prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 1.

Report 1: Black lung benefits include both cash assistance and medical benefits  Maximum cash assistance payments generally ranged from about $650 to $1,300 per month in fiscal year 2017, depending on the number of dependents the miner has  Miners receiving cash assistance are also eligible for medical benefits that cover the treatment of their black-lung- related conditions, which may include hospital and nursing care, rehabilitation services, and drug and equipment charges, according to DOL documentation  DOL estimates that the average annual cost for medical treatment in fiscal year 2017 was approximately $6,980 per miner  There were about 25,700 total beneficiaries (primary and dependents) receiving black lung benefits during fiscal year 2017 (see fig  1)  The decrease in the number of beneficiaries over time has resulted from a combination of declining coal mining employment and an aging beneficiary population, according to DOL officials  Further, black lung beneficiaries could increase in the near term due to the increased occurrence of black lung disease and its most severe form, progressive massive fibrosis, particularly among Appalachian coal miners, according to HHS officials  Black lung claims are processed by DOL’s Office of Workers’ Compensation Programs  Contested claims are adjudicated by DOL’s Office of Administrative Law Judges, which issues decisions that can be appealed to the Benefits Review Board  Claimants and mine operators may further appeal these agency decisions to the federal courts  If an award is contested, claimants can receive interim benefits, which are generally paid from the Trust Fund according to DOL officials, while their claims are in the appeals process  Final awards are either funded by mine operators—who are identified as the responsible employers of claimants—or the Trust Fund, when responsible employers cannot be identified or do not pay  In fiscal year 2017, black lung claims had an approval rate of about 29 percent, according to DOL data  Of the 19,430 primary black lung beneficiaries receiving benefits during fiscal year 2017, 64 percent (12,464) were paid from the Trust Fund, 25 percent (4,798) were paid by liable mine operators, and 11 percent (2,168) were receiving interim benefits, according to DOL officials  Black Lung Disability Trust Fund revenue is primarily obtained from mine operators through the coal tax  The coal tax is imposed at two rates, depending on whether the coal is extracted from underground or surface mines  The current tax rates are $1 10 per ton of underground-mined coal and $0 55 per ton of surface-mined coal, up to 4 4 percent of the sales price  Therefore, if a ton of underground-mined coal is sold for less than $25, than the tax paid would be less than $1 10  For instance, if a ton of underground-mined coal sold for $20, than it would be taxed at 4 4 percent of the sales price, or $0 88  To a lesser extent, the Trust Fund also receives other miscellaneous revenue from interest payments, and various fines and penalties paid by mine operators, among other sources, according to DOL documentation  Coal tax revenue is collected from mine operators by Treasury’s Internal Revenue Service and then transferred to the Trust Fund where it is then used by DOL officials to pay black lung benefits and the costs of administering the program  Trust Fund expenditures include, among other things, black lung benefit payments, certain administrative costs incurred by DOL and Treasury to administer the black lung benefits program, and debt repayments  When necessary for the Trust Fund to make relevant expenditures under federal law, the Trust Fund borrows from the Treasury’s general fund  When this occurs, the federal government is essentially borrowing from itself—and hence from the general taxpayer—to fund its benefit payments and other expenditures  Multiple factors have challenged Trust Fund finances since it was established about 40 years ago  Its expenditures have consistently exceeded its revenue, interest payments have grown, and legislative actions taken that were expected to improve Trust Fund finances did not completely address its debt  Combined black lung benefit payments and program administrative costs exceeded Trust Fund revenue every year for the program’s first decade (fiscal years 1979 through 1989), resulting in the accrual of debt  During the Trust Fund’s first three fiscal years in particular, revenue covered less than 40 percent of the Trust Fund’s combined benefit payments and administrative costs  For instance, in fiscal year 1980, the Trust Fund received about $251 million in revenue and paid about $726 million in black lung benefits and administrative costs  Beginning in 1982, revenue increased as a result of the Black Lung Benefits Revenue Act of 1981 that doubled the coal tax rates from $0 50 to $1 per ton of underground-mined coal and from $0 25 to $0 50 per ton of surface-mined coal, up to 4 percent of the sales price  Even with the tax rate increase, combined benefit payments and administrative costs continued to exceed revenue throughout the 1980s (see fig  2)  As a result, the Trust Fund borrowed from Treasury’s general fund to cover the annual differences between its expenditures and revenues, and by fiscal year 1989 the Trust Fund’s outstanding debt to Treasury’s general fund exceeded $3 billion  Beginning in fiscal year 1990, Trust Fund revenue generally began to exceed combined benefit payments and administrative costs, and, in fact, total Trust Fund cumulative revenue collected from fiscal years 1979 through 2017 exceeded total cumulative benefit payments and administrative costs incurred during these years  However, interest owed from earlier years of borrowing led to more borrowing and debt  From fiscal years 1979 through 1989, the Trust Fund borrowed—primarily through 30-year term loans according to Treasury officials—from Treasury’s general fund at interest rates that varied from about 6 5 percent to about 13 9 percent  In fiscal year 1985, for instance, the Trust Fund paid about $275 million in interest, which was equal to about half of the total revenue collected that year  Since fiscal year 1990, revenue has generally exceeded combined benefit payments and administrative costs, although interest payments on the Trust Fund’s outstanding debt kept the fund in a position whereby its total expenditures continued to exceed its total revenues  As a result, the principal amount of the Trust Fund’s total outstanding debt to Treasury’s general fund increased and exceeded $10 billion by fiscal year 2008  Legislation has been enacted over the years that was expected to improve Trust Fund finances: In 1981, the Black Lung Benefits Revenue Act of 1981 doubled the coal tax rates from $0 50 cents to $1 per ton of underground-mined coal, and from $0 25 cents to $0 50 cents per ton of surface-mined coal, up to 4 percent of the sales price (as mentioned previously)  In 1986, the Consolidated Omnibus Budget Reconciliation Act of 1985 established a 5 year moratorium on interest accrual with respect to repayable advances to the Trust Fund (which we refer to as annual borrowing from Treasury’s general fund), and increased the coal tax rates to $1 10 per ton of underground-mined coal, and $0 55 per ton of surface-mined coal (up to 4 4 percent of the sales price), where they have remained since  In 2008, the EIEA included provisions that were expected to eliminate the Trust Fund’s debt  Specifically, EIEA (1) generally extended the coal tax rates at their current rates until December 31, 2018 (after which they are scheduled to decrease to their original levels of $0 50 per ton of underground-mined coal, and $0 25 per ton of surface- mined coal, up to 2 percent of the sales price); (2) provided for a one- time federal appropriation toward Trust Fund debt forgiveness (about $6 5 billion, according to DOL data); and (3) provided for the refinancing of the Trust Fund’s debt that was not forgiven as a result of EIEA (which we refer to as the Trust Fund’s legacy debt)  Specifically, the Trust Fund’s legacy debt was refinanced with more favorable interest rates, according to DOL data  Interest rates on the refinanced legacy debt range from about 1 4 percent to about 4 5 percent  The forgiveness and refinancing of Trust Fund debt along with extending the current coal tax rates through 2018 were expected to result in annual tax revenue that could be used to pay down interest and principal on the Trust Fund’s legacy debt, according to DOL and Treasury officials  These officials said that models showed that debt would be eliminated by fiscal year 2040; however, they noted that coal tax revenue has been less than originally projected due, in part, to the 2008 recession and increased market competition from other energy sources  As a result, the Trust Fund’s total expenditures continued to exceed revenue and the Trust Fund borrowed from Treasury’s general fund each year from fiscal years 2010 through 2017 to cover debt repayments expenditures  In fiscal year 2017, the Trust Fund’s total principal amount of outstanding debt, which includes its legacy debt and the amount borrowed from Treasury’s general fund that year, was about $4 3 billion (see fig  3)  Trust Fund borrowing will likely continue to increase from fiscal years 2019 through 2050 due, in part, to the scheduled coal tax rate decrease of about 55 percent that will take effect in 2019 and declining coal production, according to our moderate simulation  We simulated the effects of the scheduled 2019 tax rate decrease on Trust Fund finances through 2050, and in this report, we generally present the results of a moderate case set of assumptions (see table 1)  These simulations are not predictions of what will happen, but rather models of what could happen given certain assumptions  For more information on our simulation methodology see appendix I  In addition to the moderate case assumptions, we also simulated how Trust Fund debt could change through 2050 given various other assumptions, and the full range of results for all of our simulations are presented in appendix II  Our moderate case simulation suggests that Trust Fund revenue may decrease, from about $485 million in fiscal year 2018 to about $298 million in fiscal year 2019, due, in part, to the scheduled approximate 55 percent decrease in the coal tax  Our simulation, which incorporates EIA data on future expected coal production, also shows that annual Trust Fund revenue will likely continue to decrease beyond fiscal year 2019 due, in part, to declining coal production  Domestic coal production has declined from about 1 2 billion tons in 2008 to about 728 million tons in 2016, according to EIA  Based on these projections, our moderate simulation shows that Trust Fund annual revenue may continue to decrease from about $298 million in fiscal year 2019 to about $197 million in fiscal year 2050 (see fig  4)  With the scheduled 2019 tax rate decrease, our moderate case simulation suggests that expected revenue will likely be insufficient to cover combined black lung benefit payments and administrative costs, as well as debt repayment expenditures  Specifically, our moderate case simulation suggests that revenue may not be sufficient to cover beneficiary payments and administrative costs from fiscal years 2020 through 2050 (see fig  5)  For instance, in fiscal year 2029, simulated benefit payments and administrative costs will likely exceed simulated revenue by about $99 million  These annual deficits will likely decrease over time to about $4 million by fiscal year 2050 due, in part, to the assumed continued net decline in total black lung beneficiaries  Our simulation also therefore suggests that Trust Fund revenue may not be enough to also cover the debt repayment expenditures it must continue to make through fiscal year 2040, per the payment schedule established following the 2008 EIEA  Our moderate simulation suggests that the amount borrowed by the Trust Fund will likely increase from about $1 6 billion in fiscal year 2019 to about $15 4 billion in fiscal year 2050 (see fig  6)  Although the Trust Fund’s legacy debt decreases through fiscal year 2040, total Trust Fund expenditures—including combined benefit payments and administrative costs as well as debt repayments—will likely continue to exceed revenue which will require continued annual borrowing from Treasury’s general fund  However, the amount borrowed by the Trust Fund could vary depending, in part, on future coal production and the number of new beneficiaries and could range between about $6 billion and about $27 billion in 2050, according to our simulations (see appendix II)  We simulated three options that can affect Trust Fund finances through fiscal year 2050  Specifically, we simulated the effects of (1) adjusting the coal tax, (2) forgiving interest, and (3) forgiving debt  In each of the simulations, we compared the results of the option to a baseline in which the coal tax rates will decrease by about 55 percent, which we refer to as the scheduled 2019 tax rate decrease  We compare interest and debt forgiveness options to a baseline which assumes the scheduled 2019 tax rate decrease has taken effect, and that there is no interest or debt forgiveness  The simulated options are not intended to be exhaustive and we are not endorsing any particular option or combination of options  Using the moderate case, we simulated four options: (1) implementing the 2019 coal tax rate reduction to $0 50 per ton of underground-mined coal and $0 25 per ton of surface-mined coal; (2) maintaining the current coal tax rates of $1 10 per ton for underground-mined coal and $0 55 per ton of surface-mined coal; (3) reducing the tax rates by 25 percent (from $1 10 and $0 55); and (4) increasing these tax rates by 25 percent (see fig  7)  Increasing the tax rates by 25 percent was the only option that eliminated simulated Trust Fund debt by fiscal year 2050, according to our moderate case simulation  We simulated three interest forgiveness options including forgiving interest on (1) legacy debt, (2) annual borrowing, and (3) all debt  Our moderate case simulation suggests that forgiving interest will not eliminate simulated debt by fiscal year 2050 (see fig  8)  We simulated two debt forgiveness options by forgiving principal and interest on (1) legacy debt and (2) all debt  Our moderate case simulation suggests that both debt forgiveness options would reduce simulated Trust Fund borrowing by fiscal year 2050, but these options would not eliminate debt altogether as simulated revenue will likely not be enough to cover simulated expenditures (see fig  9)  In these cases, the Trust Fund will need to continue borrowing from Treasury’s general fund to cover annual deficits, and thus accumulate debt  While adjusting coal tax rates and forgiving interest or debt could reduce the Trust Fund’s simulated borrowing by 2050, implementing them could affect the coal industry or general taxpayers, according to stakeholders we interviewed  For instance, a coal industry representative noted that maintaining the coal tax at its current rate would continue to burden the coal industry and increasing the tax would exacerbate the burden at a time when coal production has been declining  Treasury officials noted that the costs associated with forgiving Trust Fund interest or debt would be borne by the general taxpayer since Treasury borrows from taxpayers to lend to the Trust Fund as needed  These officials also said that making a one-time federal appropriation to forgive interest or debt would be the most transparent way to satisfy the Trust Fund’s outstanding debt to Treasury’s general fund  In addition to the simulations, other options could affect the financial position of the Trust Fund including reducing black lung benefits, eliminating or adjusting the coal tax cap, or creating a variable coal tax  Our moderate case simulation suggests that completely eliminating black lung benefits as of fiscal year 2019 could reduce the Trust Fund’s borrowing from Treasury’s general fund in fiscal year 2050 from about $15 4 billion to about $6 4 billion  However, doing so would generally mean that coal tax revenue would be collected solely to fund the repayment of Trust Fund debt  Another option could be to eliminate or adjust the coal tax cap, which currently prevents mine operators from paying a coal tax of more than 4 4 percent of the price per ton of coal sold  If the coal tax cap were eliminated, for instance, mine operators would pay $1 10 per ton of underground-mined coal and $0


Report 2:  55 per ton of surface-mined coal regardless of price sold, which could increase revenue  As an additional option, changing the structure of the coal tax to flexible rates that change based on an annual actuarial assessment of the Trust Fund could help to ensure that coal mine operators pay the necessary amount of tax to cover Trust Fund expenditures, without resulting in a Trust Fund balance or deficit  Multiple options could reduce the Trust Fund’s future debt and distribute the financial burden among the coal industry and general taxpayers  We simulated whether various coal tax and debt forgiveness options could balance the Trust Fund by fiscal year 2050, whereby its simulated revenue would be sufficient to cover its simulated expenditures  These options were selected, in part, based on interviews with Trust Fund stakeholders and the availability of DOL and other data  We approached these simulations from two perspectives  First, we simulated how much Trust Fund debt would need to be forgiven based on various coal tax rates  Second, we simulated the average tax collected per ton needed to balance the Trust Fund by 2050, based on certain debt forgiveness options  The simulated options are not intended to be exhaustive and we are not endorsing any particular combination of options  Our first set of options using the moderate case simulations are based on the current coal tax rates of $1 10 per ton of underground-mined coal and $0 55 per ton of surface-mined coal, and show the amount of debt forgiveness in fiscal year 2019 needed to balance the Trust Fund by fiscal year 2050 based on certain tax rates (see fig  10)  Specifically, our moderate case simulations show the following: Increasing current coal tax rates by 25 percent could balance the Trust Fund by 2050 and would likely require no debt forgiveness  For this option, the simulated coal tax revenue would likely be sufficient to cover simulated Trust Fund expenditures, including combined benefit payments and administrative costs, as well as debt repayments  However, this option would place the burden solely on the coal industry that would be paying higher taxes at a time when coal production has been declining  Maintaining current coal tax rates could balance the Trust Fund by 2050 if coupled with about $2 4 billion of debt forgiveness  This option would distribute the burden among the coal industry and general taxpayers  Decreasing current coal tax rates by 25 percent could balance the Trust Fund by 2050 if coupled with about $4 8 billion in debt forgiveness  This option would burden the coal industry less than maintaining the current tax rates, but would increase the burden on general taxpayers  Decreasing current tax rates by 55 percent, which we refer to as the scheduled 2019 tax rate decrease, would balance the Trust Fund by 2050 if coupled with about $7 8 billion in debt forgiveness  This figure comprises the Trust Fund’s total simulated outstanding debt in fiscal year 2019 ($6 6 billion), and an additional about $1 2 billion that would be required because the Trust Fund will accrue additional debt from fiscal years 2020 through 2050, according to our moderate case simulations  The coal industry would bear some of the financial burden of this option, while also placing a financial burden on general taxpayers  Our second set of options using moderate case simulations show the change in average coal tax revenue collected per ton to balance the Trust Fund by fiscal year 2050 based on certain debt forgiveness options (see fig  11)  Specifically, our moderate simulations show the following: Forgiving the Trust Fund’s legacy debt would allow for an average tax collected of about $0 59 per ton to balance the Trust Fund by 2050  Based on certain assumptions, this could be accomplished with a tax of $0 88 per ton on underground-mined coal and $0 44 per ton on surface-mined coal  Forgiving all Trust Fund debt would allow for an average tax collected per ton of coal sold of $0 47 per ton to balance the Trust Fund by 2050  Based on certain assumptions, this could be accomplished with a tax of $0 70 per ton on underground-mined coal and a tax of $0 35 per ton of surface-mined coal  We provided a draft of this report to the Departments of Labor (DOL), Treasury, and Health and Human Services (HHS) for review and comment  DOL, Treasury, and HHS provided technical comments, which we incorporated as appropriate  As agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date  At that time we will send copies of this report to the appropriate congressional committees, the Secretaries of Labor, Treasury, and Health and Human Services, and other interested parties  In addition, the report will be available at no charge on GAO’s web site at http://www gao gov  If you or your staff should have any questions about this report, please contact me at (202) 512-7215 or brownbarnesc@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  GAO staff who made key contributions to this report are listed in appendix III  We examined the extent to which (1) Black Lung Disability Trust Fund (Trust Fund) debt may change through 2050 and (2) selected options to improve its future financial position  We interviewed officials from the Departments of Labor (DOL), Treasury, and Health and Human Services (HHS), as well as representatives from the National Mining Association and the United Mine Workers of America  We then selected options to simulate based, in part, on these interviews and the availability of DOL and other data  These options included adjusting the coal tax, forgiving interest on some or all Trust Fund debt, forgiving some or all Trust Fund debt, or various combinations of these options  The options we simulated are not intended to be exhaustive and we are not endorsing any particular option or combination of options  Our simulations are based on various assumptions and simulate Trust Fund revenues and expenditures from fiscal years 2016 through 2050  To develop these simulations, we used actual and projection data from (1) DOL for fiscal years 2015 through 2040; (2) Treasury’s Office of Tax Analysis for fiscal years 2011 through 2015; (3) the Department of Energy’s Energy Information Administration (EIA) for calendar years 2015 through 2050; and (4) the Office of Management and Budget for fiscal year 2017  To simulate future Trust Fund benefit expenditures, we simulated the number of beneficiaries each fiscal year, and the annual average amount of benefits received (cash assistance and medical benefits)  To simulate the numbers of beneficiaries, we used DOL data on the (1) age distributions of miner and widow beneficiaries for fiscal year 2015; (2) mortality rates by age for miner and widow beneficiaries as of fiscal year 2015; and (3) numbers of beneficiaries—including married miners, single miners, widows, and miners receiving medical benefits only—in fiscal year 2015  We assumed—as DOL does in its Black Lung Budget and Liability Model—that all miners are men, all widows are women, and all spouses are 3 years younger than the miner  We also assumed that the age distribution of single miners is the same as for married miners, and that the age distribution of new miner and widow beneficiaries is the same as for miner and widow beneficiaries during fiscal year 2015  We used DOL’s mortality rates to simulate the number of beneficiaries of each age and type in each year, and used those numbers to then simulate the total number of beneficiaries of each type each year (see table 2)  We also assumed that there will be no new medical-benefit-only recipients  Formula The number of married miner beneficiaries age a in fiscal year y is equal to the number of new married miner beneficiaries age a in fiscal year y plus the number of married miner beneficiaries age a-1 in fiscal year y-1 who survived and whose spouse survived  The total number of married miner beneficiaries in fiscal year y is then the sum of the number of married miner beneficiaries of all ages in fiscal year y  Finally, we averaged the number of married miner beneficiaries by averaging the prior fiscal year’s total and the current fiscal year’s total  The number of single miner beneficiaries age a in fiscal year y is equal to the number of new single miner beneficiaries age a in fiscal year y plus the number of single miner beneficiaries age a-1 in fiscal year y-1 who survived plus the number of married miner beneficiaries age a-1 in fiscal year y-1 who survived but whose spouse did not survive  The total number of single miner beneficiaries in fiscal year y is then the sum of the number of single miner beneficiaries of all ages in fiscal year y  Finally, we averaged the number of single miner beneficiaries by averaging the prior fiscal year’s total and the current fiscal year’s total  The number of widow beneficiaries age a in fiscal year y is equal to the number of new beneficiaries who are widows age a in fiscal year y plus the number of widow beneficiaries age a-1 in fiscal year y-1 who survived plus the number of married miner beneficiaries age a+2 in fiscal year y-1 who did not survive but whose spouse did survive  The total number of widow beneficiaries in fiscal year y is then the sum of the number of widow beneficiaries of all ages in fiscal year y  Finally, we averaged the number of widow beneficiaries by averaging the prior fiscal year’s total and the current fiscal year’s total  The number of MBO beneficiaries of age a in fiscal year y is equal to the number of MBO beneficiaries of age a-1 in fiscal year y-1 who survived  The total number of MBO beneficiaries only in fiscal year y is then the sum of the number of MBO beneficiaries of all ages in fiscal year y  Finally, we averaged the number of MBO beneficiaries by averaging the prior fiscal year’s total and the current fiscal year’s total  To simulate future coal tax revenue, we used Treasury and EIA data to calculate (1) the amounts of underground and surface-mined coal taxed at fixed dollar amounts of $1 10 and $0 55 per ton, respectively, in 2015; (2) the amounts of underground and surface-mined coal taxed at variable dollar amounts per ton equal to 4 4 percent of the price in 2015; and (3) average prices of underground and surface-mined coal taxed at 4 4 percent of the price in 2015  We then used EIA data on projected amounts of total coal production, underground-mined coal production, lignite coal production, and coal exports, as well as projected average coal prices, for the period from 2015 through 2050 to simulate future coal tax revenues (see table 3)  We simulated other Trust Fund expenditures and revenues, including administrative costs and debt repayments (see table 4)  For our simulations, total Trust Fund expenditures are the sum of black lung benefits (cash assistance and medical benefits), total administrative costs, repayment of interest and principal on outstanding debt to Treasury’s general fund, and other expenditures  Total Trust Fund revenues are the sum of coal tax revenue and other miscellaneous revenue, and exclude annual borrowing from Treasury’s general fund  Annual borrowing from Treasury’s general fund is the difference between total Trust Fund expenditures and revenues and is assumed to be repaid with interest the following year  If total revenues are greater than total expenditures, then the Trust Fund has a balance and would not have to borrow that year  In this case, we assumed that the Trust Fund will earn interest on that balance at the same rate on which interest would accrue on annual borrowing  We simulated how the scheduled 2019 tax rate decrease and various options including adjusting the coal tax, forgiving debt interest, and forgiving debt principal and interest may affect Trust Fund finances through fiscal year 2050 (see table 5)  The options listed are not intended to be exhaustive and we are not endorsing any particular option or combination of options  We simulated option combinations for coal tax rates, interest forgiveness, and debt forgiveness to demonstrate how potential financial adjustments could affect future Trust Fund borrowing from Treasury’s general fund through fiscal year 2050  For options that involve adjusting coal tax rates, we estimated the amount of debt that would need to be forgiven in fiscal year 2019 for the Trust Fund’s revenues to be sufficient to cover its expenditures through fiscal year 2050, assuming the Trust Fund does not borrow from Treasury’s general fund after fiscal year 2018  To do so, we first calculated the real discounted present value of Trust Fund expenditures for fiscal years 2019 through 2050, including benefit payments, administrative costs, legacy debt repayments, and repayment of annual borrowing from Treasury’s general fund  Second, we calculated the real discounted present value of Trust Fund revenue for the same period, including coal tax revenue and other miscellaneous revenue  Third, we calculated debt forgiveness as the difference between the real discounted present value of Trust Fund expenditures from the first calculation and the real discounted present value of Trust Fund revenues from the second calculation  When the amount of debt forgiveness is greater than the amount of debt outstanding, the Trust Fund would need an additional cash inflow in addition to forgiveness of all outstanding debt  Amounts of debt forgiveness less than zero suggest that no debt forgiveness is required  For options involving forgiving debt (interest or principal), we estimated the average tax per ton of coal that, if implemented in fiscal year 2019, would provide the Trust Fund sufficient revenue to cover its expenditures through fiscal year 2050, assuming the Trust Fund does not receive any advances from Treasury’s general fund after fiscal year 2018  To do so, we first calculated the real discounted present value of Trust Fund expenditures for the period from fiscal year 2019 through fiscal year 2050, again including benefit payments, administrative costs, legacy debt repayments, and repayment of annual borrowing from Treasury’s general fund, minus the real discounted present value of miscellaneous revenues for the same period  Second, we calculated the real discounted present value of coal production for the same period  Third, we calculated the average tax per ton of coal as the first amount divided by the second amount  To assess the sensitivity of each option, we ran each simulation 36 times using four different sets of assumptions about the numbers of future beneficiaries and nine different sets of assumptions about future coal production and prices (see table 6)  Doing so provided a range of estimates about the Trust Fund’s future borrowing needs and provided insight on the sensitivity of its overall financial position relative to its various expenditures and revenues  The analysis also provided a range of estimates of the amount of debt forgiveness needed to bring the Trust Fund into balance by fiscal year 2050, assuming various coal tax rates, and the average tax collection per ton needed to do the same, and assuming various amounts of debt forgiveness  From the range of estimates that resulted from our sensitivity analysis, we selected cases with moderate expectations related to future Trust Fund expenditures and revenue  Specifically, for future expenditures, we assumed an average growth rate of new black lung beneficiaries for fiscal years 2003 through 2015 as a moderate case that reflects historical experience  For future revenue, we used a moderate coal production outlook based on EIA’s reference case, which reflects moderate expectations about future coal production based on various assumptions about economic growth, oil prices, technological innovation, and energy policy  We summarized the results of our simulations by showing the extent to which the Black Lung Disability Trust Fund’s (Trust Fund) balance—the sum of tax revenue and miscellaneous revenue less expenditures—may change in fiscal year 2050 for each option simulated  For example, with the scheduled 2019 tax rate decrease, our moderate case simulations suggest that the Trust Fund would likely have a deficit in fiscal year 2050 of about $15 4 billion  Multiple options could reduce the Trust Fund’s future debt and distribute the financial burden among the coal industry and general taxpayers  We simulated how various coal tax and debt forgiveness options could balance the Trust Fund by fiscal year 2050, whereby its simulated revenue would be sufficient to cover its simulated expenditures  We approached these simulations from two perspectives  First, we simulated how much Trust Fund debt would need to be forgiven based on various coal tax rates  Second, we simulated the average tax collected per ton needed to balance the Trust Fund by 2050, based on certain debt forgiveness options  For our first set of simulations, we calculated the amount of debt outstanding in fiscal year 2019 and the amount that would likely need to be forgiven in fiscal year 2019 for the Trust Fund to have sufficient revenues to cover its expenditures by fiscal year 2050, assuming that it does not borrow from Treasury’s general fund after fiscal year 2018  For example, before any options are implemented, our moderate case simulations suggest that the Trust Fund’s outstanding debt in fiscal year 2019—including both legacy debt and annual borrowing from Treasury’s general fund—would likely be about $6 6 billion (after discounting and adjusting for inflation)  Therefore, with implementation of the coal tax rate decrease of about 55 percent as scheduled in calendar year 2019, about 117 7 percent of that debt would need to be forgiven to balance the Trust Fund  In other words, balancing the Trust Fund would require forgiveness of $6 6 billion and an additional cash inflow of about $1 2 billion because the Trust Fund will accrue additional debt from fiscal years 2020 through 2050, according to our moderate case simulations (see table 8)  For our second set of simulations, we estimated the average tax per ton of coal that, if implemented in fiscal year 2019, would likely provide the Trust Fund sufficient revenues to cover its expenditures in fiscal year 2050, assuming that it does not borrow from Treasury’s general fund after fiscal year 2018  For example, if all principal and interest on Trust Fund legacy debt is forgiven, as of 2019, the estimated average tax that balances the Trust Fund is about $0 59 per ton (see table 9)  Based on certain assumptions, this could be accomplished with a tax of $0 88 per ton on underground-mined coal and $0 44 per ton on surface-mined coal  In addition to the contact named above, Blake Ainsworth (Assistant Director), Justin Dunleavy (analyst-in-charge), Angeline Bickner, Courtney LaFountain, and Rosemary Torres Lerma made key contributions to this report  Also contributing to this report were James Bennett, Melinda Bowman, Lilia Chaidez, Caitlin Cusati, Holly Dye, Alex Galuten, Carol Henn, John Lack, Emei Li, Almeta Spencer, Kate van Gelder, and Shana Wallace 

ground_truth: The LDA, as amended, requires lobbyists to file quarterly disclosure reports and semiannual reports on certain political contributions. The law also includes a provision for GAO to annually audit lobbyists' compliance with the LDA. GAO's objectives were to (1) determine the extent to which lobbyists can demonstrate compliance with disclosure requirements, (2) identify challenges to compliance that lobbyists report, and (3) describe the resources and authorities available to USAO in its role in enforcing LDA compliance, and the efforts USAO has made to improve enforcement. This is GAO's 11th report under the provision. GAO reviewed a stratified random sample of 98 quarterly disclosure LD-2 reports filed for the third and fourth quarters of calendar year 2016 and the first and second quarters of calendar year 2017. GAO also reviewed two random samples totaling 160 LD-203 reports from year-end 2016 and midyear 2017. This methodology allowed GAO to generalize to the population of 45,818 disclosure reports with $5,000 or more in lobbying activity, and 30,594 reports of federal political campaign contributions. GAO also met with officials from USAO to obtain status updates on its efforts to focus resources on lobbyists who fail to comply. GAO is not making any recommendations in this report. GAO provided a draft of this report to the Department of Justice for review and comment. The Department of Justice provided technical comments, which GAO incorporated as appropriate. For the 2017 reporting period, most lobbyists provided documentation for key elements of their disclosure reports to demonstrate compliance with the Lobbying Disclosure Act of 1995, as amended (LDA). For lobbying disclosure (LD-2) reports and political contributions (LD-203) reports filed during the third and fourth quarter of 2016 and the first and second quarter of 2017, GAO estimates that 87 percent of lobbyists filed reports as required for the quarter in which they first registered; the figure below describes the filing process and enforcement; 99 percent of all lobbyists who filed (up from 83 percent in 2016) could provide documentation for income and expenses; and 93 percent filed year-end 2016 LD-203 reports as required. These findings are generally consistent with prior reports GAO issued for the 2010 through 2016 reporting periods. However, in recent years GAO's findings showed some variation in the estimated percentage of reports with supporting documentation. For example, an estimated increase in lobbyists who could document expenses is notable in 2017 and represents a statistically significant increase from 2016. As in GAO's other reports, some lobbyists were still unclear about the need to disclose certain previously held covered positions, such as paid congressional internships or certain executive agency positions. GAO estimates that 15 percent of all LD-2 reports may not have properly disclosed previously held covered positions. On the other hand, over the past several years of reporting on lobbying disclosure, GAO found that most lobbyists in the sample rated the terms associated with LD-2 reporting as “very easy” or “somewhat easy” to understand. The U.S. Attorney's Office for the District of Columbia (USAO) stated it has sufficient resources and authority to enforce compliance with the LDA. USAO continued its efforts to bring lobbyists into compliance by reminding them to file reports or by applying civil penalties.

prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 2.

Report 1: The LDA requires lobbyists to register with the Secretary of the Senate and the Clerk of the House and to file quarterly reports disclosing their respective lobbying activities  Lobbyists are required to file their registrations and reports electronically with the Secretary of the Senate and the Clerk of the House through a single entry point  Registrations and reports must be publicly available in downloadable, searchable databases from the Secretary of the Senate and the Clerk of the House  No specific statutory requirements exist for lobbyists to generate or maintain documentation in support of the information disclosed in the reports they file  However, guidance issued by the Secretary of the Senate and the Clerk of the House recommends that lobbyists retain copies of their filings and documentation supporting reported income and expenses for at least 6 years after they file their reports  The LDA requires that the Secretary of the Senate and the Clerk of the House guide and assist lobbyists with the registration and reporting requirements and develop common standards, rules, and procedures for LDA compliance  The Secretary of the Senate and the Clerk of the House review the guidance semiannually  It was last revised January 31, 2017, to (among other issues) update the registration threshold to reflect changes in the Consumer Price Index, and clarify the identification of clients and covered officials and issues related to rounding income and expenses  The guidance provides definitions of LDA terms, elaborates on registration and reporting requirements, includes specific examples of different scenarios, and provides explanations of why certain scenarios prompt or do not prompt disclosure under the LDA  The offices of the Secretary of the Senate and the Clerk of the House told us they continue to consider information we report on lobbying disclosure compliance when they periodically update the guidance  In addition, they told us they e-mail registered lobbyists quarterly on common compliance issues and reminders to file reports by the due dates  The LDA defines a lobbyist as an individual who is employed or retained by a client for compensation, who has made more than one lobbying contact (written or oral communication to covered officials, such as a high ranking agency official or a Member of Congress made on behalf of a client), and whose lobbying activities represent at least 20 percent of the time that he or she spends on behalf of the client during the quarter  Lobbying firms are persons or entities that have one or more employees who lobby on behalf of a client other than that person or entity  Figure 1 provides an overview of the registration and filing process  Lobbying firms are required to register with the Secretary of the Senate and the Clerk of the House for each client if the firms receive or expect to receive more than $3,000 in income from that client for lobbying activities  Lobbyists are also required to submit an LD-2 quarterly report for each registration filed  The LD-2s contain information that includes: the name of the lobbyist reporting on quarterly lobbying activities; the name of the client for whom the lobbyist lobbied; a list of individuals who acted as lobbyists on behalf of the client during the reporting period; whether any lobbyists served in covered positions in the executive or legislative branch such as high-ranking agency officials or congressional staff positions, in the previous 20 years; codes describing general issue areas, such as agriculture and education; a description of the specific lobbying issues; houses of Congress and federal agencies lobbied during the reporting reported income (or expenses for organizations with in-house lobbyists) related to lobbying activities during the quarter (rounded to the nearest $10,000)  The LDA also requires lobbyists to report certain political contributions semiannually in the LD-203 report  These reports must be filed 30 days after the end of a semiannual period by each lobbying firm registered to lobby and by each individual listed as a lobbyist on a firm’s lobbying report  The lobbyists or lobbying firms must: list the name of each federal candidate or officeholder, leadership political action committee, or political party committee to which he or she contributed at least $200 in the aggregate during the semiannual period; report contributions made to presidential library foundations and presidential inaugural committees; report funds contributed to pay the cost of an event to honor or recognize an official who was previously in a covered position, funds paid to an entity named for or controlled by a covered official, and contributions to a person or entity in recognition of an official, or to pay the costs of a meeting or other event held by or in the name of a covered official; and certify that they have read and are familiar with the gift and travel rules of the Senate and House and that they have not provided, requested, or directed a gift or travel to a member, officer, or employee of Congress that would violate those rules  The Secretary of the Senate and the Clerk of the House, along with USAO, are responsible for ensuring LDA compliance  The Secretary of the Senate and the Clerk of the House notify lobbyists or lobbying firms in writing that they are not complying with the LDA reporting  Subsequently, they refer those lobbyists who fail to provide an appropriate response to USAO  USAO researches these referrals and sends additional noncompliance notices to the lobbyists or lobbying firms, requesting that they file reports or terminate their registration  If USAO does not receive a response after 60 days, it decides whether to pursue a civil or criminal case against each noncompliant lobbyist  A civil case could lead to penalties up to $200,000 for each violation, while a criminal case—usually pursued if a lobbyist’s noncompliance is found to be knowing and corrupt—could lead to a maximum of 5 years in prison  Generally, under the LDA, within 45 days of being employed or retained to make a lobbying contact on behalf of a client, the lobbyist must register by filing an LD-1 form with the Secretary of the Senate and the Clerk of the House  Thereafter, the lobbyist must file quarterly disclosure (LD-2) reports detailing the lobbying activities  Of the 3,433 new registrations we identified for the third and fourth quarters of 2016 and the first and second quarters of 2017, we matched 2,995 of them (87 2 percent) to corresponding LD-2 reports filed within the same quarter as the registration  These results are consistent with the findings we have reported in prior reviews  We used the House lobbyists’ disclosure database as the source of the reports  We also used an electronic matching algorithm that allows for misspellings and other minor inconsistencies between the registrations and reports  Figure 2 shows lobbyists filed disclosure reports as required for most new lobbying registrations from 2010 through 2017  For selected elements of lobbyists’ LD-2 reports that can be generalized to the population of lobbying reports, our findings have generally been consistent from year to year  Most lobbyists reporting $5,000 or more in income or expenses provided written documentation to varying degrees for the reporting elements in their disclosure reports  Figure 3 shows that for most LD-2 reports, lobbyists provided documentation for income and expenses for sampled reports from 2010 through 2017  However, in recent years our findings showed some variation in the estimated percentage of lobbyists who have reports with documentation for income and expense supporting lobbying activities  Specifically, our estimate for 2017 (99 percent) represents a statistically significant increase from 2016  Figure 4 shows that for some LD-2 reports, lobbyists did not round their income or expenses as the guidance requires  In 2017, we estimate 25 percent of reports did not round reported income or expenses according to the guidance  We have found that rounding difficulties have been a recurring issue on LD-2 reports from 2010 through 2017  As we previously reported, several lobbyists who listed expenses told us that based on their reading of the LD-2 form they believed they were required to report the exact amount  While this is not consistent with the LDA and the guidance, this may be a source of some of the confusion regarding rounding errors  In 2016, the guidance was updated to include an additional example about rounding expenses to the nearest $10,000  In 2017, 11 percent of lobbyists reported $10,000 or more in income or expenses  The LDA requires lobbyists to disclose lobbying contacts made with federal agencies on behalf of the client for the reporting period  This year, of the 98 LD-2 reports in our sample, 51 reports disclosed lobbying activities at federal agencies  Of those, lobbyists provided documentation for all lobbying activities at executive branch agencies for 34 LD-2 reports  Figures 5 through 8 show that lobbyists for most LD-2 reports provided documentation for selected elements of their LD-2 reports from 2010 through 2017  Lobbyists for an estimated 93 percent of LD-2 reports filed year-end 2016 for all lobbyists listed political contributions on the report as required  Figure 9 shows that lobbyists for most lobbying firms filed contribution reports as required in our sample from 2010 through 2017  All individual lobbyists and lobbying firms reporting lobbying activity are required to file LD-203 reports semiannually, even if they have no contributions to report, because they must certify compliance with the gift and travel rules  The LDA requires a lobbyist to disclose previously held covered positions in the executive or legislative branch, such as high ranking agency officials and congressional staff, when first registering as a lobbyist for a new client  This can be done either on a new LD-1 or on the quarterly LD- 2 filing when added as a new lobbyist  This year, we estimate that 15 percent of all LD-2 reports may not have properly disclosed previously held covered positions as required  As in our other reports, some lobbyists were still unclear about the need to disclose certain covered positions, such as paid congressional internships or certain executive agency positions  Figure 10 shows the extent to which lobbyists may not have properly disclosed one or more covered positions as required from 2010 through 2017  Lobbyists amended 15 of the 98 LD-2 disclosure reports in our original sample to change previously reported information after we contacted them  Of the 15 reports, 7 were amended after we notified the lobbyists of our review, but before we met with them  An additional 8 of the 15 reports were amended after we met with the lobbyists to review their documentation  We consistently find a notable number of amended LD-2 reports in our sample each year following notification of our review  This suggests that sometimes our contact spurs lobbyists to more closely scrutinize their reports than they would have without our review  Table 1 lists reasons lobbying firms in our sample amended their LD-1 or LD-2 reports  As part of our review, we compared contributions listed on lobbyists’ and lobbying firms’ LD-203 reports against those political contributions reported in the Federal Election Commission (FEC) database to identify whether political contributions were omitted on LD-203 reports in our sample  The sample of LD-203 reports we reviewed contained 80 reports with contributions and 80 reports without contributions  We estimate that overall for 2017, lobbyists failed to disclose one or more reportable contributions on 12 percent of reports  Additionally, ten LD-203 reports were amended in response to our review  For this element in prior reports, we reported an estimated minimum percentage of reports based on a one-sided 95 percent confidence interval rather than the estimated proportion as shown here  Estimates in the table have a maximum margin of error of 11 percentage points  The year to year differences are not statistically significant  Table 2 illustrates that from 2010 through 2017 most lobbyists disclosed FEC reportable contributions on their LD-203 reports as required  As part of our review, 88 different lobbying firms were included in our 2017 sample of LD-2 disclosure reports  Consistent with prior reviews, most lobbying firms reported that they found it “very easy” or “somewhat easy” to comply with reporting requirements  Of the 88 different lobbying firms in our sample, 34 reported that the disclosure requirements were “very easy,” 40 reported them “somewhat easy,” and 13 reported them “somewhat difficult” or “very difficult” (see figure 11)  Most lobbying firms we surveyed rated the definitions of terms used in LD-2 reporting as “very easy” or “somewhat easy” to understand with regard to meeting their reporting requirements  This is consistent with prior reviews  Figures 12 through 16 show what lobbyists reported as their ease of understanding the terms associated with LD-2 reporting requirements from 2012 through 2017  U S  Attorney’s Office (USAO) officials stated that they continue to have sufficient personnel resources and authority under the LDA to enforce reporting requirements  This includes imposing civil or criminal penalties for noncompliance  Noncompliance refers to a lobbyist’s or lobbying firm’s failure to comply with the LDA  However, USAO noted that the number of assigned personnel has decreased due to attrition  USAO officials stated that lobbyists resolve their noncompliance issues by filing LD-2, LD-203, or LD-2 amendments, or by terminating their registration, depending on the issue  Resolving referrals can take anywhere from a few days to years, depending on the circumstances  During this time, USAO creates summary reports from its database to track the overall number of referrals that are pending or become compliant as a result of the lobbyist receiving an e-mail, phone call, or noncompliance letter  Referrals remain in the pending category until they are resolved  The pending category is divided into the following areas: “initial research for referral,” “responded but not compliant,” “no response/waiting for a response,” “bad address,” and “unable to locate ” The USAO attempts to review and update all pending cases every six months  USAO focuses its enforcement efforts primarily on the “responded but not compliant” and the “no response/waiting for a response” groups  Officials told us that, if the USAO, after several unsuccessful attempts, has been unsuccessful in contacting the non-compliant firm or its lobbyist, USAO confers with both the Secretary of the Senate and the Clerk of the House to determine whether further action is needed  In the cases where the lobbying firm is repeatedly referred for not filing disclosure reports but does not appear to be actively lobbying, USAO suspends enforcement actions  USAO officials reported they will continue to monitor these firms and will resume enforcement actions if required  USAO received 3,213 referrals from both the Secretary of the Senate and the Clerk of the House for failure to comply with LD-2 reporting requirements cumulatively for filing years 2009 through 2015  Table 4 shows the number and status of the referrals received and the number of enforcement actions taken by USAO to bring lobbying firms into compliance  Enforcement actions include USAO attempts to bring lobbyists into compliance through letters, e-mails, and calls  About 45 percent (1,450 of 3,213) of the total referrals received are now compliant because lobbying firms either filed their reports or terminated their registrations  In addition, some of the referrals were found to be compliant when USAO received the referral  Therefore, no action was taken  This may occur when lobbying firms respond to the contact letters from the Secretary of the Senate and the Clerk of the House after USAO received the referrals  About 55 percent (1,752 of 3,213) of referrals are pending further action because USAO could not locate the lobbying firm, did not receive a response from the firm after an enforcement action, or plans to conduct additional research to determine if it can locate the lobbying firm  The remaining 11 referrals did not require action or were suspended because the lobbyist or client was no longer in business or the lobbyist was deceased  LD-203 referrals consist of two types: (1) LD-203(R) referrals represent lobbying firms that have failed to file LD-203 reports for their lobbying firm and (2) LD-203 referrals represent the lobbyists at the lobbying firm who have failed to file their individual LD-203 reports as required  USAO received 2,255 LD-203(R) referrals (cumulatively from 2009 through 2015) and 3,716 LD-203 referrals (cumulatively from 2009 through 2014 from the Secretary of the Senate and the Clerk of the House for lobbying firms and lobbyists for noncompliance with reporting requirements)  LD- 203 referrals are more complicated than LD-2 referrals because both the lobbying firm and the individual lobbyists within the firm are each required to file a LD-203  Lobbyists employed by a lobbying firm typically use the firm’s contact information and not the lobbyists’ personal contact information  This makes it difficult to locate a lobbyist who is not in compliance and may have left the firm  USAO officials reported that, while many firms have assisted USAO by providing contact information for lobbyists, they are not required to do so  According to officials, USAO has difficulty pursuing LD-203 referrals for lobbyists who have departed a firm without leaving forwarding contact information with the firm  While USAO utilizes web searches and online databases, including social media, to find these missing lobbyists, it is not always successful  Table 5 shows the status of LD-203 (R) referrals received and the number of enforcement actions taken by USAO to bring lobbying firms into compliance  A little more than 44 percent (998 of 2,255) of the lobbying firms referred by the Secretary of the Senate and Clerk of the House for noncompliance from calendar years 2009 through 2015 are now considered compliant because firms either filed their reports or terminated their registrations  About 56 percent (1,251 of 2,255) of the referrals are pending further action  Table 6 shows that USAO received 3,716 LD-203 referrals from the Secretary of the Senate and Clerk of the House for lobbyists who failed to comply with LD-203 reporting requirements for calendar years 2009 through 2014  It also shows the status of the referrals received and the number of enforcement actions taken by USAO to bring lobbyists into compliance  In addition, table 6 shows that about 47 percent (1,741 of 3,716) of the lobbyists had come into compliance by filing their reports or are no longer registered as a lobbyist  About 53 percent (1,966 of 3,716) of the referrals are pending further action because USAO could not locate the lobbyist, did not receive a response from the lobbyist, or plans to conduct additional research to determine if it can locate the lobbyist  Table 7 shows that USAO received LD-203 referrals from the Secretary of the Senate and the Clerk of the House for 4,991 lobbyists who failed to comply with LD-203 reporting requirements for any filing year from 2009 through 2014  It also shows the status of compliance for individual lobbyists listed on referrals to USAO  About 51 percent (2,526 of 4,991) of the lobbyists had come into compliance by filing their reports or are no longer registered as a lobbyist  About 50 percent (2,465 of 4,991) of the referrals are pending action because USAO could not locate the lobbyists, did not receive a response from the lobbyists, or plans to conduct additional research to determine if it can locate the lobbyists  USAO officials said that many of the pending LD-203 referrals represent lobbyists who no longer lobby for the lobbying firms affiliated with the referrals, even though these lobbying firms may be listed on the lobbyist’s LD-203 report  According to USAO officials, lobbyists and lobbying firms who repeatedly fail to file reports are labeled chronic offenders and referred to one of the assigned attorneys for follow-up  USAO also receives complaints regarding lobbyists who are allegedly lobbying but never filed an LD-203  USAO officials added that USAO monitors and investigates chronic offenders to ultimately determine the appropriate enforcement actions, which may include settlement or other civil actions  In regards to the four active cases involving chronic offenders they reported to us in 2016, USAO officials noted that the agency is investigating one case, negotiating a resolution that will include a civil penalty in another case, and closing two other investigations without further action  In addition, USAO is reviewing its records to identify additional chronic offenders for further action due to noncompliance  We provided a draft of this report to the Department of Justice for review and comment  The Department of Justice provided technical comments, which we incorporated as appropriate  We are sending copies of this report to the Attorney General, Secretary of the Senate, Clerk of the House of Representatives, and interested congressional committees and members  In addition, this report is available at no charge on the GAO website at http://www gao gov  If you or your staff have any questions about this report, please contact me at (202) 512-2717 or jonesy@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  GAO staff who made major contributions to this report are listed in appendix IV  Our objectives were to determine the extent to which lobbyists are able to demonstrate compliance with the Lobbying Disclosure Act of 1995, as amended (LDA) by providing documentation to support information contained on registrations and reports filed under the LDA; to identify challenges and potential improvements to compliance, if any; and to describe the resources and authorities available to the U S  Attorney’s Office for the District of Columbia (USAO), its role in enforcing LDA compliance, and the efforts it has made to improve LDA enforcement  We used information in the lobbying disclosure database maintained by the Clerk of the House of Representatives (Clerk of the House)  To assess whether these disclosure data were sufficiently reliable for the purposes of this report, we reviewed relevant documentation and consulted with knowledgeable officials  Although registrations and reports are filed through a single web portal, each chamber subsequently receives copies of the data and follows different data-cleaning, processing, and editing procedures before storing the data in either individual files (in the House) or databases (in the Senate)  Currently, there is no means of reconciling discrepancies between the two databases caused by the differences in data processing  For example, Senate staff told us during previous reviews they set aside a greater proportion of registration and report submissions than the House for manual review before entering the information into the database  As a result, the Senate database would be slightly less current than the House database on any given day pending review and clearance  House staff told us during previous reviews that they rely heavily on automated processing  In addition, while they manually review reports that do not perfectly match information on file for a given lobbyist or client, staff members approve and upload such reports as originally filed by each lobbyist, even if the reports contain errors or discrepancies (such as a variant on how a name is spelled)  Nevertheless, we do not have reasons to believe that the content of the Senate and House systems would vary substantially  Based on interviews with knowledgeable officials and a review of documentation, we determined that House disclosure data were sufficiently reliable for identifying a sample of quarterly disclosure reports (LD-2) and for assessing whether newly filed lobbyists also filed required reports  We used the House database for sampling LD-2 reports from the third and fourth quarters of 2016 and the first and second quarters of 2017, as well as for sampling year-end 2016 and midyear 2017 political contributions reports (LD-203)  We also used the database for matching quarterly registrations with filed reports  We did not evaluate the Offices of the Secretary of the Senate or the Clerk of the House, both of which have key roles in the lobbying disclosure process  However, we did consult with officials from each office  They provided us with general background information at our request  To assess the extent to which lobbyists could provide evidence of their compliance with reporting requirements, we examined a stratified random sample of 98 LD-2 reports from the third and fourth quarters of 2016 and the first and second quarters of 2017  The sample size of 98 LD-2 reports for this year’s review represents an increase from the sample size selected for the 2015 and 2016 reviews, and is a return to the sample size selected in reviews prior to 2015  We increased the sample size because, in 2016, we observed a change in the estimate of the percentage of reports that had documentation of income and expenses (83 percent down from 92 percent in 2015)  At that time, we were unable to state that this was a statistically significant change because, in part, the reduced sample size of 80 did not give us enough power to detect and report on the change of that size  We excluded reports with no lobbying activity or with income or expenses of less than $5,000 from our sampling frame  We drew our sample from 45,818 activity reports filed for the third and fourth quarters of 2016 and the first and second quarters of 2017 available in the public House database, as of our final download date for each quarter  Our sample of LD-2 reports was not designed to detect differences over time  However, we conducted tests of significance for changes from 2010 to 2017 for the generalizable elements of our review  We found that results were generally consistent from year to year and there were few statistically significant changes after using a Bonferroni adjustment to account for multiple comparisons  For this year’s review, we identified that the estimated change in the percent of LD-2 reports that provided written documentation for the income and expenses from 2016 to 2017 is notable  In recent years, our findings show some variation in the estimate percentage of reports with documentation  Specifically, our estimate for 2017 (99 percent) represents a statistically significant increase from 2016  These changes are identified in the report  The inability to detect significant differences from year to year in our results may be related to sampling error alone or the nature of our sample, which was relatively small and was designed only for cross-sectional analysis  Our sample is based on a stratified random selection and is only one of a large number of samples that we may have drawn  Because each sample could have provided different estimates, we express our confidence in the precision of our particular sample’s results as a 95 percent confidence interval  This interval would contain the actual population value for 95 percent of the samples that we could have drawn  The percentage estimates for LD-2 reports have 95 percent confidence intervals of within plus or minus 12 percentage points or fewer of the estimate itself  We contacted all the lobbyists and lobbying firms in our sample and, using a structured web-based survey, asked them to confirm key elements of the LD-2 and whether they could provide written documentation for key elements in their reports, including the amount of income reported for lobbying activities; the amount of expenses reported on lobbying activities; the names of those lobbyists listed in the report; the houses of Congress and federal agencies that they lobbied, and the issue codes listed to describe their lobbying activity  After reviewing the survey results for completeness, we interviewed lobbyists and lobbying firms to review the documentation they reported as having on their online survey for selected elements of their respective LD- 2 report  Prior to each interview, we conducted a search to determine whether lobbyists properly disclosed their covered position as required by the LDA  We reviewed the lobbyists’ previous work histories by searching lobbying firms’ websites, LinkedIn, Leadership Directories, Legistorm, and Google  Prior to 2008, lobbyists were only required to disclose covered official positions held within 2 years of registering as a lobbyist for the client  The Honest Leadership and Open Government Act of 2007 amended that time frame to require disclosure of positions held 20 years before the date the lobbyists first lobbied on behalf of the client  Lobbyists are required to disclose previously held covered official positions either on the client registration (LD-1) or on an LD-2 report  Consequently, those who held covered official positions may have disclosed the information on the LD-1 or a LD-2 report filed prior to the report we examined as part of our random sample  Therefore, where we found evidence that a lobbyist previously held a covered official position, and that information was not disclosed on the LD-2 report under review, we conducted an additional review of the publicly available Secretary of the Senate or Clerk of the House database to determine whether the lobbyist properly disclosed the covered official position on a prior report or LD-1  Finally, if a lobbyist appeared to hold a covered position that was not disclosed, we asked for an explanation at the interview with the lobbying firm to ensure that our research was accurate  In previous reports, we reported the lower bound of a 90 percent confidence interval to provide a minimum estimate of omitted covered positions and omitted contributions with a 95 percent confidence level  We did so to account for the possibility that our searches may have failed to identify all possible omitted covered positions and contributions  As we have developed our methodology over time, we are more confident in the comprehensiveness of our searches for these items  Accordingly, this report presents the estimated percentages for omitted contributions and omitted covered positions, rather than the minimum estimates  As a result, percentage estimates for these items will differ slightly from the minimum percentage estimates presented in prior reports  In addition to examining the content of the LD-2 reports, we confirmed whether the most recent LD-203 reports had been filed for each firm and lobbyist listed on the LD-2 reports in our random sample  Although this review represents a random selection of lobbyists and firms, it is not a direct probability sample of firms filing LD-2 reports or lobbyists listed on LD-2 reports  As such, we did not estimate the likelihood that LD-203 reports were appropriately filed for the population of firms or lobbyists listed on LD-2 reports  To determine if the LDA’s requirement for lobbyists to file a report in the quarter of registration was met for the third and fourth quarters of 2016 and the first and second quarters of 2017, we used data filed with the Clerk of the House to match newly filed registrations with corresponding disclosure reports  Using an electronic matching algorithm that includes strict and loose text matching procedures, we identified matching disclosure reports for 2,995, or 87 2 percent, of the 3,433 newly filed registrations  We began by standardizing client and lobbyist names in both the report and registration files (including removing punctuation and standardizing words and abbreviations, such as “company” and “CO”)  We then matched reports and registrations using the House identification number (which is linked to a unique lobbyist-client pair), as well as the names of the lobbyist and client  For reports we could not match by identification number and standardized name, we also attempted to match reports and registrations by client and lobbyist name, allowing for variations in the names to accommodate minor misspellings or typos  For these cases, we used professional judgment to determine whether cases with typos were sufficiently similar to consider as matches  We could not readily identify matches in the report database for the remaining registrations using electronic means  To assess the accuracy of the LD-203 reports, we analyzed stratified random samples of LD-203 reports from the 30,594 total LD-203 reports  The first sample contains 80 reports of the 9,474 reports with political contributions and the second contains 80 reports of the 20,335 reports listing no contributions  Each sample contains 40 reports from the year- end 2016 filing period and 40 reports from the midyear 2017 filing period  The samples from 2017 allow us to generalize estimates in this report to either the population of LD-203 reports with contributions or the reports without contributions to within a 95 percent confidence interval of within plus or minus 11 percentage points or fewer  Although our sample of LD- 203 reports was not designed to detect differences over time, we conducted tests of significance for changes from 2010 to 2017 and found no statistically significant differences after adjusting for multiple comparisons  While the results provide some confidence that apparent fluctuations in our results across years are likely attributable to sampling error, the inability to detect significant differences may also be related to the nature of our sample, which was relatively small and designed only for cross- sectional analysis  We analyzed the contents of the LD-203 reports and compared them to contribution data found in the publicly available Federal Elections Commission’s (FEC) political contribution database  We consulted with staff at FEC responsible for administering the database  We determined that the data are sufficiently reliable for the purposes of our reporting objectives  We compared the FEC-reportable contributions on the LD-203 reports with information in the FEC database  The verification process required text and pattern matching procedures so we used professional judgment when assessing whether an individual listed is the same individual filing an LD-203  For contributions reported in the FEC database and not on the LD-203 report, we asked the lobbyists or organizations to explain why the contribution was not listed on the LD-203 report or to provide documentation of those contributions  As with covered positions on LD-2 disclosure reports, we cannot be certain that our review identified all cases of FEC-reportable contributions that were inappropriately omitted from a lobbyist’s LD-203 report  We did not estimate the percentage of other non-FEC political contributions that were omitted because they tend to constitute a small minority of all listed contributions and cannot be verified against an external source  To identify challenges to compliance, we used a structured web-based survey and obtained the views from 88 different lobbying firms included in our sample on any challenges to compliance  The number of different lobbying firms is 88, which is less than our original sample of 98 reports because some lobbying firms had more than one LD-2 report included in our sample  We calculated responses based on the number of different lobbying firms that we contacted rather than the number of interviews  Prior to our calculations, we removed the duplicate lobbying firms based on the most recent date of their responses  For those cases with the same response date, the decision rule was to keep the cases with the smallest assigned case identification number  To obtain their views, we asked them to rate their ease with complying with the LD-2 disclosure requirements using a scale of “very easy,” “somewhat easy,” “somewhat difficult,” or “very difficult ” In addition, using the same scale we asked them to rate the ease of understanding the terms associated with LD-2 reporting requirements  To describe the resources and authorities available to the U S  Attorney’s Office for the District of Columbia (USAO) and its efforts to improve its LDA enforcement, we interviewed USAO officials  We obtained information on the capabilities of the system officials established to track and report compliance trends and referrals and on other practices established to focus resources on LDA enforcement  USAO provided us with reports from the tracking system on the number and status of referrals and chronically noncompliant lobbyists and lobbying firms  The mandate does not require us to identify lobbyists who failed to register and report in accordance with the LDA requirements, or determine for those lobbyists who did register and report whether all lobbying activity or contributions were disclosed  Therefore, this was outside the scope of our audit  We conducted this performance audit from April 2017 to March 2018 in accordance with generally accepted government auditing standards  Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives  We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives  The random sample of lobbying disclosure reports we selected was based on unique combination of House ID, lobbyist, and client names (see table 8)  See table 9 for a list of the lobbyists and lobbying firms from our random sample of lobbying contribution reports with contributions  See table 10 for a list of the lobbyists and lobbying firms from our random sample of lobbying contribution reports without contributions  In addition to the contact named above, Clifton G  Douglas Jr  (Assistant Director), Shirley Jones (Assistant General Counsel) and Ulyana Panchishin (Analyst-In-Charge) supervised the development of this report  James Ashley, Ann Czapiewski, Krista Loose, Kathleen Jones, Amanda Miller, Sharon Miller, Stewart W  Small, and Kayla L  Robinson made key contributions to this report  Assisting with lobbyist file reviews were Justine Augeri, Matthew Bond, James A  Howard, Jesse Jordan, Sherrice Kerns, Dalton Matthew Lauderback, Alexandria Palmer, Alan Rozzi, Shane Spencer, Jessica Walker, Ralanda Winborn, and Kate Wulff  Lobbying Disclosure: Observations on Lobbyists’ Compliance with New Disclosure Requirements  GAO-08-1099  Washington, D C: September 30, 2008  2008 Lobbying Disclosure: Observations on Lobbyists’ Compliance with Disclosure Requirements  GAO-09-487  Washington, D C: April 1, 2009  2009 Lobbying Disclosure: Observations on Lobbyists’ Compliance with Disclosure Requirements  GAO-10-499  Washington, D C: April 1, 2010  2010 Lobbying Disclosure: Observations on Lobbyists’ Compliance with Disclosure Requirements  GAO-11-452  Washington, D C: April 1, 2011  2011 Lobbying Disclosure: Observations on Lobbyists’ Compliance with Disclosure Requirements  GAO-12-492  Washington, D C: March 30, 2012  2012 Lobbying Disclosure: Observations on Lobbyists’ Compliance with Disclosure Requirements  GAO-13-437  Washington, D C: April 1, 2013  2013 Lobbying Disclosure: Observations on Lobbyists’ Compliance with Disclosure Requirements  GAO-14-485  Washington, D C: May 28, 2014  2014 Lobbying Disclosure: Observations on Lobbyists’ Compliance with Disclosure Requirements  GAO-15-310  Washington, D C : March 26, 2015  2015 Lobbying Disclosure: Observations on Lobbyists’ Compliance with Disclosure Requirements  GAO-16-320  Washington, D C : March 24, 2016  2016 Lobbying Disclosure: Observations on Lobbyists’ Compliance with Disclosure Requirements  GAO-17-385  Washington, D C : March 31, 2017 


Report 2: Historically located between empires, various Georgian kingdoms and principalities were incorporated into the Russian Empire beginning in the early 19 th century  Georgia enjoyed a brief period of independence from 1918 until its forcible incorporation into the Union of Soviet Socialist Republics (USSR, or Soviet Union) in 1921-1922  Georgia gained independence in 1991 with the collapse of the Soviet Union  Georgia is located in the South Caucasus, a region between the Black and Caspian Seas and separated from Russia by the Greater Caucasus mountain range  The South Caucasus also borders Iran and Turkey (see Figure 1 )  Georgia's South Caucasus neighbors, Armenia and Azerbaijan, have been locked in territorial conflict for almost three decades over the predominantly Armenian-populated region of Nagorno-Karabakh, formally part of Azerbaijan  Georgia has its own unresolved conflicts with two Russian-supported regions, Abkhazia and South Ossetia  These regions, in addition to being settled by ethnic Georgians, are home to ethnic groups that more closely identify with ethnic kin in Russia's North Caucasus, located across the Caucasus mountain range  After a short war with Georgia in 2008, Russia unilaterally recognized the independence of these breakaway regions and stationed military forces on their territory  Georgians speak and write their own distinct Caucasian language, with a written literary form that emerged at least as early as the fifth century  The Georgian Orthodox Church, to which most Georgians belong, is autocephalous (independent), with roots that date back to the fourth century  Today, many observers consider Georgia to be one of the most democratic states among the USSR's successor states  The U S -based nongovernmental organization (NGO) Freedom House considers Georgia to be the freest post-Soviet state (not including the Baltic states), followed by Ukraine, Moldova, and Armenia  Georgia has a parliamentary system of governance, resulting from constitutional reforms that came into effect in 2013 and 2018  The prime minister is the country's most powerful executive  Georgia's president is commander in chief of the armed forces and has the power to veto legislation and dissolve parliament under certain circumstances  Georgia's prime minister, Mamuka Bakhtadze (aged 36), assumed office in June 2018  Bakhtadze was Georgia's minister of finance from November 2017 to June 2018; he previously served as the head of Georgian Railways and the Georgian International Energy Corporation  Georgia's president, elected in November 2018, is Salome Zurabishvili (aged 67), a former member of parliament (2016-2018) and minister of foreign affairs (2004-2005) who was previously a French national and diplomat  The parliamentary chairman is Irakli Kobakhidze (aged 40), a former professor of law and politics  Georgia has a unicameral legislature with 150 members elected for four-year terms by two methods: 77 by party list and 73 by majoritarian district  The most recent parliamentary elections in 2016 resulted in a sizeable win for Georgia's center-left ruling party, Georgian Dream-Democratic Georgia (GD), which initially led a ruling coalition after coming to power in 2012 and now governs alone  GD won 49% of the party list vote and nearly all majoritarian races, leading to control of more than 75% of parliamentary seats (116 of 150 deputies)  Before losing this supermajority in February 2019 (see " Ruling Party Tensions " below), GD had enough votes to unilaterally enact changes to Georgia's constitution  This led many observers and opposition supporters to express concern that there were insufficient checks and balances against the ruling party  GD's main competitor in 2016 was the center-right United National Movement (UNM), the former ruling party previously led by ex-president Mikheil Saakashvili  The UNM received 27% of the party vote and 27 seats (18%)  After months of infighting, the UNM fragmented in 2017, and most of its deputies, including much of the party's senior leadership, formed a new opposition party called European Georgia-Movement for Liberty  A third electoral bloc, the nationalist-conservative Alliance of Patriots of Georgia-United Opposition, cleared the 5% threshold to enter parliament with six seats  Georgia's most recent local elections were in 2017  They provided a similar picture of ruling party dominance across the country  In the party-list portion of the vote to local councils, GD won in all 73 districts, with a total of 56% of the vote  The UNM and European Georgia won 27% of the vote (17% and 10%, respectively)  The nationalist-conservative Alliance of Patriots won 7%  GD won more than 92% of majoritarian seats, giving it a total of 77% of seats in local councils nationwide  GD also won mayoral elections in all but two districts  The most recent presidential elections were held in two rounds in October and November 2018  The victor, Salome Zurabishvili, won 60% of the vote in the second round  Zurabishvili ran as an independent candidate, although she was supported by GD  UNM candidate Grigol Vashadze, like Zurabishvili an ex-foreign minister, received 40%  The first round of the election was a closer race (39% to 38%), but Zurabishvili appeared to benefit from greater turnout in the runoff (56%, compared to 46% in the first round)  Domestic and international observers considered the election to be competitive but flawed  Observers noted instances of official pressure against state employees to support Zurabishvili, as well as incidents of ballot box stuffing  They also expressed concern about allegations of mass vote-buying, related to Prime Minister Bakhtadze's pre-runoff announcement that a philanthropic foundation associated with GD founder and chairman Bidzina Ivanishvili had agreed to purchase and forgive the small private debts of more than 600,000 individuals  The U S  Department of State said it shared the concerns of observers and indicated "these actions are not consistent with Georgia's commitment to fully fair and transparent elections " Since 2018, GD has exhibited signs of internal tension  Many observers believe that GD founder Ivanishvili continued to maintain an influential behind-the-scenes role in government after stepping down as prime minister in 2013  Ivanishvili formally returned to politics as GD's party chairman in 2018, reportedly due to frustration with the party's growing internal divides  Then-Prime Minister Giorgi Kvirikashvili resigned less than two months later, citing "disagreements" with Ivanishvili  Kvirikashvili's resignation also followed a series of anti-government demonstrations against what protestors perceived to be heavy-handed police raids and judicial bias  Prime Minister Bakhtadze succeeded Kvirikashvili in June 2018  More recently, GD suffered parliamentary defections in February 2019, as a result of a dispute concerning judicial appointments (see " Dispute over Judicial Reforms " below)  By the end of March 2019, eight members of parliament, led by Eka Beselia, former chairwoman of the parliamentary committee on legal affairs, had left GD  Beselia and most of the defecting MPs were expected to establish a new faction, while two MPs joined the Patriots of Georgia faction  The GD government also has had tense relations with the presidency  Ex-President Giorgi Margvelashvili, who was elected in 2013, initially was allied to GD  He subsequently adopted a more independent stance and fell out of favor with then-Prime Minister Ivanishvili  Margvelashvili frequently criticized the government and vetoed legislation several times, although parliament usually overrode his veto  Margvelashvili chose not to run for reelection in 2018  For the 2018 election, GD did not nominate its own presidential candidate  This possibly reflected a belief within the party leadership that the powers of the presidency were too limited to warrant fielding a candidate for the position  After some deliberation, however, GD decided to support Zurabishvili, an independent candidate  Before making this decision, government officials had criticized Zurabishvili for comments she made on the 10 th anniversary of the August 2008 war that appeared to blame Georgia's ex-leadership for the war  One of the government's internal disputes concerns judicial reform  A series of reforms from 2013 to 2017 restructured Georgia's judicial institutions  A High Council of Justice oversees the appointment and dismissal of judges  The council has 15 members, a majority of whom are selected by the Conference of Judges, the judiciary's self-governing body  In December 2018, several GD members of parliament criticized the High Council's decision to nominate several judges to Georgia's 28-seat Supreme Court whom they considered tainted by association with the UNM  The dispute sparked an intensive debate within the ruling party, as well as with some NGOs who sided with the dissenting GD members out of a concern that the nominated judges could be susceptible to corruption  Ultimately, the Supreme Court nominees withdrew their candidacies  GD's leadership agreed to further debate the rules of appointment and blamed the dispute on the opposition  Appointments to a nine-member Constitutional Court are divided between the parliament, president, and the Supreme Court  In recent years, the Constitutional Court has been the focus of various disputes concerning possible bias (sometimes against the government, other times against the opposition)  In July 2018, the Constitutional Court received international attention for ruling that marijuana use was not a criminal offense, a decision government officials and church representatives heavily criticized  In response, parliament passed legislation imposing strict limitations on marijuana use  After GD won a supermajority in 2016, Georgia's parliament convened a State Constitutional Commission to draft additional reforms to the constitution intended to consolidate Georgia's transition to a parliamentary system of governance  Parliament passed the reforms in September 2017 by a vote of 117-2  Opposition parties, who opposed certain measures that appeared to strengthen the ruling party, refused to participate in the vote; civil society organizations also registered opposition  Then-President Margvelashvili vetoed the amendments and proposed alternative reforms  Parliament overrode his veto, and the president signed the amendments into law  The constitutional reforms entered into force after the 2018 presidential election  The reforms affect Georgia's parliamentary system in several ways  One of the main changes is the abolition of Georgia's directly elected presidency beginning in 2023  Instead, the president is to be indirectly elected by a college of electors made up of parliamentary deputies and local government representatives  Another major change is that parliamentary elections are to be held entirely on the basis of party lists, eliminating single-member districts  In theory, this change is expected to lead to greater opposition representation in parliament, as in Georgia parties that win the party-list vote tend to overwhelmingly win single-member districts  Although this change was to take effect in 2020, parliament voted to push back its implementation to 2024, a move many observers interpreted as an attempt to prolong the ruling party's dominance  In January 2019, several opposition parties launched a petition to pressure the government to implement the shift to a fully proportional system in advance of the 2020 parliamentary elections  In the course of adopting constitutional reforms, parliament considered several recommendations of the Council of Europe's Venice Commission, a legal and democratic advisory body  In the end, the commission provided a "positive assessment" of the reforms, although it noted "the postponement of the entry into force of the proportional election system to October 2024 is highly regrettable and a major obstacle to reaching consensus " The Venice Commission said the reform "completes the evolution of Georgia's political system towards a parliamentary system and constitutes a positive step towards the consolidation and improvement of the country's constitutional order, based on the principles of democracy, the rule of law and the protection of fundamental rights " For more than two decades, Georgia has been recovering from the severe economic decline it experienced after the Soviet Union collapsed  It remains a relatively poor country  In 2018, Georgia's GDP was around $16 7 billion (approximately 16 times less than that of Connecticut, a U S  state with a similar population size)  Its per capita GDP ($4,506) is midsized in comparison to Russia and other post-Soviet states  In 2017-2018, Georgia's economy appeared to enter a period of relatively strong growth  After average GDP growth of around 3% a year from 2013 to 2016, Georgia's GDP grew at 4 8% a year in 2017 and 2018  Increased economic growth has been based on strengthening domestic consumption and external demand, as well as "generally strong policy efforts," according to the International Monetary Fund (IMF)  The IMF forecasts a sustained rate of GDP growth of around 4 9% annually from 2019 to 2021  In February 2019, the IMF commended Georgian authorities "for advancing structural reforms [but] stressed the need for continued efforts to promote inclusive growth and higher economic resilience to external shocks " Poverty has declined in recent years, although it is still relatively high  According to official data, 22% of the population lived in poverty in 2017 (down from 39% a decade before)  In recent years, recorded unemployment has been around 14%; some surveys suggest a higher rate of unemployment  More than 40% of Georgian laborers work in agriculture, a sector of the economy that accounts for less than 10% of GDP  Georgia's economy depends in part on remittances from labor migration  From 2013 to 2017, remittances made up around 11% of Georgia's GDP  In 2017, Russia was estimated to be the source of almost 60% of Georgian remittances, followed by Ukraine (8%), Greece (5%), and Armenia (4%)  In 2017, the IMF approved a three-year Extended Fund Facility arrangement to provide Georgia with around $285 million in loans to support economic reforms focusing, among other things, on financial stability and infrastructure investment  The IMF noted the need for Georgia to increase its agricultural productivity, improve its business environment, and reform its education system  Georgia has suffered in the past from energy shortages and gas cutoffs, but it has improved its energy security in recent years  Georgia has rehabilitated hydropower plants and constructed new ones  Nearly all its natural gas supplies come from neighboring Azerbaijan  In 2018, Georgia's three largest merchandise trading partners were Turkey ($1 7 billion, or 14% of Georgia's trade), Russia ($1 4 billion, 11%), Azerbaijan ($1 1 billion, 9%), and China ($1 0 billion, 8%)  Trade with the European Union (EU), as a whole Georgia's largest trading partner, made up around 27% of total trade ($3 4 billion)  More than half of Georgia's merchandise exports (51%) went to five countries: Azerbaijan, Russia, Armenia, Bulgaria, and Turkey  Its main exports were copper ores, beverages (wine, water, and spirits), motor vehicles, and iron and steel  Free trade agreements with the EU (signed in 2014) and China (signed in 2017) may improve Georgia's prospects for export-led growth  Georgia is also exploring a trade agreement with India  However, Georgia's manufacturing sector is small, and its top exports include used foreign cars and scrap metal, which provide low added value  The IMF indicates that Georgia could further diversify its agricultural exports but notes the need to improve quality and standards  Tourism to Georgia has increased in recent years and annual tourism-related income has more than quadrupled since 2010  In 2018, the number of international visitors who stayed in the country overnight was around 4 8 million, a 345% increase since 2010  Most tourists are from neighboring countries: Russia, Azerbaijan, Turkey, and Armenia  In recent years, foreign direct investment (FDI) appears to have exceeded the high levels Georgia enjoyed in 2006 to 2008, before the global financial crisis, when FDI averaged $1 5 billion a year  From 2014 to 2018, FDI averaged $1 64 billion a year  More than 60% of the total amount came from Azerbaijan, the Netherlands, the United Kingdom, and Turkey  During this period, most FDI was in transport and communications (28%); other leading sectors were finance (13%), construction (13%), and energy (10%)  In 2017, the IMF noted that attracting FDI to sectors with high export potential, including tourism and agriculture, is "crucial to ensure growth in foreign markets " Georgia aspires to be a key transit hub for the growing East-West overland trade route between China and Europe  In pursuit of this goal, a U S -Georgian consortium is constructing a major new deepwater port and free industrial zone in Anaklia, which is located on Georgia's Black Sea coast and abuts the Russian-occupied region of Abkhazia  The port, scheduled to begin operations in 2021, is considered Georgia's largest-ever infrastructure investment and is to be accompanied by major government investments in Georgia's road and rail infrastructure  The Georgian government has long made closer integration with the EU and NATO a priority  According to recent polls, over 80% of the Georgian population supports membership in the EU and over 75% supports membership in NATO  In 2014, Georgia concluded an association agreement with the EU that included a Deep and Comprehensive Free Trade Area (DCFTA) and encouraged harmonization with EU laws and regulations  The EU granted Georgia visa-free travel in 2017  The EU also is a major provider of foreign aid to Georgia, providing on average over €120 million (around $135 million) a year in 2017 and 2018  As of 2018, the benefits of the EU free-trade agreement for Georgia remain unclear  In 2018, the total value of Georgian exports to the EU was 17% greater than in 2014  Exports to the EU as a share of Georgia's total exports, however, were the same in 2018 as they were in 2014 (22%)  The EU asserts that Georgia is "reaping the benefits of economic integration" with the EU but notes that "further efforts are needed to stimulate exports and improve the trade balance " Georgia has close relations with NATO, which considers Georgia one of its "closest operational partners " A NATO-Georgia Commission, established in 2008, provides the framework for cooperation  At its 2014 Wales Summit, NATO leaders established a "Substantial NATO-Georgia Package" to help Georgia bolster its defense capabilities, including capacity-building, training, exercises, and enhanced interoperability  In 2015, Georgia joined the NATO Response Force, a rapid reaction force  Georgia is one of the top troop contributors (and the top non-NATO contributor) in the NATO-led Resolute Support Mission in Afghanistan  At its height, Georgia's deployment to NATO's previous International Security Assistance Force (ISAF) reached over 1,500 troops, who served with no operational caveats  As of December 2018, Georgia is the fifth-largest contributor to the Resolute Support Mission, with 870 troops  Georgia also contributed more than 2,250 troops to the NATO-led Kosovo Force, or KFOR, between 1999 and 2008  In 2015, NATO opened a Joint Training and Evaluation Center in Georgia to provide training, evaluation, and certification opportunities to enhance interoperability and operational readiness  The center hosted its second joint NATO-Georgia exercise in March 2019 (the first one was held in 2016)  Some NATO member states also participate in two sets of annual U S -Georgia military exercises: Agile Spirit and Noble Partner (see " Security Assistance Since the August 2008 War ," below)  NATO also has established a Defense Institution Building School for professional development and training  Many observers consider that closer integration with the EU and NATO has not enabled Georgia to improve its near-term prospects for membership in these organizations  The EU is unlikely to consider Georgia a candidate for membership soon, given the EU's internal challenges and a lack of support for enlargement among many members  In 2008, NATO members agreed that Georgia and Ukraine would become members of NATO, but Georgia has not been granted a NATO Membership Action Plan (MAP) or other clear path to membership  Many observers attribute Georgia's lack of a clear path to NATO membership to some members' concerns that Georgia's membership could lead to a heightened risk of war with Russia, which currently occupies around 18% of Georgia's territory  Many believe that NATO will not move forward with membership as long as Russia occupies Georgian territory and the conflict remains unresolved  Georgia's secessionist regions of Abkhazia and South Ossetia broke away from Georgia in the early 1990s, during and after Georgia's pursuit of independence from the USSR  Since then, Georgia's relations with Russia have been difficult, as Tbilisi has blamed Moscow for obstructing Georgia's Western leanings  Many observers believe that Moscow supports Abkhazia and South Ossetia to prevent Georgia from joining NATO  Georgia's relations with Russia worsened after ex-President Saakashvili came to power in 2003 and sought to accelerate Georgia's integration with the West  After clashes increased between Georgian and secessionist forces, Russia invaded Georgia in August 2008 to prevent Georgia from reestablishing control over South Ossetia  Russia subsequently recognized Abkhazia and South Ossetia as independent states  Over the last decade, Russia has tightened control over Abkhazia and South Ossetia  It has constructed border fencing and imposed transit restrictions across the administrative boundary lines dividing the two regions from the rest of Georgia  Russia has established military bases that reportedly house around 3,500 personnel each, and it also stations border guards in the two regions  In 2016, Russia finalized an agreement with the de facto authorities of Abkhazia, establishing a combined group of military forces  In 2017, Russia concluded an agreement with South Ossetia to integrate the breakaway region's military forces with its own  Since coming to power in 2012, the GD government has sought to improve relations with Russia, particularly economic ties  In 2013, Moscow lifted an embargo on popular Georgian exports (including wine and mineral water) that had been in place since 2006  As a result, Russia again became one of Georgia's main trading partners  The share of Georgia's merchandise exports to Russia as a percentage of its total exports rose from 2% in 2012 to 13% in 2018  Improved economic relations with Russia have not led to progress in resolving the conflicts over Abkhazia and South Ossetia  The EU leads an unarmed civilian Monitoring Mission in Georgia (EUMM) that monitors compliance with the cease-fire agreements that ended the August 2008 war  Although the EUMM's mandate covers all of Georgia, local and Russian authorities do not permit it to operate in Abkhazia and South Ossetia; EUMM representatives have been allowed to cross the boundary line on a few occasions to address specific issues  All parties to the conflict, together with the United States, the EU, the United Nations (U N ), and the Organization for Security and Cooperation in Europe (OSCE), participate in the Geneva International Discussions, convened quarterly to address issues related to the conflict  They also participate in joint Incident Prevention and Response Mechanisms (IPRM), together with the U N  and OSCE, designed to address local security issues and build confidence  Abkhaz and South Ossetian representatives periodically have suspended their participation in the IPRM, however; the IPRM for Abkhazia did not convene at all from 2012 to 2016  In general, efforts to rebuild ties across conflict lines or return internally displaced persons have made little progress  In 2018, the Georgian government unveiled a peace initiative and enacted related legislative amendments to facilitate greater engagement with Abkhazia and South Ossetia in trade and educational affairs  The United States and the EU have expressed support for this initiative  Whether Russia and the two regions will accept any of the initiative's elements remains to be seen  Improved relations with Russia do not appear to have led to greater public support in Georgia for closer integration with Russia  Several overtly pro-Russian parties performed poorly in the 2016 parliamentary elections  One electoral bloc critical of Georgia's European integration, the nationalist-conservative Alliance of Patriots, cleared the 5% threshold to enter parliament, but even this bloc's leadership did not campaign for membership in the Russia-led Eurasian Union  In a 2018 survey, less than 30% of respondents expressed support for joining the Eurasian Union  Georgia is one of the United States' closest partners among the post-Soviet states  With a history of strong economic aid and security cooperation, the United States and Georgia have deepened their strategic partnership since Russia's 2008 invasion of Georgia and 2014 invasion of Ukraine  A U S -Georgia Charter on Strategic Partnership, signed in 2009, provides the framework for much of the two countries' bilateral engagement  A Strategic Partnership Commission convenes annual plenary sessions and working groups to address political, economic, security, and people-to-people issues  Before the 2008 war, the United States supported granting Georgia a NATO Membership Action Plan and backed NATO's April 2008 pledge that Georgia eventually would become a member of NATO  In August 2017, U S  Vice President Michael Pence said in Tbilisi that the Trump Administration "stand[s] by the 2008 NATO Bucharest statement, which made it clear that Georgia will one day become a member of NATO " At a press conference after the July 2018 NATO summit in Brussels, President Trump said that "at a certain point [Georgia will] have a chance" to join NATO, if "not right now " U S  policy expressly supports Georgia's sovereignty and territorial integrity  In a visit to Tbilisi in August 2017, Vice President Michael Pence said the United States "strongly condemns Russia's occupation on Georgia's soil " In January 2018, the State Department indicated that "the United States' position on Abkhazia and South Ossetia is unwavering: The United States fully supports Georgia's territorial integrity within its internationally recognized borders " The United States supports a resolution to the conflict within these parameters  The United States calls on Russia to comply with the terms of the 2008 cease-fire agreement, including withdrawal of its forces to prewar positions, and to reverse its recognition of Abkhazia and South Ossetia as independent states  The U S  government has expressed support for Georgia's "commitment to dialogue and a peaceful resolution to the conflict," and in 2018 the State Department welcomed the new peace initiative that the government of Georgia unveiled  The State Department regularly participates in the Geneva International Discussions  Congress also has expressed firm support for Georgia's sovereignty and territorial integrity  The Countering Russian Influence in Europe and Eurasia Act of 2017 ( P L  115-44 , Title II, §253) states that the United States "supports the policy known as the 'Stimson Doctrine' and thus does not recognize territorial changes effected by force, including the illegal invasions and occupations" of Abkhazia and South Ossetia, and other territories occupied by Russia  As with previous appropriations, FY2019 foreign operations appropriations prohibit foreign assistance to governments that recognize Abkhazia or South Ossetia and restrict funds from supporting Russia's occupation of Abkhazia and South Ossetia ( P L  116-6 , §7047(c))  The 2014 Ukraine Freedom Support Act ( P L  113-272 ) provides for sanctions against Russian entities that transfer weapons to Georgian territory  In February 2019, the Georgia Support Act ( H R  598 ) was reintroduced in the House  The act originally passed the House by unanimous consent in December 2018, during the 115 th Congress  The act would express support for Georgia's sovereignty, independence, and territorial integrity, as well as for its democratic development, Euro-Atlantic and European integration, and peaceful conflict resolution  The act would require the Secretary of State to submit to Congress reports on U S  security assistance to Georgia, U S -Georgia cybersecurity cooperation, and a strategy to enhance Georgia's capabilities to combat Russian disinformation and propaganda  The act also would require the President to impose sanctions on those responsible for serious human rights abuses in Abkhazia and South Ossetia  Many Members of Congress have expressed their support for Georgia in House and Senate resolutions  In September 2016, during the 114 th Congress, the House of Representatives passed H Res  660, which expressed support for Georgia's territorial integrity, in a 410-6 vote  The resolution condemned Russia's military intervention and occupation, called upon Russia to withdraw its recognition of Abkhazia and South Ossetia as independent states, and urged the U S  government to declare unequivocally that the United States will not recognize Russia's de jure or de facto sovereignty over any part of Georgia under any circumstances  In January 2019, a resolution (H Res  93) was reintroduced in the House supporting Georgia's territorial integrity and condemning a decision by the Syrian government to recognize Abkhazia and South Ossetia as independent states  The Senate and House have passed other resolutions in support of Georgian sovereignty and territorial integrity: in 2011-2012 ( S Res  175 , H Res  526), in September 2008 ( S Res  690 ), and, before the conflict, in May-June 2008 (H Res  1166, S Res  550 ) and December 2007 ( S Res  391 )  Georgia has long been a leading recipient of U S  foreign and military aid in Europe and Eurasia  In the 1990s (FY1992-FY2000), the U S  government provided over $860 million in total aid to Georgia ($96 million a year on average)  In the later part of the decade, the United States began to provide Georgia with increased amounts of aid to improve border and maritime security and to combat transnational crime, including through the development of Georgia's Coast Guard  In the 2000s, Georgia became the largest per capita recipient of U S  aid in Europe and Eurasia  From FY2001 to FY2007, total aid to Georgia amounted to over $945 million ($135 million a year, on average)  In 2005, Georgia also was awarded an initial five-year (2006-2011) $295 million grant from the U S  Millennium Challenge Corporation (MCC) for road, pipeline, and municipal infrastructure rehabilitation, as well as for agribusiness development  The United States gave increased amounts of military aid to Georgia after the terrorist attacks of September 11, 2001  At the time, the George W  Bush Administration considered Georgia part of a "second stage" in the "war on terror," together with Yemen and the Philippines, and supported Georgia with a two-year Train and Equip Program  This program was followed by a Sustainment and Stability Operations Program through 2007 that supported a Georgian troop deployment to Operation Iraqi Freedom  After Russia invaded Georgia in August 2008, the United States substantially increased its assistance to Georgia  The U S  government immediately provided over $38 million in humanitarian aid and emergency relief, using U S  aircraft and naval and coast guard ships  In September 2008, then-Secretary of State Condoleezza Rice announced a total aid package worth at least $1 billion  Total U S  assistance to Georgia for FY2008-FY2009 amounted to $1 04 billion, which included $250 million in direct budgetary support and an additional $100 million in MCC funds (taking the total amount of Georgia's initial MCC grant to $395 million)  Since the 2008 war, Georgia has continued to be a major recipient of U S  foreign aid in the Europe and Eurasia region  Nonmilitary aid totaled $60 million a year on average from FY2010 to FY2017  In addition, Georgia was awarded a second five-year (2014-2019) MCC grant of $140 million to support educational infrastructure and training, and to improve the study of science and technology  In FY2018, U S  nonmilitary aid to Georgia totaled $70 8 million  For FY2019, Congress appropriated $89 8 million in nonmilitary aid  The president's FY2020 nonmilitary aid request for Georgia is $42 4 million  After the 2008 war, Georgia continued to receive U S  military assistance, including around $144 million in postwar security and stabilization assistance in FY2008-FY2009  Since FY2010, Georgia has received further military assistance, primarily through Foreign Military Financing (FMF) aid, Coalition Support Funds, and Train and Equip and other capacity-building programs  These funds have been used to support Georgia's deployments to Afghanistan in ISAF and the follow-on Resolute Support Mission, as well as for Georgian border security, counterterrorism, and defense readiness  U S  military assistance to Georgia in FY2010-FY2017 is estimated to have been around $74 million a year on average  For FY2018, military aid to Georgia is estimated to have totaled $40 4 million  This includes $35 million in FMF assistance, $2 million in International Military Education and Training (IMET), and $3 4 million for counter-weapons of mass destruction (WMD) capacity-building assistance  For FY2019, Congress again appropriated $35 million in FMF and $2 million in IMET funds  Additional defense funding includes $4 3 million in maritime capacity-building assistance and $2 5 million in counter-WMD capacity-building assistance  Outside of Afghanistan, the United States has gradually deepened its postwar defense cooperation with Georgia  The Obama Administration refrained from approving defensive (anti-tank and antiaircraft) arms sales to Georgia  Observers considered various reasons for this hesitation, including doubts regarding the deterrent effect of such weapons, concerns about encouraging potential Georgian offensives to retake territory, and a desire to avoid worsening relations with Russia as the Administration embarked on a new "reset" policy with Moscow  In testimony to the Senate Foreign Relations Committee a year after Russia's invasion, then-Assistant Secretary of Defense Alexander Vershbow characterized U S  defense cooperation with Georgia as "a methodical, yet patient, strategic approach … [focused] on building defense institutions, assisting defense sector reform, and building the strategic and educational foundations" for training and reform  He said the United States was "carefully examining each step [of its military assistance program] to ensure it would not be counterproductive to our goals of promoting peace and stability in the region " U S -Georgia defense cooperation deepened over time  In a 2012 visit to Georgia, then-Secretary of State Hillary Clinton said that increased cooperation would help improve Georgia's self-defense capabilities, promote defense reform and modernization, and provide training and equipment to support Georgia's ISAF deployment and NATO interoperability  U S -Georgia security cooperation expanded further in 2016  In July 2016, then-U S  Secretary of State John Kerry and then-Georgian Prime Minister Giorgi Kvirikashvili signed a Memorandum on Deepening the Defense and Security Relationship between the United States and Georgia  In December 2016, the two countries concluded a three-year framework agreement on security cooperation that would focus on "improving Georgia's defense capabilities, establishing [an] effective and sustainable system of defense, enhancing interoperability of the Georgian Armed Forces with NATO, and ensuring effective military management " The framework agreement led to the launching in February 2017 of a three-year, $35 million training initiative, the Georgia Defense Readiness Program  This initiative seeks to build the capacity of Georgia's armed forces "to generate, train and sustain forces in preparation for all national missions " Unlike the Obama Administration, the Trump Administration approved the provision of major defensive lethal weaponry to Georgia  In November 2017, the U S  State Department approved a Foreign Military Sale of over 400 Javelin portable anti-tank missiles, as well as launchers, associated equipment, and training, at a total estimated cost of $75 million  The Georgian Ministry of Defense confirmed that the "first stage" of two sales was complete as of January 2018  In June 2018, then-U S  Assistant Secretary of State for European and Eurasian Affairs Wess Mitchell said the United States seeks to "check Russian aggression," including by "building up the means of self-defense for those states most directly threatened by Russia militarily: Ukraine and Georgia " The United States and Georgia have held annual joint military exercises in Georgia since 2011  Initial exercises, dubbed Agile Spirit, began as a counterinsurgency and peacekeeping operations training exercise and shifted to a "conventional warfare focus" in 2015, the year after Russia's invasion of Ukraine  That year, Agile Spirit began to include other NATO partners  A second bilateral exercise, Noble Partner, was launched in 2015; the Department of Defense characterized it as the "most robust" U S -Georgia exercise ever, designed to support Georgia's integration into the NATO Response Force  In 2018, the United States was Georgia's seventh-largest source of merchandise imports and eighth-largest destination for exports  The value of Georgia's merchandise imports from the United States—mainly vehicles, industrial machinery, and meat—was $360 million in 2018  The value of merchandise exports to the United States—mainly iron and steel and inorganic chemicals—was $160 million in 2018  Since 2012, the United States and Georgia periodically have discussed the possibility of a free-trade agreement  The two countries have signed a bilateral investment treaty and a Trade and Investment Framework Agreement  They also have established a High-Level Dialogue on Trade and Investment  During Vice President Michael Pence's August 2017 visit to Georgia, he expressed the United States' "keen interest in expanding our trade and investment relationship with Georgia "

ground_truth: Georgia is one of the United States' closest partners among the states that gained their independence after the USSR collapsed in 1991. With a history of strong economic aid and security cooperation, the United States has deepened its strategic partnership with Georgia since Russia's 2008 invasion of Georgia and 2014 invasion of Ukraine. U.S. policy expressly supports Georgia's sovereignty and territorial integrity within its internationally recognized borders, and Georgia is a leading recipient of U.S. aid to Europe and Eurasia. Many observers consider Georgia to be one of the most democratic states in the post-Soviet region, even as the country faces ongoing governance challenges. The center-left Georgian Dream-Democratic Georgia party (GD) has close to a three-fourths supermajority in parliament and governs with limited checks and balances. Although Georgia faces high rates of poverty and underemployment, its economy in 2017 and 2018 appeared to show stronger growth than it had in the previous four years. The GD led a coalition to victory in parliamentary elections in 2012 amid growing dissatisfaction with the former ruling party, Mikheil Saakashvili's center-right United National Movement, which came to power as a result of Georgia's 2003 Rose Revolution. In August 2008, Russia went to war with Georgia to prevent Saakashvili's government from reestablishing control over the regions of South Ossetia and Abkhazia, which broke away from Georgia in the early 1990s and became informal Russian protectorates. Congress has expressed firm support for Georgia's sovereignty and territorial integrity. The Countering Russian Influence in Europe and Eurasia Act of 2017 (P.L. 115-44, Title II, §253) states that the United States "does not recognize territorial changes effected by force, including the illegal invasions and occupations" of Abkhazia, South Ossetia, and other territories occupied by Russia. In September 2016, the House of Representatives passed H.Res. 660, which condemns Russia's military intervention and occupation of Abkhazia and South Ossetia. In February 2019, the Georgia Support Act (H.R. 598), which originally passed the House by unanimous consent in the 115th Congress (H.R. 6219), was reintroduced in the 116th Congress. The act would express support for Georgia's sovereignty, independence, and territorial integrity, as well as for its democratic development, Euro-Atlantic integration, and peaceful conflict resolution in Abkhazia and South Ossetia. The United States provides substantial foreign and military aid to Georgia each year. Since 2010, U.S. nonmilitary aid to Georgia has totaled around $64 million a year on average, in addition to a five-year Millennium Challenge Corporation grant of $140 million to support education. In FY2019, Congress appropriated almost $90 million in nonmilitary aid to Georgia. Since 2010, U.S. military aid to Georgia has been estimated at around $68 million a year on average. In FY2019, Congress appropriated $35 million in Foreign Military Financing and $2 million in International Military Education and Training funds. Defense assistance also includes a three-year, $35 million training initiative, the Georgia Defense Readiness Program.