Floor Statements

Mr. President, for the Committee on Armed Services I report favorably the following nomination lists which were printed in the Records on the dates indicated, and ask unanimous consent, to save the expense of reprinting on the Executive Calendar that these nominations lie at the Secretary's desk for the information of Senators.

Mr. President, I would like to the say a few words about my colleague and friend and my battle buddy, Senator Jim Inhofe.

It has been a great honor to serve beside Jim. I am grateful--we are all grateful--for the legacy of his service he leaves in this Chamber.

For three decades, Senator Inhofe has served on the Armed Services Committees, from his time as a Member of the House of Representatives to his role in the Senate.

For more than 20 years, I have had the privilege to serve with him on the Senate Armed Services Committee--in turn, each of us serving as chairman and ranking member. Together, we have produced nearly two dozen National Defense Authorization Acts, traveled to combat zones and military posts around the world, and worked to support our men and women in uniform. No one could have had a better partner in those endeavors.

We both served in the Army earlier in our lives, and I know Jim carried out his deep sense of responsibility to our troops in the Senate each day. He never forgot that what we do here ultimately is executed by young men and women in the uniform of the United States. He never broke faith with those young men and women who wear that uniform, and the American military is stronger and the United States is safer because of Jim Inhofe.

I am especially proud that the Armed Services Committee voted to name this year's Defense bill the ``James M. Inhofe National Defense Authorization Act.'' It is a fitting tribute and honor.

Jim is an extraordinary leader whose legislative skills and boundless capacity for hard work are unmatched, and he is a firm and fierce advocate for the people of Oklahoma. He has made sure that they benefit from his hard work and his great efforts, and he has done it with unswerving honesty and integrity.

Senator Inhofe, thank you for your leadership and dedication to the committee and the Senate and particularly the men and women of the Armed Forces. You have been a wonderful partner and colleague, and I believe I speak for the committee and the entire Senate when I say we will miss you dearly. Your steady, unselfish leadership will continue to help guide our Nation in the years ahead, and I wish you and Kay and the family much happiness as you plan for a well-deserved retirement.

May we all strive for the wisdom, courage, and humility that Senator Jim Inhofe imparted upon this great Nation and this distinguished Senate.

I yield the floor.

Madam President, I request unanimous consent to enter into a colloquy with the Senator from Oklahoma. As the chairman and ranking member of the Senate Armed Services Committee, we rise to commemorate and celebrate the distinguished career of Ms. Cheryl M. Black of the Department of Defense.

A native of California, Cheryl joined the Army in 1977 and worked at every echelon since, to include the U.S. Army Military Personnel Center; Immediate Office of the Secretary of the Army; the Army Office Legislative Liaison. After retiring from the Army in 1998, Cheryl served on the personal office staff of Senator John Warner and then went back to her roots at the Department of Defense in 2001, where she has served as the Deputy Director General and Flag Officer Matters. In every assignment, she was known to her colleagues as a dedicated leader and an expert of her craft.

Cheryl did not serve alone, however. Throughout her career, she was supported by her family, friends, and colleagues. We owe a special debt of gratitude to Cheryl's son, Damion, and his family, who supported her with strength and love. Her contributions to the Nation were possible because of their support.

Madam President, I rise today to honor a great American and an exceptional member of the U.S. Air Force.

Lt. Col. Nathan ``Nate'' Kitzke has distinguished himself through his professional character and dedication by serving this Nation in uniform. A leader and expert communicator, he has provided distinguished service to our country while assigned to the Air Force Senate Liaison Office. He is an outstanding leader and a great airman to represent the Air Force on Capitol

Hill. A graduate of the U.S. Air Force Academy, Nate has served in the Air Force for over 18 years. As a deployed squadron commander and C-130 pilot, Nate has led thousands of airmen in support of U.S. Air Force missions worldwide.

Throughout his career, Nate has demonstrated exceptional, unrivaled officership. He is a senior pilot with over 2,150 flying hours in the C-130E/H and has flown more than 1,000 combat hours over five deployments in support of Operations Enduring Freedom, Iraqi Freedom, New Dawn, and Inherent Resolve. Prior to his current assignment, Nate had the privilege of being a deployed squadron commander at the 407th Expeditionary Operations Support Squadron, where he led two teams of airmen and civilians in managing two strategically essential Kuwaiti airfields.

As a legislative liaison in the Air Force Senate Liaison Office from June 2020 to June 2022, Lieutenant Colonel Kitzke performed his duties well and without reservation supporting the 116th and 117th U.S. Congresses. His strategic thinking and foresight helped to strengthen and improve our national security. Nate accomplished this utilizing his in-depth Air Force knowledge with numerous engagements between Congress and the Department of the Air Force.

Nate expertly conveyed Department of the Air Force positions on the Air Force Future Design that included the future bomber, tanker, and fighter force. Nate's direct support provided the U.S. Senate critical information necessary for three National Defense Authorization Acts. His efforts helped establish the U.S. Space Force, ensure the confirmation of the 26th Air Force Secretary, the 22nd Air Force Chief of Staff, and ensured the Department of the Air Force support of the National Defense Strategy in our return to great power competition.

Lieutenant Colonel Kitzke planned and led delegations for Members of Congress on visits all over the world to include the bicameral Reagan National Defense Forum. Nate's significant efforts led to successful engagements between this governing body and senior Department of Defense Officials including the Secretary of the Air Force. All of these engagements helped U.S. Senators understand defense equities and their impact on national security. Due to his direct involvement and stewardship, Members of Congress were able to make informed decisions and ensure the Department of the Air Force was properly resourced and funded.

After serving in this crucial role for the past 2 years and becoming a fixture on Capitol Hill, Lieutenant Colonel Kitzke will move to his next assignment, attending Air War College at Maxwell AFB, AL, a selection reserved only for the top echelon of Air Force leaders. Nate, his wife Gileanne, and their son Diego have sacrificed much as a family in service to our Nation. I am thankful for Nate's service and his work with my office and the Senate over the past 2 years on issues of vital importance to this great Nation. I salute this American patriot whose selfless service has kept our country safe and strong.

Mr. President, I call up amendment No. 5499, as modified, and ask that it be reported by number.

Mr. President, I ask for the yeas and nays.

Mr. President, I have an amendment to the substitute, and I ask that it be reported by number.

Mr. President, I submit amendments on behalf of other Senators.

Mr. President, I rise to discuss the fiscal year 2023 National Defense Authorization Act. In a few minutes, I will bring up this bill, which the Armed Services Committee passed by a broad bipartisan vote of 23 to 3 in June. I am glad we have the opportunity to consider the NDAA on the Senate floor. We are at a critical period in our Nation's security, and this bill will help ensure our military has the tools and capabilities it needs to combat threats around the globe and keep Americans safe.

First, I would like to acknowledge Ranking Member Inhofe, whose leadership on this committee and in this body has been invaluable. His commitment to our men and women in uniform is unwavering, and he was instrumental in helping produce this bipartisan legislation. In honor of his well-earned retirement, I am pleased that the committee voted to name this year's bill the James M. Inhofe National Defense Authorization Act.

As we discuss the NDAA, we must keep in mind that the United States is engaged in a long-term strategic competition with China and Russia. Beijing poses the primary potential threat to our national security, as the only country in the world with the economic and technological capacity to mount a sustained challenge to our interests. And, as we have seen with disturbing clarity, Putin has demonstrated his willingness to inflict violence and undermine global world order for his own benefit. The importance of U.S. support for the Ukrainian people cannot be overstated. They are fighting our fight, and we must aid them.

Elsewhere, states like Iran and North Korea continue to push the boundaries of military brinksmanship, and issues like terrorism, climate change, and pandemics remain persistent threats. The interconnected nature of these problems must drive how we resource and transform our tools of national power. The passage of the fiscal year 2023 National Defense Authorization Act will be a critical step toward meeting these complex challenges.

Turning to the specifics of this year's defense bill, the NDAA authorizes $817 billion for the Department of Defense and $29 billion for national security programs within the Department of Energy. The bill contains a number of important provisions that I would like to briefly highlight.

To begin, we have to ensure that the United States can outcompete, deter, and prevail against our near-peer rivals. This NDAA confronts China and Russia by fully investing in the Pacific Deterrence Initiative, the European Deterrence Initiative, and the Ukraine Security Assistance Initiative.

As part of this effort, the bill increases the defense topline authorization by $45 billion to address the effects of inflation and accelerate implementation of the national defense strategy. This topline boost will accelerate the production of certain munitions and increase procurement of aircraft, naval vessels, armored vehicles, long-range fires, and other resources needed by the services and combatant commands.

The committee has also included an authorization of $1 billion for the National Defense Stockpile to acquire strategic and critical minerals currently in shortfall. This will go a long way to help meet the defense, industrial, and essential civilian needs of the United States.

We also include additional support for our industrial base to produce the munitions needed to backfill our stocks, while also keeping supplies flowing to Ukraine and other European allies. Many Senators on both sides of the aisle have been actively engaged in this effort, but I especially want to recognize Senator Shaheen's leadership. She has been instrumental in pushing new authorities that can be helpful for the Department of Defense to address the current challenge we have and better posture us for our future. Senator Shaheen's work has been highly impactful in the direction we ultimately took, which is reflected in the amendment that Senator Inhofe and I have offered as part of the managers' package.

Relatedly, America's capacity for technological innovation has long given us the strongest economy and military on Earth, but this advantage is not a given. It must be nurtured and maintained. To that end, this year's NDAA authorizes significant funding increases for cutting-edge technologies like microelectronics, hypersonic weapons, and low-cost unmanned aircraft. Similarly, it increases funding to support U.S. Cyber Command's Hunt Forward Operations and artificial intelligence capabilities.

And, as we navigate threats of nuclear escalation from Russia and increasing capabilities from China, the NDAA enhances our deterrence by helping to marginalize the U.S. nuclear triad. It also makes progress in ensuring the safety, security, and reliability of our nuclear stockpile, delivery systems, and infrastructure; increasing capacity in theater and homeland missile defense; and strengthening nonproliferation programs.

Importantly, this year's NDAA provides a 4.6-percent pay raise for both servicemembers and their Department of Defense civilian workforce. It also authorizes additional funding to ease the impacts of inflation on the force and provides resources to support recruiting and retention needs.

When I introduce the fiscal year 2023 NDAA, it will be a substitute to the House-passed NDAA. This substitute will be modified with a package of amendments that have been cleared on both sides. There are 75 amendments, including 6 major authorization bills from other committees.

Again, I am pleased that we have brought this bill to the floor so the entire Senate has an opportunity to participate in the process.

I also want to take a moment to thank all the staff who accomplished this herculean task in a week. The staff of the Armed Services Committee worked tirelessly to ensure every possible amendment was cleared and included.

I particularly want to thank Kevin Davis of the Office of Legislative Counsel, who went above and beyond to draft this substitute.

The staff did a remarkable job, working tirelessly. They were led by Liz King and John Wason, and I salute both of them and all the members of the staff for their extraordinary efforts.

The topline defense number in this bill, together with the allocations set by Chairman Leahy for defense and nondefense funding across the appropriations bills, provides a realistic balance for funding the military and the rest of the Federal Government. Once we have completed work on this important authorization bill, we need to complete the appropriations process.

Let me conclude by once again thanking Ranking Member Inhofe and my colleagues. I particularly want to recognize and thank the Presiding Officer, Senator King of Maine, for his great work, and all for their thoughtful and bipartisan efforts to develop this important piece of legislation. I would also like to thank the staff, as I said before, for their tireless efforts on this bill throughout the year.

I look forward to a thoughtful debate on the issues that face our Department of Defense and national security.

I yield the floor.

I suggest the absence of a quorum.

Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. President, I ask unanimous consent that the Senate proceed to the immediate consideration of the following resolutions that were submitted earlier today en bloc: S. Res. 822, S. Res. 823, and S. Res. 824.

PRESIDING OFFICER. The clerk will report the resolutions by title.

Mr. President, I further ask that the resolutions be agreed to, the preambles be agreed to, and that the motions to reconsider be considered made and laid upon the table, en bloc, with no intervening action or debate.

Mr. President, I understand that there is a bill at the desk that is due for a second reading.

In order to place the bill on the calendar under the provisions of rule XIV, I would object to further proceeding.

Mr. President, I ask unanimous consent that the November 10 pro forma time be changed to 3 p.m., with all other provisions of the previous order in effect.

Mr. President, if there is no further business to come before the Senate, I ask that it stand adjourned under the previous order.

Mr. President, literacy opens the door for lifelong opportunity and economic success. But in the aftermath of the COVID-19 pandemic, we have a lot of work to do to help kids catch up. The National Assessment of Education Progress results show the terrible toll the pandemic has taken on students' literacy skills. Reading scores for 9-year-olds, dropped by five points, the steepest decline since 1990. We need urgent action to ensure that all children have the means and the right to read. That is why I am pleased to join Congressman Raul Grijalva in introducing the Right to Read Act.

The Right to Read Act will require States and school districts to have policies protecting the right to read, which includes access to evidence-based reading instruction, access to effective school libraries, access to developmentally and linguistically appropriate materials, reading materials at home, family literacy support, and the freedom to choose reading materials.

The Right to Read Act will ensure that low-income, minority children, English learners, and students with disabilities are not disproportionately enrolled in schools that lack effective school libraries. This is a matter of equity. Data shows that school libraries make a big difference in giving kids the skills and inspiration to become proficient and enthusiastic readers. Students who utilize school libraries have 73 percent higher literacy rates than students who do not, and the positive impact of effective school libraries is highest for marginalized groups, including students experiencing poverty, students of color, and students with disabilities. But not every student has access to library services. The U.S. Department of Education reports that 2.5 million students are enrolled in districts where there are no school libraries. An estimated 1 out of 10 schools in America does not have a school library, and 30 percent of U.S. public schools do not have full time librarians. Students experiencing the highest levels of poverty are 30 percent more likely to attend a school without a school library. And while school libraries are most effective when they offer resources that resonate, engage, and empower students and that align with their first amendment rights, 32 States have enacted bans on books that disproportionately limit access to titles with LGBTQ+ characters and characters of color.

The Right to Read Act will address the disparities in access to school library resources. It supports the development of effective school libraries, including the recruitment, retention, and professional development of State-certified school librarians. It will also increase the Federal investment in literacy by reauthorizing Comprehensive Literacy State Development Grants at $500 million and the Innovative Approaches to Literacy program at $100 million, targeting critical literacy resources in high need communities. Critically, the bill protects access to quality reading materials and provides the resources needed to create a foundation for learning and student success.

In developing this legislation, Congressman Grijalva and I worked closely with the library community, including the American Library Association and the American Association of School Librarians. These are the experts in helping kids become lifelong readers and learners. I appreciate their insight and assistance on this bill, and I urge my colleagues to join us in cosponsoring this legislation to ensure that all students have a right to read.

Mr. President, we all recognize that a postsecondary education is often the key to a family-sustaining, middle-class job. We also know that an educated workforce is essential to a modern, productive economy. However, our system that relies on student loan debt to finance that education is broken. At the end of fiscal year 2021, over 43 million Americans owed more than $1.6 trillion in Federal student loan debt.

The pandemic has forced a long-overdue reckoning with the cost of student loan debt to our society. But the warning signs have been clear for some time. A National Center of Education Statistics Report found that students who graduated in 2016 still owed 78 percent of the amount they borrowed. Black graduates owed more than they had originally borrowed. Thirty-four percent of graduates reported negative net worth. As student loan debt has

grown, young adults have put off buying homes or cars, starting a family, saving for retirement, or launching new businesses. They have literally mortgaged their economic future.

In response to the pandemic, Congress and two administrations took unprecedented steps to ease the burden of student loan debt. While those steps provided urgently needed relief to current borrowers, we need to take steps now to reform the student loan system so future graduates are not saddled with crushing debt. Part of the answer is requiring institutions of higher education to have a greater stake in the outcomes for student loan borrowers.

While institutions are largely shielded when student borrowers can't repay their loans, students who fall into default face catastrophic consequences with little opportunity for relief. Only in rare instances can the debt be discharged in bankruptcy, and the Federal Government has the power to withhold tax refunds, garnish wages, and even garnish Social Security benefits to collect defaulted student loans.

We have seen the costs to students and taxpayers when institutions are not held accountable. The Department of Education has forgiven over $13 billion in student loans for students cheated by their colleges since 2021 alone. Just recently, Stratford University announced it would be shutting its doors leaving thousands of students in the lurch.

We cannot wait until an institution is catastrophically failing its students before taking action. Institutions need greater financial incentives to act before default rates rise. Simply put, we cannot tackle the student loan debt crisis without States and institutions stepping up and taking greater responsibility for college costs and student borrowing.

That is why I am pleased to reintroduce the Protect Student Borrowers Act with Senators Warren and Durbin. Our legislation seeks to ensure that institutions have more ``skin in the game'' when it comes to student loan debt. The bill will create stronger market incentives for colleges and universities to provide better and more affordable education to students, which should in turn help put the brakes on rising student loan defaults.

The Protect Student Borrowers Act would hold colleges and universities accountable for high student loan defaults by requiring them to repay a percentage of defaulted loans. Only institutions that have one-third or more of their students borrow or have a repayment rate after 3 years below 50 percent would be included in the bill's risk-sharing requirements based on their cohort default rate. Risk- sharing requirements would kick in when the default rate exceeds five percent. As the institution's default rate rises, so too will the institution's risk-share payment.

The Protect Student Borrowers Act also provides incentives for institutions to take proactive steps to ease student loan debt burdens and reduce default rates. Colleges and universities can reduce or eliminate their payments if they implement a comprehensive student loan management plan. The Secretary may waive or reduce the payments for institutions whose mission is to serve low-income and minority students, such as community colleges, historically Black institutions, or Hispanic-serving institutions, if they are making progress in their student loan management plans.

The risk-sharing payments would be invested in helping struggling borrowers, preventing future default and delinquency, and providing additional grant aid to students receiving Pell grants at institutions that enroll a high percentage of Pell grant recipients and have low default rates.

With the stakes so high for students and taxpayers, it is only fair that institutions bear some of the risk in the student loan program.

We need to tackle student loan debt and college affordability from multiple angles. All stakeholders in the system must do their part. With the Protect Student Borrowers Act, we are providing the incentives and resources for institutions to take more responsibility to address college affordability, reduce student loan debt, and improve student outcomes. I urge my colleagues to cosponsor this bill and look forward to working with them to include it and other key reforms in the upcoming reauthorization of the Higher Education Act.

Mr. President, literacy opens the door for lifelong opportunity and economic success. But in the aftermath of the COVID-19 pandemic, we have a lot of work to do to help kids catch up. The National Assessment of Education Progress results show the terrible toll the pandemic has taken on students' literacy skills. Reading scores for 9-year-olds, dropped by five points, the steepest decline since 1990. We need urgent action to ensure that all children have the means and the right to read. That is why I am pleased to join Congressman Raul Grijalva in introducing the Right to Read Act.

The Right to Read Act will require States and school districts to have policies protecting the right to read, which includes access to evidence-based reading instruction, access to effective school libraries, access to developmentally and linguistically appropriate materials, reading materials at home, family literacy support, and the freedom to choose reading materials.

The Right to Read Act will ensure that low-income, minority children, English learners, and students with disabilities are not disproportionately enrolled in schools that lack effective school libraries. This is a matter of equity. Data shows that school libraries make a big difference in giving kids the skills and inspiration to become proficient and enthusiastic readers. Students who utilize school libraries have 73 percent higher literacy rates than students who do not, and the positive impact of effective school libraries is highest for marginalized groups, including students experiencing poverty, students of color, and students with disabilities. But not every student has access to library services. The U.S. Department of Education reports that 2.5 million students are enrolled in districts where there are no school libraries. An estimated 1 out of 10 schools in America does not have a school library, and 30 percent of U.S. public schools do not have full time librarians. Students experiencing the highest levels of poverty are 30 percent more likely to attend a school without a school library. And while school libraries are most effective when they offer resources that resonate, engage, and empower students and that align with their first amendment rights, 32 States have enacted bans on books that disproportionately limit access to titles with LGBTQ+ characters and characters of color.

The Right to Read Act will address the disparities in access to school library resources. It supports the development of effective school libraries, including the recruitment, retention, and professional development of State-certified school librarians. It will also increase the Federal investment in literacy by reauthorizing Comprehensive Literacy State Development Grants at $500 million and the Innovative Approaches to Literacy program at $100 million, targeting critical literacy resources in high need communities. Critically, the bill protects access to quality reading materials and provides the resources needed to create a foundation for learning and student success.

In developing this legislation, Congressman Grijalva and I worked closely with the library community, including the American Library Association and the American Association of School Librarians. These are the experts in helping kids become lifelong readers and learners. I appreciate their insight and assistance on this bill, and I urge my colleagues to join us in cosponsoring this legislation to ensure that all students have a right to read.

Mr. President, we all recognize that a postsecondary education is often the key to a family-sustaining, middle-class job. We also know that an educated workforce is essential to a modern, productive economy. However, our system that relies on student loan debt to finance that education is broken. At the end of fiscal year 2021, over 43 million Americans owed more than $1.6 trillion in Federal student loan debt.

The pandemic has forced a long-overdue reckoning with the cost of student loan debt to our society. But the warning signs have been clear for some time. A National Center of Education Statistics Report found that students who graduated in 2016 still owed 78 percent of the amount they borrowed. Black graduates owed more than they had originally borrowed. Thirty-four percent of graduates reported negative net worth. As student loan debt has

grown, young adults have put off buying homes or cars, starting a family, saving for retirement, or launching new businesses. They have literally mortgaged their economic future.

In response to the pandemic, Congress and two administrations took unprecedented steps to ease the burden of student loan debt. While those steps provided urgently needed relief to current borrowers, we need to take steps now to reform the student loan system so future graduates are not saddled with crushing debt. Part of the answer is requiring institutions of higher education to have a greater stake in the outcomes for student loan borrowers.

While institutions are largely shielded when student borrowers can't repay their loans, students who fall into default face catastrophic consequences with little opportunity for relief. Only in rare instances can the debt be discharged in bankruptcy, and the Federal Government has the power to withhold tax refunds, garnish wages, and even garnish Social Security benefits to collect defaulted student loans.

We have seen the costs to students and taxpayers when institutions are not held accountable. The Department of Education has forgiven over $13 billion in student loans for students cheated by their colleges since 2021 alone. Just recently, Stratford University announced it would be shutting its doors leaving thousands of students in the lurch.

We cannot wait until an institution is catastrophically failing its students before taking action. Institutions need greater financial incentives to act before default rates rise. Simply put, we cannot tackle the student loan debt crisis without States and institutions stepping up and taking greater responsibility for college costs and student borrowing.

That is why I am pleased to reintroduce the Protect Student Borrowers Act with Senators Warren and Durbin. Our legislation seeks to ensure that institutions have more ``skin in the game'' when it comes to student loan debt. The bill will create stronger market incentives for colleges and universities to provide better and more affordable education to students, which should in turn help put the brakes on rising student loan defaults.

The Protect Student Borrowers Act would hold colleges and universities accountable for high student loan defaults by requiring them to repay a percentage of defaulted loans. Only institutions that have one-third or more of their students borrow or have a repayment rate after 3 years below 50 percent would be included in the bill's risk-sharing requirements based on their cohort default rate. Risk- sharing requirements would kick in when the default rate exceeds five percent. As the institution's default rate rises, so too will the institution's risk-share payment.

The Protect Student Borrowers Act also provides incentives for institutions to take proactive steps to ease student loan debt burdens and reduce default rates. Colleges and universities can reduce or eliminate their payments if they implement a comprehensive student loan management plan. The Secretary may waive or reduce the payments for institutions whose mission is to serve low-income and minority students, such as community colleges, historically Black institutions, or Hispanic-serving institutions, if they are making progress in their student loan management plans.

The risk-sharing payments would be invested in helping struggling borrowers, preventing future default and delinquency, and providing additional grant aid to students receiving Pell grants at institutions that enroll a high percentage of Pell grant recipients and have low default rates.

With the stakes so high for students and taxpayers, it is only fair that institutions bear some of the risk in the student loan program.

We need to tackle student loan debt and college affordability from multiple angles. All stakeholders in the system must do their part. With the Protect Student Borrowers Act, we are providing the incentives and resources for institutions to take more responsibility to address college affordability, reduce student loan debt, and improve student outcomes. I urge my colleagues to cosponsor this bill and look forward to working with them to include it and other key reforms in the upcoming reauthorization of the Higher Education Act.

The following executive reports of nominations were submitted:

Mr. President, for the Committee on Armed Services I report favorably the following nomination lists which were printed in the Records on the dates indicated, and ask unanimous consent, to save the expense of reprinting on the Executive Calendar that these nominations lie at the Secretary's desk for the information of Senators.

Mr. President, today, I am joined by Senator Cortez Masto in introducing the Private Markets Transparency and Accountability Act, a bill that will address a disturbing trend in our capital markets. Increasingly, some of America's largest and most important companies are exploiting weaknesses in our securities laws to stay or go dark; that is, they are avoiding requirements to enter the public markets, where disclosure and transparency are required under law. Instead, they are remaining indefinitely in the private markets, where there is less visibility into the health and activities of the company.

Why should average Americans care? First, they are invested in these companies through pension plans and mutual funds. Second, transparency is the lifeblood of fair and efficient markets. And third, these companies have incredible influence over our society and way of life.

This legislation will address this disturbing trend by requiring the Nation's largest and most important private companies to register with the Securities and Exchange Commission, SEC. Requiring registration would put these companies on par with publicly traded corporations with regard to ongoing public disclosure about their business practices and financial condition.

The most significant development in the capital markets over the last decade has been the explosive growth of the private markets. According to consulting firm McKinsey, annual private market fundraising reached a record of almost $1.2 trillion worldwide in 2021 up from $380 billion in 2011. More money has been raised in the private markets than in the public markets each year over the past 10 years. Many large companies find the allure of virtually no public transparency or oversight that is available in the private markets irresistible. Under current law, they find that it is all too easy to stay private forever.

Under the Securities Exchange Act of 1934, Exchange Act, a private company

must register with the SEC after reaching 2,000 shareholders ``of record.'' But this requirement is easily circumvented because a single Wall Street broker or bank, which holds securities on behalf of thousands of underlying investors, is counted as one recordholder. The SEC estimates that under this threshold, 89 percent of public companies could choose to transition to the private markets and go dark tomorrow.

This threshold desperately needs reform. Former SEC Chairman Mary Schapiro has testified before the Banking Committee that ``since the definition of `held of record' was put into place, a fundamental shift has occurred in how securities are held in the United States.'' And Harvard Law Professor John Coates recently testified before the committee that ``there is much to be said for revisiting the thresholds that are built into the [Exchange] Act, thinking about them in a different way, [and] not simply counting numbers.''

It should be alarming when private companies can become extremely large and influential in our economy and raise unlimited amounts of capital from an unlimited number of investors, while circumventing the basic disclosure and governance requirements that Congress sought to apply. That is what is happening today. A central feature of the Exchange Act has effectively been gutted.

Again, these are not small or inconsequential companies. Former SEC Commissioner Allison Herren Lee has observed that very large private companies are ``notable not just for their size, but for their transformational impacts on our way of life. They have, for example, changed the transportation and travel habits of millions across the globe, spawned billions of dollars in litigation, changed the legal underpinnings of entire markets, and launched civilians into space. Yet, despite their outsize impact, there is little public information available about their activities. They are not required to file periodic reports or make the disclosures required in proxy statements. They are not even required to obtain, much less distribute, audited financial statements. This has consequences for investors and policymakers alike, which in turn may have consequences for the broader economy.''

The Private Markets Transparency and Accountability Act would restore the Exchange Act in order to provide the public with the essential insight it needs to make informed decisions. Under our legislation, private companies would be required to register with the SEC if they either reach a valuation of $700 million, excluding shares held by affiliates, or have at least 5,000 employees and $5 billion in revenues. These companies would enter the public disclosure system that Congress established in the Exchange Act and would have powerful incentives to conduct public stock offerings and list their shares on stock exchanges.

Our legislation would provide mom-and-pop investors in the private markets with nearly all of the same protections that they are entitled to in the public markets. Pension plans that invest in companies through private equity funds would finally be able to obtain basic information about those companies, such as their audited financial statements, and employees who get compensated with company stock and options would be able to determine the true value of their shares. They would no longer need to fly blind when deciding whether to take another job and face the potentially enormous financial consequences of relinquishing their stock or options.

By mandating that very highly valued or large companies register with the SEC, our legislation would raise the bar on governance for companies that control huge swaths of our economy. The ability to stay private forever has directly led to the dramatic rise of ``unicorns,'' or private companies with at least a $1 billion valuation. At the start of December 2021, the United States had nearly 473 unicorns. Some of these unicorns have been plagued by scandals and toxic cultures, without needing to comply with governance requirements for public companies designed to curb waste and force management accountability. Still others have been exposed as outright frauds. In these situations, investors suffer losses while fund managers keep their fees and company executives keep their bonuses. Arguably, greater transparency would have protected investors from unnecessary losses. Indeed, some unicorns that received sky-high valuations in the opaque private markets saw those valuations tumble when they faced the discipline and scrutiny that comes with public market transparency.

Finally, our legislation helps markets allocate capital more efficiently. When risks are obscured in dark corners of our markets, then capital may not be directed towards the most deserving companies. When similar companies in similar industries of similar size are subject to wildly different disclosure requirements, market participants have less information to value those companies. That means the shares of many public companies may not be accurately priced. Without accurate prices, retail investors cannot have confidence that they are getting reasonable returns on their hard-earned savings.

Our capital markets depend on disclosure and transparency. As more companies remain private indefinitely or go dark, we lose those features and weaken the foundational strengths of our economy. We need to restore these bedrock requirements and ensure that they apply to all major companies whether they are in the private or the public markets.

I thank the bill's supporters, including the AFL-CIO, the Consumer Federation of America, the North American Securities Administrators Association, the Healthy Markets Association, Public Citizen, former SEC Commissioner Robert J. Jackson, Columbia Law Professor John Coffee, and Harvard Law Professor John Coates.

I would like to thank Senator Cortez Masto for working with me on this legislation, and I urge our colleagues to join us in supporting the Private Markets Transparency and Accountability Act.