In This Issue Bush's Budget Proposal – Analysis President Bush's Budget (A Tax Cut) and Fuzzy Math Budget Process Reforms Government Reform Initiatives Bush Strongly Supports GPRA Faith-Based Initiatives Promoting Older American Volunteers Tax Cuts House Ways And Means Approve The First Part Of The Bush Tax Cut Fair Taxes for All Regulatory Action Senate Moves to Strike Down Ergonomics Rule Supreme Court Upholds Clean Air Rulemaking Court Strikes Down Oregon Ballot Measure on "Takings" Mining Congress for Goodies Listeria Rule Moves Forward Medical Privacy Revisited Nonprofit Sector Issues Bills To Increase Charitable Giving Introduced In Congress Charitable Choice Update FEC Seeks Comments On Expansion Of "Political Committee" Definition VeriSign: Saving the "org" in dot.org Tech Help: Interactive Messaging President Bush's Budget (A Tax Cut) and Fuzzy Math Since it now seems that regardless of which ideological position you take on the Bush tax cut, the numbers and somebody's leadership are there to support you, we're going to try to simplify things. First, it is indisputable that if you calculate the percentage amounts of taxes paid across the board, those people who make more money will get more tax relief – two percent of $150,000 is more than two percent of $20,000. The across-the-board cuts are the centerpiece of the Bush tax cut, and the most expensive component. If you add in the benefits of the estate tax, the wealthy benefit even more. The U.S. Treasury reports that of all the people who died in 1997, only 1.9% paid any estate tax. While there are a few – a very few – small businesses and farms who are affected by the estate tax in a negative and unfair way, the people who pay most of the estate tax are the super-rich. Repeal of the estate tax will do nothing to benefit low- and middle-income people. Any reforms of the estate tax, necessary to prevent the loss of what are truly "family" farms and businesses or to simplify the tax, could be accomplished without total repeal. (See OMB Watch's Estate Tax Resource Page for more information.) Finally, let's look at the child tax credit. Again, it's indisputable that if you pay no income tax, it makes no difference whether you get a $500 child credit or a $1,000 child credit. (And, remember, people who pay no income tax are still paying the full percentage of payroll taxes with every paycheck.) President Bush's proposal ignores the fact that working people with the lowest incomes will get no benefit, but, at the same time, he raises the income level of families who are eligible for a child credit from $110,000 to $200,000. That means that all those folks will get the full amount of the higher child credit. Once again, wealthier Americans will benefit more, but, according to estimates from the Center on Budget and Policy Priorities 12 million families would not benefit at all. President Bush has the right idea – raise the amount of the child tax credit. Going a little further, and making it fully refundable – payable to families who don't owe income tax – would make a huge difference. According to some estimates it would lift some 2 million children out of poverty. The numbers about the distribution of the tax cut vary. The Center on Budget and Policy Priorities estimates that the Bush tax cut would give from 36% to 43% of its benefits to the wealthiest 1% of Americans. Citizens for Tax Justice sticks with its 43% figure, as do the House Budget Committee Democrats. The White House reluctantly, after being pressed, said that the wealthiest 1% of Americans would get 22% of the total tax cut-this figure, however, excludes benefits from repeal of the estate tax and the rate cuts that go into effect in 2006. It is also not based on U.S. Treasury data. Even if you are not convinced that the Bush tax cut is unfair, there are factors that reveal it to be dangerous. This tax cut, once it becomes law, is phased in over the next 9 years. In other words, it will gradually cut revenue for the next nine years and then continue to drain resources forever unless taxes are raised. Even tax breaks that are put into effect for only a year almost always continue, each year, to be extended. For instance, the Research and Development tax credit that President Bush proposes to make permanent was enacted on a yearly basis. In budget parlance, such tax cuts are called "tax extenders." So, putting a "trigger" on the tax cut to somehow stop it midstream if the proposed surpluses don't materialize will likely be totally ineffective, and will create practical problems, as well. The actual cost estimates vary. Few people still hold to the $1.6 trillion figure, simply because interest costs incurred from not paying down the national debt must be included, bringing the total to at least $2 trillion. Depending on other assumptions the Bush tax cut will cost from $2.1 to $2.5 trillion. The Joint Tax Committee has issued cost estimates for elements of the Bush plan in conjunction with the House Ways and Means consideration of HR 3 (see below), showing the cost to be at least $2.2 trillion, not including an adjustment of the Alternative Minimum Tax. (See also the CBPP analysis.) Appropriated programs, on the other hand, are decided every year. While it isn't easy to cut popular programs, if there is no money to pay for them, it is much easier to end or curtail programs than tax cuts. President Bush has got it backwards-essentially making cuts in appropriated programs first in order to pay for his tax cuts. To turn to the rest of President Bush's budget proposals, he indicates that discretionary spending will go up 4%, slightly above the cost of inflation. (This, however, assumes that population, a major factor in assessing the amount of funding required, remains constant.) It also excludes any "one-time-only " or earmarked appropriations that were included in last year's budget (and are always included in the budget). President Bush also proposes raising education and military spending. Since there is only one pot, these increases will necessarily result in cuts in other programs. Most of the actual cuts were unspecified. It is clear, though, that many agencies will have their discretionary spending reduced. According to The Washington Post, the following will receive cuts: Agriculture (-7.7%), Commerce (-5.9%), Transportation (-11.4%), Energy (-3.6%), Interior (-3.9%), Justice (-4.8%), the Environmental Protection Agency (-6.4%), and Labor (-5.0). However, without more information, which Bush's budget outline does not contain, it is impossible to know with any certainty the amount of cuts or the specific programs that will be cut. Further, there is lots of language in the budget outline about "redirecting" funds from duplicative or outmoded programs and achieving savings by eliminating wasteful or inefficient programs or practices. Again, without giving direct information, much of the budget blueprint remains open to wide interpretation. The President's budget really is only clear about one thing-his $1.6 plus trillion tax cut. Everything else is being fitted around that goal, in spite of the fact that many Americans are not particularly interested in a tax cut if it means cuts in important services and programs or threats to Social Security and Medicare. A tax cut may be a good idea, but shouldn't we talk about the meat and potatoes first, and then get to dessert? Back to Top Bush's Budget Process Reforms The President proposes a number of changes in the budget process "[t]o provide for a more orderly and responsible budget process and to wrest waste out of the Federal budget...." Most of the provisions are primarily intended to limit or reduce the size of government and insure enough resources to pay for the large tax cut that is the centerpiece of the President’s budget outline. As with the rest of the budget outline, except for his proposed tax cut, these recommendations for changing the budget process are only briefly sketched out and many questions about how they would work are left unanswered. The budget identifies four major structural reforms:

• Extend discretionary spending caps at the current level adjusted for inflation and extend the pay-as-you-go (PAYGO) requirements. Although there is not much detail, the President proposes a continuation of caps or limits on discretionary spending for the next five years, holding spending constant after adjusting for inflation. The budget outline does not give precise numbers for the amount of the caps. One controversial issue will be what the "baseline" of last year’s spending will be when calculating the cap. There are rumors that the baseline would exclude about $15 billion in "earmarks" that were in last year’s spending bills. Since such earmarks are included nearly every year, this type of baseline would cause a substantial cut in federal discretionary spending. (EPA’s proposed budget, for example, is not discussed as a cut because the administration excludes "earmarks.") Further, while a modest adjustment for inflation is included, there is no adjustment for increased population. There is also no adjustment for increases in military spending which comes out of the same overall cap as domestic and international aid programs. The caps were originally established to get the budget out of deficit. Once that was achieved, the caps for FY 2000 and 2001 were quietly waived because spending needs were recognized and budget surpluses existed. Now, President Bush proposes setting caps for the sole purpose of limiting discretionary spending and insuring that there will be the resources to pay down the national debt. The real threat to debt reduction, however, and the primary purpose of the President’s budget, is his huge tax cut. More simply, the President wants to limit discretionary spending in order to have the resources to pay for his tax cut and keep his other promises about debt reduction. Discretionary spending is not the problem. As a percentage of the overall GDP of the country, discretionary spending is at its lowest level since 1966. In addition to the limits on discretionary spending, the President also proposes continuing the pay-as-you-go (PAYGO) requirements on mandatory spending. The Bush PAYGO extension is highly controversial. PAYGO was created through the 1990 Budget Enforcement Act (BEA) which was written to reduce the deficit. PAYGO rules say that any mandatory spending (mandatory spending, such as entitlement programs, are not covered by annual appropriations bills and the discretionary caps discussed above) or tax legislation cannot increase the deficit. It must be offset by reductions in mandatory spending or increases in receipts (e.g., taxes). The President proposes to extend these rules to reducing the surplus – after Congress acts on his tax cut plan and Medicare reform plan. Thus, if there is any surplus left, any spending or tax change would need to be offset with other spending or tax change so as to not reduce the remaining surplus (or increase a deficit). In other words, it would be a vehicle to insure that the surplus cannot be used to create or expand any mandatory spending programs. The President also proposes to eliminate the use of advance appropriations "simply to avoid spending limitations." Advance appropriations have commonly been used to by-pass spending caps. Another way the spending caps have been exceeded is by designating "emergency" spending. The President proposes to establish a $5.6 billion National Emergency Reserve. This would entail a much stricter definition of what constitutes an emergency and would require both the President and Congress to agree. There is no indication of what happens if there is no agreement or if a true emergency exceeds the Reserve.
• Change from annual to biennial budgeting. The President proposes a two-year budget cycle that would occur in the non-election year. Depending on the specific proposal put forward, this, too, could be highly controversial. Congressional spending is often guided by a variety of factors including the state of the economy. When there is an economic downturn, the counter-cyclical effect of federal spending can help to minimize, even reverse, the downturn. Thus, it is important that there is a means for changing spending priorities each year to respond to these type of influences. Also, given the long lead time necessary to doing a budget, needs may arise that were unforeseeable when the budget is prepared. Finally, biennial budgeting tends to reinforce the status quo rather than allowing adjustments for changing priorities and needs.
• Change budget process rules, including an anti-government shutdown requirement. The President proposes that if an appropriations bill is not signed by October 1 – the start of the fiscal year – funding would be automatically provided at the lower of the President’s budget request or the prior year’s level. This would allow indefinite funding at a possibly inadequate level and could have very harmful effects especially on programs for low-income Americans. The President also proposes to make the congressional budget resolution a binding document by converting it to a joint resolution, thereby requiring the President’s signature and giving it the force of law. It is unclear what would happen if the President and Congress could not agree on a budget resolution.
• Recreating the President’s line-item veto. Although a line-item veto was passed in 1996, it was found to be unconstitutional. Now Bush proposes another line-item veto but pegged to reducing the national debt. The savings from anything he vetoes would be used to retire the national debt. Exactly why this circumvents the constitutional challenge is unclear.

For more discussion on these budget process changes, please see OMB Watch’s analysis of a previous 106th Congress budget process bill, which includes many of the same proposals. While we agree that the budget process could use reform, budget caps that were set at unreasonably low levels actually led to much of the gimmicks and abuse over the past ten years. The proposals made by the President do not seem primarily concerned with improving the budget process, eliminating pork-barrel and special interest spending, and insuring adequate review of agencies and programs, rather, they serve as a way of insuring the resources to pay for his tax cut. This is the wrong priority. The resources to meet the country’s domestic needs and make the right investments ought to be insured first. Back to Top Bush Proposes Government Reform Initiatives More Use of Internet; GPRA Performance to be Tied to Budgets As part of the Bush budget outline, the President has proposed a number of government reform efforts, most of which build on actions started during the Clinton administration. The list is most notable, however, for what is not there. 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 being undertaken 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. Instead, the budget outline highlights three areas for reform:

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

Citizen-Centered Unlike the Gore reinventing government initiative, the Bush administration no longer refers to the public as "customers." Instead, the focus is on making government more responsive to citizens. Bush offers three approaches. First, flatten the federal hierarchy by reducing the number of layers in the bureaucracy and put more resources into "front-line, service delivery positions that interact with citizens." Second, make greater use of the Internet to improve the relationship between government and citizens. "By enabling individuals to penetrate the Federal bureaucracy to access information and transact business, the Internet promises to shift power from a handful of leaders in Washington to individual citizens." Third, create a $10 million "E-Government fund." This will largely be an interagency innovative project fund administered by the General Services Administration (GSA), but may include support for FirstGov, the government's web portal, and development of a Public Key Infrastructure to develop secure digital signatures. Some think that the $10 million fund would ultimately be administered by the new Chief Information Officer (CIO) mentioned previously by the President, but this was not specified in the President's budget outline. On the last two points, Sen. Joseph Lieberman (D-CT) is rumored to be drafting an e-government bill that he hopes will be introduced with bipartisan support. The bill provides specific tasks in using the Internet to make government more transparent. The Bush administration has seized on a powerful idea, but will need to put much more detail to the idea so that the public truly benefits. Hopefully, the Lieberman-led legislation will provide such detail. Results-Oriented A significant component to making government results-oriented, is to give more teeth to the Government Performance and Results Act (GPRA). The President proposes to increase the linkage between funding and performance. "Department and agency heads have been directed to ensure that their 2002 performance plans, which will be submitted to Congress in April, also include performance goals for Presidential initiatives and for Government-wide and agency-specific reform proposals." While agencies have placed a high priority on complying with GPRA, budgets have not been tied to the quantitative performance measures required under the law. (See related story.) The President also proposes to eliminate "duplicative and ineffective programs," but does not identify a list of such programs. This is likely to create some controversy once it is made public. The President also proposes to put greater emphasis on incorporating private sector reforms in the government, and to strengthen financial management and accountability. 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. Back to Top Bush Strongly Supports GPRANonprofits Likely To Be Affected President Bush and his lieutenants are placing a heavy emphasis on "results oriented" government, including implementation of the Government Performance and Results Act (GPRA), which requires federal agencies to measure performance in quantifiable terms. In keeping with this emphasis, the president's budget outline submitted to Congress on February 28 indicates the administration's intent to link agency and program budgets to performance – a philosophy that will apparently extend all the way down to nonprofit grantees. In a recent talk to nonprofit leaders, John DiIulio, head of the new White House Office on Faith-Based and Community Initiative, indicated that GPRA performance measures would likely be imposed on federal grantees, not just federal agencies. These measures would help to determine who receives federal funding. Most of the DiIulio discussion was focused on services to low-income and vulnerable populations. And it appeared that DiIulio felt that performance measures could be a tool for redirecting federal resources to faith-based organizations in the delivery of such services. Some in the audience felt that DiIulio was explaining how federal resources would be shifted from large intermediary organizations – possibly even state and local governments – to individual congregations under the belief that they will be more efficient with federal resources. DiIulio did not address who would review and award grant applications, but it appeared he thought all applications would come through the appropriate federal agency. If GPRA performance measures are tied to funding levels or determination of who receives funding, it will likely put more focus on the federal agency's selection of the performance measures. Unfortunately, GPRA does not require agencies to seek public input on the performance measures they incorporate – although there is nothing prohibiting them from seeking such input. Moreover, the law requires agencies to use quantitative measures except when a waiver is granted from the Office of Management and Budget (OMB). The application of solely quantitative measures in social policy has always been suspect because of the difficulty in doing so. Depending on the performance measures used by the federal agency, it could have enormous impact on service delivery at the local level if extended to nonprofit grantees. In the worst case scenario, nonprofit providers may choose to ignore the hardest to serve in order to ensure that performance does not lag and jeopardize federal funding. This type of "creaming" could become a large disruption in the basic social safety net. The widespread application of GPRA may have other implications. Currently, the data used to assess performance is most often not available to the public to verify and validate. This is especially significant in the case of protections for health, safety, consumers, and the environment. Should such information become available to the public, there might be a better understanding of governmental problems and successes. Such information could also help to make government more transparent and accountable. Back to Top Bush's Faith-Based Initiatives The President's budget outline places a heavy emphasis on "championing compassionate conservatism," particularly through what he has previously called his faith-based initiatives. Although the budget outline provides very little detail, it does identify $700 million for his Champion Compassionate Conservatism initiative, which would receive $4.8 billion over the next five years and $10.8 billion over the next 10 years. The budget also provides a number of tax incentives for charitable giving and "to support charities and other private institutions that save and change lives." The budget states this adds up to $8 billion, but no detail is provided. This initiative includes the following components:

• Create a Compassion Capital Fund. There are no details on what this Fund will be used for, how it will be administered, or how much money will be put into it. John DiIulio, the head of the White House Office of Faith-Based and Community Initiative, told a group of nonprofit leaders that the President is proposing $700 million for the Fund for next year, but the budget proposes that amount for the entire Champion Compassionate Conservatism initiative, not just this Fund. On February 27, the President said in his address to Congress that he will make $700 million over 10 years available for the Fund. How much money is proposed for next year is not clear. DiIulio did indicate that the Fund would be used to for innovative community, faith-based initiatives, but he did not have any more detail.
• Open federal after-school programs to community groups, churches, and charities.
• Start a new pre-release inmate pilot that makes federal funds available on a "competitive basis for faith-based pre-release programs at Federal facilities."
• Make grants to faith-based and community groups for dealing with low-income children of prisoners.
• Increase drug treatment funding and "ensure that faith-based and other non-medical drug treatment programs" are considered.
• Establish second chance homes for unwed teenage mothers.
• Promote responsible fatherhood. The budget calls for $60 million in grants to "faith-based and community organizations that help unemployed or low-income fathers and their families avoid or leave cash welfare," as well as programs to strengthen parenting and marriage. It is unclear whether this $60 million is part of the overall $700 million in the initiative or an additional amount; the budget does not provide enough detail.
• Increase the adoption tax credit from $5,000 to $7,500 and make it permanent.
• Expand efforts to help low-income families pay rent and avoid homelessness.

There is no detail on any of these initiatives. To increase charitable giving, the President proposes:

• To allow non-itemizers to deduct charitable contributions. The budget provides no detail, but other documents made public by the Bush Administration indicate that non-itemizers could deduct the full amount of their contributions, up to the amount of the standard deduction (see related story).
• Create a state charity tax credit that allows individuals to give money to designated charities that address poverty and take a tax credit on state income taxes. States can offset lost revenue by using TANF money. The budget provides vague estimates on the cost to TANF, saying that the five-year cost to TANF will be $850 million. There are no details on this proposal, but past legislative initiatives had narrow definitions of "poverty" and excluded advocacy activities in determining whether a charity qualified for the credit program.
• Allow IRA rollovers for charitable contributions. This would allow individuals to give money from their Individual Retirement Accounts to charities without paying a tax on the income.
• A number of changes to promote corporate philanthropy. The state charity tax credit mentioned above would be extended to corporations, although there are no details on how this would be done. The cap on corporate charitable deductions would be raised. And corporations would be protected against liability for charitable contributions, such as with food, vehicles, equipment, facilities.

The budget states that the President "is committed to removing barriers to the participation of faith-based groups in Government programs." Of course, faith-based organizations already participate in government programs. For example, Catholic Social Services and United Jewish Communities receive federal funding to provide a number of social services, most aimed at serving low-income individuals. Thus, it would appear that the new dimension to the Bush faith-based initiative is focused on providing federal funds to congregations, such as churches, to deliver services. Although the President has not spelled out his program, there are several concerns. First, will "removing barriers" mean a relaxing of program standards that are central to quality services? For example, will licensing standards (e.g., number and type of professionals) be changed giving certain groups an advantage over others? The "charitable choice" provision in the 1996 welfare reform legislation exempts congregations from some anti-discrimination laws such as allowing them to hire individuals based on their religion. (The delivery of services cannot be limited on the basis of religious faith.) DiIulio has said that he agrees that non-discrimination laws and rules should not be relaxed. But this is only part of the issue. Second, the constitutional separation of church and state must be preserved. While the President has been clear that federal funds will not be used to support the proselytizing of religion, the boundaries of church/state become murky when federal funds are used in a program, such as drug abuse counseling program, that emphasizes the values of religion. Many nonprofits have described this as a slippery slope. A report released on February 27, In Good Faith: A Dialogue on Government Funding of Faith-Based Social Services, resulting from a two-year dialogue among Jews, Baptists, Evangelicals, Catholics and Muslims, found some areas of agreement, but remained deeply divided on charitable choice. Third, the budget states, "Resources will be devolved, not just to the States, but to the neighborhood healers who need them most." This suggests that the large faith-based organizations, such as Salvation Army or Catholic Social Services, would be by-passed, as might cities and states in order to give grants directly to local congregations. This will require a massive build-up of federal administration to review applications and monitor grantees. This is not a wise use of federal resources. Back to Top Promoting Older American Volunteers The President proposes to expand opportunities to encourage older adults to volunteer in community service and schools. He has three initiatives, all part of the National Senior Service Corps (NSSC), a program of the Corporation for National and Community Service. The President had announced his intent to nominate former Indianapolis Mayor Stephen Goldsmith, who is a Presidential Special Advisor on Faith-Based and Not-for-Profit Initiatives, to be chair of the Corporation. However, the Administration then realized that the Corporation board members choose their own chair person. Thus, Goldsmith has been nominated to the board and is hoping to be elected chair. The three initiatives include:

• Increasing NSSC funding by $14 million to $203 million. After five years, the President would like NSSC funding to be $250 million.
• Establishing the Silver Scholarship Program which will allow seniors who provide 500 hours of volunteering in tutoring or mentoring programs to receive a $1,000 scholarship that can be deposited in an education savings account. $20 million is proposed for 10,000 scholarships.
• Creating a Veterans Mission for Youth program which provides $15 million for grants to connect veterans and retired military personnel with youth through mentoring, tutoring, and other after-school programs.

Back to Top House Ways And Means Approve The First Part Of The Bush Tax Cut On March 1, 2001, by a straight party line vote of 23-15, the House Ways and Means Committee approved H.R.3, to cut personal income taxes. This bill represents the first piece of the House's strategy of passing President Bush's tax cut proposal piece by piece. The bill slightly modifies Bush's proposal by including an interim 12% lowest tax bracket effective retroactively to January 1, 2001. Reductions in other tax brackets would begin in 2002, and by 2006, the current five tax rates of 39.6, 36, 31, 28, and 15 percent would be changed to four rates of 33, 25, 15 and 10 percent. The Democratic alternative was not considered. This is only one part of the Bush tax cut plan, and its cost is estimated at $958 billion over ten years, or almost $1 trillion, not including the cost of lifting the Alternate Minimum Tax (AMT), which would almost certainly need to happen. The Democratic alternative would have created a 12% tax bracket for the first $20,000 of a married couple's income; simplified and increased the Earned Income Tax Credit (EITC), doubled the standard deduction for married couples, and raised estate tax exclusions. It is estimated to have cost about $585 billion. For a distribution of the benefits of both the Democratic and Republican plans, see the Citizens for Tax Justice analysis. The bill is expected to be debated on the House Floor on Thursday, March 8. Back to Top Fair Taxes for All After outlining his budget in his Address to a Joint Session of Congress, President George W. Bush formally released his budget proposal on Wednesday, February 28. On Thursday, Fair Taxes for All, a bi-partisan coalition of coalitions, representing 500 organizations, announced its opposition to the President's tax cuts. Ralph Neas, President of People for the American Way, and co-chair, along with AFSCME president Gerald W. McEntee, of the Fair Taxes for All coalition, described the coalition as "unprecedented," in its size and diversity - the coalition is comprised of organizations including civil rights, labor, women's, environmental, disability, religious, gay and lesbian, health care reform, campaign finance reform, good government, older Americans' and children's groups. Citing the irresponsibility of committing the government to 10 years of huge tax cuts based on numbers that are only estimates and reminding the public of the opportunity the surplus offers for addressing the still unmet needs of the nation's working families, the Fair Taxes for All message was simple and to the point:

• The tax cut proposed by President Bush is far too large and fundamentally unfair.
• The Bush tax cut jeopardizes the nation's ability to meet its domestic and foreign responsibilities, threatens the nation's fiscal stability and security, and inequitably distributes the benefits it provides.
• Any tax cut enacted into law must be far smaller and much more equitable than the Bush tax cut in order to meet the needs and interests of the American people.

Neas warned that, "For our nation President Bush's tax cut proposal offers a return to the 80's and its days of budget slashing and government deficits that we have just recovered from." And David Sapperstein, Director of the Religious Action Center of Reformed Judaism, conveyed the urgency of the coalition's message in describing the budget as the "great moral document of our country," and affirmed that "we should be building a society of justice and equality." "We as a nation will have missed a great historical opportunity to address structural poverty, environmental degradation, international human rights," Sapperstein explained, if Congress enacts this tax cut that leaves out 24 million poor children and guarantees cuts in vital social programs. As this coalition continues to fight the Bush tax plan, OMB Watch will provide more information. Read OMB Watch's statement supporting the Fair Taxes for All coalition. To sign the Fair Taxes for All Statement of Principles, you may call (202) 467-4999. Back to Top Senate Moves to Strike Down Ergonomics Rule Senate Republicans are moving to strike down ergonomics standards - finalized toward the end of the Clinton administration - through a special expedited process laid out in the Congressional Review Act (CRA). A "resolution of disapproval" to repeal the standards was introduced late last Thursday – by Sens. Kit Bond (R-MO), Don Nickels (R-OK), Michael Enzi (R-WY) and Tim Hutchinson (R-AR) – and it is likely to be on the Senate floor for a vote as early as Tuesday. Under the CRA, a resolution of disapproval can be forced to the floor immediately – without any hearings – through a petition of at least 30 senators. Such a petition reportedly exists. Once on the floor, debate is limited to only 10 hours. There can be no filibuster of the resolution, and it requires only a simple majority for success. If it passes the Senate, House Republicans are also expected to pursue a resolution repealing the ergonomics standards. According to the Washington Post, the leadership is already whipping up votes to support such a resolution even before its introduction. Should the resolution of disapproval ultimately pass both the House and Senate, President Bush would have the option of vetoing it; unfortunately, comments out of the White House have not been encouraging. If Bush allows the resolution to go forward, OSHA would be forbidden from coming back with a rule that is "substantially the same," even in subsequent Congresses, unless Congress explicitly passes a law allowing the agency to do so. In other words, passage of the resolution of disapproval would likely kill the current ergonomics standards for quite some time. This would be a very troubling development for workers. Musculoskeletal disorders (MSDs) caused by ergonomic hazards (including back injuries and carpel tunnel syndrome) are the biggest safety and health problem in the workplace today, causing more than 600,000 serious injuries and costing $45 to $50 billion each year. Passage of such a resolution could also spell danger for a host of other health, safety, and environmental standards finalized toward the end of the Clinton administration. Industry lobbyists have targeted many of these rules for repeal. And a victory on ergonomics could embolden their friends in the Republican leadership to go further. For more information on the rule, see the AFL-CIO's Ergonomics site. Back to Top Supreme Court Upholds Clean Air Rulemaking In a unanimous decision, the Supreme Court ruled (on February 27) that the Environmental Protection Agency (EPA) had exercised proper authority in promulgating its 1997 clean air standards on ozone (smog) and particulate matter (soot). This represents a major victory for public health advocates and a major blow to industry polluters – which argued, first, that EPA had taken on powers reserved to Congress and, second, that it had improperly excluded cost considerations in developing the rules. The Supreme Court’s action overturns an earlier ruling by a U.S. Appeals Court, which threw out EPA’s standards. In justifying the appeal court decision, two of the three ruling judges in that case (both Reagan appointees) invoked the pre-New Deal "nondelegation doctrine," which holds that certain issues are too important for Congress to delegate. This decision raised concerns beyond the particular issue of clean air by suggesting that Congress cannot delegate authority to federal agencies – which have scientific expertise that Congress lacks – to develop standards for public health, safety and the environment. Fortunately, the Supreme Court firmly rejected this argument. Writing for the Court, Justice Antonin Scalia pointed out that EPA’s rulemaking "fits comfortably within the scope permitted" by past precedent. The Supreme Court also rejected industry’s claim that EPA must consider costs in developing clean air standards. Lower courts – including the court that threw out EPA's clean air standards – have previously interpreted the Clean Air Act to explicitly forbid EPA from basing its decisions on costs to business; instead, rules must be based on what’s best for the public health – EPA estimated the 1997 standards would prevent 15,000 premature deaths a year – and costs are to be considered during the implementation phase. Industry plaintiffs thought they might be on the verge of a coup when the Supreme Court unexpectedly agreed to hear this part of the case. But the Court found the industry argument lacking. The Clean Air Act "unambiguously bars cost consideration from the [standard]-setting process, and thus ends the matter for us as well as EPA," Scalia wrote. Industry wasn’t completely shut out, however. Echoing briefs filed by Ohio, Michigan, and West Virginia, the Court ruled that EPA had provided industrial states an unreasonably short amount of time to come into compliance with the new standards for ground-level ozone (or smog). This will hold up implementation of these standards until EPA can devise a plan consistent with the Court’s findings. Back to Top Court Strikes Down Oregon Ballot Measure on "Takings" On February 23, an Oregon judge struck down a ballot measure – passed on November 7, 53 percent to 47 percent – that directs the state and local governments to pay land owners when a regulation lowers the value of their property. The judge ruled Measure 7 violated the state's constitutional requirements for ballot initiatives on two grounds. First, he said, voters were not adequately informed of the changes that Measure 7 made to the state constitution, which already provides for "just compensation" to land-owners whose property has been seized. And second, he found that Measure 7 amounted to a package of amendments, which the state constitution forbids, instead of just one. If Measure 7 had been allowed to move forward, it could have had devastating consequences. This so-called "takings" measure would have required that Oregon tax money be used to pay corporations to obey virtually any land use zoning, as well as laws protecting wetlands and wildlife habitat. This sets up a fool's choice: either pay out millions or billions of dollars in "compensation" or stop enforcing important public and environmental safeguards. Unfortunately, Measure 7 isn't dead quite yet. Its supporters plan to appeal the decision. Back to Top Mining Congress for Goodies Sens. Mitch McConnell (R-KY) and Robert Byrd (D-WV) are pushing a bill (S. 60) that would exempt coal-fired power plants from major sections of the Clean Air Act. Specifically:

• It gives plants a 10-year exemption from all new air pollution controls by EPA and states;
• It exempts new plants from having to install the best, most-up-to-date pollution controls; and
• It allows plants to ignore a requirement that they show pollution increases will not damage nearby National Parks.

McConnel and Byrd – who received a combined total of $75,000 from the coal-mining industry during the 2000 election cycle, according to the Associated Press – claim their bill is simply about providing financial incentives to encourage the development of "clean-coal" technologies. However, these "incentives" – totaling $1 billion in direct subsidies and $6 billion in tax breaks over the next 10 years – amount to a massive corporate give-away, which provides a perverse advantage to dirtier coal-fired power plants over much cleaner, more efficient gas-fired plants. Unfortunately, S. 60 may have a sympathetic ear at the White House. In his recent budget plan, President Bush – the number one recipient of coal-mining-industry dollars in the last election cycle at $114,521, according to the AP – asked Congress for $2 billion over 10 years for "clean-coal" research projects. Read a complete analysis of S. 60 provided by the HREF="http://www.nrdc.org/">Natural Resources Defense Council. Back to Top Listeria Rule Moves Forward The Bush administration recently announced that it has approved a proposed rule that requires producers of hot dogs and other ready-to-eat meats to conduct periodic testing for listeria bacteria, which, according to estimates by the Centers for Disease Control and Prevention, cause 2,300 hospitalizations and 500 deaths per year. The proposal was left over from the Clinton administration, and had been put on hold by the Card memo, issued during Bush’s first day in office, which directed agencies to halt all regulatory activity. New Agriculture Secretary Ann Veneman requested an exception to the freeze, and was granted it, marking a major victory for food safety. For more information, read the reaction of the Center for Science in the Public Interest. Back to Top Medical Privacy Revisited Tommy Thompson, President Bush’s new secretary of Health and Human Services (HHS), announced (on February 26) that the administration would delay and reconsider medical privacy protections put in place at the end of the Clinton administration that would limit the information health care providers can divulge without a patient’s consent. This marked a victory for the health care industry, which had been urging such an action. The delay of the standards was mostly the fault of the Clinton administration. Under the Congressional Review Act, a major rule takes effect 60 days after it is submitted to Congress for review. In this case, however, Clinton’s HHS forgot to submit the privacy protections – which were later submitted by Bush’s HHS, and are now scheduled to take effect on April 14. What’s most troubling is that Thompson has opened the final rule for additional public comment. The Clinton administration received more than 50,000 comments – including many from the health care industry – after it proposed the standard in November 1999. It’s difficult to see what new information Thompson hopes to gain. Instead, this action seems a clear sign that the administration has already decided to revise the privacy protections, perhaps to suit the interests of the health care industry. The new comments will likely be used to justify reopening the rulemaking. The administration may want to further delay the privacy protections past April 14 while it undertakes a new rulemaking to revise the rule. However, there is a statutory deadline in place – already lapsed – that will likely discourage this action. Moreover, the rule leaves a number of years for implementation. If the administration were to undertake a new rulemaking, this would indicate to affected industry that they would not need to take steps to come into compliance with the rule. Back to Top Bills To Increase Charitable Giving Introduced In Congress Three tax bills aimed at increasing contributions to charities were introduced in the House on February 28. Rep. Phil Crane (R-IL), sponsor of the bills, said, "The tax code contains absurd disincentives to individuals willing and able to exercise the gift of charity, and these disincentives have terrible consequences in reducing the resources available to support private organizations that help people in need." The Charitable Giving Relief Act (H.R. 777) would allow non-itemizers to deduct charitable contributions up to the amount of the standard deduction. This proposal is more generous than the version passed by the House last year, which would only have allowed half the value of contributions to be deducted. A recent study by PriceWaterhouseCoopers estimates that passage of the bill would create more than 11.7 million new donors, increasing giving levels by 11%. In the first year it is expected to increase charitable giving by $14.6 billion and over ten years generate an additional $160 billion. These numbers have been challenged by some who wonder whether the non-itemizer will generate as many new contributions or whether it will simply allow current contributors to receive a tax deduction. The IRA Charitable Rollover Act (H.R. 774) is another proposal that passed the House last year, but became part of a larger package vetoed by President Clinton over unrelated issues. The bill would allow individuals age 59 ½ or older to make donations by withdrawing funds from Individual Retirement Accounts (IRAs) without having to recognize the amount as income and then take a deduction. Under current tax law couples with taxable incomes over $128,950 can lose part of their charitable deduction to a phase-down provision passed in the 1986 Tax Reform Act. The deduction can also be reduced if the donor gives more than half their adjusted gross income. In introducing the bill, Crane estimated that these problems represent as much as $10 billion in loss of resources for charities. The phase-down in the deduction, known as the itemized deduction "haircut," would be eliminated by the third bill, the Charitable Contributions Growth Act (H.R. 776). Currently the phase-down reduces the charitable deduction by 3% for every $1,000 given over the income threshold, up to 80% in lost deductions. Crane noted that "when the effective price of charitable giving rises, which is exactly the consequences for the paste-down in itemized deductions, there is a disincentive to give." Last year's bill on the non-itemizer deduction had 122 co-sponsors in the House, and the IRA rollover bill had 125 co-sponsors. It is expected that this year's package of bills on giving could move easily through the House as one of a small number of tax bills with bipartisan support. However, it is unclear how tax bills overall will move in the House. The House is moving a piece of the Bush tax cut bill this week (see related story). In doing this, it may become more difficult to move additional tax bills because of scoring reasons – that is, causing tax cuts that exceed the President's limit of $1.6 trillion over ten years. The picture on how a tax bill will move is even murkier in the Senate. Back to Top Charitable Choice Update Several developments have occurred surrounding the Bush Administration's plan to allow churches to receive federal funds for social service programs. Church affiliated social service programs are nothing new, and groups like Catholic Charities have been an important part of the country’s social safety net for decades. These groups, however, are separate charitable entities from their religious affiliates, and must adhere to the regulations that govern all charities. The Bush plan, however, allows for direct federal funding of church programs while enabling them to avoid regulation because of their unique First Amendment rights. This means that federally funded church programs would be able to discriminate in hiring and even ignore health and licensing regulations. The Coalition Against Religious Discrimination (CARD), of which OMB Watch is a member, has met with the offices of many Senators in order to educate them about the potential impacts of the Bush proposals. CARD has also been successful in getting Sen. Joseph Lieberman (D-CT) to hold off on co-sponsoring charitable choice legislation with Sen. Rick Santorum (R-PA). Lieberman said in a March 1 speech before the Pew Forum on Religious and Public Life that he thinks that faith-based groups should receive federal grants for the delivery of social services as long as the service is kept separate from the religious activity. We will continue meeting with Congressional offices as this issue develops. On the legislative front, it is expected that the first appearance of charitable choice legislation will make it to the floor in the next few weeks as an amendment offered by Sen. Judd Gregg (R-NH) to the reauthorization of the Elementary and Secondary Education Act (ESEA). It is expected that his amendment will allow churches to receive federal funding for after-school programs. Also, a charitable choice provision has been included in a drug abuse prevention bill sponsored by Sen. Orin Hatch (R-UT) and Sen. Patrick Leahy (R-VT). Leahy has expressed "serious reservations" about the charitable choice portion of the bill in a statement upon the bill’s introduction, and stated that it was added by Hatch, over Leahy's objections. As part of the hearings for this bill and for the first time in the history of the charitable choice issue, it is likely that there will be a hearing on charitable choice in early April. See OMB Watch's Nonprofit Advocacy's analysis. Back to Top FEC Seeks Comments On Expansion Of "Political Committee" Definition The Federal Election Commission (FEC) is considering revising the definition of "political committee" to include currently unregulated organizations that use "issue advocacy" to influence federal elections, or whose major purpose is to do so. The Advance Notice of Proposed Rulemaking (ANPRM), to be published in the Federal Register this week, details the activities that would result in regulated contributions or expenditures in connection with federal campaigns. (The Federal Election Campaign Act defines a political committee as a group that receives more than $1,000 in contributions or makes more than $1,000 in expenditures in connection with a federal election.) The definition of "contribution" would expand to incorporate six detailed elements, including money, services or any other thing of value received:

• From a solicitation made expressly for the purpose of influencing federal elections;
• From a party committee, separate segregated fund used for electioneering or an individual campaign committee (501(c)(3) organizations are excepted);
• By an organization whose charter or by-laws authorize it to become involved in federal election related activities;
• By an organization controlled by a federal candidate, his or her campaign committee or any committee authorized by a federal candidate (would exclude groups that have an incidental relationship with a vendor used by a campaign);
• By a group exempt for taxation under the Internal Revenue Code section 527 that is not restricted to working on state and local elections;
• Through in-kind contributions for communications to the general public, made in coordination with a campaign.

The definition of expenditure would include the following payments and costs:

• Fundraising that states proceeds will be used to influence a federal election;
• Communications to the general public that are coordinated with a campaign;
• Communications to the general public that refer to a candidate for federal office that have been tested to determine their impact on voters or where the intended audience is chosen because of its voting behavior;
• Those made to a commercial vendor for a product expressly designed to influence a federal election.

The ANPRM also seeks comment on how the regulations could determine when a group's major purpose is to influence federal elections. Three alternatives are presented, including an expenditure test (at least 50% of disbursements), a percentage of time and disbursements (including how, if at all, volunteer time should be counted) and a percentage of expenditures for communications that expressly call for election or defeat of a federal candidate. Comments are due at the FEC by May 7, 2001, and can be submitted in writing or by e-mailing to polcomms@fec.gov. The text of the ANPRM is available on the FEC web site. Back to Top VeriSign: Saving the "org" in dot.org VeriSign is the dominant domain name registrar on the Web. Among other things, it has had an exclusive lock on registering domain names that end in .org and .net. On March 1, 2001, VeriSign gave notice that it was giving up its exclusive arrangement in order to focus its registry services on commercial and individual customers. Network Solutions Inc. (NSI) used to be the major Internet registrar, having benefited from what was, in effect, a monopoly granted by the federal government in 1993, to register Internet name space that ended in .com, .net, and .org. NSI made a deal with the