In This Issue Bush's Budget – Analysis Slow Burning Bush Budget Hiding Estate Tax Repeal Behind Family Farms Bush Proposes Government Reform Initiatives Bush Citizen-Centered Internet Initiative Digital Divide Funding Leaving A Lot Out of the "Leave No Child Behind" Formula Regulatory Action Bush Regulatory Report Administration Rolls Back Standard for Air Conditioner Efficiency Medical Privacy Rule Stands, For Now EPA Releases New Data on Toxic Pollution As Pollution Climbs So Do Right-To-Know Attacks Nonprofit Sector Issues 1999 IRS Data Continues to Show Estate Tax-Philanthropy Link Campaign Finance Reform Legislation Heads To The House OMB Watch Joins Groups Opposing Charitable Choice Bill in House Internet Tax Moratorium Likely to Heat Up Tech Help: Online Advocacy Corrections SIDE BAR: Taxes: Sign on to Oppose Repeal of the Estate Tax; Nonprof Sector: Announcements: Foundation Payout Report Briefing; Democracy Works Conference Slow Burning Bush Budget There were two remarkable things about the Bush budget released on April 9. First, it was released after both the House and the Senate voted on their respective budget resolutions. As a result, Congress did not know the impact tax cuts would have on Bush spending initiatives and priorities. Second, the budget presentation is very understated. For example, Bush claims he will eliminate "duplicative and ineffective programs" but does not list them. He does not provide real numbers on military spending because he is doing a bottom-up review. His numbers for health care and prescription drugs for the elderly are far below what the Senate notes is needed. If you listen to Bush, he can do it all – a major tax cut, pay down the debt, increase spending for defense, "fix" Social Security, provide a prescription drug program for the elderly, launch an education initiative, and adequately finance the rest of government. "My budget does all these things, and more," according to Bush. If you believe this, you probably also believe that you can click your heels three times and land in Kansas. The tax cut is clearly the first priority in this budget. The President must recognize that if his tax cut is enacted it will crowd out any spending opportunities. If there is a continued economic downturn it will mean that the government cannot spend on programs – the very thing that may be necessary to stimulate the economy – without deficit spending because of the large tax cut. The Senate recognized this even without the President's budget submission, and as a result lowered the size of the tax cut in favor of putting money into programs. The President says that spending will increase in his budget by 4%. But there is great controversy over these figures. Democrats on the Hill say it really is a massive budget cut. The Center on Budget and Policy Priorities says it's a 1.5% increase, but a decrease if you adjust for inflation. And some conservatives are arguing that it is a larger spending increase. The bottom line is that the President uses budgetary gimmicks (e.g., items that Congress forward funded are counted as new spending), excludes earmarks that Congress always puts in the budget (e.g., $10 billion for farm subsidies and millions for environmental activities), uses an imaginary spending reserve, and doesn't provide real numbers for military spending. Even so, of the $25.7 billion the President claims is new spending, $14.5 billion (55%) goes for military spending, $5.6 billion goes for the reserve fund, and $3.7 billion goes for international affairs. That leaves only $4.8 billion for the rest of government. This squeeze on domestic discretionary programs becomes even worse in future years, especially after adjusting for inflation and population shifts. CBO puts the cuts at $246 billion over ten years. And this is in an era of the largest surplus ever. The budget is like a slow burning bush. It smolders, but once it catches hold it will flame out of control. Chart: President's Fiscal Year '02 Proposed Increases" Chart: Where the Surplus Goes Back to Top Is Estate Tax Repeal Really About Helping Small Businesses and Family Farmers? The President’s April 9 Budget restates his February proposal to phase out the estate, gift, and generation-skipping taxes over a ten year period at an estimated cost of $261.3 billion. The Budget is somewhat superfluous since the House has already passed a bill to repeal the estate tax, albeit most of it in the last year of a ten year plan. Moreover, the Joint Committee on Taxation has scored the cost of full repeal at $662 billion over ten years, considerably higher than the Bush estimate. A major reason cited for repealing the estate tax is that it “is killing family business,” including family farms. But the facts simply do not support this contention. Family Farms "To keep farms in the family, we are going to get rid of the death tax," noted President Bush. Yet a recent New York Times article (April 8, 2001, "Focus on Farms Masks Estate Tax Confusion") notes that the American Farm Bureau Federation, one of the leading voices calling for repeal of the estate tax, cannot give a single example of a farm lost to the estate tax. A farmer in Iowa is quoted in the article as saying the emphasis on repeal of the estate tax to save family farms is misplaced because "for most farmers around here, the estate tax is not high in their minds ... what we need are better crop prices." His comments are echoed by a South Dakota farmer, John Sumption, who recently testified at a Senate Finance Committee hearing about the estate tax. Mr. Sumption argued for modification of the estate tax by raising exemption levels, as was proposed by the Democrats in their alternative to the estate tax repeal bill in the House, and he testified: "Mr. Chairman, I am not an expert on tax law, but I know about family farmers. They are my friends and neighbors. They are not worried about estate taxes, because, for the most part, they don’t have to pay them. They are worried, however, about the prices they receive for their crops and livestock, about good public schools for their kids, about local community services, paying for prescription drugs and being able to pay their bills in retirement. And, of course, they are always worried about the weather." (Mr. Sumption’s full testimony can be found at on the Senate Finance Committee website.) The data supports Mr. Sumption’s point. According to 1999 data recently released by the IRS, only 6.8% of estate tax filers have farm assets. Indeed, only 2.8% of those filers with farm assets pay any tax. (And they have up to 15 years to pay with reduced interest rates.) According to the New York Times, "The average value of these farm assets was $440,000, only about a third of the amount that any married couple could leave untaxed to heirs." The New York Times also notes that family farms are given an extra exemption beyond the $675,000 ($1.35 million for couples) that is currently exempt from the tax. (This income exclusion amount is scheduled to increase to $1 million ($2 million for couples) in 2006.) "[A] farm couple can pass $4.1 million untaxed, so long as the heirs continue farming for 10 years." Of course, this is the rub. Many heirs do not want to continue doing family farming. They are already adults, often with families of their own, pursuing their own careers. When a family farm is willed to them, they often may choose to sell the farm, not because of the estate tax, but for other unrelated reasons. Table: Estate Tax Returns and Farm Assets: 1999 Source: IRS, Statistics of Income, unpublished data, March 26, 2001. At the same time that President Bush would do away with the estate tax to "save" family farms, his budget plan, according to one source, would cut funding to agriculture next year by $1.7 billion (or 8.3% below the FY 2001 level adjusted for inflation). He also fails to allow for emergency farm assistance to ameliorate the current farm recession. (See the House Democratic Leadership site) Finally, the President would eliminate the Wetlands Reserve Program, under which farmers receive a payment in return for preserving marshy habitat on their property. Already 1 million acres have been protected under this program. The Bush budget would get rid of all $162 million provided this year for a program that both helps farmers and protects the environment. As The Washington Post notes in an editorial, farm crop supports will be cut by nearly $10 billion because the Bush administration does not continue what was dubbed "emergency" spending in the past to avoid budget caps. This illustrates an ironic aspect that runs through many of President Bush’’s proposals. It’s more than giving with one hand and taking away with the other, since the "gift" is often not worth much. Farmers don’t need estate tax repeal. It’s a gift with little value. Farmers do need all of the other things that Mr. Sumption mentions. But, if the estate tax is repealed, there will be less government revenue to provide all of those benefits. Small Business There is no uniform definition of small business in this country. For regulatory purposes a small business can be comprised of up to 1,500 employees or up to $17 million in revenue, depending on the type of business it is. (The Small Business Administration generally describes small business as up to 500 employees.) For tax purposes the criteria to determine whether it is small can be based on gross assets, gross receipts, number of shareholders, or a combination of factors. The thresholds for taxation, like regulatory matters, depend on type of business and type of tax. For the estate tax, assets of a small business are calculated. A recent Joint Committee on Taxation report, Overview of Present Law and Selected Proposals Regarding the Federal Income Taxation of Small Business and Agriculture, (March 27, 2001, JCX-19-01) provides data on different types of corporations and their asset size. According to the report:

• 99.6% of Nonfarm Sole Proprietorships have receipts less than $1 million;
• 92.1% of S Corporations have assets less than $1 million;
• 83.3% of Partnerships have assets less than $1 million; and
• 88.1% of C Corporations have assets less than $1 million.

In other words, the estate tax will not affect the vast majority of couples since the income exemption is currently $1.35 million for a couple and scheduled to increase to $2 million by 2006. In most cases, if those owning a small business are being taxed under the estate tax, it is because they are unlike most small businesses and have considerable wealth from their businesses or they have wealth accumulated from holdings outside their small businesses. Moreover, as with family farms, careful estate planning for most small businesses means that they can avoid most if not all estate taxes. There are special rules for small businesses that insure that the value of capital is assessed at use value instead of at market value, helping to reduce the assessment of equipment and other property. In fact, according to the IRS, of the 2.3 million people who died in 1998, only 780 left an estate with significant business assets. A Treasury Department analysis found that estates that included family businesses paid less than 1% of all estate taxes. Back to Top Bush Proposes Government Reform Initiatives More Use of GPRA and Internet Performance to be Tied to Budgets President George W. Bush's budget, released on April 9, 2001, places a high priority on government reform efforts, most of which build on actions started during the Clinton administration. In particular, it's clear the administration intends to place heavy emphasis on the Government Performance and Results Act (GPRA), which requires agencies to do a three-year strategic plan, an annual performance plan with quantifiable measures, and an annual performance report that assesses progress in achieving the measures identified in the performance plan. As originally envisioned, GPRA performance reports were to help guide Congress and the administration in their budgetary decisions. Some conservatives have seized on this and attempted to exploit it as a tool for downsizing the federal government. Nonetheless, appropriators have largely ignored agency performance reports. The Bush administration hopes to turn this around. According to the budget, "a systematic integration of budgeting with program performance has yet to occur, and GPRA has not been fully harnessed to improve management and managerial accountability. Bringing about a better linkage between performance and budget information will be a priority of this Administration." (pg. 12) More generally, the first substantive chapter of the budget lists three topics for improving government performance:

• Making government more "citizen-centered;"
• Making government more "results-oriented;" and
• Making government more "market-based."

These are the same themes as Bush announced in his February budget blueprint. However, the specific recommendations under each have changed. They are described below. Citizen-Centered Efforts While the theme remains the same as the Clinton administration's reinventing government initiative run by then-Vice President Al Gore, the language of the Bush administration appears to have changed. Gore talked about the public as "customers," whereas, Bush appropriately uses the term "citizens." The budget describes two major citizen-centered initiatives: (a) Use the Internet to strengthen public access to government information and to improve citizen interaction with government; and (b) Create an E-Government Fund. According to the budget, "The President believes that providing access to information and services is only the first step in electronic Government (e-gov)." He believes the Internet can make it possible to conduct transactions with the public while still protecting privacy. However, some of the budget numbers belie this commitment. For example, the President proposes to cut the Toxics Release Inventory, the government's premier right-to-know program, by $500,000, a nearly 4% cut from the current year. Moreover, the administration announced its intent in March to withdraw a proposed rule issued during the Clinton administration that will result in less public access to information about hazardous chemicals being used in communities across the country. Overall, the Bush budget for information technology will rise less than 1%, whereas current spending increased roughly 8%. Many agencies received small cuts. While EPA's TRI program has been cut, the Bush budget does, however, earmark $25 million for a National Environmental Information Exchange Network, which will help the EPA, states and other parties share environmental data. The Bush budget also calls for changing the e-rate program, which provides support for wiring schools for Internet access. The changes would allow use of the funds for other school-related expenses, such as teacher training and software. Since the overall allocation for e-rate would not change, some argue that this amounts to a cut. The budget does call for additional money to strengthen public access in one area. It calls for creation of a three year $100 million "E-Government Fund" (2002-2004). For the first year, FY 02, the President is requesting $20 million, up from $10 million in the budget blueprint presented in February. This will largely be an interagency innovative project fund administered by the General Services Administration (GSA), but controlled by OMB. Funds may be used to support FirstGov, which is the government's web portal, development of a Public Key Infrastructure to develop secure digital signatures, implementation of the Government Paperwork Elimination Act, or other interagency projects. (GSA has also requested $3 million in its regular appropriations request to support FirstGov, which will include 16 full-time staff.) Results-Oriented As mentioned above, the budget gives more teeth to GPRA. To strengthen the linkage between budget and performance, the President proposes to:

• Require agencies to submit performance information with budget requests. As a starting point, OMB will require, for selected programs, "performance-based budgets" this September. Ultimately all agencies and programs will be required to do this. Apparently, "performance-based budgets" means "agencies will be advised of specific performance targets that are compatible with funding levels, and program managers will be held directly accountable for managing to the targets." The budget does not provide details on who will advise agencies of the performance targets or the compatible funding levels. But the choice of performance measures and the amount of money to achieve them will both be controversial and certainly something the nonprofit sector should have some say over.
• Publish detailed performance data. By 2004, the U.S. Budget will "integrate detailed performance and budget data...." Next year's budget will have more performance information as a step to the full integration.
• Propose legislation to change budgeting to give program managers more information. In particular, the budget notes that since agency officials will be held accountable for performance, they should have more accurate figures on costs, such as retirement and non-direct costs, and "flexibility in choosing service providers." It is unclear what this legislation would really propose.

The President also proposes to eliminate "duplicative and ineffective programs," but does not identify a list of such programs. The President also proposes to put greater emphasis on incorporating private sector reforms in the government, and to strengthen financial management and accountability. The administration will reduce erroneous payments to beneficiaries and other recipients of government money. Market-Based In making government more market-based, the President proposes to open many government activities to competitive bidding by both private and public sector bidders. "Opening Government functions to competition to the fullest extent possible is the best way to ensure market-based pricing and encourage innovation..." To complement this endeavor, the President intends to make e-procurement the government-wide standard. The market-based theme is echoed in other parts of the budget. For example, there is an emphasis in the EPA budget on making its regulations and program activities more market-based. What's Not Being Said The Budget chapter dealing with government performance is notable for what is not discussed. There is no mention of reforming the regulatory process, something that has been identified by conservatives and businesses as a very high priority. This is rather surprising since each administration tends to describe the regulatory improvements intended by the President. Included in the budgets submitted by President Clinton, was reference to a new Executive Order, to develop "smarter" regulations, and to efforts under the reinventing government initiatives. The absence of any reference to regulatory changes is all the more surprising because of the intense lobbying by business interests for regulatory "relief." The Chamber of Commerce, National Association of Manufacturers, National Federation of Independent Businesses, and others have urged the Bush administration to change the rulemaking process to favor business interests. For example, some have drafted a new executive order for the President that would change the regulatory review process. Yet the budget outline does not mention any of this. It is even more surprising since the Administration has received major media attention to its decisions to revise or rescind Clinton standards dealing with carbon dioxide releases (as part of the Kyoto Protocol), arsenic in drinking water, ergonomics, hard rock mining, medical privacy, and much more. Back to Top Bush Citizen-Centered Internet Initiative One of President Bush's budget citizen-centered initiatives is use of the Internet to strengthen public access to government information and to improve citizen interaction with government. As noted in the above article, this initiative is tied directly to FirstGov and is related to an e-government fund. There are, though, many other initiatives and ongoing efforts across the federal government which can be seen as tied to those of the President. And here, the message is mixed. NARA: President Bush has proposed budget cuts for the National Archives and Records Administration (NARA). Present funding for the agency is $316.7 million and the President's budget allocates a total of $259.3 million in all accounts for FY 2002, a nearly 20% cut. On the other hand, the budget includes $20 million (more than 20 times its budget for this year) for NARA's Electronic Records Archives, the program through which NARA is working to develop solutions for preserving and providing permanent access to the records of the Federal Government in the digital age. NARA's budget also includes $1.1 million to help to preserve and process electronic records from the Clinton White House and $237,000 to pilot the implementation of a records management application at NARA. The Federal Register would receive $1.4 to implement an Electronic Editing and Publishing System and further develop its electronic Code of Federal Regulations (e-CFR). Along the lines of the President's interest in improving citizen interaction with government, the President's request includes $5 million to expand opportunities for citizens and Federal agencies to use more NARA services electronically and to meet the requirements of the Government Paperwork Elimination Act. NTIS: The ongoing problem with the National Technical Information Service (see "Whither NTIS? Is Commerce Planning to Just Let It Wither?") is not resolved because no legislation was ever introduced to change its funding formula (i.e., self-funding through sales and reimbursements). So, the 2002 budget has no appropriated funds requested for the work of the agency. And no new legislation is proposed. NCLIS: The National Commission on Libraries and Information Science just recently completed a large study that had as its genesis and part of its focus the problems at and with NTIS. The Commission has been responsible for "developing plans and recommendations for meeting the library and information needs of the Nation, for coordinating Federal, State, and local activities to meet these needs, for advising the President and Congress on implementation of national and international library and information services policies, and for providing advice on general policies about library services under the Museum and Library Services Act." NCLIS has been de-funded in the President's budget because, according to the Budget, "other agencies can effectively perform the necessary functions for which the Commission has been responsible." It is not apparent, however, that the million dollars in funding taken from NCLIS has gone where it would be applied to these "necessary functions." IMLS:For the Institute for Museum and Library Services's budget, the funding for the Museum component is essentially static with FY 2001, but the proposed funding for the Library component was cut approximately 25% (from $207 million to $167 million). TOP: The Technology Opportunity Program (formerly TIIAP–Telecommunications and Information Infrastructure Assistance Program) has had its proposed funding cut by 30 percent. The proposed amount for grants is $13 million. Many communities have used this funding to generate other support for information and communications infrastructures. This cut seems counter to the President's expressed desire to improve citizen interaction with government and to strengthen public access to government information, particularly if his concern is not just directed at the federal government. GPO/SuDocs: The Superintendent of Documents at the Government Printing Office received a small increase in funding, about $2 million or 7% over FY 2001. Back to Top Digital Divide Funding On April 9, 2001, President George W. Bush released his first budget request, providing a mixed picture for community technology centers. While the program receives an increase in funding, the funding has been shifted away from the Department of Education to the Department of Housing and Urban Development, raising concerns about both existing programs, and future availability of federal funding for local CTCs in non-urban areas. The budget also signals a possible change in funding priorities for technology access in underserved areas, courtesy of a massive slash in funding avaialble for the Department of Commerce's Technology Opportunities Program. More information is available in this OMB Watch analysis Back to Top Leaving A Lot Out of the "Leave No Child Behind" Formula Bush's FY 2002 budget claims a large increase for education spending next year. As he and Education Secretary Rod Paige have proclaimed, the $44.5 billion for the Department of Education, a $4.6 billion or 11.5% increase over this year, provides the largest spending increase among domestic discretionary priorities. (Indeed, Health and Human Services(HHS) and Housing and Urban Development (HUD) received only $2.8 and $1.9 billion above this year's budget, respectively, and EPA and Interior received $500 and $400 million less, respectively.) As Bush's February budget outline, "A Blueprint for New Beginnings," noted, the $4.6 billion increase includes $2.1 billion of funds allocated in FY 01 for local school districts. The Center on Budget and Policy Priorities (CBPP) explained that this is a result of a Congressional maneuver of creative number-crunching that allows school-year funding to be distributed over two fiscal years. (The school year runs from August to July, but the Federal Government's fiscal year begins in October and runs until September.) A CBPP paper notes that while "this change makes no difference to school districts [who] receive their monthly funding on the same schedule either way," this jostling of the numbers allows for a "technical increase" of $4.6 billion, when there was actually only $2.5 billion of new money (that is, funds not already allocated for something else). (CBPP notes that this sort of "gimmick" also results in an apparent increase in the HUD budget, which will actually receive less funding in FY 02.) Even when looking at the "real" increase, it is still a 5.9% increase over the current year. But the Democratic Policy Committee's (DPC) "Truth and Consequences" analysis of the Bush budget notes that it is the smallest percentage increase in 5 years. And when this funding is adjusted for inflation and for population growth, as Bush had previously stated funding analyses should be, the increase comes to only 2.9% (see CBPP April 13 and April 11 analyses, "The Myth of the 4 Percent Spending Increase" and "Under President's Budget, Education Funding Would Grow 5.3 Percent," respectively.) The DPC also juxtaposed the $41 billion increase over the next 10 years that Bush will put into education with the $550 billion tax cut for the wealthiest 1% of Americans that he wants. It raises questions about fairness and the appropriateness of the tax cut. Others have questioned whether the Bush budget proposal really "leaves no child behind" as the administration promised. A number of programs serving children and families are proposed to be cut or do not even hold pace with inflation. For example, HUD will lose $700 million in grants for low-income housing repairs and $309 million in funds aimed at eliminating drug dealing from public housing projects (see the Washington Post story). CBPP notes that several smaller agencies such as the Smithsonian, the National Endowments and the Library of Congress are considered a component of education programs, but they have been level funded. Education Secretary Paige noted in his press release that, "While the Federal Government is the junior partner to States and local governments in providing education to our children, it has a special obligation to our most disadvantaged students, in particular those who are low income." Even with this touted increase in education spending, leaving no child behind will be even more difficult now than ever before without the funding for the many other programs that impact a child's ability to learn, especially with 24 million American children living in families that will see no benefits from the tax cut. Back to Top Bush Regulatory Report Since his first day in office, President Bush has been waging war on health, safety, consumer, and environmental protections. From ergonomics standards and safe drinking water to medical privacy and global warming to contractor responsibility and mining on public lands, this president has made clear that he stands with corporate interests, no matter the price. For a complete run-down of priority safeguards and where they stand, see this OMB Watch analysis. Please let us know (e-mail ombwatcher@ombwatch.org about rules that are in limbo, are threatened, or have moved forward in a manner that benefits the regulated community at the expense of the public interest. Back to Top Administration Rolls Back Standard for Air Conditioner Efficiency The Department of Energy announced last week that it would roll back Clinton-era standards to promote energy-efficient air conditioners and heat pumps. The Clinton rule would have required a 30 percent increase in energy efficiency in air conditioners and heat pumps by 2006. The Bush administration will propose a rule that lowers this to 20 percent. Officials at Energy HREF="http://www.washingtonpost.com/wp-dyn/articles/A16819-2001Apr13.html">told the Washington Post that mandating a 30 percent gain would have eliminated the need for 39 new electric power plants over the next 30 years, whereas the 20 percent gain will offset the need for 27 new plants. For more information, read the statement opposing the roll back from the Alliance to Save Energy. Earlier last week, the administration backed Clinton rules on washing machines and hot water heaters to promote energy savings. Back to Top Medical Privacy Rule Stands, For Now The Bush administration announced last week that it will move forward with new medical privacy standards that limit the information health care providers can divulge without a patient's consent. However, Health and Human Services Secretary Tommy Thompson also signaled his intent to revise the standards, perhaps substantially, before they are fully implemented two years from now. The privacy standards, which were completed at the end of the Clinton administration, have been fiercely opposed by the health care industry. Recently, Thompson asked for public comments on the standards -- which is highly unusual for an already final rule -- leading some to speculate that they would be scrapped. However, there is a statutory deadline for the standards that has already lapsed, which likely discouraged such an action. Revoking the standards outright would have undoubtedly invited a court challenge. Moreover, the rule leaves a number of years for implementation, giving the administration time to make revisions, which seem likely to favor the health care industry. For more information on the medical privacy standard, see the Health Privacy Project's web site. Back to Top EPA Releases New Data on Toxic Pollution New data released by the Environmental Protection Agency (EPA) show toxic chemical pollution has increased, reversing a downward trend over the last decade. EPA data covers nearly 8 billion pounds of releases of roughly 650 toxic chemicals into the air, land and water in the U.S. under EPA's flagship right-to-know program, the Toxics Release Inventory. The new data covers toxic chemical pollution occurring during 1999. Data for 2000 is not due out for another year. While there was a 15-month time lag between the polluting and public disclosure of the pollution through TRI data, this is the quickest release of TRI data in several years. Industry reports their releases for the previous calendar year by July 1, at which point EPA runs data quality checks on the information and seeks corrections from facilities. Last year, release of TRI data for 1998 was delayed for months while EPA helped numerous facilities in industrial sectors new to TRI reporting fix errors in their forms. EPA posted summaries and analyses of the 1999 TRI data on their web site. Anyone can create their own report based on TRI data using EPA's TRI Explorer at www.epa.gov/tri The data will also be available soon through www.rtknet.orgThe Right-To-Know Network (RTK NET), a project of OMB Watch and The Center for Public Data Access. Back to Top As Pollution Climbs So Do Right-To-Know Attacks While new TRI data highlights continuing pollution problems, OMB Watch and several other organizations issued a report documenting the unabated attacks threatening the public's right-to-know. "Ignorance is Bliss: The Secret War on Our Right-To-Know" outlines efforts to undermine right-to-know principles vital to our democracy. A number of current attacks threaten the public's right-to-know. The Bush Administration has until Tuesday, April 17 to decide whether to kill a new rule that would have required thousands of industrial facilities to newly report toxic lead pollution released to air, land and water. Industry has lobbied hard to avoid disclosing their lead releases. The new rule -- already finalized by the Environmental Protection Agency (EPA) in January -- lowers the threshold for reporting lead discharges under the Toxics Release Inventory. In addition, the mining industry has launched a legal challenge to current requirements that force mining companies to disclose the toxic results of their mining operations, and it is unclear whether EPA will defend these existing requirements. Furthermore, the Administration's highly publicized withdrawal of a new regulation for arsenic in drinking water may also make it harder for consumers to learn about potentially dangerous levels of arsenic in their drinking water. Efforts to decimate right-to-know continue out of the public eye. From requirements to ensure agencies release only "objective" information to making it easier for industry to keep secrets about the chemicals they release, attacks on right-to-know have been unrelenting. "Ignorance is Toxic Bliss" documents these attacks in order to raise awareness of the dangers posed by inside-the-Beltway deals to kill the public's ability to find out about environmental and public health problems. Back to Top 1999 IRS Data Shows Continuing Correlation Between Estate Tax and Philanthropy New data from the IRS for 1999 shows a continuing trend in the estate tax and philanthropy. As the Chart: Charitable Deductions Claimed in Estate Tax Returns: 1999 shows:

• Total charitable bequests in 1999 were $14.6 billion. On average, 16.2% of those filing the estate tax claimed a charitable deduction.
• Two-thirds of charitable bequests are from estates of $5 million or more. Nearly half (46%) come from the super wealthy with estates of $20 million or more.
• The use of the charitable deduction under the estate tax is directly related to the size of the estate. The percentage of estates claiming charitable deductions increases from 13.3% in smaller estates (under $1 million) to 45.2% in the largest estates ($20 million or more).
• The average size of the amount given to charity increases dramatically as the size of the estate increases. The smaller estates (under $1 million) give, on average, $171,950; the largest estates ($20 million or more) give, on average, $25,873,096.

Under current tax law, estates can give an unlimited amount to charity to reduce estate taxation. The trends from the 1999 data continue to show that the tax is an incentive for giving. Back to Top Campaign Finance Reform Legislation Heads To The House The McCain-Feingold campaign finance bill that passed the Senate on April 2 is now headed to the House of Representatives, where its fate is uncertain. Even though reform bills sponsored by Reps. Christopher Shays (R-CT) and Martin Meehan (D-MA) passed by overwhelming margins in 1998 and 1999, parliamentary maneuvers by opponents such as Rep. Tom Delay (R-TX), Majority Whip, could keep the bill from coming to the floor for a vote. Delay, a noted soft money raiser, has promised to do what he can to kill the bill, which contains a ban and soft money contributions to political parties. Issues To Be Debated After two weeks of debate and a series of amendments, the bill that passed the Senate contains a combination of provisions that will cause debate on both sides of the aisle in the House. The combined impact of the soft money ban and an increase in hard money contribution limits (contributions to candidates, parties and PACs), issue advertising, donor disclosure and other provisions is still being assessed. Some, including reform opponent Sen. Mitch McConnell (R-KY) think the soft money ban will weaken political parties and strengthen special interests. Others believe large PACs, who are largely unaffected by the bill, could become more influential as hard money contributions increase. For example, PACs could be the major force behind get out the vote drives, since political parties will not have the soft money they have been using to fund this activity. The Senate bill's prohibitions and limitations on issue advocacy will also be an issue in the House. The final Senate bill bans broadcast communications by corporations, including nonprofits, and labor unions, that mention a federal candidate, or show their likeness, within 60 days of a general election or 30 days of a primary. 501(c)(4) social welfare organizations and 527 political action committees are exempt from the ban if the broadcast audience is not primarily made up of residents of a state where the candidate is running. However, if expenditures for these broadcasts exceed $10,000 the group would have to disclose donors and expenditures to the Federal Election Commission. Only contributions from individuals could be used to finance covered broadcasts. In an unusual move, the Senate bill provides an alternative for the ban on issue advocacy if the 60/30 day ban is declared unconstitutional. The alternative standard narrows the prohibition to cover broadcasts that "promote or support" or "attack or oppose" a federal candidate and "which are suggestive of no plausible meaning other than an exhortation to vote for or against that candidate." Nonprofits unsuccessfully urged the Senate's bill sponsors to exempt charities from the ban on issue advocacy, citing examples of legitimate, nonpartisan activity such as grassroots lobbying or airing candidate debates that would become illegal. These issues will also be brought up as the bill is considered in the House. Hearings, Floor Debate Anticipated in House The House could pass the Senate version of the bill, amend it, pass the Shays-Meehan reform bill (H.R.380) or consider another bill altogether. Administration Committee Chair Rep. Robert Ney (R-OH), plans to mark up H.R.380 and encourage debate. He intends to hold at least two field hearings and one in Washington, and predicts the bill will come up within 90 days. However, Rep. Richard Armey (R-TX), House Majority Leader, says the issue will have to wait on other priorities, such as the President's tax cut and education plan. Rep. Shays is pushing for consideration before Memorial Day. The major procedural issue will be whether or not the bill is sent to a conference with the Senate, where opponent and Senate Rules and Administration Committee Chair Mitch McConnell could try to kill the bill again. House leadership could avoid a conference by sending the Senate their version of the bill for passage. The next step would be getting the President's signature. In the meantime, McConnell and his allies have started planning for litigation challenging the constitutionality of reform legislation. For a summary of the final McCain-Feingold bill, see this summary. Back to Top OMB Watch Joins Groups Opposing Charitable Choice Bill in House A group of 27 national organizations, including OMB Watch, unions, educators, civil rights, religious and social service groups, sent a letter to members of the House of Representatives on April 11 expressing "our strong opposition" to the charitable choice provisions of H.R. 7, sponsored by Rep. J.C. Watts (R-OK) and Rep. Tony Hall (D-OH). The letter noted that charitable choice legislation "is not necessary to foster partnerships between religiously affiliated groups and the government." It pointed to the long history of service by groups such as Catholic Charities and United Jewish Communities, but noted that these entities have always followed civil rights laws and state and local standards for safety and professional competence. The groups cited numerous problems with H.R.7, including authorization of religious discrimination in employment for government funded positions and proselytizing to people seeking help. The bill also contains burdensome reporting requirements that would undermine the independence of religious congregations. Another provision authorizes lawsuits against state and local governments by congregations that have been denied funding. Citing the lack of any new federal funds for human service programs, the letter said "The Watts-Hall bill distracts attention from the real issue of providing adequate federal resources to address the problems of poverty." The full text of the letter is available on OMB Watch's Nonprofit Advocacy site. A summary of H.R.7 can be found in the April 2, 2001 Watcher. OMB Watch will be releasing a report later this week on charitable choice. Back to Top Internet Tax Moratorium Likely to Heat Up Three years ago, Congress passed a moratorium on states imposing new taxes on Internet sales or access, called the Internet Tax Freedom Act (47 U.S.C. 151 note). But that moratorium is scheduled to expire on October 1, 2001. Accordingly, Sen. John McCain (R-AZ), chair of the Commerce Committee, has placed this issue on his priority list of action items for when the Senate returns next week. There are two leading bills that are likely to be considered: the Internet Tax Moratorium and Equity Act (S. 512) introduced by Sen. Byron Dorgan (R-ND), and the Internet Tax Nondiscrimination Act (S. 288) introduced by Sen. Ron Wyden (D-OR). The Dorgan bill is favored by those wishing to develop a unified system for allowing taxation of sales on the Internet, mostly the states and public interest groups. The Wyden bill is favored by those wishing to limit Internet sales tax and banning taxes on Internet access, mostly the technology and business community. Neither bill addresses enforcement issues, which the Senate Committee may consider. Both bills extend the moratorium on imposing new taxes. The Dorgan bill extends the moratorium until December 31, 2005. The Wyden bill extends the moratorium on imposing new taxes on Internet sales until December 31, 2006. It would also permanently ban any taxes on Internet access. Both bills have a "sense of the Congress" provision describing the elements of a sales and use tax system that states could employee in the context of remote sales. But the two are very different. The Dorgan bill would allow states to enter into an Interstate Sales and Use Tax Compact modeled on the elements in the bill. When 20 states have joined in the compact, it would immediately allow those states to tax Internet and catalog sales unless Congress acts within 120 days to disapprove the compact. The intent of the compact is to deal with Supreme Court decisions on remote use taxes. A 1992 Supreme Court decision (Quill Corp. vs. North Dakota), combined with a 1967 decision (National Bellas Hess vs. Illinois), made clear that states cannot require sellers without a "nexus" to the state (e.g., out of state) to impose a tax. So consumers are supposed to fill out information on their state tax forms about goods they bought from other states and pay a sales tax on those items. But state enforcement of these "use" or "remote" taxes is nearly impossible. The Wyden bill requires that there be a single uniform statewide sales and use tax rate on all transactions that are taxed. Unlike the Dorgan bill, Congress must pass a joint resolution authorizing states to require sellers to collect a sales or use tax. Back to Top Tech Help: Online Advocacy The notion of online advocacy provides an opportunity to address how technology can provide both greater visibility and heightened concealment to both legitimate and questionable grassroots activity generated and sustained by nonprofits and non-nonprofit entities in the public and policy arenas. NPTalk lifts the veil on the current thought and practice around online advocacy by virtual groups. Back to Top Corrections The April 2, 2001 Watcher contained an error in the last chart of public opinion data, "Country's Top Priorities." The chart was corrected on April 3 and the new chart has been available online since then. Back to Top Tech Help: Back to Top Over 18,000 Sign Petition to Preserve the Estate Tax In an online petition, sponsored by MoveOn.org, more than 18,000 people signed their opposition to repeal of the estate tax. This tax, which only the wealthiest 2% of Americans pay, is vital to the charitable sector, as all estate contributions to charities are exempt from taxation. To sign the petition, go to MoveOn.org's Save Charity site. For more information on the estate tax, see OMB Watch's Estate Tax Resource Page. Oppose the Estate Tax Repeal And you can also sign your organization onto the nonprofits' petition opposing estate tax repeal. For more information on this effort to oppose repeal, see OMB Watch's Estate Tax Resource Page. Fair Taxes for All Website The Fair Taxes for All website is now up and running, providing information on the coalition's opposition to the Bush tax cut proposal. Soft Money Contributions Soft Money Contributions Doubled Between 1996 and 2000 Elections: See "The Half Billion Dollar Shakedown," a study by Common Cause detailing how 7 or 8 top industry soft money donors, political parties are others more than doubled their contributions in 2000. Congressional Hearings on Charitable Choice Scheduled In the House Constitution Judiciary subcommittee, on April 24 at 2 pm, to hear how faith-based programs have been implementated at the state level. Senate Judiciary Committee hearing May 1at 10 am. --> Payout for Change: Increasing Foundation Grantmaking The National Network of Grantmakers (NNG) and the National Committee for Responsive Philanthropy (NCRP) will be releasing "Payout for Change," a publication that shows how some foundations do better that the legal requirement and use their money aggressively for social change. All are invited to the April 26 briefing on foundation payout and the findings of Payout for Change. A distinguished panel of nonprofits and foundation leaders will address why foundation payout should be raised – and how. Please RSVP by contacting Almudena Ocejo at (202) 387-9177 or e-mailing her at almudena@ncrp.org. The briefing will be held on Thursday, April 26, from 10-12, at the National Council of La Raza (NCLR) Conference Room, 1111 19th St., NW, 10th Fl, Washington, DC Empowering Democracy: Challenging Corporate Power and Demanding Accountability" Conference and Day of Action From May 27 through May 30, 2001, activists and organizations from all over the US will be coming together in Dallas, TX, with and to learn from experts and other activists successful in changing corporate behavior. APPLICATION DEADLINE IS APRIL 16 (TODAY!) Applications are available from Empowering Democracy. Contact Molly Rooke at Molly@LaRosa-Ranch.com or by phone at (214) 369-6667. IRS Seeks Comments on Form 1023: Application for Tax-Exempt Status for 501(c)(3) Organizations Nonprofits are invited to provide the IRS with comments on Form 1023 as part of an ongoing effort to reduce paperwork and ensure the usefulness of information collected. Comments are due April 16 and should be sent to Garrick Shear, IRS Room 5244, 1111 Constitution Ave, NW, Washington, D.C. 20224. For more information see the Federal Register Online, Vol. 66, Number 31, February 14, 2001. MAKE YOUR VOICE HEARD! SIGN ONTO THE INVEST IN AMERICA STATEMENT OF PRIORITIES The Invest in America coalition continues to press for increased domestic investment in programs that will provide opportunities to low-income people and create stronger and safer communities. We have revised our original Statement of Principles and will be sending the new Statement of Priorities to the Administration and Congress. We hope to get even more organizations on the list of supporters, so sign on now! The Century Institute Summer Program for Undergraduates Applications are now being accepted for The Century Institute Summer Program, a two-week fellowship designed to introduce undergraduate students to the progressive tradition in American public policy. The program will be held at Williams College in Williamstown, MA from July 1 through July 14, 2000. The program is open to any student who is a sophomore or junior in the 2000-2001 year, who has an interest in public policy and civic engagement. More information and an application is available at the The Century Institute's web site.