Arlen Specter

Mr. SPECTER

Mr. SPECTER. I thank the Chair, and I thank my colleague from Arizona. As I understand the thrust of the amendment, the provisions which would strike $1,800,000 to replace underground storage tanks has been deleted from the amendment because that change or that work may be necessary in any event; is that correct?

Mr. SPECTER. Mr. President, I have sought recognition for a moment just to be sure that I understand the thrust of the amendment of the distinguished Senator from Arizona. If I might have the attention of my colleague, Senator McCain, for just a moment. He and I were just talking briefly, and I wanted to be sure----

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 President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. SPECTER. And the items on electrical targeting systems upgrade, $770,000, and flight simulator and air medical complex, $4,584,000, and barracks, $6,200,000, will be reinstated in the event Fort Indiantown Gap remains open by proceedings under the Base Closing Commission.

Mr. SPECTER

Mr. SPECTER. Madam President, this is an issue of really enormous importance, as we have reviewed the work of the Intelligence Committee. It has been my conclusion that the problems of international terrorism and the problems of weapons of mass destruction are problems of overwhelming importance, posing a security threat to the United States. When we have a document which has as much practical importance as this so-called agreed framework does, it is simply inappropriate to not have it subjected to Senate scrutiny. It may well be that this Senate will ratify this treaty, the document that I consider to be a treaty. It is certainly necessary, in my judgment, that matters of this sort be elevated to a level where there is very, very, considerable public scrutiny and scrutiny by the Senate under the constitutional doctrine of checks and balances. So awaiting the reply by Secretary of State Christopher, it is my intention at the appropriate time to bring this matter to the Senate for ratification because of its importance on the merits compliance with the U.S. Constitution. I thank the Chair. I yield the floor. Madam President, I suggest the absence of a quorum.

Mr. SPECTER. Madam President, during the first hearing of the Senate Intelligence Committee, which I chair, back on January 10 of this year, I expressed a concern about what was happening with the arrangements between the United States and North Korea on the deal where North Korea would have a 5-year window without inspection of used fuel rods, which is the best way on an inspection line of determining what is happening with respect to the potential for North Korea to build a nuclear weapon. During the course of the next several weeks, and in discussions with a number of my colleagues, it seemed to me preferable to have that so- called agreement, the United States-North Korea agreed framework for resolving the nuclear issue, submitted to the United States Senate for ratification, because it really was, in effect, a treaty even though the administration had denominated it as an agreed framework, not even, according to the administration, rising to the level of an executive agreement which would activate certain congressional review. On February 24, I prepared a letter, which was submitted under the signatures of Senator Helms, in his capacity as chairman of the Foreign Relations Committee; Senator Murkowski, in his capacity as the chairman of the Energy and Natural Resources Committee; and myself, as chairman of the Senate Select Committee on Intelligence, to Senator Dole setting forth our request that the Senate handle as a treaty under the constitutional ratification process the United States-Democratic Peoples Republic of Korea Agreed Framework for Resolving the Nuclear Issue. The letter set forth that the Clinton administration was seeking to proceed under this so-called agreed framework without submitting it as a treaty, which it really was, for Senate ratification. We submitted at that time to Senator Dole a legal memorandum prepared by the Congressional Research Service, the Library of Congress, dated February 8, 1995, which set forth the criteria for considering whether an arrangement was a treaty. In our letter, we noted that, while the memorandum specifies that ``there are no `hard and fast rules,' we believe the underlying rationale suggests that the agreement should be handled as a treaty because it is a matter of great importance (involving North Korea's potential for developing nuclear weapons),'' that the document ``constitutes a substantial commitment of funds extending beyond a fiscal year and is of substantial political significance,'' all of which were criteria for an evaluation as to whether the arrangement was in fact a treaty. We concluded our letter to Senator Dole noting that ``The formal treaty ratification process will enable us''--that is, the Senate--``to undertake a detailed factual analysis to determine whether this agreement is in the national interest.'' substantive grounds and constitutional grounds, this matter ought to be handled as a treaty. The Constitution of the United States provides for ratification by the Senate on treaties. There are a whole series of criteria, some of which I have just referred to, which indicate, suggest, provide evidence for the conclusion that this agreed framework is in fact a treaty. If you take a look at some of the items which we have handled as treaties in the Senate through the treaty ratification process, you will note the great difference between the importance of this United States-North Korean arrangement, contrasted with other matters which have been submitted to the full Senate ratification process. For example, Treaty 102-7, which is a Convention for the Prohibition of Fishing with Long Drift Nets in the South Pacific; or Treaty Document Exhibit EE 96-1, an International Convention on Standards of Training Certification and Watch Keeping for Seafarers; or Treaty Document 100- 7, Agreement for Medium Frequency Broadcasting Service in Region Number II; or Treaty Document No. 101-15, Amendments to the 1928 Convention Concerning International Expositions, as Amended. On some occasions, as is well known, in the Senate, we handle as many as six treaties at one time in a single vote, with notification being given to Senators that if they miss that one vote, it will be counted as a half dozen absences, because the treaties do not rise to the level of any individual identification or individual voting, but are very, very much pro forma. So that it is indeed surprising, when a matter comes before the international forum and is the subject of a document between North Korea and the United States, that it is denominated only as an agreed framework for resolving the nuclear issues. Following receipt of our letter, Senator Dole, by letter dated March 10, wrote to Secretary of State Christopher asking a series of specific questions which set out the criteria for determining whether or not such a matter is or is not a treaty. It had been my intention to offer a sense-of-the-Senate resolution early on as soon as a legislative vehicle arose. I had notified the managers of this legislation that I would be offering that sense-of- the-Senate resolution at this time. But I have decided to defer doing that because Senator Dole's letter, dated March 10, 1995, is now outstanding and, as of this date, March 16, there has not been an adequate opportunity for the Secretary of State to respond to the majority leader's letter. I make the statement at this time to put the administration on notice that it is my intention--and there are a number of cosponsors who are prepared to join with me on this important matter, including the distinguished Senator from Texas who is the Presiding Officer, was asked a series of questions in closed session before the Intelligence Committee on this matter. I state for the Record because the camera may have been on me rather than her, and might have missed her acquiescing nods. There are a number of colleagues who agree with the seriousness of this matter. In dealing with North Korea, while it is my hope that they will abide by the international commitments, there is good reason for concern as to whether they will abide by their commitments. Nobody said it better than President Reagan when he made the comment about trust but verify. There is a chronology on North Korea's activities which raises very, very, considerable grounds for concern as to whether North Korea will, in fact, comply with their commitments under this statement of agreed principles. Madam President, at this time I ask unanimous consent that the text of the United States-North Korea Agreed Framework for Resolving the Nuclear Issue be printed in the Record except as to a confidential part which cannot be disclosed publicly at this time; that a copy of the legal memorandum from the Congressional Research Service, dated February 8, 1995, be printed in the Record; that a copy of the joint letter submitted by Senators Helms, Murkowski, and myself, be printed in the Record; as well as an unclassified document prepared by the State Department on the North Korea nuclear timeline, showing many actions by the North Koreans which raise real issue as to whether there has been compliance by North Korea, and raising real issues as to what might be expected in the future.

Mr. SPECTER. Finally, Madam President, I would like to ask unanimous consent to print in the Record the proposed amendment that I had intended to offer with a number of cosponsors, as I say, including the distinguishing Senator from Texas who is presiding, so that all of that will be part of the Record and available for review in anticipation of the response by Secretary of State Christopher, to Senator Dole's leadership.

Mr. SPECTER

Mr. SPECTER. Mr. President, I ask that the text of my bill, S. 488, the Flat Tax Act of 1995, which I introduced on March 2, 1995, be printed in today's Record. The bill was inadvertently not printed in the Record on March 2, 1995, when it was introduced. The bill follows:

Mr. SPECTER

Mr. SPECTER. Mr. President, I now turn to the introduction of the modified flat tax bill entitled the Flat Tax Act of 1995. This is a proposal which would simplify the filing of Federal tax returns, would provide for fairness among all taxpayers, and would stimulate economic growth in the United States. As these proceedings of the U.S. Senate are being watched on C-SPAN2, I am confident that thousands of Americans are sitting at their desks with an ear to television but an eye to their tax returns and they are poring over the complexities of the Federal tax laws. This bill would permit the American taxpayer to file his or her return on a small, 10-line postcard. It would do so because it retains the principles of a flat tax, which have long been discussed but not really considered in sufficient depth and not acted upon by the American Congress. This flat tax would be a 20-percent rate, with deductions limited to interest on home mortgages up to $100,000 in borrowing and charitable deductions up to $2,500. The entire return could be filled out on a simple 10-line postcard. This postcard would identify the taxpayer, specify the total amount of wages, salaries, pensions, and retirement benefits, list the deductions and exemptions, and allow taxpayers to compute their taxes on this simple postcard form. Beyond simplicity, and the simplicity is of great importance, we now have reliable estimates that Americans spend some $5.4 billion a year on their tax returns. The Internal Revenue Service regulations have grown from 744,000 words in 1955 to some 5,600,000 words at the present time. The Internal Revenue Service is a mammoth bureaucracy, with annual spending of $13 billion on the IRS bureaucracy alone, with 110,000 employees in over 650 offices nationwide. The compliance costs to the American people are almost $200 billion a year. We all know that the greatest impediment in confidence between the American Government and the American citizen is concern with the Internal Revenue Service. How often have you and I received those automatic computer printouts from the IRS, written them a letter, written them a second letter or multiple letters, and finally had a conference to work out some bureaucratic computer error? And most of the time, no additional tax is needed. This legislation would liberate the American people to devote their time and energy to productive pursuits. A second major advantage to my flat tax bill is that there would be an enormous increase in growth. This growth would occur because this flat tax would not impose any tax burden on interest, on dividends, or capital gains because the source; that is, at the business level. Another benefit of the flat tax is the projected growth in the economy. From the point of view of growth, reliable estimates are that we would have an increase in the gross national product of some $2 trillion during the course of a 7-year period--an increase of some 28 percent. We would also benefit from increased savings, which would mean that the United States of America would be less dependent on borrowing from foreign sources. These increased savings would substantially change the great imbalance we have now, where we have massive interest payments on foreign debt flowing abroad. Additionally, in terms of fairness, there would be a lesser tax on those in the lower brackets by having an increase in the personal allowance for $16,500 for married couples filing jointly, $9,500 for single taxpayers, $14,000 for single head of households, and an exemption of $4,500 for each dependent. That would be substantially more than under the present code and would enable a family of four earning $25,500 to pay no taxes at all. A family of four earning up to $30,000 a year would pay very minimal or no taxes at all. The effective tax rate would be as low as 12.7 percent for an average projection of a family earning $100,000 a year. This proposal is revenue neutral based upon the computations made by Professor Hall and Professor Rabushka of Stanford's Hoover Institute. They have elaborately projected a national flat tax with no deductions and are calling for a rate of some 19 percent to have tax neutrality. This bill deviates from what Professors Hall and Rabushka have proposed by having the allowance of charitable contributions of up to $2,500 a year and the deduction for interest on home mortgages with a maximum borrowing of up to $100,000 a year. The computations provided by the Joint Tax Committee show that the cost will be $35 billion a year to the Government for the interest deduction on borrowings up to $100,000 a year, and $13 billion for the charitable contributions up to $2,500 a year. The computation is that the additional 1 percent in my flat tax above Hall and Rabushka would cover those deductions. I might say the computation is necessarily inexact because the model used by the Joint Tax Committee was on a national flat tax on individuals alone while this proposal is a national flat tax on both individuals and businesses. The Hall-Rabushka proposal is very similar to the proposal made by Congressman Armey last year with the differences being in the allowance here for interest and charitable contributions. Also, a difference between this plan and the flat tax plan of Congressman Armey is that Congressman Armey did not provide for automatic withholding. Mr. President, my interest in tax policy is longstanding, originating during my law school days. Some of my early practice of law included some tax work. And years ago, I published an article on the subject in the Villanova Law Review raising an issue of fairness as to the pension and profit sharing deductions for professional associations contrasted with corporations. This is a subject where I debated my former colleague, Senator John Heinz, almost 20 years ago in our contest for the Republican nomination to the U.S. Senate in 1976 based upon legislation which he had introduced in the House of Representatives where he had suggested very substantial cuts in a good many deductions. Mr. President, in offering this legislation, it is not cast in stone, but I think it is high time that the U.S. Senate consider in some detail the benefits of this national flat tax proposal or the modified Flat Tax Act which I am suggesting today. The benefits are very, very substantial in terms of simplicity, growth, and fairness. Mr. President, I ask unanimous consent that the full text of my statement be printed in the Record, as well as the text of the legislative proposal itself. Mr. President, as April 15 rapidly approaches--and as I present this floor statement--millions of Americans are spending their evenings poring over page after page of IRS instructions, going through their records looking for information and struggling to find and fill out all the appropriate forms on their Federal tax returns. At the same time, a patchwork quilt of deductions, credits, and special exceptions lets some Americans pay less than their fair share of taxes. Year after year, we continue to ask the same question--isn't there a better way? Today I am introducing legislation that provides that better way. I am introducing legislation which will fundamentally revise the present Tax Code, with its myriad rates, deductions, and instructions. Instead, the legislation I offer today would institute a simple, flat 20 percent tax rate for all individuals and businesses. It will allow all taxpayers to file their April 15 tax returns on a simple postcard. This legislation is a vital first step in simplifying our Nation's Tax Code and redirecting our collective energies toward productivity and growth. This proposal is not in stone, but is intended to move the debate forward as the first such legislation to be introduced this term in the Senate, by focusing attention on three key principles which are critical to an effective and equitable taxation system: simplicity, fairness, and economic growth. Over the years, I have devoted considerable time and attention to analyzing our Nation's Tax Code and the policies which underlie it. I began this study of the complexities of the Tax Code 40 years ago as a law student at Yale University. I included some tax law as part of my practice in my early years as an attorney in Philadelphia. In the spring of 1962, I published a law review article in the Villanova Law Review, ``Pension and Profit Sharing Plans: Coverage and Operation for Closely Held Corporations and Professional Associations,'' 7 Villanova L. Rev. 335, which in part focused on the inequity in making tax-exempt retirement benefits available to some kinds of businesses but not others. It was apparent then, as it is now, that the very complexities of the Internal Revenue Code could be used to give unfair advantage to some; and made the already unpleasant obligation of paying taxes a real nightmare for many Americans. I became interested many years ago in the practicality and simplicity of a flat tax as a way to reduce the burden on working Americans. My former Senate colleague, John Heinz, while he was in the House of Representatives, introduced H.R. 636, which would have eliminated numerous deductions, including the deductibility of home mortgage interest, charitable contributions, the investment tax credit, the oil depletion allowance and other exemptions, exclusions and deductions. Last fall, I had discussions with Congressmen Richard Armey, now the House majority leader, about his flat tax proposal, which he introduced as H.R. 4585. Since then, my staff and I have studied the flat tax at some length and have engaged in a host of discussions with economists and tax experts, including the staff of the Joint Committee on Taxation, to evaluate the economic impact and viability of a flat tax. Based on those discussions, and on the revenue estimates supplied to us, I have concluded that a simple flat tax at a rate of 20 percent on all business and personal income can be enacted without reducing Federal revenues, and I offer such a bill today. The flat tax will help reduce the size of Government and allow ordinary citizens to have more influence over how their money is spent because they will spend it and not the Government. With a simple 20- percent flat tax rate in effect, the average person can easily see the impact of any additional Federal spending proposal on his or her own paycheck. By creating strong incentives for savings and investment, the flat tax will have the beneficial result of making available larger pools of capital for expansion of the private sector for the economy-- rather than more tax money for big Government. This will mean more jobs and, just as important, more better paying jobs. As a matter of Federal tax policy, there has been considerable controversy over whether tax breaks should be used to stimulate particular kinds of economic activity, or whether tax policy should be neutral, leaving people to do what they consider best from a purely economic point of view. Our current Tax Code attempts to use tax policy to direct economic activity, called tax breaks are inevitably used as the basis for tax shelters which have no real relation to solid economic purposes, or to the activities which the tax laws were meant to promote. Even when the Government responds to particular tax shelters with new and often complex revisions of the regulations, clever tax experts are able to stay one or two steps ahead of the IRS bureaucrats by changing the structure of their business transactions and then claiming some legal distinctions between the taxpayer's new approach and the revised IRS regulations and precedents. Under the massive complexity of the current IRS Code, the battle between $500-an-hour tax lawyers and IRS bureaucrats to open and close loopholes is a battle the Government can never win. Under the flat tax bill I offer today, there are no loopholes, and tax avoidance through manipulations will become a thing of the past. The basic model for this legislation comes from a plan created by Professors Robert Hall and Alvin Rabushka of the Hoover Institute at Stanford University. Their plan envisioned a flat tax with no deductions whatever. After considerable reflection, I have decided to include limited deductions for home mortgage interest on up to $100,000 in borrowing and charitable contributions up to $2,500 in the legislation I offer today. While this modification undercuts the pure principle of the flat tax, and does continue the use of tax policy to promote homebuying and charitable contributions by retaining those deductions, I believe that those two deductions are so deeply ingrained in the financial planning of American families that they should be retained as a matter of fairness and public policy--and also political practicality. With those two deductions maintained, passage of a modified flat tax will be difficult; but without them, probably impossible. In my judgment, an indispensable prerequisite to enactment of a modified flat tax is revenue neutrality. Professor Hall advised that the revenue neutrality of the Hall-Rabushka proposal, which uses a 19- percent rate, is based on a well documented model founded on reliable governmental statistics. The bill offered today raises that rate from 19 to 20 percent to accommodate retaining limited home mortgage interest and charitable deductions. A preliminary estimate by the Committee on Joint Taxation places the annual cost of the home interest deduction at $35 billion, and the cost of the charitable deduction at $13 billion. While the revenue calculation is complicated because the Hall-Rabushka proposal encompasses significant revisions to business taxes as well as personal income taxes, there is a sound basis for concluding that the 1-percent increase in rate would pay for the two deductions. Revenue estimates for Tax Code revisions are difficult to obtain and are, at best, judgment calls based on projections from fact situations with a myriad of assumed variables. It is possible that some modification may be needed at a later date to guarantee revenue neutrality. This legislation offered today is quite similar to the bill introduced in the House by Congressman Armey, which was itself modeled after the Hall-Rabushka proposal and uses much of the same legislative language as the Armey bill. The flat tax offers great potential for enormous economic growth, in keeping with principles articulated so well by former Congressman Jack Kemp. This proposal taxes business revenues fully at their source, so that there is no personal taxation on interest, dividends and capital gains. Restructured in this way, the tax code can become a powerful incentive for savings and investment-- which translates into economic growth and expansion, more and better jobs, and a rising standard of living for all Americans. In this Congress, we have so far been concerned with the work of reducing the size and cost of Government, and this is work which is vitally important. But the work of downsizing Government is only one side of the coin; what we must do at the same time, and with as much energy and care, is to grow the private sector. As we reform the welfare programs and Government bureaucracies of past administrations, we must replace those programs with a prosperity that extends to all segments of American society through private investment and job creation--which can have the additional benefit of producing even lower taxes for Americans as economic expansion adds to Federal revenues. Just as Americans need a tax code that is fair and simple, they also are entitled to tax laws designed to foster rather than retard economic growth. The bill I offer today embodies those principles. Professors Hall and Rabushka have summarized the advantages of their proposals as follows: The tax on families is fair and progressive--the poor pay no tax at all, and the fraction of income that a family pays rises with income. The system is simple and easy to understand. And the tax operates on the consumption-tax principle [encourages savings; discourages consumption]-- families are taxed on what they take out of the economy, not what they put into it Our system rests on a basic administrative principle: income should be taxed exactly once, as close as possible to its source. Today's tax system violates this principle in all kinds of ways. Some kinds of income--like fringe benefits-- are never taxed at all. Other kinds, like dividends and capital gains, are taxed twice. And interest income, which is supposed to be taxed once, escapes taxation completely in all too many cases, where clever taxpayers arrange to receive interest beyond the reach of the IRS. Under our plan, all income is taxed at the same rate. Equality of tax rates is a basic concept of the flat tax. Its logic is much more profound than just the simplicity of calculation with a single tax rate. Whenever different forms of income are taxed at different rates or different taxpayers face different rates, the public figures out how to take advantage of the differential. Limiting the burden of taxes on the poor is a central principle of tax reform. Some ideas for tax simplification and reform flout this principle--neither a federal sales tax nor a value-added tax is progressive. Instead, all citizens, rich and poor alike, pay essentially the same fraction of their spending in taxes. We reject sales and value-added taxes for this reason. . . . Exempting the poor from taxes does not require graduated tax rates rising to high levels for upper-income taxpayers. A flat rate, applied to all income above a generous personal allowance, provides progressivity without creating important differences in tax rates. Graduated taxes automatically create differences in tax rates among taxpayers, with all the attendant opportunities for leakage. Because it is high- income taxpayers who have the biggest incentive and the best opportunity to use special tricks to exploit tax-rate differentials, applying the same tax rate to these taxpayers for all of their income in all years is the most important goal of flat-rate taxation. . . . We believe that the simplicity of our system is a central feature. Complex tax forms and tax laws do more harm than just deforesting America. Complicated taxes require expensive advisers for taxpayers and equally expensive reviews and audits by the Government. A complex tax invites the taxpayer to search for a special feature to exploit to the disadvantage of the rest of us. And complex taxes diminish confidence in government, inviting a breakdown in cooperation with the tax system and the spread of outright evasion. My plan, which like Representative Armey's is based on the Hall- Rabushka analysis, differs from the legislation introduced by Representative Armey in four key respects: First, my bill contains a 20-percent flat tax rate. Second, this bill would retain modified deductions for mortgage interest and charitable contributions, which will require a 1 percent higher tax rate than otherwise. Third, my bill would maintain the automatic withholding of taxes from an individual's paycheck. Lastly, my bill is designed to be revenue neutral, and thus will not undermine our vital efforts to balance the Nation's budget. The estimate of revenue neutrality is based on the Hall-Rabushka analysis together with preliminary projections supplied by the Joint Committee on Taxation on the modifications proposed in this bill The key advantages of this flat tax plan are threefold: First, it will dramatically simplify the payment of taxes. Second, it will remove much of the IRS regulatory morass now imposed on individual and corporate taxpayers, and allow those taxpayers to devote more of their energies to productive pursuits. Third, since it is a plan which rewards savings and investment, the flat tax will spur economic growth in all sectors of the economy as more money flows into investments and savings accounts, and as interest rates drop. By contrast, there will be a contraction of the IRS if this proposal is enacted. Under this tax plan, individuals would be taxed at a flat rate of 20 percent on all income they earn from taxed on any capital gains, interest on savings, or dividends--since those items will have already been taxed as part of the flat tax on business revenue. The flat tax will also eliminate all but two of the deductions and exemptions currently contained within the Tax Code. Instead, taxpayers will be entitled to personal allowances for themselves and their children: $9,500 for a single taxpayer, $14,000 for a single head of household and $16,500 for a married couple filing jointly; and $4,500 per child or dependent. These personal allowances would be adjusted annually for inflation. In order to ensure that this flat tax does not unfairly impact low income families, the personal allowances contained in my proposal are much higher than the standard deduction and personal exemptions allowed under the current Tax Code. For example, in 1994, the standard deduction is $3,800 for a single taxpayer, $5,600 for a head of household, and $6,350 for a married couple filing jointly, while the personal exemption for individuals and dependents is $2,450. Thus, under the current Tax Code, a family of four which does not itemize deductions would pay tax on all income over $16,500--personal exemptions of $9,800 and a standard deduction of $6,350. By contrast, under my flat tax bill, that same family would receive a personal exemption of $25,500, and would pay tax only on income over that amount. My legislation retains the provisions for the deductibility of charitable contributions up to a limit of $2,500 and home mortgage interest on up to $100,000 of borrowing. Retention of these key deductions will, I believe, enhance the political salability of this legislation and allow the debate on the flat tax to move forward. If a decision is made to eliminate these deductions, the revenue saved could be used to reduce the overall flat tax rate from 20 to 19 percent. With respect to businesses, the flat tax would also be a flat rate of 20 percent. My legislation would eliminate the intricate scheme of complicated depreciation schedules, deductions, credits, and other complexities that go into business taxation in favor of a much- simplified system that taxes all business revenue less only wages, direct expenses and purchases--a system with much less potential for fraud, ``creative accounting,'' and tax avoidance. Businesses would be allowed to expense 100 percent of the cost of capital formation, including purchases of capital equipment, structures and land, and to do so in the year in which the investments are made. The business tax would apply to all money not reinvested in the company in the form of employment or capital formation--thus fully taxing revenue at the business level and making it inappropriate to retax the same money when passed on to investors as dividends or capital gains. Professors Hall and Rabushka summarize the benefits from this kind of flat taxation of business revenue as follows: The business tax is a giant, comprehensive withholding tax on all types of income other than wages, salaries, and pensions. It is carefully designed to tax every bit of income outside of wages, but to tax it only once. The business tax does not have deductions for interest payments, dividends, or any other type of payment to the owners of the business. As a result, all income that people receive from business activity has already been taxed. Because the tax has already been paid, the tax system does not need to worry about what happens to interest, dividends, or capital gains after these types of income leave the firm. The resulting simplification and improvement in the tax system is enormous. Today, the IRS receives over a billion Form 1099s, which keep track of interest and dividends, and must make an overwhelming effort to match these forms to the 1040s filed by the recipients. The only reason for a Form 1099 is track income as it makes its way from the business where it originates to the ultimate recipient. Not a single Form 1099 would be needed under a flat tax with business income taxed at the source. Let me now turn to a more specific discussion of the advantages of the flat tax legislation I offer today. simplicity The first major advantage to this flat tax is simplicity. According to reliable studies, Americans spend approximately 5.4 billion hours each year filling out tax forms. Much of this time is spent burrowing through IRS laws and regulations, which, according to the Tax Foundation, have grown from 744,000 words in 1955 to 5.6 million words in 1994. The Internal Revenue Code annotations alone have grown to 21 volumes of mind-numbing detail and minutiae. Even those IRS forms which are intended to be simple are not--the instructions for the 1040EZ form--the so-called easy form--alone comprise 17 small-print pages. Whenever the Government gets involved in any aspect of our lives, it can covert the most simple goal or task into a tangled array of complexity, frustration and inefficiency. By way of example, most Americans have become familiar with the absurdities of the Government's military procurement programs. If these programs have taught us anything, it is how a simple purchase order for a hammer or a toilet seat can mushroom into thousands of words of regulations and restrictions when the government gets involved. The Internal Revenue Service is certainly no exception. Indeed, it has become a distressly common experience for taxpayers to receive computerized printouts claiming that additional taxes are due, which require repeated exchanges of correspondence or personal visits before it is determined, as it so often is, that the taxpayer was right in the first place. The plan offered today would eliminate these kinds of frustrations for millions of taxpayers. This flat tax would enable us to scrap the great majority of the IRS rules, regulations and instructions and delete literally millions of words from the Internal Revenue Code. Instead of tens of millions of hours of nonproductive time spent in compliance with--or avoidance of--the Tax Code, taxpayers would spend only the small amount of time necessary to fill out a postcard-sized form. Both business and individual taxpayers would thus find valuable hours freed up to engage in productive business activity, or for more time with their families, instead of poring over tax tables, schedules and regulations. The flat tax I have proposed can be calculated just by filling out a small postcard which would require a taxpayer only to answer a few easy questions. The postcard would ask for the following information: Form 1--Individual Wage Tax, 1995 Your first name and initial (if joint return, also give spouse's name and initial): Your social security number: Home address (number and street including apartment number or rural route): Spouse's social security number: City, town, or post office, state, and ZIP code: 1. Wages, salary, pension and retirement benefits: 2. Personal allowance (enter only one): $16,500 for married filing jointly $9,500 for single $14,000 for single head of household 3. Number of dependents, not including spouse, multiplied by $4,500: 4. Mortgage interest on debt up to $100,000 for owner- occupied home: 5. Cash or equivalent charitable contributions (up to $2,500): 6. Total allowances and deductions (lines 2, 3, 4, 5): 7. Taxable compensation (line 1 less line 6, if positive; otherwise zero): 8. Tax (20% of line 7): 9. Tax withheld by employer: 10. Tax or refund due (difference between lines 8 and 9): Filing a tax return would become a manageable chore, not a seemingly endless nightmare, for most taxpayers. cutting back government Along with the advantage of simplicity, enactment of this flat tax bill will help to remove the burden of costly and unnecessary government regulation, bureaucracy and redtape from our everyday lives. The heavy hand of government bureaucracy is particularly onerous in the case of the Internal Revenue Service, which has been able to extend its influence into so many aspects of our lives. In 1994, the IRS employed over 110,000 people, spread out over 650 offices across the United States. Its budget was in excess of $13 billion, with some $7.1 billion spent annually just to administer the tax laws, and another $4 billion for enforcement. By simplifying the Tax Code and eliminating most of the IRS' vast array of rules and regulations, the flat tax would enable us to cut a significant portion of the IRS budget, including the bulk of the funding now needed for enforcement and administration. In addition, a flat tax would allow taxpayers to redirect their time, energies, and money away from the yearly morass of tax compliance. According to the Tax Foundation, in 1994, businesses spent approximately $127 billion in compliance with the Federal tax laws, and individuals spent an additional $65 billion, for a total of $192 billion. Moneys spent by businesses and investors in creating tax shelters and finding loopholes could be instead directed to productive and job-creating economic activity. With the adoption of a flat tax, the opportunities for fraud and cheating would also be vastly reduced, allowing the Government to collect, according to some estimates, over $120 billion annually. economic growth The third major advantage to a flat tax is that it will be a tremendous spur to economic growth. Harvard economist Dale Jorgenson estimates adoption of a flat tax like the one offered today would increase future national wealth by over $2 trillion, in present value terms, over a 7-year period. The economic principles are fairly straightforward. Our current tax system is inefficient; it is biased toward too little savings and too much consumption. The flat tax creates substantial incentives for savings and investment by eliminating taxation on interest, dividends, and capital gains--and tax policies which promote capital formation and investment are the best vehicle for creation of new and high paying jobs, and for a greater prosperity for all Americans. It is well recognized that to promote future economic growth, we need not only to eliminate the Federal Government's reliance on deficits and borrowed money, but to restore and expand the base of private savings and investment that has been the real engine driving American prosperity throughout our history. These concepts are interrelated, for the Federal budget deficit soaks up much of what we have saved, leaving less for businesses to borrow for investments. It is the sum total of savings by all aspects of the U.S. economy that represented the pool of all capital available for investment--in training, education, research, machinery, physical plant, et cetera-- and that constitutes the real seed of future prosperity. The statistics here are daunting. In the 1960's the net U.S. national savings rate was 8.2 percent, but it has fallen to a dismal 1.5 percent. In recent international comparisons, the United States has the lowest savings rate of any of the G-7 countries. We save at only one-tenth the rate of the Japanese, and only one-fifth the rate of the Germans, which is clearly reflected in the comparative growth rates of our economies over the last three decades. An analysis of the components of U.S. savings patterns shows that although the Federal budget deficit is the largest cause of dissavings, both personal and business savings rates have declined significantly over the past three decades. Thus, to recreate the pool of capital stock that is critical to future U.S. growth and prosperity, we have to do more than just get rid of the deficit. We have to very materially raise our levels of private savings and investment. And we have to do so in a way that will not cause additional deficits. The less money people save, the less money is available for business investment and growth. The current tax system discourages savings and investment, because it taxes the interest we earn from our savings accounts, the dividends we make from investing in the stock market, and the capital gains we make from successful investments in our homes and the financial markets. Indeed, under the current law these rewards for saving and investment are not only taxed, they are overtaxed--since gains due solely to inflation, which represent no real increase in value, are taxed as if they were really profit. With the limited exceptions of retirement plans and tax-free municipal bonds, our current Tax Code does virtually nothing to encourage personal savings and investment, or to reward it over consumption. As William Schreyer wrote recently in the Harvard Business Review, ``the budget deficit is only one part of a larger national problem: the U.S. saving deficit.'' This bill will change this system, and address this problem. The proposed legislation reverses the current skewed incentives by promoting savings and investment by individuals and by businesses. Individuals would be able to invest and save their money tax-free and reap the benefits of the accumulated value of those investments without paying a capital gains tax upon the sale of these investments. Businesses would also invest more as the flat tax allowed them to expense fully all sums invested in new equipment and technology in the year the expense was incurred, rather than dragging out the tax benefits for these investments through complicated depreciation schedules. With greater investment and a larger pool of savings available, interest rates and the costs of investment would also drop, spurring even further economic growth. Critics of the flat tax have argued that we cannot afford the revenue losses associated with the tremendous savings and investment incentives the bill affords to businesses and individuals. Those critics are wrong. Not only is this bill carefully crafted to be revenue neutral, but historically we have seen that when taxes are cut, revenues actually increase, as more taxpayers work harder for a larger share of their take-home pay, and investors are more willing to take risks in pursuit of rewards that will not get eaten up in taxes. As one example, under President Kennedy individual tax rates were lowered, investment incentives including the investment tax credit were created and then expanded, depreciation rates were accelerated, and yet between 1962 and 1967 gross annual Federal tax receipts went from $99.7 to $148 billion--an increase of nearly 50 percent. More recently under President Reagan, after his tax cuts in the early 1980's, Government tax revenues rose from just under $600 billion in 1981 to nearly $1 trillion in 1989. In fact, the Reagan tax cut program helped to bring about the longest peacetime expansion of the U.S. economy in history. There is every reason to believe that the flat tax proposed here can do the same--and by maintaining revenue neutrality in this flat tax proposal, as we have, we can avoid any increases in annual deficits and the national debt. In addition to increasing Federal revenues by fostering economic growth, the flat tax can also add to Federal revenues without increasing taxes by closing tax loopholes. The Congressional Research Service estimates that for fiscal year 1995, individuals will shelter more than $393 billion in tax revenue in legal loopholes, and corporations will shelter an additional $60 billion. There may well be additional moneys hidden in quasi-legal or even illegal tax shelters. Under a flat tax system, all tax shelters will disappear and all income will be subject to taxation. The larger pool of savings created by a flat tax will also help to reduce our dependence on foreign investors to finance both our Federal budget deficits and our private sector economic activity. Currently, of the publicly held Federal debt, that is, the portion was not held by various Federal trust funds like Social Security, nearly 20 percent is held by foreigners--the highest level in our history. By contrast, in 1965 less than 5 percent of publicly held national debt was foreign-owned. We are paying over $40 billion in annual interest to foreign governments and individuals, and this by itself accounts for roughly one-third of our whole international balance of payments deficit. These massive interest payments are one of the principal sources of American capital flowing abroad, a factor which then enables foreign investors to buy up American business. During the period 1980-91, the gross value of U.S. assets owned by foreign businesses and individuals rose 427 percent from $543 billion to $2.3 trillion. The substantial level of foreign ownership of our national debt creates both political and economic problems. On the political level, there is at least the potential that some foreign nation may assume a position where its level of investment in U.S. debt gives it disproportionate leverage over American policy. Economically, increasing foreign investment in Treasury debt furthers our national shift from a creditor to a debtor nation, weakening the dollar and undercutting our international trade position. A recent Congressional Research Service report put it succinctly: ``To pay for today's capital abroad in exchange for fewer foreign products. These payments will be a consequence in part of heavy Federal borrowing since 1982.'' With a flat tax in place, America's own supply of capital can be replenished, and we can return to our historic position as an international creditor nation rather than a debtor. Professors Hall and Rabushka describe the pro-growth aspects of the flat tax in this way: Today's absurd system taxes entrepreneurial success at 60 percent while it actually subsidizes leveraged investment. Our simple tax would put the same low rate on both activities. A huge redirection of national effort would follow. And the redirection could only be food for national income. There is nothing wrong with shopping centers, apartment buildings, airplanes, boxcars, medical equipment, and cattle, but tax advantages have made us invest far too much in them, and their contribution to income is correspondingly low. Real growth will come when effort and capital flow back into innovation and the development of new business, the areas where confiscatory taxation has discouraged investment. The contribution to income from new resources will be correspondingly high. We project a 3 percent increase in output from increased total work in the U.S. economy and an additional increment to total output of 3 percent from added capital formation and dramatically improved entrepreneurial incentives. The sum of 6 percent is our best estimate of the improvement in real incomes after the economy has had seven years to assimilate the changed economic conditions brought about by the simple flat tax. Both the amount and the timing are conservative. Even this limited claim for economic improvement represents enormous progress. By 2002, it would mean each American will have an income about $1,900 higher, in 1995 dollars, as a consequence of tax reform. As Professors Hall and Rabushka state it, the growth case for a flat tax is compelling. It is even more compelling in the case of a tax revision that is simple and demonstrably fair. fairness By substantially increasing the personal allowances for taxpayers and their dependents, this flat tax proposal ensures that poorer taxpayers will pay no tax and that taxes will not be regressive for lower and middle income taxpayers. At the same time, by closing the hundreds of tax loopholes which are currently used by wealthier taxpayers to shelter their income and avoid taxes, this flat tax bill will also ensure that all Americans pay their fair share. A variety of specific cases illustrate the fairness and simplicity of this flat tax: Case No. 1.--Married couple with two children, rents home, yearly income $30,000 Under Current Law: Income.........................................................30,000 Four personal exemptions........................................9,800 Standard deduction..............................................6,350 Taxable income.................................................13,850 Tax due under current rates...................................2,081

Mr. SPECTER

Mr. SPECTER. I thank the Chair. (The remarks of Mr. Specter pertaining to the introduction of S. 488 are located in today's Record under ``Statements on Introduced Bills and Joint Resolutions.'') Mr. INHOFE addressed the Chair.

Mr. SPECTER. Mr. President, the Senate made a mistake today in rejecting the balanced budget amendment. But make no mistake, that issue will be before the Senate before very long again. In failing by a single vote, the Senate rejected the overwhelming demand of the American people, as expressed in last November's election, that we need to exercise restraint in a constitutional context to live within our means. Today, on the motion for reconsideration entered by the majority leader, the procedural posture is now established so that the Senate can take up the issue again at any time. It is my prediction that the American people will respond to today's vote by a forceful declaration to the 34 Senators who voted against the balanced budget amendment that the American people want the balanced budget amendment passed. The procedure of the Senate is such that, if any one of those 34 Senators changes his or her mind, the amendment may be brought again to the floor of the Senate on short notice, giving Senators an opportunity to be present so all may express themselves, and the amendment could be passed. So my request, my plea to the American people, is to let your representatives, your U.S. Senators, the Senators who represent you in the U.S. Senate, know what your feelings are. A number of the Senators had been expected to vote in favor of the balanced budget amendment based upon prior votes or upon prior statements. I do not challenge in any way, shape, or form the good faith of any Senator who voted, in any respect, in any way. But there were six Senators who had previously voted in favor of the amendment and today voted against it. Those six Senators previously expressed themselves forcefully in favor of the principles of the balanced budget amendment, suggesting at least some indication of a favorable disposition. It is my thought that if their constituents express themselves, that there may well be a change of heart. Beyond that, there are 20 other U.S. Senators who might be persuaded to have a shift of position, based upon the will of the American people. I do believe the principle behind the balanced budget amendment is sound. I do not say so lightly, because changing the Constitution of the United States is a very major act. But it has been demonstrated that not only the Congress of the United States, but the people of the United States, need a discipline to have a framework which requires us to live within our means. Every State has to live within its means-- every county, every city, and every individual. If you and I do not live within our means, we wind up in a bankruptcy court. Within the context of the need for economy, constituents now come to us--and I am sure you, Mr. President, have had the same response in your State of Oklahoma as I have in my State of Pennsylvania--people are no longer asking for increases or even cost-of-living adjustments. But in many cases, they are saying, ``Do not make the cut too big.'' In other cases, they are saying, ``Do not zero out the program all the way in this year.'' I think that mental attitude is very important. I think this amendment would have been a good thing for America, to have that kind of discipline imposed. Mr. President, in the absence of any other Senator in the Chamber, I ask unanimous consent I may proceed up to 10 minutes for the purpose of introducing legislation. THE PRESIDING OFFICER. The Senator from Pennsylvania is so recognized.

Mr. SPECTER

Mr. SPECTER. Mr. President, at a time when citizen participation and volunteerism are uniquely important in addressing problems of our society, with the contemplated reduction of governmental expenditures I consider it worthwhile to note the important humanitarian contributions of The Sovereign Order Of Malta and its American foundation, the American Knights and Dames. Some of the important activities of The Knights of Malta have been called to my attention by a longstanding friend and distinguished Philadelphia lawyer, Mr. James Binns: (1) This year the Order plans to support the Medical Research Center of New York University, for finding and improving the care, and prevention of Parkinson's Disease and Movement Disorders, which unfortunately affects more and more people every day. (2) This year also, a 400-bed hospital and a byomedical university is now under construction in Frosinone, Italy, for all students from throughout the world. (3) For Christmas 1994 the Order donated food, toys and clothing to an entire orphanage in Oradea, Rumania. (4) In 1992 in the State of Nueva Esparta, Venezuela, the Order donated medical equipment to the Civil Defense and to the Firefighter. In 1993, substantial humanitarian help was sent by the Order to Fiume, Yugoslavia, through the Red Cross. (5) In 1988 a ``Proclamation'' was signed by Prime Minister Yitzchak Shamir, with a special Ambassador of the Order, sent to Israel, to encourage the spirit of ``Vatican II'', that Jews and Christians are brothers and sisters under Almighty God. Further, to uphold through dialogue, commerce and diplomacy, the World Council of Nations to recognize the State of Israel's inherent rights through Her Sovereign History in perpetuity, as stated in the United Nations Resolution of November 29, 1947. (6) In 1984 in Rome, Italy, the Order collected over a million US dollars for the Institute, ``Regina Elena'', specializing in the research of the Hyperthermic Treatment or Cancer. (7) In 1980 the Belgium branch of the Order donated medical assistance to Africa and a special machine to be utilized for the search of water. (8) In 1978, in Salvador, Bahia, Brazil, an orphanage for 900 children, was founded with complete facilities, including a school up to the 8th grade. These humanitarian contributions continue activities of The Knights of Malta which originated with the Order of St. John of Jerusalem in 1099 with assistance to the wounded when the first crusaders arrived at the Holy City. After being expelled from Jerusalem in 1291, the Knights established a new headquarters of the Order at Limassol in Cyprus until 1309. They fortified the city and laid down the armaments regulations for the vessels carrying traders and pilgrims to the Holy Land. In doing so, the maritime power of the Order was established and the Mediterranean Sea was substantially liberated from pirates. The Knights continuously played a significant role with the siege of the Island of Rhodes in 1309, the defeat of the Ottomans who attempted to seize Rhodes in 1480 and the later battle with the Ottomans in 1522 resulting in the Knights leaving for Candia in 1523. After the Holy Roman Emperor Charles V ruler of Spain and Sicily granted the Island of Malta to the Order, the Knights of Malta reigned over Malta until 1798. After the surrender of the Island to Napoleon Bonaparte in 1798, many of the Knights returned to their own countries forming different commanderies. During the 19th and 20th centuries, The Knights of Malta sought to avoid political affairs in order to pursue philanthropic activities which its 40,000 members do to this day. The Knights of Malta, with its unique history over nine centuries, have established a model for worldwide efforts which should inspire other individuals and organizations to do similar good deeds.

Mr. SPECTER

Mr. SPECTER. Mr. President, I have sought recognition to comment briefly on the issue of the potential issue of the jurisdiction of the Federal courts to decide matters under the constitutional amendment for a balanced budget if it is passed and ratified. I think it is important that courts not have jurisdiction to intervene in any controversy where the issue is the raising of taxes or the cutting of expenses, which would be the issues under the balanced budget amendment, because it is not a judicial function. I think the preferable course is to have within the body of the amendment itself a flat statement that the Federal courts--no courts-- would have jurisdiction over any controversy arising out of the balanced budget amendment. We have seen in a case originating in Kansas City, MO, the State of the distinguished Presiding Officer, a situation where the courts actually ordered the imposition of taxes which, in my view, is not in any conceivable regard a judicial function. If there is any core legislative function, it is the raising of taxes. We elected officials are responsible to our constituents, and that is a core legislative function. But it happened and it was upheld by the Supreme Court of the United States in the celebrated 5-to-4 decision a few years ago. There is a major issue as to whether the Congress has the authority, through legislation, to take away the jurisdiction of the Supreme Court or the Federal courts on a constitutional issue. There is a post-Civil War case, ex parte McCardle, which suggests that Congress has that jurisdiction. In my legal judgment, that case is not valid for any matter which is current today. I believe that it is very unwise for the Congress to have legislative authority to take away the jurisdiction of the Supreme Court of the United States, for example, on a first amendment issue. That was a matter which was discussed extensively during the confirmation proceedings of Chief Justice Rehnquist, when after some discussion Chief Justice Rehnquist concluded that the Congress would not have the authority to take away the jurisdiction of the Federal courts on a matter involving the first amendment. When we got to other amendments, the fourth amendment, fifth amendment and sixth amendment, Chief Justice Rehnquist would not give the same response, nor would he respond to the difference of the authority of Congress to take away jurisdiction of the first amendment contrasted with the fourth, fifth or sixth amendments. I give that very brief review to suggest that there may well be a question as to whether the Congress, through enabling legislation, could take away the jurisdiction of the courts to intervene on a controversy arising out of this balanced budget amendment. It is my hope that we will yet address that issue within the confines of the amendment itself. It may well be that critical votes necessary to pass the balanced budget amendment will depend upon our ability to find a way to satisfy those Senators. I believe that it is so important to pass the constitutional amendment for a balanced budget that I continue to support the amendment, even though an amendment offered to the constitutional amendment for a balanced budget failed in an effort to put within the balanced budget amendment itself a prohibition of Federal court jurisdiction. It gets sort of complicated when we talk about it, Mr. President. I think the factors are clear. I think that our legislative history is clear. Aside from putting in a prohibition of Federal court jurisdiction, our legislative history is clear that it is congressional intent on the balanced budget amendment that the Federal courts should not have jurisdiction. But even the question of congressional intent is a muddy field, with some Justices--notably, Justice Scalia--saying he will not look to congressional intent but only to the body of the language itself. So I will conclude by saying that I hope we have made it clear as a matter of Senate intent, congressional intent, that the courts should not have jurisdiction over any controversy under the balanced budget amendment, and with the extra hope that we may make it plain in the body of the amendment itself before we conclude. I yield the floor. Mr. SARBANES addressed the Chair.

Mr. SPECTER

Mr. SPECTER. Mr. President, today I am submitting along with Senators Lautenberg, D'Amato, and Simon a resolution to designate March 25, 1995, as ``Greek Independence Day: A Celebration of Greek and American Democracy.'' One hundred and seventy-four years ago, the Greeks began the revolution that would free them from the Ottoman Empire and return Greece to is democratic heritage. It was, of course, the ancient Greeks who developed the concept of democracy in which the supreme power to govern was vested in the people. Our Founding Fathers drew heavily upon the political and philosophical experience of ancient Greece in forming our representative democracy. Thomas Jefferson proclaimed that, ``to the ancient Greeks * * * we are all indebted for the light which led ourselves out of Gothic darkness.'' It is fitting, then, that we should recognize the anniversary of the beginning of their efforts to return to that democratic tradition. The democratic form of government is only one of the most obvious of the many benefits we have gained from the Greek people. The ancient Greeks contributed a great deal to the modern world, particularly to the United States of America, in the areas of art, philosophy, science, and law. Today, Greek-Americans continue to enrich our culture and make valuable contributions to American society, business, and government. It is my hope that strong support for this resolution in the Senate will serve as a clear goodwill gesture to the people of Greece with whom we have enjoyed such a close bond throughout history. Similar resolutions have been signed into law each of the past several years, with overwhelming support in both the House of Representatives and the Senate. Accordingly, I urge my Senate colleagues to join me in supporting this important resolution.

Mr. SPECTER

Mr. SPECTER. Mr. President, paragraph 2 of Senate rule XXVI requires that not later than March 1 of the first year of each Congress, the rules of each committee be published in the Record. In compliance with this provision, I ask that the rules of the Select Committee on Intelligence be printed in the Record. The rules follow: Select Committee on Intelligence--Rules of Procedure rule 1. convening of meetings 1.1. The regular meeting day of the Select Committee on Intelligence for the transaction of Committee business shall be every other Wednesday of each month, unless otherwise directed by the Chairman. 1.2. The Chairman shall have authority, upon proper notice, to call such additional meetings of the Committee as he may deem necessary and may delegate such authority to any other member of the Committee. 1.3. A special meeting of the Committee may be called at any time upon the written request of five or more members of the Committee filed with the Clerk of the Committee. 1.4. In the case of any meeting of the Committee, other than a regularly scheduled meeting, the Clerk of the Committee shall notify every member of the Committee of the time and place of the meeting and shall give reasonable notice which, except in extraordinary circumstances, shall be at least 24 hours in advance of any meeting held in Washington, D.C. and at least 48 hours in the case of any meeting held outside Washington, D.C. 1.5. If five members of the Committee have made a request in writing to the Chairman to call a meeting of the Committee, and the Chairman fails to call such a meeting within seven calendar days thereafter, including the day on which the written notice is submitted, these members may call a meeting by filing a written notice with the Clerk of the committee who shall promptly notify each member of the Committee in writing of the date and time of the meeting. 2.1. Meetings of the Committee shall be open to the public except as provided in S. Res. 9, 94th Congress, 1st Session. 2.2. It shall be the duty of the Staff Director to keep or cause to be kept a record of all Committee proceedings. 2.3. The Chairman of the Committee, or if the Chairman is not present the Vice Chairman, shall preside over all meetings of the Committee. In the absence of the Chairman and the Vice Chairman at any meeting the ranking majority member, or if no majority member is present the ranking minority member present shall preside. 2.4. Except as otherwise provided in these Rules, decisions of the Committee shall be by a majority vote of the members present and voting. A quorum for the transaction of Committee business, including the conduct of executive sessions, shall consist of no less than one third of the Committee Members, except that for the purpose of hearing witnesses, taking sworn testimony, and receiving evidence under oath, a quorum may consist of one Senator. 2.5. A vote by any member of the Committee with respect to any measure or matter being considered by the Committee may be cast by proxy if the proxy authorization (1) is in writing; (2) designates the member of the Committee who is to exercise the proxy; and (3) is limited to a specific measure or matter and any amendments pertaining thereto. Proxies shall not be considered for the establishment of a quorum. 2.6. Whenever the Committee by roll call vote reports any measure or matter, the report of the Committee upon such measure or matter shall include a tabulation of the votes cast in favor of and the votes case in opposition to such measure or matter by each member of the Committee. rule 3. subcommittees Creation of subcommittees shall be by majority vote of the Committee. Subcommittees shall deal with such legislation and oversight of programs and policies as the Committee may direct. The subcommittees shall be governed by the Rules of the Committee and by such other rules they may adopt which are consistent with the Rules of the Committee. rule 4. reporting of measures or recommendations 4.1. No measures or recommendations shall be reported, favorably or unfavorably, from the Committee unless a majority of the Committee is actually present and a majority concur. 4.2. In any case in which the Committee is unable to reach a unanimous decision, separate views or reports may be presented by any member or members of the Committee. 4.3. A member of the Committee who gives notice of his intention to file supplemental, minority, or additional views at the time of final Committee approval of a measure or matter, shall be entitled to not less than three working days in which to file such views, in writing with the Clerk of the Committee. Such views shall then be included in the Committee report and printed in the same volume, as a part thereof, and their inclusion shall be noted on the cover of the report. 4.4. Routine, non-legislative actions required of the Committee may be taken in accordance with procedures that have been approved by the Committee pursuant to these Committee Rules. rule 5. nominations 5.1. Unless otherwise ordered by the Committee, nominations referred to the Committee shall be held for at least 14 days before being voted on by the Committee. 5.2. Each member of the Committee shall be promptly furnished a copy of all nominations referred to the Committee. 5.3. Nominees who are invited to appear before the Committee shall be heard in public session, except as provided in Rule 2.1. 5.4. No confirmation hearing shall be held sooner than seven days after receipt of the background and financial disclosure statement unless the time limit is waived by a majority vote of the Committee. 5.5 The Committee vote on the confirmation shall not be sooner than 48 hours after the Committee has received transcripts of the confirmation hearing unless the time limit is waived by unanimous consent of the Committee. 5.6 No nomination shall be reported to the Senate unless the nominee has filed a background and financial disclosure statement with the Committee. rule 6. investigations No investigation shall be initiated by the Committee unless at least five members of the Committee have specifically requested the Chairman or the Vice Chairman to authorize such an investigation. Authorized investigations may be conducted by members of the Committee and/or designated Committee staff members. rule 7. subpoenas Subpoenas authorized by the Committee for the attendance of witnesses or the production of memoranda, documents, records or any other material may be issued by the Chairman, the Vice Chairman, or any member of the Committee designated by the Chairman, and may be served by any person designated by the Chairman. Vice Chairman or member issuing the subpoenas. Each subpoena shall have attached thereto a copy of S. Res. 400, 94th Congress, 2nd Session and a copy of these rules. rule 8. procedures related to the taking of testimony 8.1 Notice.--Witnesses required to appear before the Committee shall be given reasonable notice and all witnesses shall be furnished a copy of these Rules. 8.2 Oath or Affirmation.--Testimony of witnesses shall be given under oath or affirmation which may be administered by any member of the Committee. 8.3 Interrogation.--Committee interrogation shall be conducted by members of the Committee and such Committee staff as are authorized by the Chairman, Vice Chairman, or the presiding member. 8.4 Counsel for the Witness.--(a) Any witness may be accompanied by counsel. A witness who is unable to obtain counsel may inform the Committee of such fact. If the witness informs the Committee of this fact at least 24 hours prior to his or her appearance before the Committee, the Committee shall then endeavor to obtain voluntary counsel for the witness. Failure to obtain counsel will not excuse the witness from appearing and testifying. (b) Counsel shall conduct themselves in an ethical and professional manner. Failure to do so shall, upon a finding to that effect by a majority of the members present, subject such counsel to disciplinary action which may include warning, censure, removal, or a recommendation of contempt proceedings. (c) There shall be no direct or cross-examination by counsel. However, counsel may submit in writing any question he wishes propounded to his client or to any other witness and may, at the conclusion of his client's testimony, suggest the presentation of other evidence or the calling of other witnesses. The Committee may use such questions and dispose of such suggestions as it deems appropriate. 8.5 Statements by Witnesses.--A witness may make a statement, which shall be brief and relevant, at the beginning and conclusion of his or her testimony. Such statements shall not exceed a reasonable period of time as determined by the Chairman, or other presiding members. Any witness desiring to make a prepared or written statement for the record of the proceedings shall file a copy with the Clerk of the Committee, and insofar as practicable and consistent with the notice given, shall do so at least 72 hours in advance of his or her appearance before the Committee. 8.6 Objections and Rulings.--Any objection raised by a witness or counsel shall be ruled upon by the Chairman or other presiding member, and such ruling shall be the ruling of the Committee unless a majority of the Committee present overrules the ruling of the chair. 8.7 Inspection and Correction.--All witnesses testifying before the Committee shall be given a reasonable opportunity to inspect, in the office of the Committee, the transcript of their testimony to determine whether such testimony was correctly transcribed. The witness may be accompanied by counsel. Any corrections the witness desires to make in the transcript shall be submitted in writing to the Committee within five days from the date when the transcript was made available to the witness. Corrections shall be limited to grammar and minor editing, and may not be made to change the substance of the testimony. Any questions arising with respect to such corrections shall be decided by the Chairman. Upon request, those parts of testimony given by a witness in executive session which are subsequently quoted or made part of a public record shall be made available to that witness at his or her expense. 8.8 Requests to Testify.--The Committee will consider requests to testify on any matter or measure pending before the Committee. A person who believes that testimony or other evidence presented at a public hearing, or any comment made by a Committee member or a member of the Committee staff may tend to affect adversely his or her reputation, may request to appear personally before the Committee to testify on his or her own behalf, or may file a sworn statement of facts relevant to the testimony, evidence, or comment, or may submit to the Chairman proposed questions in writing for the cross-examination of other witnesses. The Committee shall take such action as it deems appropriate. 8.9 Contempt Procedures.--No recommendation that a person be cited for contempt of Congress shall be forwarded to the Senate unless and until the Committee has, upon notice to all its members, met and considered the alleged contempt, afforded the person an opportunity to state in writing or in person why he or she should not be held in contempt, and agreed by majority vote of the Committee, to forward such recommendation to the Senate. 8.10 Release of Name of Witness.--Unless authorized by the Chairman, the name of any witness scheduled to be heard by the Committee shall not be released prior to, or after, his or her appearance before the Committee. rule 9. procedures for handling classified or sensitive material 9.1 Committee staff offices shall operate under strict precautions. At least one security guard shall be on duty at all times by the entrance to control entry. Before entering the office all persons shall identify themselves. 9.2 Sensitive or classified documents and material shall be segregated in a secure storage area. They may be examined only at secure reading facilities. Copying, duplicating, documents and other materials is prohibited except as is necessary for use in, or preparation for, interviews or Committee meetings, including the taking of testimony, and in conformity with Section 10.3 hereof. All documents or materials removed from the Committee offices for such authorized purposes must be returned to the Committee's secure storage area for overnight storage. 9.3 Each member of the Committee shall at all times have access to all papers and other material received from any source. The Staff Director shall be responsible for the maintenance, under appropriate security procedures, of a registry which will number and identify all classified papers and other classified materials in the possession of the Committee, and such registry shall be available to any member of the Committee. 9.4 Whenever the Select Committee on Intelligence makes classified material available to any other Committee of the Senate or to any member of the Senate not a member of the Committee, such material shall be accompanied by a verbal or written notice to the recipients advising of their responsibility to protect such material pursuant to section 8 of S. Res. 400 of the 94th Congress. The Clerk of the Committee shall ensure that such notice is provided and shall maintain a written record identifying the particular information transmitted and the Committee or members of the Senate receiving such information. 9.5 Access to classified information supplied to the Committee shall be limited to those Committee staff members with appropriate security clearance and a need-to-know, as determined by the Committee, and, under the Committee's direction, the Staff Director and Minority Staff Director. 9.6 No member of the Committee or of the Committee staff shall disclose, in whole or in part or by way of summary, to any person not a member of the Committee or the Committee staff for any purpose or in connection with any proceeding, judicial or otherwise, any testimony given before the committee in executive session including the name of any witness who appeared or was called to appear before the Committee in executive session, or the contents of any papers or materials or other information received by the Committee except as authorized herein, or otherwise as authorized by the Committee in accordance with Section 8 of S. Res. 400 of the 94th Congress and the provisions of these rules, or in the event of the termination of the Committee, in such a manner as may be determined by the Senate. For purposes of this paragraph, members and staff of the Committees may disclose classified information in the possession of the Committee only to persons with appropriate security clearances who have a need to know such information for an official governmental purpose related to the work of the Committee. Information discussed in executive sessions of the Committee and information contained in papers and materials which are not classified but which are controlled by the Committee may be disclosed only to persons outside the Committee who have a need to know such information for an official governmental purpose related to the work of the Committee and only if such disclosure has been authorized by the Chairman and Vice Chairman of the Committee, or by the Staff Director and Minority Staff Director, acting on their behalf. Failure to abide by this provision shall constitute grounds for referral to the Select Committee on Ethics pursuant to Section 8 of S. Res. 400. 9.7 Before the Committee makes any decision regarding the disposition of any testimony, papers, or other materials presented to it, the Committee members shall have a reasonable opportunity to examine all pertinent testimony, papers, and other materials that have been obtained by the members of the Committee or the Committee staff. 9.8 Attendance of persons outside the Committee at closed meetings of the Committee shall be kept at a minimum and shall be limited to persons with appropriate security clearance and a need-to-know the information under consideration for the execution of their official duties. Notes taken at such meetings by any person in attendance shall be returned to the secure storage area in the Committee's offices at the conclusion of such meetings, and may be made available to the department, agency, office, committee or entity concerned only in accordance with the security procedures of the Committee. rule 10. staff 10.1 For purposes of these rules, Committee staff includes employees of the Committee, consultants to the Committee, or any other person engaged by contract or otherwise to perform services for or at the request of the Committee. To the maximum extent practicable, the Committee shall rely on its full-time employees to perform all staff functions. No individual may be retained as staff of the Committee or to perform services for the Committees unless that individual holds appropriate security clearances. 10.2 The appointment of Committee staff shall be confirmed by a majority vote of the Committee. After confirmation, the Chairman shall certify Committee staff appointments to the Financial Clerk of the Senate in writing. No Committee staff shall be given access to any classified information or regular access to the Committees offices, until such Committee staff has received an appropriate security clearance as described in Section 6 of Senate Resolution 400 of the 94th Congress. 10.3 The Committee staff works for the Committee as a whole, under the supervision of the Chairman and Vice Chairman of the Committee. The duties of the Committee staff shall be performed, and Committee staff personnel affairs and day-to-day operations, including security and control of classified documents and material, and shall be administered under the direct supervision and control of the Staff Director. The Minority Staff Director and the Minority Counsel shall be kept fully informed regarding all matters and shall have access to all material in the files of the Committee. 10.4 The Committee staff shall assist the minority as fully as the majority in the expression of minority views, including assistance in the preparation and filing of additional, separate and minority views, to the end that all points of view may be fully considered by the Committee and the Senate. 10.5 The members of the Committee staff shall not discuss either the substance or procedure of the work of the Committee with any person not a member of the Committee or the Committee staff for any purpose or in connection with any proceeding, judicial or otherwise, either during their tenure as a member of the Committee staff at any time thereafter except as directed by the Committee in accordance with Section 8 of S. Res. 400 of the 94th Congress and the provisions of these rules, or in the event of the termination of the Committee, in such a manner as may be determined by the Senate. 10.6 No member of the Committee staff shall be employed by the Committee unless and until such a member of the Committee staff agrees in writing, as a condition of employment to abide by the conditions of the nondisclosure agreement promulgated by the Senate Select Committee on Intelligence, pursuant to Section 6 of S. Res. 400 of the 94th Congress, 2d session, and to abide by the Committee's code of conduct. 10.7 No member of the Committee staff shall be employed by the Committee unless and until such a member of the Committee staff agrees in writing, as a condition of employment, to notify the Committee or in the event of the Committee's termination the Senate of any request for his or her testimony, either during his tenure as a member of the Committee staff or at any time thereafter with respect to information which came into his or her possession by virtue of his or her position as a member of the Committee staff. Such information shall not be disclosed in response to such requests except as directed by the Committee in accordance with Section 8 of S. Res. 400 of the 94th Congress and the provisions of these rules, or in the event of the termination of the Committee, in such manner as may be determined by the Senate. 10.8 The Committee shall immediately consider action to be taken in the case of any member of the Committee staff who fails to conform to any of these Rules. Such disciplinary action may include, but shall not be limited to, immediate dismissal from the Committee staff. 10.9 Within the Committee staff shall be an element with the capability to perform audits of programs and activities undertaken by departments and agencies with intelligence functions. Such element shall be comprised of persons qualified by training and/or experience to carry out such functions in accordance with accepted auditing standards. 10.10 The workplace of the Committee shall be free from illegal use, possession, sale or distribution of controlled substances by its employees. Any violation of such policy by any member of the committee staff shall be grounds for termination of employment. Further, any illegal use of controlled substances by a member of the Committee staff, within the workplace or otherwise, shall result in reconsideration of the security clearance of any such staff member and may constitute grounds for termination of employment with the Committee. 10.11. In accordance with title III of the Civil Rights Act of 1991 (P.L. 102-166), all personnel actions affecting the staff of the Committee shall be made free from any discrimination based on race, color, religion, sex, national origin, age, handicap or disability. rule 11. preparation for committee meetings 11.1 Under direction of the Chairman and the Vice Chairman, designated Committee staff members shall brief members of the Committee at a time sufficiently prior to any Committee meeting to assist the Committee members in preparation for such meeting and to determine any matter which the Committee member might wish considered during the meeting. Such briefing shall, at the request of a member, include a list of all pertinent papers and other materials that have been obtained by the Committee that bear on matters to be considered at the meeting. 11.2 The Staff Director shall recommend to the Chairman and the Vice Chairman the testimony, papers, and other materials to be presented to the Committee at any meeting. The determination whether such testimony, papers, and other materials shall be presented in open or executive session shall be made pursuant to the Rules of the Senate and Rules of the Committee. 11.3 The Staff Director shall ensure that covert action programs of the U.S. Government receive appropriate consideration by the Committee no less frequently than once a quarter. 12.1 The Clerk of the Committee shall maintain a printed calendar for the information of each Committee member showing the measures introduced and referred to the Committee and the status of such measures; nominations referred to the Committee and their status; and such other matters as the Committee determines shall be included. The Calendar shall be revised from time to time to show pertinent changes. A copy of each such revision shall be furnished to each member of the Committee. 12.2 Unless otherwise ordered, measures referred to the Committee shall be referred by the Clerk of the Committee to the appropriate department or agency of the Government for reports thereon. rule 13. committee travel 13.1 No member of the Committee or Committee Staff shall travel abroad on Committee business unless specifically authorized by the Chairman and Vice Chairman. Requests for authorization of such travel shall state the purpose and extent of the trip. A full report shall be filed with the Committee when travel is completed. 13.2 When the Chairman and the Vice Chairman approve the foreign travel of a member of the Committee staff not accompanying a member of the Committee, all members of the Committee are to be advised, prior to the commencement of such travel, of its extent, nature and purpose. The report referred to in Rule 13.1 shall be furnished to all members of the Committee and shall not be otherwise disseminated without the express authorization of the Committee pursuant to the Rules of the Committee. 13.3 No member of the Committee staff shall travel within this country on Committee business unless specifically authorized by the Staff Director as directed by the Committee. rule 14. changes in rules These Rules may be modified, amended, or repealed by the Committee, provided that a notice in writing of the proposed change has been given to each member at least 48 hours prior to the meeting at which action thereon is to be taken.

Mr. SPECTER

Mr. SPECTER. Mr. President, I cannot allow the passing of an American whose unsung contributions over 44 years have served to enhance, in ways that cannot be measured, the national security and well-being of this country. I speak of Bill Lackman. The name Bill Lackman is not known to the American public. But in the intelligence community, his is a household name. I know Bill only from his many trips to the Senate Intelligence Committee to testify on the complex and necessary business of intelligence programs and budget. If I were asked to select one word which would best describe Bill, it would be a professional--in the finest sense of the word. Bill knew his business better than anyone and he was an articulate spokesman. It goes without saying that his wife Anne and his family will miss him. It will also go without commentary that the intelligence community and his country will miss him. At this point, I can think of no greater tribute to Bill than to recount his career and contributions to his country. Bill graduated from the U.S. Military Academy at West Point, NY, in 1951 and served in the U.S. Army from 1951 to 1973, rising to the rank of colonel in the Infantry. During his military career, he served combat tours in Korea and Vietnam. He served as assistant professor of Russian history at the U.S. Military Academy, and he also served as assistant professor of international relations at the U.S. Air Force Academy. His military decorations include four Bronze Stars, the Army and Air Force commendation medals, two Purple Hearts, and two awards of the Combat Infantryman's Badge. In 1976, Bill joined the intelligence community staff and rose to become the principal spokesman for the entire national intelligence community budget. In 1986, he became deputy director of the intelligence community staff. For this service and his many contributions, Bill was awarded the National Intelligence Distinguished Service Medal in January 1993. Bill was appointed the first Director of the Central Imagery Office by Secretary of Defense Cheney on May 22, 1992, where he pioneered many management innovations in the provision of imagery to national defense. Bill gave unselfishly to a country he loved. His contributions can never be adequately repaid. He shall be missed.

Mr. SPECTER

Mr. SPECTER. I ask my colleague from Utah, if the language exception as to section 2 were removed, would the amendment be agreeable?

Mr. SPECTER. Only if the court is----

Mr. SPECTER. Well, if this amendment is defeated, could the U.S. courts entertain jurisdiction in a suit that is brought challenging the following or compliance with the constitutional amendment for a balanced budget?

Mr. SPECTER. If you are going to rely on standing, the vagaries of that issue, or a defense that may be advanced to stop somebody from going into court, that is very perilous ground. I think it is advisable for this body to face the jurisdictional issue squarely. I think we ought to say whether or not we wish the Federal courts to have jurisdiction over compliance with the constitutional amendment for a balanced budget.

Mr. SPECTER. Well, if I may have 30 seconds more, is it the view of my colleague from Utah, the manager of the measure, that there would be no Federal jurisdiction, no jurisdiction in the Federal courts even without this amendment?

Mr. SPECTER. It depends on how long Senator Hatch's answer is.

Mr. SPECTER. I thank my colleague. That is very limited exception. There is no jurisdiction. The issue of jurisdiction concerns me greatly. Earlier this year, I argued a case at the Supreme Court of the United States involving the Base Closure Commission. The issue was whether Federal courts had jurisdiction of the matter. I had the occasion to do very extensive research on the jurisdictional question. It is my view that there ought not to be jurisdiction in the Federal courts on the compliance with the constitutional amendment. This is a duty on the Congress. There is the possibility of extensive litigation, and we ought to make our position clear on that in one way or another. If I may have the attention of the Senator from Utah. I understand the concerns the Senator from Utah has in not wanting to have amendments added to the bill because that subjects the issue to conference, but the question I have of the managers of the measure is what is the import of the absence of this amendment? Will there be jurisdiction of the Federal courts, I first inquire of my colleague from Utah?

Mr. SPECTER. Mr. President, I had asked the distinguished Senator from Louisiana to yield me time because the manager of the bill, the distinguished Senator from Utah, asked me if I could get time. I have not made up my mind yet on the matter, but I wanted to express my concerns about the pending issue's repealability and have some ideas from the manager as to where the issue stood. While this floor debate has been in process, the Judiciary Committee has been meeting in the Antitrust Subcommittee on the baseball issue. The pending amendment makes it plain that there will not be Federal court jurisdiction, that the judicial power of the United States shall not extend in any case or controversy arising under this article except section 2 here, which may be specifically authorized in implementing legislation pursuant to this section. But I inquire of the Senator from Louisiana what the exception for section 2 refers to.Mr. JOHNSTON. Section 2 provides that the limit on the debt of the United States held by the public shall not be increased unless three-fifths of the whole number of each House shall provide for that.

Mr. SPECTER

Mr. SPECTER. I would accept my colleague's statement that it is a fraud on the taxpayers which is about the same thing as a fraudulent conversion, which I think is the technical term.