September 27, 1977 EXTENSIONS OF REMARKS 31:279 EXTENSIONS OF REMARKS TV, REAL-LIFE VIOLENCE LINKED examples: knocking a boy off his bike, break­ ambiguously to offer any firm assurance that ing a telephone in a booth, throwing bricks the mass media in general, and films and at a girl, kicking a boy hard in the crotch, television in particular, either exercise a so­ HON. NEWTON I. STEERS, JR. burning a boy's chest with a cigarette, at­ cially harmful effect or that they do not ... OF MARYLAND tempting rape and bashing a boy's head "The mass media are no different than against a wall. other forms of cultural expression, which, IN THE HOUSE OF REPRESENTATIVES Of Belson's group of 1,565, only 725 claimed though they reveal the state of a society or Tuesday, September 27, 1977 not to have committed a single serious vio­ civilization, cannot be said to determine its lent act. development." Mr. STEERS. Mr. Speaker, the bene­ To determine television's effect, Belson, a fits of a highly technical, consumer­ professor at North East London Polytechnic, oriented society are many, but the split his group in two. Those who spent the dangers accompanying such a system most time watching more-violent programs were "qualifi·ers"; those who watched less­ ROSE-HULMAN PRESIDENT SPEAKS should not be ignored. Television is one violent fare and less often were his "con­ OUT ABOUT BENEFITS OF FREE of these dangers. It is my belief that the trols." MARKET hours of commercially popular, violent His most dramatic finding is that the pro­ programs are distorting the picture that longed violence-watchers had engaged on American children get of the role of vio­ average in 7.48 acts of serious violence in the HON. JOHN T. MYERS lence in society. past six months. The "controls," however, had OF INDIANA committed an average o! 5.02 such acts. For that reason, I have cosponsored IN THE HOUSE OF REPRESENTATIVES House Resolution 345, introduced by my Skeptics might contend that this simply reflects an extraordinary amount of violence Tuesday, September 27, 1977 distinguished colleague from Illinois among London's youths. But Belson argues

ANNUAL GASOLINE COSTS, WITH VARIABLE GAS PRICES AND MILEAGE RATES, FOR A CAR DRIVEN 10,000 MILES (ROUNDED TO NEAREST DOLLAR)

Mileage in miles per gallon

50 I 48 46 44 42 40 38 36 34 32 30 28 26 24 22 20 18 16 14 10

Gasoline costs per gallon: $0.56 ____ -- $112 $117 $122 $127 ~133 ~140 $147 $156 $165 $175 $187 $200 $215 $233 $255 $280 $311 $350 $400 $560 $0.58 ______116 121 126 132 138 145 153 161 171 181 193 207 223 242 264 290 322 363 414 580 $0.60 ______120 125 130 136 143 150 158 167 176 188 200 214 231 250 273 300 333 375 429 600 $0.62 __ -- -- 124 129 135 141 148 155 163 172 182 194 207 221 238 258 282 310 344 388 443 620 $0.64 ___ _-- 128 133 139 145 152 160 168 178 188 200 213 229 246 267 291 320 356 400 457 640 $0.66 ____ -- 132 138 143 150 157 165 174 183 194 206 220 236 254 275 300 330 367 413 471 660 $0.68 _-- _ -- 136 142 148 155 162 170 179 189 200 213 227 243 262 283 309 340 378 425 486 680 $0.70 ____ -- 140 146 152 159 167 175 184 194 206 219 233 250 269 292 318 350 389 438 500 700 $0.75 ____ -- 150 156 163 170 179 188 197 208 221 234 250 268 288 312 341 375 417 469 536 750 $0.80 ______160 167 174 182 190 200 211 222 235 250 267 286 308 333 364 400 444 500 571 800 $0.85 ______170 177 185 193 202 213 224 236 250 266 283 304 327 354 386 425 472 531 607 850 $0.90 ______180 188 196 205 214 225 237 250 265 281 300 321 346 375 409 450 500 563 643 900 $0.95 ____ -- 190 198 207 216 226 238 250 264 279 297 317 339 365 396 432 475 528 594 679 950 $1.00 ____ -- 200 208 217 227 238 250 263 278 294 313 333 357 385 417 455 500 556 625 714 1, 000 $1.20 __ __ -- 240 250 261 273 286 300 316 333 353 375 400 429 462 500 545 600 667 750 857 1, 200 $1.40 ___ --- 280 292 304 318 333 350 368 389 412 438 467 500 538 583 636 700 778 875 1, 000 l, 400 $1.60 ______320 333 348 364 381 400 421 444 471 500 533 571 615 667 727 800 889 1, 000 l, 143 1, 600 $1.80 ____ -- 360 375 391 409 429 450 474 500 529 563 600 643 692 750 818 900 1, 000 l, 125 l, 286 l, 800 $2.00 __ -- -- 400 417 435 455 476 500 526 556 588 625 667 714 769 833 909 1, 000 l, 111 1, 250 1, 429 2, 000

1 Miles per gallon.

VOTING RECORD OF REPRESENTA- authorizing appropriations for civilian say that Judge C. L. "Bud" Summers TIVE JONATHAN B. BINGHAM energy research and development, "yea." was a pillar of the community in La- Rollcall No. 532, motion to pass H.R. fayette County, Mo. Bud Summers 6683 to reduce hazards of earthquakes, passed away recently and, with his pass- HON. JONATHAN B. BINGHAM "yea." ing, the local community certainly lost OF NEW YORK one of its strongest supporters. IN THE HOUSE OF REPRESENTATIVES Bud Summers was a lifetime resident Tuesday, September 27, 1977 A TRIBUTE TO JUDGE C. L. "BUD" of Lafayette County and during his life SUMMERS Mr. BINGHAM. Mr. Speaker, over the he served the community in a wide va- past several weeks, I have missed, or riety of ways. At one time or another, he have not been recorded, on five rollcall was a member of the school board, presi- HON. IKE SKELTON dent of the Lions Club, a member of the votes. I wish to record here what my posi- OF MISSOURI tions would have been had I been re- Show-Me Regional Planning Commis- corded as voting: IN THE HOUSE OF REPRESENTATIVES sion, a member of the Missouri Valley Rollcall No. 320, motion to pass S. 521, Tuesday, September 27, 1977 Human Resources Development Commis- sion, and president of the Alma Tele- to authorize funds for repair of leaks at Mr. SKELTON. Mr. Speaker, many John F. Kennedy Center, "yea." times we hear the expression that some- phone Co. In 1971, he was elected as Rollcall No. 405, motion to pass House one is "a pillar of the community," but presiding judge of the Lafayette County Resolution 642, rul~ to consider H.R. 5023, we do not stop to think about exactly Court. re claims by United States on behalf of what that means. Webster's Dictionary Judge Summers is survived by his wife, Indians, "yea." defines "pillar" as : "a firm, upright sup- Dorothy; one daughter, Janell Summers Rollcall No. 527, motion to pass House port; a chief supporter." In light of this of Fort Wayne, Ind.; and three sisters Resolution 657, rule to consider H.R. 6796 definition, I think it is most fitting to Mrs. Lettie Bargstadt of Concordia, Mrs. 31284 EXTENSIONS OF REMARKS September 27, 1977 Nell Gieseke of Malta Bend, and Mrs. agement is a new phenomenon of short, THE REPUBLICAN PARTY-DOWN Robyn Payne of Higginsville. stable, and coherent pulses of radiation, BUT NOT OUT I knew Bud Summers well and the greater in intensity than lasers. This friendship between us was a warm, per­ effort, called pulse formation by ampli­ sonal bond. He was one of the best-loved fication of superradiant emission, was HON. GUY VANDER JAGT individuals in all of Lafayette County. begun in 1976 and is expected to play an OF MICHIGAN He was one of those rare people who earn important role in the scientific com­ IN THE HOUSE OF REPRESENTATIVES both affection and respect from those munity. Tuesday, September 27, 1977 around them. His death leaves a void in Dr. McDaniel was born September 13, the lives of his friends and relatives that 1918 in Guin, Ala. He holds a bachelor's Mr.VANDERJAGT. Mr. Speaker, on will be hard to fill. degree, summa cum laude, in chemistry Friday, September 23, the minority leader from Berry College, Mount Berry, Ga., delivered what I consider to be the sharp­ and honorary doctor of science from est, most comprehensive and detailed DR. JOHN L. McDANIEL RETffiES AT Auburn University, Auburn, Ala., and analysis that I have seen yet of the Car­ REDSTONE ARSENAL WITH A an honorary doctor of laws degree from ter administration. RECORD OF OUTSTANDING Athens State College, Athens, Ala. It is an unrivaled unraveling, thread ACHIEVEMENTS As Redstone Arsenal's top ranking by thread, of the Carter administration, civilian, he has been an Army employee exposing, as JOHN RHODES has so aptly since 1942 except for time spent in the phrased it, an administration that is HON. RONNIE G. FLIPPO Navy during World War II. marked by "uncertainty and ineptitude, OF ALABAMA Dr. McDaniel earned many honors in­ compounded by a moral blindness and a IN THE HOUSE OP REPRESENTATIVES cluding the highest honor awarded by lack of understanding of the processes of Tuesday, September 27, 1977 the Secretary of Defense, the Depart­ government." ment of Defense Distinguished Civilian Politicians often are accused of saying Mr. FLIPPO. Mr. Speaker, on Oc­ Service Award. He has also received one thing and meaning another; or of tober 1, a leader in the scientific and the Army Research and Development trying to say all things to all people. But, technical community of our Nation will Achievement Award, the Meritorious in this speech before the Commonwealth retire from active Government service. Civilian Service Award, and the Decora­ Club of California, JOHN RHODES has I feel that the recognition of the Con­ tion for Exceptional Civilian Service, of called the shots as they clearly are, and gress is fitting in respect to the accom­ the Department of the Army. Other they have landed cleanly within the plishments of Dr. John L. McDaniel of awards include Outstanding Service bullseye. the U.S. Army Missile Research and De­ Award, National Society of Professional I urge my colleagues to read the minor­ velopment Command at Redstone Arsen­ Engineers: Decoration for Exceptional ity leader's excellent critique, and ask al, Ala. Civilian Service Award: Alabama Sec­ that it be placed in the RECORD. Dr. McDaniel was personally involved tion, American Institute of Aeronautics THE REPUBLICAN PARTY-DOWN BUT NOT OUT in the engineering work on the Anny's and Astronautics, Holger N. Toftoy ( By Hon. JOHN J. RHODES) early missile and rocket systems. His Award. Last November second a new President was has been a career of service since 1942. elected. The new Congress that came into Since 1960, he has provided the man­ Dr. McDaniel is past president of the Tennessee Valley Chapter, American De­ office with him reflected the principat reason agerial leadership in directing major re­ for the change of Administration. 292 Demo­ search and development missile pro­ fense Preparedness Association. He is a crats were returned to the House of Repre­ grams for the Army, serving as Tech· member of the American Society for sentatives and 143 Republicans joined them nical Director of the Research and En­ Public Administration, the American In­ on the other side of the aisle. In the United gineering Directorate of the U.S. Army stitute of Aeronautics and Astronautics States Senate, 62 Democrats and 38 Republi­ Missile Command and later as Director the Alabama Academy of Science, th~ cans were sworn in. This at a time when 17 Society of Logistics Engineers, and the Senate seats had changed hands; the great­ of the Research, Development and En­ est number in nearly 30 years. If the Ameri­ gineering Laboratory, U.S. Army Mis­ Association of the U.S. Army. He served a 3-year term to the National Advisory can people had not voted overwhelmingly for sile Command. In January of this year, Democrat Representatives and Senators it is when the U.S. Army Missile Research Board of Directors of the Association of highly unlikely that Jimmy Carter wou'ld be and Development Command was created. the U.S. Army. He is a member of the sitting in the White House today. Indeed, he was named Deputy and Technical Committee on Federal Laboratories, Fed­ he lagged behind his ticket in most sections Director of the command. eral Council for Science and Technology. of the Country. Dr. McDaniel has demonstrated his He served on the National American Today-eight months after the President's Institute of Aeronautics and Astronau­ inauguration-those figures still sting men technical and managerial capabilities in and women devoted to the Republican cause. fielded U.S. Army missile systems such tics Technical Committee for Missile In­ According to the latest Gallup Poll, released as Pershing, Hawk, Tow, and Dragon; Systems. He is past president of the just two weeks ago, only 20 percent of the other systems still in the developmental stitute of Electrical and Electronics En­ American people choose to call themselves stage are Viper, Stinger, and Hellfire. gineers: the Alabama Chapter of the Republicans. But I believe that beneath the In addition to the missile and rocket American Society for Public Adminis­ surface of those somewhat disheartening fig­ systems conceived and developed under tration; and the Alabama Section of the ures lies a very different story. Although I Dr. McDaniel's direction, his leadership American Institute of Aeronautics and have to concede that the Republican Party and ingenuity have been demonstrated Astronautics. He is a member of the is down-it is very far from out. Madison County United Way board of The elections in 1974 and in 1976 both re­ in the development of a laser target il­ flected the awful impact of the Watergate luminator. This illuminator and the directors and the City of Huntsville Man­ era on the fortunes of the Republican party. technological concept for laser semi­ power Area Planning Council. I believe that the Watergate tragedy-and active guidance, were trans!erred to the Dr. McDaniel has been a strong ad­ its effects-have distorted the true picture U.S. Air Force in 1965 for initiation of vocate of higher education. He has of the Republican Party's basic health. the Paveway guided bomb program. served as a faculty member of the Uni­ Indeed, I am convinced that we are in the versity of Alabama in Huntsville and of opening months of a renaissance of national in 1968, a breakthrough in hyper­ Republican strength. And that strength is velocity technology was demonstrated the Florida Institute of Technology in based on the vitality of Republican prin­ which paved the way for development of Huntsville. He is an advisor to Auburn ciples. It is also based on the actions of an a family of hypervelocity weapon sys­ University, Athens State College, and the Administration and a Democrat Congress · tems. University of Tennessee Space Institute. that underline the dangers for America--ot Dr. McDaniel led the task of plan­ He has authored a number of technical a Democrat Administration and Congress nt ning and developing the Anny missile publications and has patents in the field the controls of our national destiny. plan in 1969 which was adopted through­ of guidance control. In four special elections to the House of out the Department of the Army in 1971 Dr. McDaniel is listed in Who's Who in Representatives since the 95th Congress be­ gan-three of them have been won by Re­ as an authoritative reference for man­ America, Who's Who in the South and publican candidates. One of those seats had agement of resources. Southwest; the National Register of been held by a Democrat for over one hun­ A moot recent breakthrough by re­ Scientific and Technical Personnel; and dred years. I am convinced that these spe­ searchers under Dr. McDaniel's man- American Men of Science. cial elections were won because of a com- September 27, 1977 EXTENSIONS OF REMARKS 31285 bination of factors that imply the basic tal expenditures that will improve produc­ What Jimmy Carter has a.:complishecl has empathy of the American people with the tivity-and open up meaningful jobs for been to sketch a blueprint of dramatically­ beliefs of the Republican Party. Each candi­ those who wish to work. growing government-and shrinking Amer­ date campaigned as an individual. They had The President has committed himself to a ican business initiatives and economic little reason-unfortunately-to emphasize balanced budget by the end of his first term. growth. I believe that Jimmy Carter-if he their association with the Party itself. But But the fiscal magic he's going to have to keeps up his current policies-will go down they made no bones-any one of them­ invoke to make those figures come out his in history as our first "no growth" President. about their belief in a balanced budget--in way is no magic at all. It's simply the old And-whatever some extreme environmen­ a firm national defense-and. a. steady re­ shell game. talists may believe-most Americans don't duction of the staggering tax burden borne But this is a shell game in which the stakes want a "no growth" society. They know that by American working men and women. They are unbelievably high. There are nuggets of this society can't survive as it is with no ma.de no bones-any one of them-about useful information to be plucked even from growth. We simply are not a no growth civi­ their individual beliefs that the American the governmental statistical hand-outs that lization. And we can't tolerate a "no growth" people are entitled to be let alone: That the choke the Washington paper machine. One Presidency. ever increasing encroachment of government of those statistics has just been released by The entire American story is a story of on the way we conduct our daily lives must the Congressional Budget Office. It's almost progress; and if it is to continue-so it must be brought to an end. These beliefs are impossible to believe-but the Congressional remain. shared by men and women throughout this Budget Office projects an increase in the In the early 1930's, under the desperate Country, and they are the principles on American tax burden that could produce in­ conditions of worldwide depression, many which Republican candidates have stood for calculable social and political consequences. American thinkers sounded the note of "the generations. According to the CBO-our perrnnal income mature economy,"-we had reached "the last I think it's also worthy of note that the tax will rise from $130.8 billion to $339 bil­ frontier"-in other words, we were finished­ results of these elections have run parallel lion by the close of fiscal '82. That means, my we had to make do with what was. to a growing sense in the Country, as re­ friends, that the American working man If we had listened to the voices of the corded in recent national polls, that the and woman will pay three times as much in "mature economists" and the "last frontier Democrat President and the Democrat Con­ taxes at the end of Jimmy Carter's first­ experts" , the American people would have gress have failed to instill a national confi­ and hopefully last-term, as they paid the closed down shop right after the California dence in their ability to do the job. I believe day he took his oath of office . goldrush. that Republican fortunes are bound to rise That's no way to balance a budget-indeed Well-I'm here to tell you-ladies and gen­ as increasing evidence of this Administra­ it looks to me to be very similar to some of tlemen-that if we listen to the no growth tion's failures continue to be written into the fiscal gimmickry to which New York experts of the 1970's-and to tlhe fine tuners the public record. City's government has been prone-and look of the American economy-we'll wind up in The President of the United States is the where they are. exactly the same place. For the fact is that national leader, and it is really no pleas­ Not only iG that no way to balance a civilization on the rise is propelled by the ure--even for the leader of a beleagured Re­ budget-but it is no way to encourage the exigencies of human nature to explore any publican minority in the House-to criticize surge of economic growth that is required to and all potential for growth. Government-­ him for his actions in that capacity. But put the unemployed back to work and to business enterprise and most of all-the peo­ eight months of the Carter Administration dampen the inflation that threatens to kill ple-are obliged to direct that growth in the reveal a pattern of uncertainty and inepti­ the hope of the future. most fruitful way and in the most intelligent tude, compounded by a moral blindness and How in the world can Jimmy Carter and direction. But to stoo it--to make a virtue of a lack of understanding of the very processes his Democrat colleagues in Congress come to its absence-is to create a need for authori­ of government, that bode no good for the grips with the enormous economi: problems tarian institutions tlhat almost inevitably Nation's economic health or for the state which now confront the Nation when they will lead either to social chaos or the ulti­ of its defenses. cannot see that one problem must be con­ mate loss of human freedom. When President Carter was candidate Car­ fronted in the context of another-that so­ We may seem a long way from those cir­ ter-he was free to make the mistakes of lutions cannot be applied like bandaids­ cumstances, my friends, but I believe that inexperience, and. the judgments of self­ but that the body of government and of the the Carter Administration is inadvertently righteousness. But the bill for those m istatres national system is one and must be treated taking the first steps along the road. and for that self-righteousness has come due . as one. Witness the creation of the New Depart­ and the American people are the ones who Perhaps the most dramatic illustration of ment of Energy, under Dr. James Schlesinger. have to pay. the Carter Administration's failure to under­ (I have-by the way-great respect for Dr. This Administration has compiled a record stand the system it must govern is the so­ Schlesinger's abilities and energy. Indeed­ in domestic and foreign policy in only eight called energy conservation plan. The fact that's part of the problem.) For the new De­ months that signals four years of difficult is-that the Carter energy package-intro­ partment of Energy concentrates unto itself times for the American people. I submit to duced with such fanfare-and with a call to enormous power to determine the price and you that in the actions already taken, and t.acrifice-is simply a disguised tax pro­ flow of and make market decisions as to the in those actions that have not been taken, gram-designed to take the money from the distribution of energy resources that fuel President Carter has drawn a map of intent po:kets of the American people-in order to the American economy. Never before-except with lines drawn by a hand guided by im­ put it into the U.S. Treasury-and to dole in war time-has a department of govern­ pulses that are a combination of the quixotic, it out for the President's heavily inflated ment been given the power that now accrues the stubborn, and the uncertain. social welfare programs. Why doesn't the to the Department of Energy. As an old Democrat used to say, "Let's look President of the United States understand Leave aside the fact that in an age of dis­ at the record." It is a record that strongly that his energy tax is bound to drive up the enchantment with unresponsive government implies an inability to maintain a sense of costs of production throughout American bureaucracy-President Carter and the Dem­ proportion-to recognize the limitations of industry? ocrat Congress have added yet another layer governmental action-and most of all-to Why doesn't the President of the United of 20,000 bureaucrats. (Incidentally, if the put first things first. States understand that his so-called energy history of the Department of Health, Educa­ program is lighting the fires of renewed tion and Welfare is any indication, we'll have President Carter came into office at the 200,000 of them in less than ten years.) Leave beginning of a period of resurgence in the inflation? Why doesn't the President of the United aside the blatant interference with personal national economy. The long recession had freedom which must evolve out of such a bottomed out-in considerable degree be­ States understand that lower production concentration of power. Think only of the cause of the courageous actions initiated by means fewer jobs and that fewer jobs means simple fact that the men and women who the Ford Administration; and there aopeared pain for the working people who can least make these decisions-decisions of economic to be in the offin,6 a long and sustained re­ afford that inflation? life and death-are responsible only to them­ covery. But the Carter Administration, wish­ Why doesn't the President of the United selves. ing to put its own stamp on national eco­ States understand that encouraging the price The fact is that the President and his Con­ nomic policy, has produced-only eight of fuel to rise to the so-called "world gressional cohorts are well on the way to months later-a situation in which inflation market level" is simply a surrender to the creating a hidden tax mechanism; its sole continues to rise at an annual rate of over economic power of the OPEC countries? meaningful function (aside from inhibiting six percent--and in which the unemployment Since when do the American people wish natural growth and progress) is to provide of black Americans is worse than at any time to surrender their economic well-being-the revenues for tlhe Carter coffers. since the end of the Second World War. Four­ determination of their Country's future-to But even that's not enough for an Admin­ teen and one-half percent of those black a small group of Arab potentates on sandy istration dedicated to the principle of hidden Americans who wish to work are unable to strips of deserts tens of thousands of miles tax. Under the guise of so-called "tax re­ find jobs. Over forty percent of black youth from our own shores? form," the President's people have drafted between the ages of 16 and 24 can't find em­ I don't believe the American people have and floated in the press a blueprint for com­ ployment. 'I'hat--ladies and gentlemen-is come to any such conclusion about whom bating the enormous housing shortage. Their social dynamite. And Jimmy Carter has lit they want to make their decisions for them. solution to the dilemma of millions of Ameri­ its fuse by his refusal to encourage circum­ And frankly-I don't believe that Mr. Carter cans who can no longer afford their own stances in which American business enter­ understands that this is exactly the situa­ homes because of uncontrolled inflation is a. prise is willing and able to invest in the cap,i- tion that his policies will create. simple one. Wipe out the historic mortgage 31286 EXTENSIONS OF REMARKS September 27, 1977 loan tax deduction. By so doing-you'll make American expenditure by American decision. This President has calied repeatedly for a it impossible for the middle income Ameri­ That is the way to conduct a winning war. "full employment" economy-but when cans even to dream of owning their own Somehow-though-this Administration heavy political contributors asked f"or special homes. There will no longer be a need to ful­ ha;, in a very short time appeared to lose "cargo preference," he backed them up df­ fill that dream. When Jimmy Carter talks its moral nerve. A Presidential campaign spite a report from the Government Account­ about filling loopholes-that apparently is on the theme of moral rectitude-a Presi­ ing Office that cargo preference-and I what he means. Lower the expectations of dent who declared that obeying the law quote-"will cause a net loss of employ­ the American people and their threshold of would not be sufficient for officials in his ment." aspiration will be lowered, too. Administration-now publicly declares his When the Administration's rationale for Would anyone in this room-would any­ "pride" in his closest and most power­ supporting this give away-rip-off legislation one in this audience-have thought it possi­ ful aide simply because a highly critical was questioned in the House of Representa­ ble only a few years ago-that an American government report declared that there were tives, the Democrat steam roller cut off all President and an American Congress would no apparent violations of the law in that debate. That's a splendid example of the seriously consider driving middle class Amer­ official's conduct. Democrat party's commitment to open gov­ icans from the housing market as an act A President who received his Party's nomi­ ernment. of public policy? I don't believe so-and I nation with the words that the American If the White House is to be perceived as a do believe that even public consideration of people are tired of seeing "big shots" evade place of moral leadership, then its occupant, such a tax policy-implies an attitude by the consequences of their actions-now ap­ particularly when he has made such lead­ this Administration that can only result in pears to millions of his fellow citizens to be ership his principal rallying cry, must call its departure from public life-as soon as singing a very different song. the shots as he sees them; and if he is to see the American people have an opportunity I very much dislike saying this-but I them as they are, he must take the moral to open the door marked "Exit." believe that it needs to be said. If there is mote from his eye. The President of the United States is an one strand of behavior discernible through Politics, above all, is a process of accom­ engineer. But-in his first; eight months in the fabric of the Carter Administration's modation. Effective political leadership in office-he has behaved more like Mr. Fixit­ policy-it is the strand of duplicity. this country demands the presumption that a tinkerer with public policy-who has pro­ Mr. Carter tells us on Tuesday that his duced by his tinkering so many holes in the one's political opponents are just as com­ welfare program will cost not one dime more mitted to the well-being of the American public dike that it will take far more than than those expenditures now being made: - ten fingers to fill them. people (no matter how mistaken they may Mr. Carter's tinkering is nowhere more but on Thursday,-he offers a program that be) as you yourself are. And I certainly think evident than in his proposal to alter the will cost, by his own estimates, 1.2 billion that the President has given every evidence financing mechanism for our Social Security more annually than current expenditures. of his desire to make his Administration a System. Whatever problems the Social Secu­ And by the estimates of impartial observers, benchmark for achievement. rity System faces, the American people wish the total will actually be over six billion But his politics, guided as they are, by it to be treated as a rational-soundly struc­ dollars more than we now spend. self-righteousness inappropriate to a process tured-system of insurance-geared to the Whether or not such a program is justi­ of conciliation, threaten the well-being of the contributions made by workers over a pro­ fied is a matter for debate, but there can be ver :I peoule he wishes to lead to oeace and ductive lifetime. But Jimmy Carter has sent no debate about the necessity for saying prosperity. Nowhere is this more evident legislation to Capitol Hill which would take what you mean in public discourse. than in the Carter Administration's foreign that first-and believe me, it is only the Witness another Carter campaign prom­ policy. first-step toward using general revenues to ise and what has happened to its implemen­ The President took office at a time when pay the Social Security bill. Instead of rem­ tation during the "days of wine and roses." American interests around the world were edying the System's ills by attacking its The President made the unqualified com­ in better shape than they had been in many inequities and by making the fundamental mitment to see to it, that all appointments years. The tragic war in Viet Nam had been changes that are necesrnry to restore its to the judiciary will be made solely on the concluded; the threatened backlash of bit­ health-the President simply wants to open basis of merit and without political con­ terness had evaporated by the obvious good up the public treasury and to increase yet sideration. will of President Ford. The United States again the tax burden of the American peo­ And now we have the sad spectacle of Mr. was well on the way to a successful conclu­ ple. Carter's Attorney General squabbling with sion of the SALT talks; the opening to It is because of Mr. Carter's first steps his Deputy Attorney General over exactly China had opened new possibilities for in the directions I have so far outlined that that promise. Some of the most successful achieving a stable relationship with the I believe the Republican Party is down­ prosecutors in the federal system have been greatest power in Asia, and quiet diplomacy yes-but very far from out. For although removed from office solely because of their to achieve an end to the bloody anguish in the American people have exhibited great membership, and sometimes it is a very Africa was the watchword for American good will for the President-and the polls nominal membership, in the Republican policymakers. But in eight months the Car­ indicate it-that good will-even as it ex­ Party. Witness Jonathan Goldstein. the ter Administration has inadvertently pro­ presses approval of Mr. Carter's personal U.S. Attorney in New Jersey who has made duced a situation in which the SALT talks qualities-is accompanied by great dissatis­ one of the most enviable records in the are threatened with deadlock, and a surge faction with the President's policies. country as a prosecutor of corrupt public in the arms race may be the inevitable officials of both parties, and who was forced result. We have polarized the situation in The American people don't believe that Southern Africa by an ongoing and appar­ there is an energy crisis-and they don't just last week to leave office as a result of pressure from the Democrat machine in ently never ending series of ad libs by our believe it because the President's remedies Ambassador to the United Nations, who are not in the American spirit-because the his own state. Witness the Deputy Attorney General who seems to have a mandate from the Presi­ President has not demonstrated his commit­ dent himself to conduct foreign policy on ment to doing everything necessary to tap is not even told when his personal recom­ mendation for U.S. Attorney in Western the front pages of the world's newspapers. new and increasing energy resources from Sometimes we in Washington wonder who every possible source. Pennsylvania is vetoed. And why was he vetoed? The New York Times tells us that he the Secretary of State is ... Cyrus Vance It is fashionable among Administration at the State Department in Washington ... circles to say that self-sufficiency is an illu­ has prosecuted friends of Democrat office­ holders who apparently have a line-indirect or Andy Young at the U.N. in New York. sion-but I remember-and some of you Most tragic of all-we appear to be moving remember-when-during a great crisis an­ though it may be-to the White House. Is this what Jimmy Carter meant when he steadily toward a confrontation in the Mid­ other President committed himself to help­ dle East-which could result in an explosion ing American industry build fifty thousand promised to insulate judicial appointments from our political process? of cataclysmic proportions. It is a sad fact airplanes a year. He was laughed at-it was that the rising tensions in the Middle East an impossible dream-it was whistling in the On the other hand, it would be unfair to can be directly related to the President's dark. But he pointed the way and American accuse Mr. Carter of breaking all of his cam­ off-the-cuff comments about negotiations know-how did the job. If it had not been paign promises. At least one promise-made between the Arabs and the Israelis-nego­ for his vision and for the drive of the Amer­ in the context of heavy campaign contribu­ tiations that must be conducted between ican people-if it had not been for our tech­ tions by the Maritime Union-has been kept. the parties themselves if they are to have nological ingenuity and our willingness to The President o! the United States-de­ any reasonable chance of success. Only last meet the test-the outcome of the world's spite the advice of the Secretary of the week the Administration renewed its pres­ greatest war might have been different Treasury-of the U.S. Navy-and of his own sure on Israel to deal with the Palestinians. indeed. counsel-has endorsed the principle of cargo With its usual exquisite timing-the State If we are now engaged in the moral preference-a principle that according to the Department put the squeeze on-on the eve equivalent of war-as this Democrat Presi­ Government Accounting Office will cost the of Rosh Hashanah-the beginning of the dent tells us-we must take positive action American consumer over 600 million dollars Jewish High Holy Days. to win that war. Husband the ammunition, a year in additional energy costs.-This at If American pressure is required-it is a yes-and that is what conservation is all the very same time when the President has pressure that should be exercised in quiet about. But take the offensive;-seize your pledged to fight the energy crisis as the negotiations-not via the avenue of moral own destiny and find new resources for "moral equivalent of war." preachment. September 27, 1977 EXTENSIONS OF REMARKS 31287' Our Secretary of State travels to China­ These recent Republican victories are an earthquake. It has built youth centers, and his journey is followed by two successive expression of the commitment of the Re­ religious conference buildings, cabins for statements by Premier Teng in which the publican Party and its candidates to apply the YMCA and, during the war, dormi­ Chinese leader stated explicity that the those measur·es that will permit us to main­ Vance trip resulted in a setback to Sino­ tain and strengthen a system in which in­ tories for servicemen. The East Los An­ American relations. This Administration has dividual liberties are the ultimate value. And geles Lions Club has always met the tra­ succeeded in worrying our allies on Taiwan they are an expression of the rapidly in­ ditional need for food for the hungry as to whether or not we are preparing to creasing understanding throughout the and in line with the commitment of abandon them. This Administration has country that it is indeed time for a change. Lions everywhere to aid the blind and succeeded in antagonizing an Israeli govern­ The Republican Party in Congress has al­ those with visual problems, it has pro­ ment because they perceive us as withdraw­ r·eady begun to demonstrate its capacity to vided eyeglasses for schoolchildren, ing slowly but steadily from our commit­ implement that change. In the House of ment to that country's survival. Representatives, the Minority has offered a braille instruments for the blind and has At the same time as all these develop­ comprehensive reform of the Social Se:::urity given seeing-eye dogs to and chauffered ments begin to loom on the horizon, we Act. Just last week-the Democrat Majority the blind. The benevolence of the club find President Carter unilaterally withdraw­ of a key subcommittee lined up on behalf of has not been limited to its own commu­ ing a key element of American defense (and the Republican initiative to take off the nity but it has also sent contributions in I mea.!l the B- 1 Bomber)-from the na­ earnings limitations that prevent older money and in food and clothing to Amer­ tional arsenal. We should look at this from Americans from supplementing their income. ican Indians on their reservations, to the the viewpoint of Premier Leonid Brezhnev. Just as important-we persuade::l the Major­ poor of Mexico, the Philippines, and Af­ He sees an American foreign policy in ity on that Committee that it was time for increasing disarray. He sees the U.S. fall the Federal bureaucracy to join the rest of rica. back from its initial negotiating position the American people by participating in the It is this type of service to mankind on SALT simply as a result of a Soviet re­ Social Security System. There is no reason which makes the East Los Angeles Lions fusal to accept-its premises. He sees a for the ordinary citizen to be obliged to pay Club truly outstanding in its spirit of strong verbal commitment to human rights Social Security taxes and for Washington's service. I commend them and wish them around the world sharply de-escalate at the government employees to es:::ape the burden well during their n~t 50 years and wish first signs of Russian displeasure. And he of a tax system they themselves have created. to bring their contributions to the atten­ asks himself the question- Am I dealing In the United States Senate, the Republi­ tion of the Members. with a strong Administration that has an c,i.n minority-all 38 Republican Senators­ i!lternational strategy designed to protect offered a comprehensive program emphasizing American interests- or am I dealing with an new production. I believe it's an alternative Administration whose right hand has no that will eventually be written into law. CATTLEMEN PLEAD CASE idea what its left hand is doing? I think I We Republicans in Congress have suc­ know the judgment that President Brezhnev ceede::l in preventing an overwhelming has arrived at-and I can only hope that Democrat majority from imposing a phoney HON. MAX BAUCUS he makes no mistake about what the mis­ public finance law-big union restrictions takes of the Carter Administration imply in the construction industry- and a host of OF MONTANA about American will and American resolu­ other Presidential musts. But most impor­ IN THE HOUSE OF REPRESENTATIVES tion. tant-we have offered alternatives. We have Tuesday, September 27, 1977 The simple fact is that President Carter's produced models for sober and moderate foreign policy-on its face, is non-existent. response to the needs of the Ameri ::: an people. Mr. BAUCUS. Mr. Speaker, last week The President has taken a series of initia­ We have repeatedly offered legislation call­ 40 desperate Montana cattle producers tives. He has then publicly retreated as soon ing for substantial tax cuts and I believe that traveled over 2,000 miles to come to as those initiatives c,i.me under fire- and he we have forced the Administration into a Washington to plead their case at the has failed to grasp the global implications p osition in which it will make at least a ten­ International Trade Commission hear­ of each and every one of his acts. Foreign tative and hes it,i. nt response. Tax reform may ing on meat and live cattle imports. These policy is no policy at all unless it is an inter­ be an abstraction but tax relief is a necessity. locking serief' of attitudes-iudgments and As our numbers grow-and they will grow 40 cattle producers represented the fol­ movements that are related to an overall steadily-our influence on the process will lowing seven State organizations: The global objective. I don't believe that we have magnify. I hope and trust that when I am Montana Cattlemen's Association-Eu­ such a policy today, because I don't think next invited to be with you, I will speak as gene Walker, president; The Montana President Carter has given his subordinates the Speaker of the House-and the title of Stockgrowers Association-Walter John­ the opportunity to develop such a policy. It's my talk will be-"The Republican Party-At son, president; The Meat Promoters of "off the cuff,"-and "shoot from the hip" the Gates of the White House." Montana-Voyle Samuelson, president; in Jimmy Carter's Washington. Thank you very much. Women Involved in Farm Economics­ I've spent a considerable amount of time today discussing the shortcomings of the Gay Holliday, president; Montana Na- Democrat President and the Democrat Con­ tional Farmers Organization-Phil gress for two reasons : EAST LOS ANGELES LIONS CLUB Olsen, presidE>nt; Montana State ( 1) I believe that we are going through CELEBRATES GOLDEN ANNIVER­ Grange-Jack Iman, master; and Min­ a period in which the high hopes of the SARY utemen for Agriculture-LeRoy Musick, majority that elected President Carter are president. These 40 cattlemen were now increasingly shadowed by the reality of joined by Montana's Governor, Thomas his performance. And I believe it neces­ HON. GEORGE E. DANIELSON L. Judge, and Robert Barthelmess, chair­ sary for Democrats-Republicans-and In­ OF CALIFORNIA man of the Montana State Board of dependents alike to send a message to IN THE HOUSE OF REPRESENTATIVES Livestock. Jimmy Carter. We want strong and coherent Montanans understand that beef im­ government designed to let us live our own Tuesday, September 27, 1977 lives here at home a!ld to protect the na­ ports are not the only cause of the pro­ tional interest abroad. We do not wish gov­ Mr. DANIELSON. Mr. Speaker, it has longed depression of cattle prices, but ernment to grow ever larger-ever more come to my attention that the East Los we do know that more restrictions on unresponsive-and ever further removed Angeles Lions Club of the district in Cal­ beef imports would provide some much­ from the realities of our individual day-to­ ifornia which I represent, is celebrating needed relief. day lives. its 50th anniversary. For half a century Following is a copy of my testimony (2) I was asked to discuss the future of before the International Trade Commis­ the Republican Party. I believe that the the East Los Angeles Lions Club has ren­ performance of the Carter Administration dered valuable service to our commu­ sion hearing describing the plight of and of the Democrat Congress is the most nity and to people needing help every­ the Montana cattle producer: vivid and powerful illustration of the neces­ where. The East Los Angeles Lions Club TESTIMONY OF CONGRESSMAN MAX BAUCUS sity for the Republican Party to elect office­ has also organized several other Lions Thank you for giving me the opportunity holders on the local-state and national Clubs in surrounding areas and through to present testimony on your investigation levels in ever-increasing numbers. I believe this "seed" effect has broadened its im­ into the conditions of competition in U.S. that the recent series of special elections to markets between domestic and foreign live Congress offers the first clue that the Ameri­ pact. cattle and cattle meat fit for human con­ can people are beginning to sense the in­ During its 50 years the club has made sumption. adequacies of Democrat solutions-based on generous contributions to people whose My testimony will be brief because I shall the history of the 1930's-to the problems homes have been destroyed or damaged limit it to Montana's unique situation rather we face in the 1970's. by such disasters as fire, flood, and than rehashing the facts and figures of in- 31288 EXTENSIONS OF REMARKS September 27, 1977 ternationa.l trade in general that will be CHILD PORNOGRAPHY the most popular themes seem to make the presented to you by other livestock sources. man a family friend or even the father. To begin with, I was distressed to learn All of this has been treated like an isolated, that the Commission recently vot ed unan­ HON. BARBARA A. MIKULSKI mysterious perversion by the Congressional imously that beef and cattle imports do not OF MARYLAND and state hearings, the citizen marches and ha.rm the domestic cattle industry. Coming pre:s exposes currently devoted to "doing from Mont ana, I can assure you that imports IN THE HOUSE OF REPRESENTATIVES something" about child pornography. hurt our state's domestic industry, both Tuesday, September 27, 1977 But how different are those obsessed, directly and deeply. power-hungry purchasers of child pornog­ Montana has the open spaces and range­ Ms. MIKULSKI. Y-:r. Speaker, yester­ raphy from the many "normal" men who are land for grazing cattle, but its removal from day we passed the reauthorization for convinced of the need and permission to be primary feedlot and distribution centers the Child Abuse Prevention and Treat­ violent, to conquer sexually? Once the belief and its proximity t o Canada make it par­ ment Act. Included in this bill was an in a false superiority is inflicted on men in ticularly vulnerable to both fluctuations in expanded definition of child abuse to in­ order to perpetuate a male-dominant system, the import picture for live cattle and the clude sexual exploitation. I think that surely the question is only one of degree; of long-term problem of excess imports. When how far the individual has to or will go in feedlots feel the pinch from increasing im­ now is an appropriate time to share order to get the drug of male superiority to ports, our cattlemen feel it first and hardest. an article written by Ms. Gloria Steinem, which society has addicted him. When imports cut directly into local markets, an editor of Ms. magazine, on the subject And how different are the child victims of the flood of beef a.cross the border from of Child Pornography. She addresses pornography from the millions who have Canada hits us harder than most other several crucial questions: Who are the been sexually approached or molested or states. purchasers of child pornography? What continuously brutalized as children, some­ Let me assure you that Montana's cattle are these men really like? Does child times by men in or close to their own fami­ markets are severely depressed and the eco­ lies? How many readers of these words have nomic bind that this places most of our pornography really differ from pornog­ had one such childhood experience them­ ranchers in is prolonged and disastrous. raphy in general? What conditions in selves? While imports are not the sole ca use of this our society allow pornography to thrive? And finally, how different are the profiteer­ problem, so much beef is coming into this Ms. Steinem's perceptions are full of in­ ing producers of child pornography from country and so many soundly managed sight. I think that she is right on target. other socially accepted pushers of the male­ ranches are on the ver~e of bankruptcy, that The article follows : dominan t drug? From all the media creators the relationship between imports and eco­ Children are being undressed and sexually who confuse sexuality with a "masculine" nomic disaster is hard to miss. fondled by adult males; men performing sex­ need for violence, superiority, and power? While direct cause-and-effect relationships ual acts on children; "Fathers" having inter­ Nonetheless, most of the current legisla­ are hard to pin down, a. look at the tables course with "daughters"; These widely avail­ tive, law enforcement, and societal efforts do for meat imports subject to the Meat Import able, very profitable films and photographs set off child pornography as a thing apart. Act and the price per hundredweight of are the subject of Congressional hearings and Though in most ways, lawmakers are quite slaughtered steers seems to indicate that TV documentaries as America discovers child comfortable grouping women and children the dramatic drop in imports due to the im­ pornography, and condemns it as a sexual together, in this case children are being position of mandatory quotas last December perversion. In fact, it is neither sexual nor a singled out. Pornographic violence against resulted in at least a slight firming of the perversion. It is one logical, inevitable result women seems to be regarded as an unfortu­ price for slaughtered steers after the appro­ of raising boys to believe they must control or nate but necessary by-product of First priate time lag. While slightly under $42 a conquer others as a measure of manhood, Amendment guarantees of free expression; hundredweight is far from a price that will and producing men who may continue to be­ or even as an inevitable,~normal part of keep Montana's stockgrowers from going lieve that succef:3 or even functioning-in sexual expression. In any case, the efforts are broke over the long run, it was certainly the sex as in other areas of life-depends on to create stiffer penalties for the producers highest price we've seen for over a year. Now, subservience, surrender, or some clear trib­ of child pornography, to make the transport with the new influx of imported beef, the ute to their superiority. If that sounds far­ of boys under 18 across state lines for im­ price is going back down. Our ranchers can­ fetched, consider the facts of child pornog­ moral purposes a federal crime ( as the trans­ not adjust their operations over the short, raphy. And consider their echoes in our own port of girls has been under the Mann Act), or even medium haul for the effect of im­ observations, perhaps even in our own lives. and generally to separate child pornography ports. They have no control over the world Who are the purchasers who feed their from the rest of the pornographic empire by pricing picture, over inflation, or over the sexual needs and a nationwide, lucrative in­ categorizing it as child abuse. many imput costs which almost every other dustry by buying books, films, and maga­ If the measures do rescue and protect worker or business person in America can zines of the humiliation, the brutalization children, they are obviously worth every pass either " back" or "forward." For our of children? They are, of course, men. That effort. But hws have a way of being en­ stockgrowers, there is no "back" and no way fact i3 so taken for granted that it's rarely forced according to the cultural values of to pass increased costs "forward." We a.re specified, nor is it a surprise that investiga­ their makers. Antiobscenity statutes seem stuck with reacting after the fact to deci­ tions have yet to turn up even a significant to be invoked more often against antiestab­ sions or oversights that will determine the few female buyers. (Yes, there have been lishment groups than against powerful por­ market picture for long periods of time. some women who help produce such pornog­ nography industries. (Self-help sex manu­ I hope that your cumulative picture of the raphy, but their need seems to be money als produced by and for women have been harm done to our producers is not unduly or the approval of men they're dependent suppressed, for instance, while Pl,,yboy and limited or colored by general considerations on, not the personal need for intimate, ob­ most of its imitators continue unquestioned of consumer pricing. It is easy enough to say scene power that creates the pornography and free.) One can imagine puritanical that st atistical measures a.re difficult to come market in the first place.) judges and communities using such laws, no by and, thus, absent adequate proof, the And who are these men who purchase matter how carefully worded, to suppress the Council on Wage and Price Stability should pornography? Their biographical facts aren't personal, freely chosen expressions of teen­ be accepted at face value with the warning recorded and rarely are their real names agers, while letting commercial violence go that consumer prices would be unduly af­ listed, but the clerks and dealers who serve free. fected by a reduction of beef and meat prod­ them usually remark on their respectable The truth is that sexuality itself isn't the uct imports. Politicians and bureaucrats appearance, their briefcases, white skins, source of the almost unbearable feeling of must always play to the person behind the and well-tailored clothes. Whether they are outrage and vicarious humiliation that shopping cart. But the inability to develop younger and "mod" or older and "Establish­ brings tears to our eyes-and a frightening adequate proof of harm to our industry may ment," they seem to be of a group most desire for revenge to our hearts- when we be partially the result of not putting enough likely to have been raised to expect power look at pornography, whether the object is resources into looking for the cause and ef­ and authority. an adult or a child. It is the obscene use of fect and then saying it's not there to be found The victims of child pornography are, of power, the physical or psychic violence done with the level of analysis we've done so far. course, even more powerless and without al­ to one human being by another, the pleas­ If you want to see effect, come to Montana, ternatives than the women who are the sub­ ure of the powerful in the humiliation and visit our ranches, and talk to our stock­ jects of most "adult" pornography. Many of dehumanizing of the powerless-that is the growers. If you want to find cause, don't stop these victims of "chicken porn," as it is source of our outrage. True, it is more ob­ with the conclusion that, since beef imports known to the profit-making trade, are young vious in the case of children: they cannot cannot be traced directly as the primary boys, and the television exposes have put a have the power and knowledge to either con­ cause of the depressed cattle industry, noth­ homophobic emphasis on them, as if the use sent freely or to defy the adult masculine ing can or should be done a.bout it. I'm sure of little girls by adult males were somehow world. But the forces at work are the same in that further digging will prove enough evi­ less shocking and less worthy of outrage. But all pornography. dence of a strong connection between the much of child pornography is devoted to the Right now, however, the only popular con­ flood of beef products into America and the undressing, fondling, genital display, and nection between the pornognphic uses of problems faced by my constituents. oral or genital penetration of female chil­ women and children is a patriarchal con­ Thank you very much. dren. Where there is a description or story, nection of blame. If women weren't becom- September 27, 1977 EXTENSIONS OF REMARKS 31289 ing so rebellious, the reasoning goes, we Keynes must bow to newly emerging MADAME MARIA JERITZA: SALUTE would continue to satisfy man's "natural" wage-price relationships. Many hourly TO A GREAT DIVA need for sexual dominance-and then men wages and salaries are now indexed to wouldn't become desperate enough to turn the cost of living. It is no longer true to children. In other words, child pornogra­ that wages rise at a slower rate than HON. PETER W. RODINO, JR. phy, like so many other social ills, is some­ OF NEW JERSEY how the fault of women. prices, more and more frequently, they It may take even more marches and law­ move together. IN THE HOUSE OF REPRESENTATIVES suits-and as many people jailed for civil If our larger and larger budget deficits Tuesday, September 27, 1977 disobedience and speak-outs-to affect the cannot significantly reduce unemploy­ "masculine" sexual war as it did to change ment, what is their effect? I maintain Mr. RODINO. Mr. Speaker, earlier this minds on the war in Vietn9.m. that their direct effect is twofold. First, month, a great lady and a dear friend Clearly, we have a long, long way to go.­ they give support to sustained and in­ was bestowed a richly deserved honor. GLORIA STEINEM. creasing inflation. Second, they crowd Honors are nothing new, of course, for out businesses from borrowing money Madame Maria Jeritza. For four decades, she dazzled the artistic world as a legen­ TAXING AND SPENDING POLICY and force up the interest rates for those that do manage to borrow. dary soprano, becoming one of opera's true luminaries in both this country and HON. WILLIS D. GRADISON, JR. PART II. BUDGET DEFICITS AND INFLATION in Europe. On September 18, Governor When the Federal Government spends OF OHIO Byrne presented her with New Jersey's more than it receives in tax revenue, the first annual a.ward of the State Council IN THE HOUSE OF REPRESENTATIVES deficit must be financed through borrow­ on the Arts-an award honoring New Tuesday, September 27, 1977 ing money from the public. The Govern­ Jersey residents for distinguished service Mr. GRADISON. Mr. Speaker, when ment competes with private business for in the arts and promoting culture in New John Maynard Keynes published his money. For example, in 1975, businesses Jersey. book, "General Theory," he set in motion borrowed $125.2 billion, the U.S. Gov­ The occasion was especially meaning­ a way for Government to influence the ernment borrowed $85.2 billion. In 1976, ful for me as Madame Jeritza has been a performance of an economy and control business borrowed $202.6 billion as the close and prized personal friend to me the problems of inflation a.nd unemploy­ recovery progressed, the Government and my wife for more than 25 years. She borrowed $69 billion. In 1975, two-fifths is godmother to my granddaughter who ment. For the last 50 years, Keynesian of all the money availablz for businesses economic theory has been the foundation bears her name. At her home in New for Government economic policy in over to use to expand production and employ­ Jersey, it has been my great privilege to 95 percent of the free world countries. ment went instead to the Government. socialize with some of the great artists It was used to purchase already existing of our time, men and women whose bril­ Assigning a very minor role to changes goods and services. With our rapidly in the size of the money supply. Keynes­ liance has given so much to the Nation expanding labor force, the need for new and to the world-Tucker and Farrar, ian economics relies on taxation and capital is crucial. Government spending to deal with infla­ Schipa and Gigli, DeLuca, and Martin­ Government action thus hinders capi­ elli. And no photograph of the many I tion and unemployment. tal formation in two ways. Business ac­ value is more dear to me than the one PART I. THE INADEQUACIES OF KEYNESIAN quires money to build and expand by bor­ Madame Jeritza gave to me showing ECONOMICS rowing from private individuals. The Puccini himself presenting her with a According to the theory, inflation and problem is that business must compete complete score of one of his works. It unemployment should not be increasing with the Government to borrow the limit­ enjoys an important spot in my home in at the same time. As prices rise, busi­ ed money available. Simultaneously, the New Jersey. nesses experience a nominal rise in prof­ money that the Government borrows is Jeritza, of course, is more than a great its and, in response, increase their pro­ used to purchase goods and services, low­ artist; she is a humanitarian whose work duction by hiring new workers. As infla­ ering the supply available to the Ameri­ and spirit have brought aid and joy tion creates the illusion of prosperity in can consumer. The result is that Gov­ throughout the world. business circles, the unemployed find ernment borrowing and spending leads to Mr. Speaker, I am pleased to place in work and the unemployment rate drops. higher prices for both business and con­ the RECORD a copy of the New York Daily In the face of this proposed inverse rela­ sumer. News article regarding last week's Gov­ tionship, unemployment can be cured President Carter should be applauded ernor's award: by greater Government spending to bol­ for his promise to balance the budget by [From the New York Daily News] ster aggregate demand and induce busi­ 1981. His method, however, should be BYR?l.'E'S BRAVOS FOR AN 0PF.RA GREAT ness to increase their production and hir­ scorned. Instead of reviewing all the (By Bruce Chadwick) ing. This can be done, in theory, without spending programs that are already tak­ triggering further increases in the price Madame Maria Jeritza Seery, 92, a legen­ ing place and making cuts of the waste, dary soprano in America and Europe for four level. the President intends to spend as usual. decades, was honored by Gov. Byrne yester­ But the experience of the last 5 years How will the budget be balanced? As our day as the first winner of what will be an in the United States has been one of wages rise with the cost of living, we will annual cultural award for the Garden State. simultaneous increases in inflation and move up into higher tax brackets. Our The award, bestowed yesterday at Morven, unemployment. Increased Government money would not be worth any more, but the Governors mansion in Princeton, was the spending has not had the effect on the highlight of the second annual reception for more of it will go into the tax revenues. members of New Jersey's cultural com­ employment rate that it should. What We must balance the budget, the soon­ munity. has gone wrong? Have the stimulus pack­ er the better. I say this not because bal­ Madame Jeritza, who was a sensation at ages been too conservative? The budget ancing the budget is so right, but rather the Court Opera in Vienna before moving to deficits too small? No. The deficits have because prolonged large deficits are so the United States in 1921, was the first choice been enormous. The reason for the inef­ wrong. We have not had a surplus in the ot the State Council on the Arts, which will fectiveness of the stimulus packages lies budget in over 10 years. Even during the recommend the culture award recipient to not in the implementation but in the boom times of the early 1970's, when the the governor each yt-ar. theory. "It is appropriate that the very first gov­ Government should have been running ernor's annual award go to Madame Jeritza," Keynesian economic theory draws its surpluses, we had deficits. This has gone said Gov. Byrne. "Sht> is more than just a policy conclusions from one crucial as­ on too long. Both taxes and spending great lady of the opera in New Jersey. She is sumption: wages will always rise at a should be reduced. We are no longer liv­ a singer of international stature. We all re­ slower rate than prices. This assumption ing in a Keynesian society where a na­ spect her very much. She has lived in New was accurate in the world Keynes lived tion's economy can be molded by fiscal Jersey for decades and has elevated New Jer­ in, and remained reasonable up to the policy. Clearly, our fiscal policies of the sey through her distinguished life." In the future, one or more people may re­ last decade. But just as Newtonian phys­ recent past have distorted the labor and ceive the award each year. The purpose of ics bowed to Einstein's discoveries on financial markets much more than they the award is to honor New Jersey residents relativity as techniques of measure­ have reduced inflation and unemploy­ for distinguished service in the arts field and ment became increasingly sophisticated, ment. to promote culture in New Jersey. 31290 EXTENSIONS OF REMARKS September 27, 1977 "We think the arts are as important as any sentatives is $42,500 a year with substantial which are in Philadelphia, to be subjected other field of endeavor. Thi.s award will at­ additional benefits in the form of prestige, It tract attention to what is going on in New travel pay, administrative pay and pension to an unnecessary side-step in flight. Jersey's artistic life. This is a state with some plans also available. This is not to imply would be to this country's advantage to great theaters, concert halls and ballets. that these benefits are not earned for the welcome visitors from abroad by making Many great New York and international per­ truth is that as in any organization there their journey here as fast and as easy formers live here, as well," said Al Kochka, are some earning their salaries while a few as possible. executive director of the State Council on noticeable individuals abuse the privileges Many members of Philadelphia's Jew­ the Arts. bestowed upon them. However, because of the ish community as well as large numbers A rambunctious child by her own admis­ position, status, honor and pay which the of Christian pilgrims and tourists visit sion, Madame Jeritza spent six years in a taxpayer grants to these men it behooves the Israel frequently. Therefore, we hope convent before turning to opera. She made ordinary citizen to be more aware of the real her debut as Elsa in "Lohengrin" in Olmutz, nature of the Congressman's work so that he that the Secretary of State will rule fa­ a small Austrian city, when she was 17. Her may properly evaluate his job performance. vorably on our request, which has the en­ religious training stayed with her. She al­ In order to inform the taxpayer, however, thusiastic support in Philadelphia of ways wore several religious medals beneath a number of myths about Congressional work Mayor Frank Rizzo, city aviation of­ her gowns during performances. must first be disspelled. The first and most ficials, and our constituents. She later moved to Vienna and became the important myth is the one which holds that I would like to enter in the RECORD the premier diva at the principal opera house the greatest amount of a representatives text of a letter sent on September 26 by there. She made her debut at the Met in 1921 time is spent speaking, debating and voting the Philadelphia congressional delega­ in Erich Korngold'.s "The Dead City." on the floor of Congress. Nothing is further The famed singer, who retired from a full­ from reality. The Congressman's real effort tion to Secretary of State Vance: time opera schedule in the mid-1930s, was is spent actually in two pursuits: working on WASHINGTON, D.C. famous for her Tosca, Thais, Salome and committees and dealing with the citizens September 26, 1977. Carmen. She was generally acknowledged to (constituents) from his region who he at Hon. CYRUS R. VANCE, be the favorite soprano of Puccini and Rich­ least in theory represents. Committee work Secretary, Department of State, ard Strauss. is usually dull, dreary, detailed investiga­ Washington, D .C . At the height of her career, she was mobbed tion of legislative issues carried out by DEAR Ma. SECRETARY: We are writing to you on the streets, treated like royalty wherever groups of representatives. The vast majority to ask for your support for a request from she went and the center of whatever room of this work deals in listening to testimony El Al Israel Airlines that it be granted land­ she was in. It was a little like that yesterday and investigating the validity of this testi­ ing rights in the City of Philadelphia. for the aging diva, as dozens swirled around mony. Such work constitutes the heart of Mr. Secretary, every year thousands of her offering congratulations. It was, well, like Congressional performance. Sadly the work is tourists and business people from all across a scene out of an opera. usually obscure, unrecorded to a great extent the tri-state Greater Philadelphia region and not readily known by the public at large. travel to Israel. However, a great inconven­ The really crucial votes a Congressman casts ience is added to their trip, because they MISREPRESENTATION OF will probably fall in committees and yet they must travel first to New York City, the only CONGRESS are the least noticed by the public and quite United States city which El Al ls allowed to often are not recorded in the public records. serve. As a result the citizen too often sees attend­ This inconvenience seems especially un­ HON. OLIN E. TEAGUE ance and voting upon the floor of Congress necessary now that Philadelphia's Interna­ as the essential criteria by which to judge OF TEXAS tional Airport has undergone millions of Congressional performance. The facts are dollars worth of expansion and moderniza­ IN THE HOUSE OF REPRESENTATIVES that committee votes are much more im­ tion. The expansion has included construc­ Tuesday, September 27, 1977 portant and that by the time a bill reaches tion of an Overseas Air Terminal. We are the floor for a vote the outcome may be proud to say that because of this new facility Mr. TEAGUE. Mr. Speaker, all of us obvious. The idea that Congressmen should and others built by the City, the airport in this body know that Congress as an always be ready to be on the floor to vote is ranks with the finest in the country as a entity and all of us as individuals from a rather simple one which overlooks the gateway for international travelers. time to time have been criticized and basic fact that a Congressman by meeting in Several major foreign airlines now land in maligned by the fourth estate. Some is committees, by talking to constituents or by Philadelphia-among them Air Jamaica, listening to various interest groups may Alitalia, Lufthansa, and British Airways, brought on by our own actions as indi­ actually be performing his job in a more viduals and as a body; but there is also along with the American overseas carriers, meaningful manner. TWA and Pan American. It would be a great much that is not deserved. NEXT: The New, New Congress. service to our constituents and our region, Mr. Mike Mask of the Weatherford Mr. Secretary, if El Al were to be added to Democrat wrote an article entitled "Sci­ this list. ence of Politics" in which he states: PHILADELPHIA SEEKS LANDING In this regard, we fully support the Phil­ Probably no area of political activity is RIGHTS FOR EL AL AIRLINES adelphia City Council resolution calling for more misconceived or misunderstood by the the United States to grant landing rights to ordinary citizen than is the nature of the El Al. We urge an affirmative response. work which our representatives in the Con­ HON. JOSHUA EILBERG Please feel free to call upon us if we can gress perform. OF PENNSYLVANIA provide further information in support of IN THE HOUSE OF REPRESENTATIVES El Al's request to begin service to our City. No truer statement by the press has Sincerely, ever been made; and I wish to include Tuesday, September 27, 1977 ROBERT N . c. NIX, Mr. Mask's article at this point: Mr. EILBERG. Mr. Speaker, I have JOSHUA EILBERG, THE MISREPRESENTATION OF WORK-THE joined my colleagues from Philadelphia, MICHAEL 0. MYERS, CONGRESSMAN'S WORK Hon. RoBERT N. c. NIX, Hon. MICHAEL 0. RAYMOND F. LEDERER , (By Mike Mask) MYERS. and Hon. RAYMOND F. LEDERER Members of Congress. Probably no area of political activity is in requesting Secretary of State Vance more misconceived or misunderstood by the to grant El Al Israel Airlines landing ordinary citizen than is the nature of the rights in Philadelphia. This is an issue FOOD STAMP PROVISIONS OF THE work which our representatives in Congress that concerns the citizens of our city, and perform. The typical view of this work is FARM BILL either profoundly cynical or exceedingly directly involves many of them. naive picturings our elected representatives Direct flight between Israel and Phila­ as either crooks or self-sacrificing citizens delphia would facilitate international HON. WILLIAM C. WAMPLER engaged in public duty. Of late in response travel and cultural exchange between OF vmGINIA to Watergate and other corruptions the the United States and Israel. Philadel­ former view has gained predominance and phia's International Airport has recently IN THE HOUSE OF REPRESENTATIVES publicity. It shou1d be obvious that the undergone extensive renovation and ex­ Tuesday, September 27, 1977 American people have a proper right to examine the job these representatives per­ pansion, and is ideally suited for inter­ Mr. WAMPLER. Mr. Speaker, while form after all they are their employers and national arrivals and departures. In ad­ perusing the Septerriber 16, 1977, issue the benefits which they bestow on these dition, it is inconvenient to force visi­ of the CONGRESSIONAL RECORD, I was sur­ employees is not insignificant. tors from abroad who wish to see the his­ prisecYby a comment of my distinguished Salaries alone !or U.S. Senators and repre- torical sites in this country, many of colleague from New York (Mr. RrcH-

/ September 27, 1977 EXTENSIONS OF REMARKS 31291

MOND) in regard to the food stamp pro­ TRIBUTE TO A GREAT LADY her on its payroll in West Chester. She ex­ visions of the farm bill (S. 275). On page pressed undying faith ln Tect Rubino, right 29578 the gentleman is quoted as saying down to the time when he was convicted. It HON. RICHARD T. SCHULZE was not the worst virtue for anyone to have. that- OF PENNSYLVANIA Part of her conviction that Rubino was an ... lt ls expected that the department honest man sprang from Rubina's relation­ would move to implement EPR-elimination IN THE HOUSE OF REPRESENTATIVEf3 ship with her devoted husband, Sam, who, of the purchas.e requirement-as soon as Tuesday, September 27, 1977 after retiring from the State Police, served possible, without waiting for the final pro­ as a Rubino aide in the Court House. No one mulgation of the other eligibility require­ Mr. SCHULZE. Mr. Speaker, last week ever said a. word against Sam Semelsberger's ments. marked the passing of one of my dis­ honesty-nor against Mary's. trict's most active and dedicated com­ As in the Nixon administration, the lower As one who fallowed this provision mitteepeople, a friend who will be missed echelons kept the faith long after the rea­ closely throughout the legislative proc­ in no small measure. Mary Semels­ son !or it had departed. ess, I take exception to the gentleman's berger, of Tredyffrin Township, Chester In· many conversations over the years, interpretation of legislative intent. Sec­ County, Pa., was a truly unique indi­ Mary deplored the disintegration of the tion 1303 Ca) of S. 275 states in part vidual whose long suit was honesty. At Republican Party nationally and locally as that-- an effective organization. We knew then, and times, Mary's devotion to a fair represen­ we know now, that had Republican leader­ The Secretary of Agriculture shall imple­ tation of the truth embroiled her in ment the Food Stamp Act of 1977 as expe­ ship kept faith with those who served them ditiously as possible consistent with the heated controversy. But, with Mary, it so devotedly, the question of party disinte­ efficient and effective administration of the could have been no other way. gration would never have arisen. food stamp program. The provisions of the Her memory is preserved in an edito­ With Mary Semelsberger there were no Food Stamp Act of 1964, as amended, which rial which appeared in the September 22, "Watergate" quibblings with the truth. You are relevant to current regulations o! the 1977, issue of the Suburban and Wayne knew where Mary stood-and many a Tre­ Secretary governing the food stamp program, Times. For what the editorial communi­ dyffrin politician felt the lash of her hon­ shall remain in effect until such regulations esty-and unfairly resented it. She wanted cates about the human virtues of loyalty an honest, open party-not a. devious one. are revoked, superseded, amended, or modi­ and honesty, I enthusiastically commend fied by regulations issued pursuant to the Too often, e!:;peclally near the end of her Food Stamp Act of 1977. it to the attention of my colleagues: active career, she was unable to put across TRIBUTE TO A GREAT LADY the point that an open, active, concerned Current program regulations are con­ We have been privileged, over the years, to party would bring in the vote·rs. tinued in force specifically in recognition know TWO great committeepeople--both, in­ Mary Semelsberger was truly a great com­ of the fact that major change of the cidentally, women. mitteewoman. She was truly a great friend food stamp program cannot be accom­ One of them died the other day, and the whose like we shall not see again, whose plished overnight without seriously jeop­ Republican Party of Tredyffrin is much the friendship we cherished. ardizing effective and efficient program poorer for her passing. It's sort of a shame that there was not an administration. Sound program admin­ Mary Semelsberger was the quintessential evening memorial service or viewing for commi tteewoman-actl ve, energetic, compa,s­ Mary. We're sure that her constituents istration obviously includes observance siona te, helpful-and imbued with long­ would have turned out, once more, to "vote" of established procedural mechanisms, standing principles of Party and Religion. for her in record numbers, in her final such as those prescribed by the Admin­ How many thousands of voters did she reg­ "election." istrative Procedure Act. ister for the benefit of the Party? How many The phrase "consistent with the effi­ of them would have registered Democrat, cient and effective administration of the 1f not for her active interest and persuasion? BOOTLEGGED CIGARETTES II food stamp program" in the statute it­ How many of them appreciated her true .and self should therefore be clear enough. vivid interest in their welfare and their prob­ In addition, the gentleman's interpre­ lems? tation is inconsistent with legislative his­ We can give a clear answer to that last HON. MATTHEW F. McHUGH tory. For example, cost estimates pre­ question. In the primary election of 1971, OF NEW YORK when the Chester County "Independents" IN THE HOUSE OF REPRESENTATIVES pared by House Agriculture Committee gave the Republicans their first big scare, staff, the Congressional Budget Office the Independents planned to take Tedyffrin Tuesday, September 27, 1977 and the Department of Agriculture­ by storm and with it, the whole county. Mr. McHUGH. Mr. Speaker, yester­ which were relied upon extensively dur­ Their strategy was to win Tedyffrln by ing committee and floor deliberations capturing its East 5 precinct. That was the day I noted that the program "Sixty and which are contained in the com­ key. It was also Mary Semelsberger's pre­ Minutes" had devoted a segment of its mittee report on the farm bill-House cinct-just how much it was her precinct no telecast on Sunday to the problem of report No. 95-464, pages 427, 464, and one ever fully appreciated until the vote was bootlegged cigarettes. AB that telecast tabulated. made clear, the problem is extremely 472-assumed that elimination of the The Independents brought in all their big serious because of the involvement of purchase requirement would not have guns to campaign in East 5. They openly effect until April 1978. organized crime and the loss of tax bragged that they were going to "beat Mary revenues to State governments. It is important to recognize, too, that Semelsberger." But when the vote was budget and appropriation allocations for counted, she had racked up an astounding What is the present legislative situ­ the food stamp program during fiscal majority that turned Tedyffrin around, and ation? As I indicated in my statement year 1978 are based on similar estimates. preserved Chester county for the "regulars" yesterday, several Members of Congress, To proceed down a different course at for another two years. including myself, have introduced legis­ this point could play havoc with the The reason? Mary collected every "due bill" lation designed to curb traffic in boot­ she had earned over nearly 40 years by help­ legged cigarettes. To date, however, budget by inflating anticipated Federal ing the people of the precinct. By no means costs to the tune of $364 million. the least o! these was black Mt. Pleasant, ln hearings have not been scheduled. I opposed elimination of the purchase whose homes Mary Semelsberger was a !re­ A more thorough and comprehensive requirement, and still do, because I am quen t visitor, a solver of quarrels, one who analysis of the present legislative situ­ convinced that this provision will de­ would help with finances or keep a youngster ation was presented by Leon Rothenberg, stroy the nutritional focus of the food from going to jail. No one thought that the executive secretary of the National black community would ever turn out to vote Tobacco Tax Association, in a paper pre­ stamp program. However, as it soon will in a. primary. Mt. Pleasant did-for the one be law, I fully expect the provision to be woman who totally cared about its people. sented to NTTA Administrators on June implemented in line with the intent and It was the key to that election victory-and 20, 1977. letter of the law. Unnecessary delay is the triumph was all Mary's. For the benefit of those Members not tantamount to an item veto of the farm Despite many and major illnesses, she re­ familiar with this issue, or with what can bill. And premature implementation of mained active until about two years ago, be done to deal with it, I am inserting a when she turned the reins over to her RECORD. It the provision would raise havoc with the daughter, Mary Alice. But she retained her copy of that paper into the budget and fly in the face of sound ad­ interest in the Party. is my hope that Members concerned ministrative practice. I hope the Depart­ Mary had going for her what too few have with this issue will support my call for ment will use good judgment in this today-a. sense of total loyalty to the Re­ hearings. matter. publican organization which, for a time, had The article follows: 3129t2 EXTENSIONS OF REMARKS September 27, 1977 STATUS OF N'I'TA CONTRABAND CIGARETI'E Bn.L New Jersey, Chairman of the House Judiciary We have been advised that Congress will (By Leon Rothenberg) Committee, the committee which has juris­ enact a contraband bill only if the states diction over such bills. Congressman Rodino demonstrate unanimous support for such We began this year with a very good pros­ had been the sponsor of a contraband bill in pect that a major blow could be struck legislation. There have been several develop­ 1972, and his bill was the subject of a hear­ ments which may raise some question, at against cigarette bootlegging through the ing that year. NTTA President Bob Murphy enactment of a federal contraband cigarette least in the minds of Congress, as to the of New Jersey has worked strenuously for solidity of that support. law. The principal encouraging prospects contraband legislation, and in April of this may be summarized as follows: One, considerable attention has been given year, he received correspondence from Con­ in recent months to a proposal for a feder­ FAVORABLE FACTORS gressman Rodino, in which the Congressman ally-imposed uniform cigarette tax rate as NTTA had requested and received the tech­ expressed concern over cigarette bootlegging a means for ending bootlegging. nical assistance of the Alcohol, Tobacco and and strong interest in legislation designed to There is no doubt that a uniform rate Firearins Bureau in drafting a new contra­ combat this activity. would remove the profit incentive for boot­ band bill which met all the requirements Early in May, I visited with the general legging. There is doubt, however, as to of federal enforcement. The NTTA bill which counsel of the Judiciary Committee in Wash­ whether such legislation could be passed at had its origins in the latter 1960's was re­ ington. He reiterated Congressman Rodina's this sesrion or, foreseeably at a session in the viewed and revised by ATF's legal staff to strong interest in contraband legislation and near future, because of the difficulty in get­ assure that it met fully the requirements suggested that there was a good likelihood ting high tax and low tax states to agree on a for effective federal enforcement. The draft that the Judiciary Subcommittee on Crime uniform rate. It should be pointed out that b111 had then been submitted to tax admin­ would hold a hearing on the b111 this year. the Advisory Commission on Intergovern­ istrators of each of the states for their con­ CONTRABA!'l'D CIGARETTE BILLS IN THE mental Relations has described a uniform sideration and suggestions and ATF and NINETY-FIFTH SESSION rate proposal as a "radical approach" which N'I'TA representatives further reviewed the Where do we stand now with respect to the might be considered only after contraband bUl in light of these suggestions. There was NTTA Contraband bill? As of NTTA's last legislation and other reasonable enforcement common agreement that the resulting bill tally, there are more than a dozen contra­ efforts are tried. was a good bill, which would bring into the band bills before the Ninety-fifth Congress. Also, we have been told that Congress will fight against bootlegging the much needed More than half of these bills are in the form not act until it evaluates the results of the resources and talent of the ATF. of NTTA bills introduced in past years, the $787,500 LEAA grant to the Interstate Reve­ Secondly, there was a new awareness in most prominent example of which was the nue Research Center. This came as a surprise Congress of the significance of bootlegging Javits bill of the early 1970's. Predominantly, to tax administrators, since I am sure that as a law and order and state revenue prob­ these bills were introduced in the session none of the States participating in IRRC has lem. No longer was cigarette bootlegging re­ before the NTTA-ATF draft was completed. ever viewed the bootlegging problem as in­ garded as uniquely a northeastern problem. These introductions reflect the continued volving a choice between IRRC and contra­ The evidence of bootlegging throughout the support of their sponsors for contraband leg­ band legislation. The contraband bill is eastern half of the country had become over­ islation, and we may expect their sponsors to needed because of the recognition that no whelming. The presence of organized crime support the 1977 NTTA version when the enforcement effort by the states individually in these 11licit operations had become a mat­ time arises. or collectively can match the effectiveness of ter of record. It was apparent that the profits In addition, five b1lls have been introduced a federal enforcement agency which would of bootlegging had an impact considerably which are either identical to the current have superior resources and which would not be confronted by the problems created by beyond the areas of specific activity. NTTA bill or which follow the NTTA bill with small modifications. state borders. A third major development in support of Finally, the states themselves have not a contraband b111 was the 1976-77 study and The identical bills are: in the House of Representatives, been sufficiently aggressive in supporting the recommendations on the subject of cigarette contraband bill. The number pf such bills bootlegging by the Advisory Commission on H.R. 5995-by Representative Patterson of California, and now before Congress is not impressive. We Intergovernmental Relations. ACm is a pres­ have said again and again that cigarette boot­ tigious research group, composed of federal, H.R. 7019-by Representative Railsback of Illinois; and in the Senate, legging is a national problem. The few NTTA state, and local officials. It has a deserved S. 1487-by Senators Bellmon of Oklahoma bills which have been placed in the Congres­ reputation for thoroughness and objectivity sional hopper give limited support to that ir. its studies on state and local governmen­ and Anderson of Minnesota. The bills which correspond, but not pre­ assertion. tal problems. Several years ago, NTTA re­ cisely, to the NTTA bill are: It should be stressed that the NTTA and quested ACIR to consider cigarette bootleg­ H.R. 7044 by Representative Duncan of the National Association of Tax Administra­ ging as an appropriate subject for an inter­ Tennessee, which differs in a few points of tors-which like NTTA has adopted a reso­ governmental tax study. The study has now language which are minor in nature and lution in support of contraband legislation­ been conducted and the Commission has H.R. 7381 by Representative Eilberg of are making a determined effort to direct Cun­ listed among its conclusions a specific and Pennsylvania which has one difference which gressional attention to the need for a contra­ strong recommendation for the enactment of may be substantive, from the NTTA bill. The band bill. NTTA President Bob 'Murphy and a contraband bill. current NTTA bill, like its predecessors, iden­ Arthur Roemer of Minnesota, Chairman of Another encouraging factor has been the tifies contraband cigarettes by the absence of the NTTA Committee on Contraband Legisla­ strong suoport given contraband legic;Iation tax indicia and limits the definition of tion, and his committee have worked contin­ by the tobacco trade. As Louis Ehrlich, "state" to those which use tax indicia in uously toward this objective.Daniel G.Smith, Chairman of the National Association of To­ cigarette hx administration. The Eilberg bill President of NATA, has been personally in­ bacco Distributors' Committee on Legisla­ deletes this limitation and redefines a "con­ volved in this effort. The NATA- NTTA head­ tion and Taxation will tell you this morn­ traband" cigarette in language which is be­ quarters has contraband legislation as a pri­ ing, the NATD has worked closely with NTTA ing examined to determine whether or not ority item on its current calendar. in support of contraband legislation. Louis the bill would apply in a state, specifically In order to demonstrate the national sup­ Ehrlich's testimony to the Advisory Commis­ Michigan, which does not use tax indicia. port for contraband legislation, NTTA and sion on Intergovernmental Relations con­ The NTTA bill would make the absence of NATA call upon each of you to approach your tributed importantly to the information tax indicia prima facie evdience of a contra­ Congressional delegations again : provided at that hearing. At that same hear­ band violation when such cigarettes are in To indicate your concern over bootlegging. ing, the Tobacco Tax Council presented testi­ the possession of unauthorized persons. In To indicate your support for the NTTA bill. mony in opposition to the contraband b111. order to assure specific and effective enforce­ And to stress that this bill is a carefully However, it ls hoped that the Council will ment, this provision has been an element of drawn measure and that it reflects the work recognize that federal contraband enforce­ the proposed NTTA contraband legislation and the technical expertise of ATF , the ment would benefit all segments of the to­ since its inception, and it is strongly sup­ agency that would have the responsibility for bacco industry and give public support to ported by ATF. The Michigan Revenue Divi­ enforcing the law. this needed legislation. sion has supported the NTTA Contraband Another significant factor has been Con­ Bill, with this provision, in recognition that gress' increasing awareness of the press cov­ the curbing of cigarette bootlegging NATO-ENDURING ALLIANCE erage of bootlegging. Time magazine, Jack throughout the country would benefit Mich­ Anderson, and the daily press have given igan directly. (Subsequent to the NTTA Cen­ considerable attention to the social evils tral Region Meeting, the AFT legal staff HON. ROBERT J. LAGOMARSINO and consequences of cigarette bootlegging. A issued a verbal opinion that the Eilberg bill, few years ago, cigarette bootlegging was a H .R. 7381 , like the NTTA contraband bill, OF CALIFORNIA matter of concern to the few who were di­ would make the absence of tax 1nd1ca on IN THE HOUSE OF REPRESENTATIVES rectly involved in combatting this operation. cigarettes in the possession of unauthorized Tuesday, September 27, 1977 It ls now common knowledge. persons evidence of a contraband violation). Still another factor which has lent en­ PRESENT 0-µTLOOK FOR LEGISLATION Mr. LAGOMARSINO. Mr. Speaker, I couragement to the prospects for passage of a If prospects for a contraband bill ap­ would like to bring to the attention of contraband bill is the interest displayed in peared good several months ago, what are my colleagues the following column by such legislation by Congressman Rodino of they now? The picture is less clear. my constituent Gen. Henry Huglin. Gen- September 27, 1977 EXTENSIONS OF REMARKS 31r293 eral Huglin is a retired Air Force briga­ Our European NATO partners crucially Anyone who flies over the Northwest dier general and syndicated columnist. need our active role. But, also, they continue can look down and see vast areas of He comments on NATO and the need for to be crucial to our security and economic clear cutting which threatens reduction interests. Hence, we have invested a great of our timber supply. While I concede the United States to continue its strong deal in NATO over 28 years and will continue ties with it: to do so. But this great invest ment can be that there are responsible reforestation NATO-ENDURING ALLIANCE considered as an essential payment of pre­ programs in effect, particularly in the (By Henry Huglin) miums on our national security and eco­ private sector, the fact remains that the nomic insurance policies. private areas are being seriously over­ NATO headquarters, Brussels. NATO has .Now, the likelihood of war breaking out in cut. This, in due course, will mean been a viable, effective alliance, linking our Europe is low. But, if the Soviets' strength country, Canada, and 13 European nations, greater pressure on public lands for is not counterbalanced by us and our NATO available timber. for more than a generation. It has been partners, they can achieve their goals with­ highly successful in fulfilling its purpose­ out war. The climate of security and confi­ As a Representative of an area that to deter war and political coercion by the dence will erode and NATO could break up, is primarily dependent on timber har­ Soviets i~ Europe. as the Europeans vote into power govern­ vesting and the wood products industry, NATO, as usual, has deficiencies and prob­ ments which will turn away from their poli­ I want to see this industry healthy and lems, but they are being dealt with. And the t ical and economic ties with us to appease profitable. I also want to see it continue Alliance is needed as much as ever today, as the Soviets, as t r eir only perceived prudent the Soviets' military strength is greater than for many years in the future. That is way of accommodating to power politics why I take exception to having so many it has ever been and their expansionist in­ realities. tentions are evidently unchanged, even Military strength is the basic ingredient of our finest logs exported to Japan. That though their Cold War bluster has been of the Alliance. But also essential are mutual country presently has 26,000 mills that muted by the siren sounds of detente. understanding, trust, confidence, and coop­ are busy cutting up our Douglas fir and Further, as always since the Alliance was eration among the NATO partners-and col­ hemlock timber. founded in 1949, our country's leadership is lective national wills to meet the challenges Mr. Speaker, a few months ago, I in­ essential. And this leadership needs to en­ and pay the price in troops, arms, and deter­ compass overall military forces at least troduced a bill to make permanent a ban mination. on the export of logs and place the em­ equivalent to the Soviets', as well as ideas, We can expect that NATO will continue to example, and leadership to keep the All1ance be the heart of our foreign policy for the phasis instead on sending out finished effective. Wisely, President Carter is com­ fore.3eeable future. To keep it viable will re­ products. This will get the Japanese out mitted to this course. quire our continued strong effort, persist­ of bidding for domestic logs and revital­ In addressing the NATO Council in May, ence, and leadership. There is no feasible al­ ize local wood mills in the Northwest. My Mr. Carter renewed the pledge of U.S. com­ ternative, as long as our protracted conflict bill will also close the loopholes, par­ mitment to NATO with these words: "We will with Soviet Russia is unresolved and unre­ ticularly the practice of substitution, continue to make the Alliance the heart of solvable. our foreign policy. We will remain a reliable that allow the export of logs from Fed­ and faithful ally. We will join with you to eral timberlands to continue. strengthen the Alliance-politically, eco­ NORTHWEST EXPORT OF LOGS The high cost of housing is reason nomically, and militarily. We will ask for ADDS TO HOUSING COSTS alone to enact this legislation. We need and listen to the advice of our allies. And to protect our national resources and stop we will give our views in return, candidly exporting unprocessed logs and the jobs and as friends." HON. DON BONKER that go along with them. He then gave this assessment: "This effort OF WASHINGTON Mr. Curry included in the Washington rests on a strong foundation. The state of the IN THE HOUSE OF REPRESENTATIVES Alliance is good. Its strategy and doctrine are Post article a brief recap on "Lumber: solid . .. In the aftermath of World War II, Tuesday, September 27, 1977 Supply and Demand," which highlights, the political imperatives were clear-to build at least statistically, the case. I draw my the strength of the West to deter Soviet ag­ Mr. BONKER. Mr. Speaker, on Sep­ tember 19, 1977, the Washington Post colleagues' attention to the fact that gression. Since then East-West relations have Douglas fir timber for the Northwest become far more complex. Managing them re­ carried a front page story about the sky­ quires patience and skill." rocketing price of lumber and the severe provides 8 billion board feet-but what is These statements are consistent with the impact it is having on the cost of hous­ not mentioned is the fact that over one­ general policy toward NATO of previous ad­ ing. According to the article, by Mr. Bill third of the amount will end up in ministrations, although performance has not Curry, the prices paid for timber have Japan: always matched the rhetoric. never been so high, adding "$700 to $1.500 LUMBER: SUPPLY AND DEMAND The cement that holds NATO together ls (By Bill Curry) the common concern over the Soviets' in­ to the cost of an average new home." tentions to use their great and increasing While the building surge will help to Pine from 12 western states is the single military strength to overrun western Europe, revitalize the South's forest industry, it biggest source of timber in the United or to politically coerce us into withdrawal is the consumer who ultimately suffers. States-9.9 billion board-feet last year. from Europe and the western European na­ In the Northwest, the timber supply Douglas fir from western Washington and tions into neutrality or subservience. western Oregon provided another 8 billion problem is compounded by the export of board feet in 1976. The military strength and political unity of unprocessed logs to other countries. Last NATO have provided the climate of stability Southern states produced 7.9 billion, and and confidence under which the western year, approximately 2.8 billion board these regions combined accounted for more Europeans have flourished. feet, more than one-third of that har­ than half of the nation's timber production. But now serious economic problems of in­ vested, ended up in Japan. Unlike the South, where individuals own flation and recession in many NATO Euro­ The continued export of logs greatly most of the woodlands, the western states are pean countries, triggered primarily by the affects supply and demand. Local man­ heavily dependent-about 50 percent--on quadrupling of foreign crude oil prices four ufacturers must compete with Japanese federally owned lands for their supplies. years ago, are being reflected in political un­ Thus higher prices go more to the U.S. Treas­ buyers in bidding for available timber, ury and less to the local economy. certainties, especially in Britain, France, and thus driving the price upward. Small Italy. mill owners simply cannot compete with All told, the United States consumed some These economic and potential political 43 billion board feet of wood last year, with problems could become unmanageable on what the Japanese are willing to pay for 20 percent of that imported, primarily from a democratic basis, if the military threat and premium Northwest timber. The higher Canada. One-half of the total went for lum­ potential for political pressure from Soviet purchase price, of course, adds signif­ ber and plywood, with half of that used in Russia were not effectively dealt with by icantly to the cost of housing. new home construction. (One-fourth of all NATO's strength and unity. And if local mills cannot compete, they paper is made from sawdust and leftover wood chips of this production). These realities, the illusoriness of detente, have no choice but to drop out or sell the disappointing results of the Helsinki ac­ to the larger corporations. This practice In 1973, when the last sharp rise in prices cords, and the Soviets' acceleration of the is much too common in the Northwest occurred, there were 2.5 m1llion new housing arms race have led our government and starts. The federal government says the cur­ which at one time was thriving with rent pace of new housing construction is those of our partners to cooperate further to small wood and pulp mills. In one com­ improve NATO's military forces, in equip­ about 2 million for 1977. ment, standardization, logistics, reserves, and munity there used to be 20 mills. Today Demand for single-family houses has in­ other effectiveness measures. They have also only one remains. This trend can only creased the most, a type of construction that agreed to try to add 3 % to their defense bud­ lead to fewer and fewer multinational requires some 50 percent more lumber and gets in real terms and to project their de­ corporations totally dominating the plywood per unit than multi-family housing. fense planning to 1990. wood products industry. Between the high-price years of 1973 and 3.1294 EXTENSIONS OF REMARKS September 27, 1977 1977, housing starts plunged, as did prices for would be permitted to repay society by mak­ THE UNFORTUNATE HAZARDS OF wood products. ing restitution to the vfctim. In a crime PUBLIC SERVICE Joe Muench, an economist with the Na­ against his property, for example. the victim tional Forest Products .ru:sociation, says that may enjoy the temporary pleasures of venge­ while the cost of buying trees has gone up ance when the offender is put away for HON. WILLIAM F. WALSH 462 percent since 1970, the average price of a few mon ths or years, but he is still without OF NEW YORK finished building materials at the mill has whatever was st olen. The New Orleans res­ risen only 143 percent. He says that increased titution program seeks to have the property IN THE HOUSE OF REPRESENTATIVES efficiency and new technology have allowed returned or replaced by the person who took Tuesday, September 27, 1977 the industry to absorb some of the increase it. in timber prices. As simple as it sounds, the success of the Mr. WALSH. Mr. Speaker, recent restitution program depends on meeting sev­ events in Washington have added still eral challenges. Probation officers need to another unfortunate chapter to the leg­ select the offenders who can accept both the end of the hazards of life in the public RESTITUTION FOR VICTIMS personal freedom and the demands of a daily service. job. From the job's salary comes the money It is an unpleasant story, it does not OF CRIME to pay back the victim. The offender also keeps some of the money himself. Because read well, and it has had a pronounced­ they are under court order to reduce prison and, I think unfortunate-effect on each HON. DON EDWARDS crowding, New Orleans officials are using a and every citizen who cares about his OF CALIFORNIA restitution shelter to house 30 to 50 persons. Government and the type of person serv­ Although restitution programs have been ing them therein. IN THE HOUSE OF REPRESENTATIVES working-and succeeding-in other areas of In conversations with my family, my Tuesday, September 27, 1977 the country, the New Orleans experiment is friends, my constituents and my col­ Mr. EDWARDS o~ California. Mr. different because it is dealing with criminals leagues, the disturbing theme of a lack of that other programs seldom go near: the respect and trust in public officials is re­ Speaker, on Thursday, September 29, unskilled and uneducated. the House is scheduled to vote on amend­ peated again and again. New Orleans officials dismiss talk that their Political pundits, polltakers, preach­ ments and final passage to H.R. 7010, restitution program is "a bleeding-heart providing compensation to victims of scheme." Calling Parish Prison "a maggot ers and the man on the street all will violent crime. It is my feeling that this reeking in the middle of the city," one official tell you that the level of public confidence bill would be much improved by requir­ said that with the institution's being a severe in the institution of government-and ing that States seeking grants under economic drain, the restitution program of­ more particularly in the personal ability, the Victims of Crime Act be required to fers fiscal relief. Figures from the Law En­ honesty and integrity of government of­ have on their books a provision allowing forcement Assistance Administration about ficials-has never been lower. And every judges to require criminals to pay res­ four similar programs in Georgia suggest new revelation of impropriety, of in­ that the economics of restitution are sound. fluence peddling or of suggested scandal titution to their victims. I intend to From 504 offenders who have gone through offer an amendment to that effect. the Georgia program in the past four years, brings that confidence even lower still. The attached article by Colman Mc­ $62,500 has been paid back to victims, $172,- Newspapers, news magazines and Carthy appeared in the June 21, 1977, 500 has gone to federal and state taxes, $113,- news broadcasts devote considerable at­ issue of the Washington Post and indi­ 000 to the offenders' own families and $61,000 tention to investigations, to opinion sur­ cates some of the successes which can saved as nest eggs. veys, to the intimate details of an agency be achieved under a creative restitution LEAA, which has been an advocate of res­ or its head in difficulty, yet seldom do we program. I commend the article to my titution as an alternative to prison, recently hear about-or stop to consider on our colleagues: commissioned a $2-million evaluation of the own-the infinitely repeated instances programs. The agency's endorsement of res­ of a governmental unit that shines in SENTENCES OF RESTITUTION-NOT VENGEANCE titution is based on the concept that "a its performance, or about the official (By Coleman McCarthy) monetary repayment to the victim by the of­ whose personal code is nothing less than NEW OltLEANs.-1! buildings could heave fender, or the offender's performing service quiet, dedicated, deeply honest duty. and groan with despair, the Orleans Parish for the community, not only helps the of­ Prison would be a quaking mass of cement fender on the road to rehabilitation but also What a tragedy, and how unfortunate and steel. Built 50 years ago to hold 450 peo­ saves taxpayers money that would have been it is that the institution of government­ ple, it is crammed now with between spent keeping the offender in jail." a government founded and run on the 900 and 1,000. Its record of squalor, cruelty In New Orleans, as elsewhere, officials dar­ best principles man has ever devised­ and turmoil has earned it a reputation as ing to support restitution programs know and the reputations of the very people one of the nation's most oppressive prisons. that they are the exceptions. Charles C. Foti, who uphold these principles should be New Orleans itself, romanticized as a city the parish sheriff and the force behind the regarded with scorn with ridicule and of fine cuisine and charming customs, festers local restitution program, has found that his with indifference. with crime. Thirty-three per cent of the harshest critics are those who express a state's crime is here, but only 16 percent "lock'em-up-and-throw-away-the-key" phi­ I had not intended to make this week's of its population. Major crime has increased losophy. Foti, a survivor of the wild style of column a forum for my personal beliefs, 77 per cent since 1965. The human beings politics that has made much of southern but I feel strongly you should know that suffering in Parish Prison are mostly black Louisiana into a political swampland, is bet­ my opinion of our Government, imper­ or poor, the products of New Orleans' over­ ting that his efforts will be seen as making fect though that system can often be, is crowded low-income housing, understaffed good economic sense rather than "coddling high. public schools, low per capita income and criminals." Foti believes that "those who ad­ severe unemployment rate (the state's high­ minister the correctional system in this Even more important, I wanted you est). country must become more concerned with to know of my unshakable conviction Inhumane Jails and crime-creating living economics of crime and the problems of the that the vast majority of the men and conditions are not unique to New Orleans. victim. In our system of criminal justice, women who have devoted their lives to Few large cities, Washington included, are restitution is the only method where society public service are numbered among the without them; even more bleak, few cities is actually paid back by the criminal. With most deeply committed, unselfishly hon­ have public officials willing to break from so many overcrowded prisons, restitution be­ est Americans I know. conventional thinking by seeking alterna­ comes a necessity rather than simply a mean­ tives to the expensive, useless and brutal ingful alternative to incarceration." I have been in public service for near­ system of punishment that is imprison­ New Orleans is not the only jurisdiction ly 40 years-all my adult life-starting ment. under court order to reduce prison crowding; as a welfare caseworker and continuing New Orleans may be different. Owing to the District of Columbia is another. But it through my experience in county and the foresight of a few officials of conscience, is among the few, backed by a small LEAA State government, as a mayor and now a group of criminals from Parish Prison is a member of Congress. I don't know that about to be involved in a program based on grant of $150,000, that insists on seeing crim­ the sound notion of punishing people with­ inals as human beings. From what is known I could be truly happy in any other pro­ out imprisoning them. The idea is that con­ so far, the restitution programs that have fession, for following this profession is, victed criminals, instead of "paying back" been gi~n a chance are proving to be suc- in every sense of the word, a privilege. society by languishing in prison (and earn­ cessful. The question now is whether the suc­ An even greater privilege for me is the ing advanced degrees in the school of crime) cess will be allowed to spread. opportunity to work side by side in pub- September 27, 1977 EXTENSIONS OF REMARKS 31295 lie service with people of high moral a transcript of the proceedings for the first lished largely by OMB and Peace Corps pro­ character, great personal ability, and hearing, so I feel reasonably up to date. grams are determined by appointees subject tremendous and loyal dedication to their As members of this subcommittee know, I to the political guidance of those who hap­ have a strong interest in the Peace Corps and pen to be in power? Is a Peace Corps within calling. its future. I requested these hearings in or­ ACTION viable whe.n it has taken over seven When someone tells me, "Government der to explore ways of revitalizing and re­ months simply to nominate a new director, is crooked, and the biggest crooks are shaping the Peace Corps as an effective ex­ at great expense to program development politicians." I am saddened-not for my­ pression of American values in helping to and support? self, but for the vast and overwhelming cope with essential human needs abroad and Thus far, I have not been jmpressed with majority of persons whose entire lives promote better international understanding. the reasons set forth by Mr. Brown for keep­ have been given to honest service tooth­ This is based on the realization that Peace ing Peace Corps within ACTION. First, the ers through Government. Corps presently is a vestige of its former self, formidable challenges which confront Peace By far, they have earned your praise, and a. belief tha.t a. new beginning is neces­ Corps volunteers working on the vlllage level sary. in impoverished areas of foreign countries as well as mine, and I thought this would I use the phrase "new beginning" because are fundamentally different in several re­ be an appropriate time to say so. I hope there is not any question as to spects from those faced by volunteers in whether the Peace Corps should continue to the U.S. Second, it has been my impression exist. I know of no other organization which that in most instances Peace Corps credibil­ TOWARD A NEW BEGINNING FOR better represents the spirit which the Carter ity has been damaged not so much because THE PEACE CORPS administration is trying to create in its rela­ other countries felt that Peace Corps was tions with the rest of the world, or which not involved with problems of poverty and has generated more goodwill and under­ human development in the U.S., but because HON. DON BONKER standing in our foreign relations. The cen­ either the Peace Corps could not adequately tral question before us is how can t he Peace OF WASHINGTON perform the tasks it was committed to under­ Corps be revitalized most effectively, to take take due to inadequate support to the field, IN THE HOUSE OF REPRESENTATIVES more into account the needs of the relatively of sloppy programming, or because the Peace Tuesday, September 27, 1977 least developed areas of the world, while re­ Corps was perceived simply as an extension taining the same spirit which inspired the of the U.S. foreign policy establishment. Mr. BONKER. Mr. Speaker, on Janu­ creation of the Peace Corps. Third, an autonomous Peace Corps would not ary 22, 1977, I submitted a statement in When the Peace Corps was first formed, in itself prevent a. high degree of inter­ the RECORD which expressed my concern emphasis was placed on promoting voluntary change between domestic and international about the need to revitalize and reshape action among Americans to work abroad in a development programs. Former PCV's would the Peace Corps; about the need for a variety of programs. These programs were still be eligible to work in VISTA and vice fresh start so that once again the Peace aimed primarily at enhancing international versa. Finally, the gains in efficiency through goodwill and mutual understanding. Over centralized services thus far have not been Corps can serve as a uniquely creative the years, this mandate was weakened sub­ very noteworthy. To the contrary, these and vibrant expression of "the best that stantially due to the increasing politiciza­ "services" seem to have led to an extremely is in us." I also mentioned my plan to tion and bureaucratization of the Peace cumbersome recruitment and personnel sys­ introduce legislation which would recon­ Corps, culminating in its incorporation into tem, and discouraged a process by which stitute the Peace Corps as a public cor­ ACTION. Ironically, as the Peace Corps was more support could be delegated to field staff. poration along the lines suggested in a facing virtual extinction primarily because In short, Peac1:: Corps' mandate should be of political pressure exerted under previous strengthened, and its important programs study conducted by Harlan Cleveland administrations, the Agency !or Internation­ of the Aspen Institute for Humanistic revitalized so that it is once again a uniquely al Development was given new life through vibrant and creative expression of "the best Studies. the "new directions" legislation, which in­ that is in us", particularly in the way the I have refrained from introducing this corporated many key concepts already de­ U.S. relates to the needs of the least devel­ legislation to allo,·1 an opportunity for veloped by the Peace Corps in its work. oped countries. My comments are designed ACTION officials to develop their I believe that major priority should now to provide a constructive stimulus for dis­ thoughts on the future of the Peace be given by the Peace Corps to the unique cussion. We need to address some very diffi­ Corps. Acting on my request, the Sub­ role it can play in reducing human poverty cult questions concerning the future of the committee on International Development and misery, a.nd promoting equity in human Peace Corps and I look forward to learning Assistance has been conducting hearings development, particularly in the least de­ the views of our witnesses on this matter veloped countries of the world. This means during the course o:! these hearings. on the future of the Peace Corps. much more emphasis and attention will Thus far, I have not been impressed have to be placed on recruitment and train­ with the arguments brought forward in ing of volunteers. Likewise, Peace Corps field favor of retaining the Peace Corps as offices will have to be strengthened consid­ SOCIAL SECURITY CHOICES part of ACTION. I have reason to believe erably to provide more technical and ma­ that no more attention has been devoted terial assistance to volunteers, and help vol­ to the Peace Corps in this administration unteers substantially improve their perform­ HON. BARBER 8. CONABLE, JR. ance in training host country counterparts. OF NEW YORK than in recent administrations. With the Peace Corps volunteers should no longer be exception of appointing an able admin­ automatically regarded as de facto host gov­ IN THE HOUSE OF REPRESENTATIVES istrator for ACTION, little has been done ernment employees. Gone are the days whe.n Tuesday, September 27, 1977 to help restore the utility the Peace Corps Peace Corps can send English teachers to once had. Consequently, I have decided areas where the central concern is having Mr. CONABLE. Mr. Speaker, earlier to proceed with introducing a bill during enough food to eat, or supplying volunteers this month the minority leader, Mr. the next couple of weeks which would to work at universities in central cities when RHODES, joined me and the four Repub­ establish the Peace Corps as a public there are no schools, much less teachers, for lican members of the Social Security the majority of the population living in rural Subcommittee of the Ways and Means corporation. At the same time, I would areas. Committee in presenting a comprehen­ like to insert in the RECORD an opening My call for a new beginning for the Peace sive 15-point proposal for social security statement I made before a recent Inter­ Corps raises important questions concern­ reform. That package includes provisions national Development Assistance Sub­ ing the best organizational arrangement for to restore the system's financial stability, committee hearing, which sets forth an encouraging and effectively harnessing the updated expression of my thinking con­ creative energies and talents of Americans to remove the longstanding inequities in working abroad which the Peace Corps is the system-especially those pertaining cerning the future of the Peace Corps· to women-to adjust th'? system to PEACE CORPS: TOWARD A NEW BEGINNING seeking to foster. While I am wary of plac­ ing trust in some kind of "organizational changing American lifestyles and to (By the Honorable DONALD BONKER) fix", frankly it ls difficult to justify the pres­ move closer toward truly universal Mr. Chairman, I deeply regret that a con­ ent organizational arrangement of having coverage. flict between the date set for this subcom­ Peace Corps within ACTION which was Any major changes in the social secu­ mittee's first oversight hearing on the Peace originally designed to de-emphasize Peace Corps and the schedule for my return from Corps' programs and erode its identity. Is rity program are controversial, but this the district prevented my being present to Peace Corps within ACTION credible as a proposal has received considerable favor­ hear the testimony of Sam Brown, Director non-political entity when budget levels and able notice as a comprehensive plan to of ACTION. and Gretchen Handwerger, Act­ several essential programs under control deal realistically with the long-term ing Director of the Peace Corps. I have read chiefs of domestic operations are still estab- problems. I would like to submit three CXXIII--1969-Part 24 31296 EXTENSIONS OF REMARKS September 27, 1977 more editorials, from the New O:rleans ing periods of high unemployment) for the what happens in the year 2000. They have States-Item, the Chattanooga Times, years 1978-82. On a longer term, the admin­ more pre.;:sing problems with mortgage pay­ and the Miami Herald commenting on istration would require employers to pay the ments and kids who aren't learning anything Social Security tax on each employe's full in school. the proposals. In view of the serious salary; the latter would pay only on the pre­ We doubt the jump to age 68 for retire­ problems confronting the social security set salary base. ment will go far in Congress during the Car­ system, I would urge that all Members Even though some portions of the system ter years, but we would like to see serious give serious consideration to these are funded from general income taxes, we're thought given to a parallel Republican rec­ editorials: leery of expanding the idea. Wide-scale use ommendation that Soical Security benefit in­ (From the New Orleans States-Item, of 'lreasury funds for the system would alter creases be tied more closely to inflation and Sept. 15, 1977] it fundamentally, destroying the key con­ not, as it is today, double hinged to inflation cept that benefits are an "earned right." and wage rates. That has pushed pension SOCIAL SECURITY CHOICES Worse, an "easy" access to general revenue benefits up faster than they should have Congressional Republicans' plan to over­ would leave congressmen wide open to pres­ gone, though a lot of senior Citizens are sure haul the Social Security system seems more sure to increase benefits, the type of pressur-9 to tell us they are barely getting by on what realistic than proposals advanced by Presi­ they have been notoriously unable to with­ they receive. dent Carter and congressional Democrats. stand in other areas. The basic problem, of course, is the federal The system is faced with two critical prob­ Similarly, removing the salary ceiling on government itself which hasn't the political lems. In the short term, its reserves are in employers could boomerang by forcing them courage to deal with inflation. It is easier to danger of depletion. Over the long haul, the to cut back on other fringe benefits for their increase retirement benefits and that takes system faces a deficit running into the tril­ employes. no courage at all. lions of dollars. To rescue the Social Security program, Another portion of the GOP pension pack­ Mr. Carter has proposed shifting money Congress either has to increase the amount age that intrigues us is the recommendation from the General Fund and raising taxes to being paid in, or reduce the benefits. In this that the federal retirement program be deal with Social Security's problems. The regard, the plan offered by House Republi­ folded into Social Security. It used to be General Fund proposal has encountered stiff cans, a portion of which has already been when federal wages were so low that retire­ opposition in Congress, as well it should, and approved by a subcommittee, is attractive. ment after 20 or 30 years was considered a the Carter plan appears to be getting The GOP alternative would make Social fair exchange. But that is no longer true. nowhere. Security practically an universal retirement Many middle-management federal em­ A plan offered by Rep. Al Ullman, Oregon system by including employes of nonprofit ployes do better than counterparts in the Democrat, also would increase the rate of corporations as well as government workers. private sector. They get out after 20 years, the payroll tax paid by employers and em­ Obviously the latter will fight the proposal. collect generous retirement benefits and ployes. Mr. Ullman also has proposed in­ But the GOP plan would stop the present then go back to work to earn another pen­ creasing the maximum wage base on which practice of allowing civil servants to retire sion. You've heard of "double dipping?" the Social Security tax is levied by $500 a year early, work outside government for five years If this is a good idea for federal employes, for each of the next five years. This would be and then collect a Civil Service pension and then why not fold state and municipal work­ in addition to the automatic increases now in a relatively generous Social Security pension. ers into the Social Security system? Here in the law. Further, it would, beginning in 1990, raise Miami, we have seen examples of public em­ The Democrats would ease Social Security the age for retirement with full benefits at ploye pensions that go far beyond what pressures in the short term without address­ age 68 instead of the present 65-but in private employes can hope for even at age 65. ing the incredible deficit, which lies ahead. gradual steps. Earlier retirement would be And have you heard that Mayor Abe Current workers, who would be taxed more, permitted but with reduced benefits. Beame of New York, defeated for a second would have no real assurance that the sys­ Republicans and Democrats are agreed term after a career in city government, will tem would be solvent when they retire. that ccrrection of a faulty inflation adjust­ retire at $64,000 a year? That's $4,000 more The Republican plan tackles major causes ment in 1972 is necessary. Under this meth­ than he has been making. of funds depletion: The drain of early re­ od, Congress "indexed" the Social Security tirement on the system, which removes funds system to provide adjustments for cost-of­ faster than they can be restored, and the living and inflation automatically. Benefits double indexing of future benefits based on for persons already retired in 1972 is based STEEL CRISIS both wage rates and inflation. simply on increases in the consumer price The Republicans would increase the index; for those currently at work, however, source of funds by bringing federal em­ their future retirement benefits are adjusted HON. ROBERT H. MOLLOHAN ploye pensions under Social Security. They twice. Because wages-and the payroll tax OF WEST VIRGINIA would raise the age for maximum benefits wage base---will rise to keep pace with infla­ IN THE HOUSE OF REPRESENTATIVES from 65 to 68, but on a graduated scale, tion, today's workers will be entitled to beginning in 1990. And they would index higher Social Security benefits since they will Tuesday, September 27, 1977 benefit increases to inflation only. have higher average earnings at retirement. Mr. MOLLOHAN. Mr. Speaker, this Federal workers and those affected by the Thus, their benefits will be computed from a Nation is confronted by one of the most increase in retirement age will not be happy formula already adjusted for price increases. with the Republican plan. Yet the plan If the "decoupling" is not accomplished, serious challenges to our entire economic really goes to the core of the Social Security future Social Security costs could mushroom structure since the Arab oil embargo of problem. Such hard and uncomfortable dramatically-depending on changes in 1973. In the long term, it can be even choices will have to be made if the system wages and prices; because of the overadjust­ more devastating. I refer, of course, to is to become solid again and avoid bank­ ment, Social Security benefits in some cases the crisis in the American steel industry ruptcy. could even exceed workers' pre-retirement caused by a multiple of factors. Wheeling, wages. W. Va., is a "steel city." Harry Hamm, (From the Chattanooga Times, Sept. 19, 1977) With the present multi-billion deficit in the editor of its leading newspaper, the SOCIAL SECURITY: NEEDED CHANGES the government's regular budget, it is foolish to cure the woes of Social Security with a News-Register, has stated the situation Few would argue that the nation's Social transfer of income tax funds. The system's in clear and unmistakable words. I invite Security program is in trouble. The number "pay-as-you-go" premise can be main­ the attention of all my congressional col­ of persons to whom it pays out benefits is tained-but not without some fundamental leagues to his editorial of September 25, increasing, unemployment and other factors changes that must be made soon. have reduced its income and it is obvious the 1977: HOMEFRON'l' NEGLECT system cannot continue to absorb more an­ [From the Miami HEirald, September 19, nual deficits. The nation's steel industry is facing a 1977) major crisis today with plants closing, lay­ The government estimates that Social Se­ EQUALIZING THE BURDEN curity payments will exceed revenues by $5.6 offs spreading like wildfire and whole com­ Commerce Secretary Juanita Kreps lofted munities and regions facing serious economic billion this year, compared to deficits of $3.2 setbacks. billion and $1.2 billion for 1976 and 1975, a trial ballon last month when she suggested respectively. the way to solve the money crunch for the Youngstown Sheet and Tube Company's (Social Security) system was to raise the announcement last week that it was laying If this continues, with no changes in in­ retirement age from 65 to 68. That didn't off 5,000 workers came as a real shocker point­ come or benefit levels, the Old Age, Survivors seem to go over very well, but the Republi­ ing up in a dramatic fashion the problems and Disability Insurance (OASDI) trust cans in Congress are saying it is not a bad faced by one of the nation's most basic in­ funds will be depleted; the disability idea if you take it gradually and put off the dustries-steel. funds could run out by 1979, followed by the effective date until 1990 and then take 10 The Youngstown cutbacks are the severest retirement and survivors trust fund in 1983. years to inch the retirement age to 68. to date, but they are by no means an isolated The Carter Administration has proposed That would limit the sharpest protest to incident. U.S. Steel and Inland have laid off higher employer payroll taxes and the trans­ the group under 40 and not many people in some 4,000 workers in the Chicago area. Beth­ fer of income tax funds to the system (dur- that age bracket are going to worry about lehem Steel announced furloughing 3,500 em- September 27, 1977 EXTENSIONS OF REMARKS 31'297' ployees at its Lackawanna, N.Y., plant. Other the Japanese nation was doing e,;erything in group recruiting specialists, is celebrat­ operations at its Johnstown, Pa., faciliti~s its power to create capital for its steel in­ ing their 20th anniversary of being in also are being restricted. Jones & Laughlin dustry, our nation was doing everything in business. I would like to honor them for has dismissed personnel in its research and its power to restrict "our industry's growth engineering staffs and Armco last week re­ and its ability to create capital. In many the record today for these years of aiding vealed cutbacks. cases. these programs, which had the guise in the advancement of minority employ­ In our own area, Weirton Steel has released of other more 'noble' causes restricted capi­ ment. some 160 workers and the exact number of tal formation by raising taxes, controlling Through their efforts, thousands of persons who have lo.st their jobs with Wheel­ prices or creating more costly government talented people have found executive ing-Pittsburgh Steel in what the firm calls a regulations e n the industry." jobs and hundreds of companies have cost-cutting program is open to speculation. I find it hard to understand at a time been helped to tap the great neglected Last week U.S. Stamping at Moundsville an­ when unemployment in the United States nounced it will shut down its plant in De­ hovers close to the 7 percent mark, with human potential of black college grad­ cember after 75 years of operation with 300 millions of workers unable to find employ­ uates. employees told to find other work. ment, our government conti.nues to show In 1957, Richard V. Clark founded the Cheap steel imports, coupled with strin­ undue favoritism to foreign producers of Hallmark Employment Agency which gent government environmental require­ goods. Such favoritism continues to work to moved to the Rockefeller Center complex ments and a slack demand from major steel the extreme disadvant:1ge of American in­ in 1962. In 1964. Richard Clark Associ­ markets have combined to cause havoc in the dustry and to the workers which American ates was established. In June of the same steel industry. In July, steel imports ac­ firms employ. I find it incredible that the year the first minority group Job Oppor­ counted for nearly 19 percent of the nation's administration would continue to permit steel supply-the highest percentage to date. expansion of foreign imports at a time when tunity Center was created. This was in Through the first seven months, the nation's this same administration bemoans the na­ the days when it was a rare occasion to trade deficit in steel mill products stood at tion's high rate o! unemployment. see a black executive. nearly $2.2 billion. Somewhere in Washington there must be Well that is changed now. Pushed by A week ago, the American Iron and Steel men and women in high government posi­ the law, prodded by their consciences, Institute reported that the industry poured tions with the counge to stand up for Amer­ and doggedly following their own self­ only 2.28 million tons of steel in the week ica and insist that steps be taken to curb interest in hiring qualified talent, many ended Sept. 17, down 0.5 percent from the unfair foreign competition that results in big corporations are now anxious to hire previous week, meaning the industry was state-supported industries dumping their putting to use only 74.9 percent of its total excess production in this country at prices black executives. Often the problem lies capability. often less than that at which they could in a system that helps corporate person­ Total steel output rn far this year is 89 .75 sell the goods for a profit in their own nel people, in letting blacks know what million tons, down 4.7 percent from the 94.14 countries. jobs are available, and in 9ringing the million tons poured through Sept. 17, 1976. Surely it is time for the administration two together. Despite these grim statistics, President Car­ to consider tax incentives for capital im­ Looking back we can all see and ap­ ter told a group of worried Senators last week provements so that would allow our indus­ preciate the amount and quality of prog­ that he sees n:> immediate need to grant the tries to compete with those modern facili­ ress made by Richard Clark Associates. steel industry's demands for more restraints ties overseas built as a result of massive on foreign imports. U.S. assistance. Congress too must take a The blacks of America are just now be­ President Carter's reaction to steel's prob­ stand by enacting laws that assure American ginning to realize their own potential and lems is not surprising. Ever since the end of industry that no unfair competition will be are also developing the self-confidence World War II, America's Presidents have been permitted to flourish in this country at the needed to adapt to the mainstream of preoccupied with foreign affairs with the re­ expense of our own workers. prosperous American living. sult that problems on the homefront often I cannot accept the attitude taken by The Before concluding this statement, I were neglected. New York Times in addressing the steel would like to show you some results of This country's international economic crisis, when that newspaper concluded, that this company's efforts in tangible terms. policies under successive administrations, American steelworkers should be content to Republican and Democrat, h3.ve sn own undue discard their jobs on the trash heap because In June of this year the recruiting week­ favoritism to foreign producers of goods. the "burden of protecting the industry from end produced 180 engineers, 150 MBA's, Presidents and Secretaries of State were unpleasant realities would be too great." 80 chemists, 75 systems and program­ prone to use economic favors to per.su3.de In response to the position taken by The ing specialists, and a host of other fcreign countries to adopt policies they be­ Times, Mr. Gorman, president of a specialty skilled people. Four out of five will have lieved were beneficial to U.S. foreign policy steel company, who I quoted above says this had work experience, the rest were new objectives, many of which were open to ques­ kind of talk is not only monstrous but im­ graduates. All were available for job in­ tion. moral. He correctly points out that the "un­ Today we are paying for these misdirected terviews with major corporations drawn pleasant reality that should be faced is that from the Fortune 500. policies with thousands of American workers it is our total national economy which is being forced to join the ranks of the unem­ competing, not the steel industry alone." I am proud to see this great record and ployed because of unfair foreign trade com­ It is discouraging indeed to hear our Sen­ I hope you all will appreciate this great petition. Steel especially is feeling the pinch ators and Reoresentatives in Washington work also. although the textile industry is hurting for cry protectionism when the American steel the same reason. ind us try even suggests remedies used by the Even now when the crisis in the American Japanese to protect and expand their own steel industry seems obvious to everyone, PHILADELPHIA STATE HOSPITAL industry. Japan enjoyed all-out unrestricted PAYS TRIBUTE TO FATHER RICH­ President Carter's chief trade negotiator, growth of its industry and especially steel Robert Strauss, seems to place a higher prior­ because of the protection of its domestic ARD FLEMING, FIRST CATHOLIC ity on foreign trade interests than on unem­ markets from foreign competition. CHAPLAIN ployment at home. Even though there is For thirty years the United States has ample evidence of dumping in the steel in­ poured out $140 billion in foreign aid around dustry by the Japanese, Strauss has discour­ the globe. The reconstruction of Japim and HON. JOSHUA EILBERG aged U.S. steel companies from seeking jus­ Europe in the postwar period was made OF PENNSYLVANIA tice in the courts. He has told them their possible primarily because of U.S. dollars IN THE HOUSE OF REPRESENTATIVES effortr; to fight unfair competition would be freely given to those countries. It is time harmful to world trade. Isn't it time our to look homeward before all is lost. Tuesday, September 27, 1977 leaders began looking after their own people? Government officials take the attitude that Mr. EILBERG. Mr. Speaker, my very good friend, Father Richard J. Fleming, our steel comoanies failed to modernize and RICHARD CLARK ASSOCIATES: keep up with their Japanese counter­ 20 YEARS OF ACCOMPLISHMENT parts. The truth is that while the Japanese recently was honored by staff members Central Bank was arranging for the Japanese of the Philadelphia State Hospital, where steel industry to receive massive loans through large city banks, the government in HON. CHARLES B. RANGEL for nearly 20 years he served as its first this country was milking the lifeblood capi­ OF NEW YORK Catholic chaplain. The hospital is lo­ tal from the U.S. steel industry with income IN THE HOUSE OF REPRESENTATIVES cated in the Fourth District of Pennsyl­ taxes alone 419 percent grP.ater than paid by vania, which I am privileged to serve in Japanese firms. Tuesday, September 27, 1977 the House of Representatives. Thomas Gorman, president of the Al Tech Mr. RANGEL. Mr. Speaker, this year A very fine article on the tribute paid Speciality Steel Corporation, says that while Richard Clark Associates, minority to Father Fleming, and on his years of 31298 EXTENSIONS OF REMARKS September 27, 1977 selfless service to the mentally disturbed, They are apprehensive, because we are tive impact of benefit erosion has been appeared in the September 22, 1977, issue at a point of no return. Within the fore­ to reduce military personnel's real pur­ of the Catholic Standard and Times, the seeable future, the system will go bank­ chasing power by 6.3 percent. very fine weekly publication of the Arch­ rupt if major action is not taken. In my judgment, we can all benefit diocese of Philadelphia. Out of genuine The responsibility for overhauling so­ from a study of Senator STEVENS' state­ respect for Father Fleming and the work cial security rests squarely on the ment, and I respectfully insert it in the which he has done, it is a personal priv­ shoulders of Congress. My colleague from RECORD at this time: ilege and pleasure for me to place this Georgia (Mr. LEVITAS) was on record 2 ADDRESS BY SENATOR TED STEVENS article in the CONGRESSIONAL RECORD: years ago as urging a head-to-toe revi­ Thanks for the generous introduction and FATHER RICHARD J. FLEMING-STATE HOSPITAL sion to put the system on a sound finan­ warm reception. I'm honored to be here. I HONORS FIRST CATHOLIC CHAPLAIN cial footing. I commend him and join know this invitation reflects your recogni­ Father Richard J. Fleming, first full-time him in that desire. I request that an tion of my efforts on behalf of military Catholic Chaplain at a State psychiatric editorial from the Atlanta Journal and benefits. But we all know what we're up hospital in Pennsylvania, will be honored on Constitution which addresses this prob­ against. Sept. 23 by staff members of Philadelphia lem be printed in the RECORD as an ex­ Since 1973, we've witnessed erosion in State Hospital. tension of my remarks: medical and champus benefits; the regular Father Fleming, earlier this summer, was re-enlistment bonus; travel pay upon re­ transferred by the Archdiocese to become HERE WE Go AGAIN enlistment; superior performance pay; ter­ pastor of St. Charles Borromeo Church, 1731 How long ago was it that Rep. Elliott minal leave payments; sick pay exclusions; Hulmville Rd., Cornwells Heights. He was Levitas of Georgia's Fourth District proposed G.I. bill benefits, the airman education and the original head of the Catholic Chaplaincy to the U.S. House of Representatives that the commissioning programs. at Philadelphia State Hospital, Byberry, hav­ Social Security System be revamped and This litany could go on. But you know ing joined the staff in 1958. At that time the placed on a sound financial basis the list as well as I do. The cumulative im­ hospital's population was overcrowded with He proposed it during his first term in the pact has been to reduce military personnel's well over 7 ,000 patients. House. He's now in his second term. And real purchasing power by 6.3 percent during When Father Fleming started at the hos­ we seem no closer to finding a solution to the a period when the non-military sector's pital, the religious affiliation-whether mess that characterizes Social Security. purchasing power has increased 6.5 percent. Catholic, Protestant or Jewish-was un­ What brings it to mind is that Congress In not keeping its commitments to the known for most of the patients. Father continues to deal with the Social Security military, Congress has all too often proved Fleming enlisted the help of 15 volunteers to System in the same makeshift manner that to be a summer soldier and sunshine patriot. determine the religious faith of all for whom has been the norm since the system was Its record demonstrates, once again, the the information could be obtained. This in­ born. It's the same concept of papering over simple truth of that old verse: formation was recorded on the patient's the holes, of pain ting over the cracks, of "Our God and soldiers alike we adore me::l.ical records. During his first four years being unwilling to face reality. At the brink of danger; but not before: at Byberry, Father Fleming served without Demonstrating a remarkable lack of imagi­ After deliverance both alike requited, pay from the Commonwealth. nation and a total absence of courage, a Our God's forgotten, and our soldiers Father Fleming in his 19 years service to House subcommittee has voted to increase Slighted." the hospital brought a warmth and geniality the tax base on which Social Security taxes to patients and staff alike. He knew the pa­ are paid by individuals and by businesses. In peacetime, with foreign policy focusing tients by name and addressed each one per­ This would then be followed by increasing on detente and inflation the primary domes­ sonally. In 1960, the annual patients' Com­ the rate of tax paid by individuals and by tice problem, it's easy to forget past priori­ munion Breakfast was established under his businesses. ties and debts. The need to balance the guidance by Mrs. Frances Kochut, R.N., who Rather than following the Levitas idea budget takes precedence over all other con­ also established the Sacred Heart Guild at of taking a good hard look at Social Security siderations. All Departments' budgets are the hospital to raise funds for the program. and coming up with a revamp, the House subject to renewed scrutiny, and in terms of The innovation of these Sunday breakfasts subcommittee is taking the easy way out by Defense appropriations, military benefits rep­ in a large restaurant in the community for doing what has been done by all its prede­ resent the easy and obvious place to start patients after attending Mass was a mile­ cessors. The House members are moving to­ slashing. stone since lari6e groups of psychiatric pa­ ward imposing substantially heavier Social In the FY 1978 Defense appropriations bill, tients had never been taken outside the Security taxes on individuals and businesses attempts to phase out commissary subsidies institution for a program. in a typical makeshift approach. for clerk-hires; limit D.0.D. blue collar In 1960, when one of the cottages in a After all, members of the House don't pay worker wages; and prohibit dual compen­ group at the south end of the groun:is was Social Security taxes. So it's no skin off their sation, exemplify this problem. being converted from a residence to the Cath­ respective noses. As you know, I sponsored amendments to olic chapel and offices, later named Kennedy This makeshift approa()h is nothing more block these actions. We had to go to the floor Hall, Father Fleming personally helped in than an abdication of responsibiilty by mem­ in all three cases, and we won, by majority the manual work. In July 1961, Cardinal Krol bers of the House. We urge Rep. Levitas to vote of the Senate. dedicated the chapel to St. Dymphna, the renew his campaign to bring reason and The Senate restored the Wage Board patron saint of the mentally ill. logic to the Social Security morass. amendment by voice-vote; the commissary Father Fleming was graduated from St. subsidy by a vote of 59 to 33, and dual com­ Charles Seminary, Overbrook, and ordained pensation by 49 to 46. But even this narrow margin is encouraging. in 1946. He has been a member of the Associ­ SENATOR STEVENS SPEAKS ON ation of Mental Health Chaplains since 1959 MILITARY SERVICE It shows common sense and common de­ and is accredited as a Teaching Chaplain by cency can prevail. And while we cannot deny the National Catholic Welfare Conference. He the diecouraging trend in erosion of military is also a member in the National Association HON. DAN DANIEL benefits ... these recent votes request an en­ OF VIRGINIA couraging trend in the erosion of anti-de­ of Catholic Chaplains, the Pennsylvania fense, military voting. Hospital Chaplains Association and the IN THE HOUSE OF REPRESENTATIVES Catholic Chaplains of Pennsylvania Hos­ Given a good case to preserve military pitals & Schools. He serve::!. for several years Tuesday, September 27, 1977 benefits-and we have an excellent one-the majority will respond to reason. as chairman of the Planning Committee for Mr. DAN DANIEL. Mr. Speaker, last Institutional Chaplains on a State-wide The majority supported my amendments basis. week Senator TED STEVENS of Alaska because they recognized the proposed actions served as keynote speaker for the an­ were unconscionable, unfair, short-sighted, nual meeting of the American Logistics and counter-productive. Association here in Washington. It is unconscionable to place the burden HERE WE GO AGAIN for defense budget cuts on those who have As most Members of the Congress are committed the best years of their lives to ' well aware, Senator STEVENS has labored service for their Nation. HON. DOUG BARNARD long and hard in the interest of the It is unfair, particularly in a period of OF GEORGIA men and women who serve in the Na­ inflation, to reduce the range of benefits IN THE HOUSE OF REPRESENTATIVES tion's Armed Forces. which military personnel have counted on Senator STEVENS lays out plainly the when they made their career decisions. Tuesday, September 27, 1977 actions which have been taken and con­ It is short-sighted, for the steady erosion Mr. BARNARD. Mr. Speaker, the peo­ templated which would make military of military benefits will deter recruitment and enlistment in an all-volunteer army. ple of this country are painfully aware service even less attractive than it is, What inducement or incentive exists, if pro­ that social security system is in desper­ but it sums matters up completely in spective personnel see fringe benefits cur­ ate financial straits. his remarks that since 1973, the cumula- tailed and long-term commitments unkept? September 27, 1977 EXTENSIONS OF REMARKS 31299 It is counter-productive, specifically in the work and increase ultimate, cumulative With the electric utility industry supply­ area of the dual compensation prohibition. benefits. ing about 10 percent of this Nation's The net result would have been to deprive The Presidential Commission on Military end-use energy while consuming ap­ the Federal Government of highly qualified Compensation and Congress are challenged proximately 25 percent of the primary personnel. to come up with solutions which accomodate I don't need to re-hash all the arguments all these considerations-and whatever the fuel resources and 33 percent of the new or all the statistics which explained why new programs, they cannot penalize those private capital annually, improved effi­ commissary clerk-hire phase-out, D.O.D. presently in or retired under the existing ciency in the generation, transmission, blue collar wage restrictions and dual com­ system. and consumption of electric energy is pensation prohibitions failed, and my amend­ As a member of Subcommittees on Defense simply too important for any of us to ments prevailed. The point is that Congress and Interior Appropriations, I have a per­ ignore: recognized a strong peacetime defense de­ spective of the conflicting claims upon Con­ Question. Doesn't Part V provide for a fed­ pends on a viable, volunteer army. If we do gress. We are going to have to make realign­ eral takeover of regulatory authority tradi­ not keep past commitments or provide in­ ments. We continue to revise domestic pri­ tionally vested in the states? centives, inducements and opportunities orities. we must get a handle on inflation. No. The minimum federal standards pre­ comparable to and competitive with the non­ But we must not compromise national scribed in the legislation as passed by the military public and private sectors, we are security. House are to be implemented by state regu­ not going to be able to sustain this peace­ All of us are going to have to live with latory agencies and enforced by state courts time force. change. All of us are going to have to make (with two exceptions as noted below). Even So what lies ahead? If the past is indeed some sacrifices. But we all will do better if if the federal government determines that prologue, what can we anticipate for the we approach the situation in a spirit of the utilities in a state are not in compliance future? cooperation and candor. / with the legislation, its power is limited to Congress, as I have noted, appears to be Specifically, cooperation means the Presi­ publishing a finding of noncompliance which coming around. dent's Commission. The military, veterans is then used in the state court. As noted The administration's position is open to groups, and Congress should work together, above there are two exceptions to the ex­ question. On the plus side, the President in good faith, to develop a compensation clusive reliance on state courts: in cases was-for 13 years-a career military man. On system which achieves equitable revision where the parties have traditionally been the minus side, administration decisions on rather than unfair erosion of military bene­ able to go to federal courts, such as when Defense programs, to date, reflect a tendency fits. one state sues another, or when the state to opt for the cheapest-not necessarily wis­ Candor means clearly explaining to the court refuses to hanc..le the matter. est-investment. American people that they have three alter­ A further precaution taken by the House However, most important, the President natives so far as military compensation is to avoid a federal "takeover" was to make the has completed appointment of the Military concerned: Federal Energy Regulatory Commission the Compensation Commission, and its Chair­ To bear the costs-no matter how high­ agency responsible for oversight rather than man, Charles Zwick, in interviews has of All-Volunteer Armed Forces; or the Department of Energy. Thus an adjudi­ demonstrated an open mind. To return to the draft, compulsory mili­ catory agency rather than an advocacy agency Clearly, revisions in compensations and tary service; or will have responsibility for this program. benefits are inevitable. However, any realign­ To live in constant jeopardy due to a It should also be noted that there is no ment must respond to the unique situation physically and mentally depleted military. federal rulemaking attached to these federal of the military. There is no other way around this issue. minimum standards (unlike the Administra­ Maintenance of an All-Volunteer Army re­ Americans will have to pay or serve or tion's proposal) and no federal rate-setting quires dealing with the issues of comparabil­ sacrifice national security. And confronted ( except where the state abdicates all re­ ity and competitiveness in the job market. with this choice, I am confident that they sponsibility). Specific consideration must be given to will opt to bear the costs for a strong, peace­ Question. Doesn't the bill add another these facts: time, All-Volunteer Army. regulatory layer full of red tape to an already Military careers presently provide lower Public opinion polls show that Americans' burdensome process? lifetime earnings than equivalent civilian feelings fluctuate on a wide range of issues­ No. As described above, existing state and positions. we have never waivered in our commitment local institutions and procedures are used Only 9 percent of enlisted men and 19 per­ to national security. We have never wanted rather than providing for a federal review of cent of officers can expect to achieve retire­ to be second in national defense. state decisions (as was suggested by the Ad­ ment eligibility due to the "up and out" And while we have and will continue to ministration and rejected in the Commerce policy. change our positions and programs in many Committee). Military retirees must seek post-retirement areas, Americans have, for two centuries, Question. Aren't the minimum standards employment to approximate comparability held constant to Thomas Jefferson's admo­ specified in Part V new, untried, and unsound with the civilian sector's lifetime earnings. nition: rate principles which will lead to chaos in Military employees are subject to hard­ "For a people who are free and who moan ratemaking and unfair pricing? ships and hazards-ranging from weekend to remain so, a well organized and armed No. Every minimum standard in the leg­ duty without overtime to abrupt transfers militia is their best security." to remote regions. And while Adak is like islation passed by the House is already in home to me, it's a helluva an adjustment for effect in one state or another at this time. a recruit from South Carolina. Benefits like Furthermore these standards involve basic NATTONAL El\TE'R.GY ACT-ANSWER­ principles which have been used in indus­ commissaries are not a convenience in loca­ ING QUESTTOl\lS RELATED TO tions like Adak-they're a necessity! try for years. An example is time of use pric­ As co-sponsor of Senate bill 274, prohibit­ PUBLIC UTILITY REGULATORY ing which has been a cornerstone of rate­ ing unionization within the Armed Forces, POLICIES making in the telephone industry (it costs I believe it is incumbent upon Congress to more to make a call during the busy hours act equitably in the area of salaries and of the day than at the slack periods at night) be~efits to compensate for this restriction HON. JOHN D. DINGELL which is only now beginning to be used in on personal freedom--essential to national OF MICHIGAN the electric utility industry at an unreason­ security. IN THE HOUSE OF REPRESENTATIVES ably slow rate. It should be kept in mind that these minimum standards are only Finally, we can't just single out military Tuesday, September 27, 1977 broad guidelines which must be implemented retirement and cost increases. This situation by state regulatory agencies only when they is apolicable to the ssi:, csi: and private Mr. DINGELL. Mr. Speaker, I have re­ find it cost effective to do so. systems. Over the last decade, General ceived many inquiries both from my col­ Motors-for example-experienced a $500 The charge that these standards will lead leagues in the House and from concerned to unfair pricing is also without merit. Un­ million increase in pension costs and IBM's citizens related to part V of title I of the costs have increased 500 percent. fair pricing exists today in varying degrees National Energy Act as it passed the throughout the country not only because of Certainly, there is a legitimate concern House, the part which relates to public ,overt attempts to subsidize one class of cus­ about the unfunded liability portions of utility regulatory policies. 'tomers to the disadvantage of others but military, SSI and CSI systems. This must be It appears that the basis of these in­ also because utilities and the commissions corrected on an across-the-board actuarial which regulate them have often failed to basis to protect future generations . .. but. quiries, in large measure, is a result of an organized effort to kill these provi­ collect the necessary data to determine Military retirement funds cannot be which cu ~tomers or class of customers are singled out. sions. I have seen many "letters to stock­ causing what costs. A principal element of Compensation or comparable benefits must holders" which, in my view, do more to this legislation is that prices for electric be provided to off-set contributions to re­ misinform than to inform the public. energy be based on the cost of providing tirement systems. In any event, I feel that the questions service; no more, no less. If measures and dual compensation are to raised should be answered so that my Question. Weren't all these provisions be phased out they must be replaced by a colleagues and the public can better added to t he Carter energy program at the system which permits retirees to continue to understand these important provisions. last moment, going much further than the 31300 EXTENSIONS OF REMARKS September 27, .1977 Administration's proposals, and why does stockholders. It should be kept in mind that nection, wheeling, and the like would be of Congress feel it necessary to legislate here? the costs which we are asking the stock­ general benefit to all consumers of the The legislation which the Administration holders to pay are minimal: In 1975 privately affected region, would not cause financial sent to Congress earlier t h is year had pro­ owned electric utilities spent approximately harm or a decrease in the reliability of serv­ visions not only for regulation of the elect ric $15 million on advertising and had a net ice to the consumers of the utility affected utility industry but also t he gas ut111ty in­ income of $6 billion. Thus if all advertising by the order, and that the utilities request­ dustry. While it is t rue that the legislation expenses were paid out of net income and not ing the orders were ready, wllling, and able suggested by the Administration wasn't as recovered from ratepayers (which we do not to pay for any capital and operating expenses broad in scope as t hat passed by the House, advocate) the percent age reduction in net involved in the order so that the utility sub­ the Administration's version had a much income would have been 0.2 percent or a loss ject to the order would be made whole. In no greater impact on the degree to which the of l e for every $5 of net income. way does this involve a "takeover" of man­ federal government would participate in Question. Doesn't the legislation make it agement decision-ma.king prerogatives. It is state ratemaking. Furthermore electric util­ more difficult for electric utilities to get com­ merely an attempt to communicate to those ity regulation has been of great interest re­ petent people for their boards of directors? few managers who do not see any value in cently in Congress as evidenced by the stud­ lt shouldn't. Existing law already restricts cooperating with some of their fellow utili­ ies and hearings conducted in both the who can serve on the board of directors of ties that there may be larger issues at stake. House and the Senate and by Title II of the a public utility and has done so since the Question. Even if the measures set forth Energy Conservation and Production Act 1930's. No person on the board of a firm in the legislation are needed, won't they which passed both bodies and was signed authorized to underwrite securities for utili­ lead to increased capital financing problems into law in 1976. In preparation for the pub­ ties or a firm which supplies electrical equip­ for an industry already plagued with difficul­ lic utility regulatory provisions of the legis­ ment to electric utilities can be on the board ties in raising capital? lation now being considered before Congress, of the electric utility unless a waiver is ob­ No, the exact opposite is true. There are, 1100 pages of testimony from 70 different tained from the Federal Power Commission indeed, certain portions of the Administra­ witnesses representing all segments of the (FPC) . Thus there is a presumption that tion's energy program which will require utility industry and the consuming public there is a conflict unless proven otherwise. significant capital expenditures. An example was heard. In fact, more time was spent on The present legislation says that members of is coal conversion which is estimated to cost public utility regulatory provisions in hear­ boards of firms which supply fuel to utilities, the utility industry $40 billion by 1985. How­ ings and in marking up of the legislation which are general types of financial institu­ ever, the same computer model which pre­ than for any other single section of the tions, or which are the 20 largest customers dicts this increase in capital requirements National Energy Act for which the Com­ must disclose these positions when they Join also predicts that there will be a net capital merce Committee was responsible. The rea­ the board of an electric utility. The FPC can savings of $55 billion by 1985 due to utility son that Congress is deeply interested in remove them only when they find, in a pub­ rate reform and conservation (even taking this subject can be summarized very lic hearing, that a conflict of interest exists. into account added metering expenses and briefly: the electric utility industry which Thus the presumption is that no conflict the like). Thus Part V dealing with a public supplies the nation with a.bout 10 percent exists unless proven otherwise. This measure utiltiy regulatory policies not only is a saver of its energy, consumes annually about one­ certainly shouldn't have any adver~e effect of capital resources but provides the capital quarter of the primary fuel resources and on a utility's ability to obtain qualified in­ to support other measures such as coal one-third o! the new private capital. This dividuals for its board of directors. conversion. ls too important an area for Congress to Question. In establishing these minimum ignore. standards, why were privately owned utili­ Question. Doesn't the bill provide for cer­ ties covered and not publicly owned ones? THE FTC AMENDENTS AND CLASS tain loopholes for some customers? Coverage is not controlled by type of ACTION SUITS-I Two exceptions to the cost of service prin­ ownership but by size: both privately and ciple are included in the bill, one temporary publicly owned electric ut111tles are covered. and one ironically due to state's rights. It It happens that most of the large utilities HON. HENRY A. WAXMAN has always been a basic principle of rate­ are privately owned (and, therefore, covered) making that rates should not only be fair while most of the small ones are publicly OF CALIFORNIA but also predictable and consistent. If a owned ( and, therefore, not covered) . The IN THE HOUSE OF REPRESENTATIVES threshold of coverage for the first seven yea.rs state with rates which were not based on Tuesday, September 27, 1977 cost of service were suddenly to change its ls annual sales of 750 million kilowatt-hours rate structure, certain customers who had per year. This threshold captures about 90 Mr. WAXMAN. Mr. Speaker, a vigor­ made economic decisions based on the old percent of total sales in the nation. After the ous lobbying campaign has been under­ rate schedule (such as buying an ele<:tric first seven years the threshold drops to 200 mllllon kilowatt-hours per year which cap­ taken by corporate interests across the hot water or converting an industrial pro­ country to strike section 7 of H.R. 3816, cess from gas heat to electric heat) might tures 95 percent of total sales. This covers suffer a severe economic shock. Thus there about 400 companies. To capture all sales the Federal Trade Commission Amend­ ls a provision in the bill for a gradual 5-year would involve covering 2,000 more companies ments of 1977. Section 7 provides for changeover in these cases. Furthermore, sev­ to get Just 5 percent of the sales. This would citizen suits and other consumer actions eral states have made the decision to have clearly involve bureaucratic red tape at its to enforce FTC rules prohibiting unfair "lifeline" rates and the Commerce Com­ worst. Even with the highest limit of 750 and deceptive trade practices. This pro­ mittee felt, that while it did not necessarily million, many public utilties are covered such vision is the heart of the legislation. It approve of such rates, it would be improper as those which serve Los Angeles, Anaheim, and Pasadena, California; Jacksonville and is designed to give consumers an equi­ to override these local decisions. Thus states table and effective tool with which they who wish to have such rates may do so but Orlando, Florida; Kansas City, Kansas; there is no federal mandate to do so. Austin, Texas; Seattle and Tacoma, Wash­ can protect themselves when the FTC is ington; all of Puerto Rico; and many unwilling or unable, due to a lack of Question. Does the legislation mandate others. marginal cost pricing and, if so, why? resources, to go into court in their be­ Question. Why give the FPC authority to half. The legislation does not mandate any order interconnections, wheeling of power, specific costing methodology and says so ex­ and the takeover of similar management pre­ A number of fallacious arguments plicitly in the report to the legislation. There rogatives? have been raised as to the effects this was very convincing testimony given to the The reliability and adequacy of electric provision would have. It has been con­ Subcommittee on Energy and Power that service is no longer a local or even a state­ tended that consumer class action suits marginal cost pricing might be appropriate wide question. The massive electrical grid would serve only to enrich attorneys and but the final Committee (and House) deci­ which has evolved, has turned this into a sion was to leave the choosing of a costing not to benefit consumers. It is also al­ regional and a national question. Often what leged that class action attorneys would methodolgy in the hands of the states. is best for one utility or one state may not Question. Why is there a ban on advertis­ be in the best interest of the entire region. utilize this new opportunity to "black­ ing by utilities? Many times the utilities involved are able mail" corporate defendants into settling There is no ban on advertising by utilities; to address these problems by themselves claims against them. that would be a blatant violation of the First without any intervention. However there are Both these charges are utterly without Amendment. There is no doubt, however, instances when a parochial attitude prevents merit. In order to refute them fully, I that certain classes of advertising, such as the efficient use of fuel and capital resources am pleased to insert a memorandum pre­ political advertising (much like that with within an entire region. The House con­ which we have recently been inundated) is cluded, therefore, that the FPC should be pared by Beverly C. Moore, Jr., editor of performed for the benefit of the stockholders given anuthority in certain areas. However Class Action reports. This is the first of of the company and not for the ratepayers. it made sure that this authority would not three such memoranda Mr. Moore has Thus, the legislation provides that in these be abused by requiring that the FPC, in prepared on various aspects of this cases costs of advertising cannot be passed to exercising its powers, would have to deter­ critical legislation. I commend it to my the ratepayer but must be borne by the mine beforehand that orders for intercon- colleagues : September 27, 1977 EXTENSIONS OF REMARKS 31301

FALLACIOUS ARGUMENT No. 1: CONSUMER CLASS entire profession is called for. In the final ants actually capitulate to settlement ACTIONS WOULD SERVE ONLY To ENRICH analysis, if the earnings of plaintiff class demanas in such baseless class actions-or, ATTORNEYS-NOT To BENEFIT CONSUMERS action lawyers are so excessive, why are there where the case is not "frivolous", whether Plaintiff attorneys have long been used as so few of them? Why are there several times defendants are forced to settle for more than scapegoats to discredit or obscure the deter­ as many class action defense lawyers-unless its merits would justify. Of the 81 final dis­ rent and compensatory benefits of class ac­ defense work is where the big money really positions of class actions in the Senate Com­ tions. The truth is that class actions have ls? Why are defense firms manned by 50 or merce Committee sample, defendants pre­ cut in half the proportion of the monetary even 200 lawyers, while a "large" plaintiff vailed in 47 cases, or 58 percent. In 44 of recovery consumed by attorney fees. The class action firm may have ten attorneys'? those 47 cases, defense victories were ob­ available data show that attorney fees have Again, the answer is that the earnings of tained by summary judgment, denial of class accounted for an averaf?e 16-17 percent of class action defense lawyers exceed those of certification. or other dismi~sal at a prelimi­ class action recoveries,1 compared to 33 per­ plaintiff lawyers. In one case a wealthy class nary stage of the litigation. In short, defend­ cent or more in nonclass litigation such as action plaintiff attorney, in response to a ants do not capitulate. Whether the plaln­ automobile accident or medical malpractice defense assertion of excessive fees, offered to tifl"s' case is strong or weak, defense resist­ cases. Thus, 83-84 percent of a class recovery stipulate that for winning the case he would ance ls consistently vigorous--often pro­ is, in fact, distributed to the members of the accept half of what the defense attorneys tracted. Strike suits simply do not pay, and class. On its face this performance is su­ were paid for losing it. at least by now practically all class action perior even to those paragons of distribution In sum, H.R. 3816 opponents' contention plantiff attorneys know this to be true. efficiency, the modern supermarket or depart­ that class actions merely enrich attorneys is The other study, a phase of the exhaustive ment store, where retail price markups range simply defied by all of the available evidence and authoritative American Bar Foundation from 25 to 40 percent. and logic. More than four out of every five Class Action Project, painstakingly analyzed If attorney fee awards in class actions are dollars recovered does end up in the hands all antitrust class and nonclass actions filed considered excessive, that can only be the of class members. That large aggregate re­ in the Northern District of Illinois during fault of the judges. For all fee awards to the coveries can be distributed in small amounts fiscal years 1966-1973.5 Conclusion: "The successful attorney for a class are determined to large numbers of individual consumers charge that the costs of defending class ac­ by the court. In recent years courts have de­ has been amply demonstrated by the Anti­ tions are so high and the potential liability veloped and applied strict standards. The biotics Antitrust Litigation, where 882,000 so great as to force defendants to settle ir­ basic consideration is the time spent on the households in six western states received 're­ respective of the merits of plaintiff's claim case multiplied by the attorney's noncon­ funds averaging $30-$40 for alleged prescrip­ finds little support in this district." In fact, tingent hourly market rate. The product is tion drug price overcharges that had oc­ the study complained that even "success­ then adjusted for contingent risk, quality of curred eight to 20 years earlier.2 The greater ful" class actions had been able to recover performance, benefits conferred, and other benefit for consumers, however, is deterrence only a fraction of single damages, although factors. Fees are no longer awarded on a per­ of future injuries that effective class action the law provides for treble damage recov­ centage basis, although a substantial per­ remedies would render unprofitable. Cor­ eries. If there is a "blackmail" aspect to the centage of the recovery continues to serve as porate opponents' objective in attacking at­ class action process, it is wielded not by an upper limit regardless of how many hours torney fees is unmistakeable. By destroying plaintiffs but by defendants who can, even the attorney may have spent on a case. or limiting the incentive for attorneys to under H.R. 3816, avail themselves of an array It should be noted also that the percentage prosecute class actions, corporations can of artificial legal doctrines to escape full of a class recovery consumed by fees tends escape legal liability for harms perpetrated liability for class harms perpetrated. A sur­ to decline as the size of the recovery in­ on the consuming public. vey of the reported decisions does not reveal crea,;es. Thie; is significant becau!'e rec·overies a single consumer class action in which dam­ in most class actions thus far, and particu­ FALLACIOUS ARGUMENT NO. 2: CLASS ACTION ages approaching 100 cents on· the dollar larly in consumer class actions, have been ATTORNEYS WOULD BRING "STRIKE SUITS" were recovered. reduced to a fraction of the actual harm to UNFAIRLY "COERCING" DEFENDANTS INTO We do not suggest that class action strike the class through the requirement that each SETTLEMENTS UNRELATED TO THE MERITS OF suits have never been filed. A few have been, class member must be identified and lo­ THE PLAINTIFFS' CLAIMS but they represent a tiny fraction of all class cated and must ultimately come forward to actions. More importantly, strike suits clearly claim or prove his individual share of the This is sometimes referred to as the are more frequent in nonclass actions than damages. Since H.R. 3816 permits damages to "legalized blackmail" argument. As we shall in class actions-more frequent also in small be assessed in the aggregate, based on the see, it is really another argument against class actions, where less harm can be done, actual harm to the class rather than the the class action device per se. Naturally, than in large class actions, where, accord­ number of class members who affirmatively defendants would rather escape liability to ing to the American Bar Foundation study, submit claims, class recoveries will be sub­ small claimants altogether. The notion here defendants' willingness to resist rather than stantially larger although the attorney hours is that a defendant could adequately resist to capitulate corresponds with the amount necessary to obtain them will remain about a baseless $10 lawsuit brought by an indi­ at stake m the litigation. Occasional strike the same. Accordingly, the percentage of re­ vidual consumer. But when confronted with suits are a characteristic phenomenon of coveries consumed by fees in H.R. 3816 class the aggregation, through a class action, of every type of litigation. If the Congress is actions is likely to be lower than the tradi­ one million equally baseless $10 claims, de­ determined to thwart class action remedies tional 16-17 percent. fendants complain that they are somehow because an even tinier percentage of class To be sure, s·ome attorneys have become coerced-perhaps "leveraged" would be the than nonclass actions may be "strike suits," wealthy through class action litigation, but better term-into settling in order to avoid then perhaps the desirability of our entire at least a few people make a fortune in the mere possiblity of a $10 million class civil legal system should be reconsidered. practically every type of business pursuit. Judgment. It is not surprising that there is no em­ Would the corporate interests who opposed The short answer to this contention is that pirical evidence of a legalized blackmail H.R. 3816 be able to live with the limited its proponents have never identified a single problem, since the basic economics of class incomes and incentives they propose for class one of these class action "strike suits". If action litigation pose severe disincentives for action plaintiff attorneys? We think not. A they are so prevalent, giving just one actual strike suits. Any lawyer filing a class action fee award of $300,000 or $3 million may seem example ought not to be o-;erly difficult. Yet must be prepared to make a substantial in­ large, and it is, by class action standards. in 1972, when the Senate Commerce Com­ vestment. He must be willing, over a course But such fees are normally just compensa­ mittee sent a questionnaire to opposing of perhaps five years or more, to sacrifice tion for hundreds or thousands of hours of counsel in over 400 class actions, including hundreds or thousands of professional work by several attorneys over a period of 127 defense counsel, asking specifically for hours, to advance perhaps tens of thousands years during which they must forego other, examples of frivolous or unmeritorious class of dollars for notice and other litigation ex­ often more profitable legal work and con­ suits, not a single such example was forth­ penses, and to pay out further sums for office tinue to pay their secretaries, office rent, and coming.3 overhead-all down the drain unless he ulti­ other substantial overhead. Since such at­ To date there have been two major empiri­ mately obtains a class recovery. No attorney torneys ara paid nothing unless they win, the cal studies of class action litigation, both in his right mind is going to risk having risk is substantial. Despite the few who have of which have investigated this legalized to make and lose that investment because succeeded handsomely, many class action at­ blackmail problem. Both found no evidence the defendant will not capitulate to the torneys who have obtained recoveries in a whatever that it exists. The first study, con­ quick settlement of a baseless claim. To file majority of their cases have yet to register ducted for the Senate Commerce Committee a class action without a strong case on the an overall profit after five or ten years of by the editors of the Georgetown Law Jour­ merits is irrational economic behavior. litigation. nal, investigated all class actions filed in the Even if the defendant were to capitu­ It may be that lawyers in general make too U.S. District Court for the District of Co­ late-and the studies discussed above sug­ much money, due in part to various anti­ lumbia during the 1966-1972 period.4 Per­ gest that this rarely occurs-Rule 23(e) pro­ competitive restrictions contained in bar as­ sonal interviews with opposing counsel in 64 vides further safeguards. Any such "strike sociation "ethics" codes. But there is no of these cases "disclosed that no more than settlement" would have to be approved by basis for singling out plaintiff class action a handful [of defense attorneys) would label the court as being fair and adequate for the attorneys when a. solution applicable to the their opponents' cases as frivolous." absent class members. Any fees awarded the Of more centre.I importance to the legal­ plaintiff attorney would be related to the Footnotes e.t end of article. ized blackmail argument is whether defend- number of hours expended rather than the 31302 EXTENSIONS OF REMARKS September 27, 1977 success in extracting a settlement. And where When viewed in the context of a nonclass ing the amendment I will move to H.R. the settlement fund is relatively modest, claim of equal magnitude, the class action 6566-the ERDA National Security Au­ being merely a payoff to dispose of the liti­ consistently has less leverage potential. The thorization-deleting all funds for the gation, its size would also be a constraint, reason why is quite simple. In the nonclass since judges are unlikely to award fees con­ action, all plantiff parties are by definition neutron bomb. I strongly urge my col­ suming more than 30-40 percent of a class already before the court, and if there is a leagues to examine the views expressed recovery regardles3 of the attorney hours in­ recovery they will definitely receiv,e it. In a in these letters for their valuable advice. volved. Furthermore, Rule 23(e) prevents class action, no one except the named plain­ In addition to these two organizations, the attorney from withdrawing his class tiffs is before the court until and unless the the following groups support the amend­ claims, settling the claim of the named court allows the case to proceed as a class ment: The United Auto Workers, the plaintiff, and privately extracting a fee from action. In a substantial proportion of the Americans for Democratic Action, New the defendant. All such activity is subject to cases class status is denied on grounds hav­ Directions, the Coalition for a New For­ court approval and possible notice to the ing nothing to do with whether a class exists absent class members.6 that has suffered a real injury adjudicable eign and Military Policy, the New Demo­ Strike suits are far more likely to occur in on a classwid·e basis. That will continue to cratic Coalition, the Women's Strike for nonclass actions, not only because there is be so under H.R. 3816, although its aggregate Peace, and the Women's League for no mandatory judicial scrutiny of settlement class damage remedy ensures a full recovery Peace and Freedom. and fee payments but also because the where class status is granted and the planit­ Twenty-four Members of the House "nuisance value" of avoiding further de­ iffs have the evidence to prevail on th'e have joined me in introducing this fense costs may exceed the amount even of merits. amendment: Representatives HERMAN a meritorious nonclass claim. For example, A further consideration is the usually sub­ BADILLO, BERKLEY BEDELL, WILLIAM BROD­ if an individual plaintiff has a $100 claim, stantial imbalance of litigation resources be­ a defendant may be well advised to pay it tween the small claim class plantiff and the HEAD, JOHN BURTON, JOHN CONYERS, RON rather 'Ghan to incur thousands of dollars of defendant corporation. A nonclass plaintiff DELLUMS, ROBERT DRINAN, ROBERT EDGAR, billings from its own attorneys. When con­ with a substantial claim is more likely to DON EDWARDS, DAN GLICKMAN, ELIZA­ fronted with a potential $10 million class have substantial resources to prosecute it. BETH HOLTZMAN, ROBERT KASTENMEIER, claim, however, it is extremely unlikely that Ind,eed, the real danger of "strike settle­ PETER KOSTMA YER, ANDREW MAGUIRE, the cost of defending will exceed or even ments" in the class action context comes EDWARD MARKEY, BARBARA MIKULSKI, approach the value of the claim itself. In from the ability of well financed defendants GEORGE MILLER, PARREN MITCHELL, that situation the defendant's primary mo­ to engage in protracted litigation which de­ RICHARD NOLAN, RICHARD OTTINGER, LEON tivation for settling is not "nuisance value" pletes the plaintiff's resources and coerces but the fear of being held liable for $10 mil­ an inadequate class settlement. PANETTA, FRED RICHMOND, FORTNEY, "PETE" STARK. and HENRY WAXMAN. lion. The settlement amount will be some­ FOOTNOTES what less than $10 million, since it repre­ The material follows: 1 See data presented at 3 Class Action Rep. sents a compromise based upon both sides SEPTEMBER 26, 1977. uncertain assessments of the outcome at 51 n. 77, 162 (1974). DEAR MEMBER OF CONGRESS: Congressman trial. This is not "coercion"; it is simply the " See Lebedoff, "Operation Money Back," Weiss' amendment to delete funds for en­ normal settlement proces3. 4 Class Action Rep. 147-168, 228-241 (1975). 3 hanced radiation warheads will be on the It is necessary to make this point because See data on file with Senate Commerce House floor on Wednesday. SANE urges you drug companies who were defendants in the Comm.; Senate Commerce Comm., Staff Re­ to vote in favor of this amendment, for we view of Class Action Legislation, 92d Cong., epic Antibiotics antitrust litigation have believe the neutron bomb is an unnecessary been circulating the argument that they 2d Sess. (1972). I and dangerous weapon. were "blackmailed" into a series of settle­ Note, "The Rule 23(b) (3) Class Action: It is unnecessary because our seven thou­ ments totaling $213 million, "of which $42 An Empirical Study," 62 Geo. L.J. 1123 sand tactical nuclear weapons already de­ million ( 19.7 percent] was awarded (1974). ployed in Europe present enough of a risk :; Du Val, "The Class Action as an Anti­ in attorney fees,"· in order to avoid to deter Soviet invasion. Alleged Soviet fear­ "the possibilities of protracted liti­ trust Enforcement Device: The Chicago Ex­ lessness in the face of currently deployed gation in the public eye." 8 Although we perience," 1976 A.B.F. Res. J. 1021-1106, 1273- weapons is a Pentagon fabrication with no do not know what these drug companies' 1358. parallel in reality. defense costs were, the suggestion that they a See, e.g., Magana v. Platzer Shipyard, Inc., The neutron bomb is dangerous because were willing to pay out $213 million to avoid 14 FEP Cases 561 (S.D. Tex. 1977). 7 the Soviets will react by developing one of such costs is absurd on its face. Obviously, This fee percentage is somewhat higher their own. In a period of tension, each side the payments of $213 million, representing than the 16-17 percent average for two legit­ would be motivated to launch an attack in a modest fraction of the asserted single dam­ imate reasons. First the Antibiotics litiga­ order to preempt the other side's likely use ages, were made to avoid the possibility that tion consisted not of a single case but of a of neutron weapons. The military standoff in the court or jury would impose a far greater series of cases involving different subclasses Europe would become more unstable. and geographic regions. The litigation was liability, exceeding $1 billion, and that this If a war were to occur (no deterrent can judgment would be supported by sufficient highly protracted, spanning a ten year guarantee that it will not) and neutron evidence to be upheld on appeal. That the period, involving dozens of attorneys and bombs were used according to plan, the re­ defendants' willingness to settle for $213 mil­ thousands of hours of their time on both sult would almost certainly be escalation of lion was based not on "coercion" but on their sides. Second, relatively high fees were the conflict to a nuclear world war. per:::eived probability of a greater liability awarded the plaintiff attorneys because While leaving negotiating tables intact, the at trial is amply demonstrated by a single they were the first to obtain a recovery of neutron bomb would damage American arms fact. When the state of North Carolina held this magnitude in the history of legal control efforts. It would hamper attempts to out for more, the defendants did not capitu­ institutions. conclude a comprehensive test ban treaty. It late to "blackmail". They went to trial-and This suggested adverse publicity factor would signal American disinterest in a Mu­ won.9 can be quickly dismissed, since most mem­ tual Force Reductions agreement. It would, Finally, it must be emphasized that th·e bers of the public have no idea which corpo­ by adding to the forward-based systems proper standard for evaluating the black­ rations are being sued for what. Indeed, at problem, make the arms reductions we seek mail "leverage" of a class claim is to com - any point in time, most large corporations in SALT more difficult to negotiate. And it pare it with a nonclass claim of the same are being sued for something. O would worsen the prospects for controlling magnitude. As the Ninth Circuit observed in The attorneys representing North Caro­ nuclear proliferation by setting the wrong Blackie v. Barrack: lina presented little evidence of their own. example for other nations. "Precisely the sam-e power to coerce a set­ They merely submitted the transcripts and SANE believes that a neutron bomb de­ tlement ... is wielded by any (individual records from prior government prosecutions. ployment will be viewed in retrospect as a or corporate] plaintiff with a substantial The jury returned a verdict for the defend­ very unfortunate mistake. Your support of claim.... (W]e have no means of deciding ants. the Weiss amendment can help the United whether the present hue and cry of "black­ 10 524 F. 2d 891 (9th Cir. 1975). States avoid this error. mail" in fact repre"ents an abnormally high Sincerely, incidence of unfairly coerced settlement!, VICTOR LLOYD, or is rather the pained outcry of defendants NEUTRON BOMB Administrative Director. whose previously advantaged litigating posi­ PAUL R. BENNETT, tion has been undermined, and who must Staff Associate. now confront small claimants (who have HON. TED WEISS been given the capacity to exert pressure pro­ OF NEW YORK SEPTEMBER 26, 1977. portionate to the magnitude of the total IN THE HOUSE OF REPRESENTATIVES injury occasioned by defendants' alleged vio­ DEAR REPRESENTATIVE: NETWORK endorses 10 Tuesday, September 27, 1977 the Weiss amendment to HR 6566, the ERDA lation of the law) on more -equal grounds." National Security Authorization. This Mr. WEISS. Mr. Speaker, I would like amendment prohibits funds for production, Footnotes at end of article. to share the following letters support- procurement or deployment of any en- September 27, 1977 EXTENSIONS OF REMARKS 31303 hanced radiation weapon or for research, rated before we create another huge, but Now back to WIN AND CETA. People are development, test or evaluation of same. impotent, bureaucracy. human beings. Most people want to work. Granted there are persuasive military ar­ What happens if you have a system that is I think that the most important thing designed to keep people from working. Now guments on both sides and religious groups that we must keep in mind, during this cannot be briefed on the highly sensitive take a look at the kind of jobs that come and technical material with which you are debate on welfare policy, is that we are through to WIN and CETA. Clerk jobs low familiar, still we felt we wanted to communi­ talking about people's lives. The num­ paying, part-time, unskilled, jobs that want C3.te our deep concerns to you. bers, statistics, and policies are all mean­ people in their twenties, jobs that require We pose two questions which we feel are ingless, unless we listen to the people, only one (1) or two (2) years experience. serious because they probe the moral im­ how they view the system, and whether When you are interviewed by one of the plications behind a decision to proceed with our noble efforts are truly helping those program interviewers they know that you the neutron bomb: have experience that exceed the require­ who need the help. The text of her letter ments for a particular job. They are kind "Will the choice to go ahead with the follows: enhanced radiation weapon increase the like­ enough to tell you. Now you find yourself lihood of nuclear weapons use in the future? FORTNEY H. STARK, unable to get a job through WIN er CETA. "Are the federal dollars best spent in this Congress Of The United States, What's next? I have asked myself this ques­ area?" House Of Representatives , tion over and over. I am in good health and With the inform::i.tion we have, we urge Washington, D .C . I have many working years left and I cannot you to choose to stop this weapon. DEAR PETE : Well here I am again. I read find a job! What am I going to do? Am I Some of the arguments which we have with interest, some understanding and very going to remain on welfare for the rest of much confusion about your new role with found persuasive are: my life? Must I take a job that is beneath "The neutron weapon is designed to be the President's Welfare Reform Law. It's my requirements (providing that I can se­ used in a package; therefore there is com­ amazing and wonderful to think that most or cure such a job)? What am I going to do?? all people on Welfare will have a job! A job parable damage to existing weapons in Now everything seems dark and hopeless. I that will pay at least $3600.00 a year!! say to you Congressman Stark that there Europe. Finally after many year.3 of struggle the "European leaders are not urging it. can be no Welfare reform in this country AFDC program and the Foo:l Stamp program until there is some reform in these federally "Other nations in the future m3.y follow will be separate components! Is this letter funded programs. The programs should be our example or even purchase these war­ confusing? Well it is because I am confused. set up to meet the needs of the people of heads from us." Well now why do I of all people have the this country and not gather names and num­ However, the main arguments are our sudden interest in Welfare!! I have this in­ bers for information on the unemployed in answers to the above questions. Since prop­ terest because now for the first time in my this country. erty has been valued over human life by life I am a welfare recipient. Why! Every­ I am not on welfare because I want to be. many nations down through history, we where I have gone in this city of Oakland I am on welfare because I am black, 40, sense such a weapon could, in the hands of has refused me a job. Why? I have come to divorced and the mother of a seven year old some decision m3.kers in the future, be de­ this conclusion-personal-I am black, 40, son! ployed. To the second question our exper­ divorced and the mother of a seven year old ience with people in rural and urban poverty son. My second conclusion-the systems in areas in this country leads us to urge the which the cities, counties and states of this STEEL INDUSTRY BLAMED FOR ITS government to spend money instead on great nation are designed to keep persons on health, housing, and most of all full em­ welfare. The stigma that is attached to a WOES ployment programs. welfare recipient is inescapable. The myth Peace, is ridiculous! ! I am enclosing this article Sr. CAROL CosToN, O.P., from the September issue of the Reader's HON. RALPH S. REGULA Executive Director. Digest as condensed from the Washington OF OHIO Post. An article by Joseph A. Califano, Jr. IN THE HOUSE OF REPRESENTATIVES Let me tell you what I have been through INABILITY OF PUBLIC EMPLOY - for the last six months. Five of those months Tuesday, September 27, 1977 MENT AGENCIES TO HELP UN­ I refused to go to welfare to seek help. I was Mr. REGULA. Mr. Speaker, I would EMPLOYED above such and would not stoop so low. like like to share a recent newspaper ar­ Finally out of desperation I went to seek ticle from the Cleveland Plain Dealer help. I was una.ble to get a job thru the var­ HON. FORTNEY H. (PETE) STARK ious companies and corporations. I enrolled with my colleagues. As you know, last OF CALIFORNIA in the WIN program and in the CET A pro­ week members and representatives of 63 House offices met to establish the steel IN THE HOUSE OF REPRESENTATIVES gram with the Urban League. (WIN/ E.D.D. State of California) Surely I would be guar­ caucus. Those of us who heard Ambas­ Tuesday, September 27, 1977 antee:! a job through one of these programs. sador Robert Strauss testify before the Mr. STARK. Mr. Speaker, today I re­ I am poor. I meet the requirements. Instead Subcommittee on Trade were distressed ceived a letter from a constituent that il­ of meeting hope in these programs I met to learn that there is no policy to deal apathy. Apathy was evident in all the inter­ with the current steel crisis. I am hopeful lustrates the plight of our welfare popu­ viewers of all the programs I went through. lation with poignant simplicity. The Here I am a person on Welfare who wants the Congress and the administration can writer is 40 years old, black, and a to get off and I am told day after day call us, work together to come up with some woman. She is a trained accountant. yet come back keep trying surely something will positive solutions, rather than assessing cannot find any employment, either turn up. blame as their article appears to do. through her own efforts, or through the In desperation one of the employees of the (From the Plain Dealer, September 26, 1977) services provided by the CETA and WIN "state" told me to write my congressman. STEEL INDUSTRY BLAMED FOR ITS WOES The programs WIN and CET A are not really programs. She comes to the conclusion, meeting the needs of poor people who want YOUNGSTOWN.-Some top Carter adminis­ and I must say rightfully so. that she is to work. I have found that the employed tration officials claim the steel industry cre­ on welfare because she is 40, black, di­ persons of these programs only have a job. ated its own problems, and argue that the vorced, and the mother of a 7-year-old It is their job to see as many as possible and government should not rescue marginal steel child. do the necessary work the state wants. To plants like those in the Mahoning Valley. She eloquently recounts her experi­ them its just a job and no more. They are Interviews with several administration of­ not allowed to show any empathy to the ficials indicate the feeling in Washington ences with the public employment agen­ is that the steel industry created its crisis by cies, and their inability to even provide people whom they serve. To most perhaps this is the best job they have had in their lives paying too high wages and refusing to mod­ her with a semblance of assistance. It and certainly they aren't going to do any­ ernize, according to a copyrighted story in would be advisable for us all to read her thing to jeopardize their job. Federal funds the Youngstown Vindicator yesterday. letter very carefully, before we plunge and State funds are fed into these programs. "To raise their wages as much as they into a massive reform of the welfare The only good that the Federal and State have in the face of an economic recession system. This woman is a living example funds do is to see that the employees of the simply shows insufficient re~ard for the stat­ of the myths of welfare that Secretary programs have good jobs. us of the market," said William D. Nordhaus, Pete, I am on welfare, not because I want of the White House Council of Economic Ad­ Califano is so fond of stressing. She is visers. healthy, able to work, trained, yet there to be. I am here because there was no other source to turn to. I love to work. I am good "The industry is in a 10-foot hole and it simply are not any jobs for her. The wel­ at what I do. I am an accountant and have dug five feet of it by itself," Nordhaus was fare reform proposal does give jobs to been for more than twenty (20) years. Sud­ quoted as saying. "We cannot afford to com­ recipients. but her doubts as to the effec­ denly for the first time in my life I can't promise national economic expansion to bring tiveness of the jobs programs. as they are find work. More than that I have not been it up." currently administered, must be amelio- granted the luxury of an interview. While expressing sympathy for the plight 31304 EXTENSIONS OF REMARKS September 27, 1977 of communities hit by steel industry cut­ tions, and its patrons became the vic­ Procedure-the rule governing class action backs, administration policy-makers say the tims of tbis neglect. pro:::edures-requires that the named plain­ federal government's Job is to act in the na­ We must educate the public on fire tiff give individual notice of the pendency tion's interests, not the interests of individ­ of a class action to all class members who ual communities. prevention and control in their own are identifiable with reasonable effort. Since "By propping up an inefficient industry in homes as well as what to look for in "[t]he usual rule is that a plaintiff must inefficient ways on the one hand you alleviate places of public assembly in case of a initially bear the cost of notice", that cost some human misery. But, on the other hand, fire. (over $315,000 in the Eisen case) could not you engender a low standard of living for The only mechanism we now have is be shifted to the defendants. workers and consumers in the long run," education, training, and proper en­ Furthermore, the procedure adopted by Nordhaus said. "The federal government is forcement of existing regulations to the district Judge for allocating part of the not in the business of telling industry not to cost of notice to the defendant-a "mlni­ shut down, when to shut down or where to overcome the horror and tragedy which trial" on the merits to determine which side shut down. Those are industry decisions in fire presents. probably would win in the end-contravened this country, and it's only natural that it It is my belief that we should investi­ the basic Rule 23 policy that any decision on should begin with marginal facilities." gate the possibility of enhancement of the merits must come after rather than be­ "We know Youngstown Sheet & Tube, the Federal role in fire prevention and fore the decision on whether the case can Wheeling-Pittsburgh and Alan Wood Steel control. Until such an investigation is proceed as a class action. are in sad shape, but that's a private sector complete, I call your attention to "Fire In short, the Eisen decision is nothing problem," said Richard W. Heimlich, assist­ Safety Month" in Hamilton County, more than a literal interpretation of what ant special ambassador for trade. "Unless the language of Rule 23(c) (2) means. "[W]e there's something specifically illegal going on Ohio, and urge all Members of Congress find the notice requirements of Rule 23 to be in the trade area, the way our system works, to initiate similar efforts in their home dispositive of petitioner's attempt to main­ it's up to the steel industry." towns and counties to educate con­ tain the class action as presently defined", A White House adviser on economic affairs stituents of the programs and train­ since petitioner was unable to bear the cost. was quoted as saying tax reforms expected to ing which is available on fire safety and "We therefore have no occasion to consider be compiled by mid-October "are almost cer­ prevention. whether the Court of Appeals correctly re­ tain to help the steel industry but only if it solved the issues of manageability and fluid decides to modernize." class recovery"-i.e., the constitutional and Two other officials anticipated the Labor THE FTC AMENDMENTS AND CLASS "streamlined" class action issues. The Department will designate the Mahoning Supreme Court vacated the appeals court Valley a trade impact area. That would qual­ ACTION SUITS-II decision on these matters. ify Sheet & Tube's 5,000 displaced workers Rule 23 is not a constitutional provision. for additional unemployment benefits, the It is merely a rule promulgated by the newspaper said. HON. HENRY A. WAXMAN Supreme Court in 1966 to govern class action "We know 5,000 people lost their Jobs," OF CALIFORNIA procedures in the federal courts. The au­ Heimlich said. "How much of it was due to IN THE HOUSE OF REPRESENTATIVES thorization for the Supreme Court to imports and how much of it was due to promulgate such rules is contained in the inflation of costs? There's a lot more to the Tuesday, September 27, 1977 Rules Enabling Act and is subject both to Youngstown situation than imports." Mr. WAXMAN. Mr. Speaker, busi­ Congressional veto of proposed rules and to Congressional legislation to change existing ness opponents of section 7 of H.R. 3816, rules or interpretations with which Congress OCTOBER IS "FIRE SAFETY the Federal Trade Commission Amend­ disagrees. The opponents' blatant distor­ ments of 1977, have seriously misrepre­ MONTH" IN HAMILTON COUNTY tion of Eisen raises serious qliestions about sented the provisions in this legislation the credibility of arguments against this regarding first, notification of consum­ legislation. Certainly constitutional objec­ HON. THOMAS A. LUKEN ers affected by pending litigation, and tions to § 7 may be raised by its opponents, but to tell this Committee that the Supreme OF OHIO second, the award of damages, to the ex­ tent where their constitutionality has Court has already sustained those objections IN THE HOUSE OF REPRESENTATIVES been questioned. The Subcommittee on smacks of a deliberate attempt to deceive. Tuesday, September 27, 1977 Consumer Protection and Finance and SHIFTING NOTICE COSTS TO THE DEFENDANT Mr. LUKEN. Mr. Speaker, the month its chairman, Representative BOB ECK­ One such constitutional objection relates of October has been proclaimed "Fire HARDT of Texas, have taken great pains to the provision allowing the court to shift to carefully craft a class action policy part or all of the cost of notice to the Safety Month" in Hamilton County, defendant. It has been suggested that the Ohio, by the South Western Ohio Fire that is not only fully consistent with due effect of this provision would be a taking of Safety Officers Association. The purpose process requirements of the Constitution property without due process. Where the de­ of this proclamation is to expand the but is scrupulously fair as well. fendant ultimately won the case, it would activities of "Fire Prevention Week" to Beverley C. Moore, Jr., editor of Class be unable to recover its notice costs from the a full month and help the public learn Action Reports, has prepared a careful plaintiff, whose inability to bear those costs how to prevent fires, burns, and loss of and thoughtful review of the constitu­ initially precipitated their being shifted to life due to fire. tional issues raised by this provision. I the defendant. am pleased to insert it in the RECORD The first point to be made in response is Mr. Speaker, I bring this citation to that the bill provides only for a fraction of the attention of my colleagues in the for the benefit of my colleagues: the notice costs to be shifted, proportionate hope that they will see fit to follow suit in 1. CONSTITUTIONAL CONSIDERATIONS-NOTICE to the likelihood that the plaintiff ultimately their own Districts. AND "FLUID RECOVERY" will win the case, at which point notice and Fire prevention and control in this Among the arguments that business op­ other costs would be taxable against the country is alarmingly lax. The United ponents have made against § 7 of H .R. 2816 losing defendant under existing law. Thus, is the following : all of the notice costs can be shifted only if States has the highest per capita loss The class action section calls for a "stream­ the court finds a 100 percent probability that of life and property damage due to fire lined" procedure of class action suits, by al­ the defendant will lose. What the probability of any industrialized nation in the world. lowing limited notice to class members, cost actually is would be determined by a pre­ The Subcommittee on Consumer of notice allocation to defendants before liminary hearing into the merits of the case. Protection and Finance has just com­ trial, and the "fluid recovery" concept of Eisen referred to this procedure as being pleted the second day of hearings on damages. This "streamlined" procedure was analogous to that for obtaining a preliminary my bill, H.R. 7684, which calls for a rejected by t he Supreme Court in 1973 (see injunction, which obviously is not uncon­ study to be conducted by the Depart­ Eisen, 417 U.S . 156) as unconstitutional in stitutional though the defendant may some­ that it did not provide defendants due times prevail in the end and may have suf­ ment of Commerce on the advisability process of law. To allow this "streamlined" fered unrecoverable losses in the interim. of Federal fire standards. I introduced procedure is not good substantive or pro­ Many examples could be given of costs, such this legislation in the wake of the Bev­ cedural law. as compliance with discovery demands, that erly Hills Supper Club fire which oc­ This is quite a surprising contention either party to a lawsuit must bear with lit­ curred May 28, 1977, in Southgate, Ky. because, as its authors surely knew when tle hope of recoupment. As in most such in­ This tragic fire took the lives of 164 they made this statement, the Supreme stances, shifting notice costs to the probable persons. Mr. Speaker, the subcommit­ Court's Eisen decision did not in any way loser is justified as necessary for the probable rule upon the "streaIIllined" class act.ion winner to avoid the even greater loss of not tee found at its hearjng last week that procedur"', the "fluid recovery", or a n y con­ being able to proceed with the suit. the building which housed this supper stitutional issues whatever. Elsen held only In any event, shifting notice costs to a club was rampant with fire code viola- that Rule 23 of the Federal Rules of Civil defendant will very rarely occur. The bill's September 27, 1977 EXTENSIONS OF REMARKS 31305 major thrust is to limit the extent, and thus and the expense of giving personal n otice to argument, which has been discredited by all the expense, of the notice that the plaintiff all members is large, notice to a statistically of the available empirical evidence, is not is required to give. For classes ranging in size valid sample of the class is just as likely to even theoretically tenable. See the analysis into the ten thousands, the plaintiff (or in ensure the coming forward of adequate class contained in the H.R. 3816 Memorandum of reality his attorney) will ordinarily be able to representatives as is notice to the entire class . Congress Watch distributed to the members give individual notice to all identifiable class Requiring more extensive notice than neces­ of this Committe. Otherwise, the Second Cir­ members. At least that has been the experi­ sary to guarantee adequate representation cuit's ruling on constitutionality consists of ence in post-Eisen federal class action litiga­ provides no further benefits to the class. a bare conclusion, unsupported by any rea­ tion. Accordingly, in perhaps a majorit y of Due process, a reasonablene.'.':s concept, soning or analysis whatever. The Ninth Cir­ class actions that would be brought under surely cannot require an e.£ sentially worth­ cuit and a few district courts have reached H.R. 3816, the bill does not necessarily man­ less notice effort the expense of which , by the same conclusion, citing the Second Cir­ date departures from Eisen notice require­ preventing the suit from going forward at all, cuit, but again falling to explain how assess­ ments. would destroy the very rights of class mem­ ing clas<; damages in the aggregate violates In the larger class actions, those with more bers that notice to a sample of the class is a defendant's due process rights. than 40 or 50 thousand identifiable class designed to protect. H.R. 3816 merely adopts The overwhelming majority of academic members, the plaintiff's resources may be the position that personal notice need not be and other independent legal commentators inadequate for giving personal notice to all given to all class members if its cost would have disagreed with the Second Circuit. It class members. The bill then directs the be prohibitive-a position already taken by is difficult indeed to discern how a defendant court to weigh the interests of class members such States as California, New York, New is prejudiced by being held liable on a class­ in receiving personal notice of the lawsuit's Jers ey, Florida, and Nebraska and by the wide basis for an aggregate amount which is pendency against their interest in having drafters of the Uniform Class Actions Act. no more than the sum of its liabilities to in­ the suit go forward in their behalf. What this THE " FLUID RECOVERY" CONCEPT dividual class members were it feasible and will mean, in practice, is that where the po­ The district court in Eisen, finding that it cost effective to bring each and every one of tential recovery of each class members is would be prohibitively expensive to compute them before the court. A guilty defendant has relatively small, the court may tailor the and distribute small damage awards to mil­ no legitimate interest in what is done with notice to the plaintiff's pocketbook, by limit­ lions of individual class members who had its' damage payments. If the aggregate class ing individual notice to some fraction or paid allegedly inflated brokerage commis­ damage remedy and fluid recovery are uncon­ sample of the class and providing notice by sions on odd lot securities transactions, de­ stitutional, then so are the Parens Patriae publication or other means calculated to termined to use the unclaimed damage funds antitrust provisions enacted last year; so are reach at least some of the class members not to reduce the commi.ssion rates paid by fu­ stockholder derivative suits, since at least receiving personal notice. ture securities purchasers. Since many class some of the stockholders benefiting from a Because of these options, shifting notice members were likely to purchase odd lot corporate recovery were n4)t stockholders at costs to the defendant need be considered securities in the future, at least those per­ the time of the corporate injury; so are Fed­ only where ( 1) the class is so large that the sons would be compensated for the prior eral Energy Administration price rollback or­ plaintiff (or his attorney) cannot afford the overcharges through the subsidized com­ ders. cost of personal notice and (2) the personal mission rates. Ironically, after concluding that the fluid stake of each class member is so large that This type of remedy is commonly known recovery would be unconstitutional, the individual notice would be required as a as the "fluid recovery." H.R. 3816 makes no Second Circuit then invited Congress to ad­ matter of due process. N·ormally in a large specific reference to the term, but does pro­ dress the problem. "If penalties are to be im­ consumer class action individual claims are vide that class damages are to be assessed posed upon wrongdoers, at least let the Con­ small, not large. Thus it is conceivable that in the aggregate, as computed by statistical gress decide how the money is to be spent." the need to shift notice costs to a defendant or sampling techniques, with any portion of This logic is unfathomable. If the aggregate will never arise. It has not yet arisen in Cali­ the recovery remaining after payments to class damage remedy is unconstitutional, fornia, New York, or New Jersey, where stat­ individual claimants to be disposed of as Congress cannot by statute make it constitu­ utes or court rules authorize notice cost the court in its discretion directs. Presuma­ tional. On the other hand, if Congress can shifting. The comparable provision in H.R. bly the fluid recovery would be one of several authorize this remedy, then certainly it can 3816 should therefore be viewed as a measure distribution alternatives, another being de~egate enforcement to the private sector. It to ensure justice in the extraordinary case. eschea t to the federal treasury. The method can hardly be q uestioned that Congress has actually selected would depend upon which virtually unlimited constitutional authority GIVING PERSONAL NOTICE TO LESS THAN ALL OF to impose almost any civil penalty for harm­ THE REASONABLY IDENTIFIABLE CLASS MEMBERS would most benefit the actual class members, the costs involved, the nature and composi­ ful economic conduct, however arbitrary the It has been argued that Eisen required in­ tion of the class, etc. amount may be in relation to the harm and dividual notice to all class members because In any case, the overriding objective is to regardless of whether the victims are given the Court viewed the Rule 23 notice provi­ disgorge the defendant of an of its illegal notice or are allowed to share the penalty as sions as incorporating the requirements of gains, regardless of how many individual compensation for their injuries. In that con­ constitutional due process. This interpreta­ class members can be identified, located, and text H .R . 3816, which equates the "penalty" tion is foreclosed by the subsequent decision persuaded to submit their personal claims with the actual and proven damage to the in Sosna v. Iowa. There the Supreme Court for damages. Only in this manner can the class, and which provides for reasonable no­ ob.served that the Eisen notice requirements cla:s action remedy achieve its primary ob­ tice and an opportunity for individual class apply to Rule 23(b) (3) class actions for dam­ jective of deterring violations of FTC rules members to obtain compensation for their ages but not to Rule 23 (b) (2) class actions and orders. Only in this manner can the losses, is not only constitutional but is also seeking injunctive or declaratory relief. Since class action achieve its secondary objective sound as a matter of policy. the due process interests of class members in of compensating injured consumers, since 11. FTC rules and orders are so vaguely receiving notice may be of equal magnitude without the aggregate cla<:s d emage fund worded that private enforcement would in either type of case, Eisen must be viewed the plaintiff may lack the resources to carry lead to nonuniform judicial interpreta­ merely as a construction of what type of out an effective program for locating the tions notice the language of Rule 23 itself requires. class members and distributing damage pay­ More specifically, the argument is as fol­ It must be kept in mind that the notice ments to them. Without the aggregate class lows: at issue here is not the notice that there has damage remedy, defendants would continue Current TRR's and FTC rules are drawn been a damage recovery-come get your to escape substantial proportions of deserved with a view towards keeping open flexible money. This notice merely advises class mem­ damage liabilities for proven harm to con­ enforcement options, not with a view of de­ bers that there is a lawsuit pending in their sumer classes. fining wrongs for which consumers will have behalf. I! they do nothing in response to the As noted previously, the Supreme Court per se redress. To this end, TRR's are broad­ notice they are included in the cla,;s. Other­ did not reach the fluid recovery issue in ly written-and therefore subject to a myriad wise, the notice advises that any class mem­ Eisen, but the Second Circuit did. Two of of judicial opinions. If enforcement of TRR's ber may "opt out"-which few do because of the three appellate judges concluded that is left to the creative ingenuity of counsel for the prohibitive cost of bringing individual the fluid recovery was not authorized by class action plaintiffs, muddled interpreta­ suits-or he may come into the class action Rule 23, if authorized would in any event tions can be expected and the concept of uni­ with his own attorney. violate the defandant's constitutional due form interpretation of the law will almost The due process concerns relate solely to process rights, and was generally "illegal, certainly be lost. To avoid this, FTC orders this latter function of eliciting the participa­ inadmissible as a solution of the manage­ should be enforced by the FTC, as they pre­ tion of class members who may more ade­ ability problems of class actions and wholly sumably have an idea of what was in their quately represent the interests of the class improper." mind when the orders were written. than the initial plaintiff. For example, the The only policy reason given for these con­ This contention, it should be noted, ap­ Mullane decision mentioned by the Supreme clusion<; was a referen~e to the allegations of plies equally to class and nonclass actions. Court in Eisen was a case in which the party some class action defense attorneys that the It is an attack on the advisability of any representing the class members had interests large recoveries of actual and proven dam­ private cause of action for violation of FTC clearly adverse to theirs. Furthermore, the ages that the fluid recovery would facilitate rules. class was small and personal rather than could be used as leverage to coerce defend­ FTC rules are pictured as "flexible en­ publication notice could have been given at ants into settling class claims regardless of forcement options" whose actual meanings mininmal cost. Where the size of the class their merits. This "legalized blackmail" are "presumably" known only to the FTC. 31306 EXTENSIONS OF REMARKS September 27, 1977 It is unclear whether this means that the sumers are easily identifiable and their dam­ outerwear accounted for $1.29 billion. FTC can decide that practically any act or ages easily computable on an individual Thus, although the knitted outerwear practice violates the language of some rule basis. segment of the textile industry employs and is therefore subject to arbitrary $10,000 It is not necessary to suggest that this per­ per day penalties, or that the FTC has ar­ formance is inconsistent with the best of 5 percent of the total labor force in the ranged. for itself the "flexibility" to enforce motives and eff ort on the part of the FTC. textile industry, it had to absorb over 50 the rules of its choosing and to ignore viola­ After all, the Magnuson-Moss Act does not percent of the entire textile deficit. tions of other rules, as long as the agency grant the FTC the critical aggregate class Over 300 knitting companies have been claims to exercise this discretion uniformly damage remedy. Furthermore, the agency's forced out of business due to rising im­ and consistently against all violators. redress powers are somewhat constrained b y ports over the last year. An estimated Either situation should be intolerable to the defense that "we didn't mean to do it"­ 60 yarn-dyeing plants which supplied the business interests, who should welcome po­ a defense which the defendant's everyday marketplace, unlike the legal system, seldom industry have also succumbed, despite tential private class action liabilities as a the existence of measures which are de­ poten1; argument to persuade the FTC to in­ recognizes, and for gcod reason. corporate more specificity into its rules. More importantly, the FTC could not pos­ signed to prevent this dislocation. The After all, both trade regulation rules and sibly detect and prosecute even an ideal con­ net effect has been an exportation of jobs cease and desist orders (which are usually sumer class remedy against every violator o! from the United States to other countries consent decrees) ate the product of negotia­ any rule or order unless the size of the FTC with wage levels and working conditions tion between the FTC and the industry or were expanded to Pentagon proportions. Is that are intolerable by American stand­ firm. It is likely that corporations accede to that what the opponents of this legislation ards. such purportedly broad language mainly be­ really want when they argue for exclusive U.S. knitting mills are the most effi­ cause they know that the FTC lacks the re­ FTC remedies? Or does the business commu­ nity really fear harnessing the superior cient in the world. But their margin of sources to detect and litigate sanctions efficiency cannot be great enough to against most violations and therefore must entrepreneurial virtues of the capitalist sys­ limit its compliance efforts to the most obvi­ tem-Le., private class action enforcement­ overcome the gap between foreign and ous or blatant violations. We can be sure to reduce harmful byproducts of that very domestic labor conditions. About 90 per­ that when faced with the more abundant system? cent of all imports of sweaters come from resources of the private sector, corporations three low wage countries: Taiwan, Hong and industries would make sure that they Kong, and Korea. Their imports have not understood the violations of FTC rules and CONSIDERATION FOR THE TEXTILE only destroyed job opportunities in the orjers that could subject them to class ac­ KNITWEAR INDUSTRY AND knitting industry, but also in the supply tion liabilities. WORKERS trades. I must ask how we can expect our The basic problem with the opponents' own companies to compete success! ully argument, however, is that most FTC rules and orders are far more specific than most with foreign manufacturers who pay of the statutory provisions under which cor­ HON. ANDREW MAGUIRE wages which are so low as to be illegal porations have traditionally been amenable OF NEW JERSEY in the United States. to private lawsuits-not to mention the far IN THE HOUSE OF REPRESENTATIVES Recognizing the dangers of protec­ more imponderable risks of the marketplace Tuesday, September 27, 1977 tionism in international trc.de and this which corporations must face dally. I! Con­ country's traditional and important gress were to accept this argument as to Mr. McGUIRE. Mr. Speaker, Amer­ commitment to furthering th~ cause of broad language, the long ago enacted private ica's negotiating team recently returned tariff and quota reductions, I am a firm causes of action under the antitrust, securi­ from Geneva where 85 percent of the ties, and employment discrimination laws believer in the merits of free trade. How­ which give rise to most federal class action participating countries agreed to renew ever, I must note that it is one thing to litigation would not be enacted if voted the multifiber arrangement (MFA) on espouse the merits of free trade, but it is upon to:iay. Yet each of these areas lllus­ December 15. Our negotiators were un­ something quite di~erent when our trates patterns of dual public/ private en­ able during these talks to reduce the trading partners overseas play the game forcement which, if anything, have increased present 6 percent growth rate of imports under different rules. rather than decreased the uniformity of to one closer to the 3 percent of our own Government negotiations will soon be judicial interpretation, a consequence textile market. We must now rely on in­ returning to Geneva to undertake mainly of the large body of legal precedent dividual bilateral negotiations to aline that private enforcement has generated. No further multilateral trade negotiations significant legal conflicts have developed import growth closer with the growth as part of the Tokyo round. Despite through competition between private en­ of the domestic industry. Many such previous assurances that text:les would forcers and the Antitrust Division/FTC, SEC, bilaterals will be renegotiated before the not be included in the forthcoming tariff or EEOC. year's end. negotiations, it seems not only that they For the litmus test of whether private en­ Hundreds of thousands of American will be discussed but that cuts can be forcement would be dysfunctional to FTC en­ textile and apparel jobs will be seriously expected. It is difficult to understand forcement, we need only observe that the affected by these renegotiations. Un­ how U.S. tariffs on textiles ~,nd apparel FTC itself favors the H.R. 3816 private class checked import growth will mean loss action provisions. The jealousy with which can be cut when imports of these items government bureaucracies guard their do­ of jobs and loss in gross national increased 34 percent in 1976. mains from intrusions by outsiders is well product. Because only 18 countries are partic­ known. It is curious that the business inter­ I am especially concerned about the ipants in the MFA and because the MFA ests opposing this legislation are so protec­ fate of the many mills and suppliers in­ and bilateral agreements riegotiated tive of a government regulatory monopoly volved in the textile and apparel in­ thus far allow imports to grow at more which, when left to its own devices, they are dustry in New Jersey. Particularly hard than twice the present grr.wth rate of the so eager to condemn. hit have been the companies and employ­ domestic industry, textile tariffs cannot llI. PRIVATE CLASS ACTION REMEDIES ARE NOT ees engaged in the knitwear industry. be reduced. These bilaterals, indeed, NEEDED There are over 13,000 people employed in were negotiated in light o: the present Specifically: Under the Magnuson-Moss the knitted outerwear industry in New Act (the FTC improvement Act of 1975), the tariffs. With -~he bilaterals almost con­ FTC is given authorization to file civil ac­ Jersey, many of whom work and reside cluded, it would be unfair to the domestic tions "to redress injury to consumers" for in my district. textile industry to remove these tariffs knowingly dishonest or fraudulent violations While the entire textile industry has now. The lowering of these tariffs would ot clearly defined prohibitions, including suffered from the astronomical growth of induce the growth of imports to reach monetary refunds and damage payments .... textile imports over the last several the limit of growth for every category The FTC should be given a chance to exer­ years, no segment of the textile industry of textiles and would encourage those cise its new authorities-and an evaluation of this exercise should be made-before en­ has suffered as severely as the manu­ exporti:ig nations which are not partic­ actment of new class action type legislation. facturing of knitted outerwear. In 1976, ipants in th~ MFA to increase their After more than two years of exercising knitted outerwear faced over 50-percent exportation of textiles to the United "its new authorities", the FTC has obtained market penetration from imports, as the States at an even faster rate. The tariffs "consumer redress" in less than two dozen market share of imports in the knitwear must be retained against the kind of cases. Monetary relief is seriously sought in industry grew 5 percent from 1975 to unrestrained imports which today a rather tiny minority of prosecutions. They 1976 alone. The textile deficit for 1976 threaten to destroy the American textile tend to be cases in which the injured con- was $2.59 billion, but of this total knitted industry. September 27, 1977 EXTENSIONS OF REMARKS 31307 OIL CORPORATIONS AND THE FOR­ Subcommittee on Commerce, Consumer, ing Petrolia's oilfields. The going rate is 20 EIGN TAX CREDIT: TIME FOR A and Monetary Affairs of the Committee cents a barrel. But in a spirit of friendly compromise, the Sheikh pays Gigantic a no­ CHANGE on Government Operations, of which I tional 40 cents a barrel, applies the standard am a member, is conducting hearings Petrolian corporations tax of 50% to that, into Treasury and IRS action, or the lack and actually hands over 20 cents a barrel. HON. ROBERT F. DRINAN of it, in this regard. Under the able lead­ This makes no difference to Petrolia, but OF MASSACHUSETTS ership of the subcommittee chairman, Gigantic Oil has 20 cents of tax credit to re­ IN THE HOUSE OF REPRESENTATIVES Representative BENJAMIN s. ROSENTHAL, duce its British corporation tax." we will seek to determine what factors The result is that Gigantic, instead of pay­ Tuesday, September 27, 1977 ing a British tax of 50% on its 20 cent profit, Mr. DRINAN. Mr. Speaker, the Inter­ have been taken into account in the for­ pays nothing, since its British tax on its nal Revenue Service in the very near mulation of U.S. policy in this area and nominal 40 cent profit is wiped out by the future will issue long-awaited guidelines what factors are now being considered as phony 20 cent "foreign tax credit." regarding the use of the foreign tax the review proceeds through several Another typical gimmick involves using a stages. "posted price" several dollars below the mar­ credit by U.S. oil corporations with op­ ket price, the difference being a paper profit erations abroad. This regulation, antici­ This issue is a complex one, but it is most important in terms of the nature on which a "tax" is assessed. For example, pated in October, will have a profound Exxon might buy oil from Saudi Arabia at $8 effect on the revenues collected by the and direction of U.S. tax policy. The cur­ per barrel and then sell to one of its own U.S. Government from oil companies. rent issue of People and Taxes, pub­ subsidiaries, or to someone else at $12. They The oil companies have avoided bil­ lished by Public Citizen, contains an ex­ would then pay a tax of, say, $2 on the $4 lions in taxes by the use of the oil tax cellent summary of the history and pres­ "profit," giving Saudi Arabia a total of $10 credit; 1976 losses were estimated at $1.2 ent status of the use of the foreign tax for the barrel of oil. billion. The oil companies are able to credit by oil corporations with substan­ But the $10 per barrel would just about tial operations abroad. The article, by m::i.tch the selling price that the Saudi's avoid paying these taxes because the huge wanted from the start, and the company per barrel taxes levied against them by Mr. Robert Mcintyre, is entitled "Oil would have a $2 "tax credit" to use for low­ the oil producing nations are still con­ Foreign Credits Under Attack." ering its U.S. taxes. sidered income taxes, rather than royalty I commend Mr. Mcintyre's summary The basic idea behind all these schemes payments, by the IRS. to my colleagues : ( and there are many more) is to assure the So long as this situation continues, the OIL COMPANIES' FOREIGN CREDITS UNDER oil producing countries of a fixed return per oil companies can subtract $1 of taxes ATTACK barrel, while at the same time maximizing owed to the United States for every (By Robert Mcintyre) the foreign tax credits available to the mul­ tinational oil companies. For example, the dollar paid in "taxes" to foreign nations. Long after the price of oil has sextuplej Petroleum Intelligence Weekly described the The result, of course, is that some petro­ and Arab countries have become among the OPEC pricing system announced on Decem­ leum giants pay as little as 3 or 4 per­ richest in the world, the U.S. Trea,ury con­ ber 13, 1975, as establishing the rule that cent of their income to the United States tinues to provide foreign aid to Araq coun­ "the average 'government take' per barrel of in the form of taxes. Meanwhile, the oil tries and subsidies to the multinational oil oil would be $10.12. This $10.12 could be producing nations have reaped a multi­ companies through the tax system. made up of any combination of "taxes," roy­ The primary form of the tax subs.idy in­ alties, "buy back payments," or other pay­ billion dollar windfall. Many have char­ volves the foreign tax credit. Designed to acterized the U.S. tax treatment of oil ments, "so long as these various elements a.void "double taxation," the foreign tax always total $10.12 per barrel." company income earned abroad as "hid­ credit provides that U.S. re·s.idents need pay Since the price charged by the Arabs for den foreign assistance" to the oil pro­ U.S. taxes on their foreign income only to the oil is fixed and has nothing to do with ducing nations. It would seem more ap­ the extent that foreign rates are lower than the oil company's actual profits, it is fairly propriate that we direct such assistance U.S. rates. For multinational corporations, clear that the Arab "tax" is really a royalty, to needy nations, rather than to coun­ this means that where foreign taxes are 48 % and certainly not an income tax. Neverthe­ tries such as Saudi Arabia and Kuwait, or more no U.S. tax is due. If the foreign rate less, oil companies operating under similar which enjoy the highest per capita stand­ were, say, 30 % then the U.S. would pick up schemes will accumulate $17.6 billion in for­ ards of living in the world. the 18 % remaining ( 48 % - 30 % = 18 % ) . eign tax credits in 1977, and will thereby The foreign tax credit is only applicable to pay virtually nothing in U.S. taxes. There is substantial evidence that the fore-ign income taxes. Other a~sessmen ts, Department of State and the Treasury such as sales taxes, are treated as no·rmal FOREIGN POLICY VERSUS TAX POLICY put pressure on the IRS to treat these business expenses and a.re deductable from Why does the Treasury allow this to hap­ payments as income taxes rather than gross income, rather than creditable against pen? The answer to this ouestion is not a royalties. In 1955, the State Department tax. The difference is significant. For ex­ simple one. It is rooted in foreign policy con­ ample, suppcse U.S.-based Atlantic Corp. ha.s siderations which go back at least 50 years, and lawyers for some of the oil giants and which crystalized into the current ap­ worked with the Saudi Arabian Gov­ $100 in before-tax income in Luxembourg and it has paid Luxembourg $40 in tax. If the proach in the mid-1950s. ernment to draft a tax code which would $40 is an income tax, then Atlantic's U.S. tax Beginning in the 1920s, the U.S. govern­ permit such action. The State Depart­ liability is only $8. (U.S. tax of 48 % of $100 ment actively encouraged U.S. companies to ment ,and National Security Council or $48, minus foreign tax credit of $40, equals gain access to and control over foreign oil. strongly urged that the taxes all go to $8.) If Luxembourg's tax is not an income These efforts culminated in 1956 with an IRS the oil producing nations, many of whom tax, then Atlantic owes the U.S. Treasury $29 ruling that "taxes" paid by oil companies to were felt to be vulnerable to Communist [ 48 % X ( $100-$40) ]. more than three times Saudi Arabia would be treated as "income as much. taxes" for purposes of the foreign tax credit. takeover. In 1955, the IRS in a landmark This ruling, which was instigated by the revenue ruling, reversed its position and A DISTINCTION WITH A DIFFERENCE State Department, was intended as a back permitted the oil giants to credit all taxes The distinction between a foreign income door method of foreign aid. In essence, tax paid abroad against taxes owed in the tax and other taxes is not always crystal payments which would otherwise have gone United States. They have been taking clear, but it does make sense. Non-income to the U.S. were diverted to the Saudis­ advantage of it ever since, to the tune taxes, such as sales or excise taxes, do not as they raised their taxes, the U.S. Treasury of more than $16 billion of U.S. taxes. have much of an effect on profits, since they would collect less. Direct aid was unfeasible At present, the huge petroleum corpora­ can be passed on to consumers in the form at the time, due to the recent Arab-Israeli of higher prices. Income taxes, on the other war. Following the initial ruling, similar tions account for an astonishing 70 per­ hand, do reduce profits, and from the U.S.'s allowances were made for at.her oil producing cent of annual tax dollars foregone due point of view 48 % is enough for a company countries. In addition, other governments, to the foreign tax credit. to have to bear. such as Britain and France, made similar The massive price increases of recent The hardest distinctions arise when the credit allowances so that their companies years, all of them on a straight per bar­ foreign country imposing a "tax" is also the would not be disadvantaged. rel basis with no direct relation to in­ seller of the product a company markets. There is some evidence that at the time of come earned, make even less credible the This is exactly the situation which the mul­ the original ruling, the Saudis did, in fact, tinational oil companies are involved in. One impose what might reasonably be called an fiction that these payments are income not uncommon scenario was recently de­ income tax. This situation did not last long, taxes rather than royalties. Now, the In­ scribed by the London Economist (the United however. Within a few years the Arab tax ternal Revenue Service and Treasury De­ Kingdom has a foreign tax credit system systems had been changed so that they de­ partment are finally in the process of similar to the U.S.'s) : "Imagine the Sheikh­ manded a fixed return per barrel of oil. The reviewing this matter. dom of Petrolia has nationalized its oil, but foreign policy rationale remained in effect, In connection with that review, the wishes to pay Gigantic Oil Ltd. for manag- however, and the ruling was not revoked. 31308 EXTENSIONS OF REMARKS September 27, 1977 The multinationals, for their pa.rt, cooperated Laurence Woodworth told the committee that for consumer class actions to enforce by supplying American consumers with cheap both he and Treasury Secretary Michael compliance with FTC rules, is arbitrar:­ oil and gasoline. Blumenthal would be involved in the ulti­ punitive, and dangerous. In 1973, however, the picture abruptly mate de:::i.sion. Kurtz obviously did not want Nothing could be further from th changed. The Arab oil embargo shattered the to und·ercut his boss on whatever decision 15 year holding action against higher prices, might be made. truth. The FTC does not have the ability a.nd the cost of oil went up by a. factor of six. According to Church, Blumenthal currently in all instances, to file suit to protec At the same time oil company profits sky­ appears to favor retention of OPEC tax cred­ consumers even when the agency knowf Tocketed, going from $5.7 billion in 1972 to itability. This is one reason why Church has that its rules are being violated at a cost $11.3 billion in 1976. contacted Pr,esident Carter directly. to the American people of over $1.3 bil­ Although the OPEC countries nationalized Whatever the ultimate re:;,olution o! the lion annually. Common citizens must many of the oil fields held by foreign multi­ issue, it does not app-ear that it will be made have a remedy directly available to them nationals, they ha.d no desire to reduce the ov. technical grounds. There is growing agree­ compa.nie3' foreign ta.x credits, which en­ ment that the oil companies will lose if tax to protect their interests· against unfair hance both the company's profits a.nd the re­ policy is the only consideration. and deceptive trade 11ractices. Section 7 turn enjoyed by the OPEC governments. A LOT AT STAKE provides this remedy. LIMITING THE CREDITS At the same time, and in response to The multinationals continue to press their the concerns raised by the business com­ It is not clear, however, that the credit will technical arguments, but they also raise the continue to be allowed. So fa.r there ha.s bee:i spector of dire consequences to the U.S. i! munity, this tool has been carefully lim­ a. split between those who want to look at the creditability is eliminated. According to a ited in its application under the bill. industry's narrow technical arguments, a.nd spokesman for Aramco (a partnership of Specifically- those willing to look a.t the total picture. Exxon, Texaco, Mobil, and SoCal), "If some­ First, perhaps most importantly, suits Thus, in 1975 the Senate voted to disallow one tried to figure out the best way of driving can be brought only if the commission, all foreign tax credits for oil income, but the American companies out of the Middle East, in promulgating rules, has affirmatively House rejected this approach in favor of and turning it over to the Dutch, the French, decided that a consumer action can be limited restrictions on the use of the credits. and others, they couldn't find a better way. Emil Sunley, deputy assistant Treasury Sec­ The whole thing astounds me." brought for a violation of a particular retary for Ta.x Policy, accurately described However, the U.S. was the leader in pro­ rule; the result: "Congress threw up its hands and viding for the creditability of OPEC "taxes," Second, the damages contested must said 'It's too hard. We can't tell the differ­ and it is not clear that other countries would be over $25,000; ence between taxes and royalties. We'll as­ not revise their tax laws if the U.S. rescinded Third, the court may not a ward plain­ sume that you pay enough taxes abroad, but its favorable treatment. According to Church, tiffs exemplary of punitive damages, we'll stop you from using excess credits from the United Kingdom, at least, is likely to which can be awarded, for example, un­ oil extraction as a credit against non-oil follow the U.S. lead. der antitrust law; income'." In addition, Church would like to see Advocates of completely denying the American companie3 move a.way from Arab Fourth, plaintiffs must bear the cost credits have not given up, however, the leader oil into other areas. He believes that U.S. of notifying all persons affected by the in the fight is Sen. Frank Church (D-Idaho), security requires more stable sources of en­ suit; who heads the Senate Foreie:n Relations ergy, and that incentives for the major com­ Fifth, suits regarding any rule viola­ subcommittee on Fcreign Economic Policy. panies to look elsewhere are therefore in the tion must be brought within 3 years of Church has asked IRS to rethink its old national interest. Jn fact, Church has actively the rule's promulgation. ruling, and to reclassify the OPEC "taxes" as supported creditability for a British "tax" en The intent of these provisions is to royalties. He has also written to President North Sea oil, although IRS has indicated Carter urging him to take action. Church that the tax does not qualify as an "in­ prevent citizen suits which are frivolous told the President that the rulings are in­ come tax." This conce:;,sion is likely to be in nature or would have the effect of un­ compatible with the tax laws, extremely established in a proposed tax treaty between duly harassing businesses regulated by costly to the Treasury, and inconsistent with the U.S. and Britain. the FTC. the goal of reducing dependence on Arab oil. What ,exactly the OPEC governments would In order to more fully respond to the He noted that even the tax attorneys for the do in response to the U.S. denying credita­ arguments raised by Dears, Beverley C. major oil comoanies recognize this fact, cit­ bility is a matter of speculation. Some observ­ Moore, Jr., editor of Class Action Re­ ing a 1970 cable from an intercompany ne­ ers worry that the volatile Arabs would re­ ports, ha.s prepared a memorandum on gotiating team which states that "the arti­ taliate with production cuts and higher oil ficialty of this system is obvious and well­ this issue, which I am pleased to bring to prices. Even Church's chief aide Jerome the attention of my colleagues. known." Levinson admits that the Saudis would prob­ Because of the touchy foreign policy ques­ ably decry such a step as "impairing peace The memorandum follows: tions involved it appears likely that any de­ pro,;pects in the Middle East." ANALYSIS OF FALSE AND MISLEADING ARGU­ cision in this area will in fact be made by On the other hand, elimination of the tax MENTS OF SEARS, ROEBUCK & Co. AG."1NST the President himself. credits would not directly aff,ect the OPEC SECTION 7 OF H.R. 3816, WHICH WOULD ms RETHINKS ITS POSITION governments immediately, and the most EMPOWER THE FTC TO AUTHORIZE CON­ Last year, however, IRS seemed to begin to noticeabl"e short term effect would probably SUMER CLASS ACTION LAWSUITS AGAINST take some steps on its own. In response to a be a reduction in the oil companies profits VIOLATORS OF F'uTuRE FTC CEASE AND DE­ request by Mobil to carry forward its claimed because of increased tax payments to the SIST ORDERS OR TRADE REGULATION RULES tax credits, IRS put out a press release say­ U.S. Treasury. 1. Sears' Argument. The policy of uniform- ing that "income taxes which are part of a Whatever the effects of a decision in this ity in law enforcement will be upset be­ scheme to collect a fixed charge per barrel will be, it is clear that such a decision will cause of the great potential for conflicting and thus are not arm's length transactions, b'e made within the next few months. The court interpret3.tions and decisions. A judge may, in the future, not be eligible to be IRS could revoke its que3tionable rulings of in one state or federal jurisdiction may rule credited against U.S. corporate income tax the 19f,Os, it could let them stand or it could that an order or rule has been violated liability." Coming from a Treasury Depart­ reevaluate the creditability of foreign "taxes" whereas a judge in another state or federal ment where one of the officials was an Exxon in each oil producing country separately. At jurisdiction may rule that it has not been employee on leave, this seemed a radical stake is hundreds of millions of dollars for violated. Historically, Congress has reserved statement. But at recent hearings held by the multinational oil companies or the enforcement power to the FTC-as opposed the Foreign Relations Committee on a pro­ U.S. Treasury. to private parties-precisely to ensure uni­ posed tax treaty with the United Kingdom, formity of enforcement. IRS Commissioner Jerry Kurtz was curiously The Truth. The very same potential !or guarded in responding to Church's questions THE F'TC AMENDMENTS AND CLASS conflicting court interpretations already about foreign tax credits. ACTION SUITS-III exists. In suits brought by the FTC itself, Kurtz took a narrow technical line with "(a] judge in one state ... may rule that the committee, stating that the distinction an order or rule has been violated whereas between a royalty and an income tax was HON. HENRY A. WAXMAN a judge in another state ... may rule that complicated and subtle and that the unique OF CALIFORNIA it has not been violated." Such conflicting facts of each situation had to be analyzed. IN THE HOUSE OF REPRESENTATIVES decisions are ultimately resolved by the ap­ That fa.ct is obviously well known to the oil pellate courts. Whether a suit ls brought by companies, who constantly conspire with the Tuesday, September 27, 1977 the FTC or by injured consumers themselves OPEC governments to change the local tax pursuant to § 7 of H.R. 3816, the ,iudge must laws to stay ahead of JRS. Jn fact, Kurtz ad­ Mr. WAXMAN. Mr. Speaker, some out­ apply exactly the same legal principles in mitted that "events move faster than our spoken opponents of section 7 of H.R. deciding whether a violation has been est"lb­ audits and rulings." 3816, the Federal Trade Commission lished. If anything, consumer suits would Kurtz's hesitancy was partially explained Amendments of 1977, have argued that result in more rather than less uniformity, when Assistant Secretary for Tax Policy the new authority in the bill, providing by increasing the body of judicial precedent September 27, 1977 EXTENSIONS OF REMARKS 31309 defining which business practice~ are viola­ them, because the bill would allow courts to lished. To have required greater precision tive of FTC rules and orders. award damages on a fluid recovery basis to in determining which households purchased If H.R. 3816 class actions really threatened ail members cf the class, on evidence of in­ more or less than the "average" quantities of "uniformity of enforcement", the FTC it­ jury by only a few. bakery products would have prevented most self would be among the first to complain. The Truth. Every penny of damages consumers from recovering at all-the out­ But the FTC favors this bill, including the awarded to a class of consumers must repre­ come that potential defendants of course de­ § 7 class action provision. In fact, the bill sent proven harm. "[E]vidence of injury sire. Yet regardless of the imprecision in ap­ requires the FTC to specify which provisions by only a few" would only produce a damage portioning damages among consumers who of rules or orders may be enforced through award for injuries to a few. What Sears were injurec;i in varying, but actual, degrees, private class actions. If dual enforcement really demands is that each of thousands or the defendant's total liability remains exactly of a particular provision would be likely to millions of defrauded consumers be re­ the same as if absolute individual precision result in conflicting judicial interpretations, quired to come into court individually to had been attained. The defendant has no then presumably the FTC would not au­ present sales receipts and testimony con­ legitimate interest in who receives proven thorize private enforcement of that pro­ cerning the subjective motivations for their damages. vision. purchases-even though the aggregate Sears also claims that "the bill would al­ The uniformity of enforcement issue is a damage to the entire class has already been low courts to award damages on a fluid re­ false one. Our legal system has traditionally established through statistical methods with covery basis to all members of the class, on relied upon combinations of public and pri­ equal or greater accuracy than could be evidence of injury by only a few." This state­ vate enforcement. The antitrust, securities, achieved by examining each consumer in­ ment refers to the second stage of the dam­ employment discrimination, civil rights, en­ dividually. Sears itself relies on some of age distribution process in which the court vironmental, and many other statutes have these sampling and survey techniques in disposes of any monies not already distrib­ long been enforced by government officials deciding whether to market a new product uted to individual members of the class. and private plaintiffs. Yet no problems of or in making other vital business decisions. Again, the re ::=: idual funds do not represent nonuniformity of outcomes have developed. Shouldn't Sears' customers have the same unproven damages. They represent proven The real issues are enforcement resources tools to measure the refunds they are en­ damages to individuals who cannot be iden­ and prosecutorial vigor. As Sears and other titled to for overcharges or product failures tified or located at reasonable cost. The court business interests well know, the FTC cannot that Sears uses to sell those products to may distribute the unclaimed funds "for a possibly detect, sue, and recover full civil them? public purpose which benefits, as closely as penalities from every violator of an FTC rule What Sears really wants is for business possible," the injured but unidentifiable or order. In order to spread its limited re­ firms to be able to escape most of their de­ members of the class. The most common ap­ sources among the violators that are prose­ served liabilities for proven harm to con­ plication of this "fluid recovery" is to reduce cuted, the FTC must often accept compro­ sumer classes. For few consumers will take the future price of a product, such as bread, mise relief having little or no deterrent im­ the time and effort to press individual claims likely to be purchased again by those un­ pact on either the defendant or other po­ for $10 or $100. Nor is there any reason why identifiable consumers who had been over­ tential violators. That is why Sears prefers a defrauded consumers should have to bear charged or defrauded in the past. It may be more easily dealt with government enforce­ that burden. After all, it is the defendant t.hat a minority of fut1-~re purchasers, such as ment monopoly to the vigor and ingenuity of corporation who was responsible for their new residents in the area, will not have been private enforcement. This is merely anothe1 losces. Accordingly, H.R. 3816 places the actual class members and wlll receive wind­ example of the bastions of "free enterprise' initial focus on measuring the total damages falls from the subsidized prices. But this im­ seeking government refuge from the rigon on a classwide basis. Then, with the resources precision is, again, the necessary consequence of a free marl{etplace for legal remedies. provided by the class damage fund, the court of affording some compensation to the ma­ 2. Sears' Argument. The courts could be can tackle the problem of distributing the jority of future purchasers who were pre­ overwhelmed with a flood of irresponsible money to the individual class members. viously injured. lltigation because separate suits can be This distribution process starts with in­ Sears neglects to mention that an impor­ brought in any state or federal court juris­ dividual payments to actually injured mem­ tant purpose of H.R. 3816 is to prevent viola­ diction where a company does business. Sears, bers of the class. These individuals will not tions of FTC rules and orders by holding vio­ for example, operates in all 50 states. "recover damages without actually proving la tors liable for the full amount of proven The Truth. A plaintiff may bring suit them". Indeed, individualized proof will class damages regardless of the feasibility of "where a company does business" for the vast usually be superfluous once it is established precisely distributing the entire recovery to majority of harms for which lawsuits can be that the particular consumer (a) purchased tho individual members of the class. Of equal If importance, Sears neglects to mention that brought. class actions were brought the product in suit, (b) the product failed against Sears in 50 state courts, it could have under H .R. 3816 some or all of the unclaimed all of those suits removed to federal courts. to perform according to the seller's repre­ class damages will ordinarily be returned to At that point, or if 50 class actions had origi­ sentations, and (c) the true market value of the defendant. The amount reverting to the nally been filed in federal courts, Sears could the product would have been $X less than defendant will depend upon the willfulness have them all consolidated before a single the actual sales price had its characteristics of the violation, the degree of unjust enrich­ court by the Judicial Panel on Multidistrict been accurately represented or an FTC rule ment, economic hardship, and other factors. Litigation. Sears' argument is utter nonsense or order had otherwise been complied with. 4. Sears' Argument. Section 7 would serve because the very essence of the class action The individual consumer need not establish to enrich attorneys and not consumers be­ concept is that similar injuries to large num­ elements (b) and (c) of this formula. These cause attorneys would receive large legal fees bers of people are adjudicated in a single suit will already have been established for him whereas individual plaintiffs may receive rather than in "seoarate suits ... brought through the econometric measurement of mino..r sums where injury is sllght and re­ in any ... jurisdiction where a company does aggregate class damages. All he need do is ceive no recovery where injured plaintiffs can business." show that he purchased the product. This, no longer be identified or are never notified. Apart from how many class actions al­ too, may frequently be done for him by his The Truth. All attorney fee awards in H.R. leging the same violation might be brought representatives, the class plaintiffs, using 3816 class actions must be determined by the in different jurisdictions, Sears also sug­ the defendant's own records of purchases or court to be reasonable-based upon actual gests that such suits would be "irrespon­ other affirmative means of identifying the time expended, sl{illful performance, con­ sible". Studies of class action litigation dur­ purchasers and sending refund checks to tingent risk, and other factors that courts ing the past decade indicate quite the con­ them. havo traditionally considered in class action trary. No attorney desirous of making money To be sure, there may be some impre­ cases. The fact is that the class action law­ wlll file a major class action suit unless he cision in apportioning class damages among suit, when compared with the nonclass suit, knows that he has a good case. For in order the class members. A recent consumer anti­ has cut in half the percentage of the recovery to earn a court awarded fee, he must win the trust class action charging Arizona bakeries consumed by attorney fees. In class actions, case. If he does not have a good case, he will with price fixing serves as an example. Ob­ 80-85 percent of the recovery is actually dis­ lose not only the lawsuit but a very sub­ viously, consumers would not have been able tributed to the class members. stantial investment of hi:.; own time and to produce supermarket receipts for each It is true that the reasonable fee received resources. The evidence is unequivocal that loaf of bread purchased during the alleged by the class attorney, often representing defendants do not settle unmeritorious class conspiracy period, but data was available thousands of hours of legal work, will by def­ actions. Nor may they "buy off" an un­ showing the average expenditures on bakery inition dwarf the amount recovered by any founded case with a payment to the plain­ products for Arizona households of different individual consumer. But exactly the same tiff attorney, since all class action settle­ sizes. Based on that data, "average damage" thing can be said about the gross profit of ments must be approved by the courts. In checks were mailed to 250,000 consumers who Sears or any other major business corpora­ short, natural economic disincentives and had demonstrated (a) their Arizona resi­ tion, in comparison to the benefit that any close judicial scrutiny guarantee much more dencies, and ( b) the sizes of their house­ single consumer receives from purchasing the "responsibility" in the bringing of class ac­ holds. firm's product. Like Sears, the class attorney tions under H.R. 3816 than can be said of Note that the imprecision here relates to has not a single "customer" but thousands or most other types of lltigation. each individual's amount of damages. Con­ even millions of them. The reasonableness of 3. Sears' Argument. Individuals could re­ trary to Sears' suggestion, the fact of injury, the attorney's compensation must be assessed cover damages without actually proving in some amount, had already been estab- as a percentage o! the total recovery, just as 31310 EXTENSIONS OF REMARKS September 27, 1977 Sears' profits must be asse:::sed as a percent­ A NEW AIRCRAFT LANDING SYSTEM Navigation Commission reviewed the age of total sales. One thing is clear. The 15- work of the technical panel and deter­ 20 percent of class recoveries consumed by attorney fees and costs is less than the aver­ mined that AWOP had fulfilled its man­ HON. DALE MILFORD date and that a worldwide meeting could age retail markups in Sears' own stores. OF TEXAS 5. Sears' Argument. Section 7 would fur­ now be scheduled to vote on the issue. ther jam the courts by discouraging volun­ IN THE HOUSE OF REPRESENTATIVES Some entities in the United Kingdom tary resolution of problems through Consent Tuesday, September 27, 1977 have not been satisfied with the decision Orders. Many companies consent to F .T .C. made by the constituted international orders to save the expense of litigation Mr. MILFORD. Mr. Speaker, my Sub­ panel and they mounted a major effort though they may not be proved guilty of committee on Transportation, Aviation at discrediting the FAA program. A wrongdoing. Companies will be less likely to and Weather is presently examining major lobbying effort was instituted enter into consent decrees if such action R. & D. efforts of the Federal Aviation merely opens the door to private class action Administration. wherein key members of Congress and suits and the potential that massive sums of One program which has been the sub­ the administration were targeted. money may be awarded against them. ject of much interest and concern is that I have been reluctant to enter this The Truth. Signing a consent order "mere­ of the microwave landing system-MLS. fracas for fear of interfering with legiti­ ly opens the door to private class action mate international deliberations. How­ suits" and "massive" damage liabilities only Because of the importance of this pro­ ever, I feel that I would be remiss in my if ( 1) the company violates the consent order gram, and the complexities associated responsibilities if I did not now speak and ( 2) the plain tiff can prove that the vio­ with it, I would like to summarize those lation inflicted "massive" damage on the aspects of the program that are impor­ out. consumer class. Companies have no busi­ tant to our committee and to Congress I believe I was the first Congressman ness signing consent orders unless they in­ as a whole. to begin examining, in detail, the Dop­ tend to obey them. If companies really sign The MLS research and development pler-TRSB argument. And over the past consent orders not because they have vio­ 2 years I have looked at it longer and lated the law but mainly to save legal fees, effort has been going on now for over harder than perhaps any other Member why would such law abiding firms be ex­ 10 years. During this period, the FAA of Congress. During this period of time pected to violate the consent orders? What­ has appeared before Congress on a regu­ ever the answer to that question, the threat lar basis and received congressional ap­ I have found no evidence of foul play by of class action damage liabilities will ensure proval for their program. This is amply either the FAA technicians and scien­ that consent orders are not violated. evident in the nearly $100 million in tists or those from Great Britain. In the 6. Sears' Argument. The "streamlined" no­ funds that the Congress has authorized best political fashion, I have heard spir­ tice procedures of Section 7 are not in the and appropriated for the MLS program. ited debates from each nation's politi­ public interest because only a sample number Also during this period, the program cians. I have also observed some less of class members may be notified even than commendable lobbying activities. though all members are reasonably :dentifi­ has been conducted in full public view. The U.S. program benefited from the It is clear to me that TRSB evolved in able. Thus, damages may be awarded to the the open, and has survived in national whole class though some class members oversight of an advisory committee, might not elect to sue if notified. chartered by the FAA, which represented and international competition in the open. Duly constituted international The Truth. The notice to which Sears re­ the Broad interests of the aviation com­ fers is not the notice that there has been a munity and the public. This user oriented panels of ICAO have been doing their class recovery against which all class mem­ committee helped to structure the ex­ work and evaluations of these two com­ bers may claim their damage shares. It is tensive test and evaluation process that peting landing system designs are on merely the notice that a class action suit schedule. is pending in their behalf. The main pur­ led to the selection of the time reference scanning beam (TRSB) system as the Accordingly, our continued support is pose of this notice ls to afford other class appropriate, in the interest of this Na­ members an opportunity to actively partici­ preferred technique for the U.S. MLS pate in the litigation through their own program. tion and in the interest of the world­ attorneys, thus enhancing the adequacy with This decision was obtained with the wide aviation community. which the named plaintiffs represent the active participation of foreign experts I would like to make one final state­ absent class members. Since at most only a and. was reviewed by senior officials from ment concerning Lincoln Labs data and few additional plaintiffs can be necessary for DOT, DOD, and NASA. I would also field test data. this purpose, and since those few can easily reiterate that at this point in time, the The integrity of Lincoln Labs was cast be enlisted through random sampling no­ into question by some lobbyists who, not tice, it is wasteful, and unfairly burden­ U.S. had invested $20 million in develop­ only misrepresented the situation, but some to the class plaintiffs who must pay the ing and evaluating the doppler technique before choosing TRSB. also inferred that their position was also cost, to send a class action pendency notice the official United Kingdom position. to all identifiable members of a large class The United Kingdom chose to con­ These allegations caused great concern of small claiman_ts. tinue developing doppler, claiming the to the chairman of the full committee, A recent study of one major class action superiority of this technique over TRSB. to myself, and to many other members case shows that most people who ultimately Because of these British claims and of the committee. In order to clearly responded to the notice soliciting their dam­ certain accusations directed toward Lin­ place the Lincoln Labs data in proper age claims paid little attention to, did not coln Lab simulations of the doppler sys­ perspective, let me-quote a passage from understand, or did not even remember re­ tem, I and the subcommittee staff visited the AWOP 6 final report-a report ceiving the class pendency notice. That ls with doppler engineers at their British understandable. Of the three options pro­ signed off by-not only the United King­ facility in Bedford, England. We discov­ dom and the United States-but also the vided by the pendency notice-(!) come into ered that the engineers had no quarrel the suit as a named plaintiff, (2) "opt out" entire technical panel. Paragraph 2.8.1. with the Lincoln Labs simulations and states: of the suit and recover no damages, and (3) that only lobbyists and politicians raised do nothing and be automatically included ... It was generally considered that the in the class-the overwhelming majority of arguments questioning Lincoln Lab work. assessment program could not have been class members choose the latter. Only small We reviewed the British program and carried out without the Lincoln Laboratory percentages "opt out", or "elect [not] to presented our findings to the committee. simulation facilities ... (and) the majority sue", in Sears' words. And the evidence in­ Our conclusion was then, and still is, of Panel Members felt that the results of the dicates that perhaps a majority of those that the British have a fine landing sys­ simulations had been most useful, and that people "opt out" because they misconstrue tem, that the technical differences be­ the margins of error applicable to them were tween the United States and United such that Members could use them with the legalese language of the notice as rec­ confidence in arriving at conclusions. ommending that they do so. In any event, Kingdom systems are extremely small. these people can always "elect not to sue" Both systems are deserving of equal and Thus, I think there is little doubt _be­ at a later point by affirmatively declining to fair opportunity in the international se­ tween technical p'eople and responsible participate in the class damage recovery. lection process. officials of the United States and United That factor would then be considered by Of course this process is now nearly Kingdom concerning the accuracy or the court in determining what portion o! completed. The technical panel of ICAO usefulness of the Lincoln Labs data. the total unclaimed damages ls to be re­ voted 6 to 1 in favor of the American In fact, paragraph 6.1.3.1. of the turned to the defendant. scanning beam system (TRSB). The Air AWOP final report states: September 27, 1977 EXTENSIONS OF REMARKS 31311 The computer simulation was verified by a co-channel interference due to lack of ade­ fringe benefits fall into this category. If significant degree of field tests and bench quate frequencies, a replacement system they did not it would be a simple matter Simulations. . . . must be developed. to avoid paying taxes by receiving all in­ Although U.S. research has dictated a In spite of all the foregoing, some per­ choice of the scanning beam (TRSB) micro­ come in the form of nonfinancial sons still are insisting on a side by side wave technology, the United States should remuneration. fly-off between the two landing systems. not permit lack of international agreement Therefore, it is not really necessary for Any engineer worth his salt knows that on technology choices by !CAO to unduly the IRS to establish new rules for the such a contest has no technical merit. delay the availability of MLS to U.S. oper­ taxation of fringe benefits. There is no This is akin to saying that the only way ators. reason at all why individual °IRS agents to determine the heavier of two persons ALPA states: may not on their own begin implement­ is to weight them only when they are at ALPA fully endorses the recommendation ing the taxation of fringe benefits during the same location: for TRSB and urges the FAA to move rapidly individual audits. This has already hap­ That is why paragraph 6.1.3.1 of the in its MLS development program. pened in several cases-most recently with regard to the taxation of demon­ AWOP stated: ATA states: Because the Panel agreed that overall mul­ strator automobiles used by car sales­ tipath performance could not be assessed by We are pleased that the !CAO All Weather men in Missouri-and could continue in testing a system in one situation, computer Operations Panel has recommended interna­ spite of the Ways and Means action. simulation, using a number of agreed air­ tional standardization of the U.S. candidate TRSB MLS. I strongly suspect, at this point, that ports, was the primary technical assessment the fringe benefit issue is not dead. Next tool. On the civil side, in order to avoid prolifer­ ation of the ISMLS, FAA, should take steps week the administration is scheduled to Thus, it is difficult for me to get overly to permit operational use of advanced ver­ send its tax reform package t.o the Hill excited about the results of a TRSB­ sions of the TRSB MLS by any civil users who and it may very well contain provisions Doppler fly-off. However, if this is what is have special needs which cannot be met by for the taxation of fringe benefits-an needed to satisfy the lobbyists and politi­ !LS. idea which was recently endorsed by the cians, then I'll not oppose it. They can, Thus, it is obvious that the United Brookings Institution. however, take full credit and responsi­ States has a compelling need for a timely I still believe, therefore, that the Con­ bility for the $300,000 per test, cost to the ICAO decision. gress .ought to move ahead to prevent taxpayer, that will prove nothing and The ICAO process has been time con­ taxation of fringe ~enefits. The reasons benefit no one. suming and deliberate, but it has also I have cited earlier are still valid: In summary, I would like to reiterate been very fair and thorough. The United First. Taxation of fringe benefits will that both the United States and United Kingdom, the FAA, and the AWOP mem­ increase the tax burden on the vast ma­ Kingdom have developed fine systems. bers have all worked very diligently and jority of working Americans; Debating about the differences between are deserving of the highest praise for Second. It will cause monumental ad­ them is like choosing between a Ford and bringing the program this far under very ministrative problems with regard to de­ a Chevy as a family automobile. It's just competitive, very political, and very dif­ liniating fringe benefits fr.om conditions that close. The whole argument between ficult circumstances. of work; and ~ Doppler and TRSB has been an engineer­ It is time now to cease the bickering Third. It will seriously disrupt all ing debate involving microseconds, when and back-biting and to proceed resolutely labor/management relations in this a day or two either way would make no forward with a common goal-that of country because virtually all union con­ real difference. developing and installing an improved tracts contain fringe benefit clauses Eventually a decision had to be made. instrument landing system-one that which will, in effect, be negated if fringe The United States made its decision in may save thousands of lives here, in the benefits are taxed. 1974 in favor of TRSB. The International United Kingdom and around the world. One of the maxims of a good tax sys­ Air Navigation Commission made its rec­ tem is that taxation be consistent. I be­ ommendation for TRSB to the ICAO lieve that regardless of the ambiguities worldwide body for resolution in April. MORE ON THE IRS PLAN TO TAX of the Tax Code with respect to fringe Yet, the debate continues. FRINGE BEN:SFITS benefits the American people have come Unfortunately, there are some people to operate their lives on the assumption here and abroad who stand to gain by that such things as free parking spaces, delaying the final selection process and HON. JACK F. KEMP store discounts for retail employees, air­ these interests have developed stalling OF NEW YORK line passes for airline employees, and tactics accordingly. IN THE HOUSE OF REPRESENTATIVES day care centers for working mothers, I, for one, will not sanction such a Tuesday, September 27, 1977 will not be taxed as income. To do so delay. A delay is not in the best interest now would be capricious and counter­ of the United States. Mr. KEMP. Mr. Speaker, this after­ productive. The U.S. has three urgent require­ noon the House Ways and Means Com­ ments: mittee adopted an amendment to H.R. The Army needs MLS immediately; 6715, the Technical Corrections Act of BONN TO ALLOW NEUTRON ARMS Some large airports in the U.S. have 1977, which prohibits the Internal Reve­ reached the point of ILS frequency sat­ nue Service from promulgating new rules uration and need the additional capabili­ with regard to the taxation of fringe HON. CHRISTOPHER J. DODD ties of MLS; benefits which would take effect prior to OF CONNECTICUT Small community airports need MLS July l, 1978. The purpose is to delay the IN THE HOUSE OF REPRESENTATIVES because of ILS limitations and the high effect of any such rules until Congress cost of ILS; has had time to study them. Tuesday, September 27, 1977 Off-shore oil producers need the preci­ I applaud this action by the Ways and Mr. DODD. Mr. Speaker, I will be offer­ sion guidance and accuracy of MLS. Means Committee because I have been ing an amendment to H.R. 6566-ERDA The U.S. has over 600 installed Instru­ speaking out against the IRS plan to tax national security programs-which is in­ ment Landing Systems-over one-half fringe benefits since it was first revealed tended to give Congress the time neces­ the entire world's total. Many of our by Commissioner of Internal Revenue sary to seriously consider whether or not main competitors in the landing system Jerome Kurtz in July. Since then, 49 the United States should produce en­ business have less than 10. By sheer vol­ Members of Congress have joined me in hanced radiation weapons. This amend­ ume, the problem is most acute here in 2. resolution denouncing the IRS plan. ment will further Congress ability to ex­ the United States. Unfortunately, the basic problem still ercise its constitutional responsibility to In fact, I have copies of letters from remains; namely, the ambiguity of the the American people, and to itself, to NBAA, ALPA, and ATA that emphasize Tax Code with regard to what constitutes participate fully in Government decisions the requirement for MLS. income and what does not. Consequently, which could have profound national se­ NBAA states: because the Tax Code clearly specifies curity and foreign policy implications. For reasons of cost-effectiveness, site limi­ that all income is taxable-unless other­ One of the critical reasons why Con­ tations, governmental support criteria, and wise excepted-there is no doubt that gress should adopt my amendment is the CXXIII--1970-Part 24 31312 EXTENSIONS OF REMARKS September 27, 1977 fact that neither President Carter nor [From the Washington Post, Sept. 27, 1977) that if the government appears to be en­ our NATO allies have as yet reached po­ BONN Is EXPECTED To ALLOW STATIONING OF thusiastic about the weapons, the situation NEUTRON ARMS could prove to be a minefield because it sitions on the issue of eventual deploy­ clearly remains controversial. ment of enhanced radiation warheads. In (By Michael Getler) Thus, in Bonn's view, the NATO consulta­ this regard, the Washington Post re­ BONN, September 26.-The West German tions are very important to give an allied, ported today that though West Germany government probably would not oppose the rather than a U.S.-West German, cast to will probably not oppose the stationing stationing of U.S.-produced neutron weap­ the situation. Bonn-Washington discussions ons on West German soil. and commitments are apt to remain private of U.S.-produced neutron weapons on its That is the view of most leading govern­ until all major positions are worked out, soil, that Government will probably ment and political figures here about one sources here say. reach no public decision until President of the most politically sensitive defense The neutron weapon is likely to be a main Carter states his intent to produce the issues to arise in the postwar era. topic of conversation here Tuesday night weapons and the NATO allies agree that The Bonn government, however, has made when President Carter's national security ad­ they are necessary. no final decision on the stationing of these viser, Zbigniew Brzezinski, has scheduled a According to the Washington Post re­ special atomic weapons here. private dinner meeting with Schmidt. port, one top aide to Chancellor Schmidt Nor is it likely to say anything about West German military strategists generally allowing deployment until President Carter view the neutron warheads as having sig­ stated explicitly that the West German publicly states his intent to produce the nificant advantages against massed Soviet Government does not "want to give an weapons and the 14-member NATO military tank armies. The strong radiation emitted answer before it i5 decided by the Presi­ alliance agrees that they are necessary and by these weapons, they suggest, could pene­ dent to produce the weapon." Another should be stockpiled on the potential battle­ trate the heavy shielding against atomic at­ German official said that-- field of West Germany. tack that Soviet tanks already carry. Thus, We are not going to invite deployment be­ In effect, Bonn and Washington, the two they view the weapon as a major factor in fore your president has even made that de­ most crucial links in West European defense deterring attack. cision and make political fools of ourselves. plans, are locked in a "which comes first, the The argument against these weapons has chicken or the egg" situation when it comes been that they are seen as being easier to Earlier this month Defense Minister to publicly endorsing this controversial new use and control and therefore could lower Georg Leber cautioned that more discus­ atomic warhead for short-range missiles and the threshold at which warring nations might sions are needed before enhanced radia­ artillery shells. decide to escalate to nuclear warfare. Although President Carter appears to want Leber argued in Parliament that these tion warheads can be deployed and that some public declaration of support from weapons, in his view, would not lower that such decisions can only be taken by NATO allies before he makes his decision to threshold and that the guidelines for use of NATO as a whole. request production funds from Congress, the nuclear weapons would not be changed by Mr. Speaker, I also believe that we West Germans "don't want to give an answer the neutron weapon. in Congress should not make fools of before it is decided by the President to pro­ The issue is especially sensitive here be­ ourselves by unconditionally approving duce the weapons," said a top aide to Chan­ cause the basically short-range field army funds for the production of enhanced cellor Helmut Schmidt. missile and artillery that would carry the "We are not going to invite deployment neutron warhead would be based in West radiation warheads in the ERDA na­ before your president has even made that Germany and undoubtedly would be landing tional security authorization. Similarly, decision and make political fools of our­ on East German or West German soil when I do not believe that we should invite the selves," another official said. they are fired. The que3tion of when a con­ potentially devastating foreign policy ef­ The neutron weapons-which are designed ventional war becomes a nuclear war is of fects that might result from a deletion to kill primarily by enhanced radiation tech­ critical importance to people who live on the of funds for production of such war­ niques rather than by the combined blast, battlefield. heads. Instead, I proposed that we take heat and shock of existing atomic weapons­ Although the trend here at the moment have generated sharp controversy and some may be to go along with the neutron weapon, a reasoned, cautious approach that will strong criticism here. there is lingering dismay, as the Frankfurter put the funds in the bill, but allow Con­ The widespread view after discussions Allgemeine newspaper noted, at how the Car­ gress full scope to review whatever deci­ earlier this month in the Parliament, or ter administration showed so little skill in sion is reached by the President and our Bundestag, however, is that West Germany allowing such an important, yet controver­ NATO allies. will not prevent introduction of the new sial, new weapon to be introduced into public Specifically, the amendment I will weapon if Carter gives the go-ahead. and political discussion. Although the Parliament did not give The West Germans believe that the United propose would require the following ac­ a resounding "yes" to the new weapon, "at tions by the executive branch and Con­ States blundered by not being more open least no major obstacle was put in its path," and informative with its allies and the gress before any funds could be expended an aide to Schmidt said. public. for production of enhanced radiation A speech by Conrad Ahlers, a member of Right after the neutron weapon contro­ warheads in fiscal year 1978: the Bundest ag Defense Committee and of versy developed, portions of a new U.S. strat­ The President certifies to Congress for Schmidt's ruling Social Democrat Party, is egy assessment were revealed in the press. each enhanced radiation warhead that widely interpreteted a.s reflecting the coali­ They suggested that the United States might its production is in the national interest; tion government's position. Reciting the pros give up one-third of West German territory a n d cons of the new weapon, Ahlers con­ in the face of an initial Soviet attack. The ERDA Administrator submits a cluded, "In my opinion, we will have to learn complete arms control impact statement to live with the neutron bomb and to include Although U.S. officials explained that new to Congress on each neutron weapon; it in our defense concept." administrations always order studies of all Defense Minister Georg Leber, also a Social possible options, and the flap has since died The President authorizes production Democrat, rejected as too emotional the most down, the West Germans viewed it as yet of each neutron weapon, as required by stinging criticism of the weapon that came another alarming signal of confused thinking the Atomic Energy Act; this summer from his party colleague, Egon in Washington. The President studies and reports to Bahr, the executive secretary of the Social Congress on the use of neutron weapons Democrats. and their impact on the NA TO strategies Bahr called the weapon's design-which kills people without causing the enormous CLINCH RIVER BREEDER REACTOR for conventional weapons, on the use of physical damage of standard atomic weap­ other tactical nuclear weapons, and on ons-an example of " perverted thinking." the deterrent effect of NATO forces; Leber said the new weapon was neither HON. JOSEPH L. FISHER more nor less humane than other atomic The President reports the full reasons OF VffiGINIA for any production decision to Congress; weapons. and Leber was also careful to say neither yes IN THE HOUSE OF REPRESENTATIVES nor no to deployment. He cautioned that Tuesday, September 27, 1977 Congress does not disapprove of any more discussions are needed and that such production decision by concurrent reso­ decisions can only be taken by NATO as a Mr. FISHER. Mr. Speaker, I would lution within 45 calendar days of noti­ whole. A Bonn newspaper reported after Le­ like to bring out an important aspect fication. ber's speech, however, that "indications are of this issue of whether or not to con­ that a basic decision has been taken in favor I would like to share the text of today's of t h e neutron bomb." tinue the Clinch River breeder reactor Washington Post article with my col­ Conservative opposition party leaders have program which thus far has been given leagues by inserting it at this point in generally expressed support for the weapon. little attention. Ma ior, long-term re­ the RECORD: Politicians here make it clear, however, search and demonstration projects like September 27, 1977 EXTENSIONS OF REMARKS 31313 Clinch River, once begun after careful Clinch River. The expected cost has risen would like to call to the attention of consideration, should not lightly be dis­ considerably because of the general in­ my colleagues the special message of continued. The burden of proof properly flation in the cost of construction and of President Truman on this issue. rests on the shoulders of those who sophisticated industrial equipment as SPECIAL MESSAGE TO THE CONGRESS RECOM­ would stop the project. Otherwise such well as because of the redesign of certain MENDING CONFLICT-OF-INTEREST LEGISLA­ a project is always in jeopardy and the portions of the project. Furthermore, it TION SEPTEMBER 27, 1951 organizing and staffing of the work is is true that the design would be different To the Congress of the United States: rendered inefficient and costly. I make in a number of respects if it were done I recommend that the Congress enact leg­ this point out of long personal experience all over again now. Several things can be islation requiring officials in all branches of in directing research in the energy and said about these points. the Government to place on the public rec­ related fields. Return-on-investment and benefit/ ord each year full information concerning In my ju(lgment the burden of proof cost estimates are difficult and uncertain their incomes from all sources, public and private. I believe this will be an important in this case has not been carried suc­ with respect to research and demonstra­ step in assuring the integrity of the public cessfully by those who would have the tion projects because commercial results service and in protecting government officials Clinch River breeder reactor project are remote and indirect by the very na­ against false and unfounded charges of im­ stopped. The hope that stopping CRBR ture of research. If we already knew what proper conduct. would enhance the likelihood that our would work technically and economically, The overwhelming majority of the people Government could induce other coun­ research and demonstration would not who are working for the Federal Govern­ tries developing breeder reactors to be needed. From my experience in re­ ment in the Legislative, Judicial, and Exec­ abandon their breeder programs and search if 1 project out of 5 or 10 really utive branches are decent, honest, and upright citizens who are doing their very give up supplying breeders and fuel proc­ works out well, you would be lucky. Also, best in the public interest. I believe that essing equipment to other countries­ from my own experience, during the the standards of conduct now prevailing in the nonproliferation point which Presi­ course of a large, long-term project like the Government service compare favorably dent Carter emphasized when he rec­ CRBR there will be times when the whole with those of the past and with the stand­ ommended against CRBR-has largely undertaking seems to be going badly, the ards now prevailing in business and the eroded during the past several months. outcome looks doubtful, personnel be­ professions. Nevertheless, it should be our The other "breeder" countries-France, come discouraged, and financial backers constant aim to improve these standards. United Kingdom, the Soviet Union-are are tempted to withdraw. At other times, As the burdens of the Government increase during this defense period, and more and continuing their programs and Japan things look good and everyone concerned more citizens enter into business or finan­ has begun a modest effort. West Ger­ is upbeat. cial dealings with the Government, it is many recently has checked further work This last point brings me back to what partl~ularly necessary to tighten up on our on its breeder temporarily, but appar­ I said near the beginning: Because the regulatory procedures, and to be sure that ently will go forward with furnishing fortunes and outlook for a great new re­ uniformly high legal and moral standards Brazil with a reprocessing plant. Breeder search or demonstration project will go apply to all phases of the relaticnship be­ reactors off er prospects so promising to up and down, the burden of proof that it tween the citizen and his Government. should be stopped rests on those who In operations as large as those of our Gov­ meet the very severe problems of future ernment today, with so much depending on energy supply facing these countries that would stop it. I do not think that case has official action in the Congress and in the ex­ they cannot in all good sense give up been made convincingly, that proof has ecutive agencies, there are bound to be at­ their own programs. been presented. Therefore, I come down tempts by private citizens or special interest The environmental and health objec­ on the side of continuing the Clinch groups to gain their ends by illegal or im­ tions to breeders still exist: an accident River project. Those in charge should proper means. Unfortunately, there are some­ could result in radioactive fallout dam­ strive to hold down costs, of course; and times cases where members of the Executive age. But the health and environmental they should readjust the project, even re­ and Legislative branches yield to the tempta­ risks of going to other heat and power design portions of it as this can be done tion to let their public acts be swayed by pri­ within limits of completing the project vate interest. We must therefore be con­ sources are as great or greater-sources stantly on the alert to prevent illegal or such as conventional reactors (landscape on a reasonable schedule. Along these improper conduct, and to discover and pun­ scarring from much more extensive ura­ lines, I supported a proposal which ish any instances of it that may occur. nium mining, accidental fallout) and sought to provide for gradually increas­ We must also guard against the danger coal (landscape degradation from sur­ ing private financial participation in that the misconduct of a few will result in face mining, acid mine drainage from paying off cost overruns on the Clinch unwarranted suspicion and distrust of the underground mining, air pollution from River breeder reactor which exceed $2 honesty of all government officials. burning of coal) . Nuclear waste disposal billion. This was rejected by the House, In recent months, there has been some­ however. To stop the Clinch River proj­ thing amounting to a deliberate effort to dis­ is a serious problem but is even more credit the government service. Attempts have pervasive with a conventional reactor ect now would deny us all the benefits of been made through implication and innu­ program requiring much larger amounts the lessons that can only really be endo, and by exaggeration and distortion of of uranium ore. learned from a careful evaluation of the the facts in a few cases, to create the impres­ The danger of irresponsible, even sub­ completed demonstration. sion that graft and corruption are running versive conversion of plutonium into rampant through the whole Government. bombs would be present. This possibility To my mind the most disturbing feature of FINANr.T AL DISCLOSURE LAW REC­ the charges and rumors stirred up by these exists with respect to assembling bombs OMMENDED BY PRESIDENT attempts is their effect on the confidence of from conventional hot fuel; India already HARRY S TRUMAN ON SEPTEM­ the American people in their Government has detonated a bomb manufactured BER 27, 1951 and in all the individuals who make up the from fuel used in a research reactor and Government. I am told that people all around many other countries could do this over the country are getting a mistaken and a dis­ a few years' period in a similar way. The HON. ROBERT W. KASTENMEIER torted impression that the Government is full range of risks-health, environmen­ OF WISCONSIN full of evil-doers, full of men and women with low standards of morality, full of people tal, diversion of radioactive elements to IN THE HOUSE OF REPRESENTATIVES bombs-has to be dealt with promptly on who are lining their own pockets and dis­ Tuesday, September 27, 1977 regarding the public interest. an international scale whether or not the This is a terrible distortion of the true United States goes forward with Clinch Mr. KASTENMEIER. Mr. Speaker, to­ facts about our Government. It would be River. day marks the 26th year since President tragic if our citizens came to believe it. It The argument that the CRBR no longer Truman sent a special message to the would be tragic for the American people represents a good investment of the large Congress recommending enactment of themselves to have such an idea about their funds it will require, that the benefit/cost conflict-of-interest legislation contain­ Government, and it would be a terrible estimate is no longer favorable, has more tragedy for all those who serve within the ing public financial disclosure. Since Government. None of us can afford to let the substance and point at this time in my the House will soon be considering whole body of public officials be given a bad opinion than the other arguments which legislation providing for Government­ name by accusations, rumors, and sensational have been offered against continuing wide public financial disclosure, I publicity tending to smear everybody. 31314 CONGRESSIONAL RECORD ·-HOUSE September 28, 1977 I believe the best thing we can do to spike closure of current outside income, however, applied equally and fairly to the officials of this effort to discredit Government officials will strike at the danger of gifts or other all three branches of our Government. This is to place all the facts right on the l'ecord. inducements made for the purpose of in­ is the best protection we can give ourselves The facts themselves are the best cure for fluencing official action, and at the danger and all of our co-workers against the charge public doubts and uncertainty. of outside interests affecting public deci­ of widespread graft and favoritism in the I recommend, therefore, that the Con­ sions. public service. gress promptly enact a statute which wlll A disclosure of all sources of outside in­ I know of no other single step that will do require all full-time civilian Presidential c :,me will be of obvious help in tucking down so much good so quickly in protecting the appointees, including members of the Fed­ any case of wrongdoing. Furthermore, the reputations of our public servants and-at eral bench; all elected officers of the Fed­ mere existence of a requirement that such the same time-in producing concrete in­ eral Government, including Members of the disclosure be made will act as a deterrent to dications of any really questionable practices. Congress; and all other top officials and em­ improper conduct. Much the same considerations apply also, ployees of the three branches of the Gov- If an official of an executive agency knew I believe, to those people who hold the prin­ ernment-say those receiving salaries of that he would have to disclose the fact that cipal posi,tions of responsibility in our great 10,000 dollars or more, plus flag and general he accepted a gift or loan from a private political parties. Of course, these offices are officers of the Armed Services-to file an­ company with which he has public business, not Government positions. But those who nually a statement of their total incomes, or if a Member of Congress who is on a hold them are necessarily brought into very including amounts over and above their committee concerned with a certain indus­ close contact with the Government. And Government salaries, and the sources of this try knew that he would have to disclose our major political parties have traditionally outside income. Consideration should also the fact that he accepted a fee from a com­ been so much a part of our whole system of be given t:> requiring other Government pany in that industry, I believe the chances government, that those responsible for the employees to file such statements if their are that such gifts or fees would not be conduot of party business are in fact, if not outside income exceeds a specified amount­ accepted. in law, charged with a real public respon­ perhaps $1,000 a year. Some items which are Such a disclosure procedure will also serve sibility. For that reason, I would favor in­ not ordinarily counted as income, such as to protect officials and legislators from wide­ cluding the principal national party officials gifts and loans, should be included in the spread misunderstanding on the part of the and employees among those persons re­ statements filed under this statute. Penal­ public. Our citizens will be able to see for quired to file annual income statements ties for willful violation of this statute themselves that the talk about corruption along the lines I have described. should be equivalent to those for violation and enrichment in public office is grossly The legislation I have here recommended of the laws relating to the filing of income exaggerated. should be passed as soon as poss-ible. I! ac­ tax returns. tion cannot be completed before adjourn­ These statements when filed should be As a general rule, I do not like to see public ment of the present session, then I earnestly made accessible to the public. officials, or any other particular group sub­ hope that Congress will finish the task a.s Such public disclosure will, in my opinion, jected to rules and requirements which do soon as it reconvenes. We should lose no time help to prevent illeg:11 or improper conduct not apply to the rest of the population. in placing all the facts before the country, and at the same time protect Government But at the same time, public office is a privi­ and in clearing up those false impressions officers from unfounded suspicions. lege, not a right. And people who accept the that are injurious to the proper functioning The majority of Federal employees have privilege of holding office in the Govern­ of our Government. no income of consequence other than their ment, must of necessity expect that their I believe also that both the Congress and official salaries. Some of our best public ser­ entire conduct should be open to inspection the Executive should continue to search for vants, on the other hand, do have sizeable by the people they are serving. With all the other means, legislative and administrative amo·mts of outside income. The g-reat publi'.! questions that are being raised today about alike, to re3.Ssure the American people about service that is being rendered today by many the probity and honesty of public officials, the high standards of their Government and men who have been successful in business or I think all of us should be prepared to place to make sure that those high standards con­ other forms of endeavor demonstrates that the facts about our income on the public tinue to be maintained by every individual no distinction can be drawn between these record. We should be willing to do this in who holds public office. two groups in terms of public good. The dis- the public interest, if the requirement is HARRY S. TRUMAN.

HOUSE OF REPRESENTATIVES-Wednesday, September 28, 1977 The House met at 12 o'clock noon. THE JOURNAL LEGISLATIVE PROGRAM FOR The Chaplain, Rev. Edward G. Latch, The SPEAKER. The Chair has ex­ WEDNESDAY, SEPTEMBER 28 D.D., offered the following prayer: amined the Journal of the last day's Mr. WRIGHT. Mr. Speaker, I ask Be strong, all ye people of the land, proceedings and announces to the House unanimous consent to speak out of order saith the Lord, and work, for I am with his approval thereof. for 2 minutes. you.-Haggai 2: 4. Without objection, the Journal stands The SPEAKER. The gentleman from O Thou seeking shepherd of our striv­ approved. Texas is recognized for 1 minute. Mr. WRIGHT. I take this time, Mr. ing spirits, whose goodness and mercy There was no objection. follow us all our days, we open our lives Speaker, to announce the revised sched­ to Thee that the thoughts of our minds, ule for today in order that Members may the attitudes in our hearts, the words on be informed. MESSAGE FROM THE SENATE We would begin with House Resolution our lips, and the work of our hands may 70, to establish a Select Committee on be acceptable in Thy sight as we face the A message from the Senate, by Mr. Population. When that is concluded, we tasks of this day. Sparrow, one of its clerks, announced hope to take up the conference report Amid the shifting scenes of modern that the Senate insisted on its amend­ on H.R. 7554, HUD appropriations. Fol­ moods we pray for wisdom to solve our ment to the bill (H.R. 4544) entitled lowing that, we will go to House Resolu­ problems, ·for strength to carry our bur­ "An act to amend the Federal Coal Mine tion 760, to authorize the Assassinations dens, for good will to relate ourselves af­ Health and Safety Act to improve the Committee to apply to courts. Then, we firmatively to others, and for a faith black lung benefits program established would go to H.R. 9290, to increase the that holds us steady and keeps us stead­ under such act, and for other purposes," temporary debt limit. fast that we fail not man nor Thee. disagreed to by the House of Representa­ There will be a vote on the rule and Bless our President. our Speaker, tives, and agree to the conference asked a vote on the bill. It calls for a modified rule of 1 hour of debate. Members of Congress and those who by the House on the disagreeing votes of Then we hope to take up H.R. 8638, the work so untiringly with them. Give them the two Houses thereon. Ordered, that Nuclear Antiproliferation Act of 1977, strength of body and mind that they Mr. WILLIAMS, Mr. PELL, Mr. NELSON, Mr. for vote both on amendments and on the may fulfill Thy purposes for our coun­ RIEGLE, Mr. RANDOLPH, Mr. KENNEDY, bill. try and for all mankind. Do thou shed Mr. LONG, Mr. HASKELL, Mr. JAVITS, Mr. Finally, we hope to take up H.R. 6566, Thy good on us and crown our good SCHWEIKER, Mr. STAFFORD, Mr. CHAFEE, ERDA authorizations for national secu­ with brotherhood from sea to shining and Mr. LAXALT be the conferees on the rity programs, for votes on amendments sea. Amen. part of the Senate. and the bill.