Paul Simon

Mr. SIMON

Mr. SIMON. Mr. President, here is a defense contractor. Let me just read one paragraph here. I am writing to express the strong support of the Timken Company for an amendment to be offered by Senator Paul Simon during consideration of the Defense Appropriations bill for Fiscal Year 1997. . . . Unfortunately, there is no mechanism, now under law, to enforce these [Buy American] laws. Foreign producers consistently violate the statute by including products in U.S. defense systems that were mandated by Congress to be produced within the United States. The effect is a short term cost savings for the Pentagon with a permanent weakening of our industrial base. Such foreign sourcing of key products causes American producers to discontinue needed research and development, as well as reduce domestic capacity. We slowly become vulnerable by losing our long-term ability to produce critical defense systems. I think this is a security issue. What would happen, practically, when a company submits a bid, they would have to submit that they are going to spend 70 percent, 80 percent, or whatever percent of this contract in the United States. Then, when the Defense Department reviews the contract, that should be a high factor--not the sole factor, but a high factor--in determining where the manufacturing should go. If a company submits a bid saying, ``We are going to produce 80 percent in the United States,'' and then they produce 20 percent in the United States, that would be considered a breach of contract, and it would have to be considered in any future contracts by that company. I think it makes sense. A recent GAO study in April of 1996 found that other countries are much more pressing in terms of their defense establishment in how they insist their defense money is spent within their own country. The GAO found out, among other things, that U.S. companies have entered into offset agreements totaling more than $84 billion since the mid-1980's. In order to get a contract in another country, we have agreed to $84 billion in manufacturing and purchasing of their products in another country. I understand why some companies want to go abroad. China pays an average of $50 a month. Wichita, KS, now makes part of what it made in Wichita, KS, in China. I understand the cost savings there. We are not saying that cost savings cannot be a factor, but that a high factor has to be how much is manufactured in the United States. As the president of Timken Company said, there is a security factor here. We need to maintain our industrial base, our research. I am told that the McDonnell Douglas facility in St. Louis, where 500 employees have just been laid off, the company is subcontracting work to Finland, Spain, Australia, Germany and Switzerland for the F-18. Now, we are not saying that none of this work can go abroad. We are just saying it ought to be upfront in the contract. I am pleased to be joined by Senator Specter and Senator Harkin as cosponsors of this legislation. I hope it will be adopted by the Senate.

Mr. SIMON. Mr. President, I buy many of the arguments that my friends from Hawaii and Alaska used. I voted for NAFTA. I voted for GATT. In general, we have to have reciprocity in terms of trade. But we also have, in theory, a Buy American Act, which is, frankly, toothless. So I think we need something that is a little stronger. Let me add that this amendment is more narrowly crafted than the House amendment. The House amendment introduced by my House colleague, Congressman Dick Durbin, is stronger than this amendment. But this amendment at least says, let us find out what percentages are made in the United States and what percentages abroad. In response to my friend from Alaska, who said this is going to mean a lot of work, I have a news release--and it is fairly typical--from the Office of the Assistant Secretary of Defense about various contracts. Here is a contract awarded to McDonnell Douglas that says, ``Work will be performed in St. Louis, Missouri, 70 percent, and in the United Kingdom, 30 percent.'' So they are doing some of this right now. All we are saying is that the percent that is manufactured in the United States should be of high importance--not the sole consideration, but should be of high importance. Here is another one. Refinery Associates of Texas. ``Work will be performed in overseas locations.'' Here is another contract that says, ``Work will be performed 43 percent in Germany, 30 percent in Alabama, 22 percent in Michigan, 4 percent in California.'' So they are doing these things now. What we are doing is just ignoring how much is made in the United States. Here is another contrast as to how much would be done in the United States, how much in Germany, how much in England, how much in Italy, how much in Korea, how much in Australia. So they are doing this now. This is not an undue burden. Now, one argument they make is that this may cost a little more. It may cost a little more. I do not know what they pay for that foreign truck on an American base. Maybe we save a few dollars. But I think that when it comes to defense dollars, insofar as practically possible, we ought to be spending that money here at home. That is the reality. Again, I stress that there is a waiver where we have agreements with other countries and memoranda of understanding with other countries for any kind of emergency. I think this makes sense, and I urge my colleagues to reject the motion to table.

Mr. SIMON. Mr. President, I send an amendment to the desk and ask for its immediate consideration.

Mr. SIMON. Mr. President, I ask unanimous consent that reading of the amendment be dispensed with.

Mr. SIMON. Mr. President, this corrects an error made in the National Security Education Program legislation and is supported by the Defense Department. It is agreed to on both sides.

Mr. SIMON

Mr. SIMON. My answer to my friend from Nevada, Senator Bryan, is an unequivocal yes on both counts. As my colleague points out, the first amendment freedom of commercial speech provides important liberties for advertising. It is my hope and intention that the Commission will grant special attention to the first amendment implications of its recommendations and avoid trespassing upon any constitutionally protected freedoms of commercial speech when it formulates its policy recommendations. Moreover, as my friend from Nevada points out, section 5 of the Federal Trade Commission Act empowers the FTC to prevent ``unfair or deceptive acts or practices affecting commerce.'' It is my hope and intention that the Commission will take this fact into account and, to the extent practicable and appropriate, will incorporate the FTC's existing authority and expertise over false and deceptive advertising.

Mr. SIMON. Mr. President, reserving the right to object--I shall not--I would like to speak for 2 minutes on the bill.

Mr. SIMON. Parliamentary inquiry, Mr. President: I reserved the right to object subject to my being acknowledged for 2 minutes to speak on this bill. I do not think that the request was granted.

Mr. SIMON. I would like to speak for 2 minutes on the bill which was just passed, if I may. I think my colleague from North Carolina would yield to me.

Mr. SIMON. I thank him.

Mr. SIMON. Mr. President, I thank a number of my colleagues for their help on creating the commission that has just passed, assuming the House acts favorably. Particularly, I would like to thank my colleague from Indiana, Senator Lugar. Senator Warner from Virginia has been very helpful. Senator John Glenn was helpful. Senator Stevens was helpful. And a number of others that I should acknowledge, as well as Michael Stevenson of my staff. What we have just done is to say, let us look at this problem. I think we owe that to the Nation, and I appreciate our colleagues doing that. The fastest growing industry in our Nation today is legalized gambling. Is this good for the Nation? Is it not? Should it be slowed somewhat? No one suggests that we are going to close down Las Vegas or Atlantic City. But I think we ought to look at this problem and see what the dimensions of that problem are and what we ought to do. That is what the commission bill does. I thank my colleagues.

Mr. SIMON

Mr. SIMON. Mr. President, I would like to commend the Orphans of Centralia High School of Centralia, IL, for the amazing success of their boys basketball program. They have the best winning record of any high school basketball team in the Nation, according to the 1996 edition of the National High School Sports Record Book. Since 1907, the basketball program has been dedicated to excellence on the basketball court. In this span, the Centralia High boys team has recorded 45 regional championships, 16 district titles, 16 sectional crowns, two second-, one third- and one fourth-place finish in the State tournament. With 20 wins and 6 losses during the 1995-96 season, their record now stands at 1,780-761. This is quite an achievement. I would also like to extend my appreciation to coach Rick Moss. In the three seasons he has been coach, he has posted a 71-12 record--a record that looks a lot like the Chicago Bulls' great success of the past season. Coach Moss and his staff have done a magnificent job in preparing his team for competition. Again, I offer my congratulations to the Centralia High School boys basketball team for achieving this feat. I look forward to seeing them maintain this winning tradition during the 1996-97 season, which will make the 90th year of the boys basketball program.

Mr. SIMON

Mr. SIMON. I sympathize with your concerns over the jurisdictional issue. It is my understanding, however, that Senator Domenici does not object to our addressing this problem on the WRDA bill.

Mr. SIMON. Is the chairman aware that the U.S. Army Corps of Engineers Division Restructuring Plan calls for the closure of the North Central Division Office, in Chicago, IL? My colleague and I are particularly concerned that the Great Lakes region is losing skilled personnel at a time when waterway issues are requiring the increased attention of the corps.

Mr. SIMON. The chairman is also aware that in response to the restructuring plan we sought to include language in the Senate version of the Water Resources Development Act, S. 640, to preclude the closure of the North Central Division Office.

Mr. SIMON

Mr. SIMON. Mr. President, the FBI and the Office of Personnel Management are making a terrible move that is not in the national interest, that may save a few dollars temporarily, but will cost us in the long run. They are privatizing many of our background checks. Not only is this questionable from a security point of view, it will result in a massive invasion of privacy. Those of us in public life are on a big ``privatizing'' kick. The reason is rarely to save money. The main reason is so that people who are in executive positions can go out and say ``When I took office, there were so many Federal employees or State employees or city employees, but now there are fewer.'' The decrease makes it appear that a great job is being done. The reality is while that kind of talk goes on, the budgets tend to go up. Frequently, those who are adversely affected by privatization are people at the very bottom of the economic ladder. For example, we have privatized custodial services at some of the Federal buildings in Chicago. The already low wages for these people are being depressed more, and they lose the benefits of retirement pay and other things. Privatizing background checks for those who either are coming into government or who may be given greater responsibilities is simply foolish. Prof. Stephen Gillers of the New York University School of Law had an op-ed piece in the New York Times about this that should be creating some concerns among Federal officials, as well as people at the State and local level. I ask that the New York Times op-ed be printed in the Record. The op-ed follows: Filegate Was Bad Enough. Now This? (By Stephen Gillers) The F.B.I. called again last month. It phones several times a year to ask me about former students who are seeking sensitive Government jobs. I could verify that indeed it was the Federal Bureau of Investigation calling. The voice-mail message had the bureau's telephone exchange, and the agent talked the way agents do, unfailingly polite and right to the point. I answered all his questions. I trusted the confidentiality of my answers, even though Louis J. Freeh, the F.B.I. director, had recently acknowledged that the White House had managed to ``victimize'' the bureau by getting its secret files on prominent Republicans and others. I figure that two ``Filegates'' in a generation is not something the bureau will permit. It seems that my next call may come not from the F.B.I., or from the Office of Federal Investigations, which also checks out Government personnel. It may instead come from a private company, which under a Clinton Administration plan will conduct 40 percent of Government security clearances. And I may be questioned not by a G-Person (formerly G-Man), but by a private investigator whose employer submitted a winning bid. The decision to privatize this work, rash in the best of times, needs a close second look after Filegate. Take quality. Privatizing will dilute it. The company will be free to accept other customers, including private ones. Can I be confident that what I say will not be shared with those customers? I'm not going to be as candid if my answers can find their way into private files. What about subpoenas? I doubt the courts will protect private records as jealously as they do F.B.I. files. And whom will I be talking to? I have a pretty good idea of what's required to become a Government investigator, the quality of supervision, and the length of time people hold that job. But who will the private investigators be, who will check their work, and where will they be working tomorrow? The need to earn a profit will also compromise quality. Under the plan, a private company owned by former Government employees will have an exclusive contract for three years. Then the work will be put up for bid. Whether payment is a fixed sum for all investigations, or like piecework, a flat fee per investigation, profitability will encourage companies to do the minimum and not pursue the last elusive detail. Abuse will also be easier. The F.B.I. has many ways to protect itself. Its director cannot easily be fired, it enjoys broad public support, and it has excellent media contacts. Yet it did not stand up to a White House that, by accident or design, easily obtained files for no lawful reason. Will a private company, dependent on Government officials for renewal of a lucrative contract, be able to challenge an improper request? Don't count on it. The only defense offered for this misguided plan is that it may save $25 million yearly. But even that is unsure. While the General Accounting Office cautiously concluded that ``privatization would be likely to produce a net savings to the Government in the long term,'' it added that ``any new business faces many uncertainties that affect profitability.'' One hidden cost will be duplication of work. Certain law- enforcement records will be unavailable to private investigators. So Government personnel will have to complete the assignments, inevitably requiring them to retrace some steps. This time must be added in figuring the true cost. In any event, the savings are not worth it. As one Federal investigator put it, this work is ``inherently governmental.'' Some tasks should not be privatized because the value of having the Government do them is priceless. Enforcing the law and approving new drugs are two examples. Security investigations for public jobs are a third. No business, especially one with other customers, should be authorized to routinely collect sensitive information on American citizens in the name of the United States.

Mr. SIMON

Mr. SIMON. Yes. There are a number of things. I thank my colleague for yielding.

Mr. SIMON. I thank my colleague. There are several provisions in here. First of all, ESOP's--we take away the advantage. We have always said ESOP's are a good thing. Now we retreat on that. Harris Trust is a provision that protects the pension funds. I do not know how much is at stake here; $300 billion is one figure. I heard $500 billion, another figure. This complicated thing we are acting on without a hearing. I do not think it makes sense. Then, finally, we are changing the small business provisions on 401(k) plans so that highly compensated executives will have advantages over those of lesser incomes. I think the managers' amendment is a very bad amendment.

Mr. SIMON. I thank my colleague from New York, and I thank him for his leadership. I strongly support the minimum wage and I oppose the Bond amendment. The speech that my friends from Colorado and Utah just made about teenagers, if the Bond amendment said, let us not apply it to those under 18, then, frankly, I might even consider voting for such an amendment. I think that would make a little bit of sense. I do not think the Bond amendment, as it is constructed, does make sense. Raising the minimum wage clearly is needed. I hear the phrase ``welfare reform'' around here a great deal. But 95 percent of it is not welfare reform. This bill raising the minimum wage probably will do more for welfare reform than all the bills that are called ``welfare reform'' around here because you give people a chance to earn a little. You give them an option. Twenty-four percent of our children in this Nation live in poverty. No other Western industrialized nation has anything close to that. If you need a good argument for campaign finance reform, look at what is happening in the minimum wage. What if the people at the minimum wage were big contributors? Would we have this kind of a problem? The minimum wage would pass overwhelmingly. And this is a women's issue; 58 percent of the people who draw the minimum wage are women. We ought to be doing better than this. Having said that, Mr. President, I am concerned about some provisions in the basic bill, the small business provisions, and the managers' amendment which I am going to ask for a vote for and will oppose. On the basic bill, we knock out the incentive to banks to finance ESOP's, the employee stock option plans. This is a legacy of Senator Russell Long, and it is a good legacy for our country. ESOP's should be encouraged, not discouraged. Let no one fool themselves; knocking out this financial incentive for ESOP's virtually kills the chance for additional ESOP's in this country. Second, the modification of the 401(k) plans. Here it is geared to helping people in the higher income brackets. Here is a letter from the American Academy of Actuaries. Let me just quote from this letter. There is likely to be increased discrimination in favor of highly compensated employees. Such redistribution of contributions in favor of higher income workers could tarnish 401(k) plans to the extent that they would no longer receive the support needed in Congress to justify their cost to taxpayers. Under current law, if lower income employees put in 1 percent, or defer 1 percent, higher income employees can defer 2 percent. There is a whole series of limitations. Under this proposal, if a lower income employee puts in 1 percent, the higher income employee can defer 9.5 percent. It is clearly for the benefit of those in the high-income brackets who work for corporations. Then, finally, Mr. President, in the managers' amendment, which is a procedure under which we put this in--and we did not have a chance to modify it, no amendments; and the same on these other provisions that I just talked about--this reverses the Hancock versus Harris Trust decision in the U.S. Supreme Court. It is an ERISA thing. I have to tell you candidly--I see the chair of our committee here, and she knows this--I do not know that much about ERISA, and, real candidly, I do not think anyone in the U.S. Senate really understands ERISA. It is a very complicated thing. I do know this, that we are moving back on safeguarding the pension funds of workers with this amendment. What the Harris Trust decision did was, it said that the John Hancock Co., when it set aside pension funds in stocks, had to meet the ERISA standards. But what John Hancock was doing was taking these other funds and putting them--let me read the Supreme Court decision, the group annuity contract No. 50, which is what they call it there. Group annuity contract No. 50 assets were not segregated, however. They were part of Hancock's pool of corporate funds or general account out of which Hancock pays its cost of operation and satisfies its obligations to policyholders and other creditors. They do not think they had to meet ERISA standards. The Supreme Court said you have to meet ERISA standards here, and the managers' amendment, with all due respect to my friends who are sponsoring this, the managers' amendment reverses that decision and says that insurance companies, when they do not have these fixed stocks and put the rest in the general pool, they continue to do that, out of which they take all these expenses. Let me just point out one unusual feature of this bill. Mr. President, you have been here a while in this body and in the other body. Listen to this: ``The amendment made by this section shall take effect on January 1, 1975.'' Have you heard about a bill like that before? Why does this take effect January 1, 1975? To protect insurance companies who have abused these pension funds so they do not have to meet ERISA standards. That is not good legislation, my friends. We ought to be protecting pension funds, not loosening the protection. I have great respect for Senator Moynihan, Senator Roth, Senator Lott, and Senator Daschle, but I think this is a move in the wrong direction. The managers' amendment ought to be defeated. We should not reverse that Supreme Court decision. Justice Thomas wrote the dissent and took the side of the insurance companies. The U.S. Senate, with this vote, will take the side of the insurance companies. There is huge money involved. I was told about $300 billion in assets are affected here. I received a call from our former colleague, Senator Howard Metzenbaum, who said, ``You are wrong. It is $500 billion.'' I do not know what it is. Maybe it is $100 billion. Whatever it is, it is a lot of money. We ought to be doing everything we can to protect pension funds, not to move in the other direction. Mr. President, when the time comes on the managers' amendment, I will request a vote. I will vote against it. I know what the situation is and I recognize that I will be outvoted but I want to make clear I am not part of moving in this direction.

Mr. SIMON. If my colleague would yield.

Mr. SIMON. Mr. President, I am happy to respond. Some of what the Senator says is correct, and I appreciate the changes that were made. I do think this area is complicated enough we should have at least had a hearing. Here we are passing this massive change without a hearing. I think it is not a good way for a legislative body to proceed.

Mr. SIMON

Mr. SIMON. Mr. President, I ask for the yeas and nays.

Mr. SIMON

Mr. SIMON. Mr. President, I thank my colleague. I rise in support of the Dorgan amendment. I think it makes sense. It provides balance. It makes it clear that if the Kempthorne Industries, for example, decide they want to have a committee to look at the question of plant safety or plan a picnic for the staff, or anything else, they can do that. But the Dorgan amendment also says if you are going to get into a question of wages and hours, and the traditional benefits, the traditional labor-management things, that should be left up to the conventional process. You should not have employers appointing a committee of employees. The employees, when you get into labor- management issues like wages and hours and so forth, should be left to a committee picked by the employees. I think that makes sense. I think it contains balance. I add that I think balance is the one word we need in labor- management relations in this country today. I was interested a while back in picking up the New York Times and seeing where George Shultz, whom we think of primarily as the former Secretary of State, and noting that George Shultz also was the Secretary of Labor at one point under a Republican administration, saying our laws have gone out of balance in terms of not being balanced enough in the direction of encouraging labor organizations and the result is going to be a loss of productivity in our country. I think that point is an extremely important point. I have introduced a series of seven bills that I think also provide a little balance. For example, in this whole area of labor-management relations, if you have a pattern in practice of violating the Labor Relations Act, you can still get a Federal contract; while, if you have a pattern in practice of violating civil rights laws, you cannot get a Federal contract. I think the example of the civil rights laws is what we ought to follow in the labor laws also. I do not know why we should award companies that have a pattern and practice of violating labor laws with Federal contracts. I mention this because I think there we need balance. I think the Dorgan amendment provides balance. I think what we want is to say to an employer, if the Kempthorne Corporation, or the Kassebaum Corporation, or the Dorgan Corporation, or the Simon Corporation, if as an employer I want to appoint a committee to look at plant safety, or lighting in the plant, or planning an annual banquet, that is a fine thing. I do not think plant management ought to have the ability to say this is a committee of employees that is going to negotiate with me in terms of wages and hours. I think the National Labor Relations Act should be left as it is on that issue. So I am going to strongly support the Dorgan amendment. I think it is a move in the right direction. I hope that we can get a majority to favor it. One of the things that has happened, Mr. President, over the years in my 22 years here is that we have become excessively partisan. I have said this before on the floor. I think an amendment like the Dorgan amendment is one that frankly Republicans and Democrats alike ought to be supporting. I think it makes eminent good sense. Mr. President, I am about at the end of my time. I see two of my colleagues standing. I yield the floor at this point.

Mr. SIMON. Mr. President, if my colleague will yield.

Mr. SIMON. Just to respond by saying when you say it needs clarification, the reality is we have had clarification. For example, California has had 29,000-and-some cases brought before the NLRB. They have had two cases before the NLRB which said you have a problem here in creating a company union through management. And then they did not fine anyone. They just sent it back to them and said restructure it. The State of Illinois with 12 million people--I do not know how many cases; I forget; just one case nationally. We have only had half a dozen. I really do not think there needs to be the clarification that my friend and colleague from Kansas suggests is needed.