Proceedings, Debates of the U.S. Congress
the commodity futures modernization act of 2000
(Senate - December 15, 2000)
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[Pages S11878-S11885] From the Congressional Record Online through the Government Publishing Office [www.gpo.gov] the commodity futures modernization act of 2000 Mr. FITZGERALD. Mr. President, I rise in support of the Commodity Futures Modernization Act of 2000 (``CFMA''), the proposed legislation to reauthorize the Commodity Futures Trading Commission (``CFTC'') and to amend the Commodity Exchange Act (``CEA''). This legislation is the Senate companion of H.R. 5660, which Congressman Thomas Ewing introduced yesterday in the House of Representatives and which is part of the final appropriations measure. As an original co-sponsor of the CFMA, I am proud to join Chairmen Gramm and Lugar in supporting legislation to provide much needed regulatory relief to the United States futures exchanges, to remove the eighteen-year-old ban on single stock futures, and to bring legal certainty in the multi-trillion dollar derivatives markets. The CFMA gives a substantial boost to Chicago's futures industry and the 200,000 jobs that depend on it. The Chicago futures exchanges will be given an opportunity to compete on a level playing field with the world markets. Burdensome federal regulations will be removed and a new regulatory structure will be implemented that will give our nation's most important futures exchanges the ability to compete equally with world markets in product innovation and the ever-changing demands of the marketplace. Chicago's exchanges will now have the opportunity to offer single stock futures so that they can compete with global markets already trading those types of futures. This is potentially an enormous market for Chicago's exchanges and U.S. investors. It goes without saying that this market is absolutely necessary for Chicago to remain the center for world futures trading. I commend Chairman Lugar on his efforts to act swiftly to modernize the CEA and to implement the recommendations of the President's Working Group on Financial Markets (``PWG''). The challenges involved in such an undertaking are enormous and I appreciate Chairman Lugar's thoughtful and comprehensive approach to this complex task. As Chairman of the Subcommittee on Research, Nutrition, and General Legislation, I have been actively involved in the evolution of the CFMA and am committed to working closely with Chairman Lugar, Chairman Gramm, and my other colleagues to ensure that the United States derivatives markets remain strong, competitive, and viable. The CFMA codifies the recommendations of the PWG to enhance legal certainty for over-the- counter (``OTC'') derivatives by excluding from the CEA certain bilateral swaps entered into on a principal-to-principal basis by eligible participants. The market for OTC derivatives has exploded over the past two decades into a multi-trillion dollar industry. These large and sophisticated markets play an important role in the global economy and legal certainty is a critical consideration for parties to OTC derivative contracts. Accordingly, the CFMA recognizes that legal certainty for OTC derivatives is vital to the continued competitiveness of the United States markets and achieves this certainty by excluding these transactions from the CEA. The provisions of the CFMA also address the problem that federal regulation has not adapted to the rapid growth of the financial markets and today serves as a substantial restriction on market competitiveness and modernization. In order for the United States to maintain the most efficient markets in the world, regulatory barriers to fair competition must be removed. The CFMA reduces the inefficiencies of the CEA by removing constraints on innovation and competitiveness and by transforming the CFTC into an oversight agency with less front-line regulatory functions. The provisions for three kinds of trading facilities with varying levels of regulation provide needed flexibility to both traditional exchanges and electronic trading facilities by basing oversight of the futures markets on the types of products they trade and on the investors they serve. Finally, the CFMA removes the Accord's prohibitions on the trading of single stock futures and small indices. Stock index futures have matured into vital financial management tools that enable a wide variety of investment concerns to manage their risk of adverse price movements. The options markets and swaps dealers offer customers risk management tools and investment alternatives involving both sector indexes and single stock derivatives. It seems only fair that futures exchanges be allowed to compete in this important market. The CFMA lifts the ban on single and index stock futures restrictions to allow the marketplace to decide whether these instruments would be useful risk management tools and to enhance the ability of the U.S. financial markets to compete in the global marketplace. The bill reforms the Accord to allow both futures and securities exchanges to trade these products under the jurisdiction of their current regulators. The CFMA also allows both the [[Page S11879]] SEC and the CFTC to enforce violations of their respective laws regardless of whether the products are traded on a futures or securities exchange and requires that the agencies share necessary information for enforcement purposes. The CFMA represents an arduous effort to remove burdensome regulatory structures and provide much needed legal certainty to the United States derivatives markets. This effort has produced comprehensive legislation that is designed to remove impediments to innovation and regulatory barriers to fair competition for the United States financial markets. The positive impact of this legislation on Chicago's futures markets cannot be overstated. The CFMA is vital to Chicago remaining the derivatives capital of the world and gives Chicago's futures exchanges the ability to lead the way in the potentially explosive single-stock futures market. restricting cruise ship gambling Mr. STEVENS. Mr. President, I would like to engage the Senator from Hawaii in a colloquy regarding a provision of interest to him, that would restrict cruise ships from gambling in the State of Hawaii. For the benefit of our colleagues, I would like to ask the Senator if he would explain the clear intent of this provision. Mr. INOUYE. Mr. President, I would be happy to have a brief discussion with Chairman Stevens on this matter. As he knows, on many occasions I have expressed to my colleagues in this Chamber my strong opposition to gambling in the Hawaiian Islands. Our State of Hawaii is one of only two states in the entire country that prohibits gambling of all kinds. When Federal laws, including the Gambling Devices Transportation Act, more commonly known as the Johnson Act, affecting the ability of cruise ships to conduct gambling operations were relaxed over the past decade, I was involved in drafting those provisions to be sure that the longstanding Federal prohibition against the possession and operation of gambling devices be maintained with respect to the State of Hawaii. Unfortunately, I understand that a foreign cruise line seeks to exploit a loophole in Federal law and circumvent this long standing prohibition. This legislation closes this loophole. This recent announcement by a foreign cruise line--that is substantially owned by foreign gambling interests--to permanently based a large cruise ship with an extensive casino on board in Hawaii for year-round operation on cruises that will begin and end in Honolulu has prompted this amendment. This amendment ensure that there is no ambiguity in the intent of the Johnson Act's application to the State of Hawaii by expressly preserving the act's original prohibition of the transportation, possession, repair, and use of any gambling devices aboard vessels that embark and disembark passengers in the State of Hawaii, as defined in 19 C.F.R. 4.80a(a)4. I want to make clear to my colleagues that this provision would not affect any State other than Hawaii. Moreover, it would not prohibit current gambling operations on board cruise ships that, for example, begin or end their cruises on the mainland or in foreign countries, even if they call at multiple ports in Hawaii, so long as the gambling facilities are closed when the vessel is in Hawaii and the passengers do not begin and end their trip in Hawaii. Passengers could either begin or end their trip in the State, but could not do both. A vessel that is operating in dedicated service in Hawaii, however, cannot escape the Johnson Act's broad prohibitions simply by calling at Christmas Island or some other similar foreign port. I have made clear that I do not want gambling in Hawaii many time and in particular on the occasions that we have debated the Johnson Act and gambling on cruise ships. I have been unwavering in my position that gambling on voyages beginning and ending in Hawaii will not be accepted practice. This provision should clarify any ambiguity in the Johnson Act as to what types of gambling operations on board vessels are allowed and not allowed in Hawaii. I can assure my colleagues that if gambling interests believe they can exploit and circumvent the spirit and intent of Federal laws prohibiting gambling in Hawaii, I will be back in this Chamber to attempt to make the necessary changes to continue our State's longstanding prohibition on such activities. Mr. STEVENS. Mr. President, we all recognize the Senator's diligence in keeping the gambling industry out of Hawaii. Would I be correct then saying this provision would not have any impact on those cruise ships that begin or end their voyages in a foreign port or on the mainland so long as they don't gamble while in Hawaii? Mr. INOUYE. The Senator is correct. Mr. STEVENS. I thank the Senator for his explanation. Mr. INOUYE. I appreciate the opportunity to explain this matter for our colleagues. coal waste impoundment study clarification Mr. BYRD. Mr. President, conference report language has been added to H.R. 4577, the fiscal year 2001 Labor/HHS Appropriations bill to address concerns about the safety of coal waste impoundments. A study, which is to be completed by the National Academy of Sciences (NAS) in nine months, will be funded by monies included in the Mine Safety and Health Administration's (MSHA) Fiscal Year 2001 appropriations. Because MSHA has regulatory authority for coal waste impoundment oversight, I hope that MSHA officials will play an active role throughout the course of the study. The NAS study is intended to review the coal waste impoundments and report on viable methods and alternatives to prevent another dam failure like the one that occurred in Martin County, Kentucky, in October of this year. I would like to clarify the understanding of the chairman and ranking member of the Senate Labor/HHS Appropriations subcommittee regarding this conference report language. Is it their understanding that the NAS study should involve the participation of experts to include, but not be limited to, members of relevant state and federal agencies, such as the Mine Safety and Health Administration, the Office of Surface Mining and Enforcement, the Environmental Protection Agency, as well as industry, labor, citizen, and environmental groups, which have either been, or may be, impacted by impoundments in their areas? Further, in addition to addressing how best to assure the stability of existing impoundments, is it the understanding of my distinguished colleagues that this NAS study should also address alternative methods of coal mine waste disposal and placement in the future? Mr. SPECTER. As I, too, have had a long-running interest in coal mining and health and safety matters, I thank the Senator for his interest in this important coal matter. Yes, I believe that it is important for a range of stakeholders to be involved in this study as well as to look at both the current and future issues related to coal waste impoundments. Mr. HARKIN. I would like to thank the Senator from West Virginia for his leadership on this subject. It is also my understanding that relevant federal, state, industry, labor, citizen, and environmental parties should participate in this study so as to gain a broader range of views and recommendations on the current problem and future solutions in order to prevent such problems as he has described from occurring again. Swan Lake-Tyee Intertie Mr. STEVENS. Mr. President, I would like to engage the distinguished chairman of the Senate Interior Appropriations subcommittee in a short discussion on an item which is included on page 171 of the conference report on the recently passed Interior appropriations bill, H.R. 4578. In that bill, there is a reference to utilizing the Alaska ``Job in the Woods'' program for projects ``that enhance the southeast Alaska economy, such as the southeast Alaska intertie.'' May I inquire of the distinguished chairman if that language refers specifically to the currently proposed Swan Lake-Lake Tyee Intertie project for which the Forest Service completed its final environmental impact statement and issued its record of decision on August 29, 1997? Mr. GORTON. The distinguished chairman of the Appropriations Committee is correct. That reference is specifically intended to refer to the Swan Lake-Tyee Intertie project and was inadvertently referred to as the southeast Alaska intertie. I hope the Record [[Page S11880]] will reflect this clarification and will result in an expeditious use of the funds. liheap Mr. HARKIN. Mr. Chairman, as you know, many members on both sides of the aisle have concerns about the Low-Income Home Energy Assistance Program (LIHEAP) and the lack of an advance appropriation for that program in fiscal year 2002. As you know, home heating costs have skyrocketed over the past year in many areas of the country. The LIHEAP program helps over four million low-income households with their heating bills. Usually this appropriations bill includes advance funding for LIHEAP so that states have time to plan their program, but due to a provision in the budget resolution capping advance appropriations we were not able to do so this year. I hope, as I know you do, that we finish our work on this bill before October 1 next year. But if we do not, I think we should do everything we can to see that any continuing resolution for fiscal year 2002 would include sufficient funds for States to properly run their LIHEAP programs. Mr. SPECTER. As you know, I have been a strong supporter of the LIHEAP program and I am aware of how essential the program becomes in times of high fuel prices. While I hope that a continuing resolution will not be necessary next year, I would certainly support including funding for the full winter season in the first continuing resolution for fiscal year 2002, if that is necessary. catholic social services Mr. STEVENS. Mr. President, I would like to engage the distinguished chairman of the Senate VA-HUD Appropriations subcommittee in a short discussion on an item which is included on page 79 of the Conference Report H. Rept. 106-988 (H.R. 4635) for the VA-HUD appropriations bill. In that bill, there is funding available for Catholic Community Services. I am told that reference is incorrect and that the funding should actually be made available for Catholic Social Services for renovations and construction at the Brother Francis Shelter and AWAIC's transitional housing. I would ask the distinguished subcommittee chairman whether it was his understanding that Catholic Social Services was the intended recipient of this funding rather than Catholic Community Services, and if so, would the chairman make note of this for the Record? Mr. BOND. The distinguished chairman of the Appropriations Committee is correct. That reference is specifically intended to refer to Catholic Social Services for renovations and construction at the Brother Francis Shelter and AWAIC's transitional housing and was inadvertently referred to as Catholic Community Services. I hope the Record will reflect this clarification and will result in an expeditious use of the funds. Mr. STEVENS. I thank my colleague. authoritative root server Mr. BURNS. Will the chairman yield for purposes of a colloquy? Mr. GREGG. I yield to the Senator from Montana. Mr. BURNS. I understand that the Internet Corporation for Assigned Names and Numbers, ICANN, intends to request that the Department of Commerce transfer the Internet's authoritative root server to ICANN's control. The authoritative root server is the foundation of the Internet, which cannot function without it. Would the chairman agree that the Department of Commerce should retain control of the authoritative root server until the appropriate committees of Congress have reviewed the legality, appropriateness and implications of such a transfer? Mr. GREGG. I agree with the Senator from Montana that Congress should be given the opportunity to exercise its oversight responsibility over this important issue. Mr. HOLLINGS. Will the chairman yield to me on this issue? Mr. GREGG. I yield to the Senator from South Carolina. Mr. HOLLINGS. Mr. Chairman, I would like to join you in supporting the statements made by the Senator from Montana. As managers of the Commerce, Justice, State bill, you and I have the responsibility and expectation of providing agencies under our jurisdiction with congressional input and guidance. On an issue of this great importance--transferring the a-root server to ICANN--it is critical we carefully look at the implications a decision like this would have. Mrs. MURRAY. Will the chairman yield to me on this issue? Mr. GREGG. I yield to the Senator from Washington. Mrs. MURRY. I share the concerns expressed by the Senators from Montana and South Carolina about the premature transfer of the authoritative root server to ICANN. Control of this root server includes the power to dramatically affect all aspects of Internet activity, including e-commerce and our national security. The Department of Commerce should not transfer the root server to ICANN until Congress has had the opportunity to review the wisdom of such a transfer. Mr. GREGG. I agree with the views expressed by my ranking member, Senator Hollings, and the Senators from Washington and Montana on this matter. Antidumping duties Mr. DURBIN. Mr. President, I would like to commend the chairman of the Finance Committee for his bipartisan efforts which resulted in the passage of section 1425 of H.R. 4868, the Miscellaneous Tariff Act. This section is intended to address an unfortunate situation involving the imposition of antidumping duties on a number of entries of conveyor chain from Japan. At the time of these entries, the applicable antidumping duty cash deposit rate was 0 percent. As a result, no cash deposits were made on these entries by the U.S. importer. Through no fault of the U.S. Customs Service, the antidumping duties and interest subsequently imposed when these entries were liquidated as a result of the Department of Commerce administrative review process now represents a severe and unanticipated hardship on the U.S. importer, Drives, Inc., based in Fulton, Illinois. This legislation is intended to address this situation by having the Customs Service reliquidate the entries at the antidumping duty cash deposit rate in effect at the time of entry. Mr. ROTH. The senior Senator from Illinois is correct and I thank him for his kind words. He is correct with regard to the purpose and intended effect of this section. My understanding is that the antidumping duty order covering these entries has recently been revoked. I also understand that the domestic industry association that was the complainant in the dumping proceedings is aware of this legislation and does not object. Mr. DURBIN. That is correct. In accordance with this legislation, the identified entries will be re-liquidated with no antidumping duties assessed. Moreover, no interest charges which relate in any way to antidumping duties will be assessed. Since the deposit rate at the time of entry of all of the identified entries was 0 percent, this will have the effect of liquidating the entries at the cash deposit rate in effect at the time of entry. Mr. ROTH. We should note for the record that during the drafting of this legislation, a few words were inadvertently left out, with the unintended consequence of the language being not as clear as we would like for Customs' interpretation. It was our intent with this legislation that re-liquidation should occur within 90 days of enactment. This was the intent of the Congress when it reviewed and passed this section. Mr. DURBIN. The senior Senator from Delaware is correct. There was a mistake made in drafting the language. Regardless, the intent of the original legislation, and the intent that can still be interpreted from the law as enacted, is to have the Customs Service re-liquidate the entries at the antidumping duty cash deposit rate in effect at the time of entry. I thank the Senator from Delaware for his guidance and appreciate working with him on a bipartisan basis. Mr. ROTH. I thank the Senator from Illinois. asbestos victims Mr. DeWINE. I notice my colleague from Ohio, Senator Voinovich is on the floor as well as the majority leader. I think I speak for my colleague when I say we are extremely disappointed that our bill, S. 2955, was not able to be passed in this Congress. That bill is very important to asbestos victims and two of our State's largest employers. [[Page S11881]] As we all probably know, our nation is facing an asbestos litigation crisis. A crisis for which the federal government, in my opinion, shares responsibility. From World War II through the Vietnam war, the government mandated the use of asbestos to insulate our naval fleet from secondary fires. This mandate is the cause of many tragic disabilities. Unfortunately, while the federal government would be one of the largest asbestos defenders due to this mandate, an aggressive and successful litigation strategy to assert sovereign immunity has allowed them to evade any monetary culpability. Since the federal government is not paying their fair share of the costs, the former asbestos manufacturers are burdened with asbestos claims. Of the approximately 30 original core defendants, over two dozen have gone bankrupt, in large part due to asbestos claims. The situation has reached the crisis stage. Good companies, providing good jobs, and providing payments to victims, are in significant peril. The recent bankruptcies of several former asbestos manufacturers have placed an even more overwhelming burden on the remaining defendants. Due to joint and several liability, the remaining defendant companies are now paying an even higher share of asbestos claims. The markets have taken note. Stock market values are declining, making it more and more difficult for these companies to receive the financing they need to survive. The very future of these companies, the very future of these jobs are at stake. But, it is not just the companies who are suffering. Asbestos victims are also suffering greatly. They are not receiving the awards to which they are entitled. If something is not done to correct this situation, good companies will continue to go bankrupt, good jobs will continue to be lost, and asbestos victims will not receive any compensation. We must act now to do this. I understand the majority leader understands and appreciates the urgency of this situation. I would ask that the bill that Senator Voinovich and I have introduced would be one of the first bills considered when we return for the 107th. Mr. VOINOVICH. I wholeheartedly agree with my colleague, Senator DeWine. I do not think we can stress enough that this really is a matter of survival for these companies and their employees. The government bears some responsibility here, we simply must get this bill done as soon as possible. The companies, their workers, and asbestos victims--after all when the companies go bankrupt it affects payments to victims--need certainty that this will be brought to the Senate floor at the earliest possible date next year. We need to work to keep these companies afloat. Mr. LOTT. I appreciate the concerns of the two Senators from Ohio. They have made a very strong and convincing case on the need for a solution to this problem. I pledge to work with them to see that this issue is addressed as early as possible in the 107th Congress. disaster-resistant wood construction program Ms. COLLINS. Mr. President, as you know, natural disasters exact a tremendous toll on our nation. In just two decades (1975-1994), 24,000 individuals nationwide lost their lives to natural disasters. An additional 100,000 were injured, and the resulting property damage reached a staggering $500 billion. Hurricanes are responsible for 80 percent of these $500 billion in damages. The continued rapid building of homes and commercial facilities along our coastlines increases the potential for even higher natural disaster costs in the future. Since Congress often responds to these disasters with emergency supplemental appropriations, it makes sense to also support the development of technologies and building techniques to mitigate damage resulting from hurricanes and other natural disasters. Mr. GREGG. I agree with my distinguished colleague from Maine that we need to do what we can to mitigate the devastation caused each year by natural disasters. Exciting new building techniques and technologies hold promise in this regard. Ms. COLLINS. They certainly do. And one of the most exciting technologies involve wood composites. The fact is, most natural disasters directly affect wood construction, which is used for 99 percent of houses constructed nationally. The University of Maine Advanced Engineered Wood Composites Center (AEWC) has developed new technologies to reinforce wood construction materials with fiberglass material. These fiberglass-reinforced wood composites are two to three times stronger, more impact resistant and more ductile than their unreinforced counterparts. Homes and buildings constructed with these advanced materials should greatly enhance occupant protection from hurricanes, earthquakes, tornadic missiles, and other natural threats. In addition to their benefits in new construction, these technologies can be used to retrofit and strengthen existing wood buildings. The University of Maine and its industry partners require $4 million in fiscal year 2001 funds to complete material and wood panel testing on these technologies, and to start developing building code provisions to transition the new disaster resistant panels into residential and commercial construction. I commend my good friends, Chairman Gregg and the subcommittee's ranking member, Senator Hollings, for their efforts thus far to allocate additional funds to the National Institute of Standards Scientific and Technical Research Services programs. I am particularly pleased with the additional funds that have been allocated to the NIST Building and Fire Research Laboratory, which is ideally suited to develop improved building technologies resistant to natural disaster. I would strongly encourage the NIST Building and Fire Research Lab to support development work on advanced wood composites, demonstrate the performance of reinforced-wood composites under simulated hurricane wind conditions, and introduce the new construction materials into national building codes and standards. Mr. HOLLINGS. I thank my good friend and colleague, Senator Collins, for her kind remarks regarding this subcommittee's work on the FY '01 Commerce, Justice, State, and judiciary appropriations bill. I recognize the importance of investing in advanced building technologies that can resist damage from hurricanes. As you know, South Carolina has experienced several costly and disastrous hurricanes. Yet our coastal economy continues to expand and to serve as a commercial and recreation resource to our State and the Nation. I agree with my colleague that development of fiberglass-reinforced wood composites is important, and I also encourage the National Institute of Standards and Technology to support the development and deployment of these materials. Improvements to wood building materials will result in direct benefits to the people of South Carolina and all other coastal communities in the United States. Mr. GREGG. I thank my distinguished colleague from Maine as well and share her concerns about the impact of natural disasters on the lives of people and on the economy. In the past, government has worked effectively with the building industry to make homes and commercial buildings better and safer through building codes and standards, and by supporting improvements in building technology. The subcommittee is very interested in the contributions that the NIST Building and Fire Research Laboratory can make to improve the quality of building products. Fiberglass-reinforced wood composites can greatly increase the safety of homes subjected to natural disasters. I agree that the National Institute of Standards should pursue with the University of Maine the development and demonstration of fiberglass- reinforced wood composites for improved building materials. expansion of a successful executive mba program Mr. L. CHAFEE. Mr. President, I would like to clarify the intent of the conferees regarding a provision in the conference report accompanying H.R. 4576, FY01 Defense appropriations bill (H. Rept. 106- 754). Within this legislation is $2 million for the expansion of a successful Executive MBA program, jointly administered by the Naval Undersea Warfare Center (NUWC), Newport, Rhode Island and Bryant College, Smithfield, Rhode Island. The funding [[Page S11882]] will be used to expand the current student enrollment from 30 to 60 Navy personnel and to expand and upgrade Bryant's technical capabilities. Specifically, funds will be used to expand and upgrade Bryant's network bandwidth to gigabit speed, as well as fund technological enhancements to Bryant's new Bello Center for Information and Technology, allowing Executive MBA students better access to valuable information resources. This, in turn, will assist them in their studies at Bryant. The $2 million for the expansion of this program will not only allow 30 more military/government personnel to earn an MBA at Bryant, but will link those students with expanded technical resources at Bryant. This linkage will allow Executive MBA students access to all information available within Bryant's resources and create the capability to interact with each other and with other students on and off campus. Is this description what the conferees intend? Mr. STEVENS. Yes, that is correct. Mr. GRAHAM. Mr. President, I do not mean to be the skunk at the picnic party, but I believe there are some realities to be faced. Those realities are that we are establishing on the last evening of the 106th Congress some standards that are going to be either positive paths towards greater cooperation in the next Congress or will be impediments to achieving success in what will be the most divided National Government in our Nation's history. I am afraid what we are doing tonight will not make a positive contribution. The fact is that at 7:08 p.m. on a Friday evening, we are taking up in one enormous piece of legislation--a piece of legislation which dwarfs the New York City telephone directory in size, a piece of legislation which not one single Member of this body or the House of Representatives has ever had an opportunity to read. The fact that we are about to adopt this legislation without the normal debate and opportunity to understand what is in this bill is not a positive sign because, in my judgment, the kinds of bipartisan cooperation that we will require in the future are going to be based upon respect, understanding, and a due regard for our constituents who also deserve to be served better than we are doing this evening. It also, frankly, has to be based on a level of trust among Members when commitments are made, that there is a sense of a solemn obligation. This body cannot function, as no human institution can function, unless there is a fundamental level of trust and regard among its membership. This document does not reflect that trust. My fundamental concern about this appropriations bill, which will expend approximately $180 billion of our taxpayers' money, is that it takes the wrong fundamental path. Contrary to myth, the 21st century has not begun. The new century will actually commence at 12:01 a.m. on January 1, 2001. The first Congress of the new millennium, the 107th Congress, will convene on January 3. This historic Congress will find itself at the proverbial commencement of the century and a fork in the road. Two very different fiscal paths will lie in front of it. The path we select will play a major role in shaping our country's future in the 21st century. One path maintains the fiscal discipline that has marked the latter half of this decade. It has played an integral part in creating the longest economic expansion in U.S. history. This expansion has created over 20 million jobs since 1993. It has reduced unemployment to a 30-year low of 3.9 percent in October of this year. During all of this, inflation has remained at its lowest core rate since 1965. Those are all achievements for which we can take considerable pride. This first path views the projected budget surplus as a means to continue this economic success by continuing to pay down the national debt. This first path also recognizes that a portion of the surplus should be used to address some of the long-time intergenerational challenges which are confronting our Nation--securing Social Security's future and modernizing Medicaid. Social Security is in fine shape today. Payroll tax revenues exceed the funds needed to pay current benefits by record amounts. This positive cash-flow, however, will not last long. In just 15 years, payroll tax revenue will no longer be sufficient to pay benefits. We need to act now to strengthen the program's finances so that today's workers and tomorrow's retirees will have the security of knowing that their Social Security benefits will also be paid. Medicare faces a similar long-term funding shortfall, only it begins 5 years earlier, in 2010. In addition, Medicare has one substantial deficiency. That is its focus on sickness rather than wellness. Thus, Medicare needs to be fundamentally reformed to conform with modern medicine and the desires of its beneficiaries. That will require the inclusion in Medicare of a prescription drug benefit. Virtually every preventive program currently in use has prescription drugs as a substantial component of its treatment modality. A portion of the surplus should be devoted to fixing these deficiencies in Social Security and Medicare. I just described the first path. There is a second path. That alternate path veers off to a far different destination. That path focuses on short-term desires, the here and now, and foregoes fiscal discipline in favor of new spending programs and tax cuts. It views the surplus as a giant windfall to be doled out to favored constituencies as if Christmas lasted 365 days. In short, this is a path back to the past. This final bill of the 106th Congress represents another step down the wrong path, the path to the past. The Senate is considering the final 2001 appropriations bill, a bill that combines the Department of Labor and HHS, the Departments of Treasury, Postal, and the legislative branch. This agreement also clears the Department of Commerce, Department of State, and Department of Justice bill for signature. Discretionary spending in these combined bills totals nearly $182 billion. This bill follows the pattern established by most of the previous appropriations bills considered by the Senate. Its total spending greatly exceeds the standard established by the Senate in the budget resolution adopted in April of this year. Section 206 of the budget resolution proposed a cap on discretionary appropriation spending for the fiscal year 2001 at $600 billion. That level would have allowed discretionary spending to grow at a rate that was above inflation, a rate of approximately 3.5 percent. What do we have before the Senate at 7:15 in the evening of December 15? We have a bill which allows spending to grow by 8 percent, more than twice that tolerated under the budget resolution. I admit I support many of the programs funded in this bill, but we must exercise restraint. We must establish some sense of priorities. I have spoken on the Senate floor on several occasions earlier this year to decry specific appropriations bills as they were being considered. The common complaint I have had with each of these bills has been that they have been crafted in a vacuum without a clearly defined blueprint to give Congress the full picture of the implications of its actions before it acts. It is as if a carpenter about to build a home would start to build the living room without any awareness of what the rest of the house was going to look like. The budget resolution should have provided exactly such a blueprint. But it has failed to do so. A good part of the reason it has failed to do so is that it was developed without the full participation of all Members of the Senate. It was a partisan document, representing one point of view but not providing the context around which all Members of this body as reflective of the public of the United States could give their support. In addition, it was crafted with wholly unrealistic expectations of where we were headed. Let me demonstrate in this chart back to the year 1997. In 1997, we passed a budget resolution that capped discretionary spending at $528 billion; we actually spent $538 billion. By 1998, our commitment to fiscal discipline had grown stronger and we only exceeded the budget resolution by $2 billion. Since that year, every year, we have had substantial deviations from our budget resolution. In every year, we have spent substantially more than we had committed ourselves to do in our budget resolution. To go back to that example of the carpenter and the house, it is as if the family said: we have a budget. We can afford, based on our income, to build a [[Page S11883]] $100,000 house. But they build a $125,000 house which stretches their financial capability. This year we had a resolution that said we spent $600 billion; with this legislation tonight, we will spend $634 billion. We have overspent our budget by $34 billion. This chart exposes the failure of our current budget process. Each year we pass a budget resolution which establishes limits, and each year we break the resolution. The fiscal year 1999 budget resolution which was supposed to be a spending limit of $533 billion had a final tally of $583 billion. In the year 2000, the limit was supposed to be $540 billion and the final tally was $587 billion. As I indicated, this year was supposed to be $600 billion and we have concluded now at $634 billion. The last 3 years highlight the dangers of considering spending bills without a credible budget, one that establishes reasonable parameters and results from the participation of both parties. While that is my fundamental objection to this budget and why I will request to be counted as voting no when we take the final voice vote on this matter, this legislation also includes changes to the Medicare program that will result in greater payments to providers. This bill increases payments to Medicare providers by $35 billion over the next 5 years, $85 billion over the next 10 years. My primary objection to these changes is that too much of the $35 billion for the first 5 years and $85 billion for the next decade is funneled into one aspect of the Medicare program--health maintenance organizations, HMOs. In my opinion, and more importantly, in the opinion of the experts, the HMOs do not need and cannot justify the level of additional appropriations which they are about to receive. While I appreciate the modest improvements for beneficiaries which are included in this bill, the fact remains that HMOs, which enroll less than one out of six Medicare beneficiaries, will receive almost one-third of the overall funding. I am alarmed by increasing payments to HMOs because we are told by the experts that the payments are already too high. The General Accounting Office says under current law: Medicare's overly generous payment rates to HMOs well exceed what Medicare would have paid had these individuals remained in the traditional fee-for-service program. The General Accounting Office concluded that Medicare HMOs have never been a bargain for the taxpayers. Increasing HMO payments will not keep them from leaving the markets where they are most needed. One of the several outrages in this area is the requests that were made that if we were going to provide this generous additional payment to HMOs, one-third of the money for less than one-sixth of the Medicare beneficiaries, that they would have to commit they would not, as they have done in many areas in my State and virtually every other State, pack up leaving beneficiaries without coverage. Or in other areas, as I recently experienced in the city of Jacksonville, HMOs have been driving down the benefits within their plans. I found while working at a pharmacy in Jacksonville earlier this year, most of the HMOs in that city have now put a cap on the annual payments of prescription drugs, and that cap is $500. As anyone who knows about the cost of prescription drugs, a $500 annual limit, particularly for an elderly population, is a very meager benefit. If you take this overly generous additional payment, you have to make some commitments to the beneficiaries relative to your willingness to stay and serve in the communities where you are currently providing services and to maintain your service benefit level. None of that is in this final bill. This is a check being written with no response, in terms of protection for beneficiaries. According to the testimony from Gail Wilensky, chair of the Medicare Payment Advisory Commission, she states that plan withdrawals--that is, withdrawals from HMOs: . . . have been disproportionately lower in counties where payment growth has been the most constrained. What Ms. Wilensky is saying is that where you have constrained reimbursements to HMOs, you have less withdrawals than you do where you are, as we proposed to be in this legislation, excessively generous. It comes down to priorities. Should we spend billions on HMOs or try to help frail and low-income seniors, people with disabilities and children? The managed care industry and its advocates in Congress have thwarted every effort to reform the Medicare+Choice Program so that it does what it was designed to do--save money while providing reliable, effective health care services. A prime example of this occurred almost a year ago in this Chamber. In 1997, under the Balanced Budget Act, we provided for two demonstration projects to provide for the outrageous idea that there be competitive bidding among HMOs, to let the marketplace--which we all laud as being the best distributor of resources--let the marketplace decide what should an HMO be paid. This happens to be the same practice which is used in the private sector in its selection of HMOs and in some of the largest public employee HMO plans. Implementation of such a process had the potential of saving taxpayers and the Medicare program millions of dollars. It could have ensured that HMOs with the best bids were awarded contracts. It would have eliminated the discrimination against rural and smaller communities vis-a-vis the large communities which now get the largest HMO reimbursement. Unfortunately for the American public, last year the managed care industry convinced their friends in Congress to beat back even these two demonstration projects. In so doing, they assured that we would not have a competitive system, a system that based contracts on merit. In fact, they would not have to compete at all. In fact, there would be no basis by demonstration of what would be the potential benefits to competition. This year the HMOs have launched a multimillion-dollar lobbying effort to pressure Congress to increase their payment rates, and they have been successful. The HMOs are claiming that their current rates are too low, yet these are the same HMOs that committed congressional homicide when they killed a proposal that would have allowed a more market oriented system which would have resulted in higher reimbursement rates if the market indicated that was appropriate. This is the equivalent of a man shooting his mother and father and throwing himself on the mercy of the court because he is an orphan. Worse yet, the bill fails to provide adequate accountability requirements for these plans. The House bill, when it was originally passed, required that any new funds be used for beneficiary improvements. This bill, this conference bill, contains no such requirement. To be honest, there are some high points in this bill, as few and far between as they might be. I was pleased to learn the bill being considered added new preventive benefits for Medicare beneficiaries. I strongly believe Medicare must be reformed from a system based on illness to one based on maintaining the highest standard of health. I have introduced legislation to this effect. The benefits I included were based on recommendations made by the experts in the field: the United States Preventive Services Task Force. Therefore, I was disappointed to find that this bill fails to provide Medicare coverage for hypertension screening and smoking cessation counseling, which are the highest two priorities as identified by the United States Prevention Services Task Force in its ``Guide to Clinical Preventive Services.'' This bill also provides access to nutrition therapy for people with renal disease and diabetes, but leaves out the largest group of individuals for whom the Institute of Medicine recommends nutrition therapy, people with cardiovascular disease. This is the recommendation of the Institute of Medicine, a recommendation which has been politically rejected. I believe strongly that additions to the Medicare program must be based on scientific evidence and medical science, not on the power of a particular lobbying group or the bias of a single Member. It appears to me that instead of taking a rational, scientific approach to prevention, the Members who constructed this Medicare add-back provision used a ``disease of the month'' philosophy, leaving those who [[Page S11884]] need help the most without relevant new Medicare services. When I asked why did the authors of this bill ignore the expert recommendations, why did they provide that seniors with cardiovascular disease could not take advantage of the nutrition therapy, what was the answer? I was told that it was excluded because it was too expensive. It does not take a Sherlock Holmes, or even a Dr. Watson, to understand what is happening. This bill provides $1.5 billion over 5 years for prevention services to our older citizens. It provides a whopping $11.1 billion for the HMO industry. Clearly, the money is there but the real goal is not to direct it to the greatest need. It is, rather, to herd seniors into HMOs as a means of avoiding the addition of a meaningful Medicare prescription drug benefit for our Nation's seniors. Whether you believe in the broad Government subsidization of the managed care industry or in providing benefits to seniors and children, we should all agree that taxpayers' money should be spent responsibly. This legislation does not meet that test. Congress has the responsibility to make certain that the payment increases we offer are based on actual data rather than anecdotal evidence or speculation. How can we justify that over the next 10 years the managed care industry-- Mr. President, I ask you and our Members to listen to this startling fact--over the next 10 years the HMO industry will walk away with almost the same amount of funding increase as hospitals, home health care centers, skilled nursing facilities, community health centers, and the beneficiaries combined. That allocation makes no sense. One of the most appalling omissions of this bill is the exclusion of a provision which would have given the States the option, under another important program, Medicaid and children's health insurance coverage, to make that coverage available to legal immigrant children and pregnant women. Current census data shows us that last year nearly half of low-income immigrant children in America had no health coverage. Congressional Republicans and Democrats, Governors--and I am proud to say including Gov. Jeb Bush of the State of Florida, Christie Todd Whitman of New Jersey, Paul Cellucci of Massachusetts, and the Clinton administration--have been advocating for the inclusion of this commonsense provision in this balanced budget add-back bill. But some in Congress have opposed the inclusion of a provision that will provide health care coverage for indigent immigrant women and children, arguing that the welfare reform law removed legal immigrants from the health rolls. There was a reason why they were removed, and that reason was money. By limiting the number of people eligible for Medicaid and children's health insurance, the Federal Government was able to save some dollars. This provision had nothing to do with the overall worthy goals of welfare reform, which were encouraging self-reliance, self-sufficiency, and discouraging single parenting. There is no evidence that legal immigrants come to the United States to secure health benefits. In fact, in the last decade immigrants have been moving from high benefit States such as California and New York to low benefit States such as North Carolina and Virginia. There is also no denying that the money to cover this population of approximately 200,000 persons is available if we choose to use it. The proof is covering children and pregnant women is not only humane, it is fiscally responsible. The Medicare ``give back'' package is aimed at keeping strapped hospitals solvent. These same struggling hospitals bear the brunt of providing uncompensated emergency room care for children without health insurance whose families cannot afford to pay. Taxpayers are eventually going to wind up paying the cost of citizen children born prematurely because their legal immigrant mothers could not get prenatal care. This bill is disturbing for both what it has and what it does not have. As I said, it does not have a clear blueprint towards a path of sustained fiscal responsibility. Mr. President, I ask unanimous consent that at the conclusion of my remarks an article written by Dr. Robert Reischauer entitled ``Bye-Bye Surplus'' be printed in the Record. The PRESIDING OFFICER. Without objection, it is so ordered. (See Exhibit 1.) Mr. GRAHAM. Dr. Reischauer outlines the four ingredients present in today's political environment that are likely to lead to a feeding frenzy that will lay waste to the surplus that we have until now guarded. Those ingredients are: No. 1, the need for the next President to affirm his administration's legitimacy; No. 2, even larger budget provisions; and a compliant Congress, and finally a weakening economy. Why should we worry about all this? Why should we at this stage, at 7:35 on a Friday evening, suddenly become exercised about the issue of fiscal discipline? Some budget observers believe the Federal surplus may be revised upward by as much as $1 trillion when the new budget estimates are revealed. If that is the case, the unified budget surplus for the next 10 years will rise to roughly $5.5 trillion. Given these larger surplus projections, one may ask why Americans should be concerned with the deterioration of budget discipline. Americans should worry because Congress is frittering away the hard-won surplus without a real plan for utilizing those surpluses, without addressing the long-term, major challenges facing Americans--Social Security, Medicare, and paying down a $5.5 trillion national debt. Americans should care because we are sleepwalking through the surplus. We are denying ourselves the chance to face major national challenges. We are leaving to our grandchildren the credit card bills that our generation has accumulated. The Congressional Budget Office recently released its long-term budget outlook. The findings in that report are not encouraging, but they are not surprising. That may explain why the report garnered such little attention. What were the Congressional Budget Office findings? The Federal Government spending on health and retirement programs-- Medicare, Medicaid, Social Security--will dominate the long-term budget outlook. Spending on major health and retirement programs will more than double, rising from 7.5 percent of gross domestic product today to 16.7 percent 40 years from now. Why? The retirement of the baby boom generation will drastically increase the number of Americans receiving retirement and health care benefits, and the cost of providing health care is growing faster than the overall economy. Saving most or all of the budget surpluses that CBO projects over the next 10 years--using them to pay down the debt--would have a positive impact on these projections and substantially delay the emergence of a serious fiscal imbalance. There could be no more clear delineation of the long-term problem. Equally clear is the proffered outline of the short-term steps Congress can take to begin to address this problem: Save the surplus; pay down the debt. Yet despite the obvious, Congress seems content to take the easier path and to fritter away the surplus. We have an obligation not to let this happen. The ugly days of deficits taught Congress some very valuable lessons. One of those lessons was the need to prioritize. We all have expectations. We all are representing our constituents to the best of our ability. We all have a sense of our national responsibility. But the tool that forced us to do what was required was the one that said that for each additional dollar of spending, a dollar of spending had to be reduced or a dollar of taxes had to be raised. That is what discipline is about. The surplus has eroded that discipline. We are failing the American public by not having honest, open debate about the tradeoffs that are necessary if we create programs, build projects, or cut taxes. Few Congresses in the history of this Nation have squandered their opportunities as much as the 106th. Few Congresses in the history of this Nation have had the opportunity of redemption that awaits the 107th Congress. Few Congresses will be judged more harshly for avoiding, trivializing, and ultimately failing to seize that opportunity. [[Page S11885]] For those reasons, I have asked that I be recorded as ``no'' on the final vote on the omnibus appropriations bill. I thank the Chair. Exhibit 1 [From the Washington Post, Dec. 5, 2000] Bye-Bye, Surplus (By Robert D. Reischauer) A president with no mandate to pursue his campaign promises. A Congress hardened by four years of partisan combat, scarred by a bitter election and immobilized by the lack of a party with a clear majority. Isn't this the recipe for continued gridlock? Won't legislative paralysis leave the growing budget surpluses safe from plunder for another two years? Don't bet on it. A torrent of legislation that squanders much of the projected surplus is much more likely than continued gridlock, because four key ingredients needed to cook up a fiscal feast of historic proportions will all be present next year. First, there will be the new president's desperate need to affirm his administration's legitimacy. There's no better way to do this than to quickly build a solid record of legislative accomplishment, one that convinces Americans that the era of partisan gridlock is over and the new occupant of the Oval Office deserves to be president of all the people, even if he didn't win a convincing majority of the popular vote. The second ingredient will be new and even larger projections of future surpluses. These will make the president's legislative agenda look like the well-deserved reward for a decade of fiscal fasting rather than a return to reckless budget profligacy. During the presidential campaign, the two candidates debated how best to divide an estimated $2.2 trillion 10-year surplus among tax cuts, spending increases and debt reduction. The budget offices' new projections, which will be released early next year, will almost certainly promise even fatter, juicier surpluses, surpluses that will boost the expectations of all of the greedy supplicants. Rather than being bound by gridlock, the 107th Congress will be poised for a feeding frenzy, the third ingredient for the fiscal feast. Nervously eyeing the 2002 election, when each party will have a reasonable shot at gaining effective control of Congress, Democrats and Republicans will curry favor with all important--and many not so important--interest groups. While the election campaign underscored the different priorities of the two parties, it also revealed many areas where there was bipartisan agreement that more should be spent. Education, the top priority of both candidates and the public's primary concern, could benefit from a bidding war if each side tries to prove that it is the ``Education Party.'' Increases in defense spending also have broad bipartisan support. And then there is the irresistible impulse to shower resources on health research (NIH), Medicare providers and farmers, to name but a few. The size of the projected surpluses, the uncertain political environment, and the argument that those surpluses are ``the hardworking people of America's money . . . not the government's money'' will make a large tax cut almost inevitable. No one will stop to ask whose money it was when the hard-working people's representatives racked up $3.7 trillion in deficits between 1980 and 1998 or whether we owe it to our kids to pay down the increased public debt these deficits generated. Instead, large bipartisan majorities will rally around and add to a presidential proposal that includes marriage penalty relief, rate cuts, tax credits for health insurance, new incentives for retirement saving, and an easing of the estate tax for struggling millionaires who have had to suffer through a period of unprecedented prosperity and soaring stock values. A weakening economy--the final ingredient--will wipe away any lingering qualms lawmakers may have about wallowing again in waters of fiscal excess. No matter that the vast majority of economists welcome slower growth because they believe that the current 4 percent unemployment rate is incompatible with price stability. If the unemployment rate drifts up close to 5 percent--a level that labor, business and the Fed considered unattainable as recently as 1995--the summer soldiers of fiscal prudence will cut and run, slashing taxes and boosting spending, claiming as they retreat that these actions are the only way to save the nation from another Great Depression. The current fiscal year will be the third consecutive one in which the budget, excluding Social Security, has been in surplus. The last time such a record was achieved was 1928 to 1930. If the new president and the 107th Congress do what comes most naturally, we may have to wait another 70 years to celebrate such an accomplishment. Worse yet, we will wake up after the fiscal feast to discover that the surplus has been squandered while the nation's foremost fiscal challenge-- providing for the baby boomers' retirement--has not been addressed because that required difficult choices and political courage. The PRESIDING OFFICER. Under the previous order, the conference report is agreed to. Ms. COLLINS. Mr. President, the Appalachian National Scenic Trail is a treasure that thousands of Americans enjoy every year. From day hikers to adventures making the 2,167 mile trip from Georgia to Maine, all who travel the footpath enjoy a remarkable wilderness experience. The National Trails System Act of 1968 designated the Appalachian Trail as one of our nation's first scenic trails and authorized the Secretary of Interior to protect the trail through the acquisition of land along the trail or by other means. Over the years, Congress has supported this important effort through appropriations that have enabled the National Park Service to acquire more than 3000 parcels of land, protecting ninety-nine percent of the trail for future generations. Despite the success of the last thirty years, more work needs to be done to ensure that the trail is preserved in its entirety. The longest remaining unprotected segment of the Appalachian Trail crosses Saddleback Mountain, in the Rangeley Region of western Maine. The 3.1 miles that traverse the Saddleback Mountain range is one of the trail's highest stretches, offering hikers an alpine wilderness trek and extraordinary vistas. The mountain is also home to Saddleback Ski Area, which draws skiers to an area of Maine where many are employed in the tourism industry. For nearly twenty years, the National Park Service and the owners of the ski area have sought an agreement that balances the preservation of the trail experience as it exists today and development opportunities at the mountain that would draw additional skiers to the resort and the region. Some have been inclined to suggest that skiers and hikers cannot share Saddleback Mountain, but I have always maintained that with careful planning, preservation and economic development can coexist. Consequently, I have long urged both sides to work together to find a resolution that satisfies the interests of those who cherish the Appalachian Trail, as well as those who live and work in the Rangeley Region. Mr. President, the impasse between the National Park Service and the owners of Saddleback Mountain is drawing to a close. The agreement so many have labored to achieve has been all but finalized, and with the passage of the bill before us today, Congress will establish the framework by which this matter can be resolved. Included in the bill is a provision proposed by me and Senator Snowe directing the Secretary of Interior to acquire the land necessary to protect the Appalachian Trail as agreed to by both the Department and the owners of Saddleback Mountain. The language also directs the Secretary to convey the land to the State of Maine. I would like to express my appreciation to Appropriations Committee Chairman Stevens and Subcommittee Chairman Specter for working with Senator Snowe and I on this matter of importance to our State. I would also like to thank Interior Subcommittee Chairman Gorton for including the Saddleback acquisition in the list of projects approved for Title VIII funds in the FY 2001 Interior Appropriations bill. Their support, along with the dedication of many others who have been involved in the negotiations, will ensure that skiers and hikers can share in the enjoyment of the natural beauty and wonders of Saddleback Mountain for generation to come. ____________________