Small Business Broadband and Emerging Information Technology Enhancement Act of 2011

Mr. President, I rise this evening to introduce the Federal Employees Compensation Reform Act of 2011. This bill would preserve the essential purpose of the Federal Workers' Compensation Program, which is to ensure income for injured Federal and postal workers, while at the same time it would protect the program from fraud and abuse.

The Federal Employees Compensation Act, which is known as FECA, provides benefits that serve as a safety net for Federal employees and postal employees who are injured on the job, providing income until the healing process and rehabilitation allowed them to return to work. Obviously, we want to support those employees until they can return to work. That is both humane and just.

Over the years, however, this program has unintentionally morphed into an alternative retirement program that is far more financially lucrative for recipients than the standard Federal retirement system. Because of the way the program is structured, for some individuals, FECA has become a gold-plated retirement system, tainted by unfairness, perverse incentives, and the potential for abuse and fraud.

This program pays monthly benefits to about 49,000 recipients. Those are recipients who have suffered a work-related injury and have been approved for workers' comp benefits.

In the past fiscal year, this program cost $2.78 billion. Of that amount, nearly $1.1 billion went to Postal Service employees receiving these benefits.

This program has become increasingly expensive and requires some commonsense reforms--reforms that many States have already implemented in their own workers' comp programs.

As it currently operates, FECA includes a perverse financial incentive that encourages older employees who otherwise would have retired to continue to receive workers' comp benefits.

Remember, these payments are designed as a bridge to help injured workers until they are able to return to work. That is the important phrase--``return to work.'' This program was never intended to serve as a higher paying alternative to the Federal retirement system.

Federal employees on FECA receive an average of 73 percent of their gross pay. Moreover, these workers' comp benefits are tax free--another substantial benefit.

By contrast, a Federal employee, with 30 years of service under the Civil Service Retirement System, would average slightly more than 56 percent of his or her gross pay as a retirement benefit, and these retirement benefits are taxed. It pays then to stay on workers' comp for as long as possible, since many recipients receive more money under that program than they would if they were to retire.

Let me again emphasize that these workers' comp payments are tax free--another big difference.

In fact, according to the numbers produced by the Department of Labor, nearly 30 percent of the current workers' comp recipients are age 66 and older, while the average retirement age for both Federal employees and postal workers is age 60.

With no mandatory Federal retirement age, FECA recipients are allowed to stay on workers' comp rolls for their entire lifetimes, even when there is no expectation that they will return to work because of their advanced age.

Some employees have continued to receive Federal workers' comp benefits into their hundreds. For the U.S. Postal Service alone, let's look at the statistics.

As we can see, there are more than 15,000 recipients in total. Of those, more than 2,000 recipients are age 70 or older; 927 recipients are age 80 or older; 132 recipients are age 90 or older; and astonishingly enough, 3 postal employees receiving workers' comp are age 98 or older.

Mr. President, it is obvious these workers are not going back to work. They clearly should be transitioned to the retirement system. I must ask the obvious question: Is there any likelihood at all these recipients are ever going to return to the workforce? No. Then why aren't they transitioning to the retirement system when they reach retirement age? Think how unfair that is to the worker who does retire, say, at age 65 and gets a lesser amount.

Right now, the way the system is structured it does not encourage people to go back to work or to transfer to retirement at an age when most of their fellow workers would have retired. To prevent this continued abuse, my bill would convert retirement-eligible postal and Federal employees on workers' compensation to the retirement system when they reach age 65.

Now, that is generous, Mr. President, because we know the average retirement age is actually 60. I would choose age 65. This is a commonsense change that would save millions of dollars that the Postal Service, the Federal Government, and the American taxpayer cannot afford to spend. It is also a matter of fairness, Mr. President. But we must also examine other elements of the FECA program to determine whether there are some additional improvements that are necessary.

Unlike many State programs, the Federal workers' compensation program has no cap nor time limits on benefits. Moreover, the Federal Department of Labor acknowledges a 2- to 3-percent fraud rate in the program. I suspect it may be even higher. We need to reduce this rate of fraud by examining whether the medical certification requirements and other internal controls should be strengthened. Are we doing medical reviews to see if these individuals could go back to work?

For example, a former postal worker was sentenced just a week or so ago to 5 months in jail after pleading guilty to workers' compensation fraud. The employee claimed he was unable to walk from his parked car to the post

office. But at the same time he was receiving tax-free workers' compensation benefits, he was also operating a snow removal and lawn care business.

In addition, about 100 other claimants per year are prosecuted by the Department of Labor's Office of Inspector General because they received workers' compensation and their retirement pay. These are the so-called ``double-dippers.''

Mr. President, as part of my effort to strengthen oversight of this program, I have asked the Government Accountability Office, along with Senator Coburn and Senator McCaskill, to audit the FECA program and report on the length of time individuals remain on the program, the number of recipients who exceed the standard Federal retirement age, and how the Federal program compares to State workers' compensation best practices. I expect these findings will lead to additional reform proposals as the bill proceeds through the Senate.

I also intend to work with stakeholders to determine if changes in the Federal Employees Retirement System, the FERS system, as opposed to the old Civil Service Retirement System are necessary to make sure that workers' compensation recipients would be treated fairly when they are converted to FERS retirement benefits under this bill.

For example, this may require the Department of Labor to administer the Thrift Savings Plan contributions for recipients or to require Social Security contributions from workers' compensation recipients.

What is clear, however, is that this program is in need of urgent reform. The program is costing too much, injured workers are not being monitored sufficiently and helped to return to productive work, recipients who should be in the retirement system are instead receiving tax-free benefits, and some agencies have high claim rates, suggesting that safety improvements are needed.

For the sake of fairness and fiscal responsibility, we must reform this program now. Not doing so is an affront to the thousands of Federal employees who enter the retirement system. It is a disservice to those Federal and postal employees who truly need workers' compensation benefits, and it is an unnecessary burden on taxpayers.

Mr. President, we know we need to focus on cutting our spending. We know we need to focus on the tax reform effort. I think everybody generally agrees on that. Although they may disagree on what the particulars would be, they agree we need to do those two things. The third thing we also must do is to focus on the economy and jobs. This is something that we have seen in this country over the last 2\1/ 2\ years, where we have gone through a very harsh, very difficult recession and we have seen an unemployment number that stays stubbornly high. We have seen a lot of topsy-turvy economic numbers over the last 2\1/2\ years, and I believe the Congress--the House and Senate--and the White House need to set the table for job creation and economic growth in this country, and we need to do it in a very smart way.

Today, I am here to talk about the angel investment tax credit bill I am introducing. I want to encourage my colleagues to consider reading the bill and becoming cosponsors. I would love to be working on this over the next few weeks to get a broad base of support and to get as much emphasis on this effort as possible right now. It is one of many job-creating pieces of legislation I am interested in in this Congress, but I would love to get as many colleagues as possible interested now to look at this and see if it is something we could pass sooner, rather than later, around here.

The angel investment tax credit is modeled after the new market tax credit, and it would provide a 25-percent Federal income tax credit for investing in qualified early-stage small businesses. The focus will be on advanced manufacturing, aerospace, biotechnology, clean energy, and transportation. The bill would provide that up to $2 million per year in tax credit-eligible cash equity investments could be made, with a total of $10 million per small company. The goal would be that for every $1 we put in, there would be $4 of private-sector stimulus.

This is the private sector getting back on its feet with a little bit of grease provided by the government to get things going in the right direction through the Tax Code. The bill I have written would authorize $500 million per year for 5 years for these tax credits. As I said, this proposal is expected to stimulate $2 billion per year in new capital formation.

Let me give one quick example of how this can work. All these companies on this chart here started with an angel investment to get over the hump. What happens is someone will have a good idea. They think they can innovate, they think they can produce, they think they can have value in the marketplace, but they can't get the capital in order to get established. They can't quite get over the hump. J. B. Hunt company is now a $5 billion company. It employs 14,500 people and has 400 facilities in 48 States. In 1961, J. B. Hunt had an idea and he went to five poultry company executives with his hat in his hand asking for money. They gave him $25,000 in seed money, and that is what he has done with that company throughout the course of his lifetime.

There are lots of examples of folks like that--HP; there is a company in Arkansas called NanoMech, BlueInGreen, and other companies we have seen do this. But many of these companies are very much household names--Google, Facebook, Amazon, eBay, and Apple. All of these companies started with angel investment to get them through what they call the valley of death. The valley of death is usually that period where something has gone from the idea stage to the marketplace. They usually need somewhere between $1 million and $4 million to get their ideas to market.

Our bill is designed to bridge that gap and cross that valley of death so we can see a lot of startup companies come into the marketplace. We are looking for the next J.B. Hunt, we are looking for the next Apple, or the next Amazon. We are trying to find the next HP, whoever is out there who has great ideas who wants to come in and invest. Angel investment led to the creation of 250,000 jobs in 2009 and 2009 wasn't a great year, but angel investment led to the creation of 250,000 jobs. This represented about 5 percent of all the new jobs in the United States, so this can have a measurable impact. This can move the needle in the right direction.

The time is now for us to work on this. I encourage my colleagues on both sides of the aisle to read the legislation. If they are interested, I would like to visit with them about it. I would love to get this bill moving through the system as quickly as possible.

Mr. President, I come to the Senate floor today to discuss an issue of great importance to small businesses, the drivers of this Nation's economy.

In the same way the interstate highway system and the railroads revolutionized transport, connecting main streets across the Nation to facilitate the stream of commerce; broadband technology has forever changed the relationship between small businesses and the customers that they serve. This is especially true for rural small businesses, which now have direct access to new customers in major cities across the globe through broadband connectivity. Over 95 percent of the world's customers are located outside of our borders, and in the United States alone, an estimated 60 million Americans use the Internet on a daily basis. With the click of a mouse, they now have access to goods and services from main streets around the world. With every click, our Nation's small businesses are growing, and helping to create jobs as well as further innovate within the U.S. economy.

Unfortunately, too many of our small businesses are missing out on these opportunities for growth. Due to a combination of factors that range from a lack of computer literacy to the inability to access high speed or broadband Internet services, many entrepreneurs have yet to capitalize on the resources available to them via the Internet. In fact, it is estimated that fewer than 24 percent of our Nation's small businesses routinely use e-commerce applications to sell their products online. As a result, they are missing out on opportunities to expand to new markets or find new customers. We must do more to help our Nation's small businesses

utilize advanced technologies like broadband so that they can best compete in the global marketplace.

As Chair of the Committee on Small Business and Entrepreneurship, I have made increasing the ability of small businesses to access high- speed broadband Internet a top priority. That is why today, I along with my distinguished colleague on the Small Business Committee, former Chairman John Kerry, am introducing the Small Business Broadband and Emerging Information Technology Enhancement Act of 2011. This critical piece of legislation will help to level the playing field for our entrepreneurs and small businesses by implementing key findings from the Federal Communications Commission's 2010 National Broadband Plan.

More specifically, this legislation calls on the Small Business Administration to take a lead role in helping our small businesses to access broadband and other advanced technologies. To accomplish this, the legislation requires the SBA to make three key improvements to its core programs. First, it calls on the agency to create a Broadband and Emerging Information Technology Coordinator to facilitate the development of small business broadband initiatives within the agency, and also to act as a liaison with other Federal agencies. Second, the legislation requires SBA resource partners, such as Small Business Development Centers, SBDCs, to provide technical assistance related to both accessing and utilizing broadband and emerging information technology. Finally, the bill will improve the SBA's popular 7(a) and microloan programs by allowing borrowers to use the proceeds of their loans to finance the purchase of broadband services, equipment or other emerging technologies. Making these three simple changes will allow more of our small businesses to not only access previously untapped customers and markets; it will also allow them to become more competitive with their foreign counterparts, fostering innovation and job creation.

I have heard from a number of my Committee members and I know how important this issue is to them, and I am proud to introduce this legislation for the second consecutive Congress. I look forward to working with them in the coming months to get this legislation to the President's desk.

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

Mr. President, I come to the Senate floor today to discuss an issue of great importance to small businesses, the drivers of this Nation's economy.

In the same way the interstate highway system and the railroads revolutionized transport, connecting main streets across the Nation to facilitate the stream of commerce; broadband technology has forever changed the relationship between small businesses and the customers that they serve. This is especially true for rural small businesses, which now have direct access to new customers in major cities across the globe through broadband connectivity. Over 95 percent of the world's customers are located outside of our borders, and in the United States alone, an estimated 60 million Americans use the Internet on a daily basis. With the click of a mouse, they now have access to goods and services from main streets around the world. With every click, our Nation's small businesses are growing, and helping to create jobs as well as further innovate within the U.S. economy.

Unfortunately, too many of our small businesses are missing out on these opportunities for growth. Due to a combination of factors that range from a lack of computer literacy to the inability to access high speed or broadband Internet services, many entrepreneurs have yet to capitalize on the resources available to them via the Internet. In fact, it is estimated that fewer than 24 percent of our Nation's small businesses routinely use e-commerce applications to sell their products online. As a result, they are missing out on opportunities to expand to new markets or find new customers. We must do more to help our Nation's small businesses

utilize advanced technologies like broadband so that they can best compete in the global marketplace.

As Chair of the Committee on Small Business and Entrepreneurship, I have made increasing the ability of small businesses to access high- speed broadband Internet a top priority. That is why today, I along with my distinguished colleague on the Small Business Committee, former Chairman John Kerry, am introducing the Small Business Broadband and Emerging Information Technology Enhancement Act of 2011. This critical piece of legislation will help to level the playing field for our entrepreneurs and small businesses by implementing key findings from the Federal Communications Commission's 2010 National Broadband Plan.

More specifically, this legislation calls on the Small Business Administration to take a lead role in helping our small businesses to access broadband and other advanced technologies. To accomplish this, the legislation requires the SBA to make three key improvements to its core programs. First, it calls on the agency to create a Broadband and Emerging Information Technology Coordinator to facilitate the development of small business broadband initiatives within the agency, and also to act as a liaison with other Federal agencies. Second, the legislation requires SBA resource partners, such as Small Business Development Centers, SBDCs, to provide technical assistance related to both accessing and utilizing broadband and emerging information technology. Finally, the bill will improve the SBA's popular 7(a) and microloan programs by allowing borrowers to use the proceeds of their loans to finance the purchase of broadband services, equipment or other emerging technologies. Making these three simple changes will allow more of our small businesses to not only access previously untapped customers and markets; it will also allow them to become more competitive with their foreign counterparts, fostering innovation and job creation.

I have heard from a number of my Committee members and I know how important this issue is to them, and I am proud to introduce this legislation for the second consecutive Congress. I look forward to working with them in the coming months to get this legislation to the President's desk.

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