1986 - The Exon Library

U.S. government in the railroad business. It, too, would
bring into serious question the U.S. government's ability
to operate as a good faith partner in any business
transaction. A technical violation of the Budget Act
should not be used to abort debate on this issue which has
been before the Senate since 1981. Presently, there are
three alternatives concerning Conrail before the Senate,
and if the budget waiver is not passed, none of these will
be considered. The proposed sale of Conrail, they argued,
does not include any tax or contractual provisions which
are substantially different than those that would be
included in a similar transaction with a party other than
the Federal government. No special tax benefits, they
argued, would be conferred to anyone if Conrail is sold
under the Norfolk Southern proposal.
Opponents claimed that this was not a technical violation
but a real violation of the Budget Act. As the first
significant act of the Senate upon convening, it violates
Gramm-Rudman which prohibits consideration of any
legislation that causes a revenue loss. CBO has estimated
that there would be a tax revenue loss of about $400
million if Norfolk Southern purchases Conrail, plus an
additional $800 million in repayment on the public debt and
interest. The sale of Conrail would provide the largest
tax shelter in history according to the Joint Committee on
Taxation. They cited twelve provisions in the Memorandum
of Intent that give favorable tax treatment to Norfolk
Southern. The Budget Act should not be waived so the
government can give away a railroad that has been
recognized for its quality service, profitmaking, and
efficiency. The people of this country put $7 billion into
Conrail, and now the Senate is asked to give it away for
$1.2 billion.