THIS WEEK IN WASHINGTON
August 6, 2020
Welcome to the Georgia edition of This Week in Washington. Thank you for your interest in politics and policy from the Peach State to the Potomac.
 
In this week’s Heard on the Hill, Steve Gordon, Erik Paulsen, and Todd Smith cover the process, negotiations, and progress toward the next COVID-19 recovery legislation. They share an interview with Senator Tim Scott (R-SC), and provide updates on bringing pharmaceutical manufacturing back to the U.S., Tuesday evening’s Kansas Republican primary election – the first battle for control of the U.S. Senate – and they report on the race for a COVID-19 vaccine in an update that’s appropriately titled ‘The Cavalry Is REALLY coming.’
 
Al Jackson brings us up to date on defense issues, while Ramona Lessen reports on a hearing held before the Senate Commerce Subcommittee on the PACT ACT and Section 230, the law that helped create the Internet and an examination of proposed reforms.
 
Jesse Weathington gives us an update on legislative vetoes and signings by Governor Kemp and the latest in Georgia with his Gold Dome Report. As always, make sure to check out the Infographs for an in-depth look at current hot topics.
 
It is a rather lengthy version of This Week in Washington, but worth the read. We will continue to watch the oncoming negotiations and will report as the situation warrants. 
 
Y’all stay safe, healthy AND sane…

Todd Smith
Chairman, Georgia Group
Jesse Weathington
Director, Georgia Group
Heard on the Hill
by Todd Smith, Partner and Georgia Group Chairman; Steve Gordon, Managing Director; and
U.S. Rep. Erik Paulsen (2009-2019), Strategic Consultant

The next COVID Recovery Bill
Negotiations on the next COVID recovery bill have been frozen solid, but Tuesday there was a thaw. The new optimism is based on the reality that Congress must stay in town until they pass COVID recovery legislation, but that the Democratic convention will start the week of August 17. There is every reason to be hopeful, but it will not be done until it is done.
 
The House of Representatives passed in May their HEROES Act, which would appropriate around $3 trillion dollars. Senate Majority Leader McConnell, as he promised over the past month, released last week his Health, Economic Assistance, Liability Protection, and Schools Act – the HEALS Act – which is a series of smaller legislative agendas that total around $1 trillion.
 
Continued below after the Gold Dome Report
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Partner and
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Gold Dome Report
 
This week in Georgia, many students returned to school while others fired up their laptops for a resumption of distance learning, while still others faced delayed starts to what will be a most unusual academic environment for students, teachers, and parents. 
 
Governor Brian Kemp completed bill review, signing many measures into law towards the end of the 40-day post-session period, as well as wielding the veto pen on four bills. Two vetoes were of local bills and two were on healthcare related measures. The big news came in the form of a signing statement accompanying HB 105, which addresses tax relief related to Hurricane Michael and other revenue provisions. Due to an issue with legislative procedure, the Governor intends to call a special session to ensure any potential procedural defects do not endanger relief for farmers and businesses affected by the 2018 natural disaster. The legislative and lobbying community will be watching the call for a special session closely in the coming weeks.  

House Speaker David Ralston has joined the chorus of public officials pressing Congress to act on state fiscal support in the pending fifth coronavirus relief package, urging Georgia’s Congressional delegation and especially our two Senators to support financial relief for state governments hard hit by the twin blows of coronavirus and recession.  

Negotiations between the White House and congressional leaders are ongoing on the size and scope of the package. To date coronavirus stimulus has amounted to 13.2% of GDP, among the highest in the OECD, however this should be measured against the 32% drop in GDP in the second quarter, the largest such quarterly decline on record. The National Governor’s Association called for $500 billion in state relief earlier this spring. 
 
Primary run-offs will come down to the wire over the next week, concluding on Tuesday, August 11. The District 14 run-off to replace retiring Congressman Tom Graves between Marjorie Taylor-Greene and John Cowan has generated the most noise and has become a proxy fight between the establishment and populist wings of the GOP in deep-red northwest Georgia. The no-less conservative Ninth District will decide between State Rep. Matt Gurtler (the most reliable NO vote in the Gold Dome) and entrepreneur Andrew Clyde to determine who will assume the safe GOP seat currently held by Congressman Doug Collins, who is of course running for the open U.S. Senate seat in the November “jungle” primary.  

Of 16 state legislative races (and one special election to Senate District 4) to be decided on Tuesday, two feature longtime incumbent members of the House Democratic Caucus: Reps. Sharon Beasley-Teague and Michele Henson. Two former Republican members are seeking to regain seats in the Georgia House: Republicans John Deffenbaugh in District 1 and Charlice Byrd in District 20. The remaining seats are open or being vacated by candidates seeking higher office. There are also numerous local and nonpartisan races on ballots around the state, the highest profile of which is the race for Fulton County District Attorney, which has generated headlines consistently over the summer as Fani Willis seeks to defeat her old boss Paul Howard. 
Heard on the Hill continued

The Senate Republican Policy Committee, chaired by Senator Roy Blunt (R-MO), produced a summary of past legislative responses to the coronavirus emergency, and a summary of the eight pieces of legislation that constitute the HEALS Act. The Policy Committee also produced a summation of the unemployment insurance provision.
 
Here is a thumbnail sketch of key items in the eight parts of the HEALS Act:

Safely to Work Act
  • Liability relief for businesses, non-profits, and schools.
 American Workers, Families, and Employees Assistance Act
  • Unemployment provision that reduces the federal unemployment benefit from the current amount of $600 to around $200 for a 60-day period.
  • Additional funds for states to help them process unemployment claims.
  • Direct rebate of $1,200 per person/$2,400 per married couple filing jointly.
  • Allows employers to claim a 65% credit for employee wages under the employee retention credit, up from 50% in the CARES Act.
  • Extends the work opportunity tax credit to include hiring people who lost their jobs because of the pandemic.
  • Establishes a payroll tax credit for 50% of expenses employers incur to make the workplace safer during the pandemic.
  • The CARES Act provided $150 billion for state and local governments to cover pandemic expenses through the end of December 2020. This bill extends this provision until the end of December 2021 and provides greater flexibility in how the funds can be used.
Continuing Small Business Recovery and Paycheck Protection Program Act
  • $100 billion appropriated for the Paycheck Protection Program and new second draw loans for firms with fewer than 300 employees.
  • $100 billion for recovery sector loans under the Small Business Administration’s 7(a) loan program.
  • $10 billion for the Small Business Administration’s Investment Company Program.
Safely Back to School and Back to Work Act
  • Establishes state stockpiles of medical supplies and products.
  • Expands telehealth access.
  • Expands the ability of the National Institutes of Health and the Federal Drug Administration to transfer more money to public-private partnerships working on the vaccine under Operation Warp Speed and provides more funds for testing.
  • Simplifies the repayment of student loans.
  • Provides $105 billion for schools and colleges to reopen.
  • Provides grants to states to help childcare providers open and stay open.
Trust Act
  • Authorize studies by Congress and the Treasury Department on how to rescue the Social Security, Medicare, and Highway Trust Funds.
Restoring Critical Supply Chains and Intellectual Property Act
  • Requires purchases made by the Department of Health and Human Services for the Strategic National Stockpile to be manufactured in the U.S.
  • Directs the Secretary of Commerce to create a grant program that would advance the semiconductor industry.
  • Requires a review and development of our policy on rare earth and critical minerals.
Supporting America’s Restaurant Workers Act
  • Temporarily increase the business meal deduction from 50% to 100% through December 31, 2020.
 
Additional Emergency Appropriations for Coronavirus Health Response and Agency
Operations
  • Provides $306 billion. Of this, $226.2 billion is for labor, health, and human services, and for education. The additional money is for defense, with $20 billion to agriculture and federal agencies.
 
The Negotiators
Former Congressman and now White House Chief of Staff Mark Meadows, Treasury Secretary Steven Mnuchin, Senate Minority Leader Chuck Schumer, and House Speaker Nancy Pelosi are participating in the discussions.
 
Senator McConnell
Majority Leader McConnell is – at least for the time being – staying away from direct participation. He believes that the “man with the pen” (President Trump) should represent his side. But Leader McConnell will have a major impact on the final legislation because he has red-lined the liability provisions in the Act and said that if there is no liability provision, there will be no bill. The U.S. Chamber wrote a letter on July 30th supporting the inclusion of liability relief.
 
The Republican Senate
Senate Republicans have been unified on all the previous COVID-19 legislation, but this time the Republican Caucus is split over how much money to spend.
 
The federal government has spent more than $3 trillion on COVID-related programs this year and has authorized the Federal Reserve to spend additional funds. By comparison, President Trump’s proposed 2019 budget for discretionary spending was $1.19 trillion. (This figure does not include entitlement spending – which means that when an individual is entitled to the funds he gets it – and it does not include interest on the debt).
 
Some Republican Senators are worried about the impact on the economy and our debt if Congress spends trillions of dollars of additional funding to fight the effects of COVID-19.
 
Other Republican Senators worry about the impact on our fight against COVID, the economic shutdown, and the outcome of the upcoming election if Congress holds back spending as much as is necessary. Senator Lindsey Graham (R-SC) speaks for those Republican Senators who want to spend as much as is necessary. He told a few of us that it is all about either “[s]pending it now or spending it later – when a President Biden makes a request.”
 
Leader McConnell’s bill calls for sending about $1 trillion, an amount he figures is the sweet spot for his caucus. But there is a realization that the final bill will total more.
 
The Administration
The President really wants a deal, and he said last week that he would be alright if the final legislation did not include liability limits. President Trump also said that he would issue a series of executive orders if Congress did not act.

Secretary Mnuchin said Tuesday that the negotiators have agreed to aim for a stimulus deal by the end of this week and a vote next week. “We’re not at the point of being close to a deal, but we did try to agree to set a timeline that we are going to try to reach an overall deal – if we can reach one – by the end of this week so the legislation can pass next week.”
 
White House Chief of Staff Meadows called Tuesday’s session, “probably the most productive meeting we have had to date.” However he added, “I would characterize the concessions made by Secretary Mnuchin and the Administration as being far more substantial than the concessions made by the Democrats.”
 
The Speaker and The Senate Minority Leader
Speaker Pelosi is holding firm in the negotiations. Both the Speaker and Senator Schumer indicated before Tuesday to the press that a) the discussions are making some progress but b) not significant progress. Their response to Tuesday’s discussions were upbeat but businesslike. The Speaker said, “We believe the crisis calls for big bold solutions. The Republicans are wrapped up in the belief that government cannot do much and that the private sector can – and it does not work. They are also not unified. We are slogging through and making progress – and we will keep at it.”
 
The Process
The Senate passed this week a ‘shell bill’ – legislation that could be the vehicle to carry the end-product of the negotiations.
 
The Democratic convention is set for the week of August 17, and the Republican convention is the week of August 24, so negotiators have set the time parameters for their work.
 
Several weeks ago, one of us asked Senator John Barrasso (R-WY), Chair of the Senate Republican Conference, what he felt would resolve the negotiations. He said that the negotiations would ultimately be about how much money Republicans would have to spend to get liability relief. We suspect that is the key question, because the Republican Senate caucus is unified in support of liability limits but divided as to how much money should be spent in the package.
 
One of us asked a Republican Senator’s chief of staff on Wednesday how he viewed the negotiations. His read: “Chief of Staff Meadows and Secretary Mnuchin are trying to frame up the scope of the next bill. Assuming that the scope can be defined, I am quite sure that liability will be in there.”
 
One thing is for sure: Leader McConnell will need a fair number of Democrats to ultimately pass the bill out of the Senate.
 
A visit with Senator Tim Scott (R-SC)
Senator Tim Scott serves on the Finance Committee; the Banking, Housing and Urban Affairs Committee; the Health, Education, Labor and Pensions Committee; and the Small Business Committee. He was elected to represent South Carolina’s first congressional district in 2010, was appointed to fill a vacancy in the U.S. Senate in 2012 and was elected to a full term in the U.S. Senate in 2016. A few of us visited Tuesday morning with Senator Scott on a wide range of topics.
 
Senator Scott said that the Main Street Program has had its share of problems getting off the ground, but it is being made more flexible, and that there is an additional package of loans in the HEALS Act.
 
Senator Scott wanted to talk about the negotiations for the next COVID-19 recovery legislation. He said that it is always darkest before the dawn and he expects that there will be a thaw. “The bill, when it passes, will have direct payments to taxpayers, federal unemployment insurance, funds for state and local government, education funding – at least $105 billion – more funds for testing and vaccines, and additional capacity for the Paycheck Protection Program which has saved at least 50 million jobs.”
 
Senator Scott was the prime author of the JUSTICE Act, a bill designed to provide long-term solutions focused on police reform. While it has not passed the Senate, he remains optimistic and said that negotiations are ongoing. He specifically mentioned three programs that the business community could implement to teach minority youth to have a “mentality for business”:
  • Sponsor scholarships for deserving students to help resolve the inconsistency of American public education.
  • Develop mentoring programs to assist minority students.
  • Diversify your pool of supply chain companies and vendors.
 
He concluded his discussion with an upbeat view of the future. “We have gone through a lot, but I think we are on the path to create a more cohesive country and a better economy.”
 
Update #1 – Bringing pharmaceutical manufacturing back to the US
The April 28 issue of This Week In Washington featured an interview with Joe Carson, a supply chain expert, on the need to bring the manufacture of pharmaceutical and medical equipment back to the U.S. An excerpt from the interview, entitled “Should our healthcare needs be manufactured in the U.S.?”:
 
The COVID-19 crisis has exposed potential vulnerabilities when part of a company’s supply chain is outside of the U.S., especially for critical industries like health care.
 
In March, Senator Dick Durbin (D-IL) and Senator Lamar Alexander (R-TN) introduced bipartisan legislation to safeguard America’s medical supply chain and address shortages due to our country’s dependence on foreign made medical equipment. Joining Senators Durbin and Alexander in sponsoring this legislation were nine Senators, including Senators Roy Blunt (R-MO), Patty Murray (D-WA), Mitt Romney (R-UT), Doug Jones (D-AL), and Tina Smith (D-MN).
 
They pointed out that 40 percent of finished drugs and 60 percent of active pharmaceutical ingredients are manufactured overseas, primarily in China and India. The proposal directed the National Academies of Sciences, Engineering, and Medicine to assess the dependence and vulnerabilities that the U.S. has to critical medicines, medical devices, and medical equipment sourced from or manufactured in foreign counties.
 
This proposal was enacted as part of the CARES stimulus legislation.
 
Last week, Eastman Kodak and the U.S. International Finance Corporation, an agency of the federal government, jointly released a statement announcing a loan of $765 million. The money will allow Kodak Pharmaceuticals to create the chemical ingredients needed to make generic pharmaceuticals. Three hundred fifty jobs will ultimately be created here in the U.S. The preliminary agreement was signed last Tuesday, but it is subject to final due diligence by the U.S. International Finance Corporation.
 
This week, President Trump will sign an executive order which calls on federal agencies to purchase “essential drugs” and medical supplies made in the U.S., rather than from overseas companies who now provide the bulk of those materials, thus seeking to address a concern that has been exacerbated by the coronavirus pandemic.
 
Update #2 – the Kansas Senate race
We stated in the last issue of This Week In Washington that Tuesday’s Republican primary in Kansas was the first battle for control of the U.S. Senate. The primary candidates in this very crowded race were Dr. Roger Marshall, the Congressman from Kansas’s first district, and former Kansas Secretary of State Kris Kobach, who lost his 2018 race for governor. Polls showed that Dr. Marshall could defeat the democratic nominee in November, and the same polls showed that Kris Kobach would be the significant underdog in the general election.
 
Dr. Marshall’s tracking polls showed a very close race going into Tuesday’s primary, but it all broke his way. Unofficial vote totals had Dr. Marshall getting 40% of the vote in a very crowded field, and Mr. Kobach receiving 26%. A Kobach win would have been read as a clear sign of trouble for the Republican majority in the Senate. Dr. Marshall’s win was a good first sign that Republicans might be able to hold the Senate. Nothing succeeds long term better than an initial success.
 
Update #3 – The Cavalry is REALLY Coming
Most economists agree that our economy has an excellent chance to return to pre-COVID levels if we can control the virus. That is why Congress and the Administration funded Operation Warp Speed to expedite the development and production of safe and effective vaccines.
 
Senator Blunt, a member of the Appropriations Committee and Chairman of the Labor, Health, and Human Services, Education and Related Agencies Subcommittee, had a major hand in funding the public-private partnerships that are working to rapidly and safely develop vaccines for COVID-19. He has said on numerous occasions the worst that can happen is some of the vaccines which we are helping to fund will not work. The best that can happen is we save lives.
 
Companies working on vaccines include Johnson & Johnson, Pfizer, Moderna, AstraZeneca, Glaxo, Eli Lilly, Merck, Sanofi, and Novavax, among others.
Defense Update
By Al Jackson, Strategic Consultant to Total Spectrum
 
Earlier this month, in a strong bipartisan vote, the House of Representatives passed their version of the National Defense Authorization Act (NDAA). The bill authorizes $740.5 billion in spending, which includes a military pay raise, new restrictions on the president’s war powers, and requirements that the Defense Department rename bases that were named for Confederate leaders. 
 
The provision regarding the renaming of bases drew the ire of President Trump and prompted a veto threat from the White House. In a statement President Trump indicated that renaming the bases would dishonor troops who served in those locations. Democratic lawmakers, however, feel these continued tributes to the Confederacy are offensive to minorities and Americans as a whole. 
 
The veto threat appeared to have little effect on House Republicans, as the measure passed with a veto-proof majority, 295-125. The bill vote yielded Democrats split 187-43 and Republicans 108-81. During debate, progressive Democrats failed in their attempt to cut spending in the defense bill by 10%. The amendment failed by a vote of 324-93, as a majority of Democrats (139) voted no. By a vote of 77-23, the Senate rejected a similar amendment to their version of the NDAA which was offered by Senator Bernie Sanders (I-VT). 
 
The $740.5 billion top line would bring Defense Department spending in line with Senate and White House negotiated plans of two years ago. The separate drafts of the defense budget outline also call for a three percent pay raise for troops next year and an increase in service numbers. 
 
In a 13-page list of complaints from the White House, the administration laid out its objections to the bill. Among the objections is a provision that affords a basic needs allowance for the lowest paid troops, which the White House indicates is too expensive. The lack of funding dedicated for military construction projects affected by the southern border wall plans and limits on U.S. troop moves out of Afghanistan and Germany are also problematic according to the administration. Most of the consternation from the White House appears to be the issue of the Confederate base names, which includes Fort Bragg in North Carolina, Fort Hood in Texas, and Fort Benning in Georgia.
 
The White House also objected to a raft of provisions in the House bill that would limit the Air Force’s retirement plans for the A-10 Warthog attack planes, RQ-4 Global Hawk surveillance drones, and KC-135 and KC-10 tankers, citing the administration’s efforts to shift resources toward competition with Russia and China. In a statement from the White House, “The President’s Budget divests or retires platforms to reinvest in leading-edge innovation, ensuring dominance across all domains: air, land, sea, space and cyber. Limiting DOD’s flexibility to prioritize resource investment delays modernization of capabilities, preparation for great power competition, and implementation of the [National Defense Strategy].”
 
The Senate bill included similar provisions pertaining to the A-10, RQ-4, KC-135 and KC-10 aircraft, virtually ensuring these policies will be in the final conferenced version of the legislation.
 
With the exception of the aforementioned issues related to the renaming of bases and war power limitations, House Democrats added fewer partisan provisions than they did in last year’s bill. However, during consideration of amendments, lawmakers did add limits to the “Insurrection Act” after the President threatened to invoke it to deploy active duty troops against recent civil unrest over racial injustice. The vote to add the amendment was 215-190, largely along party lines. The amendment, sponsored by Representative Veronica Escobar (D-TX), would require the president to always consult with Congress before invoking the Insurrection Act. Republican opposition cited that the amendment would tie the hands of future Presidents. 
 
Additionally, an amendment was added that would establish the office of the National Cyber Director, which would reside at the White House. This provision was recommended by the Cyberspace Solarium Commission, a group created previously by Congress to recommend changes to the federal government’s cyber strategy. This provision will be debated in conference with the Senate, as the Trump administration eliminated its cybersecurity coordinator position in 2018. 
 
Once the Senate finishes debate on their version of the NDAA, negotiators from both chambers will spend the rest of the summer working out a compromise measure for final consideration. Despite increased partisan infighting in recent years, this legislation has been passed by of Congress and signed into law for 59 consecutive years.
 
The House Appropriations Committee reported their annual defense spending bill, which was $3.5 billion below the administration’s request, although substantial spending of $4.1 billion was dedicated to several weapons systems, including 12 additional F-35 aircraft. The legislation also funded a three percent pay raise and force structure increases to all services except for the Marines, who will trim their force by 2,100. The total cost of the bill is $694.6 billion. 
 
The House Committee on Appropriations’ approval of an increase in F-35 buys counters the House Armed Services Committee skepticism of the program, as no more planes were added to the administration’s request of 79 aircraft. The NDAA legislation also eliminated several F-35 supporting line items by a total of $561 million. By contrast, the Senate Armed Services Committee added $1.36 billion to buy more Air Force F-35As, Marine F-35Bs, and Navy F-35Cs, plus spare parts.
 
In other plus-ups, the committee funded eleven V-22 aircraft, adding $1.1 billion to buy an additional two aircraft above the President’s request. It also added three P-8A Poseidon aircraft for the Navy Reserve, which is three more than the request for an additional $510 million. Just as in the House version of NDAA, the appropriators added sixteen MQ-9 Reaper unmanned aerial vehicles to the administration request for a cost of $344 million. The language is a good sign for the aircraft’s manufacturer, General Atomics, which stood to lose hundreds of millions of dollars in sales if the Air Force stopped buying the aircraft. The service in FY20 had planned to buy only nine MQ-9s in FY21, seventeen in FY22, two in FY23, and three in FY24, but zeroed out all plans to buy additional Reaper drones as part of its FY21 budget request.
 
Other highlights include $965 million for 11 C-130J aircraft, an increase of two planes, $1 billion for nine CH-53K helicopters, two more than the administration request. The Air Force gets 12 F-15EX fighters, 15 KC-46 tankers, and 19 HH-60W combat rescue helicopters. Additionally, the Navy’s request of 24 F/A-18E/F Super Hornets, made by both Boeing and Northrop Grumman, were fully funded by the committee. Significant funding was also put towards 50 AH-64 Apache attack helicopters.
 
Consternation over the wall along the southern border continues between Democrats and Republicans, as a provision to the legislation was added to prevent the President from using emergency powers to divert Defense Department funding to wall construction.  Last month, a federal court declared $2.5 billion of that transfer was illegal. This issue could end up in the Supreme Court. 
Hearing Report:
Senate Commerce Subcommittee on Communications, Technology, Innovation, and the Internet hearing entitled, “The PACT Act and Section 230: the law that helped create the Internet and an examination of proposed reforms.” 
July 28, 2020
By Ramona Lessen, Executive Director, Total Spectrum
 
We strive to provide vital and current information on key subjects, and high on that list is the internet and broadband. I covered the July 28 hearing of the Senate Commerce Committee’s Subcommittee on Communications, Technology, Innovation, and the Internet for its hearing on the internet and proposed reforms. This is not intended to be a transcript, but rather these are my notes, trimmed to fit available space.
 
Witnesses:
Hon. Chris Cox (former Congressman)
Counsel
Morgan, Lewis & Bockius
 
Mr. Jeff Kosseff
Assistant Professor, Cyber Science Department
U.S. Naval Academy
 
Mr. Olivier Sylvain
Professor of Law
Fordham University
 
Ms. Elizabeth Banker
Deputy General Counsel
Internet Association
 
Opening Statements:
Sen. John Thune (R-SD), Chairman: (panelists are appearing virtually). Internet platforms are not responsible for whatever appears on the Internet. Content moderation is a black box. Internet platforms all optimize keeping users on their platforms. We live and work online. Reevaluating Section 230 will protect the interests of consumers and companies. Need greater transparency of users. The PACT Act would require a user policy as to how and why content was used. Section 230 reform is about balancing consumer needs and autonomy with the companies. Our conversation today will help us confirm we are reforming Section 230 in the right way. 
 
Sen. Brian Schatz (D-HI): I offer thanks to the Chairman Thune. Our process has been thorough, bipartisan and the way that the Senate should work. I am proud to partner with Sen. Thune on this legislation. Some may use this hearing as a clip for social media. However, we are here to legislate. This is a serious effort to review Section 230 in a bipartisan way. The process is made much more difficult by grandstanding. It became law in 1996. Innovators built third party contact without threat of litigation. It is the reason that the largest tech companies started in the U.S. Today’s internet is different than when adopted. It is okay to update a law. It doesn’t mean the law is badly written; it just means that it needs to be updated so that it continues to work well. It has new responsibilities for online platforms. This bill is not targeted at a specific contact or company or to influence free speech. I am proud to be working on such a measured process and thank Sen. Thune and his staff for their hard work. We are working on common sense changes to make it function better. 
 
Sen. Roger Wicker (R-MI): Congratulate Sen. Thune and Sen. Schatz on working to solve this matter in a bipartisan way. Section 230 protects interactive computer services such as social media platforms. The intent of the law is to preserve a vibrant online marketplace for the benefit of all Americans. The bill has allowed there to be a free flow of information on the Internet. I have been troubled that some online platforms are censoring conservative content. It is our responsibility that the law be applied consistently. The term “objectionable content” is problem language in the bill, as it may be too broad. 
 
Sen. Thune: Cong. Cox is a former colleague of Sen. Wicker and mine from the House. 
 
Cox: You will remember the debate on pornography on the Internet in 1995 and 1996. My bill eventually became Section 230. We can see that the law has contributed to the success of the internet. Think about Wikipedia - it has long outstripped the encyclopedia - just one marvel of the 21st century. The objective of Section 230 is to protect the innocent and punish the guilty. The law says they will not be treated as publishers. If a website is in any way complicit of illegal content, it doesn’t have Section 230 immunity. Section 230 changed none of the legal situations - same applies to the Internet. Companies do not need to monitor content from 3rd parties. Internet is real time communication. Amending Section 230 is a big job. I appreciate you taking a thoughtful approach before legislating in this area.
 
Kosseff: My remarks today do not represent the Naval Academy. Section 230 is responsible for the open internet. My goal is to expand public understanding of Section 230. Under the First Amendment, distributors cannot be held responsible for third party content. 1) Not all problems on the Internet are Section 230 problems. 2) We don’t know how platforms would react to changes. They would worry about liability. 3) Section 230 is to encourage not discourage content. Does Section 230 require neutrality? The answer is no. Should it? If we had a neutrality requirement, we would need to know what it is. I appreciate the thoughtful solutions that the committee has identified. Section 230 is not set in stone but can be improved. I urge you to make any decisions for change with great care. The challenge is how we want the internet to look in the future.
 
Banker: We appreciate the committee’s thoughtful approach to reforming Section 230. The law allows free expression. Without Section 230, many groups could not create spaces for discussion because of liability. Allowing expression and protecting users is what our member companies strive for. Spam is a helpful example of how Section 230 works. Facebook took corrective action with 1.9 billion spam cases. The law performs as the Congress intended. Section 230 is far from a blanket immunity. Great care should be taken when thinking about making changes to Section 230. 
 
Q&A:
Sen. Thune: Does Section 230 require platforms to be neutral?
Cox: It has never required neutrality. Every website should be free to come up with its own approach. It’s not a question of everybody being neutral but need to distinguish whether they want to have a business model or neutrality and they should be held to that in terms of advertising. Hold them to their model. Many existing laws hold them to this.
 
Sen. Thune: Would rigorous transparency of platforms be a plus?
Cox: How steep is the compliance burden? Using the law and other tools available to encourage and get more transparency is a good approach. 
 
Senator Thune: What content transparency needs to be applied to internet platforms?
Cox: Consumers sometime operate in the dark. When takedown decisions are made and people are up in arms about it, a lot of the complaints are, “why did they do that?” The more information provided so people understand the decision-making is best. Ultimately you need to focus on how this is going to operate in the real world - is it workable? Will they interfere with the real time feature of the internet? Is it going to put platforms in a position where a liability that we thought protected them evaporates? More resources need to be devoted to this.
 
Sen. Thune: Ms. Banker, is there a minimum transparency platform that needs to be met? What is happening in that space?
Banker: There is not a minimum standard. 
 
Sen. Schatz: Can you describe what happens when a company invokes Section 230 to avoid a lawsuit regardless of civil rights?
Sylvain: Just to be clear, summary judgment, discovery will have happened. It is invoked before discovery. They are not reviewing the statute but are evaluating if the defendant has immunity. Whether they are online. They evaluate whether they are treated as a publisher or a distributor. That shuts down the litigation. 
 
Sen. Wicker (R-MS): Critics argue that “otherwise objectionable” language allows social media companies to remove if they dislike or disagree with content. The content available to be removed already includes obscenity, harassment, etc. Would it be helpful if we removed the “otherwise objectionable?” Mr. Cox, what does this term mean to you as an author and the intent and inclusion of that term?
Cox: What the statute says is most important. I think what we intended were all consistent with how we would want it to work. The words need to be considered ‘as a whole’. When general words follow specific words - general would apply to similar in nature. It is the specific words that precedes them. There are a lot of bad things that need to be taken down on the Internet that would be just as objectionable.
 
Senator Wicker: Banker, what content do you find objectionable?
Banker: There is a wide range of types of content covered by the business model of a company. What is appropriate for one company many not work for another. Again, spam is one that courts have applied as being objectionable.
 
Senator Wicker: Why don’t we just add spam and take out “otherwise objectionable”? 
Banker: That would be too narrow.  
 
Sen. Amy Klobuchar (D-MN): This is a great hearing and I’m glad we’re taking on this issue. Section 230 has played an important role, and changes must be made. Mr. Sylvain, do you believe that proposals to reform election-related advertising is targeted to certain groups?
Sylvain: How to do that? FEC has actions. Section 230 does pose an obstacle for this. Is there civic obligation? 
 
Senator Klobuchar: There is currently misinformation going out regarding the pandemic. Mr. Cox, you mention transparency. You wrote the law to consider the future. If you knew what you know now, would you have written in protections?
Cox: Watching caselaw develop after you retire from Congress, some will make you proud and other cases it will disappoint you. Most of the courts have gotten it right; important parts that cover the situation where a platform is involved in illegal content or activity. We wanted to make sure that if a website was a problem, that the website could be prosecuted criminally.
 
Sen. Deb Fischer (R-NE): Mr. Cox, in your testimony, we hear concerns that Section 230 limits their ability to take action. How can we support actions to keep illegal content off the Internet?
Cox:  It was the original intent of the law to be consistent with law enforcement aims and civil unrest. Punish the guilty and protect the innocent. The law gives us tools. Get the states more deeply involved. To do that would be to extend the limited opportunities in law right now for state attorneys general to enforce federal law or state laws that are in parallel. The PACT Act gets some of this going. On the civil side on how the law ought to operate, it is vitally important that there be objective standards judges can apply so they can make a determination on content. 
Kosseff: Agree with Congressman Cox. My concern would be if there were 50 different variations of state laws applying to Internet platforms. Backpage was shut down because of that federal criminal exception.
 
Sen. Richard Blumenthal (D-CT): (in person). Appreciate your broad look at the need for reform. There is a need now, as Section 230 no longer affords protection to the public, consumers, victims, and survivors. Judiciary Committee approved the Earn It Act to fight online child sexual exploitation. 
 
Sen Jerry Moran (R-KS): (in person). Artificial Intelligence - how should we improve algorithmic patterns?
Cox: This is the future. Increasingly we will see it take over on decision-making about how they promote material. It raises questions about liability and responsibility. If people can say the computer did it, we didn’t have knowledge, it would be the greatest loophole. We need to stick with enduring principles of the law. Avoid the jargon in the statute. Compliance will adhere to whatever you put in the statute. General principle is that human beings write the code.
Sylvain: I may be wrong, I thought there was an algorithm act on the Hill? It has to be the way we think about intermediaries. How do we render them accountable? Require them to have an algorithm statement. There is a question whether any algorithm is understood by most people, as most are not. We are not code writers. An impact statement might be an avenue.
Kosseff: Behind algorithms there are policies forming them. We need to make policy as transparent as possible. Point to Facebook last year releasing a more detailed list of their community standards with specific examples what is allowable and what is not allowable. Need to understand policies driving this.
 
Sen. Gary Peters (D-MI): Mr. Sylvain, African Americans make up 14 percent of Michigan’s population. How can targeted ads influence selected groups?
Sylvain: This is difficult. Twitter and Facebook have made a good step forward. Disinformation regarding elections - they are being proactive. Is there a mechanism that Congress can undertake? Civil enforcement, but the content you address - the big social media question is maximizing user engagement. There is disregard for content until there is a problem. Attend to things like election tampering to social media.
 
Sen. Peters: Mr. Cox, private companies have control over what you see through their algorithms. How to take greater control?
Cox: I hope that increasingly tools would be available for this. Who should be in charge of what is on the internet? Only if we are talking about material that is legally acceptable, it is about what the internet user wants on their computer. But if it is illegal, then that’s the government’s concern.
 
Sen. Cory Gardner (R-CO): Five percent of Americans used social media in 2005. Last year it was 72%. Mission statements of companies - give everyone a voice, bring the world together, give everyone the power to promote instantly, let people communicate anywhere without barriers. Internet freedom declined for the ninth year in a row. Why is that? Government censorship is alive around the world. China bans all social media. U.S. should push back on government censorship. Platforms that claim to be for all - these platforms need to be transparent. Has Congress paid enough attention to this? Should Congress use Section 230?
Cox: I do think that Congress has paid attention and observed that policy in practice. It has not imposed stifling regulation on the internet. As we reevaluate, Freedom House reports on how we are doing across the planet on social media. It is not just China, but Russia and others are using social media for social control and punishing them online. 
 
Sen. Gardner: As we consider internet regulation and First Amendment rights of free speech, what more can American companies be doing?
Cox: The challenge that our global companies face is countries trying to control the content. One of the questions that has been debated is when we have trade agreements, we need to protect user generated content. We need to put it in our trade agreements. Use our trade leverage and put our foreign policymaking as “the wind to our back” so that the internet can be visible globally.

Sen Tammy Baldwin (D-WI): It makes sense to take a hard look at this law and the changes we have seen. Any reforms need to be thoughtful. There have been problems with content moderating by companies. Current suggestions by the Chairman and Ranking member include improving their content moderating. More prescriptive requirements would overcompensate. Is there an approach by which we can incentivize companies to comply?
Kosseff: The balance that 230 has been able to strike. Cannot be liable for everything on their system. Content moderation is very difficult. Transparency is needed. Giving the public a better insight as to how the platforms are working is a positive first step.
Sylvain: Agree with Kosseff. Incentives matter. We want to encourage moderation but may not want to chill speech too much. The only difficulty for me is that current law is not good enough. We need more than standards on moderation. Law engenders public norms. How do we formalize that? Tough question. Need to see more law playing a role on this question.
Cox: A reason about more enforcement regarding moderation with other agencies getting involved. Section 230 gives plenty of reasons to comply, but some companies have not. We need backbone to get platforms to comply. We have laws that aren’t being used that we can apply to this situation. There are promises being made regarding neutrality. When those things are violated, they can be enforced.
 
Sen. Mike Lee (R-UT): Internet is not free of bad actors. In order to find the solution to those evils, we need to understand the problems. Are today’s problems, political bias, caused by Section 230 immunity?
Kosseff: Success of the internet has amplified problems. Section 230 being responsible; the internet has more of an impact. 
Banker: The harms we see on the internet were enabled by Section 230. It is the protection companies receive under the law. 
 
Sen. Marsha Blackburn (R-TN): Social media has grown and functions like a government. They should not prioritize content on their sites. As you look at Section 230 cases, are there any cases that have been wrongly decided?
Cox: Yes. 
Kosseff: Yes.
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