In This Issue Campaign Finance Reform Legislation Threatens Nonprofits   Estate Tax Repeal Passes House   Appropriations Shortfall   Dumbing Down the Debt   Thompson Pushes Permanent Regulatory Accounting   House Passes Bill Blocking Ergonomics Standard   Kyl Rider Calls for Impossible Paperwork Study   Agencies Still Falling Short on E-FOIA   Tech Help: Electronic Publishing   Notes and Sidebars   Nonprofits Would Be Adversely Affected by Campaign Finance Reform Legislation Campaign finance reform is once again a hot topic in Congress, and nonprofits are again being swept up in the flood of activity. The central focus of most of this activity is nonprofit organizations established under section 527 of the Internal Revenue Code. These organizations have been called "stealth PACs" because they are allowed to engage in issue advocacy, sometimes coming very close to the line between issue advocacy and electioneering, without any regulation by the Federal Election Commission or the Internal Revenue Service. The legislation being generated by this push is not limited to 527s, and addresses most nonprofits, either by design or because of over-broad definitions of political advocacy. In the House, the leadership has promised to bring a bill addressing campaign finance reform to the floor before the July 4th recess, and has given Rep. Amo Houghton (R-NY), Chair of the Ways and Means Oversight Subcommittee, the responsibility of drafting it. He will be holding a hearing on June 20th, dealing with broad issues of the disclosure of "political activities of tax-exempt organizations." It is rumored that the bill he is developing will apply to 527s, unions, business leagues, and 501(c)(4) social welfare organizations, and will include some element of tracking the flow of money between covered organizations that are affiliated. Legislation has already been drafted by Rep. Michael Castle (R-DE), "The Accountability and Disclosure Act of 2000" (H.R. 4621), to disclose sources of funds used for certain types of election-related communications by any entity, nonprofit or otherwise. The Castle bill covers any communication "which mentions an individual holding Federal office," a candidate for Federal office, or the political party of the office holder or candidate. The bill also covers communications "which contain the likeness of such an individual or candidate." This overly-broad definition applies to any entity that spends $10,000 or more in a year on such communications, and would cover this newsletter simply because of the mention of Rep. Castle. As implied, the Castle bill would directly affect 501(c)(3) organizations.(Read an OMB Watch analysis of the bill.) The Senate has already passed an amendment to a defense authorization bill, sponsored by Sen. John McCain (R-AZ), to require disclosure by 527 organizations. Specifically, this amendment would require 527s to register with the IRS and provide periodic reports of expenditures over $500 and donations over $200. However, since the Senate cannot generate tax legislation it will need to be removed from the defense authorization bill upon final passage. Perhaps in response to this problem, Sens. Gordon Smith (R-OR) and Mitch McConnell (R-KY), have drafted their own disclosure bill, "The Tax-Exempt Political Disclosure Act" (S. 2742), that extends the disclosure requirements in the McCain amendment. The first part of the Smith/McConnell bill is the exact language of the McCain amendment, while the second part extends disclosure to a broader range of activities, similar to the Castle bill, to 501(c)(5) and 501(c)(6) organizations (unions and trade associations, respectively). Because the Senate leadership has not given a clear indication of its desire to act on campaign finance reform, it is not known when this legislation will come up for a vote (although Majority Leader Trent Lott (R-MS) is a co-sponsor of the bill). Check the Nonprofit News page for updates on this fast-moving issue. Back to Top So-Called "Death" Tax Relief Passes House Since their huge tax relief bills last year went nowhere, the GOP is now adopting a strategy of passing tax relief measures in smaller doses. One of these is the GOP Estate Tax Phase Out bill, named the "Death Tax Elimination Act" by its proponents. This bill, HR 8, sponsored by Rep. Jennifer Dunn (R-WA), passed the House by a vote of 279 to 136 on June 9, 2000, with 65 Democrats joining almost all of the Republicans in voting for the bill. The bill gradually repeals the gift and estate tax over ten years. It is not, as the title might suggest, a tax on dying, but a tax on large inheritances. The Republicans have portrayed the bill as coming to the rescue of heirs of the small farm or family business. However, government figures show that only 2% of the population is affected by the estate and gift tax, and only a few thousand estates, those with assets of more than $2.5 million, pay nearly half of the taxes collected annually. Currently, the regulations exempt up to $675,000 (scheduled to rise to $1 million by 2006) of an estate. Family farms and business are subject to other special tax exemptions. Had the GOP been truly concerned with helping small businesses and family farms, which constitute only 10% of all estates, they could have increased exemptions for those "estates," rather than creating a bill that primarily gives huge tax breaks to the wealthiest. Since charitable bequests are one way that wealthy people reduce tax burdens, including estate taxes, it is also likely that the estate tax repeal would have a negative effort on charitable gifts and bequests. According to the President, the bill could eliminate up to $6 billion a year of charitable giving. The tax bill will be expensive. The cost is estimated at $100 billion over the next ten years and then $50 billion a year after the tax is completely eliminated in 2010. President Clinton has issued a Statement of Administration Policy (SAP) saying he will veto the bill. While the legislation passed with enough votes to override a Presidential veto, it is unlikely that there would be enough support to override his veto, since it is expected that some Democrats who voted for the bill would not vote to override the President's veto. The Senate is expected to bring its version of an estate tax bill (sponsored by Majority Leader Lott) to the floor sometime in July. It is likely that the House will consider more tax cut bills, including some of the provisions of their defeated $792 billion bill, before this legislative session ends, perhaps including tax cut measures (likely the "marriage penalty" tax bill) under the "protection" of reconciliation measures. For a FAQ about the estate tax, see Citizens for Tax Justice For an opposing view, see the Heritage Foundation paper, "Time to Eliminate the Costly Death Tax." Back to Top Appropriations Shortfall The Labor-HHS-Education bill, usually the last appropriation to be considered, passed the House on June 14 by a 217-214 vote. The House now has to figure out how to find close to $1 billion in offsets because of "emergency" designations being overturned in Labor-HHS ($501 million in public health and social services funds), the threat of loss of emergency designation in the VA-HUD bill (FEMA), and to add funds to the Legislative appropriation for the Capitol Police, the Government Printing Office, and other shortchanged programs in that bill. Overall, though, there still just isn't enough money to realistically make appropriations for FY 2001, if spending caps remain in place. According to a Center on Budget and Policy Priorities analysis about the huge Senate appropriation committee cuts in the Social Services Block Grant, the budget resolution calls for reducing non-defense discretionary appropriations for fiscal year 2001 by more than $19 billion — or 6.3 percent — below the fiscal year 2000 level adjusted for inflation. That's a lot of money to find offsets for. In spite of bills getting passed, there is still a lot of work to be done before the FY 2001 appropriations process is finished. The Coalition on Human Needs has a helpful Side-By-Side analysis of funding for selected human needs programs in the Agriculture, Labor-HHS, and VA-HUD bills. Back to Top Dumbing Down the Debt The "Debt Reduction and Reconciliation Act of 2000," requiring that a portion of FY 2000's budget surplus be used to reduce the national debt is now expected to be on the floor next week. HR 4601, introduced by Rep. Ernie Fletcher (R-KY), requires that if the forthcoming CBO estimate of the surplus for FY 2000 is larger than the $24.4 billion estimate used in the budget resolution, an amount equal to the excess must go into a new fund, the "Public Debt Reduction Payment Account," to be used to buy back government obligations held by the public. It is very likely that the new CBO estimate (expected in July 2000) will be considerably higher than earlier estimates. The non-Social Security surplus for FY 2000 may be as much as $40 billion, which would require that $15.6 billion be used to reduce the national debt. There is general agreement in Congress that the entire Social Security surplus must used to pay down the debt. The debt ceiling, now at $5.95 trillion, will also be reduced by the amount deposited into the new "Public Debt Reduction Payment Account." The purpose of using an additional portion of the surplus to reduce the national debt is, in the rather grand language of the bill, to increase national savings, promote economic growth, reduce interest costs, and prepare for the Government's future budget obligations. More to the point, this legislation is aimed at preventing any last minute efforts to increase spending for the next fiscal year, even though everyone agrees that there is not enough money to adequately fund important government efforts and programs. In other words, an increase in the estimated non-Social Security surplus will not be used to directly benefit people who need it -— no more money for Head Start or community development or child care. In the longer range, since the Social Security surplus has been declared off-limits for anything but reducing the debt, legislation of this nature will make even less money available for domestic investment. There is a good argument to be made that future productivity will be guaranteed more by investments in education, employment training, research and development, and in improving the overall lot of all Americans, than by debt reduction. It's an argument that is not being heard at all in the bipartisan stampede to reduce the national debt. The Senate is likely to add a provision to the Military Construction/Supplemental to allocate some of the non-Social Security surplus for FY 2000 to debt reduction. Back to Top Thompson Pushes Permanent Reg Accounting Sen. Fred Thompson (R-TN) is pushing a rider that would require the Office of Management and Budget to conduct a cumulative cost-benefit analysis of all agency rules and paperwork -- referred to as regulatory accounting -- on a permanent basis, each and every year. This rider has been enacted as a one-time requirement for the last four years, and OMB has completed three regulatory accounting reports. These reports, however, have revealed the vast analytical uncertainty, as well as the limited utility, of such an endeavor. "... we still believe that the limitations of these estimates for use in making recommendations about reforming or eliminating regulatory programs are severe," OMB stated in its second report. "Aggregate estimates of the costs and benefits offer little guidance on how to improve the efficiency, effectiveness, or soundness of the existing body of regulations." Given this, it makes little sense as a permanent requirement -- especially given the limited resources of OMB and the agencies. For this reason, Democrats on the Governmental Affairs Committee have unanimously opposed regulatory accounting legislation (S. 59) pushed by Thompson. (Similar HREF="/article/articleview/571/1/4/">legislation has already passed the House.) In fact, Thompson has scheduled S. 59 for markup on a number of occasions, but has never been able to muster the votes to report it to the floor. Now Thompson is attempting to circumvent the committee through this very problematic rider. Back to Top House Passes Bill Blocking Ergo Standard If the House has its way, the Occupational Safety and Health Administration (OSHA) will never issue an ergonomics standard to address repetitive motion injuries in the workplace, which account for a third of all serious job-related injuries. On June 14, the House passed the Labor-HHS appropriations bill by a vote of 217-214 (largely along party lines), which included a rider blocking OSHA from moving forward on ergonomics. Shortly after the vote, President Clinton HREF="http://www.whitehouse.gov/library/ThisWeek.cgi?type=p&date=5&briefing=12">issued a statement that he would veto the bill if it comes to his desk, citing the anti-ergonomics rider as one of the reasons. The fight on OSHA's ergonomics standard and the Labor-HHS bill now moves to the Senate, which is likely to take up the bill in the coming weeks. On June 13, Sen. Mike Enzi (R-WY) issued a statement and circulated a "Dear Colleague" making clear that he will offer an amendment to block the rule. In his statement, Enzi claims that OSHA is moving too fast on the rule -- even though it's been 10 years in the making -- and "wants OSHA to slow down on ergo." But the risks of not acting are well known. Musculoskeletal disorders (MSDs) caused by ergonomic hazards are the biggest safety and health problem in the workplace today. Each year 1.8 million workers suffer from work-related MSDs, and 600,000 suffer from serious injuries that result in lost work time. The AFL CIO lays out the full HREF="http://www.aflcio.org/safety/index.htm">case for an ergonomics standard here. Back to Top Kyl Pushes Paperwork Study Sen. Jon Kyl (R-AZ) is pushing HREF="/article/articleview/477/1/4/">a rider to the Treasury-Postal appropriations bill that would require OMB to conduct an unrealistic study of federal paperwork. Specifically, the bill requires OMB to evaluate the extent to which the implementation of the Paperwork Reduction Act (PRA) has reduced burden imposed by rules issued by each agency, including the burden imposed by each major rule. This would require an enormous amount of work and would be virtually impossible to fulfill. For starters, the PRA has been in place since 1980. To measure the extent of its impact, OMB would be forced to guess at what would have happened in the absence of the PRA. Moreover, the PRA makes no distinction between regulatory paperwork and other forms of paperwork -- a change made in the law's 1995 reauthorization at the urging of conservatives like Kyl. OMB would have to go back to each agency for each major rule and attempt to separate out the associated paperwork, and then attempt to calculate how much that paperwork has been reduced by the PRA -- all in 180 days. This is truly an impossible task. The rider would also raise problems for the next administration. OMB would be required to make recommendations on how to amend the PRA. But the report -- which the current administration would be forced to begin working on -- would be due at the beginning of the next administration. The next administration should have the opportunity to develop its position on the PRA as part of the normal legislative process. Most troubling is that the rider is focused only on the burdens created by regulatory paperwork, not the benefits. As a result, it will skew the information made available to Congress and the public. Back to Top Agencies Still Falling Short on E-FOIA Compliance It's been four years since the passage of the Electronic Freedom of Information Act (E-FOIA), and two years since OMB Watch's first report critical of agencies' implementation of the requirements of the Amendment. A follow-up report released in January, "A People Armed?," finds that many agencies are still falling short when it comes to providing meaningful and consistent electronic access to government information. In recent testimony before the Subcommittee on Government Management, Information and Technology of the House Committee on Government Reform, the report's author, Patrice McDermott of OMB Watch, reiterated the importance of E-FOIA as a fundamental aspect of access to information and government accountability. "It is essential that the public be able to understand how the government organizes itself and its records in order for the public to be able to truly hold government accountable," McDermott stated. McDermott also expressed concern about recent attempts to carve out sections of the Freedom of Information Act and E-FOIA on what are largely baseless claims of unspecified security risks, and the ensuing potential for electronic technology to become used for limiting access, rather than promoting it. The hearing on "Agency Response to the Electronic Freedom of Information Act" held on June 14th had two panels. The government panel was composed of Joshua Gotbaum, Executive Associate Director and Controller, Office of Management and Budget; Ethan Posner, Deputy Associate Attorney General, Department of Justice; and Henry J. McIntyre, Director, Directorate for the Freedom of Information Security and Review, Department of Justice. The other members of the non-government panel were Lucy Dalglish, Executive Director, Reporters' Committee for Freedom of the Press; and Ian Marquand, Freedom of Information Chair, Society of Professional Journalists. Read OMB Watch testimony, including suggestions for increased agency compliance. Transcripts of the statements of all witnesses. Back to Top Tech Help: Electronic Publishing Publishing enters a new chapter of development, as technology creates new opportunities to make the written word available to audiences through software and handheld devices. But will electronic pages replace books for information dissemination? NPTalk discovered which electronic publishing tools are bound to meet audience expectations and which should be shelved. View our results Subscribe to NPTalk Your comments are always welcomed! Notes and Sidebars Job Announcement OMB Watch is seeking a person to track federal budget and government performance issues, and coordinate a coalition to increase investments on domestic initiatives. If you have a commitment to social justice, government accountability, and civic participation; excellent written and verbal skills; demonstrated ability in coalition building; and an interest in domestic issues, please see the full announcement. Online Survey Take approximately one minute to help OMB Watch determine the best way to encourage increased public policy participation and civic engagement. Fill out our online survey and let us know what you think of the Watcher, what your interests are, and what motivated you -- or would motivate you -- to get involved in the democratic process. 1998 TRI Available on RTK Net Visit RTK Net to search for the latest available data on toxic pollutants in your community. The Toxics Release Inventory for 1998, one of multiple environmental databases available on RTK Net, had a belated and complicated data release by the Environmental Protection Agency. You can read more about the data release, the changes to the data, and the differences in the three TRI database formats now available on RTK Net's TRI Search Page. Budget Surplus Update The Congressional Budget Office in its June Monthly Budget Review estimates that "continued robust economic growth is likely to yield a total surplus for the year in excess of $200 billion and an on-budget surplus of more than $40 billion." The CBO will release its new budget projections for 2000 through 2010 in July. Children and the Internet A recent survey by Grunwald Associates, "Children, Families and the Internet 2000," finds that 25 million American children -- or 40% of 2-17 year olds -- are now online, with the number expected to rise to 44 million by 2005. Almost two-thirds of all households with children have computers and almost half of those are plugged into the Internet. Environmental Success Stories Wanted The Working Group on Community Right-to-Know is looking for success stories involving environmental hazard reduction and Right-to-Know. They will follow up on any leads to stories from newspapers, legal work, direct experience, newsletters, or reports. Have you heard about a success story involving use of information gathered by government that resulted in pollution prevention? Pass it along to the Working Group: phone (202) 544-9586; fax (202) 546-2461.