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Texas Legislature 4/26/89 [OA 8747] [2]
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Records of the White House Office of Speechwriting (George H. W. Bush Administration)
Mark Davis Subject Files
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This is not a textual record. This is used as an
administrative marker by the George Bush Presidential
Library Staff.
Record Group/Collection:
George H.W. Bush Presidential Records
Collection/Office of Origin:
Speechwriting, White House Office of
Series:
Davis, Mark, Files
Subseries:
Subject File, 1989-1991
OA/ID Number:
13874
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13874-011
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Texas Legislature, 4/26/89 [2]
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19
2
6
7
FUNDING SUMMARY
(Revenue change in millions of dollars)
1989
1990
1991
1992
1993
R&E expense allocation
proposal
n.a.
-1,699
-749
-814
-887
g. Enhancing Energy Security
OVERVIEW
Sufficient energy supplies at reasonable prices are vital to the economic well-being of this
country and to the preservation of our national security.
Domestic production should be stimulated but not by protectionist measures such as an
oil import fee. An oil import fee would amount to a tax increase on everyone who uses energy.
New energy exploration is needed-not more taxes.
Tax incentives can give the domestic oil and gas industry the necessary stimulus. Tax
incentives are particularly needed for the small producers who are so vital to our energy security.
Historically, independent producers have drilled a majority of America's exploratory wells.
There is a need to encourage new methods for recovering oil from old fields, as well as
finding new fields.
Our national security requires a strong domestic oil and gas industry.
PRINCIPLES
The President is committed to the development of programs to reduce America's depend-
ence on foreign oil.
The President believes that a return to high levels of exploratory drilling is needed to
achieve greater domestic production. Such exploratory drilling requires independent
producers with financial strength.
The President believes that tax incentives targeted to exploratory drilling, tertiary
enhanced recovery projects, and independent producers is the most cost-effective method
of achieving these goals.
The President believes incentives are needed because current prices of U.S. oil are low
relative to the costs of finding and producing that oil. When the energy sector recovers,
the proposed incentives would be phased out.
The President believes that at long last the Federal Government should fully decontrol
natural gas.
POLICIES
The President proposes four incentives to encourage the finding of new oil and gas fields
and the reclaiming of old fields. The credits would be phased out if the price of oil reaches $21
per barrel.
40
Banks /S&L'S
The President proposes a 10 percent credit on the first $10 million of expenditures (per
year per company) on exploratory intangible drilling costs (IDCs) and a 5 percent credit on the
balance. The credit may be applied against both the regular tax and the minimum tax but will
not eliminate more than 80 percent of the tentative minimum tax in any year in conjunction
with all other credits and net operating loss carryforwards. Unused credits may be carried
forward. The limits on the full 10 percent credit increases the proportion of the incentive going
to the smaller independents.
To encourage increased production from enhanced recovery methods, the President proposes
a 10 percent credit for capital expenditures on all new tertiary enhanced recovery projects.
Teritary enhanced recovery projects use steam, carbon dioxide, or chemical injectants to remove
oil and gas from oil fields. The credit would function in the same manner as the credit for
exploration.
The President proposes elimination of 80 percent of current preference items generated by
exploratory IDCs by independent producers under the minimum tax. IDCs are now an item of
minimum tax preference to the extent the total expense exceeds an allowance based on net in-
come and a first year amortization amount. The taxpayer is denied the benefit of amortization
relating to later years. Further, net income is reduced by percentage depletion even though
percentage depletion may be treated as a minimum tax preference. These problems are greatest
for independent producers doing exploratory drilling. The proposal addresses this particular
application of the minimum tax by eliminating 80 percent of the independent producer
exploratory IDC amount that would otherwise be included as a preference.
The President also proposes modification of the oil and gas depletion rules that discourage
the transfer of marginal wells to independent producers and result in the premature abandon-
ment of producing wells. Independent oil producers are limited in their use of depletion deduc-
tions by two provisions: (1) "proven" properties transferred from integrated oil companies to
independent producers are ineligible for percentage depletion, and (2) the deduction may not
exceed 50 percent of the owner's net income from the property. The President proposes to
remove the transfer rule restrictions and to raise the deduction limit to 100 percent of the
property's net income.
FUNDING SUMMARY
(Revenue change in billions of dollars)
1989
1990
1991
1992
1993
10 Percent credit for explora-
tory drilling
-
-0.2
-0.3
-0.3
-0.4
10 Percent credit for new ter-
tiary enhanced recovery
*
I
*
*
*
Eliminate 80 percent of ex-
ploratory IDC tax prefer-
ences from minimum tax for
independent producers
-
-0.1
-0.1
-0.1
-0.1
Modification of oil and gas de-
pletion rules
*
-
*
*
*
* $50 million or less.
41
h. Pushing Out the Research Frontier: The Superconducting Super
Collider
OVERVIEW
The Superconducting Super Collider (SSC) is a critical part of this Administration's initia-
tive to strengthen the position of the Nation as a world leader in science and technology. The
SSC holds the potential for new breakthroughs in science, technology, and education. It will
produce discoveries, innovations, and spin-offs that could touch profoundly every American.
The Superconducting Super Collider will be the world's most powerful atom smasher, produc-
ing particle collisions with total energies approaching 40 trillion electron volts, an energy 20
times greater than the highest energies available in the world today. The heart of the facility
is a 53 mile racetrack shaped accelerator. Particles will be guided around this accelerator by
nearly 10,000 state-of-the-art superconducting magnets. The total project cost is estimated at
$5.9 billion, the largest pure science project ever envisaged for actual construction.
"We will succeed in that competition by doing what we do best-by exploiting our
comparative advantage. And our greatest single strength for the future is not mining or
manufacturing or even agriculture-it is our ability to expand the limits of our knowledge.
From that will flow the scientific and technological advances that will enable us to compete
and to raise the living standards of all the nations of the world."
George Bush
PRINCIPLES
The Administration is committed to the construction of the SSC. The SSC will be a one-
of-a-kind experimental facility that will ensure continued progress in advancing our
knowledge of matter and energy at its most fundamental level.
The SSC will provide the capability for the U.S. to remain the world's leader in the field
of high energy physics well into the next century.
The SSC will be used by scientists around the world. The facility will attract an inter-
national community of scientists who will travel to the U.S. to conduct state-of-the-art
research.
The SSC will also serve as a valuable training ground for students from over 100
university-based research teams located across the country.
The Administration believes that the SSC should be a truly international facility. One
third of the total project funding should be provided by non-Federal sources such as the
host State and foreign countries that will share in the scientific and technological benefits
that will accrue from the SSC.
POLICIES
The President is proposing budget authority of $250 million in 1990 for the Federal share
of the construction of the Superconducting Super Collider.
The current request will allow DOE in 1990 to complete site-specfic designs of the techni-
cal systems and conventional construction facilities. Increases are also being proposed in the
operating budget for the design, fabrication, and testing of the superconducting magnets by
42
PROPOSED CHANGE
(In millions of dollars)
Dollar
Percent
1989
1990
Change
Change
Budget Authority
100
250
+150
+150
Outlays
100
206
+106
+106
U.S. industry. Finally, construction funds are proposed to order long-lead time, critical procure-
ments such as power stations and superconducting materials. The actual initiation of conven-
tional construction on the site will be dependent upon the details of the non-Federal cost sharing
commitments to the project obtained in 1990.
FUNDING SUMMARY
(In millions of dollars)
1989
1990
1991
1992
1993
Budget Authority
100
250
392
494
450
Outlays
100
206
375
380
370
i. Expanding Biomedical Research: The Promise of a Healthier Future
OVERVIEW
Biomedical research holds out the promise of a healthier America, made possible by im-
proved understanding of disease, refined prevention techniques, and better therapies.
Progress requires both knowledge and readiness-a readiness to seek out and use valu-
able discoveries. For example, scientists recently discovered that frogs produce magainins,
humans. which shield them from infection. This discovery may lead to powerful new antibiotics for
The Administration seeks to accelerate basic research in partnership with industry, which
has the role of developing new applications and marketing them. New partnerships are being
formed to shorten the time between laboratory discoveries and their application.
Promising new techniques, like mapping of the human genome, hold new opportunities to
discover the cause of many diseases, leading to their future remedy.
43
THE WHITE HOUSE
Office of the Press Secretary
For Immediate Release
February 6, 1989
PRESS BRIEFING
BY
SECRETARY OF TREASURY NICHOLAS BRADY;
DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET RICHARD DARMAN;
ATTORNEY GENERAL RICHARD THORNBURGH;
CHAIRMAN OF THE FEDERAL RESERVE ALAN GREENSPAN;
CHAIRMAN OF FEDERAL HOME LOAN BANK BOARD DANNY WALL;
HEAD OF FEDERAL DEPOSIT INSURANCE CORPORATION WILLIAM SEIDMAN;
COMPTROLLER OF CURRENCY
Room 450
Old Executive Office Building
4:35 P.M. EST
Q
What's this going to cost the taxpayers?
SECRETARY BRADY: Thank you, Mr. President.
From the day five months ago that I was sworn in as
Secretary of the Treasury, achieving a sound and responsible
resolution to the savings and loan crisis has been a top priority.
As the President has said, there are no simple or painless solutions
to the problem. When he took office just 18 days ago, the President
reaffirmed our commitment to fix it now, fix it right, and fix it for
good. He also directed us to consult with Congress, and this we have
done.
Two watch words guided us as we undertook to solve this
problem: never again. Never again should we allow a federal
insurance fund that protects depositors to become insolvent. Never
again should we allow insolvent federally insured deposit
institutions to remain open and operate without sufficient private
capital at risk. Never again should we allow risky activities
permitted by the states to put the Federal Deposit Insurance Fund in
jeopardy. Never again should we allow fraud committed against
financial institutions or depositors to be anything but a serious
white collar crime. We're going to find the wrongdoers, as the
President said, recover the assets they stolen, and put them in
jail for a very long time.
The plan I'm about to describe to you meets all of these
requirements. It is a blueprint for comprehensive reform and
financing. It is supported by all the federal bank regulators -- the
Federal Reserve, the Comptroller of the Currency, the Federal Home
Loan Bank Board, and the Federal Deposit Insurance Corporation.
I will first describe the reform program and then turn to
the financing structure. But before I begin, let me stress that
insured depositors need not worry. Insured deposits are as safe
today as they were yesterday, regardless of whether these savings are
in savings and loans or commercial banks. Savers with insured
accounts will continue to be protected in the future. The banks that
are open today will be open tomorrow. Our aim is to ensure that
there will be no disruption of services in local communities. Above
all, federally insured savings are and will remain backed by the full
faith and credit of the federal government.
Now for the reform program. The current organization of
the thrift system dates back to the New Deal era. However, as the
events of the 1980s have demonstrated, this system is antiquated.
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The Federal Home Loan Bank Board, under the leadership of Chairman
Danny Wall, has addressed this crisis in an expedited manner, under
extremely difficult circumstances, with very low funding, and a
limited staff. The men and women who work at the Bank Board and the
FSLIC deserve our thanks for this tireless effort under difficult
circumstances.
But to correct the long-term structural problems
inherent, we proposed the creation of an independent insurance agency
to protect depositors. FSLIC will be consolidated with the FDIC.
The existing expertise and manpower of the FSLIC will be incorporated
into the FDIC. However -- and I stress this point -- two separate
insurance funds, with separate premium screens, one for the S&Ls and
one for the commercial banks, will be maintained. The two separate
funds cannot be comingled.
In conjunction with this step, we propose to reorganize
the existing regulatory structure to ensure the availability of home
financing in the future. The entire supervisory structure will be
accountable to the Chairman of the Federal Home Loan Bank System
instead of to the industry they regulate. And the Chairman of the
revitalized Federal Home Loan Bank System, like the Comptroller of
the Currency, will report to the Secretary of the Treasury.
In a further measure to put our financial institutions on
a sound footing, we will require that the level of private capital be
uniform for all banks and S&Ls in adequate quantities to act as a
buffer to the federally insured deposit funds. Therefore, by June 1,
1991, all insured institutions must meet the uniform capital
standards applicable to FDIC. insured banks. For the savings and
loans, this will mean roughly doubling the required capital.
Further, we are upgrading safety and soundness measures.
If this plan is enacted, in the future, depositors will be protected
through a range of new measures, including a capital requirement that
will be pegged to the risk of the S&L investments; stricter standards
for granting insurance, prohibitions in restrictions on growth and
risk-taking by undercapitalized institutions; and where risky
activities authorized by the states pose a threat to the insurance
fund, federal deposit insurance standards will prevail.
Requirements for receiving federal deposit insurance will
be determined by the FDIC. There will be no more windmill farms, no
prize cattle herds financed by federally guaranteed deposits. And
the new uniform accounting, supervisory and disclosure methods will
help enforce these measures.
Lest anyone have any doubts about how serious we are
about cleaning up the thrift industry and keeping it clean, we are
upgrading enforcement and increasing penalties to make fraud against
the financial institutions and depositors a most serious white collar
crime. Under our plan, the maximum civil penalty will be increased
from the current $1,000 per day to $100,000 per day. Under our plan,
the U.S. government will make every effort to recover the squandered
funds by increasing funds available for enforcement.
These reform measures are vitally important to the future
of the thrift industry. Without them we will not have a healthy
private savings and loan industry to provide home financing to
Americans. But, as you all are acutely aware, reform and a financial
solution to the problems of the current system go hand in hand.
When combined with the $40 billion already spent, the $50 billion of
new funds provided by this program will bring to $90 billion the
total amount available to address the problems of insolvent S&Ls.
We believe it is essential that we resolve with all
deliberate speed the cases of the insolvent S&Ls you've all read
about. We will do so through the creation of a new organization
called the Resolution Trust Company, the RTC. It will be a
corporation whose function is to isolate insolvent S&Ls, separate
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them from healthy ones, and resolve them in an orderly fashion. The
RTC mechanism will allow one consolidated resolution process where
accounting for and controlling the funds will be a clear and
straightforward process.
In short, strict accountability will be ensured. The RTC
will not have a. big staff and the FDIC-will manage the-resolutions.
The work of the RTC will be overseen by a board consisting of the
Secretary of the Treasury, the Chairman of the Federal Reserve, and
the Comptroller General. And a funding corporation will sell $50
billion in bonds over the next three years to finance the
resolutions.
Our plan for refinancing the recovery and restructuring
of the S&L industry uses both private and public funds to resolve
insolvent thrifts. This plan is on budget. In other words, every
set of additional public funds spent counts as an increase in budget
outlays. Funds for the payment of principal will come from the S&L
industry itself.
In all, this plan provides funds for three purposes.
First, S&L industry and Treasury funds are used to finance the RTC's
resolution of the insolvent thrifts. Second, S&L insurance premiums
are used to create an insurance fund for healthy S&Ls. And third,
increase commercial bank insurance premiums help bring the FDIC
insurance fund for commercial banks up to a fully funded level. But
let me reiterate, no commercial bank insurance premiums are used to
resolve insolvent S&Ls or to go into the S&L insurance fund.
The S&L industry financing comes from three sources --
retained earnings of the Federal Home Loan Banks, funds from the
disposal of assets received by the insurance fund from insolvent
S&Ls, and deposit insurance premiums charged to individual S&Ls.
Commercial bank resources required to bring the FDIC fund up to a
fully funded level will also come from an increase in insurance
premiums. The FDIC will reduce insurance premiums to both commercial
banks and S&Ls once it determines that their respective funds are
fully financed and pegged to the more historical reserve-to-deposit
ratio of 1.25 percent.
FSLIC and the FDIC will immediately begin a joint
supervisory program -- by "immediately," I mean tomorrow . with
personnel also contributed by the Federal Reserve and the officer of
the Comptroller of the Currency. Over the next several weeks, FDIC
personnel will assume supervisory control of insolvent S&Ls to
protect depositors. This program will stabilize these institutions
by curbing losses and will give a head start for the tough job ahead.
This then is the administration's solution to the savings
and loan crisis. If enacted by Congress in a timely manner, it will
provide a sound, long-term solution to the S&L problem. I join the
President's call on Congress to work with us to turn this plan into
law as soon as possible. Working together, we can recreate and
rejuvenate the vital thrift industry which has served our country so
long and so well in the past.
Q How much is it going to cost?
Q
How much money do you think it's going to cost the
taxpayers? I mean, we know about the $90 billion. If you could give
us an idea of what it's actually going to cost out of our pockets.
SECRETARY BRADY: Well, $90 billion is both -- it counts
for money that's been spent and the $50 billion that will be spent.
Our best estimates in the first 10 years is that it will come roughly
half from the industry and half from the taxpayers.
Q
Is that all the money that it's going to cost us --
$90 billion?
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- 4 -
SECRETARY BRADY: That's what we think. We think the
problem -- the size of the problem is $90 billion. Actually there is
a slight reserve in there so that if there are any unforeseen
unpleasant circumstances that show up, we've got some room in there
to take care of it.
Q
Let me make certain I-understand that If it's half
from the taxpayers and half from the S&Ls, that's $45 billion from
the taxpayers and over 10 years it's $4.5 billion a year?
SECRETARY BRADY: That's about right.
Q
Mr. Secretary, there -- in the fact sheets we were
given, it says there is -- of the $40 billion already committed that
the S&L industry will pick up part of that and that Treasury the
rest. I don't understand how you get the $40 billion.
SECRETARY BRADY: I'm going to let Dick Darman comment on
that. (Laughter.)
Q
Can you explain the relationship of the $45 billion
to the estimate here that there was a $40 billion already committed
and that Treasury will pick up the rest of that?
DIRECTOR DARMAN: You people are too tall for me.
Let me try to give you a more detailed breakdown. In
Fiscal Year '90, the net budget outlays associated with this,
everything considered, the new element that has to go to cover some
interest and Treasury contribution to some funding of the old piece
which is still left over for funding, which is what I think you are
referring to, would be $1.9 billion for Fiscal Year '90, $6.0 billion
for '91, $3.8 billion for '92, $3.7 billion for '93, $1.5 billion for
'94. That's a total of, if you add $11.1 for Fiscal Year '89, which
deals with some of what has already happened -- a good deal of what
has already happened -- that's not new -- the total for '89 through
'94 would be $28.1 billion. I think you may have that in the fact
sheet. I haven't seen the latest version.
The number for '89 to '99 -- comparable number -- would
actually be $39.9 billion on our estimates.
Q
I take it you're estimating the funds -- a couple of
funds will be capitalized by that? Is that the reason, and that the
premiums would decline or what? or that the amount -- the
contributions would decline?
DIRECTOR DARMAN: No. These numbers bounce around for a
variety of reasons, and -- you mean, over time? All that's left to
pay for as you move out is the -- or, the main thing left to pay for
is the Treasury contribution to interest. It's offset by some other
things that are happening -- some asset sales along the way, some
premiums coming in, things going out. There are a lot of flows, but
the nets are the ones that I gave you. We can give you a more
detailed backup if you'd like to see it all the way across.
The Treasury payments for the bond interest itself -- and
then I'll retire from the podium and let it get back to substance,
not numbers -- for the bond interest itself, those numbers go in
Fiscal Year '91, .4; '91, 1.6; '92, 0.9; '93, 0.8; '94, 1.1; and the
five-year total for that component is $6.3 billion. So that is part
of the 28 billion.
Q
And that is taxpayer payments to help pay for the
bond interest? That's separate and beyond what the savings and loans
have contributed?
DIRECTOR DARMAN: It is in addition to what they will
have contributed. Let me just clarify one thing. There is zero
Treasury or public or taxpayer -- whatever label you want to use --
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money that is involved with respect to the principal of these bonds.
Those are covered entirely and in advance by private sources. There
is, however, a shortage when it comes to servicing the interest, a
projected shortage, when it comes to serving the interest on these
bonds. And to make sure that the bonds can be sold at a low cost in
the market, the Treasury is saying it will cover the difference
between what will be covered by- the premium flow for that interest
and the total interest burden. That's the number that I gave you for
interest. And it's only the interest that is the public money.
Indeed, it's not all of the interest, as your question suggests.
It's only a portion of the interest, and it's none of the principal
-- zero on the principal.
Q
I take it that number is the 39.9 -- that's the
taxpayers number? Not 45, it's 39.9?
DIRECTOR DARMAN: The 39.9 is the total net of everything
over a 10-year period, that's correct. And it bounces around year to
year.
Q
Secretary Brady, President Bush said that he did not
know -- said there was no guarantees that this higher cost for
bailing out the S&Ls would be passed on to the consumer. Do you have
any concern at all about the recent trend towards higher interest
rates in the United States and the affect that has on the dollar?
SECRETARY BRADY: Well, to get to President Bush's
question, it was asked first of all, there's no way of knowing
that'll be passed on to the depositor. But competition is a very
hard force in this country, and perhaps those who pass it on won't
get the deposits; the guys that might absorb it will get the
deposits. So I don't think there's any way of saying whether it will
or won't be passed on until we see how it works. My own private
opinion is competition will take over and the guys that don't pass it
on are -- will be able to give the depositors more money.
Q
Are you concerned about interest rate levels at
present, though? The trend towards higher rates?
SECRETARY BRADY: I think you better wait until Chairman
Greenspan gets up here. I don't want to comment on that.
Q
You said that $40 billion has already been spent.
But $40 billion has been committed, at least the way I understand
this. Can you explain why you're only having to raise $50 billion?
SECRETARY BRADY: Well, the problem is somewhere between
$80 billion and $90 billion big. When people say that, and all the
estimates that you've been reading over the past months, they also
include in that figure that amount of resolutions that have already
been taken care of by Danny Wall and FSLIC. So you shouldn't add
that to the total. You add the 40 that's been in the past and what
we say is some 40 to 50 to go, and that gets to the 80 and the 90.
Q
But the money -- what has been committed in the
future, but that money hasn't already been laid out by the
government.
SECRETARY BRADY: Well, in a sense, it has been laid out
by the government because it's been committed in bonds and
resolvements that the FSLIC has made. So someday you've got to pay
those off, so it's committed.
Q
But there will be adequate funds in the FSLIC to --
SECRETARY BRADY: There are adequate funds in this
program to pay off not only what has been committed before December
31st, 1988 and what we are proposing from here on.
Q
How much of this will require congressional
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legislation and how much of it can be done administratively without
Congress' approval?
SECRETARY BRADY: In terms of congressional legislation,
all the first part of what I mentioned to you this afternoon, which
is the creation of the Resolution Trust Company and certainly all of
the reforms that go.. along with that -- increasing the penalties and
the like, take congressional action. But starting tomorrow morning,
Chairman Wall and Chairman Seidman have said that they're going to
put the two funds together -- FSLIC from an administrative standpoint
will start to go into FDIC, although the two funds will remain
separate.
Q
Mr. Secretary, I'm puzzled by the fact that the fact
sheet there's a small, only 10-percent increase in the insurance
premium to be paid by the S&Ls and an increase of nearly 50 percent
to be paid by the banks. Since you're saying that these premiums are
not going to be comingled, why are the bank proportionately taking a
much bigger hit than the S&Ls?
SECRETARY BRADY: Well, to start off with, the banks come
from a much lower level and the funds that are generated out of the
bank premiums to take a fund which is at a historical low level
compared to what it should be and bring it back up. And you can't do
that in one year; it takes some time.
Q
If I may follow up, what are some of the problems
that have accrued apparently in recent years with the banks that
require a virtual doubling of the bank's insurance premium?
SECRETARY BRADY: Well, we can get into that a little bit
later; Bill Seidman can tell you. But the same problems that the
banks have had -- I mean the same problems that the S&L industry have
had, the bank industry has also had. It isn't just particular to the
S&L industry.
Q
Mr. Secretary, when you reorganize the Bank Board,
do you anticipate Mr. Wall will remain as Chairman?
SECRETARY BRADY: He will remain as Chairman.
Q
Mr. Secretary, I know when you fellows start talking
about a billion here and a billion there, to paraphrase Ev Dirksen,
you're not yet talking about real money. But I need the difference
between the $39.9 billion that Dick Darman talked about and the $45
billion that you talked about clarified, please.
SECRETARY BRADY: Dick?
Q
Is that just difference in estimates or is that part
of round figuring the other more precise figure?
DIRECTOR DARMAN: I think the Secretary was rounding, if
I'm correct.
SECRETARY BRADY: Correct.
Q
Is that right, Mr. Secretary?
Q
Could we get the total figure that the taxpayer is
going to have to pay? Mr. Darman only gave us the five-year figure.
What is the total amount?
DIRECTOR DARMAN: I gave you a five-year figure of $28.1
billion and a 10-year figure of $39.9. I don't have the figure over
the whole life, but the proportion of the interest that is covered by
the public sector rises as you go beyond 10 years. But the present
value of that is an extremely small number because, obviously, you're
talking about 20, 30 years from now.
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- 7 -
Overall, just to give you a rough feel, if you looked at
the total expenditures involved and you said, what percent is public?
In five years it's about 25 percent. Over the 10-year period it's
about 42 percent. Over the 30-year period, in nominal terms, it's
about 54 percent. That is not the correct way to look at this. If
you looked at it in present value terms, the public share would be
substantially smaller. But if you looked at it the way people
ordinarily look at it, you would say over the 30-year life, it would
be about half and half.
Q
Dick, in terms of your short-term problem and what
the President has to do on February 9th, this will require a line for
additional outlays in the Fiscal '90 budget, is that correct?
DIRECTOR DARMAN: This will be included in the February
9th presentation with, I hope, exactly the numbers I've read to you
now. targets. And we will, I hope, still meet the Gramm-Rudman-Hollings
Q
So to be specific, that means $1.9 billion
additional in Fiscal '90?
DIRECTOR DARMAN: Obviously, if you're going to spend
this money and it's treated as outlays and you're going to budget it,
then it means it's got to be in the budget. It will be in the budget
and I would hope and expect we will still meet the
Gramm-Rudman-Hollins targets.
That said, I might note that the baseline estimates that
have been done prior to our doing this analysis presumed that there
would be about this level of expenditure required. So it is not
something which suddenly shows budget planning way off. It fits
roughly within the funds that have been allocated.
Q
But to be specific, that's $1.9 billion over and
above what the Reagan administration left you?
DIRECTOR DARMAN: No, that's incorrect. No, it's $1.9
billion in '90 period. In fact, in the Reagan budget, that number
was $2.1 billion. So it's slight -- it's almost the same as in the
Reagan budget.
Q
To follow that, the Reagan budget also had $10
billion for '89 and you've got $11.1 billion. So you've dumped some
past. of your current costs that went over it, you dumped it back into the
DIRECTOR DARMAN: Rich, if you'll pardon my saying so,
the word "dump" is not really appropriate. (Laughter.) The November
estimates were done before the December action. When we put out our
budget, you will see that we take account of the December action.
And because the December action was taken after the November
estimates, it wasn't in those estimates, but it will be in our
estimates. We haven't dumped anything. We will properly account for
what has already been done.
Q
Mr. Brady, the competitive implications of requiring
the S&Ls to be brought up to a standard of financial management that
banks meet is likely to produce fewer of the benefits that bring
deposits to them in the first place. Has this contingency been taken
into effect in assessing future ability to contribute to this deposit
premium fund?
SECRETARY BRADY: Yes. I think that the fact that we're
requiring more capital in the system and that the whole system is
sounder will, in effect, reduce the amount of money they have to pay
for their deposits. It should come down.
Q Do you expect them to -- there be a failure rate as
they try to bring themselves --
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SECRETARY BRADY: Well, there may be some, but in the
long run we'll have a much sounder and safer system. We've got some
assumptions for institutions not being able to stand the competitive
climate in our assumptions. It's accounted for in the figures. But
I don't think it's going to be all that big.
2
sir, are you anticipating to continue the moratorium
on S&Ls and the banks going from one fund to the other, or --
SECRETARY BRADY: We are -- that moratorium, if the
legislation is enacted, will be part of the legislation.
Mr. Attorney General, they want to ask you a question.
ATTORNEY GENERAL THORNBURGH: There are really two
important roles that the law enforcement community can play here.
One is the obvious prosecution of those persons who have violated the
laws in connection with failures and shortfalls in the system as it
presently exists. The other is to provide some suggestions for
remediation as we develop these cases and uncover patterns that can
be dealt with better within the regulatory structure.
The review of the Department of Justice activities in
this area began shortly after I assumed office, and we are able to be
fairly precise about where the needs are and how we can utilize the
figure that has been announced today as a goal for increased
resources for the Department of Justice. The $50 million will be
allocated to increasing our investigative capability through the
Federal Bureau of Investigation, providing more prosecutors and more
support personnel in the areas in which these problems exist. And in
addition to resources, the increased civil and criminal penalties
which Secretary Brady spoke about, the addition of new seizure and
forfeiture language which will enable us to recoup some of the
resources that have been diverted out of the system all provide a
package that we are, I think, confident will greatly enhance the
ability to contribute to restoring the credibility and integrity of
the system as a whole.
Q
Are those, sir, who mismanaged in the past, largely
beyond your reach?
ATTORNEY GENERAL THORNBURGH: We have a number of
indictments that have resulted in convictions thus far, a number
awaiting trial, and a number of investigations in various stages.
It's been clear, however, that lack of resources has been a major
problem in providing the deterrent capability that we ought to have
in our law enforcement operations.
Q
Since about half, or 40 percent or half of these
frauds or collapses have occurred in Texas, do you plan to allocate
about 40 percent or half of the enforcement resources to Texas, too?
ATTORNEY GENERAL THORNBURGH: Well, as you know, we
already have a substantial commitment to the Dallas task force and we
will be looking at ways in which to bring that up to the level
necessary to pursue every allegation within that jurisdiction, but we
have the advantage there of not only having a head start in terms of
the placement of resources, but a laboratory within which this
special effort has been undertaken that can be used in replicating in
other districts across the country.
Q
If I could ask Secretary Brady -- President Bush in
his opening remarks said that broader factors in the economy figured
into the S&L crisis that we have now. Many people feel that this
proposal will be simply throwing good money after bad unless some
more steps are taken to deal with the highly-leveraged position that
the overall economy is in. That is, the creation of unsecured notes,
the junk bonds that are used in leveraged buyouts, and so forth,
which they believe has actually contributed to the condition that the
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- 9 -
S&Ls find themselves in now.
SECRETARY BRADY: Well, I don't really think that's what
caused the problem in the S&L industry. The S&L industry problem was
caused by mismanagement to some extent, fraud to some extent, but
also some severe depressions in some of the industries that these
people did. business in.
Also, it's a mistake, we have found out, to federally
insure one side of the balance sheet and on the other side of the
balance sheet let the institutions who can go and get federally
insured funds invest in any kind of activity that they want. So the
main stem of this program is to make sure that two things happen --
if people want to do that, they've got an awful lot more of their own
money at risk first so that the federal government has some cushion
there before they have to come up with their guarantees, but also to
make sure that the type of investments that these people can get into
is severely restricted from what they were.
Q
How about the LBOs? Do you think that there should
be any actions taken to divert the level of activity that's going on
now?.
SECRETARY BRADY: We've had extensive hearings on this
subject. I'm sure you read about the results of those hearings --
Chairman Greenspan testified, I testified. I think the general
conclusion, not only from the people in Congress who listened, but to
those of us that testified, is that this is a trend that we should
watch very closely, that some of the reasons that we should be
concerned about it are more philosophical reasons, which are that so
much of our talent and expertise in this country is used to come up
with financial engineering when the rest of the world is setting long
term plans. But for a fix right now, I think the general conclusion
so far, from the people that I've talked to that come out of those
hearings, is people want to watch and wait some more.
We'll just take a couple more questions. We're going to
-- we have a complete briefing for those who want to stay and some
fact sheets to hand out, but why don't we take two or three more
questions.
Q
Mr. Secretary, can we go back to the $40 billion?
As I understand it, is the amount of notes that were issued under Mr.
Wall's resolution -- right?
SECRETARY BRADY: I'm going to let Mr. Darman come up
here and repeat what he said before to you.
Q
How is that going to be repaid?
DIRECTOR DARMAN: It's the the $40 billion is not the
amount of the notes. About 20 is the amount of the notes, and the
remainder is an estimate of the value of the yield maintenance
agreements that are associated with those notes, and other costs
associated with those deals. The notes -- the roughly $20 billion in
notes have already been scored as outlays in the federal budget. The
remaining portion has not yet been scored because in most cases the
remaining portion has not yet been paid. The deals have been
concluded, the obligations are there, but the additional funds are
paid over time and it's a projection as to what those expenses will
be. So some of those are costs that continue into the future even
though these deals have already been concluded and the $40 billion
has already been committed.
Some of that continuing stream can be funded from the S&L
premiums, but that when you add up everything that has to be
funded, with the premium structure that is projected, you still come
up short by the amount that I indicated over the period. So part of
the amount that I indicated you could think of -- and I identified it
specifically -- as paying the interest. The remainder is filling a
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- 10 -
gap which exists above and beyond the interest in part from the
expenses -- future expenses associated with deals already done.
Q
So what you're saying is that the principle -- no
principle will be repaid, that's limited to the $50 billion in
bonds? There is a portion of those notes and deals that you will
have to cover out of general revenue funds?
DIRECTOR DARMAN: Well, this takes all of that into
account. The 30 year cost, the 10 year, 15 -- all of that takes
fully into account a presumption as to what the repayment schedule
and how that's going to be financed and so on. And I think that will
all be laid out in the detailed fact sheets you'll get.
SECRETARY BRADY: We're going to take one more question
from this lady here. But I just want to comment on one thing. The
$50 billion that's going to be raised by the Resolution Trust Company
is coming all from S&L industry funds, that is not coming from the
taxpayers.
Q
I have a two-part question. First of all, I just
want to understand -- the $40 billion that Danny Wall committed last
year, the GAO estimates that the Bank Board is going to have a short
fall of about $26 billion. Is that what you're saying you have
included in your estimate?
DIRECTOR DARMAN: No, we don't have exactly the same
estimate, but we have a little bit different estimate than was used,
I think, by Danny Wall, and we are taking our revised estimate into
account. But what you say is the amount of the shortfall depends on
where* you say your allocating what's coming in. What's coming in --
Q
They said over ten years -- the GAO said over 10
years --
DIRECTOR DARMAN: I understand, but there's a question of
whether -- what you assume else is being paid for with the stream of
money coming in. What you'll see, I think, in the sheets that we'll
hand out is an easier way to look at it. Just separate out the
pieces, look at all collections coming in, all obligations for things
going out, and you can see what the gap is there and which portion is
paid publically and which is --
Q
But regardless of what the short fall is, you're
saying it will only be interest rates --
DIRECTOR DARMAN: No, --
Q
That the taxpayers will only pay --
DIRECTOR DARMAN: No, that's with respect to the $50
billion that Secretary Brady has correctly said will be raised, and
the principle of -- with that $50 billion, the principle obligation
-- $50 billion -- will be covered entirely and in advance by private
sources. It's not dependent on any future stream because it will be
covered, if I might say, it would be covered by the purchase of zero
coupon bonds immediately from private sources, from industry sources.
And those zeros mature and fully cover the $50 billion. This isn't
some promise dependent upon a future income stream.
Q
Well, what about the $40 billion? We understand
that for the 50, but the 40 --
DIRECTOR DARMAN: Some of that is not adequately covered
and a portion --
Q
How much?
DIRECTOR DARMAN: Well the difference, roughly speaking,
the net amount that isn't covered is the difference between the
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- 11 -
number I gave you for the interest portion and the bottom line for
total outlays.
Q
Can you give us a number? How much are taxpayers
going to have to pay of the $40 billion?
DIRECTOR DARMAN: I can't break it up that way for you.
I gave you the amount that really matters which is how much the
taxpayers are going to have to pay, period.
Q
And second, the follow-up question on that is, when
you talk about a $90 billion problem, that's on principle, that
doesn't count the interest payments, correct?
DIRECTOR DARMAN: That is a way of putting it that would
be correct. If you looked at the total debt servicing associated
with it, the number would be larger than 90, which is why some of.
these numbers we've been using here don't correctly add.
Q What's the number if you add the total amount --
SECRETARY BRADY: Let me just say, you know, that is a
way to look at it, but it -- I mean if you buy a house and the person
sells it to you for $100,000 you don't -- and somebody asks you how
much it cost, you don't say $100,000 plus all the interest that it
cost you.
Q
I do when I'm thinking about tax dollars.
SECRETARY BRADY: Well, you know, when we account for an
aircraft carrier or some capital item in the budget we don't -- we
say what the thing cost when you buy it from the guy that sells it to
you and not what the financing charges are and the portion of the
deficit over --
Q
Just humor me, how much is the total payment,
principle and interest?
Q
Can somebody else ask a question.
Q Yes, please.
DIRECTOR DARMAN: Maybe this would humor you. I have
already given you that. The total I gave you is for all of the
above, it is the way you would want it, not the small way. If we
wanted to give it the way people normally think about a house, the
number would be lower.
SECRETARY BRADY: We're going to -- thank you all very
much. We've got Richard Breeden and Bob Glauber here who have got
fact sheets and all of the backups and we urge you to stay here and
work with them and get the subject cleared up.
END
5:15 P.M. EST
Testimony
of
Thomas W. Luce III
Chairman of the Texas
National Research Laboratory
Commission
before the
Subcommittee on International
Scientific Cooperation
of the
House Committee on
Science, Space, and Technology
March 8th, 1989
Mr. Chairman, Members of the Committee, it is a pleasure to appear
before you today to testify concerning the Superconducting Super Collider (SSC).
I am the Chairman of the Texas National Research Laboratory Commission (TNRLC),
the state agency which is responsible for the State of Texas' participation in
the development and operation of the SSC.
My prepared testimony today will focus on 3 important issues:
1.
The national interest in proceeding with construction of the SSC;
2. The role of the State of Texas in funding the construction of the
SSC; and
3.
Foreign participation in the SSC.
National Interest in Commencing Construction of the SSC
As Chairman of the TNRLC, I am asked from time to time to justify the
commencement of construction of the SSC at a time when every expenditure in the
Federal budget must be scrutinized and prioritized.
First, let me say I believe that nothing less than our world leadership
in science and related technology is at stake. Our country's efforts to solve a
host of issues ranging from economic competitiveness to environmental problems
will depend on our commitment to maintaining this leadership.
While we cannot predict with certainty the exact applications which will
flow from the construction and operation of the SSC, history tells us there will
be numerous applications of enormous importance.
Throughout history, pure or basic scientific research projects such as
the SSC have laid the groundwork for the development of technologies that have
improved the quality of human life.
Luce Testimony, Page 2
Basic research led to the discovery of the electron in 1897, which in
turn led to the development of the transistor, microchips, and television.
In the last 2 decades, all of us have been impacted by the basic physics
research of the 1920s; applications of quantum mechanics have included the
utilization of microchips in personal computers and laser beams in compact disc
players. All of these products are derived from our understanding of the
behavior of individual electrons and atoms.
Proton and heavy-ion accelerators, originally built for physics
research, have been used in medical therapy for over 25 years. In the diagnosis
of illness, Magnetic Resonance Imaging (MRI) and CAT scans, which utilize
superconducting magnets, enable doctors to see inside the body and determine the
precise location and size of tumors. This once arcane medical practice impacts
100 million Americans and is now a billion dollar industry.
Fermilab is currently building an accelerator for the Loma Linda
University that will be used for the treatment of cancer.
Positron Emission Therapy (PET) scans are now being used to distinguish
the 2 major types of cancerous breast tumors.
It does not take much imagination to conclude that future research in
the field of high energy physics could some day help us to conquer cancer.
Today x-ray beams from electron accelerators are being used by industry
to produce the next generation of computer chips that will be at the heart of
future super computers.
Accelerators are also being used to remove noxious chemicals from smoke
stack emissions.
Luce Testimony, Page 3
As a result of these examples and many more, it is clear that a large
portion of U.S. technology today owes its existence to the development of modern
accelerators and related technologies. Past investments in basic research of
the interior of atoms have been repaid 100 times over in terms of new
technology, new jobs, enhanced national security, and advances in medicine. In
pure financial terms, it is easy to see why observers estimate that
approximately 1/3 of our gross national product (GNP) is based on our knowledge
of the atom.
In addition to the past history of the development of applications from
basic research in the field, today - even before we have had a ground breaking
ceremony in Ellis County, Texas - research for the SSC has already begun to
yield high technology spin-offs.
The spin-offs to date include:
- Better magnets for medical diagnostic machines using magnetic
resonance imaging, a method of looking inside the human body, that
promises to be even more useful than x-rays and CAT scans.
- More efficient techniques for tunneling that could save millions
of dollars in the construction of subways.
- A light-weight compact microwave amplifier that could boost the
effectiveness of satellite communications.
- A giant coil of superconducting cable that could store
Luce Testimony, Page 4
electricity produced by power plants at night when demand is low
and release it during the day when demand is high.
- Enhancements in hardware and software that will enable us to
remain in the race for leadership in the super computer field.
In addition to the numerous tangible "spin-offs" which we can reasonably
expect from our review of historical precedents and the advances which have
already resulted from preliminary work on the SSC, there are many intangible
benefits which we can expect from the SSC. They include:
- The attraction of many of the world's leading physicists to live
and work in the United States as opposed to the "brain drain" the
United States would suffer if the center of high energy physics
shifts to Switzerland, Japan, or Russia.
- The SSC will be utilized by over 100 American universities,
thereby strengthening the research capabilities of universities in
every section of the country.
- The SSC will be a visible and tangible commitment by our country
to science and technology and thus serve as an inspiration for
young people to pursue careers in science; and finally,
- Construction of the SSC will symbolize American determination to
Luce Testimony, Page 5
maintain our scientific leadership in the world and remain
competitive in the increasingly challenging world economy.
In summary, I submit that we must proceed with construction of the SSC.
What is the price of failing to do so? It means we will relinquish scientific
leadership in a field that has yielded enormous benefits to our society. It
means continuing a trend in our country of short term spending decisions instead
of investing in the future. If we are going to bequeath to the next generation
a deficit, the least we can do is invest today in a long range project which
will yield enormous benefits to that generation.
This is a very rich country, rich in resources and talent. But it still
requires leaders of vision to spend today and invest for tomorrow in the right
proportion. I am confident the Congress will accordingly invest in the
construction of the SSC.
The Role of Texas in the Construction of the SSC
The people of Texas feel so strongly about the importance of the SSC
that they voted in a state-wide election by an overwhelming 62% to spend $1
billion to help finance the construction of the SSC.
Surely, you say, why not, since the SSC will be located in Ellis County,
Texas. First, it should be noted that Texans voted for this financial package
even before the site selection decision was made; and second, virtually none of
the $125 million appropriated to date by Congress has been spent in Texas. Most
of the money has been spent in California, Illinois, and New York. The SSC is
Luce Testimony, Page 6
not a pork barrel project for Texas. To assure that the project is indeed
national in scope, Texas has proposed to use $100 million dollars of the $1
billion dollar package to support higher education and physics research at the
SSC site and at universities and laboratories throughout the country.
The people of Texas are committed because we see the national interest
inherent in this project and on a smaller scale, we see the same type of
tangible benefits accruing to Texas and our neighboring states. We see the
opportunity to use science and technology to transform our economy from a
natural resource and agriculture-based one to an economy based on technology.
As a result of the farsightedness of the citizens of our state, the
Commission I head is authorized today to utilize $1 billion to ensure the
development of the SSC. What we need from Congress to justify our investment is
a decision to authorize construction and to appropriate $250 million for the
construction process.
If Congress sees fit to commence construction, we are prepared to be
your financial partner.
Texas is willing to pay its fair share to ensure that the non-federal
participation goal of 30% envisioned in legislation introduced by Congressman
Hall of Texas is met. We believe this goal is obtainable with a combination of
participation by Texas as well as foreign countries.
Foreign Participation
If Congress continues to want foreign participation in the development
and operation of the SSC, we believe the best strategy to accomplish this
objective is to:
Luce Testimony, Page 7
(i) demonstrate our commitment to the SSC by Congress voting to
spend a significant amount of construction money;
(ii) ask Texas to "front load" for 2 years a portion of its
investment.
I believe this strategy will permit us to debate and decide upon the
terms and conditions under which we want foreign governments to participate.
There are many serious intellectual property issues that must be addressed. In
addition, a firm construction commitment by Congress and Texas will demonstrate
the inevitability of the SSC project. I sincerely believe this strategy will
optimize the amount and the terms of that investment.
Texas feels so strongly that this is the best strategy that we are
willing to "front-load" some of our investment for the first 2 years to meet the
30% non-federal contribution requirement.
In this regard, we would propose, Mr. Chairman, that Section 2 of H.R.
1195 be amended to allow the total non-federal contributions to the project to
meet the 15 percent and 30 percent requirements of this section. This would
allow time for Congress and the Administration to negotiate significant foreign
commitments under acceptable terms, while allowing the State to meet the
expected non-federal contribution requirement during the early phases of
construction.
In closing, I want to thank this Committee for their work in the fields
of science, space, and technology. I know you face many difficult choices with
a finite amount of funds.
Luce Testimony, Page 8
I sincerely believe the SSC can be the most important machine
mankind has ever built. I hope you reach the same conclusion.
I would be happy to respond to any questions you may have.
Thank you.
THE SUPERCONDUCTING SUPER COLLIDER
A TEXAS COMMITMENT TO NATIONAL EXCELLENCE
November 10, 1988
CONTACT: Rosanna Salazar or
Jay Rosser
512-463-1826
TEXAS LANDS SUPERCONDUCTING
SUPER COLLIDER
(AUSTIN) -- The U.S. Department of Energy (DOE) today announced Texas as the
preferred site for the Superconducting Super Collider (SSC). The SSC represents the
world's largest and most advanced particle accelerator and, as such, the world's largest
scientific instrument. Basically, the SSC will accelerate two beams of protons in opposite
directions to nearly the speed of light and bring them into collision at four points where
detectors will record previously unobserved results of such collisions.
"This is a gigantic boost for the Texas economy," Governor Bill Clements said. "This
project brings a cutting-edge technology to our state. Thousands of scientists from across
the nation and the world will participate in the project. The Super Collider is a shining
triumph for the people of Texas."
The SSC will be located in a tunnel approximately 53 miles in circumference and will be
used for the study of fundamental nature of matter and energy. Its estimated total cost is
about $5 billion with an annual estimated operating budget of about $250 million.
The site is located in the northeastern portion of Texas, approximately 25 miles south of
Dallas and 35 miles southeast of Fort Worth. It is entirely within Ellis County.
- MORE -
A significant economic enhancement will result from the state's landing the SSC. Increases
will be generated in wages and salaries, company profits, and state and local taxes. In
addition to the direct and indirect economic impacts of the SSC, it is expected that various
ancillary economic benefits will also accrue to the state, primarily through increased
research and development activities at Texas universities.
The on-site work force during construction will peak at approximately 4,500 people. Once
the facility is operating, the SSC staff will number around 2,500 and 500 visiting scientists
are expected to be on-site at any given time.
Following Presidential approval of the project in January 1987, the DOE requested
proposals for sites in April 1987 and received 43 proposals from across the U.S. In
January 1988, the seven best qualified sites were announced by the DOE. Those sites were
located in Texas, Arizona, Colorado, Illinois, Michigan, North Carolina and Tennessee.
The final site selection was based on six technical evaluation criteria: geology and
tunneling, regional resources, environment, setting, regional conditions, and utilities.
- 30 -
THE SUPERCONDUCTING SUPER COLLIDER
A TEXAS COMMITMENT TO NATIONAL EXCELLENCE
SSC - What it took for Texas to get it
6/85
Texas National Research Laboratory Commission created
by 69th legislature.
1/87
President Reagan approves for submission to Congress a proposal to
construct the world's largest and most advanced particle accelerator -- the
Superconducting Super Collider (SSC).
3/87
Texas SSC Advisory Council established to make recommendations to
Commission. Texas Commission holds first meeting and solicits
proposals from regional groups throughout state.
4/87
U.S. Dept. of Energy issues invitations for site proposals.
5/87
70th Legislature grants Commission authority to issue $500 million in
revenue bonds and, contingent on voter approval on Nov. 3, an additional
$500 million in general obligation bonds. Fourteen proposals are
submitted to Commission, and sites near Amarillo and Dallas/Ft. Worth are
selected as state finalists.
9/87
Submission of proposals from throughout the nation to DOE. Preliminary
review of proposals by DOE, followed by evaluation of proposals by a
committee appointed by the National Academy of Sciences and National
Academy of Engineering. Texas Commission begins collection of
data for environmental impact statements.
11/87
Texas constitutional amendment approved by voters. It authorizes
issuance of up to $500 million in general obligation bonds to pay for land
acquisition, utilities, buildings, roads, etc.
1/88
Best qualified list of proposers submitted to DOE.
5/88
DOE Site Task Force visits Texas for on-site review of every facet of the
the Texas proposal--from geology to local resources.
11/88
DOE announces Texas as preferred site.
1/89
Announcement of final site.
1996
Target date for start-up of SSC.
THE SUPERCONDUCTING SUPER COLLIDER
A TEXAS COMMITMENT TO NATIONAL EXCELLENCE
Advanced Technology Infrastructure
In Texas To Support SSC
Texas scientists, public and private, are pushing the
frontiers of science and technology in fields critical to the
world economy and quality of life.
The following is a description of some of the most concentrated of these efforts.
Texas has a reputation as a great place to do business, and among U.S. metropolitan
regions of more than 1 million, the Dallas-Fort Worth Metroplex showed the highest
business birth rate in the nation a result of productivity, competitiveness, and the low
cost of land, labor and capital. Many of these new businesses are producers and users of
advanced technology.
The Metroplex today ranks as the fourth largest center of technology activity in the
country. For employment growth, the Metroplex ranks in the top five regions in the
country in each of the high-tech sectors of computers, instrumentation, and
telecommunications.
These new jobs include positions on the front line of new research, as evidenced by the
fact that the region received nearly $930 million for federal R&D in 1987. In fact, the
Metroplex is the fastest growing region in the U.S. in capturing federal support for BASIC
research -- about $400 million in fiscal year 1987.
Industry-funded R&D is also significant -- Texas Instruments alone budgets about $425
million for internal research, more than half of which remains in the Metroplex. Major
corporations support university collaborative research in robotics, automation, and
manufacturing sciences.
The Metroplex stakes a strong claim in medical research, too. Southwest Medical Center
scientists brought home the second Nobel Prize in three years. Southwest Medical broke
ground in November for a Magnetic Resonance Center, expected to advance medical
research as well as provide opportunities for collaboration with scientists connected with
the Superconducting Super Collider.
Houston already houses the world's largest medical center, as well as the world-
renowned NASA Johnson Space center, and now hosts the Texas Superconductivity
Center, as well.
The Texas Medical Center comprises 39 institutions and an operating budget of over $2
billion a year. The Center leads the world in numerous fields of clinical research and
medical care, and is particularly famous for heart and cancer research. More than $200
million of research a year is conducted at the Center. Several private companies have
successfully spun off of faculty discoveries, laying the groundwork for a powerhouse
biotechnology industry.
-MORE-
As a center of aerospace technology, the NASA - Johnson Space Center and its affiliated
contractors and subcontractors serve as a dynamic foundation in building and maintaining
our country's space exploration efforts. The University of Houston at Clear Lake, by
providing educational offerings for the space industry, has helped attract further investment
in the region from additional aerospace companies that require continuing education
opportunities for their employees.
The Texas Legislature recognized the achievement of Dr. Paul Chu and the importance of
high-temperature superconductors by creating, in 1987, the Texas Center for
Superconductivity, another part of the University of Houston System. Strong participation
by the private sector in this Center is indicative of the promise of this new and exciting area
of research.
Austin leads the country in hosting two industry collaborative efforts that are each unique
in the nation.
The Microelectronics and Computer Research Corporation, after a grueling and
competitive site-selection process, found Austin to have the strongest commitment to
developing the academic infrastructure this path-breaking research effort required.
Four years later, MCC was able to tell Sematech that "Austin, and Texas, honor their
commitments." Sematech chose to leverage its $250 million/year semiconductor
manufacturing research effort with those of MCC, the University of Texas at Austin, and a
computer and electronics industry that has been thriving in Austin for years.
San Antonio's growing excellence in biomedicine has been rewarded with substantial
private support and philanthropy.
Southwest Research Institute, one of the nation's non-profit research powerhouses, the
University of Texas Health Science Center, the Texas Research and Technology
Foundation, and the Texas Research Park, combine with a tremendous military medical
infrastructure, to create a dynamic environment for both producers and consumers of
research opportunities.
Other regions of Texas foster technology as well, nurtured by the state's diverse research
programs and its network of Agricultural and Engineering Extension Services and
information networks. Bryan/College Station and Lubbock benefit from the extensive
university infrastructure in those cities. Texas' border with Mexico, because of the
explosive development of the maquiladora program, is becoming a new market for
technology products and services.
THE SUPERCONDUCTING SUPER COLLIDER
A TEXAS COMMITMENT TO NATIONAL EXCELLENCE
POTENTIAL COMMERCIAL SPIN-OFFS
Superconducting Super Collider (SSC) -- a sophisticated particle
accelerator that represents an enormous step in both energy and the
quality of light beyond existing levels. The SSC would discover not
only new particles, but new dimensions of known particles.
Particle Accelerator a machine which provides charged particles -- usually protons and
electrons -- with high kinetic energies by accelerating the particles in an electric field.
These particles enter at a low velocity with low kinetic energy and are ejected at a velocity
close to that of light with high kinetic energy. These energized particles are then
"smashed" into a target or into another quantity similarly energized. The resulting
particles give information about the constituents and forces that govern matter --
representing a fundamental step into new scientific frontiers.
The products and the knowledge gained from using accelerators ranges from medicine for
diagnosis and treatment of illness to industrial radiography. Some examples of
accelerator products and their potential uses are:
*
Medicine - the uses range from sterilization of medical apparatus and
materials to the diagnosis and treatment of diseases such as cancer.
*
Industry - uses vary from removing harmful bacteria in foods to
surveying for hydrocarbon deposits in the rock surrounding the shaft of
a well to converting certain plastics into materials that will not melt
in boiling water.
*
Computers - Through the use of soft x-rays produced by electron
accelerators, chip-makers can achieve finer resolution, allowing for a
higher density in chips. This would increase the amount of
information that fits on a chip by 1000 times.
*
Energy - Accelerators are used in the magnetic fusion program for
neutral beam heating, in obtaining relevant neutron cross-section data,
in beam-toil spectroscopy experiments which obtain data required for
analysis of impurities in fusion plasmas, and as a source of neutrons
and other particles to study materials damage in fusion reactors.
*
Superconductivity - provides an innovative x-ray technique for
locating damaged electric power cables. It also utilizes a laser device
which can be developed for uses such as monitoring the air quality in
industrial environments like coal mines, grain elevators and
chemical plants.
-MORE-
SUPERCONDUTING SUPER COLLIDER FACT SHEET
PAGE 2
*
Synchrotron Radiation - used in medical biological studies of protein
structures such as the virus that causes the common cold and the
diagnosis of cardiovascular disease.
*
Magnetic Resonance Imaging makes use of superconducting
magnets to "see" inside the human body without use of x-rays or
invasive surgery.
*
Technology - there's no better way to ensure technological leadership
for the U.S. than to make sure we are on the leading edge when it comes
to advancing world knowledge.
*
Education - the SSC will help attract the best and brightest young people
into careers in the sciences. The SSC will provide a rich training
ground for graduate students and the kind of challenging problems that
will inspire young scientists from many different disciplines.
*
International relations - accelerators are international institutions
which offer unique opportunities for international exchanges and
cooperation. The formal and informal contacts that take place routinely
at accelerator laboratories have an influence far beyond science. They
are bridges for international understanding and peace.
Future Possibilities
*
SSC uses may range from fusion catalysis using new stable particles,
which offers valuable implications for power generation, to prospecting
for oil and minerals using neutron beams.
*
The SSC will contribute to technologies and computing capabilities that
simply do not yet exist but which should push the abilities of our
machines to new levels.
*
The use of light in place of electrons in detectors that measure the proton
collisions could open the door to revolutionary changes in the way we
build and use computers.
Significance of particle accelerators to science:
Without the invention of particle accelerators, and their energy sufficient to cause the
breakdown of protons, much of science and technology as we know it would not have
happened.
If particle accelerators had never been invented, the understanding of radioactivity and
nuclear physics would have been very small. Thus, nuclear medicine and the use of
accelerators in cancer therapy would not exist. Neither electron microscopes nor the idea
of fusion power would have come into being. Nor would there be a radiation processing
industry, which is having an ever-increasing impact in developing important sterile
products for the medical industry.
-END-
THE SUPERCONDUCTING SUPER COLLIDER
A TEXAS COMMITMENT TO NATIONAL EXCELLENCE
HIGHER EDUCATION IN TEXAS:
A FOUNDATION FOR TECHNOLOGY DEVELOPMENT
Higher education and technology development represented a strong plus in Texas' quest for
the Superconducting Super Collider. Texas has the two essential components for a strong
technology/ education infrastructure: a history of making the necessary investments, and a
tradition of innovation in and out of the laboratory.
THE INVESTMENTS:
*
Texas has made a long-term investment to support quality higher
education. The Permanent University Fund and the Higher Education
Assistance Fund together support higher education infrastructure
investment, providing $610 million for research and development in the
1988 fiscal year.
*
Texas targets research funding in areas of particular value to both the
state's developing and future industries. A total of 44 research-oriented
special programs within institutions of higher education received $46
million in the current biennium.
*
Texas encourages innovation in basic and applied research through
the Advanced Research Program (ARP) and the Advanced Technology
Program (ATP). The ARP is a competitive grants program which funds
basic research in thirteen specified areas. The ATP funds applied
research with potential for commercialization within the state, in any
of ten targeted areas.
THE INNOVATION:
*
The state, in conjunction with the University of Texas System, is host to
two of the nation's most promising and innovative efforts in
collaborative effort and technology transfer: Microelectronics and
Computer Technology Corporation (MCC) and Sematech. While MCC
and Sematech are not university programs, their presence in Texas is
testimony to the commitment of Texas higher education and public
officials to developing a foundation of basic and applied research in
Texas.
-MORE-
SUPERCONDUCTING SUPER COLLIDER FACT SHEET
PAGE 2
*
Texas couples long experience in technology transfer with some of the
newest and most innovative approaches in the country. These
mechanisms will help move new products and processes out of the
laboratory and into the commercial sector.
*
The Texas Engineering Experiment Station (TEES) and the Texas
Agricultural Experiment Station (TAES) demonstrate Texas' long-
standing interest in technology assistance and transfer. Both are
components of the Texas A&M University System. They have facilities
throughout the state and conduct research in areas of direct interest to
Texas industries.
*
The Texas Innovation Information Network System (TIINS) is a non-
profit service dedicated to helping business-university relationships
develop more easily. Business people in Texas are able to quickly
identify key researchers and research programs in the Texas higher
education community through the use of a TIINS-sponsored database.
*
Technology transfer is facilitated by Texas' enlightened approach to
intellectual property at Texas institutions of higher education. Each
institution is required to have a formal intellectual property policy,
intended to encourage faculty members to commercialize the results of
their research.
*
At least twenty-five institutions foster technology development and
transfer directly, through offices specifically charged with that goal.
Two of these were given a state-wide charter for the commercialization
of university technology and all are pooling their experiences and skills
through the new Texas Technology Transfer Association.
*
The Houston Area Research Center (HARC) carries out a broad
spectrum of collaborative research and is a leader in magnet design for
the Superconducting Super Collider. HARC is a collaboration of the
University of Texas at Austin, Texas A&M University, the University
of Houston at University Park and Rice University.
-END-
THE SUPERCONDUCTING SUPER COLLIDER
A TEXAS COMMITMENT TO NATIONAL EXCELLENCE
KEY CONTACTS CONCERNING
THE TEXAS SUPERCONDUCTING SUPER
COLLIDER
The Texas National Research Laboratory Commission (TNRLC)
The TNRLC, appointed by Governor Bill Clements, is the lead Texas group
associated with the national competition for the Super Collider. The
TNRLC was established by the Texas Legislature to provide the technical
expertise as well as developing support for Texas' proposal for the Super
Collider.
Chairman:
Mort Meyerson, 512/471-8153
Executive Director:
Dr. Edward C. Bingler, 512/471-8153
Key contacts for
the Commission:
Jack Evans, Chairman
Texas SSC Authority, 214/385-2841
Martin Goland, President,
Southwest Research Inst., 512/522-2200
Gerald Giffin, President,
Houston Chamber of Commerce, 713/658-2400
Jerome Johnson, Partner
Underwood, Wilson, Berry, Stein & Johnson
806/379-5613
Peter O'Donnell, Jr., 214/742-7211
Texas Scientific Advisory Council
The Scientific Advisory Council is appointed by the Governor and serves as
science and technology counsel to the TNRLC concerning the proposal as
well as future technological benefits of the Super Collider.
Key Contacts:
J. Fred Bucy, Chairman, 214/869-0852
Peter T. Flawn, Ph.D., Vice Chairman,
512/471-1825
Perry L. Adkisson, Ph.D., Chancellor,
Texas A&M System, 409/845-4331
Texas A&M University, 409/845-4432
Austin M. Gleeson, Ph.D., Physics Department
The University of Texas, 512/471-7773
Hans Mark, Ph.D., Chancellor,
The University of Texas, 512/499-4201
The Texas Superconducting Super Collider Authority
The Texas SSC Authority was established to provide support to education,
fundraising and other programs for the Dallas-Fort Worth/Ellis County
site of the Super Collider.
Key Contacts:
Jack Evans, Chairman, Texas SSC Authority
214/385-2841
Dr. William Banowsky, President, Texas SSC
Authority, 214/385-2841
Bob Duke, Executive Director,
Texas SSC Authority, 214/987-9792
Additional Scientific Contacts:
Dr. K.W. Chen, Center of Accelerator Science
and Technology, The University of Texas -
Arlington, 817/273-2298
Dr. Albert Halff, Albert Halff & Associates
214/979-6646
E.L. (Buddy) Langley, President
General Telephone Company of the Southwest
and
Chairman of the North Texas Commission
Irving, Texas
(For comments on technology and economic
development potential)
214/812-4600
Jerry Farrington, Chairman of the Board & Chief
Executive, Texas Utilities Company, Dallas,
Texas
(For comments regarding support of utilities,
technology and economic development
opportunities.)
214/812-4600
Admiral Bobby Inman, Chairman and Chief
Executive Officer, Westmark Systems, Inc.
Austin, Texas, 512/322-2322
John V. Roach, Chairman, Tandy Corporation
Fort Worth, Texas, 817/390-3214
H. Bartell Zachry, Jr., Chairman of the Board
H.B. Zachry Company, San Antonio, Texas
512/299-1100
John Johnson, Managing Partner,
Johnson & Swanson, Dallas, Texas
214/977-9002
John Stevenson, Vice President, Bass Brothers
Enterprises, Forth Worth, Texas, 817/390-8832
Dr. Hylan B. Lyon, Jr., North Texas Commission,
Dallas, Texas, 214/6210400
Dr. Robert K. Tener, Executive, North Texas
Commission, 214/621-0400
Mr. Harden Wiedemann, President,
North Texas Commission, 214/621-0400
Mr. Scott Eubanks
The Dallas Partnership, 214/746-6733
State Public Officials
Governor William P. Clements
State Capitol
Austin, Texas, 512/4631826
Lt. Gov. William Hobby
Austin, Texas, 512/463-0010
Mayor Annette Strauss
City of Dallas, 214/670-5682
Mayor Bob Bolen
City of Fort Worth, 817/870-6111
Roy English
County Judge, Tarrant County
Fort Worth, Texas, 817/334-1441
Lee Jackson
County Judge, Dallas County
Dallas, Texas, 214/653-7555
Ellis County Contacts
G. Stephen Howerton
City Manager, City of Ennis
Ennis, Texas, 214/875-9081
Nicholas B. Jordan, Jr.
Executive Vice President
Waxahachie Chamber of Commerce
214/937-2390
C. Edwin Farrar
Managing Partner, Coldwell Banker
(former Mayor of Waxahachie)
Waxahachie, Texas, 214/937-3308
Standard D. Lambert
President
First National Bank of Ennis
Ennis, Texas, 214/875-8461
John M. McKinney
District Manager
Texas Power & Light Company
Waxahachie, Texas, 214/937-0660
Charles Pinto
City Manager
City of Midlothian
Midlothian, Texas, 214/775-8271
OFFICE OF THE GOVERNOR
TUESDAY, OCTOBER 4, 1988
CONTACT: ROSSANNA SALAZAR
(512) 463-1826
HENRY GANDY
(202) 488-3927
STATEMENT OF GOVERNOR BILL CLEMENTS
ON THE STATE OF TEXAS' FINAL PRESENTATION ON THE
SUPERCONDUCTING SUPER COLLIDER
WASHINGTON, D.C.
With me, as you all know, is Senator Gramm, Speaker Wright and
Congressman Barton. We are also joined by Mr. Mort Meyerson, who is chairman
of the Texas National Research Laboratory Commission, and Dr. Edward Bingler,
its Executive Director.
At the request of Secretary Herrington, Texas today made its final
presentation on the state's proposal for the Super Collider.
Under the leadership of this fine group here today, we recapped, for
the Secretary, Texas' unwavering commitment to this project and our dedica-
tion to its successful completion.
It's in the Texas character to continually reach for greater heights,
to set higher and higher goals. And just as the Reagan Administration is
dedicated to preparing America for a new era of progress in high energy
physics, so is Texas committed to helping the nation reach that goal.
We believe the Texas site -- with its technical merits and the
rock-solid support of Texans across our state -- is best suited to realizing
that achievement.
As many of you know, we propose that the Super Collider be built in
Ellis County, some 30 minutes south of the Dallas-Fort Worth area.
1
This location was selected because of its numerous strengths, includ-
ing an ideal geology, its proximity to a highly qualified work force, its
access to solid educational and research facilities, as well as to a high
technology research, transportation and manufacturing base.
And just as important, we firmly believe that the minimal environ-
mental impact the SSC would have on this site would allow the Department of
Energy to complete the project on time and under budget.
The resolve of Texans to host such a vital facility is great. It
stretches from Waxahachie --- which has welcomed the prospect with open arms
-- to Washington -- where our delegation has taken the lead in marshaling the
project through the budget process.
Yes, we believe that Texas has the superior site -- superior in all
respects -- for the scientific endeavor of this century.
Over the past 20 months, the Department of Energy has conducted an
exhaustive and detailed technical analysis of each of the sites under review.
Throughout, the Department has been fair and impartial, and we know
the final seven states will receive the same consideration now.
So, let me close by congratulating Secretary Herrington and the
Department for their excellent job in handling this project.
While we remain convinced that the Texas site is the best for the
SSC, we will await the Secretary's decision in late November with great
anticipation.
END
SECTION
D
INSIGHT
Sunday, April 16, 1989 Austin American-Statesman
By Dick Stanley
American-Stateeman Staff
A
sking high-energy physicists why they want
the superconducting supercollider makes the
giant particle accelerator reminiscent of the fa-
Supercollider traces
ble about the blind men who touch different parts of
an elephant.
Each describes the part he knows best.
"There are hundreds of different answers and
they're all partly true," said F. Russell Huson, a profes-
its theoretical roots
sor of physics at Texas A&M University.
Theoretical physicists such as Steven Weinberg and
Austin Gleeson of the University of Texas believe the
machine will help discover a simple, unifying explana-
tion for all matter in the universe and the forces that
act upon it.
They say the explanation high energy physics has
to time's beginning
had since the early 1970s, called the
Standard Model, is complicated. con-
tradictory and incomplete.
Experimental physicists such as
Huson and Peter McIntyre of A&M
also want a unified theory. But they
speak of the machine's practical
advantages.
They see design and construction
problems whose solution would ad-
vance American science and techno-
logy, launch spinoffs for medicine and
industry and, ultimately, produce a
machine that might uneover a source
of energy without the pollution prob-
lems of fossil and nuclear fuels.
Then there are the cosmologists.
Their training combines physics and
astronomy and their vision of the su-
percollider may be most romantic of
all.
Cosmologists believe the universe
began with a cataclysmic explosion
called the Big Bang. They have long
known that while the galaxies of stars
seem motionless to us, they are mov-
ing rapidly away from each other.
"Our whole galaxy," Weinberg
wrote in a recently revised edition of
his 1977 book The First Three Minutes,
the
"is traveling relative to the radiation
background at about 400 kilometers a
second, more or less in the direction of
the rich clusters of galaxies in Virgo."
Scientists say the condition sug-
gests that, at one time, matter in the
universe was much closer together.
They believe that, in the terrifically
hot trillionth of a second after the Big
monent
Bang when matter began to fly apart,
nature's laws were in balanced
proportion.
even
If they could relive that moment,
scientists say, they would be able to
see the true ralationship between mat-
ter and the forces of nature. The su-
percollider is designed to re-create
those conditions.
Thus, cosmologists expect the ma-
chine to lead to a new understanding
of how we and the universe came to
be. "Then," as English physicist Ste-
phen Hawking wrote in his 1988 book
A Brief History of Time, "we would
know the mind of God."
But since its invention by the
Greeks in about 450 B.C., science has
been an art without certainty. There
has always been room for doubt.
"You won't answer all the ques-
tions," said Gleeson. "You'll get
answers and, therefore,
new
questions."
To Gleeson, chairman of the phy-
sics department at UT-Austin, the
best reason for the supercollider is to
help high-energy physics get unstuck.
"We're stalled for lack of new, ex-
perimental tests of theory," he said.
"Our experiments aren't giving us any
new leads."
Scientific theories are not random
notions of the way things might be.
They are based on and explain experi-
mental evidence and they lead the way
to new things.
"We try to fit things to mathe-
matical theory," said Huson. "The atom was known in
the 19th century but barely understood until the the-
for the fundamental science of high-energy physics
Staff illustration by Cliff Vancur
ory of quantum mechanics was developed in the 1920s.
has been the particle accelerator. The first one, a cy-
In a cyclotron or synchrotron, the particles move in a
Then, we could predict lasers, radar, solid-state phen-
clotron built in 1932, was a pillbox-shaped machine 4
circular path inside a magnetic field.
omenon. That's what you get from a theory, an enor-
inches in diameter. An 11-inch version later screler-
For accelerating protons, nature's most abundant
mous expansion of things you can do."
ated a proton to an energy of 1 million electr n olts.
particle, to high energies, scientists say the synchro-
Gleeson said ft is science's current understanding of
By comparison, the electrons in the filament of
tron is best. The most powerful one in the world is the
quantum theory that underlies the manufacture of
flashlight bulb are accelerated by its batteries to about a
Tevatron. at the Fermi National Accelerator Labora-
computer chips and the designer molecules chemists
three electron volts.
tory near Chicago, known as Fermilab.
use to create new compounds.
There are two general classes of accelerators the
The Tevatron delivers 2 trillion electron volts. The
For more than 50 years, the chief experimental tool
linear and the cyclotron, or synchrotron. The linear
supercollider, to be buried beneath the North Texas
kind accelerates particles down a long, straight tube.
prairie in a 53-mile circular tunnel big enough to walk
through, will also be a synchrotron. But at 40 trillion
electron volts, it will be 20 times more powerful than
the Tevatron.
Accelerator technology is a matter of magnets. The
supercollider will be composed of 9,600 magnets that
become superconducting when they are cooled with
liquid helium. This means they will conduct electricity
with perfect efficiency and great power. Each magnet
will be 55 feet long, and they will be laid end-to-end in
refrigerated vacuum pipes curved into two rings
around the machine's 53-mile circle.
The 50 miles of magnets in each ring will be aug-
mented by three miles of connecting devices called
"spool pieces," placed between about every five mag-
nets in each ring.
Water will be the source of the protons for the su-
percollider. They will be drawn from ionized hydrogen.
Two beams of protons rotating in opposite directions
will be confined in the magnetic field created by the
thousands of magnets. The protons
will circle the two rings 200,000 times
a minute.
When each beam reaches an energy
of 20 trillion electron volts, techni-
cians will open electromagnetic gates
and the beams will be switched to a
collision course. They will meet inside
a detector. run by a supercomputer. at
a combined energy of 40 trillion elec-
tron volts, giving scientists what they
hope will be a glimpse of the balanced
condition of nature at the beginning
of the universe.
When accelerators first came into
use in the 1930s. it was thought that
the atom and its nucleus were com-
posed only of protons and electrons.
Then the neutron was discovered. By
the end of the 1960s, hundreds of sub-
atomic particles had been discovered
in accelerator experiments.
Gradually, physicists began to be-
SOUNDS like typical
panty n 6tree
lieve this blizzard of complexity was
hiding a deeper simplicity of nature.
Experiments at Fermilab and in Eu-
rope led in the early 1970s to the Stan-
dard Model. It holds that all matter
consists of two primary classes called
quarks and leptons. But from there, it
gets much more complicated.
Quarks come in six varieties: up,
down, strange, charm, top and bot.
tom. Leptons also come in six forms:
electron, electron neutrino, muon,
muon neutrino, tau and tau neutrino.
These particles, the model explains,
interact with each other via four fun-
damental forces, each of which is
transmitted by its own carrier particle
called a "gauge boson."
The four forces and their gauge bo-
sons are: the strong force and the
gluon, the electromagnetic force and
the photon, the weak force and its W
and Z particles. and gravity and its
gravitons.
The strong force is the source of en-
ergy for nuclear fission and fusion.
The weak force causes radioactive
materials to decay. The electromag-
netic force is responsible for chemical
reactions and electronics. The gravi-
tational force, the weakest of the four,
keeps things from drifting off the
Earth's surface and maintains the
motion of the planets in the solar
system.
Although the forces have distinct
personalities, physicists believe they
are united by a common bond that
was severed by the Big Bang. Finding
a theory to describe this unity has
been a scientific obsession for dec-
ades. The legendary physicist Albert
Einstein spent 30 years on the prob-
lem without success.
So far, scientists have succeeded
only in combining the electromagnetic
and weak forces into an "electroweak"
force. That was done in the 1960s by
UT's Weinberg, Sheldon Glashow of
Harvard University and Abdus Salam
of Imperial College of London. After
the theory was confirmed. they won
the Nobel Prize.
But no experimental evidence has
been found for the graviton, which is
believed to transmit the force of gravity. The force it-
self has been explained by Weinberg and others by the
theoretical existence of superstrings.
They are infinitesimally small. one-dimensional
strings that vibrate like violin strings. If they exist, the
theory goes, then the universe consists of strings of 10
dimensions. six of which are curled so tightly that only
four dimensions are visible to us.
But neither superstrings nor gravity has a place in
See Supercollider, D7
Sunday, April 16, 1989
Austin American-Statesman
D7
Supercollider
From D1
the Standard Model.
come more ingenious and sophisti-
tained in the bond energy of the
This is the major reason the
cated. But after more than a
development of the supercollider
high-energy physics advisory panel
'Our theories have
strong force," McIntyre said. "If we
decade, we still have no clear and
and related accelerators.
were able to manipulate the bonds
of the U.S. Department of Energy
definite idea of anything beyond
recommended in 1983 to build the
the Standard Model."
become more
as an energy source, well, it's hard
They include a magnet derived
to put into perspective what that
from work on superconducting
supercollider. Uniting the strong,
Physicists are convinced the su-
ingenious and
might mean. The supercollider will
magnets that could improve the re-
electroweak and gravitational
percollider can solve the problems
forces in what is called a Grand Un-
of the Standard Model because of
sophisticated. But
help us gain that knowledge."
solution of Magnetic Resonance
ified Theory would be the ma-
after more than a
Beyond its actual uses, scientists
Imagers (MRI) used in hospitals by
the machine's great power.
chine's major task.
argue, just building the supercol-
about three times and could also
Gleeson said, "It turns out the
The giant accelerator the Rea-
decade, we still
lider would give a giant push to
help shield the fringe magnetic
size of the object you can look at is
American technology. And it would
fields, which limit the performance
gan administration chose to build
directly related to the energy you
have no clear and
produce spinoffs for medicine, elec-
of MRIs. They can produce images
in Texas ironically had a Lone Star
use. With higher energies we can
genesis. It was conceived in 1982 in
definite idea of
tric utilities, microelectronics,
of every organ in the body without
look at smaller scales."
communications and defense.
surgery. radiation or chemicals.
a discussion between Robert Wil-
Accelerators, in essence, are
anything beyond
For electric utilities, the acceler-
son and Leon Lederman, the direc-
microscopes.
tors of Fermilab, and Peter
the Standard
According to Weinberg, the su-
ator center is trying to apply work
Huson said, "With the Tevatron,
percollider will require advances in
McIntyre of Texas A&M.
on superconducting magnets to a
we now can see things as small as
Model.'
magnet technology; vacuum tech-
system for storing electricity. Ac-
One of their arguments for the
10 to the (power of) minus 17 centi-
nology for the magnet-containing
cording to McIntyre, industry be-
supercollider was that elegance and
meters. That is point-16-zeros-
- Steven Weinberg,
pipes; supercomputers for the de-
lieves utilities could save money
simplicity have been guiding prin-
and-a-one centimeters. When we
UT physicist
tectors to analyze the proton colli-
with a coil of superconducting ca-
ciples of science since the Greeks,
look at protons today with that
sions; superconducting cable to
ble the size of a football stadium.
and the Standard Model is neither
Fermilab microscope, we see three
simple nor elegant.
Scottish physicist Peter Higgs,
"It would mean," he said, "that
carry the electric current to power
The coil would store electricity
fuzzy balls - three quarks - but
As Lederman joked in a recent
who was one of the first to predict
our whole framework of theories
the magnets; and even tunnel
generated overnight and deliver it
we can't see within them or what is
their existence. They are believed
construction.
lecture at UT-Austin, any good
must be wrong in some essential
to the power grid the next morning.
holding them together. So that's
to explain how all the particles in
scientific theory ought to be simple
respect."
Huson said some supercollider
our limit of knowledge."
Though they don't always agree
the universe get their mass, which
enough to be printed on a T-shirt.
But the supercollider would still
spinoffs already are in sight from
The supercollider will let scien-
on the details, high-energy physi-
He said the Standard Model fails
corresponds to weight in a gravita-
be useful.
work on magnets to power the ma-
cists in the United States unani-
tists see 20 times better.
the test.
tional field. The origin of mass is
For instance, McIntyre, who
chine. He is director of the Texas
mously hope the supercollider will
One of the biggest holes in the
one of science's oldest mysteries.
And, there, according to Wein-
commutes from College Station to
Accelerator Center in Houston, a
be ready for use by about 1998. As
Standard Model, according to
Weinberg said the supercollider
berg, high-energy physics is stuck
Fermilab to do accelerator experi-
consortium of Texas A&M, UT-
McIntyre put it in a recent letter to
Weinberg, is that physicists are un-
hard.
is designed so that if Higgs bosons
ments, wants to use the supercol-
Austin, the University of Houston
The New York Times, which has edi-
sure of the mechanism by which
exist, they will be found. The ma-
"Since the early 1970s," he told
lider to examine the strong force.
and Rice University. It was created
torialized against the machine as
the symmetry of nature's forces
chine will be powerful enough to
The source of energy for nuclear
in 1983 to help design the supercol-
Congress in 1987, "the experimen-
too costly:
was broken. They think it involved
examine them in fine detail.
fission and fusion, the strong force
lider and also does basic research
talists have done a brilliant job of
some new kinds of forces and one
If the supercollider succeeds in
confirming the outlines of the
holds the quarks together in the
on accelerators and trains doctoral
"The supercollider is not a nicety
or more species of theoretical par-
Standard Model and filling in some
demonstrating there is no Higgs
proton.
candidates in high-energy physics.
that must be weighed on the scales
ticles called Higgs bosons.
boson, said McIntyre, that also
"The bulk of the energy locked
of a precarious budget; it is an im-
of its holes. Our theories have be-
Higgs bosons are named for the
He said the center has identified
would be valuable news.
perative for the vitality of Ameri-
up in the proton is actually con-
several spinoff technologies from
can science and technology."
The Houston Post/Saturday, April 8, 1989/ A-31
Furthermore offers a voice to readers on timely topics. Essays,
typed and double-spaced, should be 2½ pages or shorter. Do not
send a copy to other publications. P.O. Box 4747, Houston 77210-4747.
Good sign for collider
Barton cracks super collider whip
I
N THE CASE OF THE PROPOSED superconducting super col-
lider to be built in Texas, it's not over till it's under - under-
ground, that is. Authorizing its construction is one thing: fund-
ing it is quite another. So it is encouraging that on Thursday the U.S.
House Appropriations subcommittee approved $160 million for the
T
exas quote of the week: "While I'm
parochial in that I'm very pleased Tex-
with Mrs. Thatcher, but that's not quite true. I
North Texas atom smasher.
as was selected (for the superconduct-
listened a lot, and then I had a dialogue.'
Still, supporters of the high-tech project can't afford to take their
ing super collider)
I'm parochial not just for
Washington
Insurance policy
Bush didn'tneed any
eyes off the budgeting process for an instant. A subcommittee's OK
Texas but for the United States of America."
cover for the Baltimore Orioles' opening game
is a far cry from final authorization, and the collider's foes are many
- Rep. Ralph Hall, D-Rockwall
when he pitched the first ball this week, but it
and real. Some are Congress members with honest concern about
has not always been so. He tells how during the
the nation's budget deficit; others are sour-grapes enemies whose
Whip update
Rep. Joe Barton, R-
campaign he was to do the honors at the all-star
own states didn't get this massive research plum.
Ennis, probably won't replace Rep. Tom De-
game and how he knew he'd get booed. "This
And as Rep. Lamar Smith, R-San Antonio, told a Houston Post
Lay, R-Sugar Land, as GOP deputy whip after
is suicide, man. What are you doing out there?"
reporter, "I don't feel we have the votes" in the full Appropriations
all, but he will play a role in new whip Newt
Gingrich's organization. Georgian Gingrich had
Sen. Hugh Parmer, D-Fort Worth, who hopes to
he recalled asking himself. He now tells how he
Committee yet. But Texas backers are laboring for it nonstop, and
be Texas Republican Sen. Phil Gramm's gener-
co-opted two Little Leaguers - a boy and girl
said Barton could have the job - held by De-
who were supposed to walk out before he
the numbers probably will be in place when the committee votes
Lay under former whip Dick Cheney - if he
al election opponent next year.
next week.
did. "So I got with them and asked, 'You guys
wanted it. The job would have been a reward
Getting it right
I
nervous? Well, why don't we all walk out to-
Thursday's subcommittee action was the first solid evidence of
If a hearing by the
for the work Barton did for Gingrigh in the race
House Science, Space and Technology Commit-
gether?' Bush reports there wasn't a boo in
super collider support outside Texas - a tangible relief to state
for whip against Illinois Rep. Edward Madigan,
tee this week to review the site-selection pro-
the house.
legislators nervous about spending millions of state tax dollars on
whom DeLay supported. Barton says being
cess for the super collider accomplished nothing
deputy whip would take too much time from his
The A list
Gov. and Mrs. Bill Clements
the collider amid doubts over federal funding. And beyond argu-
else, at least it educated the panel's chairman
other duties, especially defending the super col-
on one crucial matter about the North Texas site
were among the Texans on President and Mrs.
ment, numerous reports have been circulating in recent weeks that
some 30 miles from the Metroplex area. At one
Bush's invitation list for Thursday's dinner hon-
Congress might simply balk.
lider as the first-year construction funding re-
quest weaves its way through Congress. He
oring Israeli Prime Minister Yitzhak Shamir.
That's a scary prospect, and not merely because the mammoth
point in the proceedings, Chairman Robert Roe,
might take another leadership position, such as
D-N.J., blurted out in all seriousness: "Well, let
Other Texans: Shuttle Discovery commander
research facility is economically good for Texas. The super collider
regional whip, keeping tabs on lawmakers from
Michael Coats and Mrs. Coats, George W. and
bids fair to provide technical and medical benefits to the human race
me ask one thing, is that area inhabited? Are
Texas and surrounding states.
there any cities around there?" Through the
Laura Bush of Dallas, Mr. and Mrs. William
that can now only be dimly imagined. It is farsighted public policy at
In talking about
laughter that broke out, one of Roe's colleagues
Munn of Midland, Secretary of State and Mrs.
With friends like this
its best - but in politics, farsightedness sometimes doesn't garner
James Baker and Secretary of Commerce and
the prospects for getting the money from Con-
could be heard telling him, "Yes, Dallas and
many votes.
Fort Worth."
Mrs. Robert Mosbacher. Texans at the diñner
gress this year to begin construction of the su-
earlier in the week honoring Egyptian President
The Post urges perseverance on the part of lawmakers trying to
per collider, Hall was talking to reporters about
Getting it right II
Hosni Mubarak: June Scobee, widow of Chal-
push this worthy project forward. If they are successful, history will
Texas Democratic
what the state has going for it. in addition to
Sen. Lloyd Bentsen, at a press conference this
lenger pilot, Dick Scobee, Mr. and Mrs. Dee
judge them kindly.
having the president and the speaker of the
week, was discussing his recent trip to Europe
Kelly of Fort Worth, Mr. and Mrs. Fitz-Alan
House, Hall said, "we' got the two best sena-
and started saying that he had had "an hour-
Korth (she is the former Texan who was co-
tors in the United States." We are willing to
long dialogue' with Prime Minister Margaret
chair of the Bush inaugural), and the Bakers.
wager that those are words you aren't likely to
Thatcher. But Bentsen caught himself and said,
see in any of the campaign literature of State
"I started to say I had an hour-long dialogue
Compiled by The Post's
Washington Bureau
COLLIDER:
Super collider
Funding bill clears
hurdle in House
From A-1
clears critical
mittee votes on the bill.
Even if the budget request sur-
vives the full Science, Space and
Technology Committee, its sup-
House hurdle
porters still can't relax.
An authorization bill merely tells
an agency what programs it can
spend money on, and even though
it says how much money can be
Construction
spent it is up to the Appropriations
Committee to provide the money
Congress
after the budget committee sets out
funds advance
a spending plan.
Neither of these committees has
acted yet.
takes on
"The real danger point is the Ap-
to committee
propriations Committee," said sub-
committee member Lamar Smith.
By Juan R. Palome
R-San Antonio. "I don't feel we
POST WASHINGTON BUREAU
oil mess
have the votes there yet."
Smith added, however, that the
Texas supporters of the super col-
WASHINGTON - The super
By Kathy Kiely
lider are working around the clock
collider passed its first legislative
POST WASHINGTON BUREAU
to round up the needed support.
test Thursday when a House sub-
Rep. Joe Barton, an Ennis Re-
committee gave its stamp of ap-
WASHINGTON - If there
publican whose district includes
proval to the $5.9 billion project.
was any doubt as to the politi-
the construction site, said Thurs-
The House Science, Space and
cal fallout of last month's mas-
Technology Committee's subcom-
day's vote "gives us good momen-
sive oil spill in Alaska, it was
tum for the next stage" and pre-
mittee on energy research and de-
dispelled Thursday as Con-
dicted approval by the full
velopment gave unanimous ap-
gress opened its investigation
committee next week.
proval to a $3.2 billion bill that
into what one Bush adminis-
"I feel
vindicated," Barton
authorizes the Department of Ener-
tration official blasted as the
said. "I have said every time asked
gy's fiscal 1990 activities.
energy industry's "totally in-
Included in the authorization is
adequate" response.
$250 million requested by the
At two separate hearings be-
"
Bush administration, of which
fore House and Senate com-
The real danger
$160 million is earmarked for con-
struction of the 53-mile-round
point is the
atom smasher near Waxahachie.
Tanker captain freed af-
ter bail lowered/A-20
Appropriations
That was the good news.
Still unknown is whether the su-
Drug testing on oil ves-
Committee. / don't feel
per collider project will suffer the
sels sought/B-1
we have the votes
same fate as other DOE projects.
The subcommittee voted an
mittees, criticism rained down
Rep. Lamar Smith,
across-the-board 3.4 percent cut
from the amounts requested by the
in torrents, much of it coming
R-San Antonio
administration for most of the
from politicians who normally
lies. would be energy industry al-
that I felt we were in good shape in
agency's activities.
the authorization process and that
The adminstration asked for
$3.3 billion for DOE - - 4 percent
'We've been betrayed,
proved to be the case.
This is
Alaska Lt. Gov. Steve McAl-
the first manifestation of support
more than last year's $2.9 billion
pine said.
budget - but the subcommittee
for the project outside the state of
sliced it to $3.2 billion.
Chief targets of the com-
Texas.
But Rep. Howard Wolpe, D-
The full committee could change
plaints were the Exxon Corp.,
the subcommittee's action, or ap-
whose tanker Exxon Valdez
Mich., issued a statement saying he'
prove it unchanged.
created the 10 million gallon
and Rep. Paul B. Henry. R-Mich.,
"We made deep cuts in every-
spill by running aground under
had reservations about the site se-
thing else to fund the super col-
circumstances that witnesses
lection process and the magnitude
lider,' said Rep. Harris Fawell, R-
termed "unbelievable" and
of the project.
III., who added that if funds are not
inexplicable, and the
"We are simply trying to focus
restored to members' pet projects,
Alyeska Pipeline Service Com-
members' attention on the proce-
those members might go after the
pany, an industry consortium
dural questions and on the broader
super collider when the full com-
policy question of the impact on
the budget," Wolpe said.
Please see SPILL A-20
In their joint statement, the
Please see COLLIDER, A-19
Michigan congressmen said they
believe "that the magnitude of
contemplated national expendi-
ture, combined with unresolved
questions of procedure and sub-
stance on the site selection pro-
cess, demands futher review before
recommending authorization for
continued work on the project."
Clements says Bush
A-14 The Houston Post/Saturday, April 8, 1989
optimistic on collider
By Juan R. Palomo
Rep. John Bryant, a Dallas Dem-
POST WASHINGTON BURE AU
ocrat who opposes foreign partici-
pation in the superconducting su-
WASHINGTON - Texas Gov.
per collider, said he welcomed
Bill Clements said Friday he is con-
Clements "to the battle."
fident Congress will support fund-
"I think it's only common sense
ing for the super collider project,
that we ought to question a pro-
but indicated lawmakers will trim
posed arrangement in which we
the amount of money designated
pay all the costs and Japan gets as
for the science project
much benefit as we do," Bryant
Following a 15-minute session
said.
with President Bush, Clements said
he is optimistic about the funding
"It's costing $5.9 billion and
but "at what level, I'm not quite
they're negotiating with Japan on
an in-kind contribution of $400
sure."
million. "It's peanuts compared to
The administration is asking for
the overall cost of it," he added.
$250 million for fiscal 1990 for the
If the anticipated spinoffs make
$5.9 billion atom-smasher sched-
uled to be built near Waxahachie.
the project worth spending billions
to build, "surely it would be non-
The governor said Bush reiterat-
sense to give all the benefits away
ed his support for it.
in return for a tiny contribution
"He strongly supports it and he
from Japan," Bryant said.
will help in any way he can." he
said. "Not as Texan, but as a na
Texas Republican Sen. Phil
tional issue
Gramm said he is still committed to
Asked if Bush was as optimistic
cost-sharing arrangements with
as he is, Clements replied, "Well,
foreign governments, but added
I'm known to be an optimistic per-
the review proposed by Clements
son
and President Bush is of
is "prudent."
the same demeanor.'
Gramm's Democratic counter-
Texans, he added, "have to be
part, Sen. Lloyd Bentsen, said
optimstic."
Clements has a "good point. We
The governor, who also met
ought to resolve this question."
with Defense Secretary Dick Che-
The governor said he and Bush
ney during his two-day visit here,
also discussed the effects of the
said while he welcomes foreign
Alaskan oil spill "in regard to its
participation in the super collider
influence on the price of oil and the
project, "I want to be sure that we
fact that it does seem to be having
understand what the national secu-
some importance.'
rity implications are, if any."
He said he doesn't think the spill
AP photo
Asked to elaborate on his con-
will affect the Texas economy over
Texas Gov. Bill Clements talks with reporters outside White
cerns over national security, Clem-
the long term, but that the higher
House Friday after meeting with President Bush.
ents replied, "if I knew I wouldn't
oil prices resulting from a drop in
be investigating.'
Alaska shipments because of the
He predicted the establishment
Exxon Valdez spill may help the
of a task force on the matter.
state temporarily.
20
Texas IC lawmakers, wary of Super Collider spending
CAN ANTONIO DIPRESS
Associated Phone
is seenewhat anknown," said state Bep. Jim
the Super Collider the state will helt the efforts
Non in 1000. Members of Congress, many of
Stude, Brownlield, chairman of the hadget-
"We're not going to pour millions of dellars
when are net happy the project was not n
AUSTIN Texas Involvers are growing
writing Home Appropriations Committee.
into something If it is not going to P forward,
opted in their states, my they are not can-
about spending refillines of state tax
dollars - the Super Collider while support in
So far, the state Inc spout about us million
Luce mid. That 1 am optimistic a is going for-
vinced the project is worth the expense.
on the project, ment of which funded the No-
word"
Congress for the when muster Initers.
Under Texas law, the commission could be
SMIL, state dellars are being used to dramati-
Lawmobern any M they don't provide mill
timel Research Laboratory Commission, the
dishanded - 30 days' antice If Congress about
cally expand the commission Not only last 1
None of dellars for salaries, engineering and
Texas agency created in 115 to lobby for and
consultants for the project, they will guarantee
oversea the building of the project.
done plans to build the Super Cellider, a 23-mile
year had a staff of seven people and was work-
underground Cannel shoped the a race track
Ing and of ap effice OR the University of Texas
its death,
The commission adved the Legislature this
Tel, there is a relectance to est the state's
Unit will be used to study the high speed coll-
at Austin calapus.
year for another $16 million to Anisk paying
slow of protens. Waxahoride, which 6 miles
The nimber envisions more then trip-
Super Collider handget - of fear such a move
this year's expenses and nearly 91 million for
south of Dallas, has been chasen as the site for
Mag its staff to 24 members this year. и has
would undernine state londers' lobbying of
the next two years.
the Super Cellider.
moved to new office space in Deticle that has
forts in Washington:
Commission Chairman Term Late, a Dallas
Congram in botting all President Dunis re-
meant Increasing annual rent from $7,000 to
"We're spending money for something that
attorney. said M Congress decides not to had
quest But the Super Collider receive $150 will-
$60,000.
Collider
funds hit
Catch-22
SALLAS TIMES FULL
State lawmakers wary
of sending wrong signal.
By Bennett Roth
APR 02 1989
TIMES HERALD AUSTIN BUREAU
PAI
AUSTIN - With support for the
superconducting super collider faltering
in Congress, key Texas lawmakers are
growing nervous about continuing to
spend millions of state tax dollars on
billion-dollar project that might die for
lack of federal funding.
Lawmakers say they are caught in &
Catch-22 situation, fearing that if they
don't provide millions of dollars for wh-
ries, engineering and consultants for the
Waxahachie endeavor they will guaran-
tee the death of a project many had
hoped would be the correrstone of the.
state's economic revival
"We're spending money for something
that is somewhat unknown," said state
Rep. Jim Rudd, D-Brownfield, chairman
of the budget-writing House Appropria-
tions Committee that is reviewing super
collider funding.
Yet, there is reluctance to cut the
state's super collider budget out of fear
that such a move would undermine the
state leaders' lobbying efforts in Wash-
ington.
Gov. Bill Clements, who with a corps
of other high-powered Texans has
worked closely with U.S. Sens. Lloyd
Bentsen and Phil Gramm, has made the
super collider a top priority.
"Nobody wants to embarrass the gov.
ernor. Nobody wants to embarrass the
leaders," said Rudd. "We don't want offi-
cials from other states to say, 'Well, they
are not doing anything in Texas; let's not
fund them.
So far. the state has spent about $4.3
million on the project, most of which
funded the National Research Laborato-
ry Commission, the Texas agency creat-
Please see COLLIDER, A-21
COLLIDER
concern" among state lawmskers
into new office space in DeSire
officials such as Clements lead
ysis of the site required by the
about the project, particularly of
that has meant increasing annual
private fund-raising drives for
U.S. Department of Energy.
ter he has explained the project
rent from $7,000 to $00,000.
the super collider.
They argue the state must pay
From A-1
to them.
The commission plans to
"Clements raised $2 million to
top salaries to lure experts to FLITH
Meanwhile, Congress is balk-
spend nearly $180,000 this year
just decorate the [Governor's]
the agency. Bingler, who is paid
ing of President Bush's request
on travel alone, including fre-
Mansion. If be wanted to he
almost $20,000 more than the
ed in HRS to lobby for and over-
that the super collider project re-
quent trips to Washington and
could raine $1 million foir the su-
governor, was deputy director of
see the building of the project.
ceive $250 million in 1990. Mem-
more than $450,000 on consul-
per cullider," said Leedom.
the Bureen of Economic Genlogy
The commission asked the Legis-
bers of Congress, many of whom
tants to study everything from
State Sen. Kent Caperton, D.
at the University of Texas.
lature this year for another $1.5
were unhappy that the project
regional geology to file manage-
Bryan, chairman of the Senale
million to Finish paying this
was not located in their states,
Ken Welch, the commission's
ment.
Finance Committee. said if the
year's expenses and nearly $4
say they are not convinced the
associate director for administra-
Staff sularies comprise a large
federal government fails to come
million for the next two years.
project is worth the expense, par-
share of the proposed increased
up with the funding. the state
tion, has admitted the heavy lob-
Commission Chairman Tom
ticularly during fight budget
funding. The commission's exce-
will hall all funding.
bying effort in Washington has
Luce, . Dallas lawyer, said law-
times.
contributed to a high travel bud-
utive director, Dr. Ed Bingler, is
"We are not going to do our
makers should not worry about
Even Gramm, a staunch sup-
get. He also said that while the
paid $110,000 - the highest min-
part unill we see some good Girth
wasting taxpayer money on the
porter of the project, warned re-
ry in state government that is
effort on the part of the federal
commission is increasing its staff,
project. Luce said if Congress de-
cently that there are too few
it has been culling back on run-
paid solely from state funds.
government," said Caperton.
cides not to fund the super colli-
votes in the Sensie to approve
suitants.
The increasing expenditure has
der, the state will hall its efforts.
Commission staff defend the
super collider financing for next
"We want people who answer
bothered some lawmakers who
"We're not going to pour mil-
Increased spending. saying the
directly to the commission and
year.
are trying to balance the budget
lions of dollars into something if
U.S. Rep. Jim Chapman, D-
funds are needed to prepare the
don't have interests elsewhere."
without raising taxes.
it is not going to go forward,"
Surpher Springs. "mender of
complicated environmental anal-
said Welch.
said Luce. "But , am optimislic it
"II's really gotten a little bit
the House Appropriations sub-
out of hand," said state Rep.
is going forward."
committee, which must approve
Dudley Harrison, D-Sanderson,
Under state law, the commis-
super collider funding, said re-
chairman of the House Agricul-
sion could be disbanded on 30
cently that "there is no question
ture Committee.
days' notice if Congress aban-
the super collider is in big trou-
State Sen. John Leedom, R-
dons plans lo build the super col-
ble." Chapman said only he and
Dallas, said he was opposed to
lider, a 53-mile underground tun-
one other member of the 10 per-
spending state taxpayer dollars
nel shaped like a race track that
son subcommittee fevor the pro-
on the super collider, arguing the
will be used to study the high-
ject.
state has many more urgent
speed collision of protons. Scien-
But in Texas, state dollars are
needs to meet such as aid to the
ists say the super collider will
being used to dramatically ex-
mentally relarded.
help them better. understand the
pand a bureaucracy that only last
"There are needs of the state
Fundamentals of energy and mal-
year had a staff of seven people
and there are wants. And I put
et.
working out of an office on the
the super collider in the wants,"
Last fall, after an intense com-
University of Texas at Austin
Leedom said, adding that fund
oetition, the U.S. Department of
campus.
ing for the commission should
Energy chose the Waxahachie
The commission envisions
come from businesses that would
site in Fills County.
more than tripling its staff to 24
benefit from it being located in
Luce said he has "not seen any
members this year. II has moved
Texas. He suggested that Texas
APR
1989
A.5
HOUSTON POST
LOCAL & STATE
Lagging support concerns
super collider's Texas fans
tions Committee.
sion could be disbanded on 30
ASSOCIATED PRESS
So far, the state has spent about
'days' notice if Congress abandons
AUSTIN - Texas lawmakers are
$4.3 million on the project, most of
plans to build the super collider, a
growing nervous about spending
which funded the National Re-
53-mile underground tunnel
millions of state tax dollars on the
search Laboratory Commission,
shaped like a race track that will be
super collider while support in
the Texas agency created in 1985
used to study the high-speed colli-
Congress for the atom smasher fal-
to lobby for and oversee the build-
sion of protons.
ters.
ing of the project.
Congress is balking at President
Lawmakers say if they don't pro-
The commission asked the Leg-
Bush's request that the super col-
vide millions of dollars for salaries,
islature this year for another $1.6
lider receive $250 million in 1990.
million to finish paying this year's
Members of Congress, many of
engineering, and consultants for
the Waxahachie endeavor they will
expenses and nearly $4 million for
whom are not happy the project
the next two years.
was not located in their states, say
guarantee the death of the project.
they are not convinced the project
Yet, there is a reluctance to cut
Commission Chairman Tom
is worth the expense.
the state's super collider budget out
Luce, a Dallas attorney, said il Con-
Still, state dollars are being used
of lear such a move would under-
gress decides not to fund the super
to sharply expand the commission
mine state leaders' lobbying efforts
collider the state will halt its efforts.
that only last year had a staff of
in Washington.
"We're not going lo pour mil-
seven people and was working out
"We're spending money for
lions of dollars into something if it
of an office on the University of
something that is somewhal un-
is not going to go forward," said
Texas-Austin campus.
known," said state Rep. Jim Rudd,
Luce. "But 1 am optimistic it is go-
The commission envisions more
D-Brownfield, chairman of the
ing forward."
than tripling its staff to 24 mem-
budget-writing House Appropria-
Under Texas law, the commis-
bers this year.
WILLIAM P. CLEMENTS, JR.
HENRY M. GANDY
GOVERNOR
INVESTATE OFTER OF
DIRECTOR
THE STATE OF TEXAS
OFFICE OF STATE-FEDERAL RELATIONS
NOTE TO SPEECHWRITERS
SUBJECT: SSC
The Texas State Legislature approved the bonds
for the Texas offer to the Federal government
of $1 billion in State funds to help defray the
Federal cost of the SSC. This took place
in 1987, even before Texas was selected as the
site. The bonds were subsequently approved by
the voters in November, 1987.
Several recent articles have appeared in Texas
papers expressing doubts about the funding of
the Supercollider in Congress. As a result,
many in the Legislature are questioning whether
the State should commit any of its funds.
It would be extremely helpful to the Governor
if the President would reiterate his strona
support for the SSC and acknowledge the key
role played by the State Legislature in
approving State funds to help fund the project.
600 MARYLAND AVENUE, S.W.
SUITE 255
WASHINGTON, D.C. 20024
202/488-3927
POST OFFICE BOX 13005
AUSTIN, TEXAS 78711
512/463-1803
Texas Taxpayer
Bill
of
Rights
T
axpayer rights are the heart of good
tax administration-a pledge that the tax
laws will be administered with fairness,
courtesy and common sense.
The Texas State Comptroller's Office is
dedicated to that pledge and has created the
first taxpayer bill of rights in the nation.
Some of the rights of Texas taxpayers
are quite specific in detail, such as when,
where and how to appeal assessments.
Other rights are general in nature, such
as the right to ask for and receive assis-
tance in filling out forms.
Continued on reverse side
The 24-point Texas Taxpayer Bill of
Rights covers a wide variety of tax and
administrative policies, ranging from the
right to prompt and accurate responses to
protection from unreasonable notices.
To obtain a copy of the Texas Taxpayer
Bill of Rights, call toll-free:
1-800-252-5555
or in the Austin area: 463-4600,
or write to:
Bob Bullock, State Comptroller
Capitol Station
Austin, Texas 78774-0100
THE
OF
OFFICE
COMPTROLLER
*
*
TEXAS
Bob Bullock
Texas Comptroller
of Public Accounts
Recent Newsltters
from Texas'
Washingtor office
HENRY M. GANDY
WILLIAM P. CLEMENTS, JR.
CF
DIRECTOR
GOVERNOR
THE STATE OF TEXAS
OFFICE OF STATE-FEDERAL RELATIONS
WASHINGTON ACTION ITEMS
April 14, 1989
*
MARKUP OF BUSH THRIFT BILL COMPLETED IN HOUSE
SUBCOMMITTEE, SENATE COMMITTEE
PAGE 3
*
BUDGET ACCORD REACHED BY ADMINISTRATION, CONGRESS
PAGE 5
*
HOUSE SUBCOMMITTEE REPORTS VOCATIONAL EDUCATION
REAUTHORIZATION
PAGE 6
*
NATURAL GAS DECONTROL BILL PASSES HOUSE COMMITTEE
PAGE 7
AGRICULTURE ITEMS
--- FRAMEWORK AGREEMENT ON AGRICULTURE REACHED IN GATT Agreements
reached on April 8th between representatives of 105 countries signalled the end
of the "mid-term review" of the Uruguay Round of talks on the General Agreement
on Tariffs and Trade (GATT), and determined the parameters of debate for the
final 20 months of negotiations on the liberalization of world trade. In
agriculture, which has been probably the most contentious area of debate, a
framework agreement was finally adopted which satisfied both the United States
and the European Community.
The agreement on agriculture is divided into short-term commitments and
long-term goals. The short-term commitment calls for all member countries to
hold trade-distorting subsidies and import barriers at or below current levels
through 1990, when the negotiations are scheduled to end. Developing countries,
which have not utilized export subsidies to the extent others have, are exempted
from this short-term commitment. The long-term objective of the negotiations as
agreed to by all parties is "to provide for substantial progressive reductions
in agricultural support and protection sustained over an agreed period of time,
resulting in correcting and preventing restrictions and distortions in world
agricultural markets". This wording is obviously subject to varying
interpretations as has already been demonstrated by comments from the top
negotiators from the U.S. and EC.
The main sticking point on agriculture in the GATT thus far has been the
EC's unwillingness to agree to the U.S. proposal to phase-out all
trade-distorting subsidies and import barriers by a set date. U.S. Trade
Representative Carla Hills told a House Subcommittee that the "substantial
progressive reductions" called for in the agreement would logically lead to
600 MARYLAND AVENUE, S.W.
SUITE 255
WASHINGTON, D.C. 20024
202/488-3927
POST OFFICE BOX 13005
AUSTIN, TEXAS 78711
512/463-1803
zero, and that the new phrasing was simply a more diplomatic way of expressing
the U.S. position. The EC's chief negotiator, however, said at a press
conference after the meeting that "elimination of subsidies has always been
unrealistic and unacceptable. Now the word elimination is gone for good and
that's that."
The agreement also requires countries to announce by October, 1989, any
short-term steps they will take to lower subsidies and barriers. By December,
1989, countries are to put forth their detailed proposals for the achievement of
the long-term reforms. Additionally, GATT members agreed to work toward
internationally accepted standards on sanitary measures, and that health-related
border measures should be consistent with sound scientific evidence. This could
have implications for the dispute with the EC over beef hormones, as all
scientific evidence indicates that the EC is unjustified in banning imports of
beef produced with the aid of growth hormones. In the area of textiles, the
GATT members agreed to incorporate the Multi-Fiber Arrangement (MFA) into the
GATT, but made no specific commitments on timing or implementation of this
objective.
--- FIRST HEARING ON 1990 FARM BILL SCHEDULED IN SENATE The Senate
Agriculture Committee on April 19th will kick-off debate on the direction of
U.S. farm policy after the expiration of the Food Security Act of 1985 (1985
Farm Bill). The full Committee will hear testimony from Secretary of
Agriculture Clayton Yeutter, and will review programs established under the 1985
Farm Bill. While Yeutter and some Members have urged that Congress not re-write
the 1985 Farm Bill until after the completion of the GATT negotiations,
Congressional leaders have indicated that they plan to proceed with hearings
this year and markup next year.
--- GAO REPORT FINDS 1985 FARM BILL A SUCCESS In a report issued to
Congress on April 7th, the General Accounting Office said that the 1985 Farm
Bill, along with other factors, has contributed to an improvement in the general
farm economy. This improvement can be measured through reduced surplus stocks,
increased volume and value of agricultural exports, reduced farm debt, and a
steady rise in farmers' net cash income since 1985. On the downside, the report
found that government costs had increased, with CCC net outlays for the first
three years of the Farm Bill at $49 million, compared to $44 million for the
last three years of the 1981 Farm Bill. Also, the GAO said that it is uncertain
how much progress can be attributed to the legislation as opposed to other
important factors, such as changes in currency exchange rates and the 1988
drought.
--- USDA CALLS FOR CHANGES IN COTTON PROGRAM Secretary of Agriculture
Clayton Yeutter announced April 5th that the USDA will soon propose changes in
the upland cotton program to make American cotton more competitive
internationally. The proposals, which will be printed in the Federal Register,
include: a change in the current formula for determining average world price
(AWP) to consider price quotations in designated U.S. spot markets, as well as
the level of exports from the U.S.; and, a requirement of payment, in advance,
of interest and storage charges on outstanding loans during the 8-month loan
extension period.
--- HOUSE PANEL REVIEWS MEAT INSPECTION PROPOSAL An April 11th
hearing of the House Committee on Government Operations' Subcommittee on Human
- 2 -
Resources and Intergovernmental Relations heard critical testimony on the USDA
plan to implement an Improved Processing Inspection System. The USDA proposal
is designed to implement the Processed Products Inspection Improvement Act,
passed by Congress in 1986. USDA's proposed regulations have, however, run into
opposition since their publication. The basic thrust of the new law is to
incorporate new technology into meat inspection and allow the most efficient
allocation of inspection resources by allowing less-than-continuous inspection
at those. processing facilities with exemplary safety records. A coalition of
labor and consumer organizations, many of whom opposed the legislation, have
called upon USDA to withdraw their proposed regulations. Significantly, the
American Meat Institute, a supporter of the legislation, has also called for the
withdrawal and rewriting of the regulations.
USDA announced April 4th that they will hold public hearings this summer
on developing its new inspection system.
--- USDA REPORT DETAILS FOREIGN OWNERSHIP OF FARMLAND An April 6th
report by the U.S. Department of Agriculture revealed that slightly less than
one percent, or about 12.5 million acres, of U.S. farmland is owned by foreign
interests. This represents an increase of 99,100 acres from the previous year.
The Agricultural Foreign Investment Disclosure Act of 1978 requires foreign
interests to report this information to USDA. A USDA analysis of this
information revealed: 48 percent of the foreign-owned land is in forests,
corporations own 80 pecent of the acreage, and only 40 percent of the acreage is
held by foreign interests not affiliated with a U.S. corporation. In Texas,
1,029,885 acres are held by foreign owners, second to Maine with 1,799,794
acres.
--- TASK FORCE ON EC HORMONE BAN FACES MAY 5TH DEADLINE The joint
U.S. - European Community Task Force appointed to seek a solution to the trade
dispute over the EC ban on beef produced with growth hormones has continued
meeting, but has not made significant progress towards a solution. The 75 days
allotted to the Task Force to come up with a solution expires on May 5th, and it
is not known whether the deadline will be extended if there is no solution, or
if other actions will be taken.
For more information, contact Glen Hodges
Agriculture Coordinator
BANKING ITEMS
--- MARKUP OF BUSH THRIFT BILL COMPLETED IN HOUSE SUBCOMMITTEE, SENATE
COMMITTEE On April 13th, the Financial Institutions Subcommittee of the House
Banking Committee completed consideration of President Bush's thrift rescue
plan, H.R. 1278, giving final approval to a substantially revised version of the
bill. Further deliberation in the House will continue on April 25th or 26th, as
the full Banking Committee begins marking up the bill. Action on the House
floor is expected in early May. On April 12th, the Senate Banking Committee
also approved a version of the bill. Senate floor action is targeted for April
17th.
During several days of deliberations, the House Banking Committee's
Financial Institutions Subcommittee made several significant changes to the bill
presented by the Administration. The Subcommittee began markup of the bill on
- 3 -
April 6th, approving amendments which would transfer federal regulatory
authority over state chartered thrifts from the Federal Home Loan Bank System to
the Federal Deposit Insurance Corporation (FDIC) and which would authorize the
implementation of risk-based deposit insurance premiums, among others. Major
amendments approved by the Subcommittee this week include:
0
an amendment offered by Subcommittee Chairman Frank Annunzio (D-IL)
and Rep. Stan Parris (R-VA) which substantially weakened the thrift
capital requirements contained in the Bush bill. The
Annunzio-Parris amendment would require thrifts to maintain a 3
percent "core" capital level, as defined by the Office of the
Comptroller of the Currency, by June 1990. However, only 1.5
percent of this capital would have to be equity capital. The
remainder could consist of supervisory goodwill and purchased
mortgage servicing rights. The Bush proposal would have required
thrifts to meet the same capital standards as commercial banks
(currently 6 percent) by June 1, 1991. The controversial amendment
was approved by a vote of 24-23. Subsequent to the approval of the
amendment, the Administration indicated that it would veto a bill
with the lower capital standards.
0
an Annunzio amendment which would raise the qualified thrift
lender, or QTL, standard from 60 percent of assets to 80 percent of
assets, while broadening the scope of the assets which could be
used to meet the standard. The QTL standard, approved in the
Competitive Equality Banking Act of 1987, must be met by any thrift
which is a member of the Federal Home Loan Bank System. Current
law requires that 60 percent of thrift assets be held in mortgages
or mortgage-related instruments. The Annunzio proposal would allow
the inclusion of assets such as multi-family housing mortgages,
property used by a thrift for its business, liquid assets, consumer
loans, and others in the new 80 percent standard.
0
amendments, further altering thrift capital standards, which would
permit federally chartered thrifts to include the capital of, loans
to, and investments in thrift subsidiaries in core capital,
provided certain conditions are met.
0
an amendment which would allow bank holding companies to acquire
healthy thrifts immediately upon passage of the bill. The Bush
bill would impose a two-year waiting period.
0
an amendment which removed a provision in the Bush bill which would
have placed a limit on thrift lending to within a 100-mile radius
of the institution.
The Senate Banking Committee used as its markup vehicle a committee
print written by committee members in closed-door meetings prior to the markup.
The committee print, described by Treasury Secretary Nicholas Brady as "on
balance, meritorious," included a proposal backed by Committee Chairman Don
Riegle (D-MI) which would have placed the financing mechanism for FSLIC case
resolutions on budget. During the markup, the Committee voted 11-10 to retain
the Administration's off-budget financing approach. In other key changes to the
committee print, the Committee approved amendments which would:
- 4 -
0
equalize bank and thrift deposit insurance premiums at 15 basis
points by 1998,
0
permit thrifts to write-off goodwill, both voluntary and
supervisory, over 25 years as opposed to the 10 years in the Bush
plan,
0
prohibit thrifts from counting any goodwill acquired after April
12, 1989 as capital,
0
separate the regulatory and credit functions of the present thrift
regulatory apparatus, placing a new Office of Savings Associations
under the Treasury Department to take the place of the Federal Home
Loan Bank Board (FHLBB) and leaving the credit functions of the
FHLBB outside the Treasury's purview, and
0
require the Resolution Trust Corporation (RTC), which is charged
with the disposition of assets of failed thrifts, to issue
semiannual reports on the book value of assets it holds and related
issues. This amendment was offered by Sen. Phil Gramm (R-TX). Two
other Gramm amendments would require the RTC to take local real
estate market conditions into account in disposing of assets and to
set up regional advisory boards to aid the RTC with its duties.
The Committee is also expected to offer committee amendments to the bill
when it reaches the floor, dealing with, among other things, offenses which
would be covered by the Racketeer Influenced and Corrupt Organizations Act
(RICO).
For more information, contact Carter Breed
Economic Development Coordinator
BUDGET ITEM
--- BUDGET ACCORD REACHED BY ADMINISTRATION, CONGRESS On April 14th,
Administration officials and congressional leaders announced that they had
reached a tentative budget agreement for fiscal year 1990. The agreement,
anticipating significantly increased receipts, augmented by $8.4 billion in new
revenues resulting from tax law changes, would result in a budget deficit of
$99.4 billion, $600 million below the deficit target specified in the
Gramm-Rudman-Hollings Deficit Reduction Act.
The budget blueprint lays out broad spending levels and guidelines to be
followed by Congress and the Administration in the authorization and
appropriations process later this summer. Agreed upon spending levels for the
three discretionary appropriations categories are as follows:
CATEGORY
BUDGET AUTHORITY OUTLAYS
Domestic
$157.5 billion
$181.3 billion
Defense
305.5
299.2
International
19.0
17.0
Affairs
For more information, contact Carter Breed
Economic Development Coordinator
- 5 -
DRUG ITEM
--- SENATE COMMITTEE VOTES FULL MEXICO AID. On April 13th, the Senate
Foreign Relations Committee defeated legislation, S.J. Res. 82, that would cut
off half of U.S. economic and military aid to Mexico because it is not "fully
cooperating". in drug control efforts. Despite the Committee action, the measure
will move to the Senate floor for consideration as required by law.
Current law requires the President to certify that drug-producing
countries are cooperating with U.S. programs to control drugs. If approved by
the full Senate, S.J. Res. 82 would overturn the President's positive
certification of Mexico.
For more information, contact Mark Schnabel
Energy and Natural Resources Coordinator
EDUCATION ITEM
HOUSE
SUBCOMMITTEE
REPORTS
VOCATIONAL
EDUCATION
REAUTHORIZATION On April 12th, the House Subcommittee on Elementary, Secondary
and Vocational Education reported legislation reauthorizing the Carl D. Perkins
Vocational Education Act.
The bill reported by the Subcommittee incorporates the "Tech-Prep"
program introduced earlier this year in a separate bill. This program would
encourage secondary and postsecondary schools to form pacts that would help lead
students from 11th grade to an associate's degree. The Subcommittee set aside
$200 million for the "Tech-Prep" program.
Also included in the Subcommittee's bill is a requirement that each
state form a human resources council to administer funding under the Perkins
Act, the Job Training Partnership Act (JTPA), the Adult Education Act and the
Rehabilitation Act. At the federal level, the Secretaries of the Education,
Labor, and Health and Human Services Departments would coordinate the programs.
States would also be required to begin a two-year process of building
performance measures with internal studies in FY 91 and 92 measuring
coordination, counseling, access and competency factors.
The Subcommittee made substantative changes in the composition of the
distribution formula. Of the 80 percent of total funding for basic state grants
to local education agencies, funds would be distributed in the following manner:
70 percent of the funding would be based on Chapter 1 enrollment, 20 percent on
handicapped enrollment and 10 percent on K-12 enrollment. Twenty percent of the
available vocational education funds would still go to states, but specific
requirements are placed on states' use of the money. Of the 20 percent
allocated to states, 5 percent must be used for program administration, 5
percent for discretionary programs and 10 percent for displaced homemaker and
sex equity programs.
Those Members supporting the formula change claim that vocational
education resources will be targeted toward inner city schools where the most
economically disadvantaged students can be reached. A state allocation analysis
will be prepared before the full committee considers the measure.
- 6 -
Full committee markup is expected around April 25th, with House Floor
action shortly thereafter. The Senate is scheduled to begin vocational
education hearings in September.
For more information, contact Lori Bounds
Human Resources Coordinator
ENERGY ITEMS
--- DOE STUDY SAYS TEXAS POSSIBLE CHOICE FOR EXPANDED STRATEGIC
PETROLEUM RESERVE A new Department of Energy report has concluded that the
Gulf of Mexico coast appears to be the best location for additional Strategic
Petroleum Reserve (SPR) storage if a decision is made to expand the SPR.
Texas sites mentioned as candidates included the expansion of the
current Big Hill site near Beaumont, Clemens in Brazoria County and Gyp Hill in
Brooks County.
Lawmakers are currently deliberating the idea of increasing the SPR from
750 million barrels to 1 billion barrels.
--- NATURAL GAS DECONTROL BILL PASSES HOUSE COMMITTEE On April 11th,
the House Energy and Commerce Committee approved, by voice vote, H.R. 1722, a
bill that would completely decontrol natural gas prices by 1993.
H.R. 1722 represents a compromise between producers, who favor immediate
decontrol, and pipeline companies, who prefer a five-year phase-out of price
controls.
The legislation would remove the last of federal controls on the price
companies pay for gas at the wellhead. Most wellhead gas has already been
decontrolled, but price restrictions remain on gas wells that were producing
before 1978.
For more information, contact Mark Schnabel
Energy and Natural Resources Coordinator
ENVIRONMENTAL ITEMS
--- ADMINISTRATION PLANNING "PIECEMEAL" APPROACH ON CLEAN AIR
BILL Reports from the White House this week indicate that the Administration
may propose clean air legislation this spring and summer.
The Administration is planning three different proposals dealing with
ozone/carbon monoxide non-attainment, air toxics and acid rain.
Support for the "piecemeal" approach stems primarily from Congressional
sponsors of clean air bills who are anxiously awaiting Administration proposals
prior to continuing work on the legislation.
--- EPA RELEASES TOXIC INVENTORY DATA On April 11th, the
Environmental Protection Agency announced the results of an inventory of
chemicals released to the nation's water, air and land. The chemical data was
collected under the Emergency Planning and Community Right-to-Know-Act.
- 7 -
Under the Emergency Planning and Community Right-to-Know Act,
manufacturing facilities with 10 or more employees that produced, processed or
used certain amounts of any of more than 300 toxic chemicals were required to
report their annual releases of those chemicals to EPA and to the states by July
1, 1988.
Texas did not fare well in the inventory, ranking first in air and land
releases, third in water releases and second in underground injection and
off-site transfer releases.
EPA will be studying the data in the coming months for possible
legislative or regulatory action.
For more information, contact Mark Schnabel
Energy and Natural Resources Coordinator
HUMAN RESOURCES ITEMS
--- PARENTAL LEAVE LEGISLATION MOVES TOWARD HOUSE FLOOR On April
12th, the House Post Office and Civil Service Committee approved the federal
employee provisions of the parental leave legislation, H.R. 770.
The bill requires employers (including states) to give workers unpaid
leave to care for children and sick parents. Firms with 50 or more workers
would be required to grant up to 10 weeks of job-protected leave over two years
to employees to care for a newborn or seriously ill child or an ailing parent.
Workers with a serious illness of their own could take off as much as 15 weeks a
year. Federal workers are provided more generous leave: 18 weeks every two
years for parental leave and 26 weeks every year for sick leave.
State cost estimates for H.R. 770 are not yet available.
--- LEGISLATION AUTHORIZING REGIONAL TRAUMA CENTERS REPORTED BY
SUBCOMMITTEE legislation (H.R. 1602) designed to expand the availability of
trauma care was approved April 12th on a voice vote by the House Energy and
Commerce Subcommittee on Health.
The bill, which is opposed by the Administration, is designed to address
the problem of adequate trauma care. Trauma centers, created to provide
immediate help to people with life-threatening or potentially disabling
injuries, are especially scarce in rural areas of the country. H.R. 1602
authorizes $45 million in FY 90 and additional sums in FY 91-92 to help states
set up and run regional trauma centers.
--- WELFARE REFORM REGULATIONS TO UNDERGO OMB REVIEW The Department
of Health and Human Services (HHS) will forward for review by the Office of
Management and Budget (OMB) proposed regulations implementing the Job
Opportunities and Basic Skills Training Program (JOBS).
The JOBS program was created by the Family Support Act of 1988 and
requires states to implement a job training program for welfare recipients. The
regulations were scheduled to have been published by April 13, 1989, but OMB's
review is likely to take several weeks.
- 8 -
--- KENNEDY, WAXMAN MANDATED HEALTH BENEFITS LEGISLATION TO EXTEND
MEDICAID PROGRAM On April 12th, Senator Edward Kennedy (D-MA) and Rep. Henry
Waxman (D-CA) introduced a proposal, Basic Health Benefits for All Americans
Act, mandating minimum employer-provided health benefits and expanding the
Medicaid program to cover the uninsured.
The legislation is similar to that introduced by Kennedy last year. All
employers would be required to provide a minimum package of health insurance
benefits to full-time employees and their dependents. Medicaid would be
expanded by creating a new program to cover the uninsured. The required
benefits include hospital and physician care, diagnostic tests, prenatal care,
well-baby care and limited mental health and catastrophic care benefits.
Like last year's legislation, the new bill would require employers to
pay 80 percent of the health insurance premium for most workers and the full
premium for low wage workers. Coinsurance would be limited to 20 percent, and
deductibles could not exceed $250 per individual and $500 per family. No
cost-sharing could be imposed for prenatal and well-baby care.
There are several new provisions in the bill, including a small business
subsidy and a proportional contribution for part-time employees. Small
businesses for which the cost of the minimum plan exceeds five percent of gross
revenues would be eligible for a subsidy equaling 75 percent of the excess cost.
Part-time employees working between 17.5 hours per week and 25 hours per week
would have a proportional premium.
Another new provision would expand the Medicaid program to cover those
not eligible for employment-based health insurance by the year 2000. Beginning
in 1991, the program would be phased-in to provide coverage to 6 million
uninsured individuals with incomes below the poverty level. In 1996, the
program would extend coverage to individuals with incomes within 185 percent of
the poverty line and in 1999 coverage would be extended to all remaining
uninsured citizens. The new program would be financed by a combination of
federal-state funds and beneficiary premiums related to income. Federal
contributions would be based on the current Medicaid matching formula.
--- HHS TRANSFERS FUNDS TO EXTEND AZT PROGRAM Health and Human
Services Secretary Louis Sullivan last week transferred $5 million in federal
AIDS funds into an AZT grant program whose authorization would have expired
April 1st.
The new funds will go to states that need more money before September
30th. Of the original $15 million AZT pool, only $10 million has been spent and
some states have already run out of money. Senator Edward Kennedy (D-MA). had
tried to get legislation through to extend the program through September 30th,
:
but was unable to beat the April 1st deadline for expiration of the program.
While many in Congress contend that there will be no more expansions of
the program, others say that a federal-state matching AZT program may be
established.
For more information, contact Lori Bounds
Human Resources Coordinator
- 9 -
LABOR ITEM
--- SENATE APPROVES MINIMUM WAGE HIKE On April 11th, the Senate
approved a House-passed compromise raising the federal minimum wage to $4.55 an
hour after three years and a two-month subminimum wage for new hires.
Immediately following the 61-39 vote to increase the wage to $4.55, the
Senate voted against, 41-58, the lower increase to $4.25 supported by the
President.
President Bush has said that he would veto any raise in the minimum wage
over $4.25 an hour.
Although the increase to $4.55 passed both the House and Senate, neither
vote was substantial enough to override a presidential veto of the bill.
For more information, contact Mark Schnabel
Energy and Natural Resources Coordinator
SUPERCONDUCTING SUPER COLLIDER ITEMS
--- CONGRESSMEN, LUCE TESTIFY BEFORE HOUSE APPROPRIATIONS SUBCOMMIT-
TEE Congressmen Joe Barton (R-TX) and Martin Frost (D-TX) joined Tom Luce,
Chairman of the Texas National Research Laboratory Commission (TNRLC) and Ellis
County Judge Penny Redington in testifying before the House Appropriations
Subcommittee on Energy and Water Development on April 11th on the FY 90 funding
for the SSC. The panel, chaired by Rep. Tom Bevill (D-AL), has jurisdiction
over the SSC. In their testimony, the witnesses emphasized the national bene-
fits of the SSC and reiterated Texas' offer to "front-load" a portion of the $1
billion state contribution to the project.
--- GOVERNOR CLEMENTS MEETS WITH BUSH, BENTSEN, ADMINISTRATION OFFI-
CIALS On April 11th-12th, Governor Bill Clements met in Washington with
President George Bush, White House Chief of Staff John Sununu, Sen. Lloyd
Bentsen (D-TX), Secretary of Defense Richard Cheney, and Deputy Secretary of
State Lawrence Eagleburger regarding the SSC and a broad range of issues affect-
ing Texas. In the meetings the Bush Administration reconfirmed its commitment
to seek construction funding for the SSC in FY 90.
For more information, contact Henry Gandy
Director
TAXATION ITEMS
--- ROSTENKOWSKI SETS LBO HEARING DATES On April 12th, House Ways and
Means Committee Chairman Dan Rostenkowski (D-IL) announced that the Committee
has scheduled hearings on May 16-18 on new proposals to change the tax treatment
of leveraged buyouts, or LBOs.
The Ways and Means Committee and the Senate Finance Committee held
hearings on the LBO issue earlier this year, but the issue was de-emphasized
after legislators failed to reach a consensus. However, Rostenkowski announced
last month his intention to reopen the issue, and he requested that committee
members submit proposals for the committee's consideration which will form the
basis of the committee's deliberations. The proposals cover a wide range of
- 10 -
possibilities, including reductions in debt deductions, changes in the tax
treatment of equity financing and changes in treatment of investment banking
fees.
--- ROSTENKOWSKI DISTRIBUTES SECTION 89 REVISION OPTIONS On April
12th, House Ways and Means Committee Chairman Dan Rostenkowski (D-IL)
distributed to other legislators a list of options for revision of Section 89
employee benefit non-discrimination rules. The list of options is currently
being discussed among committee members and will be introduced as legislation as
early as next week.
The draft plan would drop requirements in current law requiring
employers to test the extent to which low-income employees participate in
employee benefit plans. Further, it would retain rules requiring that plans be
available to a wide range of employees and would add provisions requiring that
tax-favored plans be "affordable" to low-income workers as well as to
high-income workers. The basic requirement in the draft proposal would be that
a tax-favored plan be available to 90 percent of rank-and-file workers and be
affordable. Plans qualifying as affordable would be those requiring no more
than a $7 per week contribution for individual workers and a $17.50 per week
contribution for families.
In a separate development, Sen. Lloyd Bentsen (D-TX), Chairman of the
Senate Finance Committee, indicated that he plans to introduce a bill which
would make major changes to the Section 89 rules.
The Section 89 rules were adopted as part of the Tax Reform Act of 1986
to ensure that tax-favored employee benefit plans were available to, and
affordable for, low-income workers. Since enactment of the rules, legislators
have been swamped by complaints from businesses, claiming that the complexity
may force many of them to discontinue their plans completely.
The Treasury Department has stated that it will enforce "without delay"
Section 89 rules in the absence of Congressional action.
For more information, contact Carter Breed
Economic Development Coordinator
TRADE ITEM
--- TREASURY TO ISSUE GUIDANCE ON FOREIGN INVESTMENT RULES SOON An
official with the Treasury Department indicated last week that Treasury will
issue proposed regulations for implementation of the Exon-Florio foreign
investment provisions of the 1988 trade bill within the next two or three weeks.
The provision, sponsored by Sen. James Exon (D-NE) and Rep. James Florio (D-NJ),
empowers the President or his designee to investigate certain proposed foreign
acquisitions of U.S. companies and, if necessary, to block those transactions
that "threaten to impair the national security" of the U.S. Responsibility for
enactment of the law was given last year to the Committee on Foreign Investment
in the United States (CFIUS), which includes representatives of the Treasury,
Commerce, State, Defense and Justice departments.
For more information, contact Carter Breed
Economic Development Coordinator
- 11 -
THE WEEK AHEAD
*
1990 FARM BILL
The Senate Agriculture, Nutrition and Forestry Committee will hold a
hearing to review programs under the 1985 Farm Bill in anticipation of
the 1990 Farm Bill. Secretary of Agriculture Clayton Yeutter is the
lead witness. 10am SR-328A Russell Building. April 19.
*
CLIMATE CHANGES AND AGRICULTURE
Department Operations, Research and Foreign Agriculture Subcommittee and
Forests, Family Farms and Energy Subcommittee of the House Agriculture
Committee will hold a joint hearing on the effect of climatic changes on
U.S. agriculture. 9:30am 1302 Longworth HOB. April 19.
CHILD CARE PROPOSALS
The Senate Finance Committee will hold hearings to review and evaluate
the child care proposals that have been referred to the committee for
consideration. 10am SD-215 Dirksen Bldg./April 18th and 19th
*
PHYSICIAN PAYMENT REFORM
Health Sbucommittee (Senate Finance Committee) will hold a hearing on
revision of physician payment under Medicare. 2pm SD-215 Dirksen
Bldg./April 20th
WORKING POOR
Human Resources Subcommittee (House Ways and Means Committee) will
continue hearings on the problems of the working poor. 10am B-318
Rayburn Bldg./April 27th
STATE ENERGY CONSERVATION PROGRAMS
Energy Regulation & Conservation Subcommittee (Senate Energy & Natural
Resources Committee) will hold a hearing on legislation (S. 247) to
amend the Energy Policy and Conservation Act to increase the efficiency
and effectiveness of state energy conservation programs. 2 pm SD-366
Dirksen Bldg./May 2
*
AMERICAN HERITAGE TRUST MARKUP
National Parks & Public Lands Subcommittee (House Interior & Insular
Affairs Committee) will mark up legislation (H.R. 876) to establish the
American Heritage Trust for purposes of enhancing the protection of the
nation's natural, historical, cultural and outdorr recreational
heritage. 10am 1324 Longworth Bldg./April 20th
- 12 -
TEXAS THIS WEEK:
President George Bush will address the Legislature in joint session April 26th.
The White House said Bush would stop in Texas on his way back to Washington from
a trip to California
The Texas Senate approved a two year state spending
plan that calls for an estimated $46.75 billion that would give state employees
a raise, boost funding for poor school districts and maintain current services
without a major tax increase. The Senate version is about $150 million less than
the $46.9 billion approved by the House. A conference committee will work out
the differences between the House and Senate plans later this spring
A late
addition to the House budget plan was $6 million for a study and planning of a
Texas high speed rail system linking Houston, Dallas-Fort Worth and Austin-San
Antonio
Three scientists at Texas A&M University essentially duplicated
controversial results of a fusion experiment done at the University of Utah. The
experiment indicates that clean energy from sustained nuclear fusion at room
temperature could replace all of the polluting fuel sources the world now uses
within 20 years
Six. East Texas counties were declared disaster areas last
Wednesday by Governor Clements, who asked for federal relief for damage caused
by flooding last month. The six counties are Cass, Cherokee, Gregg, Harrison,
Marion and Rusk
The Texas Senate passed a fair housing bill that provides
for state enforcement against housing discrimination. Senator Eddie Bernice
Johnson (D-Dallas) sponsored the bill, which tracks the federal Fair Housing Act
but allows for state enforcement. It is expected to pass the House, were it is
being sponsored by Representative Hugh Shine (R-Temple)
The Texas Senate
approved a series of accounting maneuvers proposed by State Comptroller Bob
Bullock to produce an extra $1.1 billion to fund critically needed state
programs for the next two-year budget period. The maneuvers involve shifting
money among state funds, borrowing money from state funds and delaying payments
to other funds. Most of the money generated is being earmarked for public
education and raises for state employees
Another budget matter that passed
the Senate was a measure to use $143 million in bonds, authorized by voters in
1987, to build three prisons, including two 2,250-bed maximum-security units and
a 500-bed psychiatric hospital. The House approved the measure
earlier
State Representative Weldon Betts (D-Houston) died last Thursday of
cancer
The Senate passed and sent to the House a bill that would create a
commercial fisheries marketing council within the state agriculture department.
The projected cost of the Texas Council for the 1990-91 fiscal year is
$203,396
Governor Bill Clements, Lt. Governor Hobby, and Speaker Gib
Lewis endorsed a $150 million plan to renovate and substantially expand the 100
year old state Capitol. The plan, unveiled at a meeting of the State
Preservation Board, would entail the construction of a four-story underground
structure that would more than double the office space for state legislators and
provide two floors of parking
The Texas State Senate voted to raise the
state's legal age for buying cigarettes and other tobacco products from 16 to
18. Under the bill, sponsored by Senator Cyndi Krier (R-San Antonio), selling
tobacco products to a person under the age of 18 would be a misdemeanor
punishable by a fine of as much as $200
Legislation that would allow
"mini-bars" in hotel rooms won approval of the Senate Economic Development
Committee
Lt. Governor Bill Hobby, Senator O.H. "Ike" Harris (R-Dallas),
and Representative Ashely Smith (R-Houston) will travel to Washington next month
to discuss Texas' troubled financial industry
Legislation to restrict
lobbying by former state employees stalled after some state senators suggested
lawmakers put themselves under the regulations
Officials at the Texas
Department of Human Services said their search for a new commissioner to replace
- 13 -
Marlin Johnson has narrowed to five candidates. They are Brian Baxter of
Harrisburg, Penn.; Micheal Becker of Clearwater, Florida; Camille Miller of
Austin; Frank Smith of Dallas; and Terry Trimble of Austin
Representative
Ron Lewis (D-Mauiceville) has introduced a bill that would prohibit police from
setting ticket-writing quotas for officers. Lewis said some communities receive
70% of their budget from traffic fines and set quotas to ensure that revenues
will meet expectations
A New York based chemical firm in Marshall, Texas
has agreed to pay the second-largest pollution fine in the state's history
because of hazardous-waste handling and storaging practices. Witco Incorporated
has agreed to pay $955,000 in civil penalties and fees
The criminal justice
reform package is expected to be considered in House and Senate committees this
week. Major components of the package call for construction of 22,000
correction beds and combining the State Prison Board, Adult Probation Commission
and the Board of Pardons and Parole into one criminal justice board
First
Lady Barbara Bush honored Peace Corp Volunteer Micheal C. Bainum of San Antonio
as one of three recipients of the 1989 John F. Kennedy Peace Corps Volunteer of
the Year awards
The Texas House approved a bill sponsored by Representative
Bill Blackwood (R-Mesquite), that would make it a felony to take a peace
officer's weapon. The measure was prompted by the shootings of two Dallas law
enforcement officers
In 1988 the state collected $499 million in oil
production taxes, down form a high of $1.3 billion in 1982
Several hundred
people gathered at the State Capitol last Wednesday to urge state financing of
water and sewage improvements for the rural Texas border subdivisions called
Colonias. State leaders predicted that the House will approve legislation that
passed the Senate 30-0. The legislation would make available up to $100 million
in state-guaranteed bonds to allow governmental units along the Texas-Mexico
Border to construct the water and sewage systems
The House State, Federal,
and International Affairs Committee approved H.B. 2972 by Representative Henry
Cuellar (D-Loredo). The bill would establish an office within the Texas
Department of Health to promote health and environmental issues between the
State of Texas and Mexico
Governor Bill Clements celebrated his 72nd
birthday on April 13th.
- 14 -
WILLIAM P. CLEMENTS, JR.
STATE
OF
HENRY M. GANDY
GOVERNOR
DIRECTOR
THE STATE OF TEXAS
OFFICE OF STATE-FEDERAL RELATIONS
WASHINGTON ACTION ITEMS
April 7, 1989
*
WHITE HOUSE AGRICULTURE ADVISOR TOURS TEXAS DROUGHT AREAS
PAGE 1
*
HOUSE BANKING SUBCOMMITTEE BEGINS MARKUP OF FSLIC BAILOUT
PAGE 3
*
BUSH SUBMITS EDUCATION PACKAGE TO CONGRESS
PAGE 3
*
HOUSE SUBCOMMITTEE APPROVES SSC CONSTRUCTION AUTHORIZATION PAGE 9
AGRICULTURE ITEMS
--- WHITE HOUSE AGRICULTURE ADVISOR TOURS TEXAS DROUGHT AREAS
Cooper
Evans, President Bush's special assistant for agricultural affairs, toured some
of the worst drought-affected areas in Texas April 5th and 6th at the request of
Sen. Phil Gramm (R-TX). Evans also met with agricultural leaders in the Rio
Grande Valley and in Lubbock to discuss the drought and other agricultural
issues of concern to Texas agriculture. On Thursday, Evans addressed the annual
meeting of the Plains Cotton Growers Association in Lubbock.
--- HOUSE AGRICULTURE COMMITTEE CONSIDERS DROUGHT RELIEF BILL The
Wheat, Feed Grains and Soybeans Subcommittee of the House Agriculture Committee
held a hearing April 6th to hear testimony from the U.S. Department of
Agriculture and others on the impact of the continuing drought on the 1989 wheat
crop. Rep. Pat Roberts (R-KS) also discussed legislation he is introducing to
extend the provisions of the 1988 Disaster Relief Act to producers of 1989 crop
hard red winter wheat. USDA officials said that inadequate precipitation and
abnormal temperature extremes have devestated much of the wheat crop in the
Great Plains, including the Texas Panhandle. They believe that timely rains
could save most of the crop, but that significant portions are already beyond
recovery. They also indicated that USDA is monitoring the situation closely,
and may sharply reduce the Acreage Reduction Program (ARP) requirements if dry
conditions continue by June 1st, when program announcements must be made for the
1990 crop.
The Chairman of the Subcommittee, Rep. Glickman (D-KS), discussed four
options as responses to the drought, including: an extension of the 1988 drought
bill into 1989, extending the 1988 bill only for winter wheat planted in 1988,
extending the enrollment period for the 0/92 program and modifying it to ensure
600 MARYLAND AVENUE, S.W.
SUITE 255
WASHINGTON, D.C. 20024
202/488-3927
POST OFFICE BOX 13005
AUSTIN, TEXAS 78711
512/463-1803
farmers full deficiency payments, and, extending the enrollment period for
farmers to purchase federal crop insurance for the 1989 winter wheat crop. Both
Glickman and Sen. Minority Leader Dole (R-KS) have said Congress is likely to
pass legislation providing aid to drought-stricken farmers.
--- DROUGHT CAUSING NEAR-RECORD WIND EROSION IN GREAT PLAINS Wilson
Scaling, Chief of the USDA's Soil Conservation Service, announced March 23rd
that some 4.7 million acres of land in the Great Plains has been damaged by wind
erosion since November, 1988. While most of the damage is concentrated in the
northern Great Plains, Texas has seen significant wind erosion as well. During
the same November to February period a year ago, about 894,000 acres in Texas
were damaged. This year, however, about 1,050,000 acres has been damaged by
wind erosion.
--- FmHA PROCESSING DEBT RESTRUCTURING APPLICATIONS The Farmers Home
Administration (FmHA) reported March 21st that 28,000 completed responses had
been returned to them out of over 66,000 notices sent out to seriously
delinquent borrowers last November. Under provisions included in the
Agricultural Credit Act of 1987, FmHA was required to notify borrowers who were
more than 180 days delinquent in servicing their debt of new debt servicing
options included in the new law. Borrowers then had 45 days to respond and
furnish financial information to FmHA, who had 60 days to process the
applications for debt relief. In Texas, notices were sent to 4,975 borrowers,
and 2,086 applications were returned to FmHA. Once the applications are
processed by FmHA, borrowers will have 45 days to decide whether to accept
FmHA's proposal for restructuring. The debt restructuring plans could include
loan rescheduling, deferral or forgiveness of debt, and interest rate reduction.
--- FCA PLANS HEARING ON DIVERSIFICATION OF FCS FINANCIAL
SERVICES The Farm Credit Administration recently announced that it will soon
hold a public hearing to get public input on the advisability of allowing Farm
Credit System lenders to diversify into financially related services. FCA wants
to hear from borrowers and others on the need for financially related services,
the availability of these services to agricultural borrowers, and the ability of
FCS institutions to provide them. Details of the hearing will be announced in
the Federal Register.
--- GATT NEGOTIATIONS ON AGRICULTURE CONTINUE IN GENEVA Multilateral
negotiations on reforming agricultural trade practices under the auspices of the
General Agreement on Tariffs and Trade (GATT) continued in Geneva April 4th and
5th, but a major breakthrough did not occur. A proposal drafted by GATT General
Director Arthur Dunkel, but not adopted, called for a freeze in farm supports at
current levels, a freeze on import barriers at current levels, and a limit on
export subsidies at the average of the past two years. A key element of the
plan would require GATT member countries to implement "substantial, progressive
reductions in farm subsidies" in the future.
House Agriculture Committee Chairman de la Garza (D-TX) led a delegation
of Congressman to the negotiations to assist Administration officials. Rep.
Charlie Stenholm (D-TX) also attended.
For more information, contact Glen Hodges
Agriculture Coordinator
- 2 -
BANKING ITEM
--- HOUSE BANKING SUBCOMMITTEE BEGINS MARKUP OF FSLIC BAILOUT On
April 6th, the Financial Institutions Subcommittee of the House Banking
Committee began marking up H.R. 1278, the Bush Administration's plan to solve
the savings and loan crisis. Since there are only four members of the House
Banking Committee who are not also members of the Financial Institutions
Subcommittee, the great majority of action on the bill is expected during the
Subcommittee markup. The markup is scheduled to resume April 11th.
The Subcommittee defeated, by a vote of 7-39, an amendment offered by
Reps. Paul Kanjorski (D-PA) and Marcy Kaptur (D-OH) which would have required
Texas and several other states to pay 20 percent of the cost to clean up the
state-chartered thrift problem within each state. Estimates of the cost to the
State of Texas for its portion of the cleanup under the amendment approached $10
billion. In lieu of paying the 20 percent share of the cleanup cost, the
relevant state could opt to convert all state thrift charters to federal
charters, eliminating Texas regulation of any aspect of the thrift industry.
The state would have the additional option of financing a new or existing
housing authority which would purchase all non-performing real estate from
insolvent state-chartered thrifts and warehouse the assets until such time as
the values rise sufficiently. Rep. Henry Gonzalez (D-TX), Chairman of the House
Banking Committee, Rep. Steve Bartlett (R-TX) spoke out against the amendment.
Among the amendments approved was one offered by Rep. Jim Leach (R-IA)
which would make the Federal Deposit Insurance Corporation (FDIC) the chief
federal regulator of state-chartered thrifts. The amendment was approved by a
vote of 35-12. The Federal Home Loan Bank System (FHLBS), which would be placed
under the supervision of the Department of the Treasury, would retain regulatory
responsibility for federally-chartered thrifts.
The Subcommittee also approved an amendment offered by Reps. Marge
Roukema (R-NJ) and John LaFalce (D-NY) which authorized the immediate imposition
of risk-based deposit insurance premiums upon completion of a study on the issue
by the FDIC. The Bush plan called for the study, but left authorization of the
premiums for later consideration.
The Senate Banking Committee is scheduled to begin consideration of the
Bush plan on April 13th.
For more information, contact Carter Breed
Economic Development Coordinator
EDUCATION ITEMS
-- BUSH SUBMITS EDUCATION PACKAGE TO CONGRESS President Bush
announced April 5th that he has asked Congress for an additional $422 million in
FY 90 to promote educational excellence. The legislation (S. 695), introduced
by Senator Nancy Kassebaum (R-KA), was quickly deemed by Democratic leaders as
inadequate.
Critics argued that the President's education budget does not account
for inflation, thereby forcing cuts in current programs. They maintain that
money for the new initiatives would be better spent expanding successful
programs for disadvantaged and handicapped students.
- 3 -
The Bush legislation would:
- Provide $250 million in grants for merit school programs that promote
educational achievement, create a safe and drug-free environment and
reduce the dropout rate;
- Provide $100 million for magnet schools;
- Authorize $25 million for state grants in 1990 to improve teacher
certification programs;
- Provide $7.6 million for a three-year program of grants to outstanding
teachers;
- Provide $50 million over three years to historically black colleges
and universities; and
- Authorize $25 million annually for a three-year program of grants to
urban schools with serious drug problems.
CAVAZOS ANNOUNCES ANTIDRUG INITIATIVE On April 3rd, Secretary of
Education Cavazos announced several new programs designed to beat America's drug
problem.
Cavazos said that he would spend an additional $2 million to expand the
Department's drug prevention efforts with projects that include:
- Publication of a comprehensive antidrug handbook for parents;
- Preparation of a new videotape linking drug use to the school dropout
problem. The videotape will be aimed at inner-city vouths and will be
produced in Spanish and English;
- Publication of a new version of the Department's "What Works: Schools
Without Drugs"; and
- Translation of several antidrug videotapes into Spanish.
--- HOUSE PANEL SCHEDULED TO BEGIN MARKUP OF VOCATIONAL EDUCATION
REAUTHORIZATION
The House Subcommittee on Elementary, Secondary and Vocational
Education will begin April 12th markup of H.R. 7, legislation reauthorizing the
Carl D. Perkins Vocational Education Act.
Members are expected to focus on setasides and the ability to transfer
funds. The Administration's proposal still is being reviewed by the Office of
Managment and Budget (OMB), and most likely will not be available before the
markup.
Senate action on the reauthorization legislation is unlikely before
September.
--- HOUSE AND SENATE BUDGET COMMITTEES BEGIN EARLY CONSIDERATION OF
EDUCATION FUNDING PROPOSALS Senator Timothy Wirth (D-CO) and Congressman
Augustus Hawkins (D-CA) have presented to their respective Budget Committees
- 4 -
plans that would provide substantial funding increases for education and
children's services.
Hawkins' plan would commit $5.4 billion a year over FY 1989 spending
levels for four years to federal programs that provide for: early childhood
nutrition, education and development for children at highest risk; strengthening
basic skills; address the drugs and dropout problems; training and retraining of
American workers for competitiveness; and strengthening American higher
education.
The Wirth proposal would increase spending for certain programs,
depending on FY 89 budget authority. The additional funding is proposed for:
the Head Start program; inflationary increases for all Department of Education
programs; increases for elementary, secondary and postsecondary education
programs aimed at disadvantaged students; an increase for the drug-free schools
program and for child nutrition programs; and an increase for maternal and child
health programs.
Details are still not available for President Bush's education proposal.
In testimony before the House Labor/HHS/Education Appropriations Committee,
Office of Management and Budget (OMB) Director Richard Darman indicated that all
areas of spending are on the negotiating table.
For more information, contact Lori Bounds
Human Resources Coordinator
ELECTION ITEM
--- UNIFORM POLL CLOSING TIME APPROVED ON HOUSE FLOOR By a vote of
238-154, the House passed a bill, H.R. 18, requiring all polls in the
continental United States to close at 9 p.m. EST during presidential elections.
The legislation is aimed at preventing network television from announc-
ing early results from the East that could influence Western voters. Supporters
of the bill said it would boost voter turnout.
The bill provides that states in the Pacific time zone remain on day-
light-saving time until the Sunday after Election Day in presidential election
years so polls can stay open until 7 p.m. PST.
The bill is identical to two bills that passed the House in previous
Congresses but failed to pass the Senate. Supporters said they think the bill
will do better in the Senate this year because Sen. Wendell H. Ford (D-KY),
Chairman of the Rules Committee, told them he would make an effort to push
similar legislation to the floor.
For more information, contact Randy Erben
Deputy Director and General Counsel
ENERGY ITEMS
---
ALASKAN OIL SPILL MAY AFFECT ANWR DRILLING PROSPECTS Recent furor
over the huge oil spill off the coast of Valdez, Alaska may change the dynamics
- 5 -
of congressional debate concerning the opening of the Arctic National Wildlife
Refuge to oil and gas exploration.
Valdez is the location of a large oil terminal at the Southern end of
the Trans-Alaska Pipeline. An Exxon oil tanker was returning from the terminal
when it struck a reef, spilling 11 million gallons of crude oil into the Valdez
Sound.
The opening of the ANWR to exploration has been a key issue among both
the environmental and energy communities for some time. Proponents of opening
the ANWR to drilling argue that the potential oil reserves under the 1.5 million
acre coastal plain portion of the refuge are vital to our energy security and
that minimal environmental damage will occur.
Opponents, on the other hand, maintain that potential oil findings in
ANWR do not outweigh environmental risks associated with drilling.
While many feel that pro-ANWR legislation is imminent this year, others,
primarily among the environmental community, believe that the Valdez accident
will be a major setback for ANWR exploration prospects.
--- GAS DECONTROL BILL PASSES HOUSE SUBCOMMITTEE On April 6th, the
Energy and Power Subcommittee of the House Energy and Commerce Committee passed
legislation, H.R. 1595, to decontrol all natural gas prices by January 1, 1993.
The 1993 deregulation date proposed by the bill represents a compromise
between members wanting immediate decontrol, including Rep. Joe Barton (D-TX)
who had offered an amendment as such, and those who want a five-year phase-in.
The full committee is expected to take up the measure next week.
For more information, contact Mark Schnabel
Energy and Natural Resources Coordinator
ENVIRONMENTAL ITEMS
--- AMERICAN HERITAGE TRUST BILL REVIVED On April 6th, the initial
hearing of the House Interior and Insular Affairs Subcommittee on National Parks
and Public Lands held its initial hearing on legislation regarding the American
Heritage Trust Fund.
H.R. 876 would restructure the Land and Water Conservation Fund (LWCF),
the government's main land-buying account, and the Historic Preservation Fund
(HPF) into a dedicated trust fund invested in interest-bearing accounts. The
interest would be used to acquire new parks, wildlife refuges, forests, and
historic sites.
The Appropriations Committee, which represented the principal
congressional opposition last year, does not look favorably on proposals to
remove programs from the annual appropriations process. This year's bill,
however, has been amended in an effort to address the Appropriations Committee's
concerns by specifying that the distribution of money from the fund will be
allocated pursuant to annual appropriations legislation.
- 6 -
Revenue from offshore oil and gas leases, which totals nearly $900
million annually, goes into the funds. However, Congress must appropriate from
those funds to provide for land acquisition. In recent years, Congress has
appropriated far less than the maximum available. According to House Interior
and Insular Affairs Chairman Morris K. Udall (D-AZ), the unappropriated balance
amounts to nearly $6 billion for the LWCF and $1.2 billion for the HPF.
In Texas, the LWCF is administered by the Texas Parks & Wildlife Depart-
ment while the HPF is administered by the Texas Historical Commission
WAXMAN POSITIVE ON NATURAL GAS/CLEAN AIR POSSIBILITIES Rep. Henry
Waxman (D-CA) indicated this week that natural gas may play a role in new clean
air legislation if the natural gas industry aggressively gets involved in the
rewriting of the Clean Air Act on Capitol Hill.
Waxman is Chairman of the Subcommittee on Health and the Environment of
the House Energy and Commerce Committee, which has jurisdiction over the clean
air issue.
Waxman, speaking at an April 4th meeting of the American Gas
Association, also said that he supports freedom of choice for polluters on
control strategies which include increased natural gas use as an option for
decreasing air pollution along with another option of increased use of
scrubbers, the option most favored by high-sulfur coal producers.
Action on the Clean Air Act should increase on all fronts as the Admin-
istration prepares to unveil its bill around June 1st, as the "Group of Nine"
bill gains momentum, and as Energy and Commerce Chairman John Dingell (D-MI) and
Waxman set the time frame for bill activity in the Energy and Commerce Commit-
tee.
For more information, contact Mark Schnabel
Energy and Natural Resources Coordinator
HUMAN RESOURCES ITEMS
LEGISLATION INTRODUCED TO PREVENT INFANT MORTALITY Legislation
designed to prevent infant mortality was introduced April 5th by Senators Bill
Bradley (D-NJ) and Dave Durenberger (R-MN) and Rep. Tom Tauke (R-IA).
The bills, which would cost $100 million in FY 90, are designed to
educate pregnant women and mothers about the need for early and continued health
care through home visitor programs and information services. The legislation
follows a study by the National Commission to Prevent Infant Mortality which
found that almost 40,000 American infants die each year before reaching one year
of age.
--- KENNEDY INTRODUCES MEASURE TO EXTEND FEDERAL PROGRAM FOR AIDS
DRUG Senator Edward Kennedy (D-MA) has introduced legislation that would
extend until September 30th the federal program for AZT, the drug used in the
treatment of AIDS patients.
Congress passed a measure in 1988 that gave states access to $15 million
in federal funds to assist eligible AIDS patients in purchasing AZT. The
federal program is scheduled to expire shortly after April 1st unless Congress
- 7 -
intervenes. The original $30 million program, established in 1987, was intended
to be a one-year program. Last year's extension was supposed to give states
needed support in starting up their own programs.
Only $9.6 million of the $15 million authorized by Congress last year
has been spent. Kennedy's legislation is strongly opposed by Senator Jesse
Helms (R-NC), who with his colleagues is opposing any AZT extension.
--- HOUSE PANEL CONDUCTS HEARING ON FEDERAL REFUGEE POLICY,
ADMINISTRATION PROPOSES NEW IMMIGRATION CATEGORY Congress continued this week
to focus attention on the backlog of refugees waiting to enter the United
States.
The House Subcommittee on Immigration, Refugee and International Law
held a hearing yesterday on several bills which raise the refugee ceiling for
Soviet Jews and other Soviet emigres waiting to enter the United States.
Testifying at the hearing were representatives from the Departments of State and
Health and Human Services, the Immigration and Naturalization Service (INS) and
representatives from various advocacy organizations.
Office of Family Assistance Director Kathryn Bertini, testifying on
behalf of the Department of Health and Human Services, indicated that the
Administration opposes the provision contained in Rep. Howard Berman's (D-CA)
legislation (H.R. 1605), that would "borrow" $100 million from the State
Legalization Impact Assistance Grant (SLIAG) program to fund the resettlement of
Soviet Jews. Bertini indicated that the Administration supports a reprogramming
of some refugee resettlement funds to support settlement of the Soviet Jews, an
action that would shift more of the refugee burden to the states.
Prior to the hearing, the Bush administration proposed creating a new
immigration category that would let in up to 30,000 additional immigrants
yearly. The proposed legislation would set up a new category of "special
immigrants" whose admission is deemed necessary for foreign policy reasons to be
in the national interest. The proposal would permit up to 30,000 of the special
visas for each of the next five years and would allow the emigres to eventually
become eligible for citizenship.
Senator Edward Kennedy (D-MA) has scheduled a Senate Judiciary Committee
hearing on the refugee situation for April 10th.
--- HOUSE SUBCOMMITTEE ON LABOR/HHS/EDUCATION PASSES FY 89
SUPPLEMENTAL The House Subcommittee on Labor/HHS/Education quickly passed its
portion of the FY 89 supplemental appropriations request on April 5th.
While the Administration had requested a 1.1 percent across-the-board
cut in all programs, the Subcommittee did not implement the cut and added
funding for several programs of interest to states. The Foster Care program
received $423 million for FY 89, and $892 million was appropriated for the
Guaranteed Student Loan program.
Full committee markup is expected early next week.
For more information, contact Lori Bounds
Human Resources Coordinator
- 8 -
SUPERCONDUCTING SUPER COLLIDER ITEMS
--- HOUSE COMMITTEE DEBATES SUPER COLLIDER SITE SELECTION PROCESS, GAO
FINDS TECHNICAL MERIT, NOT POLITICS, WAS BASIS FOR TEXAS SITE SELECTION. The
House Committee on Science, Space and Technology held a hearing on Wednesday,
April 5th to discuss the fairness of the Department of Energy's selection of
Texas for the Super Collider. Testifying at the hearing were: Dr. Raphael
Kasper, a member of the committee from the National Academies of Science and
Engineering, Robert Hunter and Wilmot Hess from the Department of Energy, Ms.
Flora Milans from the General Accounting Office (GAO) and Dr. Brad Vinson of
Texas A&M University.
The witnesses assured the Committee that the DOE's Site Selection Task
Force decision was above-board and free of political pressure. DOE officials
reaffirmed that the decision of the task force was an "unbiased evaluation of
the merits of each of the best qualified list (BQL) sites against the published
evaluation criteria and their relative importance."
The GAO, Congress' investigative arm, found no reason to question the
decision to site the SSC in Texas. In her testimony GAO Assistant Director
Milans testified that the GAO examination of the site selection process revealed
that technical merit, not politics, was the basis of the Department of Energy's
decision to locate the SSC in Ellis County.
In response to the GAO findings, Senator Dennis DeConcini (D-AZ), who
earlier had criticized the selection as politically motivated, stated he was
satisfied politics played no role in the decision. DeConcini, who sits on the
Senate Appropriations Subcommittee which has jurisdiction over the project,
expressed he would now support SSC funding.
--- HOUSE SUBCOMMITTEE APPROVES SSC CONSTRUCTION AUTHORIZATION The
House Science, Space and Technology Committee's, Subcommittee on Energy Research
and Development held a markup on Thursday, April 6th to review the Department of
Energy's Budget Authorization for FY90.
At the hearing, the Subcommittee approved authorization for FY 90
construction funding for the SSC.
Chairwoman of the Subcommittee Marilyn Lloyd (D-TN) submitted an
amendment for a general, across the board reduction for the General Sciences
portion of the budget. This could cause a slight reduction in the $250 million
recommended for the Super Collider.
Congressman Lamar Smith (R-TX) spoke in favor of authorizing
appropriation of portion of the $20 million recommended for the Geo Sciences
section of the budget to the Geo Sciences Institute for Oil and Gas Research
Discovery in Austin, Texas.
--- NATIONAL SSC COALITION HOLDS FIRST MEETING, NAMES KEYWORTH AS
HONORARY CHAIRMAN Senators Lloyd Bentsen (D-TX) and Phil Gramm (R-TX) were the
keynote speakers at the inaugural meeting of the National SSC Coalition on April
5th in Washington. The purpose of the Coalition, which consists of industries,
universities, scientists and others with a strong interest in ensuring that
Congress appropriates construction funding in FY 90, is to provide and coordi-
nate broad based national support of the project. Joining Bentsen and Gramm at
- 9 -
the gathering were House Science, Space & Technology Chairman Robert Roe (D-NJ),
Rep. Ron Packard (R-CA), Rep. Carl Pursell (R-MI), ten Texas congressmen and I50
representatives from the business, science and education communities.
At the meeting, Hollye Doane, Executive Director of the Coalition,
announced that George Keyworth, who served as science advisor to President
Ronald Reagan, had agreed to act as honorary chairman.
For more information, contact Henry M. Gandy
Director
- 10 -
THE WEEK AHEAD
The House will convene at noon on April 10th. Four bills are scheduled for
consideration Tuesday under suspension of the rules. Wednesday's schedule
includes the State Department authorization and the base closing bill. The
House make take up the Central American peace plan on Thursday.
The Senate will not be in session on Monday. Tuesday's schedule includes a bill
pertaining to the Eastern Airlines strike. On Thursday, the Senate will take up
legislation to increase the minimum wage.
UPCOMING CONGRESSIONAL HEARINGS
*
AGRICULTURE & GATT
The Domestic & Foreign Marketing Subcommittee (Senate Agriculture,
Nutrition and Forestry Committee) will hold a hearing on the General
Agreement on Tariffs & Trade (GATT) proceedings in Geneva as they relate
to agriculture. 2pm SR-328A Russell Bldg./April 12th
FSLIC BAILOUT
Senate Banking, Housing & Urban Affairs Committee will mark up
legislation to recapitalize the Federal Savings and Loan Insurance
Corporation. Time TBA SD-538 Dirksen Bldg/tentative April 13th and 14th
FY 90 NASA BUDGET
Science, Technology & Space Subcommittee (Senate Commerce, Science &
Transportation Committee) will hold a hearing on the FY 90-91 budget
request for NASA's space science and applications programs. 9:30am
SR-253 Russell Bldg./April 11th
*
CHILD CARE PROPOSALS
Senate Finance Committee will hold hearings to review and evaluate the
child care proposals that have been referred to the committee for
consideration. 10am SD-215 Dirksen Bldg./April 18th and 19th
*
NUTRITION MONITORING
Senate Governmental Affairs Committee will hold a hearing on legislation
to establish a coordinated national nurtition monitoring program and a
comprehensive plan for the assessment of the nutritional and dietary
status of the US population. The plan also would assess the nutritional
quality of food consumed in the US. 9:30am SD-342 Dirksen Bldg./April
13th
*
IMMIGRATION REFORM
Immigration and Refugee Affairs Subcommittee (Senate Judiciary
Committee) will markup legislation to amend the Immigration and
Nationality Act to change the level and preference sytem for admission
of immigrants to the United States and provide for administrative
naturalization. 1:45pm SD-226 Dirksen Bldg./April 10th
REFUGEE PROGRAM REVIEW
Immigration and Refugee Affairs Subcommittee (Senate Judiciary
Committee) will hold a hearing to conduct a mid-year review of the US
refugee program. Following above markup SD-226 Dirksen Bldg./April 10th
- 11 -
*
FSLIC BAILOUT
Financial Institutions, Regulation & Insurance Subcommittee (House
Banking, Finance & Urban Affairs Committee) will continue marking up
legislation to recapitalize the Federal Savings and Loan Insurance
Corporation. 9am 2128 Rayburn Bldg./April 11th, 12th and addl dates if
needed
*
VOCATIONAL EDUCATION ACT REAUTHORIZATION
Elementary, Secondary & Vocational Education Subcommittee (House
Education & Labor Committee) will mark up legislation revising and
extending for five years vocational education programs included in the
Carl Perkins Vocational Education Act. 9:30am 2175 Rayburn Bldg/Arpil
12th and 13th
*
HANDICAPPED EDUCATION
Select Education Subcommittee (House Education & Labor Committee) will
continue oversight hearings on the reauthorization of discretionary
programs under the Education of the Handicapped Act. Time & Room
TBA/May 4th
*
MEAT INSPECTIONS
Human Resources &Intergovernmental Relations Subcommittee (House
Government Operations Committee) will hold a hearing on a Department of
Agriculture plan to allow reduced inspections of meat-processing plants.
10am 2247 Rayburn Bldg./April 11th
*
MEDICAL EDUCATION
Health Subcommittee (House Ways & Means Committee) will hold a hearing
on FY 90 budget issues related to graduate medical education support
under the Medicare program. 10am B-318 Rayburn Bldg./April 11th
*
GATT TRADE NEGOTIATIONS
Trade Subcommittee (House Ways & Means Committee) will hold a series of
hearings on the Uruguay Round of the General Agreement on Tariffs &
Trade (GATT). 10am 1100 Longworth Bldg./April 11th
*
MEDICARE PHYSICIAN PAYMENTS
Health Subcommittee (House Ways & Means Committee) will hold a hearing
on issues relating to Medicare payments to physicians. 1pm B-318
Rayburn Bldg./April 17th
- 12 -
TEXAS THIS WEEK:
A bill sponsored by Senator Tati Santiesteban (D-E1 Paso) will bring water and
sewer service to colonias along the Texas-Mexico border. The bill authorizes the
state to issue $100 million in bonds to provide low-cost, long term loans to
counties and other government entities to install water and sewage systems. In
addition the legislation authorizes the state to join the United States and
Mexican government in funding a $44 million sewage plant in Nuevo Laredo. The
bill will now go to the House for approval
The Texas House approved a new
law requiring all adult motorcyclists to wear helmets. The measure has already
been approved by the Senate and will go to the Governor for signing
The
Texas National Guard (TNG) will be stationed along the Rio Grande as part of an
increased military role in the fight against narcotics trafficking. Ninety-two
members of the TNG began full time employment April 1st through a $2.9 million
grant for the U.S. Department of Defense
The House State Affairs Committee
cleared bills expanding cruise ship gambling and allowing Texans to vote on a
non-binding resolution on whether they would support a lottery. Both bills await
consideration by the full House
Senate Finance Committee Chairman Kent
Caperton said the $46.7 billion general appropriations bill will go before the
Senate this Wednesday
The Texas House Ways and Means Committee on Wednesday
approved a plan that would cut the oil severance tax from 4.6% to 2.3% on oil
recovered through techniques such as carbon dioxide and waterflow
operations
The Texas Racing Commission has granted three parimutual horse
racing track licenses. Tracks that have received approval are Trinity Meadows, a
Class II track just west of Fort Worth; Bandera Downs in Bandera; and G. Rollie
White Downs in Brandy, 150 miles northwest of Austin
San Marcos, Texas
native Catalina Vasquez Villalpando has been nominated by President George Bush
to be the next United States Treasurer
The Senate State Affairs Committee
has endorsed two bills that promote the use of natural gas in Texas. One would
require use of natural gas or other alternative fuels in state-owned and
operated vehicles, school districts with more than 50 buses and local transit
authorities. The second would require conversion in the 21 counties that fail to
attain federal clean air standards. Those include Dallas-Fort Worth, Houston,
Beaumont-Port Authur and El Paso
Texas could become the 28th state to
ratify a 200-year old amendment to the U.S. Constitution on congressional,
judicial and executive salaries. The Texas House approved a resolution to ratify
the amendment that would delay enactment of pay legislation until after the next
election of voting members. Since 1789, 27 states have ratified it, 38 is needed
to meet the three-fourths requirement
The Texas State Teachers Association
said teachers salaries fell from 27th to 31st nationally, according to a
National Teachers Association survey. The 1988-89 average teacher salary in
Texas is $21,513 or $3,054 less than the national average of $29,567.
- 13 -
WILLIAM P. CLEMENTS, JR.
HENRY M. GANDY
GOVERNOR
ST
OF
DIRECTOR
THE STATE OF TEXAS
OFFICE OF STATE-FEDERAL RELATIONS
WASHINGTON ACTION ITEMS
March 24, 1989
*
SUPREME COURT SAYS FSLIC MAY NOT TRY CLAIMS
PAGE 3
HOUSE MEMBERS WITH DOE FACILITIES IN DISTRICTS FORM CAUCUS
PAGE 6
MINIMUM WAGE BILL PASSES HOUSE
PAGE 9
WATKINS TESTIFIES BEFORE HOUSE APPROPRIATIONS SUBCOMMITTEE PAGE 10
[Congress will be in recess for the Easter holidays March 24-April 2. The next
edition of the Newsletter will appear on April 7th, 1989]
AGRICULTURE ITEMS
--- CAIRNS GROUP WARNS OF POSSIBLE TRADE WAR OVER AGRICULTURAL TRADE
DISPUTES Following meetings in New Zealand March 17th through 19th, the Cairns
group of exporting countries issued a strongly-worded statement threatening to
block progress in all areas of the General Agreement on Tariffs and Trade (GATT)
negotiations if the dispute over agricultural trade is not resolved to their
satisfaction. Substantial progress was made in several areas at the mid-term
review last December, but final agreements could not be reached because of the
impasse between the U.S. and EC on agriculture. The economies of the fourteen
members of the Cairns group are all dependent on exports of their agricultural
commodities, and all have been hurt by the subsidy war between the U.S. and the
European Community (EC), especially as their countries have few export subsidy
programs. In the current round of negotiations on the GATT, the U.S. has been
seeking a commitment from all exporting countries to phase-out all
trade-distorting export subsidy and import barrier programs. The EC, however,
has been unwilling to make any such commitment, saying that short-term measures
will be sufficient to cure problems with the agricultural trading system. The
Cairns group has advocated a position similar to that of the U.S. in the past,
and their statement following the recent meeting reserves most of the criticism
for the EC.
Specifically, the group called for a freeze in current levels of
agricultural protection, consisting of: no further restriction on market access,
no increase in price supports, and no increase in export subsidies. The group
also called for target dates for developing the new GATT rules, urged the EC to
modify its negotiating position in a market-oriented direction, urged Japan to
play a more active role in the negotiations, and called for negotiations over
600 MARYLAND AVENUE, S.W.
SUITE 255
WASHINGTON, D.C. 20024
202/488-3927
POST OFFICE BOX 13005
AUSTIN, TEXAS 78711
512/463-1803
the coming weeks to establish a framework for long-term reform with the
objective of full liberalization of agricultural trade.
--- HOUSE TRADE SUBCOMMITTEE TO REVIEW GATT NEGOTIATIONS An April
11th hearing has been scheduled by the House Ways and Means Trade Subcommittee
to review the status of the Uruguay Round of multilateral trade negotiations to
update the General Agreement on Tariffs and Trade. U.S. trade officials are
scheduled to meet with their counterparts in Geneva April 5th and 6th to
complete the "mid-term review" meeting, which was broke up after an impasse
between the U.S. and EC over how far to go in reforming agricultural trade.
U.S. Trade Representative Carla Hills will testify at the hearing on the 11th.
--- ARGENTINA DROPS EFFORTS TO FIGHT EC HORMONE BAN Argentina, a
major exporter of beef to the European Community, has given up on its efforts to
oppose the EC ban on meat produced with the use of growth hormones. The EC ban,
which went into effect January 1st, has cost the U.S. about $100 million in beef
exports to the EC and caused retaliation against imports of agricultural
products from the EC into the U.S. A special joint task force has been
appointed and has commenced meetings to seek a solution to the dispute which
will be acceptable to American production practices and the EC directive. No
progress has been reported to date.
--- COMMERCE OFFICIAL SAYS NORTH AMERICAN TRADE PACT WITH MEXICO
CURRENTLY IMPRACTICAL Ann Hughes, deputy assistant commerce secretary for the
Western Hemisphere, said March 16th that although a "North American Common
Market" for Mexico, Canada and the U.S. isn't currently feasible because of
Mexico's problems with foreign debt, inflation and capital flight. However, Ms.
Hughes noted that Mexico is currently the third largest trading partner of the
U.S., with bilateral trade totaling $40 billion in 1988. She also pointed out
that while the Mexican president has said "a free trade agreement is not in the
cards today", Mexico and the U.S. are discussing how to achieve future
reductions in common trade barriers. Hughes said that overall trade relations
between the two countries are quite good. One recommendation of Governor
Clements' Task Force on Agricultural Development was analyzing the potential for
creating a free trade agreement with Mexico comparable to the one signed with
Canada.
AUTHOR OF JACKSON-VANICK AMENDMENT URGES FREER TRADE WITH
USSR Former Ohio representative Charles Vanick, author of a 1974 amendment
tying Most-Favored Nation (MFN) status to human rights, told an agricultural
group March 8th that he feels the "climate is right for America to consider
extending a waiver of the Jackson-Vanick Amendment to the USSR". Speaking to
the U.S. Feed Grains Council Board, Vanick said that improved emigration
policies and the possible repeal of religious restrictions in Russia were the
types of circumstances which could justify the waiver of the Amendment and
granting MFN status. The Soviet Union has asked the U.S. for equal treatment in
trade, saying that trade between the two countries could only advance with MFN
status. Such a move could result in increased exports of agricultural
commodities to the the Soviet Union, and could yield economic benefits to Texas
agriculture.
--- HOUSE BUDGET COMMITTEE STUDY SHOWS EFFECTS OF SEQUESTRATION ON
AGRICULTURE The House Budget Committee released results of a study of the
effects of the automatic spending reductions which will go into effect under the
- 2 -
Gramm-Rudman-Hollings (GRH) deficit reduction law if Congress fails to reduce
the deficit by $27 billion. The automatic cuts of $27 billion would reduce
defense outlays by $13.5 billion and domestic discretionary outlays would be
reduced by $10.6 billion. Cuts of $3.9 billion in mandatory domestic spending
such as farm programs and Medicare would make up the balance. According to the
numbers, based on estimates from the Congressional Budget Office, outlays for
commodity price support programs would be reduced by $505 million, with other
agricultural programs reduced by $319 million for a total reduction in
agriculture of $824 million. The budget proposal of the Bush Administration
calls for savings in agricultural spending of $1.1 billion.
--- OTA STUDY ON GRAIN QUALITY SUGGESTS POLICY CHANGES The Office of
Technology Assessment (OTA) has released their report on "Enhancing the Quality
of U.S. Grain for International Trade", which was mandated by the 1985 Farm
Bill. The report says the U.S. has advantages over other countries, but their
are areas with room for improvement. Specifically, the report says the U.S.
grain system enjoys five fundamental advantages over other countries,
including:, efficiency, encouragement of productivity growth built into the
system, the wide variety in products the U.S. offers, grading and inspection by
an independent agency, and market-based premiums and discounts.
In areas where U.S. grain quality can be improved, the report
recommends: gearing technology toward increased quality in such areas as grain
handling, drying and storage, changing farm policies to encourage increases in
quality rather than yield, changing grading standards to better reward high
quality grain, and better identifying both the end-use of the grain and buyers'
needs.
--- CONSUMER GROUPS CALL FOR MANDATORY FEDERAL INSPECTION OF
SEAFOOD A coalition of 29 groups, led by the consumer group Public Voice, is
calling for the federal government inspection of all fish products in a
comprehensive and mandatory inspection program. The group claims that seafood
is 10 times more likely to cause a food poisoning outbreak than beef and veal,
seven times more likely than poultry and 6 times more likely than pork. The
group also says that seafood is the only fresh food in the U.S. not subject to
well-organized, rigorous oversight.
For more information, contact Glen Hodges
Agriculture Coordinator
BANKING ITEM
--- SUPREME COURT SAYS FSLIC MAY NOT TRY CLAIMS Handing down a
unanimous decision on March 21st, the Supreme Court ruled that the Federal
Savings and Loan Insurance Corporation (FSLI) does not have the power to try
claims against a failed thrift in administrative proceedings. The decision
overturns the so-called "Hudspeth doctrine", stemming from a 1987 Fifth Circuit
Court of Appeals ruling which held that the FSLIC did have such powers. The
Fifth Circuit had cited portions of the United States Code which empower the
FSLIC to "settle, compromise, or release claims" against failed savings and
loans.
As part of its sweeping thrift industry rescue plan, the Bush
Administration has proposed provisions which would grant the Federal Deposit
- 3 -
Insurance Corporation (FDIC) the same powers denied the FSLIC. Section 211 of
the Administration's bill (H.R. 1278, S. 413) would empower the FDIC "to
determine claims in accordance with rules and regulations it shall prescribe and
subject to judicial review as herein provided." Slight alterations of the
language would be necessary in order to conform with the Supreme Court's ruling.
--- DEBATE OVER FSLIC FINANCING MECHANISM CONTINUES In hearings
before the House Banking Financial Institutions Supervision, Regulation and
Insurance Subcommittee on March 21st, Members of Congress and Administration
officials continued to debate whether or not the proposed FSLIC refinancing plan
should be carried on- or off-budget.
Subcommittee members Charles Schumer (D-NY) and Barney Frank (D-MA)
argued that the extra financing costs associated with the off-budget financing
approach are too costly. It is estimated that raising the $50 billion in new
capital for the FSLIC through a conduit such as the Resolution Trust Corporation
(RTC) would cost 25 basis points more than would direct Treasury financing.
Office of Management and Budget Director Richard Darman repeated the
Administration's contention that the off-budget approach outlined in the bill
(H.R. 1278, S.413) submitted to Congress is necessary in light of
Gramm-Rudman-Hollings (GRH) deficit reduction targets. Darman further argued
that the resulting need to amend GRH to avoid automatic spending cuts would send
a damaging signal to financial markets and would ultimately make an on-budget
approach more expensive.
--- FED VICE CHAIRMAN SAYS U.S., EUROPEAN BANKS TO DISAGREE OVER
SECURITIES ACTIVITIES At a conference sponsored by the Securities Industry
Association on March 22nd, Federal Reserve Board Vice Chairman Manuel Johnson
said that U.S. and European banks may be headed for a collision over the issue
of how banks will be permitted to engage in activities outside of those in which
they traditionally engage.
In most European countries, banks may engage in banking and securities
activities within the same company. In the U.S., under Federal Reserve
guidelines, banks may only engage in securities activities within a separate
affiliate of a bank holding company. "I think we are heading toward some point
where these relative banking structure issues are going to be a major focus of
attnetion in terms of international trade and financial policy," Johnson said.
Johnson indicated that the U.S. believes in the principle of "national
treatment", in which countries give foreign banks the same powers they accord
their own institutions.
For more information, contact Carter Breed
Economic Development Coordinator
BUDGET ITEM
--- WHITE HOUSE, CONGRESS AIM FOR EARLY APRIL BUDGET
AGREEMENT Following a series of meetings this week, Administration officials
and congressional budget leaders indicated that they will try to reach agreement
on a deficit-reduction plan by early April. However, the issue of revenue
increases as part of a budget compromise remains a stumbling block, according to
House Budget Committee Chairman Leon Panetta (D-CA). Rep. Bill Frenzel (R-MN),
- 4 -
the Ranking Minority Member of the House Budget Committee, while maintaining
that the Administration is sticking to its no-new-taxes pledge, said that both
sides in the negotiations recognize the need to compromise.
Reaching early agreement on a deficit plan is seen as critical, in order
to allow Congress time to draft and enact a budget resolution. The resolution
must be adopted by Congress by April 15th. For purposes of the budget
resolution, only broad revenue and spending figures are required. The
delineation of specific types of revenue increases is handled later in the year
during consideration of the omnibus budget reconciliation bill.
Negotiations are expected to resume during the week of April 3rd, and
participants expect an agreement at the end of that week.
For more information, contact Carter Breed
Economic Development Coordinator
DRUG ITEM
--- SUPREME COURT UPHOLDS DRUG TESTING PLANS On Tuesday, March 21st,
the U.S. Supreme Court upheld the rights of the U.S. Customs Service and the
Federal Railroad Administration to test their employees for the use of illegal
drugs.
The rulings, hailed by Attorney General Richard Thornburgh a "momentous"
victory for the war on drugs, upheld two testing programs. In one case, the
court ruled 7 to 2 that Federal Railroad Administration regulations for testing
railroad crews after accidents are constitutional. In the other case, the court
upheld, 5 to 4, a Customs Service Policy of testing applicants for drug
enforcement jobs.
For more information, contact Mark Schnabel
Energy and Natural Resources Coordinator
EDUCATION ITEMS
--- CAVAZOS TESTIFIES ON VOCATIONAL EDUCATION On March 21st,
Secretary of Education Lauro Cavazos testified before the House Education
Subcommittee that the Administration favors a number of changes in federal
vocational education programs in an effort to make them more relevant and
efficient.
Cavazos indicated that the Administration's priorities include:
- requiring local educational agencies to develop minimum performance
standards for all vocational education programs in order to determine
which are most effective;
- eliminating most funding set-asides for specific programs, with state
and local administrators being given greater flexibility to determine
how best to spend their federal dollars within broad guidelines; and
- emphasizing vocational education programs for jobs with a large number
of openings.
- 5 -
Subcommittee Chairman Augustus Hawkins (D-CA) said that the Subcommittee plans
to begin markup of a reauthorization bill April 12th.
--- SENATE UNANIMOUSLY APPROVES STUDENT LOAN DEFAULT BILL The Senate
March 17th unanimously approved legislation (S. 568) which threatens to cut off
the flow of federally guaranteed student loans to schools and lenders that fail
to reduce high default rates within three years.
The bill, which is virtually identical to legislation passed by the
Senate last year, was taken directly to the Senate Floor by Senate education
policy makers who were angered by the decision to delay action on the default
issue. Default legislation was sidetracked last year when the House and the
Reagan Administration agreed to delay consideration until the 101st Congress.
For more information, contact Lori Bounds
Human Resources Coordinator
ENERGY ITEMS
--- HOUSE MEMBERS WITH DOE FACILITIES IN DISTRICTS FORM CAUCUS The 16
Members of the House of Representatives who have nuclear weapons facilities
operated by the Department of Energy within their districts have formed a caucus
to discuss common problems arising as the sites begin undergoing environmental
cleanup and modernization. The group met March 21st with Troy Wade, Assistant
Secretary for Defense Programs at DOE, to discuss DOE's plans for the cleanup.
One member of the caucus indicated that a function of the group will be to
advocate adequate funding "to provide restoration of the environment at the
facilities. Rep. Bill Sarpalius (D-TX), whose district includes the Pantex
facility near Amarillo, has joined the caucus.
For more information, contact Glen Hodges
Agriculture Coordinator
BUSH CALLS FOR OUTER CONTINENTAL SHELF STUDY President Bush, in a
March 21st statement, announced the creation of a five-person task force to
examine concerns over three offshore oil lease sales.
The Outer Continental Shelf Leasing and Development Task Force, headed
by Secretary of the Interior Manuel Lujan, will look at lease sale 91 off the
coast of northern California, lease sale 95 off the coast of southern
California, and lease sale 116 off southern Florida.
The task force, which is to issue a report before January 1, 1990, will
consist of the Secretary of the Interior, Secretary of Energy, the Director of
the Office of Management and Budget, the Administrator of the Environmental
Protection Agency, and the Administrator of the National Oceanic and Atmospheric
Administration.
For more information, contact Mark Schnabel
Energy and Natural Resources Coordinator
- 6 -
ENVIRONMENTAL ITEM
--- GROUP LED BY WAXMAN RELEASES AIR TOXICS DATA On Wednesday, March
22nd, Rep. Henry Waxman (D-CA) and three other members of the House, including
Rep. Mickey Leland (D-TX), announced the issuance of preliminary data from the
Environmental Protection Agency documenting emissions of 320 toxic chemicals,
including 60 known carcinogens.
The data was obtained under the community "right-to-know" provisions in
the 1986 superfund toxic-waste cleanup bill, which required U.S. industries to
disclose, for the first time, the amount of toxic air pollutants being emitted
from smokestacks.
The EPA data showed that Texas was by far the largest emitter of toxics
followed by Louisiana, Tennessee, Virginia, Ohio and Michigan.
Rep. Leland said at the Rayburn House Office Building press conference
that he would join with Waxman, Rep. Jim Florio (D-NJ) and Rep. Gerry Sikarski
(D-MN) in introducing legislation following the Easter recess which will address
both routine and accidental releases of toxic air substances.
While Leland acknowledged that this move may "surprise" some of his
fellow Texans, he said that this decision was based on "my deep and abiding
concern for Texas." While this bill would be costly for the Texas
petro-chemical industry, Leland declared that "a sound economy and clean air can
both be achieved."
For more information, contact Mark Schnable
Energy and Natural Resources Coordinator
HUMAN RESOURCES ITEMS
--- HOUSE VOTES TO INCREASE FUNDING FOR HEAD START The House voted
March 21st to increase funding for Head Start, raising the authorization for FY
90 by $147 million to $1.5 billion.
Head Start, the education program providing educational, social,
nutirtional and health needs to children aged 3 to 5 from low-income families,
has been plagued by inadequate funds. The Senate must act on the increase
before it can be added to the 1990 budget through the regular appropriations
process.
President Bush requested the increase in child care legislation (S. 602,
H.R. 1467) proposed by his Administration.
--- PHYSICIAN PAYMENT REVIEW COMMISSION PROPOSES NATIONAL FEE SCHEDULE
FOR
PHYSICIANS Testifying before the Senate Finance Subcommittee on Medicare
and Long Term Care, the Physician Payment Review Commission (PPRC) proposed that
Medicare abandon its existing payment system to physicians in favor of a
national fee schedule.
This fee schedule, which would entail a fixed amount for a particular
service or procedure, could be phased in gradually beginning in April 1990 and
could be fully in place in 1992. The PPRC also proposed creating annual
- 7 -
expenditure targets for the portion of the Medicare program that pays for
physician and outpatient services. Designed to reduce the rising cost of
Medicare, the targets would be aimed at preventing physicians from making up
lost Medicare income by increasing the volume of services they provide. The
Commission's report includes a limitation on "balanced billing," the practice
whereby doctors bill patients for the difference between what Medicare pays and
what the doctor would like to be paid.
The American Medical Association has tentatively endorsed the concept of
a fee schedule but opposes both the balance-billing limits and expenditure
targets. The Finance Subcommittee members reviewed the PPRC's recommendations
cautiously, because the physician payment reform issue is likely to provoke a
long and heated debate.
--- HOSPITALS TESTIFY ON REFORM OF CAPITAL PAYMENT SYSTEM Hospital
industry witnesses told the House Ways and Means Health Subcommittee that the
Administration's proposal to cut 25 percent from hospital capital reimbursements
would leave many aging facilities unable to perform necessary renovations.
Capital reimbursements are Medicare payments made to hospitals for
construction and renovation of facilities. Hospital administrators oppose a
proposal by Rep. Pete Stark (D-CA) (H.R. 712) that would require states to set
up statewide and local agencies to monitor and approve construction and
renovation projects. Stark's plan would also lump payments for medical
equipment, a substantial portion of capital spending, into Medicare's Diagnostic
Related Group system.
--- ADMINISTRATION TO REQUEST ADDITIONAL $100 MILLION FOR REFUGEE
RESETTLEMENT The White House announced March 15th that President Bush will
request an extra $100 million in the current fiscal year to help relocate
refugees from the Soviet Union and other countries.
$85 million would be requested to help with the recent increase in
numbers of Soviet refugees, and the remaining $15 million would be used to
assist refugees who are taking temporary asylum in other countries. The current
rate of refugee applications threatens to exhaust the FY 89 appropriation of
$365.95 million.
In another effort to bring relief to states experiencing an influx of
Soviet Jews, Rep. Howard Berman (D-CA) introduced legislation that would take
$150 million from the State Legalization Impact Assistance Grant (SLIAG) fund to
use for refugee resettlement. Berman's proposal would extend the four-year
SLIAG program for one year and restore the $150 million to the fund in the fifth
year.
OSFR will work with the Texas delegation to protect the State's SLIAG
dollars from the Berman proposal. Like the Kennedy companion legislation in the
Senate, the Berman bill cannot guarantee that the SLIAG dollars would be
reappropriated in future years.
--- HOUSE RURAL HEALTH CARE COALITION INTRODUCED LEGISLATIVE AGENDA
At
a press conference on March 22nd, the House Rural Health Care Coalition
introduced its 1989 agenda to alleviate the problems being experienced by rural
health care providers.
- 8 -
Representatives Joe Barton (R-TX), Jim Chapman (D-TX), Larry Combest
(R-TX), Ralph Hall (D-TX), Greg Laughlin (D-TX), Marvin Leath (D-TX), J. J.
Pickle (D-TX), Bill Sarpalius (D-TX), and Lamar Smith (R-TX) are members of the
Coalition, and Rep. Charles Stenholm (D-TX) sits on the steering committee. The
group was formed in 1987 to give the health care needs of rural residents a
voice in Congress and to enact legislation protecting and strengthening health
care services in rural areas.
The package would: eliminate separate urban/rural rates in Medicare
reimbursement; reduce administrative barriers to establishing rural health
clinics; state the sense of Congress that disparities between rural and urban
physician fees should be reconciled; establish a $45 million block grant program
to help states establish rural emergency medical services; increase the
authorization for maternal-child health programs by $50 million; and create an
Undersecretary of Rural Health in the Office of the Secretary of Health and
Human Services.
--- PRESIDENT INTRODUCES CHILD CARE PROPOSAL President Bush sent to
Congress this week a two-part child care proposal developed by the Treasury and
Health and Human Services Departments.
The legislation consists of two bills: the Working Family Child Care
Assistance Act (S. 601, H.R. 1466), to provide low-income families with more
money to pay for child care, and the Head Start Amendments of 1989 (S. 602, H.R.
1467), which increases the authorization level for the preschool education,
nutrition and health program for disadvantaged three and four-year-olds.
Under the provisions of the Working Family Child Care Assistance Act,
the existing dependent care tax credit would be made refundable, meaning that
families with incomes too low to owe taxes would become eligible for a refund
they could use toward child care expenses. Families with incomes below $13,000
would be given the option of taking the expanded dependent-care credit or a new
credit of up to $1,000 per child under age 4. The new credit would also be
refundable and would be available to families with no child care expenses.
Eligibility thresholds for the new credit would be phased upwards gradually
under the plan to between $15,000 and $20,000 of annual income by 1994.
While many Republicans quickly signed onto the bills, supporters of the
House and Senate child care bills maintained that a tax break is not a
substitute for comprehensive child care legislation.
The other half of the Bush proposal would raise the Head Start programs
FY 90 authorization to $1.49 billion, $250 million more than the amount
appropriated in FY 89 and $80 million more than the FY 90 authorization level.
For more information, contact Lori Bounds
Human Resources Coordinator
LABOR ITEM
--- MINIMUM WAGE BILL PASSES HOUSE On Thursday, March 23rd, the House
of Representatives passed a compromise bill which raises the minimum wage from
$3.35 an hour to $4.55 an hour over a three year period including a 60-day
subminimum training wage.
- 9 -
The House passed the measure by a vote of 248-171 after, on Wednesday,
defeating a proposal which would have expanded the earned income tax credit
(EITC). This measure would have increased the minimum wage to $4.00 an hour in
addition to providing a larger tax break to the working poor depending on family
size.
For more information, contact Mark Schnabel
Energy and Natural Resources Coordinator
SUPERCONDUCTING SUPER COLLIDER ITEM
-- WATKINS TESTIFIES BEFORE HOUSE APPROPRIATIONS SUBCOMMITTEE
Department of Energy Secretary James Watkins, testifying before the House
Appropriations Subcommittee on Energy and Water Development, characterized
foreign participation in the SSC as a "chicken and egg" situation. "Everybody
is looking to the next person to make a commitment before they jump in," Watkins
said. Foreign governments, he told the Subcommittee, will not be interested in
participating in the Collider until the project is well underway. Congressman
Tom Bevill (D-AL), chairman of the Subcommittee, reiterated his position on
foreign participation to Secretary Watkins: "That (foreign participation) is
something Congress is going to insist on. The mood in Congress, and the mood in
the country for that matter, is not going to be too keen on building a project
of this size."
Congressman Jim Chapman (D-TX), a member of the Subcommittee, asked
Secretary Watkins how much confidence he has regarding the possibility of strong
non-federal participation. Watkins replied that there is significant foreign
interest in the project and the Texas offer of $1 billion is an incentive for
others to join in. "This is the time to make a bold move in an area that is
extremely critical to our competitiveness, = Watkins said. "If we do it well,
other countries will come in."
--- UPCOMING SSC EVENTS On April 5th, 1989, at 10:30 a.m., the
House Science, Space, and Technology Subcommittee on Investigations and
Oversight will hold a hearing on the SSC site selection process. Invited to
testify are the governors of the seven finalist states, the General Accounting
Office, the Department of Energy, and Senator Trent Lott (R-MS) and Senator
Dennis DeConcini (D-AZ). Rayburn House Office Building 2318.
On April 5th, 1989, at 4:00 p.m., the National SSC Coalition will
convene a meeting of parties interested in the construction and operation of the
Superconducting Super Collider. Those interested in attending should call the
Coalition at (202) 659-6568. Rayburn House Office Building 2318.
Thomas Luce III, Chairman of the Texas National Research Laboratory
Commission, will be testifying before the House Appropriations Subcommittee on
Energy and Water Development on Tuesday, April 11th, 1989 at 10:00 a.m. Rayburn
House Office Building 2362.
For more information, contact Henry Gandy
Director
- 10 -
TAXATION ITEM
--- ROSTENKOWSKI TO REOPEN DEBATE ON LBO PROPOSALS. On March 21st,
House Ways and Means Committee Chairman Dan Rostenkowski (D-IL) asked committee
members to submit to committee staff specific proposals for changing the tax
treatment of leveraged buyouts, known as LBOs. He indicated that further
hearings on the subject in May were possible.
The announcement of further hearings gives new life to the LBO issue,
which had been the subject of intense debate earlier in the year. Interest in
the issue faded after the hearings in the Ways and Means Committee and the
Senate Finance Committee had failed to produce a consensus. The Treasury
Department's decision not to propose LBO tax changes with the Administration's
budget request was thought to have further dampened enthusiasm for action on the
issue.
--- TREASURY UNVEILS CUSTOMS USER FEE CHANGES On March 17th, the
Treasury Department unveiled a draft of proposed legislation which would change
the user fee paid by importers of commercial merchandise from an ad valorem fee
to a transaction-based fee in order to make it consistent with the General
Agreement on Tariffs and Trade (GATT). The draft legislation calls for changing
from the ad valorem fee of 0.17 percent to a transaction-based fee offsetting
actual commercial costs as defined by GATT. It is estimated that the new fee
approach would result in a revenue loss of $160 million in FY 1990 if enacted.
Treasury officials have requested suggestions from lawmakers before
sending the bill to the Hill for consideration.
For more information, contact Carter Breed
Economic Development Coordinator
TRANSPORTATION ITEM
--- LOCAL RAIL ASSISTANCE APPROVED BY HOUSE SUBCOMMITTEE On
Wednesday, March 22nd, legislation, H.R. 422, was passed by the House Energy and
Commerce Transportation Subcommittee intended to maintain rail service to small
towns that have been bypassed by major railroads.
The bill, approved by voice vote, would authorize funds for the Local
Rail Assistance Program which makes grants to states for the acquisition of
rail lines being abandoned by major carriers, rehabilitation of equipment, and
construction of facilities.
Funding for this program has decreased steadily in recent years.
For more information, contact Mark Schnabel
Energy and Natural Resources Coordinator
- 11 -
TEXAS THIS WEEK:
Governor Bill Clements, Lt. Governor Hobby and House Speaker Gib Lewis have
endorsed a bi-partisan plan to overhaul the Texas' criminal justice system.
House and Senate hearings could begin within the next two weeks. Key elements of
the more than $300 million plan are; construction of 10,800 new prison beds,
community corrections programs such as boot camps and halfway houses,
consolidation of four state agencies into a new Department of Criminal Justice,
establishment of a three tiered system of probation and parole, and changes in
sentencing laws to give judges more leeway to sentence law breakers to community
based corrections programs
Bills to improve the water quality in the Rio
Grande have been filed by Representative Henry Cuellar (D-Laredo) and Senator
Judith Zaffirini (D-Laredo). H.B. 1862 and S.B. 1545 will allow Texas, working
through the U.S.-Mexico International Boundary Commission, to finance
construction of sewage treatment plants in Mexico
Appointments were made to
the State Insurance Board last wednesday. The Governor nominated Thomas McDade,
a retired Houston banker, and Richard Reynolds, a former House member from
Flower Mound
Lt. Governor Hobby and House Speaker Lewis said the current
regular session is one of the calmest they can remember, but added the
possibility of a special session to deal with workers' compensation or the
state's prison system still exists
S.S.C. legislative update:
The
General Appropriations Bill, H.B. 20 which authorizes $2.5 billion in general
revenue funding for state services is before the House Appropriations Commit-
tee
Legislation to establish a state lottery, H.B. 33 and H.J.R. 7 is being
considered in the House State Affairs Committee
The Worker's Compensation
bill, H.B. 1, which reforms the workers' compensation system and alter the
powers, duties and composition of the Texas Industrial Accident Board has been
passed by the House and referred to the Senate State Affairs Committee
Senator John Montford (D-Lubbock) has proposed a bill, S.B. 255, to raise the
capital and surplus requirements for starting insurance companies and require
more rigorous regulation of insurers by the State Board of Insurance
A bill
by Senator Kent Caperton (D-Bryan) to propose a constitutional amendment
relating to appointment of appeals court judges and justices and certain
district judges by the governor. The judges would be subject to voter approval
on a non-partisan ballot
The state Senate passed a bill that will make
canoeists, tubers and others who use Texas rivers more cautious where they stop.
Under the bill anyone setting foot on the private property along navigable
rivers will be trespassing
State Representative Harold Dutton (D-Houston)
reported he has received death threats over his proposal to ban assault rifles
in Texas
George C. Hixon of San Antonio was appointed to the Parks and
Wildlife Commission. Hixon is replacing William Graham of Amarillo, whose term
expired
State Senator John Leedom (R-Dallas) assumed the gubernatorial
office as "Governor for a Day" through a tradition in which the governor and
lieutenant governor are absent from the state for a day. Leedom declared last
Saturday to be "Texas Volunteer Good Turn Day. II
The Texas economy is moving
away from being primarily dependent on energy and agriculture. A report prepared
by Southern Methodist University for Senator Lloyd Bentsen suggests that Texas
is on its way to kicking the oil and gas habit
Proposals by Representative
David Cain (D-Dallas) and Senator Don Henderson (R-Houston) would require 50% of
public school buses to convert from gasoline to natural gas power by
1996
Texas Department of Public Safety Director Col. Joe Milner reported
that Texas had an increase in traffic fatalities for the first time since 1984.
Among the factors cited in traffic fatalities are alcohol or drug abuse,
excessive speed and failure to use safety belts
Sematech's second ranking
- 12 -
executive Paul Castrucci has resigned. Turner Hasty, a former Texas Instruments
Inc. executive who has been a member of Sematech's management team since 1987,
was named acting chief operating officer
Randall Dale Adams was freed last
Tuesday from a Dallas prison. A state District Judge set aside Adam's conviction
for the 1977 shooting death of Dallas police officer Robert Wood. Support for
Adams galvanized after the 1988 documentary "The Thin Blue Line"
The Senate
Nominations Committee approved the appointments of Raul Ferdandez of San
Antonio, former House Speaker Billy Clayton of Springlake and Ross Margraves of
Houston as Texas A&M University regents. The appointments now go before the
Senate for a confirmation vote
Governor Clements appointed Milton Risinger
of Terrell and William Poteet III of Lubbock to the Texas Board of
Health
Republican Ken Vandervoort defeated Democrat Ken Yarbrough to become
the new state representative for District 138 in northwest Harris County. The
final vote count was 2,415 to 2,185. The seat became vacant when former State
Rep. David Patronella resigned to become a Harris County Justice of the
Peace
Legislation that would repeal the "LBJ Law", which allows a candidate
to simultaneously seek national office while running for re-election, was
approved by the House Elections Committee and is pending in the House Calender
Committee
U.S. Secretary of State James Baker III has been chosen to
receive the 1989 Outstanding Alumnus Award of the University of Texas at Austin
School of Law. Also, former U.S. Senator Ralph Yarborough of Texas will receive
a 50th anniversary award.
- 13 -
THE STATE OF TEXAS
OFFICE OF STATE-FEDERAL RELATIONS
600 MARYLAND AVENUE, S.W. SUITE 255
WASHINGTON, D.C. 30024
WILLIAM P. CLEMENTS, JR.
STATE
OF
OF
HENRY M. GANDY
GOVERNOR
DIRECTOR
THE STATE OF TEXAS
OFFICE OF STATE-FEDERAL RELATIONS
WASHINGTON ACTION ITEMS
March 17, 1989
*
EPA SET TO PROPOSE NEW PESTICIDE RESTRICTIONS TO
PROTECT ENDANGERED SPECIES
PAGE 2
FAILED THRIFT ASSETS WILL NOT BE DUMPED, BRADY SAYS
PAGE 4
SENATE PANEL REPORTS CHILD CARE PACKAGE
PAGE 9
*
TAX EXEMPTION FOR STATE AND LOCAL BONDS SAFE FOR NOW
PAGE 10
AGRICULTURE ITEMS
--- USSR MOVING TOWARD REFORMS OF AGRICULTURAL SYSTEM On March 15th,
Soviet President Mikhail Gorbachev announced new efforts aimed at making the
USSR more self-sufficient in food production through the introduction of
individually-controlled, rather than collective, farms. The USSR, whose
agricultural system has been plagued by inefficiency and food shortages since
the collectivization of private farms in the 1930's, must import millions of
tons of grain every year and is an important market for American agricultural
producers. In response to these chronic problems, Gorbachev says farmers should
be given broad opportunities for displaying independence, enterprise and
initiative.
The new system envisioned by Gorbachev would include a mix of several
different management forms, including farms run by the state, collectives and
individuals. He also said the collectives and The individuals should be granted
complete freedom in the marketing of their production. Currently, more than 98
percent of the farmland in the USSR is owned and run by the state. Collective
farms make up the remainder. Although the reforms proposed by Gorbachev don't
go so far as to allow private ownership of farmland, the land could be leased
from the state for up to 50 years.
TECHNICAL AMENDMENTS BILL TO DAIRY POLICY PASSES HOUSE S. 553, a
bill designed to save $35 million over the next two years through a minor
adjustment to dairy policy, was passed by the House of Representatives on March
15th. The bill is designed to insure that the agriculture function of the
budget will be credited as having achieved the savings, potentially reducing the
amount of cuts the Agriculture Committee will be required to come up with in a
deficit-reduction package.
600 MARYLAND AVENUE, S.W.
SUITE 255
WASHINGTON, D.C. 20024
202/488-3927
POST OFFICE BOX 13005
AUSTIN, TEXAS 78711
512/463-1803
EPA SET TO PROPOSE NEW PESTICIDE RESTRICTIONS TO PROTECT ENDANGERED
SPECIES Allan Abramson, Environmental Protection Agency director for program
management, announced March 3rd that a controversial EPA plan to protect
endangered species had been significantly changed and would be re-proposed in a
few weeks. The original plan had met with vigorous opposition from farmers and
farm organizations because it would have severely limited the use of certain
pesticides throughout the country in order to protect the habitat of endangered
species. Critics of the original plan said the habitat maps were inaccurate and
the regulations were overly burdensome and unworkable. The EPA says it has
redrawn the habitat maps and reduced the amount of new language it is requiring
to be added to product labels.
U.S., EC NAME TASK FORCE TO STUDY BEEF HORMONE DISPUTE The U.S.
members have been named to a task force to study the trade dispute over the
European Community's ban on imports of hormone-treated beef. They are Joshua
Bolton, Acting Deputy U.S. Trade Representative, Leonard Condon, Deputy U.S.
Trade Representative for Agricultural Affairs, Dr. Lester Crawford,
Administrator of USDA's Food Safety and Inspection Service, and Ann Veneman,
Associate Administrator of USDA's Foreign Agricultural Service.
Members of the joint U.S-EC task force will have 75 days to arrive at a
solution to the trade dispute resulting from the EC's ban on hormone-treated
beef. The U.S. contends the ban is an arbitrary trade barrier as U.S. and
international organizations have certified the practice poses no health risks.
--- YEUTTER, HILLS MEET WITH EC OFFICIALS ON GATT U.S. Agriculture
Secretary Clayton Yeutter and Trade Representative Carla Hills met March 10th
and 11th with counterparts from the European Community to try and resolve
disputes over agricultural subsidies which are holding up progress in
negotiations on the General Agreement on Tariffs and Trade (GATT). Talks broke
down at the "mid-term review" meeting in Montreal last December over
disagreements between the U.S. and EC about how far reforms in agricultural
trade practices should extend. The U.S. had been adamant that the goal should
be the complete elimination of trade-distorting export subsidies and import
barriers; the EC had been equally adamant that short-term adjustments would
suffice and that the EC's Common Agricultural Policy would remain in place.
In recent weeks the U.S. has softened its position somewhat in an effort
to move the process forward. Officials have indicated that the U.S. is willing
to discuss short-term measures without an agreement on long-term, permanent
reforms. However, the U.S. will not begin implementation of short-term measures
without reaching agreement on long-term reforms. A meeting of all GATT
participants will be held in April to try and strike a deal on agriculture and
finalize tentative agreements reached in numerous other areas.
--- CROWDER NAMED UNDER SECRETARY OF AGRICULTURE President Bush
announced March 7th his intention to nominate Dr. Richard Crowder to be Under
Secretary of Agriculture for International Affairs and Commodity Programs,
succeeding Dan Amstutz who served in that capacity during the Reagan
Administration. Crowder has been with the Pillsbury Company for several years,
most recently serving as president of the Burger King Corporation. Dr. Crowder
received his Ph.D from Oklahoma State University in 1967.
- 2 -
U.S. MILITARY BASES IN EUROPE MAY HALT PURCHASES OF EUROPEAN GOODS
IN RESPONSE TO EC BAN OF U.S. BEEF Two key House Committee Chairmen announced
March 15th they are considering halting the purchase of European food products
for American military bases in Europe in response to the ban on American beef
imposed by the European Community. Rep. de la Garza (D-TX), Chairman of the
House Agriculture Committee and Rep. Aspin (D-WI) said in a joint statement that
their respective committees will study this matter at hearings this spring.
Rep. Marvin Leath (D-TX), who serves as Chairman of the Armed Services
Subcommittee on Morale, Welfare and Recreation, has been appointed by Aspin to
lead the inquiry on the Armed Services Committee.
Last year, $55 million worth of European beef was sold by commissaries
on American military installations. The joint statement indicated several
reasons for discontinuing this practice, including: the European ban on American
beef; the declining value of the dollar pushing up the cost of European beef;
improvements in the military transportation system enabling quicker delivery of
U.S. products to our commissaries; and the superior quality of U.S. beef and
doubts over whether the European beef is being inspected to U.S. standards.
Although the EC has banned the use of all growth hormones in beef production, a
black market for illegal and possibly unsafe hormones is reportedly flourishing
in Europe.
HOUSE SUBCOMMITTEE REVIEWS BUDGET FOR FARM PROGRAMS At a March
16th hearing of the Wheat, Soybeans and Feed Grains Subcommittee of the House
Agriculture Committee, a top official from the Department of Agriculture said
the Department hopes to release by early April details of its plan to achieve
$1.1 billion in farm program savings. This came in response to criticism by
committee members that the Administration is taking too long to come forward
with specific proposals on agricultural spending. William Bailey, deputy
undersecretary for international affairs and commodity programs, told the
subcommittee that the Department and the Office of Management and Budget were
carefully studying various options that would achieve the desired savings
without weakening the Administration's position in negotiations on the GATT.
Also discussed during the course of the hearing was the condition of the
winter wheat crop in the Great Plains, which is suffering from continued
drought, temperature extremes, insect damage and high winds. A Kansan on the
subcommittee suggested bringing the winter wheat planted in 1988 under the
provisions of the 1988 drought relief legislation. A hearing on that
proposal will be held on March 23rd.
--- FCS ASSISTANCE BOARD PROVIDED $690 MILLION IN 1988 In its annual
report sent to Congress on March 13th, the Federal Farm Credit Assistance Board
reported spending $690 million to help financially troubled lending institutions
in the Farm Credit System. The Assistance Board was created as part of the
Agricultural Credit Act of 1987, which authorized the Board to spend up to $2.8
billion. If that level was insufficient, the Board could have returned to
Congress to seek authorization to provide additional assistance up to $4
billion.
FARMERS OFFER ADDITIONAL 3.2 MILLION ACRES FOR ENROLLMENT IN
CRP
The U.S. Department of Agriculture announced March 14th that farmers had
bid to enroll 3.2 million acres into the Conservation Reserve Program (CRP)
during the latest sign-up period. The CRP is a soil-bank program established by
- 3 -
the 1985 Farm Bill which authorizes annual rental payments to farmers who retire
highly erodible land from production for a ten-year period. Secretary of
Agriculture Yeutter has announced on March 6th that maximum acceptable bids for
CRP acreage would not exceed the levels accepted during the previous sign-up
period. In Texas, the maximum rates acceptable vary from $35 per acre per year
in some areas to $55 per acre per year in others. USDA also announced that
another sign-up period is scheduled for July 7th through August 4th.
--- ENVIRONMENTAL COALITION SEEKS SUPPORT OF LOW-INPUT FARMING
A
group calling itself the Midwest Sustainable Agriculture Working Group held a
briefing on Capitol Hill March 15th to outline their recommendations for the
1990 Farm Bill. The recommendations of the group include a five-year federal
demonstration program for Low-Input Sustainable Agriculture (LISA) involving 25
million acres. LISA is the acronym for farming methods designed to greatly
reduce or even eliminate the use of chemical pesticides and fertilizers in favor
of organic and other alternative production methods. The group also recommends
that Congress strictly limit the volume of production for which government
support can be received on individual farms. The Sierra Club and the Izaak
Walton League are included among the members of the organization.
--- USDA WON'T PROPOSE "BILL BACK" PROCEDURES The U.S. Department of
Agriculture announced March 9th that it has decided against proposing to "bill
back" sellers of livestock found to contain illegal drug residues. A proposal
published in the May 24th Federal Register described a plan to shift economic
responsibility for illegal drug residues from the meat packer to the producer
causing the violation. The proposal requested comments on deterring illegal
sulfa and antibiotic drug residues in carcasses of young calves, cull dairy COWS
and swine. 87 percent of the comments received on the proposal opposed the
concept, mostly because of the difficulty in accurately tracing back and
identifying the source of the illegal residue.
For more information, contact Glen Hodges
Agriculture Coordinator
BANKING ITEMS
--- SENATE BANKING COMMITTEE SCHEDULES MARKUP OF THRIFT PLAN On March
16th, Senate Banking Committee Chairman Don Riegle (D-MI) announced that the
committee will mark up legislation (S. 413) intended to resolve the nation's
thrift crisis on April 13th and 14th. Riegle added that he would like to
schedule consideration of the bill on the Senate floor between April 18th and
21st. The House Banking Committee's Financial Institutions Subcommittee has
tentatively scheduled a markup of the bill (H.R. 1278) for April 6th, with full
committee action to follow.
--- FAILED THRIFT ASSETS WILL NOT BE DUMPED, BRADY SAYS In a speech
before the National Association of Homebuilders (NAHB) on March 13th, Treasury
Secretary Nicholas Brady assured the audience that insolvent thrift assets would
not be dumped on an already depressed housing and real estate market under the
Bush plan for resolving the thrift crisis. Under the Bush plan, a corporation
known as the Resolution Trust Corporation (RTC) would be created in order to
merge or liquidate failed thrifts and to deal with the huge amounts of assets
seized from these thrifts. It is generally thought that the RTC, under the
direction of a three-member board consisting of the Treasury Secretary, the
- 4 -
Chairman of the Federal Reserve and the Attorney General, would delegate most of
the actual liquidation work to the Federal Deposit Insurance Corporation (FDIC).
The NAHB has asked Congress to amend the Bush plan and require the RTC
to spell out exactly how it intends to deal with the asset portfolio it will
assume control over. It also wants the life of the RTC extended from the
currently envisioned Five years to eight years to further lessen the chance of
asset dumping. Sen. Phil Gramm (R-TX), also at the NAHB conference, shared
NAHB's concerns, questioning the federal government's ability to efficiently
manage and dispose of the assets well.
--- RISKY ACTIVITIES ONLY IN SEPARATE AFFILIATES, SAYS RIEGLE During
a Senate Banking Committee hearing on March 16th, Committee Chairman Don Riegle
(D-MI) indicated that he supported allowing state-chartered banks and thrifts to
engage in risky activities not permitted for federally-chartered institutions,
but only if such activities are engaged in by a separate affiliate in a holding
company. Further, the activities of the holding company should not be insured
by the appropriate federal insurance agency. State-chartered institutions
should be permitted to engage in broader activities, Riegle said, "but not at
the expense of the foundation of federal deposit insurance". Riegle's comments
came during testimony by representatives of the American Council of State
Savings Supervisors.
For more information, contact Carter Breed
Economic Development Coordinator
BUDGET ITEM
--- BUDGET TALKS BETWEEN CONGRESS AND ADMINISTRATION CONTINUE Budget
talks between the Administration and congressional leaders continued this week,
although no significant breakthroughs were achieved. Early rounds of the
discussions have focused on the need for new revenues, with the Administration
ruling out broadly-based tax increases to reduce the deficit. However, Office
of Management and Budget Director Richard Darman and other Administration
officials have said that proposals to close tax loopholes might be acceptable.
Following a March 16th meeting, House Budget Committee Chairman Leon
Panetta (D-CA) reiterated concerns over whether proposed Medicare cuts and many
of the $14.2 billion in higher revenues proposals submitted by President Bush
would pass Congress. He again pointed out that many of the revenue proposals,
such as extension of the Medicare payroll tax to all state and local government
employees have been rejected in the past. Senate Finance Committee Chairman
Lloyd Bentsen (D-TX) agreed, saying it would be "exceedingly difficult" to get
the Administration's Medicare and revenue proposals through Congress.
Further negotiations on revenue proposals between the chairmen and
ranking minority members of the tax-writing committees and the Administration
will continue next week. In separate negotiations, the chairmen and ranking
minority members of the budget committees plan to meet on March 17th and 20th to
discuss foreign and domestic spending issues.
For more information, contact Carter Breed
Economic Development Coordinator
- 5 -
DEFENSE ITEM
--- BASE-CLOSING PROPOSAL APPROVED BY ARMED SERVICES COMMITTEE The
House Armed Services Committee this week defeated 3 resolutions which would have
stalled the proposed list of unnecessary or obsolete military bases slated for
closure under the base-closing plan.
If Congress does not pass a resolution of disapproval before April 24th,
the plan to close ninety bases would go into effect.
For more information, contact Mark Schnabel
Energy and Natural Resources Coordinator
EDUCATION ITEMS
--- NATIONAL SERVICE LEGISLATION DRAWS CONTROVERSY A House Education
and Labor Committee hearing on a plan requiring students to perform public
service work to qualify for student aid drew sharp criticism from those opposing
mandatory service.
The legislation (H.R. 660), sponsored by Representative Dave McCurdy
(D-OK), would provide a $10,000 education voucher for each year of service.
Opponents maintain that while they support efforts to encourage public service,
they oppose making it mandatory for student aid recipients.
McCurdy and Senator Sam Nunn (D-GA), sponsor of the Senate companion
measure, say that their proposal is designed to increase rather than restrict
student aid availability. Nunn has indicated that he will accept three
compromises to his bill, including:
- allowing students to perform community service work on weekends so
they can be enrolled in college while fulfilling their commitment;
- allowing a certain number of students to attend college and perform
public service work after graduation; and
- establish a program that would allow low-income students to qualify
for education benefits beyond the $10,000 a year called for in the plan
if the student attends an expensive college.
---
LEGISLATION LIKELY TO ADDRESS NATION'S MATH/SCIENCE
INADEQUACIES Members of the House Science, Research and Technology
Subcommittee, at a March 9th hearing on science education, indicated that they
intend to pass legislation addressing the inadequacies of science and
mathematics education in the United States.
Subcommittee chairman Doug Walgren (D-PA), has introduced a bill that
would award four-year scholarships of $5,000-a-year to an annual group of nearly
900 excellent science and math students. President Bush has a similar proposal.
While the Education Department would run Bush's plan, however, those testifying
before the Subcommittee identified the National Science Foundation (NSF) as the
best agency to manage science educators.
- 6 -
The Walgren and Bush proposals would create congressional scholarships,
but they differ significantly. Walgren's bill (H.R. 996) would cap grants at
$5,000 a year, half as much as Bush's. Bush would have each member of Congress
pick one scholar, and the President would name 30 others. In Walgren's package,
NSF would select one male and one female scholar from each congressional
district.
--- HEARINGS CONTINUE ON VOCATIONAL EDUCATION ( ACT The House
Elementary, Secondary and Vocational Education Subcommittee continued this week
with hearings on H.R. 7, legislation reauthorizing the Perkins Act.
Witnesses, primarily business and education leaders, promoted new and
innovative approaches to vocational education. Those testifying acknowledged
that innovation would be likely to cause the setaside program to suffer.
---
BUSH NOMINATES EDUCATION UNDERSECRETARY
President Bush announced
March 10th that he has nominated Illinois School Superintendent Ted Sanders to
be the undersecretary of the Department of Education.
If confirmed by the Senate, Sanders will succeed Linus Wright, who left
tht Department at the end of the Reagan administration to work for a Dallas job
recruitment firm. Sanders, who has been the Illinois school superintendent
since 1985, has also served as Nevada state school superintendent and in several
positions within the New Mexico state education department. He is a native of
Texas.
For more information, contact Lori Bounds
Human Resources Coordinator
ENERGY ITEM
--- SENATE ENERGY APPROVES ANWR DRILLING BILL On Thursday, March
16th, the Senate Energy and Natural Resources Committee approved a draft bill,
S. 406, that would authorize oil and gas drilling on a portion of the Arctic
National Wildlife Refuge on Alaska's North Slope.
Approval of the measure came after the Committee rejected an amendment
by Sen. Tim Worth (D-CO) that would have delayed the decision for a year until a
national energy plan could be developed.
"We have been studying energy policy in this Committee for 17 years,"
said Committee Chairman Bennett Johnston (D-LA) and "its about time we made some
decisions."
The Senate Environment and Public Works Committee, which also claims
jurisdiction over the bill, has yet to act on the measure.
For more information, contact Mark Schnable
Energy and Natural Resources Coordinator
HOUSING ITEM
--- HOUSING POLICY DRAFT INTRODUCED IN SENATE On Wednesday March
15th, Senators Alan Cranston (D-CA) and Alfonse D'Amato (R-NY), Chairman and
- 7 -
ranking minority member of the Senate Banking, Housing, and Urban Affairs
Subcommittee on House and Urban Affairs, unveiled draft legislation recommending
a major overhaul of the federal government's housing assistance program.
The package would create a $3 billion program to assist in the creation
of affordable housing. The federal money would be supplemented by funds from
state or local governments, non-profit institutions or private enterprise.
The legislation also calls for increased spending for rental subsidies
and a doubling of funds provided for homeless assistance. The bill would
authorize about $15 billion in FY 90 compared to slightly less than $11 billion
for current housing programs.
For more information, contact Mark Schnable
Energy and Natural Resources Coordinator
HUMAN RESOURCES ITEMS
--- HHS SECRETARY SULLIVAN TESTIFIES BEFORE CONGRESS Secretary of
Health and Human Services Sullivan spent much of this week before Congress,
laying out the broad outlines of his agenda.
Testifying before the House Ways and Means Committee and the House and
Senate Budget committees, Sullivan indicated that unless Congress makes the $5
billion in cuts that Bush proposes, Medicare spending will rise 14 percent.
Sullivan said that he is concerned about the possibility of hospital closures
resulting from Medicare cuts, but vowed to preserve access to care. He said
that he will try to narrow the current gap between Medicare payments to urban
and rural facilities.
Sullivan called AIDS a priority issue and stated that the most effective
means of combatting the disease is through information about the consequences of
high-risk behaviors. The Secretary said that a clean needle swapping program
should be dealt with by local governments who would offer federal support for
information, personnel and training. Sullivan's needle swapping proposal has
drawn criticism from the White House and some in Congress.
--- INCREASE FOR PUBLIC HEALTH SERVICE AIDS BUDGET REQUESTED AT BUDGET
PANEL HEARING At a March 7th hearing of the House Budget Committee's panel on
Human Resources, Rep. Henry Waxman (D-CA) and researchers, physicians and
advocacy groups requested that Congress add $575 million to the FY 90 Bush
Administration AIDS budget. Such an increase would bring up the President's
requested $1.6 billion for AIDS to $2.17 billion in FY 90.
The majority of the extra money would go to the Centers for Disease
Control (CDC) to bolster education of minorities, college students and women of
childbearing age about AIDS. The National Insitutes of Health would get more
money for research and personnel. The National Institute on Allergy and
Infectious Diseases had requested 133 new staff slots; OMB has approved only 49.
Other funds would go to combat drug abuse and study treatment methods, including
cheaper ways to deliver care to AIDS patients. Waxman has also requested $30
- 8 -
million to help place babies with AIDS abandoned in hospitals in foster homes,
$30 million to keep paying for AZT for indigent AIDS patients, $50 million to
pay for home health and nursing home care for AIDS patients and $50 million for
long term counseling of AIDS infected people.
Waxman also requested $500 million more to fund five Medicaid
initiatives. He wants to expand coverage to pregnant women and infants, poor
children, the mentally retarded, the frail elderly and the terminally ill.
--- SENATE PANEL REPORTS CHILD CARE PACKAGE On March 15th, the Senate
Labor and Human Resources Committee passed S.5, the Act for Better Child Care
Services (ABC), legislation allocating $2.5 billion for child care programs in
FY 90.
The bill was passed 11-5 after an amendment was adopted prohibiting
child care providers from using federal funds for religious purposes. The
amendment also makes clear that organizations cannot discriminate based on
religion at any time. Members also approved an amendment increasing Head Start
funding by $250 million annually.
Funding provided for by S.5 would be distributed on a sliding fee scale
based on need. Parents would be able to choose child care from school-based,
private and nonprofit sites. The ABC bill would:
- establish grants for communities wishing to start after school child
care programs;
- make grants available for businesses with child care; and
- provide funding for services such as referral programs, health and
safety training for child care workers and state licensing and
inspection requirements.
A Floor date has not been set for consideration of S.5, but it is likely
to be influenced by the Administration's child care proposal introduced this
week. The Bush plan calls for a tax credit of as much as $1,000 per child
under age four in low-income families. The Administration estimates 3.5 million
people would be eligible for the credit. In addition, the President supports
the $250 million increase in Head Start funding if it is targeted for day care
services.
The Education and Labor Committee held hearings on the House version of
the bill (H.R. 3) last week. Additional hearings will be held with a markup
unlikely before May.
For more information, contact Lori Bounds
Human Resources Coordinator
LABOR ITEM
--- HOUSE COMMITTEE PASSES MINIMUM WAGE BILL On Tuesday, March 14th,
the House Education and Labor Committee approved a bill, H.R. 2, which would
increase the minimum wage from $3.35 an hour to $4.65 an hour over a three year
period.
- 9 -
The vote to pass the bill was along strict party lines, 22-13.
The vote came in spite of a warning by Secretary of Labor Elizabeth Dole
that President Bush would veto any increase over his proposed increase in the
minimum wage.
The President's proposal calls for a 90-cent increase to $4.25 an hour
over three years coupled with a six-month sub-minimum training wage equal to 80
percent of the minimum wage for new hires.
The Senate Labor and Human Resources Committee passed a bill last week
similar to H.R. 2 and each House is expected to vote on their respective bills
this week.
For more information, contact Mark Schnabel
Energy and Natural Resources Coordinator
TAXATION ITEMS
--- TAX EXEMPTION FOR STATE AND LOCAL BONDS SAFE FOR NOW Speaking to
reporters following a meeting of the National League of Cities, tax counsel for
the Senate Finance Committee and the House Ways and Means Committee said they
doubted that Congress would alter the tax-exempt status afforded state and local
bonds. In the wake of a Supreme Court decision last year (South Carolina V.
Baker) in which the Court upheld the federal government's right to tax such
bonds, many had feared that the tax exemption would be re-examined. The
committee aides, while acknowledging the significant revenue loss the exemption
causes the government, said that bond financing revenues are generally well
spent by state and local governments.
--- STARK INTRODUCES BILL TO RAISE CIGARETTE TAX On March 15th, Rep.
Pete Stark introduced a bill (H.R. 1452) which would raise the federal excise
tax on cigarettes from 16 cents to 41 cents per pack. Stark said his bill would
raise $4 billion annually for the federal government.
For more information, contact Carter Breed
Economic Development Coordinator
- 10 -
THE WEEK AHEAD
*
FY 90 BUDGET MARKUP
The Senate Budget Committee will begin to mark up the concurrent budget
resolution for FY 1990. 10am SD-608 Dirksen Bldg., March 17.
SAVINGS AND LOAN CRISIS
The Financial Institutions Subcommittee of the House Banking Committee
will continue hearings to examine the problems in the savings and loan
industry and the potential threat to the insurance fund protecting S&L
deposits. 9am 2128 Rayburn Bldg., March 21 and 22.
HIGH DEFINITION TV
The Science, Research and Technology Subcommittee of the House Science,
Space and Technology Committee will hold a hearing on the federal role
in fostering a domestic High Density TV (HDTV) industry. 9:30am 2318
Rayburn Bldg., March 22.
DROUGHT RELIEF
The Wheat, Feed Grains and Soybeans Subcommittee of the House
Agriculture Committee will hold a hearing to review implementation of
the 1988 drought relief legislation. Also, Members have indicated they
will discuss the possibility of extending the assistance to winter wheat
planted in the fall of 1988, which is now undergoing severe stress due
to drought and other adverse conditions. 9:30am, 1302 Longworth Bldg.,
March 23rd.
GRAIN QUALITY (field hearing)
The Agricultural Research & General Legislation Subcommittee of the
Senate Agriculture, Nutrition and Forestry Committee will hold a field
hearing on the results of the Office of Technology Assessment study on
U.S. grain quality. 10am, Huron, SD, March 22nd.
HEALTH EFFECTS OF AIR POLLUTION
Environmental Protection Subcommittee of Senate Environment & Public
Works Committee (Chairman Baucus, D-MT) will hold a hearing on the
health effects of air pollution. 10am SH-216 Hart Bldg. April 18.
COASTAL BARRIER RESOURCES SYSTEM
Fisheries & Wildlife Conservation & the Environment Subcommittee (Chair-
man Studds, (D-MA) and Oceanography Subcommittee of House Merchant
Marine & Fisheries Committee (Chairman Hertel, (D-MI) will hold an
oversight hearing on the Dept. of Interior's report to Congress on the
Coastal Barrier Resources System. 10am 1334 Longworth Bldg. March 22.
- 11 -
TEXAS THIS WEEK:
The Texas House last Wednesday tentatively approved a $1.2 billion
package of bookkeeping measures and paper transactions to help balance the state
budget. The bill would help close the anticipated budget shortfall by allowing
Comprtroller Bob Bullock to raise 1990-91 general revenue estimates. In related
House action, a bill that would free $260 million for the Legislature to spend
this session won preliminary approval. The $260 million stems from money that
was being held from a lawsuit that challenged the state's taxation of property
and casualty insurance
The worst fire in Big Bend National Park's 45-year
history was considered under control last Tuesday. Firefighters in the 740,000
acre park contained the 615 acre blaze after several days of burning. Meanwhile,
the Texas Forest Service has ordered a ban on all outside burning because of 208
fires that have consumed more than 45,000 acres statewide
Roger Wallace, the
deputy director for business development at the Texas Department of Commerce,
has taken a position at the U.S. Department of Commerce. He is going to be
deputy assistant secretary to the International Trade Administration, the arm of
the Commerce Department that promotes exports and investments
A record
number of bills have been filed in both the state House and Senate. At the close
of deadline last Friday the total this session was 3,062 in the House and 1,503
in the Senate
A plan to provide venture capital to small businesses has
been proposed by state Representative Barry Connelly (R-Houston) and Rob
Mosbacher, the chairman of the Texas Board of Human Services. The plan calls for
state funding of $5 million in small business loans through Texas banks and
financial institutions
The Southern Pacific Transportation Co. has agreed
to a $175,000 settlement with the state over an acid spill in the Medina River
that killed thousands of fish in 1985
Common Cause, the League of Women
Voters, National Organization for Women, Texas Consumer Association and American
Association of Retired Persons have endorsed a proposal by state Representative
David Hudson (D-Tyler) to more than triple state legislators' salaries
The
Texas Senate voted to lengthen the state's compulsory school attendance age by
two years, requiring students to remain in school from age 6 to their 17th
birthday
The Senate Committee on Health and Human Services recommended to
the full Senate a bill that would require motorcyclists to wear
helmets
Texas Railroad Commissioner Kent Hance is supporting legislation
that would exempt new oil and gas wells in new fields from state taxes. Hance
said the legislation would encourage exploration and energize a sluggish Texas
industry.
- 12 -
WILLIAM P. CLEMENTS, JR.
TE
OF
HENRY M. GANDY
GOVERNOR
OFFICE
DIRECTOR
THE STATE OF TEXAS
OFFICE OF STATE-FEDERAL RELATIONS
WASHINGTON ACTION ITEMS
March 3, 1989
OMB DIRECTOR DEFENDS THRIFT RESCUE PLAN COST ESTIMATES
PAGE 2
HOUSE SUBCOMMITTEE APPROVES PARENTAL LEAVE MEASURE
PAGE 4
*
JUSTICE DEPARTMENT SENDS SOME RELIEF TO THE
SOUTH TEXAS REFUGEE CRISIS
PAGE 6
*
HOUSE SUBCOMMITTEE TO REVIEW FOREIGN COST SHARING
PROVISIONS IN BUILDING THE SSC
PAGE 7
AGRICULTURE ITEMS
CALIFORNIAN NAMED DEPUTY SECRETARY OF USDA Jack
Parnell,
the
director of the California Department of Food and Agriculture, was appointed by
President Bush February 28th to be the Deputy Secretary of the U.S. Department
of Agriculture. In addition to his government service, Parnell is a cattleman,
banker and livestock auctioneer. He replaces Peter Myers.
YEUTTER TESTIFIES ON RURAL DEVELOPMENT, BUDGET CONSTRAINTS
Secretary of Agriculture Clayton Yeutter testified March 1st before the House
Appropriations Subcommittee on Rural Development and Agriculture. In his
written testimony and in response to questions from Members, Yeutter said rural
communities should look to the federal government for guidance and leadership in
the area of rural development but not to expect USDA to pour billions of dollars
into programs. He urged rural communities to take the initiative to diversify
their ailing economies and said he was working with HUD Secretary Jack Kemp on a
plan to coordinate the various economic development programs of the federal
government.
Yeutter also said that his staff was conducting economic analyses on
various options for achieving the $1.9 billion in farm program savings called
for in the budget proposal submitted by President Bush, and he indicated it
would be several weeks before details of a plan would be ready. Yeutter
emphasized that proposed cuts would be ones that would not reduce the
negotiating leverage of the U.S. in the ongoing negotiations on the General
Agreement on Tariffs and Trade (GATT).
600 MARYLAND AVENUE, S.W.
SUITE 255
WASHINGTON, D.C. 20024
202/488-3927
POST OFFICE BOX 13005
AUSTIN, TEXAS 78711
512/463-1803
--- YEUTTER URGES BUDGET COMMITTEE TO NOT LIMIT EEP In testimony
before the House Budget Committee on February 28th, Secretary of Agriculture
Clayton Yeutter urged Members to not put an appropriations limit on the Export
Enhancement Program (EEP). Yeutter said the EEP has made a significant
contribution to our strategy of challenging those competitor nations which use
trade-distorting subsidies and for securing agreements on agricultural reform
during the Uruguay Round of GATT negotiations. If an appropriations limit were
put on the EEP, competitor nations would know how much we were willing to spend
to compete with their export subsidy programs, and might decide they could
afford to outspend us in their bid for world-market share. However, if left
uncapped, the EEP would be a more formidable tool because the competitors
wouldn't know from the outset how much they would have to spend to outbid us.
Yeutter's testimony drew a complaint from the Agriculture Commissioner
for the European Community (EC), Ray MacSherry. MacSherry issued a statement in
Brussels saying that Yeutter had called for supplementary weapons to help force
the EC into accepting U.S. proposals on reforming agricultural trade. He also
complained that Yeutter's statements were a departure from the more conciliatory
tone of U.S.-EC talks held February 17th and 18th.
--- NGA PASSES RESOLUTIONS SUPPORTING RURAL DEVELOPMENT, GROUNDWATER
PROTECTION At the mid-winter meeting of the National Governors' Association
(NGA), several resolutions and amendments to NGA policy on agricultural and
rural issues were passed. One policy amendment urges the Congress to create
within the U.S. Department of Agriculture a new Agricultural Research
Commercialization Corporation. The new Corporation would help promote the
development, commercialization and marketing of new agricultural products in an
effort to provide new uses and new markets for agricultural products.
The Governors also approved a resolution urging Congress to develop and
pass a comprehensive rural development program, along the lines of that
contained in the 1988 Omnibus Trade Bill. Although the resolution does not
recommend specific legislation, it does call for support in such areas as job
training, education, infrastructure, health, transportation and tax incentives.
In the area of groundwater, NGA called for federal monitoring of
groundwater quality, coupled with state groundwater management plans to reduce
pollution. Additionally, their new policy calls for revisions in federal farm
and tax policy to reduce nonpoint pollution by nitrates and pesticides.
For more information, contact Glen Hodges
Agriculture Coordinator
BANKING ITEMS
--- OMB DIRECTOR DEFENDS THRIFT RESCUE PLAN COST ESTIMATES Testifying
before the Senate Banking Committee on March 2nd, Office of Management and
Budget Director Richard Darman defended the Bush Administration's cash-flow
projections associated with its proposed thrift rescue plan. Darman also
indicated that a $10 billion "fudge factor" had been built in to the $50 billion
financing total to offset the possibility of rising interest rates.
Current OMB cost estimates assume that interest rates on FSLIC notes
will fall from 9.5 percent in FY 1989 to 4.0 percent in FY 1994. In addition,
- 2 -
deposit growth at FSLIC-insured institutions is estimated at 7.2 percent
annually through 1994, and growth at FDIC-insured institutions at 6.9 percent
annually. In response to concerns about the assumptions raised by Banking
Committee Chairman Don Riegle (D-MI), Darman conceded that "the interest rate
forecast for the out years is optimistic."
Darman. also addressed the effects of reduced deposit growth on the cost
projections. In earlier testimony on March 1st, Federal Home Loan Bank Board
Chairman M. Danny Wall noted that thrift deposits decreased $4 billion to $5
billion in February and $7 billion in January. Darman indicated that a deposit
growth rate of significantly less than 7.2 percent - specifically, 4.0 percent -
would indicate that the thrift industry is in serious decline. In that case,
Treasury outlays would be increased by $1.2 billion through 1994 and $4.7
billion through 1999. However, the Administration's deposit growth forecasts
are based on historical data from the past 10 years. If Congress writes a
responsible bill and it is enacted, there will be a return of depositor
confidence in the industry, Darman said.
Darman was again forced to defend the off-budget system of financing the
rescue plan. In response to claims that the proposed financing system is more
costly than direct Treasury financing, Darman argued that the possible
triggering of Gramm-Rudman automatic cuts which could result from direct and
immediate on-budget "scoring" of Treasury financing could cause problems in the
financial markets and ultimately prove more costly.
--- ADMINISTRATION DROPS INSURANCE PREMIUM PLAN Regulatory officials
confirmed on February 27th that the Bush Administration has withdrawn a
controversial provision in the proposed thrift industry rescue plan. The
provision would have tied the level of bank deposit insurance premiums to the
combined reserves of the bank and thrift insurance funds. The FDIC would have
been granted authority to hike commercial bank premiums if the combined funds'
reserves fell below a 1.2 percent reserves to deposits ratio. Banking officials
had criticized the provision from the outset, saying that it violated the
Administration's pledge not to commingle the thrift and bank insurance funds.
For more information, contact Carter Breed
Economic Development Coordinator
COMMUNITY DEVELOPMENT ITEM
--- KEMP PREDICTS ENACTMENT OF ENTERPRISE ZONE LEGISLATION Speaking
before the Economic Development Committee of the National Governors'
Association, Housing and Urban Development Secretary Jack Kemp predicted that
Congress will pass legislation implementing the enterprise zone program this
year. Thirty-seven states currently have enterprise zone programs, which
provide financial incentives to businesses to stay in or relocate to
economically depressed areas. A bill introduced by Rep. Charles Rangel (D-NY),
H.R. 6, would provide such relief on the federal level. Kemp indicated that he
expects positive action on the Rangel bill during this session of Congress.
For more information, contact Carter Breed
Economic Development Coordinator
- 3 -
ENERGY ITEMS
GOVERNORS ENDORSE ENERGY, CLEAN AIR PLANS The National Governors'
Association, during their annual winter meeting in Washington last weekend,
endorsed new policies for dealing with the nation's energy and clean air needs.
The NGA's Energy and Environment Committee, of which Texas Governor Bill
Clements is a member, put the finishing touches on a comprehensive energy policy
statement at the winter meeting after months of negotiations between
representatives of governors from producing and consuming states. The energy
policy includes an investment tax credit on exploration and development
expenditures for marginal or "stripper" wells and for secondary or tertiary
enhanced recovery projects; expensing of geological and geophysical costs;
repeal of the well transfer rule; and elimination of exploration and development
expenditures as alternative minimum tax "preference" items.
The clean air policy toughens previous ozone and carbon monoxide
nonattainment strategies by calling for Environmental Protection Agency
adoption, rather than consideration, of additional motor vehicle control
measures such as gasoline evaporation standards and more stringent regulations
on trucks.
--- WATKINS, DERWINSKI CONFIRMED: BENNETT NEXT WEEK
Admiral James D.
Watkins and Edward J. Derwinski were confirmed by the Senate this week to be
President Bush's Secretary of Energy and Secretary of Veterans Affairs,
respectively.
Both were confirmed unanimously by the Senate.
William J. Bennett, nominated by President Bush to be the Director of
the Office of National Drug Control Policy, underwent hearings this week in the
Senate Judiciary Committee, where a vote is expected next week.
For more information, contact Mark Schnabel
Energy and Natural Resources Coordinator
HUMAN RESOURCES ITEMS
--- SENATE CONFIRMS SULLIVAN AS HEALTH AND HUMAN SERVICES
SECRETARY The Senate voted overwhelmingly Wednesday to confirm Louis W.
Sullivan, M.D., as Secretary of the Department of Health and Human Services.
Sullivan was confirmed 98-1 with Senator Jesse Helms (R-NC) casting the
lone nay vote. Helms indicated that he did not think Sullivan's position on
abortion was clear.
--- HOUSE SUBCOMMITTEE APPROVES PARENTAL LEAVE MEASURE On February
28th, the House Education Committee's Labor-Management Relations Subcommittee
gave approval to legislation (H.R. 770) permitting employees to take time off to
be with newborn or ill children without jeopardizing their jobs.
The Subcommittee passed the bill on a 11-5 vote after defeating several
Republican amendments. The amendments would have weakened several provisions of
the bill by making the measure applicable only to businesses with more than 500
workers; by exempting part-time workers; by exempting state and local government
- 4 -
workers; and by limiting the percentage of a firm's workers that could be on
leave at the same time.
The full Education and Labor Committee is scheduled to take up the bill
next week. As passed by the Subcommittee, H.R. 770 would require companies
employing more than 50 workers to allow employees to take as much as 10 weeks of
unpaid leave to care for children or ailing parents. Workers would also be
permitted to take up to 15 weeks of unpaid leave to recuperate from a serious
illness. The highest paid 10 percent of a company's workforce would not be
covered by the bill.
COMMISSION RECOMMENDS INCREASE IN MEDICARE PAYMENTS TO
HOSPITALS Testimony by the Prospective Payment Assessment Commission (ProPAC)
before the House Ways and Means Subcommittee on Health recommended an average
Medicare payment increase of 4.9 percent in FY 90 for hospitals serving Medicare
patients.
The Subcommittee hearing on March 1st reviewed the prospective payment
system, which pays hospitals a set fee for each Medicare patient based on the
patient's illness. The Chairman of ProPAC, the body designed to oversee the
prospective payment system and to make recommendations to Congress, told the
Subcommittee that the Commission recommends a five percent increase for
hospitals in large, urban areas; a 4.5 percent increase for hospitals in smaller
urban areas; and a 5.6 percent increase for rural hospitals.
STATE IMMIGRATION FUNDS ENDANGERED BY KENNEDY
LEGISLATION Legislation introduced March 1st by Senators Edward Kennedy (D-MA)
and Robert Kasten (R-WI) would shift $150 million in federal State Legalization
Impact Assistance Grants (SLIAG) to support the processing and resettlement of
Soviet Jews.
Kennedy's legislation is designed to address the problems being
experienced by several U.S. cities (Los Angeles, Boston, New York and Chicago)
from an influx of Soviet immigrants. The bill proposes that the ceiling on
granting political refugee status to Soviet emigres during FY 89 be raised from
25,000 to 30,000. To fund the processing and resettlemnt of the immigrants, the
Kennedy Kasten proposal would shift $150 million in SLIAG funds to the State
Department's emergency resettlement fund to assist those states most heavily
impacted by the Soviet influx.
SLIAG is the program established under the Immigration Reform and
Control Act (IRCA) to reimburse states for the cost of legalizing aliens. The
Administration has proposed to rescind $300 million of the SLIAG fund in FY 90
and again in FY 91, claiming that states are not meeting the anticipated need
for the SLIAG dollars. The states counter that the Department of Health and
Human Services' tardiness in finalizing SLIAG regulations along with a
burdensome and inconsistent state cost reporting requirement have combined to
produce FY 89 SLIAG cost estimates that are deceivingly low.
Within the next few weeks, the Administration is expected to submit to
Congress a proposal permitting the President to admit up to 30,000 additional
people a year for humanitarian or foreign policy reasons. However, the
Administration will continue the practice of requiring immigrants to finance
their own processing and resettlement.
- 5 -
JUSTICE DEPARTMENT SENDS SOME RELIEF TO THE SOUTH TEXAS REFUGEE
CRISIS The Department of Justice announced February 24th that it would devote
$3 million of its Community Relations Service (CRS) funds to help alleviate the
problems being experienced in South Texas as a result of the Central American
refugee influx.
The CRS program is designed to provide aid to areas which experience an
influx of Cuban and Haitian refugees. The $3 million which was sent to South
Texas was identified as unobligated, surplus funds. Senator Lloyd Bentsen
(D-TX) and Representative Solomon Ortiz (D-TX) have introduced legislation
giving CRS permanent authority to intervene in the Central American refugee
problem.
For more information, contact Lori Bounds
Human Resources Coordinator
LABOR ITEMS
--- BUSH PLANS TO CONTINUE TRADE ADJUSTMENT ASSISTANCE PROGRAM The
Office of Management and Budget has indicated that plans to terminate the Trade
Adjustment Assistance (TAA) Program have been scrapped. The program had faced
elimination in President Reagan's budget.
TAA provides job training and extended unemployment insurance benefits
to workers displaced because of increased foreign competition. Last year's
Trade Bill extended eligibility for TAA benefits to oil and gas workers laid off
by exploration or drilling companies, with retroactive benefits available to
those terminated after September 30, 1985.
Texas has received approximately $10.5 million under this program since
1985, with 345 companies certified for employee applications and 150 more in the
process. Estimates indicate that up to 40,000 Texans may be eligible for the
program.
--- BUSH INTRODUCES MINIMUM WAGE President Bush's anticipated
proposal to increase the minimum wage was made public this week as Secretary of
Labor Elizabeth Dole presented the proposal to the Senate Labor and Human
Resources Committee on Friday.
The President's proposal calls for an increase in the hourly wage to
$4.25 over three years and provides for a six-month training wage for "new
hires" at the current rate of $3.35 an hour.
As expected, Bush's proposal is more modest than minimum wage
legislation (S. 4, H.R. 2) offered by Sen. Edward Kennedy (D-MASS) and Rep.
Augustus Hawkins (D-CA), the Chairmen of the Senate and House Labor Committees.
The Kennedy-Hawkins bills would increase the minimum wage to $4.65 an hour over
three years.
Both the House and Senate Labor Committees have markups scheduled for
next week on minimum wage legislation.
For more information, contact Mark Schnabel
Energy and Natural Resources Coordinator
- 6 -
SUPER COLLIDER ITEM:
FIRST APPROPRIATIONS HEARING ON THE SUPERCONDUCTING SUPER
COLLIDER. On Tuesday, February 28th, the House Appropriations Subcommittee on
Energy and Water Development held its first hearing on the Department of
Energy's FY 90 request for general science research. Included in that request
is $250 million for the SSC. The Committee, while generally supportive of the
SSC initiative, expressed its concern with finding revenue to build the project.
Congressman Jim Chapman (D-TX) brought to the attention of the Subcommittee that
high energy physics has provided measurable, beneficial advances for our nation
and that there is no reason to believe that the SSC would not continue to do SO.
Congressman Chapman introduced the chairman of the Texas National Research
Laboratory Commission, Thomas W. Luce, to the Subcommittee during the hearings.
--- HOUSE SUBCOMMITTEE TO REVIEW FOREIGN COST SHARING PROVISIONS IN
BUILDING THE SSC Congressman Ralph Hall (D-TX) and Congressman Joe Barton
(R-TX) introduced a bill in the House on March 1st to set limits on foreign
participation in the Collider. Congressman Hall, Chairman of the House Science,
Space, and Technology Subcommittee on International Scientific Cooperation, has
scheduled a hearing for March 8th on his and Congressman Barton's bill. In
addition to Department of Energy witnesses, Thomas Luce is scheduled to testify.
The hearing begins at 10:00 a.m. in room 2318 of the Rayburn House Office
Building.
For further information, contact Henry Gandy
Director
TAXATION ITEM
GREENSPAN REPEATS SUPPORT OF GAS TAX On March 2nd in testimony
before the House Budget Committee, Federal Reserve Board Chairman Alan Greenspan
reiterated his support for an increase in the federal gasoline excise tax.
Greenspan indicated that he favored the increase as a method of enhancing U.S.
energy security, saying that it would encourage conservation and reduce
dependence on foreign oil supplies. However, Greenspan indicated that he does
not support higher gasoline taxes as a source of revenue to be earmarked for
deficit reduction.
For more information, contact Carter Breed
Economic Development Coordinator
TRADE ITEMS
--- USTR DENIES MOVE TOWARD MANAGED TRADE WITH JAPAN On March 2nd,
United States Trade Representative Carla Hills denied reports that the United
States has shifted its trade policy toward Japan from a position of advocating
free trade to one of managed trade. She indicated that she was "four-square
behind free trade", but she did acknowledge that managed trade proposals were
under consideration. Hills and Commerce Secretary Robert Mosbacher testified
before the Oversight Subcommittee of the House Energy and Commerce Committee.
Hills also fielded questions from members, including Rep. John Bryant
(D-TX), concerned about unfair trade practices in the telecommunications
industry. Under a provision in the Omnibus Trade and Competitiveness Act of
- 7 -
1988, the USTR is responsible for identifying countries which engage in unfair
telecommunications trade practices toward the U.S. In announcing a preliminary
list of countries last week, Hills did not identify Japan as one of the
offending partners.
--- BILL TO AUTHORIZE US/JAPAN TRADE AGREEMENT INTRODUCED Rep. Phil
Crane (R-IL) recently introduced legislation, H.R. 1051, which would authorize
the Administration to negotiate a free trade agreement between the United States
and Japan, much like the recently approved U.S./Canada Free Trade Agreement. A
similar bill, S. 292, was introduced in the Senate by Sen. Max Baucus (D-MT) on
January 31st. Crane's statement noted that Japan is the United States' second
largest trading partner and that the development of a long-term trade
relationship between the two countries is of paramount importance. The bill is
cosponsored by Rep. Sam Gibbons (D-FL), Chairman of the Ways and Means
Subcommittee on Trade.
For more information, contact Carter Breed
Economic Development Coordinator
- 8 -
THE WEEK AHEAD
*
MEDICARE OVERSIGHT
Medicare and Long Term Care Subcommittee (Senate Finance Committee) will
hold an oversight hearing on the Medicare program. 10am SD-215 Dirksen
Bldg, March 3
*
EDUCATION APPROPRIATIONS
Labor, Health and Human Services, Education & Related Agencies
Subcommittee (House Appropriations Committee) will hold hearings to
review the FY 90 budget request for programs under its jurisdictions.
10am and 2pm 2358 Rayburn Bldg., March 7,8 & 9
CHILD CARE
House Education and Labor Committee will hold hearings on various child
care proposals. 9:30 am 2175 Rayburn, March 6
VOCATIONAL EDUCATION ACT REAUTHORIZATION
Elementary, Secondary & Vocational Education Subcommittee (House
Education and Labor Committee) will hold hearings on legislation
reauthorizing the Carl Perkins Vocational Education Act.
2175 Rayburn, March 7th, 10am and 9th, 9:30am
HANDICAPPED EDUCATION
Select Education Subcommittee (House Education and Labor Committee) will
hold an oversight hearing on the reauthorization of discretionary
programs under the Education of the Handicapped Act. 9:30am 2257
Rayburn, March 7
FAMILY AND MEDICAL LEAVE ACT OF 1989
House Education and Labor Committee will mark up the Family and Medical
Leave Act of 1989. 10am 2175 Rayburn, March 8
*
HEALTH BENEFITS
Health and the Environment Subcommittee (House Energy and Commerce
Committee) will hold a hearing on health benefits. 9:45am Room TBA,
March 9
*
TRAUMA CARE
Health and the Environment Subcommittee (House Energy and Commerce
Committee) will hold a hearing on trauma care. 9:45am Room TBA, March
10
*
SAVINGS AND LOAN CRISIS
The Senate Banking, Housing and Urban Affairs Committee will continue
hearings to examinie the problems in the savings and loan industry and
the potential threat to the insurance fund protecting S&L deposits.
10am SD-538 Dirksen Bldg, March 7,8,9,10.
SPACE SCIENCE BUDGET
The Science, Technology and Space Subcommittee of the Commerce, Science
and Transportation Committee will hold hearins on NASA's space science
and applications budget for FY 90. 9:30am SR-253 Russell Bldg, March
11.
- 9 -
BILATERAL TRADE AGREEMENTS
The International Trade Subcommittee of the Senate Finance Committee
will hold a hearing on the possibility of future bilateral trade
agreements focusing on the relationship between such agreements and the
General Agreement on Tariffs and Trade (GATT). 9:30am SD-215 Dirksen
Bldg, March 13.
SAVINGS AND LOAN CRISIS
The Financial Institutions, Regulation and Insurance Subcommittee of the
House Banking Committee will hold hearings to examine the problems in
the S&L industry and the potential threat to funds protecting deposits.
Time and dates TBA, 2128 Rayburn Bldg, Week of March 6.
ARTIC NATIONAL WILDLIFE REFUGE
Senate Energy & Natural Resources Committee will hold a hearing on
legislation S. 406 to allow oil and gas leasing in the Artic National
Wildlife Refuge. 9:30am SD-366 Dirksen Bldg. March 6th.
MINIMUM WAGE
Labor Standards Subcommittee of House Education & Labor Committee will
hold a hearing, followed by a markup on legislation H.R. 2 to amend the
Fair Labor Standards Act to restore minimum wage to a fair and equitable
rate. 10am 2261 Rayburn Bldg. March 9th
LABOR & HUMAN RESOURCES
Minimum Wage - Full Committee markup. Senate Labor & Human Resources
Committee will mark up legislation S. 4 to increase the minimum wage.
10am SD-430 Dirksen Bldg. March 8th.
SUPERCONDUCTING SUPER COLLIDER
House Science and Technology's International Scientific Cooperation
Subcommittee, chaired by Rep. Ralph Hall (D-TX), will hold a hearing on
H.R. 1195, regarding non-federal funding sources for the SSC Wednesday,
March 8th, 10am, 2318 Rayburn.
- 10 -
TEXAS THIS WEEK:
The Texas Legislature has overwhelmingly approved the first tax bill of the
session, taking steps toward curbing an estimated revenue shortfall for the
90-91 state budget. The House and Senate approved a bill that would restructure
the state corporate franchise taxes, raising $279 million over a three year
period, $90 million in revenue this year will be put toward the 90-91 budget.
Because of the March 15 deadline to send out tax notices under the provisions of
the new law, lawmakers were rushing to get the bill signed by Governor Clements
The House Business and Commerce Committee has finished work on 271
proposed amendments to House Bill 1, the worker's compensation reform bill. The
House is expected to vote on the 190-page bill this Tuesday. The aim of the
legislation is to curb the escalating costs of workers' compensation insurance
premiums, which have business owners pressing the Legislature for change. The
bill would expand the oversight and regulatory powers of the state's
administrative agency for workers' compensation, raise some benefits for injured
workers and move the decisions of disputed claims to an administrative
process
House Speaker Gib Lewis has endorsed a plan that would allow
counties to relieve jail overcrowding with a voter-approved half-cent sales tax.
The local-option tax will be included in a package of criminal justice reform
legislation being worked out by key lawmakers
Representative A1 Granoff
(D-Dallas) has filed a bill that would close a legal loophole that allows
possession of small quantities of anabolic steroids and provide stiffer
penalties for illegally dispensing of the drug
State Board of Insurance
members, Edwin "Jack" Smith and David Thornberry announced that they would
resign from the embattled State Board of Insurance. The agency has been under
fire since the October failure of Dallas-based National County Mutual Fire
Insurance Co. It was the largest property and casualty insurance company failure
in the state's history
The Texas Banking Department says they will urge
federal regulators to adopt specific measures which would give "failing but
salvageable" banks financial and non-financial aid from the Federal Deposit
Insurance Corporation. Supporters of the proposal say it would give all problem
banks, except those suffering mismanagement and fraud, better odds at sur-
vival
The U.S. Supreme Court has allowed Texas to intervene in a multi-
million-dollar dispute with New York State over unclaimed money. Texas was
allowed to intervene in a case between Delaware and New York. over dividend and
interest payments that have no known owner. Texas Attorney General Jim Mattox
says payments originating from companies or government bodies located in Texas
should be paid to Texas
A Senate committee last week approved a bill that
will keep West Texas skies dark. The bill would authorize counties within 57
miles of U.T.'s McDonald Observatory to adopt ordinances regulating outdoor
lighting
Senator Bob McFarland (R-Arlington) has sponsored a bill that is
intended to shift regulatory authority for protecting wells, underground water
tables and aquifers from the federal government to the state. The bill would
create a $80 to $100 million-a-year state "superfund" to clean up existing and
future contamination from leaking fuel storage tanks
The Texas House has
appointed a nine member committee to begin reviewing the legal requirements for
redistricting. On April 1, 1991 the Texas Legislature will have 60 days to
redraw district lines for the 150 Texas House seats, 31 Texas Senate seats, 15
Board of Education slots and the Texas Delegation to the U.S. Con-
gress
Senator Hugh Parmer (D-Fort Worth) has filed a bill that would allow
the Texas Department of Agriculture to declare a pesticide unsafe. The
manufacturer would have 30 days to file a protest and have a hearing. If the
pesticide couldn't be proved safe, it could no longer be used. The current law
- 11 -
requires that a pesticide be proved unsafe before it is banned
The Senate
Education Committee has approved legislation to set up a law school at Texas A&I
University and make Corpus Christi State University a four year institution
beginning in 1994
The Senate State Affairs Committee last Monday approved a
bill to make it illegal to operate a pickup or open flatbed truck at a speed
greater than 15 miles per hour with a child younger than 12 years old riding in
the bed
Two bills that would prohibit a candidate from seeking two or more
offices in the same election will be reviewed by the House Elections
Committee
Senator Tati Santiesteban (D-E1 Paso) has introduced a bill that
would set aside portions of several Texas rivers for protection from dams and
channeling. Santiesteban, chairman of the Senate Natural Resources. Committee,
said he does not expect the bill to be voted on until later this month
Lady
Bird Johnson was honored last Wednesday by the Legislature as a champion of
wildflowers and the environment. Mrs. Johnson received standing ovations in
separate House and Senate ceremonies
State Representative Jim Rudd is
proposing that a new state agency be created to take over the child-support
enforcement program. Rudd, chairman of the House Appropriations Committee,
envisions a computer system that would maintain files on delinquent fathers who
owe child support, and give state judges more direct supervision of the
cases
A state appeals court judge has set aside the 1976 murder conviction
of Randall Dale Adams, who was convicted of killing a Dallas policeman. Adams'
case was dramatized in the movie "The Thin Blue Line"
Former UT System
regent Jess Hay, Peter O'Donnell Jr. and others representing the Texas
Foundation for Higher Education emphasized to Senate and House committees that
an increase of at least $918.7 million in higher education funding is necessary
for Texas to continue winning "trophies" such as the superconducting
supercollider and Sematech
The Senate Education Committee has approved
three bills to reduce Texas' high dropout rate. Senator Gonzalo Barrientos
(D-Austin), who is sponsoring a package of 18 bills to keep Texas children in
school, said it costs more to send someone to state prison in Huntsville than to
Harvard University
Representative Ric Williamson (D-Weatherford) is helping
Decatur Elementary School with a resolution to make the Guadalupe Bass, the
State Fish. The fish is endorsed by state Parks and Wildlife
The national
Centers for Disease Control, through the Texas Department of Health has awarded
$200,000 in federal grants to six Texas AIDS-prevention organizations
The
House Administration Tax Subcommittee left pending a request from Representative
Kent Grusendorf (R-Arlington), calling for federal legislation for a state sales
tax deduction on federal taxes
In a joint meeting, the House Human Services
and Public Health budget and oversight subcommittees were told that Texas'
social services could lose more than $2.4 billion in federal funding if the
legislature fails to come with an additional $350 million during the next two
years. Representatives of the Texas Department of Human Services, Department of
Health, and Department of Mental Health and Mental Retardation said the
additional costs are caused by revisions in federal programs
Sam Barshop,
chairman of La Quinta Motor Inns Inc., was elected a vice chairman of the UT
System Board of Regents last Thursday. The Board Elected Louis Beecherl Jr. of
Dallas as Chairman and Bill Roden of Midland as another vice chairman. New
Board members are Tom Loeffler of San Antonio, Robert Cruikshank of Houston and
Dr. Mario Ramirez of Rio Grande City.
- 12 -
WILLIAM P. CLEMENTS, JR.
STATE
OF
HENRY M. GANDY
DIRECTOR
GOVERNOR
THE STATE OF TEXAS
OFFICE OF STATE-FEDERAL RELATIONS
WASHINGTON ACTION ITEMS
February 24, 1989
*
HORMONE DISPUTE WITH EC UNRESOLVED, TASK FORCE
APPOINTED TO SEEK SOLUTION
PAGE 1
CONGRESSIONAL LEADERS EXPRESS CONCERNS ABOUT S&L PLAN
PAGE 4
WATKINS TESTIFIES FOR BALANCED ENERGY POLICY
PAGE 7
*
SOUTH TEXAS CONTINUES TO STRUGGLE WITH INFLUX
OF NICARAGUANS
PAGE 10
AGRICULTURE ITEMS
FEDERAL CROP INSURANCE HEARING SCHEDULED FOR LUBBOCK On Tuesday,
March 7th, a field hearing of the Commission for the Improvement of the Federal
Crop Insurance Program will be held in Lubbock, Texas at the Lubbock Plaza
Hotel, 3201 South Loop 289. The hearing will begin at 10:00 am and will be held
in the Arlington Room. The Commission will be holding numerous hearings
throughout the country over the next two months before issuing its report on
ways to improve the federal crop insurance program. The Lubbock hearing is the
only one scheduled to be held in Texas.
House Agriculture Committee Chairman de la Garza (D-TX) is urging
farmers to give serious consideration to crop insurance this year, as it is
unlikely that Congress would be able to pass another massive disaster relief
bill due to severe budgetary constraints. De la Garza is also urging farmers
and other interested parties to attend and participate in the field hearings
being held by the Crop Insurance Commission. Persons interested in testifying
at the hearings should contact: Kellye Eversole, Executive Director, Commission
for the Improvement of the Federal Crop Insurance Program, 1255 23rd Street,
N.W., Suite 880, Washington, D.C. telephone 202/887/6700 or telefax
202/887/0149. Copies of testimony must be delivered to the above address by
5:00 pm, Friday March 3rd for witnesses wishing to testify at the Lubbock
hearing. Witnesses should arrive at the Lubbock Plaza by 9:30 am on the 7th.
HORMONE DISPUTE WITH EC UNRESOLVED, TASK FORCE APPOINTED TO SEEK
SOLUTION After meetings over the past weekend between U.S. Trade
Representative Carla Hills and EC officials, the dispute between the U.S. and EC
600 MARYLAND AVENUE. S.W.
SUITE 255
WASHINGTON, D.C. 20024
202/488-3927
POST OFFICE BOX 13005
AUSTIN, TEXAS 78711
512/463-1803
remains unresolved but the two sides have agreed to continue working on it
rather than escalating the dispute through further retaliation. The dispute
centers around an EC directive that only beef that is certified as having been
produced without the use of growth hormones may be imported into EC member
countries. The U.S. contends that this is an unfair trade barrier, as U.S. and
international regulatory bodies have approved the use of growth hormones. In
response to the EC directive, the U.S. increased tariffs on several EC products
coming into the U.S. The EC had threatened to counter-retaliate against
additional American products, but agreed to hold off until after the meeting
between Hills and EC officials.
Also as a result of the meeting, an 8-member Task Force was appointed to
seek a solution which would meet the EC directive without requiring changes in
U.S. production practices. The task force was given 75 days to find a solution.
The U.S. also agreed that if any U.S. beef is shipped to the EC during the 75
days, we would reduce our retaliation by an equivalent amount.
On a related matter, the U.S. has given the EC until March 31st to
verify that they have adequate inspection capabilities to assure us that EC beef
for export is wholesome and safe. This is a result of reports that producers in
the EC have begun administering unsafe black market hormones to their cattle as
a result of the ban on hormone sales in EC countries.
--- HOUSE AGRICULTURE COMMITTEE RECOMMENDS LEVEL FUNDING FOR 1989 The
House Agriculture Committee sent a letter to the House Budget Committee on
February 22nd recommending that funding for agriculture programs be maintained
at current levels, plus adjustments for inflation. This recommendation covers
all USDA programs with the exception of the Commodity Credit Corporation, the
Farmers Home Administration and the Federal Crop Insurance Program. For these
three, the Committee recommends funding at levels consistent with the 1985 Farm
Bill and the Agricultural Credit Act of 1987.
House Committees are required to make recommendations to the Budget
Committee by February 25th, although there is no assurance that the Budget
Committee will heed their recommendations. The Agriculture Committee
recommendations opposed the spending reductions called for in both the Reagan
and Bush Administration Budget proposals. Committee Chairman de la Garza (D-TX)
told Committee members that by recommending level funding plus inflation, they
retained full leeway if negotiations occured in a "budget summit" with the White
House.
HOUSE AGRICULTURE COMMITTEE HOLDS HEARING ON COTTON
PROGRAM Several witnesses testified February 22nd that changes need to be made
to the cotton program to make U.S. cotton competitive in the world market and
reduce surplus stockpiles of cotton. The hearing before the Cotton, Rice and
Sugar Subcommittee featured witnesses from the USDA and the cotton industry.
With 9.2 million bales of cotton on hand already and production for this year
estimated at 13.2 million bales, surpluses are mounting. Industry witnesses
stated that our cotton isn't selling overseas because of improper implementation
of the marketing loan program by the USDA, while the USDA witness testified that
Congress needs to make changes in the law to fix the program. Industry
witnesses asked for changes in the Department's methodology for determining the
Average World Price to ensure that U.S. cotton is competitive. The Department
witness said the problem is the 18-month loan and equity payments which allow
- 2 -
risk-free storage, encouraging farmers to hold cotton in the loan on the chance
that prices will improve. Committee Members expressed some degree of support
for implementing a paid land diversion in the cotton program to reduce the
oversupply.
--- SENATE AGRICULTURE COMMITTEE HOLDS HEARING ON FUTURES TRADING The
Senate Agriculture Committee heard testimony February 23rd from the General
Accounting Office (GAO) on their investigation of the ability of regulators to
control fraud and abuse at the commodity futures exchanges. The GAO witness
indicated that while the GAO is still in the beginning stages of its
investigation, they have determined that changes made in the audit trail system
in 1986 substantially enhanced the ability of regulators to detect trading
abuses.
The Agriculture Committee is responsible for drafting legislation
reauthorizing the CFTC this year, and have indicated that they will hold
additional oversight hearings to determine if legislative changes need to be
made to ensure that the CFTC is adequately equipped to regulate the exchanges.
--- COMMISSION ON AGRICULTURAL FINANCE ISSUES REPORT TO CONGRESS The
National Commission on Agricultural Finance, mandated by the 1985 Farm Bill,
issued its report to Congress on February 22nd. Recommendations include
standardization of loan application forms and accounting practices for use by
all agricultural lenders and borrowers; development of new means for financing
the export of agricultural products; and a thorough evaluation of the federal
crop insurance program and federal disaster payments to farmers, to determine
which is the better means of providing disaster assistance to farmers.
The Commission also recommended that Congress not interfere with
financial markets by legislatively adjusting terms of loans and functions of
financial markets, and that market forces and competition should be allowed to
work. Also, the Commission said the government's role should be to oversee and
regulate markets with a minimum of interference. The Commission also said that
adequate credit is currently available to farmers and ranchers.
--- COMMENT PERIOD REOPENED FOR PROPOSED BEEF INSPECTION SYSTEM Dr.
Lester Crawford, administrator of the USDA's Food Safety and Inspection Service
(FSIS), has announced that the comment period for a proposed new cattle
inspection system has been reopened, and that comments will be accepted until
May 15th. The comment period was originally closed January 30th, but Crawford
said it was being reopened after requests for additional time were made. The
proposed system is designed to increase inspection efficiency and allow
inspectors to concentrate on detecting disease conditions. Comments should be
submitted to: Policy Office, Attn. Linda Carey, Hearing Clerk, Room 3175-South,
Food Safety and Inspection Service, U.S. Dept. of Agriculture, Washington, D.C.
20250. Questions should be directed to Richard Bryant at 202/447/9113.
--- CRP MAY PROVIDE UP TO $4 BILLION IN CLEAN WATER BENEFITS A new
report from the USDA says that if the full 45 million acres is enrolled in the
Conservation Reserve Program (CRP), benefits of up to $4 billion a year in
cleaner water may result. The CRP pays farmers annual rental payments for
removing erodible land from production and planting it to permanent cover for a
10-year period. The benefits would take several forms, including lower water
treatment costs, lower sediment removal costs, reduced flood damage, less damage
- 3 -
to water-use equipment and enhanced recreation fishing. Texas has 3,457,007
acres enrolled in the CRP thus far.
GATT NEGOTIATIONS ON AGRICULTURE REMAIN STALLED Despite offers of
concessions from U.S. negotiators, progress on agricultural trade reforms in the
General Agreement on Tariffs and Trade (GATT) remains elusive. Latin American
nations have insisted that agreements which have been achieved in 11 of the 15
broad areas of discussion cannot be implemented unless an agreement is reached
on agriculture. The U.S. has agreed to discuss short-term measures to reform
trade without a commitment for long-term reform, showing new flexibility from
our previous position. However, the U.S. is still insisting on a long-term
agreement before implementation of short-term initiatives.
For more information, contact Glen Hodges
Agriculture Coordinator
BANKING ITEMS
CONGRESSIONAL LEADERS EXPRESS CONCERNS ABOUT S&L PLAN On February
22nd, several members of the Senate Banking Committee expressed concerns about
the Bush Administration's plan for resolving the savings and loan crisis. The
legislation implementing the plan was presented to the Committee by Treasury
Secretary Nicholas Brady.
Senate Banking Committee Chairman Donald Riegle (D-MI) charged that the
financing of the cleanup in the Administration proposal would cost an estimated
$4.61 billion more over 30 years than if the financing were handled directly by
the Treasury Department. The Administration's plan would create a new financing
corporation called the Resolution Funding Corporation (REFCO) to issue the $50
billion in bonds to be used in the cleanup. Financing costs for the issue would
run an estimated 25 basis points over the cost of Treasury securities. Treasury
officials have indicated that the reason for the off-budget financing mechanism
as opposed to direct Treasury financing is that direct financing could cause
problems with regard to the Gramm-Rudman deficit reduction target for this year.
Sen. John Heinz (R-PA), a member of the Banking Committee, questioned
Brady about the actual cost to the taxpayers of the Administration plan, which
Treasury officials have estimated at $40 billion. Heinz noted that the
Administration's $126 billion estimate for the overall cost of the plan only
takes into account bond interest payments for the first 11 years and ignores
payments to be made after 1999. When these out-year payments are taken into
account, about $70 billion is added to the total. When asked by Heinz, Brady
indicated that a large part of the additional costs would be borne by the
Treasury and, by extension, the taxpayers.
Sen. Riegle also indicated that he favors placing a restriction on the
activities of state-chartered thrifts insured by the federal government. He
also said he supports raising the "qualified thrift lender" or QTL threshold
from 60 percent to 70 percent or higher. The QTL test was created in the
Competitive Equality Banking Act of 1987. A 60 percent threshold would mean
that at least 60 percent of a particular thrift's assets would have to be in
home mortgage loans.
Sen. Phil Gramm (R-TX) took issue with a requirement in the plan that
thrifts meet a 6 percent capital level by June of 1991. Sen. Gramm said a 6
- 4 -
percent level "might be possible in heaven - whether or not it's going to be
possible in Texas is debatable."
Despite their concerns, most of the members of the Committee praised the
plan as a good blueprint for further negotiations between the Administration and
Congress.
--- TAX BREAKS FOR S&L ACQUISITIONS SEEN AS INEFFICIENT In hearings
before the House Ways and Means Committee on February 22nd, two witnesses told
the Committee that using tax breaks as incentives in assisted mergers and
acquisitions of troubled savings and loans may be more costly to the government
than direct assistance. Comptroller General Charles Bowsher and James Blum,
Acting Director of the Congressional Budget Office, said reliance on the breaks
will ultimately prove the costlier of the two options. The tax breaks, which
allow portions of net operating losses to be used by an acquiring interest in a
thrift merger or acquisition, were extended last year in the Technical
Correction Act of 1988, but they are set to expire at the end of this year.
Ways and Means Committee Chairman Dan Rostenkowski (D-IL) indicated that, if the
Administration wants the breaks extended beyond this year, it will have to come
up with a way to pay for them. Otherwise, he said, the Committee will not
consider an extension.
For more information, contact Carter Breed
Economic Development Coordinator
DEFENSE ITEM
--- BASE CLOSING HEARING DRAWS CROWD On Wednesday January 22nd, the
Military Installations Subcommittee of the House Armed Services Committee heard
from a number of Members of Congress who oppose the closing of military bases in
their districts.
Fifteen House Members and two Senators testified before the
Subcommittee, mainly expressing concerns over the lack of data explaining how
bases were chosen and doubts over the actual amount of cost-savings to be
achieved by the closures.
Rep. Jack Brooks (D-TX), Chairman of the House Judiciary Committee, was
among those testifying against the closure plan. The Navy had proposed a
Homeport facility at Galveston, but the proposal was scrapped by the Pentagon in
its base closing list.
To stop the shutdowns, Congress must reject the Pentagon report within
45 legislative days of March 1st.
Additional hearings are scheduled on the base closing list.
For more information, contact Mark Schnabel
Energy and Natural Resources Coordinator
DRUG ITEM
HOUSTON ONE OF TWO NEW SITES FOR ANTI-DRUGGED DRIVING PRO-
GRAM
Houston/Harris County was recently chosen by the National Highway Traffic
- 5 -
Safety Administration as one of two new areas eligible to participate in the
Drug Evaluation and Classification Program. New York City was the other site
chosen. The program is designed to remove drugged drivers from the road by
providing police officers special training to detect drivers who are using drugs
other than alcohol.
According to NHTSA, the techniques employed in the training program have
been tested thoroughly by the John Hopkins University School of Medicine and are
a valuable tool. Until recently, police had no practical way of determining if
someone arrested for impaired driving was under the influence of drugs.
For more information, contact Mark Schnabel
Energy and Natural Resources Coordinator
EDUCATION ITEMS
--- SECRETARY CAVAZOS TESTIFIES BEFORE HOUSE BUDGET PANEL In
testimony February 14th before the House Budget Committee, Secretary of
Education Cavazos indicated that he expected the Bush budget proposal to adopt
and build on the Reagan budget and to give the Department a total of $22.5
billion in FY 90.
In an oversight hearing on Chapter 1 and budget issues, Chairman
Augustus Hawkins (D-CA) discussed the ten new education initiatives contained in
President Bush's budget proposal. Hawkins indicated that the proposals would
require legislation and expressed reluctance to amend the newly reauthorized
Hawkins/Stafford Elementary and Secondary School Improvement Act. At the
oversight hearing, Cavazos indicated that the Department would issue final
Chapter 1 regulations by the end of April so that schools can implement them by
the 1989-90 school year.
For more information, contact Lori Bounds
Human Resources Coordinator
ENERGY ITEMS
--- OIL IMPORTS REACH DECADE PEAK For the first time since January
1980, U.S. oil imports exceeded 8 million barrels per day, according to a report
issued recently by the American Petroleum Institute (API).
API said that the January increase in imported oil to 8.2 million
barrels per day was up more than 1 million barrels per day from levels late in
1988.
The API report should fuel both industry and government concerns that
recent increases in U.S. dependence on foreign oil could have devastating
consequences to the national security of the U.S.
The U.S. Department of Commerce made the determination last fall that
oil imports do pose a threat to our national security.
According to the API, production in the United States declined 283,000
barrels to 7.9 million barrels per day from January 1988.
- 6 -
In a related report, the Department of Energy's Energy Information
Administration said the rate of petroleum demand is expected to grow by 1
percent this year to 17.3 million barrels per day. Imports of crude oil are
expected to continue increasing this year due to projections for declines in
domestic production and increasing demand.
WATKINS TESTIFIES FOR BALANCED ENERGY POLICY On Wednesday,
February 22nd, Admiral James D. Watkins, President Bush's Secretary of Energy
designee, told the Senate Energy "and Natural Resources Committee that he be-
lieves there's a need to bring energy policy into "better balance" and that he
intends to focus initially on the problems in the department's nuclear weapons
complex but plans to be extremely active in all parts of departmental management
and policy development.
Watkins said he views the rise in oil imports as a "serious problem" and
suggested that "we need to give more incentives to turn that curve around." He
also mentioned alternate transportation fuels as a high priority in countering
the trend.
During his appearance, Watkins encouraged the opening of the Artic
National Wildlife Refuge and offshore waters to oil and gas drilling, indicated
that he will become a "major player" on reauthorizing the Clean Air Act and
alluded to the clean coal technology program as among his "greatest personal
interests."
Watkins' confirmation is expected in early March.
For more information, contact Mark Schnabel
Energy and Natural Resources Coordinator
ENVIRONMENTAL ITEM
CLEAN AIR ACTIVITY Activities in and around this year's attempt
to reauthorize the Clean Air Act are increasing dramatically as seemingly every
entity involved is gearing up for the upcoming Congressional fight.
The following is a partial list of recent developments on the clean air
issue:
*
The Office of Management and Budget, the Environmental Protection
Agency, and the White House are engaged in discussions over who
should develop the Administration's clean air bill.
The EPA has recently released a new list of potential areas in
non-attainment for ozone and carbon monoxide. Texas has no new
additions on the list.
The "Group of Nine" is combating environmentalists' reports that
their ozone bill, H.R. 99, is too weak.
Bush advisors say that the Administration bill will be based on a
"market-oriented" approach.
For more information, contact Mark Schnabel
Energy and Natural Resources Coordinator
- 7 -
HUMAN RESOURCES ITEMS
SENATE PANEL APPROVES SULLIVAN FOR HHS SECRETARY POST The Senate
Finance Committee approved Louis W. Sullivan as Secretary of the Department of
Health and Human Services. The full Senate is expected to vote on the
nomination Tuesday.
The recommendation came after Sullivan fielded a variety of questions
concerning his position on abortion, Social Security, Medicare cuts and fetal
tissue research. Sullivan, whose earlier statements on abortion had raised some
doubts about his position, stated that he believes that abortion should be
prohibited except in cases of rape, incest or danger to the mother's life.
The Senate Labor and Human Resources Committee will hold a hearing on
Monday to hear Sullivan's views, although the Committee has no official role in
the confirmation process.
APPOINTMENTS MADE TO THE NATIONAL COMMISSION ON AIDS Members were
recommended this week for the National Commission on AIDS, which was authorized
in the Omnibus Health Act.
Among Speaker of the House Jim Wright's (D-TX) recommendations is the
Rev. Scott Allen of Texas. Rev. Allen is a member of the State Legislative
Task Force on AIDS which recently issued its final report on the AIDS situation
in Texas. Wright's other selections include: Rep. J. Roy Rowland (D-GA), Dr.
Norman Zinberg of Massachusetts, Mr. Donald S. Goldman of New Jersey and Ms.
Dianne Ahrens of Minnesota.
Senators Lloyd Bentsen (D-TX), Edward Kennedy (D-MA) and Alan Cranston
(D-CA) have submitted recommendations to Senate Majority Leader George Mitchell
(D-MI) who is expected to formally make the appointments in the near future.
The Senate recommendations include: Ms. June Osborne of Michigan, Mr. Larry
Kessler of Massachusetts, Ms. Dionne Warwick of California, Mr. Vernon Marks of
North Carolina and Mr. Peter Carpenter of California.
President Bush will appoint the Secretaries of Health and Human
Services, Defense and the Veterans' Administration as members of the Commission
along with two members of the general public. The President has not yet
selected his two appointments from the public.
The purpose of the Commission is to promote the development of a
consensus on national AIDS policy and to make policy recommendations on matters
ranging from agency funding to federal policy initiatives. Fifteen members make
up the Commission - five selected by the Speaker of the House, five by the
President pro tempore of the Senate and five by the President. Membership will
reflect backgrounds in medicine, science, law, ethics, health care economics and
social services.
--- PROPOSAL INTRODUCED TO ASSIST THE WORKING POOR Legislation has
been introduced by Rep. Thomas Downey (D-NY) and Senator Albert Gore, Jr. (D-TN)
(H.R. 882 and S. 364) in an effort to provide assistance to the working poor.
The bills would expand the Earned Income Tax Credit (EITC) and adjust
the credit for family size. Currently, the EITC equals 14 percent of the first
- 8 -
$6,180 in earned income with a maximum credit of $874 in 1989 and $953 in 1990
regardless of family size. Under the legislation, the EITC would increase to 21
percent of the first $6,180 for families with one child with a maximum credit of
$1,430. For families with two or more children, the EITC would equal 30 percent
of the first $6,180 with a maximum credit of $2,043. The EITC level would be
reduced by 20 cents for each dollar of income above $10,740.
Downey and Gore's legislation would also make the Dependent Care Tax
Credit refundable, and add $200 million a year for child care and training child
care workers to the Social Services Block Grant (SSBG) from FY 91 through FY 93.
The sponsors claim that approximately 1.6 million working poor people
would be assisted by the legislation, which would take effect on January 1,
1990. The estimated cost of the initiative would be $34 billion over five
years.
--- WAXMAN, FLORIO INTRODUCE MEASURE TO PROVIDE COMMUNITY SERVICES FOR
THE MENTALLY RETARDED Reps. Henry Waxman (D-CA) and James Florio (D-NJ) have
introduced the Medicaid Community and Facility Habilitation Amendments of 1989
(H.R. 854), a revised version of last year's Medicaid Community Family Living
Amendments.
The bill would amend Title XIX of the Social Security Act to encourage
development of community habilitation facilites and supportive services for the
mentally retarded and developmentally disabled through a new state Medicaid
option. States would be able to obtain federal Medicaid matching funds to cover
community-based habilitation and support services for the retarded. Provider
participation rules, standards and monitoring would be made more stringent for
both institutional and community-based care.
Currently, Medicaid covers only institutional care for the retarded.
States are permitted to obtain waivers for coverage of community care of the
retarded as long as the care costs below institutional costs. The Waxman/Florio
legislation does not carry this cost stipulation.
Similar legislation has been reintroduced in the Senate by Senator John
Chafee (R-RI). Action on the bills will depend largely on the FY 90 Medicaid
budget.
--- QUICK ACTION EXPECTED ON FAMILY LEAVE LEGISLATION
The Family and
Medical Leave Act (S. 345 and H.R. 770) has been reintroduced by Senators
Christoper Dodd (D-CN), Edward Kennedy (D-MA) and Bob Packwood (R-OR) and Reps.
William Clay (D-MO), Patricia Schroeder (D-CO) and Marge Roukema (R-NJ).
The legislation would guarantee job security, seniority and health
benefits for employees who care for a newborn, newly adopted or seriously ill
child or a seriously ill parent. Employers would be required to provide up to
10 weeks of unpaid leave every two years for these workers, although paid leave
with the same protections could also be provided. Employers would also be
required to provide paid leave to workers due to personal illness of up to 13
weeks a year in the Senate bill and up to 15 weeks in the House bill.
Both measures have bipartisan support and the committee leadership in
both Houses has promised to move early. The House Subcommittee on
- 9 -
Labor-Management Relations will mark up the legislation on February 28th.
--- SOUTH TEXAS CONTINUES TO STRUGGLE WITH INFLUX OF NICARAGUANS The
Immigration and Naturalization Service (INS) began erecting tents this week
inside the fence of a minimum-security prison in Bayview in an effort to speed
the processing of Nicaraguan aliens and to jail those denied political asylum.
This action is the latest development in a, crisis which began last
December when about 2,000 Nicaraguans per week began to cross the border and to
apply for political asylum in the Brownsville/Harlingen area. A combination of
factors contributed to the influx, including the continuing deterioration of the
Nicaraguan economy, an upswing in violence in E1 Salvador and policy changes by
the INS.
In December 1988, INS officials in Texas decided to permit aliens
applying for asylum to move out of the Brownsville area after they filed their
claims. This departs from normal INS procedures which requires those applying
for asylum to remain in the area while their claims are adjudicated. INS
Commissioner Nelson, in mid-December, ordered the Texas INS office to stop the
procedure.
A lawsuit was then filed on behalf of those aliens detained near the
border, and a federal district judge issued a temporary restraining order
January 9th barring the government from keeping the aliens in the
Harlingen-Brownsville area. On February 20th, the restraining order was lifted,
allowing the INS to restrict the asylum-seekers to South Texas while they await
decisions.
Under the new plan, applicants are to receive an answer as early as the
same day and would be subject to immediate arrest and detention if denied
asylum. Single adults will be held in INS detention centers. Families and
unaccompanied minors will be placed in less restrictive custody and must report
for daily roll calls.
OSFR is working with Senators Lloyd Bentsen (D-TX) and Phil Gramm (R-TX)
and House members from South Texas to identify federal relief for the severe
problem that the refugee situation is posing for South Texas. The Texas
Department of Health (TDH) has sent a team to South Texas to assess the public
health conditions and TDH officials are in contact with the Centers for Disease
Control (CDC).
Senator Bentsen and Rep. Solomon Ortiz (D-TX) have sponsored legislation
authorizing the Community Relations Service (CRS), an agency of the Justice
Department, to provide aid to areas which attract large numbers of Central
American refugees. The agency has $20 million in the CRS budget but is
currently allowed to disburse the money only if Cuban or Haitian immigrants, or
unaccompanied minor immigrants, are involved.
For more information, contact Lori Bounds
Human Resources Coordinator
- 10 -
SUPER COLLIDER ITEM
SUPERCONDUCTING SUPER COLLIDER AUTHORIZATION HEARINGS BEGIN On
February 23rd, the House Science, Space, and Technology Subccmmittee on Energy
Research and Development held the first hearing of the 101st Congress on the
SSC. Congressman Joe Barton (R-TX) was the first witness to speak at the
hearing. Barton told the Subcommittee that the SSC was not just a Texas
project, but a national priority, and critical to the U.S. maintaining
preeminence in high energy physics well into the 21st century. His testimony
was followed by Congressman Jim Chapman (D-TX), a member of the Energy and Water
Development Subcommittee of House Appropriations. Chapman emphasized the use of
non-federal funds, especially the Texas commitment of the $1.1 billion approved
by Texas voters in 1987. Also testifying was Professor Roy Schwitters, the new
director of the SSC Laboratory located in Ellis County, Texas.
On February 24th, the Subcommittee on Energy Research and Development of
the Senate Committee on Energy and Natural Resources held its initial SSC
authorization hearing. In addition to Congressman Barton, Senators Lloyd
Bentsen (D-TX) and Phil Gramm (R-TX) expressed their strong support for
proceeding with a $250 million FY 90 construction start for the SSC in their
testimony before the Subcommittee.
In both hearings, subcommittee members were concerned with funding the
SSC -- the nation's largest scientific undertaking after the Space Station -- in
an austere budget period. Members expressed skepticism regarding new revenue
sources and concern about whether full funding of the Collider would drain
available revenues from other science projects.
For more information, contact Henry Gandy
Director
- 11 -
TEXAS THIS WEEK:
The Texas Senate approved a $79 million emergency appropriation bill that
includes health insurance payments for community college employees and more
money for the Superconducting Super Collider (SSC). Of the $79.5 million, $24.3
would be used for staff insurance at 50 junior colleges, $38 million would be
for redeeming bonds sold as part of the package to attract Sematech to Austin,
$7.4 million for architectual and engineering work in restoring the state
Capitol, and nearly $1.7 million would allow the National Research Laboratory
Commission to begin buying land for the SSC
The House Business and Commerce
Committee will begin reviewing the omnibus workers compensation reform bill,
House Bill No. 1 next week. On Monday, the Committee will begin work on more
than 200 amendments. The bill would expand the oversight and regulatory powers
of the present Industrial Accident Board, while intensifying safety programs,
increasing some workers' benefits and moving the resolution of disputed claims
to an administrative process. A Committee vote on H.B. 1 is expected in the
first week of March The Senate Education Committee overwhelmingly voted to
merge both Pan American Universities, located in Edinburg and Brownsville, with
UT, and Texas A&I, Corpus Christi State and Laredo State with Texas
A&M
President Bush announced Wednesday the nomination of Houston state
district Judge Melinda Harmon for a federal district judgeship for the Southern
District of Texas
William Leonard Carlton, a state legislator from
northeast Texas in the 1940's died last Wednesday at 83
Clements named
Austin attorney Dan Matheson III last Thursday to the Texas State University
System Board of Regents
Governor Clements also approved an application
prepared by the Texas Department of Agriculture to feed 42,000 Texas needy. The
federal grant money, which will require a $250,000 appropriation by the
Legislature, would provide about $800,000 in vouchers for needy Texans to buy
fresh produce at farmers' markets.
- 12 -
SUPER COLLIDER ITEM
--- SUPERCONDUCTING SUPER COLLIDER AUTHORIZATION HEARINGS BEGIN On
February 23rd, the House Science, Space, and Technology Subccmmittee on Energy
Research and Development held the first hearing of the 101st Congress on the
SSC. Congressman Joe Barton (R-TX) was the first witness to speak at the
hearing. Barton told the Subcommittee that the SSC was not just a Texas
project, but a national priority, and critical to the U.S. maintaining
preeminence in high energy physics well into the 21st century. His testimony
was followed by Congressman Jim Chapman (D-TX), a member of the Energy and Water
Development Subcommittee of House Appropriations. Chapman emphasized the use of
non-federal funds, especially the Texas commitment of the $1.1 billion approved
by Texas voters in 1987. Also testifying was Professor Roy Schwitters, the new
director of the SSC Laboratory located in Ellis County, Texas.
On February 24th, the Subcommittee on Energy Research and Development of
the Senate Committee on Energy and Natural Resources held its initial SSC
authorization hearing. In addition to Congressman Barton, Senators Lloyd
Bentsen (D-TX) and Phil Gramm (R-TX) expressed their strong support for
proceeding with a $250 million FY 90 construction start for the SSC in their
testimony before the Subcommittee.
In both hearings, subcommittee members were concerned with funding the
SSC -- the nation's largest scientific undertaking after the Space Station -- in
an austere budget period. Members expressed skepticism regarding new revenue
sources and concern about whether full funding of the Collider would drain
available revenues from other science projects.
For more information, contact Henry Gandy
Director
- 11 -
TEXAS THIS WEEK:
The Texas Senate approved a $79 million emergency appropriation bill that
includes health insurance payments for community college employees and more
money for the Superconducting Super Collider (SSC). Of the $79.5 million, $24.3
would be used for staff insurance at 50 junior colleges, $38 million would be
for redeeming bonds sold as part of the package to attract Sematech to Austin,
$7.4 million for architectual and engineering work in restoring the state
Capitol, and nearly $1.7 million would allow the National Research Laboratory
Commission to begin buying land for the SSC
The House Business and Commerce
Committee will begin reviewing the omnibus workers compensation reform bill,
House Bill No. 1 next week. On Monday, the Committee will begin work on more
than 200 amendments. The bill would expand the oversight and regulatory powers
of the present Industrial Accident Board, while intensifying safety programs,
increasing some workers' benefits and moving the resolution of disputed claims
to an administrative process. A Committee vote on H.B. 1 is expected in the
first week of March
The Senate Education Committee overwhelmingly voted to
merge both Pan American Universities, located in Edinburg and Brownsville, with
UT, and Texas A&I, Corpus Christi State and Laredo State with Texas
A&M
President Bush announced Wednesday the nomination of Houston state
district Judge Melinda Harmon for a federal district judgeship for the Southern
District of Texas
William Leonard Carlton, a state legislator from
northeast Texas in the 1940's died last Wednesday at 83
Clements named
Austin attorney Dan Matheson III last Thursday to the Texas State University
System Board of Regents
Governor Clements also approved an application
prepared by the Texas Department of Agriculture to feed 42,000 Texas needy. The
federal grant money, which will require a $250,000 appropriation by the
Legislature, would provide about $800,000 in vouchers for needy Texans to buy
fresh produce at farmers' markets.
- 12 -
WILLIAM P. CLEMENTS, JR.
HENRY M. GANDY
GOVERNOR
THE STATE OFTER OF
DIRECTOR
-
THE STATE OF TEXAS
OFFICE OF STATE-FEDERAL RELATIONS
February 22, 1989
SPECIAL REPORT
On February 9th, President Bush submitted a revised budget proposal for fiscal
year 1990. Enclosed is a brief analysis of the new budget for programs and
policies of particular interest to our State. In general, the President's
revised budget, while reflecting the priorities of the new Administration,
suggests few substantive changes from the FY 90 budget submitted by President
Reagan on January 9, 1989 (see "President Reagan's FY 1990 Budget Proposal: An
Analysis of its Possible Impact on Texas," dated January 16th, for OSFR's
analysis of the Reagan budget).
600 MARYLAND AVENUE, S.W.
SUITE 255
WASHINGTON, D.C. 20024
202/488-3927
POST OFFICE BOX 13005
AUSTIN, TEXAS 78711
512/463-1803
AGRICULTURE
In the agriculture function of the budget, President Bush proposes
reduction of Federal farm expenditures by $2 billion in FY 1990, in addition to
the projected savings of $1.2 billion which will come about under current law.
The President also proposes shifting government credit programs from direct
lending to borrowers to a policy of guaranteeing loans made by private lenders.
This concept is already well underway in agricultural credit, with guaranteed
loan volume already ahead of direct loan volume in Farmers Home Administration
operating loans to producers. The Bush budget would continue that trend.
The 1985 Farm Bill mandated a 3 percent cut in target prices for major
program crops in FY 1990, and an additional 1.4 percent reduction was mandated
by the Omnibus Budget Reconciliation Act of 1987, for a total target price
reduction for 1990 of 4.4 percent. This reduction, coupled with higher market
prices for program crops, will result in lower deficiency payments and lower
farm program costs. These savings, along with a projected decrease in the cost
of the crop insurance program, account for the $1.2 billion in savings under
current law. As for the additional $2 billion in proposed savings, Secretary of
Agriculture Yeutter has been directed to work with Congress to develop a
specific set of initiatives to achieve the savings. Two possible options listed
in the Bush budget are further reductions in target prices and a decoupling of
income support payments from production decisions by reducing the number of
acres eligible for income support payments.
The farm price support programs have become very important to Texas
producers in recent years, as plummeting market prices for major commodities
have left producers relying on government payments for a larger part of the
income from their crops. Target price cuts already scheduled under current law
will adversely impact farm income in Texas; obviously further cuts such as
proposed in the budget would exacerbate the adverse effects.
- 2 -
The budget also proposes more guaranteed, rather than direct, lending
for the Rural Electrification Administration (REA), Farmers Home Administration
(FmHA), Rural Development Insurance Fund (RDIF) and the Rural Housing Insurance
Fund (RHIF). The budget cites several benefits from these changes, including
reduced outlays in the near-term from decreased loan disbursements, lower
outlays in the long-term as interest expense to the government on direct loans
is greater than the potential default claims on guaranteed loans, and savings in
administrative costs, as private lenders rather than Federal employees will
service the guaranteed loans. Specific funding levels for the credit programs
follow:
1989
1990 Proposal
REA
Direct
$1.8 billion
$ ---
Guaranteed
---
$1.4 billion
FmHA Agricultural Credit Insurance Fund
Direct
$1.6 billion
$.7 billion
Guaranteed
$2.8 billion
$3.0 billion
RDIF
Direct
$426 million
$200 million
Guaranteed
$96 million
$196 million
RHIF (most current funding would be shifted to a new housing voucher program)
Direct
$1.8 billion
$.1 billion
The budget proposal is silent on funding levels for the numerous other
programs funded under the agriculture function. These programs include the
Extension Service, Soil Conservation Service, various inspection services and
many others, Presumably, these programs fall under the "flexible freeze"
proposal, and the funding levels are to be determined through negotiations with
the Congress.
- 3 -
CLEANUP OF NUCLEAR WEAPONS FACILITIES
The budget proposes an increase of $1.1 billion to protect and clean up
the environment at the nuclear weapons production facilities operated by the
Department of Energy. This amount represents an increase of 42 percent from
1989 funding. The facilities, many of which have been in operation for over 30
years, were the subject of a recent DOE report which pointed out potential
environmental problems. The Pantex facility near Amarillo was listed as one of
the potential sites under review.
The increased funding would be allocated in a number of ways. Funding
would be increased by 23 percent to ensure that day-to-day activities required
to operate the facilities are safe and environmentally sound. An additional
$242 million would be allocated for cleaning up environmental problems from past
operations, representing an increase of 150 percent. Most of this money would
go to investigations to determine the extent of environmental damage and proper
cleanup methods. Additionally, increased funding for the modernization of aging
facilities is proposed. An increase of $471 million, or 56 percent over 1989
would go for capital improvements and expansion of production reactor capacity.
1989
REAGAN PROPOSAL
BUSH PROPOSAL
ES & H*
$1.6 billion
$2.0 billion
$1.95 billion
Env. Cleanup
$159 million
$315 million
$401 million
Modernization
$842 million
--
$1,313 million
* ES & H - Environmental Safety and Health; day to day activities required to
operate DOE facilities in a safe and environmentally sound manner.
- 4 -
AVIATION SAFETY
The President proposes an increase for the Federal Aviation
Administration (FAA) of $1.15 billion in budget authority, an increase of 17
percent. This funding will provide for a 14 percent increase in FAA operations
to permit hiring of numerous more controllers, safety inspectors, and security
specialists.
The request will also provide for a 41 percent increase in the ongoing
program to modernize and improve the air traffic control system in the U.S.
- 5 -
COMMUNITY DEVELOPMENT
President Bush has made the implementation of the enterprise zones
program a top priority in his budget proposal. The program, created in the 1987
housing bill, will encourage economic development in distressed areas through
the provision of selected employment and investment tax incentives. These
incentives will be offered in conjunction with federal, state and local
regulatory relief proposals.
The Administration estimates that up to 70 enterprise zones will be
selected between 1990 and 1993. The total revenue loss to the federal
government from the program is estimated at $1.05 billion over four years: $150
million in 1990, $200 million in 1991, $300 million in 1992 and $400 million in
1993.
- 6 -
DEFENSE SPENDING FREEZE
The President's budget proposes a one-year freeze on the real growth of
the defense budget, but only on condition that:
*
The savings must be allocated to his priority initiatives for
reducing the scourge of drugs and increasing our long-term economic
growth.
*
The defense spending level must be part of a comprehensive budget
agreement that meets the Gramm-Rudman-Hollings target without a tax
increase and incorporates reforms in the budget process.
Under a freeze on real growth, there would be an increase of $9.1
billion in budget authority over the 1989 level and an increase of $1.4 billion
in outlays. The President proposes real increases of one percent in FY 91, one
percent in FY 92, and two percent in FY 93 in future year defense spending.
- 7 -
DRUG PROGRAMS
The Bush budget proposes nearly $6.0 billion in 1990 for numerous drug
programs. The budget outlines four major fronts in dealing with the drug
problem: drug prevention, drug treatment, drug law enforcement and drug
penalties.
Drug Prevention
The budget requests nearly $1.1 billion for drug prevention, including:
*
$367 million for the Drug-Free Schools and Communities program, a
$12 million increase over 1989.
*
$25 million for a new drug prevention initiative: Urban Emergency
Grants.
*
$35 million for a new program of community partnership grants for
drug abuse prevention.
*
$5 million for the Drug Policy Director to support both supply and
demand research in the drug control effort.
*
$45 million of the $150 million drug grant program to states for
drug prevention activities.
Drug treatment
The budget proposes $735 million for drug treatment activities, an 18
percent increase over 1989:
*
$25 million for a grant program to reduce the time a person must
wait for admission to a drug treatment program.
*
$30 million for a new grant program to support expansion of
treatment capacity for the indigent, disadvantaged, youth, or
expectant mothers in selected states.
*
$7 million for HHS research into effective treatment programs.
Law Enforcement
The Administration requests $4.1 billion for drug law enforcement
programs in 1990, a 10 percent increase over 1989.
- 8 -
*
330 new positions and increased strategic and operational
intelligence capabilities for the Drug Enforcement Administration.
*
$3 million for the U.S. Customs Service for money laundering
activities.
*
A 9 percent increase to $690 million for Coast Guard efforts at
interdiction of drug smugglers.
*
$300 million for the Department of Defense.
*
$150 million for the Bureau of Justice Assistance drug grant
program.
*
$215 million for the new Organized Crime Drug Enforcement program.
*
$18 million for expanded caseload for U.S. attorneys.
- 9 -
ENERGY POLICIES
Oil & Gas production incentives
President Bush has proposed four incentives to encourage the exploration
of new oil and gas fields and the reclaiming of old fields. These incentives
are to be phased out if the price of oil reaches $21 per barrel.
*
A 10 percent credit on the first $10 million of expenditures on
exploratory intangible drilling costs and a 5 percent credit on the
balance.
*
A 10 percent credit for capital expenditures on all new tertiary
enhanced recovery projects.
*
Elimination of 80 percent of current preference items generated by
exploratory intangible drilling costs by independent producers
under the minimum tax.
*
Modification of the oil and gas depletion rules that discourage the
transfer of marginal wells to independent producers and result in
the premature abandonment of producing wells.
Oil & Gas exploration
The President proposes to open the Artic National Wildlife Refuge for
oil and gas drilling on an environmentally prudent basis. He also proposes to
sell leases for exploration in the federally administered waters of the Outer
Continental Shelf, again under an environmentally prudent plan.
Helium processing
The President's budget calls for federal helium processing facilities to
be sold.
- 10 -
ENVIRONMENTAL ISSUES
Included in the Bush budget is strong language advocating a commitment
to clean air, preserving and expanding recreation lands, developing offshore oil
and gas while protecting the environment, speeding hazardous waste clean up,
fighting ocean pollution, preserving our wetlands, enhancing water quality,
reducing the growing volume of waste, and fostering international cooperation on
the environment.
*
The President will introduce legislation to reauthorize the Clean
Air Act.
*
$2.5 billion in federal funds will be devoted for the Clean Coal
Technology Programs.
*
The President supports a limited but sustained program of federal
recreational land acquisition financed by annual appropriations
from the Land & Water Conservation Funds.
*
$64 million for increasing existing funding for coordinating water
quality programs in the Department of Agriculture, Commerce, and
Interior and the Environmental Protection Agency.
- 11 -
EDUCATION
The President makes no changes in the Reagan budget request for the
Department of Education. However, President Bush proposes a number of new
education initiatives attempting to target dollars to those children most in
need and providing public recognition and financial awards for educational
achievement.
Presidential Merit Schools: Rewarding Successful Schools - To assist
schools in developing the skills and abilities of children, the President will
propose legislation and a 1990 appropriation of $250 million for a new
initiative to reward schools whose students demonstrate substantial educational
progress. Funding for the initiative would increase each year until an annual
funding level of $500 million is reached.
Guidelines would be established for the objective measurement of school
improvement, emphasizing improved educational performance, a safe and drug-free
environment and fewer dropouts. Elementary, secondary and middle schools
throughout the country would compete annually within each State for recognition
as Presidential Merit Schools. Certificates of Recognition would be awarded,
with special emphasis on Chapter 1 schools and others enrolling substantial
numbers of children from low-income families.
President's Award for Excellence in Education: Recognizing Superior
Teachers - The President will propose new legislation to reward exceptional
teachers with $8 million in annual appropriations to establish the President's
Award for Excellence in Education.
Award competitions would be held annually in each State. All elementary
and secondary school teachers, in public and private schools and teaching any
academic subject, could compete for recognition and awards. The number of
teachers receiving awards in each State would vary with the size of the State.
Each award would be $5,000 and could be used by the individual teacher for any
purpose.
The National Science Foundation program recognizing excellent teachers
in mathematics and sciences would remain a separate program.
National Science Scholars Program . The President will seek authority to
establish a National Science Scholars Program in an effort to produce talented
scientists, mathematicians and engineers. An appropriation of $5 million will
be requested for the first year, rising to $20 million per year by the fourth
year.
- 12 -
National standards of excellence for high school seniors' achievement in
the sciences and mathematics would. be set for annual competitions for the
National Science Scholarships. One student would be nominated by each Member of
the House of Representatives, one by each Senator and 30 by the President for a
total of 570 scholars each year. Scholarships would be for four years for up to
$10,000 per year.
Scholarships would be available for use at any accredited institution of
higher education to which the student is admitted. Students would be required
to major in the sciences, mathematics or engineering and show continuing
excellent performance. Student receiving the scholarships would have
opportunities for summer jobs in federal science laboratories.
Fostering Magnet Schools of Excellence - To expand parental choice in
education, the President proposes a new authority and $100 million in new
funding for magnet schools. The current magnet school program will not be
affected.
Grants will be authorized to States for the purpose of establishing new
magnet schools, and the funds will be available for schools offering choices
from the full range of curriculum options. States will be encouraged to examine
opportunities for development of magnet schools with mathematics and science
orientations. Funds will be for initial costs, with a requirement that States
and local school systems rapidly assume full operating costs. Special
consideration will be given to proposals that offer recognition of the potential
of children from low-income families.
Alternative Certification Systems for Teachers and Principals - In an
effort to address the shortage of competent teachers and to allow qualified
scientists and engineers to bring their talents into the schools, President Bush
proposes new authority and $25 million for 1990 to make grants to States and
school districts to develop alternative certification systems.
Grants will be one-time only, with States allowed to spend the money
over several years. The funds may be used for a variety of purposes, including
design and testing of different options tailored to individual states or school
districts, establishing administrative structures, training staff, developing
recruitment strategies and evaluating new systems.
Those alternative teacher certification demonstrations funded in the
Department's Fund for the Improvement and Reform of Schools and Teaching will
remain in place to support demonstration projects.
Expanding Experiments for Educational Achievement - The President
proposes $13 million in new resources to expand experiments in educational
innovation and data collection.
The funding will permit the Secretary of Education to set flexible
priorities for experiments, establish objective rules for evaluating performance
and disseminate as rapidly as possible information on what is and is not
effective. Experiments and data collection will be designed to address issues
- 13 -
across the full spectrum of education: teaching and learning methods, school
organization and management, problems of populations with special needs,
parental choices, mathematics and science curriculum design, integrating higher
order skills into school curricula, improving early childhood education programs
and others.
Endowing Historically Black Colleges and Universities - President
Bush's budget request proposes a total of $60 million over four years (beginning
with $10 million in FY 90) for endowment matching grants for Historically Black
Colleges and Universities (HBCUs).
HBCUs are currently eligible to compete for endowment matching grants
under Part C of Title III of the Higher Education Act. Title III provides
endowment matching grants to HBCUs as well as other institutions with financial
needs. In 1988, HBCUs were awarded $2 million in Title III endowment matching
grants.
Guaranteed Student Loan Subsidy - The budget proposes a change to the
subsidy paid to banks that make federally guaranteed student loans. Currently,
students receiving federally Guaranteed Student Loans (GSLs) owe a low, fixed
rate of interest to lenders. The government pays lenders a "special allowance"
- the difference between the student rate and the sum of the current interest
rate on 91-day Treasury bills plus 3.25 percentage points. The lender subsidy
is designed to produce a profit that will ensure adequate lender participation
in the GSL program.
President Bush proposes to reduce the special allowance to 3.0 in an
initiative that the Administration claims will reduce excess profits and result
in federal savings.
- 14 -
CHILD CARE
The President's budget contains a number of new initiatives designed to
assist parents, especially low-income parents, in making decisions about their
children's care. The Bush proposal reflects four child care initiatives
designed to enhance parental choice in child care and to ensure that assistance
is provided to those families most in need.
Tax Code Changes - The budget proposes a new tax credit of up to $1,000
for each child under age four in low-income working families. This credit,
which would be available to families in which at least one parent works, would
be provided to very low-income families in tax year 1990 and expanded to include
additional families in subsequent years. For each child under the age of four,
families could receive a credit equal to 14 percent of wages, with a maximum
credit equal to $1,000 per child. In 1990, the credit would be phased out
between $8,000 and $13,000 in income. This phase-out range would increase to
between $15,000 and $20,000 by 1994.
The President also proposes modifications to the existing Dependent Care
Tax Credit. Under current law, parents are allowed a credit for the child care
costs incurred in order to obtain or maintain employment. The credit currently
applies only to families with sufficient income to pay federal income taxes.
The Bush budget proposes that the credit be made refundable. Families that meet
eligibility criteria for both the Dependent Care Tax Credit and the new Child
Credit could claim whichever credit suits their needs and circumstances for each
child.
Expansion of Head-Start - The Reagan budget proposed $1.23 billion for
the Head Start early childhood development program, the same level as FY 89
funding. President Bush requests $1.48 billion for the program, a $250 million
increase.
The additional funds would be used to expand enrollment of poor,
four-year-old children in Head Start. With the requested increase, an estimated
95,000 additional children could benefit from Head Start.
Head Start is a comprehensive program providing educational, medical,
nutritional and social services to children at risk of falling behind. It is
designed to give poor children a more solid foundation in life.
- 15 -
HOMELESSNESS
The Administration proposes to fully fund existing programs to combat
the plight of homelessness and to fund a new homeless initiative.
Programs for the homeless under the Stewart B. McKinney Act will be
fully funded up to the authorized level of $746 million. This would be a $416
million increase over FY 89 levels. This includes $676 million of discretionary
funding for programs providing emergency food and shelter, transitional and
permanent housing, as well as health, substance abuse, educational, training and
other services. Requested funds will also be used to support community-based
mental health clinics.
The President also proposes a new $50 million initiative designed to
reduce homelessness. The proposal would build on local private-public
partnerships and would use volunteers and community organizations to help the
homeless. States and localities, with the non-profit sector, would be allowed
to identify those homeless groups most in need in a local area and to put
together a unique package of services for them. The proposed projects would
then be selected on a competitive basis and matching funds would be required.
- 16 -
BIOMEDICAL RESEARCH
The Administration emphasizes a desire to accelerate basic biomedical
research in partnership with industry, which has the role of developing and
marketing new applications. New techniques like human genome mapping (mapping
of the human gene) will be given priority.
AIDS - The President retains the emphasis placed by the Reagan
administration on funding to fight the deadly public health threat of AIDS.
Like the Reagan budget, the Bush budget requests $1.6 billion in FY 90 for
Public Health Service (PHS) AIDS-related activities. This represents a 24
percent increase over 1989 funding levels.
- 17 -
INCREASING ADOPTION
To make adoption a viable alternative to abortion, the Administration is
proposing federal incentives to encourage adoption, including adoption of
children who are older or handicapped. The President's FY 90 request for
adoption programs totals $138 million, including support for Adoption
Assistance, Adolescent Family Life, Adoption Opportunities and Social Security
benefits.
Currently, families adopting children with special needs can be
reimbursed for up to $2,000 in nonrecurring adoption costs through the Adoption
Assistance program. To complement this assistance, the Administration proposes
to restore and double the federal income tax deduction for adoption of special
needs children. Under the proposal, a federal tax deduction of up to $3,000
would be allowed to cover adoption costs that are not otherwise reimbursed.
The Adolescent Family Life (AFL) demonstration grant program, which
supports multi-year grants to test new and innovative approaches for addressing
the problems of teenage pregnancy and then disseminates the findings, will be
continued. The AFL grants have produced nearly 100 new approaches to addressing
the problem of adolescent pregnancy.
In an effort to expedite the adoption of foster children, the
Administration supports continuation of federal financial participation in
adoption assistance payments to states which assist families adopting special
needs children. Adoption Opportunities Grants, designed to facilitate the
elimination of barriers to adoption, will be continued.
The Administration will also seek a revision to the Social Security Act
so that biological and adopted children will be treated equally when their
parents are disabled or retired. President Bush supports legislation to remove
the special dependency requirement for children adopted after a worker's onset
of disability or entitlement to retirement benefits. Under current law,
children adopted after Social Security entitlement is established must meet a
dependency test, sometimes resulting in a wait of a year or more for dependent
benefits. Biological children are entitled to the benefits at birth.
- 18 -
ENGAGING YOUTH IN SERVICE (YES)
The President's commitment to volunteer programs spirit is demonstrated
in a $25 million proposal to endow the YES to America Foundation. The national
Youth Entering Service (YES) initiative will be administered by a public-private
foundation with the goal of channeling the energy and creativity of young people
into successful community-based organizations and programs.
The Foundation will be chaired by the President who will appoint a
national volunteer Board of Directors composed of outstanding leaders from
government, the private sector and voluntary organizations. The Board will
develop the criteria for matching funds, the application process and plans for
community and State direction. Federal funds will match private funds for
informational, promotional, organizational and administrative expenses during
the pilot phase. After the pilot phase, funds will be employed to initiate the
National YES to America program.
- 19 -
MEDICARE AND MEDICAID
President Bush's budget proposal for Medicare retains the $5 billion
reduction contained in the Reagan budget. Increases in payments to hospitals,
physicians and other providers will be limited. In addition, reductions in
hospital capital-related payments and supplemental payments to teaching
hospitals proposed by President Reagan are retained in the Bush proposal.
Proposed cuts in federal Medicaid matching funds contained in the Reagan
budget are eliminated by President Bush. Funding is proposed at the current
services level of $37.6 billion. The new Administration will target Medicaid
funds at pregnant women and children and proposes to assist States in an effort
to fight infant mortality. The proposed funding will support expansions of
Medicaid coverage for: pregnant women and infants up to 185 percent of the
poverty level; children up to age eight under the poverty level; 12 months of
Medicaid coverage for families who leave Aid to Families with Dependent Children
(AFDC) to go to work, families in which both parents are unemployed and other
recently enacted expansions.
The President proposes to raise mandatory Medicaid eligibility for
pregnant women and infants to 130 percent of the poverty level. In an effort to
address the problem of infant mortality, $20 million is proposed in FYs 90 and
91 for development grants to States with high infant mortality. States would
develop demonstration proposals to address the problems unique to each locale.
States would specify how their delivery systems will be organized, how high risk
pregnancies will be identified and which services will be targeted to women at
risk. The federal government would grant necessary program waivers for approved
State demonstrations.
To pay for the proposed expansions, the Administration would phase-out
special matching rates for certain categories of administrative expenses.
- 20 -
TAXATION
One of the central features of the Bush budget is the planned
restoration of the tax break for long-term capital gains. Operating on the
principle that a lower capital gains rate will stimulate investment and economic
growth, the Administration proposes to restore the marginal tax rate for
long-term gains on qualified capital assets to 15%. Preferential treatment for
capital gains was removed in the Tax Reform Act of 1986.
Under the plan, qualified capital assets sold between 1989 and 1992,
inclusive, will be required to have been held more than 12 months to be eligible
for the lower rate. Assets sold between 1993 and 1994 would have to be held for
24 months, and those sold after 1994 would have to be held for 36 months. The
Administration envisions increased revenues of $16 billion over the next five
years as a result of the restoration of the lower rate.
The Administration also proposes to make the research and development
tax credit permanent. The current credit is set to expire at the end of 1989.
It is equal to 20 percent of the excess of current qualified R&D expenditures
over the base amount. The base amount is equal to the average of the previous 3
years' R&D expenditures. The Administration's proposal would retain the
incremental nature of the credit and the 20 percent rate, but it would make the
credit permanent and would modify the manner in which the base amount is
calculated.
Expected revenue losses due to the credit are estimated at $337 million
in 1990, $688 million in 1991, $963 million in 1992 and $1.15 billion in 1993.
- 21 -
SCIENCE, SPACE AND TECHNOLOGY
The Bush Administration has proposed several initiatives that will
strengthen our basic research base, allowing the private sector to capitalize on
this knowledge in developing productivity-enhancing innovations. These
initiatives stem from the belief that funding in the general category of
science, space and technology contributes to the nation's long-term growth
capacity and competitiveness.
The Administration plans to focus its investment in research and
development on basic research and to allow the private sector to decide which
emerging technologies will have the most potential in the marketplace. The
linchpin of the Administration's efforts in this area will be an increase of
$361 million, or 13 percent, in science and technology programs over the level
enacted for FY 89. These programs include the National Science Foundation (NSF)
and the general science programs of the Department of Energy (except for the
Superconducting Super Collider). The increase will continue progress toward the
goal of doubling NSF's budget by 1993. It will allow NSF to fund the
Engineering Research Centers, Advanced Scientific Computing Centers, and the 11
new interdisciplinary Science and Technology Centers established in 1989.
In outlining science and technology budget intentions, the Bush
Administration has made increased funding of the nation's space program one of
the key priorities. A 22 percent increase, from $10.9 billion to $13.3 billion,
in the budget of the National Aeronautics and Space Administration (NASA) is
proposed.
The increase in the NASA budget will allow the agency to continue the
development of the Space Station Freedom on schedule. The Administration also
proposes advance appropriations for the Space Station for fiscal years 1991 and
1992 and a ceiling on total development costs for the program. Because of the
presence of the Johnson Space Center near Houston, the continued development and
construction of the Space Station will have a significant impact on the
economies of the Houston area and the State of Texas as a whole.
- 22 -
Superconducting Super Collider
The budget proposes budget authority of $250 million in 1990 for the
SSC, including $160 million in construction-related activities. This is the
same amount requested by the previous Administration for 1990. The proposed
request will also allow the Department of Energy to complete design of the
technical systems and to procure critical long-lead items such as the
superconducting materials.
The Bush Administration suggests that the actual initiation of con-
struction at the site be dependent upon the details of the non-federal cost
sharing commitments to the project.
Included in the budget request is a five year profile of current and
anticipated federal budget expenditures for the SSC, as follows:
1989
1990
1991
1992
1993
Budget Authority
100
250
392
494
450
Outlays
100
206
375
380
370
- 23 -
WILLIAM P. CLEMENTS, JR.
STATE
OFFICE
OF
HENRY M GANDY
GOVERNOR
DIRECTOR
TH
THE STATE OF TEXAS
OFFICE OF STATE-FEDERAL RELATIONS
WASHINGTON ACTION ITEMS
February 15, 1989
*
OUTLINES OF BUSH'S THRIFT RESCUE PLAN RELEASED
PAGE 4
BUSH PRESENTS BUDGET REVISIONS TO CONGRESS
PAGE 6
*
OMB ISSUES INTERIM RULE ON DRUG-FREE WORKPLACE
PAGE 7
MATERNAL, CHILD HEALTH PROPOSALS INTRODUCED
PAGE 10
AGRICULTURE ITEMS
CLAYTON K. YEUTTER CONFIRMED AS SECRETARY OF AGRICULTURE
The
Senate voted 100-0 on February 9th in favor of the nomination of Clayton Yeutter
to serve as Secretary of Agriculture in the Bush Administration. Yeutter is a
farmer and rancher from Nebraska who has served under Presidents Ford and
Reagan. His resume also includes a Ph.D. in Agricultural Economics and a law
degree, as well as a stint as President of the Chicago Mercantile Exchange. The
unanimous vote in the Senate followed a confirmation hearing in which Senators
generally praised Yeutter's experience, abilities and qualifications for the
position.
During the last three years of the Reagan Administration, Yeutter served
as U.S. Trade Representative, a position from which he strongly advocated the
lowering of trade barriers and trade-distorting subsidies in international
agricultural trade. In his confirmation hearing, Yeutter indicated that he
would continue to press for such reforms and sounded optimistic about the
possibility of reaching agreements with our trading partners before the current
round of GATT negotiations ends in 1990.
BUSH BUDGET FOR AGRICULTURE VIRTUALLY UNCHANGED FROM REAGAN
PROPOSAL The budget outline for fiscal 1990 released by President Bush on
February 9th contains virtually the same recommendations for savings in the
agriculture portion of the budget as were contained in the Reagan
Administration's final budget request. The Bush budget states that the
Secretary of Agriculture has been directed to work with Congress in developing a
specific set of initiatives designed to reduce Federal farm expenditures by $2
billion in 1990. The budget also states that the current farm programs were
established during the height of the farm crisis, and now that farm incomes are
rising and reaching record levels, the time has come to adjust the program to
today's conditions. The outline mentions as potential options for savings a
600 MARYLAND AVENUE, S.W.
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WASHINGTON, D.C. 20024
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POST OFFICE BOX 13005
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reduction in target prices or decoupling of income support payments from
production decisions by reducing the number of acres eligible for support
payments.
--- U.S. OFFICIALS SEEK SOLUTION TO BEEF DISPUTE WITH EC The
lingering dispute between the U.S. and the European Community (EC) over the
issue of growth hormones used in beef production is raising concerns among
officials in the Bush Administration, who want to get diplomatic relations with
Europe off to a good start. The dispute centers around a new EC requirement
that all imported beef be certified as having been produced without the use of
growth hormones. The U.S. contends that the requirement is an unfair trade
barrier, as U.S. and international health organizations have approved the use of
naturally-occuring growth hormones in beef production. Additionally, the U.S.
says that there is no detectable residue of the hormones remaining in the
animals at slaughter, and thus there is no scientific way to determine if
hormones were administered to the animals. The EC has banned imports of
American beef, and the U.S. retaliated by raising tariffs on a number of EC
products. The EC has drawn up a list of U.S. products and will meet on February
20th to decide whether to counter-retaliate by raising tariffs on them.
--- U.S. TRADE OFFICIAL PREDICTS SUCCESS IN GATT NEGOTIATIONS Alan
Holmer, until recently the Acting U.S. Trade Representative, has predicted that
a framework for negotiations between the U.S. and EC on agricultural trade
reform will be reached by April. The mid-term review of the "Uruguay Round" of
negotiations on the General Agreement on Tariffs and Trade (GATT) were adjourned
without the finalization of tentative accords in many areas, largely because the
U.S. and EC could not reach any agreement on agriculture. The U.S. has pushed
for an agreement which would lead to the eventual phaseout of practices which
distort trade, such as barriers against imports or subsidization of exports.
The EC, which has a highly protected and subsidized agricultural sector, has
refused to make such a commitment, arguing that short-term adjustments in
current policies would suffice.
The GATT negotiators will meet again in April to finalize agreements;
interim talks on agriculture will be held starting February 13th. Both U.S. and
EC officials will be represented by a mix of old and new faces when they meet
again. Former U.S. Trade Representative Clayton Yeutter has been replaced by
Carla Hills, but Yeutter has been confirmed by the Senate as the new Secretary
of Agriculture and is expected to continue to play a major role. Also, former
Treasury Secretary James Baker will continue to be involved through his new
position as Secretary of State. Former EC Minister of Agriculture Willy de
Clercq has become EC External Relations Commissioner.
The GATT negotiations were identified by Governor Clements' Task Force
on Agricultural Development as an issue of great significance to the
export-oriented Texas agricultural economy. OSFR will follow these negotiations
carefully and keep state officials apprised of developments through Washington
Action Items and more in-depth issue briefs as appropriate.
--- HOUSE AND SENATE AGRICULTURE COMMITTEES REORGANIZED, NEW MEMBERS
ADDED
The House Agriculture Committee has two new subcommittee chairmen, two
new members and two new temporary members. Glen English (D-OK) has replaced the
retired Ed Jones as Chairman of the Conservation, Credit and Rural Development
Subcommitte, and Charles Hatcher (D-GA) replaces Leon Panetta as Chairman of the
- 2 -
Domestic Marketing, Consumer Relations and Nutrition Subcommittee. Newly
elected Rep. Bill Sarpalius (D-TX) joins fellow Texans Larry Combest, Charlie
Stenholm (Chairman of Livestock, Dairy and Poulty Subcommittee) and E. "Kika" de
la Garza (Chairman of full House Agriculture Committee).
The Senate Agriculture Committee has four new subcommittee chairmen and
one new member. David Pryor (D-AR) replaced the defeated John Melcher (D-MT) as
Chairman of the Agricultural Production and Price Stabilization Subcommittee,
David Boren (D-OK) replaced Pryor as Chairman of the Marketing and Product
Promotion Subcommittee, Kent Conrad (D-ND) replaced Boren as Chairman of
Agricultural Credit, and Tom Daschle (D-SD)replaced Conrad as Chairman of
Agricultural Research and Legislation. Slade Gorton (R-WA) is the new member of
the full Committee.
--- USSR SUFFERS POOR HARVEST, PURCHASES FROM U.S. TO INCREASE As
Soviet officials announced that the estimated grain harvest for 1988 is 40
million metric tons (mmt) below their government's target, USDA officials raised
the limit on Soviet grain purchases from the U.S. under the Long-Term Grain
agreement we have with the Soviets. The agreement originally had a 12 mmt
limit, which was raised to 16 -mmt on December 23rd and has now been raised to 20
mmt. The poor Russian crop, which is being attributed to bad weather
conditions, is 15 mmt below the 1987 harvest of 210 mmt.
--- CONGRESSIONAL, ADMINISTRATION OFFICIALS CONCERNED ABOUT PROSPECTS
FOR CONTINUATION OF DROUGHT Agriculture Committee Chairman de la Garza
expressed concern with the potential for a continued drought in the farm belt,
and urged farmers to give serious consideration to purchasing federal crop
insurance. After a weather briefing for the House Agriculture Committee on
February 2nd, de la Garza urged farmers to make every effort to save moisture,
utilize drought-resistant crop varieties, and consider purchasing crop
insurance, because severe budgetary constraints would make it very difficult for
Congress to pass a drought-relief bill as they did in 1988. The inter-agency
drought task force, which consists OT representatives of several departments of
the federal government, also met recently to evaluate current moisture
conditions and begin contingency planning in case the drought persists.
--- SCS OFFICIAL REPORTS TEXAS HAS MOST LAND DAMAGED BY WIND
EROSION Wilson Scaling, Chief of the Soil Conservation Service (SCS), reported
on January 31st that the drought is causing wind erosion damage to increase in
the Great Plains, with Texas sustaining the greatest amount of damage. In fact,
the 664,128 acres damaged in Texas represents over 30 percent of the national
total. At this time last year, 250,220 acres had been damaged in Texas by wind
erosion. Lack of residue and poor vegetative cover are the major factors
causing the damage, and both factors are a result of the drought.
-- FmHA IMPLEMENTATION OF AGRICULTURAL CREDIT ACT CRITICIZED At
a
January 24th hearing of the Agricultural Credit Subcommittee of the Senate
Agriculture Committee, several witnesses criticized the Farmers Home
Administration (FmHA) for their implementation of the Agricultural Credit Act of
1987. The FmHA makes farm operating, ownership and emergency loans to farmers
and ranchers who are unable to obtain credit from commercial lending
institutions. The 1987 Act directed the FmHA to write down delinquent loans
when the cost to the government of a write-down is less than the cost of a
foreclosure. The '87 Act also contained provisions mandating new rights for
- 3 -
FmHA borrowers. In a November, 1988, notice, FmHA notified 81,000 of its
delinquent borrowers of their rights and responsibilities under the new law, and
required them to request loan servicing options within 45 days or face
foreclosure.
Witnesses at the hearing testified that the deadline should be extended,
as the farmers were required to give detailed financial information to FmHA, and
the Thanksgiving and Christmas holidays fell in the time between receipt of the
notices and the deadline.
--- CONGRESSIONAL PANEL TO INVESTIGATE COMMODITY FUTURES MARKETS On
February 1st, House Agriculture Committee Chairman de la Garza (D-TX) announced
that he had directed Rep. Glenn English (D-OK) to study the allegations of
illegal activity resulting from an FBI investigation of the commodity futures
markets. As Chairman of the Conservation, Credit and Rural Development
Subcommitte, English has oversight responsibility over futures trading. The
Commodity Futures Trading Commission (CFTC), which regulates the futures
markets, is up for reauthorization this year and de la Garza has indicated that
he wants to know if the Committee needs to grant additional statutory authority
to the CFTC to enable them to properly regulate the markets.
For more information, contact Glen Hodges
Agriculture Coordinator
BANKING ITEMS
--- OUTLINES OF BUSH'S THRIFT RESCUE PLAN RELEASED On February 6th,
the White House released the broad outlines of President Bush's plan to resolve
the nation's savings and loan industry problems. The Bush plan calls for a
refinancing of $50 billion over five years for the Federal Savings and Loan
Insurance Corporation (FSLIC) by issuing long-term bonds and raising deposit
insurance premiums. The plan will significantly rework the regulatory structure
of the savings and loan industry by separating the FSLIC from the Federal Home
Loan Bank Board (FHLBB). The total cost of the plan to the taxpayers is
difficult to determine, although Treasury Secretary Nicholas Brady estimated
that roughly half of the cost will be borne by the industry and half by the
taxpayers.
Initial reaction to the proposal from Capitol Hill and the banking
industry was mixed, and most indicated they would have to study the plan more
closely as details emerge. Senate Banking Committee Chairman Don Riegle (D-MI)
praised the Administration for acting on the crisis so quickly. House Banking
Committee Chairman Henry Gonzalez (D-TX) worried that the increased costs of
higher insurance premiums for savings and loans would be passed on to the
consumer in the form of higher fees for customer services.
The Bush plan would create a new Resolution Finance Corporation (REFCO)
which would issue the $50 billion in new FSLIC financing. The principal of the
bond issue would be repaid entirely with savings and loan industry funds.
Ongoing interest costs associated with the refinancing will be covered first by
thrift industry funds and then, to the extent necessary, by Treasury funds.
- 4 -
The primary source of savings and loan industry funding used to finance
the recapitalization would be slightly increased insurance premiums which the
FSLIC charges. The insurance premium would be increased from 20.8 cents to 23
cents per $100 on deposit. Thrifts would be required to pay this premium level
for four years, and afterwards, assessments would drop to 18 cents per $100 on
deposit.
Commercial banks also face an insurance premium increase under the Bush
plan. However, commercial bank premiums would not be used to resolve insolvent
thrifts or to support the FSLIC. The assessment is intended to shore up the
FDIC, whose ratio of reserves to insured deposits has fallen to an uncomfortably
low level. Currently, commercial banks pay a premium to the FDIC equal to 8
cents per $100 on deposit. Under the Bush proposal, banks would pay 12 cents
per $100 in the first year. From the second year on, the premium would be 15
cents per $100 until the FDIC's ratio of reserves to insured deposits rises from
the current 0.83 to 1.25. Once that level of protection is achieved, commercial
banks would receive annual rebates on their premiums.
The plan also calls for the removal of the FSLIC from the oversight of
the Federal Home Loan Bank Board and for its administrative attachment to the
Federal Deposit Insurance Corporation (FDIC) which insures commercial bank
deposits. While administered by the same agency, the commercial bank and
savings and loan funds will be maintained separately, they will not be
commingled, and premiums from each industry will be used only for its own
insurance fund. The FHLBB would be placed under the direct authority of the
Treasury Department and renamed the Federal Home Loan Bank System. The Office
of the Comptroller of the Currency, which regulates national banks, already
operates under Treasury's control.
The resolution of the remaining insolvent institutions would be handled
by a newly created private corporation called the Resolution Trust Corporation
(RTC). The RTC would have an oversight board comprised of the Secretary of the
Treasury, the Chairman of the Federal Reserve Board and the Comptroller General
of the United States.
President Bush also announced that the FDIC and FSLIC would begin an
immediate joint supervisory program intended to stabilize insolvent institutions
with personnel from the Federal Reserve and the Office of the Comptroller of the
Currency. In keeping with this pledge, on February 7th, the FDIC was appointed
conservator of four large thrifts that are "losing money at a rapid pace,"
according to FHLBB Chairman M. Danny Wall.
Treasury officials are expected to unveil a legislative proposal
implementing the plan sometime before Treasury Secretary Nicholas Brady
testifies before the Senate Banking Committee on February 22nd. White House
officials have requested congressional action on the plan within 45 days.
-- ROSTENKOWSKI DOUBTS MERIT OF S&L TAX BENEFITS On February 10th,
House Ways and Means Committee Chairman Dan Rostenkowski (D-IL) indicated that
he is doubtful of the merit of certain tax breaks for financially troubled
savings and loans and banks. The breaks allow favorable tax treatment for
transfers of net operating losses during mergers and acquisitions. They were
extended in the Technical Corrections Act of 1988, but are scheduled to expire
at the end of this year. The tax breaks were a major tool used by the Federal
- 5 -
Home Loan Bank Board to attract investors when resolving troubled thrift cases.
The slight scaling back of the breaks which occurred at the end of 1988 is
thought to have contributed significantly to the wave of thrift acquisitions
which occurred in December.
For more information, contact Carter Breed
Economic Development Coordinator
BUDGET ITEMS
--- BUSH PRESENTS BUDGET REVISIONS TO CONGRESS In a speech to
Congress on February 9th, President Bush unveiled his package of revisions to
the fiscal year 1990 budget request submitted by President Reagan last month.
The Bush budget has a projected FY 90 deficit of $91.1 billion, substantially
lower than the $100 billion FY 90 Gramm-Rudman deficit reduction target. While
substantially similar to the Reagan request, the Bush budget makes room for new
spending priorities by freezing defense spending for one year, changing economic
assumptions, and including increased revenues from a number of sources,
including the controversial proposal to restore tax preferences for capital
gains.
On February 12th, the chairmen of the two congressional budget
committees, House Budget Committee Chairman Leon Panetta (D-CA) and Senate
Budget Chairman Jim Sasser (D-TN), criticized the Bush budget for failing to
specify domestic spending cuts to reduce the deficit, and they ruled out serious
negotiations unless the White House provides more details. However, Office of
Management and Budget Director Richard Darman has indicated that spending
reduction proposals were left intentionally vague in order to allow room for
negotiation with Congress. Congressional hearings on the FY 90 budget are
expected to begin later this month.
Other tax proposals in the Bush budget would provide for:
0
a permanent research and development tax credit;
0
enterprise zone tax incentives;
0
a 10 percent tax credit for exploratory oil drilling;
0
a 10 percent credit for tertiary enhanced recovery;
0
elimination of 80 percent of current alternative minimum tax
preference items generated by exploratory intangible drilling costs
incurred by independent producers;
0
repeal of the airport trust fund tax trigger;
0
an enhanced child care credit; and
o
an extension of the telephone excise tax.
WITHIN THE NEXT WEEK, OSFR WILL RELEASE AN ANALYSIS OF PRESIDENT BUSH'S
BUDGET REVISIONS AND THEIR IMPACT ON THE STATE OF TEXAS.
--- CBO EXPANDS DEFICIT-CUTTING OPTIONS LIST On February 7th, the
Congressional Budget Office issued a report entitled "Reducing the Deficit:
Spending and Revenue Options" which expands the list of deficit-reduction
options available to the Congress. The revision of the options list was made
necessary because, "In CBO's view, since the economy is already operating near
its potential, further rapid growth cannot be counted on to close the fiscal
deficit." CBO is projecting that the FY 90 deficit will drop to a level of $141
- 6 -
billion from $155 billion in FY 89. The $141 billion projected deficit is
significantly higher than the $100 billion Gramm-Rudman target for FY 90.
To a report issued earlier, CBO added eight options: reducing the
alternative minimum tax; repealing the Medicare taxable maximum; indexing the
unemployment insurance taxable wage base; repealing the automatic
aviation-related excise tax rate reduction; disallowing net interest deductions
on indebtedness exceeding 50 percent of the basis of tangible assets; decreasing
the exemption for estate and gift taxes; phasing out the child and dependent
care credit; and taxing the income replacement portion of workers' compensation
and black lung benefits.
Other options identified by CBO previously include: raising marginal tax
rates for individuals or corporations; amending or repealing the indexing of
income tax schedules; limiting mortgage interest deductions; taxing 30 percent
of capital gains from home sales; decreasing limits on contributions to
qualified pension and profit-sharing plans; increasing taxation of Social
Security; taxing credit unions like other thrifts; increasing energy and excise
taxes; and imposing a value-added or national sales tax.
--- NEC SEEN UNLIKELY TO PLAY ROLE IN BUDGET PROCESS Following a
January 31st meeting of the National Economic Commission, members indicated that
it was unlikely that the commission would play any role in this year's budget
process. Senate Budget Committee Ranking Member Pete Domenici (R-NM) said this
was due to a failure of the commission members to come to agreement on the
necessity of taxes in a deficit-reduction plan for FY 90. They also said that a
majority of the commission members is likely to endorse President Bush's
no-new-taxes pledge and that the remaining members are loathe to take a stance
in opposition to the President.
The National Economic Commission was created in the Omnibus Budget
Reconciliation Act of 1987 and was directed to present a report containing
deficit-reduction proposals to Congress and the President. The current deadline
for submission of the report is March 1st. An extension by President Bush until
September 1st is possible, but seen as increasingly unlikely.
For more information, contact Carter Breed
Economic Development Coordinator
DRUG ITEM
--- OMB ISSUES INTERIM RULE ON DRUG-FREE WORKPLACE On January 31st,
the Office of Management and Budget (OMB) issued an interim rule regarding
federal contractor requirements under the recently enacted Drug-Free Workplace
Act of 1988. This statute requires that all grantees receiving grants from any
Federal agency certify to that agency that they will maintain a drug-free
workplace.
This rule goes into effect on March 18th, with the comment period
continuing through April 3rd.
Initial interpretations of this rule indicate that any state agency
which receives a grant from a federal agency must, each year, send a letter to
the granting agency certifying their compliance with the Act.
- 7 -
Certification requirements may be found on pages 4951-4952 of the
January 31st, 1989 federal register under appendix C.
For more information, contact Mark Schnabel
Energy and Natural Resources Coordinator
EDUCATION ITEMS
--- PROPOSAL INTRODUCED TYING FEDERAL COLLEGE AID TO VOLUNTEER
SERVICE Legislation introduced January 31st in the House and Senate would link
volunteer public service to federal student aid.
The new bills, sponsored in the House by Rep. Leon Panetta (D-CA) and in
the Senate by Senator Christopher Dodd (D-CN), would build on existing youth
volunteer organizations by establishing an American Conservation Corps and a
Youth Service Corps. The corps would be operated by the states and would put
enrolling 16 to 25-year-olds to work for six months to two years rendering human
service assistance to local communities while providing any remedial education
deemed necessary. Depending on how long they served, students leaving the corps
program would receive either an education grant or job training assistance. The
bills would not require students to perform national service before qualifying
for federal student aid.
Another proposal, sponsored in the House by Rep. Dave McCurdy (D-OK) and
in the Senate by Senator Sam Nunn (D-GA), would require students seeking federal
aid for college or vocational education to serve their country as community
service volunteers at subsistence wages or join the military at cut-rate pay.
Under this legislation, individuals would work for one or two years in
some type of community service for $100 a week plus federal health insurance.
Another option would be to join the military for two years' active duty at
two-thirds of regular pay, with a Reserve commitment of six years. Once their
service was completed, community service volunteers would get $10,000 for each
year served. The money could be used only for college, vocational education or
a down payment on a home. Armed services volunteers would get $24,000 after
their two years of active duty. Individuals unable to participate because of
handicaps or other special circumstances would still be eligible to receive
federal student aid.
--- UNITED STATES STUDENTS RANK NEAR BOTTOM IN MATH, SCIENCE SKILLS
A
recently released report from the Educational Testing Service (ETS) ranks U.S.
students last in math and next to last in science knowledge when compared with
students in four other countries and four Canadian provinces.
According to the ETS study, 78 percent of 13-year-old U.S. students know
basic math skills well enough to solve simple problems, and 80 percent can apply
simple science principles. However, their knowledge of more advanced concepts
and their ability to analyze data falls behind that of Korean and British
Columbia students. While Korea ranked first in math, it was a close second to
British Columbia in science.
--- HOUSE AND SENATE BUDGET COMMITTEES SET TO EVALUATE EDUCATION
PROGRAMS The House and Senate Budget Committees plan to hold hearings this
month that will examine education programs in an attempt to identify those that
- 8 -
are productive and those that are not. During the week of February 20th, the
House and Senate panels will begin the hearings which should end around
mid-March. According to Senate Budget Committee Chairman Jim Sasser (D-TN),
Congress will seek to put emphasis on those programs that will serve as the best
long-range investment.
For more information, contact Lori Bounds
Human Resources Coordinator
ENERGY ITEM
--- INTERIOR SECRETARY AWAITING INSTRUCTIONS ON ANWR Newly-confirmed
Secretary of the Interior Manuel Lujan indicated recently that that he would
await more specific instructions from President Bush before formulating final
agency policy on the Arctic National Wildlife Refuge.
Opening a 1.5 million acre coastal plain portion of the 19 million acre
refuge to oil & gas development was a key priority of the Reagan Administration.
The question of whether or not to open ANWR to oil and gas leasing will
be this year's chief legislative struggle between environmentalists and the
energy industry.
Proponents of opening ANWR claim that this could be the last huge
reservoir of oil available, and as yet untapped, in the North American conti-
nent. Opponents believe that development of the coastal plain will destroy
pristine wilderness area, harm the local caribou herd, and set adverse precedent
for future development.
For more information, contact Mark Schnabel
Energy and Natural Resources Coordinator
ENVIRONMENTAL ITEM
--- EPA ENDORSES NO-NET-LOSS WETLANDS POLICY A goal of restoring or
creating another wetlands area for every wetlands area destroyed was endorsed in
late January by the Environmental Protection Agency.
Officials estimate that more than half of the original 215 million acres
of wetlands in the United States have been destroyed by filling, draining and
other development activities. That loss is estimated at 300,000 to 500,000
acres per year. Texas has lost some 600,000 acres of bottomland hardwoods alone
since 1950.
Wetlands, which include swamps, marshes, parts of estuaries and other
lands, are important spawning grounds for fish, habitat for wildlife and flood
control barriers.
For more information, contact Mark Schnabel
Energy and Natural Resources Coordinator
- 9 -
GUN CONTROL
ASSAULT WEAPON BILL SLATED TO MOVE Sen. Paul Simon (D-IL) Chair-
man of the Senate Judiciary Constitution Subcommittee, has stated his intentions
to move quickly on a bill, S. 386 by Sen. Howard Metzenbaum (D-OH), which would
outlaw semi-automatic weapons.
On Friday, February 10th, the Subcommittee heard Los Angeles Police
Chief Daryl F. Gates urge a ban on the "military assault weapons.' The National
Rifle Association opposes a gun ban saying many of the aforementioned rifles are
functionally identical to many semi-automatic rifles owned by hunters and
sportsmen.
For more information, contact Mark Schnabel
Energy and Natural Resources Coordinator
HUMAN RESOURCES ITEMS
HHS PUBLISHES FINAL RULES ON REFORM OF LONG TERM CARE
FACILITIES On February 2nd, the Health Care Financing Administration (HCFA)
published final rules revising the requirements and standards that long-term
care facilities must meet in order to participate in the Medicare and Medicaid
programs.
Originally proposed in October 1987 in response to the recommendations
of the National Insitute of Medicine's report on the quality of care in nursing
homes, the regulations were revised to comply with some of the statutory
provisions of the nursing home reform legislation included in the Omnibus Budget
Reconciliation Act of 1987 (OBRA).
The regulations become effective August 1, 1989, although implementation
of some sections will not go into effect until October 1, 1990 as specified in
OBRA. HCFA published the regulations as a final rule, but comments will be
accepted if they are submitted by May 3, 1989.
--- MATERNAL, CHILD HEALTH PROPOSALS INTRODUCED Children's health was
the focus of a joint press conference held February 1st by Senator Bill Bradley
(D-NJ), Rep. Henry Waxman (D-CA) and Rep. Mickey Leland (D-TX).
The Leland bill calls for coverage of pregnant women and infants up to
185% of the federal poverty level on a phase-in schedule, beginning with
coverage below 125% of poverty in July 1991. Coverage would be extended to
those below 150% of poverty in July 1992 and to those below 185% of poverty in
July 1993. The proposals would also require state Medicaid payments to
providers of obstetric and pediatric services to be sufficient to maintain or
increase provider participation so that services are available to Medicaid
beneficiaries to the extent that the same services are also available to the
general population. States would also be required to streamline their
eligibility process for pregnant women SO that pregnant women are automatically
covered for prenatal care for at least 45 days from the earliest point of
contact until final eligibility is determined.
Waxman's Medicaid Child Health Amendments of 1989 would phase-in
coverage of children up to age 18 in families with incomes below 100 percent of
- 10 -
poverty. Effective January 1, 1990, states would be required to cover all poor
children age 6 and under and continue to do so until they reach 18. States
would be given a new option of extending Medicaid coverage immediately to all
children up to age 18 with incomes below the poverty level. The legislation
would also require states to coordinate their Medicaid plans with the Women,
Infants and Children (WIC) program and make information about special
supplemental food programs for women, infants and children available to all
pregnant, breast-feeding and post-partum women and children applying for
Medicaid.
Bradley's legislation combines the provisions of the Waxman and Leland
bills.
--- NEW CHILD CARE PROPOSALS INTRODUCED
Child care is on the front of
the Congressional agenda, and several bills addressing the child care issue have
been introduced.
Rep. Augustus Hawkins (D-CA), chairman of the House Education and Labor
Committee, has introduced the Child Development Act of 1989 (H.R.3), which is
expected to be the major House child care vehicle. The legislation authorizes
$2.5 billion in funds to expand Head Start services, School-Based Child Care and
Development and Infant and Toddler Care.
In addition to Hawkins bill, the Act for Better Child Care (ABC bill),
which failed at the end of last year, has been reintroduced by Rep. Dale Kildee
(D-MI) and Senator Christopher Dodd (D-CN). The new version of the ABC bill
(S.5), would authorize $2.5 billion for child care in FY 90, mainly for direct
aid to low-income families. Families could use the funds for school-based or
other care for children up to age 15.
Senator Edward Kennedy (D-MA) has also reintroduced his "Smart Start"
package (S. 123). Kennedy's legislation would provide funding to states and
local agencies to develop high-quality early childhood development programs for
pre-kindergarten children.
The Administration's child care initiative, outlined by President Bush
in his State of the Union address, is a $331 million increase in federal
spending for child care. The increase would be used to create a new refundable
child tax credit for low-income families with children 4-years-old and younger
and to make the existing child care tax credit refundable for those whose
incomes are so low that they do not pay federal taxes. Taxpayers currently
eligible to claim the existing $2,400 child care deduction would continue to do
so. Initial cost of the tax refund program would be $331 million for FY 90. By
FY 93, however, outlays for the two tax programs are estimated at $2.4 billion.
A number of other proposals modifying the Earned Income and Dependent
Care Tax credits are expected to be introduced in the coming weeks.
--- SUBCOMMITTEE BEGINS HEARINGS ON REAUTHORIZATION OF CHILD NUTRITION
PROGRAMS The House Subcommittee on Elementary Education began February 8th a
series of hearings on legislation (H.R. 24) amending and reauthorizing for five
years programs set up by the Child Nutrition Act and the National School Lunch
Act. Witnesses focused on the Women, Infants and Children (WIC) nutrition
program, noting that it now serves only 50 percent of eligible women. Those
testifying maintained that WIC is cost-effective because it prevents infants
from becoming sick.
- 11 -
--- NATIONAL COMMISSION ON CHILDREN HOLDS FIRST MEETING The National
Commission on Children, created by Senator Lloyd Bentsen (D-TX) in the Omnibus
Budget Reconciliation Act of 1987 (OBRA), held its first meeting in Washington
on February 6th.
The panel, which is to produce easily-implemented ideas that address
children's health and social welfare problems, will be chaired by Senator Jay
Rockefeller (D-WV). In his address to the Commission, Bentsen urged the group
to come up with "a realizable blueprint for action." Bentsen cautioned that
proposals must take into account budgetary constraints, but he promised to be a
strong advocate of the Commission's proposals - due by mid-1990.
--- CONFIRMATION OF HHS SECRETARY-DESIGNATE SULLIVAN POSTPONED Two
Senate committees have indefinitely postponed confirmation hearings on Health
and Human Services Secretary-designate Louis Sullivan, MD.
Sullivan was to have appeared before the Senate Finance Committee
February 1st and before the Senate Human Resources Committee on February 3rd.
White House officials requested a postponement of the hearings, saying that more
time was needed to complete a background check and the necessary paperwork on
Sullivan.
Neither Senate panel has rescheduled the Sullivan hearing.
--- LEGISLATION INTRODUCED TO AID RURAL HOSPITALS Legislation
introduced January 31st in the House and Senate would address the financial
problems of rural hospitals, particularly with regard to Medicare reimbursement.
The bills (S. 306 and H.R. 762), introduced by Senators Lloyd Bentsen
(D-TX) and Robert Dole (R-KS) and Rep. Jake Pickle (D-TX), would gradually
eliminate the gap between Medicare payments to urban and rural hospitals.
Introduction of the legislation was prompted by increasing concern about the
number of rural hospital closures. In 1988, 43 rural hospitals closed; 18 were
in Texas.
Following are major provisions of the bills:
Elimination of Average Standardized Amounts:
The HHS Secretary would be required to design a legislative proposal to
eliminate the current policy of determining separate average standardized
payment rates for hospitals classified as large urban, other urban or rural.
The proposal would have to include a transition period from the current system,
recommendations for the treatment of payments or adjustments for teaching
hsopitals, rural referral centers, sole community hospitals and disproporionate
share hospitals. The Secretary would submit a report on the required legislative
proposal by October 1, 1989 which would be reviewed by the Prospective Payment
Assessment Commission and the Congressional Budget Office. Each of these
entities would submit a report, including an impact analysis, by April 1, 1991.
Interim Provisions for Additional Payments:
The Secretary would provide additional payments for each Medicare-dependent,
small rural hospital to ensure that the total of the payments made to the
- 12 -
hospital for any cost reporting period is at least equal to the reasonable costs
associated with the hospital's operating costs of inpatient hospital services
for Medicare beneficiaries. The payments would be for hospital cost reporting
periods beginning after September 30, 1989 and ending before October 1, 1991.
Rural hospitals are defined as those hospitals participating in the Medicare
prospective payment system that is receiving payments based on the rural
standardized amount, that has no more than 100 beds and for which at least 70
percent of inpatient hospital services are for Medicare Part A.
Sole Community Hospitals:
The bills would also modify the method for determining the reimbursement amount
for sole community hospitals. Currently, 75 percent of the reimbursement amount
is determined by using hospital-specific costs from a base year updated to the
current year. The bill would continue to base 75 percent of the payment on
hospital-specific costs but would calculate these on the most recent cost
reporting information available. The amount received by the hospital could not
be less than what would have been paid under the current system. Presently the
remaining 25 percent is based on the applicable prospective payment program
regional rate. The bill would establish the 25 percent amount on the higher
regional or national rate.
Classification Review Board:
A Medicare Geographical Classification Review Board would be established. The
five members of the Board would be appointed by the Secretary, and two of the
members would represent rural hospitals. The Board would consider the
application of any rural hospital requesting that the Board classify the
hospital as being located in an urban area for purposes of determining the
hospital's average standardized amount.
Rural Health Care Transition Grants:
The limit of $50,000 on rural health transition grants would be waived when the
Secretary determines that a greater amount is necessary to assist a hospital in
implementing a transition project. The two-year limit on grants would be raised
to three years, and the program would be extended through FY 92. The funding
authorization level would be increased from $15 million to $25 million for FY 90
with that amount also authorized for FY 91 and FY 92. The bill also makes some
procedural changes, such as no longer requiring that applications for grants be
made through the Governor's office.
Rural Health Demonstration Projects:
The bill increases from four to ten the number of teaching hospitals with which
agreements could be entered into to conduct demonstrations to assist resident
physicians in developing field clinical experiences in rural areas.
Nursing Education:
The Secretary would provide for nursing demonstration programs under Medicare in
each of five hospitals for cost reporting periods beginning on or after July 1,
1990 and before July 1, 1995. Under each demonstration project, the reasonable
- 13 -
costs incurred by a hospital as part of an approved educational program leading
to a bachelor's degree in nursing would be allowed as reasonable costs under
Medicare and reimbursed on the same basis as if they were allowable direct costs
of a hospital-operated approved educational program, other than an approved
medical education program.
--- DEADLINE CLOSE FOR RURAL HEALTH TRANSITION GRANT
APPLICATIONS Letters of intent from rural hospitals planning to file for rural
health transition grants are due to be sent to the Health Care Financing
Administration (HCFA) by February 21st.
The Transition Grant Program was created in the Omnibus Budget
Reconciliation Act of 1987 (OBRA) to assist rural hospitals in strategic
planning; expert assistance in determining viable diversification; compensating
hospital staff and supporting renovations. $8.8 million is available for these
grants, and individual hospitals can receive up to $50,000 per year for two
years.
For more information, contact Lori Bounds
Human Resources Coordinator
LABOR ITEM
--- SENATE COMMITTEE MINIMUM WAGE VOTE POSTPONED A scheduled February
8th vote to increase the minimum wage by the Senate Labor and Human Resources
Committee was postponed and rescheduled for March 8th. It marked the second
time this Congress that the committee vote on the increase has been postponed.
The legislation, S. 4, sponsored by Committee Chairman Edward Kennedy
(D-MA), proposes to increase the minimum wage from $3.35 an hour to $4.65 an
hour over a three year period.
Attempts to increase the minimum wage last year died on the Senate floor
during the waning moments of the 100th Congress.
For more information, contact Mark Schnabel
Energy and Natural Resources Coordinator
NOTE: The Congress adjourned on Friday, February 10th for the President's Day
recess and will reconvene on Tuesday, February 21st. The next edition of
Washington Action Items will be published on Friday, February 24th.
- 14 -
"Colonias"
Colonias are rural, unincorporated communities located in the Texas Valley. There are more
than 100 such communities in Cameron, Hidalgo, Willacy and Starr counties. Similar
communities may also be found in Val Verde County and in the Lower Valley area of El Paso
County.
The Valley colonias range in size from 5 families to more than 450 families and are often
grouped near each other (for example, outside Pharr as many as 17 colonias seem to merge into
one massive slum dwelling area.)
The estimates of how many people live in the colonias vary from a high of 200,000 to as few as
75,000. Valley Interfaith estimates are about 125,000.
Many of the residents are unemployed with few job skills. Others are migrant and seasonal farm
workers.
Many of the colonias were "developed" by local land owners who sold land (and sometimes
housing) to low-income Hispanic families, usually on contracts of sale. In many cases the
occupants have constructed their own dwelling on the land they are purchasing.
Living conditions in the colonias are generally poor. Some would describe them as "third world".
All of them were built in unincorporated areas where there were no building code or zoning
restrictions.
All the colonias lack, to one degree or another, potable water systems (some rely on trucked in
water, some have small wells drilled into the same strata as their septic tank fields, others use
raw untreated water taken from agricultural irrigation ditches), sewage and drainage systems ,
adequate housing and health and recreational facilities.
The apparent biggest need--other than jobs for their residents--appears to be water and sewage
service. Efforts are under way to bring this service to some of the colonias--including efforts
by the Texas Water Development Board, which under a legislative mandate, is making loans and
grants for such systems.
Other methods being used are to have one of the nearby cities either annex and serve the area or
extend service to a colonia in its extra-territorial area. (Pharr, for example, is annexing a
large group of colonias just outside its current city limits. Brownsville, on the other hand, is
willing to extend service to some but apparently only on financial terms which most of the
colonia residents can't afford.)
In El Paso the legislature approved the creation of a special water district to serve the areas, but
its plans have failed to get off the ground as the voters in the district recently rejected a bond
issue on the grounds that the residents couldn't afford to pay the monthly charges and/or hook up
fees. (Valley Interfaith estimates that a total fee--covering service, maintenance and debt
retirement--of more than $30 per month is out of the financial range of most of the colonia
residents.)
Attached is a brief "inventory" of the Valley colonias which can give you some picture of the
situation. It was prepared to show the needs for paving and drainage and does not talk about
water and sewer, but still may give you a picture of what a colonia is.
America's Third World:
Colonias
by Solomon P. Ortiz
n South Texas, the beauty of the
Rio Grande Valley is marred by
the misery of many of the people
who live there with no running
water or sewers. Health problems
are rife due to the resulting pol-
lution.
In the border area between the
United States and Mexico an esti-
mated 185,000 people live in poor
unincorporated settlements without
adequate sanitation facilities. In
the fertile Rio Grande Valley of Tex-
as, many residents earn extremely
low per capita incomes and have
settled in substandard communities
called colonias. Colonias are typi-
cally located outside the limits of
established cities along the U.S.-
Mexico border in Arizona, Califor-
nia, New Mexico and Texas. They
are populated by a proud mix of peo-
ple who, like many Americans, are
pursuing a dream of home owner-
ship. Unlike most emerging neigh-
borhoods, however, colonias develop
without planning and without es-
sential infrastructure.
The lack of sanitary water sup-
plies and improper sewage disposal
and treatment are two striking de-
ficiencies which plague colonias and
limit the individual progress of co-
lonia residents. Governmental bodies
have begun to try to bring water and
sewage service to colonias. Wide-
spread efforts in this regard have
only been initiated in earnest in re-
cent years, and have been impeded
by the sheer magnitude of assis-
U.S. Rep.. Solomon F. Ortiz (D-Texas) was
elected in 1988 to a fourth term in Con-
gress. He represents a portion of the
Rio Grande Valley along the U.S. Mexican
border, one of the poorest regions of
the United States. Ortiz was born and
raised in a colonia, and maintains close
ties with these communities.
A colonia family has no indoor cooking
facilities.
Photo by David Anthony Padilla
tance required, as well as existing
drums for lack of a better container.
cause many colonia residents ei-
regulations which have contributed
Sewage treatment consists primar-
ther don't seek treatment or cross
to the establishment and prolifera-
ily of septic tank systems, although
the border to see doctors in Mexico.
tion of colonias.
the soil is not sufficiently permeable
to allow proper operation of a sep-
What government can do
How colonias grew
tic tank. When heavy rains come to
colonias, the raw sewage overflows
To correct the problems found in
Colonias have existed in one form
and eventually rises to the surface.
colonias, public servants must strive
or another for many years in rural
Under these conditions, residents
to achieve two goals. State officials
areas of the Southwest. Their origins
must wade through this untreated
must extend to county governments
are as varied as the people living in
mixture to get to work or school.
the authority to regulate all pro-
them. Colonias have grown where
This is a key reason why disease
posed residential developments in
low-income individuals looking for
rates in colonias exceed those found
rural areas. Those who sell land
inexpensive home sites have found
in Third World nations. Schools
should be required to provide de-
developers eager to sell rural land
have reported a high incidence of
tailed plans for the establishment
unsuitable for agriculture. These
skin rashes and diarrhea among
of water and sewage service, trans-
potential landowners are either re-
colonia children.
portation and road maintenance and
cent immigrants to the United
El Paso County had more cases of
other services. As the population
States or Americans who are tired
hepatitis A in 1986 than 29 states;
increases, county governments must
of paying monthly rents in nearby
more cases of hepatitis B than 13
be granted authority which recog-
cities. The land may be sold under
states; more shigella dysentery than
nizes their broader needs and re-
false premises, with the developer
30 states, and more tuberculosis
sponsibilities. This is an important
promising to bring clean water,
than 19 states, according to Dr.
step for ensuring that future colo-
sewage treatment facilities and de-
Laurance Nickey, health director of
nias will not pop up in rural areas
cent roads to the area.
El Paso city-county. A university
throughout the state.
What results are patchwork neigh-
study found that 90 percent of all
Given these preventive measures
borhoods of cinderblock houses,
adults living in colonias had had
to deter the spread of colonias, fi-
trailers and even homes constructed
hepatitis, which is a waterborne
nancial assistance from state and
out of tarpaper and cardboard. Wa-
disease.
federal authorities would improve
ter, brought in from nearby sources,
Health statistics cannot do justice
conditions in existing colonias. Var-
often is transported in used chemical
to the full extent of the problem be-
ious federal initiatives were intro-
A Texas woman relies on the wind and sun to dry her clothes.
Photo by Brad Doherty
The Council of State Governments 21
There are no paved roads in Cameron Park in Brownsville, Texas.
Photo by Brad Doherty
duced during the 100th Congress
directing the FmHA to consider the
The state comptroller, the Texas
which target funding to programs
unique status of colonias in award-
Water Development Board, the state
that could assist colonias. Among
ing grants and loans. Related legis-
treasurer and the lieutenant gover-
these, I introduced H.R. 3524 in Oc-
lation was approved by voice vote in
nor, in conjunction with organiza-
tober of 1987 to provide $45 million
the House of Representatives Oct.
tions representing colonia residents,
for two Farmers Home Administra-
13, 1988, earmarking 10 percent of
contributed to the plan. Due to the
tion (FmHA) programs. These pro-
the Community Development Block
magnitude of needs in colonias,
grams would fund the construction
Grant Small Cities allocation to the
teamwork of this nature is critical
of water and sewage facilities, and
four border states (Texas, New
to develop and implement programs.
offer grants and loans to low-income
Mexico, Arizona and California) for
Legislation based on this plan is ex-
families for housing improvements
colonias.
pected to be introduced in the 1989
needed to use newly available water
Texas Legislature.
and sewer services.
Similar measures will be brought
up again in the upcoming Congress.
These federal and state proposals
In addition, I introduced legisla-
for bringing clean water, sewage
treatment and improved housing to
tion enabling cities to annex nearby
Texas plans relief
the colonias represent a concerted
colonias, while protecting federal
effort to enhance the quality of life
loans to existing water service cor-
While Congress considers these
for colonia residents. As one who
porations operating in the annexed
proposals, officials in Texas in Oc-
was born and raised in a colonia, I
areas. Colonias, because of their
tober 1988 announced the details of
know an intense pride remains
proximity to larger cities, are not
a $500 million bond program to im-
among the residents, and a healthy
classified as "truly rural areas" un-
prove living conditions in colonias.
environment will greatly contrib-
der FmHA language and thus are
This plan relies upon financing
ute to their ability to explore and
less able to secure FmHA assistance.
from the state, as well as affordable
pursue their full potential. Only
To tackle this problem, Texas Con-
monthly payments from colonia
then can our country truly benefit
gressman Ron Coleman proposed
residents, to service debt resulting
from economic and personal vitality
adding to the fiscal year 1989 Agri-
from the construction of water and
found in abundance among all people
culture Appropriations bill language
sewage facilities.
along the U.S.-Mexican border.
22 State Government News January 1989
22 A
The Ba line Merning Nrins
Friday, April 14, 1989
Bush backs Rio Grande sewage plant at Laredo, Baker says
By Jennifer Dixon
Five miles below Laredo-Nuevo
America Prom
Laredo, the level of pollution is
"The Rio Grande is certainly the most polluted
gallons a day. Downstream from
Reagan's last budget request to Con
Laredo and Nuevo Laredo is consid-
WASHINGTON - The State De-
1,400 times higher than is safe for
gress recommended that 57.5 mil-
contact with human skin.
body of water that borders on the United States."
ered the most polluted stretch of
partment strongly supports a $44
lion be appropriated next year for
river.
million plan to clean up raw sewage
"And we're not talking about
initial construction of a sewage
- Sen. Phil Gramm, R-Texas
pollution of the Rio Grande, Secre-
drinking the water," Mr. Gramm
Since the bill's passage last year,
plant at Laredo-Nuevo Laredo.
tary of State James Baker testified
said. "We're talking about touching
the International Boundary and
"The Rio Grande is certainly the
be accelerated because the money
threats to economic development,
it. Now the problem is, people on
Water Commission worked out an
Thursday before a Senate appropri-
could be spent before fiscal 1990 be-
most polluted body of water that
tourism and public health."
ations committee.
the Mexican side are drinking out
agreement with Mexico for a jointly
borders on the United States," Mr.
gins in October.
of the river.
Congress last year approved leg-
During questioning by Sen. Phil
The pollution prob-
funded, $44 million cleanup at
Gramm said.
"This is obviously good news for
islation authorizing the State De-
Gramm, R-Texas, Mr. Baker said the
lem comes primarily from the
Nuevo Laredo, which has no treat-
all Texans and citizens of Mexico
"I'm delighted that Secretary
partment, acting through the Inter-
Bush administration is behind a re-
dumping of human sewage into the
ment plant for the city's sewage, Mr.
that live on the Rio Grande," Mr.
Baker is committed to this project,
national Boundary and Water Com-
river on the Mexican side."
Gramm's office said.
quest to spend 57.5 million in next
Gramm said in an interview. "As
to funding under the State Depart-
mission, to negotiate with Mexico 10
year's budget toward building a
Mr. Baker said he was consider-
Under the plan, Texas would
ment," said Mr. Gramm. a member
the population is growing on both
clean up the Rio Grande.
sewage treatment plant on the river
ing putting a portion of the $7.5 mll-
spend $2 million, Mexico $22 mil-
sides of the river, we face a growing
of the Senate Appropriations Sub-
The river is polluted by dis-
at Laredo, Texas, and Nuevo Laredo,
lion into a supplemental appropris-
lion and the federal government
committee on Justice, State and
threat from pollution If it is not
charges of industrial waste and raw
Mexico.
tions bill, allowing the cleanup to
$20 million, Mr. Gramm said.
Commerce, before which Mr. Baker
dealt with, we ultimately face
sewage totaling tens of millions of
Former
President
"It is vitally important." Mr.
Ronald
testified.
Gramm fold the committee. "So far
as I am aware, 11 is the worst pollu-
tion problem in North America."
He told Mr. Baker that It was
"only a matter of time" before the
river pollution causes a public
health crisis.
Hundreds join rally for 'colonias'
Demonstrators at Capitol urge water, sewerage improvements P3SA
DALLAS MORNING NEWS
Associated Press
APR 13 1989
Related photo.
33A
would provide water and sewerage
AUSTIN - Several hundred peo-
services for 700 colonias from El
ple. rallying at the Capitol Wednes-
but from the general membership.
Paso to Brownsville.
day to urge water and sewerage im-
I think this is the year we're
"This bill will address the health
provements for Rio Grande Valley
going to do it." Mr. Moreno told the
problems that people suffer because
colonias, heard top state officials
demonstrators organized by a coali-
of the lack of water and sewers. The
predict that this is the year such
tion of groups, including Valley In-
quality of life for our children will
help will come.
terfaith.
be improved," said Maggie Martinez
A bill already passed by the Sen-
The legislation would make avail-
of the El Paso Interreligious Spon-
ate "recognized for the first time
able up to $100 million in state-guar-
soring Organization.
that South Texas ought not be a
anteed bonds to allow governmental
State Treasurer Ann Richards
Third World country," Lt. Gqv. Bill
units along the Texas-Mexico border
was among the state officials who
Hobby told the cheering crowd on
to construct water and sewer sys-
praised demonstrators for their con-
the Capitol steps.
tems in the rural subdivisions. Low-
tinuing efforts to win passage of the
"That bill passed the Senate
interest loans also could be made
legislation.
unanimously. H71 be taken up in the
available.
"When communities stand up for
House soon. I trust it will be passed
Counties that accept the funds
themselves, speak for themselves,
by the same majority there and be
would be required to demand that
call the attention of public officials
signed by the governor - and we
future developments comply with
to the situation that you are dealing
can all be proud of having been a
minimum water and sewerage
with in the colonias, the public offi-
part of that process that improved
standards, and developers who
cials must respond and they must re-
the quality of life of everybody in
failed to do so would face stiff fines.
spond 'yes,' Ms. Richards said.
South Texas," Mr. Hobby said.
The bill, Mr. Hobby said, "recog-
"Thank you for speaking up' for
Rep. Alex Moreno, D-Edinburg, a
nized it is time to clean up raw sew.
the people who are your neighbors.
House sponsor of the legislation.
age running down the middle of
and who are your friends, who have
predicted that chamber also will ap-
streets.
(It) will bring a new age
needed attention and needed help
prove the bill.
to the colonias."
for clean water, for sewage, for a
"We have a lot of support for the
Organizers of the demonstration
good neighborhood, for a very long
bill - not only from the speaker,
said they believe the legislation
time.'
Tarrant Seel, activists P24 rally for 'colonias'
FORT WORTH STAR TELEGRAM
APR
13
198ater, sewer projects may start this year, officials say
From Staff and Wire Reports
sewage connections to the illegal rural
House sponsor of the bill, predicted
AUSTIN - More than 100 Fort
subdivisions is one of the groups' major
that chamber also will approve the bill,
Worth residents took part in a rally at
legislative goals this year, said Perry
which won 30-0 Senate approval.
the Capitol yesterday to urge-state fi-
Perkins, lead organizer for the group,
nancing of water and sewage improve-
who estimated the rally crowd at 1,500.
"We have a lot of support for the bill
ments for the impovervished rural Tex-
- not only from the speaker. but from
Two busloads of activists but-
as border visions called colonias.
the general membership
I think this
The members of Allied Communi-
tonholed virtually everyone in the Fort
is the year we going to do it, Moreno
Worth delegation and were assured of
ties of Tarrant. a church-affiliated com-
told the demonstration.
munity action group, heard top state
support by House Speaker Gib Lewis,
D-Fort Worth. Perkins said.
The legislation would make available
officials predict that such help will
up to $100 million in state-guaranteed
come this year.
A bill already passed by the Senate
bonds to allow governmental units
"We were sharing that we're con-
"recognized for the first time that
along the Texas-Mexico border to con-
cerned even in Fort Worth about the fi
South Texas ought not be a Third
struct water and sewage systems in the
colonias. It affects all of us," the Rev.
World country," Lt. Gov. Bill Hobby
rural subdivisions. Low-interest loans
C.M. Singleton of the First Missionary
told the cheering crowd on the Capitol
also could be made available.
Baptist Church told the crowd.
steps.
Counties that accept the funds would
The community group is a sister or-
The bill. Hobby said, "recognized it
be required to demand that all future
ganization to Valley Interfaith and a
is time to clean up raw sewage running
developments comply with minimum
number of other Texas groups that have
down the middle of streets
(It) will
water and sewage standards. and devel-
lobbied for improvements in public
bring a new age to the colonias.
opers who failed to do $0 would face
schools. Providing sanitary water and
Rep. Alex Moreno, D-Edinburg, a
stiff fines.
21
Colonia dwellers
cheer lawmakers
APR 13 1989
RICHARD SMITH
News Austin Bureau
"
USTIN - Lawmakers told
see a new
nutarly 1,200 sign-waving residents
issue and that is to
from substandard unincorporated
Aleas along the South Texas bor-
help bring sanitation
Colonia aid likely, state leaders predict
not Wednesday that they would
make sure the residents got ade-
and water to those
quate water and sewerage facili-
AMERICAN STATESMAN
thes
people who are so
Associated Press
1989
everybody in South Texas."
would be required to demand that
"We will be watching the mem-
APR
13
for our children will be improved."
hers of the House very closely. We
deserving.
"
Rep. Alex Moreno, D-Edinburg,
all future developments comply
with minimum water and sewage
State Treasurer Ann Richards
are ready to work," San Antonio
Several hundred people, rallying
a House sponsor, predicted that
COPS Chairwoman Patricia Ozuna
- Lt. Gov. Bill Hobby
at the Capitol Wednesday to urge
was one of several state officials
chamber also will approve the bill,
standards, and developers who
told the cheering colonia residents
passage of water and sewage im-
which won a 30-0 Senate approval.
failed to do 80 would face large
who praised demonstrators for
gathered outside the Capitol.
cluding San Antonio COPS, Valley
provements for Rio Grande Valley
fines.
their continuing efforts to win pas-
Lt. Gov. Bill Hobby, House
Interfaith and similar groups
colonias, heard top state officials
"We have a lot of support for the
sage of the legislation.
Speaker Gib Lewis and State
around the state, was to garner
predict that this is the year such
bill - not only from the speaker,
The bill, Hobby said, "recog-
Treasurer Ann Richards were
support for a House bill that would
help will come.
but from the general membership.
nized it is time to clean up raw sew-
"When communities stand up
among state officials and lawmak-
provide enforceable living stand-
I think this is the year we're go-
age running down the middle of
for themselves, speak for them-
er$ who told the group they were
ards for the habitants and finance
A bill passed by the Senate "re-
ing to do it," Moreno told the de-
streets. (It) will bring a new
selves, call the attention of public
working to improve their quality of
water and sewerage projects.
cognized for the first time that
life.
monstration organized by a
age to the colonias."
officials to the situation that you
On Tuesday, the Senate unani-
South Texas ought not be a Third
World country," Lt. Gov. Bill Hob-
coalition of groups, including Val-
Organizers of the demonstration
are dealing with in the colonias, the
"We have recognized that it is
mously passed a constitutional
ley Interfaith.
said they believe the legislation
public officials must respond and
the state's responsibility to clean
amendment authorizing the Issu-
by told the cheering crowd on the
would provide water and sewage
they must respond 'yes,'' Rich-
up the raw sewage running down
ance of up to $500 million in water
Capitol steps.
The legislation would make
services for 700 colonias from El
ards said.
the streets of the colonias. South
development bonds to finance the
"That bill passed the Senate
available up to $100 million in
Texas ought not be a third world
Paso to Brownsville.
projects.
unanimously," Hobby said. "It'll be
state-guaranteed bonds to allow
"Thank you for speaking up for
country,' Hobby said.
The amendment, which now
taken up in the House soon. I trust
governmental units along the Tex-
"This bill will address the health
the people who are your neighbors,
When I look back and see the
heads to the House, also would al-
it will be passed by the same major-
as-Mexico border to construct wa-
problems that people suffer be-
and who are your friends, who have
great changes that has taken place
low the Texas Water Development
ity there and be signed by the gov-
ter and sewage systems in the rural
cause of the lack of water and sew-
needed attention and needed help
in Texas in the last several years
Board to provide financial assist-
ernor - and we can all be proud of
subdivisions. Low-interest loans
ers," said Maggie Martinez of the
for clean water, for sewage, for a
in social reform, I see the Valley
ance for retail water distribution
Interfaith behind those efforts
having been a part of that process
also could be made available.
El Paso Interreligious Sponsoring
good neighborhood, for a very long
systems and indoor plumbing.
that improved the quality of life of
Counties that accept the funds
Organization. "The quality of life
time," Richards said.
each and every time," Lewis said.
State Rep. Alex Moreno, D-Ed-
"I see a new issue and that is to
inburg, said his House version of
help bring sanitation and water to
the bill would be similar to the Sen-
those people who are SO deserv-
ate's but would include specific
ing,' he continued.
stipulations for utility, water and
The rally, organized by a num-
sewerage codes that counties
ber of community-rights groups, in-
would have the option of adopting.
STATE OF TEXAS
OFFICE OF THE GOVERNO
Energy
Austin. TEXAS 78711
WILLIAM P. CLEMENTS. JR.
GOVERNOR
March 31, 1989
The President
The White House
1600 Pennsylvania Avenue, N.W.
Washington, D.C. 20500
Dear Mr. President:
Enclosed is an opinion-editorial article in which I urge that
the Administration or Congress establish a $20 per barrel floor price
for crude oil. The article was requested by the Jefferson Energy
Foundation and I wanted to call it to your attention prior to
publication.
As you know, I believe strongly that action must be taken to
stabilize prices if a viable domestic exploration and producing
industry -- which we both agree is vital to our national security --
is to be maintained. There is little that state governments can do to
help stabilize prices, and I do not believe we should rely solely on
foreign governments for that purpose.
The federal government can, and in my judgment should, act to
stabilize prices. If crude oil prices can be stabilized at a
reasonable level, then the domestic industry can arrest the current
decline in production, thereby enabling the United States to regain
control of its energy future.
Mr. President, I know that you and your financial advisers worry
about inflationary pressures. I do, too. However, I worry more about
the trauma associated with boom and bust cycles that do untold damage
to our economy -- regional as well as national -- and to a vital
industry such as oil. A price floor would serve to dampen these
extreme swings in our economy. Moreover, strictly from an inflationary
standpoint, $20 per barrel oil likely would not have a significant
impact since prices have recently exceeded that level. However, until
the industry is assured that prices will stabilize at a minimum level
of $20 per barrel, we will not see the new investment necessary to lead
to a rebound in production.
-2-
I support the tax incentives for oil and gas which you announced
as part of your budget package. I believe they could be very helpful
and, indeed, act as an incentive over and above a floor price. But tax
incentives cannot fulfill the critical function that a floor does of
assuring a stable, minimum price.
It is with great respect and warm regards that I call this
matter to your attention.
Respectfully,
Bill
Bill Clements
Governor
WPC: ALM/dk
Enclosure
Copy to: The Honorable John Sununu
Chief of Staff to the President
VOLATILE OIL PRICES THREATEN OUR NATIONAL SECURITY
Governor William P. Clements, Jr.
In the three years since oil prices crashed in January 1986,
domestic crude oil production has plunged nearly a million barrels
a day. To cover this reduction and to meet increased demand, oil
imports have increased dramatically -- up some two million barrels
per day from about five million daily in 1985 to more than seven
million a day last year. Put simply, about 42 percent of the oil
consumed in America today is imported. And we must all understand
that unless action is taken, imports will exceed 50 percent in the
early 1990's.
This trend clearly puts our national security at risk. It is
a serious problem that should concern the entire nation. It cannot
be safely shunted aside as merely a Texas or a producing state
problem. We must take steps to stabilize the situation and reduce
imports to more manageable levels. In short, we must regain
control of our energy future. Our domestic producers can help by
providing increased supplies, but they need a stable price
environment to do so.
Measured by import dependence, the United States made
significant progress on the energy front between 1977 and 1985, as
oil imports were cut from about one-half to under one-third of our
daily consumption. This triumph was attributable to actions of
both producers and consumers. In response to higher prices, the
U.S. industry arrested a decade-long production decline through
-2-
stepped-up exploration and development while consumers reined in
consumption.
With adequate incentives, American producers can maintain mid-
1980's production levels well into the next century. There is
ample evidence that our nation's oil resource base, though explored
and developed to an advanced stage, is capable of yielding enough
reserves to maintain stable U.S. Lower 48 production at these
levels for the next 45 to 50 years. Substantial undeveloped but
discovered reserves exist in Alaska, and significant volumes of
yet-to-be-discovered oil are likely. The deeper offshore areas of
the Lower 48 states also hold promise and our ability to extract
substantial additional amounts from existing reservoirs can be
increased. In sum, the U.S. resource base is stronger than a lot
of people think. We just have to pursue it with vigor.
The nation will benefit many ways from the resumption of
aggressive development of our own resources. In my judgment a
strong U.S. producing industry that continues to be the second
largest in the world can have a stabilizing influence on world oil
production and, therefore, prices. Moreover, pursuit of these
opportunities offers an additional payoff for the nation, beyond
stabilization and quelling the rising tide of imports. That is,
development of these resources will allow time to smooth the
transition from the current conventional liquid hydrocarbon era
to one when other domestic energy sources such as synthetics may
predominate or breakthroughs make systems using hydrogen or high-
temperature superconducting materials feasible.
-3-
Price Volatility is Damaging
The single most important energy supply issue before us today
is how to stabilize crude oil prices. The petroleum industry is
capital intensive and projects take time to bring to fruition. No
one -- not a producer, not a service company, not a banker -- can
plan in a volatile environment where, as in 1986, prices were $27
a barrel in January and $10 in April. In 1987, prices continued
their roller coaster ride, ranging from $20 in August to $14 in
December. In 1988, we experienced similar gyrations: $18 in May,
$12 in September and near $18 again at the year's end. We can
arrest our production decline and regain some lost ground, but only
if prices stabilize.
Our nation flourished during the era of stable oil prices,
from the 1930's to the 1970's. As the National Petroleum Council
has observed, state regulatory bodies, in conjunction with federal
oil import quotas beginning in 1959, were able to maintain relative
stability until 1973. We must find a mechanism for again unifying
state and federal energy policy for the benefit of all Americans.
Action is required, and we should act immediately.
There are several ways to stabilize prices. But, in my
judgment, the best means is through a floor to be maintained for
five years at, say, $20 per barrel. To put that figure in per-
spective, $20 a barrel in 1989 equates to about $11 a barrel ten
years ago. That's just about where world oil prices were before
prices shot up in 1979, due to the Iran-Iraq war.
The next five years will be critical to the domestic producing
community. This industry is in a depression now, and a $20 floor
-4-
for that period would assure survival. This level would eliminate
substantial discounts currently imposed by bankers and other
financiers due to uncertainty. And excess world capacity --
particularly in the Middle East -- could not again be used to swamp
markets and drive prices to basement levels.
Resuming exploration and development in this country in the
next five years would increase domestic supplies in the 1990's just
when world supplies are projected to tighten. Indeed, at a $20
floor I would expect an increase in production in the 1990's of
about 1.5 million barrels per day over that which would be achieved
with continued chaotic price fluctuations. That level of
production and our firm commitment to it would provide a buffer
against increased global oil prices expected as supplies tighten.
In addition, a crude oil floor would bring stability to
natural gas which is being pummelled by price cycles as volatile
as those of oil. The nation is slowly reawakening to the fact that
natural gas is an environmentally benign fuel which can also
significantly diminish our dependence on imported oil. But these
benefits cannot be fully realized without stable prices.
Imports clearly threaten our national security. This situa-
tion can only get worse with continued price fluctuations.
Congress and the Administration can take steps to prevent further
deterioration. I urge that they act without delay.
STATE
or
STATE OF TEXAS
OFFICE OF THE GOVERNOR
AUSTIN. TEXAS 78711
file
WILLIAM P. CLEMENTS. JR.
GOVERNOR
March 31, 1989
The Honorable Brent Scowcroft
National Security Adviser
The White House
1600 Pennsylvania Avenue, N.W.
Washington, D.C. 20500
Dear Brent:
I have requested the President, by attached letter, to
consider instituting a $20 per barrel floor on crude oil. I
believe a floor is justified on national security grounds and urge
that you provide your views to the President on this matter.
The domestic producing industry is now in rapid decline and
will continue to deteriorate unless something is done. A stable
$20 per barrel price would halt this decline and assure survival
of the industry.
Brent, action is needed -- now. If the oil industry slips
much farther, it will be exceedingly difficult to bring it back in
any reasonable time frame. Imports now threaten our national
security, and that situation is going to get worse. I ask your
help in proposing actions to the President such as imposing a
floor.
If you have any further thoughts on this matter, I would be
most interested in discussing them with you.
Sincerely,
Bill
William P. Clements, Jr.
Governor
WPC:ALM/dk
Enclosure
Alaskan oil means money and jobs for Texas
by Paul L. Kelly
Opening the ANWR to development holds the same
Yet, the record in Alaska shows that petroleum op-
Kelly is vice president of Rowan Companies Inc. in
kind of economic potential for the state in the decade
erations are being carried out there in an environmen-
Houston and a member of the board of directors of
ANDMARK LEGISLATION to allow more dril-
ahead. For this reason. the enabling legislation deserves
tally sound manner. More than 6 billion barrels of oil
the Alaska Oil and Gas Association. Rowan's busi-
and is receiving strong bipartisan support from Texas.
have been produced so far at Prudhoe Bay with
nesses include contract drilling and aviation services
ling in the U.S. Arctic region took an important
Those who argue against opening the ANWR coastal
minimal impact on the environment. In fact, the
in Alaska.
step forward last week when the House Mer-
chadt Marine and Fisheries Committee approved a bill.
plain to development would prefer to declare all of it
caribou herd in the area has more than quadrupled. the
that would open a limited part of Alaska's Arctic
wilderness. worrying about the tundra and the wildlife.
snow geese population has increased and other wildlife
National Wildlife Refuge (ANWR) to oil and gas
continues to thrive.
exploration. The area is considered one of America's
best prospects for major new oil and gas discoveries
Some 55 million acres in Alaska already are desig-
and is unportant 10 the future energy security and
nated wilderness. In the ANWR, which is technically
economic well-being of Texas and the nation.
classified as a cold desert. 9 million acres have been
The debate over whether to allow oil and gas leasing
$10.5 billion was spent in all 50 states for Alaska's
declared wilderness, including 450,000 acres on the
in the ANWR got into full swing in 1987 with the release
coastal plain.
of the Department of the Interior's final report on the
North Slope oil development, 1980 - 1986*
$0.3
$5.9
No one proposes to touch that. Of the 19 million acres
IN
area and Secretary Don Hodel's recommendation that
Mains
in the entire refuge, industry would use less than 15,000
$1.3
leasing be allowed. This officially put the matter before
vermont
acres for pipelines, production pads, roads and other
Congress. which must authorize development. In Febru-
$50.5
$704.8
0
facilities, assuming oil is found. To put it another way.
Massachusetts
ary a bill allowing development cleared the Senate
I
0
$4.3
the ANWR is more than 11 percent the size of Texas, yet
$3.0
$541.2
Energy Committee and now awaits action on the Senate
North Demote
$0.8
Montana
$60.5
- York
oil activity there would occur only in an area smaller
Rhode in
floor. Another bill, which would put the ANWR totally
$183.0
$13.7
than Houston.
$128.0
Disconsin
off lumits to exploration. is awaiting action in the House
$65.7
Connecticut
Dragon
$0.8
$175.5
$42.1
Oil exploration and development in an arctic environ-
$84.7
Michagan
Interior Committee.
- Debeta
- Jersey
ment is a lengthy process and can take anywhere from
Issue
$14.0
$0.3
Arctic Alaska seems so remote from Texas that it is
$33.6
$83.3
Wyoneng
Delivers
10 to 15 years. Long lead times are needed because of
Other
difficult 10 imagine that ANWR development could
lews
$47.9
$0.2
$30.5
$59.9
$126.0
West
$2.3
the remoteness of the region, the need to plan for
Indiana
Maryland
have a major economic impact on our state in the
$7.7
-
Virgares
$2.0
environmental protection and regulatory requirements.
decade ahead. Surprisingly, the project holds economic
$12.3
District of
$146.5
potential for Texas which puts it in the same league as
$245.8
$53.1
aproughy
$42.7
Common
Current North Slope production soon will begin to
LASA
$84.2
$1816.3
Colorate
Marth Carenina
decline from its present level of 2 million barrels per
the superconducting super collider project and the
-
Conforms
$1.8
$3.2
day to less than 1 million barrels per day by the year
space program.
South
2000. Assuming only moderate year-to-year increases in
Carolina
While no one will know for sure until more drilling is
$442.8
$53.3
oil prices and demand, unless something is done to
Details
$73.5
done. preliminary indications are that the ANWR holds
$8.0
$6.9
offset the decline in the reserve base of crude oil and
$2.4
$5.0
George
the potential for an oil field comparable in size to
Artrens
- Items
natural gas liquids in the United States, it is not
Prudhoe Bay which.. with neighboring fields on the
unrealistic to expect a tripling of our trade deficit for
North Slope. now supplies about 25 percent of U.S.
oil imports in 10 years.
$3475.9
domestic oil production. Figures obtained from Alaska
$147.8
lease
$18.3
The ANWR offers one hope of mitigating the national-
oil producers show that $10.5 billion was spent in all 50
back -
Fiends
- -
security and economic-stability problems we are sure
states in hard goods alone for Alaska's North Slope oil
$1350.6
- Pule
to face if we get to that point. America cannot afford to
development during the years 1980-86.
Alsoho
wait one more year to open the ANWR for exploration.
The largest share of this amount by far. $3.475 billion,
"Source Alaska Oil Producers
Texas Democrats and Republicans should unite to
was spent in Texas. Economic modeling done by the
(Individual State Figures Are in Millions)
$0.8
help the ANWR development bills clear the remaining
state comptroller's office indicates that these expendi-
11 - estimated that a total of $36 bilsion
Nawas
hurdles in the House and Senate. Congress should pass
has been spent on the North Slope
tures were responsible for the creation of over 15,000
the necessary enabling legislation this year and then
new jobs in Texas. An additional $7 billion was spent
hope and pray that the big oil and gas fields everyone is
nationwide on labor and engineering and design ser-
anticipating are actually discovered.
vices. a significant portion of which also came to Texas.
Houston Chronicle
Sunday, May 8, 1988