In This Issue Oregon Ballot Initiatives Would Harm Nonprofits   The Estate Tax Elimination Bill Goes to the President   Appropriations -- What Will Happen Before October 1?   More Hurdles for FirstGov   The Real Threat of "Lockboxes"   Survey Results: Spending the Surplus   FEC Says Nonprofit Group Can Send Campaign Ads as Part of Study   Oregon Voters to Decide on Troubling Reg "Reform" Initiatives   Official Seeks Disclosure of Pesticide Ingredients   Digital Divide in Government Procurement   Tech Help: Newsgroups   Notes and Sidebars   Oregon Paycheck Protection Initiatives Hit Nonprofits A conservative group calling itself "Oregon Taxpayers United" has sponsored two "paycheck protection" initiatives which will be on the Oregon ballot in November. Each are reminiscent of Proposition 226 in California, the controversial referendum that was defeated, but are far worse for charities. The first initiative, Ballot Measure 92, would apply to public and private employees, making its reach far broader than California's Proposition 226. The Measure would prohibit payroll deductions for any "political purpose" unless there is an annual written authorization from the employee. According to the Secretary of State in Oregon, this must be "on a form used only for that purpose." The definition of "political purpose" is so broad that it includes legitimate lobbying activities conducted by charities -- again, much broader than the California fight. More specifically, the definition covers lobbying an elected official; supporting or opposing a ballot measure, including efforts to get people to sign or not sign an initiative petition; contributions to a candidate, political committee, or party; or supporting or opposing a candidate. The Measure covers any organization, even "pass-through contributions through an affiliated organization," and includes not only cash contributions but also in-kind contributions. Although this may be targeted to unions, this Measure will have a major impact on nonprofit organizations, as well as insurance companies and financial institutions that use payroll deduction programs. Many organizations, most notably the United Way, receive major funding through voluntary paycheck deductions, and this measure would make it extremely difficult for United Way agencies that engage in public policy issues to receive money through paycheck donations. The costs associated with collecting a signed sheet from every person who donates would negate the attractive ease of paycheck contributions. The result is that nonprofits will need to either restrict their involvement in lobbying for their cause or drop out of a federated campaign or workplace giving program. According to the National Committee for Responsive Philanthropy, these campaigns provided more than a million dollars to Oregon charities in 1998. The Measure, which would cost the state roughly $1.5 million annually to implement, would levy heavy penalties. A violator would be required to pay the state a "civil penalty of not less than double the amount of money spent" on political purposes. This is to include commingled funds, even if those funds were not used for political purposes. In addition, the violator would be required to pay the employee "double the amount of money that was taken from him or her and used for a political purpose, plus all attorney fees and costs" incurred to recover the funds. The second initiative, Ballot Measure 98, is extremely similar to an initiative that failed 53-47% in 1998 (Ballot Measure 59), but is far more draconian than Measure 92. It states that "no public funds shall be spent to collect or assist in the collection of political funds," using the same definition of "political" as above. By limiting it to "public funds," this Measure does not reach to private sector workplace giving programs. But "public funds" include more than just money. It also includes employee time, space, equipment and supplies. Thus, a nonprofit organization that engages in public policy matters would be required to put all workplace charitable giving funds received from public employees into a segregated fund if they want to continue to participate in the giving program -- and such funds cannot be commingled with funds that might be used for lobbying or other political purposes. Similarly, in-kind gifts, such as used computers, would trigger complicated bookkeeping to demonstrate that the gift was not used for any political purpose. Again, lobbying officials and participating in ballot initiatives are both important activities of many charities. If this measure were to pass, similar to Measure 92, charities could be forced to choose between relinquishing their advocacy rights or forgoing participation in workplace giving campaigns for public employees, a significant source of their charitable funding. For more information, go to http://www.keepitfair.org/ Back to Top The Estate Tax Elimination Bill Goes to the President Hoping to use the promised veto of the Estate and Gift Tax Elimination bill as a campaign tool and try to override it, Congress sent what is sometimes misnamed the "death tax elimination" bill to the President on August 24, 2000. The political posturing behind this bill, and the time and effort that will be expended on a veto override (which is not likely to happen anyway) when eleven of the thirteen appropriations bills necessary to keep government running come October 1 still must be passed, and when no major legislation benefiting low and middle income people has been passed or is likely to pass, is appalling. The estate tax elimination bill, which gradually phases out the estate tax owed by heirs, is touted as "saving" family farms or businesses, but actually favors the wealthiest of Americans and would be enormously costly, especially after the tax becomes fully eliminated in 2010. In addition, the elimination of the estate tax would have a serious impact on charitable giving to nonprofits—according to the Treasury Department, it could reduce charitable bequests by 12%. Today, House Speaker Dennis Hastert (R-Ill), sent a letter to President Clinton about cutting a deal -- raising the minimum wage a dollar by January 1, 2002 in exchange for eliminating some of the tax cut provisions passed in March by the House. It is unclear how this would affect the estate tax passed by both Houses in July and already sent to the President. While it appears that that the House is trying to find areas of compromise with the President, it is difficult to gauge the possible implications for the tax bills already passed. Back to Top Appropriations -- What Will Happen Before October 1? The endgame approaches. With less than two weeks of actual work time, can the remaining eleven appropriation bills be passed at the budget resolution level that is $30 billion less than the President's request? It's not likely. And, with the Presidential election campaign gearing up, there is a lot to lose, whether it be a forced government shutdown, or a concession to higher spending levels, or a mess of continuing resolutions funding programs at last year's allocation. A "train wreck," consisting of last minute close-door omnibus appropriations, is deplorable in terms of the virtues of rationality and an open budget process. However, it will probably result in higher spending levels for many of the government services and programs that are funded through the appropriations "process." It looks like that that train wreck will happen. Back to Top More Hurdles for FirstGov On August 11, the General Services Administration awarded a contract to GRC International Inc. of Vienna, Va. to build the FirstGov web site. FirstGov is a portal to federal government information that is scheduled to be unveiled on September 30. The contract with GRC International is for $4.1 million and runs for two years. GRC International develops and integrates information systems and provides analytical services. In March, it began operating as a unit of AT&T Government Markets within AT&T Business Services. FirstGov is an exciting opportunity to strengthen public access to government information. With the speed at which it is being built, however, many important questions about its operation remain unanswered. Many of these questions focus on the relationship of FirstGov and Fed-Search, which is a nonprofit organization established to provide the search engine for the web portal. There has also been a heavy emphasis on private sector co-branding, or "Certified Partners." The status of these relationships is dependent on the partners agreeing to abide by certain standards (such as no advertising on the link to the index of government information); there is reportedly resistance from some in the private sector on this issue and the relevancy of the partners concept is in some doubt. Fed-Search was created by Eric Brewer, who is a co-founder of Inktomi, a private company that develops software, such as search engine tools, for the Internet. Brewer, who developed some of the key software for Inktomi while operating on a federal contract wanted to give something back to government. He is donating money, time, and his knowledge to create the search mechanism that will be used by FirstGov. Brewer intends for Fed-Search to close shop within two years and to transfer responsibility to the federal government. To achieve a government-wide search engine, Fed-Search has been given a helping hand by the government to set a "spider" to crawl every government web page. The results will be stored in a database/index that will allow the public the ability to search all government sites as they would Yahoo, Google or other search engines. The Clinton Administration has indicated that FirstGov will be public domain, but that the Fed-Search database will not be. This has raised issues about access to the database and whether there will be a proprietary Inktomi framework surrounding the database. The Clinton Administration claims that there will be no proprietary issues surrounding the database. But this confuses technical experts that claim the index and algorithms for searching the database will have to be Inktomi's proprietary version. Additionally, Fed-Search has indicated that it will charge money for anyone other than the federal government to use the database to provide value-added search interfaces. These issues will likely come to a head in two years when Fed-Search will close its doors. Another concern that has received little discussion is how the search engine used by FirstGov will produce results that are relevant to the user. It does little good to receive a search result with 1,000 hits. Producing results that are useful to the searcher is the heart of the engine, but has not been discussed in public meetings or described on the FirstGov web site. GRC, the First Gov web page contractor, recently announced a partnership with Autonomy Corp., which has capacity for providing very robust relevancy to the user. How much of that capacity GRC will be able to apply to the Fed-Search/Inktomi index is not known. But Autonomy is expected to work on natural language queries through the Fed-Search database. OMB Watch and others have criticized FirstGov for not having a directory of topics to help the public browse and search for government information. In a reversal from the first description of FirstGov, the Clinton Administration indicates there will be a directory. They have warned, however, that with the limited time until its unveiling on September 30, it will not be everything they want it to be. FirstGov has come a long way in a short amount of time. When it is revealed on September 30, we will see what remains to be done. Back to Top The Real Threat of "Lockboxes" It appears that Congress and the Administration are in accord that the so-called Social Security surplus (off-budget surplus) should only be used for paying down the national debt. There is a growing bipartisan agreement to take Medicare Hospital Insurance surpluses (now included as on-budget surpluses) off-budget to be used only for debt reduction. There are even those who call for using some portion of the on-budget, non-Social Security (or non Medicare) surplus for more debt reduction. Both the House and Senate have passed bills or included provisions in appropriations bills that would make it more difficult to use these surpluses for anything but debt reduction. All differ slightly in the mechanism to accomplish that goal -- requiring a three-fifths vote of the Senate to use the Social Security and Medicare HI surpluses for anything but debt reduction; putting the Medicare HI surplus off-budget like Social Security; requiring cuts in programs or increases in taxes to avoid a deficit in the Social Security/Medicare HI surpluses; or even making it illegal for any government official to talk about the budget in terms of unified figures (combining the numbers of the on-budget surplus and the off-budget surplus), presumably to make sure the surplus looks smaller than it is. Besides the goal of debt reduction, these lockbox provisions are also billed as "protecting" the Social Security surpluses from government raiding. However, since U.S. Treasury bonds in the full amount of the Social Security surplus always go into the Social Security Trust Fund, whether the money is spent on government programs or debt reduction, that claim is untrue. Paying down the national debt does not extend the solvency of Social Security or Medicare by even one day. The benefit of paying down the national debt is to reduce the interest that the government pays on the debt and, some argue, to keep individual interest rates lower which is good for the economy. Many of the arguments against these "lock-box" mechanisms assert that using all of the Social Security and Medicare surpluses to pay down the national debt is a fine idea. They object because it could be negative, if we have an economic downturn or some kind of war or national emergency, to be so tightly restricted from using the Social Security/Medicare HI surpluses if those resources are needed for other purposes. They're right -- making it difficult to spend a large portion of the surplus no matter what other compelling need may arise probably isn't a good idea. No one seems to be looking at the larger issue of whether using most of our budget surpluses for debt reduction is the wisest course of action. No one is questioning whether we ought to "protect" the surplus from use for pressing national needs in the first place. Debt reduction is just one of many possible national priorities. Only two priorities are receiving any serious national attention now at all -- either you're for tax cuts or you're for debt reduction. We think that there is another great priority, now that we have huge budget surpluses and a great economy, of investing in the country. We've always had excuses before -- we had to fight Communism, we had to wage a war, and we had to balance the federal budget. Investing in the country had to wait. Now, the Cold War is over, we are relatively at peace, and the budget is not only balanced, but in surplus. Devoting most of the surplus to paying down the debt by 2012 appears to be the latest excuse for failing to address priorities of investing in people and communities -- putting much needed resources into education and job training, the alleviation of poverty, the provision of health care, protecting the environment, and stimulating economic growth through research and development. Whatever happened to progressive, "big" ideas about addressing inadequate health care, and poor education, and fighting poverty in a concerted way, and fixing crumbling infrastructure, and improving inadequate transportation, and addressing the huge problems that exist in our inner cities. The needs exist:

• Income inequality is growing. Ten years ago, there were 66 billionaires and 31.5 million people living below the poverty line. Now there are 258 billionaires and 34.5 million people living below the poverty line. Among industrialized countries, UNICEF reported that the U.S. has the second-highest percentage of children living in households with incomes below 50% of the national median income, second only to Mexico.
• The U.S. remains well behind the rest of the industrialized nations of the World, and even some Third World countries, in measures of the health and well-being of children. The rate of poverty among Black children is an astonishing 36% and among Hispanic children it is 34%.
• While 73.2% of white households own their homes, only 46.7% of Black households and 45.5% of Hispanic households own their homes.

The "lockbox" proposals raise the question of why, exactly, we need to go to such lengths to save the surpluses from investing in our people. There are many arguments for why investing in the country should be our national priority. There's a moral argument -- in this prosperous country, no child should go hungry and no person should be homeless. There's a practical argument -- increasing income inequality is a threat to our overall prosperity and stability as a democracy. There's a very pragmatic argument -- investing in education and training and in research and development is a better guarantee of future economic growth than debt reduction. Back to Top Survey Results: How Would You Spend the Surplus? In an online survey in the last OMB Watcher Online, readers were asked, "If the continuing solvency of Social Security/Medicare is assured, what do you think is the most important use of the federal budget surplus?" Readers were asked to choose between paying down the debt, investing in America, tax cuts, and military spending. 55% voted for increasing domestic investment, 41% for paying down the debt, 4% for tax cuts, and 0% for increased military spending. (This was in spite of the fact that the default survey choice was accidentally set for the paying down the debt option.) In this time of surplus, more and more people are realizing that the best investment we can make in the long-term health of our country is spending the surplus on raising people up through education and improved social programs. Back to Top Federal Election Commission Says Nonprofit Group Can Send Campaign Ads Via the Internet as Part of a Nonpartisan Study The FEC issued an Advisory Opinion letter on August 10th to Third Millennium, a 501(c)(3) charitable organization, unanimously finding that purchase of Internet space to show ads provided by Presidential campaigns is not an illegal in-kind campaign contribution because it is part of a nonpartisan study on the impact ads will have on the voting behavior of young voters. Third Millennium's project, called "Neglection 2000", was found to fall within the exception for nonpartisan activity even though the content of the ads will be partisan and expressly encourage votes for identified candidates. Third Millennium's purpose is to promote civic involvement of young people in elections and legislative issues. Earlier this year they released "Don't Ask, Don't Vote", a study that found low participation by young voters in this year's presidential primaries. The group suggests that mutual neglect perpetuates the problem: low turnout results in a low level of campaigning targeted to younger voters, which in turn leads to low turnout. Neglection 2000 will test whether an increase in exposure to campaign ads increases younger voter turnout. The Internet was chosen as the medium for the ads because its audience is disproportionately young. The experiment will be carried out through an Internet service provider that requires its subscribers to provide demographic information and review paid advertising as a condition of free service. Random samples will be selected, with some participants seeing ads and a control group seeing none. Over 40,000 participants are expected to see 15-20 ads between Labor Day and the election. The candidates are being asked to supply the ads, which must not refer to opponents and contain a positive message about the candidate. After the election a survey will be conducted to see if participants voted and results will be presented to the public in December. In finding the project to be nonpartisan and aimed only at encouraging individuals to vote, the FEC noted two significant factors: a wide range of candidates will be included (not just those from the major parties) and they will be treated equally. The Advisory Opinion also noted that the FEC considered the nature of the group as well as the activity. As a charitable organization, Third Millennium is barred from supporting or opposing candidates for office. Back to Top Oregon Voters to Decide on Troubling Reg "Reform" Initiatives Two Oregon ballot initiatives -- to be decided on in November -- would cripple the state's ability to protect public health, safety, and the environment. One (Measure 2) would allow special interests to challenge administrative rules through a petition process and the other (Measure 7) would require Oregon taxpayers to compensate corporations for complying with laws or regulations that reduce their property value. Measure 2 would amend the Oregon Constitution to allow a corporation to challenge any administrative rule, such as a clean water standard, that it dislikes through a petition signed by at least 10,000 voters (which can easily be obtained for an estimated $10,000 in paid petitioning). Multiple rules could be challenged in a single petition, but they "must relate to one subject only." Although this is meant as a limitation, it isn't much of one. Potentially numerous environmental standards, for instance, could be listed in a single petition. Once a petition is completed, Oregon's Legislative Assembly must affirmatively approve the rule or rules before the end of the legislative session on which it is received. Otherwise, the rule expires and has no force or effect. Another version of this initiative was on the Oregon ballot in 1998. Fortunately, Oregon voters realized that special interests should not have the power to throw important public protections in limbo, and it was defeated. The second initiative, Measure 7, would require the public to compensate property owners whenever a regulation reduces a property's value. This so-called "takings" measure means that Oregon tax money would be used to pay corporations to obey virtually any land use zoning, as well as laws protecting wetlands and wildlife habitat. That sets up a fool's choice: either pay out millions or billions of dollars in "compensation" or stop enforcing important public and environmental safeguards. Similar "takings" measures were defeated by voters in Washington (in 1995) and Arizona (in 1996). Click here for more information on these ballot initiatives, including the text of the initiatives. Back to Top Inert & Invisible: Official Seeks Disclosure of Pesticide Ingredients The New York Attorney General has called for the Environmental Protection Agency to require labeling of inert ingredients in pesticide products. In his report, Attorney General Eliot Spitzer pushes EPA to require pesticide manufacturers to substantiate their confidential business information claims when they seek to keep from the public the chemical names of inert ingredients in their pesticide products. Spitzer called on the federal government to require that product labels list the secret "inert" ingredients that can make up 95 percent or more of pesticide products. "The public has a right to know about all pesticide ingredients, not just those ingredients the pesticide manufacturers want to disclose," said Spitzer. Environmental organizations have been pushing EPA to require public disclosure of inert ingredients in pesticides. Manufacturers can keep this information from the public by simply claiming the information is a "trade secret" and thus should be kept confidential. The Food & Drug Administration and even other EPA programs require industry to substantiate their confidentiality claims with evidence of potential harm. The report is available on the Attorney General’s website at www.oag.state.ny.us./ Back to Top The Digital Divide in Government Procurement Section 818 of the Senate Defense Authorization bill (S. 2549) has been amended to permit agencies to move immediately to electronic-only publication of procurement notices and contracting opportunities through FedBizOpps. Most public notices of procurement actions over $25,000 are now published in the Commerce Business Daily (CBD), which is available both in print and online. It is not clear why two separate online sites (FedBizOpps and CBDNet) are considered necessary and non-duplicative. The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council published a proposed rule, in the August 21, 2000 Federal Register (Volume 65, Number 162), to amend the Federal Acquisition Regulation (FAR) to designate FedBizOpps as the single point of universal electronic public access to Government-wide procurement opportunities. Agencies will have until October 1, 2001, to complete their transition to, or integration with, FedBizOpps. Under the proposed rule, agencies would no longer furnish separate notices to the CBD. Many nonprofits and small businesses without ready access to the Internet will be disadvantaged by this provision because the clock for submission of bids and proposals would begin with the electronic publication of the notice. On the plus side, the proposed rule also changes the public notification requirements to allow greater electronic access to information on Government acquisitions, including notices of upcoming acquisition opportunities, notices of subcontracting opportunities, and notices of contract awards. Back to Top Tech Help: Newsgroups Newsgroups are both one of the oldest and one of the most versatile Internet tools available. Yet this resource is not widely known or utilized in the nonprofit arena, not for lack of ease, cost, or functionality, but because it is viewed as increasingly irrelevant in an Web-focused environment. There are some significant comparative advantages, however, to newsgroups that address commonly-voiced nonprofit information and communication needs. NPTalk delivers the news on newsgroups, including information on a live demonstration in which you can participate. Subscribe to NPTalk Back to Top Your comments are always welcomed! Notes and Sidebars Comments Due on Responsible Contractor Rule Comments on a revised proposed rule that promotes greater accountability for federal contractors -- to make sure they comply with important public protections -- are due on Tuesday, Aug. 29. Comments should be addressed to: General Services Administration, FAR Secretariat (MVR), 1800 F St., NW, Room 4035, Washington, D.C. 20405, Attn.: Laurie Duarte Briefs on Clean Air Case Due Amicus briefs on a clean air case before the Supreme Court must be filed by Sept. 7. The court will be making two crucial decisions: (1) whether EPA overstepped its authority in setting 1997 clean air standards; and (2) whether EPA must take costs into consideration in developing its standards. Oral arguments have been set for Tuesday, Nov. 7, 2000. A decision is expected to be determined around June of 2001. Internet Tidbits Total number of Internet domain names registered around the world: 27,617,0333 (Source:DomainStats) Percentage, as of January 2000, of Web URLs ending in ".org": 4.35% (Source: Inktomi) Percentage, as of January 2000, of Web URLs ending in ".gov": 1.15% (Source: Inktomi) Percentage, as of January 2000, of Web URLs ending in ".com": 54.68% (Source: Inktomi) Best minimum guesstimate of total number of Web pages as of July 2000: 2.1 billion (Source: Cyveillance)