June 9, 1986 CONGRESSIONAL RECORD-SENATE 12983 SENATE-Monday, June 9, 1986 The Senate met at 12 noon and was offer an amendment or ask for a roll­ simple without strangling our econo­ called to order by the President pro call, but not after 6 p.m. We shall keep my. The present unfair, complicated tempore [Mr. THURMOND]. the 6 o'clock curfew in that no rollcall income tax is terrible, wasteful, expen­ votes begin after 6 p.m. If one starts sive, and cannot be described ade­ PRAYER before 6, we will obviously conclude it. quately using good language." The Chaplain, the Reverend Rich­ That decision will be made by Senator A woman from Eureka, KS, is no less ard C. Halverson, D.D., offered the fol­ PACKWOOD and Senator LONG. outraged. "We recently went to a semi­ lowing prayer: I assume it will take all week to dis­ nar," she writes, "And the investment Let us pray. pose of the tax reform bill. Hopefully, speculator giving it bragged about not As the heart panteth after the water we can dispose of it this week. We paying any taxes because of the loop­ brooks, so panteth my soul after thee 0 have a very crowded calendar before holes in the tax laws. It made me furi­ ~ct;-My-sottl-thi'FSteth for God, tor the the June 27 recess begins. So it is my ous. Why has Congress made this pos­ living God: when shall I come and hope that we might complete action sible?" appear before God?-Psalm 42:1-2. on the measure, say, Thursday night. I And finally, there is the Wichita Like the psalmist Father God, our assume Senator PACKWOOD would like woman who signs herself a "Con­ hearts cry out for You-for the living to push on. I am not certain at this cerned and upset citizen:" God-but we ignore the cry and our point how many amendments have hearts languish for the most basic re­ been filed. I am advised only one as of Once again, I have had my taxes figured, Friday. If that would continue, we and feel that I and everyone else that is not ality in life, the exquisite touch of rich are paying too much in Federal taxes. God. We starve our souls while we sa­ might set a new record here. I doubt If you're rich, you can afford an accountant tiate our bodies. We immerse ourselves that will hold. that knows all the loopholes. If you have in the temporal, and deprive our spir­ It seems to me that many people lots of money you can afford to pay a bro­ its of the eternal. We who are made to have had an opportunity to study the kers' commission and buy tax-exempt bonds live forever deprive ourselves of the tax bill, and I assume there will prob­ and such. breath of God and suffocate our souls ably be additional amendments. I Mr. President, it is no wonder the in the smog of the transitory. Quicken agree with the distinguished minority American people are ready for real tax us to our need of You, 0 Lord, and leader, this is a legislative body, and reform. We are talking about the aver­ make us wise to respond for the sake we have a right to offer amendments. age American man and woman who of our spiritual health and our moral We cannot flat out say there will be no amendments adopted. There might be are out there every day working and strength. In His name who is virtue in­ trying to pay their tax bill and trying carnate. Amen. some accepted. I think what Senator PACKWOOD is attempting to underscore to figure why somebody else down the is as far as major amendments, that is street or in the next town who can RECOGNITION OF THE where he will try to draw the line. I afford tax shelters will pay less than MAJORITY LEADER hope that will be met by bipartisan people who work every day. The PRESIDENT pro tempore. The support. They work 2 hours and 39 minutes able majority leader, Senator DoLE, is

e This "bullet" symbol identifies statements or insertions which are not spoken by the Member on the floor. 12984 CONGRESSIONAL RECORD-SENATE June 9, 1986 logic that will defeat any such amend­ RECOGNITION OF THE able to have a much better under­ ment. MINORITY LEADER standing of the important step that is The PRESIDING OFFICER. Under being taken here toward reforming the 0 1210 the previous order, the Democratic tax system. The American people We also have those who would like leader is recognized. kn'ow that the Tax Code is complex, to restore full sales tax deductibility they know it is unfair in some ways, but again I urge my colleagues that and they want reform. The tax bill FAIR TAX REFORM FOR THE will probably be the most important both of these matters can also be ad­ MIDDLE CLASS piece of legislation that will come out dressed in the conference, where they Mr. BYRD. Mr. President, I join of the 99th Congress. I do not find keep the IRA's as is in the House bill with the distinguished majority leader fault with the distinguished majority and you have full deductibility of the in not only predicting that this will be leader's continued beseeching that we sales tax. a vote of 100 to nothing, if every Sena­ pass this bill and pass it quickly, but I It would be my hope that we can tor is in attendance, but in also work­ am constrained to find some minor dis­ make those choices if necessary or ing for that kind of outcome. I want to agreement at least in the idea that we make certain modifications, and I be­ see a vote of 100 to zero. I will certain­ need to do it by Thursday of this lieve some should be made in the ly do ~vrrything I can to that end. week. More so do I find myself in some IRA's. But I believe they can be made I thmk we have to keep our eye on lack of accord on the idea that we in a conference setting without depriv­ the middle class as we debate this bill. ought to pass it as quickly as possible ing anyone in this legislative body of Six million taxpayers have been taken here, get it down to the conference, having their rights impaired, depriving off the tax rolls in the Finance Com­ and let the conferees resolve all the anybody of the right to offer the mittee. That is at the lower income issues. levels. There will be a House bill in confer­ amendments, debate the amendments, Now, the wealthy will get some re­ whatever. ence. There will be a Senate bill in ductions. But it is my understanding conference. But I do not subscribe to In the first spring I ever spent in that the take-home pay of the middle the idea, never have I subscribed to this city I heard John Kennedy de­ class will be proportionately less than the idea, nor will I ever subscribe to clare that "To govern is to choose." is accorded to the very high-income the idea, that the Senate ought to Now we, too, must choose. We must levels-! am talking about the wealthy simply roll over and play dead, make a choose between satisfying a wealth of in particular-in this bill. few good speeches and just leave it up special interests or serving the public Now, if that is the case, then we ought not to just give this bill a lick to the conferees to rewrite a bill and interest, between genuine reform and do our work for us. some half-hearted tinkering with a and a promise and say let the confer­ ence ·handle it. I am not on the Fi­ Of course, I agree that the conferees system universally regarded ·as too nance Committee, but I do believe will write the final product. That is costly, too complex, and too much the that the middle class in this country what I call the third House. captive of sharp operators like those has borne the tax burden in the heat We have the House of Representa­ complained about in my constituent of the day and over the years: The tives, which some of us like to refer to letters. middle class sends its own kids to col­ as the lower House. I suppose that ref­ In both statute and spirit, we claim lege; the middle class helps the lower erence may come out of history and to embody democratic values. The income people to send their children out of the fact that when Congress time has come for us to practice some to college; the middle class pays the first met in 1789, the other body was economic democracy as well. That bills for rental programs; welfare pro­ on a lower level. The Senate was on means everyone paying a fair share, grams, health programs, food stamps. the second floor and was referred to as The great middle class is the backbone the upper body. no more, no less. It means a system But there are the two Houses. And simplified and a government ordered of the Nation, and it has shouldered the main individual tax burden. then the third house is when the con­ to live within its own means. That is ferees from both Houses meet to re­ what the people want and that is what This bill is a good bill. It is a tax reform bill. It is real reform, if I may solve the differences in the two bills, we should deliver, not only in our dis­ underline the word "real" as I use it in because those differences have to be cussions but in the final product of a descriptive sense. But we must just resolved so that the product that is the tax reform bill, the final product be doubly sure that the middle class sent to the President is agreed on be­ on the budget resolution and anything gets the fair shake which it deserves in tween the two Houses precisely in else we seek to accomplish in the U.S. this bill. If the middle class, indeed, is every word, comma, semicolon and Senate. not getting its share, if it is, indeed, dash, every punctuation mark, that on As I indicated earlier, sometimes taking home a disproportionate share, every jot and title both Houses are in there are partisan differences, some­ if its take-home pay is disproportion­ full agreement. That is done in the times there cannot be bipartisan sup­ ate to that of the very wealthy, then if conference committee. Of course, port for certain legislation, but I will that is the case, let us do what we can there will also be big issues resolved accept marginal bipartisan support. It to fix it. there. seems there are some people who do I think we ought to examine the bill. But to say that 100 Senators should not care a hoot about politics, but we I do not feel that if the bill is not just gloss over this bill, let us roll it have a rare opportunity to speak with passed by Thursday or Friday of this on, let us get through by Thursday one voice in the Senate, one strong bi­ · week anybody has suffered a defeat. I and possibly be out on Friday, let the partisan voice. In my view that is all presently have no amendment th~t I conferees handle the w,ork at the going to happen. We are going ·to intend to offer, I do not say, I will not other end, that is not my idea of legis­ offer one, but I have no intention at lative responsibility. finish this bill, finish the conference the moment because I have not heard I will not be a conferee. Normally, a report, and have it on the President's enough of the debate. whole committee is not chosen by the desk by Labor Day as he expressed we I feel that it is our duty to take a Senate to act as conferees on the part might have in his radio message on good look at the bill. I want to hear of the Senate. But the Senate makes Saturday. If we can accomplish that the debate on the bill. The debate will that decision by order of the Senate and a few other things this year, we be enlightening. I hope-now that we and ·should the Senate in its wisdom will have a good year in this second have televised coverage of Senate de­ decide that all members of the Fi­ session. bates-the American people will be nance ColllJD.ittee should act as confer- June 9, 1986 CONGRESSIONAL RECORD-SENATE 12985 ees on the part of the Senate, fine, would suppose. But it is surely not in a summit late this year by all this talk that might be a good idea. That is not our interest militarily at this point to about ditching the SALT II accords. for me to say. In the event that were see those ceilings broken because the Mr. President, I thank the Chair to happen, however, there would only Soviet's production lines are geared and, of course, all of us will have more be 20 Members of the Senate in con- up; they are ready to go. ·about these matters later. terence. In other words, one out of Our production lines are not geared every five Senators would be in confer- up; we are not ready to go. And if· we · ence with the other body. are just going to summarily throw 0 1230 Now so much fbr that. I am for a these SALT II accords into the trash RECOGNITION OF SENATOR 100-to-nothing vote on this bill. It is basket and say, "We will have no more THURMOND bipartisan. It came out of the Finance to do with it; we are all done with Committee by a vote of 20 to nothing. this·," why, then, I think we are being . The PRESIDING OFFICER. Under That is like Lindbergh's flight over very unwise from a number of stand­ the previous order, the Senator from New York City in 1927 when he was on points because the Soviets can break South Carolina, the distinguished his way across the Atlantic, the Spirit out quickly from the central systems. I President pro tempore, is recognized of St. Louis came across New York am talking about the intercontinental for 5 minutes. City, according to the newspapers, "at ballistic missiles, . the submarine- the terrific speed of 100 miles per launched missiles, and land-based mis- TEXTILE EMPLOYMENT AND hour." · siles. I am talking about all these Well, this bill came out of the Fi- things, because all of them are in the IMPORT FIGURES nance Committee at about that speed, ceilings. Once the Soviets break out Mr: ·THURMOND. Mr. President, 100 miles per hour, and I say let us from under the accords whereas they the bad news for the American textile pass it. are allowed to put only 10 warheads and· apparel industry continues to I do not envision any amendment, on a single missile, they could then · pour in as foreign imports continue to Mr. President, as being a "killer" put 30 on their SS-18's. The ceilings flood our country. The latest figures amendment on this bill. Whether an also apply to launchers. It is certainly released by the Department of Com­ amendment is "major" or "minor" not in our interest, because over the merce show that imports of textiles does not make any. difference. It is next 3 or 4 or 5 years, the Soviets' pro- and apparel were up 28.3 percent this what the content of the amendment duction lines are geared up now .and Aptil over April of 1985. For the first 4 is. ~f it is "major" and the content is ready to go. For us to say at this time, months of 1986, imports of these prod­ such that the Senate should adopt the "Let us abolish the ceilings; let us ucts are up an astonishing 26.4 percent amendment, it should do it. If it is forget about the accords; we are not · over the first 4 months of the record­ "minor," and the Senate should adopt going to live U.P to the limits," would setting year of 1985. Unfortunately, it the amendment, that is fine. It is up to just be cutting our nose off and not looks like the 1986 imports will break the will of the Senate. helping the looks of our face because all previous import records. My main interest in this bill is to see the Soviets are ready to break out im- Mr. President, these figures are con- what happens to the middle-class citi- mediately. As long as they are living vincing evidence that imports are run­ zens in West Virginia, for example, the within the ceilings, it would not be in ning wild. For. months we have been smoke stack industries in West Virgin- our interest to make such an unwise hearing that steps were being taken to ia. How do those people come out? and hasty decision. bring the situation under control. Yet, It is the middle-class Americans who · Second, and finally, I would say that · the figures speak for themselves-for­ are the people who are entitled and it is very symbolic for the positive at- eign co.mpanies and foreign workers who deserve some tax relief at this mosphere which developed in the first steadily increase · the flow of textile time, and I believe they are going to summit to continue. · I th.ink the products into our Nation, apparently get it under this bill. summit at Geneva was good. I believe without fear that we will enforce our Mr. President, do I have any tilne re- that the President did himself well. I rights to stop them. maining? think that it was good for· our side, Mr. ·President, these unrestrained The PRESIDING OFFICER. The good for the other side, and I woQld imports are shattering the hopes and distinguished Democratic leader has 2 hope that we would I)Ot just cast cold dreams of many American families. minutes remaining. water, as it were, on the possibility of Throughout the country, hard work- Mr. BYRD. I thank the Chair. I will another summit later this year. ing. people are losing t,heir jobs be- use these last 2 minutes to make refer- After all, if we are going to have a cause of the influx of foreign goods. It ence to a very important matter that I summit, what are we · talking about almost seems as if jobs have become think needs some attention. from the standpoint of benchmarks? ·our largest export item. A recent arti- If we are going to lower the ceilings in cle in the Charleston Evening Post re­ another summit, we lower the ceilings ported the latest Labor Department THE SALT II ACCORDS from what? We are talking about the textile employment figures. They Mr. BYRD. Mr. President, President SALT II accords. If we have another show that in seven southeastern Reagan announced on May 26 that summit, we would hope to be able to States employment in the textile in­ there would be no undercutting of the lower those SALT II ceilings. We dustry has declined by 9,300 jobs in SALT II accords. I think the President would lower the future ceilings in any the past year. My home State of made the right decision at this time, future accord or in any future treaty South Carolina alone showed a drop of because as to the central systems that from those ceilings that are set forth 4,400 jobs from the first quarter of are included in the SALT II accords, if in the SALT II accords. We have to 1985 to the first quarter of 1986. The we are going to undercut the limits on have a benchmark and that is the only April.figures reflect a loss of 600 more those central systems, and the Soviet benchmark of which I know. If we are textile jobs in South Carolina. These Union, from everything I can hear, is going to just go helter skelter at this losses have placed textile employment living up to the limits, then it is in our point and say the accords are off, all in the·State at a record low since rec­ interest from a national security bets are off, and engage in an arms ordkeeping on textile jobs began after standpoint that we not undercut those race, what is the benchmark if we Worlci War II. accords, certainly at this time. I would have a summit later? Let us hope for a During the past 5 years over 25,000 hope we do not even talk about under­ second summit and let us hope that South Carolina textile workers have cutting the accords before a summit, the Soviets will stop waffling and lost their jobs. lt does not take a hopefully, which will occur in this agree to a summit date. Let us hope genius to figure out the reason for country subsequent to the elections, I that we will not poison the chances for these job losses. Without a doubt, the 12986 CONGRESSIONAL RECORD-SENATE June 9, 1986 culprit is the unimpeded growth of im­ Mr. HUMPHREY. Mr. President, I tax· roles. And one of the best things ports. ask unanimous consent that I might they did was not increasing excise Mr. President, the textile and appar­ be recognized following Senator CRAN­ taxes on consumers. el industry has been ranked by the De­ STON. Mr. President, I yield the floor. fense Department as second only to The PRESIDING OFFICER. With­ Mr. President, I suggest the absence steel in importance to national de­ out objection, it is so ordered. of a quorum. fense. One out of every 10 manufac­ The PRESIDING OFFICER. The turing jobs in America is in this indus­ RECOGNITION OF SENATOR clerk will call the roll. try. We cannot and will not stand idly CRANSTON The assistant legislative clerk pro­ by and watch the demise of one of our ceeded to call the roll. Nation's most important industries. The PRESIDING OFFICER. The Mr. HUMPHREY. Mr. President, I Last month 70 Senators and 302 House Senator from California is recognized ask unanimous consent that the order Members signed a letter to President for not to exceed 5 minutes, after for tne quorum call be rescinded. Reagan supporting a stronger Multi­ which the Senator from New Hamp­ The PRESIDING OFFICER. With­ fiber arrangement to deal with the shire will be recognized. out objection, it is so ordered. past 5 record years of textile and ap­ Mr. CRANSTON. I thank the Sena­ parel imports. Swift, decisive action is tor from New Hampshire for his gra­ necessary to stop the flow of unfair ciousness. RECOGNITION OF SENATOR imports and preserve American jobs. HUMPHREY Two million Americans still employed NO INCREASE IN FEDERAL The PRESIDING OFFICER. Under in this industry are depending on it. EXCISE TAX Mr. President, I ask unanimous con­ the previous order, the Senator from sent that an article from the Evening Mr. CRANSTON. Mr. President, the New Hampshire is now recognized for Post of Charleston, SC, dated June 2, best kind of tax is a tax that never a period not to exceed 5 minutes. 1986, entitled "South Carolina Leads gets imposed. One tax that fortunate­ Region in Textile Decline" be printed ly never was imposed is a 54-percent in the RECORD. increase in Federal excise taxes on a AMENDMENT TO ELIMINATE There being no objection, the article host of commonly consumed products. TAX EXEMPTION FOR ABOR­ was ordered to be printed in the The Senate Finance Committee actu­ TION CLINICS RECORD, as follows: ally had seriously considered such a Mr. HUMPHREY. Mr. President, SOUTH CAROLINA LEAns REGION IN TEXTILE proposal during its deliberations over during the debate on the tax bill DECLINE tax reform. which will soon commence, Senators ATLANTA .-Textile employment in As we all know, an excise tax on con­ are going to be asked to make some the Southeast dropped in the first quarter sumer goods, like a sales tax, falls very important decisions. But I dare­ of 1986, with the sharpest drop in South most heavily on families in the middle say that no decision will be more im­ Carolina, the U.S. Labor Department re­ and lower income brackets. Over a portant than that which Senators will ported. period of 5 years, the tax hike the The government counted 481,500 textile committee considered would have ex­ be asked to make when Senator ARM­ jobs in Florida, Georgia, Alabama, Tennes­ tracted up to $75 billion from those STRONG, Senator HELMS, and I offer an see, Kentucky, South Carolina and North families. And they would not have amendment that seeks to eliminate Carolina. The total was 1,600 less than the known what hit them! the tax-exempt status of abortion clin­ figure for the fourth quarter of 1985 and ics. 9,300 below the first quarter 1985 level. A Federal excise tax on consumers­ the technical form of the Federal sales I speak now in advance of the bill, South Carolina showed the biggest drop Mr. President, to alert Senators and compared to the same period a year earlier, tax-would hit the poor consumer dropping 4,400 jobs to a total of 102,200. with a double-whammy: It not only interested parties in the hopes that The April unemployment figures for would be unfair, it would be secret. they will have a greater opportunity South Carolina showed that the state lost In the case of a State or local sales to familiarize themselves with this im­ 600 more textile jobs. Those losses placed tax, at least the consumer knows what portant amendment before it is pend­ the state's textile employment to 101,500, a is being charged: The sales clerk or ing. record low job total since record-keeping on the sales slip tells you the amount of Mr. President, Congress has long ex­ textile jobs in the state began after World empted from taxation certain nonprof­ War II. the tax. Robert David, executive director of the Not so with a Federal excise tax on it organizations. Engaging in certain South Carolina Employment Security Com­ consumer purchases. It is included in types of activities entitles organiza­ mission, said the April losses were further the basic price of the product. Not tions to tax-exempt status. Those evidence of the need to control textile im­ even the clerk knows how much tax is exempt from taxation are organiza­ ports into the country. being charged. Only the manufacturer tions operated exclusively for charita­ Textile plant production workers averaged and the Treasury know. ble purposes, religious purposes, edu­ 40.7 hours of work per week, down 2.4 hours cational purposes, scientific purposes, from the first quarter of 1985. The average Moreover, the manufacturer-under gross hourly wage of $6.75 was up 21 cents the committee's original proposal­ literary purposes, for purposes of test­ from the previous year. would have had to pay income tax on ing for public safety, for purposes of the excise taxes he was collecting from fostering national or international his customers for the Treasury! How is amateur sports competition, or for ORDER OF PROCEDURE that for a bummer of an idea? purposes of preventing cruelty to chil­ The PRESIDING OFFICER. Under The committee finally thought so dren or animals. the previous order, the Senator from too. To its credit, the Finance Commit­ Organizations which qualify on the New Hampshire is recognized for not tee dropped the excise tax proposal basis of these criteria enjoy a privi­ to exceed 5 minutes. and went on to a much better idea: leged status in our society. They are Mr. HUMPHREY. Mr. President, The Packwood tax bill. privileged because they pay no taxes other Members have been waiting The Packwood bill is defective in a on their income. It may come as a sur­ longer than I. I would be happy to number of ways which I hope to be prise to some Senators and to many of yield to them if either are in a hurry able to correct. But by and large, the our citizens to learn that among the this afternoon. committee did a noteworthy job in many organizations which enjoy this Mr. CRANSTON. If the Senator lowering rates, closing some insupport­ privileged status of paying no tax on would not object, I would appreciate it able tax loopholes, and removing mil­ their income are many which perform if I could be recognized. lions of low-income workers from the abortions. June 9, 1986 CONGRESSIONAL RECORD-SENATE 12987 0 1240 subsidized by the people of the United perts at the Stanford Center for Inter­ Congress has granted tax exemption States. national Security and Arms Control to certain activities, Mr. President, as Mr. President, I note my time is for much of his information. a way of encouraging those activities. about to expire. I ask the courtesy of After reading Sartori's article this Let us remember what kind of encour­ my colleagues to permit me to seek Senator comes to the conclusion that agement that constitutes. It is a subsi­ unanimous consent to continue for 2 whatever SALT II does to advance the dy. Congress has chosen to subsidize minutes that I might complete this im­ cause of arms control and peace is certain organizations who perform cer­ portant statement. greatly surpassed by its contribution tain kinds of activities as a way of en­ The PRESIDING OFFICER. Is to U.S. military strength vis-a-vis the couraging those activities. It is a subsi­ there objection? Without objection, it Soviet Union. We all know SALT II dy. It is just as much a subsidy as a is so ordered. hangs by a feeble, unraveling thread. cash disbursement in the like amount Mr. HUMPHREY. I thank the We know SALT II was recommended from the Treasury. It would have the Chair. I thank my colleagues for their by the Senate Foreign Relations Com­ same bottom-line effect that the indulgence. mittee to this body by a 9-to-6 vote in Treasury would have with a cash dis­ Mr. President, without question 1979. It was never sent to the floor of bursement-or that a tax exemption Congress has the authority, indeed­ the Senate. of the same value has which is exactly the responsibility-to determine which Until 1981 the United States and the the same effect on the bottom line at activities are fit to be subsidized, and Soviet Union were obligated under Treasury. And more. importantly may which are not. international law to abide by the I point out it would have exactly the Now it is time to make it clear to the treaty because it carried the status of same effect on the organization which IRS that we do not deem performing a signed treaty awaiting ratification. benefits by such privilege-namely, a of abortions an activity fit to be subsi­ That obligation ended in 1981 when subsidy, and namely an encourage­ dized by the Congress, and by the President Reagan said the United ment to continue engaging in that Treasury, and by the taxpayers. States would not ask the Senate to kind of activity. Mr. President, I began by suggesting ratify SALT II. But in May of 1982 the Mr. President, I hardly need remind that among all of the important President announced in an ambiguous my colleagues that the Congress on amendments which we will be consid­ statement that we would abide by the many occasions over the last 7 or 8 ering over the next week or so in con­ terms of the treaty as long as the Sovi­ years has refused to provide for tax­ nection with the tax bill, none will be ets did likewise. About 4 months ago payer financing of abortions. We have more important than this amendment on December 31, 1985, SALT II ex­ adopted Hyde amendment language to because by the kinds of activities that pired. Professor Sartori concludes that many, many pieces of legislation. In we encourage, by the kinds of activi­ in the period between 1981 and 1985, other words, the Congress has said if ties that we subsidize, and Mr. Presi­ compliance with SALT II cost the its citizens want to procure an abor­ dent, by the nature in which our socie­ United States exactly nothing. The tion that is their business, but Con­ ty is defined. Reagan administration was able to ad­ gress and the taxpayers have no obli­ I believe-! am certain in my mind­ vance every phase of its military build­ gation to subsidize it. the American people do not want up without encountering any restrain­ Not only has Congress repeatedly re­ abortion subsidized either with cash ing pressure from this treaty. In Sar­ fused the subsidization but the Su­ disbursements or with the equivalent tori's words, "the administration preme Court has upheld our refusal to tax-exempt status for abortion provid­ subsidize abortion. Nonetheless, Mr. would have been hard put to find a ers. way to violate the SALT restraints if it President, as I have pointed out, abor­ Mr. President, I will be speaking fur­ tion today continues to enjoy a very had sought to do so." In 1985 and con­ ther on this amendment in advance of tinuing into 1986 the situation real and concrete form of subsidiza­ offering it. I solicit the support of my tion at the expense of the taxpayers changed but only slightly. Here is colleagues not on any question of the how: SALT II more recently imposed which incidentally or not incidentally fundamental nature of abortion, applies approval by the taxpayers and though that is an important question, some modest restraints. In October of by Congress of that activity. but on the question of whether we 1985 with the commissioning of the Of course, we all know, irrespective should be subsidizing this, and wheth­ seventh Ohio class Trident submarine, of our views on the fundamental issue er our constituents want us to subsi­ the United States was scheduled to of abortion, that the overwhelming dize this activity. exceed the SALT II ceiling of 1,200 majority of American citizens do not I thank the Chair. MIRV'd launchers. To continue to want their dollars used to pay for comply with the treaty the United their abortions, and I suggest by the States would have to eliminate 14 same logic they do not want any other RECOGNITION OF SENATOR MIRV'd launchers. Moreover as each kind of subsidy at their expense ex­ PROXMIRE succeeding Trident boat entered the tended to the providers of abortion. The PRESIDING OFFICER. Under fleet, the United States would have to How does it happen, Mr. President, the previous order, the Senator from eliminate another 24 MIRV'd launch­ that the Congress and the taxpayers Wisconsin [Mr. PRoXMIRE] is now rec­ ers. The next Trident is scheduled for are subsidizing abortion through tax­ ognized for a period not to exceed 5 this summer. Second, this summer the exempt status for such organizations? minutes. United States will reach the ceiling of Did Congress pass a law authorizing 1,320 combined MIRV'd launchers and the tax exemptions for abortion pro­ airlaunched cruise missiles [ALCMSJ. viders? No. Did the IRS through its HOW SALT II INCREASES U.S. Also, coming up 2 years from now is own regulations provide for that kind MILITARY SECURITY flight testin!{ of Midgetman. This of granting of tax-exempt status? No. Mr. PROXMIRE. Mr. President, a would violate the new-type limitation It happened by virtue of a 1976 inter­ recent edition of Current News, a pub­ of SALT II because the MX is the one nal memorandum, Mr. President, that lication prepared for the Defense De­ allowed American new type. enormously important social policy partment, raises some serious ques­ Whereas the United States suffered was set by an internal memorandum. tions about the future of SALT II. literally no weapons constraints in the Now, we seek to overthrow that The name of the study was "Will first 51f2 years of SALT II from 1979 to memorandum and to tell the Treasury SALT II Survive?" The author, Leo late 1985, SALT II substantially limit­ that the Congress does not consider Sartori, is a professor of Political Sci­ ed the Soviets from the beginning. performing of abortion as an activity ence and Physics at the University of Some of the limitations could have to be encouraged by the Congress or Nebraska-Lincoln. Sartori credits ex- made a substantial difference in in-

71-059 0 - 87- 37 (Pt. 9) 12988 CONGRESSIONAL RECORD-SENATE June 9, 1986 creased strategic power for the Sovi­ The Dairy Price Support Program support of the Senate and the Ameri­ ets. When the SALT II Treaty was provides a market stability which has can people. signed the Soviets had 608 MIRV' d enabled U.S. dairy farmers to make ICBM's. They continued to add to continuous gains in productivity. Since their total until they reached the 1950, dairy farmer productivity-as RECOGNITION OF SENATOR SALT II limit and stopped. Sartori measured by man-hours required to KASTEN concludes: produce 100 pounds of milk-has in­ The PRESIDING OFFICER. Under There is no reason to believe that absent creased-not doubled, not tripled-but the previous order, the Senator from the commitment to SALT II, the Soviets twelve-fold. Wisconsin [Mr. KASTEN] is recognized would have stopped at just 818. Prices for dairy products have for a period not to exceed 5 minutes. They did. Sartori also concludes that stayed consistently below increases in Mr. KASTEN. Mr. President, I absent SALT II the Soviets could and the overall Consumer Price Index. In thank the Chair. would have pushed the deployment of the 1982-1985 time period, for exam­ MIRV'd-submarine launched ballistic ple, the CPI increased by 11.4 percent, THE TAX BILL missiled significantly above their cur­ compared to a 4.5-percent increase for rent level. dairy products. Mr. KASTEN. Mr. President, the bill And here was the most significant The average national retail price for before us today is truly revolutionary. restraint SALT II has imposed on the a half-gallon of milk was less than a It takes power away from Washington, U.S.S.R. Without the limitation of penny higher in 1985 than in 1982. and gives it back to the American SALT II, the Soviets could and prob­ And, as I said, it actually takes less people. The tax policy will no longer ably would have increased by several than half the time today-as com­ be used to dictate the economic life of thousand the number of nuclear war­ pared to 1950-for the typical Ameri­ our country. heads on their strategic missiles. It can worker to earn the money needed 0 1250 would be a cheaper and more efficient to make purchases like a half-gallon of Mr. President, this legislation allows way of deploying their nuclear arsenal milk, a pound of butter, and a half­ every American to keep more than 70 than building more launchers. The So­ gallon of ice cream. percent of every dollar eamed. Only 6 viets without their SALT II agreement Americans spend about 15 percent of years ago, Uncle Sam claimed up to 70 could have increased the rate of pro­ their disposable income on food. This percent for himself. duction of their backfire bombers. As is the lowest percentage of any major It reaches the goals of simplicity and Sartori concludes: nation in the world. About 12 percent fairness we set out when some of us From the beginning, the burden of adher­ of that figure goes for dairy products. embarked on this path, embarked ing to the treaty has fallen almost exclu­ The successful operation of the upon this direction, more than 2 years sively on the Soviet side. Dairy Price Support Program over the ago. Now this is real tax reform! On Friday this Senator called to the years means that American shoppers I listened to the Democratic leader attention of the Senate a meticulous can walk into their grocery stores earlier speaking in favor of tax reform. analysis of the alleged violations by every day in every city across the I listened to the words of the Senator the Soviets of SALT II in an article country and find the shelves stocked from Louisiana, Senator LoNG, the written in the New York Times by with fresh milk and dairy products. ranking Democrat on the tax-writing Charles Mohr. The article convincing­ Mr. President, it is very important to committee, last week, saying that he ly demonstrated that any Soviet viola­ note, too, that dairy farmers them­ believed it was possible we could have tions of this treaty are of no real mili­ selves take responsibility for helping near unanimous support. tary significance. to pay for the Dairy Price Support Mr. President, I believe today it is It is easy to see why only 1 of the 5 Program when there is a serious im­ possible to predict that this tax bill Joint Chiefs of Staff has been report­ balance between milk supply and may pass the Senate with the unani­ ed to hold the view that dropping all demand. Recent examples include the mous vote of the Senate. This would, restraints of the SALT II Treaty Milk Diversion and Dairy Termination indeed, be historic. would be militarily advantageous to Programs, where dairy farmers fi­ This bill embraces many of the prin­ the United States. Mr. President from nanced substantial portions of the ciples of the "fair and simple tax" a strictly military standpoint as well as costs of these programs designed to plan that Congressman KEMP and I in­ for the future of arms control and help bring supply more evenly in line troduced earlier in this Congress. world peace, we should not permit with consumption. Like Kemp-Kasten, this bill recog­ SALT II to die. We should revive it. Dairy price support cuts have been nizes the need to reduce tax rates dra­ We should ratify it. We should extend shown not to serve a useful purpose. matically and the beneficial effect it. Faced with two 50-cents-per-hundred­ such a bold move will have on our weight price support reductions in economy. 1985, dairy farmers were forced to Like Kemp-Kasten, this bill removes MYTH OF THE DAY: DAIRY produce more in an effort to maintain thousands of low-income Americans PRICE SUPPORT PROGRAM IS their cash flow and preserve their from the tax rolls, and gives them a A FAILURE farms. From October 1980 through boost up to reach that first rung of Mr. PROXMIRE. Mr. President, the 1985, there were three price support the ladder of economic progress and myth of the day is that the Dairy cuts totaling $1.50 per hundredweight. success. Price Support Program is a failure. During this time, farm milk prices Like Kemp-Kasten, this bill elimi­ Since June is Dairy Month, I think dropped 7 percent, while farmers' nates hundreds of tax loopholes in the now is an especailly appropriate time costs increased 15 percent. And what current Tax Code, ensuring that every to lay this myth to rest. about the average retail price of whole corporation and every individual pays The Dairy Price Support Program milk? It increased 8 percent. their fair share. was established in 1949 to help ensure Taxpayers, consumers, and farmers This proposal is good for families, it that American consumers enjoy de­ alike benefit from keeping a viable is good for working people, and it is pendable supplies of dairy products Dairy Price Support Program intact. good for our Nation. throughout the year at reasonable To say that this program has been a Yet, it is not perfect, and I believe it prices. failure is truly a myth. The data I can be improved here on the Senate Does the Dairy Price Support Pro­ have cited portray the reality of the floor. I am concemed about the gram work to achieve these goals? You Dairy Price Support Program, which impact of the IRA changes on savings, bet it does. Let us look at the facts. richly deserves the continuing strong the loss of the deductibility of charita- June 9, 1986 CONGRESSIONAL RECORD-SENATE 12989 ble contributions for nonitemizers, and First of all, everybody in the Senate, an intrusion on their constitutional re­ the change in the treatment of capital and the American public, knows full sponsibility to try to ratify treaties. gains. well that this treaty was never ratified An additional concern that I have But I commend the chairman of the by the Senate. The treaty was not rati­ about our continuing to adhere to Senate Finance Committee for getting fied by the Senate because it did not SALT is that we know full well that such a historic tax package out of have the support of the Senate. The the Soviet Union has failed to comply committee. reason it did not have the support of with the basic requirements of this The chairman is a true believer and the Senate was because by and large treaty. The Soviets have violated a real leader on tax reform, and the this treaty gave a clear advantage to SALT time and time again. Yet, for American people are the ones who will the Soviet Union. It gave a clear ad­ some strange reason, many people gain. vantage to the Soviet Union in first want to have unilateral compliance Now the Senate has a chance to strike, hard target kill weapons. They with this treaty. In other words, the complete the revolution. I urge my col­ have that advantage now. The treaty United' States of America would have leagues to join me in supporting this insures that advantage. to comply with this treaty but the package and fighting any attempt to It is also disadvantageous to the Soviet Union would be operating increase the tax rates. United States because we are trying to under whatever interpretation they I believe we · will prove ourselves move toward second-strike missiles, want to give to it and they would be equal to the task and maybe even like the cruise missiles carried on our able to continue to violate the treaty­ achieve a unanimous vote on tax bomber force. We are limited to 120 to establish a double standard. reform in the U.S. Senate. long-range cruise missile-carrying Where would our credibility be in Mr. President, I suggest the absence bombers under SALT II. That is a po­ negotiating treaties, not only with the of a quorum. sition that the President will not Soviet Union but with any country, The PRESIDING OFFICER. The comply with later on this year. were we to come down and say, well, clerk will call the roll. Many people in this Senate have we are going to live up to the obliga­ The assistant legislative clerk pro­ argued that we ought to get away tions and concerns of a treaty, but you ceeded to call the roll. from first-strike destabilizing weapons do not have to? Mr. QUAYLE. Mr. President, I ask like the MX and go to destabilizing That would be utter nonsense. Yet unanimous consent that the order for missiles like the cruise missile. I have many are advocating just this when the quorum call be rescinded. heard the merits of cruise missile de­ they call for compliance for the The PRESIDING OFFICER. With­ bated for a long time. I am a strong United States to SALT without the out objection, it is so ordered. proponent of both deploying and im­ Soviet Union having to comply. Basic proving such weapons. But now, no, we contract law tells us that if you are can only have approximately 130 going to have a contract, if you are RECOGNITION OF SENATOR cruise missile-carrying bombers. Even going to have an agreement, if you are QUAYLE conventional cruise missiles that could going to have a treaty, then you had The PRESIDING OFFICER. Under be substituted for nuclear weapons are better have compliance .. and it had the previous order, the Senator from severely restricted under SALT II, Mr. better be a two-way street. Indiana [Mr. QuAYLE] is recognized for President, as the Presiding Officer But focusing on our behavior rather not to exceed 5 minutes. knows full well, being the head of our than the Soviets' is not unusual. For delegation to Geneva. You cannot tell some strange reason, it seems that we the difference between a nuclear are always in the wrong. Blame us SALT II tipped and a conventional tipped first; we are the ones that are some­ Mr. QUAYLE. Mr. President, I cruise missile. Therefore, they are how responsible for the problems in would like to discuss the President's counted the same. the breakdown in the arms control decision last week to not extend the SALT II also is a disadvantage to the processes. Yet, we are the ones who SALT II Treaty. United States because, under SALT, have been pushing for a genuine arms Last week there was a barrage of we cannot have a sound mixture of of­ reduction proposal. The Soviet Union criticism of the President. That criti­ fensive capability and defensive capa­ is the one that has been the obstruc­ cism will be studied and debated. It is bility in our forces. SALT in fact, is tionist in that process. They are the being debated in the House of Repre­ premised on MAD, and MAD on there opes who have, in fact, put sand in the sentatives. It is being debated around being no missile defenses. gears to prevent a genuine arms con­ the country. If people are really serious about trol proposal by this administration Many have said that this decision, in continuing SALT II, though, I suggest from going forward. effect, kills the arms control process that perhaps at some time, the majori­ Mr. President, it also has been or has set it back considerably. I dis­ ty leader might just want to bring it argued that somehow, the SALT agree. In fact, if we really want to up for discussion, for debate, and see Treaty will restraint the Soviet Union have a genuine arms control process where the votes are. If two-thirds of and if we take the SALT limits off, the and see an arms control agreement the Senate vote for the SALT Treaty, Soviet Union will just go like gangbus­ reached, we simply are going to have then obviously, the United States has ters in the development of ICBM's to begin with a new arms control foun­ to be bound by that. But if two-thirds MIRV'ed warheads, SLBM's fighter dation. do not vote for it, obviously, the treaty planes, you name it; that strategically, I believe that that foundation is the fails for insufficient support. I think it they will just go forward and there is one that the President has put for­ is a rather disingenuous argument no way in the world the United States ward over these years to see a reduc­ that has been going around this Cap­ could even come close to catching up. I tion rather than an increase of nuclear itol for the last few days that, some­ think that is not a valid argument for weapons that we'ver seen under SALT. how, we are going to impose SALT II a number of reasons. That is the direction that the Presi­ requirements not by the constitutional One, we will do what is in our best dent wants to take this country­ route of treaty ratification, but by a interest. Two, the Soviets do not need toward real reductions and I strongly 51-percent vote in the House and a 51- any more first-strike hard-target weap­ support it. percent vote in the Senate that will ons to target our fixed assets. They al­ Let us look at some of the specific deny the President this opportunity ready have thousands of these weap­ considerations that are going to be de­ and this flexibility. I believe that ons that put all of our fixed assets at bated on the continuation of the would be a serious mistake, and I risk. If they want to go ahead and SALT II Treaty. assume that Senators would see this as spend more and more, fine, let them. 12990 CONGRESSIONAL RECORD-SENATE June 9, 1986 It is not going to do any good. They al­ So, it is time, Mr. President, to estab­ There being no objection, the article ready have such capability to put at lish a new foundation for arms con­ was ordered to be printed in the risk our fixed targets with their first­ trol. We cannot rely upon an unrati­ RECORD, as follows: strike hard-target killer weapons. We fied and violated treaty. We must have EXILES FIGHT FOR CULTURAL SURVIVAL do not have that capability; they do. a new beginning that will focus on re­ In fact, Mr. President under the duction of these weapons, a beginning terms of the treaty itself, the Soviet that will provide for greater deter­ In the Afghan capital of Kabul, Najibul­ Union, if it wanted to, could produce rence and security, a beginning that lah, the new leader of the Soviet-backed several thousand more warheads-sev­ government, promises to wage an even will provide for peace and stability in bloodier war against the anticommunist re­ eral thousand more warheads could be this world. Those are sacred issues sistance. But in the rebel-held countryside, produced if they wanted to under the with the American people, as they another war is being fought with books and SALT II Treaty. The reason that is should be. tape recorders-against illiteracy, against the case is that SALT II focused pri­ The American people believe in a the destruction of the country's culture and marily on launchers, rather than on strong and secure national defense, educational system by the Soviet occupa­ the missiles' ability to carry warheads. and they want to have adequate secu­ tion. And we know full well that the mis­ rity, because they know that security Its voice is that of a 3-year-old girl sending siles' warheads are what impose and is essential to peace and prosperity. her tape-recorded blessings to the mujahi­ inflict the nuclear disaster that we are So, Mr. President, the time to begin is deen, the Muslim "holy warriors" of the re­ trying to prevent. So even by the sistance who-vastly outgunned by superior now, to establish a new foundation for Soviet weaponry-are fighting the invaders terms of SALT alone, you can have es­ arms contrrol, to get a legitimate to a standstill. "Greetings to you," she says. calation of thousands more warheads. treaty that, in fact, can be ratified by "Go and fight the infidel Russians. When I The Soviet Union has decided not to this body and put into law that will grow up, I will have a gun and kill the Rus­ do this for a number of reasons. If, in work, that will be fair, will be equita­ sians myself. God be with you." fact, the treaty is now no longer com­ ble, and will provide for peace. Its voice is also that of a talking tree, in a plied with by the United States as it is Mr. President, I suggest the absence storybook written for the children of the not being complied with by the Soviet of a quorum. war. The tree speaks of the importance of Union, I dare say they will not do The PRESIDING OFFICER . To carry out this authorization, Government to frustrate the sales contract war and preserve an Afghan culture threat­ the Department entered into a sales con- through diplomatic communications with ened by the Soviets' policy of Russifica­ tract with Wake Forest in November 1974 the. Italian Government would raise grave tion-the systematic destruction of the Af­ . providing for payment of legal issues. ghans' ancient ways and the indoctrination the sales price of $250,000 in installments. It should be noted that this sale in no way of Afghan children in Soviet schools. Wake Forest completed these payments in provides a windfall to Wake Forest. Both The government closed all but 50 of the 1978. the legislation authorizing the sale and the 1,900 village schools operating before the Final transfer of title to the property sales contract provide that Wake Forest communist coup and is sending many chil­ from the United States Government to must give the Department a right of first re­ dren to the Soviet Union for instruction. Wake Forest University has been delayed fusal to repurchase the property for the About 1 million children in Afghanistan are for a considerable period, due initially to $250,000 sales price if Wake Forest should without any schooling, according to Kush­ now-resolved uncertainties over tax liabil- cease to use the property. kaki. Along with opening their own elemen­ ities and then to the need to satisfy various 1 hope this information satisfies your in- tary schools and training teachers, Kushka­ requirements for Italian Government ap- quiry. ki's Cultural Council of Afghanistan Resist­ provals. When the tax questions were re- With best wishes, ance is distributing cassette tapes to counter solved in 1983, all the documents required Sincerely, Soviet propaganda, which runs 18 hours a under Italian law to transfer title were com- JAMES w. DYER, day on the radio and five hours a day on tel­ pleted and executed by the parties before an Acting Assistant Secretary, Legislative evision. Italian notarial official, but registration of and Intergovernmental Affairs. The center has also acquired six video the title in the property to Wake Forest has cameras and trained Afghans to operate been suspended under an escrow-type ar­ them. The group wants to record the war rangement pending receipt by Wake Forest PUBLIC LAW 93-264 for the outside world and to create a docu­ of authorization from the Italian Govern-.. An act to authorize sale of a former Foreign mentation center. "Its significance cannot ment to complete the purchase. The Italian Service consulate building in Venice to be overstated," Kushkaki said. "Most of the Government's file on Wake Forest's request Wake Forest University published materials in Afghanistan, wheth­ t? purch~e Is i_n the Forei.gn Ministry for Be it enacted by the Senate and House of er it be textbooks, historical documents, re­ f~nal review. pr~or to t~e Issuance of the Representatives of the United States of ligious books, museum articles or other ma­ fmal authonzat10n reqUired to complete the A . . C bl d Th t < > terials representing Afghan society, culture, title transfer menca tn ongress assem e • a a values and tradition have been systematical­ The forme~ Consulate property is consid- the Secretary _of s_tate is hereby authorized ly destroyed." ered an historic building under Italian law. to ~ell, _by qUitclaim deed, to Wake For~st The Department understands, however, U~1v~rs1ty the . former co~sulate off1ce that this designation arises principally from bUlldmg and resld~nce a~ R10 Torre-Selle VENICE CONSULATE BUILDING its location on the Grand Canal and not and Canal Gr~nde, m Vemce, for the sum ~f from its historic importance of architectural $_250,000, subJect to such terms ~nd con~l­ Mr. PRESSLER. Mr. President, sev­ significance. The valuation estimate cited in t10n~ as the ~ecretary sha_ll_ prescnbe not m­ eral weeks ago I placed in the RECORD your letter, suggesting that the property c?ns1stent . With t~e . prov1s1ons of the For­ a letter I wrote to the State Depart­ may be worth as much as $40 million, ap- e1gn ServiCe BUlldm~s Act, 1926. Such ment asking for comment on certain pears greatly excessive. The Department's $250,0~0 shall be apphed or held pursuant information I had been given regard­ Office of Foreign Buildings appraised the to sect10n 9 of such_ Act ?f 1926. ing the sale of the former U.S. consul­ property in 1973 at approximately $250,000 (b) Wak~ For~st Umver~1ty shall not lease ate building in Venice, Italy. to $350,000. The Department is informed ?r otherwise al~enate th1s proper_ty except that a reasonable current estimate might m accordance ~1th t~e terms o~ th1s Act. I have received a response from the range from one to four million dollars. But If t~e umvers1ty de~ermmes t~at the department and ask that it be printed in view of the use and alienation restrictions property IS no longer requ1red and Wishes to in today's RECORD. Wake Forest is a imposed by Italian law on Grand canal dispose of it, the university will offer the fine university, and I am pleased to see properties, any attempt to estimate market property, by quitcl~im deed, to the Se<:re­ that the department has determined value would be necessarily speculative. tary of State at a pnce of $250,000, grantmg that all aspects of its acquisition of The Department has no information to a one-year option at that price, and may this property satisfy the highest support the allegation that was reported to only dispose of the property to a third party standards of public accountability. you that the sale is opposed by any Italian after written notice from the Secretary of entity, private or public. In the course of State that he does not wish to exercise the There being no objection, the letter the reviews required by Italian law, certain option, or after the expiration of the year's was ordered to be printed in the preliminary objections were raised to the option without its being exercised by him. RECORD, as follows: sale, notably by the Venice municipal gov- In the event the Secretary shall exercise the U.S. DEPARTMENT OF STATE, ernment, which initially felt that use of the option, he shall have one year from the date Washington, DC, May 15, 1986. premises for educational purposes by Wake of exercise in which to make settlement. If Hon. LARRY PRESSLER, Forest might be inconsistent with the city's the university has made capital improve­ Chairman, Subcommittee on European Af­ intended reservation of Grand Canal prop- ments to the property during its ownership, fairs, Committee on Foreign Relations, erties for residential use. The city's plans such improvements shall be evaluated by U.S. Senate. were subsequently modified, and its objec- the Secretary, and paid to the university in DEAR MR. CHAIRMAN: The Secretary of tion withdrawn. To the Department's addition to the $250,000 price stated above State has asked that I reply to your letter of knowledge, there is no current opposition to in compensation therefor. April 9, 1986, inquiring concerning the sale the sale on the part of any agency of the Wake Forest University shall provide of the former United States Consulate prop­ Italian Government, nor are we aware of suitable office space for United States Gov­ erty in Venice, Italy to Wake Forest Univer­ any private Italian opposition to the sale. ernment employees on official business in sity. You express your concern that this The Department has received letters from Venice at any time such space is requested property is being sold for a fraction of its private Americans suggesting that the prop- by the American Embassy in Rome or the market value, and ask that the Department erty be reserved for use as consulate prem- American Consulate In Milan, in accordance consider taking steps to prevent completion ises. The Department has no current plans with arrangements to be determined by the of the sale. We believe the transaction to reopen a consulate in Venice, and in fact parties prior to transfer of title under this should go forward for the following reasons. severe budget constraints have required us act. 12992 CONGRESSIONAL RECORD-SENATE June 9, 1986 CONTRACT FOR SALE OF THE AMERICAN Milan or the American Embassy at Rome, in think, will certainly be a matter of CONSULATE PROPERTY IN VENICE, ITALY accordance with arrangements to be deter­ great interest to all Americans. This Contract is made the -- day of --, mined by the parties within two months fol­ Mr. President, we all, of course, were 1974 between the Government of the United lowing signature of this agreement. deeply saddened by the loss of the States of America, through the Secretary of 6. The Vendee hereby assumes all mainte­ State of the United States of America, nance and repair and operating expenses, Challenger and its crew on that fateful acting by Orlan Clemmer Ralston, Deputy including charges for utilities, gas, heat, oil, day. It was a personal loss to all of us, Assistant Secretary for Foreign Buildings, electricity and water. The Vendee also and particularly to the dedicated men hereinafter called " the Vendor", of the one agrees to the payment of all legal fees, no­ and women directly involved in the part, and Wake Forest University of Win­ tarial charges, registration charges, taxes of shuttle project. Since that time, NASA ston-Salem, North Carolina, acting by any kind on the property and any other has taken some hard knocks. James Ralph Scales, its President, herein­ fiscal charges incurred in connection with But it would seem to me this is sort after called " the Vendee", of the other part. this sales agreement and with the convey­ Witnesseth: The parties hereto, for the ance of the property to the Vendee. of maybe hanging in the balance at considerations hereinafter mentioned, and 7. All insurance premiums and all taxes or this point and, before we rush to jud­ in compliance with the authorities granted assessments levied or assessed on the said ment and everybody starts pouncing by Public Law 93- 264, dated April 12, 1974, property and accruing before title transfer on NASA and our finding fault with agreed as follows: hereunder shall be paid by the Vendee. that person, we want to keep in mind 1. The Vendor agrees to sell and the 8. When full payment of the $250,000 is that this is an outstanding program Vendee agrees to buy, upon the terms here­ made by the Vendee, the U.S. Government and it is a matter, I think, of great inafter appearing, all that piece or parcel of will transfer to the Vendee a quitclaim deed land located in the Commune and city of and all previous title documentation on the pride to all Americans over the years Venice, Sestiere Dorsoduro, at S. Gregorio, property. The title transfer must take place and we need to move ahead as quickly Calle S. Cristofaro Nos. 699-699/ A-699/b- in Venice, Italy, and will be subject to all as we can. NASA, with the support of 700, all recorded as follows in the cadastral local laws and requirements. The title trans­ Congress, should move very quickly to records: fer must include the rights on repurchase as correct the problems-and there are "Comune and Section of Venice-Sheet expressed in paragraph 4, above. The title problems- outlined in the Presidential No. XIV, Map 2081 house with storage place consist­ ment expressed in paragraph 2, above. ing of three floors and twelve rooms, at 9. The risk of loss or damage to the prem­ gram moving again. Calle S. Cristofaro, Nos. 699-699/ A-700, tax­ ises by force majeure or other causes until In my view, until we have time to able income 11,900 lire." the conveyance of title is assumed by the digest it, and until we hear from the 2. The purchase price is U.S. $250,000, Vendee. experts, we should hold our fire- let payable as follows: us not rush to judgment. Our space $70,000 within ten days following signa­ program is hanging in the balance. ture of this contract by both parties; at SHUTTLE REPORT which time the lease held by the University The Commission indicates that the is considered terminated. Mr. DOLE. Mr. President, today Nation's worst space disaster was a $45,000 per annum, together with 8 per­ members of the Presidential Commis­ combination of faulty space age hard­ cent interest on the unpaid balance, payable sion on the Space Shuttle Challenger ware and poor management at the Na­ annually in advance on the anniversary date accident present their report to the tion's space agency. The report con­ of the $70,000 payment, or, at the option of President. At a White House ceremony tains about a dozen major findings and the Vendee, the unpaid balance may be paid this afternoon, several Senators, in­ recommendations concerning the in full in advance at anytime without pre­ agency and the shuttle program and payment penalty. cluding our distinguished astronaut 3. The Vendee shall not lease or license colleagues JoHN GLENN and JAKE will say that Challenger's seven astro­ this property to a third party unless the GARN, join the President at this impor­ nauts died because hot gases escaped Vendor is advised of the proposed disposi­ tant event. We are certainly pleased from the seam of the shuttle's right tion of the property at least 6 months in ad­ the Commission has completed its booster rocket, triggering a chain reac­ vance of such disposition in writing, work and we look forward to reviewing tion that ended in a gigantic fireball. through the American Embassy in Rome. it. It is an indepth report that will re­ These are grim accounts that demand 4. It is understood and agreed that if the the most careful deliberations we can Vendee determines that the property is no quire detailed study by the experts. longer required and wishes to dispose of the And the Senate is doing just that. muster. property, the Vendee will offer the com­ I must say I was caught in traffic Mr. President, all Americans were plete property, by quit claim deed, to the and missed the report but I arrived in deeply saddened by the loss of the Secretary of State, at a price of $250,000, on time to congratulate the members of Challenger and its crew on that fateful a one year option to repurchase at that the Commission for their oustanding day. It was a personal loss to all of us, price. In the event the Secretary of State job. and particularly to the dedicated men shall exercise the option, he shall have one I do believe it is a very good report. and women directly involved in the year from the date of exercise in which to shuttle project. Since that time, NASA make settlement. If the Vendee has made There will be hearings starting tomor­ capital improvements to the property row, I understand, in the Commerce has taken some hard knocks; there during its ownership, such Improvements, Committee. Senator DANFORTH, the have been numerous charges aimed at excluding normal maintenance and repair, chairman of that committee, will pre­ NASA. Some of them may be deserved, provided they are documented by descrip­ side over those hearings. others may be just the product of po­ tion and amount of expenditure by the But I believe that we should with­ litical rhetoric. That's why today's Vendee, shall be evaluated by the Secretary hold judgment until we have all the report is important. It gives us the op­ of State, acting thru the American Embassy facts available. There are some conclu­ portunity to develop an unbiased eval­ at Rome, and the total current value of It such improvements will be paid to the sions drawn in the report. is my un­ uation of what really happened on Vendee in addition to the $250,000 sales derstanding the President responded January 28. price, in compensation therefor. The to a reporter that he supported the But, Mr. President, as devastating as Vendee may only dispose of the property to report. It will lead to a number of the Challenger loss was, it should not a third party after written notice from the major changes at NASA. So I primari­ be allowed to blur our vision of the Secretary of State that he does not wish to ly wish to congratulate members of future, nor should it sour our taste for exercise the option or after the expiration the Commission, particularly the discovery. We have come a long way­ of the year's option without it being exer­ chairman, Bill Rogers. Many of us together- to become the world leader cised by the Secretary of State. 5. The Vendee hereby agrees to provide have known Bill Rogers over the in space exploration. NASA has helped suitable office space, rent free, to United years. He was an outstanding public fill the Nation with pride and has States Government employees on official servant, and certainly this is an act of helped give us the practical benefits of business in Venice, at any time upon reason­ public service that will affect not only technological advances. I believe that able advance notice by the Consulate at the future of the space program but, I NASA should, as soon as possible, June 9, 1986 CONGRESSIONAL RECORD-SENATE 12993 begin production of a fourth orbiter to pared to pay any amount within our Soviet air-breathing weapons, the SDI replace the Challenger; a project incor­ means for SDI given its transcendent has to their ballistic missile forces. In porating the recommendations of the importance. other words, ADI will have as its goal, Commission, but also embodying the Well, transcendent or not, there are the objective of finding the means to high expectations of a nation ready limits past which we cannot afford to shoot down any Soviet bomber or and willing to push into outer space. pay for SDI if we want the rest of our cruise missile before it can reach tar­ The space shuttle is the Nation's door military forces to be kept up properly, gets in the United States. That in­ to outer space; long launch delays will and if we intend to get the national cludes, I presume, an ability to deal only mean that important commercial, debt under control. even with Soviet applications of military, and scientific payloads will In this speech, therefore, I will take Stealth technology. also be delayed. NASA, with the sup­ up the more earthbound question of This is truly a formidable-one port of Congress, should move quickly how much SDI might actually cost would rather say, preposterous-objec­ to correct the problems outlined by and whether it is by any stretch of the tive. But it is also unavoidable within the Presidential Commission and get imagination within the means of this the context of SDI, for two reasons: the shuttle program moving again. Government. first, because without it, SDI cannot The grief over the loss of the Chal­ 0 1400 fulfill its pledge to protect the popula­ lenger seven will be with us always, tion; and second, because without it, but the best tribute we can make is to The only figure with any solidity at all, and therefore the logical starting SDI cannot even undertake to protect reach again for the heavens. itself. What the costs will be is purely Mr. QUAYLE. Mr. President, I sug­ point, is $27 to $30 billion, which is the administration's estimate of the cost a matter of conjecture, even for re­ gest the absence of a quorum. search alone. One omits here the pos­ The PRESIDING OFFICER. The of strategic defensive research over a period of about 7 years. Indeed, this is sible costs for actually procuring and clerk will call the roll. operating the kinds of equipment re­ The legislative clerk proceeded to the cost of SDI, since that program will not actually produce a defense, quired to do the job. call the roll. Further on, but clearly present in Mr. GORE. Mr. President, I ask but merely the scientific and techno­ logical wherewithal to decide if such a the shadows, is work on antitactical. unanimous consent that the order for ballistic missile technologies; for deal­ the quorum call be rescinded. defense is feasible. Or at least, so we are told by the administration. ing with the kinds of shorter range The PRESIDING OFFICER. With­ weapons that threaten our forces in out objection, it is so ordered. This sum of $30 billion alone rivals the cost of developing, producing and Europe, and, of course the Europeans operating many big ticket weapons. It themselves. An ATBM capability RECOGNITION OF SENATOR already-that is, at current levels-is would be for NATO, what SDI is for GORE pressing very hard on funding for any the continental United States. Concep­ The PRESIDING OFFICER. Under other kind of military research and it tually, the development of such a ca­ the previous order, the Senator from is going to press much harder in the pability is not needed for SDI. Politi­ Tennessee [Mr. GoRE] is recognized future. cally, however, it is likely to be un­ for not to exceed 5 minutes. It is very important to understand, avoidable unless we wish to do without Mr GORE. Thank you, Mr. Presi­ however, that even this enormous sum Allies in the future. No ones knows dent. only applies to those forms of research what research for such systems might pertinent to defense against intercon­ cost. tinental missiles. Moreover, within Final, and even further out, one can THE STRATEGIC DEFENSE this category, what we would be anticipate the need to develop INITIATIVE paying for is primarily work address­ counter-counter measures, including Mr. GORE. Mr. President, this is the ing, in the first instance, what I have elaborated antisatellite systems for de­ lOth in a series of floor speeches that I been calling "SDI 2;" that is, a defense feating any anti-SDI weapons the So­ have been making on the strategic de­ of limited capacity, as compared to the viets might put into orbit. fense initiative. promised final product-an ultimate We then come to the threshold of In earlier comments I have discussed defense. the reality of producing, deploying the importance of the so-called Nitze Even so, the figure is grossly mis­ and operating all of this hardware. criteria-especially the concept of cost leading, because it excludes other Thus far we have just talked about re­ effectiveness at the margin-for assur­ forms of research indispensible for search. And again, there are virtually

ing that rational of economic stand­ SDI1 which the administration is get­ no numbers worthy of consideration. ards will be applied before any defense ting under way elsewhere. Except perhaps for some of the esti­ is actually deployed. There is, to begin with, the NASA mates now beginning to emerge as to In theory, cost effectiveness is a Program for development of a TAV, the type and number of satellite battle method for estimating whether it transatmospheric vehicle. Granted, stations, monitoring systems, ground­ would be more expensive for us to sus­ that this program is being presented based interceptors, and the like, tain a strategic defense against Soviet as the Orient Express-the next great needed to realize one or another de­ countermeasures than it would be for leap in passenger transportation. But fense architecture, as it is called. the Soviets to pay for the counter­ the fact is that 80 percent of its fund­ The architectures themselves are measures themselves. What this tech­ ing comes from the military, because still classified, and in any event, one nique allows us to do is watch out for a this project is a fundamental necessity can only make guesses as to cost, situation in which the Soviet Union for SDI. Why? Because at existing based on the costs of such things as in­ could undermine a vast United States costs per pound of placing objects in telligence collection systems-again, a investment in SDI for a relatively orbit, there is no possible way the classified number. But former Secre­ small investment of their own in coun­ United States can afford even the tary of Defense Harold Brown has said termeasures. transportation costs for emplacing the that a grand total on the order of $1 Typically, the administration has equipment and fuels required for SDI. trillion might well be what we find at yet to decide what cost effectiveness The estimated cost to devise a test ve­ the bottom of the bill. And I do not would mean in practice when applied hicle is $3 billion. think he is exaggerating for effect: He to SDI, and is already looking for an Then there is the air defense initia­ is estimating with some care. easy out. The name of that easy out is tive, whose precepts are still being What can one conclude from all "affordability," which in plain lan­ worked out. ADI, as it is called, will this? First, that the costs for this kind guage means that we should be pre- have much the same relationship to of research will likely impoverish 12994 CONGRESSIONAL RECORD-SENATE June 9, 1986 other aspects of our defense work. the Supreme Court. We then passed a As a matter of fact, we started Second, that vitally needed investment constitutional amendment which al­ adding other deductions. in conventional forces will be drained lowed an income tax to be levied. Most What happened over the years is away. Third, that the scale of these people are really unaware that up that people eventually got hooked. costs will ultimately threaten the sub­ until almost World War I the bulk of They began to think that they could stance of this Nation. the Federal revenues in this country not live without the deductions: Char­ Mr. President, I yield the floor. were raised from either excise taxes or ities could not exist unless people tariffs. We managed to run the whole could deduct the charitable contribu­ CONCLUSION OF MORNING Federal Government on those two tion from their tax; venture capital BUSINESS sources of money. No income tax, no would not invest in risky ventures nationwide sales tax, other than a few unless they had a capital gains differ­ The PRESIDING OFFICER. Morn­ of these excises, no real property tax ential. ing business is closed. at the national level, no personal prop­ Each group has their own special tax erty tax at the national level, no interests, and they are perfectly well­ TAX REFORM ACT OF 1986 income tax, corporate or individual. meaning groups-when you go Then in 1913, we passed a corporate The PRESIDING OFFICER to reform the Internal that stage, apart from deductions for Revenue laws of the United States. greedy special interest. They ap­ State taxes paid and one or two other peared. The Senate resumed consideration very minor deductions, we had no per­ of the bill. sonal dependent deductions, no medi­ The League of Theater Producers in Mr. PACKWOOD addressed the cal deductions, no charitable deduc­ New York were worried about continu­ Chair. tion, no differentiation for capital ation of legitimate theater in this The PRESIDING OFFICER. The gains, because, frankly, nobody cared. country. chairman of the committee is recog­ If you made $1 million, and very few The National Association of School nized. Americans did, but assuming you did, Boards were worried we would take Mr. PACKWOOD. Mr. President, I you were in the 7-percent tax bracket. away the deduction for real property suggest the absence of a quorum. You paid $70,000 to the Federal Gov­ taxes. The National Collegiate direc­ The PRESIDING OFFICER. The ernment and you had $930,000 left. tors were worried that, at an 80 per­ clerk will call the roll. From that you could make whatever cent level on entertainment allowance, The bill clerk proceeded to call the donations to charity yo wanted or many college town businesses would roll. whatever investments you chose. not buy as many tickets as they had Mr. PACKWOOD. Mr. President, I An interesting thing happened in been buying and that the colleges ask unanimous consent that the order 1917. When World War I started, we would not have as much money to of the quorum call be rescinded. suddenly had a great need for money spend on men's sports and women's The PRESIDING OFFICER. With­ that we never had before. We raised sports. These are organizations that out objection, it is so ordered. the rate rather significantly. The top no one in his right mind calls greedy Mr. PACKWOOD. Mr. President, we individual rate in 1917 went to 67 per­ or a special interest. But in every case, had many opening statements, last cent. Bear in mind it had been only 7 they were worried about something. Wednesday. I was encouraged to see percent 4 years earlier, but because we Again, none of these interests is evil that in this Chamber both liberals and were trying to win World War I and or greedy. Most of them are trying to conservatives, Republicans and Demo­ we needed the money, and we did not further what most Americans would crats, those representing principally believe in excessive debt financing in say is good. We think it is good if you rural States and those representing those days, we raised the rates. give to your church; we think it is principally urban States all spoke in good if you join the YMCA or play favor of the bill in its general concept D 1410 basketball there each week. We think and preferred to have no amendments. A 67 -percent rate is high enough to it is good that you support the Boy I was very encouraged when we were make a world of difference. If a person Scout camp that you enjoyed when at the White House for breakfast last made $1 million and he paid $670,000 you were a child. We encourage health week with the President that both of it to the Federal Government, he insurance, we encourage charitable de­ Senator LONG and Senator BYRD indi­ might be less inclined to be generous ductions, we encourage everything cated that they hoped this bill might to charity than if he paid only 7 per­ through the code. pass 100 to nothing. It is very encour­ cent to the Federal Government. So We got to the point where we were aging to have those statements coming we put in the charitable deduction. It making all kinds of business deduc­ from the Democratic minority leader, said you could deduct your contribu­ tions through the code. And we were Senator BYRD, and the ranking tion to charity before you figured your worried about the kind of business de­ member on the Finance Committee, tax. ductions we should continue to make. Senator LoNG. World War I ended. We kept the As you look at the code, you will see Since it has been 5 days since we rates relatively high, did not bring preferences existed at one time for have had the opening statements, I them down. So in 1921, we added the real estate, then dropped off, then in­ would like to review briefly why the capital gains tax. The rate was 12.5 creased a little. Finance Committee has attempted to percent for capital gains. Senator LoNG, our distinguished mi­ come forth with the bill which is now Then, during the 1920's, interesting­ nority leader on the committee, who before us. ly, we started to ·lower the rate of tax. has been in the Senate since 1948, will We should go back and trace the his­ It had actually reached a high of 73 tell you that in his career, he has tory of the income tax. We did not percent. We started to lower it, but voted three times to put in the invest­ have one in this country for the better even though we started to lower it ment tax credit and three times to part of a century and a quarter. It was again, we did not get rid of the deduc­ take it out. Every time, it ·was done at initally held to be unconstitutional by tions. the request of a President in a tax June 9, 1986 CONGRESSIONAL RECORD-SENATE 12995 reform bill. He loves to humorously so people of immense wealth will pay theory if you stand with one foot on a say, "Now, you just tell me: When was more tax. However, when you are block of ice and one foot in some hot it tax reform and when was it not tax trying to knock out those special privi­ coals, on average the temperature is reform?" He even says in one particu­ leges in the law that allow the General all right. But that is only on average. lar situation he voted to put the in­ Dynamics and General Electrics, that On average, ev~ry individual tax vestment tax credit in and voted to make billions of dollars and pay no group classification-and that means take it out under the same President. taxes-those groups that we are at­ zero to 10, 10 to 20, 20 to 30, 30 to 40- So we have had these fluctuations of tempting to bring into the tax system that is the way the Internal Revenue favoritism, whether it be for social to have them pay taxes are naturally Service and Treasury break them policies like health insurance or for reluctant to be brought in. You start down-every single group gets some­ business investment policies. to do it and immediately out go the things of a tax cut. The lowest income Last summer, however, we had 36 telegrams to your constituents from groups get the highest percentage tax days of hearings in the Finance Com­ the Washington office of whatever cut. It is greatest for those in the zero mittee, and those hearings went from group you may be offending. Back to 10, next greatest in 10 to 20, next 2 to 6 hours a day. At the end of those come the letters, telephone calls, and greatest in 20 to 30, next greatest in 30 hearings, I asked one of the staff to telegrams from these people and none to 40. But every group on average gets put together for me a list of the wit­ from the general public. some cut. · nesses and the groups they represent­ What we hoped to find was a There are two exceptions that you ed. Not the testimony; I had had an method of changing the code that can say without any question do not opportunity to read the testimony. I would allow us to lower the rates so get a tax cut. The first are corpora­ just wanted their names and whom far but to lower it principally by clos­ tions that have been paying no taxes they represented. I tried to go through ing loopholes. that list to see if I could find any in­ and making profits. They will pay terest group-and I mean that in the 0 1420 taxes. And that is not even an average. best sense, not the worst-in America The only way we could finally do it You can simply say now under this bill that was not represented. I could not at the end was to almost close all loop­ it is impossible, if you are a profitmak­ find one. holes on individuals. I mean almost all, ing corporation, to escape taxes. If you Sometimes you could not have ev­ whether it is passive losses in real are a corporation and you are making erybody testify, so rather than having estate, which is a tax accountant's profits, we do not care what the law somebody from General Motors, some­ term for artificial losses, paper losses, has been in the past; you will pay body from Ford, somebody from as they call them, or investing in taxes now. Chrysler, and somebody from Ameri­ cattle feeding operations or investing Second very, very wealthy individ­ can Motors, you might have one in greyhounds. They have wonderful uals who have been sheltering their person representing the automobile in­ ads; you can own your own greyhound. income in a variety of legal, and I dustry. But I could not find an interest I do not know if people investing have want to emphasize legal, tax dodges group that was not represented-not ever seen a greyhound race or not, but that have been put into the law over low-income women, not high-income you can own your own greyhound and the past 20, 30, 40, 50 years will pay tax shelters, not bankers, not labor, get an up-front advantage and set it tax. If they have been sheltering their not charities, or ballet societies-they off against your income. income, if they have been making were all there. We closed almost all of those. And $100,000, $150,000, $200,000 $250,000 What we discovered is, first, the in­ by hitting them all, some were not and paying less taxes frequently than terest groups were afraid of losing able to say, "We are losing our advan­ somebody that makes $20,000 or their preference because they have tage but you are letting other tax shel­ $25,000 or $30,000, those wealthy indi­ had it so long they cannot imagine ters keep theirs." By bringing them all viduals' taxes will go up. But for the what it would be like to be without it. down, we raised almost $50 billion in rest of the Americans on average this Second, they would be afraid that this bill which we could use to then bill is a boon. they might lose their tax preference lower individual rates. First, about 6.5 million working poor but their competitor might keep its Second, we looked at the business are taken off the tax rolls altogether. preference. A good example-coal and side and we shifted taxes that are cur­ These are people who are making oil and nuclear and hydro and natural rently on individuals to business to the about $12,000 a year, $12,500, $13,000. gas are all alternative methods of gen­ amount of about $100 billion. The They are right at the poverty line. It erating electricity. All of them in one shift of income is especially notable in is absolutely outrageous that people form or another have some prefer­ the minimum tax. Under current law, making that amount of money should ences in the Tax Code. Sometimes the corporate minimum tax over a 5- be paying Federal income tax. They they are identical preferences for all year period will raise about $2.5 bil­ will be off the tax rolls. And I want to the industries, but on other occasions, lion. Under the Senate bill, over a 5- emphasize these are not people on wel­ they are not. Each business within any year period it will raise about $35.5 bil­ fare. These are people who are work­ particular industry is afraid that they lion. That gives you a rough idea of ing. They are more often women than might lose their tax preference which the magnitude of the loopholes we men. They are often doing household would put them at a competitive disad­ closed on the corporate side. work and they are making $12,000, vantage. So first, they fight tooth and With that we are able to take rough­ $13,000 a year. They are often heads nail to keep every preference they ly $150 billion and use it to reduce in­ of households with children. They will have. They are used to it, they like it, dividual rates. And here is where I be taken off the tax rolls. it is the devil you know rather than want to be careful so that everyone Second, I have already talked about the devil you do not. So they fight to who is listening to this debate under­ the effective corporate minimum tax keep it. Second, they fear they might stands. First I am going to talk about that guarantees that never again will lose theirs but somebody else who is a averages, and you want to be careful we see stories about multimillion competitor does not lose his. because no one is exactly average. If dollar profit corporations paying no The general public, who we are you have ever spoken to an audience taxes. trying to help, is inclined to more or and you were to say, "Will everybody Third, we have closed down $50 bil­ less say, "Sure, sure, when the bill is here who is average please raise their lion in individual tax shelters. all done, I will look at it and see if it hands," nobody raises their hand. Fourth, we have been able to lower helps me or not." So as we are going Nobody thinks they are average. Aver­ the rates to two rates for individuals, along passing amendments one at a ages are aggregate numbers where you 15 percent and 27 percent. And again I time, trying to knock down privileges, add everybody together. I suppose in am going to speak in terms of averages 12996 CONGRESSIONAL RECORD-SENATE June 9, 1986 and I am going to speak in terms of Senate will pass it unscathed and let stock exchange elsewhere. I think cer­ how much income you make, not what us go to conference with the House, tain preferences should be given them. tax lawyers call taxable income or ad­ with the most dramatic, probably the While this particular bill lowers the justed gross income. most radical but without question the rates for individual taxpayers and for If you go out and you ask somebody most fair piece of legislation that has corporations, except, as the distin­ who is working at the mill, "How gone through this Congress in the last guished chairman has pointed out, for much do you make?" they might say, half-century. I yield the floor. those who have been able to have tax "$6.50 an hour," or they might say, Mr. BOSCHWITZ addressed the preferences, tax shelters, tax loop­ "$18,000 a year." They do not say, Chair. holes-call them what you will-who "Well, my taxable income is." So for a The PRESIDING OFFICER. The have been able to protect or shelter all family of four that does not itemize, Senator from Minnesota [Mr. BoscH­ their income, they will pay more, and that takes their personal exemptions, WITZ]. justifiably so. Frankly, I do not think which we now raise to $2,000 under Mr. BOSCHWITZ. Mr. President, I that a top of 27 percent will particu­ this bill, $2,000 for the man, $2,000 for just appeared on the floor and I lis­ larly injure them. As a matter of fact, the wife, $2,000 for each of the chil­ tened to my friend and colleague from I think they will be energized by that dren-and we raise the standard de­ Oregon speak about the tax bill, for rate. duction for that family to $5,000-for which he has such great responsibility, Nevertheless, in the case of capital the average family of four that does and a tax bill that I intend to vote for gains, the rate goes up from 20 percent not itemize, they will have to be when it comes to final passage in the to 27 percent, which is a 35-percent making $42,500 before they go above Senate. As he knows, and as I have rise. For a married person with an the 15 percent bracket. That is rough­ said to him privately, I have joined the income between $75,000 and $145,000, ly 85 percent of all the taxpayers in vast number of people who have con­ this country who will be at the 15-per­ the rate goes to 32 percent, which is a cent level. People who are now paying gratulated him for bringing this bill to 60-percent increase in the capital gains 25, 30, 35 percent are going to have the floor because I must say that I rate, with no distinction being made their taxes go down to 15 percent. never expected, as a Senator, to vote for a capital gain of a long-term or Fourth, as far as the tax rate for for a bill that had just two tax brack­ short-term duration, wherever that is corporations is concerned, the maxi­ ets, that had just two rates, that had a made. mum rate is now 46 percent. The max­ maximum rate of 27 percent. I say to the chairman that I think that is not so bad. I think it would not imum rate under this bill drops to 33 0 1430 percent. The way we were able to do be so bad in the event that the asset that is with the investment rax credit. Having been an entrepreneur and a were over a period of time so that in It is almost a dollar-for-dollar ex­ taxpayer for many years, together the event the asset was lowered in change. We eliminated the investment with my family, if the tax law is sup­ value by inflation, that would not be tax credit for business. We used the posed to make the entrepreneur and taxed as ordinary income, or in the money that that produces for the Gov­ the citizen just bring his pants up a event there be an exclusion of 25 or 26 ernment to offset the lowering of the little faster and draw them up and hit percent, so that the 20 percent we rates from 46 to 33 percent. And most the floor running a little harder in the presently have on capital gains would businesses think that that is a fair morning, I think this tax bill is going be retained. tradeoff. to achieve that. I will talk to the chairman and to Next in terms of simplicity, because If the tax bill is to really make the the other Senators about that as we we have wiped out many deductions wheels of industry and the wheels of proceed on this tax bill, because I and because we have lowered the rate the economy turn and flow so that, as think that is a particularly good tax to 15 percent, many more people will Jack Kennedy used to say of the econ­ policy. now find it more advantageous to just omy, as it gets better, all ships ride The chairman stated at the begin­ take the short form, the standard de­ with the tide, I think they never had ning of his speech that people began duction and their personal excemp­ an opportunity to participate in a tax to think-! believe those were the tions, than to itemize. Currently about bill that will do more of that than the words-that they could not exist with­ 60 percent of the taxpayers do not tax bill that the distinguished Senator out these tax preferences; and I agree itemize. They just take the short form. from Oregon, together with his col­ that they can exist very well without It is estimated that under this bill league from Louisiana and their col­ those preferences. Many thought that about 80 percent of the taxpayers will leagues, have brought to the floor of certain types of activities would not not itemize; they will file the short the Senate. change unless those tax preferences form. So that is a move toward sim­ If it does go through the Senate un­ existed. I share the chairman's opin­ plicity. scathed, the Senator from Oregon ion that those kinds of economic ac­ So overall what I can say about this knows that I would hope that in the tivities will be oiled, will be height­ bill is that, one, it is fair on average to area of capital gains, it would get a ened, because of lower tax rates. every working person. little scathed, either in conference or Every time we have had tax rates Two, it closes the loopholes for perhaps here on the floor; because, as lowered, people in the highest brack­ those individuals who for years have he has indicated, the history of tax­ ets have paid more dollars in taxes. escaped paying any or very much in ation in the United States is that cap­ Every time we have had tax rates low­ the way of taxes by using tax shelters. ital gains, except, I think, at the very ered, people in the highest brackets Three, it lowers the rates dramati­ beginning, when the rate on all have paid a larger share of their cally for individuals and corporations. income was very low, 6 or 7 percent­ income and a larger share of the total Four, it insures that those great cor­ except at that very beginning, capital tax take of the Federal Government porations of extraordinary wealth and gains have always been given, for good than they did under higher rates. immense profits that have paid no cause, a different kind of treatment. When I went into business as a taxes will pay taxes. This particular bill does not distin­ young entrepreneur in 1963, the top Now, Mr. President, that is a good guish between a long-term capital gain tax rate was 91 percent. Ninety-one bill. It is a bill that I am proud the Fi­ or investments that are made for the cents of every dollar, after you got to a nance Committee reported. It is a bill creation of new businesses and new certain bracket, went to the Federal that I am proud the Senate is consid­ jobs-it does not distinguish between Government. Then the State govern­ ering but, more importantly, this is a that and an exchange that might take ment took a little nick. good, this is a fair, this is an equitable place on a futures contract on a com­ In the case of Minnesota, they took bill for America. I hope that the modities exchange in Chicago or on a 14 percent of the remaining 9 percent. June 9, 1986 CONGRESSIONAL RECORD-SENATE 12997 So that the taxpayer who was particu­ woon; and the majority leader. They What did they do prior to 1921? larly productive, kept about 6.5 per­ have brought· us the truest tax reform There was no capital gains tax prior to cent or 7 percent of everything he within my experience as a legislator, 1921 in this country. You want to earned. Anyone who would not shelter which is of relatively short duration, know what the risky ventures were? his income to take advantage of what­ or as a businessman. Andrew Carnegie said "I can make ever loophole he could find would be a As I look back on my career as a steel rail cheaper than it is being fool under those circumstances. So the businessman and entrepreneur, I made." He formed United States Steel idea of using loopholes really was think this would have energized me with no capital gains and in a very brought about by the higher tax rates. and would energize others like me. short time cut the cost of steel rail by In 1963, at the suggestion and pro­ 88 percent. It was probably the key posal of then President John Kenne­ 0 1440 that allowed Mr. Hill and Mr. Harri­ dy, rates came down to 70 percent on I say, in conclusion, that if the tax man to race across the country com­ unearned income and 50 percent on law is to energize investment, if the peting with each other to build those earned income. tax law is to energize the taxpayer to great railroads. Or the original John Interestingly, in an article that ap­ go out and make the wheels of the Rockefeller when he said, "I can cut peared in the Wall Street Journal in economy turn, indeed, I have seen no the cost of kerosene" and managed to 1978, they traced the collections in finer piece of legislation than this cut it in 18 months by 63 percent. dollars from the people in income piece of legislation that has been That was a venture capital operation brackets of $100,000 and above, and brought to the floor by the distin­ as was Ford Motor. the increase in dollars paid by those guished chairman of the Finance Com­ Why would anybody put money in folks was really remarkable. The same thing happened again in mittee and his associate, Senator Ford or United States Steel or Stand­ 1981, when this President lowered the LoNG, and the majority leader and ard Oil of America in those days when rates from 70 percent to 50 percent. others. So I congratulate them. they were risky and you could just as I know that probably the Joint Tax While I will discuss with them the well put your money in the local bank Committee and its computers have not ideas of passive losses and phasing in or haberdashery or something else factored this in, but I would suggest of those and the ideas of capital gains where you assumedly would be guar­ that we are going to receive a very and perhaps also the retirement ac­ anteed a safe return? large increase in revenues from the counts, nevertheless, in the final anal­ I think the reason you put in those people in the highest brackets and ysis this is the finest tax bill that I ventures is because, first, you had a that many of them, as the Senator have ever seen. This is the first real trust and a faith in the person who from Oregon pointed out, who have tax reform measure that I will have was managing them that they were not assumed their fair share of the tax had the occasion to vote upon in the going to make money; second, you burden will now do so. I suggest that 71f2 years that I have been here in the knew that if you hit you would make they will do so very willingly; that is, it Senate, and I am very pleased to be great money and so you were willing no longer will be in their interest to part of the Senate at this time with to run the risk that you might hit, you shelter their income. this bill before us. might lose, in the hopes that if you hit Twenty-seven percent-and it goes I yield the floor. it big you won big. all the way back to dollar No. 1, with Mr. PACKWOOD. Mr. President, I As a matter of fact, the railroads are the exception of deductions-but 27 thank my good friend from Minnesota. a good example. More people lost percent plus the 14 percent for the re­ He had a few comments about capital money in this country on the railroads mainder, in the case of a Minnesotan, gains. than made money. The Hills and the would amount to approximately 37 Let me talk about capital gains for a Harrimans made it by the pot full. But percent. I suppose that Minnesota, moment because we had a fair number all of our States, and especially the like other States, will now lower its of witnesses talk about it and the need Western States, because that is where rates in response to this bill, so that for what they call the differential, the great race was to go across the perhaps 35 percent will be the total that the people will not invest in risky continent, are strewn with old tracks income tax take. business if the return is no greater and old locomotives and narrow-gauge The experience over the years, as re­ than investing in a safe business. railroads and people that went bust ported by the Treasury, indicates that One witness testified many times on and people that lost their shirts be­ people simply do not shelter or do not behalf of the capital gains differential. cause they hoped to hit it big and hit shelter as much. So I think that is a He has also testified over the years in nothing. very positive aspect of this Tax Code. favor of consumptions taxes, value­ So, can we do without a capital gains I know there will be amendments added taxes, which I oppose. It is nei­ tax in this country? I think we can if with respect to the IRA's. I know ther here nor there. He favored lower­ the rates are kept low enough and this there will be amendments or discus­ ing the individual rates. is a pledge to the Senate. There was a sions about lengthening the transition I said to him let us say Mr. Jones: tipping point. And you could see it in period for the deductibility of passive "Mr. Jones, you favor a value-added the committee. We started out trying losses, losses that were incurred by tax?" to get a rate of 25 percent. We could taxpayers who operated under the "Yes." not because to get that rate we would scope of the code as they then found "And you are in favor of using it to have to put a limit on the deductions it. lower the individual rates?" of State income taxes or State and I know there will be some sugges­ "Yes." local real property taxes, and we tions about capital gains. I will be par­ "But no matter how low we lower would not and did not do that. You ticularly active with respect to capital them you think there has to be a dif­ gradually see it going up-25, 26, 27. gains and the deductibility of passive ferential between the regular and cap­ When we hit 27, that was the point losses, seeking to get a little longer ital gain rate in order to get people to at which a number of members said, transition period for those losses. But, invest?" "You go up one more point and I have win or lose on those issues, I am going He said, "Yes." to insist upon a differential for capital to vote for this tax bill. I said: "What would happen if we gains." If you put in the differential I see in the Chamber the three prin­ got the individual rates down to zero? then you lose money and you have to cipal actors in the business of tax­ Would there then be a differential if raise the rates to get more money and ation: the Senator from Louisiana you had no income tax at all? Why you raise the rate so you have to raise [Mr. LoNG], who has had the longest would people invest in risky ventures the capital gains differential, and it association with this; Senator PAcK- rather than safe ventures?" goes up like this. 12998 CONGRESSIONAL RECORD-SENATE June 9, 1986 I noted in the Wall Street Journal recess. We have not been in session all The clerk will continue to read the on Friday that Martin Feldstein, who last week. We started discussion on resolution. previously had been somewhat critical this bill on Wednesday, and only one The assistant legislative clerk re­ of this bill, now says this bill will be amendment has been filed. sumed reading as follows: better for capital formation than I know that Senator LONG, who Whereas, in winning forty home games either the current law or the House worked these bills much longer than I and losing only one home game during the bill, and that makes almost 100 per­ have, is surprised there is only one 1986 regular season, the Boston Celtics have cent in accord of what we call the amendment filed to date. set a new National Basketball Association principal economists of this country Another thing our reading clerk told record for regular season home court victo­ today. They think this bill will be me last week it is very significant not ries; great for capital formation overall. only is there only one amendment Whereas, K.C. Jones, in his third season You balance off the loss of the capital filed, but when he went out in the as coach of the Boston Celtics, has won his gains, on the one hand, versus the re­ anteroom there were no lobbyists. second world championship and has won more than sixty games in each of his three th~ They are gone. They by and large duction in corporate rate and seasons; better depreciation than we have have given up on this bill and they re­ Whereas, Larry Bird of the Boston Celtics under current law. I do not mean just alize the Senate is serious in trimming was named the Most Valuable Player in the the House bill. I mean better deprecia­ loopholes and making sure corpora­ National Basketball Association in 1986 for tion under the current law. tions pay taxes and those of wealth the third consecutive season; So from the standpoint of business pay taxes. Whereas, K.C. Jones, Larry Bird, Dennis venture in this country this bill will In response to the majority leader, I Johnson, Robert Parrish, Kevin McHale, work and it will work without a capital think there is a good chance we will Danny Ainge, and Bill Walton have made gains differential so long, and this is finish it relatively soon and, speaking the Boston Celtlcs of 1986 one of the great­ critical-there is going to be an for myself, I am ready for amend­ est professional sports teams of all time: amendment offered on the floor-as ments. Now therefore be it we do not go above that 27-percent Mr. DOLE. I certainly thank the dis­ Resolved, that the Senate of the United States of America joins with basketball fans rate. tinguished chairman. in Massachusetts and across the nation in If we do, if we go to conference, we As I indicated earlier this morning, honoring the Boston Celtics for winning the have to stand firm on that rate be­ we would honor no record votes after 6 National Basketball Association Champion­ cause if we do not, if we go above 27, o'clock, but if there are Members who ship for 1986. we are going to unwind not just the have amendments, I am certain both Mr. KENNEDY. Mr. President, in capital gains elimination but dozens of Senator PACKWOOD and Senator LONG other things in this bill that are pre­ my 24 years in the U.S. Senate, I have will be perfectly willing to entertain had numerous occasions to congratu­ mised on the fact that people will be those amendments. best motivated when they invest in en­ late the Celtics on their many champi­ terprises they know or in managers 0 1450 onships, and I am as pleased and they trust and invest in things that Mr. KENNEDY. Mr. President, I do proud today for the Celtics and for all will return a profit on their money, not want to interfere with the orderly their fans as I have ever been. not just return a tax loss. consideration of the tax reform legis­ Through the years, we have seen So I am deeply appreciative of the lation but, anticipating that there is great Celtics teams with great players comments of my good friend from just one pending amendment and no such as Bill Russell, K.C. Jones, Bob Minnesota and delighted to have his one is prepared to speak on it, I would Cousy, John Havlicek, and Dave support. I will be happy to talk with like to take just a moment of the Sen­ Cowens. him about the issues he is concerned ate's time on a different matter. But this 1986 Celtics team will rank with, but I hope we can pass this bill in history with the best of the Celtics as it is, with no amendments, get it to and with the greatest professional COMMENDING THE BOSTON sports teams of all time. the House and see what we can do in CELTICS ON WINNING THE NA­ conference. Only an outstanding team could TIONAL BASKETBALL ASSOCIA­ have beaten the Houston Rockets in Mr. DOLE. Mr. President, I would TION CHAMPIONSHIP FOR 1986 just like to thank all of our colleagues this champship series. The Rockets de­ on the floor today, and I would hope­ Mr. KENNEDY. Mr. President, I serve great credit for their own highly and I think it is the hope of the man­ send to the desk a resolution and ask successful season, and they have ex­ agers-we might complete action on for its immediate consideration. traordinary promise for the future. the bill this week. The PRESIDING OFFICER. Is Basketball fans around the world I do not think that is an exceptional there objection? If there is no objec­ are well aware how Celtics President request because if we start early to­ tion, the clerk will report. Red Auerbach lights up a victory cigar morrow and stay not late but get in a The assistant legislative clerk read at the end of each Celtic win to let the full day tomorrow, Wednesday, Thurs­ as follows: world know that the Celtics are in day, and, if necessary, Friday, it seems A resolution commending the command. Yesterday, Red lit up an­ to me we might be able to complete Boston Celtics on winning the National Bas­ other championship cigar. The Celtics action on this bill, and it would really ketball Association Championship for 1986. are champs again, and I commend Whereas, on June 8, 1986, the Boston them for their incredible season. help the leader in working out the Celtics won the National Basketball Associa­ schedule for the balance of the period tion Championship for 1986; I hope that the Senate, in its good before the June 27 recess. Whereas, since 1946, under the leadership judgment and sound wisdom, will Mr. PACKWOOD. A parliamentary of Red Auerbach, the Boston Celtics have accede to passing this resolution this inquiry. won 16 World Championships, three times afternoon. The PRESIDING OFFICER. The as many as any other team in the history of Mr. DOLE. Mr. President, I watched Senator will state it. the National Basketball Association. the game. Is there any way I could be Mr. PACKWOOD. Will the Chair Mr. KENNEDY. Mr. President, I ask included in that resolution. [Laugh­ tell me to date how many amendments unanimous consent, as wonderful as it ter.] we have on file on this bill? is, that further reading of the resolu­ Mr. KENNEDY. This, like the tax The PRESIDING OFFICER. The tion be dispensed with. bill, is nonamendable. Chair will state there is one amend- Mr. LONG. Mr. President, I object. Mr. DOLE. Mr. President, I was ad­ ment currently on file. · [Laughter.] vised the Senators from Texas might Mr. PACKWOOD. That is very en­ The PRESIDING OFFICER. Objec­ want a rollcall, so we better vote couraging. We filed this bill during the tion is heard. before they arrive. June 9, 1986 CONGRESSIONAL RECORD-SENATE 12999 Mr. LONG. Mr. President, I am sat­ ferred compensation or a retirement certainly show up in Florida, particu­ isfied that the Senator is entirely cor­ plan or with a whole host of tax shel­ larly in their older years because we rect in what he said. The Celtics are ters?" have such a high rate of tax in Minne­ truly one of the great teams of all BILL said that that was his first ex­ sota, and there is none at all in Flori­ time and they deserve a commenda­ perience in realizing how you could da. tion in the resolution to be heaped shelter what was then a relatively I would suggest to my friend from upon them. I am happy to vote for the good-sized income. So I guess we all Oregon that this bill really does not resolution. learn, in one way or another, the Tax intend to raise tax rates but yet, in the • Mr. MITCHELL. It gives me enor­ Code and its intracacies and its favor­ case of capital gains, it does, and the mous pleasure to join in cosponsoring itism. rates have to be competitive not only this resolution to commend the mag­ Senator BRADLEY was humorous in with other parts of this code, but with nificent Boston Celtics for a superbly the Finance Committee one day when other nations. I think the bill makes won victory in the NBA championship we were talking about retirement us very competitive internationally as series. plans, how many different ones exist­ far as the individual is concerned. Maine joins in celebrating the per­ Keough plans, 401(k)'s, Social Securi­ As I understand it, there is no coun­ formance of New England's team. Re­ ty, IRA's. He said, "I will go you one try in the world other than perhaps gardless of the differences that may better. How many people here have an Hong Kong that has a lower rate of divide New Englanders on other issues, NBA pension plan." And he has an taxes for the individual. However, with we are a region united when it comes NBA pension plan. I did not ask him respect to capital gains, there are to the Celtics. how much it was, but my hunch is it many countries that have no tax at Sunday's victory over the Houston may dwarf all the other pension plans all, or have a tax that is substantially Rockets vindicated New England's he has put together. lower, and most of the large industrial faith in the Celtics. It gave us an un­ But it just shows that the Tax Code nations would be included in that­ matched performance by Larry Bird. involves everything every place, even that have either no capital gains tax It was a fitting finish to a recordmak­ the Boston Celtics. or have a capital gains tax of 5, 6, or 7 ing series of wins for the Celtics this· Mr. BOSCHWITZ. Mr. President, percent. and that certainly the empha­ season. what a shame to return the Senate to sis could well be placed to some degree As a dedicated Celtics fan, I salute more mundane considerations than in those nations as well. Larry Bird, the most valuable player; basketball. I certainly hope that my Kevin McHale; Robert Parish; Dennis friend, the Senator from Massachu­ There are other considerations-po­ Johnson; Danny Ainge; Bill Walton; setts, does not bring all those basket­ litical considerations, considerations as K.C. Jones; Red Auerbach; and all of ball players here. I am about 6 feet 2 to stability, and so forth. But the in­ the Celtics-past and present-for the inches, but I always feel somewhat set centive could be well placed to invest 16 flags which fly over the parquet back when I see these guys come along elsewhere, and our code cannot just be floor of the Boston Garden. This may and they are about 6 feet 10 inches or looked at within the scope of our 50 be the best one yet. Long may they 7 feet, and even more these days. States. The incentive to invest else­ reign.e I did not follow the basketball series, where is being heightened because The PRESIDING OFFICER. If the tournament. Unfortunately, Min­ again I say the capital gains tax, while there is no further debate, the ques­ nesota teams, in recent years, have not all other rates are coming down, are tion is on agreeing to the resolution. participated in virtually any tourna­ going up 35 percent with the 27 -per­ The resolution GIFT TAX.-Section 2522 as subsection and by in­ DOLE; to MALCOLM WALLOP, my great ue performing abortions, financing serting after subsection (f) the following friend from Wyoming; to LLoYD BENT­ abortions, or providing facilities for new subsection: SEN; to BILL BRADLEY. We had best the performance of abortions-for "(e) DENIAL OF DEDUCTION FOR CONTRIBU­ heed what they have to share with us those who wish to continue in their TIONS TO ORGANIZATIONS WHICH PERFORM, about what happens when we begin to present mode, to lose their special tax FINANCE, OR PROVIDE FACILITIES FOR ABOR­ TIONS.-No deduction shall be allowed under tinker with the machinery of this bill. status. Other hospitals who perform this section for gift to or for the use of any Finally, we get away from "business abortions and all of the other proce­ organization which Performs, finances, or as usual" in the Tax Code and get to dures generally associated with hospi­ provides facilities for any abortion performed after the date of the enact­ enthusiasm for this measure. They yield the floor. ment of this Act. may not have a detailed understand­ EXHIBIT 1 (2} SUBSECTION (a).-The amendment ing, but they believe that it is simplifi­ At the appropriate place in title XVII, made by subsection shall take effect on cation and they are ready to do it only insert the following new section: September 30, 1986. if we protect those tax rates. (3) SUBSECTION (b).-The amendments SJo~C. . J)Jo~NIAL OJo' TAX HJo;NJo~Jo'ITI' Jo'OR OR<;ANIZA- The 15 percent and the 27 percent, TIONS WHICII PJo~RJo'ORM. Jo'INANCJo~. OR made by subsection (b) shall apply to es­ PROVIIlJo~ Jo'ACILITIJo~S Jo'OR AHOR­ tates of decedents dying, and transfers, taking away the array of rates from 11 TIONS. after September 29, 1986. percent to 50 percent, 14 of those­ (a) DENIAL OF TAX-EXEMPT STATUS.-Sec­ Mr. SIMPSON. Mr. President, I those things have been shared with tion 501 is amended by redesignating subsection as subsec­ ments of my friend from New Hamp­ 0 1640 tion and by inserting after subsection shire, the senior Senator is amended by of their tax-exempt status. It will be a watch-always doing something for adding at the end thereof the following: serious debate and be very interesting "the little guy" and then the money "For purposes of this section, such term goes to the biggest, heaviest hitters in does not include a contribution or gift to or for the Senate to consider as we for the use of any organization which per­ always have a lot of anguish, a lot of America. We do that with veterans' forms, finances, or provides facilities for any pain, a lot of heavy debate when we benefits; we do it with medical care; abortion (within the meaning of section come to anything that has to do with we do it with Social Security. We are 501(m))." abortion. It will come again. always taking care of "the little guy" (2) ESTATE TAX.- Before we conclude our activities and we take care of the big guys in (A) IN GENERAL.-Section 2055 (relating to today, I want to commend my fine col­ royal fashion. transfers for public, charitable, and reli­ Now, finally, we get to tax reform gious uses>. as amended by section 717, is leagues on the Finance Committee, amended by redesignating subsection (g) as particularly Senator PACKWOOD. I have and we are going to take care of the subsection and by inserting after subsec­ not had the opportunity on the floor little guy. We knock 6 V2 million of tion (f) the following new subsection: to say what a remarkable man he is them off of the tax rolls. That is "(g) DENIAL OF DEDUCTION FOR CONTRIBU­ and how he helped recruit me for this pretty good taking care of the little TIONS TO ORGANIZATIONS WHICH PERFORM, job. If I had known then what I know guy, I think. And then we also kind of FINANCE, OR PROVIDE FACILITIES FOR ABOR­ now, who knows? He is a superb gen­ hammer the big guy-minimum tax TIONS.-NO deduction shall be allowed under tleman and we are very fortunate to rates, 20 percent on the rich, 20 per­ this section for a transfer to or for the use of any organization which performs, fi­ have him in this role. I am looking for­ cent on corporations. That is what we nances, or provides facilities for any abor­ ward to his leadership and steward­ are told we want to do. I am ready to tion (within the meaning of section ship as we process the tax reform do that. But I think that the little guy 501(m))." measure. It is a historic effort, and a is going to come off pretty well here, (B) TECHNICAL AMENDMENTS.- bipartisan effort. only if we protect this very delicate (i) Subparagraph of section 2106<2> It is just as important to BoB DoLE package. Any tinkering with it is going is amended by in the Senate after serving here for for the little guy. striking out "section 2055(e)" and inserting in lieu thereof "subsections and (g) of nearly one-fifth of the entire history We are going to get to that IRA section 2055". of the U.S. Senate. I commend Sena­ debate, and Senator BRADLEY will be Subparagraph of section tor BRADLEY, who came here when I speaking on that, Senator PACKWOOD 2106<2>. as amended by section 717, is did. We have really a remarkable case and many others. But the huge per- 13010 CONGRESSIONAL RECORD-SENATE June 9, 1986 centage of IRA's is used by those with and that had nothing to do with what If we move up the income scale, we gross incomes above $40,000, and that party they are in. I think they have get to income class $20,000 to $40,000. I think is hardly anyone's true defini­ done a superb job and I hope many of Thirty-two percent of the American tion of the little guy. I am going to be us will stay right with them as we go taxpayers fall in this class, or about 32 listening to that debate carefully be­ through this exercise, and it will be million Americans. As you can see de­ cause I think, in the long run, even indeed a spirited debate. picted in this particular drawing, these though you lose deductibility if you Now, I believe the Senator from New middle-class taxpayers are out of the are in a rate now of 30 or 35 or 40, Jersey may have a comment. I see he hole, but they are right on the edge. whatever it may be, you are going to has brought with him some extraordi­ They do not have a lot of margin for be better off on that sharply reduced nary charts and I am ready to hear tax rate of 15 and 27 percent, which is about those, too. I will. My friend error. A serious illness, a catastrophe certainly lowering the value of that from New Jersey. of one kind or another, three kids to deduction as compared to current law. Mr. BRADLEY addressed the Chair. send to college in 5 years, or whatever, Keeping the tax deferral, keeping The PRESIDING OFFICER. The and they could indeed be back in the the inside tax buildup, I will not go Senator from New Jersey. hole once again. into those technicalities. Those will be Mr. BRADLEY. Mr. President, I The important point to be made by covered well. One of the things we lose thank the distinguished acting minori­ these three frames of the chart is that in my own State is the sales tax de­ ty leader, the Senator from Wyoming, 85 percent of the American taxpayers ductibility. In a State like mine where for his comments about the bill and earn under $40,000 in income-85 per­ we have no income tax, that is disturb­ for his thoughtfulness about what it cent. ing and yet if you look where the com­ means to the country and about the The median income in America­ mittee has taken us, we raise the difficulty in attempting to get the that means 50 percent of the taxpay­ standard deduction to $3,000 for single kind of support that was manifested in ers had more and 50 percent less-is filers, $5,000 for joint filers. We get the Finance Committee by a 20 to 0 $23,450. the personal exemption up to $2,000. vote in reporting this bill to the floor As we move up the scale, we see that So really, unless you are the "con­ of the U.S. Senate. The fact is tax 12 percent of the American people are sumer of the year," that is not going reform means that everyone is going in the $40,000 to $75,000 income cate­ to be very beneficial, if you take the to benefit in terms of getting a tax gory. From $75,000 to $200,000 is standard deduction. And I think that break and a better chance to prosper. is important to remember. about 3 percent. In the $200,000 cate­ If you are going to do balanced bill gory, as you can see by the man on the If the figures are correct as to those and get the overwhelming support who itemize, that advantage is only to that was manifested in the Finance top of the hill, are less than one-half the high-income, big-spending taxpay­ Committee vote, then you clearly need of 1 percent of all the taxpayers in ers who benefit most. I think in 1984, to provide benefits for all taxpayers. this country. less than 25 percent of the sales tax And so, Mr. President, I decided to We have 32, 21, 32, 12, 3, and 112 of 1 revenues collected by States were take the floor-! did not intend to percent. Eighty-five percent of all tax­ claimed as itemized deductions. I think speak-at this lull in the debate to payers earn under $40,000 in income. we want to remember that. return to a chart that I brought to the Mr. President, what does this bill do So the time has come. It, indeed, has Senate last week when I made my for the 85 percent of the taxpayers been said by everyone this is not a per­ opening statement on this tax reform who earn under $40,000 in income? fect bill, so that must thrill the spon­ bill. I would like to refer to the chart Let us take a family earning $20,000. sors. And it is not. There is no such simply because I think it is terribly im­ What is their life like? They live in thing as perfect legislation. It is odd to portant that we understand who the rental housing, more than likely. It is me how our constituents expect per­ taxpayers in America are, who is no doubt not air-conditioned. Their fection from us, especially those who paying the taxes, and what this bill idea of entertainment is not the three­ do not have any perfection in their does for each of these groups of tax­ martini lunch. Their idea of entertain­ own lives. payers. ment is going to a public park or to It is a great adventure. You expect As a matter of reference, let us just the public playground or to the public perfection in legislating but you do quickly go over this chart in order to beach. They eat more potatoes than not have it in your own life and the etch in our minds who are the taxpay­ meat. They drink beer instead of wine. more you do that the more you at­ ers. They ride the subway and the bus to tempt to shuffle that off on the Con­ As you see on this chart, this is work. They believe in America. They gress. I always say that there is no income class zero to $10,000 in income. hope their children will have a better such thing as the perfect bill, the per­ Those are who we refer to in this life. fect crime, the perfect mother, and country as the people who are living in Not surprisingly, Mr. President, this the perfect father, the perfect child. poverty. Now, oddly enough, about group, the $20,000 family, in most That is not the way it is. And it never two-thirds of them are kids under 25 cases claim no itemized deductions. will be here because, you see, we have years of age, and another large per­ about the same percentage of They do not have any loopholes to centage are elderly women living use. They claim no itemized deduc­ lightweights and heavyweights and alone; about 32 percent of the total doers and shakers and show horses tions. Well, what does this bill do for taxpayer population falls into the cat­ that $20,000 family? What this bill and workhorses as you do in the gen­ egory of zero to $10,000. And we tried eral population right in your own to depict in this drawing that they are does is double the exemption for each hometown because, after all, it is a in the hole. They are having a diffi­ dependent, each child, and gives a representative Government. You cult time. much more generous standard deduc­ would not want to leave out any of tion. those people among the 100 of us. So 0 1650 In other words, what this bill does is we should keep track of that, too. As we move up the chart, we find raise the threshold before that family I will be paying close attention and I that 21 percent of the taxpayers, or has to pay any income tax. It raises will be listening carefully to what the about 21 million taxpayers, earn be­ the threshold before they get any tax­ Finance Committee is sharing with us, tween $10,000 and $20,000. They are able income. It is a remarkable and I am going to support this chair­ the backbone ot' the country; they are achievement. At the same time it does man. I am going to support these 20 working class. They are still in the the doubling of the exemption and people who served this Nation admira­ hole, but they are surviving, and they raising the standard deduction, it bly in the package they put together are beginning to climb out of the hole. helps that $20,000 family. June 9, 1986 CONGRESSIONAL RECORD-SENATE 13011 What does it do for the people deep ty of taxpayers are in a unit that is a out. For the fixed-income elderly you down in the hole? It takes 6 million of two-earner couple. Interestingly, when have given them hope that they will them off the tax roles. you get above $85,000, you do not have be able to get by. For the young One of the sad aspects of our tax two-earner couples. Usually, one works couple that had the dream of home system is that in the last 6 or 8 years, and the other stays home or does ownership you have given them the more and more people in this category other things. hope that they will indeed own their pay more tax than do some people at What does the bill do for the that own home. For the unemployed work­ this category of income. That is no family? What it does is lower the tax ers you have given them hope that a longer the case here. We have taken 6 rate so that they will keep more of the · more efficient economy will mean a million people off the roles, and that money they earn. It reduces the mar- higher income growth and a prospect $20,000 family gets a doubling of an riage penalty. It essentially tells them of another job on the horizon. exemption and a much improved that because of the reduced marriage So, -Mr. President, I hope that we standard deduction, which means that penalty and the lower tax rate, in will entertain all of the amendments less of their income is taxed-and that, order for them to achieve economic se- that will be offered seriously, and I by the way, taxed at a lower rate than curity, they will not need to invest in know the distinguished chairman of in the current system. tax shelters. All they have to do is the Finance Committee, Senator PACK­ Let us take another family. Let us concentrate on what they do best, wooD, who has been the stalwart here take a family earning $35,000. More which is their profession. and who has really provided, I think, than likely, they own their home, but One might even make the argument unparalleled leadership on this issue they probably have 15 years on the that this is the classic yuppie family. in the body, will listen to all of the mortgage. This $35,000 family lives Even if they were going to pay more amendments and make his arguments. with a very strict budget. What might taxes, $100 or $150, in year 1, in years I hope ultimately we will be guided in that budget allow them to purchase? 2, 3, 4, and 5, in the long run, in the part by what this chart tells us about It would allow them to purchase for midterm, they would be much better who the taxpayers are in this country dad a suit every 3 or 4 years, maybe a off with the reform system of the and not forget what this bill does for couple of dresses for mom every 2 lower rates of tax and a much reduced each of the income categories depicted years, and allows them to get a new marriage tax penalty. on this chart, nor lose sight of the op- TV set every 10 years, a new refrigera­ So, Mr. President, in coming before portunity that it presents for the long­ tor every 17 years, a new toaster every the Senate today, I want to do several 33 years. They are not going to be too things in this lull in this debate, and term economic health of this country. I yield the floor. concerned about the loss of the con­ that is to try to get people to focus on Mr. PACKWOOD. Mr. President, sumer-interest deduction, because who the taxpayers are and how this they do not buy that much. They are bill benefits each income class. once more let me thank my distin­ not going to be hurt by the loss of the guished colleague from New Jersey IRA, because many of them have abso­ D 1700 who has taken the lead on this 3 112 or 4 lutely no stocks, no bonds, no financial Mr. President, we are going to hear a years ago. I have listened to him with assets. They are just trying to make it; lot of amendments offered on the some trepidation as he described how and if they get some extra dollars in floor. These will more than likely be he first tried to explain this Bradley­ the course of the year, they are going amendments that are thought to be Gephardt plan in an attempt to ex­ to buy a used car. important by the authors of the plain that indeed you could reduce So, Mr. President, what does this bill amendment and by the proposers of taxes but you had to give up some do for that family earning $35,000 in the amendment. cherished deductions. The initial reac- income? First of all, the bill provides There will be attempts to try to tion we got from the people was why lower rates of tax. Some individuals in change the bill in one way or another. can we not lower the taxes and close that class could be as high as the 28 ffitimately at some point in the debate the loopholes. percent or 33-percent tax rate under the proponents of the amendment will You have to explain that some of the current system. They are going to say, "And what this means to income the loopholes that are very, very well be in a 15-percent tax rate under this class $30,000 is this, $100 less or more identified, and indeed we are closing bill. in taxes or $120 or $130, or $140 or many of those in this bill, unfortu­ In addition, if they do not take ad­ whatever." nately produce only a teeny-weeny bit vantage of the standard deduction, Whatever they say, remember that of money on occasion, and if you they will be able to itemize their de­ is a snapshot of year 1. That simply really wanted to get the rates down, ductions for mortgage interest and for says that if this bill were in effect next you had to talk about tax shelters and property taxes, which, for the great year, given the tax returns that we minimum taxes and a variety of other majority of the American public, is the have available from 1983, how many things that produced great quantities only real investment they have-their winners and losers would there be and of money. If you are going to lower home. At the same time, that family where would they be, among which the bulk of the peoples taxes signifi­ earning $35,000 will be able to contin­ income classes. cantly or even a bit, you are going to ue receiving their health benefits tax What it fails to say is what will have to close loopholes that upper­ free. happen in year 2, 3, 4, 5, 6 and on out. income taxpayers use and close them So, Mr. President, there is no doubt That is what this bill addresses most as close to completely as possible. that this is a good bill for the $20,000 directly. Senator BRADLEY was the first one to to $40,000 income class, and particular­ What it means in terms of mid to see that. He deserves extraordinary ly for the $35,000 family to whom I long term is that you have reformed credit. I think because of his leader­ have just referred. the tax system. You have finally elimi- ship and a few others from the start 3 Let us move the income level. Let us nated some of those $400 billion loop- and 4 years ago, the rest of us have move up to the family that is on level holes, allowed the economy to func- seen the light and I hope before a fort­ ground. It is starting to run; no worry tion more efficiently and the market night is out we may have this bill about falling off the edge. They are in to allocate resources, and for each one through the Senate. pretty good shape, no hole on the ho­ of those income levels you have pro- Mr. SIMPSON. Mr. President, I rizon. What does this bill do for that vided some hope that they can control thank the chairman of the commjttee family, and who is that family? their own destiny. For the poor, for and Senator BRADLEY. -_ More than likely, a family earning the low-income person, you have given I have never abrogated my legisla­ $75,000 is a two-earner couple. In fact, them hope that if they work hard tive function, but I will be much like at income levels of $75,000, the majori- they will be able to pull themselves those in the coliseum, I think, during 13012 CONGRESSIONAL RECORD-SENATE June 9, 1986 the vote and if I see Senator BRADLEY constituents that we are not going to over current law. The bill provides us and Senator PACKWOOD going like permit our Tax Code to be treated as with an historic opportunity to create this-indicating-! will go that way. If some kind of grand lottery-a game of a dramatically more fair and effective I see them going like this-(indicat­ chance in which the rich and lucky Tax Code than we have at the present ing-I may well go that way. can escape taxes while the working, time. I intend to work toward that I will be listening intently to the middle-income taxpayer get stuck with end. debate as I hope all of us in the Cham­ the bill. ber will do. On this issue, at least, the bill rec­ Mr. GORTON. Mr. President, the ommended by the committee is a ROUTINE MORNING BUSINESS tax reform measure which the Fi­ major step in the right direction. By Mr. SIMPSON. Mr. President, I now nance Conimittee has recommended to imposing a stiff minimum tax it en­ ask unanimous consent that there now us is one of the most far-reaching, fun­ sures that large corporations and be a period for the transaction of rou­ damental, and important bills the wealthy individuals will no longer be tine morning business to extend not Senate has debated in years. As a able to avoid paying taxes through the beyond 5:15 p.m. result of that committee's willingness wholesale exploitation of tax prefer­ The PRESIDING OFFICER. With­ to pursue the kind of real tax reform ences. By repealing or restricting a out objection, it is so ordered. that cynics had dismissed as politically wide range of tax shelter provisions, unrealistic, we now have the opportu­ we will distribute more fairly the nity to address an issue which ranks in burden of paying for Government, and MESSAGES FROM THE HOUSE importance with many of the great de­ simplify the Tax Code considerably. At 12:08 p.m., a message from the bates that this Chamber has addressed And by taking 6 million poor people House of Representatives, delivered by throughout history. In the days ahead off the tax rolls completely, we will Ms. Goetz, one of its reading clerks, we can continue the Senate's tradition satisfy a basic criterion of fairness: announced that the House has passed of being the nation's great forum. People living in poverty should not be the following bill, with amendments, As I talk to my constituents about paying taxes, especially while wealthy in which it requests the concurrence this bill, it is clear that there are parts people are escaping them. Under this of the Senate: of which enjoy widespread support, bill that injustice of current law will S. 2251. An act to authorize the Adminis­ and other parts which engender strong be remedied. trator of General Services to convey proper­ opposition. Most often this is ex­ I do not pretend that passing these ty to the District of Columbia, and for other pressed in terms of support or opposi­ provisions will stop the erosion of con­ purposes. tion for one or another specific part of fidence immediately. It is too late for the bill. Sometimes it is expressed as that. But passing at least these basic concern over the economic impact of fairness provisions is essential to ac­ INTRODUCTION OF BILLS AND the bill as a whole. But in all of these complishing this goal eventually, and JOINT RESOLUTIONS discussions, one troubling observation it is time that we got started on this The following bills and joint resolu­ keeps recurring-something that goes job. tions were introduced, read the first beyond the pros and cons of any indi­ There are other counts, however, on and second time by unanimous con­ vidual provision; beyond even the eco­ which I have serious reservations sent, and referred as indicated: nomic impact of the bill as a whole. about this bill. For a bill whose princi­ By Mr. THURMOND (for himself and That is this: I have seen a growing pal appeal is to a sense of fairness, this Mr. LAXALT): conviction among my constitutents bill has several serious defects. The S. 2529. A bill to amend title 28 of the that our current income tax is funda­ bill's unjustified repeal of the State United States Code to provide for retired mentally unfair; that it permits too and local sales tax deduction, coupled magistrates to be recalled to service and to many people to avoid paying their fair with its retention of that deduction provide a retirement system for U.S. magis­ share of taxes; and that the burden of for other types of taxes, is especially trates equal to the retirement system for bankruptcy judges; to the Committee on the this tax avoidance is being transferred unfair and discriminatory. It lacks any Judiciary. to the working man and woman, the basis in equity or rationality. I oppose By Mr. SPECTER: wage earner, the taxpayer who does it, and want to see it changed. Similar­ S. 2530. A bill for the relief of Rocco A. not have accountants and lawyers to ly, I am troubled by retroactive appli­ Trecosta; to the Committee on the Judici- search out every loophole in our cur­ cation of a tax on investment income. ary. rent Tax Code. Though I support the goal of this new By Mr. GRASSLEY Mr. GRASSLEY. Mr. President, I DEPARTMENT OF JUSTICE, and the unavailability of witnesses, often rise today to focus the Senate's atten­ June 4, 1986. forecloses any hope of recovery. Because tion on a glaring loophole in our Fed­ Hon. CHARLES E. GRASSLEY, our consumer protection cases often involve eral Bankruptcy Code. It's a loophole Chainnan, Subcommittee on Administrative hundreds of thousands of victims, each victim could be required to testify as to wide enough to drive a truck through. Practice and Procedure, Committee on the Judiciary, Washington, DC. their reliance on the defendant's false rep­ It lets convicted felons and consumer resentations and their resultant damage. If ripoff artists thumb their noses at DEAR SENATOR GRASSLEY: As Attorneys General, we are keenly aware of your con­ the individual claims are small, the case State efforts to collect restitution for cerns relative to the "loophole" in federal fails. ill-gotten gains. bankruptcy law which may allow a convict­ As if the "loopholes" noted thus far were Let me give you an example from a ed felon to avoid making court ordered resti­ not enough, the United States Court of Ap­ recent court case called Robinson tution. See Robinson v. McGuigan, 776 F. 2d peals for the Eighth Circuit held in In Re versus McGuigan. A few years ago, a 30 <2d Cir. 1985). We are in agreement that Cannon, 741 F .2d 1139 <8th Cir. 1984), that New Haven woman was convicted of the Robinson decision has serious implica­ the Missouri Attorney General lacked tions for state law enforcement efforts and standing to challenge the dischargeability defrauding Connecticut's Welfare De­ of a consumer protection restitution order. partment out of nearly $10,000 in we strongly urge Congress to remedy this problem. We fear that the Robinson deci­ Thus, the Attorney General was foreclosed phony payments. As part of the judg­ sion could be used by debtors to discharge from protecting the viability of a consumer ment, she was ordered to make restitu­ all types of restitution, including consumer fraud restitution order he had obtained. tion payments to the State. After and environmental-related compensation The individual victims were told to proceed making a few payments, the woman for the state, as well as criminal restitution. alone with their dischargeability com­ sought to simply avoid the debt by The difficulties faced by our consumer plaints. The decision in Cannon has even filing a bankruptcy petition. The protection attorneys in litigating unfair and been used to estop Attorneys General from Bankruptcy Court agreed and allowed deceptive trade practices cases graphically challenging debts which were believed to be illustrate the problems created by the Bank­ based on fraudulent practices but which the debt to be discharged. ruptcy Code. For some time now, our attor­ had not yet been made the subject of a con­ The State attorney general appealed neys have had to do battle on two fronts in sumer protection lawsuit. Our authority to the decision, but the Second Circuit order to obtain restitution for victims of enforce court orders for restitution in state Court of Appeals recently overruled consumer fraud. First, our attorneys file pe­ consumer protection cases <2> and 523(c). Courts actions. June 9, 1986 CONGRESSIONAL RECORD-SENATE 13015 afford to pursue restitution on their own; GoLDWATER] were added as cosponsors s. 2326 nor is it cost effective for them to do so. of S. 1654, a bill to amend title 18, At the request of Mr. HEFLIN, the A simple "Exception to Discharge" United States Code, to provide for name of the Senator from Alabama amendment to 11 U.S.C. § 523 and a corre­ sponding amendment to § 1328 would criminal forfeiture of proceeds derived [Mr. DENTON] was added as a cospon­ change the course of enforcement of restitu­ from espionage activities and rewards sor of S. 2326, a bill to protect the tion orders nationally. for informants providing information name and marks of the Alabama We applaud your efforts to correct the leading to arrests in espionage cases. Space Science Exhibit Commission. bankruptcy law and we will assist you with s. 2050 s. 2335 this legislation in any way possible. Sincerely, At the request of Mr. METZENBAUM, At the request of Mr. DENTON, the Thomas J . Miller, Attorney General of the name of the Senator from Arizona name of the Senator from Virginia Iowa. State of Alabama, Charles A. [Mr. DECONCINI] was added as a CO­ [Mr. WARNER] was added as a cospon­ Graddick, Attorney General; State of sponsor of S. 2050, a bill to notify sor of· S. 2335, a bill to protect U.S. California, John Van de Kamp, Attor­ workers who are at risk of occupation­ citizens from terrorism. ney General; State of Connecticut, al disease in order to establish a s. 2401 Joseph Lieberman, Attorney General; State of Illinois, Neil Hartigan, Attor­ system for identifying and preventing At the request of Mrs. KAssEBAUM, ney General; State of Indiana, Linley illness and death of such workers, and the name of the Senator from Virginia E. Pearson, Attorney General; State of for other purposes. [Mr. WARNER] was added as a cospon­ Massachusetts, Francis X. Bellotti, At­ s. 2186 sor of S. 2401, a bill to prohibit the torney General; State of Missouri, At the request of Mr. MURKOWSKI, manufacture or distribution in, or the William Webster, Attorney General; importation into, the United States of State of New York, Robert Abrams, the names of the Senator from South certain firearms. Attorney General; State of North Carolina [Mr. HOLLINGS], and the Sen­ Carolina, Lacey Thornburg, Attorney ator from Virginia [Mr. WARNER] were s. 2444 General; State of Ohio, Anthony Cele­ added as cosponsors of S. 2186, a bill At the request of Mrs. HAWKINS, the brezze, Attorney General; State of to exempt any amounts available to name of the Senator from West Vir­ South Carolina, Travis Medlock, At­ provide certain benefits to veterans ginia [Mr. ROCKEFELLER] Was added as torney General; State of Tennessee, with service-connected disabilities a cosponsor of S. 2444, a bill to reau­ W. J. Michael Cody, Attorney General; from any requirement for sequestra­ thorize the Head Start Act, the Low­ State of Texas, Jim Mattox, Attorney Income Home Energy Assistance Act General; State of Washington, Ken­ tion of funds under part C of the Bal­ neth 0. Eikenberry, Attorney General. anced Budget and Emergency Deficit of 1981, the Community Services Control Act of 1985. Block Grant Act, the Dependent Care Mr. GRASSLEY. Mr. President, I State Grant Program, and for other expect that the National Association s. 2209 purposes. of Attorneys General will also soon ap­ At the request of Mr. DOLE, the s. 2494 prove a resolution of support for this names of the Senator from Hawaii bill at their upcoming convention. [Mr. INOUYE], and the Senator from At the request of Mr. BRADLEY, the Simply stated, Mr. President, my bill names of the Senator from Maine [Mr. Kansas [Mrs. KAssEBAUM] were added CoHEN], and the Senator from Iowa would remove the safe harbor that has as cosponsors of S. 2209, a bill to make sheltered the fraudulent. It would [Mr. HARKIN] were added as cospon­ permanent and improve the provisions sors of S. 2494, a bill to amend title allow our State attorneys general to of section 1619 of the Social Security protect consumers without one hand XVIII of the Social Security Act to Act, which authorizes the continued modify the limitations on payment for tied behind their backs by the bank­ payment of SSI benefits to individuals ruptcy code. home health services under the Medi­ who work despite severe medical im­ care program to conform regulations; Similar legislation, H.R. 3742, has pairment; to amend such act to re­ been introduced in the other body. I to assure that all legitimate costs are quire concurrent notification of eligi­ taken into account in calculating such urge my colleagues in both the House bility for SSI and Medicaid benefits and Senate to waste no time filling the limitations; to provide affected parties and notification to certain disabled an opportunity to comment on revi­ gap created by the Robinson case. SSI recipients of their potential eligi­ At this point, Mr. President, I yield sions in Medicare policies; and to re­ bility for benefits under such section quire discharge planning procedures. the floor. 1619; to provide for a GAO study of SENATE JOINT RESOLUTION 314 the effects of such section's work in­ At the request of Mr. QuAYLE, the ADDITIONAL COSPONSORS centive provisions; and for other pur­ poses. name of the Senator from Kansas s. 1525 [Mrs. KASSEBAUM] was added as a co­ At the request of Mr. PELL, the name s. 2273 sponsor of Senate Joint Resolution of the Senator from Michigan [Mr. At the request of Mr. KASTEN, the 314, a joint resolution to designate the RIEGLE] was added as a cosponsor of S. name of the Senator from Tennessee week beginning July 27, 1986, as "Na­ 1525, a bill to amend the Elementary [Mr. SASSER] was added as a cosponsor tional Nuclear Medicine Week." and Secondary Education Act of 1965 of S. 2273, a bill to amend the Internal SENATE JOINT RESOLUTION 343 to provide grants to local educational Revenue Code of 1954 to deny the tax At the request of Mr. D'AMATo, the agencies for dropout prevention dem­ exemption for interest on industrial name of the Senator from Maine [Mr. onstration projects. development bonds used to finance ac­ MITCHELL] was added as a cosponsor of s. 1654 quisition of farm property by foreign Senate Joint Resolution 343, a joint At the request of Mr. STEVENS, the persons. resolution designating the week of names of the Senator from North s. 2305 September 21, 1986, through Septem­ Dakota [Mr. ANDREWS], the Senator At the request of Mr. KENNEDY, the ber 27, 1986, as "Emergency Medical from South Dakota [Mr. ABDNOR], the name of the Senator from Vermont Services Week." Senator from Washington [Mr. [Mr. STAFFORD] was added as a cospon­ SENATE JOINT RESOLUTION 345 GORTON], the Senator from Iowa [Mr. sor of S. 2305, a bill to amend title IV At the request of Mr. DOLE, the GRASSLEY], the Senator from Wiscon­ of the Public Health Service Act to re­ names of the Senator from Florida sin [Mr. KASTEN], the Senator from quire the Director of the National [Mrs. HAWKINS], the Senator from Indiana [Mr. QUAYLE], the Senator Cancer Institute to make grants and Kansas [Mrs. KASSEBAUM], the Sena­ from New Hampshire [Mr. RuDMAN], enter into contracts to support re­ tor from North Dakota [Mr. AN­ the Senator from Idaho [Mr. SYMMS], search on adoptive immunotherapy DREWS], the Senator from Ohio [Mr. and the Senator from Arizona [Mr. for cancer. GLENN], the Senator from Vermont 13016 CONGRESSIONAL RECORD-SENATE June 9, 1986 [Mr. STAFFORD] , and the Senator from tained for the 10-year period of which it is Whereas in winning forty home games Virginia [Mr. WARNER] were added as authorized: and losing only one home game during the cosponsors of Senate Joint Resolution e Mr. ABDNOR. Mr. President, today 1986 regular season. the Boston Celtics have 345, a joint resolution to designate the I am submitting a concurrent resolu­ set a new National Basketball Association record for regular season home court victo­ week beginning November 9, 1986, as tion expressing the sense of Congress ries; "National Reye's Syndrome Awareness that the Essential Air Service [EASJ Whereas K.C. Jones, in his third season as Week." Program should be maintained for the Coach of the Boston Celtics, has won his SENATE JOINT RESOLUTION 348 10-year period for which it was author­ second world championship and has won At the request of Mr. GLENN, the ized. more than sixty games in each of his three name of the Senator from Virginia A similar resolution was authored seasons; [Mr. WARNER] was added as a cospon­ and introduced in the House of Repre­ Whereas Larry Bird of the Boston Celtics sentatives by the distinguished gentle­ was named the Most Valuable Player in the sor of Senate Joint Resolution 348, a National Basketball Association in 1986 for joint resolution to designate the week man from Arkansas [Mr. HAMMER­ SCHMIDT], who is the ranking minority the third consecutive season; beginning November 24, 1986, as "Na­ Whereas K.C. Jones, Larry Bird, Dennis tional Family Caregivers Week." member on the House Public Works and Transportation Aviation Subcom­ Johnson. Robert Parrish, Kevin McHale, SENATE JOINT RESOLUTION 350 Danny Ainge, and Bill Walton have made mittee. the Boston Celtics of 1986 one of the great­ At the request of Mr. LUGAR, the Mr. President, as a member of that names of the Senator from Vermont est professional sports teams of all time; particular subcommittee during my Now therefore be it [Mr. STAFFORD], and the Senator from service in the House of Representa­ Resolved, That the Senate of the United Alabama [Mr. HEFLIN] were added as tives, I strongly opposed airline de­ States of America joins with basketball fans cosponsors of Senate Joint Resolution regulation-knowing full well that it in Massachusetts and across the nation in 350, a joint resolution to designate would adversely affect air service to honoring the Boston Celtics for winning the 1987 as "The National Year ·of the rural States and small communities. National Basketball Association Champion­ Americas.'' However, airline deregulation occurred ship for 1986. SENATE CONCURRENT RESOLUTION 145 and those of us who opposed it were At the request of Mr. STEVENS, the assured that the Essential Air Service names of the Senator from Wyoming Program would protect those commu­ SENATE RESOLUTION 423- AU­ [Mr. WALLOP], the Senator from South nities across America which were ad­ THORIZING REPRESENTATION Carolina [Mr. THURMOND], the Sena­ versely affected by airline deregula­ BY THE SENATE LEGAL COUN­ tor from North Dakota [Mr. AN­ tion. This program currently provides SEL DREWS], the Senator from Hawaii [Mr. funding to nearly 50 small air carriers Mr. SIMPSON (for Mr. DoLE) (for INOUYE], and the Senator from Cali­ which serve nearly 150 communities in himself and Mr. BYRD) submitted the fornia [Mr. CRANSTON] were added as 40 States. following resolution; which was con­ cosponsors of Senate Concurrent Res­ Here in the Senate, the distin­ sidered and agreed to. olution 145, a concurrent resolution to guished chairman of the Senate S. RES. 423 encourage State and local govern­ Transportation Appropriations Sub­ Whereas, in the case of People of the State ments and local educational agencies committee, Senator ANDREWS and the of California v. Robert Corenevsky, Case No. to require quality daily physical educa­ distinguished chairman of the Com­ C-55447, pending in the Superior Court of tion programs for all children from merce Aviation Subcommittee, Sena­ the State of California, Orange County, the kindergarten through grade 12. tor KAssEBAUM, have assisted in assur­ defendant has commenced proceedings to SENATE RESOLUTION 4 13 ing the integrity of this program to obtain the testimony of William Gallinaro At the request of Mr. DENTON, the protect air service to small communi­ and Philip Manuel, former employees of the name of the Senator from Ohio [Mr. ties and rural States. Senate Permanent Subcommittee on Inves­ GLENN], was added as a cosponsor of Since 1981 the Reagan administra­ tigations; tion has endeavored to eliminate this Whereas, pursuant to sections 703(a) and Senate Resolution 413, a resolution to 704(a)(2) of the Ethics in Government Act recognize the devotion of Bob Hope to program. Those of us who believe that of 1978, 2 U.S.C. 288b(a) and 288c(a)(2) the United States on his 83d birthday. this commitment to rural and small <1982), the Senate may direct its counsel to AMENDMENT NO. 1823 town America should be kept have represent former employees of the Senate At the request of Mrs. KASSEBAUM, been successful in opposing such ef­ with respect to subpoenas issued to them in the names of the Senator from Utah forts. We have reduced the cost of the their former official capacity; [Mr. GARN], and the Senator from Wy­ EAS Program from $100 to $33.6 mil­ Resolved, That the Senate Legal Counsel lion in fiscal year 1985. However, the is directed to represent William Gallinaro, oming [Mr. SIMPSON] were added as Philip Manuel. and any other former em­ cosponsors of amendment No. 1823 in­ commitment was made and the com­ mitment should be kept and the con­ ployee of the Permanent Subcommittee on tended to be proposed to S. 100, a bill Investigations who may be the subject of to regulate interstate commerce by current resolution which I submit proceedings to require them to testify in the providing for a uniform product liabil­ today reiterates our support for this case of People of the State of California v. ity law, and for other purposes. vital transportation program.e Robert Corenevsky.

SENATE RESOLUTION 422-COM- SENATE CONCURRENT RESOLU­ MENDING THE BOSTON CELT- SENATE RESOLUTION 424-WEL­ TION 146-RELATING TO THE ICS COMING COL. RICARDO MON­ ESSENTIAL AIR SERVICE PRO­ TERO DUQUE TO THE UNITED GRAM Mr. KENNEDY (for himself, Mr. STATES KERRY, and Mr. MITCHELL) submitted Mr. ABDNOR (for himself, Mrs. Mrs. HAWKINS submitted the fol­ KASSEBAUM, Mr. ANDREWS, Mr. PRES­ the following resolution; which was considered and agreed to. lowing resolution; which was referred SLER, and Mr. ExoN) submitted the fol­ to the Committee on the Judiciary: lowing concurrent resolution; which S. RES. 422 was referred to the Committee on Whereas on June 8, 1986 the Boston Celt­ S. RES. 424 Commerce, Science, and Transporta­ ics won the National Basketball Association Whereas Colonel Ricardo Montero Duque, Championship for 1986; after spending twenty-five years in a Cuban tion: Whereas since 1946, under the leadership prison, was released on June 8, 1986; S. CoN. RES. 146 of Red Auerback the Boston Celtics have Whereas Colonel Montero was one of only Resolved by the Senate fthe House of Rep­ won sixteen world championships, three two remaining prisoners in Cuba who was a resentatives concurring), That the Essential times as many as any other team in the his­ member of the Brigade 2506, which conduct­ Air Service Program should be main- tory of the National Basketball Association; ed the Bay of Pigs operation in April 1961; June 9, 1986 CONGRESSIONAL RECORD-SENATE 13017 Whereas Colonel Montero has demon­ <1 > constant and conflicting policy Confirmation of these disruptive strated a deep commitment to the causes of changes in the Internal Revenue Code of arms dealings by Communist China freedom and the Cuban nation and has 1954 (hereinafter referred to as the "Tax appeared this month in the authorita­ made extraordinary sacrifices for his com­ Code") make it difficult for individuals to mitment to these causes; properly plan for the future. tive annual military study published Whereas the United States continues to (2) constant and conflicting policy by the International Institute of Stra­ stand for the restoration of freedom and de­ changes by the Congress retard capital for­ tegic Studies in London. As reported mocracy in Cuba; and mation by increasing the risk of a project, by the Washington Post on June 7, Whereas the United States continues to <3> constant and conflicting policy the institute concludes in its most honor and commend those who have sacri­ changes by the Congress place undue bur­ recent issue of the Military Balance ficed in the effort to restore Cuba's true ex­ dens on individuals and businesses by re­ that Red China has sold $1.6 billion of pression of its national will: Now, therefore, quiring utilization of financial resources to be it anticipate such changes and modifications arms to the -radical Government of Resolved, That the Senate hereby wel­ in the Tax Code, Iran alone. Then to further unleash comes Colonel Ricardo Montero Duque to <4> the Internal Revenue Service is the dogs of war, Peking has peddled its the United States and commends him for drained of limited resources in trying to weapons to Iraq, becoming a supplier the extraordinary sacrifices he has made to adapt to changes in the Tax Code, of each combatant in the same war. further the cause of freedom in Cuba. <5> one of the greatest burdens placed Clare Hollingworth of the London e Mrs. HAWKINS. Mr. President, I upon small businesses is the completion of Sunday Telegraph first exposed these paperwork to comply with the Tax Code, rise to submit a resolution to extend and constant changes by Congress unneces­ identical activities a year ago, giving the welcome of the Senate to a true sarily compound this paperwork burden, strong credence to the accuracy of the hero. Col. Ricardo Montero Duque is <6> any tax reform legislation passed by reports. The meddling of Peking in the one of the six battalion commanders the Congress should stimulate economic gulf war is matched by its attempts to who participated in the Bay of Pigs growth, encourage investment, promote cap­ unload arms on Marxist regimes in operation of April 1961. As one of the ital formation, expand job opportunities, Africa and stir up the arms race in leaders of the 2506 Brigade, Colonel and encourage savings, and South America. Montero has been forced to spend the <7 > the American taxpayer deserves cer­ tainty in the tax treatment of economic de­ No matter that Chinese Communist last 25 years of his life in prison in cisions. officials have openly announced their Cuba. He is a person who has made ex­ (b) PoLicY.-It is the policy of the Con­ design to finance military moderniza­ traordinary sacrifices to further the gress that the provisions of the Internal tion by exactly such blataut interven­ cause of freedom in a nation that has Revenue Code of 1954 which are added or tion in Third World problems. No seen the rights of its people crushed amended by this Act remain unchanged for matter that Peking has loudly de­ under the heel of a brutal totalitarian at least 5 years in order to provide stability nounced United States air strikes in dictatorship. Yesterday, Cuban au­ for the American taxpayer and the private Libya as "state terrorism" and voted thorities finally allowed Colonel Mon­ sector. to condemn our Government in the tero to be released. He arrived at U.N. Security Council. Homestead Air Force Base in Florida ADDITIONAL STATEMENTS This Congress and this administra­ yesterday morning. I hope now that tion seem prepared to coddle and kow­ Colonel Montero is free to speak about tow before Red China no matter what the nature of the government on the COMMUNIST CHINA-ARMS Peking does. A myth has arisen that island of Cuba, that the people will MERCHANT FOR THIRD WORLD Red China supports Western strategic listen to his story. e Mr. GOLDWATER. Mr. President, interests and no matter how often Mr. President, I believe that it is in several statements in the Senate Chinese Communist officials them­ very important for this body to ex­ preceding approval, by congressional selves deny it, and prove otherwise, we press its appreciation and support for inaction, of the military avionics sale hold onto this wishful thinking. the efforts of people like Colonel Mon­ to Red China, I indicated that a pri- Red China is selling arms to one of tero who have put themselves at great mary reason for my opposition to the our worst enemies and kindling arms personal risk in the cause of freedom. sale is the involvement of Peking as a races in places where the powder keg My resolution is such an expression of major supplier of the Third World is already smoldering. By selfishly ex­ appreciation for Colonel Montero. I arms race, contrary to United States ploiting the enmities within impover­ encourage my colleagues to join me in foreign policy interests. Lacking the ished countries which are desperate extending a warm welcome to Ricardo foreign exchange needed to acquire . for food and necessities of life rather Montero Duque and expressing our advanced Western weapons systems than weapons of war, Communist appreciation for his determination and and technology, Red China is and has China is manipulating the misfortunes strength in furthering the goals we all been actively seeking to raise currency of others at the risk of creating great­ share for the future of Cuba and the by pushing its present military inven- er international disturbances. Unfortu­ causes of freedom and democracy.e tory in the international arms bazaar, nately, the U.S. Government is fool­ without regard to who buys the arms ishly contributing to this state of af­ AMENDMENTS SUBMITTED or what damage is done to peace and fairs by giving Peking increased reason stability in areas of vital importance to for accelerating its foreign arms sales the United States. activities. TAX REFORM ACT OF 1986 Oblivious to past known foreign Mr. President, when I charged that arms transactions exceeding well over Red China was involved up to its ears $4 billion by Red China, the adminis- in the Third World arms race, it MATTINGLY AMENDMENT NO. tration had made it official Govern- seemed that on one believed it or 2058 ment policy to induce Peking to esca- would listen. Perhaps now that the FINDINGs.-The Congress finds that- ment for sale abroad. fers be financed by Peking out of any 13018 CONGRESSIONAL RECORD-SENATE June 9, 1986 part of the gain extracted from its ex­ were certain China had been selling conven­ lar results that have been achieved so quick­ ploitation of the turmoil in developing tional weapons to Iran for several years. ly. nations. Second, we shoud insist that They said the purpose appeared to be two­ Like every other nation selling arms, Peking stop supplying arms to terror­ fold: to earn foreign exchange for China's China tends to be secretive about its clients, economic modernization program and to but it is clear that it has already sold consid­ ist nations and adversaries of the assure Chinese influence in a key part of erable quantities to Pakistan, North Korea, United States before we will allow the the Middle East. Albania, Zaire, Sudan, Tanzania, Egypt, the sale or transfer of any American arms A western businessman here knowledgea­ Gulf States and Algeria, as well as to other for Red China to go forward. ble about the arms industry has said that if African and South American countries, and Mr. President, I ask that the recent the Chinese can continue to increase their to rebels battling the Soviets in Afghanistan article in the Washington Post and an overseas arms sales they will earn more for­ and guerillas fighting the Vietnamese invad­ earlier report in the Wall Street Jour­ eign exchange and will be in a better posi­ ers of Cambodia. nal discussing the role of Communist tion to buy sophisticated military equip­ Western military experts say-though the ment from abroad of the type that they Chinese deny it-that in March Norinco China as an arms merchant for the cannot yet produce themselves. signed an agreement with Iran to sell it $1.6 Third World may each appear in the According to a report published in The billion in weapons over the next two years. RECORD. Washington Post in the spring of 1984, The reported contract includes 12 F-6 fight­ The material follows: China began secretly supplying arms to Iran er aircraft, 200 T-59 tanks, and antitank [From the Washington Post, June 7, 1986] by way of North Korea sometime after mid- guns and rocket launchers. Earlier reports, CHINA SELLING MORE ARMS TO IRAN, STUDY 1982. Diplomats said late last year that this also unconfirmed, claim that China has al­ SHOWS-INSTITUTE CITES $1.6 BILLION IN channel continued to be used possibly along ready sold hundreds of tanks to Iraq with RECENT PURCHASES, SAYS IRAQ ALSO A with others. North Korea acting as the middleman. the International Institute of Strategic ous in the National Day parade in Peking Studies in London, was credible. The sales PEKING.-In the past year, China has last Oct. 1. The engineers said the designs of were agreed to early last year, the London made an unprecedented and little-noticed their weapons were "all Chinese," stressing institute said. entrance into the world-wide arms trade. As that they hadn't modernized or adapted The institute said China had also sold the producer of reliable, sturdy equipment Soviet weapons. weapons to Iraq, which has been locked in a at competitive prices, it is likely to carve out (The same engineers have created a costly, protracted war with Iran, thus a sizable chunk of the global market for highly successful spinoff for civilian use by making China, like North Korea, a supplier small arms in the next few years. Arma­ utilizing the machine tools used to produce to both sides in that war. ments will become increasingly important gun barrels to make the lengthy narrow Not long ago, estimates of China's total foreign-exchange earners for China. steel tubes oil drillers need. This equipment arms sales to all overseas customers came to Last year Peking sold $1.66 billion in used to be imported into China at consider­ little more than $1 billion. But the Chinese weapons, accounting for nearly 7% of the able expense.) have been moving agressively in this field, country's total export earnings. It is now Other technicians were keen to show me selling not only to Middle Eastern countries the world's fifth-largest arms merchant their new designs for a 180-mm rocket but also seeking markets throughout the after the Soviet Union, the U.S., France and launcher and for antitank guns. They dis­ Third World. Their latest target for over­ Britain. Although almost one-third of the cussed their efforts to increase the range of seas arms sales appears to be Latin America. goods-such as trucks for towing guns­ the new rocket and claimed, with truth, to The institute listed China as a primary could be classified technically as meant for have overcome the problems in the accuracy supplier to Iran, providing the Iranians with civilian use, they were sold for military pur­ of firing caused by the vibrations of the J6 interceptor jets, T59 tanks, artillery and poses. Exports are handled by China North truck transporting the rocket. . surface-to-air missiles under an agreement Industries Corp. . a broad, Boesak knows, and the government in Pre­ dom and human dignity for all South multiracial coalition of South African Civic toria knows that those demonstrations will Africans, fear that the government in associations, student bodies, youth, labor, take place. And all their ban does is give Pretoria will not allow that freedom or and church groups, formed in 1983 to them a "legal" cover for an illegal and im­ dignity to be achieved without even oppose the South African government's new moral restraint on human freedom. constitution. The UDF has become the most But that is what happens all too often. more bloodshed and violence. prominent vehicle of peaceful protest in Look at another example. While we do not yet have a tran­ South Africa. For years many of us have called for free­ script of Reverend Boesak's comments, Through his work in the church, Dr. dom for Nelson Mandela. Artists wrote I do want to share with my colleagues Boesak has emerged as "the articulate new songs calling for it; politicians filed resolu­ some remarks prepared for my intro­ theological voice for the Black people of tions demanding it; the Senate voted for it. duction of him. I hope that they com­ South Africa." He has played a leading part And now there are stories circulating which municate a sense of the stakes in the in defining a meaningful role for the suggest that the government in Pretoria is current struggle. And I hope they sug­ Church in South African society. Consider considering it. just one example of Dr. Boesak's and the The government may free Nelson Man­ gest even a fraction of the admiration Church's role in attempting to promote dela-while awaiting events on June 16th and respect I have for the men and social change. On August 27, 1985, one day and passing new laws prohibiting public women-both here and in South prior to a planned march by thousands of demonstrations? Africa-who have joined with Rever­ South Africans to deliver a message of soli­ The government may free Nelson Man­ end Bocsak in fighting for change in darity to imprisoned Nelson Mandela, Rev­ deJa-without requiring him to sever his that troubled land. Mr. President, I erend Boesak was detained by the police in connections with the ANC while, at the ask that the text of my remarks may Cape Town, under Section 29 of the Inter­ same time, the same government bombs sus­ appear in the REcORD. nal Security act, which provides for interro­ pected ANC centers in neighboring lands? gation of people suspected of involvement The government will hopefully free The remarks follow: in, or having knowledge of, the planning or Nelson Mandela. But how will they try to INTRODUCTION OF REV. ALLAN BOESAK commission of an act of "terrorism." use Nelson Mandela. Reverend Boesak, I want to welcome you Dr. Boesak knew that might happen. We know-we know-that if Mandela is and thank you for being here today. Your Before he was detained, while the demon- freed there will be ceremonies, there will be

71-059 0-87-38 Arabia's Air Force. California for a few hundred thousand dol­ Relations between the friendliest of coun­ Most of what led to these improbable out­ lars. The Saudis were then earning foreign tries occasionally become agitated, but comes was known only to a small circle of exchange from a declining trade in pilgrim­ never more so than when their governments senior people in government and industry in ages to Mecca and Medina-the holy places are competing to sell weapons to some other the countries directly involved, and to some of the Hejaz, a stretch of desert on the west­ government. The bigger the sale, the froth­ of their diplomats. Among the closely in­ ern shore of the Arabian Peninsula. By the ier relations become. In a world as prone to volved people were two heads of state­ end of the Second World War, the American violence as ever, and with technology beget- President Francois Mitterrand of France oil companies and their government had dis- June 9, 1986 CONGRESSIONAL RECORD-SENATE 13021 covered that Saudi Arabia contained about equal of any in the entire region except Is­ sional partisans; they were aware that by twenty-five percent of the world's known oil rael's. But Saudis haven't taken to mainte­ then the Saudis were also seeking the pro­ reserves. nance as they did to flying; immigrant work­ scribed bomb racks and fuel tanks for their In February of 1945, President Franklin ers continue to do most of that. "The Saudis F-15s, as well as highly sophisticated air-to­ D. Roosevelt, on his way back from the are still the victims of their traditions, and air missiles. The Carter Administration had Yalta conference, met with King Ibn Saud, regard themselves as warriors and lovers, never fully recovered from the F-15 struggle the lofties figure of his country's short his­ not mechanics." an American specialist says. and, like Ford's, chose to avoid becoming tory. Roosevelt didn't tell Winston Church­ In the late nineteen-sixties, with the embroiled in a major row over Middle East ill, a fellow-conferee at Yalta, about this un­ Saudis even richer and becoming even more arms sales before a Presidential election. scheduled stop until the day before the con­ of a regional presence, Washington decided The AWACS issue was going to have to be ference ended. Churchill, too, was planning that their main defense connection should dealt with by the Reagan Administration, is see Ibn Saud, but Roosevelt reached him be with the United States Air Force. which quickly decided to approve the Saudi first. He and Ibn Saud got on well- so well, They were encouraged to buy an Ameri­ request for the AWACS, the aerial tankers. in fact, that Roosevelt assured his host that can aircraft called the F-5, and this became the external fuel tanks, and the air-to-air he would do nothing about the Palestine the workhorse of the Saudi air arm. In the mlssiles. Through most of 1981, the White question without clearing it with Saudi mid-seventies, however, the American Air House and Congress quarrelled over the Arabia. And did happened to be in Paris and would come to expressed a strong interest in buying Torna­ Weinberger's visit commit the United States London. The meeting was arranged, and the does, and even signed a nonbinding letter of to selling the additional F-15s? "Yes, we American told Bandar that the F-15 deal intent. The British began to think that were absolutely committed," he said. "There could go forward provided that the Saudis they, and not the French, might win the was a strong desire in the Pentagon to make agreed to support a parallel arms sale to prize of prizes if it turned out that the this happen. Cap is the senior Saudi desk of­ Jordan and, what's more, help the Jordani­ Saudis couldn't buy American. "We made a ficer over there. He's very pro-Saudi, and ans pay for it. Bandar reported the offer to lot of progress in the early months of '84," a his attitude was 'Damn the torpedoes, full member of the British sales team says. speed ahead.' The N.S.C."-the National Se­ King Fahd, who declined to tie Saudi de­ curity Council staff-"wasn't opposed but fenses to anyone else's. Back in Washington, Then they sensed the tide turning against was very mindful of Congress. State wanted Bandar met separately with Shultz and them and in France's favor. to go ahead with the sale, but was more con- McFarlane, each of whom, I'm told, dis- The tide did seem to turn in April, while June 9, 1986 CONGRESSIONAL RECORD-SENATE 13023 King Fahd was vacationing on the C6te Ojjeh and his French client felt that they highly intelligent and, many say, a born pol­ d'Azur. Fahd takes a geostrategic view, and held the high cards. Their airplane was itician. He has a light touch. In the early likes discussing world issues as much as re­ cheaper on the open market, the King days of the 1984 Presidential primaries, he gional politics. "I knew him when he was seemed to be leaning their way, and a link was asked by an American acquaintance Crown Prince," a French diplomat says. "He to the Ibrahims had been established. They what he thought of America's method of spends most of his time talking about East­ doubted whether the Saudis would buy a choosing a leader. "After watching your se­ West relations and strategy," Fahd had strike aircraft, and so did the British. I lection process for a while, I think you could been put off by the manner in which both asked a member of the British sales team describe me as a born-again monarchist," he Washington and London withdrew forces about that. "I go flat no's for two years," he replied. · from Beirut a few weeks before. It looked to said. "They didn't want to be seen by the Bandar meets privately with Mrs. Tatcher him as if the Americans and the British had world as having an offensive capability." at frequent intervals. Just how frequent is just cut their losse and, in some disorder, The Saudis had even invested some money hard to say, because the Saudis have asked run from a situation they had agreed to sta­ in the development of the French airplane. No. 10 Downing Street to keep a lid on that bilize. The French stayed longer and left in "Around Christmas of 1984, we were told sort of information. A British banker who good order-even with a bit of fanfare-and that France had it won," a key Whitehall tracked the aircraft deal told me that in thus impressed Fahd. Charles Hernu, who figure says. In the spring of 1985, when it 1985 Bandar and Mrs. Thatcher met six was then France's Defense Minister, flew looked as if the Americans would renege on times that he knows of. In April of 1985, on down from Paris to meet with Fahd, who their commitment to Fahd, the French returning from a trip to the Far East, Mrs. talked about modernizing his Air Force and judged that the British were soundly Thatcher made an unscheduled stop of five expressed an interest in the French air­ beaten. In fact, the French were by then hours in Riyadh, and had a long talk with plane. Fahd then went to Paris and contin­ being outflanked, and by mid-July it was the King. Bandar, I'm told, orchestrated the ued the discussion with Mitterrand. A bi­ they who were beaten, although they didn't meeting, advising Mrs. Thatcher about sub­ zarre situation was~or seemed to be-devel­ know it. "All the Saudi defense people fa­ jects to take up with Fahd and alerting him oping. "At that point, Fahd had three coun­ vored the French airplane and were telling to the subjects she might raise. Encouraged tries thinking that he would buy their air­ the French what they wanted to hear," a by Bandar, Fahd, the geostrategist, began to planes," an American insider says. And a French authority says. "A few people did see in Mrs. Thatcher the sort of European British banker says, "It was a Saudi cock-up. see the handwriting on the wall when the ally he might be able to rely on. He admires There was Sultan, who had signed a letter Saudis cancelled a meeting in May between strength, and she had shown hers in the of intent to buy British, and there was his Sultan and Hernu." Falkland Islands War and in most of the King, who was undertaking to buy French." Britain's triumph was engineered by other difficulties she had confronted. Her Actually, Fahd hadn't gone nearly that far, Prince Bandar. He did it by forging a link special relationship with Reagan was a and the Frensh set about retrieving Sultan between Fahd and Mrs. Thatcher that was major plus in Fahd's view; he is thought to and anchoring his support for their air­ stronger than any of France's links. Wafiq have calculated that buying British would plane. They think that he supported their Said helped, but Bandar, because he now give him better, if indirect, access to Reagan bid to the very end. Others disagree. has more influence with Fahd than anyone on issues of importance in the Middle East. The French had some other Saudi connec­ else, was able to take charge of the affair "It was her resolve to be firm with Reagan tions, who were less prominent but very and shape the outcome. Bandar, at thirty­ on those issues which made the difference," useful. One of them was Akram Ojjeh, a pic­ six, is as interesting as any diplomat in a well-placed Whitehall figure says. In aresque Syrian-born Saudi national who Washington or perhaps any\\·here else. He is France, where Fahd had detected strength a lives in Paris and has amassed a huge for­ a son of Sultan In September, just a company in Britain, had build a system that Ptarmigan in America and, lacking experi­ few days before the announcement, it called ptarmigan-for the Arctic bird. ence with some of this technology, had France's leadership was still trying to save And Thomson CSF, France's state-owned more difficulty in estimating the costs. the day by various means, one of which was electronics behemoth, had created a rival Also, Plessey is widely described as having sending Jacques Mitterrand, the President's system. Thomson took the well-worn acro­ been unwilling to divulge all its detailed brother and the former president of A~ro­ nym path by naming it RITA-for R~seau costs, even to Rockwell. "That's absurd," a spatiale, the country's largest aircraft com­ Int~gr~ de Transmissions Automatiques. senior figure at Plessey says. "The U.S. pany, on a mission to the Royal Family. I Each company knew that it would need an Army officials had the entire Plessey cost asked one of the British for his net impres­ American partner to neutralize political re­ breakdown. They got it from Her Majesty's sion of the episode. "We haven't had so sistance to making a deal of such magnitude Government." A British diplomat who fol­ much fun since Agincourt," he said. with foreigners. In 1983, Plessey joined lowed it all closely disagrees. "Plessey was Agincourt it wasn't. Britain's victory was forces with the Rockwell International Cor­ holding back on costs, even though it was bittersweet, for it exactly coincided with a poration, an aggressive company that builds being urged not to," he says. The uncertain­ major defeat in a different arena at the the B-IB bomber, the space shuttle, and ty about costs created a problem between hands of the French. And the defeat other big defense-related systems. Thomson, Plessey and Rockwell. In the bidding on de­ became all the harder to take as its causes­ after flirting with A. T. & T., aligned itself fense contracts, uncertainties inspire cau­ ignorance, and some hubris-became known. with GTE. Unlike Rockwell, GTE operates tion of a kind that dulls the competitive The stakes were several billion dollars and a mainly in the civilian market, but the mili­ spirit and makes cost estimates rise. Rock­ possible foothold in America-ordinarily the tary work that it does do consists mainly of well is thought by many who followed the fastest horse on technology's track, a maker developing communications for the Army. affair to have hedged against uncertainty and seller of products more rarefied than Rockwell offered Plessey intimate knowl- by implanting a large "fudge factor" in its June 9, 1986 CONGRESSIONAL RECORD-SENATE 13025 cost estimate. An American businessman he said. "Its technology is outstanding, but berger, told them. They hit on a two­ who observed the proceedings says, "When it usually lacks good intelligence. It is badly pronged strategy: Mrs. Thatcher would you've never built a product, you tend to informed and unreasonably greedy.'' appeal directly to Reagan, and her Govern­ feed pessimistic assumptions about costs Last summer, as the time for best and ment would propose a somewhat simpler into your calculations. Being conservative in final bids drew near, relations between Ples­ version of Ptarmigan-one that ought to this game is being pricey. It sends a signal sey and Rockwell had become "appalling," cost a billion or so dollars less. through the whole organization and affects according to a British diplomat, Plessey was Mrs. Thatcher's letter, dated August 30th, price calculations all the way down the line. nominally in charge, but Rockwell, because arrived in Washington on August 30th and The effect is to pyramid costs." it was supposed to do three-quarters of the reached the President in California the next The early bidding was followed by field work on ptarmigan, would be making the day. The letter drew on a paper that had tests of the two systems. ptarmigan was final bid. And Plessey, I heard, wasn't told been prepared by the Foreign Office and demonstrated twice-once in West Germany the figure the Rockwell actually bid. I spoke was designed to show that France was a bad and then on Salisbury Plain. RITA was on the telephone with Michael Heseltine ally. It cited de Gaulle's withdrawal from demonstrated only once, but over a larger this spring, shortly after he had resigned as the North Atlantic Treaty Organization's area. Two thousand French soldiers were Mrs. Thatcher's Defense Secretary, and military structure, and various other alleged maneuvered over a region of eastern France asked him why Britain's bid was so high. misdeeds of the French, "It was an astonish­ which is roughly the size of Rhode Island­ "I don't know," he said. "I asked but never ing document," says a foreign diplomat who about as large as the area an Army corps got a satisfactory answer." received a copy purely by mistake. The might defend. Observers included five I then asked if Plessey had known what Thatcher letter surprised the Administra­ American generals and several congressional Rockwell was bidding. tion by its blunt and rather emotional tone. staff members, who roamed the area by jeep "No," he said. "Nobody did." It began by noting her personal interest in and helicoptor watching Army evaluators British intelligence was in a bad way. It the Army's program as it had been reflected try to "crash" the system by pushing it to didn't know what the opposition was bid­ in her conversations with the President and various extremes. They never succeeded. ding, or even what Plessey's American part­ "Cap." She then said she was "profoundly The demonstration was a great success, and ner was bidding. Whitehall was frankly disturbed" that the Army seemed to favor the observers liked being able to call their uneasy-although, like the companies, it RITA. This, she said, "would simply not be offices in Washington from jeeps in what took comfort from the Thatcher card, understood" in her country. "People will seemed the middle of nowhere. The ptarmi­ which, if necessary, would be played to the not understand" how this could happen, she gan demonstrations were just as successful. hilt. The State Department and the N.S.C. said, given the large amount of American According to Ambrose, the two systems per­ staff tried to avoid becoming mixed up in a military equipment bought by Britain and formed equally well. Since the British had battle between major allies. And some effort in view of British support for the United argued all along that ptarmigan had an was made to protect Reagan from the affair. States "in every way.'' edge, I asked Ambrose about that. A member of the N.S.C. staff recalls warn­ The third paragraph said that the Ptarmi­ "On balance Ptarmigan had a bit more at­ ing a British diplomat during the spring gan system offered greater capability in pro­ traction," he said. "But it was the sum of about relying on the Thatcher connection. portion to costs, and that if less capability pluses and minuses. The British had some "I told him that they were whistling in the was required the British wanted an opportu­ pluses, but not enough to justify a signifi­ dark if they thought Reagan would involve nity to bid "like for like." The last para­ cantly larger price. They had some minuses, himself," he says. "He doesn't involve him­ graph said a decision against the British too-on the technical side. We called them self in procurement matters." would be "difficult to deal with," and reem­ close to even." Mrs. Thatcher had raised the question of phasized Mr. Thatcher's "extreme interest Since either system could do the job, the Ptarmigan with both Reagan and Secretary in this program." The Foreign Office, only real issue should have been the price Weinberger during a visit to Washington in having urged a letter, "was surprised by the the Army would have to pay. But everyone February of 1985. She was there again in tone and content" of this one, according to knew that if all things were equal the Brit­ April, for just a few hours, and again men­ a British diplomat, who says that Mrs. ish would beat the French. The Thomson­ tioned it. In July, she raised it with Wein­ Thatcher rewrote a milder version that had GTE forces felt they had to be ten per cent berger separately on yet another visit. But been submitted to her. "better"-cheaper-in order to overcome in mid-August, about two weeks after the "All hell began breaking loose," one of the Plessey-Rockwell's political advantage. Ac­ bidding was closed, the French began to American players says. And a senior British tually, the ten-percent calculation was too hear rumors that RITA was the winner, and diplomat says, "The transatlantic wires low. In the light of what happened, the that the Army would announce the decision were humming. Any of us who had possibly British would have won if their entry had before the end of the month. On August useful contacts in Washington were told to been only ten percent higher than France's. 21st, Thomson drafted alternative press call them, and we did. It was all hands to But it was higher by more than seventy per­ statements-one for good news and one for the pump.'' A new, wholly unsolicited bid on cent. The Thomson-GTE bid was four bil­ bad. But the expected announcement wasn't ptarmigan arrived, even though "best and lion three hundred million dollars; Plessey­ made, mainly because the figures on which final" normally means just that. And the Rockwell's bid was seven billion four hun­ the Army was basing its decision were being French, having seen the Thatcher letter dred million. The Thatcher Government is independently reviewed. within two or three days of its delivery, still trying to work out how so absurdly On large contracts, the Office of the Sec­ were furious and were tempted to protest. large a gap in the prices could have devel­ retary of Defense may, if it chooses, call for The American Embassy in Paris was strong­ oped. The answers aren't all in, but it does an independent audit of the data by its own ly urging such a move. But the French gov­ seem that Thomson and GTE did every­ people. Weinberger called for an audit of ernment decided to keep faith with its earli­ thing right, while their competitors did the RITA-Ptarmigan bidding. er decision against intervening. However, nothing right. The French, having stifled The audit was aimed at buying time. Joe M. Rodgers, a wealthy building contrac­ pride once, did it again by putting GTE in "Reagan was in a tough spot," a British dip­ tor from Tennessee who had arrived as Am­ charge of the effort to win the competition; lomat says, "His best friend and ally was bassador during the summer, decided to their American partner, they reasoned, playing the special-relationship card. He take a hand. On September 12th, Rodgers would do better at selling a French brand knew, but she didn't, that the price dispari­ flew back to Washington on the Concorde name in the American market. Moreover, ty was huge. The affair was highly embar­ and-more im­ passed asking her not to. look like candy by comparison. The It was all over. The final decision had portant-that Britain's bid, if a trifle been made by Weinberger, Britain's fore­ most recent of the stories on the higher, was nonetheless competitive, and most advocate. Still, the British couldn't, or deadly drug appears in this week's this was obviously quite wrong. Questions wouldn't, accept the fact that they had lost Newsweek. arise. Since neither Plessey nor the Ministry to the French in Washington, a town where In my view, Newsweek is doing the of Defense knew what Rockwell had bid, they normally run rings around the French Nation a public service with the atten­ how could either have assured Mrs. Thatch­ and everyone else. On Monday, November er that the bid was competitive? And why tion and education it is providing on 4th, they made a last but futile try to this new threat to our communities­ was Her Majesty's Government so incuri­ reopen the bidding on some new basis. And ous? Why didn't some part of its official ap­ on the following day Weinberger called He­ and, in fact, our whole society. There paratus uncover the awful truth of Britain's seltine and gave him the bad news. Hesel­ should be no mistake, crack is danger­ position? tine then informed Mrs. Thatcher. Both ous not only because of the effect it On Saturday, September 28th, McFarlane were described to me as surprised, and very has on the user, but also because of arrived at London's Heathrow Airport and emotional-a reaction that struck me as pe­ the crime it engenders. was driven directly to Chequers, the Prime culiar, since the handwriting had been on Mr. President, I commend this News­ Minister's official country residence, to brief the wall for some time. I asked Heseltine her on talks in Washington with Soviet For­ week article to my colleagues and ask about that. that it be printed in the RECORD. eign Minister Eduard Shevardnadze. The "Until the game is lost, you must believe talks had dealt mainly with the Reagan­ you are winning," he replied. The article follows: Gorbachev summit conference to be held in I asked about the decision itself. [From Newsweek, June 16, 19861 Geneva in November. "I think Cap took the only decision he The Administration was planning to invite could take, given the figures being dis­ CRACK AND CRIME European leaders to a "mini-summit" dinner cussed," he said. Cruising the high-crime streets of Bos­ in New York in late October; its purpose The French and the British were both ton's Roxbury ghetto, Officers Leo Ronan would be to discuss the Gorbachev encoun­ amazed by the size of the of the gap in the and Fred Stevens spotted three young men ter, McFarlane, in his conversation with bids when the formal announcement was who seemed to be delivering drugs. The cou­ Mrs. Thatcher, didn't disclose this plan. He made. "It stupefied us," an official of rier was carrying a large gym bag; the other flew on to Paris later that afternoon to give France's Defense Ministry says. Within a two were bodyguards. Ronan and Stevens Mitterrand the same briefing. Again, he few days, Heseltine had ordered an inquiry stopped their car to investigate and the trio didn't mention the dinner. By Monday into what went wrong. In Washington, ev­ took off running. Ronan chased the man morning, news of it has been leaked to the eryone agrees that the French helped their with the gym bag, but the suspect got away press. Mitterrand was furious that McFar­ cause by not intervening politically at any through the backyards of Roxbury. But the lane hadn't alerted him. And Mitterrand point. I asked Ambrose about intervention. bag, found under a parked car, contained was the only invitee who declined the invita­ "Beyond a certain point, political activity 1,051 vials of crack cocaine worth more that tion, although he almost certainly would raises questions about the procurement $26,000 and an address list written on the not have accepted on such abrupt notice process," he said. "Mrs. Thatcher's letter back of a receipt from a five-and-dime store even if he had been forewarned. I asked a came after the bidding was closed. That is in New York City. The evidence of a New British diplomat if the British had also been why it was wrong. The government can't op­ York connection was disturbing and so was upset about not being told in advance about erate if it is going to buy goods and services the size of the shipment: Ronan and Ste­ the dinner. "No," he said. "Bud may have for some reason other than function.'' vens had stumbled onto the biggest crack felt he didn't have the authority to discuss Actually, the French government normal­ bust Boston had ever seen. "We've been it; the President may not have fully commit­ ly intervenes in arms deals with at least as lucky so far," said Lt. James Wood, com­ ted himself to it when Bud departed. We much brio as any other. It responded to the mander of the Boston PD's Drug Control didn't think anything of it." But French exceptional circumstances of this affair by Unit. "But we have to keep it contained or it diplomats worried that Mitterrand's "snub" adopting exceptional restraint. could blow up like New York.'' June 9, 1986 CONGRESSIONAL RECORD-SENATE 13027 Or like Los Angeles, Miami, Houston and income blacks and Hispanics-and one of caine into crack. The suspects had about Detroit-cities where, by every estimation, New York's open-air drug markets. "One-a­ two pounds of crack worth about $150,000 in the epidemic of "crack" or "rock" cocaine seven, you can get anything you want," says the room. They also had more than 16,000 has already reached crisis proportions. Juan, a skinny 19-year-old. "You get crack, plastic vials that are commonly used in New Crack-smokable cocaine-has suddenly coke, herb, heroin. But crack's the thing. York to package crack for sale. The only become America's fastest-growing drug epi­ That's what's happening now." The street equipment needed was two glass coffee pots, demic and potentially its most serious. It is moves to the furtive sound of illicit com­ a hot plate, a pair of scales and a case of cheap, plentiful and intensely addictive, a merce. At night, particularly on weekends, baking soda; baking soda is used as a rea­ drug whose potential for social disruption West 107th Street sees a steady stream of gent in the conversion process. Luckily, the and individual tragedy is comparable only to limos, taxis and out-of-state cars. "Some­ suspects were caught totally off guard-for heroin. Fueled by the 500 percent increase times you get the impression we're in New they had a small arsenal of loaded weapons in the amount of cocaine smuggled into this Jersey," says Deputy Inspector Frank that included a rifle, four pistols and two country from South America, the crack Bihler, commander of the NYPD's 24th Pre­ machine guns. It was the biggest crack bust craze is spreading nationwide. According to cinct; he jokes about blowing up the bridges in the city's history-but the "factory," Arnold Washton, a respected drug-abuse and tunnels to keep the suburbanites out. police said, probably served no more than a specialist who operates a national cocaine But nobody jokes about the neighborhood 10-block area. hot line, crack and rock are now widely young addicts. "They're skinny, dirty and A city like New York may have scores of available in 17 major cities and 25 states totally obsessed with getting crack," says underground factories-and only rarely are from coast to coast. Crack has captured the social worker Joe Stewart. "I see young girls police lucky enough to find them. Each fac­ ghetto and is inching its way into the sub­ in doorways trying to sell themselves "for tory supplies a handful of crack houses. urbs; its users come from all social strata the $5 it costs to get high. Each crack house keeps only small amounts and all walks of life. Wherever it appears, it It could be anywhere. The drug is the of the drug on hand. By restocking their spawns vicious violence among dealers and same, the hustle is the same and the cops salesmen frequently, dealers prevent police dopers and a startling increase in petty all say the same things. Selling crack is from making large-scale busts. Crack houses crime: in new York, where crack is now the where the money is, where the action is and are well protected by lookouts and fortified top-priority drug-enforcement problem, where the ghetto's inverted social pecking doors; if the police stage a raid, the sellers police believe it is the primary cause of an order begins. "Rock cocaine has taken on need only a few seconds to flush their dope 18 percent jump in robberies early this year. the social esteem that being a pimp had 20 down the toilet and evade prosecution. "You The police are losing the war against years ago," Wilkinson says. "It's just the 'in' can raid a house that's filled with people crack, and the war is turning the ghettos of thing to do, like wearing Fila running shoes. and has a table covered in cracR and drug major cities into something like a domestic And these people are very, very into the 'in' paraphernalia," says John Hogan, chief of Vietnam. The analogy is shopworn but apt. thing." The ounce men drive BMW's and the felony section of the Dade County State The crack trade operates like a guerrilla in­ Mercedeses, the kids who work as runners Attorney's Office in Miami. "But the place surgency and makes an infuriatingly elusive and lookouts wear $200 designer-label run­ is usually registered under a fictitious name, target for police. Dealers-"ounce men," as ning suits. By the weary estimate of one of and by the time the police get in, no one is they are known in L.A.-organize small cells Wilkinson's colleagues on the LAPD, Det. physically linked to the drugs. You can't of pushers, couriers and lookouts from the Charles Johns, the rock business is now the charge anyone." ghetto's legion of unemployed teenagers. largest employer in the Los Angeles ghetto. The war between cops and dealers has They enforce discipline with savage vio­ Although law-abiding neighbors still call in become an intricate game. In Los Angeles, lence, change locations frequently and alter tips by the hundreds, Wilkinson and Johns where police have successfully raided hun­ their tactics constantly to foil narcotics say the community as a whole is apathetic dreds of rock houses, dealers are sending agents. Police raids on "crack houses" typi­ about controlling the contagion. "You can't their sales teams into the streets. Each team cally recover too little cocaine to impress expect the police department to stop the consists of a steerer, who screens would-be prosecutors or the courts: given the logjam tide of rock cocaine when the people aren't buyers for security risks, a cashier, who in the prisons, most offenders spend little or policing themselves," Johns says. "Right takes the buyer's money, and a third dealer, no time in jail. Undercover investigations now they're saying, 'If it's not directly in­ who hands over the drugs: if a narcotics aimed at ringleaders often lead nowhere: volving me I'm not going to worry about it.' agent tries the usual buy-bust tactic, the crack can be manufactured in any kitchen, But it does involve them-and their neigh­ team scatters instantly and leaves the narc and the trade in bulk cocaine is highly de­ bors and their children." empty-handed. "Today you'll find the big­ centralized. "It's futile," says Det. Ken Wil­ L.A. may be the model for other cities gest amount of dealing in rock cocaine kinson, a 22-year veteran of the Los Angeles around the country: rock cocaine first ap­ is ... done by street people who are very, Police Department. "The answer has to be peared there nearly three years ago. Hous­ very transient," says the LAPD's Lt. Dick something other than what we're doing. ton has been flooded with it for the past Koskelin. "The reason is that we've educat­ Like other narcs in other cities, Wilkinson two years, Detroit about 18 months; New ed these dope dealers. Every time you make readily compares rock to heroin-and York police have discovered the crack crisis an arrest, they [ask each other], 'How'd you though the two drugs are very different, the within the past six months. They now see get caught?' So they know the rock-house comparison is not farfetched. Rock and crack as their top priority in drug enforce­ approach is passe." crack represent a quantum leap in the ad­ ment-and as a damnably difficult problem. There are ominous signs that crack and dictive properties of cocaine and a market­ The crack business is a cottage industry rock dealers are expanding well beyond the ing breakthrough for the pusher. Sold in which needs virtually no technology or cen­ inner city. L.A. police say rock houses are tiny chips that give the user a 5- to 20- tral organization, and which is essentially opening up in the San Fernando Valley and minute high, crack often is purer than sniff­ bound together only by vast amounts of in beach-front towns like Venice; in Florida, able cocaine. When smoked, cocaine mole­ cash. Its raw material, cocaine, is smuggled lawmen report a similar trend. "In the past cules reach the brain in less than 10 sec­ into this country from South America, often six months every city, county and almost onds; the resulting euphoric high is fol­ through Colombia and Mexico. Since 1980, every little town has been hit by the crack lowed by crushing depression. The cycle of according to congressional sources, the epidemic," says John J. Barbara of the Flor­ ups and downs reinforces the craving and, influx of smuggled cocaine has risen from ida Department of Law Enforcement. "It's according to many experts, can produce a approximately 25 tons a year to 125 tons a everywhere, and it crosses all racial, social powerful chemical dependency within two year. The U.S. Drug Enforcement Adminis­ and economic boundaries.'' In the North­ weeks. While a typical heroin addict shoots tration, which concentrates on major traf­ east, police are keeping a wary eye on the up once or twice a day, crack addicts need fickers, believes there is a two- or three-tier crack boom in New York, and there are another hit within minutes-which means network of wholesale distributors. Crack early indications that New York pushers are that even at $10 a chip, crack addition can dealers, operating just above the retail level, branching out. In Texas, rock has recently be more expensive than heroin. Heroin, frequently buy no more than a pound or shown up in Dallas and San Antonio, and a moreover, is a depressant, while cocaine is a two at a time. DEA official in Houston says at least some stimulant-which means that heroin addicts What happens next is best illustrated by a of the dealers operating in rock-infested are lethargic and mostly immobile during raid in New York last week. A police narcot­ Houston have migrated down from New the high, while crack addicts are likely to be ics squad raided a small crack house in a York. Houston police got grisly evidence of paranoid, and highly active. In Boston, Lt. Bronx apartment and found records leading the New York connection in a double homi­ Wood says, heroin addicts, "are scared of to the drug ring's factory, which turned out cide last August. The victims, both Haitians this stuff-and when a heroin addict says to be in another apartment building next from Brooklyn, were involved in a Jamai­ something is bad, you know it's bad." door. They got a warrant and surrounded can-run rock operation. "The workers in the West 107th Street in Manhattan is a the building. Two Puerto Rican men were dope house are being recruited from poor fringe neighborhood populated by low- allegedly caught in the act of converting co- Haitian and American black kids in New 13028 CONGRESSIONAL RECORD-SENATE June 9, 1986 York," says Houston Police Sgt. Steven plea-bargaining drug cases-and warned despair, played out under the glaring neon Clap part. that some neighborhoods now have "more o.f the street's once elegant theaters, long The most frightening aspect of the crack crack stops than bus stops.'' John Cusack smce become seedy porn palaces. Times problem is its exponential growth. In March chief of staff of the House Select Commit: Square is the no man's land of the crack Sen. Lawton Chiles convened a meeting of tee on Narcotics Abuse and Control, stresses trade, a place where the scavengers, the local police officials in Florida to discuss the the role of judicial "gridlock." "We are not losers from turf wars in the outlying neigh­ spread of "designer drugs" and was startled thinning out the ranks and making any borhoods are forced into the most danger­ to find his audience largely unconcerned by impact. We are not deterring.'' Cusack says. ous and wide-open drug hustle of them all. exotic hallucinogens. "He found that crack "As a matter of fact, the opposite is happen­ Despite a citywide crackdown that has was on everyone's mind," an aide says. ing. What's the risk? So few are getting "cooled" many other areas of the city, the "Crack is a firestorm issue that is over­ caught and the risk of prosecution is so 42nd Street commerce appeared to be in full whelming them and spreading like wildfire remote that we are encouraging people to cry last week: the junkies with drawn faces across the state. They want and need help." traffic." begging dimes for their next high, the "run­ A survey by the National Institute on Drug Art F. was a fortyish San Francisco lawyer ners" acting as lookouts and corralling cli­ Abuse indicates that 4.2 million Americans when cocaine took over his life. He was both ents, the undercover narcs on the prowl for reported having used cocaine within the a dealer and an addict. At the peak of his a bust. previous month-but the survey, which addiction, he smoked $1,000 worth of rock a One of the boldest dealers on the street is dates from 1982, made no distinction be­ day. Somewhere along the way he lost his "Eare," a big-shouldered Trinidadian wear­ tween sniffable cocaine and crack. "The wife, his two children and his Marin County ing gold chains and a diamond-studded growth in the past nine months is alarm­ home. "I. could see what was happening, but bracelet with his name engraved on it, who ing," says Arnold Washton. "In September none of 1t mattered." he says now. "I'd get claims a take of $12,000 a week at $10 per '85 we had not gotten a single call [on the d~pr~ssed that I was an addict, but when I'd vial of crack. Eare operates as brazenly as a cocaine hot line] about crack. Now, 33 per­ sllp mto depression it would lead five min­ utes later to another pipe. And when I was t~ee-card-monte dealer, waving fistfuls of cent of all coke users who call are talking btlls around as he deals his drugs at the about crack addiction. The explosion has happy, that would lead to another pipe." It all ended when a San Francisco police nar­ corner of 42nd and Seventh. One night last taken place in the past six to nine months. week a stretch limo pulled up near his turf It's a true epidemic." cotics squad kicked down his front door­ though even then, his first impulse after with two young couples coming from a prom Outmanned and underfunded police offi­ in New Jersey. While they stood at the car cials point to the abundant supply of co­ being booked was to go home and get high. Today, Art F. is staying straight and trying getting their picture taken, the chauffeur caine as the root of their problem. As the bought them some crack and the girls each rising tonnage of smuggled cocaine demon­ to rebuild his life. "I only hope the people using it-the kids smoking it-get sick roses. strates, the DEA's interdiction campaign Eare is surrounded by smaller fish: sellers, has so far failed to make much headway enough that they get into a recovery pro­ gram." he says. "Otherwise, life is tough runners and hangers-on. Most are under 25 against major traffickers-and though few and many are themselves crack addicts, lik~ local cops blame the DEA for their prob­ and then you die." Crack's rising cost to the nation is perhaps Arnold, a runner who smokes $100 worth of lems, they are increasingly angry at Wash­ crack a night. Some of Eare's henchmen ington. The DEA is "inundated just like we best measured by its toll on individuals like ~t F. Despite its benign reputation, cocaine pack supersharp box cutters, for slicing are," says L.A.'s Wilkinson. "My personal open competitors' faces. Many also wear feeling is that [federal policymakers arel 1S unquestionably addictive-and crack is ex­ tremely addictive. Researchers are not en­ "knuckle-busters"-rings implanted with afraid of stepping on the toes of certain tiny razor blades for "sparkups" with ma­ leaders of certain countries. It's obvious to tirely sure how the addiction takes hold. Unlike heroin, which creates a specific phys­ rauding dealers from the outer boroughs. us where the cocaine is coming from." In Eare got his start selling angel dust in the Detroit, Police Inspector Joel Gilliam makes iological need in the body, cocaine depend­ ency involves the subtle chemistry of the street's movie theaters. "Then they came the same point in more dramatic terms. "In out with this new thing called crack" he 1941 the Japanese bombed Pearl Harbor brain itself; both forms of addiction are re­ inforced by psychological dependence says. With $1,600 saved up from his• pro­ and we went to war," Gilliam says. "Today ceeds, he bought an ounce of cocaine which lit~le white packets are being dropped o~ which as any cigarette smoker can testify,~ also very powerful. In one experiment, says he turned into $6,000 worth of cra~k. <"In thlS country and nobody gives a damn." this business," he observes, using a maxim The DEA, meanwhile, tends to regard the Dr. Richard H. Schwartz, medical director of a Virginia drug-rehabilitation center of the street, "money talks, bullshit walks.") spread of crack as a problem for local police. Eare distributes the crack to his 12 to 15 "If you want to call it crack or rock or what­ monkeys allowed an unlimited supply of in: travenous cocaine died of convulsions within runners, each of whom may pull in about ever.. it's still cocaine," says Raymond $200 to $300 a day, keeping $1 for every $10 Vinstk, chief of cocaine investigations for five days. "They preferred cocaine to life­ that's the bottom line," Schwartz says. Dr. sale. He estimates he will make $250,000 by the agency. "For DEA it's a matter of get­ August, when he hopes to take his profits ting to the major suppliers and importers Frank Gawin of Yale University is pessimis­ tic that cocaine addicts can truly eradicate home to Trinidad. and shutting them down. For the local All too often, a dealer like Eare will spend police departments, it is to attempt to limit their need for the drug. "The best way to reduce demand would be to have God rede­ the money as fast as he makes it. In any the availability of cocaine to the street deal­ case, the prospects for comfortable retire­ ers." Another DEA official thinks the media sign the human brain to change the way the cocaine molecule reacts with certain neu­ ment are dim, If a dealer is not busted by are partly to blame for the crack craze. "We the police, he may be rolled by a competitor, are very concerned about a market being de­ rons," Gawin says. "It produces pleasure. That's a very unfortunate accident and I or become addicted himself. Eare says he is velo~ed because of all the publicity," says prepared to do time in jail, confident that spectal agent Robert O'Leary of the DEA's don't know how to solve it." The implications for national policy are his business will be waiting for him when he Washington-Baltimore field office. "We feel gets out. But most likely he is deluding him­ it's being accelerated by media hype." clear. Given the widespread societal accept­ ance of drugs of all types and given co­ seJ!. While his legal bills would probably be The point is plausible if not persuasive: in patd to keep him from testifying against New York, for example, crack suddenly caine's immense- addictive power the war against crack will not be won by ~ampaigns others, he is apt to be replaced on the street became the city's biggest drug problem with the day he leaves. very little attention from the press. Crack's to reduce public demand. To be sure, that lurid appeal as a potent high is part of its conclusion contradicts the current line BLEAK ROUTINE rising popularity; conversely, heroin use taken by many in the Reagan administra­ Eare's only sure legacy is his crack-addict­ may be declining because of the addicted tion-and it would require bigger law-en­ ed clientele. They include regulars like population's fear of contracting AIDS from forcement budgets at both the federal and Hector, who works the graveyard shift for a contaminated needles. But at bottom, crack local level. But the alternative, as the frus­ private garbage hauler and spends part of and rock are spreading because cocaine is so trated street cops know, is far worse. his $20- to $30-a-day salary on his drug widely available in the United States and needs. Hector says he controls his habit. He because the justice system has been unable AN INFERNO OF CRAVING, DEALING AND uses a standard pipe to smoke rather than to thwart the cocaine trade at any level. DESPAIR the slicker water pipes that increase the Police in every city where crack is now a . Total entitlements ...... 688 570 SENATE CONCURRENT MEMORIAL 1001 Total current level as of June 6, 1986 ...... 1,057,108 980,302 778,469 To the Members of the Arizona Congres­ CBO WEEKLY SCOREKEEPING REPORT FOR THE U.S. SENATE, 1986 budget resolution (S. Con. Res. sional Delegation: 99TH CONGRESS, 2D SESSION AS OF JUNE 6, 1986 32) ...... 1,069,700 967,600 795,700 Your memorialist respectfully represents: Amount remaining: [In billions of dollars and fiscal year 1986] Over budget resolution ...... 12,702 ...... Whereas, Native Americans desire to Under budget resolution ...... 12,592 ...... 17, 231 comply with the law; and Debt Whereas, eagles are an endangered species Budget ' lnterfund transactions do not add to budget totals. authority Outla~ Revenues su~~~ to worthy of federal protection; and Note.- Numbers may not add due to rounding. Whereas, Native Americans in Arizona use eagle feathers in their tribal ceremonies, in Current level' ...... 1,057.1 980.3 778.5 2,040.1 the healing procedures of their medicine Budget resolution, S. Con. Res. 32 ...... 1,069.7 967.6 795.2 • 2,078.7 men, and in the ceremonies of the Native Current level is: NOMINATION OF WILLIAM F. American churches; and OVer resolution by ...... 12.7 ...... MARTIN Whereas, the Endangered Species Act and Under resolution by ..... 12.6 ...... 17.2 38.6 the Bald Eagle Protection Act currently allow certain exemptions for traditional ac­ 1 The current level represents the estimated revenue and direct spending • Mr. McCLURE. Mr. President, on effects (budget authority and outlays) of all lej:islation that Congress ha~ June 6, 1986, the Senate confirmed the tivities of Indian tribes; and enacted 1n th1s or previous sessions or sent to the President for his approval. Whereas, the Congress of the United In addition, estimates are included of the direct spending effects for all nomination of William F. Martin to be States is considering legislation which entitlement or other programs requiring annual appropriations under current law Deputy Secretary of Energy. The even though the appropriations have not been made. The current level excludes would amend either the Endangered Species the revenue and direct spending effects of legislation that is in earlier stages nomination was favorably reported by Act or the Bald Eagle Protection Act to of completion, such as reported from a Senate Committee or passed by the the Energy and Natural Resources affect existing requirements for Indian Senate. The current level of debt subject to limit reflects the latest U.S. Treasury information on public debt transactions. Committee on April 30, 1986. The vote tribes. Wherefore, your memorialist, the 2 The current statutory debt limit is $2,078.7 billion Senate of the State of Arizona, the House of was 17 to 0. Representatives concurring, prays: I would like to comment briefly on 1. That, prior to the enactment of any FISCAL YEAR 1986 SUPPORTING DETAIL FOR CBO WEEKLY Mr. Martin's background and his new such legislation, the Members of the Arizo­ SCOREKEEPING REPORT, U.S. SENATE, 99TH CONGRESS, responsibilities as Deputy Secretary of na Congressional Delegation carefully bal­ 2D SESSION AS OF JUNE 6, 1986 the Department of Energy. ance the competing needs of the traditional Mr. Martin brings to the Depart­ and time-honored American Indian beliefs [In millions of dollars] ment substantial experience in the and practices with the fundamental need to field of international energy policy. He protect America's resources, as expressed in Budget Outlays Revenues the Endangered Species and Bald Eagle Pro­ authority served as Special Assistant to the tection Acts. President for National Security Af­ 2. That the Secretary of State of the State I. Enacted in previous sessions: fairs, and in that position, he coordi­ Revenues -··················································································· 777,794 of Arizona transmit copies of this Memorial Permanent appropriations and nated overall policy for the National to each Member of the Arizona Congres­ trust funds ...... 723,461 629,772 ...... Security Council. Mr. Martin first Other appropriations ...... 525,778 544,947 ...... sional Delegation.• Offsetting receipts ...... - 188,561 - 188,561 ...... joined the National Security Council in 1982 as an energy and East-West Total enacted in previous ses- BUDGET SCOREKEEPING sions ...... 1,060,679 986,159 777.794 economic specialist. From 1981 to 1982 ======he was Special Assistant to the Under REPORT II. Enacted this session: Commodity Credit Corporation Secretary for Economic Affairs at the e Mr. DOMENICI. Mr. President, I Urgent Supplemental Appropria· Department of State, and from 1977 to hereby submit to the Senate the lion, 1986 (Public law 99- 1981 he worked on the staff of the 243) ········································································································· budget scorekeeping report for this Federal Employees Benefits lm· International Energy Agency. week, prepared by the Congressional r:~~st' ~~ ~~~~ ~~~·~ ········ · ············ · ···· During his testimony before the Budget Office in response to section 5 VA Home loan Guarantee...... Amend- committee, Mr. Martin described his of the first budget resolution for fiscal ments (Public law 99-255) ...... - 51 Omnibus Budget Reconciliation general approach to Federal energy year 1986. This report also serves as Act of 1985 (Public law 99- policy. He stated: the scorekeeping report for the pur­ 272) ...... - 4,259 - 6,001 765 Department of Agriculture Urgent The experience of the last decade has il­ poses of section 311 of the Congres­ Supplemental, 1986 (Public lustrated the importance of striving for sional Budget Act, as amended. I ask law 99- 263) ...... secure and diversified energy sources at rea­ Advance to Hazardous Substance that the report be printed in the Response Trust Fund (Public sonable prices. To that end, we should con­ RECORD. law 99-270) ...... tinue to support the economic development June 9, 1986 CONGRESSIONAL RECORD-SENATE 13031 of our indigenous energy base including oil, has the potential to benefit all Ameri­ For many young trees that are being re- gas, coal, nuclear power and new and renew­ cans. planted able energy resources through reliance on "People Diplomacy" is a commenda­ Which will in time the felled trees replace free markets and continued efforts to ble effort and one that I wholeheart­ And not leave just an empty space. remove obstacles to the functioning of the It's a pleasure to think of the fishing we do market. edly applaud. I can think of no other issue more important to our Nation's With commercial boats and by sportsmen As Deputy Secretary of Energy, Mr. too. Martin will have a major role in for­ well-being than world peace.e Many food fish in schools abound mulating and implementing our Na­ Off Washingt on's coast and in Puget Sound. And lurking in our lakes and streams tion's energy policies. He will serve ODE TO WASHINGTON STATE with the Secretary in carrying out the Are game fish fit for a nimrod's dreams. responsibilities delegated to the De­ • Mr. GORTON. Mr. President, today It is our pride that no state in our nation partment by both the Congress and I should like to share with my col­ Can boast of more sources for recreation. leagues a very thoughtful and enter­ There are mountains to climb, lakes and the President. He will also assist the rivers to fish Secretary in representing the Depart­ taining piece of poetry written by Jess And if boating and sailing is our dish, ment's views before the public and Clifford, of Elma, W A. Mr. Clifford, Blue waters beckon from the bay presenting its policy positions to the who is 80 years old, wrote the poem in Where seagulls glide and orcas play. Congress. response to a relative's challenge to One may even spot a gam of whales Mr. President, Mr. Martin is now in come up with a better ballad than See them spout and show their tails. a position to begin fulfilling these re­ some being considered for the Wash­ For here in Washington man may be sponsibilities. I am pleased that his ington State song. I believe that Mr. In touch with nature on land and sea. nomination has received Senate con­ Clifford's efforts and love for Wash­ I may be biased as I relate firmation.• ington deserve to be recognized public­ The many good points of my chosen state ly. But to deny them would simply be folly So I'll stand up and declare by golly His expressed love for the people That the blessings of nature, the good life PEOPLE DIPLOMACY and natural resources of Washington and clean fun e Mr. BOSCHWITZ. Mr. President, I State is a true inspiration to those of All come together in this state, Washing­ rise today to bring to the attention of us familiar with what he writes about. ton.• my colleagues a very special event It is a pleasure to be reminded of the taking place this summer-a campaign fine qualities of the State that Sena­ to promote international peace tor Evans and I represent-especially NOMINATION OF DAVID B. through "People Diplomacy." "People by Mr. Clifford's creative work. WALLER Diplomacy" is starting in Washington Mr. President, I ask that the poem • Mr. McCLURE. Mr. President, on this week and will reach all around the be printed in the RECORD. June 6, 1986, the Senate confirmed the country over the next few weeks. It is The poem follows: nomination of David B. Waller to be a movement based on the belief that if ODE TO WASHINGTON Assistant Secretary of Energy for nations simply begin to communicate There are many fine states in the USA International Affairs and Energy on a personal level, we will make great But there's only one where I want to stay. Emergencies. The Committee on strides toward world peace. The theme Its bounty from nature is nowhere out done, Energy and Natural Resources favor­ of the movement, "Peace, Light and And the name of this state has to be Wash- ably reported Mr. Waller's nomination Friendship," emphasizes that, regard­ ington. on April30, 1986. We have scenic vistas by the score less of race, religion or political back­ On mountains, plains, and the big seashore. Mr. President, during committee ground, people worldwide are more Other items of interest are easy to find consideration of the nominee, the similar than different from each And here are a few that come to my mind. question once again arose as to the other. It started with 122 Americans There are clam-bed beaches on the ocean benefits that the United States re­ who toured Egypt early this year. strand ceives from membership in the Inter­ They felt compelled to share the And across the Cascades is apple land national Energy Agency, which was es­ bonds they developed in Egypt and Where grow those juicy, gourmet delights tablished to deal with severe disrup­ have arranged to bring their Egyptian That got their red color from chilly nights. tions in international energy supplies. tour guide, Mr. Abdel Hakim, to the We ship apples to market by the ton Because of my concerns, as well as United States this summer. Where they spread the fame of Washing­ those of other members, a briefing of ton. Throughout his stay, Mr. Hakim, an And waving in the breeze, much like the committee members was convened Egyptian archeologist who guided main with Allen Wallis, the Under Secretary Henry Kissinger through Egypt in Are acres and acres of golden grain. of State for Economic Affairs, and 1974, will be meeting with Govern­ What to a farmer's sight so neat George Bradley, the Acting Assistant ment officials, lecturing at colleges, As a well-tilled field of ripened wheat. Secretary of Energy for International and meeting Americans in an attempt For from this precious grain 'tis said Affairs and Energy Emergencies. to bring about understanding between Comes the staff of life, a loaf of bread. This discussion emphasized the our cultures. Upon his return to Of man-made structures, what a thrill to see status of emergency oil stocks among Egypt, Mr. Hakim has pledged to con­ That modern world wonder in Grand lEA-member countries. Our discussion Coulee. tinue to promote good will between It's a mammoth work, the biggest dam also reviewed efforts to establish an our two nations by conducting lectures That was ever built by Uncle Sam. lEA policy and framework for an early throughout his own country. A firm source -of power for industries' goals and consolidated stock draw in the One of my constituents, Larry Miller Is there where the mighty Columbia rolls. event of an international supply dis­ of Minneapolis, is one of the founders This hydro-power we plainly can see ruption. of the movement. "The idea was Benefits all of society. At this point a brief review of the purely spontaneous," he said. "We are The tall timber that grows in our Evergreen lEA Agreement would be appropriate. just a group of ordinary Americans, a State The agreement requires that each cross-section of the country, who want Is really something to relate. member nation maintain a strategic oil world peace." There's the Noble Fir and the Douglas too stock commitment equivalent to 90 Cedar, hemlock, pine and yew Ordinary? I do not think so. These It would be a chore just to number days of net oil imports. This require­ people are hardly ordinary. They have The mills that hum producing lumber. ment was modified in December 1982 taken money from their own pockets And it is gratifying to see when the lEA Governing Board decid­ to promote a cause in which they Regard for our ecology. ed that member countries would un­ wholeheartedly believe, and one which Public approval has been granted dertake efforts not to let stocks fall 13032 CONGRESSIONAL RECORD-SENATE June 9, 1986 below 90 days of oil imports for the stocks from the standpoint of its logis­ office, who volunteered thousands of preceding 3 calendar years. tical systems, its legal authorities, and hours of their own personal time. However, because of the way that its administration procedures. Bob Fletcher was the chief engineer this commitment is calculated this re­ I raise these concerns at this time, and chief recruiter for union trades quirement does not necessarily result Mr. President, as an indication of people in the project, as well as one of in 90 days of usable stocks. For exam­ areas for priority consideration by the the project's main supporters. His in­ ple, under the International Energy Assistant Secretary. Greater effort is volvement was critical to the fabulous Program, member nations may satisfy needed to encourage a strengthening success of the Centennial Ice Palace. this commitment by a combination of of implementation of the Internation­ Allen Geisen volunteered his time as means, including actual oil stocks, fuel al Energy Agreement. While much has head of engineering, and worked tire­ switching capacity, and standby oil been accomplished, much more re­ lessly to ensure the safety of the production. Therefore, a member can mains to be accomplished if the spirit project and other volunteers. John be in technical compliance with the of the International Energy Agree­ Kliethermes, head of the construction agreement without maintaining 90 ment is to be realized. The importance resource committee, spent long hours days of actual usable stocks in excess of the U.S. continuing these efforts is securing donations from area business of minimum operating requirements. reinforced by the continuing political people and labor unions. Mike Osterby Indeed, Mr. President, 16 out of the difficulties in the Middle East.e worked on the landscaping and layout. 21 lEA-member states now are in tech­ Jim Mosner and Sheldon Edd were in · nical compliance with the provisions charge of construction monitoring and of the International Energy Agree­ ST. PAUL'S ICE PALACE ment, but in my judgment, that is not e Mr. BOSCHWITZ. Mr. President, cleanup. Dave Swanson headed up site sufficient. We should be seeking full legend has it that long ago, Boreas layout, Kevin Kliethermes did cost es­ compliance with the spirit of the Rex, King of the Wind, roared down timates, and Charles Johnson recruit­ agreement. In several instances, while from the icy north and came upon a ed and organized supplies. All told, technical compliance exists, it is winter paradise that today we know as these and other members of the St. doubtful whether such compliance Minnesota. Enraptured by the loveli­ Paul office brought the contribution constitutes 90 days of usable stocks. ness of its seven hills, he declared St. of the Army Corps to almost 2,500 For example, there are differences in Paul to be his capital and winter play­ hours! stock availability depending upon ground. The voluntary involvement of corps whether such stocks are held by and One hundred years ago, the citizens employees on the Centennial Ice under the direct control of member of St. Paul began to celebrate the mar­ Palace demonstrates the strong rela­ governments, such as strategic petrole­ velous winter season in Minnesota by tionship between their employees and um reserve stocks, or whether such holding winter carnivals which help the people of St. Paul. And the entire stocks are being held by private com­ people enjoy and ignore the cold Winter Carnival once again demon­ panies in excess of their normal prac­ weather. This year marked the centen­ strates the volunteer spirit and strong tices and under the indirect control of nial anniversary of the St. Paul community pride for which Minneso­ member governments. Similarly, there Winter Carnival, and to celebrate the tans are so well known-no matter is a difference between total stocks occasion, the people and businesses of what the temperature.• and those stocks in excess of minimum the Twin Cities donated their time operating requirements, that is those and money to revive a tradition of past amounts in the oil production, trans­ carnivals-the construction of a giant SDI AND ARMS CONTROL GO portation, refining, and marketing ice palace to celebrate the legendary HAND IN HAND system, that are necessary for its home of King Boreas. • Mr. WALLOP. Mr. President, some normal operation. Perhaps one of the most unique fea­ scholars of the arms control process But technicalities aside, the spirit of tures about this year's ice palace was have put forward the argument that the lEA Agreement is that the the fact that it was a "People's the strategic defense initiative is in­ member countries would create a 90- Palace," almost entirely funded and compatible with arms control. This day emergency stockpile upon which constructed from private donations. theory was advanced, inter alia, by the member countries could rely. And Over 800 people volunteered many Thomas Schelling in a recent article in it is this spirit of the agreement that thousands of hours of time during the Foreign Affairs. But it has also been the U.S. position on IEA matters 2-month period it took to build this advanced by other arms control propo­ should fully support. Moreover, now, magnificent structure entirely out of nents and has gotten a grip on the when there is a weak oil market, is a ice. On February 5, when the Centen­ thinking of large segments of public particularly appropriate time for lEA­ nial Ice Palace was completed, it stood opinion in the Western democracies. member states to increase emergency at over 128 feet in height, the tallest Mr. President, this idea is competely oil stock levels. This possibility was in ice palace history. illogical. The most important effect of specifically recognized in the May 6 The tremendous spirit of those Min­ SDI thus far has been to promote and Tokyo Economic Declaration, as was nesotans who volunteered to build the advance the arms control process. SDI, the need for continuity of policies for palace is truly inspiring. Today, the ice Mr. President, was the program which achieving long-term energy market palace has long since melted away, but succeeded in bringing the Soviet stability and security of supply. Minnesotans will always remember Union to the negotiating table at Besides the question of the adequacy that while the palace was erected to Geneva for serious talks after years of of the amount of emergency stocks, commemorate the centennial anniver­ unproductive negotiations. Without issues remain regarding the capability sary of the Winter Carnival, it also SDI, the Soviets had no impetus to of lEA-member states to use their served as an important tribute to the enter into meaningful arms control stocks to meet lEA obligations. The voluntarism and community spirit by talks with us. recent AST-5 provided many lEA­ which it was built. Mr. President, SDI is at this moment member countries with exp~rience Of the many corporations, labor only a research program. The Soviets through simulation of the drawdown unions, and other organizations which have been engaged in such research of government held· stocks and manda­ helped build the palace, one group of for a long time in a very robust way. tory company stocks, as well as the in­ Federal employees from the St. Paul Indeed they are in production of troduction of demand restraint meas­ District Army Corps of Engineers was major segments of actual ABM de­ ures. Nevertheless, issues remain re­ truly outstanding in the ice palace vices. Since the advent of our SDI pro­ garding the adequacy of each coun­ effort. I would like to recognize some gram, they have been motivated to ad­ try's capabilities for drawing down of the dedicated individuals from this vance the arms control process, if only June 9, 1986 CONGRESSIONAL RECORD-SENATE 13033 to stop us and preserve their own sig­ complished by nuclear war. Such a defense weapons sites were relatively well protected nificant advantage. might provide an answer to the problem of and opportunities for successful preemp­ Mr. President, I ask that a thought­ "nuclear winter"; certainly it is the only de­ tion-i.e., for utterly debilitating the oppo­ velopment on the horizon, technological or nent's retaliatory force-had thereby been provoking article on the interrelation­ political, that holds out any hope of doing removed. ship of SDI and arms control by Pat­ so. The notion that an attacker would strike rick Glynn in the June 2 issue of New But at issue here are in fact two separate first, hoping that his defenses could handle Republic magazine be printed in the questions, which tend to be confused. First, a weakened retaliatory strike, depends on a REcoRD. I would flag for the readers is a world with strategic defenses more dan­ illogical assumption-namely, that defenses the point Mr. Glynn makes about the gerous than a world without them? Second, somehow fail to reduce the vulnerability of importance of developing technology is a world in which the Soviets gain an ad­ retailatory forces themselves. At present, to detect ballistic-missile submarines. vantage in defenses against nuclear missiles people dismiss the "window of vulnerabil­ The article follows: more dangerous than a world in which both ity" phenomenon on the grounds that the sides stay abreast in defensive research or in Soviet could never be confident of destroy­ STAR WARS AND ARMS CONTROL which the U.S. stays ahead? ing enough of our land-based force to make . Com­ TV movies like "Threads" and "The Day against almost everybody that I know, and mentators have subsequently complained After" predicting nuclear incineration? while most of them would have no interest about the absence of a MIRV ban, blaming At the very least, we ought to be clear in harming me there must be some that it on lack of U.S. will. More was involved: about what we will be bargaining away. To would. I feel safer in an environment of de­ any ban of MIRVs would have dispropor­ trade away SDI is to return, strategically terrence than I would in an environment of tionately hurt the Soviets because their ad­ and politically, to the conditions of 1979 to defense." vantage in "heavy" missiles gave them more 1983. True, SDI does not yet solve the prob­ These are striking statements coming warheads after MIRVing. Gerard Smith, lem of vulnerability at the root of popular from one of the major architects of arms the chief U.S. SALT negotiator, observed in nuclear anxiety, but at least the program control theory. They suggest something of his memoir of the SALT I negotiations that holds out some hope of eventualy doing so. the moral vision that has always been at the it was "far from clear" that the Soviets And it is necessary at the least to prevent bottom of the idea of "mutual assured de­ would have accepted even an attractive our present and very real vulnerabilities struction." While most of us would agree offer for a MIRV ban. Clearly, MIRVs con­ from getting any worse.e that we consent to a certain vulnerability in tributed to instability; but so did the ban­ our everyday lives (for example, walking ning of ABM. It was in fact the combina­ dark streets at night>. few of us like it or ac­ tion of the ABM limitations (including pre­ PROPOSED ARMS SALES tively seek it out. Schelling is confusing the vention of effective point defenses> and the • Mr. LUGAR. Mr. President, section effects of civilization with the cause. We failure to ban MIRV that by the early 1980s consent to vulnerability because of trust, left U.S. land-based missiles and airfields 36(b) of the Arms Export Control Act and we trust because a certain order has vulnerable to a preemptive strike into the requires that Congress receive advance been established, guaranteed by custom, by indefinite future. One can blame either fea­ notification of proposed arms sales law, and ultimately by the jail cell and the ture of the treaty, but the point is that the under that act in excess of $50 million policeman's baton. When this order fails to problem came from the combination of or, in the case of major defense equip­ obtain, we understand it as a breakdown of both, and that this was a characteristic ment as defined in the act, those in civilization. In Schelling's formulation, the result. excess of $14 million. Upon such noti­ offer of vulnerability becomes the source of In practice, there is no such thing as a fication, the Congress has 30 calendar trust. True, there are relationships in which leak-proof or complete arms agreement. we gain intimacy and trust by offering vul­ Every agreement is destined to overlook days during which the sale may be re­ nerability-with our spouses, our good some category of weaponry, to leave several viewed. The provision stipulates that, friends. But the natural distinction between new avenues to danger unclosed. SALT I in the Senate, the notification of pro­ the "private" and the "public" or "political" comprehensively limited strategic ballistic posed sales be sent to the chairman of realms lies partly in the fact that such inti­ missiles, defining them arbitrarily as having the Foreign Relations Committee. macy is impossible in the latter. Schelling a 5,500-kilometer range. Within a few years In keeping with my intention to see seems to be looking in politics for the kind we faced an incipient crisis in Europe preci­ that such information is available to of satisfaction people are lucky to find in pitated by a wholly new Soviet missile, the the full Senate, I ask consent to have marriage. SS-20 uncovered by existing agreements. Its It is questionable enough to argue that we reported range: 5,000 kilometers. printed in the RECORD at this point the must accept as unavoidable the vulnerabil­ The argument is sometimes made that notification I have received. ity of our society to a massive Soviet attack. without SALT things would have turned out The material follows: when research, permitted to go forward, worse for the United States. But given that DEFENSE SECURITY AsSISTANCE AGENCY, might render this vulnerability entirely the Soviets managed to ensure the vulner­ Washington, DC, June 6, 1986. avoidable. It is wholly perverse to embrace abUity of the entire U.S. ICBM force but did Hon. RICHARD C. LUGAR, this state of vulnerability, as Schelling so only by keeping their defense spending at Chairman, Committee on Foreign Relations, seems to do, as a positive moral good. As a a painful 2 to 14 percent of GNP, it is not U.S. Senate, Washington, DC. practical matter, in a world where armed self-evident that there was much more they DEAR MR. CHAIRMAN: Pursuant to the re­ tyrannies remain, no nation that takes this could-or were in a position to-do. As a porting requirements of Section 36(b)(l) of view is destined long to survive, let alone to cure for the arms race, at any rate, modern the Arms Export Control Act, we are for­ remain influential. Nothing will more quick­ arms control has always been a bit more like warding herewith Transmittal No. 86-36, ly spell our doom than if we come to define Novocain than penicillin: it has treated and concerning the Department of the Air "civilization" as a condition where liberty disguised the symptoms without affecting Force's proposed Letter of Offer to Japan and tyranny are equally vulnerable to the underlying cause. for defense articles and services estimated attack. In short, the choice that is within our to cost $55 million. Shortly after this letter SDI is now sustained against a wide array power to make is a good deal simpler: it is is delivered to your office, we plan to notify of opponents by the president's prestige and not whether to stop technology, but wheth­ the news media. public relations abil.ities. It is a fact of poli­ er to permit the Soviets to gain decisive Sincerely, tics that any agreement to curtail SDI will technological advantages. What we confront PHILIP C. GAST, Director. not simply limit but destroy it. Those like is not a symmetrical decision between arms [Transmittal No. 86-361 Schelling who believe in mutual vulnerabil­ control and the Strategic Defense Initia­ ity for its own sake would mount a cam­ tive-though Soviet propaganda, and some NOTICE OF PROPOSED ISSUANCE OF LETTER OF paign to finish what the treaty had begun. domestic critics of SDI, try to make it seem OFFER PuRSUANT TO SECTION 36(b)(l) OF THE ARMS EXPORT CONTROL AcT It is hard to see how a world with strate­ that way. If we hold on to SDI, we can gic defenses will be more dangerous than almost certainly keep both SDI and arms (i) Prospective purchaser: Japan. the present one. But that is not the choice control. Agreements should be possible on a Total estimated value: that policy is probably in a position to number of subjects-for example, not even Million 1 make. To prevent strategic defenses from the Soviets at present make unilateral aban­ Major defense equipment •••••••••••••••••• $44 emerging of the Arms Export we already face. That means, to be safe, trol, it is not clear that we will ultimately Control Act. stopping technology from detecting ballis­ have either. We may have a new arms agree­ Description of articles or services of­ tic-missile submarines as well as technol­ ment, it is true; but one wonders what hap­ fered: Two C-130H aircraft, spare parts, and ogies for strategic defense. Even if this were pens next. Any actual agreement will at best provisioning and technical data. desirable, it almost certainly cannot be achieve reductions only in certain classes of Military department: Air Force done. weapons. From the standpoint of real disar­ . The fact is that in controlling technology, mament, a huge amount of work would Sales commission, fee, etc., paid, of­ past arms control agreements have had a remain. What will we do the next time the fered, or agreed to be paid: None. June 9, 1986 CONGRESSIONAL RECORD-SENATE 13035 Sensitivity of technology contained in pending in a State court in California leader, I ask unanimous consent that the defense articles or defense services pro­ is seeking to compel the testimony of once the Senate completes its business posed to be sold: None. several former members of the staff of today, it stand in recess until 10:30 Section 28 report: Case not included in section 28 report. the Permanent Subcommittee on In­ a.m., on Tuesday, June 10, 1986. and indicate that votes can be expected 704<2> of the Ethics in Government Act during Tuesday's session throughout of 1978, 2 U.S.C. 288b and 288c<2> the day. DIRECTING THE SENATE LEGAL <1982), the Senate may direct its counsel to And it is the intention of the majori­ COUNSEL TO REPRESENT WIL­ represent former employees of the Senate ty leader to ask the Senate to remain LIAM GALLINARO AND PHILIP with respect to subpoenas issued to them in in session into the evening hours of to­ MANUEL their former official capacity; morrow, Tuesday, to deal with the tax Mr. SIMPSON. Mr. President, after Resolved, That the Senate Legal Counsel reform issue expeditiously. is directed to represent William Gallinaro, conferring with the Democratic leader, Philip Manuel, and any other former em­ Mr. President, we await clearance on and on behalf of Senators DoLE and ployee of the Permanent Subcommittee on the appointment of conferees on H.R. BYRD, I send a resolution to the desk Investigations who may be the subject of 4515, the supplemental appropriations and ask for its immediate consider­ proceedings to require them to testify in the measure which we wrestled with ation. case of People of the State of California v. during last week. There are better The PRESIDING OFFICER. The Robert Corenevsky. words for it, too, I think. The sooner resolution will be stated by title. Mr. SIMPSON. Mr. President, I we have those conferees available to The legislative clerk read as follows: move to reconsider the vote by which do their work, we will be able to com­ A resolution to direct the the resolution was agreed to. plete that. It is a very important meas­ Senate legal counsel to represent William Mr. BYRD. I move to lay that ure. There are some expiring appro­ Gallinaro and Philip Manuel in the case of motion on the table. priations there. Moneys are required People of the State of California v. Robert The motion to lay on the table was at various levels of the Federal Gov­ Corenevsky. agreed to. ernment. With that, we shall wait a The PRESIDING OFFICER. Is few moments to clear the appointment there objection to the present consid­ of those conferees. eration of the resolution? ORDERS FOR TUESDAY I suggest the absence of a quorum. There being no objection, the Senate RECESS UNTIL 10:30 A.M. proceeded to consider the resolution. 0 1720 Mr. DOLE. Mr. President, the de­ Mr. SIMPSON. Mr. President, again The PRESIDING OFFICER. The fendant in a criminal proceeding now after conferring with the Democratic clerk will call the roll. 13036 CONGRESSIONAL RECORD-SENATE June 9, 1986 The legislative clerk proceeded to supplemental appropriations for the chapter .III A only-conferees on the call the roll. fiscal year ending September 30, 1986, part of the Senate. Mr. SIMPSON. Mr. President, I ask and request a conference with the unanimous consent that the order for House on the disagreeing votes of the the quorum call be rescinded. two Houses thereon: and that the RECESS UNTIL TOMORROW AT The PRESIDING OFFICER. With­ Chair be authorized to appoint confer­ 10:30 A.M. out objection, it is so ordered. ees on the part of the Senate. Mr. SIMPSON. Mr. President, I in­ The PRESIDING OFFICER. With­ quire of the Democratic leader if he out objection, it is so ordered. has any further business to conduct? APPOINTMENT OF CONFEREES­ The Chair appointed Mr. HATFIELD, Mr. BYRD. No, Mr. President, I H.R. 4515 Mr. STEVENS, Mr. WEICKER, Mr. have not. Mr. SIMPSON. Mr. President, after McCLURE, Mr. GARN, Mr. COCHRAN, Mr. Mr. SIMPSON. There being no fur­ conferring with the Democratic leader ANDREWS, Mr. ABDNOR, Mr. KASTEN, ther business, I move, in accordance and awaiting the comments from our Mr. D'AMATO, Mr. RUDMAN-Mr. GOLD­ with the previous order, that the colleagues on both sides of the aisle, WATER for chapter III A only-Mr. Senate stand in recess until 10:30 a.m. because of the importance of the re­ STENNIS, Mr. BYRD, Mr. PROXMIRE, Mr. tomorrow morning. quest, I now ask unanimous consent INOUYE, Mr. HOLLINGS, Mr. CHILES, Mr. The motion was agreed to and, at that the Senate insist on its amend­ JOHNSTON, Mr. BURDICK, Mr. LEAHY, 5:37 p.m., the Senate recessed until to­ ments to H.R. 4515, making urgent and Mr. DECONCINI-Mr. NUNN for morrow, June 10, 1986, at 10:30 a.m.