I further announce that, if present and voting, the Senator from Minnesota (Mr. Anderson) and the Senator from Michigan (Mr. Riegle) would each vote "yea."

Mr. STEVENS. I announce that the Senator from Oklahoma (Mr. Bartlett) and the Senator from Oregon (Mr. Packwood) are necessarily absent.

The result was announced-yeas 53, nays 40, as follows:

PRESENT AND GIVING A LIVE PAIR AS PREVIOUSLY RECORDED-1

So the motion to lay Mr. Stevens' amendment No. 90 on the table was agreed to.

Mr. SARBANES. Mr. President, I move to reconsider the vote by which the motion to table was agreed to.

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

The motion to lay on the table was agreed to.

The PRESIDING OFFICER (Mr. Matsunaga). Under the previous order, the Chair recognizes the Senator from Virginia (Mr. Scott). Mr. ROBERT C. BYRD. Mr. President, I ask unanimous consent, and I have cleared this with Mr. Scott, that Mr. Thurmond be recognized at this time to call up an amendment, and that upon the disposition of that amendment Mr. Scott then be recognized. The PRESIDING OFFICER. Is there objection?

Mr. CHURCH. Mr. President, I understand that it would be agreeable with Senator Thurmond that there be a time agreement on this amendment, the time agreement being limited to 1 hour and the time being divided equally, 30 minutes to a side.

Mr. THURMOND. Mr. President, I can agree if we make it 35 minutes. I may not take that, but I would rather have it.

Mr. CHURCH. Very well. It is agreeable to the Senator from Idaho.

I, therefore, ask unanimous consent that the time be limited on the Thurmond amendment to an hour and 10 minutes, with 35 minutes allocated to each side, Mr. Thurmond being in charge of the side for the proponents and I being in charge of the side for the opponents.

Mr. ROBERT C. BYRD. Mr. President, I ask that it be in order for Mr. Thurmond to call up his amendment out of order.

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

UP AMENDMENT NO. 24

Mr. THURMOND. Mr. President, I send my amendment to the desk and ask that it be stated.

The PRESIDING OFFICER. The amendment will be stated.

The second assistant legislative clerk read as follows:

The Senator from South Carolina (Mr. Thurmond), for himself and Messrs Harry F. Byrd, Jr., Helms, Garn, Laxalt, Schweiker, Hansen, Allen, and Schmitt, proposes unprinted amendment numbered 24:

At the end of paragraph 4 of article XIII, add the following:

"(d) Notwithstanding the provisions of subparagraphs (a) and (b), the funds required to be paid in any year under this paragraph to the Republic of Panama may be paid only to the extent that the operating revenues of the Canal exceed all operating expenses of the Panama Canal Commission not including payments made to Panama under this paragraph."

The PRESIDING OFFICER. The Senator from South Carolina (Mr. Thurmond) is recognized for 35 minutes, in support of his amendment.

Mr. SCOTT. Mr. President, will the Senator from South Carolina yield briefly?

Mr. THURMOND. I am pleased to yield to the Senator from Virginia.

Mr. SCOTT. It is my understanding that the previous unanimousconsent agreement, insofar as it relates to the Senator from Virginia, is not changed in any way, other than that I will follow the Senator from South Carolina in the amendment that he brings up. The PRESIDING OFFICER. The Senator from Virginia is correct. Mr. SCOTT. I thank the Chair.

Mr. THURMOND. Mr. President, I would like to address myself to the financial aspects of the Panama Canal treaties. I believe the

American people are not fully aware of what it will cost them if these treaties are ratified. Let me just say, on that score, that I do not blame the American people for not being fully aware of the costs of these treaties primarily because of totally misleading statements by leading proponents of these treaties.

MISLEADING STATEMENTS ON THE COST OF TREATIES

On February 1, 1978, President Carter, in a nationally televised address to the American people, stated:

Are we paying Panama to take the Canal? We are not. Under the new treaties payments to Panama will continue from tolls paid by ships which use the canal. On December 28, 1977, President Carter stated:

We wanted a treaty that did not put a financial burden on the American taxpayer, and we got it.

On September 26, 1977, Secretary of State Vance in testimony before the Senate Foreign Relations Committee stated concerning the cost of the treaties:

The treaties require no new appropriations, nor do they add to the burdens of the American taxpayer.

Later in his testimony before the Senate Foreign Relations Committee, Chairman Sparkman asked Secretary Vance concerning the so-called implementing legislation: Will there be a necessity for the usual appropriations action?

Secretary Vance answered: "No."

Then Chairman Sparkman asked: "What, if any, budgetary impact would this have?"

Secretary Vance answered: "No appropriations will be required." And Chairman Sparkman replied, "No appropriations will be required. I think those are two questions that have concerned people."

I believe these quotes from administration officials are representative of many statements made be treaty supporters concerning the cost of the treaties. I believe these statements are misleading, intentionally or not, concerning the cost of these treaties to the American taxpayer. It is small wonder that the American taxpayer believes these treaties will not cost him.

COST OF TREATIES TO AMERICAN TAXPAYER

Let me state, as clearly and emphatically as I can, that these treaties will cost the American taxpayer a bare minimum, a rockbottom, $758 million over the next 22 years, and in all likelihood considerably more than that.

Let me outline what constitutes this $758 million:

$440 MILLION FOREGONE INTEREST TO THE TREASURY

The Panama Canal Company has the statutory obligation to pay interest to the U.S. Treasury on the interest-bearing portion of the U.S. investment in the Canal Zone. At $20 million per year over 22 years, this will amount to a $440 million loss to the Treasury over the life of the treaty. I might note that Comptroller General Staats, in testimony before the Senate Armed Services Committee, stated

that this $20 million estimated annual interest payment "could be substantially more" per year over the next 22 years, since the interest rate is based on the U.S. Treasury average rate for longterm issues and "as that portfolio turns over, these rates are bound to go up, and I do not believe that this has been fully taken into account in these projections." According to an Armed Services Committee staff study, Mr. Staats has estimated the total loss to the Treasury over the next 22 years at $505 million.

$165 MILLION EARLY RETIREMENT BENEFITS

Additional early retirement benefits to present Panama Canal Company employees are being negotiated. These payments would, of course, come from appropriated funds. Estimates of the annual costs of the various proposals being negotiated range from $6.5 to $8.5 million per year. If we take $7.5 million, which is the midpoint of the estimates, this would amount to $165 million over the next 22 years. I believe the Senate Budget Committee estimates these retirement costs at $196.2 million through 1999.

$100 MILLION IN DEPARTMENT OF DEFENSE COSTS

Certain support functions under the treaties, such as hospitals and schools, will be transferred to the Department of Defense. Most of these costs will be billed to the new commission directly. However, under the present accounting methods, the Department of Defense will not be reimbursed for certain schooling costs which are estimated at $5 million per year, or $110 million over 22 years.

$43 MILLION IN BASE RELOCATION COSTS

There will be certain treaty-related costs having to do with relocation of certain U.S. military bases in the Canal Zone. This onetime cost is estimated to be $43 million.

Let me add up what these costs that I have just described are: $440 million in foregone interest to the U.S. Treasury; $165 million in early retirement costs; $110 million in certain Department of Defense costs; and $43 million in certain base relocation costs. The addition of these figures makes a grant total of $758 million-a direct cost to the U.S. taxpayer for these treaties, either in money that will not accrue to the U.S. Treasury or will be drawn from the U.S. Treasury through the appropriations process.

Mr. President, the Comptroller General of the United States, Elmer B. Staats pointed out in his testimony before the Senate Armed Services Committee that there will be other treaty-related costs that will be borne by other agencies of Government, but that "only sketchy details are available at this time." There is also the question of approximately $8.9 million currently owed by Panama to the Panama Canal Company for certain services which is still outstanding. Some of this debt has been outstanding since 1959.

PAYMENTS TO PANAMA TREATIES

Payments to Panama from tolls under the treaties are:

First. $0.30 per canal ton-estimated at $40 million per year-for a total of $880 million for 22 years.

Second. $10 million per year-fixed expense-$220 million for 22 years.

Third. $10 million per year for certain services such as police, fire protection-$220 million for 22 years.

Fourth. $10 million per year if revenues exceed expenditures$220 million for 22 years.

This is a potential total of about $1.5 billion for the next 22 years, at a minimum, since some of those payments will be adjusted for inflation. This sizable sum will accrue to a country of 1.7 million people, or a total of $880 for every man, woman, and child in Panama.

Thus, in addition to the tremendous $758 million direct burden to the taxpayer, Panama will also receive from tolls over $1.5 billion over the next 22 years. While the $1.5 billion amount is anticipated to come from tolls, as treaty supporters would have us believe, there is a serious question whether or not revenues will be sufficent to meet expenditures including the payments to be made to Panama.

Let me quote from testimony of Comptroller General Staats in his testimony before the Armed Services Committee.

If the canal transits fall short of what is currently estimated, it is possible that toll revenues will be insufficient to cover the costs of the Commission, including the scheduled payments to Panama. In this eventuality, the U.S. Government is likely to be required to provide financial assistance either through the congressional appropriations or by allowing the Commission to borrow from the U.S. Treasury.

Looking at the possibilities of increased costs over the Company's initial estimates, Mr. Staats concluded:

It seems to me there are some very real concerns as to whether we can adjust tolls upward, assuming you do all these things that I have just lifted, and still make it possible to operate the canal without serious deficits.

While one can make different assumptions on factors affecting future canal revenues and arrive at different conclusions as to whether the canal operation will be financially sound, there is a substantial possibility that the canal will suffer operating deficits during the life of the treaty, and if so, it will be our taxpayers who will make up the deficits. I might add that these payments from our Treasury to make up deficits would, in effect, amount to a payment from the U.S. taxpayer to Panama. I would remind my colleagues that under article XIII of the the Panama Canal Treaty that the United States shall turn over the canal in 1999 "in operating condition and free of aliens and debts

On page 92 of the Foreign Relations Committee report, there is this statement:

The treaty provides that the new Panama Canal Commission will make three different annual payments to Panama. The revenue for these payments will come exclusively from canal tolls and not from the American Treasury.

This contrasts with Mr. Staats' testimony before the Armed Services Committee, which I will repeat, because I believe it is important, since he is the chief accountant for our Government:

If the canal transits fall short of what is currently estimated, it is possible that toll revenues will be insufficient to cover the costs of the Commission, including the scheduled payments to Panama. In this eventuality, the U.S. Government is likely to be required to provide financial assistance either through congressional appropriations or by allowing the Commission to borrow from the U.S. Treasury.