Government Executive - Authors - Martin Vaughan

Government operations bills may be postponed until 2008

Peter Cohn and Martin Vaughan — Mon, 10 Dec 2007 00:00:00 -0500

A set of good-government bills, despite strong support, appear increasingly likely to be pushed to next year as Congress focuses on higher priority legislation before recessing.

Senate Judiciary Committee aides said they remain hopeful the Senate this week will pass, by unanimous consent, a bill to overhaul the Freedom of Information Act. Judiciary Chairman Patrick Leahy, D-Vt., said last week that he wants to secure President Bush's signature this year on FOIA reform.

But while Leahy and co-sponsor Sen. John Cornyn, R-Texas, have said they revised and reintroduced their FOIA bill to address pay-as-you-go objections raised by House conference negotiators, a House Oversight and Government Reform Committee aide said last week that the bill "doesn't deal with all our concerns."

The staffer declined to elaborate, but criticized the senators for reintroducing the bill without consultation.

"We were having productive, bipartisan talks with the Senate, so the new bill is a surprise," she said.

"It appears the Senate prefers to send bills back and forth instead of working this out quickly and cooperatively."

Although FOIA experts say the differences between the chambers' preferred versions of the bill remain relatively minor, the continuing disagreement leaves it unclear when negotiations will be completed. Also in limbo is a bill intended to increase the independence of inspectors general.

The House and the Senate Homeland Security and Governmental Affairs Committee have passed similar IG bills, but aides said they did not know when the full Senate might consider the bill.

Senate votes on bills on e-Government, telecommuting for federal employees and a pilot program to dispose quickly of unused federal buildings are also unscheduled.

The Senate Homeland Security and Governmental Affairs Government Management Subcommittee has scheduled a Thursday hearing on creating chief management officer positions at federal agencies.

Government Management Subcommittee Chairman Daniel Akaka, D-Hawaii, and ranking member George Voinovich, R-Ohio, along with GAO, have been vocal advocates of creating CMO positions to spur management reforms at the Defense and Homeland Security departments in particular.

The hearing will examine whether CMOs could help drive personnel and other reforms at many federal agencies, according to a subcommittee summary.

]]>

House panel to take up bill to block outsourcing of tax collections

Martin Vaughan — Tue, 17 Jul 2007 00:00:00 -0400

The program, authorized by the 2004 corporate tax law, is in a pilot phase, which would end in March. But it has drawn heavy criticism since its inception from Democrats and the Treasury employees' union, who have argued that the use of private companies will lead to abuse and invasions of privacy, and that tax collection is an inherent government function.

The Joint Committee on Taxation estimates that repealing the provision will reduce revenues to the Treasury Department by just over $1 billion over the next 10 years. Under the Ways and Means bill, that cost would be offset by several revenue raisers, none of which by themselves are expected to generate much controversy: an increase in penalties for failing to provide information on returns, an extension to 36 months of the time IRS has to notify taxpayers of delinquency, a tax on individuals who expatriate and a temporary increase in estimated corporate tax payments.

The private collection repeal will be the focus of Republican opposition. At a May hearing, acting IRS Commissioner Kevin Brown said the program is "operating as Congress envisioned" and was an effective tool in collecting back taxes that would not otherwise be collected.

In what some saw as an effort to woo GOP support for the private debt collection repeal bill, Ways and Means Chairman Charles Rangel, D-N.Y., included a provision to delay by one year a 3-percent withholding requirement on government payments that is set to take effect in 2011.

That requirement, slipped in tax extenders legislation last year by then-Senate Finance Chairman Charles Grassley, R-Iowa, has been targeted for repeal by a coalition of federal, state and local contractors, local governments, trade associations like the U.S. Chamber of Commerce and National Association of Manufacturers, and recipients of farm subsidies.

Reps. Kendrick Meek, D-Fla., and Wally Herger, R-Calif., both Ways and Means members, authored legislation to repeal the withholding requirement that has garnered 179 House co-sponsors.

Herger told CongressDaily that, while he was encouraged that Rangel has backed a delay in the withholding requirement, he will not support the debt collection bill in its current form and does not think many other Republicans will either. "Why wouldn't we be going out in a legal, justifiable way, collecting from those causing the rest of our citizens who are paying their taxes to bear a heavier weight on their shoulders?" he said.

Likewise, one member of the business coalition against withholding said it is unlikely the group will push for legislation that essentially kicks the can down the road by a year. At Wednesday's markup, Republicans are expected to offer a substitute that strikes the debt collection repeal provision and lengthens the implementation delay for 3-percent withholding.

]]>

Treasury chief warns of burdens in attempts to close tax gap

Martin Vaughan — Wed, 18 Apr 2007 00:00:00 -0400

Baucus said that would represent a 6 percent increase in compliance rates and add about $150 billion each year to the Treasury. But Paulson said he is hesitant to agree to that target because the steps needed to achieve that result could punish honest taxpayers.

"It's a mirage to say that that 90 percent is out there without some pain," Paulson said under questioning from committee members. "The steps that need to be taken are very, very onerous steps if people are going to get there."

Baucus rained criticism on the administration's efforts to reduce the tax gap, or the difference between federal taxes owed and what is collected. IRS estimates put that figure at $345 billion for 2001, the latest data available. The White House offered 16 legislative changes aimed at trimming the gap in its budget plan, but all those proposals combined would raise less than $30 billion over 10 years.

"[A] few worthy ideas do not rise to the level of a plan," Baucus said. "And a penny on every dollar of the tax gap is simply not enough."

Baucus also noted that nine of the administration's tax gap proposals were included as offsets in the emergency war spending bill that is in conference, and he said he believed the other seven will become part of legislation when details are ironed out.

Paulson said additional progress on the tax gap will be achieved by increased IRS enforcement, in part contingent on Congress approving requested funding increases. But he said the service has no plans for a sharp increase in hiring agents or conducting audits.

Paulson cautioned against "extreme" and "draconian" legislative proposals aimed at identifying and collecting unreported income. He singled out two: a proposal that would require individuals to report payments to service providers on 1099 forms and a plan to require business owners to eliminate cash transactions and use only electronic payment methods, which are easier for the IRS to track.

"In theory, each of these measures could bring in some additional revenue, but the cost of compliance for individuals and businesses -- most of whom already pay what they owe -- would far outweigh the gains," Paulson said.

]]>

Tax withholding provision sparks uproar among contractors

Martin Vaughan — Fri, 12 May 2006 00:00:00 -0400

The provision -- which could affect a wide range of contracts from multibillion dollar defense contracts right down to garbage collection services procured by city and county governments -- would pose an enormous administrative burden on contractors and on governments, the groups said.

Under the provision, federal, state and local governments would be required to withhold 3 percent from payments for many kinds of goods and services.

Tax-writers delayed the effective date of the provision until 2011, which gives local and state governments time to prepare for the implementation of the withholding requirement. The delay also might create a legislative battleground as opponents fight to repeal the requirement or scale it back.

"We expect this to pass the Senate, and then the scramble begins," said Alysoun McLaughlin, associate legislative director at the National Association of Counties.

"If we can't get it repealed immediately, we'll talk to Treasury to figure out how this is going to work, look at how it would affect procurement, and figure out if we can make something work. In the meantime, we'll keep fighting," she said.

Sen. Larry Craig, R-Idaho, speaking on the floor Thursday before the Senate voted 54-44 to send the tax-cut package to the president, called the withholding requirement "misleading" and "the wrong thing to do. ... I'm going to vote for this bill, but I'm going to work every day after I vote to have this out before 2010," said Craig.

Opponents had little time to fight the provision because it was slipped into the conference report without having been included in either the House- or Senate-passed tax reconciliation bills.

The provision is scored to raise $7 billion between 2011 and 2015, and tax committee staff closely guarded their revenue raisers before bill details were announced Tuesday evening.

Local government representatives rushed to the ramparts, warning senators to vote against the tax package.

In a Wednesday letter, NACO, the National League of Cities and the Government Finance Officers Association called the provision "egregious" and said it would "put counties and cities at a severe competitive disadvantage to the private sector in purchasing goods and services."

Had the proposal seen the light of day earlier, critics might have been able to fight it substantively and procedurally.

The Congressional Budget Office said in a Tuesday analysis that the withholding provision would impose an unfunded mandate on state and local governments, and would exceed allowable thresholds in the federal unfunded mandates law.

The provision was one of a host of proposals offered by the Joint Committee on Taxation in 2004 as options for improving tax compliance, or narrowing the so-called tax gap.

The Government Accountability Office has also highlighted the problem of underpayment of taxes by federal contractors, finding in a February 2004 report that in 2002, Defense Department contractors owed $3 billion in unpaid federal taxes.

The withholding provision is also supported by Democrats, and was included as a revenue raiser in the Democratic substitute to the Senate tax reconciliation bill.

Aides argued that the provision would aid state and local governments by helping them collect taxes that otherwise would go unpaid. "Withholding is the least intrusive, most cost-effective way to ensure compliance," said one Finance Committee aide.

Patrick McCartan, director of legislative affairs at the Aerospace Industries Association, said most prime defense contractors now make lump sum quarterly federal tax payments.

The new withholding system would appear to force firms to track tax liability on a payment-by-payment basis. "This is a compliance and reporting nightmare for law-abiding taxpayers," he said.

But critics added that until they have fully analyzed the provision, they will not know its full scope.

The provision will not apply to contracts for public assistance and welfare programs, and local governments with less than $100 million in annual expenditures will also be exempt.

]]>

Senators differ on plans for overhaul of foreign investment oversight

Martin Vaughan — Tue, 14 Mar 2006 00:00:00 -0500

Shelby plans to mark up his own legislation to revamp the Committee on Foreign Investment in the United States the week of March 27, when Congress returns from its St. Patrick's Day recess.

Collins' bill would abolish CFIUS and create a process steered by the Homeland Security Department. It is perhaps the most sweeping of a spate of proposals introduced in the past two weeks aimed at improving national security reviews of proposed investments.

Collins' bill -- co-sponsored by Homeland Security and Governmental Affairs ranking member Joseph Lieberman, D-Conn., and Sens. Norm Coleman, R-Minn., Daniel Akaka, D-Hawaii, Lindsey Graham, R-S.C., and Jim Talent, R-Mo. -- replaces CFIUS with a new body called the Committee for Secure Commerce.

The Homeland Security Department would chair the panel, while the Defense Department and Treasury Department would hold vice chairmanships. Other agencies would be appointed at the discretion of the president.

But a spokesman for Shelby called the Collins bill a "fundamentally wrong approach."

Shelby's opposition might pose a major hurdle for Collins' bill, because the Banking Committee has primary jurisdiction over CFIUS issues.

"The notion that CFIUS should be chaired by the Department of Homeland Security or any agency other than Treasury demonstrates a lack of understanding on how dependent on foreign investment the United States is, how the current review process operates, and how that process can be improved without incurring the law of unintended consequences," a Shelby spokesman said.

Shelby believes that Treasury should continue to manage the process in the interest of "an appropriate balance between economic policy and national security concerns," the spokesman said. Homeland Security officials also were key players in the approval of the Dubai Ports World deal that rained criticism on CFIUS to begin with, which the Shelby spokesman called "worrisome."

Through a spokeswoman, Collins responded that GAO has already noted, in a September 2005 report, that the effectiveness of the current system is limited because Treasury, as the panel's chairman, narrowly defines what constitutes a threat to national security.

Shelby is drafting his own CFIUS overhaul bill, which the spokesman said will likely include the advice of Democrats on the Banking panel. Sens. Evan Bayh, D-Ind., and Christopher Dodd, D-Conn., have floated their own CFIUS reform proposals.

In one similarity to Collins' bill, Shelby's legislation likely will make a 45-day investigation mandatory for all transactions that involve foreign government-owned entities -- closing the so-called Byrd amendment loophole. Also like most of the bills to date, Shelby's bill will include new congressional notification requirements.

Meanwhile, business groups launched a counter-attack Monday against far-reaching reforms to the current CFIUS process they claim would undermine U.S. interests.

A broad coalition of business trade groups sent House and Senate lawmakers a list of seven principles they said reform proposals should honor. The groups included the Business Roundtable, National Association of Manufacturers, and the Emergency Committee for American Trade.

The principles signal opposition -- albeit indirectly -- to some popular proposals that are or are likely to become a part of CFIUS reform legislation. On CFIUS organization, the groups wrote that the current CFIUS structure, "chaired by Treasury, represents an appropriate mix of security, diplomatic, trade and investment agencies."

The groups wrote that the statutory language governing CFIUS reviews, which refers to transactions that relate to U.S. "national security," should remain broad.

"It may be counterproductive to redefine the scope of the investment review process, which actually could limit the issues that the U.S. government can review," they wrote. Collins proposed adding language to the statute that officials should look at "homeland security" specifically as a factor in reviewing proposed transactions.

The letter also called for CFIUS reviews to be "objective, fact-based and analytically rigorous," which one business source said refers to keeping decisions out of the political process. Shelby's legislation might provide a way for Congress to block pending transactions by a joint resolution of disapproval by both chambers.

]]>

Administration officials say port takeover underwent rigorous review

Martin Vaughan — Thu, 23 Feb 2006 00:00:00 -0500

Deputy Treasury Secretary Robert Kimmit said DP World officials approached Treasury staff informally last October about the proposed deal and a potential review by the Committee on Foreign Investment in the United States.

"In contrast to some accounts, this was not rushed through the process in early February," he said.

Kimmit said that Treasury followed up in early November by requesting an intelligence assessment of the transaction and alerting Homeland Security officials. In early December, staff from several agencies met with company officials to review the transaction, and the company on Dec. 16 filed a formal notice of the transaction with Treasury.

CFIUS approved the transaction Jan. 17. Kimmit said members of Congress had not been briefed prior to that approval because CFIUS has no authority to do so.

"We can respond to request for information, but we cannot initiate a briefing on a pending decision," he said. He also said he was surprised at the outcry of the past several days, given that the Dubai deal had been reported by major news outlets going back several months.

Panel Democrats charged that the administration officials ignored a statutory requirement that any takeover involving a state-controlled company be subject to a seldom-used 45-day investigation phase, provided that the takeover "could affect the national security of the United States."

"If 9/11 was a failure of imagination and Katrina was a failure of initiative, this matter was a failure of judgment," said Sen. Hillary Rodham Clinton, D-N.Y.

Kimmit claimed that the CFIUS statute leaves it up to the discretion of administration officials whether to initiate the more rigorous investigation. He said that the 45-day phase is triggered only if one of the agencies that sit on the CFIUS panel believes there is a national security threat, and that was not the case with the Dubai ports acquisition.

Clinton said she planned on introducing legislation -- likely with Republican co-sponsors -- that will require CFIUS to undertake a 45-day investigation of the take-over. Kimmit promised to provide the committee with an agreement the administration reached with DP World that was a condition for CFIUS approval, and said he would also provide the intelligence assessment and whatever minutes of CFIUS meetings are available.

Deputy Defense Secretary Gordon England portrayed the United Arab Emirates, of which the Emirate of Dubai is a part, as a vital ally in the war on terror. He noted that more U.S. warships reside there than anywhere in the world outside of the United States, including 590 military sea-lift command ships in 2005.

"We rely on them for the security of our forces there," he said. England warned Congress of reacting too strongly against the Dubai deal. "The terrorists want us, they want our nation, to become distrustful, they want us to become paranoid and isolationist, and in my view, we cannot allow this to happen," he said.

Armed Forces ranking member Carl Levin, D-Mich., challenged the view of UAE as a squeaky-clean partner in the global terrorism conflict, noting that the 9/11 Commission report concluded that UAE is "both a valued counterterrorism ally of the United States and a persistent counterterrorism problem."

Meanwhile, House Homeland Security ranking member Bennie Thompson, D-Miss., on Thursday asked GAO to review the process CFIUS followed in approving the firm's bid to buy British firm Peninsular and Oriental Steam Navigation Co.

]]>

Senate to begin final push on legislation

Martin Vaughan — Tue, 20 Dec 2005 00:00:00 -0500

A spokesman for Senate Majority Leader Bill Frist, R-Tenn., said final passage on the budget bill, originally envisioned for Tuesday evening, likely will be the first order of business Wednesday.

That will give all senators a chance to be present for the vote -- including Sen. Jon Corzine, D-N.J., who is in his home state preparing for gubernatorial duties -- and also Vice President Dick Cheney, who is returning from the Middle East, and may be called upon to break a tie on the budget vote.

The spokesman did not rule out that roll-call votes could occur Tuesday night on any points of order that may be raised against the reconciliation bill -- including a potential objection under the Byrd rule because the Agriculture committees did not meet savings targets in the budget resolution.

Following the budget vote, the Senate likely will vote to end debate on the fiscal 2006 Defense appropriations bill, which includes language to allow drilling in the Arctic National Wildlife Refuge that is opposed by Democrats and some Republicans.

If GOP leaders succeed in invoking cloture on that bill, they would move to a procedural vote to overturn an expected ruling that the ANWR language is outside the scope of conference. Congressional aides said after those two votes, the momentum should pick up for completing other outstanding legislation, possibly allowing for an exit Wednesday evening or by mid-day Thursday.

"Once the cloture vote is had, the water starts swirling down around the drain," said one Senate Democratic aide.

After final passage of the Defense appropriations bill, the Senate would turn to the defense authorization conference report. Senate Minority Leader Harry Reid, D-Nev., said on the Senate floor Tuesday morning that he will not insist on a cloture vote on that bill so it can be dealt with in one simple up-or-down vote. After that, a possible vote on extending the USA PATRIOT Act and approval of the fiscal 2006 Labor-HHS appropriations bill would cap Senate action for the year.

]]>

Defense contractors want in on manufacturing tax break

Martin Vaughan — Wed, 20 Apr 2005 00:00:00 -0400

Defense companies, including Boeing, Lockheed Martin, Raytheon and United Technologies, have insisted to Treasury officials that Congress intended the manufacturing tax cut -- enacted last fall as part of a broader corporate tax bill -- to apply to all U.S. manufacturing, including government defense contracts. Having failed to persuade Treasury, they have taken their case to Congress and are pushing for a technical correction to overrule the interpretation, according to these sources.

The dispute concerns defense companies' eligibility for the deduction that was part of the law repealing the foreign sales corporation/extraterritorial income tax break. The World Trade Organization ruled FSC/ETI benefits to be an illegal export subsidy, and Congress last year replaced them with an array of new tax cuts for corporations.

The centerpiece of the bill was a provision intended to boost manufacturers that export abroad and reward companies that keep manufacturing activities in the United States. It lowered the effective tax rate for U.S. manufacturing activities from 35 to 32 percent. Originally targeted to manufacturers, it was broadened to include activities as diverse as construction and engineering services.

Treasury issued guidance in January aimed at clarifying what activities qualify. In an effort to prevent "double-dipping," or multiple companies involved in a manufacturing process claiming the benefit for the same activity, officials developed an ownership test. Only a company assuming all the "benefits and burdens of ownership" would qualify.

Defense industry officials quickly realized they had a problem. Defense contracts that involve sensitive or expensive technologies, such as the production of fighter jets, require the government to take ownership of materials as soon as they are procured. Under Treasury's interpretation, such "cost-plus" contracts would be excluded from the benefits of the manufacturing deduction.

"Neither Congress nor industry anticipated or intended that manufacturing for a government customer, whether pursuant to cost-reimbursable or fixed-price contract, would be treated differently under [the manufacturing deduction] than would manufacturing similar products for a commercial customer," the Aerospace Industries Association wrote in a March 7 letter to acting Assistant Treasury Secretary Eric Solomon.

The letter argued that the FSC/ETI bill, whose stated purpose was to boost job creation in the United States, could not have been intended to exclude the large aerospace manufacturing sector, which accounted for 560,000 jobs in 2002.

Industry officials have raised the issue with staff on the House Ways and Means and Senate Finance committees, and broached the idea of a technical correction to clarify congressional intent. They are working quietly to address the issue, rather than having lawmakers send letters or pressure Treasury in a public way, sources said.

Congressional aides said there might be support for a correction, and that Treasury is interpreting the law too narrowly. "It is clear from the legislative history and from FSC/ETI that defense contractors are intended to be eligible," said a congressional aide closely involved in the creation of the manufacturing deduction.

These sources and industry officials point to the history of the FSC/ETI benefit to illustrate that Congress meant defense manufacturers to be in on the full benefits. Before 2000, defense companies could only claim half of what commercial manufacturers were able to claim. But with the 2001 ETI law, Congress ensured that defense firms could receive 100 percent of benefits, in a provision that aides informally termed "FSC for bombs," one congressional aide said.

A senior Treasury official said the statutory language of last year's bill was a more important guide than the history of FSC/ETI. "What we have here is a situation in which what qualifies under [the manufacturing deduction] is in many respects very different than what qualified under the FSC/ETI regime," the official said.

The Treasury source also said officials used for comparison the provision that made construction services eligible for the tax cut. That language spells out that ownership of materials is not required to qualify, while no such clear-cut language is included in the manufacturing provision, the official said.

Treasury will issue a proposed regulation this summer addressing the issues contained in its January guidance. That regulation will be made final only after an additional comment period.

A technical correction would require agreement by the majority and minority sides of the Finance and Ways and Means committees, JCT and Treasury. Aides said it is not yet clear when a technical corrections bill, which would include other tweaks to various provisions in the FSC/ETI law, will move.

]]>

IRS blames complexity, cheating for gap in tax revenue

Elaine S. Povich and Martin Vaughan — Thu, 14 Apr 2005 00:00:00 -0400

Internal Revenue Service Commissioner Mark Everson said the gross tax gap was between $312 billion and $353 billion in 2001, the most recent year for which figures were available. He said IRS enforcement and late payments close about $55 billion of the gap -- making the net annual tax gap between $257 billion and $298 billion.

"Complexity in the tax code compromises both the service and enforcement missions of the IRS," said Everson. "Those who try to follow the law but cannot understand their tax obligations may make inadvertent errors or ultimately throw up their hands and say 'Why bother?' Meanwhile, individuals who seek to pay less than what they owe often hide behind the tax code's complexity in order to escape detection by the IRS and pay less."

The IRS study showed that underreporting of income is responsible for more than 80 percent of the total tax gap, with non-filing and underpayment accounting for about 10 percent each. Two thirds of the total comes from individual income taxes and more than 80 percent of that comes from understated income, mostly by the self-employed.

Everson, GAO Comptroller General David Walker and several other witnesses suggested tax withholding from independent contractors or self-employed individuals could begin to address that segment of the problem.

Walker suggested several tactics to reduce the tax gap, including beefing up enforcement, simplifying the tax code and enhanced withholding "in segments of the population where compliance is lower," and the possibility of a consumption tax. But he and National Taxpayer Advocate Nina Olson, an employee of the IRS, cautioned that enhanced withholding and beefed-up enforcement need to be balanced against the right of privacy and the unwanted effect of turning off more taxpayers than it captures.

Meanwhile, Sen. Saxby Chambliss, R-Ga., and Rep. John Linder, R-Ga., again introduced their legislation to replace the income tax with a national sales tax. "We're going to have to do a revolutionary change in the way we fund our systems," Linder said at a news conference.

The legislation would repeal individual and corporate income taxes, payroll taxes and the alternative minimum tax and instead impose a 23 percent tax on consumer goods. That tax would be collected by the states, which would keep a small percentage and remit the rest to the federal government.

The tax is strongly opposed by retailers, who say it would have a disproportionate impact on low- and middle-income families.

Chambliss said the tax reform issue could breathe some life into the lagging Social Security debate.

"The president's going to find out that there is a large segment of Americans who are ready for tax reform, unlike Social Security, where there is a small segment of Americans pushing the issue," he said.

Linder said the White House-appointed tax reform panel will consider his national sales tax proposal at a May 11 hearing. Linder said he believed the panel would put forward two or three tax reform options -- one that will make minor adjustments to the current income tax structure, and one that will be "a pure consumption tax."

]]>

Congressional gatekeepers control access to IRS records

Martin Vaughan — Mon, 06 Dec 2004 00:00:00 -0500

Those three individuals serve as "gatekeepers" to confidential IRS information, with authority to extend that access to congressional staff or other interested parties, such as Government Accountability Office personnel, according to Senate Finance Committee aides.

That authority is used infrequently -- less than a couple of dozen times in a given year -- these aides said. It has been used in recent years in such cases as the congressional investigation of Enron's financial collapse and in efforts to track terrorist financing networks, they said. The joint committee may need access to confidential tax returns to estimate the revenue effects of certain legislation.

There is a defined process in place to ensure that taxpayer privacy is strictly protected, these aides said. It involves written authorization by one of the "gatekeepers" to individuals who are granted access, and a pledge in writing by those individuals not to disclose information to any unauthorized person.

The provision inserted into the omnibus to which Senate Finance Committee Chairman Chuck Grassley, R-Iowa, and House Ways and Means Committee Chairman Bill Thomas, R-Calif., objected would not have included such strict confidentiality safeguards, they said. It would have granted the chairmen of the appropriations committees in each chamber similar access to confidential material.

"Basically it operates like a bubble. The bubble can be expanded by the gatekeeper" to include staff members, an aide said. "Anyone who shares the information outside the bubble bursts the bubble, and that's a criminal offense."

]]>

Senator says offshore outsourcing provision must be revisited

Martin Vaughan and Mark Wegner — Tue, 09 Mar 2004 00:00:00 -0500

The amendment, a compromise worked out by Sen. Christopher Dodd, D-Conn., and Finance ranking member Max Baucus, D-Mont., includes a number of broad exceptions including contracts for national security purposes and contracts involving countries that have already opened their procurement markets to U.S. bidders through international agreements. But Grassley said those exceptions did not go far enough and would have to be revisited in conference.

"I think it will have to be modified further if we are going to get the White House to sign it," he said.

In the House, Majority Leader Tom DeLay, R-Texas, said Tuesday he would like to move corporate tax legislation that repeals the foreign sales corporation/extra-territorial income exclusion to the House floor within the next four weeks.

"I would hope we could get that bill to the floor before we break for the Easter recess," DeLay said.

DeLay deferred to Ways and Means Chairman William Thomas, R-Calif., about the bill's content, but noted that Thomas' latest proposal included a provision to address the alternative minimum tax. The Ways and Means-passed FSC/ETI bill would provide relief from the corporate AMT at a cost of $6.7 billion over 10 years. Grassley said he believed if the Senate could pass a FSC/ETI bill, it would help break the logjam in the House by showing the extent of bipartisan support for many of the same proposals Thomas is putting forward.

DeLay, asked about the prospects for extending or making permanent previously passed tax cuts, said he thought the House would support whatever tax relief that could pass the Senate -- so long as it did not include a tax increase.

"The Senate over the past few years has been the lowest common denominator. We'll take what we can get," he said.

DeLay said he hoped Congress this year would at least pass an extension of the full $1,000 child tax credit, so-called marriage penalty relief and expansion of the 10 percent tax bracket. He said Republicans would "live to fight another day" and would try to make tax cuts permanent after the November elections.

]]>