No Tax Write-offs for Corporate Wrongdoers Act

I rise today to talk about a problem that affects virtually every American, and that would be government regulations; to be more accurate, government overregulation.

Let me point out something. In 2014, the administration issued 3,541 rules in 1 year. That cost $181 billion. The first week of this new year brought us 35 new rules which added another 1,326 pages to the Federal Register. I would urge people back home in the business community or any other endeavor in which they are bothered by regulations to read the Federal Register as opposed to the Congressional Record. The Congressional Record deals with natural gas. The Federal Register deals with facts and regulations.

Yet just last night we learned that President Obama has threatened to veto a significant regulatory reform proposal now being considered by the House of Representatives. It is interesting to me that the President is now threatening to veto his own ideas. Back in January of 2011, President Obama issued an Executive Order. It was entitled ``Improve Regulation and Regulatory Review.'' That is in quotes. Unfortunately, despite claims otherwise, the Executive order has largely been ignored.

My bill takes this order and gives it the force of law. My bill would require that all regulations put forth by the current and future administrations consider the economic burden on American businesses and ensure stakeholder input during the regulatory process, thus promoting innovation and new jobs.

Just as the President said in his order, this egregious assault on our economy must stop; it must end.

Like many of my colleagues, I have had a longstanding concern with the regulatory process. Like other States, from every corner of Kansas, the No. 1 topic of concern for all businesses, including agriculture, energy, small shops on Main Street, healthcare, education, lending-- virtually every enterprise is harmed by overly burdensome and costly regulations. Whether it is the EPA'S Waters of the United States proposed rule or listing of the infamous lesser prairie chicken as an endangered species, the public is losing faith in our government.

Obamacare is a prime example of this administration's vast regulatory overreach. The bill, as signed into law by the President, as most of us know, was no short read. It was over 2,000 pages. But as the rollout continues, the administration has now expanded Obamacare into over 24,000 pages of regulations in the Federal Register.

Here is one example of the overly intrusive regulations this administration used the Affordable Health Care Act to implement. It is Health and Human Services' mandate requiring religious institutions to provide insurance coverage for contraceptives and emergency contraceptives.

Last year the U.S. Supreme Court had to intervene and determine that the HHS mandate placed an excessive burden on the religious freedom of owners of family business.

Regrettably, costly and intrusive regulations are not limited to HHS and Obamacare and CMS and all of those regulations. Not to be outdone by HHS, the Environmental Protection Agency has its own set of overly burdensome regulations.

Let's take the proposed Waters of the United States rule. For example, as the distinguished Senator from Arkansas knows, this proposal has caused a firestorm of opposition all throughout farm country. The EPA claims that the proposed Waters of the United States rule simply clarifies their scope of jurisdiction.

Well, therein lies the problem.

Farmers and ranchers do not believe it. I don't believe it. They fear the rule would allow the EPA to further expand its control of private property under the guise of the Clean Water Act.

If finalized, this rule could have the EPA requiring a permit for ordinary field work, construction of a fence, or even planting crops near certain waters.

Kansans are justifiably worried the permits would be time consuming, costly, and that the EPA could ultimate deny the permits, even for longstanding and normal cropping practices.

This is another prime example of why many Kansans feel their way of life is under attack by the Federal Government's overreach and overregulation. Simply put, they feel ruled, not governed.

Let's not forget the burdensome carbon regulations now being proposed by the EPA. Over the last 6 years, this administration's EPA has pursued an agenda that can only be described as a war on fossil fuels and coal.

Just last week, in fact, the EPA announced that by June of this year it would finalize carbon reduction rules for both new and existing powerplants. That is going to be a move that will drive up the energy cost for all Kansans, all Americans, hoping to heat their homes during extremely cold winters or hot summers such as the ones we are experiencing now.

This decision, which the EPA itself admitted would do nothing to reduce global temperature if similar plans are not adopted by Russia, China, India and Brazil, will have unbelievable costs. According to a recent study about the American Action Forum which cites the administration's own estimates these rules are anticipated to cost industry $8.8 billion to comply. That translates into a 6-percent rise in electricity prices. Sadly, these regulations will hurt low-income individuals the most--folks who can least afford it and who spend a greater percentage of their income to heat their homes and feed their families.

Now let's look at what the Department of Labor is trying to do with President Obama's pen-and-paper dictates. Currently the Department of Labor has a regulation to eliminate the companion care exemption put forth by this body 40 years ago. This important exemption allows seniors and the disabled community access to affordable in-home care. If eliminated, those who need in-home care the most, and their families, would be forced to determine which hours are the most crucial in the day they receive assistance. In addition, caregivers who currently work over 40 hours would see their hours and paychecks cut because of this rule.

As the Department of Labor issued this rule and geared up for implementation on January 1 of this year, benefit recipients, individual States, and Members of this Chamber stood together to shine a light on the negative effects this would have on communities all across the Nation.

At the same time, a judge issued a partial determination on this regulation, and he stated the following:

The fact that the Department issued its Notice of Proposed

Rulemaking after all six of these bills failed to move is

nothing short of yet another thinly-veiled effort to do

through regulation what could not be done

through legislation. Such conduct bespeaks an arrogance to

not only disregard Congress's intent but seize unprecedented

authority to impose overtime and minimum wage requirements in

defiance of the plain language of Section 213. It cannot

stand.

My legislation addresses these abuses. Far too often the good intentions of regulations lead to job loss and red-tape that strangles business. Worse still, the agenda of bureaucrats drives bad policies and stifles economy.

I have a solution. My comprehensive bill requires agencies to promote economic growth and job creation by ensuring the benefits outweigh the cost of regulations. It is as simple as that.

We need to be listening to the folks as well who have to live with and pay for the effects of these rules. I am hearing from stakeholders that they are weighing the time and expense of responding to regulations against the fact that this administration keeps giving them the minimum allowable time and then doesn't even consider their input. Bottom line, fewer Americans are bothering to participate in the comment period process.

Stakeholder input is crucial and needs to be considered. Right now, time varies on how long the comment period stays open. Sometimes it is as little as 2 weeks. My bill would ensure the period stay open for at least 60 days. My colleagues, as we all well know, sometimes the people who are most affected by these rules don't even know they are subject to the changes.

My bill would mandate that agencies provide warnings, appropriate default rules, and disclosure requirements to the public. Right now, just the opposite takes place. The administration skirts stakeholder input by issuing interim final rules--called IFRs--and they become effective immediately upon publication. My bill allows delay of implementation if that rule is challenged in court and until the court makes a decision. All too often new regulations are proposed and finalized while existing regulations are not being enforced.

I have heard from a lot of folks in Kansas that the problems these new regulations claim to fix could be solved if the current regulations were properly monitored. Simply put, the solution is not more rules and regulations; it is considering the existing ones.

My bill mandates an ongoing review of regulatory actions to identify those outmoded, ineffective, insufficient, or excessively burdensome rules--or, as the President himself once put it, ``rules that are just plain dumb''--and allows agencies to streamline, expand, or repeal those regulations.

We need regulatory reform. My bill codifies the President's Executive order while closing the loopholes and gives it the rule of law. I do not know how the President could disagree with that.

The U.S. Chamber, the National Federation of Independent Business, the Farm Bureau, and the Competitive Enterprise Institute have all endorsed my bill.

Last year I had 35 cosponsors. We have about thirteen. I urge my colleagues to support this legislation and stay engaged as this process continues.

Mr. President, today I am introducing legislation that will close a tax loophole that allows companies to write off the punishment they receive for corporate wrongdoing. Under current law, a corporation or individual business owner may deduct the cost of court- ordered punitive damages paid to victims as an ``ordinary'' business expense. For the victims of extreme corporate misconduct, there is nothing ordinary about this. It is simply wrong. This tax loophole allows corporations to wreak havoc and then write it off as a cost of doing business. That undermines the whole point of punitive damages.

Punitive damage awards are designed to punish the wrongdoers and to correct dangerous or unfair practices. These awards are reserved for the most extreme and harmful misconduct. Sadly, our country's history is replete with examples of serious corporate misconduct that resulted in injury and death to American citizens, but through our civil justice system and the thoughtful deliberations of our Nations' juries, this misconduct is not only punishable by assessing punitive damages, it has led to broad changes to improve the safety and security of American consumers. Unfortunately, our current tax laws shield the worst corporate misconduct. The No Tax Write-Offs for Corporate Wrongdoers Act would change that by making a simple fix to our tax code.

In 2010, the Deepwater Horizon drilling rig exploded and 11 Americans were killed in the worst oil spill in American history. That same year, an explosion in the Upper Big Branch Mine in West Virginia claimed the lives of 29 miners. In 2009 and 2010, Toyota recalled more than 10 million vehicles because of a faulty acceleration system that has been linked to at least 31 accidents and 12 deaths, and recently admitted to misleading the public about these dangers. Let us also not forget Exxon's misconduct in 1989, which led to an ecological and human disaster that affects Alaskans even today. Vermonters and all Americans deserve to have companies such as these held accountable for their actions. Why should hard-working taxpayers subsidize corporations who deserve to be punished?

In 1994, a jury awarded $5 billion in punitive damages against Exxon for its actions which caused the Valdez spill that devastated an entire region, the livelihoods of its people, and destroyed a way of life. The role of the jury is enshrined in our Constitution, and nothing is more fundamental to the American justice system than our trust in the judgment of those who serve on them. Rather than accept this reality, Exxon paid its cadre of lawyers to fight the jury's measure of accountability all the way to the Supreme Court. In 2008, after 14 years of appeals, an activist majority on the Court invented a novel rule and held that in maritime cases, punitive damage awards could not exceed twice the amount of compensatory damages, reducing Exxon's punitive damages to $500 million. Adding insult to injury to the victims of the oil spill, Exxon was then able to use the federal tax code to write-off the punitive damages as an ``ordinary'' business expense. This is not how the system should work and it is long past time for Congress to fix it.

I have previously supported legislation by Senator Whitehouse to overturn the Supreme Court's decision in Exxon, and I am disappointed that not a single Republican joined this commonsense effort. If we cannot get bipartisan support to ensure corporations pay the highest possible price for actions that cause serious harm to health and public safety, I hope we can at least agree that American taxpayers should not have to subsidize their misconduct once a jury has determined they should be punished.

The Obama administration requested eliminating this tax deduction in its 2014 budget proposal. The Joint Committee on Taxation has estimated that ending this deduction loophole will result in increased revenues of $355 million over 10 years. Members who have devoted so much of their focus to reducing the Federal deficit should support my legislation. Anyone who cares about protecting consumers should agree that extreme corporate misconduct should not be treated in our tax code simply as a cost of doing business.

Right now, the new Republican majority in Congress is pushing legislation to approve the Keystone XL Pipeline. Despite being billed as the safest pipeline in history, the existing Keystone pipeline has spilled 12 times in its first year of operation. This has a familiar ring: Before the Valdez spill in Alaska, Exxon executives told us their oil tankers were safe. I do not support Congress bypassing the environmental appeal process to fast-track further construction of the Keystone pipeline, which poses considerable safety and environmental risks. But anyone who does want this pipeline should at a minimum consider the communities and families who would be affected by its construction, and in the event of a spill, they should make sure taxpayers are not subsidizing the damage. This speaks to our basic notions of justice and fair play.

I hope all Senators will join me to end tax write-offs for corporate wrongdoers. When companies can write off a

significant portion of the financial impact of punitive damages, the incentives in our justice system that promote responsible business practices lose their force. Corporate misconduct should no longer be treated as a cost of doing business.

Mr. President, today I am introducing legislation that will close a tax loophole that allows companies to write off the punishment they receive for corporate wrongdoing. Under current law, a corporation or individual business owner may deduct the cost of court- ordered punitive damages paid to victims as an ``ordinary'' business expense. For the victims of extreme corporate misconduct, there is nothing ordinary about this. It is simply wrong. This tax loophole allows corporations to wreak havoc and then write it off as a cost of doing business. That undermines the whole point of punitive damages.

Punitive damage awards are designed to punish the wrongdoers and to correct dangerous or unfair practices. These awards are reserved for the most extreme and harmful misconduct. Sadly, our country's history is replete with examples of serious corporate misconduct that resulted in injury and death to American citizens, but through our civil justice system and the thoughtful deliberations of our Nations' juries, this misconduct is not only punishable by assessing punitive damages, it has led to broad changes to improve the safety and security of American consumers. Unfortunately, our current tax laws shield the worst corporate misconduct. The No Tax Write-Offs for Corporate Wrongdoers Act would change that by making a simple fix to our tax code.

In 2010, the Deepwater Horizon drilling rig exploded and 11 Americans were killed in the worst oil spill in American history. That same year, an explosion in the Upper Big Branch Mine in West Virginia claimed the lives of 29 miners. In 2009 and 2010, Toyota recalled more than 10 million vehicles because of a faulty acceleration system that has been linked to at least 31 accidents and 12 deaths, and recently admitted to misleading the public about these dangers. Let us also not forget Exxon's misconduct in 1989, which led to an ecological and human disaster that affects Alaskans even today. Vermonters and all Americans deserve to have companies such as these held accountable for their actions. Why should hard-working taxpayers subsidize corporations who deserve to be punished?

In 1994, a jury awarded $5 billion in punitive damages against Exxon for its actions which caused the Valdez spill that devastated an entire region, the livelihoods of its people, and destroyed a way of life. The role of the jury is enshrined in our Constitution, and nothing is more fundamental to the American justice system than our trust in the judgment of those who serve on them. Rather than accept this reality, Exxon paid its cadre of lawyers to fight the jury's measure of accountability all the way to the Supreme Court. In 2008, after 14 years of appeals, an activist majority on the Court invented a novel rule and held that in maritime cases, punitive damage awards could not exceed twice the amount of compensatory damages, reducing Exxon's punitive damages to $500 million. Adding insult to injury to the victims of the oil spill, Exxon was then able to use the federal tax code to write-off the punitive damages as an ``ordinary'' business expense. This is not how the system should work and it is long past time for Congress to fix it.

I have previously supported legislation by Senator Whitehouse to overturn the Supreme Court's decision in Exxon, and I am disappointed that not a single Republican joined this commonsense effort. If we cannot get bipartisan support to ensure corporations pay the highest possible price for actions that cause serious harm to health and public safety, I hope we can at least agree that American taxpayers should not have to subsidize their misconduct once a jury has determined they should be punished.

The Obama administration requested eliminating this tax deduction in its 2014 budget proposal. The Joint Committee on Taxation has estimated that ending this deduction loophole will result in increased revenues of $355 million over 10 years. Members who have devoted so much of their focus to reducing the Federal deficit should support my legislation. Anyone who cares about protecting consumers should agree that extreme corporate misconduct should not be treated in our tax code simply as a cost of doing business.

Right now, the new Republican majority in Congress is pushing legislation to approve the Keystone XL Pipeline. Despite being billed as the safest pipeline in history, the existing Keystone pipeline has spilled 12 times in its first year of operation. This has a familiar ring: Before the Valdez spill in Alaska, Exxon executives told us their oil tankers were safe. I do not support Congress bypassing the environmental appeal process to fast-track further construction of the Keystone pipeline, which poses considerable safety and environmental risks. But anyone who does want this pipeline should at a minimum consider the communities and families who would be affected by its construction, and in the event of a spill, they should make sure taxpayers are not subsidizing the damage. This speaks to our basic notions of justice and fair play.

I hope all Senators will join me to end tax write-offs for corporate wrongdoers. When companies can write off a

significant portion of the financial impact of punitive damages, the incentives in our justice system that promote responsible business practices lose their force. Corporate misconduct should no longer be treated as a cost of doing business.

I thank the Presiding Officer and I thank my colleague Senator Isakson, and I am pleased to join him on the floor today as we reintroduce this bipartisan legislation, the Biennial Budgeting and Appropriations Act. I want to start by recognizing the good work of Senator Isakson because he started working on this issue when he came to the Senate in 2005, and he has introduced this legislation in every Congress since then. I have been pleased to be able to join him in the last two Congresses.

I think we have an opportunity in this Congress to pass this commonsense bipartisan reform. As Senator Isakson pointed out, there is no question that the budget process in Washington is broken. Since 1980 there have been only two budgets that have been finished on time, according to the process. In that timeframe Congress has resorted to more than 150 short-term funding bills or continuing resolutions, and we all remember what it was like when the government shut down in October of 2013. It cost the economy $24 billion. It hurt small business. It hurt people across this country. That is no way to govern.

While we have made significant progress to reduce deficits in recent years, we need a new way to do business in Washington. Biennial budgeting won't fix everything, but as Senator Isakson said, it is an important reform that will allow us to work across the aisle not only to make more sense of the budget process but to be better stewards of taxpayer dollars.

We know that biennial budgeting works. I can attest to that personally, coming from the State of New Hampshire where we have a biennial budget. I served three terms as Governor. We were able in each of those bienniums to pass a budget that was balanced, that allowed us to get the budget done in the first year of the election cycle and in the second year to be able to have oversight. It works in New Hampshire, it works in 20 States around the country, and it can work in Washington.

Biennial budgeting offers a better process that encourages us to work together to pass budgets on time and to use taxpayer dollars more efficiently. As Senator Isakson says, in the first year congressional agencies would put together a 2-year budget. In the second year Congress would have time to conduct oversight to give agencies the ability to focus on achieving their missions.

As we all know, there are regular reports from the Government Accountability Office, GAO, that identify areas of waste, fraud, and duplicative programs within government.

For example, they have identified ways to reform the farm programs, to cut down on inefficiencies in defense, to reduce fraud in health programs, but the current budget process doesn't provide an effective mechanism to regularly review GAO's recommendations.

Under my annual budgeting, we would be able to take a close look at

those recommendations to implement savings in the second year which will allow us to figure out how we can more effectively provide programs to the American people and eliminate those that don't work and support those that do.

As we said, in 2013 we had a very strong vote with 68 Senators voting to endorse the concept of biannual budgeting. It was a very strong bipartisan vote. A similar biannual budget bill passed the House last year with a bipartisan bill vote. It is clear the momentum is growing for this concept because people understand we have to do something to reform our budget process.

The bill we are introducing today has 22 bipartisan cosponsors. I know we are both working to get more bipartisan sponsors on the bill, and we think we have a great shot, with support from this body, to pass biannual budgeting. We think there is support in the House to do that, and I look forward to working with Senator Isakson and my colleagues in the Senate to get this done.

Mr. President, I am very pleased to announce today that the biennial budget proposal introduced by Senators Isakson and Shaheen has been dropped. There are 21 cosponsors, 15 Republicans, 6 Democrats, and 1 Independent, and the number is growing as we speak.

Senator Shaheen and I started this initiative 2 years ago and it received 68 votes and a test vote on the budget in 2013. We believe it will receive the necessary votes to become the law of the land in the United States of America.

You might ask why a biennial budget or you might ask yourself why an $18 trillion debt and why hundreds of billions of dollars in deficit. We don't have the oversight necessary with the spending that we do now to keep us from wasting money. It is time we ran our country like we run our home. It is time we held our agencies accountable. It is time our appropriations weren't just idle promises but our oversight was the rule of law in the United States Senate.

Twenty States out of fifty in the United States have biennial budgets. Countries around the world have biennial budgets. This Congress 3 years ago did a biennial budget for the Veterans' Administration just to ensure we wouldn't have a break in funding if the government shut down. Predictability of funding of government is critical, but the oversight of that funding is more critical.

Picture this. You get elected in an even-numbered year, 2014. Your first order of business in 2015 is to pass a 2-year appropriations act and a 2-year budget. But then in the even-numbered year that comes up when you are running for reelection, your job is not spending, your job is oversight. Wouldn't it be nice, instead of going home and promising you are bringing home the bacon, instead you are bringing home the savings to see to it that taxpayers' money is better spent?

The biennial budget is an idea whose time has come. It is the only way we are going to measurably and sustainably reduce the deficits and reduce the debt in the United States of America and hold our spending more accountable.

Just last night on the floor of the U.S. House of Representatives, the Clay bill was passed on suicide prevention, a new program in the VA, and the funding mechanism was existing funds and fungibility. We already know there is existing money in the appropriations to our agencies to pay for new ideas if we charge them to go find them. Some of the measures we have been funding for 40 or 50 years probably don't need to be done anymore and some of the things we are not doing probably need to be done. But the way to do it is not to spend more money and throw more money at the problem, but the way to do it is to do it the way the American taxpayers do it back home--sit around the kitchen table, set their priorities, make their funding predictable, and from time to time go back and look at where they are spending money and see if they can't improve it. This is an idea that will make America great.

Senator Shaheen is a former Governor of the State of New Hampshire. She had a biennial budget process in her State, and I wish to yield to her to describe her cosponsorship of this bill.

I thank the Senator for her support, and I urge the other Members of the Senate to join us in this reform effort for the spending of the taxpayer's dollars.