
Vol. 2 No. 21 October 15, 2001
by Guest Blogger, 7/17/2002
In This Issue
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SUBHEAD
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Role of Federal Gov't at the Center of Post-September 11 Debates
Economic Stimulus Package
Charitable Giving Incentives May Be In Economic Stimulus Bill
Will There Be a Stimulus Package that Actually Does?
Nonprofit Sector
IRS Publishes Guidelines For Election Year Activities
IRS FY 2002 Workplan Targets Audits, Issues
Agencies Behind In Developing Uniform Application Procedures
McConnell Introduces Bill On Fraudulent Solicitations
Federal Budget
Appropriations Round-Up
Information Policy and Technology
Right-to-Know Reconsidered
NARA Electronic Records Management Rule
GOVNET
NPTalk: Web Animation -- Is it right for you?
Reader Responses
Right-to-Know and Terrorists; Economic Stimulus and Energy
SIDE BAR: Budget: CTJ - Stimulus Package Tax Cuts Would Nearly Double Bush Tax Cut; Economic Stimulus Hearing; Progressive LA Conference
Role of Federal Gov't at the Center of Post-September 11 Debates
There is no dispute that feelings of national unity since the September 11 terrorist attacks have been strong. For example, there is widespread support in Congress for an economic stimulus bill and for overhauling airport security. Yet just beneath the surface lies fundamental differences about the role of government that will likely make it difficult to achieve the objectives voiced with national unity, particularly with regard to these two pieces of legislation.
The Gallup Organization released the results of a poll on October 12 that showed six out of 10 Americans now say they trust their government, a level not seen since 1968, and half want the government to do more to solve the country's problems. This percentage is the highest it has been in the nine years that Gallup has been asking the question. On the eve of the terrorist attacks, Gallup found 36% who wanted the government to do more. Whether the sharp uptick is temporary, however, only time will tell. However, it is consistent with public opinion research done before the attacks that found the public wanted to see the government invest more in the future of the country with federal resources.
In many ways, the issue about the role of the federal government is an unresolved issue lingering from the last national election. It appeared to drop from the radar screen after September 11. But suddenly, as specific legislation appears, the viewpoints that represent essential ideological differences also appear.
Few dispute the need to strengthen airport security. However, Senate Democrats are advocating a bill that federalizes baggage checking, noting that the privatization of such security has not worked. Creating a federal regime is anathema to conservatives that believe in downsizing government. As Majority Leader Richard Armey (R-TX) said in a post-tax cut July 5, 2001 message, "Did we Republicans come to Washington merely to slow the growth of leviathan government? Or did we come to shrink and re-limit it? I say we came here to shrink and re-limit it... Restraining government [through the tax cut] was step one. Step two is roll-back." (Emphasis not added.)
At the same time, the public demands a government that serves to protect us. The conservative framework simply does not work in the aftermath of September 11. Yet Congress may become locked in a battle over federalizing or privatizing airport security, putting the needed legislation in jeopardy.
The same can be said of the economic stimulus legislation that is discussed in other stories in this issue. It is widely supported that Congress should pass something that can help to stimulate the economy. But passage of such legislation will need to leap the ideological divide. Republicans that believe in less government argue vehemently that the stimulus should be done through tax cuts, including the acceleration of the large tax cut that was enacted earlier this year and large corporate tax cuts. Even though most economists note that such tax changes will not create immediate stimulus, Republicans remain grounded in such proposals. Of course, tax cuts -- even temporary ones -- leave less in federal resources to spend on programs.
Progressives have been arguing that the stimulus requires immediate spending and, to the extent that there are tax cuts, they must be targeted to stimulate the economy. Providing support to state and local governments that are facing economic downturns and budget shortfalls is essential, they argue. Putting resources into infrastructure, such as high-speed rail, provides jobs and invests in our future. Providing resources for those affected by September 11 helps to stimulate the economy and is compassionate. Wise federal spending can payoff in long-term dividends and, at the same time, help immediately get the economy going.
These two legislative initiatives -- airport security and economic stimulus -- represent a broader issue about the role of the federal government. We believe it is time to tell our elected leaders that we want a strong federal government, that it is time to wisely invest in our future -- whether that means strong federal regulation of airport security or new federal spending to stimulate the economy or other initiatives. Until we voice our opinion, national unity will likely translate into improved civility in Congress but with continued roadblocks on key legislation.
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Charitable Giving Incentives May Be Part of Economic Stimulus Bill
There is renewed discussion in Washington of the President's faith-based initiative. However, there seems to be little interest in Congress for addressing the charitable choice provisions this year. Instead, the focus has turned to the charitable giving proposals.
On Capitol Hill there is discussion of including a charitable deduction for non-itemizers and funds for technical assistance to small community based charities in the economic stimulus package being debated (see related story, this issue). Many charities that serve low-income communities have expressed concern about ongoing donations, especially in the wake of the September 11 attacks. These charities provide services and assist those most impacted by the economic downturn. Some have argued that inclusion of charitable giving incentives in the economic stimulus package is a good way to provide relief across the board.
The charitable giving incentives being discussed follow the plan in S. 592, a bill sponsored by Sens. Joseph Lieberman (D-CT) and Rick Santorum (R-PA). It would allow a 50% deduction for non-itemizers that contribute over $500 in the first year after passage, increasing the deduction by 10% every year until it reaches 100%. It also would allow tax-free donations from rollovers of Individual Retirement Accounts and deductions for food inventory. The estimated cost is $50 billion over ten years. This formula could change, depending on the make-up of the total stimulus package. The version passed by the House in H.R. 7 would cost $13.3 billion over 10 years, and is too small to stimulate new giving. It was opposed by OMB Watch as too small to be meaningful.
The prospects for movement on the giving bills have been revived by discussions between the administration and Lieberman and Santorum. If an agreement is reached, the charitable choice portion of the President's initiative, which would allow religious congregations to get direct federal grants, would be tabled, allowing the non-controversial giving incentives to move forward. Senate Majority Leader Tom Daschle (D-SD) has been holding off consideration of H.R. 7 because of its charitable choice provisions.
Decisions are being made quickly on the stimulus plan. If you have a viewpoint, you should share it with your Senators and Representative. OMB Watch has established a vehicle to facilitate direct communication with your state and federal lawmakers. For more information on this issue, see OMB Watch's alert.
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Will There Be a Stimulus Package that Actually Does?
As Congress began its formal work last week on constructing an economic stimulus package, there was agreement on only a few items, foremost of which is that the bipartisan spirit of the last month has all but disappeared over the course of this debate.
With each side accusing the other of being responsible for the demise of bipartisanship, it seemed that the primary cause was a mutual loss of focus on many of the economic stimulus principles the Administration and party leaders from both houses had agreed on less than two weeks ago, namely:
- The economic stimulus package should consist of temporary measures only and should not threaten the long-term budget outlook or raise long-term interest rates;
- It should be made up of both tax cuts and spending measures; and
- It should immediately address the economic effects of the events of September 11 including the further slow-down of the economy and the thousands of workers who have been laid off since September 11.
- An increase in the amount a company is allowed to deduct in the first year of a purchase of property used in generating the company's income;
- Acceleration of the timeline companies use in calculating the depreciation in value of their equipment; and
- Repeal of the corporate Alternative Minimum Tax (AMT).
- A rebate (up to $300 for an individual) for those 35 million people who did not receive the rebate from the earlier tax cut bill because their incomes were low enough not to require an income tax payment in 2000;
- Acceleration to January 1, 2002, of the June tax cut package's drop of the 28% marginal tax rate to 25%, which was scheduled to take place in 2004;
- Reduction of the capital gains tax rates from 10% to 8% and 20% to 18%; and
- An increase in the individual AMT exemption
- A rebate for the 35 million people who did not receive tax rebates earlier this fall (this component is the same as that put forth in H.R. 3090);
- A two-year -- instead of the Republicans' permanent -- waiver of the corporate AMT;
- $15 billion in expansion of unemployment benefits; and
- $17 billion to continue health care insurance for the unemployed.
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