the fact that for the first time we have an amendment that at least recognizes that there is a problem with the way the Department of Labor is doing business. I wish that we could accept the gentleman's amendment. However, he simply does not go far enough. What we are trying to do with the bill as it stands is to go back to the situation that existed during the Carter years and the Reagan years and the Bush years, where essentially what the gentleman has suggested occurred, and that was that the Department of Labor did not take a position relative to the ETI's unless they were requested to do so by somebody, some pension fund manager who wanted the Department of Labor's interpretation as to the appropriateness of an investment. So we negate the interpretive bulletin. We do away with the clearinghouse, and we stop the expenditure of any Federal moneys to in any way promote ETI's. The gentleman's amendment, while it is certainly well thought out, according to the information I have here, expresses the sense of Congress that it is inappropriate for the Department of Labor to promote ETI's and that is nice. However, we prefer to have this carry the effect of law, and that is what the bill, as it currently stands, does. In addition to that, the gentleman's amendment also renders the interpretive bulletin null and void, but he weakens that statement by saying only to the extent that is construed to violate ERISA. I am not quite sure at this hour how to interpret exactly what that does or what it is intended to do, so I think the bill, as it currently stands, is absolutely clear. It goes to the points that the gentleman made in his very articulate explanation of his amendment. It negates the interpretive bulletin. It does away with the clearinghouse, as it currently stands, and it stops the expenditures of money to advocate for a particular class of investment.

Mr. SAXTON. I yield to the gentleman from Pennsylvania, the chairman of the full committee.

Mr. SAXTON. Mr. Chairman, I would like to thank the gentleman from California for bringing up this very important point. As a matter of fact, as the gentleman from California well knows, this publication, called ``Economic Indicators,'' which is put out by the Council of Economic Advisors, who, incidentally, are appointed by the President, and prepared for the Joint Economic Committee, verifies that exact fact. As a matter of fact, it is kind of interesting to look at the history, and these charts give just the opposite impression. This year, as the gentleman pointed out, $151 billion more in capital flowed into this country from pension funds and other sources than flowed out, $150 billion net income to us. Let me just go back and give you some perspective on this. In 1990, it was $92 billion more flowed into the country than out; in 1991, it was down to $7 billion more flowed in than flowed out; and then we began to rebuild the next year, it was $61 billion; the next year, $99 billion; and this year, $150 billion more came across our borders, coming in, than went out. Again, the proponents of these charts for this amendment are once again trying to confuse this situation by saying more capital, and these charts certainly give the impression that you are saying more capital is flowing out than flowing in; quite the opposite is, in fact, the case.

Mr. SAXTON. Mr. Chairman, I would like to address this matter of the GAO report that the previous speaker alluded to. As everyone knows, there are dozens of examples of ETI's that can be studied and reported on. The GAO happened to select the seven best ETI's that were available for them to report on. Even given the dismal record of ETI's, it is conceivable that in a few cases that there can be five cases which can be expected to match market returns, and that was the case with the seven examples that were studied. When the remainder of ETI's are studied, the performance of ETI's is not so rosy, and the pattern we have been talking about all afternoon comes right back. Returns are down and risk is up. Because of the limited data set, the GAO report even acknowledges and they say this in their report: ``These results cannot be generalized to other pension plans.'' Mr. Chairman, I thank the gentleman for yielding.

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

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

Mr. SAXTON. Mr. Chairman, I move to strike the last word. Mr. Chairman, I would just make the observation that the opponents of the bill seem to be very anxious to avoid the key issue, the underperformance of ETIs. All of the amendments from the other side seem to be destined to distract attention away from the fact that ETI assets offer lower yields and more risk than normal investments; thus, ETIs are especially inappropriate for pension fund investments. The bill as it stands does not in any way prohibit the Department of Labor from issuing advisory opinions. Nor does it prohibit the Department of Labor, nor did it discourage domestic investment, nor did it encourage foreign investment, nor does it do any of the other things that these amendments purport that it does. This is just an attempt to divert attention away from the key issues. Those are the underperformance of ETIs and the additional risks posed by ETIs. I ask all Members to vote against this amendment.

Mr. SAXTON. Mr. Chairman, I rise in opposition to the amendment. Mr. Chairman, I would just like once again to make the observation that the opponents of this bill seem to be very anxious to avoid the key issue, and that issue is the underperformance of economically targeted investments. All of the amendments from the other side seem designed to distract 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 investment. Once again, I believe the amendment of my friend from New Jersey [Mr. Payne] is totally unnecessary. There is nothing whatsoever in the bill that prohibits or in any way inhibits pension fund managers from investing their funds for the purposes stated in the gentleman's amendment. Therefore, I think the amendment is unnecessary and I believe intended to cloud the issue. To the issue of ETI's and their underperformance, I would point once again to four studies done to demonstrate this quite conclusively. The first one was done by Alicia Munnell, an employee of the Department of Labor nominated to the Council of Economic Advisors by the President, who concludes in a study and report that she has done that there is a differential of about a negative two points, 2 percentage points in the rate of return, on ETI's. Olivia Mitchell of the Wharton School comes to exactly the same conclusion, that ETI's underperform by about 2 percentage points. Marr, Nofsinger, and Low has a study showing it is worse than that, that ETI's underperform by 2.1 percent. So in the interest of moving this process forward, and in the interest of protecting the rates of return for private pension participants and in the interest of keeping risk low, I would suggest that this amendment is unnecessary and that all Members should vote no.

Mr. SAXTON

Mr. SAXTON. Mr. Speaker, it is a great honor and privilege for me to congratulate the Honorable Carl W. Block, mayor of Stafford Township, for his 25 years of dedicated public service as a member of the Stafford Township Council, Planning Board, Regular Republican Club, and the Board of Trustees of Southern Ocean County Hospital. Under Carl's leadership, Stafford Township has won 24 State and national environmental awards, more than any other municipality in the country. Many of the environmental processes conceived and piloted by Stafford are now being used nationwide and in Europe. Under Mayor Block's leadership, Stafford Township is the fastest growing community in all of Ocean County, with more business and commercial development than any other Ocean County community. This has enabled the township to maintain a tax rate for its citizens well below the county average. Mayor Block has been successful in bringing to Stafford millions of dollars in revitalization grants, including the Neighborhood Preservation Program, which is used to revitalize older areas of the township. He has also increased parks and recreational areas for the residents of Stafford by 1,000 percent. Manahawkin Lake, which has revitalized under Mayor Block's leadership, has had the highest percentage of swimmable days in all of Ocean County. Carl developed a long-range master plan for Stafford which gave careful consideration to growth while protecting the environment and assuring that future growth would be managed properly through existing infrastructure and roadways. His dedication to quality of life issues in Stafford Township resulted in the township receiving the Quality New Jersey Award in 1992. This award is equivalent of the Malcolm Bainbridge Award. Stafford's successes with environmental planning and management have been recognized by numerous national magazines, including National Geographic, which pointed to Stafford Township as an example of how one town can make a difference. The past year, under Carl's leadership, Stafford was the first township in New Jersey to win the prestigious Lawrence Emerson Award from the National Arbor Day Foundation. This resulted in the permanent display of New Jersey's State Flag at the Lied Conference Center in Nebraska. Stafford was also selected for the 1995 First Place National Award for Excellence by the U.S. Environmental Protection Agency [EPA] for its innovative storm water management design. Stafford Township's designation as a Tree City U.S.A. for 6 consecutive years, and as a Tree Growth Award Winner for 4 consecutive years are records unsurpassed by any other community in the entire Nation. Carl Block's motto throughout his tenure as an elected official has been ``Progress With Pride.'' Stafford Township's economic growth, as well as the environmental regulations in existence in the township today, are indicative of his success in judiciously encouraging growth while protecting the environment. For his contributions to the citizens of Stafford Township and all of Ocean County, I recognize Mayor Carl Block today.

Mr. SAXTON

Mr. SAXTON. Mr. Chairman, I offer an amendment on behalf of the gentleman from Virginia Mr. BATEMAN.

Mr. SAXTON. Mr. Chairman, I ask unanimous consent that the amendment be withdrawn.

Mr. SAXTON. Mr. Chairman, it is my intent to ask that the amendment be withdrawn, and we had hoped to be able to conclude this colloquy in 5 minutes or less. We are currently over that. I know that there are many people who feel deeply about this subject, and the fact of the matter is we are not going to take any action tonight on this, so they will be permitted to submit their statements for the Record in writing.

Mr. SAXTON. I yield to the gentleman from Missouri.

Mr. SAXTON. Mr. Chairman, I yield such time as he may consume to the gentleman from Nebraska [Mr. Christensen].

Mr. SAXTON. I thank the gentleman. Mr. Chairman, I yield 1 minute to the gentleman from Texas [Mr. Edwards].

Mr. SAXTON. I yield to the gentleman from Illinois.

Mr. SAXTON. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, I rise for the purposes of offering this amendment, and to have a colloquy with the gentleman from Illinois [Mr. Porter], the gentleman from Texas [Mr. Armey], the gentleman from Nebraska [Mr. Christensen], and the gentleman from Texas [Mr. Edwards], and then I will ask that the amendment be withdrawn. Mr. Chairman, the amendment which I have offered on behalf of the gentleman from Virginia [Mr. Bateman] is an amendment which the gentleman from Virginia has worked long and hard over the last months to bring about. Unfortunately, as we all know, the gentleman from Virginia is home recuperating today from an illness, so on behalf of the gentleman from Virginia [Mr. Bateman], I would like to enter into a colloquy with the distinguished subcommittee chairman, the gentleman from Illinois [Mr. Porter]. Mr. Chairman, the amendment that is pending, offered on behalf of the gentleman from Virginia, would transfer $22 million to impact aid, providing a total of $667 million for fiscal year 1996. The Labor-HHS- Education appropriations bill, when combined with the $35 million in the fiscal year 1996 DOD appropriations bill, would provide $702 million for impact aid, 96.4 percent of last year's level. I would like to yield to the distinguished chairman to solicit his views on our goal of providing no less than 96 percent of last year's level, and possibly as much as 98 percent of last year's funding level, to impact aid for fiscal year 1996. The Labor-HHS-Education conference report, including $35 million of fiscal year 1996 DOD appropriations in the conference report, is what we are interested in. I would like to ask the chairman of the subcommittee for his thoughts as to the outcome which he will seek through the conference and the conference report.

Mr. SAXTON. I yield to the gentleman from New Jersey.

Mr. SAXTON. I yield to the gentleman from Texas.

Mr. SAXTON. Mr. Chairman, I would like to thank the gentleman from Texas, the majority leader, for his cooperation throughout the day and over the past months on this issue.

Mr. SAXTON

Mr. SAXTON. Mr. Chairman, I appreciate the willingness of the chairman of the subcommittee to include this language in the report. This program of research is vital to effective and strategic planning of dealings with terrorism, violence and other criminality associated with certain organizations.

Mr. SAXTON. Mr. Chairman, I thank the gentleman for yielding me this time. Mr. Chairman, if I said to all the folks here who are in this room that I wanted to talk to you for a couple of minutes about how pension fund managers invest pension moneys, I would see a bunch of people yawn and you would all think it was pretty boring, and you would be right. But if I said to you that I want to talk to you about your pension check when you retire, the size of it and the security of it, and to be sure that it would come every month, I am sure there would be a lot more interest. But if I said to you and anybody else that could hear that the pension fund, total amount of pension fund moneys in our country, has grown since 1983 from a level of about $1.5 trillion to about $4.8 trillion today, you know, that is kind of hard to relate to. But if I said to you that particularly people who are beginning to think about retirement that that pot of money is where your paycheck is going to come from after you retire and that it should be protected with all due diligence, that would be interesting. So let me talk about that for a minute, because the Clinton administration, particularly Secretary of Labor Robert Reich, has done some things over the last year which I think are very unsettling for people who are beginning to think about retirement, particularly if their savings for their old age are invested in private retirement funds, because you see, in June 1993, Secretary Reich reinterpreted the law that provides safeguards for those savings in private pension funds. Secretary Reich calls the program economically targeted investments. What he is saying to the people that manage all of that money for us so that we can retire with it, ``We want to change the rules a little bit to permit you to do some things that you were not permitted to do before,'' because, before, they were considered to be too risky and, in my opinion, while nothing has changed to make the things that Secretary Reich would like us to do less risky, he wants us to go ahead and begin to invest in other kinds of things with other people's money that they are saving for their retirement. Now, I think it is a bad idea. For years, what the gentleman from Illinois [Mr. Fawell] refers to often as the ``prudent man'' rule was followed, and in the late 1960's and early 1970's, private pension funds began to have some problems, and so in 1974, and I think correctly, the Congress passed a law known as the Employee Retirement Income Security Act, which we refer to as ERISA. It says clearly that the people that manage those moneys in private pension funds must follow one rule, that those moneys must be invested for the sole purpose of providing benefits to the participant in the plan, the sole purpose. Secretary Reich would like us to do some other things with the money and is encouraging pension fund managers to do so, to invest in socially good programs, to make social investments, to invest in housing projects, to prop up a failing company if it means jobs for a community. They are worthy goals, but if I want the moneys that I am investing for my old age in a private pension fund invested in those kinds of investments, then I will take my IRA fund and invest in some social good. Most people do not choose to do that, and Secretary Reich, in my opinion, should not be encouraging pension fund managers to do that with my money either and the money of all the Americans, the 600,000 or so that I represent, and I think you will agree, Members on both sides of the aisle, that you do not want your constituents' money tampered with in an unsafe investment either. This bill cuts back on funding that Secretary Reich and his staff are using for the purpose of encouraging pension fund managers to make these investments. Now, we have lots of information that says that these are not good investments and they are not safe. For example, in one study at the University of Pennsylvania, Olivia Mitchell determined that the public pension funds which were required to make certain investments generated lower rates of interest, lower returns, and were less safe. So I urge everyone to support this bill the way it is.

Mr. SAXTON. Mr. Chairman, the Labor, HHS, Education Committee report contains language that highlights the need for a Comprehensive Scientific Research Program addressing characteristics of extra- societal groups. Many Americans are concerned and puzzled by the conduct of individuals involved in events such as the bombing of the Murrah Federal Building in Oklahoma City, the Sarin attack in the Tokyo subway and the extreme hold that David Koresh had on his followers. The National Institute of Mental Health is particularly suited to examine such concerns in a scientific manner. The current state of understanding of such groups is extremely limited. Through efforts by the National Institute of Mental Health, we hope to increase our understanding of characteristics of such groups which are associated with increased potential for terrorism, violence or other criminal behavior; the manner in which such groups recruit individuals and influence their behavior sufficiently to move them toward terrorism, violence, and other criminality; the causes behind members leaving such groups; and mental health effects of membership in such groups. I want to clarify the committee report language. The committee language discusses the need for increased understanding of such extra- societal groups, but does not specifically request information on the above mentioned causes and characteristics to the extent the National Institute of Mental Health concludes that these concerns can be addressed scientifically, based on present knowledge and additional research. I ask the subcommittee chairman if the intent of the committee language includes addressing the concerns I just mentioned?

Mr. SAXTON

Mr. SAXTON. Mr. Chairman, I support the Stokes-Boehlert amendment. I think the way this bill is written simply stated, plays Russian roulette with our country's future, with both the health of our economy, and, as has been pointed out here several times, the health of our people as well. Let me talk for just a minute about the relationship that I see and that many other Americans see between the health of our environment and the health of our economy because I think it is very important. In March of this year the Times-Mirror magazine did a national survey of 1,003 people, and the second question they asked was this: ``Most of the time do you think environmental protection and economic development can go hand-in-hand, or that we must choose between environmental protection and economic development?'' Sixty-nine percent of those people responded that economic development and environmental protection go hand-in-hand. That is because there is a very close relationship, because the way people perceive the environment and the economic activities they are willing to partake in that environment are very closely related. In other words, if it is bad for my health, I will avoid that area that is polluted. That makes perfect sense to me, and, therefore, we need the provisions that exist in current law without this bill in order to continue to protect the environment and provide for an environment in which economic growth will take place. I speak from some experience. As all of you know, I represent a large section of the New Jersey shore. In 1987 and 1988 we had an historic economic slump that was directly a result of bad ecological policy. We had algae buildup not just in New Jersey but on the shores of Long Island as well. We had red tides and blue tides and green tides. We had sewer sludge dumped offshore. We had medical waste on our beach. We had all kinds of wood burning offshore. People did not visit the shore. It was just that simple. Our economy went into the basket with the environment. I listened to the gentleman from Syracuse here a few minutes ago, who is a good friend, and it reminded me of when I was a young boy and I used to go to the Finger Lakes to visit my uncle. One summer I went up there and he said, ``You cannot eat the fish or go in the water.'' I said, ``Why not?'' He said, ``Because the farmers who grow grapes on the hills surrounding these lakes have used too much DDT over the years and it has washed into the lakes and the fish are contaminated and they are trying to determine whether or not it is safe to go in the water.'' Do you think that caused degradation to the economy of the area? You bet it did. In the Chesapeake Bay a few years ago we determined that in the upper reaches of the Susquehanna River, in both Maryland and Pennsylvania, there was a large amount of runoff that came from overuse of fertilizers and pesticides and herbicides by farmers. When the crustaceans and the rockfish and the oysters went away in Chesapeake Bay, do you think that degraded the economy? You bet it did. This is a close relationship. My Republican friends care about the environment and care about the economy as well.

Mr. SAXTON

Mr. SAXTON. Mr. Chairman, I appreciate the willingness of the chairman of the subcommittee to include this language in the committee report. This program is vital to New Jersey and I want to commend the gentleman for his excellent work as chairman of the subcommittee. amendment no. 50 offered by mr. obey