SENATE-Tuesday, October 20, 1981 - US Government ...

24480 CONGRESSIONAL RECORD-SENATE

SENATE-Tuesday, October 20, 1981 October 20, 1981

<Legislative day of Wednesday, October 14, 1981>

The Senate met at 10:30 a.m., on the There being no objection, the poem was expiration of the recess, and was called ordered to be printed in the RECORD, as to order by the President pro tempore follows: (Mr. THURMOND). ESPECIALLY WHEN THE OCTOBER WIND

PRAYER The Chaplain, the Reverend Richard

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

Let us pray. Except the Lord build the house, they

labour in vain who build.-<Psalms 127: 1>

Sovereign Lord of history, with those words, Benjamin Franklin called the members of the Constitutional Convention to prayer when they were hopelessly divided. "We indeed seem to feel our own want of p:>litical wisdom," he said; we !lre "groping In the dark to find political truth." Father of Light, as Thou didst grant political wisdom to our forebears to establish this unprecedented union of States, so grant to the Senators and their staffs in this present critical hour, wisdom which transcends their human best as they address imponderable issues.

Gracious God, this Nation was conceived in the minds and hearts of appointed leaders who acknowledged their need of Thee. May the leaders of today humble themselves before Thee, admit their need and submit to the guidance of the Holy Spirit. In the name of mm who is "the Way, the Truth and the Life." Amen.

RECOGNITION OF THE MAJORITY LEADER

The PRESIDENT pro tempore. The majority leader is recognized.

Mr. BAKER. Mr. President, 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.

ESPECIALLY WHEN THE OCTOBER WIND

Mr. BAKER. Mr. President, this morning, as I arose, I did so with a sure certain knowledge that summer had passed and fall had begun. As I observed the temperature on my thermometer below the 30° mark, I realized that the cold weather had descended upon Washington; warm days would be this year's past. Dylan Thomas, in his poem entitled "Especially When the October Wind," illuminates this climatical passage, and I ask unanimous consent that the poem be printed in the RECORD.

(By Dylan Thoma.a) Especially when the October wind With frosty fingers punishes my hair, Caught by the crabbing sun I walk on fire And. cast a shadow crab upon the land, By the sea's side, hearing the noise of birds, Hearing the raven cough in winter sticks, My busy heart who shudders as she talks Sheds the syllabic blood and drains her

words.

Shut, too, in a tower of words, I mark On the horizon walking like the trees The wordy shapes of women, and the rows Or the star-gestured Ohildren in the park. Some let me make you of the vowelled

beaches, Some of the oaken voices, from the roots or many a thorny shire tell you notes, Some let me make you of the water's

speeches.

Behind a pot of ferns the wagging clock Tells me the hour's word, the neural meaning Flies on the shafted disc, declaims the

morning And tells the windy weather in the cock. Some let me make you of the meadow's signs; The signal grass that tells me all I know Breaks with the wormy winter through the

eye. Some let me tell you or the raven's sins.

Especially when the October wind (Some let me make you of autumnal spells, The spider-toungued, and the loud hill of

Wales) With first of turnips punishes the land, Some let me make you of the heartless words. The heart is drained that, spelling ln the

scurry Of chemic blood, warned of the coming fury. By the sea's side hear the dark-vowelled birds.

Mr. BAKER. Madam President, I must momentarily de.tain the Senate while I check on another matter. I suggest the absence of a quorum.

The PRESIDING OFFICER <Mrs. KASSEBAUM). The clerk will call the roll.

The legislative clerk proceeded to call the roll.

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

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

PROPOSED LEGISLATIVE SCHEDULE Mr. BAKER. Madam President, for a

number of days the minority leader and I have jousted verbally on the question of how the Senate might e,rrange its schedule to accommodate the appropriation bills that are now on the calendar and which hopefully may be soon received for the attention of the Senate and the House of Representatives.

For a number of days, it has been my obligation to advise the minority leader that I was not yet ready to announce a proposed schedule of the appropriation

bills. I am prepared to do that now, however. What I am about to say, of course, represents the wishes of the leadership on this side in respect to a tentative scheduling of approprie.tion bills. I have gone over this list with the distinguished chairman of the Appropriations Committee, but in doing so I made it clear to him that the schedule was tentative but was for the purpose of planning and to give Senators as much advance notice as possible of the present intention of the leadership with respect to the appropriation measures.

It would appear, Madam President, that the first bill that we can reach will be the Interior appropriations bill on Friday. I had hoped to be able to reach that bill on Thursday. I am advised that, for e. number of reasons-all of them good and valid reasons-it is not possible to do that.

I would expect then to go to other matters. On today, of course, we will be on the foreign assistance bill, as previously announced and provided for by unanimous consent. I do not anticipate that we can finish the foreign assistance bill today; but, if we ce.n, I would be delighted to be in error.

If we do not finish, we will continue with the foreign assistance bill tomorrow and then tum to the consideration of the Emergency Petroleum Allocation Act, S. 1095.

Following that, Madam President, it would be the intention of the leadership on Thursday to attempt to address the Clean Water Act and perhaps the identities bill, S. 391, which has been reported from the Intelligence Committee. Although these matters have not been cleared, they are, however, suggested now for the attention of Senators who have special interests in these measures in order to provide them with the opportunity to contact the leadership on both sides to express their wishes concerning these matters.

On Friday, October 23, Madam President, I hope we can then proceed, as mentioned earlier, to the Interior appropriations bill, which is on the calendar and has been for some time.

Madam President, I would hope that on Monday, October 26, 1! we have finished with the Interior appropriations bill, we could then proceed to the consideration of the Agriculture appropriations bill. Some may note, of course, that the authorization bill has not cleared the Senate, let alone through conference. But I think we should not wait. I would urge that we attempt to deal with the Agriculture appropriations bill on the 26th.

On Wednesday, October 28, it is our intention to take up the resolution of disapproval to the proposed sale of AW ACS aircraft and other weapons to Saudi Arabia. I expect to confer with the minority leader on a proposed unani-

• This .. bullet" symbol identittes statements or insertions which are not spoken by the Member on the Boor.

October 20, 1981 CONGRESSIONAL RECORD-SENATE 24481 mous-consent order to establish a time for consideration of the AWACS resolution in a moment.

In any event, I would anticipate that the AW ACS resolution of disapproval would be disposed of in 1 day so that on Thursday, October 29, we could resume the appropriations process with the Treasury /Post Ofilce appropriations bill. I hope that we can finish that bill in 1 day. There are certain controversial issues involved, including the FEC issue, which I hope can be resolved with a minimum of dispute. Tlle abortion issue is perennially with us, but I urge Senators to consider that appropriation bills are poor vehicles to carry expressions of public policy on these volatile and sensitive public issues.

On Friday, October 30, I would propose that we consider the Transportation and D.C. appropriation bills. The D.C. appropriation bill will no doubt continue over until Monday, November 2.

Assuming that we can complete that bill at that time, I would hope that the leadership would be in a position to ask the Senate to proceed to the consideration of the energy and water appropriations, to continue on Wednesday, November 4, and to complete on that day, and tum then, perhaps, to the Labor, HHS, and Education appropriation bill. This bill would surely require more than 1 day, and I would expect us to continue on that bill on Friday, November 6, and on Monday, November 9.

On November 10, Madam President, I would anticipate that the Senate might tum its attention to the State, Justice, Commerce appropriations bill.

Wednesday, November 11, is Veterans Day and the Senate will not be in session.

The leadership would then hope that on Thursday, November 12, it would be possible to turn to the military construction appropriation bill.

This is an ambitious schedule, Madam President. I understand the difilculties involved in trying to keep to that schedule. But, for the purpose of giving all Senators as much advance notice as possible, and especially to accommodate the very real concerns of all Members, especially the minority leader, I wanted to give as much possible insight on the planning for the appropriations process.

One measure that I did not include, but which must be dealt with, is the defense appropriation bill. I would hope to be able to do that during the month of November as well.

Madam President, some of these measures have not yet reached the Senate and, of course, consideration depends then not only on the Appropriations Committee of the Senate dealing with these matters and reporting them in an appropriate time frame to permit their consideration, but also on the House expeditiously sending us these bills so we can address them in sequence as the Constitution requires.

Madam President, that is a tentative outline of the appropriations schedule, and much of the business of the Senate as I foresee it and am prepared to suggest at this time. Once again I reiterate, it is a tentative schedule. The only part

that is firm is that I would propose to proceed to the Interior appropriations bill on Friday, October 23. Beyond that. I hope to be able to keep this schedule. but I am willing to consider whatever adjustments may be reasonably necessary to accommodate the convenience of Senators.

Mr. ROBERT C. BYRD. Madam President, will the distinguished majority leader yield?

Mr. BAKER. I yield. Mr. ROBERT c. BYRD. Madam Presi

dent, I thank the distinguished majority leader for his having stated the tentative schedule for debate on the various appropriati9n bills. I thirtk he has indicated dates for all of the appropriation bills which appear on the calendar, the only other two being foreign assistance and the Department of Defense appropriation bills. They are not there by virtue of their not having come over from the House. I join the majority leader in hoping that action can be completed on these appropriation bills within the time frame stated.

Is the distinguished majority leader in a position at this moment, and I recognize the problems confronting him \'Tith regard to stating an answer, to indicate a tentative adjournment date sine die?

Mr. BAKER. Madam President. I am not, although I would like to do that. I have discussed the matter briefly and informally with the Speaker; I intend to try to contact the Speaker this week to discuss it further.

There are some matters. as the minority leader knows, that will require our attention, perhaps, that will not require the attention of the other body. That will have some bearing, will have some considerable bearing, on when the Congress can adjourn sine die. It would appear that it may be that the House of Representatives will complete ihs business well in advance of the time the Senate can complete its business and arrange for an adjournment sine die.

Madam President, I will report later on my conversations with the Speaker, and will, of course, confer with the minority leader before I attempt to join with the other body in making a decision on when we might reach an adjournment date.

Mr. ROBERT c. BYRD. Madam President, I thank the majority leader.

Madam President, I hope we can agree on a time for a final vote on the resolution regarding the sale of AWACS. I think on this side of the aisle we are seeking to establish a time such as, say, 5 p.m. on Thursday of next week, if that would be of any assistance to the majority leader. I want to correct that to 5 p.m. on Wednesday, the 28th.

Mr. BAKER. Madam President, I am pleased to tell the minority leader that I can agree on a time certain vote at 5 o'clock on Wednesday, the 28th. I guess the remaining question is whether or not we can establish a convening hour or a time certain to begin debate. I h:id previously suggested 9 a.m. on Wednesday, the 28th. That would mean, of course, that we would have a maximum of 8 hours for debate instead of the

10 hours required by statute. I wonder if the minority leader can respond to that suggestion. _

Mr. ROBERT C. BYRD. As far as I am concerned, we could certainly do the debate within less than 10 hours, but I will have to contact my colleagues. I will certainly work with that in mind.

Mr. BAKER. Is the minority leader in a position now to establish 5 o'clock Wednesday as the time certain for disposition of this measure, leaving the balance of it open?

Mr. ROBERT c. BYRD. Not finally, but I think the situation is resolving itself in that direction. I shou1d know shortly. .

Mr. BAKER. I thank the minority leader.

Madam President, I will, of course, withhold any request in that respect, but I join the minority leader in hoping we can establish a time certain for the final disposition of this resolution of disapproval, for the hour of convening, and for the Senate to turn to the consideration of this matter under the statute.

Madam President, I have no further requirement for any time I have remaining under the standing order and I rather suspect I have used it all. I yi~ld the floor.

· ORDER TO REVERSE ORDERS FOR RECOGNITION OF SENATORS WEICKER AND PROXMIRE Mr. BAKER. Madam President, will

the distinguished minority leader yield tome?

Mr. ROBERT C. BYRD. I am happy to yield.

Mr. BAKER. Madam President, I am advised that the distinguished Senators from Wisconsin and Connecticut wish to reverse the order of their special orders this morning so the Senator from Wisconsin is first and the Senator from Connecticut is second. I ask un9.nimous consent that that occur.


Mr. BAKER. I thank the distinguished minority leader.

RECOGNITION OF SENATOR PROXMIRE

Mr. ROBERT C. BYRD. Madam President, I yield whatever time I have rem9.ining to the distinguished Senator from Wisconsin <Mr. PROXMIRE) for his use.

The PRESIDING OFFICER. The Senator from Wisconsin is recognized.

Mr. PROXMIRE. Madam President, I understand that under the regular order, I have 15 minutes plus the time that the distinguished minority leader yielded to me?

The PRESIDING OFFICER. The Senator is correct.

HOW TO BALANCE THE BUDGET: USE THE DEBT LIMIT

Mr. PROXMIRE. Madam President, I expect to continue to speak out in the

24482 CONGRESSIONAL RECORD-SENATE October ·20, 1981

Senate frequently on the importance of limiting the Federal debt as the best and most effective instrument for balancing the budget and stopping net off-budget borrowing; 3 weeks ago, Congress raised the debt limit from $985 billion to a massive $1.079 trillion. For the first time in the history of our country, the Federal Government is about to sink more than a. trillion dollars in debt.

The Secretary of the Treasury has been reported to expect to come back once or even twice next year to ask for a. further increase in the debt. Lately, interest rates have come down moderately. Will they continue to fall? And will they stay down? The answer: Not without a tragic economic recession.

Doubt it? Consider the implications of the huge debt we have, the even more immense debt we will incur and the reported expectation of the administration's top economic official, the Secretary of the Treasury, that the country will sink even further in debt, beyond the present astronomical limit.

Within the next 12 months we can expect the Federal Government to push to the new limit that will be another $94 billion into debt on top of its $985 billion present obligation. Because of this and the fact that the average maturity of our Federal debt is less than a year, we can expect the Federal Government to dominate the credit markets next year as never before, borrowing far more than before and pushing interest rates ever higher.

THE TRAP

Of course, if the private sector continues to mosey along with housing starts at a pathetic 900,000 or less, with domestic auto sales at depression levels, with farmers unable to borrow to buy the equipment they need, with business large and small hunkering down and moving out of the credit markets, and consumers so concerned about the future they stop buying on credit, then interest rates may not shoot back up.

But if we have a business revival, private sector demand for credit will run smack into the huge share of credit the Federal Government will take. Result: We shall have a repeat performance of what happened earlier this year, with the prime once again exceeding 20 percent, and once again business revival aborted, slapped down by interest rates that choke off economic recovery.

Is this dismal scenario inevitable? No. The Federal Reserve could ease up on the availability of credit. It could pump enough new credit into the economy to accommodate both the Federal Government's huge needs and the demands of the private economy.

Why not? Again the answer should be obvious to all of us: Such an increase in the availabiilty of credit would push us once again on the booming inflation escalator. With enough funds available to finance new car purchases and new housing starts and to help farmers buy the new silos and tractors they need and give business the necessary credit to hire and train new workers and build more plants, prices would certainly rise more sharply.

So we appear to be in a trap. If we moderate inflationary pressures by limiting credit growth and keeping interest rates high, we stifle recovery, increase unemployment, and stunt our economic growth. Meanwhile, the condition of our Government worsens as interest on the national debt moves over $100 billion a year-think of that. We have to pay $100 billion a year interest on the national debt because we have driven interest rates so high.

Also, recession adds $25 billion in deficit for every 1 percent increase in unemployment. But if we try to escape from our trap by rushing to the door mar~ed "Federal Reserve" and increase the supply of credit, we push prices up again.

OUR BEST WEAPON: THE DEBT LIMIT

So what can we do? We can take another exit. Let me warn that what I propose is painful and offers either or both of the politically least attractive actions that elected representatives can take: Cut spending or increase taxes or do both. Cutting spending provides the surest anti-inflationary path. After all, a tax increase may help reduce the

. credit demands of the Government, but since taxes constitute a cost of livingwe pay them or we do not live free, at least-an increase in taxes is surely and directly inflationary. But reducing the deficit by a tax increase or a reduction of spending would certainly ease pressure on interest rates.

Whatever pa.th we follow to a balanced budget, the time has come to do it. So why do we not? Why do we ·not decide right now that we will balance the budget in the coming fiscal year? We have virtually a full year-until October 1, 1982-to prepare for balancing the budget. The President earnestly wants us to move in that direction.

The overwhelming majority of our constituents support a balanced budget now. The urgent need to ease the pain of inflation and the excruciating agony of high interest rates should convince us the time has come. And for once, all America would be served by this policy: Jobs for the working man, profits for the businessman. A balanced budget would begin to 'bring interest rates down to stay.

Th·at would permit the immense pentup demand for housing to develop. With every housing start. we could expect 2 man-years of work. We need at least a million additional housing starts in the year beginning next October 1. That would put 2 million additional people to work.

We could easily produce an additional 2 million automobiles and, again, the pent-up demand simply awaits a permanent and assured reduction in interest rates. That would also increase employment in the automobile industry by several hundred thousand as well as production in the steel, machine tool, and myriad other industries that supply automobiles.

Why would not such a resurgence feed inflation? Because both the housing and auto industries have vast unused capacity and literally millions of workers ready, willing, and able t.o move back

to work. The construction industry alone has more than 15 percent unemployment.

TODAY BUDGET BALANCE BENEFITS ALL

Madam President, we now have an economic situation in which we can reduce both inflation and unemployment by balancing the budget. Today, unlike the thirties or war periods, the mammoth deficits we have serve no American interest.

Our problem is, how do we overcome the immense oppoisition to the painful, unpopular steps we have to take to increase revenues or to cut spending or to do both?

The answer lies in a strict, stringent, absolute debt limit. If the President should announce right now-this weekthat he intends to stick with the debt limit the Congress enacted, not exceed $1.079 trillion, we would have ample warning to live within the roughly $90 billion leeway that limit now gives us. Always, in the past, we have waited until the debt limit has come upon us, until the debt already has come within 1 or 2 percent . or less of the limit, and obligations have been assumed so that a refusal to increase the debt limit would have required an extraordinary and immediate decision to live ·at once on a cash basis.

Frankly, I have appealed to my colleagues to do exactly that. That kind of action with a debt limit so close and time so limited appeared to many to be irresponsible.

But what is wrong with resolving right now---today-that we will not increase the debt limit again, unless we face an immediaite and overwhelming military emergency, or unless we are moving into a depression? And even if we do seem to be moving into a depression, in the peculiar economic circumstances we now find ourselves, a fiscal policy that brought down interest rates in a credible and assured way with a clear and decisive, overt Government action like esita.blishing a debt limit and living within it could have a salutary and expansive effect that could stimulate and expand the econom.v. ONE YEAR NOTICE: NO DEBT LIMIT INCREASE

If we are to live within the present debt limit ceiling, and not find ourselves forced to increase it next year, we have to make some really painful decisions right now.

First, we should try to cut discretionary programs as deeply as we can.

Then we should reexamine our entitlement programs, and begin now to make some painful decisions.

Then we should develop a series of revenue-raising options and prepare to enact those unless we reduce spending enough to make the increase in taxes unnecessary.

We should reexamine every lending program-especially the oft'-budget lending programs that require no regular congressional scrutiny and have expanded at a much more rapid rate than the budget in the past 5 years. Every dollar of guaranteed loans contributes to inflationary pressure and every penny of Federal financing bank borrowing that we have permitted with very little knowl-

October 20, 1981 CONGRESSIONAL RE.CORD-SENA TE 24483

edge-let alone crtticism-eontributes as much to the national debt limit as any of our spending programs and, of course, also contributes dollar for dollar to the pressure on interest rates.

The loss of revenue through a tax incentive may serve a useful purpose, but it also increases the Federal Government's enormous appetite for credit by reducing revenues and deepening the deficit. We need to reexamine such incentives in light of the urgent need for getting the Federal Government out of the credit markets by increasing revenues and reducing the deficit.

A CREDIT BUDGE'?

For years we have talked about a credit budget. But we have never brought ourselves to require it. It is time we did exactly that. But meanwhile we should view every credit commitment-every direct loan, every guarantee-with the same critical eve we view appropriated funds. A credit budget would begin to give us some of that discipline and constantly remind us that Government loans displace farm loans and small business loans and housing loans, and that if we really mean business about fighting high interest rates, we get the Government out of the credit markets.

Madam President, Congress has tried all kinds of means to bring about a balanced budget. We passed the Budget and Accounting Act. We have set up a Budget Committee in both the House and the Senate. Those committees have done hard, tough, useful work. But they have not given us what we need, a fiscal policy to serve our obvious economic interest. The country has even gone to the length of electing as President of the United States a candidate who devoted much of his appeal to exactly what I have been talking about this morning: Stopping deficits and balancing the budget. In his inaugural speech, President Reagan devoted his principal emphasis to the importance of ending deficit spending and balancing the budget, and I am sure that the President wants to do exactly that.

Indeed, he has made that clear over and over again. I am sure he is completely sincere. But, somehow, with a President devoted to balancing the budget, with a budget and reform act designed to give Congress will control of our fiscal policy, with a cotmtry that in every poll has indicated its determination that the Government balance its budget, and in a country in which every family, every business-small or bigevery city, and virtually every State, must and does balance its budget, we in the Federal Government cannot find a wav to do it.

Madame President, there is a way. It is simple and clear. We draw a line with the debt limit and announce that is it. We do not increase it. Indeed, if we could enlist the President on our side in holding down the debt limit, this strategy could not fail. If the President should today announce that there will be no further increase in the debt limit unless we have a catastrophic economic or military emergency, we would do it. We simply would not have any other choice.

REWARD

Madam President, the rewards for such conduct would be both prompt and rich. We would provide the first and most difficult and important step in :fighting inflation. If this Federal Government of ours were to balance the budget for 2 consecutive years in a row, our people would begin to believe that we mean business about fighting inflation. Interest rates would certainly fall. We would get back toward that magical world of 1950 when the mortgage rate was 4 % percent-what a happy thought-the prime rate 2.09 percent, the Treasury bill rate 1.2 percent.

Because of lower rates, we would save $50 billion a year in interest charges on the national debt. That year, 1950, inflation was-listen to this-1 percent, unemployment only 5% percent, and growth more than 6 % percent. That is the kind of strong, healthy economy I am talking about. That is not some kind of a never-never-land utopia. That happens to be precisely the economic world in 1950. That was a time when we were balancing the budget, when the Federal Government was providing all the reforms of the New Deal, including social security, unemployment compensation, et cetera, a time when we had strong unions. In fact, union membership constituted a larger share of the work force than it does today. Yet, we had inflation and interest rates under control.

So the rewards for rediscovering fiscal sanity are great indeed. How do we do it? We draw the line with the present debt limit and announce this time: That is it; we will not go a dollar further; and then stick with it.

GENOCIDE CONVENTION IN THE CONTEXT OF INTERNATIONAL LAW

Mr. PROXMmE. Madam President, over the years, much of my time in supporting the Genocide Convention has been spent in answering unsubstantiated allega;tions. However, today I would ask my colleagues to view the Genocide Convention in a larger perspective, as part of the body of international law. Ratification of the Genocide Treaty would undoubtedly strengthen the foundations of international law as a whole, and enhance its legitimacy.

The Genocide Treaty is clearly valuable for its own merits. In furthering the r.ause of human rights, and in creating an international law atnrming 1tihe value of human life, the treaty is most worthy of ratification. As part of the fabric of international law, however, the treruty takes on an even more important role. One must only observe how the legitimacy of international laws has been promoted by the increasing number of measures passed by a large number of nations ito understand the value of ratification of the Genocide Convention.

Examples of the importance of international laws abound. Efforts to curb tlhe spread of nuclear weapons have been significantly aided by the passage and ratification of measures such as 1the Nonproliferation Treaty, the Partial TestBan Treaty, Seabed Treaty, Tlatleloco

Nuclear Free Zone Agreement, and obviously the SALT I accords.

We must simply take note of international and domestic concern over the breakdown in the SALT talks to understand the impol'tance of international agreements. Obviously, the Genocide Treaty alone will not legitimate the entire body of international law. However, ratification wm provide impetus to continue international dialog and cooperation on this and other vital issues.

In withholding ratification of the Genocide Convention, the United States has clearly shirked its responsibility as a leading member of the community of nations. While the treaty is not a perfect document, its many advantages far outweigh any imperfections. This, combined with the value of the treaty as an integral part of international law, make ratification of the treaty imperative. Clearly, the United States must ratify the Genocide convention.

Madam President, I yield back the remainder of my time, and I yield the floor.

I thank the distinguished minority leader for graciously yielding time.

Mr. ROBERT C. BYRD. My friend is welcome.

UNANIMOUS-CONSENT AGREEMENT-A WACS

Mr. BAKER. Madam President, I ask unanimous consent that I may proceed for 1 minute, without the time being charged against the time of the distinguished Senator from Connecticut.


Mr. BAKER. Madam President, I inquire of the distinguished minority leader if he is now in a position to consider a unanimous-consent request in respect to the AW ACS matter we discussed earlier.

Mr. ROBERT C. BYRD. I am. Through the cloarkroom lines and

through personal conversations, I have discussed this matter with Senators on our side and have brought it to the attention of their offices. I find no objection to establishing a definite time for a vote at 5 p.m. on Wednesday next.

Mr. BAKER. I thank the minority leader. Let me put this request, then.

Madam President, I ask unanimous consent that no later than 9 a.m. on Wednesday, October 28, the Senate proceed to the consideration of House Concurrent Resolution 194, the resolution disapproving the proposed sales to Saudi Arabia of AW ACS, conformal fuel tanks for F-15 aircraft, AIM-9L Sidewinder missiles, and Boeing 707 aerial refueling aircraft, and that a rollcall vote occur on final disposition at 5 p.m. on that day.


Mr. BAKER. Madam President, I thank all Senators, and I especially thank the distinguished minority leader; the chairman of the Armed Services Committee; the ranking minority member, Mr. PELL; Senator PACKWOOD, who is the principal sponsor of the resolution. I thank all for agreeing so that we can attempt to accommodate the convenience of the greatest number of Senators.

24484 CONGRESSIONA~ RECORD-SENA TE October 20, 1981 ORDER OF PROCEDURE

Mr. BAKER. Madam President, while we await the attendance of the next Senator who is favored with a special order, I ask unanimous consent that I may suggest the absence of a quorum, without the time being charged against that special order.


The clerk will call the roll. The legislative clerk proceeded to call

the roll. Mr. WEICKER. Madam President, I

ask unanimous consent that the order for the quorum call be rescinded.


RECOGNITION OF SENATOR WEICKER

The PRESIDING OFFICER. Under the previous order, the Senator from Connecticut <Mr. WEICKER) is recognized for not to exceed 15 minutes.

AIR TRAFFIC CONTROLLERS STRIKE Mr. WEICKER. Madam President,

more than 10 weeks have passed since some 12,000 air tramc tontrollers walked off their jobs and were summarily fired. If there is one thing these 10 weeks have taught us, it is this: The strike is exacting a far greater toll on the Nation than was contemplated by PATCO, the Professional Air Traffic ContTOllers Organization, or the President.

Yesterday, the Federal Aviation Administration Imposed strict new regulations on private pilots and announced that commercial airline traffic will be further curtailed starting December 1. Commercial fll;hts had already been cut back by 25 percent. Airline revenues are down as a result. Every day, according to the Department of Commerce, the air transport industry is losing $3 to $4 million because of the strike. Estimates by some industry :representatives run to 10 times that much. Commertial and private aircraft builders are also starting to get nicked badly.

Consumers are not faring much better. Paradoxically, even though there are fewer flights, many airports are experiencing more delays. FAA.spokesmen disclosed yesterday that as of last Thursday, delays of 30 minutes or more were up 600 percent. Winter weather will soon be upon us. The question is: Will our air traffic control system then have the capacity to operate without far greater inconvenience?

More importantly, will it be able to operate safely? James King, chairman of the National Transi:ortation Safety Board, has his doubts. "We may be at the edge of risk," he said recently and I can understand why. When the controllers hit the bricks, they were complaining that 40-hour workweeks were too long considering the kind of stress they had to put up with. A special Government task force recently found that some of the remaining contI'ollers are now working as many as 52 hours a week. Fiftytwo hours of juggling airplanes on the ground and in the sky. Another heavy

burden has fallen on their shoulders in the form of rookie colleagues to train. And these veteran controllers will have even more work on their hands when the new generation of raw recruits this administration is soliciting hits the control towers.

Recognizing the present and potential strains on our air traffic control system, the Federal Aviation Administration is acting to cut back the workload. But that will also mean more losses for the airlines and fewer flights for passengers to choose from.

And so I repeat, during the past 10 weeks we have watched the tale unfold and the moral is this: A strike by air traffic controllers is no zero-sum game. The airlines, their passengers, the controllers, the country, everybody comes up a loser.

Who is to blame? Clearly, many mistakes were made before and just after the walkout. Errors of judgment occurred on both sides. It may be that the bulk of the bad calls were made by the union. I am not here to decide on that, to pass judgment or apportion guilt. I do want to say that I do not believe things should go on like this much longer. At a t.ime when the Government is trying to cut costs, it seems to me needles.sly extravagant to spend more to train a new generation of controllers than it would cost to renegotiate a contract with those they would replace. Then there is the additional expense of adding many of the 12,000 controllers to the already crowded unemployment ro:ls and causing count;less layoffs in associated industries. In these trying economic times, we cannot afford it. Neither can we afford to subject the airline industry to this trial by firing when it was already experiencing the worst financial times in its history.

The President has made his point. The air traffic controllers took an oath never to participate in a strike "while an employee of the Government of the United States or any agency thereof." The question which the President must now address is whether the controllers, as violators of Federal law, should be subject to the maximum penalty for such action. I believe that, to the extent that the law requires, they should be fined and forced to pay those fines.

But it is also true that 1 year ago t.oday, on October 20, 1980, candidate Ronald Reagan made a pledge to PATCO President Robert Poli.

He wrote in a letter seeking the union's support:

You can rest assured (that) I will take whatever steps are necessary to provide our all" tramc controllers with the most modern equipment available and to adjust staff levels and work days so that they al"e commensurate with achieving a. maximum degree of publlc safety.

A promise does not go away with an election. That letter contained a promise not just to the controllers but to the American people, too. Their safety was, and is, the bottom line.

Nobody knows better than this President that leadership is a two-sided coin. The ability to be firm is half the battle. Effective leadership also demands the ability to forgive when circumstances

call for it. Surely, we need no more divisions in this Nation.

I hope, therefore, that the administration will not let another 10 weeks pass without taking the initiative and sending its negotiators back to the bargaining table. That is the place to put the pieces togetheT and restore the authority of the President, the dignity of the controllers, and the economics of a nation.

I yield back the remainder of my time.

ROUTINE MORNING BUSINESS The PRESIDING OFFICER. Under

the previous order, there will now be a period for the transaction of routine morning business for not to exceed 1'5 minutes with statements therein limited to 2 minutes each.

Mr. WEICKER. Madam President, I suggest the absence of a quorum.

The PRESIDING OFFICER. The clerk will call the roll.


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

The PRESIDING OFFICER (Mr. DANFORTH). Without objection, it is so ordered.

FLORIDA DAY Mrs. HAWKINS. Mr. President it is

with great pleasure that I ann~unce that today, October 20, is Florida Day in the U.S. Senate.

My State, the Sunshine State, is known throughout the world for its wide white beaches, wilderness everglades vacation resorts, and entertainment centers. But Florida is much more than that-she is a kaleidoscope of history achievement, and entertainment. Indus~ try and agriculture thrive here midst unique cultural and geographic diversity.

No Southern State has changed more in the last generation than Florida. Her people have come from all parts of the Nat~on, all parts of the world, in search of sunshine and warmth, of year-round recreation, in a quest for opportunity.

Florida, with its 67 counties, now ranks sixth in the Nation in population. Per capita income increased nearly 145 percent from 1970 to 1980, and total statewide employment grew by almost 42 percent during the same period. Through Florida's airlanes, highways, rail lines, and busy ports, international trade approached $17 billion this past year.

Host to many of the world's greatest centers for family entertainment-Walt Disney World, Sea World, Busch Gardens, Circus World, Cypress Gardens, just to name a few-in 1980, we welcomed 36 million visitors spending $17 billion.

Much of the fruit, vegetables, beef, pork, poultry, and flsh that grace America's tables and those of other countries throughout the world originated in the Sunshine State. The cans of orange juice alone squeezed each year would reach from the Earth to the Moon, or go around the Earth nine times.

October 20, 1981 CONGRESSIONAL RECORD-SENATE 24485

An outstanding educational system has also always been a calling card for Florida. We have 37 renowned State and private universities and colleges and 28 community colleges. Florida also plays host to numerous important athletic events such as the Orange Bowl and the Gator Bowl.

Complementing our areas designed and developed to serve the professional, educational, and recreational needs of our citizens, the vast Everglades expanse sustains abundant wildlife and tropical plants, one of many examples of the State's scenic variety.

So, Mr. President, on this special Florida Day, I invite my fellow Senators to join me in celebrating the many resources that make my State such a magical place-stretching south from the Apalachicola River to the palmlined shores of Key West. Every hour, 30 people make Florida their new home. There is a good reason for that-something exciting for every age, for ages to come.

IN APPRECIATION OF SENATOR EDWARD M. KENNEDY'S ADDRESS AT THE UNIVERSITY OF HAWAII Mr. MATSUNAGA. Mr. President, ear

lier this month the distinguished Sena.tor from Massachusetts <Mr. KENNEDY), traveled to my State to address the faculty and student body of the University of Hawaii Schools of Medicine and Public Health.

His remarks, which touch on a myriad of national and world issues, were particularly incisive and timely. In light of the contents of Senator KENNEDY'S text, and in view of their pertinence to recent events both at home and abroad, I feel that it is only proper, and indeed, exceedingly appropriate to share with my colleagues and readers of the CoNGREssIONAL RECORD the thoughts that were delivered on that occasion by the senior Senator from Massachusetts.

I ask unanimous consent that Senator KENNEDY'S address be included in the RECORD at this point.

There being no objection, the address was ordered to be printed i.n the RECORD, as follows:

ADDRESS OF SENATOR EDWARD M. KENNEDY

It is an honor for me to visit the Manoa Campus and to be the guest of the students at the S~hool of Medicine and the School of Public Health.

President Eliot of Harvard once said that the reason a university is such a valuable storehouse of learning is that each student brings a little knowledge in, and no graduate ever takes any knowledge out.

But that is obviously not true here, with your outstanding reputation for excellence in education, and your creative vision of the contemporary role of America toward Asia and the Pacific.

I have come here today to discuss that role. But first, let me speak briefly about two other critical current issues.

A few hours ago, half a world away, they laid to rest the man whose dream of peace began a peaceful revolution in the Middle East.

'The words of Shaw that my brothers loved are a fitting measure of this man-"Some men see things as they are and say why. I dream things that never were and say, why not?"

A giant of the earth has now returned to the earth. But we in America know-as the

people of Egypt and of Israel know-that the dream of Anwar 88.dat shall never die.

It is that same cause of peace which is at issue in our own foreign policy and the future of the Pacific Basin.

We must act with the same boldness and bravery Anwar Sadat brought to the crisis in the Middle East as we deal with the greatest issue of our time or any time in human .history-the prevention of nuclear war.

Eight days ago, President Reagan announced a new policy on our strategic nuclear forces. Many of his recommendations deserve support. But I believe that some are dangerously unwarranted and decisively unwise.

The President has properly given high priority to protecting the Command, Control and Communications systems for our nuclear forces. The vulnerabmty of these systems is more serious than any present danger to our land-based missiles, and we must move immediately to reduce it. It makes no sense to spend blllions of dollars on ever more complex nuclear missiles, while neglecting the command and control procedures that are even more essential to the credib111ty and reliab111ty of our deterrent.

I also agree with the President's decision to move ahead with a strong-sea based strategic missile force, including the Trident II missile.

And I agree as well with the President's decision to develop the Stealth strategic bomber for the 1990's.

But I believe it is a serious mistake to revive the discredited, impractical a.nd wasteful B-1 bomber. The issue here is priorities. B-52's fitted with cruise missile3 are all we need until the Stealth bomber comes on line. At a time when we are already short-changing our conventional military forces-even to the point of cutting back on ammunition stockpiles in Western Europe-we should not embark on a thirty-bilUon dollar spending binge for a B-1 bomber that will not be able to penetrate Soviet air defenses.

Three years ago, the B-1 was cancelled because it wm be obsolete the day it leaves the ass~m~ly line. Nothing has changed since then. It is still a gold-plated airborne Edsel-and it always will be.

Finally, on M-X the President and the Secretary of Defense deserve credit for rejecting the absurd race-track basing plan, because it offered no real additional protection for our land-based missiles against Soviet attack. The country has been spared a costly and unnecessary scheme that would have been highly destructive of large regions of the Western States. At a time of deep budget cuts in mass transit for cities, it makes no sense to spend billions of tax dollars on a glorified nuclear shell game that is nothing more than mass transit for missiles.

But the President's alternative on M-X has an equally grave strategic drawback. M-X missiles in fixed, hardened silos will be no less vulnerable to Soviet attack than the current Minuteman missiles in such silos. I support research and development on methods that offer genuine hope of protecting our land-based missile force. But I oppose the recent Reagan M-X plan. Until the question of vulnerability is answered. we should not spend vast amounts on -a new type of land-based missile.

Above all, in this Administration, there ts too much talk of nuclear war, and not enough action on nuclear arms control. The Achilles heel of the Reagan defense plan is the absence of any genuine commitment to arms limitation. The peril of our present policy is clear. Without controls on the number of nuclear weapons, there may well be no real way to protect our missiles. our deterrent will be forever chasing its own tail. In the debate ahead, we nsed a maximum effort for arms control, not a. mindless escalation of the arms race. We must follow the road

to peace, not the road to humanity's final war.

Let me tum now to my principal topic here-American foreign policy and the future of the Pacific Basin. Few if any regions of the world can take greater pride in recent progress, or see greater promise for the future.

We have come a remarkable distance in remarkably few years. Only a decade ago, America was still at war in lndochina. China was still in the throes of diplomatic isolation and the Cultural Revolution. And Japan was still ab.:;orbing the twin shocks of our surprise economic controls and our surprise initiative on China.

Today, past frictions have been smoothed. Old confrontations have turned into new relationships of cooperation-not just in economics and technology, but even in politics and security. For the first time in this century, China, Japan and the United States enjoy friendly, not hostile, relations with each other. Although Oommunist and nonCommunist military confrontations continue in Korea. and elsewhere in the region, the major conflicts now are among the Communist states themselves-between China and the Soviet Union, and between China and Vietnam.

Through ASEAN, the nations of Southeast Asia have moved closer to each other and to Japan, China, and the United States. Better than any other region of the world, the countries of Asia. have survived the assaults of OPEC and maintained or enhanced their economic growth and their energy security.

In the shorthand of Atlantic Ocean diplomacy, East-West relations mean U.S.Soviet confrontation and escalation of the arms race. But in the Pacific Basin, EastWest relations have the vastly different connotation of a prospering political partnership and accelerating economic growth. Las,t yiear, the United States exported $'50 billion and imported $71 billion in trade with this new economic colossus. For the first time in our history, U.S. trade with Asia. and the Pacific surpassed. our trade with any other region.

But behind the glowing numbers lie statistics of a different sort. A recent book is titled "Japan As Number One," because, the author says, "Japan has dealt more successfully with more of the basic problems of post-industrial society than any other country."

A Japanese worker makes 45 cars a year-67 at Nissan's most modem factory---compared with 25 for an American. He makes 400 tons of steel a year, compared with 250 for an American-not because Japanese workers are more efficient, but because of better plants, better equipment, better techniques of planning and production, and better partnership between government, management, and labor.

I reject the view that American ingenuity has run out, or that we are nearing the end of the American Century, in which our economy can be at the forefront of world progress.

That is why, long before the Reagan Administration, I called for comprehensive incentives for innovation, investment, and productivity to achieve the reindustrialization of America. I believe that in the 1980's, there is no reason the American economy cannot do as well as, or better than, any other economy on earth.

To some extent, American business must share a portion of the blame for our present unsatisfactory position in the world economy. Often, U.S. firms have been slow to respond to obvious possibilities overseas. Golden opportunities have been lost, as new Asian markets flow to European and other foreign competitors.

But in other cases, American enterprises are shut out by unfair barriers erected by other economies to protect their domestic industries. This year, Japan's trade surplus with the United States wlll be $15 billion-

24486 CONGRESSIONAL RECORD-SENA TE October 20, 1981

an unprecedented. deficit that impairs the tie.> between our nations.

Free trade must be a two-way street. Developing countries deserve assistance, and their industries deserve a fair opportunity to reach maturity. But the fairness doctrine also means that American business deserves a fair chance to compete with Asian economic giants. Parity is a necessity-and in the present troubled state o! our economy, I assure you that Congress Will demand it.

And I shall do all I can in Congress to ensure that the magnificient environmental heritage we share with all people of the Pacific ls not sacrificed on the altar of blind economic growth. In particular, I am proud to stand with you against the incredibly short-sighted schemes of those who would transform these beautiful waters into a blighted basin for the storage of nuclear waste.

Here in these islands, you know the endless promise o! energy from the sun and the sea. Already, the "mlni-OTEC" experiment at the East-West Center ls proving the incredible potential of thermal power from the ocean. Before us lies the possiblllty of energy security for all time for all nations of the Pacific Basin. Nuclear power ls an idea whose time has come and gone. The nuclear way is not the Pacific way.

We must also give greater priority on the Paciflc agenda to fundamental issues of security, human rights and human needs.

Asia faces the spectre of growing Soviet m111tary power by sea, air, and land. Despite world-wide condemnation, the Soviet Union continues to occupy Afghanistan. And conflict and turmoil still tear at Cambodia and Laos.

We must do more to meet this security challenge. We must strengthen the m111tary capab111ties of our allles in Asia through bilateral treaties and multilateral agreements.

We must press harder for a political settlement, under which the Vietnamese withdraw from Cambodia and the Soviets withdraw from Afghanistan.

consistent with its post-war constitution and political tradition, Japan must bear a greater part of the burden of its own defense. It can share the costs of our m111tary forces on its territory. It can contribute its innovative technological genius to our pressing security needs. And it can offer greater private and public assistance to speed the development o! the poorer Asia nations.

On China, I approve the sale of limited defensive mllitary equipment, such as radar and anti-tank and anti-aircraft weapons, to the Peoples Republic. But we must avoid a military alliance and supply relationship with Peking that could threaten our friends and increase the risks of war between Ch Ina and the Soviet Union. It was an unnecessary blunder for the Reagan Administration to announce the arms sales without consulting Japan or our other allies.

And, as we improve relations with Peking, we must continue to support the security and well-being of the people on Taiwan . .

The search for peace and security in Asia must also be pursued in the arena of human rights.

It was wrong !or President Reagan to invite General Chun, the President of South Korea, to Washington and then neglect any mention o! the destruction o! democracy and the denial o! human rights in Korea in the military coup and the subsequent military repression. Over thirty thousand American soldiers gave their lives in the 1950's for the freedom and independence of the people o! South Korea. By standing up for human rights in South Korea in the 1980's, we can help ensure that they did not die in vain.

It was also wrong for the Vice President to travel to Manila and pay tribute to President Marcos !or his "dedication to democratic principles and process." And it wm be an even greater wrong !or President Reagan to welcome President Marcos to the White

House, without pressing our concern !or human rights. The Administration knows full well the shameful scope of violations of human rights in the Ph111ppines where elections are meaningless, and where hundreds Jf innocent men, women and children have been assassinated by the security forces and their murderous confederates.

To those who say that Asians do not believe in democracy or care about human rights, I reply: Tell that to the starving victims in the cruel new economic zones of Vietnam.

Tell it to the inmates of prison camps in China.

Tell it to Wei Jingsheng, imprisoned for 15 years in China. Tell it to Shih Ming-teh and Reverend C. M. Kao, imprisoned in Taiwan; or the family of Professor Chen, who died after being released from interrogation there.

Tell it to Kim Dae Jung, imprisoned for life in South Korea; or to the thousands like him held in North Korea.

They are the silent heroes of human rights, the courageous keepers of the conscience of our time. Together with their thousands of friends and supporters, they have kept the flame of hope alive. They are the true patriots of our century who have pledged their lives, their fortunes, and their sacred honor to the cause of human independence.

They deserve more from the government of the United States than a quiet diplomacy of silence and indifference. When human rights are endangered in Asia or any other region of the world, America must never look the other way.

Nor can we turn our backs on the hundreds of mlllions of our brothers and sisters in Asia who lack adequate food, shelter and health care. It is a sad irony that bellles are most distended, disease is most deadly, and poverty ls most pervasive in Indonesia, the Ph111ppines, and Thailand, whose material resources should rank them among the richest nations of the world. Nations poorer in natural resources, like Japan, Singapore and Taiwan, have achieved much higher growth and much fairer distribution of their wealth.

The lesson ls clear. More indispensable than any bounty that nature can provide are human and technological resources. That means decent health care and housing and education and the other things that make all the difference in the age-old struggle against ignorance and pestilence and poverty. Above all else, perhaps, it means integrity in leadership and unyielding resistance to corruption.

America can do more to seed and nourish these critical human qualities and resources. We need broader partnerships in many different areas between governments and universities and private enterprises. Within the nations of this region, we must make a greater effort to bring public and private interests together and to encourage more effective means of Paciflc cooperation. America has profound political, social, economic and security interests 'in the Pacific Basin. What we seek is neither a grand milltary alliance nor an all-embracing economic bloc, but a partnership for peace and progress reflecting the realities of the region and the aspirations of its peoples.

Leaders of vision In Hawaii are pointing the way to a future of peace and progress in the Paciflc for America and for all nations. Over the generations-from Truman and MacArthur to Johnson and Westmoreland-American national leaders have come to Honolulu to plot the course of war in the Pacific.

I look forward to the day when our leaders will come here, to these beautiful islands, to plan the course o! peace in an oc~an which bears the name of peace.

I look forward to the time when the Mainland will catch up with Hawaii-and all

Americans Will understand that the Paclflc ls truly the Ocean of the Future.

CONCLUSION OF MORNING BUSINESS

The PRESIDING OFFICER. Morning business is closed.

INTERNATIONAL SECURITY AND DEVELOPMENT ACT OF 1981

Mr. PERCY. Mr. President, what is the pending business before the Senate?

The PRESIDING OFFICER. The Senate will resume the consideration of S. 1196, which will be stated by title.

The legislative clerk read as follows: A blll (S. 1196) to amend the Foreign As

sistauce Act of 1961 and the Arms Export Con·~rol Act to authorize appropriations !or development and security assistance programs for the fiscal year 1982, to authorize appropriations for the Peace Corps !or the fiscal year 1982, to provide authorities !or the Overseas Private Investment Corporation. and for other purposes.

The Senate resumed the consideration of the bill.

Mr. PERCY. Mr. President, is it correct that the Zorinsky amendment, which calls for earmarking tunds for Nicaragua, is the amendment pending before the Senate?

The PRESIDING OFFICER. There are two amendments pending. There is the second-degree Zorinsky amendment pending to the first-degree Zorinsky amendment.

Mr. PERCY. Senator ZORINSKY has been notified or has been on notice that that is the pending business before the Senate. He has not yet arrived in the Chamber. Until he arrives, I suggest the absence of a quorU1D.





Mr. PERCY. Mr. President, as has been previously stated by the Chair the pending business before the Senate i~ the Zorlnsky amendment on Nicaragua. It has been aptly said that Senators are expected to know scmething about everything and everything about something. We do rely, in the Committee on Fore:gn Relations, upon the expertise of many of our individual Members who have taken a deep interest in certain areas of the world. Senator DODD has made a major contribution to legislation affecting El Salvador. He has just been down there again this weekend. We await with interest consultation with him on the progress he was able to report publicly that might have been made with respect to bringing parties together for some negotiated settlement.

So, too, in Nicaragua, one of the most difficult and troubled areas in South America, Senator ZoaINSKY has done tremendous serv~ce to the Senate by checking out particular troubled areas. spending a great deal of time on it, concentrating on it. And now, testimony to his resilience as a practical politician-


he has grappled with municipal problems, grappled with national problemshe has, I believe, worked out a basis for us to proceed.

From the standpoint of the majority floor manager, we can accept the basic concepts o! the Senator's amendment, and perhaps Senator ZORINSKY would want to expand on his amendment.

The committee has authorized the amounts requested for Nicaragua by the President as .part of this bill. Senator ZoRINSKY's amendment would simply earmark these totals and make certain that those funds are used only to strengthen the private sector of Nicaragua. Using those funds for private sector support is consistent with the administration's intentions in Nicaragua.

Senator ZORINSKY is concerned that the administration may not use these economic support funds for the h;1-tended purpose and has thus added the language "notwithstanding any other provision of law" as part of the earmark. With this language added, the administration could not use the section 614 waiver of the Foreign Assistance Act to reprogram the funds.

Senator ZoRINSKY has stakd his concern that these funds not become a slush fund if they are not used for the Nicaraguan private sector. The majority floor manager shares Senator ZoRmSKY's concern that the funds authorized for the Nica-raguan private sector not become a slush fund.

I do have concern with the precedent set by the "notwithstanding" language. If such language is added in this case, in the future we may see every committee earmarking containing a similar "notwithstanding" clause. This would provide no flexibility at all for the President in the administration of these programs. Senator Zon.INSKY has been a chief executive officer,. and he recognizes that we should not try to tie the President's hands-as he said the other day-to actually get in and run the day-by-day administration of foreign palicy. We want to lay down basic policy guidelines. We want to see that we stay within those guideline. But we do not want to unnecessarily restrict the President.

I also agree with Senator ZoRINSKY that Nicaragua is a special case. Therefore, if Senator ZoRINSKY agrees to delete the "notwithstanding" phrase, I propose that the legislative history of the earmark, wh~ch would be maintained, would indicate that the earmark could not be waived by section 614 of the FAA and the funds earmarked for the Nicaraguan private sector could not be reprogramed unless: First, there is an unforeseen emergency situation in which the vital national security interests of the United States are threatened; and second, Senator ZoRINSKY is consulted throui;rh a memorandum in advance of the official notice.

I tMnk the aoministration should be amenable to such an arrangement. I believe that in this case, as in many other cases, Senator ZoRINSKY's particular knowledge in the area should suffice. I believe the committee would accept his judgment if he were advised on this matter. The administration officials should agree that this would give them

the flexibility they need in providing aid to the private sector in Nicaragua.

Senator ZoRINSKY has my personal commitment that if the administration attempts to reprogram these funds without adhering to these two conditions, I will vigorously oppose it.

Finally, I also note that this committee receives notices of reprograming and has the right to object to such notices.

I believe the distinguished ranking minority member, who has been following this issue very closely and has been working closely with Senator ZoRINSKY, would like to comment.

Mr. PELL. Mr. President, due to the administration's desire to provide aid to Nicaragua and to retain flexibility, I find the compromise described and outlined by our chairman as eminently satisfactory. This will be a very helpful initiative.

I agree, with the Senator from Nebraska that it is not the intent of Congress to establish slush funds in the foreign aid account. It is our intention to discourage the constant reprograming of funds.

If the Senator from Nebraska finds this compromise proposal to be acceptable, then I will join in urging the adoption of the amendment.

Mr. ZORINSKY. Mr. President, I thank the chairman of the Foreign Relations Committee and the ranking minority member, Senators PERCY and PELL.

I agree to delete the notwithstanding clause of my amendment, but only on the conditions stated by the floor man- · agers-that section 614 of the Foreign Assistance Act could not be used to reprogram funds eairmarked for the Nicaraguan private sector unless, first, there is an unforeseen emergency situa-· tion in which the vital national security interests of the United States are threatened and, second, that the sponsor of this amendment is consulted through a memorandum in advance of the official notice.

Under these circumstances, I am con-_ ft.dent that the funds authorized by the committee for the Nicaraguan private sector will not be used as a slush fund but, rather, will be used, as intended, for the private sector in Nicaragua.

Let me say, further, that if the section. 614 waiver is ever used too frivolously, the President may lose that waiver authority altogether. I believe that this amendment has the overwhelming support of the Senate. Further, I believe that the administration and the majority and minority floor managers should press the House to accept the Senate amendment, should the House not have comparable language.

Mr. President, I ask unanimous consent oo modify my amendment <No. 571) and to substitute the perfecting amendment (No. 572) thereto, to reflect these agreements, requested by Senator PERCY after consultation with the administration.

Mr. PERCY. I know of no objection to the unanimous-consent request.

The PRESIDING OFFICER <Mr. KASTEN). Is there objection? The Chair hears none, and it is so ordered.

Will the Senator from Nebraska send the modification to the desk?

Mr. PERCY. Mr. President, I concur in the comments of Senator ZoRINSKY. If the Senate agrees to the modification of his amendment, then, under the terms of the legislative history created by this colloquy, the floor manager can accept this amendment and will support it vigorously in conference with the House.

Mr. ZORINSKY. Mr. President, I ask unanimous consent that the order for the yeas and nays on the amendment be vitiated.

The PRESIDING OFFICER. Is there objection? The Chair hears none, and it is so ordered.

Mr. PERCY. I thank my colleague. The PRESIDING OFFICER. Will the

Senator from Nebraska. send his modification to the desk?

Mr. ZORINSKY. Mr. President, I suggest the absence of a quorum.


The bill clerk proceeded to call the roll. Mr. PERCY. Mr. President, I ask

unanimous consent that the order for the quorum call be rescinded.

The PRESIDING OFFICER. Without objer.tion, it is so ordered.

Mr. PERCY. Mr. President, while we have a few moments, it is my understanding that at the completion of the vote on the Zorinsky amendment, which will be a voice vote, the Senate will recess until approximately 2 p.m., in accordance with the request of the majority leader. We will then proceed immediately with the foreign e.ssistance bill.

I flhould like to read the list of amendments, some dozen in number, that will be brought up, in accordance with the information supplied to the managers of tho bill.

There is an amendment by Senator .KASTEN-ESF contingency fund.

Another amendment by Senator KAsTEN to delete all SFRC earmarks.

An amendment by Senator HELMS-El Salvador land reform.

Another amendment by Senator HELMS to repeal the Chile prohibitions.

Senator GLENN-mandatory aid cutoff for nonnuclear country detonating a nuclear device.

Senator GLENN-provide Symington waiver for Pakistan for 6 years only.

Senator GLENN-nonproliferation reporting requirement for Pakista.n.

Senator HATFIELD-report and special envoy for El Salvador.

Senator TowER-Armed Services control over SDAF.

Senator TowER-Anned Services control over defense leasing.

Senator HATCH-rejoin ACTION and Peace Corps.

Senator ZORINSKY-conditions on aid to Guatemala.

Senator HART-Libya oil cutoff. Sena.tor DANFORTH-cargo preferences. I respectfully ask Members of the Sen-

ate and the staff members of those Senators to indicate to the managers of the bill or their staffs at what point they would be prepared to call up their amendments. We have today set aside, but apparently it will not be a. late evening. We will then go on this business tomorrow. But it is the desire of the floor managers to move forward expeditiously in an orderly way and, if at all possible,

24488 CONGRESSIONAL RECORD-SENATE October 20, 1981

to obtain time agreements and a sequence so that Senators can more aptly plan their time, not be celled out of committees, and so that we can move forward with this measure.

So 1 urge staff members on both sides of the aisle to contact Senators and to see if we can line up the 14 amendments we now have which will be pending. otherwise, we will be on this measure much longer than we have advised the leadership.

At this time, I believe Senator ZoRINSKY is ready to send forth the text of his amendment.

Mr. DANFORTH. Mr. President, will the Sen tor yield?

Mr. PERCY. I yield. Mr DANFORTH. Mr. President, as the

senator from lllinois has pointed out, I do have an amendment. I would be prepared right now to enter into any agreement the Senator from Illinois wouid like. From my standpoint, my amendment would take about 15 minutes to debate. There may be other Senators who would like to participate in the debate. I estimate that 20 minutes or a half hour to a side would be ample, and I could flt it in at the pleasure of the Senator from Illinois.

Mr. PERCY The Senator from Illinois is strongly prepared to accept the amendment, though there may be objections to it. I know that Senator DixoN also would support the amendment. Because of the number of Senators who would wish to speak on the amendment, r believe we should have a half hour on each side.

Mr. PELL. Mr. President, I should mention, speaking for the minority side, that we are not authorized to enter into any time agreements at this time.

Mr. PERCY. Is it possible, though, to have this as the pending business at 2 o'clock, wirth everyone on notice that we are not entering into a time agreement? We hope to dispose of it within 1 hour.

Mr. PELL. Certainly. Mr. PERCY. Mr. President, I ask

unanimous consent that tbe Danforth amendment on cargo preferences be the pending business when the Senate recesses and thaJt it be the pending business ait 2 o'clock when we resume busi-ness.

The PRESIDING OFFICER. Is there objection? The Chair hears none, and it is so ordered.

Mr. PERCY. I thank my distinguished colleague for ·his cooperation. I hope it will proVide a striking example to our other colleagues to come forward and indicate when they will be prepared to move ahead. I believe it is a very important amendment.

AMENDMENT NO, 571 (AS MODIFIED)

Mr. ZORINSKY. Mr. President, I send . to the desk a modification of my amendment.

The PRESIDING OFFICER. The modified amendment. will be stated.

The legislative clerk proceeded to read the modified amendment.

Mr. ZORINSKY. Mr. President, I ask unanimous consent that reading of the modification be dispensed with.

The PREmDING OFFICER. Wlth'out objection, it ts so ordered.

The modified amendment is as follows:

on page 24, Unes 2 and 3, tnsert the following new section 716 and renumber the aubsequent section accordingly:

Sze. 716. Of the funds authorized to be appropriated to carry out this Act tor the tisoe.l year 1982, elS,275,000 under part I and $20,000,000 under chapter 4 of part II of this Act shall be available only tor Nicaragua under the following conditions:

(a) all of the funds made available to Nicaragua shall be tumished solely for assistance to the prviate sector in Nicaragua:

( b) the provisions of subsection (a) shall not apply when the President determines, and reports to the Speaker of the House of Representatives and the Chairman of the Committee on Poreign Relations of the Senate that Nicaragua ls making substantial pro~ess toward tree and fair elections;

(c) for each 6-month period in which any funds are expended under this Act tor Nicaragua the President shall submit to the speak~r of the House of Representatives and the Chairman of the Committee on Foreign Relations of the senate a report accounting fully and in Itemized detall tor the amounts obllgated and actually expended in Nicaragua.

Mr. ZORINSKY. Mr. President, if the chairman of the Foreign Relations Committee and the ranking minority member are ready, we can have a voice vote on the perfecting amendment.

Mr. PELL. From the viewPoint of the minority, I believe we should move ahead and vote.

Mr. PERCY. The floor manager for the majority has Just been advised that there is objection by one Senator to the unanimous-consent request. We will have to consult with our colleague, who is a member of the Foreign Relations Committee. I suggest the absence of a quor?m until we can get direct word from him.


It is the administration's proposal, lest there be any confusion as to who proposed what for the budget. My amendment ' to the administration's proposal does not require that the money requested by the administration be spent. It does require that if funds are spent in Nicaragua that those funds be available solely for the private sector.

There are those who question the need for an amendment on Nicaragua because it is assumed that under the current strain in relations the administration is not planning to send any AID funds. I would answer that it is an assumption that should not be made. I am aware of reports in the press that indicate that discussions between the United States and Nicaraguan oftlcials could very well result in resumed assistance to the Nicaraguan Government. My amendment would insure that funds will not go to the Government of Nicaragua unless the President certifies that the Government there is making substantial progress toward free and fair elections.

Furthermore, I realize that there are those who feel that AID has not been very eftlcient in disbursing funds in Nicaragua and insuring that 60 percent is getting to the private sector. I have taken a back seat to no one regarding this situation and that is one of the principal reasons for my amendment. The amendment would tighten the accountabiUty procedures by requiring the President to report to the Congress every 6 months on Just how the funds are used.

My colleagues would be interested to know that for the past 8 months, I have attempted to obtain from AID an accounting of funds expended thus far in Nicaragua. I wanted to make certain that 60 percent of U.S. aid had gone to the private sector as required by law.

The bill clerk proceeded roll.

In recent committee hearings, I put to call the the request for an accounting directly to

Mr. BAKER. Mr. Presdent, I ask unanimous consent that the order for the quorum call be rescinded.

The PRESID.cNG OFFICER. Without objection. it is so ordered. .

Mr. BAKER. Mr. President, could I inquire of the distinguished managers of the bill if it is possible to disp~e of the pending amendment, the Zorinsky amendment? If it is, it would be my intention to ask the Senate to recess over until 2 o'clock.

Mr. PERCY. Yes. I see no reason why we cannot and should not recess until 2 o'clock. At that Point, for the information of the majority leader, we have agreed to the fact that the pending business would be a Danforth amendment on cargo preference. The majority manager and the author of the bill have · said that that could be disposed of wlthin 1 hour. We were unable to reach a time agreement on. it. We still think we can aim for that time frame, but · it will be at least the pending business at 2 o'clock.

I think we are ready now for a voice vote, the yeas and nays having been Vitiated. '

Mr. ZORINSKY. 'MT. President, I would like to point out, prior to the · voice vote on this amendment, that it is not my proposal to allocate money in" the next year's budget for Nicaragua.

Secretary of State Haig and I now have his commitment for AID to produce such an accounting within a reasonable time ... And in a recent meeting with oftlcials from the AID mission in Nicaragua, Senate Foreign Relations Committee staff were assured that figures still beinJ compiled will bring the amount of private sector assistance to the 60-percent -level. My amendment will insure tighter control and supervision of any future expenditure of funds, and mandate in the law a full and detailed accounting every 6 months.

Mr. President, 2 years ago I recommended that the Senate adopt a requirement that 60 percent of all aid to Nicaragua go to the private sector .. This re- .: quirement became the law. This year, the administration requested that .the law . be changed, deleting any requirement that aid go to the private sector in . Nicaragua. Mr. President, I believe that sends the wrong ·signal to the Govern- · ment of Nicaragua.

If u .S. aid is a means to an end, · th•t · end in Nicaragua ought to be the establishment of democracy. My amendment, by earmarking not 60 percent, but · 100 percent of aid to the private sector is an attempt to keep that ptospect of democracy allve.

With that having been said, I appreciate the voice vote on this amendment.

October 20, 1981 CONGRESSIONAL RECORD-SENA TE 24489 Mr. HELMS. Mr. President, I ask that

I be recorded in the negative on this amendment.

Mr. President, while I applaud the intent of the distinguished Senator from Nebraska. in earmarking the entire $30 million of U.S. economic aid for the private sector in that beleaguered country, I cannot support his amendment. In that connection, I would mention two points to illustrate why I deem it impossible to aid the private sector in Nicaragua through these channels without strengthening, even more, the hold of the Sandinistas over that country. ,

Mr. President, Jerry Wein, the AID mission director for Nicaragua, recently visited with members of the staff of the Senate Committee on Foreign Relations to explain the conduct of the AID programs in Nicaragua. In reviewing the points he made during his discussi~n with the committee's staff, Mr. Wem made me even more wary of any attempt to direct aid to the private sector in Nicaragua while the Sandinistas are in power.

First of all, I am troubled by the revelation that, in AID's judgment, any enterprise which is owned in part by the Sandinista government still qualifies as a "private sector" entity, even though the Sandinistas may own as much as 49 percent of the stock.

Second, Mr. President, I am troubled that of the $33 million of the aid earmarked for the private sector which was disbursed in June and October of 1980, only slightly more than $13 million can be accounted for to the satisfaction of our AID officials. That means that our AID officials are not satisfied that any of the other $20 million was spent on the private sector-as mandated by the Congress. So, what happened to the other $20 million? Where was it spent?

Mr. President, the truth is, our AID officials cannot insure that U.S. dollars will be spent as mandated by Congress. How can we be sure that the U.S. taxpayers' dollars will be aiding the Nicaraguan private sector throughout the nationalized banks controlled by the Sandinistas? If past performance is any guide, we cannot.

Finally, Mr. President, my good friend and colleague, the distinguished Senator from Nebraska, has assured us that the money which he has asked to be earmarked for aid to the Nicaraguan private sector was in the administration's budget-the :figure, he emphasizes, did not originate with him. Mr. President, I am confident the able Sznator realizes that, while the Reagan administration budget did contain such a line item, surely the administration had no intention of sending millions of the American taxpayers' dollars to the Sandinistas, with the compliments of the American taxpayer.

To the contrary, it is clear that the administration wanted to have this money available in the event that developments in Nicaragua might find the Sandinistas out of power, or renouncing its aggressive pro-Marxist programeither development being one which I and many other Americans, as well as many members of the Nicaraguan private sector, would welcome. ';I'he admin-

istration would then be able to proceed with aid to that country in such new ci·rcumstances.

Under present circumstances, Mr. President, I am concerned that any money going to Nicaragua, however well intentioned anyone may be in supplying it, will only serve to buy time, if not arms, for the Sandinistas. For that reason I must oppose the Zorinsky amendment, and I ask that the RECORD re:fiect my opposition to it. PRIVATE SECTOR ASSISTANCE FOR NICARAGUA

• Mr. KENNEDY. Mr. President, 3 years ago we saw the nation of Nicaragua in Central America struggle through its last violent throes of revolution, to emerge at an important crossroads in its political and social development. Today, with an economy still in tatters, and a restive public increasingly aware of revolutionary promises yet unfulfilled, the internal difficulties shouldered by the Nicaraguans weigh heavily upon them.

It is with this in mind, and with an eye toward our Nation's long-term interests in Central America, that I welcome the amendment offered by Senator Zorinsky. This amendment would provide much-needed assistance to the vital private sector in Nicaragua, stimulating the long-idle machinery of private enterprise. This could prove the :first step in bringing Nicaragua back to the road of peace and prosperity through private initiative and responsibility.

Nicaragua has experienced the lion's share of social and political injustice under two regimes--including first a corrupt tyrant of the right and now an authoritarian regime of the left. Revolutionary reforms include an impressive literacy campaign, but censorship of the press, repression of free labor union activity, and delaying tactics on early elections still mar the past record and future hopes of Nicaragua.

America must strongly oppose the abuse of basic human rights and denial of political plurality, whether from the right or the left. Nicaraguans have experienced severe hardship and deprivation for too long; and the truly just revolution can come only when basic political, social and economic freedoms are assured for all.

The amendment before us now is a necessary :first step for the United States to take in expressing support for these freedoms in Nicaragua and so encouraging more to follow.•

Mr. EAGLETON. Mr. President, with the possible exception of the 1978 Middle East arms sale, no foreign aid proposal of the Carter administration has remaine<i as controversial as the Nicaraguan aid bill of 1979. Only after 7 months of intensive lobbying and acceptance of a number of conditional limitations was former President carter able to shepherd his $75 million economic aid package through the Congress. In April, President Reagan suspended transfer of $15 million of the package in the wake of the disclosure that Nic~guan territory was being used for a massive airlift of weapons to Salvadoran guerrillas.

Eviden-ce that the Sandinista regime is exporting its revolution is but one troubling aspect of post-Somoza politics m Nicaragua. This past summer, we wit-

nessed the 2-day closing of the country's most popular new:;pa,per, La Prensa, following nighly critical reporting of Sandinista policies. Likewise, there was a government-imposed, 4-day closing of Radio Cooperation, an independent and critical voice. Following expressions of concern over the in:fiuence of Marxists and Cubans in the country, the popular church leader, Archbishop Obando y Bravo, was prevented from broadcasting his weekly televised sermon. If this were not enough, Sandinista junta coordinator Daniel Ortega announced at the July 19 anniversary celebration of the Sandinista revolution that 13 companies were being nationalized because of the suspected criminal activity of their owners.

Let there be no mistake about it, the Sandinistas are moving swiftly to silence opposition to their rule and securely establish a one-party police state based on the Cuban model.

Since the Sandinista Liberator Front <FSLN) ;issumed power in July of 1979 the United States has sent $120 millio~ to Nicaragua in an efiort to strengthen ~oderate elements in the country, that IS, the church, the private sector, the press, and the free labor unions. I only wish, in addressing this matter today, that I could say that our efforts have been somewhat successful; unfortunately, I do not believe this to be the case.

Only this past April, I headed a congressional delegation that visited Managua. After 2 days of discussion with Nicaragua's political, business, and church leaders, I left convinced that although the city remains the commercial and cultural capital of the country, Nicaragua's political capial is rapidly gravitating toward Havana. If there were any doubts at the outset about what political direction post-Somoza Nicaragua would take, there can be no doubt now that Sandinista failure to live up to its commitment to political pluralism is ample evidence that the Sandinistas do not intend to make good on their pledge to hold early, democratic elections. Contrary to the more optimistic expectations of the White House and State Department officials, the Sandinista regime is turning out to be Havana and Communist dominated.

Perhaps the most troubling aspect of the Sandinista rule has been Nicaragua's extraordinary military buildup. U.S. intelligence analysts estimate that Nicaragua now has some 20,000 regular troops, plus about 50,000 in a militia. At the height of his power, Somoza's troops numbered only 7,000. The Sandinistas have developed one of the largest military forces in Central America with the help of several hundred Cuban military advisers and military equipment supplied by Fidel Castro and his Soviet bloc colleagues.

In a recent statement, Assistant Secretary of State for Inter-American Affairs Thomas Enders charged that Nicaragua is turning into a "forward base of operations" for Cuba. Indications that Nicaragua is preparing to receive Soviet-made tanks via Cuba and improving airstrips in the east for possible use by mig-23's and military transports further supports Ender's conclusion.

Although the State Department has


backed off its assertions that Nicaragua is acting as a CUban surrogate in providing aid to Salvadoran leftists, there is little doubt that there has been some Sandinista complicity. Now there are growing indications that arms shipments to Guatemalan guerrillas from Cuba by way of Nicaragua have begun. In a confidential evaluation made public last April, the Defense Intelligence Agency reported:

A tape recording receutly captured in a skirmish with Guatemala guerrillas has provided convincing evidence of Cuba and Nicaraguan complicity in organizing, directing, and supporting the Guatemalan Revolutionary Movement.

Mr. President, the compromise reached today on the Zorinsky amendment concerning the future of aid payments to Nicaragua is a moderate measure; one that will hopefully aid the dwindling, free enterprise sector in Nicaragua. Although I would have liked to have seen the Zorinsky amendment passed intact, I appreciate that the compromise language will still express Senate concern over the future of our aid program. . ·

For the reasons I have already stated, I do not support aid to the Sandinistt. government. I do not believe that the United States should spend 1 penny supporting the ruling junta. I can support and do support aid to the free enterprise sector as a last, slim hope that a modest degree of pluralism can survive in Sandinista Nicaragua. I am not at all sure that free enterprise can survive there. But I am willing to take the gamble. I look to the leadership displayed by Senator ZoRINSKY in this matter to insure that our future dealings with the Sandinistas are more prudent then our past dealings.

Mr. President, as we consider the fiscal year 1982 foreign aid ·authorization bill, I believe it is imperative that we look closely at our policy toward all the nations of Central America. In my opinion, our efforts to date have done little to dissuade the Sandinista regime from positioning itself 99 percent within the Cuban sphere of influence. In my opinion, Guatemala is the next domino in what can only be termed a Soviet-assisted Cuban strategy to tum all of Central America into a Marxist enclave.

During the past several months, I have collected a score of editorials and articles discussing recent events in Nicaragua, Guatemala and what they portend. In closing, I ask unanimous consent that a selected sampling of these be printed in the RECORD.

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

[From the New York Times, Oct. 9, 1981 I NIC.,RAGUA ON A TIGHTROPE

(By Flora Lewis) MANAGUA, NICARAGUA.-The revolution here

remains a. peculiar combination of closed minds and open possibilities. The impact has already been intense throughout Central America, and it wm take a sage U.S. policy to help the queasy region emerge with reasonable sta.b111ty.

Two years after the Sa.ndinists gained power, Managua looks depressingly fa.m111ar to anyone who has watched Communists consolidate or even try to establish a hold on other countries. Slogans, posters-the political idiom sounda much like CUba, the Por-

tuguese Communist& befor& their 197& ooup failed, Eastern Europe in the early days, China at times.

Leaders insist their revolution has. no model, that its doctrine and even its. language are home-grown. Tomas Borge, 50-yea.rold Minister or Interior and only surviving founder or the 8and.1nist movement, seemed surprised to hear that it ls very reminiscent.

Whether because or in tema.l disagree-men ts or waffilng tactics, the tough llne is turned oft and on. The Government even corrected e. printed brochure of an Aug. 25 speech by Defense Minister Humberto Ortega before official distribution, omitting declared allegiance to "Marxist-Leninist doctrine" and changing phrases llke "Socialist camp" to "revolutionary and progressive forces," "oapitalist ca.mp" to the vaguer "reactionary countries.'•

Sergio Ramirez Mercado, a handsome, fluently literary member of the junta, said the first version was a "falsification" distributed by opponents.

But the import of the first and second texts ls scarcely different, the changes are minor and the printing is exactly the same including all the typographical errors. The final version looks like an afterthought.

Both Mr. Ramirez a.nd Mr. Borge said the Government had decided to "take the risk" of domestic and international outcries by suppressing the resolutely independent pa.per La Prensa if it continues to print da.ma.ging stories. They added, however, that then it would be replaced by another "right-wing paper" willing to observe limits of "constructive criticism." "We must put an end to the myth of La Prensa.," Mr. Ramirez said.

The paper is a potent symbol. Its owner, Pedro Joaquin Chamorro, was murdered by the Somoza regime precisely because of the stubborn courage it showed. Killlng it would kill much of Nicaragua's chanee of reconciliation.

Its plight reflects the issue now. A coalition of forces, including much of the business communty, threw out Somoza. Some wanted a. democratic but conservative replacement, some wanted social democracy, and some really meant "the revolution," not just an upheaval to bring reform.

Still, despite their pro-Soviet training and support; the ra.dlca.ls are as Nicaraguan as the liberals. They have authentic roots, and if they consider the U.S. "the enemy," they can cite a lot of history to justify their suspicion.

Despite the harsh rhetoric, they don't sound all that convinced they can succeed in making their people better off and their country more independent, nor even that they really know how to go about lt. They claim massive popular support, but they refuse to consider elections before 1985. They are acutely a.ware that the economy has deteriorated badly and ls getting worse.

"The Soviet Union won't save us, that's been made clear," Mr. Ramirez said. It's probably true. It's also true that they are looking for help wherever they can get it, whether by additions to the $100 m111lon cheap loa.n received from Libya, or by supporting neighboring revolutionaries in hopes they too wm win power and become allies.

Even domestic opponents feel the point of no return has not been reached. They urge U.S. aid, with conditions that would strengthen their hand, though they haven't been able to develop a social program of their own that might offer an appealing alternative to the worried people.

The U.S. is now focusing on braking Nicaraguan help to Salvadoran guerrillas. Talks have started in which the U.S. seeks to cut arms tramc to the insurgents and urge restraint on Nicaragua's big milJ.tar.y buildup, while the Sa.ndinists seek assurances against U.S. intervention, which they seem really to fear. But they are also exploiting that fear, extravagantly, to mob111ze their people.

Obviously, progress toward a Salvadoran

settlement would help. But also needed ts a better definition for both sides. o! how we expect to live together.

The Sandinlsts aren't. doing well and they sound worried. Thoughtful Latin Americana elsewhere, including some conservatives, say the one .thing ,that would push them definitely into the Soviet camp 1& isolation.

There should be no llluslons. There i& a risk that a pro-Soviet hard line will come to dominate anyway and produce another Cuba. But the risk can only be increased l! the U.S. acts as though the gamble were already lost. We are reaping the harvest of gunboat diplomacy and rlght-wlng dictatorship. Sowing the same crop again won't produce better results. Nicaragua ls in for a rough time, but so are we if we try to push too hard.

[From the Washington Star, May 9, 1981) THE CUBAN ROLE IN NICARAGUA

(By Cord Meyer) Drawn to the sp~ctacle of tragic violence

between extreme left and right in El Salvador, the American media are overlooking more significant developments in Nicaragua that could transform that country into Castro's first arm~d beachhead on the ma.inla.nd of the hemisphere.

Having decided to draw a line against Soviet-supported Cuban intervention in Salvador's civil war, the Reagan administration now realizes that it ls in danger of being outflanked in Nicaragua but hesitates to ring the alarm bell because it has as yet no coherent strategy for dealing with the threat.

Contrary to the expectations of Jimmy Carter's more naive advisers, the Sandinista regime is turning out to be dominated by ideologically-committed communists. Castro's man ln Managua, 8and1nlsta Defense Minister Humberto Ortega, has boasted that he is reorganizing the 111-tralned Sandinista. guerrlllas into a regular army of 50,000 backed up by an armed militia of 200,000 to make it by far the largest force in Central America.

With defiant disregard for President Reagan's warnings, the Cubans have prepositioned in Nicaragua stockpiles sufficient to equip this army with modern weaponry. It wm take some time to whip the Sandinista guerrllla bands into dlsclpilned shape but of the 5,000 Cuban advisers in Nicaragua 800 are mm tary specialists working overtime. Many Cuban technicians are being integrated into this force to handle sophisticated weapons.

TANKS AND PLANES

More ominously, two Nicaraguan airfields are being extended to accommodate M1G-23s and Nicaraguan pilots are being trained in Bulgaria. Reliable intelligence reports predict the imminent arrival of Soviet heavy tanks which could be used to put down popular revolt in the towns.

The restraining leash of economic dependency that the Reagan admlnlstratlon had hoped to use ln Nicaragua ls being frayed to the breaking point by Soviet moves. When the administration announced the suspension of economic aid, it was careful to promls3 renewal of the aid lf the Sandtnlstas kept their pledge not to continue shipping arms to the Salvadoran rebels.

As lf to demonstrate the irrelevance of this inducement, the Sandinista regime promptly announced a gift from Moscow of 20,000 tons of grain, made available by the cancellation of the embargo. Just prior to his recent visit to Moscow, the Libyan strongman, Colonel Ka.daft, insured a warm reception from Brezhnev by granting a $100 million loan to Nicaragua, which the 8andinlstas hailed as proof of their immunity to "Yankee economic aggression."

Anxious to gain time to complete the construction of the Sandinista war ma.chine, Castro discreetly redirected his flow of arms to the communist guerrlllas in El Salvador,

October 20, 1981 CONGRESSIONAL RECORD-SENATE 24491 when captured documents revealed the full extent of Nicaraguan involvement. F·earlng possible American interdiction of these supply lines, Castro has used the local Communist Party and some collaborators within the Honduran army to open up safe trucking routes across Honduras for the smuggled arms.

The Soviet-assisted Cuban strategy for Central America should now be apparent to anyone prepared to put the various pieces of the puzzle together. While keeping the guerrilla resistance in El Salvador alive by clandestine arms deliveries and the continuous infiltration of new recruits trained in Cuba, Castro's m3.in objective is to consolidate his foothold in Nicaragua until the Sandinistas are sufficiently organized to eliminate their domestic opposition.

THE CUBAN MODEL Once the Nicaraguan base has been

secured by the establishment of a one-party police state on the Cuban model, there will be time enough for a massive infusion of "volunteers" to turn the tide o! the Salvadoran civil war and to open the way !or a final guerrilla offensive into Guatemala, where a savagely-repressive right-wing government may be ripe !or the plucking.

The Reagan administration ls acutely aware of these dangerous possib111ties but has been hampered in formulating a response by its own disorganization and by Sen. Jesse Helms' success in delaying Senate confirmation o! a Latin American policy team. Now that an a.ble career officer, Thomas Enders, is assured of appointment as assistant secretary of state for the region, there is hope that a cohe·rent strategy will emerge.

Standing between Castro and his ambition to transform Central America into a Marxist enclave ls the growing st1·ength of the democratic opposition in Nicaragua. The Catholic Church, the unions, the private sector and the democratic parties are united in their determination to demand the elections that the Sandinistas promised to hold when Somoza fell.

I! the Reagan administration working with our Latin allles cannot find ways to assist these genuinely democratic forces and to insist on long-delayed elections under Organization of American States (OAS) aus;>lces, dominoes are likely to fall from the Panama Canal to the Mexican border. and Reagan's tough talk will be seen as blunder.

[From the Wall Street Journal, May 4, 1981] SANDINISTAS TESTED IN NICARAGUA

(By Steve Frazier) MANAGUA, NICARAGUA.-Amld the thick at

mosphere of polltical crisis here, a people once united in the overthrow of Gen. Anastasio Somoza ls choosing up sides for or against the former guerllla commanders who now rule the country.

Nicaraguans are still waiting !or their Sandlnlst leaders either to select a radical, totalitarian model for their revolution or to work out a more moderate con~ensus with the business sector and other Independent forces such as the Roman Catholic Church. Meanwhile, the revolution moves uncertainly between those two paths, and intertwined economic and political disorders are Increasing.

"The Sandinlstas' error has been to confuse unity for the removal of Samoza with unity of supoprt for them," says a Latin American diplomat here. "Society ls divided ~~to two blocs," he continues, warning that when societies are divided in that way, there

has to be a confrontation." In an attempt to ease current tensions the

Sandlnlst leadership has initiated a 'new "dialogue" with opposition groups. The Sandlnistas want their critics to tone down their attacks on the government and cooperate in reconstructln~ the nation. The busines sector, independent political parties and other non-Sandinist forces are calling for renewee1

proof that the Sandlnistas will respect press freedom, political pluralism and private enterprise.

"There ls a yearning for all the things we didn't have under Somoza that we still don't have under the Sandinistas," says an omclal of an opposition political party. And both sides realize that Nicaragua's economic health depends largely on settling their <11!ferences.

"A political confrontation now impedes reconstruction," says berglo Ramirez Mercado, a member of the government junta. I! the government and independent groups can't come to terms, he says, "we believe tension will increase."

AMERICAN AID CUT Despite the general agreement that re

newed unity would help rebuild the economy and encourage business investment, currently almost nonexistent, lasting cooperation wlll be di1ficult to achieve. Many analysts .think the Sandlinstas reopened talks with the opposition mainly as show and don't intend to make the important policy switches necessary to please their opponents.

On their side, the indepe.ndent forces seem to want free elections, which they are convinced would unmask the Sandinistas as an armed minority. But the Sandinistas have announced that such elections won't be held for several years, and then only to amrm their role as leaders of the revolution.

The Sandinistas' relations with the U.S. also have turned rocky, following the Reagan administration's decision early this mo.nth to cut $15 mill1on in economic aid because of alleged Nicaraguan help in shipping arms to Salvada.roan guer1llas. 01ficial Nicaraguan reaction to the cut has been "vocal" but "subdued," in the words of the U.S. Ambassador, Lawrence Pezzullo. Mr. Pezzullo and others here believe the many Nicaraguan o1ficlals who uy they want to stay on friendly terms with the U.S.

Besides the $15 million, Nicaragua could receive many millions of ·U.S. aid dollars over the next year, U.S. officials say. If the political climate improves and the current halt in arms shipments continues, U.S. omcials would like to parcel out other aid packages before beginning the laborious process of certifying to Congress that the arms fl.ow has ended once and for all. Such certification is necessary to renew the specific $15 mlllion in aid that has attracted the most attention.

The cutoff was labeled an act of "economic aggression" by Nicaraguan officials. The pro-government press treated its readers to large photo features showing Nicaraguan exiles training in Florida for a supposed U.S.-backed invasion of Nicaragua. And moderates worried that any added instab111ty would work against them. "It's quite clear to us that any suspension of aid may upset the creaky balance that we have," says a business-group o1ficial.

Few b ere think the $15 million cut itself wm sink an already-floundering economy or "force" Nicaragua into the Soviet bloc. However, opposition leaders worry that the cutoff may give the Sandinistas something to blame their problems on, as one government official acknowledges. "The cutoff was a windfall to our government," he says. "It gives the Sandinistas moral strength."

The balance has been tipping against the non-Sandinist sectors of Nicaragua in a series of confrontations that peaked a month ago. Violent mobs, openly encouraged and organized by Sandinist officials, broke up an opposition political rally. In the course of blocking travel to the rally, the mobs blockaded roads and burned two non-Sandinist radio stations. An independent newspaper, La Prensa, didn't publish for two days after angry crowds gathered outside its omces in Managua.

Although the Sandinistas had been systematically cracking down on political dissidents, the touch of mob rule prompted an

increase in the exodus from Nicaragua of solely needed technicians and professional& "It was an ugly show of storm-trooper mentality," says a U.S. diplomat, noting that the Sandinistas had rarely resorted to such tactics before. Even Sanciinist leaders were reportedly surprised by how quickly their mobs got out of control. Outside observers, who have long looked for cracks in the unifted Sandinist leadership group, think a division may have opened due to the crude breakup of the opposition rally.

Publicly, however, the government explained the mob action as a natural reaction of the "masses" against the opposition rally's wealthy organizer, Alfonso Robelo. "If you attack the revolution," says Mr. Ramirez, the junta member, "you must count on the response of people who support the confrontation between the poor and the rich." Mr. Ramirez asserts that the Sandinistas have disappointed some of their supporters by !ailing to take stronger action against the rich. "It would be very easy to promote class warfare," he notes.

UNRAVELING ECONOMY The continuing political turmoil ls ae

laying the crucial reawakening of the Nicaraguan economy. The government's severe shortage of foreign exchange is crimping imports of Industrial raw materials and of suc~'l critical agricultural needs as machinery, fert111zer and pesticides. Inflation, unemployment, external debt and the trade deficit are all expected to increas~ this year. In the marketplaces and on the streets, Nicaraguans• first response to questions about the revolution is that everything is more expensive. Government officials acknowledge that people are rankled at the slow progress of the revolution in improving their way of life.

More critical in the long run is the erosion of the nation's productive base if investment continues to lag. A recent study by an international financial institution concluded that, even if a political consensus on reconstruction is reached, per-capita output of gooas and services wlll still take seven years to attain the level achieved before the 1978-79 civil war. Others are even more pessimistic, projecting that the economy will simply unravel as productive capacity declines. ' 1Unless something major happens," says one economist, "we're talking about the longterm running down of Nicaragua's economy."

A LESSON FROM ORWELL The brightest note is that so many of Nic

aragua's troubles are out in the open. Despite r .·strictions on what newspapers can publish, the three dames here are filled with the ongoing political debate, ranging from serious discussions of economic systems to trivial potshots at the other papers.

In the same week that the Sandinlst paper published a cartoon showing a Nicaraguan businessman shopping !or a swastika-emblazoned Ku Klux Klan robe in Miami, the independent La Prensa showed a drawing of a poor peasant family quizzically watching a Sandinlst official whiz by In a shiny Mercedes-Benz marked "property of the people." La Prensa published another implicit comment on the revolution when it inserted In all its editions newsprint copies.

[From the Washington Star, Jan. 25, 1981) SAYING No TO NICARAGUA

Never mind that the Carter administration, so long under fl.re for its Latin American policies, was all but out of office before deciding to cut off financial aid to the government of Nicaragua. It was, and remains, a necessary decision in terms of the law authorizing $75 million in economic assistance to the country. At least as a stopgap measure, it should be in line with the policies to be expected of the Reagan administration.

The point is that it does not make sense to give economic support to the Sandinista& 1f we are serious about wanting to keep a


more or less moderate junta in power in El Salvador. There ts too much evidence that Nicaragua has been actively helping the guerrlllas who want to refashion Salvadorean society according to the Cuban-Soviet model.

The reports keep coming in. Julian Ignacio Otero, former logistics chief of the People's Liberation Front (FPL), who defected recently from the Salvadorean terrorist group, describes the training camps ln Nicaragua where guerrlllas are prepared to fight ln El Salvador. According to him, every commander above the platoon level has been trained in either Cuba or Moscow.

Many sources report that about 100 fighting men of unknown national origin landed on the beach in eastern El Salvador around the middle of this month. American Ambassador Robert White concedes that there ls strong evidence of seaborne reinforcements for the guerrlllas coming into El Salvador.

From Costa Rica come reports of Soviet transports. In Washington, two weeks ago, more than a dozen correspondents heard members of a senator's staff describe more than a thous~d Soviet m111tary men in Nicaragua, some at work improving the port faclllties and the airfields where their MIGs are stationed, some in combat gear. The American ambassador to Honduras confirms that there are Nicaraguans in El Salvador.

There are various ways to interpret these developments. Some Latin American experts in Wa.shington belle1e the fighting tn El Salvador is actually a ploy to divert attention from the buildup of Soviet military strength in Nicaragua. In Managua, the newspaper, Dlarlo Las Americas, quotes the Soviet ambassador saying in a public speech that the United States is underwriting socialist revolution in Nicaragua.

There ls too much convergence of evidence for there to be nothing to it. The Reagan administration wlll undoubtedly want to reappraise Latin American policy as a whole before adopting far-reaching strategies, and the benefits of financial aid to countries such as Nicaragua should figure in them.

Those benefits--to American interests and the hope of a pluralistic society in Nicaragua-are equally real. Most of the money has gone to the country's surprisingly vigorous private sector, which means that it represents a hope of holdins back the totalitarian tendencies of the Sandinista government.

However, the de,•elopments of the moment call for stopgap measures if nothing more. A stepping up of military aid to El Salvador may be indicated-perhaps even lethal armaments. But the least we can do ls to stop paying people who are trying to bring down the beleaguered go~·ernment we are trying to shore up in San Salvador.

(From the New York Times, Aug. 1, 1981) UNCERTAIN SIGNALS IN NICARAGUA

The; foundation ls beginning to crack tn the hnlfway house that ls Nlca.ragua. Three fissures seem particularly unsettling. The main opposition newspaper, La Prensa, was recently closed for two days, in what was clearly a warning pour les autres. By widening state control over exports and the private sector, the Sandinista-led junta ls jeopardizing an alliance that has brought Nicaragua domestic tranqullllty and foreign support. And there has occurred a Sovtet-supnported m111tary buildup, only partly justified by fears of an exile invasion from Honduras.

Yet, lnsplrttlngly, democratic and freemarket advocates in Nicaragua refuse to give up the fight. The battle for a free press, for elections and political pluralism continues as the revolutionary regime enters its third year. The persistent struggle ls all the more remarkable since the Reagan Administration decided in April to suspend aid that had been expressly designed to bolster the private sector.

Libya then obliged with a $100 million loan. Yet d1.1sp1te its economic straits, Nicaragua invested heavily in an army of 40,000 and a mllltia of 200,000. CUba has supplied more advisers and the Soviet Union is now providing wea.po:ls, including tanks, according to a junta spoke3man. Even conceding security fe.a.rs, there were less provocative sources for military supplies.

If this were the whole story, Nicaragua could now be labeled a Soviet-bloc dependen~y. But t:P,e label doesn't quite flt, as Aldmini:stratlon officials acknowledge. The coalition that overthrew General Somoza produced no domineering figure, like Fidel Castro. Power in the three-member junta and nine-member Sandinista. directorate ls checked by continuous argument. Nicaragua's young leaders are intolerant but not yet ruthless. Critics are harassed but not wholly silenced or tortured, as was common in tha Somoza era.

The relative clv111ty of the revolution is among its vital assets. It has brought Nicaragua peace at home and moral credit abroad. Despite the strain with Washington, the Sandinista regime has been befriended by Venezuela and Mexico, and by European Soclialists and Christian Democrats. This support would be jeop·a.rdlzed by a. lurch to the Leninist left, as the junta in Managua. is well aware.

But if political constraints a.re still accepted in practice, the revolution's theory lags suspiciously behind. No timetable exists for the promised elections; pluralism ls su!fered rather than a.ssured. Lacking a solid charter of rights, Nicaragua ca.n easily drift back into repression.

These are arguments that Americans can and should make. But Washington does not help its natural allies in Nicaragua when it uses aid as a bludgeon. Some $15 mlllion was withheld in reprisal for the alleged smuggling of arms to Sa.l vadoran guerrillas. The Reagan Administration acknowledged a good-faith effort to ha.It the traffic, but the aid was not reinstated, relations worsened and Nicaragua ls a.gain accused of running guns to El Salvador. Thus did it turn to Libya, whose Colonel Qadhafi, you may be sure, won't be askinG lnccnvenlent questions about human and politie&l rights.

THE NICARAGUAN BALANCING ACT

(By Gerald F. Seib) Nloaragua and the U.S., which can't agree

on much of anything these days, are in accord on one point: Both concede that relations between them are sinking to a dangerous low.

The rhetoric flowing between Managua and Washington is growing increasingly harsh. From Washington, Thomas Enders, ass!.s!:ant secretary of state for inter-American attalrs, recently charged that Nicaragua is turning into a forward base of operations" for Cuba. The Re3ge.n administration continues to complain that weapons tlow across Nicaragua. to rebe!s ln El Salvador. And U.S. offtcla.ls contend that Nicaragua's leftist Sandinista government is squeezing out democratic elements and coming to resemble Cuba's totalitRrlan regime more every day.

The a.dmlnis:ration hopes its tough words wm dissuade Nicaragua from sliding completely into the Cuban mold. But the strategy is risky. A combative U.S. stance could alienate Nicaragua and drive it toward the very nations the U.S. wants it to avoid. For instance, 1n· the wake of a recent cutoff of some U.S. aid, Nicaragua, turned for assistance to the Soviet Union, Libya and East Germany.

If relations should break down, the adminlstra tlon could lose a.11 hope of inftuenclng even:s in Nicaragua, thereby thwarting its goal of cutting into Cuba's influence in Central America.

In short, the U.S. ls at a delicate sta.ge in a diplomatic balancing act. "Nicaraguans can do Castro's bidding if they choose, but they

could do our bidding too," says one State Department offtcial. "I felt for some time we needed to be harder with them. But you've got to mix that with being forthcoming."

The path Nicaragua takes has broad repercussions for U.S. interests in Central America. In many polltioal and strategic respects, Nicaragua may be more important than El Salvador, which has stolen the headlines lately. Though much more sparsely populated, Nicaragua. is roughly seven times a.s large as El Salvador. It borders Honduras and Costa Rica, two states friendly with the U.S. that are :iervously watching the leftward drift in Nicaragua..

Also, Nicaragua is just a few miles down the Pacific coast from El Salvador. Looming large in the minds of administration offtcla.ls ls the worry that Nioa.ragua could--or already has-become an exporter o! revolution to neighboring states.

"If Nicaragua. does radicalize and does become a totalitarian state and ls a surrogate of Cuba, we're going to have a fight on our hands in El Salvador," says one U.S. analyst. "It's hard to see how you could win in El Salvador."

To a large extent, the administration ts agonizing over the same policy dilemma that has confounded the U.S. ever since the Sandinista. revolution in Nicaragua in 1979. Both the White House and Congress have been trying to decide whether a policy of conclllatlon or one of confrontation would be more effective with Nicaragua's left-leaning government.

Initially, the U.S. settled on cooperation. The Carter administration maintained cordial relations and fought a bitter congressional battle to win aid for Nicaragua. The theory was that U.S. help would enhance Washington's lnftuence, which could be used to protect Nicaragua's private sector and democratic institutions.

Thus far, the Reagan admlnlstratton seems to have mixed the hard line and the soft. Ea.rlier this year it cut off the final t15 mllllon of a $75 million aid package for Nicaragua, charging that Nicaragua's government failed to stop, and perhaps assisted, the fiow of arms to Salvadoran guerrillas. But the administration didn't demand repayment of an earlier $60 milllon ln ald, as it could have under U.S. law. Disbursements of earlier U.S. aid parcels continue, and the administration has left open the possib111ty of resuming economic and food aid if the Salva.doran arms tlow stops.

Lately, though, the criticism from Washington has grown harsher. There ls little talk today of resuming aid, and administration offtcials say that Nicaragua isn't likely to be included in a.n emerging plan to beef up economic aid to Caribbean and Central American countries. Many in the administration think that the conclllatory strategy used by the Carter White House hasn't moderated Nicaragua's behavior and that the U.S. therefore must "take a harder line and expose them,'' one State Department omclal says.

The administration ls particularly upset about a military buildup by Nicaragua. U.S. analysts assert that Nicaragua ls assembling the large>t army in Central America. They estimate that Nicaragua now has some 20,-000 regular troops, plus about 50,000 in a m111tia. The government has said it would like an army of 50,000 regulars and a m111tia of 200,000-although many U.S. officials consider those numbers unrealistic.

By contrast, Gen. Anastasio Somoza, the U.S. ally overthrown by the Bandlnista guerrillas, had a national guard of about 14,000 regulars when he lost power.

What's just as troublesome, U.S. lntelllgence offtclals claim that they see signs Nicaragua is preparing to receive tanks from Cuba. (Earlier reports that Nicaragua already had received Soviet-made tanks via. Cuba. were incorrect. oftlcials aay). Analysts also report 11gna that N1ca-

October 20, 1981 CONGRESSIONAL RECORD-SENATE 24493 ragua has improved airstrips 1n the eut, possibly for military planes.

The adm.1n1stration fears that this mmtary buildup may be used by Nicaragua's leaders to clamp down on internal political opposition, which so far has enjoyed relative freedom. Worse, however, the U.S. worrie;:; that the mmtary buildup indicates Nicaragua may want to help Cuba spread trouble in the region.

But Nicaraguan leaders, and some U.S. anal)sts, say Kica.ragua is girding to defend itself against potential attacks from its more conservative nei~hbors. Nicaragua has rocky relations with Honduras, Guatemala and El Salvador. Those countries, in turn, worry about Nicaragua and thus seek military aid from the U.S.; the administration already has said it 1s seeking to double military aid sent to Honduras, which has had border clashes with Nicaragua. Thus, tensions in the area threaten to precipitate an arms race.

COUNTER-REVOLUTION THREAT .

Moreover, Nicaraguan omc1als say their defense buildup is necessary to guard against the threat of a counter-revolution launched by exiled supporters of the late Gen. Somoza. Some of these exiles have launched raids on Nicaragua. from Honduras. Others a.re training openly in Florida.

Nicaragua maintains that, by fa.111ng to stop the Florida training, the administration is hinting that it would approve a. counter-revolution launched by exile group~. Thus, Nicaragua. compains, Washington policymakers are creating the need for the very m111tary buildup they criticize. "It hurts our economic position because we have to be in a. defensive military posture," says Arturo Cruz, Nicaragua's ambassador to the U.S. "Then we find it bewildering that we are accused of this military buildup." (U.S. omclals respond that they discourage mllitary training in Florida but can't legally stop it unless the participants break weapons laws.)

For now, Nicaragua and the U.S. appear locked in a faceoff. The U.S. says that Nicaragua. should slow its military buildup and choke of! the arms flow to El Salvador if it wants relations to improve. Nicaragua says the Reagan administration should shut down the training activities in Florida.

The bright side in this cloudy picture is tha.t both sides at least profess a hope that they can improve relations. "It is essential that we close the existing gap, "Mr. Cruz •a.ya. "We want an improvement based on reciprocity."

But it isn't clear which side will make the first move to improve relations. "I'm personally concerned about the process we're in now because I don't see either aide doing anything to change the trend," worries one State Department omcial.

[From the Washington Post, May 10, 1981) INFLUENCING GUATEMALA

Frankly, when we suggested the other day that the United States consider resuming military aid to Guatemala in order to acquire infiuence with which to tame the government's repressions, we were quite aware that the idea is sub:ect to abuse, but we did not know the administration was heading so fast toward potential abuse of it. A plan has since emerged. The United States evidently is to resume m111tary a.id to the Lucas Garcia dictatorship, but to do so on grounds that there are some 2,000 "Cubansupported Marxist guerrillas" in Guatemala. The notion of using aid for leverage seems to have faded into the middle distance, where it can be held up as evidence of good intentions but not allowed to get in the way.

There a.re guerrmas in Guatemala. But though they are certainly in some sense Cuban-encouraged, they have been around !or years and are pretty much sustained on their own. Some foreign observers have

detected a guerrllla build up in the last year or so, but this is attributed to a very s"Jecifl.c !actor. It is a reaction to the almost unbelievable scale of violence conducted, not against guerrillas, but against civil1ans by the government's security forces and by death squads with omcial ties. Amnesty rnternational suggests that perhaps 3,600 citizens have been killed or have "disappeared" in the last two years. The army claims to have lost only 62 men in 1980.

What these figures suggest to us is that any program of American mil1tary aid not tied tightly to specific measures on limiting official violence is unthinkable. The evidence is that the Lucas Garcia government, which ls outside the pale even !or some of Washington's most reflexive anti-communist combatants, ls the chief source of the guerrilla movement. I! the administration's aim is simply to fight the guerrillas, then no aid should be given. If its aim is to stop the killings in order to try to help make Guatemala a healthy society and an emclent anti-communist bulwark than it must tie aid to government performance. Whether this administration has the self-discipline to make that connection remains the relevant question.

Actually, administration self-discipline is already being tested in El Salvador. The situation is different there: Ronald Reagan inherited an American commitment, while in Guatemala he inherited a vacuum as far as current omcial American ties are concerned. Before trying his hand in Guatemala, it might be useful for him to show whether he can push the genie of omcial repression back into the bottle in El Salvador, even while aiding the local junta in a battle against guerr1llas. His administration is trying, perhaps harder than some critics grant, but it has not yet met with success.

[From the Washington Post, Apr. 22, 1981] A DIFFERENT DICTATORSHIP

Superficially, Guatemala looks like your typical Central American disaster area.. It's a small blood-stained country run by a rightwing m111tary dictatorship regarded now a.s the mcst repressive in Latin America.. American intelligence quie.tly confirms Amnesty International's charge that the government runs an immense murder and torture campaign, involving thousands of victims, out o! an annex of the National Palace. A Cubanencouraged guerilla movement is evidently giving some ground.

All this is, in a sense, fammar. What makes Guatemala different is that the United States does not prop it up. For human rights reasons, Jimmy Carter cooled political relations and cut most m111tary ties. In nationalistic response, President Romeo Lucas Garcia cut the rest. The bloodshed and uncertainty are thinning economic ties. That makes it dimcult to blame the United States for President Lucas' atrocities. It also makes it dimcult to apply pressure to make him change his ways.

The point is perhaps insufficiently appreciated. Guatemala called the American liberal bluff. It dared the United States to cut it off, and it seems to be surviving the cut. Georgia Anne Geyer has reported that Guatemala filled the m111tary gap wt.th supplies from elsewhere. Worse, she warns, from Argentina the local armed forces are receiving the sort of sustained assistance that may lift Guatemala out of th:? customary civilianmmtary cycle and leave it indefinitely in m1litary hands. To the extent this is so, the United States, by cutting Guatemala off, has spared itself a certain taint but has done nothing to alleviate the country's agony or to relieve the political strain. It may even have made things worse.

At the mcment the United States is treading water. The American Embassy in Guatemala. lacks an ambassador and a purpose, no

poUcy direction ls coming out ot the State Department, and those in the Reagan administration who might, on the basis of the tip sheets, favor cowing up to anti-communist mill tary regimes--even this one---do .not seem to have zeroed in on Guatemala. There is no burning crisis down there, only the kind that builds slowly and surely.

It is a good time, then, to mull over another appr-0ach. The time of the liberal squeeze is pa.st. What about a conservative filer? Could the United States conceivably buy back influence in Guatemala by resuming mmtary contacts? Could the Reagan administration manage to pull off such a gamble without simply becoming partners of Guatemala's guerillas in fighting real or imagined guerrillas? Is there a responsible alternative?

[From the Wall Street Journal, Sept. 15, 1981)

AFTER THE REvoLT-NICARAGUA Is PLUNGED INTO ECONOMIC CRISIS UNDER NEAR ANARCHY

(By Steve Frazier) NIQUINIHOMO, NICARAGUA.-For Nicara-

guans like Cesar Munoz who expected the 1979 ouster of the tyrannical Somoza regime to bring better times and a more democratic government the first two years of life under the victorious Sandinist guerrillas has been a bitter disappointment.

Mr. Munoz, a tailor whose brother was killed by Gen. Anastasio Somoza's national guard, says, "I can see this government isn't democratic. There is too much Somoza.ism in the regime we have now." His wife, Belia, who leaves their home most days at 2: 30 a.m. to tend a. market stall 20 miles a.way in Managua, complains shrilly that the Sandinist revolution has left her family poorer because of higher prices and new taxes "We are workers and fighters," she keeps repeating. "The revolution hasn't clone much for people like us."

What hurts many of the 2.5 million citizens of this tropical country about the size of Michigan is an economic crisis so severe that Nicaragua doesn't have enough dollars to import the machinery and raw materials it needs to keep its largely agrarian society functioning. Many analysts think the economic problems will mean even lower standards of living !or the generally impoverished population-a potentially explosive development for a young, almost anarchic government struggling with increasing political tension on the one hand and the frustrations of the masses on the other.

SERIES OF FIEFDOMS

"This isn't a government but a. series of fiefdoms with a thin veneer covering the anarchy," says Lawrence Pezzullo, who recently ended a two-year stand as U.S. ambassador to Nicaragua. (A successor hasn't been named yet.) He contends the Sa.ndinists haven't worked out among them a. true policy for the future. "You may eventually end up in totalitarianism here because they don't have a plan," he worries.

The nation is run by nine commanders, representing three Sandinist factions, which form the national directorate of the Sandinist National Liberation Front. TJ::>:ere also is a three-man junta that formally heads the government. Layers of bureaucracy; public "mass" organlzationn and other power bases support various commanders. One result is that from all over the government, wildly confiicting signals and programs emerge almost daily. For instance, local bureaucrats have indicated satisfaction with the independent operations of some businesses that were subsequently grabbed in a wave of confiscations announced by the junta In July.

Private economists assert that the confusion exacts a high price. Government programs are prollfere.ting, and spending on them wm increase 41 % this year. But many poor people who hnve been barely touched by new health or social programs over the

24494 CONGRESSIONAL RECORD-SENATE October 2(.J, 1981

past two years say a bigger change in their lives has been higher prices. Infiation in food prices was 37 % last year, and general infiation could hit 50 % this year. l..memp.oyment, estimated by the U.S. embassy at 18% of Nicaragua's workers, also could worsen as the economy tumbles.

A more immedia.te crunch for the nation is a lack of hard currency. Although government officials say Nicaragua. has money to import be.sic goods, businessmen report they can't get dollars from the central bank to buy even such crucial items as raw materials to manufacture pharmaceuticals. Agricultural .producers say their implements are stalled because of a shortage of spare parts; ported out of commission for the same a third of the national fishing fleet ls rereason.

With its back against the wall, the junta last week declared a state of emergencr.It cut the national budget 5% to the equivalent of about $87 milllon; slashed subsidies for food, transportation and other items 10%; froze the government payroll , and imposed a 30% to 100 % luxury imports levy. It also threatened jail terms for acts of "economic sabotage,'' said to include strikes, raising prices without permission and publishing :l:alse econ.:>mlc news. Although the measures are viewed as generally beneficial to business as a first step in dealing with the crisis, there ls concern that the decree also might be used to stlence economic criticism.

For the time being, the economy is projected to worsen. "The problem of our balance of payments ls so great that we can't solve it even by doubling our exports," says Sergio Ramirez, a junta member. Export income suffers from low coffee, sugar and cotton prices-the products usually account for more than half of Nicaragua's export income-and from le.ck of investment to increase production. Even after receiving more than $310 million in foreign a.id this year, mostly from Mexico, Venezuela and Libya, Alfredo Cesar, the head of the central bank, says he will need to obtain $110 million more to pay an imports bill that wm be something less than last year's $800 mlllion. For next !fear, some projections show Nicaragua needing as much as $750 million in outside help, far more ths.n its expected export sales ot $450 mllllon to $fi00 mlllion.

Meanwhlle, the means to produce more dollar-earning exports ls declining. Mr. Cesar says a World Bank study that concludes the nation needs 10 years to rebulld per-capita production to 1977's level ls "within government estimates." He adds: "We are going to h~vc to work harder and consume less for ' while."

But even that prolonged reconstruction requires cooperation from private business that isn't yet ta.king place. The latest indicator of lack of confidence ls word that the just-completed cotton plantings wlll reach only about 220,000 acres-far fewer than the government plan for 300,000 acres and fewer even than last year's plantings of 233,000 acres.

The divisiveness that plagues Nicaragua has evolved from an unprecedented unity about two years ago among Marxist-led guerrillas, upper-class businessmen and the Roman Catholic church. Their common goal was to overthrow Gen. Somoza. Now, however, "the situation is polarizing every day," says Miguel Obando y Bravo, the archbishop of Managua, who ls revered for his opposition to the Somoza dictatorship and now for his public criticism of the Sandinists. "The revolution has brought some good things,'' he adds, "but it has filled the hearts of men with hate."

Many of the bad feelings arise from the Sandinists' conflicts with business owners, who are in the forefront of dissent to the Sandinist line. They have shown reluctance to invest in national reconstruction untn they receive assurances of more political freedoms and protection of private property.

The government retaliated by confiscating businesses for allegedly depleting capital instead ot investing as the government wants them to. It has also urged workers to report on employers who are "decapitalizlng."

Businessmen contend that the confiscations, although relatively insignificant, a.re a. step backward in rebuilding the econ<)lny, which is stlll 50% to 60% in private hands. What ls most disturbing to them ls that the businesses involved range from the truly bankrupt to some that were well run and productive. "This has been a. signal that any business can be taken over at any time,'' says a Nicaragua economist.

One of the confiscated enterprises, Jabonerla Prego S.A. in Granada, ls the nation's oldest soap maker. Prego had money in the bank, rising production, a three-year supply of spare parts and a stockplle of imported ra.w materials. Constantina Lugo, whose famlly owned the company, says he hopes the government will soon change its direction. But he asks, "how can you feel secure working here if you can get confiscated?"

CLASS-STRUGGLE FEARS

One aside effect of the campaign against the country's largest businesses is that in this nation of thousands of small farmers and shopkeeJ:ers, even the humblest entrepreneurs a.re starting to fear that private enterprise could yield to a class struggle whipped up by the Sandlnists' rhetoric.

"The Sandlnlsts wm have to take away from the people who have, to give to the people who don't have," says Manuel Gaitan, who farms 34 acres and runs a tiny store from a corner of his home in Catarina, which is a few miles from Niqulnihomo. Mr. Gaitan has always considered himself .a peasant, but now he worrle3 he may be deemed too well-to-do by standards of his crumbling, muddy vllla.ge. "We fought in the revolution to acquire a government that truly represents the people, "he says, "but this has become a war between the poor and the rich."

Government officials acknowledge the tense relations with their critics but promise they wlll come to terms with productive businessmen and protect their right to operate. Mr. Ramirez, the junta member, denies that the government wants to break the remaining political and economic influence of business, saying, "If we were really interested in destroying the private sector, we have the means and the power to destroy it."

DIRT IN THEIR EYES But in the northern town of Matagalpa,

officials of a 7,000-member coffee growers' cooperative attribute several recent kllllngs and continuing threats to a Sandinlst campaign to demolish their organization. "The government sees in the coffee growers an accumulation of economic power that could confront them some day,'' says Alfonso Escorsla., the director of the co-op, which was formed shortly after the 1979 war. "We are like dirt in their eyes."

When the Matagalpa co-op grew in influence and membership, efforts to coerce small coffee growers to join Sandinlst-allied

. rural workers'. groups also increased. Last fall, Sandlnist security agents kllled the cooperative's founder, Jorge Salazar, and accused him of counterrevolution plotting. This summer the new president, Franlt Bedana, an American citizen, was deported.

Now another government-sponsored organization ls trying to woo members away from the original cooperative. Mr. Escorsia says members of the Sandlnist group travel through the mountains accompanied by armed men in military garb, telling coffee growers they won't get financing through the private-sector group because it ls counterrevolutionary and will "disappear." Pascual Perez, a small grower who helps organize the Matagalpa co-op in his region, says two armed men left a. message with his wife that he should quit the group. "I am defined by them as bourgeoisie because I belong to this

association,'' he says, "even though I have nothing."

Over the past several months, half-a-dozen members of the co-op have been killed. Two of the victims were seen in the custody or Sandinlst security men in July and later found dead, the co-op contends. The same month, on the second anniversary of Gen. Somoza's ouster, the government announced that all agricultural cooperatives must be registered with the government. The Matagalpa. co-op was forced to remove the sign from outside its office and given two days to change its name to "association" from "cooperative." Mr. Escorsia says he has since been warned by the police that "if members a.re found in groups of five or more discussing the association, they a.re going to put us into jail immediately."

[From the New York Times, Oct. 2, 1981) DESPAIR IN GUATEMALA

(By Flora Lewis) GuATEMALA.-Nobody seems excited. No

body sounds emotional. There is an eerie quiet in Guatemala.

D.iy after day the newspapers print items like one the day I came: "Unknowns kllled 31 peasants in Rabinal,'' a small county. "Unknowns" has become a code for armed men on the Government side. The item also said that "none of the victims has been identified so far, since the residents who remained alive preferred to fiee their [four different] villages and nobody knows where to find them."

Col. Jaime Rabanales Reyes, the army spokesman, said correctly that there was no crisis in Guatemala. "But I feel a crisis coming,'' he said.

So does practically everyone. A sm111ng taxi driver said, "Either there wlll be an arrangement after elections or things wlll get worse. We don't know what we want." A veteran Western diplomat shrugged and said, ''It's hopeless, that's all." And a. responsible American official said with tight lips, "I don't get embarrassed about things I can't do anything about."

Tne cynical 'l. tmosphere seems worse than the passions of c,onftlct, but it is bound to burst aflame one day. People are kllled by the hundreds each week, sometimes decapitated. Nobody knows how many. Often, nobody knows why.

Lawyers, teachers, moderate politicians are becoming in short supply. Those who remain live in a numb, almost thoughtless fear. Offlclals boast chllllngly that there are no political prisoners m Guatemala. It seems to be too true. When there is an arrest, a trial, people are sure it's a common criminal because politicos are simply "disappeared" without further ado.

There is a. sinister war going on between two cold-blooded r;roups seeking to dominate by terror. There u ·e no white hats. The great bulk of people are caught between, and if they turn to ~ne side for protection, they know they are m ::rking themselves as targets for the other. Nonetheless the leftist guerrlllas seem to be expanding, if only because they lack the capacity to klll as many bystanders as the official forces , and they concentrate on soldiers. So they offend ordinary people less.

The Government forces, often unable to retaliate directly against the hit-and-run guerrlllas, take out their fury on the v1llagers left behind. It tsn't hard to pick up firsthand stories, but the sense of outrage is dulled. ·

President Romeo Lucas Garcia refused to meet with a. recent U.S. Congressional delegation, and publicly denounced its members as "Communists" when they left. It is hard to imagine roo::n for anyone to the right ot President Lucas, but it does exist in Guatemala.

Support comes from landowners and businessmen who are nevertheless disgusted by his modest raise in the very low minimum

October 20, 1981 CONGRESSIONAL RECORD-SENATE 24495 wage and his token land reform. "They are like the people," said an American omctal, "who thought they could make use of Adolf Hitler to preserve their interests."

Their main candidate for the election next March ls Marlo Sandoval Alarc6n, who has said that with power he wlll klll not hundreds but thousands of "Communists" a week and put an end to the 20-year-old guerrma campaign. Mr. Sandoval goes often to the U.S., and then claims he was received by the Secretary of State and people close to President Reagan.

That doesn't check out at the State Department. But no matter, it impresses people here. Actually. U.S.-Guatemalan relations are very cold, but both sides make a public pretense of getting on nicely. The Administration theory that tough regimes wm be more amenable if they aren't pressured out loud-as with South Africa-has been tried here.

Ex-deputy C.I.A. chief Vernon Walters was sent recently to say Washington would like to help against the real Communist insurgents but that Guatemala must help Was!llngton with Congress and public opinion by showing some willingness to moderation. He was angrily rebuffed.

The establishment here hated President Carter without reserve. But it is no more prepared to indulge the Reagan Administration unless it ls backed without question.

Nonetheless, the U.S. silence and a fair amount of American-supplied military equipment-trucks and jeeps-are seen by others here and by most in the rest of the world as a sign of support for the regime. Inevitably, the U.S. ts coming to appear as an accomplice.

What can we do? At the moment, the answer must be that there ls nothing positive. Guatemala has substantial resources for its widely spread seven m1llion people. It has oil. The leaders seem prepared to withdraw into a kind of Fortress Guatemala, and they have established links outside the U.S. to maintain it.

There are close ties with Argentina and Chile. Israel has traditionally supplied arms, and now South Africa ts helping build a weapons factory. Taiwan has the secondlargest diplomatic mission and provides technical aid.

Seeds of the whirlwind are being sown. The best course for America to avoid reaping them would be to disassociate the U.S. as much as possible from this regime, persuade friends like Israel and Taiwan that they have little to gain from collaboration, and make clear we don't share Guatemala's outlook. We can't do anything to improve it, but it's a tar brush we don't need.

[From the New York Times, Oct. 2, 1981) THE U.S. AND SALVADOR

(By Robert E. White) WASHINGTON.-The Senate was a.t its best

when on sept. 24 it refused to drop an amendment proposed by Christopher J. Dodd, Connecticut Democrat, requiring President Reagan, in advance of any further United States assistance, to certify twice a year that El Salvador is working to put an end to the "indiscriminate torture and murder" practiced by its armed forces. This amendment points the way toward a common-sense resolution of the Salvadoran crisis.

Administration policies have completely undermined El Salvador's dv111an leadership. President Jose Napole6n Duarte stands for reform, for negotiation, and for an end to the savagery of the armed forces. But the Administration's policy of rejecting negotiation has given final authority to the hardline mil1tary of El Salvador. Moderate clv111an leaders in Central America fear that the Administration's insistence on m111tary defeat of the Salvadoran insurgents could engulf the entire region in fratricidal war.

These fears have a solld base. The Hon-

duran Army al.ready cooperates wt.th its Salvadoran counterpart in anti-insurgent operations. The Salvadoran m111tary regularly violates Honduran territory and airspace in carrying out search-and-destroy missions. Now the Reagan Administration has approved the Pentagon plan known as operation Falcon's Eye, which wm send 180 United States offtcers and ·troops to Honduras for joint military exercises early this month.

The Pentagon's success in gaining approval for these exercises implies that the Administration ls ready to give the go-ahead to the revival of a new version of the notorious Central American Detense Councll, which traditionally has run the exercises. The United States Southern Command, in Panama, ls the founder and overlord of the council, whose mandate is to create a regional military strategy and a common 1ntell1gence service to counter "subversive Communist agents" who infiltrate Central America.

For a few filckering moments in the last days of the Carter Administration, there was some reason to hope that El Salvador might be saved from further bloodshed. An honest beginning on agrarian reform had been made. The Salvadoran Government publicly pleaded with the Revolutionary Democratic Front to come to the negotiating table. Pressure from the United States combined with threat.:> by the Christian Democrats to bolt the Government unless human rights abuseio were curbed resulted in small but real progress. The military published a code of conduct and transferred many hardline military officers out of positions of power. In January, the guerrllla forces' highly touted "final offensive" failed. The Salvadoran Government began plans to complete the second and third phases of the agrarian reform. The Front began to talk seriously of entering the negotiations. But within a few weeks, Reagan Administration policy undercut the Government's revolutionary program. Agrarian reform was slowed and the vital second stage of the reform, which decreed the redistribution of the rich coffee lands, was canceled.

The Administration's insistence on a military solution prevented the Christian Democrats from fulfill1ng Its pledge to negotiate with the left. Thus, the Christian Democrats, who have much more in common with the moderate wing of the Democratic Revolutionary Front than they do with the oligarchy, were demoted to a subordinate role.

The Reagan policy has diminished to the vanishing point the influence of Mr. Duarte and the Christian Democrats, returned the oligarchy to its formerly dominant position, and associated the good name of the United States with death squads and the massacre of Salvadoran youth.

The Administration condemns as "straight terrorism" the dynamiting .of power lines by insurgents, and remains silent while Salvadoran forces routinely practice torture and assassination.

United States policy in Central America has created a serious rift with our allies. Recently, France and Mexico correctly recognized the revolutionary movement as a "representative political force" that must be dealt with if a lasting peace is to be attained. This deft diplomatic initiative calls for the restructuring of the armed forces be·fore the holding of elections. There exists adequate common ground here for the beginnings of a multinational diplomatic effort to bring peace and reconcmation to the Salvadoran family.

While there is still time, the United States should adopt the position that the only unacceptable outcome in El Salvador would be military victory for the insurgents. A negotiated solution to the confilct is the one certain way to prevent that military victory.

The PRESIDING OFFICER. The question is on agreeing to the amendment numbered 571, as modified, of the Senator from Nebraska <Mr. ZoRINSKY).

The amendment <No. 571). as modified, was agreed to.

Mr. ZORINSKY. I move to reconsider the vote by which the amendment was agreed to.

Mr. PERCY. I move to lay that motion on the table.

The motion to lay on the table was agreed to.

Mr. BAKER. Mr. President. I will advise the Senate, as Members are already aware, that caucuses of an official nature are going on at this time concerning. Senators on both sides of the aisle. I beLeve those caucuses may contribute in a substantial way to the further progress of the agenda of the Senate today and for the remainder of this week.

Therefore, I think it would expedite the proceedings of this body to recess and not interrupt those caucuses.

Mr. PERCY. Mr. President, if the Senator will yield, I would like to reiterate once again that the period between now and 2 o'clock will be used by the managers of the bill and the staff on the respective sides of the aisle to urge 13 Senators to come forward now who intend to offer amendments and to try to work out with us a time agreement and a schedule so we can proceed in an orderly fashion to finish this business.

The manager of the bill is prepared to go through the night and finish the b:Il. But, as I understand it, there are bipartisan considerations that would preclude that. As I understand it, the Senate will work a reasonably norm.al workday today and then this bill will be the pending business tomorrow morning. Is that correct?

Mr. BAKER. That is my understanding.

Mr. PERCY. I thank the majority leader.

RECESS UNTIL 2 P.M. Mr. BAKER. Mr. President, I ask

unanimous consent that the Senate now stand in recess until the hour of 2 p.m.

There being no objection, the Senate, at 12 :37 p.m., recessed until 2 p.m.; whereupon, the Senate reassembled when called to order by the Presiding Officer (Mr. DURENBERGER) .-

UP AMENDMENT NO. 490

(Purpose: To exempt certain programs under Public Law 480 from the requirement.& of cargo preference laws)

The PRESIDING OFFICER. Under the previous order, the Senator from Missouri <Mr. DANFORTH) is recognized to call up an amendment.

Mr. DANFORTH. Mr. President, I send an amendment to the desk.

The PRESIDING OFFICER. The amendment will be stated.

The bill clerk read as follows: The Senator from Missouri (Mr. DANFORTH)

proposes an unprinted amendment numbered 490.

Mr. DANFORTH. Mr. President, I ask unanimous consent that reading of the amendment be dispensed with.


The amendment is as follows: On page 84, between lines 2 and 3, insert

the following: ELIMINATION OF CARGO PREFERENCE

SEC. 716. The Agriculture Trade Development and Assistance Act of 1954 (7 u.s.c.


1697 et seq.) ls amended by adding at the end thereof the following:

"SEc. 414. Notwithstanding any other pro· vision , of law, the provisions of the cargo preference laws shall not apply to transportation ot commodities financed under the au-

thority ot title I or made available under title II ot this Act.".

On page 84, llne 4, strike out "Sec. 716." and insert in lieu thereof "Sec. 717. ".

Mr. DANFORTH. Mr. President, this amendment would eliminate the cargo preference requirements for food shipped under Public Law 480.

At present, the Merchant Marine Act provides for cargo preference for Public Law 480 food. The meaning of that is that, under the law, one-half of the food shipped abroad under Public Law 480 must be shipped in U.S. flag vessels. The practical meaning of that is that a portion of Public Law 480 funds must be used to pay the differential between the price of shipment of food on other vessels and the higher cost of the shipment of food on U.S. flag vessels. Therefore, we are subsidizing the di:ff erential in cost of shipment, and we are subsidizing that cost out \>f Public Law 480 funds.

Mr. President, the cost to the Public Law 480 program of the cargo preference requirement has been estimated by the Congressional Budget Office to be $75 mllllon in 1982. That estimate is said by some to be too low a figure, and an informal estimate by the U.S. Department of Agriculture put it at about $95 million; others have said about $100 million. So somewhere in the neighborhood of $75 million to $100 million of Public Law 480 funds ~re now being used to finance the cargo preference requirements.

What can be done with this amount of money? Well, $75 million to $100 million, which is now used to pay the increased cost of 5hipment, could be used instead tc buy food. It is estimated that that amount of money, that extra amount of money, could buy between 350,000 >tnd 500,000 more metric tons of food in 1982. Three hundred fifty thousand to 500;000 metric tons of food is enough to feed an estimated 6 to 8 million children.

So, Mr. President, what we are talking about in this amendment is transferring a portion of Public Law 480 money which is now used for the purpose of subsidizing the merchant marine fleet and using it instead to buy food which is desperately needed by a hungry world.

Last week, on the floor of the Senate, we observed World Food Day, and a number of speeches were made on the floor on that occasion. It was pointed out that every day, 40,000 people, some 30,000 of them ·oeing children, die of hunger m various parts of the world. It is estimated that every minute, 28 human beings starve to death; that every 3 days, hunger claims as many llves ns those lost in Hiroshima; and that each year, 20 million people starve to death in the world.

Public Law 480 is the ba~ic program ln the United States to get food, which we have in abundance in America-a bumper crop this year, for example-to get food in this country, to buy it. and to send it abroad. It is the basic program for getting our food into the hands of people who otherwise will die.

The point is made, on behalf of cargo preference, that our American merchant

marine fleet is a disaster; that the merchant marine fleet in the United States is not comp2titive; that the merchant marine lieet in the United States is in a very bad competitive position with regard to the rest of the world, and that America needs a good, strong merchant marine fleet. I do not debate that point. It may be that the United States has to provide some sort of subsidy, some sort of bailout, for our merchant fleet. That can well be the case, and indeed we are providing that kind of bailout now.

I used to think that I did not like bailouts, as a matter of general economic principle. Yet, I have found myself voting for a variety of them since I have been in the Senate. But this is a bailout like none other; because this particular provision with respect to Public Law 480 is a bailout of the merchant marine industry, not just from the funds of the taxpayer, but, instead, is a bailout of the merchant marine industry out of food that otherwise would go to people who are starving.

So it is not the typical kind of subsidy that is involved here. Rather, it is quite directly a transfer of resources from food otherwise destined for people who are dying to the merchant marine industry.

So if we are going to subsidize our merchant marine fleet, let us do so openly and directly. Let us do so in so mi:my words. Let us do so by facing up to that fact on its own merit3, not b.Y reducing what is otherwise available for Public Law 4SO.

Mr. President, we have already decided in the process of budget cutting to cut the Public Law 480 funds approximately $100 million less than what they were under President Carter's budget. If we go through with the next series oi budget cuts the President has proposed that is ano~her ~J.40 million below President Carter·s figure.

So at a time when starvation is rampant in the world, and when people are dying, we have already cut this program very substantially, and this amendment would simply say that we can mitigate that damage at least somewhat by not forcing a subsidy literally out of the mouths of children around this world into the merchant marine fleet.

Mr. LEAHY addressed the Chair. The PRESIDING OFFICER. The Sen

ator from Vermont. Mr. LEAHY. Mr. President, I support

the amendment by the distinguished Seng.tor from Missouri, because I believe that every penny that goes for food aid should do just that. I firmly believe that the Public Law 480 program should be exempt from the cargo preference requirement so that what scarce resources we have for emergency relief and famine protection be put to their intended uses, not to an ancillary one.

Now, we have heard a great deal about the vital role of our merchant marine, the role it plays in our defense effort and the number of companies dependent on Government support for their very survival. I understand these arguments. And I would urge the administration to make good on its plans to draft a new maritime policv. I would urge the Commerce Committee to take a careful look at the cargo preference program. Maybe

it makes more sense to have this program funded by the Department of Defense, since national security is so often med as the basis for the program's rationale and not the feeding of the world's hungry. Possibly the Commerce Department or the Departtnent of Transportation would be the logical home for all cargo preference provisions.

But, Mr. President, I do not believe that the Agriculture Department in general, or the Public Law 480 program specifically, is the proper home for cargo preference.

The Public Law 480 program is the food for peace program. Ever since 1954 it has had four tasks. First, it has provided an outlet for our surplus farm commodities. Second, it has met certain foreign policy goals. Third, it has had overwhelming success in developing new export markets for our farm goods. Finally, it has provided vital food relief for needy countries around the world.

In a time of sharp budget constraint.s, every dollar spent on this program is precious. Public Law 480 has been cut, and will come in for more cuts. At the same time the costs of cargo preference keep 1going up and up. It is now cal..: culated that around $100 million of Public Law 480 goes not fOO' food but for the shipment of food. That means that 500,000 metric tons of food goes unpurchased. It means that people will go a little more hungry. And it means that in the long run, the world is a little more insecure, a little bit more desperate.

As a member of the Presidential Commission on World Hunger, I feel it is essential that the Senate take a clear stand on this issue and support a successful program that has positive benefits for this country. Our own fate as a free and secure nation is linked to the stability of the rest of the world. Our efforts through Public Law 480 contribute to this stability and should not be diluted.

Mr. President, this is not the first time this year that the Senate has considered this issue. The enti're Agriculture Committee recommended this action as part of the budget reconciliation measure. There was merit in the proposal then, there is even more merit to the proposal now.

I urge my colleagues to support this amendment by the Senator from Missouri. I also urge the administration to take a cold, hard fook at cargo preference itself-speCircally, in light of last year's loss of the Public Law 480 transport ship the SS Poet which went down without a trace, taking with it all 33 members of its crew. Secretary of Commerce Drew Lewis had promised to personally review this country's grainshipping system "to make certain that it does not have the effect of encouraging the use of any unsafe ships which risk the lives of American seamen."

Mr. President, our cargo preference proQ'Tams play an important role in support of our merchant marine. It is clear to me that the whole program will benefit from careful review by both the relevant eenate committee and the administration. But whatever the outcome of this review, I see no need for the Public

October 20, 1981 CONGRESSIONAL RECORD-SENATE 24497 Law 48 progTam, a vital component of our food aid efforts and our foreign policy itself, to be penalized.

Again, this $100 million translates into food-food for hungry children. I urge support for this amendment.

ELIMINATION OF CARGO PREFERENCE

Mr. DOLE. Mr. President, I would like to indicate my support for the amendment offered by the Senator from Missouri, and to express my opposition to the continuation of cargo preference in the Public Law 480 program.

I would hope that both Congress and the administration are beginning to recognize the fundamental unfairness of continued subsidization of an industrial special interest at the same time that we are cutting supports for agriculture and other sectors and increasing their reliance on the free market.

CUTTING BACK THE FOOD FOR PEACE PROGRAM

Mr. President, the economic recovery program outlined by the President and undertaken by Congress has required significant sacrifices in the food for peace program--some $100 million in commodity sales already, with another $140 million requested in the second round of budget cuts.

Frankly, I can make no commitment to support a further reduction in the Public Law 480 program at this time. The benefits of food for peace in providing humanitarian relief to less developed countries over the past 26 years have been the margin of survival for many of the world's poor.

In addition, Mr. President, Public Law 480 has contributed to our rural economy by insuring the export of a small but significant quantity of U.S. agricultural products.

If we are to reduce American assistance to both the world's hungry, and to U.S. farmers and ranchers, we should also be willing to scale down the overdependence of the maritime industry on Government cargo preference guarantees.

I am informed that the elimination of cargo preference proposed bv the Senator from Missouri would divert an estimated $100 million to the sale of farm products abroad. While this amount would not compensate for the budget reductions made or requested in the Public Law 480 program, it would restore a sizable share.

At current commodity prices. the United States would be able to sell an additional 350,000 to 500,000 metric tons of corn, wheat. soybeans, and other products with the same money-sales that would greatly benefit the depressed level of farm prices today.

CARGO PREFERENCE INCONSISTENT WITH FREE TRADE

Mr. President, Congress is now completing consideration of a new farm bill which will set commodity support provisions for the next 4 years.

The 1981 farm bill will provide some insurance for farmers against low prices but will need to be complemented by ~ strong and aggressive policy on agricultural exports in order to restore prosperity to our farm sector.

79-059 0-85-40 (Pt. 18)

We must explore every opportunity for expanding trade, for eliminating import barriers and unfair export practices which restrict U.S. exports, and for maklng our products competitive in the world marketplace.

One of the few tools currently in place for assuring at least a minor percentage of annual exports of agricultural products in today's highly restrictive market is the food for peace program.

If farm prices are to be raised, maintenance of a meaningful level of exports under Public Law 480 is an essential objective of our agricultural trade policy.

ADMINISTRATION POSITION ON CARGO PREFERENCE

To my knowledge, Mr. President, the administration has yet to take a position on whether cargo preference for Public Law 480 should be continued.

Transportation Secretary Lewis has twi?e indicated that there is an ongoing rev1e~· of the subject within the overall context of a policy framework on the decline of the U.S. merchant marine.

I certainly will look forward to Secretary Lewis' conclusions on the subject. If ~here is any way to bring our shipping mdustry back to life without burdening the U.S. taxpayer, he will have my full support.

On the other hand, I see no reason to continue to burden the American farmer or the taxpayer with the rising cost of U.S. freight rates under cargo preference.

I know the condition of the farm economy in the countryside right now and it is serious. Farmers need all th~ help they can get-not through Government subsidies but through greater exports and higher prices.

As a result, Mr. President, I would hope that the administration moves ahead quickly with its review of the maritime industry and makes its recommendations before we are asked to make further cuts in the commodities side of the Public Law 480 program.

Mr. President, I commend my colleague from Missouri for his forthright effort to correct a situation that simply does not make good economic sense for either the administration or the maritime industry.

We need a healthy shipping sector in this. country just as we need a healthy agricultural sector. We will have neither if private initiat~ve and enterprise are not allowed to determine profitability in the domestic and world economy.

I commend my distinguished colleague from Missouri for his initiative in this effort. It is one that is supported by the distinguished Senator from Vermont <Mr. LEAHY), and by nearly every member of the Senate Committee on Agriculture, and I hope the amendment will be adopted.

Mr. INOUYE. Mr. President, I speak in opposition to the amendment.

At the end of World War II our merc;hant marine controlled the seven seas. ~e were No. _1 in every category of shippmg. Countries that wanted to do business with the United States had to ship their goods in American bottoms. For that matter, even if they wanted to ship

their go~ds to another country, it was an American ship that carried them

It may interest many of my collea8'ues to know that we no longer have the world's largest merchant fleet. In a sho~ period of time, because of our gen~rosity, our merchant fleet ranks 11th m the world in terms of the number of vess~ls. We carry only 4 percent of our foreign ?ommerce on American ships. The. Soviet Union, on the other hand, c'.'Lrnes more than 50 percent of its foreign cargo on its ships, and its fleet ranks second in the world in size.

Public Law 480, Mr. President, is a fine program. The title itself is an excellent one, Food for Peace. It is an assistance ?rogriam. It is one of the main programs m our foreign assistance program.

Pub.lie Law 480 cargo is produced by Americans, on American soil. I just wonder ~ow starving people feel when they receive food under Public Law 480 which ha~ been carried on Soviet bloc ships. This amendment will permit ships flying the hammer and sickle to be carrying our goods. We intend these goods to feed the hungry and, at the same time, carry a message that these are American goods.

Stevedores in some of these undeveloped countries, not being able to read or write, will see vessels flying the hammer and sickle, and will come to a conclusion that these goods represent the b01.~nty of the Soviet Union, not of the Uruted States.

Our laws are so generous and so liberal that it may surprise some of you to know ~hat to this day our transoceanic mail is not b~ii:tg carried by American ships. Our mail m some cases is being carried b~ vessels of one of the Soviet bloc countries.

This present law says that at least 50 perce~t of o~r goods must be carried on Amen~an ships. We are not saying that all ?f it must be so carried. Now we are saymg that all of it can be carried by anyon_e as long as they bid below us.

I thmk we should keep in mind that we are not .dea:ling with apples and oranges. Our sh1pp:ng companies are privately o~ned, and operate privately owned ships. They are not owned by the Government. There is a shipping company called FESCO, the Far East Steamship Co. Looking at the letterhead one would conclude that it must be some Chinese c?mpany. It is wholly owned by the Soviet Government. It has no trade unions· no board of directors; no stockho.icters'. It can under bid the Americans vessels at every turn.

The Soviets long ago concluded that the merchant marine was part of their def~nse structure, that it was part of their navY. We won World War II because we had a merchant marine. Some have argued that we do not need a merchant marine because we can always rely upon our friends.

Just think back to Vietnam. We had a few problems down there. NATO ships refused to carry our cargo to Vietnam.

Let li~ go back, not too long ago, to the Yorn Kippur War. At a time when the Israelis were almost on their knees, and were in need of military cargo, we looked

24498 CONGRESSIONAL RECORD-SENATE October 20, 1981 around for U.S. ships. All of our ships were on the high seas so we called upon Americans, Americans who owned ships under foreign registry, and asked them, "How about being good Americans and help carry our cargo to Israel?''

Well, the word got back to the OPEC countries, and they notified Panama and Liberia that any ship in their registry carrying this cargo would be considered doing an unfriendly act. So what was the outcome? Not a single Amerlcan responded to our call; not a single American. So when the crunch is on, I think we can only count on our own ships.

I hope that my colleagues will look upon the sad plight of our merchant marine industry. To think that we carry only 4 percent of our foreign trade should be of major concern to us. Not too long ago we were concerned about the oil embargo. It was real. I can still see p:ctures of cars bumper to bumper lined up in front of gas stations waiting for their little quota of gasoline.

Imagine what would happen if there is a shipping embargo. It is not too far way. The Soviets who were No. 30 at the end of World War II are now No. 2 in the world. At the rate they are going, in about 3 years they will be No. 1. And the time may come when some Foreign Minister of the Soviet Union, sitting acros3 from our Secretary of State, would say, "Mr. Secretary, I don't like your attitude and your country's attitude. I am ordering all of our ships to stay away from the United States." Then we will have problems.

And so this may seem like a very minor amendment, and I commend its author. But Mr. President, we should be concerned about the health and strength of our merchant marine and this amendment is not the way to do it. I hope the author will reconsider.

Mr. PERCY addressed the Chair. The PRESIDING OFFICER. The

Senator from Illinois. Mr. PERCY. Mr. President, I have a

great respect for my distinguished colleague from Hawaii and I, too, would like to see a strong merchant marine.

The problem is that, as we get into this area of regulation and doing it this way, we get all kinds of distortion. I would almost sooner see an appropriation come up and just vote on it. We do not try to subsidize the Navy, we do not try to subsidize the tank program for the Army, we just appropriate the money and say, "This is in the national interest and we are going to do this." To do it by the back door invites all sorts of distortion.

For instance, I would ask my dist\ngutshed colleague, what do we do in the Great Lakes, the fourth seacoast of the country? What do we do with 50 percent cargo preference when we only have one American bottom in all the Great Lakes? What do you do? What is the distortion of dollars there? What do our manufacturers do? What happens on any Government-paid cargo that is required to ship 50 percent of it? That penalizes everyone. You never know what the cost with the merchant marine is then.

I have presented this problem, and Senator SLADE GORTON, chairman of the Subcommittee on Commerce, has promised to hold hearings on this whole issue so that we can look at it as a whole and not piecemeal.

I want a strong merchant marine. But I have a problem doing it by the back door. You never know what the cost of a subsidy is, and that is, in principle and economic theory, a problem that we constantly face on this.

Now, with respect to the pending amendment, I would like to ask my distinguis.hed colleague a question. Senator DANFORTH has distinguished himself for his deep concern about people, and not just people in the United States. He is concerned about our own citizens, his own constituents, and he is concerned about the people of the world because he recognizes that instability in the world creates instability for the United States. With 80 percent of our raw materials coming from outside the United States, with virtually all of our really growing dynamic markets abroad, instability anyplace creates conditions that undercut our own economy.

It is certainly symbolic from a humanitarian standpoint, that the Nobel Peace Prize went this year to the United Nations International Commission on Refugees. This was a statement that they did more to bring about peace by taking care of the millions of impoverished, starving people, and they moved in to meet a critical need. And our distinguished colleague from Missouri went out on his own months ago, half a year ago or more, to report back to the Senate what was happening there.

Now in this case, I would ask the question: With the additional costs of the 50.-percent cargo preference--equalling the equivalent of 350,000 to 450,000 tons of grain-how many hundreds of thousands of people could be fed for a whole year with what is paid as transportation costs in this requirement, this regulation by Government? What are we talking about in the terms of human beings?

We place tremendous value on one life in this country. We will go to extraordinary means to save one life. Look what we spent trying to save the hostages in Iran, a country that for 444 days humiliated and plagued this Nation because those lives were at stake. How many lives are we talking about with this food subsidy that goes to pay the regulation of 50-percent cargo?

Mr. DANFORTH. Let me say to the Senator from Illinois that I think that his question is right on target. The Senator from Hawaii claims that this was an amendment designed to save money. It is not. I would love to think of an amendment to save money, but this particular amendment is not designed to save money; rather, what this amendment does is to save that portion of Public Law 48'.>, spending, which is now being used to subsidize the merchant fleet, should instead be used to buy food to send abroad. and that if we want to subsidize the merchant fleet, let us do so directly, not through a back door method and not through a method which di-

rectly takes food out of the hands of those who are dying.

The answer to the Senator's question is that between 350,000 and 500,000 metric tons of food, which could be bought with this savings, would feed 6 to 8 million children for a year. So you are talking about millions of people-millions of people-whose lives can be saved if we simply use the Public Law 480 money for tne purpose of Public Law 480. The purpose of Public Law 480 is to feed people-that is the purpose of the law-not to allow the money to be diverted to some other cause, however just that other cause might be.

So the answer to the Senator's question is somewhere in the neighborhood of 6 to 8 million people.

I would just like to add one other point in answer to his question and in response to part of the question.

The Senator from Illinois pointed out that last June during the consideration of the Budget Act, when the same issue was made on the floor of the Senate, it was said at that time, "Well, there will be hearings and we will hear the matter. We will discuss it. We will have further chances to hear witnesses and so forth, and that the administration would study it."

Well, since that time, almost 4 months have gone by and the only hearing that was held was a hearing by Senator BoscHWITZ's subcommittee of the Agriculture Committee. And so hearings have been held. And I am told at that subcommittee hearing, the Department of Defense and the Department of Transportation did not even bother to testify.

We can go on and promise hearings forever. But let us bear in mind that every day that goes by more people are going to die. And I do not relish being so dramatic as to talk about people dying by the second, but, in fact, it is true, And for us to have "World Food Day", which -we celebrated on the floor of the Senate just last week and our rhetoric is all polished up about what we are going to do to help the people who are hungry around the world, and then when we have a provision in the law where we knowingly divert funds available to get food into the stomachs of children and we divert that money for some other purpose, I think that it makes a mockery of what we were saying last week.

Mr. SARBANES. Will the Senator yield?

Mr. PERCY. I thank my distinguished colleague very much indeed. I will be happy to yield in just a moment.

But I would like to say that we hear a lot about right to life, and that is a controversial issue. But I know of no controversy over 8 million people-whether they are children already born, whether they are teenagers, youngsters, whether they are women, whether they are menwho are so impoverished, so weak that they cannot even till their own fields, they cannot even work for a living. And there is hardlv a protest from them. Those of us who have seen the starving-we have all seen them-know that

October 20, ~981 CONGRESSIONAL RECORD-SENATE · 24499

there is no protest there. They are just too weak to protest.

In Kampuchea, we know that many faltered on the way. Because of lack of food, they could not carry on any longer, even though they knew the promised land, the opening of the door of Thailand to them, was there. And the same thing down in Afghanistan, where some were able to go into Pakistan, but some just did not make it.

In Africa, people just could not get to food.

We cannot find a way to justify taking away the source of nourishment and life for 8 million people when we could tum this around, hold our hearing, and face up to the issue. Then we could say, "A merchant marine is in the national security interest of the United States. We IU'e going to have one. It is going to cost so much. We arc not going to do it with backdoor methods, with indirect accounting so ~hat we do not know what it really costs us. That is not the American way to do things. Face up to it. Cast a vote. Put us on the spot and let us determine that this is something we must have and we are going to have."

Mr. DANFORTH. I think the Senator from Illinois would also recognize that if a merchant fleet is in the security interests of the United States, then clearly in the Defense Department budget somewhere there is the $75 million to $100 million necessary to provide for what i'3 allegedly a key portion of our national security. Clearly, we can get that funding somewhere.

But the problem with this particular program, the way it is operating now, is that m?ney is taken directly from food purchases and put into the subsidy. That is what we believe is just a perversion of the purposes of Public Law 480.

Mr. PERCY. We will certainly want t.o hear from other Senators on the floor from the standpoint of the majority leader, the floor manager, and the minority floor manager. We would be prepared to have a voice vote, unless there is a request from someone else for a rollcall vote. I would be happy to yield the floor.

Mr. SARBANES addressed the Chair. The PRESIDING OFFICER. The Sen

ator from Maryland. Mr. SARBANES. I would like to ask

the Senator from Missouri, how long has the provision he is seeking to repeal been in the law?

Mr. DANFORTH. Since 1954. Mr. SARBANES. I think that is a very,

very important fact. This program has embraced as one of its purposes, since 1954, 27 years ago, support for an American merchant marine. In other words, there is not a new provision in this legislation that for the first time is seeking to introduce into our law the concept of providing some support for our merchant marine. That provision has been in the law for 27 years. The amendment of the Senator from Missouri seeks to pull that longstanding provision out of the law.

We hear all this criticism about this way of supporting the American merchant marine; I think such support is a very important objective. I would point

out that every other maritime nation in the world is providing support in one way or another, and that we are losing out in the process because we do not have a commitment to an American merchant marine and a fully developed program for achieving it.

We hear the assertions, "Well, if you are going to do it, it ought to be done differently. It should be in the Defense Department budget; or it ought to be done directly by appropriations."

But none of those alternatives are in the offing. They are not before us. Instead what is before us is an amendment which would take out a long-standing provision for supporting our merchant marine. This amendment will have a major impact on the little sustenance that we now provide for maintaining an American merchant marine. We have already allowed the merchant marine to deteriorate very badly, at a significant expense to the country. I believe that decline affects our national security position. It affects our international economic position. It carries with it very serious potential consequences in the future.

To come now with an amendment that would rip out of the law a provision that has been there for the last 27 years represents a complete reversal of policy. This cargo preference provision has been in the law since 1954. No one has analyzed carefully what the impact would be to pull it out of the law.

I sympathize with the objective of feeding more people. Provided a larger appropriation for the Public Law 480 program. You could feed more people by paying less for the food that you take into the Public Law 480 program. Would the Senator supporting this amendment want to take that approval? The entire program has been structured carefully and that structuring has prevailed for more than a quarter of a century. One of the objectives of the legislation for over a quarter of a century, I would say to the Senator from Missouri, is suppc.rt for the American merchant marine, which is refiected in this requirement that at least a certain percentage of these shipments be made in American bottoms.

If we are going to start dropping such support off the side without substitut.i.ng anything in its place in terms of continuing support for the merchant marine, then the bottom line is that the merchant marine will diminish even further with all of the costs and all of the repercussions that will bring in terms of important economic and security interests of this country.

Mr. President, I join the distinguished Senator from Hawaii in strong opposition to this amendment and hope it will be rejected by the Senate.

Mr. BOSCHWITZ addressed the Chair. The PRESIDING OFFICER. The Sen

ator from Minnesota. Mr. BOSCHWITZ. Mr. President, I rise

in support of the amendment offered by my distinguished colleague from Missouri.

I rugree with the comments he made regarding the humanitarian mission of the Public Law 480 program. In addition

to the benefit this amendment will have overseas, it also has important consequences for U.S. agriculture.

Clearly, the total co.st of the Public Law 480 cargo preference requirements for fiscal year 1982 will be much greater than the $70 million that was estimated only last summer. The differential between the rates charged by foreign flag carriers and U.S.-fiag carriers has widened in the past few months due to rate increases by the domestic fieet. The new estimate for the cost of cargo preference is $90 million for title I and another $6 to $10 million for title II. That means we are now talking about a $100-million subsidy to the maritime industry that is counted as an expense in the agricultural portion of the budget. Note that this subsidy is not included in the budget of the Maritime Administration. Instead, it is hidden in the budget for agricultural programs. This gives the mistaken impression that the agricultural programs cost more than they actually do.

Mr. President, in order to fully appreciate the impact of cargo preference on the Public Law 4:80 program, it is necessary to understand the way the program is administered. I have no complaint with the way the program is run by USDA. They handle it this way in order to comply with the law. What bothers me is that they have to run the program at all.

These facts are clear. U.S.-fiag vessels charge higher rates than foreign vessels. The differential payment averaged over $49 per metric ton in 1981 (equivalent to $1.32 per bushel on wheat). USDA has no control over the size of the differential it must pay. The Maritime Administration decides, based on· Public Law 664 of 1954, whether the rates charged by U.S.-fiag carriers are "fair and reasonable." I question whether a rate of $49 per metric ton on top of the rates charged by foreign carriers is either fair or reasonable. However, if MarAd decides that they are, then USDA must pay for the differential on the 50 percent of Public Law 480 shipments required to be shipped on domestic carriers. It is as simple as that.

In actual practice, the $100 million Jess that will be shipped if this amendment ls not adopted will be spread among the various commodities. For sake of illustration, though, let us assume that all of it comes from reduced wheat shipments. This helps to point out the enormity of the problem. If we assume that wheat at export locations is worth $4.50 per bushel, the $100 million to be spent on cargo preference would buy 22 million bushels of wheat.

Mr. President, I believe that 22 million bushels is an awful lot of wheat. It amounts to nearly 16 percent of all the wheat grown in Minnesota this year. I am proud to say that Minnesota was the seventh ranking wheat producing State in 1981. Wheat is very important to the farmers of Minnesota and virtually all others States in the country. When we realize how much more wheat could be exported under the Public Law 480 program by eliminating the cargo preference requirement, it seems clear to me that this amendment is in the best interest of American agriculture.


I wish to clarify one point. It is my intention-and I am sure the intentio11 of the other cosponsors-that the moneys freed up by this amendment be used for purchase of commodities and not be extracted from Public Law 480 as still another budget cut.

Mr. President, when we discussed this issue during the reconciliation process in June, those who wanted to eliminate cargo preference were criticized for not having held hearings. I am pleased to report that I have since held a hearing under the auspices of the Foreign Agricultural Policy Subcommittee, which I chair. The hearing was held on July 10 with representatives of the maritime industry, organized labor, the administration, and other interested parties invited We learned several interesting things. One thing is that the administration is not overly interested in the issue of cargo preference as it applies to Public Law 480. We invited representatives from the Department of Commerce (old home of Mar Ad), The Department of Transportation <new home of MarAd), and the Department of Defense to appear and present testimony. All three of these Departments declined to send representatives.

Another point that was brought out is that cargo preference benefits only eight or nine companies which charter bulk vessels to carry title I commodity shipments. The total number of vessels which are generally offered to carry these cargoes is less than 25. A little arithmetic shows ·us that the $100 million subsidy divided by 25 ships comes out to around $4 million per ship per year.

Still another interesting fact is that most of the ships are quite old. Only three of them were built in the 1970's. One was built in the 1960's. One was built in the 1950's. All the rest were built in the 1940's. This means much of the fleet is over 35 years old. Most of the vessels are not efficient compared to more modem craft. Many are not really designed to handle the bulk grain cargoes.

In fact, it was pointed out that Sri Lanka ar.nounced a Public Law 480 wheat tender under protest. Sri Lanka has a modem high-speed pneumatic unloading system that works efficiently only with large bulk carrlers. Unloading vessels with small, awkwardly located compartments not only slows the whole operat!on and increases costs, but greatly increases the potential for damaging the equipment.

This situation wears heavily on the good will that has teen established with Sri Lanka as an agricultural trading partner. As that country develops and becomes more of a commercial grain customer and less of a Public Law 480 customer, will they tum to the United States to meet their needs? More likely, a negative experience with our country will induce them to buy more heavily from other countries. This Sri Lankan problem results directly from the cargo preference requirement.

Some people are concerned that many Jobs could be lost if cargo preference would be ended. On the contrary, we found that this would not be the case.

Even if the entire fleet currently carrying bulk chartered Public Law 480 cargoes was retired-which we do not expect-the impact would be lim:ted. If each of the 25 vessels has a crew of 40, there would be a total of 1,000 jobs that could be lost. Keep in mind, though, that the average cargo preference subsidy for each of those jobs would be $100,000 ($100 million divided by 1,000 jobs equals $100,000 per job). If the $100 million was used to ship more commodities, the net impact on the domestic economy would be to create far more jobs than could possibly be lost by adopting this amendment.

Mr. President, in our hearing we found no evidence whatsoever that these 25 ships add to our country's military security. They may well have done so during World War II when so many of them were built, but now most are simply too old, too slow, too small, and too unreliable to be of any significant military benefit in a time of national crisis.

I would like to conclude my statement by telling of an incident involving a ship carrying a Public Law 480 cargo that just came to my attention yesterday. I do not wish to reveal the name of the ship or the company involved because I am advised that USDA may be initiating legal action against the owner.

The ship involved is an old tanker which was chartered to carry a Public Law 480 cargo of soybean oil to Asia. At the time it was chartered, it was the only U.S.-flag carrier available. The freight differential was in line with Mar Ad regulations. After the oil had been loaded and the ship was ready to sail, the owner announced his intention to scrap the vessel atter completing the voyage.,

This was a convenient decision for the owner since one of the largest ship scrapyards in the world is located in Singapore. The ship did deliver its cargo of soybean oil to Karachi, Pakistan, and Chittagong, Bangladesh. Even as I speak that ship is heading toward Singapore or has just recently arrived.

What we have is a situation where the taxpayers of the United States through Public Law 480 have paid the owner more in freight differential payments to deliver the soybean oil and return the ship to the United States than it cost fot· the entire trip to Pakistan, Bangladesh, and Singapore. The same thing has happened before. USDA hopes to recover some of this loss through the courts. Th~ issue is clear, though. If the pro

gram is being abused in this manner, why should we continue to support it? Are these rusty old tubs actually doing us any good, or is the program merely providing a subsidy for a few companies in the ocean shipping business? I feel clearly that the program has outlived its usefulness and should be scrapped like the ship I have just talked about.

Mr. President, I urge my colleagues to join me in supporting this amendment.

Mr. President, in the Agriculture Committee we have held some hearings on this subject. Of course, the whole business of Public Law 480 falls under the Jurisdiction of the Agriculture Committee.

We found that if the objective that the distinguished Senator from Maryland was citing were being achieved, it would be one thmg. But that objective is not being achieved. The problem with the merchant marine in this country is not related to the presence or absence of cargo preference on Publlc Law 480 shipments. Of course, the merchant marine is supported by hundreds and hundreds of mil1ions of dollars in other forms. In the case of Public Law 480, the cost is approximately $70 million. I understand that cost has now gone up to $90 million, the cost of using American bottoms instead of going out into the open market.

But the most compelling aspect of the argument, in my judgment, is the kind of vessels being offered for the Public Law 480 shipments, for the title I goods that we give and sell at preferred rates to other countries. As I look at that list of vessels, I note that of the 13 vessels, 10 of them were built in 1945 or earlier. Pardon me, one was built in 1948. Ten of them were built during the 1940's. Most of them saw service in the Second World War, apparently. One was built in 1961 ~nd two, indeed, were built very recently, m 1978.

Of the dry bulk vessels, of the 13 of them which are normally offered and that have been offered in the last year for title I cargoes, 10 of them were built in the 1940's, and only two of them were built recently, within the last 3 years. Only two of them were built within the last 20 years.

Of the tanker vessels that are offered for title I goods, I note that 9 of the 11 were built in the 1940's, 1, the Banner, was built in 1956, and 1 tanker vessel was built in 1973.

There are other U.S.-flag vessels, of course, that.are liners, Mr. President, but the above vessels are those that are offered on title I cargo.

If we are to achieve the very desirable end of having an active, usable, and progressive fleet of ships in our merchant marine, and if, indeed, the cargo preference requirement was helping such an objective, that would be one thing. But from the hearings that we have held it does not seem to be achieving that objective.

For those reasons, Mr. President I jo1n in the amendment of my distinguished colleague from Missouri, ask to be made a cosponsor, if I am not already a cosponsor, and hope that it will be agreed to.


Mr. PELL. Mr. President, I have listened to the arguments on both sides. They are succinct and well presented. I come down on the side of those who oppose this amendment for the following reasons:

First, we obviously need a strong American merchant marine.

Second, the elimination of the cargo preference requirement for Public Law 480 would be the start of an erosive process in the present all-too-small subsidy program we have for the merchant marine.

The thought of the Senator from Hawaii, that we ought to use Amert-

October 20, 1981 CONGRESSIONAL RECORD-SENATE 24501 can carriers to carry American food aid, is a very important one because it enables us to stress that these gifts are from the United States, not from some other country that otherwise transported them across the ocean.

I agree wholeheartedly with the Senator from Missouri in his idea that we should have more food for the hungry. The best way to do that would be to increase the authorization for our Public Law 480 program.

I was struck with his statistic that $100 million would feed-how many children for how long, did the Senator say?

Mr. DANFORTH. About 8 million for a year.

Mr. PELL. Eight million children for 1 year, Mr. President. That is a startling statistic and a very important one. What concerns me is that if this amendment is passed, we would find that its benefits would quickly be gobbled up by OMB and Mr. Stockman. We have no assurance that the savings would in fact be used to feed t.ha hungry. The administration has already reduced the food for peace program by exactly $100 million, from $1.26 billion to $1.16 billion. If my friend, the Senator from Missouri, is correct, one can hold that the administration is responsible for starving, over a period of a year, 6 to 8 million children; statistically, that would be a correct statement.

I have long supported efforts aimed at the alleviation of world hunger, and I am in sympathy with the intent of this amendment, but my own view is that we should add to the Public Law 480 authorization. I would support any amendment to add to our food aid program, because that would continue to provide a modest subsidy to the merchant marine-while also feeding more hungry children. In my view, we can accomplish both goals.

Finally, we have President Reagan's most recently revised budget proposal with an additional cut of $140 million in the food for peace program. This additional cut is more than the projected savings which would accrue if this amendment is adopted. Statistically, President Reagan will be responsible for the starving for a year and a half of another 6 to 8 million children. According to the Senator from Missouri, that 1s the result of a further cut of $140 million.

Mr. President, I think the important thing here is to be honest with ourselves, recognize that we do have a subsidy for the merchant marine. It is not hidden. It is perfectly open and fully Justifiable. I urge my colleagues to continue this subsidy, fight the projected reduction of $140 million the administration is proposing for Public Law 480, and fight to increase the total amount of funds made available for the world's hungry children. For me, that is the proper course of action.

Mr. GORTON and Mr. BOSCHWITZ addressed the Chair .

The PRESIDING OFFICER. The Senator from Minnesota.

Mr. BOSCHWITZ. Mr. President, if I may have another minute Just to expand on the point I was making regarding the

age of the ships, I should like to conclude my statement by telling of an incident that is actually happening just now. That is that a ship carrying a Public Law 480 cargo of soybean oil that is going to Asia, at the time it was chartered, was the only U.S.-fiag carrier available. The freight differential was in line with the regulations. After the oil had been loaded and the ship was ready to sail, the owner announced his intention to scrap the vessel after completing the voyage. This was a convenient decision for the owner, since one of the largest ship scrapyards in the world is located in Singapore.

So the ship delivered its cargo of soybean oil to Karachi, Pakistan, and should have gone to Bangladesh. As I speak here, Mr. President, that ship is heading toward Singapore or has Just recently arrived.

Mr. President, again, I state that we do want to maintain a merchant marine, but we want to maintain a merchant marine that, in this day and age, is a useful one and not a bunch of old tubs that are not going to serve us in the event of difficulties, inasmuch as the whole purpose of the cargo preference is to maintain our merchant marine.

I note that the distinguished proponent of the amendment had a note handed to him about the U.S.S. Poet. This is an often discussed ship. In this case, it was carrying food, principally wheat, to Egypt approximately a year ago and was simply lost and never heard from, Just swallowed up by the sea, together with its crew. It was never heaTd from again.

Another case was a mid-1940's ship that we were preserving for our great merchant marine through the cargo preference amendment. It was carrying, of course, a load of wheat under the Public Law 480 program.

In conclusion, Mr. President, I agree with those who argue that we should have a formidable merchant marine. We are simply going albout it in the wrong way or we are not accomplishing the objective by the cargo preference program and we are not adding to the strength of our merchant marine.

Instead, as the distinguished Senator from Rhode Island said, and as I know my colleague from Missouri has pointed out, we are reducing the amount of food that is available for the world's hungry. So I am fervidly in support of this amendment.

I thank the Chair. The PRESIDING OFFICER. The Sen

ator from Washington. Mr. GORTON. Mr. President, the

fundamental disagreement over the desirability of this amendment is at least partially disguised by agreement among all Members who have spoken on this issue on at least two propositions. The first of those propositions is that the Public Law 480 program, the food for peace program, is important. It is important to those who receive and are able to use that food to improve their own lives; in some cases, to keep starvation away. It is important also to the agricultural community of the United States, as it helps us rid this country of certain kinds of agricultural surpluses

which would otherwise cost money to store and have an adverse effect on prices which our agricultural community receives for its products.

The second area of substantial agreement among all of those who have spoken on this issue is at least lip service to the importance of preserving and enhancing some American merchant marine. I have not heard any of the proponents of this amendment say that we should simply allow that portion of the American merchant marine which works in foreign commerce to disappear entirely. Instead, they say, this is simply not the way in which to provide for the American merchant marine; there must be some other, there must be some better way; if there is to be a subsidy, the subsidy should be direct; why do we not have a proposal to that effect?

Yet, so far this year, in connection with direct proposals for aid to the American merchant marine, we have taken Just two actions. First, we have made no appropriation whatsoever to that portion of our merchant marine philosophy which calls for a subsidy for the construction cost differen.tials between American yards and foreign yards, so that, except for a little bit left over from last year, there will be no subsidy, which will further, to a certain extent, harm American yards and promote those in other countries.

Second, there is a relatively modest program of subsidy for operating differentials, refiecting the difference in costs between running an American merchant marine on a day-to-day basis in foreign commerce and that of the balance of our foreign competitors.

That area of our budget has not been increased at all this year and limps along at a relatively slow rate. Since I took office in this body in January and was assigned the chairmanship of the Subcommittee on Merchant Marine, that subcommittee has been quite busy at attempting to provide for the better way to help the American merchant marine.

We have had extensive hearings on and are close to the time for markup of a proposal, a deregulatory proposal which will reduce the redtape of the regulatory activity of various Federal agencies in the hope that the American merchant marine will be somewhat better ab~e to compete with foreign merchant marines, many of which are very heavily subsidized, many of which are, in fact, owned by the foreign governments whose flags they fiy.

We do not think it possible, and I am not sure that we think it desirable, in that subcommittee, substantially to increase the amount of money which goes directly into such subsidy programs. But I must say that without these reforms, without the modest subsidies represented both by direct appropriations to ... day and by those included in Public Law 480, and a number of other similar programs, we simply will not have an American merchant marine.

To adopt this amendment in the absence of substituting something of tangible merit and value for it is simply another element in a sentence of death to that American merchant marine. All the

24502 CONGRESSIONAL RECORD-SENATE - October 20, 1981

fine words a.bout the desirability of retaining some such capability, both for its own sake and for its contribution to national defense, will be nothing but the most hollow form of rhetoric.

The distinguished Senator from Maryland <Mr. SARBANES), in his remarks just a few moments ago, pointed out that this subsidy is 27 years of age; that it was a part of the creation of Public Law 480 when it first became a part of the law of the land.

I believe we should speak bluntly about this entire program. It is all a subsidy. Public Law 480 is a subsidy. It plays, we hope, a constructive role in our foreign relations. It certainly is an act of charity and nobility on the part of the people of the United States, but it is a subsidy. It is a very significant subsidy to the agricultural part of the economy of the United States. It came into being as a result of a coalition-a coalition between agricultural interests, a coalition which involved foreign policy interests, a coalition which involved charitable- interests, and a coalition which involved merchant marine interests in the United States.

It involves somewhere between 4 and 5 percent of the amount of money appropriated for Public Law 480. That is a significant amount of money. It may be close to $100 million; it may be somewhat closer to $70 million.

I a.m delighted to hear, incidentally, from the Senator from Missouri that that that amounts to food for 8 million children for a year. That may be true. That means that we feed a child in some foreign country for $12.50 in American commodities, which is a remarkable program, a remarkable statistic, if it is correct. ·

But we do so partly because people who are interested in our merchant marine were willing to appropriate the taxpayers' money in order to do so.

The Foreign Relations Committee, in adopting the proposal which is before us right now, knew that Public Law 480 included this cargo preference. If it had felt that more !Iloney was necessary for the food which actuallv goes to foreign recipients, it presumably would have made a recommendation at an appropriate level. But here we simply have a request that the subsidy for one element in our society be increased by wiping out entirely the subsidy for another element of our economy which is important to our national security and which is important to the balance which our economy needs.

I am authorized to say, as the result of a recent phone call, that the administration opposes this amendment. The Secretary of Transportation believes that it · would have a very negative effect on our merchant marine and on any kind of balanced transportation system whatsoever.

We have, of course, a number of other subsidies, direct or indirect, for the merchant marine, many preferences of this nature-the Jones Act itself, which requires cargoes going between American ports to be carrfed by American merchant ships. If we were to repeal that subsidy, transportation costs, at least in the short run, would be less expensive,

again at the ~xpense of wiping out entirely an American .merchant marine.

It is not appropriate, it seems to me, that we will sutsidize one element of our economy but will simply wipe out any kind of help whatsoever for another.

When the Cotllmerce Committee brings to the fioor a proposal for the reform of the merchant marine and when the Appropriations Committee brings to the fioor appropriations for present programs, I suppose it would be quite welcomed by many who support it that the Senators who support this amendment suggest increased direct appropriations in order that they may wipe out indirect subsidies such as Public Law 480.

Bluntly, that has not happened to this point on this issue or on any other, and I suspect that if it did, what would be more likely to happen would be a cut in the appropriation of the authorization with which we are dealing now. This, it seems to me, is inappropriate.

Public Law 480 always has involved the proposition that Americans should benefit from it, that American farmers should benefit, that American transportation systems internal to the United States should benefit, and that the American merchant marine should benefit in a modest fashion, to the extent of 4 or 5 percent or so, from these appropriations. The appropriations or the authorizations include that as a part of the policy. They are a fair division. They are helpful to the security of the United States.

The argument that we could feed more people if more money went into the program applies more directly to the committee itself and to the recommendation it has made to us than it does to deprive the American merchant marine of its fair share of cargo.

Mr. President; this is the second time this year that we have come to the Senate floor to debate whether federally generated agricultural exports under Public Law 480 should be exempted from the cargo preference laws embodied in section 901 of the Merchant Marine Act of 1936.

The Agriculture Committee in June proposed an identical measure on the omnibus budget reconciliation bill and the Senate adopted my amendment to eliminate that measure. My amendment was offered with 26 cosponsors and, after debate, was passed by unanimous consent.

At that time, my colleagues and I argued in essence that:

Elimination of cargo preference would jeopardize the economic viability of several American-flag shipping companies and further corrode our already seriously impaired sealift capacity; and

No hearings have been held on the defense and economic implications of this maior shift in Federal maritime policy.

We stated then that our subcommittee intends fully to examine this issue as well as others affecting our merchant marine. I wish to emphatically reaffirm our commitment to fully review our cargo preference requirements.

I want there to be no impression that we are ignoring this issue or stalling on hearings. I am aware that Senator BoscHWITz held a morning of hearings

before his Agriculture Subcommittee ·on Foreign Agricultural Policy during which he addressed the issue of which agency should fund the cost of cargo preference. Commerce Committee staff attended and reported to me after that hearing. But the issue is complex in its dramatic negative impact on our merchant vessel fleet and it is complex in its impact on various ports. During consideration of the earlier attempt to exempt Public Law 480 from cargo preference, I agreed with Senators PERCY and DIXON that we would pay special attention to the unusual effects of cargo preference requirements on Great Lakes ports.

Mr. President, Congress has been very busy these past 4 months. The Commerce Committee and the Merchant Marine Subcommittee also have been busy and productive. We have not yet, however, had the chance to review and evaluate the grave impact on the merchant marine or on the Great Lakes of such a change in longstanding law. There will be several Senators attending a conference this Saturday, October 24, in Chicago to discuss Great Lakes maritime issues; we will be very interested in their opinions on this issue.

To the Merchant Marine Subcommittee, this issue relates to many other issues and programs we are now reevaluating that have been conducted to support our merchant fleet to be prepared for national defense. In 1979, the revenues to · U.S.-:fiag operators from carriage of Public Law 480 cargoes was $253 million. Of this, $181 million in revenues went to U.S.-flag liner operators and $72 million went to U.S.-flag bulk vessel operators. The most serious impact of loss of Public Law 480 preference cargoes would be felt by about 15 U.S.-:fiag bulk ship participants, whose business depends entirely on this tr::uie and who could be expected to go out of business if the trade were eliminated. The liner operators would also be severely affected.

Carriage of Public Law 480 cargoes generated about 5 percent, $181 million, of those operators' revenues, whereas their net profit from shipping operations amounted to 4 percent of total revenues. Loss of the Public Law 480 revenue would thus change the industry profit picture from positive to negative.

At a time when we have just eliminated construction subsidies, placed limits on loan guarantees, and called into question other programs upon which the maritime industry has un.fortunately become dependent, we cannot now so abruptly pull another rug out from under them.

We must be sure we know the impact; we must be mindful of our national defense needs; we must protect massive private investment; and more importantly, we must make changes in a manner that will not debilitate our maritime objectives and efforts.

Mr. DANFORTH. Mr. President, I ask for the yeas and nays on the amendment.

The PRESIDING OFFICER <Mr. HUMPHREY). Is there a sufficient second? There is a sufficient second.

The yeas and nays were ordered. Mr. MATHIAS. Mr. President, I asso

ciate myself with the remarks of the dis-


tinguished Senator from Washington. He has given a very comprehensive review of the problems that would be involved if the Senate were to adopt this amendment. He has analyzed very carefully, and with great accuracy, the situation.

At the beginning of this century, Admiral Mahon wrote a book which changed the course of history. He wrote a book on seapower. In that book, he made it very clear that one of the elements of seapower was a merchant marine; that you could not have a great Navy and exercise power at sea without the concomitant of a merchant marine.

Here we are in a period in which we are worried about our capacity to defend ourselves and our interests around the world and to do our share in the defense of our allies. We are worried, of course, because of the existence of a very large arsenal of strategic weapons in other hands. But we also are worried because of the relative strengths of conventional arms in the world, and that includes navies.

It seems to me to be utterly ridiculous to talk about beefing up the Navy or building more ships when at the same time we are talking about dismantling the merchant marine. Go back to the books. Go back to Admiral Mahon, who makes it clear that without a merchant marine, there cannot be significant naval power. In fact, we do not even have to go back as far as Admiral Mahon. Go back to our attempt to conduct the war in Vietnam with chartered boats, other people's ships-a great problem.

So, Mr. President, although I believe we should, where we can, avoid either the appearance or the fact of subsidies, in this case we are in a situation in which the survival of the merchant marine requires this particular program. We need to expand the merchant marine, not to contract it, and I am afraid that that would be the effect of the amendment. So I shall oppose the amendment.

Mr. PACKWOOD. Mr. President, I associate myself with the remarks of the Senator from Washington <Mr. GORTON), who is the chairman of the Merchant Marine Subcommittee of the Commerce Committee.

When he became chairman of that subcommittee, I asked him to prepare and to hold extensive hearings on cargo preference, on the Jones Act, on all the issues being debated here today. He has indicated that he will hold those hearings, and he is as good as his word. He will attend a conference in Chicago this weekend on the particular problems of the act as it affects the Great Lakes merchant marine.

I urge the Senate to withhold approval of the Danforth amendment until the Senator from Washington has had a chance to hold hearings. He is as fair as any other Member of the Senate. He is as impartial as any other Member of the Senate, and I know that the Senator from Missouri and the others will have an opportunity to make their case at that hearing. If their case is just, they will convince the Senator from Washington.

Secretary of Transportation Lewis has called, indicating that the administration does oppose this amendment at this time. They, too, plan to testify when we have the hearings. They have asked that the amendment not be adopted on the Senate floor at this time.

Therefore, I encourage Senators to vote against it.

Mr. STEVENS. Mr. President, I want to join those who have spoken in opposition to the amendment ottered by the distinguished Senator from Missouri. I opposed a similar provision included in the Agriculture Committee's portion of the first concurrent budget resolution earlier this year.

I want to say to my good friend from Missouri that I am not one who opposes this amendment on the basis that sufficient hearings have not been held. I oppose the amendment in principle. I come from a State that is heavily dependent on shipping, a State whose future depends upon international maritime trade. As my good friend from Washington knows, we recently held a hearing on the issue of maritime trade and subsidized shipping. During the course of the hearing we examined the question of whether or not it would be proper to allow subsidized shipping to stop, for example, at Dutch Harbor, Alaska. The matter of subsidized shipping is critical because in many instances, there is not enough service available to meet the needs of domestic trade.

As chairman of the Defense Appropriations Subcommittee I have received repeated requests for additional naval capacity. As the distinguished Senator from Maryland stated, it makes little sense to have this tremendous emphasis on increasing our naval capacity and increasing our ability to be involved in the oceans of the world on the basis of being a military power, without having a viable merchant marine to go along with it.

Perhaps if the Senate and the Congress were to adopt the position of the Senator from Missouri, I would predict that we would be in position of then being asked to build, with military dollars, the type of capacity we are now able to keep going through the subsidized shipping which is the subject of this amendment.

I support the exist'.ng practices of the exist·ng law in earmarking through cargo preference, and I oppose taking them out.

I think my friend understands my position in this regard. It seems to me we should be doing more, not less, to stimulate the rebirth of our own merchant marine so that we will have our vessels available to assist our Navy in the event of difficulty.

Mr. DANFORTH. Mr. President, I ask unanimous consent that Senators PERCY, DOLE, BOSCHWITZ, and LEAHY be included as cosponsors of the amendment.

The PRESIDING OFFICER. Without object:on, it is so ordered.

Mr. DANFORTH. Mr. President, I think the arguments have been pretty well made on both sides. The principal argument against the amendment is

that the merchant marine needs a subsidy. The principal argument for the amendment is that while that may well be, there are direct ways to subsidize, and the most direct way to subsidize is to simply give them the money.

But what this way of operating under Public Law 480 does is to divert funds that are available for buying food and shipping it and feeding people. It is to divert funds that would be used to get food into the stomachs of dying people, and it is to put those funds into the merchant marine ..

I do not doubt, do not argue, that · maybe some funds are necessary for the merchant marine. The Senator from Washington and I have debated in a very leisurely fashion over the past 9 or 10 months various kinds of bailouts for various kinds of dying industries, and 1 do not oppose him on the philosophy of that. If we want to bail out the shipping industry-although as the Senator from Minnesota pointed out it has not done very much good in the past, because we have got instead of new ships, we have got some tubs, very few ships have been built in the last decade or even two decades. These are 1940 ships that are limping along.

But, be that as it may, if we want t-0 get money for them to them, fine. Let us decide that issue.

But this question is not that question. This question has to do with whether it is necessary and whether it is sound policy to take money a way from food and put it into the merchant marine. That is the tradeoff.

Ag.ain. Mr. President, it is not as though the people of the world are well fed. They are not. They are dying. When 20 million people starve to death each year in this world, we have a serious situation.

The United States has a job to do. The United States has a role to play, and we are not doing well enough in playing that role right now. But to divert these funds from food to the merchant marine is truly perverse.

Mr. President, I ailso ask unanimous consent that the Senator from South Carolina <Mr. THURMOND) be added as a cosponsor.

I had previously misstated, Mr. President, when I added cosponsors. I understiand that the Senator from Illinois is not a cosponsor of this amendment, although he supports it.


Mr. DANFORTH. Mr. President, I ask unanimous consent that Senator DURENBERGER be added as a cosponsor of the amendment.


Mr. GORTON. Mr. President, I suggest the absence of a quorum.




24504 CONGRESSIONAL RECORD-SENATE October 20, 1981 The PRESIDING OFFICER. Without

objection, it is so ordered. Mr. PERCY. Mr. President, I do not

know at what point we will be ready. We have been delaying a little bit a rollcall vote on the Danforth amendment because I know that some Senators are down at the White House. Senator INOUYE is down there and he would want to be recorded "no" on the Danforth amendment. If it is possible to accommodate those Senators we certainly will, but I do not think we have had any specific request to hold off the vote.

It is the understanding of the Senator from Illinois that the Senator from Hawaii <Mr. INOUYE) does wish to have his vote recorded on this, and he, as I understand it, will be leaving the White House at approximately 3: 30.

Mr. GORTON. He said he would be here a quarter of 4.

Mr. PERCY. He will be here at a quarter of 4 and we would, there! ore, not want to begin the vote until 3: 30.

Mr. President, in view of the fact that some of our colleagues, including Senator INOUYE and Senator STEVENS, I know, have commitments, and we want to protect them on this particular vote, I ask unanimous consent that the pending amendment be temporarily laid aside and that it be the pending business as soon as Senators have returned to the Senate.

Mr. President, I ask unanimous consent that we temporarily set aside the Danforth amendment and open the floor for any amendments that can be brought up, with the understanding that we shall return to the Danforth amendment just as quickly as possible. As I understand it, the yeas and nays have been ordered on that amendment.


The yeas and nays have been ordered. Mr. PERCY. Mr. 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. CRANSTON. I announce that the

Senator from New Jersey <Mr. BRADLEY) and the Senator from Missouri <Mr. EAGLETON) are necessarily absent.

The PRESIDING OFFICER (Mr. ABDNOR) . Are there any other Senators in the Chamber who desire to vote?



Mr. PERCY. Mr. President, we understand that Senators are now on their way back from the White House. There being no further discussion on the Danforth amendment, I suggest that we proceed directly to a vote. The yeas and nays have been ordered.

The PRESIDING OFFICER. Does the Senator ask unanimous consent to resume consideration of the Danforth amendment?

Mr. PERCY. Yes. The PRESIDING OFFICER. Without

objection, it is so ordered.

The question is on agreeing to the amendment of the Senator from Missouri. On this question the yeas and nays have been ordered, and the clerk will call the roll.

The legislative clerk called the roll. The result was announced-yeas 28,

nays 70, as follows: [Rollcall Vote No. 316 Leg.]

YEAS-28 Ab:inor Armstrong Baker Bo3chwitz Bumpers Danforth Dole Domentci Duren berger Exon

Grassley Hatch Hayakawa Humphrey Jepsen KaSEebaum Leahy Lugar McClure Nickles

NAYS-70 Andrews Goldwater Baucus Gorton Bentsen Hart Eiden Hatfield Boren Hawkins Burdick:. Heflin Byrd, Heinz

HarryF.,Jr. Helms BYlI'd, hobert c. Hollings Cannon Huddleston Chafee Inouye Chiles Jackson Cochran Johnston Cohen Ka3t.en Cranston Kellllledy D'Amato La xalt DeConcini Levin Denton Long Dixon Mathias Dodd Matsunaga East Mattingly Ford Melcher Garn Metzenbaum Glenn Mitchell

Percy Provmire Pryor Quayle Roth Simpson Symms Thurmond

Moynihan Murkowakl Nunn Packwood Pell Pressler Randolph Riegle Ruc:lman Sarbanes Sasser Schmitt Specter Stafford Stennis Stevens Tower Tsongss Wallop warner Welcker Will' ams Zortnsky

NOT VOTING-2 Bradley Eagleton

So Mr. DANFORTH'S amendment (UP No. 490) was rejected.

Mr. INOUYE. Mr. President, I move to reconsider the vote by which the amendment was rejected.

Mr. FORD. I move to lay that motion on the table.

The motion to lay on the table was agreed to. PREVENTING THE SPREAD OF NUCLEAR WEAPONS

AROUND THE WORLD

Mr. GLENN. Mr. President, I have three amendments which I will submit at the appropriate time, but I have a statement I would like to make first.

The PRESIDING OFFICER. The Senate will be in order.

Mr. GLENN. May we have order, please, Mr. President?

The PRESIDING OFFICER. The Senate will please be in order. Will Senators take their seats.

Mr. GLENN. It appears that every year about this time, I am, unfortunately faced with the prospect of coming up before the Senate to try to prevent whatever administration is in power from making a decision to provide some form of assistance to a country on the South Asian subcontinent that would have the effect of seriously compromising our attempts to prevent the spread of nuclear weapons.

May we have order, Mr. Presid~nt? The PRESIDING OFFICER. The Sen

ator is correct. The Senate will please be in order.

Mr. GLENN. Last year it was the Carter administration that did everything it could to induce the Senate to send uranium to India despite the sorry history of that country's nuclear program.

I fought very hard against the President of my own party at that time, and I lost as a MSUlt of a very heavy and successful lobbying effort that included the President himself. I am sure the Members of this body will remember that battle. I lost on the Senate floor 48 to 46.

Considering what we have learned since that time about India, I wonder how many people in the body today feel the decision that the Senate took last year was the appropriate one; India has once again stated its inclination to go its own way no matter regardless of the views of the United States.

I also note that despite the fact that the vote last year authorized the shipment of two loads of uranium for India, only one shipment thus far has been sent, and that the lobbying effort to send the other shipment has died from all quarters except from India itself.

Mr. President, I believe it is important to point out that a common principle applies both in the case we discussed last year and in connection with the aid package that is being proposed in the foreign assistance bill. That principle is that in the U.S. pursuit of nuclear nonproliferation, we must draw a line regarding the nuclear behavior of other countries which, if stepped across will produce an immediate, unequivocal, and substantive negative response by the United States.

I would go so far as to say, Mr. President, that the chief ingredient that has been missing thus far from the international nonproliferation regime is a consensus on the application of sanctions whenever there is a violation of international safeguards or the detonation of a nuclear device by a nonweapons state.

The fact that we have been unable to reach an international consensus does not mean that the United States should not take a clear leadership position on this issue and show, by example, that it really means business. .

Mr. President, what we have been trying to do is say that while we are trying to negotiate SALT nor III or START, or whatever it is we are going to call it these days, that we are asking, in turn, is that other nonweapons states hold in abeyance any desire for nuclear weapons while we try and get the superpowers' weapons stockpiles under control; for that forbearance, for that holding in abeyance any movement toward nuclear weapons, we will cooperate with those nations in the peaceful development of nuclear energy.

Present U.S. law incorporates the principle that I mentioned before. The Nuclear Nonproliferation Act provides for a cutoff of nuclear supplies for countries that do not accept full-scope IAEA safeguards, or which violate these safeguards, or detonate a nuclear exnlosion. The Symington and Glenn amendments to the Foreign Assistance Act of 1961 provide for economic and military assistance cutoffs to countries that engage in transfers of dangerous nuclear equip-


ment, materials, and technology that cannot be effectively safeguarded by the international safeguard system.

Under the Symington amendment, in particular, Pakistan has already been cut off from U.S. economic and military assistance, except for humanitarian aid under Public Law 480, since 1979, because of its activities in clandestinely obtaining the technology and equipment for building a nuclear enrichment plant that will give Pakistan a weapons-making capability in a few years, if not sooner.

Now, the administration proposes to lift that cutoff and provide military sales of F-16's to Pakistan, plus a $3.2 billion package of economic and military assistance over the next 6 years. Under Secretary James Buckley has stated that the purpose of the program is to allow Pakistan's military forces to "enhance Pakistan's ability to deter attacks across the Afghan border."

Mr. President, I am just as anxious as anyone else in this body to see that we contain that Soviet threat, whether it comes from Afghanistan or anywhere else; but in our desire to react to Soviet aggressive moves, we must not completely lose sight of all other aspects of foreign policy.

The administration has tried to make the case that this aid program for Pakistan is of such transcending importance that we can afford to look the other way in terms of Pakistani nuclear activities that might be detrimental to the achievement of our nonproliferation objectives. I think it behooves us to take a careful look at wh3.t Pakistan has been doing in the nuclear area so that we have a clear understanding of exactly why we ought to be concerned about such activities. We also need to understand what Pakistan's activities might mean in terms of Indian responses and the extent to which the economic and military aid program might end up shoring up an unpopular regime, possibly creating another Iran-type situation.

Let me give some facts on Pakistan's nuclear program.

It is important to recognize at the outset that Pakistan has no nuclear power program to speak of. It has a 5-megawatt research reactor located at Pinstech, the Pakistani Institute of Technology, and a 137-megawatt nucleaT powerplant called Kanupp located near Karachi. These plants are under safeguards. although there have been serious problems over a period of time with the application of saf egua.rds at the larger plant. I will say more about that later. Despite their minuscule program the Pakistanis have worked very hard to obtain advanced nuclear technology and equipment-technology and eq_uipment th3.t would be most useful in obtaining weapons-usable materials for use in a nuclear explosion.

In fact, there can be no other reason for the types of equipment that they have been purchasing except the desire for nuclear weapons development. For example, in 1961 Pakistan entered into an agreement with Belgo-Nucleaire to set up a hot-cell reprocessing unit at Pinstech. Pakistan has also set up a pilot plant for uranium enrichment. Larger

scale enrichment and reprocessing facilities are under construction.

In case anyone has furgotten, those are the two methods by which one can obtain nuclear weapons material. First in, either one can irradiate nuclear fuel in a reactor and then put the spent fuel through a reprocessing facility to extract the plutonium or one can enrich uranium to make it into weapons grade material. So when we say they have large-scale reprocessing enrichment and facilities under construction, there can be little doubt as to what the purpose may be.

The reprocessing facility will be capable of producing 10-20 kilograms of plutonium annually-approximately 5-10 kilograms of plutonium is enough for a Nagasaki-type bomb. In 1975 Pakistan signed a contract with France for a commercial-scale reprocessing facility that would have had the capacity to produce tons of plutonium per year. As a result of American intervention, the deal did not go through entirely, although the technology in the form of blueprints was transferred by the French. But it is in the area of Pakistani activities in building enrichment capacity that is perhaps the most disturbing story of all. A Pakistani naltional, Dr. A. Q. Khan, managed to obtain a position in 1974 with the European consortium called URENCO that constructs and operates gas centrifuge enrichment facilities.

The consortium consists of Britain, Holland and Germany and Khan worked for the main contractor located in the Netherlands. Over a 3-year period Dr. Khan was able to procure probably all the important information and documents including blueprints of the URENCO gas centrifuge enrichment plant. He also procured the list of subcontractors in Europe who could provide the required equipment and materials. Through a series of dummy corporations and with the active assistance of Western nuclear business firms who were more concerned about money than about nuclear weapons Pakistan was able to procure much of the items on its shopping list.

It was not until 1978 when questions were raised in the British Parliament about the supply of inverters by Emerson Electric that intelligence agencies throughout the world were alerted to the fact that Pakistan was engaged in a worldwide effort to obtain nuclear enrichment equipment and technology that would give it a substantial weapons-making capability.

Among the materials which the Pakistanis have managed to acquire are 6,500 tubes of a special hard-type steel used for gas centrifuges obtained from a firm in Holland; vacuum valves to regulate streams of uranium hexafluoride gas into and out of the centrifuge system from a company in Switzerland; inverters from companies in Great Britain, West Germany, and the United States; electronic equipment used for centrifuges from firms in the United States by way of Canada and Turkey; a gas-feed system for the centrifuge from Kora Engineering of Switzerland; a metal finishing plant from Great Britain; rotors !rom Hol-

land; rotor parts from West Germany; measuring equipment from Holland; aluminum parts from West Germany; vacuum equipment from West Germany; vessels and tanks for the reprocessing plant from an Italian company; precision equipment for the reprocessing plant from Switzerland.

According to press reports, the materials which Pakistan has imported for uranium enrichment could build a plant large enough to produce sufDcient enriched uranium for six weapons per year.

Now, one thing this activity suggests is that the nuclear supply guidelines that were adopted with such fanfare in 1978, have turned out to be a sham in practice. Most of the companies that were engaged in this activity must have known or suspected that the products that they were delivering either directly to Pakistan or to phony trading companies, were going to end up in a sensitive nuclear installation, and yet with only one or two exceptions, they did nothing except collect the money. But it's not my intention to belabor this point. To some extent we dealt with it when we passed Senate Resolution 179 on July 17 of this year. I am concerned at the moment only with the intentions of Pakistan 1n building these clandestine f acillties.

Under Secretary Buckley says that he has received assurances from President Zia th3.t the Pak!stani program is peaceful and that Pakistan has no intention of building nuclear weapons. Zia has given the Under Secretary no assurances as to whether Pakistan would mount nuclear explosions, however. It is the U.S. position that there is no difference between nuclear weapons and nuclear explosive devices and as a result, the President has been unable to use the waiver provided for in the Symington amendment to allow economic and military assistance to go to Pakistan, for to use the waiver, he would have to certify in writing to the Congress that he has received reliable assurance that Pakistan will not acquire or develop nuclear weapons or assist other nations in doing so. I~ is evident that these assurances have not been given by the President of the United States.

I would be remiss in my duty Mr. President, if I did not point out that there has been some difference apparently, between the administration's public statements about Pakistan and its private statements. For example, on June 24, of this year, testifying before the Senate Subcommittee on Energy, Nuclear Proliferation, and Government Processes, Under Secretary Buckley said that he was assured by President Zia that it was not the intention of the Pakistani government to develop nuclear weapons. But he could not certify that Pakistan has no intentions as to peaceful explosions.

Of course, there is no difference between such an explosion used as a bomb or as a peaceful demonstration.

However, a week before that, according to Barry Schweid, a reporter for the Associated Press, a secret State Department cable was sent to the American Embassy in Ankara that declared, "we have strong reason to believe the Paki-


stan is seeking to develop a nuclear explosives capability," and that a "covert purchasing organizatlon" of Turkish companies known to the American, Turkish, and Pakistani Governments, was purchasing American-made electrical equipment and diverting it to Pakistan's nuclear weapons program. The cable which Mr. Schweid had gotten hold of also said "that Pakistan is conducting a program for the design and development of triggering package for nuclear explosive devices." To put the icing on the cake, Mr. Agha Shahi, Fore~gn Minister of Pakistan, in· a speech delivered on June 30, 1981, in a seminar on Pakistan's foreign policy, organized by the Council of Pakistani newspaper editors, declared,

We told Buckley that our program ls only for peaceful purposes • • • an we are fully aware of the concern of the United States over our atomic energy program which we think to be baseless, unwarranted, unjustified. But we understand and we have taken note of this concern. So if we decide to carry out an explosion then we would be prepared to forgo this U.S. aid progr:im. That is a matter for our judgment, but we have given no undertaking to Mr. Buckley about explosions.

Is this the basis on which to contemplate a possible Presidential waiver if they explode a device or to give an unrestricted waiver of the Symington amendment? Hardly.

Let me go further. On more than one occasion, Pakistan has declared that there is no difference between nuclear weapons and so-called peaceful nuclear devices. That is, Pakistan in the past has taken the same position that the United States has taken for more than a decade. They recognize there is no dlff erence between a nuclear weapon and a peaceful nuclear explosion and we recognize it. Secretary Buckley, in his testimony before the House Foreign Affairs Committee said· "the Pakistan Government can be in no doubt about our concerns on this issue and the serious consequences which would inevitably fiow from a Pakistani nuclear explosion."

I do not know what Mr. Buckley ref erred to as serious consequences, but to my way of thinking that can only be interpreted as an implied threat of a cutoff.

All I am asking is that we ratify that position in law by calling for a cuto1f without any possibility of a waiver if Pakistan were to detonate a nuclear explosive device. Obviously, the same consideration should apply to India.

Finally, Mr. President we have most recently received news of an ominous development in Pakistan regarding the safeguards situation at the Kanupp reactor. In essence, the director general of the IAEA has told the board of governors of that organization that it will no longer be possible for the IAEA to give assurances that diversions are not occurring within countries containing onload continuously fueled reactors with other factlities that are not under safeguards. Both Pakistan and India fall under this category.

Indeed, as Senator CRANSTON has painted out, there is some concern that

a diversion may even have occurred in Pakistan, although the evidence to date is not definitive. It is of interest, Mr. President, to consider what the response of Pakistan has been to the director general's report. It is my understanding that at the conclusion of the report, the Pakistani representative to the board of governors of the IAEA stated that it was a violation of Pakistan's sovereignty for the IAEA to suggest an upgrading of safeguards and that Pakistan would not agree to any additional safeguards beyond those which were negotiated 15 years ago, that was before Pakistan built its present unsafeguarded fuel fabrication plant, and before it engaged in its worldwide clandestine activities in obtaining the materials for constructing a nuclear enrichment and nuclear reprocessing plant.

Are these the appropriate conditions under which we should sacrifice the Symington amendment? Should we shrink back from stating under these ci.rcum~tances that it is our p0licy to discontinue economic and military assistance in the event of a nuclear detonation?

Last July 18, only a couple of months ago, this body voted 88 to o on a resolution that I introduced calling the President to urge all the nuclear suppliers and recipient countries alike to agree on a system of predetermined sanctions for countries that violate safeguards commi.tments. Are we now, 3 months later, gomg to say that we were not serious .in the resolution that we passed in July?

The Washington Post reported last week that the administration is considering proposals now which, in my view, would gut the Nuclear Nonproliferation Act-proposals that would effectivelv cripple the central parts of our non·proli_f eration policy. To me, this is not a partis~n. issue~ It is not a Republican issue, it is not a Democratic issue. I opposed the President of my own party last year on this and I hope there are Members on the other side of this aisle who Will stand up and say-"The administration is wrong in some of their specific nonproliferation proposals and that one place. to start c?rrecting them is right here m the Foreign Assistance Act."

<Mr. EAST assumed the chair.> Mr. GLENN. Mr. President, I have

spoken so far today almost entirely about the Pakistani nuclear program. I have said very little about the aid package. I think it behooves me to say something about the latter.

As I have said already a number of times in my remarks today, I am in favor of sending assistance to Pakistan. That does not mean, however, that even under the best of circumstances, I can be totally sanguine about the results which may be obtained through the present package. Although President Zia has been in his position for some 4 years, which may be longer than many people might have predicted when he first came in, there seems to be some continuing doubt or continuing comment in the international press, at least, regarding what the internal situation actually is in Pakistan.

It seems to me we have gone down that road in 'the past too many times. The last example for us was disastrous, not only for us but for many other people as well, including the people of Iran. So there are many other considerations which need to be taken into account in considering this package.

Mr. President, the ostensible purpose of this package is to provide Pakistan with the ability to withstand Soviet or Soviet-backed aggression. But what is the Pakistani view of their security situation? In the speech by Foreign Minister Agho Shahi that I mentioned earlier, he says:

There should be no constraint on the pursuit of an independent foreign policy as we have been pursuing in the past. Whether tn regard to Jerusalem or Palestine or support to the Iranian revolution or wanting to bring out a transformation of the whole Persian Gulf region into a nonaligned area free of the m111tary presence of the super-powers, free of the presence of t he American rapid deployment force and withdrawal of Soviet forces from Afghanistan.

Mr. Shahi continued: We have epsoused the cause of Palestin

ians !or 35 years. We stand for the Uberation ot Jerusalem, we support the Islamic Revolution of Iran. We are totally against military super-power presence in the Gulf.

Mr. Shahi also stated: The Soviet Union has assured that we pose

no danger to you. We have to take the Soviet Union at her word. Again here, if I were speaking to you off the record, I could tell you something more, but I shall have to confine myself on this issue by saying that an attack by a super-power on another country in the region wm not remain confined to the aggressor and the victim . . . and therefore this fear in your mind about the danger of an attack by the Soviet Union should be allayed. And the Soviets have categorically assured us, and this has been stated by President Brezhnev a number of times that we should not take into account this posslbillty. Any other attack, well this Is precisely the reason why we want to get the arms quickly. We should be able to defend ourselves against an attack from any quarter.

I add, Mr. President, that if you look at a map of the alinement of Pakistan's military forces today, you will find the overwhelming preponderance of those forces over along the Indian border-not transferred over onto the Afghan border. That seems to be an area that we are ~ore ~oncerned about, apparently, than is Pakistan.

Finally, Mr. Shahi states in his speech: We will pursue, in spite o! this agreement,

normalization with India, but on the basis of sovereignty, equality, we will never accept the Indian hegemony or its predominant position.

Mr. President, these statements can only be interpreted as suggesting that the Pakistanis are as much concerned about their security, vis-a-vis India, as they are vis-a-vis the Soviet Union. As I said, indeed, I have looked into the deployment of Pakistani military manpower and equipment and I can tell you that since the Soviet invasion of Afghanistan, there has been very little movement of troops and material toward the border with Afghanistan. Two-thirds of the Pakistani Army, and its associated eauipment are arrayed on or near the Pakistani-Indian border. The Indians are naturally upset


at the prospect of a large-scale arms shipment to Pakistan, including the delivery of F-16s, which at some future date could have the capability of being nuclear weapons' carriers. I am tempted to say to the Indians that their own billion-dollar deal with the Soviet Union for arms, as well as their own nuclear program, has not exactly been designed to inspire confidence on the part of their neighbors. On the other hand, we must be realistic about what the impact of an arms shipment to Pakistan might be. If the result is to spark an arms race on the South Asian subcontinent we will have contributed to insecurity and instab1llty rather than the converse.

Moreover, there has been significant comment among hil?h level Indian leaders that a continuation of the Pakistani nuclear program toward a nuclear weapons capab1Uty will drive the Indian program still further in the same direction. For that reason, Mr. President, it is impartant that we keep close tabs on the political consequences of this arms and economic aid package, that we take an evenhanded view of our relationships with the Indians and the Pakistanis, that we not build up the security of one side at the expense of the other and that we not flnd ourselves in another Iran-type situation somewhere down the road. For that reason, I believe it is important to examine this program year by year to note what our long-term intent is but not to make commitments that will put us in a situation from which we shall find ourselves unable to extricate ourselves later on.

With that caveat, Mr. President, I shall be happy to support the first step of the administration's program as long as our nonproliferation efforts are kept intact. With the passage of my amendments, I believe they will be.

Mr. President, I inquire as to the parliamentary situation. Was an agreement entered into that there would be no votes beyond 5:15 p.m.?

The PRESIDING OFFICER. The Chair is aware of no such agreement.

Mr. GLENN. I suppose it was not done formally. I suppose it was an informal agreement.

Mr. PELL. The Senator is correct. It was an understanding, not a formal agreement.

Mr. GLENN. Mr. President, I suggest the absence of a auorum.



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


Mr. GLENN. Mr. President, I will call up these three amendments this evening, and I doubt whether we can get to a vote on them. It will take me a little while to describe the amendments specifically.

As I understand it, there will be no votes after 5:15 p.m., today. AlthouS?h it is not up to me to set forth the procedure, I assume that these votes will come in the morning.

UP AMENDMENT NO. 491

(Purpose: To require the President to transmit a classified report regarding the nuclea.r program ot Pakistan) Mr. GLENN. Mr. President, I send to

the desk three amendments, and I will describe them.

The PRESIDING OFFICER. Is the Senator asking that they be considered en bloc?

Mr. GLENN. I ask that they be considered separately, whenever they are considered.

The PRESIDING OFFICER. The first amendment will be stated.

The legislative clerk read e.s follows: The Senator from Ohio (Mr. GLENN) pro

poses. an unprinted amendment numbered 491:

011 page 83, between llnes 10 and 11, insert the tollcwlng:

"(d) .Beginning with the fiscal year 1983 and during each fiscal year thereafter during which the waiver contained in subsection (b) ls in effect, the President shall prepare and tranCJmit to the Congress, as part ot the presentation materials tor foreign assistance programs proposed for each fiscal year, a classifted report describing the nuclear program and related activities ot Pakistan, including an assessment of (i) the extent and effectiveness of IAEA safeguards at Pakistan's nuclear facllltles; and (ll) the capablllty, actions, and intentions of the Government of Pakistan with respect to the manufacture or acquisition of a nuclear explosive device.". Nothing in thls act rellevea the Executive Branch from the reporting requirements of appllcable law.

On page 83, line 11, strike out "(d)" and insert in lleu thereof " ( e) ".

Mr. GLENN. Mr. President, I ask unanimous consent that it be in order for the other two amendments to be brought up in order, after the first amendment.

The PRESIDING OFFICER. Is there any objection? The Chair hears none, and it is so ordered.

Mr. GLENN. Mr. President, on the first amendment, it is important to note at the outset that Congress will have to authorize funds annually for this aid package even if it passes S. 1196 in tts present form.

Therefore, I am offering this amendment which will require the President to deliver to Congress, prior to consideration of his authorization request, a yearly classified repart on Pakistani nuclear-related activities whose content should be accorded great weight in determining whether or to what extent t.o authorize appropriations or set levels of program activity for each fiscal year under the Foreign Assistance Act of 1961 or the Arms Export Control Act with respect to Pakistan.

This amendment also requires the President to provide an assessment of the extent and effectiveness of IAEA safeguards at Pakistan's nuclear facilities. Most recently, information came to myself and to Senator CRANSTON regarding problems which the IAEA was having in safeguarding Pakistan's nuclear reactor near Karachi. That reactor 1s the only nuclear installation in Pakistan that is safeguarded by the IAEA. For a period of time the Agency has been attempting to get safeguards upgraded at the f acllity because the react.or is a

CANDU reactor which means that tt Is loaded while still operating on a continuous basts.

Such a reactor, which aperat.es on natural uranium rather than enriched uranium. poses specie.I safeguards problems since you need continuous inspection in order to be sure that fuel rods which are not under safeguards are not being Inserted and removed from the reactor. Within the past year Pakistan has established its own fuel fabrication facllity, which is not under safeguards, and, therefore, Pakistan has the cap&bllity of placing fuel rods into the reactor without being detected by the IAEA.

A recent article in the New York Times reported thait some anomalies had been detected at the reactor site, leaving some suspicion that there may have been a possible diversion at the CANDU reactor. I do not know whether a diversion has taken place, but I do know, as I indicated earlier, that the Agency has not received full cooperation from the Government of Pakistan in upgrading safeguards. The in·tent of the reporting amendment is, therefore, to put the Government of Pakistan on notice that if safeguards are not improved and if they continue to go down the path t.oward a weapons option, then the Congress w1ll consider these actions very seriously in determining whether to authorize the aid package in fiscal year 1983 and beyond.

Mr. President, it ts my understanding that the distin·guished floor manager of the bill, who is not in the Chamber at this time but who will be here when we take up this matter later, may be prepared to accept this amendment on behalf of the committee.

Mr. President, I ask that the second amendment be stated.

The PRESIDING OFFICER. Does the Senator wish to set aside the first amendment by unanimous consent?

Mr. GLENN. What I was t4'ytng to do was to save time for tomorrow by discussing these amendments at this time and having them on record. I will be happy to forgo that if we have to take up this amendment first. We could set aside the vote on this amendment until all three amendments have been discussed.

Mr. President, we already have permission to consider the amendments seriatim. Is that correct?

The PRESIDING OFFICER. The Senaitor is correct.

Mr. GLENN. Rather than calling up the first amendment or having the clerk read it, I will discuss it on my own, without calling it up. I will discuss the second and third amendments, and we can take them up in a more official way tomorrow.

Mr. President, the one that I will bring up tomorrow but which ts not officially called up at this time since I have an amendment still pending will be one in favor of limiting the lifting of the Symington waiver.

Mr. President, it is being argued by the administration and its supporters that if we are going to establish a longterm relationship with Pakistan, of which the present proposal proaram

24508 CONGRESSIONAL RECORD-SENATE October 2p, 1981

would be the initial step, we need to establish an atmosphere of trust and to do so we need to give an open-ended waiver of the prohibitions under the Symington amendment. Now let us not kid ourselves about what this means. Pakistan is one of the most visible examples, if not the most visible example, of a country moving down the road towaTd a nuclear weapons capability in opposition to every principle upon which the entire nonproliferation effort worldwide, is based.

If we give Pakistan an open-ended exemption, who is it who will be denied in the future? Brazil? Argentina? Did we not learn anything in the wake of the decision that was made regarding India last year, in which the authorization of uranium fuel did not prevent Mrs. Gandhi from going ahead and ordering activities which, according to press reports, look very suspiciously like preparations for another Indian test? I reiterate we should pay attention to Pakistan's security needs, and I am supportive of Pakistan's security needs, but we also need to show that we are desirous of establishing a long-term, friendly relationship; we want to have Pakistani assistance in resisting Soviet or Soviet-backed moves toward the Persian Gulf. But we should not buy this assistance at the expense of our nonproliferation effort, particulaTlY so in light of the comments by Agha Shahi, the Foreign Minister, that I read just a moment ago regarding the Soviet Union and the lack of concern about their expansion into that area.

We have received no assurances from the Pakistanis regarding the future direction of their nuclear program .. They are insisting that whether they set off nuclear explosions or not will be entirely their concern. I submit that under these circumstances it makes no sense for us to give them carte blanche to continue to build up their nuclear explosives capability, even if they do not test a device within the next 6 years. If we give them an open-ended waiver without receiving any assurances in return, then we ·are essentially telling the Pakistanis, ''Go ahead and continue to build your enrichment plant, go ahead and cont!nue to build your reprocessing plant, go ahead and find some source of spent fuel from which to obtain plutonium or some source of uranium which can be enriched to weapons-grade material, and go ahead and even manufacture some weapons, and as long as you do not test them we will continue to be your friend and we will cont!nue to provide you with economic and military assistance."

Mr. President, I bow to no one in my desire to stop Soviet expansionism. But the Soviet Union is not the only possible threat to future national security of the United States. It is conceivable that in 25 years from now, there may be Senators standing here who will argue that policymakers in this day and age paid too much attention to the Soviet threat and insufficient attention to the forthcoming threat to American national security arising from the spread of nuclear weapons to many nations a.round the world.

I need not remind anyone that the damage caused by a megaton weapon dropped on New York City is independent of whether the markings on the delivery vehicle are Soviet or Libyan or otherwise. For pragmatic reasons, because we are dealing with an immediate threat to both United States and Pakistani security, it may make sense to apply a temporary waiver of the prohibitions of the Symington amendment to Pakistan. The administration is proposing a 6-year program of assistance and we can, therefore, contemplate a 6-year waiver although the language in my amendment is structured so that if the President wishes, he can alter the length of the waiver within that period.

At the same time, Mr. President, we should be putting Pakistan on notice that we do not approve of the direction in which their nuclear program is moving and that if they have expectations that we will be faithful in carrying through our part of the process of constructing a long-term relationship, we should have every expectation that they will carry through their part as well.

It should be made clear that their part includes desisting from constructing a nuclear explosive capability. Six years will give us plenty of time in which to see whether, as the administration believes, the Pakistanis can be deterred from moving in this direction with their nuclear program as a result of this new security relationship with the United States. That is fine. There is nothing to prevent the U.S. Congress from extending the waiver as the time approaches and as we see how the two parties have kept up their end of the bargain. At the same time, we shall be able to monitor the reports which the executive branch will be providing to Congress on the Pakistani nuclear program and on their nuclear-related activities so that we can make a judgment, even on a year-byyear basis, as to whether authorization of the aid should continue.

We have an opportunity, Mr. Pres·ident, to show that we can be flexible in our approach to nonproliferation without making radical changes in our goals or in our laws. An open-ended waiver on the Symington amendment would, in my view, be a radical change--a radical change that should be resisted. I urge the support of the Senate for a cap on the waiver.

I add, Mr. President, that what the committee has done is to grant a waiver o.f the Symi~gton amendment for Pakistan into the indefinite future while the Symington amendment still applies to every other nonnuclear weapon nation in the world. This hardly seems fair. We have a 6-year military aid program and what my amendment does is say that at the end of that 6-year military aid program we then will reinstate the Symington amendment so that we do not give excessively favorable treatment to the Pakistanis over every other nation in the world.

I do not believe that was the intent of the committee and that is what my amendment would attempt to correct.

The other amendment that will come up for a vote tomorrow, Mr. President, is an amendment that is very simple. It provides for a cutoff of assistance in the event of a nuclear detonation. It changes one word in S. 1196. It changes the word "should" in one subsection of the foreign assistance bill to the word "shall." But in that simple change there is a mountain of difference.

In 1976 Congress adopted an amendment that I had introduced to the Foreign Assistance Act providing for a cutoff of economic and military assistance to any country that imports or exports reprocessing equipment, materials, or technology, or in the case of a nonweapon state, detonates a nuclear device.

It also allows for Presidential waiver of the cutoff provisions if our nonproliferation objectives, or the common defense and security would be best served by continuing assistance.

The present version of the foreign assistance bill says that the President "should not" use the waiver provided in the 1976 Glenn amendment if either Pakistan or India detonates a nuclear device.

Mr. President, I submit that the nuclear records of both Pakistan and India are so replete with a disregard for the strengthening of international nonproliferation efforts that even to contemplate the possibility of a Presidential waiver to allow continued economic aid and military assistance to those countries after they detonate a nuclear device is to do grave damage to our public commitment to the longstanding goal of nonproliferation, a commitment to which we have rededicated ourselves time and time again.

The administration claims that President Zia and Prime Minister Gandhi should be "under no illusion" as to what the response of the United States would be in the event of either of them detonating a nuclear device.

If you will forgive me, Mr. President, I have heard that line before. The Indians were supposed to be under no illusions that the United States would seriously enforce the full-scope safeguard criterion in determining whether to ship fuel to Tarapur. Well, the Carter administration, when the crunch came, decided to overturn the NRC decision not to send the fuel, and we had a battle royal on this floor, which I lost unfortunately.

Now the Reagan administration, according to the Washington Post, is considering the possibility of cutting back the full-scope safeguard criterion; I repeat, considering the possibility of cutting back the full-scope safeguard criterion in the Nuclear Nonproliferation Act so that we can send fuel not only to India but nuclear materials also to South Africa, Brazil, Argentina, perhaps all of those without requiring full-scope safeguards.

I am not here today to argue that particular case or those cases. I will do that when the appropriate time comes. We are not talking about nuclear export criteria today. We are talking about nuclear explosions, and we are talking about whether the United States is prepared to


give the impression that we would still provide economic and military assistance to nonweapons states that actually set off such explosions.

The administration is worried about President's Zia's sensitivities on this issue. They do not want any conditions attached to this economic and miltary aid package. They want any conditions to be implicit rather than explicit, and I can understand that. But I think there are a lot of other countries around the world whose sensitivities we must also pay attention to. We have the sensitivities, for example, of the 112 nonweaPons states that signed the Nonproliferation Treaty. Neither Pakistan nor India has signed that Nonproliferation Treaty, and we have 112 nonweaPQns states which have signed. Are we going to say to those 112 nations that the United States can contemplate the possibility of going right ahead and sending economic, sending military assistance to Pakistan and India after they have actually exploded nuclear devices?

Mr. MATHIAS. Mr. President, will the senator yield at that point?

Mr. GLENN. I will. Mr. MATHIAS. I think the Senator

makes a very interesting Point, but I want to be sure in my own mind that we are on the same track.

The amendment of the committee was, provided, that the President should not use the waiver provided in section 670 of the act if such country detonates a nuclear device.

AJJ I understand the senator's oneword amendment, it is to substitute "shall" for "should"?

Mr. GLENN. That is correct. Mr. MATHIAS. But is the Senator pre

senting that language as if it was to say that if such country hereafter detonates such a device? Of course, in the case of India there has been some detonation.

Mr. GLENN. It would be hereafter, it is prospective not retrospective.

Mr. MATHIAS. The language, as the Senator interprets it, has no retrospective aspect?

Mr. GLENN. This would not cut off aid to India because of its 1974 explosion.

Mr. MATHIAS. What we are really doing is to say to the world that this is notice that if any nation which has a relationship with us within the purview of this act hereafter detonates a nuclear device, that that will be a mandatory cutoff?

Mr. GLENN. That would be correct· that is correct. '

Mr. MATHIAS. That was what I thought was in the Senator's mind, but I though it would be usefUl to have that explicit in the RECORD.

Mr. GLENN. One correction. This would not change existing law with respect to any nation. This bill and my amendment deal speciftcal~y with Pakistan and India.

Mr. MATHIAS. That is true. But any other nation would be covered by the other provisions of law.

Mr. GLENN. By the existing Symington amendment; that is correct.

Mr. MATHIAS. That is correct. Mr. GLENN. Mr. President, let us con

template the status of these 112 other

nations, for a moment. They have trusted us to cooperate with them and have given up any desire they might have to develop nuclear weapons. Are we to tell them that we are just going to put bombs up for sale irrespective of the nuclear activities of recipient countries; that we are going to be a reliable supplier of weapons no matter what? That would be one fundamental approach to it.

Are we incapable of drawing the line and cutting off military assistance even when a country detonates a nuclear device?

If we are, then we are incapable of ever drawing a line anywhere. So when this amendment is brought up I would urge the Senate to support this amendment. It will simply put the President in the position of having to carry out what the administration has implied would be carried out in the event the Pakistanis or the Indians detonated nuclear devices.

The international nonproliferation regime is best served in this case by an explicit statement by the U.S. Congress rather than by implicit understandings that may or may not be viewed as credible based upon the past performance of this Government.

Mr. President, I would add only one other very short remark before closing, and that would be along this line: Let me reiterate once again what the overall objectives are of the NPT and of our relationship with those nations that are parties to it.

It is true, as Prime Minister Desai told us in a meeting we had in the Foreign Relations Committee room, which I believe the distinguished floor manager of the bill attended back some years ago, we want to push Third World nations to give up the nuclear option, but at the same time we will put renewed efforts into our own efforts to get control of the superpowers nuclear weapons stockpiles.

We wish we could go back to the days of Baruch and Lilienthal, and others in those earlier days of the nuclear er~ when the proposals were made to put all things nuclear under some sort of international control. But we cannot unring the bell; we have taken another path much as we would like to go back to that particular time period and call that signal back. We find ourselves trying to make the best of a very poor situation, where there are large nuclear weapons stockpiles. To attempt to control these we have such things as SALT or START, as the administration now prefers to term it: we have had SALT I, SALT II, and I hope we can get back to those SALT II discussions as soon as possible because I think it is futile to go ahead with weapons buildups without having some of those talks already underway.

But while we are trying to get SALT talks underway, what we are asking the nonwea:rons states to do is just to forgo this nuclear weapons option. It is a dual track, in other words, we are embarked on. One is to get control of the problems of additional nations getting weaPons ask!ng others to sign the NPT, cooperat~ with the IAEA, and not go the weapons

option route, while we try to get control of the bigger problem of the superpowers' nuclear arsenals.

Nearly 112 nations have agreed to forgo nuclear weapons under the NPT. Now, in effect, by some of the things we are doing with India and now with Pakistan, we are saying "It makes no difference whether you signed NPT or not, we will cooperate with you anyway. We will send assistance, we will do all sorts of things so far as milit:i.ry equipment, economic assistance." Those who are the 112 signers get no particular benefit except through their knowledge, I guess, that they went ahead and did not help spawn nuclear proliferation in further areas of the world.

Mr. President, at the appropriate time I will call for votes. It is my understanding that my amendment will be the pending amendment when we do have votes tomorrow.

Let me Just clarify that the second and third amendments I have been discussing are my printed amendments 559 and 560 dealing specifically with the 6-year time limit on the waiver to the Symington amendment, and with the mandatory termination of assistance to Pakistan and India in the event of a nuclear test. ·

I ask unanimous consent that amendments Nos. 559 and 560 be reprinted In the RECORD at this time.

There being no objection, the amendments were ordered to be printed in the RECORD, as follows:

AMENDMENT No. 669 (Purpose: To Um.it the p~rlod during which

the President may waive a prohlbltlon on :furnishing assistance to Pakistan, and for other purposes) On page 82·, line 25, Insert "at any time

during the period beginning on the date of enactment o:t this sedion and ending on September 30, 1987," after "Act".

AMENDMENT No. 560 (Purpose: To require a prohibition on fur

nishing assistance to India or Pakistan lf such country detonates a nuclear device) On page 83, line 14, strike out "should''

and insert in lieu thereof "shall".

Mr. GLENN. I thank the Chair. Mr. McCLURE. Mr. President, the re

marks I am about to make are not confined to this single pending amendment of the Senator from Ohio which he has offered, but to each of the three and the cumulative effect of the three and, perhaps, most pointedly, toward the third of the three.

I do it in this manner because I do understand that each of the three has different effects upon our nonproliferation policy and upon the stance of our nonproliferation efforts and that because of that there may be differing action with respect to both the committee view of the amendments and the Senate response to those amendments.

Mr. President, the fundamental Interest of the United States in stability in Southwest Asia and in the independence and territorial integrity of all states in the region are being challenged by the Soviet invasion of Afghanistan. Certainly it is also being challenged by the turbulent course of events in Iran. Friendly


countries in the region are looking to the United States for evidence that we will support them if they stand firm against strong Soviet pressure to acquiesce in the Soviet occupation, and to accommodate to the radically altered politicomilltary situation resulting from that occupation.

Pakistan-notwithstanding a long border with Afghanistan, not so subtle direct and indirect Soviet political pressure, and overflights of its territory-has been a leader in the Moslem states' resistance to that fateful event.

Pakistan needs and deserves our support in this effort, not just for themselves, certainly, but also for our security interests in that region. And I do not think there is any debate or question on the floor with respect to that fact.

Unlike Saudi Arabia and several other countries in the region, Pakistan is not an oil exporter, capable of financing its defense needs while at the same time sustaining its economic development. Pakistan is implementing needed economic reforms under a 1980 3-year stabilization agreement with the IMF, but its economy is being buffeted by the additional security burdens and the continuing inftux of refugees from Afghanistan. It is not sufficient simply to sell arms for cash to Pakistan; we must provide economic assistance and foreign military sales financing as an integral part of our evolving relationship with Pakistan, which in tum is part of our efforts to shore up all of our friends in Southwest Asia.

·I do not want to get into the question of detailing the past, sometimes stormy, sometimes unsatisfactory relationships with Pakistan or some of the things that have happened in the past. I am dealing with realities of the present circumstances and the likelihood of the evolution toward the future.

Accordingly, I strongly support section 714 of the bill as reported by the committee which provides the President with an effective waiver authority to the Symington amendment to permit the United States to furnish badly needed assistance to Pakistan.

At the same time, I share the concerns of my colleagues about the ultimate purpose of Pakistan's nuclear program. Detonation of a nuclear device by Pakistan, or another detonation by India; would heighten tensions on the subcontinent, with grave implications for regional stabiUty and nuclear nonprolif eration objectives. The committee b1ll sends a strong signal to both countries that U.S. assistance should be terminated in the event of a detonation, and that there would be grave damage to our bilateral relations in that instance.

The amendment of the distinguished Senator from Ohio, however, would go further-and I refer to the third amendment-and mandate termination of U.S. assistance to the country detonating a device. While I have no doubt that termination of assistance would, and barring unforeseen circumstances should, be the U.S. response, I must strongly oppose the Senator's amendment which would tie our hands now, and provide no fiexibWty for the President to respond based

on an evaluation of all pertinent facts and an assessment of the totality of U.S. interests.

It is difficult now to foresee a specific set of circumstances in which we would not want to terminate assistance, but we must not forget that Southwest Asia is a volatile area and one in which two Presidents have publicly stated that the United States has vital interests. We must not legally handcuff ourselves so that we are unable to counter those external forces who might take advantage of a future situation to the detriment of Pakistan or our broader interests in the region.

More specifically, Mr. President, I believe the committee language better serves overall U.S. policy interests and the bilateral relationship we are attempting to build with Pakistan. The language in this amendment offered by the Senator from Ohio will limit the discretion and flexibility of the President unnecessarily. A confrontational approach such as that proposed in this amendment has been tried with Pakistan in the past and has failed. I would hope that the United States will be able to build a new relationship of confidence with Pakistan which we believe would give us a better chancP. to insure that Pakistan's nuclear program follows a peaceful path. Adoption of this language change would undermine this new relationship.

Mr. President, I believe that the distinguished Under Secretary of State, our former distinguished colleague from New York, Mr. Buckley, has worked tirelessly with the.Pakistanis to make progress on these issues. He has reported to the committee and the Congress regarding those continuing discussions with the Pakistanis. It is my strong belief that this President, Secretary Haig and Under Secretary Buckley should be given every opportunity and the type of discretion in the reported bill to fashion a realistic and viable nonprolif era ti on arrangement with Pakistan which will harmonize all of these national security interests. Nuclear nonproliferation, regional peace and security, and our mutual security interests in Southwest Asia can be successfully accommodated by this administration with Pakistan if, and I emphasize if, the Congress will refrain from legally tieing the President's hands, and his negotiating options 1n fashioning such an arrangement.

We cannot allow this one specific consideration, albeit very important, to override the other policy considerations. We have had sad experience in that regard in the past administration and under the more restrictive provisions of the Nuclear Nonproliferation Act.

I believe the existing language in the committee bill, which gives the President some discretion in the use of the waiver authority in current law, should be retained. The existing committee language sends a strong signal to Pakistan and the administration that foreign assistance should be terminated if Pakistan were to explode a nuclear device. However, this would not require the President to take such action irrespective of the situation and our overall interests in Pakistan and

international stab111ty in that region of the world.

SlX•TSd LDllT

· I am opposed to the 6-year limit on the waiver of the Symingt;on amendment. We are seeking to establish a long-term securi~y relationship with Pakistan. A 6-year hmit would send a false signal in that it could be interpretffd by the Pakistanis as an indication that we are thinking of a security tie only during the next 6-year period.

Congress, through its authorization and appropriation process, will examine on an annual basis our Pakistan policy. This, in our view, already provides congressional control over our policy. The best way to defuse the tempt.ation to go nuclear is to address Pakistan's legitimate security needs by creating an enduring conventional assistance relationship. The 6-year limit totally undermines the credibility of an enduring security assistance relationship and this vitiates the entire thrust of our nonproliferation effort.

Pakistan needs the assurance of a dependable long-term U.S. security assistance relationship and the Senate needs to def eat the 6-year limit on the waiver so that we can provide it.

REPORTING REQUIREMENT

I also oppose the amendment requiring the President to report annually on Pakistani nuclear activities. The President is already required to file an annual nonproliferation report to the Congress under section 60(a) of the Nuclear Nonproliferation Act of 1948. The Department of State, ACDA, and other concerned agencies are further required under section 601 (c) of that law to keep the Congress "fully and currently informed" about activities of other nations which are of significance from the nonproliferation standpoint. Finally, the administration's policy of periodically providing classified briefings to the Congress is the best vehicle for a discussion of the Pakistani nuclear issue. This restricted channel affords both branches of Government adequate safeguards for the protection of sensitive information while meeting congressional requirement.is for information. There! ore, this proposal for an additional country-specifics nonproliferation report is redundant of other provisions of law.

Also, during the annual authorization and appropriations process, the administration will be asked to. and I am sure will be happy to, provide the Congress with an update on Pakistan's nuclear program. I do not believe, however, that this requires an amendment to the Senate foreign relations amendment on Symington, which the administration strongly supports.

Mr. President, I think it is important for us to note, and I do not mean to be unduly troublesome in raising the issue, that we are here singling out a specific country for special treatment as a condition for the kind of bilateral aid that we extend on other occasions to other countries around the world without this requirement.

We do not require this kind of specific action with every other country that has


not signed the Nuclear No~pr?liferation Act. We do not require this kmd of action with respect to every country that has or is suspected of having, a nuclear cap~bility or who is attempting to ob-tain such a nuclear capability. .

There is an ongoing effort by this administration, as there was by the last administration, strongly supported . by the Congress, to encourage every nation that has not signed the Nuclear N~nproliferation Act to do so, and, with strong congressional concern about the proliferation of weapons, a very careful scrutiny of what is done by other countries that are not, and, as a matter of fact other countries that are, signatories to the Nuclear Nonproliferation Act.

It is not because I disagree with the thrust of the amendments or the concern of the Senator from Ohio with respect to nuclear nonproliferation that I oppose the amendments, but I feel constrained to do so in order to strengthen the ability of this administration to do so.

Mr. President, I thank the Chair and I thank the Senator from Illinois for having stepped aside temporarily that I might present these remarks at this time.

Mr. PERCY addressed the Chair. The PRESIDING OFFICER. The Sen

ator from Illinois. Mr. PERCY. Mr. President, I thank

Senator McCLURE very much for the contribution he continues to make in this very impartant field. We do not always agree, but his deep interest and the close way in which he follows these matters has been of impartance.

I have looked at the various amendments that our distinguished colleague, a member of the Foreign Relations Committee, the distinguished Senator from Ohio, Senator GLENN, has proposed to offer today. I would like to put into context those amendments.

The question of nuclear nonprolif eration has really accelerated in importance throughout the world ever since we began working on this matter in the Governmental Affairs Committee, work which ultimately led to a jo!nt piece of legislation that is now the law of the land dealing with U.S. policy on nonproliferation. There is a movement sweeping this country.

Dr. Goldberger, who has been so active as the president of the California Institute of Technologv, told me as recently as last night in Pasadena that a small movement of universities, which began with just a dozen universities to address themselves, the student bodv, the faculty, the scientists, to this prob!em, has now grown to 110 universities engaged in ari intensive study. He, as chairman of the delegation that went to the Soviet Union to talk to their counterrarts, the scientists in the Soviet Union, talked about th;s prob~em.

Scientists around the world are concerned with the trends which are moving us closer and closer to the day when there mav be some nuclear explosion, not under test conditions and not for so-caned peaceful nuclear purposes but aotually detonated for the purpose of destruction.

I attended the Pugwash conference this year in Calgary, Canada. I was there on a personal holiday but took 2 days off to just stop by and speak on behalf of the American delegation from one point of view. Paul Warnke spoke from another point cf view.

I was deeply impressed with the fact that 1,000 people assembled on .a Su~day afternoon, with 500 of them bemg scientists from 80 different countries, to talk about the nuclear problems of the world. They really operated under an organization created and financed originally by Cyrus Eaton, and Mrs. Cyrus Eaton was there. It grew from a spirit of a challenging set of remarks and resolutions introduced by Albert Einstein and Bertram Russell, an eminent scientist and an eminent philosopher with the admonition to the world that we have to do something about this problem.

I deeply respect my colleague from Ohio, Senator GLENN, for the interest he has taken, and that other members of our committee have taken. Our ranking minority member, Senator PELL, has addressed himself to this problem without cessation. Senator CRANSTON has offered leadership in forming a luncheon group, where many of us, regardless of political ideology, have met together with outstanding experts in this field.

Many of us worked together a decade ago on the ABM. We defeated the ABM. Thank heavens in retrospect we did. Where would we be today if we had gone ahead with that project? We would have been $70 billion more in debt, plus the cumulative compaunded cost of $12 to $15 billion a year just to maintain a system thaJt probably would be obsolete by now, as obsolete as the Dew Line covered with ice and snow. Yet here it is, and you would have to maintain it.

What would the respanse have been? Our adversaries would have been trying to build more offensive weapons to penetrate it and we would have had to expand our ABM missile. We would have been spreading it not just to protect our missiles and Washington, D.C., as we were allowed to do-thank heavens we have never gone ahead with those projectsbut we would have been expanding it to, so-called, protect other cities, and we would have had no further security bUJt, in fact, less.

By standing together on these issues, we have made, I think, considerable progress.

Mr. President, I should like to comment on a letter from Secretary Haig to me as chairman of the committee, in which he comments upon these matters. Secretary Haig said:

The Reagan Administration fully shares the deep Congressional and public concerns regarding nuclear proliferation. We understand the motivations which led to the enactment of Section 669 of the Foreign Assistance Act. At the same time, we must recognize that application of Section 669 to Pakistan has not had the intended effect on that country's nuclear efforts. I belleve t":lat by providing Pakistan with conventional mmta.ry equipment in the framework of a bilateral relationship of confidence and mutual understanding, the United States wlll be in a better position to influence the shape and direction of Pakistan's nuclear program in the future. This is, in our view,

the most effective way to pursue the nonproliferation goals we all share.

We strongly support the change in Section 669 proposed by your Committee since lt provides the President with ,an effective national interest waiver in order to permit assistance to Pakistan. Amendments which would substantially alter this provision and limit Presidential flexibility would from the start undermine the basis of the new relationship so carefully negotiated with the Government of Pakistan. The Committee has taken a responsible approach to this issue by proposing legislative language which clearly expresses a deep sense of concern on the vital nuclear question. We welcome and accept this initiative. No purpose would be served in resorting to further mandatory legislation on this issue which would unnecessarily restrict the United States Government's ability to react responsibly in future circumstances that we cannot now predict.

I a.ppreclate your Committee's thoughtful action in relation to Pakistan and your personal leadership in guiding the Committee proposals through the Senate. I want you to know that we consider positive Senate action on the bill as reported out of Committee to be a matter of vital national interest.

Mr. President, I always deeply appreciate letters of ~mpport from the administration, but I am constantly reminded that we are a separate body and we have a separate respunsibility to think through these matters !:lnd to arrive at our own conclusion, hopefully regardless of the administration, or with the support of the administration but, unhappily, sometimes, we do come up with differences. We may have a case here where we do not see eye-to-eye on every single aspect of it.

With respect to the pending amendment that has been introduced by the distinguished Senator from Ohio, I think that from the standpoint of the majority manager of the bill, and I do believe, the standpoint of the minority manager of the bill <Mr. PELL), the committee can accept the first amendment introduced by Senator GLENN.

It is an amendment whith clearly provides that there shall be a reporting requirement to be provided annually on the nuclear program of Pakistan. This amendment would provide for a report from the President as to the extent and effectiveness of IAEA safeguards o! Pakistan's nuclear facility. That is a basic requirement.

The amendment would have the President judge the capability, actions, and intentions of the Government of Pakistan with respect to manufacture or acquisition of a nuclear explosive device.

It is no secret to Pakistan, certainly, Mr. President, that we are opposed in this regard to proliferation in the volatile Middle East of nuclear weapon capability. We have done so in an evenhanded way. We oppose it in India, have vigorously opposed it. We oppose it in Pakistan and have vigorously opposed it. We think it would be a disaster for both countries to have that hanging over their heads.

We have tried to work out a constructive program with Pakistan to give them the assurance that, after the Soviet invasion of Afghanistan, we will provide a package of conventional weaponry that will provide for their defense-not the


offensive capability-but for the c;lef~:u~e of Pakistan against its adversarlet.' ·1 know in conversations I have seen wisely undertaken between the Governments of Pakistan and India, the emphasis is not placed upon pitting themselves against each other. That is not the point. There are known problems that Pakistan has with neighboring countries and certainly, backed by Iran, the question of oil storage facilities is evidence of concern.

The very fact that there are over 2 million Afghan refugees in Pakistan today indicates the danger to that country. But maybe the U.S. assistance package will then make it unnecessary and undesirable for Pakistan to move ahead with nuclear weapon capability. We hopo so.

Mr. President, we think the President should report periodically to Congress on these two vital issues. So, without further ado, I say on behalf of the managers of the bill, we are prepared to accept the pending amendment and I hear no request for a rollcall vote on it. We are prepared to have a voice vote on it at this time.

Mr. GLENN. Mr. President, I would be prepared to have a voice vote and I appreciate the consideration of the distinguished chairman of our committee in this regard and his remarks. I think this requirement for reporting it will go a long way toward keeping us informed on these most important matters. The chairman has taken the lead in these matters, as he has mentioned, as we have worked together through the years .here. I appreciate his consideration. I am prepared to move a vo~ce vote at this time and I so move, Mr. President.

Mr. CRANSTON. Mr. President, I urge my colleagues to support the Glenn amendment.

The Senate is being called upon today to take the momentous step of waiving important nuclear nonproliferation restrictions on aid in order to facilitate a $3.2-billion package of military and economic assistance to Pakistan.

The simple fact that this is a time of severe budgetary restrictions, when basic domestic programs are being cut to the bone, is sufficient to warrant careful scrutiny of this request. But equally important are the policy implications of the administriation's proposed action.

!Vithout a single Senate hearing on this request, we are being asked to weaken our nonproliferation standards in the hope that by building a new security ~elati~nship with Pakistan, the admin-1strat10n will succeed in halting that nation's nuclear weapons development program. And yet there is strong evi<:fence to the contrary.

Since the initiation of new aid discussions between the Carter administration .officials and Pakistan, Pakistan has contmued deliberate progress on completion of its clandest:ne enrichment a_nd reproce::;sing plants. Since submission of the Reagan administratton request to waive nonproliferation restrictions last spring, reports have circulated about a !luclea! bomb test site being prepared m Pakistan. And since the Senate Foreign Relations Committee was briefed on this issue last May, new in-

formation has come to light regarding possib~e Pakistani diversion of spent fuel after use of domestically fabricated fuel rods used in their Kanupp reactor. Thus it should be clear to all that Pakistan has not halted its methodical progress toward attainment of a nuclear weapons capability.

Mr. President, I believe it is our duty here in the Senate to ask: "What are U.S. taxpayer dollars to be used for?'' We would approve today the tip of a $3.2 billion iceberg, a package of military and economic aid which will go for what-to shore up the repressive and unpopular regime of General Zia? To buy convent:onal weapons so that he can use this American subsidy to continue his costly and perilous nuclear development program?

I am deeply concerned by the precedents we could set were we to approve this money without setting further conditions today as the Glenn amendment would do. We have had no hearings on this; we have not been briefed on the latest intell'.gence information on the Pakistani nuclear program, information which the administration is obligated by law to share with the Congress in a timely manner. News reports about this information make clear that Pakistan continues its relentless pursuit of all avenues toward achieving a nuclear bomb making capability, that International Atomic Energy Agency inspections are completely insufficient to prevent such developments, and that any U.S. leverage gained by the adm!nistration's proposal of $3.2 billion in aid is useless if the aid is made unconditional.

I will submit for the RECORD at the end of my remarks an excellent article by Judith Miller of the New York Times, wh 'ch details many of these recent developments.

Mr. President, the Reagan admtnistration is offering unconditional aid to Pakistan because U.S. officials perceive the Soviet threat as paramount in that region. But Pakistan is more likely to use military aid in a confrontation with India, with whom Pakistan has fought three wars in the last 34 years. Already we see a nuclear arms race unfolding between these two terribly poor nations. Now, with the proposed sale of F-16 aircraft and the offer of lavish U.S. m;litary aid to Pakistan, it appears the United States could encourage a renewed conventional arms race between these two countries as well.

I welcome the effort by Senator GLENN to attach more stringent conditions regarding nonproliferation on U.S. aid to Pakistan. I believe continued efforts to link U.S. aid to nonproliferation conditions are essential if our national security interests are to be advanced.

The article follows : U.S. AIDES STUDYING PAKISTANI REACTOR

(By Judith Miller) w ASHING TON. September 29 .-Administra

tion arms control and intelligence officials and international atomic energy inspectors are investigating what they describe as "suspicious" activities at Pakistan's nuclear reactor, which is capable of producing plutonium for atomic weapons.

Administration and Congressional officials said that the International Atomic Energy

Agency, which monitors nuclear installations, had been pressing Pakist.an for permission to improve the safeguards at its 135-megawa tt reactor near Karachi. The reason, Congressional aides said, is that over the pa.st several months, "anomalies" and "irregularities" have been detected at the site, among them a high rate of failure of survemance equipment and problems in accounting for used or spent nuclear fuel.

As a result, some Administration and International Atomic Energy Agency officials have expressed suspicion that fuel might have been diverted from the civ111an reactor for nonpeaceful purposes.

Administration officials stressed, however, that there was no proof that a diversion had occurred. Nevertheless, the officials said, the Pakistani developments have raised questions about the integrity of the international monitoring system designed to stop the spread of nuclear weapons.

Pakistan has not signed the Nuclear Nonproliferation Treaty of 1968, but its reactor, which was supplied by Canada, comes under the safeguards of the International Atomic Energy Agency because of Canadian-imposed conditions for the sale.

Congressional officials said that Pakistan had refused the request for improved safeguards, contending that the improvements constituted a. virtual renegotiation of the original agreement it had signed with the agency in 1971.

The agency's report on the Pakistan situation has led American intelllgence and arms control officials to redouble efforts through various intelligence channels to determine what accounts for the "irregularities" at the Karachi plant.

Officials here said that, because the Reagan Administration has placed emphasis on the role of international safeguards, the Pakistan case could jeopardize President Reagan's goal of stopping the spread of nuclear weapons while continuing to promote American nuclear exports for peaceful purposes.

President Mohammad Zia ul-Haq of Pakistan has said his country would not develop nuclear weapons, but he has refused to rule out developing a peaceful nuclear device a. distinction not accepted by the Reagan Administration.

Senator Alan Cranston of California., the assistant Democratic leader, disclosed last Friday that the international agency had privately expressed concern in a board meeting two weeks ago that the use of domestically produced nuclear fuel in Pakistan's reactor, and in a. similar reactor in India, would make effective surveillance "impossible."

According to Congressional and arms control officials, the international agency's latest concern about Pakistan's program stems from that country's ab111ty to produce its own nuclear fuel and from the nature of its so-called Candu reactor, an acronym for Canadian Deuterium Uranium reactor.

In this type of reactor, which the United States does not sell, fuel rods are continually loaded. into and extracted from the reactor, without a shutdown of the plant and without the presence of inspectors.

As a result, officials said, the possib111ty exists that additional so-called undeclared. fuel could be introduced into the reactor without alerting insI>ectors.

The agency's inspectors monitored the installation of the first 75 bundles of domestically produced fuel rods into the rea.ctor which holds about 2,000 rods. But they be~ ca.me concerned that as Pakistan's fuel production capability increased, more cameras and survelllance equipment would be needed to insure that fuel was not being secretly inserted, processed a.nd diverted from the reactor and its cooling ponds.

The monitoring problems led Sigvard Ek-1 und, the Swedish physicist who is director general of the international agency, to preaa

October 20, 1981 CONGRESSIONAL RECORD-SENA TE 24513 PaJclstan to permit the agency to improve sa!egua.rds by installing such equipment at two additional locations, according to congressional officials.

The agency has been negotiating for similar improvements in other countries, including India, that have slmllar reactors. One arms control official said that India had seemed somewhat receptive to the request.

As a result of Pakistan's refusal, Mr. Eklund expressed concern two weeks ago about the Pakistan program and the adequacy of safeguards in a special meeting with his board. He promised another report on the situation in two months.

Last week, the Nuclear Regulatory Commission was informed of the sLtuation in Pakistan, officials said, as was Senator Charles H. Percy, the Illinois Republican who is chairman of the Foreign Relations Committee.

In general, however, the Administration has attempted to keep details of the dispute from being disclosed, concerned the.t a disclosure might Jeopardize both the Administration's nonprolifere.tlon policy and President Reagan's effort to solidify a new security relationship with Pakistan.

The Administre.tion has proposed a sixyear, $3.2 billion aid program for Pakistan, and the sale of 40 F-16 fighter planes on a stepped-up schedule to help that country withstand Sov~et pressures from neighboring Afghanistan. Mr. Reagan has asked Congress to exempt Pakistan from the law that bars military a.td to countries that pursue nuclear weapons program.

In 1979, congress suspended aid to Pakiata.n in the wake of evidence that Pakistan had established a worldwide network of purchasing agents, Including phony companies and lntelllgence opera.tlves, to obtain components for a uranium centrifuge enrichment plant that could be used to fabricate fuel for weapons.

Since that time, what Congressional om.cials describe as Pakistan's "crash" program to develop a nuclear weapons option has been in full awing.

Nevertheless, the Senate Foreign Relations Committee, concerned about Soviet incursions in southwest Asta. voted 10 to 7 last May to grant the exemption sought by the Admlnistrat.lon. A sharp debate is expected when the Sena.te considers the issue, possibly tomorrow.•

Mr. PELL. Mr. President, I wish to add my voice in support for the amendment of the Senator from Ohio and his other amendments. too. I think they are excellent. I am delighted to join in sup-porting them. .

The PRESIDING OFFICER. The question is on agreeing to the amendment.

The amendment <UP No. 491) was agreed to.

Mr. GLENN. I move to reconsider the vote. Mr. President.



AMENDMENT NO. 559

(Purpose: To limit the period during which the President may waive a prohibiticn on furnishin~ assistance to Pakistan, and for other purposes)

Mr. GLENN. Mr. President. I shall have to call up mv next am<>ndm~nt, I believe. That is amendment No. 559.


The legislative clerk read as follows: The Senator from Ohio fM'!'. GL'l!!-•N) pro

poses an amendment numbered 559:

On page 82, line 25, insert "at any time during the period beginning on the date of ena.ctmen t of this section and ending on September 30, 1987,'' after "Act".

Mr. GLENN. Mr. President, we had discussion of this amendment earlier. I do not believe I need to repeat all 'of that. I · believe the distinguished fioor manager of the bill is familiar with the cap that this would propose and I yield for any comments he wishes to make.

Mr. PERCY. Mr. President, I have listened with considerable interest to the explanation of my colleague from Ohio <Mr. GLENN) on this amendment. After consultation with my distinguished colleague Mr. PELL, the ranking minorlty manager of the bill, we think well of this amendment. There are some explanations, however, that must at this time be offered and some comments on it.

The amendment introduced by Senator GLENN, this second amendment, provides that the waiver of the Symington amendment for Pakistan will be extended for only 6 years. The President's $3.2 billion aid package to Pakistan would be provided over a 6-year period. Thus, this amendment is consistent with the President·s aid request for Pakistan. It is crit:cal, however, that prior to accepting this amendment, the committee has Senator GLENN'S pledge that in conference, he wlll accept no less than this 6-year cutoff. If this 6 years were to be reduced to 3 or 4 years, it would undermine the administration's entire strategy on Pakistan.

Mr. President, this is a subject that Senator GLENN and I discussed on the telephone on Sunday, prior to my going out to California. He is thoroughly fammar with my concern. He is also familiar with the fact that when we agree to stand together, we really stand together. We have never :flinched one bit. We have never been talked out of pe>sit:on once we have agreed that we are going to go forward.

Mr. President, I feel that our colleagues in the House will respect the fact that we have worked out here an amendment that I believe is in the national security interest of the United States of America.

Although it is an amendment which is not supported by the administration, I believe, to use the terminology they have used previously, they could live with it. I ask, then, does the committee have Senator GLENN'S support in conference to keep this cap at 6 years and not let it drop to less than that?

Mr. GLENN. Mr. President, I am glad to agree with the chairman.

Mv purpose in submitting this amendment was not to shorten it to less than the 6-year period, although I wish for no waiver at all, obviously. My concern was that although we were making an arms arrangement for deliveries over a 6-year period the wording in S. 1196 establishes an o~en-ended waiver of the Symington amendment that would extend well beyond the 6-year period for delivery of the conventional arms. If that arms deal is not extended beyond the 6-year period, S. 1196 would still have the effect of giving Pakistan a waiver for

nuclear matters, a waiver from the Symington amendment, that no other nation has.

That is what we are trying to correct in this amendment. I was not trying to shorten the Symington waiver further. I was trying to make certain that Pakistan did not have a nuclear waiver that went beyond the 6-year period.

Mr. PERCY. Just to be certain that the Senator from lliinois understands. does that mean that, on the record, the Senator from Ohio has assured the floor managers of the bill ths.t he will stand firm on thi.s 6-year cap?

Mr. GLENN. Yes. I said that when I began. Perhaps the chairman knows something about what is going to happen in conference that I do not know.

I just explained that my purpose is not to try to shorten this. As in any conference, I support the will of the Senate. If it is the will of the Senate that we put this in for a 6-year period. I will not advocate a lesser period. I do not want to have an ad infinitum waiver of the Symington amendment applied to Pakistan, as it is now worded.

Mr. PERCY. Before bringing this issue to a vote-unless Senator PELL wishes to comment-I believe that, unhappily. we have come to the end of the period where we have unanimity. From now on. we do have some difference of opinion.

The hour is 6: 03-not traditionally late by Senate standards; on the other hand, several bipartisan functions are being carried on tonight. I would be perfectly willing to stay and continue discussion of the third amendment, but I know that Senator GLENN has already made some comments. Starting in the morning, I could take 5 or 10 minutes to comment briefiy on the amendment. have some dialog back and forth. and then be ready to have a vote on that amendment, depending on how soon the leadership would want to have the first vote.

We may ask the leadership to clarify what time we will be coming and when we will be ready for th.e first vote. 3o far as I am concerned, if the Senate comes in at 9 o'clock-whatever the leadership decides-or 9: 30 and we go on the bill at 10, we should be ready to go, and the managers of the bill will be ready to vote just as soon as we finish our discussion.

Mr. GLENN. I would be prepared to do that. I will have some remarks to make in the morning. Attendance in the Chamber this afternoon was rather sparse during our discussion, and I would want to repeat some select remarks tomorrow morning. I would not want to agree to a time certain.

What time do we come in tomorrow? Mr. PERCY. Nine-thirty, and appar

ently we will go on the bill at 10 o•clock. as I understand it.

Mr. GLENN. I am sure that we will wind up before noon on this.

Mr. PERCY. I thank m:v colleague for h~s usual gracious cooperation.

Mr. President, I know of no further discussion on amendment 559. which ts the pending business. Both fioor manaP'ers are prepared to accept it, with a voice vote.

The PRESIDING OFFICER <Mr. Aur-


STRONG) • The question is on agreeing to the amendment.

The amendment <No. 559) was agreed to.

Mr. GLENN. Mr. President, I move to reconsider the vote by which the amendment was agreed to.



The PRESIDING OFFICER. Under the previous order, the Senator from Ohio is to be recognized .at this time for the purpooe of calling up an amendment.

AMENDMENT NO. 560

(Purpose: To require a. prohibition on furnishing assistance to India. or Pakistan if such country detona.tes a. nuclear device) Mr. GLENN. Mr. President, I call up

my third amendment which is at the desk.


The legislative clerk read as follows: The Sens.tor from Ohio (Mr. GLENN) pro

poses an amendment numbered 560: On page 83, line 14, strike out "should"

and insert in lieu thereof "sha.11".

IMr. GLENN. Mr. Pres·ident, there will be no discussion on this amendment this evening. We will take it up in the morning. • Mr. CHILES. Mr. President, as the Senate moves toward final passage of S. 1196, the International Security and Development Cooperation Act of 1981, I want to take note of one provision in the legislation that I believe will prove of great importance in our effort to cut off the flow of illicit narcotics into this country. The Chiles amendment, adopted by the Committee on Foreign Relations, will repeal the existing prohibition on the use of U.S. funds to support the spraying of marihuana with paraquat and other herbicides, while continuing needed safe guards to insure that no health risli is posed for U.S. citizens.

A renewed and aggressive drug law enforcement effort is urgently needed if we are to turn the tide on the narcotics trade. We should be under no illusion, however, that winning this battle will be anything but a long and difficult task. There is no simple solution. There is no single step we can take that will rid our Nation of this menace. Rather the point is we should be taking every step possible that promises to improve our capacity to thwart the drug flow.

As the Congress and Federal law enforcement agencies grapple with programs and strategies to combat the narcotics flow, there is one inescapable conclusion: The most effective means to stop drugs is at the source. Any enforcement strategy that does not include an effort to cut off the drug supplies in producing countries, such as Colombia, is doomed to failure. As long as marihuana and opium are produced in bumper crops in foreign nations, a good portion of these drugs will end up on our shores.

In an effort to foster an effective narcotics control program in the Republic of Columbia, $16 million in foreign assistance funds were made available for the purchase of aircraft, patrol vessels, com-

munications equipment and for the training of personnel to interdict drug tramc. This was a positive step. U.S. Ambassador to Colombia, Thomas Boyatt, reported to me in May on an aggressive effort by the Colombian National Police Force to seek out and destroy drug raw materials. However, due to the prohibition contained in section 4 of the International Securities Assistance Act of 1978, these funds are not and cannot be used for the most effective narcotics control mechanism, namely, an herbicide eradication program. It is a case of doing battle without our best weapon.

The effectiveness of an herbicide spraying program has been clearly demonstrated by our experience in Mexico. In the year 1976, according to Drug Enforcement Administration figures, seizures of marihuana by all sources in Mexico totaled only 900,000 kilos while 7.2 million kilos were eradicated from the air. At that time Mexico was the primary pot supplier to the United States. A paraquat spraying program over a 2-year period ended that nation's role as a major source of marihuana.

The amendment passed by Congress in 1978 which resulted in the spraying prohibition was adopted by the Congress with limited debate and I believe without a full appreciation of its potential consequences. It was adopted in the wake of a concern that a great many Americans might suffer serious health problems as a result of smoking contaminated marihuana. A concern that I believe was unwarranted. In looking at the situation today, with what we know about the effects of marihuana smoking and as we examine our failure to stop drug trafficking, a different conclusion is in order. The case is decisive for lifting the restriction and resuming U.S. assistance to destroy drug raw materials.

WRONG SIGNAL TO THE INTERNATIONAL COMMUNITY

A troubling difficulty that is experienced in our efforts internationally to control drug production is convincing foreign governments that we are truly serious. If we encourage these governments to crack down, provide them financial assistance and yet turn around and prohibit the use of the most effective eradication tool, it is no wonder there is skepticism.

I know from personal conversations with President Turbay of Colombia, who is attempting to end the narcotics industry in his country, that questions exist about our resolve to really wipe out the drug trade. The prohibition on paraquat spraying feeds that type of questioning and I cannot think of a worse signal to be sending to the international community.

MARIHUANA IS A DANGEROUS SUBSTANCE

In the concern over the potential health risk of paraquat-sprayed marihuana there is an implied assumption that marihuana smoking itself is not posing a health risk of any consequence. That assumption is far from correct. It is becoming increasingly evident that marihuana is a dangerous substance and it is being used by more young people and at a younger age.

The potency of marihuana has in-

creased sharply over the past 10 years. Latest reports indicate that it may affect the reproductive functions of men and women and may adversely affect the unborn child. Extended use of marihuana over a period of years may eventually be shown to cause cancer in humans. ·

Equally disturbing are findings that the . percentage .of students beginning mar1huana use m the ninth grade or earlier has nearly doubled over the past 4 years.

The serious nature of the problem is perhaps best summed up by Dr. William Pollin, Director, National Institute on Drug Abuse, who concludes:

If widespread marihuana use, especially among young people, is not curtailed, our society may pay a large price in health consequences and medical costs. • • • Many young people want to view marihuana as a simple herb with the power to enhance their lives. In fact, research is showing it as a complex drug which can negatively affect learning and motor coordination, a.nd may eventually lead to serious h.ealth problems. USE OF PARAQUAT DOES NOT POSE SIGNIFICANT

HEALTH RISK

In marked contrast to the negative health consequences of marihuana use the potential health consequences to th~ American public from paraquat-sprayed marihuana present much less cause for concern.

The current statute requires an assessment of the health risk to persons who smoke marihuana contaminated by an herbicide. To accomplish this, consideration must be given to factors such as the amount of paraquat an individual .must inhale to suffer fibrosis; the amount of paraquat-contaminated marihuana in the U.S. market; the concentration of paraquat; and the smoking and purchasing habits of American marihuana users.

Obviously, a large part of such an assessment will be speculative in nature, depending upon statistical projections and extrapolations from animal test data.

The findings by HEW, which resulted in the paraquat ban, represent a structuring of those factors to provide a worst case estimate. Even in a worst case analysis the HEW study indicated that only between 50 to 100 marihuana smokers could be exposed to significant amounts of paraquat-contaminated marihuana.

Thts represents an extremely small fraction of all American marihuana smokers. With the exception of individuals who may make one very large buy per year of contaminated marihuana, the computer simulation data projected a population approaching zero that might risk exposure to 500 micrograms of paraquat, a dosage considered potentially harmful.

Further, the Department of Agriculture raised serious questions about the validity of even this worst case analysis by HEW. UEDA comments:

Technical evidence presented in your letter dated June 20, 1979, is based on computer simulation studies which largely indicated tha.t marihuana. smokers in thla country are not subjected to exposure levels of pa.raqua.t that a.re judged by health authorities to be harmful. The simulation

October 20, 1981 CONGRESSIONAL RECORD-SENATE 24515 study based on one large "buy" per year in which an upper limit of 60 persons would be exposed to 500 micrograms of paraquat is based on exposure assumptions we question.

The United Nations Narcotics Laboratory study group confirms this view in its analysis of paraquat, findings that:

Residues of sprayed formulations on cannabis would not be sufficient to cause toxic effects to the marihmma user.

PARAQUAT NECESSARY FOR AN EFFECTIVE

ERADICATION PROGRAM

At the time Congress passed the herbicide amendment, there was a prevalent expectation that an equally effective eradication mechanism could be quickly developed. This has not proven tio be the case. survey of the scientific inquiry into eradication alternatives po?nts to the unique properties of paraquat for destroying drug raw materials.

Tho United Nations Study Group on Methods for the Eradication of Illicit Narcotics Crops evaluated the various ways of eradicating narcotics plants and concluded that: "Chemical attack at the present time offers the best overall opportunities to successfully destroy narcotics crops."

Of the chemicals tested, paraquat produced the most rapid response.

The Mitre Corp., in a study for the Bureau for International Narcotics Matters, Department of State, concluded, on the basis of testing 140 herbicides marketed in the United States, that paraquat is the only herbicide environmentally acceptable for the eradication of opium poppy and marijuana.

The Science and Education Administration of the U.S. Department of Agriculture maintains that: "Paraquat is currently the most effective herbicide and method for rapidly killing marijuana."

It provides a quicker kill than any other herbicide available and there is no single alternative herbicide that can do an equal satisfactory job. For the immediate future at least, paraquat is the only effective tool we have for accomplish~ng large-scale destruction of marijuana crops.

TIME TO CHANGE THE LAW

In light of the seriousness of the marijuana problem and the urgent need for an effective crop eradication program, I th5nk it is definitely time for the United States to again assist foreign nations with herbicide programs to destroy drug raw materials where they are grown. Such assistance has been demonstrated to be a successful tool in controlling the :fiow of narcotics. With the ever increasing traffic in marijuana from abroad, it is a tool we can no longer afford to forgo.•

ROUTINE MORNING BUSINESS Mr. BAKER. Mr. President, I ask unan

imous consent that there now be a brief period for the transaction of routine morning business to extend not past the

•hour of 6:40 p.m. in which Senators may cpeak.


CRISIS IN HOUSING Mr. MITCHELL. Mr. President, ac

cording to the President, the United States is in a recession.

That may come as a surprise to some people.

But it will come as no surprise to those involved in the American housing industry.

That industry is now and has for many months been in a depression.

Housing production is the lowest since U>46. The seasonally adjusted annual rate of housing starts was only 937 ,000 starts in August, compared to 1.4 million a year ago.

Unemployment in the industry is at 16.3 percent--more than double the overall national unemployment rate this year of 7.5 percent.

Construction firms going out of business .this year are up 41 percent.

Subcontractors going out of business are up 127 percent.

The average mortgage rate nationally i~ now 18.28 percent, compared to 13.6 percent 1 year ago.

In Maine, the average mortg.age rate in August was 1 7 percent.

Between DO and 95 percent of American families have been priced out of the housing market.

The housing industry comprises an astonishing 23 percent of our national economy. Hundreds of thousands of individuals make up itis work force-carpenters, plumbers, electricians, masons, real estate brokers and agents, and many others. We cannot remain indifferent to their plight, nor to the plight of the many individuals and families who want to buy El.· home and are being squeezed by high intere~t rates, by mounting rental costs, and, m many cities, by condominium conversions.

When Congress passed tho National Housing Act of 1949, it declared as a national goal the provision of "a decent home and a suitable living environment for every American family."

That goal is now more distant than ever.

In this time of crisis in the housing industry, what has been the administration's response? Unfortunately, indeed tragically it has denied that a problem exists. In a report recently submitted to Congress, the administration said that "there is no current nationwide shortage in the rental housing market" and that, with limited exceptions, the private market is successfully addressing the need for rental housing. This statement ignores the facts-which show that the ·;acancy rate is as low as 1 percent in some cities and th::i.t construction of new rental units is near record lows.

And, incredibly enough, the administration is advancing proposals which will add to the devastation in the housing industry.

The Office of Management and Budget has recommended that the Federal Government end some housing insurance and loan guaranty programs.

The Treasury Department has proposed regu1ations to permit nationally chartered banks to preempt State laws guaranteeing sellers the right to pass on

their existing mortgages to prospective buyers without increases in the interest rate. The rule would essentially validate due-on-sale clauses, sometimes known as acceleration clauses, that give lenders the right to call all money due upon the sale of a home, and thus prohibit loan assumption.

The administration has suggested asking for the termination of all State taxexempt bond :financed housing programs.

The President's Commission on Housing has voted to recommend a Federal voucher system to replace the public housing program.

The administration's failure to develop a coherent policy to deal with our housing crisis has led the National Association of Home Builders and the National Association of Realtors to reconsider their support for the President's economic program. These groups, like many others which earlier urged unswerving support, now oppose important parts of that program.

In the absence of meaningful action by the administration, the Congress must act. Not only is the housing industry important to our national economy, it is critical here in Maine. As the most heavily forested State in the Union, with wood resources as the main element in its economy, Maine is especially hard hit by the crisis in the housing industry. To help meet this crisis Congress should enact legislation to remove some of the restrictions imposed last year on the sale of tax-exempt single-family housing bonds. The law can be tightened in some respects to prevent abuse. But the industry needs this source of mortgage credit to serve those who cannot afford to borrow in the conventional mortgage market. Legislation is now pending in the Senate Finance Committee which would accomplish this end. I support its prompt passage.

Second, Congress should reject any administration proposal to abruptly eliminate Federal housing insurance and guarantee programs. In capital poor States such as Maine, individuals and home builders have come to rely heavily on Federal assistance programs as one of the few methods of building and rehabilitat!ng homes. While private mortgage companies may in the long run assume a greater share of the burden now carried by the Federal Government, Federal programs should not be eliminated abruptly especially if the private sector is not ready to absorb a greater share of the market. And there may be a continuing need for Federal assistance to lowand moderate-income families who even in the best of times, have trouble affording suitable housing.

Third, the budget deficit must be held down. The largest portion of the budget, to remain uncut, is defense. While I strongly believe in the need to maintain our defense capability, I am not persuaded that a $1.5 trillion program over a 5-year period does not allow any room for reductions. Clearly, there are cuts that can be made in the Defense Department's budget. As one small example, the Department is the largest producer of films in the world-larger than all of the


film-making industry in Hollywood. A 10-percent reduction in its film-making capacity would save money without harming our national security.

Fourth, the revenue side of the Federal budget must be bolstered. The Economic Recovery Tax Act of 1981 gave the oil industry one-third of the total depreciation tax break even though that industry already earned over one-third of all corporate profits in this country, on top of all that, the $12 billion in special tax relief over the next 5 years which was included for the oil industry in the tax act was nothing more than a giveaway, a break without economic or moral justification.

The surge in oil prices since 1973 has caused a massive transfer of income from the oil-consuming States to the oil-producing States. Rural States like Maine, with a relatively small population and low per-capita income, lb.ave seen wages and corporate earnings drained to pay for higher fuel costs.

Repeal of this unwarranted tax break for the oil industry would help reduce the size of the Federal defici:t by $12 billion.

J.f the administration moves to immediate deregulation of natural gas, as the Pres'ident has said many times he will do, a windfall profit tax similar to the one on oil should be imposed. It would generate Federal revenues of $20 billion annually and would go a long way to closing the budget deficit.

The Federal tax system is often used as a means of achieving desirable national goals. Frequently, as in the tax act just passed by Congress th;.s summer, it is used to stlmulate economic growth and productive investment.

One of the d:dving forces of inflation has been the wage-price spiral that has gone unabated for a number of years. Attempts to impose direct controls on wages and prices have, in the past, proved futile. We should use the tax system to encourage anti-inflationary behavior, to provide incentives for moderation in wage demands by labor and rewards to business and industry for cutting back on the level of price increases they might otherwise command.

Reliance on a tough monetary policy alone, especially in the face of an expansionary fiscal policy, will not solve our economic problems.

If we act boldly to increase Federal revenues, to further reduce spending, and to provide incentives for action contrary to the traditional inflationary cycle, we will be taking an encouraging step forward. Such action would permit the easing of monetary policy wh~ch will bring down the high interest rates that have been so Jevastating to the housing industry and other segments of the economy-without fueling the fires of inflation.

We can no longer expect builders, realtors, and housing industry workers, most of them in small businesses, to shoulder an undue share of our economic burden. Their survival is at stake. We cannot ignore theu· plight.

EXPORT OF ALASKAN NORTH SLOPE OIL TO JAPAN

Mr. D'AMATO. Mr. President, I rise to express my deep concern over recent press reports that the Carter administration's ill-considered and soundly defeated proposal to export Alaska North Slope oil to Japan is being cons~dered once again by the Cabinet Council on Natural Resources and the Environment.

To increase by that move this country's dependence on imported oil-at a time when events in the Middle East remind us once again of how fragile our principal petroleum lifeline really iswould be sheer folly. As pointed out in a recent report of the Office of Technology Assessment, this country will continue during the next two decades to be dangerously dependent on foreign supplies of crude oil and those foreign sources will continue to be dangerously subject to disruption and limitation.

Will the American people understand why billions of tax dollars must be spent on foreign oil to fill our strategic reserve when we are sending our own crude oil abroad? Will they understand the national need to drill for more oil on the Outer Continental Shelf if we do not keep at home all the oil we are producing now?

Congress has never relaxed the restrictions on exporting Alaskan crude 0:1 and, if my soundings are correct, it never will. Alaskan North Slope oil was pledged in the original pipeline law to be an asset for all States and regions in this country, including the east co1st which is most dependent on imports and most vulnerable to a new embargo or other disruption. If the export of Alaskan oil to Japan were ever permitted, the east coast would never see any of that oil again.

Both our national security and our economic stability require an assured energy resource base. No base is more secure than our own domestic production. No so-called "swap" for Japanese rights to some other country's oil can give us the same assurance. No foreign supply, no matter how friendly and stable that source may be today, can be counted on for the future in the same way that we can count on our own production. Remember when Congress was urged to send Alaskan oil to Japan in exchange for more rights to Iranian oil? Does anyone think, once such an export flow started, that we could or would cut off the Japanese in the midst of an emergency; or that, if we did, we would have the necessary tankers, pipelines, and refineries geared to this type of oil?

Bureaucratic theories about all the benefits of "increased marketing efficiency" resulting from sending Alaskan oil to Japan are al! nonsense.

There would be no balance-of-payments to selling our oil abroad, then purchasing an equal amount abroad, and cutting our merchant marine out of both transactions.

There would be no real improvement in our balance of trade with the Japanese, on~e our oil exports make the statistics look better and enable the Japa-

nese to still ref use to let 1n the goods we have been trying for years to export to them.

There would be no benefit to our national defense in the decimation of our tanker fleet, whose availability is a key part of our military contingency planning.

There would be no benefit to our consumers, only increased danger of longer gasoline lines during the next emergency.

There would be no benefit to our environment, only the prospect of more foreign tankers in our ports and waters without all the environmental safeguards that apply to domestic tankers.

There would be no benefit to our economy, only a loss of thousands of jobs in the maritime industry, the loss of a substantial part of our tanker fleet, the default of federally insured tanker mortgages, and a loss of prospective revenue by ship owners, independent refiners, pipeline investors and the governments that would otherwise tax those revenues.

But these issues all pale beside the primar~ issue of our energy independence and security. \Ve must continue to streng_then it. Exporting Alaskan oil would weaken it. I am certain that President Reagan wiJ.l never make that mistake.

CA:r;cER IN THE WORKPLACE Mr. GORTON. Mr. President, as chair

man of the Subcommittee on Toxic Substances and Environmental Oversight of the Environment and Public Works Committee, I have a very real interest in workingplace hazards caused by various chemicals spawned by our complex and technologically advanced society.

Mr. President, there was a fascinating and thoughtful article on that subject and on possible solutions by one Devra Lee Davis, entitled "Cancer in the Workplace, the Case for Prevention" from the July-August edition of "Environment," a magaine published here in Washington.

Mr. President, I ask unanimous consent that that article be printed in the RECORD.

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

CANCER IN THE WORKPLACE, THE CASE FOR PREVENTION

(By Devra Lee Davis) The history of public health suggests that

successful disease prevention strateg.les ma.y be devised before the basic mechanisms of diseases a.re fully understood. It is now generally conceded that during the last half of the 19th century, mortality from bacterial diseases was reduced in the developing world almost ten-fold by such public health measures as improved sanitation and nutrition, better working conditions, and housing improvements.1 If we had waited for full scien- · tific confirmation of the merits of such preventive policies, we might only now be recovering from epidemics of typhus, diptheria, whooping cough and tuberculosis. These improvements in public health constituted a far more significant advance than the introduction and widespread use of immunization and antibiotics.

Footnotes at end of article.

October 20, 1981 CONGRESSIONAL RECORD-SENATE 24517 Some striking similarities can be detected

between the puzzlin3 nature of today's leadin5 caus:::s of death an::l disease and those of the 19th century. Until the turn of this century, infectious diseases cs.used most sickness and death. Then, as now, although some of the most common factors in sickness and death had been identified, the role of predisposing conditions remained in question. Today chronic degenerative diseas:::s, such as cardiovascular disease and cancer, with irreverible and often slowly deb111tating effects, together with accidents, constitute the most common causes of death, and years of life lost.2

While the basic mechanisms by which environmental factors affected life and health were not well understood in the latter part of the 19th century, some rather simple, gross observations had been made about the relationship between the environment and disease. Eric Eckholm SUf!gests that the c.a.mpfires of prehistoric people probably produced noticeable pollution. The smoke-filled air inside caves, tents, or homes undoubedly Irritated eyes and encouraged lung and heart disorders. But l!iven the serious thre3.ts posed by wild animals and weg,ther, the health toll of. this prehistoric air pollution would have paled in importance.a

TABLE 1.-YEARS OF POTENTIAL LIFE LOST

(Total population ages 1 to 64, United States, 1975)

Cause

Cancer _____________________ _ Heart disease _______________ _ Motor vehicle accidents _______ _ All other accidents ___________ _ Homicide._------------ ---- __ Suicide .. ___________________ _ Cerebrovascular disease ______ _ Cirrhosis of liver_ ____________ _ Influenza and pneumonia _____ _ Diabetes ____________________ _

Total years lost

1, 802, 820 1, 769, 180 1, 424, 823 1, 166, 793

621, 846 58~. 751 352, 524 320, 457 205, 673 118, 119

Percent total years

17.5 17. 2 13. 8 11. 3 6. 0 5. 7 3. 4 3. 4 2. 0 1. 4

Source: Ten Leading Causes of Death in the United States, 1975. U.S. Deoartment of Health, Education, and Welfare, Washington, D.C., 1978.

Shakespeare g:we literary expression to concern about the air, in Hamlet: "This most excellent canopv, the air .... Why it appears no other thing to me than a foul and pestilent congregation of vapours." Twelve years after Hamlet's first production, John l!."'velyn in 1616 attempted to relate chronic respiratory disease to air pollution. In his eseay, "Smoake of London," he wrote about "the hellish and dismal cloud of 'Eea coale' impure and thick mist accompanied with a fuligious and filthy vapor . . . corrupting the lungs."• Much later, the English socialists and ministers noted that clean and wellfed people were more healthy,5 and in 1848 Fredrich Engels provided a more detailed analysis of the links between certain occupations and certain diseases.e

De'3pite all these observations, some of which were quite meticulous natural histories of occupational and environmental disease, no unifying view of the etiology, or origin, of these dise:ises emer"?ed until the late 19th century. By this time, substantial improvements in public health had already been achieve:i.

To the extent that today's leadin~ mortality and morbidity problems are also well studied clinically, although not well understood in terms of their origin, an analogous situation exists. However, while adequate knowledge about the basic mechanism may not be at hand, effective preventive policies for some occupationally and environmentally based diseases can nonetheless be devised.


THE NEED FOR PREVENTION

Although it has become commonplace to note the change in the leading causes of mortality from infectious diseases at the turn of this century to chronic degenerative diseases and accidents today, what is less commonly recognized is that two very different sets of health problems emerge, given these changes: ( 1) how best to manage (or, when possible, cure) those who now have degenerative chronic dise~es, and (2) how best to prevent these diseases from developing in others. Any effective national health policy must combine both curative and preventive strategies.

For several years now, federal repor·ts have noted the significance of the environmerut for public health. In 1977 the Second Ta.sk Force for Research Planning in Environmental Health Science identified three relaited characteristics of contemporary public health problems:

(1) Further investments in medical treatments and in.terventions will not yield signlficant reductions in mortality or morbidity.

( 2) Prevention of illnes:; and premature death will yield the greatest benefits to society.

(3) Therefore, the identification, evaluation, and subsequent modification of the role of environmental factors in causing illness and premature death promise to be critical strategies for the prevention of disease and the promotion of health.

The Task Force concluded tha.t decisions on environmental control significantly affect the quality of our lives and the time a.nd manner of our deaths. To the extent that specific components of the environment which cause, contribute to, or ameliorate human disease oan be identrned and altered, preventive strategies for intervention and control can then be planned. In a society that has been moving st~adily toward ever moro costly therapeutic technologies, preventive approaches would seem to be dicta.ted on economic grounds alone. An even more persuasive argument for primary prevention is the po::sib1Uty of eliminating or delaying d·isease and suffering.1

Similar sentiments are contained in the First Annual Report to Congress of the Task Force on Environmental Canoer, Heart and Lung Disease.8 They re?orted that the ri.sk and occurrence of cancer and of heart and lung disease increase with enrvironmental pollution and, moreover, that current preventive measures are inadequate. The Cancer, Heart and Lung Disease Task Force called for the generation of preventive strategies in order to reduce the health risks of these diseases.

PROBLEMS OF RISK ASSr.:SSM!:NT

Much of the information presented here on the causes of chronic diseases pertains directly to workplace exposures and worker canoer mortalities. Such an emphasis on cancer understates the problem of other chronic worker diseases and environmental diseases of the general population. However, since many of the agents that permeate the workplace are also present in lower concentrations in the air and water of heavily industrialized areas, worker mortality trends can be viewed as indicators of more general public health problems. And, since methods can be developed for reducing exposures to some confirmed carcinogens, the assessment of wori:er cancer risks sbou11 provide important clues for effective public health prevention strategies.

Although this article focuses on available cancer mortality data for workers, two needs are recognized: that data be developed on other causes of chronic disease and death for workers and the general population,9 and that such data be used to generate effective disease prevention strategies. As the British

scientists Richard Doll and Richard Peto have recently remarked, it is astonishing that a country with such an interest in health collects so little systematic data on the subject.10 The National Death Index, some ten years in the making, which allows the linkage of some occupational information with cause of death, is seriously underfunded. Until more such information is routinely available, discussions of environmental and other causes of death will remain speculative.

Assessing human health risks on the basis of the best available evidence in order to restrict or prevent exposures to hazardous substances constitutes a primary preventive policy, akin in its potential public health impact to improved sanitation and nutrition. These strategies will, of course, be improved when the basic mechanisms of disease are better understood, but such strate>!ies need not await these improvements. Given the recent exponential increase in expo3ures to manufactured chemicals, most of which have not have been evaluated as to health risk, the need to improve our capacity to perform human risk assessment becomes a pressing public health problem.11

Any effort to evaluate what proportion of the current disease burden may be linked to environmental and occupational pollutants is itself fraught with risks. Students of env!ronmental health 1bave been confounded for years by the scientific requirement that likely casual links be established between specific environmental pollutants and particular heal th effects. This demand has had the effect of forcing reliance on laboratory animal studies of single pollutants under highly controlled conditions.

Importance of animal tests A recent Heritage Foundation Report which

a,..,pears to guide some of this Administration's policies suggests a move away from reliance on studies of human populations. The report further suggests that "the assumption underlining TOSCA [sic!; that industrial chemicals pose a substantial health threat to humans and the environment ... has not been substantiated. An epidemiological study to determine true incidence would aid [EPA 1 in directing resources to their mo'3t effecthre use. The Agency should determine 'substantial' and 'unreasonable' risk based on adequate analyses in the 'real world' environment where many factors not considered in laboratory testing cause different results." 12

As this article makes clear, tlhe complexity of epidemiological studies greatly exceeds that of toxicological studies. Moreover, there is no realistic prospect that any single epidemiological i:;tudy could determine the true incidence of human health risks of industrial chemicals for reasons elaborated below. Further, maldn~ studies cf humans pivotal for rec;ulation treats exoosed persons as expei:-imental sub1ect<>. While the real world differs importantly from the laboratory, solid scientific evidenc~ is rarelv obtained in the former. The admi.,istrators of EPA and OSHA will always confront the neces..,ity of making decisions in the face of scientific uncertainties. Science remains an evolving institution which ca.n never prove hypotheses, but only refute them. TABLE 2.-Thirty-six chemicals or industrial

processes associated with cancer induction in humans

Chemical or process Acrylonitrile. Aft.a toxins. 4-Aminobiphenyl. Ami trole ( aminotriazole) . Arsenic and certain arsenic compounds. Asbestos. Auramine.

24518 CONGRESSIONAL RECORD-SENATE October 20, 1981 Manufacture of auramlne. Benzene. Benzi dine. Beryllium and certain beryllium com

pounds. N, N-Bis (2-chloroethyl)-2-naphthyla

mine ( chlornaphazine) . Bis ( chloromethyl ether and technical

grade chloromethyl methyl ether. Cadmium and certain cadmium com-

pounds. Carbon tetrachloride. Chlorambucn. ,Chromium and certain chromium com-

pounds. Cyclophosphamide. Diethylstilboestrol. Dimethylcarbamoyl chloride. Dimethyl sulphate. Ethylene oxide. Underground haematite mining. Iron dextran. Manufacture of isopropyl alcohol (strong

acid process) . Melphalan. Mustard gas. 2-Naphthylamine. Nickel and certain nickel compounds. Nickel refining. Oxymetholone. Phenacetin. Polychlorinated biphenyls. Soots, tars and mineral oils. Tris ( 1-aziridinyl) phosphine sulphide

( thiotepal) . Vinyl chloride. SOURCE: International Agency for Re

search on Cancer, Chemicals and Industrial Processes Associated with Cancer in Humans, Supplement to vols. 1-20, Lyon, France, 1979.

Epidemiological studies have identified more than 36 substances as carcinogenic to humans (see Table 2). Scientific and technical consensus reviews by the International Association for Research on Cancer (IARC) indicated evidence of carcinogenicity in animals for 142 substances reviewed as of 1979,13 Virtually every substance known to cause cancer in humans also causes cancer in animals. The majority of these agents can be found in the workplace, but only a small number of them have been regulated as carcinogens. 'In addition, there are many chemicals to which people are exposed that are suspected to be hazardous to human health but for which little or no scientific data are available.

At a recent Conference at Banbury Center, Cold Spring Harbor, on occupational carcinogens, Karstadt presented important evidence on the difficulties of studying the human health effects of exposure to 60 percent of the known animal carcinogens now in commerce.u

In many of these cases the numbers of workers exposed are small, and those exposed are exposed to multiple hazards, making identification of the single cause of a single :!isease highly unlikely. For these substances, waiting for human confirmation of carcinogenesis bezomes "waiting for Godot." 15. As a matter of public policy, IARC recommends that "in the absence of adequate data in humans, it is reasonable, for practical purposes, to regard chemicals for which there ls


.sufficient evidence of carcinogenicity . . . in d.nimals as if they presented a carcinogenic .risk for humans." 16 This consideration also guided the U.S. Regulatory Council when it announced a cancer policy for more than 20 federal agencies in 1979.

Problems of scale Resource and logistic problems associated

with toxicological studies of laboratory animals pose perplexing problems. For instance, manageable sample populations do not reveal increases in toxic events of less than 5 to 10 percent. For some health effects, such as mutagenesis and teratogenesis, incidences in a human population of 3 per 1,000 or 3 per 10,000 are significant. Obviously, these health effects cannot now be well studied in whole-body mammalian assays, where only the strongest of such effects can be observed. The magnitude of this problem is illustrated by the fact that in assays for environmental toxicants using 1,000 animals, each animal is a surrogate for 200,-000 people.11

Problems of sea.le occur in epidemiological studies as well. Mack et ai.1s note that in order to detect the doubling of a cancer risk in 10 percent of the members of a population, one would need to study at least 570 exposed people. To put this in perspective, the researchers note that only 1,000 new cases of squamous cell carcinoma of the lung occur annually among the entire white male population of Los Angeles County (over 3 million people) .

In fa.ct, researchers rarely survey countries where as many as 10 percent of all people are employed in and exposed to a particular industry. 'Ihus, a 7 percent increase in lung cancer within a population, if actually due to occupational exposures of the 1 to 2 percent of that population employed in that industry, would indicate a risk to workers of four to eight times that of the general population.1° County increases of only one or two cases of particular disease per 100,000 can be quite significant, given the small proportion of workers that may be involved.

Problems of design As Lalonde ::o and others have documented,

public health now reflects a complex interaction between environment, lifestyle, an::l genetic factors. Toxicological studies of single pollutants necessarily exclude such confounding factors. Epidemiological studies of human populations can include some of these multiple factors, but it is rarely possible to devise an epidemiological study which can clearly confirm that exposure to substance X causes Y dis'?'ases. un"."er Z conditions.

As Lave and Seskin note, genetic factors are at present difficult to measure conceptually, while data on life-style factors such as smoking and nutrition do not generally exist or a.re poorly mea.sured.21 Figure 1 provides a model of what an ideal air-pollution/ mortality-rate study would entail. The arrows indicate the theori7ed causal links. This "path analysis" shows that simple correlations between air pollution and mortality reflect numerous influences, including occupation, life-style, and genetics. While indepen:lent replications of Lave and Seskin's air pollution findings (see "Measuring and Managing Pollutants," Environment, June 1981, p. 29) under somewhat different conditions would strengthen their hypothesized

link between air pollution and mortality, the complex interactions which an ideal study would include a.re not thereby eliminated.

Problems of causality Lave and Seskin suggest that causality

may not be a useful concept in investigating the prevention and cure of chronic dlsea..ses. Reduced pulmonary function might arise from a vast number of causes, ranging from acute lung disease, developmental immaturity, or inadequate nutrition to the inhalation of some toxic compound. Whatever the initial cause, the failure of the body to repair the damage may be due to a set of independent factors. Furthermore, the lung damage may become progressive through a third and even larger set of contributing factors, including viral infection, occupational exposure, smoking, air pollution, or even one's genetic disposition. What, for example, ls the cause of severe dyspnea in a sixty-yea.rold asbestos worker who smokes, lives in a large city, comes from an impoverished family, and has never received proper nutrition.22

Rall comments on this issue in his review of differences between la.bora.tory animals and humans. "'Ihe human population is dif:ferent .... The mouse doesn't smoke or breathe hydrocarbons or sulfur oxides from fossil fuels, doesn't drink, doesn't take medicine, doesn't eat bacon or smoked salmon," and doesn't have to make the mortgage payments in times of double-digit inflation.23

Causality cannot be empirically proven, as philosophers of science have often observed. Imputing simple causation entails an artificial isolation or singling out of factors, as though only X explains Y.2' Isolation is a simplifying hypothesis that scientists ma.ke in order to render complex interacting systems explicable.

CANCER-A PREVENTION PRIORITY

Although, obviously, cancer is not the only health problem with which we should be concerned, it has become a key target for preventive actions because data shows that some cancers can be linked to patterns of industrial activity and lifestyle practices. Cancer is also a. dread disease which may include much mental and physical pain. It is the second largest cause of death of Americans (as it has been since the 1930s) and can strike anyone, regardless of age. It is also the leading oa.use of lost years of productive life prior to age 65 (see Table 1).

In 1978, the Occupational Safety and Health Administration (OSHA) held extensive hearings on its proposal to identify and regulate workplace carcinogens generically, that is, as a class of substances. The General Accounting Office noted in 1977 that a.t the prevailing rate of regulation, OSHA would require one hundred years to regulate known occupational hazards on a substance-bysubsta.nce basis.25 For hearings on this OSHA proposal, scientists from the Department of Health, Education and Welfare (HEW) considered how to estimate the proportion of future cancer deaths a....c::socia.ted with past occupational exposures to six workplace carcinogens. Their study made a "worst-case" analysis and suggested that, based on ·a.ve.11-a.ble estimates of exposures to these six carcinogens, at least 20 percent of future cancer deaths in this country might be the result of past occupational exposures to 1ndus-tria.l ca.rcinogens.21

TABLE 3.-RISK FACTORS ASSOCIATED WITH WORKPLACE EXPOSURES TO 5 HIGH-VOi UME HUMAN CARCINOGENS 1

Chemical Sites of prirrary cancers 1

Arsenic.··--·---- Skin, lung, liver, lymphatic system.

Other chronic health effects Occupations at risk

Gastrointestinal disturl:ances, hyperpigrrentation, periph· eral neuropathy, hemolytic anemia, dermatitis, bron· chitis, nasal system ulcera· ti on.

Miners, smelters, insecticide makers and sprayers, chem· ical workers, oil refiners, vintners.

Latency period for cancer

(years)

10+

Risk ratios for cancer

3-8

1977 NOHS esti· 1981 NIOSH estimated num· mated numbers bers of workers exposed 1

of workers exposed full Full+

and part time part time Full time

1, 500, 000 255, 277 I 432, 017

5,926 596


Chemic1I Sites of primary cancers 1 Other chronic health effects Occupations at risk

latency period for cancer

(years)

Asbestos ••••••••. Lung, pleural and peritoneal Asbestosis (pulmonary fibro-mesothelioma, gastrointes- sis, pleural plaques, and tinal tract. pleural calcification), ano

rexia, weight .loss. Benzene __________ Bone marrow (leukemia) _____ Central nervous system and

gastrointestinal effects, blood abnormalities (ane· mia, leukopenia, and throm· bocytopenra).

Chromium ________ Nasal cavity and sinuses, lung, Dermatitis, skin ulceration, larynx. nasal systm1 ulceration,

bronchitis, bronchopneumonia, inflarr.mation of the larynx and liver.

Nickel. __________ Nasal cavity and sinuses, lung_ Dermatitis _________________ _

Miners, millers, textile, insulation and shipyard workers.

Explosives, benzene and rub· ber cement workers, dis· tillers, dye users, printers, shoemakers.

Producers/ processors, and users o Cr: · acetylene and aniline workers; bleachers; glass, pottery, and linoleum workers; batcery makers.

Nickel smelters, mixers, and roasters, electrolysis workers.

1 D. L. Davis and D. P. Rall "Risk Assessment for Disease Prevention" in L. K. Y. Ng and D. L. a Oxides. Davis eds. Strategies for Public Health, Van Nostrand Reinhold, New York, 1581.

2 National Institute for Occupational Safety and Health, Interim Estimate, 1981. 1 Arsenic oxides. ' Chromium oxides.

a Chromium II. 1 Lung. s Nasal sinuses. o Inorganic nickel.

4-40

6-14

5-15

3-30

1977 NOHS esti- 1981 NIOSH estimated num· mate~,"~~~;~~ bers of workers exposed 2

Risk ratios exposed full Full+ for cancer and part time part time Full time

1. 5-12

2-3

3--4

7 5-10 s 100+

1, 600, 000 2, 522, 000

2, 000, 000 1, 900, 000

• l, 500, 000 I 175, 000

I 1, 400, 000 D 25, 000

1, 280, 202 449,960

1, 495, 706 147, 604

I 1, 451, 631 59, 946

• l, 369, 279 51,840

TABLE 4.-RISK FACTORS ASSOCIATED WITH WORKPLACE EXPOSURES TO 6 HIGH-VOLUME HUMAN CARCINOGENS

Chemical Sites of primary cancers 12 Other chron:c health effects a• Occupations at r;sk 1

Latency period for cancer (years) 1

1981 NIOSH estimated numbers of workers exposed

Risk rat' os ts Full + part time • Full time o

Acrylonitrile ____________ Colon, lung _____________________ Eye and nose irritant, gastroin· Chemical workers and plastics testinal effects, jaundice, mild workers.

20+ 4-6 374, 345 55, 706

anemia. Carbon tetrachloride _____ Liver ___________________________ Cirrhosis and liver disease, Drycleaning, machinists.------------------------------------- 1, 380, 232 64, 023

kidney and gastrointestrnal effects, dermatitis, jaundice.

Ethylene oxide __________ Leukemia, gastric cancer (sug- Mutagenic, respiratory irritant. ••• Hospital workers, laboratory ----------------------------gested). workers, fumigators.

144, 152 107, 455 Beryllium ______________ Lung ___________________________ Dermatitis, bronchitis, respiratory Berylliun workers, defense and

effects. aerospace industry, nuclear industry.

ls+ 1. 5-2 855, 189 632

Cadmium _______________ Prostate, respiratory tract, renal... Renal disease, respiratory effects .• Electrical workers! painters, bat- -------------- 2. 5 tery plant and a loy workers.

1, 376, 871 38, 433

Vinyl chloride ___________ Angiosarcoma-lung, brain, hae· Reproductive and central nervous Piastres industry. __ ------------- 20+ -------------- 239, 375 29, 838 matolymphopoietic. system, Reynaud's syndrome,

acroosteolysis.

1 Cole, P., and Goldman, M., in Fraumeni, J. (Ed.), Persons at High Risk of Cancer, New York: 'Waldbott, G., Health Effects of Environmental Pollutants, Saint Louis: C.V. Mosby, 1978. Academic Press 1975. s International Agency for Research on Cancer, Chemicals and Industrial Processes Associated

2 Occupational Diseases, Washington, D.C.: U.S. Department of Health, Education, and Welfare, With Cancer in Humans, supplement to vols.1-20, Lyon, 1979. 1977. o National Institute for Occupational Safety and Health, Interim Estimate, 1981.

a Casarett, I., and Doull, J. (Eds.), Toxicology, New York: Macmillan, 1975.

The HEW testimony became the subject of heated controversy,27 in part because it failed to take into account the fact that many workplaces were now much cleaner than they had been. But, the chief reason that the HEW study overestimated the contribution o! industrial exposures to the overall cancer rate was that it overestimated the extent o! human contact with such substances. Exposure data was then, and still ls, lncomr.-lete and uneven.

The HEW study noted the risks for workers previously exr-osed to higher levels ~f carcinogens. It then multiplied these risk rates by the number of workers then estimated to be exposed at the time o! the study to these same substances. Based on this number for the six substances studied in detail. the study projected that about 20 percent of future cancers could be the result o! pa.st occupational exposures. The paper relied on the only evidence of such exposures available at the time, the National Occupational Health Survey (NOHS) .~s NOHS indicated that 12,622,000 workers were exposed full- or pa.rt-time to five industrial carcinogens.

Table 3 shows risk !actors and latency periods then known to be associated with these substances, other noncancer health effects, and occupations at risk of exposure, along with the NOHS estimates of full- or part-time exposure. The last two columns of Table 3 contain more re:::ent provisional estimates from the National Institute for Occupational Safety and Health (NIOSH), which differentiate between full- and part-


time expo.sures.2e These later figures suggest that 6,284,111 workers are currently exposed full- or part-time to these five industrial carcinogens. But only 715,872 workers may be exposed !ull-·time to these same substances, or only 5.6 percent o! the 1977 estimate o! full- and part-time exposure.

Recent tin.clings While the contribution to the overall can

cer rate !or these five substances ls definitely substantially less than the HEW paper originally estimated, since the time of that study new research has revealed additional WO'l"k· place exposures that cause cancer, as Ta'Jles 4 and 5 lndic.\te. Recent NIOSH estimates indicate that 1,111,959 workers are now exposed full-time to eleven substances identified by IARC as human carcinogens; 10,-654,275 are exposed full- or part-time. Whlle there is evidence that many workplaces are cleaner today, they also contain more new hazardous substances. Moreover, for some substances, such as some polychlorinated biphenyls, protective clothing does not protect.30 Figure 2 indicates the relatively recent surge in the production of synth-?ttc organic chemicals, with exponential growth in the 1960s. Similar patterns are evident !or some of the substances in Table 4 that are known to cause cancer in human9, including ethylene oxide, carbon tetrachloride, acrylonitrile, and vinyl chloride.

Obviously the 1978 study was fiawed by its reliance on inflated exposure data. Yet its conclusions and methods of analysts may well be correct. Several points made in that paper bear repeating.

Rather few potential carcinogenic proc-

esses have been identified to date; and only infrequently are workers studied from time of e:cposure until their deaths. Thus, if an exposed worker ls only studied while working, the cancer which develops from this exposure one year before death at age 62 (a post-retirement age) wm not be registered as an occupationally related death. In addition, as Ran,s1 Davls,32 and others have observed, people are never exposed to single carcinogens but to a multitude of potential carcinogens and other toxins. There ls an important additional component of rtak involving a heightened susceptiblllty to <Ja11-cer induction by a variety of agents which individually might be relatively h&.rmless.

The HEW report stressed that no firm auantlficatlon of the risks assooiated with cs!"cinogens in the workplace can be made, given the state o! the art of extrapolating from animals to humans. The report added, however, that there ls no evidence that these risks a.re substantially less than the risks resulting from exposures in the recent past, given the increased variety of chemicals being produced.

It should n.lso be noted that the report did not include de;i.ths due to noncancer, chronic diseases; nor did tb.e report give any general consideration to morbidity effects a.ssoclated with cancer or other diseases; nor did it include any occupational or medicinal exposures to low-level ionizing radiation, nor take account o! likely synergies with naturally occurring hazardous substances. Most importantly, given the average 20-year latency period for many cancers, and the relative recency of production !or many human carcinogens, present cancer rates cannot be expected

24520 CONGRESSIONAL RECORD-SENATE October 20, 1981 to reflect recent increases in industrial production.33 Future rates, however, bear watching.

In its first four years of activity, the Interagency Testing Committee (est!l.blished under the authority of the Toxic Suh.stances Control Act to advise the Administrator of EPA)

identified ~5 individual chemicals or classes of chemicals (E:ach of which includes a number of individual substances) to which thousands of workers ha.vc been exposed, but for which little toxicological information is available. Many of these same substances were also listed by the Interagency Regulatory

Liaison Group in its recent compilation ot pl3.ns to regulate hazardous materials. In some cases the production of these substances has been steadily rising since the early 1960s, but exposures are too recent to have caused any noticeable epidemiological effects.

TABLE 5.-AMOUNTS OF CONFIRMED HUMAN CARCINOGENS POTENTIALLY AVAILABLE FOR HUMAN EXPOSURE, 1940-79

Time period

Substance, measure, and unit 1940-49 1950-59 1960-69 1970-79

Asbestos (U.S. apparent constmption, thousands of short tons>--------------------------------------- 4, 637 Benze~e (U.S. production, thousan~s of pounds) ___ ------------------------------------------------- 1, 284, 931

7, 419 6, 663, 481

7, 561 49, 362, 521

6,875 94, 203, 110

13, 377 13, 316 11, 580 387 1, 396

Chromite (U.S. apparent consumption, thousands of short tons>--------------------------------------- 7, 992 Chloroform (U.S. production, millions of pounds) ______ ---- __ -------- -- -- -------- -- ------ -- -- -- -- -- ------ ---- -------- -- __ Ethylene oxide (U.S. production, r.iillions of pounds>-------------------------------------------------------------------- 6, 670 21, 268

2, 820 43, 465

Source: The International Trade Commission and the Bureau of Mines.

Until adequate exposure assessment methodologies are developed, some surrogate measures wm be re~uired, lest the absence ot hard numbers leaci to a tendency to minimize the significance of exposure problems. One possible surrogate measure for human exposure is data on production and consumption ot toxic chemicals (see box at left). Table 5 summarizes the amounts ot confirmed human carcinogens potentially available for human exposure to asbestos, benzene, chromite, and nickel. (Data on arsenic are subject to proprietary restrictions, since it has been produ~ed domestically since 1961 by only a sin111e company.) Particularly striking is the recent exponential rise in the

production of these four substances. During the past decade, the production of benzene, ethylene oxide, carbon tetrachloride, and a number of other carcinogens virtually doubled, although the amount of asbestos and chromite consumed fell.

As to reported changes in workplace exposure, DOW Chemical Company reports that its workers are now exposed to 1 ppm of benzene, the standard which OSHA unsuccessfully recommended tor workers.34 Yet such data are generally not available from other companies. While exposure to any single known workplace carcinoeen is certainly less today, more synthetic organic chemicals are now used in the workplace.

Laws protecting public health and the environment from hazardous chemicals, such as the Toxic Substances Control Act and the Resource Conservation and Recovery Act of 1976, stm await full implementation. Intended to cover the entire chemical life cycle from production, transport and use, through disposal or recycling, these laws have created a sense that environmental and workplace protection are being provided. Yet, only a handful of workplace and environmental hazards have in fact been controlled under this legislation, and these only after protracted and costly litigation. The bulk of chemicals produced since the 1960s remains largely uncontrolled in any effective fashion.

TABLE 6.-NEW STUDIES SUGGESTING A RELATIONSHIP BETWEEN WORKPLACE AND CANCER

Typo of cancer Occupation/industry/exposure Reference

Prostate ____ ---------------------------------- Rubber and tire workers. __ ---------------------- -- Goldsmith, D. F ., Smith, A.H., and A. J. McMichae I, 191!0, A case-controlstudy of prostate cancer within a cohort of rubber and tire worker~. J. Occ. Med. 22: 533-541.

lymphatic leukemia.-------------------------- Rubber workers.---------------------------------- Wolf, P. H., An:ljelkovich, D., Smith, A. and H. Tyroleri 1981, A case-control study of le•Jkemia in the U.S. rubber im!•atry, J. Occ. Med. 23: 03-108.

Bowel and rectum _____________________________ Paint and coatin&s manufacturini------------------- Morg3n, R. W., Kaplan, S. 0., and W.R. Gaffey, 1981, A general mortality study of produc-tion workers in the paint and coatin&s manufacturin& industry: a preliminary report, J. Occ. Med. 23: 13-21.

Stomach, brain, leukemia, and multiple myeloma __ Petroleum refining and petrochemical plants __________ Thomas T. L., Decoufle, P., and R. Moure-Era~o. 1980, Mortality among workers employed in petroleum refining and petrochemical plants. J. Occ. Med. 2: 97-103.

Respiratory system ____________________________ Welders, shipfitters and metal-trades workers _________ Beaumont, J. J., and N. S. Weiss, 1930, Mo~ality of wel:lers, shiofitters and other metal trades workers in Boilermaker's Local No. 104, AFL-CIO, Am J. Epidemiol. 112: 775-786.

Buccal and pharyn2ea'------------------------- Newsprint pressroom workers.--------------------- Nicholson et al., 1981, Buccal and Pharyngeal Can:er in Newsprint Pressroom Workers, in press.

Soft-tissue sarcomas___________________________ Phenoxyacetic acids and chlorophenols, farmworkers __ Harde II, L., and A. Sandstrom, 1979, Case-control study: soft·tissue sarcomas and exposure to phenoxyacetic acids or chlorophenols, B•it. J. Cancer 39: 711-717.

Stomach cancer and leukemia. __________________ Ethylene oxide, ethylene dichloride, hospital and Hogstedt, C., Malinqvist, N., and Wadman, B., 1979, Leukemia in workers exposed to laboratory workers. ethylene oxide, JAMA 241: 1132-1133.

Malignant lymphoma, lune cancer, and pancreas •• Aluminum reduction plant workers __________________ Milham, S., 1979, Mortality in aluminum reduction plant workers, J. Occ. Med. 21: 275-480. Luna bronchus, esophagus, and lymphatic/hema- Plumbers and pipefitters ___________________________ Kaminski, R., Geissert, K. s.

1 and E. Dacey, 1980, Mortality analysis of plumbers and pipe-

lopoietic. fitters, J. Occ. Med. 22: 83-189. Brain cancer---------------------------------- Petrochemical workers _____________________________ Alexander, V., leffingwell, S. s., Lloyd, J. W., Waxweiler, R. J., and A. l. Miller, 1981. Brain

cancer in petrochemical workers: a case series report, Am. J. Ind. Med. 1: 115-123. Choroidal malignant melanoma __________________ Chemical workers·---------------------------- ---- Albert, D. M., et al., 1980, Increased incidence of choiroidal malignant melanoma occurrina

in a sinale population of chemical workers. Am. J. Ophthal. 89: 323-337. Kidney and aenitals ____________________________ laundry and dry cleanina workers __________________ Katz, R. M. and o. Jowett] 1981, Female laundry and drycleanina workers in Wisconsin:

a mortality analysis, A F'H 71: 305-307. Luna and uterine cervical cancers _______________ Laundry and dry cleaning workers ___________________ Blair, A., Decoufle, P., and D. Grauman, 1979. Causes of death among laundry and dry-

cleaning workers, AJPH 69: 503-511. Bladder cancer-------------------------------- Leather and leather products manufacturing __________ Decoufle, P., 1979, Cancer risks associated with em1>_loyment in the leather and leather

products industry, Arch.Environ. Health 34: 33-37. lung cancer·--------------------------------- Spray painters, zinc chromatic primer-paints __________ Dalager, N. A., Mason, T. J., Fraumeni, J. R., Hoover, R., and W. W. Payne, 1980,. Cancer

mortality amon11 workers exposed to zinc chromate paints, J. Ccc. fl ed. 22: 25-i9. Diaestive organs and lun11s ••• ------------------ Smelter and battery plant workers, lead ______________ Kang, H.K .. Infante, P. F., and J. S. Carra, 1980, Occupational lead exposure and cancer,

Science 207: 935-936. Respiratory cancer ••• -------------------------- Arsenic-exposed workers.-------------------------- Pinto, S., Henderson, V., and P. Enterline, 1978, Mortality experience of arsenic-exposed

workers, Arch. Environ. Health Nov./Dec., 325-331. lun11 cancer·--------------------------------- Beryllium workers ••• ------------------------------ Cole, P., and F. Merletti, 1980, Chemical aaents and occupational exposures, J. Envir

Pathol. Toxicol. 3: 399-417. Prostate, kidney, and lun&---- -- ---- -- ---- __ ---- Cadmil'm workers •. ______________________________ Cole and Merletti, 1980. . lun11 cancer -- -------------- ------------------ Automoliile manufacture (castin11 and platina). ------- Silverstein, M., Mirer, F.1 Kotelchuch, D., Silverstein, B., and M. Bennett, 1981,_ Mortality.

amon11 workers in a die casting and electroplatine plant, Scand. J. Work Environmental Health, in press.

Further, workers and their physicians rarely know what substances they may be exposed to. Labeling of hazardous substances is inconstant in both the workplace and the home. Unsuspecting consumers may purchase paint with lead, baby shampoo and cosmetics with formaldehyde, anti-dandt'llff rinses with pesticides, spot cleaner with perchloroethylene or benzene, and carpet cleaner with anti!reeze.SG


such toxic polluta.nts in the home and thooe in the neighborhocd can be expected to have some health effects, although detection will prove difficult for the reasons elaborated earller Despite these methodological problems, Shear et al. determined that residents of Louisiana neighborhoods within 1.2 km of three or more industries had 3.2 times as much lung cancer as did residents of other non-industrialized neighborhoods.30

The ubiquity of environmental pollutants such as pentaclorophenol, a wood preserva-

tive and pesticide component which is present ir.. the blood of most Americans, makes such assessments of environmental risk a matter of special concern.

Of special relevance to future cancer risks of workers are those studies published in the last three years and summarized in Table 6, which implicate 18 different industrial proces.'."es as cancer-causing in some manner. While these studies should be replicated with other cohorts, their recency and the fact that more than 20 different primary tumor altes

October 20, 1981 CONGRESSIONAL RECORD-SENATE 24521 are involved are reasons for concern. Moreover, t.o the extent that these processes affect ·their surrounding communities, neighborhoods may also be at risk. Tables 5 and 6 suggest there is reason to expect some increase in future cancer ntes associated with both workplace and environmental exposures to these carcinogens.

The suggestion has been made that, since cigarette smoking is the single most important cause of many cancers, it is folly to control less important ca.uses. However, whlle present-day cancer rates and trends are not dominated by occupational carcinogens, such exposures are important. If only five percent of current cancers are associated with occupational exposures, then 20,000 excess cancer deaths a year occur among exposed workers. For these workers, the risks are great indeed. If these carcinogens are not appropriately controlled, then future rates may well reflect such exposures.37 Schneiderman suggests that those cancer sites that may be associated with occupational exposures have increased at approximately 4 percent annually during the 1970s, while those not occupationally exposed have been increasing at only one percent.31

While the precision of the estimates in the 1978 HEW report can be faulted and the methodologies for confirming them can be questioned, the overall conclusion of the report stands. Cancer today and in the near future will be substantially influenced by past occupational exposures.

Possibillties for effective preventive policies are clear, even though the mechanisms of the disease are not. If we fail to implement these policies now, we will pay the price tomorrow.

J'OOTNOTES

1 J. Cairns, Cancer: Science and Society. W. H. Freeman and Co., San Francisco, 1978, p. 151.

1 S. Mushkin, "Cost of Disease and Illness in the United States in the Year 2000," Public Health Reports 93 (1978): 495-588.

s E. Eckholm, The Picture of Health, W.W. Norton and Co., New York, 1977.

'J. P. Wyatt, "Chronic Lung Disease in Adults ," in D. H. K. Lee (ed.), Environmental Factors in Respire. tory Disease, Academic Press, New York, 1972, pp. 120-139.

1 G. Rosen, "Economic and Social Policy in the Development of Public Health," Journal of the History of Medicine, 1953; reprinted in Rosen, From Medical Police to Social Medicine, Science Hi3tory Publications, New York, 1974, pp. 156-200. (Rosen notes that, in the 17th century, it was believed to be in the interest of the state to create the largest possible number of healthy and productive subjects. Quantitative studies of public health were developed largely to provide better information on the value of people, especially of those occupational groups regarded as most productive.)

e F. Engels, The Conditions of the Working Class in England (1848), W. O. Henderson and W. H. Chaloner (trs.), Stanford University Press, Palo Alto, 1958.

1 Human Health and the Environment: Some Research Needs, Report of the Second Task Force !or Research Planning in Environmental Health Science, U.S. Department of Health, Education, and Welfare, Washington, D.C., 1977.

e U.S. Environmental Protection Agency, National Cancer Institute, National Heart, Lung, and Blood Institute, and National ::nstitute of En··ironmenta.l He3.lth Sciences, First Annual Report to Congress of the Task Force on Environmental Cancer, He!l.rt and Lung Disease, U.S. Environmental Protection Agency, Washington, D.C., 1978.

e Personal communication, 1979, Sergio Fabro, Director, Maternal Fetal Medicine Division, Department of Obstetrics and Gynecology, the George Washington University Hoapital, Senior Consultant Invest!-

gator, National Institute of Environmental Health Sciences, Toxicology Branch, Research Triangle Park, North Carolina. (One o: the most promising areas for development in this regard is that which will provide for the assessment of reproductive effects. A data base indicating subtle behavioral teratological effects, such as mental retardation, and some short-term human effects, such as fetal wastage, reduced !ert111ty rates, and other reproductive problems, may prove far less expensive to develop and far easier to use in setting public heal th priorities than the more costly data now available on carcinogenesis.)

10 Richard Doll and Richard Peto, "The Causes of Cancer: Quantitative Estimates of A voidable Risks of Cancer in America Today," Journal of the National Cancer lnstitute, June 1981.

11 s. Weinhouse, "Problems in the Assessment of Human Risk of Carcinogenesis by Chemicals," in Hiatt, Watson, and Winsten (eds.), Origins of Human cancer, Book c, Human Risk Assessment, Cold Spring Harbor Laboratory, 1977, pp. 1307-1310; D. Rall, "Extrapolating Environmental Toxicology: Costs and Benefits of Being Right and Wrong," paper presented to the American Association for the Advancement of Science meetings, New York City, i975; and D. Rall, The Role of Laboratory Animal Studies in Estimating Carcinogenic Risks for Man, paper presented to the International Association for Research on Cancer Symposium, "Carcinogenic Risks-Strategies for Intervention," Lyons, France, 1978.

a L. J. Cordia, "Environmental Protection Agency," in Mandate for Leadership: Policy Management in a Conservative Administration, Heritage Foundation, Washington, D.C., 1981, p. 994.

11 International Agency !or Research on Cancer, Chemical and Industrial Processes Associated with Cancer in Humsns, Supplement to vols. 1-20, Lyons, France, 1979.

14 M. Karstadt, R. Teitler, and I. J. Selikoff, Banbury Report 9: Quantification of Occupational Cancer, forthcoming.

u Devra Lee Davis, Kenneth Bridbord, and Marvin Schneiderman, "Estimating Cancer Causes: Problems in Methodology, Production and Trends," Banbury Report 9, forthcoming.

1e !ARC. note 13 above. 11 Weinhouse, note 11 &bove. 1s 1•. M. Mac1~. M. c. Pil~e. and J. T. casa

grande, "Epidemiologic Methods for Human .H.bk Assessment," in Hir.t;;, Watson, and Wins~en, no-::e 11 above, pp. 1749-176~.

1° w. J. Blot, et al., "Cancer by County: Etiologic Implications," in Hin.tt, Wa;;son, and Winst.en, no-::e 11 abo•;e, pp. 21-32.

~0 M. Lalonde, A New Persnective on the Health of Canadians: A Working Document, Ministry of Health and Welfare, Ottawa, Canada, 1974.

:.:i L. B. Lave and E. P. Seskin, Air Pollution and Health, The Johns Hopkins University Press, Baltimore, 1977.

~J Ibid., p. 15. 2.i D. Rall, "Thresholds?" Environmental

Health Per.spectives 22: HH-165, 1978. 2

• H. C. Blalock, Causal '..nte!'ences in Nonexperimental Re~earch, Cha.~: el Hlll: Unhersity of North Carolina Press', 1964.

:z;; General Accounting Office, Delays in Setting Workplace Standards for Can~er-Causing e.nd Other De.nge:-ous Substances, Govt. Prtg. Off., Washington, D.C. 1977.

~8 National Cancer ~ nstitute, National Institute of Envi!'Onmental Health Sciences, and National Institute for Occupational Safety and Health, Estimates o! the Fraction of Cancer in the United States Related to Occupational Factors, dra.!t paper, 1978.

2• See for example, P. H. Abelson, "New Di

rections in Toxioology,., Fd. Cosmet. Toxicol. 8 (1980): 3J3-306; P. Cole and F. Merletti, "Chemical agents and occupational exposures," ~- Envir. Pathol. Toxicol. 3 (1980):

399-417; S.S. Epstein and J.B. Swartz, "Fallacies o! Lifestyle Cancer Theories," Nature 289 ( 1931) : 127-130; J. Higginson, "Multiplicity of Factors .:.nvolved in Cancer Patterns and Trends," J. Envir. Pathol. Toxicol. 3, 4 (1980): 113-125; J. Higginson and c. s. Muir, "Environmental Carcinogenesis: Misconce,:itions and Limitations to Cancer Control," U.S. J. Natl. Cancer Inst., 63 ( 1979) : 1291-1298; T. H. Ma.ugh, "Cancer and Environment: Higginson Speaks Out," Science 205 (1979): 1353-1356; W. K. c. Morgan, "!ndustrial Carcinogens: The Extent of the Risk," Thorax 34 (1979): 431-433; R. Peto, "Distorting the Epidemiology of Cancer: The Ne3d for a More Balanced Overview," Nature 284 (1980): 297-3GO; R. A. Stallones and T. Downs, A Critical Review of Estimates of the Fraction of Cancer in the United States Related to Occupational Factors, 1978.

~s National Occupational Hazard Survey III, National In:;titute !or Occupational Safety and Health, Cincinnati, 1977.

"~ N.!.O.;)H, . nt~:·im Estimate, 1981. :;o N · OSH, Permeation of Protective Gar

ment Material by Liquid Halogenated Ethanes and a Polychlorinated Biphenyl, DHHS (NIOSH) Cincinnati, pp. 81-110, 1981.

31 Rall, note 23 above. 32 D. L. Davis, "Multiple Risk Assessment

as a Preventive Strategy for Public Health," in J. Staffa (ed.), FDA Symposium on Risk/ Benefit Decisions and the Public Health, 1979.

33 Doll and Peto, note 10 above. 34 Fred Hoerger, "Indicator of Exposure

Trends," Banbury Report 9, forthcoming. :i;; Center !or Science in the Public Interest,

Th:> Hous·ehold Pollutants Guide, Anchor Books, Garden City, New York, 1979.

38 C. L. Shear, D. B. Seale, and M. s. Gottlieb, "Evidence for Space-Time Clustering of Lung Cancer Deaths," Archi :res of Environmental Health 35 (November/D~ember 198:>): 335- 342.

37 Doll and Peto, note 10 above. 33 Marvin Schneiderman, "The Relation

ship Between Diet, Occupation, The Environment, and Cr!.ncer," Proceedings of the U.S./ Es-yptian Symposium on the Biomedical Impact of Technology Tranr.fer, Cairo, in press. See also Norton Nelson, "Cancer Prevention," Cancer 47 (1981): 1065-1070.

WAR TALK Mr. CRANSTON. Mr. President, among

the most important duties of the President and his top assistants is to speak with a clear and calm vo~ce about the security of our Nation. It falls to the executive branch wiiquely to speak with one voice on matters of national security, to soberly assess our Nation's strengths and weaknesses and to speak with realism about the prospects for the future.

I was therefore appalled by the irresponsible statements made yesterday by the top military official in the White House's National Security Council. This presentation, made by Army Maj. Gen. Robert L. Schweitzer, head of the NSC defense issues team, was full of bombast, sensational rhetoric, and military assessments which are completely alien to the mainstream of American defense policy.

As reported in this morning's Washington Post, in a front page article which I am submitting for the RECORD, General Schweitzer cited "a drift toward war" and concluded that the United States is "in the greatest danger that the republ!c has ever faced since its fowiding days." Such war talk bears the danger of becoming a self-ful1llling prophecy

24522 CONGRESSIONAL RECORD-SENATE October 20, 1981 when mouthed carelessly by top Presidential assistants.

Mr. President, less than 12 months ago the leading military and executive branch officials in this country were firm in their conviction that a situation of "rough parity" existed in United States and Soviet strategic forces. Granted, this was under a different Presidential administration. But I believe it is extremely serious that the top military official in the White House could possibly declare, a3 did General Schweitzer yesterday, that the United States is now inferior to the Soviet Union in each of the three legs of the strategic triad.

Such reckless charges can only fuel an unjustified sens·e of insecurity on the part of Americans. These statements reduce Americans' confidence in the credibility of military officials and cause deep concern that at least one White House official is apparently at odds with military officials a.nd policymakers of the preceding and current administration.

I think the Reagan administration has the duty either to explain and defend Schweitzer's :i.·eckless charges or to dissociate the President from such extreme views. AC{!ording to the Post report, there is concern in the White House about Schweitzer's extremism; a "White House spokesman" is quoted in this morning's report as conceding that Schweitzer's speech was "otI ihe wall."

I hope therefore that the President will separate himself from such statements and that this will be the last we hear of unwarranted nuclear war talk.

Mr. President, I ask unanimous consent to have printed in the RECORD the article to which I referred.

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

NSC Ami: Sus "A DRIFT TOWARD w AB."

(By Michael Getler) The top m111tary officer on the staff or the

White House National Security Council claimed yesterday that the "Soviets are on the move, they are going to strike," and said the United States is "in the greates<; danger that the republic has ever raced since its rounding days."

In a speech that appeared to go beyond even the ha.rd line the administration has taken, Army Maj. Gen. Ro~ert L. Schweitzer also declared that Moscow now has nuclear superiority in all three legs or the strategic triad-meaning land-based and submarinebased missiles and long-range bombers-and spoke or "a dri!t toward war."

Schweitzer, who heads the defense group on the NSC statr, said evidence continues to mount that the Soviets have in mind invading Poland, that Moscow continues practicing maneuvers aimed at taking over Persian Gul! oil fields, that U.S. church leaders have not been helpful in combating the Soviet presence in Latin America and that a backlash involving Israel could occur here if the sale or AW ACS planes to Saudi Arabia ls thwarted by Congress.

A White House spokesman, describing Schweitzer's speech as "off the wall," said, "We want to knock this one hard." He said or the speech, "It's much more pessimistic than the president's own views."

Schweitzer provided his grim assessment in a speech before several hundred Army officers and others at the annual meeting here of the Association or the United States Army. H1s speech marked one of the rare times that someone on the NSC statr,

other than its director, presidential adviser Richard V. Allen, has been allowed to speak publicly. Allen has also told NSC staff members they may not talk to reporters.

Another White House spokesman said Schweitzer "was giving his own personal views and not speaking for the administration." It Schweitzer ha<l submitted his speech for White House api:-roval, it would not have been approved, the spokesman said.

Schweitzer told the audience that his speech probably would not ha 7e been approved if he had submitted an ad ;.ranee text. He said he told his bcsses generally what he was going to say and they expressed the "hope" he would not cau.:::e trouble.

"Well, I think we are going to have to get ourselves in trouble and our principals [apparently meaning our a.Illes] in order to lay out the threat, because the threat is believed not to exist," Schweitzer said. "That's the feeling in [Western] Europe. They think it's automatic, another 30 years of peace. That's wrong. The Soviets are on the move. They are going to strike. They've got every incentive and the capabillty."

Schweitzer also sa.td: On Poland: "A po~sible, certainly threat

ened, Soviet invasion" is the leading challenge to the western alliance. While scholars and analysts may debate the timing or strength, "the evidence continues to mount that the Soviet Union very much has this in mind."

On the Caribbean: The region "is in flames. There is no other way to describe it." There ts some level of active, organized communist insurgency in every country throughout South America, he said, while in the Caribbean and Latin America there ls, in addition, endemic economic and sociological revolutions. "The last administration minimized the communist threat and maximized human rights. In so doing, they confused a goal with a policy."

On pacificism: "Tb e seed or pacificism and neutralism is sweeping over Europe, and we're not immune to it in this country, where bishops and churchmen have been extremely unhelpful in trying to deal with the realities of the [communist) threat down in Latin America."

On the Middle East: It the AW ACS deal is vetoed. the United States races an ~8.5 bill1on loss or sales and tax revenues and the Saudis would buy Nimrod warning planes and Mirage fighters from Britain and France. Then Jsrael would ask U.S. help to meet this new threat. The Israelis wm say, "Here is our list, and we want it on tr.e same terms ... and 50 percent grant aid that you've always given us in the past.

"I wonder if there lsn 't going to be some backlash in the U.S.," Sc.hweitzer said, when it is considered that the United States diminished !sraeli security and now is making demands on U.S. taxpayers "to buy them [the Israelis] out of a threat that really wlll be created with our own hands."

On Soviet superiority: "The Soviet Union knows that !or the first time they have suP.eriority in every leg of the triad," and thus

they may be tempted to use nucleP..r or nonnuclear forces." This was "a very bad trendthe drift toward war." No administration figure has made such a sweeping claim or Soviet supremacy, U.S. submarines and bombers stm are Judged superior.

On the press: "The press gets fed a steady diet ... and if they didn't get this, they'd get sick. So sometimes they make it up, or ext.end .and expand on it." Those remarks brought the most applause.

MOSHE DAYAN Mr. MATHIAS. Mr. President, Moshe

Dayan had the special talent of being able to combine hindsight with foresi.,.ht. His passion for archeology and history

matched his flair for contemporary politics and both were projected by his courage and independent judgment.

His is the second voice of moderation lost to the Mideast this month, and so it is espec:any important to remember his thoughtful approach to the solution of the problems of that dangerous part of the world.

Both Mrs. Mathias and I were privileged to know General Dayan and to enjoy his company on many occasions. We join his friends around the world in extending sympathy to Mrs. Dayan and their family.

COLLECTION OF DEBTS BY THE FEDERAL GOVERNMENT

Mr. PERCY. Mr. President, in today's RECORD under routine morning business there is printed my statement relating to a resolution that I submitted on reducing the national debt by selling surplus properties.

Another area that we have looked at very carefully, as we have been looking for money, is that we have been finding ways to bring added revenue in by reducing expenditures; just not spending the money. And we have cut back materially.

But another way to bring additional revenue in, particularly at a time when we are cutting taxes, is to just collect debts owed the Government. The Federal Government is the largest creditor in the world. We have dozens of agencies whose purpose is to loan money-loan money to students, loan money to small business people, loan money to large business enterprises, loan money for the purpose of expanding our exports, loan money to go through school, whatever it may be. We are a big lender.

In fact, we have outstanding $147 billion of debt owed today to the Federal Government, over $25 billion of which is in arrears right today. So that the Governmental Atiai.rs Committee reported out a bill called the debt collection bill of 1981.

I had authored a similar bill several years ago and tried to interest the then Carter administration in it. They must have been busy with an awful lot of th~ngs and maybe did not have time to focus in on a little item like $25 billion in arrears.

But we did really start this year with a good deal of interest. One of our forme1· colleagues put his bifocals on, those great, big oversized spectacles and took a look at $147 billion owed us and $25 billion in arrears, and he took a look at the figures we showed him of the Department of Education student loans, 81 percent of those billions of dollars outstanding were in arrears. He took a look at the fact that thousands of Federal employees, who; if they worked for a private organization, would have their wages garnisheed, would have a report made to the local collection agency, they would have a bill collector after them, a credit bureau would be told about them and other people would not have loaned them money and that pressure would have caused them to pay their bills. None of that was possible because of the stranee


and weird way we worked things. The Federal Government prohibited notifying a collection agency, hiring a collection agency, notifying the credit bureau, or garnisheeing Federal wages. We continued to pay some employees over $50,000 a year and they had never paid the loan that gave them the master's degree, the Ph. D.'s that enabled them to get the jobs in Government at those very large salaries.

So, Mr. President, we have begun work on the debt collection bill with earnest. It is not only supi:orted by the Reagan administration and by OMB, but has been cons~derably strengthened by them. Treasury has worked with them and Director Stockman has worked personally on it. Ed Harper, his able D:rector, has worked on it. They have testified and asked that it be given the highest priority by consideration of the Senate and the House, because every single day that goes by we are los:ng money. That money should be brought into the Federal Treasury. We should be earning at least 13 or 14 percent interest on it.

I find it just appalling that we have let so much time go by with such sloppy procedures, which I think cause utter disdain by the American public for its Government. Students do not have the respect for Government when they send, finally, the third notice and they know if they ignore the third notice they are not going to get the fourth because the computer just shuts them right off.

I think a government should take into 9.ccount that any individual that goes to their local bank is asked for a social security number so they can keep find.'..ng him if he moves, and yet the Government itself is prohibited from asking for a social security number so they can find someone who owes them money. It is just foolish and we have to do something about that.

So I place the matter on a very high priority and have been assured by the leadership that we will deal with the debt collection bill of 1981 this year.

This measure, in putting businesslike procedures and fiscal responsibility in the way of Federal Government to manage its assets in connection with very large assets that we have, is just another step in the direction of making some waves and moving toward businesslike procedures in running the business of the United States.

MESSAGES FROM THE PRESIDENT

TWELFTH REPORT OF THE U.S. SINAI SUPPORT MISSION-MESSAGE FROM THE PRESIDENTPM 84

The PRESIDING OFFICER laid before the Senate the following message from the President of the United States, togethe·r w~th an accompanying report which was ref erred to the C'ommittee on Foreign Relations:

To the Congress of the United States: I am pleased to transmit herewlth the

Twelfth Report of the United States Sinai Support Mission. It covers the ~ssion's act.ivities during the six-month period ending October 1, 1981. This report is provided in accordance with Section 4 of PubLc Law 94-110 of October 13, 1975. Th~ Sinai Support Mission and its

overseas arm, the Sinai Field Mission, have since 1976 made unique contributions to the peace process in that part of the Middle East, first by establish'..ng and operat:ng the tact:cal early warning system that made possible the second disengagement agreement between Egypt and Israel, and when tha..t m.'..ssion was successfuay completed in January 1980, by undertaking during the interim withdrawal period the verification of Egyptian and Israeli adherence to the military Lm:tations called for in their 1979 Peace Treaty.

This second peacekeeping role will end on April 25, 1982, the date established under the Treaty for the completion of Israeli withdrawal from the Sinai. At that time, the Sinai Field Mission will reLnqu:sh its verification responsibilities to the new Mult:national Force and Observers being established tio supervise implementation of the Treaty's security arrangements after Israel's withdrawal.

Funding for the Sinai Support Mission for Fiscal Year 1981 was authorized at $16 milLon. Only $10 m:llion is being requested for Fiscal Year 1982, a level that wlll fund the Mission's operations dur~ng its final months and tJhe projected costs of its phase out after April 25, 1982.

The role of the Sinai Support and Field Missions has been a concrete example of the United States commitment to the achievement of a just and lasting peace in the Middle East. Our participation in the Multinational Force and Observers will be the next crucial step in the further promC>tion of that peace. I am counting on the continuing support of the Congress for our role in the peace process.

RONALD REAGAN. THE WHITE HOUSE, October 20, 1981. Messages from the President of the

United States were communicated to the Senate by Mr. Saunders, one of his secretaries. DEFERRALS OF CERTAIN

AUTHORITY-MESSAGE THE PRESIDENT-PM 85

BUDGET FROM

EXECUTIVE MESSAGES REFE.RRED 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.)

The PRESIDING OFFICER laid before the Senate the following message from the President of the United States, tot{~t.her with accompanying papers; which, pursuant to the order of January 5, 1975, was referred jointly to the Committee on Appropriations, the Committee on the Budget, the Committee on Environment and Public Works, the Committee on Governmental A.ff airs, the

Committee on Labor and Human Resources, the Committee on Finance, the Committee on Agriculture, Nutrition, and Forestry, the Committee on Armed Services, the Committee on Banking, Housing, and Urban Affairs, the Committee on Commerce, Science, and Transportation, and the Committee on Energy and Natural Resources:

To the Congress of the United States: In accordance with the Imcoundment

Control Act of 1974, I herewith report 59 deferrals of fiscal year 1982 funds totaling $147.0 million.

Fifty-six of the deferrals, totaling $95.1 million, constitute the first group of deferrals of fiscal year 1982 funds made available for the period through November 20, 1981, by the Continuing Resolution, P.L. 97-51. These deferrals are intended to preserve Congressional options to act favorably on the proposals for reductions in FY 1982 budget authority that I announced on September 24, 1981, and subsequently transmitted to the Congress. These deferrals recognize the intent of Congress, reaffirmed during House and Senate action on the Continu!ng Resolution, that amounts provided in Continuing Resolutions are ceilings, not mandatory spending levels.

Accordingly, where the Continuing Resoluti:m provides amounts in excess of my requests for the period of the resolution, deferrals are being proposed to restrain spending to levels in my requests until action on regular a:,>propriations is complete. However, exceptions have been made in this general policy to a void major administrative or personnel problems or to a void serious disruption of an agency's missions.

Deferrals under the Continuing Resolution are included in this special message for the Executive Office of the President and twenty-two departments and agencies. Additional deferrals under the Continuing Resolution will be transmitted duTing the next week.

Three other deferrals, totaling $51.9 million, included in this special message report on amounts routinely carried forward from fiscal year 1981 in the Department of Health and Human Services that c::i.nnot be used immediately or are withheld pending completion of a review.

The details of each deferral are contained in the attached reports.

RONALD REAGAN. THE WHITE HOUSE, October 20, 1981.

MESSAGES FROM THE HOUSE ENROLLED BILL SIGNED

At 12: 36 p.m., a message from the House of Representatives, delivered by Mr. Berry, one of its reading clerks, announced that the Sl)eaker has signed the following enrolled bill:

H.R. 4612. An act to temporarily delay the October 1, 1981, increase in the price support level for milk and to extend the time for conducting the referendum with re;opect to the national marketing quota for wheat for the marketing year beginning June 1, 1982.

The enrolled bill was subsequently signed by the Vice President.


At 3: 54 p.m., a message from the House of Representatives, delivered by Mr. Gregory, one of its reading clerks, announced that the House has passed the following joint resolution, without amendment:

S.J. Res. 4. Joint resolution to authorize the President to issue a proclamation designating the week beginning November 22, 1981, as "National Family Week".

The message also announced that the House has passed the following joint resolution, in which it requests the concurrence of the Senate:

H.J. Res. 331. Joint resolution designating the fourth Sunday in October as "National Mother-in-Law De.y".

HOUSE JOINT RESOLUTION REFERRED

The following resolution was read twice by unanimous consent, and ref erred as indicated:

H.J. Res. 331. Joint resolution designating the fourth Sunday in October as "National Mother-in-Law Day"; to the Committee on the Judiciary.

EXECUTIVE AND OTHER COMMUNICATIONS

The following communications were laid before the Senate, together with accompanying papers, reports, and documents, which were referred as indicated.

EC-2078. A communication from the secretary of Agriculture transmitting, pursuant to law, the fiscal year 1981 report on food and needs and availabilities; to the Committee on Agricutlure, Nutrition, and Forestry.

EC-2079. A communication from the Certifying Officer of the terminated Pacific Northwest River Ba.sins Commission transmitting, pursuant to law, a report on a violation of law created by an overobligation of funds for Columbia River Estuary Data Development Programs; to the Committee on Appropriations.

EC-2080. A communication from the Secretary of Defense transmitting, pursuant to law, reports on four violations of law regarding overobligation of appropriated funds; to the Committee on Appropriations.

EC-2081. A communication from the Secretary of the Air Force transmitting a draft of proposed le3islation to authorize the Secretary of Defense to enter into cooperative military airlift agreements with allied countries; to the Committee on Armed Services.

EC-2082. A communication from the Principal Deputy Assistant Secretary of the Air Force for Manpower, Reserve Affairs, and Installations transmitting, pursuant to law, notice of the Air Force's decision to withdraw certain support activities from Duluth International Airport, Minnesota; to the Committee on Armed Services.

EC-2083. A communication from the Acting Comptroller General of the United States transmitting, pursuant to law, a report entitled "Two Navy Ship Contracts Modified Under Authority of P.L. 85-804-Status as or August 3, 1980"; to the Committee on Armed Services.

EC-208i. A communication from the Secretary of the Interstate Commerce Commission transmitting, pursuant to law, a proposal for an extension of time to December 29, 1981 in the matter of Tennessee Valley Authority v. Louisville and Nashville Railroad Company; to the Committee on Commerce, Science, and Transportation.

EC-2085. A communication from the Assistant Secretary of Energy for Conservation and Renewable Energy transmitting, pursuant to law, notice of a delay in submission of the Department's fiscal year 1980 report on the Federal Geothermal Program; to the Committee on Energy and Natural Resources.

EC-2086. A communication from the Secretary of Heal th and Human Services transmitting, pursuant to law, a report on methods for providing coverage for orthopedic shoes under Medicare; to the Committee on Finance.

EC-2087. A communication from the Acting Comptroller General of the United States transmitting, pursuant to law, a report entitled "AID and Universities Have Yet to Forge an Effective Partnership to Combat World Food Problems"; to the Committee on Foreign Relations.

EC-2088. A communication from the U.S. Postal Rate Commission tr:-.nsmitting its o;iinion and recommended decision approving stipulation and agreement in Docket No. MC81-4, Express Mail Insurance; to the Committee on Governmental Affairs.

EC-2089. A communication from the Acting Com::itroller General of the United States transmitting, pursuant to law, a report entitled "Fec!.eral Agencies Still Need to Develop Greater Computer Audit Capabilities"; to the Committee on Governmental Affairs.

EC-2-090. A communication from the Chairman of the U.S. Commission on Civil Rights transmitting, pursuant to law, a report entitled "Who is Guarding the Guardians"; to the Committee on the Judiciary.

EC-2091. A communication from the Special Assistant to the Secretary of Defense transmitting, pursuant to law, the report on Small Business Participation in Department of Defense Procurement for the period October 1980-July 1981; to the Committee on Small Business.

PETITIONS AND MEMORIALS The following petitions and memo

rials were la '.d before the Senate and were referred or ordered to lie on the table as indicated:

POM-525. A resolution adopted by the House of Representatives of the Commonwealth of Massachusetts; to the Committee on Banking, Housing, and Urban Affairs: "RESOLUTIONS MEMORIALIZING THE CONGRESS

TO REJECT LEGISLATION THAT WOULD PRE• EMPT STATE CREDIT LAWS

"Whereas, legislation is pending before Congress which would preempt all State usury ce1Ungs, thereby legalizing interest rates at loan shark levels for all consumer credit; and

"Whereas, title V of the Depository institutions deregulation and monetary control act of 1980 (Public Law 96-221 as amended) preempted State laws limiting rates and charges on certain consumer credit transactions; and

"Whereas, the laws of the various States have been more responsive to the needs of the citizens of those States, making such Federal preemption in this area undesirable and unnecessary; and

"Whereas, the Massachusetts General Court has often enacted landmark statutes, such as truth-in-lending, to protect consumers in credit transactions; and

"Whereas, Massachusetts has recently amended several credit laws to liberalize their restrictions in response to the current economic conditions, thereby demonstrating an ability to act when necessary in order to assure an adequate supply of consumer credit; and

"Whereas, Massachusetts has reaffirmed its desire to retain control of its interest

rate statutes by overriding title V of said Public Law 96-221; and

"Whereas, legislation (H.R. 2501 and S. 1406) is now being considered in Congress which would among other things preempt State laws expressly limiting the nature, rate, amount of, or manner in which, interest finance charges or other fees may be charged; and

"Whereas, the legislation may not include authority for States to override such a Federal preemption; therefore be it

"Resolved, That the Massachusetts House of Representatives urges the United States Congress to reject any legislation that would preampt any part of the State credit laws; and be it further

"Resolved, That copies of these resolutions be forwarded by the clerk of the House of Representatives to the congressional delegation of this commonwealth and appropriate congressional · committees."

POM-526. A resolution adopted by the National Advisory Council on Indian Education, relating to Federal Trust responsibility for Indian Education; to the Select Committee on Indian Affairs.

POM-527. A joint resolution adopted by the Legislature of the State of Montana.; to the Committee on the Judiciary:

"JOINT RESOLUTION

"Whereas, with each passing year this nation becomes more deeply in debt as lt1 expenditures grossly and repeatedly exceed. available revenues; and

"Whereas, convinced that fiscal irresponsibility at the federal level, with the inflation that results from this policy, is the greatest threat that faces our nation, the Legislature firmly believes that constitutional restraint is vital to bring the tiscal discipline needed to restore financial responsibility; and

"Whereas, under Article V of the Constitution of the United States, amendments t.o the federal constitution may be proposed by the Congress whenever two-thirds of both houses consider it necessary.

"Now, therefore, be it resolved by the Senate and t(ie House of Representatives of the State of Montana:

" ( 1) That the Congress of the United States is requested to propose and submit to the states an amendment to the Constitution of the United States requiring that, in the absence of a national emergency, the federal budget be balanced each fiscal year within 4 years after the amendment is ratified by the various states.

"(2) That as this resolution is the ex~rcise of a fundamental power of the sovereign states under the Constitution of the United States, it is requested that receipt of this resolution by the Senate and the House of .n.epresentatives of the Congress of the Unltecl States be officially noted and entered upon their respective records and that the full text of this resolution be published in the official publication of both the Senate and the House of Representatives of the Con· gress.

"(3) That copies of this resolution be sent by the Secretary of State of Montana to the Secretary of State and presiding officers of both houses of the legislatures of each state in the Union, the Speaker and the Clerk of the United States House !o Representatives, the President and the Secretary of the United States Senate, and to each member of the Montana congressional delegation."

POM-528. A petition from a citizen of Arvada, Colorado, relating to compulsory unionism and outlaw monopoly bargaining in the federal service; to the Committee on Labor and Human Resources.

October 20, 1981 CONGRESSIONAL RECORD-SENA TE 24525 REPORTS OF COMMITI'EES

The following reports of committees were submitted:

By Mr. THURMOND, from the Committee on the Judiciary, favorably without amendment:

S. 175: A bill for the relief of Puangpaka Vertrees and Puangtip Vertrees (Rept. No. 97-212).

s. 235: A b111 for the relief of Hyong Cha Kim Kay (Rept. No. 97-213).

S. 278: A bill for the relief of Hun Silt Sanderson (Rept. No. 97-214:).

S. 555: A b111 for the relief of Michael Whitlock (Rept. No. 97-215).

S. 593: A bill for the relief of Rosita N. Pacto (Rept. No. 97-216).

By Mr. THURMOND, from the Committee on the Judiciary, favorably with an amendment and an amendment to the title:

s. 174: A blll for the relief of Walter Prey (Rept. No. 97-217).

By Mr. THURMOND, from the Committee on the Judiciary, favorably with an amendment in the nature of a substitute:

S. 1143: A bill for the relief of Sang Sun Russo (Rept. No. 97-218).

S. 1144: A blll for the relief of Maxine Ann Fricioni (Rept. No. 97-219).

By Mr. THURMOND, from the Committee on the Judiciary, favorably with amendments:

S. 167: A blll for the relief of Juan Esteban Ramirez (Rept. No. 97-220).

By Mr. THURMOND, from the Committee on the Judiciary, favorably with an amendment and an amendment to the title:

S. 220: A b111 for the relief of Duk Chan Byun, his wife Yung Ja Byun, and his chlldren Hye Ja Byun, Hye Sun Byun, Hye Ryung Byun, and Yung Eun Byun (Rept. No. 97-224).

By Mr. THURMOND, from the Committee on the Judiciary, favorably with amendments and an amendment to the title:

S. 367: A bill for the relief of Kuan Sheng Fong a/ k/a Pete K. S. Fong; and Shyr Yuh-Yu Focig alk/a Nancy Fong, his wife; and Suen Wei Fong, a/k/a Sylvia Fong, his daughter, and I. Chun Fong a./k/a Victor Fong, his son (Rept. No. 97-221).


S. 1093: A b111 for the relief of Sandra Reyes Pellecer (Rent. No. 97-222).

By Mr. THURMOND, from the Committee on the Judiciary, favorably with an amendment in the nature of a substitute and an amendment to the title:

S. 215: A b111 for the relief of Inocencio F.der and Lourie Ann Eder (Rept. No. 97-223).

By Mr. THURMOND, from the Committee on tihe Judiciary, favorably with an amendment:

S. 244: A b111 for the relief of Doctor Joselito Sison Almario, and his wife, Leticia Almario (Rept. No. 97-225) .

S. 280: A b111 f-0r the relief of Yaeko Howell (Rept. No. 97-226).

S. 340. A b111 for the relief of Doctor Herman Sa.rdjono and his wife, Erlanda Sardjono (Rept. No. 97-227).


S. 191: A b111 for the relief of Tessie and Enrique Ma.rfori (Rept. No. 97-228).

S. 236: A b111 for the relief of Peter Chi Hung Kwok, doctor of medicine, and Ping Chi Chau Kwok, husband a.nd wife (Rept. No. 97-229).

By Mr. THURMOND, from the Committee on the Judiciary, favorably without amendment:

H. R. 661: A b111 for the relief of Blanca Rosa. Luna de Frei (Rept. No. 97-230) .

H. R. 688: A bill for the relief of Junior Edmund Moncrieffe (Rept. No. 97-231) .

H. R. 783: A b111 for the relief of Roland Karl Heinz Vogel (Rept. No. 97-232). · ·

H. R. 1469: A bill for the relief of Madeleine Mesnager (Rept. No. 97-233).

H. R. 1480: A blll for the relief of Omar Marachi (Rept. No. 97-234) .

H. R. 1550: A bill for the relief of Aurora Isidra Rullan Diaz (Rept. No. 97-235).

H. R. 1785: A biH for the relief of Gladys Belleville Schultz (Rept. No. 97-235) .

H. R. 2010: A bill for the relief of Kai-Mee Chen (Rept. No. 97-237).

H. R. 2185: A bill for the relief of Hanlfe Frantz (Rept. No. 97-238).

H. R. 2373: A blll for the relief of Moses Bank (Rept. No. 97-239).

H. R. 2975: A bill for the relief of Yuk Lee Li (Rept. No. 97-240).

By Mr. THURMOND, from the Committee on the Judiciary, favorably without amendment and with a preamble:

H.J. Res. 268: Joint resolution to design!l.te October 23, 1981, as "Hungarian Freedom Fighters Day".

EXECUTIVE REPORTS OF COMMITTEES

The following executive reports of committees were submitted:

By Mr. THURMOND, from the Committee on the Judiciary:

Wllliam L. Garwood, of Texas, to be U.S. circuit judge for the fifth circuit;

Hayden Wilson Head, Jr., of Texas, to be U.S. district judge for the southern district of Texas;

James R. Nowlin, of Texas, to be U.S. district judge for the western district of Texas;

H. Franklin Waters, of Arkansas, to be U.S. district judge for the western district of Arkansas;

Dan K. Webb, of Illinois, to be U.S. attorney for the northern district of Illinois for the term of 4 years;

Ronald E. Meredith, of Kentucky, to be U.S. attorney for the western district of Kentucky for the term of 4 years;

Stanford O. Bardwell, Jr., of Louisiana, to be U.S. attorney for the middle district of Louisiana for the term of 4 years;

Joe D. Whitley, of Georgia, to be U.S. attorney for the middle district of Georgia for the term of 4 years;

P. A. Mangini, of Connecticut, to be U.S. marshal for the district of Connecticut for the term of 4 years;

Ralph L. Boling, of Kentucky, to be U.S. marshal for the western district of Kentucky for the term of 4 years;

Robert W. Foster, of Ohio, to be U.S. marshal for the southern district of Ohio for the term of 4 years;

Donald James Quigg, of Oklahoma, to be Deputy Commissioner of Patents and Trademarks.

By Mr. GARN, from the Committee on Banking, Housing, and Urban Affairs:

Edgar F. Callahan, of Illinois, to be a Member of the National Credit Union Administration Board for the term expiring August 2, 1987.

By Mr. HATCH, from the Committee on Labor and Human Resources:

John F. Cogan, of California, to be an Assistant Secretary of Labor; and

Lenora Cole-Alexander, of the District of Columbia., to be Director of the Women's Bureau, Department of Labor.

(The above nominations were reported from the Committee on Labor and Human Resources with the recommendation that they be confirmed, subject to the nominees' commitment to respond to requests to a';)pear and testify before any duly constituted committee of the Senate.>

By Mr. PERCY, from the Committee on Foreign Rela tlons:

Alan M. Hardy, of Virginia, a Foreign Service Officer of class one, to be Ambassador Extra.ordinary and Plenipotentiary of tha United States to the Republic of Equato.ria.l Guinea:

Contributions are to be reported for the period beginning on the first day of the fvurth calendn.r year preceding the calendar year of tho nomination and ending on the date of the nomination.

Nominee: Alan M. Hardy. Post: Ambassador to Equatorial Guinea.. Contributions, amount, da.te, donee: 1. Self, none. 2. Spouse, Suzanne B. Hardy, none. 3. Children and spouses names: David

Hardy, $5.00, Oct. 1980, Democratic Pa.rty; Catherine Keberly Hardy, none. Robert, Joan, James, and Allan Dickson (step-children), none.

4. Parents names: deceased. 5. Grandparents names: deceased. 6. Brothers and spouses names: Steven B.

Hardy and Pat Hardy, none.

David Charles Miller, Jr., of Maryland, to be Amba.ssador Extraordinary and Plenipotentiary of the United States to the United Republic of •ranzania:

Contributions are to be reported for the period beginning on the first day of the fourth calendar year preceding the calendar year of the nomination and ending on the date of the nomination.

Nominee: David Charles Miller, Jr. Post: Ambn.ssado.r to Tanzania.. Contributions, amount, date, donee: 1. Self and spouse: David and Mo111e M111er. 1981-None. 1980-July 21, 1980, Republican Pres-Unity

Comm., $50; September 24, 1980, Pauken for Congress, $50.

1979-May 3, 1979, Westinghouse Employees Polltical Participation Plan (WEPPP), $50; July 16, 1979, WEPPP, $50.

1978-May 2, 1978, Wirth for Congress, $20; July 10, 1978, Wirth for Congress, $50; September 1, 1978, WEPPP, $200.

1977-August 9, 1977, Gardner for Council, $30.

(One donation-to Charles Ravenel for Senate-in the $50 range will be documented as soon as records are available.)

2. Children and Spouses-None. 3. Parents: David C. and Patricia A. Mlller,

Jr., my pa.rents: 1977-May 30, 1977, Americans Against

Union Control of Government, $2. 1978-February 1, 1978, National Republi

can Committee to the Senate, $10. 1979-0ctober 30, 1979, Committee for

Cleveland Heights Progress, $15. 1980-March 18, 1980, Cleveland Heights

Repub1ican Club, $5; Cleveland Heights Republlcan Club, $6; September 20, 1980, Cuyahoga Republican Organization, $20; October 20, 1980, G.O.P. Victory Fund, $50; October 20, 1980, Nahra for Congress, $30.

1981--Ja.nu.a.ry 6, 1981, Nahra for Congress, $25; April 5, 1981, Cleveland Heights Republlcan Club, $5; April 24, 1981, G.O.P. Victory Fund, $25.

Thornton and Helen Lake, wife's parents: 1977-August 20, 1977, Senator J. Helms, $5. 1978-None. 1979-September 11, 1979, Voinovich for

Mayor, $15; October 28, 1979, Reagan for President, $50.

1980-August 4, 1980, Ohio Fair Taxation, $10; August 8, 1980, Republican National Comm., $10; September 18, 1980, Ohio Republlcan Comm., $15; September 22, 1980, Republican National Comm., $15.

1981-June 18, 1981, Ashbrook for Senate, $100.


Helen La.ke: 1980-September 22, 1980, Ohio State Re

publican Comm., $100; October 29, 1980, Victory '80 Campaign (GOP), $100.

1981-April 29, 1981, Ohio Republican Party, $150.

4. Grandparents-None. 5. Brothers and spouses-None. 6. Sisters and spouses-None.

Thomas R. Pickering, of New Jersey, a Foreign Service Officer of the Class of Career Minister, to be Ambassador Extraordinary and Plenipotentiary of the United States to the Federal Republic of Nigeria:

Contributions are to be reported for the period beginning on the first day of the fourth calendar year preceding the calendar year of the nomination and ending on the date of the nomination.

Nominee: Thomas R. Pickering. Post: Lagos, Nigeria.. Contributions, amount, date, donee. 1. Self, none. 2. Spouse, none. 3. Children and spouses: Margaret S. Pick

ering, Timothy R. and Mary Ann Pickering, none.

4. Parents: Hamilton R. and Sarah C. Pickering, none.

5. Grandparents, none. 6. Brothers and spouses, none. 7. Sisters and spouses, Marcia and Bruce

Hunt, none.

(The above nominations were reported from the Committee on Foreign Relations with the recommendation that they be confirmed, subject to the nominees' commitment to respond to requests to appear and testify before any duly constituted committee of the Senate.)

INTRODUCTION OF BILLS AND JOINT RESOLUTIONS

The following bills and joint resolutions were int:rioduced, read the first and second time by unanimous consent, and ref erred as indicated:

By Mr. THURMOND: s. 1750. A bill to amend section 8914 of

title 10, United States Code, to authorize the retention in the Air Force Reserve of certain regular enlisted members retired under that section until such members' total service equals 40 years or until such members attain the age of 60 years, whichever occurs earlier; to the Committee on Armed Services.

By Mr. HATCH (by request) : S. 1751. A bill to amend the Freedom of

Information Act, and for other purposes; to the Committee on the Judiciary.

By Mr. HEINZ (for himself and Mr. TSONGAS):

s. 1752. A bill to amend the Home Owner's Loan Act to increase the lending, investment and operating authority of Federal mutual savings banks; to the Committee on Banking, Housing, and Urban A1fairs.

By Mr. MATSUNAGA: S. 1753. A bill for the relief of Clayton

Timothy Boyle and Clayton Louis Boyle, son and father; to the Committee on the Judiciary.

By Mr. HETNZ (for himself, Mr. PACKWOOD, Mr. BRADLEY, Mrs. KASSEBAUM, Mr. PERCY, Mr. COHEN, Mr. PRYOR, Mr. MELCHER, and Mr. BURDICK):

S. 1754. A bill to amend title XVIII of the Socia.I Eecurity .Act to remove the 3-day prior hospitalization requirement for coverage of extended ca.re serv'ices; to the Committee on Fina.nee.

By Mrs. HAWKINS (for herself and Mr. CHILES):

S. 1755. A bill to amend chapter 207 of title 18 o! the United States Code to provide

explicitly for consideration of the sources of bail money and the risk to the safety of the public and other persons in proceedings for the consideration of release of criminal defencta.nts in drug related cases befora trial under that chapter; to the Committee on the Judiciary.

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

By Mr. THURMOND: s. 1750. A bill to amend section 8914

of title 10, United States Code, to authorize the retention in the Air Force Reserve of certain regular enlisted members retired under that section until such members' total service equals 40 years or until such members attain the age of 60 years, whichever occurs earlier; to the Committee on Armed Services. RETENTION OF CERTAIN MEMBERS IN THE AIR

FORCE RESERVE

Mr. THURMOND. Mr. President, I rise to introduce a bill to relieve a critical shortiage of highly skilled personnel in the Air Force Reserve, such as loadmasters and flight engineers.

Title 10, United States Code, sections 269(d) and 8914, is the governing law which is utilized when necessary in the recall of retired loadmasters and flight engineers in the Air Force Reserve. This law provides the Secretary of the Air Force with the authority to place members of the Retired Reserve who are entitled to retired pay in the Ready Reserve. The Secretary of the Air Force must determine in each specific case that such reservists are indispensable in the Ready Reserve.

Mr. President, the Air Force has used this provision since 1969 to recall flight engineers, and since 1974 to recall loadmasters. There is a restriction placed on the number of personnel which the Secretary is authorized to recall in these skilled categories. Only 25 percent of the total personnel authorized in each Air Force wing in these two special skills can be recalled. Also, the total service, Active and Reserve, of the reservist involved cannot exceed 30 years of military service.

The Air Force Ready Reserve plays a vital role alongside the Active Force in combat readiness training with specific unit missions in the strategic airlift. The reservists serve with Active Force aircraft.

Retirement eligible Ready Reservists are retained in the Ready Reserve only when their critical skills are required in the unit to insure that the unit will remain in an operationally combat-ready status. Each case is individually determined by the Secretary of the Air Force.

Mr. President, my bill would expand the authority of the Secretary of the Air Force to allow indispensable retired individuals to continue in the Ready Reserve as required, until they reach 40 years of combined military service, or 60 years o.f age, whichever comes first.

However, the 25 i;ercent restriction on retired reservists beir.g reta ~ned in this Ready Reserve category will remain in effect under this bill. The authority granted the Secretary of the Air Force under this measure only extends the mandatory retirement date.

This change will save $2.5 million in the next 5 years in training costs, and it will assist in maintaining the combat readiness of the Air Force Reserve. At the present time, this measure, if approved, will allow the Air Force to retaih 34 critically needed loadmasters and flight engineers who will otherwise be mandatorily retired in March 1982.

I urge my distinguished colleagues to grant the Secretary of the Air Force this important authority to help maintain the combat readiness of the Air Force.

Mr. President, I ask unanimous consent that this bill be printed in the RECORD.

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

s. 1750 Be it enacted by the Senate and House

of Representatives of the United States of America in Congress assembled, That section 8914 of title 10, United States Code, relating to the retirement of enlisted members of the Air Force who have at least 20 years but less than 30 years of service, is amended-

( 1) by inserting "(a)" before "Under" at the beginning of such section;

(2) by striking out "A" at the beginning of the third sentence and inserting in lieu thereof "Except as provided in subsection (b), a"; and

(3) by adding at the end a new subsection as follows:

"(b) A regular enlisted member who has been retired and has become a member of the Air Force Reserve under this section and has been placed in the Ready Reserve pursuant to the authority contained in the second sentence of section 269(d) of this title may be retained in the Air Force Reserve until such member's service com'Juted under section 8925 of this title, plus his inactive service as a member of the Air Force Reserve, equals 40 years or until such member attains 60 years of age, whichever occurs first.".

By Mr. HATCH (by request): S. 1751. A bill to amend the Freedom

of Information Act, and for other purposes; to the Committee on the Judiciary. FREEDOM OF INFORMATION ACT IMPROVEMENrs

ACT OF 198l

•Mr. HATCH. Mr. President, I am honored today to introduce on behalf of Attorney General William Smith and Assistant Attorney General Jonathan Rose, the Reagan administration's proposed amendments to the Freedom of Information Act. This proposal is a part of the Department of Justice's legislative program for the 97th Congress.

The letter and spirit of the act require all agencies to respond promptly and fully to requests for information from the general public, except where this would compromise other important governmental functions. These vital functions which might be impaired by indiscriminate disclosures are protected by several exemptions in the act.

Extensive hearings before the Constitution Subcommittee have revealed that in some instances the Freedom of Informat'.on Act (FOIA) has been misused in ways that are inconsistent with the goals Congress had in mind when it enacted FOIA in 1966.

Some requirements of the act have impeded proper law enforcement activi- · ties and jeopardized national security

October 20, 1981 CONGRESSIONAL RECORD-SENATE 24527 functions. In addition, the act has cost hundreds of times more than Congress contemplated even as recently as 1974, when the Government-wide expense of FOIA was estimated at $40,000 to $100,000.

Even the Federal courts have acknowledged the increasing burdens imposed by the act on some vital governmental functions. A very recent example concerns requests for intelligence files by Mr. Philip Agee, a pr ~vate citizen who has announced a campaign to expose the Central Intelligence Agency officers wherever they are operating. Responding to Mr. Agee's requests has cost the Amer!can public nearly $500,000. A respected Federal district court judge who heard the which arose over the requests stated that:

(I]t ls amazing that a rational society tolerates the expense, the waste of resources, the potential injury to its own security which this process necessarily entails." Agee v. Central Intelligence Agency, 517 F. Supp. 1335, 1341-42 n.5 (D.D.C. 1981).

Another recent opinion by the U.S. Court of Appeals for the Third Circuit stated:

What concerns us particularly ls that a law enforcement agency, the FBI, ls hel..ng required to expend sorely needed resources, not to deal with the burgeoning problems of crime which seriously besets all our citizens, but to devote a large number of hom·s of exacting labor sortln~ our amdavlts that were collected to apprehend crimes and prosecute offenders. Moreover. informants, once aware that copies of amdavlts submitted to law enforcement ag-encies can be made public, might be inhibited from future coope:-atlon.

A further concern ls that the use of the FOIA, in the fashion emnloyed here, will impose an additional burden on the tri!l.l courts that an alreadv overworked. It will make it necessary for them to review large numbers of records, such as had been requested here, in camera. And the fact that this procedure wm be placed in an adversarial context wm further prolong the process and add to its vexatious nature.

Perhaps when Conczress ls made aware of the problems spawned bv the l'Se of the Act which we have identified here and on which JudP.'e .Adams has co""'!menterJ in a sligbitly different context in Ferri v. Bell. 645 F. 2d 1213, 1226 n.17 (3d Cir. 1981), it will attempt to accommodate the concerns which we have expres.-,ed. Lame v. United States Department of Justice, 654 F.2d 917, 929 (1981).

To remedy these and other shortc<>mings in the current act. the administration offers a-series of amendments to the _ Freedom of Information Act to imorove procedures for the disclosure of informati<>n and to give broader protect~on to certain types of information. The changes proposed by the amendments are as follows:

The amendments would clarify several of the act's exemptions and procedures to strengthen the protection given to information where disclosure would result in an unwarranted invasion of personal privacy, harm the public interest in law enforcement, injure the legitimate commercial interests of private parties who have submitted proprietary information to the Government, or impede the effective collection of intelligence.

The amendments would preclude the use of the Freedom of Information Act

as a means to circumvent discovery rules by parties in litigation.

The amendments would provide for expedited processing of requests from the media and others seeking inf ormation for broad public dissemination while establishing realistic time requirements for agencies to respond to requests and decide appeals.

The amendments would establish procedures enabling submitters of confidential commercial or financial information to object to the Government's release of such information.

The amendments would permit the Government to charge requesters fees that more closely reflect the actual costs of the Government's search and review of documents.

The amendments would add two new exemptions from the act for records generated in legal settlements and records containing technical information the export of which is controlled by law.

This admmistralion b1ll will be considered in conjunction with S. 1730-see CONGRESSIONAL RECORD, October 7, 1981, page 23658-as the Subcommittee on the Constitution holds another hearing and then proceeds to mark up on this subject.

Mr. President, I ask unanimous consent that the text of the bill and the section-by-section analysis prepared by the Justice Department be printed in the RECORD.

There being no objection, the bill and section-by-section analysis were ordered to be printed in the RECORD, as follows:

s. 1751 Be it enacted by the Senate and House of

Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Freedom of Information Improvements Act of 1981". AMENDMENTS RELATING TO THE OBLIGATION TO

MAKE rtECORDS AVAILABLE

SEC. 2. Section 552(a) of title 5, United States Code, ls amended-

( a) in paragraph (2)-(1) by adding in subparagraph (A) ", if

the final opinions or orders are cited, used, or relied en as p:::ecedent by the agency" after "cases"; and

(2) by striking out "a clearly unwarranted" in the second sentence and inserting in lieu thereof "an unwarranted";

(b) by amending paragraph (3) to read as follows:

" ( 3) (A) Except with respect to the records made available t·nc!er paragraphs (1) and (2) of this subsection, each agency, up:m a~y r~que_st b_Y any United States person for records which (1) reascilably describes such records and (11) ls made in accordance with publlshed rules stf',ting the time, place, fees and procedures to be followed, shall make the records promptly available to the requester.

"(B) A requester shall not make or maintain a request under this paragraph for records relating to the subject matter of any ongoing judicial or adjudicatory administrative proceeding (civil or criminal) to which the requester, or any person upon whose behalf the requester acts in making the request , ls a pnrty.

"(C) An agency may require by regulation that each request for records under this secticn include declarations by the requester t-hat the requester, or any person unon whose behalf the requester acts in making the request. ls

"(i) a United States person as defined in this section, and

"(11) not barred by subsection (a) (3) (B) from making the request. A request that does not comply with any such regulation requirement ls not a proper request under this section."; and

( c) by adding the following new para.grapb sat the end thi;reof:

"(7) An agency is not required to disclose any material requested under this subsection which consists of newspaper clippings, magazine articles, court records, publications available from the Government Printing Office, or any similar items which are in the public record or otherwise publicly available, but the agency shall inform the requester of the nature of such public source materials.

"(8) Nothing in this section shall be deemed. applicable in any way to the informant records maintained by a law enforcement agency under an informant's name or personal identifier, whenever access to such records ls sought by a third party according to the informant's name or personal identifier.".

AMENDMENTS RELATING TO FEES

SEC. 3. Paragraph (4) (A) of section 552(a) of title 5, United States Code, is amended-

(a) by striking out the second sentence and inserting in lieu thereof the following· "The schedule may provide for the payment of all costs reasonably attributable to responding to the request, including the costs of searching for, reviewing, and duplicating requested records. If the requested records contain commercially valuable technological or reference information, generated or acquired by the government at substantial cosit to the public, fees may be charged which reflect the fair market value or royalties or both, in addition to or in lieu of any processing fees otherwise chargeable, taking into account such factors as the estimated commercial value of the information, its cost to the government, and any public interest served by its disclosure."; and

(b) by adding after the word "determines" in the last sentence ", in the exercise of its discretion,". AMENDMENTS RELATING TO THE ADMINISTRATIVE

RIGHTS OF SUBMITTERS OF INFORMATION

SEc. 4. Paragraph (4) of section 552(a) of title 5, United States Code, ls amended-

(a) by redesigns.ting subparagraph (B) as subparagraph (E), and by redesignatlng subparagraphs (C) through (G) as subparagraphs (J) through (N). respectively; and

(b) by adding after subparagraph (A) the following new subparagraphs:

"(B) Each agency shall promulgate regulations, pursuant to notice and receipt of public comment, specifying procedures by whlch-

"(1) a submitter may be required to designate, at the time of submission, any information consisting of trade secrets, commercial or financial information, or other commercially valuable information, which ls exempt from disclosure under subsection (b) (4) ~

"(11) the- agency shall notify the submitter that a request has been made for information provided by the submitter within a reasonable time prior to a decision to release any such 1n!ormat1on;

"(111) the submitter may, within ten working days of the forwarding of such notification, submit to the agency written objection to such disclosure specifying all grounds upon which it ls contended that the information should not be disclosed; and

"(iv) the agency shall notify the submitter of any final decision to release such information.

"(C) An agency ls not required to notify a submitter pursuant to subparagraph (B) lf-

"(1) the information requested ls not designated by the submitter as exempt from disclosure in accordance with agency regulations promulgated pursuant to paragraph

24528 CONGRESSIONAL RECORD-SENATE October 20, 1981 (4) (B) (i), if such designation is required by the agency;

"(ii) the agency determines, prior to giving such notice, that the request should be denied;

" ( 111) the disclosure Ls required by law (other than this section) ; or

"(iv) the information lawfully has been published or otherwise made available to the public.

"(D) If a submitter has objected, pursuant to subparagraph (B) (111), to disclosure of information that the agency determines to be exempt from disclosure under subsection ( b) ( 4) , the agency shall not release such information unle3s the agency determines in writing that the failure to disclose the records would injure an overriding p"l,lblic interest and disclosure is not otherwise prohibited by law.".

AMENDMENTS RELATING TO JUDICIAL REVIEW

SEC. 5. Paragraph (4) of section 552(a) of title 5, United States Code, is amended

(a) by amending redesignated subparagraph (E) to read as fo:lows:

"(E) On complaint filed by a reque3ter within 90 days from the date of final agency action or by a submitter prior to the release of submitted information, the district court of the United States in the district in which the complainant resides, or has his principal place of business, or in which the agency records are situated, or in the District of Columbia, has jurisdiction-

"(i) to enjoin the agency from wi .. hholding agency records and to order the production of any agency records improperly withheld from the requester; or

"(ii) to enjoin the agency from any disclosure of records which wa.s objected to by a submitter under subparagraph (B) (111) or which would have been objected to had notice been given as required by subparagra'!)h (B) (11) .";

(b) by adding after sub!Jaragraph (E) the following new subparagraphs:

"(F) In an action based on a comp1alnt"(i) by a reques •er, the court shall have

jurisdiction over any submitter of information contained in the requested record.s, and any such submitter may intervene as of right in the action; and

"(11) by a submitter, the court shall have jurisdiction over any requester of records containing information which the submitter seeks to have withheld, and any such requester may intervene as of right in the action.

"(G) The agencv that is the sub~ect of the complaint shall promptly, upon service of a complaint-

"(!) seeking the production of records, notify each submitter of information contained in the reauested records that the complaint was filed; and

"(11) seeking the withholding of records, notify each requester of the-records that the complaint was filed.

"(H) In any action in which a requester is an intervenor or is 1oined the court shall on timely motion of the requester transfer the action to a district court which would have had 1urisdiction had the action been brought by the requester, unless the court otherwise directs for good cause shown.

"(I) In a cas~ in which a record is withheld under subsection (b) (1), the court shall not enjoin the agency from withholding such record unless the agency's action is found to b~ arbitrary or capricious. In all other cases, the court shall determine the matter de novo. The court may examine the contents of requested agency records in camera to determine whether such records or any part thereof shall be withheld under any of the exemptions set forth in subsection (b) of this section. The burden is on the ag:mcy to sustain it.s action to withhold information and the burden is on any submitter seeking the withholding of information. The court shall main teJn under seal any af-

fidavit or record submitted in camera. to the court in support of the applica.bmty of any exemption, and shall stay any order requiring the release of records pending final judicial resolution of a.ny appeal from such order."; a.nd

(c) in redesignated subpa.ragraph (L)(1) by a.dding "or any submitter who ls a.

party to the litigation" after "United States"; and

(2) by striking out "complainant" and inserting in lieu thereof "requester".

AMENDMENTS RELATING TO THE TIME FOR AGENCY RESPONSE

SEc. 6. Paragraph (6) of section 552(a) of title 5, United States Code, ls amended-

( a) in subparagraph (A)-( 1) by striking out "for records made un

der pa.rs.graph (1), (2), or (3) of this subsection" and inserting in lieu thereof "made under paragraph (1), (2), or (3) of this subsection for records which are sufficiently identified and limited that no more than eight working hours of sea.rch and review time are required to respond to the request, and which do not contain trade secrets, commercial or financial information, or other commercially valuable information provided by a submitter";

(2) in clause (1), by striking out "ten days (excepting Saturdays, Sundays, and legal public holidays) " and inserting in lieu thereof "ten working days"; and

(3) in clause (11), by striking out "twenty days (excepting Saturdays, Sundays, and legal public holidays)" and inserting in lieu thereof "twenty working days";

(b) by amending subparagraph (B) to read as follows:

"(B) Except as provided in subparagraph (A), each agency, upon a.ny request for records ma.de under para~raph (1), (2), or (3) of this subsection, shall-

" ( 1) within thirty working days after the receiTlt of the recmest-

"(a) determine whether to comply with suoh request, in whole or in part, and immediately notify the requester of such determination and the reasons therefor, and of the requester's right to appeal to the head of the agency any adverse determination; or

"(b} notify the requester of the estimated time period required for such dete:rmlnation, and the reasons therefor, such time period to be esta.blLshed in accordance with agency regulations promulgated thereunder but not to exceed one year; and

"(ii) within thirty woirking days after the receipt of an appeal-

" (a> make a determination of the appeal; or

"(b) notify the requesteT of the estimated time periiod required for such determination, and the reasons therefor, such time period to be established in accordance with agency regulations prcmJUlg,ated hereunder but not

- to exceed ·six -months. If en appeal the denial of the request for records is in whole or in pa.rt upheld, the agency shall notify the requester of the provisions for judicial review of that determination under paragraph ( 4) of this subsection.";

(c) by redesigna.tlng subparagraph (C) as subparagraph (E);

(d) by adding the following new subparagraphs after subparagraph (B):

"(C) Eaich agency shall promulgate regulations pursuant to notice a.nd receipt of public c·cmment, specifying the time perlOds under subpa.ra.graph (B). Such regulations shall provide for the shortest practicable time periods and shall take in to account all relevant factors, including but not limited to-

.. (i> the volume of requests and appeals received by the agency;

" ( 11) the resources ave.liable to the agency for the processing of such requests and appeals;

" ( 111) the volume o! records required to

be searched to loca.te a.U records responsive to the request or appeal;

"(iv) the volume of responsive records required to be reviewed for release pursuant to the request or appeal;

" ( v) the need to search for or review recoros maintained in field fac111tles or other establishments tha.t a.re separate from the agency office processing the request or appeal;

"(vi) the character of the records requested;

"(vii) the need for consultaitlon, which shall be conducted with all practicable speed, with another agency or among two or more components of the agency having substantial subject matter interest therein; and

"(v111) the need for notification of submitters of information and for consideration of any objections to disclosure ma.de by such submitters.

"(D) Each agency shall promulgate regulations, pursuant to notice and receipt of public comment, by which a requester wiho demonstrates a compelling need for expedited access to records and whose request for information will primarily benefit the general public may, as a matter of the agency's discretion, be given processing priority over other requesters."; and

(e) in redeslgnated subparagraph (E)(1) by strUkng out "person making a re

quest to any agency for records under paragraph (1), (2), or (3) of this subsection" and inserting in lieu thereof "requester";

(2) by adding after the first . sentence the following new sentence: "If a requester files a complaint under paragraph (4) (E), the administrative remedies of a submitter o! information conteJned in the records which are the subject of the request shall be deemed to have been exhausted."; and

(3) in the next to last sentence, by striking out "such person making such request" and inserting in lieu thereof "the requester, except that if the disclosure of records ls objected to by a. submitter pursuant to paragraph (4) (B) (111), the agency shall not disclose the records for fifteen working days after notice of the final decision to release the requested information has been forwarded to the submitter.".

AMENDMENTS RELATING TO EXEMPTIONS

SEC. 7. Section 552 (b) of title 5, United States Code, is amended as follows:

(a) Paragraph (2) ls amended by adding ", including such materials as (A) manuals and instructions to investigators, inspectors, auditors. and negotiators, and (B) examination material used solely to determine individual qualifications for employment, promotion, and licensing" after "agency".

(b) Paragraph (4) ls amended to read as follows:

"(4) trade secrets, and commercial or financial information or other commercially valuable information obtained from any person if the information ls privileged or if its release may impair either the legitimate competitive, financial, or business interests of any person or the government's ab111ty to obtain such information in the future;".

(c) Paragraph (6) is amended to read as follows:

"(6) records or information concerning individuals the release of which would constitute an unwarranted invasion of personal privacy, including compilations of lists of names and addresses that could be used for solicitation purposes;".

(d) Paragraph (7) ls amended(1) in the introductory language-(A) by striking out "investigatory records"

and inserting in lieu thereof "records or information"; and

(B) by adding "or information" after "such records";

(2) by amending subparagraph (A) to read as follows:

"(A) reveal investigatory information relating to an ongoing investigation or enforcement proceeding,";

October 20, 1981 CONGRESSIONAL RECORD-SENA TE 24529 (3) by amending subpargraphs (D), (E).

and (F) to read as follows: "(D) tend to disclose the identity of a

confidential source, including any foreig~. state, or other public agency or authority or any private institution that furnished information on a confidential basis, and, in the case of a record or information compiled by a criminal law enforcement authority in the course of a criminal investigation, or by an agency conducting a lawful national security intel11gence investigation, information furnishe:i by a confidential source, (E) disclose techniques, procedures, guidelines, or priorities for law enforcement investigations or prosecutions, (F) endanger the life or physical safety of any natural person, or"; and

(4) by adding the following new subpargraph at the end thereof:

" ( G) disclose information relating to such categories of investigations of terrorism, organized crime, or foreign counterintel11-gence as are defined by the Attorney General by regulation or order;".

(e) Paragra>Jh (8) is a.mended by striking out "or" at the end thereof.

(f) Paragraph (9) is amended by striking out the period at the end thereof and inserting in lieu thereof a semicolon.

(g) Subsection (b) is amended by adding the following new paragraphs after paragraph (9):

"(10) records generated by the United States or any party in connection with the settlement of a legal action in which the United States is a party or has an interest; or

"(11) technical data that may not be exported lawfully outside the United States without an approval, authorization, or a license from an agency, unless the requester has obtained the appropriate approval, a~thorlzation, or license.".

AMENDMENTS RELATING TO REPORTING REQUIREMENTS

Sec. 8. Section 552(d) of title 5, UnLted States Code, is amended-

( a) by striking out "calendar" the second and fourth places it appears and inserting in lieu thereof "fiscal";

(b) 1n paragraph (4), by striking out "subsection (a) (4) (F)" and inserting in lieu thereof "subsection (a) ( 4) ( M) "; and

(c) in the next to the last sentence, by striking out "subsections (a) (4) fE). (F), and (G)" and inserting ln lieu thereof "subsections (a) (4) (L), (M), and (N) ".

AMENDMENTS RELATING TO DEFINITIONS

SEC. 9. Section 552(e) of title 5, United States Code, ls amended to read as follows:

" ( e) For purposes of th ls section-" ( 1) •agency' as defined ln section 551 ( 1)

of this title includes any executive department, military department, Government .corporation, Government controlled corporation, or other establishment ln the executive branch of the Government (including the Executive omce of the President), or any independent regulatory agency;

"(2) 'submitter' means any person who has submitted t-0 an agency (other than an lntelllgence agency) trade secrets, commercial or financial information (other than personal financlal information), or other commercially valuable information, ln which the person has a commercial or proprietary interest;

"(3) 'requester' means any person who makes or causes to be made, or on whose behalf is made, a proper reaPest for disclosure of records under subsection (a);

"(4) 'United States person' means a citizen of the United States or an alien lawfully admitted for nermanent residence (as defined in section lOlfa) (20) or the Immigration and Nationality Act, 8 U.S.C. 1101 (a) (20)), an unincorporated association a substantial number of members of which are citizens of the United States or aliens law-

79-059 0-85-41 (Pt. 18)

fully admitted for permanent residence, or a corporation which is incorporated in the United State3, but does not include a corporation or an association that is a foreign power, as defined in section lOl(a) of the Foreign Intelligence Surveillance Act of 1978 (50 u.s.c. 1801(a.));

"(5) 'working days' means every day E;Xcluding Saturdays, Sundays, and Federal legal holidays;

"(6) 'record' means existing documentation of information in any form, including computer tapes and discs, but does not include system software in any form or documentation created for the personal convenience of any government employee or otficial.".

SECTION-BY-SECTION ANALYSIS

I. INTRODUCTION

The blll proposes amendments to the Freedom of _ nforma.tion Act, 5 U.S.C. § 552, in order to improve the a.<iministra.tion of the Act, remedy unforeseen problems that have a.risen under the Act, correct judicial constructions of the Act which do not comport with the original intent of Congress, and generally balance the public interest in disclo.;ure of go'7ernment information with the public interest in e .• ective government. The proposed amendments would improve the Act in several respects:

First, they would clarify several of the Act's exemptions and procedures in order to strengthen the protection given to information where disclosure would result in an unwarranted invasion of privacy, ha.rm to the public interest in effective law enforcement, or ha.rm to the legitimate commercial interests of private parties who have submitted information to the government, or where the threat of disclosure would harm the public interest in the effective collection of intelligence.

Second, the amendments would preclude the use of tthe Freedom of Information Act as a. means to circumvent discovery rules by pa.rtie.> in litigation.

Third, the amendments would establish realistic time requirements for agencies to respond to requests and decide appeals, while assuring prompt responses to limited reque.:;ts and requests which primarily benefit the gene:-al public.

Fourth, the amendments would establish procedures enabling submitters of confidential commercial or financial information to object to the government's release of such information.

Fifth, the amendments would permit the government to charge requesters fees that more closely reflect the actual costs of the government's search for and review of documents.

Sixth, the amendments w.D'Uld add two new exemptions relating to records generated in legal settlements and technical information the export of which is controlled by law.

In general, the bill sets forth the proposed amendments to the Freedom of Jnforma.tion Act, by topic, in the order in which the affected provisions of the Act appear in current law. This section by section analysis describe3 the proposed amendments in the same order.

II. SECTION 1 OF THE Bll.L-POPULAR NAME

Section 1 of the blll states that the Act may be cited as the "Freedom of Information Improvements Act of 1981". III. SECTION 2 OF THE BILL-PROPOSED AMEND

MENT'"· TO 5 U.S.~. § 552 <al REL.\Til'qG TO THE OBLIGATION TO MAKE RECORDS AVAILABLE

Section 2 of the bill would change the government's obligations under paragraphs (2) and (3) of se-ction 552(a) in five ways: (1) it would relax the requirement tha.t agencies index opinions and orders where those opinions and orders have no precedent!al value; (2) it woUld limit the right to

make requests under the Act for disclosure of government records to "United. States persons"; (3) it would restrict the use of the Act to supplement or circumvent discovery limitations; ( 4) it would free agencies from having to disclose information that is already publicly available; and (5) it would render the Ac·i; inapplicable to law enforcement informant reoords whenever such records a.re specifically requested by third partieu.

A. Final Opinions and Orders of an Agency:

Sootion 2(a.) of the bill contains two proposed amendments to subsection (a) (2) of 5 u.s.c. § 552.

First, para.graph ( 1) of section 2 (a) of the bill would a.mend subsection (a) (2) (A) of the Act to relieve an agency from the requirement that it make available for public inspection and copying all of its fina.l opinions and orders if those opinions and orders have no precedential value. Under current law, an agency is required to index and make ava.11-a.ble for public inspection and copying all final opinions and orders whether or not the opinions and orders are ever used as prece._ dent or have any value to the public.

This requirement can impose very exepnsive indexing burdens on agencies that provide little or no public benefit. For example, in National Prison Project v. Sigler, 390 F. Supp. 789 (D.D.C. 1975), the court held that the decic:ions denying federal prisoners' applications for parole are subject to the requirements of subsecitdon (a) (2). As a result, som3 200,000 of these one-page form le<tteirs -which wt mo3t contiain only routline data rel•a.tdng to the p11isone-r, hls offense .and sentence, but no further eXJp'1anaition of the government's reasoning in denying the application-were colleoted, edited to delete the prisoner.:;' nam~s. p1a.ced in a public reading room, and indexed., a.lthough they had no direct precedentiia.l vialue and could not be meaningfully indexed. See 390 F. Supp. at 791 n.1, 793-94. Ths proposed amendment would ellmina.te the burdell.3o0me and costly requirement thia.t decisions a.nd orders without precedentia.l value be indexed and made availa.ble.1 The few persons who might be interested dn such deoisions stlll could obtain t.h':'l'!ll hv filing: r~aues"s ,!>Ursuant to subsection (a) (3). rather than subsection (a) (2). of the Act. An agency is precluded from relying on, using, or citing as precedent any final opinion or order which is not indexed and ma.de available under subsection (a) (2).

Second, para.graph (2) of section 2(a) of the bill would :i.mend subsection (a) (2) of 5 U.S.C. § 552 to permit an agency to delete identifying deta.lls in published or otherwise publicly available opinions, statements of policy, interpretations, or staff manuals or instructions in order to prevent "an unwarranted invasion of personal privacy." Under -current law, such s. deletion is permitted only to prevent a "clearly unwarranted' 'invasion of privacy. The proposed amendment would permit the agency to decide more readily than under current law to delete identifying details, consistent with the current language of subsection (b) (7) (C) and the proposed amendments to subsection (b) (6) of 5 u.s.c. § 552 in section 7(c) of the bill.

B. Requests for Agency Records: Section 2(b) of the bill redesignates exist

ing paragraph (3) of 5 U.S.C. § 552(a) as paragraph (3) (A), makes several amendments in that provision, and adds new subparagraphs (B) and (C) to paragraph (3).

1. Requests Limited to "United States Persons":

Under current law, an agency ls required to comply with any request for records covered by 5 u.s.c. § 552(a) (3) made by "any person." The proposed amendment in section 2(b) of the bill would require the agency to make information available only to a re-


24530 CONGRESSIONAL RECORD-SENATE October 20, 1981 quester who is a "United States person". Section 9 of the bill would add a. definition of the term "United States person" in a. new subsection (e) (4) of 5 U.S.C. § 552, to include a United States citizen, an a.lien lawfully admitted for permanent residence, and certain corporations and unincorporated associations. The definition of "United States person" follows the definition set forth in section 101 (i) of the Foreign Intelligence Surveillance Act of 1978 (50 U.S.C. § 1801 (i)). with certain exceptions. Restricting the right to make requests to United States persons would reverse the present rule that "any person," including foreign nationals and governments, can use the Freedom of Information Act to secure information.2 This proposed amendment is consistent with the purpose of the Freedom of Information Act to inform the American public of government actions. It would also prevent the use of the Freedom of Information Act by foreign nationals and governments for purposes which may be contrary to the national interest.

2. Freedom of Information Act Not a. Discovery Device:

Section 2 ( b) of the bill would also enact a new subsection (a.) (3) (B) of 5 U.S.C. § 552 to prohibit a. party to a. judicial or adjudicatory administrative proceeding, or any requester acting for such a. party, from using the Freedom of Information Act as a. discovery device in connection with the proceeding. Most government agencies report significant numbers of such requests, whose purpose is to a.void a.ppllca.ble rules of discovery and sometimes, where the government ls a. party, to harass and burden government agencies. The prohibition would apply in either civil or criminal proceedings, whether or not the United States is a. party to the proceeding, whenever a party files or maintains a request relating to the subject matter of that proceeding.

The Supreme Court has recognized that the "FO":A was not intended to function as a private discovery tool." NLRB v. Robbins Tire & Rubber Co., 437 U.S. 214, 212 (1978). Notwithstanding the fa.ct that the Freedom of Information Act was not intended as a discovery device, a. requester.'s rights under present law "a.re neither increased nor decreased" because of his status as a lltigant. NLRB v. Sears, Roebuck & Co., 421 U.S. 132. 143 n.10 ( 1975). As a result, the Freedom of Information Act has been widely used to discover government documents for use in both administrative and judicial proceedings.

In civil cases, parties openly use the Freedom of Information Act to circumvent the judicial discovery requirements that they show a. need for the requested information, that the information ls relevant to the case, and that compliance with the request would not be unreasonably harassing, oppressive or burdensome. See Fed. R. Civ. P. 26. Government attorneys working on a case are forced to divert their attention from preparing the case to complying with a Freedom of Informa tlon Act request filed by a party opponent. The resulting diversion of resources to respond to such requests substantially impairs the government's capacity to prepare and successfully carry forward to a conclusion many of its cases.

Similarly, in criminal cases a defendent seeking discovery information must ordinarily demonstra. te not only the relevance of the information sought, but also that the request is "reasonable" and within the scope of criminal discovery. See Fed R. Crim. P. 16(a.). In addition, a criminal defendant's request for discovery may trigger a government right to reciprocal discovery. Fed. R. Crim. P. 16(b). Criminal defendants have, in practice, however, made frequent use of Freedom of Information Act requests, often close to scheduled trial dates, to disrupt the prosecutor's case preparation or delay

Footnotes at end o! article.

the trial while disputes over the Freedom of Information Act request a.re resolved by the court. Most courts have ruled that the use of the Freedom of Information Act to supplant ordinary criminal discovery is improper.3 However, some courts have ruled that related Freedom of Information Act requests are acceptable during a criminal trial and that the district court should resolve issues respecting such requests in the pending criminal action.' This ab1Ilty to make requests before and during criminal trials disrupts trial proceedings and upsets the discovery scheme established under the Federal Rules of Criminal Procedure. Th!s proposed provision seeks to limit such abuses of the Freedom of Information Act.

3. Statement of Eligib1Uty of Requester: To implement these proposed amendments,

section 2(b) of the bill would also add subsection (a.) (3) (C) to 5 U.S.C. § 552, to permit an agency to rP.quire by regulation that ea.ch request for records under the Freedom of Information Act include declarations that the requester, or any person upon whose behalf the requester acts, is a. United States person and is not barred from making a. request because he is a. party to a. related civil or criminal proceeding. A request that does not comply with any such regulation requirement would not be deemed a. proper re""ue~· und"r +lie Ac~.

c. New Provisions to 5 u.s.c. § 552(a.): Section 2 ( c) of the bill would add two new

paragraphs at the end of 5 U.S.C. § 552(a.). The first new para.graph, para.graph (7), would provide that an a r-ency would not have to produce requested material that consists of newspaper clippings, magazine articles, court records, publications available from the Government Printing Office, or any similar items that are in the public record or otherwise publicly available. If the agency chose not to produce such publlc source information, it would be required to inform the requester of the a.va.1la.b111ty of the information. This provision would make processing of reque3ts more efficient and avoid unnecessary fees to requesters,5 without limiting public access to information.

The second new paragraph, paragraph (8), would provide that § 552 shall not apply to informant records maintained by a. law enforcement agency under an informant's name or personal identifier, whenever access to such records ls sought according to the informant's name or personal identifier by a. third party. This provision would address a. serious problem that has arisen for some law enforcement agencies, particularly for the Federal Bureau of Investigation, when requests have been received for the files of named individuals who a.re or have been confidential sources. Under current law, criminal organizations can use the Act to attempt to uncover suspected informants in their midst, simply by asking for the records of individuals whom they suspect of being informants. In such a case, it ls not sufficient that the Federal Bureau o! Investigation could re.spond that it is withholding the informant's file under exemption (b) (7) (D), since specifying an exemption or even a.cklowledging the existence of records relating to the informant could compromise the source. New para.graph (8) would resolve this problem by excluding the informant files of law enforcement agencies from the ambit of the Act when those records a.re requested by name or personal identifier by a. third party. In this way, the agency could limit its response to any collateral records or, if no such other records existed, properly respond that it has found no records within the scope of the Act. IV. SECTION 3 OF THE BILL-PROPOSED AMEND-

MENTS TO 5 U.S.C. § 552 (.8,) RELATING TO FEES

section 3 (a.) o! the b1ll would make two important changes in subsection (a.) (4) (A) of 5 U.S.C. § 552 relating to the fees charged to requesters o! information !or the coats o!

searching, reviewing, and duplicating requested records. Section 3 (b) of the bill would codify the rule developed by the majority of courts for judicial review of cases where an agency denies a. waiver of reduction o! fees.

A. Recovery of Full Processing Costs: Section 3 (a.) of the bill would provide that

the schedule of fees charged by an agency for responding to a. request may "provide for the pa.ymen~ of all costs reasonably attributable to responding to the request, including the costs of searching for, reviewing, and duplicating requested records." Under current law, the agency may not charge for any costs other than the direct costs of search and duplication.

Clearly one of the unexpected developments from the 1974 amendments to the Act has been the great volume of requests and the expense o! processing those requests, particularly requests which serve only commercial or private interests rather than the interests or the public.

In contrast to Congress' estimate that the 1974 amendments to the Act would cost no more than $40,000 to $100,000 annually to implement, the direct cost of compliance with the Act by all agencies rose to at least $57 million by 1980 (of which only 3 % or 4% was recovered from requesters). Many hundreds o! federal employees--over 300 at the FBI a.Ione-devote all their work time to complying with Freedom of Information Act requests. Countless others spend pa.rt of their time reviewing files in response to requests concerning projects they are working on.

Frequently, the cost to the government of search and review bears little correlation to the public interest in disclosure. It appears that a. majority of all Freedom of Information Act requests a.re filed by or made on behalf of corporations for purely private commercial reasons. In some instances, tndividua.Is too have made excessive use of the Act, at public expense, for reasons that a.re purely persona.I, serve no public interest, and may in some cases even be contrary to the public interest. In one case, a single Freedom o! Information Act requeat 1or voluminous Central Intelligence Agency documents by an ex-agent, Mr. PhlUp Agee, cost the public more than $400,000 to process. Agee v. Central Intelligence Agency, 517 F. Supp. 1335, 1342 n.5 (D.D.C. 1981). The blll is intended to end public financing o! the processing of requests which do not benefit the general public

Accordingly, the b1ll would allow each agency to promulgate a. standard schedule of fees for the recovery of the full costs involved in searching for, reviewing, redacting, and duplicating requested records. This would bring the Act much closer to the general government policy establlshed 1n 31 U.S.C. § 483a, which requires that all agencies providing "publications, reports, documents" or other privileges of value to private parties should charge fees therefor so as to operate on a. self-sustaining basts. This would insure that those who would take advantage of the Freedom o! Information Act mechanism !or purely personal or commercial purposes are not subsidized at taxpayer expense, and would encourage n.ll requesters to make reasonable efforts to narrow excessively broad requests.

The bill would :retain the provision In current law that requires an agency to waive or reduce the fee whenever a request serves the public interest. Such waivers a.re Intended to assure that requesters, such ns representatives of the media and public interest groups, whose work would primarily benefit the general public, would have ready, inexpensive access to government records. In addition, many agencies routinely waive all fees below a. specified minimum. The blll would have no effect upon such practices.

October 20, 1981 CONGRESSIONAL RECORD-SENATE 24531 B. Fees For Valuable Government Infor

mation: Section 3 (a) of the blll also would add a

new provision to 5 U.S.C. § 552 (a) (4) to permit an agency to charge additional or alternative fees for technological or reference information that has a commercial market value and that was generated or acquired by the government at substantial cost to the public. These fees would reflect the fair market value of the information or impose royalties for its u.se by the requester, and would be determined by the agency after taking into account such factors as the estimated commercial value of the information, the cost to the government of acquiring the information, and any public interest served by its disclosure to the requester. The present Act does not take into account the fact that such valuable information must now be turned over to private parties for fees that reflect little more than the cost of copying.e Consistent with existing federal law. such as 31 U.S.C. § 483a, this provision would permit the government to recover the costs of developing or acquiring commercially valuable information.

c. Review of Agency Determinations: Section 3 (b) of the bill would cla.rify the

standard of review of agency determinations on applications for a waiver or reduction of fees. At present, almost all courts follow the rule that an agency's denial of such applications ls an exercise of administrative discretion that may be reversed only when the a.gency action is arbitrary or capricious.1

However, at le'.l.st one court has determined to review such agency action on a de novo basis.s The blll would amend subsection (a) (4) (A) to codify the majority rule permitting an agency to waive or reduce fees "in the exercise of its discretion." V. SECTION 4 OF THE BILL-PROPOSED AMEND

MENT'> TO 5 U.S.C. § 552 (al RELATING TO THE ADMINISTRATIVE RIGHTS OF SUBMITTERS OF

INFORMATION

Section 4(a) of the blll would redesignate existing subparagraph (B) of 5 U.S.C. § 552 (a) (4) as subparagraph (E). and would redesignate subparagraphs (C) through (G) as subparagraphs (J) through (N). respectively. Section 4(b) of the bill would add new paragraphs (B), (C), and (D), which establish procedures creating administrative rights for submitters of proprietary information.

A. Notice to Submitters: Proposed subparagraph (B) would require

agencies to promulgate regulations implementing the procedures that would be established by clauses (i) through (iv) of that subparagraph. Clause (i) would allow an agency to require submitters to designate at the time of submission information which they claimed consisted of trade secrets, commercial or financial information, or other commercially valuable information which is exempt from disclosure under subsection (b) (4). The proposed provision would allow each agency to determine, in accordance with its own practices and the types of information it receives, whether to require such a designation, the manner in which this designation would be made, and the degree of specificity that would be required.

Clause (11) of this subparagraph would provide that, within a reasonable time before the agency made a final decision regarding the release of information consisting of trade secrets, commercial or financial information (other than personal financial information), or other commercially valuable information, the agency would be required to give notice to the submitter that a request for such information had been received.

Under clause (111), the submitter would be allowed to submit written objections to the agency, within ten working days from


the date of the forwarding o! notification, stating all the grounds upon which the submitter contended that the information should not be released. Under clause (iv), the agency would be required to notify the submitter of any final decision to release materials provided by the submitter.

Under new subparagra;.h (C), an agency need not notify the submitter that a request has been made for information provided by the submitter or that the agency has made a final decision to release such information, if the information is not designated as exempt under subsection (b) (4) and such designation is required by agency reglilations.

Notice to the submitter would also not be required if the agency decided to deny the request for disclosure, if a law other than the Freedom of Information Act required disclosure, or if the information had already been lawfully made available to the public.

These amendments would assure that submitters of · trade secrets, commercial or finanical information (other than personal finanical information}, or other commercially valuable information would be notified of a requeat for disclosure of the information. They are intended to relieve the widespread fear among business submitters that the Freedom of Information Act may be used by their competitors to acquire commercially valuable information which they have given the government. Moreover, these provisions would permit a submitter, who is frequently more aware of the commercial value of information than ls the government, to inform the government why the submitter believes the information should not be released. For the3e reasons, these proposed provisions would be beneficial not only to the submitter, but also to the government.

B. Restrictions en Agency Disclosure: Under proposed subsection (a} (4) (D), an

agency could not disclose information exempt from disclosure pursuant to subsection (b) (4) of the Act over the objection of a submitter unless "the failure to disclose the records would injure au overriding public interest and disclosure is not otherwise prohibited by law." The exemption now provided under subsection (b) (4) of the Act does not itself limit an agency's discretion to disclose information. See Chrysler Corp. v. Braum, 441 U.S. 281, 292-94 (1979). Proposed subsection (a) (4) (D} would impose an affirmative limitation on discretionary releases of information exemnted under subsection (b} (4). A decision to release information under this provision would be subject to judicial review under the provisions of proposed subsection (a) (4) (E}.

Proposed subc;ecti::m (a} (4) (D) wol11d not, however. nrovide requesters a cause of action to seek discJo~ure of e"remnted information on the ground of "overriding public interest." Nor would this provision authori7.e disclosure where it is otherwise forbidden by law. VI. SECTION 5 O'F THE BILL-PROPOSED AMEND

MENTS TO 5 U.S.C. § 552 (a) (4) RELATING TO JUDICIAL REVIEW

section 5 of the bill would make several procedural and substantive revisions to the judicial review provisions o! 5 U.S.C. § 552 (a} (4). Section 5(a) of the blll would amend redesignated subsection (a} (4) (E} (currently subsection (a} (4}B)} to include a statute of limitations. Section 5(a} of the bill would also provide for jurisdiction in the district courts for suits by submitters of information to enjoin an agency's disclosure of information.

Section 5(b) would add a se?"ies of rrocedural provisions, subparagraphs (F), (G) and (H), to subsection (a} (4), relating to suits by submitters and by rea_uesters. Section 5 (b} would also add a new subsection (a} (4) (I) that would make several substantive and procedural revisions in the Act's standards !or Judicial review, which are presently con-

tained in the second sentence of subsection (a) (4) (B} of the Act. Finally, section 5(c} of the draft bill would amend the attorney fees provision of redesignated subsection (a} (4) (L} (currently subsection (a} (4) (E)) to allow requesters who substantially prevail to recover attorney fees from a submLtter participating in the litigation. The following paragraphs discuss these proposed changes by topic.

A. Statute of Limitations: The present Act contains no time limit for

a requester to initiate a judicial action after an agency's final denial of a request. The bill would amend redesignated subsection (a) (4) (E) of the Act (currently subsection (a) (4) (B}} to require that suits by requesters must be brought within 90 days of the agency's final administrative action.

The bill would not set a specific limitations period for actions by submitters. However, it would establish, as a prerequisite to district court jurisdiction under proposed sub.sections (a) (4) (E} through (a} (4) (I), that the submitter must file a complaint before the disclosure of the information.

B. Subject Matter Juriodiction: The bill would amend redesignated sub

section (a} (4) (E} of the Act (currently subsection (a) (4) (B)) to vest the district courts with jurisdiction to enjoin an agency from e.ny disclosur1 of trade secrets, commercial or financial information, or other commercially valuable info::mation which was objected to by a submitter under subsection (a) (4) (B) (iii} (or which would have been objected to had the submitter received the required notice from the agency pursuant to subsection (a} ( 4} (B) (ii) ) . Under the amended provision, the submitter may file a complaint at any time prior to the disclosure of the information by the agency.

This provision would create a right of action for submitters within the structure of the Freedom of Information Act. Under present law, submitters have no such right of action under the Freedom of Information Act, but must resort to section 10 of the Administrative Procedure Act, 5 U.S.C. § 706, in order to safeguard confidential business information from disclosure by the government in possible violation of the Trade Secrets Act, 18 U.S.C. § 1905. Chrysler Corp. v. Brown, 441 U.S. 281, 285, 317-18 (1979). The rights of submitters as outlined by the supreme Court in Chrysler are inadequate to protect against the disclosure of material which should properly be kept confidential. For that rel.Son, this bill would establish procedural rights in the F.i·eedom of Information Act itself.

C. Personal Jur.isdiction: Proposed subsection (a} (4) (F) would pro

vide the district courts with pe-rsonal jurisdiction, in any sult filed under the Act, over all reque3ters and submitters of particular information. If a requester filed a complaint to compel disclosure of particular in.formation, the district court in whi·ch the complaint was filed on its own motion would have jurisdiction over any submitter of the information. Similarly, in a suit by a submitter, the court would have jurisdiction over any requester o! the in!ormatton. These proposed provisions would assure that an adverse party receives notice of the complaint, has the right to intervene, and will be bound by the court's decision.

D. Notice of Li·tigation: Proposed subsection ('a} (4) (G} would re

quire agencies to notify requesters and su.bmi tters whenever a suit is brought concerning trade secrets, commercial or financial lnfo':"mation (other than personal financial information), or other commercially vialuable in.ormation fl.led a complaint to compel disclosure, the agency would be required to notify ea.ch submitter of that information that the complaint had been fl.led. Similarly, 1! a submitter filed a complaint to enjoin

24532 CONGRESSIONAL RECORD-SENATE October 20, 1981 dl.&closu:re of such information, the agency would be required to notify each reque.;;ter.

E. Venue: Proposed subsection (a) (4) (H) would pro

vide tha.t a requester who intervenes or is joined in an lliction under the Act maiy move to tran.;;fer the action to a distr·ict court that would 'have had jurisdiction had the action been .brought 'by the 1requester. The coua-t should not deny such .a motion except for good cause shown.

F. Standard for Judicial Review of Exemptions Under 5 U.S.C. § 552(b) (1):

The bill would relocate the second sentence in the existing subsection (a.) (4) (B) of the Act, which sets forth the standards for judicial review of agency denials of requests under the Act, into new subsection (a.) (4) (I). Subsection (a.) (4) (I) would modify the current standard of de novo review where the requested information is withheld by an agency pursuant to exemption (b) (1). In such cases, the court could order disclosure of such classified information only if it finds that the agency decision to withhold the material was arbitrary or capricious. With respect to all other exemptions, however, the bill would not affect the de novo standard of review.

This recommendation change in the applicable standard of judicial review in cases where a.n agency withholds information pursuant to exemption (b) (1) reflects the particularly sensitive nature of documents relating to national security and foreign policy and the need to give substantial deference to an agency's classification decisions. In the Conference Report on the 1974 amendments to the Act, Congress ma.de clear that even with a de novo standard of review, the court should give "substantial weight" to an agency's explanation of its classification actions.10 In construing the Act's present provisions for de novo review of national security exemptions under exemption (b) (1), the United States Court of Appeals for the District of Columbia Circuit has noted that " [ f] ew judges ha. ve the sklll or experience to weigh the re~ercussions of disclosure of intelligence information,'' 11 and that "this ts precisely the sort of situation where Congress intended the reviewing courts to respect the expertise of an agency." 12

Indeed, that same court has determined that summary judgment on the basis o! the agency's amdavit a.lone should be granted in cases involving classified lnform~tion where the aftldavit shows merely the "plausibUlty" of the alleged harm of disclosure in a "re3.Sonably detailed manner." 1a While the Act provides that a reviewing court may, in cases where it ls necessary and appropriate, review such documents in camera to evalUJa.te the agency's classification decision, the court should not be called upon, in effect, to make the initial cla.ssi.'.:cation decision. A change to the traditional Administrative Procedure Act standard of review for arbitrary or capricious action from the present de novo standard would be more consistent with the courts' need to give "substantial weight" to an agency's "expertise".

O. Burden of Proof Upon Submitters: Proposed subsection (a) (4) (I) of the Act

would also provide that in judicial proceedings seeking to prevent the agency from disclosing information, the submitter bears the burden of demonstrating that such information should not be disclosed.

H. Additional Procedural Changes In Suits Under the Freedom of Information Act:

Section 5(b) of the bill would also provide, in proposed subsection (a) (4) (T) of the .Act, two procedural rules for 11t1gat1on under the Act.

First, this revision would contain new language to clarify the requirement that the court maintain under seal the records and


affidavits submitted in camera to the court in support of an exemption from disclosure.

In camera review of confidential documents or explanatory affidavits may be appropriate in particular cases where the court determines that it cannot discharge its reviewing function based on information in the public record.u However, because in camera affidavits explain the signlflcance of the disputed documents and put them into a broader context, the aftldavits submitted by agencies are frequently as sensitive or even more sensitive than the records thP,mselves. Without the assurance that such amdavits will not be disclosed, the agency may be faced with a serious dilemma in attempting to justify a withholding. The agency may risk summary judgment against it if it does not provide the court with confidential information .1ustifying its position, yet risk greater disclosure of confidential information in the course of providing the court with an oxplanation justifying the withholding. Although almost all courts have respected the confidentiality of materials submitted in camera, there have been a few instances when this has not been done.15 This ai,.· ··nun.ent would provide tha.t all materials submitted in camera would be maintaintd under seal.

Second, proposed subsection (a) (4) (I) would require the court to stay any order to release records pursuant to the Freedom of Information Act pending flna.1 determination of n.ny appeal. Because disclosure of disputed documents prior to the decision on appeal would effectively moot the government's position, a provision that would provide for the stay of such disclosure orders is essential to preserve the Government's rights of appeal. See Providence JoU?nal co. v. Federal Bureau of Investigation. fi95 F.2d 889 (1st Cir. 1979) .1e The a.mended provision would make the stay mandatory, not discretionary as under present law.

I. Attorney Fees: Under present law, subsection (a) (4) (E)

authorizes a court, in its discretion, to allow attorney fees and other litigation costs in favor of a requester who "substantially prevails" in litigation with the government. Section 5(c) of the bill would change the language of subsection (a.) (4) (E) (which is redeslgna.ted as subsection (a) (4) (L) by section 4(a) of the b111) to provide for the a.ward of attorney fees against submitters. The current Act only a.nows the assessment of attorney fees against the United States. However, in actions where both a submitter and a requester are parties, the government might be a. relatively disinterested stakeholder involved in the litigation only because the disputed information is in its possession. In such cases, this provision would allow the court to charge the costs and attorney fees of a requester who substantially prevails against a submitter rather than against the United States. As under present law, the provision would authorize the a.ward of attorney fees only in favor of requesters who substantially prevail, and even then the award would be discretionary. VII. SECTION 6 OF THE BILL-PROPOSED AMEND

MENTS TO 5 U .S.C. § 55218.l (6) RELATING TO

THE TIME FOR AGENCY RESPONSE TO REQUESTS

Section 6 of the bill would revise the pro-visions of section 552(a) (6) of the Act that relate to time limits to make time limits more realistic and to provide for prompt response in those cases where expedited processing 1s necessary to serve the public interest.

A. Existing Time Liml ts for Agency Response to Requests:

The Act currently provides that within ten working days an agency must make an initial determination whether to disclose the reouested documents and, lf the decision ls made not to disclose the requested documents, to notify the requester of the rea-

sons why documents are exempt. The agency thereafter has twenty working days to determine a requester's appeal of an adverse decision.

Upon notice to a requester, an agency may extend these 'time limits for ten days in "unusual circumstances", such as where there ls a need for additional time to search for and collect the documents from distant offices, to examine a voluminous amount of records, or to consult other agencies on the records. If an agency fails to comply with these deadlines, the requester is deemed to have exhausted his administrative remedies and may file a suit in district court to compel disclosure. Section 552(a.) (6) (C), nevertheless, permits the court to allow, in "exceptional circumstances", additional time for agency processing, provided that the agency is exercising "due d111gence".

The complexity and sheer volume of the requests received by many agencies often render compliance with the current time limit~ impossible. Recognizing the inherent inab111ty of many agencies to process requests within the specified time limits, many courts have freed agencies of the need to comply with time limits by resorting to use of the "exceptional circumstances" and "due d111gence" provisions in section 552(a) (6) (C). In the leading case, Open America v. Watergate Special Prosecution Force, 547 F. 2d 605, 616 ( 1976), the United States Court of Appeals for the District of Columbia Circuit ruled that-

.. 'Exceptional circumstances exist' when an agency, like the FBI here, is deluged with a volume of requests for information vastly in excess of that anticipated by Congress, when the existing resources are inadequate to deal with the volume of such requests within the time limits ot subsection (6) (A), and when the agency can show that it 'ls exercising due d111gence' in processing the requests." 17

Accordingly, the court ruled that, under those circumstances, the Act's time limits "become not mandatory but directory." Id. It is then sufficient for the agency to process all requests on a first-in, first-out basis, unless the requester can demonstrate to a court "exce'ltional need or urgency" for preferential treatment. Id.

The time limits in their present form cause serious problems both for the agencies and for the requesters. Agencies a.re frequently pressed to engage in ha.sty processing, which increases the likelihood of premature denials, unnecessary litigation, and serious errors. For requesters, the inab111ty of many agencies to meet the rigid deadlines of the Act may often lead to a. general dissa tisfa.ction with the Act's operation as well as needless litigation. Moreover, the present "first-in, first-out" system prevents agencies that have a backlog of requests from responding promptly even to small Freedom of Jnformation Act requests when their processing is congested, unless the requester can demonstrate "exceptional need or urgency." Members of the public and the news media are often unable to get timely responses from agencies that receive a large volume of requests.

B. Proposed New Time Limits for Agency Response to Requests:

Section 6 of the bill would amend subsection (a) (6) of the Act to create a more flexible system that would permit each agency to consider the amount of work required by a reqiiest.

1. Limited Requests: Proposed subsection (a) (6) (A) would facilltate prompt processing of limited requests. The existing ten and twenty-day time limits would continue to r..oulv t-0 a11 requestis "which a.re sumciently identified and limited" so rth&t no more than eight working hours of search and review time are required to respond to a request, and which do not request disclosure of records that contain trade secrets,


commercial or financial informati~~· or other commercially valuable information provided by a submitter. The latter limitation on expedited processing is necessary to give the agency time to provide the notice to the submitter re:iuired under proposed section 552(a) (4) (B) (11) and to receive any objections to disclosure the submitter may have.

Section 6 (a) of the bill would also make a technical change in subsection (a) (6) (A) to conform to the new definition of "working days" in amended subsection (e) (5). No change in the manner of calculating the time periods is intended.

2. Other Requests: Section 6(b) of the bill would make important revisions to the time limits and the scope of existing 5 U.S.C. § 552 (a) (6) (B). Under existing law, subsection (a) (6) (B) allows an agency an additional ten days beyond the mandated ten-day limit for responses only where there are specified "unusual circumstances" relating to the volume of records searched, the need to acquire records from field offices, and the need to consult with other agencies or components of the same agency. Under the proposed revision to subsection (a) (6) (B), each agency would be allowed up to 30 working days to determine whether to comply with requests for records that would require more than eight hours to process or which seek trade secrets, commercial or flnancial information, or other commorcially valuable information. If the agency were unable to complete the processing within 30 days, it would have to notify the requester of the length of time it would take to process the request. Similarly •. the agency would, in such cases, have 30 days in which to determine appeals or notify a requester how long it would take to determine the appeal. An agency's deadlines for compliance must be as short as practicable, but in no event longer than one year for processing a request or six months for determining an appeal.

Section 6(c) of the b111 would redesignate existing subsection (a) (6) (C) as subsection (a) (6) (E). New paragraph (6) (C) of section 552(a), added by section 6(d) of the b111, would direct each agency to promulgate regulations, after notice and opportunity for public comment, setting forth time periods for processing requests and appeals. Proposed paragraph (6) (C) lists a number of factors to be considered, including those contained in existing subsection (a) (6) (B) as wen as those suggested by the court in Open America v. Watergate Special Prosecution Force, 547 F.2d 605, 616 (D.C. Cir. 1976). The agency would consider, among other factors, the volume of requests and appeals received by the agency, the resources available to the agency for processing the requests end appeals, the volume of records required to be searched, the nature of the records requested, and, where appropriate, the need to give submitters an opportunity to object.

c. Expedited Access to Records: Section 6(d) of the b111 would also add

subsection (a) (6) (D) to the Act. This new provision would require each agency to promulgate regulations whereby a requester who can demonstrate a compelling need for expedited processing and whose request will primarily benefit the general public may be given processing priority over other requesters.

Because of the lengthy periods of time often required to respond to requests, the Act is sometimes virtually useless to certain recuesters, such as the current event media, who require a timely response. Existing law does not permit an expedited response to requesters unless they can satisfy the "exceptional urgency" test established in Open America, supra. This provision would allow an agency to give requesters such as the current events media processing priority in order to make the Act a more useful device for

the dissemination of information to the public.

D. Other Amendments Relaiting to rthe Time for Agency Response to Requests:

Seotion 6 ( e) of the bill would make three procedural amendments to the redesignated subsection (a) (6) (E) (currently subsection (a) (6) (C) ).

Section 6 ( e) ( 1) of the bill would make a teohnical change to conform the langua.ge of the paragraph to the new defirution of "re:iuester" in new subsection (e) (3), a.s added. by section 9 of the bill. This is not a substantive change.

Seotion 6(a) (2) of the b111 would add a sentence to redesignated subsection (a) (6) (E) of the Act to make clear that a submitter of information is deemed to have exhausted his administrative remedies if the requester files a complaint in the district court pursuant to redesignated subsection (a) (4) (E) of the Act. The submitter would be able to intervene in the requester's civil action pursuant to the provisions of proposed 5 U.S.C. § 552(a) (4) (F) (i) (section 5(b) of the bill) without awaiting further aigency action, even if the agency had not yet ma.de a fin.al decision t-0 release the submi·tter's information ..

Section 6(e) (3) of the bUl would amend the next to last sentence of redesignated subsection (a) (6) (E), which requires the agency to make records available to a requester promptly upon a determination ·to comply with his request. Section 6(e) (3) of the bill would provide an exception to this requirement if a submitter made an objection pursuant to proposed subsection (a) (4) (B) (111), as added by the bill . If such an objection is· made, the agency would have to delay disclosure of the records for fifteen working days in order to allow the submitter to seek injunctive relief against disclosure pursuanrt; ·to proposed subsection (a) (4) (E). VIII. SECTION 7 OF THE BILL-PROPOSED AMEND-

MENTS TO 5 U.S.C. § 552 Cb> RELATING TO EXEMPTIONS

Section 7 of the bill would make a number of important revisions and additions to the exemption provisions of 5 U.S.C. § 552(b).

A. Internal Agency Rules and Practices: Section 7 (a) of the bill would add two new

subparagraphs to 5 U.S.C. § 552(b) (2). Proposed subparagraph (A) of exemption (b) (2) would make clear that materials whose confidentiality is necessary to e!fective law enforcement and other vital government functions are exempt from disclosure. Such materials include manuals and instructions to investigators, inspectors, auditors and negotiators. Although materials of this nature are arguably protected under present law, the confusion engendered by judicial attempts to reconcile purported inconsistencies in the legislative history make the extent of '.:he protection afforded by exemption (b) (2) uncertain.18

The legislative history of exemption (b) (2) has proved confusing to the courts that have been called upon to interpret it. The Senate committee report on the exemption stated that it related only to internal personnel rules and practices of an agency, such as the agency's rules about its employees' use of parlcing facilities or its policies concerning sick leave.1° The House committee report, on the other hand, indicated that the exemption should protect from disclosure the operating rules, guidelines and manuals of procedure for government investigators or examiners.20 Adding to this confusion is the fact that the legislative history of a related provision of the Act, subsection (a) (2) (C) (which requires .an agency to make available to the public "administrative" staff manuals and instructions to staff that affect a member of the public) indicates that Congress intended only for staff manuals of a purely routine, administrative nature to be dis-


closed. Both the Senate and the House committee reports on the Freedom of Information Act stated that manuals containing instructions to law enforcement personnel or setting forth guidelines for auditing and inspection procedures should not be disclosed.21

The difficulty courts have encountered in reconc111ng this confiicting legislative history has produced a body of conflicting case law concerning the scope and meaning of the present exemption (b) (2) for law enforcement manuals.!?!l Similarly, courts are divided concerning the protection exemp·tion (b) (2) presently affords guidelines for audits and investigations.23

The proposed amendment would expressly protect confidential information in manuals and instructions to investigators, inspectors, auditors, and negotiators from disclosure. This change would also complement the amendment to section (b) (7) (E) relating to guidelines or priorities for law enforcement investigations or prosecutions.

Negotiators are included in this list in recognition of the fact that the government has a legitimate need to maintain the confidentiality of its instructions to staff in contexts other than law enforcement. Thus, the term "negotiators" is not limited to law enforcement personnel who are called upon to negotiate the settlement of pending and impending litigation, but applies as well to agency staff who conduct negotiattons for the procurement of goods and services, the acquisition of lands, the resolution of labo'!"management disputes, the release of hostages, or any other negotiations conducted in the course of carrying out a legitimate government function where the release of such instructions or manuals may jeopardize the success of the negotiations.

Proposed subparagraph {B) ts added to exemption (b) (2) to exempt testing or examination materials used to determine indivi1t.~ ual qualifications for employm~nt, promotion, and licensing. This amendment ts Intended to protect from disclosure material that would compromise the objectivity of fairn ~ss of the testing, examination or licensing process within various agencies. Such a provision exists now in 1.he Privacy Act of 1974, 5 u.s.c. § 552a(k) (6), and inclusion of this paragraph in the Freedom of Information Act would promote consistency between the two statutes.

B. Commercially Valuable Information: Section 7 ( b) of the bill would revise ex

emption (b) (4) of the Freedom of Information Act, which currently exempts from disclosure "trade secrets and commercial or financial information obtained from a person and privileged or confidential."

The prevailing interpretation of the scope and meaning of exemption (b) (4) was stated by the court in National Parks and Conservation Association v. Morton, 498 F.2d 765, 770 (D.C. Cir. 1974), which held that commercial or financial information is considered "confidential" and is exempt only if ( 1) its release is likely to "impair the Government's ability to obtain necessary information in the future," or (2) its disclosure is likely to "cause substantial harm to the competitive position of the person from whom the information was obtained." The National Parks test has been widely accepted, although it appears to narrow significantly the scope of subsection (b) (4) originally intended by Congress.2• The proposed amendment to exemption (bl (4) would substitute for the term "confidential" criteria defining this term formulated in National Parks, but would cast these criteria in somewhat broader terms in order to conform the exemption more closely to tre original intent of Congress. The amendment would exempt all trade secrets, and would exempt other lnforma tion obtained from a person if it ts pri vlleged or if release "may impair either

24534 CONGRESSIONAL RECORD-SENATE October 20, 1981 the legitimate competitive, financial, or business interests of any person or the government's ability to obtain such information in the future."

This revise.i standard does not protect all business submissions, but would greatly alleviate the widespr<iad fear among business submitters th::i.t the ~overnment cannot maintain the confidentiality of sensitive busdness information. 1't would require a determination on ly th a.t relea.::e m a.y impair the legitimate commercial or fi. !.1ancial interests of a person, rather than a finding that disclosure is likely to cau~e "su'.:>sta.ntial competitive harm" to the submitter, as required under the National Parks te.st. This amendment would make processing of requests simpler by providi ng a broader and more easily administered standard. It would also greatly relieve the overwhelming burden imposed on the government information system by commercial requesters who believe that the Act can, under present standards, be successfully used as a means of obtaining valuable i nformation about competitors.

Section 7 ( b) of the bill would also amend exemption (b) (4) to provide expressly that the exemption ap::>lies to "any person" and that "fi ::i.ancial" interests as well a.s "competitive" and "business" interests, are pr·otected by the e :~emption. This proposed amendment would also extend the protection of exemption (b) (4) which is enjoyed by profit-making f rms to non-profit submitters. such as universities, hospitals, and scientific researchers. It would overturn the decist.:::n i n Washington Research Project, Inc. v. Department of Health, Education & Welfare, 366 F. Supp. 929 (D.D.C. 1973), aff'd in part and rev'd in part, c04 F.2d 239 (D.C. Cir. 1974). cert. denied, 421U.S.963 (1975), which held that the exemption currently does not protect valuable information submitted by a non-profit organization.

The bill, in addition, would add "other commercially valuable information" to the categories of information encompassed by the exemption. This amendment would assure the pr.?tection of any i ".lformation that is commercially valuable, whether or not it consists of trade secrets o·r commercial or finan- . cial information concer !'.ling the submitter. Thus, for instance, copyrighted materials submitted to the government would be protected from disclosure where this may impair the financial interests of the submitter, regardle3s of its subject matter. Under current law such materials may not be protected.23

These revisions to exemption (b) (4), togetiher with the procedural rights for submitters allowed in the proposed amendments to 5 U.S.C. § 552 (a) ( 4), would considerably stren~then the protection a~ainst disclmure of commercially valuable, information and procurement activities.

C. Personal Information: Section 7(c) of the bill would significantly

revise 5 U.S.C. § 552 (b) (6), which currently protects from disclosure "personnel and medical files and similar files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy." First, the amendment would eliminate the thresh~ old requirement that the information be of the type contained in "personnel and medical files and similar files" and apply the e~~emption to the broader category of "records or information concerning individuals." Second, the proposed amendment would broaden the "clearly unwarranted invasion of personal privacy" standard by eliminating the modifier "clearly." Third. the proposed emendment would protect from disclosure lists of names that c:mld be used for commercial solicitation.

The proposed amendment of the threshold language, which would apply the exemption to all "records of information concerning individuals," is intended to overrule decisions


that have construed with excessive narrowness the term "similar files." Until recently, the courts construed the term "similar files" broadly to protect all legitimate privacy interests regardless of the nature of the record.za Certain recent decisions have, however, determined that the current exemption in subsection (b) (6) is not applicable, even where disclosure would cause a "clearly unwarranted invasion of privacy," .unless the information is also "similar" to medical or pers:mnel files because it ls "as highly personal or as intimate in nature--as that at stake in personnel and medical records." 27

Under this construction of the exemption, a court would not even consider the fundamental question of whether disclosure would cause a clearly unwarranted invasion of privacy unless it first determines that the information is of a type "similar" to medical or personnel files.

This narrow interpretation has resulted in decisions to disclose information concerning individuals that c::mld cause substantial harm to these indlvi:iuals and whose dissemination clearly violates legitimate privacy interes :s. See, eg., Simpson v. Vance, 648 F.2d 10 (D.C. Cir. 198')) (requiring disclosure of nemes and biographies of foreign service per.oonnel); Washington Post Co. v. Department of State, 64 7 F.2d 197 (D.C. Cir. 1981) (per curiam), petition for cert. filed, No. 81-535 (Sept. 15, 1981) (requiring disclosure of information concerning the suspected United States citizenship of :rranian nat ion-::ls residing in ·ran). The proposed amendment would enable the protection of all personal pri ·1z.cy interests, regardless of the nature of the record at issue.

The proposal would also amend the substantive standard of (b) (6) to allow exemption when disclosure would cause, simply, "an unwarranted invasion of privacy," rather than "a clearly unwarranted invasion of privacy" as provided by present law. To determine whether disclosure causes an "unwarranted" invasion of privacy under the current exemption, the court must weigh the invasion of privacy interests against the public interests in disclosure. The word "clearly" has been construed as an instruction to th9 court to "tilt the balance in favor of disclosure." Getman v. NLRB, 450 F .2d 670, 674 (D.C. Cir. 1971). Indeed, the word "clearly" in this exemption has been construed at times as "an imposing barrier to nondisclosure" and as evidence that Congress has weighted the balance "heavily in favor of disclosure." Kurzon v. Devartment of Health & Human Services, 649 F.2d 65, 67 (1st Cir. 1981).

Deletion of the word "clearly" would enable a more even-handed balancing and a more effective protection of privacy interests. This would conform exemption (b) (6) to exemption (b) (7) (C), which provides "a somewhat broader shield against disclosure than Exemption 6." Congressional News Syndicate v. Deryartment of Justice, 438 F. Supp. 538, 541 (D.D.C. 1977); see Department of Air Force v. Rose, 425 U.S. 352, 379 n.16 ( 1976). This change is necessary also to assure the protection of privacy which Congress sought to achieve through the Privacy Act of 1974, 5 U.S.C. § 552a. Absent clear and broad protection of privacy in the Freedom of Information Act, the extensive and well-considered protection of personal information which Congress sought to achieve through the Privacy Act is rendered wholly ineffective.

The amendment would, in addition, specifically exempt "com?ilations of lists of names and addresses that could be used for solicitation purposes.'' The government currently receives many thousands of requests every year for mailing lists for commercial solicitation purposes. Some decisions have found that such mailing lists may not be withheld under current exemption (b) (6). See, e.g., National Western Insurance Co. v. United States, 512 F. Supp. 454 (N.D. Tex.

1980); Disabled Officers Association v. Rumsfeld, 428 F. Supp. 454 (D.D.C. 1977). The amendment would make the disclosure of solicitation mailing lists per se an unwarranted invasion of privacy. As the court found in Wine Hobby USA, Inc. v. Internal Re"Z?enue Service, 502 F.2d 133, 137 (3rd Cir. 1974), there is no public interest in the disclosure of names for commercial solici ta.ti on-such disclosure is "wholly unrelated to the purposes behind the Freedom of Information Act and was never contemplated by Congress in enacting the Act."

Exemption of such lists is also fully consistent with 5 U.S.C. § 552a(n) of the Privacy Act and necessary to make that provision fully effective. Congress expressly mandated in that provision that "(a.Jn individual's name and address may not be sold or rented by an agency unless such action is specifically authorized by law." The Senate Committee Report on the Priva.cy Act stated that the disclosure of mailing lists by the Federal Government is "totally inconsistent with the purposes of the bill." 28

D. Law Enforcement Information: Section 7 ( d) of the bill would make a series

of amendments to exemption (b) (7) of the FTeedom of Information Act which, under certain circumstances, exempts investigatory records compiled for l&w enforcement purposes. The proposed amendments are designed to address three major concerns that have arisen from the present language of exemption (b) (7): (1) the fear among informants and other confidential sources that ~heir identities will be revealed through Freedom of Inform::i.tion Act disclosure.s, and the resulting difficulties that law enforcement authorities have encountered in enlisting and using confidential sources; (2) the concern that sensitive law enforcement information will be disclosed to law enforcement suspects by Freedom of Information Act disclOBures, thereby hampering law enforcement activities; and (3) the concern that Freedom of Information Act disclosur~s wm reveal lnw enforcement guidelines and priorities to law enforcement suspects.

1. General Scope of Exemption: Under present law, records arc eligible for

exemption from the Act under subsection (b) (7) only if they are "investigatory records compiled for law enforcement purposes: · Some courts have read this threshold requirement strictly, holding that law enforcement records are not within the scope of exemption (b) (7) if they are not "investigatory" in m.ture.29 Section 7(d) (1) of the bill wouJ.d broaden the scope of exemption (b) (7) by eliminating the requirement that records must be "inventigatory" and apply exemption (b) (7) generally to all "records or information" compiled for law enforcement purposes. This language would make additional categories of documents besides "investigatory records" eligible for exemption under (b) (7), such as varloi:s types of background information, law enforcement manuals, procedures and guidelines, and statements of law enforcement prioritien. This more general threshold language also would properly focus the inquiry not on the nature of the records but on the substantive law enforcement interests which exemption (b) (7) was intended to protect.

2. Interference With Law Enforcement: Section 7(d) (2) (A) of the blll would

e.mend subparagraph (A) of exemption (b) (7) to provide a cle:>.r rule that investigatory information relating to ongoing investigations or enforcement proceedings is exempt. At present, subsection (b) (7) (A) protects records from disclos<.ll'e where disclo.sure would "interfere with enforcement proceedings." This language was adopted by Congress in 1974 to overrule a series of cases that had held that law enforcement records enjoyed virtually blanket protection from disclosura, even after the terir-1nat1on of the underlying investigation or enforcement proceeding. See NLRB v. Robbins Tire & Rubber co., 437'U.a.


214-, 228.-30 (1978). Nevertheless, Congress dld not intend a.t the time of the 1974 Amendments to the Freedom of Information Act to permit premature disclosure of investigative information or to allow the targets of law enforcement investigations to use the Act to ha.rass and obstruct an investigation. Id. nt 236.

At present, however, subsection (b) (7) (A) does. not clearly protect ·all information perte.in!ng to pendin5 in•: es~igat!o:: s. The present s:a:1dard hus engendered some uncertainty by apparently requiring agencies and courts alike to soecula.te whether or not disclosure would :.interfere with" a pending proceeding. Res9onding to requests under the current (7) (A) exemption can result in severe disruption of enforcement proceedings, since agencies hn-ve frequently been required to create lengthy and detailed a.md·avits (required under the ru~e of Vattghn v. Rosen, 484 F .2d 820 (D.C. Cir. 1973)) to justify the d4'ltermination that disclosure would "in:er!ere wi7h" an ongoing investigation or proceeding.so

The bill would a.dc!ress these concerns by eliminating the req1:irement that disclosure must "in':erfere with" a pendi:lg investigation or proceeding and by imposing, in its place, a standnrd that would permit an agency to withhold records from disclosure whenever disclosure wou1d "reveal investignt-0ry information relating to an ongoing in,•estignt.ion or enforcement proceeding."

As amended, subsection (b) (7) (A) would provide clear protection for s':!nsitive law enforcement inves7igat ory information by simply exempting such information from disclosure while en inYest kation or enforcement proceeding wr.s ori~oing. This new standard would he consistent with recent judicial constr11ction of the current exemption (7) (A)-"[llower courts have consistently held thn.t.' the f!Overnment can meet its burden by demonstrating penClency of an ongoing lnves~l!!ation and that th':l withheld info:-mntlo".1 wns clearly re1ated to it." Campbell v. Department of Health & Human Services, 518 F . SU!)p. 1114, 1115 (D.D.C. 1981) .:n While the nronosed nmendment of exemption (7) (A) wou'd not, in lt~ht of such case l!lw, s!p.-nifi~a.ntl:v modify the a.vailnb1Uty of 1nves~ip:at.ive records. it. would mnke clear that the ~ove'l"nmen+; could meet its burden of !'roof through reneric Vaughn affid·avtts. This would p:reat1y alleviate the administrntive hurdcr.s that cr.n curri:-ntly be imposed on ngenc!es by reques~s for information concernln!? on'!oln~ inv!'stiq:atlons. Consistent with the intent of Congress in enact!n~ t!'le 1971: emenrlmen+s to exemntion (b) <7). 1nvestt-atory ma+erlal would not, howe·:er. be ex~mp+ed under the propos~d s~~bsect.ion fb) (7) (A) after the inves':icration or enforcement proceeding is concluded.

3. Confidential Source Information: Section 7(d) (3) of the bill would make a

series of imuortant changes to subp·ara.!7,raoh (D) of exemption (b) (7). These proposed chs.m;rns a.re intended to clarify and strengthen existing exemptions to make clear that the Act· does not require the disclosure of information that would comoromise a confidential source that nrovided.informa.tton or ass!stance to agencies or law enforcement authorities.

Exemption (b) (7) <D) presently protects information from disc1osure that "would . .. disclose the ioentitv of a co'."lfidential so~rce." The pro"'losect amendment would broad~n this exemption to in~lude informat!on t-hat would "tend to" d1s~lose the identity of a source. This broadenin~ oft.he provision is necessary because the release of in!o~ma+ion t.hat does not itself ide"ltlfv an informant can. in some r.lrcumstances. result in such iden+!ficg,tion. When viewed in context with other information known to a re-


quester, pieces of information obtained through the Act that do not appear revealing on their face may enable a. requester to surmise the identity of an informant.

Exemption of information not only where disclosure "would" identify an informant, but also where it would "tend to" do so is generally consistent with the construction or the exemption sug-gested in the current cas& la.w .32 l\Ioreo•1er, this change· would conform the terms of the exemption more closely to the original intent of Congress. The author of the exemption, Senator Ha.rt, stated. plainly that: "[t)he amendment protects without exception and without limitation the identitity of the in!orme::-s. It protects both the identity of the informer and information which mic;ht reasonably be found to lead to such disclosure." 120 Cong. Rec. 17,034 (1974).

Section 7(d) (3) of the b111 would also amend the langt!age of subparagraph (D) to identify more clearly the range of entities that may be considered "confidential sources." Under present law, there has been uncertainty whether foreign governments a::id state and local governments or agencies can properly be deemed "sources".33 Similarly, questions have been raised concerning the applicability of the term "confidential sources" to businesses and other private institutions.3' The majority of courts, nonetheless, have held that foreign, state, and local governments and agencies, as well as private businesses, may be "confidential sources" within the meaning of subpnragraph (D) o! exemption (b) (7) .36 The bill's amendments to subparagraph (D) would ccnfirm this majority rule and would provide a clear statement on the face o! the statute that institutional informants are included among tl1ei confidential so :.~rces protected by the Act, thereby alleviating the concern among some of these institutions that law enforcement information they provide the federal government may be subject to release.

Finally, section 7(d) (3) of the blll would grant g·reater protection to the information furnished to criminal law enforcement authorities by confidential sources. Currently, snbpnragraph (D) permits the government to withhold from disclosure "confidential information" furnished "only by a confidential source" ln the course o! a criminal investigation. These chanr;:es would make lt clear that all information provldecl by a confidential source is exempt, by eliminating qualifying terms that create confusion and ambiguity with respect to the scope of the exemption. The present terms of the Act would appear, if read literally, to suggest that "non-conB.dential" information provided by an informant ls not exempt. This ls, however, contrary to the apparent intent of Congress.30

Indeed, any attempt to segregate "confidential" from non-confidential information received from an informant would be impossible since informants could be identified from even very circumstantial information that might appear on its face to be non-confidential.

The appare:it requirement that information must be furnished "only" by a confidential source to be exempt would also be ellminated by the bill to prevent the confusion which can result from a res~rl::tlve reading of the current exemption. For instance, the lower court in Radowich v. United States Attorney, 501 F. Supp. 284, 288 (D. Md. 1980), determined that the exemption was not applicable unless the information was available "only" from a confidential source and not available from another source. This was properly reversed by the court of appeals, which found no such congressional intent to restrict the exemption. Radowich v. United States Attorney, No. 81-1068 (4th Cir. Sept. -i, 1931). The proposed amendment would make clear that all information provided by a confidential source is exempt, regardless o! whether it might also have been obtainecl from another source.

4. Disclosure of Law Enforcement Techniques:

Section 7(d) (3) of the blll would also a.mend subsection (b) (7) (E) to grant bros.der protection from disclosure to records containing law enforcement guidelines and priorities. At pre.sent, subparagraph (E) protects from disclosure only those records that would disclose "investigative techniques and procedures." This language has proven insufficient to protect a broad range of sensit~ve law enforcement materials from dlsclosure.37

The blll would expand exemption (b) (7) (E) to protect expressly "guidelines, or priorities for law enforcement investigations or prosecutions," in nddition to "techniques" and "procedures". This change, together with the new threshold language !or subsection (b) (7) (which eliminates the requirement that exemption (b) (7) applies only to "investigatory records"), would expand the scope of subparagraph (E) to apply to any information revealing techniques, procedures, guidelines or priorities !or law enforcement purposes, and not simply to such records disclosing techniques and procedures compiled in the course of an lnYestigation.:11; It should be noted that tho revision of subsection (b) (7) (E) ls complemented by the proposed amendments to exemption (b) (2), which would exempt all "manuals and instructions" to investigators an:! others from disclosure.

5. Endangerment of Life or Physical Sn!ety:

Section 7(d) (3) of the bUl also would expand subparagrnph (F) of exemption (b) (7). Paragraph (F) now authorizes the withholding of records where disclosure would endanger the life or physical safety of law enforcement personnel. The blll would replace the words "law enforcement personnel" with the words "natural person", thus e:<tendlng exemption (b) (7) (F) to include such persons as witnesses and potential witnesses whose personal safety ls of central importance to the law enforcement process.

6. Disclosure of Information Relating to Terrorism, Organized Crime, or Foreign Counterintelligence Investigations:

Section 7 ( d) ( 4) of the bill would add a new subparagraph (G) to exemption (b) (7) that would enable the Attorney General to e:rnmi)t by regulation or order information relatin~ to investiga.tlons of terrorism, organized crime or !oreiGn counterintelligence. A-number of law .enforcement agencies have found that organized criminal elements, hostile foreign government intelllgence agenc!es, and extremist political groups have attempted to use the Freedom of Information Act to uncover government informants iu their midst or to dls~over information concerning government inJ;.estigations. Such organizations have the incentive and the resources to use the Act systematically to gather, analyze, and piece together se3rega ted pieces of information obtained from government files. The current application of the Act to such files necessarily presents a si-::nific~.nt risk of innd<ertant or unknowing -disclosure of extre:nely h::i.rmful information. Indeed, acknowledgement of the very existence or non-existence of records relating to particular investigatory activities or designated individuals can provide valuable information to criminal org:mi::;ations and harm law enforcement and national security interests. The t.m would permit the Attorney General to e,...empt from the Act in;restigations of orGanized crime, foreign counterintelligence and terrorism.

Those categories of organized crime, foreign counterintelligence and terroism lnvestige.tions to be exempted and the periods of time for which they would be exempted would be defined by regulations or orders promulgated by the Attorney General. Thi• procedure would allow t~e Attorney General


to continue to permit access to such files, for example those of a historical nature, where disclosure would not endanger per3onal sa1ety or impair law enforcement. The Attorney Genera.l's authority to exempt such record3 would extend not only to the law enforcement compc.nents of the Department ot Justice, but also to other government law enforcement agencies.

E. New exemptions in 5 U.S.C. § 552(b): Sections 7(e) througil. (g) of the blll

would add two new exemptions to 5 U.S.C. § 552(b). Sections 7(e) and (f) are technical in nature. Section 7(g) would add the new exemptions, which relate to lnfo::-matlon generated in connection with the settlement of a legal a.cUon and to technical data the export of which ls controlled by the federal government.

1. Information Relating to Legal Settlements:

Proposed exemption (b) ( 10) would exempt from disclooure records generated in connection with settlement in a legal action in which the United States ls a party or has an interest. Under current law, the United States ls at a serious disadvantage in attempting to settle lawsuits. Private parties involved in sensitive settlement negotiations can, and normally will, enter into an agreement with an opponent that information disclosed during settlement negotiations wm be kept confidential. Dccuments generated under such an agreement by private parties in connection with settlement negotiations thus would not generally be obtainable by a third party \\.ithout judicial order and would be subject to all the protections offered in such court proceedings by the Federal Rules of Evidence and the Federal Rules of Civil and Criminal Procedure.:111 The United States, however, cl\.llnot assure confidential treatment of settlement information because it may be forced to reveal the information in response to a Freedom of Information Act reque5t.'0

The proposed exemption would place the Unlt~d States on an equal footing with private parties in settlement negotiations by enabling it to promise that information disclosed during those negotiations wm not normally be revealed to third parties. This wm serve to encourage settlement of lawsuits and to protect the integrity of the settlement process, both important public pollcles.

2. Critical Technology: New exem'.1tion <b) ( 11). set forth ln sec

tion 7(g) of the blll, would exempt from disclosure technical data that cannot be exported from the United States without approval, authority or a llcense from an agency, except that the exemptions would not apply 1! the requester obtained the appropriate approYal, authorization or llcense.

Congress has sought to limit the export of critical technology which might be used for purposes contrary to American interests 1n the Arms Export Control Act, 22 U.S.C. § 2751, et seq., and the Export Administration Act o! 1979, 50 U.S.C. App. § 2404. These laws impose controls on the export of technology which may be used for military purposes.

The proposed new exemption would insure that Congress' intent to control the export of sensitive technoolgy could not be frustrated by a Freedom o! Information Act request for information regarding or comprising critical technology subject to export control under these statutes. It would make clear that agencies such as the Department of Defense have the authority to refuse to disclose surh information 1n res;>onse to a Freedom of In!ormat1on Act request when the terhnolol"'y itself ls suhject to exoort restrictions. This change would help effect Congrf"ss' desire to Umlt and control the dissemination and export of critical technology.

IX. SECTION 8 OF THE BILL--PROPOSED AMENDMENTS RELATING TO REPORTING REQUIREMENTS

Under current 6 u.s.c. f 552(d), each

agency ls required to submit to the Congress by March 1 of each year a report on its Freedom of Information Act activities during the pre::ed!n3 csl:m .:.a::- yea:.-. Sec:ton 8 (a) of the blll would amend the reporting requirement to provide that the report would cover the preceding fiscal, rather than calendar, year. Most agencies maintain their records on a fiscal year basis and must con'/ert them to an annual year basis in order to comply with existing law. The amendment would remedy this problem by conforming th~ reporting requirement to data collection practices.

Sections S(b) and (c) of the blll conform citations tn 5 U.S.C. § 552 (d) to provisions of the Freedom of Information Act that would be redeslgnated by provisions of the b111. X. SECTION 9 OF THE BILL-PROPOSED AMEND

MENTS RELATING TO DEFINITIONS

A. Definition of "Agency": Section 9 of the bill retains the definition

of "agency" set forth in current 5 U.S.C. t 552te). The definition is carried forward as 5 U.S.C. § 552(e) (1).

B. Definition of "Submitter": New 5 U.S.C. § 552(e) (2), contained in sec

tion 9 o! the blll, defines the term "submitter" as "any person who has submitted to an agency (other than an intelligence agency) trade secrets, commercial or financial information (other than personal financial information), or other commercially valuable information in which the person has a commercial or proprietary interest." This subsection provides a standard definition !or the group of persons affected by sections 4 and 5 of the bill, relating to the administrative and judicial rights of submitters of commercial information. The provision generally tracks the language of the blll's revision to exemption. (b) (4).

The definition does not, however, include persons who have provided only personal financial information to the government. Some agencies (such as, for instance, the veterans Administration) routinely receive financial information of a purely personal nature from large numbers of individuals. If all such persons were included in the definition of submitters, the administrative burden of simply providing notice of a request (as required in section 4 of the blll) could, in some circumstances, be enormous. Moreover, this expense would seem entirely unnecessary to protect either the financial or the privacy interests of such individuals, since personally identifiable financial information ls exempt from disclosure pursuant to exemption (b) (6). This definition also does not include persons who submit information in ·which they have no "commercial or proprietary interest", such as informants who submit information to a law enforcement agency concerning another person.

c. Definition of "Requester": New 5 U.S.C. § 522(el (3), contained in

section 9 of the blll, defines the term "requester" as "a person who makes or causes to be made, or on whose behalf ls made, a proper request for disclosure of records under subsection (a)."

In part, this definition ls intended as a mere drafting change in substitution for cumbersome phrases in tbe present Act, such as "Any person making a request to any agency !or records under paragraph (1), (2), or (3) o! this subsection" and "such person making such request" (subsection (a) (4) (C)). However, this definition includes not only the person who makes the request but also any person who causes a request to be made or on whose behalf a request ls made.

D. Definition o! "United States Person": New 5 U.S.C. § 552(e) (4), contained in

section 9 of the blll, defines the term "United States person". That definition ls discussed in connection with the analysis of 5 U .S.C. § 552(a) (3) (A).

E. Definition of "Working Days": New 5 U.S.C. § 552(e)(5), contained in sec

tion 9 of the bill, defines the term "working days" to mean "every day excluding saturdays, Sundays, and federal legal holldays." This definition ls essentially the same as the language of the present Act, and is intended to place conveniently in one provision o! the Act the standard rule for calculating time periods under the Act. This definition is not intended to be a substantive change.

P. Definition of "Record": New 5 U.S.C. § 552(e) (6), contained in sec

tion 9 o! the bill, defines the term "record" to make clear that the Act applies to existing documenta.tion in any form, including computer tapes and discs. The limitation to "existing documentation" ls intended to make clear that an agency's obligation to disclose information extends only to existing information, and that an agency ls not required to create new documents or records in response to a request under the Act.

Although the definition of record includes information stored on computer ta.pea or discs, it specifically excludes system software. This exclusion ls intended to protect thesecurity of agency computer systems. It doea not limit the avallab111ty o! substantive in· formation held in computer form.

The definition of record also makes clear that it is not intended to include those documents created for the personal convenience of any government employee or offlcial.il Agency employees and officials often create documents and other materials, like diaries, journals, telephone logs, desk calendars, or personal or research notes, that are not o! a public character. Such materials are often nothing more than an extension of an individual's own memory. No purpose of the Freedom o! Information Act would be served by their disclosure. Their release would not only threaten a serious incursion on the privacy of the individuals who created them, but would also chill their practices of committing to writing their personal views or ideas even for their own use. In a related context, Congress recognized that such private materials, when not prepared or used for, or circulated or communicated in, the course of transacting government business, a.re entitled to be kept confidential. See Presidential Records Act, 44 U.S.C. § 2201 (3) (A).

This definition does not attempt a comprehensive analysis of what constitutes an "agency record" for purposes of the Act. Neither section 552 nor the definitions section o! the Administrative Procedure Act, 5 U.S.C. § 551, provide a definition o! what constitutes an "agency record" in this context, and so the courts have undertaken to give content to the term. The blll does not address the maner in which the courts have applied the term, for example, to documents that originate in the Congress or the courts.e

FOOTNOTES 1 This practice has a well-established an

alogue in the courts. In order to improve judicial administration, virtually every United States Court of Appeals has adopted a rule providing for the disposition without opinion of cases that do not involve any new points of law, do not create or resolve conflicts within the circuit or with other circuits, and are of no general precedent1al or jurisprudential value. See D.C. Circuit Rule 13; First Circuit Rule 14; Second Circuit Rule 0.23; Fourth Circuit Rule 18: Fi!th Circuit Rule 21; Sixth Circuit Rule 11; Seventh Circuit Rule 35; Eighth Circuit Rule 14; Ninth Circuit Rule 21; Tenth Circuit Rule 17.

2 E.g., Stone v. Export-Import Bank of the States, 552 F.2d 132, 136-37 (5th Cir. 1977), cert. denied, 434 U.S. 1012 (1978): NealCooper Grain Co. v. Kissinger, 385 F. Supp. 769, 776 (D.D.C. 1974).

, 3 See United States v. Murdock, 548 F.2d 599 (5th Cir. 1977): Murphy v. Federal Bureau. of Investigation, 490 F. Supp. 1138, 1143

October 20, 1981 CONGRESSIONAL RECORD-SENATE 24537 (D.D.C. 1980); see also United States v. Layton, No. CR 80-0416 (N.D. Cal. August 6, 1981).

•See United States v. Brown, 562 F.2d 1144 (9th Cir. 1978); United States v. Wahlin, 384 F. Supp. 43, 47 (W.D. Wis. 197<!) .

;; For example, in the 1974 Hearings on the Freedom of information Act, The New York Times complainfd of paying fees for copying documents that turned out to be newspaper clippings. See Joint Committee Print, Senate committee on the Judiciary and House Committee on Government Operations, Freedom of Information Act and Amendments of 1974 (P.L. 93-502), 94th Cong., 1st Sess. 163 (1975).

•For example, the Defense Department recently prepared an extensive course of instruction, pa.rt of which it sold overseas for $180,000, yet a. requester under the Freedom of Information Act was able to obtain it for merely the cost of duplication.

1 See, e.g., Sneed v. Bresson, 1 Gov't Disclosure (P-H) 11 79,143 (W.D.N.C. 1979), aff'd, No. 79-1800 (4th Cir. Aug. 4, 1980); Eudey v .Central Intelligence Agency, 478 F. Supp. 1175 (D.D.C. 1979); Lybarger v. Cardwell, 438 F : Supp. 1075 (D. Mass. 1977), aff'd, 577 F. 2d 761 (1st Cir. 1978); Burke v. Department of Justi ce, 432 F. Supp. 251 (D. Kan. 1976), aff'd, 559 F. 2d 1182 (10th Cir. 1977).

s Rizzo v. Tyler, 438 F. Supp. 895 (S.D.N.Y. 1977).

9 Such "nationwide" jurisdiction and service of process of a district court by the court itself is already provided !or by statute in other contexts. See, e.g., Interpleader Procedure Statute, 28 u.s.c. § 2361; Sherman Antitrust Act, section 5, 15 U.S .C. §5.

10 Joint Committee Print, Senate Judiciary Committee and House Government Operations Committee, Freedom of Information Act and Amendments of 1974 (P.L. 93-502), 94th Cong., 1st Sess. 229 ( 1975) .

11 Weissman v. Central Intelligence Agency, 565 F.2d 692, 697 (D.C. Cir. 1977).

lll Hayden v. National Security Agency, 608 F.2d 1381, 1388 (D.C. Cir. 1979), cert. denied, 446 U.S. 937 ( 1980).

1:1 Halpern v. Central Intelligence Agency, 629 F .2d 144, 148 (D.C. Cir. 1980).

u See, e.g., Hayden v. National Security Agency, 608 F.2d 1381, 1384 (D.C. Cir. 1979).

16 In a. still-pending case, the district court ordered disclosure of an in camera affidavit but, after o. petition for rehearing by the agency, that disclosure order was vacated. Baez v. National Security Agency, Civ. No. 76-1921 (DD.C. Nov. 2, 1978; July 17, 1980). See also Jaffe v. Central Intelligence Agency, 516 F. Supp. 576 (D.D.C. 1981) (publicly quoting from portions ot classified documents and affidavits).

18 In one case, for example, the district court initially ordered disclosure of classified information but, after reversal by the court ot appeals, ultimately determined the information to be exempt .. Had the district court not stayed the disclosure order, the government would have been foreclosed from pursuing its ultimately successful appeal. Weberman v. National Security Agency, 490 F. Supp. 9 (S.D.N.Y. 1980) (ordering disclosure), rev'd, No. 80-6155 (2d Cir. Dec. 18, 1980) (unpublished), on remand, No. 77 Civ. 5058 (CLB) (S.D.N.Y. June 5, 1981) (denying disclosure): see also 50'7 F. Supp. 117 (S.D.N.Y. 1981) (on remand).

11 See also Exner v. Federal Bureau of Investigation, 542 F.2d 1121, 1123 (9th Cir. 1976).

1s See, e g ., Department of Air Force v. Rose, 425 U.S. 352, 362-67 (1976); Sladek v. Bensinger, 605 F .2d 899, 901-02 (5th Cir. 1979); Jordan v. Department of Justice, 591 F.2d 753, 767-71 (D.C. Cir. 1978) (en bane); Ginsburg, Feldman & Bress v. Federal Energy Administration, 591 F.2d 717, 721-31 (D.C. Cir.); vacated and reheard en bane, 591 F.2d 752 (D.C. Cir. 1978) (per curiam),

aff'g by an equally divided court Civ. No. 76-:l.7 (D.D.C. June 18, 1976), cert. denied, 441 u .s. 906 ( 1979) .

1' Senate Committee on the Judiciary, Clarifying & Protecting the Right of the Public to .1..nform.i.tion and for Other Purpos~s, s. Rep. No. 813, 89th Cong., 1st Sess. ts p.9o5).

-" ...... ou.,e Committee on Government Operations, Clarifying & Protecting t11e Right of the r-UbliC to lnformation, .ri.R. Rep. No. 149 7, 89th Cc.,ng., 2d Sess. 10 (1966). Couns are divided in the relative weight to be given to the two committee reports. See, e.g., <.:rinsburg, Feldman & Bress v. Federal Energy Administration, 591 F .2d 717, 723-26 (D.C. Cir.), vacated and reheard en bane, 591 F.2d 752 (D.C. Cir. 1978) (per curiam), aff'g by an equally divided court No. 76-27 (D.D.C. June 18, 1976), cert. denied, 441 U.S. 906 (1979) (court followed House committee report); Tietze v. Richardson, 342 F. Supp. 610, 614-15 (S.D. Tex. 1972) (same); Jordan v. Department of Jwrtice, 591 F.2d 753, 767-69 (D.C. Cir. 1978) (court follows Senate committee report); Vaughn v. Rosen, 523 F.2d 1136, 1142 (D.C. Cir. 1975) (same).

2 1 S. Rep. No. 813, $Upra, at 2; H.R. Rep. No. 1497, supra, at 7-8. See City of Concord v. Ambrose, 333 F. Supp. 958, 959 (N.D. Cal. 1971).

22 One court granted a prose Freedom of Information Act litigant access to all portions of the Drug Enforcement Administration Agents Manual other than those pertaining solely to internal housekeeping matters, Cox v. Department of Justice, 576 F.2d 1302 (8th Cir. 1978), only later to deny to that same prose litigant the portions of the Federal Bureau of Investigation's Manual of Instruction relating to investigative t e:::hni r_ues and procedures. Cox v. Levi, 592 F . 2d 460 (8th Cir. 1979 ) . See also Cox v. Department of Justice, 601 F.2d 1 (D.C. Cir 1979) (same pro se litigant denied access to portions of United States Marsha.ls Service Manual describing procedures for tran3porting prisoners in custody) ; Sladek v. Bensinger, 605 F. 2d 899 (5th Cir. 1979) (portions of Drug Enforcement Administration Agents Manu3l concerning DEA's handling of confidential informants and search warrant procedures ordered di3closed ); Caplan v . Bureau of Alcohol, Tobacco & Firearms, 587 F .2d 544 (2d Cir. 1978) (entire BATF pamphlet concerning raids and searches withheld from disclosure ) .

23 Compare Hawkes v. Internal Revenue Service, 507 F .2d 481 (6th Cir. 1974) (Internal Revenue Service audit guidelines ordered disclosed ) with Ginsburg, Feldman & Bress v. Federal Energy Administration, 591 F. 2d 717 (D.C. Cir) , vacated and reheard en bane, c91 F. 2d 752 (D.C. Cir. 1978) (per curiam), aff'g b•r an equally divided court Civ. No. 76-27 (D.D.C. June 18, 1976), c:ert . denied, 441 U .S . 906 (1979) (Federal Energy Administrat.ton f!'Uidellnes for audits of refiners' re"lorts withheld from disclosure). ~See House Committee on Government

Operations, Freedom of Information Act Requests for Business Data and Reverse-FOIA Lawsuits, H. R. Re!>. No. 95-1382, 95th Cong., 2d Sess. 16-19, 21 (1978).

zi See Weisberg v. Department of Justice, Civ. No. 75-1996 (D.D.C. Feb. 9, 1978), aff'd in part, vacated in part on other grounds, 631 F.2d 824 (D.C. Cir. 1980) (lower court ordered disclosure of valu!i.ble news :i>hotographs copyrighted by a submitter).

2e See, e.g., Pacific Molasses Co. v. NLRB, 577 F.2d 1172, 1178-81 (5th Cir. 1978); Rural Housing Alliance v. Department of Agriculture , 498 F .2d 73, 77 (D.C. Cir. 1974).

21 Chicaqo Board of Trade v. Commodity Futures Trading Commission, 627 F.2d 392, 397-98 (D.C. Cir. 1980); see also Kurzon v. Department of Health & Human Services, 649 F.2d 65 (1st Cir. 1981); Ferri v. Bell, 645 F.2d 1213 (3d Cir. 1981).

ss Senate Committee on Government Oper-

ations, Protecting Individual Privacy in Federal Gathering, Use and Disclosure of Information, S. Rep. No. 93-1183, 93d Cong., 2d Sess. 31 (1974).

"11 Cox v. Department of Justice, 576 F.2d 1302, 1310 (8th Cir. 1978); National Mutual Insurance Co. v. Friedman, 451 F. Supp. 736, 746 (D. Md. 1978).

30 In fact, in one case, the Internal Revenue Service was required to file a 13,000 page affidavit. Kanter v. Internal Revenue Service, 433 F. Supp. 812 (N.D. Ill. 1977), dismissed, 478 F. Supp. 552 (N.D. Ill. 1979).

a1 See also Grabinski v. Internal Revenue Service, 478 F. Supp. 486 (E.D. Mo. 1979); Steinberg v. Internal Revenue Service, 463 F. Supp. 1272 (S.D. Fla. 1979).

3:l See e.g., Nix v. United States, 572 F.2d 998, 1004 (4th Cir. 1978); Church of Scientology v. Department of Justice, 410 F. Supp. 12~7. 1302 (C.D. Cal. 1976). aff 'd, 612 F.2d 417 (9th Cir. 1979).

33 See, e.g., Church of Scientology v. Department of Justice, 612 F.2d 417, 428-31 (9th Cir. 1979) (Wallace, J., d :s3enting); Founding Church of Scientology v. Miller, 490 F. Supp. 144, 148-49 (D.D.C. 1980).

3 1 See, e.g., Ferguson v. Kelly, 455 F. Supp. 3·24, 326-27 (N.D. Ill. 1978).

3~ See, e.g., Lesar v. Department of Justice, 636 F.2d 472, 4899 (D.C. Cir. 1980); Church of Scientology v. Department of Justice, 61'2 F.2d 417, 420 (9·th Cir. 1979); Nix v. United States, 572 F.2d 998, 1005 (4th Cir. 1978).

33 Senator Hart explained that under hds amendment a.n agency "can provide blanket protection for any information supplied by a confidential source" and tha.t " all the FBI has to do ls state that the information was furn !shed by a confidential source and it is exempt." Joint Committee Print, Senate Committee on the Judiciary and House Commltt~e on Government Operations, Freedom or I n formation Act and Amendments of 1974 (P.L. 93-500), 94th Cong. 1st 8es·s. 4&1 (1975).

37 See Jordan v. Department of Justice, 591 F.2d 753 (D.C. Cir. 1978) (en bane) (internal guidelines and criteria to be considered in the prosecution of certain offenses); Hawkes v. Internal Revenue Service, 507 F.2d 481 (6th Cir. 1974) C"nternal Revenue Service audit guidelines) ; Firestone Tire & Rubber Co. v. Coleman, 432 F. Supp. 1359, 1365-66 (N.D. Ohio 1976) (guidelines for bringing tire safety investigations) .

38 See Sladek v. Bensinger, 605 F.2d 899, 903 (5th Cir. 1979); Cox v. Department of Justice, 576 F .2d 1302, 1310 (8th Cir. 1978).

39 See, e.g., Fed. R. Evid. 408 and Fed. R. Civ. P. 26(c).

'°See County of Madison v. Department of Justice, 641 F .2d 1036 (1st Cir. 1981) .

41 See Porter County Chapter of Izaak Walton League of America, Inc. v. Atomic Energy Commission, 380 F. Supp. 630 (N.D. Ind. 1974).

By Mr. HEINZ (for himself and Mr. TSONGAS):

S. 1752. A bill to amend the Home owners' Loan Act to increase the lending, investment and operating authori7.y of Federal mutual savings banks; to the Committee on Banking, Housing, and Urban Affairs.

SAVINGS BANK ACT OF 1981

• Mr. HEINZ. Mr. President. on behalf of Mr. TsoNGAs and myself, I am today introducing S. 1752, "the Savings Bank Act of 1981," a bill to expand the lending, investment and operating authority of Federal mutual savings banks.

Mr. President, the current plight of the thrift industry has been well documented in the press and in extensive testimony before various committees or


the Congress. In the past year, thrift institutions have experienced one of the worst periods in their history in terms of profitability. The figures are startling. Former FDIC Chairman Irvine Sprague testified that the 79 largest savings banks representing three-fourths of the industry's deposits recorded net losses for the first 5 months of 1981 in excess of $400 million, portending the worst losses ever for the industry.

Numerous proposals have been advanced to address the industry's current problems, in particular the so-called "Regulators Bill" and the "All Savers · Act." Whatever the merit of these proposals, none of them addresses the fundamental issue of the continued longterm vlability of the thrift industry. Moreover, the combination of Federal budgetary constraint and unrelenting market forces leads inevitably to the conclusion that the only meaningful tool available to the thrift industry over the long run is self-help-the means to be independently viable in a continually changing financial and economic environment. That is precisely what this bill is designed to accomplish for savings banks.

Under the Deregulation Act of last year, it is now public policy that regulation Q limitations on rates on consumer savings deposits are to be phased out. Under the auspices of the Depository Institutions Deregulation Committee, that process is well underway. On August 1, 1981, rate limitations on certificates of deposit of 4 years or more were eliminated. In succeeding years, certifl.cates of deposit with progressively shorter maturities can be offered at unregulated rates. Moreover, the quarter-percent rate differential available to thrift institutions on most certificates of deposit is scheduled to expire in just 2 years.

For years regulation Q was a cornerstone of U.S. housing policy. Under that regulation the existence of institutions devoted to the creation of housing was fostered by the existence of the quarterpercent rate differential which was tied to limitations on the use of the institutions. Like regulation Q, the All Savers Act seeks to direct flows of funds into the residential mortgage market. But unlike regulation Q, the All Savers Act does not differentiate between commercial banks and thrift institutions. The All Savers Act is designed to assure a ftow of lower cost funds into housing through banks and thrift institutions alike.

To the extent that Congress adopts programs encouraging ftows of funds into housing, with commercial banks and thrift institutions given equal opportunities to participate, a policy restricting thrift instituton investments can no longer be justified.

Treasury Secretary Donald T. Regan told the Senate Banking Committee on April 28, 1981:

It seems that at some point all the institutions must have the same powers to perform the same types of business. The current problems !acing thrift institutions are largely the result of prior government attempts to structure an industry by statute in ways that are not economically feasible. We believe all depository institutions should have equal powers and should be free to

choose whatever specialization they wish based on their individual competitive skills and goals. The ultimate beneficiary of this fiexibllity would be the consumer.

Commercial ·banks with their shorter term, rate sensitive asset structure, are much better able to adjust to changing conditions than are thrlft institutions with their long-term investments in the Nation's housing. The solution is not to abandon the principle of intelligent deregulation. Savers deserve and need a fair, market rate of return. Otherwise, depositors will not be protected from inflation and thrift institutions will continue to lose funds if the Government simply dictates the payment of rates noncompetitive with alternative market opportunl ties.

As the Deregulation Committee itself acknowledges, market events do not permit ignoring the process of deregulation. Yet, unless thrift institutions can begin making a broader range of profitable, interest-sensitive loans, these institutions wi'll be unable to survive the consequenc·es of dereguliation of the cost of th~jr f•·nds. The solution is to dismantle barriers counterproductively restricting thrift access to commercial markets.

Mr. President, thls bill brings the asset powers of mutual savings banks close to those of commercial banks. Unlimited commercial loan authority is essential if savings banks are to adjust their portfolios sufficiently quickly and profitably over future raite cycles.

I recogniz1e the concerns expressed regarding the impact of this bill on the traditional commitment of savings banks to housing finance. If one fundamental lesson has been learned in the past few years it is that confining thrift institutions to residential mo.tga,.ge inve.stment.s in periods of rising interest rates jeopardizes their very existence and thereby does not assure an adequate supply of mortgage financing.

Housing d·oes remain an important national priority and assur~ng an adequate flow of funds for housing is an objective that all Members of the congress share. But I am convinced that basically confining thrift institutions to housing by statute is not a part of the solution to the problems of housing.

It would be unrealistic to anticipate that under this bill the savings bank industry's deep-rooted expertise in this area will be substantially diverted. Indeed, one of the principal thrusts of this bill is to enable thrift institutions to pursue their housing orientation viably.

The level of continued specialization must be determined by each individual institution's realistic evaluation of economic opportunities. The failure or elimination of substantial numbers of thrift institutions through the failure to grant them flexibility would seriously undermine the competitive balance ~f the depository industry as a whole. We dare not starve the thrift industry to save it.

This bill addresses only the statutory powers of Federal mutual s~tvings banks. For the reasons I have already stated, I generally support the concept of broadened earnings powers for all thrift institutions. I intend to work closely with

the sponsors of similar legislation. The bill I am introducing today, however duplicative in some respects, underscores the degree of urgency with which I view its enactment. It is my hope that the Senate Banking Committee will move quickly to consider this legislation.

An explanation and a section-by-section analysis of the legislation follows:

Section 101 expands the investment of Federal mutual savings banks. Fresent law provides that a State-chartered savings bank converting to a Federal charter may only carry on activities it was engaged in on a specified date-December .:sl, hJ7'1. Such an mst.a.tut.a.on is also authorized to retain or make any investments of a type it held on that date, except that its equity, corporate bond, and consumer loan investments may not exceed the average ratio of such investments to total assets for the 5-year period immediately preceding the filing of an application for conversion.

The December 31, 1977 cutoff date is obsolete given the dynamic chfmges in financial services, investments and technology affecting all types of institutions. There is no reason to hold a Federal savings bank organ'zed now or in the future years to the particular activities and investments which it happened to engage in as of December 31, 1977.

Similarly, the limitation on equity, corporate bond and consumer loan investments looks backward rather than forward, and may have little relationship to investment opportunities and borrower demanls in future !:ears.

Both restrictions are inconsistent with the thrust of the 1980 Deregulation Act which mandates the phaseout of deposit interest rate ceilings in an environment of liberalized investment authority. Thrift institutions need increased asset :flexibility if they are to be able to pay market rates to savers. In keeping with a basic safeguard of the Federal savings bank provision, the investment powers of these institutions will continue to be exercised only to the extent authorized by the chartering agency, the Federal Home Loan Bank Board.

Mr. President, let me take a moment to discuss the sections of this bill one at a ti:ne.

Section 101 removes the prohibition against conversion from m'..ltual-tostock form of organization for savings banks converting from a State to a Federal charter. Here again, it is my understanding that the leg!slation submitted by the Federal Home Loan Bank Board addresses the question of corporate structure and, in fact, permits mutualto-stock conversions on an unrestricted basis in both the savings bank and savings and loan industries. These issues should be addressed and fully studied, including the issues of chartering de novo stock Federal savings banks and the conversion of mutual savings and loan associations into stock savings banks.

Section 102 amends the commercial loan authority of Federal mutual savings banks in light of the experience ga:ned since the enactment of the Deregulation Act. Current law restricts commercial loans to 5 percent of the institution's assets. It also requires that such loans be

October 20, 1981 CONGRESSIONAL RECORD-SENA TE 24539

made only within the State where the bank is located or within 75 miles of the bank's home office.

If this is not changed, when institutions bump up against the 5-percent limit they will be forced to curtail future commercial loan activity. Other institutions are inhibited from entering the commercial loan market because the presently permitted volume of lending may be economically insufficient to absorb the additional salary and other costs necessarily involved in undertaking a new activity of this type. Furthermore, the geographic limitation needlessly restricts commercial lending opportunities and is contrary to long-standing public policy which encourages the free flow of credit to areas of greatest need. Tne Community Reinvestment Act and FHLBB supervision will continue to act as safeguards to insure that local credit needs are met.

In order to make the commercial loan authority a practical reality, the amendment eliminates the 5 percent and geographtc llmitations. This authority, like any other authority granted Federal mutual savings banks in this act, would be subject to regulation by the Federal Home Loan Bank Board. At the same time, the amendment would add a provision, identical to that of national banks, that commercial loans to any single borrower may not exceed 10 percent of the net worth of a Federal savings banks.

Section 103 would authorize Federal mutual savings banks to accept demand deposits from any source, rather than in connection with a commercial, corporate or business loan relationship. This change would permit all Federal savings banks to accept personal and busmess checking deposits. This is clearly consistent with the recent action of the Congress in authorizing NOW accounts for all types of depository institutiona. Consumers will now have the opportunity to obtain the same transfer of funds services from Federal savings banks that are available from commercial banks. Federal savings banks will also be able to compete for business and government demand deposits on the same terms as commercial banks. Such competition would clearly be beneficial to all users of demand deposits.

Section 104 would increase the investment authority for savings and loan associations and mutual savings banks in service corporations from 1 percent to 10 percent of an institution's assets. Furthermore, it would increase, from 1 percent to 1 percent of assets, the amount of investment above which one-half of any further investment would be required to be used for community and inner-city development purposes. As a result, the authority to invest in service corporations would be increased to more economically feasible levels.

Section 105 will clarify the obligation of the FDIC to indemnify the FSLIC on the occasion of a convers'on to a Federal mutual savings bank. The effect would be to reduce a barrier to the conversion of an FDIC-insured State mutual savings bank to a Federal mutual savings bank

which under the act must be insured by FSLIC. Without this change, the possibility arises that the conversion authority provided by the Congress may be unintentionaJly undermined in practice.

Mr. President, I ask unanimous consent that the bill and a brief section-bysect!on analysis be pr:nted at th·s po:nt.

There being no objection, the bill and anal}' sis were ordered to be printed in the RECORD, as fallows:

S.1752 Be it enacted by the Senate and House

of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Savings Bank Act of 1981".

CHARTERING SEC. 101. Section 5(a) (1) of the Home

Owners' Loan Act of 1933 (12 U.S.C. 1464(a) ( 1) ) is amended to read as follows:

"(a) (1) In order to provide local mutual thrift institutions in which people may invest their funds and in order to provide for the financing of homes, the Board is authorized, under such rules and reg~lations as it may prescribe, to provide for the organization, incorporation, examination, operation, and regulation of associations to be known as 'Federal Savings and Loan Associations', or 'Federal mutual savings banks' (but only in the case of institutions which, prior to conversion, were State mutual savings banks located in States which authorize the chartering of State mutual savings banks, provided each conversion is not in contravention of State law), and to issue charters therefor, giving primary consideration to the best practices of local mutual thrift and home-financing institutions in the United States. ·

An association which was formerly organized as a savings bank under State law may, to the extent authorized by the Board, continue to carry on any activities it was engaged in immediately prior to conversion and to retain or make any investments of a type it held on that date, and such an association which was formerly organized as a savings bank under State law shall only be permitted to establish branch offices and other facilities in accordance with the limitations imposed by State law controlling applications of a savings bank organized under such State law, :provided that such an association: (A) shall be exempt from any numerical limitations of State law on the establishment of branch offices and other facilities, and (B) may, in any case, subject to the approval of the Board, establish branch offices and other facilities in its own standard metropolitan statistical area, its own county, or within thirty-five miles of its home office, but only in its State of domicile. An association which was formerly organized as a savings bank under State law shall be subject to the requirements of State law (including any regulations promulgated thereunder and any sanction for the violation of any such law or regulation) in effect at the time of conversion, in the State of its original charter-

" ( i) pertaining to discrimination in the extension of home mortgage loans or adjustment in the terms of mortgage instruments based on neighborhood or geographical area, and

" ( 11) pertaining to requirements imposed under the Consumer Credit Protection Act, if the Board determines that State law and regulations impose more stringent requirements than Federal law and regulations.".

COMMERCIAL LENDING SEc. 102. Section 5(a) (2) of the Home

Owners' Loan Act of 1933 (12 U.S.C. 1464(a) (2)) is amended to read as follows:

"(2) A Feaeral mutual savings bank may make commercial, corporate, and business

loans. The total obligations to any Federal mutual savings bank of any person, copartnership, association, or corporation shall at no time exceed 10 per centum of the net worth of such Federal mutual savings bank. The term 'obligations' means the direct liability of the maker or acceptor of paper discounted with or sold to such Federal mutual savings bank and the liability of the endorser, drawer, or guarantor who obtains a loan from or discounts paper with or sells paper under his guaranty to such Federal mutual savings bank and shall include in the case of o::>ligations of a copartnership or as.sociation the obligations of the several members thereof and shall include in the case of obligations of a corporation all obligations of all subsidiaries thereof in which such corporation owns or controls a majority interest. Such limitation of 10 per centum shall be subject to such exceptions as the Board shall by regulation prescribe from among those exceptions provided for national banks in section 5200 of the Revised Statutes or elsewhere.".

DEMAND DEPOSITS SEC. 103. Section 5 (a) (3) of the Home

Owners' Loan Act of 1933 (12 U.S.C. 1464 (a) ( 3) ) Ls amended to read as follows:

"(3) Federal mutual savings banks may accept demand deposits from any source whatever.".

SERVICE CORPORATIONS SEc. 104. Section 5(c) (4) (B) of the Home

Owners' Loan Act of 1933 (12 U.S.C. 1464(c) (4) (B)) is amended to read as follows:

"(B) SERVICE CORPORATIONS.-Invest-ments in the capital stock, obligations, or other securities of any corporation organized under the laws of the State in which the home office of the association is located, 1f the entire capital stock of such corporation is available for purchase only by savings and loan associations or mutual savings banks of such State and by Federal associations having their home offices in such State, but no association may make any investment under this subparagraph 1f its aggregate outstanding investment under this subparagraph would exceed 10 per centum of the assets of the association, except that not less than one-half of the investment permitted under this subparagraph which exceeds 1 per centum of assets shall be used primarily tor community, inner-city, and community development purposes.".

CONVERSION INDEMNIFICATION SEc. 105. Section 26 of the Federal Deposit

Insurance Act (12 U.S.C. 183lc) is amended by designating the first paragraph "(a)" and adding the following new paragraph at the end thereof:

"(b) In implementing the indemnification agreement specified in subsection (a), the Corporation and the Federal Savings and Loan Insurance Corporation shall include, but not be limited to, those losses resulting from a. decline in the market value of a.sseta due to interest rate fluctuations."

SECTION-BY-SECTION ANALYSIS OJ' THI:

"SAVINGS BANK ACT OF 1981"

Sec. 101. Increased investment authority: This provision would delete the present 11m1-tation on the equity, bond, and consumer loan investment authority of Federal Mutual savings banks, which restrict the investment to the five-year average immediately precedln~ conversion. 'J"he orovision also removes the prohibition against mutual-tostock conversion for savings banks converting from a state to Federal charter.

Sec. 102. Increased commercial lending authority: This provision would delete the present 5 percent of assets and home stateor-75 miles limitations on commercial lending by Federal mutual savings banks and would substitute a single provision derived from~nd similar to-the 10 percent ( o!


ca.pita.I stock and surplus) loa.n limitation to any one borrower imposed on national banks by 12 U.S.C. 84.

Sec. 103. Increased demand deposit authority: This provision would delete the present requirement tha.t a Federal mutual savings ba.nk only accept business demand deposits "in connection with a commercial, corporate, or business loan relationship." The provision would substitute genera.I authority to accept demand deposits from "any source whatever." This would authorize personal as well a.s business demand deposits. This grant of authority would, like any other authority granted Federal mutual savings banks in the Act, be subject to regulation by the FHLBB.

Sec. 104. Increased investment in service corporations: This provision would increase the authority to invest in service corporations to corporations jointly owned by mutual savings banks as well as by savings and loan associations. It would also increase investment authority from 3 percent of asset::i to 10 percent of assets.

Sec. 105. FDIC-FSLIC indemnification: This provision would clarify the FDIC obligation to indemnify the FSLIC on the occasion of a conversion to a Federal mutual savings bank.e

e Mr. TSONGAS. Mr. President, today I join with Senator HEINZ to introduce the Savings Bank Act of 1981. This legislation to expand the powers of mutual savings banks is urgently needed. These institutions, Which are the predominant type of thrift in New England, must have new powers to stop the hemorrhaging of red link. We must give them the capacity to compete in today's volatile economy.

During the first quarter of 1981, thrift institutions overall lost nearly $900 million. In June, Chairman Richard Pratt of the Federal Home Loan Bank Board testified that a full one-third of America's thrifts are no longer viable under current conditions. Our largest 79 savings banks-representing 75 percent of the industry-lost $400 million dur:ng the :first 5 months of 1981. Savings and loans are in the same boat. Chairman Pratt has estimated that nearly three! ourths of them will lose money in 1981.

Why do the current high, volatile rates of interest make new powers for thrifts essential. Quite simply, it is because money market funds and money market certin,..ates hq,ve made regulat!on Q a moot paint. Thrifts must reward savers at competitive rates if they expect to keep and attract funds. Money market funds have been paying interest at rates in the high teens-and most :financial analysts expect these rates to remain high.

Thrifts must offer market certificates in order to compete. In a time of skyhigh interest rates, they must have flexibility on their asset side to have any hope of long term survival. This bill makes the asset powers of savings banks closer to those of commercial banks. Expanding commercial loan authority is essential for savings banks to build portfolios that can survive the business cycle.

THRIFTS AND HOUSING

I know that some people in the housing industry-and some of my colleagues-sincerely believe that housing will suffer unless thrifts are required to make fixed rate mortgage loans. This view is plausible at first glance. But a

hard look at the history of these lenders indicates the contrary. The very inflexibility of their investments has hurt earning and crippled thrifts in bidding for money against nonfinancial entities such as the money market funds. This has liteTally dried up mortgage credit in some areas for months at a time.

Savings banlts and savings and loan associations arc our specialists in housing :finance. They know the business. I am not afraid that, given the broader powers, they will turn away from housing. Mortgages will still be a dominant part of their portfolio. But future home lending will be tied to more interest-sensitive mortgage notes And the ability to make other interest-sensitive loans to consumers and businesses will make a crucial difference in their capacity to compete and endure. It will let them moderate the dramatic declines in mortgage credit 1va.ilability that occur now during periods of tight money.

THE URGENCY OF ACTION

Mr. President, the time to act is now. On many occasions, Chairman Pratt has voiced his support for a so-called superthrif t, one with the expanded powers vital to meet today's competition. I understand that t.he Bank Board has prepared legislation on new powers for thrifts, and I appreciate that leadership. However, savings banks generally are not under the Bank Board's regulation. It is essential that .:;avings banks be included in the :final plans to make the thrift industry more competitive.

Mr. President, this is the second time in this session that I have introduced legislation concerned with powers for mutual savings banks. In June, I introduced S. 1413, c:1. bill to expand their powers and to provide flexibility for regulators who oversees thrifts. I am .happy to join with Senator HEINZ today because the situation is so critical. We must act now to give thrift institutions the powers to survive. compete, and continue to provide their vital services.•

By Mr. HEINZ (for himself, Mr. PACKWOOD, Mr. BRADLEY, Mrs. KASSEBAUM, Mr. PERCY, Mr. COHEN, Mr. PRYOR, Mr. MELCHER, and Mr. BURDICK):

S. 1754. A bill to amend title XVIII of the Social Secur:ty Act to remove the 3-day prior hospitalization requirement for coverage of extended care services; to the Committee on Finance.

COVERAGE OF EXTENDED CARE SERVICES

• Mr. HEINZ. Mr. President, I am introducing today a bill to amend the Social Security Act to stop forcing older Americans to shuttle between nursing homes and hospitals just to meet costly paperwork requirements. My colleagues joining me in cosponsoring this legislation are Senators PACKWOOD, BRADLEY, KASSEBAUM, PERCY, COHEN, PRYOR, MELCHER, and BURDICK.

This amendment will eliminate the current requirement that a medicare beneficiary spend 3 days as a hospital inpatient before eligibility for a skilled nursing facility can be established. Deleting this requirement will reduce unnecessary hospitalization, put an end to the traumatic trans! erring between

hospitals and nurssing homes thait the current requirement entails.

The original requirement was intended as a gatekeeping mechanism, but a recent HHS study conducted in Massachusetts and Oregon reveals that it may actually increase costs. The study found that some patients, such as the terminally ill or those needing to be upgraded from intermediate to skilled care, must be inappropriately placed in a hospital to obtain medicare coverage. Since hospital costs are three to five times that of skilled nursing facilities, elimination of this requirement would provide savings that would be applied to less expensive SNF stays. The study concluded that eliminating the 3-day prior hospitalization requirement would be unlikely to increase utilization beyond the present hospital/SNF stays since current skilled requirements would still be in place.

This amendment provides one of the rare occasions in our present system where we can expand benefit flexibility without a reciprocal expansion of program costs. Furthermore, it eliminates a burdensome requirement impeding appropriate placement of medicare beneficiaries and medical decisionmaking. Therefore, I urge my colleagues to join me in supporting this legislation which will provide a much needed benefit to medicare beneficiaries.

I ask unanimous consent that the bill be printed in the RECORD.

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


Representatives of the United States of America in Congress assembled, That (a) section 1811 of the Social Security Act is amended by striking out "related post-hospital" and inserting in lieu thereof "extended. care".

(b) Subsections (a) (2), (b) (2), and (e) of section 1812 of such Act are ea.ch amended by striking out "post-hospital".

(c) Subsections (a) (3) and (b) (2) of section 1813 of such Act are each amended by striking O'Ut "post-hospital" ea.ch place it appears.

(d) Section 1814(a) of such Act ls a.mended-

(1) by striking out "post-hospital" each place it appears in paragraphs (2) (C), (6), and (7); and

(2) by striking out ", for any of the conditions" and all that follows in paragraph (2) (C) and inserting in lieu thereof a semicolon.

( e) ( 1) Subsection ( e) of section 1861 of such Act is amended-

( A) by striking out ", and subsection (d) of this section" in the matter before para.graph (1); and

(B) by striking out ", section 1814(f) (2), and sub3ection ( i) of this section," in the third sentence and inserting in lieu thereof "and section 1814(f) (2) ".

(2) Subsection (i) of such section is repealed.

(3) Pa.ragra.phs (1) (G), (2) (A), and (3) of subsection (v) of such section a.re ea.ch a.mended by striking out "post-hospital" each place it appears.

(4) Subsection (Y) of such section is amended by striking out "Post-Hospital" in the heading and by striking out paragraph (4).

(f) Subsections (b) and (d) of section 1866 of such Act are each amended by strik.-

October 20, 1981 CONGRESSIONAL RECORD-SENATE 24541 ing O'Ut "post-hospital" each place it appears.

(g) Subsections (d) and (f) of section 1883 of such Act are each amended by striking out "post-hospital" each place it appears.

(h) Section 226(c) of such Act is amended by striking out "post-hospital extended ca.re servicea" and inserting in lieu thereof "extended care service3" and by striking out "except that" in paragraph (1) and all that follows through the end of such paragraph and inserting in lieu thereof "; and".

(i) Section 7(d) (1) of the Railroad Retirement Act of 1974 is amended by striking out "posthospital extended care services" a.nd inserting in lieu thereof "extended ca.re services".

SEC. 2. The amendments ma.de 'by this Act shall be effective with respect to service3 provided on or after the date of the enactment of this Act.e

By Mrs. HA 'WKINS (for herself and Mr. CH::i:LES) :

S. 1755. A bill to amend chapter 207 'lf title 18, United States Code, to provide expEcitly for consideration of the sources of bail money and the risk to safety of the public and other persons in proceedings for the consideration of release of criminal defendants in drug-related cases before trial under that ~hapter; to the Committee on the Judiciary.

RELEASE OF CRU;UNAL DEFENDANTS IN DRUG-RELATED CASES

• Mrs. HAWKINS. Mr. President, today I am introducing, along with Sena.tor CHILES, companion legislation to H .R. 4705 by Representative SHAW that will help keep drug smugglers off our streets by sti1Iening bail provisions. This bill has been endorsed by the entire Florida deleeation. Federal bail procedures for drug smugglers must be reformed if we are to curb the ever-increasing amount of ille· gal drug trafficking in our country. Currently, drug smugglers post bail just likP. others charged with a crime. However, drug smugglers are not just like other defendants. The diff.erence is that drug smugglers are often worth $30 or $40 million and even $1 million in forfeited bail is just another business expense to them. Therefore, accused drug smugglers must be treated differently because conventional procedures do not insure that these defendants will be tried in a court of law. Instead, drug smugglers skip town and continue unhindered in their illegal and highly profitable business elsewhere.

The bill I am introducing toda'{ changes current bail procedures in two ways. First, this bill requires judges, when determining the amount of bail or if it should be granted at all, to consider whether a defendant will harm the community if released pending trial. Th.is change will permit judges to refuse bail to repeat otrenders of our drug-smugglin~ laws and to raise bail amounts shouid they decide to release them.

Second, judges are required to hold a hearing before a defendant charged with drug smuggling is released to determine that source of funds used to post bail. If the judge determines that the sourc~ of funds is an illegal one, then he will deny a request for bail. The purpose of this change is to insure that funds put up for bail come from a source unrelated to drug smuggl::.ng. That way, bond money will not be forfeited simply as a cost of

doing business. And it "°ill cost someone dearly if these defendants do disappear.

Mr. President, I represent a State with a very special problem. Because of Florida's unique location, we must deal with an incredibly high volume of drug smuggling. And as long as Federal bail procedures remain lenient, Florida will have a serious crime problem. The Federal Bureau of Investigation's 1980 crime report showed that of the 10 cities in the country with the highest crime rates, 6 of those cities are in Florida. A primary cause of these high rates of violent crime is directly related to illegal drug dealing.

Recently, the New York Times highlighted the problem associated with setting bond for drug smugglers in an article entitled "Violence and Rot Spread in Florida With Its Vast Flow of Drugs." The article auoted Capt. Marshall Frank, chief of the homicide section of the public safety department in Dade County. He stated:

Drug dealers outman us, they have unlimited budgets. There's hardly any bond they can't make, and if they make it, they're gone. Why should they go to prison in the United States?

The article also quoted Jim Simmom, the inspector in charge of the fugitive squad for the U.S. Marshals Office in south Florida as saying that as of last March he was looking for 365 persons who had jumped bond. Of these, 350 were involved with drugs. Mr. President, I ask unanimous consent that the bill, along with a copy of this New York Times article be printed in the RECORD.

There being no objection, the bill and article were ordered to be printed in the RECORD, as follows:


Representatives of the United States of America in Congress assembled, That subsection (a) of section 3146 of title 18 of the United States Code is amended by inserting "and that the person, if the offenses charged involves pos~ession or t.t"ansfer of a controlled substance (as such term is defined for the purposes of the Controlled Substances Act), will not pose a danger to any other person or to the community" after "assure the appearance of the person for trial".

SEC. 2. Subsection (b) of section 3146 of title 18 of the United States Code is amended-

( 1) by striking out "will reasonably assure appearance" and inserting in lieu thereof "will give the required assurance"; and

(2) by adding at the end the following: "If the accused is charged with an offense involving possession or transfer of a controlled substance (as such term is defined for the purpose of the Controlled Substances Act) the judicial officer shall hold hearings and accept testimony to determine that the resources of sureties or the cash used for deposit has been obtained by noncriminal means and will reasonably assure the appearance of the pet:son charged.".

VIOLENCE AND ROT SPREAD IN FLORIDA WITH !TS VAST FLOW OF DRUGS

(By Jo Thomas) MIAMI, March 3.-Through this city of

sunlight and excess, where now and then a child will turn up at a corner store with a $100 bill, demanding candy bars and change, there flows a river of narcotics bringing with it so much opulence and violence, so much money and corruption, that public

oftlcials look back at Prohibition for comparisons, and even those fail.

The staggering volume of Florida's drug trade cannot readily be seen: 70 percent of the nation's cocaine, 80 percent of its marijuana, 90 percent of the counterfeit Quaaludes go into the pipeline here. The local trade is conservatively estimated at $7 billion, "the biggest retail business in our state," as Jim Smith, the Florida Attorney General, describes it.

But the effects of this commerce can be seen and felt everywhere, in the glittering shops where one can buy a $5,000 hat, in the private clubs where one can buy a $600 bottle of wine, in middle-class neighborhoods where houses are leased for cash, paid five or six months in advance in $20 bills, no questions asked, and in the hospital intensive care ward where Josephine Williams, 25 years old, has been waiting 40 days and 40 nights for her little boy to wake up.

SHOT FIRED BY 15-YEAR-OLD

The child, Donnell Robinson, 6 years old, was shot in the head while walking home from school with his mother, who wanted to make sure he would be safe. The bullet came from a gun fired by a 15-year-old having a quarrel with a friend over marijuana. Donnell and his mother were on the wrong corner in Liberty City at the wrong time.

"Drugs are probably the biggest reason for the upsurge in homicides," said Capt. Marshall Frank, chief of the homicide section of the Public Safety Department in Dade County, which encircles Miami. So far this year, homicides are running 49 percent a.head of last year's record number, 567.

On the wall of Captain Frank's oftlce is a framed ba.r graph of homicides in recent years, with red columns for homicides and shorter blue columns for cases that have been cleared. For 1980, the red column climbs up out of the graph, over the wooden frame and onto the wall.

Twenty-four percent of the homicides, Captain Frank said, are drug-related, but "that doesn't include robberies or domestic kUlings in which drugs figure."

"Realistically," he said, "I'd say 50 percent of homicides directly or indirectly are a result of drug use or drug traffic."

"The average law-abiding citizen or tourist has a low risk factor of being victimized by violent crime," Ca"Jtain Frank contends. "Most homicides occur in ghetto areas or among participants in crime."

The murder last week of Adolfo Ibarra, 23, a Colombian, is typical of what Captain Frank is up against. Mr. Ibarra stopped his car in a residential neighborhood popular with what are called "cocaine cowboys." Four men surrounded his car, machine-gunned him, got back in their car and drove off. Mr. Ibarra represented the county's lOOth homicide this year.

"In many cases," Captain Frank said, "we're investigating Colombian homicides that happen to occur on United States soil. They have no roots in the community. We can't identify the victims. The sus;iects have false names."

Jack Sullivan, a Miami police spokesman, discussed the case of Jorge Marrero, 26, who was shot once in the stomach while walking to his car shortly after midnight Friday and survived. But Mr. Sullivan said, "He just wouldn't say anything."

Mr. Marrero was believed to have been involved in a drug-related quarrel. Today, shortly after midnight, someone went to the Mercy Hospital room where Mr. Marrero lay sleeping and shot him again, this time in the head at close range. He did not survive.

"Drug dealers outman us," said Captain Fra.nk, "They have unlimited budgets. There's hardly any bond t"'ey can't make, and if they make it, they're gone. Why should thev go to prison ln the United States?"

According to Jim Simmons, the inspectoc

24542 CONGRESSIONAL RECORD-SENATE October 20, 1981 1n charge of the fugitive squad for the United States Marshal's omce in South Florida, as of last March he was looking for 365 persons who had jumped bond. Of these, he said, 350 were Involved with drugs.

BOND LOWERED TO $1 MILLION

One of Miami's most notable fugitives ls Alfredo Gutterrez, 44 years old, a Bollvlan Indicted in an operation in which he was allegedly to handle a $9 mllllon down payment for $200 mlllion in cocaine. His bond, originally set at $3 mllllon, was lowered to $1 mlllion, which Mr. Gutierrez paid. He then falled to appear for trial.

Drug Enforcement agents arrested Isaac Kattan, described by the Federal authorities as the inaln figure involved in the concealing and transferring, or laundering, of profits for the major narcotics traffic from South America. on Friday, Mr. Kattan's bond was set at $10 million. His records, according to Atlee Wampler, 3d, the United States Attorney, showed transactions of hundreds of mllllons of dollars.

Yesterday Mr. Kattan's bond was reduced to $2 mllllon over the objections of Charles Blau, the assistant United States Attorney handling the case.

In the last year, according to records of the Drug Enforcement Administration, Federal agents seized 4,887 pounds of cocaine In Florida, 847,733 pounds of marijuana, and 15.2 mllllon doses of counterfeit Quaaludes. They also confiscated $42 mllllon in cash, automoblles, boats, planes and other assets.

So much marijuana has been seized, in fact, that storing it has become a problem.

A WAIT FOR INCINERATOR TIME

"The round-the-clock guards are k1111ng me," said Sheriff Wllliam A. Freeman of Key West. "By the time we get rid of a batch, there ls another batch coming in. We have four or m111ion dollars worth of it outside my omce window right now," Sheriff Freeman can burn his marijuana at a United States Department of Agriculture incinerator on Fleming Key, but he has to wait for incinerator time: Hay-burning comes first.

Marijuana is st111 arriving in giant loadsthe Coast Guard seized lCO tons yesterday from the Panamanian freighter Alaskan !but a newer trend for Colombian marijuana seems to be shipments of 1,000 pounds each stowed under false decks on small boats. Jn October, 57 boats were seized. Marijuana from Jamaica, on the other hand, has been arriving in containerized freight.

According to Jim Dingfelder, a Customs spokesman, more than half the cocaine arrives by air cargo. The rest is shared by air passengers and by private planes.

"They're the pitcher, and we're the catcher,'' said Don Meyer, regional director of the Drug Enforcement Administration. "How do we catch what they're pitching?" Two things the drug smuggler has, he noted, are plenty of time to plan and plenty of money.

Last July a Cuban whom the authorities belleved to be a marijuana dealer was found murdered here. With him were duffel bags and paper sacks full of money, $5, $10, $20 and $50 bUls, $841,000 in all.

There ls so much money in Miami, much of it also from tourism and from Latin American investment, that the Federal Reserve Bank here has a $4 bllllon annual surplus. Most other Federal Reserve banks have currency shortages.

10 BANKS REPORTED UNDER INQUIRY

With this much money comes the possibllity of corruption. According to sources at the Department of Justice, at least 10 Florida banks are now under a Federal grand Jury investigation, part of Operation Greenback, a joint venture of the Justice Depl.rtment, the Federal Bureau of Investigation, the Internal Revenue Service, the Customs Service and the Drug Enforcement Administration

to cut otY drug dealers' ab111ty to move and launder money.

Last month an officer of the Landmark First National Bank in Fort Lauderdale was among three persons arrested in a scheme to launder $70 m1111on in profits from the sale of cocaine and marijuana.

Investigations also involve the pollce. Six officers in Captain Frank's homicide section have been suspended from the force and nine have been transferred out of the section pending an F.B.I. investigation of charges that some of the dete::tives accepted expensive gifts from a ml.n identified by Federal agents as a major cocaine del.ler.

Most of those trying to stop the drug trade point out that the tramc ls enormous because the market for drugs is huge.

"Cocaine," said Captain Frank, "is not a slum drug. It's the drug of the ellte. The profits wouldn't be here if people weren't using it."

The ki111ngs and the corruption occur where the drugs and money meet and change hands, in Southwest Dade County or in Liberty City, in places the beautiful people are not llkely to see. "There is no way, they can know what it's like," Captain Frank sald.e

ADDITIONAL COSPONSORS s. 46

At the request of Mr. THURMOND, the Senator from Arizona <Mr. DECONCINI) was added as a cosponsor of S. 46, a bill to amend title 5 of the United States Code to permit present and former civilian emp!oyees of the Government to receive civil service annuity credit for retirement purposes for periods of military service to the United States as was covered by social security, regardless of eligibility for social security benefits.

s. 603

At the reouest of Mr. ZoRINEKY, the Senator from Wiscons·n <Mr. KASTEN) was added as a cosponsor of S. 603, a bill to amend title 17 of the United States Code to exempt nonprofit veterans' organizat~ons and nonprofit fraternal organizations from the requirement that certain performance royalties be paid to copyright holders.

s. 604

At the request of Mr. MATHIAS, the Senator from South Dakota <Mr. PRESSLER) was added as a cosponsor of S. 601, a. bill to amend the Communications Ar,t of 1934 to provide that telephone receivers may not be sold in interstate commerce unless they are manufactured in a manner which permits their use oy persons with hearing impairments.

s. 895

At the request of Mr. MATHIAS, the Senator from Vermont (Mr. LEAHY) was added as a cosponsor of S. 895, a bill to amend the Voting Rights Act of 1965 to extend certain provisions for an additional 10 years, to extend certain other provisions for an additional 7 years, and for other purposes. '

s. 1081

At the request of Mr. MATHIAS, the Senator from Texas <Mr. BENTSEN) was added as a cosponsor of S. 1081, a bill to amend the Internal Revenue Code of 1954 to orovide for a deduction forcertain amounts paid into a reserve for service liability losses and expenses 'Jf design professionals and for other purposes.

s. 1106

At the request of Mr. ZORINSKY, the Senator from Iowa <Mr. JEPSEN) was added as a cosponsor of S. 1106, a bill to reform the insanity defense.

s. 1276

At.the request of Mr. DURENBERGER, the Senator from North Dakota <Mr. BURDICK) was added as a cosponsor of S. 1216, a bill to amend the Internal Revenue Code of 1954 to permit small businesses to reduce the value of excess inventory.

s. 1610

At the request of Mr. DANFORTH, the Senator from Utah <Mr. GARN) and the Senator from Oregon <Mr. HATFIELD) were added as cosponsors of S. 1610, a bill to increase the excise tax on cigarettes and to transfer the revenues from such tax to the Federal hospital insurance trust fund.

s. 1631

At the request of Mr. SPECTER, the Senator from Hawaii <Mr. INOUYE) was added as a cosponsor of S. 1631, a bill to establish a Presidential Commission on the Bicentennial of the U.S. Constitution.

s. 1637

At the request of Mr. D'AMATO, the Senator from Florida <Mrs. HAWKINS) was added as a cosponsor of S. 1637, a bill to establish a Federal annuity program to compensate participants in private pension plans which terminated before July 1, 1974, for nonforfeitable pensions benefits which were lost by reason of the termination, and for other purposes.

s. 1645

At the request of Mr. MOYNIHAN, the Senator from Texas (Mr. BENTSEN) was added as a cosponsor of S. 1645, a bill to let funds in individual retirement accounts be used to purchase collectibles.

s. 1706

At the request of Mr. MITCHELL, the Senator from Massachusetts <Mr. KENNEDY), the Senator from Rhode Island (Mr. PELL), and the Senator from Connecticut <Mr. WEICKER) were added as cosponsors of S. 1706, a bill to amend the Clean Air Act to better protect against interstate transport of pollutants, to control existing and new sources of acid deposition, and for other purposes.

SENATE JOINT RESOLUTION 62

At the request of Mr. DOLE, the Senator from Pennsylvania <Mr. HEINZ) was added as a cosponsor of Senate Joint Resolution 62, a joint resolution to authorize and request the President to designate the week of September 20 through 26, 1981 as "National Cystic Fibrosis Week."


At the request of Mr. MITCHELL, the Senator from Michigan <Mr. RIEGLE) was added as a cosponsor of Senate Joint Resolution 97, a joint resolution to designate the second full week in October as "National Legal Secretaries' Court Observance Week."


At the request of Mr. DODD, the Senator from California <Mr. HAYAKAWA). the


Senator from New Hampshire <Mr. HUMPHREY) , the Senator from Michigan <Mr. RIEGLE), the Senator from South Carolina (Mr. THURMOND)' and the Senator from North Dakota <Mr. ANDREWS) were added as cosponsors of Senate Joint Resolution 114, a joint resolution to authorize and request the President to designate October 23, 1981, as "Hungarian Freedom Day."

SENATE CONCURRENT RESOLUTION 21

At the request of Mr. THURMOND, the Senator from California <Mr. HAYAKAWA) was added as a cosponsor of Senate Concurrent Resolution 21, a concurrent resolution expressing the sense of the Congress on the Baltic States question.

SENATE RESOLUTION 211

At the request of Mr. BENTSEN, the Senator from Arkansas <Mr. BUMPERS), and the Senator from Kentucky <Mr. HUDDLESTON) were added as cosponsors of Senate Resolution 211, a resolution calling on the Governors of the Federal Reserve System to encourage banks to make loans available for productive uses while eliminating loans for speculative and unproductive uses.

SENATE RESOLUTION 231-RESOLUTION RELATING TO MANAGEMENT OF U.S. ASSETS Mr. PERCY submitted the following

resolution; which was referred to the Committee on Governmental Affairs:

8. RES. 231 Whereas the debt of the United States now

exceeds one trlllion dollars; Whereas the acquisition cost of the assets

owned by the United States alSo exceeds one trillion dollars;

Whereas many Federal properties have appreciated significantly since they were acquired, so that the true value of the tangible assets of the United States may be substantially more than one tr1llion dollars;

Whereas the federal government has n.o idea what its assets are currently worth;

Whereas the federal government currently has surplus property with an acquisition cost of $1,323 ,387,000 and may have property worth many times this amount that is not needed by the federal government, but has not been declared surplus;

Whereas most properties declared to be surplus to the needs of the federal government, of which many ·are quite valuable, have been given away;

Whereas the proceeds from those few federal properties sold at market value have been used, not to restrain or reduce the national debt, but to acquire more government property;

Whereas federal assets are the property of the American people, but they have not heretofore been managed to the maximum benefit of the people;

Whereas without an up-to-date Inventory of federal assets, there ls no way to distinguish between those which are needed and those which are not; without knowledge of the approximate market value of such assets, there is no way to set priorities for liquidation; and without improved procedures the government may be unable to liquidate unneeded assets at their market value;

Whereas many federal properties could be liquidated without damage to the public welfare, and often without changing the present public use of such properties;

Whereas the federal government can continue to increase the nationa.l debt only at

the risk of serious da.ma.ge to the economy of the United States and other national economies throughout the world;

Whereas the liquidation of carefully .selected federal properties could contribute to restraining and ultimately reducing the national debt of the United States;

Resolved, that it is the sense of the Senate that ( 1) the government of the United States must manage its assets in a. manner more prudent and beneficial to the interests of the American people; (2) the President should immediately direct the heads of all Executive Branch agencies to Inventory their assets (except for national parks, monuments, historic sites and other holdings for which an inventory would serve no purpose), to estimate the approximate value of ea.ch asset, and to identify the uses to which each asset is put; (3) the President should then identify which assets a.re surplus to federal needs and should be candidates for liquidation; ( 4) the President should submit recommendations to the Congress of the United States on any legislative and administrative revisions that may be needed to carry out such a program of liquidation In an orderly manner; ( 5) the receipts Of this program should be used only to restrain and ultimately reduce the national debt of the United States; and (6) the Comptroller General should investigate and recommend to the Congress and each agency improved processes for managing federal assets, estimating their va.lue, and liquidating those which a.re unneeded.

Mr. PERCY. Mr. President, today I am calling for measures that will bring business-like discipline and fiscal responsibility to the way the Federal Government manages its assets. The resolution I am introducing today calls on the President to inventory the assets of the United States, estimate their market value, identify which are unneeded and can be sold, and recommend legislative and administrative action to streamline the liquidation process.

I am not suggesting that this be done as an alternative to cutting the budget. However, I do believe that this housecleaning would contribute significantly to our long-range goals of a more efficient Government, reduced inflation, and relief from high interest rates and, above all, our need to restrain and ultimately reduce the national debt.

I might say this has been one of a series of many things that I, and others who are somewhat aghast at 'the way the Government runs, have tried to bring into the business of Government those business like procedures which are adapta:ble. We recognize that you do not run the Federal Government as a pro:fitmaking enterprise. We certainly are a long, long way from that with a $1 trillion debt, and going up to astronomical figures.

But there are certain aspects which have been developed in the world of business that are universally applicable. A good university should run itself in accordance with these principles; a good nonprofit organization should run itself in a~cordance with these principles.

For instance, on budgetary control, in the :first 190 years of Congress we never really had any kind of budgetary control. We did not have a Budget Committee.

We did not have deadline dates before we did things. We always worked in the area. of appropriations and authoriza-

tions, looking at the President's budget, but generally paying not 1000 much attention to it, com.ng up at the end of the :fiscal or beginning of a fiscal year, runnmg late rnght sessions, putting bill after bill in, all of which we call Ohristmas tree bills, adding :things, adding things, adding things, adding billions of dollars to the deficit which, for many months, we never even knew what the total actually was.

And so the Governmental Affairs Committee began work on 1the Budget Reform Act oi 1974. And, in lead witlh my distinguished colleague, the chairman of the ~omm'ittee, Senator Sam Irvin, and, as ranking minority member, I also worked bipartisanly with Ed Muskie, we developed a system, invented 1the word "reconciliation," a word that was not well known, but certainly is well known now, because it enabled $36 billion to be cut out of the budget. It has s•omewha;t delayed the process, but what it has done is it has given us the biggest 'budget cut in the history of 1the Congress of the United States. And I do not think we would reverse that.

We are now just a few days away from a mJestone in American history-the day our national debt reaches the $1 trillion mark. Every year, the debt keeps rising, and every year the Congress approves lifting the debt ceiling to yet another record level. If we do not learn how to stop this dangerous trend by the mid-1980's, we could easily push our economy past the breaking point. The trill ~on dollar milestone should be a signal to us in Congress that now is the time to get serious about finally doing something about this.

We have already begun to cut back on sprawling, unmanageable Government programs to help put the Federal establishment back on a leaner, more manageable footing. We have made remarkable progress in a short time, cutting the Federal budget, cutting Federal income taxes, and cutting back on the inflationary impact of Government regulations. But, Mr. President, I believe there remains an extremely significant opportunity where far too little has been done. Until today, we have had little or no discussion about finding out what the Government owns-its assets-and cutting back on those assets which are simply not needed.

Mr. Pres~dent, according to the most recent Federal reports, the Federal Government's total assets amount to just over $1 trillion. About $434 billion of this is property, buildings, equipment and various materials, with $130 bilEon classified as real property assets. But these :figures I know seriously underestimate current market values since they reflect only the cost of acquisition. And the cost of acquisition of anything in the past is substant;ally less than the cost of acquisition today.

For example, the Federal Government's assessment of 47 million acres of Federal land in California breaks down to only $21 per acre. Nevada land is valued at 65 cents per acre and Illinois land at $300 per acre. In contrast to that, some of the rich farmland of Illinois that I have seen traded lately is trading


for well over $4,000 an acre. The District of Columb:a land is valued at $12,500 and all of these are less than 10 percent of their probable market value.

The same point could be made about improvements made on the property since it was acquired; that is, missile silos, parking lots, et cetera. The multibillion Naval Petroleum Reserve is valued at just-and get this-$11 million. Based on preliminary research, we believe the true value of U.S. real property assets is likely to be much, much more than a trillion dollars; $7 trillion, at least, in my judgment.

The Government has virtually no idea of the true value of what it owns. As a former businessman, I can tell you that a company's top management has to know enough about the company's assets to know what they are actually worth. If any company's board of directors ever discovered that management had no idea about the value of the firm's assets, they would simply not stand for it.

Right now, the General Services Administration is holding 546 excess or surplus Federal propert '.es with a total acquired cost value of $1.3 billion. But in terms of current value, many of these parcels are grossly underestimated. GSA does not even make an estimation of the fair market value for surplus property until after the determination is made on how to dispose of it. And before an excess or surplus property is sold, the Federal Government typically struggles through outrageous bureaucratic delays-10 years or more in some cases.

If Members get outraged at something like that, th:ngs will get much worse than that. When we are holding on to property that we no longer need, where there is no earthly use for it, it is like someone decid!ng for sentimental reasons, "I will sell my house and buy another one. I will not sell it but hang on to the old homestead and buy another house and hang on to the two of them, buy another and hang on to the three of them." You would examine their sanity if they did things like that. But that is what the Federal Government does.

All over, with military and with civilians, we are hanging onto something we do not need. We are not getting back something we can use. It is costing us money to operate this surplus property that we have no earthly use for whatsoever. Then, of course, we go through the procedure of, "If we declare it surplus, what do we do? We offer it first to States and then local communities." They probably did not need it in the first place, but if it is a gift, if it comes to them for $1, why not take it? All of a sudden they are taking on an operating expense. We simply have too many examples of the Federal Government not running business in a very prudent-like way.

To give you some examples of what the Government is holding onto, there are 109 acres of surplus land in Fairfax, Va., which have been sitting unused and unsold for 9 years. In Beltsville, Md., there are 5.5 acres of unneeded Federal property which has been unused since 1937. Mr. President, I do not know how much these parcels are worth-nobody has

bothered to appraise them-but I am sure they are worth a lot of money. It is almost certain that, if sold, these properties would be put to more effective. productive use in the private sector. But because the Federal Government keeps hanging onto them, we lose the financial benefits which result from their sale, and the State and local governments receive no taxes from their private use.

Furthermore, it appears that tremendous amounts of unneeded property, much of it in the Defense Department, is never reported excess. While it is difiicult to obtain a comprehensive list, we are discovering examples of valuable land that should probably be sold-especially in view of our current economic situation. For example, the Defense Department owns prime beachfront property right in the middle of Waikiki Beach in Hawaii, on which sits a 416-room luxury hotel, used exclusively by vacationing military personnel-for super-bargain rates, I should add.

potential liquidation. The resolution calls upon the President to submit recommendations to the Congress on any legislative and administrative revisions necessary to carry out an orderly liquidation. It also calls on the Comptroller General to give top priority to investigating and recommending improved processes for the management of Federal assets.

If we begin today with these steps, we could, by the middle of the 1980's, have mechanisms in place that would allow the Federal Government to track its assets in an orderly fashion and dispose of those which are no longer needed to carry out legitimate missions of government.

A few years ago, this proposal would have been regarded as unrealistic, unworkab!e, and polit~cally impossible. Today, things have changed. We have a new beginning. The American people are demanding a return to principles of sound management and commonsense. They want a leaner, more responsive Federal Government. Action is long overdue, it is badlv needed, and it is needed now. I s;ncerely hope my colleagues will join in this important effort.

AMENDMENTS SUBMITI'ED FOR PRINTING

Finally, the proceeds from those few Federal properties so.d at market value have been used, not to relieve pressure on the national debt, but to acquire more Government property. Proceeds from the relatively small sales, only $84 million last year, go entirely to the Land and Water Conservation Fund, which is used primarily to acquire new lands. But GSA sales are only a drop in the bucket in terms of LWCF assets: The Fund has a TREASURY, POST OFFICE APPRO-surplus of approximately $3 billion from PRIATIONS, 1982 off.shore oil lease sales. Thus, the Gov- AMENDMENT No. s91

ernment is unable to liquidate assets for (Ordered to be printed and to lie on the the financial benefit of the taxpayers it table.) either gives the land away or sells it, Mr. D'AMATO (for himself, Mr. with proceeds going elsewhere. WEICKER, Mr. STEVENS, and Mr. DrxoN)

Mr. President, I want to make it clear submitted an amendment intended to be from the outset that I am not proposing proposed by them to the bill <H.R. 4121) that we should add up the value of na- making appropriations for the Treasury tional parks, historic monuments or Department, the U.S. Postal Service, the other priceless national treasures. I am Executive omce of the President, and proposing, however, that we inventory certain independent agencies for theftsand appraise acquired properties bought cal year ending September 30, 1982. for agency missions, especially those TAX-EXEMPT INDUSTRIAL DEVELOPMENT BONDS which may no longer be needed to fulfill , . . those missions. We should at least inven- ~ O Mr. DAMATO. Mr. President, durmg tory, appraise, and reevaluate all prop- ~he P~st dec~de the tax-exempt, smallerty for which it makes sense to do so. issue industrial development bond <IDB)

program has been a valuable tool for Fe~eral assets are the property of the local economic development. Without

American people, but. they have not been IDB financing, thousands of small busimanaged to the maximum benefit of the nesses would have been unable to secure people. Instead, they are manage~ in a the necessary capital for expansion and way that benefits first, the parochial in- the generation of new jobs. With today's terests of each Fed.era~ ~gency and de- continued high interest rates, small enpartment; second, mdividual State and trepreneurs cannot compete, or even surloc~l gover~ments a!1d nonprofit organi- vive, without the affordable financing za~1ons which receive free lands; a:nd provided by !DB's. third, the ~and ~nd Water Conservation In 1980, according to the congressional Fun~. National mterests are simply not Budget Office, over $8 billion of !DB's considered. were issued in accordance with section

Mr. President, it is a plain fact that 103 (b) (6) of the Internal Revenue Code. the Government may have at its dis- Eighty-four percent of this capital was posal-r:ght now-the resources it needs used by small- and medium-sized busito bolster Federal revenues in coming nesses-those smr.ller than the compayears. We must re::ognize this fact, and nies listed in the Fortune 1,000 enumeraact on it immediately. My resolution tion. !DB's are now issued in 47 States. calls on the President to immediately be- Admittedly, there are abuses in the gin making an inventory of what the IDB program. Some restrictions should, Government owns. The head of every and undoubtedly will, be placed upon executive branch agency would conduct their use. However, restructuring this such an inventory and estimate the cur- program to deal with these abuses is a rent market value of agencv-owned as- legislative, not an administrative, matter. sets, and identify assets he constders sur- Moreover, any new restrictions placed plus to Federal needs as candidates for upon the use of !DB's should be directed

October 20, 1981 CONGRESSIONAL RECORD-SENATE 24545 specifically at these abuses, but should not cripple the underlying program itself.

Thus, while we hope th:l.t the Finance Committee will hold hearings on the IDB program in the near future and will report out legislation to correct the abuses, we take exception to arbitrary regulatory actions taken by the Treasury Department in the interim which have a decidedly harmful effect on this truly useful program.

Specifically, we deplore Revenue Ruling 81-216 which prohibits the pooling of multiple lots of small issue IDBs into a single bond issue. We are also disappointed by the fact tha.t this important TUling was imposed on August 24 without prior notice and was made effective immediately. In our opinion, Ruling 81-216 and any other subsequent regulations which would have an adverse effect on the IDB program should be held in abeyance until the Congress has enacted further legislation in this area..

Thus, our amendment serves two purpases. If restores the state of affairs visa-vis IDBs to as they were on August 23, 1981, prior to the issuance of Revenue Ruling 81-216. In addition, this amendment makes it clear that the Congress has supremacy in restructuring the IDB program.

It is our sincere hope that the Finance Committee will take this oppartunity to eliminate the abuses from the IDB program. However, it is also our intention that the small businessmen who depend upon this low cost financing shall not be precluded from obtaining affordable capital.

Mr. President, we ask unanimous consent that this amendment to H.R. 4121, the Treasury, Postal Service, and General Government fiscal year 1982 appropriations bill, be printed in the RECORD.

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

At the appropriate place in the b111 add the following:

None o! the funds appropriated by this Act may be used to prepare, promulgate or enforce any regulations or Revenue Rulings on or after August 24, 1981, which have the effect or limiting the issuance or ta.x-exem?t industrial development bonds under section 103(b) (6) or the Internal Revenue Code or 1954, as amended, until such time as the Congress enacts further legislation affecting this section of the Code.e

NOTICE OF HEARINGS SUBCOMMITTEll: ON INTERGOVERNMENTAL

RELATIONS

Mr. DURENBERGER. Mr. President, I would like to announce that the Subcommittee on Intergovernmental Relations of the Governmental Affairs Committee has scheduled an oversight hearing of the Advisory Commission on Intergovernmental Relations <ACffi). The Acm has been established for 20 years now and every 5 years the subcommittee has conducted a sunset review of the Commission.

The hearing will be held in room 224 of the Russell Senate Office Building, Wednesday, October 21, 1981, beginning at 9: 30 a.m. Tho3e wishing to submit written statements to be included in the

printed record of the hearing should send five copies to Ruth M. Doerflein, clerk, Subcommittee on Intergovernmental Relations, ro:>m 507, Carroll Arms Building, Washington, D.C. 20510.

For further information on the hearing, you may contact Jimmie Powell, staff director of the subcommittee, at 224-4718.

AUTHORITY FOR COMMI'ITEES TO MEET

COMMITTEE ON THE JUDICIARY

Mr. TOWER. Mr. President, I ask unanimous consent that the Committee on the Judiciary be authorized to meet during the session of the Senate on Thursday, October 22, to hold confirmation hearings on the following nom.1nations:

Richard Caradome of New York to be a U.S. circuit judge for the second circuit;

Paul Magnuson to be a U.S. district judge for the district of Minnesota: and

Robert Potter to be a U.S. district judge for the western district of North Carolina.

The PRESIDING OFFICER. Without objection, it is so ordered. COMMITTEE ON AGRICULTURE, NUTRITION, AND

FORESTRY

Mr. TOWER. Mr. President, I ask unanimous consent that the Agriculture Oommittee be author.ized to meet during the session of the Senate tomorrow, Wednesday, October 21, to hold hearings on the nominations of Susan Phillips to be Commissioner of the Commodity Futures Trading Commission and Everett Rank to be a member of the board oi directors of the Commodity Credit Corporation.


COMMITTEE ON GOVERNMENTAL AFFAIRS

Mr. TO\VER. Mr. President, I ask unanimous consent that the Governmental Affairs Committee be authorized to hold a hearing tomorrow, October 21, at 9 : 00 a.m. on the acquisition process at the Department of Defense.

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

ADDITIONAL STATEMENTS

WATT-ISM • Mr. CRANSTON. Mr. President, yesterday the Sierra Club brought to the Capitol petitions from all over the country calling for the replacement of James Watt as Secretary of the Interior. These petitions, bearing the signatures of over 1 million Americans, are a tangible sign of the public oppos:tion to Mr. Watt and th!s administrati-on's attack on the environment.

Californian Joe Fontaine, president of the Sierra Club, spoke for the volunteer membership organization on the Capi~ol steps about this assault on environme.:ital protection and conservation which he terms "WA'IT-izm." Because the S~erra Club has members in virtually every State, I would like to share his remarks wit~ my colleagues.

Mr. Prezident, I ask that the statement of Mr. Fontaine be printed at this point in the RECO.RD.

The statement follows: SIERRA CLUB DECLARES WAR ON "WATT-ISM"

(By Joseph Fontaine) Si:<: months ago, we launched a nationwide

petition drive seeking to demonstrate unmistakably that the American people are opposed to the anti-environmental, anticonservation policies of the Reagan Administration. President Reagan's assault on the American environment is personified by his Secreta:::-y o! the Interior, James Watt.

The Sierra Club and Friends ot the Earth ha,·e now collected more than a m1llion signatures on our petition urging Congress to overturn the policies of James Watt-and to work for his removal fr,om public office.

With me today are 70 volunteer !eiiders of Sierra Club chapters from virtually all 50 states. We have come to bring these petitions and this message to each member of Congress.

1,100,000 SIGNATURES SO FAR

When we began this petition drive, our goal was to obtain one m1llion signatures. Today, we have petitions bearing more than l,100,000 signatures. To our knowledge-and to the best knowledge of the Library of Congress-this is the largest citizens' petition e;rer presented to the Congress.

And this "Replace Watt" petition wm continue .to grow. Each week some 50,000 additional signa.tures pour into our San Francisco headquarters.

In bringing these 1,100,000 signatures to the Congress, we have accomplished our goal: these petitions bear the evidence that the American people will not tolera.te the tide of ant i-conservation policies being pursued by the Reagan Administration. It is apparent that millions more Americans share this concern-this is reflected on editorial pages across the na.tion, in every major public opinion poll-and even in comic strips.

REAGAN-WATT PROGRAM OUT 01' STEP

We and millions of Americans believe Secretary Watt and his programs are radically out of step with what the people want as our national policy toward natural resources and environmental protection. Here are 1,100,000 petition signatures to prove it.

We and m1llions of Americans believe this nation should strengthen our basic fabric of environmentat protection laws and step up their enforcement--not weaken them and stop enforcement, as Watt and those around him are ,trying to do in every way they can. Here are 1,100,000 petition signatures to prove it.

We and mil11ons or Americans believe we have a moral obligation to future generations to carefully conserve our resources and to preserve the quality of the land, the ·air and the wa.ter we will leave our children . Here are 1,100,000 petition signatures to prove it.

The Reagan Administration's spokesmen are fond of talking about their great mandate." President Rea!!an did receive a narrow majority in the election last year, but not one vote was cast !or James G. Watt to be Secretary of the Interior. Not one vote was cast for Anne Gorsuch to cripple the healthprotection functions of the Environmental Protection Agency. Not a single vote was ca.st !or their radical assault on this nation's carefully constructed laws and programs for environmental protection .and conservation.

So, we have come from across the ng,tion to tell our la"Vmakers that this Reagan/Watt a.ttack on America's resources and environment is out of step with the wishes of the people.

And here is our mandate I


REAGAN'S ASSAULT ON THE ENVIRONMENT

These petitions single out James Watt. But our fight ls not against one man. James Watt may have become the symbol-but the problem is broader.

Watt a.nd like-minded Reagan appointees a.re engaged in a carefully calculated, singleminded, zealous assault on every aspect of our nation's environmental protection and natural resource conservation programs.

It is ':ihis broader three.t we are resisting. It is not just Watt whom we and these 1,100,000 1dgners oppose, but the entire Reagan anti-~nvlrnnmental assault. lt can have no better name than WA'IT-ism.

CALL rr "WATT-ISM"

WATI'-ism views our public lands, forests e.nd other resources not as a legacy for the future, !.>ut as a bank balance to be drawn down as quickly as possible in the name of immediate development and a fast buck.

WATT-ism seeks to dismantle the laws that protect clean air and water and to cripple the enforcement machinery that forces polluters to clean up-Just because these essential public health programs reduoe the profits of big corporations and big Rea.ga.n campaign contributors.

WATI'-tsm may be new in its audacious scale and speed, but at the heart of this assault ~re old, old enemies the Sierra Club has been fighting for almost a century: self interest, ignorance, short-sightedness, and greed.

Reagan'.c; people say they are for "multiple use" of public lands, for easing "unnecess.uy regulatory burdens," and for "cost-benefit"' justification of any restraint on big industry. But the American people are not so easily fooled. They can tell who will benefit-and who wm pay the costs-of these antlenvlronmental policies:

Anne Gorsuch and President Reagan proclaim their belief that "the nation should continue its steady progress toward cleaner air"-but their proposals for changing the Clean Air Act would double the amount of air pollution. They are out to cut in half the vital health-protection work and enforcement machinery of the E.P.A.

James Watt proclaims he is a "mainstream conservationist" just trying to restore "balance"-but his idea of balance means oil and gas rigs in our wilderness areas, huge polluting power plants at the very edges of our national parks, mining in our national wildlife refuges, and oil development along every shoreline.

John Crowell, who oversees our national forests, says he ls a conservationist, too. But his idea of conservation is to cut down our public forests faster than they can regrows. practice long advocated by his former employers in the timber industry.

James Harris, who runs the Office of Surface Mining, says he just wants to streamline the stripmine reclamation programbut his idea of streamlining is to gut the regulations and cut in half the number of insi: ectors.

President Reagan, OMB Director David Stockman, and Energy Secretary James Edwards proclaim their unceasing devotion to the free market, then want to add to the r.1-ready massive gO!Vernment subsidies for the nuclear industry-even as they work to klll off every program encouraging solar energy and energy conservation.

WATT'S CONSERVATION TOKENISM

We need to add a word here about tokenism. Mr. Watt is a clever man. He will make, from time to time, some symbolic conservation effort to support his claim that he ts a real conservationist.

He is about to propose with great fanfare that several rather small areas of public land be designated as wilderness, including the beautiful Arivaipa Canyon of Ari-

zona. No great political courage or leadership there.

But watch what the other hand will be doing: moving to rapidly terminate any further protection for millions of acres of other wilderness study a.re~. inzluding several milllon acres in the California desert.

Mr. Watt will be posing this week as the great savior of our Ea.st Coast and Gulf Coast barrier islands, supporting a bill that others created and have moved. He's Just about the last one to get aboard thali bandwagon.

We welcome these occasional gestures, but they should not fool us, nor the Congress, nor the American people. Mr. Watt's conservationist pose rings false.

Americans care more for their land than Secretary Watt knows. They care more about green forests and abundant wildlife than John Crowell will admit. They care far more about their family's health than Anne Gorsuch can begin to appreciate. In ·their commitment to environmental protection and resource conservation, Americans seem to care more about future generations than does President Reagan.

That is why we are here. That is why these 70 other Sierra Club volunteer leaders and I will begin today to take these petitions and our message to every senator, and to every congressman and congresswoman.

OUB WAR ON WATT-ISM

In the face of the Reagan assault, the Sierra Club is redoubling its commitment to defend America's resources, our parks and wilderness areas, our wildlife, and the air we all breathe and the water we all drink.

Where w~ see WATT-ism being pushed by federal agencies, we will resist every step of the way in the courts. (The courts have already turned back Watt's plans to override state decisions and rush ahead with massive offshore oil leasing.)

Where we see WA'IT-ism emerging in reckless legislation or short-sighted budget proposals, we will fight every step of the way in Congress. (The Congress has already ordered Watt not to lease key wilderness areas for oil exploration, and has overridden Watt and Stockina.n to insist that we continue acquiring key national parklands and to maintain important energy conservation programs.)

And today, the Sierra Club is throwing down the challenge to WATT-ism in a new arena. James Watt wm not be on the ballot in 1982-but we are going to see to it that WA'IT-ism is! TAKING WATT-ISM TO THE POLLS IN THE 1982

CONGRESSIONAL ELECTIONS

We intend to make WATI'-ism a central issue in congressional elections in 1982 all across the United States.

More than 1,100,000 Americans have already "voted" against WA'IT-ism through our petition, a year before the elections. We believe that these citizens and millions more will want to cast their vote in 1982 in a way that registers their opposition to the Reagan Administration's assault on the environment-in a way Ronald Reagan can understand-even if James Watt can't. We are launching a major etrort to convince Americans to vote against WATI'-ism in 1982.

This anti-WATT-ism campaign will be bipartisan. The new anti-environmental radicals Reagan has brought temporarily into public office betray the proud conservation tradition of the Republican Party-the party of Teddy Roosevelt, of Rogers Morton, of John Saylor. They embarrass good Republican conservationists holding office today. As they stand up to WATT-ism, we are going to stand up for them.

This will be a grassroots political effort, carried out at the state and congressional district level. Working through our own Sierra Club political action committee and cooperating with national, state, ~nd local

environmental campaign organizations, we are going to enlist the full volunteer strength of the grassroots conservation movement to de11eat WATI'-ism at the polls and to permanently discredit it as a poll ti cal philosophy.

We intend to turn out workers to support incumbents who have decent conservation voting records. We are going to work for candidates who want to challenge WA'ITism. Our volunteers will go to work in these campaigns-to help raise the campaign money, to help canvass neighborhoods, to mobilize telephone banks, and to turn out the environmental vote.

To provide a national focus for this grassroots effort, the Sierra Club will question every candidate, in detail, about their positions on environmental, conservation and energy issues. We will test where candidates stand on the policies being embraced by WATT-ism. And we will announce, incumbent-by-incumbent and challenger-by-challenger, an individual WATT-ism INDEX-a measure of the degree to which that incumbent or challenger opposes or supports the central tenets of WATI'-ism.

We are going to be asking candidates specific, pointed questions as we grade them on support or opposition to WATT-ism:

Do they really support clean air--or would they allow the Clean Air Act to be weakened through major changes in pollution standards and enforcement?

Do they really support the preservation of our public lands--or would they give corporate America unrestricted access to these national treasurelands?

Do they support solar energy and energy conservation--or are they willing to see the programs launched over the past few years gutted?

Do they really want to reduce the grave dangers posed to public health through toxic dumps and spills-or will it be back to business-as-usual, Reagan-style?

Do they want to see America's wildlife protected--or are they willing to watch as the Endangered Species program ls stripped of its power, and as our wildlife refuges are turned over to development?

Do they want to achieve a sound energy system--or are they willing to provide massive subsidies to the dying nuclear industry?

Are they willing to continue U.S. efforts to help the less developed countries protect their environment-or would they cut off funding for the U.N. Environment Programme and kill a decent Law of the Sea Treaty?

These are real and important concerns of the American people. It is because of these concerns that more than one million of our fellow citizens have already signed the "Replace Watt" petition.

i\,mericans have not lost sight of the fact that the resources of this na.tlon--our public lands, our air, our water-belong to all Americans, not Just of our generation, but to countless future generations, too.

We cannot-we must not-let shortsighted, greedy officials destroy our resources for a qulclt buck nor diminish the quality of life for our children.

Some 70 years ago, the Sierra Club's founder and first President, John Muir, said:

"These temple destroyers, devotees of ravaging commercialism seem to have a perfect contempt for Nature, and instead of lifting their eyes to the God of the Mountains, lift them to the Almighty Dollar."

Today, new money changers are in the temple. We must all help to rout them out I

Mr. CRANSTON. Mr. President, the American people's concern about pollution and the environment reaches far beyond those individuals who signed the Sierra. Club petitions. A recent Louis Harris survey on air pollution 1ndicat.es

October 20, 1981 CONGRESSIONAL RECORD-SENATE 24547 that Americans support for environmental protection is widespread. The vast majority of the public nationwide does not want to cut back or relax existing Federal regulations to protect the environment, like air pollution standards.

Mr. :t-resident, I ask that the Harris survey on air pollution be printed at this point in the RECORD.

The survey follows: THE HARRIS SURVEY

Between September 19th and 24th, the Harris Survey asked a cross section of 1,249 adults nationwide by telephone:

"Congress will soon consider the Clean Air Act, which ls now ten years old. Given the costs involved in cleaning up the environment, do you think Congress should make the Clean Air Act stricter than it is now, keep it about the same, or make it less strict?"

STRICTNESS OF CLEAN AIR ACT

[In percentJ

Keep about Make it

Make it the less Not stricter same strict sure

September 198L ___ ____ __ 29 51 17 May ___ ---- __ ------ -- __ -- 38 48 12 February ___ ------------- 36 46 12

September Demographics

East_ ________ -------- ____ 35 45 18 Midwest_ ________________ 25 55 16 South __ ----------------- 25 54 17 West _______ --------- ____ 33 47 17 Cities ____ _______________ 34 49 14 Suburbs _________________ 32 48 19 Towns ___________________ 31 49 16 Rural_ ___________________ 21 56 19 Age:

40 50 10 18 to 29 _____________ -------3 30 to 49 _____________ 26 52 19 50 to 64 __ ----------- 25 48 22 5 65 and over---------- 21 52 19 8

8th grade ______ __________ 20 48 20 12 Hiph school_------------- 30 50 17 3 College __________________ 30 51 17 2 Men ____ ---------------- 24 53 22 1 Women __________________ 34 48 13 5 White __ ----------------- 27 53 17 3 Black ___ ---------------- 36 40 17 7 $7,500 or less __ ---------- 35 45 17 3 $7,501 to $15,000 _________ 31 50 16 3 $15,001 to 25,000 _________ 33 52 13 2 $25,001 to $35,000 ________ 22 53 24 1 $35,001 and over _________ 21 56 21 2 Professional_ _____________ 28 55 15 2 Executive ________________ 36 44 20 --------Proprietor ___ ·----------- 35 46 18 1 Skilled labor _____________ 25 54 21 -------2 White collar_ _____________ 30 52 16 White Protestant__ ________ 24 54 19 3 White Catholic ____________ 32 51 15 2 Jewish ___ --------------- 29 67 4 --------Union rr:ember __ --------- 32 50 16 2 Voted Reagsn 1980 ________ 24 52 22 2 Voted Carter 1980 _________ 29 50 17 4 Republican _________ ------ 23 52 22 3 Democrat_ _______________ 33 51 13 3 I ndependenL ________ ---- 28 49 21 2 Conservative _________ -- -- 25 51 21 3 Middle of road ___________ 29 54 16 1 Liberal __________________ 37 45 15 3

"Now I'm going to ask you about some specific changes that are being considered in the Clean Air Act. For ea.ch, tell me whether you favor or oppose the change."

CHANGES IN CLEAN AIR ACT

[In percent)

Not

"The Clean Air Act does not permit the c0nsideration of co,;ts when setting standards for the protection of human health. The Reagan Administration is considering asking Congress to require that pollution standards designed to protect human health be relaxed if the costs are too high. Do you favor or oppose relaxing pollution standards affecting human health lf the costs a.re too high?"

RELAX POLLUTION STANDARDS PROTECTING HUMAN .HEALTH IF COSTS TOO HIGH?

(In percent)

Total nationwide.--------

East..----------------------Midwest_ ____________________

South.----------------------West_ _____ ---- ~- -- -- -- ------Cities __ ----------------- ____ Suburbs _________ ---------- __ Towns.---------------------Rural •• ---------------------Age:

18 to 29. ----------------30 to 49. ----------------50 to 64. ----------------65 and over ______________

8th grade education ___________ High school. _________________ College ____________ -- ____ -- --Men _________ -------------- --Women __ -------------- -- -- --White ___ --------------------Black ____ .------ __ ----------$7,500 or less ________________ $7,501 to $15,000 _____________ $15,001 to $25,000 ••• ----------$25,001 to l 35,000 ____________ $35,001 and over·------------ProfessionaL ••• ______________ Executive ____________________ Proprietor------------- ------Skilled labor _________________ White collar__ ________________ White Protestant__ ____________ White Catholic__ ______________ Jewish ___ -------------------Union member _____ ----------Voted Reagan in 1980 _________ Voted Carter in 1980 __________ Republican __ _____ ---- __ ------Democrat_ ___________________ Independent__----------- ____ Conservative _______ •• ------ __ Middle of the road ____________ Liberal. _____________ •• ------

1 No response.

Favor relaxing

standards

32

33 35 33 26 29 31 33 37

27 35 36 34 30 31 34 39 26 33 31 28 30 28 37 41 32 43 43 30 31 37 26 23 31 41 25 42 26 33 41 31 22

METHODOLOGY

Oppose relaxing

standards

65

66 61 63 72 68 66 65 58

72 62 62 59 64 65 64 58 70 64 67 69 68 70 61 55 64 55 52 69 69 59 72 75 67 56 72 56 71 65 56 67 76

Not sure

1 4 4 2 3 3 2 5

1 3 3 7 6 4 2 3 4 3 2 3 2 2 2 4 4 2 5 1

(1) 4 2 2 2 3 3 2 3 2 3 2 2

This Harris Survey was conducted by telephone with a representative cross section of adults 18 and over at 1,249 different sampling points within the United States between September 19th and 24th. Figures for age, sex and race were weighted where necessary to bring them into line with their actual proportions in the population.

In a sample of this size, one can say with 95 percent certainty that the results are within plus or minus three percentage points of what they would be if the entire adult population had been polled.

This statement conforms to the principles of disclosure of the National Council on Public Polls.e

sure RESCINDING THE OCTOBER 1 MILK --------------------------------- PRICE INCREASE

Favor Oppose

Postpone the current deadlines for auto companies meeting auto pol-lution standards ________________ 42

Relax current auto pollution stand-ards ___________________________ 38 Postpone current deadlines for

electric companies meeting powerplant pollution standards ___ 37

Relax regulations that protect na-tional park and wilderness areas

36 from air pollution _______________ Relax national air quality standards_ 34 Relax pollution standards to allow

powerplants to burn higher sul-29 fur content oil and coat_ ________

54

58

57

61 61

66

3 5

•Mr. DOLE. Mr. President, I commend the Senator from Wisconsin, Mr. PROXMIRE, on his decision yesterday to withdraw his opposition to a vote on reversing the increase in the dairy support price, which went into effect on October 1.

In the intervening period, the higher support price of $13.49 per hundredweight cost u .. s. taxpayers an additional

$1,278,000 for the dairy program, or about $160,000 per business day.

Mr. President, I submit for the RECORD a letter from the Department of Agriculture attesting to this cost incxease.

The letter follows: DEPARTMENT OF AGRICULTURE,

Washington, D.C., October 20, 1981. Hon. RoBERT J. DOLE, U.S. Senate, Washington, D.C.

DEAR SENATOR DOLE: As requested we are providing you with purchases of dairy products that have occurred since the October price support increase of $13.49 per hundredweight went into effect.

Purchases of dairy products for tbe period from October 7 through October 19 were as follows:

Nonfat Butter dry milk Cheese Total

Quantity purchased (million pounds) ____ 10. 5 25.6 5.8 41.9

Increase in purchase price (cents per pound) _______ • ____ 4.0 2. 5 3. 75 ---------Increased costs (thou· sands) _____ ---- ____ $420 $640 $218 $1, 278

The first purchases in the new marketing year began on October 5 but represented September production at the cld lower prices. The initial purchase of October production at the new higher prices began October 7 for butter, October 8 for nonfat dry milk and October 13 for cheese. Thus, the table shows only six days of purchases for butter, five days for ~onfat dry milk, and four days of purchases for cheese.

Sincerely, WILLIAM 0. LESHER,

Assistant Secretary for Economics. UNDERSTANDING AGRICULTURE'S PROBLEMS

Mr. DOLE. Mr. President, I share the Senator from Wisconsin's deep concern for the grave problems faced by U.S. farmers and ranchers today.

We must continue to work to expand understanding of how low prices, high inflation, and double-digit interest rates are endangering the Nation's family farm structure among other sectors of the economy.

Unfortunately, for many urban interests whose exposure to farm problems is limited, the temporary increase in the milk price only added to the misconception that farmers want to improve their incomes at the taxpayer's expense. The Senator from Wisconsin and some others in the Senate know that nothing could be farther from the truth.

For this reason, and particularly in view of the spending restraint exercised by the Senate in passing omnibus farm legislation on September 18, I am pleased that the Senator from Wisconsin chose to abandon his costly objection to paring the dairy support price back to its previous level.•

THE FEDERAL RESERVE BOARD • Mr. METZENBAUM. Mr. President, recently I joined with my distinguished colleague from Florida, Senator HAWKINS, in cosponsoring legislation which would reconstitute the Federal Reserve Board in order to make it more responsive to the needs of our present economic conditions.

I ask that my full statement on this important legislation be printed in the RECORD.


The statement follows: STATEMENT OF SENATOR METZE'!'iBAUM

Mr. President, eighteen months ago on February 25, 1980 I wrote .to Chairman Volcker of the Federal Reserve 1a letter in which I expressed my reservations about the Fed's pursuit of a tight money-high interest rate policy. In that letter, I questioned the effectiveness of interest rates as a weapon against inflation and pointed to the devastating implications of this policy for the housing industry, for the short term credit market and for the debt service costs of Federal, State and local governments.

The letter concluded with an appeal to Chairman Volcker "to undertake an immediate policy review in light of what I believe to be persuasive evidence that high interest rates contribute to, rather than reduce, inflation."

Mr. President, I ask unanimous consent that the text of my letter to Chairman Volcker and the accompanying chart be inserted in the Record at this point in my remarks.

COMMITTEE ON THE BUDGET, Washington, D.C., February 25, 1980.

Hon. PAUL A. VOLCKER, Chairman, Board of Governors, Federal

Reserve System, Washington, D.C. DEAR CHAmMAN VoLCKER: In your recent

testimony before the House Banking Committee, you made clear your intent to continue indefinitely .the tight money .policy that you announced on October 6, 1979, after your return from the Belgrade meeting of the International Monetary Fund.

I share your sense of urgency a.bout the compelllng need for tough and etrec,tive antiinfia.tlon measures. But I am concerned because the high interest rates produced by the Fed's actions have had no apparent success to date in bringing down ,the inflation ra.te. Lt ls time that the policy be re-evaluated.

As the accompanying cha.rt demonstrates, our recent history gives little res.son to beUeve that interest rates have had much effect on controlllng inflation.

There ls no dispute about the fa.ct that a. high interest rate policy contributes 1n the short run to the very inflation tha.t it is designed to counter. La.st year, for example, soaring home mortgage rates contributed a staggering 2.4 percent.age points to the overall increase in the Consumer Price Index. And Lt is clear that mortgage rates represent just one part of the inflationary impact of rising interest rates. mtimately, the interest · costs of doing business in every sector of the economy show up in the prices paid by consumers.

In theory, higher interest rates should reduce demand and therebv reverse the upward pressure on prices. In housing, an industry highly responsive to interest rates, starts are, in fact, approachln~ record lows and savings and loan institutions report a thirty percent drop since last September in the volume of their lending.

But high prices and interest rates have not suppressed the demand for housing. Rather, slower growth tn new housing has sharplv increased prices for existing homes and has encouraged the nationwide trend to conversion of rental units to condominiums. And bankers report that purchasers remain wlll1n'5 to oa.v thirteen and fourteen percent mortJ?age interest rates in the exoectation that future appreciation in pronertv values wm more than offset today's high interest costs.

These infla.tiona'!'v exoecta.ttons may or ma.v not prove .1ustlfled, but it ls a. fa.ct that continued strong dema.nri fo'!' housing is based on more tnan the w1llinaness of some purchasers to speculate. Po1•sine: demand ts strong a.nd wm remain stron11: for no other reason than the movemPnt into the marlret of m1111ons of Americans born during the

post-World War II baby boom. Their demand is such tha.t instead of contracting, housing should at this time be a. vigorously expanding industry.

It has also been argued that higher interest rates will dampen demand for goods and services outside the housing sector. But that hasn't happened. Retail sales in January increased on a seasonally adjusted basis by 2.8 percent over the December level and according to the Congressional .Budget omce, this tra.nsla tes to an extra.ordinary compound annual rate of increase of 30.8 percent as compared to an increase of 10.5 percent in 1977-78 and 10.6 percent in 1978-79. Clearly, people are buying in anticipation of higher prices in the future, a Judgment that is confirmed by January's 4.3 percent increase in orders for durable goods.

Anothe::." argument that has been made is that we can slow down business expansion and capital investment by raising the prime rate. But that hasn't happened. Business and industry have not been at a loss for loan funds-the pattern has been to "pay the rate" and pass the added costs on to consumers. Furthermore, Henry Kaufman of Salomon Brothers has said that the disorderly behavior of the bond market is Ukely to produce new corporwte borrowers in the short-.term credit market.

I need not tell you that one of the most challenging problems facing the Congress ls the need to balance the Federal budget. But higher interest rates have ma.de that task all the more dimcult. According to the Congressional Budget omce, ea.ch one percent increase in the interest rate on Federal instruments in calendar year 1980 wm add $1 billion to debt service outlays in FY 1980, $2 billion in FY 1981 and $1.1 blllion in FY 1982. And just last week, the Dow Jones average of twenty municipal bonds crossed the eight percent mark for the first time since the New York City crisis, thereby ensuring higher debt service outlays tn the future for state and local units of govern_., ment, which already face serious problems in balancing their budgets.

In conclusion, Mr. Chairman, I urge you once again to undertake an immediate policy review in the light of what I believe to be persuasive evidence that high interest rates contribute to, rather than reduce, inflation.

Sincerely, HOWARD M. METZENBAUM,

U.S. Senator.

(In percent)

Prime interest CPI annual rate

1977:

~~~?:::::::::::::::: September ____________ _

19V!f ember-------- _____ _

~~:-~~-::::::::::::::: June ____ ------ _______ _

~~1lt1i-.n1;;;r: == :: == == == == October-------------- __

19V:fember ---------- ___ _

~~~-~':_::============= June_-----------------September ___ ----------October------ __ -------December------------ __

rate of increase

6.25 6.5 6. 75 7. 25 7. 75

8.0 8. 5 8. 75 9.0 9.0

10. 0 11. 75

11. 75 11. 75 11. 5 13. 0 14. 5 15. 25

8.0 5.0 5.0 5. 0 7. 0

8.0 9. 5 9. 5 9.5 8.5 9.0

11. 0

11. 0 13. 0 13. 0 13. 0 13. 0 13. 4

Mr. President, my purpose here today ts not to say "I told you so." If anything, my prediotions of eighteen months a.go were too conservative and the impact of excessively tight monetary policy has been even worse than I anticipated.

Last year, for example, twelve thousand businesses closed their doors-the highest

figure 1n more than a decade. And last month, the rate of business failure rose by a shock· ing 42 percent.

The Commerce Department has just reported that in June, the number of hous1ng permits issued dropped by 16.4 percent from la.st yea.r's already sluggish level. All of this at a time when literally millions of growing American fa.milies want urgently to buy their own homes. Farmers, many or whom depend on short term loans to cover planting cost and livestock feed a.re facing financial disaster. And like countless businessmen, farmers a.re having to defer the purchase of essential equipment. Inevitably, this will lead to lower productivity.

Business owners who deal in durable goods-automobiles for instance, today ha.ve to pay more than twenty percent on the money they borrow to purchase inventory.

For some, that has meant bankruptcy. For others it has meant smaller inventories, and smaller inventories contribute to unemployment in our basic industries. Across the boa.rd, Mr. President, whether we're talking a.bout cars or home appliances or fa.rm equipment, these crushing interest rates have a kill1ng combination of lower profit margins for business, fewer orders for industry, and higher prices for consumers.

And the disastrous, consequences of the Fed's misguided policies a.re by no means confined to the businesses and consumers of this country. Interest costs to government at every level threaten our a.b111ty to eliminate deficit spending.

Debt service today accounts for ten percent of the Federal budget and it has been estimated that higher-than-expected interest rates on Federal instruments wm add a.t least 6 blllion to Federal outlays in this year alone. And that same upward pressure is at work on State and local budgets in every corner of this country.

This policy cannot and must not continue. It ls inhibiting the productive investments our economy so urgently needs. And by eliminating the gains in productivity, we would get from such investments, the policy is projecting inflation far into the future.

This policy creates and sustains unemployment in our basic industries. And by keeoing the ~rice of money high, it raises business costs at every stage of production, distribution and marketing.

In the end, a.11 of this translates into higher prices for the consumers of this country.

I would not argue that the policies of the Federal Reserve a.re the only cause of high interest rates, inflation and economic stagnation. There is no "magic bullet" or easy flx for this Nation's economic problems, but the fa.ct remains that as la.st week's edition of Business Week observed, "If the Fed does not give way soon, you can bet that the economy will."

Mr. President, Congress has delegated the power to regulate the supply of money to the Federal Reserve, reserving only the authority to a.~prove Presidential appointments and requiring the Federal Reserve to report to Congress on a. regular basis, but it is nowhere carved in stone that this delega. tion of authority need be permanent.

In fa.ct ample precedent exists for the reassertion of congressional prerogative vls-avis the Federal Reserve System. In the 1920's and 1930's for example, Congress has considered numerous amendments to direct the FRB to stab111ze prices.

Furthermore, the Congress in 1922 increased the number of Presidential appointees on the board from fl ve of the seven members to six. In 1935, Congress removed exofficlo members-until then, the Secretary of the Treasury and the Comptroller of the Currency--a.nd provided for seven appointive members with overlapping fourteen year terms. And as recently as 1961, the Commis-

October 20, 1981 CONGRESSIONAL RECORD-SENATE 24549 sion on Money and Credit recommended amending the Federal Reserve Act to set goals of low unemployment, an adequate rate of economic growth, and reasonable price stab1lity.

I believe that the time has come for the Congress once again to re-examine the composition of the Federal Reserve Board. The direct conflict we have today between the administration's program for economic expansion and the Fed's massive pressure for contraction and even recession demonstrates our urgent need to make consistent the economic policy objectives of the Fed and those of the rest of the government.

There's only one effective way out of that conflict, Mr. President, and that's to clean house at the Federal Reserve.

First, the bill I ha;ie cosponsored with Senator Hawkins will permit the President to immediately reconstitute the membership of the Federal Reserve Board, and total membership wm expand. from seven to nine. The new Board would be constituted after nominations have been confirmed by the Senate. Secondly, the terms of office wlll be reduced from fourteen to five years.

Mr. President, I believe that the Federal Reserve Board requires a degree of independence from this or any other administration. But I do not believe that Board should be in a position to directly frustrate economic policy. And I believe also that the administration's economic program deserves a fair chance to work.

I am happy to Join my colleague from Florida, Senator Hawkins, as an original cosponsor of this legtslatlon, and I urge the Banking Committee to schedule hearings on this issue in the near future.e

VA'S OUTSTANDING HANDICAPPED EMPLOYEE-1981, STEVEN TICE

• Mr. LAXALT. Mr. President, I am proud g.nd delighted that a fellow Nevadan, Steven Tice, has been honored as 1of10 winners of the Annual Outstanding Handicapped Federal Employees of the Year Awards.

Mr. Tice is a Vietnam war veteran. In 1969 he was hit by a rocket grenade which resulted in the loss of his right ann and shoulder and other serious external and internal injuries.

Steven did not let these tragic disabilities discourage him, though. He adjust-ad courageously to everyday life, both physically an1. mentally. He recently completed requirements for his master's degree in U.S. Social History from the Umversity of Nevada and competes in Las Vegas area sports.

Mr. Tice's dedication to his fellow Vietnam veterans is quite commendable. He works in t.he L(•S Vegas VA's special outreach project, counseling the men who have returned with him from the contlict. His commitment to those less fortunate than him is remarkable when considering what he has b~en through. I ask that an article about Mr. Tice in VAnguard, the VA employee publication, be printed at this point in the RECORD.

The article follows: VA'S OUTSTANDING HANDICAPPED EMPLOYEE-

1981, STEVEN TICE For some men and women who served their

country in Vietnam, the battle goes on-a battle to fully readjust their lives. I would like to bring to your attention the case of one veteran who won that ba.ttle in a ra.ther dramatic fashion, and who now is helping others with readjustment problems.

Steven N. Tice has been named one o!

the 10 Outstanding Handicapped Federal Employees of 1981. Mr. Tice ls a counselor in the Veterans Administration's Vietnam veteran outreach program in Las Vegas.

The story of this young man's achievements actually begins in 1969, in the heavy combat area. of "I" Corps, South Vietnam. The record states simply: "North Vietnamese rocket grenade scored direct hit, infantryman Tice, Steve:i N." Beyond this official statement lies the terrible reality of massive injuries. Nearly two years in milltary hospitals followed-recuperating frcm the loss of his right arm and shoulder, multiple head and body wounds, loss of part of his stomach, right lung, intestines and damage to his right eye.

Dealing with his disab111tles and the resulting chronic health problems in a courageous fashion, Mr. Tice soon demonstra.ted a remarkable determination to become involved ln productive activities. Having lost his dominant arm, he learned to write and do everyday tasks with his left hand-but everyday tasks were not enough for this young man. He remains active in sports, playing basketball and_ pitching softball in local leagues.

Mr Tice pursued his professlona.l studles ln the same. determined manner. He obtained his bachelor of science degree from the University of Nevada where he recently completed requirements for a masters degree in United States Scoial History. He has taught on both the high school and college level. Married, he is the father of two chlldren.

In the 14 months Mr. Tice has worked 1n the VA's special outreach project, he has displayed an unusual capacity to counsel Vietnam veterans. He presently co-leads two group counseling programs and he ls part of the faculty for training outreach project counselors in dealing with veterans with dlsabilltles. His ablllty to encourage Vietnam veterans through his own example of independence, and his attitude of personal concern for their well being give him special stature in his client's eyes.

In his professional counseling activities, in making frequent home visits to veterans with particular problems, in serving 1n many capacities in community programs fostering awareness of the needs and capab111ties of disabled persons, Mr. Tice has demonstrated a deeply felt commitment to Vietnam veterans and his fellow man. I am proud that this Nevada veteran was selected as an outstanding handicapped Federal employee.e

POLICY CHOICES FOR CONTROL-LING INFLATION

• Mr. HART. Mr. President, in our quest for alternative solutions to our present unsatisfactory economic conditions, we ought to give careful consideration to the suggesUons of Mr. Barry Bosworth in his study on w·age/price policies commissioned by the Center for Democratic Policy. He outlines in "Policy Choices for Controlling Inflation" the failures of economic policy over the last two decades, concluding that the insensitivity of wages and prices to variations in demand means that trying to squeeze out inflation exclusively by demand restraint will lead to a prolonged recession.

Mr. Bosworth's prescription is to impose short-term wage and price controls to buy time for longer term anti-inflation remedies. He would add the force of restrictive monetary and fiscal policies, along with a number of drastic steps with respect to collective bargaining and strong governmental measures elsewhere. He would ban multi-year wage contracts and fundamentally alter arbitration

procedures. COLA's <cost-of-living increases> would be banned.

Mr. Bosworth further argues that, where domestic industry is impacted by international competition, the Govemmenlt should require as a ·prerequisite that the industry take some actions, such as a freeze on wage increases and suspension of dividend payments as a means of helping it.self before government extends protection. Mr. Bosworth also urges the Government to evaluate many of its own agriculture and other support programs.

I ask unanimous consent that Mr. Bosworth's study be printed in the RECORD. POLICY CHOICES l'OR CONTROLLING INFLATION

(By Barry Bosworth) The ineffectiveness of efforts to control in

flation has been the central problem of economic policy for over a decade. The emergence of "stagflation"-the simultaneous existence of high levels of unemployment and continuing inflation-was a surprise to a traditional interpretation of inflation as the consequence of excess aggregate demand and U served to destroy much of the optimism tha.t surrounded economic policy 1n the 1960s.

Today, the design of an effective antiinfla.tlon policy ls made even more difftcUlt by the emergence of additional problemsfa1ling productivity growth and high unemployment--whose remedies encounter serious conflicts with the traditional means of fighting infia.tion. The 1nab111ty to ~hieve a coordinated policy to meet these three problems has given rise to repeated reversals of direction (as government fluctuates between a concern for unemployment versus inflation), an economy tha.t alterna.tes between boom and bust, and the worst of all worlds-rising inflation and unemployment, and falling real incomes.

THE EMERGING PROBLEMS

The dominant issue for economic policy in the ea.rly 1960s was the issue of unemployment and ithe need to accelerate the growth of demand, production, and job opportunities.

Unemployment was above 6 percent and inflation was essentially zero. The policies were largely Keynesian; they emphasized that government could control the level of aggregate demand through the rational manipulation of fiscal and monetary policy. Of critical importance to this policy was the idea. that by controll1ng demand-a.voiding the extremes of excess demand and recession-government also would achieve an unemployment. The notion of a stable tradeoff between inflation and unemployment waa perhaps most clearly enuncia.ted in the em• pirical formulation of the "Ph111ps Curve." The interpretation or the inflation process that underlay this relationship always smelled Just a little of "ad hockery" and seemed to lack a solid theoretical basts, but this was not generally admitted. Still, some or the doubts about whether demand management alone would be enough were evident in the development of wage-price guideposts and in the almost perpetual government Jawboning of private wage-price decisions.

The demand-management program began to unravel in the mid-1960s, 1n1tlally because the President's economic advisors were misled about the magnitude of the defense bulldup in Vietnam and later because they were unable to convince the President of a need for a tax increase to finance the war. The President, for his part, doubted that a tax increase would be approved by Congress and further was concerned that higher taxes would erode public support for the war and dera11 his new social programs. The result: several years of excessive demand stimulus


and the re-emergence of a serious inflation problem.

The post-1965 period also witnessed a breakdown in the coordination of fiscal and monetary policy. In the earlier period fiscal policy had been the more active element; monetary policy tended to follow in an essentially accommodative path. The failure to offset the fiscal stimulus of the defense surge in 1966 led to an eitort to restrain the expansion of demand with monetary policy. The resulting restraint was very uneven: most of the output reduction was in homebuilding, and severe strains were placed on U.S. financial ' institutions. A coordina. ted policy of fiscal and monetary restraint was in fact not achieved until 1961}; by that time, the inflation had developed a strong self-sustaining momentum.

The fundamental breakdown of demand management policies and the collapse of a policy consensus, however, occurred principally in the a.ftPrmath of the 1969 recession. While the combination of fiscal and monetary restraint did slow the rate of demand growth, lt failed to slow inflation. Demand restraint translated, instead, into a reduced output and a rise of unemployment from 3.5 to 6 percent of the labor force. Economists at first viewed the problem as one of lags in the response of prices and wage rates; they recommended patience and a continuation of restrict! ve policies. By the beginning o! 1971, however, wage rate increases had actually accelerated slightly despite the high unemployment; lind, once excess inventories had been disposed of, the rate of price increases also picked up. Demand restraint was abandoned in l:l71; the government shifted to a policy of nscal-monetary stimulus combined with wage and price controls. That program also broke down under the onslaught of excessively expansionary fiscal and monetary policies, a world crop failure, and a fourfold increase in petroleum prices. Since that time the government has reverted to demand management policies-yet, despite two subsequent recessions and sustained high unemployment, inflation has continued to worsen.

The difficulty of controlling inflation is further complicated by the emergence of another problem, the decline in productivity gro.wth. In the period between the end o! World War II and the late 1960s, labor productivity (output per man-hour) expanded at a relatively steady rate of about 3 percent annually. In the early 1970s, that growth rate fell off to a.bout 2 percent annually; in the last half · of the 1970s it averaged less than 1 percent; and in recent years productivity actually has declined, and with it real incomes.

A pattern of little or no growth in productivity and general living standards ls likely to have major implications for a heterogeneous population like that of the United States. In the past, a portion of each year's productivity dividend genera.Ily was used to improve social security programs, expand private health and retirement benefits, and raise the relative income of the most disadva.nt.a.ged; yet, there rem.a.ined a re:idua.l amount sufficient to allow for a significant general increase in real incomes. Mediation among confilctlng groups was accomplished by promising more to some Without actually reducing tl:)e incomes of others. Thus, a slow productivity growth would seem to be an almost certain prescription for increased social conflict. In addition, it certainly will complicate the effort to reduce inflation. It is not easy to obtain restraint on nominal wage demands when the average worker notes that prices are in fa.ct rising faster than his or her wages. While this problem of falling real wages cannot be solved In the aggregate by an acceleration of nominal wages, which simply pass through into higher inflation, many lndlvlduals and groups a.re certain to try-and indeed they must if others do Just to keep pace.

THE POLICY DEBATE

Throughout the 1970s the efforts to develop an effective anti-inflation policy were frustrated by continued disagreement a.bout the nature and ca.uses of the inflation process.

The traditional view of inflation, and thus of the appropriate remedies, interprets the economy as an aggregation of individual markets that are "competitive." Within these markets, changes in individual prices and wage rates a.re highly flexible in adjusting to changing demand and supply.

.1.n such an economy inflation can be constrained by aggregate demand policies alone. The adjustment of relative prices can occur within a. constant average price level as !ong as the growth in money balances (adj us ~ed for secular trends in velocity) does not exceed the growth in real output. In fact, :inflation can be viewed strictly as a monetary phenomenon since any tendency of the overall price level to rise can be offset by a refusal of the monetary authorities to accommodate the increased demand for money balances, with a consequent rise in interest rate3, reduction in total demand, and increased supply of idle capital and labor. Increased competition for jobs and sales forces re3tra.int in wages and prices. By controlling the size of the pool of the unemployed, government can control inflation. Most imoorta.ntly, prices and wages fall with lower· demand, while employment and output are not much affected.

The difficulties of anti-inflation policy, however, emerge from the application of this model to the real world. 1 n many markets, prices and wages appear to be highly insensitive to variations in demand for reasons that extend beyond expectations of policy a.lone. lnstea.d, the major effect of a reduction in demand is a decline in production and employment without the expected larger effect on prices and wages. Thus, by emphasizing monetary restraint the economist appears to have presented the politician,. with a cure. But it is a cure that does not work unless it is pushed to the roint that the unemployment and output costs are greater than society is or should be willing to pay. The average experience of recent recessions, for example, suggests that a sustained reduction in the inflation rate by a single percentage point requires a.n increase in unemployment o! at least a million people for at lea.st a two-year period. To continue t') label inflation as a monetary (political) phenomenon simply ignores the severe social dilemma that lies behind the cure of monetary restraint.

Alternatively, the policy issues can be highlighted by characterizing the inflation process in terms of two distinct components: (1) an underlying rate of domestic inflation that reflects a repetitive cycle of wage a.n'i price increases in the industrial sector of the economy, and (2) a set of largely external forces that initiate a new inflation or exacerbate an ongoing one.

The underlying inflation rate is reflected in the tendency of wa.~e and price increases within the industrial sector to feed on one another and persist even in the face of sustained i:eriods of economic slack. Wage Increases a.re fueled by expectations that the process will continue, but also by a. desire to match past price increases and the wa~es of others. Similarly, on the price side, business firms see their own actions as reflect!ng a. pass-through of pa.st cost increases. This cycle of wage and price increases ls ouly loosely related to overall demand conditions, persisting despite long recessions a.s mom~ntum anti exrectations perpetuate inflation. While most o! the participants recogn~ze

that they do not gain from the process, no one da.r~s to restrain his own actions beca.u~e of fears that others will not.

The shocks or disturbances that exacerbate this inflation momentum come from a

variety of sources. At times, such as the mid-1960a, excess aggregate demand has been an important factor. Again, in 1972-1973, a sharp worldwiae economic expansion created strong demand pressures in many basic material markets. But, in addition, the increased exposure of the U.S. to a more integrated world economy leaves it more vulnera.ole to events such as world crop failures or a. disruption of petroleum supplies. Finally, there has been a great growc.h in the involvement of government in individual markets, and it is often the case tha. t its actions initiate upward pressures on prices or wages.

These disruptions in major individual markets can have a dramatic <tirect effect on the average inflation rate. But a. secondary and longer-la.sting impact results from the !act that a surge o! inflation that originates with sharp price increases in a few markets rapidly spreads throughout the economy as other participants accelerate their own wage and price increases in an effort to catch up. 'l'he result ls an upward ratcheting of the underlying inflation rate in the industrial sector and a carry-over o! inflation into future periods.

The major change in the inflation process during the 1970s was the increased frequency and magnitude of the shocks. But there also was too little appreciation of the role of catch-up efforts by others and the strength of the momentum process. Thua unlea.> governments were prepared to accept very large increases in unemployment, a relative price increase in one market translated into a higher overall price level and a continuing impact on inflation in future periods.

POLICY OPTIONS

From the above perspective, the immediate task for anti-inflation policy is two-fold: to break the momentum of an underlying wage-price cycle that has been allowed to build up !or over a. decade and has become deeply ei:µbedded in the structure of the economy; and second, to a.void or dampen the potential future shocks that threaten to exacerbate the process. In addition, such policies must be integrated with the need to promote an improved productivity performance as the most effective means of raising standards-of-living. Finally, however, there a.re the longer-term considerations of changes in the structure of the economy, and the conduct of policy that will make it possible to pursue a sustained high-employment policy without a. renewed outbreak of inflation.

WAGE-PRICE CYCLE

Effective measures to break the momentum of an ongoing cycle o! wage and price in~rea.ses ls the most difficult aspect of antiinfla.tion policy. When the competitive !ear of lost jobs or lost sales is not a.n efficient constraining influence on wage and price demands, reliance on fiscal or monetary policy restraint forces governments into an unsatisfactory choice between inflation and unemployment. The loose relationship between the momentum aspects of inflation and aggregate demand conditions suggests a role for a voluntary incomes policy or mandatory wage-price controls. The historical record suggests that these collective et!orts can have some effect; but any such program ls verv difficult to sustain in the face of changing economic circumstances, and continued restraint is in the individual's own interest only as long as he is convinced that others will do the same.

Flsca.1-Moneta.ry Restraint. Much o! the recent discussion of anti-inflation policy has emphasized a gradualist approach, whereby a high but not extreme level of unemployment and slow growth is tolerated over a period of several yea.rs. Even the most optimistic estimates, however, suggest that such a policy would require nearly a decade of very slow growth in aggregate demand and unem-

October 20, 1981 CONGRESSIONAL RECORD-SENATE 24551 ployment rates in excess of 7 percent annually to have an appreciable effect on the inflation rate. There are doubts that the political process could stand the strain and the gradualist approach may set in motion strong pressures by individual interest groups to achieve changes in the rules and institutions (e.g., trade protection and minimum price and wage laws) to protect themselves against the consequences of such a policy-thus intensifying the basic problem.

The alternative of extreme fiscal and monetary restraint offers the opportunity for greater immediate gains against intlation, but the pressures for a reversal of the policies in the face of sharply higher unemployment would be strong. In effect this is the current policy being pursued in Great Britain where the government has followed a policy of severe restraint combined with repeated emphasis that it will not back down in its refusal to accommodate continued inflation. While the outcome of that policy remains in doubt, the risks of the policy-both political and economic-are substantial since it tends to intensify the confl.icts between social groups whose view of the appropriateness of the policy is dominated by their evaluation of their own probabillty of being included in the pool of the unemployed. In addition, such a policy faces the risks that the magnitude of stimulus required in the subsequent phase to restore employment to more normal levels will cause substantial new inflation pressures.

Incomes Policies. On the other hand, there a.re major problems with other anti-inflation policies that do not emphasize demand restraint. The failure to contain inflation !n 1979-80 has done much to destroy the credib111ty of voluntary restraint programs. The difficulty ot 1973-74, on the other hand, has convinced many economists and policymakers tha.t mandatory wage and price controls are ineffective. Finally, some economisl;s have advoc~ted the use of tax-based incentive policies (TIPs) to encourage adherence to wage-price guidelines. That is, individual workers would be rewarded directly for exercising restraint in wage increases ra.ther than relying on a belief that others will do the same. Those who limited their wage/price increases to less than a guideline number would receive a tax credit while those who exceeded it would be charged a tax penalty. It 1s difficult to believe, however, that the tax benefit to the individual could be made sufficient to 'lvercome the risks of loss if others do not go along.

Coordinated Policies. There is no easy, costless means of brea.king an ongoing cycle ot wage-price inflation. Restrictive fl.seal and monetary policies can contain inflation in competitive, flexible-price markets where demand and supply are the principal determinants of prices. But they are frustrated by the sluggishness of response in fixed-price ma.rkets where the participants have some discretion in setting wages and prices. On the other hand, income policies can moderate inflation in the fixed-price markets, but they break down in the face of supply-demand disruptions in the flexible-price markets. Yet the above crltfoism of the individual policy alternativ~s may be unduly pessimistic because it ignores the potential benefits of a policy tha~ combines the measures in a ~oordinated !n.shic·n. In that context, pa.st experience does provide some lessons for the future.

t.1on problem, while it would be free to follow expansionary fiscal ~d monetary policies to reduce unemplc yment in preparation for the upcoming c:ect!on. The result was significant shortages and upward pressures on prices in many m&rkets for industrial raw materials. Income policies should most properly be viewed as a supplement to other policies: as a mea.ns of shortening the lags and moderating the magnitude of the unemployment costs involved in making the transition to a lower inflation path.

Income policies also cannot be expected to be an effective response to supply disruptions in major materials markets, such as food and energy, where prices are responsive to demand and supply fluctuations. The collapse of the wage-price controls in 1973-1974 was due in large measure to moUllJting problems in these markets where the government was not prepared to deal with disruption. Problems in these markets require policies that address the fundamental supply or demand problems.

Third, in evaluating past programs we should remember that one reason for the modest effects was that the programs did not aim to achieve significant gains. The pay-rate target of 6.2 percent in 1972, for example, simply ratified the pattern of wage increases that existed at the program's inception. Similarly, in 1979, the pay-rate target, in excess of 7 percent, was only modestly below the prevalling trend. In both periods the standard for prices was one of a pass-through of costs. Typically, past programs have established. boards or commissions, dominated by the major private-sector interest groups, that push for rules or standards that allow them to continue as before. In effect, special interest is over-represented and the general interest is forgotten. Since government also feels threatened by evidence of non-compliance, the standards tend to be pushed up until there is no longer any such danger. After being introduced with much fanfare, the modest targets do not generate a sufficient change from the prior pattern of inflation to sustain public support and the inevitable distortions and irritations of the administrative process leads to a buildup of disenchantment.

Fourth, no formal incomes policy is likely to be sustainable for very long because of the complexity of the private market situations that must be dealt with and because the participants will learn to adapt to any set of regulations and find ways of avoiding their intent. Thus, the administrative process gets increasingly complex over time. It is perhaps best to think in terms of a severe program that aims to achieve its objectives in a short period of transition, anti not to envision anything but the most informal program as a viable option for the longer run.

Finally, while some of the above problems can be solved by better coordination with other policies, any incomes policy still encounters severe difficulties of defining and measuring price and wage changes. On the price side it is reflected in the change in quality that may accompany or substitute for price changes. On the wage side it ls difficult to distinguish between wage increases and promotions at the level of the individual worker. Yet, if prices or wages are measured in terms of avera.ges for broad categories of products or workers, shifts of mix within the category become increasingly important sources of distortion in the measurement of compliance. Thus, a.n effective program usually requires measurement at the level of small, relatively uniform groups. This, in turn, lmplles a rather large ad.min-

First, a :·estrictive fiscal-monetary policy is an important prerequisite for any antilnfiation policy. No incomes policy can de.il effectively with shortages unless the government is willing to resort to costly and complex ra.tionlog systems as an alternative to price inc;.·cs.ses. Yet, the historical record indicates a strong temptation to view the programs as substitutes for one another. In 1972, tor example, the government assumed that the controls program would solve the infia-

, lstrative structure.

,

The choice of a specific incomes policy must come from the three major options of a voluntary program, mandatory controls, or a tax-incentive program (TIP).

For the near future, a voluntary program is unlikely to be a viable option because the historical experience has sharply undermined the public's confidence that government can assure the compliance of others. Such programs are dependent upon the prestige and active involvement of the President. As such they become heavily entangled in the political pressures surrounding the Presidency. In addition, voluntary programs cannot influence existing contracts and are forced to approve new long term contracts on the basis of anticipated future events. Unforeseen changes in economic conditions can quickly embroil the program in very difficult equity issues, as occurred on the wage side of the program in 1979, whereby workers in similar circumstances receive sharply different wage increases. The result is a rapid proliferation of exceptions criteria.

A tax-based incomes program (TIP) also may be too weak to achieve the objective of sharply reducing the existing rate of inflation. It o~ers a temporary tax reduction in return for a permanently lower nominal wage rate. An effort to give a tax credit equal to the foregone wage increase would represent an excessive drain on tax revenues. Thus, as with other incomes programs, it can only be made attractive to the individual if he is convinced that others will go along. Assurances of such compliance are likely to be credible only for pay-rate targets close to the prevailing rate of wage increases.

The revenue costs of the program might be balanced. by enacting tax penalties for increases in excess of the pay-rate target, but in such an instance the program requires the same administrative machinery as that of a mandatory program since both require a firm legal basis for judging compliance. It also is possible that a tax penalty would e~acerbate the price increases in some industries as the private parties seek to push the tax cost forward onto consumers. In addition, it is difficult to design a comparable program for prices because a continuous change of relative prices ls more important for the allocation of resources among markets.

I would conclude that a voluntary program is too weak and that a TIP program offers insufficient assurances of substantial gains to be worth the budgetary and ad.ministra ti ve problems.

Under current circumstances only a man~atory program offers a substantial enough impact to break the momentum of the wage-price cycle.

A controls program ls a difficult and costly undertaking; yet, it is less so than the alternative of a go-it-alone approach of fiscalmonetary restraint. Such a program should not last for more than a few years because of the administrative costs and accumulating problems of distortions that it will cause. Thus, the wage and price standards should aim at a sharp reduction in the inflation rate rather than the gradualism implicit in past programs.

I would envision a program of about three years' duration, with a first-year limitation on pay and price increases of half their prior rate of increase.

The program should abrogate existing contracts or it will become embroiled in equity disputes where some individuals, under old contracts, receive income increases far in excess of others. It sthould apply the standards to relatively ~mall homogeneous groups of employees and products so as to avoid distortions frcm shifts in the mix while leavln~ sc4ne fiexiblllty for some differences of individual increases with the group. Products that are traded in formal auction markets should be excluded from the controls because thev are more responsive ~'J specific microeconomic policies that attract the demand/ supply problems directly-that is, they are


not ignored, but the appropriate policy action is different. At the same time, the tendency to shift control of the program to boards or commissions, controlled by the pl'lva.te interest groups, should be avoided.

It is critical to realize the limitations of a controls program and the need to combine it with a. restrictive fiscal-monetary policy on total demand and specific programs for those commodity markets where price changes are dominated by sharp shifts in demand and supply. It is this lack of co:irdination with other policies that stands out historically as the major source o! failure in past incomes programs.

The need !or p:ilicies that promote a higher growth of productivity introduces a further complication because it argues !or a mix o! fiscal-monetary policy sharply different from that which has bee::i followed in recent years. Although the causes o! the slowdown in productivity growth in the 1970s are not fully understood, e!!orts by government to reverse it must concentrate on raising the p::-oportion o! current output that is devoted t_p capit'°l formation. In ge:leral monetary policy tends to ha'l1e the g::-eatest impact on capital investment, whereas fiscal policy (variations in the b".ldget balance) impacts mo::-e di:-ectly on consumption. Thus, the past emphasis in the policy mix on a .relatively easy fiscal policy has favored consumotion.

The policy of the current administration stresses the need !or monetary restraint. Meanwhile, the enac:ment of lftrge tax cuts has opened up the potential !or large budget deficits that will be virtually impossible to close with expenditure reductions. The resulting collision between fiscal and monetary policy implies that high interest rates will continue !or many years. This is not a policy that promotes an increase in total capital formation. The enactment o! business tax cuts may offset the higher borrowing costs !or that sector, but its investment gains will come at the expense of in"t·estment by household, government, and small business. Even higher levels o! saving, if they are absorbed by government deficit financing, will not increase the volume o! resources available !or private capital investment.

An emphasis in the policy mix on fiscal restraint, on the other hand, would lead directly to a larger flow of savings into capital investment, relieve the pressure on monetary policy, and contribute to a lowe:- le,·el of interest rates. In addition, howe;·er, it is difficult to stimulate new investment in a world of restraint on demand and slow economic growth. The inclusion of a controls program would reduce the required magnitude and duration of the demand restraint policies, thus reducin!? their depressive influence on capital formation.

An increase in total capital formation would also contribute to the battle against inflation by expanding industrial capacity ln future years. Certainly, the United States has not been faced with a shortage of labor in the 1970s. But the explosion of labor force growth has not been matched by a similar expansion of the capital stock. Thus, efforts to achieve reasonable levels of unemployment quickly run up against shortages and sharp price increases in the basic materials industries.

MICRO-ECONOMIC POLICIES

It is unreasonable to emphasize wage restraint unless government is willing to act against the sharp increase in the p:-ice of goods, such as food and ene:-gy. that are critical determinants of basic living standards. The sharp explosion of food and energy prices in 1972-74 and again in 1979 is the most striking new ele:nent in the inflation. These individual market price increases cause difficulties !or anti-infiatlcn policy not only because of their direct effects on the average price level, but also because they

upset perceptions of the fairness of the relative price structure and initiate demands in other sectors to catch up and recover losses of real income.

In addition, government has aggravated the in:flatlon in ways that are not reflected in fiscal or monetary policy. In the last few years, the government has increased the minimum wage; sharply boosted social security and unemployment taxes; restricted agricultural production; raised price supports for sugar, dairy, and other agricultural interests; and exten:ied trade protection to several domestic industries. At the same time, the expansion of sooial regulations has added approxiinately one-half of a percenta~e point to the annual inflation rate by reducing productivity growth. In many areas, complex llcens1n~ requirements and delays sharply lengthen the lag of the economy's adjustment to changing market conditions. These actions were often de...irable and prov·ided important benefits to some; but a thorough evaluation of the costs and bene!its was o!ten absent.

The increased potential for disruption in individual markets and the growing involvement of government at the level of in:!ividual industries suggest the need for a microeconomic policy framework that would supplement the existing emphasis on macroeconomic policy. Government must become more sensitive to the in~ation potential of its own actions i! it expects to exert restraint on other3. At present, government lacks the ability to assess conditions 1n individual ma.rkets and to avoid or dampen the inflation impact of sudden changes in C.emand or supply. At the same time, it cannot evaluate or coordinate the regulatory and administrative actions of a large number of individual agencies. Yet, it is these events as well as aggregate demand policies that are responsible for the worsening of inflation since 1975.

In the case of major materials markets, the policies seem oi:>vious. Governrue.nt cannot expect private market participants to hold reserves sufficient to offset the c0sts to society of major disruptions in the supplies of these commodities. Programs of g::>vernment grain reserves were effective prior to their abandonment in the early 1970s. The extension of such a program to pet:.-oleum would also seem to be the only effective response for the threat of disruption in the world oil market. INSTITUTIONAL CHANGES FOR THE LONG-TERM

Even if the U.S. should be successful !n combatting the current inflation episode, it faces the longer-term probiem, in common with all the industrial democracies, that a stable inflation rate is not compatible with socially acceptable levels of unemployment. We can learn from past mistakes of fiscal and monetary policy, and improved microecono:::nic policies can reduce the threat of future commodity market disruptions. But not all mistakes of p0licy can be elimma ted and we should anticipate that in an integrated wo!"ld economy, events, similar in magnitude to the ene:-gy and food market disruptions of the 1970s, will occur in the future. At the same time, wage-price controls and similar efforts a.re not a viable approach to the longrun solution-they will be buried under the weight of their own administrative procedures. Sustained resolution o! the conflict between the goals for low inflation and unemployment wlll require changes in the institutional structu:-e of the economy. In the past, there has been only very limited consideraticn of the potential !or such changes as we have struggled to believe that the goals of price st al::>111ty and high employment could be resolved within our present institutions. In future years, the deYelonment of such a.n agenda should have higher prio:-ity. The:.e changes need not be d::-amatic because it is also evident that the U.S.

economy is not strongly biased toward a rapid acceleration of inflation and much can be done to improve the operation of existing policies. What follows is only a partial list of potential future institutional changes.

Annual Wage Conrtracts. One of the major lessons of the 1970s is that there is far more inertia in the infia tion proce.:;s than previously anticipated. In part, this is the result of reliance on long-term labor contracts where wage rates are indexed to economic indicators, such as the consumer price index, that are extraneous to the specific industry's competitive position. As a result, wages and prices do not respond to changing market conditions during the period of the contract. Even economic conditions at tbe time of negotiation are discounted because they are not expected to continue over the life of the contract. The disparate timing of multi-year contracts among industries also contributes to greater resistance to current de•·elopments because of pressures to match the pattern of wage increases established in other industries in earlier periods. In addition, unforeseen changes in inflation and other economic conditions in the presence o! long-term contracts have also caused major shifts in the distribution of relative wages within the U.S. in ways that have little relationship to relative economic needs.

One means of solving these problems would be to ban the use of multi-year wage contracts.

The major effect of annual contracting would be to force the attention of the private parties toward their own current situation and make possible a faster response to unforeseen changes in economic conditions and a quicker adjustment of wages and prices to adjustments in fiscal policy-moderating the required range of :fluctuations in unemployment. Even though multi-year contracts a!fect a minority of the workforce directly, they set a pattern for wage decisions that distracts the attention of other industries from the needs of their own specific situation.

Annual contracting also would ellminate the need for cost of living agreements (COLAs) that index wage changes to changes 1n the consumer price index. The increased uncertainty surrounding future inflation trends increases the risks to firms of offering such guarantees. Yet, workers cannot be expected to sign extended agreements without COLAs. In effect, the formal indexation of wages to prices can be removed only by eliminating long-term contracts.

The shift to an annual round of negotiations also should provide an opportunity for an exchange of views among business, labor, and government at the beginning of each cycle. The government would have an opportunity to outline its intentions with respect to economic policy and the implications !or the overall performance of the economy under different potential patterns of wage and price increases. It is also desirable to provide such a structure in order for the government to hear the suggestions of business and labor leaders and their analyses of potential probblem.s. Yet, such a program would not interfere with the current practice of decentralized bargainini through which individual industries can reach agreement within the context of their own economic situation.

Strikes. Annual bargaining may raise the potential for rr.ore frequent strikes. That was not the experience of prior decades however, when many multi-year agreements allowed for annual wage reopeners. In any case, we might question the desirabillty of the strike threat as a means of solving disputes in today's economy. When the major costs of a strike or lockout were borne by the specific workers and firms involved in negotiation, such a tool may have been the most e!!"ective means of achieving settlement. On the other hand, in toda1•s lnte-

October 20, 1981 CONGRESSIONAL RECORD-SENA TE , 24553 grated economy much of the costs ran on other workers and firms whose production is disrupted. The costs to third parties place heavy pressure on government to intervene t.o RP.t.t.le the dispute. Knowledge that such intervention may occur also disrupts normal oarga1n1ng since each party ::nows tnat sucn mtervention brings with It heavy pressure to reso1ve the dispute by averaging tne1r remaining differences. Thus, each party may adhere to its initial, most extreme position in anticipation of future arbitration.

An alternative sys tem may be req_uired to resolve strikes that extend beyond a reasonable period and where a strike would impose significant costs on third parties.

One suggestion is to require arbitration as a substitute for the strike at the stage in the negotiations when the parties declare an impasse, but with the proviso that the arbitrator cannot average. He must accept, in toto, the last offer of one of the two parties. In this case responsible negotiation is encouraged because the extreme position will be rejected, and a desire to a.void the arbitrariness of the arbitrator is likely to lead to private settlement in the preponderance of situations. In an era of increased foreign competition, American industries will be forced to move away from a framework of confrontation between labor and business to a greater emphasis on their common interests of expanding their competitive position in world markets.

Trade Policy. On the price side, the strengthening of com.petition is an oftenrepeated recommendation for reducing inflation pressures. Certainly, technological changes have made much of the former regulation of transportation, communications, and the financial industry unnecessary. Recently, deregulations has been used as a means of strengthening competition in such situations. On the other hand, many of the previous standards of domestic antitrust policy have become out moded because of increased foreign competition. Yet, the U.S. fails to realize the potential anti-inflation benefits of that competition. Too often management and the union have joined in descending upon Washington to complain about unfair foreign competition (where unfair is defined as a price below their own) • and they succeed in obtaining trade restrictions. So long as they believe such political efforts represent a more effective response to their competitive difficulties, they will avoid the more difficult tasks of cutting costs and improving efficiency.

Perhaps it is unrealistic to believe that government can refuse to temporarily extend trade prote~tion to major industries when they are in severe difficulties. But, at a minimum, it can require as a prerequisite that the industry take some actions, such a.s a freeze on wage increases and suspension of dividend payments, as a means of helping itself.

CONCLUSION

Inflation in the United States has not been for many years primarily an excess demand problem. It reflects, instead, a sustained buildup over a long period of a. cycle of wageprice increases in which everyone sees his own actions as a defensive response to the inflationary actions of others. Anti-inflation policy should distinguish between the strong measures that may be needed to break the momentum of the current process, measures to reduce the economy's exposure to future inflation shocks, and the long-term need to alter institutions so that a compatible balance between price stability and high employment is a feasible achievement.

Wage and price controls are a major and controversial step in anti-inflation policy. Yet, a review of the historical record does show a common failing of underestimating the magnitude of the problem, of advancing policies that a.re too weak, only to f\nd their

consequent collapse leads to reduced confidence in government and intensifi·~ation of the problem.

Monetary restraint alone can stop mflation, but the costs for some segments of the popu-1ation wm be very high. As long as the limi-i;ations of controls and the need for coordiuation with other policies are recognized, tney offer a chance to reduce the unemployment costs during the transition to a lower inflation pa.th. Measures that stop short of controls seem too weak a. response to the strength of the inflation momentum that has developed over the la.st decade. In that sense, the short-run choice is one of choosing between severe demand restraint and controls.

Over the longer run, we have to consider changes in the institutional structure within which wage a.nd price decisions are made if a. compatible com.:>ination of inflation and unemployment is to be a.chieved.e

PRAISE FOR SECRETARY WATT e Mr. GOLDWATER. Mr. President, this week more than 1 million signatures were presented to the Democrat leaders.hip by the Sierra Club and the Friends of the Earth urging the firing of Interior Secretary James Watt. All I have to say is, who cares?

Secretary Watt is doing a tremendous job as the leading manager of our public lands. He understands the importance of our natural resources and intends to provide the balance in our environmental policies that has been lacking under previous administrations, especially the Carter administration.

We have all heard the ludicrous and unsubstantiated st.ltements suggesting that he intends to mine minerals in our national parks, strip mine wherever possible and bulldoze wilderness areas, thus ruining the public lands for future generations, but not one of these statements is true. These statements are solely the rhetoric of liberal environmental organizations whose desire is not directed toward the well-being of this Nation. Instead, they wish only to see their selfish, protectionist policies perpetuated to benefit a minority of the American people-namely, themselves.

Secretary Watt, on the other hand, des:res to see our public lands operated under "multiple-use" policies which seek to benefit everyone by increasing domestic supplies of energy and improving our recreational lands. He is a man that has grown up with the land and his personal experience in the West has provided him with the knowledge necessary to be a great Secretary of the Interior.

The Sierra Club came to Washington under a cloud of deception. On the outside, it appears they are truly concerned about our environment, but it does not take long to see through the mist of falsehoods and innuendos to realize the real goal of this scheme of name gathering from people allegedly opposed to Secretary Watt is to raise money and increase membership by creating panic. BY spreading misinformation, thousands of Americans have been duped into signing this worthless petition believing with all their hearts that Secretary Watt was some monster on the loose waiting to gobble up all our public lands, including the parks. I truly feel sorry for those individuals who signed the petition sin-

cerely, only to find out that the! were mislead by uninformed and uncarmg environmental extremists.

More than anything else, it frustrates me to read or listen to these environmental know-it-alls who claim that Secretary Watt must be stopped so t~at future generations will be able to enJOY the environment as we do today. They are worried that their children wi~ be robbed of America and its splendor if ~e explore and produce energy or strategic minerals on public lands. Furthermore, they imply that the Secretary is ag~inst parks and recreation because he believes the 768 million acres currently owned by the public, which the Government is not able to manage efficiently, is enough. It does not matter that public lands now equal the land areas totaling one-third of the Nation, 77'2 times the size of California, 2 % times the State of Texas, or more than 18 times the size of the 6 New England States.

I believe in the future of America, and it is my hope that future generations of Americans will be able to continue enjoying the natural resources that have been bestowed upon us, but I also understand that if we expect future generations to partake in this dream, we must take action to balance our environmental policies as Secretary Watt has proposed. Otherwise, those individuals who have yet to be born may not have an opportunity to know the freedoms we enjoy today.

Only by laying the foundation for the future of America through expanded use of our natural resources and reduced dependence on unstable world suppliers will we be able to encourage peace and freedom in the world, for generations to come.

In their presentation of the petitions on Monday, the Sierra Club and the Fliends of the Earth declared war on "Wattism," but that is not really the case. In actuality, they have declared war on everyone who believes in the American dream by attacking our ability or right to use public lands for the benefit of everyone. In my opinion, this warped belief of environmental protectionism has gone too far, and Secretary Watt is just the man to turn the tide for the good of the Nation. I am a Watt supporter and proud of it.•

STUDENTS DEMANDING MORE COURSES IN ENTREPRENEURSHIP e Mr. ARMSTRONG. Mr. President, there is one exciting trend now sweeping America that I predict will do more to restore American economic vitality than any single act of Congress. American high school and college students are demimding that their schools offer more courses in economics and entrepreneurship.

Incredible though it may seem, less than a dozen schools in the entire United States offered courses on entrepreneurship in 1968. Today more than 130 schools are offering such courses, and more schools are adding such courses each year. It has grown to the point now where there is insuflicient research


and student materials to meet the demand.

TEACHERS EAGER FOR NEW ESSAYS ON ENTREPRENEURSHIP

During the 1980-Sl school term, two new essays joined the Public Policy Discussion Series. On the topics of entrepreneurship and small business, these essays had wide distribution and generated a. favorable response from ooucators.

In "Entrepreneurship: starting a New Business," Prof. Arnold C. Cooper examines the ch.a.racteristlcs of typical entrepreneurs, ways in which new businesses are launched, and factors that determine their suooesses and failures. A sheet of actual case studies

Mr. President, I encourage my colleagues to read the report I ask to be printed in the RECORD after my remarks. It was prepared by the National Federation of Independent Business Research and Education Foundation. Those who do will learn that "many students feel that entrepreneurship allows them more opportunity to use their creativity and enthusiasm in their work than does employment in large corporations."

The report follows: · accompanies the essay to stimulate class

room discussion of entrepreneurship. STUDENTS DEMAND MORE COURSES IN

ECONOMICS AND ENTREPRENEURSHIP

With the current concern for the wellbeing of the American economy, it is perhaps not surprising that business and economics are increasingly popular subjects with students. The teaching of some form of economics is now required in 29 states, reports the Joint Council on E::onomic Education. A recently released survey paid for by Phillips Petroleum shows that economics is offered in an estimated 87 percent of the high schools and junior high schools.

Courses with an emphasis in entrepreneurship are also in greater demand. Karl H. Vesper, an e:xipert in entrepreneurial education, found that the number of schools with separate courses in entrepreneurship grew from a.bout a dozen in 1968 to over 130 in 1980. Many students feel that entrepreneurship allows them more opportunity to use their creativity and enthusiasm in their work than does employment in large corpol'a.tions.

Although the interest in entrepreneurship is apparent, research and student materials on the subjects are still limited. Recent efforts of NFIB's Education Department in conjunction with the NFIB Research and Education Foundation therefore have been concentrated in ,this •area and appreciatively received.

CONFERENCE ON ENTREPRENEURIAL TEACHING DRAWS EDUCATORS WORLDWIDE

In June, the NFIB Research and Educa.tion Foundation, a.long with the Internationa.l Council for Small Business and Baylor University, sponsored a two-day C'Onference on entrepreneurial education. The conference was held a.t Baylor's Center for Private Enterprise and Entrepreneurship in Waco, 'Texas. Baylor is one of two universities in the United States offering degrees in entrepreneurship at both the graduate and undergraduate levels. rts Center for Private Enterprise and Entrepreneurship was established in 1978 and has already received national recognition for its achievements. The conference was attended by more than 100 educators who are already active in entrepreneurial education.

The educators ·addressed topics such as the import.a.nee of entrepreneurship in the private-enterprise eoonomy and in academia. Panels also discussed the characteristics of sma.11-busin~s owners, curriculum development for entrepreneurship, methods of integrating small-business courses into liberal a.rts and junior college programs, and intrepreneurial educa.tion in other countries. Herman W. L.ay, recently retired chairman of the PepsiCo Executive Committee, gave his perspective on the needs and directions for entreoreneurial education.

Thls conference was the second such event hosted by Baylor. A conference was he!d last year exclusively for the expen;s in entrepreneurtal research and education. The proceedings from that conference are being published with the aid of a grant from the NFIB Research and Education Foundation. This unique sourcebook, entitled the Encyclopedia of Entrepreneurship, will be available later this year.

This essay was initially sent to 20,000 educators, who requested more than 125,000 additional copies for· classroom use. Teachers commented that it is a concise, digestible (as well as interesting) article which encourages potenti~l entrepreneurs to prepare themselves for "the real world." One teacher suggested that perhaps its cautions could reduce the 66 percent busines.s !allure rate.

In an essay published in February, coauthors Kenneth Chilton and Murray Weildenbaum (chairman of President Reagan's Council of Economic Advisers) , explain how governmental agency regulations impact small businesses negatt~·ely. Selected cartoons from the Broom Hilda series were used to mustrate these burdens on small-business owners.

Educators' reactions to this article were immediate and favorable. Teachers found the article "delightful, educational, informative, and sadly true." Serving a special and vital purpose in consumer education classes, the article gives the students "the other side" of the dls::ussion about regulations "protecting" the consume:r.e

THE DANGERS OF INDEXING TAXES TO INFLATION

• Mr. MATIDAS. Mr. President, on July 16, the Senate voted 57 to 40 to include a provision in the tax cut bill, not among the President's original proposa!s, to adjust the Federal individual tax brackets to the annual rate of inflation. I opposed the indexing amendment and was deeply concerned when it was accepted into the final package. •

While I am aware of the problem of bracket-creeo and am as eager as anyone to weed it out of our tax system, I wou!d pref er to place my confidence in the

. positive measures contained in the tax cut bill-those that will encourage greater savings and investment and will help increase productivity. I think there is a serious prospect that indexing the income tax rates will actually work at cross-purposes to these important new incentives. It may institut!onalize inflation in our economy by making it more bearable to the American taxpayer.

Critics of inflation can point to the unhappy example of certain foreign countries that have tried the indexing experiment, such as Israel, Brazil, and Canada. But we do not have to look beyond our own national borders for similar case studies.

An article by Neal R. Pierce printed in the Journal of Commerce on August 18 outlines the experience of several of our States that have adopted income tax indexing, and it provides a good illustration of the dangers I see in our decisiQn to implement this policy at the Federal level. I ask that the article, entitled

"Minnesota's Bad Omen for Tax Indexing," be printed in the RECORD.

The article follows: MINNESOTA'S BAD OMEN FOR TAX INDEXING

(By Neal R. Peirce) ST. PAUL, MINN.-Before Congress rushed

to protect federal taxpayers from inflationary rate increases by "indexing" income taxes starting in 1985, it would have done well to take a hard look a.t the miseries Minnesota bought itself by indexing its state income tax two years ago.

The parallel isn't precise. Other factors, such as the Midwest's severe economic downturn, have added to Minnesota's revenue problems. But the similarities to what's now happening in Washington are disturbingly close:

A Republican chief executive ls elected. The conservative tide rises and even normally literal legislators agree to tax indexing. Then-in the Minnesota model-hard times come. Indexing slashes into state revenues. The Republican governor-Al Qule-won't countenance raising taxes. Acrimonious partisan bickering with the legislature ensues. Fing.lly, both severe spending cuts and new taxes have to be voted. And even then, angry state workers walk off the job in a. prolonged strike.

The consequences haven't been quite as serious, but some of the same budgetary problems have hit not just Minnesota but three other states-Wisconsin, Iowa. and Callfornia-with full-fledged indexing of income-tax brackets, deductions and exemptions. Some of the same headaches may yet be encountered in the five other states (Arizona., Colorado, Montana., Oregon and South Carolina) that recently joined the indexing camp. Canada., which went to indexing five years a.go, ls starting to experience severe deficits as a result.

All of this is not to say that Congress or a state legislature, a.ware of lndexing's difficulties, might not go ahead anyway. Especially in a conservative polltical clima.te, there's an almost irresistible attraction to protecting taxpayers from the "bracket creep" that pushes their tax rates up only because of inflation.

And what better way to discourage future growth of government? "If you're pro-taxpayer, if you're anti-Pentagon and anti-soclal welfare spending, then you have to be for indexing," says John Shannon, assistant director of the Advisory Commission on Intergovernmental Relations and a leading national advocate of indexing. De~rive legislators of their annual unlegislated tax increase through inflation and they "have to raise taxes out ln the open" if they want more government spending, Shannon insists. Elected officials "should not be allowed to reap a tax windfall while hiding in the inflationary weeds."

Experiments with indexing lllustrate anoth~r form of political hypocrisy: the suggestion that there can be dramatic tax relief without a day of reckoning. "It's a pipe d!"eam to think you can index taxes and then not, from time to time, have to raise tax rate~ven when it seems politically suicidal to do so," says director Curtis Johnson of the Twin Cities Citizens League.

And unless the entire Reagan economic recovery plan works to perfection, Minnesota's present pain wm be writ large by 1985. That•s the year federal indexing goes into effect--costing the Treasury, by some Capitol Hill estimates, $49 billion in the first two years. And several other features of the tax legislation, with the most dramatic negative impacts on federal revenues, won't be phased in fully until 1985.

"We may be all right through 1984, but all hell is going to break loose after that," one high ranking House Republican tax expert recently told the Baltimore Sun's Stephen

October 20, 1981 CONGRESSIONAL RECORD-SENATE 24555 Nordlinger. Sta.rting in 1985, all individual income tax brackets, the zero bracket amount (formerly the standard deduction) and the personal exemption wm be adjusted annually to offset the effects of inflation.

If Washington is then forced to increase tax rates, it wm be a novel experience for most congressmen. For years, the lack of indexing h~ saved them that terribly difficult experience, so fam111ar to most state and local legislators.

Might indexing then be revoked, or modified substantially? The precedents here are not good: Once such a fundamental "right" ls granted, politicians find it difficult to revoke. For evidence, one need only look to the other kind of indexing that became so popular in recent years: the wages of a lucky minority among local government workers (mostly firemen and policemen) and postal workers, the retirement pay of millions of local, state and federal workers and the military, and most expensive of all, Social Security. The use of the Consumer Price Index to drive up these wages and benefits inflates the national economy by b1llions of dollars annually. It is one reason Social Security, the supposed bedrock of financial security for millions of Americans, is now in trouble.

Any legislator can tell you that the very idea of trifling with pay and benefit indexing arouses a hornet's nest of opposition. Now the same is sure to apply to tax-bracket indexing. Yet the worst of all possible worlds is to have both: to continue pay and benefit indexing, with its huge inflationary pressures on government budgets, yet to indexand thus sharply restrain-the growth of the taxes necessary to pay the benefits.

Some of the cities that have come the closest to bankruptcy-New York, Detroit, Boston and San Francisco for example-are precisely those that have granted indexed wages or retirement benefits while lacking a growing, progressive tncome tax base with which to pay the bUl.

Only those people willlng to plunge the national government into fiscal distress akin to one of those desperately strapped cities will applaud the indexing of both benefits and taxes.

The baste problem with indexing ls that it's a political cop-out-an attempt to substitute Rube Goldberg-like statistical measures (like the imperfect Consumer Price Index) for the hard, sweaty, difficult process of forming public policy and getting majority support for tt. Whether the issue ls taxes or benefits, we're better off with tough open debate about who gets how much and who pays. The society that tries to avoid decisions by putting itself on automatic pilot will find itself headed toward a crash .•

CONTROLLING THE CA USES OF ACID RAIN-S. 1709

• Mr. MOYNIHAN. Mr. President, on October 6 I introduced an amendment <S. 1709) to the Clean Air Act providing for the inclusion of a program to control the causes of acid rain. The action we take to control acid rain must be S'=nsible, it must be reasonable, and it must be cost effective. I believe my bill meets these goals.

S. 1709 calls for a reduction of 6 million tons in annual sulfur dioxide emissions, the principal cause of ac!d rain, in a region composed of the 31 States bordering on or east of the Mississippi River. Under the terms of my legislation, such a reduction would have to occur in addition to the 2- to 3-million ton reduction in annual su!ftir dioxide em'ssions that will result from compliance

with existing provisions of the Clean Air Act. ·

Within the region, States would be required to accomplish reductions equal to an 85-percent decrease in actual s·ulf ur dioxide emissions from the largest powerplants within the States. Emission reductions would have to be achieved by Decembar 31, 1991.

States would be given the right to amend their own air pollution control implementation plans, now required by the Clean Air Act, to meet their emissions reduct.:on requirement. Moreover, States would be allowed to trade emissions offsets with other States so that a regional strategy for controlling acid rain could emerge.

If States fail, however, to meet their emissions reduction requirements, then the Adm!nistrator of the U.S. Environmental Protection Agency would be instructed to develop and enforce an appropriate plan to obtain the necessary reductions.

Mr. President I would like to call to the attention of my co~leagues an editorial in last Friday's Washington Post entitled "Dropping Acid." It concludes by saying:

Enough is known about acid rain to put an end to debates over whether the phenomenon is real, man-made and damaging. It is all three. The important area for ciiscussion now is how best to go about reducing sulfur and nitrogen oxide emissions, and how fast.

Mr. President, my bill offers what I believe to be a valid approach to achieving a substantial reduction in emissions over a 10-year period.

I ask that the full text of the Washington Post editorial be printed in the RECORD.

The editorial follows: DROPPING Acm

The problem is not merely acid rain; it is acid rain, sleet, fog, snr:w, mist, dew and particulates. The question is whether enough ls known about the various effects of all this to warrant action now to reduce its incidence-as environmentalists, the Canadian government and the National Academy of Science believe. Or are yea.rs more of study required first-as the Reagan administration, the C03.l companies and the ut111ties argue? The choice is one of tbe more important ones Congress wm make in its reauthori9-tion of the Clean Air Act.

The dispute is likely to be profoundly affected by a recent report of the Committee on the Btologtcai Consequences of Fossil Fuel Combustion of the National Academy of Sciences. The study found that acid rain does come from man-made sources, largely power plants; that the acidity ls causing well-documented "widespread damage t;O aquatic ecosystems," increased levels of a number of poisonous metals in ground water supplies, and the "ellminatlon" of "severa1 important species of fish and invertebrates over substantial parts of their natural ranges." Other effects include damage to human health, to forest and food crops and, over the long run, leaching of vital nutrients from son.

In uncharacteristically blunt terms, the academy's report concludes that continued emissions at current rates "in the face of clear evidence of serious hazard to human health and to the biosphere, wm be extremely risky from a long-term economic standpoint as well as from the standpoint of biosphere protection." The committee believes the situation "is disturbing enough to

merit prompt tightening," by as much as 50 percent in badly affected areas, of allowed emissions standards, particularly for power plants.

The scientists' sense of urgency was recently seconded by Canadian officials in an unusual appearance by foreign representatives before a congressional committee. After 10 years of research, the Canadian government believes that indisputable evidence of acid rain damage warrants prompt action by the United States, which is the source, it believes, of more than half of its acid rain. Acid rain has become the hottest issue on the U.S.-Canadian agenda, and a growing source of conflict.

In the face of all this, claims by coa1 and utility companies, such as that made by a spokesman for Consolidation Coal Co., that "there is no good data or evidence linking sulfur emissions to alleged increases in acidity of rainfall," begin to sound more and more like the claims of tobacco company spokesmen on the subject of the causal relationship between smoking and cancer.

Enough is known about acid rain to put an end to debates over whether the phenomenon is real, man-made and damaging. It is all three. The important area for discussion now is how best to go about reducing sulfur and nitrogen oxide emissions, and how fast .e

BARRIERS TO U.S. EXPORTS • Mr. HEINZ. Mr. President, as congressional efforts to improve America's export picture mount, increased attention will be focused on barriers to our exports erected by other nations. The breadth and creativity of those barriers clearly demonstrate that the danger to world free trade comes not from protectionist forces within this country but from the actions of governments in other countries.

As the leading free trade nation in the world, the United States is the major victim of other countries' protectionist devices, but it is fair to say that all would benefit, including the offending countries, if such barriers could be removed.

Recently, two publications commented on this problem in some detail. An article in the October 5 issue of Fortune provides details on the dimculties of penetrat:ng the Japanese market and includes examples of deliberate Japanese tactics to keep foreign products off their shelves and out of their factories. A second article, in the October 5 Wall Street Journal discusses barriers to services. Mr. President, I ask that both articles be printed at this point in the RECORD.

The articles follow: [From Fortune. Oct. 5, 1981)

INSIDE JAPAN'S "OPEN" MARKET

(By Louts Kraar) That vexed question of Japanese bamers

to American products is heating up again. The usually modest Japanese have taken to boasting that they have become one of the world's most open mark'ets, and a certain amount of evidence partly supports them. Businessmen and officials in Tokyo point to the array of American merchandise in their markets-from McDonald's hamburgers and Coca-Cola to IBM computers and U.S. auto parts. As a result of the Tokyo round of trade negottations that began in the early 1970s, Japan is cutting tariffs on industrial products to bring th em below American levels by 1987; controls on foreign investment have a.lready been eased. Such faots have aroused Prime Minister Zenko Suzuki to proclaim

24556 CONGRESSIONAL RECORD-SENATE October ~O, 1981 that Japa.nese protectionism 1s "a myth" and that U.S. companies a.re now welcomed with "open arms."

To American businessmen, however, this picture is extravagantly self-flattering; they see quite a diffe:.ent .Japan-a still toughly resistant customer. The Reagan Administration agrees. Last month in Tokyo, U.S. Trade Represenltative Wllliam Brock warned that America's trade deficit with Japan will rise almost 50% to a record $14 billion or more this :year. The imbalance, he says, makes it imperative that Japan "open its markets much Wider." AB B::."ock put it, Japan must overcome "the widespread perception in America that it does not play fairly." Similarly, Lionel Olmer, Under Secreta.ry of Commerce and a former Motorola. executive, says, "You have to be naive to the extreme to think that Japan is really open now." Olmer learned the frustrations firsthand when he tried introducing Motorola's products into the Japanese teleeom.munications market, sealed off till this year by a policy of spurning foreign suppliers.

An American executive even more knowledgeable about Japan comes to an even more ominous conclusion. Mark Zimmerm.an, manager of Winthrop Laboratories in Japan and president of the American Chamber of Commerce there, deplores what he terms Japan's "ingrained antipathy to anything from outside." In a new book addressed to Japanese managers and otncials in their own language, he warns that 1their country is on a collision course. The only way for Japan to avoid disaster, Zimmerman says, is "to end decisively the mounting impatience of her most important trading partners."

How can the Japanese and American perceptions be so radically at odds? A la.rge parit of the answer lies in the fact that both sides shade their views by focusing on different se,ts of economic-and social-facts.

An on-the-spot look at Japan's market by Fortune reveals-to begin with-that a few vestiges of the old protectionism do remain, including some blatantly discriminatory practices. Many middle-aged bureaucrats and company otncials, for example, feel that buying foreign products 1s downright unpatriotic. This overt resistance is most tenacious, moreover, in fields where American companies command the most competitive strength and where the influence of Japan's government is most potent. These fields include pharmaceuticals, financial services, high-technology equipment, and cigarettes.

Alongside these barriers there also arise subtle informal obstacles that confront all challengers to established patterns-even including Japanese companies trying to get into new markets. The nation's tightly knit business system operates on long-term personal relations-a kind of cult inhospitable to all outsiders. To break into the distribution system, a maze of middlemen that works like an ex:::lusive club, is an especially discouraging ordeal. As a senior official at the Ministry of International Trade and Industry advises: "To really get access to this market, you've got to learn the language and drink sake !n nightclubs for three or four years. Can you find many American executives deli~hted to do that? We send 100,000 businessmen . to the U.S., and you have only 8,000 here."

But even if American business sent in an army of sake drinkers, they would find that the Jananese culture raises an almost invisible-yet often unsealable-wall a~ainst all gaijin. foreigners . Thus Brock was essentiallv ri11ht when he said in Tokyo last month that "powerful s~-::ial and cultural forces ... make trade liberalization an excruciating process for Ja"1an."

FOREIGNERS AT ARM'S LENGTH

The cult11ral barriers are heip.htened by the pride the Japanese take in them. Government officials and businessmen keep in-

sisting that foreigners can never understand Ja.pa.u. F.1:e.::isely such an attitude tends to keep foreigners at arm's length--or out of Japan. As Ezra Vogel, a Harvard University authority on the country, remarks: "Japan is not a closed market, but is almost a closed so:.iety." An Allierican banker who has worked many years in Tokyo says bluntly: "The resistance is not to our products, but to us."

Without doubt, Japanese have sometimes encountered such resistance in this country. Without doubt, too, these cultural barriers will always make Japan a dim.cult market to crack. But some companies have proved that it can be done, and the Reagan Administration plans to keep up constant pressure against the more tangible obstacles to U.S. products.

These obstacles aren't hard to find. Japan maintains tight quotas, for instance, on citrus fruits, beef, and other agricultural items that U.S. farms produce with great effi.ciency. As a result, Japanese food costs are grossly inflated. Olm~r remarks with obvious irritation, "There's no doubt in my mind that a U.S. honeydew melon is at least the equivalent of a Japanese melon that cos+s $35 in Tokyo."

Where quotas do not apply, American companies often confront government standards that make economic life difficult for anything not made and tested in Jauan. The widespread lack of reciprocal treatment for U.S. products is most dramatically evident With autos, where Janan certainly has comparative advantage. Japanese exnorts to the U.S. need only a manufacturer's label certifying that the cars meet American safety standards-Washington accepts the assurance. But before an American car can be sold in Japan, its government requires six volumes of documents on standards for each model. plus local testing of nearly every vehicle-all of which adds as much as $500 to the retail price.

A parallel example is cited by Zimmerman of Winthrop Labs: "We can't get our health products into this market fast enough because every test has to be repeated here." Janan even rejects foreign laboratory tests on a.n!mals. "To say that a Japanese rat is any different from an American or British rat is absolute tommyrot," Zimmerman fumes.

Tokyo raises some of its biggest stumbling blocks in the field of high technology. U.S.

· comnuter-time-sharing firms got into Japan recently, for instance, only after making a government-required pledl:!'e to use Japanese equinment and to promote Jaoanese comnuter exnorts. Then the American companies had to operate for s~veral years while fighting off arbitrary technical restrictions that Control Data figures would have bloclrnd 90 percent of its potential services in Japan. Those problems faded once Washin~on quietly threatened to bar Japanese computer services from the U.S. market.

A ma1or symbolic test of Jauan's accessibillty ls now bel:!'innin~ to loom in its $3.3-blllion annual telecommunications m.a.rketa. traditional b:i.stion of protectionism. Ninpon Telephone & Telegraph, a semi-government monopoly, has habitually made most of its deals behind closed doors with four Japanes~ s1mpl1ers. NTT's standard advice to AmeTican manufactnrers was to license their nroducts to its "hmU:v"' of sun...,U~rs--Hitachi, Niupon Electric, Fu1itsu. and Oki.

SHA~ING W!TH THE "FAMILY"

After three years of stormy international ne~otiations. Jap,n has JYt"anted a concession of sorts: NTT i'J accep+in'? bids from U.S. companies. The Jananes~ telephone giant, 1"'.owever, ls not re~uired to accept the lowest bidders for its most expensive and sophisticated e("l.UlpmHit. Those sunnllers must ne!?otiate joint rP.se:t'"~""- and r:Jevelopment contract~ wi+.h NTT. HisMhi Shinto, 71, ~ former shi..,bullder installed this year as NTT's president, say: "My job is to handle the American

and Japanese manufacturers on an equal ba.sis. How much I buy from the U.S. depends on competitive conditions." Shinto is also attempting to arrange a complete swapping of technology with both lBM and American Telephone & Telegraph. "I'd like the three of us to work together on re.search," he says. But some U.S. companies fear that proprietary inform3.tion, including their production costs, may be shared with the NTT "family"their entrenched Japanese rivals.

Motorola. has had another sort of problem with NTT. Having stormed the Japanese company's fortress before the gates we.re officially down, Olmer reports, "They don't just want the product. They want to see how you build it, and they want to test it at every stage." Olmer helped find an opening for Motorola's lightweight Pocket Bell paging device, which summons users to waiting phone messages. Motorola redesigned the pager for Japanese frequencies, making it more reliable than standard Japanese models. Last October, NTT bought 150 Pocket Bells for testing that seems interminable.

Ichio Kata, senior manager of NTT's procurement and supply bureau, says: "If it's good enough for the rest of the world, why are we testing it for so long? We're not being lazy or trying to delay things, but even small e::iuipme·nt has to be compatible with our system." NTT, in fa.ct, ls testing every component of the pager, which Kata says he hopes will result "in a very substa.ntial order" from Motorola.

Other U.S. companies are ma.king strong sales efforts, though it may take them years to determine whether NTT's market is genuinely open. Robert Gressens, president of GTE International, says: "If the Japanese are sincere, we can be successfUl with our full product line. If they are not, we'll be selling them screwdrivers, line poles, and novelty equip-

. ment." Japan's trading honor is also on the line in

its big cigarette market, where the Japanese government has promised to ease restriotions that have limited imported brands to 1 percent of the $10-billion-a-year retail sales. AB an R. J. Reynolds executive says, "We haven't yet won the battle to sell freely, but only a skirmish." The new opening, in fact, puts American brands into the hands of just 20,000 retailers-less than 10 percent of the tobacco dealet"s.

Under the revised selling rules, U.S. tobacco manufacturers believe they coUld increase e:~ports eightfold to more than $300 million annually. But any such expansion is proving to be an exasperatingly tough marketing challenge. In Tokyo the Reynolds executive explains, "This coUld be the second most important outlet in the world, so it's worth a lot of our time. But we have to deal through a government monopoly that actively supports Japanese tobacco farmers."

The Japan Tobacco & Salt Corp. is both the sole distributor of cigarettes and the principal competitor of imports. Its 37 fac· tories make all the Japanese brands. The monopoly controls retail prices and sells its own brands for 45 cents a pack less than the $1.25 price of American cigarettes.

Japanese smokers plainly like American brands-and haul back so many from overseas trips that the customs counter at Tokyo's airport looks like a supermarketbut moving U.S. brands through the monopoly's channels and into the hands of consumers is a tortuous journey. Salesmen of JTS, the tobacco monopoly, conveniently forget to deliver popUlar U.S. brands to some retailers. Ordinarily, imports are distributed to retailers once a month, while Javanese brands are delivered weekly. Some JTS men in the field have mounted personal campaigns again<>t foreign cigarettes, ripping down point-of-sale signs.

To introduce new brands, the American com";)anies must rely on test outlets run by their language competitor, JTS. So far, both


Lark Mild and More Mild have sold, within a six-month period, the required 250,000 packs to qualify for general distribution. But their national debut has been delayed by the tobacco monopoly for what it terms "administrative reasons." Judging from past practice, JTS may be preparing similar Japanese brands to introduce alongside the American ones next year. No wonder U.S. Trade Representative Brock says: "We've got to keep the pressure on."

P&G TAKES THE LONG VIEW

Do all these snares, hazards, and vicissitudes mean that American pursuit of Japanese markets is a near-hopeless chase? Perhaps surprisingly, the answer is no. The race can be run-but only by American corporations capable of great tenacity, patience, and drive. The few U.S. companies that wedged in years ago and stayed have, in fact, done very well. Some 400 American manufacturing investments there have averaged an 18.5 percent return. But the struggle toward such reward can require ta.king big losses for five years or more.

Just such a struggle has been waged by Proctor & Gamble, which has made Unpressive inroads with its products by adopting a long-term, Japanese-style view of profits. In the past eight years, P&G has gained some 20 percent of the detergent market and made Pampers a household word among Japanese mothers. Fred H. Kruse, chairman of P&G's subsidiary in Osaka, explains: "It takes a major commitment at the top level-and for a considerable period."

The comp·any's cumulative losses in Japan-which P&G won't specify-are estimated to be as high as $100 million. Whatever the figure, P&G views it as the entry cost to ~n atnuent consumer market of 117 million, second in size to the U.S. As one P&G strategist says, "Getting and holding onto a piece of this market takes a lot of money up front. The payout may be longer, but you can eventually make a mint in this country."

P&G got its foothold in Japan's distribution system by buying into and later absorbing a Japane3e . .;oap comp9.D.y, Nippon Sunhome. One of the acquisition's assets is a Japanese sales force that already had established the essential personal relations with wholesalers. To inject American promotional zip along with such products as Cheer, P&G brought in r.ome 30 international managers. Kruse says, "The basic things that need to be done to succeed with Japanese consumers are the same as anywhere else in the world." Initially, P&G's hard-selling style in television commercials jolted most Japanese viewers, accustomed to more subtle approaches. Now the ads are being imitated by Japanese competitors.

To introduce Pampers, P&G invested several million dollars in giving away free boxes to half the potential customers-probably the largest sampling campaign ever conducted in Japan. Pampers sold there have the same Western infant on the box as in the U.S., but the light perfume in them had to be removed to satisfy finicky Japanese health regulations. The promotion drive persuaded stores to find room for Pampers on their shelves.

Ultimately, P&G expanded the use of disposable diapers tn Japan from less than 2 percent to perhaus 10 percent of the market. Japanese rivals jumped in with similar products to challeni>:e Pampers, which have been supplled from the U.S. To maintain its position, P&G is building a plant on a. 31-acre site in Futami, Japan. As Kruse we.ms: "If you only put a. small toe into Japan, the competition wm bite it off."

Other successful American operations in Japan have also taken much time before making respectable profits. Jn 1969, Nippon Vicks, a subsidiary of Riche.rd.son-Vicks, almost gave up its long efforts to sell cough

drops and other imported health products. Brian Taylor, administration manager of the subsidiary, says, "We were floundering around like a. lot of foreign companies here, getting no place fast." The search for ways to suit Japan has dramatically changed Nippon Vicks, whicih did a profitable $43 million in sales last year. Essentially, the company concentrates on a few products adapted to Japanese tastes and made in its Suzuka plant. Cola.c, for example, became the country's lea.ding laxative-but only after intensive market research got to the bottom of Japanese attitudes about constipation.

Levi Stra.udS waded in red ink for six years until devising a winning marketing formula in 1977. Its jeans initially were little known compared with Big John-a Japanese brand purveyed as an American-style product-and Levi's relative obscurity made it ditncult to get wide distribution. The company broke through with a barrage of Japanese TV advertising-including film clips of old John Wayne movies-that established Levi's as the authentic U.S. jeans. They have now become a prestige symbol among Japanese youtlhs, who pay $30 a pair--40 per.cent more than for local brands. Those authentic Levi's, however, a.re designed and mostly made in Japan, where buyers like a tighter flt than do Americans.

John E. Frechette, manager of Levi Strauss, Japan, says: "We target everything to pull the purcha..c::e through the distribution system and hope the retailers will support us." Bypassing wholesalers in major cities, the company deals directly With stores. Levi Strauss shuns the accepted Japanese practice of allowing the stores to return unsold merchandise. Instead, the company delivers to outlets weekly and offers store managers free training in running their businesses more etnciently. As Frechette says, "You have to establish unique strategies for Japan."

AMEX SPEAKS JAPANESE

Tokyo otncials boast of "llberallzing" the country's financial sector, a partial opening that U.S. firms can exploit 1f they are both inventive and aggressive. American Express International's special gold credit card, denominated in yen and tailored for an elite Japanese clientele, has taken off much faster than the company anticipated. Jackson N. Huddleston, a senior vice president and general manager for Japan, says: "Since opening in May last year, we signed up 42,000 members-more than in any other country during a similar start-up period. The Japanese members are the highest spenders per capita. of any in the world."

To succeed in Japan, Huddleston adds, "you've got to be WilUng to knock over som9 hU1"dles." He flung some aside to gain access to the Japanese banking system, which is essential for clea.ring payments Of crcditcards. (T>he ·Japanese don't use checks, but pay by authol'izing withdrawals from their bank accounts.)

American Express has braced for a.n onslaught of Japanese competitors by offering services they cannot readily duplicate. Its gold-card members, for example, can r;et personal assistance in the Japanese language in many cities around the world. Even so, American Express is not expecting a quick return on tt.s multi-milllon-dollar investment in Japan.

THE DANGERS 0:1' STAYING HOME

For ell the <Mtnculties, most P.S. companies cannot ultimately afford to shun a market as vast and potentially lucrative as Japan. Only by straining to understand and surmount its barriers oan U.S. business hope for profits there. Washington must help by banging on the sticky door of Japanese resistance. But the rest depends on American entrepreneurs-their sensitivity, shrewdness, and stamina.

The atakes are enormously high-in more

than one arena.. Japanese corporations left virtually unchallenged on their home turf can there gather strength to move into world markets. That free ride ca.n be more expensive to U.S. companies than investing in Japan. As William Hall, vice presid~nt of ASI Market Research-Japan, warns: "Unless you ca.n compete here, the Japanese are going to come into your home market and beat the (expletive deleted) out of you."

(From Fortune, Oct. 5, 1981) LEARNING How TO PLEASE THE BAFFLING

JAPANESE

Many otherwise savvy U.S. corporations have stumbled in Japan because they didn't take the trouble to learn enough about the distinctive habits of Japanese consumers. Purveyors of soup, for example, can't get very far unleSB they know that the Japanese drink it mainly for breakfast. Johnson & Johnson fretted about the relatively low demand for baby powder until it did some more research on how the Japanese live. In their small homes, mothers fear that powder will ft.y around and get into their spotlessly clean kitchens. The company had to settle for selling its product in fiat boxes with powder puffs so the mothers can apply it sparingly. Adults won't use it at all. They wash and rinse themselves before soaking in ho1i baths-after which powder makes them feel dirty a.gain.

Lending a hand over those cultural barriers has become a thriving business for ASI Market Research, a small firm in Tokyo. ASI's guidance to such clients as Nestle, Levi Strauss, and Procter & Gamble has doubled its own sales to $5 million in just three years. George Fields, 53, its president, says: "Japanese attitudes and teste.s differ widely from those in the west. A lot of differences are invisible."

His "classic case" is a Betty Crocker cake mix. Because few Japanese homes have ovens, General Mills designed a mix to be prepared in electric rice cookers. After the product's costly flop, Fields was engaged for the postmortem. His finding: "The Japanese take pride in the purity of their rice, which they thought would be contaminated by cake flavors. It was like asking an English housewife to make coffee in her teapot."

Fields is the offspring of a Japanese father and an Australian mother, but he is more than a cross-cultural guru. After high school in Japan, he studied economics at the Uni,·ersity of Sydney and worked as a marketing manager for Unilever. In 1965, he establlshed ASI as the Tokyo branch of Audience Studies Inc., a U.S. ctJmpany that tested reactions to commercials. Finding that many Western commercials failed to excit Japanese, Fields began probing their attitudes through "focus groups" of consumers. In 1979, he and his colleagues bought the firm from it.a U.S. parent. ASI-Japan now has 45 full-time employees, including nine Westerners completely fluent in Japanese.

JAMES DEAN LIVES

Says Willlam Hall, 35, an Australtan and vice president: "We not only gather primary data, but suggest what a company can do with it here." Examples:

Levi Strauss effectively plugged its Jeans with TV commercials featuring a pair of deceased American film stars-unlikely promoters of U .s. products nowadays. Based on 30 ASI group discussions among young consumers, Fields concludes: "Only during school days can Japanese youths be themselves and wear jeans. To them, James Dean and Marilyn Monroe are symbols of being free and outside the social system-a frequent Japanese fantasy."

Before launching Colac laxative in Japan, Richardson-Vicks got ASI to explore what Hall terms "the psychological dimensions of constipation in Japan." The reticent Japanese are willing to discuss such delicate

24558 CONGRESSIONAL RECORD-SENATE October 20, 1981 subjects once they realize they"h.re members of a group with a common problem, but no Westerners are present at the meetings. The research showed that Japanese were dissatisfied with slow-acting herbal medicines, but wary that a Western laxative might be too strong. Thus Colac presents itself as two little pink pllls with natural qualities. As one Japanese ad says, "Three things to consider for stubborn constipation-salad, beauty exercise, and Colac before bedtime."

When Burley men's toiletries ran TV commercials featuring Muhammad Ali, its sales dropped. Hall says, "It bombed because the Japanese are extremely prejudiced. They'll accept a black as a sports figure, but not as a male idol."

One candy company had all but decided to launch a. new peanut-packed chocolate bar in Japan aimed a.t giving teenagers quick energy during their cramming season for exams. "Then we found out about the Japanese old wives' tale that ea.ting chocolate with peanuts can give you nosebleed," Hall says. "That was the end of the product."

To survey markets for industrial and medical products, Hall sometimes deploys "Japanese Charlie's Angels"-a team of attractive, nonthreatening interviewers who a.re warmly received by male physicians and corporate managers. ASI also has learned that the best salesmen for industrial chemicals must be what the Japanese characterize as "wet"-very traditional and wi111ng to spend hours cultivating personal relations. But high-technology products a.re best handled by "dry" salesmen with a direct, businessllke approach. Hall explains: "The buyers are young Japanese with advanced degrees, and they don't have time for all that tea drinking."

(From the Wall Street Journal, Oct. 5, 1981] GLOBAL TRADE SKmMISH LOOMS AS RESTRIC

TIONS ON SERVICES MULTIPLY

· (By Laura Wallace) LoNnoN.-Battle llnes are taking shape for

another international trade conflict, this time over services.

U.S. officials have compiled a 210-page list of more than 2,000 instances of barriers to the free flow of services among nations, and the restrictions are multiplying almost dally. Examples of discrimination are diverse and widespread:

Australia won't let foreign banks open branches or subsidiaries.

Sweden bars local offices of foreign companies from processing payrolls abroad.

Argentina requires car importers to insure shipments with local insurance companies.

Japanese airllners get cargo cleared more quickly in Tokyo than do foreign carriers.

And, if a U.S. company wants to use American models for an advertisement in a West German magazine, it has to hire the models through a German agency--even if the ad is being photographed in Manhattan.

"If we have restrictive protectionist tendencies in services," says Geza Feketekuty, a. U.S. assistant trade representative, "It's bound to spill over to goods, and it would become increasingly difficult to maintain the open trading system."

BUSINESS ANXIETY

The trend deeply concerns the U.S. government and many of America's largest companies, such as American Express Co., American Insurance Group Inc. and Pan American World Airways. The service area-banking, lnsurance, transportation, communications, construction, accounting and the like-is one in which U.S. companies a.re best able to compete. They see other nations seeking to protect and promote their own fast-growing service industries during the generally low economic growth expected !or the coming decade.

If other nations don't move quickly to replace existing obstacles and take steps to prevent the erection of future ones, Mr. Feketuky warns, some relatively open American service sectors, such as insurance and data. processing, may throw up a. host of obstacles themselves. Moreover, he observes, there's a. growing link between trade in goods and trade in services, especially in high-technology areas where productivity has surged. Sales of computers, for example, often go hand in hand not only with software sales but also with servicing contracts.

Services already account for about onefourth of the value of all international trade. Furthermore, their growth rate is accelerating far faster than that for trade in goods. The London-based Committee on Invisible Exports, a nonprofit institution, estimates that world-wide trade in these "invisibles" jumped 24.2 percent in 1979-the latest year for which figures a.re avallable--against 21.7 percent for goods. That's a turnaround from 1978, when visible goods grew faster: 12 percent, against 8.9 percent for invisibles.

Pulling in the biggest pa.rt of the invisibles trade in 1979 was the U.S. (20.8 percent), followed by the United Kingdom (9.2 percent) and France (8.9 percent). The U.S. trade representative's office estimates that services, excluding return on investment, make up 23 percent of all U.S. exports, which totaled $220.6 blllion la.st year.

TWO TO TANGO

U.S. Trade Representative William Brock took the first big polltica.l step toward doing something a.bout service barriers when he persuaded a. June meeting of the 24-na.tion Organization for Economic Cooperation and Development to endorse the importance of establlshing some general rules in this broad area. The U.S. hopes to obtain a political commitment for multilateral talks on services-perhaps in the late 1980s-when a General Agreement on Trade and Tariffs meeting late next year brings officials together from all over the world. "We reallze we can't just say, hey man, this is what should be done," a senior U.S. trade official observes. "It takes two to tango."

But it took more than 20 years and two big negotiating rounc!s under GATT, the Geneva-based international trade watchdog, to knock down tariffs, quotas and other restrictions on trade in "tangible" products. Trade experts warn that restrictions in the service sector pose a far knottier problem.

Many governments seek-or at least say they seek-to develop domestic service industries for national-security purposes or to help carry out particular social programs. Thus it's hard to distinguish the intricate web of regulations they spin for these goals from regulations that a.re purely economic protectionism. Hugh Corbett, the director of the nonprofit Trade Polley Research Center in London, notes that "a restriction for a legitimate noneconomic purpose could nevertheless be used to protect a domestic suppller." And that, he emphasizes, "could never be proved."

Some businessmen have become almost punch-drunk from the discriminatory bes.tin.~ they !:lave taken. When David Taylor, the executi!ve vice president and treasurer of Continental Illinois National Bank & Trust Co. of Chicago, was recently in London, a re~orter asked whether he felt hampered by foreign banking rules. It took him a minute to think of even one obstacle. But then the problems poured out in a. stream: Singarore makes it tough for foreign banks to get lice":lses; Japan makes it tough for foreign banks to acquire local currency deposits, and on and on.

"We tend to get so used to them, we tend to forget how restricted we are," he !:aid. "The more r think about it, the angrier I get."

The problem with opening up trade in

services is exactly the same as with trade in goods. Nations that believe they're competitively ahead want restrictions removed. But countries that sense they are behind want to protect their industries or foster ~nfant op.es, and so they doggedly resist moves to end curbs.

Some Western European nations have built up substantial international service networks in banking, insurance, shipping, engineering and other types of consulting, yet stlll worry about their abillty to -:;ompete with America. One senior U.S. trade official sums up what he finds to be a common European attitude: "Why are the Americans pushing this so hard? They must really stand to gain and we don't."

Unlike with trade in goods, however, there's a lack of detailed information on the flow of invisibles, and some nations are merely jumping to the conclusion that if the U.S. or some other country thinks it is going to be a winner, they themselves are llkely to be losers. France, Italy and several smaller European nations, in particular, argue that it's too soon for them to figure out what's in it for them.

On the other hand, West Germany and Switzerland are making vaguely support~i\Te sounds, and in recent months, Japan has begun to show interest.

To date, however, Britain ls the only government whose trade officials have really backed the U.S. push, and only a handful of non-American corporations, such as Lloyd's of I.JOndon, have lined up with the Americans.

Cecil Parkinson, recently named by Prime Minister Margaret Thatcher to head the Conservative Party, said during his just-completed stint as U.K. trade minister: "I think we should sit down and start negotiating .... If our markets should be open to their ca.rs, their markets should be open to our insurance companies and our banks."

The difficulties involved in reaching any broad accord on removing service barriers are illustrated by the poblems within just the Common Marlret-supposedly an integrated economic unit. The Common Market has never got far in creating free internal movement for services compared with its customs union for goods. For years, for instance, France, West Germany and Italy have successfully blocked a directive standardizing insurance rules-to Britain's considerable irritation.

This sort of conflict between national interests, the need for more data on the fiow of services and normal problems of bureaucratic lethargy led Germany's deputy director for foreign trade policy, Gerhard Abel, to uge the U.S. to move cautiously. "We have to be realistic," he warns. "Otherwise we'l'l spoil something that is promising."

But even in the U.S., omcials note, support for a major otrensive against service barriers isn't spread throughout the entire business community, however loudly a number of powerful companies may clamor !or action. A few major insurance companies started lobbying back in the mid-1970s, and American Express and others joined in later, worried about nations' growing tendency to regulate data fiows. But for many corporations, the issue still seems too remote. "In a way, we're fighting the future war," says Joan Spero, the American Express vlce president who works on this problem.

When Mr. Brock became trade representative early this year, he promptly took up the service cause. Services, he has said, are "the frontier for the expansion of export sales."

Does Europe's lack of enthusiasm for action upset him? "It's like anything else in politics," the undaunted Mr. Brock replies. "You have to build a constituency." That's a big order, for the constitutency-building has to take place not only within the U.S. but also in other countries. What's needed~ l&JS

October 20, 1981 CONGRESSIONAL RECORD-SENATE 24559 Lloyd's Common Market adviser Llllana Archibald, is for the U.S. "to get everybody else's politicians walking down this road." e

SBA LOANS: FAST TRACK TO FAILURE

e Mr. DANFORTH. Mr. President, recently the St. Louis Globe-Democrat published a series of articles concerning the Small Business Administration's direct loan program. The Globe-Democrat's report followed a nationwide investigation in which reporters Tom Amberg and Mike Montgomery visited 15 States, interviewing scores of SBA officials and hundreds of loan recipients. Over 18,500 records were analyzed with the assistance of Comshare, Inc., an international computer analysis and consulting firm.

The results of the Globe-Democrat investigation are very disturbing: 42 percent of loans made between 1970 and 1978 were found in default, at a cost to the taxpayers of $157 million. In the drive to make as many loans as possible, SBA officials reportedly paid little heed to agency procedures for making or monitoring loans.

Loans were made to businesses sight unseen and to persons with no training or ability to manage the businesses for which the loans were intended. Minority-owned businesses were particularly hard-hit.

The cost to the taxpayers resulting from the SBA's mismanagement of the direct loan program is compounded by the cost to the persons who were victimized by the program, many of whom-in reliance on bad or indifferent advice from the SBA-invested thousands of dollars of their own money, even their life savings in businesses that were doomed to failure.

Repeatedly, people who had received loans told the reporters they would have been far better off if they had never heard of the SBA.

Mr. President, it would be easy to simply write off the SBA's direct loan program as a failure and forget about the whole thing. But that would be a serious mistake. Even if the direct loan program does not merit saving-and I make no judgment on that score at this time-it is important to study the program's failures so that mistakes are not repeated. With this goal in mind, and in the hope that the Globe-Democrat's investigation sparks further study and thought, I ask that the report be printed at this point in the RECORD.

The report,follows: [From the St. Louis Globe-Democrat,

Aug. 31-Sept. 9, 1981] MILLIONS LOST IN SBA LOANS; 42 PERCENT OF

BORROWERS END UP IN DEFAULT AND OUT OF BUSINESS More than $571 mlllion in taxpayers' dol

lars has been lost as more than two of every five loans have ended in default in the federal government's primary program to help the underprivileged enter the mainstream of American business.

Rather than help the disadvantaged, as the program was designed to do, recipients often become its victims. The program often ends up putting people out of work, draining life savings and leaving a. tra.11 of closed shops

and broke lives, hundreds of interviews have revealed.

The high failure rate results in part from a pattern ot making significantly smaller loans to borrowers in minority urban areas than elsewhere and a history of giving loans to totally unqualified people.

After a long, intensive nationwide investigation, The Globe-Democrat found that lax policies and sloppy procedures in the Small Business Adminlstrr..tion's direct business loan program from 1970 through 1978 have cost the federal Treasury $571,228,200-a figure that could reach $900 million if losses in 1979 are consistent with previous years.

Across the country, many SBA officials interviewed said the program should either be scrapped or completely overhauled. The officials interviewed agreed the program has serious problems.

Loan recipients whose businesses failed were more outspoken. "I wish they'd never lent me the money; I'd have been better off," said one man. His comment was repeated time and time a.gain by other borrowers across the nation.

"It's as if the money were soap and we're supposed to peddle it," said Bernard Lump. chief liquidation officer in the SBA's San Francisco district office. "it's not just a feeling I have; it's a fact. There is no respect for money in this agency. I'm appalled at this stuff. We're not helping these people."

That feeling was echoed by Clyde Cromwell, an official in the Dallas district oftlce. "I've gone back to a loan officer on occasion and said, 'What in heaven's name are you doing making this loan?' and he's said, 'Got to get the money out, man. You get no brownie points for declining a loan.'"

Added Denver District Director Chester B. 1.e~dom, "We don't do a man any favors by putting him in business with an artificially low interest rate and without proper management ab111ty.''

In fact, the actual default rate within the program is masked by a widespread policy of granting deferments to loan recipients who have missed payments, artificially understating the losses. The purpose in granting the deferments is often to make a loan oftlcer or district field office "look good," SBA insiders said. Lump, who has served in SBA offices in New York, Los Angeles and now San Francisco, said, "I would say that, at any time, 10 to 25 percent of the direct loan portfolio would be in deferment status, which means we just stopped collecting money on those loans."

Lump explained that by deferring loan payments, loan oftlcers are able to transfer the loan from delinquent status to a "current" status, thus making their portfolio appear to contain a greater percentage of good loans. That can mean more money and faster promotions for the loan officers because the agency has had an incentive program targeted largely on such things as high percentages of current loans, he said.

"I was part of the 'we' that did it," Lump declared. "I know. We were the No. 1 oftlce in New York, and when I was in LA it was the same, but it was all a charade. Jt's just a way to hide the actual default and delinquency rates. People do it to protect themselves and get ahead.''

When The Globe-Democrat informed SBA Administrator Michael Cardenas that it had found a 42 percent default rate, Cardenas expressed no surprise, admitting that the program has been poorly hand~ed for years. He said he intends to change the direction of the program but offered no specifics. As~ed what he felt was an ideal or reason

able default rate, he replied, "I'd like to see it no higher than 10 percent."

The direct loan program, set up in 1953, was expanded in 1964 and again in 1969 as a response to urban riots in the late 1960s. While there a.re several types of dire~t loans,

the overall purpose is to en.able marginally qualified borrowers to enter the free enterprise system by owning and operating their own businesses. The threshold requirement for receiving an SBA direct loan is to be turned down for the loan by at least two banks and not to qualify for even a 90-percent SBA-guaranteed loan.

The SBA generally requires a person (there is no formal policy) to put into the business whatever private money he has. The program is intended for anyone going into or expanding a business who is unable to obtain the money from conventional lending sources.

The Globe-Democrat investigation, which involved two years of litigation by the newspaper under the Freedom of Information Act, entailed the examination of more than 14,000 loans, thousands of other documents, hundreds of interviews and a computer-assisted study of loans and default records. It was based on an analysis of nine years of direct loans made In 16 SBA oftlces.

Analysis of the SBA loan data was accomplished by ut111zing the specialized computer system and consultation services of Comshare Inc., an international computer services firm.

Among the findings: Of the 14,261 SBA loans made in the 16

district oftlces from 1970 through 1978, 5,948-or 42 percent--have ended in default.

In terms of actual dollars lost, $157,535,-380-or 3·3.3 percent of the $473,079,234 loaned during the period in the 16 offices-was never repaid.

SBA attempts to collect on collateral or force payment from loan recipients through the courts are minimal at best, with the agency collecting about 18 cents on the dollar once a loan has been placed in liquidation, the first step in writing off the loan.

Loans have been concentrated in small geographical areas marked by high unemployment and economic depression, yet within those areas the size of the loans made was significantly less than average overall. That pattern of relative undercapitalization gives weight to charges by do2"ens of minority loan recipients who told reporters they felt that heavily black areas were being given many of the loans to show "commitment" to the area, but that the loans were too small to allow a business to survive.

The SBA has consistently understated its loss rate, never admitting in any year between 1970-78 more than a 10.8 percent loss rate to CongreEs. Congress' watchdog, the General Accounting Oftlce, has accepted as true and repeated with virtually no serious investigatinn the misleading loss rates.

SBA oftlcials repeatedly increased the risk by making loans to people unqualified to run the type of business for which they have received the loan. Examples found by reporters include a barber who received a loan for a grocery store, a potato chi9 salesman who received a loan to run a liquor store, a clothing store salesman who received a loan to run a restaurant and a karate instructor who received a loan to set up an Oriental food store.

There has been a substantial hardship for those who received loans but soon discovered they were tn well over their heads. Not only were life savings often lost as would-be entrepreneurs tried to keep their businesses aft.oat, but in a number of cases, reporters found peoole whose family life have been thrown into confusion and disarray due to the strain of debts, bankruptcy or loss of credit.

SBA officials failed to follow their own standard operating procedures-in making and monitoring loans and minimizing losses stemming from defaults-"in a push to get the money on the streets.''

The high volume of loans and low rate of


success within minority communities are exactly what the agency's regulations say should not happen. "From a socioeconomic viewpoint, the indiscriminate approval of loans at a high volume and low rate of success can do nothing but impair our relationship with the small business concerns and communities that we are attempting to help," the SBA's own procedures manual says.

Elsewhere in the manual, another major point is stressed: "Many loans are in liquidation solely because working capital requirements were not given adequate consideration."

So disorganized and troublesome is the program, in fact, t'hat 11 of 16 districts and branch-directors interviewed in the 16 offices, said privately that the entire program should be either scrapped or significantly overhauled.

"If we got a telegram tomorrow from Washington saying the direct loan program was being stopped, everyone in this office would stand up and cheer," said one Western district director.

Because of the large and representative sample size-the 14,261 loans examined are 26.8 percent. of the loans made by the SBA t)lrough 1970 t'hrough 1978-the figures can be translated with statistical accuracy to refiect the national loss rate during the period, according to statistical experts.

In terms of dollars lost, the SBA default rate for the direct loan program ls 33.3 percent, which means an actual loss of more than $571 mlllion from 1970 through 1978. In terms of numbers of loans, the default rate ls 42 percent.

Later years were not included in the study because there has been insufficient time for t'he businesses to show a pattern of either success or failure.

THE STORY BEHIND THE SMALL BUSINESS ADMINISTRATION SERIES

Billions of dollars have been spent through the Small Business Administration's direct loan program since 1953, but the agency refused Globe-Democrat requests for information on how many of those loans defaulted, leaving taxpayers holding the bag.

Concluding that the public's need for a meaningful evaluation of the program WP>S

not possible given the SBA's refusal to provide default information. The Globe-Democrat filed suit in 1979 under the federal Freedom of Information Act.

The newspaper eventually prevailed, and the first detailed data on SBA stewardship of taxpayer money was turned over to GlobeDemocrat reporters Thomas L. Amberg and Micha.el R. Montgomery in June and July of this year.

More than 18,500 records-refiecting 26.8 percent of the SBA loans made nationwid~ from 1970 through 1978-were statistically analyzed with the assistance of Michael Jones of Comshare Inc., an international computer analysis and conc;ulting fl.rm.

The records o.Jtained from the SBA contained raw data with regard to the loans. and The Globe-Democrat was able to analyze the data down to types of businesses within individual ZIP codes throughout the country, average loan sizes, disparities in loan amounts between areas, and many other calculations. A number of sophisticated analytical techniques were applied to the records to obtain a detailed breakdown of the entire program.

Amberg and Montgomery then traveled more than 17,500 miles, interviewing more than 80 SBA omcials and hundreds of loan recipients in 15 states to get a complete picture of the direct loan program.

Amberg, a prize-winning investigative reporter who has worked for The Globe-Democrat for 10 years, has a bachelor's degree in political s.cience and earned a master's degree in business adxninistratlon while work-

ing for the newspaper. Montgomery, who has a bachelor of science degree in admin!stration, has reported exterulvely on local affairs.

LOOSE PRACTICES LEAD TO SBA's HIGH FAILURE RATE: LOANS 0FrEN MADE TO BUSINESSES SIGHT UNSEEN

(By 'l'homas L. Amberg and Michael R. Montgomery)

Through its loose lending practices and servicing procedures, the Small Business Administration virtually assures that its direct business loan program will have a staggering default rate, said dozens of field officials throughout the nation interviewed by The Globe-Democrat.

"It's not hard to see why there's such a horrendous failure rate for these businesses. It starts with a mentality that has no respect for the money it deals with," one official said.

That official, San Francisco chief of liquidation Bernard Lump, recalled _instructions given him by a former chief of finance in the New York City office. "He said, 'Don't look at it as money. Look at it as numbers on a computer run. We call them loans, but they're really just grants'."

Asked why the default rate is as high as it is--42 percent of the direct loans made from 1970 through 1978 failed-and what can be done about it, SBA field officers who were interviewed raised these major points:

There is insufficient screening of a?plicants. "We lend money to whatever walks in the door," Lump said. "We should try to target our money to certain industries the way banks do."

Thomas Trimboli, district director in Phoenix, Ariz., said, "I'd like to see a more creative use of our direct loan money. Why not take most of the money and target it to the types of bus·inesses that the state or city or area needs to ensure that it generates economic development?"

Such targeting is not possible because the agency's rules require taking loan applicants in chronological order on a first-come-firstserved basis, Trimboli said.

Loan recipients' lack of business experience is cited as "the greatest single reason" for loan failure by most SBA personnel interviewed.

Loans are made routinely without the loan officer or other SBA personnel even seeing the applicants' proposed or present place of business.

"Field visits are a MUST," Buffalo, N.Y., Branch Director Franklin J. Sciortino said. "You can't make a rational decision on a loan without a field visit. A picture's worth a thousand words, as the saying goes, and it's just amazing how much you can tell about a business in just a five-minute visit."

And yet, in every other office visited by reporters, officials conceded that field visits were not always made, and, in many cases, rarely made, because of a lack of personnel.

SBA's internal regulations require that field visits be made in all cases of direct loans to start a new business unless specifically waived by a loan officer's superior. The shortage of personnel to handle the crush of applicants-waiting lists extend up to 2% years-makes waivers the rule and field visits the exception.

SBA has for years marched out of step with the rest of the financial world. Its loans are made throughout the year regardless of financial conditions. "Lending is a cyclical business, and we should treat it that way," said Lump, of the San Francisco SBA office.

"When interest rates are high, we should be putting people into servicing loans, not making them, and when interest rates are low, the reverse should be true.

"But what happens is that SBA acts oblivious to the wisres of the Federal Reserve. When the Fed is trying to get banks and lending institutions to cut down on lending, the old SBA is right out there pumping more

loans into its $15 billion portfolio. It doesn't make the least shred of sense," he said.

A major problem raised by several SBA field officials is the lack of specific requirements for the borrower to put his own money into the business. Although the SBA policy manual states that an "applicant must have a reasonable amount at stake in the business," there is no specific figure for private investment. The lack of a specific requirement for private equity by the applicant gives him little incentive to keep the business solvent, field offi.cials said.

The chief financial offi.cer in the Newark, N.J., district offi.ce advocated returning to the dollar-for-dollar matching concept used by the agency until the mid-1960s.

"You'd eliminate the type of situation where a couple of guys stand on a street corner one night and decide to go into business," he said.

Charles R. Hertzberg, director of the SBA's Office of Business Loans in the central office in Washington, said, "There was a weakening of the 7 (a) loans (the major part of the direct loan program) to coincide with the EOLs (Economic Opportunity Loans, which are intended to help minorities and have never required a certain amount of private equity from the applicant.)"

A sample of 534 loan files from 16 selected SBA offic~s showed that 33 percent of the loans were made in part or in whole to pay off amounts owed by the businesses to private or public creditors and to pay local, state or federal taxes.

In these cases, an average of 46.4 percent of the loan was used to pay creditors. Many times, the entire loan was used, with SBA approval, to pay off a series of private creditors.

In one case, for instance, the Danas district omce loaned $100,000 to a business that had failed six months previously. The loan went entirely to satisfy accounts payable, notes paya.ble and a bank. The business (the Canton & Edgewood Concrete Co.) subsequently went out of business for a second and last time 3% yea.rs later, with SBA losing about $55,000.

SBA regulations, however, dictate that loan proceeds may not be used to "bail out" any "creditors who a.re in a position to sustain a loss."

From the same sampie of 534 loans, The Globe-Democrat found 52, or 9.7 percent, that went in part to pay off other SBA direct loans. By doing so, the agency understated the actual number of defaulted loans.

Once a loan is approved, eventual failure and loss to SBA is often assured through policies that, in general, fail to protect the loan, investigation showed.

Those policies-or sometimes lack of policies-include:

A shortage of personnel to service loans. Servicing personnel are theoretica:lly supposed to handle a host of administrative problems, such as any changes in accounts, as well as be available to make calls on businesses in need of special help and attention.

Because the direct loan program ls by its nature made up of higher-risk individuals, those businesses genera.Uy require substantial attention. However, the average caseload in the 16 offices surveyed by Globe-Democrat reporters ls 510 loan recipients per ioan omcer.

In contrast, loan servicing officers at commercial lending institutions generally have a caseload of 10 to 100 cases, according to banking omclals.

A recent study by Robert Morris Associates, the national association o:t bank loan and credit omcers, found the majority of loan omcers at commercial institutions handled no more than 99 loans. The average caseload was 103 loans per officer, according to the study.

Phoenix District Director Thomas Trim·

October 20, 1981 CONGRESSIONAL RECORD-SENATE 24561 boll, discussing the high caseload, said, "The servicing people are not engaged in preventive management assistance; they're engaged \n reactive management assistance."

Trimboli and other SBA field personnel complained that the lack of staffing makes it lmpossible for a servicing officer to do anything other than react to a crisis, not prevent one.

"Once the thing is fa111ng, there's really nothing a government person or banker can do for it," said Lump, of the San Francisco oftlce. "The bad decision was made in making the loan in the first place.

"Putting many of these people into business in the first place is like putting them in the ring with Muhammad Ali. Once they start to take a beating, there's not much we could do if we crawl in the ring with them," he said.

Another SBA official said, "It's pretty unrealistic to think a servicing officer can provide much real help when he has hnudreds of firms to deal with."

SBA fa.Us to protect its collateral position in many cases. When a loan is made, the agency accepts certain collateral that is supposed to secure the loan. Often, the agency will later take a second position on the sa.me colla.teral, thus allowing a commercial lender that comes a.long later to ha.ve first rights to the residence or business property and giving SBA whatever, if anything, is left over from a sale of that property.

"We don't protect our position," Lump se.id. "It's common. A guy sta.rts going bad and wants more money, and if the agency won't gi•;e it to him, he goes out and gets it from a trust deed company. That company usually charges interest at prime (rate) plus five points, plus another 10 to 24 points (a point is 1 percent of the loan amount) on top of that for what's called loan origination fees.

"To make the loan, SBA has to agree to subordinate its position, and we do it as a matter of course. Absolutely. We do about two a day in San Francisco, and twice that in Los Angeles. It's rampant all over the country," Lump said.

Subordinating the loa.n position means that when the trust deed company forecloses (which almost always happens, according to Lump), SBA is left wlth no collateral return. "Millions go down the drain in that way," Lump said.

How SBA LOAN COOKED UP RESTAURANT FAILURE

(By Thomas L. Amberg a.nd Michael R. Montgomery)

Merrill L. Moss, a self-described a.mateur cook with no £:xperience in operating a restaurant, opened a posh ea.ting establishment in St. Louis with $150,000 of taxpayers' money and flopped less than six months la.ter.

With a.11 but ,5,9<l6 lost, Moss closed the gourmet dining establishment at Fourth and Olive streets called Chez Jean Pierre, which had offered main meals from Coquelet Albufera. at $15 to Carre d'Agneau eu Croute, the house specialty, for $37.

Moss told The Globe-Democrat that from the beginning in 1978 he h"' d no experience in the business "whatsoever" to back up his "glamorous" venture.

"You and all other t axpayers paid for my failure," he said.

Moss' exoerlence is one example of how the Small Businesc; Administration-through poor Procedures for making loans, monitoring them, and minimizing taxpayer losses when default occurs-has lost one-third of the $2 billion it spent during the deca.de ending in 1979, a Globe-Democrat investigation has revealed.

The performance record of the St. Louis SBA office serving ea.stem Missouri is one of the worst 1n the na.tion, reflecting the failures of a program whose CO.It is much greater

79- 059 0-85-42 (Pt. 18)

than the hundreds of millions of dollars lost through defaults, The Globe-Democrat investigation showed.

A rush to "get the money on the street," as one SBA official described it, has resulted in St. Louis officials making loans almost haphazardly to people who, by their own admission, were Lotally unqualified and inexperienced to ··un the businesses being financed at taxpayers' expense. As a result, almost six of every 10 loans of the 1.041 loans made here from 1970 through 1978 have ended in default.

Although the SBA's policy and procedures manual stresses that the management ablllty of the prospective borrower is a prime factor in considering !l.n application, SBA officials have often given loans to people who were making major career changes without benefit of prior experience.

And, in many cases, the businesses were so short-lived or did so poorly that bec~use of accruing interest and lack of payments, the SBA is owed more moner than it loan ed.

The loan failure rate here not only raises questions about the qualifications of the borrowers but the qualifications and procedures of SBA personnel as well.

The ill-fated venture of Chez Jean Pierre is one of many ex"l.mples.

On May 15, 1978, the SBA approved the $150,000 loan to Moss to set up Chez Jean Pierre-despite the fact that, as Moss said, "I had no experience whatsoever. Nothing. I'm an amateur cook, and it seemed like a sort of glamorous concept."

A former advertising wrH.er, Moss recalled the whole venture as a. nightm:ue, with the bottom line being that he opened in November 1978 and closed less than six months later on May 1, 1979.

With SBA's blessing, he said, he had selected a "terrible location," had accellted a financing pronosal that left him woefully short on working capital and got into a business he knew nothing about.

The cost to !;he SBA, and ultimately the taxpa.yers, was $144,004 in principal and interest that the ~BA has had to charge off. Moss filed for bankruptcy, and the debts were discharged by court order.

Today, living In Barnbridge Island, Wash., Moss said, "They would have done me a huge hvor if they had turned down my loan and told me to go get some experience before I try it on my :>wn."

Examples of SBA failures-In which 33.3 percent of the $2 billion spent on the program from 1970-78 ended in default-are legion.

From Februa.rv ;970 to Anrll 1Q71, the SBA the next for $25.000 a.nd the third for $65,-000-to Luther Boykins, a barber to open Luther's Market, a grocery store' at 4135 Shreve Ave. Six months after the final $65,-000 loan, the grocery shut down. Boykins went back to being a barber, and the SBA was left with $79,183 still owed in principal and interest. That amount was subsequently charged off.

Boykins said he ls bitter that the SBA even gave him the loan in the first place, because besides losing his llfe savings, he incurred a debt he said he wm never be able to pay off.

"I was going to be a failure no matter wha.t," he said. "The combination of a lack of experience and a lack of working capital doomed me."

The SBA did not inspect the stock or equipment, provided no advice on taxes, management or bookkeeping and offered no aid from SCORE (Service Corps of Retired Executives) volunteers, he complained.

He maintained that the SBA's direct loan program amounts to no more than "pacifying and satisfying" the black population, and . is, in fact, "designed for blaclc people to fall" because it sets them up in business without the· proper experience or enough .financing.

When William J. Herbster applied for an

$8,000 SBA loan on May 2, 1972, he was a potato chip salesman on a truck route. Nine days later, when his loan was approved, he was the new owner of the Driveway Liquor store at 4114 Jennings Road, Jennings. Five months later, he was out of business, lea.vlng the ~BA with $8,463 in principal and interest to charge off as another bad debt.

Herbster remembered that he "went down to see the man at SBA (to ask for a loan), and it was all real quick. They gave me the money right away," despite, he said, his lack of experience.

In another case, M. c. Skinner, with a background of 20 years in retail clothing sales, was given $32,400 in loans to turn a deserted gas station on the city's North Side into a diner.

Although SBA officials suggested Skinner might look into the idea of his own clothing shop, he insisted it was "a dying business," he said, and remained set on the idea of his own diner.

Skinner received a $29,400 loan from the SBA in December 1978 and another $3,000 loan in September 1979.

After 14 months of delays, occasioned in part by misinformation from SBA officials, Skinner said, he finally opened his restaurant at 2914 Parnell Ave. in February 1980. But the business went bust in September 1980, leaving Skinner with no diner, no credit rating and the loss of at least $2,500 of his own money.

The SBA, and taxpayers, were out a total o! $34,566 in principal and interest.

One West End restaurant at 5897 Delmar Blvd. with the catchy name of Tak-It-AnGltt received a loan in 1971 for $10,500. Today, the SBA has long since written off the loan, with Tak-It-An-Gitt stm owing $10,-471.88 In principal and interest. The interest stopped accruing in 1976 when the loan was written off. Globe-Democrat efforts to reach the owners were unsuccessful.

When auto mechanic Franklln Williams "was looking around for something to do" in Philadelphia. in 1971, he and his cousin, Dillard Mosley, a salesman for Sears Roebuck and Co., thought opening a hardware store would be a good idea. He told The GlobeDemocrat that he and his cousin put together some projections ("we didn't exactly know what we were doing") and presented them to the SBA.

SBA thought the idea was a good one, and Without changing anything in the projections, gave Wllliwn $50,000 to buy Feldman's Hardware Store.

"The projections were way, way off," Williams said. "We knew we were in trouble within a year. The store lasted 3 Y2 years." He said he ls age.in working as a truck mechanic and his cousin ls "somewhere out West."

Ye Mo Ahn was a. karate teacher in 1975 when she decided that "the karate wasn't going so good." Some friends told her that they thought "an Oriental food store would go good, so I tried it." With no managerial experience, she could only keep the store afloat 1 Y2 years on the $30,000 SBA loan before "too much competition killed the business," she said.

Similar versions of one phrase-"gettlng the money on the street"-cropped up again and again in Globe-Democrat interviews with SBA officials in 16 offices nationwide.

The phrase represents what many-including SBA officials-regard as a bureaucratic distortion of the program's original Intent of helping individual entrepreneurs become successful businessmen, but has come to be viewed In terms of how many b1lllons of taxpayers' dollars have been doled out.

DEFAULTS HERE AMONG HIGHEST The St. Louis Small Business Admlnlstra

tion 's office has one of the highest default rates in the country 1n its direct loans to asplrlng businessmen.

24562 CONGRESSIONAL RECORD-SENATE October 20, 1981 Prom 1970 through 1978, the local oftl.ce

made 1,041 loans, and 582-or 55.9 percentended in default and out of business.

Of the 16 SBA omces selected in The Glo'beDemocrat's investigation of the agency's direct loan program, only Cleveland had a higher default rate-56.46 percent of the 859 direct loans made during the same period ended in default.

In St. Louis, the direct loans during the same period totaled $22,850,945. More than 52 percent of that amount went to the 582 firms that ended in default and out of businesl?. Subsequently, the SBA, and taxpayers, took a loss on 82 percent of the money loaned to those firms. A total of $9,765,739 was charged off as a loss by the SBA here, and another $561,711 in interest owed on the loans was also written off as a loss.

The Globe-Democrat investigation chose the yee.rs 1970 through 1978 because of the high volume of loans and dollars in the program during that period. Most of the SBA loans are for a 10-year period.

For the period chosen, business failure rates were high for the first few years and then declined in the more current years. The default rate here ree.ched 69 percent in 1971; more recently it has been as low as 26 percent. The rate declines in more recent years not because SBA policies or procedures have improved, but because the businesses have not been in the program long enough to determine their ultimate success or failure.

The failure rate in St. Louis by yee.r is: 1970, 56 percent; 1971, 69 percent; 1972, 68 percent; 1973, 65 percent; 1974, 48 percent; 1975, 51 percent; 1976, 38 percent; 1977, 41 percent; and 1978, 26 percent.

Analysis of the SBA loan data for the 16 SBA offices was accomplished by using the specialized computer systems and consultation services of Comshare Inc., an international computer services firm.

TALES OF RUINED BUSINESSES-AND LIVES

(By Thomas L. Amberg and Michael R . Montgomery)

"I cant tell you how it would have helped my life so much if they had never given me the damn money. All lt did was ruin my life."

The price of failure was high for Elizabeth Taylor, who started a midtown St. Louis restaurant with a Small Business Administration loan and then watched it close.

An SBA-commissioned consultant had advised against the loan, citing a poor location, insufficient capital and her lack of business experience in concluding that the venture would be "perilous."

A top official at the SBA office here agreed, saying the $86,900 loan was "not adequate.''

But less than three weeks later, the SBA granted Mrs. Taylor a loan for $36,700-less th.e.n half the original request. A bailout loan of $32,000 followed the next year ill 1975, but the money was not enough-Mrs. Taylor closed her business last year.

She now lives on a small medical disab111ty payment and food stamps.

Mrs. Taylor ls one example of the !allures of the SBA's direct loan program, 1n which tax money-an estimated $571 mllllon was lost to defaulted loans from 1970-78-ls not the only cost, and taxpayers are not the only victims.

People who applied for loans came to the SBA office here with Ideas that represented their lives' ambitions-a chance to run their own businesses, to be independent to stand on their own feet and to be their own bosses.

But in many cases, often when SBA officials did not even follow their own rules and regulations, people who were successful in obtaining the loans not only lost their businesses, but their life savings, their homes and their credit ratings. In one case a man e':'en lost his family.

When Willie Smith walked into the St. Louia SBA omce to apply for a loan to run a

small grocery store, he waa Justly proud of himself. He was, he said proudly, one of the first blacks to be hired as a meatcutter by a St. Louis grocery cha.in, and he had worked steadily at the trade for 12 yea.rs, adequately supporting his wife and four children. Now he was ready to go to work for himself, runn1ng a mee.t a.nd grocery store.

But at the SBA, no one seemed to know anything a.bout setting up a grocery, and the $28,000 loan he received proved totally inadequate, he said.

''By the tlme we bought stock and paid regular monthly bills, there was nothing left to operate on. We (Smith and a partner) had chosen a bad location, but we didn't know any better. We did about $3,500 in sales each week. but a feasibllity study done a year after we opened said we'd have to pull in $15,000 a week 1n sales to survive. We never got o·;er $5,000," he said.

Smith's operation, the Specialty Meat Co. at 4261 Maffit Ave., soon raced downhill. A move to a sooond location, 1424 Dielman Road, Overland, proved no more successful because of the lack of adequate working capital, he said.

"We were always in debt, never a.ble to restock properly and always living hand to mouth," he said. "There was never money to make any payments to the SBA.''

"It's the blind leading the blind," Smith said bitterly. "If they (SBA officials) don't know any more than I do, they're not much help. It's nice they gave me the loan, but it 's no help if they can't help me succeed.''

Smith's business went further and further into the red, despite Smith's working more and more hours. Debts and frustrations began to take their toll in pressure on the family, he said.

"My wife couldn't take the pressure of the debts, and we ended up separating. The whole thing created a lot of hardship for the family. It really tore us up," he added.

Smith's business, started in late 1974, folded in mid-1976. Smith now does "odd jobs" and cuts meat when extra help is needed. He said he takes most of his pay 1n groceries and then takes them to his estranged wife and children.

"I tried to get a loan to do better in my life, but I got a loan and ended up a lot worse. I guess I've learned a lot," he said.

The price also was high !or Mrs. Taylor, a. St. Loulsan who for years before receiving an direct loan had run a small but successful ca.tering business out of her North Side home.

"When I applied !or that firsrt loan in 1974, my world was going pretty good. I had a.bout ~35,000 of my own money, a home with a mortgage that I had-paid down from $21,000 to $g,ooo, .a car and good health," she said.

"But afterward, after getting the loa.n and all that followed, I had lost my money, my home, my business and my health. The emotional strain of fighting through tl:ls horrible thing has Just torn my family apart emotionally. My oldest son got so upset over the business failure that he had a brea.kdown," she said.

"I can't tell you how It would have helped my life so much 1f they had never given me the damn money. All it did was ruin my life.'' she said.

In fact, the SBA turned down Mrs. Taylor's original request for an $86,900 loan, in part based on the findings of a feaslb111ty study commissioned by the SBA to look into Mrs. Taylor's idea of a restaurant and catering service a.t 3536 Washington Ave.

That study, obtained by The Globe-Democrat, stated, "This total concept appears unrealistic for this area o! St. Louis at the present time due to the !act that it ls a transitional area and the !act that Mrs. Elizabeth Taylor has little mana.gement and business experience for such a la.rge operation."

The report called Mrs. Taylor's proposed venture "perilous" and "high risk" because of the loca.tion and her lack Of busllness experience.

And, In declining her request for $86,900, S. C. Slaughter, then chief of SBA's financing division, wrote that the loan could not be approved because, "Working capital of •23,900 after the loan ls not adequate to sustain the operation during its development stages.''

So what did the SBA do for Mrs. Taylor? Less than throo wooks after Slaughter's letter, Mrs. 'I'a.ylor received a loan for $36,700 for essentially the same operation she envlSiloned in the $86,900 loan. The $36,700 loan left Mrs. Taylor with only $3,700 for working capital, according to SBA records.

A second loan the next year for $32,000 ended up being used largely to bail Mrs. Taylor out of debts rapidly incurred from the small capitalization in the first loan. records show. The loans were put in liquidation status within two yea.rs after they were made, and the business sputtered along !or five years before closing in August 1980.

In fa.ct, even though the loans went into liquidation on May 25, 1976, the SBA made no attempt to collect on 1 ts loss. The loans were officially charged off on Feb. 23, 1978, records show, again with SBA making no attempt to collect anything. For more than two yea.rs after being "charged off" SBA continued to ignore the debt.

By the time the agency finally moved to collect anything on its loan, the business had little left of value, and SBA collected absolutely nothing from the sale of business chattels, giving the sum to the auctioneers instead.

In the case of Lionel E. Lefler, an American Indian who wanted to open a health club, It was a similar story.

Lefler had been and stm ts a high school physical education teacher. He thought he would have no trouble running a health club in the OaJtvllle Shopping Center in South St. Louis County.

Once he got his $61,000 loan, he had no problems with the SBA and very little contact with the agency, either, he added.

But problems began even before the club opened, Lefter said, when the landlord o! the shopping center placed the club in the rear of the complex, not in the front as Lefter had been led to believe.

"It was a poor location, but I didn't realize how bad it was at the time. Maybe if the SBA had given me some management training, I might not have let this happen," he said.

But, Lefler said, he was offered no such courses or help despite the SBA mandates that all borrowers without management experience, such as Lefter, receive management assistance training.

In fact, Lefler said, he wanted to wait until he could get a better location because his application for the loan had been predica.te<J in part on a choice site for the club. But because the loan had already been approved, he said, an SBA omcial told him not to wait but to take the money and work with the less desirable location.

Lefier's health club opened In early 1978 and lasted a little less than three years. During that time, he received only one visit from SBA officials-"and they were In an obvious hurry to leave," he said.

Although Lefter twice requested and received a moratorium on his loan payments, no SBA official contacted him about his business problems.

He ss.id he once called the Service Corps of Retired Executives, a group of retired businessmen that offers management help to SBA borrowers, but was told no one there knew the physical fitness business and "then they told me to call back in a few months lf things didn't get better."

When the business folded in 1980, the SBA had put in a total o! $63,000 and Lefter haCl lost $20,000 of his own money, including a house he had owned.

When he thinks back on the venture, Lefter is not bitter a.nd he does not put all the blame on the SBA. Nonetheless, he would change the put 1f he could.

October 20, 1981 CONGRESSIONAt RECORD-SENATE 24563 "I'd have been a lot better off financially

lf they'd have told me no-hell no."

DECK STACKED AGAINST MINORITY AREAS

(BY Thomas L. Amberg and Michael R. Mont.gomery)

The Small Business Administration has gl ven smaller loans to borrowers in depressed minority areas than to a.spiring businessmen in surrounding regions, stacking the deck against the survival o! enterprises in the minority areas, a. nation·wide Globe-Democrat investlga.tlon shows.

Businesses in predominantly nonminority areas are given loans averaging 41.1 percent more than businesses in depressed, m.lnori ty areas under the Small Business Admlnistration'.s direct loan program.

And yet minority businessmen argue their needs a.re at least as great as their white counterparts' because of higher insurance oosts, higher security costs and renova.tion and leasehold improvement costs.

The pattern of granting smaller loans makes economic survival more difficult !or the type o! businesses that the SBA's multibilllon-dolla.r direct loan program ls designed to. foster, the investigation shows.

The smaller loans to minority businesses correspond closely with the higher default rate in minority areas. The Globe-Democrat's investigation revealed that 48 percent o! all direct loans in minority areas !ail, compared with only 35 percent o! the direct loans in predominantly white areas.

The underflna.ndng in minority areas was disclosed by a computer analysis o! 14,261 loans representing 26.8 percent o! the more than 51,000 direct loans granted nationwide from 1970 through 1978. Estimates o! nationwide performance were based on that sample, representing all defaults in 16 cities in that period.

In analyzing the data, The Globe-Democrat used the specialized computer systems and consultation services o! Com.share Inc., an lil!ternational computer services firm.

In analyzing disparities between minority and non-minority areas, loans were grouped by ZIP code. ZIP codes representing predominantly minority areas were identified through llllterviews with law enforcement, newspaper and SBA employees in 16 cities.

The average loan amount nationally in predorotnantly black or Hispanic areas was $25,031~but the average in all other areas was $35,324. The difference of $10,293 represents a 41.1 percent disparity.

The Globe-Democrat examined the direct loans made from 1970 through 1978 in 16 district offices throughout the country: St. Louis; Phoenix, Ariz.; Detroit; San Francisco; Portland, Ore.; Atlanta; Mia.mi; Minneapolis; Dallas; Cleveland; Philadelphia.; Buffalo, N.Y.; Denver; Newark, N.J.; New Orleans; and Washington. The disparity in some district offices, which generally cover either all or a major portion of a state, was particularly a.cute.

In Dallas, for instance, the average SBA loan made in predominan.tly black and Hispanic areas was $16,117, but the average loan in an other areas of Dallas was $31,163-or 93 percent more.

In Philadelphia, the average loan in black areas of the city was $29,463, but the average loan in all other areas was $47,346-or 61 percent more. The situation was the same in the 16 offices. In ea.ch case, areas of high minority concentration received less than predominantly white areas.

Not only has the SBA given smaller loans to minority businesses, it has compounded the problem by concentrating high-risk types of businesses in the depressed areas. In fact, the agency's direct lending portfolio has been heavily concentrated in six types of businesses: bars, restaurants, food stores, cle!lning shops, clothing stores, and truck hauling firms.

Those six types of businesses accounted !or 41.6 percent of the 14,261 loans reviewed by The Globe-Democrat, with more than 350 other types of businesses acoounting for the remaining 59.5 percent of SBA direct loans.

Lea.ding the list in terms of numbers of SBA direct loans were rest.iauraillts, which received 1,385, or almost one in every 10 loans. Next were bars, which received 1,121 loans, and food stores, with 1.071 loa.ns.

In St. Louis, for instance, although the SBA office ma.de loans to 231 different types of businesses during the period 1970 through 1978, 4£1 percent of all defaults during that period occurred in those six types o! businesses, records show.

The SBA office here and other omces a.round the nation are seemingly oblivious to the high risk and low need !or these types o! businesses, but nonetheless continue to finance new bars, reata.urants, grocery stores, cleaning shops, clothing stores, and truck hauling firIIlS-iUld ea.cl:. year more o! these same businesses end in failure.

SBA loans for new businesses have been concentrated in a small portion o! North St l.ouis, Wellston and Kinloch.

This concen.tration has led to a higher SBA loss ratio (defaults as a percentage o! disburi:ements> , pumping hundreds of new businesses into areas where it ls difficult to support them economically. The result ls a higher loss rate for the SBA and financial hardships for those people receiving the loans in the depressed areas.

O! 582 loans that ended in default durinb the period 1970 to 1979, slightly more than 50 percent-293 loans--were from a two-sq,uare mile area ln the northern metropolitan area of St. Louis representing only eight ZIP codes. The St. Louis SBA district office makes loans throughout Eastern Missouri.

In compa.rison, the rest o! the St. Louis metropolitan are~representtng 44 ZIP codes-accounted for only 38 percent of loa.n defaults.

The computer a.naJ.ysts by Comshare Inc. cOill.firms what dozens o! loan recipients from the northern St. Louis metropoll tan area told Globe-Democrat reporters during interviews: Loans within the predominantly black areas were signlflcantly smaller in comparison with loans ma.de in surrounding predominantly white areas.

The average loan amount in the predominantly black areas selected was $17,871, while the average loan in the rest o! the St. Louis metropolitan area was $23,496-or more than 31 percent greater. Computer analysis by Comshare shows no sta.tistic:..Uy significant difference in the types of businesses in both areas.

That means that while the same types of businesses received loans in both areas, those in predominantly black areas received less capital for their companies than fellow entrepreneurs in surrounding areas.

For example, of 67 defaulted loans to restaurants in the St. Louis area, 38 were tn the northern portion of the city, and 29 in the entiro rest of the metropolitan area. While the average loan a.mount to restaurants in minority areas was $16,989, restaurants ln the rest of the metropolitan area received an average loan of $27,991-or 65 percent moreand suffered a smaller default rate.

The same pattern ls true with food stores, where the average loan made to the 41 stores that defaulted in the northern portion of the metropolitan area was $21,400, while the average loan ma.de to the 15 defaulted stores in the rest of the metropolitan area was $27,498--or 28 percent more.

"From a socioeconomic viewpoint," says the agency's procedures manual, "the indiscriminate approval of loans at a high v0l'~"'e and low rate of success can do nothing but impair our t-elationship with the sma11 business concerns and communities that we are attempting to help."

The manual also stre~es that "many loans a.re in liquidation solely because working oapita.l requirements were not given adequate consideration."

SBA officials throughout the nation ackncwledge the concentration of loans into the few types of businesses, but argue that because of the agency's policy of accepting loans in chronological order they have little or no control over which businesses get loans.

Additionally, they say, the six categories cite:i are "entry" type businesses that are common for people starting a business. Many SBA officials add, however, tha.t they would prefer a system that would enable them to select loans for businesses based on the needs of the community and on the quality or the applloant, not just on a firstcome, first-served basis, a.s required by their procedures manual.

More than $74 mlllion was loaned into minority areas while nearly $400 mllllon went into all other areas, according to documents from the 16 SBA offices. More than 2,900 loans were made in minority areas. and more than 11,000 went into other areas.

SBA GETS PENNIES FROM DOLLARS IT Is OWED (By Thomas L. Amberg and Michael R.

Montgomery) The Small Business Administration collects

just pennies on every dollar it is owed in direct loans from businesses that close down, despite regulations requiring "maximum-recovery."

Collateral-land, buildings, or anything else pledged by a borrower to secure the loan-is often grossly overstated, and, in some instances, is actually non-existent, records show. Collection efforts proceed slowly, and large sums a.re routinely written off without filing suit against the debtor.

Nationally, a survey of 534 files from 16 SBA offices throughout the nation shows that SBA collects just 18 cents on every dollar it is owed at the time a loan is placed in liquidation status. In some offices, the rate o! collection is even lower. The SBA om :::es selec- t ?d serve not only their metropolitan areas but all or major portions of t heir states.

In Detroit, !or instance, records show that the agency collects just 6¥2 cents on each dollar it is owed at the time a loan is put into liquidation. In St. Louis, 10.4 cents per dollar owed is collected; in Buffalo, N.Y., the figure is 14.6 cents per dollar owed; and in Phlladelphla., 15.1 cents per dollar ls collected.

Two major causes for the poor collection have surfaced in discussions between reporters and SBA field personnel in the 16 offices; the widespread practice of deferring loan payments for borrowers who !all behind ln their payments; and the easy willingness of the agency to allow other and later creditors to take a higher priority in their right to collect in the event or a default.

The practice of deferring loan payments, called "gaming" by some SBA officials, often ls done to make an SBA office's loan portfolio appear to be more "current" (that ls, to have fewer 103.ns in a delinquent status) . The deferred loans often are to businesses that are clearly !a.il1ng, according to field personnel interviewed.

By allowing a recipient to defer payments to the SBA, there is often slmply a reduction in casha.ble assets over the period of deferment rather than a saving o! the business enterprise-with SBA ending up with little or nothing left in a business to collect on.

The second major ca.use o! poor collections is the willingness to subordinate the agency's lien position on real property, those interviewed said. This puts the SB'A in a poorer legal position to collect than ·Other, later creditors.

The result, once a business !alls, often leaves the agency with ·no meaningful col-

24564 CONGRESSIONAL RECORD-SENATE October 20, 1981 lection rights. But the new lender, charging high interest rates, makes thous.inds o~ ao1-lars for five or six months of participation as a. result of its better collection po.sttton.

In some cases, the reasons for lack of collection are unclear. What is clear, ho1Never, is the small return to SBA.

Some examples: On July 31, 1972, the SBA approved a. $350,-

000 loan to the Martin Luther King Jr. Plaza corp., in Cleveland. That loan, for a snapping center, was secured by a first mortgage on the land and buildings owned by the borrower, a::.si0 nment of rights, title and 10.terest in a le.lse agreement, aiid guaranties o.i: lease pa>ments of $1Ll,UOO a year for 10 years to SBA.

on April 26, 1973, another $21,600 was loaned to the Plaza 0orp. Less than a montn later, another $i}3,o00 was loa.ned to the corporation. F·our days later, a11other $45.630 was loaned, and one week later, another $108,000 was loaned to the Martin Lutner King Jr. Plaza Corp.

'!'hat, however, did not end the federal largesse to the corporation. On Sept. 24, 1973, the agency loaned it another $52,817, and followed it up in May 19 75 with a seventh and final loan of $93,630. In all, the Martin Luther King Jr. Plaza. Corp. received $765,-277 from the SBA.

Slowly, but surely, however, each loan went into default, and the borrowers repaid the SBA a total of only $4,818 of the $765,2 77 loaned. The agency was left holding the bag for another $100,244 in interest, which was written off with the principal for a total Of $860,673.

What has the SBA collected on its business property collateral, its lease agreements and its guaranties from Piaza.? $0.

The SBA made no attempt to collect, but still holds the mortgage paper, which officials now describe as virtually worthless.

on April 5, 1973, the Dallas office of the SBA approved a loan of $100,000 to the Meridian Industrial Foundation Inc., as a partial financing of a $280,000 motel and restaurant project.

To secure its investment of $100,000, however, the SBA acce;:>ted a second lien on the land and buildings of the 24-unit motel and i·estaurant, a second security interest on the machinery, equipment and turniture, and rights to a portion of equity in a lease purchase agreement.

But when the loan ended up in liquidation, the first lien holder collected. SBA collected nothing.

On Dec. 3, 1976, the Newark, N.J., office of the SBA loaned $76,000 to the Strickland Corp. to operate an automotive repair shop.

The loan was secured with a first security interest ln the machinery, equipment, fixtures, furniture and inventory, as well as a first mortgage on the business real estate.

Yet when the business closed down four years later. SBA liquidation officers collected a grand total o! only $187.50 and were forced to charge off $77,642 in principal and minimal liquidation charges.

on Nov. 15, 1972, the Miami SBA office approved a loan of $31,000 to the Bryant Trucking Co., with the ::ollateral to include a first lien on unim-roved lots in Palatka, Fla., and a first lien on two new Chevrolet dumn trucks. The dump trucks were bought for inore than $31,000, according to SBA records.

But just 21 months later, when the loan went into liquidation, the SBA allowed the borrower to sell one of the trucks, and the agency sold the second one at a public sale. The total netted by the agency for the 21-month-old dump truck was just · $2.524, records show. The SBA did not try to collect anything from the land.

Literally hundreds of cases reviewed contained similar failures to collect on collateral or failure to require a lien position better than second or third position on col-

lateral, which in most cases prove worthless to the agency in re.::overy attempts.

The highest collection rate of any of the 16 offices surveyed was in San .rrJ.n..;isco, out even there only 28.7 cents was collected on each dollar owed at the time of liquidation.

The Globe-Democrat's examination did find a. regional disparity ln collection rates, with the Western offices collecting more per dollar than office3 in the rest of the nation.

Western SBA officials say this is a result of using deed of trust foreclosure proceedings on real property. The procedure allows a lender to oypass the necessity of going to court and allows it to obtain a summary foreclousre using a deed of trust The re3ult ls faster and eas!er collection on real property, which is usually the bulk of collateral.

In the East, on the other hand, collections are complicated by a. general lack of deed of trust laws to allow the &ame summary foreclosures used in the West. And there is a lower per capita. rate of home ownership in the East than in the West, some SBA personnel say. With more apartment dwellers, the average loan is secured by less real property.

In the central state offices, there is a mixture of collection rates brought about, apparently, SBA personnel say, by differences 1n work ethic.

"I really think there is a regional ethic," Denver District Director Chester B. Leedom says. "It has to do with the type of people, and geography has to do with high recovery rates in liquidation. It starts to break down when you get into the large urban areas. The rural states are far better," he says.

Statistically, at least, Leedom's comments are borne out in The Globe-Democrat survey. The Minneapolis district office's collection rate is 26 cents on the dollar, while other, generally urban, states in the central area average far less. Detroit collects 6.5 cents on the dollar; Cleveland collects 17.3 centa per dollar; and St. Louis collects 10.4 cents per dollar. The more rural Western states also have a higher collection rate, as does the rural South, while the industrial East and Central offices l:ig behind.

But SBA field officials say the basic cause of collection failures gets. back to the failure to adequately secure the loan in the first place, and the lack of enough staff members to monitor the loans.

SBA FIGURES MISLEAD CONGRESS ON RATE OJ' DEFAULTS

(By Thomas L. Amberg and Michael R. Montgomery)

The U.S. Congress was given reports containing misleadlilg and out-of-date loss rates on direct loans by the Small Business Administration throughout the 1970s, a GlobeDemocrat investigation showed.

While the agency was losing one dollar of every three it loaned to businessmen in the direct loan program from 1970 through 1978-totaling an estimated $571 m1111on-it never admitted in reports to Congress a loss rate greater than 10.8 percent.

Those misleading and understated SBA figures on default rates were accepted without question by the General Accounting Office, Con({ress' investigative arm, and passed on as fact.

.A.c:; a result, elected officials have never been given a true and up-to-date picture or loss rates for the qulclrly deteriorating program, and there has been little concern over loans that have failed far more often than bJlieved. Indeed, misinformed .about the ma!!niti·de of t:he losses. Congreos has repeatedly increased financing for the program.

SBA reports to Cong-re!:s from 1970 through 1978 consistently understated loss rates by presenting finan::ial data in such a way as to minimize losses from the $2 billion put into

the program during the 1970s, a Globe-Democrat investigation showed.

SBA ottlcials were able to paint an optimistic picture of the direct luau ptogram losses every year by using cumt1l.a.tlve detault figures for the life of the progt·.uu, extending back to the Eisenhower era. Tllis ul>scured high losses for the last decado by merging the loss rate for any given year into the average loss rates for the early yel\rs.

SBA reporting practices m11.cle it \'lrtua.lly impossible to assess the perful'lll&nce of the SBA during any given year.

When the rates are a.verage<l together, the low dollar loss rates for tho eal'ller years serve to hide the serious dete1·iora tion of the program during the 197Us. As a result, the SBA has been telling Congress that tlle program's dollar default rate was J0.8 percent when, in fact, it was more th1.u1 threo times that high--33.3 percent--as rcvealc.Hi by The Globe-Democrat's investlgati•Jll.

In terms of numbers of l•Jalls defaulted, the default rate was even higlu~r--4:.'. percent.

Not only has SBA's loss rate reporting technique kept Congress in the dark, it has kept SBA from knowing what has buen happening.

wnen reporters asked SBA offi~lals about the loss rate during the 1970s, t:l1ey were told that the agency did not knCJw what it was and that the agency was 'Uhti.l>le tu check what happened to loans made in auy given year.

Reporting only cumulative figures blurs the impact of sharply higher defa11tt rates and thereby creates little accountabllity for the effect of specific policies.

Charles R. Hertzberg, director of SBA's Office of Business Loans, acknowledged that point to The Globe-Democrut, saying "Admittedly, your method (The <ilobe-Democrat method of tabulating loss rates by year) would give us a. better refiei:t.ive picture ot the effect of our various loan policies."

SBA also failed, and stm falls, to report the default rate in terms of 1mmbers of loans-a more slgnifican t figure in a program that is designed to help individuals.

The newspaper obtained l:IBA loan data and files on 14,261 cases throughout the nation under the Freedom of Information Act. The data was analyzed hy usmg the specialized computer systems and 0onsultation services of Comshare, Jue., au international computer services firm.

Congress expects to be i11formed of the progres.s and problems of the Small Business Administration by the G~ueral Ar.,counting Office. But when reportcl's turned to GAO reports for statistics on Joan lol:is rates, the figure3 they found turned out to he those passed on from the SBA without confirmation or checking by the GAO.

For instance, a. GAO report on Aug. 21, 1979, into the 7(a) direct loan program (one of four business loan categories thi:tt make up the direct loan program) carried figures for loss rates for 1975 through Hf/8 after noting that "SBA's loss-rate. figure, for all district offices, for fiscal years 1915-1978 follow ... "

What came next was a listing of yen.rs and loss rates, with 1975 listed a:; 11aving a loss rate of 6.42 percent; 1976, 6.51 pt:rcent.; 1977, 6.50 percent; and 1978, 6.61 pcrc~nt.

What the GAO report failed to mention was that the loss rates were unt in fuct loss rates for each year, but were cumulative totals for all years up to the year cited, and that the figures were not the result of its own study, but were supplied by SBA.

Henry Eschwege, director of GAO's Community and Economic DeparLment Division, which suoervises GAO reports, acknowledged to The Globe-Democrat, "We do often have to rely on data from the agencies, but when we find discrepancies, we'll use our own figures."

Although Eschwege said OAO routinely

October 20, 1981 CONGRESSIONAL RECORD-SENA TE 24565 runs "reliab111ty studies" on figures given it by various agencies before including the figures in its reports, an assistant, John Landicho, said that no such studies were undertaken on the SBA default figures, which passed directly from the SBA into GAO reports without questions.

When Globe-Democrat reporters asked GAO Acting Comptroller Milton J. Sokolar about the validity of the figures, he said, "In the final analysis, nobody can absolutely guarantee the accuracy of any figures, but I'd give a lot of weight to GAO figures."

Could figures in GAO's reports for 1970 through 1978 be off the mark? Sokolar replied with questions of his own: "Is it conceivable? Yes. Is it likely? No."

One top SBA official in a Western state, who asked not to be identified, called SBA's reporting system "simply invalid. What possible good does it do to have some cumulative default rate? What matters ls to know what's happened to the loans made in a given year.

"Then we'd have some reasonable idea of the effect of our loaning poltcies for those years. The way it is now, the only purpose really being served is to conceal what's happening from Con'?l'ess," he said.

Another top SBA official in a Midwestern state, who also asked not to be identified, said the figures were "not reoresentative of the true picture" but added that there were "obvious reasons" for the SBA's method of reoortln~ the loss rate.

"We've been told to push these great programs, but for every person <who gets a loan) at the end of the piueline, there are Q,999 who don't like government S?ivea.ways." Hence, the figures "are masked for the best possible picture," he said.

SUCCESS STORIES TELL How SBA SHOULD WORK

(By Thomas L. Amberg and Michael R. Montgomery)

Successes in the Small Business Administration's direct loan program have come when SBA granted loans to applicants who had experience in the business and general management, and who invested something of value of their own in the enterprise.

Those success stories point clearly to why 42 percent of the loans end in failure and default.

The agency's lax procedures in the last decade have allowed many without experience or managerial abil1ty and with little personal financial ::itake in the business to avail themselves of huge amounts of federal money at the taxpayers' expense.

The Globe-Democrat asked SBA district offices throughout the country to submit a list of borrowers who had gotten direct loans and done well in business, either paying the loan off entirely or continuing to make regular payments.

After interviewing these "successes," reporters found that, in all but a handful of cases, the reasons for success boiled down to: experience in the business, some general managerial experience, and investment of personal money or equity by the borrower.

The successful firms reviewed by The Globe-Democrat tend to be those that received loans "by the book," that ls, with SBA closely following its regulations calling for loans only to tho.se with experience in the business they are seeking to enter, with managerial experience, with "a reasonable amount (of personal equity) at stake in the business" and with an assurance of repayment ability.

The investigation shows those with little business or general managerial experience tend to be the ones who end up in default.

Some examples of t}?-e successful businesses:

In 1971, Seymour Beneroff was running a small, "hole !n the wall," corrugated package company in Brooklyn, N.Y., when the city forced him out of his building to make room for a building project. Beneroff turned to the SBA tor a loan to allow him to buy his own

building in Linden, N.J., and the agency complied, making him a loan for $202,500.

Since then, business has boomed and Beneroff has about 75 employees, he says. "Without the SBA's help, I don't think we would have gotten anywhere," he says.

Beneroff 119.d several things going for him, as well. He had spent 18 years in the corrugated package busine.:s, spending much of that time as a. so.les manager a.ud general manager, before founding his own firm, Squire Corrugated Container Corp., in 1967.

Beneroff has his own ideas about what works at SBA and what does not. "When they try to make it a. social program, seeking out special groups to help, it seems to fail. But when they stick to helping young businesses, that's when it .really works."

Nuuzlo J. Incremona. was opera.ting a small garden and florist shop in a Philadelphia mart in 1979 and had been doing a brisk business for several years when an SBA loan official happened to take note of the business and asked Incremona. whether he would be interested in expanding.

With a $30,000 loan from SBA and $12,000 of his own money, Incremona. set up Incremona.'s West End Florist and Gard.en Cente.r in Lansdale, Pa., a Philadelphia suburb. Business has ln~reased 150 percent in the la.st year a.lone, a.nd he h9.d expanded into a fullscale nursery and greenhouse, he says.

St. Louisan Herschell Clark says his SBA direct loan six years a.go "really helped me out." At that time, his fledgUng firm was undercapitalized and badly in need of money to help Lt expand, he says. When banks turned him down he turned to the SBA, which gave him $20,000.

Clark had about eight years experience in tire operations, including managerial experience, before receiving his SBA loan and opening the Clark Tire Co.

Since then, business has "just a.bout doubled every year," and sales this year wm exceed $2 million, he says. Whereas he had been renting the building where the firm is located, at 10520 Big Bend Blvd., he has since bought the entire block, opened a second store and is considering a third.

In making the loan, SBA did something it now rarely does-it went out and looked at the business location and did thorough ca.sh flow projections. Clark put up two houses and two cars as collateral.

In addition, SBA did something else it rarely does now-a servicing officer visited Clark every three months or so to check on the business and offer advice. Clark's loan wlll be pa.id off in about a year, he says.

Having been a branch manager for the Wurlitzer Co. in Boston for five years, Gene B. Ha.le Jr. earned a master's degree in business and then ventured into business. Turned down by banks, he won the approval of the SBA for a $66,500 loan in 1977 and set up Ha.le Pia.no & Organ Co. in a regional mall store ln Madison, N.J.

Since then, the SBA has given him another $88,500 for a second store, and business has been so successful he has been able to open a total of four stores. Sales have more than quadrupled in less than four yea.rs, and he has a good relationship with a local bank, enabling him to move out from under the federal government's wing, he says.

Tyree W. Hale has a long history of experience in the mortuary business in St. Louis having graduated from mortuary school in 1947 and worked in the business ever since. He built Ha.le Funeral Home in 1962 at 1238 N. Kingshighway Blvd., and got his first SBA loan, for $1,600, in 1964.

Since then, SBA has given him three more loans, totaling $36,000, enabling him to expand his business, and has sent SCORE (Service Corps of Retired Executives) representatives to help him with specific business problems.

He credits SBA with giving him the

chance to expand his business, but adds, "SBA isn't in business to put people in a successful business. They're there to help you, but you've got to be able to make it go yourself."

He advises younger people wanting to get a start in business "to get some working knowledge of the business they want to go into" before they seek a loan.

"I spent a year and a. half working in insurance just to find out what kind of insurance problems I'd run into in the funeral business," he says.

In virtually every case examined by reporters, successes in the direct loan program involved people entering a business in which they had had pa.st experience, with at lea.st a modest background of management in some type of business, and with a certain amount of their own equity involved.

SBA's MISSION CLOUDED BY CONFUSION (By Thomas L. Amberg and

Michael R. Montgomery) At the core of the problem with the Small

Business Administration's direct loan program is a lack of definition about what really is the program's-and, indeed, the agency's-true mission.

This is the public and private assessment of top SBA administrators in Washington and field personnel in 16 district oftlces contacted by the Globe-Democrat. Most agreed that there has been confusion over whether the program was to be administered as a social or an economic program. Indeed, the agency's manuals refer to the program as both.

So varied ls the implementation and administration of the program that while some district directors swear by it, others swear at it.

"Unless loan officers were deaf, dumb and blind, the thing that guided them in the last decade was numbers, not quality," said Earl Chambers, SBA's director of portfolio management. Now, the task is to reorient loan officers into thinking about quality loans, not the quantity of loans, he said.

But to do that, said Charles R. Hertzberg, director of SBA's Office of Business Loans "there has to be a stated policy, either fro~ Congress or from the administrator (SBA Administrator Michael Cardenas)."

And "once the policy ls clearly stated, then there has to be a period of retraining," Hertzberg said. "If someone grows up in this system and only knows what's gone on for the last 10 years, then there's some serious retraining necessary.''

SBA officers quickly pass the blame for a massive default rate in the program to Congress, complaining that Congress ordered them in legislation to use the loan program to aid various social groups-and in effect make the direct loan program a social program rather than a financial lending program.

"We're the tools of Congress," said New Orleans District Director Joseph M. Conrad Jr. "Congress should decide what is an acceptable loss rate (in the program)."

What is clear, as The Globe-Democrat has revealed In its long investigation of the SBA is that the SBA has indeed turned the direct loan progr.am into a social welfare program, but in doing so has mismanaged and distorted it, with the result that:

More than two of every five direct loans made end in default and failure--and this loss rate is itself understated by the agency's willingness to grant "deferments," largely to make an individual office's loan portfolio "look better."

More than $571 million was lost in the program from 1970 through 1978, largely through lax procedures and loose policies and that figure can be expected to reach $900 million if defaults from 1979 and 1980 are consistent with previous years.

But, Hertzberg said, "It we reimposed


prudent lending policies in regards to direct loans, such as matching dollars for private investment, we would make fewer loans to disadvantaged people. Whether that is right or wrong to do is up to Congress."

Totally inexperienced and unqualified peopl~ often end up receiving loans from the agency, with many soon joining the ranks of failure.

The very people the program is designed to help often become its victims, as inexperienced recipients who end in failure often lose their life savings, credit ratings, jobs and in at least some cases, their families as a result of debt and frustration .

Contributing heavily to the high default rate, the inconsistency in the experience of the loan recipients , and the seeming inability of the agency to screen out exceptionally high risk loans, is an agency procedures manual that is loose and ill-defined-leading to a program that has the same characteristics.

For instance, while the manual (called Sta.ndard Operating Procedure manual) calls for direct loans to have "reasonable assurance of repayment," it never defines exactly what that assurance is. Similarly, the mani.:.al requires recipients to have demonstrated managerta.l ab111ty, but does not define it in any way.

When a.n applicant has no management ablllty or experience, he is encouraged to attend a one-day workshop to learn to be a businessman.

The SOPs are equally unclear in terms of guiding a loan officer in how to distribute money within a loan-that is, how to allocate money among equipment, leasehold improvements, working capital or other needs. While the manual indicates that money should not be used to "ball out" a private creditor of the applicant, the language is lax enough to provide virtually any interpretation by a loan officer.

And that, the Globe-Democrat investigation found, is exactly what has happened. ·

An analysis of a sample of SBA loans showed that a third of the direct loans made by SBA went in part or in whole to pay a borrower's pre-existing business debt. Many of those loans were large loans granted for the sole purpose of paying otr past debt.

Other major points in The Globe-Democrat's investigation included:

The SBA has consistently understated its loss rate to congress, never admitting in any given year a. loss rate more than l 0.8 percent-although The Globe-Democrat determined the actual dollar loss rate was 33.3 percent and discovered that Congress's watchdog, the Government Accounting Office, has simply passed along SBA's figure with virtually no scrutiny.

Loans ma.de to business in predominantly non-minority areas a.re 41.1 percent larger than loans ma.de in depressed, minority areas.

The agency's portfolio has been largely concentrated in only six types of businesses-bars, restaurants, fOOd stores, clothing stores, laundry and dry cleaning shops, · and truck hauling firms--recognized by commercial lending experts as exceptionally high-risk ventures.

A severe shortage of servicing personnel makes it wholly unrealistic for the agency to give adequate attention to loans, increasing the chances of failure and diminishing the agency's chances o! recovering collateral.

The agency collects Just 18 cents on each dollar it ls owed once a loan goes into liquidation, the la.st step before a loan ts charged off a.s a loss.

There ls also wide disagreement over how much help the direct loan program actually gives a new businessman by loaning him money directly-that ls, without bank involvement-and at a rate well below commercial lending rates.

Washington, D.C., District Director Freddie Collins said the program is necessary because it gets people into business who cannot get any help from banks. "My personal feeling is that the program is not large enough. The demand for the program is so much greater than the &upply of money," he said

But, San Francisco's chief of portfolio management, Russell Stoddard, said, "The direct loan program never gets that borrower into. the mainstream of the business community and dealing with a. banker. If we cannot reach the small-business man effectively through the banking system, there ls no justification for this program. In my judgment, it's not worth continuing."

Denver District Director Chester Leedom said, "One of the fallacies of the direct loan program is the subsidized interest rR.te. It doesn't do the borrower any good to get an artificially low rate. He Just has to face the real world at some point."

And, said Cleveland District Director S. Charles Hemming, "With the amount of demand and the artificial interest rate, I wouldn't try to put Band-Aids on the program. I would eliminate it; it hasn't done that much good. The good that comes out of it would have eventually been there anyway."

SENATOR DIXON CALLS FOR HEARINGS ON SBA DIRECT LOANS

(By Thomas L. Amberg and Micha.el R . Montgomery)

Citing disclosures in a. series of GlobeDemocrat articles, U.S. Sen. Alan J. Dixon has called for congressional hearings into the Small Business Administration's direct loan program.

The Illinois Democrat, a member of the Senate Small Business Committee, said Thursday he would ask the committee chairman, Sen. Lowell P. Welcker, R-Conn., to convene hearings "as soon as possible" to "deal with the findings contained in The Globe-Democrat's series."

He said hearings could begin as early as October.

"If The Globe-Democrat's findin~s are correct, then we've got a program tnat i-; in very serious trouble, indeed," Dixon said. "Hearings will enable us to get the answers and perhaps to chart a new path for th!s program."

Dixon said that while The Globe-Democrat investigation revealed "what seems to oe a very high default rate, more importantly, the newspaper has raised the larger q uestions of what has this program accomplished and where is it going."

Calllng the newspaper's series "very constructive," Dixon said he believes Senate hearings wlll improve the SBA program. "Our goal is not to hurt, but to help," he said.

"It's also important that we recognize the programs which have been successful, not just those which failed," he added. "But when a program develops problems, it's critical to see that those. problems are corrected.

"It's not only essential-it's mandatorythat the Small Business Administration be administered in an impartial and competent way," he said. "The Globe-Democrat has performed a commendable public service by bringing abuses and mismanagement within the direct loan program to light."

After a. lengthy and intensive investigation, involving the review of more than 14,261 loans from 16 district offices throughout the nation. The Globe-Democrat disclosed that :

More than two of every fl. ve direct loans end up in default and fallure--and the actual loss rate is masked and significantly understated by the agency's willingness to grant "deferments" to borrowers, largely to make an individual office's loan portfolio "look better."

More than $571 million was lost in the program from 1970 through 1978, largely through lax procedures and loose policies, and that figure can be expected to reach $900 million in defaults if figures for 1979 and 19ao·are consistent with previous years.

Totally inexperienced and unqualified people often end up receiving loans from the agency as loan officers rush to "get the money on the street." Quality has been sacrificed for quantity, top SBA officials say.

While the program is meant largely to help the disadvantaged and minorities enter the mainstream of the American free enterprise system, the lax practices of the last decade have resulted in many of these disadvantaged people becoming victims of the program, as inexperienced recipients who fail of ten lost their life savings, credit rating.: an:i jobs as a result of debt and frustration .

For no apparent reason, the SBA has given an average of 41.1 percent more to businesses in predominantly white areas than to business3.3 in heavily minority areas-matched by a larger default rate among minority l.Jusinesses.

Black businessmen intervitiwed claimed the lower level of financing meant almost .. guaranteed failure."

The SBA collects just 18 cents on ea.ch dollar it is owed after a loan has gone into default.

About one-third of all direct loans ma.de by the SBA went in part or in whole to pay off a borrower's existing business debts-in apparent violation of SBA regulations.e

MILLBROOK'S SARY AND EDUCATION

f>OTH ANNIVER-FEDERAL AID TO

e Mr. MOYNIHAN. Mr. President, ~:1e prestigious Millbrook School in Dut~hess County, N.Y., recently had hap.:;..y occasion to celebrate its 50th r..nniversary and I was pleased to be among those present for the grand celebration.

Unfortunately, a crisp autumn day gave way to a rather frigid evening and as the many celebrants were gathered in a large outdoor tent, it seemed wise to all present to keep the length of speeches at a minimum.

It had occurred to me that such an auspicious event might be an opportunity for me to remark on the commencement of n. new debate in Washington on Federal aid to education-a debate which is just beginning or, at lea.st ought to be beginning. As there seemed to be some interest in my prepared remarks, I offe'red to enter them in the RECORD so that those present might read what the weat.her argued they should not hear. . Mr. President, perhaps our colleagues m the Senate might also find the address of interest, so I ask that the text of my address on occasion of the 50th anniversary of Millbrook School be printed at this point in the RECORD.

The address f oJlows: 1',EDERAL AID TO EDUCATION: A ZERO-SUM

GAME? As many of us learned in the Sunday New

York Times Magazine of October 4, 1981, William F. Buckley, Jr., graduated from Millbrook School, in Dutchess County, in the Class of 1943. That ls the year I graduated from Benjamin F<a.nklin High School in East Harlem. Although these places were apart in a number of senses, I was struck, on reading Mr. Buckley's sensitive and insightful memoir, by the similarity o! our experiences.

October 20, 1981 CONGRESSIONAL RECORD-SENATE 24567 Each of us received a fine education. Each

at an institution which was the creation (at about the same time , 1931 and 1934) of an extraordinary man. In the case of Millbrook, Edward Pulling, a first generation American who had come from England. In the case of Benjamin Franklin, Leonard Covello, a first generation American of Italian extraction. (I call attention to this: the experience of migration has much to do with the peculiar American approach to education as a process of preserving older traditions whlle acquiring newer ones.)

It wlll be remarked that these schools were surely different, in that one was public and the other private. I would reply that there ls no more unifying tradition in American education than this diversity.

It is these several concerns, then, that I would address myself on this grand occasion of Mlllbrook's Fiftieth Anniv~rsary.

A certain serendipity, which one gathers has ever attended your affairs, brings your anniversary in a year when a great new debate on educati0n is beginning in our nation-or, as I shall argue, ought to be beginning.

In Washington, Secretary of Education Terrel H. Bell has propooed to the White House that his Department be downgraded to a sub-cabinet level foundation. Furthermore, he proposes that there be a fundamental realignment of the federal role in American education. Specifically, Secretary Bell's report, as obtained by Education Week, asserts that "the Federal Government does not have responsibility for education." 1

It is proposed not merely to reduce funding, but in many areas to abolish it; to strip the federal government of virtually all activities save such as the collection of statistics and an odd bit of research support, It is said that the Tenth Amendment forbids, or at very least frowns upon the developments in which:

" ... we have seen special-interest groups successfully shifting power, in the decade of the 1970s, away from teacher, parent, and school board, and toward organized lobby, civil servant, committed elected otftcials, and convinced judges .... " 2

Lest anyone suppose that this is little more than good conservative fun--epater les fonctionnaires-the Washington Post of October 10 reports that Title I outlays, the basic program of "federal aid to education," wm be cut by a quarter (23 percent) it the Administration has its way.a That report, though denied the following day by an unnamed "otftclal" in the New York Times,' ought to cause some concern.

To repeat, a large debate ls about to begin, or at least ought to begin. Allow me at the outset two remarks sure to distress, impartially, both sides of the impending dispute.

First, having read the long extract from the document sent by the Education Secretary to the White House, I must report that the passages purporting to reflect American history and constitutional doctrine are mostly nonsense. I have remarked of some of the cadres recently come to power in Washington that they are to conservatives much as anarchists are to liberals. (George Will, a genuine conservative, has been moved to the observation that some of them seem to fear their own government more than the government of the Soviet Union.&)

Certainly the group that prepared the education report seems to have been obsessed with the fear of the national government. From this I conclude that there ls something wanting, individually or collectively, in their education. (Someone should look into this.)

Ours is the oldest republic on earth (save possibly Iceland), the longest enduring democracy in the race, the most stable nation of its size ever to exist. It is our national


government, as created by our Constitution, that has made this possible. It you think otherwise, if you think it ls the supervisors of the town of Washington-where Millbrook School is located, and not the President and Congress in the District of Columbia-if you think that they are behind it all , well .. . then there ls something lacking in your schooling.

How else to account for t he proposition that "the Fed~ral government does not have responsib111ty for education"? The statement implies a universal, plenipotentiary obligation. Not "some responsib111ty," or "any responsibility," or "primary responsibility." But "responslbillty' ' period.

Which is to say "all responsibility." In that, to my knowledge no serious person has ever suggested anything of the sort, it signifies nothing that the proposition is set up and then knocked down. I gather Mr. Pull1ng taught English when young Buckley was at Millbrook. I doubt he would have accepted any such meretricious argument. I know that Mr. Gotlieb who taught English at Benjamin Franklin would not have.

Nor would Mr. Bernstein, who taught us history. Perhaps the most important act of the Continental Congress was the Northwest Ordinance which provided a direct· federal subsidy for education. Almost the first act of the Congress established by the present Constitution was to reatftrm this grant. A plaque on the Sub-Treasury on Wall Street commemorates both actions. This does not invalidate the view that the federal government ought not to exercise any responsibility, but it does make nonsense of the view that the Constitution-presumedly because it does not mention the subject-somehow bars such a.n exercise.

As for those who hold that the federal government should exercise large responsibility for education, and has yet fully to meet that responsibility-it appears to me that a measure of imprudence on their part has endangered the purposes they so ardently and genuinely seek to advance. They have of late been seeking too much of the federal government. Elementary and secondary education in America, as well as being diverse has always, in our nation, been first of all local. This ls very different, for example, from much European experience. But it was rather to the European model that American educators turned when they acquired their enthusiasm for the creation of a Department of Education.

It ls tedious to go over the a.rgumen t yet again, but more important than ever to do so. For this time a.round there might be a greater w1111ngness-no, let me not say that-a greater capacity to listen than there was several years a.go. (Experience also teaches!)

The Department of Education was created in 1979, the fulfillment of a promise made by President Carter during the 1976 campaign. It was thus an openly political act. Its explicit purpose was to give greater saliency to education in the federal government, and to use that leverage to bring about a greater allocation of resources to education. It was the most direct possible challenge to the views of those now responsible !or education in the federal government.

Twenty-two members of the Senate voted against the bill.6 I cannot speak for the others, but I know that I voted against the bill because I felt that the outcome would just as likely be the opposite of what its sponsors intended; that by gathering all, or almost all of eduoation together in one place, it would become possible !or the opponents of a federal role in education to do away with it at one blow.

David Riesman, who for a generation now has been our nation's foremost student of education, was much of this view. As the debate progressed he sent me a long ·and thoughtful letter on the subject, portions of

which I read to the Senate. I read them now to you as an example of the capacity of a trained intelligence not only t o understand events but to foresee them:

"Education, contrary to people who speak of it as an 'establishment,' is a weak power, subject to whims and fashions in the country at large, and these show -.ip in the attitudes of individual members of Congress and their aides, assistants and others. Therefore educa.tion ls best served by being part of a much more powerful coalition in which it is joined with the rest of HEW with its labor union a.nd medical and other a.tftliations. Furthermore, education is because of its weakness, vulnerable to attack because something done in one of the 3,000 accredl ted post-secondary institutions by somebody may offend somebody or get in the papers."

"It therefore needs to have any diverse sources of support, combined with a certain precious obscurity. Once it ls separate, its target quality and actual weakness will be visible and this a weakness not only vis-a.vis potential critics by potential lobbyistscaptors-1n the country. Education is best served by decentralization, not only in this huge and diverse country but also within the federal government and its many agencies." 7

Riesman a.rgued that diffuseness is ivalu~ble for defense, but al.so that diversity is desirable in its own right. Monoculture, be it in agriculture, education or whatever, ls inherently !nstable. Obviously this argues for many levels of government-including the federal-to share responsib111ty for education, and also for modes of education that are not government-sponsored at all.

Here, interestingly, the present Ad.ministration tends rather to share Riesman's outlook. Specifically, the President has committed himself to providing tax credits to the parents of children in nonpublic schools. It is not new for persons aspiring to the Presidency to propose such aid. George S. McGovern did, Hubert H. Humphrey did. But President Reagan ls the first such person to do so in otftce, a very different thing. Moreover, this advocacy comes at a time when a major study of nonpublic secondary schools by a group headed by James S. Coleman has concluded they are quite good schools indeed, and that:

"The factual premises of underlying pol1-'cies that would fac111tate use of private schools a.re much better supported on the whole than those underlying policies that would constrain their use." s

To be sure, Coleman's findings have been disputed; but I would caution the disput·ants. The findings of his 1966 report Equality of Educational Opportunity were just (l.S

hotly contested. In 1966 and 1967 Professor Thomas F. Pettigrew and I conducted a ,faculty seminar at Harvard University to ·reexamine the data. Subsequently Professor Frederick Mosteller and I published a great thick volume of results.9 Coleman had got it right. I expect he has got it right this time, too. Indeed the findings are complementary. After a point, it is not the number of books in a library that count in student achievement so much as the number of hours students spend reading them. Criti,cal variables in school achievement turn out to be such things as the level of attendance in classes and the amount of homework done. It is amazing what modern social science can teach us!

The problem with the Administration ·s advocacy of aid to nonpublic schools is that of late it is proposed to provide it, at the expense of public schools. This is implicit in proposals such as those Secretary Bell appears to be :naking: to eliminate, or drastically reduce, present elementary and secondary education programs. It has come near to being made explicit in recent testl-


mo11y by Assistant Secretary of the Treasury, Joh11 Chapoton. I believe the Education Times accurately summarized this testimony in its headline: "Administration Says Tuition Tax Credits Would Cut Other Education Funding." 10

Wh~t an ironic, even bitter development in the troubled history of relations between public and private schooling in America..

In this, as ln much now, I go back some distance. The proposal for federal aid arose in the years following World War II as the "baby boom" of that period near to overwhelmed the capacity of local and state governments to carry on their traditional roles .

There was in any event a growing movement, which political scientists have not failed to record, to take social Issues upwards on the federal scale, in the expectation that the reception at the national level would be more "liberal." But the movement was stalemated.

Specificany, it was divided between those who wanted federal aid unly for publieschools, and those who wanted nonpublic schools included as well. So long as these forces were cti\'ided, those who wished no federal aid of any kind prevatled. It was not until the assassination of John F. Kennedy that the two groups which favored federal aid came together.

And together they prevailed. I know this history. I was present. I wrote the plank in the 1964 Democratic National Platform which constituted the agreement, which led some eight months later to the Elementary and Secondary Education Act of 1965. It was as simple as that. Once the two groups joined in common purpose, legislation stalemated for a generation was enacted in a matter of months.11

Things did not work out as they ought to have. Nonpublic schools did not receive anything like the proportionate share of federat assistance they had a right to expect under the compact of 1964. There arose, in consequence, a movement to provide aid through tax credits. This ls at best a substitute approach, but it would serve its purpose. And at a time when federal aid to public education was ample, it seemed both practical and equitable.

Now however, tax credits are proposed in an atmosphere in which federal aid to public education ls declining. A zero sum game is proposed. What one set of schools wins, another loses.

It appears to me that there can be no successful outcome to any such confrontation. In a sense we are reproducing the stalemate that preceded the compromise of 1964.

It ls entirely possible that we will shortly see a significant cutback in federal aid toeducation. This need not, per se, be a calamity. A number of innovative governors, such as Bruce Babbitt of Arizona, and Lamar Alexander of Tennessee have proposed that the federal government take over all income maintenance programs in exchange for the states assuming full responslbillty for elementary and secondary education. Such a case can be made. I expect, however, that the real choice ls between a sharp cut in all forms of federal aid, or the preservation of existing levels of aid with the addition of some form of aid to nonpublic schools and a public-private coalition able to defend the resut ting program.

If this ls to happen, ought not proponents of aid to nonpublic schools state right away that equal means equal; that they will not accept aid for nonpublic scihools at the expense of the public systems, and further, that if there ts to be no federal aid to public schools, then there should be none to nonpublic schools?

Similarly, ought school boards and other groups involved in public schools devoutly ask themselves whether they ought not now to Join forces--0nce again-witlh their oppo-

sites in the private sector? At the risk of giving offense--a risk worth ta.king, for something like social peace is at sta.ke--0ught not the champions of the public schools, which must and do come first in all our concerns, ask themselves, whether they have tried to reach out to their private counterparts, to regroup the coalition of 1964?

And both groups surely should rise as one on this occasion to assert that whatever else happens, the Federal government must not back a.way from its responslb111ties to ensure that civil rights standards a.re observed and, if need be, enforced throughout our many and varied school systems. That ls a federal responslb111ty. Period.

One would hope, finally, for discourse. Debate if you like. Large issues are at stake here. They ougiht not be disposed of as secondary consequences of a budget squeeze or a. campaign promise.

I say to my fellow teachers that a. kind of denial ls taking place down in Washington. Those who represent public education a.re for tfie most pa.rt hoping that -somehow the Congress wm come to their rescue or the Administration wm come to its senses. Those who advocate aid to nonpublic education cannot sit by silently as a. confrontation develops between their schools and the public schools-a. confrontation they are fated to lose. If the respective groups will not cooperate, can they not at lea.st talk with one another? ·

FOOTNOTES

i Education Week, Beptember 7, 1981, p. 1. 2 Ibid, p. 10. 3 Washington Post, October 10, 1981, p. 1. 'New York Times, October 11, 1981, p. 1. s Washington Post, March 26, 1981. o Conference Report on H.R. 5192, Beptem

ber 24, 1979. 1 Congressional Record, April 26, 1979, p.

84764. s James Coleman, Thomas Hoffer & Sally

Kilgore, Public and, Private Schools, A Report to the National Center !or Education Statistics. Draft, March 1981, p. xxlx.

o Frederick Mosteller and Daniel P. Moynihan, eds. On Equality of Educational Opportunity. New York: Random House, 1972.

10 September 22, 1981, Testimony of John Chopoton before House Subcommittee on Elementary, secondary and Vocational Education of t!he Committee on Education and Labor. See also Education Times: "Administration Says Tuition Tax Credits Would Cut Other Education Funding," September 28, 1981.

11 Daniel Pa.trick Moynihan, "A Matter of Justice," Address before Walsh Foundation Awards Banquet, Olean, N.Y., May 2, 1981.

Mr. MOYNIHAN. Mr. President, I should note, too, that one of Millbrook's most gifted graduates, William F. Buckley, Jr., offered us a most worthy memoir of Millbrook's founder, Edward Pulling, in a recent issue of the New York Times Magazine, and I also ask that his article be printed in the RECORD.

The article follows: (From the New York Times Magazine,

Oct. 4, 1981] Goo AND BOYS AT MILLBROOK

(By William F. Buckley, Jr.) One does not know at exactly what moment

1n the 1930's my father resolved that his children shoµld ship out to orthodox boarding schools, because one never questioned him on that, or other, grave matters. He had settled his 10 children in northwestern Connecticut, in the town of Sharon, in a large house he had bought during the 1920's in the expectation that eventually his family would live somewhere other than in Latin America, Paris or London. My oldest brother, John, was 14, suffering from creeping unmanageab111ty and an exuberant gregariousness

which absolutely required that he be detached from the informal tutor system, to which the younger of us were subjected, and go off to school. But go off where?

Just north of Sharon, six miles up, lay the Hotchkiss SChool, a. venerable institution even then, with its ivied, brick walls, and pr1Yate golf course. But there presided over the Hotchkiss SChool a formidable gentleman named George Van Santvoord, whose views on all subjects were highly pronounced, as were my father's. It would not have been easy, I dare say, for any stranger in the room to decide on that spring day in 1934 who was interviewing whom. Nor ls it exactly known why my father walked away with a negative impression of Mr. Van Santvoord, a man of immense sklll and cultivation; but probably 1t had to do with Mr. Van Santvoords' a.mazed reaction at learning from the father of four boys that the father wished to malnte.ln residual control over his sons' schedule, and that he assumed that Hotchkiss would be agreeable in such a matter. To have suggested such a thing to Mr. Van Santvoo!'d would not have been different from suggesting that my father, would take the liberty, now and then, of changing the school's architecture, as required.

In any event, the next we heard was that my t'ather had traveled 15 miles west, to interview the headmaster of another boys' school. Mlllbrook SChool was then all of three years old, and had 30 boys enrolled in it. My father's exchange with Mr. Edward Pulling was evidently satisfactory to both parties, because it gradually transpired within th& household that in the fall my brother John would go to Millbrook. And, over the ensuing six years my brother Jim, then I, then my younger brother, Reid. Moreover, my father had worked out arrangements with Mr. Pulling as follows: The boys would be his until noon on Saturday, after which they would return for one and one-half days at home. This proved a. singular, though not a. unique, privilege. Probably now that Millbrook is 50 years old such latitudinarianlsm does not exist. But my father liked very much about Mr. Pulling that anything existed that he elected to have exist. Including MUlbrook SChool.

It ls a quite splendid site. Just a month or so ago the Hollywood people moved out, ln time for the kids to move back in for the fall semester. They had spent several weeks in residence there to film "The World According to Garp," which readers wlll recall focused on the childhood of the protagonist and his energetic mother, who served the school as chief nurse. All that "Garp" evoked ln a. boys' school-tradition, civ111ty, a great beauty of surrounding natural circumstances-ls there. If you drive from Poughkeepsie, past the town of MUlbrook, where Timothy Leary ran a kind of anti-Mlllbrook SChool for drug users until the elders finally ran him out (and he himself saw the light of day-"Now that I've tuned out/Why ls life so dreary, weary/Tell me, Timothy Leary, deary"), toward Armenia, and you look out over the north, you can spot it there, in the rolling dairy country, well over 500 acres, with a. dozen buildings, a church spire, a quadrangle, a few weathered buildings for the masters, the covered hockey rink. Only the old barn and the house across the way were there when the emphatic young man from England, married to Lucy Leffingwell, daughter of the senior partner of J. P. Morgan & Company, resolved that nothing would do but that he must start his own school.

Why? Edward Pulling is one of the most articulate men in the history of American education, but he cannot really give you a.n answer to that, short of the answer he would not give you, which is: manifest destiny. Some people were born to discover transistors; others, strange lands; now and then there comes along someone whose personall ty ls so overwhelming he ca.nnot satisfy

October 20, 1981 CONGRESSIONAL RECORD-SENA TE 24569 himself with anything less than an entire institution to absorb it. Edward Pulling had gone to schools in England and served as a young midshipman in the Royal Navy in World War I, then had attended Princeton, gone on to teach at the Gilman School in Baltimore, and then to Groton under Endicott Peabody, who would infiuence him mightily, if it can be said of an Original Man that anyone 1n1luenced him. But here he was, in a huge country, in his early 30's, in the middle of the Depression, and he suddenly discovered that he must start his own school. At age 83, next weekend, he will gather there with close to a thousand alumni and their families, and they will celebrate one or the few institutions that can carry the imprint o! a single personality on, often, through generations. They can say many things about Millbrook, never that it could have been the creature o! any other man than Edward Pulling.

I had myself experienced only a single headmaster, and then only briefiy. He was a Jesuit, at St. John's, the preparatory school for Beaumont College in Old Windsor, on Runnymede, a few miles from Eton, where my father had sent me, and my sisters to a nearby convent, at the age of 12-because he mentioned to my mother after dinner in the presence o! his spirited, amused, but cautious brood, who never quite knew when my father's hyperboles would become the active agents of family policy-because, he said, as he refiected on it, at least five years had gone by since he had understood a single word uttered by any o! his 10 children. ("Oh, Father!" the groan went up. There he went again, on one of his crotchets, about people who speak indistinctly.) But the next thing we knew, five o! us were on shipboard to Great Britain, an educational experiment cut short by a world war. Father Sharkey had been a small man, o! considerable temper, affectionate, strict but understanding, with a highly developed sense o! humor. When, eight months later, I left him, I had made a lifelong friend.

Then, for another year, we went back to the status quo ante, a house with ,tutors and visiting musicians, and voice teachers. Half the year in Sharon, the other half in Camden, S.C. During that year, my thoughts were mostly on sailing, horseback riding, and on the piano, my festering inab111ty to master which probably compounded that natural unruliness of a 14-year-old. And so the word went out that the following !all I would enter Millbrook School. This meant that I would be interviewed by Edward Pulling, as my older brothers had been. There cannot have been a more imposing figure in any educational state. I am aware o! that enormous literature describing a grown man's disillusioned meeting with the mincing figure of a headmaster he once !eared and stood in awe of. I last saw Mr. Pulling during this summer, and he is no less august or imposing than when I first saw him, as a 14-year-old, in a.11 his massive, angular, self-assured, commanding completeness. He was 6 feet 4, weighed, say, 200 pounds; his light blue eyes penetrated you, and incidentally, the room; his questions were kindly composed, and patient, but there was an instant no-nonsense that prevented you, say, from suggesting impulsively that you both go out together to buy a Popsicle. Anyone interviewed by Mr. Pulling was, so to speak, permanently interviewed by him.

But both my brothers, who had graduated, were most enthusiastic about the school, though with that guarded sense that one expects from the truly urbane teen-agers. British tradition-was heavy on sports, and Millbrook-much infiuenced by the British tradition-was heavy on sports, which were prescribed !or everybody every afternoon (oh, those endless af.ternoons). My brother Jim was interested primarily in

79-059 0-85-43 (Pt. 18)

nature, and he had discovered in Millbrook a man named Frank Trevor, whose insatiable interest in the animal and vegetable worlds greatly exceeded any interest in any other subject, save possibly the necessity that the United States go to war against Hitler.

1'4ow, Mr. Trevor, lt.I.P., ali:;o left his mark on the school. It is only fair to say that later in life he developed nervous dinicu1ties, if that's what you call it when you arrive at a l'acu1ty con1erence with a demand to make, and a loaded pistol in front of you. In any event, Mr. Trevor had a genius for evangelizing his love of nature and animals. 'l'o the ho!·ror of the younger members of the family, my father announced on the summer before my matriculation that he, my mother and the three oldest members of the family would be spending the summer in Europe, and he had invited Mr. and Mrs. Frank Trevor to preside over the household (seven children, a governess two nw·ses, two music teachers, seven servants) during their absence. Mr. Trevor would teach us about nature ....

My father returned to find-somewhat to his chagrin, we were pleased to note-that our property now harbored probably the largest zoo this side of the Bronx. The entire summer had been given over to making leaf impressions in white clay, building pens, feeding snakes. And dinner conversation was usually on some such theme as how horses were actually responsible for more deaths than snakes, the poor little, misunderstood creatures. It was not until much later, when I sat opposite him in class at Millbrook, disemboweling a pig, that it occurred to me that, unlike horses, no one attempted to ride snakes; and I like to think that Mr. Trevor more than any other man developed polemical instincts in those of his students who, unlike my adoring brother Jim, believed that somehow our Maker managed, in creating man, to transcend nature.

Sports, nature. What else? Community Service. A sacred conception

for The Boss, as Ed Pulling was (is) universally known. Non sibi, sed cunctis was the school motto: Not just for oneself, but for the good of all. As I reflect on this, I find a latent inclination for collectivization there (Mr. Pulling is a liberal) ; but, really, it was not that. Mr. Pulling believed that, by and large, boys who went to boarding schools were a privileged lot, and that the priviledged people must know about the needs o! the community.

The wa.r was soon on us. and that meant that perforce we would need to perform such duties as the first generation of Millbrook students hadn't done-make up our own beds, clean the halls, serve the tables (there was no longer any unemployment, in that area, or anywhere) . And the war brought on such a scarcity o! manual fa.rm labor that we were asked to volunteer to pick apples in a neighboring orchard, at 35 cents an hour.

It was a desperate decision for me every time, because I loathed picking apples, but I loved to smo~e cigarettes. a.nd in the isolation of a. neighboring orchard one could do this with impunity. (Sixth formers could smoke at designated times . twice a. week. Boys caught smoking at other times were usually expelled.)

A dreadful ritual every Saturday morning, after a prayer and a singing of the morning hymn. came when the headmaster made the daily announcements. He would read out the names o! the boys who were to report in the late afternoon to the Jug. as we called it.

The miscreant spent their time picking up stones from one pasture, and bringing them together where a stone fence would eventually spring up. The distinctive horror for me of landing in the Jug is that it postponed, a.nd even entirely threatened, my precious weekend at home.

I remember. though, Mr. Pulling's quandary when it was brought to his attention

that the removal of stones as a form of punishment interfered with his concept o! Community Service (one or more afternoons per week) , during which other chores of public benefit were undertaken-e.g., Athletic Records, Biology Assistants, Bird Banding, Blackout Committee, Commons Room Committee, Confiscation Lockers, Electrician, Exhibits Manager, Fire Department, Flag Officer, Greenhouse, Meteorology, Receptionists, School House, Stable Assistants, Squash Court, Store Committee. He thought about it, and in due course revealed his transformation of the Jug. So as not to contaminate the noble idea of Community Service, the Jug henceforward would be held not in the late afternoon gathering stones for a new wall; but in the early evening, copying out the encyclopedia-during the hour the weekly movie was shown. I missed "Casablanca" on r,hat one.

But it was the academic part of Millbrook in which Edward Pullin_g took the greatest pride. Up until the time I left (1943), no one who graduated from Millbrook failed to be accepted by the college of his first choice (my brother John's class: two to Harvard; five t o Princeton; one, Yale; one, Rutgers; one, University of Arizona). Granted, now and then a boy would be encouraged not to apply to too exalted a college. And it was only after reading the charming autobiography of Schuyler Chapin that I discovered that the diploma ceremoniously presented to him on Commencement Day at Millbrook was merely a certificate of attendance.

But Mr. Pulling was deadly serious in the matter of academic excellence. Teaching senior English, he gave out his first A in 1942. He took lascivious pleasure from any academic accomplishm~ts by his students. I desired to pursue the study of Spanish, but since the language was spoken at home I was advanced. Never mind: Mr. Pulling directed his Spanish teacher to conduct a special class-for a single student. Under Nathaniel Abbott (father of the present headmaster), music was seriously pursued, through a student orchestra, a glee club. visiting teachers, trips to hear artists (I was driving back from a concert by Rachmaninoff when the radio reported the attack on Pearl Harbor).

Although Mr. Pulling did not himself easily manage this, retaining a residual aloofness proper to his station and harmonious with his personality, he encouraged close relationships between the masters and the boys, like Mr. Trevor's with my brother Jim, John McGiffert's with my brother Reid (McGiffert would read aloud Reid 0s short stories to his guests), my own with Mr. Abbott (who took me for several days to Tanglewood to hear Koussevitzky rehearse the Boston Symphony) .

By nature an authoritative man, Mr. Pulling nevertheless assembled a collection o! young masters to whom he gave full rein. The wife o! the teacher of Latin and football taught twQ of us (or attempted to do so) musical harmony. The gentle assistant headmaster. beloved of all the students, was incongruously the chief disciolinaria.n.

He taught American history, and by emulation he taught the virtues of Quakerism, and left to become headmaster of the Gilman School my senior year (his son ls now the headmaster o! Hotchkiss). Mr. Prum, !rom Belgium. taught the ohysical sciences and cultivated a kind of exaggerated, narcissistic authoritarianism.

("Sir. do you know the answer to Problem Five?" "I know zee answer to oll zee problems.") Mr. Hargrave Joyous Bishop, my dorm master as a fourth former, was an avid francophile. I remember In conversations with mv roommates guessing at his age. We rounded it off at 65.

He was in ract 35, a recent graduate or


Princeton. His ecstasy came when French diplomats or artists would come to Millbrook to speak (Mr. Pulling had a way of drawing people to his school to perform). Preferably if they could speak only in French (to advanced French students), so that he could utter "Tiens !" every moment or two, signifying that he understood everything. The patrician Arthur Tuttle, whose brother was master of Davenport College at Yale, taught math.

A genuine highbrow, with the reputation of having a considerable private fortune; tough, but with a soft streak. Frederick Knutson (Latin football) was so carried away by the military spirit of the World War that he marched his athletes to the playing field in accents so martial they could not be heard this side of West Point.

My roommate Alistair Horne once, in a yelp of enthusiasm, leaned out from our third floor suite and in a perfect imitation of the Ftihrer's (his underground nickname) accents, ordered, "Reverse, Hartch!" and half the undergraduate body reversed its line of march, all but managling the Ftihrer, who conducted a feverish rectanglewide investigation, but never found the voice of the imposter. Alistair Horne would in due course seriously study the martial ways of the Germans and the French.

Then he was also studious, but always with the spontaneouc; outburst of fun or trenchancy. It was his turn to wait on table, one day, and his fate to be iassiimed the Boss's table. As he put down the large platter of chow mein he managed accidentally to drip it right down the length of the headmaster's tweeded sleeve. The 10 boys ( 10 to a table, one master) watched with horror at this slow-motion profanation. Jt was only after he had i:et down the platter that Alistair recognized the enormity of the offense. So he turned and said, "Th81t's all right, sir. It won't hurt you externally." He smiled nervously, and went off to fetch a rag. Mr. Pulling's reaction to student insolence was not easy to predict. because there were insufficient statistics. But he let this one go by.

Millbrook encouraized a clv111tv iamong its students. There was ·practically no bullyiniz. and when an instance of It was uncovered Mr. Pullin~ dramatically rannounced at the morning prayer seEsion t:hat he would close down the doors of the school rather than tolerate such stuff. The initiation ceremonies for new boys were dramatic enough to bring on 1a certain tension. but were absolutely painless. The Boss understood the need for traditions in a brand-new school, and egged some on, some more successfully than others.

For instance. he would read the whole of "A Christmas Carol" to the entire school at the Christmas ceremonv, to the graduated di~may of all who had heard the story once, or twice. or three times (there were six forms then). But, ho. ho, ho, he would persevere. His devotion to the war effort wa.<:; such as to sponsor student vie;ils where, at night, we would strain to catch traces of German bombers, that we might report them to the military. The airplane-identification training wa.s turned over to Mr. Trevor, who proceeded in his most o')noxiouc; way to require 11s to distinguish between miniature wooden Heinke! 111 's and Messerschmitt llO's, in order to guarantee the security of Dutchess County. I took pleasure in informing him, after I had failed my third airplane-identification test, of the ladv who had won the prize In Great Britain, identifying the very first of the fabled Messeri:chmitt 262's-to the surprise of the communltv, l?'iven her opacity at airplane-identification class.

But the R.A.F. had risen, shot down the coveted fiuhter, and the mavor had given the ladv a banquet, and a huge cup. He asked her W'hat it was about the airplane that had distinguished it in her eyes. "Why," she replied,

"at the identification class, the Messerschmitt 262 was the only airplane with a pilot in iL!" Mr. Trevor was unamused.

Alistair was one of four English boys who had come to America . to escape the blitz. The youngest of these was positively the most insufferable brat ever exported by the United Kingdom. Lord Primrose was about 12, and I bear today on my right leg the scars from the kicking he gave me in the lee rink when I was ordered to fetch him in, he having decided to ignore the hockey master. Alistair Horne was from London, and we were drawn together as roommates in our sixth-form year. Neither of us was apparently judged by Mr. Pulling as naturally authoritative in manner because we found ourselves, in our third-floor eyrie, in charge of only three younger boys, one and a half boy each, as we delighted in putting it.

Alistair made me a bootlegged radio (these were forbidden), and read widely. I am the godfather of his oldest girl. He is among Britain's top historians. Between us, we have published 38 books.

Mr. Pulling contrived an agony I think altogether unique. Once a year, beginning in the winter term, every boy in the school had to deliver a five-minute speech to the entire school. This was done either at lunch, after the announcements, or in the morning, after the hymn and announcements. Some boys would be physically sick before their turn came. Some would freeze, for agonizing moments, while schoolboys and masters stared at their fingernails. But the Boss was determined that any graduate of his school should know how to address a large group on the subject of one's choice (typical: "The History of the Ford Motor Company"). I think it fair to say that the system seemed to work. That is, after three or four years of it a student accepted the ordeal as that, to be sure: but as an ordeal related to the coming of age, which came to me, and my 12 classmates, nine of whom survive, probably faster as the result of Millbrook, plus a world war, than otherwise.

And, of course, Mlllbrook came of age. It was 16 years ago that Mr. Pulling retired, taking with him the spirited, enchanting, amusing Mrs. Pull1ng, whose loss was an equal deprivation to the community. There followed, as so often ls the case (see "The Rector of Justin") the unsuccessful dauphin; then a second successor; finally the third, with whom the entire community is entirely comfortable. Girls were admitted in the early 1970's, but the trustees kept down the size of the school, to under 200. It prospers, and contends now against the best of the less-well-known schools. For those who grew up with MUlbrook-indeed, are even older than it, it conjures up, as schools tend to do, a special image. Always there ls the Northeastern fall, and winter, and spring; the cider, the ice, the vernal spring torpor. Weekend dances with Ethel Walker students, hours of football practice earning one's first income by typing other student's papers ($1 per paper; grammar corrected, $1.25 per paper)-until the Boss discovered this, outlawed it as a "pernicious" habit, causing me to consult the dictionary, and to puzzle over the exotic use of the word; but, at M1llbrook, we always knew that for better or for worse, if Mr. Pulllng had said it, it was, de facto, so .•

INTERIOR SECRETARY JAMES WATT

• Mr. SIMPSON. Mr. President, I have noted with the greatest of interest--and sometimes amusement--the current fullbore, last ditch attempt to apparently force the removal of James Watt from the position of Secretary of the Interior.

The Sierra Club, which characterizes Mr. Watt as "underhanded, outrageous, reckless and dangerous" has launched this final, last gasp, all-out effort to force his resignation or dismissal.

The club seems to see this battle over Mr. Watt not only as a battle over environmental policies, but as a personality clash, and in a confidential memo to its members it laid the groundwork for the current effort to oust Jim Watt the Interior Secretary and bring ridicule upan Jim Watt, the human being.

The Sierra Club sees Jim Watt as manipulative. They should know. Allow me to quote from the club's confidential memo of last August:

It ls vital that this plan remain a.bsolutely confidential. If word of this plan and its timing gets out, it wm be possible for Watt and his supporters to take counteraction which could seriously blunt the political and media impact we are seeking.

The memo called for an "ambitious and large-scale plan" and suggested the club could add 40,000 to 50,000 signatures per week to its petition calling for the removal of Watt-the reckless, dangerous Secretary of Interior.

The report also suggests use of "deep background/ off the record" meetings with members of the news media, and said a "large-scale airport rally" should be held in conjunction with the send-off of the local chapter's petitions to Washington. The memo says:

It should be a highly photographable rally (placards, balloons, etc.) with a. nice big throng of club folks and others to cheer at every anti-Watt statement ... In most states this wm be a very big story. Your airport rally can comprise several actual events, but can be staged to assure maximum coverage-especially for television cameras.

our purpose in having all the chapter representatives come to Washington simultaneously-but with individual press conferences at home as they leave-is to gain maximum press coverage, both on a local basis (hometown folks send petition to Washington) and, then, on a national basis (mighty nationwide Sierra Club assembles volunteer leaders in Washington with 1 m1llion-plus petitions against Watt policies).

You might also take a gander at a most recent letter to the general public addressed "Dear Friend". There are charged phrases in it like "surely we will see the destruction of lands-the invasion of our irreplaceable wilderness lands, the demise of habitat."

Then the phrase "his <Watt's) behavior is simply outrageous." But then we finally get to the nub of things which states:

We can make our collective voice heard effectively against James Watt if you will help, and you can help even more by deciding to join as a member of the Sierra Club at this critical time.

The media is the message-or is it the message is the media Either one, anyone can understand that pitch for support of the organization-while they use Jim Watt as the bait to get the troops all juiced up. Interesting organization. I would think one would want to learn more about them and how they really work.

The Sierra Club memo is dotted with

October 20, 1981 CONGRESSIONAL RECORD-SENATE 24571 language designed to incite its members into action that will "gain maximum press coverage" for the Washington rally-and then it plans for a Washington potluck dinner and square dance "just for fun." It appears to me that the only real fun the club leadership intends to have is directed at generating an unfair and lopsided public image of Jim Watt as being the single worst destroyer of national environmental values in our Nation's history. The Sierra Club, through this confidential memo which details plans to manipulate the medi·a, has demonstrated its consistent unwillingness to seek reason, compromise, or understanding.

There has been a lot of high old hysteria about Jim Watt. Many persons have a real sense of glee as they hurl their harpoons into him. It is ironic that various organizations in America which characterize themselves as "sensitive and gentle" who banded together years ago to "preserve, protect, and nurture'' really do like to get the gloves off and get into some pretty vile characterizations.

Those organizations are having a "hay-day" at the present time. It is interesting to see them rubbing their hands with glee as they contemplate tacking Jim Watt's pelt on a wall of their redwood paneled dens. They really are quite the hunters, even though they would like to give one the impression of hunting "only with binoculars or cameras" as they tramp through the woods t;earching for the furbish lousewort and various species of the crested titmouse. But as I have stated before, I conclude they know more about the jugular vein of adversarial combat than many a hunter I have ever known out in the high country of Wyoming.

I have known Jim Watt for over 20 years. He is no zealot, no nut, no lightweight. He is doing things that fit into this administration's agenda and he will be doing those things in a manner which will be protective of the environment. Yes, that just could be so. But there is a dedicated band out to nail him to the cross. They are so dedicated and so bizarrely zealous and so off tilt that he now has Secret Service coverage with him around the clock. Few in this administration are confTonted with the type of abuse and threats that he receives. Someone incites that.

I ask that the environmental accomplishments of Jim Watt be printed at this point in the RECORD.

The material follows: ENVIRONMENTAL ACCOMPLISHMENTS

1. Secretary Watt directed the National Park Service .to meet "The challenge to the Service in the 1980s" by refocusing its management activities to bring existing parks up to acceptable standards, in response to a GAO report citing $1.6 b1ll1on in safety and heatlh hazards for park visitors.

2. Secretary Watt approved the Bureau of Land Management's comprehensive multipleuse plan for the California Desert Conservation Area and a charter for BLM's new California Desert District Multiple-Use Advisory Council.

The CDCA plan provides for the use and protection of 12 m1111on acres of public lands administered by BLM within the 25-mllllon-

a.ere California Desert Conservation Area, which includes about one-fourth of the State. It permits development where appropriate while, at the same time, protects unique public values. The uses and values include mining, energy minerals, livestock grazing, biological, cultural, educational, recreational, scenic and scientific resources.

3. Secretary Wwtt announced the Golden Access Passiport which will allow people who are physically disabled or blind to obtain free entry to national parks, monuments, historic sites, and recreation areas. They will also receive 50 percent discounts on fees for recreational activities such as camping and boat launching.

The new Golden Access Passport results from a 1980 amendment to the Land and Water Conservation Fund Act of 1965.

4. Conservation programs for endangered and threatened species in 38 States and Territories have been helped by $4 million in matching Federal grants for fiscal year 1981.

5. Preservwtion of historic American buildings h!Ls been boosted significantly by a 25 percent tax credit for historical rehabilitation provided in the New Economic Recovery Act.

Federal tax incentives for historic preservation have stimulated more than $1.2 b1llion in private investment since enacted in 1976; over 2,200 projects have qualified nationwide for the incentives, including historic hotels, office buildings, factories. and residential buildings. More than 12,000 new housing unl.lts have been created, more than 5,000 of them for low and moderate income families. The program is administered by the Department of the Interior's National Park Service and the Department of the Treasury.

The new investment tax credl.lt will be available for projects beginning January 1, 1982; existing historic preservation tax incentives will be in effect through December.

6. Secretary Watt unveiled a plan to provide greater protection to the endangered humpback whales in their summering ground in Glacier Bay.

7. Secretary Watt ha.s announced that he will ask the Migratory Bird Conservation Commission to focus attention on continued funding for preserving wetland habitat for ducks, geese, and other migratory birds.

On October 7, the Commission, which is chaired by Secretary Watt, approved the acquisition of a new national wildlife refuge, Big Boggy, when funds become available. Big Boggy is located 20 miles south of Bay City, Texas.

8. Agents of the Fish and Wildlife Service, at the direction of Secretary Watt, have acted to uncover black market operations that deal in endangered and protected American reptiles. The agents established a "sting" operation in Atlanta and transacted business with 175 people, 27 of which have been arrested for violating Federal and State laws against collection, shipment, and interstate commerce in protected species of reptiles.

9. Secretary Watt has voiced opposition to the U.S. Army Corps of Engineers DickeyLincoln School Lakes Project in Maine.

10. Secretary Watt has announced he will seek wilderness status for Arizona's scenic Aravaipa Canyon, 22 miles northeast of Tucson.

11. Agreeing with challenges by environmental groups, the State, and industry, Secretary Watt requested the Department of Justice, to file a motion in the District Court of Utah seeking authority for the Deparltment of the Interior to review a Carter Administration decision allowing coa1 surface mining in a major part of Utah's Alton Coal Field.

12. Secretary Watt has reaffirmed the historic primacy of State water management in announcing the Department's repudiation of a controversial 1979 legal opinion that sought to establtsh a so-called "Federal non-reserved water right."

13. Revised guidelines to select, classify, and manage rivers in the national wild and scenic rivers system have been proposed jointly by the Department of the Interior and the Department of Agriculture. The system provides Federal protection for the nation's outstanding rivers in order to preserve them for the use and enjoyment of present and future generations.

14. The Fish and Wildlife Service has proposed guidelines to identify scenic vistas on Wilderness areas within the National Wildlife Refuge System that merit special air quality protection under the Clean Air Act.

15. Secretary Watt has designated five properties National Historic Landmarks. They are: The Old Stone Gate of the Chicago Union Stockyards; the John Jay House in Katonah, New York; the Old Waterworks in Bethlehem, Pennsylvania; the Folsom Powerhouse in Folsom, California; and, the Sloss Blast Furnaces in Birmingham, Alabama.

16. Secretary Watt proposed a.mending the Land and Water Conservation Fund to permit restoration of deteriorating park areas.

17. Secretary Watt announced trapping of California condors as the start of a "last ditch" captive breeding and research program designed to save endangered California condors.

18. Secretary Watt pledged the National Park Lands would be protected from mineral exploration and development.

19. The Department of the Interior awarded a $4.1 milllon contract for construction of recreation facilities on :he Wayne N. Aspinall Storage Unit of the Colorado River Storage Project.

20. The Department of the Interior has requested assurances from Virginia Governor John B. Dalton that noise from the planned Dulles Toll Road wm not disturb performances at Wolf Trap Farm Park.

21. Secretary Watt pledged protection of the Cape Hatteras Lighthouse from erosion by waves.

22. Prepared an inventory of properties in the U.S. that may qualify for nomination to the World Heritage List.

23. Called for an inventory and orderly development of America's natural resources to avoid a crisis situation where resources might be developed without regard to environmental considerations.

24. Secretary Watt has prepared a list of 32 Wilderness areas to be sent to the President for consideration and transmittal to Congress.

25. Secretary Watt recommended to the President appointment of noted conservationist Tom Garrett to the post of U.S. Deputy Commissioner to the International Whaling Commission.

26. Secretary Watt supported provisions on the Reconciliation Act of 1980 that phase out federally subsidized flood insurance for barrier islands, thereby discouraging development on the environmentally sensitive coa<>tal barriers.

27. Issued new regulations designed to reduce wildfires on public lands to protect users.

Mr. SIMPSON. Mr. President, do those actions sound like the inane ramblings of a man who is bent on destruction of the environment? I think not. They demonstrate an ability to compromise and reason. They demonstrate an ability and willingness to seek a sensible environmental course for our Nation-a course, not just incidentally, that is fully supported by the President of the United States.

Jim Watt's major problem is that some environmentalists have targeted him as the individual responsible for every single environmental situation or decision that they happen to find offensive. And


many of those persons can see absolu~ly no value in a Secretary of the Interior who does not totally share their values and standards. If that person who serves as Secretary of the Interior does not agree with the opinions of those persons 100 percent of the time, the~ he ~ .seen as being totally against their pos1t1ons. Think of that a moment and then please advise me as to who is being "irresponsible, outrageous, reckless and dangerous."

Some of those persons who have targeted Jim Watt as their enemy, those persons who have demonstrated the complete inability to yield to any reasonable compromise, those persons who have .become the most radical and irresponsible in their avowed hatred of Jim Watt the Interior Secretary, and Jim Watt the man-many of those persons are those who only seek to pursue "causes," and others know little about the true mission of the Department of the Interior, and who seek surcease and release for their pent-up frustrations in hammering away at "someone" or "something." Jim is it.

The current attack on Jim Watt appears to be the "Gettysburg" in the ?U~rent war to force his removal. This is the "high water mark." All the stops are being pulled and every effort being made to attract sympathetic media coverage.

I trust that this Nation of intelligent persons will view what is happening in Washington this week and then apply their own sense of reason and commonsense to the situation. I trust they will see through "the hype" and "the hoorah" and will observe that Secretary Watt is not the heinous and irresponsible person that the club depicts him to be-that he is truly a man seeking reasonable balances-a man who has the complete support of the President--and that they will see a man who wishes to restore the sensitive balance between preserving our fragile environment and promoting economic development and energy selfsecurity--ia balance that has been undeniably manipulated and nearly vanguished over the past two decades.•

BICENTENNIAL EMBLEM DAY 0 Mr. MITCHELL. Mr. President, I ask to have printed in the RECORD a resolution adopted by the Maine State Aerie, proposing the establishment of Bicentennial Emblem Day.

The resolution follows: EAGLE EMBLEM BICENTENNIAL

Whereas, On June 20th, 1782, the Continental Congress adopted the Great Seal o! the United States, with the American bald eagle as its central figure, and

Whereas, The American bald or whitecrested eagle symbolizes the ideals o! freedom and independence o! our Republic, and

Whereas, June 20th, 1982, w111 be the bicentennial year, the 200th anniversary o! the selection o! the North American bald eagle as our national emblem, NOW THEREFORE, be it

Resolved, That we respectfully petition the Congress o! the United States to request the President o! the United St.ates to proclaim June 20th, 1982, as Bicentennial Emblem Day, call1ng upon public agencies to fiy the flag of the United States on all Government

buildings that day, and calling upon local communities and voluntary organizations t,o observe the day with appropriate ceremonies.e

CBO COST ESTIMATES ON S. 1119 ANDS. 794

• Mr. McCLURE. Mr. President, the Committee on Energy and Natural Resources reported S. 1119 and S. · 794 on October 7, 1981. The reports which accompanied S. 1119 and S. 794 are 97-205 and 97-208 respectively.

The committee stated in the reports that the Congressional Budget Office estimate of the costs of these measures were not available at the time the reports were filed. The committee has received the reports and wishes to inform the Senate of the contents of these reports. I ask that the two reports from CBO be printed in the RECORD following these remarks.

The reports follow: CONGRESSIONAL BUDGET OFFICE,

Washington, D.C., October 7, 1981. Hon. JAMES A. McCLURE, Chairman, Committee on Energy and Natural

Resources, U.S. Senate, Washington, D .C. DEAR MR. CHAmMAN: Pursuant to Section

403 of the Congressional Budget Act of 1974, the Congressional Budget Offi.ce has reviewed S. 794, a bill to amend the National Trails System Act to designate the General Crook Trail in Arizona and New Mexico for study to determine the feasibility and desirability of its designation as a national historic trail, and for other purposes, as ordered reported by the Senate Committee on Energy and Natural Resources, September 30, 1981.

Because part o! the General Crook Trail has previously been designated as a national recreational trail, the Forest Service has already conducted the required environmental analysis verifying that that portion o! the trail meets construction, maintenance, and sa!ety standards. Based on information !rom the U.S. Forest Service, the remaining study is estimated to cost approximately $140,000. Assuming an appropriation effective by December l, 1981, this study wm cost the government roughly $25,000 in both fiscal years 1982 and 1983 and $90,000 in fiscal year 1984.

s . 794 also authorizes the Secretary o! the Interior and the Secretary o! Agriculture, in cooperation with the State o! Arizona, to provide interpretive markers at appropriate locations to identify and commemorate the Beale Wagon Road in the State o! Arizona. This activity is not expected to result in any significant cost to the government.

Should the Committee so desire, we would be pleased to provide further details on this estimate.

Sincerely, RAYMOND C. SCHEPPACH

(For Alice M. Rivlin, Director.

CONGRESSIONAL BUDGET OFFICE, Washington, D.C., October 7, 1981.

Hon. JAMES A. McCLURE, Chairman, Committee on Energy and Nat

ural Resources, U.S. Senate, Washington, D.C.

DEAR MR. CHAmMAN: Pursuant to Section 403 of the Congressional Budget Act of 1974, the Congressional Budget Offi.ce has reviewed s. 1119, a bill to correct the boundary o! Crater Lake National Park in the State o! Oregon, and !or other purposes, as ordered 1·eported by the Senate Committee on Energy and Natural Resources, September 30, 1981.

Based on this review, it is expected that no significant additional cost to the govern-

ment would be incurred as a result of enactment o! this legislation.

Sincerely, JAMES BLUM

(For Alice M. Rivlin, Director)·•

MINIMUM BENEFIT RESTORATION <H.R. 4331)

e Mr. HUDDLESTON. Mr. President, I was pleased to support legislation which restored the social security minimum benefit to some 3 million beneficiaries nationwide. It is a benefit which never should have been repealed in the first place, and I am pleased that this body finally gave the serious consideration due to a proposal to reinstate it. The House has already voted to do so, and I believe that we in the Senate had the responsibility to do the same.

The American people support the concept of reduced Federal spending, and on the whole, judging from the countless people I have heard from in Kentucky, would support some rational cuts in the social security system if need be. It is the irrational cuts, particularly that of the minimum benefit, that they were not willing to stand by and support.

The present economic crisis has prompted changes in practically every social program established in post-Depression times. I do not believe that the social security system should be totally devoid of bearing this burden. But I do not believe that it should carry the primary burden either.

The financing of the Old Age and Survivor's Insurance Trust Fund does need to be strengthened; no present or future statistics dispute this. What is more, anticipated problems may surf ace much sooner than we would like to believe. All this depends on the ability of the economy to rebound and respond to what we all hope will Q_e the successful effects of the administration's economic policy on this country.

At issue, however, is not whether changes should be made, but how. I believe and have consistently stated that this can and should be achieved without severe reductions in benefits to those now receiving them and without reducing promised protection for those now contributing to the program. The massive and piecemeal cuts propased by the itdministration to solve the problems facing the social security system have done just the opp0site; they have been examples of using a meat ax instead of a scalpel to perform necessary surgery.

In the President's televised message to the Nation on September 24, we finally had a glimpse of what the administration has meant all these months in its referral to the "truly needy." In fact, the main impact of the propo~al to repeal the minimum benefit would fall on somewhere around 1.3 million elderly Poor beneficiaries who would be forced to find ot.her sources of assistance. most probably SSI or some form of State welfare.

It did not seem to me to be good, sound policv to deny benefits to elderly people who have been living for years on benefits we have pledged them and who have no ability to otherwise compensate for


the loss of income proposed. And forcing them onto welfare or State public relief rolls was not the answer either.

There are other ways to bring the social system out of immediate threat of insolvency than to drastically cut benefits to individuals who were paying into a system that claimed it would aid them in their retirement. I believe that the interfund borrowing mechanism endorsed by the Senate Finance Committee, and mo::-e recently, by the President, is one which will allow us to take a serious and indepth look at the long-term financing of the system without placing the bulk of the responsibility of these problems on those least able to bear it.

I believe, too, that the 15-member task force proposed by the President will now have the time and resources which are integral to the formation of reasonable and workable answers to the future of social security.

Mr. President, the American people, by electing us to represent their interests in Washington, placed a trust in us. They have every right to expect us to uphold that trust, and in fact, to insist upon it. They have already experienced a violation of that trust in an administration that promised no changes in social security and then proposed benefit reductions which would collectively constitute the most severe cuts in the history of the system.

The implications for such a blatant violation of that trust are very serious. Should the American people get used to this game of chance where the tables can turn on them in the matter of seconds? I believe not. I am pleased that my colleagues joined in this effort to restore the minimum benefit, and in so doing, some of the lost confidence and trust of the American people in their elected representatives.•

ORDERS FOR WEDNESDAY Mr. BAKER. Mr. President, I have a

list of requests that relate to the session of the Senate on tomorrow and the further management qf the bill under consideration.

ORDER FOR RECESS UNTIL 9: 15 A.M.

Mr. President, I ask unanimous consent that when the Senate completes its business today it stand in recess until the hour of 9:15 a.m. on Wednesday, October 21.


ORDER FOR THE RECOGNITION OF SENATOR

ROBERT C. BYRD AND SENATOR BENTSEN

Mr. BAKER. Mr. President, I ask unanimous consent that after the recognition of the two leaders under the standing order, the distinguished minority leader be recognized on special order for not to exceed 15 minutes to be followed by a special order of not to exceed 15 minutes in favor of the distinguished Senator from Texas <Mr. BENTSEN).


ORDER FOR A PERIOD FOR ROUTINE MORNING

BUSINESS

Mr. BAKER. Mr. President, I ask unanimous consent that after the recognition of the Senators just identified on

special orders there be a period for the transaction of routine morning business to extend not past the hour of 10 a.m. with statements therein limited to not more than 5 minutes each.


ORDER TO RESUME CONSIDERATION OF S. 1196

Mr. BAKER. Mr. President, I ask unanimous consent that at 10 a.m. tomorrow the Senate resume consideration of the foreign assistance bill, S. 1196, at which time the Glenn amendment on Pakistan will be the pending amendment No. 560.

The PRESIDING OFFICER. Without objection, it is so ordered. CONSIDERATION OF HART AMENDMENT TO FOLLOW

DISPOSITION OF GLENN AMENDMENT NO. 560

Mr. TOWER. Mr. President, I ask unanimous consent that following the disposition of the Glenn amendment No. 560 to S. 1196 on tomorrow the Senate proceed to the Hart amendment dealing with Libyan oil.


DESIGNATION OF OCTOBER 23, 1981, AS "HUNGARIAN FREEDOM FIGHTERS DAY" Mr. TOWER. Mr. President, I ask

unanimous consent that the senate proceed to the consideration of House Joint Resolution 268, a resolution to designate October 23, 1981, as "Hungarian Freedom Fighters Day."

The PRESIDING OFFICER. Is there objection to the request? The Chair hears none, and it is so ordered. The clerk will state the joint resolution by title.

The legislative clerk read as follows: A joint resolution (H.J. Res. 268) to desig

nate October 23, 1981, as "Hungarian Freedom Fighters Day."

The Senate proceeded to consider the joint resolution.

The PRESIDING OFFICER. The Senator from Connecticut is recognized.

Mr. DODD. Mr. President, first of all, I ask that the following Members of the senate be included as additional cosponsors of my joint resolution, senate Joint Resolution 114: Senators ANDREWS, HAYAKAWA, HUMPHREY, RIEGLE, and THURMOND.


Mr. DODD. Mr. President, I was of the impressionable age of 12 at the time of the Hungarian revolution of 1956. I still remember what a powerful influence it had on me at the time. I knew, of course, of our great revolution and of many others from my parents, teachers, and from books. But here, the first time in my life I could actually follow a great revolution at the time it was unfolding. It was an outstanding lesson in modern history for many members of my generation. We were bitterly disappointed that even the sacrifice of tens of thousands of lives could not bring freedom for the Hungarian people. I could not understand why we had not done more to help them liberate themselves from the Soviet yoke.

I have never forgotten that lesson

since, the example of a freedom-loving people to rise up and fight courageously against the overpowering strength of the Soviet colonial army. I intended to pay respect to those who sacrificed their lives in that struggle when I asked my colleagues to join me in introducing a resolution to this effect. I want to thank the 30 gentlemen who responded favorably to my request.

In the meantime, I learned that a similar resolution with different language had passed the House last Wednesday and, Mr. President, we all agree that the speedy passage of this resolution is what is most important and, therefore, I support the passage of the House version in place of the text I have submitted.

Mr. President, another source of inspiration for my resolution came from the friends I have among former Hungarian freedomfighters and from those members of Connecticut's Hungarian community who had to flee their former homeland, after the Soviet invasion crushed the revolution. These former refugees enriched my State immensely with their talent and industry.

Finally, let me mention that I am very proud of two letters I received from two friends the other day, in support of my resolution. One came from former General Bela Kiraly, commander-in-chief of the freedom-fighter forces in the 1956 revolution. He is now a distinguished professor of history in New York City and generations of young Americans can benefit from his experience and scholarship. Instead of writing about his own deeds his letter stresses the importance of not forgetting "those who gave their lives for the freedom and independence of the Hungarians and also for human rights, freedom and justice everYWhere in the world."

A former college professor of mine and a dear friend, Janos Decsy of Bolton, Conn., sent the other letter. He was also a top military leader of the revolution, chief of staff of General Kiraly. His body bears the marks of numerous Soviet bullets. I am fortunate to have been his student and proud being his friend. His inspiring letter draws a perfect parallel between our Declaration of Independence and the list of demands the heroes of Hungary fought for, the inalienable rights to life, liberty, and the pursuit of happiness.

Mr. President, in the spirit of paying tributes to the heroes who sacrificed their lives for the universal cause of freedom and honoring those who, after their escape from Hungary became :;uch a great asset to our country I urge my colleagues to adopt this resolution.

Mr. President, I yield the floor. (By request of Mr. ROBERT c. BYRD,

the following statement was ordered to be printed in the RECORD:) • Mr. MOYNIHAN. Mr. President, the 23d of October will mark the 25th anniversary of the dawn of the Hungarian Revolution of 1956. It is altogether :fitting and proper, therefore, that we in the Senate take this time to reflect upon, and reassert our abiding commitment to, the love for liberty which inspired the Hungarian people in 1956.

24574

C O N G R E SSIO N A L R E C O R D — SE N A T E

O ctober 20, 1981

A g ain st o d d s w h ich w ere su re to o v er-

w h elm , as in d eed th ey d id in a m atter o f

a v ery few d ay s, H u n g arian freed o m

fig h ters stru ck b ack at th e S o v iet arm y

o f o ccu p atio n w h ich h ad fo r m o re th an

a d ecad e attem p ted to cru sh th e in tel-

lectual, political, and econom ic life of the

H u n g arian p eo p le. T en s o f th o u san d s o f

H u n g arian s risk ed , an d lo st, th eir v ery

liv es b ecau se th ey w an ted to liv e free o f

S o v iet ty ran n y — a ty ran n y w h ich h as

n o w d ark en ed th e liv es o f m o st o f th e

p ro u d p e o p le s o f E a ste rn E u ro p e fo r

m o re th an a q u arter o f a cen tu ry .

T o th e co n tin u in g ad v an tag e o f o u r

o w n N atio n , h u n d red s o f th o u san d s o f

H ungarians fled to the W est in 1956, and

m an y o f th em settled h ere. T h ey are as

v alu ed an d v ital a p art o f th e A m erican

people as w e have.

A m erican s to o y o u n g to rem em b er th e

ev en ts o f 1 9 5 6 ten d , I th in k , to tak e to o

m u ch fo r g ran ted th e lib erties w h ich w e

all en jo y , an d w h ich h av e allo w ed th is

co u n try to p ro sp er d u rin g its 2 0 5 y ears

o f in d ep en d en ce. R ecallin g H u n g ary 's

h ero ic fig h t fo r freed o m — a fig h t w h ich

I believe continues even today, w hich w ill

co n tin u e u n til H u n g ary is fin ally free-

w ill rem in d th e p eo p le o f th e U n ited

S tates ju st w h at it is th at d istin g u ish es

th is co u n try.

A nd it w ill help us all to be continually

a w a re o f th e c e n tra l stru g g le o f o u r

tim e: T h e b attle b etw een th e fo rces o f

to talitarian ism an d th e states g u id ed ac-

co rd in g to d em o cratic id eals. W e m u st

n o t fo rg et th e p eo p le o f H u n g ary . W e

can n o t fo rg et th e rev o lu tio n o f 1 9 5 6 , an

effo rt b y a p ro u d p eo p le to estab lish a

d em o cratic so ciety su ch as o u r o w n . W e

sh all n o t ig n o re th eir fate, th o u g h th e

y ears p ass w ith o u t im m ed iate im p ro v e-

m en t. T h eir fate is in ex tricab ly lin k ed to

o u r o w n . W e h o n o r H u n g ary 's h ero es as

o u r o w n . T h at is w h y w e sh o u ld ad o p t

th e reso lu tio n n o w b efo re u s, o f w h ich I

am p ro u d to b e a co sp o n so r.·

M r. L E V IN . M r. P resid en t, I w o u ld

lik e to tak e th is o p p o rtu n ity to sp eak

in su p p o rt o f th e reso lu tio n to au th o rize

O ctober 23, 1981, as "H ungarian F reedom

D ay."

A q u arter o f a cen tu ry ag o , o n O cto -

b er 2 3 , 1 9 5 6 , H u n g arian stu d en ts, w o rk -

ers, in tellectu als, an d p easan ts jo in ed in

a d em o n stratio n to ex p ress th eir v iew s

o n n atio n al p o licy . T h ey u sed th is o cca-

sio n to p u b lish d em an d s fo r in d ep en d -

ence free elections, and the end of S oviet

p o litical an d m ilitary co n tro l an d ex p lo i-

tatio n . T h e d em o n stratio n w h ich h ad

started p eacefu lly w as so o n ig n ited b y

th e H u n g arian p o lice an d S o v iet tro D p s

cau sin g it to ex p lo d e in to a v io len t rev o -

lution .

T h e rev o lu tio n aries p ick ed u p arm s

fo r th eir cau se an d b ecam e k n o w n fo r-

ever as the H ungarian F reedom F ighters.

T h e freed o m fig h ters' u n flag g in g effo rts

w ere fueled by their desire to discard the

y o lk o f S o v iet d esp o tism an d em erg e an

in d ep en d en t n atio n.

B y O cto b er 3 0 , th e rev o lu tio n h ad su c-

ceed ed (at least tem p o rarily ) an d m an y

d em an d s w ere m et. H o w ev er, o n N o v em -

b er 1 ,

S o v iet m ilitary u n its ro lled in to

p u t an en d to th e n ew reg im e . W ith in

d ay s, th e R u ssian s cru sh ed th e reb ellio n.

T en s o f th o u san d s o f co u rag eo u s H u n -

g arian s d ied in

th e v alian t stru g g le fo r

freed o m . H u n d red s o f th o u san d s w ere

forced to flee.

T h e ir c o u ra g e a n d v a lo u r h a s b e e n

reco g n ized w o rld w id e. In 1 9 5 7 , T im e

m ag azin e n am ed th e H u n g arian F ree-

d o m F ig h ter as "M an o f th e Y ear." T im e

to ld u s th at:

T h e M a n o f th e Y e a r h a d m a n y fa c e s, b u t

h e w a s fa c e le ss; h e h a d m a n y n a m e s b u t h e

w a s n o t n a m e le ss. H isto ry w o u ld k n o w h im

b y th e fa c e , in te n se , re le n tle ss, d e sp e ra te a n d

d e te rm in e d , th a t h e h a d w o rn o n th e e v e n -

in g o f O c to b e r 2 3 in th e stre e ts o f B u d a p e st;

h isto ry

w o u ld k n o w h im b y th e n a m e h e h a d

c h o se n fo r h im se lf d u rin g h is d a u n tle ss c o n -

te st w ith S o v ie t ta n k s: th e H u n g a ria n F re e -

d o m F ig h te rs.

In 1 9 5 6 , th e F reed o m F ig h ters fo u g h t

fo r in d ep en d en ce in th eir n ativ e H u n -

g a ry . B u t th e sig n ific a n c e o f th e ir

stru g g le is n o t b o u n d e d b y tim e o r

sp a c e — it is m a n 's e te rn a l, u n iv e rsa l

stru g g le. T h e last tw o lin es o f a fam o u s

H u n g arian rev o u tio n ary so n g p o etically

relates th eir cry , essen tially th e sam e cry

h eard fro m all p eo p le seek in g freed o m

th ro u g h o u t tim e. "L o n g liv e H u n g arian

freedom . L ong live our hom eland ."

I co m m en d m y frien d fro m C o n n ecti-

cu t fo r h is ex trao rd in ary lead ersh ip in

th is m atter.

T he P R E S ID IN G O F F IC E R . T he ques-

tio n is o n th e th ird read in g o f th e jo in t

resolution.

T h e jo in t reso lu tio n w as o rd ered to b e

re a d a th ird tim e , w a s re a d th e th ird

tim e, an d p assed .

T h e p ream b le w as ag reed to .

M r. T O W E R . M r. P resid en t, I m o v e to

reco n sid er th e v o te b y w h ich th e jo in t

resolution w as passed.

M r. R O B E R T C . B Y R D . I m ove to lay

th at m o tio n o n th e tab le.

T h e m o tio n to la y o n th e ta b le w a s

agreed to .

JO IN T R E F E R R A L O F S . 807

M r. T O W E R . M r. P re sid e n t, I a sk

u n an im o u s co n sen t th at C alen d ar N o .

170, S . 807, be referred to the C om m ittee

o n R u les an d A d m in istratio n w ith in -

stru ctio n s th at th e co m m ittee sh all re-

strict its ex am in atio n to su b sectio n s (c)

th ro u g h (f) o f 1 0 0 5 o f title I o f th e b ill,

an d th at th e co m m ittee sh all h av e 2 0

calen d ar d ay s in w h ich to rep o rt th e b ill

o r b e d isch arg ed fro m fu rth er co n sid era-

tion.

T h e P R E S ID IN G O iek aC E R . W ith o u t

o b jectio n , it is so o rd ered .

E X E C U T IV E S E S S IO N


u n an im o u s co n sen t th at th e S en ate g o

in to ex ecu tiv e sessio n to co n sid er th e

n o m in atio n rep o rted o u t o f th e Ju d iciary

C o m m ittee to d ay o f S tan fo rd 0 .

-Flard-

w ell, Jr., of L ouisiana, to be U .S . attorney

fo r th e m id d le d istrict o f L o u isian a fo r

th e term o f 4 y ears.

T h e P R E S ID IN G O F F IC E R . Is th ere

objection to the

S en ato r's req u est? H ear-

in g n o n e, it is so o rd ered .

D E P A R T M E N T O F JU S T IC E

T h e leg islativ e clerk read th e n o m in a-

tio n o f S ta n fo rd 0 . B a rd w e ll, Jr., o f

L o u isian a, to b e U .S . atto rn ey fo r th e

m id d le d istrict o f L o u isian a fo r th e term

of 4 years.

T h e P R E S ID IN G O F F IC E R . W ith o u t

o b jectio n ,

th e n o m in atio n is co n sid ered

and confirm ed .

M r. T O W E R . M r. P resid en t, I m o v e to

reco n sid er th e v o te b y w h ich th e n o m i-

n atio n w as co n firm ed .

M r. R O B E R T C . B Y R D . I m ove to lay

th at m o tio n o n th e tab le.


u n an im o u s co n sen t th at th e P resid en t b e

im m ed iately n o tified o f th e co n firm atio n

o f th e n o m in atio n.


objection, it is so ordered .

L E G IS L A T IV E S E S S IO N


u n an im o u s

co n sen t th at th e S en ate re-

turn to legislative session.


objection, it is so ordered .

R E C E S S U N T IL 9:15 A .M .

T O M O R R O W

M r. T O W E R . M r. P re sid e n t, th e re

b ein g n o fu rth er b u sin ess to co m e b efo re

th e S e n a te , I a sk u n a n im o u s c o n se n t

th at th e S en ate stan d in recess p u rsu an t

to th e p rev io u s o rd er u n til 9 :1 5 a.m . to -

m orrow .

T h ere b ein g n o o b jectio n , th e S en ate,

at 6 :2 8 p .m ., recessed u n til W ed n esd ay ,

O ctober 21, 1981, at 9:15 a.m .

N O M IN A T IO N S

E xecutive nom inations received by the

S enate O ctober 20, 1981:

T H E JU D IC IA R Y

Je sse E . E sc h b a c h , o f In d ia n a , to b e U .S .

c irc u it ju d g e fo r th e se v e n th c irc u it v ic e

L u th er M . S w y g ert, retired .

Jo h n B a ile y Jo n e s, o f S o u th D a k o ta , to b e

U .S . d istric t ju d g e fo r th e d istric t o f S o u th

D ak o ta v ice F red J. N ich o l, retired .

Ja m e s C . C a c h e ris, o f V irg in ia , to b e U .S .

d istric t ju d g e fo r th e e a ste rn d istric t o f V ir-

g in ia v ic e a n e w p o sitio n c re a te d b y P u b lic

L a w 9 5 -4 8 6 a p p ro v e d , O c to b e r 2 0 , 1 9 7 8 .

D E PA R T M E N T O F JU ST IC E

D e n n y L . S a m p so n , o f N e v a d a , to b e U .S .

M a rsh a l fo r th e d istric t o f N e v a d a fo r th e

te rm o f 4 y e a rs v ic e R ic h a rd J. D u n n , te rm

ex p ired .

IN T H E A IR F O R C E

T h e fo llo w in g -n a m e d o ffic e rs fo r p e rm a -

n e n t p ro m o tio n in th e U .S . A ir F o rc e , in

ac-

c o rd a n c e w ith se c tio n 6 0 1 , title V I,

T ran si-

tio n P ro v isio n s, D e fe n se O ffic e r P e rso n n e l

M a n a g e m e n t A c t o f 1 9 8 0 , w ith d a te s o f ra n k

to b e d e te rm in e d b y th e S e c re ta ry o f th e A ir

F o rce.

L IN E O F T H E A IR FO R C E

T o b e m a jo r g en era l

A b ra h a m so n ,

Jam es A ., .

A ck er, W illiam P , .

A h m an n , Jam es H .. .

A rm stro n g , S p en ce M ., .

B ag in sk i, Jam es I., .

B ax ter, W alter H ., III, .

B eck , S tan ley 0 ., .

B ed k e,

E rn e st A ., .

B e n n e tt, D o n a ld W . .

B o v erie, R ich ard T ., .

B o w lin g . M elv in 0 .. .

B ro ad w ater, T h eo d o re D .. .

B ro w n , B ill V .. .

B ro w n ,

Jam es L ., .

xxx-xx-xxxx

xxx-xx-xxxx

xxx-xx-xxxx

xxx-xx-xxxx

xxx-xx-xxxx

xxx-xx-xxxx

xxx-xx-xxxx

xxx-xx-xxxx

xxx-xx-xxxx

xxx-xx-xxxx

xxx-xx-xxxx

xxx-xx-xxxx

xxx-xx-xxxx

xxx-xx-xxxx

O ctober 20, 1981

B ro w n , Jam es R ., .

B ro w n , N o rm a T ., .

B u ck , Jo h n T .,

B u ck m an , L o u is C ., .

B u rn s, K en n eth D ., .

B u rp ee, R ich ard A ., .

C am p b ell, W illiam J., .

C ath ey , C arl H ., Jc., .

C h ain , Jo h n T ., Jr., .

C h u b b , M elv in F ., Jr., .

E d d in s, N eil L ., .

E d w ard s, G eo rg e A ., Jr., .

E d w ard s, Jay T ., III, .

E n n ey , Jam es C ., .

E v an s, D o n ald L ., .

F u lch er, M artin C ., .

G arriso n , L aw ren ce D ., .

G o o d all, H arry A ., .

G rah am , Irw in P .. .

G ray , D av id L .,

G reg o ry , Jack I., .

H aeffn er, F red A ., .

H all, T itu s C ., .

H a llo ra n , P a tric k J., .

H eck er,

G u y L ., Jr., .

H en d rick s, G erald K ., .

H o o v er, W illiam W ., .

K elley , R o b ert E ., .

L arso n , D o y le E ., .

L ig h t, Jam es E ., Jr., .

L y n ch , G eo rg e C ., .

M acL aren , W illiam G ., Jr., .

M a rk s, Jo h n B ., Jr., .

M arq u ez, L eo , .

M arsh all, Jam es H ., .

M asterso n , W illiam E ., .

M ax so n , W illiam B ., .

M cC arth y , R o b ert F ., .

M cC artn ey , F o rrest S ., .

M cC artn ey , K eith D ., .

M o h n ey , R u ssell E ., .

M o rris, H arry A ., .

N u g teren , C o rn eliu s, .

P a lm e rto n , L e ig h to n R ., .

P atto n , M arv in C ., .

P a u lk , Jo h n R ., .

P ay n e, D o n H ., .

P e e k , K e n n e th L ., Jr., .

P eterso n , M ilto n R ., .

P fau tz, Jam es C ., .

P ic k itt, Jo h n L ., .

P io tro w sk i, Jo h n L ., .

P o w ers, W in sto n D ., .

R a n d e rso n , Jo h n T ., .

R ey n o ld s, M arc C ., .

R id er, G rah am W ., .

R o g ers, A lb ert G ., .

R o h r, D av is C ., .

R u ss, R o b ert D ., .

S ax er, R ich ard K ., .

S ch ru p p , W alter C ., .

S eco rd , R ich ard V ., .

S h e rm a n , S tu a rt H ., Jr., .

S m ith , C a rl R ., .

S m ith , P erry M ., .

S m o th erm o n , Jam es P ., .

S p an g ru d , C asp er T ., .

T ay lo r, R o b ert C ., .

U sh er, W illiam R ., .

V o jv o d ich , M ele, Jr., .

W atk in s, Jack L ., .

W h itla tc h , W a y n e E ., .

W o o d s, C h arles E ., .

C H A P L A IN

C arr, R ich ard , .

D E N T A L C O R PS

K o lo d n y , S tan ley C ., .

M ED IC A L C O R PS

B ralliar, M ax B ., .

C h esn ey , M u rp h y A ., .

O rd , Jo h n W ., .

U n g er, H o w ard R .. .

L IN E O F T H E A IR F O R C E

T o b e b rig a d ier g en era l

A b el, R ich ard F ., .

A ld rid g e, D o n ald 0 ., .

A lex an d er, M ich ael H ., .

A lk ire, M elv in G ., .

A u tery , C laren ce R ., .

B ab co ck , L eo n W ., Jr., .

B arn es, Jero m e R ., Jr., .

B ack el, R o b ert D ., .

B eer, C arl N ., .

B ell, K en n eth H ., .

B ish o p , C h arles E ., .

B o d d ie, Jam es T ., Jr., .

B o w d en , W illiam P ., .

B ran d t, T h o m as C ., .

B reck n er, W illiam J., Jr., .

B ro o k s, E lm er T ., .

B ro w n , D o n ald D ., .

B ro w n , S tan fo rd E ., .

B ru n o , A m erica P ., .

B u d n er, Jo h n R ., .

B u h ro w ,

R o b ert E ., .

B u zard , L y m an E ., .

C allag h an , Jam es T .. .

C am p b ell, D u n can W ., .

C am s, M ich ael P . C ., .

C asey , A lo y siu s G ., .

C assid y ,

D u an e H ., .

C au d ry , R o b ert D ., .

C h arles, W illiam M ., Jr., .

C o n n o lly , Jo sep h H ., .

C o n stan tin e, W illiam M ., .

C o o n ey ,

W ilso n C ., .

C raig , T h o m as L ., .

C u n n in g h am , C h arles J., Jr., .

C u rtis, L ew is G ., .

D arlin g , T h o m as G ., .

D av is, M ilfo rd E .,

D ev er, Jam es C ., Jr., .

D iv ich , C h ris 0 ., .

D o ran , Jo h n J., Jr., .

D o y le, W illiam L ., Jr., .

D rey er, C h ristian F ., Jr., .

D u g an , M ich ael J., .

D u n w o o d y , R ich ard H ., .

D u rh am , A rch er L ., .

D y er, P in tard M ., III, .

E rick so n , D u an e H ., .

F erg u so n , A lo n zo L ., .

F o rg an , D av id W ., .

G eran , D an iel B ., .

G id d in g s, E d w ard N ., .

G o o d m an , D o n ald W ., .

G o rto n , W illiam A ., .

G ran g er, Jam es I., .

G riffith , Jo h n E ., .

H am m , C h arles R ., .

H an sen , A lfred G ., .

H arb o u r, E lb ert E ., .

H arp e, W in field S ., .

H atch , M o n ro e W ., Jr., .

H ein z, E d w ard J., .

H ick ey , T h o m as J., .

H o ck er, Jesse S ., .

H o d g es, P au l H ., .

H u g h es, H arley A ., .

H y d e, Jo h n P ., .

In g ram , R ich ard A ., .

Jaco b s, D elb ert H ., .

Jaco b so n , R alp h H ., .

Jo h n so n , H an sfo rd T ., .

Jo n es, Jam es G ., .

K aeh n , A lb ert J., Jr., 0 '

K arn s, R o b ert C ., .

K im sey , M elb o u rn e, .

K irk , W illiam L ., .

L am b erso n , D o n ald L ., .

L arso n , G erald ID ., .

L ary , B u fo rd D ., .

L asater, Jo h n R .. .

L en sk i, A lb ert J., .

L itk e, D o n ald P ., .

L u ek er, R an o E ., .

L u k en s, L elan d K ., .

L u stig , S h eld o n J., .

M all, W illiam J., Jr., .

M asterso n , G o rd o n P ., .

M cC an n , R o b ert I.,

M cC arth y , Jam es P ., .

M cC au slan d , C h arles, .

M cIn ern ey ,

T h o m as G ., .

M cP eak ,

M errill A ., .

M ey er. R ich ard L ., .

M o n ah an , G eo rg e L ., Jr., .

M o o re, Jo sep h D ., .

M o rg an , Jo e P ., .

N elso n , M ich ael A ., .

N ich o ls, D av id L ., .

O ak s, R o b ert C ., .

O d g ers, P eter W ., .

O v erack er, W illiam E ., .

P ad d en , M au rice C ., .

P atterso n , R o b ert B ., .

P atto n , D av id L ., .

P eat,

R an d all D ., .

P ed ro li, A tt.lio , .

P erro o ts, L eo n ard H ., .

P etty , R o b ert 0 ., .

P etty jo h n , Jim m y C ., .

P lo w d en , R o b ert B ., Jr., .

P o e, E u g en e M ., Jr., .

P o o re, W alter H ., .

P o w ers,

G eo rg e B ., Jr., .

P rath er, G erald L ., .

P resto n , R ay m o n d C ., Jr., .

P rin ce, P h ilip S ., .

P ry o r, R ich ard W ., .

R ach el, A llen K ., .

R an d o lp h , B ern ard P ., .

R an s, D o n ald L ., .

R ich ard s, T h o m as C ., .

R o g ers, C rav en C ., Jr., .

R o sen b erg , R o b ert A ., .

S aw y er,

T h o m as W ., .

S ch w an k l, G erald C ., .

S ech ler, H en ry J., .

S h au d , Jo h n A ., .

S h aw , W illiam M ., Jr., .

S h ep p ard , Jack W ., .

S h ield s, W illiam L ., Jr., .

S h u ler, E llie G ., Jr., .

S k ip to n , C h arles P ., .

S m ith , M o n ro e T ., .

S p rin g er, R o b ert D ., .

S teere, R ich ard E ., .

S tih l, Jo h n T ., .

S to rrie, Jo h n H ., .

S tu k el, D o n ald J., .

S w alm , T h o m as S ., .

T h u rm an , W illiam E ., .

T ib b ets, L arry N ., .

T id w ell, M ario n F ., .

T o b in , T h o m as G ., .

T o d d , H aro ld W ., .

T o lb ert, W illiam T ., .

U rsch ler, R eg is F . A ., .

V au g h t, W ilm a L ., .

V io lett, R u ssell L ., .

V o g t, D o n ald A ., .

W ack er, R u d o lp h F ., .

W ag o n er, P au l D ., .

W ard , B rien D ., .

W eb b , W illiam B ., .

W eiss, B ern ard L ., .

W h arto n , B ro w n in g C ., Jr., .

W illiam s, G o rd o n E ., .

W illiam s, H aro ld J. M ., .

W in n e, C lin to n H ., Jr., .

W rig h t, C lifto n D ., Jr., .

C H A PLA IN

C o llin s, Jo h n A ., .

JU D G E A D V O C A TES

G in sb u rg , G o rd o n A ., .

L o w ry , Jo sep h R .,

T eag ard en , C . C ., .

M ED IC A L C O R PS

D o p p elt, F red ric F ., .

G reen d y k e, W illiam H ., .

M iller, M o n te B ., .

P ark er, G erald W ., .

R o g ers, B ealer T ., Jr., .

V an d en b o s, K erm it Q ., .

M ED IC A L SER V IC E C O R PS

W ag n er, D o n ald B ., .

N U R SE C O R PS

W ells, S arah P ., .

C O N F IR M A T IO N

E x ecu tiv e n o m in atio n co n firm ed b y

the S enate O ctober 19, 1981:

D E P A R T M E N T O F JU S T IC E

S ta n d fo rd 0 . B a rd w e ll, Jr., o f L o u isia n a ,

to b e U .S . a tto rn e y fo r th e m id d le d istric t

o f L o u isian a fo r th e term o f 4 y ears.

C O N G R E SSIO N A L R E C O R D -SE N A T E

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SENATE-Tuesday, October 20, 1981 - US Government ...

Documents