HOUSE OF REPRESENTATIVES-Tuesday, November 10, 1981

27066 CONGRESSIONAL RECORD-HOUSE November 10, 1981

HOUSE OF REPRESENTATIVES-Tuesday, November 10, 1981 The House met at 12 o'clock noon,

and was called to order by the Speaker pro tempore <Mr. FoLEY).

DESIGNATION OF SPEAKER PRO TEMPORE

The SPEAKER pro tempore laid before the House the following communication from the Speaker:

WASHINGTON, D.C., November 5, 1981.

I hereby designate the Honorable THoMAs S. FoLEY to act as Speaker pro tempore on Tuesday, November 10, 1981.

THOMAS P. O'NEILL, Jr., Speaker of the House of Representatives.

PRAYER The Chaplain, Rev. James David

Ford, D.D., offered the following prayer:

Lord God, we thank You that Your Spirit sustains from the first moment of life to the final day. As people meet the emotions of their lives, from the joy and satisfaction of success to the despair of broken hopes and diminished dreams, remind us, 0 Lord, of the encouragement that Your word provides each day. May Your promise of being with us until the end of the age, enable us to live with conviction and faith through the best and the worst of what is to come. Amen.

THE JOURNAL The SPEAKER pro tempore. The

Chair has examined the Journal of the last day's proceedings and announces to the House his approval thereof.

Pursuant to clause 1, rule I, the Journal stands approved.

MESSAGE FROM THE SENATE A message from the Senate by Mr.

Sparrow, one of its clerks, announced that the Senate had passed without amendment a bill of the House of the following title:

H.R. 4792. An act to amend title 10, United States Code, to improve the military justice system.

The message also announced that the Senate had passed with amendments in which the concurrence of the House is requested, bills and a concurrent resolution of the House of the following titles:

H.R. 3455. An act to authorize certain construction at military installations for fiscal year 1982, and for other purposes;

H.R. 4144. An act making appropriations for energy and water development for the

fiscal year ending September 30, 1982, and for other purposes; and

H. Con. Res. 106. Concurrent resolution to provide for the printing of the brochure entitled "How Our Laws Are Made."

The message also announced that the Senate insists upon its amendments to the bill (H.R. 4144) entitled "An act making appropriations for energy and water development for the fiscal year ending September 30, 1982, and for other purposes," requests a conference with the House on the disagreeing votes of the two Houses thereon, and appoints Mr. HATFIELD, Mr. McCLURE, Mr. GARN, Mr. SCHMITT, Mr. COCHRAN, Mr. ABDNOR, Mr. KASTEN, Mr. MATTINGLY, Mr. JOHNSTON, Mr. STENNIS, Mr. ROBERT C. BYRD, Mr. HOLLINGS, Mr. HUDDLESTON, Mr. BURDICK, Mr. SASSER, and Mr. PRoxMIRE to be the conferees on the part of the Senate.

The message also announced that the Senate insists upon its amendment to the bill (H.R. 3455) entitled "An act to authorize certain construction at military installations for fiscal year 1982, and for other purposes," requests a conference with the House on the disagreeing votes of the two Houses thereon, and appoints Mr. TOWER, Mr. THURMOND, Mr. WARNER, Mr. HUMPHREY, Mr. COHEN, Mr. STENNIS, Mr. HART, Mr. JACKSON, Mr. CANNON, and Mr. EXON to be the conferees on the part of the Senate.

The message also announced that the Senate agrees to the report of the committee of conference on the disagreeing votes of the two Houses on the amendments of the House to the bill <S. 815) entitled "An act to authorize appropriations for fiscal year 1982 for procurement of aircraft, missiles, naval vessels, tracked combat vehicles, torpedoes, and other weapons and for research, development, test, and evaluation for the Armed Forces, to authorize appropriations for fiscal year 1982 for operations and maintenance expenses of the Armed Forces, to prescribe the authorized personnel strength for each active duty component and the Selected Reserve of each Reserve component of the Armed Forces and for civilian personnel of the Department of Defense, to authorize the military training student loads, to authorize appropriations for fiscal year 1982 for civil defense, and for other purposes.''

The message also announced that the Senate agrees to the amendments of the House to the amendment of the Senate to the amendments of the House to the bill (S. 999), "An act to

authorize appropriations for the Federal Fire Prevention and Control Act of 1974, and for other purposes."

The message also announced that the Senate had passed a bill of the following title, in which the concurrence of the House is requested:

S. 778. An act to amend Public Law 96-36 to authorize additional funds to plan for the' development of the area south of the original Smithsonian Institution Building, adjacent to Independence Avenue at lOth Street SW., in the city of Washington.

RENEWABLE RESOURCES RECOVERY ACT OF 1981

<Mr. AuCOIN asked and was given permission to address the House for 1 minute and to revise and extend his remarks.

Mr. AuCOIN. Mr. Speaker, today I am introducing emergency legislation granting new powers to the Secretary of Agriculture to save lumber and plywood mills which are now threatened by a wave of bankruptcies brought on by chronic high interest rates.

We all know that soaring budget deficits, and massive Federal borrowing to cover the deficits, drives up interest rates. Over the next 6 months, the Government will be borrowing $78 billion, or about half of all the capital available.

Now the American people are now being told by the White House that the administration is giving up on its promise to balance the budget by 1984 in order to protect outlays for history's largest tax cut and the most rapid, expensive military buildup since World War II. Well, Mr. Speaker, balancing the budget cannot wait. For Oregon and the Northwest, postponing what has to be done spells economic disaster. It also makes enactment of the bill I am introducing today more urgent than ever.

Less than a month ago, many of my colleagues from the Northwest participated in a special order detailing the economic devastation in our region caused by high interest rates. Our conclusion, and I am sure that of anyone who listened to the remarks of our colleagues, is that our region is already in a deep recession.

While the Washington Post reports that some Republican political strategists worry about what 8 percent unemployment will do to their party's electoral chances next year, the State of Oregon faces 13 percent unemployment within the next 2 months. Thirteen. percent, Mr. Speaker, and in some Oregon counties unemployment

0 This symbol represents the time of day during the House proceedings, e.g., 0 1407 is ·2:07 p.m.

e This "bullet" symbol identifies statements or insertions which are not spoken by the Member on the floor.

November 10, 1981 CONGRESSIONAL RECORD-HOUSE 27067 is near 20 percent. At the end of October, fully 60 percent of Oregon's millworkers were either working short shifts or were out of work altogether.

The crisis is not confined to Oregon. The Western Wood Products Association has just reported that for the week ending October 31, 61,788 workers, or 61 percent of the 102,000 sawmill employees in the western lumber industry, were either unemployed or working curtailed shifts. Of the 756 sawmills in the West, 257 were closed and 247 were operating at curtailed levels. Mr. Speaker, that is simply unacceptable and the problem is only going to get worse.

There is more than just an unemployment problem which has compelled me to introduce this bill, although that alone is reason enough to act.

The past few years have seen a dramatic increase in the price of timber sold by the Forest Service-a phenomenon dubbed "preemptive bidding." This increase in stumpage prices, a tenfold increase over the last decade, has occurred at the same time that lumber prices-finished priceshave plummeted because of the lack of housing starts caused by high interest rates.

For those timber operators in Oregon and the Pacific Northwest who are dependent upon Federal timber sales, the choices have been these: Either continue to bid in a speculative market and to hold timber that, if milled and sold, will be sold at a substantial loss, or refuse to enter the preemptive bidding wars and find themselves timber short. Anyone who knows the timber industry understands that it is imperative to have at least a 2-year inventory of timber at a mill.

My bill grants the Secretary of Agriculture certain emergency authorities designed to slow down the speculative merry-go-round in an effort to give the market a chance to lower the average price of stumpage. My bill authorizes the Secretary to do the following:

Cancel contracts without penalty, but a buyer with a canceled contract could not rebid that sale;

Adjust the termination date of existing contracts;

Require a 10-percent downpayment on a new timber sale if that purchaser has another sale with an adjusted ter-mination date; ·

Instigate a study to determine whether or not countervailing duties should be imposed on Canadian wood products; and

Hold hearings on whether the indexing of stumpage prices to finished prices should be allowed in western Oregon and western Washington.

These authorities would expire on December 31, 1983.

Mr. Speaker, if all of these steps were taken today, there would still be

some timber operators forced out of business. This bill needs to be enacted, nevertheless, so the Nation will have the necessary mill capacity to meet the projected demand for housing in the future. If people think housing is expensive today, just wait until only the giants of the industry are the only ones with capacity.

The timber industry is a complicated mix of large firms, co-ops, and small firms. Some have their own land, others do not. But the timber industry has been efficient because of the mix which has been achieved through competition. To wipe out a substantial portion of that mix will guarantee unprecedented economic concentration which will make housing in the future prohibitive.

Mr. Speaker, I would be remiss if I did not comment on the latest action by the administration with regard to the Forest Service's extension policy.

Assistant Secretary John Crowell recently announced that the Forest Service would extend timber sales contracts and change the terms under which new timber sales are sold. The altering of the extension policy is like applying a Band-Aid to stop arterial bleeding.

Even worse is Mr. Crowell's idea to require up-front money on all new timber sales. This would drive another nail in the coffin of the small timber operator and help only the larger timber companies.

The purpose of my bill, over the short term, is to avert more shutdowns, to give some breathing room to the small operators so that more Americans do not lose their jobs. For the longer terms, its purpose is to maintain mill capacity so that when the housing market does rebound there will be sufficient manufacturing capability to meet demand.

LEGISLATION INTRODUCED TO AUTHORIZE AND DIRECT THAT "TAPS" BE PLAYED EACH EVENING AT VIETNAM VETERANS MEMORIAL <Mr. LONG of Maryland asked and

was given permission to address the House for 1 minute and to revise and extend his remarks.>

Mr. LONG of Maryland. Mr. Speaker, today I am introducing a bill, with 36 sponsors, to authorize and direct that "Taps" be played every evening at sunset at the Vietnam Veterans' Memorial when it is completed in Washington, D.C.

A similar measure is being introduced today in the other body by Senator JOHN DANFORTH of Missouri.

Why play "Taps" at this memorial? "Taps" is a Civil War tune, com

posed by Maj. Gen. Dan Butterfield of the Army of the Potomac at Harrison's Landing, Va., in the Peninsular Campaign in July 1862.

The bugle call was used not only at day's end (in place of the French "lights out" and the British "Tattoo") but as a mark of respect at funerals in that same month-when a battery of Union artillery hidden in a forward position could not-for fear of discovery-fire the customary three rounds over the grave of a comrade. Historians differ as to which of the batteries under Butterfield's command is due the honor-but the tradition of "Taps" as honor to fallen comrades was then born. By 1874, "Taps" had been incorporated into the Infantry drill regulations of the U.S. Army.

The Civil War, which gave birth to "Taps," was the only conflict as divisive to this Nation as Vietnam. Even in the Civil War, the Union veterans were honored by the National Government, the Confederate veterans were granted amnesty, and those who fought for their nations-on both sides-were, and still are, honored by their families and neighbors.

Why a constant reminder-the playing of "Taps" every evening?

Our Vietnam veterans have had to pay constantly the price of rejection caused by doing their duty. One Baltimore veteran said of the welcome accorded the hostages from Iran:

When we came home, there was no brass band. The only thing ever thrown at us was insults.

One of the hostages pointed out: We aren't heroes. We were just doing our

job. The guys from Vietnam deserve this <welcome). They didn't get it.

At a military construction appropriations hearing, discussing the quality of life for our soldiers, sailors, and airmen, Maj. Gen. R. Dean Tice, Deputy Assistant Secretary of Defense for Military Personnel Policy, told the subcommittee:

It (quality of life) doesn't always have to be a facility; it doesn't always have to be pay. The • • • recognition by fellow citizens is very important to each and every one of us (in the military) • • •

We are asking young men-and young women-to volunteer to serve, for admittedly low pay, for less than outstanding working terms and conditions, with the ever-present risk that they will die in the line of duty. When these young people see the rejection and distaste accorded Vietnam veterans, when they see the lack of public national respect for those who fell in Vietnam, how can we expect them to sign up?

Salaries are small. Honor and recognition may be the only reward these people get. Vietnam veterans deserved it and until now have not gotten it. My resolution, which has 36 sponsors from 19 States and both parties already, would be one more step toward proper respect for and recognition of those who served in Vietnam.

27068 CONGRESSIONAL RECORD-HOUSE November 10, 1981 A TIME FOR PRESIDENT Richard Schweiker, to try and clear

REAGAN TO KEEP HIS PROMISE the air with respect to the problems <Mr. LEVITAS asked for and was that have developed concerning the

given permission to address the House planned White House Conference on for 1 minute and to revise and extend Aging in late November and early Dehis remarks.) cember. Frankly, I think many of us

Mr. LEVITAS. Mr. Speaker, many of were dismayed at the conduct of the us in this body have long believed that Republican National Committee a balanced budget is absolutely essen- Chairman, Mr. Richard Richards, in tial if we are to fight the ravages of obtaining a list under rather curious high interest rates and high inflation. circumstances from the Secretary of Therefore, it is a matter of great con- Health and Human Services, an incomcern to hear the announcements of plete list though it may have been, the dismal performance of the econo- and then conducting a survey of the my, and to hear that President Rea- delegates with the obvious purpose of gan's promise of a balanced budget by influencing the outcome of the White 1984-or was it 1983-is not to be at- House Conference on Aging. Importained. tantly, no other group was given that

I remember-although some people list until it was divulged that the Rehave forgotten-the administration's publican National Committee had reeconomic projections last spring that ceived it. we would achieve by next year if we In any event, this Friday meeting enacted the economic recovery pro- was intended to clear the air with gram-which we did right down the regard to the Secretary of Health and line. Those have literally gone with Human Services and what his intent the wind. Before the vote on the tax was. It sincerely is my hope, and I cut, I had the opportunity to discuss think the hope of all Members that the matter with President Reagan, are concerned about the conduct of and he told me at that time-and at · the Republican National Committee, the time I quoted in the CoNGRESSION- that we could go forward with regard AL RECORD, his response: to a successful White House Confer-

! asked him: Suppose your economic ence on Aging. I think it comes at a projections are not met; should we not very critical time, when many probhave economic triggers tied to the lems exist of special interest to older economy's performance that will do Americans. something about making certain we In any case, during the course of the avoid high inflation, that we avoid discussion, we raised additional con~ high interest rates and that we do cerns about the participants' rights achieve a balanced budget? and the disarray surrounding the con-

President Reagan told me at that ference. I hope that the Secretary will time, and I then quoted it in the take these concerns to heart. I believe RECORD, that in the event there are he is sincere in his willingness to economic problems, if the economic re- listen, and that he really does want a covery had not occurred by the third successful conference, but I think our year, he would come to Congress with concerns are legitimate, and I hope proposals which would raise the reve- they will be rectified so that this connues, if necessary, or take other ac- ference goes forward successfully. tions to rectify the problem, and to Mr. Speaker, the following UPI story avoid the potential deficit, interest, reflects some of my specific concerns and inflation problems. and that of others. Hopefully, Secre-

The recession is on us. Interest and tary Schweiker will respond positively: inflation is high. The deficit is grow- WASHINGTON.-Administration officials ing. The time is here for President stacked the Social Security Committee of Reagan to take the steps he said he the White House Conference on Aging to would. This should not be a partisan squash criticism of President Reagan's proissue. Too many people have so much posed benefit cuts, a Democratic Congress-

man charged Friday. at stake that we should put America Representative Bruce Vento, D-Minn., above posturing and partisan politics. made his accusation at a hearing of the We really need to turn the economy House Select Committee on Aging shortly around and not just talk about it. after Health and Human Services Secretary

Richard SGhweiker denied trying to pack

ADMINISTRATION OFFICIALS STACK SOCIAL SECURITY COMMITTEE OF WHITE HOUSE CONFERENCE ON AGING <Mr. VENTO asked and was given

permission to address the House for 1 minute and to revise and extend his remarks and include extraneous matter.)

Mr. VENTO. Mr. Speaker, on Friday, the Select Committee on Aging had a meeting with the Secretary of Health and Human Services,

the conference with last-minute delegates who would support the President. -

Soine delegates to the conference, which begins November 30, have charged the Reagan administration with trying to pack the meeting with last-minute delegates and organize procedures to end criticism of the President. .

The critics include the leadership council of aging organizations, representing the Nation's major elderly groups, which wrote Schweiker of its concern over the "drift toward a one-sided, tightly controlled · conference."

Vento said the Social Security Committee's Staff Director will be Michael Boskin,

a conservative economist who favors benefit reductions. "Staff shouldn't end up being advocates," Vento said.

Schweiker replied that Robert Ball, a former Social Security Commissioner and active critic of Reagan's proposed cuts, is also a conference delegate. "You'll have him as a conference delegate to be an advocate," he said.

Ball is not on the list of Social Security Committee members, Vento answered, adding, "We're wasting some of the best resources we have" if he is excluded.

Schweiker said 95 percent of the conference delegates were given their first choice of committee assignments, via computer matching. Vento urged Schweiker to account for "human" factors.

Vento said he hoped, "If you're going to have an advocate for one particular viewpoint ... You will make a good effort to provide someone with a different perspective."

Schweiker also defended himself against charges of trying to pack the conference saying of the 2,200 delegates, only 400-o; 18 percent-were named by the administration.

He said he kept several Reagan critics on the Conference Advisory Committee, all of whom he could have fired.

Schweiker was also questioned about why he provided a list of the committee delegates in September to the Republican National Committee, which later used them for a survey of delegates, but other groups that had requested lists were refused.

Schweiker said he did not realize until the Aging Committee's October 22 hearing that others had been refused lists, and he said they were mailed to 40 groups the next day.

The committee released a letter to Schweiker, signed by members of its Democratic majority. urging administrative changes to insure fairness, including allowing delegates to vote on rules.

Rules proposed by the Reagan administration's conference staff would allow only one final vote on the conference recommendations, which critics say would quash debate on individual issues. "I will consider that," Schweiker promised.

Many of the same rec~mmendations were made in a letter to Schweiker last week by the leadership council.

The letter said the aging groups are disturbed by the GOP poll and by the "apparent drift toward a one-sided, tightly controlled conference where those holding views that differ from the administration's will be excluded from any visble opportunity to express those views."

They also urged that Reagan issue a statement calling for "open, unfettered debate."

CONCURRENT RESOLUTION ON THE FEDERAL RESERVE BOARD

<Mr. SKELTON asked and was given permission to address the House for 1 minute and to revise and extend his remarks.)

Mr. SKELTON. Mr. Speaker, I rise today to submit a concurrent resolution which expresses the sense of Congress that small businessmen and farmers deserve representation on the Federal Reserve Board. These last few years, Mr. Speaker, have been the worst in my memory for farms and small businesses; not just in my con-

November 10, 1981 CONGRESSIONAL RECORD-HOUSE 27069 gressional district, where I have seen their problems firsthand, but throughout the country. Bankruptcies have climbed to record highs. Longstanding family businesses and farms have been liquidated or sold piecemeal in a losing battle against depressed commodity prices, high interest rates, and increased operating costs.

The cause of this situation is not the failure of these independent entrepreneurs to produce a competitive product, nor is it foreign competition, nor is it the weather <though these may contribute to their problems); rather it is the failure of the institutions of this country to provide them with the necessary tools to create a proper business climate. If there ever was a time for our institutions to be sensitive to the needs of the small businessman or farmer, it is now.

One institution where immediate action can be taken to insure sensitivity to small business is the Federal Reserve Board. Actions of the Board have a dramatic impact on interest rates and the availability of credit at reasonable terms to the various sectors of our economy. Our farms and small businesses depend on this credit for their survival yet, incredibly, they have been unrepresented on the Federal Reserve Board for more than 20 years. I call to the Members' attention the fact that a vacancy will occur on the Board on January 31, 1982, and I hope that you will join me in urging the President to nominate for appointment an individual with a background in small business or farming.

What I am asking for in this concurrent resolution is already provided for by law. In fact, the Federal Reserve Act makes it clear in section 10 (12 U.S.C. 241) and I quote, "In selecting the members of the Board, not more than one of whom shall be selected from any one Federal region, the President shall have due regard to a fair representation of the financial, agricultural, industrial, and commercial interests and the geographical divisions of the country." Our predecessors knew what they were doing. As precise as computer calculations and statistical formulas may be, the country's monetary policy still requires the human touch, tempered by a wide variety of experience as represented on the Board.

A STRANGE KIND OF COWBOY IN THE HOUSE OF REPRESENTATIVES <Mr. SOLOMON asked and was

given permission to address the House for 1 minute and to revise and extend his remarks and include extraneous matter.)

Mr. SOLOMON. Mr. Speaker, some in this body have referred to President Reagan as a cowboy because he enjoys horseback riding and the out-of-doors.

In fact, the President has been quoted as saying that "there's nothing better for the inside of a man than the outside of a horse." I suppose that does make the President somewhat of a cowboy.

Unfortunately for the older · and retired Americans in this country, there is a different kind of cowboy in the House of Representatives. The cowboys here are in the Democratic leadership and they do not ride horses. Rather, they prefer strapping a saddle of false hopes and fears on the backs of this Nation's old and aged, and plan to ride them to victory in 1982. The saddle they are cinching upon the old is a saddle consisting of false assertions of a sound social security system, devious Democratic Party fundraising letters, and a gag order on the Social Security Subcommittee and its chairman.

To paraphrase the President, apparently the Democratic leadership feels "there's nothing better for Democratic hopes in 1982 than instilling false hopes and fears in the old of America." I would suggest to the Democratic leadership that they take off their spurs and join with us in trying to solve the problems of social security instead of burdening the old with a political saddle with the intention of galloping to victory in 1982.

LEGISLATION INTRODUCED TO AMEND ENERGY POLICY AND CONSERVATION ACT <Mr. BROWN of Ohio asked and was

given permission to address the House for 1 minute and to revise and extend his remarks.)

Mr. BROWN of Ohio. Mr. Speaker, I have today introduced legislation to amend the Energy Policy and Conservation Act to provide for a comprehensive evaluation of the effects of acquisitions of domestic petroleum companies by major international energy concerns---.on the exploration, development, production, refining, transportation, distribution, and marketing of domestic petroleum supplies, and to impose a moratorium on such acquisitions pending completion of the consideration of evaluation.

The purpose of this legislation is to address the problem of takeover attempt-unfriendly takeover-of Marathon Oil Co. in Ohio by the Mobil Oil Co., and to point out in that period of moratorium the fact that Marathon is a company that has done for the most part precisely what our national policy would like to have them do. They have invested in domestic oil resources. They were caught up in the entitlements process of the Emergency Petroleum Allocation Act because their domestic oil resources were priced low, and yet they were getting a high price for their produced product, and then they were obliged to give their profits

to companies that had foreign investments; and so their stock has been undervalued as a result.

They have now continued to invest in finding additional oil. They have found it, but it has not come into production yet, so their stock is undervalued.

Finally, they have put their resources into modernizing of refineries so that we can get more high quality products, and as a result, the stock is undervalued.

Now, they have been the target of a takeover attempt, and largely because of the previous national energy policy devised in this Congress and passed by previous administrations. It is my hope, Mr. Speaker, that as a result of this moratorium, we will see the administration look carefully at the responsibility that this National Government has in the whole Mobil-Marathon controversy.

UNFAIR CRITICISM OF PRESIDENT REAGAN

<Mr. LUNGREN asked and was given permission to address the House for 1 minute and to revise and extend his remarks.)

Mr. LUNGREN. Mr. Speaker, it does appear day after day, as we sit here and listen to some of the comments being made by Members of this House, that our memories are awfully short. Perhaps that is by mistake, perhaps that is intentional. Nonetheless, it is bemusing that some would come here and criticize this President for evidently not doing enough to balance the budget; some from the other party would criticize him for giving up on that most cherished of all goals, but I remember just a few years back-in fact, the 1976 Presidental electionwhen the then-sitting President, President Ford, was criticized by leaders from that side of the aisle for bringing down veto after veto because we had excessive Government spending. In this body the majority was able to override his veto on a regular basis, and criticize him for being cruel and heartless, for not spending enough of the taxpayer's money on those programs that we in our infinite wisdom had designed for their benefit.

Now we see, as this President struggles mightily to bring those costs of Government down, he is attacked on the one hand for being cruel and heartless, for trying to cut some of these programs, and on the other hand for not doing enough to balance the budget. I would suggest, Mr. Speaker, that you cannot have it both ways. Either you attempt to support the President in his efforts to bring spending down and join with him in that effort, or you quit carping from the sidelines and criticize him because, unfortunately, he cannot control this

27070 CONGRESSIONAL RECORD-HOUSE November 10, 1981 House and cannot by fiat decide in fact how we can bring that spending down.

D 1215

NATIONAL DISABLED VETERANS WEEK

<Mr. JOHNSTON asked and was given permission to address the House for 1 minute and to revise and extend his remarks.)

Mr. JOHNSTON. Mr. Speaker, I am pleased to join Congressman BADHAM in introducing a resolution to declare the week of November 7 through November 13, 1981, as "National Disabled Veterans Week."

Mr. Speaker, tomorrow we celebrate Veterans Day-this day perhaps more than any other-brings together the people of our Nation in recognition of the men and women who have served us in time of war. We have made a commitment to those who have made this special contribution and we must insure that it is honored.

The disabled veteran is one of special concern to me. These men and women have sacrificed and suffered for the well-being of our country far more than we can ever compensate for. We can continue, and should, to protect their interest through VA administered programs and benefits, but we will never be able to fully repay them for their sacrifice.

Mr. Speaker, as every Member of this Chamber knows, we have overwhelmingly passed, and had signed into law, legislation directly benefiting the disabled veteran. We have provided service-connected disability benefits for former prisoners of war who suffer from psychosis and any anxiety state; we have increased disability by 11.2 percent; we have increased the automobile allowance for certain serviceconnected disabled veterans from $3,800 to $4,400 and extended the eligibility for automobile adaptive equipment when a service-connected disabled veteran would otherwise be impaired to drive; we have increased the specially adapted housing assistance grant from $30,000 to $32,500; we have authorized priority health care to certain Vietnam veterans exposed to agent orange and radiation at Nagasaki and Hiroshima along with subsequent nuclear testing; and, we have extended the veterans' readjustment appointment authority for eligible disabled veterans. Mr. Speaker, this was all accomplished within the reigns of the fisal year 1982 budget for the Veterans' Administration. I must commend Congressmen MoNTGOMERY and HAMMERSCHMIDT for their leadership in seeing this legislation through the House of Representatives and working closely with the Senate to insure that it passed the other Chamber.

Now we are proposing to devote 7 days to the disabled veteran-let us

reward their service by unanimously passing this legislation. Mr. Speaker, I am proud to ask my colleagues to join me in cosponsoring this resolution and urge its speedy approval.

APPOINTMENT OF CONFEREES ON H.R. 4522, DISTRICT OF COLUMBIA APPROPRIATIONS, 1982 Mr. DIXON. Mr. Speaker, I ask

unanimous consent to take from the Speaker's table the bill <H.R. 4522) making appropriations for the government of the District of Columbia and other activities chargeable in whole or in part against the revenues of said District for the fiscal year ending September 30, 1982, and for other purposes, with Senate amendments thereto, disagree to the Senate amendments, and agree to the conference asked by the Senate.

The SPEAKER pro tempore. Is there objection to the request of the gentleman from California? The Chair hears none and, without objection, appoints the following conferees: Messrs. DIXON, NATCHER, STOKES, WILSON, LEHMAN, WHITTEN, COUGHLIN, GREEN, PORTER, and CONTE.

There was no objection.

COMMUNICATION FROM THE CLERK OF THE HOUSE

In accordance with the Impoundment Control Act of 1974, I herewith report nine deferrals totaling $132.0 million and one proposal to rescind $20.5 million in budget authority previously provided by the Congress.

This group of deferrals constitutes the final in a series of actions taken to restrain spending of funds made available by the Continuing Resolution, P.L. 97-51. As I stated in my special messages of October 20, 23, and 29, these actions are not only in accord with Congressional intent to view the amounts provided by the Resolution as a ceiling, but are also necessary to preserve the Congress' options to enact regular appropriations consistent with my revised budget request levels for fiscal 1982.

Deferrals under the Continuing Resolution are included in this special message for the Departments of Agriculture, Health and Human Services, and Transportation.

I am also proposing to rescind advance 1983 funds for the Corporation for Public Broadcasting.

The details of the rescission proposal and the deferrals are contained in the attached reports.

RONALD REAGAN. THE WHITE HOUSE, November 6,

1981.

The SPEAKER pro tempore laid WITHDRAWAL OF NAME OF before the House the following com- MEMBER AS COSPONSOR OF munication from the Clerk of the H.R. 3269, MALT BEVERAGE IN-House of Representatives: TERBRAND COMPETITION ACT

WASHINGTON, D.C., November 10, 1981.

Hon. THoMAs P. O'NEILL, Jr., • The Speaker, House of Representatives, Washington, D. C.

DEAR MR. SPEAKER: Pursuant to the permission granted in the Rules of the House of Representatives, I have the honor to transmit a sealed envelope from The White House, received in the Clerk's Office at 5:00 p.m. on Friday, November 6, 1981 and said to contain a message from the President wherein he transmits the fifth special message for Fiscal Year 1982 under the Impoundment Control Act of 1974.

With kind regards, I am, Sincerely,

EDMUND L. HENSHAW, Jr., Clerk, House of Representativ_es.

NINE DEFERRALS AND ONE PROPOSAL TO RESCIND BUDGET AUTHORITY AMOUNT-MESSAGE FROM THE PRESIDENT OF THE UNITED STATES <H. DOC. NO. 97-106) The SPEAKER pro tempore laid

before the House the following message from the President of the United States; which was read and, together with the accompanying papers, without objection, referred to the Committee on Appropriations and ordered to be printed:

To the Congress of the United States:

M-rs. FENWICK. Mr. Speaker, I ask unanimous consent that my name be removed from the list of cosponsors of the bill, H.R. 3269, the Malt Beverage Interbrand Competition Act.

The SPEAKER pro tempore. Is there objection to the request of the gentlewoman from New Jersey?

There was no objection.

THE EVIDENCE SHOWS THAT REAGANOMICS IS WORKING

The SPEAKER pro tempore. Under a previous order of the House, the gentleman from Indiana (Mr. HILER) is recognized for 60 minutes.

Mr. HILER. Mr. Speaker, over the last several weeks we have increasingly been reading in the press and we have been hearing from our colleagues on the other side of the aisle that Reaganomics is not working, that the Republicans are the party of high interest rates, and that inflation is not coming down and that there is no productivity.

Mr. Speaker, that is exactly the opposite of what is happening. We have here a few figures which I think the Members will find very enlightening.

In 1976, in the last year of a Republican administration, under President Ford, the inflation rate by the con-

November 10, 1981 CONGRESSIONAL RECORD-HOUSE 27071 sumer price index was but 4.8 percent; by 1977 it had climbed to 6.8 percent, by 1978 it had climbed to 9 percent, by 1979 it had climbed to 13.3 pecent, and by 1980 it had reached 12.4 percent. In 1981 it is expected that the inflation rate will end up being about 9.5 percent, and in 1982 it will drop further, into the low 8's or the high 7's.

That is a dramatic change in direction from the direction we had been going in over the previous 4 years of rapidly rising inflation rates. We have turned the comer, and inflation has started to come down.

If we look at productivity, we see that over the last 4 years productivity has had an absolutely abysmal record. In 1976, the last year under a Republican administration, productivity, as measured by output per hour, had climbed by 3.3 percent; in 1977 productivity only increased 2.1 percent; in 1978 we had a negative productivity growth of minus 0.2 percent; in 1979 we had a negative productivity growth of minus 0.3 percent; and in 1980 we had a negative productivity growth of minus 0.2 percent. It is projected that for 1981 productivity will grow by 1.4 percent. This is the first year in 5 years that productivity has grown and not gone down. That is a dramatic turnabout in productivity.

The Republicans are quite often right now accused of being the party of high interest rates. That is just not the case at all. If we look at what happened to interest rates in the last 5 years, we find that in 1976 the average 3-month Treasury bill rate for the calendar year was 5 percent; in 1977 the average rate was 5.3 percent; in 1978 the average rate was 7.2 percent; in 1979 the average 3-month Treasury bill rate was 10 percent; in 1980 the average 3-month Treasury bill rate was 11.5 percent; and on January 1, 1981, the 3-month Treasury bill rate was 14.7 percent. Under the last auction that came out yesterday, the 3-month Treasury bill rate had fallen to 11.1 percent. For the first time in 5 years we see the Treasury bill rates going down, not going up.

If we look at the real gross national product growth, we see that in 1976 real GNP climbed to 5.4 percent; in 1977 the real GNP growth climbed 5.5 percent; but from that point on, GNP went down in terms of growth rates: 4.8 percent in 1978; 3.2 percent in 1979; in 1980, a negative rate of 0.2 percent. It is projected that in 1981, the year we are in now, we will have a real GNP of 9.1 percent. Once again, for the first time in 5 years, real GNP is on the climb and not going down.

I would like to refer you to the following chart which summarizes my remarks:

[In percent]

Inflation rate .. .................. 4.8 Interest rates ( 3 month

T -bill average) .............. 5.0 Prime rate ....................... 6.8 Productivity (output/hour). 3.3 Real GNP growth .............. 5.4

1 As of Jan. 1, 1981, 21.5 perecnt. 2 As of Nov. 10, 1981. 3 Estimated.

6.8

5.3 6.8 2.1 5.5

9.0 13.3 12.4 2 9.5

7.2 10.0 14.7 211.2 9.0 12.7 I 15.3 2 17.0

- .2 - .3 - .2 3 1.4 4.8 3.2 - .2 3 1.9

Source: Council of Economic Advisers, Economic Indicators, October 1981, prepared for the Joint Economic Committee.

Mr. COATS. Mr. Speaker, will the gentleman yield?

Mr. HILER. I am happy to yield to the gentleman from Indiana.

Mr. COATS. Mr. Speaker, I wonder if the gentleman would put that chart of interest rates back up there.

We seem to be operating under the misconception that high interest rates are the cause of Reaganomics, but when we look at this chart on interest rates, we see that just the opposite is true. It looks like high interest rates are the cause of Carternomics.

I believe the figures for the prime rate, when our previous President assumed office in 1976-in other words, speaking of what he inherited from Jerry Ford, the past Republican President-show a prime of 5%.

Do I read that right? When President Reagan was inaugurated, what was the prime at that time? In other words, what did the President inherit from Mr. Carter?

Mr. HILER. Mr. Speaker, this chart shows the average 3-month Treasury bill rate, but I think the gentleman brings up a good point about the prime rate.

Mr. COATS. Yes; what was the prime at the time?

Mr. HILER. In 1976 the average prime rate for the year was 6.84 percent; in 1977 the average prime rate was 6.83 percent, in 1978 the average prime rate was 9.06; in 1979 the average prime rate was 12.67 percent; in 1980 the average prime was 15.27 percent; and on the first day of January this year, 20 days before the President took office, the prime rate was 21.5 percent. The prime rate today is 17 percent.

We have seen a dramatic change of 4% percentage points. We can see this with Treasury bill rates, and we can see it with the prime rate as well.

Mr. COATS. Mr. Speaker, I think the chart and these statistics, which are irrefutable, present quite a different picture than what I read every morning in the newspaper and what I see on television, that somehow high interest rates are the fault of the Reagan policies. This very clearly demonstrates it is just the opposite.

Mr. HILER. That is clearly the case. And I think if we wanted to make a real case, the President's program has just started to take effect in the last

40 days, and in just 40 days, as in the 11 months the President has been in office, we have seen a dramatic turnaround in the major economic indicators, in interest rates, inflation rates, productivity, and real gross national product growth.

Mr. COATS. I think it is a dramatic change in the right direction, and that is what I think the people called for last November, a movement in a different direction. This very clearly demonstrates that we are moving in that di-rection. ·

Mr. HILER. There is no question about that.

Mr. LUNGREN. Mr. Speaker, will the gentleman yield?

Mr. HILER. I am happy to yield to the gentleman from California.

Mr. LUNGREN. Mr. Speaker, I want to thank the gentleman for bringing these statistics to the attention of this body.

It seems to me that quite often in this House we talk about what is happening today. Occasionally, we talk about what happened yesterday, but rarely do we talk about what happened last month or what happened last year. Certainly, if it is to our political advantage, rarely do we talk about what happened when we were in control.

One of the difficulties it seems that many people are having is creating an historical perspective in order to evaluate today's economic circumstance.

I think the gentleman has shown in graphic detail the fact that we not only have to look at where we are today but we have to see where the trends are going. If one would, for instance, take the interest rate graph that is pictured there and suggest that perhaps interest rates to an economy relate much like a fever relates to a disease in the body, one would say that we have broken the fever, and if one is taking care of a patient who is ill, one looks for a break in the fever as one of the several indications that in fact the body is getting healthy, not that the body is entirely healthy but that trends, if you will, physiological trends, are going in the right direction.

I happen to think that when we come here and listen to those who would suggest, as was mentioned before, that the interest rates being at 17 points-that is, the prime-are the direct result of the Reagan ad.ministration, we should say two things: Yes, they are, No. 1, but, No. 2, where would they have been had it not been for Reaganomics?

If we want to look at what happened as a predictor of what will happen in the future, it seems to me one ought to look at what the Carter administration in control of the party-their party being in control of both the

27072 CONGRESSIONAL RECORD-HOUSE November 10, 1981 Senate and the House-was able to do and what they were able to do to us or for us, if you will, over their 4-year period of time.

0 1230 If anyone would look at those inter

est rates, they would see that the interest rates virtually tripled over a 4%year period of time. As a matter of fact, had President Ford suggested in 1976 that "If you elect my worthy adversary, I will tell you that in four years he will manage to triple interest rates," we would have heard tremendous screams around this Chamber that President Ford was being unfair, that he was talking through his hat, that he was suggesting that certain hobgoblins of economic activity would take over and take what was basically a healthy economy at the time and throw it into a trash basket.

No one even asserted that. If one were to suggest in 1976, with an inflation rate of 4.8 percent, that we would manage, under the careful control of the majority party in the Senate and the House and controlling the White House, that somehow they would be able in a short period of time to bring us from 4.8 percent inflation rate up to double-digit inflation, and, in some cases, fear of going to 20 and 30 percent, again you would have been accused, at the very least, of political hyperbole, exaggeration, demagoguery even. Maybe we should have engaged in a little bit of that 4 or 5 years ago. But I am afraid if we had, people would have said:

"Now, listen, you cannot do that. Let us be reasonable. We are going to take control, after the Republicans have been in control of the White House for two terms, and we are going to do what we think should be done to right the problems of the econo-my."

So what do we have? We have got interest rates going through the roof, we have got inflation rates going through the roof. And I think perhaps the most important and telling document that the gentleman has presented is the productivity chart. You do not have to be a Republican or a Democrat or a conservative or a liberal, or even an economist of much knowledge, to suggest that if we are going to right the economy, whatever ills we have in the economy, you have got to do things which result in some sort of positive growth in productivity.

That is particularly true as we move into a more competitive environment in the international marketplace. Everyone here is for productivity. To be for productivity is to be for motherhood, for apple pie and the American flag. I have yet to hear anyone on the floor of the House say that we are not for productivity growth. Nor do I think anybody in his right mind would not be. So we are all for it. The question is: How do you get it?

Now, it seems to me that those who are criticizing what this administration is attempting to do have the burden of proof of showing and establishing with some certainty, No. 1, that what is going on now is not working; and No. 2, that they have a better idea.

Now, what better way to judge their idea than to look back on their track record? And all we have to do is to see that in a period of 4% years they were able to bring us from productivity growth in a positive sense from 3.3 percent down to 3 consecutive years of negative productivity growth. Frankly, I think only economists can figure out what negative productivity growth means. To most of us, that is a contradiction, because we know it means it is going down rather than up.

Now, we had three years of that. I would like to see someone who is now criticizing this administration-in fact, I think we ought to challenge the leadership of the other side-to come to the floor and show us how that track record is one that they can be proud of and, No. 2, how they were going to arrest that trend.

I have sat here day after day or in my office listening to the 1 minutes and the special orders and the special time taken toward criticism of the administration, and I have yet to hear one new idea different from what they did in the previous administration.

That being the case, it seems to me that they have got to accept those figures and, somehow, show us why 3 years of back-to-back negative productivity growth are preferable to what we are having now. And now, even as we are in a period of time that the President has referred to as a recession-a simple economic definition is two consecutive quarters of negative GNP growth-even taking that into account, the Joint Economic Committee, which is not a Republican organization or a White House organization but a bipartisan operation of the House and Senate, has said in their most recent figures, "We will have productivity growth in a positive sense for this year."

Now when you have those figures, it seems to me you have to show, if you are going to criticize what we are doing now, how you do a better job. I have waited in vain to hear that. And I think the opposition has the obligation to try and present that to us, because one of the things that we owe the American people is that we are not here merely to mirror the public opinion for 1 second or 1 minute. Hopefully, we are here to extend some leadership and . indicate to the American people that, since they have sent us here full time, and since we have staffs, and since we are presumably intelligent, we will take the time to look back into the figures and find out what the historical pattern has been

so that we can make reasoned judgments about the future.

One of the things that probably all of this points up to is the real loss that the Washington community sustained when it lost the Washington Star. We at least during that period of time had an opportunity for some competition from one of the major media outlets in the United States, and particularly centered here in the U.S. Capital, to talk about some very different ideas and thoughts and particularly to at least give some notion of understanding to what this administration is attempting to do. I think that as we talk over the next few weeks and months to end this year, we ought to require that the debate be centered on the facts and the historical context of the economy and say:

Certainly, we are not satisfied with an inflation rate of 9112 percent, but we sure think it is preferable to 13112 percent. We are not satisfied with the prime interest rate of 17 percent, but it is sure better than 20 percent. We are not satisfied with a productivity growth figure of a little over 1 percent, but it is better than three years of negative growth.

Let us just try and focus the debate on what we are going to do to bring this country forward. One of the things that strikes me is that we do not really have an economic problem at the present time; we have a political problem. And a political problem is brought on by the fact that we have congressional elections next year, which require us sometimes to be so concerned about how the economy may appear precisely at one particular date, such that we jockey into position to take the best political advantage as we go into our reelection bids. And we all suffer from that problem.

I was speaking with a group of businessmen today, and they told me that there was a nationwide poll of businessmen taken which suggests that the greatest fear in the business community of America is that we will be inconsistent in our governmental policies as they affect the economy. That is their biggest fear, because they have seen on-again off-again stimulation by Government entry into the bond market, by the Government attempting to throw out more dollars into the system, by any number of things. And I think we ought to caution those who are getting a little concerned, who remind me, I think as I have said here once before, of rookies coming up into the big leagues and trying to bat against Nolan Ryan for the first time-you wonder if that high, hard fast ball is going to hit the catcher's mit before it might grace your sleeve, there is a tendency to get; as is sometimes referred to, jelly-legged in the batter's box-whether we ought to take pause and think about the fact that barely 40 days into the new economic policy, does it make much sense

November 10, 1981 CONGRESSIONAL RECORD-HOUSE 27073 to say to the economic community, "We are talking about retrenching, we are talking about doing a U-turn, we are talking about canceling the tax cut proposal, we are talking about postponing the tax cut bill, we are talking about reversing what we did in August?"

I mean if you really sit down and think about it, does that make much sense? Is that the kind of clue we want to give to the American people, whether they are business people or whether they are laborers? And it seems to me passing strange, at least, to suggest that, while we can afford the business tax cuts, we cannot afford them for the working men and women of America. That would be the biggest travesty in this whole thing. Above and beyond the politics of it, if for some reason because we did not take the time to look at a historical perspective and establish where we are, where we have been and where we want to go, that we would throw away the hopes and dreams of the working men and women of America and say, "No, you cannot afford to have a tax cut this year, you cannot afford to have one for the next 6 months, we will give one to business, and we will have business as usual here in Washington, D.C."

Lastly, I would just suggest to the gentleman that the biggest problem I have heard expressed on the floor recently by some new converts, evidently, to the idea of a balanced budget being a good thing is the fact that the receipts of the Federal Government are dropping, in terms of taxes.

One of the major reasons they are dropping is that the inflation rate is dropping faster than we predicted.

Is that not a terrible thing? Inflation is going down faster than we wanted it to and, therefore, people are not being thrown into higher tax brackets and giving more of their money to the Federal Government. It seems to me that that is a positive thing. And our response to that ought to be: How can we continue that, how can we increase that, how can we accelerate that mood and that direction, rather than how do we stop it and how does it stampede us into unreasonable, illogical, although politically attractive, retreat.

I thank the gentleman for the time he has taken and I thank him for bringing these figures to the attention of our colleagues.

Mr. HILER. I thank the gentleman from California for this tremendous contribution, not only to this session here today, but for his unflinching work to bring these facts to the attention of the Congress so that we are all operating from the same base and we have a historical perspective of where we have been. I compliment the gentleman and I thank him for his tremendous contribution.

Mr. McEWEN. Mr. Speaker, will the gentleman yield?

Mr. HILER. I yield to the gentleman from Ohio.

Mr. McEWEN. I am anxious for the gentleman from Indiana to continue with his presentation, which I think is long overdue not only for the Congress but for the American people. The gentleman from California raised a very telling point, as to the media here in the Capital City, specifically, the Washington Post. Yesterday, an article discussing whether or not the Reaganomics bubble had burst. Now, for those of us who have even a minuscule understanding as to the 40 days that the Reagan economic program has been in place and can look at the figures that the gentleman from Indiana is presenting to the American people, an interest rate that 4 years ago was 7% percent, that underwent a more than 300-percent increase during the previous administration, and already is dropping significantly, from 2% percent in January down to 17 percent yesterday. A program that took an inflation rate, as the gentleman has mentioned, in 1976 of 4.8 percent, quadrupled it by the time the Carter administration left office some months ago, and already we see it dropping down to less than double digits. Then to discuss, to even place on the front page of the newspaper the discussion as to whether or not that bubble had burst, after that kind of progress in these few months to come that far.

I congratulate the gentleman from Indiana. I wish him to continue here and to share what needs to be said and what has needed to be said for some weeks now as to the progress that is now being made with the leadership that has come to Washington in the last few months.

Mr. HILER. I thank the gentleman from Ohio for his contribution. There is no question, as the gentleman from California mentioned, interest rates are still too high, inflation rates are still too high, productivity growth is not enough, real gross national product growth is not enough. But the question is: Where have we come from? Where are we going?

I think that if we look at the indicators, as the gentleman from California has said, if we look at the indicators as to what has happened in the last 11 months, the Republicans and the President are delivering on their campaign pledge to bring down interest rates, to bring down inflation, to increase real gross national product and to increase productivity. I think that we have to be careful not to get lost in the mire. We have to realize where we have been, the very tragic 4 years that we have just been through economically. We are not going to turn this around overnight, but we have made a distinct effort to move it into a positive direction for the first time in many, many years.

I noted last evening, when I had an opportunity to watch TV a little bit and Alan Greenspan was on, they were asking him whether the investment community in New York was discouraged with the President's policies, and he said, "Why, heavens, no." He said, in fact, the investment community in New York is very, very happy with what the President has been doing. Their concern is with what the Congress is doing. As the gentleman from California has said, the lack of willingness on the part of Members of the Congress to go in and make further efforts necessary in cutting budgets has the investment community discouraged, and it certainly is not the President's program. I hope that we in the Congress take heed to that, we look to where we have come, and we take our leadership and continue to push for the President's program for economic recovery.

0 1245

WHAT SHOULD DEMOCRATS DO? The SPEAKER pro tempore. Under

a previous order of the House, the gentleman from Wisconsin, <Mr. REuss> is recognized for 10 minutes. • Mr. REUSS. Mr. Speaker, yesterday I spoke to the Woman's National Democratic Club here in Washington, on the subject "What Should Democrats Do?" The text of my remarks follows:

The House of Reaganomics is tumbling down.

Last spring there were glowing predictions of low interest rates, rapid economic growth, and the new prosperity that would usher in a new Republican era. All has disappeared in the autumn chill of high interest rates and recession.

Last spring, we Democrats were figures of fun to our foes and of pathos to our friends-a party in disarray, void of ideas, helpless against the Reagan juggernaut.

Today, the public and the press are turning back in our direction. They are asking, what are we going to do, what alternatives do we offer, how are we going to save the Nation from this Administration?

We Democrats must rise to this responsibility. But we must do so within the context and the constraints of our new role-the role which was dictated to us by our defeat in the election of 1980 for the Presidency and for the control of the Senate.

We are not the party of government. We are the party of opposition. It is not within our power or our responsibility to make over every pronouncement, every decision, every appointment, or every detail of legislative draftsmanship executed by the Reagan Administration. When we try, as we did in attempting to replace Reagan's tax cut monstrosity with one of our own last summer, we merely make ourselves look foolish, and get handed an embarrassing defeat into the bargain.

Our role in this new era, like it or not, is twofold.

We must, as the party of opposition, learn how to oppose the Administration in its various works. This means we should craft good

27074 CONGRESSIONAL RECORD-HOUSE November 10, 1981 alternatives to the legislation which the Administration puts forward, and advance that legislation which the Administration puts forward, and advance that legislation in the knowledge that we do not have the votes to prevail. As an example, take the UdallObey-Reuss tax cut substitute which would have produced a balanced budget and lower interest rates in Fiscal Year 1982. This was a clean and dramatic alternative to Reaganomics. It was an alternative that commanded the support of a majority of Representatives from the Democratic Party. But in putting it forward, we were under no illusions that we would prevail.

Second, we must prepare the ground for our return, in 1984, to power as the Party of Government. This means we cannot sit back and wait complacently while the Republicans and the Republic collapse. We must be meeting, thinking, writing, and speaking out. But we must recognize that we can only accept the responsibility of governing when we have the power of government; and we won't have that, at the earliest, before January, 1985.

What of the damage and the dangers between now and then? They are very real. Because I am an optimist by nature, I observe that in past years even Republican Administrations have shown the flexibility, the wit, and the nerve to shift course before hitting the rocks.

After all, who was the leader who, confronted by a recession, loosened monetary policy and fiscal policy, and combined it with an inflation-fighting incomes policy? Who started the SALT talks to stop the arms race? Who courageously went to Peking and Moscow, and so changed the political alignments of the world?

Let me make one thing perfectly clear. I am not suggesting a Bring Back Nixon movement. I am suggesting that a change of course would be good for both the Republic and the Republicans.

But the chances of a change of course before 1984 are, to say the least, minimal.

So what of the long run? Where should the Democrats be going? What kind of Party should we be? I believe our historic mission, set in sharp relief against the performance of this Administration, is clear. And our historic opportunity is great.

In domestic policy, this Administration represents inequality and stagnation, together with environmental desolation and the exploitation of the worker and consumer. We Democrats should once again take up the banner of equality and growth, and of environmental, worker, and consumer protection.

In foreign policy, this Administration embodies the illusion that all problems can be resolved through armed might. An ugly realpolitik turns us away from our commitment to human rights and democratic development around the world. We Democrats should make ourselves the party of arms control, of negotiation, of human rights, and of worldwide democracy.

Of all the jewels in this Democratic crown, I believe that our traditional commitment to the ideal of equality still shines the brightest. I believe that a renewal of our commitment to a more equal distribution of income, wealth, and opportunity represents our best hope for establishing ourselves as the party of the far-sighted alternative to Mr. Reagan's policies-and, in direct consequence, the party of government in 1985.

Look at how the income, wealth, and power of our country has been divvied up from 1929 to today. From 1929 to 1967, the

national income greatly increased. And the middle class-workers and moderate-income professionals, the second, third, and fourth one-fifth of a nation-increased their share of the national income pie by an astounding 11 percent, taking the increased share from the top 20 percent of the nation's income receivers. A stimulative ec0nomy, low interest rates, and progressive taxation all helped to bring about this happy combination of overall growth and an increased share for the middle class. This was not Robin Hood taking from the rich to give to the poor; rather, it was increasing the total share for all, and shifting some of it from the top to the middle class. This was a glimpse of equality, and it worked.

But, in 1967, came the big war in Vietnam. And from that day through the Carter era, we have seen the national pie grow more slowly. We have also seen the middle class lose a large part of its gains back to the 20 percent at the top. Beset by inflation and stagnation, the middle class saw its earnings lag behind consumer prices, while dividend income, interest income, and executive income leaped ahead. Middle-class people enjoyed neither the transfer payments of the poor nor the tax loopholes of the rich. Increasingly, the middle class, seeing its income share declining in favor of those at the top, grew bitter with government. It voted for Ronald Reagan in droves.

And now, a year after Mr. Reagan's election, the position of the middle class is deteriorating at an even faster rate. Not only is the pie not growing-ever since last April, our Gross National Product in real terms has actually been declining! And the share of the middle class in the smaller pie has also been declining!

This decline in equality flows inevitably from the nature of Reaganomics. Listen to the words of George Gilder, leading theoretician of Reaganomics: "A successful economy depends on the proliferation of the rich. Forget the idea of overcoming inequality by redistribution."

Reagan's spending cuts not only rip the safety net of the poor, but deprive the middle class of the clean air and water, the economic development, and the cultural programs which were of particular interest to them.

Reagan's reductions in the individual and corporate income tax, and in gift and estate taxes, are of little avail to the inflation-bedeviled middle-class worker, though they promise huge bonanzas for those at the top of the economic ladder.

Reagan's super-tight money, coupled with Reagan super-large Treasury deficits, mean a never-ending regime of cruelly high interest rates that particularly hurt middle-class people-the small businessman, the farmer, the homeowner, the automobile buyer, and the borrower for education and health.

The Reagan program, even in the short run, obviously is not working. Of its four pillars, tight money and relaxed regulation have been in place since last January; the Reagan budget was approved in May, and the Reagan tax reduction in early August. President Reagan repeatedly promised that the mere enactment of his tax program would produce a great surge of prosperity. Instead, we have seen half a million Americans lose their jobs in the last two months; the big capital boom has become a capital bust; the stock and bond markets are in deep distress; we have a Reagan-made highinterest-rate recession, and now the deficits will be greater than ever.

And what lies ahead for this Administration is likely to be more of the same-floundering.

The supply-sider's quick-fix solutions are discredited. They are now talking about raising taxes-only they don't use that word; instead they call it revenue enhancement. They are urging this country to go on a gold standard-which would be of assistance mainly to the Soviet Union and South Africa, the world's leading gold producers. Failure, apparently, has gone to their heads.

We will get out of the current recession, sooner or later. But ending the recession is not enough. Reaganism, long-term, means pushing the country away from equality and toward inequality. And that shift in American history is both Mr. Reagan's Nemesis and the Democrats' historic opportunity.

What does ending the goal of greater equality mean to the millions of blacks in· this country who struggle toward first-class citizenship. What does it mean to millions of young people, many of them highly educated, unable to find a decent job?

What does it mean for the outlook on life of middle-Americans whose instincts are generous, and who have in the past supported programs to help the poor at home and abroad because they know that they weren't being lost in the shuffle?

Without the goal of equality, liberty and fraternity themselves are diminished. How can you be truly free, or truly fraternal, in a society where meanness is enshrined and class divisions sharpened?

That is why the emerging Democratic alternative must have as its centerpiece a return to Thomas Jefferson's and Franklin Roosevelt's ideal of equality.

A shift away from Mr. Reagan's inequality must include-

At home, we need a policy of growth-plusequity-a larger pie, with the pieces more fairly distributed. Our overall product must be enlarged both in quantity and in quality.

Included in our industrial policy must be a new emphasis on fostering public/private cooperation in the development of new industries. We should not try to pick "winners", nor "losers", but pick catalysts-industries whose development, like the railroads of old, the steel of the early 20th century, the semiconductors of today, underlies economic growth and development generally. Some examples for tomorrow's economy: high-speed passenger rail; clean, safe and efficient coal; and rebuilding infrastructure of our cities and towns. These can be rebuilt, if government sets the climate, and the private sector goes to work to do it.

To fight inflation and thus make growth possible, and to promote equality, we need an anti-inflationary social contract between government and labor. Such a contract would trade restraint on the part of labor for fair and equal treatment by government over the whole range of economic and social issues.

Abroad, our policy must shift to one based on peace and human rights. This Administration is pursuing a reckless international policy that is rapidly destroying 30 years of consensus between the United States and our allies.

Our evident lack of interest in arms control is fostering a wave of neutralism in Europe. This poses a huge danger to the international structure of peace. The answer is arms control negotiation, here and now. This is not a matter of altruism. It is vital to sustaining the global leadership position of the United States.

N_ovember 10, 1981 CONGRESSIONAL RECORD-HOUSE 27075 In the Persian Gulf, the Administration is

launching into a military build-up of gigantic dimensions, and incalculable risks. All this is being done without the consent of Congress, as the Constitution requires.

In Latin America and Africa, the Administration is aligned with the forces of darkness against the forces of history. This path leads to embitterment and alienation from the eventual rulers of these unhappy lands. We must change course, and restore our commitment to human rights and democracy.

That is the old-time religion to which we must return, at home and abroad-progress, equality, human rights, and peace. It was good for Thomas Jefferson, it was good for Franklin Roosevelt, and it's good for you andme.e

VETERANS DAY 1981 The SPEAKER pro tempore. Under

a previous order of the House, the gentleman from Mississippi <Mr. MoNTGOMERY) is recognized for 10 minutes. e Mr. MONTGOMERY. Mr. Speaker, as the Nation observes Veterans Day tomorrow, I ask my colleagues to join me in casting our minds back to another day more than 60 years ago. On that day, on the 11th hour of the 11th day of the 11th month of that year, the silence of the guns signaled to the world that the first truly world war had ended. People everywhere-victorious and vanquished alike-prayed that the conflict now ended would have been the war to end all wars.

It was not to be. This Nation alone has been involved in three major wars since Armistice Day 1918-World War II, Korea, and Vietnam. We have continued to honor the veterans of that First World War, and we have added to the roles of those who served their country veterans of later wars. Tomorrow we will offer thanks to more than 30 million living veterans, as well as to the memories of those who are no longer with us.

Recent memory tells us that not all American wars were "popular." Korea enjoyed only grudging support, and we all know what happened with Vietnam. But in each of these involvements abroad, Americans served honorably and well, attempting to carry out their country's intent to preserve freedom and to deter aggression throughout the world.

It is altogether fitting that we honor all American veterans, living and dead, on November 11. It is because of their service that we enjoy the freedoms which we now have in these perilous times. It is further fitting that we continue to honor the dictum of Abraham Lincoln, "To care for him who shall have borne the battle and for his widow, and his orphan." The Congress continues to assure veterans, as well as the widows and orphans of those who gave their lives in battle or died of a disability resulting from their service, that the benefits mandated by a grateful nation will continue to be available

to them. I give my personal pledge to not only honor these veterans, but to devote my best efforts toward insuring that the most tangible form of appreciation continue for them and their beneficiaries.

I ask my colleagues to join me in that pledge.e

CRIMINAL JUSTICE SUBCOMMITTEE TO HOLD HEARING ON RACIALLY MOTIVATED VIOLENCE AGAINST MINORITIES The SPEAKER pro tempore. Under

a previous order of the House, the gentleman from Michigan <Mr. CoNYERS) is recognized for 5 minutes. e Mr. CONYERS. Mr. Speaker, I wish to announce that the Subcommittee on Criminal Justice will hold its third in a series of hearings concerning racially motivated violence against minorities on Thursday, November 12, 1981.

The hearing will be held in room 2141, Rayburn House Office Building, and will commence at 9:30 a.m.

Testimony will be received from the following witnesses: Harry Hughes, Governor, State of Maryland; William Bradford Reynolds, Assistant Attorney General, Civil Rights Division, U.S. Department of Justice; Robert E. Sanders, Assistant Director, Criminal Enforcement, U.S. Department of Treasury; William Van Alstyne, professor, School of Law, Duke University; Charles Gilchrist, county executive, Montgomery County, Md.; and Patrick Murphy, president, Police Foundation.•

FINANCIAL INSTITUTIONS IN A REVOLUTIONARY ERA

The SPEAKER pro tempore. Under a previous order of the House, the gentleman from Rhode Island <Mr. ST GERMAIN) is recognized for 10 minutes. e Mr. ST GERMAIN. Mr. Speaker, over the weekend the Committee on Banking, Finance and Urban Affairs released a document which will be used by the committee to examine in a comprehensive manner the multitude of issues and proposals involving the financial services industry. The document represents the beginning of the second tier of a two-tiered approach to consideration of the major issues involving the financial services industry.

The first tier is embodied in H.R. 4603, the Deposit Insurance Flexibility Act, which passed the House on October 28, 1981. The second tier will include a look at issues revolving around expanded lending powers, improved delivery of credit and other financial services to consumers and the economy, interstate banking, the GlassSteagall Act, usury and other statutes affecting consumer lending, and questions concerning the competitive balances throughout the financial community.

Ranking Republican member J. WILLIAM STANTON and I directed the staff of the committee to develop a document for use as a guide by witnesses, by the committee and by the Congress in discussing the subject of financial institution restructuring. To assure maximum exposure of the questions the committee intends to explore, I include the text of the document in the RECORD at this point:

FINANCIAL INSTITUTIONS IN A REVOLUTIONARY ERA

A little over a year and one-half ago, the ·Depository Institutions Deregulation and Monetary Control Act of 1980 was signed into law in order to deregulate the deposit taking function of financial institutions. Now it appears the pace of change in the financial marketplace is so rapid that a substantial portion of the remaining statutes governing the operation of financial institutions-depository and non-depositoryneeds to be reviewed. Those laws, many of which were passed in the wake of the Great Depression, established a system of specialized financial institutions differentiated by product lines and markets. The result was a system where commercial banks emphasized demand deposits and commercial and agricultural loans; savings and loan associations and mutual savings banks emphasized savings deposits and home mortgage loans; credit unions provided financial services for a field of membership based primarily on employment; investment companies pooled capital and invested in securities; brokers and dealers packaged equity and debt offerings for sale to investors; finance companies borrowed funds to make commercial and consumer loans; and insurance companies used premiums for all kinds of investments closely related to actuarial needs.

An elaborate framework of Federal and state restraints and protections was created to maintain this system of specialized financial institutions. Market entry was restricted, product lines were limited and the prices of services were controlled. For example, depository institutions were provided deposit insurance, controls on prices paid for funds, and restrictions on competition. Securities dealers and investment firms were provided with distinct product lines and other activities which other financial institutions could not offer, and they were prohibited from accepting "deposits."

Today, however, the marketplace is eroding the justification for this system of specialized financial institutions and its regulatory framework. The following examples reveal the depth and magnitude of the challenges to this system. We cite them not because we consider them improper, but because they reflect the changes which are occurring in the marketplace:

1. Sears, Roebuck and Co., a retailer of merchandise through department stores and its famous catalogs, provides multi-line insurance through its Allstate insurance subsidiary, operates a major savings" and loan in California, has one of the largest credit card operations in the nation, plans to offer its own money market mutual fund, and is purchasing one of the nation's largest real estate brokerages and one of the nation's largest securities brokerage houses.

2. National Steel Corporation now has a savings and loan subsidiary which reaches both coasts. Its California savings and loan acquired savings and loans in New York and Florida in a recently publicized case.

27076 CONGRESSIONAL RECORD-HOUSE November 10, 1981 3. American Express, which operates a

travel and entertainment card system, a multi-line insurance company, and a major international bank, is now linked with one of the largest securities brokerage houses through its merger with Shearson Loeb Rhoades, Inc. That firm recently acquired a trust company in Boston as well.

4. Prudential Insurance Corporation has acquired Bache Group, Inc., another major brokerage house.

5. Bane One in Ohio agreed with Merrill Lynch to assist in the operation of the latter's cash management account. Other depository institutions are considering similar arrangements.

6. Bank holding companies in the West and the East have changed operational modes to position themselves for possible nationwide banking. Western Bancorporation in California <which has subsidiaries in eleven Western states) changed its name and that of its subsidiaries to "First Interstate Banks." Financial General <which has subsidiaries throughout the Washington, D.C. metropolitan area) changed the name of its banking subsidiaries so that each has a common name-"First American Banks."

7. Several of the nation's largest banking firms have been purchasing shares of banks in various states-up to the five percent permissible limit-in anticipation of relaxation of restrictions on interstate banking.

8. At least two firms have used a "loophole" in the Bank Holding Company Act to escape the restrictions on non-banking firms owning banks. These companies-major finance companies-have acquired banks and divested them of their commercial loan portfolios. The banks have become consumer banks, dealing in consumer deposits and loans.

9. Savings and loan associations in Washington, D.C., and Florida have announced plans to establish a money market mutual fund.

10. Major banking firms have operated loan production offices for years all over the United States.

11. Federal savings and loans have received regulatory authority to establish electronic fund transfer systems nationwide.

12. Money market mutual funds have continued to expand by offering customers the ability to earn high rates of return on their money with flexibile withdrawal capability. These funds move money by wire and mail, do not rely on deposit insurance as an attraction for customers, and are not subject to geographic restrictions on their operations.

13. The international operations of U.S. banks continue to expand in response to the increasing interdependence of the international economy; and foreign banks continue to expand into the U.S., in some cases on more favorable terms than domestically owned banks.

In large measure it is the changing financial needs of individuals and corporations which have led to the increased homogenization of financial institutions. Banks, savings and loans, mutual savings banks, credit unions, mortgage bankers, investment companies, and insurance companies are all offering, in many cases, similar and competing services to customers. The ability of all these institutions to speak to the needs of their customers, however, is limited by the differing regulatory frameworks under which they operate. Thus, the time has come to examine in more detail the supervisory and regulatory structure governing financial institutions.

The nation needs a rational statutory and regulatory structure for its financial institutions so that the financial services the people and the firms of this country need are provided fairly and efficiently in the evolving financial marketplace. Market forces are shaping the services that are offered now and statutory restrictions keep many depository institutions from providing the services the market demands. Congress must examine the role of government as it affects all customers of financial institutions. The nation's economy and the public interest require a system of financial intermediaries which assures all segments of the population needed services while moving capital efficiently.

To provide guidance in examining the financial structure of the United States, there follows an outline of broad questions and more specific issue areas. The Committee intends to focus discussions first on the needs of the economy for financial services and then on the nature of the delivery system required to fulfill those needs. Thus, rather than first looking at the lending powers of commercial banks, the focus should be on the demand for commercial credit. For example, the rapid development of the commercial paper market in which companies raise short-term funds in the open market rather than rely on bank loans has implications for the type of delivery system needed for this financial service. This one illustration is offered merely to indicate the breadth of the analysis which must be undertaken.

While it is imperative to answer the overall policy questions first, at the same time we must direct the Congress attention to

. specific proposals, many of which currently exist in legislation now pending before the Committee on Banking, Finance and Urban Affairs. Therefore, in several of the sections that follow, specific proposals are listed which the Committee should discuss in the process of addressing the overall public policy issues.

The Committee on Banking, Finance and Urban Affairs will hold hearings on these issues and proposals in order to elicit views from all affected individuals and groups. The issues and proposals are intended to illustrate the wide variety of issues that need examination and are by no means all-inclusive.

I. DEFINITION OF FINANCIAL SERVICES

The innovations of the last decade· suggest that the traditional perception of financial services is not appropriate. Old distinctions among types of financial services are being blurred. Thus, several basic issues need exploration.

A. What financial services do consumers, businesses and institutions require?

B. Is a deposit different from a security, and, if so, in what ways?

C. Is a loan to a commercial firm different from an equity security offered by that commercial firm?

II. THE ROLE OF SPECIALIZED FINANCIAL INSTITUTIONS

The changes which have occurred in the financial marketplace suggest that money flows rather freely, especially in an inflationary environment. Structures and protections designed to assure flows of funds to specialized institutions or to specific areas of the economy no lon~er operate as designed. Geographic and product restrictions do not stop funds from flowing to higher rates of return or to alternative uses. Distinctions among institutions, with each type

offering some unique services, have become blurred by recent events and statutory changes. The rationale for these distinctions and the need for their perpetuation, at least in institutional form, require examination.

A. Should there be distinct types of financial institutions which provide services to a defined portion of the economy? If so, should these types be determined by statute or by the market?

B. Should new types of institutions with specified powers and protections be created to fill particular needs?

C. Should existing institutions be given parallel powers to allow free competition among these institutions?

D. Should Federal savings and loan associations and Federal mutual savings banks be authorized to switch freely from mutual to stock charters and from savings and loan to mutual savings bank form?

E. Should mutual savings banks, savings and loans, and credit unions be authorized to accept demand deposits from any source?

F. Should Federal mutual savings banks and Federal savings and loans be authorized to invest in or make loans for a broad range of purposes-real estate, agriculture, commerce-without restriction?

G. Should mutual savings banks, savings and loans, and commercial banks be authorized to take· equity positions in real estate?

H. Should commercial banks have expanded authority to engage in real estate lending?

I. Should commercial bank and thrift institution service corporation investment limitations be liberalized?

J. Should commercial bank lending and borrowing limitations applicable to loans to one borrower and to affiliates, and applicable to bankers' acceptances, be liberalized?

K. Should Federal credit unions be allowed to make all types of consumer loans without restriction as to loan size or purpose of the loan?

L. Should Federal credit unions be provided authority to engage in expanded real estate lending activities?

M. Should the International Banking Act be modified in light of changing market conditions?

N. Should the procedures and limitations on the insider loans by banks be liberalized in light of inflationary effects on loan limits and should these limitations be extended to other depository institutions to reflect homogenization of investment and deposit taking authority?

0. Should the Bank Holding Company Act and the Savings and Loan Holding Company Act be modified to provide parallel treatment of bank and savings and loan holding companies and should the procedures of both be streamlined?

III. THE DISTINCTION BETWEEN DEPOSITORY AND NONDEPOSITORY INSTITUTIONS

A substantial portion of banking statutes was designed to segregate banking and commerce. This segregation was designed to prevent concentrations of economic power, to minimize conflicts of interest involving relationships between the two areas, and to assure a safe and sound banking system, but it has been severely ruptured. Exceptions allowed in earlier years and based on a rationale that was meaningful then have become major factors affecting potential competition in a restructured financial marketplace. For example, savings and loan holding companies exist which combine manufacturing and depository institutions-combinations

November 10, 1981 CONGRESSIONAL RECORD-HOUSE 27077 precluded under laws governing bank holding companies. Nonbank firms now solicit funds and provide services in direct competition with depository institutions. The existing distinctions need to be reexamined.

A. Should existing restrictions on crossownership of institutions or on provision of services be eliminated?

B. Can the antitrust laws provide adequate protection against concentration of power involving financial institutions and nonbank firms?

C. Is separation required to provide an ample flow of capital to firms and governments requiring funds for their endeavors? If not, then should all types of firms be subject to the same supervisory and regulatory requirements?

D. Should a Presidential Commission be convened to review and make recommendations regarding modification or elimination of the restrictions on corporate investments and underwriting by depository institutions and on financial/non-financial institution mergers and acquisitions?

E. Should all depository institutions be permitted to establish subsidiaries which would be free to engage in securities operations, provided such subsidiaries are subject to the same restrictions as the securities industry?

F. Should brokerage houses be permitted to establish subsidiaries which would be free to engage in deposit and lending operations, provided such subsidiaries are subject to the same restrictions as depository institutions?

G. Should all depository institutions have the authority to sponsor, sell, or underwrite mutual funds?

H. Should all depository institutions have the authority to underwrite municipal revenue bonds or all forms of bonds?

I. Should all depository institutions have the authority to take equity positions in export trading companies?

K. Should the Depository Institution Management Interlocks Act and the GlassSteagall Act interlock restrictions be modified in light of the changes being made in the nature and operation of depository institutions and their holding companies and of nondepository institutions?

L. Should all restrictions on interstate depository operations be terminated and, if so, should this be permitted (1) by holding companies, for example, by allowing a phased acquisition of depository institutions by outof-state depository holding companies unless a state acted to prohibit such acquisitions of its institutions, in which case holding companies which conducted their business principally in that state would be barred from acquiring institutions in other states; (2) by holding company acquisitions in contiguous states; or (3) in market areas like Standard Metropolitan Statistical Areas?

M. Should electronic fund transfer systems be authorized for nationwide operation?

IV. THE ROLE OF GOVERNMENT IN THE FINANCIAL MARKETPLACE

Government now is intimately involved in the financial marketplace. Laws on both the Federal and state levels of government provide restrictions, protections, supervision and guidance for institutions providing financial services and for those receiving or buying financial services. This involvement must be reconsidered.

A. To what extent should the government continue to provide mechanisms, whether directly or indirectly, to assure that services are provided for such specific sectors of the

79-059 0-85-37 (Pt. 20)

economy as housing, small business, and agriculture?

B. Should the government remove all of its supports for and impediments to the provision of financial services and allow market forces to determine the shape of the financial system?

C. Should government continue to provide liquidity for financial institutions by maintaining operations which create secondary markets for products of financial institutions and by providing sources of funds to meet liquidity needs or to continue levels of business?

D. Should the Federal secondary market institutions have liberalized Federal charters or should they be allowed to secure charters as nonbanking firms do now to allow market forces to determine which secondary market services are provided?

E. Should all Federal depository institutions' chartering authority be eliminated to allow such institutions to choose charters as nonbanking firms do now?

F. Should controls on the price paid for funds, whether as loans, deposits, or securities, be eliminated and, if so, should protections be provided to assure that all people and institutions have fair access to funds? If not, should existing restrictions be modified to assure that all financial instruments are subject to similar price controls?

G. Should Federal law provide a preemption of state usury ceilings-on consumer loans and in modified form on business and agricultural loans-with states having a time period within which to reimpose state ceilings, or should a national usury law be enacted?

H. Should the Credit Control Act be modified and extended?

I. Should disclosures and protections on alternative mortgage instruments be provided, and should the option of a fixed rate mortgage be required?

J. Should the Home Mortgage Disclosure Act, the Community Reinvestment Act, the Truth-in-Lending Act, and the Equal Credit Opportunity Act be reviewed to determine how best to provide disclosure of community, mortgage, and loan activities of changed financial institutions?

K. Should the government establish direct lending operations to provide credit and other financial services for the provision of housing or other national needs?

V. A REGULATORY STRUCTURE FOR A FUTURE FINANCIAL SYSTEM

-There is in many ways a bewildering assortment of regulatory agencies with jurisdiction over institutions providing financial services. The Federal Reserve System, the Federal Deposit Insurance Corporation, the Federal Home Loan Bank System, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the National Credit Union Administration, the Comptroller of the Currency, the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Federal Trade Commission, the Depository Institutions Deregulation Committee, and the Federal Financial Institutions Examination Council all regulate and supervise financial institutions and products. In many cases the philosophies of the agencies differ significantly. For example, depository institution regulation is characterized by close supervision through examination and through statutory limitations. This system relies on governmental officials for enforcement of statutes and for maintenance of stability in the industry. Securities regulation is characterized, on the other hand, by

disclosure to the public and by supervision that relies less on government. These distinctions and the need for these agencies require examination.

A. Should the supervisory and regulatory structure of financial institutions be reconstituted? If so, should a single agency be created?

B. Should the regulatory structure be based on disclosure to the public as is the case with the securities industry or should the current system that relies on government be maintained?

C. Should the deposit insurance system be broadened to include all forms of financial instruments?

D. Should govenment continue to provide deposit insurance at levels which may tend to insulate depository institutions from market judgments about the riskiness of a depository institution's operations?

E. Does the private market have the capability to develop an insurance product which would provide deposit insurance and, if so, is it sufficient to allow restructuring of the Federal deposit insurance program?

F. Should the depository institution regulatory agencies be restructured to create one agency responsible for insurance, one for supervision and promotion, and one for control of the money supply?

G. Should the deposit insurance funds be consolidated into one fund with the remaining functions and structures intact?

H. Should deposit insurance assessments be based on risk as in other forms of insurance?

I. Should the Central Liquidity Facility for credit unions be modified to provide more flexibility for its operations?

J. Should the charter of the Depository Institutions Deregulation Committee and the regulations promulgated to phase-out deposit ceilings be modified?

It can be seen from the above that many, if not all, of these issues are related to each other. Answers provided in one area lead to questions and answers in other areas. An examination of these complex issues, however, can assist in the development of a financial system which can meet the nation's future needs.e

THE NORTH ATLANTIC TREATY The SPEAKER pro tempore. Under

a previous order of the House, the gentleman from Missouri <Mr. SKELTON) is recognized for 15 minutes.

Mr. SKELTON. Mr. Speaker, "To safeguard the freedom, common heritage and civilizations of their peoples." These words are from the preamble of the North Atlantic Treaty, and they are the charge to the 15 nations which have signed the treaty since 1949.

The North Atlantic Treaty acknowledges the threat of the paranoid Soviet states, and recognizes that the only hope of protection is in collective security. It was conceived in the early years following World War II when it became evident that the Soviets lusted after war ravaged Western Europe; and it was born following the Communist takeover of Czechoslovakia, an event which provoked nightmares of wars just survived, and threatened more horrors to come. Most significantly, the treaty was the product of

27078 CONGRESSIONAL RECORD-HOUSE November 10, 1981 mutual trust and common goals. It envisioned a revitalized European economy, and later, an effective European military deterrent.

The North Atlantic Treaty is now 32 years old. It has weathered many storms, and seen us through several crises. But today, the alliance faces a different kind of challenge. While individual freedom and dignity are even more threatened by Soviet aggressors and their puppets, the alliance, a guardian of freedom, is threatened by new enemies. These new enemies are insidious; less obvious, harder to define, and much more difficult to combat. Nonetheless, they are very real, and unless we take the time now to isolate them and eliminate them, they are sure to paralyze the alliance and leave it defenseless in the face of a growing Soviet threat.

Our new adversaries do not bear armor or wield mighty weapons, rather, they are cancers within the alliance which can be loosely defined as a loss of focus, a lack of commitment, and ignorance of the threat. In their most dangerous forms, they are exhibited as accommodation to the Soviets and anti-Americanism.

In many ways, these problems are a measure of the success of the alliance itself. In the presence of a successful deterrent, the European economy has blossomed and economic and cultural exchange between Western Europe and the Eastern bloc has increased. Indeed, the younger generations have no personal memories of why it was necessary to fight World War II, of the sacrifices and suffering which resulted from lack of adequate deterrence, or of the dedicated efforts in the early postwar years to build a better international order.

The antinuclear protesters in Great Britain, Holland, and Belgium, and the arsonists in West Germany, cannot associate the invasion of Afghanistan and Soviet intervention in Africa with their own security. They see the economic fruits of detente at home, and they are blinded to Soviet imperialism · which has grown beyond the European Continent to Nicaragua and Kampuchea. These pacifists ignore Russia's nuclear buildup in Europe and blame the United States for the arms race and the danger of war. They propagate the idea that the United States is controlled by dangerous militants hankering to drag Europe into a confrontation with Russia.

It is disturbing to recall that a rather similar pattern of events marked the period between the two World Wars-an era of pacifist and neutralist sentiment which helped pave the way for the triumphs of fascism in Europe and Asia. Historical analogies are never exact. N evertheless, if history can instruct us at all, we ignore its lessons at our peril.

Remorse and guilt for the wartime propaganda which had roused the passions of millions during the First War led to an ardent commitment to pacifism in the years following the Versailles Settlement. The Kellogg-Briand Peace Pact in 1928 was widely acclaimed as having ended the threat of war forever. Prominent clergy throughout the United States embraced pacifist views, often questioning whether even police forces were necessary. Two fundamental assumptions were at work in the minds and hearts of most people who took these stands: the belief that civilized nations would never again resort to war, having seen its horrors and follies; and the conviction that the United States could with a clear conscience ignore the aggression of the dictators.

The famous Oxford Union Peace Pledge, signed by students on both sides of the Atlantic, became a symbol of the between-the-wars generation. Part of the appeal which that had to youth generally derived from the popular sense of this illusion regarding the First World War, its purposes, and its results. "Never again" became the rallying cry of writers, teachers, clergy, students and others, motivated partly by isolationist feeling, partly by antimilitarism, and partly by highminded idealism, an idealism which supposed that good will of itself could secure the peace.

Thus, the noted author Aldous Huxley opposed Britain's arming herself, arguing that-

We shall create in the minds of others, suspicion, distrust, fear, and those feelings will <encourage) rearmament abroad with the inevitable result that there will be war. Whereas there is a good chance that a genuine disarmament <even though unilateral) would produce international confidence . . .

This sincerely felt and touching faith in the example of good will commended itself to those who turned · away from the evidence before their very eyes-the rise of Nazi Germany, rearmed and belicose; the expansion of Japanese arms into China; and the Italian assault on Ethiopia. The belief that disarmament would create confidence and good will rested upon assumptions about human nature and the world community quite divorced from reality. The consequences of that divorce were to be tragic as the democracies found themselves deceived, incapable of standing up to the aggressive advance of the Fascist powers who were only encouraged by every sign of appeasement.

The Oxford Union resolution in 1933, the year in which Hitler came to power, affirmed by 275 to 152 that "this House will in no circumstances fight for King and country." It was repassed at other universities and, appropriately altered in wording, at many American schools also. Winston Churchill, then, as later, a voice crying

in the wilderness, denounced the oath as "very-shameful", the product of "foolish boys • • • in this dark time." However, the Oxford Oath only expressed the feeling already prevalent. As early as 1927 the Cambridge Union had passed a somewhat similar resolution advocating "an uncompromising attitude of pacifism" by 213 to 138.

The spirit of the Peace Pledge flourished, and in 1935 the Oxford Union went on to debate the resolution that "the Government's acceptance of collective security does not justify its claim to rearm." It was carried by 112 to 106. We may marvel how it could be possible for any nation to support collective security while disarming itself.

The fundamental error made by men and women of good will between the wars was their failure to take seriously the implications of pacifism in the face of totalitarian dictatorships armed with all the means of suppression provided by modern science and determined upon a policy of ruthless expansion. Fear of war and its terrible costs clouded their judgment, and they were unable to comprehend the potentiality for evil in the Nazi and Stalinist regimes, their capacity and will to deceive their own and other peoples by the abuse of mass media.

As the dictatorships flourished, the peace movement and neutralism in the democracies served, in effect, as a green light to war. A. A. Milne, the beloved author of "Winnie the Pooh," spoke for many when he declared in 1934 that "Germany is as amenable to reason as Italy (or any other nation), and * • • as anxious • • • for the security of peace." It was a world view which seemed more appropriate to "Winnie the Pooh" than to the world as it was and is. The road to war, like that to Hell, was heavily paved with good intentions.

The unfolding events of the 1930's, especially in Germany, gradually wakened many. In 1928 Albert Einstein had embraced pacifism as "one of the most encouraging developments of our time." He soon became the best known and perhaps the most eminent figure in the peace movement. By the early 1930's he had come to see- as a refugee from Nazism-that "conditions, unfortunately, have changed." Only "vigilance" he declared, echoing Churchill, by armed and united democracies, could prevent war and halt the tide of Hitler's advance. For this stand he was denounced by the great French writer Romain Rolland for "weakness of spirit."

Is it unreasonable to see some analogy today with those who urge unilateral disarmament on the West and who are silent on Soviet incursions throughout the globe but eloquent in denunciations of American policies? Ignorance of the threat to liberty is as

November 10, 1981 CONGRESSIONAL RECORD-HOUSE 27079 great today among many as it was in 1933.

Worldwide threats to freedom, peace, and progress are growing. The stability of the fragile Third World nations which provide us with vital raw materials and oil is threatened by sudden social, political, and economic change. The Soviets are poised to take advantage of this luscious prey. Simultaneously, the Soviets own empire is suffering from increasingly severe internal problems and failing economies. In the past decade, the Soviet Union has emerged as a global military power. Their military machine far exceeds the requirements for defense; it undermines the balance of power on which we and our allies depend, and threatens world peace.

The defense of allied interests is no longer restricted to the European Continent. Western dependence on maritime trade and access to vital raw materials and oil depends on increased military efforts in the Persian Gulf, Africa, and the Pacific and Indian Oceans. Yet, while Western Europe's stake in global peace continues to grow, their commitment to global military responsibilities has been diminishing. European NATO defense expenditures as a percentage of GNP have declined over the past 10 years, allied support for U.S. sanctions against Soviet aggression has been lukewarm, and U.S. suggestions for more equitable burden sharing are met with outright hostility.

The world's new economic/political scenario demands new obligations from our allies. Western European economies are healed now, in fact, they offer a direct challenge to many of the bulwark industries of the American economy. European NATO nations also engage in extensive trade with the Eastern bloc. Their economies are becoming increasingly intertwined, with the Communist nations owing more than. $65 billion in Westem credit, and the Western economies counting on the Soviets for supplies of energy and raw materials. As one analyst sees it, Western Europe's idea of alliance amounts to economic collaboration with the Soviets and economic competition with the United States. Ironically, the Europeans were able to build their strong, competitive economies while sitting under the security umbrella provided by the United States. A major U.S. role in the defense of Europe was warranted when our allies were weak economically with fragile political structures, but the economic and political maturity of the allies now suggests that they should play an increasingly more responsible role in their own defense. But, trying to motivate them in this direction is like trying to convince the city council to purchase a new fire engine when there has not been a fire in town for over 30 years.

So, the burden of defending Western interests has fallen to the United States. By all quantitative measures, the United States spends more on defense than our allies. In 1980, we spent $527 per person on our military commitments while the Europeans contributed only $246. NATO defense expenditures consume 5.2 percent of the U.S. gross national product compared to 3.6 percent for Western Europe. The Europeans argue that the United States is overreacting, that military forces are not the single vital component in achieving security. They stress the need for economic strength, effective diplomacy, and arms control negotiations. While we recognize the importance of these policies, we realize that they are not in themselves a deterrent-they cannot be a substitute for military strength.

Here at home, our own economy is suffering. Yet, recognizing the looming Soviet threat, Congress has just asked the American public to accept reductions in domestic social programs in order to buy more tanks, airplanes, bombs, and missiles to defend our allies. If our people are willing to make the sacrifice, the effort is going to have to be matched in Europe. Should our allies fail to respond to American leadership on this issue, the NATO commitment could suffer a loss of credibility with the American public.

European accommodation to the Soviet and anti-Americanism are eroding the foundation of Western defense. They are dampening efforts to increase defense spending, holding up the positioning of vital theater nuclear weapons, and undermining our mutual commitment to safeguard freedom and peace. The problems of Western security are now global as well as regional, political, and economic as well as military. If the Europeans want to preach peace, they are going to have to contribute to peace with machinery, manpower, and national will. There is no reason why our European allies, particularly those which are now economically as well off as the United States, should not hold themselves to the same high standard of increased defense effort as the United States.

SPECIAL ORDERS GRANTED By unanimous consent, permission

to address the House, following the legislative program and any special orders heretofore entered, was granted to:

<The following Members <at the request of Mr. SoLOMON) to revise and extend their remarks and include extraneous material:)

Mr. HILER, for 60 minutes, today. <The following Members <at the re

quest of Mr. SHARP) to revise and extend their remarks and include extraneous material:)

Mr. REUss, for'10 minutes, today. Mr. GoNZALEZ, for 15 minutes, today. Mr . .ANNuNzio, for 5 minutes, today. Mr. MONTGOMERY, for 10 minutes,

today. Mr. CONYERS, for 5 minutes, today. Mr. ST GERMAIN, for 10 minutes,

today. Mr. SKELTON, for 15 minutes, today. Mr. BINGHAM, for 60 minutes, No

vember 12, 1981. <The following Member <at the re

quest of Mr. SKELTON) to .revise and extend his remarks and include extraneous material:)

Mr. GoNZALEZ, for 60 minutes, on November 13, 1981.

EXTENSION OF REMARKS By unanimous consent, permission

to revise and extend remarks was granted to:

<The following Members <at the request of Mr. SoLOMON) and to include extraneous matter:)

Mr. McKINNEY. Mrs. SNOWE. Mr. COURTER. Mr. GREEN. Mr. GILMAN. Mr. MICHEL in four instances. Mr. ERLENBORN. Mr. McEwEN. Mr. HYDE. Mr. THOMAS. Mr. CORCORAN. Mr. HANSEN of Idaho in three in-

stances. Mrs. HECKLER. Mr. FORSYTHE. Mrs. FENWICK. Mr. DAUB. <The following Members <at the re

quest of Mr. SHARP) and to include extraneous matter:)

Mr. SCHEUER. Mr. EDWARDS of California in four

instances. Mr. BARNEs in two instances. Mr. 0BERSTAR. Mr. FoRD of Michigan. Mr. MARKEY in five instances. Mr. FLORIO. Mr. DYSON. Mr. FOGLIETTA. Mr. WAXMAN. Mr. ANDERSON in 10 instances. Mr. GONZALEZ in 10 instances. Mr. BROWN of California in 10 in

stances. Mr. ANNUNZIO in six instances. Mr. JoNES of Tennessee in 10 in

stances. Mr. BoNER of Tennessee in five in-

stances. Mr. KASTENMEIER. Mr. RATCHFORD. Mr. SOLARZ. Mr. RoDINO in two instances. Mr. LEviTAS. Mr. VENTO. Mr. BENNETT. Mr. HALL of Ohio.

27080 CONGRESSIONAL RECORD-HOUSE November 10, 1981 Mr. SKELTON. Mr. FARY.

ADJOURNMENT Mr. SKELTON. Mr. Speaker, I move

that the House do now adjourn. The motion was agreed to; accord

ingly <at 12 o'clock and 48 minutes p.m.) under its previous order, the House adjourned until Thursday, November 12, 1981, at 12 o'clock noon.

EXECUTIVE COMMUNICATIONS, ETC.

Under clause 2 of rule XXIV, executive communications were taken from the Speaker's table and referred as follows:

2481. A communication from the President of the United States transmitting a request for amendments for appropriations for fiscal year 1982 and a reduction for fiscal year 1984 appropriations <H. Doc. No. 97-108); to the Committee on Appropriations and ordered to be printed.

2482. A letter from the Comptroller General of the United States, transmitting his review of the deferrals of budget authority contained in the message from the President dated October 1, 1981, pursuant to the Impoundment Control Act of 1974 <H. Doc. No. 97-108); to the Committee on Appropriations and ordered to be printed.

2483. A letter from the Deputy Director, Office of Management and Budget, transmitting a report on the apportionment on a basis which indicates the necessity for an amended estimate of appropriations from the Department of Justice, Immigration and Naturalization Service, pursuant to section 3679(e)(2) of the Revised Statutes, as amended; to the Committee on Appropriations.

2484. A letter from the Assistant Secretary of the Air Force <Research, Development and Logistics), transmitting notice of the proposed conversion to contractor performance the closed circuit television maintenance function at Wright-Patterson Air Force Base, Ohio, pursuant to section 502 of Public Law 96-342; to the Committee on Armed Services.

2485. A letter from the Principal Deputy Assistant Secretary of Defense <Manpower, Reserve Affairs and Logistics), transmitting reports on the community and neighborhood impact analysis, the historically significant buildings analysis, and the marine facilities analysis for the Truman annex, Key West, Fla., pursuant to section 610 of Public Law 94-431; to the Committee on Armed Services.

2486. A letter from the Secretary of Education, transmitting reviews of final regulations for the graduate and professional study fellowships program, pursuant to section 431<d> of the General Education Provisions Act, as amended; to the Committee on Education and Labor.

2487. A letter from the Railroad Retirement Board, transmitting the Board's activities, pursuant to section 2l<b) Of Public Law 96-101; to the Committee on Energy and Commerce.

2488. A letter from the Administrator, Energy Information Administration, transmitting the fourth annual survey of the Nation's proved crude oil, natural gas, and natural gas liquids reserves for 1980, pursuant to law; to the Committee on Energy and Commerce.

2489. A letter from the Under Secretary for International Trade, Department of Commerce, transmitting a report on determinations that additional foreign policy controls should be placed on exports to Libya, pursuant to sundry provisions of the Export Administration Act; to the Committee on Foreign Affairs.

2490. A letter from the Assistant Secretary for Congressional Relations, Department of State, transmitting notice of a proposed transfer of U.S. defense articles by the Government of Korea to the government of Oman, pursuant to section 3 of the Arms Export Control Act; to the Committee on Foreign Affairs.

2491. A letter from the Acting Assistant Legal Adviser for Treaty Affairs, Department of State, transmitting copies of international agreements, other than treaties, entered into by the United States, pursuant to 1 U.S.C. 112b; to the Committee on Foreign Affairs.

2492. A letter from the Acting Assistant Legal Adviser for Treaty Affairs, Department of State, transmitting copies of international agreements, other than treaties, entered into by the United States, pursuant to 1 U.S.C. 112b; to the Committee on Foreign Affairs.

2493. A letter from the Comptroller General of the United States, transmitting a report on fraud in Government programs <AFMD-82-3, November 6, 1981>; to the Committee on Government Operations.

2494. A letter from the Director, International Communication Agency, transmitting notice of proposed new records systems, pursuant to 5 U.S.C. 552a<o>; to the Committee on Government Operations.

2495. A letter from the Assistant Vice President-Director of Human Resources, First Farm Credit District Group Retirement Plan, transmitting the annual report of the district's retirement plan, covering the year ended March 31, 1981, pursuant to section 121<a)(2) of the Budget and Accounting Procedures Act of 1950, as amended; to the Committee on Government Operations.

2496. A letter from the Assistant Secretary-Treasurer, Seventh Farm Credit District Employee benefits Program, transmitting the annual report of the district's retirement plan, covering the year ended April 30, 1981, pursuant to section 12l<a><2> of the Budget and Accounting Procedures Act of 1950, as amended; to the Committee on Government Operations.

2497. A letter from the Secretary of Health and Human Services, transmitting a report on refugee resettlement, pursuant to section 413(b) of the Immigration and Nationality Act, as amended; to the Committee on the Judiciary.

2498. A letter from the Associate Commissioner of Examinations, Immigration and Naturalization Service, Department of Justice, transmitting copies of reports concerning visa petitions according the beneficiaries of such petitions third- and sixth-preference classification, pursuant to section 204(d) of the Immigration and Nationality Act, as amended; to the Committee on the Judiciary.

2499. A letter from the Administrator, Federal Aviation Administration, transmitting the Administration's semiannual report on the effectiveness of the civil aviation security program for the period ending June 30, 1981, pursuant to section 315<a> of the Federal Aviation Act; to the Committee on Public Works and Transportation.

2500. A letter from the Comptroller General of the United States, transmitting a

report on the Drug Enforcement Administration concerning clandestine laboratories <GGD-82-6, November 6, 1981); jointly, to the Committees on Government Operations, Energy and Commerce, and the Judiciary.

2501. A letter from the Comptroller General of the United States, transmitting a report on the Internal Revenue Service efforts to collect delinquent taxes <GGD-82-4, November 5, 1981); jointly, to the Committee on Government Operations and Ways and Means.

REPORTS OF COMMITTEES ON PUBLIC BILLS AND RESOLUTIONS Under clause 2 of rule XIII, reports

of committees were delivered to the Clerk for printing and reference to the proper calendar, as follows:

Mr. PERKINS: Committee on Education and Labor. H.R. 3231. A bill to further the national security of the United States and the Nation's economy by providing grants for foreign language programs to improve foreign language study for elementary and secondary school students and to provide for per capita grants to reimburse institutions of .higher education for part of the costs of providing foreign language instruction with an amendment <Rept. No. 97-316). Referred to the Committee of the Whole House on the State of the Union.

Ms. OAKAR: Committee on Post Office and Civil Service. H.R. 4793. A bill to amend title 5, United States Code, to extend the Federal Physicians Comparability Allowance Act of 1978, and for other purposes with amendments <Rept. No. 97-317>. Referred to the Committee of the Whole House on the State of the Union.

PUBLIC BILLS AND RESOLUTIONS

Under clause 5 of rule X and clause 4 of rule XXII, public bills and resolutions were introduced and severally referred as follows:

By Mr. ERLENBORN (for himself, Mr. PHILLIP BURTON, Mr. PEYSER, and Mr. PETRI):

H.R. 4928. A bill to provide for pension reform for State and local public employee retirement systems, to amend the Employee Retirement Income Security Act of 1974 arid the Internal Revenue Code of 1954 to promote more efficient and satisfactory management of the functions of the Federal Government relating to employee benefit plans, and to more effectively carry out the purposes of such act and such code relating to such plans, and for other purposes; jointly, to the Committees on Education and Labor and Ways and Means.

By Mr. PHILLIP BURTON (for himself, Mr. ERLENBORN, Mr. PERKINS, Mr. BIAGGI, and Mr. PEYSER):

H.R. 4929. A bill to provide for pension reform for State and local public employee retirement systems, and for other purposes; to the Committee on Education and Labor.

By Mr. BROWN of Ohio: H.R. 4930. A bill to amend the Energy

Policy and Conservation Act to provide for a comprehensive evaluation of the effects of acquisitions of domestic petroleum companies by major international energy concerns on the exploration, development, production, refining, transportation, distribution,

November 10, 1981 CONGRESSIONAL RECORD-HOUSE 27081 and marketing of domestic petroleum supplies and to impose a moratorium on such acquisitions pending completion and consideration of the evaluation; to the Committee on Energy and Commerce.

By Mr. HANSEN of Idaho: H.R. 4931. A bill to amend the Internal

Revenue Code of 1954 to regulate and limit collection procedures of the Internal Revenue Service in order to provide protection of taxpayer civil rights, and for other purposes; jointly, to the Committees on Ways and Means and the Judiciary.

By Mr. AuCOIN: H.R. 4932. A bill to temporarily authorize

the Secretary of Agriculture to terminate, or to adjust the termination dates of, certain contracts for the sale of timber located on national forest system lands, and for other purposes; jointly, to the Committees on Agriculture and Interior and Insular Affairs.

By Mrs. HECKLER: H.R. 4933. A bill to direct the National In

stitute of Arthritis, Metabolism, and Digestive Diseases to conduct such studies as may be necessary to determine the safety and efficacy under section 505 of the Federal Food, Drug, and Cosmetic Act of dimethylsulfoxide <DMSO> as a topical analgesic and to provide that, if the drug is so determined to be safe and effective, new drug applications may be approved under such section based on the evidence submitted by the Institute; to the Committee on Energy and Commerce.

By Mr. DORNAN of California: H.R. 4934. A bill to amend the Export Ad

ministration Act of 1979 to prevent the export to certain countries of goods or technology which have any potential application for military, law enforcement, or intelligence-gathering purposes; to require the President to notify the Congress of any approval of a license for the export of goods or technology to such countries; to provide for congressional disapproval of any such license application; to require the Secretary of Defense to prepare a military impact statement for the Congress with respect to certain export license applications; and for other purposes; to the Committee on Foreign Affairs.

By Mr. RODINO: H.R. 4935. A bill to amend title II, United

States Code, to correct technical errors, a~d to clarify and make substantive changes, with respect to securities and commodities; to the Committee on the Judiciary.

By Mr. SCHEUER: H.R. 4936. A bill to amend the Clean Air

Act to provide for a program to control acid precipitation; to the Committee on Energy and Commerce.

By Mr. SCHUMER: H.R. 4937. A bill to reestablish the tenant

rental payment and income review requirements which were in effect v.1th respect to federally assisted housing programs before the Housing and Community Development Amendments of 1981; to the Committee on Banking, Finance and Urban Affairs.

H.R. 4938. A bill to repeal the provision added by the Economic Recovery Tax Act of 1981 which treats investments by individual retirement plans in collectibles as distributions; to the Committee on Ways and Means.

By Mr. WHITTEN: H.J. Res. 357. Joint resolution making fur

ther continuing appropriations for fiscal year 1982, and for other purposes; to the Committee on Appropriations.

By Mr. LONG of Maryland <for himself, Mr. ADDABBO, Mr. BAILEY of Pennsylvania, Mr. BARNES, Mr. BEREUTER, Mr. BINGHAM, Mr. BONER of Tennessee, Mrs. BouQUARD, Mr. CAMPBELL, Mr. DoRNAN of California, Mr. DREIER, Mr. DYsoN, Mr. EMERY, Mr. ERDAHL, Ms. FIEDLER, Mr. FoRD of Michigan, Mr. GRISHAM, Mr. GOODLING, Mr. HOYER, Mr. JACOBS, Mr. JoHNSTON, Mr. LAFALCE, Mr. LEE, Mr. LEHMAN, Mr. LELAND, Mr. MURPHY, Mr. OXLEY, Mr. PANETTA, Mr. PEPPER, Mr. RoEMER, Mr. SMITH of Alabama, Mr. SMITH of Pennsylvania, Mr. STATON of West Virginia, Mr. WALGREN, Mr. WEBER of Ohio, and Mr. WINN):

H.J. Res. 358. Joint resolution authorizing and directing the President t'o provide for the playing of taps at the Vietnam Veterans Memorial, Washington, D.C.; to the Committee on Armed Services.

By Mr. BADHAM: H.J. Res. 359. Joint resolution authorizing

and requesting the President to proclaim "National Disabled Veterans Week"; to the Committee on Post Office and Civil Service.

By Mr. REUSS: H.J. Res. 360. Joint resolution directing

the President and the Federal Reserve System to immediately rescind the scheduled decrease in the targets for the growth rate of the monetary aggregates until the current recession is ended; to the Committee on Banking, Finance and Urban Affairs.

By Mr. FRANK: H. Con. Res. 215. Concurrent resolution

expressing the sense of the Congress with respect to the imprisonment and treatment by the Government of the Soviet Union of Alexander Paritsky and his family; to the Committee on Foreign Affairs.

By Mr. HALL of Ohio <for himself and Mr. MILLER of California>:

H. Con. Res. 216. Concurrent resolution to express the sense of the Congress concerning regulations pertaining to meal pattern requirements and nutritional requirements for meals served in programs under the National School Lunch Act; to the Committee on Education and Labor.

By Mr. SKELTON: H. Con. Res. 217. Concurrent resolution

expressing the sense of the Congress that the President of the United States should nominate for appointment to the Board of Governors of the Federal Reserve System an individual whose qualifications are in accordance with the Federal Reserve Act with regard to fair representation of agricultural and commercial interests; to the Committee on Banking, Finance and Urban Affairs.

By Mr. GARCIA (for himself, Mr. DELLUMS, Mr. FAUNTROY, Mr. GEJDENSON, Mr. MITCHELL of Maryland, and Mr. RANGEL):

H. Res. 266. Resolution to express the sense of the House of Representatives concerning proposed Presidential emergency powers with respect to immigration; to the Committee on the Judiciary.

MEMORIALS

system for the sugar industry; to the Committee on Agriculture.

222. Also, memorial of the House of Representatives of the Republic of Cyprus, relative to disarmament; to the Committee on Foreign Affairs.

ADDITIONAL SPONSORS Under clause 4 of rule XXII, spon

sors were added to public bills and resolutions as follows:

H.R. 375: Mr. SYNAR. H.R. 716: Mr. PEPPER, Mr. MURPHY, Mr.

CLAY, Mr. MITCHELL of Maryland, Mr. STOKES, and Mr. BEVILL.

H.R. 718: Mr. GARCIA. H.R. 726: Mr. GREEN. H.R. 748: Mr. RATCHFORD and Ms. FER

RARO. H.R. 2314: Mr. KEMP. H.R. 2387: Mr. CLAY, Mr. SAVAGE, Mr.

FAUNTROY, Mrs. CHISHOLM, Mr. MITCHELL of Maryland, Mr. RicHMOND, Mr. CoNYERS, Mr. GRAY, Mr. WoLF, Mr. DIXON, and Mr. OBERSTAR.

H.R. 4091: Mr. BAILEY of Pennsylvania, Mr. BEDELL, Mr. BEVILL, Mr. BUTLER, Mr. DASCHLE, Mr. FORSYTHE, Mr. HARKIN, Mr. JEFFORDS, Mr. MURPHY, Mr. NELLIGAN, Mr. OBERSTAR, Mr. PRITCHARD, Mr. SWIFT, and Mr. WEAVER.

H.R. 4562: Mr. SEIBERLING and Mr. DICKS. H.R. 4617: Mr. ST GERMAIN, Mr. VENTO,

Mr. MITCHELL of Maryland, Mr. D'AMOURS, and Mr. LoWRY of Washington.

H.R. 4673: Mr. McCOLLUM, Mr. WoN PAT, Mr. DAUB, Mr. TAUKE, and Mr. ScHULZE.

H.R. 4751: Mr. APPLEGATE, Mr. DOUGHERTY, Mr. BOWEN, Mr. SOLOMON, Mr. LoWERY of California, Mr. HowARD, Mr. NICHOLS, Mr. DERWINSKI, Mr. GOODLING, and Mr. WEAVER.

H.J. Res. 144: Mr. YoUNG of Missouri. H.J. Res. 174: Mr. McEWEN, Mr. SOLOMON,

Mr. CARNEY, Mr. DOWNEY, Mr. ASPIN, Mr. STENHOLM, Mr. MINISH, Ms. FERRARO, Mr. WOLF, Mr. KILDEE, Mr. LUKEN, Mr. MORRISON, Mr. DREIER, Mr. NELLIGAN, Mr. McCURDY, Mr. MINETA, Mr. GARCIA, Mr. SMITH of New Jersey, Mr. STRATTON, Mr. YOUNG of Florida, and Mr. AuCOIN.

H.J. Res. 293: Mr. HIGHTOWER, Mr. HATCHER, Mr. ARCHER, Mr. RHODES, Mr. YOUNG of Missouri, Mr. STUDDS, Mr. MADIGAN, Mr. RINALDO, Mr. MCHUGH, Mr. DELLUMS, Mr. EDWARDS of California, Mr. BETHUNE, and Mr. BROWN of California.

H. Con. Res. 81: Mr. MINETA, Mr. ADDABBO, Mr. WALGREN, Mr. MITCHELL of Maryland, Mr. RoYBAL, Mr. WoN PAT, Mr. HERTEL, Mr. VENTO, and Mr. ANTHoNY.

H. Con. Res. 100: Mr. BOLAND, Mr. RATCH-FORD, Mr. McCuRDY, and Mr. GRADISON.

H. Con. Res. 192: Mr. CONTE. H. Con. Res. 195: Mr. MOLLOHAN. H. Con. Res. 196: Mr. DYSON. H. Res. 230: Mr. FisH, Mr. SHAW, Mr. PAT

TERSON, Mr. DYSON, Mr. PORTER, and Mr. GILMAN.

DELETIONS OF SPONSORS FROM PUBLIC BILLS AND RESOLUTIONS Under clause 4 of rule XXII, memo

rials were presented and referred as follows: Under clause 4 of rule XXII, spon-

221. By the SPEAKER: Memorial of the sors were deleted from public bills and House of Representatives of the State of resolutions as follows: Louisiana, relative to the price support H.R. 3269: Mrs. FENwicK.

27082 CONGRESSIONAL RECORD-SENATE

SENATE-Tuesday, November 10, 1981

November 10, 1981

<Legislative day of Monday, November 2, 1981)

The Senate met at 9:30 a.m., on the expiration of the recess, and was called to order by the President pro tempore (Mr. THURMOND) .

PRAYER The Chaplain, the Reverend Richard

c. Halverson, LL.D., D.D., offered the following prayer:

Let us pray. Gracious God, as business is suspended

tomorrow in remembrance of those who have sacrificed so much to protect the freedom won for us by the blood, sweat, and tears of our forebearers, make us thankful for our priceless heritage and dedicated to its preservation.

Deliver us, 0 Lord, from the tyranny of the trivial. Let us not be like children playing games on the mouth of a volcano, indifferent to the boiling and belching underneath. Sensitize us to the deepest issues, the issues beneath the issues, of national restlessness and fear. Keep us from preoccupation with symptoms while ignoring causes. Let us not be busy rearranging the furniture while the house is burning down.

Freedom has been so costly in American lives; help us Lord not to demean it, to devalue tt, to let it degenerate into, "I do as I please," or "If it feels good, do it." Help us to understand that freedom is never cheap, that it has been purchased at an awful price and 'Can be preserved only as we realize how precious it is, how rare in today's world, and that relentless vigilance is required to preserve it. We pray this in the name of Jesus Christ who died to make men tree. Amen.

RECOGNITION OF THE MAJORITY LEADER

The PRESIDENT pro tempore. The majority leader is recognized.

Mr. BAKER. I thank the Chair.

THE JOURNAL Mr. BAKER. Mr. President, I ask

unanimous consent that the Journal of the proceedings of the Senate be approved to date.

The PRESIDENT pro tempore. Without objection, it is so ordered.

ORDER OF PROCEDURE Mr. BAKER. Mr. President, this

morning there is a special order in favor of the distinguished Senator from California <Mr. HAYAKAWA) to be recognized for not to exceed 15 minutes.

So after the recognition of the two leaders, the recognition of Senator HAYAKAWA, and the transaction of routine morning business and whatever time remains before 10 o'clock, at the

hour of 10 o'clock the Senate will resume consideration of S. 1112, the Export Administ·ration authorization bill.

Three amendments have been scheduled on time limitations. It is my hope, Mr. President, that third reading can be obtained, and that the Senate can then proceed to take up the State, Commerce, Justice appropriations bill.

There will be no votes after 1 o'clock today. That announcement has been made previously. ORDER FOR NO ROLLCALL VOTES AFTER 1 P.M.

TODAY •

In order to nail it down, I now ask unanimous consent that no ro1lcall votes occur after the hour of 1 o'clock today, and that if ordered prior to that time they be delayed until the Senate next convenes and is prepared to return to the consideration of the b:n.


Mr. BAKER. I thank the Chair. Mr. President, this will be a busy week.

This morning will be a busy morning. Senators are urged to take account of thaAt. There will be three votes today before 1 o'clock and, perhaps, more, almost certainly more, since I would expect a rollcall vote on final passage.

I would urge Senators to remain close to the floor in order to meet those rollcall votes. I expect that the 15 minutes allocated to rollcalls today will be observed with more than the usual regularity.

NO SENATE SESSION TOMORROW

Mr. President, the Senate will not be in session tomorrow. It will resume its session on Thursday.

Is there an order for the Senate to convene on Thursday?

The PRESIDENT pro tempore. There is not an order. ORDER FOR RECESS UNTIL 11 A.M. ON THURSDAY

Mr. BAKER. Mr. President, I ask unanimous consent that when the Senate completes its business today it stand in recess until the hour of 11 a.m. on Thursday.


SCHEDULE FOR THURSDAY AND FRIDAY

Mr. BAKER. The Senate will resume session then at 11 o'clock on Thursday and will proceed with the heavy schedule of legislation, including appropriation bills as previously suggested.

Thursday night almost surely will be a late evening, Mr. President. There is a possibility that Friday will be a late day. I hone not. If we continue to make good pragress on the schedule of appropriation bills, as has been announced from time to time by the leadership, I would expect the Senate to complete its business at a regular hour, in the range of 6 o'clock, on Friday.

I do not see the prospect of a Saturday session this weekend unless we run into great dimculties today or Thursday or Friday.

Mr. President, I have no further need for my time under the standing order, and I am prepared to yield it to any Senator or yield the remainder of it over to the control of the distinguished acting minority leader.

RECOGNITION OF THE ACTING MINORITY LEADER

The PRESIDENT pro tempore. The acting minority leader is recognized.

Mr. TSONGAS. Mr. President, I also have time on the agenda, but I will yield to the Senator from California, and then I will speak after he has finished. I will reserve the minority leader's time.

The PRESIDENT pro tempore. The Senator from California is recognized.

Mr. BAKER. Mr. President, before the Senator proceeds, may I ask the assistant minority leader-the acting minority leader if he has any need for additional time beyond the 10 minutes?

Mr. TSONGAS. I thank the majority leader for the title.

Mr. BAKER. I assure him, as I assured my long-time patron, the distinguished minority leader, that the minority leader's position does not entitle him either to the office or the car. [Laughter.]

Mr. TSONGAS. I was referring to assistant.

Mr. BAKER. I yield back the remainder of my time remaining under the standing order.

RECOGNITION OF SENATOR HAYAKAWA

The PRESIDING OFFICER (Mr. SIMPSON). The Senator from California.

SENATE JOINT RESOLUTION 123-NATIONAL DISABLED VETERANS WEEK <Introduced by Mr. HAYAKAWA for

himself and Mr. DOLE, Mr. EAST, Mr. INOUYE, Mr. KENNEDY, Mr. SARBANES, Mr. HUDDLESTON, Mr. MOYNIHAN, Mr. BRADLEY, Mr. DOMENICI, Mr. GOLDWATER, Mr. QUAYLE, Mr. SASSER, Mr. WARNER, Mr. MELCHER, Mr. EAGLETON, Mr. EXON, Mr. PERCY, Mr. SCHMITT, Mr. LEVIN, Mr. LONG, Mr. FoRD, Mr. DENTON, Mr. RIEGLE, Mr. MURKOWSKI, Mr. DURENBERGER, Mr. ARMSTRONG, Mr. LUGAR, Mr. ANDREWS, Mr. TOWER, Mr. BAUCUS, and Mr. WALLOP.)

Mr. HAYAKAWA. Mr. President, Wednesday marks the 43d anniversary of a special day which has been set aside to pay tribute to the soldiers, sailors, marines, and airmen who have honorably

• This "bullet" symbol identifies statements or insertions which are not spoken by the Member on th~ floor.

November 10, 1981 CONGRESSIONAL RECORD-SENATE 27083 anq bravely served their country during times of war.

Traditionally, this has been a time for celebration and reflection, a time to honor the brave who fought and died in defense of this Nation, and a time for the living to lament the dead.

For a long time our country has recognized the need to pay tribute to its veterans. In 1938 Congress declared that November 11 of each year would be a legal holiday-a day dedicated to the cause of world peace and known as "Armistice Day." This day was originally set aside to honor veterans of World War I, but in 1954, after World War II, and at the urging of veterans service organizations, Public Law 380 was enacted and November 11 became a day to honor all American war veterans.

Tragically, not every soldier returning from war returns whole. Today I would like to bring to the attention of my colleagues this select group of veterans, the disabled, who deserve special recognition.

Currently, there are 2% million disabled veterans in America, over 200,000 live in California. Their disabilit ies range from the permanent crippling injuries of the paraplegics, amputees, blind and deaf to the delayed stress syndrome from which many of the Vietnam veterans suffer.

Every disabled veteran has individual and specific needs which must be met if they are once again to become productive citizens. There are approximately 50,000 blinded veterans in the United States with hundreds more going blind every year. Frequently blindness is not their only disability. These veterans may also have additional facial or head injures, such as hearing loss, or may have lost the use of an arm or leg.

Eighty percent of all blinded veterans are employed. These individuals need help to become reoriented and readjusted. They need assistance in obtaining vocational training and career guidance. We all know that the blind are able to work and there are many kinds of work that they can do. The greatest obstacle to their employment is the mistaken belief of the employer that blind persons cannot work. Organizations such as the Blinded Veterans Association <BVA> offer encouragement to blinded veterans and have outreach employment programs which actively seek employment opportunities for the blinded veteran. The dedication and hard work of the BVA field representatives, who themselves are blind, has accomplished a great deal.

The problems of paralyzed veterans are unique and deserve to be addressed. Unemployment figures for persons suffering from paraplegia vary from 14 to 44 percent. These distressingly high figures can be attributed to financial disincentives to productivity and negative attitudes of employers.

The public must be shown that these individuals are employable and make very capable workers.

Also, an emphasis on teaching the disabled must be stressed. In order to reduce prejudice these individuals must

solidly prove themselves to be capable workers. Emotional and psychological encouragement is very crucial in achieving this goal.

A surprising fact I recently discovered was that as much as 46 percent of deaths of persons who survive the critical phase of spinal cord injury may involve self-neglect or self-destructive behaviors. Jt is essential that paralyzed veterans be highly motivated in order to achieve success.

Fortunately, there are many organizations nnd programs which have been developed to help in the rehabilitation of paralyzed veterans and paraplegics. Programs such as wheelchair competition in track and field, basketball, football, and tennis do much for the disabled vet. Having recently become a certified scuba diver, I was excited to learn about disabled v0terans using this sport for exercise and rehabilitation.

Apparently, diving can be a very worthwhile experience because of the feeling of mobility in three dimensions and the freedom from gravity it provides. Scuba diving is a sport at which it is difficult even for able-bodied people to succeed ; for a disabled person to become a certified diver is a tremendous accomolishment.

The- Paralyzed Veterans Association (PVA> is an onganization set up to provide many of the counseling and rehabilitation programs I have mentioned. Their objectives are to obtain as much assistance for the disabled veteran as is needed to assure their physical, mental , and financial success. I commend these worthwhile goals.

Finally, I would like to mention the most recent. but perhaps the most difficult disability of many of our Vietnam war veterans-delayed stresf> syndrome. This disability is not a mental illness, but rather a delayed reaction to the enormous stress endured by American GI's during the Vietnam war period.

It is estimated that about 500,000 VIetnam era veterans a:re suffering from de!ayed stress. According to the Disabled American Veterans <DAV) the responses seen among veterans suffering delayed stress include bitterness, anger and anxiety, depression, loneliness, alienation. sleeplessness and ina·bility to get close to others, flashbacks to combat and suicidal feelings, drug and alcohol dependence and much more.

We owe much to these veterans who did their duty and fought to support our Government and its policies. They did it because they loved America-we must reassure them that their loyalty has not gone unnoticed or unanpreciated.

Already much has been done to assist these individuals. Recently Public Law 97-66, the Veterans Disability Compensation, Housing and Memorial Benefits Amendments of 1981 was enacted. This law will provide, among many things , increased disability compensation, automobile assistance, and housing benefits to the survivors of disabled veterans whose deaths were service connected. This Congress has also passed the Veterans Programs and Improvement Act of 1981, Public Law 97-72. This act provides an extension of the period for Viet-

nam era veterans to request adjustment counseling,

In addition, it extends eligibility for medical care for veterans exposed to agent orange or radiation. Both laws provide for important and much needed programs. Nevertheless, much more needs to be done.

While Congress has the ability to provide for the financial welfare of disabled veterans it has the moral responsibility to provide for their emotional welfare as well. We can legislate away some problems-others, we cannot. But for 1 week next November we can focus the Nation's attention on all brave men and women who have suffered military disabilities.

So, today, I would like to introduce along with 31 other Senators a resolution declaring the week of November 7 through November 13, 1982 as "National Disabled Veterans Week," to recognize and pay tribute to honorably discharged veterans who have incurred disabilities from mllitary service. There is no way in which Congress or America can give back what has been taken from these brave individuals. All we can hope to do is let them know of our deep respect and appreciation for their service to our country.

Mr. Fresident, I ask unanimous con~::ent that the text of the joint resolution be printed in the RECORD.

There being no objection, the text of the joint l'esolution was .ordered to be printed in the RECORD, as follows:

S .J. RE.s . 123 Whereas there are 2,500,000 disabled veter

ans in the Unit ed States; Whereas disabled veterans have sacrificed

their well-being in the service of their count ry;

Whereas disabled veterans endure severe disa!:l111ties, I'Uch as loss of limb, paralysis, blindness, deafnes3, and delayed-stress syndrvme;

Whereas 16 to 35 percent of all disabled veterans arE' jobless as a result of their disabllities; and

Whereas disabled veterans have made important cont ributions to the national welfare: Now, tho:-efore, be it

Resolved by the Senate and House of Represent atives of the Untted States of America in Congress assembled, That the President is authorized and requested to issue a proclamation designating the week of November 7 , 1982, as "National Disabled Veterans Week", in recognition of the contributions that disabled veterans have made to the welfare of the United States, and calling upon all Government agencies and the people of the United States to observe the week with appropriate programs, ceremonies, and activities.

• Mr. LEVIN. Mr. President, America's disabled veterans have given a great deal in the defense of thejr country, and it is fitting and timely that we recognize these sacrifices in a meaningful way. I rise in SUP!'Ort of Senator HAYAKAWA'S resolution calling for the establishment of "National Disabled Veterans Week" because thts Nation can ill afford to forget the courage and dedication exhibited by disabled veterans both on and off the battlefield.

Senator HAYAKAWA's resolution calls for the public display of appreciation and commemoration in honor of those

27084 CONGRESSIONAL RECORD-SENATE November 10, 1981

who have sacrificed so much in the cause of liberty. The disabled veteran lives everyday with memories and challenges that most Americans can only begin to imagine. Long after the war has ended, long after the dead have been laid to rest, long after the names of the battles cease to have meaning, the war for the disabled veteran goes on. .

We cannot replace what the disabled veteran has lost in our defense. However, we can; and must, show for such bravery our lasting respect and admiration.

National Disabled Veterans Week will encourage every American to turn their thoughts to the unheralded price of freedom. This commemoration will serve to educate the American people about the challenges faced by the disabled veteran attempting to rebuild a place for himself within society. Further, this week will stand testament to the ongoing display of courage and fortitude that makes the disabled veteran so very worthy of our admiration.

Tomorrow, November 11, marks the day that this Nation has set aside to pay due respect to all who have served in the Armed Forces in the defense of liberty. Senator HAYAKAWA's resolution is a fitting and appropriate memorial, offered at a most auspicious time, to courage and partriotism. I join with him in urging that this resolution receive swift consideration and passage.•

RECOGNITION OF THE ACTING .MINORITY LEADER

The PRESIDING OFFICER. The acting minority leader is recognized.

Mr. TSONGAS. Thank you, Mr. President.

ALEXANDER PARITSKY Mr. TSONGAS. Mr. President, tomor

row will mark yet another sad day in the struggle of Soviet Jewry. In Kharkov, Ukraine, in the Soviet Union, Alexander Paritsky, a leader in the Jewish community, will be put on trial on charges of slander against the Soviet state. These charges carry a maximum penalty of 3 years in prison. It is clear, however, what Alexander's real crime has been-he is a Jew who wishes to immigrate to Israel.

Since 1976, when he first applied to emigrate, Alexander Paritsky and his family have been subjected to persistent harassment from KGB officials in the Ukraine. This officially sanctioned harassment of the Paritsky family began when Alexander was taken to KGB headquarters, interrogated and threatened, and told to end his involvement in the Kharkov Jewish University, an institution which he helped found. Alexander's professional credentials as a doctor of ocean electronics were then stripped from him and the Soviet Government begaP-. publishing vicious articl.es in the Kharkov newspaper accusing him of black m':irketeering, racism, and propagandizing against the Soviet Union.

Other members of the Paritsky family have also felt the heavy hand of Soviet oppression. Dorina Paritsky, who is only 15 years old, was harshly interrogated by Soviet investigators at her school and

told to denounce her family. Paulina, Alexander's wife, has beep repeated1y threatened with arrest. In an unprecedented move, Soviet authorities have also threatened Paulina with the po3sibility of loslng custody of her two daughters. And those of us who have daughters I would hope would be sensitive to that. When Paulina attempted to obtain independent legal counsel for her husband, she was forcefully detained.

Mr. President, this past Sunday I attempted to call Paulina Paritsky in Kharkov to learn about the treatment she and her family have been forced to endure. Although my original call to the Soviet Union did not go through, a successful call was made shortly after my meeting with the Committee to Free the Paritsky Family in Boston. This was the first time the Paritsky committee has been able to talk with a member of the family in over 6 months.

Mr. President, today I am introducing a resolution, which is being introduced concurrently in the House of of Representatives by Congressman FRANK, that calls upon the President and the Secretary of State to express at every suitable opportunity and in the strongest possible terms our opposition to the imprisonment of Alexander Paritsky. The resolution also urges the Soviet Government to release Alexander Paritsky, end the campaign of harassment against Alexander and his family, and finally, per-mit Alexander, Paulina, Dorina, and Anna Paritsky to immigrate to Israel and join their relatives in accordance with the final act of the Conference on Security and Cooperation in Europe, the Universal Declaration of Human Rights, and the International Covenant on Civil and Political Rights.

Mr. President, I have been deeply moved by the activities of the Committee to Free the Paritsky Family and I urge all my colleagues to support this important humanitarian effort.

Mr. President, at this point I would like to read into the RECORD the transcript of the conversation between Paulina Paritsky and two members of the committee who are in Boston, Lenny Marcus and Uri Sthern.

The call took place on Sunday between the Committee to Free the Paritskys in Boston and Paulina Paritsky who was at the post office in Kharkov. TRANSCRIPT OF CONVERSATION BETWEEN PAU-

LINA PARITSKY, LENNY MARCUS, AND URI 8TH ERN Date: Nov-ember 8, 1981. Key: Lenny Marcus (Lenny), Paulina

Paritsky (Paulina), Uri Sthern (Uri). Half of the conversation 1s in English and the other half is in Russian and has been translated by Alia Kan.

LENNY. PaULina? PAULINA. Who are you? LENNY. Lenny Marcus in Bos·ton. I spoke

with you in April. Paulina, Senator Tsongas was just here but he already left , but we are anxious to bear news from you.

PAULr~A. The trial will be the 11th of November.

LENNY. Do you have a lawyer?

Mr. President, I am going to read thls ~.s '5he snake jt. The first part is in English so the grammar is not totally correct, but I am sure my colleagues will understand.

PAULINA. No, I haven't. I tried to make a contact, but it is five days before the trial. The ... (pause) Counsel (defense attorney 1 ) said that he is busy with another contract, an.d I haven't a lawyer. I don't know nothing about the charge, nothing a.bout my husband. I tried to went to Moscow for Counsel, but I was arrested at Railway Station and stopped and I can't. I asked ... (pause) I know nothing about my husband, about the trial. I can't to be at the protest (trial2).

LENNY. You can't to be what? PAULINA. Yes ... because the Official in

vited me as a witness for the prosecution and because of that I can't be present at the trial.

LENNY. What is your situation? PAULINA. I appealed to all my friends for

help for my husband, for help to my family because they (Soviet officials) say that I also will be before the Court.

LENNY. You too? PAULINA. I tried to defend my husband

but I can't. LENNY. What about Dorina and Anna

(your daughters) . PAULINA. Repeat please. LENNY. Dorina and Anna, what about

them? PAULINA. They are so-so. Dorina was

prosecuted and the investigator went to school where Dorina (age 15) is studying and we're in' a serious situation.

LENNY. Paulina, I will give you to a friend and he wlll speak in Russian and give us all the information.

URI. Hello, Hello. I am from Moscow. I came from Israel to the United States to tell a-bout the situation of Soviet Jews. If you can tell us something else in Russian, it may be easier. What is happening with you now?

PAULINA. I can tell you that the Investigator has been questioning witnesses. A lot of witnesses were questioned on my husband's case. Most of them were Jews, those who took part in the seminars and the study of the language (Hebrew).

URI. In the University? (The Kharkov Jewish University, developed by the Refuseniks in that city to· study both secular and religious topics).

PAULINA. I don't even know what is in his c.ase. I even couldn't hire a lawyer. I was trying to find a · lawyer and had almost made the arrangements. He (the lawyer) promised me. The lawyer's name is KORABLOV. On the fourth of the month (November) a week before the trial, he told me that he is engaged in another case, and he refused (to be our lawyer).

URI. Oh yes, I heard of that. You were taken off the train.

PAUI.INA. Yes, to go to Moscow. I was trying to go to Moscow, but they (Officials) wouldn't let me g.:> onto the train. They showed me a search warrant and they took all my papers and letters. I had wanted to see a lawyer in Moscow to make arrangements. I was searched and everything was taken from me. Thev wo11ldn't let me go to the prosecutor's office and then they called me as a witness (for the prosecution) .

URI. O.K., I understand. PAULINA. And I flatly refused to be a wit

ness (for the prosecution). Then the Investigator, in a deceptive way, tried to ...

URI. What do you mean by deceptive? PAULINA. He told me that there is a request

written by my husband, a note written from him. It was a lie. There was not a note. The last time I saw the Prosecutor, he said that

1 All notes ln parentheses are explanations and not direct quotes.

2 Explanation: A witness for the prosecution cannot be present during the trial until he/she is called to testify. After the testimony, the person may remain until the end of the trial.

November 10, 1981 CONGRESSIONAL RECORD-SENATE 27085

I already have 1 foot in jail. I will go after my husband, .accused by the same article of law. Also, my daughter was questioned in the school. The Prosecutor and Investigator came to her school and interrogated my 15-yearold girl.

Uat. In school? PAULINA. Her composition which she wrote

when she was 13 years old about her motherland being Israel . . .

URI. I know about this. It is printed right here in English and I have read it.

PAULINA. They consider that this composition was written by my husband. Probably this is also in his case and probably this will be presented as part of his guilt.

URI. O.K., I understand. Do they still threaten you? Oh, I am sorry.

PAULINA. I am constantly being followed. I cannot leave Kha.rkow nor can I make a call.

URl. Oh, my God. PAULINA. Slander. URI. Do you mean the accusation against

your husband? PAULINA. My husband is accused of spread

ing slanderous fabrications, defaming the Soviet Union.

URI. Yes, I know, but what materials are against him? The composition? The petition? (A petition signed by all Kharkow Refuseniks protesting emigration policies of Ovir).

PAULINA. They asked me about the composition.

URI. Well, that's very ,interesting. Did you know that people from Boston are calling you regularly at the Post Office?

PAULINA. The calls for me are not put through. I sometimes spend over two hours in the post office and the call is not put through.

URI. At this moment, we have a big meeting here, and in this city there is a lot of activity in the political arena and politicians are involved.

PAULINA. I oa.ppeal to all to help my husband somehow.

URI. Yes. PAULINA. In the beginning, before the in

vestigation started, the Investigator told me that very severe punishment is awaiting my husband-and the inves·tigation had not even started yet. He will spend time in jail and then maybe he will leave (the Soviet Union). I will try ...

URI. I am going to say good-bye and wlll give the telephone to 1 enny Marcus. You hold on ... Say hello to Tanya Frenlik if you know her.

PAULINA. No, I don't. URI. I am giving you to Lenny Marcus who

organized all this. Goodbye. LENNY. Paulina, this is Lenny again. I want

you to know that as we speak now, television cameras are recording your conversation, it is on radio and it is reported in the newspapers. This week Senator Tsongas from Massachusetts and Representative Barney Fran){ from Massachusetts will introd,Jce resolutions in the U.S. Senate and U.S. House of Representatives to ask for your freedom , and Alexoa.nder's freedom, and Dorina's and Anna's. And I wan't you to know that you, and Alexander, Dorina and Anna are honorary citizen of the City of Bost.on and all of the people of Boston send a wish for your freedom and we are with vou.

PAULINA. Thank you. Give my regards to all our frlenls.

LENNY. There are 150 people in this room now who se'lld regards to you.

PAULINA. Than'k you. LENNY. Here is Uri, al!ain. URI. Well, hold on. What else can I say?

I understand what all of that means. PAULINA. It's all verv complicated. URI. I understand. They are doing every

thing (the people who or~ani7ed the rally) and you are the honorary citi.,.ens of Boston. The Senators who are involved, Tsongas and

Kennedy, are very influential people. Well, you know ... What can be done? Everybody here will try. Local authorities made a mistake in the case of your husboa.nd, and it will be corrected in time. Let's hope for that.

PAULINA. Thank you. URI. Don't mention it. Hang in there. Good

bye.

Mr. President, I urge my colleagues to a;gree to the resolution inasmuch ~ts the trial takes place tomorrow.

ROUTINE MORNING BUSINESS

The PRESIDING OFFICER. Under the previous order, there will now be a period for the transaction of routine morning business, not to extend beyond the hour of 10 a.m., with statements limited therein to 1 minute each. Is there morn~ng business?

FOUR-BCORE AND TEN Mr. ROBERT C. BYRD. Mr. Presidellt,

Thomas Carlyle wrote, "Biography is the only true 'history." Many historians, indeed, contend that the central factor in creating h.istory are the actions of great men and women.

Be tlhat as it may, next 'Sunday is the 90th birthday of one great American who has more than once been central in creating modern history. For most of the last five of hls nine decades, that man has served in public life. To an extraordinary extent, that man has been an adviser and confidant of Presidents, kings, and prlme ministers. Tha.t man is W. Averell Harriman.

Mr. Harriman embarked on his public career when he was in lhis early forties. He C'OUld have abs·tained from Government service and still enjoyed a life of exciting elegance. The heir to one of America's great fortunes, Averell Harrjman was the son of E. H. Harriman, a brilliant railroad titan. But from his youth, Averell Harriman was nurtured in the philosophy that grea.t wealth earned wlth it great reSiponsi'bility. In response to tJhat doctrine, in the 1930's, while still chairman of the Union Pac-ific Railroad, Averell Harriman beg·an sharing his prodigious business and economic experience with the Fed·eral Governm~nt. By the outbreak of World War II in Europe, Mr. Harriman had sufficiently won President Franklin Roosevelt's confidence to be appointed first as a Presidential liaison to London, later as the American Am'bassador to tJhe Soviet Union, and finally as our Ambassador to the Court of St. James.

After helping administer the historic Marshall plan and then serving as President Truman's national security adviser, Averell Harriman was in 1954 elected Governor of New York State. During the 1950's, Mr. Harriman was also twice considered for the Democratic Presidential nomination.

In the 1960's, Averell Harriman began a distinguished career as an exceptional traveling diplomat, serving usually under direct Presidential orders. Again and again, Presidents have since availed themselves of his talents and sought his counsel.

W. Averell Harriman embodies an ad-

mirable American tradition. Like several gifted and selfless private citizens in our history, Mr. Harriman placed his considerable skills and abilities at America's disposal. His patriotism, maturity, and perception have consistently served AmerlCa's best interests.

Mr. President, I am sure that many of our colleagues share my appreciation for Averell Harriman's contributions to America and join me in wishing this great patriot, statesman, and fellow countryman our best wishes on his 90th birthday.

Mr. President, I ask unanimous consent that a column by James Reston entitled "Harriman at 90," which appeared in the New York Times on Wednesday, November 4, 1981, be printed in the RECORD.

There being no objection, the column was ordered to be printed in the RECORD, as follows:

HARRIMAN AT 90 (By James Reston)

WASHINGTON, November 3.-Averell Harrim:m, former Governor of New York, Secretary of Commerce, Ambassador to London and Moscow, among many other things, will be 90 in a few days, and he reminds us not of how old he is but how young this Republic is.

He has lived for almost half the life of our history as an independent nation. He was born on Nov. 15, 1891, when Benjamin Harrison was President. He has survived 16 more Presidents since then, and plans to stick it out for a while longer until he sees another Democrat in the White House.

The Democrats naturally share his hope. They don't have much to celebrate these days, but they're going to throw a big party for him here next week, with John Kenneth G::tlbraith S?eaking for the Roosevelt years, Clark Clifford for the Truman years, Senator Kennedy for the Kennedy years, Lady Bird Johnson for the Johnson years and Fritz Mondale for the Carter years. Republicans need not apply, but some of them, remembering that Mr. Harriman was once a Republican, will be there anyway.

At 90, he still looks and lives like a Republican-tall and nobly handsome, with his elegant house on N Street in Georgetown, and the house next door filled with his papers, and his house in Virginia., with its views of the Blue Ridge Mountains.

He has not avoided the trials of advancing years. His sight and hearing are impaired. But he has the newspapers read to him every day, and he swims every morning and is now writing a book on Truman. He keeps young by see-ing the young and telling them stories of the men of his time.

For e·xample, he remembers congratulating Stalin at the Potsdam conference after World War II for leading the Red Army to Berlin in the final defeat of the Nazis. Stalin was still aggrieved that Eisenhower had kept him from advancing farther West. "The Czar Alexander got to Paris," Stalln complained.

Mr. Harriman has long memories of Winston Churchlll, whose former daughter-inlaw is now Mr. Harriman's wife. He was in London In the critical months after Pearl Harbor as Roosevelt's special envoy, and returned to Grosvenor Square as U.S. Ambassador in 1946.

He recalls a conversation with Church111 In which he ventured to criticize the British parliamentary system. Churchlll was not amused, Mr. Harriman says, and replied, "Few men are so gifted as to understand the politics of their own country, let alone criticizing the politics of another."

Mr. Harriman Is not exactly a Horatio Alge:~: rags-to-riches charaoter. He inherited

great wealth from the Union Pacific 'R'allroad from his father, who also bequeathed to him a Presbyterian conscience. He has ·been trying ever since to •be faithful to his father 's admonlition that "great wealth requires great responsibiUties."

He is not very happy these days about the drift in U.S.-Soviet rel'ations. He has keot a cool and wary eye on the Russians ever since his service as our Ambassador in Moscow from 1943 to 1946. I remember his appearance at the San Francisco conference on t he formation of the United Nations, when he warned about the objectives ot Sovie·t policy, and insisted on a charter that would protect the rights of the free nations.

He has kept to this oa.utious skepticism about the Russians ever since, but is now vaguely depressed because he thinks the anti-Soviet temper of the Reagan Administra.tion is going too far, ·and is leading to an arms ra.ce and even a revival of the cold war that may get out of control.

There is, of course, very lit tle he can do about this now, but he keeps trying. He had lunch the other day with the Soviet Ambassador, Ailialtoly Dobrynin, and deplored the rancorous propaganda between Washington and Moscow. But he also observed that while President Brezhnev t'alked a great deal about peace, the Ruc:sians were still keeping their S&-20 missiles targeted on every European capital. How, Mr. Harriman asked, could we have peace or coexistence until these missiles were withdrawn?

This is his main regret: that he has devoted the last 40 of his 90 years to t he belief that there will be no decent order in the world unless .the United States and the Soviet Union somehow overcome their fears of one another, and reach some kind of accommodation, and on his 90th birthday he fears the trend is going the ot her way.

His ha-ppiest days were not when he was appointed to Federal office, but when he was elected by the people as Governor of New York, and his second re~et is that he was defea.ted by Nelson Rockefeller for reelection.

But '8lt his birthday party next week, everybody will call him "Governor." which is the title he likes best, and pay their resuects to him for a long life of public service. This, however, is not likely to s'atisfy him. As his wife says, he has "a whole dungeon of papers" next door on N Street,' and is determined to sort them out, so that vounger men will remember at Georgetown University or somewhere else what he is likely to forget .

CONCLUSTON Ol<' MORNING BUSINESS

The PRESIDING OFFICER. If there is no further morning business, morning business is closed.

EXPORT ADMINISTRATION AUTHORIZATION, FISCAL YEAR 1982-83

The PRESIDING OFFICER. Under the previous order, the hour of 10 a.m. having arrived, the Senate will now resume consideration of s. 1112, which the clerk will state.

Tho bill clerk read as follows: A blll (8. 1112) to authorize a.opropriations

for the fiscal years 1982 and 1983 to carry out the purooses of the EX'Pol'lt Administration Act of 1979, and for other purposes.

Tha Senate resumed consideration of the b111.

AMENDMENT NO, 627

The PRESIDING OFFICER. The pending question is on the Chiles amendment, No. 627, on which there shall be 30

minutes debate, with a rollcall vote thereon to follow immediately.

Tho Senator from Pennsylvania is recognized.

Mr. HEINZ. Mr. President, we spent a good deal of time yesterday on this subject. I think we debated the Chiles amendment and the Heinz amendment at some length. I move to table the Chiles amendment.

Mr. CHILES. Mr. Pres~dent, when there is a unanimous-consent agreement that says there is going to be 30 minutes equally divided, I wonder if the Senator is playing exactly fair if he is going to move to table now.

Mr. HEINZ. Let me say to my good friend, Mr. President, as the Senator knows, I was going to move to table the Sen~tor's amendment last night.

Mr. CHILES. No; I did not know. The Senator never told me.

Mr. HEINZ. Mr. President, I think we have adequately debated the issue and I move to table the amendment.

Mr. CHILES. I would like to make a parliamentary inquirv, Mr. Pres;dent.

The PRESIDING OFFICER. The Senator's parliamentary inquirv is noted.

The Chair advises the Senator from Pennsylvania that a vote on a motion to table will not be in order stnce the agreement provides for a vote on the amendment.

Mr. HEINZ. I withdraw my motion, Mr. President.

The PRESIDING OFFICER. The Senator from Pennsylvania has h1s time.

Mr. HEINZ. I am prepared to Yield back all my time if the Senator from Florida is prepared to yield back his.

The PRESIDING OFFICER. The Senator from Florida.

Mr. CffiLES. I thank the Senator. Mr. HEINZ. I am propounding a ques

tion to the Senator from Florida. Mr. CffiLES. The Senator from Flor

ida is not prepared to yield back his time.

Mr. HEINZ. I withdraw my offer, Mr. President.

The PRESIDING OFFICE'R. The Senator from Florida.

Mr. CHILES. Mr. President, the Senate has a clear choice this morning about whether it wants to do anyth!ng about high interest rates. The Heinz substitute says that, since the prime interest rate is coming down, everything will be OK.

The Heinz substitute ignores the fact that home mortgage interest rates are not coming down at all, and that the housing industry is expected to remain at disastrously low levels of 1.2 to 1.3 million starts, compared to the 2 million we need each year just to replace the loss of old hous:ng stock.

The Heinz substitute ignores the fact that the small businessman has to borrow at rates well above the prime, and that banks will simply not make credit available to small business.

Mr. President, I do not think we can take any comfort from the fact that interest rates are coming down due to a recession. The same factors remain out there that will drive rates back up when the economy recovers, wh:ch the administration says will be in the early spring. The huge tax cuts leave us deficits of over $100 billion a year; the administration remains committed to a supertight

monetary policy. We just cannot wait 2 years for those policies to br~ng down home mortgage rates.

. I think it is interesting, Mr. President, that the National Association o! Homebuilders has supported the amendment that we are debating-the Chiles perfecting amendment that is before us today. These are the people who make up a major segment of our economy. They are the ones who, right now, are dying on the vine. They say, on behalf of their 123,000 members, that they are writing to "express our support for your emergency resolution directing the President to assure an adequate ftow of affordable credit to small borrowers."

They go on to say that the record-high mortgage interest rates are having . a devastating impact on the housing industry. Housing starts in September were down to an annual rate of 918,000, 56.2 percent below the peak level of 2.09 m :llion in 1978. So we are currently in the midst of the longest housing recession since World War II.

The National Association of Homebuilders' forecast for 1981 assumed some moderation in interest rates by the end of the year, but they are es·timating that only 1.07 million housing units will be started this year.

The drop in housing starts, they tell us, has a significant impact on the overall economy by raising the unemployment rate in construction trades. The official unemployment construction rate is 16.3 percent, which means over 828,000 wage and salary workers are out of jobs.

First-time home buyers in particular have been priced out of the housing market by high interest rates. Each 1 percent increase in interest rates puts a mediumpriced house out of reach of over 860,000 families.

Mr. Presldent, as we pointed out, the impact of high interest rates on housing is going far beyond housing to many other industries. One of the hardest hit is the timber and forest products. Mr. President, I ask unanimous consent to have printed in the RECORD at the end of my statement a recent position paper of the National Forest Products Association regarding housing and mortgage'ftnance.

The PRESIDING OFFICER. Without objection, it is so ordered.

<See exhibit 1.) Mr. CHILES. It is a particularly lucid

interpretation of the awful economic impact of the current high interest rates policy. This paper makes particular points of two things that I think are important.

First, while we need some long-term restraint, we need short-term flexibility to avoid vast economic losses.

Second, they point out that the FHA and related Federal housing credit programs have been self -supporting and have played a vital role in developing new mortgage instruments to make housing available to more potential homeowners at affordable cost. The industry feels it would be a great economic mistake to cut back on these Federal programs during these difficult and changing times.

Mr. President. I think from these comments and the debates that we had yesterday, it is pretty clear that the choice is, do we want to adopt the Heinz sub-

November 10, 1981 CONGRESSIONAL RECORD-SENATE 27087 stitute, which says everything is all right, interest rates are coming down; or are we ready to express ourselves as wanting to put our hand out to the President and say, "We want to support you in trying to do something about interest rates. We want you to meet with the Fed; we want you to come up with some voluntary guidelines that are going to send a strong signal to the financial and banking institutions that we do not wish to see money made available for mergers and conglomerate takeovers. We want to see that rationed amount of money out there reserved so it can go into the sectors of business that are productive to this country, that are actually creating employment; that we want to do something to stop some of the bankruptcies that are occasioned at such a rapid rate now in our small businesses."

We are going to send a signal to those small businesses and small farmers that we are aware of their plight, we are aware of the high interest rates they are being charged, and we are going to try to do something about it, re~ognizing that this is only one part of the puzzle, that fiscal restraint is just as important as this, but that we cannot ignore the monetary policy, especially when it comes to where money is now being used and where it is going for these nonproductive things.

Mr. President, I urge that we adopt the Chiles perfecting amendment, which 35 Senators have coauthored, and let us get on with trying to do something about this particular problem.

ExHmiT 1 FOREST INDUSTRY POSITION-HOUSING AND

MORTGAGE FINANCE, OCTOBER 1981 This statement reflects the pollcy of the

National Forest Products Association on issues of housing and home mortgage finance . It is based on a paper by NFPA's Committee on Housing and Mortgage Finance submitted to the President's Commission on Housing and to committees of Congress.

SUMMARY Immediate national economic problems,

including a severe crisis in the home building industry, must be dealt with before real progress can be made toward long-term, ant11ntlati6n goals. The immediate problems and challenges facing the home building industry include:

Reducing government borrowing, which is now crowd1ng out private sector growth so essential to combat inflation;

Establishing and achieving non-inflationary monetary growth targets that provide sufficient capital for priva-te sector growth;

Developing alternate mortgage instruments w.lth secondary market and consumer acceptance;

Easing bullding and land use restrictions to lower the costs of home bullding·

Establishing policies that encourage capital formation;

Broadening the secondary market for mortgages;

Conttnuinsz existinsz unsubsidi"'ed P."o•rernment mortga~e insurance pro~?rams while at the same time encouracztn~ the develooment of private mortgage insurance programs;

Providing the means and su,mort for a rapid transition to mort"'ac;re lendin"' institutions that are competitive und'er a dereszulated structure.

The forest products industry has been a strong supporter of the Administration's policies to control inflation by reducing pub-

lie sector spending and increasing private investments. The first round of budget cuts has been successful and the tax law changes should eventually encourage new capital formation. However, because tax revenues will be less than expenditures for the near term, federal deficits will continue. Until these deficits are substantially reduced, federal financing requirements w111 continue to compete with the demands of private credit markets. This means interest rates will not be reduced as expected, thereby raising the cost of federal borrowing and compounding the deficit problem.

In addition to these fiscal changes, the deregulation of financial markets is disrupting savings flows needed to SllP?Ort private investment. This has affected the assets and liabUlties of lenders very differently, and many mortgage lenders are facing the prospect of bankruptcy. Deposits are being lost by traditional mortgage lenders, leaving these institutions unable to provide their normal support to new home markets.

The overall impact of these changing conditions is being felt in the homebuilding and suppller sectors, with serious long-term implications. Although home construction and its suppller markets have been weak for more than a year, the situation has become critical over recent months.

The backlog of available financing for homes has come to an end and builders are cance111ng almost all development plans. Housing starts may well fall in historic lows with no immediate recovery in sight. This is in contrast to earlier projections of a recovery within six months. New orders for wood products have deteriorated to the point that operating rates and plant closures w111 almost assuredly be worse than any time since the 19-30's depression. NEEDED ; A SUPPLY -SIDE RESPONSE IN HOUSING

Without an immediate recovery, major portions of the housing industry may not survive. This industry has gone through peaks and valleys many times, but builders and suppliers of products such as lumber and plywood recognize that this is no normal business cycle.

The homebuilding industry and its suppliers could lose as much as 25 percent of their production capacity in this housing slump. Much of this capacity will not be restored in the long term, contributing to even more inflationary housing shorta"es.

Current tight money and high interest rates w111 not stop the demand for housing from accelerating. In the 1974-76 period, when new home construction was curtailed below the level of demographic demand, the result was a record shortfall of supply relative to demand. This shortfall triggered an enormous increase in home prices starting in 1976. These inflated prices have resulted in appreciation in housing prices exceeding one trillion dollars an amount dwarfing even the asset shifts caused by oil price increases.

Appreciation in housing prices has greatly increased the demand for mortgage credit for existing homes. Real estate contracts between individuals have mushroomed, replacing institutional lending. These contracts must be refinanced in the next few years, thus giving rise to further congestion in financial markets.

To reduce these inflationary demands on capital markets, the supply of new homes must be increased. Housing is a capital asset like plant and equipment. When supply is restricted, inflationary forces are induced with serious long-term consequences.

These new forces in the economy are working against the goals of increased private investment and reduced inflation. The future inflation in home prices that can be expected to continue as a. consequence of increasing shortages wm further fuel price expects.-

tiona, wage demands, increased transfer payments, and worsening deficits.

Immediate liteps are essential to a. void these problems and to assure success for the Administration's long-term economic program, which has been so broadly supported. DEFICITS MUST BE REDUCED TO ALLOW ADEQUATE

PRIVATE INVESTMENT The Economic Recovery Tax Act of 1981

and current economic conditions have made it clear that additional federal spending cuts are essential in the near future. These additional budget cuts w111 not be without economic, social, and political costs. The homebuilding and supplier industries will n9t be exempt from their fair share of these spending reductions.

New spending reductions must be multiyear programs so that longer-term planning certainty can be introduced into the economy. To prevent a worsening crisis in private capital markets, significant new federal budget cuts need to be enacted now.

Further budget cuts of at least $20 to $30 billion are needed in fiscal year 1982. Without these cuts, severe competition between government and private users of a limited capital market wm continue. This wm prevent interest rates from declining, making it impossible to reach the targeted goal of no more than a $43.1 billion deficit for fiscal 1982.

Spending must be balanced with the revenues that wm be collected. Crowding out by government borrowing, which is now constricting private capital markets, wm only worsen unless immediate budget cuts are identified and enacted by Congress.

As new fiscal spending constraints begin to work in the economy, expectations of continued inflation will be reduced and credit market conditions wm aga.ln support private investments. These are the key to a permanent turnaround in inflation. The investments are necessary to improve our country 's productivity as well as to support a housing recovery-and thus reduce the inflationary pressures of a worsening housing shortage. CREDIT CONDITIONS ARE PREVENTING A PRIVATE

SECTOR SUPPLY RESPONSE Credit conditions need to be tightened in

the economy for the foreseeable future. They have been too loose too long, with spirallng inflation the result. Also, an excessive relaxation of the Federal Reserve's monetary aggregate growth targets would be counter productive.

However, a more complete look is needed at the role of money supply growth restraint in the economy as an element of the government's anti-inflation policy. The link between the growth of money supply and economic activity is imprecise under the best of circumstances and is especially difficult to establish at present. Interest rates have attained record levels, structural changes are occurring throughout the financial markets, and financial sector deregulation is proceeding-all of which add to the difficulty in determining proper monetary targets.

A healthy, non-inflationary private sector requires a certain level of credit growth !or sustenance. When that need is coupled with large government credit demands a shortterm credit growth rate larger than longerterm monetary target rates may be appropriate. These credit market requirementsand conditions in labor and product markets- must be considered when economic policy is formulated and implemented.

As now constituted, money targets are causing a reduction in private sector investment, as attested by present conditions in housin~ markets and record real interest rates. Econo:onic oolicy which results in a t1"'hteninl7 of credit markets t o S' 1Ch a point t~"'?.t t~er: is no chance for anv "s110'11v-side" response is not efficient ln either the short or long run.

27088 CONGRESSIONAL RECORD-SENATE November 10, 1981 When labor markets are underemployed

and when other intermediate and final demand markets are severely underutilized, especially in credit-sensitive sectors, a relaxing of credit conditions is not inflationary. This is the present need in housing, as well as other credit sensitive sectors of the economy. Conversely, when markets are fully employed, additional or surplus credit is almost purely inflationary. This is the condition that has prevailed too often, and must not be allowed to develop in the future.

As efforts to reduce the federal deficit are successful, the long-term commitment to gradually reduce the growth of the monetary aggregates must continue.

In the development of monetary control targets, the .tore.;t produds !lndustry recommends that specifically ag.reed-·to target reductions in government deficits be incorporated with adequate private capital for investment. This wlll assure adequate capital to make progress towa·rd the long-term goals of the economy without ilntroducing the intlationa.ry consequences of past policies.

The integration of these fiscal policy and monP.t.a.rv policy propositions needs to be .reemphasized. A more austere fiscal stand, begmning immediately, is a necessary condition to this reinterpre·tation of the monetary-capital targets. If fiscal policy is not adequately tightened, more inflation will result. DEREGULATION FORCING NEW INSTRUMENTS FOR

HOUSING FINANCE

The combined effect of increased housing demand , record high interest rates, and structural changes resulting from the Depository Institution Deregulation and Monetary Control Act of 1980 will make it difficult for traditional mortgage lending institutions to meet mortgage credit needs. It has been estimated that a mortgage credit gap of approximately $31 bllllon annually wm exJ.s.t during 1980s. The expanded use of alternate mortgage instruments is essential for lende·rs to be able to offer financing and for consumers to be able to obtain mortgages during periods of volatlle interest rates.

The forest products industry supports recent actions of the Comptroller of the currency and the Federal Home Loan Bank Board in authorizing federally c'ha.rtered financial institutions to issue adjusted-ra-te mo..-ti!RI?'e<;. R.ecent. lmnlementation of standard mortgage origination :forms by the Federal National Mortgage A&sociation should also substantially increase use of alternative mortgage instruments. Increased standardi?:Rtinn "·f mo--te-a.P"e forms i'> 11rged. thereby facllltating increased market activity by non-traditional purchasers of secondary mortgage instruments. The shorter-term interest adjustment features of many alternative mortgages will also provide assistance to the thrift industry in dealing with its asse-t problem.

Experiences in other countries with alteTnative mortgage instruments has shown substantial consumer acceptance; however, initial consumer resistance is likely. Thus, it is important that the public is supplied with pertinent, understandable information about the different features of alternative mortgage instruments, and their suitabill.ty for each individual homebuyer. A BROADER SECONDARY MARKET IS ESSENTIAL

FOR HOUSING

The secondary mortgage market is relatively new. and its imnortance is increasing with deregulation. With the present economic squeeze on the thrl:ft industry, a large proportion or mortg84!'e lenders are operating as mortgage intermedi.ators. The secondary market, simllar to our highly developed corporate bond markets, has become a bridge between lending originators and investors. Expanded use or altem81tlve mortgage instruments should allow mortgage rates to be tied to other long-term ra.tes, minimizing

the severe fluctuation of short term rates that has been so prevalent recently.

The existence of both private a.nd public secondary market entities provides an excellent partnership for developing new markets for mortgage instruments. The mixture of the Federal National Mortgage Association, the Government National Mortgage Association, a.nd the Federal Home Loan Mortgage Corporation provides unique services for various types of mol'tgage lenders. GNMA alone has guaranteed more than $115 b1llion in mortgage-backed securities a.nd has pioneered numerous marketing innovations. Its marketing opera.tions are not subsidized, and function on a self-sustaining user-fee ba.sfs.

An important feature of Federal National Mortgage Association is that it allows broader acceptability of mortgage instruments. This is of particular importance during periods of capital stringency and transition. Strong support should be given to continuing unsubsidized GNMA programs. FEDERAL CREDIT PROGRAMS AND PRIVATE SECTOR

ALTERNATIVES TO THOSE PROGRAMS

The forest products industry supports the continuation of the unsubsidized mortgage insurance programs conducted by the Federal Housing Administration (FHA), the Veterans Administration (VA), and the Farmers Home Administration (FarmHA). S1nce 1934 FHA has met the housing credit needs of more than 16 milllon :families and has been a pioneer in establishing innovative mortgage instruments. Its existence has been the prime ingredient in providing needed mortgage credit at affordable cost. The non-subsidize::l portion of FHA is self-supporting and provides potential homeowners with an alternative for mortgage finance.

In addition, FHA provides stab111ty in the consumer mortgage market, particularly in periods of limited conventional mortgage availabllity. While terms o:f conventional loans insured by mortg·age insurance comp3.nies change with market conditions, FHA terms (other than interest rates) remain constant. THE ROLE OF SPECIALIZED INSTITUTIONS FOR

HOUSING FINANCE

The challenge :facing the thrift industry today is how to continue providing home mortgages at a time when savers are demanding premium rates. Special attention should be given the needs of mortgage lenders, including new legislative initiatives that can provide a bridge for existing thrift institutions to adjust to the demands they will experience this decade. The problems that mortgage lending institutions have in attracting deposits in today's deregulated climate deserve immediate study and attention. TAX ISSUES: HOUSING FINANCE AND FINANCIAL

INSTITUTIONS •

Tax policy. probably has a greater impact on housing finance and credit avallability than any other area or federal involvement. Since home buyers must now compete in the capital market for mortgage funds, t ·ax policy which encourages capital !ormation 1s of critical importance to the housing industry.

The savings rate in the U.S. has declined to an all-time low point. During 1979 households saved only 4.5 percent of disposable personal income, the lowest annual rate in the last 35 years. This is less than one-half o! the savings rate of most industrial nations.

A national savings rate target should be established and this target should be incorporated in the expected growth of capital markets and monetary targets. Since the expanded investment needs or the economy, including housing, must rely on the capital market, federal actions are needed to encourage greater savings and capital formation. The savings incentives contained in the Economic Recovery Tax Act o! 1981 should provide additional encouragement !or individuals to increase their rate o! savings. The

forest industry 1s particularly interested in whether or not the "All Savers" certificate wlll have a favorable impact on mortgage rates and the liquidity of the thrift industry.

During this decade, expanding needs for credit will place incrzasing pressures on the capital market to provide credit at competitive rates. Housing demand during the 1980's will also reach an all-time high. Since the housing industry must obtain its financial req,uirements from the broad available capital pool, Congress should continue its program of removing the existing anti-capital biases built into the tax code.

Tax incentives designed to encourage greater construction activity would not significantly alleviate the present crisis facing the housing industry. The problems causing the greatest difficulties are: ( 1) constraints on credit avallabllity; (2) regulatory restrictions, including those on land ava1lab111ty; and (3) interest costs. Ta.x subsidies designed to encourage building will not offer a solution to these problems. OTHER REGULATORY COSTS CONTRIBUTING TO

INFLATION IN HOUSING

The costs o! meeting build·ing code regulllltlons and local land use controls have become an embedded element of inflation in housing costs, and, in turn, the Consumer Price Index and wage negotiations. These costs have contributed significantly to the shortage o:f bullding lots for housing. Federal, state, and local code restrictions are also adding to higher building costs. The combined effect is inflationary increases in home prices. A program to reduce regulatory costs would contribute significantly to lowering inflation in both home construction costs and real estate values. This would benefit the economy as a whole, through reduced credit demands and lower 1ntla,.tion.

The PRESIDING OFFICER. Who yields time?

Mr. HEINZ. Mr. President, yesterday, I opposed the Chiles amendment. The perfecting amendment the Senator from Florida has offered to his amendment is virtually identical. The amendment attempts to do something we know does not WOTk. Credit allocations have been tried before. They are not the solution. Every time we try to solve one problem with a credit allocation, we cause another.

Mr. President, the Senate has a clear choice this morning whether or not it wants to do anything about high interest rates.

One of the things you cannot tell about these objectives, laudable as they may be-we would all like to see loweT interest rates-is that you are going to get higher interest rates when you try to bring about lower interest rates in some part of the economy by legislative fiat.

Second, as was discussed at some length yesterday-! think the Senator from Wisconsin put it very cleaTly and very succinctly-the problem with high interest rates relates to the size of the Federal deficit; and the si7-e of the Federal deflcit is a auestion for whJch we in Congress are ultimately responsible.

The House of Representatives, acting ftrst, under our ConsUtution. originates money bills and they come here, whether they are spending bills or tax bills, and it is our responsibiHty to deal with spending and tax matters so that we get the de~cits down.

To simply say to the President, "What you have to do is politicize the Federal

November 10, 1981 CONGRESSIONAL RECORD-SENATE 27089 Reserve Board, run the Federal Reserve Boa·rd," goes against everything most people in this body stand for. We do not want to politicize the Fed. We do not want any President to run the Federal Reserve Board. What we do want is a President and a Congress that will be fiscally responsible.

If we act on that precept and that principle, we will bring down these currently high interest rates-and even though they are down from 22 to 17 percent, I still think they are too highand we will get these interest rates down not for just one group or another group but for everybody in this economy.

Mr. PROXMIRE. Mr. President, will the Senator yield?

Mr. HEINZ. I yield. Mr. PROXMIRE. Mr. President, I con

gratulate the Senator from Pennsylvania. I believe he has stated the case extremely well. I agree with everything he has said. However, let me put it in a slightly different way.

The argument has been made by the able Senator from Florida that what we need to do is to relieve particularly the high interest rates in the homebuilding industry. I have great sympathy for that. There is no question that the people in the homebuilding industry, the homebuilders, are fiat on their back. Fine firms have gone bankrupt. Many young families want homes. They have that American dream, and they have saved for it, but they cannot buy because interest rates are too high.

However, where does the money come from? Either you have the Federal Reserve Board increase the supply of money. which is inflat•onary, and which the other side denies they want to do, as I understand it-they do not want to monetize the debt-or you get it from some other sector of the economy, or the Federal Government reduces its claims on the available amount of credit.

They say, "We would like to provide money for housing, for the automobile dealers, for the small business people, for the farmers." That is fine. But that is a colossal demand. From whom do you take it? Do you take it away from big business? They provide jobs. Virtually every State in the Union has a big corporation that provides a great number of jobs. In my State, in Kenosha, Janesville, and other parts of my State, if it were not for large corporations, we would have a very serious economic problem.

Take the problem of mergers. This has been attacked. Even with respect to mergers. there is no way we can take money out of that without reducing jobs.

For example, in my State, we have Schlitz and Heileman. Schlitz is in very bad shape. They have lost so much business that they are about to go out of business. Heileman is a smaller firm with excellent management. There is n~ question that if they can merge, they can save many of those jobs. There are thousands of people in Wisconsin who depend on it, as well as thousands of people all over the country. If we deny that merger, it means jobs will be destroyed in that industry. This is true everywhere.

We have to be extremely careful about saying that we are going to allocate more from one sector to the other, because either we deny jobs or we destroy companies in the process.

The one safe policy that I think all Members of Congress agree we should follow is to reduce the Federal debt, to balance the budget just as soon as we possibly can, to reduce net off-budget borrowing. If we do that, we can ease the amount of credit available. Less credit wlll be demanded by the Federal Government and more will be available in the private sector.

That is the way to go, but that is not the way the Chiles amendment would go. The Chiles amendment, with all due respect, would require, one way or the other, an allocation of credit and would ignore the fundamental problem, which is the problem of getting our Federal fiscal house in order.

Mr. KENNEDY. Mr. President, I am pleased to join the ,other sponsors of this emergency amendment calling on President Reagan to take action to bring interest rates down.

Responsibility for the plague of high interest rates rests squarely with the PreS'ident. In a very real sense, the Federal Reserve follows the flag. I am confident that if the President sends the proper signal to the Federal Reserve, the Fed will act to insure that assistance flows immediately to the critical sectors of our economy that are starved for credit.

But this interest-rate-induced recesS'ion for the rest of the economy long ago became a depression for the housing industry, the auto industrv, small business, and small farmers. Unless the President acts now, these essential sectors of our economy will be damaged even more severely.

In addition to directing credit on an urgent basis to these important areas, the amendment we are offering also calls on the President to take action to prevent vast amounts of scarce credit from being siphoned from the economy for oil company takeovers and other nonproductive purposes.

A few weeks ago, we saw the first of the new wave of "oil wars" battles, in which some of the largest oil companies in the Nation obtained lines of credit worth tens of billions of dollars in their unsuccessful bid to take over Conoco.

Now, it is happening again. One of the largest oil companies has obtained a $5 billion line of credit to finance its takeover bid for Marathon Oil Co. And Marathon has countered by openin~ a $5 billion line of credit of its own. in order to finance its defense against the takeover.

It is wrong, and the worst kind of economics, to pursue a credit policy under whi.ch giant oi.l companies can borrow $5 billion in a single day, while an average family cannot obtain a home mortgage even at the fantastic interest rate of 19 percent.

The crisis of high interest rates has now been compounded by the most recent figures on unemployment, which have brought even more bad news for the economy. The unemployment rate has surged to 8 percent across the Na-

tion, a rise of half a point in a single month. In Massachusetts, the rate climbed even more steeply, from 6.4 percent to 7.9 percent in the past monththe largest increase in any industrial State.

The soaring rate of unemployment is yet another symptom of our sick economy. In his Labor Day address to the Nation, the President promised that his economic program would bring "jobs jobs, jobs, and more jobs." But so far: wha~ we have seen is "lost jobs, lost jobs, lost JObs, and more lost jobs."

We are witnessing the disintegration of the Reagan economic policy. Their plan just will not work. It was flawed from the beginning. They pledged torestore prosperity. But instead they have given us what is likely to be the worst economic mess since the Great Depress :on- an unremitting assault of high interest rates, high inflation, rising unemployment, huge budget deficits, and now a serious recession.

The "misery index"-the sum of the inflation rate and the unemployment rate-is one of the measures President Reagan himself used in his campaign last year to describe the distress in our economy. When the President took office last January, the "misery index" stood at 15.8 percent. Now, it has climbed to 22.4 percent, an increase of over 40 percent in 9 short months.

The time has come for the administration to take off its rose-colored economic glasses and confront the crisis caused by its failing economic program.

Above all, the President must put his own house in order. His policy is divided three ways against itself, as tensions and conflicts escalate among the budgetbalancers, the supply-siders, and the monetarists in the administration's councils-each tugging the President in a different direction on the economy. The President must choose. The administration must speak with a single voice on economic policy, not the three-headed monster we hear today.

As the President once asked, are we better off today than we were before? In November 1981, the answer is clearly no. Millions of Americans are far worse off today than they were in January when the President took office. The question the President asked has now come back to haunt him, and it is time he found a better answer.

What the country needs is a serious economic policy to deal with our serious economic problems. What we do not need is more tax increases or deeper spending cuts that hurt the middle class and the unemployed. What we do need are realistic steps to bring interest rates down and to stop this recession before any more workers lose their jobs.

I urge the Senate to adopt the pending amendment as a first important step toward achieving this goal. The well-being of millions of families and countless enterprises in our society hangs in the balance. The time has come for action to bring interest rates down and to bring our economy back to health. e Mr. HUDDLESTON. Mr. President, the repercussions of the stubbornly high r~tes are shaking the very foundations


of our economy and we must find a solution to the problem soon. I believe that this amendment will heLp us focus our attention on the devastating problem and choose the necessary course of action we must take in the coming weeks.

I believe that there is a general consensus in the country today which accepts the fact that some sacrifices will have to be made in order to reduce inflation and provide incentives for economic growth. However, the evidence clearly shows that the high interest rates brought about by our present policies are having a substantially disproportionate impact upon certain groups within the economy.

There is no question that the brunt of this burden is now falling on potential homeowners, small businesses, small farmers, consumers, the auto industry, and small thrift institutions. I believe this inequitable distribution of the economic burden shows basic disregard for the principles of fair play which we operated under in the past. And I believe that we must bring an immediate halt to the policies which are contribuing to it.

The housing industry is experiencing the deepest slump in its recorded history. Recent housing starts fell to the lowest level in more than 5 years and the proS'Pects for the future do not look better. Most of this has been brought on by the excessively high interest rates which have sharply reduced the ftow of money into the housing market.

When housing is down the effects are felt throughout the economy. Hundreds of housing-related businesses have closed their doors and thousands of pea1;>le have been put out of work as a result of the ripple effects. And, more will surely follow.

However, far more damaging than these economic effects is the repudiation of the commitment this country made to provide affordable and decent housing for all its citizens. We hear a lot being said these days about preserving the family, but little concern is shown for the new families who are unable to afford their own homes.

Those who were priced out of the housing market by the high inftation rates now see their dreams of owning their own homes fading further into the distant future as a result of the unconscionable high interest rates.

Small businesses of all kinds are finding it more and more difficult to survive because of the excessively htgh mterest rates which have deprived them of needed capital and lines of credit. Dun & Bradstreet reports that the bankruptcy rate is up 42 percent compared to the same period last year.

However, the plight of the small businessman is in direct contrast with the situation larger businesses now find themselves in. The corporate loan demand for larger businesses is on the ri'Se and there appears to be plenty of credit for these companies regardless of the need.

In July the House Banking Committee reported that "at last count nearly $40 billion worth of takeover lines of credit exist." WhiJe it is difficult to .iudge the merits of these mergers and takeovers,

it does appear that substantial lines of credit are readily available for what some would consider to be nonproductive purposes.

It increasingly appears that we may be in an economic situat;_on where smaller companies are starved for credit due to excessively high interest rates and large corporations are taking advantage of the situation to make nonproductive acquisitions.

Some would argue that this is the normal competitive process and it is the expected result when the free market is allowed to work its will. However, I believe that this is not a "f!ee market" in operation. The administration's economic policies have forced upon us an arbitrarily set tight monetary situation which is allocating credit through high interest rates to large businesses. This is hardly a situation which could be called competitive.

In the auto industry the news is also bad. Analysts were expecting a modest gain in auto sales in August. However, the expected 2-percent increase turned out to be 0.6 percent and predictions for the fourth quarter are for a continuing slump.

Net farm income fell 40 percent last year and the prospect of bumper crops and the high cost of financing inventories make the outlook exceedingly bleak. Farmers are now paying anywhere from 16 to 20 percent for financing and a substantial part of this is only short term. If the high interest rates continue, many small farmers will be forced out of business and only the larger ones will survive.

Traditionally, a tight monetary policy and high interest rates have been used as the weapon to :fight inftation. However, when it is the primary weapon and is used to extreme, it also contributes to the inftation problem. The high interest rates will increase the net interest burdens on nonfinancial business organizations and these higher costs will certainly show up in the future economy as higher prices.

Balancing the Federal budget is another way of :fighting inftation, but the excessively high interest rates are obstructing and delaying our efforts along these lines. The high rates mean that when the Federal Government borrows money to finance the existing debt, it must pay considerably more for that money.

This extra cost is in tum piled on top of the Federal debt. Throughout the 1970's the annual net interest rate charges amounted to about 7 percent of Federal expenditures. However, this has now increased to over 12 percent in fiscal year 1981. The high interest rates are literally adding billions of extra dollars to the Federal budget.

While it is obvious tha;t excessively h;.gh interest rates are causing the United States severe economic problems, there is disagreement on why the rates are so high. Part of the reason is that the Federal Reserve is carrying out a I:Jght monetary policy which can be expected to result in high interest rates. However, the severity and continuity of these high rates has produced confticting

opinions as to the true underlying reasons.

After reviewing various economic reports, I am convinced that all of the fault cannot be laid at the feet of the Fed. Instead, it must be traced back to the inconsistent and contradictory economic policy which the administration has put in place.

By the beginning of the August recess the President had gotten everything he had asked for in regard to his economic program. The massive budget cuts had been agreed to and the much more massive tax cut was passed. All of this was done with assurance that this program would stimulate growth, reduce innation, promote economic stability, and balance the budget by 1984.

However, it did not take much time for the illusion created by the administration to dtsanpear and the reaUties to sink in. The realities are quite simply that the real figures do not support the rosy picture we were painted by the administration. The budget deficits, instead of receding into oblivion in 1984, are now growing larger with every new proiection. Most economists now believe that it will be over $100 billion by 1984. Once Wall Street realized this, we began to feel the feedback in the form of excessively high interest rates which would not come down.

These high interest rates should not be a surprise to most of us since they have been a part of the administration's economic program for some time. The President has consistently supported them and it is obvious that the Federal Reserve could not continue its extremely tight monetary policy without strong administration support.

However, none of this should come as a surprise because most economists agree that with a stimulative :fiscal policy, the only effective weapon against inftation is a rec:;trictive monetary policy. This dual and inconsistent economic policy has been graphically described by the chairman of the House Budget Committee as "the equivalent of stepping hard on the gas at the same time as you slam on the brakes. The result will sound spectacular-until either the brakes faiJ or the engine blows."

The American people were promised by the administration that it had the formula for stimulating economic growth, reducing inftation, lowering interest rates, and balancing the Federal budget. They have been delivered huge deficits, near record interest rates, a recession, and increasing unemployment.

I do not think that ·any economists, even the suppl:v-stders, would disagree with the observation that it does not take a great deal of imagination or ability to reduce inftation by inducing a recession. However, we were promised much more by this administration. If the present economic situation is the introductory course in the new Reaganomics, I do not belteve that the working people of this country can afford to sign up for the advanced degree.• e Mr. BRADLEY. Mr. President. high interest rates have driven the economy into a disturb:ng recession, leaving countless bankruptcies and high unem-

November 10, 1981 CONGRESSIONAL RECORD-SENATE 27091 ployment in their wake. The damage being done to our economy pains me because of the cost to our citizens and our national strength, and it disturbs me because it was not necessary. Rather it was the direct result of the irresponsible economic policy demanded by this administration. It was the direct result of a policy which forced the Federal Reserve to conduct a tight monetary policy to combat the inflationary pressures released by the administration's expansionary :fiscal policy.

Mr. President, we cannot allow ourselves to forget for 1 minute that the reason for the high interest rates is this :fiscal policy, a policy which even the President now admits will preclude a balanced budget by 1984, and which some of the President's advisers are said to now recognize will produce a 1982 deficit near $100 billion.

The response of the Federal Reserve to this kind of :fiscal policy was predictable: To restrain the inflationary pressures of the President's budget by keeping monetary growth at low levels. In fact, the President's advisers encouraged the Federal Reserve to keep money tight. The budget had been made the victim of a careless personal tax cut. With a hemorrhaging budget and with administration encouragement, the Fed felt compelled to restrict the flow of money through the economy. That meant high interest rates.

Mr. President, I will vote against the resolution of the Senator from Florida and the substitute offered by the Senator from Pennsylvania because I believe they divert attention from the real cause of the interest rate tragedy-the President's :fiscal program. The economic injuries and hardships described in the two amendments are correct, and I join in the urge to deplore current conditions and resolve to do someth!ng about them. But the solutions which the amendments appear to point to are wrong. The antidote to high interest rates is not loose money or credit controls or even exhortation of the Fed. Loose money will spur inflation, which risks driving long-term interest rates even higher. Credit controls risk diverting resources from more to less productive uses.

Distorting market decisions could exact a high price in the productivity growth we need to lower prices and restore competitiveness to our industries. And exhorting the Fed risks not only the result of an inflationary or distortionarv monetary policy, but the diversion of public attention from the President's budget and revenue program, which is the real source of the economy's ills, including high interest rates.

Mr. President, I oppose high interest rates, I oppose the devastation of the housing industry, the crippling of the auto industry, and the debilitation of small businesses generally. I oppose all these things because they are dec;troving the lives of Americans today and their dreams for tomorrow. And I fear that the pains produced by the high interest rates today are mild compared to the pains that may be produced by the recession underway. Ironically, because of this re-

cession, interest rates are falling and probably will continue to fall, even dramaticallY. But we can take no pleasure in declining rates brought about by declining growth.

I cannot support a resolution that appears to me to divert blame from where it truly lies-with the administration's economic program of large and poorly structured tax cuts.

This program has placed us in a dilemma where continuing the President's loose fiscal policy risks unacceptably high deficits, while t.ightening :fiscal policy by increasing or restoring taxes risks exacerbating the current recession.

If the President had kept his :fiscal policy tighter, with a smaller and different tax cut, wh~ch permitted the Fed's monetary policy to be less restrictive, we would not be in this dilemma today. We would be moving the budget toward balance, and because of lesser monetary pressures, interest rates almost surely would be lower.

But conditions are what they are, and they are largely what the President's program has made them. They would not be imnroved by looser money, credit controls, credit allot:ations, or time spent cajoling and crit~cizing the Federal Reserve Board. Therefore I will vote against these resolutions. By doing so I reaffirm my commitment to work with the President and my colleagues to correct the damage, including high interest rates and recession, being done to the economy by the administration's current tax and spending program for :fiscal year 1982 and the outyears.e HIGH INTEREST RATES: PUBLIC ENEMY NO. 1

Mr. ROBERT C. BYRD. Mr. President, I rise in sup~ort of the amendment offered by Senator CHILEs. We are at a crisis in the credit-sensitive ~ectors of our economy. Whatever hope the supply side m~.racle may have held out to our jobless citizens is swept away by sky-high interest rates that make new investment unprofitable.

The Chiles amendment directs the President by November ;'.5, 1981, t·o work with the Federal Reserve Board to assure an adequate flow of credit to small borrowers. It requires that particular attention be paid to reducing home mortgage rates and increasing employment.

The amendment also directs the President to limit large-scale diversion of credit to nonproductive uses, such as conglomerate mergers and corporate takeovers. This amendment takes strong action to bring interest rates down now, and let the economy begin to grow.

There has been much talk about declining interest rates lately, and it is true that the prime rwte has fallen to 17 percent. But is 17 percent something to be satisfied With? Is it a rate we can tell our Nation's businessmen they should pay?

While the prime rate, and other shortterm rrutes, are edging downward, longterm rates are staying high. Just last Thursday, 29%-year Treasury bonds sold at an all-time high of 14.1 percent, and mortgage rates continue to hover near 18 percent.

Unless long-term ra·tes come down,

capital investment will not increase significantly, and the housing industry will not recover. Companies Will be reluctant to use short-term money for capital investment, even if these rates are low, because the returns to capital investment are often many years in the future. Turning to housing, one simple fact determines the fate of that industry: The vast majority of our Nation's families cannot afford to buy a house at 18 percent interest. Until those rates come down the housing industry cannot recover.

The drop in short-term rates, while long-term rates stay high, reflects a combination of widespread confusion about the administration's fiscal policies, and the strangling effects of its tight monetary policy.

The lower short-term rates reflect the impact of the current recession, but the high long-term rates reflect a belief that after a small dip, inflation and credit demands will soar once more.

The administration's disarray on fiscal policy is only adding fuel to the fire. Investors will not accept lower returns on long-term investments until they believe that our Government has returned to a responsible fiscal policy. Unfortunately, every week brings new, and larger deficit predictions for the next 3 fiscal years.

Only a few months ago, $100 billion deficits were characterized as out of the question. Now a $100 b111ion deficit is widely predicted for this fiscal year. It may be hard to imagine deficits that large, but consider that to spend $100 billion we have to spend $1.60 for every second since the birth of Jesus Christ.

Last Friday, after assuring the Nation for 9 months that a balanced budget could be reached in 1984, the administration formally abandoned that goal. As a result of that announcement, the investment community, small businessmen, and labor leaders have no reference point against which to make their economic plans for the next few years. The administration must come forth with new, realistic deficit goals for fiscal years 1982, 1983, and 1984. There is no substitute for fiscal responsibility as a way to bring long-term interest rates down.

As the days go on, and this recession deepens, the importance of passing Senator CHILEs' amendment becomes more clear. Unless interest rates come down it will be next to impossible for th~ economy to recover.

The housing industry, which traditionally leads the economy out of recessions, shows no signs of improving. Yesterday's Wall Street Journal quotes a homebuilder in Kansas City as saying "Thic; fall, we builders will drop lik~ leaves."

If the fall turns out to be anything like the first 9 months, there may be little left of the housing industry by year's end; 2,660 construction contractors had filed for bankruptcy by the end of September. That is up nearly 50 percent from the 1980 period. The rate for subcontractor failures is even higher, with bankruptcy filings up 120 percent from last year's figures.

No amount of supply-side rhetoric, or administration assurances will help the Nation's housing industry lead us out of recession. We need fast action, and the Chiles amendment guarantees such action. I hope you will all join me in supporting this amendment today.

I ask unanimous consent th!'tt the full text of yesterday morning's Wall Street Journal article be printed in the RECORD.

There being no obiection, the article was ordered to be printed in the RECORD, as follows: BUILDERS' LOSSES MOUNT As PROLONGED SLUMP

IN HOUSING CONTINUES (By G. Christian HUl)

KANSAS CITY, Mo.-Robert 0. McCollom has the wistful, grizzled look of ·a prospector who once struck it rich only to lose it all to bad luck.

The look fits. The lanky, 39-year-old former schoolteacher began a home-building business in 1969, parlaying $350 from the sale of an old Chevrolet into a fair-sized fortune by tl)e mid-1970s. He gained a reputation for building innovative, well-designed homes. But in September, Mr. McCollom filed for bankruptcy, joining hundreds of home builders ruined by two years of high interest rates that have sapped sales.

Nonetheless, Mr. McCollom views his troubles with equanimity. "I made some bad business decisions," he says, "but they wouldn't have been fatal without the economic downturn." He adds, "This fall, we builders wm drop like leaves."

OMINOUS ASSESSMENT Most home builders and lenders agree with

his ominous assessment. Builders have been hammered by the longest housing slump since World War II. Although many of them shut down early anct trimmed inventories, others were caught with ra.w or developed land and partly built or completed homes, financed at steadily ballooning interest rates. With home sales at record lows, their huge carrying costs have finally exhausted the profits they made in the good years after the 1973-75 recession.

The current housing recession is markedly different from prior ones in the mood of despair it has spread throughout the industry. For the first time in 50 years, this usually optimistic breed doesn't see much chance of a recovery or a boom in the near future.

"Much of the building fraternity is reaching a shocking conclusion," says Merr111 Butler, a California builder and past president of the National Association of Home Builders (NAHB). "That is, mortgage rates will srtay high through much of 1981, and it is better to take your medicine now than in six months. The small builder is just being wiped out, and it's going to get worse."

In the first nine months of this year, 2.660 construction contractors filed for bankruptcy, up nearly 50 percent from the 1980 period, according to Dun & Braclstreet. :rn all of 1975, 2,262 contractors filed for banl{ruptcy. Bankruptcy filings by subcontractors have increased 120 percent so far in 1981 from last year. These trends are likely to continue because lenders' foreclosures on new housing developments have picked up in the last 60 days, especially in previously hot markets such as Texas and Southern California.

LOSING THEIR SHIRTS And lots of builders are losing their shirts

in ways that don't show up in the failure statist,ics. Some are handing proJects back to lenders in lieu of foreclosure, which avoids a court action but still wipes out their entire investment. Others are subsidizing home buyers by paying lenders to offer belowmarket interest rates. or are aur.tioning off pro?~rty or selling entire s11bdivisions to investor groups at cut-rate prices. These agreements cost them much of the equity they have built up over the years.

Builders aren't the only ones hurt by the housing slump. Some financial experts believe the national economy will remain sluggish without a robust recovery in housing. which accounts for 4 percent of the gross national product. The NAHB predicts thart housing starts will total only 1.07 million units this year, down 18 percent from last year's 1.31 million starts and the lowest level since 1940. A further slowdown could lead the country into a sharper-than-expected recession.

lAnd there are signs that the true depths of the plunge in housing starts haven't yet shown up in government statistics. Many lenders stopped making residential-construction loans at least two to three months ago. These include Royal Savings & Loon in Dallas, Gi·bralter Savings & Loan in Houston and First Interstate Mortgage Co., a unit of First Interstate Bank in Los Angeles and one of the nation's biggest residential construction lenders. About half of the NAHB's 44,000 member builders have stopped building homes.

PENT-UP DEMAND The industry's problems would ease if the

recent decline in interest rates results in a sharp drop in mortgage rates from thetr current level of 17 percent to 18 percent for builders report tremendous pent-up demand for housing. Such a rapid recovery occurred after the 1974-75 housing slump.

But mortgage rates haven't dropped yet, and they probably won't until lenders are convinced that interest rates will keep falling and stay down. For now, most lenders believe that infiation, the FedeiJ.·al Reserve Board's tight-money policy and huge government deficits promise to keep long-term interest rates chronically high.

So the current decline in housing production, which started in November 1978, is expected to continue at least through mid-1982.

The collapse of housing starts and home sales also appears to be sparldng a marked defiatlon in real estate, although the existence of such a trend is sharply debated by economists. Here in Kansas City, for example, builders say land prices ha~ fallen as much as 25 percent and labor, materials and other construction costs as much a.s 25 percent to 40 percent, in the past 18 months.

One real estate man reports concern among homeowners in the affluent Johnson Oounty suburbs of Kansas City, as partly completed subdivisions are abandoned by builders or neighboring homes are sold for significantly less than a year ago. In Palm Springs, Calif., builder Karl Bergheer auctioned off 38 singlefamily homes last May for an average price of $205,000, about $45,000 be,low the avernge price paid by buyers of identical units last year.

"No other postwar cycle has seen (such) a defiation in prices of homes and land," says Michael Sumichrast, the chief economist for the NAHB.

The average price of new homes sold in the 1981 third quarter rose just 0.6 percent, the smallest increase since the 197'> fourth quarter and down sharply from the 8.9 percent increase over the past 12· months. However, even these increases are supported largely by subsidies given to buyers through below-market-rate loans. Such loans represent hidden discounts of 5 percent to 10 percent from stated prices. If these costs are taken into account, home prices are falling, some observers say.

Other economists doubt that defiation is widespread. They regard reports of dro-s in home values as evidence of a short-term cooling of overheated prices in a few areas, rather than a long-term trend. But a staff member of the Federal Reserve Board says its governors are "horribly concerned" about the housing industry and the possiblllty of wides-read deflation in housing. That would endanger both lenders and borrowers, who bank on the continuing value of real estate for their net worth and repayment of loans.

Builders' costly inventory of unsold homes, their mo~t lmme::!ia+e problem, stands at about 300,000 units. That is below the 1974 level, but the annual rate of new single-family home sales also is lower now. As m~my as 25 percent to 50 percent of reported home sales end up falling through because buyers can't a.uallfy for mortgage loans.

Builders also must compete with the inventory of existing homes for sale, which hq,c; c;wnll~n to an estimated five mlllion listings as existing home sales have declined by ne.uly 50 percent from a peak recorded three years ago.

"In my opinion, the future is more bleak than in 1974, even though the oversupply of new housing isn't as great," contends John Opperman, First Interstate Mortgage's chairman. "We have an affordab111ty problem we didn't have then, interest rates are higher and I think there is an overall expectation that housing isn't as good an investment as it has been in the past."

In the last few months, First Interstate foreclosed on five su"Jdivisions in C:~lifornia, three in the depressed San Diego market. Another big West Coast banker, who has recently foredosed on seven California projects, says "The end result of the squeeze on small and medium-sized builders wm be lenders' re"'ossessing projects." He adds, "I can't see what wlll stop it, to tell you the truth."

In Dallas, Royal Savings & Loan since July has taken over 56 single-family homes worth about $6.7 million. Builders handed them over in lieu of foreclosure. Tl"e S&L is having trouble selllng them at their average appraised value of $120.000 each, even though it is offering 11% percent mortgage loans with no ori~in::~tlon fees and is paying an extra $1 ,000 bounty to real-estate agents for each buy·er thev brinR" ln. So far, it has 10 houc;es sold or under contract.

Mo.st lenders are leaning over backward to avoid talring back prooertv. Jn Houston, Superior Homes Co., a large home builder, has defaulted on its construction lo·ans with Gibraltar S&L. The Houston thrift is deferring interest charges on about 60 homes as Superior attempts to sel'l them with heavily suhc::ifdzed mortgages.

The outlool{ is grim. however. "Another six months of these interest ra.tes, with sales volume as it stands. will ha•re a se·•ere impa.ct on any 'builder's a.biUty to ma.1nta1n deht service." ~avs Rir:hard Knee, Gibralh•,.'::l vt"e nresinent. "We can prepare ourserves to own some real estate." Superior's pre3ident. David A. Hall, vows never to return to building tract homes, and instead will concentrate on custom homPS.

Mr. McCollom. the Kansas City b ' 11ldoer. al"o won't be building bomes ac:mln, at least not in the U.S. Up until the fall of 1979. he was constructing 10 to M custom homes a year, in the $100,000 to $300,000 ran~. He lived in a fancy house. fiew his own airplane, and took lengthy scuba-diving and sailing vacB~tions. "I spent a whole bunch of money," he recalls.

But in the ciac::sic case of bad timing, he be·'!an salec; at a small subdivision in midOctober 1979, when mortgage rates were starting their rapid climb. Mr. McCollom was traoped with seven homes and 10 lots, $1.2 mlllion of debt and interest ex::>ense of about $450 a day. Jn ·the next two years, he managed to sell three 0<! the homes, two at prices as much as $13,000 below his costs. Other tentative sales fell through as ·buyers couldn't qualify foor financing. His carrying costs didn't fall because interest rates continued to soar.

He kept his head above water by turning to remodeling, whic.h generated enough inoome to pay his debt interest. But that business evnporated on July 1, when subcontractors underbid him for $200.000 of cunstruction by 20 percent to 25 percerut.

In Se..,t.emb!'!r. Mr. l\Jf<"'Co11om, whose home-bulldlng bu~iness is incorporated, filed for protection under Chapter 11 of the Fed-

eral Bankruptcy Act. It is possible under Chapter 11 for a company to survive a.s a going concern after working out a plan to pav its debts.

Mr. McCollom contends that his liabi11-ties ex..;ee ..... n." a.;secs iJY bO much that l:~e expects to lose everything in bankruptcy proceedings, including about $100,000 invested in his houses. His creditors include four lenders and several subcontractors.

He now is looking for a job in Saudi Arabia, or some other developing nation, managing a residential construction project.

"The sad part about all of this is that when the housing market turns, nobody will be here," Mr. McCollom remarks, "I know I won't be coming back.''

Mr. HEINZ. Mr. President, if the Senator from Florida is prepared to do so,

I am prepared to yield back the remainder of my time.

Mr. CHILES. I will use a couple of minutes.

Mr. President, I listened with interest to what the distinguished Senator from Wisconsin said. While I know there is a merger such as the Schlitz merger which may be one of necessity, I do not think that speaks to the kind of merger that involved Conoco, the ninth largest energy company in the country. There was nothi.ng wrong with their financial stability. In fact, one of their problems was that they had too much cash in the bank, too much reserves; and because of that, they were the target for a takeover, and they were taken over.

We see that happening with many other companies, not because of economic necessity but because of c-orporate greed as much as anything else. We are just going to go out there now and sop up credit and take over these particular companies. That is what we see happening out there, and that is the kind of thing we have to reverse.

The Heinz substitute would say that the current policies are working. The President has already said he is not goi.ng to be able to balance the budget in 1984. When the credit markets see the new 1983 and 1984 deficit figures in January, we can imagine that they are going to go wild. The President has said he will not accept any tax changes to balance the budget. The table I put in the RECORD yesterday shows that everything will be cut 36 percent, not 12 percent, and I do not think that could be possible. Certainly, a fundamental part of this is on the spending side, but a fundamental part of this is also on the monetary side.

Mr. President, I am prepared to yield back the remainder of my time.

Mr. HEINZ. I yield back the remainder of my time.

The PRESIDING OFFICER. All time having been yielded back, the question is on agreeing to the Chiles perfecting amendment. On this question the yeas and nays have been ordered and the clerk will call the roll.

The bill clerk called the roll. Mr. STEVENS. I announce that the

Senator from Rhode Island (Mr. CHAFEE), the Senator from New York <Mr. D'AMATO), the Senator from Alabama <Mr. DENTON), the Senator from Arizona <Mr. GoLDWATER). the Senator from California <Mr. HAYAKAWA), the Senator f:rom Kansas <Mrs. KASSEBAUM) , the Senator from Idaho <Mr. McCLURE),

and the Senator from Oregon <Mr. PACKWOOD) are necessarily absent.

I further announce that, if present and voD:ng, the Sc.nator from Rhode Island <Mr. CHAFEE) would vote "nay."

I further announce that, if present and voting, the Senator from New York <Mr. D'AMATO) would vote "yea."

Mr. CRANSTON. I announce that the Senator from Arkansas <Mr. BuMPERS) , the Senator from Nevada <Mr. CANNON), the Senator from Connecticut (Mr. D:)DD), the Senator from Hawaii <Mr. INOUYE), the Senator from Rhode Island (Mr. PELL), the Senator from Mississippi <Mr. STENNis), and the Senator from Hawaii <Mr. MATSUNAGA) are necessarily absent.

I also announce that the Senator from Vermont (Mr. LEAHY) is absent because of illness.

I further announce that, if present and voting, the Senator from Nevada (Mr. CANNON), the Senator from Rhode Island <Mr. PELL), and the Senator from Vermont <Mr. LEAHY) would each vote "yea."

The PRESIDING OFFICER. Are there any other Senators in the Chamber wishing to vote?

The result was announ:ed-yeas 32, nays 52, as follows:

[Rollcall Vote No. 361 Leg.] YEA&--32

Baucus Hart Biden Hawkins Bor.en Heflin Burdick Hol lne;1 Byrd, Robert C. Huddleston Chil.e<> Jackson Cranston Johw.ton DeC' ·nclni Kennedy Eagleton Levin Exon Long FOii'd Melcher

Abdnor An·irews Armstrong Baker Bentsen Boschwitz Bran ley Byrd,

H!\!'rV F ., Jr. Cochran C0h en Danforth Dl ·~on Dole Domen:ic1 Duren berger Ear;t Ga.rn

NAYS-52 Glenn Go·rtc-n Grassley Hatch Ha tfield Heinz Helms Hrmphrey Jepsen Kasten Laxa:t Lu e-ar Mathias Mattingly M')ynihan Murkowsk1 Nickles Percy

Nret'7enbaum Mitchell Nunn Pryor Randolph RleO' ·e Bar banes Sasser Wil'tams Zorinsky

Pressler Pro·· mire Q1~avle Roth R.,, ~:ma.n

Schmitt s ·mpson Specter S i.afford Stevens Symms Thn:·mond Tower T"on~as Wallop warner Weicker

NOT VOTING-16 Bumpers Goldwater Cannon Hay.akawa Chafee Inouye D'P.m.a to Kassebaum Denton Leahy Dodd Matsunaga

McClure Packwood Pell Stennis

So Mr. CHILES' amendment was rejected.

<No. 627)

AMENDMENT NO. 626

Mr. HEINZ. Mr. President, what is the pending business?

The PRESIDING OFFICER. Under the previous order, the Senate will now resume conr,iderat;on of the amendment of the Senator from Pennsylvania <Mr. HEINZ) , amendment No. 626, on which there shall be 30 minutes' debate with a rollcall vote thereon to follow immediately.

Mr. HEINZ. Mr. President, I do not know that there is much need to debate

the subst:tute. I think we have debated these issue3 pretty thoroughly and at length yesterday and again this morning at 10 o'clock. So I am prepared to yield back the remainder of the time on this side in order to expedite the vote on the substitute.

Mr. CHILES. I am ready to yield back my time.

The PRESIDING OFFICER. All time having been yielded back, the question is on agreeing to the amendment of the Senator from Pennsylvania. The yeas and nays have been ordered, and the clerk will call the roll.

The bill clerk called the roll. Mr. S.l 'EVENS. I announce that the

Senator from Rhode Island <Mr. CHAFEE), the Senator from New York <Mr. D'AMATO), the Senator from Alabama · <Mr. DENTON), the Senator from Arizona (Mr. GOLDWATER), the Senator from California <Mr. HAY/.KAWA), the Senator from Kansas <Mrs. K o\SSEBAUM), the Senator from Idaho <Mr. McCLURE), and the Sena~.or from Oregon <Mr. PACKWOOD) are necessarily absent.

I further announce that, if present and voting, the Senator from Rnode Island <Mr. CH'lFEE), and the Senator from New York <Mr. D'AMATo) would vote "yea."

Mr. CRANSTON. I announce that the Senator from Arkansas <Mr. BuMPERs), the Senator from Nevada <Mr. CANNON), the Senator from Connecticut <Mr. DODD), the Senator from Hawaii <Mr. INOUYE), the Senator from Rhode Island <Mr. PELL) , and the Senator from Mississippi <Mr. STENNIS) are necessarily absent.

I also announce that the Senator from Vermont <Mr. LEAHY) is absent because of illness.

I further announce that, if present and voting, the Senator from Nevada <Mr. CANNON), the Senator from Rhode Island <Mr. PELL), and the Senator from Vermont <Mr. LEAHY) would each vote "nay."

The PRESIDING OFFICER. Are there any other Senators in the Chamber who wish to vote?

The result was announced-yeas 50, nays 35, .as follows:

[Rollcall Vote N?· 362 Leg.] YEAS-50

Ab!'lnor Andrews Armotrong Baker Bentsen Bo.schwitz Byri,

Harry F., Jr. Cochran Cohen Danfo.rth Dole Dom P.n 1ci Duren berger East Garn Gorton

Grassley Hatch Hatfield Hawkins Heinz Helms Humphrey Jepsen Kasten Laxalt Lugar Mathias Matt•ngly Moynihan Murkowski Nickles Percy

NAY&--35 Baucus Ford Biden Glenn Boren Hart Bradley Befl.'n Burdick Holllngs Byrd, Robert c. Hudd.leston Chiles Jackson Cra.no;ton Johnston DeConcini Kennedy Dixon Levin Eagleton Long Exon Matsunaga

Pressler Proxmire Quayle Roth Rudman Schmitt :S . lll,t,>.,OD Specter Stafford Stevens Symms Thurmond Tower Wallop Warner Weicker Zorinsky

Melcher Metzenbaum Mitchell Nurun Pryor Randolph Riegle Sarbanes Sasser Twngas Williams

NOT VOTING-15 Bumpers Dodd Loshv CamtJliOID. G()]ctwater McOlure Chafee Hayak:e.wa Packwood D'Amato Iruouye Pell Denton Kassebaum Stelnlnda

So Mr. HEINZ' amendment <No. 626) was agreed to.

Mr. HEINZ. Mr. President, the pending business would now be to vote on the Chiles amendment, as amended. We have already had two votes on the Chiles perfecting and the Heinz substitute.

I have talked to Senator CHILES. I understand that, although the yeas and nays have been ordered, he would be amenable to vitiating them. Therefore, I ask unanimous consent that we vitiate the yeas and nays on fihe Chiles amendment as amended.

The PRESIDING OFFICER. Is there objection? Without objection, it is so ordered.

Mr. MELCHER. Mr. President, the action that the Senate has ,iust taken in agreeing to the substitute offered by the Senator from Pennsylvania is an action that does little or nothing to lower interest rates. With unemployment at 8 percent--meaning 8% million workers are out of a job currently-with perhaps more loss of jobs to occur during the next several months due to high interest rates, this action bv the. Senate seems to be saying to the American people that we really do not need to do very much, or at least, we do not need to do very much at this time. Yet it is absolutely essential that interest rates come dow'n quickly.

In the case of housing, with the fewest ~ousing starts in the past several years, ~t comes ~ no surprise that the housing mdustry 1s in a depression. That affects a tremendous amount of Americans and is one of the causes of the high unemployment rate currently. It affects the realtors, surveyors, the ditch diggers, the laborers that work on housing, the carpenters and electricians and plumbers, the rou!!'hers and the building supply people, the forest products industry.

Mr. Pre~ident, in all of these housing supply busmesses, small business has had to retrench. That means job losses. also. The forest products industry with the mills shutting down, the loggers out of work, the truckers that haul the logs out of work, .also has tremendous job losses. All of this can be traced to high interest rates. Let me point out that Martin M~y~r. member of the President's Commission on Housing, has recently stated:

The easiest wa:v to knock $20 billion off the deficit Is to loosen the reins on the money supply and let short-term interest rates drop 4 percentage points. This would be a ga.mble but continuing conflict bet"?•een the highly stimulative fiscal policy and hiP.'hly restrictive monetary policy is a sure loser.

No doubt int-erest rates below ·the rate of inflation are immensely inflationary In t.hemselves. Mr. Carter and Fed Chairman G. William MUler proved that once again in 1978 but Treasurys at 11 percent would still shoV.: a real return. It is by no means certain that a 6 percent rate of growth in MlB coupled with a 7 percent rate of growth in the national debt is more infiationarv than a 3 percent rate of growth in the money suooly and a 10 percent rate of growth in the debt.

High interest. rates are also clobbering agriculture and agribusiness, Mr. Prest-

dent. Jobs are at stake there also. The question is, are we acting fast enough? There is no reference in this amendment to the Federal Reserve Board and their requirement to have a monetary policy that reflects the goals of the country. The Board's powers come directly from Congress itself and we do have a responsibility to see that the vast authority granted to the Board by acts of Congress carry out a sensible and sound monetary policy that reflects the interest of the country.

We are not getting that now, Mr. President. We are sinking into a recession that could become a very deep recession. We do have a responsibility in the Senate to make certain that this does not happen.

Unfortunately this amendment treats the issue as if we can continue to drift and slide into deep depression. The amendment itself does not do anything of note. We should give a stiff reminder to the Federal Reserve Board that cooperation with the President and the President's goals are necessary. The President has been silent on this far too long. It is time now that we remind the President that the sole success of economic recovery depends upon reducing rates quickly. Present policies have not been satisfactory and adopting this little reminder that we do want to have lower interest rates simply is not enough.

There is need for great action, prompt action, bold action now, and we need immediate correction to reduce the rates. I respectfully submit that bringing the rates down 3 to 4 points within the next 60 to 90 days fits anybody's monetary policy. It could avoid a deep recession. That is exactly what we intend to do in the amendment we offered prior to the amendment of the Senator from Pennsylvania.

I regret that we are doing that, because I believe we are doing too little and not nearly enough. It is a serious and tragic error on the part of the Senate by not taking more positive steps at this time.

AMENDMENT NO. 625, AS AMENDED

Mr. ARMSTRONG. I ask whether the minority is ready to yield back the time on this amendment.

Mr. PROXMIRE. I am not sure what the pending business is.

The PRESIDING OFFICER. The amendment of the Senator from Florida (Mr. CHILES) as amended by the amendment of the Senator from Pennsylvania (Mr. HEINZ).

Mr. PROXMIRE. I misunderstood. Yes, we are ready to yield back the remainder of the time. I understand that the Senator from Florida does not wish to speak further.

Mr. ARMSTRONG. We also yield back our time.

The PRESIDING OFFICER. The question is on agreeing to the amendment, as amended.

The amendment <No. 625), as amended, was agreed to.

Mr. ARMS~ONG. Mr. President, I move to reconsider the vote by which the amendment was agreed to.

Mr. PROXMIRE. I move to lay that motion on the table.

The motion to lay on the table was agreed to.

Mr. BAKER. Mr. President, will the Senator yield for a brief moment?

Mr. MELCHER. Yes, I am glad to yield. ~r. BAKER. Mr. President, may I in

qmre now of the managers of this bill and any Members who have amendments how much time It is going to take to finish this measure? Before anybody answers, I understand that some Members would like to see passage of this bill postponed for at least one amendment until after the Agriculture conference report. If we put this matteT over until Thursday, Mr. President, we shall put it over until Friday and we shall put it over in competition with appropriation bills. I simply do not think we can do that. So, Mr. President, I urge Members ~o con~ider that we ought to try to finIsh this measure today. May I inquire now how many amendments we know of that are yet to be offered to th is bill?

Mr. ARMSTRONG. Mr. President if the majority leader would yield to ~e. the best advice we have at the moment is that there are no other amendments to be offered than the Dixon-Percy amendment, of which the majority leader is a ware . Mr. PROXMIRE. Mr. President, that 1s my understanding, too, that there are n<? other B.mendments except the PercyDixon amendment.

Mr. BAKER. May I inquire then Mr ~resident, if it is possible to g~t a u~an~ rmous-consent agreement?

Mr. PROXMIRE. If the Senator wilJ yield, I am sorry, I have just been informed there is a possibility of a Robert C. Byrd amendment and a possible Kennedv amendm~nt.

Mr. BAKER. I am sorry I yielded. Mr. President, I was about to say if

there is only one more amendment could we agree to debate that today and have third reading and passage on Thursday? We have three amendments under the same question. Is it possible to take up all the amendments today to put the bill over then and have vote;, if rollcall votes are ordered, to occur backto-back on Thursday? We already have an order to come in at 11 on Thursday and I would be glad to ask the Senate to adjust that time to accommodate it if we are going to have votes only on third reading and passage. We simply have to get to the State-Justice appropriations bill.

What I propose, Mr. President, is the possibility of a unanimous-consent agreement that onl.y these three amendments would be in order on this bill' that debate wilJ be co:ncl.uded on them t~day; that no votes will occur af.ter 1 p.m. in accordance with the previous order; that at a specified time on Thursday as yet to be determined. we ~h~ll begin to vote on these three amendments back-to-hack, the first one to be 15 minutes. subseouent amendments to be 10-minute rollcall votes; that we have third reading without intervening motion. debate. appeal, or po~nt of order: and that we go to passacte on a 15-minute vote immediately thereafter.

I do not put that request now, Mr. President, but I ask if the managers of

the bill would be good enough to see if that would be agreeable. If so, I would like to put that request within the next 15 minutes.

Mr. PROXMIRE. Mr. President, I shall be happy to check. I understand that the Senator from Massachusetts <Mr. KENNEDY) will not offer his amendment. I was mistaken on that. The minority leader may or may not offer an amendment, but I shall discuss that with him in the next 15 minutes.

Mr. BAKER. I thank the Senator. I withhold, Mr. President, making that request but I urge all Senators to understand that such a unanimous-consent request will be made at or about 11: 30 and that, in turn, will determine the schedule for the balance of this day and Thursday and how late we have to stay in on Thursday.

Mr. JEPSEN. Mr. President, will the Senator yield?

Mr. BAKER. Yes, I yield. Mr. JEPSEN. Mr. President, I under

stand that the proposal not yet officially presented postpones the votes but does not at this point set a time certain for them. Is that correct?

Mr. BAKER. Not yet, Mr. President. That would be something we could adjust as it might be necessary to adjust on Thursday.

Mr. JEPSEN. I thank the majority leader.

AMENDMENT NO. 624

The PRESIDING OFFICER <Mrs. HAWKINS) . The question recurs on the amendment of the Senator from Illinois (Mr. PERCY).

Mr. ARMSTRONG. Madam President, I suggest the absence of a quorum.

The PRESIDING OFFICER. The clerk will call the roll.

The legislative clerk proceeded to call the roll.

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


The question is on the amendment of the Senator from Illinois.

Mr. KENNEDY. Madam President, I suggest the absence of a quorum.



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


UP AMENDMENT NO. 603

(Purpose: To discourage the use of credit for large-scale corporate takeovers)

Mr. KENNEDY. Madam President, I send to the desk an amendment in behalf of myself, the Senator from Pennsylvania <Mr. HEINZ), the Senator from Wisconsin <Mr. PROXMIRE), the Senator from Washington <Mr. JACKSON), the Senator from Montana (Mr. MELCHER), the Senator from Ohio <Mr. METZENBAUM), the Senator from Michtgan <Mr. RIEGLE) and the Senator from Maryland <Mr. SARBANES) and ask for its immediate consideration.

The PRESIDING OFFICER. It will take unanimous consent to set aside the pending amendment.

Mr. KENNEDY. I ask unanimous consent that the pending amendment be set aside.


The clerk will state the amendment. The bill clerk read as follows: The Senator from Massachusetts (Mr. KEN

NEDY), for himself, Mr. HEINZ, Mr. PROXMmE, Mr. JACKSON, Mr. MELCHER. Mr. METZENBAUM, Mr. RIEGLE and Mr. SARBANES, proposes an unprinted amendment numbered 603.

At the appropriate place in the Act, add the following section:

EMERGENCY CREDIT CONSERVATION SEc. . (a) The Congress finds that-(1) Continued high interest rates are con

tributing to the current sarious slowdown in the economy.

(2) These high interest rates are a principal cause of the severe decline in agriculture, small business, the housing and automobile industries, and other productive sectors of the economy.

(3) Large corporations and banks may have compounded the problem of high interest rates and contributed to the scarcity of credit by reserving billions of dollars of credit for the takeover of other corporations.

(4) Strong measures are needed at this time to discourage wasteful uses of credit and to conserve credit for productive sectors of the economy.

(b) The President shall take appropriate actions on a voluntary basis to encourage banking or other financial institutions to exercise restraint in extending credit for the purpose of unproductive large scale corporate takeovers. Such actions shall include consultation and cooperation with the Board of Governors of the Federal Reserve System.

Mr. KENNEDY. Mr. President, for the benefit of the Senators who wish to make their plans, I ask for the yeas and nays on the amendment.

The PRESIDING OFFICER. Is there a sufficient second? There is a sufficient second.

The yeas and nays were ordered. Mr. KENNEDY. Madam President, I

am prepared to enter into a 20-minute time limitation on the amendment, 10 minutes to a side, so that Senators may know more precisely when the vote will take place.

Mr. HEINZ. Reserving the right to object, I know of no objection on this side.

Mr. PROXMIRE. I have no objection, Madam President.

The PRESIDING OFFICER. Is there objection, providing that the vote will occur at the end of 20 minutes? Without objection, it is so ordered.

Mr. KENNEDY. Madam President, I yield myself 5 minutes.

Earlier this morning, I voted for the Chiles omnibus interest rate amendm~nt. which contained two key provisions. The first of those provisions urged the allocation of credit to sectors of our economy badly hurt by high interest rates, primarily the housing industry, the automobile industry, small business, and small farms. That amendment was defeated, but I continue to feel that it is needed. Nevertheless, at least for the present, the Senate has spoken and exercised its judgment on that issue.

This amendment is directed toward the second of the two reature.3 of . the earlier amendment. It calls for the conservation of credit, by urging the President, in cooperation with the Federal Reserve Board, to encourage banks not to extend credit for unproductive largescale mergers. This amendment we now offer is not a credit allocation measure. It is a credit conservation measure. It asks voluntary action by the President and the Federal Reserve Board to conserve credit by limiting its availability for large and unproductive corporate mergers.

All . of us understand the principal target of this amendment. In recent months, some of the Naton's largest oil companies and other giant corporations have tied up huge amounts of c·redit in the takeover battles for Conoco and Marathon. These mergers are unproductive. They add nothing to the productivity of the Nation or even the oil industry. Instead of going out and exploring for oil and finding new oil reserves, these firms are simply using vast amounts of credit to buy up the oil reserves of their takeover targets. They would rather buy their oil than drill for it.

We are not talking here about any form of credit controls. It is my belief that banks should not be extending large amounts of credit, as they have done over the past few months, for nonproductive corporate mergers. By doing so, they are reducing the amount of credit available to critical areas of the economy such as housing, the automobile industry, small businesses, and family farms.

I believe that this amendment is a prudent and a reasonable indication of the feelings of the Members of the Senate and, I dare say, of the overwhelming majority of the American people. When credit is scarce and interest rates are extremely high, banks should not be extending credit for activities that are unproductive, that do not provide and that do not strengthen additional jobs. When small businesses and family farms are starved for credit and being driven into bankruptcy, credit should not be available for oil mergers and similar unproductive activities. This is a measure which. ~.'e .c;h"1111 c:Jdorse, and I hope the Senate will adopt it.

'!'his is not an unusual idea. On past occasions, when interest rates have been high, Chairman Volcker of the Federal Reserve Board has subscribed to this concept, and has urged its member banks to limit the extension of credit for such purposes. What we are basically saying to the ·Federal Reserve Board is, "You have found this step to be propitious at other times; now we are urging you to find it to be propitious at the present time with regard to nonproductive mergers."

Madam President, I reserve the remainder of my time.

Mr. HEINZ. Madam President, I am going to support this amendment, and I am going to do so because I think it is a reasonable approach, although not a perfect approach, to a difficult problem. I do not know that we have any evidence, one way or the other, that corporate mergers and takeovers are, in fact, the

cause of high interest rates. The people I have talked to, and I have talked to a number of them, say that it is very difficult to conclude that with any certainty at all. There certainly are some suspicions and possibilities of that and, as a result, the amendment reflects some concern in finding that that is a possibility, without coming to the conclusion that corporate takeovers may be having an impact on interest rates.

I can support this amendment, Madam President, because it says that large corporations and banks may-we do not know, they may-have compounded the problem of high interest rates and, therefore, may have contributed to the scarcity of credit by reserving billions of dollars in lines of credit for the takeover of other corporations.

The second reason I can support this amendment is that the only thing it does is ask the President to take a look at this problem and, on a purely voluntary basis, to encourage banking and other financial institutions, also on a voluntary basis on their part, to restrain the extension of credit for the purposes of unproductive, large-scale corporate takeovers.

I think the key word there is "unproductive," Madam President. Obviously, there are takeovers, large and small, that are very productive, very necessary, and it would be a great mistake to thinkand I commend the Senator from Massachusetts for recognizing this-that corporate takeovers are, per se, bad. There are many that allow corporations to make investments, to modernize, to expand, that result in more jobs for the American people.

Clearly, we can and we should do whatever is appropriate to discourage unproductive uses of our capital; and when the formulation is that this is to be done on a purely voluntary basis by those concerned, it is a formulation that I can support.

However, I want people to understand that if I thought for onz moment that this was some kind of back-door attempt at intimidating people, or if I thought for one moment it was a back-door attempt at credit allocation, to which Senator PROXMIRE and I are very strongly opposed, or if it is an attempt to intimidate the Fed from following a responsible course of action, I would not support this amendment.

In my judgment, thi.s amendment is simply an expression of concern. It ls an expression of concern about high interest rates, first and foremost; and I do not know of anybody who can disagree with that express~on of concern.

It says: Congress finds that continued high in

terest rates arc contributing to the currrent serious slowdown in the economy.

Madam President, who can disagree with that? That is absolutely correct.

It goes on to say: These hi~h interest rates are a principal

cause of the severe decline in agriculture. small business, the housing and automobile industries, and other productive sectors of the economy.

That is absolutely true. Nobody can argue against that proposition.

It says that lines of credit being reserved for unproductive takeovers may be compounding this problem. That very well may be-not necessarily. We cannot disagree with that.

It says that measures are needed at this time to discourage wasteful uses of credit. I do not know anybody who is for wasteful uses of credit.

In adopting this amendment, Congress should not lose sight of the fact that the way we are going to make most progress on interest rates, on the recession, on helping our sma.U business people, our homebuilders, and those who want to buy automobiles is to continue the progress we are beginning to make on fiscal policy, which is not nearly enough, to get our de.ficits down-and certainly we should not allow them to go up-to try to establish in this year and future years responsible fiscal policy, and take the actions this body needs to take to make it a reality. That is what we should be doing.

So I hope nobody misunderstands this amendment. This amendment, no matter how good anybody may think it is, may say it is, or may believe it is, must not be construed in any way as taking the heat off Congress to cut unnecessary spending, to do whatever we have to do to get the deficits down and l;ltimately balance the Federal budget.

On that basis, Madam President, I am prepared to support this amendment.

M1•. PROXMIRE. Madam President, will the Senator yield?

Mr. HEINZ. I yield. Mr. PROXMIRE. Madam President,

I support this amendment. I think it is a moderate, reasonable, and necessary amendment.

I am reminded that in the Conocodu Pont case, the charge was that lines of credit up to $25 billion were involved. The du Pont Co. may have borrowed less than that, but it was billions of dollars. It was tied up and prevented from going into other productive enterprises.

What this amendment does, as I understand it, is to send a clear signal to the Federal Reserve Board that financing corporate takeovers may be contributing to high interest rates. It may be, but I think it is something they can look at. They are an expert agency. They have one of the finest staffs in Washington. Some takeovers-no question about it--do involve ab<>orbing credit that could go elsewhere in the economy.

We also ask the President to take appropriate action to encourage voluntary restraint of credit, as the Senator from Pennsylvania has pointed out, for nonproductive takeover purposes.

I should like to give an example of "nonproductive." The Senator from Pennsylvania gave some excellent reasons, also.

I point out that one of the most important elements in a takeover is to bring better management to a finn that might be failing. Today, we have literally hundreds of savings and loan institutions in trouble. They can be saved only through mergers. With better management, they can make it.

In my State, the Schlitz Brewery is in very serious trouble. The only way it

could be saved is with top flight management. The Heileman Brewery, which is smaller, has that kind of management, and that merger would be productive and should be encouraged.

This does not in any way interfere with the independence of the Fed, as I see it. It maintains the independence of the Fed. It provides for consultation with the Fed, in cooperation with the Fed and that is the way it should be worded:

I am proud and happy to be a cosponsor of the Kennedy amendment, and I hope the Senate will support it.

Mr. KENNEDY. Madam President, I welcome the strong support of both the floor manager and the ranking minority member of the committee with respect to this amendment.

I believe all Americans have been startled by the fact that, as the Senator from Wisconsin has pointed out, there have been literally billions and billions and billions of dollars made available to some of the largest and wealthiest corporations in this country for what I consider, as the former chairman of the Antitrust Subcommittee, nonproductive mergers.

We are facing the simple reality that tens of billions of dollars-some estimates are as high as $60 billion-have been made available to giant corporations in the past few months to engage in unproductive mergers. When that amount of credit is available to those corporations, it means that less credit is available for small businesses, for the housing industry, for the family farmers, and for the automobile industry.

I hope the Federal Reserve Board and the White House are listening to this discussion. This step, although not as strong as I would have liked, is a significant and important signal and I hope they will act on it. It is a voluntary measure. It is based upon the previous precedents of the Federal Reserve Board. It calls for action now to conserve credit for productive purposes in our economy.

If we are concerned, and I believe we are in the Congress, about trying to be a constructive partner with the White House and the executive branch, in dealina- with the economic challenges of our time, this amendment is a reasonable suggestion that deserves to be implemented. I hope the Senate will adopt it. e Mr. BRADLEY. Mr. President, I support the amendment urging banks to avoid lending for purposes that are not likely to contribute to growth and productivity in the economy. The amendment does not call for credit controls or for looser money. Nor does it aopear to blame the Federal Reserve rather than the administration's fiscal policy for high interest rates. It simoly urges banks to do what Federal Reserve Chairman Volcker often has called on them to do-to make the productive use of a loan a prime consideration in a bank's decision to make it. Thic; is a reouest from Congress that bankers emphasjze the contribution of the loan to the Nation's broader eco!lomic obiectives anci it is appropriate that the Congress make it.e

Mr. KENNEDY. I am prepared to yield back the remainder of my time.

Mr. HEINZ. Madam President, I yield back the remainder of my time.

The PRESIDING OFFICER. All time having been yielded back, the question is on agreeing to the amendment. On this question the yeas and nays have been ordered, and the clerk will call the roll.

The bill clerk called the roll. Mr. STEVENS. I announce that the

Senator from Rhode Island <Mr. .CHAFEE), the Senator from Alabama <Mr. DENTON), the Senator from Arizona <Mr. GoLDWATER), the Senator from Kansas <Mrs. KA<;SE1'1•UM), the Senator from Idaho <Mr. McCLURE), and the Senator from Oregon <Mr. PAcKwooD) are necessarily absent.

I further announce that, if present and voting, the Senator from Rhode Island <Mr. CHAFEE) would vote "yea."

Mr. CRANSTON. I announce that the Senator from Nevada <Mr. CANNON), the Senator from Hawaii <Mr. INOUYE), and the Senator from Mississippi <Mr. STENNIS) are necessarily absent.

I also announce that the Senator from Vermont <Mr. LEAHY) is absent because of illness.

I further announce that, if present and voting, the Senator from Rhode Island <Mr. PELL) would vote "yea."

The PRESIDING OFFICER (Mr. CoHEN). Are there any other Senators in the Chamber who desire to vote?

The result was announced-yeas 77, nays 12, as follows:

[Rollcall Vote No. 363 Leg.] YEA8-77

Abdnor Eagleton .Andrews Ea.Sit AITnst~g Exon Ba.ker Ford Baucus Glenn Bentsen GOII'ton Blden Grassley Boren Hart Boschwttz Hatfield Br.ad!ley Hawk.l·ns Bumpers H<~ '-:S.k·awa Burd·lck IIefiJ.n Byrd, Heinz

Ha.rrv F .. Jr. Helms Byrd, Robert C. HoJtin gs Chile.<J Huddleston Cochl'8llll Jackson Cohan Jepsen Cnuurton Jo~n D' AmeJto Kasten Danforth Kerun.edy DeOo.ndni La.xalt Dodd Levin Dole Long Domenlct Mathi.a.s Dm'enberger Matsunaga

NAYS-12

Mlatt.ingly Me' cher Metzenbe.um Mitchell M'>yndhan Nunn P :e.Js.ler Proxm1re Pryo;r QuayJe Ran "olph Riegle Rcth Rudma.n Sarbanes Sasser Simpson Specter Stafford Stevens Thurmond Tsongas Warner Welcker Williams Zol'illJsky

Dixon Ga.rn Hatch Humphrey

Lugar Schmitt Murlrowsk.l Symms Nickles Tower Percy Wallop

NOT VOTIN0-11 Cannon Inouye Cha!ee Kassebaum Denton Leahy Goldwater McClure

Packwood Petll Stenttl!l.s

So Mr. KENNE1lY's amendment (UP No. 603) was agreed to.

Mr. GARN. Mr. President, I move to reconsider the vote by whicp the amendment was agreed to.

Mr. JF.PSEN. I move to lay that motion on .. ,,. t!:>l:'ll".

The motion to lay on the table was ag1·~cu to.

The PRESIDING OFFICER (Mr. CoHEN) . The question recurs on the amend-

ment of the Senator from lllinois <Mr. PERCY).

Mr. GARN. Mr. President, I suggest the absence of a quorum.


The legis•lative clerk proceeded to call the roll.

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


UNANIMOUS CONSENT AGREEMENT-S. 1112

Mr. BAKER. Mr. President, in connection with the pending matter, I have before me a unanimous-consent request which embraces a number of items. It is fairly complex. I will read it in just a moment.

I understand that it has been submitted to the distinguished minority leader and the minority manager, as well as the chairman of the committee and the majority manager. I hope it is agreed to.

If this unanimous-consent agreement is entered into, Mr. President, it will be my intention, at some point, as soon as the managers of the bill indicate there is no further business that can be transacted on this measure today, to ask the Senate to temporarily lay aside the pending business and to take up the State, Justice appropriations bill. That is not included in the agreement, but I make that statement at this time so that Senators will be on notice as to what the intention of the leadership is on this side.

This is the request, Mr. President. Mr. President, I ask unanimous con

sent that the Senate temporarily lay aside the pending business, the Export Administration bill, and proceed to other matters.

I further ask unandmous consent that at the hour of 6 .10 p.m. on Thursday, November 12, the Senate resume debate on the Export Adm~nistration bill, S. 1112. I ask that there then be 20 minutes of debate, equally divided on the PercyDixon amendment dealing with grain embargo, with a rollcall vote to occur in connection with the amendment at 6: 30 p.m., unless an amendment in the second degree is offered by either Senators PERCY or DIXON.

I ask unanimous consent that if such a second degree amendment is offered, there be 20 minutes of debate equally divided on the amendment.

I further ask unanimous consent that following the dispositJion of the PercyDixon amendment, and/or an amendment in the second degree, that there be 30 minutes debate equally divided on an amendment to be offered by the Senator from West Virginia (Mr. ROBERT C. BYRD) dealing with embargo.

Finally, I ask that following the rollcall vote in connection with the Robert c. Byrd amendment, that the bill be advanced to third reading; that the Senate proceed to the consideration of Calendar Order No. 162, H.R. 3567, the House companion bill, and that a rollcall vote occur on final passage of H.R. 3567 follow:ng a motion to be made by the majority manager of the bill to strike all after the enacting clause of H.R. 3567 and to insert the text of S. 1112, as amended.

I further ask unanimous consent that the agreement be in the usual form as to division of time.

Mr. ROBERT C. BYRD. Mr. President, reserving the right to object, may I inquire of the distinguished majority leader whether or not the amendment in the second degree which may be offered by either Senator DIXON or Senator PERCY would be a grain embargo amendment or would it be germane to the Percy-Dixon amendment dealing with grain embargo?

Mr. BAKER. Mr. President, I am advised that the amendment would be germane.

Mr. ROBERT C. BYRD. I thank the Senator.

My second question is, would Senators be agreeable to allowing an up-or-down vote on my amendment rather than a possible tabling motion?

Mr. BAKER. Mr. President, I would have to check further on that, I am afraid. The agreement is drafted so that in each case the vote is in connection with the measure. I would hope the Senator from West Virginia would permit us to continue with that format since that applies to every other item that is within the contemplation of the agreement. I hope he would not insist.

Mr. ROBERT C. BYRD. Of course, that leaves open the possibility of a tabling motion. This agreement, if entered into, would provide that there certainly would be no up-or-down vote, very likely, on my amendment. It does not insure against an up-or-down vote on the amendment but it leaves open the right of Senators to move to table the motion, which certainly is the norm.

I merely would like to bargain if I could, to get an up-or-down vote on my amendment. I am not adamant about that.

Mr. BAKER. I am willing to agree to that.

Mr. President, I amend the request so that the words "in connection with the Robert C. Byrd amendment" be changed to a rollcall vote on the Robert C. Byrd amendment."

Mr. ROBERT C. BYRD. Mr. President, I thank the distinguished majority leader.

The PRESIDING OFFICER (Mr. RUDMAN) . Without objection, it is so ordered.

Mr. BAKER. Mr. President, I thank all Senators and since I assume the managers have not ascertained whether any more business can be transacted on this matter, I do not know if I should return to this this afternoon.

Mr. President, has the agreement been agreed to?

Tho PRESIDING OFFICER. The Chair advises the majority leader that there is now a request for a rollcall vote on two items which have not been ordered at this time.

Mr. BAKER. Mr. President, I add to the unanimous-consent request that it be in order at this time to order the yeas and nays on the various measures described, with the exception of the Percy second-degree amendment, which may not be ordered, and the same be seconded by a show of hands.


R W'th t ANNOUNCEMENT OF DATE OF DE-The PRESIDING OFFICE . I ou CEMBER 3, 1981, FOR CONSIDERA-

objection, it is so ordered. TION OF SENATE RESOLUTION 204 Mr. BAKER. I ask for the yeas and nays, Mr. President, as indicated.

The PRESIDING OFFICER. Is there a suftlcient second? There is a sufficient second.

The yeas and nays were ordered. Mr. BAKER. Mr. President, has the

entire agreement been agreed to? The PRESIDING OFFICER. It has. Mr. BAKER. I thank the Chair. The text of the agreement follows: Ordered, That at 6:10 p.m. on Thursday,

November 12, 1981, the Senate resumo consideration of S. 1112 (Order No. 115). an Act to authorize appropriations for the fiscal years 1982 and 1983 to carry out the purposes of the Export Administration Act of 1979, and for other purposes: Provided, That there be 20 minutes debate on the pending amendment offered by the Senator from Illinois (Mr. Percy), amendment No. 624, dealing with grain embargo, with a vote to occur in connection with the &mendment at 6:30p.m. unless a germane amendment in the second degree is offered by either of the two Senators from Illinois (Messrs. Percy and Dixon): Provided further, That if such second degree amendment is offered, debate wm be limited to 20 minutes, to be equally divided and controlled by the mover of such and the manager of the b111.

Ordered further, That following the disposition of amendment No. 62.4, and any amendment thereto, the Senate proceed to an amendment to be proposed by the Senator from West Virginia (Mr. Robert C. Byrd) dealing with embargo, with debate thereon to be limited to 30 minutes. to be equally divided and controlled by the mover of such and the mana.ger of the b111, and with a vote on the amendment to follow.

Ordered further, That following the disposition of the Byrd, of West Virginia, amenctment. the bill be advanced to third reading and then laid aside for the consideration of H.R. 3567 (Order No. 162). and that following a motion by the Ma1ority manager to strike all after the enacting clause of the House blll and insert the text of S. 1112, ·a.s amended. the House b111 be advanced to third reading and a vote occur on final passage thereof.

Mr. BAKER. Mr. President, before I ask the Senate to turn to the consjderation of the State-Justice appropriations bill, I announce that there will be no more rollcall votes today. I wish to make a further announcement.

Mr. ROBERT C. BYRD. Mr. President, will the distinguished majority leader yield?

Mr. BAKER. Yes; I yield. Mr. ROBERT C. BYRD. Will there be

objection to mv laying down my amendment and having it Printed and my making a brief statement in support thereof?

Mr. BAKER. Mr. President, I would certainly have no objection to that.

Mr. ROBERT C. BYRD. I can do that now or later, whatever is more convenient.

Mr. BAKER. Mr. President, I should like to make one further announcement at this time. Then I think it would be an accommodation of the Senate if the Senator from West Virginia did go ahead with laying down his amendment and thus advance the time that we ask the Senate to proceed to the consideration of the Commerce, Justice, State appropriations bill.

Mr. BAKER. Mr. President, for some time now there has been on the calen~ar Senate Resolution 204 from the Ethics Committee dealing with the Williams question. I report to the Senate .that. a number of meetings have transpired m connection with that matter. I am prepared now to announce that, on the 3d day of December, at approximately noon, I shall ask the Senate to proceed to consideration of that item. Senator WILLIAMS is aware of that. I advised the distinguished minority leader and he is fully aware of these circumstances as well. I expect that there will be further statements to ml.ke in the course of the next several days, but the Senate should be on notice and should plan to proceed to consideration of the Williams resolution at approximately noon on the 3d day of December.

Mr. WALLOP. Will the majority leader yield for a brief statement?

Mr. BAKER. Yes; I yield, Mr. President.

Mr. WALLOP. Mr. President, the Ethics Committee will announce, either

today or on Thursday, the additional showing of the films and the playing of audio material in connection with the Williams case four more times so that all Senators may make themselves available to see them. I urge now that all Senators who have not done that do so.

Mr. ROBERT C. BYRD. Mr. President, will the majority leader yield?

Ml•. BAKER. Yes. Mr. ROBERT C. BYRD. Mr. Presi

dent, I think it should be said that the distinguished majority leader has been very fair and considerate in his scheduling of this matter. It could have been scheduled many, many weeks ago and it was at the request of myself and Mr. WILLIAMS and others that the scheduling of the matter was delayed; certainly that it would not come up in October and that it be delayed into November then further that it be delayed to No~ember 30, and now that it be delayed into December.

The request from our side was for the purpose of allowing Mr. WILLIAMS to have ample time to prepare his defense and to allow any Senators who might wish to speak in his defense time to consider the matter and prepare themselves. I think the distinguished majority leader has been as considerate as one could be in this regard.

As far as I am concerned, Mr. President, the majority leader has stated the matter correctly. Mr. WILLIAMs is aware of the majority leader's decision and I again thank the majority leader on behalf of the distinguished senior Senator from New Jersey for his consideration and understanding in relation to the scheduling of the matter.

Mr. BAKER. Mr. President, I would like to express to the minority leader my appreciation for his careful consideration, not only for the interests of Senator WILI.IAMs but also for the burden I bear in trying to deal with this matter and ask the Senate to proceed

to its consideration, and for his thoughtfulness in participating in meetings 1rom time to time and dealing with complex issues.

It is never an easy thing for the Senate to address the question of discipline or expulsion of one of its Members. The minority leader has been most understanding, most diligent in his protection of the interests of Senator WILLIAMs and I am sure I correctly state that both he and I are dedicated to a single purpose. That is to seeing that, as the Senate discharges its constitutional responsibility in respect to fitness of Members, we do so in a fair and honorable way, resolving every close issue in favor of our colleague who is the subject of this inquiry.

I have made that statement and Senator WILLIAMS is aware that in every case where there is a close question, the benefit of any doubt will be resolved in his favor. I believe we have done that. The minority leader has been materially helpful in seeing that that occurs.

I thank the distinguished chairman of the Ethics Committee and the distinguished vice chairman of the Ethics Committee for their careful consideration of this matter and their cooperation throughout. It gives me no pleasure to announce to the Senate that th!s proceeding will begin on December 3. I feel my responsibility requires that; hence the reason for the announcement at this time. • Mr. WALLOP. Mr. President, the resolution to expel Senator WILLIAMS, Senate Resolution 204, has now been scheduled for floor action on December 3;

In response to requests for an additional opportun · ty to hear and view tape recordings received in evidence during the Ethics Committee hearings, Senator HEFLIN and I have scheduled four more presentations. These will be held on Thursday, November 19, 1981, and on Tuesday, November 24, 1~81. There will be identical presentations in the morning and afternoon of each of those days. The exact times and location are set out in a "Dear Colleague" letter mailed today-and I shall submit that letter for the RECORD following my remarks. Any questions concerning these sessions may be directed to staff counsel, Donald Sanders, at 4-2018.

Approximately two-thirds of the entire Senate has already attended taping presentations in September and October. Senator HEFLIN and I urge the remainder of the Senate to take advantage of one of these final opportunities before December 3. There is an extensive record in this case. All materials printe~ by the committee, including the co~m1ttee report, No. 97-187, and the briefs of Senator WILLIAMS' attorneys, have been sent to each Member's oftlce in or~er to help you in making a careful and mformed judgment. As you m~ke us~ of this data in preparing for this very Important matter, please do not hesitate to call Sen a tor HEFLIN or mys~lf if you wish further assistance. Comm'ttee staff and special counsel will also be avanable, at your request, to answer any questions.

The letter follows:

November 10, 1981 CONGRESSIONAL RECORD-SENATE 27099 SELECT COMMITTEE ON ETHICS,

Washington, D.C., November 10, 1981. Re s. Res. 204, a Resolution Expelling Sena

tor HARRISON. A. WILLIAMS, JR. DEAR COLLEAGUE: The Senate Leadership

announced today that the Senate wlll proceed to the consideration of S. Res. 204 on Thursday, December 3.

You will recall that the Ethics Committee provided a number of opportunities in September and October for each Member to view and listen to tape recordings pres:mted at the Committee hearings. In response to requests from Members who could not attend those sessions, we have scheduled four more sessions: in the morning and again in the afternoon on Thursday, November 19, and Tuesday, November 24. The morni::1g presentation wlll be from 9:15 a .m . to 12:45 p.m., and the afternoon pres~ntation from 2:15 p.m. to 5:45 p.m. The sessions wlll all be held in Room 457, Russell Senate Office Building. The recordings to be played are listed on the enclosure to this letter.

Because of a number of requests, one staff person for each Senator will be permitted to attend the session on Tuesday afternoon. Senate identification should be displayed to the person on duty at the door.

We want to encourage you to attend one of these sessions, and to become famUlar with the transcripts and other documentary material. All Committee publications in this matter, including the Committee Report, No. 97-187, have been sent to your office. The Majority and Minority Leaders have each urged all Members to devote time and attention to this very important matter.

Please let us know if we can be of any further assistance to you in this matter.

Sincerely, MALCOLM WALLOP. HOWELL HEFLIN .•

DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED AGENCIES APPROPRIATIONS, 1982

Mr. BAKER. Mr. President, I ask unanimous consent that the Senate proceed to the consideration of the Commerce, Justice, and State appropriations bill.


The clerk will state the bill by title. The legislative clerk read as follows: A bill (H.R. 4169) making appropriations

!or the Departments of Commerce, Justice, and State, the Judiciary, and rt>l::~.ted agencies for the fiscal year ending September 30, 1982, and for other purposes.

The Senate proceeded to consider the bill, which had been reported from the Committee on Appropriations with amendments.

Mr. WEICKER. Mr. President, I suggest the absence of a quorum.



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


EXPORT ADMINISTRATION AUTHORIZATION, FISCAL YEAR 1982-83

Mr. ROBERT C. BYRD. Mr. President, as I indicated to the distinguished ma-

jority leader a moment ago, I have an amendment in connection with the matter which has just been set aside; and I wish at this time to offer that amendment, have it printed for the RECORD, and make a brief statement in support thereof.

I send the amendment to the desk and ask that it be stated.

The PRESIDING OFFICER. The amendment will be stated.

The legislative clerk read as follows: The Senator from West Virginia (Mr. RoB

ERT C. BYRD) proposes an amendment as foUows:

At the ap~ro!Priate place add the following:

"SEc. . Notwithstanding any other provision of law, a suspension of or restriction on all exports from the United States to the Union of Soviet Socialist Republics shall be imposed if the Union of the Soviet Socialist Republics, or its allies , engages in a direct military action against Poland, including but not limited to an armed invasion.

SEc. . Such suspension or restriction of all exports from the United States to the Soviet Union shall be impo3ed unless the Pre-;ident certifie3 to the Ccngre3s within 30 days of direct Soviet m111tq.ry intervention in Poland that the susuension is not in the national security and foreign policy interests of the United States.".

Mr. ROBERT C. BYRD. Mr. President, I am offering this amendment to S. 1112, the Expert Administration Authorization Act for fiscal years 1982 and 1983. The purpose of my amendment, which has been read and which is self-explanatory, of course, is to impose an acrossthe-board embargo on all exports from the United States to the Soviet Union, if the Soviet Union or its allies invade Poland.

Under my amendment, such an embargo would be imposed automatically unless the President certified to the Congress within 30 days of direct Soviet intervention in Poland that the suspension was not in the national security and foreign-po,icv interests of the United States.

On January 24 of this year, Secretary of State Alexander Haig wrote Soviet Foreign Minister Gromyko warning that a Soviet invasion of Poland would have grave consequences for East-West relations.

However, I believe since that time we have sent mixed signals to the Soviet Union and our allies about any steps we might take in reaction to Russian aggression around the world. For example:

On April 24 of this year, the administration lifted the grain embargo impased by the Carter administration in the aftermath of the Soviet invasion of Afghanistan.

In July, we warned our European allies that purchases of Soviet natural gas could allow the Soviet Union to exercise an unhealthy influence over Western economies.

However, in early August we gave the Caterpillar Tractor Corp. the green light to sell pipelaying machines to the Soviet Union. This action came after we pressured the Japanese to refrain from selling the pipelayers to the Soviets for the same gas project.

On August 5, the administration announced it was selling 220 mUFon pounds of butter to New zealand, at 20 to 30 cents below market prices, with the pro-

vision that none of it could be resold to the Soviet Union. Yet, New Zealand was not precluded from selling our butter to a third country wh~ch, in turn, tould sell it to the Soviet Union.

At the same time, the administration extended for 1 year the long-term agreement that permits the Soviets to purchase a minimum of 6 to 8 million tons of American grain without consulting formally with the U.S. Government. In recent weeks, the administration announced that a.n additional 15 million tons of grain over the 8 million ton floor would be made available to the Soviet Union. The Department of Agriculture reported on October 26 that the Soviet Union had already purchased 8.667 mill ion tons from the United States for the current marketing year.

Mr. President, I know that people do not like grain embargos, or any other embargo for that matter. Embargos impose a burden on people in our country as well as those in the target countries. But Americans also do not like Soviet aggressive behavior. In a case as critical as an invasion of Poland, if short-term economic damage is more important than punishing brutal aggressors, then I do not think we are in tune with the concerns of the American people.

We demonstrate inconsistency in our foreign policy by selling the Soviets more grain and machinery as they continue their pattern of aggression. Our rhetoric will ring hollow if we are not willing to utiHze all the political and economic tools at our disposal to penalize such aggression.

The President made it clear when he lifted the grain '=mbargo that he objected particularly to the fact th3.t American farmers had been singled out to sacrifice for foreign policy ~onsiderations. He stated:

As a Presidential candidate, I indicated my opposition to the curb on sales because American farmers had been unfairly singled out to bear the burden of this ineffective national policy. To demonstrate a serious response to aggression against Poland, an across-the-board embargo should be imposed.

The Soviet grain harvests will be disappointing once again this year. They will need our help in order to feed their peor le. Soviet industrial production is also down. Yet, we are not denying the Soviets this helu. We are not denying this help even though Soviet troops remain in Afflhl'lni<;t.gn.

However, we have to be constantly on guard af!ainst thP. n ·.;i';iJ.ity of ~,_;_, i: .- :;~; · sion of Poland. We have to demonstrate that our actions wm match ou~· rb.~;.toric. We have to demonstrate that there are teeth in our current policy by making it clear that, at a minimum, there will be a significant economic cost to the Soviets in the event they risk further adventurism.

My amendment does not tie the hands of the President. If the President decides that a suspension of exports to the Soviet Union is not warranted, even with an event as severe as an invasion of Poland, he has to certify to the Congress that it is not in our national interest to impose such an embargo.

Mr. President, I yield the floor, and I suggest the absence of a quorum.

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


DEPARTMENTS OF COMMERCE, JUSTICE, STATE, THE JUDICTARY, AND RELATED AGENCIES APPROPRIATIONS FOR 1982 The Senate continued with the con

sideration of H.R. 4169. Mr. WEICKER. Mr. President, what is

the pending business? The PRESIDING OFFICER. H.R. 4169. Mr. WEICKER. Mr. President. the

committee recommends $8.630,589.000 in new budget authority for the Departments of Commerce, Justice, State, the judiciary and 21 related agencies funded by this bill. This amount is a net reduction of $992.290,000 from appropriations enacted for fiscal year 1981 for the;;e de·· partments and agencies, and is $169,-411,000 below the subcommittee's allocation for budget authoritv. The committee recommendation is $130.513.000 below the bndget estimate submit.tPd in March, $449,089.000 above the 1982 SeotE>mber revised budget estimate. and $53.41.0.350 below the amount provided in the House bill.

The net decrease of $992,290 000 from appropriations enacted in 1981 is due primarily to substantial orogrammatic reductions. These reductions affect a number of programs including: The Economic Develooment Adminic:;tration: the Maritime Administration ship construction subsidv program: the .iuvenile justice and delinquency orevention program of the Department of Justice: t.he business loan and disaster loan making activities of thP. Sma.Jll B11siness Administration: and the Legal Services Corporation. The reduction for thec:;e agenc;es from fiscal year 1981 totals $1,548,-764.000.

These budget reductions are offset bv nondiscretionary increases necessary to maintain on-going programs and by selected program increases. Program increases recommendP.d bv the committP.e include: $117.000.000 for the Department of State for the construct~on of a new embassv in Saudi Arabia and the como1et1on of pro;ects in Moscow: $23.-800.000 for the Immigration and Naturalization Service to restore oositions for the border patrol. insoections, investigations, and adiudications: and $22.438.000 for the International Communication Agency for the con~truction for new radio transmission facilities for the Voice of America.

The committee has restored several vital activities that were scheduled for elimination or severe curtailment. These include:

Within the National Oceanic and Atmospheric Administration. restoration of the following programs: sea grants; anadromous fisheries grants; commercial fisheries research and development'

grants; fruit frost program; and funds for 20 of 38 weather stations proposed for closure.

Within the Economic Development Administration, the committee's recommendation would insure that all public works projects now in the pipeline will be funded.

At the Census Bureau, the 1982 Census of Agriculture will be maintained.

The committee recommendation restores funding for the public telecommunications facilities grants for public television and radio.

Furthermore, the committee recommendation maintains support for the regulatory commissions that have been scheduled for a 12-percent rollback in the revised September budget estimates.

Our other principal recommendations are highlighted on a statement that I ask unanimous consent to have printed at the conclusion of my remarks.


<See exhibit 1.) Mr. WEICKER. Mr. President, I

acknowledge the valuable assistance from our ranking minority member, Senator HoLLINGS. In aeveloping this bill Senator HoLLINGS and I tried to be sensitive to the many requests of the members within the limited amount allocated to the subcommittee. We have tried to maintain the broad national interest in making a fair assessment of recommendations that adequately maintains the various departments and agencies and allows for program growth in a few critical areas.

Before we move on to questions or amendments, I will give Senator HoLLINGs time for any comments he may have.

Mr. President, it is my hope that this bill can be moved right along by the full Senate. I realize that it grants an opportunity to those who care .to legisla~e on appropriations bills to do JUst that m a variety of controversial areas. But the fact remains that those areas, be they prayer in school, or busing, or abortion, or whatever. will have their day before this assembly either in terms of the authorizing bills now wending their way through the process or in the sense of any special time that might be set aside for discussion of such issues.

I strongly appeal to all my colleagues on both sides of the aisle to allow the appropriations process to be conducted in a way which, in effect, has the business of the United States accomplished in a timely fashion rather than in an ad hoc way which really does not address itself to the problems of the moment.

I know that my distinguished colleague and friend, Senator HATFIELD, has expressed similar views, as has the majority leader.

If indeed it becomes clear that we will not be able to accomplish the business of appropriations, then indeed I want it known that the fault does not lie in the leadership of the subcommittee or the full committee on the minority or the majority side. Every conceivable principle that could be compromised has been made. Rather the fault will lie on other heads.

EXHIBIT 1 HIGHLIGHTS OF COMMITTEE RECOMMENDA

TIONS

DEPARTMENT OF COMMERCE

For the Department of Commerce, the Committee recommends an app1·op1·iation o! $1,720,318,000 in new budge& authority, a net reduction o! $317,921,000 from the 1981 appropriations to date, and an increase or $Jo3,792,000 above the budget request. This recommends. t1on 1ncl udes:

$139,000,000 !or the Economic Development Administration in new budget authority plus $82 million to be transferred !rom the EDA revolving fund. Thus, the recommended program level is $226,000,000, or $64,000,000 less than the amount authorized in the Omnibus Reconciliation Act of 1981.

Total appropriations recommended !or the National Oceanic and Atmospheric Administration are $854,596,000. The Committee action restores several vital programs including: Sea Grant; Anadromous Fishery Grants; Commercial Fisheries Research and Development Grants; Aquaculture; and provides funds !or 20 of 38 weather stations proposed for closure.

For the Fruit Frost Program, the Committee has restored one-half or the funding w.Mch will permit th:e progmm to continue through 1982 at a reduced level.

$20,()90,000 is provided for public telecommunica.td.ons facUJ.td.es grants in 1982. This action 1J consis.tent wLth the reaUJtJhol"'.zation of the program under the Omnibus ReconciliaUon Act.

The Ma.rLtime AdminiSit.m..tion is offi.cially transferred from the Department of COIIIlmerce to the Department of Transportation. The Committee recommendation for MarAd is $85,389,000; a net reduction of $129,411,000. As requested, no funds are provided !or ship construction subs-idles.

Thus, the appropriation recommended represents a net reduction of 15.7 percent from 1981 appropriations. I! we include the Maritime Administration in this comparison, the Department of Commerce has been rP-duced by 23.7 percent and the appropriations for MarAd and the Denartment together is 19.9 percent less than last year.

DEPARTMENT OF JUSTICE

The ap•roprlatlon recommended for the Department of Justice is $2,441 ,038,000 an increa."'e of $115 ,832,000 over 1981 anpro~riations. This allowance is a total of $129,087,000 higher than the re;vised budget estimates.

For INS, the Committee recommends $25,000,000 more than the budget estimate. These funds are necessary in order to restore border patrol, inspections, and investigations positions proposed !or reduction.

The recommendation includes $70 m1llior., for the Juvenile Justice program and $4 mil· lion for Treatment Alternatives to Street. Crimes (TASC) .

In the general law enforcement area, the Committee has restored reductions in Administratively Uncontro11able Overtime (AUO) for the FBI, DEA, and INS. In addition, funds are restored to maintain the FBI and DEA state and local training and assistance programs.

For the U.S. Attorneys, funds are provided to maintain emnloyment levels in the March request; and for the Marshals Service, the Committee recommends restoration of positions for courtroom security and private process.

Because of the late date of submission of the INS amendment, a.Uowance could not be made within the Committee's allocation. The amount recommended by the Committee includes a portion of the Administration's reat•est for enforcement. As I have indicated to -the Department, I wlll offer an amendment to nrovlcl.e $8'>,181.000 additional funds for enforcement, detention, and deportation while the blll is before us today. It 1s my

November 10, 1981 CONGRESSIONAL RECORD-SENATE 27101 intent that-at a minimum-sufficient funds must be provided to cover necessary expenses at the Krome detention center and costs for processing the HaiUan and running the center at Fort Allen, Puerto Rico, In addition, we will provide $35,000,000 for the construction of a permanent new facility.

Senator Hollings and I have closely examined the rElj'vised budget request for the Department of Justice. In order to meet the Administration's new estimates, the Committee's 1·ecommendations for the Department would have to be reduced by $215,000,-000. This new request would seriously impair the basic law enforcement efforts of Justice agencies and, severely impact anumber of State and local law enforcement agencies as well, and therefore has not been adopted by the Committee.

DEPARTMENT OF STATE

The Committee recommends a.n appropriation of $1.810,840,000 for the Department of State. This is an increase of $305,782,000 from 1981, and is $38,233,000 higher than the revised budget estimate. This includes:

$80,000,000 for the construction of a new embassy and residentia.I housing complex in Riyadh, Saudi Arabia..

The revised budget estim.81te would delay the appropriation of $35.8 milllon assOCJiB~ted with the construction of staff housing in the Riyadh complex for one year. The Committee did not recommend this reduction. Staff housing in the embassy complex wlll be essential. A one-year delay will result in immediate and substantial costs increases of up to 50 percent. Prudence dictates that we proceed w1th this project.

THE JUDICIARY

For the Judiciary, the Committee recommendation is $714,662,00Q---.a.n increase of $68,019,000; but a. reduction of $27,141,000 from the budget estimate.

RELATED AGENCIES

There were a. number of significant changes in the budget recommendations for some of the related agencies.

The recommendation for the International OOmmunication Agency provides $9,139,000 for the expansion of international education exchange prognwnB.

For the Lega.l Services Corporation, the Committee has recommended $241 million which is the same as the House allowance and is $80,300,000 less than fiscal year 1981 a.ppropriatio·ns.

The Committee recommends the termination of the Metric Board by September 30, 1982. $1,500,000 is recommended for this purpose.

In summary, the recommendations we are presenting on behalf of the Committee reflect the earlier decision of Congress on the Omnibus Reconc111ation Act and the current requests of the Administration.

Mr. WEICK.ER. At this time, Mr. President, before making the usual motion to adopt the committee amendments I am informed that there is a printing error in connection with the amount on page 22, line 8, and I ask unanimous consent that the committee amendment be modified to correctly show that the committee deleted the $979.000 amount and inserted in lieu thereof $500,000.

The PRESIDING OFFICER. Without objection,1it is so ordered.

Mr. WEICKER. Mr. President I ask unanimous consent that the co~mittee amendments as modified with the exception of the following committee amendments be agreed to en bloc and that the bill, as thus amended, be regarded for the purpose of further amendment as original text providing that no points of order shali be waived

by reason of agreement to this request, and that any of the excepted committee amendments may be laid aside by agreement between the majority and minority fioor managers, those amendments to be excluded from en bloc consideration are: page 2, lines 17 through 23; page 11, lines 24 to 25; page 12, lines 1 to 3; page 26, line 3; page 26, lines 10 to 19; page 31, lines 22 to 24; page 32, line 23 through line 25; pages 33, 34, 35, in toto, page 36, lines 1 through 10; page 53, lines 11 through 15; and page 42, lines 11 through 12.


The committee amendments agreed to en bloc are as follows:

On page 3, line 9, strike "$288,500,000", and insert the following: $139,000 ,000: Provided, That during 1982 total commitments to guarantze loans shall not exceed $150,000,000 of contingent liability for loan principal: Provided further, That total obligations for new loans under the Economic Development Revolving Fund shall not exceed $30,000,000.

On pa"'e 3. after line 15, insert the following: "(INCLUDING TRANSFER OF FUNDS)";

On page 3, line 19, after "$25,000,000", insert the following: of which $20,000,000 shall be derived by transfer from the Economic Development Revolving Fund:

On page 4, line 20, strike "$174,206,000", and insert "$165,606,000";



On page 5, line 11, strike "$41,750,000", and insert "$42,522,000"

On page 5, after line 13, insert the following:

UNITED STATES TRAVEL AND TOURISM ADMINISTRATION

SALARIES AND EXPENSES

For necessary expenses of the United States Travel and Tourism Administration as provided for by law; including employment of aliens by contract for service abroad; rental of space abroad for periods not exceeding five years, and expenses of alteration, repair, or improvement; advance of funds under contracts abroad; payment of tort claims in the manner authorized in the first paragraph of 28 U.S.C. 2672, wben such claims arise in foreign countries; and not to exceed $5,000 for representation expenses abroad; $8,600,-000.




On page 7, line 2, strike "Obligations", and insert the following:

For payment to the Coastal Energy Impact Fund for administration of the Act of October 27, 1972, as amended, $500,000, to rem ,a.in avallable untll expended; obligations.

On page 7, line 8, strike "$9,000,000", and ins~rt "511.000,000";

On page 7, line 8, strike ": Provided", through and i11cluding line 19;


On page 8, line 23, after "programs," insert the following: and for necessary expenses to enable the Department of Commerce to enter into an agreement with the Smithsonian Institution to close out the Smithsonian Science Information Exchange (SSIE), to transfer the assets of the SSIE to the Department, and to pay the outstanding net liab111ties of SSIE;


On page 9, Une 5, strike "$7,228,000", and insert "$7 ,800,00J";



On page 9, strike line 19, through and including line 11 on page 11;


DEPARTMENT OF TRANSPORTATION MARITIME ADMINISTRATION

OPERATING-DIFFERENTIAL SUBSIDIES (LIQUIDATION OF CONTRACT AUTHORITY)

For the payment of obligations incurred for operating-differential subsidies as authorized by the Merchant Marine Act, 1936, as amended, $417,148,000, to remain available until expended.

RESEARCH AND DEVELOPMENT

For necessary expenses for research and development activities, as authorized by law, $10,491,000, to remain available until expended.

OPERATIONS AND TRAINING

For necessary expenses of operations and training activities authori:red by law, including not to exceed $2,500 for entertainment of officials of other countries when specifically authorized by the Maritime Administrator; not to exceed $2,500 for representation allowances; not to exceed $2,500 for contingencies !or the Superintendent, United States Merchant Marine Academy, to be expended in his discretion; $74,898,000, to remain available until expended: Provided, That reimbursements may be made to this appropriation from receipts to the "Federal ship financing fund" for administrative expenses in support of that program.

FEDERAL SHIP FINANCING FUND

During 1982, total commitments to guarantee loans shall not exceed $1,050,000,000 of contingent liabi11ty for loan principal.

GENERAL PROVISIONs-MARITIME ADMINISTRATION

Notwithstanding any other provision of this Act, the Maritime Administration is authorized to furnish ut111ties and services and mal{e necessary repairs in connection with any lease, contract, or occupancy involving Government property under control of the Maritime Administration and payments received by the Maritime Administration for utilities, services, and repairs so furnished or made shall be credited to the appropriation charged with the cost thereof: Provided, That rental payments under any such lease, contract, or occupancy on account of items other than such ut111ties, services, or repairs shall be covered into the Treasury as miscellaneous receipts.

No obligations shall be incurrt;d during the current fiscal year from the construction fund established by the Merchant Marine Act, 1936, or otherwise, in excess of the appropriations and limitations contained in this Act, or in any prior appropriation Act and all receipts which otherwise would be deposited to the credit of said fund shall be covered into the Treasury as miscellaneous receipts.

On page 15, line 12, strike "$77,351,000", Bind insert "$76,900,000";

On page 15, line 12, strike "no part", through and including "Not" on line 15, and insert "not";

On pal?'e 16. line 7, strike "$11,400,000", and insert "$11,225,000";

On page 16, line 17, strike "No funds", through and including line 2 on page 17;


On page 17, line 20, strike "$10,000,000" and insert "$9,000,000";

On page 17, line 21, strike "$40,000", and insert "$60,000";

27102 CONGRESSIONAL RECORD-SENATE November 10, 1981 on page 18, line 6, strike "$81 ,706,000", and

insert "$84,000,000"; on page 18, line 6, strike " : Provided",

through and including line 10; On page 18, a.!ter line 12, insert the follow

ing: "(INCLUDING TRANSFER OF FUNDS)" On page 18, line 17, strike "$227,380,000",

and insert "$217 ,000,000"; On page 18, line 18, strike ": Provided",

through and including the period on page 19, line 3;


On page 19, line 4, after "activities", insert "including loan servicing";


On page 20, line 2, after "limitation", insert the following: Provided, That during 1982, within resources and authority available, gross obligations for the principal amount of direct loans shall not exceed $205,000,000 and total commitments to guarantee loans shall not exceed $3,300,000,000 of contingent liab11ity for loan principal.

On page 20, strike line 8, through and including line 13;

On page 20, line 17, strike "$4,000,000", and insert ''$3,000,000";

On page 20, line 22. strike "$22,200,000", and insert "$19,000,000";

On page 20, line 23, after "limitation", inser•t the following: Provided, That during 1982 total commitments to guarantee shall not exceed $1,200,000,000 of contingent llabllLty for prin<:lpa.l.

On page 21, strike line 7, through and including line 9, and insert the following:

For necessary expenl!"es of the United States Metric Board, including termination or cessation of activities of the Board, including hire of passenger motor vehicles and services as authorized by 5 U.S.C. 3109, $1,500,000, to be available until September 30, 1982, at which time the Board shall terminate : Provided, That all property, assets, obligations, records, and unexpended balan-ces of approprillltions, allocations, and other funds employed, used, held, available, or to be made avail&ble to the United States Metric Board shall be transferred to the Department of Commerce.

On page 22, line 7, strike "$42,271,000", and insert ''$39,347,000";

On page 22, line 13, strike "$6,400,000'•, and insert "$6,200,000";



On page 23, after line 23, insert the following: PoLLUTION CONTROL EQUIPMENT CONTRACT

GUARANTEE REVOLVING FuND During 1982, t.otal commitments to guar

antee shall not exceed $250,000,000 of contingent liab111ty f'or principal.

On page 24, llne 6 , strike "$299,180,000", and insert "$291,950,000";

On page 24, llne 9, strike "$25,000,000", and insert "$24,100,000";


On page 24, line 21, strike "$5,313,00J", and insert "$5,500,000";

On page 25, line 7. strike "$736,129,000", and insert "$742,609.000";

On page 25, line 10, after "1983", insert the following: Provided, That fees may be established to process identification records for State and local employment and licensing agencies and banking ii).stltutions, such fees being deposited to the credit of this appropriation without regard to the provisions of 31 u.s.c. 484.




On page 28, line 8, after "$13,731,000", insert the following: "including $1,920,000 for the planning, design, acquisition, and preparation of a site for a Federal Correctional Institution to be located in central Arizona and any necessary relocation or replacement of existing site structures or other improvements, as well as the grading and development of utillty distribution systems"


(DISAPPROVAL OF DEFERRAL) The Congress disapproves $1,900,000 of the

proposed deferral 082-17 relating to the Department of Justice, Federal Prison System, "Building and facilities" as set forth in the message of October 1, 1982, which was transmitted to the Congress by the President. This disapproval shall be effective upon enactment into law of this Act and the amount of the proposed deferral disapproved herein shall be made available for obligation.



On page 30, line 18, a.!ter "amended", insert the following : ": Provided further, That $5,000,000 of said amount shall be allocated for undercover property recovery programs operated by State ·and local governments under the supervision of the Department of Justice.".


On page 32. line 18, strike "$139,389,000", and insert "$140,389,000";



On pa!Ze 38, line 16, strike "$5,000,000", and insert "$4,400,000"


On page 39, line 10, strike "$400,257,350", and insert the following : "$435,240,000: Provided, That $28,566,86'\ shall be available only for the Pan American Health Organization for the payment of 1982 assessed contributions and to reimburse the Pan American Health Organization for payments under the tax equalization program for employees who are United States citizens.".

On page 40, line 3, strike "$8,277,000", and insert "$7.2Jii ,OOO";


On page 41 , line 11, strike "$3,235,000", and insert "$2,847,000";


On page 43. line 24, strike "$88,317,000", and insert "$86.519,000";

On page 44, line 8, strike "$458,000", and insert "$404,000";

On page 45, line 3. strik..J "$448,286,000", and insert "$41::7,425,000";

On page 45, line 23, strike "$16,500,000", and insert "$16.880,000";

On page 46. line 8, after "receotion, ", insert the following: "and for lease of real !)roperty for periods of up to twenty-five years in Africa. Eurooe. and Asia";


GENERAL PROVISIONS The funds provided by this title shall be

available for obligation and expend·iture notwithstanding section 15(a) of the State Department Basic Authorities Act of 1956 and section 701 of the United States Information and Educa tiona! Exchange Act of 1948, as amended.

On page 49. line 21, strike "$265,000,000", and insert "$264,000,000";



SEc. 508. (a) None of the funds provided under this Act shall be availa·ble for obligation or expenditure through a reprograming of funds which: (1) creates new programs; (2) eliminates a program, project, or activity; (3) increases funds or personnel by any means for any project or activity for which funds have been denied or restricted; (4) relocates an office or employees; or (5) reorganizes offices, programs, or activities; unless the Appropriations Committees of both Houses of Congress are notified fifteen days in advance of such reprograming of funds.

(b) None of the funds provided under this Act shall be available for obligation or expenditure for activities, programs, or projects through a reprograming of funds in excess of $250,000 or 10 per centum, whichever is less, that: (1) augments existing programs, projects, or activities; (2) reduces funding for any existing program, project, activity, or personnel by 10 per centum approved by Congress; or (3) results from any general savings from a reduction in personnel which would result in a change in existing prof:uams, activities, or projects approved by Congress, unless the Appropriations Committees of both Houses of Congress are notified fifteen days in advance of such reprograming of funds.

Mr. HOLLINGS. Mr. President, for the last 5 years Senator WEICKER and I applied a team effort in the development of the State, Justice, Commerce appropriations bill. Our team is still operating-we just have a new captain.

And Sen.11tor WEICKER, the new captain, has done an outstanding job. He is totally famHiar with the bill, the needs of our Department of State, Department of Commerce, and Department of Justice, particularly the FBI, and the more than 100 different appropriation items in this bill.

We have had a thoroughgoing oversight hearing review of the various agencies and departments.

I am glad to join now with him in presenting the bill. '

The chairman has outlined the highlights of the bill. The budget reductions originally presented by President Reagan have largely been taken in this bill, but we have drawn the line in several places, for instance:

The President proposed onlv phase out funds for the Econom;c Development Administration, but we have retained a $226.000,000 EDA program level.

The President proposed deep cuts in the research and development programs of the National Oceanic and Atmospheric Administration, that represent our investment in the future. That is our Weather Service and quite a bit of information that is being used currently and daily in research endeavor.

And I think that perhaps the Secretary of Commerce is a little frustrated as a businesgman to go and find that in the Commerce Department the largest agency is NOAA but it has been there for some time now. It was thought at one time to set it up as an independent agencv with the Coast Guard which has 42,000 personnel.

In fact, the bipartisan study commission known as the Stratton Commission in the mid-1960's after a very, very thorough study recommended just that. The

November 10, 1981 CONGRESSIONAL RECORD-SENATE 27103 question simmered down to whether or not to put it in the Department of the Interior or put it in the Department of Commerce.

I think that President Nixon very, very properly determined that it ought to be in the Department of Commerce.

Previously we had ESSA, the Environmental Science Services Administration, in the Department of Commerce that included the Coast and Geodetic Survey as well as the Weather Bureau. NOAA was a natural successor to ESSA.

NOAA has been doing an outstanding job. The fact that we have coastal zone management and are taking care of our barrier islands and estuarine sanctuaries should be recognized by the Secretary of Commerce and his Department, so that the people will not be running all over the place with new bills about barrier islands and sanctuaries and everything else.

We only instituted that program of coastal management after 3 years of hearings, and we have a distinct and unique feature that once a plan is approved by the Federal Government-and the distinguished Presiding omcer, as a former Attorney General, would appreciate this particular factor-then the State plan is supreme.

In other words, there is a consistency provision, a Federal consistency provision, and thereafter the Federal Government, as well as all other State endeavors, have to check through that particular plan.

A month ago the administration with no appreciation of either NOAA, the coastal zone management, the working partnership--and they act like they invented government and now all of a sudden work with the States for the first· time-on the contrary, this took 10 years to develop. It was almost the same misunderstanding and lack of appreciation that President Carter had for the Nation's midsection-the Midwest-where over a 75-year period 11 State bipartisan Governors developed a water allocation project of the waters of the Colorado River. We turned a veritable desert land or area into very, very fruitful farmland, the breadbasket not only of America but some 15 countries.

Here comes this group and they sent over and wanted to do away with the Federal consistency program. Fortunately, the State Governors resryonded, Congressmen and .Senators on both sides of the aisle resoonded. and fortun!l.tely the administration withdrew that. But I say that at this particular point we have got to emphasize in this budget, which Chairman WEICitER and I both did at the hearings relative to the Secretary of Commerce, and thev said they appreciated and understood them, but they have not responded accordingly. I can tell you that.

The President proposed eliminating all funding for juvenile justice and dellnquency prevention, but we retained $70 milllon.

The President prooosed no funding for the Legal Services Corporation. We recommend $241 million to insure-I have here in the prepared remarks equal access to justice for the poor-but let us

say more correctly "some" access for the poor.

The Legal Services Corporation, which, incidentally, was a Republican initiative coming in under President Nixon-they always talk of my friend President Johnson and the Great Society, but some day I will list the programs President Nixon thought up too, and, incidentally, this is a good one.

The Legal Services Corporation has had a very stormy history because they went way overboard. They were taken over by the theoreticians, the philosophical types, the study groups, and the college campus crowd. They got massive studies and got into all kinds of programs.

They had people outside on the steps demonstrating what you and I were paying for. So we had to put restrictions on the money. We let them demonstrate, but this is legal services for the poor and the disadvantaged of America, and the American Bar Association, under the leadership of Associate Justice Powell, devised this.

How could you have a system of justice where there was no access? In the days when we started practicing we were all assigned cases, but very few lawyers want a domestic case. Very few lawyers want a landlord and tenant case and to take one all the way to the Supreme Court, like I did over a 3-year period. I think the fee was $100 over 3 years, and the distinguished Presiding 01Hcer knows exactly what I am talking about.

So we had to have some kind of access. We have developed it judiciously. Senator WEICKF..R has looked at the corporation's budget very, very carefully, and so have I and, frankly, we both would have retained it at a $321 billion level if we could have. But we have gone along with the spurt of spending cuts. We went along with this cut but not the elimination.

If they want to get down to the fundamentals-and maybe some day soon I will be able to furnish that figure-we will just have to balance this particular program of legal services for the poor with legal services for the rich. If we are going to say we are going to feed tfiem all out of the same spoon and give them equal treatment, let us look at legal services for the rich and the writeoff of for the these law firms.

I am constantly meeting, Mr. President <Mr. RUDMAN) you and others sent a lot of our colleagues packing and they are all Washington lawyers-! am constantly meeting them and they say, "Well, we miss being here but we are sure making a lot of money." You get out and go to their offices and they have got all the peo:rle to do the work for them, and they are having all of these nice parties. Well, all of that is a cost to the revenue side. We are trying to find out the cost. But I can tell you it far, far, far exceeds any $241 million by way of legal expenses each year for the rich.

They have their particular program, it is in place. It is costing the budget, so let us not just jump around, let us do as the committee has done. Senator WEICKER and Senator CHILES worked out appropriate amendments relative to class

actions, relative to the matter of the illegal aliens and otherwise so as to have equal access. But we have worked out and eliminated many of the abuses there, and we should continue with the Legal Services Corporation for some access to our system of justice for the poor.

<Mr. GRASSLEY assumed the chair.) Mr. HOLLINGS. Mr. President, the

most important determination we made was to hold onto our levels for law enforcement. Last month our distinguished President went down to New Orleans, talked about the "thin blue line" that separated the jungle of crime from this island ·we call civilization, and he assured all the attorneys general and the law enforcement omcers that he stood behind them foursquare. That was on a Monday.

By the end of that week we received the revised recommendations that emanated from the administration. They were such that they had cut 600 FBI agents, had cut the Drug Enforcement Administration, cut the Coast Guard, cut the CUstoms Service, everything just right stralght across the board.

That brings us down to the crux of not necessarily wanting or not wanting in a wa.v but everyone would like to try to effect some economies. But there is a point where you reach the law of diminishing returns and, particularly, in the area of law enforcement. We have been cutting back, and we now have less FBI agents the moment I talk here in 1981 than what we had in 1971. We have not been expansive in that particular budget area. On the contrary, crime is up. we have got a greater responsibiltty with the population, so we really ought to be increasing it.

We have held the line and we have reduced the cuts of some 350 to 500 FBI agents. We have tried to work against the 2-week furlough for all employees of the Drug Enforcement Administration that the President's reunions would require.

Just this past week-fortunately they changed it after we made our presentation on the :floor-but the Drug Enforcement Administration has only got three agents in Charleston. They told each agent-each agent has got a car and they told two of the agents to park the cars and keep them parked.

I happen to know of one particular case where they assigned them to a case, a Federal judge, bv the way, and rthey said, "I am sorrv. your Honor. you cannot use the car." He said, "Here, go ahead ·and get some gas and put it in there and rgo ahead and use it." He said, "No. we started that down in Fort Lauderdale and we have been restricted down there." Apparentlv the local agents, because thev could not with the car go anywhere and do anything, got up with their wives a cake bake sale and a carwash program in order to get the money to put gasoline in the automobiles. And they put out an administrative directive forbi.ddinf{ the use of any gas except official credit cards, Federal Government credit cards. to use for the gaso1ine. That is how destitute we are in November and December where

they literally deluge us with all kinds of drugs coming into this country in Florida, Georgia, and South Carolina.

Last year-I do not know why, but this is the season__.they had a large freighter off the coast of Charleston, S.C., they put it out there about 50 milles, and they offload the drugs and marihuana onto trawlers and small boats. It took us 2 weeks-talking about the Coast Guardto get a Coast Guard cutter finally down from New York, and we got a tanker. It was the largest bust that you have ever seen. They told us that actually we were lucky to intercept 20 percent coming into the various streams and islands; 80 percent was coming through.

Now, I am not talking fanciful figures. These are actual facts.

So we are trying our best to keep up in counterintell1gence with FBI agents, and the Drug Enforcement Administration, in the fight against the everexpanding international drug traffic.

Mr. President, I endorse our chairman's recommendation and commend him for his excellent work and commend his staff for the excellent work that they have given our subcommittee.

The b111 is a good bill. It meets the proven national needs while making the necessary reductions required to put our overall fiscal policy in order. So I am glad to join with our distinguished chairman and the staff in presenting the bill to the Senate.

Mr. WEICKER. I thank my distinguished colleague from South Carolina.

As the Senator from New Hampshire commented as he left the chair and came by my desk, he said, "I could listen to Senator HoLLINGS all day." And so could I. I mean that. I think the Senator's perceptions are right on target and most eloquently articulated.

Mr. President, I ask unanimous consent to amend my unanimous-consent agreement to include the committee amendment on page 37, line 22, in the list of amendments excluded.

Mr. THURMOND. Mr. President reserving the right to object, when' the Senator brings up these different matters on page 2, line 17 through line 23 the committee struck out a House limita~ tion there that we would like to have a rollcall vote on. And I will give the Senator several others.

Mr. WEICKER. If the distinguished Senator would allow me, I would like to go over the list. He was not on the floor when I went through a whole list.

Mr. THURMOND. As soon as I was notified, I came right over.

Mr. WEICKER. Much of what the Senator is about ready to do has already been done at the request of Senator HELMS.

Mr. President, I suggest the absence of a quorum.



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

'!'he PRESIDING OFFICER. Without obJection, it is so ordered.

Mr. THURMOND. Mr. President, it seems that the differences here in what the Appropriations Committee did and what some of us felt otherwise has been taken care of. So we have no further objection.

Mr. WEICKER. I thank the Senator from South Car-olina.

Mr. President, what is the status of my last unanimous-consent request? Was that passed upon by the Chair?

The PRESIDING OFFICER. That has not yet been agreed to.

Is there objection? If not, it is so ordered.

Mr. WEICKER. Mr. President, I ask unanimous consent that the committee amendments be laid aside in order that I might present a technical amendment.



(Purpose: Technical amendment to change ci taM on from the "Foreign Service Act of 1946, a.s amended" to the "Foreign Service Act of 1980") Mr. WEICKER. Mr. President, I send

an amendment to the desk and as·k for its immediate consideration.

The PRESIDING OFFICER. The clerk will state the amendment.

The legislative c'lerk read as follows: The Sena.tor from Oonnecticut (Mr.

WEICKER) proposes a.n unprinted aanendment numbered 604.

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


The amendment is as follows: On page 23, after the word "by" on line 10,

strike all through the word "amended" on line 11 and insert in lieu thereof "the Foreign Service Act of 1980".

Mr. WEICKER. Mr. President, this is a technical amendment to correct a citation in the House bill. Employees of the Foreign Claims Settlement Commission are entitled to benefits and allowances similar to those provided Foreign Service employees. As passed by the House, the bill mistakenly cites the provisions of "title IX of the Foreign Service Act of 1946, as amended". However, the correct citation is. "the Foreign Service Act of 1980".

Mr. President, I move the adoption of the amendment.

The PRESIDING OFFICER. The question is on agreeing to the amendment of the Senator from Connecticut <Mr. WEICKER).

The amendment <UP No. 604) was agreed to.



The leg;lslative clerk proceeded to oall the roll.

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


Mr. WEICKER. Mr. President, I ask unanimous consent to lay the excepted committee amendments aside.



(Purpose: To provide $2,000,000 to the Federal Bureau of Investigation for Fingerprint Identification; $828,000 to the National Institute of Corrections for State and local training and to reduce the appropriation for the Department of State by $10,000,000) Mr. WEICKER. Mr. President, on be

half of myself and Senator HoLLINGS, I offer an amendment which amends the appropriations for the Federal Bureau of Investigation and the National Institute of Corrections and the Department of State. I send the amendment to the desk and ask for its immediate consideration.

The PRESIDING OFFICER. The clerk will state the amendment.

The legislative clerk read as follows: The Senator from Connecticut (Mr.

WEICKER), for himself and Mr. HOLLINGS, proposes an unprinted amendment numbered 605.

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


The amendment is as follows: On page 25, line 7, strike "$742,609,000" and

insert in lieu thereof "$744,609,000". On page 25, line 15, before the period, ln

se.rt the following: "and that $2,000,000 shall be available for the employment and training of .personnel and purchase of equipment necessary for this purpose; Provided further, That no ceiling shall be established at less than 19,500 on full-time equivalent employment of the Federal Bureau of Investigation".

On page 28, line 1, strike "$10,358,000" and insert in lieu thereof "$11,186,000".

On page 37, line 10, strike "$912,258,000" and insert 1n lieu thereof "$902,258,000".

Mr. WEICKER. Mr. President, this amendment has several parts and it results in a net reducti<>n in budget authority provided under the bill.

First, it reduces the appropriation for salaries and expenses of the Department of State by $10,000,000 to $902,258,000. The reduction is entirely from foreign currency gains which have resulted since the preparation of the budget. It does not affect the program level proposed by the Department.

Second, the amendment provides $2 million to the Federal Bureau of Investigation. These funds are specifically provided for personnel and equipment necessary to resume servicing State and local applications for fingerprint identification.

On October 1, the FBI suspended processing of all non-Federal fingerprint identification requests other than those from criminal justice agencies for 1 year. State and local agencies affected by the suspension include employment, and licensing agencies, and regulatory boards. In committee we approved a provision enabling the FBI to establish a fee structure so that it can receive reimbursement for this service. The fee structure will allow the FBI to hire personnel necessary to process these requests.

The amendment which I am offering will enable the FBI to proceed quickly and hire and train necessary personnel

November 10, 1981 CONGRESSIONAL RECORD-SENATE 27105 and purchase equipment so that it can proceed quickly and resume this vital service earlier than planned.

Finally, the amendment provides $828,000 in additional funds for the National Institute of Corrections. During full committee markup on this appropriations bill my colleague from Pennsylvania (Mr. SPECTER) raised a concern that the amount requested by the administration in the September revised budget and the amount recommended bY the committee might cut severely into the training of State and local corrections officers. I gave my assurance to Senator SPECTER that I would look further into this matter. The amount recommended by this amendment will provide for the training of 1,400 State and local corrections ofiicers.

As I have mentioned, the net effect of the amendment is to reduce the amount of budget authority recommended by the committee by $7,172,000.

The PRESIDING OFFICER. The Senator from South Carolina.

Mr. HOLLINGS. Mr. President, I jojn the distinguished chairman on this amendment.

As he stated, it increases the FBI by $2 million and sets a floor under the ceiling relative to the number of personnel. If Director Webster does not need all the personnel, he does not need to hire them, but we do not want the budget officers to impede our law enforcement by creating artificial savings through personnel ceilings. It increases the National Institute of Corrections by $828,-000 to maintain the vital training of State correctional personnel.

Both of those increases are taken care of by reducing the State Department because of foreign currency gains. In other words, there is no net increase in this particular bill, in fact, it reduces the bill by $7,172,000.

The State Department is not hindered in any way in its programs but the necessary additional money is allocated to the National Institute of Corrections and the FBI.

I urge adoption of the amendment. Mr. WEICKER. Mr. President, I move

adoption of the amendment. The PRESIDING OFFICER. Without

objection, the amendment is agreed to. The amendment <UP No. 605) was

agreed to. Mr. WEICKER. Mr. President, I move

to reconsider the vote by which the amendment was agreed to.

Mr. HOLLINGS. Mr. President, I move to lay that motion on the table.





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


AUTHORIZATION OF SERVICE BY THE FCC

Mr. HOLLINGS. Mr. President, I wish to take a moment to elaborate on an understanding that the Senator from Connecticut and I have regarding the appropriation for the Federal Communications Commission.

An essential function of the Commission is the expeditious authorization of new and additional services to the public. The Appropriations Committee believed that if the Commission's budget were reduced below the level we set it might well have a detrimental effect on the provision of additional, more innovative, and more efficient services to the public. If we are to truly have a competitive communications industry, it is necessary that the Commission encourage rather than discourage new technologies and new services with minimal delay. It is largely for this reason that we maintained the Commission's funding at $76.9 for fiscal year 1982.

Since we have donta so, we fully expect the Commission to authorize new and additional services expeditiously. For example, the Commission has been attempting to write rules for a new low power television service for many years. Congress has already tried to speed the issuance of these and other licenses bY allowing the Commission to use lotteries instead of the cumbersome comparative hearing process in making grants. All comments on the proposed low power rules have been filed, and the time has come to issue final rule. We believe that these final rules should be issued by February 1, 1982. Further, we believe that the actual granting of all low power applications should be started shortly thereafter and should proceed rapidly.

The Commission should also proceed to authorize other new and additional services as well as individual licenses as quickly as possible. Cellular Radio and VHF Drop-Ins are two examples that come to mind. In both instances, the Commission has spent much time working on rules. This aspect of the process needs to end, and the processing of applications should begin, where such services are found to be in the public interest. Further, in these instances as

. well as with other services, the lottery approach is, as Congress has intended in passing that provision, a perfectly proper way to proceed.

Just as we show here with the $76.9 million funding level, Congress. in enacting the lottery provision, believed that the Commission needs to reduce the long delays that have traditionally been experienced in the introduction of new and additional services. This lottery provision can appropriately be used in selecting among competing applicants for all proposed uses of the electromagnetic spectrum. We believe that the use of lotteries must be seriously considered in all instances, and we expect the Commission to place the highest priority on the authorization of new and additional services.

Does the Senator from Connecticut agree with my statement of our under-

standing regarding the high priority for new and additional services?

Mr. WEICKER. Yes, I agree with the Senator. It is our understanding that the Federal Communications Commission should authorize new and additional services as expeditiously as possible.

POLITICAL BROADCASTING LAW

Mr. HOLLINGS. Mr. President, I wish to address the Senator from Connecticut concerning the fiscal year 1982 appropriations for the Federal Communications Commission.

The Federal Communications Commission has the important responsibility of administering and enforcing the various political broadcasting laws, including the equal time rule, the fairness doctrine, and the reasonable access provision. The Senator from Connecticut and I strongly believe that these laws must be effectively and promptly administered and enforced. In the funding for the Commission for fiscal year 1982, we have provided a more than sufficient cushion to insure that the Commission meet this objective. But, even if this level of funding were reduced further, we still believe that the administration and enforcement of these political broadcasting laws remain a priority. Regardless of the funding level, we do not believe that the staff assigned to administer and enforce these laws should be reduced below fiscal year 1981 levels, and we believe that all inquiries and complaints must be responded to as promptly as in the past.

Mr. WEICKER. I agree completely with the Senator that the administration and enforcement of the political broadcasting laws remain a priority at the Federal Communications Commission. We have examined this aspect of the Commission's responsibilities very carefully and firmly believe any lessening of attention to this area is completely unwarranted.

Mr. President, I suggest the absence of a quorum.



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


ROUTINE MORNING BUSINESS Mr. BAKER. Mr. President, I ask

unanimous consent that there now be a period for the transaction of routine morning business not to extend past the hour of 2:30 p.m., in which Senators may speak for not more than 5 minutes each.

The PRESIDING OFFICER <Mr. SYMMS) . Without objection, it is so ordered.

DIRECTOR OF FAMED BOYS TOWN RECIPIENT OF DISTINGUISHED NEBRASKAN AWARD Mr. ZORINSKY. Mr. President, the

Nebraska State Society of Washing-


ton, D.C., conferred its "19th Annual Distinguished Nebraskan Award" on one of its citizens who has brought honor and fame to our great State. The 19th annual award was presented this year to the Reverend Robert P. Hupp, executive director of Boys Town, Nebr.

Father Hupp, a native of Wheeler County, Nebr., has been director of Boys Town since 1973. He is responsible for leading Boys Town into a new era for communication disorders in children and the Boys Town urban program.

Father Hupp is active in many civic organizations, including the Boy Scouts, the United Way, and the City of Hope National Medical Center.

For many years, this distinguished clergyman was active in parish work in Nebraska and served as a chaplain in the U.S. NaVY during World War ll.

On the occasion of the award, the prayer and benediction was given by the Reverend John P. Gates of Bethesda, Md. It was a moving benediction which I wish to share with all of my colleagues. 0 llving God, our Creator and Sustainer in

life, we thank Thee for this fine gathering of people this night who love the State of Nebraska as something special in your Creation.

We are particularly thankful for the life, career and accomplishment for ·the good of Father Robert P. Hupp of Boys Town. Grant him continued health and joy and blessedness in the days ahead.

Now for the pleasurable memories of home and family we give Thee thanks.

We are grateful for the hope for the future; hope for ourselves, for our loved ones, for our state, our country, for the world and mankind everywhere in spite of the forbidding circumstances in which we live in our time.

Bless all who are here with worthy motives and purposes in all their endeavors,

And give us all a high resolve to do justly, love mercy in all our dealings with our fellow man, especially toward the poor and handicapped in any way.

Now may the courage of the early morning dawning,

The strength of the eternal hills, The peace of the evenings ending, And the companionship of Jesus Christ Be with you tonight and ever more. Amen.

THE DEATH OF PHIL SUTHERLAND

Mr. GORTON. Mr. President, I would like to bring to the attention of the Senate the recent tragic death of Phil Sutherland, president of the Puget Sound Gillnetters Association, and ask that the Members of the Senate extend their prayers to Phil and his family.

Phil Sutherland was considered by many people to be a maverick. He was a strong-willed, honest, decent man who fought for what he believed in and was respected by all who dealt with him. He was a hard-working salmon fisherman who lived according to his principles and honesty, and he expected others to be guided by honesty, hard-work and principle.

His battles brought him to the Senate on a number of occasions during the

past few years in regard to the controversies which have plagued the salmon fisheries of Washington State. During the couTse of Phil's work for the gillnetters he had his share of adversaries, but he always had their respect. The Northwest fishing community has lost a true friend and knowledgeable participant. But we have all lost an outstanding citizen. Phil will certainly be missed by the fishing industry and those who knew him.

Mr. President, I ask unanimous consent than an article from the November 4 Seattle Post-Intelligencer on Phil Sutherland be printed in the RECORD at this point.

There being no objection, the article was ordered to be printed in the REcoRD, as follows:

FisHING REBEL DIES AS BOAT FLIPs (By Solveig Torvik)

Phll Sutherland, who led non-Indian commercial fishermen in their stubborn, losing battle against the Boldt decision that upheld Indian treaty fishing rights, died early yesterday when his glllnet boat overturned during a gale and sank off Marrowstone Island nea.r Port Townsend.

He died while enjoying a small personal victory-an unusually long, three-day fishing season for non-Indians--after a decade of losses in the bitter salmon controversy that has darkened the waters of Puget Sound.

Sutherland, 58, described by associates as "a dedicated, hard and stem fellow" went to jail for 20 days in 1979 for fishing off Lopez Island when fishing was closed to nonIndians.

"He had true grit. He was a true American all the way," said Terry Proios, office manager for the Puget Sound G1llnetters Association, which Sutherland headed.

He had been fishing alone aboard the 38-foot "Suds" for chum salmon at the time of his death, according to his wife, Lorene. She said it wasn't "financially feasible to have more than one aboard. But it makes a long night when you don't have someone to help you."

Exactly what happened to Sutherland remained a mystery yesterday. Coast Guard officials said he was found wearing a survival suit some 200 yards downwind from his boat. Tentative cause of death was listed as hypothermia., a.ccording to Coast Guard spokesman Dale Mlller. A small dinghy was bobbing nearby and a fishing net was out, indicating that he was fishing at the time of his death, Mlller said.

He was last seen fishing in the area, described by fishermen as treacherous, about 4:30a.m. yesterday by another glllnetter who left the area when 35-knot winds came up.

COAST GUARD PROBE

The Coast Guard wm conduct an investigation into the cause of the accident, Mlller said.

Sutherland, who lived in Port Townsend and had been fishing for 33 years, had been active in getting the State Fisheries Department to set the three-day season that opened Monday for non-Indian fishermen in the area, said Proios.

"He was proud that some of his efforts had paid off," she said. "He was real excited."

Sutherland. the father of four grown chlldren, was a former amateur boxer and arespected coach for youngsters In Port Townsend. He trained Olympic hopeful Charles Robinson, 18, who was k111ed in Poland with 23 other U.S. boxing team members in a plane crash in 1980.

Sutherland, who helped develop the mechanical clam harvester now widely used in the shellfish industry, had become "very discouraged" about the financial plight of non-Indian commercial salmon fishermen after the Boldt ruling, his wife said.

The controversial 1974 decistoo by U.S. District Judge George Boldt gave half the steelhead and salmon catch to treaty Indians.

When Sutherland was sentenced to jail by federal Judge Morell E. Sharp, 300 protesters demonstrated their outrage on the steps of federal courthouse in Seattle.

"We see the light at the end of the tunnel," he said when he carne out of jail. "But it 1s a train coming the other way."

Blll Frank, the Nisqually Indian who as chairman of the Northwest Indians Fl&h Commlss.lon was Sutherland's arch foe, yesterday called Sutherland "a good friend. He felt very strong for what he was doing. Irespect that. I think the Indian people did too."

KIND WORDS FROM FOE

"We could always sit down without ra.lslng our voices," Frank, even though Sutherland called Indians "super-citizens" who got more tlhan their fa.ir share of the fish.

"I always said we can't compete in the society out here because we don't own the banks," Fra.nk said.

"We were coming closer and closer to a better understanding of the Indians and the glllnetters, which, in the past, hadn't happened," Frank sal d.

Frank added that Sutherland seemed to blame tlhe Indians for the fact that non-Indian glllnetters were not getting 50 percent of the catch, but Frank argued that this was because they had to Share their 50 percent with sport.sftshermen, large commercial concerns and others catching the fish off the coast before the run entered the Sound.

"That wasn't the Indiana' fault,'' Frank said. "The problem was the fish disappeared."

REBUFFED BY HIGH COURT Sutherland had argued that "a small In

dian fleet can rake in 300,000 fish from Puget Sound, while the g111netters get only about 26,000 fish. For us that is a.bout a one-in-10 spilt. That puts us flat out of business economically. We don't know where to tum."

He turned to the U.S. Sup·reme Court. It ruled against him.

Then he turned to politics, entering the 1980 race for state representative against Brad Owen. He lost.

At tlhe time of his death, he was spending his time lob'by·ing in Olympia to prevent an increase in the license fees and landing tax for glllnetters. And he was pleading for longer fishing seasons for non-"!'ndians.

This time he won one, but it cost him his life.

DEFENSE BUILDUP

Mr. THURMOND. Mr. President, an important statement on the economic impacts of the 5-year defense buildup was presented to the Con~ress October 29, by Jack R. Borst1ng, Comptroller for the Deoartment of Defense.

Dr. Borsting assured the Congress that the defense buildup planned by the Reagan administration would not be inflationary, increase bottlenecks in industry, or disrupt the economy in general.

Mr. President. the Comptroller also told the Congress that the proposed 5-year plan is not excessive in comparison with past defense spendln~. He pointed out that over the 5-vear period DOD outlays w111 average 8.3 percent of the gross

November 10, 1981 CONGRESSIONAL RECORD-SENATE 27107 national product, increasing from 5.7 percent in fiscal year 1982 to 7 percent by fiscal year 1986.

Mr. President, although we have serious budget and inflation problems the Congress should be aware that the defense budget is not inflationary and represents a carefully regulated buildup. While our overall budget problems are serious, the military threat has not changed and we must respond to the Soviet efforts to use military superiority to achieve their goals around the world.

Mr. President, I ask unanimous consent that the statement by Dr. Borsting be printed in the RECORD.

There being no objection, the statement was ordered to be printed in the RECORD, as follows: STATEMENT OF THE HONORABLE JACK R.

BORSTING, ASSISTANT SECRETARY OF DEFENSE (COMPTROLLER)

Dear Mr. Chairman and Members of the Committee: I appreciate the invitation to appear before you today to discuss Defense spending and the economy. The topic ts most relevant at a time when the Administration is commUted to modernizing and upgrading the m111tary resources of the United States and at the same time cutting back total Federal spending in order to bring the budget into balance. The topic is also one that is often misunderstood. There is a great deal of concern that the vital steps required to improve the state of our national Defense wlll, in the process, destroy the state of the economy by increasing infiatlona.ry pressures, causing bottlenecks in industry, and competing with the private sector for a shortage of skilled manpower. We believe these concerns are exaggerated. There likely wlll be certain areas where current bottlenecks in the Defense industry wlll occur; where inft.atton may continue at a higher rate than in the non-defense sector; and where competition for sktlled technicians wlll be intense. But we believe the nature of this buildup is sufficiently different from prior buildups-largely associated with wa.r-so that ·the U.S. economy will be able to absorb this Defense buildup without major disruption and upheaval.

DEFENSE BUDGET

We are now formulating the Fiscal Year 1983 budget and, as part of tha.t process, revising the Five Year Defense Program (FYDP). The budget process wtll be completed in late December and the FY 1983 Defense budget will be released by the President to Congress next January. The adjustments which the Department has recently been asked to make as part of the reductions in total Federal spending do not signal a change in our m111tary requirements, but rather a need to achieve them under more stringent fiscal restraints.

The President, as you are aware, has called for Defense to reduce FY 1982 spending by $2 billion and by $11 b1lllon for the following two years from the levels established this past July. We have presented to the Congress proposals to accomplish that goal.

DOD AS PERCENTAGE OF GNP

The five-year projection of DOD outlays wtll average 6.3 percent of the GNP increasing from 5.7 percent in FY 1982 to 7.0 percent in FY 1986. The cumulative increase over the FY 1982 level is approximately $150 billion. The real increase, after adjustment for infiation, 1s about $80 billion in FY 1982 dollars.

As with outlays, the GNP percentages can be reviewed in a historical perspective. These trends do not prove that the Defense budget is too high or too low, or that we are better or worse off in a military sense than at some time in the past. Defense certainly is not entitled to a.ny specific share o! public spending or of GNP. Nonetheless, these comparisons

provide a historical perspective that wm assist in assessing the future.

In 1945, at the end of World War II, DOD outlays were 35.3 percent of GNP; in 1946, they declined to 19.9 percent and by 1950, were 4.4 percent of GNP, averaging 4.6 percent for the years 1947 to 1950. The peak Korean War percentage of 12.1 percent was reached in 1953. From 1956 to 1964. the DOD outlays ranged between 8.0 percen:t to 8.6 percent of the GNP and in 1965 reached a 14-year low of 6.9 percent.

In 1968, during the height of the Vietnam Involvement, DOD outlays reached 9.3 percent of GNP, the highest since the Korean War ~ra. DOD outlays dropped to 8.5 percent of GNP by 1969 and by 1979 had reached 4.8 percent, the lowest DOD percentage of GNP in 29 yea..rs.

The decline was reversed in 1980 with outlays reaching 5.1 percent of GNP and we expect that by 1986, DOD outlays will be approximately 7.0 percent of GNP. In a historical perspective, 7.0 percent of GNP does not appear excess! ve.

IMPACT OF BUILDUP ON INFLATION

Infiatton has had an immense impact upon the Defense budget in recent years, but this impact is by no means peculiar to Defense. It has been an economy-side phenomenon, affecting our family budgets and expenses as well. Infiation in the Defense sector has been higher than in the general economy, not so much as a result of any added pressure from incre~ed Defense spending, but rather by economic factors pecullar to Defense.

Rising energy costs have a more pronounced affect on Defense because DOD is more fuel intensive than the general economy and dramatically more so than the rest of government. Scarcity of certain critical materials, some of which are only avallable from monopolistic suppllers outside the United states also bid up Defense prices. Recent, and large price increa.ses ba ve been experienced 1n titanium, specialty metals such ·as cobalt, nickel, and chromium, and to an extent, aluminum, as well as large castings and forgings made from those raw materials. The combined effects of these factors, together with the high technology state of much of the Defense industry, have caused infia.tion in the Defense sector to be higher than the GNP impllctt price defiator.

Infiation guidance provided to Defense is based on changes in the GNP defiator. As a result, Defense acquisition programs which are based on a full funding conce!)t always have some risk of not being priced properly. A Defense program that is appropriated 1n FY 1982 may not be completed for several years. Yet it must be priced on infiatton rates currently projected for future years.

IMPACT OF DEFENSE GROWTH

The Department of Defense frequently confers with private consulting firms to assess the impact of higher levels of Defense expenditures on the U.S. economy. For example, in October iast year, well known economists represent ing Wharton, Data Resources, Inc., (DRI), Evans Economics, Chase Econometrics, and Merr111-Lynch participated in the annual DoD Cost Analysis Symposium. This group concluded that a 10 percent real growth in DOD outlays over the period 1981-1986 would not be 1nfiat1onary if there were a carefully planned, progressive lncrelse in government purchases. The forecasters also agreed that current U.S. production capac-1tie5 are generally adequate to accommodate the increased demands generated by the accelerated Defense spending.

There are no audden, dramatic increases in the planned buildup for 1981-86, so the infiattonary expectations normally built into such explosive expansions are missing from the current five-year economic forecast. Past Defense buildups, and especl .. lly the Vietnam buildup, involved rapid reallocation of resources to the Defense sector with little or no

compensating adjustments in taxes or reduced spending in other parts of the budget.

We are continuously working with industry groups and representatives to alert them concerning what we believe will be the future demand for defense goods and services in their respective industry sector. At the same time we are checking to see what excess production capacity exists and what the consequences would be 1! further demand were placed on these sectors. I do not believe all bottlenecks can be prevented; nor do I believe that some economic dlsloca.tton will not take place, but I do belleve we are in a much better condi·tion ·to assess the economic pulse of the private sector, as it relates to defense needs .than we have been able to do before.

During the 1950-53 butldup, the DOD percentage of the GNP increased from 4.4 percent to 12.1 percent. The sharpness of that buildup was indicated by a 40 percent average annual increase in the proportional DOD share of GNP. An increase from 7 percent fn 1965 to 9.3 percent in 1968 was much less sharp, as it amounted to only a 9.9 percent average annual rate of increase 1n the proportion·al DOD share of GNP. The currently planne:i buildup is gradual in comparison to prior periods. The increase in the DOD percentage of GNP is less than one-third as sharp as the increase ln the 1965-68 period.

The currently planned butldup is also compensated by planned fiscal actions to offset the economic effects of the higher rates of Defense spending. Excluding National Defense, the Mid-Session Review for Federal Budget Authority for the five-year period 1982-86 provides about 2.2 percent annual decline in real growth, i.e., after inft.a.tion. The programmed decrease in nonDefense spending wlll help accommodate adjustments to the Defense butldup within the economy. If appropriate fiscal and monetary measures are followed and if the Department of Defense can remain on a steady but upward budget course, I believe the currently proposed defense program need not cause serious economic difficulties.

The leadtimes necessary to increase Defense procurement of major weapon systems and other investments in M111tary Construction and R&D result in gradual effects on the economy. The current buildup in DefPnse investment is in sharp contrast to the Vietnam buildup in manpower which had a more immediate effect on the economy. The spendout of investment programs differs among accounts with most of RDT&E program spending over a two-year period while 55 percent of a shipbuilding pro~ram wm spend in the fifth year or later. These spending profiles are very important, not only because of the gradual way that they impact the economy, but also 1n understanding the controllab111ty of outlays. Increases in DOD outlays wlll Jag tbe currently planned increases in Defense programs (Total Obligational Authority) .

These outlays relate to obligational authority of several prior years, as well as that of the current year. For example, in FY 1982, 30 percent of the $181.8 billion dollar outlay result from funds approved in prior years. These unexpended balances are not the result of an 1nab111ty to spend the money. Rather, they are associated with research, acquisition, and construction projects which take more than one year to complete. In essence, they are the portion of our noncurrent 11ab111t1es from the prior year which are reclassified as current 11ab111t1es this year. An understanding of this relra.tlonshlp between TOA and outlays is fundamental to controlllng expenditures ln any given year or time period.

INDUSTRIAL BASJ!!

The expected expansion of millta.ry procurement will not overload industries so long as it is well anticipated at the industry level


and approprialte compensatory measures are taken. The u.s. does have the industrial capablllty to absorb the planned increase in Defense spending, provided we continue to pay close attention to the areas which have typically a.ffeelted production. Our assessments show that materials and manpower avallablllty. particularly for engineers and skilled workers, wm require attention to ensure that problems are solved as they occur. Wllthout this it can be expected that leadtimes wm be long, resulting in increased hardware costs and reduced readiness. Leadtimes in the aerospace sector are currently showing improvement as the commercial modernization effort slows and Defense work receives itlbreasing priorities. There are clear indications thalt industry oa.pacity exists and that in certain arew; such as forging c~ablllty, additional capability has been readied. We believe that the time phasing of our major programs is such that wllth prudent attention by both government and industry in these particular a.reas, we wm be able to produce them. Our major concern, as you know, is the subcontraclt base. We a.re working hard to stimulate interet~t in DOD at that level and to ensure that our prime contracltors pass down the acquisition improvements to their subcontre.ctors. In addition, we are encouraging new entries into the Defense market for figures not generally in the Defense market place. We are also encouraging exislting Defense contractors to add capital as required to meet growing requirements due to hig'her levels of defense spending.

In mid-1981, the average rate of capacity utlllzation for manufacturing industries was about 78 percent. Both the materials industries and the primary and advanced proces.sing industdes currently are operating with about 20 percent idle cape.city. DRI projects that these utlllzation rates wm ·move above 90 percent by the mid-1980's.

Plans to shift to greater reliance on multiyea.r contracts wm provide a sign-ificant step toward efficiency and an insurance againstt bottlenecks. This change in the ma.jor systems acquisition process facllltates industry adjustments to a stable five-year Defense program, as opposed to having tto react to major year-to-year shifts in Defense procurement.

I have enclosed to my statement severa.l trend llnes which show DOD spending as a percentage of budgetary and economic aggregates. The point thart; I make a.nd, one that is clear from the charts, is that the currently planned Defense buildup will not have as much impact on the budgelt or the economy as those experienced in earlier periods.

This concludes my statement, Mr. Chairman. I am prepared to answer any questions you may have.

THE 'STATUS OF MATH AND SCIENCE EDUCATION AT THE ELEMENTARY SCHOOL LEVEL

Mr. THURMOND. Mr. Prt:sident, I wish to share with my colleagues the concerns I have for the status of math and science education at the elementary school level. Math teachers are leaving the teaching ·profession for the more lucrative computer science field. As a result, there is a severe shortage of qualified elementary school math teachers in our Nation.

I feel that this is a par't of a larger national problem that manifests itself in the current shortage of sclentists and engineers in many fields. Furthermore, no improvement is foreseen in this situation. I believe that t'he place to begin to develop strong interests in science

and mruth is at tlhe elementary school level.

Mr. President, a recent article on this subject by Mr. Joseph D. Whitaker in the Washington Post of November 8, 1981, discussed this serious prOblem and

· it oauses. In order to share this article with my colleagues, I ask that this article be printed in the RECORD following my remarks.

The article is as follows : SUBTRACTING MATH TEACHERS

When Sandra Lavene began teaching in the Montgomery County public schools 10 years ago, she had visions of unlocking the intricacies of mathematics for bright youngsters in a classroom brimming with enthusiasm

But not long after she began teaching at Walt Whitman High School in Bethesda, Lavene's vision started to fade. As she expected, the work was hard, the students were sometimes unruly, and the pa.y was inadequate. What surprised her was the student apathy, the lack of respect for her profession, and the thanklessness.

"I would knock myself out," said Lavene, 34. "I'd stay up long hours marking papers. I worked after school helping the kids. But in nine years, the parents, the principal, the kids-nobody said 'thanks'."

She quit her $19,000-a-year teaching job 18 months ago and exchanged the noisy classrooms for quiet -.:omputer keyboards, higher pay, merit raises and profit sharing at the Rockv11le office of Hewlitt-Packard.

Decisions like Lavene's are causing increasing concern among educators and scientists .who fear that the difficulty of attracting and keeping math teachers poses a threat not only to schools' ablllty to offer a full range of math courses but also to the nation's long-term dominance in math-related fields.

The same lures of higher pay and fewer hassles that have prompted an exodus by many math teachers also have reduced sharply the number of students opting for math education degrees in college, with the result that there are serious shortages of math teachers in various areas around the country.

Other areas, including Washington, have managed to maintain an adequate supply of certified math teachers so far. But they are aware of the problem and are scrambling to develop strategies to steer them around possible future shortages.

Many experts, pointing to the growing gap between teachers' salaries and those in private industry, expect the shortages to worsen, primarlly in grades 7 through 12.

"A lot of math teachers are going into the computer field simply because it pays more and there are fewer hassles," said Max Sobel, president of the 80,000-member National Council of Teachers of Mathematics. "Math teachers coming out of college already realize that the $12,000 paid to a beginning teacher is a lot less than the $20,000 they could earn in the first year with some computer firms.

"In addition, the public's indifference to the plight of teachers, the low pay, crowded classrooms and poor faclllties are a signal to many students to stay from the teaching field," added Sobel, who teaches math at Montclair (N.J.) State College.

Evidence of the problem abounds: In North Carolina, 45 .percent of all per

sons teaching math are not certified in the subject. Cleo Meek, assistant director of the mathematics division in the state department of education, said the state's math teachers-who earn $12,000 to start-have been hired in large numbers by nearby computer firms that sometimes pay starting salaries of more than $20,000.

the city of Houston, in a desperate effort

to hire more math teachers, has added an $800 bonus to the starting salary of teachers certified to teach math. Still, this year the city issued 44 "emergency permits" to teachers not certified in mathematics in order to cover its math classes, according to Oscar Sara·bia, director for secondary school assignments.

Philadelphia, which has just come off a crippling 50-day teachers' strike, began the last school year with 90 vacancies for math teachers and ended the year with 24 of those positions unfilled. With a starting salary of only $10,900 for new teachers, school officials said they cannot compete with thriving, talent-hungry computer firms.

The National Center for Education Statistics last month released its most recent survey on the issue, showing that in 1979 there were 900 math teacher vacancies in elementary and secondary schools nationwide, although there were major surpluses in most of other fields.

A 1979-80 survey in Maryland found that 50,000 secondary school students were being taught mathematics by more than 400 teachers who were not certified to teach math. Whlle that survey has not ·been updated, state education officials say the situation has not improved since it was taken.

In the Washington area, which has had fewer problems because of generally higher salaries and .the lure of the nation's capital, public school systems routinely use persons uncertified in math to teach for a few days or a few wee"ks while they arrange to fill math vacancies.

Montgomery County, apparently alone among area systems, is allowing half a dozen former elementary school teachers uncertified in math to teach the subject at upper .levels--after thley took an aptitude test and promised to take the college courses necessary for certification.

Fairfax County reports no uncertified math teachers, but had been concerned about filllng 25 vacancies when the year beg.an. The county is developing a series of college courses that would be taught to teachers in the county schools over two summers and would culminate in a mathematics certification.

D.C. publlc schools, which have laid off hundreds of teachers in recent years because of decllning enrollment and budget cuts, have been able to keep an adequate supply of math teachers by drawing from that pool.

The difficulty of recruiting and retaining math teachers natl'onwide over the past five years has been paralleled by a simllar but somewhat lesser problem with science teachers, but more attention and concern are being focused on math because it is critical to so many discipllnes.

"If school systems can't find enough qualified teachers, they wm use teachers who do not have a. good math background," said Alphonse Buccino, the National Science Foundation's acting deputy assistant director for science and engineering. "Advancedlevel mathematics classes which usually have the lowest student enrollment are the first ones to be dropped when there are not enough teachers.

"Then students who might otherwise have studied math in college enter higher education poorly prepared and cannot compete in science and en~tneering programs. mtimat.ely, we could find that the pool from which we select our future scientists and engineers is shrinking."

Buccino said that current trends in the United States in which high school students over the last decade have been rertuired to take fewer and fewer math and science courses are directly opposite the approach in Jaryan, R11ssia and Germany, where increasingly more math and science studies are required.

November 10, 1981 CONGRESSIONAL RECORD-SENATE 27109 At the University of Maryland at College

Park, the nwnber of graduating students with math education majors has dropped from 39 eight year.:> ago to only 10 last year, according to Robert Risinger, director of math education at the university. During the same period, the school's business admmistration, business management and engineering programs became overcrowded, 1t1singer said.

The same trend has emerged at the University of Virginia in Charlottesvllle where the number of math education graduates has gone from seven in 1973 to only three this year, according to Wllliam Lowery, the university's only remaining math education professor.

"I didn't go into teaching for the money," Lavene said recently. "I wanted to teach k1ds who had a love for learning math and would be willing to work hard. But after I taught for a few years, I found that the kids wanted good grades, but didn't want to do the work."

Her search for alternative employment led to Hewlett-Packard, where she said she was hired at a salary "significantly higher" than the $19,000 she was earning as a teacher after nine years. Her employment package includes stock purchase options, profit sharing and merit pay increases that brought her pay raises amounting to 25 percent in her first year, she said.

"Mathematics is always a good background for working with computers," said Jerry Hendrick, a spokesman for Hewlett-Packard. "And math teachers make attractive prospective employes because they can usually assimilate computer information rapidly.

"But we don't want to give the impression that we're out to raid the high schools," Hendrick said. "In every instance that we've hired a teacher, they've come to us. If we have an opening and a math teacher applies, we can't say, 'You're needed in the school system, go back there.' "

Lavene's reasons for leaving teaching are echoed by Paris Rasnic. At age 22, he graduated from Virginia Polytechnic Institute with a bachelor's degree in mathematics and immediately took a job teaching math at Marshall High School in Fairfax County.

For the first few years, said Rasnic, he enjoyed teaching. Then the novelty of the classroom wore off and the daily routine of teaching began to wear on his nerves.

"The kids wouldn't cooperate in the classroom," said Rasnic, 32, who is currently employed by a Fairfax County computer firm. "It was a discipline problem that I couldn't control. I frequently came home from school frustrated and mad. That was no way to live."

Rasnic found the contentment he was seeking in a nearby computer firm, which hired him to keep an array of computer programs running smoothly. With few regrets, Rasnic replaced his chalk board, text books and complaining students with a cozy suburban office equipped with computer terminals and silent green screens.

Wlhen he went to work for the computer firm in Vienna, Ra.snic said, they first increased the $16,500 a year he was earning after .seven years as a teacher by $5,000 In cash and other benefits. He currently earns $27,000 annually, after three years with the company, Rasnic s9.1d.

But the money is only one of the benefits of his new job, he said. "I like it here because your supervisors notice what you do and they show ap-oreciation if you've done good work." His job is to keep an array of computer programs runningo smoothly, and "I can go lhome relaxed. I don't have to carry my work home with me."

At the end of a tyPical day, Andre Samson, a math tea.cher at Woodson Hi~h School in Fairfax, leaves work with a. briefcase filled with student papers. At home, after dinner, he will typically spend two to three hours

79-059 0-85-38 (Pt. 20)

marking and evaluating the .papers so he can return them to his students the next day.

"Wihen i. go home, I don't play with my daughter or talk to my wife or watch televisio .. 1.," said Samson, who said he values job satisfaction over wealth. "I grade my papers. I feel I owe it to the kids to get their papers back to them as quick as possible."

As Samson, voted Virginia's "Teacher of the Year" three years ago, has continued his devotion to teaching, he has seen several of his colleagues move into lhigher paying, less demanding jobs in the computer field.

"I must admit .i.'m beginning to envy them more and more," he said. "The people who have left teaching come back with a new personality. They say they have fewer pressures and don't have to take their work home."

"Teaching is not a rosy profession," said Samson, 39. "But I'm a professional and the ze3t for teaclhing is still 1n me. But I don't know how long I can continue because the economic pressure has hit me like it has everyone else.

"I work hard and every now and then I get a pat on the back. But a pat on the back won't feed my family."

THE MOVING AUTOBIOGRAPHY OF CHARLOTTE SALOMON

Mr. PROXMIRE. Mr. President, I have never ceased to be amazed by the stream of incredible stories flowing from tho3e who experienced the horrors of the Jewish holocaust. C>ver the years that I have urged ratification of the Genocide Treaty I have discussed articles and books written by both the victims of the Nazi death camps, and those few who survived.

Last Sunday, the New York Times reviewed yet another of these deeply moving works. "Charlotte: Life or Theater?" is an autobiography by ChaTlotte Salomon, who became a victim of the Auschwitz gas chambers at the age of 26. Her story, according to the reviewer, is an attempt to come to terms with the tragic circumstances of her life.

In 1943 she was put to death at Auschwitz, but as the reviewer notes, "not before she had completed a work that will live."

And indeed this work does live. It is living testimony to the dignity of human life, even under the most dire of circumstances.

Charlotte Salomon lived a short and tragic life, yet in that lifetime she created a masterpiece of literature and art work. In the 2 years prior to her deportation to Auschwitz she completed a manuscript of 1,325 sheets of paintings and text.

The Times reviewer calls this work an extraordinary performance, an operetta of despair. And he uses words like "stunning and realistic" to describe the art work of Charlotte Salomon, who he says "was an artist in her own right."

Mr. President, how many other Charlotte Salomons did the world lose to the Nazi death camps? How much creativity and talent was snuffed out?

Mr. President, the Genocide Convention is an amrmation of and tribute to that special dignity which Charlotte Salomon and other victims of the holocaust enlbodied. It seeks to safeguard the fundamental human rights denied

them by making genocide an international cpme.

I urge my colleagues to add additional meaning to Charlotte Salomon's story and those of others like her by ratifying the Genocide Convention.

I ask unanimous consent that the article which appeared in the New York Times on November 8 be printed in the RECORD.

There being no objection, the article was ordered to be printed in the RECORD, as follows:

PAINTED LIFE-"CHARLOTTE: LIFE OR THEATER?"

(By Peter Gay) Each autobiography Is, by definition,

uni4ue. If many published self-explorations !ail to claim their readers' attention for long, it is because they a.re so predictable, running in the well-worn grooves of the chattyanecdotal, the portentous-public, the confessional-intimate. Yet, rarely, an autobiography comes along that speaks with an arresting voice o! its own which seems to owe notbing to anyone else. "Charlotte: Life or The·a.ter?" which Its author called, in the original German subtitle, a singspiel, or musical play, is such a rarity. It Is an extraordinary performance, at once an operetta of despair and a heroic attempt at self-liberation from the double curse under which Charlotte Salomon found herself: the curse of the time in which he lived and the curse of her particular family history.

"Charlotte," an intriguing and beautifully produced book, consists of almost 800 gouaches, most of which Salomon inscribed with bits of dialogue or authorial asides. Some of the paintings, however, stand eloquently mute, depending on their visual message alone. In this dramatized rather than literal account of her life, Salomon sought to come to terms with depressing circumtances. She did so, memorably.

Born in Berlin in 1917 to a cultivated Jewish family, Salomon emigrated to southern France in early 1939 to join her grandparents, who had lived there since 1933. Anxiety, temporary internment, concealment and the death camps followed. In the midst of this most unpromising of esthetic environments, racing against time, Salomon wrote and painted her "autobiographical play," with its physical detail and psychological evolutions. It is a gripping story.

It is also a reminder that the curreruts of · private life, however diverted, dislodged, twisted by overpowering public events, retain their hold on the individual. After her grandmother fell into a suicidal depression, Saloman's grandfather told her something of the dismaying family background. When Charlotte was 9 years old, her mother had commttted suicide-e. death ascribed in the family mythology to influenza. Several other members of her family, including her greatgrandmother and her aunt, af.ter whom she had been named, had also killed themselves. Her grandmother, for all of her family's efforts, eventually chose the same way out, and Charlotte, feeling doo•med, saw her choice to be, as she put it, "to commit J::Uicide or to undertake something wild:ly eccentric."

Fortunately for pooterlty, she chose the latter alternative. An accomplished painterthe self-portrait on the book's jacket is a stunning, realistic rendering-she began the immense labor that resulted in "Charlotte.'• She worked rapidly and effecti·•ely. and by violating the laws of perspective, distorting her figures and choosing shal'lply contrasting, sometimes livid colors, she gave her gouaches a dreamlike quality. Some of the paintings, in which s.he repeats a single disembodied !ace over and over, endowing eG.ch with a


line to say, look strikingly like anticipations of Jules Feitfer cartoons. Many of them, were they less than grim and more ope-nly playful, bear a distinct resembla.nce to Ludwig Bemelman's drawings in such books a.s "Madeline." Some of her use of color reminds one, as she was remind·ed, of van Gogh. But such comparisons are odious: Charlotte Salomon was an artist 1n her own rlgh•t.

Most of her autobiography weaves fantasies around two figures: her stepmother, a viva.cious singer whom ;the young Charlotte visibly adored and (I should suppose) uncon5cl()usly resented; and the mysterious Alfred Wolfsohn, a voice teacher and accompanist who came into her household, a.pparen tly had a.n a.tfa.lr wirth her stepmother and beca.me the target of Cba.rlotte's youthful capacity for infra.tuation. Wolfsohn, who had developed some mystical theories about the relation of the voice rto ·the soUl and the meaning of dreams, seems to have been a charismatic man, and Charlotte's largely iJllalg·inary involvement with him punctura.tes her book.

It is a disheveled but not unorganized work; the events of the outside world impinge, but mainly as spurs to further work, and as causes of misery, sounding offstage, louder and louder. She worked on it intensely, feverishly, for a.bout two years. Then, in the late summer of 1942, not long before she was to be deported, she handed it over to the doctor of Vllle-franche-sur-Mer, and asked him to take care of it, saying, "C'est toute ma vie." Her parents, who had spent the last years of the wa.r in hiding in Holland, returned to the village in 1947, claimed a self-portrait and 1,326 sheets of paintings and text, and returned with them to Amsterdam.

The introductory material to this bulky and handsome volume outlines the details of Cha.rlotte Se.lomon's story with dignity and economy. Judith Bellnfante, director of the Jewish Historical Museum in Amsterdam, where most of Salomon's work is housed, provides a brief appreciative preface, and Judith Herzberg, in e. sympathetic and informative introduction, adds the biographical background essential to an understanding of this painted autobiography. What a poignant and agitated life it was! But the real life is within the book: Page ·after page reveals a profound and touching eroticism. Salomon paints scenes of herself and her fancied lover naked, intertwined, and by the epilogue, which is largely devoted to her grandmother's futile struggle against her suicidal wishes, as Salomon's style grows more and more frenzied, more and more expressionistic, her association of sexuality with death is direct and explicit. Yet there is peace here, and a love of life.

The last page of "Charlotte" repeats the question of the title. It shows a young woman in a bathing suit, drawn from the back in partial profile, sitting on the beach sketching, with "Leben Oder Theater?" ("Life or Theater?") written on her back. Charlotte Salomon might eventually have decided to k111 herself; we shall never know. The Nazis did the kllling for her, probably at Auschwitz, in 1943. But not before she had completed a work that will live.

VETERANS DAY

Mr. SIMPSON. Mr. President, tomorrow is Veterans Day 1981. Citizens of our great Nation will pause, reflect, honor, laud, and express gratitude to the countless thousands who have made the ult1-mat~ sacrifice .for us-so that we may contmue to enJOY the blessings of freedom and liberty. The sacrifice of our brave and valiant men who fought in World War I and all of the wars since,

remains vivid, but we need to remind ourselves on a day set aside in honor of our veterans of the sacrifices made by so many in behalf of our country.

In 1926 Congress officially proclaimed November 11 of each year as Armistice Day, a day of celebration of the end of the "war to end all wars." As we all know, this date each year became a special day to honor all Americans who served in our Armed Forces during our Nation's wars.

From 1968 to 1978 Veterans Day was officially observed on the fourth Monday in October. It was for "convenience" that the special Monday holiday legislation was created by public law in 1968. The original date of November 11 was restored by act of Congress because of its historical significance as the day originally set aside to honor the memory of .those Americans who sacrificed their lives in the military service of their country. Most Americans are pleased that we are now back on track and observing Veterans Day on the original Armistice DayNovember 11 of each year.

American forces have been in war many times. The memory of our last encounter-the Vietnam war-is still very much with us. Our participation in that conflict extended over the longest wartime period of our history-from 1962 to 1975. Two and a half million American men and women served; 57,000 lives were lost and over 300,000 were wounded.

The Vietnam war was unique in many ways. It was indeed different from other wars in the way it was supported and received. That war provoked bitter debate here at home with lingering divisions between families and friends. Returning veterans did not receive the traditional heroes' welcome when they returned. Many of those veterans are still left with the feeling that their sacrifice was in vain-forgotten victims of an unpopular war.

It is especially appropriate on the occasion of this 1981 Veterans Day to honor all veterans and especially those who served in Vietnam. The Nation does appreciate the heroic Americans who aerved in Southeast Asia. The Nation is indebted to those veterans as it is to the veterans of all wars in which we have participated.

As chairman of the senate Committee on Veterans' Affairs and in behalf of its members I pay tribute to the veterans of Vietnam and all veterans of the wars. In doing this, we pay tribute not only to the dead but also to the living-to the great majority of the American people who have built our Nation, fought for it and preserved it and made it great.

On this special day let us not forget the thousands of disabled veterans, many still confined to hospitals. Let us be mindful of the dependents and the widows and families of deceased veterans whose lives were shattered in our Nation's behalf. Let us take this opportunity to pay tribute to personnel of our veterans' hospitals and the doctors, nurses and technicians whose efforts are often overlooked, and who are giving the very best of their energies, their knowledge and their skill to assist in comforting the sick and disabled.

On this Veterans Day, 1981, it is fitting

to review legislative accomplishments for and in behalf of veterans during the y~ar. It has indeed been a year of achievement. I will not comment on all of the legislative activities, but among those bills enacted is the Former Prisoners of War Benefits Act of 1981 which grants the VA authority to allow service connection of any of the anxiety states of any psychosis to any veteran who was held in POW captivity for 30 days or more. It also reduces from 180 to 30 days the time a veteran was held in POW captivity before certain disabilities commonly assumed to be related to the POW experience may be presumed to be service connected by the VA. It provides ex-POW's with a variety of health care entitlements.

This year's health care bill will greatly enhance the benefits of Vietnam-era veterans as well as the benefits for disabled veterans. Among other things that legislation will:

Authorize VA medical treatment for conditions that may be related to exposure to agent orange in Vietnam or radiation during atomic weapons tests.

Extend the VA's operation outreach psychological readjustment programstorefront counseling centers-for Vietnam-era veterans for 3 more years.

Extend the authority of Federal agencies to hire eligible disabled and Vietnam-era veterans on a noncompetitive basis.

Extend GI bill training benefits under certain, very limited circumstances.

Create a small business loan program within the VA for Vietnam-era and certain disabled veterans.

Make $2.5 million available over 5 years to upgrade veterans' health care facilities in the Philippines.

This year's service-connected disability compensation legislation provides for an average of 11.2-percent increase in compensation and for a 11.2-percent increase in survivors' dependency and indemnity compensation. This legislation also increased the VA's automobile assistance and adaptive equipment program for eligible handicapped veterans.

This legis] ation increased the maximwn amount of servicemen's group life insurance and veterans' group life insurance that trucy" be purchased from $20,000 to $35,000. Other provisions of the compensation bill will be beneficial to disabled veterans and indeed, to all veterans.

Our Senate Committee on Veterans' Affairs continues its deep interest and concern in behalf of veterans, their survivors and dependents. We are aware of our responsibilities.

On this Veterans Day 1981 may the Nation recognize the need to employ our talents to prevent war so that men can live in peace and harmony. The world continues to be filled with deadly threats and possibilities for war. We must continue to look for peaceful means of solution of the world's problems. What a tremendous responsibility and opportunity those of us serving in the Congress of the United States have at the present time. May God grant us grace and courage to act reasonably and responsibly in meeting the challenges of a difficult and dangerous period of our history.

November 10, 1981

VETERANS DAY 1981

CONGRESSIONAL RECORD-SENATE 27111

Mr. CRANSTON. Mr. President, tomorrow moming-traditiona.lily at the 11th hour of the 11th day of the 11th month-this Nation will pause to remember and pay tribute to those citizens who have served this country in the Armed Forces. It is a day set aside to reflect upon and be thankful for the sacrifices of all those noble men and women who since the American Revolution have given of themselves to preserve and protect our Nation's strength and prosperity. The debt owed to those veterans is one which will never fully be repaid.

Thus, Mr. President, while it is entirely appropriate that the Congress has set aside one day a year to honor these individuals, we cannot lose sight of the fact that our obligations and commitments to them extend far beyond this one day. It is a full-time responsibility. And it is a national responsibility shared by all citizens.

In recognition of the contributions of these former servicemen and women, the Federal Government has historically provided a system and program of veterans benefits designed, as Abraham Lincoln so eloquently sta;ted more than 110 years ago:

To care !or h1m who shall have borne the battle and for his widow and his orphan.

Maintaining and i.mprovin·g those benefits is one of the most important ways in which we can attempt to fulfill our responsibilities to this individual.

This year, during a period of ex,tremely tight fiscal constraints and budget cuts, I am proud to say that we in Congress have succeeded in seeing that our commitments to veterans are kept. As ranking minority member of the Committee on Veterans' A1Iairs, it has been my privilege to be deeply involved in the development of the three measures that the Congress has approved thus far this year, which have each now signed into law, that are designed to meet the needs of those who responded to their country's call for service to preserve our national security.

First, the Fotmer Prisoner of War Benefits Act of 1981, Public Law 97-37, enacted on August 14, 1981 is desiJgned to improve VA benefits for veterans who are former prisoners of war and who made such special sacrifices and endured such extreme hardships. Their strength, courage, and love of freedom helped to preserve our country. This new public law includes provisions from a bill, S. 670, which I introduced earlier this year, and is based, in part, on the findings and recommendations made by the VA in its repol"lt entitled "Study of Former Prisoners of WaT," which was submitted to the Congress on June 2, 1980, pursuant to a provision I authored in 1978 in Public Law 95-479. The provisions of the new Public Law 97-37:

Require the establishment in the VA of a national advisory committee on former POW's.

Make a number of modifications rela.ting to presumptions of the serviceconnected nature of certain disabilities so as to relieve the burden on a former POW to submit evidence to the VA that

those disabilities are service-connected. Otherwise, the burden of providing service connection is often difficult and unfair because of missing or inadequate records or the medical difficulty of tracing service connection to the POW experience.

Provide eligibility-without the need to claim and show the inability to defray expenses-for health care in VA facilities for any disability of a former POW that may require hospital care.

Second, the Veterans' DisabiUty Compensation, Housing, and Memorial Benefits Amendments of 1981, Public Law 97-66, enacted on October 17, 1981, provides increases in a number of VA benefits and programs designed to meet the needs of those who suffer from the wounds, scars, or other impairments of service to their country.

I have always considered service-connected disabled veterans, who now number 2.3 million, and the more than 350,-000 surviving family members of those who have died of service-connected causes to be the highest priority category of veterans. This new law, which contains a number of provisions I authored from S. 415, S. 416, and various amendments to S. 917, not only provides cost-of-living increases in various VA benefits for service-connected disabled 'veterans, but also makes a number of improvements in other VA programs. The major provisions of this new law:

Increase, effective October 1, 1981, the basic rates of service-connected disability compensation by an average of 11.2 percent, as follows: for veterans rated 100-percent disabled, 11.2 percent; for veterans rated 70 through 90 percent, 20 percent; for vete<rans rated 40 through 60 percent. 12.6 percent; for veterans rated 10 through 30 percent, 8 percent. This new law also increases by 11.2 percent the rates payable forcertain severe disabilities, the rates of dependency and indemnity compensation, the annual clothing allowance, and the dependents' allowance.

Raise by one full step the statutory award designation that determines the rates of special monthly compensation payable to veterans who suffer from service-connected loss or loss of use of both upper e~tremities. • Increase from $3.800 to $4,000. effective October 1, 1981, the maximum amount of assistance payable by the Administrator toward the purchase price of an automobile or other vehicle in the case of certain severely disabled serviceconnected veterans.

Extend eligibility for appropriate automobile adaptive equipment to serviceconnected disabled veterans who suffer from ankylosis-fused .ioints-of one or both knees, or one or both hips.

Increase from $20.000 to $35,000, effective December 1, 1981, the maximum amount of servicemen's group life insurance and veterans' group life insurance that may be purchased.

Permit certain beneficiaries of National Service Life Insurance and U.S. Government Life Insurance policies to elect lump-sum payment of proceeds.

Permit the VA to guarantee graduated-payment mortgage loans.

Increase from $30,000 to $32,500, ef-

fective October 17, 1981, the maximum amount of assistance payable for specially adapted housing-the "wheelchair home" program for certain severely disabled service-connected veterans.

Conform the maximum maturities for mobile home loans which may be guaranteed by the VA to the maximum maturities applicable in the case of FHA-insured mobile home loans so as to facilitate the "pooling" of such loans for selling on the secondary market.

Provide that the non-service-connected pension of certain hospitalized veterans would not be reduced during certain periods of hospitalization where the primary purpose of care is the provision of a prescribed program of rehabilitation.

Prohibit the expenditure of any medical care account funds from being used to carry out any preliminary studies of the feasibility of contracting out of functions in VA health-care facilities pursuant to Office of Management and Budget Circular A-76 unless Congress appropriates funds specifically for that purpose.

Require at least a 9-month advance notice to the Congress of certain reorganizaltions involving substantial reductions of employment. levels in VA facilities and offices.

Clarify that the section 5010(a) (4) of title 38 requirement-that. after the enactment of each law making appropriations to the VA. the Director of OMB must provide the VA with the authority and funds needed to employ not less than the numbers of employees for which the Congress has appropriated funds in three named VA-health-care accountsapplies to an appropriation law-such as a continuing resolution-that provides funding for only part of a fiscal year.

Third, the Veterans' Health Care, Training, and Small Business Loan Program Act of 1981, Public Law 97-72, enacted on November 3, 1981, will probably prove to be the most significant single piece of legislation for Vietnam veterans passed by the Congress in recent years. It includes the rna ior provisions of S. 458 and s. 636 which I introduced earlier this year. Its enactment demonstrates that the Federal Government recognizes that it has a continuing commitment to this generation of war-time veterans. The key provisions of this new law:

Provide for a 3-year extension, until September 30. 1984. of the eligibility period within which Vietnam-era veterans can request readjustment counseling from the VA.

Establish eligibility for basic VA health care for Vietnam veterans for disabilities requiring hospitalization that mav be related to exposure to dioxin, the toxic contaminant in agent orange, or to other toxic substances used in other herbicides or defoliants in Vietnam. Similar eligibhlity is established for veterans suffering disabilities requiring hospitalization that may be related to exposure to radiation during their service-as a resul.t of their participation in nuclear testing programs or the occupation of Hiroshima or Nagasaki following World Warn.

Require the VA to operate and maintain a combined total of 90,000 hospital beds and nursing home beds and to request funds annually sufficient for that purpose and to maintain the availability of such additional beds and facilities as are necesary to fulfill the Administrator's contingency responsibility regarding assistance to the Department of Defense in caring for military casualties resulting from armed conflict.

Provide a targeted extension of the time period for certain Vietnam-era veterans to use certain GI bill benefits. This is a 1-shot, 2-year extension, until December 31, 1983, and is provided for Vietnam-era veterans who lack a high school diploma or are in need of job or skill training.

Extend the veterans• readjustment appointment--VRA-authority for 3 years. Under this authority, disabled or educationally disadvantaged Vietnam-era veterans may be given excepted appointments by Federal agencies.

Provide authority for the establishment of a new small business loan program through the VA. If funds are appropriated for this program, the VA would be able to make or guarantee loans for service-connected disabled veterans and guarantee loans for Vietnam-era veterans to assist them in small business undertakings.

Authorize the VA to expand the congressionally mandated agent orange study to include an evaluation of the effects of exposure to other substances in Vietnam, including other herbicides, chemicals, medications, or environmental hazards and require a systematic followup by the VA on the study results and other available scientific evidence related to these subjects.

Mr. President, I am also generally pleased with and would note briefly the progress that the Congress had made thus far in the budget and appropriations processes for veterans' programs in fiscal year 1982. In the :first concurrent resolution on the budget for fiscal year 1982-thanks to the efforts of many in the House and Senate, among whom I would note in particular the House Veterans' Affairs Committee Chairman SONNY MONTGOMF.RY and House committee member BILL HEFNER-potentially disastrous cuts in Veterans' Administration health-care programs and in the operation of VA regional offices were restored.

Thereafter, the House and Senate each passed, with minor differences in VA programs, the proposed HOD-Independent Agencies Appropriations Act 1982, H.R. 4034, with ·generally adequat~ funding levels for the VA. The subsequent conference report on H.R. 4034, the funding levels of which were incorpora~ed in the continuing resolution, Publlc Law 97-51, is a good measure in terms of appropriations for veterans programs, but it unfortunately was passed only by the House and is still pending in the Senate, where it is in serious danger because of expressions of ~dministration opposition to the fundmg levels in the bill.

I support and have urged Senate action on the conference report on H.R.

4034 as the best approach toward helping insure that VA programs receive the support they need in fiscal year 1982.

Mr. President, 39 million brave men and women have served this country in uniform during time of war. These individuals--more than 25 million of whom are still living-as well as the 4.2 million peacetime veterans deserve our utmost respect and admiration for their service to the Nation. Since coming to the Senate in 1969, I have worked hard to ensure that veterans of all service periods and their dependents receive all the benefits and assistance they have earned by their service and to improve existing programs and authorize new ones when necessary to meet their special needs.

On the occasion of Veterans Day 1981, I pledge to them and their loved ones my continued efforts and support.

NATIONAL DISABLED VETERANS WEEK

Mr. DOLE. Mr. President, few have sacrificed more for our great country than our disabled veterans. Some 2% million of the brave Americans who have fought in combat have not only endured the fear, loneliness, and extreme deprivation that engulfed them while at war, but have also carried with them, to this day, harsh reminders of that dark period in their lives. These selfless Americans, after seemingly giving all they had to give that their country might remain free, gave even more-the ultimate sacrifice, their physical or mental health.

Their disabilities range from the loss of limbs, sight, hearing, and mobility to the delayed stress syndrome experienced by many Vietnam veterans, Often, the loss these patriots have suffered prevent them even now from attaining and holding the jobs they would otherwise have been able to acquire.

We as Members of Congress have no greater responsibility than to insure the security of our Nation, that great bulwark of freedom. This responsibility is appended by our equally pressing obligation to honor and serve as best we can those veterans who gave that which can never be returned. It is to recognize this great sacrifice that I join with the Senator from California in introducing a resolution to designate the week of November 7 through November 18, 1982 as "National Disabled Veterans Week." While we honor these veterans, let us hope and pray that there will be no new veterans to honor in the years to come.

RETURNING HOLIDAYS TO THEIR ORIGINAL DAY OF OBSERVANCE Mr. RANDOLPH. Mr. President, to

morrow, Veterans Day, is the special occasion established to honor the men and women who have served in our Armed Forces to preserve and protect the freedoms that our forefathers first guaranteed for us over 200 years ago.

In 1968, there was a strong initiative to create a special Monday holiday observance for Federal holidays. A special Monday holiday was established for George Washington's Birthday, Memorial Day, Columbus Day, and Veterans

Day, as a result of the enactment of Public Law 90-363. ,.

Veterans soon sensed that their special day of armistice observance had lost much of its credibility and recognition as their day became a day of holiday convenience in November.

Strong efforts by veterans and their service organizations brought legislation in the 94th Congress to return Veterans Day to its original date of observance on November 11. As a cosponsor of the proposal to return the observance to November 11, it was my privilege to work with our Nation's veterans organizations and other groups to seek passage of our proposal. Effective help of all those involved gave us Public Law 94-97. The first observance of the return date was in 1978.

Mr. President, on February 6, 1981, it was my responsibility to introduceS. 447, which if enacted will return the three remaining Monday holidays to their original date of observance-George Washington's Birthday would be returned to February 22; Memorial Day to May 30, and Columbus Day to October 12.

Presently S. 447 is cosponsored by Senators STAFFORD, STENNIS, THURMOND, GOLDWATER, SIMPSON, GARN, and BURDICK.

I am hopeful that we will receive needed support in this Congress to return these historical dates to their actual date of observance.

Newspaper editorials support this proposal. We have the full support of the major veterans organizations: The American Legion, the Veterans of Foreign Wars, and the Disabled American Veterans.

America has a heritage that is important and it must be maintained. I believe that by passing our proposal we can return to some of our traditional values to our way of life.

Mr. President, I urge my colleagues to support S. 447. It would be helpful to have their cosponsorship.

MESSAGES FROM THE PRESIDENT Messages from the President of the

United States were communicated to the Senate by Mr. Saunders, one of his secretaries.

EXEC~VE MESSAGES REFERRED As in executive session, the Acting

President pro tempore laid before the Senate messages from the President of the United States submitting sundry nominations which were referred to the appropriate committees.

<The nominations received today are printed at the end of the Senate proceedings.)

REPORTS OF COMMITI'EES The following reports of committees

were submitted: By Mr. THURMONID, from the Committee

on the Judiciary. with amendments and an a.me.,dment to the title:

S.J. Res. 34. Joint re"0111tion to provide for the designat'lon annually of "National Patriotism Week".

By ·Mr. GORTON, from the Committee on Environment and Public Works, with a.mendments:

November 10, 1981 CONGRESSIONAL RECORD-SENATE 27113 S. 1192. A b111 to amend the National Visitor

Center Fac111ties Act of 1968 to provide for the reha.b111tation and completion of Unlon Station in Washington, District of Oolumbia, and for other purposes (Rept. No. 97-269}.

taxation and the prevention of fiscal evasion with respect to taxes on estates of deceased persons and on gifts (Ex. Rept. 97-28}.

By Mr. PERCY, from the Committee on Foreign Relations, with an understanding:

By Mr. MOYNIHAN: S. 1836. A blll to remove the llmitattons

on the authority of the Federal Deposit Insurance Corporation and the Federal Savings and Loan Insurance Corporation to borrow from the Treasury; to the Committee on Banking, Housing, and Urban Affairs.

By Mr. THURMOND, from the Committee on the Judiciary, without amendment:

H.R. 4734. An act to recognize the organization known as the Italian American War Veterans of the U.o1ted States.

EXECUTIVE REPORTS OF COMMI'ITEES

The following executive reports of committees were submitted:

By Mr. THURMOND, from the Committee on the Judiciary:

W1lliam H. Kennedy, of California, to be U.S. attorney !or the southern district of California !or the term of 4 years;

Joseph Wentling Brown, of Nevada, to be a Member of the Foreign Claims Settlement Commission of the United States for the term expiring September 30, 1983;

Ronald D. LaJhners, Of Nebraska, to be U.S. attorney for the district of Nebraska for the term of 4 years;

Charles Pennington, Jr., of Kentucky, to be U.S. Marshal !or the eastern dlstrict of Kentucky for the term of 4 years;

Kernan H. Bagley, or Oregon, to be U.S. Marshal for the district of Oregon !or the term of 4 years:

Gerald D. Fines, of Illinois, to be U.S. attorney !or the central district of Illinois for the term of 4 years;

W. Hunt Dumont, of New Jersey, to be U.S. attorney for the district of New Jersey;

Charles R. Brewer, of North Carolina, to be U.S. attorney for the western district of North Carolina for the term of 4 years;

Lincoln C. Almond, of Rhode Island, to be U.S. attorney for the district of Rhode Island for the term of 4 years;

John Perry Alderman, of Virginia, to be U.S. attorney !or the western district of Virginia for the term of 4 years;

Blaine Skinner, of Idaho, to be U.S. Marshal for the district of Idaho for the term of 4 years;

Delaine Roberts, of Wyoming, to be U.S. Marshal for the district of Wyoming for the term of 4 years; and

Elsie L. Munsell, of Virginia, to be U.S. attorney for the eastern district of Virginia for the term of 4 years;

By Mr. PERCY, from the Committee on Foreign Relations:

S. Ex. Res. 2. An original executive resolution providing for the return to the President of various income tax treaties (Ex. F. 89-1); (Ex. D. 94-2, Ex. E. 88-1} (Ex. Rept. No. 97-25).

By Mr. PERCY, from the Committee on Foreign Relations, without reservation but subject to two understandings:

Ex. Y, 96th Cong. 2nd sess. Tax Treaty With the People's Republic of Bangladesh (Bangladesh} for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and the encouragement of International trade and investment (Ex. Rept. 97-26} .

By Mr. PERCY, from the Committee on Foreign Relations, with a reservation and an understanding:

Ex. C, 94th Cong. 2nd sess. and Ex. M, 96th Cong., 2nd sess. Tax Treaty and Proposed Protocol with the State of Israel (Israel) for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and the encouragement of international trade and investment (Ex. Rept. No. 97-29).

By Mr. PERCY, from the Committee on Foreign Relations, with an amendment and subject to an understanding:

Ex. E, 96th Cong., 2nd sess. Tax Treaty with the Republic of Malta for the avoidance of double taxation and the prevention of fiscal evasion w1 th respect to taxes on income and the encouragement of international trade and investment (Ex. Rept. No. 97-30}.

By Mr. PERCY, !rom the Committee on Foreign Relations, subject to a reservation anct an understanding:

Ex. H, 95th Cong., 2nd sess. Tax Treaty with the Kingdom of Morocco (Morocco} for the avoidance of double taxation and the provision of fiscal evasion with respect to taxes on Income and the encouragement of international trade and Investment (Ex. Rept. 97-31).

By Mr. PERCY, from the Committee on Foreign Relations, without reservation but subject to an understanding:

Ex. Z, 96th Cong., 2nd sess. Protocol to the Tax Treaty with the Kingdom of Norway for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income (Ex. Rept. 97-32).

By Mr. GARN, from the Committee on Banking, Housing, and Urban Affairs:

JeffreyS. Bragg, of Ohio, to be Federal Insurance Administrator, Federal Emergency Managemen.t Agency.

INTRODUCTION OF BILLS AND JOINT RESOLUTIONS

The following bills and joint resolutions were introduced, read the first and second time by unanimous consent, and referred as indicated:

By Mr. ROTH: S. 1831. A bill to provide for the establish

ment of a national cemetery on the Delmarva Peninsula in Delaware, Maryland, or Virginia, and for ot her purposes; to t he Committee on Veterans' Affairs.

By Mr. LEVIN (for himself and Mr. COHEN):

S. 1832. A bill to amend the Internal Revenue Code of 1954 to provide taxpayers a cause of action for wrongful levy on property, and for other purposes; to the Committee on Finance.

By Mr. BENTSEN: S. 1833. A bill to reduce the regulatory

burden; to the Commitee on Governmental Affairs.

By Mr. MOYNIHAN (for himself and Mr. DURENBERGER) :

S. 1834. A blll to amend the Internal Revenue Code of 1954 to provide that a dividend paid by a. corporation directly to certain charitable organizations at the direction of a shareholder shall be treated as a charitable contribution of the corporation, and to exclude such dividend from the income of such shareholder; to the Committee on Finance.

By Mr. HAYAKAWA (for himself, Mr. DOLE, Mr. EAST, Mr. INOUYE, Mr. KENNEDY, Mr. SARBANES, Mr. HUDDLESTON, Mr. MOYNIHAN, Mr. BRADLEY, Mr. DOMENICI, Mr. GOLDWATER, Mr. QuAYLE, Mr. SASSER, Mr. WARNER, Mr. MELCHER, Mr. EAGLETON, Mr. EXON, Mr. PERCY, Mr. SCHMITT, Mr. LEVIN, Mr. LONG, Mr. FORD, Mr. DENTON, Mr. RIEGLE, Mr. MURKOWSKI, Mr. DURENBERGER, Mr. ARMSTRONG, Mr. LUGAR, Mr. ANDREWS, Mr. TOWER, Mr. BAUCUS, and Mr. WALLOP):

S.J. Res. 123. A joint resolution authorizing the President to proclaim "National Disabled Veterans Week"; to the Committee on the Judiciary.

By Mr. DANFORTH (!or himself, Mr. MOYNIHAN, Mr. DECONCINI, Mr. BAUCUS, Mr. SARBANES, Mr. HAYAKAWA, Mr. BRADLEY, Mr. KASTEN, Mr. HUDDLESTON, Mr. STEVENS, Mr. KENNEDY, Mr. EAGLETON, Mrs. KASSEBAUM, Mr. RANDOLPH, Mr. TSONGAS, Mr. LEVIN, Mr. SASSER, Mr. STENNIS, Mr. GARN, Mr. DixoN, Mr. DOMENICI, Mr. FORD, Mr. SYMMS, Mr. NICKLES, Mr. ROTH, Mr. HUMPHREY, Mr. BENTSEN, Mr. HEINZ, Mr. DOLE, Mr. MELCHER, Mr. BOREN, Mr. MURKOWSKI, Mr. COHEN, Mr. JoHNSTON, and Mr. MATHIAs):

S.J. Res. 124. A joint resolution authorizing and directing the President to provide for the playing of taps at the Vietnam Veterans Memorial, Washington, D.C.; to the Committee on Armed Services.

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

By Mr. ROTH: S. 1831. A bill to provide for the estab

lishment of a national cemetery on the Delmarva Peninsula in Delaware, Maryland, or Virginia, and for other purposes; to the Committee on Veterans' Affairs.

NATIONAL CEMETERY ON THE DELMARVA PENINSULA

• Mr. ROTH. Mr. President, on November 11 our Nation will pay tribute to the deserving men and women who have served in our Armed Forces by celebrating Veterans Day. With this day of recognition approaching, I believe it is most fitting and I am pleased to be introducing legislation to provide for the establishment of a national cemetery on the Delmarva Peninsula.

Ex. U, 96th Cong. 2d sess. Thx Treaty with the Arab Republlc of Egypt for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on Income and the encouragement of international trade and investment (Ex. Rept. No. 97-27}.

By Mr. PERCY, from the Committee on Foreign Relations, with an understanding:

Trea.ty Doc. 97-1, 97th Cong. 1st sess. Tax Treaty with the Federal Republic of Germany (Germany) for the avoidance of double

By Mr. LEVIN (for himself, Mr. BOREN, Mr. MOYNIHAN, and Mr. D'AM-\TO):

S. 1835. A b111 to allow for the termination of certain single-employer pension plans maintained by enterprises which have been created pursuant to an o-rder by the Federal Trade Commission: to the Committee on Labor and Human Resources.

There are over 79,000 veterans in Delaware and thousands more on the eastern shore of Maryland and Virginia. Mr. President, these veterans have served the United States with honor when duty called. They deserve to be buried in a national cemetery, close to where their loved ones and friends live. The families and friends who survive these patriotic veterans should not have to travel long distances to gravesites. Yet, there is no national cemetery in the State of Delaware, and the ones in the adjoining States of Maryland, Pennsylvania, or New Jersey, are closed. The closest one is Arlington National Cemetery in Virginia. However, Arlington is already overcrowded and most veterans cannot be buried there. This is all the more reason a centrally


located cemetery should be established on the Delmarva Peninsula.

A fitting answer to the lack of a national cemetery in Delaware and to the lack of burial space in the cemeteries in Virginia, Maryland, Pennsylvania, and New Jersey is to establish a national cemetery on the Delmarva Peninsula. This would make it possible for veterans from all five States to be buried close to their homes.

I feel it is most fitting to recognize the outstanding service of veterans in Delaware, Virginia, and Maryland by introducing this bill establishing a national cemetery on the Delmarva Peninsula.

Mr. President, I ask unanimous consent that the text of the bill be printed in the RECORD.

There being no objection, the bill was ordered to be printed in the RECORD, as follows:

s. 1831 Be tt enacted. by the Senate and HoU8e of

Representatives of the United. States of America tn Congress assembled., That the Administrator of Veterans' Affairs is authorized and directed to ( 1) establlsh a national cemetery on the Delmarva Peninsula, (2) acquire by donation, purchases, condemnation, or otherwise, such lands in the State of Delaware, Maryland or Virginia, as may be required for the establlshment of such cemetery. In determining the location of such cemetery, the Administrator of Veterans' Affairs shall take into consideration such factors as the Administrator determines will best serve the needs of veterans and their famllles in the States of Delaware, Maryland, Virginia, and adjacent States.

SEc. 2. The national cemetery establlshed under authority of this Act shall become part of the National cemetery System and shall be administered 1n accordance with the provisions of Chapter 24 of title 38, United States Code.

SEC. S. There are authorized to be appropriated such sums that may be necessary to carry out the provisions of this Act.e

By Mr. LEVIN (for himself and Mr. COHEN):

s. 1832. A bill to amend the Internal Revenue Code of 1954 to provide taxpayers a cause of action for wrongful leVY on property, and for other purposes; to the Committee on Finance.

INTERNAL REVENUE SERVICE LEGISLATION

• Mr. LEVIN. Mr. President, on July 31, 1980, I chaired a hearing which the Governmental Affairs Subcommittee on Oversight of Government Management held on Internal Revenue Service collection practices and their impact on small bUsinesses.

The investigation began as a result of reports from small businesses of what appeared to be unnecessary and heaVYhanded IRS use of its broad lien, leVY, and seizure authority to collect delinquent taxes. Similarly, a number of ms revenue officers had contacted the subcommittee with criticisms of internal managerial pressure mandating arbitrary liens, levies, and seizures even though inappropriate and where the tax delinquency could have been better recovered for the Treasury with less harsh methods.

The subcommittee made the following specific findings:

Liens were imposed against property with value grossly in excess of the

amount of the tax delinquency. The IRS failed to partially discharge property from the lien after the taxpayer had made partial payment. Liens remained on taxpayer property even after the delinquency was satisfied.

Levies were issued against taxpayer bank accounts and receivables with no concurrent notice to the taxpayer. Levies and seizures were made against taxpayers even where the IRS and the taxpayer had agreed to an installment pay plan, and the taxpayer was abiding by it.

Seizures were made by the IRS against taxpayer property which had no salable value, so-called no-equity seizure, despite an express IRS policy prohibiting such seizures.

A lien of a taxpayer's assets ties up the property and destroys its usefulness as collateral for the business or individual to borrow againSit-even to pay the IRS. A levy against a taxpayer can quickly strip a taxpayer of all cash reserve and irrevocably damage his or her creditworthiness, particularly when the taxpayer is a small business. Seizure of property which has no saleable value brings no benefit to the ms, other than that of threat and intimidation to thetaxpayer; however, the property seized ts often of much value to the taxpayer or his or her business.

In ftscad. year 1979, the ms issued 4:6·5,029 levies, 371,337 liens, and conducted 5,723 seizures. More recently, in fiscal year 1980, levies had risen to 610.-942, up 31 percent, liens had climbed to 445,285, up 20 percent, and seizures had reached 9,421, up 66 percent. For the first 9 months of fiscal year 1981, there were 580,899 levies, 370,219 liens, and 6,651 seizures. With the continuing increase in use of levies, liens, and seizures, the concern for fairness and necessity in their application is even more pressing.

For that reason, I am int'I'oducing this bill, along with Senator CoHEN who now chairs the subcommittee which addresses the specific problems which were brought to our attention during that hearing.

The first of these problems, as noted earlier, is that the IRS imposes liens against property with value far in excess of the amount of the tax delinquency. Currently, the Internal Revenue Code allows, but does not require, the IRS to discharge excess property from a lien as long as the IRS retains an. amount under llen equal to double the amount of the liability.

This bill would require the IRS to discharge, at the taxpayer's request and where legally feasible, any property under lien which exceeds the amount needed to cover the actual tax liability and any approximated interest, penalty, costs, and prior liens.

This would insure the taxpayer that at least the value of the llened property was reviewed and an assessment made of the need to lien all of it. At the same time, the IRS is unfettered in its need to move quickly and effectively to protect the Government's interest.

Similarly, where the tupa.yer has made .partial payment of a tax liability, the IRS has the statutory discretion to discharge a proportional portion of the liened property. This bill woUild require the IRS, again at the taxpayer's request

and where legally feasible, to partially discharge liened property once pe.rtial payment has been made.

The IRS would be allowed to keep a lien on property in an amount necessary to cover the actual rema.ining tax UahUity, and any approximated interest, penalty, costs, and prior liens. Taxpayers would no longer be totally at the mercy of arbitrary IRS decisions on discharge requests, and yet the IRS would still have the authority to maintain a lien of property needed to insure the Government's eventual recovery.

A final problem with IRS' use of liens 1s that it failed to promptly release liens on taxpayer property once the tax delinquency had been fully paid. Currently, the Code authorizes the ms to release liens when the liability has been satisfied; however, use of that authority is entirely discretionary and without guidance on how soon that release should occur. This bill would amend that section of the Code by requiring the prompt release of liens where the liability has been paid.

Taxpayers who had their bank accounts or accounts receivable levied by the IRS 'received no notice of leVY from the ms afterward. We propose to amend the Code to require the IRS to send a notice to the taxpayer concur .. rent with the notice to the bank or other third party property holder. This change would not affect levies on wages.

Where the IRS and the taxpayer have entered into an installment pay plan and the taxpayer meets those terms. then the IRS should no longer be allowed to precipitously levy or seize taxpayer propertv while the agreement 1s still in effect.

This bill would prohibit levies and seizures agatnst the taxpayer for the duration of the agreement or for as long as the terms of the agreement were kept.

IRS seizure of property which has no salable value is forbidden by internal IRS guidelines, yet "nb equity" seizures have continued to be used as a way of threatening and harassing taxpayers. This bill would impose a statutory prohibition on those seizures since IRS' internal policy has been ineffective in controlling this abuse.

The need for these proposed changes has been well documented in the testimony and evidence heard and received at the hearing. The Congress has conferred forcible collection powers on the IRS, including its authority to summarily lien, leVY, or seize and sell taxpayer property. These powers play an important role in the IRS collection effort and are necessary to insure that taxpayers will not play fast and loose with the Federal tax system. However, when the use of these powers is abused or arbitrarily applied, then what was created as a necessary tool turns into a deadly weapon.

It seems timely then that the Congress should confer some protections on the taxpayers who are otherwise helpless in the face of IRS abuses or intentional violations of its own Code, rules, and regulations. It is for that reason that this btll also creates a specific cause of action for the taxpayer where the IRS knowingly violates the Code or its procedures or regulations in the following cases:

November 10, 1981 CONGRESSIONAL RECORD-SENATE 27115 Where the IRS maintains excessive liens; where levies are imposed without proper subsequent notice to the taxpayer; and, where taxpayer property is levied or seized while the terms of an installment pay plan are in effect and still being met. Provisions in the Code which prohibit taxpayer action which impede tax collections or assessments still remain intact; this bill would create a cause of action after the collection action has been taken.

Mr. President, I request that the bill be printed in the RECORD.

There being no objection, the bill was ordered to be printed in the RECORD, as follows:

s. 1832 Be it enacted by the Senate and House

of Representatives of the United States of America in Congress assembled, SECTION 1. RELEASE OR DISCHARGE OF LIEN ON

PROPERTY. (a) MANDATORY RELEASE.-8Ubsection (a)

of section 6325 of the Internal Revenue Code (relating to release of lien) is amended by striking out "may issue" and inserting in lieu thereof "shall promptly issue".

(b) DISCHARGE OF PROPERTY.-Paragraphs (1) and (2) of section 6325(b) of such Code (relating to discharge of property) are amended to read as follows:

" ( 1) PROPERTY IN EXCESS OF THE LIABILITY.-Upon request from the taxpayer, the Secretary shall promptly issue a certificate of discharge of any part of the property subject to any lien imposed under this chapter it the Secretary finds that such discharge is legally feasible and that the fair market value of that part of such property remaining subject to the llen is approximately equal to the sum of-

"(A) the amount of the unsatisfied liability secured by such llen, plus

"(B) the total amount of all other llens which have priority over such llen, plus

"(C) any Interest, assessable penalty, or costs.

"(2) PART PAYMENT,' INTEREST OF THE UNITED STATES VALUELESS.-

Upon request from the taxpayer, the Secretary shall issue a certificate of discharge of any part of the property subject to the llen where partial discharge Is legally feasible and where-

"(A) there is paid over to the Secretary in partial satisfaction of the 11ab111ty secured by the llen an amount determined by the Secretary, which shall not be less than the value, as determined by the Secretary, of the interest of the United States in the part to be so discharged, or

"(B) the Secretary determines at any time that the interest of the United States in the part to be so discharged has no value. In determining the value of the interest of the United States in the part to be so discharged, the Secretary shall give consideration to the value of such part and to such Hens thereof as have priority over the lien of the United States."

(C) EFFECTIVE DATE.-The amendments made by this Act shall take effect on the date of enactment of this Act. SEC. 2. LEvY AND DISTRAINT.

(a) LEVY DEFINED.-8ubsection (b) of section 6331 of the Internal Revenue Code of 1954 (relating to seizure and sale of property) is amended to read as follows:

"(b) SEIZURE AND SALE OF PROPERTY.-The term 'levy' as used in this title includes the power of distraint and seizure by any means. Except as otherwise provided in subsection (d) (3), a levy shall extend only to property possessed and obllgations existing at the time thereof, and shall not extend to property which has no value (other than a value pecu-

liar to the owner). In any case ln which the Secretary may levy upon property or rights to property, he may seize and sell such property or rights to property (whether real or personal, tangible or intangible).".

(b) EFFECTIVE DATE.-The amendment made by this section shall apply to levies made on property after the date of enactment of this Act. SEC. 3. NOTICE OF LEVY TO TAXPAYER IN THIRD

PARTY CASES. (a) IN GENERAL.-section 6331 of the In

ternal Revenue Code of 1954 (relating to levy and distraint) is amended by redesignating subsection (e) as subsection (g) and by inserting after subsection (d)' the following new subsections:

"(e) NOTICE OF LEVY TO TAXPAYER.-In the case of property held by a person other than the taxpayer (other than salary or wages described in subsection (d)), levy may be made under subsection (a) only it, at the same time notice of levy is sent to such person, notice of levy is also sent to the taxpayer at the taxpayer's last known address.

"(f) INSTALLMENT PAY PLANS.-Where an installment pay plan has been entered into between the taxpayer and the Service, the Secretary shall not levy upon or seize any property or rights to property belonging to that taxpayer for the specified duration of the agreement, unless the terms of the agreement are violated."

(b) EFFECTIVE DATE.-The amendment made by subsection (a) shall apply to any levy or installment pay plan made on or after the date of the enactment of this Act. SEC. 4. CIVIL ACTION BY TAXPAYER FOR VIO-

LATION OF CERTAIN PROCEDURES. (a) IN GENERAL.~Paragraph ( 1) of section

7426 (a) of the Internal Revenue Code of 1954 (rele.ting to civil actions by persons other than taxpayers) is amended to read as follows:

" ( 1) WRONGFUL LIEN OR LEVY.-"(A) ACTION BY TAXPAYER.-If a lien has

been 1mposed, or a levy made, on property, the person against whom the tax (with respect to which such llen or levy arose) is assessed may bring a civil a.otlon against the United Sta.tes in a district court of the United States on a claim that such llen was imposed or maintained, or such levy made, knowingly in violation of the procedures provided in sections 6325 or 6331 (or any regul&ltions prescribed under such seotions) or knowingly in viola.tion of any agreement entered into between the Secretary and such person. Such action may be brought without regard to whether such property has been surrendered to, or sold by, the Secretary.

"(B) ACTION BY THIRD PARTY.-If a levy has been made on property or property has been sold pursuant to a levy, any person other than the person against whom the tax with respect to which such levy arose is assessed) who cla.ims an interest in or Hen on such property and that such property was wrongfully levied upon may bring a civil action against the United States in a district court of the United States. Such action may be brought without regard to whether such property has been surrendered to or sold by the Secretary.

"(C) WRONGFUL LEIN OR LEVY ACTION BY TAXPAYER.-The district court shall have 1urisdiction to grant whatever form of reiief may be approprie.te under the circumst&nces in a cause of action brought under subsection (a' (1) (A) ."."

(b) CONFORMING AMENDMENTS.-( 1) Section 7426 of such Code is amend

ed-(A) by striking out the headllng thereof

and inserting in lieu thereof the following: "SEC. 7426. CIVIL ACTIONS RELATING TO COL

LECTION OF TAX.". (2) The table of contents of subchapter B

of cha.pter 76 of such Code 1s amended by

striking out the item relating to section 7426 and inserting in lieu thereof the folloWing: "Sec. 7426. Civil actions relating to the col

lection of tax.". (3) Subsection (c) of section 6532 of such

Code (relating to periods of llmlt&tlons on suits) is amended-

(A) by striking out "the levy" in paragraph ( 1) and dnserting in lieu thereof "the lien, the levy,", and

(B) by striking out the caption thereof and inserting in lleu thereof the following:

"(c) SUITS RELATING TO CoLLECTION OF TAX.-".

(4) Subsection (f) of section 6503 of such Code (relating to suspension of running of period of 11mltat1on) is amended-

(A) by striking out "of a. third party", and (B) by striking out "of Third Party" in

the caption thereof. (C) EFFECTIVE DATE.-The amendments

made by this section shall t&ke effect on the date of enactment of this Act.e

By Mr. BENTSEN: S. 1833. A bill to reduce the regulatory

burden; to the Committee on Governmental Affairs.

REGULATORY BURDEN REDUCTION ACT

• Mr. BENTSEN. Mr. President, most voters and taxpayers look on Washington as a city of mirrors, where enormous quantities of smoke are generated but little substance. Well, more often than not, that perception is right.

Take the issue of regulatory reform, for example. That word has cut through the media and Congress like a buzzsaw through bamboo. Expectations were created over the past several years that the web of sticky sometimes incomprehensible redtape woven by Government around our society would be slashed away. We were all going to wake up one morning to find the cavalry had routed the bureaucrats and chased them-with spools of tape and paper flying all about-perhaps overseas to bedevil our trading competitors.

The cavalry would be flying banners emblazoned with tiny scissors spelling out "Executive Order 12044," and the date "March 23, 1978," or "Executive Order 12291," and the date "February 17, 1981," to memorialize famous battles in the war on redtape. Well, I have not seen the cavalry come over the rise yet.

I believe I share the growing frustration that many of my colleagues andespecially our citizens feel with the dilatory or nonexistent pace of efforts to slash the burden of Federal regulations. The issue of reducing the burden of Federal paperwork and regulations is a nonpartisan one.

Many Republicans heartily supported the Democratic House and Senate laBt year in enacting two major laws expressly designed to systematically attack our regulatory burden.

The Paperwork Reduction Act provides the administration with the tools it needs to bring the rampaging burden of Federal forms and data solicitations under control.

The Regulatory Flexibility Act, also passed last year, explicitly established the principle for all Federal rulemakers that rules and regulations for small business must be simple and less complex than rules for larger firms.


This notion of "two-tiering" Federal regulations is only an interim step to my mind, because we must move as quickly as we can to make all Federal regulations simple. This law acknowledged the particularly heavy burden which Federal regulations impose on smaller enterprises, which typically have fewer reserves, smaller profit margins, and less ability to pass on regulatory costs to customers than larger firms.

REGULATORY RELIEF AND THE RECESSION

Never was the need for quick action on regulatory relief greater than it is today. The deadly duo of high interest rates and recessions are stalking Main Street and rural America with a vengeance. Small business, farmers, and ranchers are truly becoming an endangered species as they are stretched tighter and tigher between excessive interest costs-far above the 17 percent prime rate-and weak demand.

Our farmers and ranchers face an additional burden as a result of weak commodity prices. Many are being pressed further and further into debt and face the terrible decision of either closing their doors or putting their personal assets, such as homes, up as collateral in hopes of weathering the recession.

The burden played by Federal paperwork and regulations in this drama is not a minor one. Yet, the Federal Government still has little idea of which regulations fall most heavily on our small businesses, farmers, and ranchers, much less what their actual burden is.

It is a tragically absurd situation. The Federal Government is pushing these key economic sectors into bankruptcy court. Yet, it has no idea why or how to prevent it.

My b111, the Regulatory Burden Reduction Act, is designed to tell "why" and "how," and get the Government off the backs of small business, farmers, and ranchers as quickly as possible. It will push small business, farmers, and ranchers to the front of the regulatory relief line. They w111 be the first group targeted for general regulatory reduction.

EXPLANATION OF BILL

The Regulatory Burden Reduction Act has two provisions.

First, it requires the President to estimate the cost of all major rules and paperwork requirements which are imposed by any Federal agency on farmers, ranchers, or small business. He is required to collect that data annually and provide it in a report to Congress no later than January 31 of each year.

After all the years of rhetoric and smoke, we still have no precise estimate of the impact of Federal regulation on our private sector, not to mention important sectors such ·as agriculture or small business.

In fact, the only estimate was presented to me by, then professor, Murray Weidenbaum before a hearing I chaired in 1979 of the Joint Economic Committee. He projected a regulatory burden then of $100 billion. Professor Weidenbaum has become the chairman of the President's Council of Economic Advisers. But his old estimate is still the only one we have.

My b111 will put an end to the mystery of regulatory burdens on farms, ranches, and small business. We w.i.ll know each year what that burden is and wlll know which regulations account for that burden, as well.

My bill also requires the President to come up with estimates for the benefits of these regulations so that Congress can begln the hard task of improving the cost effectiveness of these regulations.

The second component of my bill requires each Federal agency head to reduce the burden of its major rules and paperwork requirements on fanners, ranchers, and small business by 25 percent over the next 2 fiscal years. This provision expands a provision of the Paperwork Reductions Act which mandates a similar slash in the burden of Federal paperwork by the end of fiscal year 1983.

My 25 percent burden reduction is a mandate for Federal agencies to get off their duffs and start the hard work of meeting regulatory objectives more efficiently. It will light a fire under their feet. They will have a clear and simple target and timetable for reducing regulations bedevilin·g farmers, ranchers, and small business.

My act sets forth a major challenge to Federal agencies. It is a challenge, however, which they must confront. And it is a challenge which I believe the Office of Management and Budget and the President will welcome, as well. It will put the full force of the law in their hands in dealing with the Federal tangle of redtape.

Let me close by noting, Mr. President, the excellent job done by the Senate Governmental Affairs and Senate Judiciary Committees in crafting the Regulatory Reform Act, S. 1080, soon to come before the Senate for fioor action. They have been diligently drafting this bill to establish, once and for all. a regulatory reform, review, and reduction system for the Federal Government.

It will be a linchpin of our efforts to improve the cost effectiveness of Federal redtape and Senators LAXALT, RoTH, LEAHY, and EAGLETON have done an excellent job.

In addition, provisions by Senator DuRENBERGER have insured that the task of identifying and reducmg the entire Federal regulatory burden will be a key component of the Regulatory Reduction Act. And he deserves recognition and congratulations for that success.

I ask unanimous consent, Mr. President, for my bill, the Regulatory Burden Reduction Act, to be printed in the .RECORD.

There being no objection, the b111 was ordered to be printed tn the RECORD, as follows:

s. 1833 Be it enacted by the Senate and Howe of

Representatives of the United States ol America in Congress assembled, That this Act may be cited as the "Regulatory Burden Reduction Act." SEC. 2. DEFINITIONS.

(A) For purposes of this Act--(1) "agency" shall have the same meaning

provided by section 551 (1) of title 5, United States Code;

(2) "major rule"-"(A) (i) means a rule r.>r a group of closely

related rules that the agency, or the President, reasonably determines is likely to have an annual effect on the economy of $100,-000,000 or more in direct or indirect enforcement and compliance costs;

"(11) but does not mean-"(a) a rule of particular appl1cab111ty that

approves or prescribes tor the future rates, wages, prices, services, or allowances therefor, corporate, or financial structures, reorganizations, mergers, or acquisitions thereof, or accounting practices or disclosures bearing on any of the foregoing, or a rule that involves the internal revenue laws of the United States; or

"(b) a rule that authorizes the introduction into commerce or recognizes the market.aole status of a product or service that, pursuant to statute, could not lawfully be introduced into commerce or marketed in the absence of the rule; and

"(B) means a rule or a group of closely related rules that is otherwise designated a major rule by the agency proposing the rule, or is so designated by the President, on the ground that the propos~d rule is likely to result in-

.. ( i) a substantial increase in costs or prices for wage earners, consumers, individual industries, nonprofit organizations, Federal, State, or local government ngencies, or geographic regions;

"(11) significant adverse effects on competition, employment, investment, productiv-11ty, innovation, the environment, public health or safety, or the ablllty of enterprises whose principal places of business are in the United States to compete in domestic or export markets;

(3) "benefit" or "benefits" means the reasonably identifiable significant benefits and beneficial effects, including social and economic benefits and effects, expected to result directly or indirectly from implementation of a rule or an alternative to a rule;

(4) "compliance cost" means the reasonably identifiable significant costs and adverse effects, including social and economic costs and effects, expected to result directly or indirectly from implementation of a major rule or an altern·ative to a ma1or rule;

( 5) "small business" means a small business concern as defined by the Administrator of the Small Business Administration under section 2 of the Small Business Act (72 Stat. 384, as amended; 15 U.S.C. 632);

(6) "collection of data" means the obtaining or soliciting of facts or opinions by an agency through the use of written report forms, application forms, schedules, questionnaires, reporting or recordkeeping requirements, or other similar methods, calling for either-

"(A) answers to identical questions posed to, or identical reporting or recordkeeptng requirements imposed on, ten or more persons, other than agencies, instrumentalities, or employees of the United States; or

"(B) answers to questions posed to agencies, instrumentalities, or employees of the United States which are to be used for general statistical purposes;

(7) "Independent regulatory agency" means the Board of Governors of the Federal Reserve System, the Civil Aeronautics Board, the Commodity Futures Trading Commission, the Consumer Product Safety Commission, the Federal Communications Commis~ion, the Federal Deposit Jnsurance Corporation, the Federal Energy Regulatory Commission. the Federal Home Loan Bank Board. the Federal Marltlme Commission, the Federal Trade Commission, the Jnterste.te Commerce Commission, the Mine Enforcement Safety and Health Review Commission, the National Labor Relations Board, the Nuclear Regulatory r:"ommis.~lon. the Occupational Safety and Health Review Comm.lssion, the Postal Rate Commission, the Securities and

Exchange Commission, and any other similar agency designated by statute as a Federal independent regulatory agency or commission; SEC. 3. R.EDUcriON IN BURDEN OF REGULATION.

(A) By October 1, 1983, the head of each agency and independent regulatory agency shall reduce by 25 percent the compliance cost which existed on October 1, 1981, on small business, farms, and ranches of major rules and collection of data of that agency or independent regulatory agency.

(B) The President shall transmit to Congress by October 1, 1982, and October 1, 1983, a report on the progress made by ea.ch agency during the preceding fiscal year in carrying out subsection (A). SEC. 4. REGULATORY BURDEN ANNUAL REPORT.

(A) Not later than January 31 of each year, the President shall transmit to Congress a report. The report shall include a.n estimate of the benefits and compliance cost on small busineEs, farms, and ranches of major rules and collection of data-

(1) issued or in effect during the preceding calendar year; and

(2) which wlll be in effect during the current calendar year;

(B) The report issued pursuant to subsection (A) shall include benefit and compliance cost estimates for each agency and for each independent regulatory agency.e

By Mr. MOYNIHAN (for himself and Mr. DURENBERGER):

S. 1834. A bill to amend the Internal Revenue Code of 1954 to provide that a dividend paid by a corporation directly to certain charitable organizations at the direction of a shareholder shall be treated as a charitable contribution of the corporation, and to exclude such dividend from the income of such shareholder; to the Committee on Finance. SHAREHOLDER DIVIDENDS PAID TO CHARITABLE

ORGANIZATIONS

Mr. MOYNIHAN. Mr. President, I am introducing a bill today that should lead to an increase in corporate contributions to charity. The idea for the bill came from Robert Sproull, the president of the University of Rochester. Mr. Sproull calls it "a modest proposal for effi.cient charitable giving." But it is nothing of the kind. It is an ambitious and imaginative plan to give every shareholder in a corporation an incentive to donate one or more dividends a year to charity, and for the corporation to match the dividends with an additional contribution of its own.

The president called recently on Americans to embrace a spirit of voluntarism, to make up for the loss of Federal support for education, medical research, job training and other basic programs. Voluntarism will help. But the missing Federal support will be replaced only if our public policies also foster and stimulate philanthropy. Charitable giving, as a percentage of personal income, declined from 1.99 percent in 1970 to 1.84 percent in 1980. As each one-hundredth of 1 percent of personal income is equal to approximately $200 million, this decline means that annual giving is now almost $3 billion less than it would be if the level of giving of just a decade ago had been maintained.

The bill amends the Federal Tax Code. Any shareholder in a corporation would be free to direct the corporation to pay one or more of his quarterly dividends

each year to a section 501(c) (3) organization. The organization could be the Salvation Army, the United Way, a local public television station, or a private college or university. The list is practically endless. However, the corporation could restrict the option in any way it chooses. For example, it could require that dividends go only to the local muscular distrophy campaign.

A shareholder who forgoes a dividend would not be considered to have constructively received the dividend. He would not pay taxes on it.

Meanwhile, the charity would receive not only the dividend, but also the Federal tSJxes that the corporation paid on the earnings that produced the dividend. Suppose the dividend is $1 and the corporation is in the 46 percent tax bracket. How much does the charity receive? The question to ask is how much did the corporation have to have in pretax earnings to produce a dividend-after taxesof $1. The answer is $1.85. One divides the dividend by 1 minus the corporation's ma.rginal tax rate. In the example, the fraction is $1/ <1-.46).

The bill seems needlessly complicated in at least one place. Instead of using the simple phrase "marginal tax rate" as I have-a corporation divides the dividend by 1 minus its marginal tax rate-the bill says "the rate of tax for the highest rate bracket under section 11<b) which is applicSJble to the taxable income of the corporation (determjned without regard to any payment described in paragraph (1) (B) ) ." There is a reason for this. Since the corporation would be allowed a tax deduction each time it pays a dividend to charity, its tax bracket could change. Thus, the question arises: What marginal tax rate should the corporation plug into the formula? The answer is it should use the marginal rate it would have used had no shareholder turned back a dividend.

Another point: A corporation that makes a contribution of $1.85 to charity would receive a tax deduction for $1.85. So, in etiect what the bill does is allow a corporation to make a charitable contribution from its pre-tax earnings.

Finally, any charity that owns stock in a corporation would not be deemed to have received taxable, unrelated income if it forgoes a dividend and takes a contribution from the corporation, instead. Under current law, a charity is taxed on income it receives from business enterprises that are unrelated to the charity's exempt purpose.

Mr. President, I ask unanimous consent that two items be printed in the RECORD: the bill and an article by Robert Sproull from the Wall Street Journal.

There being no objection, the bill and article were ordered to be printed in the RECORD, as fOllOWS:

s. 1834 Be it enacted by the Senate and House of

Repre3entatives of the United States of America in Congress assembled, SECTION 1. DIVIDENDS PAID DIRECTLY TO CER

TAIN CHARITABLE ORGANIZATIONS AT THE DIRECTION OF A SHAREHOLDER.

(a) TREATMENT OF CERTAIN DIVIDENDS AS CHARITABLE CONTRIBUTIONS OF THE CORPORA-

TION.--8ection 170 of the Internal Revenue Code of 1954 (relating to ch&rit'able contributions ·and gif.ts) is amended by redesignating subsections (j) and (k) ·as subsections (k) and (1), respectively, and inserting after subsection (i) the following new subsection:

"(j) DIVIDEND PAYMENTS." ( 1) IN GENERAL.-If-"(A) a shareholder to whom a dividend is

payable directs the co11pore.tion to p:ay such dividend to an orga.niZ'ation described in section 501(c) (3), and

"(B) in lieu of paying Slllch dividend to such shareholder, the corporation pays the qualified contribution amount directly to such organi2'l81tlon, then an amount equal to the qualified contribution amount shall be treated, for purposes of subsection (a), as a charl·table contribution of .the corporation paid during the taxable year in which the dividend is declared.

"(2) QUALIFIED CONTRIBUTION AMOUNT DEFINED.-For purposes of this subsection-

.. (A) IN GENERAL.-The term 'qualified contribution amount' means, with respect to a dividend of a corporation, an amount equa.l to-

"(i) the amount of such dividend, divided by

"(11) the qualified rate applicable to such coJ:'IP(>ration.

"(B) QUALIFIED RATE.-For purposes Of this paragraph, the term 'qualified rate' means the excess of-

"(i), over "(11) the rate of tax for the highest rate

bmcket under section ll(b) which is appUcable to the taxable income of the corporation (determined without regard to any payment described in paragraph (1) (B)).

"(3) CONTRIBUTION OF TAX REDUCTION.-No amount other than the qualified contribution amount shall be taken into account under subsection (a) as a chartt&~ble con~ trlbution of the corporation with respect to any portion of the paym.ent described in paragraph ( 1) (B) .

" ( 4) CONTRIBUTION OF SHA'REHOLDER.N'either the amount of the dividend descrl·bed in pe.ragr&ph (1) (A) nor any portion of the payment described in paragraph (1) (B) shall be treated, for puTposes of sUJbsection (a) , as a charlteJble contribution of the shareholder to Wlhom such di vid~nd was pe.ye.ble.".

(b) ExCLUSION OF DIVIDENDS PAm D:ntECTL Y TO A CHARITABLE ORGANIZATION FROM THE INCOME OF THE SHAREHOLDER.-

( 1) IN GENERAL.-Part I'll Of subchapter B of chapter 1 of such Code (rel8/ting 'to items speclfioally e:lroluded i!rom gtoss income) 1s amended by redesignating section 130 as section 131 a.nd in~erting Sifter section 129 the following new section: "SEC. 130. DIVIDENDS PAID DIRECTLY TO CER

TAIN CHARITABLE ORGANIZATIONS. "The gross income of a 51hareholder does

not illiClude the amount of any d.tvidend payBible to such shareholder if, a.t tihe dtreotion of such sh3.1'eholder, the corporaUon p81ys the qualified contrllburtion amount (within the meaning of section 170(j) (3)) to an orga.nliza.tion described in section 501 (c) (3) .".

('2) CONFORMING AMENDMENT.-'l'!le table of sections for part Im of subOhapter B or! chapter 1 of such Code is amended by striking out ·the Ltem rela.ting to section 130 a.nd inserting in lieu thereof the following: "Sec. 130. Dividends paid directly to certain

charitable organizations. "Sec. 131. Cross treferences to other Aets.". SEC. 2. EFFECTIVE DATE.

The amendmenrt;s made by this Act shall apply to ta.xa.ble years beginning a.fter December 31, 19&1.

- 27118 CONGRESSIONAL RECORD-SENATE November 10, 1981

fFrom the Wall Stl'eet Journal, l.-Larch 4, .1961]

A MODEST PROPOSAL FOR EFFICIENT CHARITABLE GIVING

(By RObert L. Sproull) Voluntary support or! America's service ln

stltutlons is needed now more than ever before: The United Ways and churches, the a"t. <?.q:l.l~.-1~ and orchestras. the con~~ and universities ~H require additiollM support to maintain the quality ~ their programs. Most s~•· "..- .J • .J llCA.r ti. 10r federa.l dollars. But rt'he tortuous and inefficient route of federa;l taxation, legislative action, program management, proposal writing, wa.tting and (for the lucky) auditing is increasingly frustrating. Direot, VOiluntary support ~f chari~ble institutions by lndividua.ls, foundations and oorpoNIItlons is thus much in the public interest and is appropriately recognized as such by the tax laws.

Individuals and founda.tions, however generous spirited, cannot do tlhe job alone. For emmple, a.l:thou.g:h a deoade ago foundations gave to higher education twice as much ea.ch year as corpoNIItions, in 1979 corporation giving exceeded thart; of foundi81tions. I need not dwell on the Umitati~ns experienced by individuals, who find it difficult enough to save, much less .to give. And one of .the damaging results of the d1fficul.ty of se.ving 1s thM very few new foundations l8ire being created from individuaJ.s' lifetime savings. COrporations thus play a central role.

Giving by corporations is even more effilcent than giving by indiViduals in one limited .but very interesting sense. Most individuals who give substantial amounts to charitable groups also own common stock in corporations. The corporations can use pre-tax dollars for giving, and the 1ndividual gives before his personal income tax. But for the individual with appreciable income from common stock di vldends, ihe is in effect doing his giving after the corpora.t1on income tax has ·been taken out. Direct-corporate giving is thus more efficient.

This llne of argument suggests a more emicent combination of the corporate and shareholder giving, an extension of the employe matchlng-glft concept. Suppose I am a shareholder who receives several hundred dollars a year in dividends from Xerox Corp. and suppose I have 'been giving $100 a year to the University of Roclhester (to pick an institution at random). Suppose I were given instead the option of requesting Xerox to pay me $100 less in diVidends and e.sking Xerox to write a check to the university for $200. How do we stand?

First, me: If I 1 temized ded:uotdons on my inoome tax, I am left exactly as before; 1! I do not itemize, I a.m a little ahead. Second, Xerox: They have paid $100 less to me, $100 less to the IRS (for simplicity I assume a 50 percent tax rate level) and $200 more to the university; they are lett exactly as before. The big difference is that my gift is having twice as much effect to produce quality education at the university (obviously at the expense of the IRS and Its circuitous route to make tihlng·s happen).

Of course this procedure could be "trimmed up" to use actual tax rates. It could be limitP.d in any way the COt1loration chose, but limiting to one quarterly dividend per year would assure in most corporations tba·t their giving did not exceed the 5 percent maximum. Further, limiting each shareholder to use of only a full Quarterly dividend and only one charitable ".target" each year would minimize paperwork (which In any case should be less than the dividend re-investment options offered by many corporations) .

This prooosal seems to flV in the face of IRS rules and possibly of SEC rules, but It Is not obvious whv it should. (I realize; of course, that logic 'is not a gOOd guide in this dark forest.) When corporations offer to their

employes the privilege 01! having their charitable gifts matched by pre-tax corporate gifts, the latter are not called "constructive reecipt of lnco1lle." The employes.in effect constitute an in.vislble committee which directs some of the corporation's giving. AS a committee, tlhey have two enormous advantages over most committees: 1) they never meet; 2) their votes are proportional to their own willingness to be generous ·and are not responsive to the gooey rhetoric that moves the usual committee.

This proposal merely extends to shareholders the privileges already granted to employes by those corporations with matching gift programs. The invisible committee of shareholders could be expected to be at least as wise and as pure in the eyes of tihe IRS as employes. There 1s no gain to the shareholder from the dividend he dld not receive any more than there is to the employe who directs the corporate matching gift.

Since it costs the corporation notihlng (except the paperwork) , shareholders who do not choose to use the option are in no way disadvantaged. There might even be two amiable side effects. First, this form of shareholder participation is, in a small way, a contribution to "corporate democracy," with only beneficial results, unlike ·the mischievous "ego trips" of holders of handfuls of shares who sometimes domlna.te annual meetings In the name of "corporate democracy." second, since there are large numbers of shareholders who wish "to make things happen" in charitable institutions, offering this option to its shareholders ought, at least in a small way, to enhance the price of a corporation's stock.

This proposal seems to fit squarely within the spiri·t of tax and securities legislation: No individual or corporation receives e.ny untaxed benefit; tihe only gain is to ·501(c)3 organizations, and It is acknowledged public policy that tax rules should benefit them. All shareholders are treated alike.

Nevertheless, the accountants I have consulted believe that under the Internal Revenue Code, specifically section 61, the shareholder would be taxed on the dividend he did not receive. Sections 10'1 through 128 of the Code already include many exceptions to Section 61, presumably all for wortihy purposes. I should like to urge an additional exception for this proposal to make corporate giving more efficient.

BY Mr. MOYNIHAN: S. 1836. A bill to remove the limitations

on the authority of the Federal Deposit Insurance Corporation and the Federal Savings and Loan Insurance Corporation to borrow from the Treasury; to the Committee on Banking, Housing, and Urban Atiairs.

DEPARTMENT OF TREASURY LOAN AUTHORITY

Mr. MOYNIHAN. Mr. President, I am introducing a bill today to allow the Federal Deposit Insurance Corporation and the Federal Savings and Loan Insurance Corporation to borrow, without limit, from the Federal Treasury.

The FDIC has $12.1 billion in its insurance fund and the ability to borrow another $3 billion from the Federal Government. The FSLIC fund is smaller: only $6.8 billion, with $750 million in borrowing authority.

Both insurance funds are ably managed, and should be adequate to handle a string of bank failures or even a worse emergency. Nevertheless, the size of the funds in relation to total deposits does not inspire public confidence. Consider these statistics: There are 3,800 savings and loan associations in the United States, with roughly $465 billion in in-

sured deposits. Four in five are losing money. At least 1 in 20 is reported to be on a danger list kept by Richard Pratt, the Chairman of the Federal Home Loan

·Bank Board. That proportion could represent as much as $23 billion in deposits-more than three times the value of the FSLIC insurance fund.

Meanwhile, the FDIC insures deposits of $948.7 billion. Between 15 and 16 percent, or over $140 billion, are deposits with mutual savings banks, which have invested heavily over the years in residential mortgages and which have the same problems as savings and loan associations. The FDIC insurance fund is worth only $15 billion, includ!ng what the agency can borrow from the Treasury.

Obviously. these figures exaggerate the danger to the public. The Greenwich Saving Bank, which came close to filing last week, was a huge bank, with over $2 billion in deposits, but the loss to the FDIC was only $185 million. That is what the agency paid to induce two other savings banks to merge with the Greenwich.

But it is the perception of the public · that matters. The law says the FDIC and the FSLIC shall reimburse depositorsu-p to $100,000 per account-whenever an insured bank or savings association closes because of insolvency. The law does not say what happens if the insurance funds run out of cash. There is no reason why we should let this worry anyone. My bill merely makes clear that the full faith and credit of the Federal Government stands behind our promise to insure bank accounts.

I ask unanimous consent that the bill be printed in the RECORD.

There being no objection, the b111 was ordered to be printed in the RECORD, as follows:

s. 1836 Be it enacted b11 the Senate and House of

.Representatives of the United States of America in Congress assembled. That (a) section 14 of the Federal Denoslt Insurance Act (12 U.S.C. 1824) is amended by striking out". not exceeding In the agJZre~Zate $3,000,-000.000 outstanding at any one time".

(b) Sect ion 402(i) o! the National Housing Act (12 U.S.C. 1725(1)) is amended by striking out " . not exceeding in the aggre~;taU, $750,000,000 outstanding at any 'one time".

By Mr. HAYAKAWA (for himself, Mr. DoLE, Mr. EAST, Mr. INOUYE, Mr. KENNEDY, Mr. SARBANES, Mr. HUDDLESTON, Mr. MoYNIHAN, Mr. BRADLEY, Mr. DOMENICI, Mr. GOLDWATER, Mr. QUAYLE, Mr. SASSER, Mr. WARNER, Mr. MELCHER, Mr. EAr-LETON, Mr. ExoN, Mr. PERCY, Mr. ScHMITT, Mr. LEVTN, Mr. LoNG, Mr. FORD, DENTON, Mr. RIEGLE, Mr. KOWSKI, Mr. DURENBERG ARMSTRONG, Mr. L~ R, ANDREWS, Mr. T))WER, BAUCUS, and Mr. WALLOP):

S.J. Res. 123. Joint resolution authorizing and requesting the President to proclaim "National Disabled Veterans Week"; to the Committee on the Judiciary.

<The remarks of Mr. HAYAKAWA on this legislation appear earlier in today's RECORD.)

By Mr. DANFORTH <for himself, Mr. BAUCUS, Mr. MOYNDIAN, Mr. DECONCINI, Mr. SARBANES, Mr. HAYAKAWA, Mr. BRADLEY, Mr. KAsTEN, Mr. HUDDLESTON, Mr. STEVENS, Mr. KENNEDY, Mr. EAGLETON, Mrs. KASSEBAUM, Mr. RANDOLPH, Mr. TSONGAS, Mr. LEVIN, Mr. SASSER, Mr. STENNIS, Mr. GARN, Mr. DIXON, Mr. DOMENICI, Mr. FORD, Mr. SYMMS, Mr. NICKLES, Mr. ROTH, Mr. HUMPHREY, Mr. BENTSEN, Mr. HEINZ, Mr. DOLE, Mr. MELCHER, Mr. BOREN, Mr. MURKOWSKI, Mr. COHEN, Mr. JOHNSTON, and Mr. MATHIAS):

S.J. Res. 124. Joint resolution authorizing and directing the President to provide for the playing of taps at the Vietnam Veterans Memorial, Washington, D.C.; to the Committee on Armed Services.

PLAYING OF TAPS AT VIETNAM VETERANS MEMORIAL

e Mr. DANFORTH. Mr. President, tomorrow is Veterans Day. In September, a memorial was dedicated in South Boston, Mass., to the Sons of South Boston who died serving their country in Vietnam. An inscription on the memorial reads, "If you forget my death, then I died in vain."

Mr. President, it is important that we not forget the sacrifice of the more than 57,000 Americans who died in the Vietnam war.

In 1980, Congress authorized the construction of ·a memorial in honor and recognition of the men and women of the United States who served in Vietnam. Since that time a memorial design has been chosen, and efforts are underway to raise the funds needed to build the memorial. All of the funds to construct the memorial will be provided by private donors. The yeoman's work of raising these funds is being carried out by the Vietnam Veterans Memorial Fund, under the leadership of Jan Scruggs, who spearheaded the effort to establish the memorial. The memorial will be constructed in Constitution Gardens. near the Lincoln Memorial, and will bear the name of each of the 57,661 Americans-1,394 of them from my home State of Missouri-who died in the Vietnam war.

Today, together with several of my colleagues, I am introducing a joint resolution authorizing and directing the President to provide for the playing of taps at the Vietnam Veterans Memorial each evening at sunset, forever.

The suggestion that taps be played at the memorial was first brought to my attention some time ago in a letter to the editor of the Washington Star. That letter, written by two Vietnam veterans-Van Davidson. Jr., and Clarence D. Long III-eloquently argued for the playing of taps at the memorial. The ceremony, they said, would represent an important effort by the American people to he~p their sons rest in peace. It will. And It will do more than that.

Mr. President, there are times when words fail us in our efforts to speak of things that touch us deeply, In such

times, music can speak for us. Each evening, at sunset, let this simple ceremony speak for us. And let us remember.

Mr. President, I ask unanimous consent that the letter written by Mr. Davidson and Mr. Long be printed in the RECORD.

There being no objection, the letter was ordered to be printed in the RECORD, as follows: (From the Washington Star, Apr. 25, 1981]

THE BUGLE CALL THAT SAYS IT ALL

As contributors to the Vietnam Veterans Memorial fund to construct on the Mall a monument that wlll "recognize and honor those who served and .. died (and that) wlll provide a symbol of acknowledgement of the coura.ge, sacrifice and devotion to duty of those who were among the nation's finest youth," it is our opinion that somewhere on this monument should appear tlie words, "obedient to our laws, ... with reference to the sacrifice that these Americans made.

In 490 B.C. some 300 Spartans and others led by King Leonidas fought to the death, although greatly outnumbered by the Persians, at a pass named Thermopylae in Greece. To commemorate the sacrifice of Leonidas and his men, upon a monument there is inscribed Simonides' immortal quote:

"Go tell the Spartans, thou who passest by,/that here, obedient to their laws, we lie."

John Rusl{in, the famous 19th century English critic and social theorist called this epitaph ". . . the noblest group of words utter~ by man."

In a speech delivered on Memorial Day, 1895, to the graduating class at Harvard University, Justice Oliver Wendell Holmes said:

"The faith is true and adorable which bids a soldier to throw away his life in obedience to a blindly accepted duty, in a cause which he little understands, in a plan of campaign of which he has no notion, under tactics of which he does not see the use."

The "blindly accepted duty" Justice Holmes was referring to is the result of the nation's laws enacted to prosecute the war. While on its face the statement appears to worship m111tarism, it does not. As Justice Holmes well knew-for he had been three times wounded as a Union officer in the Civil War-that statement is only a recognition of the realtty of things as they always are for soldiers of our country in any war.

In the Vietnam war, 57,661 Americans died obedient to their nation's call to arms. It is this obedience that makes it possible for the nation to organize its manpower for the common defense. It is this obedience that is the guardian of the nation in time of danger. It makes our ctvmzation possible and insures the nation's survival. Tt is for this obedience to our laws that 57,661 of America's sons are to be remembered.

The memorial will be a symbol of man's destiny and nower for duty which led these brave Americans (to quote Mr. Holmes again) "to toss life and hope like a flower before the feet of their countrv and its cause." This is why the phrase "obedient to our laws" should be Inscribed in stone on any memorial built to honor America's sons who died in the Vietnam war. It is our opinion that President Reagan,

a'> commander-ln-chtef. should order that the bugle call "Taps"' be played at the memortal by an American soldier every day at dusk-forever. This simple ceremony will represent an effort by the American people to help their 57,fl61 sons rest in peace.

There is precedent for this sugczested ceremony. The Brish built a memorial to their missing in action at the Ypres salient of World War I. Inscribed on the monument are the names of 55.000 missing men. To this day, a buqler blows "Taps" there every evening.-Van M. Davidson, Jr. and Clarence D. Long In.e

ADDITIONAL COSPONSORS s. 569

At the request of Mr. JEPSEN, the Senator from Kentucky (Mr. HUDDLESTON) was added as a cosponsor of S. 569, a bill to amend the Internal Revenue Code of 1954 to provide an investment tax credit for certain soil and water conservation expenditures.

S. 12U

At the request of Mr. KASTEN, the Senator from North Carolina <Mr. HELMS), and the Senator from Minnesota <Mr BoscHWITZ) were added as cosponsors of S. 1215, a bill to clarify the circumstanc~s under which territorial provisions in licenses to distribute and sell trademarked malt beverage products are lawful under the antitrust laws.

s. 1693

At the request of Mr. KASTEN, the Senator from California <Mr. CRANSTON), the Senator from ID1nois (Mr. DIXON), the Senator from Indiana <Mr. LuGAR), the Senator from New Mexico <Mr. ScHMITT), the Senator from New Jersey <Mr. WILLIAMS), and the Senator from North Dakota <Mr. BuRDICK) were added as cosponsors of S. 1693, a bHl to provide for the issuance of a special stamp to commemorate the 200th anniversary of the presence of the bald eag~e on the omcial seal of the United States of America.

SENATE RESOLUTION 209

At the request of Mr. JEPSEN), the Senator from Montana <Mr. MELCHER), the Senator from North Carolina <Mr. HELMs), the Senator from Idaho <Mr. SYMMS), the Senator from Indiana <Mr. LuGAR), the Senator from Oregon <Mr. HATFIELD), the Senator from Arizona (Mr. GOLDWATER), the Senator from Wisconsin <Mr. KASTEN), the Senator from Indiana <Mr. QuAYLE), the Senator from Iowa <Mr. GRASSLEYJ, and the Senator from Florida <Mrs. HAWKINS) were added as cosponsors of Senate Resolution 209, a resolution exPressing the sense of the Senate that the President of the United States, the U.S. Senate, and the Sen~te Committee on Banking, Housing, and Urban Affairs should pay careful deference to the specific provisions of the Federal Reserve Act, requiring broad regional and economic representation on the Board of Governors of the Federal Reserve System, in their consideration of nominees to the Board.

SENATE RESOLUTION 238

At the request of Mr. BENTSEN, the Senator from Virginia <Mr. HARRY F. BYRD, JRJ , the Senator from Louisiana <Mr .. JoHNSTON). the Senator from Utah Mr. GAR'N), and the Senator from Kentucky (Mr. FoRD) were added as cosponsors of Senate Resolution 238, a resolution to retain the deductibility from personal taxes of interest paid on residential mortgages.

SENATE CONCURRENT RESOLUTION 47---CONCURRw.NT :RESOLUTION WITH RESPECT TO THE IMPRISONMENT OF ALEXANDER PARITSKY AND IDS FAMILY Mr. TSONGAS submitted the follow

ing concurrent resolution; which was

referred to the Committee on Foreign Relations:

S. CoN. RES. 47 Whereas, the Universal Declaration of Hu

man Rights and the International Covenant on Civil and Political Rights guarantee to all citizens the rights to freedom of religion, the right to hold opinions without interference, the right to freedom of expression, and the right to emigrate;

Whereas the Final Act of the Conference on Security and Cooperation in Europe commits the signatory nations to respect individual rights and freedom, specifically the right to immigrate to the country of one's choice to rejoin their relatives;

Whereas the Soviet Union has signed the Final Act of the Conference on Security and Cooperation in Europe, is a. party to the Universal Declaration of Human Rights, and has ratified the International Govenant on Civil and Political ,Rights;

Whereas Alexander Paritsky and his famlly first applied to emigrate from the Soviet Union in 1976 and have been repeatedly denied permission;

Whereas Alexander Paritsky was dismissed from his position as a scientist at the Kharkov Institute for Metrology in 1977 as a direct result of requesting permission to emigrate;

Whereas Alexander Paritsky and his family have been continually harassed by Soviet authorities as a result of his involvement in the Kharkov Jewish University;

Whereas Soviet officials have confiscated numerous books, letters, and medicines from the Paritskys' apartment;

Whereas Soviet officials have published slanderous articles in the Kharkov press accusing Alexander Paritsky of black ma.rketeerlng and racism;

Whereas Dorina Pa.ritsky, aged fifteen, has been harshly interrogated by Soviet investigators at her school and told to denounce her family;

Whereas Paulina Paritsky has been threatened with arrest and informed that she wlll lose custody of her two daughters;

Whereas Alexander Pa.ritsky was arrested on August 28 and charged with anti-Soviet agitation and propaganda;

Whereas Alexander Paritsky is scheduled to be tried by Soviet officials on November 11th and has been denied the legal counsel of his choice; and

Whereas Paulina Paritsky was forcefully prevented from obtaining an independent lawyer for her husband: Now, therefore, be it

Resolved by the Senate (the House of Representatives concurring), That it is the sense of the Congress th.at the President, acting directly or through the Secretary of State, should-

(1) continue to express at every suitable opportunity and in the strongest terms the opposition of the United States Government to the imprisonment of Alexander Paritsky;

(2) urge the Government of the Soviet Union to-

(A) release Alexander Paritsky from prison,

(B) halt all further harassment of Alex~ ander Paritsky .and his family, and

(C) permit Alexander, Paulina, Dorina, and Anna Paritsky to emigrate to Israel to join their relatives, in accordance with the Final Act of the Conference on Security and Ccoperation in Europe, the Universal Declaration of Human Rights, and the International Covenant on Civil and Political Rights; and

(3) inform the Government of the Soviet Union that the Government of the United States, in evaluating its relations with other countries, w111 take into account the extent to which such countries honor their commitments under international law, especially commitments with respect to the protection of human rights.

SEc. 2. The Secretary of the Senate shall transmit a copy of this concurrent resolution to the President with the request that he further transmit such copy to the Ambassador of the Union of Soviet Socialist Republics to the United States.

<The remarks of Mr. TsoNGAS on this legislation appear earlier in today's RECORD.)

SENATE CONCURRENT RESOLUTION 48-CONCURRENT RESOLUTION DISAPPROVING THE PROPOSED SALE TO PAKISTAN OF F-16 AIRCRAFT

Mr. HATFIELD (for himself and Mr. MOYNIHAN) submitted the following concurrent resolution, which was referred to the Committee on Foreign Relations:

S. Con. Res. 48 Resolved by the Senate (the House of

Representatives concurring), That pursuant to section 36(b) of the Arms Export Control Act, the Congress objects to the proposed sale to Pakistan of F-16 aircraft together with related defense articles and defense services, such proposed sale being described in the certification submitted to the Speaker of the House of Representatives and to the chairman of the Committee on Foreign Relations of the Senate on October 23, 1981 (transmittal numbered 81-108).

SENATE RESOLUTION 242-RESOLUTION REGARDING SALT II

Mr. HART submitted the following resolution, which was referred to the Committee on Foreign Relations:

S. Res. 242 Whereas, it is in the national security

interests of the United States to limit the size of the Soviet nuclear threat through arms control agreements, and

Whereas, both the United States and the Soviet Union have adhered to the provisions of SALT II since it was negotiated and signed, a.nd

Whereas, General Rowny, chief arms control negotiator for the United States testified before the Senate Armed Services Committee on behal! of the Administration that "we ought to take no steps inconsistent with the terms of the treaty so long a.s the Soviets take no steps and so long as our nationru security does not require that we take such other steps.",

Therefore, be it resolved, that it is the sense of the Senate that the United States shall continue to take no steos incon~istent with the terms of the SALT II treaty so long as the Soviet Union also continues to take no &teps inconsistent with the treaty. • Mr. HART. Mr. President, the resolution I am submitting today will demonstrate the Senate's support for what I believe to be the administration's position on continued adherence to the provisions of the SALT II treaty. Although SALT II has not been ratified, the United States and the Soviet Union adhere to its provisions. My resolution simply expresses the sense of the Senate that the United States shall continue to take no steps inconsistent with the terms of the SALT II treaty so long as the Soviet Union does likewise. When General Rowny, chief U.S. arms control neP"otiator testified before the Armed Se~ices Committee he stated:

We ought to take no steps inconsistent with the terms of the treaty so long as the Soviets take no steps and so long as our

national security does not require that we take such other steps.

Mr. President it is vital to the national security interests of the United States that we limit the size of the Soviet nuclear threat through arms control agreements. Continued United States-Soviet adherence to the SALT II treaty benefits our national security in the following ways:

It limits the size of the Soviet nuclear threat. By 1985 the Russians will have the technical capacity to increase vastly their nuclear arsenal. They will be able to more than double the number of silokiller warheads that SALT II would have permitted, deploy additional heavY missiles, and nearly double their arsenal of land-based missiles with multiwarheads. Regardless of whether the limits 2 years ago were adequate, right now we are living without any legal limits whatsoever. It strengthens our national security for the Soviets to respect the negotiated limits. If they do, we should also.

It would provide greater ability to focus our resources on conventional forces. If we embark on an uncontrolled nuclear buildup, pressures on the Soviets to do the same would be enormous. An administration so aware of Soviet expansionism should be alert to the dangers of an uncontrolled nuclear arms race. It would divert both our attention and our resources from the conventional forces we and our allies need to discourage Soviet adventurism. It is in our national security interest for the Russians not to embark on a nuclear arms buildup which would violate the provisions of SALT II. If the Soviets continue to abide by those provislons we shoul.d also.

I, and many others in the Senate, have called on President Reae:an to begin arms control talks with the Soviets forthwith. The onlv wav to achieve limitations on the Soviet nuclear threat is by entering into negotiations. We gain no additional securitv by waiting; we lose nothing by negotiating. Before the talks begin, however. and whUe they continue, it is essential that both sides avoid any unnecessarv nuclear arms escalation, which either might regret once an agreement is negotiated. For this reason I urge the Senate to go on record in favor of the United States continuing to take no steps inconsistent with the terms of the SALT II treaty so long as the Soviets also continue to take no steps inconsistent with SALT II.e

AMENDMENTS STTBMITTED FOR PRINTING

AUTHORIZATION OF APPROPRIATIONS FOR EXPORT ADMINISTRATION

AMENDMENT NO. 628

<Ordered to be printed and to lie on the table.)

Mr. ROBERT C. BYRD submitted an amendment intended to be proposed by him to the bill <S. 1112) to authorize appropriations for the fiscal years 1982 and 1983 to carry out the purposes of the Export Administration Act of 1979, and for other purposes.

November 10, 1981 CONGRESSIONAL RECORD-SENATE 27121 NOTICES OF HEARINGS

SUBCOMMITTEE ON FEDERAL EXPENDITURES, RESEARCH, AND RULES

Mr. DANFORTH. Mr. President, on Thursday, December 3, 1981, the Subcommittee on Federal Expenditures, Research, and Rules will hold a hearing to consider the draft proposal for a uniform procurement system submitted to the Congress on October 29 by the omce of Federal Procurement Policy, pursuant to Public Law 96-83. The hearing will begin at 10 a.m. in room 3302 of the Dirksen Senate omce Building. The hearing was previously scheduled for December 1.

ADDITIONAL STATEMENTS

A SALUTE TO VETERANS • Mr. BAUCUS. Mr. President, tomorrow, November 11, has been set apart so that we may remember and honor those men and women who gave service, and too often their lives, in the Armed Forces of our Nation. Many made enormous personal sacrifice and many suffered injuries that will disable them for the rest of their lives. All of us owe much to them, and it is with humility and great admiration that I extend my personal gratitude and this tribute to them.

A resolution will be enacted to declare the week of November 7 through November 13, 1982 as "National Disabled Veterans Week." I am honored to cosponsor this as a small expression of my appreciation.

In addition to this type of recognition, I believe that real, concrete steps must be taken to assist our veterans in meeting a number of their very serious problems which have been ignored far too long. I am encouraged that the 97th Congress has taken steps in this direction.

For example, medical evidence indicates a link between many health problems and dioxin, a toxin in agent orange, a defoliant used in Vietnam. Other problems are thought to have been initiated by exposure to nuclear weaponry test radiation.

I am honored to report that the 97th Congress has overwhelmingly supported legislation which provides health care eligibility and outpatient care priority to veterans for disabilities linked to their exposure to dioxin and other toxic substances found in herbicides and defoliants, as well as nuclear weapons test radiation.

This is not all. A study commissioned by the Veterans'

Administration found that many of the psychological difHculties experienced by veterans begin for the first time 10 or more years after a combat tour. Recognition of these problems, referred to as "delayed stress syndrome," resulted in the establishment of readjustment counseling or Vietnam veteran Outreach centers. The obvious value of these centers prompted the VA to increase their number by almost 50 percent in July of this year. Despite this, several factors-the reluctance of veterans to use the centers, program funds for centers diverted to other sources, and delays in establishing

centers-contributed to lessening th~ir potential effectiveness.

As a result, Congress, recognizing that continuity and stability of the readjustment counseling service is essential to the program's effectiveness, voted unanimously in favor of an amendment which extends for 3 years, until September 1984, the period during which Vietnam era veterans are eligible for readjustment counseling and related mental health services. It also provided for appropriate transition into VA health care facilities of the readjustment counseling program during its last year.

These are but two of many actions taken on behalf of our veterans so far this Congress. They demonstrate the Nation's desire to serve veterans despite the prevailing mood to consolidate and simplify Federal spending programs.

It is important that we continue to demonstrate our gratitude and care to these most deserving men for their brave and selfiess service to our country, not only on Veterans Day but on all days. For this reason it is essential that we maintain and improve the various programs and services available to them. This is the least we can do to thank them for their sacrifices.•

VETERANS DAY • Mr. CHILES. Mr. President, Wednesday, November 11, has been set aside as a day to pause and reflect on the extreme sacrifices made on behalf of our country by a special group of individuals-those men and women who have served in our Armed Forces. Veterans Day stirs special thoughts and memories 1n each of us. The ceremonies performed throughout the country tomorrow will prompt patriotic feelings, feelings which will call to mind past challenges to our democratic freedoms and will reinforce our commitment to continue the cause of American liberty.

Our Nation's flag has forever been a symbol of what is meant by Americanism. Recently, an article on our country's flag written by an American Legion member in my State was brought to my attention. I find these words especially meaningful as we approach Veterans Day and, for this reason, I wish to share it with my colleagues in the Senate. I submit this article for the RECORD.

The article follows: How MUCH DOES OUR FLAG CosT?

(By Walter J. Kaiser, Americanism Chairman, American Legion Post 79, New Port Richey, Fla..) In January 1981, President Reagan and the

people of this free Nation, welcomed home Fifty Two freed men and women who were held hostage in Iran for Four Hundred and Forty Four days. At the end of the White House ceremonies, the President presented each freed hostage with a. replica of the Flag of the United States of America, and he told them it was a. symbol. I am now going to try to leave you with an impression of that symbol, and of Our Flag, which I hope wm remain in your hearts and in your memories for a. long time to come.

During our many American Flag campaigns, there is always one question that seems to be outstanding, and that question is, "How much does Our Flag cost?" I have always answered that question in terms of dollars and cents, but that answer never re-

fiects the real price, the true price, that so many Americans, and too many Americans have paid for Our Flag. I believe that if we want to find out the real answer to that question, we wlll have to go back many, many years, to many, many wars, to many, many battlefields. Back there, on those bloodstained battlefields, we could ask the crippled, the blind, the dying and the dead. Yes. we could ask them "How much did Our Flag cost you?" Back there we could ask the Patriots at the Boston Tea Party, the Minutemen at Concord, the frost-bitten soldiers at Valley Forge, and the weary and the hungry fighting at Gettysburg. Back there we could ask all the great Presidents, and all the great Generals, who constantly saw through teardimmed eyes, ever present death and destruction. I am very sure that they could tell us how much Our Flag cost.

We could ask the heroes at Chateau Thiery and Verdun, the gallant sailors. buried on the Arizona at Pearl Harbor, the Marines at Iwo Jima and Guadalcanal, the stretcher bearers at bloody Anzio beach-head. We could ask all those who landed at Normandy, and those who fought in the Battle of the Bulge. They should be able to tell us how much Our Flag cost.

We could probably find the answer right here in these United States. We could visit the numerous Veterans Hospitals, and there we could ask the thousands of disabled veterans, who lay on their sick beds. There we could ask the armless, the legless, the mentally 111, the diseased and the shell-shocked. Yes, we could ask them, but I don't think we would have to, for there we would surely see the price they paid for Our Flag.

We might be able to find the answer right in our own hometown, perhaps on the street where we live. We could ask the Gold-star mothers who lost their only sons, the wives who lost their husbands, the children who lost their fathers, or perhaps their brothers, and. we could ask all those who lost their sweethearts. I know that we wouldn't ask, but if we were to ask I am sure they would say they paid for Our Flag with loneliness and sorrow; heartache and tears; sacrifice and suffering; heartbreak and despair

Today and everyday, as you see Our Flag waving ever so proudly in the breeze, try to give it a long lingering look, and deep in your hearts try to realize just what it symbolizes. The White and the R'!ld stripes symbolize t1'e purity of purpose for which our comrades shed their blood. The White Stars in the field of Blue symbolize that the heights of pure democracy can reach to the very stars in the heavens.

Our Flag could be made from a fiimsy piece of printed cotton, or it could b~ made into a banner of the most beautiful silk. The intrinsic value could be very small, or it could be very great, but its real value, its true value, is the precious symbol we all work for, the precious symbol we all live for, and the precious symbol for which someday, some of us may die for, it is the symbol of a free Nation, of free man, true to the faiths of the past, and dedicated to the principles of Justice, Freedom and Democracy.

For just one moment let us bow our heads, and in the concept of our own belief, say a silent prayer, thanking God that the colors of the Flag are still Red, White and Blue, and pray that the men and women, who are now serving in the Armed Forces stationed all over this world, will do everything they can to keep it that way.

Forever in our hearts. let us pay tribute to those brave comrades, who paid for Our Flag with their lives.e

MOST RECENT ADMINISTRATION DISCUSSIONS ON BUDGET

e Mr. DOLE. Mr. President, it is estimated that the medicare and medicaid

programs will cost the Federal Government in excess of $75 billion in fiscal year 1983. This is over 15 percent more than for fiscal year 1982. In the welfare area, we will be spending about $20 billion in fiscal year 1983, or about 10 percent over fiscal year 1982 expenditures. These extraord1nary levels of spending must be examined carefully in any serious attempt to bring our economy under control. The story in yesterday's Washington Post outlines a nwnber of proposals, some of which are similar to items discussed by members of the Finance Committee in the past, that are designed to achieve savings.

Just to put things in perspective, the $9.3 billion mentioned in the Post represents about 9 percent of projected fiscal year 1983 outlays for health and welfare programs under the Social Secul'lity Act. It should be noted, however, that the $9.3 billion is merely a target nwnber and Secretary Schweiker has only proposed about $4.1 billion in additional program changes for fiscal year 1983, or about 4 percent of the estimated outlays for that year. It is also important to note that even this lesser amount is tentative and subject to ongOiing review and revision by the administration.

Moreover, some of the items discussed are not cuts in benefits but rather changes of sources of coverage and revenues. For example, the working aged proposal would not cause reduced benefits; it would merely require private health insurance to pay benefits for those aged who remain in the work force, with medicare fllling in any gaps. This would reduce med!care outlays by about $258 million in fiscal year 1983. Requiring Federal workers to pay the medicare health insurance tax, as is being proposed, would bring in about $650 million in addit!onal trust fund revenues mostly from Federal workers who are now reaping windfall benefits under medicare.

Other proposals in the package are directed toward reducing payments to providers of services such as limits on hospital reimbursement. Again, these are not cuts in covered services, but signals to hospitals that we are not going to continue to fuel the near 20-percent rate of increase in hospital costs so far this year.

Although we have not had an opportunity for an in-depth review of the proposals being discussed by the administration, I bel'.eve some may have merit, and will deserve our consideration. However, in examining whatever final proposals are presented to Congress, it will be important to strike a reasonable balance, particularly in the medicare and medicaid programs, so that the burden of reduced spending is not borne solely by the poor and elderly, but is shared by the providers of health care services. It seems to me that Secretary Schweiker is taking that approach.e

SANCTIONS AGAINST LIBYA

• Mr. HART. Mr. President, two items in today's Washington Post. a news report and an editorial, highlight the continuing contradiction in our Government's

relations with Libya and its leader, Colonel Qadhafi. Both items indicate the Reagan administration has failed to dramatize in any meaningful way it's commitment to combat Qadhafi's military adventurism and political subversion in Africa. I ask that both articles be inserted in the RECORD following my remarks.

Our status as the No. 1 customer of Libyan oil m~kes us hypocrites in the eyes of the world. Our interests as a democratic nation should outweigh the economic benefits of Libyan oil. This embarrassing international spectacle-condemning Qadhafi's words and supporting h lm with pe~.rodollars-must end.

Last month we had an opportunity to do th;.s. I propos·ed legislation to cut off all American imports of Libyan oil within 3 months. We could easily have found the quarter-million barrels a day elsewhere. And this relatively painless cutback would have been a good starting point for eventually eliminating all Mid-· dle Eastern oil imports.

The proposal presented a clear choice-either to continue to export American do1.lars for terrorist oil, or to stop. If the Reagan administration had wanted to stand on principle before the rest of the world, it would have matched its rhetoric with action.

But the administration . opposed the legislation, and the Senate narrowly defeated it. And so a commitment of profound moral consequence was not made. The administration rejected an opportunity to squarely oppose Qadhafi'::; campaign of terror. It rejected the chance to stop American dollars from funding Libyan destabilization and violence. And it missed a chance to demonstrate American leadership and moral bommitment in a world increasingly a hostage to terror.

The articles follow: U.S. OFFICIALS DIFFER ON SANCTIONS AGAINST

LIBYA

(By Michael Gertler) Although the Reagan administration has

branded Libya's Col. Mua.mmar Qaddafi public enemy No. 1, there is no agreement on what a number of government specia-lists think might be the best way for this country to dramatize its commitment to CIOIIlibat Qaddafi's miUtary adventur1sm and polit'l.c:al subversion in Afr1ca.

That device is economic sanctions, a.nd above all a halt to U.S. purchases of Libyan oil.

Some government officials studying the situation would like to out off ,Amerlcan purchases of Libyan oil as "the right thing to do" regardless of effectiveness. But a major complicating factor is that President Reagan and White House counselor Edwin Meese Ill have both rejected such a move in public precisely because, in their view, it would not be effective or in U.S. interests.

The essentla.l contradict-ion in American policy toward Libya thus remains: whlle fingering Qa.ddafi as a major threat , and even after s'hooting down two Ll·bya.n planes last summer, the United states continues to spend b1llions of dollars to buy Qa.ddafi's on. Although current U.S. imports are down substantially from last year, officials empha..."tize that this is due to price, other economic factors and the general on glut, rather than to any political decisions here.

The oil revenues not only help finance the kinds of Libyan activities this administra-

tion regards as dangerous, but some of the money also undoubtedly finds its way to the Soviet Union, which needs dollars to finance purchases from the West, because Qaddafi buys lots of Soviet weapons with U.S. currency.

Last month, the chairman o1' the senate Foreign Relations Committee, Charles H. Percy (R-Ill.}, called on the president to oonduot a review "of concrete steps the United States could take, individually and in concert with its allies, to bring economic and political pressure on Libya."

Sources say the options under study range from a U.S. boycott of Libyan oil to more rhetoric. In between, sources say, are such things as a ban on export of spare parts for American-owned oil fac111ties in Libya, a declaration that U.S. passports are not valid for travel to Libya and a more concerted effort to foroe the withdrawal of some 2,000 Americans st111 working for U.S. energy firms and living in Libya. These workers are the key to effective operation of the oil fac111ties in Libya.

Officials say there are drawbacks to an of these and other possib111ties and that the fact that there is a review doesn't mean there wm be a decision to act. "I would have to say that as of this moment, we have not found the formula for an effective economic program," the director of State's office of North African affairs, Robert Flaten, told a congressional committee last week.

Interviews with officials involved with the review suggest that three main points of view predominate.

One is the view espoused by Reagan and Meese, which is that a boycott "would have to be worldwide" for it to work. "No one country could affect them [the Libyans] by having a boycott," Reagan said last month after former president Nixon proposed an economic boycott. Continuing to buy the on also "involves a particular balance of interests" for this country, Meese added.

In this view, Libya could find plenty or other buyers for its oll in Europe and Asia. Indeed, officials say that sounding out American allies privately has clearly indicated there would be little or no support for joining any U.S.-led boycott of Libyan oil. Aside from their need for oil and good relations throughout the Arab world, the Europeans reportedly have said that using on as a weapon is a bad precedent, one that the United States objected to after the ·1973 Arab-Israeli war and that was onposed by Europeans in the Iran crisis of 1980.

Many Europeans, officials here report, "also feel that we are too hung up on Qaddafi and make too much out of him." That view is echoed by some U.S. officials and constitutes a second line of argument.

"Is Qaddafi worse than the Soviet Union?" one official asks. "The Soviet Union Is a real threat to the survival of the United States and we trade with them. Qaddafi is just a pain in the butt, especially to his neighbors. He is no mmtary threat but rather a threat to subvert neighbors."

In a way, he said, public attention to Qaddafi by the Reagan administration may have gotten "out of hand. where he becomes a symbol, like El Salvador, of everything evll . So a lot of neople would argue that we have vastly o"erblown Qaddafi as a person and as a threat."

Manv soecialists say that at the mowent, the United States clearly could get along without Libyan oll, though the situation could change if Saudi Arabian production continues to oecJlne. Some arg-ue that if necessary the United States could eventually buy mol'e oil. from Ni,.,e'~'ll\, a fl' 1endly conntry that ls having trouble sell1ng ita high-m1aJ1ty cru<'~e . They acknowledge, however, that switching suppliers ls not as easy as it sounds.

November 10, 1981 CONGRESSIONAL RECORD-SENATE 27123 Nevertheless, in the third view it is a

sham !or the United States to condemn Qaddaft veroally witnout taking oven ;,auctions against him, such as an oil boyco~t. even if they are inefficient or hurt American business or energy interests. ln this view, it would also improve the image or American backbone among important African and Middle East opponents of Qaddafi in Egypt, Saudi Arabia, Sudan and several other African neighbors.

THINKING ABOUT LIBYA

Libya's Col. Qa.cidafi seems to have decided to remove the tnousa.nas oi troops ne nau ordered into Chau, on 0.1s soutnern boraer, last year. lt is a.i.wa3s risKy to specul.ate on what moves this curious figure. ln re..:ent months, however, the United o::.tates has been escalating its expressions oi concern over hiS international banditry. French President Mitterrand bad devised a new diplomatic plan, holding out to Chad's president an alternative to dependence on Libya and encouraging other African states to expedite the dispatch of a peace-keeping force. The Libyan decision is neither !uily consummated nor irreversible. In the best of circumstances, Chad will be left with the internal tensions that opened the way to Libya's intervention 1n the first place. For now, however, the specter of a muscular fundamentalist Iglamic movement marching across black Africa appears to be suspended.

How dangerous is Col. Qaddafi? One school of thought holds that he is an overcompensating anti-imperialist capable only of an occasional assassination and that the West simply gives him ideas and advertises its own impotence by thinking he can do much more. But this is a patronizing and misleading view. His oil wealth, his Soviet connection, his !eel for Arab and Islamic currents and his tactical boldness have made him a menace out of all proportion to his nation's underdevelopment and small size. Of the different countries that the Reagan administration has identified as villains on the international scene, none has established itself in that role more convincingly on its own. That is what is satisfying-if it sticksabout the latest development in respect to Chad. Other nations, acting on their own judgment of Col. Qaddafi, sought .to neutralize him in tha,t corner at least.

One measure of his administration's concern is that it is now reported to have offered Egypt a m111tary shield against the Soviet Union in the event that Egypt attacks Libya. This is o.n extraordinary offer, not least because it appears to delegate to another country the power to commit the United States to war. Fortunately, there are less risky and more defensible things the United States might do. One would be to cut back American purchases of oil from Libya, a development that market conditions currently fac111tate. A second would be to call home the 2.000 Americans working in Lihva whom Col. Qaddafi uses as a Jrind of shleld. A third would be to find an effect.fve way to remove the 11nf!erlng and damag-ln~ snsnlclon that the ex-CIA men who nave been hel"'fng hfm murder his enemies and condnct subversion still have some subterranean connection to the CIA.e

CHILEAN ECONOMITCS • Mr. EAST. Mr. President, in the continuing controversy over "Reaganomics," there has been comparatively little attention paid to the arrrlication of the principles of free market economics in other countries or to the disastrous consequences of abandonin~ t.he free market. One of the success storiPS of our time in this respect is the example of Chile under the government of General Pinochet. AI-

though Chile is governed by an authoritarian and undemocratic regime, it has made remar~able econom1c recovery since 197~. when the Marxist experiments of Salvador Allende were overthrown.

My good friend and supporter, Mr. John W. Thomas, Jr., or High Point, N.C., ha.s brought to my attention an article on "Chile's Brave New World of Reaganomics" by Peter Dworkin trom the November 2, 1981, issue of Fortune magazine. Mr. Thomas, who is president of Thomasbuilt Buses, Inc., one of North Carolina's most successful businesses, is deeply knowledgeable in the principles Of the free market as well as in their application, and his practical experience and observations of the world in his traveLs give him considerable authority in economic, political, and business affairs.

Mr. Dworkin's article points out that under Allende's collectivist policies, Chile suffered from an inflation rate of 600 percent; today, due to the adherence to free market principles, the in:tlation rate is about 12 percent. Budget deficits under Allende were 23 percent of the GNP; today, the budget has a surplus and the GNP itself has grown by an annual average of 8 t:ercent tor the last 4 years.

This remarkable economic progress has been due to the policies of Chilean Finance Minister Segio de Castro, a University of Chicago trained economist and a student of Nobel Prize winner Milton Friedman. Minister de Castro has employed many University of Chicago trained economists in the Chilean Government.

While Chile's authoritarian Government should not be emulated, the United States can still learn an important lesson from the failures of Allende's socialism and the astounding success of the application of free market economics under the Pinochet government.

I am indebted to Mr. Thomas for bringing Mr. Dworkin's article to my attention. I commend the article to my colleagues, and I ask that it be reprinted in the CONGRESSIONAL RECORD.

The article follows: CHILE'S BRAVE NEW WORLD OF REAGANOMICS

(By Peter Dworkin) Any country that knocks down its infla

tion rate from high triple digits to the low teens is bound to attract attention. And because Chile did it with a mix of budget cuts, tax changes, and free-market doctrine that looks a lot like Reaganomics, the Administration's boosters are pointing to Chile as proof that the Reagan economic program ls sound and wlll really work.

Certainly Chile's turnaround since 1973 is impressive. From the economic wreckage of Salvador Allende's Marxist regime, when inflation topped 600 percent and the deficits reached 23.6 percent of GNP (equivalent to a. U.S. deficit of $630 billion), Chile's military junta has fashioned a rela-tively healthy economy. Inflation is down to about 12 percent, and the budget has a surplus. For the past four years, GNP has grown an average of 8 percent annually. Though the government still controls big industries like copper mining, steel, and electric utilities, nearly all of the 500 com:>anie.s nationalized by Allende have been returned to private ownership. Most tariffs, once averaging 105 percent, are down to 10 percent and trade 1s fiourlsh1ng.

The results are strikingly visible in Santiago. Gllttering, luxury-filled shops rival the oest ot Houston or Los Angeles. With trade barriers down, shiny new Japt.nese cars have large.y replaced the elderly gas-eating Chevrolet Novas and Ford F'al.cons that once plied the streets. Though the gap between rich and poor seems not to have narrowed, the junta has sharply reduced the country's infant mortality ra~e. once e. scandalous 65 per 1,000. Milton Friedman, who made a celebrated, advice giving lecture tour of Chile in 19'79 calls the recovery "comparable to the economic miracle of postwar Germany. Arthur Laffer sees t~e country e.s nothing less than a showcase of what the supply-side ideas can do.

That may be too much praise. Even the Chilea.ns are careful not to make extravagant claims about what their program might accomplish wmewhere else. And Chile may not be the most suitable laboratory in which to test ideas for the huge and diverse U.S. economy. It has a budget about the size of New York City's, and its population of 11 million is remarkably homo&eneous.

l\tloreo .-er, in Chile the market's invisible hand Ls an iron fist. The junta, led by General Augusto Pinochet, rules by fiat backed up by Chile's goose-ste.Jping army. (Chile long ago patterned its land forces on the Prussian model.) Freedom of speech is restricted, industry-wide strikes are outlawed, and police with machine guns keep order in Santiago. Unemployment hovers around 15 percent, which is surely an unacceptable level for any democracy.

Still, there are some lessons t.o be learned from Chile. Neighboring Argentina has demonstrated that an authoritarian regime can mess up its economy as thoroughly as can a. democratic government. And Chile's strategy is especially intriguing because it was cru.fted and executed by · the CHEE-ca-go Boys, a close-knit group of Chilean economists led by Finance Minister Sergio de Castro, 51, who learned free-market theories at the University of Chicago.

Chile got into its fix in the first place by spending more on social programs than it could afford. Through the 1950s and 1960s, a succe.ssion of democratic civilian governments was slowly turning Chile into a welfare state. But the rickety economy, with its dependence on copper exports and welter of tariffs and price controls, could not keep up with the rising social expectations. In 1970 Allende was elected on a Marxist platform pledging, among other goodies, rapid and ·Strong economic growth.

Allende pushed so hard on the economic throttle that it broke. OVersized wage increases fed spiraling prices. When world copper prices fell and foreign lenders fled, he ran the printing presses at the treasury to cover the soaring fiscal deficit. Everything except striltes was in short supply. Housewives desiJerate over bare shelves in Santiago food stores took to the streets slamming pots-political theater Chileans remember as the March of the Casseroles. In September 1973. a.s air-force rockets slammed into the presidential palace, the military took over. Allende, refusing to surrender, died in his office-a murdered martyr to his supporters, a suicide accordlng to the generals.

THE GENERAL HITS THE BOOKS

Pinochet, 65, the cautious and nonpolitical army chief appointed by Allende, had been the last of the brass to back the coup. But when the smoke cleared, he was on top. Educated at Chile's military academy, Pinochet app:uently knew how to run a junta, but he didn't know much about the economy. According to one story, the general ordered up a copy of Paul Samuelson's famous economics text and spent more than a year plowing through it--as the indicators barely budged.

27124 CONGRESSIONAL RECORD-SENATE November 10, 1981 The generals and moderate free-market

economists Pinochet appointed to the top economic jobs quickly abolished most price controls, but they only gradually reduced spending. The slow approach didn't work, and by the end of Pinochet's first year, inflation raged at 369 percent annually and the red ink stm gushed.

Meanwhile the Chicago Boys kept hammering away for deep and immediate budget cuts. De Castro, who had once been the economics dean at Santiago's Catholic University, spent the Allende years drafting an economic recovery plan that formed the basis of what he has since accomplished. Shortly after the coup, De Castro joined the mmtary government as ,a senior adviser in the Ministry of Economics. Many of his associates followed, and soon a dozen Chicago Boys were spread through various government agencies. They finally moved to the forefront early in 1975, but only because a collapse in copper prices SEI.ddled Chile with a balance-of-payments crisis. Drained of foreign reserves, the economy faced a billion-dollar import bill lt couldn't pay. The only option, the Chicago disciples convinced Pinoohet, was to go cold turkey. In distress, the general agreed:

De Castro was promoted to minister of economics and, along with Jorge cauas, 47, the finance minister at the time, began to fashion the rescue operation. (Cauas, a former World Bank staffer, departed the next year to be ambassador to Washington a,nd De Castro took his title.) It was at this point that De Castro's old professor, Milton Friedman, showed up in Santiago, the guest of a group of Chilean businessmen. Along with University of Chicago Professor Arnold Harberger, longtime friend and mentor of De Castro and many of the other Chicago Boys, Friedman spent a week in Chile recommending economic shock treatments on the budget. The prof's message was carried on TV; and Friedman even trooped over to Pinocbet's offi.ce to give the general a one-hour course in monetary theory.

Though the visit has become part of the Friedman folklore-he saved Chile in a week-the Chileans are at some pains to point out that the government had already decided to move. Still, the Chicago Boys realized that the Friedman-Harberger road show was good public relations for the drastic steps they were about to take. With the country thus softened up, they swung a budgetary ax that would have delighted David Stockman. They cut spending by 25 percent across the board, pruned the public-sector payroll, and either sold off sta,te enterprises or ourtailed their access to the treasury. Within the year, except for payments on the go·,rernment debt, the budget showed a surplus.

But as they slashed spending, the Chileans departed from Reaganomics-at least initially-in one important way: they raised taxes. Rates on personal income went up by 20 percent over two years. They also put in a 20 percent value-added tax and appointed a tough taxman to collar cheaterS'.

It wasn't until the budget began to come into balance in 1977 that De Castro started cutting taxes. And it is this phase of tax reform that Laffer focuses on as his supplyside litmus test. Personal exemptionS' were raised to the point that two-thirds of the wage earners pay no income taxes. Brackets were widened for all except the wealthiest.

The Chicago Boys shrug off Laffer's contention that the cuts were a major cause of the recovery, and the jury is sun out on the effect of the tax cuts on savings. Are the Chileans supply-siders? Says Arnold Har

berger, "What they've done are the things wise old men at the World Bank and the IMF have been saying for 25 years."

In managing the money supply, the Chicago Boys did not go nearly as far aS' Friedman had taught in the Fifties or suggested durillP, his 1975 visit. Friedman wanted Chile's money growth stopped in its tracks

within months. Harberger was a bit more moderate. He believed the annual expansion of money could gradually be slowed from about 260 rercent to 80 percent. Instead, the ChileanS' moved more cautiously. The nominal supply of money measured by M1 (cash and demand deposits) expanded at an average of 125 percent a year from 1975 on. The policymakers reasoned that Chileans had been hooked on inflation for so long that they would have to be weaned gradually. "We were careful to look at the monetary aguregates," recalls Jorge Cauas. "But it would have been almost impossible to try to squeeze money further."

The bigger problem was the dire recession triggered by the Chicago shock treatment. The Chicago Boys foresaw-indeed, they sought-the contraction, but its severity and duration took them by surprise. The national output fell 15 percent in 1975 and wages slid to one-third below wr. at they had been in 1970. Unemployment went to 20 percent, and stuck within three points of that level for the next four years. A crash program put heads of large families on the public payroll. There were outbreakS' of mange and other infectious diseases. Beggars appeared on city streets, and the Catholic Church organized soup kitchens.

That painful reality was a sobering contrast to what had been promised. In 1975 Milton Friedman predicted that the unemployed would rapid!y find work. "You'd be surprised," he told a Santiago audience, "how fast people would be absorbed by a growing private-sector economy." The Chicagotrained president of the Central Bank predicted that inflation would fall from 343 percent that year to 10 percent by 1976. Inflation did drop-to 199 percent in 1976 and to 84 percent in 1977. The private sector, caught l?etween limp demand and high interest rates, came back very slowly. Only in 1978 did output regain its prerecession le~l.

In hindsight, it's clear that the shock treatment succeeded in bringing down inflation only by putting the country through a wringer. Harberger blames the worldwide recession of 1974-75 for causin~ a big part of the suffering. Ru:d.iger Dornbusch, an MIT economist who trained at Chicago, charges that the government could have alleviated the pain with a more generous aid program for the poor. Whatever the causes, certainly a democracy would demand more compassion and quicker results. Perhaps only an autocrat like Pinochet could clobber inflation with such a heavy hand.

BOATLOADS OF SUMMER FRUIT

Chile's new trade policy was at least as important to the recovery as budget cutting and tax reform. For years food and other basic prices were held down. Huge tariffs on manufactured imports kept prices of locally produced products high and consumption low. Tariffs and subsidies to industry increased employment but encouraged ineffi.ciency and poor quality. Bicycles enjoyed effective tariffs of 555 percent; texti'es got 492 percent. Consumers and taxpayers paid the freight.

Pinochet's professors substituted the freemarket theory of comparative advantage. Each nation, argued British economist David Ricardo 160 years ago, should make only those goods it can produce more cheaply than anyone else. One thing Chile could do was mine copper. But reliance on cop,per had long been troublewme for Chile, so De Castro sought new "comparative advantage" exports. Once the government stopped controllin~ food prices, farmers could export boat'oads of summer fruits and vegetables to winter markets in Europe and the Mideast, seizing the advanta~e that Chile's seasons are opposite what they ,are north of the equator. In total, nontraditional exports, including paper products and fish, have grown ninefold since 1973.

As tariffs toppled, Chileans with pesos in their pockets went on an import drunk, reveling for the first time in everything from microwave ovens to Chun King Chinese food. Finnish butter and American mayonnaise, among other products, are cheaper than the local stuff. Chileans joke that even the chickens come from Taiwan. But it's no laughing matter: local manufacturers must compete with imports on price and quality or die.

Stripped of their tariffs, small companies in textiles, electronics, and metalworking did die. But a surprising number of other firms managed to adjust. An old refrigerator company now makes bicycles. The owners of an electronics firm shut it down and are now growing fruit, much of it for export. ~orne tex'ile hou=:es survive as importers.

The shi!t of resources to the private sector rewarded the swift and the strong. "People with a little luck and knowledge Blbout the free market became kings," says Larry Sjaastad, an economist at Chicago who visits Chile frequently.

A good example of a new king is Javiar Vial, 47, the stocky chairman of the $1.3-blllion BHC Group, among Chile's largest conglomerates. Ordinary Ohileans call Vial and a few of his rivals "piranhas," an endearment roughly equivalent to "robber barons." Vial's 40-odd holdings include one-quarter of Chile's largest bank, the biggest lumber and home-appliance companies, as well as mines, metal-processing plants, and a fishing fleet.

Vial amassed large chunks of his empire by borrowing abroad and gobbling up the nationalized com?anies the government wanted to peddle. The Chicago Boys were in a hurry to sell the mostly money-losing firms, but there were few takers. With real interest rates at 65 percent in 1976, most Ohilean companies could not raise the cash. Even the few that did have access to cheap foreign credit were too timid to move. "When the rules of the game changed, many people didn't," says Vial, sipping Chilean wine in the private dining room of his ornate 19th-century bank headquarters. Vial estimates the assets he acquired from the government about six years ago are now worth eight times what he paid.

The latest wrinkle in Chile's free-enterprise revolution is a unique plan to save the bankrupt social-security system by turning it over to the private sector. People now entering the work force must enroll in a private fund (more than a dozen have been approved since the plan began last May), and older workers have five years to ditch the public program. Employees must pay 10 percent of their salaries into the fund of their. choice and can voluntarily contribute another 10 percent, both tax free. New wage increases offset the cost to the worker, who can change funds every 30 days, chasing the best returns.

THE WHITE HOUSE MADE :INQUmms

Jose Pifiera, 32, the ebullient Harvard trained economist who created the new system, believes it is foolproof. If a fund's performance falls 7 percent below the industry average for one year, the company that manages it must make up the difference with its own capital. The manager would go broke before the fund could fall. Pifiera savs. and iust in case, the government guarantees a minimum pension. The idea is more radical than anything the Administration or Congress has orouosed to save our failing Social Security system, but the Chileans say they have had discreet inquiries from the White House.

The social-security innovation is part of a broader effort to create a "nonsoclalist social policy," as Pifiera puts it. The idea is for the marketnlace to provide services like pension benefits, health care, and higher ertuca.tion for a profit while a safety net of public orograms catches the needy.

Sketchy evidence suggests that while those

November 10, 1981 CONGRESSIONAL RECORD-SENATE 27125 in the lowest category have had modest increases in social services, the average level of services has deteriorated. Though the government denies it, Catholic charity workers claim that the incidence of diseases like typhoid that flourish in poor neighborhoods has doubled. Per capita social spending is down 10 percent from a decade ago.

The persistence of high unemployment takes a bit more of the shine off the Chicago experiment. "To me it's a puzzle," confides Arnold Harberger. The government is trying to nudge the marketplace: This summer it a-bolished th!) $154: m :m rhly minimum wage ror workers under 21 and over 65 to make youngsters and the aged more employabl~

LESSONS FROM ORTHODOXY

The big question is whether Chile can sustain its impressive growth. Claremont Economics Institute predi0ts output will expand only 4 percent to 5 percent this year and next, barely half the rate of the late Seventies. In the first half of the year imports dwarfed exports, as the country's con· sumer-goods craze continued and the price of copper and other exports faltered. Payments on $13 billion in foreign debt, for Chile's size one of the hignest in the world, are increasing rapidly.

For his part, De Castro is willlng to sacrifice immediate growth to keep infiation down. Since June 1979, when infiation was stuck around 40 percent a year, he has kept the rate of exchange firm at 39 pesos to the dollar. That way, the low prices of foreign goods would squash domestic prices. The gambit worked. But the overvalued exchange rate favors imports and punishes exporters who cannot recover rising costs. De Castro is now betting that local and international inflation will converge.

What can we learn from Chile's experiment in economic orthodoxy? First, if a small undeveloped country can live by the theory of competitive advantage, then surely our infinitely more resourceful economy can-without Import quotas or auto-company bailouts. Second, Chlla teaches that in controlling infiatton neith~r money nor tax policy can substitute for sustained fiscal discipline. The U.S. economy should neither require the severity seen in Chlle nor exact the same pain to solve its problems. Milton Friedman. for examole. counsels gradualism not shock treatment. But the response time may be just as agonizingly long as it was in Chlle. Whether a democracy has enough staying power is a question only Ronald Reagan's Washington-an:! the passage of time-can answer.e

EDUCATION OF DAVID STOCKMAN

• Mr. HART. Mr. President, I ask that the attached article from the December 1981 Atlantic magazine entitled "The Education of David Stockman" be printed in the RECORD in full at this point. It is a fascinating story about what the Director of the Office of Management and Budget, Mr. Stockman, knew about "supply-side" economics, and when he knew it. For anyone who has had any doubts about either the darker philosophic underpinnings of the administration'<; economic proposals, or the faulty logic behind them. this article will prove extremely enlightening.

The article follows: THE EDUCATION OF DAVID STOCKMAN

(By William Greider) I. HOW THE WORLD WORKS

Generally, he had r• time for idle sentim.,ntallty, but David A. Stockman indulged himself for a moment as he and I approached the farmhouse in western Michigan

where Stockman was reared. With feeling, he described a youthful world of hard work, variety, and manageable challenges. "It's something that's disappearing now, the working family farm," Stockman observed. "We had a little of everything-an acre of strawberries, an acre of peaches, a field of corn, fifteen cows. We did everything."

A light snow had fallen the day before, dusting the fields and orchards with white, which softened the dour outline of the Stockman brick farmhouse. It was built seventy years ago by Stockman's maternal grandfather, who also planted the silver birches that ring the house. He was county treasurer of Berrien County for twenty years, and his reputation in local politics was an asset for his grandson.

The farm has changed since Stockman's boyhood; it is more specialized. The brightred outbuildings behind the house include a wooden barn where 11 vestock was once kept, a chicken coop also no longer in use, a garage, and a large metal-sided building, where the heavy equipment--in particular, a mechanical grape picker-is stored. Grapes are now the principal crop that Allen Stockman, David's father, produces. He earns additional income by leasing out the grape picker. The farm is a small but authentic example of the entrepreneurial capitalism that David Stockman so admires.

As the car approached the house, Stockman's attention was diverted by a minor anomaly in the idyllic rural landscape: two tennis courts. They seemed out of place, alone, amidst the snow-covered fields at an intersection next to the Stockman farm. Stockman hastened to explain that, despite appearances, these were not his family's private tennis courts. They belonged to the township. Royalton Township (of which AI Stockman was treasurer) had received, like all other local units of government, its portion of the federal revenue-sharing funds, and this was how the trustees had decided to spend part of the money from Washington. "It's an right, I suppose," Stockman said amiably, "but these people would never have taxed themselves to build that. Not these tight-fisted taxpayers! As long as someone is giving them the money, sure, they are willing to spend it. But they would never have used their own money."

Stockman's contempt was directed not at the local cl tizens who had spent the money but at the people in washington who had sent it. And soon he would be in a position to do something about them. This winter weekend was a final brief holiday with his parents; in a few weeks he would become director of the Office of Management and Budget in the new administration in Washington. Technically, Stockman was still the U.S. congressman from Michigan's Fourth District, but his mind and exceptional energy were already concentrated on running OMB, a small but awesomely complicated power center in the federal government, through which a President attempts to monitor all of the other federal bureaucracies.

Stockman carried with him a big black binder enclosing a "Current Services Budge·t," which listed every federal program and its current cost projections. He hoped to memorize the names of 500 to 1,000 program titles and major accounts by the time he was sworn in-an objective that seemed reasonable to him, since he already knew many of the budget details. During four years in Congress, Stockman had made himself a leading conservative gadfly, attacking Democratic budgets and proposing leaner alternatives. Now the President-elect was inviting him to do the same thing from wl!ihin. Stockman had lobbied for the OMB job and was probably better orepared for it despite his youthfulness, than most of his predecessors.

He was thirty-four years old and looked yo11nger. His shaggy hair was streaked with

gray, and yet he seemed like a gawky collegian, with unstylish glasses and a prominent Adam's apple. In the corridors of the Capitol, where all ambitious staff aides scurried about in serious blue suits, Representative Stockman wore the same uniform, and was frequently mistaken for one of them.

Inside the farmhouse, the family greetings were casual and restrained. His parents and his brothers and in-laws did not seem overly impressed by the prospect that the eldest son would soon occupy one of the most powerful positions of government.

Opening presents in the cluttered living room, watching the holiday football games on television, the Stockmans seemed a friendly, restrained, classic Protestant farm family of the Middle West, conservative and striving. As sometimes happens in those fam111es, however, the energy and ambition seemed to have been concentrated disproportionately in one child, David, perhaps at the expense of the others. His mother, Carol, a big-boned woman with metallic blond hair, was the family organizer, an active committee member in local Republican politics, and the one who made David work for A's in school. In political debate, David Stockman was capable of dazzling opponents with words; his brothers seemed shy and taciturn in his presence. One brother worked as a county corrections officer in Michigan. Another, after looking on Capitol Hill, found a job in an employment agency. A third, who had that distant look of a sixties child grown older, did day labor, odd jobs. His .sister was trained as an educator and worked as a consultant to manpower-training programs in Missouri that were financed by the federal government. "She believes in what she's doing and I don't quarrel with it," Stockman said. "Basically, there are gobs of this money out there. CETA grants have to do evaluation and career planning and so forth. What does it amount to? Somebody rents a room in a Marriott Hotel somewhere and my sister comes in and talks to them. I think Marriott may get more out of it than anyone else. That's part of what we're trying to get at, and it's layered all over the government."

While David Stockman would speak passionately against the government in Washington and its self-aggrandizing habits, there was this small irony about his siblings and himself: most of them worked for government in one way or another-protected from the dynamic risk-taking of the private economy. Stockman himself had never had any employer other than the federal government, but the adventure in his career lay in challenging it. Or, more precisely, in challenging the "permanent government" that modern liberalism had spawned.

By that phrase, Stockman and other conservatives meant not only the layers and layers of federal bureaucrats and liberal politicians who sustained open-ended growth of the central government but also the less visible infrastructure of private interests that fed off of it and prospered-the law firms and lobbyists and trade associations in rows of shining office buildings along K Street in Washington; the consulting firms and contractors; the constituencies of special interests, from school teachers to construction workers to failing businesses and multinational giants, an of whom came to Wa.shington for money and for legal protection against the perils of free competition.

While ideology would guide Stockman in his new job, he would be confronted with a large and tan"'ible political problem: how to resolve the three-sided dilemma created by Ronald Reagan's contradictory campaign promises. In private, Stockman agreed that his former congressional mentor, John Anderson, running as an independent candidate for President in 1980, had asked the right question: How is it possible to raise d~fense spending, cut income taxes, and balance the budget, all at the same time? Anderson had

taunted Reagan with that question, again and again, and most conventional political thinkers, from orthodox Republican to Keynesian liberal , agreed with Anderson that It could not be done .

But Stockman was confident, even cocky, that he and some of his fellow conservatives had the answer . It was a theory of economics-the supply-side theory- that promised an end to the twin aggravations of the 1970s : high inflation and stagnant growth in America's productivity. "We've got to figure out a way to make John Anderson 's question fit into a plausible policy path over the next three years," Stockman said. "Actually, it Isn 't all that hard to do."

The supply-side approach, which Stockman had only lately embraced, assumed, first of all, that dramatic action by the new President, especially the commitment to a threeyear reduction of the income tax. coupled with tight monetary control, would signal investors that a new era was dawning, that the growth of government would be displaced by the robust growth of the private sector. If economic behavior i n a climate of high inflation is primarily based on expectations about the future value of money, then swift and dramatic action by the President could reverse the gloomy assumptions in the disordered financial markets. As inflation abated, i nterest rates dropped, and productive employment grew, those marketplace developments would, in turn, help Stockman balance the federal budget.

"The whole thing is premised on faith, " Stockman explained. "On a belief about how the world works." As he prepared the script in his mind, his natural optimism led to bullish forecasts , which were even more robust than the Reagan Administration 's public promises. "The inflation premium melts away like the morning mist," Stockman predicted. "It could be cut in half in a very short period of time if the policy is credible. That sets off adjustments and changes in perception that cascade through the economy. You have a bull market in '81 , after April, of historic proportions."

How the world works.-It was a favorite phrase of Stockman's frequently invoked in conversation to indicate a coherent view of things, an ideology that was whole and consistent. Stockman took ideology seriously, and this distinguished him from other bright, ambitious politicians who were content to deal with public questions one at a time without imposing a consistent philosophical framework upon them.

In 1964, when he went off to Michigan State, having played quarterback in high school and participated in Future Farmers of America, Stockman assumed that he would be a farmer like his father . His political views were orthodox Republican, derived from his mother. and from his reading of The Conscience of a Conservative, by Senator Barry Goldwater. "In my first three months, I went through an absolute clash of cultures," Stockman recalls. "My first professor was an atheist and socialist from Brooklyn, and within three months I think he destroyed everything I believed in, from God to the flag . When the Vietnam War became the focus of campus radicalism, Stockman became a leader, and read Herbert Marcuse, C. Wright Mills, and Paul Goodman's critiques of American society. "I became a radical, not in the hard-core sense but in the more casual sense that nearly everybody was on campus in those days. Naturally, as a good Methodist, I looked for the Methodist youth center, which became the anti-war center, because that was the socially conscious thing to do. I was still enough of a farm boy to. believe that revolution was God's work."

After graduation he, enrolled at Harvard Divinity School thinking he might become a great moral philosopher in the tradition of

Christian social activists. (He was perhaps also thinking, like so many other students of the time, that divinity school would extend his deferment from the draft. ) At Michigan State, he had dropped the study of agriculture and moved into the humanities. At Harvard, he dropped theology and moved into the social sciences (though he never received training as an economist), "I guess I always had a strong intellectual bent, so I neede:l a strong theory of how the world worked."

When he found the divinity courses uninspiring, he be~an taking political science and history- studying under neo-conservatives such as James Q. Wilson Nathan Glazer, and Daniel Patrick Moynihan-and discovered, he said, "that it was possible to have a sophisticated view of the world without being a Marxist ." In a Harvard seminar, he made a connection with John Anderson, who was looking for a bright young idea man to help prepare issues for the House Republican Conference, which Anderson chaired. The Illinois congressman was moving gradually leftward in his views; Stockman was continuing his intellectual search in the opposite direction.

Stockman 's congressional district was composed of small towns and countryside, a world that worked quite well without Washington, in his view. After dinner at the farm that day, we took a driving tour of the area. The government's good works were everywhere-a new sewer system in Bridgman, a modern municipal building in Stevensvillebut Stockman belittled them as "pork barrel." Stockman's district was overwhelmingly rural and Republican, but he saw it as a fair representation of America.

Indeed, as a congressman, Stockman himself had worked hard to make certain that his Fourth District constituent s exploited the system. His office maintained a computerized alert system for grants and loans from t he myriad agencies, to make certain that no opportunities were missed. " I went around and cut all the ribbons and they never knew I voted against the damn programs," he said .

Still, more than most other politicians, Stockman was known for standing by his ideological principles, not undermining them. When Congress voted its bail-out financing to rescue Chrysler from bankruptcy, Stockman was the only Michigan representative to oppose it, even though a large town in his district St. Joseph, would be hurt. The town's largest employer, St. Joe's Auto Specialties, was a Chrysler supplier, and its factory was laying off workers. Its owners were among Stockman's earliest and largest contributors when he first ran for Congress, in 1976. Still, he opposed the bail out. "Some of them were a little miffed at me and others applauded. I only had one or two argue strenuously with me. They're probably more derogatory behind my back."

Stockman felt protected from local pressures, in a way that most members of Congress do not-partly by the Republicanism of the district but also by the consistency of his ideology. Since he had a clear, strong view of what government ought and ought not to do, he found it easier to resist claims that seemed illegitimate, no matter who their sponsors might be. "Too many politicians are intimidated by the squeaking wheel, in my judgment. Regardless of their ideological viewpoint, they're able to incorporate the squeaking wheel into their general position. If the proposal is pro-business, they call it conservative. If they're from Nebraska, it 's pro-farmer. It's whatever serves the constituencies."

This was the core of his complaint against the modern liberalism launched by Franklin Roosevelt's New Deal. He did not quarrel with the need for basic social-welfare programs, such as unemployment insurance or

Social Security; he agreed that the government must regulate private enterprise to protect general health and safety. But liberal politics in its later stages had lost the ability to judge claims, and so yielded to all of them, Stockman thought, creating what he describes as "constituency-based choice-making," which could no longer address larger national interests, including fiscal control. As Stockman saw it, this process did not ameliorate social inequities; it created new ones by yielding to powerful interest groups at the expense of everyone else. "What happens is the politicization of the society. All decisions flow to the center. Once we decide to allocate credit to certain activities-and we're doing that on a massive scale-or to allocate the capital for energy development, the levels of competency and morality fall . Then the outcomes in society begin to look more and more like the work of brute muscle. The other thing it does is destroy ideas. Once things are allocated by political muscle, by regional claims, there are no longer ideabased agendas. "

Across the river from St. Joe 's, Stockman drove through the deserted Main Street of Benton Harbor, his favorite example of failed liberalism. Once it had been a prosperous commercial center but now most of its stores and buildings were boarded up and vacant except for an occasional storefront church or social-service agency. As highways and suburban shopping centers pulled away commerce, the downtown collapsed, whites moved, and the city became predominantly black and overwhelmingly poor. The federal government's various efforts to revive Benton Harbor had quite visibly failed.

"When you have powerful underlying demographic and economic forces at work, federal intervention efforts designed to reverse the tide turn out to have rather anemic effects," Stockman said, surveying the dil<apidated storefronts. "I wouldn't be surprised if $100 million had been spent here in the last twenty years. Urban renewal, CETA. model cities, they've had everything. And the results? No impact whatever."

The drastic failure seemed to please him, for it confirmed his view of how the world works. As budget director, he intended to p!'oceed against many of the programs that fed money to the poor blacks of Benton Harbor, morally confident because he knew from personal observation that the federal revitalization money did not deliver what such programs promised. But he would also go after the Economic Development Administration (EDA) grants for the comfortable towns and the Farmers Home Administration loans for communities that could pay for their own sewers and the subsidized credit for farmers and business-the federal guarantees for economic interests that ought to take their own rislcs. He was confident of his theory, because, in terms of the Michigan countryside where he grew up, he saw it as equitable and fundamentally moral.

"We are interested in curtailing weak claims rather than weak clients," he promised. "The fear of the liberal remnant is that we will only attack weak clients. We have to show that we are willing to attack powerful clients with weak claims. I think that's critical to our success-both political and economic success."

II. A RADICAL IN POWER

Three weeks before the inauguration, Stockman and his transition team of a dozen or so people were already established at the OMB office in the Old Executive Office Building. When his appointment as budget director first seemed likely he had agreed to meet with me from time to time and relate, off the record, his private account of the great political struggle ahead. The particulars of these conversations were not to be reported until later, after the season's battles were over, but

November 10, 1981 CONGRESSIONAL RECORD-SENATE 27127 a cynic familiar with how Washington works woul:l understand that the arrangement had obvious symbiotic value. As an assistant managing editor at The Washington Post, I benefited from an informed view of policy discussions of the new administration; Stockman, a student of history, was contributing to history's record and perhaps influ.encing its conclusions. For him, our meetings were another channel-among many he used-to the press. The older generation of orthodox Republicans distrusted the press; Stockman was one of the younger "new" conservatives who cultivated contacts with columnists and reporters, who saw the news media as another useful tool in political combat. "We believe our ideas have intellectual respectability, and we think the press will recognize that," he said. "The traditional Republicans probably sensed, even if they didn't know it, that their ideas lacked intellectual respectab1lity. "

In any case, for the eight months that followed, Stockman kept the agreement, and our regular conversations over breakfast at the Hay-Adams, provided the basis of the account that follows.

In early January, Stockman and his staff were assembling dozens of position papers on program reductions and stu::lying the internal forecasts for the federal budget and the national economy. The initial figures were frightening-"absolutely shocking," he confided-yet he seemed oddly exhilarated by the bad news, and was bubbling with new plans for coping with these horrendous numbers. An OMB computer, programmed as a model of the nation's economic behavior, was instructed to estimate the impact of Reagan's program on the federal budget. It predicted that if the new President went ahead with his promised three-year tax reduction and his increase in defense spending, the Reagan Administration would be faced with a series of federal deficits without precedent in peacetime-ranging from $82 billion in 1982 to $116 billion in 1984. Even Stockman blinked. If those were the numbers included in President Reagan 's first budget message, the following month , the financial markets that Stockman sought to reassure would instead be panicked. Interest rates, already high, would go higher; the expectation of long-term inflation would be confirmed.

Stockman saw opportunity in these shocking projections. "All the conventional estimates just wind up as mud," he said. "As absurdities. What they basically say, to boil it down is that the world doesn't work."

Stockman . set about doing two things. First. he changed the OMB computer. Assisted by like-minded supply-side economists, the new team discarded orthodox premises of how the economy would behave. Instead of a continuing double-digit inflation, the new computer model assumed a swift decline in prices and interest rates . Instea::I of the continuing pattern of slow economic growth, the new model was based on a dramatic surge in the nation's productivity. New investment, new jobs and growing profits-and Sto::kman's historic bullmarket. "It 's based on valid economic analysis," he said, "but it 's the inverse of the last four years. When we go public, this is going to set off a wide-open debate on how the economy works, a great battle over the conventional theories of economic performance."

The original apostles of supply-side. particularly Representative Jack Kemp, of New York, and the economist Arthur B. Laffer, dismissed budget-cutting as inconsequential to the economic problems, but Stockman was trying to fuse new theory and old. "Laffer sold us a bill of goods." he said, then corrected his words : "Laffer wasn't wrong-he didn't go far enough."

The great debate never quite took hold in the dimensions that Stockman had antici-

pated, but the Reagan Administration's economic projections did become the source of continuing controversy. In defense of their counter-theories, Stockman and his associates would argue, correctly, that conventional forecasts , particularly by the Council of Economic Advisers in the preceding administration, had been consistently wrong in the past. His critics would contend that the supply-side premises weer based upon wishful thinking, not sound economic analysis.

But, second, Stockman used the appalling deficit projections as a valuable talking point in the policy discussions that were under way with the President and his principal advisers . Nobody in that group was the least bit hesitant about cutting federal programs, but Reagan had campaigned on the vague and painless theme that eliminating "waste, fraud, and mismanagement" would be sufficient to balance the accounts. Now, as Stockman put it, "the idea is to try to get beyond the waste, fraud , and mismanagement modality and begin to confront the real dimensions of budget reduction." On the first We:lnesday in January, Stockman had two hours on the President-elect's schedule to describe the "dire shape" of the federal budget; for starters, the new administration would have to go for a budget reduction in the neighborhood of $40 billion. "Do you have any idea what $40 b1llion means?" he said. "It means I've got to cut the highway program. It means I've got to cut milk-price supports. And Social Security student benefits. And education and student loans. And manpower training and housing. It means I've got to shut down the synfuels program and a lot of other programs. The idea is to show the magnitude of the budget deficit and some suggestion of the political problems."

How much pain was the new President willing to impose? How many sacred cows would he challenge at once? Stockman was still feeling out the commitment at the White House, aware that Reagan 's philosophical commitment to shrinking the federal government would be weighed against political risks.

Stockman was impressed by the ease with which the President-elect accepted the broad objective: find $40 b1llion in cuts in a federal budget running well beyond $700 billion. But, despite the multitude of expenditures, the proliferation of programs and grants, Stockman knew the exercise was not as easy as it might sound.

Consider the budget in simple terms, as a federal dollar representing the entire $700 billion . The most important function of the federal government is ma111ng checks to citizens- Social Security checks to the elderly, pension checks to retired soldiers and civil servants, reimbursement checks for hospitals and doctors who provide medical care for the aged and the poor, welfare checks for the dependent, veterans checks to pensioners. Stwh disbursements consume forty-eight cents of the dollar .

Another twenty-five cents goes to the Pentagon, for national defense. Stockman knew that this share would be rising in the next four years , not shrinking, perhaps becoming as high as thirty cents. Another ten cents was consumed by interest payments on the national debt, which was fast approaching a tr1llion dollars.

That left seventeen cents for evrything else that Washington does. The FBI and the national parks, the county agents and the Foreign Service and the Weather Bureauall the traditional operations of government~onsumed only nine cents of the dollar. The remaining eight cents provided all of the grants to state and local governments, for aiding handicapped children or building highways or installing tents courts next to

AI Stockman's farm. One might denounce particular programs .as wasteful, as unnecessary and ineffective, even crazy, but David Stockman knew that he could not escape these basic dimensions ofc, federal spending.

As he and his staff went looking for the $40 billion, they found that most of it would have to be taken from the seventeen cents that covered government ope:mtions and grants-in-aid. Defense was already off-limits. Next Ronald Reagan laid down another condition for the budget-cutting: the main benefit programs of Social Security, Medicare, veterans' checks, railroad retirement pensions .. welfare for the disabled-the socalled "social safety net" that Reagan had promise:l not to touch-were to be exempt from the budget cuts. In effect, he was declaring that Stockman could not tamper with three fourths of the forty-eight cents devoted to transfer payments.

No President had balanced the budget in the past twelve years. Still, Stockman thought it could be done by 1984, if the Reagan Administration adhered to the principle of equity, cutting weak claims, not merely weak clients, and if it shocked the system sufficiently to create a new political climate. He still believed that it was not a question of numbers. "It boils down to a political question, not of budget policy or economic policy, QUt whether we can change the habits of the political system."

The struggle began in private, with Ronald Reagan 's Cabinet. By inaugural week, Stockman's staff had assembled fifty or sixty policy papers outlining major cuts and alterations, and, aiming at the target of $40 billion, Stockman was anxious to win fast approval for them, before the new Cabinet officers were fully familiar with their departments and prepared to defend their bureaucracies. During the first week, the new Cabinet members had to sit through David Stockman's recital-one proposal after another outlining drastic reductions in their programs. Brief discussion was followed by presidential approval. "I have a little nervousness about the heavy-hande ::l ness with which I am being forced to act," Stockman conceded. "It 's not that I wouldn 't want to give the decision papers to the Cabinet members ahead of time so they could look at them. it's just that we're getting them done at eight o'clock in the morning and rushing them to the Cabinet room .. . It doesn't work when you have to brace these Cabinet officers in front of the President with severe reductions in their agencies , because then they 're in the position of having to argue against the group line. And tne group line is cut, cut, cut. So that's a very awkward position for them, and you make them resentful very fast ."

Stockman proposed to White House counselor Edwin Meese an alternative approacha budget working group, in which each Cabinet secretary could review the proposed cuts and argue against them. As the group evolved, however , with Meese, chief of staff James Baker, Treasury Secretary Donald Regan, and policy director Martin Anderson, among others, it was stacked in Stockman's favor . "Each meeting will involve only the relevant Cabinet member and his aides with four or five strong keepers of the central agenda," Stockman explained at one point. "So on Monday, when we go into the decision on synfuels programs, it will be [Energy Secretary James B.] Edwards defending them against six guys saying that, by God, we've got to cut these back or were not going to have a savings program that w1ll add up ."

In general, the system worked. Stockman's agncy did in a few weeks what normally consumes months; the process was made easier because the normal opposition forces had no time to marshal either their argu-

ments or their constituents and because the President was fully in tune with Stockman. After the· budget working group reached a decision, it would be taken to Reagan in the form of a memorandum, on which he could regist er his approval by checking a little box. "Once he checks it," Stockman said, "I put that in my safe and I go ahea:l and I don't let it come back up again ."

The check marks were given to changes in twelve m~jor budget entitlements and scores of smaller ·ones. Eliminate Social Security minimum benefits. Cap the runaway costs of Medicaid. Tighten eligibility for food stamps. Merge the trade adjustment assistance for unemployed industrial workers with standard unemployment compensation and shrink it. Cut education aid by a quarter. Cut grants for the arts and humanities in half. "Zero out'' CETA and the Community Services Administration and National Consumer Cooperative Bank. And so forth. "Zero out" became a favorite phrase of Stockman's; it meant closing down a program "cold turkey, " in one budget year. Stockman believed that any compromise on a program that ought to be eliminated-funding that would phase it out over several years-was merely a political ruse to keep it alive, so it might still be in existence a few years hence, when a new political climate could allow its restoration to full funding.

"I just wish that there were more hours in the day or that we didn't have to do this so fast. I have these stacks of briefing books and I've got to make decisions about specific options .. . I don't have time, trying to put this whole package together in three weeks, so you just start making snap judgments."

In the private deliberations, Stockman began to encounter more resistance from Cabinet members. He was proposing to cut $752 million from the Export-Import Bank, which provides subsidized financing for international trade- a cut of crucial symbolic importance, because of Stockman's desire for equity. Two thirds of the Ex-Im's direct loans benefit some of America's major manufacturers-Boeing, Lockheed, General Electric, Westinghouse , McDonnell Douglas, Western Electric, Combustion Engineering-and, not surprisingly, the program had a strong Republican constituency on Capitol Hill. Stockman .thought the trade subsidies offended the free-market principles that all conservatives espouse-in particular, President Reagan's objective of withdrawing Washington from business decision-making. Supporters of the subsidies made a practical argument: the U.S. companies, big as they were, needed the financial subsidies to stay even against government-subsldlze:i competition from Europe and Japan.

The counter-offensive against the cut was led by Commerce Secretary Malcolm Baldrige and U.S. Trade Repre~entative William Brock, who argued eloquently before the budget working group for a partial restoration of Ex-Im funds. By Stockman's account, the two "fought, argued, pounded the table," and lthe meeting seemed headed for deadlock. "I sort of Innocently asked well isn't there a terrible political spin on' this; It's my impression that most of the money goes to a handful of big corporations. and if we are ever caught not cutting this while we:re biting deeply into the social programs, were going to have big problems." Stockman asked if anyone at the table had any relevarut data. Deputy Secretary of the Treasury Tim McNamar thereupon produced a list of Ex-1m's major beneficiaries (a list that Stockman had given him before the meeting). "So then I went into this demagogic tirade about how in the world can I cut food stamps and social services and CETA jobs and EDA jobs and you're going to tell me you can't give up one penny for Boeing?"

Stockman won that argument, for the moment. But, as with all the other issues in the budget debate, the argument was only beginning. "I've got to take something out of Boeing's hide to make this look right .. . You can measure me on this, because I'll probably lose but I'll give it a helluva fight."

Stockman also began what was to become a continuing Sltruggle, occasionally nasty, with the new secretary of energy. Edwards, a dentist from South Carolina, was ostensibly appointed to dismantle the Department of Energy, as Reagan had promised, but when Stockman proposed cutt1.ng the department in half, virtually eliminating the vast synthetic-fuels program launched by the Carter Administration, Edwards argued in defense. In the midst of the battle, Stockman said contemptuously, "I went over to DOE the other diay and here's a whole roomful of the same old bureaucra1:8 I've been kicking around for lthe last five years--advising Edwards on why we couldn't do certain things on oil decontrol that I wanted to do." The relationship did not improve as the two men got to know each other better.

But Stockman felt only sympathy for Secretary of Agriculture John Block. an Illlnois farmer. The budget cuts were hitting some of Agriculture's principal subsidy programs. A billion dollars would be cUlt from dairyprice supports. The Farmers Home Administration loans and grants were to be sharply curtailed. The low-interest financing for rural electric cooperatives and the Tennessee Valley Authority would be modified.

In the early weeks of the new adminLstraticn, the peanut growers and their congressional lobby had campaigned, as they did every year, to have the new secretary of agriculture raise the price-support level for peanuts. Stockman told Block he would have to refuse-for Stockman wanted to abolish the program. "I sympathize with Jack Block," Stockman said. "I forced him into a po~ition that makes his life miserable over there. He's on the central team, he's not a departmental player, but the parochial politics of that department are fierce." Victories over farm lobbies could be won, Stockman believed, if he kept the issues separate-attacking each commodity program in turn, and undermining urban support by cutting the food and nutrition programs. "My strategy is to come in with a farm bill that's unacceptable to the farm guys so that the whole thing begins t{) splinter." An early test vote on milk-price supports seemed to confirm the strategy-the dairy farmers lobbled and lost.

The only cabinet officer Stockman did not challenge was, of cour~e. the secretary of defense. In the frantic preparation of the Reagan budget message, delivered in broad outline to Congress on February 18, the OMB review officers did not give even their usual scrutiny to the new budget projections from Defense. Reagan had promised to increas:e military spending by 7 percent a year, adjusted for inflation, and this pledge translated into the biggest peacetime arms buildup in the history of the republic-$1.6 trillion over the next five years, which would more than double the Pentagon's annual budget while domestic spending was shrinking. Stockman acknowledged that OMB had taken only a cursory glance at the new defens:e budget, but he was confident that later on, when things settled down a bit, he could go back and analyze it more carefully.

Jn late February, months before the defense budget became a subject of Cabinet debate, Stockman privately predicted that Defense Secretary Ca!:'par Weinberger, himself a budget director during the Nixon years, would be an ally when he got around to cutting back military spending. ''As scon as we get past this first phase in the process, I'm really going to go after the Pentagon.

The whole question is blatant inefficiency, poor deployment of manpower, contracting idiocy, and, hell , I think that Cap's going to be a pretty good mark over there. He's not a tool of the military-industrial complex. I mean, he hasn 't been steeped in its excuses and rationalizations and ideology for twenty years, and I think that he 'll back off on a lot of this stuff, but you just can't challenge him head-on without your facts in line. And we ·re gcing to get our case in line and j'.l£t force it through the presses."

Stockman shared the general view of the Reagan Admlnistra tion that the United States needed a major build-up of its armed forces . Bu ·~ lJ.e also recognized that the Pentagon, as sole customer for weapons systems, subsidized the arms manufacturers in many direct ways and viola ted many freemarket principles. "The defense budgets in the out-years won't be nearly as high A.S we are showing now, in my judgment. Hell, I think there's a kind of swamp of $10 to S20 to $30 billion worth of waste that can b<' ferreted out if you really push hard."

Long before President Reagan's speech to Oongress, most of the painful details of the $41.4 billion in proposed reductions were already known to Capitol Hill and the public. In early February, preparing the political ground, Stockman started delivering his "black book" to Republican leaders and committee chairmen. He knew that once the information was circulating on the Hill, it would soon be available to the ne·ws media, and he was not at all upset by the deJ.ly storm of headllnes reveallng the dimensions of what lay ahead. The news conveyed, in its drama and quantity of detail, the appropriate political message: President Reagan would not be proposing business aa usual. The President had in mind what Stockman saw as "fiscal revolution."

But it was not generally understood that the new budget director had already lost a major component of his revolution-another set of proposals, which he called "Chapter II," that was not sent to Capitol Hill because the President had vetoed its most controversial elements.

Stockman had thought "Chapter II" would help him on two fronts: it woUld provide subsltantially increased revenues and thus help reduce the huge deficits of the next three years; but it would also mollify liberal critics complaining about the cuts in social welfare, because it was aimed primarily at tax e-xpenditures (popularly known as "loopholes") benefiting oil and other business interests. "We have a gap which we couldn't fill even with all these budget cuts, too big a deficit," Stockman explained. "Chapter II comes out totally on the opposite of the equity question. That was part of my strategy to force acquiescence at the last minute into a lot of things you'd never see a. Republican administration propose. I had a meeting this morning at the White House. The President wasn't involved, but all the other key senior people were. We brought a program of additional tax savings that don't touch any social progra.ms. But they touch tax expenditures." Stockman hesitated to discuss details, for the package was politically sensitive, but it included elimination of the oil-depletion allowance; an a,ttack on tax-exempt industrial-development bonds; user fees for owners of private airplanes and barges; a potential ceiling on home-mortgage deductions (which Stockman called a. "mansion cap," since it would affect only the wealthy); some defense reductions; and other items, ten in all. Total additional savings: somewhere in the neighborhood of $20 blllion. Stockman was proud of "Chapter II" and also very nervous about it, because, while liberal Democrats might applaud the closing of "loopholes" that they had attacked for years, powerful lobbies-in Congress and business-would mobilize against it.

November 10, 1981 CONGRESSIONAL RECORD-SENATE 27129 Did President Reagan approve? "If there's

a consensus on it, he's not going to buck it, probably."

Two weeks later, Stockman cheerfully explained that the President had rejected his "tax-exp.enditures" savings. The "Chapter II" issues had seemed crucial to Stockman when he was preparing them, but he dismissed them as inconsequential now that he had lost. "Those were tnore like ornaments I was thinking of on the tax side," he insisted. "I call them equity ornaments. They're not really too good. They're not essential to the economics of the thing."

The President was willing to propose user fees for aircraft, private boats, and barges, but turned down the proposal to eliminate the oil-depletion allowance. "The President has a very clear philosophy," Stockman explained. "A lot of people criticize him for being short on the details, but he knows when something's wrong. He just jumped all over my tax proposals."

Stockman dropped other proposals. Nevertheless, he was buoyant. The reactions from Capitol Hill were clamorous, as expected, but the budget director was more impressed by the silences, the stutter and hesitation of the myriad interest groups. Stockman was becoming a favorite caricature for newspaper cartoonists-the grim reaper of the Reagan Administration, the Republican Robespierre-but in his many sessions on the Hill he sensed confusion and caution on the other side.

"There are more and more guys coming around to our side," he reported. "What's happening is that the plan is so sweeping and it covers all the bases sufficiently, so that it's like a magnifying glass that reveals everybody's pores. . . . In the past, people could easily get votes for their projects or their interests by saying, well, if they would cut food stamps and CETA jobs and two or three other things, then maybe we would go along with it, but they are just picking on my program. But, now, everybody perceives that everbody's sacred cows are being cut. If that's what it takes, so be it. The parochial player wm not be the norm, I think. For a while."

lli. THE MAGIC ASTERISK

On Capitol Hill, ideological consistency is not a highly ranked virtue but its absence is useful grounds for scolding the opposition. David Stockman endured considerable needling when his budget appeared, revealing that many programs that he had opposed as a. congressman had survived. The most glaring was the fast-breeder nuclear reactor at Clinch River, Tennessee. Why hadn't Stockman cut the nuclear subsidy that he had so long criticized? The answer was Senator Howard Baker, of Tennessee, majority leader. "I didn't have to get rolled," Stockman said, "I just got out of the way. It just wasn't worth fighting. This package will go nowhere without Baker, and Clinch River is just life or death to Baker. A very poor reason, I know."

Consistency, he knew, was an important asset in the new environment. The package of budgets cuts would be swiftly picked apart if members of Congress perceived that they could save their pet programs, one by one, from the general reductions. "All those guys are looking for ways out," he said. "It they can detect an alleged pattern of preferential treatment for somebody else or discriminatory treatment between rural and urban interests or between farm interests and industrial interests, they can concoct a case for theirs."

Even by Washington standards, where overachieving young people with excessive adrenalin are commonplace, Stockman was busy. Back and forth, back and forth he went, from his vast office at the Old Executive Office Building, with its classic high ceilings and its fireplace, to the cloakrooms and hideaway offices and hearing chambers of the

Capitol, to the West Wing of the White House. Usually, he carried an impossible stack of books and papers under his arm, like a harried high school student who has not been given a locker. He promised friends he would relax-take a day off, or at least sleep later than 5 a.m., when he usually arose to read policy papers before breakfast. But he did not relax easily. What was social life compared with the thrill of reshaping the federal establishment?

In the early skirmishing on Capitol Hill, Stockman actually proposed a tight control system: Senator Baker and the House Republican leader, Robert Michel, of Illinois, would be empowered to clear all budget trades on particular programs-and no one else, not even the 'highest White House advisers, could negotiate any deals. "If you have multiple channels for deals to be cut and retreats to be made," Stockman explained, "then it will be possible for everybody to start side-dooring me, going in to see Meese, who doesn't understand thet policy background, and making the case, or [James] Baker making a. deal with a subcommittee chairman." Neither the White House nor the congressional leadership liked his idea, and it was soon buried.

By Marc'h, however, Stockman could see the status quo yielding to the shock of the Reagan agenda. In dozens of meetings and hearings, public and private, Stockman perceived that it was now inappropriate for a senator or a congressman to plead for his special interests, at least in front of other members with other interests. At one caucus, a Tennessee Republican began to lecture him on the reduced financing for TV A; ether Republicans scolded him. Stockman cut public-works funding for the Red River project in Louisiana, w'hich he knew would arouse Russell Long, former chairman of the Senate Finance Committee. Long appealed personally at the White House, and Reagan stood firm.

One by one, smaH signals such as these began to change Stockman's estimate of the political struggle. He began to believe that the Reagan budget package, despite its scale, perhaps because of its scale, could survive in Congress. With sk1llful tactics by political managers, with appropriate public drama provided by the President, the relentless growth rate of the federal budget, a permanent reality of Washington for twenty years, could actually be contained.

Stockman's analysis was borne out a few weeks later, in early April, when the Senate adopted its first budget-cutting measures, 88-10, a package close enough to the administration's proposals to convince Stockman of the vulnerab111ty of "constituencybased" politics. "That could well be a turning point in this whole process," Stockman said afterward.

Still, Stockman was even more impressed by the performance of the new Republican majority in the Senate. After a week of voting down amendments to restore funds for various programs-"voting against every motherhood title," as Stockman put it-moderate Republicans from the Northeast and Midwest needed some sort of political solace. Led by Senator John Chaffee, of Rhode Island, the moderates proposed an amendment spreading about $1 billion over an array of social programs, from education to homeheating assistance for the poor. Stockman had no objection. The amendment wouldn't cost much overall, and it would "take care of those people who have been good soldiers." Senator Pete Domenici, of New Mexico, the Senate budget chairman, decided, however, that the accommodation wasn't necessary, and he was right. The Chaffee amendment lost.

"It was the kind of amendment that should have passed," Stockman refiected afterward. "The fact that it didn't win tells me that the political logic has changed."

Not entirely, however. While the Senate majority was rejecting additional money for the coalition of social programs, it was also tinkering with an important item in Stockman's balance of equitable cuts-the ExportImport Bank. The great multinational industrial firms that received the tr·ade subsidies from Ex-Im were already at work, arguing that U.S. sales abroad and jobs at home would suffer without the Ex-Im loans and guarantees. The Republicans, led by Senator Nancy Kassebaum, of Kansas, where Boeing is a major employer, voted to restore $250 miHion to the Ex-Im budget. Later, the House raised the figure even higher, with little resistance from the White House.

"We weren't really closely in control," Stockman explained. "The mark-up went so fast, and those amendments came out of the woodwork, and we weren't prepa.red to deal with it." Stockman seemed nonchalant about his defeat. The principle of cutting the Ex-1m's corporate subsidies, which had seemed so important to him in January, was now regarded as a minor blemish on the Senate victory. "It did open a little breach that is troublesome," he conceded.

The vulnerab111ty of Stockman's ideology was always that the politics of winning would overwhelm the philosophical premises. But after the Senate victory, Stockman devoted his energy to the tactical questionswinning again in the House of Representatives, which was controlled by the Democrats. "This is pure politics," he said. "It's a question of whether the President can prevall on the fioor of the House, because if he can't, then the committee chairmen know they have license to do anything they want."

Stockman watched with admiration as his principal intellectual rival, Jim Jones, the Democratic chairman of the House Budget Committee, attempted to fashion a budget resolution that would hold the Democratic majority together. The budget director calculated that Jones had an impossible task, but he could see that the Oklahoma congressman was going to come closer than he had expected. The Democrats, by Stockman's analysis, were really three groups: the oldline liberal faithful·, who would follow the party leadership and defend against any or all budget cuts; a middle group, including Jones and other younger members, who recognized that federal deficits were out of control and were willing to confront the problem (Stockman referred to them as "the progressives"); and, finally, the "boll weevils," the thirty-eight southerners who were pulled toward Reagan both in conservative philosophy and by the politics of their home districts, which had voted overwhelmingly for the President. Jones was drawing up a resolution that would restore some funds to social programs, to keep the liberals happy; that projected a smaller deficit than Stockman's, to appear more responsible in fiscal terms; and that did not touch the defense budget, which would offend the southerners.

Artful as it was, the Jones resolution was, according to Stockman, a series of gimmicks: economic estimates and accounting tricks. "Political numbers," he called them. But Stockman was not critical of Jones for these budget ploys, because he cheerfully conceded that the administration's own budget numbers were constructed on similar shaky premises, mixing cuts from the original 1981 budget left by Jimmy Carter with new baseline projections from the Congressional Budget Office in a way that, fundamentally, did not add up. The budget politics of 1981, which produced such clear and dramatic rhetoric from both sides, was, in fact, based upon a bewildering set of numbers that confused even those, like Stockman, who produced them.

"None of us really understands what's going on with all these numbers," Stockman

27130 CONGRESSIONAL RECORD-SENATE November 10, 1981 confessed at one point. "You've got so many different budgets out and so many different baselines and such complexity now in the interactive parts of the budget between policy action and the economic environment and all the internal mysteries of the budget, and there are a lot of them. People are getting from A to Band it's not clear how they are getting there. It's not clear how we got there, and it's not clear how Jones is going to get there."

These "internal mysteries" of the budget process were not dwelt upon by either side, for there was no point in confusing the clear lines of political debate with a much deeper and unanswerable question: Does anyone · truly understand, much less control, the dynamics of the federal budget intertwined with the mysteries of the national economy? Stockman pondered this question occasionally, but since there was no obvious remedy, no intellectual construct available that would make sense of this anarchical universe, he was compelled to shrug at the mystery and move ahead. "I'm beginning to believe that history is a lot shakier than I ever thought it was," he said. in a reflective moment. "In other words, I think there are more random elements, less determinism and more discretion, in the course of history than I ever believed before. Because I can see it."

The "random elements" were working in Stockman's behalf in the House of Representatives. He had a good fix on what Jones would produce as the Democratic alternative, in part because he had a spy in the Democratic meetings-Phil Gramm, of Texas a like-minded conservative and friend who agreed to co-sponsor the 1i.dministration's substitute resolution. Did Jones know that one of his Democratic committee members was really on the other side? "No," said Stockman. "That's how I know what's in Jones's budget."

Stockman was also dealing with the recognized leaders of the "boll weevils." He thought that the southerners could be won to the President's side with a minimum of trading, but he was prepared to trade. He agreed with G. V. "Sonny" Montgomery, chairman of the House Veterans' Affairs Committee and a genuine leader among the southern Democrats, to acquiesce in the restoration of $350 to $400 million for staffing at veterans' hospitals. Once Montgomery announced he was with the President, it would be a respectable position, which other southerners could embrace, Stockman felt. Still, he was confident that he could defend the agenda against general trading for votes.

In political terms, Stockman's analysis was sound. The Reagan program was moving toward a series of dramatic victories in Congress. Beyond the brilliant tactical maneuvering, however, and concealed by the public victories, Stockman was privately staring at another reallty-a gloomy portent that the economic theory behind the President's program wasn't working. While it was winning in the political arena, the plan was losing on Wall Street.

The financial markets, which Stockman had thought wguld be reassured by the new President's bold actions, and which were supposed to launch a historic "bull market" in April, failed to respond in accordance with Stockman's script. The market not only failed to rally, they went into a new decline. Interest rates started up again; the bond market s'lumped. The annual inflation rate, it was true, was decllning, dropping below double digits, but even Stockman acknowledged that this was owing to "good luck" with grain harvests and world on supolies, not to Reaganomics. Investment analysts, however, were looking closely at the Stockman budget figures , looking beyond the storm of political debate a.nd the President's winning style, and what they saw were enor-

mous deficits ahead-the same num.bers that had shocked David Stockman when he came into office in January. Henry Kaufman, of Salomon Brothers, one of the preeminent prophets of Wall Street, delivered a sobering speech that, in the cautious language of financiers, said the same thing that John Anderson had said in 1980: cutting taxes and pumping up the defense budget would produce not balanced budgets but inflationary deficits.

Was Kaufman right? Stockman agreed that he was, and conceded that his own original conception-that dramatic political action would somehow a'lter the marketplace expectations of continuing inflation-had been wrong. "They're concerned about the out-year budget posture, not about the nearterm economic situation. The Kaufmans don't dispute our diagnosis at all. They dispute our remedy. They don't think it adds up . . . I take the performance of the bond market deadly seriously. I think it's the best measure there is. The bond markets represent worldwide psychology, worldwide perception and evaluation of what, on balance, relevant people think about what we're doing ... It means we're going to have to make changes ... I wouldn't say we are 'losing. We're stlll not winning. We're not winning."

The underlying problem of the deficits first surfaced, to Stockman's embarrassment, in the Senate Budget Committee in midApril, when committee Republicans choked on the three-year projections supplied by the nonpartisan Congressional Budget 01fice. Three Republican senators refused to vote for a long-term budget measure that predicted continuing deficits of $60 billion, instead of a balanced budget by 1984.

Stockman thought he had taken care o! embarrassing questions about future deficits with a device he referred to as the "magic asterisk." (Senator Howard Baker had dubbed it that in strategy sessions, Stockman said.) The "magic asterisk" would blithely denote all of the future deficit problems that were to be taken care of with additional budget reductions, to be announced by the President at a later date. Thus, everyone could finesse the hard questions, for now.

But, somehow or other, the Senate Budget Committee staff insisted upon putting the honest numbers in its resolution-the projected deficits of $60 billion-plus running through 1984. That left the Republican senators staring directly at the same scary numbers that Stockman and the Wall Street analysts had already seen. The budget director blamed this brief flare-up on the frantic nature of his schedule. When he should have been holding hands with the Senate Budget Committee, he was at the other end of the Capitol, soothing Representative Delbert Latta, of Ohio, the ranking Republican in budget matters, who was pouting. Latta thought that since he was a Republican, his name should go ahead of that .of Phil Gramm, a Democrat, on the budget resolution: that it should be LattaGramm instead of Gramm-Latta.

After a few days of reassurances, Stockman persuaded the Republican senators to relax about the future and two weeks later they passed the resolution-without being given any concrete answers as to where he would find future cuts of such magnitude. In effect, the "magic asterisk" sumced.

But the real problem, as Stockman conceded, was stlll unsolved. Indeed, pondering the reactions of financial markets, the budget director made an extraordinary confession in private: the original agenda of budget reductions, which had seemed so radical in February, was exposed by May as inadequate. The "magic asterisk" might sumce for the political debate in Congress, but it would not answer the fundamental question asked by Wall Street: How, in fact, did Ronald

Reagan expect to balance the federal budget? "It's a tentative judgment on the part of the markets and of spokesmen like Kaufman that is reversible because they haven't seen all our cards. From the cards they've seen, I suppose that you can see how they draw that conclusion."

"It means," Stockman said, "that you have to have some recalibration in the policy. The thing was put together so fast that it probably should have been put together differently." With mild regret, Stockman looked back at what had gone wrong:

"The defense numbers got out of control and we were doing that whole budget-cutting exercise so frenetically. In other words, you were juggling details, pushing people, and going from one session to another, trying to cut housing programs here and rural electric there, and we were doing it so fast, we didn't know where we were ending up for sure ... In other words, we should have designed those pieces to be more compatible. But the pieces were moving on independent tracks-the tax program, where we were going on spending, and the defense program, which was just a bunch of numbers written on a piece of paper. And it didn't quite mesh. That's what happened. But, you see, for about a month and a halt we got away with that because of the novelty of all these budget reductione."

Reagan's pollcy-makers knew that their plan was wrong, or at least inadequate to its promised effects, but the President went ahead and conveyed the opposite impression to the American public. With the cool sincerity of an experienced television actor, Reagan appeared on network TV to rally the nation in support of the Gramm-Latta resolution, promising a new era of fl.scal control and balanced budgets, when Stockman knew they still had not found the solution. This ;practice of offering the public eloquent reassurances despite privately held doubts was not new, of course. Every contemporary President-starting with Lyndon Johnson, in his attempt to cover up the ·true cost of the war in Vietnam-had been caught, sooner or later, in contradictions between promise:. and economic realities. The legacy was a deep popular skepticism about anything a President promised about the economy. Barely four months in omce, Ronald Reagan was already adding to the legacy.

Indeed, Stockman began in May to plot what he called the "recalibration" of Reagan policy, whtch he hoped could be executed discreetly ever the coming months to eliminate the out-year deficits for 1983 and 1984 that alarmed Wall Street--without alarming political Washington and losing control in the congressional arena. "It's very tough, because you don't want to end up like Carter, where you put a plan out there and then, a month into it, you visibly and unmistakably change postures. So what you have to do is solve this problem incrementally, without the appearance of reversal, and ther~ are some ways to do that."

Stockman saw three main areas of opportunity for closing the gap: defense, Social Security, and health costs, meaning Medicare and Medi:oa4d. And there was a fourth: the Reagan tax cut; if it could be modified in the course of the congressional negotiations already ur..cler way, this would make for additional savings on the revenue side. The public alarm over the deficits was, to some extent .• "fortuitous," from Stockman's viewpoint, because the Wall Street message supported the sermon that he was delivering to his fellow policy-makers at the Whlte House: the agonies of budget reduction wtre only beginning, and, more to the point, the Reagan Administration could not keep lts promise of balanced budgets unless it was willing to back away from its promised defense spending, its 10-10-10 tax-cut plan, and the President's pledge to exempt !rom


cutbacks the so-called "safety-net" programs. Stockman would deliver this speec~. in different forms, all through the summer ahead, trylng to create the leverage for action on t.hose fronts, part1cu:arly on defense . He l::tter explained his strategy:

"I put together a list of twenty social programs that have to be zeroed out completely, like Job Corps, Hzad Start, women and children's feeding programs, on and on. And another twenty-five that have to be cut by 50 percent: general revenue sharing, CETA manpower training, et cetera, et cetera. And then huge bites that would have to be taken out of Social Security. I mean really fierce, blood-and-guts stuff- widows' benefits and orphans' benefits, things like that. And still it didn't add u:> to $40 billion. So that sort of created a new awareness of the defense budget.

"Once you set aside defense and Social" Security, the Medicare complex, and a few other sacred cows of minor dimension, like the VA and the FB: , you have less than $200 billion worth of discretionary room- only $144 billion after you cut all the easy discretionary programs this year. "

In short , the fundamental arithmetic of the federal budget , which Stockman and others had brushed aside in the heady days of January, was now back to haunt them. If the new administration would not cut defense or Social Security or major "safetynet" programs that Reagan had put off limits, then it must salvage the smaller slice remaining. Otherwise. balancing the budget in 1984 became an empty promise. The political pain of taking virtually all of the budget savings from government grants and operations would be too great, Stockman believed; Congress would never stand for it. Therefore, he had to begin educating "the West Wing guys" on the necessity for major revisions in their basic rlan. He was surprisingly optimistic. "They are now understanding all those things," Stockman said. "A month ago, they didn 't. They really thought you could find $144 billion worth of waste, fraud , and abuse. So at least I've made a lot of headway internally."

Revisions of the original tax-cut plan w:mld probably be the easiest compromise. A modest delay in the effective date would save billions and, besides, many conservatives in Congress were never enthusiastic about the supply-side tax-cutting formula. In order to win its passage, the administration was "prepared to give a little bit on the tax bill." Stockman said, which would help cure his problem of deficits.

Social ~ecurity was much more volatile, but Stockman noted that the Senate had already expressed a willingness in test votes to reconsider such basic components as annual cost-of-living increases for retirees. rn the House, the Demo::rats, led by J . J . Pickle, of Texas, were preparing their own set of reforms to keep the system from bankruptcy , so Stockman thought it would be possible to develop a consensus for real changes. He didn't much care for Pickle's proposals, because the imoact of the reforms stretched out over some yearr-, whereas Stockman was looking for immediate relief. "I'm just not going to spend a lot of polltical capital solving some other guy's problems in 2010." But he felt sure a compromise could be worked out. "T! you don 't do this in 1931, this system is going to land on the rocks ," he predicted, "because you won't do it in '82 [a congressional election year) and by '83 , you will have solvency problems coming out of your ears. You know, sometimes sheer reality has a sobering effect."

Finally, there was defense. Stockman thought the sobering effects of reality were working- in his favor there. too, but he recognized that the political tactics were much trickier. In order to get the first round of

budget cuts through Congress, particularly in order to lure the southern Democrats to the President's side, there must be no hint of retreat from Reagan's promises for the Pent~_9n. That would mob1llze the defense lobby against him and help the Dem9crats hold control of the House. Still, when the timing was right , Stockman thought he would prevail.

"They got a blank C'heck ," Stockman admitted. "We didn't have time during that February-March period to do anything with defense. Where are we going to cut? Domestic? Or struggle all day and night with defense? So I let it go. But it worked perfectly, because they got so greedy that they got themselves strung way out there on a limb."

As policy-makers and politicians faced up to the additio:tal cuts required in programs, the pressure would lead them back, inevitably, to a tou~-minded re-examination of the defense side. Or s::> Stockman believed. That combination of events, he suggested, would complete the circle for Wall Street.

"The markets will respond to that. Unless they are absolutely perverse."

IV. OLD POLITICS

The President's televised address, in April , was masterly and effective: the nation responded with a deluge of mail and telephone calls, and the House of Representatives accepted Reagan's version of budget reconc111-ation over the Democratic alternative. The final roll call on the Gramm-Latta resolution was not even close, with sixty-three Democrats joining all House Republicans in support of the President. The stunning victory and the disorganized opposition from the Democrats confirmed for Stockman a political hunch he had first developed when he saw the outlines of Representative Jim Jones' resolution, mimicking the administration's budget-cutting. The 1980 election results may not have been "ideological," but the members of Congress seemed to be interpreting them that way.

This new context, Stockman felt, would be invaluable for the weeks ahead, as the budget-and-tax issues moved into the more complicated and vulnerable areas of action. The generalized budget-cutting instructions voted by the House were now sent to each of the authorizing committees, most of them chaired by old-line liberal Democrats who would try to save tlhe programs in their jurisdictions, but their ab111ty to counterattack was clearly limited by the knowledge that President Reagan, not Speaker Tip O'Neill, controlled the floor of the House. Stockman expected the Democratic chairmen to employ all of their best legislative tricks to feign cooperation while actually undermining the Reagan budget cuts, but he was already preparing another Republican resolution, dubbed "Son of Gramm-Latta," to make sure the substantive differences were maintained-the block grants that melded social programs and turned them over to the states, the "caps" on Medicaid and other open-ended entitlement programs, the "zeroing out" of others.

In the first round, Stockman felt that he had retreated on very little. He made the trade with Representative Montgomery on VA hospitals, and his old friend Representative Gramm had restored some "phase-out" funds for EDA, the agency Stockman so much ·wished to abolish . "He put it in there over my objections," Stockman explained, "because he needed to keep three or four people happy. I said okay, but we're not bound by it." The Republican resolution also projected a lower deficit than Stockman thought was realistic, as a tactical necessity. "Gramm felt he couldn't win on the floor unless they had a lower deficit, closer to Jones's deficit, so they got it down to $31 billion by hook or by crook, mostly the latter."

Stockman was supremely confident at that point. The Reagan Administration had taken

the measure of its political opposition and had created a new climate in Washington, a new agenda. Now what remained was to follow through in a systematic way that would convince the financial markets. In the middle of May, he made another prediction: the bull market on Wall Street, the one he had expected in April, would arrive by late summer or early fall.

"I think we're on the verge of the response in the financial markets. It takes one more piece of the puzzle, resolution of the tax bill. And that may happen relatively quickly, and when it does, I think you'll start a long bull market, by the end of the summer and early fall. The reinforcement that the President got politically in the legislative process wlll be doubled, barring some new war in the Middle East, by a perceived economic situation in which things are visibly improving. I'm much more confident now."

Stockman was wrong, of course, about the bull market. But his misinterpretation of events was more profound than that. Without recognizing it at the time, the budget director was headed into a summer in which not only financial markets but life itself seemed to be absolutely perverse. The Reagan program kept winning in public, a series of well-celebrated political victories in Congress-yet privately Stockman was losing his struggle.

Stockman was changing, in a manner that perhaps he himself did not recognize. His conversations began to reflect a new sense of fatalism, a brittle edge of uncertainty.

"There was a certain dimension of our theory that was unrealistic .... "

"The system has an enormous amount of inertia ... "

"I don't believe too much in the momentum theory any more ... "

"I have a new theory-there are no real conservatives in Congress .. . "

The turning point, which Stockman did not grasp at the time, came in May, shortly after the first House victory. Buoyed by the momentum, the White House put forward, with in:ii,dequa.te political soundings, the Stockman plan for So~al SecurJ..ty reform. Among other ~hings, it proposed a drastic reduction in the benefits for early retirement at age sixty-two. Stockman thought this was a privilege that older citizens could comfortably yield, but 64 percent of those eligible for Social Security were now taking early retirement, and the "reform" plan set off a sudden tempest on Capitol Hill . Democrats accused Reagan of reneging on his promise to exempt Social Security from the budget cuts and accused Stockman of trying to balance his budget at the expense of Social Security recipients, which, of course, he was. "The Social security problem is not simply one of s!l.tisfying actuaries," Stockman conceded. "It's one of satisfying the here-and-now of budget requirements." In the initial flurry of reaction, the Senate passed a unanimous resolution opposing the OMB version of how to reform Social Security, and across the nation, the elderly were alarmed enough to begin writing and calllng their representatives in Congress. But Stockman seemed not to grasp the depth o! his political problem; he stlll believed that congressional reaction would quiet down eventually and Democrats would cooperate with him.

"Three things," he explained. "First, the politicians in the White House are overreacting. They're overly alarmed. Second, there is a serious political problem with it. but not of insurmountable dimensions. And third, basically I screwed up quite a bit on the way the damn thing was handled."

Stockman S!l.id that Republicans on Ways and Means were urging him to propose an administration reform plan as an alte.rnative to the Democrats'; Stockman misjudged the political climate. The White House plan, put together in haste, had "a lot of technical


bloopers," which made it even more vulnerable to attack, Stockman said. "I was just racing against the clock. All the office thing3 I knew ought to be done by way of groundwork, advance preparation, and so forth just fell by the wayside .... Now we're taking the fiak from all the rest of the Republicans because we didn't inform them." · Despite the political uproar, Stockman thought a compromise would eventually emerge, because of the pressure to "save" Social security. This would give him at least a portion of the budget savings he needed. "I stlll think we'll recover a good deal of ground from this. It will permit the politicians to make it look like they're doing something for the beneficiary population when they are doing something to it which they normally wouldn't have the courage to undertake."

But there was less "courage" among politicians than Stockman assUllled. Indeed, one po:itician who scurried away from the President's proposed cuts in Social Security was the President. Stockman wanted him to go on television again, address the nation on Social Security's impending bankruptcy, and build a popular constituency for the changes. But White House advisers did not.

"The President was very interested [in the reform package j and he believed it was the right thing to do. The problem is that the politicians are so wary of the Social Security issue per se that they want to keep him away from it, thinking they could somehow have an administration initiative that came out of the boondocks somewhere and the President wouldn't be tagged with it. Well, that was just pure naive nonsense ... My view was, if you had to p!ay this thing over, you should have the President go on TV and give a twenty-minute Fireside Chat, with some nice charts ... You could have created a climate in which major things could be changed."

The White House rejected that idea. Ronald Reagan kept his distance from the controversy, but it would not go away. In September, Reagan did finally address the issue in a televised chat with the nation: he disowned Stockman's reform plan. Reagan said that there was a. lot of "misinformation" about in the land, to the effect that the President wanted to cut Social Security. Not true, he declared, though Reagan had proposed such a cut in May. Indeed, the President not only buried the Social Security cut he had proposed earlier but retreated on one reform measure--elimination of the minimum benefits-that Congress had already, reluctantly, approved. As though he had missed the long debate on that issue, Reagan announced that it was never his intention to deprive anyone who was in genuine need. Any legislative action toward altering Social Security would be postponed until 1983, after the 1982 congressional elections, and too late to help Stockman with his stubborn deficits. In the meantime, Reagan accepted a temporary solution advocated by the Democrats and denounced by Stockman as "irresponsible"-borrowing from another federal trust fund that was in surplus, the health-care fund, to cover Social Security's problems. Everyone put the best face on it, including Stockman. The tactical retreat, they explained, was the only thing Reagan could do under the circumstances--e. smart move, given the explosive nature of the Social Security protest. Still, it was a retreat, and, for David Stockman, a fundamental defeat. He lost one major source of potential budget savings. The political outcome did not suggest that he would do much better when he proposed reforms for Medicare, Social Security's twin.

Where would Stockman find the money to cover t~ose deficits, variously estimated at $44 to $65 blllion? The tax-cut legislation itself became one of Stockman's best hopes. The tax bargaining had begun in the spring

as a delicate process of private negotiations and reassurance with different groups-with Democrats needed for a House majority, with nervous Republicans still leery of the supplyside theology, and with the supply-side apostles zealously defending their creed. Stockman was a participant, though not the lead player, in this process; he met almost daily with the legislative tactical group at the White House--Edwin Meese, Jim Baker, Donald Regan, presidential assistant Richard Darman, and others-that called signals on both the tax legislation and budget reconc111-ation.

Stockman's interest was made clear to the others: he wanted a compromise on the tax bill which would substantially reduce its drain on the federal treasury and thus moderate the fiscal damage of Reaganomics. Stockman thought that if the Republicans could compromise with the Ways and Means chairman, Representative Dan Rostenkowsk1, the tax legislation would still be a supplyside tax cut in its ·approach but considerably smaller in size. More important, they would avoid a bidding war for vites. "We're kind of divided, not in an antagonistic sense, just sort of a judgment sense, between those who want to call off the game ... and those of us who want to give Rostenkowski a few more days to see what he can achieve."

The negotiations with Rostenkowski ended in failure, and the Reagan team agreed that it would have to modify its own tax-cut plan in order to lure fiscal conservative. Under the revised plan, the first-year reduction was only 5 percent and, more important, the impact was delayed until late in the year, substantially reducing the revenue loss. The White House also made substantial changes in the business-depreciation and tax-credit rules, which were intended to stimulate new industrial investments, reducing the overly generous provisiuns for business tax writeoffs on new equipment and buildings.

Stockman was privately delighted he saw a three-year revenue savings of $70 blllion in the compromise. The depreciation rules that big business wanted were "way out of joint," Stockman insisted. But he was nervous about the $70 billion figure, because he feared that when Representative Jack Kemp (co-sponsor of the original supply-side tax proposal, the Kemp-Roth bill) and other supply-side advocates heard it, they might regard the savings as so large that it would undermine the stimulation effects of the major tax reduction. "As long as Jack is happy with what's happening," Stockman said, "it's hard for the (supply-side] network to mobilize itself with a shrlll vote. Jack's satisfied, although we're sort of on the edge of thin ice with him."

The supply-side effects would be strong, Stockman said, but he added a significant disclaimer that would have offended true bellevers, for it sounded like old orthodoxy: "I've never believed that just cutting taxes alone wlll cause output and employment to expand."

Stockman himself had been a late convert to supply-side theology, and now he was beginning to leave the church. The theory of "expectations" wasn't working. He could see th!llt. And Stockman's institutional role as budget director forced him to look constantly at aspects of the political economy that the other supply-siders tended to dismiss. Whatever the reason, Stockman was creating some distance between himself and the supply-side purists; eventually, he would become the target of their nasty barbs. For his part, Stockman began to disparage the grand theory as a kind of convenient illusion-new rhetoric to cover old Republican doctrine.

'The hard part of the supply-side tax cut is dropping the top rate from 70 to 50 percent--the rest of it is a secondary matter," Stockman explained. "The original argument was that the top bracket was too high, and thlllt's having the most devastating effect on

the economy. Then, the general argument was that, in order to make this palatable as a political matter, you had to bring down all the brackets. But, I mean, Kemp-Roth was always a Trojan horse to bring down the top rate."

A Trojan horse? This seemed a cynical concession for Stockman to make in private conversation while the Reagan Administration was still selling the supply-side doct!l'ine to Congress. Yet he was conceding wh111t the liberal Keynesian cri·tics had argued from the outset--the supply-side theory was not a new economic theory at all but only new language and argument to conceal a hoary old Republican doctrine: give the tax cuts to the top brackets, the wealthiest individuals and largest entel'lpl'ises, and let the good effects "trickle down" through the economy to reach everyone else. Yes, Stockman conceded, when one stripped away the new rhetoric emphasizing across-the-board cuts, the supply-side theory was really new clothes for the unpopular doctrine of the old Republican orthodoxy. "It's kind of hard to sell 'trickle down'," he explained, "so the supply-side formula was the only way to get a tax policy that was really 'trickle down.' Supply-side is 'trickle-down' .theory."

But the young budget director once again misjudged the political contex.t. The scaleddown version of the admlnistrntion's tax bill would need to carry a few "O!l'naments" in order to win-a special ball-out to help the troubled savings-and-loan industry, elimination of the so-called marriage penaltybut he was confident that the Reagan majority would hold and he could save $70 billion against those out-year deficits. The business lobbyists would object, he conceded, when they saw the new Republican version of depreciation allowances, but the key congressmen were "on board," and the pac~age would hold.

In early June, it fell apart. The tax lobbyists of W·ashington, when they saw the outlines of the Reagan tax bill, mob111:zed the business community, the influential economic sectors from oil to real estate. In a matter of days, they created the political environment in which they fiourish best--a bidding war between the two parties. First the Democrats revealed that their tax bill would be more generous than Reagan's in its depreciation rules. Despite Stockman's self-confidence, the White House quickly retreated-scrapped its revised and leaner proposal, and began matching the Democrats, billion for billion, in tax concessions. The final tax legislation would yield, in total, an astounding revenue loss for the federal government of $750 billion over the next five years.

Stockman, with his characteristic ab111ty to adjust his premises to new political realities, at first insisted that the White House cave-in on the business-depreciation issue was of no consequence to his budget problems, since the major impact of the concessions would hit the period 1985 and 1986, beyond the budget years he was struggling with.

Nevertheless, Stockman conceded that the administration had fiinched, sending a clear signal to the political interests that it would respond to pressure. "I think we're in trouble on the tax bill," he said in mid-June, "because we started with the position that this was a policy-based bill ... that we weren't going to get involved in the tax-bill brokerint5 of s..,ecial-interest claims. But then we made the compromise . . . my fear now Is that, if we do that too many times, it becomes clear to the whole tax-lobby constituency in Washington that we will deal with them one at a time, and then you'll find their champions on the tax-writing committees, es~ecially Finance, swingin~ into action, and we are going to end up back-pedaling so fast that we will have the 'Christmas tree' b111 before we know it."


That was an astute forecast of what unfolded over the next six weeks. Stockman both participated in the process and privately denounced it. But he was not fully engaged in the political scramble for tax concessions, because he was preoccupied with controlling another political auction already under way: the furious bumping-and-trading for the :final budget-cutting measure, the reconc111-ation bill. The thirteen authorizing committees of the House were drawing up the legislative parts to comply with the budget instructions voted by the House in May; simultaneously, the Republican minority members of those committees were drawing up their alternatives, which would become pieces of the administration's alternative-"Son of Gramm-Latta." Stockman was working closely with the Republican drafting in the House, but at the same time he was trying to keep the specific cuts and policy changes in line with the work of the Republican committee chairmen in the Senate. Stockman had a believable nightmare: if House and Senate produced drastically different versions of the :final reconc111ation measure, there could be a conference committee between the two chambers that would include hundreds of members and months of combat over the differences. Failure to settle quickly could sink the entire budget-cutting enterprise.

Some of the Democratic committee chairmen were playing the "Washington Monument game" (a metaphor for phony budget cuts, in which the National Park Service, ordered to save money, announces that it is closing the Washington Monument) . The Education and Labor Committee made deep cuts in programs that it knew were politically sacred: Head Start and impact aid for local schools, and care for the elderly. The Post Office and Civil Service Committee proposed closing 5,000 post offices. Stockman could deal with those ploys-indeed, he felt they strengthened his hand-but he was weakened on other fronts. Again, he had to hold all Republicans and win several dozen of the "boll weevils"-to dE-monstrate that Ronald Reagan controlled the House. It was not a matter of trading with liberal constituencies and their representatives; Stockman had to do his trading with the conservatives. "In that kind of game," he said, "everybody can ask a big price for one vote."

The final pasted-together measure would be several thousand pages o1 legislative action and, Stockman feared, another version of the Trojan horse-"a Trojan horse :filled full of all kinds of budget-busting measures and secondary agendas."

A group of twenty northern and midwestern, more moderate Republicans, who organized themselves as "gypsy moths" as a counterweight to the "boll weevils," threatened defection. In the end, concessions were made: $350 milllon more for Medicaid, $400 million more for home-heating subsidies for the poor, $260 milllon in mass-transit operating funds, more money for Amtrak and Conrail. The administration agreed to put even more money into the nuclear-power project that Stockman loathed, the Clinch River fast-breeder reactor. It accepted a large authorization for the Export-Import Bank, and more.

Stockman tried to keep everything in line. When he agreed with House Republicans to restore $100 m1llion or so to Amtrak, he had to go back and alert Bob Packwood, of Oregon, chairman of the Senat~ committee. "The Senate level which his committee tentatively voted out would have shut down a train in Oregon," Stockman said, "and he didn't relish the prospect of not being able to defend his train in the Senate and have it put back in by House Republicans."

In private, the budget director claimed that these new spending figures that Republlcans had agreed upon for the various federal programs were not :final but merely authorization ceilings, which could be reduced later on, when the appropriations bllls

for departments and agencies worked their way through the legislative process. ··n doesn't mean that you've lost ground," he said blithely of his compromises, "because in the appropriations process we can still insist on $100 mill1on (or whatever other :figures appeared in the original Reagan budget) and veto the bill if it iOes over ... On these authorizations, we can give some ground and then have another run at it."

This codicil of Stockman's was apparently not communicated to the Republicans with whom he was making deals. They presumed that the :final :figures neiotiated with Stockman were :final figures. Later on, they discovered that the budget director didn't agree. When in September the President announced a new round of reductions, $13 billion in across-the-board cuts for :fiscal year 1982, the ranks of his congressional supporters accused Stockman of breaking his word. In private, some used stronger language. The new budget cuts Stockman prepared in September did, indeed, scrap many of the agreements he negotiated in June when he was collecting enough votes to pass the President's reconc111ation bill. In the political morality that prevails in Washington, this was regarded as dishonorable behavior and Stockman's personal standini was d~ged.

"Piranhas,'' Stockman called the Republican dealers. Yet he was a wllling participant in one of the rankest trades-his casual promise that the Reagan Administration would not oppose revival of sugar supports, a scandalous price-support loan program killed by Congress in 1979. Sugar subsidies might not cost the government anything, but could cost consumers $2 to $5 billion. "In economic principle, it's kind of a rotten idea," he conceded. Did Ronald Reagan's White House object? "They don't care, over in the White House. They want to win."

This process of trading, vote by vote, injured Stockman in more profound ways, beyond the care or cautions of his fellow politicians. It was undermining his original moral premise-the idea that honest freemarket conservatism could unshackle the government from the costly claims of interest-group politics in a way that was fair to both the weak and the strong. To reject weak claims from powerful clients-that was the intellectual credo that allowed him to hack away so confidently at wasteful social programs, believing that he was being equally tough-minded on the wasteful business subsidies. Now, as the :final balance was being struck, he was forced to concede in private that the claim of equity in shrinking the government was significantly compromised if not obliterated.

The :final reconc111ation measure authorized budget reductions of $35.1 billion, about $6 billion less than the President's original proposal, though Stockman and others said the dift'erence would be made up through shrinking "off-budget" programs, which are not included in the appropriations process. The block grants and reductions and caps that Reagan proposed were partially successful-some sixty major programs were consolidated in different block-grant categories-though Stockman lost several important reforms in the :final scrambltng, among them the cap on the runaway costs of Medicaid, and user fees for federal waterways. The Reagan Administration ellminated dozens of smaller activities and drastically scaled down dozens of others.

In polltlcal terms, it was a great victory. Ronald Reagan became the :first President since Lyndon Johnson to demonstrate both the tactical sklll and the popular strength to stare down the natural institutional opposition of Congress. Moreover, he forced Congress to slog through a series of unique and painful legislative steps-a genuine reconctuation measure-that undermined the parochial baronies of the committee chairmen. Around Washington, even among the critics who despised what he was at-

tempting, there was general agreement that the Reagan Administration would not have succeeded, perhaps would not even have gotten started, without the extraordinary young man who had a plan. He knew what he wanted to attack and he knew Congress well enough to know how to attack.

Yet, in the glow of victory, why was David Stockman so downcast? Another young man. ambitious for his future, might have seiZed the moment to claim his full share of praise. Stockman did appear on the Sunday talk shows, and was interviewed by the usual columnists. But in private, he was surprisingly modest about his achievement. Two weeks after selling Congress on the biggest package of budget reductions in the history of the republic, Stockman was willing to dismiss the accomplishment as less significant than the participants realized. Why? Because he knew that much more traumatic budget decisions still confronted them. Because he knew that the budget-resolution numbers were an exaggeration. The total of $35 billion was less than it seemed, because the "cuts" were from an imaginary number-hypothetical projections from the Congressional Budget Office on where spending would go if nothing changed in policy or economic activity. Stockman knew that the CBO base was a bit unreal. Therefore, the total of "cuts" was, too.

Stockman explained: "There was less there than met the eye. Nobody has :figured it out yet. Let's say that you and I walked outside and I waved a wand and said, I've just lowered the temperature from 110 to 78. Would you believe me? What this was was a cut from an artificial CBO base. That's why it looked so big. But it wasn't. It was a significant and helpful cut from what you might call the moving track of the budget of the government, but the numbers are just out o! this world. The government never would have been up at those levels in the CBO base."

Stockman was proud of what had been changed-shutting down the $4 blllion CETA jobs program and others, putting real caps on runaway programs such as the trade adjustment assistance for unemployed industrial workers. "Those were powerful spending programs that have been curtailed " he said, "but there was a kind of cons~nsus emerging for that anyway, even before this a.dministrart:don."

All in all, Stock:nmn gave a modest summary of wha:t had been wrought by the budget viatory: "It has rea.J.ly slowed down the momentum, but it hasn't stopped what you would call the excessive growth of the budget. Because the budget isn't som.ethlng you reconstruct eaoh yea.r. The budget is a sort of rollring history of dooisions. All kinds of decisions, made :five, ten, :fifteen years ago. are coming back to bilte us unexpectedlt. Th.er'efure, in my judgment, it Will take three or four or :five years to sUJbdue it. Whether anyone can maintain the political momentum to fight the beast for that long, I don't know."

Stockman, the natural optimist, was not especially optimistic. The future of fiscal conservatism, in a political community where there are "no real conservatives," no longer seemed so promising to him. He spoke in an analytical tone, a sober intellect trying to figure things out, and only marginally bitter, as he assessed what had happened to his hopes since January. In July, he was forced to conclude that, despite the appearance of a great triumph, his original agenda was fading, not flourishing.

"I don't believe too much in the momentum theory any more," he said. "I believe in institutional inertia. Two months of response can't beat :fifteen years of political infrastructure. I'm talking about K Street and all of the interest groups in this town, the community of interest groups. We sort of stunned it, but it just went underground for the winter. It wlll be back .... Can we win? A lot of it depends on events and luck. It w~

27134 CONGRESSIONAL RECORD-SENATE November 10, 1981 got some bad luck, a fiareup in the Middle East, a scandal, it could all fall apart. "

Stockman's dour outlook was reinforced two weeks later, when the Reagan coalition prevailed again in the House and Congress passe::i the tax-cut legislation with a final frenzy of trading and bargaining. Again, Stockman was not exhilarated by the victory. On the cont.M.ry, it seemed to leave a bad taste in his mouth, as though the democratic process had finally succeeded in shocking him by its intensity and its greed. Once again, Stockman participated in the trading- special tax concessions for oil-lease holders and real-estate tax shelters, and ~enerous loopholes that virtually eliminated the corporate income tax. Stockman sat in the room and saw it happen.

"Do you realize the gree::i that came to the forefront? " Stockman asked with wonder. "The hogs were really feeding. The greed level, the level of opportunism, just got out of control."

Indeed, when the Republicans and Democrats began their competition for authorship of tax concessions. Stockman saw the "new political climate" dissolve rather rapidly and be replaced by the reflexes of old politics. Every tax lobby in town, from tax credits for wood-burning stoves to new accounting concessions for small business, moved in on the legislation, and pet amendments for obscure tax advantage and profit became the pivotal issues of legislative action, not the grand theories of supply-side tax reduction. "The politics of the bill t urned out to be very traditional. The politics put us back in the game, after we started making concessions. The basic strategy was to match or exceed the Democrats, and we did."

But Stockman was buoyant about the political implications of the tax legislation: first, because it put a tightening noose around the size of the government: second, because it gave millions of middle-class voters tangible relief from inflation, even if the stimulative effects on the economy were mild or delayed. Stockman imagined the tax cutting as perhaps the beginning of largescale realignment of political loyalties, away from old-line liberalism and toward Reagan ism.

And where did principle hide? Stockman, with his characteristic mixture of tactical cynicism and intellectual honesty, was unwilling to defend the moral premises of what had occurred. The "idea-based" policies that he had espoused at the outset were, in the final event, greatly compromised by the "constituency-base::i" politics that he abhorred. What had changed, fundamentally, was the list of winning clients, not the nature of the game. Stockman had said the new conservatism would pursue equity, even as it attempted to shrink the government. It wou,ld honor just claims and reject spurious ones, instead of simply serving powerful clients over weak clients. He was compelled to agree, at the legislative climax, that the original moral premises had not been served, that the new principles of Reaganism were compromised by the necessity of winning.

"I now understand, " he said, "that you probably can't put together a majority coalition unless you are willing to deal with those marginal interests that will give you the votes nee:ied to win. That's where it is fought-on the margins-and unless you deal with those marginal votes, you can't win."

In order to enact Reagan's version of tax reduction, "certain wages" had to be paid, and, as Stockman reasoned, the process of brokering was utterly free of principle or policy objectives. The power flowed to the handful of representatives who could reverse the majority, regardless of the interests they represented. Once the Reagan tacticians began making concessions beyond their "policybase::i" agenda, it developed that their trades and compromises and giveaways were utterly indistinguishable from the decades of inter-

est-group accommodations that had preceded them, which they so righteously denounced. What was new about the Reagan revolution, in which oil-royalty owners win a.nd welfare mothers lose? Was the new philosophy so different from old Republicanism when the federal subsidies for Boeing and Westinghouse and General Electric were protecte:i, while federal subsidies for unemployed black teenagers were "zeroed out"? One could go on at great length, searching for balance and equity in the outcome of the Reagan program without sat!sfying the question; the argument will continue as a central theme of electoral politics for the next few yea-rs. For now, Stockman would concede this much: that "weak clients" suffered for their weakness.

"Power is contingent," he said. "The power of these client groups turned out to be stronger than I realized. The client groups know how to make themselves heard. The problem is, unorganized groups can't play in this game."

When Congress recessed for its August vacation and President Reagan took off for his ranch in the West , David Stockman had a surprising answer to one of his original questions: could he prevail in the political arena, against the status quo? His original skepticism about Congress was mistaken; the administration had prevailed brilliantly as politicians. And yet, it also seemed that the status quo, in an intangible sense that most politicians would not even recognize, much less worry over, had prevailed over David Stockman.

V. "WHO KNOWS ?"

Generally, he did not lose his temper, but on a pleasant afternoon in early September, Stockman returned from a meeting at the White House in a terrible black mood. In his ornately appointed office at OMB, he slammed his papers down on the desk and waved away associates. At the Oval Office that afternoon, Stockman had lost the great argument he had been carefully preparing since February : there would be no major retrenchment in the defense budget. Over the summer, Stockman had made converts, one by one, in the Cabinet and among the President 's senior advisers. But he could not convince the only hawk who matteredRonald Reagan. When the President announced that he would reduce the Pentagon budget by only $13 billion over the next three years, it seemed a pitiful sum compared with what he proposed for domestic programs, hardly a scratch on the military complex, which was growing toward $350 billion a year.

"Defense is setting itself up for a big fall. " Stockman had pre::iicted. "If they try to roll me and win, they're going to have a huge problem in Congress. The pain level is going to be too high. If the Pentagon isn't careful they are going to turn it into a priorities debate in an election year."

Two days later, when we met for another breakfast conversation, Stockman had recovered from his anger. The argument over the defense budget, he insisted crankily, was a tempest stirred up by the press. The defenc:e budget was never contemplated as a major target for savings. When Stockman was reminded of his earlier claims and predictions-how he would attack the Pentagon's bloated inefficiencies, assisted by a clear-eyed secretary of defense-he shrugged and smlled thinly.

Autumn was cruel to David Stockman's idea of how the world should work. The summer, when furious legislative trading was under way, had tattered his moral vision of government. Politics, in the dirty sense, had prevailed. Now he was confronted with more serious possibilities--the failure of the economic strategy and the political unraveling that he had feared from the beginning. On Capitol Hill, where Stockman was admired and envied for his nimble mind, where even

critics conceded that his presence in the Cabinet was essential to Ronald Reagan's opening victories, politicians of both parties were beginning to reach a different conclusion about him. Despite the wizardry, Stockman did not have all the answers, after all. The wizard was prepared to agree.

His failed expectations were derived from many events. In August, when enactment of the Reagan program was supposed to create a boom, instead, the financial markets sagged. Interest rates went still higher, squeezing the various sectors of the American economy. Real-estate sales were dead, and the housing industry was at a historic low point. The sam was true for auto sals. Farmers complained about the exorbitant interest demanded for annual crop loans. Hundreds of savings-and-loan associations were at the edge of insolvency. The treasury secretary, perhaps also losing his original faith in the supply-side formulation, suggested that it was time for the Federal Reserve Board to loosen up on its tight monetary policy. Donald Regan saw a recession approaching.

Stockman's prospects for balancing the budget were getting worse, not better. The optimistic economic forecast made in January to improve his origin!l.l budget projections came back to haunt him in September. The inflation rate was down considerably (a prediction fortuitously correct because of oil and grain prices) but interest rates were not: the cost of federal borrowing and debt payments went still higher.

Stockman was boxed in , and he knew it. Unable to cut defense or Social Security or to modify the overly generous tax legislation, he was forced to turn back to the simple arithmetic of the federal budget- and cut even more from that smaller slice of the federal dollar that pays for government operations and grants and othr entitlements. For six months, Stockman had been explaining to "the West Wing guys" that this math wouldn 't add. When Reagan proposed his new round of $16 billion in savings, the political outrage confirmed the diagnosis. Stockman was accused of breaking the agreements he had made in June : Senate Republicans who had accepted the "magic asterisk" so docilely were now talking of rebellionpostponing the enormous tax redu.ctions they had just enacted. While the White House promised a war of vetoes ahead, intended to demonstrate "fiscal control," Stockman knew that even if those short-range battles were won, the budget would not be balanced.

Disappointei by events and confronted with potential failure, the Reagan White House was developing a new political strategy: wage war with Congress over the budget issues and, in 1982, blame the Democrats for whatever goes wrong.

The budget director developed a new wryness as he plunger gamely ·on with these congrec:sional struggles: it was a quality more appealing than certitude. Appearing before the House Budget Committee, Stockman listed a new budget item on his deficit sheet, drolly labele::i "Inaction on Social Security." With remarkable directness and no "magic asterisks," he described the outlook: federal deficits of $60 billion in each of the next three years. Some analysts thought his predictions were modest. In the autumn of 1981, despite his great victories in Congress, Ronald Reagan had not as yet produced a plausible answer to John Anderson's question.

Still, things might out, Stockman said. They might find an answer. The President's popularity might carry them through. The tax cuts would make people happy. The economy might start to respond, eventually, to the stimulation of the tax cuts. "Who knows?" Stockman said. From David Stockman, it was a startling remark. He would continue to invent new scenarios for success, but thev would be more complicated and cloudy than his original optimism. "Who knows?" The world was less manageable


than he had imagined; this machine had too many crazy moving parts to incorporate in a single lucid theory. The "random elements" of history-politics, the economy, the anarchical budget numbers--were out of control.

Where did things go wrong? stockman kept asking and answering the right questions. The more he considered it the more he moved away from the radicai vision of reformer, away from the wishful thinking of supply-side economics, and toward the "old-time religion" of conservative economic thinking. Orthodoxy seemed less exciting than radicalism, but perhaps Stockman was only starting into another intellectual transition. He had changed from farm boy to campus activist at Michigan State, from Ohrtstlan moralist to neo-conservative at Harvard; once again, Stockman was reformulating his ideas on lww the world worked. What had he learned?

"The reason we did it wrong-not wrong, but less than the optimum-was that we said, Hey, we have to get a program out fast. And when you decide to put a program of this breadth and depth out fast, you can only do so much. We were working in a twenty or twenty-five-day time frame, and we didn't think it all the way through. We didn't add up all the numbers. We didn't make all the thorough, comprehensive calculations about where we really needed to come out and how much to put on the plate the first time, and so forth. In other words, we ended up with a list that I'd always been carrying of things to be done, rather than starting the other way and asking, What is the overall fiscal policy required to reach the target?"

That regret was beyond remedy now; all Stockman could do was keep trying on different fronts, trying to catch up with the shortcomings of the original Reaga.n prospectus. But Stockman's new budget-cutting tactics were denounced as panic by his former allles in the supply-side camp. They now realized that Stockman regarded them as "overly optimistic" in predicting a pa.lnless boom through across-the-board tax reductions. "Some or the naive supply-siders just missed this whole dimension," he said. "You don't stop inflation without some kind of dislocation. You don't stop the growth of money supply in a three-trilllon-dollar economy without some kind of dislooa.tion ... Supply-side was the wrong atmospherics-not wrong theory or wrong economics, but wrong atmospherics . . . The supply-siders have gone too far. They created this nonpolitical view of the economy, where you are going to have big chg,nges and abrupt turns, and their happy vision of this world of growth and no inflation with no pain."

The "dislocations" were multiplying across the nation, creating panic among the congressmen and senators who had just enacted this "fiscal revolution." But Stockman now understood that no amount of rhetoric from Washington, not the President's warmth on television nor his own nimble testimony before congressional hearings, would alter the economic forces at work. Tight monetary control should continue, he believed, until the tnfl.atlonary fevers were sweated out of the economy. People would. be hurt. Afterward, after the recession, perhaps the supply-side effects could begin-robust expansion, new investment, new jobs. The question was whether the country or its elected representatives would walt long enough.

His exasperation was evident: "I can't move the system any faster. I can't have an emergency session of Congress to say, Here's a resolution to cut the permanent size of government by 18 percent, vote it up or down. If we did that, it would be all over. But the system works much more slowly. But what can I do about it? Okay? Nothing. So I'm not going to navel-gaze about it too long."

Still trying, still energetic, but no longer abundantly optimistic, Stockman knew that congressional anxieties over the next election were already stronger, making ee.ch new proposal more difficult. "The 1982 election cycle will tell us all we need to know about whether the democratic society wants fiscal control in the federal government," stockman said grimly.

The alternative stlll energized him. If they failed, 1! inflation and economic disorder continued, the conservative reformers would be swept aside by popular unrest. The nation would turn back toward "statist" solutions, controls devised a.nd administered from Washington. Stockman shrugged at that posslb111ty.

"Whenever there are great strains or changes in the economic system," he expla.ined, "it tends to generate crackpot theories, which then find their way into the legislative channels."e

WILFRED BURCHETI': NO ORDINARY JOURNALIST

• Mr. SYMMS. Mr. President, what would we say 81bout the news reports of a newsman who appeared at a prisoner of war camp in the uniform of the captors, to tell the captives that they would get better treatment if they agreed with him, and went over to the enemy and more or less collaborated with them? I suspect we would ask serious questions about the dedication of this newsman to news and view his dispatches with a critical eye.

Unfortunately, my s\JSII)icions a.re incorrect. Wilfred Burchett, the Australian "newsman" did exactly what I have outlined, and his dispatches continue to receive favorable treatment by the Westem media, most particularly the major newspapers of the United states. I was paraphrasing a sentence from a libel trial held in Australia in 197 4, as reported in Stephen Morris' review of Burchett's memoirs, in the November issue of COmmentary. Sworn testimony at that trial, which Burchett lost, confirms what should be obvious from the most cursory examination of his "reporting," that Burchett's interest has long been in pushing the Communist Party line.

Mr. President, the treatment accorded Wilfred Burchett by the ediltors and reporters of our news media is truly troubling. I believe the news establishment should read Mr. Morris' article, and spend some time examining its own conscience and the attitudes of those who people it. So that my colleagues can get some idea of what I find so troubling, I ask that the complete article be printed at this point in the REcoRD.

The article referred to follows: A ScANDALous JOURNALISTIC CAREER

(By Stephen J. Morris) Wilfred Burchet:It is no ordinary journalist.

An AustraHan, he ha.:; been actively involved in reporting the major oonfronta.tions between East and West for over forty years. He has also been a highly controversial figure. In 1955 the British and Australia.n gove!'nments refused to is:;ue him a passport. For many yea.m he W!aS banned from entering the United State:;. The controversy which ha::; surrounded him has centered on his own role in the various conflicts he has reported. The recent publication of Burchett's mem-

olrs,t with an introduction by another fe.mou:; journoa.l:lst, Harrison Salisbury, offers an occasion for evalUJa.ting his calt'eer.

Wllf·red Burchett was born in Melbourne, Austral·le. in 1911. His father was a Methodist lay preacher with strong radical left-wing views. Family poverty forced the young Wilfred to drop out of school a.t a.n early age, and he worked for several yea.rs on various jobs, including as farm-laborer a.nd vacuumcleaner salesman. During his spa:re time he studied langlll8.ges, acquiring a. sk111 which was later to become very useful.

In 1936 Burchett lef.t Australia for England. His firat job a!ter arriving in England was working for the Thomas Cook travel agency. Later the same yeaT he SIWitcl:led to the London office of the Soviet government tmvel agency, Intourist. In hls memoirs, Burchett devotes only two sentences to this event: he suggests that he got ''the job" (never specified) because of his rudimentary knowledge of Russian and because the assistant manager was an Australian. But according to the knowledgeable and impeccably honest Australian journalist Denis Warner. Burchett was invited to open the London office of Intourist by the then Soviet ambassador to England, Ivan Malsky.2 In any case a diplomatic quarrel between England and the Soviet Union soon led to a closing of the office. After searching unsuccessfully for a job in Paris, Burchett returned to London, where he found a job with the travel agency Palestine Orient Lloyd, which specialized in handling emigrant traffic out of Germany to Palestine and the United States. Burchett remained at that job until 1939. Meanwhile, in September 1938, he married Erna Hamer. a German Jewish refugee.

Burchett finally found his niche as a journalist ditWing World War II. Jn 1940 he reported the revolt against the Vichy regime on the French South Pacific colony of New Caledonia, and this helped him gain accreditation with the popular London newspaper, the Daily Express, for which he reported the Asian battlefield throughout World war II. The war in China and Burma, and the islandhopping campaign of General MacArthur's forces, were the main subjects of his dispatches.

It was during those years that Burchett met a man who was later to beoorne an important friend-chou En Lal.

Burchett's first major journalistic coup was achieved at the end of World Wa.r II. He was the first Western correspondent to tour the remains of Hiroshima after the atomic bomb was dropped. Burchett claims that his reports of t'he devastation infuriated General MacArthur. But these reports did not harm his career. After three years of work for the Dally Express in Trieste, Greece, and Berlin, Burchett turned up in Eastern Europe in 1949, with access to the courtroom for the Stalinist show trials of East European Communist leaders and of Cardinal Mindszenty of Hungary, Burchett was now reporting for the most prestigious newspaper in Britain, the Times.

Though the charges against the Hungarian and Bulgarian Communists were utterly fantastic, similar to the kinds of accusations Stalin had leveled against the Old Bolsheviks in the Soviet Union in the 1930's, Burchett in his reports endorsed the prosecutor's line. In the case of the Hungarian Foreign Minister, Laszlo Rajk, and his co-defendants,

1 At the Barricade: Forty Years on the Cutting Edge of History, New York Times Books, 340 pp., $15.00.

2 See Warner's "Who is Wilfred Burchett?", the Reporter, June 1, 1967. This article provides a valuable account, much of it firsthand, of Burchett's activities in Asia from World War II to 1967.

Burchett wrote later (ln People's Democracies, 1951) that the accused were "Titotst spies" ultimately linked to British and American inte111gence:

"In the Western press, even in so-called liberal sections, an attempt was made to present Rajk, Pallfy, and Co. as a small group of nationalist-minded Communists, people who wanted Communism but independent of the Soviet Union. This is nonsense. There was not one convinced Socialist among the whole band. They were mostly cheap police spies . . . they are a miserable collection of plotters without a human ideal between the lot of them. . . . Before the court and before the Hungarian public, as all proceedings were broadcast from the court, Rajk and his gangs were disclosed as miserable, bloodthirsty adventurers .... "

When Stalin ordered the purge of independent-minded Communists in Bulgaria, Burchett wa.s once again on the spot. As he wrote in People's Democracies:

"If Laszlo Rajk could be regarded as the right arm of Tito's plans for Eastern Europe, Traicho Kostov, member of the Bulgarian politburo, 2nd Deputy Premier, was certainly his left arm. I sat in a crowded court in Sofia in December 1949, heard and watched Traicho Kostov and ten other accused and dozens of witnesses testify to a Yugoslav plan for Bulgaria every whit as diabolical and bloodthirsty as that for Hungary.''

Burchett further asserted that Kostov was a British spy.

Not long after the show trials were concluded, Burchett, who had divorced his first wife in 1948 after a long separation, married Vesselina Ossikovska, a member of an old Bulgarian Communist family who at the time of their marriage was a journalist in the Bulgarian Ministry of Foreign Affair.s. W"Pen Burchett left Bulgaria for Budapest in 1950, the Bulgarian authorities refused to allow his wife to accompany him. But the decision did not make Burchett bitter toward the Bulgarian regime. On the contrary, in People's Democracies he expressed great admiration for the human-rights record of all the Eastern European regimes:

"If the same advance is made in the next twenty years as has been made in the past five years in bringing real Uberties to the workers and peasants of the People's Democracies, and 1! the Western powers give up their morbid plans to destroy the People's Democracies by force of arms and the hydrogen bomb, the whole population will be enjoying Uberties of a quality not yet dreamed of in the Western world."

In early 1951 Burchett returned briefly to his native Australia, where he gave lectures for the Australian Peace Council, a front organization run by the Australian Communist party. That same year he took up residence in the People's Republic of China, as a correspondent for the French Communist ne·wspapers L'Humanlte and Ce Soir. (Neither the Times nor the Daily Express was interested in Burchett's reporting at this stage.) After six months in China, Burchett managed to rush off a gushing book-length panegyric to the regime. China's Feet Unbound. The introduction to this book made its outlook and purpose clear:

"It is written as a weapon for tho~e who fight for peace and as confirmation for those who refu"'e to accept the idea that their living standards must be lowered, their civil rights abolished, their late enemies rearmed because China menaees world peace. It was written against the background of American bombs landing on Chinese soil, American tanks rumbling toward China's frontier, American germ warfare launched against China's neighbor."

The last clause was significant, as it previewed Burchett's next major pubUc actdissemination of the story that the United States was uc:ing germ warfare against North Korea, Burchett made his way to North Korea in July 1951, along with the British

Communist journalist Alan Winnington. One of his purposes was to cover the Panmunjom peace talks from the Chinese Communist side. (This is the only purpose Burchett mentions today.) Burchett also produced scathing attacks on the UN forces, complete with atrocity stories which included the myth that America had conducted germ warfare. Finally, Burchett visited Chinese-run camps where Allied POW's were being held. He worte of one:

This camp looks like a holiday resort hi. Switzerland. The atmosphere is also nearer that of a luxury resort than a POW camp.'' 3

At the end of the Korean war, returning Allied ex-POW's gave a different account of the camps, and alleged that Burchett had been more than a journalist reporting "from the other side." Former pri.soners interviewed by the British and Australian governments maintained that Burchett had collaborated with the Chinese Communists in interrogation procedures. Because of these charges of collaboration, the British government refused to renew and the Australian government refused to issue a passport to Wilfred Burchett in 1955.

It was through China that Burchett made his first contact with the Vietnamese Communists. In fact Burchett spent most of the period between 1953 and 1956 shuttling back and forth between China and North Vietnam, Laos and Cambodia. In these countries, as pr~viously in Korea, he reported on the supposed strength and popularity of the Communist forces and provided captioned photographs which were meant to show that French prisoners were being well treated by their Vietminh captors. Aoart from those reports for the world press, Burchett produced two books as a result of his visits-North of the 17th Parallel and Mekong Upstream. Burchett also established a personal connection with Ho Chi Minh and Pham Van Dong. In 1955, when he was without a British or Australian passport, the government of North Vietnam took the unprecedented ste~ of offering him a special travel document of its own.

In the middle of 1955 Burchett visited Hungary and Poland, where social unrest was beginning to develop in the wake of Khrushchev's de-Stalinization program. Burchett was most disturbed by the growth of liberal and nationallst ideals among some of the anti-Stalinist party leaders and intellectuals who took him into their confidence.

In 1956 Burchett arrived in Moscow with accreditation from the National Guardian (later renamed Guardian), a tiny pro-Communist American weekly. During the next six years he devoted himself to reporting the achievements of Soviet science and technology, beginning with Sputnik and continuing on through the launching of Yurt Gagarin into snace. These sub 'ects were of a kind to reestablish Burchett's connectionS' with the mainstream British press, including the Dally Express and even the prestigious Financial Times. A book written by Burchett during this period was Come East Young Man (1962), which detailed the astonishing successes of the Soviet economy, especially in the areas of agricultural output, housing, and consumer goods. Burchett also reported on the innovative and humane approach to criminal justice which he saw in the USSR. All of this, combined with the party's determined campaign to eliminate bureaucracy, encouraged Burchett to write:

"A new humanism is at work in the Soviet Union which makes that peddled in the West look shoddy, for it starts right down in the grass roots of Soviet society; its allembracing sweep leaves behind no underprivileged.''

In 1962, with the conflict in Indochina heating up again, Burchett began a series of trips back to the war zones. In 1965 he

3 Quoted by Denis Warner in "Who is Wilfred Burchett?"

set up a new residence in Phnom Penh and developed a relationship with Cambodian Prince Sihanouk which was to last for over a decade. Burchett ghosted some of the Prince's English-language publications and also served as a liaison between Sihanouk and the North Vietnamese. It was from Cambodia that Burchett made his way to the "liberated zones" of the National Liberation Front of South Vietnam, as well as to Hanoi.

At first Burchett's articles on the Vietnam war appeared only in Soviet magazines, such as New Times. But the thirst for news "from the Ott.her side" was so great in the West, and Hanoi's restrictions on foreign newsmen so severe, that by 1967 Burchett's artJ.cles were beginning to appear in the mainstream Western press---particularly Le Mende and tlhe New York Times. The articles tended to deal with the alleged effects of the American bombing on North Vietnam. Stories of civ111an suffering were combined with tales of the indomitable Vietnamese will to resist "imperialist aggression." Burchett also provided advance notice of changes in Hanoi's position on the issue of negotiations.

The "special relationship" Burchett enjoyed with the Hanoi regime to manifest itself in many ways. According to Dennis Warner, Burchett's intervention, or veto, could determine whether or not a Western journalist would be given a visa to North Vietnam. Many of the applicants were people whom he had known from World War II and the Korean peace talks in Panmunjom. Burchett was a wise judge of friends and enemies. The first American correspondent allowed to visit North Vietnam was an old fmend, Harrison Salisbury of the New York Times, whom Burchett accompanied on part of his visit. Salisbury did nothing to embarrass Burchett. Rather, he reported to readers of the New York Times, and ultimately to the entire Western world, that the United States was deliberately bombing not military but civilian ta.rgets in North Vietnam. What Salisbury did not tell his readers was his source for this charge: not direct observation but North Vietnamese officials and one of their ;published propaganda booklets.'

Burchett also helped secure visas for other well-disposed foreigners. Among the most notable was the writer Mary McCarthy, who conducted a well-publicized visit to· Hanoi in 1968. Miss McCarthy too wrote nothing that might emlbarrass Burchett.

When, in 1968, peace talks began among the United States, South Vietnam, North Vietnam, and the Vietcong, Burchett was in Par·is to cover them. This time his personal ties witlh Western newsmen paid off handsomely. He had befriended Charles Collingwood many years earlier. Now Collingwood was chief foreign correspondent of CBS News, and Burchett was employed under wlhat he himself calls "a discreet a.rrangement" as a consultant to the CBS News team in Parts.

Nineteen-sixty-eight was also the year in which Burchett's book on Korea appeared (Again Korea). In it he wrote:

"Kim II Sung . . . has the warm human touch, the simplicity of the great, and a down-to-earth manner, rare amen~ men in his position. This comes through in his speeches. Even dealing with such unromantic problems as hea~ry ind"strv. thP-re is always some little aside, to remind his listeners, especially if there are bureaucrats among them, that the end result of everything is to make life better and gayer for everyone."

In the same year Fidel Castro took the unprecedented step of granting Burchett a. Cuban passport, to replace the now cum·bersome

' Salisbury's misleading reports about the bombing of North Vietname are metioulously anqlyzed by Guenter r..ewy in America in Vietnam, pn. 400-4()3; see also the iillJPortant account of t•:he f<'·rmer Brltish consul general in Hanoi, John Colvin, "Hanoi in My Time," Washington Quarterly, Spring 1981.

November 10, 1981 CONGRESSIONAL RECORD-SENATE 27137 document the North Vietnamese had provided many years earlier.

Sensing the changing climate of intellectual opinion in the West, Burchett now began a public campaign for the restoration of his Australian passport. A Burchett Passport Committee was formed in Australia, and its activities resulted in a petition to Parliament. Among the signatories were various journalistic associations around the world, the PEN Club, Bertrand Russell, JeanPaul Sartre, Jane Fonda, Vanessa Redgrave, Norman Mailer, and Arthur Miller. The petition wa~ presented in April 1969, but rejected by the Australian government. The Australian Journalists Association then appealed to the UN Human Rights Commission.

Buoyed by the tide of international support, Burchett decided to challenge the government's ban on his reentry into Australia. With the help of Gordon Barton, a wealthy Australian businessman and publisher, Burchett was privately flown into the country in 1970 and was accorded a spectacular reception with great attendant publicity. His public challenge to the Australian government to bring charges against him was not taken up, and this helped discredit the case of the Australian conservatives and strengthened the hand of his many admirers within the Australian Labor party. Thus when the party came to power in 1972, one of its first acts was to restore the passport of Wilfred Burchett.6

In the early 1970's, with American public opinion now favoring withdrawal from Vietnam, Burchett turned to other international settings. The end of the Cultural Revolution in China saw his friend Chou En Lai back in power in Peking. Burchett now began to disseminate Chou's version of the power struggle in China. In particular he publicized the story that Lin Piao had attempted to assassinate Chairman Mao and seize power, but was foiled and died while attempting to flee.

After the 1974 m1litary coup in Portugal, Burchett reappeared on the European scene, defending the cause of the Portuguese radical Left against the Socialists and centrists. But with the victory of the democrats in Portugal, Burchett was forced to turn elsewhere. In 1975 he flew to Angola, where he provided extensive reporting favorable to the Cuban forces helping to install the MPLA government.

The Angolan civil war catalyzed Burchett 's growing estrangement from the Chinese Communists. In 1976, after the death of Chou En Lai (for whom he wrote a powerful eulogy), Burchett began openly to criticize Chinese foreign policy. What forced him to take sides was not the Sino-Soviet split but rather the Sino-Vietnamese split and the broader international realignments of which it had been a part. China's abandonment of the "anti-imperialist struggle," in Angola and elsewhere, in order to develoo a united front against the Soviet Union, was for Burchett totally unacceptable.

Like the North Vietnamese politburo, Burchett had not anticipated the rapid collaose of the South Vietnamese government in 1975 after the final American withdrawal. He was thus not in place for the beginning of the end. But he made up for that after the victory by producing two books on the military campaign of North Viet nam and numerous articles celebrating life after "liberation." On October 25, 1975 he wrote in the Guardian:

5 The reason for the unwillingness of the previous Australian government to press charges against Burchett in 1970 or earlier was that the offenses for whirh he h ad been denied a passport occurred during the Korean war. Since the war h~d b"!en undeclared. actions rPlating to it could not be considered treasonous under the provisions of the Australlan Crimes Act as originally formulated .

"The South Vietnamese people are tasting the heady wine of running their own afiairs for the first time in livmg memory. This is the dominating factor in all spheres of pu.::>Uc life."

In 1975 and 1976 Burchett was also ecstatic about the new regime Pol Pot had created in Cambodia. On January 14, 1976 he wrote in the Guardian:

"Cambodia became a worker-peasantsoldier state last week, with the January 5 adoption of a 21-artlcle constitution . ... The new constitution ... confirms the new democratic revolutionary order built up in the countryside during the struggle .... It guarantees that everyone has the right to work and a fair standard of living ... it is one of the most democratic and revolutionary constitutions in existence anywhere."

In 1975 and 1976 Burchett was also denouncing as "fabricated" a number of reports that Sihanouk had become dis11lusioned with the Khmer Rouge. But after the Vietnamese Communists turned against their former allies, Burchett discovered the truth of what had previously been "fabricated." Pol Pot suddenly became a Hitlerite monster whose crimes exceeded the claims of the most virulent anti-Communist propaganda. So incensed now was Burchett by the horrors of the Pol Pot regime that when his friends on the editorial board of the Guardian refused to take a position on the Vietnam-Cambodia conflict he announced he would no longer write for t he newspaper. This inflexible stand was uncharacteristic of Burchett, but it corresponded to the totally uncompromising position of the Vietnamese.

Burchett is today somewhat distant from the Soviet Union, with regard to which he might be considered a "critical sympathizer." He reserves his uncrit'ical admiration for the Soviet Union's most militant clients-Vietnam and Cuba. One of his recent concerns has been to denigrate the moral credentials of the last Marshal Tito as leader of the nonaligned world, and to promote Fidel Castro in his place. Burchett also maintains his support for Kim II Sung's regime in North Korea, which is independent of both Moscow and Peking.

This slightly unusual pattern of allegiances within the fragmented Communist world has led some observers to conclude that Burchett's political position is an "independent" one, reflecting his own brand of idiosyncratic radicalism. What these observers do not real'ize is that the twists and turns in Burchett•s Communist sympathies, and his current firm attachments to theregimes in Hanoi, Havana, and Pyongyang. have correlated exactly with the foreign-policy line of the Communist party of Australia.

What do Burchett's memoirs tell us about the man and his political record?

First they contain interesting information on Burchett's friends and patrons in the Communist world. He is anything but modest in describing his close ties with Chou En Lai, Ho Chi Minh, Pham Van Dong, and Fidel Castro. Burchett's link with Kim II Sung seeinS to have been much less personal in nature, though still significant. As far as the Soviet Union is concerned, Burchett gives no indication of having made any close personal contact at the highest level.

The memoirs also list some of the people in the Western media who have befriended and promoted him. Harrison Salisbury is at the top of the list. So too is Russell Spurr. an English journalist formerly with the London Daily Express and later with the English-language Hong Kong weekly, the Far Eastern Economic Review. Charles Collingwood is mentioned as en important friend. Not only was he instrumental in having Burchett named as a consultant to the CBS News team at the Paris peace talks, but he also introduced Burchett to Averell Harriman, President Johnson's roving ambassador for peace. (Harriman sought Burchett's a.ct-

vice on how the U.S. might proceed in tts dealings with Hanoi.)

But the memoirs are also interesting !or the way Burcilett attempts to explain his own past. As an illustration, let us consider Burchett's account of his reporting of the show trials in Eastern Europe during the 1940's.

The Eastern European Communist victims of Stalin, whose guilt Burchett affirmed, were rehabllitated (many posthumously) in the Khrushchev era. Today in his memoirs, BurCihett explains his own role in the pseudojudicial farce by drawing what he considers to be an important distinction between the Rajk and Ko..stov trials. Burchett claims that he believed at the time in the guilt of Laszlo Rajk because of the calm and unemotional nature of the confessions he made. He adds: "I had no doubt of their guilt or of the inevita.b111ty of a death sentence for Laszlo Rajk, given the gravity of tlhe activities to which he had c-onfessed."

But Kostov's trial, he says, was different. Kostov (like Bukharin in the Moscow show trial of 1938) stood up in court and denied his handwritten confession. This is how Burchett today describes his reaction then to Kostov's publlc retraction:

"In his own way, Kostov had done Wlhat his old comrade Georgi Dimi·trov had done sixteen years earlier at the Reichstag Fire Trial. He had knocked the stuffing out of the prcse·cution .... Kostov's honesty and courage could make no difference to the conduct of the trial or its outcome, but it posed questions in everyone's minds about the methods by which suCih confessions were produced and the validity of the charges against Tito .... I was considerably shaken by the Ko..stov trial."

If the Kostov trial "posed questions" in Burchett 's mind about the methods of producing confessions and the "validity of the charges against Tito," and if he was "considerably shaken" by the Kostov trial, he did a remarkable job of concealing the fact. Burchett's earlier writings provide not a shred of e vidence to support his current claim. Instead, they contain sustained arguments to the contrary. Thus, he wrote in "People's Democracies":

" . . . If Kostov's written statement was a fraud and his oral denial correct, if he was the man of courage he depicted himself to be in 1942, no police pressure nor any threats of punl.slhment afterward should have prevented him from crying 'My statement is false. It was made under pressure. These other accused have been falsely arrested. Everything I wrote was a lie. I retract it all.'"

And further: " .. f Ko.3tov was the man who withstood

beatings and was prepared to face the firing squad rather than betray his comrades and his party in 1942, this is what he would have done in 19'49. Firstly, lhe would never have Wl'ltten a statement, secondly, if a statement had been forced out of him, he would have retracted it. But he played the double-faced role he had played in the 1930's, the role he had played in the courtroom in 1942, when he admitted everything to Geshev, the role lhe played in early 1949 after he was just denounced in the Politburo."

Burchett obviously counts on his readers' not checking his record, and for the most part they have not disappointed him.

Burchett adds a further revelation to explain his past "errors." He has now discovered the possibllity that the false evidence which came forth during the trials was planted by the CIA! Burchett bases himself on a book by Stewart Stevens, former assistant editor of the Daily Mail. According to the Stevens thesis, CIA chief Allen Dulles was worried that the emergence of "National-Communist" regimes in Eastern Europe would make Communism more attractive to the voters of Western Europe. 'l'o insure that Eastern European Communism remained Russified, Dulles,

27138 CONGRESSIONAL RECORD-SENATE November 10, 1981 operating through the American agent Noel Field and a Polish secret-pollee offi.cial, planted phony evidence of "Titoist conspiracies in conjunction with Western imperialism" in the hands of Stalin's secret police chief Beria. Thus, the story concludes, in prosecuting the alleged conspirators Stalin was all along the unknowing dupe of Allen Dulles and the CIA.

Another interesting feature of Burchett's memoirs is their failure to mention at all the two most serious charges that have been leveled against him.

In November 1969, the KGB defector Yuri Krotkov swore before a United States Senate Judiciary Subcommittee that he had been approached by and later helped to recruit Wilfred Burchett to the payroll of the KGB. Krotkov claimed that at their first meeting in East Germany in 1947, "Burchett gave me all necessary hints that he is very close to the Communists, and that he wants to have a special relation with me."

But at that time, Krotkov asserted, his KGB superiors were wary of Burchett, and instructed Krotkov not to get too close. At a second meeting in Moscow in 1956, the KGB was more trustful. Krotkov met Burchett in a restaurant:

" ... He openly told me that he is a member of the Australian Communist party, but for the benefit of the party, he is on the illegal underground position. Then he told me that he was in Korea, and then he was in China. He worked there as a freelance correspondent but he was supplied, he was paid by the Chinese Communist party all that period. Then when he came to Vietnam ... all his expenses were paid by the Vietnamese Communist party, by Ho Chi Minh, and he mentioned that he was in very close relation with Chou En Lai ... that he was in very close relation with Ho Chi Minh himself. He told me that he visited him many times, that he gave him a house in Hanoi, and a car, a secretary, that he was "equioped" very beautifully by the Vietnamese Communist. party."

And then he said that he had now a new idea ... that be wanted to come to Moscow because now after the Khrushchev soeech, Moscow became the most important place in the world. And he gave me a hint that he wants to be in Moscow in the same position as he was in China and in Vie·tnam. Jn other words to be a freelanc.e correspondent, rep.resenting the American newspaper National Guardian ... but money was a' problem, because no one would pay him money and he asked for money from the Soviet Communist party. He told me an this directlv and he said that it would be nice if I would be able to find [the] right man to discuss all this.

Krotkov testified that be .reported all this back to his superiors, and that after some consideration the KGB agreed to Burchett's proposal. But Burchett had left Mo.scow, and when he returned a new person had been put in charge of these matters in the KGB who put difficulties in his path. Now Burchett approached visiting membe.rs of an Australian Communist party delegation in Moscow, and after intervention on his be'l-)alf the relationship was established. Thus Krotkov:

"After his meeting with them ... everything WRs quite allright. The KGB gave him the good fiat and well, I guess necessary money .... I know that Burchett had a close relation with the boss of the KGB special department which is responsible for the whole foreign correspondents in Moscow. That's Colonel Barsegov."

Burchett's failure to mention the Krotkov testimony is consistent with his p·ast behavior. In fact his characteristic response to anyone who dares repeat the charges has been to issue a libel suit. One or these suits, taken out in Australia in 1973, led to the publicizing of a second series of major allegations about Burchett--allegations about his behavior during the Korean war. Although there is not a sentence in his memoirs dealing with the trial testimony, it was these allegations which

led the AustraUan and British governments to refuse to Issue Burchett a passport, an act which aroused so much indignation on the part of Burchett's friends.

The famous defamation trial, held in Sydney, in October and November 1974, involved a claim of $1,000,000 damages by Burchett against Jack Kane, an Australian politician. Kane had published an article in his political newsletter which reported the Aust·ralian parliamentary debate over the Krotkov testimony. At the trial, Kane's legal counsel presented testimony by Krotkov reiterating the charges he had made in Washington in 1969. Kane's lawyers also gathered an enormous number of witnesses from around the world, all of whom had been prisoners of war in Korea.

At the trial tha-ee AustraUa.n ex-prison&s testified that they had met Burchett in a Chinese camp !or Allled POW's, and that Burchett Wa.3 wearing the uniform of a Chinese army officer. One of these prisoners, Thomas 'HolHs, said that Burchett told him he could get them ·better treatment "H we agreed with his ide&S and went over to the Chinese more or le3s and collaborated with them." This was confirmed by another Australian prisoner, 'Robert Parker.

Even more damaging allegations a-bout Burchett's role during the Korean war were made 'by American POW's. Walker Mahurin, a former colonel ·in the Uni,ted States Air Force, met Burchett twlce during his sixteen months of captivity in North Korea. On both occasions, he claimed, Burchett wore a Chinese offi·~er's uniform. Mahurin a:Iso testified that in addressing the guards Burcheot u~ed the Chinese word for "comrade." Mahurin, who had been forced by his captor.s into confe;:s.ing falsely that :he had crurried out germ war>fare, said that Burchett called him an "!lnter>national wa.r criminal."

Paul Russell Knis:s, a.n American pilot shot down over North Kor·ea in May 1952, testified that he met Burchett five or six times in two camps in North Korea. At their second meeting, Burchett told him that it was :he, Burchett, who had edited the false con!essions Kniss <had been fo·rced to sign. According to Krulss, Burchet't made a taoe-recorded intetrview with him for a French newspaper, and the interview wa:s based upon specially prepared questions and answers Burchett handed to him, with the answers identical to the text of the false confe-ssion.

Kniss a.Jso de&cribed to the court how on one occasion a Ohi!llese inJtemogator dropped a piece or paper in htis ceu, and after the interrogator left he had picked it up. The paper, which bore the signature of W. G. Burchett on the bottom, contained questions of a miUta·ry nature, which wer·e the exact same ques1tions asked of Kniss by the Oh1-ne3e interrogator.

But the most devastating testimony against Burchett came from Derek Kinne, an EngUshman w'ho se,rv·ed with British units in Korea and was awarded the George Cross. Kinne identified Burchett in cou1:1t as t:he man he had seen twi-ce whlle a prisoner o! the Ohinese in Korea. The second time Kinne saw Burehett he a-nd the other prisoners were told that Burchett was corning to talk to them on t:he football pitch (field) in the oamp:

"It was all the Americans and all the British about 1400 men. . .. They put a table on the football pitch and he came on the football pitch and he stood in front of the table and he faced us . ... He went on to say that through the tireless efforts of the Chinese peoples' volunteers the peace talks were going on and that the Americans had sabotaged the peace talks, and he was getting booed down and the Americans started to take off their belts and put a noose in them and they would swing them and it became pretty well bedlam, so he got rather pissed off and he said: 'All right you people--you think when the peace talks break down and the Americans come this way you

wm be liberated. But I have got news for you. You're going that-a-way.' And he pointed to China."

Kinne continued: "I was in the front row and he turned his

back and started to tidy up his papers. There was a theme there-he was always saying 'our side' and 'your side.' I went to the front and I faced him, and I said to him • Are you biased, you son-of-a-bitch, are you biased?' He said 'No.' I said, 'Why do you refer to the Chinese and the North Koreans as 'our side' and the Americans as 'your side.' I can't remember whether he said, 'That was the side I correspond for' or 'the side I work for.' And then I said, 'Well you can tell your side to get some dental treatment in here because men are having their teeth extracted with regular pliers; also 39 men went up to Boot Hill and I saw the dogs dragging the bodies out, and we ate those dogs.' And I said, 'We arc starving to death.'"

His Honor: Did he say anything? Kinne: No sir, he kept his mouth shut. In answer to a further question from the

defense counsel Kinne said: "I told him that I complained .to the Chi

nese and they took me away and they put me in a room for 72 hours, and tied me up and told me I was in their to reflect, and I reflected. He (Burchett] got mad and he said to me, 'I could have you shot.' So I ran around that table and he started to move around the other way. I went around that table and I said, 'You son-of-a-bitch, if you are going to have me shot I wm tell you something.' I pointed to Boot Hill and I told him that 600 men had died from malnutrition and atrocities and he said to me, 'What can I do about it?' I said, 'You can tell them at Panmunjom,' and he said, 'It would be a good thing if I had you shot.' "

In an interview with the New York Post in 1977, Kinne also said that an hour after the meeting described above, two Chinese guards came and took him away to a small room and tortured him. According to Kinne the guards "told me I wasn't a very good student in the way I'd talked to Comrade Burchett, and that I was sick in the mind and they were going to cure me." Kinne asserted that he was kept in solitary confinement for 13 months and beaten daily while the guards tried to force him to sign a confession. "One of the parts of that confession was that I had a hostile attitude to Comrade Burchett."

At the trial Burchett denied all of these allegations, just as he denied the testimony of the KGB defector Krotkov. He lost the case on the technical grounds that the article which he had found offensive was regarded by the court as a fair rendering of the substance of a. parliamentary debate, and hence protected by parliamentary privilege from liability. Thus the jury was never asked to pass judgment on the truth or falsity of Krotkov's testimony. (The testimony of the former POW's had been presented by the defense counsel as supporting evidence.)

One need not have been fam111ar with all the charges against Burchett to have concluded that he was something other than an independent left-wing journalist. Burchett's published writings of the past thirty years demonstrate by themselves his devotion to various totalitarian causes. And the publicly acknowledged fact that Burchett was granted travel documents and a passport by the North Vietnamese and Fidel Castro-privileges not normally given to the citizens of North Vietnam and Cuba-speaks for itself concerning Burchett's "independence.'' What is most remarkable about Burchett is not his record. but how he has managed to retain credibility and respectab111ty in the eyes of so many Western intellectuals.

The effusive introduction to Burchett's memoirs by Harrison Salisbury provides an almost incredible example of this. A man who since 1945 has undertaken significant

November 10, 1981 CONGRESSIONAL RECORD-SENATE 27139 public-relations tasks for the brutal regimes of Joseph Stalin, Matyas Rakosi, Mao Tsetung, Kim 11 Sung, Ho Chi Minh, Fidel castro, and Pol Pot is deacribed by the former Moscow correspondent and associate editor of the New York Times as a "humanist" and an "iconoclast." Salisbury writes:

"In many ways Burchett reminds one more of the old-fashioned, pre-1917 radicals than those of today's highly ideological confrontations, a Lincoln Steffens or a John Reed with an Australian accent .... Burchett is an individualist as far as radicalism is concerned. If his sympathies have a polarization, it is toward the cause of struggling, backward emerging nationalist regimes, typified by Cambodia and Vietnam. . . . Burchett can be seen as sui generis, a radical who moves through a changing milieu, lending his sympathy to one cause after another not because of some Marxist doctrine, but because he believes in the underdog, whatever the continent, whatever the color, whatever the creed."

Salisbury has not been the only collaborator in Burchett's poLitical success. In the New York Times Book Review of March 22, 1981 to take a recent case, Thomas Powers desc~ibes as a man of "uncommon honesty" the same Wilfred Burchett who portrayed Communist victims of Stalinist repression as "Titoist spies on behalf of Western imperialism"; who disseminated and possibly helped fabricate the lie that the United States was conducting germ warfare in Korea; who portrayed the Chinese-run POW camps in North Korea, where Allied prisoners were being tortured, as comparable to Swiss holiday resorts; who defended the Russian invasion of Hungary; and who dismissed critics of Hanoi and Pol Pot as "CIA elements."

Burchett has been similarly praised and defended by the cream of the Western press. On March 5, 1970, during his campaign against the Australian government's refusal to issue him a passport, the Times of London wrote:

"Few Western journalis-ts who have witnessed Mr. Burchett 's conduct in the East would think him anything but misguided in his enthusiasms. He sympathized with China, reported the Korean war from the Pyongyang side, and in due course went to Hanoi-but his writings show him to be an advocate of detente rather t han a tough committed enemy of the West.

Not only was Burchett praised (and published) in the Times, he appeared in Lord Beaverbrook's Daily Express, as well as in the elite Financial Times, even after he had shown his true colors on Eastern Europe.

And not just the British were at fault. For years, as we have seen, Burchett found friends in the editorial offices of Le Monde, at CBS News, and the New York Times. Today Burchett is being promoted not by the Communist regimes whose causes he has served, but by the Western democratic liberals whose cause he despises. And in all .this he is presented to readers not as what he is, a Communist propagandist, but as what he is not, an independent, radical humanist, or, simply. an "Australian journalist."

Burchett has not n.lways been so misidentified in the American press. During the Korean war. when he was getting enormo11s space on the front page of the New York Times for his reoort on the condition of a captured American offic~r. the Times referred to Burchett as a "Red'' and as a "Communist correspondent." As late as 1967 and 1968, when t.he Times was oubllshin!? articles by and interviews with Burchett from North Vietnam, it usually prefaced them with a caption such as the following:

"Wilfred Burchett, an Australian writer. has freouentl:v bPen a sootrpsman for tre Communists in East. Perlin. Korea. ann Vietnam . . .. This article ~ives a Communist view."

But by 1970 a correspondent of the New York Times refered to Burchett only as an "Australian journalist ... who repol'ted on the Korean and Vietnam wars from the Communist side," and by 1971 Burchett had become "rt;he left-wing Australian journalist ." This identification continued throughout the decade until 1979, when the Op-Ed page began describing him as "an Australian journalist."

The New York Times Book Review followed the same pattern. As late as 1969, Frances FitzGerald, reviewing Burchett's book on Vietnam, described .him as a "Communist propagandist." But in 1973 James C. Thomson (a former official in the Johnson administration, and since the 1970's the curator of Harvard's Nieman Foundation) called Burchett a "left-wing Australian journalist." (In 1977, Burchett was given the honor of addressing the Nieman Foundation at Harvard.) By 1981 he had become a man of "uncommon honesty."

Similar trends can be seen in the weekly Far Eastern Economic Review. Its editor gave an almost accurate caption to Burchett in 1968, but by 1973, when the Review published an article by Burchett (on the Lin Piao affair) as its cover story, Chou En Lai's Australian spokesman was not even being identified at all.

Finally, there is the treatment given by the Western oress to Burchett's defamation trial. The allega.tions made in the Australian courtroom in 1974 were reported every day in Austra11a. The Times of London summarized the first day 's testimony (by Krotkov) and then forgot the whole frightful business until the end, when it offered a tiny paragraph announcing that Burchett had lost his case. The Washington Post gave a summary of the evidence in one column, at the conclusion of the trial. The New York Times and Le Monde, the two Western newspa~ers which had afforded Burchet t the greatest amount of space during the 1960's, when they were publishing many of his articles, failed to men·tion the trial at all. One might have thought that the same editors who had regarded Burchett's reporting on Vietnam as worthy of their columns would have found some interest in allegations that the writer was a Gulag bully-boy. But one would have been wrong.

Over the past thirty years W1lfre·:l Burchett has been enormously successful in winning friends in the Western media. In part his success must be laid to his own excentional talents as a kind of journalistic confidence man. H:! has been tireless in cultivating cordial relations with people of prospective influence in high places, and his polished pe"sonal manner, which reveals not a trace of fanaticism, has been extraordinarily helpful in this pursutt.

But in part Burchett's success, like that of a confidence man, has rested u..,on a favorable psvchologioal predisposition in the minds of his viotims. There seems to be a strand in our culture that is receptive to the message Burchett pres-ents, the message of the benign and non-threatening nat.ure of revolutionary Communist regimes. Though Soviet m111tary moves in recent years have heightened po!>ular concern about Western security, the case of Wilfred Burchett makes it clear that manv of our leading intelle::tuals do not fully know, or do not wish to know, wha.t the struggle is about.e

THE CANCUN SUMMIT AND WORLD HUNGER

• Mr. BAUCUS. Mr. President, the international summit meeting recently held in Cancun. Mexico. brought most of the world's leaders together to discuss major global issues.

Unfortunately, most of the discussion focused on the economic climate within the United States or political relations between particular members of the summit. There was little constructive talk about a global problem which is of particular concern to me: World hunger.

Be:lore the Cancun summit, I wrote to the President asking that he participate in discussions on world hunger. I was joined by six of my Senate colleagues and Representative GILMAN in expressing our desire that the President not· go to Cancun to tell others the state of world affairs, but, rather, to listen and discuss with others possible global solutions to the ongoing tragedy of world hunger. I submit our letter to be printed in the RECORD.

Mr. President, I would also like to bring a series of New York Times articles to the attention of my colleagues. As we all know, the problem of world hunger is one of the most pressing problems facing us today.

In my opinion, these articles give an excellent analysis of the importance of the United States in the world agricultural economy, and they make clear the key role that Americans must play in order to solve the problems of world hunger and starvation. I ask that these articles be printed in the RECORD, also.

The letter and articles referred to follow:

U.S. SENATE, Washington, D.C., October i9, 1981.

The PRESIDENT, The White House, Washington, D.C.

DEAR MR. PRESIDENT: We support the Petition to End World Hunger. This petition, which has been signed by thousands of Americans across the nation, urges you to support all efforts of the Cancun Summit Meeting to end world hunger and malnutrition, and to cooperate with all international efforts by that body to end mass hunger and starvation. This Petition to End World Hunger expresses the concern and compassion of grassroots America for the hungry of the world.

Such a position is consistent with the traditional and generous help the United States has always offered to those less fortunate than we, ·and is supported by the following facts:

In 1976, Congress approved a right-to-food resolution reaffirming the right of every man, woman and child on earth to a nutritionally adequate diet.

Congress recognizes the existence of a global emergency created by the hunger and chronic m3.lnutrition suffered by an estimMed one billion people; as outlined by both the Presidential Commission on World Hunger and the Brandt Report, this crisis threatens the s-ecurity of all nations on earth.

The United States and other developed countries are free of mass hunger and have a moral resnonsibility to prov·ide emerge-ncy relief to the starving millions in Africa. Asia and Latin America, and have a tangible interest in lon~-range assistance programs which help these oeo!Jles underta1'"e development initiatives leading to self-reliance.

As this petition campaign and other public expressions of concern for the hungry clearly demonstrate, a significant number of Americans stand ready to make the sacrifices necessary to help free the starving of their misery.

We see in the upcoming North-South Summit Meeting a Pnioue oooortnnity for your Administration to reaffirm and strengthen our commitment to eradicate wor'ld hunger


and promote global security. Therefore, we call upon you, Mr. President, to seek initiatives at the Cancun Summit that are aimed at eliminating world hunger. We ask you to lend all possible assistance to carrying out any recommendations flowing from that meeting that would alleviate the suffering caused by wortd hunger.

we issue this call, Mr. President, in the conviction that unless the United States and other developed nations are willing to share the fruits of our good fortune so that others might live, the holocaust of mass hunger and starvation will continue. And we believe that without an end to world hunger, there will be no justice; without justice, no peace; and without peace, no lasting freedom anywhere in the world.

Sincerely, Max Baucus, Carl Levin, George J.

Mitchell, Donald W. Riegle, Jr., Patrick J. Leahy, Harrison A. Williams, Jr., Benjamin A. Gilman, and John c. Danforth.

[From the New York Times, Aug. 16, 1981) DEMAND OuTPACES WORLD FOOD SUPPLY

(By Ann Crittenden) The world food situation is like a basket

half empty, half full . On the bountiful side, for the last three

decades global food production has steadily increased, slightly outstripping population growth and enabling more people to eat better than at any time in history.

This year, world grain production is expected to set historic records, permitting some rebuilding of world food stockpiles. India, once written off as a hopeless case, has almost tripled its food production in the last 30 years. Laborers in the Soviet Union expect a regular portion of meat, and Chinese peasants no longer fear the kUling famines that in the past have swept over the land.

500 MILLION SUFl'ER MALNUTRITION

Despite the real progress, however, there are still more hungry people in the world than ever before-both in absolute numbers and as a percentage of total world population. The rising cost of food has contributed to this situation.

By most estimates, more than 500 million people-roughly one out of every nine-suffer from serious .malnutrition today, compared with 100 million to 200 million-one out of every 14 to 25 people-in the 1950's.

MISMANAGEMENT ADDS TO WOES

Refugee camps are st111 filled with wideeyed children with swollen bellies. Millions of malnourished adults in Asia and Africa are still doomed to live and work far below their normal capab111ties. And even in relatively prosperous countries such as Poland, economic mismanagement has produced shortages of food so severe that the population has taken to the streets.

The coexistence of bounty and want is, in short, as stark as it ever was. The reason is that food production has not kept up with rising incomes around the world, and those incomes gains are not being equitably distributed.

As more countries-particularly the rapidly developing middle-income countries-and wealthier people in those countries gain in purchasing power, they consume more food. This in turn puts pressure on food prices, and means that poorer people everywhere have a harder time buying enough to eat.

"There has been significant progress in a few developing countries." John Mellor, head of the Jntern~tional Food Policv Research J'nstitute in Washington, said in a recent interview. "But the f!ains do mean that the poorest people will be worse off. It's a good development, but it is increasing inequalities."

"GHOST OF MALTHUS NOT BURIED"

"The ~host of Malthus," as Shahid J. Burki of the World Bank recently put it, "is not buried yet."

But the fact remains that the doomsday theorists who warned only a few years a.go that a "human tidal wave" would swamp the world's capacity to produce food have so far been proved wrong. Between 1~60 and 1980, thanks to the Green Revolution's new seeds and fert111zers, global corn and wheat yields have jumped by ·50 percent, and rice yields by 30 percent.

As a result, by the late 1970's global percapita food consumption had increased to 108 percent of the minimum essential for good health, according to the Food and Agriculture Organization of the United Nations, compared with slightly below 100 percent in the early 1950's.

MANY UNCERTAINTIES REMAIN

What are the chances of extending these gains, and more important, of translating them into food for the millions with empty stomachs? Will the 1980's bring a more secure world food system and more equal distribution of food, or a recurrence of the periodic shortages, price instab111ties and inequities of the 1970's?

The answers to these questions are as uncertain as the weather. But most international food experts agree that in the next decade the world wm be entering a new era, characterized more by food shortages than food surpluses, by widely fluctuating prices, and by a steadily widening gap between those who have plenty and those who go hungry. At worst, a disaster to dwarf the food crisis of 1973-74 is seen possible.

New stresses on the world food system are responsible for the insecurities that lie ahead. The most important structural changes are these:

Agricultural productivity in the United States seems to be leveling off, and idle cropland in this country has virtually disa.ppeared. Because the United States now supplies more than halt of the grain in world trade, this could mean less food available in the future for deficit countries.

The United States may also be forced to curtail its food exports because of accelerating soil erosion and the pressure of foreign demand on domestic food prices. Some experts, such as Walter P. Falcon, director of Stanford University's Food Research Center, believe that "the 1980's w1H almost surely see a reduction in the rate of growth of export supplies from the United States."

Even if exports of food from North America could continue expanding indefinitely, many believe that the very dependence of the rest of the world on a single re~lon is a danger. According to the World Bank's Mr. Burkl, if a drop of more than 10 percent in the North American grain crop coincided wtt.h a shortfall somewhere else, the result would be "disaster."

World food prices now rise much faster in times of scarcity, because of the spreading tendency of food-importing countries, notably Ja.nan, the European Economic community and the Soviet Union, to keep their domestic grain prices fixed. This means that, even when global food supplies shrink, consumers in these countries can continue to purchase the same amount of food and producers have no incentives to hold stocks or increase production. As a result, supplies do not adjust. international prices go higher than they would otherwise and the poorest food importers suffer.

The improvement in Uvlng standards and the tzrowln~ demand for food around the world have put pressure on food prices, making it harder for the poorest countries to import their food needs.

MANY EATXNG MORE MEAT

Rapidly develo?ing, middle-income countries such as Mexico, South Korea and Thailand are eating more meat than ever before. The Ea.stern European bloc-with the exception of hard-pressed Poland-has decided to maintain levels of food consumotion throu~h gOQd years and bad. The Middle East oil producers have adopted Western diets with

abandon, increasing their food imports from 3.1 million metric tons, valued at $350 million, in 1970 to 15 mUlion tons, valued at $3 bilUon, in 1980.

Behin.:t .these new consumers looms the enormous sha.dow of China. Its food imports tripled in the period from 1961 to 1977 and a.re st111 growing. In all, these purchasers are putting great pressures on the international grain markets and, consequently, on prices.

As a result of these trends, world grain prices are increasingly unstable. In the 1970's, world wheat price fluctuations were more than seven times greater than in the 1960's, and swings in rice prices were more than twice as extreme. Virtually all the authorities expect prices in the 1980's to be even more unpredictable, a.dding to the insecurity of the poor importing countries and of food producers and consumers in the United States, one of the few countries that allows international grain prices to be fully reflected in its domestic market.

Since the World Food Conference in 1974, a major goal of the antihunger movement has been the establishment of an international wheat reserve system to stab111ze prices, so that poor countries could be assured of affording food imports in cases of emergency. But negotiations on a global grain· reserve were adjourned without success in 1979, and the prospects for such a system being established now appea.r to be nll.

A ~ODEST WHEAT RESERVE

In late 1980, the United States did act to guarantee that a modest Government-held wheat reserve of 4 milllon metric tons would be establlshed to backstop shipments of food aid in cases of severe food shortages. The United States is also committed to a minimum annullil level of 4.47 m1111on tons of food ·aid under the Food Aid Convention of 1980, which guarantees that at least 7.6 million tons of food aid a year wlll be avallable from exporting countries as ald.

Current food aid levels are about 9 mllllon tons a year, of which about 6 million tons are from the Uni-ted States. That amount is negUgible compared with the needs of the fooddeficit areas, however. According to the F.O.A., 72 low-income, developing countries received some 8.1 mllllon tons of food aid in 1980, compared with import requirements of some 17.7 mllllon tons of wheat, 4.8 mllllon tons of coarse grain, and 4.3 mlllion tons of rice over the 1980-81 crop year.

The poorest countries wlll obviously have to go into the commercial markets to cover their food deficits. To enable them to afford emergency purchases, the International Monetary Fund recently establlshed a cri·terion for lending that would enable pooreT countries to receive additional financing from the fund when their food imports rose above a base level. This could make an additional $500 mllllon to $700 mUllan avallable to food-short countries.

To keep such an influx of funds from pushing prices even higher, and to guarantee that the poorest countries would have access to grain purchases in tight periods, several international food groups, including the F.A.O., the International Fund for Agricultural Development and the World Food Council, have proposed an international food security reserve.

A 9- TO 18-MILLION-TON RESERVE

The reserve, which could be from 9 to 18 mllllon tons in slz,e, would assure developing countries that they would not be squeezed out of the world food market tf prices skyroclret during a shortage. Grain exporters would promise to make available to the poorest countries in times of scarcity an amount of wheat based on their normal commercial import purchases. The sales would be at roughly commercial rates, although a ce111ng on the price. based on longterm market trends, would be set.

Over the longer run, however, the only real world food security ts an increase in food

November 10, 1981 CONGRESSIONAL RECORD-SENATE 27141 production in the deficit countries. The World Food Council, a United Nations policy group set up in 1974 to monitor international food security; is working with some 50 developing countries to establlsh national food plans.

Food experts agree that greatly increased investment in technical assistance, irrigation networks and agricultural research wlll be necessary in the coming decades if the world is ever to achieve freedom from hunger. The World Bank, the chief international lending agency for such projects, is now putting 30 percent of its resources into agriculture, 80 percent of which is going directly into food production. The $1 billion International Fund for Agricultural Development, based in Rome and heavily financed bv the Arab oil producers, is also devoting all of its resources to agricultural development.

$600 BILLION IN 10 YEARS

These investments are only a. drop in the bucket compared with the world's need, however. World Bank calculations indicate that an investment of $600 b1llion in developing countries, largely in expensive irrigation systems, wm be required over the next 10 years just to maintain food supplies at present levels of hunger.

No one is sure where that vast sum wm be coming from, or whether the agricultural development that is necessary wlll be accomplished before the next poor harvest years.

"Say the economic policies in the United States don't work, and we get heavy inflation here, and then a. bad crop year or two," Mr. Mellor of the International Food Policy Research Institute speculated recently. "Food prices here soar, and the Government decides to slap on an export embargo, sending global food prices through the roof. What would a Tanzania. or a. Bangladesh-which already spends 80 percent of its export earnings on f·ood imports-do then? That's the disaster scenario, and it's a perfectly possible eventuality."

[From the New York Times, Aug. 17, 1981] WORLD HUNGER Is EXACTING HIGH HUMAN

TOLL

(By Ann Crittenden) Widespread hunger remains intractable

throughout the world and is exacting a high human toll.

About half a billion individuals are still crippled by hunger, and a billion or more others should have a more varied diet, according to nutritionists.

The great majority of the undernOU!'ished-some 80 percent, by World Bank estimates-are women and children. In recentt testimony before Congress, Jean Meyer, the president of Tufts University and a. noted nutritionist, said the human toll of hunger :took the following forms:

11 Blindness caused by a lack of vitamin A occurs in more than 100,000 children every year.

11 Up to 5 percent of the nopulation in remote inland re~ions of Africa and South America, and in the Himalayas, are affected by cretinism caused by iodine deficiencies in childbearing WOillen.

rr From 10 to 50 percent of women in South America, Africa and Asia are estimated to have iron deficiency anemia..

11 In adults and children alike, undernourishment brings listlessness, muscle wastage and a reduced capacity for learning or activity, a legacy that perpetuates the poverty at the root of the hunger issue.

This problem of pervasive deprivation, it is agreed, is the real hunger problem, affecting far more people than owtright famine and far harder to solve.

As C. P. Timmer of the Harvard Business School put it in a recent paper: "The moral will of the rich is successfully spurred by emergencies; it is dulled by the chronic hunger of the masses of the poor."

79-059 0-85-39 (Pt. 20)

The public has responded to famines. those crisis si,tuations amenable to crisis solutions. In 1979 and 1980, publicity by such celebrities as Rosalyn Carter and Li v Ullmann prompted an unparalleled international relief effort for Oa.mbodia that successfully prevented the wholesale starvation of rthe Khmer people.

This year, the emergency is in Somalia, one of the poorest nations in the world, where more than one milllon refugees huddle in 33 camps. Elsewhere, in Thailand, the Sudan, Zaire, Nicaragua, Honduras, and Pakistan, severe hunger faces as many as nine mill1on more refugees.

TWO-THmDS OF WORLD'S HUNGRY

The undernourished are less visible. MOSit are in Asia: in India, Bangladesh, Pakis·te.n, Indonesia., the Ph111ppines and Ca.mbod~a.

These six countries, along with Brazil, Zaire and Ethiopia., account for two-thirds of the world's hungry.

In India alone. 300 million to 400 million people do not ha.ve enough to ea.t, despiite the country's plentiful wheat stocks, and in Pakistan, 30 percent of the population is not obtaining tthe minimum level of nutrition.

Worst of all is sub-Saharan Africa., where the food supply is so limited tha.t fully 70 percent of the population is not getting enough to eat, according rto Joseph C. Kennedy of Africa.re Inc., a. nonprofit agency for development in rural Africa.

The region, the only one in the world where per capita. food production has declined since 1960, is rapidly becoming a chronic food deficit area. Most of the countries there cannot even afford tto pa.y for essential food imports.

In his pa.per, Mr. Timm~ of the Harvard Business School dealt with the question of "what do these people need to alleviate their hunger." His answer was that "they need more of their basic food."

"Hunger is a. calorie problem," he added. "If solved by additional intake of traditional foods, especially basic ceree.l grains such as rice, wheat, or coarse grains, not only is rthe hunger problem solved but so too are many of the secondary nutritional problems, especially any protein deficiencies."

POVERTY AND INCOME DISTRIBUTION

Virtually all the authorities on world hunger agree that rthe problem is due not to overpopulation or a lack of food availab111ty. Even at the height of the world food crisis in 1974, the world was producing two pounds of grain a day-more than 3,000 calories--f()(l' every man, woman and child on earth. The cause of hunger. it is agreed, is poverty and poor income distribution in most of the affected areas.

If poverty a.nd inequality are the root causes of hunger, then it is not surprising, as Mr. Timmer puts it, that "successful relief efforts and a decreasing population growth rate in the third world ha.ve left much of the human ·hunger problem untouched."

The pro1blem is that many of the people who most need food simply cannot a.trord to buy it. According to a recent study by A.ma.rtya Sen of Oxford University, 1n three of four contemporary famines~two in Bangladesh and two in Ethiopia-there was no decline in food output; a breakdown in the economic system and in people's purchasing power CS~used the starvation.

The higher the food prices, the greater tile incidence of hunger, for in developing countries the poorest people already spend some 60 to 80 percent of their income on food.

NOT GIVEN HIGH PRIORITY

Another problem is thia.t governments of the countries in which most of the hungry lives, wLth the recent exception of India, have not placed a. hig'h priority on food production or distribution.

According to the Food and Agriculture Organization, less than 60 percenrt at the world's cultiV'Sitable land is now under cultivation.

Less than 20 percent of the potentially a.ra.ble land 1n Africa. and Laltin America. is cultivated, and. throughout the developing world, vast iru::rease.s in food production could be achie\·ed through the adoption of more sophisticated farming methods.

NEEDS OF FARMERS Na':GLECTED

Most governments in developing countries have 'pa.rticularly neglected the needs of smaJl farmel'S, 81Lthough sma:ll farms prodiuce most of the food in developing countries and ha.ve been shown to produce higher yields per hectare-2.471 acreg,...-,than la.rge farms.

Many observers argue tha.t this neglect of poor farmers, and inequity in the countryside, contributes !both to widespread 'hunger and to stagnating food production. In their book, "Food First," Fra.nces MOore Laippe and Joseph Col11ns ma.inte.tn that this issue is especially acute in Cellitra.l America and the Caribbean, where ln the mid-1970's a.pproximately hal! of ·the agricultural la.nd WI8S used to produce cattle and crop.s for export or fur a domestic elite, mther than basic staple foods. The pattern changed a.fter ·the revolution l.n Nicaragua, where the new Government has put the old cotton plantations into :bean prodluction.

In Mexico, the authors point out, more basic g:ra.ins Me consumed by livestock than by the country's peasants. And, they £ay, in the Sahel, a region in north centtral Africa, soUJth of the Sahara, characterized by pertodic drought, agrtcultur81l exports actually increased in tho late 1960's and early 1970's, when the desert tribes were f81Ced with mounting h~r.

RISE IN FOOD AID URGED

Sympathetic groups 1n the industrial countries have argued that more food aid, which has been deolining in real terms, is needed ,to eUmina.te hunger. But rthe amounts tha.t would be required to wipe out hunger dwarf the current amounts of ald.

Aocord.~ng to Mr. Timmer's oalculatlons, the world's calorie deficit .amounts to 30 million to 50 mill1on metric tons, compared witth total food aid shipments of 8 million to 10 m11Uon tlons in recent years. The deficl t amounts to only 2 to 3 percent of world grain production, however, and 15 to 2·5 percent of internationally trad.ed grain.

Moreover, it has frequently been demonstrated <that food aid undermines the ab111ty or countries to develop their own 8g'l'1culturad capa.bilittes.

The on•ly lasting solution to hunger, it is agTeed, is not food aid 'but a. more aggressive emphasis on ·a.grtcultura.l productivity and food distribution wt.thin the food deficit coullitries thexnselves.

To achieve this, the international food agentCies h81Ve suggested land reform and assistance for sxnall farmers; the bui'lding of agricultural institutions with skilled personnel 1n developing countries; more research on tropical agriculture; s:ha.rply increased employment opportunilttee for the rural and urban poor and food substdtes !or the needy.

The hungTy themselves seem to agree that help tn improving production 1s preferable to charity. Joseph Short, the executive d'irector of Axfam America., an international hunger relief organization, said that, when it was distributing food rations one day last year in Cambodia, hundreds of poor waited quietly for their share, but when fishnets were handed out, the crowd cheered.

(From the New York Times, Aug. 25, 1981] CONSUMPTION OF MEAT RISING IN THE

DEVELOPING COUNTRIES

(By Ann Crlttenden) When Lowell Haskins, an American poul

try breeder, visited Zambia. not long ago, he was invited to lunch at the luxurious home of a C&binet minister. The omcial's wife asked if he would like to see her chickens, and then led him outside. There in the back

garden were 300 broilers being fattened for the Lusaka market.

"It was like tein3 invited to the home of Alexander Hal.,. and having Mrs. Haig show you her chick~n business in the backyard ," said Mr. Haskins, whose Connecticut company, Arbor Acres , supplies almost one-third of the world's breeding stock for broilers.

POULTRY PART OF MEAT CATEGORY

All over the developing world, the production and consumption of meat are soaring. In the last five years, for example , the per capita consumption of poult ry has risen by 24 percent in the developing countries.

The meat category. as defined by experts , includes poultry in addition to beef, veal. pork and sheep, goat and horse meats.

The trend is the most important change in global eating habits of the last decade, in the view of many food experts. Despite warnings in the early 1970's that the world's food-producing capacity could not sustain an American-style diet , people in Africa and the Middle East. in the rapidly f!rowing countries of Southe•ast Asia and in Eastern Europe, Mexico and Brazil are using their rising incomes to purchase more meat.

The growth in meat consumption elsewhere is occurring at a time when Americans are reducin; the amount of meat, espedally beef, in their diet.

The United States exports 70 percent of the feed grains in world trade, supplying a foreign demand that pushes up the prices of feed grains and, therefore, of meat in the United States . As a result of the rising price of meat in this country, and because of declining real incomes and diet-health concerns. Americans themselves now eat 17 percent less beef per capita than in 1976.

"More by coincidence than by design, we have cut back on meat and made it possible for others, in Europe , Ja'Jan and the middleincome developing countries, to eat more meat," said Harold Breimeyer, an economist at the University of Missouri, in a phone interview.

A number of food experts believe the trend is a positive one. They see the growing number of farm animals as a buffer against famine, particularly in Africa and South Asia. If grain crops fail again in manv countries. the animals there can be slaughtered, providing food and making grain that has been used for feed available for humans.

"The growin:?: consumption of meat means we have more food reserves than we think," said Shahid J . Burki of the World Bank.

On the other hand, some agricultural economists believe that the trend toward more eating of meat reflects and exacerbates the growing gap between the better off and the poor around the world. Many worry that the demand for meat will contribute to serious food price inflation in the 1980's and, indirectly, to the spread of hunger around the world.

The rising consumption of meat in developing countries-fueled by rising incomes rather than population growth-is lar~e~y limited to the middle classes. Yet the trend puts pressure on the price of livestock feed and, in turn, on the prices that the very poor have to p.9.V for food.

"The potential for feed grain demand in a do'7.en middle-in"ome. oil-producing or skewed-income countries to 'drive' international grain markets tn the 1980's is very re:al," said C. P. Timmer of the Harvard Business School. Mr. Timmer is particularly concerned about what could happen to world fooci nriC'ec; if the Chinese make mafor nurchases in the feed grain market in the 1980's, as they seem to be nlanning to do.

ADDED PRESSURE OF SYSTEM

There is no doubt that higher meat consumption puts added pressure on the world's food system. LestE:lr Brown of the Worldwatch Institute in Washington has calculated that one person consumes about 180

kilograms of grain each year if it is eaten directly. But if he or she has a meat-intensive diet, the grain demand rises to 730 kilograms. A kilogram equuls 2.2 pounds.

"Such a diet, aside from the health effects of producing more cholesterol and heart disease, just isn't sustainable," said Frances Moore Lappe of the Institute for Food and Development Policy in San Francisco. "If you compare the per-capita acreage required to sustain the American diet with cultivated land per capita tn the rest of the world, you find we use twice the acreage that the world has availa!:>le per capita. We call the trend toward a meat-centered diet a wish for the impossible."

UNMISTAKABLE TREND

Whether or not it is possible over the long run, the trend is unmistakable, and is reflected tn these ways:

Today, more grain is fed to animals than is consumed by the 1.4 billion people living in low-income countries. The middle-income developing countries alone, including Brazil, Mexi"o , Ta.iwan , Singapore and Hong Kong, feed six times as much grain to animals as is eaten by humans in all of sub-Saharan Africa.

The proportion of grain consumed by livestock has doubled, from about 20 percent of total world grain consumption in 1960-61 to more than 40 percent.

Since 1970, the growth Jf grain consumption for animal feed has 't)een twice as rapid as that of the consum"'ltlon as food. According to World BanK calc:llations, one-third of all wheat and one-half of all grain imports go to feed livestock.

The Eastern Euronean countries, including the Soviet Union, consumed 97 million metric tons of food grains in 1960 and used 67 m1llion tons as animal feed. By 1981, food grain consumption was 126 million tons, while feed grain consumption had jumped to 186 million.

The bie; ex"'lloslon is in the consumption of poultry, which, unlike pork or beef, is acceptable fare to most religious and ethnic groups.

Poultry is also the most efficient converter of grain to meat. A rule oi thumb says that feeder cattle require eight calories of grain to produce one calorie of mflat and pork requires four.

But chicken can produce a calorie of meat for every two or two and :1. half calories of grain, thanks to technology that between 1950 and 1980 reduced the amount of grain necessary to produce a four-pound broiler in the United States from about four kilograms to two kilograms, and reduced the time requireQ. for that growth to seven weeks from 13.

"Chicken is the meat of the future," commented John Schnittker, a Washingtonbased agribusiness cons,.lltant and former Agriculture Department official.

GROWTH IN CONSUMPTION

In the last five years , poultry consumption has risen almost everywhere. Per capita consumption, in kilograms, rose in Brazil from 5.3 to 11.1; in Venezuela from 12.8 to 15.6; in the Soviet Union from 5.7 to 9.1; in Janan from 7.7 to 10.5; in Hong Kong from 16.8 to 21.2; in the European Economic Community from 12.4 to 13.9, and in the United States from 24.1 to 29 5.

So many small-scale chicken operations have sprung up in northern India and Pakistan that the old Grand Trunk Road, from Calcutta to the Punjab, ls now called "Poultry Lane." In the Yucatan, a thriving business has surung uo in the last three or four years to feed the tourist trade as well as the booming oil towns on the Gulf coast. And in the Sahel region and fn Upoer Volta in Africa, an explosion in the chicken populat.l.0'1 potw• ""rib'='smen the same kind of food security they used to have when they k1lled off camels during hard times.

If another food crisis did occur, most food experts say, the trend toward meat would b~ reve-sed qui :klv. But, in the meantime, much of the world's food reserves consist of farm animals.

[From the New York Times, Sept. 1, 1981] U.S . DRIVE FOR GRAIN EXPORTS STIRS DOUBTS

BOTH AT HOME AND ABROA:>

(By Ann Crittenden) A lifeline of ships streamed out of United

States ports last year with more than half of the grain in international trade, carrying wheat to the Soviet Union and China, animal feed to Eouth Korea and corn to Mexico.

More than ever before, the world der;ends upon American exports for its basic food nee:is . This country now expo;ts mo>:e e-rain than Latin America and sub-Saharan Africa to;;ether produce . Th~nks in put to ae-gre8sive promotional

efforts , the United States has become the No. 1 supplier of ducks to Singapore, nudging out China. And in Peking itself, a model $1.5 million bakery will soon be demonstrating the latest techniques in baking Westernstyle bread.

Jn the last 10 years, American farm exports have almost tri"'led in volume, surging 25 percent in the last two years alone.

Jn this bumper crop year, the United States will be shipping 163 million metric tons abroad-almo3t 40 percent of its harve:;t-and e3.rnin~ a record :t\41.7 billion for its hard-pressed balance of payments. Twofifths of the acre ~ harve>ted in the United States now produce for export. Indeed, rou~hly five million acres produce for China alone

EROSION AND INFLATION

This remarl{able and l'neYpec""ed vrowth has generally been viewed as an unmixed blessing-for the world's hungry, for American farmers and for the American balance of payments. But, ever so faintly, a chorus of doubts is beginning to be heard about whether an all-out agricultural export policy really helps feed the world or is even in the best. interests of this country

Critics of huge American grain sales emphasize two points Many soil scientists maintain that huge agricultural exrorts are a~gravating the increasl.no:lv se·•e~e nroblem of soil erosion in the United States. And, more important for American consumers, the critics as~ert that exports contribute to food price iuflation.

If the current rate of export growth continues 1·n!il 1090. pushing more marJ!inal land into production, prices paid to farmers !or corn, wheat and soybeans would have to increaRe more than 85 percent. according to Agriculture Department economists.

Price increase; of that magnitude could so_ueeze some of the poorest countries out of the marl<et for American grain. Some int.ernational food experts even worry that if food price inflation in the United States were to wors~n percentibly, political pressure might produce a sud!ien cutoff of food shipments abrosd, with disastrous consequences to the count rie> that depend U:Jon American grain for their margin of safety.

WARNING FROM OFFICIAL

M. Peter McPherson. director of the International Development Cooperation Agency, said during recent Congressional hearings, "Although the United States has traditionally served as the world's 'breadbaskets,' we cannot e'l{pand production indefinitely wit hout boostin~ grain prices and damaging our own reso,,rce base."

So far , however, the Reagan Administration has pursued a policy of all-out maximization of exports, mindful of the powerful nolitical pressure exerted by most farm org~.nizations to keep exports high.

rn the early 1950's. g":'ain surpluses had grown so large that the Eisenhower Administration conceived the Food for Peace program, formally known as Public Law 480, to

November 10, 1981 CONGRESSIONAL RECORD-SENATE 27143 let developing countries buy these surpluses on long-term credits. That was the beginning of a gradual rise in exports that continued until1972, when huge Soviet grain purchases caused the figures to surge dramatically.

Last year, during the Presidential election campaign, Ronald Reagan promised a group of Iowa farmers that he was "committed to the aggressive expansion of agricultural exports." ln a recent review, Under Secretary of Agriculture Seeley G. Lodwick said, "Many of us are using that statement as a general road map."

Agriculture Secretary John R. Block, himself a substantial corn and hog farmer, has made exports a cornerstone of his farm policy, a fact that he and other high department officials stress in virtually every speech they give. Questioned after a speech earlier this year at the Council on Foreign Relations in New York, Mr. Block declared that he could see no limit to American farm exports.

In their speeches, Agriculture Department officials stress that farm sales abroad provide more than 20 percent of farm income and some 630,000 nonfarm jobs producing, processing, shipping and financing the export trade.

"BUSHELS FOR BARRELS" Above all, farm exports of $40.5 blllion

last year paid for more than half of American oil imports. Supporters of fiat-out farm exports talk approvingly of "bushels for barrels."

In pursuit of more sales, Mr. Block led a team to Brussels in May to warn the European Economic Community to grant greater access to American farm products, particularly soybeans and corn gluten. Government-industry sales missions this year have visited China and Yugoslavia as well as nations of northern Africa and South America.

Loan guarantees for agricultural purchases by foreign buyers, through the Commodity Credit Corporation, have been increased by $300 mlllion this year and will rise by $200 million more in fiscal year 1982, to $2.5 blllion.

Above all, the Administration is keeping commodity loan rates low enough for fanners to have an incentive to sell in the world market. If farmers do not sell this year's record wheat harvest abroad, the Government will have to pay farmers some $400 mlllion in target price subsidies.

Despite these efforts, the pace of farm exports slowed this summer as a result of the economic stag.nation in Europe, high interest rates, the strong dollar and competition, especially from Argentina. Nevertheless, another record tonnage for farm exports is expected next year. Government economists warn, however, that an anticipated drop in commodity prices could make export earnings slip below this year's level.

The Agriculture Department and private grain companies are also concerned about a new reluctance on the part of the Russians to buy American grain since the Carter Administration's curtailment of grain sales to the Soviet Union in January 1980.

The Reagan Administration ended this restriction, and it has negotiated a one-year extension of the two countries' five-year grain agreement, which was to expire Sept. 30. But negotiations for another long-term agreement have not yet been scheduled, and spokesmen for the grain industry say they expect the Russians to purchase less, both this year and next than they would have in the absence of the curtailment.

PARADOX SEEN IN POLICY Some observers call it paradoxical that the

Reagan Administration is trying hard to soak up the current wheat surplus by selllng to the Soviet Union. "They have told us that the Soviet Union is a threat to our very survival and that we want to sell them more

79-059 0-85-40 (Pt. 20)

food-it's confusing to the public," Dale E. Hathaway, Wl!O Wt:t.S a. Under Secretary of AgrwuiLure in the {)aner Admini!;tration anu is now a Wd.Shing~on-based consultant, commen.eu 1n a r~::c.::u~ interview.

A growm5 uumoer of critics are also sugges~ulg tn<l.L sc:..i.es to the Soviet Union, among ui'ner c.:>uLune .. , are being made at the expense ot 1.he American laud i~self. 1:ieavy yed.r-aner-y;~d.r plA.ntiug of erosive export c1·o~s ara1ns the soil ot valuable nutrients, as l~rmers tuemsel ves acknowledge.

In Nebraska recently, a visitor viewed row after uniform row of bright green corn and soyoeana carpeting the gently curving plain. Pointing to piles of dead trees and brush, a farme1· e.~Cplamed that they came from windbreaks plan ted after the disastrous soil erosion of the 1930's but now dug up by farmers wa.n;;mg to plant every last inch of the~r land, even at the expense of some of the tops::>il.

According to William E. Larson, a soil scientist with the Agricultural Research Service of the Agriculture Department, about 1.25 Inillion acres of cropland (out of 400 million acres planted) go out of production each year aa a reault of erosion, and some damage is being done to 100 Inillion acres more of cropland. This, he says, is an "unacceptable" level of soil degradation.

Many of the effects of erosion are being masked by fert111zers. But a new Federal report prediots that over the next 50 years the United States will lose 15 percent to 30 percent of its corn and soybean yields if erosion continues at the present rate.

"There wlll stlll be adequate productive capacity to meet domestic needs," the report said. "Meeting projected export demands, however, will require an extensive conservation effort to protect the nation's soil resource base from excess! ve erosion."

Despite these warnings, however, the Agriculture Department spends only $256 Inilllon a year to help farmers pay for soil conservation measures, compared with $5.6 bllllon a year for commodity loans and payments.

There are other fears, too, about the country's dependence on farm exports.

Above all, sudden jumps in export demand have sometimes produ~d severe lnfiation in American feed grain and meat prices. A recent study, by the economists Ronald Anderson and Maurice Wilkinson of Columbia University, found that t.he huge sale of grain to the Soviet Union in 1972 cost American consumers a redtictlon of meat consumption valued at $3.3 blllion by 1975.

Exports have also contributed to rapid inflation in the price of farmland, according to many economists.

American farmers a,re now also vulnerable to good harvests abroad and drops in foreign demand, which can cause falling prices anct farm failures in this country. Some farm p:rouns say that net farm income. ad1usted for infiation. is no hi~her now than it was in tne 1 9~0's and 1960's, before the export boom began.

In the view of some agricultural economists. vast exoort markets encourage largescale. highly mechanized :tarmc; and nromote the concentt"ation of land ownership and the disanne·arance of family farms.

The necessity of farm exnorts as a way of navlng for imported on has even been cha.llenged. An alric111tural nollcy research groury in San Fra.ncis~o. the Inc;tltute for Food fl.nd Develonment PoH~y. ha.s done a studv indicatincz that for e"ery dollar's worth of farm exnorts in H~80. America.n agriclllture used the equivalent of 25 cents in imported oil.

POSSmiLITY OF EMBARGOES Finally, some observers worry that the po

tential for a bacY.'lash fl,galn'St ,,nrec;t.ralned food e"rnorts is so g!'eat that when the next bad crop years and -price increases occur, the American public might force the Govern-

ment to declare export embargoes, as President Nixon did twice in the mid-1970's.

If that happened, international grain prices would undoubtedly skyrocket, and poorer countries might find themselves squeezed out of the market. Fully 85 percent of American exports to developing countries are on commercial terms. Only 15 percent of shipments to poorer nations are sold on concesslonal terms as food aid, compared with 50 percent 10 years ago.

The Agriculture Department has repeatedly stated its opposition to export embargoes or controls. But no provisions have been made to assure that the poorest nations wm at least have access· to commercial purchases of a certain amount of American food.

(From the New York Times, Sept. 7, 1981]

U.S. FARM PRODUCTIVITY MAY BE LEVELING OFF (By Ann Crittenden)

EMERSON, NEB.-Melvin Fischer has been 11 ?ing on the same piece of land here 1n eJ.stern Nebras!ta for 46 years, and the living has been pretty good.

He and his wife, Margaret, have sent four children to college, with one to go. And they have acquired the usual accoutrements of prosperous American life, including that extra. sign of the farmer: a side yard of m·achinery that looks like a John Deere sales lot.

Viewed from a different pers':>ective, however, Mr. Fischer is not doing so well. He is paying so much more for nearly everythingland, fuel, pesticides, herbicides, fert111zers and seed corn-that he has to wring a lot more production out of the land just to stay even.

And his brother Lloyd Fischer, an agricultural economist at the University of Nebraska, is concerned that the extra output may not be forthcoming.

OUTLOOK FOR AGRICULTURE Although many successful farmers do not

recognize it, a great deal of the source o'f their prosperity-the much-vaunted productivity of America's farms-may finally be levellng off.

"Most agricultural scientists agree that we're probably going to see the growth in yields taper off, despite the fact that farmers are doing a better job of fanning," Lloyd Fischer said in a recent interview.

Echoing this sentiment, Walter P. Falcon, director of the Food Research InsJtltute at Stanford University, said during an interview in his office in Palo Alto: "The mechanical and fertilizer 'revolutions' seem to be about over. at least in terms of their productivity effects. Few new major breakthroughs are expected soon in seed technology. We've eliminated the surplus labor and gone to continuous planting of grain. I just don't see where it's going to come from in the near future."

A slowdown in the growth of agricultural productivity, one of the strongest bulwarks of the nation's economy since World War II, would have serious implications not only for the American economy but also for consumers all over the world. The steady improvement in United States farm productivity-which has grown five times :taster than industrial orcductivity over the last five years-has enabled American consumers to reduce the percentage of their income spent on food from 24 percen·t in 1950 to 16.6 percent in 1980, one of the lowest percentages in the world. And relatively cheap American food is now critical to the diet of people from Tokyo to Lagos to Jamaica.

In the long run, some agricultural economists believe, the advantages of food production may even shift to the developing countries and to an agriculture less dependent upon expensive capital and energy. But for the next 10 years or so, the United

States must remain the residual supplier of the world's food needs. Among the other major unsubsidlzed food exporters, only Argentina still has considerable unused c~pacity, but its share of world grain trade is still less than 8 percent.

IDGHER PRODUCTION COSTS If the 1980's bring higher costs of agricul

tural production in tlhe United States while foreign demand for imported food continues to increase, the result will be higher food prices and lower standards of living on almost every continent.

Statistics on agricultural productivity are confusing. But according to Agriculture Department figures, while yields increased by an average annual rate of 2.8 percent between the early 1950's and 1972, the rate of increase declined to 1.1 percent a year from 1972 to 1979.

Yields did hit an all-time high in 1979 and were 9 percent above 1978, the previous record year. But, according to Lloyd Fischer, the gains are misleading. "When we look at yields per acre," he said, "we have to remember that Inputs per acre are also increasingin tractors that cost $40,000, seed corn that is $50 a bushel, more fert111zer and herbicides, land at $2,000 and up and paid for with money that costs 20 percent. If you're putting more in, you have to get more out to stay even."

Labor productivity In agriculture, meaning how much time It takes a man to produce a given amount of food, has also long outstripped productivity performance in the rest of the economy. Since 1970, for example, labor productivity in nonfarmlng operations has increased by only 1.5 percent a year, while agricultural productivity has grown by 5.5 percent.

But Mr. Fischer argues that this, too, "is a fictitious statistic."

"WE RAISED OUR OWN POWER" "When I was a kid on a farm," he explains,

"we raised our own power-draft horses-and the fuel to go with them. We raised almost all of our own food, produced most of our inputs and did a lot of the processing of what we grew. The modern farmer doesn't do any o! that. So now when you talk about one farmer reeding 50 people, you have to remember that a lot of people contribute to that production, compared with almost none 40 years ago."

Optimists point out that yields per acre are still showing healthy increases, and that improvements in farm management and the use of new plant-growth regulators, chemicals that enable plants to mature faster, can guarantee continued progress.

It is also clear that there is room for a major increase in productivity in developing countries, where fertllizer usage and agricultural research is just beginning. Just how significant technical change can be is illustrated by the fact that, from 1960 to 1980, average global corn yields went from about 2.1 tons to 3 tons per hectare, wheat yields from 1.2 tons to 1.8 tons per hectare and rice yields from 2 tons to 2.6 tons per hectare. A hectare equals 2.471 acres.

OUTLOOK FOR BREAKTHROUGH Beyond these opportunities lies the poten

tial for dramatic breakthroughs in plant research that could bring about a second Green Revolution. Innovations achievable through recombinant DNA research, such as the improvement o! p'hotosynthesis and nitrogen-fixation capab111ties of plants and the evolution of disease- and stress-resistant plants are all distinct poss1b111t1es.

Nevertheless, none of these innovations are expected to arrive within the next 20 years or so, and many experts believe there may be a g-ap in productivity growth before the new technologies become feasible.

Among all the uncertainti~s about the pro3i'.:>ect.s f.or future croo produc .. ·ivity, the most serious is soil erosion. It is now estimated to affect one-third of the C'l'Op land

in the United States. Erosion already demonstrably reduces yields in many areas, from corn and soybeans in the Middle West to cotton in Georgia.

The Agriculture Department has made a rough estimate that a continuation of 1977 r.ates of erosion would reduce yields by the equivalent of 23 million acres in 50 years (of a total of about 400 million acres planted).

ERODED PLACES POINTED OUT Driving through his Nebraska fields, Melvin

Fischer explains that he has several spots that are severely eroded and "won't get any results if I don't put on fert111zer-that's why I put on zinc and sulfur." Ten years ago he didn't have to use zinc and sulfur on the soil.

According to Mr. Fischer, one reason for the erosion is that "there is a lot of farming on land that should've stayed in pasture.'' To plant more crops to pay for their expensive land and equipment, farmers in this part of Nebraska have torn up orchards, railroad tracks and even the stands of trees that used to stop the wind from blowing topsoil away.

Farm productivity is also threatened by the depletion of ground water in many parts of the West. Over large areas, water tables are declining, and farmers have to pump deeper for irrigation water. This adds to energy costs that have already soared with rising fuel prices.

Heavier and heavier use of fert111zers has masked the effects of erosion on crop yields for years and has been essential to the growth of farm productivity. Between 1965 and 1978, while harvested acreage in the United States increased by 10 percent, the use of plant nutrients jumped by 90 percent.

A LIMIT FOR FERTILIZER But the yield increases obtainable through

fertilizer use may be leveling off, according to William E. Larson, a research soil scientist with the Agriculture Department. As evidence, he cites figures showing that the compounded growth rate of fertlllzer use fell from 6 percent a year between 1960 and 1970 to 4.5 percent a year between 1970 and 1980.

Dr. Larson is also concerned, as he recently told a Congressional committee, that "our basic research information pool is not as great as it once was.'' During the 1960's when the main problem of American agriculture was ove·rproduction, money was switched out of farm research and was spent instead on such problems as cancer. "All of that will hit in the 1980's, and we're beginning to feel it already," said John Mellor, head of the International Food Policy Research Institute, a nonprofit research organization in Washington.

The Reagan Administration spared agricultural research in its recent round of budget cuts, and private corporations are beginning to spend heavily on some of the frontier genetic research on plants. But the payoff from this work wm not appe·ar for at least a decade.

Vernon W. Ruttan, an agricultural economist at the University of Minnesota, said in an article published by the Conservation Foundation:

"The closest analogy to the present situation in American agricultural history was the period between 1900 and 1925.

"With the closing of the frontier, productivity growth declined. The new sources of productivity growth, chemical and biological technology, did not begin to emerge for several decades."

"My guess is that it will be at least another decade before the direction of technical change induced by the rising real price of energy becomes clear."

[From the New York Times, Sept. 18, 1981] FOOD PROGRAM'S ADVOCATES FEAR CUTBACKS

WILL WIPE Ou-r GAINS IN NUTRITION (By Gregory Jaynes)

ATLANTA.-In 1967, six pediatricians were dispatched to the South on a search for

hunger, and they found it in appalling quantity. Ten years la.ter a second medical team came here for a look and concluded that although the diet of America's poor would still displease nutritionists, there was food in the icebox. The doctors agreed that in the decade that had passed, the corner would not have been turned without huge increases in the budget for Federal food aid programs.

Since 1967, the budget for such programs has risen about 3,000 percent, from $585.5 m1111on to about $16 billion. However, in the fisc.al year that begins Oct. 1, the programs will be cut by $3 billion, a move that would, among other things, disqualify one mllllon of the 23 mllllon Americans now receiving food stamps and reduce the amount of food stamps for the remaining reclpll.ents by about 10 percent.

The cuts were proposed by President Reagan and approved by Congress as part of their effort to hold down Federal spending with an eye to improving the national economy and, by extension, the lot of all Americans. But critics contend that the result will be increased hunger and malnutr'itlon.

FRUSTRATION AND FURY "We are frustrated, furious, frantic, disbe

lieving that people would cut back on these programs," said Nancy Amidel, director of the Food Research and Action Center, a. law firm and advocacy center in Washington that specializes in Federal food programs. "God knows there are a lot of people who still go without food, who stm go hungry, but God knows it's a whole lot better than it was 13 years ago."

Just how much better has not been solidly documented, however. In 1969 the Harvard University psychiatrist Robert Coles could write a book called "Stlll Hungry in America," published on the heels of an extensive national survey on nutrition, but today no comprehensl.ve picture of the state of America's bellles exists. Advocates of food programs say the United States Government, which at present has an overseas food aid program that amounts to $1.6 billion, knows more about hunger in the Third World than it knows about empty iceboxes here.

For its p.art, the Reagan Administration says "safety nets" bUillt into the systems will catch acute needs for food and other social services. Administration officials argue that families who will lose their food stamps altogether earn .as much as $14,000 a year and are well able to get by without Government help, and that those who will have their benefits reduced wlll still receive enough assistance so that they will not go hungry.

Since there has been no systematic examination in recent years of hunger in America and the ab111ty of Federal programs to relieve the p.roblem, the effect of the budget cuts cannot be known until after they take effect.

Widesc.ale hunger, apparently, was of Uttle concern to any administration until the beginning of World War II, when thousands of young men too malnourished to be drafted came under the stethoscopes of military service physicians. A committee on nutrition lor national defense was established. Nutrttlonal standards were worked out, and for a. short whlle there was a fledgling and not all that successful food stamp progr810l. In 1946, a. school lunch act was p.assed as a measure of national security.

Over the years, the Agriculture Department had a commodities program that relied on national surpluses and county bureaucrats to get food to the poor. Sometimes it worked, and sometimes it did not. Its effectiveness was never extensively measured. But all the while, the authority to do something about hunger and malnutrition in America lay on the books, a.s a measure of national security. and it was this authority that Pre<;id~nt KeTinedy, aft.el" having see.n the dlstent::led bellle<; of West Vir~inia while campaigning in 1960, seized to set up the food stamp program in 1961. It was 1967,

November 10, 1981 CONGRESSIONAL RECORD-SENATE 27145 however, before the issue touched a. na.ttona.l nerve.

That was when the Field Flound·a.tion, a. nonprofit research orga.n.lza.tion based in New York, sent the first team of pediatricians here. The doctors examined several thousand children across the South.

"Wherever we went and wherever we looked," they reported back to Congress, "we saw children in significant numbers who were hungry and sick, children for whom 'hunger is a dally fact of life, and sickness tn many forms, an inevitability. The children we saw were more than just malnourished. They were hungry, weak, apathetic.

FINDINGS ON NUTRITION That Congressional testimony led to the

establishment of the Sene.te Select Committee on Nutrition and Human Needs. Its mandate was to determine the amount of hunger and malnutrition in the United States. In 1968, the most extensive survey this country has ever conducted on nutrition was begun by the Department of Health, Education and Welfare. About 47,000 people were examined. The findings, along with some independent surveys of the time, were that millionssome estimates went as high as 35 millionof Americans suffered from serious vitamin deficiencies.

Some researchers read the data and determined that as many as 10 million Americans were hungry, and others said the estimate was high. The only thing everyone agreed upon was that me.lnutrition and little or no income were related. Every year thereafter substantially more funds were found to feed and shore up the incomes of the poor, and country and western singers began warbling about people on welfare driving C6dillacs.

When the Field Foundation sent its second medical team here for a survey in 1977, along with teams to Appalachian Kentucky, the Bronx, Mexican-American ghettos of Texas, migrant work camps in Central Florida and coastal South Carolina, the overall conclusion was encouraging.

"Our first and overwhelming impression is that there are far fewer grossly malnourished people in this country today than there were 10 years ago," the teams reported. "Malnutrition has become a subtler problem. In the Mississippi Delta, in the coal fields of Appalachia and in coastal South Carolina, where visitors 10 years ago could quickly see large numbers of stunted, apathetic children with swollen stomachs and the dull eyes and poorly healing wounds characteristic of malnutrition, such children are not now to be seen in such numbers. Even in areas which did not command national attention 10 years ago, many poor people now have food and look better off."

"In fact, the facts of life for Americans living in poverty remain as dark or darker than they were 10 years ago. But in the area of food there is a difference. The food stamp program, the nutritional component of Head Start, school lunch and breakfast programs, and, to a. lesser extent, the women-infantchildren feeding programs, have made the difference."

"A CRITICAL IMPERATIVE" In 1979, the foundation said, "While only

the barest subsistence needs are being met by Federal food programs, those programs are proving a critical imperative to the nation's health." The organization also lamented that "the nation continues to be plagued with a lack of sophisticated data about its nutritional well-being." According to health officials in Washington, there has not been another Federal survey the scope of the one conducted in the late 1960's because of the enormous cost, and because there has not been enough political or popular pressure to justify mounting another one.

Food program advocacy groups these days

monitor two continuing studies, one by the national Center for Disease Control here and the other by the National Center for Health Statistics in Washington, both of which in the last decade have indicated continuing improvement in nutrition across the country.

The Atlanta center says its studies lately have caused more concern for anemia and obesity than for hunger.

MORE FOUND OVERWEIGHT In the second quarter of 1980, the period

for which the most recent statistics are available, the center determined that of 58,000 records from public clinics in 25 states, 14.8 percent of people of all ages had symptoms of anemia, and that of 61,000 records from the same sources, 3.4 percent of the people were significantly underweight, and 9.7 percent were significantly overweight. Since the records come from public clinics, most of the patients examined tend to be from low-income fammes.

The surveys by the National Center for Health Statistics, which do not deal specifically with the poor, have, according to Director Robert Murphy, "found virtually no one with classical signs of starvation." Results from the center's 1980 survey will not be available until later this year, but he said there was some indication that the population was becoming more anemic.

Elsewhere, independent researchers report that while cases of starvation are isolated and rare, households where the head of the family is poor and poorly educated are where much of the anemia, obesity and vitamin deficiency occur in the United States.

AREAS WITH WORST DIETS Some of the worst diets in the nation, ac

cording to researchers, exist in the American Indian populations of the South and the Southwest, the migrant labor camps of central Florida and rural black communities from Texas across the Southeast to the Atlantic.

Nonetheless, in interviews here and elsewhere in the country, social workers and advocates of food orograxns said that bad diets were better than none, and they expressed bitterness about a national conservatism that would move against the impoverished.

Here in Atlanta, the executive director of the Georgia Coalition Against Hunger, Sandra Robertson, said, "In a sorry economy, people need to blame somebody, and what this Administration did was clearly see that poor people are the problem."

In Georgia, Mrs. Robertson said, 25,000 recipients will be "knocked off food stamps imme::iiately," and 30,000 recipients of Aid to Fa.m111es with Dependent Children will come off the rolls Oct. 1. "Another 10,000 will get drastically reduced benefits," she said.

"Malnutrition and hunger stlll affect a lot of people and a lot of fam111es," Steve Suitts, director of the Southern Regional Coun·:::il, an organization with deep roots in the civil rights movement, was saying· in his Atlanta office the other day. "But it just doesn't grip the national conscience any more."

[From the New York Times, Sept. 21, 1981] U.S. SEEKS SEED DIVERSITY AS CROP ASSURANCE

(By Ann Crittenden) FORT COLLINS, CoLO.-In a gray building

about the size of a large movie theater here on the Colorado State University campus, the FedE>ra-1 Government is stoclcplllng several billion seeds-samples of all known varieties of the world's major food crops.

In this innocuous and unguarded fac111ty, subject to power failures and so crowded that the seeds are piled on the floors in brown cardboard cartons and sacks, the germ plasm on which all global agriculture is based is supposed to be preserved forever.

Whether plants no longer growing in nature can really be preserved under such con-

ditions is a matter of controversy. But while specialists debate the feasibillity of seed storage, they agree without reservation that something must be done to prevent the loss of wild and no-longer-cultivated food plants.

More and more of them are disappearing the victims of encroaching development and land-clearing for a few high-yielding "miracle" seeds.

Illldeed, to many environmentalists, the spreading extinction of plants--accompan1ed by the increasing genetic uniformity of the crops consumed by man-is "the most serious single environmental problem," as Paul and Anne Ehrlich put it in their new book, "Extiction."

Others, like Donald N. Duvick, director of plant breeding for Pioneer Hi-Bred International Inc., believe the problem is less serious than it was 10 years ago, when there was even less genetic diversity in commercial corn, for example. But even Dr. Duvick wrote recently that he was dissatisfied with "the margin of safety" in agriculture today.

"We must do everything possible to increase the number of popular varieties in each crop and to increase the useful genetic diversity amo•ng those varieties," Dr. Duvick told a congress of botanists in Australia. last month.

The problem is that modern commercial agricuJ.tmre depends upon a handful of plant varieties-wheat, rice, corn and a. few other grains. Only six cultivans, or plant varieties, account for 38 percent of wheat acreage, 43 percent of corn acreage and 42 percent of soybean acreage, according to a. survey taken last year by Dr. Duvick. (The Agriculture Department has l1IO figures on crop concentration since 1969, when even more acreage was planted in the same few varieties.)

The lack of genetic diversity within these major crops me~ns that one pest or disease could wipe out a significant proportion of the crop overnight. In 1970, for example, Southern leaf blight destroyed approximately 20 percent of the Unite=! States corn crop. .And 25 percent of bread wheat and 75 percent of pasta wheat was wiped out by wheat stem rust in 1954.

WIDE "GENE POOL" NEEDED To be able to continue developing high

yielding varieties that resist ever-emerging diseases, breeders need to have access. to as wide a "gene pool" as possible. The efore, preservation of the wild and weedy rE:,la.tives of the basic food crops is essential 1f global food production is to stay ahead of demand.

A few plant scientists-notably an outspoken botanist from the University of Wisconsin named Hugh litis-want to "freeze the genetic landscape" by preserving all of the indigenous plants in the subtropical regions where most crops originated, from Mexico to Turkey to China.

"Seeds banks may help plant breeders today," Dr. Iltis said in a recent telephone interview, "but preserve varieties over 1,000 years? Forget it. The only thing we should do now is work like mad to help the countries with the richest flora to set aside natural parks that cannot be touched."

Dr. ntis has first-hand experience with how important still-undiscovered plants can be to the world food supply. In 1962 he spent a month in the Peruvian Andes on an expedition to collect wild potatoes for colleagues at the University of Wisconsin.

One sunny afternoon, as he was eating a lunch of tasty yellow boiled potatoes, avocados, oranges and cheese, he spotted a scrubby wild tomato, and on an impulse casualiy collected a few seeds from its green and white berries for a tomato geneticist in California.

NEW SPECIES DISCOVERED Last year Dr. Iltis ran into the man at a

conference in Vancouver. British Columbia, and learned not only that the plant was a new species, with a very high sugar content


and a delicious flavor, but also that it could easily be crossed with the commercial tomato.

If the new strain is widely incorporated into the American tomato crop, the processing industry could realize as much as $50 mlllion in additional profits over a decade, Dr. Iltis estimates.

More recently, the Czech-born scientist played a key part in the discovery of a strain of perennial corn (teocinte) in the sta..te of Jalisco in Mexico. The weedy nondescript plant, which can be crossed with cultivated corn, has already proved to be immune to several major virus diseases.

By one estimate, if the teocinte could add only 1 percent to yields through incorporation of genes for disease resistance, it would increase the value of the American corn crop by $150 mlllion to $200 million each year. Eventually the teocinte discovery could even lead to production of perennial corn, which would not have to be replanted year after year.

The Agriculture Department is trying to address the problem of crop uniformity by storing plant germ plasm here at the National Seed Storage Laboratory and at several r.maller storage facilities around the country.

REFRIGERATION llREAKDOWNS By Agriculture Department officials' own

admission, however, the three-level Fort Colllns facility is already full, and the refrigeration equipment necessary to preserve the seeds' viability suffers regular breakdowns. Similar conditions reportedly exist at the regional seed storage laboratories, partly because of the system's tight budget.

The Federal Government spends a total of about $12 million a year on germ plasm collection and storage. This is less (after adjustment for inflation) than was spent in 1967, and officials say that the Reagan Administration might even reduce the amount of money available for the program.

In a report earlier this year, the General Accounting Office, a Congressional agency, concluded .that the lack of funds, anrl of managerial competence within the Agriculture Department, in effect increases the risk of potential crop failures in the United States.

In the chilly seed storage rooms here, sacks of seeds are piled on the floors, overflowing the laboratory's facilities. According to Louis N. Bass, the director, only about half of the roughly 240,000 seed accessions, or collections, in the laboratory have been catalogued, and the fac111ty is already full.

The failure to catalogue means, among other things, that plant breeders who are trying to develop resistance in a given species to a certain pest or disease or weather condition cannot know which of the seeds collected may have that trait. They may have to spend years growing out different varieties to find the characteristic they need.

In one room, the world collection of guayule seeds-left over from the World War II breeding program that sought to develop a new source of natural rubber-is stored in 27 drums of 30 to 50 pounds. The seeds have not been grown out since that time, indicating that most of them have probably lost their viabllity.

According to Mr. Bass, stored seeds must be planted and grown out to produce fresh seeds within about five years. If not, they lose their capacity to germinate. Because of a shortage of funds, the laboratory grows out seeds so infrequently that only about 25 to 40 percent of the seeds in some collections germinate.

Furthermore, seeds are not always grown out in the regions from which they came. According to the agricultural botanist Gary Paul Nabhan, Hoot blue corn, which has the desirable characteristic of growing in areas with less than 10 inches of rainfall in a year, is grown out in Ames, Iowa, where there is plenty of rain.

LOSING SPECIAL QUALITIES Over several generations, he explained in a

recent telephone interview, the corn will adapt to the wet conditions, and its valuable special qualities wm be lost.

Seeds may also undergo mutation during storage. And there is evidence that natural selection takes place during stonge and subsequent growing out of seeds, so the germ plasm that surv1Ves the process is not the same as the material that was collected.

According to Eric Roos, a plant physiologist at the National Seed Storage Laboratory, "Within five or 10 years of storage, you m:1.y have lost half of the genetic material you started with."

Mr. Roos and other scientists hope that seed storage in liquid nitrogen, at ex.tremely low temperatures, would be more effective. But they acknowledge that switching to such a system would be enormously costly.

"I don't think the roof will cave in on us tomorrow," Anson J. Bertrand, director of the Agriculture Department's Science and Education Administration, said in a recent teleohone interview. "But we can't do the work that must be done if we're to have the germ plasm we'll need in the future."

[From the New York Times, Sept. 25, 1981] SOMALIS, ENFEEBLED BY HUNGER, STIL'L EXPORT

FOOD (By Alan Cowell)

BERBERA, SOMALIA.-A blunt, gray vessel docked here the other day, its decks crammed with empty pens. Soon, trucks began to arrive through the heat haze from the parched uplands of the Horn of Africa, laden with sheep and goats. The animals were loaded into the pens, and the vessel sailed for Saudi Arabia, where the livestoclt will be slaughtered and used to feed Islam's faithful on their annual pilgrimage to Mecca, known as the Hajj.

Somalia i·S a Moslem nation, so when its bellevers go to Mecca, they wm probably end up eating Somali meat. At home, paradoxically, food is a more complex issue, for Somalia falls into a category of African and third world nations that export food to nourish other markets, but cannot provide enough for themselves.

Li~vestock exports earn over 80 percent of Somalia's foreign exchange, and as long ago as the late 19th century its vast herds were used to feed foreigners.

The British created a colonial protectorate in these northern uplands, to guarantee a supply of mutton for their troops across the Gulf of Aden in what is now Southern Yemen. According to the latest statistics, Somalia boasts 5.2 million camels, 3.7 million cattle, 9.4 million sheep and 15.2 million goats. That is about 10 animals each for the three out of four people in this country who are not refugees.

HALF OF NATION'S FOOD IMPORTED Yet, drought, war and seemingly high

handed Marxist policies have contributed to a slide away from food self-sufficiency, a decline that now seems likely to transform a Western emergency operation for the refugees of the Ogaden war with Ethiopia into a long-term, open-ended commitment.

Somalia, at present, imports half the food consumed within its borders, much of it provided in the form of aid for those who fled the border conflict in 1977 and 1978. United States assistance last year totaled $90 mnlion, two-thirds of it for the refugees who live in 35 camps dotted around the country. Somalia is considered the world's eighth poorest nation, with oer capita income estimated at less than $100 a year.

These parlous conditions are said by Western economists and Somali officials to be the result of a series of calamities in the 1970's. These eroded a traditional style of life in which the nomadic herdsmen and

subsistence farmers, who make up 80 percent of Somalia's population, lived on a diet composed variously of camel and goat milk, the meat of slaughtered animals, corn and sorghum.

In 1974 and 1975, a drought wiped out the herds of almost a quarter of a million nomads. Skllled workers left the country for the high-wage oil nations of the Persian Gulf. The Iranian-Iraqi war that broke out last year cut off Somalia's suoplie.> of cheap Iraqi petroleum. Most damaging of all, the Ogaden war sent more than a million people fleeing into Somalia, increasing the population by a third in the space of a few months, and overtaxing fraU resources.

POPULATION GROWING RAPIDLY According to World Bank estimates, little

improvement is in prospect without a large development effort . The population is growing at an annual rate of 2.6 percent, the herds are overgrazing the ranges and a lack of reliable water supplies means that only 8 percent of the potentially arable land can be cultivated. At the same time, food production is falling.

The corn crop last year was down 10,000 tons from 1970's yield of 122,000 tons. The banana crop in 1979 was half the 103,300 tons recorded in 1978.

Western experts attribute the dramatic fall in food production to the policies of "wealthsharing based on knowledge"-the Somali version of "scientific socialism"-that grew from the 1969 coup in which President Mohammed Siad Barre came to power. Strict state control of the economy led to low farm prices, while price controls in the city adversely affected the countryside's terms of trade with urban centers. A recent unpublished study from the California Institute of Technology says this created "a disincentive for farmers to produce."

The report also says that the Government does not seem "prepared to make the major changes that are necessary to revitalize the rural sector," despite some loosening of its grip on the economy.

NO FUNDS TO IMPROVE FARMING "It is a vicious circle," a Somali economist

said. "Somalia does not produce enough food to feed itself, so 1t has to import food. Add the oil blll to the food blll and there isn't enough left over to improve agriculture. So less food is grown, and more is imported, and so on." Last year, the economist said, the oil b111 alone was more than total export earnings.

Yet, there is another side to the story that reflects the kind of dealings, outside the formal economy, by which many people in Africa these days circumvent economic deprivation. Farmers sell their produce on the black market, not through the official channels, and whatever the statistics say about personal wealth in Somalia, many Somalis count their capital in terms of the livestock they own. Even city-dwellers often have an investment in a distant herd, tended by nomads. According to students of Somali society, a camel stm ranks as the most prized asset.

The World Bank and other analysts estimate that over the next 20 years, up to a mlllion nomads will have to be persuaded to abandon their tradition.al livestock-raising and up to 3,000 square miles of virgin land wm have to be opened up to small-scale farming if .Somalia is to cope with its population growth.

"A MASSIVE PROGRAM" "This is a massive program by any stand

ard," says a recent United States assessm~~t, "and it does not involve a single refugee.

The huge international relief operation in Somalla costs about $150 mlllion a year and, contrary to government pollcy, the camps are slowly turning into permanent settle-

November 10, 1981 CONGRESSIONAL RECORD-SENATE 27147 ments that further tax Somalia's resources. "A situation needs to be anticipated whereby a large number of refugees will have to be settled within Somalia," a Western expert said.

As with Somalia's own economy, another analyst said, this implies a need for assistance long after the immediate refugee crisis is settled.

[From the New York Times, Sept. 28, 1981]

REAGAN WALKr~G A TIGHTROPE ON FARM POLICY

(By Seth S. King) WASHINGTON.-In its basic outline, Presi

dent Reagan's farm and food policy is quite simple: Do what most of your predecessors have done, only less, whenever possible.

The avowed objective of this policy is to help American farmers make as much money as they can in the market place . This, in turn, is supposed to insure manageable supplies of food for t!he United States and for anyone else with the cash to buy it. And this , in sum, is supposed to win political support t hroughout the nation and diplomatic successes t hroughout the world .

The President had hoped these objectives could be attained by removing the Government from a sector of the economy where it has played a major role for decades.

THE UNWANTED RELIEF Throughout his campaign for the Pres-i

dency, Mr. Reagan promised farmers he would get the Government off their backs and keep it off. But he has discovered, to his sorrow, that the farmers, or at least the farm state members of Congress and the commodit y lobbies that contribute so generously to their campaigns, do not want this at all.

Jn a sense, the President is like a man caught with one fo:)t on a slippery rook and the other on a crumbling riverbank. If he E;Ucceeds in holding down the levels of farm price support loans and subsidies contained in the farm bill passed by the Senate and scheduled to be taken up by the House early next month , he will alienate some of his st rongest political supporters.

But if he loses in his now-temporLzed fight to hold down Federal aid to farmers, he will be faced with increased Government expenditures that could add $1.5 billion to the budget for the fiscal year 1982, which begins Thursday. It is Mr. Reagan 's contention that the larger budget deficit re3ulting from such spending will make it even more unlikely that high interest rates , the single biggest complaint of farmers , will come down.

MODIFIED STAND FOR VOTES In return for votes of farm state Democrats

on his budget and tax plans, Mr. Reagan has already backed away from portions of the new farm program he had said he wanted.

But while this has antagonized consumer advocates, the President's efforts to slash dairy price supports and restrain grain subsidies and loans has angered many farmers who were previously faithful supporters. This anger has added to the dismay among farmers that began when the President delayed for three months on his promise to lift the curtailment of grain sales to the Soviet Union, heightening farmers' fears that the Russians had found other sources for their grain imports.

Such fears have been realized a.s American grain sales to the Soviet Union are roughly a. third of their level before the curtailment. The Soviet Union has found new places to buy grain; for example, it has purchased corn from suoh countries as Argentina and Brazil.

Critics of the Administration's farm policy complain that it has shown a lack of planrung as well as a lack of sensitivity to the needs of Congressmen in protecting their state's commodities .

Ellen Haas, director of consumer division of the Community Nutrition Institute, a consumer advocacy group, contends the President has failed the nation's consumers on two fronts . On one front, she says, he has cut food stamp allotments, lowered nutritional standards in the school lunoh program and cut the program itself, then eliminated the Agriculture Department's nutritional advice programs. On the other front, she says, he has made political deals that prevented changes in the farm laws that could have held down reta.n food costs.

"The Administration has lacked a comprehensive approach," she said recently. "The Reagan people talked big about cutting Government farm costs, which could help hold down consumer food costs. But they showed a lack of concern for consumers, especially lower-income consumers, when they caved in on sugar and peanut supports."

In its basic structure the Reagan Administration 's farm policy is similar to the Oarter Administration's. And the nation's agric'Ulture climate is remark1!11bly similar to the one Mr. Oarter faced four years ago when the current farm bill was passed. Then, record grain surpluses held out the hope of a slowdown in food price inflation but caused a painful loss in farm income.

Like its predecessor, the Administration has continued to provide increasingly larger amounts of money for agricultural research . And it is pLanning a new soil conservation campaign, albeit with a format placing more responsib111ty on the states to help pay for it and enforce it.

A REVERSAL IN DmE8TION But the fiery consumer advocates are gone

from the Agriculture Department's consumer affairs division. And instead of the battles they waged for stricte·r, more complex food inspection and labeling rules, the Reagan group is revising and streamlining many of these rules, which the agricultural industry detests.

Economically, Mr. Reagan is facing the same dual farm p·roblems that have troubled all Presidents beginning with Franklin D. Roosevelt: how to handle grain surp·luses, which diminish farmers' prices while keeping the Congressional farm bloc from breaking open the Treasury to bail out their constituents.

His difficulties in solving such problems were compounded this month by another record wheat CTop and the prospect of a record corn crop. Grain prices, which were comfortably high last winter when Mr. Reagan was inaugurated, have been declining since midsummer, just at the time farmers have to make their first payment on machinery and operating loans they took out at 18 percent interest.

The 1977 farm law expires Wednesday, and John R . Block, the lllinois hog and corn farmer who is Secretary of Agriculture, is seeking another four-year farm b111 that will continue the price support loan and grain reserve programs for most commodi•Ues in their current forms, but at cost levels within the Administration's budget goals.

"A SIMPLE, BASIC AIM" Mr. Block recently summarized the Presi

dent's farm philosophy in this way: "It has a simple, basic aim and that is profitab111ty for the agriculture community."

He said he and the President believed that a "he111lthy, profitable, high-producing agriculture was the greatest contribution the Administration could make to American consumers and the rest of the world.

"The means toward that end," Mr. Block declared, "are expanding marke.ts for American farmers and the opportunity for those living on the land to make more decisions without interference from the Government."

But circumstances are forcing Mr. Reagan to rise above these principles, at least the noninterference segment .

Last summer, in return for the votes of Southern Democrats on his budget and tax b1lls, Mr. Reagan agreed to d·rop his opposition to a sugar support loan program that would get the Government back into the costly business of holding up sugar prices by eventually buying and storing sugar American p·roducers cannot sell at the support prices.

PEANUT SUPPORTS UNTOUCHED He also agreed to leave the restrictive

peanut price support program alone instead of opening the industry to free, competitive production th111t Inight have increased the supply. Even without the President's support, free-enterprise Senators did manage to end acreage allotments, one element of these restrictions. But marketing quotas for peanuts wm remain in the new f·arm law unless the consumer advocates in the House can remove them.

To placate powerful Republican Congressmen from the Middle West, Mr. Reagan also abandoned his earlier efforts to end subsidy payments to grain and cotton farmers on next year's crops, a retreat that could cost the taxpayers $500 Inillion to $1 b1llion in the fiscal year 1983.

Moreover, after insisting all summer that the Administration would not try to check the expanding grain surpluses by restricting the size of next year's wheat and corn plantings, Mr. Block reversed himself and said he would require a 15 percent reduction ln wheat acreage in return for Government farm aid.

He i3 expected to invoke a similar reduction later this fall on 1982 corn acreage, something the major farm organizations are urging 'him to do. These Umitation should reduce the size of next ye111r's gra~in production. But if there is another drought nexrt su·mmer, yields would ·be reduced even further, prices would rise :again and America's livestock producers, as well as foreigners who buy such grains here, would have to pay a lo'u more for Wheat and corn.

ACTION ON DAIRY PRICES M~·. Reagan's other efforts to prevent farm

commodity surpluses from getting further out of hand have yielded no other cheers from tho fa.rmers.

To Washington's bemusement, the President stared d·own the powerful dai-ry lobbyists, previously among his more ardent supporte·rs, •!lind persuaded the Senate to reduce the dairy price support levels and eliminate inflationary annu1111 adjustments. The Senate al,so gave in and agreed to set lower loan rates on Wheat and corn. Both of these actions could influence farmers to .reduce their dairy herds and, where possible, shift more of their l:llind to other grain crop:s.

Farmers are saying this may sound all right to the economis1ts, but, faced with heavy debt loads at hlgh interest rates, they may not be aole to afford to reduce their production at all next yea.r.

Max Naylor, a prominent grain .farmer near Jefferson, Iowa, said he doubted that anything would reduce the grain surpluses very much ex-cept a return to large ex.port to the Soviet Union.

DOUBT AMONG GRAIN FARMERS "But it looks to us like Haig, the Secretary

of State, 1s really in cont;rol of agriculture B.!B far as deal,ing with the Russians is .concerned," he said, "and we don't believe the Reagan people are pus·hing hard enough to sell them more."

According to Mr. Naylor, American farmers certainly had been enthusiastic about Mr. Reagan, particularly in h ·is promises to curtail inflation and balance the Federal budget.

"Most ifarme;rs Uke the President •and want him to succeed," he said. "But the med1lcine we're having to take on these interest .rates 1.3 worse tha>n the cure. I'm beginning to hear the rumbling o! discontent around here. They had .better raise those grain loan r.ates

up closer to what lit costs us to plant or there'll 'be a lot of unhappy farmers in this area."

To offset effects of the del·ay in lifting the Soviet gre.in curtailment, Mr. Block's foreign trade specialists have taken up Where the Carter Administrrution left off in promoting American f·ann products ·in most parts of the world.

BLOCK'S "DIPLOMATIC TOOL"

Despite the recurring differences with the State Department that Mr. Naylor complained of, this hustling has continued to include the Soviet Union, China and any other Communist country with cash in its coffers and a desire to l.niorove d-iets.

"We continue to beUeve that food can be a useful diplomat'ic tool," Mr. Block said. "But Ws effective only 1!f the United States is a reliable supplier that wlll not stop trade just to control domest.lc prices."

The 'Reagan Administration is continuing the Food for Peace pa:ogram (Public Law 480), under which the Government guarantees loans to developing countries for grain purchase and seUs •surplus farm commodittes at reduced p.rices to ·charitable orga.niza' ions for distribution abroad.

The program was a 'h randy dllplomatic tool lor Mr. Reagan last summe.r when he used $45 million of it as an emergency loan to Poland afte.r a Soviet threat to invade that country diminished.

A SENSE OF DEJ" A VU

"The PL 480 program is one part of our intention to play a major leadershrlp .role in insuring 81dequate food supplies for the rest of the world," Mr. Block said. "In addition, the farmer held grain .reserve and our strategic •wheat reserve, held by the Government for !famine relief, p.rovide food security rfor the rest of the world."

At the beginning of his term as Secretary of Agriculture. Mr. Block said that the ftdministratlon had no philosoryhical differences with Bob Bergland, his predecessor, other t'hran Mr. Bergland's emphasis on consumerism.

Jndeed, for observers of Mr. Reagan's dealing with the farm and food problem, there is distinct sense of deja vu these days. President Reagan, four years lrute.r, 'has virtually the same ·fwrm program as Mr. Carter's and with the same problems: falling farm prices, rising production costs and a !Test.less bipartisan farm bloc in Congress demanding more aid for the farmers than the Administration wants to provide.

[From the New York Times, Oct. 5, 1981) FOOD AND HUNGER STATISTICS QUESTIONED

(By Ann Crittenden) As the first World Food Day nears, on

Oct. 16, the sponsoring a~ency, the United Nations Food and Agriculture Organization, \s disseminating statistics purporting to show the dimensions of the world hunger program.

"In 1981 at least 420 million people do not have enough to eat," the agency's literature says.

Increasingly, howe1rer. the unqualified assertion of such statistics is being challenged. Indeed, a vocal minority of critics maintain that the world hunger problem has been vastly exaggerated.

PROBLEM OF TRAGIC SCOPE

And most academic experts in the fields of food, nutrition and demography, while convinced that world hunrrer is a real problem of trarric scope, nonetheless aj!ree that behind confident statements about the number of the underfed there is a great deal of confusion and uncertainty.

As Prof. Thomas T. Polema.n of Cornell University put it in a recent interview: "We simply don't have sufficient evidence to estimate the numbers of hungry people. There is no basis for coming up with concrete estimates."

According to Professor Poleman, there are "three great unknowns" in trying to estimate the extent of hunger. These are the actual availability of food, the e':act amount of food people need for nourishment and how access to food varies among different income groups within a country.

Because of these uncertainties, predictions of future global famines, or of the numbers of starvation deaths that will occur by the year 2000, are widely viewed as meaningless. Even the figures on existing hunger and malnutrition vary wildly.

In a recent issue of Commentary magazine, for example, Nick Eberstadt of the Harvard Center for Population Studies guessed that at most about 100 million people-or less than one-quarter the number estimated by the F.A.O.-were "desperately hungry." This is "a lower fraction, in all likelihood, than for any previous generation in man's recorded history," Mr. Eberstadt wrote.

The incidence of hunger, Mr. Eberstadt argues, has been "hyped" by "well-paid and well-meaning functionaries who are meant to attend to world poverty" and by a press eager to dramatize the issue.

As another example of the wide range in estimates, the number of children under the age of 5 who die every year from starvation have been placed anywhere from around 15 mlllion to well over 30 mlllion.

In 1979, Robert S. McNamara, then president of the International Bank for Reconstruction and Development, told the World Bank's board of governors that "the United Nations Children's Fund estimates that more than 30 million children under the age of 5 died of starvation just last year."

But a recent analysis by Davidson R. Gwatlcin, a demographer with the Overseas Development Council, concludes that the average number of child deaths from all causes was probably around 15 m1111on a year in the late 1970's and that any number higher than 18 million would have to be suspect.

REVISION IN METHODOLOGY

Even greater discrepancies surround the estimates of the numbers of malnourished. The Food and Agriculture Organization's estimate of roughly half a bilHon people suffering from acute malnutrition in the developing countries--excluding Chinawas made in 1974. Just before the World Food Conference in that year, a revision in methodology lifted the F.A.O. estimate of the seriously malnourished from 300 milllon to 434 million-or exactly 25 percent of the developing world.

In 1976, a book published by two World Bank economists surpassed the F.A.O. with an estimate that more than half the population of the developing countries, or 840 m1111on people, were seriously malnourished in the mid-1960's.

Profe.ssr:>r Poleman, who h9.'s done an analysis of the difficulties in quantifying the nutrition situation 1n developing countries for the Agriculture Department, agrees that 100 m1llion is a better figure than the F.A.O.'s half a billion. In his view, food production in developing countries tends to be understated because taxation is often based on production, and because so much backyard production is locally consumed and never counted.

A number of nutritionists have also noted that food needs vary from person to person by 'as much as 50 percent. Individual caloric requirements established by the F.A.O. and the World Health Organization are based on the needs orf Americans and Europeans and are exaggerated for individuals in the trop-ics, perhaps by as much as one-third, according to some nutritionists.

STUDY OFFERS 42 PERCENT FIGURE

Mr. Eberstadt cited a recent study by the United States Agency for International Development indicating that, by American height a.nd weight references, 42 percoot of

the children in Sri Lanka were undernourished. Another report, by the Pan American Health Organization, concluded that more than 49 percent of the populations of Barbados, Costa Rica, Guyana, Jamaica and Panama suffered from some degree of malnutrition.

The life expectancy in all of these countries, however, is around 70 years, casting some doubt on the existence of such pervasive hunger.

On the other hand, other authorities insist that much hunger, especially in remote rural areas, is inadequately reported. Larry Minear of the Interre!igious Task Force on United States Food Policy told an interviewer recently t<h91.; "m•alnutrit.ion is underst.a.t ed becaus) th~re are a lot of p~onle who don't show up in the plannin.~ net·s, -either because the censuses are bad or because they are not in the market economy, and their inability to purchase food isn't measured.''

Similarly, Maurice J. W111iams, executive director of the World Food Council, a United Nations policy group, said: "I believe the half a billion number. In London, at the height of emnire, you had a s11bmerP:ed 2Cl percent of the population that lived on bread and tea. You have that today in many rapl.dly developing countries, and those countries don't want to admit their existence.''

S~veral hunger experts said in interviews that they were fam111ar with the effort.s of some developinP.; countries, such as Brazil, to suppress infot<mation on highly unequal income distribution. implying the existence of malnutrition among the poorest segments of t.heir populations.

Those who belleve that the incidence of hunn-er ha.s been overstated argue that the problem be,.omec; more mana~eable if it is more carefully defined. Bv Professor Poleman's calculations. food aid of only three m1Jlion tons of grain a year, if it cmtld be channeled to the truly needy, would enable lCQ m1Uio"'. malnourished people to have an adequate diet.

112 MILLION TONS OF EXPORTS

The three m11lion tons comoares with total United States food exoorts of 112 million tons last year, and food aid of almost slx m11lion tons of grain. The F.A.O., since 1974, has called for food aid of 10 million tons a year. although the donor nations have never reached that level.

Walter Falcon, the head of the Food Research Tnstitute at Stanford University, believes, however. that the debate over how manv underfed there are does not affect public policy verv much.

"It might focus more attention on Africa, where the most serious hunger evists. ra.ther than on Southeast ftsia, where the numbers are." Nrr. Falcon said in a telephone interview. "But if only l 00 mlllion individuals are clinically malnourished, there a.re probably another 200 m1llion to 400 m1111on that go hungry part of the time . Jf they're not in the hospital , they're not doing too well."

"A lot of the arg11ment is what do you do about those peoole who a.re slmnlv inadequately fed." Mr. Falcon added. "That is one of the toughest questions."e

FAMILY NEWSPAPERS BEING DE-STROYED BY ESTATE TAXES

• Mr. SYMMS. Mr. President, as chairman of the Estate and Gift Tax Subcommittee of the Finance Committee, I have heard extensive testimony from a wide range of our society in support of efforts to repeal the "death tax" which is such a burden on family farmers and small businessmen.

The President is on record favoring repeal of this tax and the Congress has taken a wise first step in substantially

November 10, 1981 CONGRESSIONAL RECORD-SENATE 27149 reducing estate and gift taxes with the enactment of President Reagan's tax bill.

An interesting article appeared in the August 19 edition of the Wall Street Journal which graphically details just one more compelling reason to remove the "death tax."

Many of us used to be familiar with hometown locally owned family newspapers which accurately reflected life in our communities. But the impact of massive estate taxes has taken its toll on this fading institution, the local family newspaper.

The Wall Street Journal highlights the case of a North Carolina newspaper, the Salisbury Post. Many other local newspapers have already been taken over by major national newspaper chains.

Mr. President, it would be tragic to have this trend continue. The ultimate repeal of the "death tax" would help family-operated local papers fend off the growing appetite of the national chains. Our communities deserve media outlets which are sensitive to local interest and attitudes.

I ask that this article be printed in the REcORD and I urge the Members of the Senate to study it closely.

The article follows: ELUDING CHAINS: NORTH CAROLINA PAPER

STRIVES To WARD OFF Bms BY PRESS EM-PmEs

(By Daniel Machala.ba) SALISBURY, N.C .. -For a newspaperman

known only in his hometown, Jame.s Hurley III gets a lot of national attention.

Mr. Hurley is the pubilsher of the Salisbury Post, a prosperous daily newspaper with 24,700 circulation in this farming and textiles region. Like many owners of the remaining 600 daily independent newspapers in the U.S., Mr. Hurley is besieged by major newspaper chains brandishing attractive sales offers and proselytizing about the benefits of chain management.

So far, the soft-spoken, 50-year-old publisher has resisted entreaties to sell the afternoon paper, which has belonged to the Hurley family since 1912. But faced with the prospect of having to pay huge estate taxes and hard-pressed to find heirs willing or able to run it, Mr. Hurley acknowledges that the family might one day be forced to relinquish control of this town's most cherished institution.

"I'm not so cocky that I'd say I'd never sell or merge," says Mr. Hurley, an easygoing North Carolina native. "But we have a good business, we enjoy producing the paper and we don't want to sell."

Big city afternoon papers like the Philadelphia Bulletin and the Los Angeles Herald Examiner face a different and far more perplexing problem than the small-town Salisbury Post; surviving the onslaught of television and the exodus of dty dwellers to the suburbs. These are among t he problems that led to the recent decic;ions to shut .down the Washington Star and the New York Daily News' Tonight edition. The Salisbury Post, on the other hand, merely want s to hold on to a good thing: a monopoly newspaper in a growing market.

But if Mr. Hurley manages to keep the Salisbury Post independent, he will be bucking a strong trend in the newspaper business. Chains now control 65 percent of the 1,745 dally newspapers in the country, up from 31 percent 20 years ago. Within a 50-mile radius of here, at least eight dailies have been gobbled up by such chains as Freedom News9apers. Landmark Communications, Knlght -Rldder Newspapers and New York Times Co. Some of these same chains have also actively courted the Post, much to

the chagrin of the local townspeople, who have come to consider it their own.

"People here have the feeling we own thh paper," says PaulL. Bernhardt, thP. president of Bernhardt Hardware Co. "A chain would cut corners and bring in an editor from the outside."

Some of the fear stems from what happened at nearby newspapers bought by the big chains. After the New York Times purchased the Lexington, N.C., Dlspatch in 1973, for example, the paper began running four full pages of the Times' Week in Review section every Monday. But to many townspeople. "It was lU{e waving a flag that the Dispatch isn't a locally owned paper," says Randall Terry, the president of the independently owned High Point, N.C., Enterprise. Facing criticism, the Dispatch d iscontinued the section a year later, replacing it with local news.

Many business people also worry that a chain would sharply increase the Post 's ad rates , which now are 20 percent to 40 percent below what other pa>;J ers its size charge. Such worries appear to have some merit. Joe Sink, the publisher of the Dispatch, sayc; one of the first moves the New York Times would make if it acquired the Post woult:l be to raic:e ad rates. "We think we could make a lot more money than the Hurleys." he says. "But we would put that money back into the product."

WINNING LOCAL LOYALTIES Mr. Hurley agrees a chain could maJre 50

percent more in profits than the Post, which earned nearly $4.00,000 last year on revenue of about $4 mlllion. But he says an independent paper has more than just profits to consider. "We couldn't raise our rates 5 percent without catching hell (from advertisers)," he says. "If a chain raises the rates, who are advertirers going to complain to?" Besides, by keeping ad rates low, he says , the Post has discouraged competition by winning the loyalties of local bu.,inesses.

Says Joe Taylor, who runs a depart ment st ore in Salisbury and is a longtime advertiser in the Post: "The Hurleys have a monopoly, but they aren 't dishonest about it ."

Many observers say, however , that the Post has att racted national attention mo-:otly because it's a better editorial product t han most da111es its size. "It 's one of the finest small-town newspa-pers in the country," says Cal Thornton, the president and editorial direc tor of the I.AJs Angeles Times-Washington Post New~ Service. " Tt ~ive<> atte'1 tion to quality and detail, and the town is confid ent the Hurley family stands behind the product."

SNIFFING OUT NEWS AltJhough ·the Post's edit orial staff of 29

has come up w'ith some blockbuster stories (as reflected in the numerous state journalism awards the Post has won) , observers say the paper's greatest strength lies in its ab111t y to serve a steady diet of local news, no matter how mundane. For example, the Post recently carried a three-paragraph story a.bout the arrival of a new air-conditionin g unit at local Catawba College. And the paper gives comprehensive coverage to local wedding ceremonies , sporting events and traffic violations. Jame.s Hurley Jr. (the Post's chairman and father of James III) was once written up for running a stop sign and his son, Haden Hurley, for drunken driving.

B11t the Post also sniffs out some snrlghtly stories now and again. A recent article told of a Bible-waving Baptist min1ster from Kannapolis who inspired about 30 youths to toss their rock albums into a bonfire at the Free Will Baptist Church and sing: "I surrender." According to the Post, the Rev. James Pauley told the assemblage that "rock music is a drug which affects you witlhout you being aware of 1t." The record-roasting party, he said, was an attempt to "save some kids from going to hell."

In another attempt to make the Post a bit

livelier, Mr. Hurley has added new feature columns in recent years, including one called Askus. In one column, a reader asked, "Why do onions make us cry?" A recent Garden Game column discussed "a stylish triplet cucumber" that captured a judge's eve. And Whoppers whipped up the usual believe-itor-not scuttlebutt, such as tlhe story of an uncanny can ine that cculd "read a rabbit's mind when hot on the chase."

The Post has also followed many other newspap~rs in updating its format. It has added more graphics-mo'Stly large color pictures of sunsets and so forth-revamped its cnce-frumpy women's wage into a lively Lifestyle section, and grouped auto accidents and various community events into regular sections of the paper to make it easier to read.

Not every::: ne is impres.,ed by the changes, however. The Post's former women's page editor, who was recently brought out of retirement, feels the paper has neglected news of bridal showers under the new format. James Hurley Jr.-who despite bein~ 85 and bein ~ the victim of three strokes still reports to the office every weekday-grumbles that "there are too many big pictures and they (his sons) waste money like hell." Other staffers complain that the Post pays too much attention to reu-crting- local news and not enouah to analyzing it. "We Slhould be reporting more about what a city budget means rat her than .1ust reportinq: the numbers," says Blll 1\!fo c;s, the Post's city hall reporter.

Desuite its shortcomings , howe·rer, the Post has plenty of suitors because it's "in a viable, growing community, it's well-equipped . and well-manacr.ed, and it's nonunion," says D. Robert Segal, the president of the Freedom Newspapers chain, which is one of those courting the Post. Louis Well HI, the vice president for development of Gannett Co., has offered to fly to Salisbury for a golf weekend with James Hurley III. And Barry H. Scripps, the executive vice president of Scripps League Newspapers, had urged Mr. Hurley to sell the Post to Scripps League before he is "forced to consider offers from groups comprised of lawyers , bankers and accountants with no experience in the newspaper field."

REMAINING INDEPENDENT In addition to bolstering the Post's profits,

the callers contend they would also improve its editorial content by providing wide-ranging research and information that isn't available to it as an indep:mdent. Mr. Hurley says that he has always listened politely to the callers and that he even agrees with most of their arguments. But be says he has his own reasons for wanting to keep the paper inde-pendent. ·

"A chain might operate a newspaper more efficiently and watch things like return on equity more than we do," says Mr. Hurley. But "a town is better off with independent owners who live in the town and want to make it a better place."

Community betterment isn't a new priority for the Hurleys. Mr. Hurley's grandfather, who bought the Post from local interests after it had been destroyed by a fire in 1912, helped expand the dairy industry hereabouts by having the Post purchase a Guernsey bull, which was lent out to fert111ze cows. During the Depression, the Post built a large electric scoreboard behind its tired-looking, threestory headquarters here to record the action of local baseball games. And in recent years, the Post has given funds for renewal of historicll.l buildings in downtown Salisbury and for other community projects.

SURVIVING AS A FAMILY PAPER "If any group needs money for Christmas

lights, the Post is the first to support it," says Mr. Bernhardt, the hardware-store proprietor.

But Mr. Hurley knows it will take more than civic pride to keep the Post independent. Jn !act, he believes the Post's survival as a family newspaper w111 depend largely on its abllity to become as efficient and technologi-

27150 CONGRESSIONAL RECORD-SENATE November 10, 1981 cally innovative as the chains. To that end, the Hurleys acquired four weekly papers, and they now employ the Post's presses to print them. To cut labor and printing costs, Mr. Hurley sends a Post photographer twice a month to talte pictures for the weeltlies. And he recently placed ·an order for a $4 million offset press to speed up production and distribution of the Post in outlying communities that are experiencing greater population growth than Salisbury.

"We're doing what a chain does on a small scale," M.r. Hurley says.

To purchase the press, however, the Hurleys plan to borrow $2 million. Consequently, the family doesn't expect the paper to post any profit for three years while the loan is being paid off. The purchase means that the Post's shareholders-Mr. Hurley, his father, his mother, his brothers Gordon (the Post's treasurer) and Haden (semi-retired and living in Naples, Fla.)-won't receive any dividends for a while. It also means the Post will be "financially strapped for the first time in decades," according to Mr. Hurley.

The tax collector, however, could put the Hurleys out of business. Estate-tax reductions included in President Reagan's tax-cut packag~ will help , but the Hurley family says it still isn't sure how much estate taxes will have to be paid on the 35 percent share of the Post held by the elder Mr. Hurley when he dies. The family's own appraiser contends that taxes ought to be levied on the $3 million "asset value" of the Post.

FINDING HURLEY HEIRS

But if precedent is any guide, the Internal Revenue Service will want to base its tax figure on the "market value" of the Post, which is around $20 million. If the IRS decides to tax the father's 35 percent share of the Post at market value, Mr. Hurley says, "we wouldn't have enough money to pay the taxes (and) we'd be out of business."

Even if the Post can overcome these pitfalls, it still faces the problem of finding Hurley heirs interested in running the paper in the future. Mr. Hnrley and his wife, Gerry, don't have any children. His brother Gordon's boys are only 13 and 14 years old. So the family has turned its hopes to Haden's daughters, Elizabeth, 20, and Anna, 18.

Family members tried to interest Elizabeth in the job. But she says she prefers to live in the North Carolina mountains, where she cleans r.ouses. babysits and calls family members collect asking for money. The Hurleys gave Anna a book about the glamorous life of K~tharine Graham, the chairman of the Washington Post Co., but that may not do any good either.

A small family newspaper like the Saltsbury Post "is boring," says Anna Hurley. "I want to work for a paper that's a leader, like the New York Times or the Washington Post," she says.e

VOLUNTEER DEVELOPMENT CORPS e Mr. DECONCINI. Mr. President, the morning after President Reagan expressed his belief that "the spirit of volunteerism still lives in America," I received demonstrable proof. One of my constituents, Timothy J. Finan, a member of the University of Arizona faculty, reported to me on his recent work in Brazil for volunteer development corps.

In the drought-stricken state of Ceara in northeast Brazil, the farmers cooperative council, Organizacao das Cooperativas do Estado do Ceara, is helping its members co-ops expand so as better to serve the needs of their low·-income members for production credit, fertilizer, insecticides, and a dependable market for

their cotton, com, beans, man.:.oc, tomatoes, and other crops.

The International Bank for Reconstruction and Development has agreed to lend Brazil's Government $163 million over the next 5 years for rural development in Ceara. In this package is $1,-488,000 for cooperative develOIJ)ment. The Bank asked OCEC to select 12 cooperatives to participate in the project and to survey their needs for additional trucks, warehouses and equ:pment.

OCEC asked VDC to help do the job, and VDC asked Dr. Finan to volunteer his services. Dr. Finan is a made-toorder choice for this assignment, sinc-e he spent 4 years in Ceara as a Peace Corps volunteer working with farmers, 1970-74, and 2 additional years collecting data for his doctoral dissertat :on, "Peasant Middlemen & Market:ng Processes in Northeast Brazil," 1977-78. He speaks fluent Portuguese.

Dr. Finan was willing to volunteer his services, but he needed leave-withoutpay from his job as associate professor, Bureau of Ethnic Research, Anthropology De:'a.rtment, Universlty of Arizona. I am glad to report, Mr. President, that at the request of William Stini, Ph. D., chairman of the anthropology department, the university made it possible for Dr. Finan to do the job.

Working with another VDC volunteer, Henry Gert>eT of Virginia, Dr. Finan helped OCEC develop tentative criteria for choosing the 12 cooperatives. These included willingness to hire a professional manager, est,ablish standardized accounting, and expand their services. They then conferred with directors of 31 of Ceara's 46 cooperatives to test these criteria and, on the basis of these interviews, recommended 22 from which OCEC has now chosen the 12.

I was particularly interested in one of Dr. Finan's recommendations: that no World Bank funds flow to these cooperatives for capital investments. He found they either had enough trucks, warehouses, and other eqwipment or could develop the resources to get them. Better, he said, to spend the money on people and training.

In the course of their work, Dr. Finan and Mr. Gerber also urged OCEC toreorient itself so as to quit hiring employees for its member co-ops and instead to hire specialists to provide them technical assistance. OCEC has agreed to do so.

Dr. Finan reported to me on his volunteer work because VDC paid his expenses-travel, lodging, meals, and clothing care--and because VDC gets most of its money from the Agency for International Development. Dr. Finan thought I ought to know how this small part of the money we authorize and appropriate was spent.

I am much impressed. VDC is a small, private, nonprofit organization U.S. cooperatives created 11 years ago to serve as the link between cooperatives overseas that want technical help, such as OCEC, and men and women from U.S. cooperatives and uni'Versities, such as Dr. Finan, who are willing to provide it.

VDC has $8,850 and 5 weeks of Dr. Finan's time invested in this one project.

With its six-member staff and an AID grant of $650,000 in 1981 funds, VDC is able to implement 35 such projects each year. This is four one-hundredths of 1 percent of development assistance funds available to AID. I would like to know that more of AID's money is spent as constructively as this.

Mr. President, I commend Dr. Finan, the University of Arizona, and all others connected with this expression of volunteerism. Because of their work, the farmers of Ceara are one step closer to economic sufficiency and independence.•

THE AMERIC'AN ECONOMY G Mr. JOHNSTON. Mr. President, before the discovery of antibiotics, the goal of medicine in treating ·an -infection was to break the fever. Doctors knew that even if the patient recovered from the disease, a prolonged high fever could do permanent damage to his system.

In treating the economy, the current practice of the Federa>l Reserve is to view high interest rates, not as the cause of an economic slowdown, but as a symptom-Jthe fever, so to speak-of an economy overheated by inflation and inflationary expectations. But the current Federal Reserve monetary policy is, as Ohairman Y.olcker admits, a blunt instrument, a kind of monetary sulfa, lacking the efficacy of the later wonder drugs like penicillin. Given time, it will work. In t!he meanwhile, the fever ·of high interest rates continues unabated. The administration is sending signals to the country that it is not interested in the survival of the small businessman.

By small businessman, I do not mean the owner of the mom-and-pop store, although he is certainly affected. I mean the independent builder ·and his suppliers, the deposit institutions, the automobile dealers, the real estate brokers, the fami.ly farmers, and their local food PI"~ocessing plants. By permitting interest rates to rise to their current levels with no attempt other than the regulation of the money supply to control t.heir volatility, the Federal ReseTve is encouraging bankruptcies and takeovers: The subsuming of traditionally independent sma.U businessmen and their firms and farms into conglomerates and agribusinesses.

If interest rates continue much l0ngP.r at their present levels, the contours of Amerlcan bus·ne1s will change dra;s•tically. Community based institutions, like those of the thrift industry, may be forced into interstate and cross-industry mergers. The avalanche of failures among construction firms-up 41 percent from 1980-and subcontractors-up 120 percent-suggests that it will be difficult, if not impossible, to restore the supply pipeline for home building when interest rates finally fan.

I agree with Chairman Volcker that inflation, fueled by deficits, is the principal enemy of a sound economy, but I do not believe that we should permit the traditional shape of the American economy to be altered as the unintended side effect of an overly rigid monetary policy. We can hardly claim to have treated the

disease successfully if the patient dies of the fever.•

NATIONAL CHILDREN'S BOOK WEEK

• Mr. WEICKER. Mr. President, the week beginning November 16 is National Children's Book Week. In 1919, this observance was created to encourage children to read. Each year since then, "Book Week" has been successful in advancing the cause of children's literature. Today, there are more books being written for children than ever before. Nearly every library has a department just for the kids, along with caring librarians who aid children in their choice of books.

I learned at an early age the rewards of spending time with a good book. When I was not out playing baseball or football, or riding somewhere on my bike, I could always be found reading. I read everything-adventure, sports, mysteries, biographies, and history. Not only did reading give me pleasure, but I learned about people, and places I had never encountered.

Reading with my own children at night makes me appreciate the joy and value of reading all the more. The look of discovery and delight on their faces is priceless. My only regret is that authors like Dr. Suess, Maurice Sendak, and Richard Scary were not around writing when I was a kid.

There is a book called "Goodnight Moon" that my kids particularly enjoy. My wife and I have read it to them so much we can both recite it by memory. Recently, I bought a copy of "Charlotte's Web," which we will enjoy together when they are a little older. I also hold a parochial preference for "Rabbit Hill," that wonderful story about a family of rabbits living in a Connecticut family's backyard.

Mr. President, in celebrating National Children's Book Week, I think it is important that we pay tribute to booksellers, publishers, editors, authors, and illustrators whose efforts have provided a wide range of books for children of all ages. We should also praise the parents, teachers and librarians who take the time to encourage each youngster. And finally, let us praise the most important people: Babar, the elephant king, the Little Prince, Stuart Little, Ferdinand the Bull, Sam-l-Am, Harriet the spy, and all their friends, the children who spend countless hours lost in their special world of books.e

POLISH INDEPENDENCE DAY e Mr. WEICKER. Mr. President, November 11 is Polish Independence Day. On that date in 1918, the occupation troops of the central powers were expelled from the country and the Poles reestablished control of their nation. Twenty-one years later, the country's aspirations were driven into the ground under the onslaught of the Nazi blitzkrieg. The defeat of the Axis in 1945 left Poland with 6 million dead as a result of war and genocide. Unable to stand on its own, the battered nation found itself under the dark shadow of the Soviet Union, from which it has yet to escape.

Czeslaw Milosz, the great Polish poet and Nobel laureate, described the situation of his country with these lines in his poem "Song of a Citizen":

A stone below who has witnessed the seas drying up and a. mlllion white fish leaping in agony,

I, poor man, see a. multitude of whitebellied nations without freedom. I see the crab feeding on their flesh.

Today, the eyes and prayers of the free world are on Poland. Inspired by the strength of the solidarity movement, the soul of a nation is stirring again. The people are crying out for freedom, while all the while the Soviet tanks crawl along the border. Let the Soviet Union be warned: Liberty cannot be held in chains forever. In Milosz's words:

The heart does not die when one thinks it should.

The people of Poland will not live in subjugation forever.•

EXTENSION OF TIME FOR THE TRANSACTION OF ROUTINE MORNING BUSINESS Mr. BAKER. Mr. President, I have a

few items of routine morning business. I ask unanimous consent that the time for transaction of routine morning business be extended by 5 minutes.


ORDERS FOR THURSDAY ORDER FOR RECESS UNTIL 11:30 A.M. THURSDAY

Mr. BAKER. Mr. President, we previously entered an order for the Senate to reconvene at 11 a.m. I would like to change that now and make the following request. I ask unanimous consent that when the Senate completes its business today it stand in recess until the hour of 11:30 a.m. on Thursday, November 12. ORDER FOR RECOGNITION OF CERTAIN SENATORS

AND ROUTINE MORNING BUSINESS

I make the following request, as well. I further ask unanimous consent that, following the recognition of the two leaders under the standing order, Senator GORTON, Senator TowER, and Senator BENTSEN each be recognized for not to exceed 15 minutes on special orders; and that following the recognition of Senators on special orders as provided for that there be a brief period for the transaction of routine morning business to extend not past the hour of 1 p.m., with statements limited therein to 5 minutes each.

ORDER TO RESUME CONSIDERATION OF H.R. 4169

Finally, Mr. President, I ask unanimous consent that at the hour of 1 p.m. the Senate resume consideration o.f Calendar Order No. 365, H.R. 4169, the State, Justice, Commerce appropriations bill.


ORDER FOR PROCEDURE Mr. BAKER. Mr. President, I have a

few items that are cleared on our calendar for action by unanimous consent. I would inquire of the minority leader if

ho is in a position t.o consider at this time H.R. 4734, the Italian Amer:can War Veterans bill.

Mr. ROBERT C. BYRD. Mr. President, that matter is cleared on this side.

Mr. BAKER. I thank the minority leader.

ITALIAN AMERICAN WAR VETERANS Mr. BAKER. Mr. President, I ask that

the Chair lay before the Senate H.R. 4734, the Italian American War Veterans bill. Th~ PRESIDTNG OFFICER. The clerk

will state the bill by title. The bill clerk read as follows:

A bill (H.R. 4734) to recognize the organiza~ion known as the Ttalian American War Veterans of the United States.

The Senate proceeded to consider the bill.

Mr. ROBERT C. BYRD. Mr. President, I want to add my supoort to HR. 4734, omcially recognizing the Italian American War Veterans of the United States.

No identlifiable group of people have contributed more to America than have t.h9 ItaEans. Christopher Columbus-an Italian-launched the modern age by discovering our hemisJ;here. Another ItaUan-Amerigo Vespucci-gave his name to our continent and to our country. And few people realize that even the English claims to America's eastern seaboard rest on the discoveries of an Italian seaman residing in England-Giovanni Caboto-the John Cabot of our childhood history books.

Since the founding of the United States, mill!ons of Italians have immigrated to these r-hores. Those Italian immigrants contributed to our country many of the strongest qualities of their background-discipline, artistry, religious faith, business acumen, warmth, and, perhaps above all, deep patriotism. Especially in the wars of the 20th century, thousands of Italian-Americans have answered America's calls for national defense.

Today, more than 23 million Americans trace their ancestry to Italy. Though they are admirably involved in all areas of American life, those ItalianAmericans retain a healthy pride in and association with their rich heritage. The Italian American War Veterans will give many Italian-Americans-especially tho :e wh::> have served in our Armed Forces-a welco:ne influence in national affairs.

Mr. President, I strongly support H .R. 4734, and I hope that my colleagues will join me in passing this measure. e Mr. DECONCINI. Mr. President, I rise in enthu>iastic support of H.R. 4734 wh~ch would grant a Federal charter to th::J It3.lian American War Veterans of the United States. As an Amer:can of Itallan de'3cent and as a member of both the Senate Judiciary and Veterans' Affa 'rs Committees. I have a deep personal interest in this legislation.

The Italian American War Veterans <IA WV> was incorporated as a nonprofit service organizat~on by a group of concerned V€ten,ns in the State of C:nmecticut in 1932 and achieved taxexempt status in 1947. Since its forma-

tion, the IA WV has continuously expanded the range and scope of its activities and is presently incorporated in 10 States ranging from Rhode Island to ~ssachusetts. Its membership numbers almost 8,000 dedicated men and women. I am pleased that the IA YVV established a chapter in my home State of Arizona just last year and is currently seeking incorporation in the State.

The IA WV is actively involved in providing volunteer services in more than 20 Veterans' Administration hospitals across the country. Last year alone, the IAWV donated approximately 7,500 hours of service in its hospital volunteer program. In addition to its hospital work, the IA WV has dedicated itself to placing markers and flags on the graves ot veterans, has generously supported the needy and handicapped, and has been actively involved in a wide range of community-related services. While IAWV draws most of its membership from individuals with an Italian American heritage, it is open to any veteran regardless of race, religion, or national origin.

The IA WV has been seeking legislation for a Federal charter since 1965. Unfortunately, for many years the Senate Judiciary Committee refused to consider approving Federal charters, regardless of the merit of any individual organization's request. Despite the fact that the 91st Congress established rigid criteria for the approval of Federal charters, the Senate Judiciary Committee adhered to a strict policy of opposing such requests. Between the 91st and 96th Congresses, only one charter was approved. Fortunately, that policy was modified during the 96th Congress when four charter requests, including that of the Italian-American War Veterans, were approved by the Senate Judiciary Committee. I was pleased to be able to chair the committee's hearings on the IAWV's charter request last year. Mr. President, as you know, that bill, S. 2542 which was introduced by my esteemed colleague, Senator CHAFEE, was passed by the Senate but, unfortunately, the House did not have an opportunity to act upon it prior to adjournment.

The IA WV will be celebrating its 50th anniversary next year. This is a particularly opportune moment for Congress to recognize that organization's past history of outstanding civic, educational, and charitable contributions by granting the IA WV's longstanding request for a Federal charter. As Federal resources continue to shrink, the role of voluntary service organizations will become increasingly important. The IA WV stands ready and willing to fill that vacuum and a Federal charter will facilitate its ability to attract new membership and expand its activities throughout the country. Congress should be supportive of these efforts and I urge my colleagues to approve this important legislation.• e Mr. CHAFEE. Mr. President, I am pleased to support H.R. 4734, legislation that would grant a Federal charter to the Italian American War Veterans.

H.R. 4734 is similar to legislation that I introduced earlier this year, and that was

reported out of the Senate Judiciary Committee earlier today.

There are 7,000 members nationwide in the IA WV and 13 posts in Rhode Island. Granting a Federal charter to this group will provide the IA WV with momentum to boost its membership drive and its activities across the Nation.

These dedicated and concerned individuals are a terrific resource that should be used to the fullest in the battle to help the disabled, aged, and economically deprived veterans, their families and their communities.

I first worked with the IA WV when I was Governor of Rhode Island, almost 20 years ago. In this time, I have had ample opportunity to see their good works and to appreciate their contributions to veterans and to the community at large.

Mr. President, legislation to grant the IAWV a Federal charter passed the Senate last year, but time ran out before it could be approved by the House of Representatives. I am pleased that the House acted first this year. There can be no more fitting time to pass this legislation than today, on the eve of Veteran's Day.e

The PRESIDING OFFICER. The bill is open to amendment. If there be no amendment to be proposed, the question is on the third reading of the bill.

The bill <H.R. 4734) was read the third time, and passed.

Mr. BAKER. Mr. President, I move to reconsider the vote by which the bill was passed.

Mr. ROBERT C. BYRD. I move to lay that motion on the table.


THE EXECUTIVE CALENDAR

Mr. BAKER. Mr. President, there is one item on today's Executive Calendar which is cleared for action on this side. I am referring to Calendar Order No. 476, the nomination of Francis S. M. Hodsoll, of Virginia, to be Chairman of the National Endowment for the Arts. I would inquire of the minority leader if he is in a position to consider that item at this time.

Mr. ROBERT C. BYRD. Mr. President, I am glad to advise the distinguished majority leader that the item has been cleared on this side.

Mr. BAKER. I thank the minority leader.

EXECUTIVE SESSION Mr. BAKER. Mr. President, I ask

unanimous consent that the Senate now go into executive session for the purpose of considering the nomination just identified and for certain other executive actions.


NATIONAL FOUNDATION ON THE ARTS AND THE HUMANITIES

The bill clerk read the nomination of Francis S. M. Hodson, of Virginia, to be Chairman of the National Endowment for the Arts.

The PRESIDING OFFICER. Without objection, the nomination is considered and confirmed.

Mr. BAKER. Mr. President, I move to reconsider the vote by which the nomination was confirmed.



Mr. BAKER. Mr. President, additionally, I have a list of 13 nominations relating to U.S. attorneys, U.S. marshals, and a member of the Foreign Claims Settlement Commission, which have been reported by the Judiciary Committee and which are not yet on the printed executive calendar. I am prepared at this time to ask the Senate to proceed to their consideration if the matters are cleared on the other side of the aisle.

Mr. ROBERT C. BYRD. Mr. President, the 13 nominations have been cleared for action on this side.

Mr. BAKER. Mr. President, I thank the minority leader.

Mr. President, I ask unanimous consent that the 13 nominees be considered and confirmed en bloc.

The PRESIDING OFFICER. Without objection, the nominees are considered and confirmed en bloc.

The nominees considered and confirmed en bloc are as follows:

THE JUDICIARY

William H. Kennedy, o! Cali!ornia, to be U.S. attorney for the Southern Distriot of California.

Ronald D. Lahners, o! Nebraska, to be U.S. attorney for the District of Nebraska.

Gerald D. Fines, of Illinois, t o be U.S. attorney !or the Central District of Illinois.

W. Hunt Dumont, of New Jersey, to be U.S. attorney for the District of New Jersey.

Charles R . Brewer, o! North Carolina, to be U.S. attorney for the Western District of North Carolina.

Lincoln C. Almond, of Rhode Island, to be U.S. attorney !or the Dis·trict o! Rhode Island.

John Perry Alderman, of Virginia, to be U.S. attorney for the Western District of Virginia.

Elsie L. Munsell, of Virginia, to be U.S. attorney for the Eastern District of Virginia.

Charles Pennington, Jr., of Kentucky, to be U.S. marshal for the Eastern District of Kentucky.

Kernan H. Bagley, of Oregon, to be U.S. marshal for the District of Oregon.

Blaine Skinner, of Idaho, to be U.S. marshal for the District of Idaho.

Delaine Roberts, of Wyoming, to be U.S. marshal for the District of Wyoming.

Joseph Wentling Brown, of Nevada, to be a member of the Foreign Claims Settlement Commission. NOMINATIONS OF JOHN PERRY ALDERMAN AND

ELSIE L. MUNSELL FOR U .S. ATTORNEYS IN THE

EASTERN AND WESTERN DISTRICTS OF VIRGINIA

f> Mr. WARNER. Mr. President, I rise in support of the nominations of Elsie L. Munsell as the U.S. attorney for the eastem district of Virginia and John Perry Alderman as the U.S. attorney for the western district of Virginia.

These two outstanding Virginians were recommended to the President because of their expertise and standing in the legal profession.

The process leading up to their recommendation was rigorous. It insured that

the very best and most qualified individuals were identified for the President's review and consideration.

In some respects, the process was unique. In addition to meeting in my Capitol Hill office, I traveled more than 3,000 miles for the purpose of consult.ations with several hundred Virginians. By so doing, I was able to personally interview each candidate I recommended.

Further, I received extremely helpful advice during meetings with every Federal judge serving Virginia and a number of State judges.

After disseminating public notices, I solicited the views of leaders of State and local bar associations, law school deans, elected public officials, and civic and community leaders. In early March, I publicly stated how I intended to proceed and made known the existence of the likelihood of new appointments for the posts we are considering today.

Mr. BAKER. Mr. President, I move to reconsider the vote by which the nominees were confirmed.



Mr. BAKER. Mr. President, I ask unanimous consent that the President be immediately notified that the Senate has given its consent to these nominations.


LEGISLATIVE SESSION Mr. BAKER. Mr. President, I ask

unanimous consent that the Senate now return to legislative session.


Early I made the decision that part- ORDER FOR RECORD TO REMAIN nership would not dominate nor distort OPEN UNTIL 4 P.M. TOlJA!I: my search. I have faithfully adhered to that commitment.

Recognizing that growing problems associated with crime require prompt, forceful and fair prosecutions, I recommended for the positions of U.S. attorney only lawyers having extensive trial experience, with some criminal practice.

In the case of both Mrs. Munsell and Mr. Alderman, it was the very qualities which I have just discussed-professional achievement, integrity, and criminal law experience and expertise-which led the President to select these two individuals as his nominations to the U.S. attorneys' posts in the two Federal districts in Virginia.

Turning for a moment to the individual qualifications of Mrs. Munsell and Mr. Alderman, I want to make particular note that with the confirmation of Mrs. Munsell I believe history will be made. It is my understanding that she is the first woman to be appointed as a U.S. attorney in Virginia.

Elsie Munsell is currently U.S. magistrate for the eastern district of Virginia. She is a former chief assistant U.S. attorney for the civil division in the same jurisdiction. Mrs. Munsell is a 1972 graduate of Marshall-Wythe School of Law of the College of William and Mary. She is a former member of the board of visitors of the College of William and Mary. Finally, Mrs. Munsell served as a member of the Virginia Commission on the Status of Women until the time she became a magistrate.

John Perry Alderman is in his fifth term as Commonwealth's Attorney o! Carroll County, Va. He is former counsel for the town of Hillsv1lle, Va. Mr. Alderman graduated sixth in his class from the University of Virginia Law School in 1958.

Mr. President, the nominations of Elsie Munsell and John Perry Alderman as U.S. attorneys for the eastern and westem districts, respectively, in Virginia, deserve the full support of all Members of the Senate.

I commend President Reagan for his excellent selections. These two individ

Mr. BAKER. Mr. President, I ask unanimous consent that the RECORD remain open until 4 p.m. today for the introduction of bills, resolutions, and statements.


Mr. ROBERT C. BYRD. I have just listened to the President's news conference. In his conference the President indicated that none of the regular appropriation bills has yet reached his desk. To my knowledge, may I say, Mr. President, there has been no delay in action on the appropriation bills that has been necessitated because of actions on this side of the aisle. I want to state that for the RECORD. We on the minority side have cooperated in the committee deliberations with respect to appropriation bills. We certainly have not interposed any time delays with respect to actions on those bills on the floor.

I would like to ask the distinguished majority leader if, to his knowledge, any delay in the floor action on these appropriations bills has been caused by the minority.

Mr. BAKER. Mr. President, absolutely not. On the contrary, I would point out that the minority leader has from time to time regularly inquired about the schedule of consideration of appropriation bills in the Senate and has been most cooperative, as has the minority in general, in trying to bring these matters to early consideration and in most cases without encumbrance of extraneous amendments. There has been no delay by the minority in the Senate.

1\11'. ROBERT C. BYRD. Mr. President, I thank the majority leader.

Mr. BAKER. Mr. President, I see no Senator seeking recognition. I have no further business to transad ..

The PRESIDING OFFICER. Will the Senator suspend for a moment?

Mr. BAKER. Yes.

APPOINTMENT BY THE VICE PRESIDENT

uals will serve with dignity and distinc- The PRESIDING OFFICER <Mr. tion. All Senators can take pride in their SYMMs). The Chair, on behalf of the nominations.• Vice President, pursuant to Public Law

84-372, appoints the Senator from Michigan <Mr. LEVIN) to the Franklin Delano Roosevelt Memorial Commission.

NO ROLLCALL VOTE TO OCCUR PRIOR TO 3 P.M. ON THURSDAY

Mr. BAKER. Mr. President, previously I indicated there would be no votes prior to the hour of 3 o'clock on Thursday. I a 1k unanimous consent tha1t no rollcall votes occur prior to 3 o'clock on Thursday. and that if such are ordered prior to that time tha;t they be deferred until that hour arrives.

Tho PHE::•IDING OFFICER. Without objection, it is so ordered.

AUTHORITY FOR CERTAIN ACTION DURING RECESS

Mr. BAKER. Mr. President, I have one further request. I ask unanimous consent that during the recess of the Senate over until Thursday, the Secretary be a.uthorized to receive messages from the President and the House of Representatives, that they be appropriately referred, and that the Vice President and President pro tempore be authorized to sign duly enrolled bills and joint resolutions.


RECESS UNTIL THURSDAY, NOVEMBER 12, 1981, AT 11:30 A.M.

Mr. BAKER. Mr. President, I have no further business to transact. I see no Senators s~eking recognition. If the minority leader has no other matter on which he wishes to address the Senate, I move, in accordance with the order previously entered, that the Senate stand in recess until the hour of 11 : 30 a .m. on Thursday.

The motion was agreed to; and at 2:50 p.m., the Senate recessed until Thursday, November 12, 1981, at 11:30 a.m.

NOMINATIONS Executive nominations received by the

Senate November 10, 1981: DEPARTMENT OF STATE

Edwin Gharst Corr, of Oklahoma, a Career Member of the Senior Foreign Service. class of Counselor, to be Ambassador Extraordinary and Plenipotentiary of the United States of America to Bolivia.

James Daniel Thebe:-ge. of the District of Columbia. to be Ambassador Extraordinary and Plt-ntnr.+o.,ttary of the United States of America to Chlle.

Melvin Herbert Evans, of the Virgin Islands, to be Ambassador Extraordinary and Plenipotentiary of the United States of America to the Republic of Trinidad and Tobago.

IN THE NAVY

The following-named temporary lieutenant commanders of the U.S. Navy for permanent promotion to the grade of lieutenant commander in the line and Medical Service Corps, as indicated. pursuant to section 611 (a) of the Defense Omcer Personnel Management Act (Public Law 96-513) and title 10, United States Code. section 624 as added by the same act. as applicable. subject to qua11-1lcatlons therefor as provided by law:


LINE

Harwell, Michael A. MEDICAL SERVICE CORPS

Ayers, Samuel H., Jr. Kane, Robert J. Bartlett, James V. Keenan, James M. Bsuer, Peter J. Kraft, John E. Bennett, Ronald E. Lowls, Jack T. Berkley, Roy L. McKinney, Arthur P. Bielawski, Jerome J. Mllls, Wayne M. Colllns, Jimmy R. Mincer, Arvin A. Dawson, Richard L. Morey, Arlen D. Denayer, John W. Mumford, William M. Donohue, Avon R., Jr. Nelson, Lee D. Dunaway, Floyd J. Owens, Kenneth L. Fry, Wendell, J. Penn, Jerry D. Gray, Donald R. Renish, John F. Grisham, Onls H. Roberson, Walter E. Hanson, Eugene C. Russmogle, Robert L. Hardy, Frederick C. Shannon, Kenneth R. Hastings, Jerry L. Shepherd, Jack W. Hixson, Steven R. Stewart. George W. K. Holstein, Elmer, Jr. Tomlinson, Tommy M Hora, Charles D. Waggoner, Lt~muel A. Hovis, RobertS. Wanamaker. John C. Johnson, David E. White, Harry G.

The following-named officers of the Supply Corps, of the U.S. Navy. for appointment In the line, as permanent lieutenants, pursuant to section 611 (a) of the Defense Officer Personnel Management Act (Public Law 96-513) and title 10, United States Code, section 5582 (a) as added by the same act, as a..pplicable, subject to qualifications therefor as provided by law:

Perry, Ronald I. Pierce, Terry C. The following-named officer of the Supply

Corps, of the U.S. Navy, for appointment in the line, as a permanent lieutenant (junior grade), pursuant to section 611 (a) of the Defense Officer Personnel Management Act (Public Law 96-513) and title 10, United States Code, section 5582 (a) as added by the same act, as applicable, subject to quallfications therefor as provided by law:

Ralls, John D. The following-named officers of the llne of

the U.S. Navy, for appointment ln the varl-

ous staff corps, as indicated, as permanent lieutenants, pursuant to section 611 (a) of the Defense Officer Personnel Management Act (Public Law 96-513) and title 10, United States Code, section Ci32 as added by the same ·act, as applicable, subject to qualifications therefor as provided by law:

SUPPLY CORPS

Kline, Kim F. Salgado, Robert T.

Town, James S. Watson, Walter F.

CIVIL ENGINEER CORPS

Ayars, Arthur D., Jr. Baker, Clifford C. Bra..dy, Patrick A. The following-named officers of the llne of

the U.S. Navy, for appointment In the various staff corps, as Indicated, as permanent lieutenants (junior grade), pursuant to section 611(a) of the Defense Officer Personnel Management Act (Public Law 96-513) and title 10, United States Code, section 532 as added by the same act, as applicable, subject to qualifications therefor as provided by law:

SUPPLY CORPS

Vonhltritz, Stephen Walter, Kevin R.

CIVIL ENGINEER CORPS

Barre, Kevin R. Foster, Dennis M. Beary, Wllliam J. Harris, Brian K. Booth, Barbara G. McClellan, Thomas K. Britain, Joseph c. Perritt, Stuart E. Doyle, Michael P.

The following-named officer of the line of the U.S. Navy, for appointment in the Civil Engineer Corps, as permanent ensign, pursuant to section 611(a) of the Defense Officer Personnel Management Act (Publlc Law 96-513) and title 10, United States Code, section 532 as added by the same act, as applicable, subject to qualifications therefor as provided by law:

Hovell, Ronald P.

CONFIRMATIONS

Executive nominations confirmed by the Senate November 10, 1981:

NATIONAL FOUNDATION ON THE ARTS AND THE HUMANITIES

Francis S. M. Hodsoll, of Virginia, to be chairman of the National Endowment for the Arts for a term of 4 years.

'ihe above nomination was approved subject to the nominee's commitment to respond to requests to appear and testify before any duly constituted committee of the Senate.

DEPARTMENT OF JUSTICE

Willlam H. Kennedy, of California, to be U.S. attorney for the southern district of California for the term of 4 years.

Ronald D. Lahncrs, of Nebraska, to be U.S. attorney for the district of Nebraska for the term or 4 years.

Gerald IJ. I•'ines, of Illlnois, to be U.S. attorney for the central district of Illlnois for the term of 4 years.

W. Hunt Dumont, of New Jersey, to be U.S. attorney for the district of New Jersey for the term of 4 years.

Charles R. Brewer, of North Carollna, to be U.S. attorney for the western district of North Carolina for the term of 4 years.

Lincoln c. Almond, of Rhode Island, to be U.S. attorney for the district of Rhode Island for the term of 4 years.

John Perry Alderman of Virginia, to be U.S. a.ttornP-y for the wes7.ern district of Virginia for the term of 4 years.

l!.:lsie L. Munsell, of Virginia, to be U.S. attorney for the eastern district of Virginia for the term of 4 years.

Charles Pennington, Jr., of Kentucky, to be U.S. Marshal for the eastern district of Kentucky for the term of 4 years.

Kernan H. Bagley, of Oregon, to be U.S. Marshal for the district of Oregon for the term of 4 years.

Blaine Skinner, of Idaho, to be U.S. Marshal for the district of Idaho for the term of 4 years.

Delaine Roberts, of Wyoming, to be U.S. Marshal for the district of Wyoming for the term of 4 years.

Joseph Wentling Brown, of Nevada, to be a Member of the Foreign Claims Settlement Commiesion of the United States for the term expiring September 30, 1983.

November 10, 1981 EXTENSIONS OF REMARKS

EXTENSIONS OF REMARKS 27155

THE DUAL TERRORS OF OVERREGULATION AND OVERENFORCEMENT

HON. GEORGE HANSEN OF IDAHO

IN THE HOUSE OF REPRESENTATIVES

Tuesday, November 10, 1981

e Mr. HANSEN of Idaho. Mr. Speaker, the dual terrors of overregulation and overenforcement of regulations by unelected bureaucrats is a nightmare for the American public which demands urgent corrective action by the Congress.

The gravity of the situation and need for reform is clearly indicated in the following testimony, on the proposed adoption of a legislative veto, which I have prepared for presentation to the House Committee on Rules. TESTIMONY OF HON. GEORGE HANSEN, PRE

PARED FOR PRESENTATION BEFORE THE COMMITTEE ON RULES

Mr. Chairman, Federal regulations have gotten completely out of hand. Congress makes the laws, but bureaucrats are writing rules by the thousands that amount to laws-and they are doing it with our blessings, but with precious little Congressional supervision, leaving a frustrated public to be preyed upon in a bureaucratic jungle where the price of survival for a citizen can be frighteningly high, if not impossible.

The costs to the nation of federal regulations are staggering-with estimates ranging up to $100 billion by the end of the current fiscal year. That breaks down to about $2,000 a year for each family of four. I cannot believe the Congress, as elected Representatives of the people, ever intended to impose such a burden on those they serve.

But let me be even more specific as one who has dedicated my several years in Congress to fighting regulatory excesses which are progressively becoming more frightening, more frustrating and more insidious.

My own Congressional District cannot be much different than the other 434 and I find the dual terrors of overregulations and overenforcement of regulations by unelected bureaucrats to be a nightmare for the public.

The posture of the laws and their enforcement has drifted from the hands of Congress and with it government is becoming the adversary, rather than the servant, of the people-even to the point of legal and financial assault. For example:

<1> I had to raise $160,000 in a nationwide effort to help an average small businessman go to the Supreme Court to prove Congressional intent on OSHA inspections-OSHA wanted him in jail to prove their authority and as a deterrent to others against such challenges.

<2> Idaho's other Congressman and I are in the process of helping raise legal funds of $40,000 to help ten farmers pay to defend themselves against an entrapment operation by the U.S. Immigration Service. Although

the farmers were exonerated of these felony charges and the Federal Court condemned such INS actions, that Agency immediately announced that it was doing the same thing in other areas and planned to continue these operations.

<3> As Congressman for the victims of the Teton Dam disaster, I have spent years fighting attempts by the IRS to tum relief funds into capital gains taxes. It was this process which fully acquainted me with the ruthlessness of the IRS and the fact that they would resort to any tactic, no matter how illegal, to have their way, such as:

<a> Hate lists; (b) spy files; (c) electronic surveillance of taxpayers; (d) wholesale unauthorized searches and seizures; <e> vindictive harassment for purpose of bankrupting small businesses and individuals; (f) criminal use of tax return information to prejudice jury selection in prosecutions and general illegal disseminations of taxpayer information. <The irony of this situation is that right now, despite this tawdry record of misuse of authority, the IRS is currently asking a joint Committee of the Congress for permission to reveal legally what they have until now been leaking illegally, the privileged return information of taxpayers.>

My point is, Mr. Chairman, if the Congress is going to pass the laws, we had better see to it that they are fleshed-out and carried out by the Agencies with proper Congressional intent.

We are the elected officials directly accountable to the people-not the bureaucrats, and not the courts. It is our duty to look at the final product of the laws we pass-we owe that much to the people we serve. And that is the spirit of the legislative veto. The legislative veto provides the fence at the top of the cliff. It sure makes a lot more sense than stationing an ambulance at the bottom to pick up the victims of neglect.

The legislative veto will enable the Congress to carry out our duty to the people we serve with a minimum of time and a minimum of cost-particularly when compared to the scandalous expense to the public of federal regulation.

Now, Mr. Chairman, the issue of the socalled legislative veto has spawned some objections which simply do not square with the facts. There are those who warn that the veto would be an improper intrusion into the powers of the Executive. It would be, so such critics say, a violation of the doctrine of separation of powers. Some critics have even claimed that such a legislative restraint on the regulatory agencies would be unconstitutional.

Isn't it interesting how we sometimes tend to forget the obvious-the fact that it is the Congress which created these agencies and vested in them the power to make regulations with the force of law. And now these very agencies raise the bogus constitutional limitation issue on Congress to monitor its own creations.

We cannot afford to ignore any longer the plain fact that too many of these agencies on too many occasions engage in making substantive positive law. The real issue is not whether we can limit the activities of these delegate lawmakers, but whether we

can continue to ignore their legislative excesses done in the name of Congress.

The existence of commissions to review the regulatory functions of agencies or of Congressional oversight of the consequences of the uncontrolled power of the regulatory agencies should not deter us from the effort to achieve regulatory veto, and I urge you to reject such suggestions.

The government has become a huge enterprise. We now undoubtedly need the agencies which have been developed over the years to operate it. We should nonetheless remain aware that the agency system is a trade-off. It is a step away from a rule of law by legislative action and toward law by the personal judgment of a bureaucrat. And while it may be a necessary device, it is also a dangerous one since it often determines issues which concern the survival of individuals, businesses and institutions.

The surge of interest in reforming the agencies cannot be trusted to maintain the kind of enduring surveillance over these agencies which recent history tells us is essential to preserving the proper functions of both the Congress and the bureaucracy. Administrations come and go. Commissions expire. Even committees for special purposes fade away. But unchecked power goes on accumulating as, with respect to most of these agencies, it has been for the better part of fifty years. Legislative vetoes, properly incorporated, will endure and protect the integrity of our legislative system for as long as there is a Congress.

The sheer number and gravity of the complaints by individuals and businesses against oppressive bureaucratic rule-making should by itself serve as a warning that the problem is not merely one of an internal struggle for power between executive and legislative divisions or between competing political parties and philosophies.

This Committee may remember that two years ago, a problem developed over the drafting and implementation by the IRS of a complicated and repressive rule on the tax exemption of sectarian private schools. The effect, if not the intent, of the rule would have been to put hundreds of small private schools out of business for failure to satisfy the IRS that they were not segregated.

Several Congressmen, among whom I was one, protested to the IRS that the compliance tests were so onerous that to prove that they qualified, would bankrupt many of the schools. In addition, the rule change was denominated as a procedural matter. Since only substantive rule changes mandate hearings, the IRS was apparently attempting to avoid accepting input from anyone on this highly emotional issue. By this evasive device the rule was adopted, but only to be suspended, once by amendment attached to an appropriations bill and once by an agreement on a continuing resolution. That matter deserves our attention here· in the context of legislative veto for three reasons.

First, in the face of clear legislative objection to the rule by literally hundreds of members of both houses, the IRS announced its continuing intention to enforce the rule, once free of the temporary financial restraints adopted.

e This "bullet" symbol identifies statements or insertions which are not spoken by the Member on the floor.

27156 Second, IRS pursued agressively in court

an attempt to subvert legislative reconsideration of this bureaucratic rule.

Third, during the controversy, the then Commissioner of Internal Revenue based his persistent attempts to enforce the rule, not on his statutory mandate from Congress, but upon his self-proclaimed duty to enforce the public policy of the nation.

No one has been able to explain to me how the Commissioner of Internal Revenue is authorized to dictate public policy through the tax collection process. Even more so, I am sure no one here can be comfortable with the idea of a Tax Commissioner creating public policy for the United States even when at apparent odds with the Constitutional guarantee of free exercise of religion.

Public policy is the sum of the legislative work of Congress, not the product of a bureaucratic ego trip.

This is not the forum to discuss racial problems or freedom of religion, but that single case is a telling example of the almost uncontrolled quality of arbitrary rulemaking. The Commissioner of Internal Revenue dives into two of the more sensitive areas in our society without the slightest indication that he either understands or cares about the social havoc his legislative usurpation could cause.

Granted that one example does not made a case. Nonetheless, it does show that, without immediate, effective Congressional supervision, the rule-making function can run wild. And I doubt that there is a Congressman in this room who has not had personal experience with the damaging effect of illconsidered agency regulations and the amount of effort required to undo them. Certainly it is not necessary to emphasize further how the legislative veto could save much time, energy and anxiety by "keeping the horse in the barn" instead of trying to round him up after leaving the stable door open as we now do.

Now there are many variances of bureaucratic abuse of the rule-making power. In some instances, the divergence between legislative authority and the actual implementation appears only by imperceptible degrees. So the Internal Revenue Service has, over time, been able to arrogate to itself the power to determine the tax due from an individual, assess the amount, seize property, sell the property, bankrupt the individual, all without the opportunity for the individual ever to see the inside of a courtroom or receive even a rudimentary form of due process. It is difficult to point to any one rule change or rutY specific time when the taxpayer as such was excluded from the operation of the protection of the Bill of Rights.

But it is plain as day that he no longer has rights vis-a-vis the IRS-rights which we have always understood were to protect all citizens including taxpayers against abusive acts of government. The legislative veto will not cure all of this overnight. But it will, beyond question, provide the electorate with a focal point for legitimate complaints. And hope for needed and timely relief in an orderly, well-constructed legislative veto process is certainly preferable to trying to impose hit-and-miss legislative restraint, through hastily conceived amendments added at the last minute to appropriations acts on the Floor of the House. In the interest of constituents and of the nation at large, Members will use any vehicle available to them. Common sense dictates that we provide a less dangerous and cumber-

EXTENSIONS OF REMARKS some means than tampering with the fiscal process of the nation.

As some of the members of this Committee may be aware, I have devoted a great deal of time and effort to limit the damage done by the Occupational Safety and Health Administration. Enlarging upon my earlier reference to OSHA, I propose to cite just a few of the worst examples of regulative abuse by that Agency. In doint so I remind you that the OSHA Act of 1970 is printed in the U.S. Code in just 34 pages while as of this moment, there are more than ten thousand regulations covering eight hundred pages in the Code of Federal Regulations-this even after a recent cancellation of approximately a thousand existing regulations.

OSHA for years was a regulatory embarassment which could have been prevented by timely Congressional review. Even now its image of over-regulation and over-enforcement remains. Many of the regulations are simply unintelligible. Others are incredible. All are an economic burden, some of such proportions as to defy belief. In the period of only ten years OSHA compliance costs are in the 20 billion dollar range.

The list of regulations produced by OSHA which violate prudence, common sense, economic realism or the civil rights of the business community is too long to produce here. A few of the worst will serve to illustrate my point.

OSHA proposed to require farmers to provide lavatory facilities no more than five minutes walk from the place of work. Congress, which always has a few farmers an:tong its number, could never do something so foolish. Trivial as it is, it illustrated the mind set of the OSHA bureaucrat, and the "travelling outhouse" became the prize joke about bureaucratic incompetence.

In another case, OSHA tried to require a western university to replace 6,000 fire extinguishers, because they were the wrong color.

Companies have been ordered to remove guardrails 41 or 43 inches high and replace them with rails exactly 42 inches high.

One firm provided more fire extinguishers than required and hung them carefully at the required height and was still slapped with a fine for setting an extra unit on the floor.

Regulations required a shorter turning radius for some fork lifts; but when their wheel bases were shortened to comply, the vehicles were rendered dangerously unstable.

Some of these regulations are no longer on the books, but that they were there at all is the essence of the problem.

However, the worst aspect of unchecked regulation is that the victim of improper rule-making is relegated to the courts for relief at his own expense and inconvenience. Several · years ago, as I mentioned in the beginning, a constituent of mine named Barlow got into conflict with OSHA over whether their inspectors had the right to enter his business premises without a court order-the question being whether the Act removed an employer's Fourth Amendment rights against unreasonable search. After years of litigation and hundreds of thousands of dollars in legal fees to finance Barlows and dozens of similar cases across the nation, the Supreme Court finally found that the Agency was wrong and Congress had indeed not intended to authorize unconstitutional warrantless searches. Surely legislation which allows recourse to Congress to determine what it intends is preferable to

November 10, 1981 putting the small businessman to such strain and expense.

ENFORCEMENT

The necessary corollary of rule-making is enforcement. It is in the agency's enforcement of its regulations that the potential for the abuse of power is most evident.

I have mentioned the Barlow incident. It is but the most prominent of many court cases where small businessmen have been forced to defend their rights in court at their own expense.

Not as attention getting, but just as important to the people involved are cases like the one in which a businessman put two identical machines in his plants, located in different states. In one of them, the federal OSHA inspector certified the machine's safety. In the other, the inspector fined the man because he was operating an unsafe machine.

Another man was driven out of business by OSHA for failure to repair a machine because of the unavailability of spare parts locally, then fined after he was out of business an an example to others in similar situations.

But OSHA is not alone. I earlier noted another case where during this session of Congress, the Immigration and Naturalization Service procured the indictment of ten farmers in my District for "aiding and abetting the transportation of illegal aliens." At trial the Federal judge threw out the case and reprimanded the INS because it had in fact gone into Mexico and brought the aliens across the border illegally, transported these fugitives a thousand miles to Idaho illegally, and delivered them to the farmers who were then amazingly charged with trafficking.

It would take an entire separate hearing, which will, I hope, soon occur to detail the collection excesses of the Internal Revenue Service which I earlier pointed out. During the past year alone, with only my staff and without committee resources, I have been able to uncover misconduct in the following areas:

1. Illegal and perhaps felonious use of IRS returns and taxpayer records to assist U.S. Attorneys in jury selection in criminal cases.

2. Seizure and sale of homes for punitive and not collection purposes.

3. Maintenance of lists of people in violation of the Privacy Act for purposes of coercion.

4. Illegal electronic surveillance of potential tax violators.

CONCLUSION

The evidence is beyond dispute that the system of legislating which has developed over the past fifty years of passing laws which are only general outlines to be filled in with regulations by a delegate agency has serious pitfalls.

Whether it be the IRS, OSHA, the Federal Trade Commission, EPA, or any other agency, substantive regulations are taking the place of legislation. It is only to be expected that some of that regulation will exceed the intent of Congress and some will even be directly opposed to that intent.

We as members of the Congress cannot give up our legislative responsibility. We must maintain control over what we set in motion. At this point, the regulatory agencies are a high powered machine without an effective emergency brake. The Congress, responsive to the public mood at the polls, must either provide that brake or continue to bear the responsibility for the increasing-

November 10, 1981 ly heavy damage being done by uncontrolled regulatory law making.

The legislative veto is a modest step to retain the advantages of the agency system while enabling us to maintain the rule of law which is the pride of our governmental system. I strongly urge the earliest possible adoption of the regulatory veto.e

PERSONAL EXPLANATION

HON. TOM CORCORAN OF ILLINOIS



e Mr. CORCORAN. Mr. Speaker, due to a previous commitment October 29, I was not present and voting on a number of issues before the House of Representatives. Had I been present, I would have voted in the following way: On a motion to approve the House Journal of Wednesday, October 28, "yea"; on a motion to table the Schroeder motion to instruct the House conferees on the bill S. 815 to concur in a Senate provision requiring the Pentagon to report to Congress certain weapons cost increases, "nay"; on a motion to recommit S. 1193, State Department authorizations, to the Foreign Affairs Committee with instructions to amend it by transferring to the International Communication Agency $36 million in fiscal 1982 and $43 million in fiscal 1983 from the accounts for the administration of foreign affairs and for U.S. participation in international organizations and conferences, "nay"; on passage of S. 1193, "yea."e

AND YOU THINK YOU HAVE TROUBLES-PART III OF A CONTINUING SAGA

HON. EDWIN B. FORSYTHE OF NEW JERSEY



e Mr. FORSYTHE. Mr. Speaker, in October 1977, 7 months after the extension of U.S. fisheries jurisdiction to 200 miles went into effect, the Associate Administrator for Marine Resources of NOAA predicted that it would take 170 days to implement a fishery management plan after the draft plan and the draft environmental impact statement were formally submitted by a Regional Fishery Management Council. Those were the days of great expectations. Had the Associate Administrator known how the review process would be "improved" over the next several years, he would surely have been more vague in his predictions. Maybe he just underestimated the Federal Government's propensity for taking something fairly

EXTENSIONS OF REMARKS

simple and, by tinkering here and there in the name of progress, creating the most incredible Rube Goldberg type of process one could imagine.

It reminds me of a situation we encountered with implementation of a program designed to compensate commercial fishermen for gear damage resulting from oil and gas activities on the Outer Continental Shelf. Congress passed a bill that we thought would result in a fairly simple system to determine whether a fishermen's claim was valid and to make reimbursement payments. Lo and behold, everybody and their brother was involved in the claims process under the final regulations issued by the Department of Commerce to implement the program. Decisions were taking so long that a fisherman would have been wise to include in his will a provision making any eventual award part of his child's inheritance, just to make sure somebody was still around to accept the award. Not only that, but the claims process was so time consuming the Department of Commerce was spending four times as much administering the program as it was paying out in claims. Now you have to admit, it took some real ingenuity to turn a gear damage compensation program for fishermen into a Federal Employees Relief Act.

That same kind of ingenuity seems to have been at work in the Department of Commerce's attempts to implement the FCMA. Do you know what E.O. 12291, RFA, PRA, or RIA are? How about FACA, DRIR, AP A? You have to carry around a book of acronyms just to understand what is going on. And then, even if you know what is going on, you would be sorely tempted to ask "why?".

Now I do not want to blame all the confusion on the inventiveness of the Department of Commerce. Congress has done its part too, and all with the best of intentions. In September 1980, the President signed the Regulatory Flexibility Act into law. This act requires that Federal agencies take into account the impact of their regulations on small businesses. The act requires the preparation of a regulatory flexibility analysis <RFA), unless an agency certifies that the regulation will not have a significant impact on a substantial number of small entities. If a RFA needs to be written, it must be preceded by an IRFA (initial regulatory flexibility analysis) which is to be made available for public comment at the same time as the notice of proposed rulemaking is published in the Federal Register. At this point you might say, "Well, this act shouldn't be much of a problem because most fishing regulations probably don't have a significant economic impact on a substantial number of small businesses". How true. But, do not be so naive as to assume that, therefore, the RF A

27157 causes no delays. For an agency to certify that no IRFA or RFA is needed, it must publish a statement explaining why it is not needed, and the preparation of this document can be as time consuming as preparing an IRF A in the first place.

On February 19, 1981, the President signed Executive Order 12291 saying,

"Each agency shall, in connection with every major rule, prepare, and to the extent permitted by law, consider a regulatory impact analysis <RIA>. Such analysis may be combined with any Regulatory Flexibility Analysis performed under 5 USC 603 and 604.

"Ah hah!", you say "this can't be much of a problem because most fishing regulations probably are not 'major rules' ". In one respect you are absolutely right. Most fishing regulations are not a "major rule". However, an agency must first determine whether that is the case. A document prepared by one of the regional fishery management councils, analyzing the economic impact of some salmon regulations, took 350 hours to draft and totaled 83 pages, while the salmon management plan itself was only 283 pages long.

Let us assume the Regulatory Flexibility Act and Executive Order 12291 are satisfied. You are home free, right? Not so fast. Do not forget the Paperwork Reduction Act <PRA>. This act, passed in December 1980, "to minimize the paperwork burden" on individuals and small businesses, requires that each agency send to the Office of Management and Budget, no later than publication of a notice of proposed rulemaking in the Federal Register, a copy of any proposed rule which will require the collection of data from the public. In addition, the agency must submit to OMB, if requested, information OMB considers necessary to decide whether the data should be collected as proposed. The Director of OMB has 60 days to submit comments, and the final rule must explain how it responds to those comments, if any.

Congress and the administration, in their wisdom, have created a system which the famed Mr. Goldberg could be proud of.e

VETERANS DAY, 1981

HON. JOHN G. FARY OF ILLINOIS


Tuesday, November 10, 1981 e Mr. FARY. Mr. Speaker, November 11, Veterans Day, is America's and the world's chance to thank all the brave men and women who have risked their lives for freedom. The ability for me to speak here, today, has been insured

27158 by the defense of democracy over the years against subversive ideologies. Called to war on several occasions the United States has represented the free world courageously. This commitment to human rights has been defended by our armed services.

Veterans Day is the anniversary of the signing of the Armistice of Compiegne by the Allies and Germans in 1918, thus ending World War I. Our European allies danced and cheered that the "war to end all wars" had finally come to an end. In rememberance of this dream we have celebrated November 11 ever since; first as Armistice Day to recognize the courage of those who fought World War I and later as Veterans Day to honor all Americans who have been called to war.

The focal point of Veterans Day continues to be Arlington Cemetery. Here the greatest shrine to our veterans resides, the Tomb of the Unknown Soldier. The first unidentified hero was from World War I later to be joined by two casualties from World War II and Korea. On November 11, wreaths from all over the world are sent to honor the U.S. Unknown Soldiers and veterans. In honoring this tomb, our veterans realize the respect that the people of the free world hold for them. Thus, joined by Unknown Soldiers in France and England, the soldiers "known only to God" are appropriately glorified.

In keeping with our duties to veterans, I, too, ask all my colleagues to participate in the 2-minute silence on this day to commemorate all veterans. As Members of Congress we have the undefinable honor to represent the U.S. citizens as their legislators, yet veterans are the only citizens who have sacrificed and risked their lives for Americans; an honor any true citizen would respectfully envy. I am proud to be a stanch supporter of veterans and have cosponsored legislation duly rewarding them. We should be proud as a body that we have passed legislation helping veterans adjust to the setbacks a war can create. The Veterans' Administration is a department that our Government can be proud of.

In this "Year of the Veteran" in which much beneficial legislation has been passed for them, I feel we should recognize our most recent veterans who have not received their due respect-the Vietnam veteran. Fighting for America and democracy during a controversial time, our Vietnam veterans, especially on this day, should receive their long-due praise. Thus, in the spirit of the holiday, I call upon my colleagues to remember our veterans from all wars in a fitting and honorable manner.e

EXTENSIONS OF REMARKS November 10, 1981 NATIONAL SCHOOL LUNCH PRO- health and well-being of our Nation's

GRAM NUTRITION STANDARDS children. RESOLUTION

HON. TONY P. HALL OF OHIO

IN THE HOUSE OF REPRESENTATIVES Tuesday, November 10, 1981

e Mr. HALL of Ohio. Mr. Speaker, today I am introducing legislation expressing the sense of Congress that the U.S. Department of Agriculture <USDA) retain the traditional and longstanding goal of the national school lunch program to provide participating children with approximately one-third of their daily nutritional needs. I am pleased to have my distinguished colleague, Representative GEORGE MILLER, joining me in submitting this resolution to the House.

Mr. Speaker, the national school lunch program was established in 1946. Its adoption marked the beginning of a national commitment-

• • • to safeguard the health and wellbeing of the Nation's children and to encourage the domestic consumption of nutritious agricultural commodities and other food • • •

For nearly 35 years we have maintained the concept initiated by the enactment of the national school lunch program. Today, we are providing more than 27 million school age children with close to one-third of the recommended dietary allowance which they require to remain healthy. I see no reason why we should fall short in continuing with our commitment.

Under the Omnibus Reconciliation Act of 1981 the Secretary of Agriculture was instructed to identify possible cost savings within the national school lunch program and issue regulations for local schools to achieve these savings. Congress explicitly directed that before current meal pattern requirements are changed, the Secretary "shall exhaust all alternatives for lowering local program costs." In addition, Congress stated that the Secretary should review regulations under the National School Lunch Act and the Child Nutrition Act of 1966 to determine ways in which cost savings might be accomplished "without impairing the nutritional value" of the meals provided under these programs.

On September 4, the Secretary of Agriculture submitted regulations proposing a number of substantial changes in program meal patterns. Perhaps the best known of these was the provision allowing catsup and relish to serve as "vegetables." In the face of strong public opposition and embarrassing publicity, the administration pulled the regulations. With a new set of regulations expected shortly, I feel that it is essential to assure that the national school lunch program continue to live up to its historical commitment of safeguarding the

The Federal moneys for the national school lunch program have been reduced, and we are certainly going to have to seek ways to change program ·operation to save money. However, I feel that there are ways to accommodate adjustments without impairing the nutritional value of meals. I do not think that it is necessary to compromise meal pattern standards which have been unchanged since the national school lunch program was created 35 years ago.

I have long supported the maintenance of a national school lunch program with a sound nutritional basis. I have worked closely with Mrs. Betty Bender, the director of food services for Dayton Public Schools, in reviewing its operation in my congressional district. We have thoroughly discussed possible cost saving changes in the program and we have reached agreement that there is a multitude of alternatives to achieve cost savings other than diminishing the nutritional quality of the meals.

In addition to the discussions I have had with Mrs. Bender, I have had an opportunity to review a survey conducted earlier this year by the hunger organizing team in California. This single survey more than 15 alternatives to making changes in meal patterns. These particular suggestions have been practiced and endorsed by individuals who know the national school lunch program probably better than anyone else-program directors and food service workers. I definitely feel that these recommendations merit study by the Department of Agriculture.

Mr. Speaker we have several studies and surveys documenting the important role assumed by the national school lunch and child nutrition programs in improving the nutritional status of young children-particularly low-income children. In 1980 the Congressional Budget Office issued a report which stated that:

• • • school feeding programs appear to be significantly more effective in improving the nutrition of low-income children than direct money payments to their families ...

The Field Foundation studies conducted by teams of health professionals in 1967 and 1977 verified substantial improvement in the health and nutritional status of low-income children and attributed these improvements to child nutrition programs. The Department of Agriculture national food consumption survey between 1965 and 1977 reflected improvements in the diets of low-income children. These results, too, were attributed to the high standards set by child nutrition programs. At a time when the costs of food, utilities, hous-

November 10, 1981

ing, and other living expenses are increasing; at a time when unemployment is continuing to rise; and at a time when a number of other Federal assistance programs are being reduced; a change in the nutritional standards · of the national school lunch program cannot take place. Any such change would only serve to risk the sound nutritional stature which we have been able to achieve and maintain.

I am pleased to note that the Subcommittee on Elementary, Secondary, and Vocational Education, on which Congressman MILLER sits, has scheduled hearings on our resolution for November 18. I am equally pleased to announce as organizations supporting our resolution: American Federation of Grain Millers; American Federation of State, County, and Municipal Employees; American Federation of Teachers; American Nursing Association; American Public Welfare Association; Americans for Democratic Action; Bread for the World; Center for Community Change; Center for Science in the Public Interest; Child Advocacy Center; Children's Defense Fund; The Children's Foundation; Child Welfare League of America; Communication Workers of America; Community Nutrition Institute; Congress Watch; Consumer Coalition for Health; Consumers Union; Council of Great City Schools; Cooperative League of U.S.A.; Food Research and Action Center; Friends Committee on National Legislation; International Ladies' Garment Workers' Union; National Catholic Conference for Interracial Justice; National Community Action Agency Executive Directors Association; National Family Farm Project; National Farmers Union; National Hook-Up of Black Women; National Milk Producers Federation; National Paralegal Institute; National P.T.A.; National Rural Housing Coalition; National Sharecroppers Fund; National Urban League; United Cement, Lime, ·Gypsum, and Allied Workers International; United Methodist Church Department of Human Welfare; and World Hunger Education Service.

Mr. Speaker, shortchanging our children on nutrition is certain to show up as an increase in health costs later. The objectives of the national school lunch program clearly will not be fulfilled if healthy, nutritious meals are not served. The purpose of this resolution is to express the strong sense of Congress that the Department of Agriculture should maintain the 35-yearold nutritional goals of the national school lunch program.

For the benefit of my colleagues, the text of the resolution follows:

EXTENSIONS OF REMARKS H. CoN. RES. -

A bill to express the sense of the Congress concerning regulations pertaining to meal pattern requirements and nutritional requirements for meals served in programs under the National School Lunch Act. Resolved by the House of Representatives

<the Senate concurring), That it is the sense of the Congress that regulations pertaining to meal pattern requirements and nutritional requirements for meals served in programs under the National School Lunch Act should be consistent with the traditional and long-standing goal of such programs that the nutrients of such meals, averaged over a period of time, provide approximately one-third of the Recommended Dietary Allowance, as established by the National Academy of Science, for the children served by such program.e

CONGRESSMAN WILLIAM CARNEY

HON. ROBERT H. MICHEL OF ILLINOIS


e Mr. MICHEL. Mr. Speaker, at its 20th annual dinner, the New York Coast Guard Chapter, Reserve Officers Association of the United States, conferred on Congressman WILLIAM CARNEY honorary life membership in the chapter.

Congressman CARNEY was cited for his interest in and contributions to the growth, development and preparedness of the U.S. Coast Guard Reserve as a major component in the defense and national security posture of the United States.

Among the current members of the House of Representatives previously honored by the chapter are Representatives MARJORIE HOLT, NORMAN LENT, and MARIO BIAGGI.

Congressman CARNEY, representing the First District, New York, served in the U.S. Army Medical Corps from 1961 to 1964 and is a member of the House Merchant Marine and Fisheries Committee and the House Science and Technology Committee.

I want to congratulate BILL CARNEY on receiving this distinguished honor.e

VOTING RIGHTS: ON GUARD

HON. DON EDWARDS OF CALIFORNIA


e Mr. EDWARDS of California. Mr. Speaker, I would like to share with my colleagues an editorial which appeared in the Los Angeles Times on Sunday, November 8. The editorial examines

27159 the President's recent statement on extension of the Voting Rights Act.

I was pleased at the President's announcement that he favored extension of the act. As the President indicated, the right to vote is one of the most precious rights provided by our Constitution, and the Voting Rights Act has been responsible for assuring the right for countless Americans.

I am concerned, however, by indications that the President might support amendments which would replace the current "'effects" test with an "intent" test in determining whether violations of the act had occurred. An amendment to make this change was soundly defeated by the House during consideration of H.R. 3112.

Such a change would inflict irreparable damage to the act. To show that the framers of a voting law intended to discriminate would be virtually impossible. In addition, why should such a finding be necessary at all? As the Los Angeles Times editorial states: "If a law discriminates, it should be taken off the books."

I urge my colleagues to read this editorial carefully. I am sure they will find it of interest.

The editorial follows: VOTING RIGHTS: ON GUARD

Blacks, Latinos and other minorities who have been victims of discrimination at the polls will hail President Reagan's statement last Friday that he will sign a 10-year extension of the Voting Rights Act of 1965 if it reaches his desk.

But the battle is far from over. The issue is now before the Senate Judiciary Committee, whose chairman-Strom Thurmond <RS.C.>-is openly hostile to the act and who almost certainly will try to dismantle its most important safeguards against the abuse of minority voting rights.

More than that, Reagan said he would be willing to accept amendments to the present law, which will expire next August if Congress fails to act, and the changes that he suggests could seriously weaken federal enforcement powers.

The President has been wavering for a number of months, and we applaud his decision to sign an extender of the law forbidding racial gerrymandering and all other discriminatory practices. But we think he should have come out strongly in favor of full extension of the law, which already has the approval of the House of Representatives by an overwhelming vote of 389 to 24.

The House version calls for an indefinite extension, and recurring attempts in a number of states to suppress the minority vote confirm the necessity for the strongest possible statute.

There is no doubt whatever that the Voting Rights Act has been effective in stimulating minority participation at the polls. In the 16 years since its enactment, literacy tests, poll taxes and hindrances to full suffrage have been struck down. Black registration in the South has risen from 29.3 percent to 56.6 percent. The number of blacks holding public office has risen from fewer than 100 to more than 1,800.

Many of those gains were made possible by a section of the act requiring nine states and sections of 13 others, all with a long his-

27160 tory of discrimination, to pre-clear changes in their election laws with the federal courts or the Department of Justice.

It is this section that Thurmond and other Southern legislators object to most strenuously. They would prefer to eliminate pre-clearance entirely, but, barring that, they are determined to make it easier for offending jurisdictions to win exemption from the requirement. In his statement, Reagan said that he would go along with this approach.

We agree that state and local governments that have complied with the law and that have also taken positive steps to increase minority voting deserve an exemption, and the House measure would grant them one if they could prove an absence of discrimination for 10 years.

But many representatives of the states in question-Alabama, Alaska, Arizona, Georgia, Louisiana, Mississippi, South Carolina, Texas and Virginia-insist that a clear record of two or three years should be adequate.

We disagree. Despite the increase in black and Latino participation, representation in government in the nine states is still far below minority voting strength. Blacks now hold only 8 percent of elective offices in the seven Southern states, although their population ranges from 20 percent in Virginia to 35 percent in Mississippi. In Texas, Latinos account for 21 percent of the population, but hold only 6 percent of public offices.

The disparity results, in most cases, from the deliberate redrawing of district lines to divide the minority vote, at-large elections and other practices, including harassment at the polls, whose clear intent is to discriminate.

Obviously, there should be no tampering with pre-clearance-and certainly not in a reapportionment year-as long as such practices exist.

Apart from the length of probation for states in which offenses have been most common, and in which they still persist, opponents of the Civil Rights Act raise objections to still another of its key features.

At present, the government must prove only a discriminatory result, not discriminatory intent, when it challenges the election laws of a state or local government. There were attempts in the House, as there may be in the Senate, to place an additional burden of proof on the government-one that would require it to prove both discrimination and intent.

Such an amendment would inflict fatal damage on the Voting Rights Act. Many of the suspect laws were written 10, 20 or even 50 years ago, and it would be impossible at this late date to read the minds of legislators. Beyond that, why should it be necessary to prove intent? If a law discriminates, it should be taken off the books.

The danger is that Reagan will concede too much to the Southerners. In our opinion, he should not accept the slightest diminution of federal authority to intervene in the continuing denial of full suffrage to many millions of Americans.

If his commitment to the Voting Rights Act is as sincere as he claims it is, he should declare flatly that he wants the House measure to come to his desk-and without the damage that Thurmond would want to inflict on it.e

EXTENSIONS OF REMARKS MESSED UP AMERICAN

ECONOMY

HON. HAL DAUB OF NEBRASKA


Tuesday, November 10, 1981 • Mr. DAUB. Mr. Speaker, the ability to translate complex economic theory into plain English is a rare craft, but H. Wade German, in a recent Omaha World Herald editorial, capsulized the economic challenge before us with precision and clarity.

This article is a straightforward and concise account of the trends that led to the passage of the Fiscal Policy and Tax Reduction Act of 1981 and of the reasoning behind the act's provisions. This is an excellent and well-written summary, and I am pleased to share it with my colleagues. [From the Sunday World-Herald, Sept. 20,

1981] How DID AMERICAN EcoNOMY GET so

MESSED UP? <By H. Wade German>

It was just a little more than five weeks ago when President Reagan signed the Fiscal Policy and Tax Reduction Act of 1981. By any historical standard, this legislation represents nothing less than a dramatic change of course in terms of being the required first step at administering the medicine needed to get an ailing economy back on its feet again.

Reagan's economic medicine, it must be remembered, was never portrayed as a miracle drug, and, yet, the financial markets and many politicians-as well as some economists-have proudly pronounced Reaganomics a failure as if the expected something along the lines of an economic laetrile.

I might also note, somewhat parenthetcially, a significant part of the business press is likewise climbing aboard the "I told you so" bandwagon.

The misunderstandings, apprehensions and widespread confusion can be traced basically to three causes.

First, many of the interpretations of the success-failure criteria indicators are made by individuals uniquely unqualified to pass judgment on economic policy in general, let alone evaluate snort-term evidence as it" relates to a long-term process.

Secondly, despite what they sound like when they talk, economists and politicians are not fuzzy-headed, strange people. Both groups are just principally inept at explaining economic policy.

Economists have an inherent propensity to discuss common-sense issues in such a way that no one other than another economist can understand, while most politicians are too busy hedging their bets to give the program their unqualified support even if they are ardent believers.

This inability or unwillingness or both to communicate political economic objectives and methods is manifested in uncertainty and anxiety on the part of many Americans.

In this regard the American public can be viewed as being composed of three groups. The first group, which can be called "supply-side believers" is a relatively small number of people who both believe and understand supply-side economics.

There is another segment, perhaps 10 to 15 percent, so dedicated to the proposition

November 10, 1981 that big government is good that their prognostications of imminent economic and social collapse are designed to frighten, as opposed to enlighten.

It seems to me, however these die-hard advocates of a massive bureaucracy to control our lives are dwindling in numbers and in a few months will be classic political antiques. My reading of the political tea leaves and prevailing winds leads me to believe Mr. Q. John American realizes that a governmental structure large enough to provide everything he wants is also powerful enough to take from him anything it wants. More and more people now believe economic freedom is just as important as religious freedom, free speech, etc.

The third group, about 85 percent, is comprised of those who are totally confused, but understand that almost anything is better than what we have had in the past five years. It is to this group that this is addressed.

HOW DID THINGS GET SO MESSED UP? The economic heartbeat of any country is

critically dependent upon its citizens' desire to produce products or services or both. When individuals place a higher priority on fishing or TV gazing than on working, the economy will stagnate.

But why would anyone give up additional income to be mesmerized by "Charlie's Angels" or to watch a giant run uphill with a refrigerator strapped to his back? The answer-when tax rates are so high the after tax income does not justify the effort.

How many times have you heard persons say they refused overtime, quit their second job or turned down a promotion because they simply didn't feel like working for the government?

The message here is very simple: when tax rates transcend reality and become confiscatory, the incentives to produce <and earn income> are obliterated. Now ask yourself the question: If we reduce a worker's tax bill by 25 percent, will he work harder and seek additional income?

Do corporations behave significantly different than individuals? Will firms continue to produce products, hire workers and pay salaries if the major part of their profits are siphoned off to the federal Treasury? The answers are obviously no and no.

Once again, could we expect the business community to produce the products we want to buy if we increased its incentives?

If all this sounds simple, it is. Rational economic policy, as I tell all of my economics students, is 90 percent common sense and 10 percent arithmetic.

Furthermore, if the skeptics would view the evidence of the February 1964 tax cuts, it would be impossible to conclude anything other than that these tax cuts had a powerful impact on savings.

This is shown in Chart 1. In 1963, savings totaled $29 billion compared to $55 billion in 1966, an increase of 90 percent. What is even more disheartening, however, is the fact that those who deny the Reagan tax cuts will stimulate savings <and investment, work effort, etc.) could reach the same conclusions, although certainly of a different magnitude, by applying the Keynesian theory embodied in virtually every introductory economics textbook.

Additionally, it is noteworthy to point out to Reaganomics disbelievers that tax cuts can reduce the deficits in future years since the increase in government tax receipts will obviously increase <at an ascending rate> as personal income increases.

November 10, 1981 The response of government tax receipts

to the "revitalized" economy in 1964-1966 is shown in Chart 2. Hence, it seems to me that much of the uncertainty and apprehension surrounding the likely effects of Reagan's tax program is due primarily to scant or non-existent review of historical evidence.

I think it is also important to point out that the skeptics of Reagan's supply-side economics <real or otherwise) generally don't argue <because they can't) that, if economic incentives are increased, economic activity will expand. Even devout socialists the likes of Catherine the Great and Karl Marx were not that naive.

The screams and howls of agony we hear periodically are not generated by people who are anti-economic growth, but rather by individuals who place social welfare programs at the pinnacle of their priority list.

Stated somewhat differently, most of the opposition to Reagan's economic program is precipitated by conflicting social objectives, not conflicting economic objectives.

Still another way to view this schism is one of ends vs. means. The president's program is designed to provide the means <incentives) via which the ends <full employment, etc.) are achieved.

Critics of the program focus principally upon the ends as being relegated to second order importance, i.e., the critics desire, or wish, to see direct governmental actions in terms of alleviating poverty etc.

Hence even the vast majority of the critics do not disagree that Reagan's program will work, they just simply want more direct action.

The problem with more direct action is it means the government does the job rather than the private sector, and it is precisely that intervention which spawned the mess we were in.e

TRIBUTE TO GEORGE F. MOODY

HON. HENRY A. WAXMAN OF CALIFORNIA



• Mr. WAXMAN. Mr. Speaker, on November 11, 1981, the Los Angeles chapter of the American Jewish Committee will present the annual Human Relations Award to the distinguished business and community leader, George F. Moody.

The list of Mr. Moody's accomplishments in the business world and in community service is staggering. His expertise and commitment to excellence in all that he undertakes is the hallmark of his success.

A native of Riverside, Calif., George Moody was born in 1930. He joined the Security Pacific National Bank in 1953, and is currently a member of the board of directors of both the corporation and the bank.

George Moody's community service record is equally impressive. Mr. Moody is chairman of the board of the Los Angeles Area Chamber of Commerce, having served on the board of directors since 1974, and as President in 1980. He is treasurer of the Merchants & Manufacturers Association,

79-059 0-85-41 (Pt. 20)

EXTENSIONS OF REMARKS director of the YMCA of Metropolitan Los Angeles, director and vice president of Hollywood Presbyterian Medical Center, and a member of its executive committee.

Mr. Moody is also director of the National Conference of Christians and Jews; member of the executive board of the Los Angeles Area Council, Boy Scouts of America; member of the board of trustees and member of the executive committee of Pomona College; director, Music Center Operating Co. Mr. Moody also serves on the board of governors of the Performing Arts Council of the Music Center of Los Angeles. He is president of the Colorado River Association. In May 1981, he was appointed western regional finance chairman of the U.S. Olympic Committee. He is also director of the United Way, Inc., serving on the executive committee, and is chairman of the corporate administration and finance committee. During 1975-81, he served as director and member of the executive committee for the American Red Cross, Los Angeles chapter, having served as chairman for 2 years, 1979-80. During 1972-73 he was, by Presidential appointment, metro chairman of the National Alliance of Businessmen <NAB> in Riverside, Calif. He is a former director of the United Fund of Riverside, the National Orange Show, and the Riverside Community Hospital.

I ask the Members to join me in congratulating George Moody on his outstanding career and record of service and to wish him many years of continued success.e

MOSES ZINBERG

HON. STEPHEN J. SOLARZ OF NEW YORK


Tuesday, November 10, 1981 • Mr. SOLARZ. Mr. Speaker, I rise today to pay tribute to Moses Zinberg, of Brooklyn, who will be 100 years old on November 23.

Moses Zinberg came to this country from Russia in 1921, together with his wife, Pearl, and four small children, to escape religious persecution. He overcame poverty, a language barrier, and many other problems to become an outstanding member of the Brooklyn community.

Mr. Zinberg's life is a testimony to true perseverance in the face of extremely difficult circumstances. Throughout his struggle, he kept his strong faith, both in his religion and in his fellow man.

Mr. Zinberg's daughter, Lucy Gamberg Husack, has written an eloquent essay on her father's life. I would like to share with my colleagues the story of Moses Zinberg-a most remarkable husband, father, and citizen:

27161 MOSES ZINBERG

Moses Zinberg, born in Russia on November 23, 1881, escaped from religious persecution to "America, the land of freedom and promise." He arrived in New York with his young wife and 4 children, ranging in age from 2 to 12. They arrived on May 1, 1921, a day that he and his family will always remember as "a day of liberation and promise."

Many immigrants came to this country during that period, but there were very few agencies to help them adjust and integrate into community life. It was a tough struggle, but most of them were determined and made it and so did the Zinberg family, headed by Moses, hardworking, ambitious, and determined to do the best for his family whom he loved dearly.

Moses Zinberg was young (40), had a skill <accounting), but he did not know the language. He worked at any job available and went to school at night as did his wife Pearl. The children attended P.S. 62 on th~ East Side, where the family lived.

As head of the family, Moses Zinberg taught us by example that a good education and hard work will enable us to reach our goals. When we were old enough to get "working papers," we all took jobs ... part time, after school, summer vacations, etc. We were all part of "a family team." When we completed high school, we took full-time jobs and went to CCNY and Hunter College at night.

Moses Zinberg was doing some accounting work and real estate management for his brother who was an attorney and owned some real estate. He was concerned and interested in the tenants' rights and problems and promptly took care of them. The tenants loved him and respected him.

At the age of 60, when things were not going well for him financially, he saw an ad in the New York Times from General Electric in Bloomfield, New Jersey, for someone who knew how to read blueprints. He knew how and applied for the job. He got up at 4:00 a.m. and travelled from Brooklyn to Bloomfield. After a short period, he designed a special "worktable" to make things easier and more efficient. He was given a special award of which he was very proud. In later years he went back to work for his brother, and again the tenants were very happy with his concern and response to their needs. He was convinced that "it was good business to take care of your property and be kind to the tenants." He worked until he was 85.

Through the years, Pearl Zinberg became involved with philanthropic and community groups. She was a life member of the Infants Home of Boro Park, the Womens' League for Israel, and the National Asthma Center. He supported her in all her endeavors: was secretary for a Family Group which raised funds for a "Home for Girls" in Israel for which a special award was received. At birthday or anniversary time he always gave his children and grandchildren "Israel Bonds" saying, "we have what we need in America, we must all help Israel."

Moses Zinberg made it in America and so did his children.

Today, when he is reaching his 100th birthday, he thanks G-d every morning for giving him a present of another day.

He is outgoing and cheerful with a deep faith in G-d and in humanity. He "lights up" when his family-3 children <one passed away), 6 grandchildren, and 3 great grandchildren-visit him at The Scharome Manor

27162 <a hotel for senior citizens). We all respect and love him very much.

He escaped persecution, found freedom, and never lost his faith in G-d and humanity.

Moses Zinberg is an "unsung hero," and now that he is reaching his lOOth birthday, a milestone in his life and in the life of his family, the first to reach this golden age, we invite you to join us and rejoice with us.

I am his daughter, Lucy Gamberg Husack, and I don't remember his ever having a birthday party. He has earned it, he deserves it, and we, his children, grandchildren, and great grandchildren, want you to help make Sunday, November 15, a very special day for our hero, Moses Zinberg.e

TRIBUTE TO OUR NATION'S VETERANS

HON. OLYMPIA J. SNOWE OF MAINE


Tuesday, November 10, 1981 e Mrs. SNOWE. Mr. Speaker, tomorrow is a day of remembrance. Tomorrow we pause and pay tribute to those Americans who have honorably and bravely served our country in the armed services. We rise to honor those who gave their lives in pursuit and protection of our most cherished national asset-our freedom. This day especially marks our Nation's immense gratitude to those who fought and those who died to preserve our freedoms. It is a day which evokes thoughts of sacrifices, courage, dignity and honor-words which aptly distinguish our veterans of national service.

We, as people, have faced many wars and different challenges since winning the War for American Independence. We have fought others, and we have fought among ourselves. But one fact remains constant: In all of the conflicts, all of the battles, all of skirmishes in which American men and women have taken up arms, these guardians of our freedom have distinguished themselves through the magnitude of their bravery and conviction. few men or women among us would actively seek out the horror of war, but fewer still in our history have failed to assume this burden with dignity and honor. It is the nobility of such actions that is the meaning of a day like we have tomorrow.

This Nation shall never forget the contributions of our veterans, and the memories of war will continue to live on in those who are survivors and the dependents of those lost at war. I am proud to report that our country shall always remain committed to its veterans, not only with ceremonies and monuments, but with services and help which only begin to recognize their special efforts through their military service to the national interest. Despite budget restraints this year, my colleagues and I here in Congress have nonetheless joined in enact-

EXTENSIONS OF REMARKS ing major legislation designed to greatly benefit all veterans. We have made dramatic improvements in Veterans' Administration <VA) hospital services, staffing, and facilities so that we may better continue our responsibilities of caring for our veterans, and all those seeking financial and medical assistance. I am especially pleased to report that the VA recently decided to establish a new counseling facility for Vietnam-era veterans in Bangor, Maine, to assist veterans who may be suffering readjustment problems following service in Southeast Asia. While a sizable majority of Vietnam veterans have returned to lead successful, productive lives, a substantial number are plagued by various difficulties. These problems can not be cured by themselves and I am delighted that the Bangor site was chosen for a counseling center so that we may continue our efforts to give back to those who gave so much of themselves.

Today, Americans are at peace throughout the world and no American, thankfully, faces combat to protect our priceless rights. This is a testimonial both to our commitment to world peace and to our renewed pledge to protect our peace with determined strength. Those whom we honor tomorrow left a legacy too precious either to forget or· to betray. Our veterans deserve our respect and much more. Our veterans have earned the right to expect that our generation and those of the future will possess their qualities of bravery, conviction and courage when America requires it. It is befitting for all of us tomorrow to speak our praise and gratitude loudly to commemorate those soldiers who have sacrified so much for this great Nation.e

A REMINDER ON VETERANS DAY

HON. IKE SKELTON OF MISSOURI


Tuesday, November 10, 1981 e Mr. SKELTON. Mr. Speaker, Starr West Jones, commentator for WCRB radio station in Boston, Mass., aired the following commentary relating to Veterans Day, and I wish to share it with the Members of this body:

WHO CARES ABOUT AMERICA?

Do you as a citizen make any effort to remind your children, or family adults, of the sacrifices made by the men and women who struggled, through peace and war, to secure for us the priceless freedoms we enjoy today? They are our heroes, they cared about America-the question is, do you?

The Hon. Ike Skelton, Democrat, Representative from Missouri in the U.S. Congress, recently addressed college and university instructors at Little Rock, Ark. That speech vividly supports the challenge I've just made. The Congressman said, in part: "Recently I accompanied my youngest son

November 10, 1981 and his Boy Scout Troop to Gettysburg, Pa., where we toured the scene of that decisive battle of July 1863, where General Robert E. Lee and his Confederates engaged General Meade and his Federal troops. We walked among the Battlefield monuments, reminders of the determined courage of the men from the North and the South who fought and died for their respective causes. At the end . . . we read an historic marker denoting Pickett's charge. One young boy . . . sarcastically remarked, 'Pickett's charge, who cares about Pickett's charge?' " ... The boy's words startled the Congressman for he realized that standing on the ground of one of the mightiest struggles of our history meant no more to the boy than standing on a street corner waiting for a bus.

Pres. Abraham Lincoln, later, on that same battlefield said: "The world will little note, nor long remember, what we say here, but can never forget what they did here". Was Lincoln wrong?

Then Congressman Ike Skelton told about travelling to Southeast Asia in 1979 to bring back bodies of American flyers killed in the Vietnam war. On the way over he stopped at Manila, in the Phillippines, to visit the island of Corregidor where a marine from his hometown had been among those captured by the Japanese in 1942 after five terrible months of resistance. Soon after his return Ike spoke to a high school history class in Missouri and recounted his trip to them. Mentioning his visit to Corregidor, Skelton asked the class what they knew of that small island? But none had heard of the name Corregidor, none in the classroom had any idea of the scores of Servicemen who defended the American Flag there in 1942. The apathy and ignorance of the students left Ike deeply troubled.

The Congressman concluded his talk by citing our American peacetime victories as well. Recalling the men, women and children who moved westward into the wilderness during the 1800's Ike said: "Our American heritage is one of challenges met by a determined people . . . That spirit charted the course of democratic government for the world . . . This is the heritage which you and I must transmit to our children ... " It is not just facts, figures and dates, it is a deeply rooted sense of loyalty to all that has gone before-the challenges, the stoutheartedness, the dedication of our past.

"Who cares about Pickett's charge?" "Who cares about Corregidor?"

God grant that you and I care and that our children care, and that our children's children will care. For, if we as a people fail to appreciate the greatness of our heritage, the day could well come when some youth might remark: "America? Who cares about America?" Thank you, Congressman Ike Skelton, for reminding us.e

WISCONSIN STATE LEGISLA-TURE CALLS FOR DISMISSAL OF INTERIOR SECRETARY WATT

HON. ROBERT W. KASTENMEIER OF WISCONSIN


Tuesday, November 10, 1981 e Mr. KASTENMEIER. Mr. Speaker, I wish to call to the attention of my colleagues the resolution passed by

November 10, 1981 the Wisconsin State Legislature which urges the dismissal of Secretary of the Interior Watt.

The voices of protest against Secretary Watt's policy of undermining the environmental progress we have accomplished over the past two decades are increasing. The American people have every right to demand that he be replaced, and I commend the Wisconsin State Legislature for seeking the removal of Secretary Watt.

Mr. Speaker, the resolution follows: ENROLLED JOINT RESOLUTION MEMORIALIZING

CONGRESS AND THE PRESIDENT To SEEK THE DISMISSAL OF THE SECRETARY OF THE INTERIOR, JAMES G. WATT

Whereas the wise use of our natural resources and the protection of our national heritage are important duties of the federal government; and

Whereas lands managed by the Department of the Interior are owned by all the people of the United States and should be managed for the benefit of all the people; and

Whereas James G. Watt has consistently, in public statements and actions, disregarded the interests of the American people by advocating and implementing policies that would destroy decades of bipartisan commitment to environmental protection and preservation of our priceless national heritage: Now, Therefore, be it

Resolved by the assembly, the senate concurring, That the legislature and the people of the state of Wisconsin hereby urge the Congress and the President of the United States to seek the dismissal of the Secretary of the Interior, James G. Watt; and, be it further

Resolved, That a duly attested copy of this resolution and a list of those who voted in favor thereof and those who opposed be transmitted to each member of this state's congressional delegation.•

HOW WELL IS THE THIRD WORLD GOVERNED?



Tuesday, November 10, 1981 e Mr. MICHEL. Mr. Speaker, the recent summit conference at Cancun, Mexico, focused attention on the problems of the Third World. But one of the major problems of the Third World is the way much of it is governed-or, more precisely, misgoverned. Unfortunately, this problem was never raised during the conference.

At this point I wish to insert in the RECORD an article that deals with the problems of Third World government: "How Well Is The Third World Governed?" by Jean-Francois Revel, in the Wall Street Journal, Thursday, November 5, 1981.

[From the Wall Street Journal, Nov. 5, 19811

HOW WELL Is THE THIRD WORLD GOVERNED?

<By Jean-Francois Revel) I was hoping that the Cancun conference

would bring to the fore the one question

EXTENSIONS OF REMARKS that is never posed about the Third World: the question of the political responsibility of Third World governments for the economic underdevelopment of poor countries. Helas! The question was not brought up.

A country, whatever its stage of development, can be well or poorly governed. A great part of the economic success or failure of all countries results from political choices by national governments. This seems evident enough when we talk of Britain, Poland, Sweden or Italy. No commentator hesitates to say that he finds American interest rates too high, the monetarism of Mrs. Thatcher too far out, the outburst of French nationalizations dangerous.

And if these policies lead to bad results, the responsibility for setbacks will naturally be attributed to those who took the decisions.

TOTALITARIAN SYSTEMS

But when it's a question of the Third World, the notion of responsibility disappears completely. This is even more unjustified in that the large majority of Third World leaders took power through coups or administer totalitarian systems. Their sole legitimacy, if one can call it that, is derived from results obtained after the fact. In a democracy, the error belongs to the voters: If Mrs. Thatcher stumbles, the British voters first stumbled by bringing her to power. In a dictatorship, the most common type of regime in the Third World, the least one can ask of those in power is efficaciousness. But one finds, above all, incompetence and extravagance, not to mention corruption.

Many of the economic maladies of the Third World are related to politics. Argentina, whose economic level 40 years ago was comparable to that of Western Europe, has regressed into an underdeveloped state following the ravages of Peronism. This is the fruit of a clearly political decision. Nkrumah in Ghana, Nyerere in Tanzania, Toure in Guinea plunged their respective countries into decline by stupid administration or policies motivated purely by ideology. On the other hand, the Ivory Coast and Kenya, which were relatively well governed, were able to reverse and ameliorate the material condition of their citizens.

A recent report of the International Monetary Fund makes no secret of the fact that the aid given by that organization to Bangladesh these last few years was badly utilized or even squandered in irresponsible fashion following errors in judgment by the country's leaders. Idi Amin, the Iranian revolution, the war between Iraq and Iran, the Soviet grip on Ethiopia, Angola and Mozambique, the disastrous agrarian reforms of Algeria, the takeover of the "non-aligned" movement by Castro-all these events and many others are political phenomena that weigh heavily, in the past, present and future, on economic development.

Of course, foreign interference and influence isn't absent from the political history of the Third World. But that's true of all countries, even the developed, even the powerful. Politics doesn't take place in a vacuum. But it's also true that a number of "less developed" countries have made their most pernicious decisions all by themselves. It was in quite independent fashion that the socialist-minded colonels who governed Peru from 1968 to 1979 conducted an economic policy whose outcome was to lower gross production more than 50% in 11 years.

The standard Third World explanation attributes underdevelopment to the "pillage of raw materials" by the rich countries and to "inequality in the terms of exchange."

27163 But if we consider copper, often cited as an example, we find that the premier producer of this metal is far and away the U.S. If the Americans bothered to conspire to "artificially lower" prices, as they are often accused of doing, they would be the first to suffer.

In 1975, a UN commission composed equally of experts from rich capitalist countries, the Third World and the Communist bloc made an elaborate stydy of raw materials. Their conclusion, which wasn't published, in unequivocal: There has been no deterioration in the terms of trade over time. This is logical, since demand hasn't stopped growing. Rich countries are big consumers of raw materials, but these raw materials would have not value if industrial demand by the developed countries didn't exist.

INCREASING ARMS PURCHASES

One can dispute whether the ultimate objective of the governments of the Third World is really economic growth. If they seek as a priority to struggle against the poverty of their people, why do they devote themselves to an ever-increasing purchase of arms.

At Cancun, the leaders of the less-developed countries essentially wanted to obtain a commitment to what they call "global negotiations," a code name signifying that they would like the distribution of aid furnished by rich countries to be carried out henceforth by the UN. In fact, this would make the Third World countries the sole masters of the distribution of aid and sole judges of the good use of money given to them by rich countries. It's certain that such "global negotiations" would result in a better deal for the governing elites of the Third World than for the people subjected to those governments.

These considerations aren't meant to overlook the purely economic aspect of the problem of poverty or the necessity of North-South cooperation. They are meant to recall that economic assistance and technology don't suffice if the governments that receive them are badly governed. The movement of "less developed" countries to a "more advanced" stage presupposes the acceptance of political responsibility. Third World demagogy is the worst enemy of the Third World.e

VETERANS DAY: A GRATEFUL NATION REMEMBERS

HON. WILLIAM M. THOMAS OF CALIFORNIA



e Mr. THOMAS. Mr. Speaker, Wednesday, November 11, is Veterans Day, a time which the Nation has set aside to honor those who have fought to preserve the freedoms we enjoy in America.

Veterans Day was first celebrated as Armistice Day to mark the end of the First World War, the "Great War," in 1918. Unfortunately, that war has been followed by others. Veterans Day now commemorates all veterans, from the Revolutionary War to the Vietnam war. Since 1776, more than 1 million Americans have died in defense of

27164 their country, g1vmg, in Lincoln's immortal words at Gettysburg, "the last full measure of devotion".

It is fitting that we should honor our veterans with medals, ceremonies, parades, and other recognition, yet the Nation owes more than 1 day a year to its veterans. That is why Congress, through the years, has provided pensions, medical care, education benefits, and housing assistance to help veterans and their families.

Within this year's budget limitations, Congress adjusted and expanded programs for all veterans, paying particular attention to veterans of our most recent conflict, the Vietnam war. Although Vietnam was an undeclared, and ultimately unpopular war, it nonetheless left very real scars upon many of the 2. 7 million veterans who served there.

The Former Prisoner of War Benefits Act of 1981, which I supported, provides hospital care and outpatient treatment to former POW's, and it provides benefits for service-connected psychosis, trauma, and anxiety suffered by former POW's. A specific clause including POW's who served in the Vietnam conflict is included in the act.

The Veterans Health Care, Training, and Small Business Loan Act of 1981, which I also supported and which the President signed November 3, extends veterans psychological readjustment counseling through 1984, sets priority care for victims of agent orange herbicide in Vietnam and for veterans exposed to nuclear radiation at Nagasaki and Hiroshima, and provides funds for small business loans to all veterans.

In addition, Congress this year increased rates for veterans disability benefits, life insurance, housing assistance, and indemnity to families. Congress also clarified its intent to bar all VA benefits to members of the All-Volunteer Armed Forces who do not complete at least 2 years of obligated service.

These benefits are part of the debt which the Nation pays to those who defend it. As we honor our veterans on November 11 with music, pomp, and ceremony, we should remember that the best thanks which a grateful nation can extend to its veterans is the opportunity for them to resume their lives at home. The programs which Congress has approved can help, but the helping hand which we lend as their neighbors is just as important.e

LISTEN TO THE CIA WATCHMEN



e Mr. EDWARDS of California. Mr. Speaker, President Reagan's an-


nounced plans for the "unleashing" of the CIA and other intelligence agencies for operations within the United States pose a serious threat to the rights of law-abiding Americans. The following lead editorial in the November 9, 1981, edition of the New York Times explains that newspaper's views of the proposed Executive order.

[From the New York Times, Nov. 9, 1981] LISTEN TO THE CIA WATCHMEN

Point: The United States cannot be secure if our spies can't use their covert methods on the home front as well as abroad.

Counterpoint: We cannot be truly free if we let them ply their methods of infiltration, surveillance and manipulation on lawabiding citizens.

There are two issues embedded in this argument. One is where-where these competing interests should be balanced. The other, much more important, is how-the process of interplay between the CIA and its Congressional Overseers. The process makes the agency and the White House squirm, but it is the only hope for the wise use of intelligence. Therefore, when the Congressional monitors sound an alarm, it behooves the White House and the intelligence community to listen.

Congress can draw a line, as in 1947 when it created the CIA, against domestic spying. But that line requires constant policing. It is heartening to see that the watchmen are awake.

A bipartisan Senate Intelligence Committee, and the Democrats, at least on the House counterpart, have sternly warned President Reagan against relaxing the curbs on domestic CIA activity, as proposed in the latest draft of an executive order. Why, they ask, does the Administration want to stir up old anxieties, risk reviving the abuses Congress has documented and distract from the main task of improving foreign intelligence?

No one expects any Administration to love the idea of Congressional supervision-and this one certainly does not. Edwin Meese, the President's counselor, reviles criticism of the new order as propaganda from former staff members of "Frank Church's infamous intelligence committee that was so destructive of our intelligence authorities some years ago." Infamous? Destructive? The Church committee was the body that nailed the CIA for collecting dossiers on thousands of law-abiding Americans. Its report helped bring some civilian control and Congressional oversight.

Mr. Meese also denies that the proposed executive order would make domestic spying easier. That denial is belied by every sentence and paragraph of the proposal. The C~rter Administration's 1978 order prohibited infiltrating or trying to influence domestic groups; the Reagan order would permit them if the Attorney General approved. The Reagan version would subject American international businessmen to surveillance at home or abroad, not because they're dangerous but because they know things the CIA wants to know.

The President has the raw power to sign this order despite the advice of the CIA's watchmen. But that kind of insularity only underscores the danger of an unchecked spy service turned inward. Mr. Reagan needs to join the watchmen in a process that can make Americans both secure and free.e

November 10, 1981 A SALUTE TO 35 YEARS OF

COMMUNITY SERVICE

HON. BILL GREEN OF NEW YORK


• Mr. GREEN. Mr. Speaker, I would like to share with my colleagues in the House of Representatives what I consider a success story of a community newspaper that began 35 years ago with the goal to reach out and enhance the quality of life of Manhattan's East Side.

Today, Town & Village newspaper is a thriving weekly community service publication serving some 8,000 residents of Stuyvesant Town and Peter Cooper Village; 35 years ago Town & Village's editorial staff set out to create a country weekly, one that would serve a city within a city.

Town & Village's present editor, Mr. Charles Hagedorn, along with an enterprising staff of some 20 dedicated journalists and production specialists, has succeeded in fulfilling the objectives of publishing a nonpartisan community newspaper that provides area residents with useful and enlightening information.

As our daily newspapers and electronic media increasingly turn their concerns to international, national and regional news, the role of the community newspaper has to expand to fill the void created by a lack of attention to local news. Town & Village continuously provides the public with important local events information such as .changes in housing, zoning regulations, police protection, religious events, political news, sanitation and other matters that affect the community on a daily basis.

I know that my colleagues will join me in saluting Town & Village on its 35th anniversary of publication and will look forward to their continued success.e

INTRODUCTION OF THE PUBLIC EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1981 <H.R. 4928)

HON. JOHN N. ERLENBORN OF ILLINOIS


e Mr. ERLENBORN. Mr. Speaker, today I am introducing legislation, cosponsored by Messrs. PHILLIP BURTON, PEYSER, and PETRI, which provides a rational approach to protecting the interests of plan participants, plan sponsors, and the public in connection with the investments and operations of State and local government pension plans. When considered in tandem,

November 10, 1981 the provisions of title I, the Public Employee Retirement Income Security Act of 1981, PERISA, and title II, the Employee Benefit Administration Act of 1981, will establish important rights and protections for the participants and beneficiaries in public employee pension plans, will enable sponsoring governments, participants, and the taxpaying public to monitor the operation of such plans so as to reduce the likelihood of future financial crises, will minimize the possible adverse impact of the operations of such plan on Federal revenues and expenditures, and will eliminate certain currently applicable provisions of Federal law which have been found to be inadequate or inappropriate.

The first title of the bill requires the disclosure and reporting of plan benefits, plan funding, plan financial operations, and other information. The bill also establishes standards of conduct and responsibility for plan trustees and the other fiduciaries of public employee pension plans. Compliance is enforced through appropriate civil remedies and access to Federal and State courts.

The bill also eliminates the annual form 5500 report" currently required under section 6058 of the Internal Revenue Code, for which a meaningful report is substituted under PERISA. Also, the Internal Revenue Code is amended to unconditionally exempt the assets of public pension plans from Federal income and excise taxes. In addition, the current provisions of the Internal Revenue Code relating to plan benefit structure; for example, the section 415 limitation on benefits and contributions, the social security integration rules, the pre-ERISA eligibility standards, and so forth, are made inapplicable to public employee pension plans. Such provisions are now enforced only rarely or on a nonuniform basis and have the effect of unnecessarily putting plans and plan participants in tax jeopardy. The effect of these provisions will be to remove the Federal Government from intruding into the areas of public plan operation best left to State and local discretion-that is, the setting of benefits and contributions.

The second title of the bill provides for the consolidation of the administration of Federal laws relating to both private and public employee pension and other benefit plans under a single agency to be known as the Employee Benefit Administration.

Mr. Speaker, my colleagues and I firmly believe that it is the primary responsibility of State and local governments to set their own houses in order in the area of public pensions. However, as we know all too well, one of the weaknesses of our governmental structure is that we often act only in a crisis and then with too little information. I fear that State and local inac-

EXTENSIONS OF REMARKS tion could lead to a national crisis precipitating congressional action. Political action at the State and local level to correct the problem is not likely to happen unless there is complete and regular disclosure of the financial status of public plans to participants, taxpayers, and government decisionmakers alike. To this end PERISA establishes reporting and disclosure requirements which are considered minimum requirements among accounting, actuarial, and other municipal finance standard-setting organizations. However, because we recognize the importance of preserving and encouraging State regulation of such plans, we have provided an exemption from the Federal reporting and disclosure rules in States where the Governor certifies that the law of the State sets substantially equivalent requirements.

The pressing need for improvement in the operation and administration of State and local governmental pension plans has been well documented in numerous studies. A recent report to Congress by the General Accounting Office concluded that pension reform on the State and local level is moving very slowly and that significant improvement is not expected any time soon. The report warns that many State and local government pension plans are not funded on a sound actuarial basis and are not setting aside sufficient funds to provide for estimated future benefits. It states that billions of dollars in unfunded liabilities have accumulated and, unless remedial steps are taken, these liabilities will increase. The report also establishes the Federal interest in sound funding, in that Federal funds are increasingly relied upon to meet State and local pension plan costs. The report recommends that Congress closely monitor the actions taken by State and local governments to improve plan funding.

Neither we, nor the public, nor retirees, nor active workers in many States and localities across the country are in a position to obtain adequate and accurate information about plan funding, plan operations, or plan participants' benefits and rights. The information is not available in many cases. In others it is known, but not disclosed. These facts were well documented in our 1978 pension task force report on public employee retirement systems. More recent studies continue to underscore the findings of the pension task force that serious deficiencies exist among public plans, that such plans do not operate in accordance with generally accepted financial and accounting procedures applicable to important financial enterprises, and that there is an incomplete assessment of true pension costs due to the lack of adequate actuarial valuations and standards.

The establishment of mmrmum standards of reporting and disclosure

27165 in accordance with the proVIsions in our PERISA bill will better enable interested parties at the State and local government levels to speed up and strengthen their process of pension plan review. This should help participants clarify their benefit expectations and lead to the steps necessary to improve employee pension benefit security.

The pension task force report also demonstrated the second-class citizenship of public employees in States which have inadequate standards governing the conduct of the people who run their plans and invest plan assets. The report concluded that:

• • • Often public plans are administered without the benefit of either statutory guidance or even written plan documents, creating open opportunities for abuse. At the other extreme, public pension plans may be enveloped in a maze of laws leading to conflicts, confusion, and the inadequate allocation of fiduciary responsibilities. The absence of a uniform standard of conduct applicable to plan fiduciaries inhibits the proper discharge by fiduciaries of their responsibilities, thereby hindering the proper operation of public employee retirement systems. Past breakdowns in the accountability of plan fiduciaries have led to favoritism and abuse in benefit determinations, failure to disclose information vital to the interest of plan participants, violations of the Internal Revenue Code, and even pension plan insolvencies. There is presently no uniform requirement that public pension plan fiduciaries manage and invest pension plan assets prudently and for the exclusive benefit of plan participants and beneficiaries or that such fiduciaries be held responsible for any loss resulting from a breach of their fiduciary duties. Because adequate safeguards have not been erected, conflicts of interest in many instances have been permitted to ripen into clear examples of fiduciary abuse, with resulting losses of pension plan assets and income.

Since the time of the publication of the pension task force report, little progress has been made by the States in clarifying or initiating fiduciary standards. Plans maintained at the State level in over half of the States still lack any statutory guidance as to general fiduciary standards. Our bill contains generally recognized standards of fiduciary conduct which will conform public employee retirement systems' administrative and investment practices with the practices expected of other important financial enterprises.

In summary, the purposes of our legislative initiative embodied in H.R. 4928 are to protect the interests of participants and beneficiaries in public employee pension plans, the interests of the Federal Government and the general public in the operation of such plans, and to minimize the possible adverse impact of the operation of such plans on Federal revenues and expenditures and the national securities markets:

27166 First, by requiring the disclosure and

reporting to participants and their beneficiaries, employers, employee organizations, and the general public, of financial and other information about such plans;

Second, by establishing standards of conduct and responsibility for fiduciaries of public employee pension benefit plans;

Third, by providing for appropriate remedies, sanctions, and access to Federal courts; and

Fourth, by clarifying the application of the Internal Revenue Code to public pension plans and extending the tax benefits of qualified plan status to such plans and their participants.•

VIETNAM VETERANS

HON. BILL CHAPPELL, JR. OF FLORIDA



e Mr. CHAPPELL. Mr. Speaker, I was deeply disturbed after reading the transcript of "Frank: A Vietnam Veteran," a program that is scheduled to be aired this Veterans Day on WETA television. What I found to be most distressing about this program is the negative way it depicts Vietnam veterans.

During this program, Frank describes himself as a human time bomb just waiting to explode. He attributes his psychological problems to his experience in Vietnam. Mr. Speaker, it is no secret that a number of those men and women who served in Vietnam have suffered postwar readjustment problems, chief of which has been the negative attitude toward them by their fellow Americans. However, it is time the American public be educated to the fact that not all Vietnam veterans are scarred, addicted, crazed, unemployed, victimized, brutalized, alcoholic, or prone to fits of violence which may someday lead to serious injury to innocent victims. The vast majority who served in Vietnam made great personal sacrifices in good faith, and have been able to readjust in a normal manner. While any wartime experience carries with it a hurting and lasting impression that only time heals, this program on tax supported, public television is a slap in the faces to the large majority of dedicated Vietnam veterans who are functioning as normal, productive citizens.

Mr. Speaker, for too many years now, the news media has highlighted the individual negative aspects of this unfortunate conflict and used that same brush to paint all Vietnam veterans. This is not only unfair to the individual veterans but to their families, friends, and relatives. Mr. Speaker, I believe it is past time that America

EXTENSIONS OF REMARKS recognize those hundreds of thousands of brave men and women who faithfully served this country with great dedication and honor during a most difficult period in our Nation's history.e

SUPPLY-SIDE ECONOMICS IS TURNING MINNESOTA "UPSIDE DOWN"

HON. BRUCE F. VENTO OF MINNESOTA


Tuesday, November 10, 1981 • Mr. VENTO. Mr. Speaker, since the application of the supply-side economic theory in Minnesota 3 years ago, the State's economic health has seriously deteriorated and the State's deficit is mounting quarterly.

The rosy predictions of supply-side economists have been brushed aside as State officials embarrassingly try to explain what is happening.

It appears to be a classic example of supply-side economics coming full circle and turning Minnesot~·s economy upside down.

I want to share with my colleagues this well-written editorial by Gordon Spielman, editor of the Union Advocate. He raises some good points and provides insights which deserve our attention.

Ironically, even since this article was published November 2, economic conditions in Minnesota have worsened. Last week Governor Quie announced that the estimated deficit has now reached $767.6 million.

I think there might be a lesson here for our country. When the Economic Recovery Act was passed, the Federal deficit was estimated at $47 billion. Now, just months later, current estimates have already risen to between $80 and $100 billion.

Should we expect our national economy to parallel what is happening in Minnesota as Reaganomics takes hold? [From the St. Paul Union Advocate Nov. 2,

1981] MINNESOTA'S DEFAULT AND REAGANOMICS

Minnesota is in default in its financial obligations to its counties, cities and townships. In less than three years, Governor Quie has turned over a surplus of $234 million in the state treasury into a deficit of over $600 million, a deficit that keeps mounting with every new revenue estimate and report.

In that period of time, Governor Quie by a combination of unsound political and economic philosophy, and just sheer mismanagement has turned the "Minnesota miracle" into the Minnesota mess.

His philosophy was that a state surplus was a sin, and that prosperity for the state and its inhabitants would be served by slashing the Minnesota income tax benefitting principally business. It took only two years to dissipate the surplus, and the mismanagement followed with the failure to recognize what was happening as the crisis deepened.

November 10, 1981 In the course of all this, state government

has all but been wrecked, with necessary services to its citizens cut to almost non-existence, and further cuts are being proposed.

Likewise the budget deficits cut into aids to schools, counties, cities and alike, and now these subdivisions of state government are being forced to raise property taxes to new high levels, while at the same time slashing and eliminating local services to residents.

The Governor, of course, blames economic conditions, the recession, all beyond his control.

This excuse ignores the fact that Minnesota weathered the previous recession of 1974-75 in good shape under the administration of Governor Wendell L. Anderson. State government maintained and even extended services to the people. Aids to local governmental units were increased so that the real estate taxes by the cities, counties and school districts were actually decreased.

The Governor's excuse also ignores the fact, that the current recession is deepening because of the unwise social and economic policies of the Reagan administration whose political philosophy is indistinguishable from that of the Quie administration.

On a national scale, . the President is trying what was attempted in Minnesota and has brought the state to the brink of bankruptcy.

There are the Reagan tax cuts benefitting chiefly big business, while federal programs have been slashed or eliminated. Federal aids to the state and local units of government have been pared to the bone exacerbating the situation. And instead of a promised balanced budget, the nation faces the biggest deficits in its history and new hidden federal taxes.

And, all this adds up to the deepening recession, with mounting unemployment and reduction of real earning power, while inflation continues unabated.

In a way the Quie crisis is a sort of pilot with a two-year head start on what we may expect from Reaganomics.

And, at the time when the state is defaulting on its obligations to the counties and cities, it is in hock to the tune of $360 million in addition to the New York banks to pay its other bills.

Neither Governor Quie, not President Reagan are mean persons. We are sure that they have good intentions. The fault lies with their basic philosophy cof -so-called "supply-side" economics. We prefer to term it what Hubert Humphrey called "trickledown" economics.

Reagan, Quie and company have not learned the simple fact that it is the buying power of workers, farmers, retired persons, and yes, people requiring programs that we call welfare, that keep an economy going.

When people have less income, they buy less and our factories have fewer orders and not only do workers get laid off, but company profits go down.

The high interest rates make it impossible for people to finance homes o:r; buy cars, and the housing and automobile industries are in deep trouble.

People with jobs and decent income pay taxes to support government at all levels. Those who are jobless, on the other hand, become a drain on government treasuries no matter how the Reaganites cut unemployment insurance and various benefit and assistance programs.

If the economic history of the past 50 years has shown us nothing else, it has demonstrated clearly that it is by job creation, if

November 10, 1981 necessary through public employment, that recessions and even depressions are ended.

Reaganomics whether on a national or a state scale is doomed to failure, but in the meantime a lot of innocent people are going to suffer, and some will starve and some will even die for lack of attention in a country that should be the greatest on earth and which has the capacity of satisfying the needs of all its citizens and supplying much of what is needed abroad as well.

This could be the moral crime of the century.e

IN REMEMBRANCE OF VETERANS

HON.EDWARDJ.MARKEY OF MASSACHUSETTS


e Mr. MARKEY. Mr. Speaker, today the citizens of this country enjoy a lifestyle which is filled with opportunities-opportunities for prosperity, adventure, personal freedom, and simple happiness. At times, we fail to remember the sacrifices which have been made in order that we can live such lives. We forget that our country and our Constitution have survived two World Wars, Korea, Vietnam, and others. And saddest of all, we often do not pay adequate tribute to the men and women who fought in those wars, who offered the greatest gift of alltheir own lives-so that we could live in peace and comfort here at home.

Veterans Day is a time of remembrance and thanksgiving. It is a time to remember those who gave their lives or who have endured tremendous physical and mental suffering on our behalf. And it is a time of thanksgiving because due to their sacrifices, we are the greatest free Nation on the Earth today.

The veterans of this country deserve this special day of recognition. I am pleased to be a part of this celebration on their behalf.e

ACTION NEEDED ON HANDGUN CONTROL

HON. MICHAEL D. BARNES OF MARYLAND


• Mr. BARNES. Mr. Speaker, I would like to submit for the RECORD a recent article from the Baltimore Evening Sun by Lois Hess, the mother of a handgun victim and a member of the board of directors of Handgun Control, Inc. While many words have been written on the subject of handgun violence, this article presents very clearly and from a personal perspective the case for immediate action to control the purchase and use of handguns.

The article follows:

EXTENSIONS OF REMARKS [From the Baltimore Evening Sun, Oct. 29,

1981] BY THIS TIME TOMORROW 29 MoRE WILL BE

DEAD

<By Lois Hess> "To look always for an answer, a solution

to the ever-puzzling riddles that confront us; that is our responsibility, our curse and our blessing."

That is a quotation my son, Stuart, selected for his high school year book. My son was shot in the back of his head by an escaped convict. In the six years that have passed since his senseless and violent handgun murder, Stuart's quotation has taken on for me an increasingly important meaning.

Stuart's death and the deaths of thousands of others by handguns each year, leave you and me with the responsibility, the curse, and the blessing to stop America's epidemic of handgun violence.

I live each day with the scars of a handgun attack. But so do you. For the everspreading handgun cancer is eroding your basic right to live in safety. By this time tomorrow, 29 more Americans will be murdered in handgun fire. Hundreds of others will be robbed, assaulted, wounded or raped at gun point. Right now there is a one-infive chance that you or a member of your family will be threatened with a handgun. And each day the handgun manufacturers continue to add to the domestic arsenal.

The handgun, because of its concealability, is the favorite tool of violence. The weapon's lethality and impersonality make it the companion of the street thug. Its ready availability has made even children deadly attackers. Handguns make it all too easy to kill.

There are two fundamental choices today before America. One is to reduce the easy availability of handguns to the criminal and the deranged. The Reagan Task Force on Violent Crime proposed four common-sense recommendations to combat handgun crime. The task force recommended measures that would:

<1> make would-be handgun buyers wait while a check is made of their background to determine if they have a criminal record or history of mental illness.

<2> require mandatory jail sentences for anyone who uses a handgun to commit a crime.

(3) stop the importation of "Saturday Night Special" parts.

<4> require owners to report the loss or theft of the handgun. The task force stated that: "Handguns should be kept out of the hands of the wrong people."

The other choice is that of the gun-pushers. These gun-zealots are urging that all Americans be armed with handguns-in their homes, on the streets, in their automobiles. Their argument is that Americans will be more secure from handgun violence if they have a handgun at the ready.

Many Marylanders are heeding the advice of the gun lobby. But how many carefully weigh the decision to purchase a handgun? Do they know that over 90 percent of the burglaries occur when the homeowner is away? Do they know that handguns acquired for self-defense are often stolen and then used in the commission of a crime?

For every burglar that is stopped by a handgun, many homeowners or family members are killed or maimed by this murder machine. The handgun replaces the frying pan in a domestic quarrel, often with fatal consequences. Children often don't know that guns do kill. Their games with

27167 daddy's discovered handgun have a deadly ending.

Some handgun owners believe they'll get the drop on the assailant, whether it be in the home or on the steet. They fail to remember that the criminal has the advantage of surprise on his side. President Reagan was fired at six times while he was surrounded by trained armed guards. None of them was able to stop the assassin. What do you think your chances are? Are we going to turn the clock back a century and begin wearing holsters with handguns at the ready? Where the quickdraw becomes the rule of law?

Visitors to our nation, while praising our freedoms, criticize our attitude towards handguns. In 1979, handguns killed 48 people in Japan; 8 in Great Britain; 34 in Switzerland; 52 in Canada; 58 in Israel; 21 in Sweden; 42 in West Germany; 10,728 in the United States.

God Bless America! We must put an end to America's hand

gun violence. And the way to begin is to place tough controls on the sale and carrying of handguns. By taking away the criminals' favorite tool we can reduce violent crime. By reducing violent crime, we can break the handgun addiction of a growing number of law-abiding Americans. And you have the power to help.

You. have the power to pick up your pen and urge your elected legislators to support sensible controls on handguns. And these letters count because legislators know that each letter is backed by a potential vote. Right now, legislators seldom hear from handgun control supporters, only the gun nuts. And these legislators listen to these gun voices.

Our legislators in Annapolis and Washington will change their tune if the handgun control voice is heard. But if the handgun control silence continues, the gun pushers will prevail. And the handgun cancer may strike closer to your home-perhaps deadly close.

This "ever-puzzling riddle" that confronts all of us can turn into a blessing by this one solution, your action: "For evil to exist it requires nothing more than good people to do nothing."

(Lois Hess is a member of the board of directors of Handgun Control Inc. of Washington.>•

VETERANS DAY



e Mr. EDWARDS of California. Mr. Speaker, tomorrow, November 11, our Nation commemorates Veterans Day. It is a day to thank those who have served in our Nation's Armed Forces and to reflect upon the over 1 million Americans who have laid down their lives in the service of our country. It is also an opportunity to acknowledge the ongoing contributions of the estimated 30 million veterans in the United States.

In this regard, I would like to take this opportunity to call to the attention of my colleagues a noteworthy achievement of a group in my congres-

27168 sional district. Recently, the Fremont Chapter of the American G I Forum of the United States was named the "Outstanding Chapter of the Nation."

As my colleagues know, the American GI Forum is a membership organization providing assistance to veterans in obtaining VA benefits and in successfully reintegrating into society. The Fremont Chapter of the American GI Forum received its charter in 1964, and has since grown to be the largest and one of the most active and progressive chapters in the Nation.

Their dedication to the aims and purposes of the American GI Forum is evidenced by the honor which has been accorded them by the national organization.

Members of the Fremont Chapter, however, have expanded their activities beyond veterans services, to become important and valued contributors to a wide range of community forums and activities. Members have served on the city councils of both Newark and Fremont, on the Alameda County Juvenile Delinquency Prevention Commission and the county's drug abuse advisory commission. They have been active in the areas of housing, employment, education, equal opportunity, and health. It seems there is not one segment of community life in Alameda County that has not benefited from the contributions of members of the Fremont Chapter of the American GI Forum.

I am extremely proud of the Fremont Chapter and its contributions to the community. It truly deserves the award it received in being named the "Outstanding Chapter of the Nation."e

DANGEROUS AND COUNTERPRODUCTIVE MOVES TO RESTRICT THE FREE FLOW OF SCIENTIFIC INFORMATION

HON. GEORGE E. BROWN, JR. OF CALIFORNIA



• Mr. BROWN of California. Mr. Speaker, the scientific community is gravely concerned about regulatory and legislative initiatives directed at restricting the exchange of scientific and technological information, on the basis of a hypothetical threat to our national interests. I wish to second that concern, and call the attention of my colleagues to the far-reaching implications of such shortsighted policies.

It is evident that the Federal Government has a valid interest in the exchange of scientific and technological information produced within the United States, to the extent that the cost of obtaining this technology is largely borne by the Federal dollar,

EXTENSIONS OF REMARKS and because of possible negative impacts the disclosure of sensitive information might have on national defense.

However, as Mr. William Carey of the American Association for the Advancement of Science so eloquently points out in the accompanying editorial <Science, Nov. 16, 1981), the free flow of knowledge is an essential ingredient of the postwar success of the American scientific and technological enterprise. Any restriction on this flow, however well intentioned from the narrow perspective of hypothetical damage to security interests, must be weighed against the real, measurable, and demonstrated benefits that ensue from the present system of free scientific intercourse.

Just as "war is too important to leave to the generals alone," national security is too important and all encompassing to leave to those who worry solely about this issue.

I urge the vigilance of my fellow colleagues, to assure that we do not kill the golden-egg goose in order to save it. I bring the following editorial to your attention:

[From Science, Nov. 6, 19811 SCIENCE AND THE NATIONAL SECURITY

In an open society the relationship between science and the military authorities is a touchy business at best. Science is rightly expected to enhance the national security, and it responds willingly. Equally, the military authorities are expected to respect the values, standards, and methods of science as an open and productive process. Yet, when the climate of national security is overtaken by hyperanxiety this qualitative balance is easily destabilized by judgmental mistakes, and that is what has now happened.

The brochure on Soviet Military Power that has been released with much publicity by the Department of Defense goes beyond documenting the U.S.S.R.'s formidable military assets. It addresses what may be termed collateral sources of Soviet military know-how. These sources, in the department's opinion, include high technology that has been transferred by the industrialized free world. Also helpful to the Soviet military, we are informed, are bilateral scientific exchanges initiated under detente. Next come "student exchanges," along with· the inter-academy exchanges that predate the government-to-government agreements. Omitting nothing, the Defense Department's distress blankets scientific conferences and symposia, unclassified research reports, and the "professional and open scientific literture." The military authorities seem convinced that the infrastructure supporting the U.S. scientific and technical enterprise caters to Soviet military power and comprises a large pane in the window of vulnerability.

If all this actually reflects the view from the Pentagon, it calls for swift revision. What is sadly missing is the recognition, which surely exists in thoughtful quarters of the defense establishment, that lively but responsible communication in science is essential to the growth and development in science on which both national security and economic potential rely. "National security" is not the simplistic proposition that it is made out to be, and it is in the best interests

November 10, 1981 of those directly responsible for it to realize that laying heavy hands upon scientific discourse is counterproductive and self-denying. Even the maligned exchanges with the Soviets have their uses, and no one supposes that they should or do involve sensitive information. To put it more strongly, it is only sensible to carry on these exchanges where both sides hold first-class rank, including such areas as condensed matter physics and astrophysics. It is a profoundly disturbing mistake to put out the notion that Soviet scientific capability is inferior to ours. We know better.

The operative premise of our military leaders is that the U.S. window of vulnerability must be closed with all possible speed. That premise is buttressed by a substantial national consensus. But if, beyond rebuilding strategic and tactical military assets, it extends to clamping down on legitimate scientific conferences and symposia as well as the open literature of science, the quality of science's interface with the military will go downhill swiftly and tragically. Scientists are well aware that information of genuine national security value must be protected. That is not the point. What is at issue is the balance between protection and overprotection. Difficult as that riddle may be to untangle, it must be dealt with responsibly and by no means solely from a military mind-set. One wants to believe that the Defense Science Board would have taken a different view of these matters had it been asked.

The issues raised here ought to be pondered, as well, by the Commerce and State Departments, where work goes on behind closed doors on regulations to tighten controls on the international transfer and exchange of scientific and technical information. Slamming the window may indeed stop the draft, but at the expense of fresh air and light. More than 30 years ago, Senator Brien McMahon, sponsor of the Atomic Energy Act of 1946, spoke eloquently of the need for a sane balance between two necessary but competing types of security: "by concealment" and "by achievement.'' Burying knowledge in silos of secrecy serves the one well, the other very badly.-WILLIAM D. CAREY.

SINGLE-RATE PERSONAL INCOME TAX




e Mr. HANSEN of Idaho. Mr. Speaker, the broad spectrum of American taxpayers is disgruntled at both the size of their tax burden and the methods of collection which Congress has authorized. The Internal Revenue Service itself admits that the underground economy alone accounts for more than $30 billion of unpaid income taxes a year and is growing at the rate of 10 percent a year. Everybody, including the rich, should pay their fair share. The time for use of tax collection for social change purposes is over and that fact should be recognized.

November 10, 1981 To correct the most flawed provi

sions of law enabling the greatest abuses, I have introduced H.R. 4821, the Tax Simplification Act <TSA), a return to single rate taxation of personal income at the rate of 14 percent, with the current basic exemptions and with deductions for only religious and catastrophic medical purposes.

The text of this legislation to amend the Internal Revenue Code of 1954 to provide taxpayer relief and simplification of the individual income tax, and for other purposes, follows:

H.R.-A bill to amend the Internal Revenue Code

of 1954 to provide taxpayer relief and simplification of the individual income tax, and for other purposes Be it enacted by the Senate and House of

Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE; AMENDMENT OF 1954

CODE. (a) SHORT TITLE.-This Act may be cited

as the "Tax Simplification Act". (b) AMENDMENT OF 1954 CODE.-Except as

otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1954.

TITLE I-SIMPLIFICATION OF INDIVIDUAL INCOME TAX

SEC. 101. RATE REDUCTION. Section 1 <relating to tax imposed on indi

viduals) is amended to read as follows: "SECTION 1. TAX IMPOSED.

"There is hereby imposed on the taxable income of-

"(1 > every individual, and "(2) every estate and trust taxable under

this section, a tax equal to 14 percent of the taxable income." SEC. 102. ELIMINATION OF CERTAIN DEDUC

TIONS AND EXCLUSIONS. (a) ADJUSTED GRoss INCOME.-Section 62

<defining adjusted gross income) is amended by striking out paragraphs (3), (8), (10), and (16).

(b) TAXABLE INCOME.-Section 63 (defining taxable income) is amended to read as follows: "SEC. 63. TAXABLE INCOME DEFINED.

"(a) CoRPORATIONs.-For purposes of this subtitle, in the case of a corporation, the term 'taxable income' means gross income minus the deductions allowed by this chapter.

"(b) INDIVIDUALS.-For purposes Of this subtitle, in the case of an individual, the term 'taxable income' means adjusted gross income reduced by the sum of-

"( 1) the deductions for personal exemptions provided by section 151, and

"(2) the allowable itemized deductions. "(C) ALLOWABLE ITEMIZED DEDUCTIONS.

For purposes of this subtitle-"(1} IN GENERAL.-The term 'allowable

itemized deduction' means-"(A) any itemized deduction attributable

to the conduct of a trade or business or an activity described in section 212,

"(B) the deduction allowed by section 170 but only to the extent attributable to contributions to a church or a convention or association of churches,

EXTENSIONS OF REMARKS "(C) the deduction allowed by section 213,

and "CD> the deduction allowed by section 215. "(2) ITEMIZED DEDUCTIONS.-The term

'itemized deduction' means the deductions allowable by this chapter other than the deductions allowable in arriving at adjusted gross income and other than the deductions for personal exemptions provided by section 151."

(C) REPEAL OF CERTAIN DEDUCTIONS.-The following sections are hereby repealed:

(1) Section 216. <2> Section 217. (3) Section 219. <4> Section 221. (5) Section 222. (6) Section 1202. (d) ELIMINATION OF CERTAIN EXCLU

SIONS.-Part III of suchapter B of chapter 1 <relating to items specifically excluded from gross income> is amended by striking out all sections thereof other than-

(1) section 101 <relating to certain death benefits),

(2) section 102 <relating to gifts and inheritances),

<3> section 108 <relating to income from discharge of indebtedness),

(4) section 111 <relating to recovery of bad debts, prior taxes, and delinquency amounts),

(5) section 115 <relating to income of States, municipalities, etc.), and

<6> section 118 <relating to contributions to capital of a corporation).

(e) DEDUCTION FOR MEDICAL EXPENSES.Subsection <a> of section 213 <relating to medical, dental, etc., expenses) is amended by striking out "3 percent of the adjusted gross income" and inserting in lieu thereof "10 percent of gross income". SEC. 103. EFFECTIVE DATE, ETc.

(a) EFFECTIVE DATE.-The amendments made by this title shall apply to taxable years beginning after December 31, 1982.

(b) TECHNICAL AND CONFORMING CHANGES.The Secretary of the Treasury or his delegate shall, as soon as practicable but in any event not later than 90 days after the date of the enactment of this Act, submit to the Committee on Ways and Means of the House of Representatives a draft of any technical and conforming changes in the Internal Revenue Code of 1954 which are necessary to reflect throughout such Code the changes in the substantive provisions of law made by this Act. TITLE II-REDUCTION OF ESTATE AND

GIFT TAX RATES SEC. 201. ESTATE TAX.

(a) GENERAL RuLE.-Subsection (b) of section 2001 <relating to imposition and rate of tax> is amended by striking out paragraphs <1) and (2) and inserting in lieu thereof the following:

"<1) a tentative tax equal to 14 percent of the sum of-

"<A> the amount of the taxable estate, and

"(B) the amount of the adjusted taxable gifts, over

"(2) the aggregate tax which would have been payable under chapter 12 with respect to gifts made by the decedent after December 31, 1976, if all such gifts have been subject to a 14 percent gift tax rate."

(b) ADJUSTMENTS IN UNIFIED CREDIT.-(1} Subsection <a> of section 2010 is

amended by striking out "$192,800" and inserting in lieu thereof "$84,000".

(2) Subsection (b) of section 2010 is amended to read as follows:

"(b) PHASE-IN OF CREDIT.-

"In the case of decedents dying in:

1983 ....................................... . 1984 ....................................... . 1985 ....................................... . 1986 ....................................... .

27169 Subsection (a)

shall be applied by substituting for $84,000 the

following amount:

$38,500 45,500 56,000 70,000."

(C) CONFORMING AMENDMENT.-Subsection (c) of section 2001 is hereby repealed.

(d) EFFECTIVE DATE.-The amendments made by this section shall apply to the estates of decedents dying after December 31, 1982. SEC. 202. GIFT TAX.

<a> GENERAL RuLE.-Subsection (a) of section 2502 <relating to computation of gift tax> is amended to read as follows:

"(a) COMPUTATION OF TAX.-The tax imposed by section 2501 for each calendar year shall equal 14 percent of the taxable gifts for such calendar year."

(b) ADJUSTMENTS IN UNIFIED CREDIT.-(1) Subsection (a) of section 2505 is

amended-<A> by striking out "192,800" and inserting

in lieu thereof "$84,000", and by inserting "(determined as if the tax

for all preceding calendar periods had been determined using a 14 percent rate)" after "preceding calendar periods".

(2) Subsection (b) of section 2505 is amended to read as follows:

"(b) PHAsE-IN OF CREDIT.-

"In the case of gifts made in:

1983 ....................................... . 1984 ....................................... . 1985 ....................................... . 1986 ....................................... .

Subsection (a)(1) shall be

applied by substituting for

$84,000 the following amount:

$38,500 45,500 56,000 70,000."

(C) EFFECTIVE DATE.-The amendments made by this section shall apply to gifts made after December 31, 1982.e

TRIBUTE TO VETERANS

HON. PETER W. RODINO, JR. OF NEW JERSEY


Tuesday, November 10, 1981 e Mr. RODINO. Mr. Speaker, I want to recognize the thousands of veterans in New Jersey's lOth Congressional District, as the Nation begins its Veterans Day commemoration. The courage, dedication, and sacrifice of the millions of men and women who have defended our country during World War I, World War II, and the Korean and Vietnam conflicts can never be fully rewarded. But there are definite ways we can show our appreciation and respect for those who have valiantly defended our country.

In ceremonies all over America tomorrow, we will honor those who have

27170 fought and died for our Nation. But our responsibility to veterans does not stop there. This year the Congress has enacted several pieces of legislation that are sensitive to veterans' needs. For example, veterans disability, dependency, and indemnity compensation have been increased by an average of 11.2 percent, helping over 2% million veterans and dependents; the Veterans' Administration is now required to operate not less than 90,000 hospital and nursing home care beds throughout the Nation; the psychological readjustment counseling program-the so-called vet centers-will continue in operation until 1984; priority medical care will now be given to Vietnam veterans suffering from the effects of the chemical agent orange.

Mr. Speaker, I pushed for these measures because I believe they offer some dignity to those who have undergone traumatic changes in their lives in defense of our country. I am talking especially about the men and women who served in Vietnam. These brave Americans did not return home to marching bands and hometown parades, as did veterans of other conflicts. Yet their sacrifices were no less than those made by American veterans of other wars. It is a measure of our character as a nation how we treat those veterans in their struggle to gain jobs, education, health care, and social acceptance. On this Veterans Day let us renew our pledge to help the Vietnam veteran, and salute the veterans of all our wars. For, without their vigilance and sacrifice, America could not celebrate the freedoms we hold so dear.e

THE WAY IT WAS



Tuesday, November 10, 1981 • Mr. MICHEL. Mr. Speaker, there is at times a tendency to view American history through a distorting lense that smooths out all our problems and differences at certain crucial times in our history. We tend to think of World War II, for example, as a time when we all pulled together, when there was national unity and a lack of divisions.

This, of course, is a myth. Democracy demands the conflict of ideas and opinions, even during times of distress like World War II. I think we should remember this today. We have divisions and arguments and disunity over certain economic and social goals today-but that is as it should be. The important thing is that we let the unruly but ultimately fair democratic process work. Our differences must, of course, be based on principle and not on a whim or prejudice or a disinclination to know the facts. But we should

EXTENSIONS OF REMARKS not be concerned because we do not have total unity. It was ever thus.

At this point I insert in the RECORD a book review that tells of one brilliant observer's view of the United States during World War II. The book in question is "Washington Dispatches 1941-1945" edited by H. G. Nicholas. These dispatches are the work of the distinguished historian and scholar Isaiah Berlin. The book review, titled "Daily Life in Washington With a World at War" is by Frank Gannon and was published in the Wall Street Journal, November 5, 1981.

The article follows: DAILY LIFE IN WASHINGTON WITH A WORLD

AT WAR

<By Frank Gannon) As the Japanese bombers disappeared

over the horizon after their attack on Pearl Harbor, the U.S. picked itself up, brushed itself off and proceeded, over the next four years, to fight back with an inspired and inspiring combination of unity, sacrifice and single-mindedness. Right?

Wrong. And the publication of a unique collection of wartime documents gives us a ringside seat for the day-in-day-out politics as usual that continued to characterize the Washington homefront despite the cataclysms of a world at war.

"Washington Despatches 1941-1945" <University of Chicago Press, 700 pages, $40) is a skillfully edited selection of the weekly political reports sent from the British Embassy to the Foreign Office in London. Their purpose was to let the British leadership know what was happening behind the headlines and behind the scenes in what was still a very strange and foreign capital city. Most of them were written by Isaiah Berlin, a young Latvian-born Oxford philosophy don, who, except for knowing some Yanks at Oxford and having a predilection for reading the New Yorker in the New College Senior Common Room had shown no particular qualifications for his new job.

Anyone who has read many diplomatic cables knows that they usually manage to be as boring on paper as most diplomats are in person. But with a combination of superb sources, instinctive insight and lucid prose style, young Berlin began producing reports that soon numbered Churchill himself among their eager readers.

The Washington he portrayed was fractiously political. Only a few months after Pearl Harbor, Mr. Berlin informed Whitehall that "the honeymoon of national unity is somewhat clouded." Politicians maneuvered to protect their prerogatives and preserve their seats; labor leaders used strikes and the threat of strikes to increase their power and their members' wages; the media moguls hurled their bolts at FDR, or the internationalists, or the isolationists, or the Republicans, or the Democrats, until finally no one's motives or wisdom were left unchallenged or unassailed.

Congress launched the post-Pearl Harbor period of non-defense expenditure cuts by voting itself into the Civil Service Pension scheme-and then reacted to the widespread criticism of this costly move by attacking Mrs. Roosevelt. And when gasoline rationing was imposed in the East, the members of Congress voted themselves eligible for "X cards" exempting them from the restrictions. As Mr. Berlin reported, "Debate on the motion was extremely heated and there were charges that the press was endeavor-

November 10, 1981 ing to lower prestige of Congress. Press retaliated by saying that Congress had lowered its own prestige by its actions and in fact its reputation is now extremely low."

For several months before the 1942 midterm elections, Congress left the administration to take the heat from the hot potatoes of the teen-age draft and universal compulsory service, lest they offend any "indignant mothers in an election in which the feminine vote is of exceptional importance."

The labor leaders, like the politicians, continued to conduct business as usual. Indeed the war intensified the jostling for power between the AFL and the CIO. There were official and unofficial strikes over questions like federal anti-strike legislation, overtime pay, resistance to a 48-hour wartime work week, and agitation for the closed shop.

John L. Lewis, seemingly impervious to the demands for uninterrupted war production, played the strike card in 1943 when 50,000 miners were already out and a nationwide coal strike was threatened on a "no contract no work" basis. Mr. Berlin reported that the fiery labor leader was thus "once more maneuvering himself into the center of the picture as the most dangerous demagogue in America."

One reason such conduct was possible was that although the war permeated every aspect of life, in many ways it left the people curiously untouched. Aside from the obvious impact on the families of fighting men, the war meant more inconvenience than suffering for the average American. Having come from a Britain already reeling under extreme privations, Mr. Berlin must have felt strongly when he reported at the end of 1942 that "talk of a food shortage caused by lack of farm labor has already followed usual pattern of rubber shortage, manpower shortage, etc., where Administration leaders make inconsistent statements and thoroughly confuse the public. In any case 'shortage' is hardly the right word and is only being used masochistically.''

This situation never really changed. Early in 1945 Mr. Berlin reported that a Gallup poll question asking whether people had made any real sacrifices for the War "found 64 per cent with refreshing honesty replying 'No' as against 36 per cent who replied 'Yes'."

The heavy curtain of censorship led many to distrust what news got through. As late as the end of 1942, Mr. Berlin wrote that "A large section of the public is becoming more and more bewildered by the war. There is no call for action, no outlet for enthusiasm, no glimmer of success. . . . Hence a kind of puzzled boredom about the war in general. At the same time the war effort is constantly hampered by the party struggle which runs along in a subdued form on the stage of Congress and more merrily behind the scenes."

It is interesting in these weekly chronicles to see how the war exacerbated the problems that were already straining the New Deal at the seams. Labor was disillusioned, the Southern Democrats were ready to bolt over FDR's desire to abolish the poll tax, and blacks, susceptible to Japanese racial propaganda, were questioning their Democratic ties.

The anti-Roosevelt forces were highly suspicious of the broad wartime powers the administration sought. In mid-1942, Mr. Berlin reported:

"Numerous speakers in Congress have been publicly and privately exclaiming against usurpation of their legislative powers by growing power of bureaucracy.

November 10, 1981 This represents in small part Jeffersonian sentiment, but is much more largely part of a concerted campaign by industrial and other interests which find that their lobbies are able to bring more pressure on members of Congress than on Administration • • •. They charge the New Deal is trying to do to States of Union precisely what Mr. Sumner Welles is practicing with regard to Latin America, binding them more and more closely to central government by systematic economic subventions for which they and their representatives in Congress pay price of political independence."

In addition to this fascinating running commentary on the almost daily life of a democracy at war, Mr. Berlin's dispatches provide dramatic moments, amusing sidelights, and literate pleasures. He quotes FDR's overheard comment on the appointment of Herbert Lehman as Relief and Rehabilitation Administrator: "I want to see some of those Goddamned Fascists begging for their subsistence from a Jew."

Mr. Berlin quotes an observer saying Wendell Willkie's ambition was "to be Mr. and Mrs. Roosevelt rolled into one." And the Vatican's Apostolic Delegate in Washington is described as "a shrewd prelate, perhaps appropriately Titular Bishop of Laodicea"referring to the passage in Revelations where Laodicea is made synonymous with indifference. ·

This hefty book-at a hefty price-is excellently edited by the distinguished British historian H. G. Nicholas. It exposes a wholly new aspect of Sir Isaiah Berlin's multifaceted talents, the vast numbers of which no longer surprise us but continue to delight us.e

TRIBUTE TO CHUCK STONE

HON. THOMAS M. FOGLIETTA OF PENNSYLVANIA


Tuesday, November 10, 1981 e Mr. FOGLIETTA. Mr. Speaker, I wish to take this opportunity to pay tribute to Chuck Stone, a columnist and senior editor of the Philadelphia Daily News, whose varied career has included service as an aide to the late Congressman Adam Clayton Powell, as well as experience as an educator and television and radio commentator.

Last Monday Mr. Stone negotiated the surrender of 7 convicts who were holding 38 hostages in the kitchen of Graterford Prison, after they failed in an attempt to escape. The convicts were armed. Their leader, Joseph Bowen, is a man who, at age 35, has spent almost all of his adult life behind bars. In 1974, when Bowen was serving a life sentence for murdering a police officer, he and another inmate fatally stabbed two wardens at Holmesburg Prison.

Mr. Stone entered the besieged prison kitchen with Bowen's brother after talks between the convicts and State officials had reached an inpasse. He emerged with a list of terms which formed the basis for a peaceful resolution of the crisis.

in his own account of the experience, Stone wrote:

EXTENSIONS OF REMARKS Saturday night, the Governor's office had

called me and asked if I would be willing to be involved in negotiations if it could be worked out.

I agreed, but why me? The Governor's representative explained, "We know about the surrender of murder suspects and escaped prisoners to you, and we think you can be helpful in this situation."

My own philosophy reminded me: "Naked and ye clothed me: I was sick and ye visited me: I was in prison and ye came unto me."

Chuck Stone deserves all of the public accolades which he has received, and more, for his successful intervention at Graterford. In undertaking the assignment, he risked his own life in the hope of saving others. His candor in admitting his all too realistic fear for his personal safety only enhances the courageous nature of this act. He also demonstrated great skill and understanding in the role of mediator in an intense and volatile situation.

One cannot do justice to the man by praising any single accomplishment, however dramatic and significant, without recognizing the qualification which recommended him for the task, and made his success possible. That qualification is credibility.

Throughout his career, Chuck Stone has fought for justice and compassion, and opposed apathy and indifference to the suffering of others. This record has won him the trust and confidence of all elements of the community. On numerous occasions in the past, accused men and convicts have staked their very lives upon this trust in calling upon him to arrange their surrender to authorities or to mediate their grievances. This was the reason that such diverse individuals as the Governor of Pennsylvania and the mother of Joseph Bowen called upon Stone to intervene at Graterford.

Credibility means that a person's word, judgment, integrity, and values are respected and relied upon. It is the highest compliment society can pay to an individual. It was Chuck Stone's credibility which led to his invitation to mediate the Graterford hostage crisis and to his success in that endeavor. It is that same credibility which makes him important as a writer, a social critic, and an example of civic responsibility.•

H.R. 4498

HON. STEW ART B. McKINNEY OF CONNECTICUT


Tuesday, November 10, 1981 e Mr. McKINNEY. Mr. Speaker, on September 16 I introduced H.R. 4498, a bill to allow the controlled medical use of marihuana for the treatment of glaucoma and anticancer therapies. Since then, this measure has received the cosponsorship of over 55 Members without regard to party or political

27171 ideology. Further, H.R. 4498 has received broad public and political support from physicians, lawmakers, and cancer and glaucoma patients nationwide. However, some questions have arisen concerning the intent of this legislation as well as the medical value of marihuana in helping to alleviate the side effects of agonizing chemotherapy treatments and the blindness induced by glaucoma. For these reasons, I want to make the following information available to my colleagues 'in order to answer any questions they might have.

COMMONLY ASKED QUESTIONS ABOUT H.R. 4498

Can marijuana prevent blindness from glaucoma?

In the 1977 Report of the National Advisory Eye Council, the National Eye Institute <NED, states that the treatment of glaucoma "generally consists of reducing intraocular pressure by suppressing the formation of aqueous humor or facilitating outflow from the eye." All glaucoma therapy, medical and surgical, seeks to reduce the elevated intraocular pressures <IOP> associated with glaucoma. According to the 1975 Marijuana & Health Report to Congress marijuana, when smoked, "produces a consistent, dose-related and clinically significant reduction in intraocular pressure."

Marijuana is an effective intraocular antihypertensive which has demonstrated an ability to significantly reduce intraocular (inner eye) pressure in both the healthy and glaucomatose eye. More than ten published studies confirm that marijuana, when smoked, and numerous chemicals within marijuana, have distinct therapeutic utility in significantly reducing ocular tensions.

H.R. 4498 would permit ophthalmologists to legally employ marijuana in the treatment of glaucoma patients beyond the reach of conventional medications. Patients will be required to sign an informed consent statement and physicians are required to report adverse reactions to the Office for the Supply of Internationally Controlled Drugs. Ophthalmologists routinely report adverse drug reactions to the National Registry of Drug Induced Ocular Side Effects and the Office will work closely with the Registry.

Finally, H.R. 4498 will rapidly advance our knowledge of marijuana's use as an antiglaucoma drug. This, in turn, will accelerate the development of more sophisticated dosage forms like topical/oral agents while permitting compassionate, medically controlled access to marijuana by those facing blindness. In its 1977 report, NEI states, "research on primary open-angle glaucoma is handicapped because this disease occurs exclusively in human beings and therefore must be investigated principally in human eyes."

Marijuana's use in glaucoma therapies is especially helpful to patients beyond the reach of conventional medications. NEI estimates between 10 and 20 percent of the nation's glaucoma population, or 400,000 to 600,000 glaucoma patients, are beyond the control of existing glaucoma medicants. For these individuals marijuana provides a medical means of prolonging vision without having to resort to risky surgical interventions.

Does marijuana prevent death in cancer patients?

27172 Yes and no. No one claims marijuana will

"cure" cancer. Marijuana, and its major psychoactive ingredient delta-9-THC, are extremely effective anti-nausea/anti-vomiting drugs. According to Dr. Phillip Schein of Georgetown University, "It is well recognized that one of the most distressing sideeffects of anti-cancer drug treatment is nausea and vomiting. This may constitute the major source of morbidity associated with such treatment, and may be sufficiently severe as to limit the patient's acceptance of further treatment."

The late Senator Hubert Humphrey called anti-cancer treatments "A living Hell" and many cancer patients, unable to withstand the side effects of these highly toxic therapies, discontinue their potentially life-prolonging treatments. Marijuana can significantly improve the quality of life available to cancer patients undergoing such therapies and, in doing so, make the therapy itself more tolerable.

A large number of published studies, unpublished data from several state programs and innumerable anecdotal accounts have clearly demonstrated that marijuana and delta-9-THC are more effective in controlling nausea and vomiting than conventional anti-nausea drugs like Compazine and Thorazine.

There are more than five published studies which report that even synthetic THC, a poorly formulated drug, is superior to conventionally prescribed anti-nausea drugs. Marijuana is superior to oral doses of synthetic THC because, when smoked, marijuana has a far more rapid onset of action, is more predictable and less likely to cause adverse side effects. This has been confirmed by the National Cancer Institute <Chang, et. aL> and in several state programs of treatment.

Thus, while marijuana does not "cure" cancer, it may help prolong the lives of cancer patients by allowing them to continue their potentially life saving chemotheraPY or radiation treatments. The medical use of marijuana as an adjunct to anti-cancer therapies may also vastly improve the quality of life available to these patients.

Is marijuana more effective than THC? On the basis of available medical evidence

marijuana, when smoked, is a more effective than synthetic THC as an anti-nausea drug. This is acknowledged in many government documents. For example, a 1978 internal memoranda from the National Cancer Institute states that the "oral absorption of [synthetic] THC is erratic, and the current formulation of THC was • • • not acceptable," for therapeutic applications. The formulation of synthetic THC has not been altered since that date.

The NCI memoranda concludes, "all in all the [marijuana] cigarette may be the best means of administering the drug."

Federal agencies have resisted comparative studies on inhaled marijuana and oral [synthetic] THC. The first <and only published) study comparing these two substances was conducted by Dr. Alfred Chang of NCI. Chang reported that only 40 percent of the oral THC doses were sufficient to control nausea and vomiting. Inhaled marijuana, by comparison, resulted in a 71 percent success rate. Chang concluded that inhaled marijuana "was more reliable" than oral doses of synthetic THC.

Dr. Donald Poster, writing in the May 22/ 29, 1981, Journal of the American Medical Association, compared synthetic THC and marijuana and noted that "marijuana that is inhaled • • • has a fivefold to tenfold

EXTENSIONS OF REMARKS greater bioavailability." He concluded that "THC by inhalation [the marijuana cigarette] may be a viable effective alternative to the oral formulation."

In New Mexico, the first state to enact legislation recognizing the medical utility of cannabis, Dr. Daniel Danzak reports that "the inhaled version [marijuana] works better than the oral [synthetic THCJ version." New Mexico reports a 90 percent success rate with the marijuana cigarette.

The most obvious problem with oral THC is that vomiting patients often cannot retain the drug long enough for it to be effective <one to three hours). Marijuana, when smoked, avoids the digestive system and produces relief in 10 to 20 minutes. Patients given the freedom to select between these drugs initially prefer synthetic THC, but quickly shift to the marijuana cigarette.

Available data also indicates synthetic THC is far more likely to cause adverse psychic reactions than is marijuana. While marijuana is a mild euphoriant, synthetic delta-9-THC is a major hallucinogenic agent. The National Cancer Institute has promoted synthetic THC as "marijuana's most active ingredient". However, synthetic THC is not marijuana's most medically useful chemical, but its most psycho-active or mind-altering chemical agent. In pure form synthetic THC is similar to major hallucinogenic drugs like LSD. Reports of adverse effects from several state programs show patients are far more likely to suffer an adverse reaction to synthetic THC than to marijuana.

Finally, synthetic THC is subject to therapeutic tolerance. Put simply, while synthetic THC may initially reduce nausea and vomiting it quickly loses this therapeutic action and patients begin to experience what Chang referred to as "breakthrough nausea". Marijuana, a far more complex substance than THC, retains its therapeutic, antiemetic action long after THC has become medically ineffective.

H.R. 4498 permits physicians and patients to determine which drug <marijuana or synthetic THC> is the best form of administration for the individual receiving treatment.

What about contaminated marijuana? This is one reason why H.R. 4498 is so im

portant. Cancer and glaucoma patients should not be compelled to purchase marijuana from an illegal and unregulated blackmarket. Illegal marijuana may be adulterated with other drugs (ie) PCP, Opium, LSD and is subject to a large variety of contaminants. Dr. Steven Kagen of the university of Wisconsin reports that marijuana obtained from the illegal "street market" may contain fungus spores and other forms of contaminants. It is better to provide seriously ill patients with legal, medically supervised access to controlled, dose-qualified marijuana. H.R. 4498, establishes stringent controls and the Office, through its regulatory procedures, will assure seriously ill patients with legal access to medical quality marijuana which is free from unhealthy contaminants that might adversely affect their health.

Does H.R. 4498 violate U.S. treaty obligations?

Absolutely not. Great care has been taken to assure that H.R. 4498 complies with the U.N. Single Convention on Narcotic Drugs which was ratified by the United States in 1967.

The Single Convention specifically acknowledges marijuana's therapeutic value and permits the medical use of cannabis. According to the Congressional Research Serv-

November 10, 1981 ice <memo to House Select Committee on Narcotics Abuse and Control, May 1980) "if it is decided that marihuana or other cannabis products should be re-scheduled • • • or made available for prescription, there appears to be no difficulty as long as the new schedule is Schedule II." H.R. 4498 reschedules marijuana to Schedule II.

The CRS further notes that "if production is permitted it must be •supervised by a national [federal] agency, which will determine the extent of cultivation, license the cultivators, and be sole purchaser of the crops." This is the reason H.R. 4498 establishes an Office for the Supply of Internationally Controlled Drugs. This Office, unG.er the direct supervision of the Secretary of Health, will work closely with the Attorney General to determine appropriate regulations and procedures for the cultivation and distribution of medicinal marijuana.

What is to assure that a diversion of marijuana will not occur?

The Office established by H.R. 4498 will determine the amount of marijuana required to meet the medical needs of seriously ill Americans and will have the authority to obtain such supplies through: < 1) contract bidding for authorized programs of cannabis cultivation, (2) employ confiscated marijuana if cultivation is inadequate, or (3) import marijuana from other governments. It should be noted that these provisions for obtaining supplies of drugs are already in place in the Controlled Substances Act.

Following enactment of H.R. 4498, the Office will establish regulations governing cannabis cultivation, the collection of crops, the manufacture of marijuana cigarettes and their distribution. The Office will work closely with the Attorney General to assure compliance with all U.S. treaty obligations and prevent unauthorized diversions.

No additional law enforcement is required. The U.S. government has grown marijuana and distributed marijuana to FDA authorized programs for more than a decade with no evidence of a significant diversion problem. It is very unlikely that individuals will risk the severe criminal penalties attached to the diversion of legitimate supplies of medicinal cannabis. <See H.R. 4498 Sec. 3(g).)

Will the U.S. government be liable for injury that may be claimed from the therapeutic use of government grown marijuana?

No. Patients receiving medical access to marijuana must sign a statement of informed consent which absolves the federal government of liability.

Nor is the likelihood of such a suit reasonable. After more than a decade of intensive drug abuse research not a single suit has been brought, much less sustained, against federal agencies as a result of supply contamination, physical distress or adverse psychic reactions.

It is important to note that since 1973, FDA has approved research and medical programs which permit marijuana's use by glaucoma and cancer patients. Consent forms similar to those employed in these FDA authorized studies will be retained and patients receiving marijuana under the provisions of H.R. 4498 must sign a statement of informed consent before initiating a program of marijuana-based therapy.

Finally, in marijuana's long history of use as a therapeutic agent there are no deaths attributed to the use of marijuana reported in the medical literature. It is reasonable to assume that 5,000 years of medical use and a decade of drug abuse research would have

November 10, 1981 graphically indicated the kind of extremely toxic reaction implied by the question. No clinically significant medical pathology of a life-threatening nature has been documented.e

CZECHOSLOVAKIAN INDEPENDENCE DAY

HON. HENRY J. HYDE OF ILLINOIS


• Mr. HYDE. Mr. Speaker, October 28 marked the 63rd Anniversary of Czechoslovakian Independence Day. This is a very important occasion for Czechoslovakian-Americans, a day of remembrance for their beloved homeland, and for their brothers still struggling for freedom in Communist-ruled Czechoslovakia. I am gratified that Chicago is one of the major cities in our country that observes October 28 as "Czechoslovakian Republic Day."

For this occasion, Denni Hlasatel, which is the only Czechoslovak daily newspaper in the free world and, I am proud to say, is headquartered in my district, published a special anniversary edition. In August, when Denni Hlasatel celebrated its 90th anniversary, I circulated copies of the paper to my colleagues and was pleased that a number of Members wrote their personal congratulations to the paper's president and manager, Joseph Kucera.

I am pleased to announce that my distinguished Illinois colleague, Congressman DERWINSKI, is circulating complimentary copies of the special October 28 edition of Denni Hlasatel.

I know all of my colleagues join me in congratulating Denni Hlasatel for its outstanding service to the Czechoslovakian community.e

VOTING RIGHTS ACT



e Mr. EDWARDS of California. Mr. Speaker, in its lead editorial on November 10, 1981, the New York Times, urges President Reagan to favor the strong but fair extension of the Voting Rights Act which the House overwhelmingly approved last month.

Like the author of the editorial, I am disturbed by the possibility that President Reagan might support Senate amendments to the bill which would cripple the effectiveness of the most successful of our civil rights laws. I would hope that the President might reevaluate his tentative support for weakening amendments and instead

EXTENSIONS OF REMARKS strongly urge the Senate to pass the extension legislation which the House has approved.

I believe my colleagues will find the following editorial of interest.

THE PRESIDENT GAGS ON VOTING RIGHTS

President Reagan says he cherishes the right to vote, but takes perverse exception to the pending extension of the Federal Voting Rights Act. Key sections of the law expire next year, and he was said by aides to be ready to sign whatever Congress produced. Now, however, Mr. Reagan has heeded one last pitch from Attorney General Smith, for a watered-down endorsement of a watered-down bill. That was bad advice, badly taken.

The timing of this flip-flop was especially curious. The President suddenly seized the unpopular side of an issue just when nationwide support for the law was becoming clear, and just when the Administration needed a gesture for constituencies ravaged by its budget-cutting.

But the Voting Rights Act is not a sop to minorities. Like other great civil rights measures of the 1960's it is a triumphant assertion of the conscience of the majority, a legal restoration of rights the Constitution has long guaranteed on paper.

So successful has it been that blacks and Hispanics are not just voting, they're making their ballots count. They are running their own candidates, losing and winning many elections, entering the political system, North and South. They must often still implore their legislators for justice, but they influence them as well.

The vote for a strong but fair extension of the law in the House last month was an overwhelming 389 to 24. The bill would continue to require 9 states and parts of 13 others to submit any changes in their election laws to the Justice Department, with proof that they are not discriminatory in purpose or effect. But the bill would also give those jurisdictions hope for relief. To graduate from its supervision, a voting unit would need only to show that it had honored all voting rights for a decade and cleaned up discriminatory procedures.

President Reagan now says, without explaining, that he'd like to see more "reasonable" bail-out provisions. But the House bill is already carefully balanced to allow onequarter of the South's counties to meet the graduation test quickly and easily. Further relaxation could amount to a disastrous backdoor repeal of the act.

Also without explanation, the President challenges the House's improvements in another section of the law. In regions where no change in election procedures is contemplated, the House bill would accept evidence of discriminatory effect as proof of discrimination. That is needed because it is often impossible to prove discriminatory intentas for example in the case of at-large elections that deny representation to sizable minority groups.

The President was better served by his first instincts about this law. He cannot both favor an effective voting rights law and be the friend of its opponents. The effort to gut this law will be strongest in the Senate. That body needs a shove and some leadership, not new equivocations.•

27173 TRIBUTE TO EASTON, MD.,

JAYCEES

HON. ROY DYSON OF MARYLAND


e Mr. DYSON. Mr. Speaker, the U.S. Jaycees, an organization devoted to community, individual, and management development, have served a worthwhile purpose for many years. They are always cognizant of the needs of the various communities they serve and take an active role in fostering good will and fellowship.

One of the Eastern Shore's communities hosts an organization of Jaycees which I would like to bring to the attention of the House. The Easton, Md., Jaycees have made outstanding contributions to their community and should be recognized. In a September newsletter the following few paragraphs appeared. They are exemp.lary of the spirit of the Easton Jaycees and I commend them for their thoughtful and caring attitude:

WHAT CAN WE Do Now? There are two groups of people in this

country: producers and consumers. When those who consume begin to equal or outnumber those who produce, a nation's economy begins to collapse.

Coming on October 1st, the first day of the new fiscal year of the United States Government, many federally funded programs will have their budgets cut and/or eliminated altogether. Maybe these cuts will be good. Certainly it will not hurt when we pay our taxes next year. But what happens to the poor and handicapped people who are going to suffer, or to the towns and other local government agencies receiving fewer federal dollars?

This is where the Jaycees enter the picture. Now, more than ever, we have the opportunity to build on our past achievements and utilize our resources on community programs to pick up some of the slack.

Remember, we have all been living in this country, taking advantage of any benefit that was available. The challenge is to become a producer. Help put something back that was previously taken; participate now and enjoy the benefits later. You'll be glad you did.e

ETHICS IN OUR SOCIETY

HON. CHARLES E. BENNETT OF FLORIDA


e Mr. BENNETT. Mr. Speaker, I greatly and sincerely admire Ivan Hill for his able and persistent efforts for higher ethical standards in every facet of our society, business and government, particularly. At this point, I include for the RECORD an excellent article about him in the November 16 edition of U.S. News & World Report:

27174 ETHICS IN OUR SOCIETY

<By Marvin Stone) Almost eight years ago, Ivan Hill gave up

a lucrative career in industry for an unpaid job as president of a nonprofit, nonpartisan organization working for honesty and social responsibility in government and business. Out of that grew the Ethics Resource Center in Washington, D.C. When Hill retired recently from the presidency of the Ethics Resource Center, we asked him how he views the present state of American society and what he foresees for the future.

Q. Mr. Hill, what was it that inspired a successful businessman to quit and spend his entire time chasing what many would consider an impossible dream?

A. It was a recognition that the most urgent task in the country was being neglected-that of trying to strengthen our ethical underpinnings.

Q. How would you define ethics? A. Albert Schweitzer said that in a general

sense, ethics is the name we give to our concern for good behavior. We feel an obligation to consider not only our personal wellbeing but also that of others and of human society as a whole.

If early man had not identified his own welfare with that of others, he could not have survived and mankind would not have developed. In recent books on anthropology, such as Richard Leakey and Roger Lewin's People of the Lake, cooperation and sharing were given as basic reasons for man's survival. Honesty and ethics are basic, working social principles, not just moral guidelines.

Incidentally, there was another compelling reason for my new pursuit: I have three children, and I hated to see them, in five to 10 years, living in a closed or almost closed society.

Q. Are you saying that lack of ethical conduct in the U.S. will lead to a closed society?

A. When trust in one another diminishes to a point where we can no longer do business without pervasive dishonesty and corruption, an open society cannot function efficiently and will become unmanageable. If business decides it cannot do business honestly and make a profit, that will severely undermine the private-enterprise system itself. A change in the system will then become inevitable.

It is my opinion that an open society cannot function efficiently and remain manageable unless about 80 to 85 percent of the people are honest about 80 to 85 percent of the time.

Q What happens if 80 percent are not honest 80 percent of the time?

A The result I see is a great deal of power concentration, centralization of authority, in a kind of messy oligarchic system which is likely to become so inefficient by the crosscutting of various special interests, that we will move into authoritarianism. I think this is the probable outlook for the United States in the foreseeable future.

Historian Arnold Toynbee observed: "Freedom is expendable, stability is indispensable." And order and stability in a society would take precedence over a multiplicity of freedOins.

Q You've said in the past that you believe it's in the interest of the corporations themselves to pursue ethical conduct. Does business have an especially bad record?

A Most of the large corporations-if they could ever get the next guy, their peer competitor, to move first-could do all their business honestly and· make a good profit and be very happy doing so. Honesty increases efficiency and productivity in business at:td government.

EXTENSIONS OF REMARKS I don't feel that big business is any more

or less honest than little business or individual citizens. We are not going to solve our problems until the country as a whole takes a different attitude, until cultural and social changes are made that will make honesty "all right" and "safe" or even fashionable. This has to be a total cultural movement. That is the method we recently recommended to the Office of Government Ethics, the Justice Department's Task Force on Crime and the President's Council on Integrity and Efficiency.

Q. How do you get a thing like that going? A. We have recommended making six or

eight different TV commercials, six or eight radio commercials and newspaper adaptations of the TV storyboard cartoons. Go into test markets, like Rochester and Columbus. Form local committees with the League of Women Voters, the Rotary, lawenforcement agencies, the churches, schools and business and conduct intensive local campaigns, placing at least 30 to 40 TV and radio spots daily on a public-interest basis through these local committees-you must have a high-volume, massive exposure of the message in order to break the prison of peer-group pressure. We should measure the effectiveness of these efforts every 30 days-the effect on crimes against property, burglaries, arson, shoplifting, all of those things.

Kits would be developed-the films and the tapes and the newspaper ads-and they would be passed to other communities for locally sponsored campaigns. These TV spots would not be preachy or admonitory or didactic.

Q. You say these programs are not preachy. Exactly what do they say to people?

A. A typical illustration would be this: A teen-age girl is seen stealing some cosmetics in a department store. And then we follow the teen-ager home on the bus. And she thinks that everybody is looking at her; she's looking around. Then an unseen announcer asks: "How do you feel when you steal?" The next morning when she walks through the steno pool in the office, she thinks that everyone knows she stole her cosmetics. And all the announcer says is: "How do you feel when you steal?"

No matter what other steps are taken or considered, we must understand that crime is bred in a bed of dishonesty. The progression is easy, from lying to stealing, from robbery to homicide.

Q. Is the government active in promoting ethics-say among its civilian employes?

A. We sponsored a bill, which was passed unanimously by the Congress, to mandate the public display of the United States Code of Ethics for Government Service in federal buildings. We have about 90,000 of these codes posted now in more than 10,000 buildings. If we could display the amount of codes that we have printed, 205,000, a person coming to work would probably see the code three or four times a day. He would thus become assured that it is all right for him to be honest and not to goof off, and become aware that it might not be the "in" thing for him to be absent or irresponsible.

There have been various estimates as to what is being lost to fraud and waste and absenteeism and such. We took a range of 25 to 50 billion dollars. If these codes are only 10 percent effective, we will save 2.5 to 5 billion dollars a year in government operations alone.

Q. Are you optimistic about spreading the word in the future?

November 10, 1981 A. To some extent. There's a great deal of

talk about ethics; there are great numbers of corporate and professional and governmental codes. If we keep increasing awareness throughout the country, we're going to make this breakthrough into acceptance of much higher standards of values.

I have been surprised to find that the leadership of the armed forces is far more concerned about, more knowledgeable about, and doing more about ethics than are our educational institutions and our large corporations.

I see more progress in industry than I do in the educational institutions. In industry, many of the companies have teaching programs and bring in ethics counselors now.

During the last three or four years, there has been a tremendous increase in the number of corporations using codes of ethics and much more interest in ethics. But we find that interest has declined in the last six or eight months. My supposition-and that's all that I can say-is that businessmen believe they don't need ethics codes now; they don't need to be as self-governing as they should be because they have President Reagan taking care of them. It's a wrong concept. They should be taking just the opposite view: Now that Mr. Reagan's in, business should focus on developing more-effective means of self-regulation through stronger codes and do everything possible to make it unnecessary for government to intervene. Let's deserve more economic freedom.e

HARRISON TOWNSHIP HISTORICAL SOCIETY RECEIVES CERTIFICATE OF COMMENDATION

HON. JAMES J. FLORIO OF NEW JERSEY



e Mr. FLORIO. Mr. Speaker, I would like to draw your attention to a ,group in my district, the Harrison Township Historical Society of Mullica Hill, N.J. I am proud to inform you that the society recently received a Certificate of Commendation from the· American Association for State and Local History. This prestigious national award was presented by the association for local history achievement at its annual meeting in Williamsburg, Va.

The historical society was chosen for a program entitled "A Friendly Legacy," a multidimensional project in which the Quaker heritage of the south Jersey area was explored and interpreted through exhibits, lecture series, workshops, and publications.

"A Friendly Legacy" brought to south Jerseyites a depiction of the Quaker heritage familiarizing them with an historical richness of which they can be duly proud. I ask you to join me in congratulating the Harrison Township Historical Society on receipt of this most outstanding award.e

November 10, 1981

IN PRAISE OF TWO CONTEMPORARY WOMEN

HON. MICHAEL D. BARNES OF MARYLAND


Tuesday, November 10, 1981 • Mr. BARNES. Mr. Speaker, on October 26-28, 1981, some 500 men and women from 14 nations and the Jewish Brigade gathered at the U.S. State Department in Washington for the unprecedented and historic International Liberators Conference where survivors of the Holocaust paid tribute to their brave and daring rescuers. The fellowship and communality of the group transcended the contrasting political ideologies, economic systems, and lifestyles of the participants in this U.S. Holocaust Memorial Council event. It was an important occasion to honor the Allied liberators and to bear witness to the memory of the 6 million Jews and millions of others who perished in the death camps of World War II Europe so that such genocide and mass destruction may never again be repeated.

The accounts, testimony, and tapes from this conference will be housed in a national memorial/museum in Washington. And I especially commend the Holocaust Council and its chairmen, Elie Wiesel, Mark Talisman, and Miles Lerman for all of their efforts on behalf of this purpose.

Mr. Speaker, later the same week, Ms. Karen Primack, a Montgomery County, Md., attorney and mother of two children stood before her family and fellow congregants at Temple Israel to become bat mitzvah and to tell about two modem day heroinesone of who took part in the Liberators Conference as a survivor only days before. I congratulate Mrs. Primack and wish to share with you and my colleagues the message which she delivered that Saturday morning:

When a woman has a bat mitzvah two dozen years after the usual time, she naturally looks to her Torah portion for its message with regard to womankind. In my portion, we hear repeatedly of Noah and his sons, Ham, Shem, and Japheth, but Noah's wife and daughters-in-law are not mentioned by name; the women are referred to only as "Noah's wife" and "Noah's sons' wives."

Therefore, I would like to take the opportunity presented by my bat mitzvah to celebrate two very special, courageous women who have nothing to do with the story of Noah, but who do have something to do with me.

The first is Ida Nudel, the only Jewish woman prisoner-of-conscience in the Soviet Union. Ida Nudel happens to share my birthdate in April, and the difference in our ages is 13 years-the age of a bat mitzvah.

Ida, along with her sister and her sister's family, applied for an exit visa in 1971 to live in Israel. Her sister's family received visas promptly and left for Israel, but Ida was turned down because her work as an

EXTENSIONS OF REMARKS economist studying food hygiene standards supposedly gave her access to "classified information." She was dismissed from her job, as are most Soviet citizens who apply for exit visas. She became a vocal dissident, joining in many demonstrations. She was also what has become known as a "guardian angel," risking her life to establish and maintain contact with Jewish refuseniks and prisoners in the Soviet Union. She sent prisoners news of the outside world, and she informed the outside world of conditions in the Soviet Union. She was able to initiate massive letter writings campaigns from the outside. She kept a file on each prisoner of clothing sizes, spectacles, prescriptions, and other medical needs. She sent birthday greetings and food parcels. She constantly fired off telegrams to bureaucrats when a prisoner was being mistreated, and since she commanded such a responsive audience outside the Soviet Union, the officials often responded to her demands rather than risk another international uproar. She also assisted non-Jewish dissidents, such as Vladimir Bukovsky, and the worldwide protest she helped start got him released in 1976; he is now living in Britain.

During the 7 years she pursued this kind of activity, Ida was followed, interrogated, beaten, arrested at least five times, and jailed. Her home was periodically searched and her belongings confiscated. Her telephone was tapped and finally disconnected. But she always persisted in continuing her work.

On June 1, 1978, Ida hung banners from her balcony saying, "KGB, give me my visa." Stones and long spiked objects were thrown at her, and her window was broken. She was arrested and convicted of malicious hooliganism, and sentenced to 4 years of internal exile in Siberia. I should say that hooliganism in the Soviet Union is most often committed by young male groups, and 90 percent of those tried for hooliganism are intoxicated when the offense is committed. Ida, then in her late 40's, was a sober and frail woman only 4 feet, 10 inches tall.

During this exile in Siberia, she has been exposed to and beaten by hardened criminals. She suffers from gall bladder disease, and her health has deteriorated rapidly. Her sister believes that her chances of surviving another severe season there are very slim. She receives insufficient food and has poor sanitary conditions. Her person and room are searched regularly without provocation. Officials have turned the local population against her, and she receives vicious anonymous letters.

Although she is scheduled for release next April, it is possible that an abusive newspaper article written about her will result in added charges and a transfer to a psychiatric hospital or prison camp. Her sister says she is warned daily that she will be re-arrested.

Ida has been adopted as a prisonet of conscience by Amnesty International and many Christians have joined in her cause. An American nun, Sister Ann Gillen, offered to change places with her last year. ThenMembers of the U.S. Congress, Robert Drinan and Pat Schroeder, acted as attorneys in petitioning Soviet authorities on her behalf in January 1979. Christian friends regularly take over the daily vigil for Soviet Jewry at the Soviet Embassy on Jewish High Holy Days, when Jews cannot maintain the vigil themselves.

Ida's final words at her Moscow trial in June of 1978 were: "These 7 years have been filled with a daily battle for myself and

27175 others. Every time I was about to help another friend, my heart filled with an extraordinary feeling unlike any other. Perhaps the closest feeling is that which a woman,feels when giving a new life. If the remaining years of my life will be gray and monotonous, these 7 years will warm my heart with the knowledge that my life has not been without purpose. None of you, my judges, is capable of finding a punishment that would take revenge and deprive me of the triumph and victory of these 7 years."

The empty chair on the bimah here today symbolizes Ida Nudel's absence from her people.

Happily, the second woman I would like to pay tribute to is actually occupying a seat in this sanctuary today. Malvina Burstein is a member of Temple Israel, and I don't think we will ever tire of hearing of our own personal heroine, so I will recap very briefly: It was 1942 in Czechoslovakia-not a good time or place to be Jew.

Alone in her 20's, her family having been taken away, Malvina walked by night from Czechoslovakia to Hungary so that she could disappear into the crowds of Budapest, carrying the identity papers of an aunt's former maid. She held a variety of different jobs and lived in many different flats, sometimes moving every few days to elude potential betrayers.

Malvina, a blue-eyed blonde, was able to pass for a Christian and volunteered to aid in an effort to secure identity papers for laborers in city industrial plants. Posing as a plant assistant, Malvina risked her life on three separate occassions by picking up 500 stamped identity papers each trip to the National Printing Office-for a total of 1,500 in all. Thus, 1,500 Jews illegally received identity credentials and were able to pass as Hungarian Christians. Not only were her trips to the National Printing Office missions of great daring, but she risked imprisonment every time she spoke to Jews or entered a Jewish home to deliver the identity papers.

Last month, Malvina received a Woman of Valor award from the Red Magen David, the Israeli equivalent of the Red Cross, for her courageous life-saving actions. In accepting the award she said modestly, "The reason I am here is because other Jews saved my life." Rabbi Lewis Weintraub, in paying tribute to her earlier this month at Temple Israel, noted that he had known Malvina for 30 years, but it was only last month, when news of her deeds was published in the local papers, that he found out about her. And he said the fact that she kept all this secret all these years "speaks volumes."

Journalist Elliott Wright has written a book, "Christian Heroes and Heroines," which gives brief sketches of 77 heroes, ranging from Catholic saints to Florence Nightingal€ and Dag Hammarskjold. His book purports to serve as "lessons in faith, in a world where society's heroic models are characterized primarily by quick passage through the revolving door of fame."

Heroes and heroines and role models cannot serve their functions unless they are shared and publicly talked about and admired, so that they can be examples. It's strange, but I had an Ida Nudel prisoner-ofconscience bracelet for 2 years before I thought to mention to my children who she is. And it was more that 1 month after I read about Malvina Burstein before it occurred to me to tell my children about her. This is wrong. Our children and grandchil-

27176 dren deserve better than Wonder Woman and Batman.

Of course, we hope that none of us will ever face the awesome challenges that Ida and Malvina faced. But we, and our childern, should think about how we would respond and whether we are made of the same stuff as an Ida Nudel or a Malvina Burstein.e

SUPPORTERS OF THE VOTING RIGHTS ACT EXTENSION

HON. PETER W. RODINO, JR. OF NEW JERSEY


Tuesday, November 10, 1981 e Mr. RODINO. Mr. Speaker, the following Members asked to be cosponsors of the Voting Rights Act extension legislation, H.R. 3112, but because of an oversight their names were submitted for cosponsorship after the committee report had been filed. House rules prevent Members from being listed as cosponsors after the filing date.

I asked that the record show that but for this rule these persons would have been cosponsors of H.R. 3112:

Mr. Blanchard, Mr. John Burton, Mr. Eckart, Mr. David Evans, Mr. Hammerschmidt, Mr. Hartel, Mr. Hoyer, Mr. Tom Lantos, Mr. Richmond, Mr. Sensenbrenner, and Mr. Scheuer.e

TAXPAYER PROTECTION ACT



Tuesday, November 10, 1981 e Mr. HANSEN of Idaho. Mr. Speaker, it is becoming increasingly clear that major reform of the Internal Revenue Service is imperative, and now.

To the end of that reform, I have reintroduced a strengthened new version of the Taxpayer Protection Act, H.R. 4931, which in essence puts a stop to the extra legal cloak and dagger operations and reduces the IRS to those collection techniques available to other governmental and nongovernmental creditors. The text of this legislation "to amend the Internal Revenue Code of 1954 to regulate and limit collection procedures of the Internal Revenue Service in order to provide protection of taxpayer civil rights and for other purposes," follows:

H.R. 4931 A bill to amend the Internal Revenue Code

of 1954 to regulate and limit collection procedures of the Internal Revenue Service in order to provide protection of taxpayer civil rights, and for other purposes Be it enacted by the Senate and House of

Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE.

This Act may be cited as the "Taxpayer Protection Act".


SEC. 2. APPLICATION OF FAIR DEBT COLLECTION PRACTICES ACT TO COLLECTION OF TAXES.

(a) IN GENERAL.-Section 6301 of the Internal Revenue Code of 1954 <relating to collection authority) is amended by striking out the text and inserting in lieu thereof the following:

"(a) IN GENERAL.-The Secretary shall collect the taxes imposed by the internal revenue laws.

"(b) LIMITATIONS ON COLLECTION PRAcTICES.-

"(1) IN GENERAL.-The conduct of officers and employees of the Internal Revenue Service shall, in the collection of any underpayment of any tax imposed by this title, comply with-

"(A) subsection (a) of section 805 of the Fair Debt Collection Practices Act <relating to communication in connection with debt collection), and

"(B) section 806 of such Act <relating to harassment or abuse).

"(2) PROHIBITION OF PUBLICATION OF DEFICIENCIES NOT REDUCED TO JUDGMENT.-No officer or employee of the Internal Revenue Service shall publish, or cause to be published, for the purpose of collecting any tax imposed by this title, the amount of any underpayment of such tax unless such underpayment has been found to be payable by a court of competent jurisdiction."

(b) CIVIL LIABILITY FOR NONCOMPLIANCE WITH COLLECTION PRACTICES.-

(!) IN GENERAL.-Part I of subchapter A of chapter 75 of such Code <relating to crimes, other offenses, and forfeitures) is amended by adding at the end thereof the ;ollowing new section: "SEC. 7128. CIVIL DAMAGES FOR IMPROPER

COLLECTION PRACTICES. "(a) GENERAL RuLE.-Whenever any indi

vidual violates the provisions of section 630l<b) with respect to the income tax liability of a taxpayer other than a corporation, such taxpayer may bring a civil action for damages against such individual, and the district courts of the United States shall have jurisdiction of any action commenced under this section.

"(b) DAMAGES.-"(!) LIABILITY ON DEFENDANT.-In any suit

brought under subsection (a), upon a finding of liability on the part of the defendant, the defendant shall be liable to the plaintiff in an amount equal to the sum of-

"(A) the actual damage sustained by the plaintiff as a result of the violation of section 630l<b),

" (B) such additional damages as the court may allow, but not exceeding $1,000, and

"(C) The costs of the suit, together with reasonable attorney fees as determined by the court. In determining the amount of liability for damages under subparagraph (B), the court shall consider, among other factors, the frequency and persistence of noncompliance by the individual, the nature of such noncompliance, and the extent to which such noncompliance was intentional.

"(2) No LIABILITY ON DEFENDANT.-On a finding by the court that a suit under this section was brought in bad faith and for the purpose of harassment, the court may award to the defendant-

"(A) attorney fees reasonable in relation to the work expended, and

" costs. "(C) No LIABILITY IN CERTAIN CASES.-An

individual may not be held liable in any suit under this section if such individual shows

November 10, 1981

by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.

"(d) PERIOD FOR BRINGING ACTION.-Any action to enforce any liability created under this section may be brought, without regard to the amount in controversy, within 1 year from the date on which the violation occurs."

(2) CLERICAL AMENDMENT.-The table Of sections for Part I of subchapter A of chapter 75 of such Code is amended by adding at the end thereof the following new item: "Sec. 7218. Civil damages for improper col

lection practices." (C) EFFECTIVE DATE.-The amendments

made by this section shall take effect on the date of the enactment of this Act.

SEC. 3. LEVY ON PROPERTY ONLY UNDER CoURT ORDER.

(a) IN GENERAL.-Section 6331 of the Internal Revenue Code of 1954 <relating to levy and distraint) is amended by redesignating subsection (e) as subsection (f) and by inserting after subsection (d) the following new subsection:

"(e) CouRT ORDER REQUIRED FOR LEVY."(1) IN GENERAL.-Levy may be made under

subsection (a) with respect to any unpaid income tax of a taxpayer other than a corporation only after the Secretary is authorized by court order to make such levy.

"(2) AUTHORITY AND STANDARD FOR ISSUANCE OF ORDER.-

"(A) AUTHORITY.-On request of the Secretary, the court order under paragraph (1) may be issued by and only by any Federal judge.

"(B) STANDARDS FOR ISSUING ORDER.-An order under this subsection may be issued only if-

"(i) the Secretary, by affidavit sworn before the judge, established that the requirements of this section <other than this subsection) have been met,

"(ii) the judge determines that there is reasonable cause to believe that such requirements have been met, and

"(iii) the Secretary shall have proved, by a preponderance of evidence, that the subject of the order is indebted to the United States in a specific amount which amount shall be stated in the affidavit and the order.

"(iv) such order may be sought only upon application on notice to the taxpayer.

"(3) JEOPARDY.-Paragraph (1) shall apply to a levy even if the Secretary has made a finding under the last sentence of subsection <a> that the collection of tax is in jeopardy."

(b) EFFECTIVE DATE.-The amendments made by subsection (a) shall apply to any levy <within the meaning of section 633l<b) of the Internal Revenue Code of 1954) made after the date of the enactment of this Act. SEC. 4. INTERNAL REVENUE SERVICE To ABIDE

BY AGREEMENTS WITH TAXPAYER. (a) IN GENERAL.-Subsection (b) of section

7121 of the Internal Revenue Code of 1954 <relating to closing agreements) is amended by adding at the end thereof the following: "In the case of an income tax liability of a taxpayer other than a corporation, a showing of fraud or malfeasance, or a misrepresentation of a material fact, shall be taken into account for purposes of this subsection only if such showing or misrepresentation is determined by a court of competent jurisdiction."

November 10, 1981 (b) EFFECTIVE DATE.-The amendment

made by subsection <a> shall apply to closing agreements entered into after the date of the enactment of this Act. SEC. 5. STATUTE OF LIMITATIONS MAY BE Ex

TENDED ONLY 1 YEAR. <a> IN GENERAL.-Paragraph (4) of section

6501(c) of the Internal Revenue Code of 1954 <relating to exceptions to limitations on assessment and collection) is amended by adding at the end thereof the following: "In the case of an income tax liability of a taxpayer other than a corporation, the Secretary may not consent to assessment of such liability after the 1-year period beginning at the expiration of the time prescribed in this section <without regard to this paragraph) for assessment of such liability."

(b) EFFECTIVE DATE.-The amendment made by subsection <a> shall apply to expirations of the time prescribed in section 6501 of the Internal Revenue Code of 1954 <determined without regard to extensions of such time) occurring after the date of the enactment of this Act. SEC. 6. DISCLOSURE OF RIGHTS AND OBLIGA

TIONS OF TAXPAYERS. (a) IN GENERAL.- The Secretary of the

Treasury shall, as soon as practicable, but not later than 180 days after the date of the enactment of this Act, prepare a brief but comprehensive statement which sets forth in simple and nontechnical terms-

(!) the rights and obligations of a taxpayer and the Internal Revenue Service (hereinafter in this section referred to as the "Service") during an audit;

<2> the procedures by which a taxpayer may appeal any adverse decision of the Service <including administrative and judicial appeals);

(3) the procedures for prosecuting refund claims and filing of taxpayer complaints; and

(4) the procedures which the Service may use in enforcing the internal revenue laws <including assessment, jeopardy assessment, levy and distraint, and enforcement of liens).

(b) TRANSMISSION TO COMMITTEES OF CONGRESS.-The Secretary of the Treasury shall transmit drafts of the statement required under subsection <a> <or proposed revisions of any such statement) to the Committee on Ways and Means of the House of Representatives, the Committee on Finance of the Senate, and the Joint Committee on Taxation on the same day. Any draft <or any revision of a draft) of the statement may not be distributed under subsection (c) until 90 days have elapsed from the date it was transmitted to such committees.

(C) DISTRIBUTION.-The statement prepared in accordance with subsections <a> and (b) shall be distributed by the Secretary of the Treasury to all taxpayers along with any tax form or forms sent from the Internal Revenue Service to the taxpayers. SEc. 7. AuTHORIZING, REQUIRING, oR CoN

DUCTING CERTAIN INVESTIGATIONS, ETC. (a) PROHIBITION, ETC.-Section 7214 (relat

ing to offenses by officers and employees of the United States> is amended by redesignating subsection (c) as subsection (d) and by inserting immediately after subsection (b) the following new subsection:

"(C) AUTHORIZING, REQUIRING, OR CONDUCTING CERTAIN INVESTIGATIONS, ETC.-

"(1) IN GENERAL.-An officer or employee of the United States acting in connection with any revenue law of the United States shall not knowingly-

"(A) authorize, require, or conduct any investigation into, or surveillance over, any

EXTENSIONS OF REMARKS person regarding the beliefs, associations, or activities of any individual or organization, or

" maintain any records containing information derived from such an investigation or surveillance. Any person violating the preceding sentence shall be fined not more than $10,000, or imprisoned not more than 2 years, or both.

"(2) ExcEPTION.-The provisions of paragraph < 1 > shall not apply with respect to any otherwise lawful investigation concerning organized crime activities.

"(3) DEFINITIONS.-For purposes of this subsection-

"(A) INVESTIGATIONS.-The term 'investigations' means any oral or written inquiry directed to any person, organization, or governmental agency.

"(b) SURVEILLANCE.-The term 'surveillance' means-

"(i) the monitoring of persons, places, or events by means of electronic interception, overt or covert observation, or photography, and

"(ii) the use of informants." (b) CIVIL REMEDIES.-(!) IN GENERAL.-Subchapter B of chapter

76 <relating to judicial proceedings) is amended by redesignating section 7 430 as section 7431 and by inserting immediately after section 7429 the following new section: "SEC. 7430. CIVIL CAUSE OF ACTION FOR VIO

LATION OF SECTION 7214 (C). "(a) REMEDIES. "(1) DAMAGEs.-Whoever violates any pro

vision of section 7214(c) <relating to certain offenses by officers and employees of the United States) shall be liable for damages to any individual or organization which, as a result of such violation, has been subject of a prohibited investigation, surveillance, or recordkeeping, in an amount equal to the sumof-

"(A) any actual damages suffered by plaintiff or $100 per day for each day the prohibited activity was conducted, whichever is greater;

" such punitive damages <not in excess of $1,000) as the court may allow; and

"(C) the costs of any successful action, including reasonable attorney fees.

"(2) EQUITABLE RELIEF.-Any individual or organization which has been the subject of any investigation, surveillance, or recordkeeping in violation of section 7214<c>, may bring a civil action against the United States for such equitable relief as the court determines appropriate to enjoin and redress such violation.

"(b) VENUE.-An individual or organization may bring a civil action under this section in any United States district court for the district in which the violation occurs, or in the United States district court for the district in which such person resides or conducts business, or has his principal place of business.

"(c) JURISDICTIONAL AMouNT.-Any Federal court in which a civil action under this section is brought pursuant to subsection shall have jurisdiction over such action regardless of the -pecuniary amount in controversy."

(C) CLERICAL AMENDMENT.-The table of sections for such subchapter is amended by striking out the item relating to section 7430 and inserting in lieu thereof the following new items: "Sec. 7430. Civil cause of action for violation

of section 7214<c>. "Sec. 7431. Cross references."

(d) EFFECTIVE DATE.-The amendments made by this section shall take effect on the

27177 date of the enactment of this Act, except that such amendments shall not apply with respect to the maintenance of records during the 90-day period beginning on such date of enactment if such records were in existence on such date. SEC. 8. AWARD OF COSTS TO PREVAILING TAX

PAYER. (a) RECOVERY OF COSTS.-Part II of sub

chapter C of chapter 76 (relating to Tax Court procedure) is amended by adding at the end thereof the following new section: "SEC. 7465. RECOVERY OF COSTS.

"(a) IN GENERAL.-In any proceeding before the Tax Court for the redetermination of a deficiency or on any action before the Secretary with respect to such a redetermination, the prevailing party, unless the prevailing party is the United States, may be awarded a judgment of costs in connection with such proceeding and any administrative proceeding relating to such deficiency to the same extent as is provided in section 2412 of title 28, United States Code, for civil actions brought against the United States.

"(b) JuDGMENT.-A judgment of costs entered by the Tax Court under subsection <a> in favor of the prevailing party shall be treated, for purposes of this subtitle, in the same manner as an overpayment of tax. No interest or penalty shall be allowed or assessed with respect to any judgment of costs."

(b) CLERICAL AND CONFORMING AMENDMENTS.-

(1) The table of sections for such part II is amended by adding at the end thereof the following new item. "Sec. 7465. Recovery of costs."

(2) Section 2412 of title 28, United States Code, is amended-

<A> by inserting "(a)" before "Except", and

 by adding at the end thereof the following new subsection:

"(b) In any civil action which is brought by or against the United States for the collection or recovery of any internal revenue tax, or of any penalty or other sum under the internal revenue laws, and in which the United States is not the prevailing party, a judgment for costs may include reasonable attorney's fees, accountant's fees, and clerical expenses."

(C) EFFECTIVE DATE.-The amendments made by this section shall only apply with respect to civil actions, agency actions, and proceedings for the redetermination of deficiencies, the judgment for which becomes final after the date of the enactment of this Act. SEC. 9. CIVIL ACTION FOR DEPRIVATION OF

RIGHTS BY INTERNAL REVENUE SERVICE EMPLOYEES.

<a> IN GENERAL.-Any officer or employee of the Internal Revenue Service who, under color of any Federal law, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress.

(b) CONFORMING AMENDMENTS.-Section 1343<a> of title 28, United States Code, is amended-

27178 ,1) by striking out the period at the end of

paragraph (4) and inserting in lieu thereof a semicolon; and

(2) by adding at the end thereof the following new paragraph:

"(5) To recover damages or to secure equitable or other relief under section 9 of the Taxpayers' Protection Act."

(C) EFFECTIVE DATE.-The amendments made by this section shall apply . to actions arising on or after the date of the enactment of this Act. SEC. 10. WRITTEN AND ORAL ADVICE GIVEN BY

THE SECRETARY SHALL BE BINDING ON THE SECRETARY.

(a) IN GENERAL.-Chapter 77 of the Internal Revenue Code of 1954 <relating to miscellaneous provisions> is amended by adding at the end thereof the following new section: "SEC. 7519. WRITTEN ADVICE GIVEN TO TAX

PAYERS BY THE SECRETARY TO BE BINDING ON THE SECRETARY.

"(a) IN GENERAL.-There shall be binding on the Secretary-

"(1) any return with respect to a tax under subtitle A prepared for the taxpayer by an officer or employee of the Internal Revenue Service acting in his official capacity to provide assistance to taxpayers in the preparation of tax returns, and

"(2) any information, advice, or interpretation given in writing to the taxpayer by an officer or employee of the Internal Revenue Service acting in his official capacity.

"(b) EXCEPTION WHERE FAILURE To PRoVIDE ADEQUATE INFORMATION.-Subsection <a> shall not apply to the extent there is a failure by the taxpayer to provide adequate and accurate information to the officer or employee preparing the return or providing the information, advice, or interpretation."

(b) CLERICAL AMENDMENT.-The table of sectons for such chapter is amended by adding at the end thereof the following new item:

"Sec. 7519. Written and oral advice given to taxpayers by the Secretary to be binding on the Secretary."

(C) EFFECTIVE DATE.-The amendment made by this section shall apply to the preparation of returns, and information, advice, and interpretations given, after the date of the enactment of this Act. SEC. 11. JUDICIAL PROCEEDINGS.

SECTION 7429.-In all administrative and judicial proceedings between the Internal Revenue Service and taxpayers, the burden of proof on all issues shall rest upon the Internal Revenue Service: Provided, however, That in those instances where the taxpayer is the sole possessor of evidence that would not otherwise be available to the Internal Revenue Service, the taxpayer may be required to present the minimum amount of information necessary to support his position. SEC. 12. HISTORICAL COST.

SECTION 2031.-For purposes of the estate and gift tax, all property of all taxpayers shall be valued at historical cost. Historical cost shall be defined as the original cost to the taxpayer or the basis of the property to the entity which transferred the property to the taxpayer if the taxpayer did not purchase the property. SEC. 13. BASIS FOR EVALUATION OF INTERNAL

REVENUE SERVICE EMPLOYEES. The evaluation of all Internal Revenue

Service personnel by their superior shall not be based in any way on the sums collected

EXTENSIONS OF REMARKS from taxpayers resulting from audits or investigations in which the Internal Revenue Service personnel participated. SEC. 14. AUTONOMY OF RELIGIOUS ORGANIZA

TIONS. The Secretary shall have no enforcement

authority over those organizations described in section 508<c>. or shall any action be taken with respect to such organizations except in cases of fraud under title 18, United States Code. SEC. 15. LIMITATIONS ON CLASS AUDITS.

(1) .,The Se<!retary shall authorize, permit, or order no audit or audits of taxpayers as groups, categories, or classes until he shall have: <a> given written notice to each member of the audit group of the item or items of the return which the group has in common, and (b) stated the position of the Secretary as to the reason the Service claims the subject return to be in error, and <c> provided an opportunity for the members of the group to file an amended return conforming to the analysis of the Service, or (d) allowed the members of the group singly or through a group spokesman to contest the position of the Service at a hearing to be provided by the Secretary in accordance with existing regulations.

<2> Upon the filing of an amended return pursuant to <c> of paragraph (1), no penalty or interest upon any increased taxpayer obligation shall be exacted, the mission of the Internal Revenue Service being the collection of taxes, not punitive action against the citizen. SEC. 16. MISCELLANEOUS PROVISIONS.

Notwithstanding the provisions of any other law, every officer, agent or employee of the Internal Revenue Service shall, before taking any action to interfere with the property rights of any taxpayer,

<A> provide to both parties to joint returns the same notices and information required to be given to either of them.

 provide to each such party all rights and privileges available to either of them.

(1) no act by which the Internal Revenue Service intends to alter the property rights of any individual taxpayer, or to commence the time within which the taxpayer may avail himself of legal remedies shall have force and effect unless and until actual notice is provided to each such taxpayer.

<C> In order to facilitate the work of the Problems Resolution Officer, or Ombudsman, and that of any other personnel assigned to the work of servicing public inquiry in any office which there is a regular staff of not less than six employees, the Internal Revenue Service shall provide an information and assistance service to the public, on the premises of such office and open not less than thirty hours during each week in normal business hours, for information, inquiry and consultation on matters concerning individual income tax responsibility. Such a facility shall be staffed by employees reasonably trained in contact with the public and the Internal Revenue Code, sufficient to supply adequate service without undue delay.

<D> Nothing in this Act shall be in derogation of the right of every taxpayer to make a written or electronic record of all contacts with employees and agents of the Internal Revenue Service.

<E> Every taxpayer shall have the right to reasonable adjournments of appointments and interviews, whether initiated by the Service or the Taxpayer, and to have such interviews and appointments made at a place reasonably convenient to the taxpayer.

November 10, 1981 <F> With due regard to the confidentiality

of taxpayer information the Comptroller General of the United States shall, not less frequently than once in every three years, make an audit of the Internal Revenue Service, its methods, practices and procedures, and shall upon completion of such audit, report his findings and recommendations to the Committee on Ways and Means of the House of Representatives and the Finance Committee of the United States Senate.

<G> Absent a showing of fraud, no individual taxpayer shall be subject to audit in more than two consecutive years, nor more than three times in any ten year period. SEC. 17. LIMITATIONS ON SEIZURE OF RECORDS.

Notwithstanding the provisions of any other law, every officer, agent, or employee of the Internal Revenue Service shall, before demanding, soliciting, procuring, or taking possession of the records of, or personal data concerning any taxpayer-

<A> inform the subject of such inquiry, in writing, of the demand, the specific material sought, and the reason for the solicitation of the material,

 have commenced an action or proceeding before a court of competent jurisdiction against the subject of the information sought, and

(C) have justified before the court its need for the data on the same basis and subject to the same limita tions as in discovery under the Federal Rules of Civil Procedure. SEC. 18. INTERNAL REVENUE SERVICE SUBJECT

TO BILL OF RIGHTS. The Internal Revenue Service, its officers,

agents, and employees shall have no authority, power, or capacity against any person by reason of the tax obligations of such person, which power, authority, or capacity is in conflict with the rights and privileges of any person under the Constitution of the United States, provisions of title 26 of the United States Code and contrary prior court determinations notwithstanding.

<A> The provisions of section 50l(c)(3) are disjunctive. Entitlement to any benefit under section 50l(c)(3) shall not be denied to any person or organization claiming under the provisions of said section by reason of a failure to qualify under more than one of the categories stated.

 The privileges, rights, immunities, and obligations of any person and organization under this title are exclusively statutory, nor shall any such privilege, right, immunity, or obligation be changed except by statutory enactment.e

IMMIGRATION POLICY

HON. ROBERT GARCIA OF NEW YORK


Tuesday, November 10, 1981 e Mr. GARCIA. Mr. Speaker, the inscription on the Statue of Liberty reads: Give me your tired, your poor,

Your huddled masses yearning to breathe free,

The wretched refuse of your teeming shore; Send these, the homeless, tempest-tost to

me, I lift my lamp beside the golden door!

With these words, America embarked on an experiment which char-

November 10, 1981

acterizes America as a microcosm of the people that make up our world.

Mr. Speaker, the administration has unveiled an extraordinary program which gives the American public the impression that we are in a state of war with the rest of the world.

The administration has requested that Congress grant emergency powers to the President in an attempt to keep unwanted immigrants from reaching the shores of the United States. The administration's proposal will authorize the President, in peacetime, the power to:

Seal off harbors, airports, and roads; Restrict the right of Americans to

travel outside the United States; Restrict the right of Americans to

travel domestically; Eliminate judicial review of immi

gration decisions; Eliminate judicial review of Attor

ney General determinations in immigration matters; and

Interdict foreign-flag vessels in international waters absent international agreement.

This incredible proposal represents a clear disregard for fundamental American ideals and freedoms, and negates the historical reality that ours is a nation of people representative of the world.

The word immigration is synonymous with American history. Indeed it can be said that the immigrants that have entered our ports have enriched what is commonly referred to as the American culture. Immigrants have paid the price. Silently they labored, sweated, and sacrificed always in the hope of making a better life for themselves and their families.

To the world's poor, our country represents a better way of life. Ours is a humanitarian declaration welcoming to our shores people who suffer religious and political persecution, and economic hardship. This is what we have stood for in the past 200 years.

If we forget our past, we are doomed to fail in our never-ending responsibility to preserve that which all humanity strives for: freedom, opportunity, and hope for a better way of life.

Mr. Speaker, today I introduce a sense of Congress resolution which calls upon the administration to join us in working together toward a more enlightened national immigration policy deserving of the ideals which we so proudly defend.e

THE FUTURE OF ENERGY



e Mr. MICHEL. Mr. Speaker, Consumer Alert is an organization dedicated to representing the consumer's in-

EXTENSIONS OF REMARKS terest in combating the added cost which results from excessive Government regulation. Its advisory council consists of such distinguished citizens as William E. Simon, former Secretary of the Treasury and former Administrator of the Federal Energy Office, Yale Brozen, professor of business economics at the University of Chicago and television personality Arthur Godfrey whose interest in environmental issues is long standing. ·

Consumer Alert recently published a report entitled "We Suggest Nuclear and Solar Energy" which is a brief summary of the major points of a report first made by the International Institute for Applied Systems Analysis. This study, entitled "Energy in a Finite World" was greeted by the New York Times as "* • • probably the most ambitious effort yet to determine the world's long-term energy needs."

I want to bring this summary to your attention. Obviously such a summary can only briefly discuss the major point of the study itself. And, just as obviously, not everyone will agree with the findings. But it seems to me that with all of the economic and national security problems we face today, we might be forgetting that the long-range energy problems that were so prominently publicized a few years ago are still with us. We have to keep thinking about where we are going in the field of energy and how we are going to get there. The following summary, which I wish to insert into the RECORD at this point, offers one view as to the dimension and the possible solutions to our energy problems:

The summary follows: WE SUGGEST NUCLEAR AND SOLAR ENERGY

THE INTERNATIONAL INSTITUTE FOR APPLIED SYSTEMS ANALYSIS STUDY

"We suggest nuclear and solar energy, as well as the renewable energy sources, as primary energy supplies in a future sustainable energy system."

In these words, the 140 scientists who made up the special energy group of the International Institute of Applied Systems Analyses, summed up their seven year indepth study Energy In A Finite World. "The study is probably the most ambitious effort yet to determine the world's longterm energy needs," states the New York Times.

This new book carries special significance because it represents the combined work of experts from the scientific communities of nineteen nations-ranging from the U.S. and Great Britain to Japan and includes the Soviet Union. The authors' "global perspective" led them to the conclusion that moresustainable-energy will be needed to ensure an adequate quality of life throughout the world, particularly in the fast growing Third World.

Energy In A Finite World is also significant because, as a Washington Post review pointed out "The authors actually have the chutzpah to present a methodical, unemotional case for the almost 'unlimited' promise of nuclear energy. They note that a world built on breeder-reactor technology would be 'self-sustaining' and capable of

27179 almost unlimited amounts of future growth.''

"Solar energy, on the other hand," the Post review continued, "while it could be self-sustaining, would face ultimate limitations on how much energy it could provide. They are enthusiastic about solar's high technology, but are chary about growing 'biomass' for fuel and other land-based schemes-calling it a 'plantation world'. They also point out the enormous capital investment that will be required to develop solar energy, something often overlooked by itS enthusiasts."

Who conducted the study

Energy In A Finite World is the result of work conducted at the International Institute for Applied Systems Analysis <IIASA>, an organization founded in 1973 "to bring the knowledge and methods of science and technology to bear on important national and international problems." The Energy Project, the Institute's first major study, includes the work of over 100 scientists and other analysts who represented nineteen countries and seventeen national research organizations.

The U.S. National Academy of Sciences, Great Britain's Royal Society of London, the Max Planck Society for the Advancement of Sciences of West Germany and the Academy of Sciences of the U.S.S.R. were all represented. In addition, the scientific academies of Canada, Japan, France, Sweden and several other nations on both sides of the Iron Curtain contributed to the study which was assembled by the Institute's Energy Systems Program Group.

The Program leader was Professor Wolf Hafele, a leading West German expert in physics and engineering. His research team included a cross-section of specialists including a French Petroleum Institute scientist, representatives of Britain's National Coal Board, the Soviet Union's Working Consultative Group on Long-Term Energy Forecasting, Austria's Institute of Psychology, Pakistan's Institute of Nuclear Science and Technology and the London branch of Friends of the Earth. Disciplines ranging from psychiatry and atmospheric research to econometrics were involved in the Energy Project.

The Institute states that the study is "comprehensive both geographically-no area has been omitted-and temporally-the period studied covers the next half century, from 1980 to 2030. The study explores the possible features of global energy systems that are not just post-oil systems, but postfossil systems. And it explores how, realistically, the world might successfully negotiate the transition to such systems."

Clearly, Energy In A Finite World, unique in its global scope and in its depth of research, provides important new direction to the efforts of the world community and the United States to solve the energy problem. Here, then, are the study's conclusions· regardipg some of the most pressing energy issues:

The energy problem: no easy fix "But subsequent events have pushed to

the fore the recognition that sharp oil price increases were merely the trigger and that the world faces not a temporary 'crisis', but a pervasive, chronic 'energy problem'. The change in perception goes further: It recognizes that the world is tightly interconnected and explains why the development of appropriate energy policies is such a difficult process.''

27180 "Provincialism can only lead to danger

ously misguided national policies. To underestimate the difficulties of others, to fail to appreciate the differences between developing and developed countries and to neglect the repercussions that one nation's actions can have on another, only inspire policies that increasingly will strain the world's resources and institutions."

"The transition from the present fossil era to an era based on inexhaustible energy sources will not be straightforward. At the very least, it will require the national energy policies, corporate energy policies, and personal energy behavior be conceived with as clear an understanding of their relationship to the global energy problem as possible. For better or worse, we cannot isolate ourselves."

New uses for coal "Coal should not be used as the major

source of primary energy for meeting world demand for large amounts of energy over the next fifty years, since this would not only deplete its resource base within one hundred years but also create severe environmental and human health hazards."

"Thus to be used strategically during the period of dwindling fossil resources, new coal must serve as the raw input for the production of synthetic liquid and gaseous fuels, so-called synfuels and syngas. Used in this way, coal would serve as a bridge to a future energy world built around nondepletable energy sources."

Fossil fuels: a dwindling resource "Fossil resources will continue to be indis

pensable to the world's energy system until we have a sustainable system built around nondepletable energy sources. Eventually, we envisage a time when people will choose not to use fossil fuels because of the availability of cheaper and easier alternatives. That the transition from the use of fossil fuels is inevitable is indisputable."

Nuclear energy: realizing the potential through breeders

"Nuclear energy could supply very large amounts of energy for millennia on a sustainable basis. The promise of nuclear energy lies in the high energy intensity of nuclear fuels as a primary energy sourceThis means that when properly used, nuclear fuels remain available almost indefinitely. The world's current rsource of uranium, if used in 'breeder' rather than 'burner' re~ actors, should last thousands of years."

"The real potential of nuclear energy would be realized not only through the production of several terawatts of electric power, but also through the production of hydrogen and other carriers at similar rates. To exploit successfully this potential involves both the timely introduction of breeders and the use of a substantial part of our high quality natural uranium resource."

"With fission breeders, the uranium used is in effect not consumed, but invested in building a system where energy supply is not constrained by resources limitations. Once installed, such a system could provide steadily increasing amounts of energy for millennia. The essence would be the use of breeding, whether fission or fusion. And it would provide the return on the original investment of our natural uranium resources-a continuous provision of energy."

Solar: big investments for large-scale use "Clearly, when one considers possible sus

tainable energy systems, solar energy technologies have their place alongside nuclear breeder reactors. Land availability is not ex-

EXTENSIONS OF REMARKS pected to be a binding constraint for largescale solar power. Rather, material requirements <e.g., steel and concrete) will be unusually large and most likely the limiting constraint."

"Currently the need for solar energy storage is a serious problem capable of inhibiting the introduction of such solar facilities on a large scale. But technological possibilities for solving this problem are promising."

"The emergence of a global solar energy system could perhaps bring with it an unprecedented international interdependence and cooperation and a substantial potential for development and growth in many poor but sun-rich regions."

Paths to a sustainable future "A sustainable energy future can only be

one that is not based on the consumption of resources. It is important to realize that there is a quite different mode of using resources-the investive mode."

"This mode can best be explained by contrasting the function of fissile material in the case of the fast breeder reactor to its function in burner reactors. While today's burner reactors burn the little stockpile of fissile material that nature has endowed us with, this is not so in the case of the fast breeder. There, the fissile material functions as a 'catalyst' for the conversion of fertile material."

"It is on this basis that we suggest nuclear and solar energy, as well as the renewable energy sources, as primary energy supplies in a future sustainable energy system. This could be a fundamental change in the situation of mankind."

"And it is in sharp contrast to the situation of today, where in our exploitation of the earth's resources <excluding water), we must devote roughly 75 percent of these resources solely to energy purposes. What the optimal mix between nuclear, solar and renewable energy sources will turn out to be is not critical to our discussion here. What is more important is that these sources exist."e

BROOKS HAYS

HON. CLAUDE PEPPER OF FLORDIA

IN THE HOUSE OF REPRESENTATIVES Wednesday, November 4, 1981

e Mr. PEPPER. Mr. Speaker, the passing of Brooks Hays was indeed the falling of a great oak in the forest of our time. Brooks Hays was a victim of the prejudice which marked a period of his life. Because he would not yield to racial prejudice and agree to deny to Americans the rights guaranteed by our Constitution, he was defeated for membership in the House of Representatives. But he made a gallant fight for principle and for Americanism. After his defeat, his career was perhaps more illustrious than it was in the years he served in this H.ouse. Because his great voice had much to do with the elimination of the kind of prejudice that defeated him, he was the voice of healing of social ruptures; he was the voice that closed the gap between groups of citizens; his was the eloquent voice that held up the high ideals of America for all Americans.

November 10, 1981 He always had a religious role-justice, fairness, decency, and respect for the dignity of all people. With his keen wit, he was able to tear down many barricades of prejudice. With his charming manner, he was able to induce those who were enemies to practice friendship and fellowship. So, Brooks Hays was a man for all seasons. He fought for and he helped to build a better America. He has left a noble legacy of charm, of wit, wisdom, and courage. He has made us all immeasurably richer in the meaningful assets of life.e

INTERIM REPORT ON THE 36TH SESSION OF THE UNITED NATIONS GENERAL ASSEMBLY BY THE CONGRESSIONAL MEMBERS OF THE U.S. DELEGATION

HON. BENJAMIN A. GILMAN OF NEW YORK


e Mr. GILMAN. Mr. Speaker, on behalf of the gentleman from Florida <Mr. IRELAND) and myself, I submit herewith our interim report of the work of our U.S. delegation at the United Nations General Assembly.

As you know, President Reagan appointed us as delegates to the 36th session of the U.N. General Assembly, continuing the tradition of a congressional presence on the U.S. delegation. The President also appointed three public delegates: George Christopher, former mayor of San Francisco; Senator John Sherman Cooper, former U.S. Ambassador to East Germany and a congressional adviser to the 1949 and 1968 UNGA; and Bruce Caputo, former Congressman and State legislator from New York.

Our assignment requires us to be at the U.N. in New York a portion of our time in order to participate in a range of assignments in the committee and plenary sessions of the U.N. General Assembly.

This General Assembly is a first for the Reagan administration as well as for both of us. The change of administration is reflected in our Nation's approach to UNGA. Components of this approach consist of promoting the administration's political goals on the range of issues on the agenda of this 156 member world body. They also include developing strategy and tactics to achieve these goals.

Our principal goal is to articulate America's interests, which could be summed up as real politik reminiscent of the tenure of Ambassador Moynihan in the UNGA and its major standing committees. Though it is too soon to assess the results of this approach, one signpost can be found in the title

November 10, 1981 of Ambassador Jeane Kirkpatrick's recent speech: "Standing Alone."

In the Ambassador's view, the United States is now standing alone as a world power in the United Nations, primarily because it is not a member of any of the many blocs in this world body. The Soviet Union belongs to the Eastern bloc. The United Kingdom, France, the Federal Republic of Germany, Italy, and the Benelux belong to the European Community (the EC-10). Venezuela and other friendly Latin American countries belong to the Latin American bloc. Singapore, Indonesia, Thailand and other Asian states, to the Asian bloc. There is also an African bloc.

In addition, about 95 African and Asian states belong to the NonAligned Movement and 124 African, Latin American, and Asian states to the Group 77 <its name refers to its original1964 membership). These various blocs of states caucus to discuss their mutual concerns and formulate policy goals and strategies.

As Ambassador Kirkpatrick pointed out, the United States belongs to none of these blocs and, therefore, stands alone. In point of fact, the United States has traditionally belonged to the Western European and Other Group <the so-called WEOG) at the United Nations. However, growing strains in our relations with our European allies threaten to put us outside theWEOG.

The United States also stands alone on some important policy issues, such as the Camp David accords in the Middle East, the U.N. program budget, the U.N. Conference on the Law of the Sea, the question of East Timor, the U.N. Decade to Eliminate Racial Discrimination and on a recent resolution calling for a report on the Jerusalem excavations.

We are not alone in everything, of course. We have joined a majority on some other important issues, for instance, the recent resolution on the political situation in Kampuchea, which calls on foreign troops to withdraw and for a political settlement.

As for strategy and tactics, the U.S. behavior is marked by both traditional and novel approaches. We are pleased to report that Ambassador Kirkpatrick and the Mission staff undertake the work of the 36th UNGA in a diligent and competent manner and are especially concerned about what other countries are saying about the United States. While our delegation has not hesitated to applaud those we approve of, there are others whom the United States unmistakenly disapproves. For instance, we have not taken lightly the unfounded accusations of Cuba, Libya, Ethiopia, and Nicaragua. When they slandered the United States, our delegation promptly interjected a right of reply to set the record straight.

EXTENSIONS OF REMARKS Perhaps the most widely publicized

response by the United States to a U.N.-sponsored initative was Ambassador Kirkpatrick's letter to 63 members of the Non-Aligned Movement who signed the Non-Aligned Communique following last September's ministerial meeting of about 95 heads of state and the foreign ministers of Non-Aligned.

This year, Cuba chaired the NonAligned Meeting <NAM) and the Communique that was issued from the Cuban mission in New York leveled accusations against the United States, Israel, and South Africa, but did not once mention the Soviet Union's aggressions.

Among other accusations, the NAM Communique condemned the Camp David accords; Israeli measures on the "Judiazation of the Holy City of Jerusalem"; the "hostile position of the U.S. Government toward the Palestinian people"; "naked Israeli aggression on Iraqi nuclear installations"; deplored the blocking of global negotiations "mainly by one country," and expressed grave concern over "strategic cooperation between the United States and Israel."

In the past, U.S. delegations have dealt with similar communiques behind the scenes and in the corridors. Ambassador Kirkpatrick, however, sent a formal letter to 63 countries expressing regret that they associated themselves with the Non-Aligned Communique. Many of those delegations had previously indicated their reservations to the Communique and, interestingly enough, some states which had not received the letter phoned to inquire why they were omitted. The U.S. mission gladly sent them a letter.

Both of us have followed up on Ambassador Kirkpatrick's initiative in the House of Representatives by introducing House Resolution 261 (similar to Senator MoYNIHAN's amendment to the 1981 foreign assistance bill). A copy of our resolution and our statements appears in the CONGRESSIONAL RECORD of October 28, on pages H7864 to H7875. We hope you will support our resolution because we believe that if we are going to provide economic and military assistance to countries, the least we can expect is that they not abuse us.

On a more general theme, we have found that just about every possible world issue comes before the U.N. General Assembly as well as some you have probably never heard of; just keeping abreast of the issues and evolving U.S. policy on them requires an enormous amount of work which absorbs the daily lives of about 100 mission professional staff, the political ambassadors and the delegates.

Every day we receive a continuous flow of U.N. documents and cables from Washington, Geneva and foreign embassies reporting on development

27181 related to issues coming up here. Early every morning, we attend U.S. delegation briefings at the mission which are followed by U.N. committee sessions which start at 10:30 a.m.

In committees, we take part in the debates, deliver U.S. delegation statements, confer with working groups within the committees and move in and out of the plenary session which usually meets simultaneously with the committees; attending official lunches and meeting with foreign representatives in the delegates lounge are all part of the business of being U.S. delegates.

At this writing, the 3-week period known as the general debate is behind us and the seven standing committees of the General Assembly are well into their respective programs of work which will carry them through the first week of December. The committees will report all resolutions they adopt to the plenary of the UNGA for final approval before mid-December.

Briefly, some of the highlights of· the opening weeks of the 36th session are as follows:

An unusual event in the UN Procedures occurred on opening day when there was a tie vote on the third ballot for the election of the Assembly's President. Pursuant to the U.N. Rules of Procedure, outgoing President Von Wechmar <FRO) had to make the final decision by drawing lots. Mr. Kittani of Iraq won, defeating Tommy Koh of Singapore and Khwaja Kaiser of Bangladesh. President Kittani had previously been Acting Deputy Permanent Representative of Iraq to the UN, the Iraq Permanent Representative to the UN in Geneva, Secretary of Economic and Social Council, and Executive Assistant to the Secretary General with rank of Assistant Secretary General.

Two new states were admitted to the U.N.: Vanautu <formerly the New Hebrides, a territory of the United Kingdom) and Belize (also a former British Colony near Guatemala), bringing the U.N. membership to a grand total of 156 states.

During the early part of the UNGA, the Credentials Committee reviewed some 40 states' credentials, including two potentially controversial casesDemocratic Kampuchea and Israel, which the Assembly in turn approved. The United States was particularly concerned that the General Assembly approve Israel's credentials because the International Atomic Energy Agency was preparing to discuss the suspension of Israel. The General Assembly's action contributed to IAEA's postponing its debate on that sensitive matter.

The General Assembly's general debate started on Monday, September 21 and concluded on Friday, October 9. While no real formal debate takes

27182 place during this time, those three weeks are extremely important to the entire General Assembly because foreign ministers and heads of state travel to the U.N. to deliver major foreign policy addresses and, after the formal proceedings, meet and consult with each other. During that period, the U.S. mission, the corridors of the U.N. General Assembly and the U.N. Plaza Hotel <next door) are bustling with constant activity while these informal, official meetings go on.

Altogether 125 foreign ministers, 14 heads of state, 11 deputies of vice presidents and 6 other ministers attended the plenary session of the UNGA. A large majority, delivered foreign policy addresses.

On the opening day of the debate, Secretary Haig came to the U.N. to deliver a major U.S. policy address. "A New Era of Growth." He focused on international development, stating we must build a new strategy for growth marked by an open assistance with sound domestic policy and self-help, regional cooperation and bilateral consultations, reliance on incentives for individual economic performance, and a measure of security and political stability. Following his address, more than 75 delegates stood in line to congratulate the Secretary.

You may recall reading about the Secretary's U.N. meetings with Soviet Foreign Minister Gromyko and President Duarte of El Salvador. He also met with numerous leaders from Africa, Asia, and Latin America.

Of the total 125 foreign dignitaries delivering major addresses only one was a woman: Her Excellency, Mrs. Mary E. Charles, Prime Minister and Minister for Finance and External Affairs of the Commonwealth of Dominica.

October 7 marked the saddest day in this General Assembly when we received news of President Sadat's assassination. Over 4 million people phoned the U.N. to find out what would happen in the Middle East and as a result caused the entire New York phone system to blank out. On the following day, the United States joined representatives of the European Communities, the Asian, African, Latin American, and ASEAN groups to pay tribute to President Sadat. Ambassador Kirkpatrick read President Reagan's eloquent message, commenting that President Sadat was an "authentic hero and a man who demonstrated that the classical virtues of reason, charity, courage, vision and honor are as relevant to our times as to past ages."

Each of us have been assigned work in two standing committees. Ben Gilman follows the work of the Special Political Committee and the Third Committee on Social and Humanitarian Affairs. Andy Ireland looks after the Second Committee o~ Economic

EXTENSIONS OF REMARKS and Financial Matters and the Fifth Committee on Administrative and Budgetary Matters.

Our committee assignments keep us busily involved. We start off the day with early morning delegation meetings at the mission reviewing the activities of the previous day and being briefed on special subjects, such as U.S. policy on arms control and disarmament, human rights, global negotiations, or the U.N. budget. We then move on to U.N. committee meetings across the street where we take part in the debate.

Andy Ireland delivered the U.S. statement on the U.N. budget for the 1982-83 biennium which outlined the Reagan administration's support for a policy of no program growth and no new institutions in an effort to maintain spending levels and prevent the proliferation of U.N. activities. He stressed the need for the efficient and effective use of existing moneys and the internal redeployment of moneys to meet new needs.

Needless to say, this is not a particularly popular position, and the United States may find itself alone in voting on the U.N. budget; however, such a policy is necessary to keep U.S. contributions, the largest of all member states, to a legal minimum.

Ben Gilman delivered the U.S. position on the question on information and on an unexpected item concerning the Jerusalem excavations in the Special Political Committee. In his remarks on information, he strongly endorsed the principles of a free press, the free flow of information and exchange of ideas, and referred to the U.S. initiative to support the training of Third World journalists under UNESCO's auspices.

The excavation item, sponsored by several Arab States, called for a resolution which would authorize the submission of a report on the status of the Jerusalem excavations in time for the debate on the item of Israeli practices later in November.

The United States opposed the resolution on procedural and substantive grounds; but the resolution was adopted by a wide margin with only the United States and Israel voting against it. In the third committee, Ben made several U.S. statements, including one on the International Youth Year, the World Assembly on the Aging and Crime Prevention; and another supporting our resolution creating a World Assembly on Aging.

Meanwhile, in plenary session, the General Assembly observed World Food Day on October 16, where Ben Gilman gave the U.S. statement, referring to strong U.S. support for food assistance, noting the large U.S. bilateral and multilateral contributions to alleviating the terrible problems of world hunger.

November 10, 1981 While the committees are at work,

the plenary continues to meet to consider items deemed too important to allocate to any one committee. It is presently considering global negotiations, the U.N. Conference on the Law of the Sea and the situation in the Middle East. As draft resolutions are adopted in the seven standing committees and forwarded to plenary, it will consider them. ·

One critical decision yet to be made is the election of the Secretary-General. This election requires the General Assembly's approval of the Security Council's nomination of the U.N. Secretary-General. For the last week neither of the two candidates, SecretaryGeneral Kurt Waldheim nor Salim Salim of Tanzania, has been able to obtain the required support in the Council.

We hope to keep you informed of further developments at the U.N. Meanwhile, if you have a particular interest in any issue before the U.N. General Assembly, we hope you will not hesitate to call upon us.e

PROMOTING IMPLEMENTATION OF HELSINKI ACCORDS

HON. MILLICENT FENWICK OF NEW JERSEY


Tuesday, November 10, 1981 e Mrs. FENWICK. Mr. Speaker, 5 years ago yesterday, on November 9, 1976, 10 brave Ukrainians announced the formation of the Ukrainian Public Group to Promote the Implementation of the Helsinki Accords. The group was founded to monitor the compliance of the Government of the Soviet Union with the terms of the final act of the Conference on Security and Cooperation in Europe, more popularly known as the Helsinki accords.

Unfortunately, in the 5 years which , have passed since then, the Soviet Government has demonstrated its unwillingness to live up to the signed commitments it made in the Helsinki pact. Almost all of the original 10 members and 27 individuals who later joined the Ukrainian Helsinki Group are now in prison, in labor camps, or in exile. The most famous member of the groups, the poet Mykola Rudenko, is serving a 12-year sentence in a corrective labor colony in the Mordovian complex. Mr. Rudenko, the original group leader, was nominated for a Nobel Peace Prize earlier this year by several members of the U.S. Commission on Security and Cooperation in Europe. Subsequently, 69 Members of the House wrote to the Soviet authorities asking that he be released, but our appeal was not answered.

As the attached list shows, however, Mr. Rudenko is not the only member

November 10, 1981 of the Ukrainian Helsinki Group to be persecuted by the Soviet Government. With the exception of the lucky few who were able to emigrate to the United States and West Germany, all of the 37 members of the group have been imprisoned, sentenced to labor camps, or banished to internal exile. The names and the current status of these brave individuals follow:

UKRAINIAN PuBLIC GROUP To PROMOTE THE IMPLEMENTATION OF THE HELSINKI AccORDS

Date and place established: November 9, 1976 in Kiev, Ukraine.

Group leader: Mykola Rudenko. Founding members <10>: Berdnyk, Oles,

labor camp; Grigorenko, Petro, now in USA; Kandyba, Ivan, prison; Lukyanenko, Levko, labor camp; Meshko, Oksana, exile; Matusevych, Mykola, labor camp; Marynovych, Myroslav, labor camp; Rudenko, Mykola, labor camp; Strokata, Nina, now in USA; Tykhy, Oleksiy,labor camp.

New members <27>: Chornovil, Vyacheslav, labor camp; Heyko, Olha, prison; Horbal, Mykola, prison; Kalynychenko, Vitaliy, prison.

Joined while in labor camp: Karavansky, Svyatoslav, now in USA; Krasivsky, Zinoviy, labor camp; Lesiv, Yaroslav, labor camp; Lytvyn, Yuriy, labor camp; Malynkovych, Volodymyr, in Germany; Melnyk, Mykhaylo, suicide; Ovsiyenko, Vasyl, labor camp.

Joined while in labor camp: Popovych, Oksana, labor camp; Rebryk, Bohdan, labor camp; Romanyuk, Vasyl, Rev., released; Rozumny, Petro, released.

Joined while in exile: Senyk, Iryna, exile; Shabatura, Stefaniya; released.

Joined while in labor camp: Shukhevych, Yuriy, labor camp; Shumuk, Danylo, labor camp; Sichko, Petro, labor camp; Sichko, Vasyl, labor camp; Sokulsky, Ivan, labor camp; Strilsiv, Vasyl, labor camp; Stus, Vasyl, labor camp; Svitlychna, Nadiya, now in USA; Vins, Petro, now in USA; Zisels, Yosyf, labor camp.

It is indeed a tragedy that those who dare to speak out on behalf of freedom, that those who seek to defend the rights which are supposedly guaranteed them, should be treated in this way. The least that we who enjoy the luxury of freedom can do is to raise our voices on behalf of those who have been silenced. We who can speak, publish, and assemble as we wish must keep the glare of world attention on those who enjoy no such rights. For this reason, I hope that my colleagues will join me in commemorating the fifth anniversary of the founding of the Ukrainian Public Group To Promote the Implementation of the Helsinki Accords.

Thank you, Mr. Speaker.e

SOIL EROSION: "THE QUIET CRISIS"

HON. JAMES L. OBERSTAR OF MINNESOTA


e Mr. OBERSTAR. Mr. Speaker, if we allow the problem of soil erosion to


worsen, the United States can look forward to a return of a soil erosion crisis rivaling the Dust Bowl days of the thirties. It is, as Minnesota conservationist Harry Major says, "the quiet crisis."

In a "Viewpoint" column from the St. Paul Pioneer Press of November 8, 1981, Mr. Major, State conservationist for the soil conservation service, offered a thought-provoking, disturbing analysis of the problem of soil erosion facing the United States, and Minnesota in particular.

Mr. Major described the effect of inadequate conservation activities on American farmland and the potential consequences of the failure to protect topsoil.

I ask that his column be included in the RECORD; it is an analysis which should disturb Members of Congress enough to provoke them into supporting continued funding for soil conservtion service programs.

OUR FARMLAND Is BLOWING AWAY

<By Harry Major> There is a quiet crisis growing in Minneso

ta. You've seen the damage created by this

quiet crisis, while driving along the country roads. Gullies and rills scar the rolling farmland. Mounds of soil are heaped in a roadside ditch-deposited during a dust storm that rivaled the Dust Bowl days. Down the road, the bank of the stream is gouged from the churning water.

Erosion of our soil is the quiet crisis. More than 100 million tons of topsoil erodes yearly from our state's cropland. That's enough soil to bury both sides of 1-94 under 12 feet of sediment from Minneapolis to Miles City, Montana.

Soil erosion costs all of us in Minnesota. How? Erosion indirectly increases the cost of our food. Expensive fertilizers are applied to compensate for the nutrients lost when the topsoil erodes. As proof, last year, Minnesota farmers applied more than a million tons of fertilizers to their cropland. And these costs are eventually passed on to the consumer.

Other costs-eroded soil clogs roadside ditches and pollutes rivers and lakes with sediment. In Polk County, located in the Red River Valley, local officials estimate the cost to excavate soil blown into ditches in last spring's wind storms at $500,000. Counties throughout Minnesota expend many thousands of dollars to clean out roadside ditches.

Dredging the Mississippi River of sediments cost $2 million last year. This fiscal year, the Corps of Engineers estimates that dredging cost will nearly double that to keep the river channel open.

And, still, there are the hidden costs. Sediment pollutes the water. The soil particles contain chemical fertilizers which threaten aquatic life.

Nationally, the productivity of 34 percent of U.S. cropland has decreased because of erosion of topsoil. If we are to control soil erosion, thereby protecting the land's capacity to produce food, more landowners need to use conservation practices. Slowing down soil erosion can be accomplished by using conservation tillage, field windbreaks, farming with terraces, and contour strips.

Landowners need not fight this battle alone. The Soil Conservation Service <SCS>

27183 provides technical assistance to farmers to plan, implement and manage conservation practices. Farmers can receive SCS assistance for just portion of their farm or on the entire operation.

Last year, SCS provided assistance to some 22,000 Minnesota landowners. Examples of conservation practices applied by farmers with SCS help include:

CONSERVATION TILLAGE

More than 5 million acres of cropland were farmed this way in 1981. By practicing conservation tillage, a farmer leaves crop residue op the field, protecting the soil from the pelting rains and gusty winds.

FIELD WINDBREAKS

Approximately 300 miles of windbreaks were planted in 1980. Windbreaks force the wind upward, protecting the soil from erosion.

STRIPCROPPING

With contour strips farmers alternate strips of row crops with grain or alfalfa, and they plant on the contour of the hillside, rather than straight up and down. This practice reduces erosion.

Financial assistance for these conservation practices is available through the Agricultural Stabilization and Conservation Service <ASCS> and the Soil and Water Conservation District <SWCD>. Through these agencies, farmers can receive a maximum of 75 percent cost-sharing for the conservation practices installed, depending on the county policies.

Our precious farmland needs to be protected, not only by the farmer but also by the urban dweller. Each year, 49,000 acres of Minnesota's farmland is paved over with housing developments, roads, and industrial buildings. Approximately one-third of this land was prime farmland-the richest, most fertile ground for crops to flourish.

The war between the bulldozer and the plow will continue until counties are armed with soil information for making land use decisions. Soil surveys, conducted by the Soil Conservation Service, provide maps and descriptions of the various county soils, land use capabilities and erosion hazards. Already, in many counties, land use planners and county commissioners use the soil survey data to assess the capability of the land for it's most appropriate use.

We have the tools to reduce soil erosion, and protect prime farmland from defacement by urban sprawl. The question remains whether we-all users of the land-will use these tools. Finite and precious, our farmland needs to be protected now.e

PUBLIC EMPLOYEE RETIRE-MENT INCOME SECURITY ACT OF 1981

HON. PHILLIP BURTON OF CALIFORNIA


e Mr. PHILLIP BURTON. Mr. Speaker, today I am introducing, with my distinguished colleagues, Mr. ERLENBORN, Chairman PERKINS, Mr. BIAGGI, and Mr. PEYSER legislation which will establish Federal disclosure requirements and fiduciary standards for pen-

27184 sion plans covering State and local government employees.

The basic thrust of this legislation remains unchanged from the bill which was introduced last Congress as H.R. 6525. But a number of changes which were suggested to the subcommittee by various interested parties have been incorporated in this bill. The subcommittee intends to consider these proposals as soon as the legislative schedule permits.

Although the legislation establishes minimum Federal reporting disclosure requirements for public employee benefit plans, we recognize the importance of preserving and encouraging State and local regulation of these plans. A key feature of the proposals is an exemption from these Federal requirements if the State or locality sets substantially equivalent requirements.

Adoption of the minimum disclosure standards in this bill is essential to protect the rights and interests not only of plan participants and their beneficiaries but also of taxpayers at large. The reporting and disclosure practices of many State and local plans fall far short of the standards established for private plans. Public employees and taxpayers of the State and localities are no less entitled to access to important financial and benefit information than their private sector counterparts.

Moreover, since the Federal pension plans are already subject to ERISAtype financial reporting standards as a result of Public Law 95-595, there is no reason that States and localities should not be held to a similar standard.

In addition, a uniform Federal standard of fiduciary conduct is urgently needed for public employee retirement systems to protect plan participants from the wasting of plan assets and plan mismanagement. Under this bill, fiduciaries are required to act prudently and to hold and use plan assets for the exclusive benefit of plan participants. This is the same standard that Congress adopted for private pension plans. Certainly no less should be expected and required of those individuals involved in the management and disposition of public funds than is expected and required of fiduciaries in the private pension community. A summary of the bill follows: SUMMARY OF THE MAJOR PROVISIONS OF THE

PuBLIC EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1981

PURPOSES The Public Employee Retirement Income

Security Act of 1981 <PERISA) will protect the interests of participants and beneficiaries in public employee pension benefit plans, the Federal government and the general public in the operation of such plans and minimize the possible adverse impact of the operation of these plans on Federal revenues and expenditures and the national securities markets by:

EXTENSIONS OF REMARKS < 1) requiring the disclosure of financial

and other information about these plans to participants and their beneficiaries, employers, employee organizations, and the general public,

(2) establishing standards of conduct and responsibility for fiduciaries of public employee pension benefit plans; and

(3) providing for appropriate remedies, sanctions, and access to the Federal courts;

COVERAGE All public employee pension benefit plans

are covered by this Act except those plans which are:

(1) covered under section 4(a) of the Employee Retirement Income Security Act of 1974 and not exempt under section 4(b)(l) of that Act;

(2) unfunded plans maintained by the employer primarily to provide deferred compensation for select management or highly compensated employees;

(3) severence pay plans; (4) agreements which are solely coverage

agreements entered into pursuant to section 218 of the Social Security Act;

(5) individual retirement accounts or annuities within the meaning of section 408 of the Internal Revenue Code, or retirement bonds within the meaning of section 409 of the Code;

(6) plans described in section 401(d) of the Code;

(7) 403(b) annuity plans; (8) eligible State deferred compensation

plans <as defined by section 457(b) of the Code).

(9) plans maintained solely to comply with applicable workers' compensation or disability insurance law.

EXEMPTION FOR PLANS MEETING MINIMUM STATE OR LOCAL STANDARDS

The bill provides an exemption from the reporting, disclosure, bonding, and certain related civil enforcement provisions of the Act if a state or a political subdivision thereof has established or establishes substantially equivalent requirements for public employee pension plans within its jurisdiction. The determination as to whether state or local requirements meet this test is made by the Secretary of Labor. Partial exemptions may also be granted.

REPORTING AND DISCLOSURE REQUIREMENTS The plan administrator of a public em

ployee pension plan has the following disclosure responsibilities under the bill:

< 1) to provide to plan participants and beneficiaries an accurate written discription and comprehensive summary of their rights and obligations under the plan. Any material modifications to the plan must be similarly summarized and communicated to participants and beneficiaries. These summaries must be written so that the average plan participant will understand them.

Generally a summary plan description <SPD) must be updated at least once every 10 years by integrating the changes made within that period. If, however, a plan amendment is adopted which has the effect of curtailing or reducing benefits or benefit entitlements, the SPD must be updated within 5 years.

A copy of the SPD and any summary of material modifications must be filed with the Secretary of Labor at the same time these materials are distributed to participants and beneficiaries.

(2) to furnish within 60 days after a written request <but not more than once a year) a statement providing a participant or beneficiary with information as to total accumu-

November 10, 1981 lated contributions, pension benefits, and vesting status.

(3) to furnish to any participant who terminates employment, makes a benefit election, or receives a benefit payment or return of contribution, information concerning that participant's pension benefits and rights.

Disclosure must be made to the public and other interested parties in the following ways:

< 1) copies of the summary plan description, annual report, bargaining agreement, and other plan documents must be available for examination in the principal office of the administrator and in other locations;

(2) copies of such documents, for which a reasonable charge may be made, must be provided to any participant, beneficiary, employee organization which represents covered employees, or resident of any state which establishes, or a political subdivision of which establishes the plan, within 60 days after a written request;

(3) the plan administrator must prepare an annual report for each plan year, which is to be filed with the Secretary of Labor within 210 days of the close of the plan year. The annual report must include the general information described in Section 105 and the financial statement described in Section 106. If applicable, plans must also include the actuarial and other information described in Sections 107 and 108.

A plan must engage an enrolled actuary to perform an actuarial valuation at least once every three years. In performing this valuation, the actuary must utilize assumptions and techniques which represent the actuary's best estimate of anticipated experience under the plan.

In addition, a plan must engage an independent qualified public accountant to audit the plan and render an opinion as to whether the financial statements are presented fairly and in accordance with generally accepted accounting principles. Under certain conditions, a state auditor may be considered an independent qualified public accountant.

The bill requires the Secretary of Labor to prescribe simplified annual reports for plans with less than 100 participants and permits the Secretary to exempt any plan or class of plans from any reporting and disclosure requirements under Title I.

Required filings may be rejected by the Secretary if they are incomplete or there is a material qualification in the accountant's opinion or actuary's statement required as part of the annual report. The plan administrator may have 45 days to cure a filing which has been rejected. After that time, the Secretary may order a plan audit, bring a civil action, or take any other action authorized under the bill.

FIDUCIARY STANDARDS The Act establishes standards of conduct

with respect to the operation and administration of a plan for persons who have discretionary control over a plan or its assets.

Every plan must be established and maintained pursuant to written instruments. These instruments must identify one or more named fiduciaries who control the plan and are responsible for its operation and administration. Plan assets must be held in trust and used for the exclusive benefit of participants and beneficiaries.

In general, a fiduciary is defined as any person who exercises any discretionary authority or control with respect to the management of a plan or the disposition of its

November 10, 1981 assets, who renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of a plan, or who has any discretionary authority or responsibility in the administration of a plan. However, a person acting in his or her governmental capacity is not a fiduciary with respect to actions taken in that capacity regarding the establishment of ·plan benefit levels, funding and eligibility standards. Moreover, a legislator acting in his or her legislative capacity is not a fiduciary with respect to legislative actions taken in connection with a public employee benefit plan.

Fiduciaries must discharge their duties with the skill, care, prudence and diligence that a prudent person acting in a like capacity and familiar with such matters would use in a similar situation under the circumstances then prevailing.

Certain transactions between the plan and a party in interest are specifically prohibited. However, the Department of Labor must establish a procedure under which a plan may request an exemption from these prohibitions for a particular transaction or class of transactions provide that adequate safeguards are demonstrated.

Pursuant to plan procedures, named fiduciaries may generally allocate responsibilities among themselves or designate other persons to carry out fiduciary duties. However, a named fiduciary with trustee responsibilities (i.e., control of plan assets) cannot allocate or designate those responsibilities. With certain limited exceptions, plan assets must be placed in one or more trusts to be managed by trustees designated in the trust instrument<s> or by trustees appointed by named fiduciaries. Plan assets must be used for the exclusive benefit of participants and beneficiaries.

The trustees <who may also be named fiduciaries) exercise exclusive control over the assets in their trust, except in the following circumstances:

(1) if a named fiduciary <who is not a trustee) properly directs the trustee to take an action, or

(2) the named fiduciary has appointed an investment manager to manage certain of the trust assets.

A fiduciary remains liable for the illegal acts of a cofiduciary if the fiduciary knowingly participates in or conceals such illegal acts. A fiduciary is personally liable to the plan for any failure to meet the requirements relating to fiduciary or cofiduciary obligations.

The Act protects plans against loss by reason of fraud or dishonesty by requiring fiduciaries who handle funds to be bonded.

ENFORCEMENT

Civil actions may be brought by specified persons to enjoin or redress violations, or otherwise enforce provisions of the Act. Failure to comply with a request for information which is required by the Act to be furnished upon request may result in personal liability for the plan administrator. Failure to file a required form with the Administration upon notification and demand may result in a $10 per day penalty, not to exceed $5000.

Exclusive Federal court jurisdiction is provided for violations of the fiduciary provisions of the Act and for suits against the Department of Labor. Concurrent state and Federal jurisdiction is retained for other types of actions, including actions brought under any provision of state law which has been deemed under section 102 by the Sec-

EXTENSIONS OF REMARKS retary of Labor to be substantially equivalent to the Federal standards.

If the plaintiff in civil action prevails or substantially prevails, the court must award attorney's fees, unless an affirmative finding of good faith on the part of the defendant is made and the court determines that such an award would not further the purposes of the Act. If the defendant prevails or substantially prevails the court may award attorney's fees.

ADVISORY COUNCIL

An eleven member Advisory Council on Governmental Plans is established under section 307 to advise the Secretary. The Council must work with employers, employee organizations, employees, administrators, and other interested persons to establish guidelines for public employee pension benefit plans with respect to matters for which requirements are not established by PERISA.

Within a year after the initial appointment of its members, the Council must submit a report to the President and the Congress which contains its recommendation with respect to the initial implementation of the provisions of the Act.

PREEMPTION

The fiduciary provisions preempt all state laws insofar as they relate to the subject matter of such provisions. All other state laws would remain unaffected except to the extent that they relate to the subject matter of the other provisions of the Act as applied to public employee benefit plans.

EFFECTIVE DATES

Generally the provisions of the Act take effect at the beginning of the second calendar year following the submission by the Advisory Council of the report which is required under Section 307(b)<l) of the Act. The provisions authorizing the Secretary to promulgate regulations shall take effect on the date of submission of the Advisory Council's report. Certain other provisions which are specifically enumerated in Section 312(c) take effect on the date of enactment.e

ACID RAIN

HON. JAMES H. SCHEUER OF NEW YORK


Tuesday, November 10, 1981 e Mr. SCHEUER. Mr. Speaker, I rise today to introduce legislation which would alleviate, in a cost-effective manner, the impacts of one of North America's most devastating environmental problems-acid rain.

Scarcely 1 year ago, a survey conducted by the Council on Environmental Quality showed that only about 20 percent of the American public knew what acid rain was; however, in large part due to the outrage of our Canadian friends and to a spate of recent feature articles in national publications, I would venture that that figure today is significantly higher. With this growing awareness of acid rain, the issue has become politicized. Unfortunately, positions have also hardened, and the facts have become obscured.

It is unfortunate that rhetoric has begun to creep into the discussions of

27185 acid rain, because there are some basic facts about the issue on which reasonable people can agree. We know, for instance, that the undesirable acidic end products of wet and dry deposition from the atomsphere are sulfates and nitrates. By and large, the vast majority of these compounds which are deposited in North America are derived from man's activities-from the combustion of fossil fuels, which releases sulfur dioxide and nitrogen oxides into the atmosphere. A University of Washington study, for example, has found that less than 2.5 percent of the sulfur emitted in the Northeastern United States is of natural origin.

We know a great deal about both current and past levels of sulfur dioxide and nitrogen oxide emissions in the United States and about the source of these emissions. In the case of sulfur dioxide, two-thirds of the 28 million tons emitted annually in the United States comes from electric utilities. The vast majority of the utility emissions are from the Ohio Valley; three States-Ohio, Pennsylvania, and Indiana-contribute almost 25 percent of the Nation's total sulfur dioxide emissions, and nine contiguous Eastern States contribute more than half of the U.S. total.

We know that because of the longrange dispersal of pollutants by tall stacks and because of average weather patterns in the Eastern United States, most of the pollutants emitted in the Ohio Valley are transported eastward to be deposited far from their source. No competent scientist would claim to know exactly how much of the pollution in New York, New England, or eastern Canada comes from the Midwest, but available evidence clearly indicates that long-range transport of pollutants is indeed occurring. It is estimated, for example, that 70 to 86 percent of the sulfur deposited in the State of New York originates outside the State's borders. In the Adirondack Mountains of New York, highest ambient sulfate concentrations occur during brisk southwesterly winds which have followed a stagnation period 12 to 36 hours earlier in the Midwest, where sulfur emissions are high.

While recent Harris polls indicate clearly that the American people are committed to improving environmental quality in this coutry, we must insure that environmental regulations are appropriate for the magnitude of the environmental insult. This country can ill afford unproductive investments at a time when our worldwide competitive posture in a wide range of industries and services is slumping.

In evaluating the estimated costs of acid rain and the costs involved in ameliorating the problem, the recently released report of the National Academy of Sciences is highly informative.

27186 The Academy-surely as objective a body as one could hope for on this issue-concluded that the circumstantial evidence for the role of powerplant emissions in the formation of acid rain was "overwhelming" and that "continued emissions at current or accelerated rates, in the face of clear evidence of serious hazard to human health and to the biosphere, will be extremely risky from a longterm economic standpoint." The panel concluded that the picture is disturbing enough to merit prompt tightening of restrictions on emissions, including a 50-percent reduction in sulfur dioxide emissions.

As the Academy panel and others have pointed out, the dangers of acid rain involve more than the destruction of fish in high-altitude lakes in the Northeast. These dead lakes-which number over 200 in the Adirondacks alone-may be a harbinger of even more serious long-term impacts of acidic precipitation. These possible impacts include reduced yields of agricultural crops and forests; damage to soil productivity; accelerated deterioration of materials and structures exposed to air, water, and soil; reduced visibility; and damage to human health from inhalation of fine particles and from drinking water contaminated by the leaching of heavy metals.

In the face of these actual and potential environmental impacts, I feel that the risks of not acting soon enough to control acid rain exceed the risks of acting prematurely. By beginning to mitigate acid rain now, we begin to protect those resources that are irreversibly threatened by acid rain-human health as well as materials and structures. We take a large step toward alleviating a source of friction between Canada and the United States. And, as the Academy panel noted, we begin to reduce the risk that we will pass on to our descendants a degraded environment, shortages of food, and risks to their health.

Mr. Speaker, I believe that the bill I am introducing today is a sensible, cost-effective approach to acid rain and a bill that will permit the States maximum flexibility in meeting its goals.

Because 80 percent of all sulfur dioxide emission in the United States origin!lte in a 31-State region consisting of States bordering or lying east of the Mississippi River, the bill targets its directives on this 31-State area, which is designated as an acid rain mitigation <ARM) region.

Under the bill, States within the ARM region which have large powerplants that are the major emitters of sulfur dioxide would be required to achieve · the greatest reductions in levels of sulfur dioxide emissions. These States are assigned emission reduction requirements equal to 85 percent of the actual emissions from


those large powerplants, and they will be given until December 31, 1991 to meet that goal. Large powerplants would be defined as those emitting over 50,000 tons of sulfur dioxide per year at a rate of more than 3 pounds of sulfur dioxide per million British thermal units <Btu) of input. Generating units subject to new source performance standards under the Clean Air Act are excluded from the reduction calculation. There is also a maximum amount that any State may be asked to reduce. That maximum figure would be based upon a percentage of a State's total allowable emissions. No State will be asked to do more than it can reasonably be expected to achieve.

The emission reductions required by this bill must take place in addition to whatever other reductions occur as sources come into compliance with current provisions in State implementation plans and new source performance standards. Compliance with currently enforced Clean Air Act provisions will result in a 2- to 3-million-ton reduction in annual sulfur dioxide emissions. This bill provides for an additional reduction of just over 6 million tons in annual emissions by December 31, 1991. The total reduction in annual sulfur dioxide emissions is therefore between 8 and 9 million tons, or about a 36 percent reduction in eastern sulfur dioxide emissions.

This bill gives States the complete flexibility to select whatever measures they want to achieve their emission reduction requirements, including the ability to trade emissions offsets between States. Each State is responsible for amending its current State implementation plan to include a program to attain the specified emission reduction requirement by December 31, 1991. Because the emission reduction requirements are well targeted, fewer States-probably only 15 or 16-need to be involved in the process of amending State implementation plans.

Should a State fail to amend its implementation plan in a manner that will achieve the necessary reductions by December 31, 1991, the Administrator of the Environmental Protection Agency is directed to develop suitable plan amendments that will result in the emission reduction being met. After initially approving a State's plan amendments, the Administrator is periodically required to review a State's plan to determine if the amendments remain appropriate for meeting the State's emission reduction requirement. In addition, if a State fails to enforce its plan amendments the Administrator is directed to take enforcement action, including applying any sanctions against or limitations on emissions from large powerplants.

This bill takes a targeted yet flexible approach towa-rd controlling the major cause of acid precipitation, sulfur dioxide emissions. Large emis-

November 10, 1981 sions reductions can be achieved in the most cost-effective manner. States are given the leading role in devising emission reduction schemes, yet the Environmental Protection Agency is given a substantial review and enforcement role to exercise when necessary. Finally the control program contained in this bill easily fits into the structure of the current Clean Air Act.

The costs of this bill have been estimated by the Office of Technology Assessment. Assuming that optimal interstate trading of emissions occurs, the emission reduction target could be achieved at a cost of $1.7 billion per year. This corresponds to about 2 percent of an average residential electric bill nationally, although local increases could be significantly higher. To put this cost estimate in perspective, the total cost for utility air pollution control in the United States in 1980 was estimated to be about $5.8 billion, over three times as great as the cost of this bill.

Mr. Speaker, I am confident that, if this bill is enacted, its benefits will far exceed its costs and that future generations of Americans will applaud the timeliness with which we headed off the dangers of acid rain. I urge my colleagues to support the bill.e

THE RIGHT OF SELF-DETERMINATION AND THE U.N., II

HON. LARRY McDONALD OF GEORGIA


Tuesday, November 10, 1981 • Mr. McDONALD. Mr. Speaker, once again, I wish to bring to the attention of my colleagues the remarks of Mr. Carl Gershman, our esteemed counselor to the U.S. Ambassador to the U.N., on the right of self-determination, which Mr. Gershman made before the Third Committee of the U.N. in right of reply to a concerted reaction by the Soviet bloc countries. Although Mr. Gershman and I have had disagreements on other issues, I must commend him for his courageous and penetrating statements before the U.N. on the subject of self-determination. Mr. Gershman, unlike many of his fellow delegates, was not afraid to speak the truth in a body which proclaims to stand for truth and justice, but in reality is a labyrinth of Orwellian "double-think" and "newspeak." To paraphrase Mr. Gershman's remarks: To listen to the debates of the U.N. on self-determination one must have either the patience of Job or the cynicism of one professionalizing in agitprop.

Underlying the U.N.'s discussion of self-determination is an anti-American and antidemocratic sentiment, while silence is the rule when it comes to the idea of self-determination as applied

November 10, 1981 to the Soviet empire. Interfering and disrupting freely and democratically negotiated internal relationships is allowed under the U.N.'s distorted world view; yet genuine self-determination for enslaved peoples is seen as a threat to world peace. This truth was well displayed by Mr. Gershman's right of reply when he compared the situation and status of Puerto Rico with that of the vassal states of the Soviet Union.

Mr. Gershman's statement, which I strongly commend to my colleagues, follows:

STATEMENT BY CARL GERSHMAN

I would like to use my time now to speak about a couple of ~ues that have been raised during the course of the deliberations of this Committee, namely, the question of Puerto Rico and race relations in the United States, and also to make some further comments with respect to the Soviet Union and self -determination.

I must say, Mr. Chairman, in listening to the debates that have taken place in this Committee, that it requires the patience of Job-or the cynicism of one professionalizing in agitprop-to listen to representatives of totalitarian states speak about self-determination in Puerto Rico. The Puerto Rican people have repeatedly exercised their right of self -determination, a fact recognized by the General Assembly in 1953 when it removed Puerto Rico from the list of non-selfgoverning territories. The Puerto Rican people have exercised their right of self-determination in referenda conducted in 1952 and 1967, and in gubernatorial elections which have provided a useful picture of the status preferences in Puerto Rico. In the election held last November, for example, Governor Romero, a statehood advocate, narrowly won re-election over former Governor Rafael Hernandez Colon, an advocate of a revised form of commonwealth. Each obtained about 47.2 percent of the vote, with two small independence parties receiving just 5.6 percent.

Puerto Rico has freely negotiated its present commonwealth relationship with the United States, and the United States has consistently maintained that any change in that relationship should come at the initiative of the Puerto Rican people.

Compare this entirely democratic arrangement with the status of the 15 union republics of the Soviet Union. To be sure, the treaty on the formation of the USSR in 1922 and the constitution of 1977 feature and article on the right of a union republic to secede from the Soviet Union. <No such right is stipulated for the so-called autonomous republics.> But there is not a single legislative act defining the procedure for the separation of a union republic from the Soviet Union, the procedure for initiating discussion on that subject, or the procedure for adopting a decision. Mention of such procedures is m~ing even in the original 1922 treaty on the formation of the USSR.

Nor are there procedures for depriving a union republic of its status. For example, the Karelo-Finnish SSR was transformed into the Karelian autonomous republic by a law adopted by the USSR Supreme Soviet on July 16, 1956. The law referred to "the desires of the workers" of this republic, yet these desires were not ascertained through any legal democratic procedure such as a referendum, so that in a legal sense these desires simply did not exist. In principle, the central authorities retain the option of de-

EXTENSIONS OF REMARKS priving any republic of union-republic status in the event it is inclined to secede from the Soviet Union.

In fact, it is not possible even to discuss the question of secession of a union republic. While Soviet law contains no direct prohibition against discussing this question, and although the criminal code does not prescribe any punishment for discussing it, practice shows that persons who have attempted to discuss the question are subjected to criminal punishment on the charge of engaging in anti-Soviet propaganda. On such occasions there is also the further possibility of accusations being leveled of incitement to national hatred and even treason to the Motherland.

Individuals have suffered repression even for speaking out for cultural and linguistic rights. For example, the Ukrainian nationalist historian Valentyn Moroz, who was released in 1979 in an exchange of prisoners, had been arrested in the course of defending church treasures and cultural monuments of the Western Ukraine against efforts of the Soviet central authorities to remove them. He was convicted of "antiSoviet activities," which is to say, of opposing Soviet attempts to Russify the Ukraine. Reports of efforts to Russify the Ukraine continue, and Ukrainian activists such as Petro Ruban, Vasyl Romaniuk, and Mykola Rudenko remain imprisoned.

The lack of any real autonomy is actually reflected in the program of the Communist Party of the Soviet Union. Specifically, the program adopted at the 22nd Party Congress in 1961, which is still officially valid, states that "The boundaries between the Union Republics are increasingly losing their significance" -which is to say that even in a formal sense, the principle of selfdetermination in the Soviet Union is losing its significance.

The Soviet leaders have never hidden the fact-indeed, they have proudly and repeatedly proclaimed it-that they regard the principle of self-determination and national sovereignty as subordinate to the so-called class struggle. Let me quote a few pronouncements on this subject:

From Lenin <"Works," Vol. 26, p. 408): "There is not a single Marxist who, with

out making a total break with the foundation of Marxism and socialism, could deny that the interests of socialism are above the interests of the right of nations to self-determination."

From Stalin ("Works", Vol. 5, p. 270): "There are cases when the right of self-de

termination conflicts with another higher right-the right of the working class that has come to power-to consolidate that power. In such cases-this must be said bluntly-the right of self-determination cannot and must not serve as an obstacle to the working class in exercising its right to dictatorship."

On September 25, 1968, in a fundamental article in Pravda defending the Soviet invasion of Czechoslovakia, Sergei Kovalev wrote:

"There is no doubt that the peoples of the socialist countries and the Communist Parties have and must have freedom to determine their country's path of development. However, any decision of theirs must damage neither socialism in their own country nor the fundamental interests of the other socialist countries nor the worldwide workers' movement, which is waging a struggle for socialism .... The sovereignty of individual socialist countries cannot be counter-posed to the interests of world so-

27187 cialism and the world revolutionary movement."

This so-called Brezhnev Doctrine was consecrated by Brezhnev himself in a speech on November 12, 1968:

"When the internal and external forces hostile to socialism seek to revert the development of any socialist country toward the restoration of the capitalist order, when a threat to the cause of socialism in that country, a threat to the security of the socialist community as a whole, emerges, this is no longer only a problem of the people of that country but also a common problem, a concern for all socialist states." Under such circumstances, Brezhnev went on, it becomes necessary to give "military aid to a fraternal country to cut short the threat to the socialist order."

To be sure, the Warsaw Pact of 1955 commits the Soviet Union and the other contracting parties, "in accordance with the Charter of the United Nations Organization, to refrain in their international relations from the threat or use of force." In practice, of course, the Soviet Union has acted in accordance with the policy, set forth by Kovalev, that "laws and the norms of law are subordinated to the laws of the class struggle" which cannot be "discarded in the name of legalistic considerations" and "the yardsticks of bourgeois law." It is not necessary to go back to the invasion of Czechoslovakia to demonstrate this point. One has only to pick up the morning newspaper on virtually any day to find ample documentation.

For example, on page 5 of this morning's New York Times, one reads the following quotation from Pravda: "The preservation of the revolutionary gains of the Polish people is not only their own domestic affair. It is a question that touches directly on the vital interests of all peoples and states that have chosen the path of socialism." It should be obvious that the Soviet talk

about defending "the cause of socialism" and observing "the laws of the class struggle" merely masks a policy of imperialism. For the Soviet Union, therefore, "socialism" serves what Marx would have called an ideological function, in the sense that it rationalizes the projection and pursuit of power. And it does so systematically and blatantly at the expense of the principle of self -determination. Nothing which the Soviet Union has said or done refutes this fact.

I would like to make a few comments concerning the propaganda we have heard in this Committee about American race relations. During the past quarter of a century the United States has undergone practically a revolution in its race relations. It has been one of the most successful and creative processes of social change to have taken place anyWhere in this or any other era. To be sure, the process is not complete. But Americans, black and white, are proud of what has been accomplished; and I personally am proud to have had the opportunity to have been part of the civil rights movement in this country-to have marched in Selma, Alabama; to have engaged in voter registration work in M~~ippi, to have worked with and lived among community groups and youth in the black neighborhoods of Chicago, Pittsburgh, and New Haven.

I am aware of the Soviet Union's long interest in the racial situation in the United States. It was none other than that great proponent of civil rights, Joseph Stalin, who suggested that the situation of blacks in the United States constituted a "national ques-

27188 tion," a point taken up by the Comintern at its Sixth World Congress in 1928 which adopted the doctrine of "the right of selfdetermination of the Negroes in the Black Belt." This doctrine, of course, had no relevance to the actual situation of American Blacks, overwhelming numbers of whom were in the process of migrating out of the South in search of greater opportunity. The doctrine was eventually abandoned by the Communists, but versions of it have periodically cropped up for purposes of agitation and propaganda.

The fact is that the Communists have addressed the racial situation in the United States as they have addressed all questions-subordinating the interests of the people concerned to the requirements of Soviet foreign policy. One story will suffice.

Back in 1941 the great Black leader A. Philip Randolph was engaged in organizing the original March on Washington, the purpose of which was to gain employment for blacks in the defense industries of this country. Initially, the Communists supported his efforts, not because they were concerned about black unemployment, but because the Hitler-Stalin Pact was in force and the Soviet Union opposed American support for the Allied war effort. The march was seen as disruptive of that effort. On May 16, 1941, for example, the month before the Nazi invasion of the Soviet Union, the Daily Worker declared, "You can't defend Negro rights without fighting against the war." Immediately after the invasion, the Communists announced their opposition to the March on Washington, and the new line became, "The Negro people cannot be true to their own best interests without supporting the war."

Today as always, Communist propaganda concerning the rights and needs of American blacks should be treated with the derision it deserves. Blacks have not needed foreign instructions to determine "their own best interests," and as a result they have steadily improved their position in American society.e

THE PARADOX OF NEO-NEW FEDERALISM-WASHINGTON POST COLUMNIST PUTS HIS FINGER ON THE PROBLEM

HON. ELLIOTT H. LEVITAS OF GEORGIA


e Mr. LEVITAS. Mr. Speaker, I have addressed you and our colleagues recently on an issue which I call neoNew Federalism. This form of federalism, which the Reagan administration has come up with, is not exactly what most of us thought we were talking about when we spoke of the New Federalism, and when we had the President's economic recovery program outlined to us.

I always thought the New Federalism meant turning power and decisionmaking back to the State and local governments which are closer to the people and know the needs of their communities better than the Federal Government far away in Washington. But the New Federalism has been given another meaning by the Reagan


administration. Their brand of New Federalism, which I call neo-New Federalism, seems to mean simply raising local taxes. I cannot see how this will provide the tax relief promised to the American people, nor will it provide the savings and investments which the economy needs for productivity.

William Raspberry explained what this means to State and local governments and to taxpayers in a column in the Washington Post on November 4, 1981. Raspberry's straightforward commentary tells it like it is. He puts his finger right on the problem. As he notes:

• • • Instead of tax relief, it seems we'll be paying the same taxes, only they'll be recorded in a different box on our paycheck stub.

I commend Mr. Raspberry for his excellent column and for bringing this paradox to the attention of the American people.

At this point I enter Mr. Raspberry's column in the RECORD:

AND SUPPLY-SIDE CONTRADICTIONS

This is to notify you that we have shipped the car you ordered. In order to reduce the weight and thereby lower your shipping costs, we have removed the wheels. You'll find them in the trunk.

It's an old joke, but the Reagan administration is about to give it new life with its latest tax shenanigans.

You know, of course, that the administration has reduced federal income taxes. The idea, we have been told since last year's election campaign, is to let you keep more of the money you earn, so that you will invest it, or put it in savings accounts, thereby stimulating economic growth.

It's a wonderful idea in theory, especially if you keep your mind focused on waste and fraud in the federal government. But as Rep. Elliott Levitas (D-Ga.) pointed out during recent congressional hearings, not all federal programs are wasteful or fraudulent. How, he asked, do we pay for the efficiently operated, necessary programs that are going to be affected by the cut in federal taxes?

The answer, delivered by Interior Secretary James Watt, who had been sent over to Capitol Hill to speak for the administration, was a model of cynical simplicity: you increase local taxes.

Levitas, with the innocence of the small boy remarking on the emperor's sartorial inadequacies, confessed that he couldn't see how reducing federal taxes would free up money for investments if the savings had to be made up by increasing local taxes.

It is such an obvious point that one might have . assumed that Watt had misspoken himself. But then, as if to prove otherwise, Norman Ture, Undersecretary of the Treasury, suggested that the states increase their taxes to offset the federal tax cuts.

Asked if such an increase woulctn•t subvert the president's economic recovery plan, which relies on a federal tax cut to free up money for savings and investment, Ture acknowledged that it would. States, he suggested, "aren't compelled to work with the federal government."

Levitas is still scratching his head, "I have always supported the concept behind the 'new federalism' approach, that is, the concept of turning power and authority back to

November 10, 1981 our state and local governments," the Georgian said.

"However, the concept of 'new federalism' as proposed by this administration is something quite different .... It seems that what the administration means by 'new federalism' is simply turning the financial burdens of government over to the state and local governments."

Ture, the Treasury Department's leading tax expert, made it explicit. Speaking at a meeting of the President's Advisory Committee on Federalism, whose members represent state and local governments, Ture supported Reagan's proposed 12 percent reduction in revenue-sharing grants to the cities. It is up to the cities to decide whether they want to continue to operate the existing programs, he said. If they do, they'll have to pay for them.

And where would the money come from? Ture said the 25 percent tax cut <through fiscal 1984) would amount to a "turnback" of an average of $2.2 billion per state, and suggested that state and local governments should look to that "turnback" as a source of new taxes.

But, of course, there is no "turnback." As administration officials never tire of pointing out, the government has no presumptive right to the earnings of the American people. By that reasoning, the reduction in federal taxes does not "give" anybody anything. It simply lets workers keep more of their earnings.

But administration officials, tacitly acknowledging that their economic recovery program is going badly, now seem ready to change their definitions. The 25 percent you will save in federal taxes is not your money at all, according to the new definition. It is nothing more than a windfall to be taken back as state and local taxes.

Levitas calls it "neo-new federalism." "I had thought that the Kemp-Roth tax

cut we passed earlier this year was to relieve the heavy burden of taxes on the people who pay them and to provide the savings and investments to spur productivity in the private sector of our economy," he said.

But instead of tax relief, it seems we'll be paying the same taxes, only they'll be recorded in a different box on our paycheck stub. What the administration is proposing is the revenue equivalent of taking the wheels off a car to make it lighter, then putting them in the trunk for convenience.

And it makes just as much sense.e

NEW LEASEBACK POLICY FOP DELAWARE WATER GAP N/ TIONAL RECREATIONAL AREA

HON. JAMES A. COURTER OF NEW JERSEY


e Mr. COURTER. Mr. Speaker, I have introduced legislation to create a new uniform, lease-back program for the residents of the Delaware Water Gap National Recreational Area. I believe that this legislation establishes a reasonable and humane policy for the people of this portion of the Delaware Valley, who deserve a clear policy after living with the indecision of the Federal Government for nearly two decades.

November 10, 1981 The Delaware Water Gap National

Recreational Area was originally conceived as a complement to the Tocks Island Dam project, and was later incorporated into the Wild and Scenic Rivers System in 1978. Since 1965, when the Army Corps of Engineers began acquiring properties for the Tocks Island Dam project and the surrounding national recreational area, many residents have left the area. The remaining tenants who lease their land from the National Park Service are in three categories: Approximately 15 residents hold life estate rights, 70 year-round residents hold 5-year special use permits along with a verbal assurance of renewal upon the expiration of the 5-year term, and 142 seasonal residents hold 2-year special use permits which expire on December 31, 1981, and face eviction on January 1, 1982. The diverse terms of the leases for the various residents exists because the land was acquired at different times by different Federal agencies.

The seasonal residents now face eviction on January 1, 1982. It is my belief that the eviction of these residents will not bring about any useful purpose, for further development of the park is far from complete. In addition, by no stretch of the imagination are the residents impeding development of the park or blocking public access to the area. The recreation area is currently being enjoyed by many visitors, and the local residents have, on many occasions, been both helpful and instructive to visitors in the area. Their absence at this point could only be detrimental by encouraging increased vandalism and arson in the area. I have therefore introduced a bill to allow the seasonal residents the opportunity to retain their leases, and to grant long-term security to the yearround residents whose leases will expire in 3 years.

My bill, H.R. 4865, would give the Department of the Interior legal authority to continue renting to the residents, which it currently does not have. This bill would establish the terms of an equitable and clear-cut, lifelong leaseback policy for all of the leaseholders, seasonal and year round, in the recreational area providing their property meets minimum health and safety standards. If this legislation is enacted, the Secretary of the Interior will, within 30 days, give notice of the extension of the lease


until May 16, 1982, by which time residents are given the opportunity to undertake any corrective measures to conform with minimum health and safety standards. The residents would then be notified in writing of a possible lifelong lease if their dwellings comply with the standards agreed upon.

The terms of the lease include an arrangement whereby the lease shall not be terminated before the death of the resident and shall be set at the fair market rental value, adjusted annually according to the Consumer Price Index. This policy, if implemented, would continue to give the Secretary of the Interior the right to terminate the lease if the residents fail to conform to the standards during the term of the lease, and the lease could not be passed on to the next generation. This legislation would not only address the current situation, but would continue to assure that similar leaseback rights be given to anyone in the area whose land is acquired in the future.

If no legislative action is taken in the very near future to implement a uniform leaseback policy in this area, the evictions of the seasonal residents will go ahead as planned. I believe that these 142 seasonal residents, as well, as the approximately 70 yearround residents, should be allowed the opportunity to remain in their homes. Although the number of citizens facing eviction is by no means large, the principle behind the decision is very important. The Federal Government's treatment of the people of the valley, since the original conception of the Tocks Island Dam, has been, to say the least, far from exemplary. Past circumstances cannot be changed, nor can past mistakes be corrected. But we can make the effort to set forth a clear and fair policy for these citizens, and I believe that this legislation I have introduced gives us the opportunity to make such a policy. I would welcome the support of my colleagues.

The text of H.R. 4865 follows: H.R. 4865

A bill to direct the Secretary of the Interior to offer lifetime leases to certain individuals leasing dwellings in the Delaware Water Gap National Recreation Area, and for other purposes Be it enacted by the Senate and House of

Representatives of the United States of America in Congress assembled, That (a) section 2 of the Act entitled "An Act to authorize establishment of the Delaware

27189 Water Gap National Recreation Area, and for other purposes", approved September 1, 1965 06 U.S.C. 460o-1), is amended by adding at the end the following new subsection:

"(e)(l) Not earlier than May 1, 1982, and not later than May 15, 1982, the Secretary of the Interior shall make a written offer to any individual who leases any dwelling owned by the United States within the exterior boundaries of the area depicted on the drawing referred to in subsection (a) of this section to enter into a new lease with respect to such dwelling, if such dwelling, on the date such offer is made, conforms to minimum health and safety standards. The lease so offered shall include terms providing that-

"(A) except as provided in subparagraph <C> of this paragraph, such lease shall not terminate before the death of such individual or the death of such individual's spouse, whichever occurs later;

"(B) the rent payable under such lease shall be equal to the fair market rental value of such dwelling on the date such offer is made, increased annually according to the percent rise during the year involved in the Consumer Price Index published by the Bureau of Labor Statistics; and

"(C) such lease may be terminated by the Secretary if such dwelling, after due notice and opportunity for corrective measures is given to such individual, fails to conform to minimum health and safety standards.

"(2) Not later than thirty days after the date of the enactment of this subsection, the Secretary, in writing-

"(A) shall notify any individual who, on the date of the enactment of this subsection, leases any dwelling owned by the United States within the exterior boundaries of the area depicted on the drawing referred to in subsection (a) of this section what, if any, measures are necessary to bring such dwelling into conformity with minimum health and safety standards; and

"(B) if the lease such individual holds on such dwelling will terminate before May 16, 1982, shall make an offer to such individual to extend such lease until May 16, 1982, or until an offer is made under paragraph 0) of this subsection, whichever occurs first. "(3) For purposes of this subsection-

"(A) the term 'dwelling' means any singlefamily dwelling, together with any appurtenant building; and

"(B) the term 'minimum health and safety standards' shall have the meaning given to it by the Secretary after considering the health and safety requirements applicable to similar dwellings in localities near to the national recreation area.".

(b) The fifth sentence of section 2(a) of the Act entitled "An Act to authorize the establishment of the Delaware Water Gap National Recreation Area, and for other purposes", approved September 1, 1965, is amended by striking out "may" and inserting in lieu thereof "shall" .e

HOUSE OF REPRESENTATIVES-Tuesday, November 10, 1981

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Transcript of HOUSE OF REPRESENTATIVES-Tuesday, November 10, 1981