Arlen Specter

Mr. SPECTER

Mr. SPECTER. The essence of my concern, albeit narrow, is very, very important, and that is what this conference report coming back from the conferees provides on how pleadings are articulated, bearing in mind that this has an enormous impact, a controlling impact on the litigation. When this bill was before the Senate, I offered an amendment which would give some direction to how plaintiffs met a very strong pleading requirement, which was taken from the Federal Court of Appeals for the Second Circuit. It has jurisdiction over New York, Vermont, and Connecticut, and many of the big security cases are brought there. Everybody agrees that the Second Circuit has articulated the toughest standard around. That has been accepted. When I read the decisions of the court of appeals, I noted that the court of appeals had pointed out how this tough standard could be satisfied, and I offered an amendment, which was opposed by the managers. I had a little discussion with the distinguished Senator from Utah, Senator Bennett, who was managing the bill that day. And my amendment was adopted by the Senate by a pretty convincing vote, 57 to 42--which is a big vote around here, when the managers are opposed to it and you have about 60 cosponsors. That amendment provided as follows: The required state of mind may be established either by alleging facts to show the defendant had both motive and opportunity to commit fraud, or by alleging facts that constitute strong circumstantial evidence of conscious misbehavior or recklessness by the defendant. That was adopted by a strong vote in this body. Why was it adopted? Because, while the Senate agreed that we ought to have a tough standard on pleading, the Senate said we ought to look to the same court which established that pleading standard which explained how the proof would be made. But this important provision was dropped in the conference. That means the conferees did not like it. There was a little feeding frenzy as to how this legislation is finally crafted, in my opinion. There is a little feeding frenzy going on in a lot of subjects in the Congress today. Not only was this important provision dropped, but the conference report came back and made it even tougher, saying that plaintiff had to plead ``with particularity'' the facts giving rise to a strong inference that the defendant acted with a certain state of mind. This is a little tough, but I hope my colleagues, who will be voting on this matter, will follow this, will listen to it--or the staffs will. In the context of what the Federal Rules of Civil Procedure provide, and these are worked out by the judges and by the rules committee of the Judicial Conference after years of experience as to what is fair, rule 9(b) of the Federal Rules of Civil Procedure requires that fraud be pleaded with particularity. That is where you have fraud. But the same rule, when dealing with state of mind, says that the particularity pleading is not required because it is unrealistic. That rule says that state of mind can be ``averred generally.'' Here we come back with legislation on this subject which virtually closes the courthouse door to plaintiffs in legitimate cases, where there are very important issues and very important damages. When the distinguished Senator from New Mexico, Senator Domenici, was saying that hundreds of thousands of people will be pleased with overriding the President's veto, I would respond that millions of Americans will be displeased when they understand that what the Senate has done here is to make it virtually impossible for them to get a case into Federal court. These are not trivial matters. It is hard to comprehend the enormous billions and trillions of dollars which we talk about in the Senate. The gross national product of the United States of America--that is what everybody produces, all the cars, washing machines, and the services--what everybody produces in this country amounts to $7 trillion, everything that goes on in this country. The transactions on the stock exchanges, the sale of stock, approximate $4 trillion. We are not talking about a small group of lawyers, or a hundred thousand people who Senator Domenici says will be pleased if we override the President's veto. We are talking about millions of people in America who invest in stocks and bonds and who need to be treated fairly. We are talking about the greatest country in the world with an economic development which has developed a corporate mechanism, the corporate machine for acquiring capital by stock offerings on the basis of fairness where we have laws which say what the offerors must do in terms of honest representations. These are matters involving enormous sums of money. Just a few of the cases are: Wedtech, which involved a matter where investors recovered $77 million of their losses which had exceeded more than $100 million in a class action suit; Platinum Software, where investors lost over $100 million, recovered $22 million in a class action suit against the company for overstating revenues; The famous Charles Keating, American Continental, Lincoln Savings case where a jury awarded $4.4 billion against Mr. Keating and others for fraud; The Drexel Burnham Lambert case where a New York securities law firm settled the claims of 40,000 class members who had invested in municipal bonds underwritten by Drexel for $26.5 million. Drexel subsequently went bankrupt in the aftermath of the Michael Milken insider trading scandal; A matter pending today involving investors in Orange County municipal bonds who lost more than $1.5 billion due to the high-risk trading and investment strategy pursued by Orange County, and suit is currently pending; Hedged Investments Associates, a $40 million settlement against Kidder, Peabody and Morgan Stanley to resolve a class action brought on behalf of 1,000 investors, mostly elderly retirees who had sustained losses of $72 million where there was a Ponzi-like scheme; The case of LA Gear, an athletic equipment maker, a class action settled for over $35 million to resolve a suit over allegations of a false public statement about stock value; Chambers Development suit settled for $75 million on allegations of false statements by management over corporate earnings and accounting methods; The Washington Public Power Supply System, 26,000 investors were defrauded of over $2 billion for fraud in selling bonds using false information, and over $800 million was recovered in a class action suit. This is a very brief statement illustrating the kind of problems for which these cases are brought. Let me point out, Mr. President, that President Clinton has committed to signing the bill with three changes which would leave the reform program provisions essentially intact. There would be reform of joint liability, which has been urged by many. That stays in. Safe harbor for forward-looking nonfraudulent statements which turn out to be incorrect--that change stays in. The elimination of liability under RICO, something which should have been changed a long time ago, stays in. Procedural changes to make certain that the plaintiffs, rather than their attorneys, control the litigation stays in. The Wall Street Journal has an interesting comment in today's edition saying that only one of the three major--let me read a paragraph. It is relatively brief. ``While supporters [that is, supporters for the bill] weren't admitting it publicly yesterday, only one of the three major interest groups pushing the bill, the high technology companies often targeted for fraud suits, regard the bill's strict pleadings standards as essential. The other two groups, accounting and securities firms, are more interested in other aspects of the lawsuit-limiting bill such as limits on their financial liability.'' And those would all be retained. President Clinton went into this pleading issue in some detail. He filed a short three-page veto message. But I can personally attest to the thoroughness of the President's analysis of this issue because he called me on Tuesday night, night before last, rather late, 10:15 at night, and told me that he was issuing a veto message and made a comment that a letter which I had written him on December 8 this year had brought to his attention matters that he had not previously understood. The letter which I wrote to him said, in part, that I urged the veto because of the restrictive method of pleading scienter; that is, knowledge on the behalf of the defendants, and talking about the sanctions which could be applied and the strong limitations on plaintiffs' suits where you have this extraordinary standard of pleading, the short statute of limitations, and the mandatory review for sanctions under rule 11, which would so discourage any litigation from being brought. And, at the bottom of the letter, I printed in longhand this note: ``Going back to my roots on studying this issue at the Yale Law School, I think that my Federal procedure professor--Judge Charles Clark--would roll over in his grave to see the specific pleading standard in this bill, prohibition on discovery until a motion to dismiss is denied, and the chilling sanctions. Your veto would send it back for important revisions.'' When the President called--and we had a conversation lasting about half an hour--he went in into these pleading provisions in detail, and talked about his own procedure professor at the Yale Law School, fully understood precisely what he was doing, and said in his veto message that he was prepared to sign the bill and supported the goals of the bill but thought it unfair to virtually close the courthouse door with these requirements. Mr. President, I ask unanimous consent that the following documents be printed in the Record following my statement: No. 1. My letter to the President dated December 8, 1995; No. 2. The President's veto message dated December 19; No. 3. My ``Dear Colleague'' letter dated December 20; No. 4. The article in the Wall Street Journal of today, December 21; and No. 5. The editorial in USA Today dated December 21, today.

Mr. SPECTER

Mr. SPECTER. Mr. President, I am pleased today to present to the Senate the conference report on the Intelligence Authorization Act for fiscal year 1996. This legislation addresses a number of critical issues identified through the oversight process and lays the groundwork for legislation the committee plans to introduce early next year to ensure the intelligence community is organized to effectively address the Nation's critical intelligence needs today and in to the future. Getting this authorization bill to this point in the process has not been easy, but it would have been impossible were it not for the unflagging efforts and cooperation of the vice chairman, Senator Robert Kerrey. It has been a pleasure working with the Senator from Nebraska over the past year and I look forward to a productive year ahead. In addition, I want to commend our colleagues on the House Permanent Select Committee on Intelligence, particularly Chairman Larry Combest and the ranking minority member, Norman Dicks, for their cooperation and willingness to work with us to produce this bill. We had some tough issues to address and their good faith and determination to seek areas of agreement were critical to the success of our efforts. Finally, I want to recognize the other members of the Senate Select Committee on Intelligence, some of whom have served on this committee for quite some time over the years and whose expertise, interest, and insights have served the committee and its chairman well. The conference report and statement of managers you have before you today contains a number of significant provisions. Several of the sections address counterintelligence issues highlighted by the Aldrich Ames case. For example, the bill closes a loophole that allowed an employee convicted of espionage to receive money the U.S. Government contributed to his or her thrift savings plan, even though the money contributed to the plan by the employee was forfeited. Similarly, the bill allows a spouse who fully cooperates in an espionage investigation to receive spousal pension benefits, thus removing a disincentive provided by current law. Perhaps most significant in this regard is the provision that will allow the Federal Bureau of Investigation to obtain certain limited information from credit bureaus as part of a duly authorized counterintelligence or international terrorism investigation. Following the money trail is a critical part of these kinds of investigations. The FBI has the authority under current law to look at bank account information of individuals who are part of such an investigation. In order to use this authority, however, the FBI must identify the banks at which the individual maintains accounts. This is often done today through the intrusive and laborious process of going through that individual's trash. This provision allows the FBI to get that information, along with basic identifying information, from a consumer credit report if it meets certain specified requirements. Access to the entire consumer credit report still will require a court order. This conference report also contains a number of provisions that reflect the changes wrought by the end of the cold war and the reexamination of the role and mission of the intelligence community [IC]. One of the key issues in this context is personnel. The committee has been concerned for some time now that the IC has not done an adequate job of removing poor performers, creating headroom for those who excel, and ensuring that the community has the right mix of skills to accomplish its current and future missions. It is particularly critical that the IC carefully manage the significant downsizing it is currently experiencing. This report calls on the DCI to develop personnel procedures for the committee to consider that include elements for termination based on relative performance and on tie in class. Another trend in the IC in the post-cold-war environment is the declassification of secrets about which there are no longer national security concerns. The conference report contains significantly greater flexibility for the DCI and we have been assured that the funds now authorized for this activity are adequate to ensure that declassification will proceed expeditiously without sacrificing the care needed to weed out the true secrets. The conference report also contains the provision from the Senate bill requiring a report on the financial management of the National Reconnaissance Organization. Like so much of the IC budget--about 85 percent, in fact--the NRO budget is under the Department of Defense rather than the Director of Central Intelligence. From what we have learned to date about the problems with NRO accounting practices and management, this bifurcated chain of authority contributed to a situation in which no one adequately supervised the use, for example, of prior year, or carry forward, funds. This committee will continue to monitor NRO's financial management situation until it is satisfied that controls are in place and there is full accountability. The budget for the IC remains classified, but I can tell you that the funding authorized in the conference report, which incorporates a classified annex, is slightly below last year's level and the administration's request. This is the sixth straight year the budget has been reduced, for a cumulative reduction of 17 percent. The conference did recommend a reallocation of funding to emphasize areas of critical importance. For example, notwithstanding the rhetorical priority placed on critical intelligence topics such as proliferation, terrorism, and counternarcotics, the committee identified areas where insufficient funds have been programmed for new capabilities, or where activities are funded in the name of high-priority targets which make little or no contribution to the issue. In the classified annex accompanying the report, the conferees recommend a number of initiatives to enhance U.S. capabilities in the areas of proliferation, terrorism, and counternarcotics. Similarly, the IC's capabilities for processing information have lagged behind the collection capabilities and the conference report attempts to address that by shifting funds. In conclusion, I want to acknowledge the work of the staff of the committee in putting this legislation together and in assisting the committee in its day-to-day oversight of this Nation's intelligence activities. I urge my colleagues to support this bill.

Mr. SPECTER

Mr. SPECTER. I will consent with the understanding that I do not lose my right to the floor after the unanimous-consent agreement is propounded.

Mr. SPECTER. Mr. President, I support the pending resolution, but I express at the outset my concern about some of the legal arguments which have been raised that the attorney-client privilege does not apply to Congress, to congressional investigations. It is not necessary for me to reach that issue in my own conclusion or judgment here, that the attorney-client privilege does not apply, but I do express that concern. There has been an argument raised that the attorney-client privilege is different from the privilege against self-incrimination because the privilege against self-incrimination has a constitutional base. In my view, however, there is a constitutional nexus to the attorney-client privilege which arises from the constitutional right to counsel. Since the citations of authority limiting the attorney-client privilege in the context of congressional investigations--since those cases were handed down, there has been a considerable expansion in constitutional law on the right to counsel--Gideon versus Wainright, in 1963, asserting that anybody was entitled to counsel if they were haled into court on a felony charge, whereas, the practice in the prior period had been that the right to counsel did not apply, and the expansion of warnings and waivers under Miranda versus Arizona. So I think the breadth of the conclusion that the attorney-client privilege is not constitutional is certainly entitled to some skepticism at the present time. It is my view, however, that the attorney-client privilege does not apply here to preclude enforcement of this subpoena because the attorney-client privilege simply, on the facts, does not apply. Upjohn versus United States contains the basic proposition that the attorney-client privilege is the oldest of the privileges for confidential communications known to the law, with the citation to Wigmore. The Supreme Court in the Upjohn case says that the purpose of the attorney-client privilege is to encourage full and frank communications between attorneys and their clients and thereby promote the broader public interest in the observance of law and the administration of justice. The privilege recognizes that sound legal advice and advocacy serve public ends, but such advice or advocacy depends upon lawyers being fully informed by their clients. In the Westinghouse versus Republic of the Philippines case, the Third Circuit articulated this view: ``Full and frank communication is not an end in itself, but merely a means to achieve the ultimate purpose of privilege, promoting broader public interest in the observance of law and the administration of justice.'' The Third Circuit, in the Westinghouse case, goes on to point out, ``because the attorney-client privilege obstructs the truth-finding process, it is narrowly construed.'' The essential ingredients for the attorney-client privilege were set forth in United States versus United Shoe Machinery Corp., a landmark decision by Judge Wyzanski, pointing out that one of the essentials for the privilege is that the communication has to have a connection with the functioning of the lawyer in the lawyer-client relationship. Professor Wigmore articulates the same basic requirement. As I take a look at the facts present here and a number of the individuals present, there was not the attorney-client relationship. There were present at the meeting in issue David Kendall, a partner at the Washington, DC, law firm of Williams & Connolly, recently retained as private counsel to the President and Mrs. Clinton. That status would certainly invoke the attorney-client privilege. Steven Engstrom, a partner of the Little Rock law firm that had provided private personal counseling in the past. That certainly would support the attorney- client privilege. James Lyons, a lawyer in private practice in Colorado, who had provided advice to the President when he was Governor, and to Mrs. Clinton at the same time. But then, also present, were Bruce Lindsey, then director of White House personnel, who had testified that he had not provided advice to the President regarding Whitewater matters. Once parties are present who were not in an attorney relationship, the attorney-client privilege does not continue to exist in that context, where they are privy to the information. There was Mr. Kennedy, himself, associate counsel to the President-- William Kennedy, who said he was ``not at the meeting representing anyone.'' Then you had the presence of then counsel to the President, Mr. Bernard Nussbaum, and also associate counsel to the President, Mr. Neal Eggleston, who were present, not really functioning in a capacity as counsel to the President or Mrs. Clinton. So, as a legal matter, when those individuals are present, the information which is transmitted is not protected by the attorney- client privilege. And then you have, further, the disclosure which was made by White House spokesman, Mark Fabiani, to the news media characterizing what happened at the November 5 meeting, and discussing the subject matter of the meeting, which would constitute as a legal matter, in my judgment, a waiver of the privilege. So that recognizing the importance of the attorney-client privilege, I would be reluctant to see this matter decided on the basis that Congress has such broad investigating powers that the attorney-client privilege would not be respected. As I say, we do not have to reach that issue. On the facts here, people were present who were not attorneys for the President or Mrs. Clinton. Therefore, what is said there is not protected by the attorney-client privilege. The later disclosure by the White House spokesman, I think, would also constitute a waiver. For these reasons, and on somewhat narrower grounds, it is my view that the resolution ought to be adopted and the subpoena ought to be enforced. I yield the floor.

Mr. SPECTER

Mr. SPECTER. Mr. President, what I had sought recognition for relates to the appropriations bill on Labor, Health, Human Services, and Education. The purpose of my seeking the floor is to see if we might move that bill along. In light of the fact we are not going to have a continuing resolution, at least as it appears at the moment, I thought it important to put on the record that there are a very substantial number of jobs which are involved here, and layoffs, if we do not have a continuing resolution; that the Social Security Administration has some 60,000 jobs, the Department of Health and Human Services has some 100,000 jobs, the Department of Labor has 18,000 jobs, the Department of Education has 5,000 jobs. We have been trying to work out a unanimous consent agreement to bring this bill to the floor. I understand that the Members of the other side of the aisle have been unwilling to give consent because of the provisions on the bill about striker replacement. There have been a number of other items. But, for the record I wanted to see if we might possibly move the bill ahead. I full well understand the likelihood of objection. But, on behalf of Senator Dole, I do ask unanimous consent that the Senate turn to consideration of Calendar No. 189, H.R. 2127, the Labor-HHS-Education appropriations bill.

Mr. SPECTER. I fully appreciate the objection. And I thank my colleague. I yield the floor.

Mr. SPECTER

Mr. SPECTER. Mr. President, the most weighty factor in deciding how to vote on the Bosnian resolution is that United States troops will be deployed in Bosnia regardless of what Congress does, since there are not enough votes to cut off the funding. In fact, the advanced troops are already in Bosnia. Not only is the congressional vote nondeterminative, but the debate has been advanced and the votes expedited in the expectation that there will be some show of congressional support to bolster our troops' morale. Certainly we should do that. So that with the troops on the way and the congressional vote nondeterminative, all the Congress can do now is to make the best of it. After extensive discussions with my constituents, my colleagues in the Senate, and executive branch officials, it is my view that the United States does not have a vital national interest in Bosnia to justify sending United States troops there. When President Clinton called me, almost 2\1/2\ weeks ago, seeking my support, I asked the President what was the vital United States national interest. He responded by commenting on the widespread killing. I said I was very concerned about the atrocities, the mass killings and genocide, but asked him how that distinguished Bosnia from Rwanda or other trouble spots around the world. President Clinton then warned about the conflict spreading to other nations of Central Europe. I asked if that posed a security threat to members of NATO, which would activate our treaty obligations on the principle that an attack on one is an attack on all. The President said that he was not basing the national security interest on a treaty obligation on that issue. In extended informal discussions with colleagues, some Senators have argued that a vital United States national interest arises in a number of contexts. For example, some contend that the stability of Central Europe is vital to U.S. security. Other Senators have said that an opportunity to involve Russia in the joint action with NATO rises to the level of a vital national interest. Others say that there is a vital United States national interest in ousting the Iranians from Bosnia, so that the fundamentalists do not gain a foothold in that important region. Former Secretary of State Henry Kissinger articulates a vital U.S. interest in the following way. The paradox of the decision before Congress is that, while we have no inherent national interest to justify the sending of troops, a vital national interest has been created by the administration's policy. Dr. Kissinger continues: If other nations cease to believe our assurances, our capacity to shape events, to protect American security and values will be jeopardized. The problem with Dr. Kissinger's analysis is that it gives the President the power to create a vital national interest by unilaterally making an American commitment without the consent of Congress in the context where the consent of Congress is necessary to bind the United States. My own judgment is that those considerations do not aggregate to a vital United States national interest. U.S. national security is not imminently threatened, and we are not the world's policeman. It may be that at some point there will be consideration to the deployment of U.S. troops for international moral commitments or from some other standard, but the vital national interest context has been that which has traditionally governed the deployment of U.S. military personnel. So far, they are proposed to be only peacekeepers. But it is a short distance from being peacekeepers to being in harm's way, and really, even being peacekeepers is in harm's way, with the troops that are already there being apprehensive about taking a step off a tarmac out of concern about stepping on a landmine. In 1991 on this floor I had the privilege to participate in the debate on the resolution for the use of force as to the gulf war. I believe that it was indispensable that Congress pass on that matter, even though it was a Republican President, President Bush, who in late 1990 said a number of things about dispatching troops there involving the United States without congressional approval. But ultimately the President did bring back the issue to the House and to the Senate. And we had debates about vital national interest. A number of us were on the floor at that time--Senator Warner, Senator Nunn, and others--and comments in the media were that it was a historic debate about what are United States vital national interests. At least, in my own judgment, we have not seen the establishment of the vital national interest in what we have present today in Bosnia. But that is a judgment call like so many other judgments that we have here. In the absence of a vital national interest, it is my judgment that the Congress should support the troops, without endorsing the President's policy. Our congressional action should show as much national unity as possible under the circumstances and project American leadership to the maximum extent possible consistent with congressional policy not to give the President a blank check. It is obviously going to be a tough winter and a tough year for our troops so we should be as supportive as possible where they are concerned. I am encouraged by the testimony presented to the Senate Intelligence Committee from the executive branch. We convened those hearings in the Intelligence Committee, which I chair. The executive branch officials testified that our troops will be authorized by the rules of engagement to defend themselves on their finding of hostile intent rather than hostile action. That means that our troops will not have to wait until they are shot at; but they can take preemptive action if they conclude that there is hostile intent. The anticipation of hostile action gives them the discretion to make the judgment that preemptive action is warranted. It is obviously problemsome on U.S. international relationships for the Congress to pull out the rug from the President's unilateral commitments to our allies. However, it is fundamental in our constitutional separation of power that the President's authority in foreign policy and as Commander in Chief is limited by Congress' authority on appropriations and the declaration of war. And the Founding Fathers were explicit in having that kind of a separation of powers, and that is what we are concerned about here today. My preference, as I expressed it to the President in our conversation, was that the President come to the Congress with authorization in advance of dispatching the troops to Bosnia. We have learned from the bitter experience of Vietnam that the United States cannot prosecute a war, or really any extended military operation, without the backing of the American people. And the first line of that determination is to have the backing of the Congress. The President chose not to do so. When we take a look at what our allies' expectation has been, or should be, we have to note that repeatedly congressional action in opposing President Clinton's Bosnia policy has put our allies squarely on notice that the Congress might well disavow the President's promises. It was plain on the public record that the Congress voted overwhelmingly to lift the arms embargo unilaterally to allow the Bosnian Moslems to defend themselves against Serbian atrocities. In the Senate we had a vote of 69 to 29. In the House the vote was 298 to 128. All of that required a Presidential veto. And it was only after those overwhelming votes occurred in both Houses of Congress that the President's policy in Bosnia was activated. For a long period of time many of us had urged the executive branch to undertake massive bombing using our tremendous air power, and we were met with the response that in the absence of ground troops the bombing would not be effective. Once that bombing was initiated, however, quite the opposite occurred from what the administration and the Department of Defense officials had predicted, and it brought the Bosnian Serbs to their knees. It brought them to the bargaining table. And this agreement has been worked out. But it is in this context of the very severe disagreement that has been expressed by this Senator--and many others on this floor and in the House of Representatives--that the allies, the other party signatory to the agreement in Dayton, have been squarely on notice that the Congress might well disagree with the President. The institutional conflicts between the Congress and the President on foreign policy have a long history. Many have challenged the President's actions in ordering United States troops to fight wars without congressional authorization in Korea and Vietnam. The War Powers Act was an effort to establish constitutional balance. But that War Powers Act met with little success. President Clinton took the initiative in ordering an invasion of Haiti in the face of overwhelming congressional resolutions expressing disapproval of that Presidential action. Fortunately, it turned out to be a bloodless invasion when potential opposition withdrew. So, Mr. President, our allies have been on notice. Depending on future events, the Congress may have to assert its authority to cut off funding, if we conclude that the President has exceeded his authority or has pursued unwise policies. Those are congressional prerogatives, and under our constitutional system of separation of powers they have to be zealously guarded and observed. But since the President is not now usurping congressional authority to involve the United States in war, and since the votes are obviously not present to cut off funding, we should make the best of the situation in formulating a resolution to support the troops, and demonstrate as much national unity as possible. To the extent possible, the resolution should impose the maximum pressure to strengthen the Bosnian Moslems militarily to establish a balance of power in that area so that our troops may be withdrawn at the earliest practical date. An exit policy from Bosnia will turn on there being a balance of power there. It is critical for the United States and its NATO allies to articulate a plan for equipping and training the Bosnian Army. Regrettably, the administration has been reluctant to articulate such a policy. But, in letters just publicized yesterday and today, we may have those assurances. And those assurances and that action ought to be subject to the maximum possible congressional power and persuasion. Arming the Bosnians is critical for two reasons. First, it will help ensure a balance of power in the region--a balance that currently favors Serbia and Croatia. Second, the Bosnian Army must be armed before the NATO implementation force can leave. As former Under Secretary of Defense, Paul Wolfowitz, recently noted, ``Until the Bosnians have the capability of defending themselves, it will be impossible for us to withdraw without terrible consequences.'' In addition, we should do our best to use the current situation in Bosnia to establish important international law precedents against genocide, and to prosecute war criminals. Bosnian-Serb leader Radovan Karadzic and army commander Ratko Mladic and others under indictment should be brought to trial in the War Crimes Tribunal. This is a unique opportunity to follow up on the Nuremberg precedent and to establish an international rule of law. Since 1989 the United States has been a signatory to the International Genocide Convention. The United States has been a leader in instituting the War Crimes Tribunal. For years, I have pressed resolutions adopted by the Congress to set up an international criminal court with the principal thrust to control international terrorism and drug dealing. It has been my view that, while it has been impossible to get countries like Colombia to extradite to the United States, if there were an international criminal court, that might be doable in a practical political context. And we have yet to be able to put our hands on the Libyans under indictment for the terrorism against Pan Am 103. And there again, if an international criminal court were present, it might be possible to have extradition to such a court if extradition to Scotland or England or the United States cannot be obtained. And it is very important for us to press ahead on these prosecutions under the War Crimes Tribunal. In 1993, my amendment was adopted to provide $3 million to assist the prosecutor in gathering evidence against those who committed atrocities and mass killings in Bosnia. We should press all parties to the peace agreement to make their maximum efforts to bring the war criminals to trial. My recent meeting with Chief Prosecutor Justice Goldstone provides encouragement that a significant international legal precedent can be achieved in that tribunal. International action against mass killings and genocide would promote an important goal of the law of nations. My discussions with Secretary of State Warren Christopher and National Security Adviser Anthony Lake provide reassurance on the firm U.S. policy to bring the war criminals to trial. For myself and many others in the Congress, continued support of the Bosnian operation would be materially affected by the intensity demonstrated to bring such war criminals to justice. While I do think it an unwise policy to deploy United States troops to Bosnia, I am very much concerned about the kind of isolationist rhetoric that we have heard in this Chamber in the past 2 days. I have consistently supported a robust national defense and a robust foreign policy by the United States, an attitude gleaned from my earliest days studying international relations as a student many years ago at the University of Pennsylvania. The United States should not turn to isolationism, but neither should we turn to being the policeman of the world when there are incidents around the world, and so many of them, without having a vital U.S. national interest involved. But weapons systems, army divisions, and aircraft carriers are not enough to ensure our security. We must be committed to the notion that the United States needs to be engaged throughout the world diplomatically, economically, militarily, and always carefully. We need to use all our instruments of national power to shape the international security environment in a way that guarantees American security. In my judgment, for the reasons I have outlined, Bosnia and the Balkans do not rise to that level. But by the same token, we must be careful to resist instantaneous or knee-jerk reactions to any use of U.S. military force even where we did so in Desert Storm. Mr. President, these are obviously matters of great complexity. We vote on them in a series of resolutions trying to exercise our best judgment, knowing that the troops are on the way, whatever we do. We obviously will follow the matter very closely through our congressional action in a variety of committees, including the Senate Intelligence Committee, which I chair, to bring our best judgment to bear on the Bosnian situation, to support the troops wherever we can and to bring them home as soon and as safely as possible. I yield the floor. Mrs. BOXER addressed the Chair.

Mr. SPECTER

Mr. SPECTER. Mr. President, I approach any constitutional amendment with hesitancy--especially one induring the first amendment. At the outset, I believe there is a major difference between an amendment seeking to change the text of the first amendment--as is now pending in the House of Representatives on freedom of religion--and one to overrule a decision of the Supreme Court of the United States. For me, a 5 to 4 decision on flag burning does not merit the difference due the language of the Bill of Rights. There is nothing in the text on freedom of speech requiring protection for flag burners. While their speech will still be protected, their acts will be prohibited. In a somewhat analogous context, I have sponsored and pressed for a constitutional amendment to overturn the Supreme Court's decision in Buckley versus Valeo, which extended the protection of freedom of speech to an individual who spends unlimited amounts of his or her own money for a candidacy for public office. It is accepted that freedom of speech is not absolute or unlimited. Justice Oliver Wendell Holmes articulated the classic statement that a person is not free to cry fire in a crowded theater. In a similar vein, the Supreme Court has interpreted the first amendment to exclude from its protection incitement to imminent lawless action, fighting words, obscenity, libel, and invasions of privacy. Based on the precedents and general principles of constitutional interpretation, it is my judgment that Texas versus Johnson was incorrectly decided. The burning of the flag is conduct--not speech. I have great respect for robust debate to the extreme. But a speaker may express himself or herself with great vigor without insults or expressions that would be reasonably interpreted as fighting words. Since I studied Chaplinsky versus New Hampshire in law school, I have been impressed with the import of the fighting-words doctrine. In Chaplinsky, the defendant was criminally charged when his speech angered a mob and almost caused a riot. He claimed his speech was protected by the first amendment. The Supreme Court unanimously rejected his argument, holding: . . . the right of free speech is not absolute at all times and under all circumstances. There are certain well-defined and narrowly limited classes of speech, the prevention and punishment of which have never been thought to raise any Constitutional problem. These include the lewd and obscene, the profane, the libelous, and the insulting or `fighting' words--those which by their very utterance inflict injury or tend to incite an immediate breach of the peace. It has been well observed that such utterances are no essential part of any exposition of ideas, and are of such slight social value as a step to truth that any benefit that may be derived from them is clearly outweighed by the social interest in order and morality. I take a back seat to no one in protecting constitutional rights and civil liberties. For years I have stood against those who have sought to strip the Federal courts of their jurisdictional to hear constitutional cases involving subjects such as school prayer and busing. I have opposed efforts to breach the wall of separation between church and state and to weaken the exclusionary rule. Earlier this year, I opposed proposals in the counterterrorism bill to expand wire- tap authority and to deport aliens using secret evidence in violation of the basic norm of due process. Our law acknowledges and respects expectations. People have real, legitimate and reasonable expectations that the flag of the United States will be treated with honor and respect. Some of the Supreme Court's most liberal Justices, the greatest defenders of our civil liberties, have forcefully held flag burning is not protected speech. Chief Justice Earl Warren: . . . the States and the Federal Government do have the power to protect the flag from acts of desecration and disgrace. Justice Hugo Black, the ardent exponent of first amendment absolutism: [i]t passes my belief that anything in the Federal Constitution bars a State from making the deliberate burning of the American flag an offense. Justice Abe Fortas articulated: . . . the reasons why the States and the Federal Government have the power to protect the flag from acts of desecration committed in public. The Bill of Rights has a special sanctity in establishing our Nation's values. There is no part of the text of the Bill of Rights which I would agree to amend. While substantial deference should be given to Supreme Court decisions on constitutional interpretation, there are some circumstances where amendment is warranted, especially on split decisions like the 5 to 4 vote in the flag-burning case. Like fighting words in Chaplinsky, libel in Sullivan, incitement of imminent lawless action in Brandenburg, and invasion of privacy in Cantrell, my judgment is that flag burning is not constitutionally protected by the first amendment.

Mr. SPECTER

Mr. SPECTER. Mr. President, I support the intent of Senator Pryor to remedy what was apparently an unintended omission when the Senate ratified the implementing legislation for the General Agreement on Tariffs and Trade (GATT) in the 103d Congress. However, I remain concerned with ambiguities in the Pryor amendment with respect to the definition of substantial investment. When the GATT implementing legislation was approved last year, it contained a provision harmonizing U.S. patent law with the rest of the world by changing patent terms to 20 years from the initial patent application rather than 17 years after granting of the patent. In order to be fair to existing patent holders, the legislation gave them the option of utilizing the longer of the pre-GATT and post-GATT patent terms. However, because the legislation affected many generic manufacturers who had been preparing to go to market with competing products upon the [[Page S 18208]] expiration of the original patent term, Congress agreed to allow generic manufacturers who had already made a substantial investment in that product to utilize the original patent expiration date and commence marketing, upon paying of a royalty to the patentee. Some have argued that the courts can interpret the definition of substantial investment, and consequently, there is no need for legislative guidance on that definition. I disagree. By retaining this legislative ambiguity, we are ceding the legislative role to the courts. We are also creating considerable costly litigation because of this ambiguity which should be made clear in the statute. These are resources which could be better devoted to developing new products and making them available to the public. I have discussed with Senator Pryor my willingness to work with him to correct this ambiguity and then accomplish his intended remedy. Mr. HATCH addressed the Chair.

Mr. SPECTER. Mr. President, I thank the distinguished Senator from California. Mr. President, I support both of the pending amendments, the amendment offered by the distinguished majority leader, Senator Dole, and the amendment offered by the distinguished Senator from California, Mrs. Boxer. I believe that the broader amendment, the Boxer amendment, is the preferable one because it articulates the basic constitutional standard which was setforth in Row v. Wade and upheld in Casey v. Planned Parenthood in 1992, an opinion written by three Justices appointed by Presidents Reagan and Bush. When you talk about the life of the mother and the health of the mother, conditioning the health on ``serious adverse health consequences,'' that is the constitutionally protected doctrine. When you talk about the language of the Dole amendment, which I intend to support, it is not in the blanket terms of life of the mother as in the Hyde amendment or the traditional amendments which are offered on appropriations bills which make an exception for life of the mother but instead talks about ``saving the life of the mother whose life is endangered by a physical disorder, illness or injury, provided that no other medical procedure would suffice for that purpose.'' That language is hard to interpret at best, and I do believe would place substantial doubt in the minds of many doctors who would be called upon to try to figure out what it means. This is a medical procedure which is chilling beyond any question, and we do at the present time have a line drawn as to when there is someone alive protected by the laws against homicide and infanticide and the constitutional protections which apply on the medical procedure of abortions. We had only 1 day of hearings on this matter. The day we had was certainly preferable to having no hearings at all, but we were unable to get on relatively short notice, because we had a very limited time span, the doctors who were really familiar with these procedures. The fact is that those who are familiar were reluctant to step forward and offer medical judgments. But we heard very profound testimony from physicians who expressed the concern about having legislation in this field where it is very difficult to start to draw lines about what medical practices and what medical procedures ought to be. There is so much to be said for the proposition that it is between the doctor and the patient as to what is necessary for the life of a mother, which is at least the most restrictive standard which ought to be adopted in clearcut terms and really is not by the amendment offered by the distinguished majority leader but really ought to be extended life of the mother or health of the mother which has been established by the constitutional parameters by the Supreme Court of the United States. We have legislation which is very profound in its import, which had one limited hearing in the House, one limited hearing in the Senate, and which we will be legislating upon which will leave many, many open questions and many doubts on a very, very serious medical procedure. So, at a minimum, Mr. President, I hope that the Boxer amendment would [[Page S 18187]] be adopted as well as the Dole amendment.

Mr. SPECTER

Mr. SPECTER. Mr. President, as chairman of the Labor, HHS, and Education Appropriations Subcommittee, I want to update the Senate on the status of the Labor, HHS, and Education appropriations bill, H.R. 2127, as it relates to the continuing resolution and the implications of the Senate's inaction on the bill for programs of the Department of Labor, HHS, and Education. In particular, I want to focus on the need to free up low-income energy assistance funds, which are so crucial at this time of year, when winter descends upon cold water States. As Senators know, the Labor, HHS, and Education appropriations bill for fiscal year 1996 is still on the Calendar. Efforts to bring it up in the Senate have been met with a filibuster due to the ``striker replacement'' provision and the abortion issue. I opposed the ``striker replacement provision being added to the bill in committee, because of the view that controversial legislative riders do not belong on an appropriation bill, but should be considered through the authorization process. In the case of the Labor, HHS, and Education appropriations bill, the legislative riders included by the House have stalled action on this important bill in the Senate, and indefinitely postponed funding for education, health, job training, and social service programs in this fiscal year. While the continuing resolution will ensure that some funding will be available for these programs, it is only on a short-term basis and at a minimal level. But, in some cases, the CR level effectively eliminates the viability of the program. The LIHEAP Program is one such example. LIHEAP provides funds to States to help low-income households meet their fuel bills during the winter months when costs soar due to cold weather. A high percentage of the program's beneficiaries are elderly and disabled people who need help in paying their fuel bills. Mr. President, it is already very cold in many parts of the Nation. Our reliance on continuing resolutions since October 1 has put LIHEAP funds in jeopardy. Under the terms of the continuing resolution, $231 million has been made available to the States. This is far short of the nearly $600 million already requested by the States to get through the first quarter of the fiscal year. In previous years an average of 60 percent of the annual appropriation for LIHEAP has been allocated to the States in the first quarter, and 90 percent by March 30. Many States have begun receiving requests for assistance, and under normal circumstances would begin distributing funds to participants at this time. However, because of the present stalemate in the Senate on the Labor, HHS, and Education appropriations bill, States have no idea how to plan for this winter's program, and hundreds of thousands of low-income families are left wondering how they will be able to meet their winter heating bills. Low-income households, as well as Governors and local officials across the country are waiting to learn whether, and how much, funding will be appropriated for this winter's LIHEAP Program. For low-income residents of cold-weather States like Pennsylvania, winter can mean choosing between eating and heating. We must not let our budgetary stalemate in the Nation's Capitol unduly burden the poor and elderly with respect to such a basic need as heated homes and apartments. I have supported the previous continuing resolutions because they provide critical short-term funding for Federal activities. But I want to make clear, it is time for the Senate to act on the Labor, Health and Human Services, and Education appropriations bill. Let's stop the filibuster, agree to bring up the bill, debate it, and let the Senate work its will. In the meantime, it is imperative that the harsh restrictions on funding for LIHEAP be lifted. It is unfair to hold hostage essential assistance to the poor and elderly in cold weather States as Congress continues to deliberate on the budget. Mr. President, winter's cold knows no political affiliation. The LIHEAP Program has had years of bipartisan support. Now is the time for all Senators to work together to ensure that our constituents in need are not denied heating assistance this winter. Thank you, Mr. President. I yield the floor.

Mr. SPECTER

Mr. SPECTER. Where is the Senator reading from? Is it in a circuit court opinion?

Mr. SPECTER. Will the Senator yield? [[Page S 17958]]

Mr. SPECTER. Mr. President, I had sought to ask my distinguished colleague from Connecticut a question relating to the pleading standard when he had said, in his presentation, that the standard in this statute is a tested standard. Then, later in his presentation, he made reference to this Senator on the pleading issue. The question that I have for my colleague from Connecticut turns on what the pleading standard of the bill is, as having come back from conference, which is significantly different from that which left the Senate. The amendment which this Senator offered had incorporated into the statute the second circuit language which would have clarified the language in the Senate bill, which provided that, ``In any private action arising under this title, the plaintiff's complaint shall, with respect to each act or omission alleged to violate this title, specifically allege facts giving rise to a strong inference that the defendant acted with the required state of mind.'' That was the tough second circuit standard. This Senator offered an amendment, which was accepted on the Senate floor, to incorporate what the second circuit said was the way of establishing that strong inference, to provide it by ``alleging facts to show the defendant had both motive and opportunity to commit fraud, or by alleging facts that constitute strong circumstantial evidence of conscious misbehavior or recklessness by the defendant.'' The conference report struck out the language which my amendment had inserted which would have given guidance to how plaintiffs could meet that very stringent standard. In addition, the conference report added that these facts had to be ``stated with particularity,'' which is an even tougher standard than the language which had gone from the Senate bill. So when the distinguished Senator from Connecticut talks about, in his words, and he referred to the House [[Page S 17960]] measure as ``intemperate''--I will not seek to characterize it, but I do know his characterization of the House measure was ``intemperate''-- contrasted with what he said the Senate action was, ``moderate,'' that the bill that has come back from conference is a lot different than the bill which the Senate sent out. I think there is an enormous difference. So the question that I have for my colleague from Connecticut is, where has this language in the conference report on the pleading standard for state of mind been tested in light of the fact that the toughest standard in existence to this moment is the second circuit standard, and this conference report toughens up the second circuit standard in two important respects by striking out the way you plead that tough state of mind standard and also by adding the requirement of pleading with particularity?

Mr. SPECTER. I challenge that.

Mr. SPECTER. From where is the Senator reading? In a circuit court opinion?

Mr. SPECTER. From where?

Mr. SPECTER. Tell me where the citation is, because I have the opinions here. I challenge that any language appears from the second circuit opinion which was not incorporated in my amendment.

Mr. SPECTER. Tell me where.

Mr. SPECTER. Reserving the right to object, under the procedural statement, I ask unanimous consent that debate on the bill be extended for 15 minutes beyond. I know that is an imposition on the Presiding Officer. I have 15 minutes reserved, and I have been here for most of the morning, a [[Page S 17959]] good part of the morning, waiting to speak.

Mr. SPECTER. What page?

Mr. SPECTER. Mr. President, the language handed down by the second circuit was articulated by Chief Judge Jon Newman as follows: These facts or allegations must give rise to a strong inference that the defendants possess the requisite fraudulent intent. A common method for establishing a strong inference of scienter is to allege facts showing a motive for committing fraud and a clear opportunity for doing so. Where motive is not apparent, it is still possible to plead scienter by identifying circumstances indicating conscious behavior by the defendant, though the strength of the circumstantial allegations must be correspondingly greater. The amendment which this Senator offered and was adopted by the Senate followed the pleading requirement by saying that the required state of mind may be established either by alleging facts to show the defendant had both motive and opportunity to commit fraud or by alleging facts that constitute strong circumstantial evidence of conscious misbehavior or recklessness by the defendant. I submit that the amendment which I offered and was adopted by the Senate tracked the second circuit's language directly, and that by striking the amendment which the Senate agreed to, by conceding to the House, the conference report omits a very critical factor in giving guidance as to how a plaintiff meets this tough standard for pleading state of mind. I would ask my colleague from Connecticut whether it is not true that the conference report came back with an additional toughening factor requiring that the facts going to state of mind be pleaded with particularity.

Mr. SPECTER. I do.

Mr. SPECTER. I thank my colleague from Connecticut for responding. When you have a dialog in debate it is invariably more instructive than the speeches we make, however eloquent our individual speeches may be. But I have very limited time remaining. The point that I wanted to make is that regardless of what the conference report intends--and the Senator from Connecticut talks about what we are trying to accomplish--the plain truth of the matter is that this is an impossible pleading standard, that where you take what was a tough standard by the second circuit on pleading state of mind, and then you delete the ways you prove state of mind, and then add in addition a particularity requirement, you simply do not have a way that a plaintiff realistically can go into the Federal court under the securities acts and have a fair chance to state a case. I say that with some substantial experience in the practice of law, as a trial lawyer for some 10 years in the civil field and with substantial practice in the criminal field, which has some bearing, and my work in the past 15 years on the Judiciary Committee, that where you have a situation here where there is a mandatory stay of discovery when a motion to dismiss is [[Page S 17961]] filed, that you simply do not give an opportunity to plaintiffs to go into court and have a chance to articulate a case. We are dealing here, Mr. President, with enormous sums of money. In 1993, the most recent year available from the New York Stock Exchange and NASDAQ, there was some $3.6 trillion traded, not even taking into account the American Stock Exchange, more than half of the gross national product of the United States. And we have had an enormous number of very, very important fraud cases. The Keating case involved some losses in excess of $4.4 billion. The Drexel Burnham case, the Quorum case, the tremendous matter now pending involving the losses incurred by Orange County. So we are talking about gigantic interests. The bill that has come back from conference, Mr. President, virtually forecloses a realistic opportunity to bring a suit under these pleading standards. And what we are not trying to do is what specifically has been done here. The standard of review is especially problemsome in the context of the mandatory rule 11 review required by the conference report. In earlier argument on June 27 of this year, at page S9165 of the Record, I put in an extensive listing of letters from judges who did not want to have this mandatory rule 11 review, the Federal judges who practice in it. Then the conference report has a presumption that, after the mandatory review, if there are sanctions against the complaint, the costs of litigation and lawyers' fees will be imposed upon the plaintiff. This is realistically more than a chilling effect. It will have the effect really to virtually discourage litigation in an important field where these private lawsuits have had a very important impact on policing the field. The Securities and Exchange Commission cannot possibly undertake it by themselves. The distinguished Senator from Connecticut concedes that in his speech about the importance of private rights of action to enforce the securities laws. But I am concerned, as a person who has had experience in the field in representing, under the Securities Act, defendants as well, that this bill in its present form simply is unrealistic and unreasonably restrictive----

Mr. SPECTER. Not on my time. I will be glad to if we can get an extension. Where you have especially the problem compounded by the short statute of limitations, which is 1 year from discovery and 3 years from commission. Efforts were made to extend the time to 2 and 5 years, favored by the Securities and Exchange Commission, but they failed. And where you have the safe harbor provisions which have come back here contrary to what has been asserted here, that there is no liability for forward-looking statements with cautionary statements no matter what the intent. The Senate bill said, if there was a knowing misstatement, that it not be covered by the safe harbor. That has been turned around by the conference report. What has come before us, Mr. President, I submit, is unreasonable, unrealistic, and imposes restraints which do not protect investors. It does not strike an appropriate balance. I would be glad to yield to my colleague from Connecticut.