In This Issue
In This Issue
The Corporate Image of The Bush Administration
Nussle Takes Over Budget Committee
Thomas Takes Over Tax Committee
The Estate Tax and Charitable Giving
The Myth of "Midnight Regulation"
IRS Reaffirms Right of Charities to Lobby
EPA Issues Rule Expanding Mandatory Disclosure of Toxic Releases
Industry Drives Environmental Information Activities
Board Issues Guidelines for Technology Access
Tech Help: Human Services Software and Technology
The Corporate Image of The Bush Administration
Last Wednesday, January 3, President-elect Bush convened an economic summit comprised of 36 business leaders. Not surprisingly, the summit concluded with Bush indicating that there is a need to push his $1.6 trillion tax cut package. The only new twist is that the proposed tax is now needed to stimulate the economy, according to Bush.
Less mentioned is the fact that the economic summit only involved representatives of corporations and was not a public meeting. There were no public interest representatives, no academic economists, no economists, and no news media. This may be setting a Bush administration theme: What is good for the Corporation is good for America.
This 1950s refrain of the slogan involving General Motors is seen in the selection of cabinet appointments, where most are direct products of corporate America, and in the selection of advisors. The implication is two-fold. First, the Bush team will likely operate as though government is a business. From our perspective, government is not the equivalent of business; we are citizens, not customers; there are processes and programs to deliver, not products based solely on efficiency models; government has a responsibility to respect transparency whereas corporations shun sunshine. Second, the substantive decisions of government -- whether through the regulatory policies or through tax initiatives -- are likely to be guided by the interests of business and those with wealth and power. Thus, we will see the erosion of regulatory protections and the advocacy of policy proposals such as the repeal of the estate tax.
The Center for Responsive Politics noted that the 36 business leaders that were part of the Bush economic summit have provided $1.7 million to federal candidates and political parties -- 93% of it to the Republicans. The corrosive influence of money in politics was noted by the online survey of nonprofit organizations in which charities from across the country identified this as the most important issue the Bush administration should address.
The connection between money and politics becomes even more direct when looking at who has been asked to serve on the Bush transition team. Of the 474 individuals who were named to serve as policy advisors, most were representing corporate America and 263 included campaign contributors. These advisers gave a total of $5.3 million to Republican candidates and the Republican Party, including $206,000 contributed directly to the Bush campaign, according to the Center for Responsive Politics. The Center notes that contribution totals include only donations made by the individual to a candidate or party committee. Totals do not include donations made by spouses or corporations, or by the individuals
themselves to political action committees. (For the complete list of the transition committee members, see the full report.)
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Nussle Takes Over Budget Committee
Rep. Jim Nussle (R-IA) won the Budget Committee chairmanship over three other candidates. He has indicated that budget reform will be a high priority. After his election as chair, he raised some questions about passing a large tax bill such as the one being proposed by President-elect Bush.
On Thursday afternoon, Nussle said he has "some initial concerns" about the tax cut that Bush was advocating on the campaign trail. It is likely that Nussle will have a significant role in any tax bill since he also serves on
the Ways and Means Committee which writes tax bills. As chair of the Budget Committee, he will have lead responsibility for writing the Budget Resolution, which provides reconciliation instructions on tax issues.
Nussle has a number of priorities for the Budget Committee. His first, which overrides tax cuts, is debt reduction. This might not be consistent with the Bush position, which places tax cuts as a higher priority than debt reduction. Bush has been talking increasingly about the need to jump start the economy with tax cuts.
Nussle is also an advocate for budget reform. Along with Rep. Ben Cardin (D-MD), he unsuccessfully pushed a bill that would have created a two-year budget cycle, an automatic continuing resolution assuming an appropriations bill had not passed, and much more.
At the end of this fiscal year -- September 30, 2001 -- the budget caps and pay-as-you-go budget rules expire. Nussle said that "no decisions have been made" about whether to extend these procedures, but reiterated his desire to make budget reforms. He also indicated he wanted to talk with ranking member Rep. John Spratt (D-SC) before coming to a final decision.
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Thomas Takes Over Tax Committee
Dropping the theme of seniority, the House passed up Rep. Phil Crane (R-IL) for the chair of the Ways and Means Committee and selected Rep. Bill Thomas (R-CA). Upon election as chair, Thomas indicated that he would pursue the
proposed large-scale tax cut being proposed by President-elect Bush.
For nonprofits, there are several implications. First, Crane is a sponsor of legislation to extend charitable deductions to taxpayers who do not itemize on taxes. The nonitemizer charitable deduction is a high priority
for the nonprofit community. If Crane were chair, there would be little doubt that the nonitemizer charitable deduction would move – and likely be enacted since there appears to be little opposition to it. The selection of Thomas, however, changes the picture. Nonprofits will need to better understand how high a priority the nonitemizer deduction will be to Thomas.
Second, Thomas advocated “paycheck protection” language on a campaign finance bill that would have adversely affected charities. The language would have required charities to get specific approval from members and contributors when using their money to engage in public policy matters. Public policy was broadly defined to include lobbying activities,
commenting on regulations, and much more. The "paycheck protection" provision, which more squarely impacted unions, helped to kill the campaign finance bill at that time.
It was rumored that Republican leadership asked Thomas to put in the paycheck protection language. Nonetheless, Thomas did it.
Third, Thomas is an advocate for repealing the estate tax, an issue that is central to the nonprofit community. OMB Watch, along with other organizations, will be working to retain the estate tax for three reasons. Repeal will create: greater concentrations of wealth and power; an adverse impact on charitable contributions; and less federal revenues
which can be used for domestic programs.
Table: House Committee Chairmen
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The Estate Tax and Charitable Giving
In the last OMB Watcher, we noted that repeal of the estate tax would have three adverse impacts: it would increase concentrations of wealth and power; it would sharply curtail charitable giving; and it would reduce federal revenues likely causing cuts in programs serving low-income and vulnerable families. In this article we begin to explore the connection between charitable giving and the estate tax.
Since there are no limits on the amount of money that can be left to charities -- and bequests to private foundations are treated the same as those to public charities -- charitable giving is a powerful way to lower the taxed value of the estate. Most estate tax filers recognize this deduction for charitable contribution as being the second largest type of deduction taken. Only the deduction for a surviving spouse -- in which an unlimited amount of money can be given -- is larger. Yet for estates worth $20 million or more – the largest estates -- the amount given to charity nearly equaled the amount given to the surviving spouse ($7.47 billion vs. $7.53 billion).
The estate tax proves to be an incentive to give to charity. Estates that have tax liability give between two and three times as much to charity as estates without tax liability. The latest available data, 1997, shows that taxable estates gave charities more than twice the amount non-taxable estates did. (Those filing taxable returns gave $9.6 billion; those filing non-taxable returns gave $4.6 billion.)
Based on this and other econometric data, most agree that repeal of the estate tax would have an adverse impact on charitable giving. The Treasury Department estimates that between $5 billion and $6 billion in charitable gifts would be lost each year if the estate tax is repealed. In a study for the Council on Foundations and Independent Sector, Price Waterhouse and Caplin & Drysdale concluded "abolishing the estate tax . . . would have reduced charitable bequests by about $3 billion out of an estimated $7 billion in 1996." Actually, charitable bequests turned out to be $10.2 billion in 1996, which would have increased the impact of the repeal. Extrapolating their calculations to newer data would suggest a $7.3 billion drop in charitable giving.
In 1997, estates provided $14.3 billion to charities. Nearly three-fourths of this comes from estates worth $5 million or more, and nearly 60% comes from the super-rich estates that are worth $20 million or more. (See chart below.)
Chart: Estate Tax and Charitable Giving (1997)
Currently, estates can give $675,000 (double this for married families) in inheritance without being taxed. This is planned to increase to $1 million in 2006. The above data suggests that changing the amount that is excluded by taxation from $1 million to $2.5 million or $5 million would not dramatically hurt charitable giving, although it would have some impact.
In the next Watcher, we will discuss which charities benefit from the charitable bequests under the estate tax.
Chart: Charitable Giving: The Estate Tax
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Cries in the Dark: The Myth of "Midnight Regulation"
As the Clinton presidency winds down, industry groups and their allies in Congress are angrily accusing the administration of "midnight rulemaking" for a number of major new regulatory initiatives designed to protect public
health, safety, and the environment. This criticism, however, is nothing more than propaganda -- which unfortunately has generated a number of misleading stories by the press.
The whole idea of "midnight regulations" should seem ridiculous to anyone who understands the rulemaking process. Agency rulemakings are guided by a legislative framework, requiring various analyses, public notice and comment, etc. These requirements are extremely time-consuming; it is not unusual for major rules to take more than 10 years to develop. If an agency ignores its legislative requirements in developing a rule, it is sure to face a court challenge, and the rule will be thrown out.
Undoubtedly, the Clinton administration is trying to wrap up work before the president’s term expires. But the regulations cited by industry have been worked on for years, and are a surprise to no one. In particular, this includes:
- A rule (issued Dec. 20) that promotes greater accountability for federal contractors – to make sure they comply with important public protections – by requiring disclosure of law violations to government contracting officers. This rule, which Sen. Tim Hutchinson (R-AR) called
“an egregious example of midnight rulemaking” (Wash Post, 12/19/00), was first published for public comment way back on July 9, 1999.
- An OSHA rule (issued Nov. 13) that requires employers to implement ergonomics programs for work environments where musculoskeletal disorders (MSDs) occur. This standard has been more than a decade in the making. Indeed, it was initiated under President Bush's secretary of Labor, Elizabeth Dole. Since then, numerous studies – including studies done wholly independent of OSHA – have clearly demonstrated that MSDs caused by ergonomic hazards are the biggest safety and health problem in the workplace today.
- An EPA rule (issued Dec. 21) to curb pollution from
diesel fuel used by heavy-duty trucks and buses. Under this rule, which has been years in the making, diesel fuel will eventually have to be nearly sulfer-free, and trucks and buses will have to be equipped with cleaner engines to reduce nitrogen oxide emissions by 95 percent and soot emissions by 90 percent.
- A rule (issued Jan. 5) banning new roads and logging in millions of acres of national forests, including much of Alaska’s Tongass National Forest. The completion of the rule, which was fiercely opposed by the timber industry, ends an eight-year battle.
- Regulations (issued Dec. 20) to protect the confidentiality of Americans’ medical records by limiting the information that health care providers can divulge without a patient’s consent. In 1996, Congress voted to adopt medical privacy standards itself within three years, or cede that responsibility to the administration if the deadline was not met. The self-imposed deadline was not met, and the Clinton administration acted -- over the objections of many in the medical industry.
President-elect Bush is on record opposing many of these rules. But now that they are on the books, they cannot simply be wiped away with the stroke of a pen. The agencies that issued the rules would have to undertake a brand new rulemaking -- going through all the hoops and hurdles the law requires -- to take them off the books. This is a difficult task, and one that Bush -– given his questionable political standing -– should not take lightly.
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IRS Reaffirms Right of Charities to Lobby, Educate Voters
Two information letters recently released by the IRS confirm what many nonprofits already know: that nonprofits exempt from tax under 501(c)(3) can lobby and conduct voter education programs. The IRS issues information letters in response to questions from taxpayers, organizations and public officials. The letters provide a general summary of existing law and do not apply to specific fact situations.
The letter on legislative lobbying (INFO 2000-0248) noted that charities can lobby up to an amount set by two alternative limits: an expenditure limit based on a formula applied to the group's annual exempt purpose expenditures, or the old substantiality test, under which no substantial part of a charity's activities can be lobbying. The IRS noted that the definition of "no substantial part" is vague, provides no clear definition of what constitutes lobbying, and volunteer time and other activities that do not count under the expenditure test could be considered.
Section 501(h) of the tax code requires charities that wish to take advantage of the expenditure test to notify the IRS by filing Form 5768. The information letter noted that the advantage of the expenditure test is its definitive terms and rules, and that filing a Form 5768 does not increase risk of being audited.
The letter also noted that charities with federal grants can still lobby, as long as they use private funds. Private foundations can fund groups that lobby as long as funds are not specifically earmarked for lobbying.
INFO 2000-248 also noted that charities can lobby incumbent legislators while a campaign is underway, but should avoid any reference to the election campaign. In another letter (INFO 2000-294) the IRS addressed a complaint that a nonprofit had prepared a television ad criticizing a presidential candidate. The Service noted that, while this activity would be impermissible for a charity, a Section 501(c)(4) organization would be allowed to air ads and engage in other political activities, as long as it was not the group's primary activity. The letter also noted that a charity may have a 501(c)(4) affiliate, and that some 501(c)(4) organizations form affiliated political action committees.
The IRS posts information letters on the web.
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EPA Issues Rule Expanding Mandatory Disclosure of Toxic Releases
In a significant step forward for the public's right-to-know about human health hazards posed by exposure to lead, the Environmental Protection Agency (EPA) today announced the issuance of a final rule expanding mandatory disclosure of toxic releases of lead and other toxic compounds that remain in the environment, do not break down chemically and accumulate in the human body.
Specifically, EPA lowered the reporting threshold under the Toxics Release Inventory (TRI) for certain chemicals that pose a threat to the environment and public health and are known as persistent, bioaccumulating toxic chemicals (PBTs). EPA noted that "[r]elatively small releases of PBT chemicals can pose human and environmental health threats and consequently releases of these chemicals warrant recognition by communities."
Facilities that emit at least 100 pounds annually of any of these chemicals into the air, land and water will have to report release amounts under the TRI program. Initially, EPA proposed to set the reporting standard at 10 pounds, but a compromise was reached and advocates can petition for EPA to review the standard, according to sources familiar with the rule. Facilities must report their releases of chemicals for any of over 600 chemicals that are manufactured or processed in excess of 25,000 pounds or otherwise used in excess of 10,000. According to the EPA announcement, the new 100 pound minimum for PBT chemicals will take effect for the 2001 reporting year, although the Office of Management and Budget (OMB) could delay the implementation of the new requirements until the 2002 reporting year. The public will not have access to the new data until sometime in 2002 or 2003.
Significant credit for this advance in the public's right-to-know goes to Jeremiah Bauman, right-to-know advocate for U.S. PIRG, who spearheaded the effort, along with the Alliance to End Childhood Lead Poisoning, Environmental Defense, National Environmental Trust and the Working Group on Community Right To Know.
The final rule is expected to be published in the Federal Register on January 9, 2001.
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Industry Drives Environmental Information Activities
The Environmental Protection Agency's (EPA) Office of Environmental Information has been busy recently responding to industry's wish list.
EPA is putting together a list of major information products. Twice a year, EPA will publish an "Information Products Bulletin" that will list major information products currently under development. EPA will make the list available on its public web site as well as provide print copies to the public. The Bulletin will likely be useful to those who peruse it periodically to get a heads up on EPA information activities. Industry sought such a list so they could better identify and take action on new information products they find objectionable.
Second, in an advanced notice of proposed rulemaking, EPA announced it is re-examining how it handles information that industry submits to EPA and claims as confidential. Of particular note, EPA is asking the public to comment on whether the agency should restrict access to public information to prevent terrorists and other criminals from piecing publicly-available information together to help plan criminal or terrorist activity.
EPA will also address other confidentiality claims. The agency has no agency-wide standards for handling information that industry submits to EPA and claims as confidential. Thus a law may require industry to report information to the agency for public disclosure but industry may use the confidentiality loophole to duck public scrutiny. Industry can submit the information to EPA but claim the information to be confidential. Under many programs, EPA will not question those confidentiality claims or require justification for the claim until public disclosure becomes an issue. Requiring upfront substantiation of confidentiality claims and limiting the time for confidentiality shields would likely make more information available to the public and reduce overly broad confidentiality claims.
Finally, EPA will hold a public meeting in Washington to discuss ways of explaining toxic release data to the public to address key industry concerns that the information is being misinterpreted. It is unclear the extent to which the meeting will address key problems the public faces in accessing, understanding and using the data. For more information, see EPA's January 3 notice published in the Federal Register.
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Board Issues Guidelines for Technology Access
On December 21, 2000, the Architectural and Transportation Barriers Compliance Board (also known as the U.S. Access Board) published its long-awaited guidelines in the Federal Register. The Access Board's efforts are geared towards the development of practices that agencies can adopt with respect to information technology to facilitate access to people with disabilities.
The Access Board's work has its origins in the Rehabilitation Act of 1973, the first federal law to include civil rights provisions for people with disabilities. When the Rehabilitation Act was re-authorized in 1986, Section 508 was added, providing civil rights protections for people with disabilities with respect to technology for the first time. Under this reauthorization, the General Services Administration (GSA) was given the responsibility to create guidelines. While this
reauthorization included provisions that allowed citizens and federal workers to both sue -- and file formal complaints against -- agencies that do not comply with the guidelines, agency compliance with the standards was considered voluntary, and there was no formal mechanism established to provide standards, or enforcement, across government agencies. The Rehabilitation Act was re-authorized in 1998, providing additional protections under Section 508, including procedures to create enforceable standards -- namely the ones released by the Access Board.
The standards cover a pretty broad range of issues, most notably government websites and the technology purchased by agencies, which must comply with the standards, except when compliance exerts undue difficulty, expense, or burden on the agency. This means, for example, that while existing equipment that doesn't meet the standards can still be used, new equipment purchased must meet the guidelines. The rules will also let individuals and government agency employees bring legal action against agencies that don't comply with the rules.
The Access Board also released an impact analysis, citing both the potential costs and benefits of its guidelines. The total estimated costs of implmenting the guidelines is between $177 million to $1.07 billion annually, with the federal share amounting to between $85 million and $691 million. By comparison, the federal government spent $37.6 billion on information technology in FY 1999.
The costs are dependent upon the amount technology producers distribute across the general consumer base, and the amount offset by value-added benefts from the implementation of the guidelines. The expected benefits include:
- larger numbers of disabled workers employed in federal agencies
- up to a 10% increase in productivity among disabled workers
- new tehnology developments that will benefit the general public
The rules were supposed to have come out February 7, 2000 with an implementation date of August 7, 2000, but jockeying by the information technology industry around the cost and scope of the rules, among other things, held up the deliberations.
The rules will take effect June 21, 2001. To assist individuals and Federal agencies with the provisions of Section 508, the Access Board and GSA, through an inter-agency effort called the Federal Information Technology Accessibility Initiative, are providing resources and reference materials that will be geared to both agency employees and end-users.
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Tech Help: Human Services Software and Technology
Human needs and social services agencies have a variety of software and technology needs that require both specialized solutions and peer-relevant input on and experiences with those resources. Where can these resources be located online? NPTalk lists some key resources for organizations to explore.
Subscribe to NPTalk
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Notes and Sidebars
New "Plum Book" Available from GPO
The 2000 edition of the United States Government Policy and Supporting Positions -- known to most simply as the "Plum Book" -- is now available from the Government Printing Office (GPO). The publication, issued every 4 years, provides a listing of all Federal Government positions that may be available through non-competitive appointment. This year, that amounts to more than 7,000 positions. For more information, go to GPO's "Plum Book" web site.
Supreme Court Web Site Gets 1.1 Million Page Views for Election Opinion
The Supreme Court's 65-page opinion in the case of George W. Bush, ET AL., Petitioners v. Albert Gore, Jr., ET AL., issued on December 12, drew 1.1 million page views, according to the U.S. Government Printing Office (GPO), which hosts the Supreme Court's website. GPO also reported that between November 21 (the day before the case first reached the Supreme Court) and December 13, the site received 6.4 million page views -- more than 4 times the load during a typical month.
Social Justice Movements and the Internet
The Peace Review Journal, an international and multidisciplinary journal of peace, social justice and human rights, is seeking papers for a special issue on social justice movements and the Internet.
This issue aims to examine whether the Internet is really a significant force for progressive political practice and how social justice movements are using the Internet.
More information, including the Peace Review's Writer's Guidelines and suggested topics, is available online. In addition, questions may be addressed by e-mail to Dorothy Kidd or Bernadette Barker-Plummer or by calling 415.422.6680.
James Madison Award Nominations Sought
Freedom of Information Day (FOI Day), Friday, March 16, 2001, celebrates the 250th Anniversary of James Madison's birth. To mark this important day, the Freedom Forum, in conjunction with the American Library Association (ALA), will be granting the 12th annual James Madison Award. This award honors those who have championed, protected, and promoted the public's right to know.
The ALA Washington Office (ALAWON) is currently accepting nominations (until Wednesday, January 10, 2001) for the recipient(s) of the 2001 James Madison
Award. Nominations should be mailed to Peter Kaplan at the ALAWON at 1301 Pennsylvania Avenue, NW, Suite 403, Washington, DC, 20004 or faxed to 202.628.8419. More information on the history of the Award and the nominations process is available online.
"Imagine e-Government Awards" Will Honor Innovation in Information Technology
The Council for Excellence in Government and its Intergovernmental Technology Leadership Consortium have announced the creation of the Imagine e-Government Awards, to be presented in the Spring. The awards will recognize one adult and one high school student who suggest the most innovative ways for government to use information technology to serve and connect with the public.
The two winners will be those individuals whose ideas best demonstrate public value, originality and feasibility. On line applications must be submitted and completed by January 15, 2001. Applications can be drafted on line prior to that date, and all applicants will be able to access their applications for editing and augmentation until the submission date. Questions can also be directed to Lucy Bisognano at 202.728.0418
