Washington – In an effort to regain public trust, the Senate voted Monday to take up a bill that would prohibit members of Congress from trading stocks and other securities on the basis of confidential information they receive as lawmakers.
The vote was 93 to 2.
Senators of both parties said the bill was desperately needed at a time when the public approval rating of Congress had sunk below 15 percent.
“The American public has no confidence in Congress,” said Senator Kirsten E. Gillibrand, Democrat of New York, who introduced an earlier version of the legislation.
At the same time, Democratic senators moved to tap into concerns about comparatively low tax rates paid by some of the nation’s top earners, introducing a bill that would require households with more than $1 million of adjusted gross income to pay at least 30 percent of it in taxes.
A handful of lawmakers have tried for years to enact restrictions on stock dealing by members of Congress. But their efforts drew little support until new attention on the practice last year — coupled with election anxiety — prompted a flood of backing for the idea and support from President Obama in his State of the Union address.
The bill states that members and employees of Congress are not exempt from the federal law and regulations that ban insider trading.
“No member of Congress and no employee of Congress shall use any nonpublic information derived from the individual’s position as a member of Congress or employee of Congress, or gained from performance of the individual’s duties, for personal benefit,” the bill says.
Federal securities law does not explicitly exempt members of Congress, but experts disagree on whether and when lawmakers may be found to have violated the law. The bill is meant to eliminate any ambiguity.
It says that lawmakers have “a duty arising from a relationship of trust and confidence” to Congress, the federal government and the citizens of the United States — a duty they violate by trading on nonpublic information.
The bill also requires members of Congress to disclose the purchase or sale of stocks, bonds, commodities futures and other forms of securities within 30 days of transactions. The information would be posted on the Web in a searchable format.
In his speech last week, Mr. Obama urged Congress to act, citing what he called “the corrosive influence of money in politics.”
“Send me a bill that bans insider trading by members of Congress,” Mr. Obama said. “I will sign it.”
The Senate was already writing such a bill. However, the bill does not subject lawmakers to a second type of restriction suggested by Mr. Obama, who said Congress should “limit any elected official from owning stocks in industries they impact.”
From talking to other lawmakers, executive branch officials and business executives, members of Congress learn potentially valuable information about military contracts, economic policy and myriad federal programs before the information becomes public. In addition, they can write spending bills in ways that, for example, benefit their own real estate investments.
The bill — the Stop Trading on Congressional Knowledge Act, or Stock Act — was drafted by Senator Joseph I. Lieberman, independent of Connecticut, and Senator Susan Collins, Republican of Maine. Similar bills were introduced by Ms. Gillibrand and Senator Scott P. Brown, Republican of Massachusetts.
“This is a measure that the American people are clamoring for,” Mr. Brown said Monday. “We need to re-establish trust with the American people, and this is a first step in doing that.”
In the House, more than 250 lawmakers, including at least 90 Republicans, have signed up as co-sponsors of a similar bill. Laena Fallon, a spokeswoman for the House Republican leader, Representative Eric Cantor of Virginia, said he “plans to move an expanded version of the Stock Act through the House in February.”
Senior House Republicans said they wanted to expand the bill to prohibit lawmakers from using nonpublic information in real estate transactions as well as stock trades.
Representative Louise M. Slaughter, Democrat of New York, who has been pushing such legislation since 2006, urged House Republican leaders to stop their “continued stalling.”
Academic studies have come to different conclusions about whether members of Congress have higher investment returns than ordinary investors.
Senator Sheldon Whitehouse, Democrat of Rhode Island, introduced the bill codifying the principle that the top earners should pay at least the tax rate of middle-class workers.
Mr. Whitehouse said he might press his legislation as a stand-alone bill or try to attach it to other legislation.
“In theory,” Mr. Whitehouse said, “we have a progressive tax code in which the more successful you are, the more money you make, the greater rate you pay in taxation. Unfortunately what turns out to be the fact, in practice, is that you have these huge exceptions.”
Mr. Whitehouse noted that the billionaire investor Warren E. Buffett had often asserted that he pays a lower percentage of his income in taxes than his secretary does.
The bill, following the rough contours suggested by Mr. Obama, creates what would be an alternative minimum tax for the most affluent.
Households with adjusted annual gross incomes over $1 million would prepare their taxes as they do now, with all the deductions, credits and loopholes intact. They would also calculate what 30 percent of their adjusted gross income amounts to. They would then pay whichever amount was larger.
Republicans showed no sign of coming to the table on the Buffett Rule legislation. Senator Orrin G. Hatch of Utah, the ranking Republican on the Senate Finance Committee, said he had breakfast with Mr. Buffett on Sunday, but rejected his personal entreaties. He cited an estimate by the liberal-leaning Citizens for Tax Justice that the proposal would raise $50 billion a year, a small percentage of a budget deficit that will probably top $1 trillion.
This article, “Bill to Prohibit Insider Trading by Members of Congress Advances in Senate,” originally appeared in The New York Times.
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