Medicare Cost Contract Extension and Refinement Act of 2005

Mr. President, today I will introduce the Lobbying and Ethics Reform Act of 2005. This bill builds on similar legislation that was introduced in the House by Representatives Marty Meehan and Rahm Emmanuel.

I have long believed that to truly serve our constituents well, we must reduce the impact of big money on the legislative process. I have devoted a great deal of time over the years to reforming our campaign finance laws. With the enactment of the Bipartisan Campaign Reform Act in 2002, we took several important, and I believe successful, steps to reduce the influence of special interests and return some measure of power to the American people.

But campaign contributions are only part of the story. In fact, during recent election cycles, the amount spent on lobbying members of Congress once they are elected has been more than double the amount spent on getting them elected in the first place. Yet lobbyists and the lobbying industry remain partly in the shadows, even after the significant improvements to the disclosure laws enacted in 1995. Ten years later, the weaknesses of that law have become apparent, as have the weaknesses in the congressional gift rules that we passed around the same time. Recent scandals involving lobbyists have made very clear that if this body is to be responsive to the people, not just a narrow set of special interests, we must strengthen the disclosure rules governing the lobbying industry and close loopholes in the gift rules.

The lobbying industry continues to grow at a startling rate. According to the Center for Public Integrity, over three billion dollars were spent on lobbying in 2004, nearly double the amount spent just six years earlier. This dramatic increase in lobbying expenditures has led to an equally dramatic growth in the number of registered lobbyists. A story in the Washington Post from June of this year reports that there are currently more than 34,750 registered lobbyists, which represents a 100% increase from 2000. Not surprisingly, a few powerful industries account for much of this growth. In the last six years, the pharmaceutical industry alone has spent over three quarters of a billion dollars on lobbying, enough to finance over 3,000 professional lobbyists. The insurance industry is not far behind. During this same period, insurance companies spent over 600 million dollars and employed over 2,000 lobbyists.

Despite the growing presence of lobbyists on Capitol Hill, and despite the improvements made in the 1995 law, regulation of the lobbying industry remains inadequate. The Senate office in charge of overseeing lobbying disclosure reports employs fewer than 20 people, and the equivalent House office employs fewer than 35. Compare these numbers to the Federal Election Commission, which many people believe is itself understaffed, but which has a staff of nearly 400 to oversee and enforce campaign finance laws.

Given these numbers, it should not come as a shock that oversight of the booming lobbying industry is not what we would like it to be. In the past six years alone, over 300 individuals and companies lobbied without registering first. One in five lobbying companies failed to file required disclosure forms. And the Center for Public Integrity reports that over 14,000 disclosure documents that should have been filed are not available, including documents relating to 49 of the top 50 lobbying firms.

When the disclosure requirements are not enforced, it can only be expected that they and other rules relating to lobbying will not be followed. In the last six months, we have seen a number of stories in the press detailing the increasingly cozy relationship between lobbyists and certain members of Congress. We have seen stories of lobbyists funding international junkets for members, their families, and their staff, which include days on famous golf courses and nights in luxurious resorts. We have seen stories of members and their staff accepting lavish gifts and expensive meals from lobbyists. And we haves seen stories of lobbyists providing members with free access to their companies' or clients' corporate jets so that they can fly in comfort from fundraiser to fundraiser.

But the enticements offered by lobbyists are not all quite so exotic indeed, many lobbyists merely offer plum positions in their K Street offices. According to a 2005 report, more than 2200 former federal government employees were registered as federal lobbyists between 1998 and 2004. Of those, more then 200 were former members of Congress. In fact, Public Citizen reports that nearly half of all members returning to the private sector accept positions in the lobbying industry. For congressional employees, the prospect of receiving lobbying positions, which often pay several times more than their current jobs, can easily create conflicts of interest and may affect the decisions they make in their official capacity.

The problems with oversight of the lobbying industry are systemic and they are troubling. Even the minimal disclosure requirements of the Lobbying Disclosure Act are often ignored because lobbyists know they will not be penalized. The revolving door between the Hill and K Street spins faster than ever. And flaws in the gift rules are allowing handouts from lobbyists to rapidly increase the influence of special interests at the expense of the average citizen. I am told that it is not uncommon for lobbyists to perch themselves at the end of a bar and buy drinks for any congressional staffer who comes by. This is permissible under the Senate's current gift rules, and it shouldn't be. Lobbyists complain about pressure--if not outright blatant requests-- from Members and congressional staff to pay for their food and drinks. Clearly, there is plenty of blame to go around.

My bill addresses these concerns in four ways. First, my bill makes the lobbying process more transparent by enhancing the specificity, frequency, and accessibility of lobbying disclosure reports. The bill would require these periodic reports filed by lobbyists to identify the members of Congress with whom they met, divulge all past senior-level legislative or executive branch employment, and separate out and report the amount of money spent on grassroots lobbying efforts. Lobbyists would have to file these reports on a quarterly, rather than a semiannual, basis. And the bill would require the Secretary of the Senate and the Clerk of the House to make these reports available in a searchable database that would allow the public to gather information on lobbyists quickly and efficiently. The bill also requires the disclosure of entities that contribute large sums of money to lobbying coalitions. And it doubles the civil penalty for knowingly failing to file lobbying reports or filing false information.

Second, this bill should slow the revolving door between Congress and the lobbying industry. It establishes a two-year waiting period for members, senior staff, and senior executive personnel to participate in lobbying. During this cooling-off period, members and senior executive personnel would be prohibited from engaging in all lobbying activities, including developing strategy for or directing a lobbying campaign. Staff would be forbidden from making direct contact with any members or staff who work in the

House of Congress that used to employ them, rather than just the former employing office, as the law now requires.

The revolving door provisions in my bill would also require members of Congress to publicly disclose their intent to seek outside employment if a conflict of interest exists. They prohibit members of Congress from taking official actions to influence the employment decisions of outside entities on the basis of partisan affiliation. And they affirm that no member should take official action based on the prospect for personal gain. The bill also prohibits registered lobbyists from taking advantage of special advantages such as gym membership, floor privileges, or access to certain areas of the Capitol that are offered to former Members of Congress.

Third, my bill addresses the growing problem of privately funded travel and lobbyist gifts. Before sponsoring a trip for a member or staff, an organization must certify that the trip was not financed or organized by a registered lobbyist and that lobbyists will not participate in or attend the trip. After returning from the trip, the Member or staff must provide a detailed itinerary and description of expenses. My bill also creates a complete ban on lobbyists providing gifts to members and staff and on members accepting gifts from registered lobbyists. Those who file false certifications or fail to observe these rules will be subject to stiff penalties.

Finally, the bill seeks to strengthen oversight of lobbying disclosure. A GAO report showing the old lobbying law passed in the 1940s was largely ignored and rarely enforced was an important impetus to passing the Lobbying Disclosure Act in 1995. The bill requires the Comptroller General to report to Congress twice annually on the state of the enforcement of the rules. These reports will help us determine if further improvements in the laws are necessary.

These measures are not crafted as a knee-jerk response to the recent spate of troubling revelations about the relationships between certain members of Congress and the lobbying industry. Instead, this bill addresses systemic problems with the rules governing lobbyists. It has been a decade since the Lobbying Disclosure Act and new gift rules were passed and we now know that some of these rules are no longer sufficient to regulate a growing and evolving lobbying industry. It is now time for us to act again. I urge my colleagues to support this bill.

I ask unanimous consent that the text of the bill and a section by section analysis be printed in the Record.

Mr. President, sustained military operations in Afghanistan and Iraq have brought to light another example of how outdated and burdensome government policies can punish generous employers. Employers that continue to pay their employees now on active duty in the uniformed services are experiencing tax and pension difficulties that are discouraging this pro-worker, patriotic gesture. Apparently, when it comes to companies showing their respect for their employees called to serve, there is special meaning to the old cliche ``no good deed goes unpunished.''

The National Committee for Employer Support for the Guard and Reserve, a nationwide association, reports that thousands of employers across the country have signed a pledge of support and have gone above and beyond the requirements of the law in support of their National Guard and Reserve employees. This includes many of our Nation's largest and most reputable corporations, including 3M, McDonalds, Wal-Mart, Home Depot, Liberty Mutual and many others. These commendable companies provide reservist employees who are on active duty with ``differential pay'' that makes up the difference between their military stipend and civilian salary.

In New Hampshire, some of the most remarkable stories of corporate patriotism can be found. BAE Systems of Nashua has 110 people serving in the Guard and Reserves, 11 of whom are currently deployed overseas. They provide differential pay to all their called-up employees and continuing access to benefits to family members. The company even provides a stipend to make up the lost pay of active duty spouses of company employees when the spouse's employer is not able to provide differential pay.

Consider also the account of Mr. Marian Noronha, Chairman and Founder of Turbocam, a manufacturer based in Dover, New Hampshire. An immigrant from India, Mr. Noronha has not only provided his employees with differential pay and continued family health benefits, but has also extended to each of his activated employees a $10,000 line of credit. His active duty reservist and Guard employees have used this money to, among other things, purchase personal computers so their families can communicate with them while they are overseas. Several other New Hampshire private-sector companies, including Hitchiner Manufacturing Company in Milford, have exemplary records when it comes to dealing with reservist employees.

Under current law, employers of reservists and guardsmen called up for active duty are required to treat them as if they are on a leave of absence under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). The Act does not require employers to pay reservists who are on active duty. But as I have pointed out, many employers pay the reservists the difference between their military stipends and their regular salaries. Some employers provide this ``differential pay'' for up to three years. For employee convenience, many of these companies also allow deductions from the differential payment for contributions to their 401(k) retirement plans.

The conflict arises, however, because a 1969 IRS Revenue Ruling considers the employment relationship terminated when active duty begins. This ruling prevents employers from treating the differential pay as wages for income tax purposes, resulting in unexpected tax bills at the end of the year for these military personnel. Further, the contributions made to the worker's retirement account potentially invalidate, disqualify, the employer's entire retirement plan which could make all amounts immediately taxable to plan participants and the employer.

The Uniformed Services Differential Pay Protection Act that I am introducing today clarifies that differential wage payments are to be treated as wages to current employees for income tax purposes and that retirement plan contributions are permissible. The bill does the following:

Differential wage payments would be treated as wages for income tax withholding purposes and reported on the worker's W-2 form. This means that active duty personnel will not be hit with end-of-the-year tax bills.

No New Taxes: The legislation does not change present law, and deferential wage payments will not be subject to Social Security and unemployment compensation taxes.

Definition: ``Differential wage payments'' are defined to mean any payment which: 1. is made by an employer to an individual while he or she is on active duty for a period of more than 30 days, and 2. represents all or a portion of the wages the individual would have received from the employer if he or she were performing service for the employer.

An individual receiving differential wage payments would continue to be treated as an employee for purposes of the rules applicable to qualified retirement plans, removing the threat that contributions on his or her behalf would invalidate the employer's entire plan.

Distributions Protected: Clarifying language is included to ensure that individuals would continue to be permitted to take distributions from their accounts when they leave their jobs for active duty. Thus, the right to receive distributions will be preserved even though individuals are treated as current employees for contribution purposes. The bill includes a prohibition on making elective deferrals or employee contributions for six months after receiving a distribution.

Satisfying Nondiscrimination Rules: In order to avoid disruptions in retirement savings plans and to remove disincentives, employers could disregard contributions to retirement savings accounts based on differential wage payments for nondiscrimination testing purposes, provided that such payments are available to all mobilized employees on reasonably equivalent terms.

In summary, the Uniformed Services Differential Pay Protection Act upholds the principle that employers should not be penalized for their generosity towards our Nation's reservists and members of the National Guard.

Mr. President, I rise today on behalf of myself and Senator Hillary Rodham Clinton of New York, to introduce the Jessica Lunsford and Sarah Lunde Act. This bill will provide grants for State and local governments to purchase the technology they need to enhance monitoring of sexual predators.

This bill and the grants it provides are named after two young girls from Florida, Jessica Lunsford and Sarah Lunde, who were both murdered by convicted sex offenders. As the Lunsford and Lunde families mourned these two beautiful girls, the Nation grieved with them. We are all united in our desire to make sure that everything can be done to prevent this from ever happening again. I hope this bill will serve as a living memorial to Jessica Lunsford and Sarah Lunde, and serve as some comfort to their families, as the grants in their names provided in this bill will allow law enforcement to help prevent other families from suffering similar tragedies.

Jessica Lunsford of Homosassa, FL, was a nine-year-old girl abducted from her home, raped, and then buried alive by a convicted sex offender who lived 150 feet from her home. Law enforcement had lost track of her confessed murderer and did not know that he worked at the nearby school that Jessica attended, despite his being a registered sex offender. A few weeks following the news of this tragedy, 13-year-old Sarah Lunde of Ruskin, FL, was murdered by her mother's ex-boyfriend. He is also a convicted sex offender.

The Jessica Lunsford and Sarah Lunde grants provided for in this bill will allow States and local government to purchase electronic monitoring systems, like global positioning systems, that will provide law enforcement with real time information on the whereabouts of sex offenders released from prison to within 10 feet of their location. Law enforcement will be able to restrict the movements of sex offenders by programming these systems to alert authorities if a sex offender goes to a park, amusement park, elementary school or other areas determined to be off-limits. The ankle-bracelets used to monitor their movement are tamper proof and will alert law enforcement in the event that an offender has removed it so law enforcement can immediately act to apprehend the offender.

In the United States there are an estimated 380,000 registered sex offenders, although thousands have disappeared, according to authorities. We have over

30,000 of these sex offenders in the State of Florida. In response to the recent tragedies in Florida, Idaho, and North Dakota, several States have enacted stronger laws to protect our children from sex predators. In Florida, for example, the legislature passed a law that will provide tougher sentences for child sex offenders, and aid law enforcement in effectively monitoring those sex offenders. This law will require sex offenders, released back into our communities, to wear a bracelet that will have a global positioning system track them.

I applaud the initiative by Florida, and other States seeking to pass similar laws, and I believe that it is important that there is an appropriate Federal response that will be supportive of the States and local governments that are addressing this problem. To be effective, tough laws on these sexual predators of children must be properly funded, and I believe these tough laws being passed by state legislatures are worth properly funding when they will protect our children.

The Jessica Lunsford and Sarah Lunde Act will support State and local governments that, like Florida, are attempting to protect their children by providing greater monitoring tools for law enforcement. This bill will provide a total of $30 million in grants to States to help implement State laws to get tougher on sex offenders released back into their communities with electronic monitoring technology. The bill will provide for $10 million in grants for fiscal years 2006 through 2008. The bill then directs the Attorney General to provide a report to Congress assessing the effectiveness of the program and making recommendations as to future funding levels.

There are no silver bullets to stop sexual predators from preying on our children, but I believe that tough laws, such as the new Florida statute, are going to go a long way in preventing sex offenders from re-offending.

I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, I rise today with Senators Bill Nelson, Stevens, Inouye, McCain, and Pryor to introduce the Identity Theft Protection Act of 2005. The introduction of this bill has been a bipartisan effort and I thank my colleagues on the Senate Commerce Committee for helping to negotiate a fair and balanced bill.

Identity theft is one of the fastest growing crimes in America. It is estimated that over 10 million Americans are victims of some form of identity theft each year. The total cost of this crime approaches $50 billion per year, with the average loss from the misuse of a victim's personal information being almost $5,000. In 2004 alone, consumers who were victims of ID theft spent a total of 297 million hours resolving problems that arose from the crime.

Every year, the FTC compiles a list of the top 10 categories of fraud-related complaints. Identity theft has topped that list of complaints each of the past 5 years. My own State of Oregon ranks ninth in the Nation for fraud complaints and identity theft.

Data breaches are becoming an increasingly common type of identity theft that affects millions of consumers nationwide. Last year, there were at least 43 known incidents of security breaches, potentially affecting over 9 million individuals. These breaches range from sloppy record keeping and security procedures by companies to extremely sophisticated online thefts by computer hackers.

Our bipartisan bill ensures that businesses and organizations have the proper security procedures in place to safeguard consumers' sensitive and personal information. This legislation requires any entity that acquires, maintains or utilizes sensitive personal information to have a security program to safeguard such data. Furthermore, we require these entities to verify the credentials of third parties seeking personal and sensitive information and require strict disposal and transfer procedures for such information.

It is imperative that consumers be notified of any potential breach in the security of their personal information. The cost of an incident of identity theft, both in terms of out-of-pocket expense and time spent resolving problems, is significantly smaller if the misuse of the victim's personal information is discovered quickly.

Our bill requires consumer notification if a data breach results in a significant risk of identity theft. Individuals will be notified immediately when any significant breach has occurred. Any breach affecting a minimum of 1,000 individuals also requires the entity to report the breach to the FTC and all the consumer reporting agencies.

We realize that an individual's Social Security Number deserves the utmost security and protection against fraud, manipulation, and theft. To that end, this bill restricts the collection of and access to Social Security Numbers by limiting the solicitation of Social Security Numbers and prohibiting their display on employee and student identification cards.

In addition, our bill will allow consumers to place, lift, and temporarily remove a security freeze on their credit, which would prevent credit from being extended to third parties without authorization from the consumer. We would also pre-empt state law to create uniformity and compliance by businesses and organizations.

Protecting sensitive information is an issue of great importance for all Americans so we are requiring the FTC to establish an Information Working Group comprised of industry participants, consumer groups, and other interested parties to develop best practices to protect sensitive personal information.

Consumers should have confidence when they share their information with others that their information will be protected. At the same time, the ability of legitimate companies to access personal information facilitates commerce and continues to have important benefits to consumers.

We believe our legislation strikes the appropriate balance between ensuring

the continued existence of these critical services and guaranteeing the security of consumer's personal information. I urge my colleagues to co-sponsor this important legislation to protect consumers from future breaches of identity theft.

I ask unanimous consent that the text of legislation be printed in the Record.

Mr. President, I am pleased to join with my distinguished colleague, Senator Santorum, in introducing the Increased Capital Access for Growing Businesses Act. The legislation would help many small businesses address the challenge of accessing capital as they look to grow, develop and create more jobs.

I would like to share with colleagues in the Senate why this legislation is necessary and desirable to update our securities laws for entrepreneurial small business owners. In 1980, Congress passed legislation, the Small Business Investment Incentive Act, which authorized business development companies, or BDCs, to provide financing to small, developing or financially troubled companies. Congress recognized the importance of small businesses to the U.S. economy and that such businesses may have a more difficult time obtaining needed capital to grow and develop.

BDCs are publicly traded companies that are required to have 70 percent of their assets invested in eligible assets, or eligible portfolio companies, which are generally to be securities of small developing or financially troubled businesses. In 1980, the definition of a small company for the purposes of a BDC's 70 percent of asset category was tied to the Federal Reserve's rules defining marginable securities. At the time, about two-thirds or 8,000 publicly traded companies were not marginable and were therefore eligible investments for BDCs.

However, there was an unintended consequence of tying the definition of small company to those issuers that do not have marginable securities--the margin rules have been changed several times, which significantly reduced the number of public companies in which BDCs could invest. This was obviously not the original intent of Congress, but the practical impact was that many small, public companies became ineligible to receive BDC financing, even if they could not receive more traditional sources of financing.

Recently, the disqualification of any private company that had issued any debt security has significantly narrowed even further the number of companies that qualify as eligible portfolio companies. Thus, for the first time many companies with no access to the public equity markets cannot access capital through a BDC. These companies are either denied capital access altogether, or are forced to turn to various unregulated sources to meet capital needs. This situation is unfair to the shareholders of BDCs, and unfair to the shareholders of businesses that could grow if only offered capital access opportunities.

That is why this legislation is so important. It will allow more small private and public companies to receive BDC financing and restore the original intent of Congress.

Specifically, the legislation would use a market capitalization standard of $250 million or less to define what is an eligible portfolio company for BDCs. The $250 million market capitalization level approximates the number of public companies that Congress originally intended to qualify as eligible BDC assets. I would note that it is also much lower than the market capitalization levels of small cap indexes, such as the S&P SmallCap 600, which uses a market cap of $300 million to $1 billion for a definition of a small company.

This legislation adds no costs or risks to the government or taxpayers. It will simply correct the unintended consequences of current rules and update the securities laws to allow more small businesses to access capital. This will in turn encourage small business growth, job creation and economic expansion.

That is why, earlier this year the House of Representatives unanimously passed similar legislation to modernize U.S. securities laws and allow more small businesses to be eligible for such financing.

I urge my colleagues in the Senate to join me in supporting this common-sense legislation for small businesses in America.