The Ferguson Group Blog

Wireless Tax Fairness Act of 2011

The House is scheduled to vote on H.R. 1002, The Wireless Tax Fairness Act of 2011, on November 1^st. H.R. 1002 would prohibit state or local governments from imposing any new discriminatory taxes on cell phone services, providers or property, for five years after it is enacted.

Groups that have voiced opposition to the Act, including, the National League of Cities, National Association of Counties, the United States Conference of Mayors, and the International City/County Management Association, argue that preempting state and local taxing authority will hurt them in a time when federal assistance is shrinking and they are dealing with growing budget shortfalls and cutbacks. In addition, the fear is that if Congress preempts the state and local taxing authority for the wireless tax industry, it will open the door for other industry groups (rental cars, online travel companies, etc) to seek a similar preemption from state and local taxes.

H.R. 1102 currently has 236 House cosponsors. If H.R. 1102 passes in the House, it will be sent to the Senate for consideration. The Senate does have its own companion bill (S. 543) and it has 12 cosponsors.

House Passes Repeal of 3% Withholding Requirement

Today the House passed, by a vote of 405-16, legislation that repeals the 3 percent withholding tax on all U.S. government contracts. 

The three percent withholding repeal legislation (H.R. 674) will be attached to a bill (H.R. 2576) that modifies the definition of income for determining eligibility for exchange subsidies, Medicaid, and the Children's Health Insurance Program. H.R. 2576 is expected to generate $13 billion, and is included as a means to pay for the repeal, which is estimated to cost $11 billion.

The White House Administration has already voiced their support for the House passed repeal bill. The legislation now moves to the Senate where an earlier version of the repeal (S. 1726) failed to pass on October 20^th.

Democrats and Republicans Present Deficit Reduction Plans

Two months after the debt ceiling compromise created a bipartisan Joint Select Committee on Deficit Reduction charged with finding at least $1.2 trillion in deficit reduction over a ten year period, both Democrats and Republicans have formally presented dueling plans to achieve this goal.

In a closed door deficit reduction committee meeting on Tuesday, Democrats unveiled a plan to slash $3 trillion from the deficit through a combination of tax increases and spending cuts. The plan was presented to the committee by Senator Max Baucus (D-MT) and reportedly includes discretionary spending cuts beyond the cap set by the debt limit law on annual appropriations over the next decade. Among the targeted discretionary cuts are further cuts to the Department of Defense. The package also includes $200 billion to $300 billion in new spending, as well as up to $500 billion in savings from Medicare and Medicaid.

Republicans on the committee presented their deficit reduction plan on Wednesday in a private, closed-door session. The details of the plan remain largely unknown at this time, but it is rumored that savings come from deeper spending cuts and income generated from non-tax revenue, like the sale of government wireless spectrum.

The committee has until November 23^rd to pass a proposal that would then be voted on by both chambers of Congress. If Congress fails to pass a deficit reduction plan, mandated cuts to discretionary domestic and defense spending would be triggered, starting in FY 2013. As we continue to learn more details about the Democrat and Republican proposals, we will provide updates on this blog.

House Judiciary Committee Passes Bill to Require Congressional Approval of Government Regulations

Yesterday, the House Judiciary Committee passed a bill that would require congressional approval of major new federal regulations before they can be enforced. The Regulations From the Executive in Need of Scrutiny (REINS) Act, H.R. 10, is sponsored by Congressman Geoff Davis (R-KY) and Lamar Smith (R-TX) and has a total of 192 cosponsors.

Currently, federal agency rulemakings take effect unless Congress passes and the President signs a joint resolution disapproving them. H.R. 10 would require federal agencies to submit to Congress a report with the proposed rule, and Congress would then have to pass a joint resolution of approval within 70 legislative days of receiving the report.

Specifically, the bill authorizes Congress to vote on regulations that will have an economic impact of at least $100 million, cause major increases in costs or prices for consumers, and have significant adverse effects on competition, employment, investment, productivity, innovation, or U.S. competitiveness.

Senate Proposal to Cut Funding for Rural Development Programs by Forty Percent

Last week the Senate debated a “minibus” spending bill that includes the FY 2012 Transportation, Housing and Urban Development, Commerce, Justice, Science and Agriculture appropriations bills.

When the Senate returns from recess on October 31st, it will resume debate on amendments to the minibus before taking a final vote. Among the amendments to be considered prior to a final vote is one offered by Senator Tom Coburn (R-OK) that would cut USDA’s rural development programs by $1 billion, representing a draconian 40 percent cut.

USDA Rural Development highly leverages appropriated funding by awarding much of its funding as low-interest loans or loan guarantees. Rural Development currently has a $155 billion portfolio of loans and will administer $20 billion in loans, loan guarantees and grants in FY 2011.  This funding helps rural individuals, communities and businesses obtain the financial and technical assistance needed to address their diverse and unique needs.  Senator Coburn argues that many of these programs are duplicative to programs in other federal agencies that are also available to rural America.

- Posted by Jennifer Imo, The Ferguson Group

Senate Rejects 3% Withholding Repeal Bill

Last night, the Senate failed by three votes, 57-43, to invoke cloture and limit debate on legislation that would repeal the 3 percent withholding tax on U.S. government contracts (S. 1726).

S. 1726, the Withholding Tax Relief Act of 2011, was introduced on October 17^th by Senator Mitch McConnell (R-KY). McConnell’s bill was nearly identical to S. 164, a bill introduced by Senator Scott Brown (R-MA) earlier this year.

The Obama administration threatened to veto the proposal because it contained an offset of $30 billion in unspecified budget cuts that would help pay for the plan.

The House is expected to vote next week on similar legislation (H.R. 674) that would repeal the withholding requirement.

Senate Votes Down Funding for Teachers and First Responders

Following the defeat of President Obama's American Jobs Act in the Senate last week, Senate Democrats have begun splitting the legislation up into several smaller parts and trying to pass these pieces individually. The first of these smaller jobs bills, the Teachers and First Responders Back to Work Act of 2011, failed to pass the Senate yesterday, with Sen. Ben Nelson (D-NE), Sen. Mark Pryor (D-AR), and Sen. Joseph Lieberman (I-CT) joining with all 47 Senate Republicans to defeat the bill by a vote of 50-50. A total of 60 votes would have been needed to advance the bill past the Republican filibuster. The legislation included $30 billion for public schools to hire teachers, $4 billion for the COPS Hiring program to support hiring police officers, and $1 billion for the SAFER hiring program for firefighter hiring and retention. Democrats had proposed offsetting the $35 billion cost of the legislation by imposing a 0.5% tax increase on individual income over $1 million.

The next smaller jobs bill to recieve a vote will be a $60 billion transportation infrastructure proposal that would establish a National Infrastructure Bank capable of financing large transportation, water, and energy infrastructure, as well as providing additional funding for existing programs such as the TIGER grant program. It is not yet certain when a vote on this proposal will be scheduled in the Senate.

Senate EPW Committee to Mark Up Highway Authorization Bill on November 9th

Yesterday, the leaders of the Senate Environment and Public Works Committee announced that the panel will meet to mark up a draft two-year surface transportation authorization bill on Wednesday, November 9^th.

The bill, Moving Ahead for Progress in the 21^st Century (MAP-21), is a bipartisan effort that holds spending at current levels plus inflation. The Committee has not provided further details on its legislation beyond the outline released in July that identified the following key priorities:

• Current program funding levels will be maintained ($56.6 billion per year or $339 billion over six years compared to the President’s proposal at $556 billion);
• No congressional earmarks will be included in the legislation;
• Programs will be consolidated;
• Legislation will focus on freight movement;
• The bill will also strengthen the Transportation Infrastructure Finance and Innovation Act (TIFIA) program which provides federal credit assistance by moving annual funding available from $122 million to $1 billion annually; and
• Expediting project delivery without sacrificing environmental considerations or due process.

Stay tuned to the blog as further details develop.

Jobs Legislation Debated in Senate

Earlier this week, the Senate failed to advance President Obama's new job creation proposal, the American Jobs Act. The legislation did not muster the 60 votes needed to overcome procedural hurdles, with two Democrats - Sen. Ben Nelson (D-NE) and Sen. Jon Tester (D-MT) - joining all Senate Republicans in opposing the bill.

In response to the bill's failure to pass the Senate, Senate Republicans have begun promoting an alternative job creation proposal. The Republican jobs bill does not propose any new spending, but instead calls for reducing regulation and reforming the tax code. The legislation would repeal last year's healthcare reform bill, the Dodd-Frank financial reform bill, establish a constitutional amendment requiring a balanced federal budget, expand offshore energy production, repeal various regulations instituted by EPA and other agencies, and reduce the corporate tax rate to 25 percent.

Senate Democrats have vocally denounced the bill as a nonstarter and plan to break the American Jobs Act up into smaller pieces of legislation that can be voted on individually.

3% Withholding Bill Marked Up by House Ways & Means Committee

On October 13, the House Ways and Means Committee marked up legislation to repeal of the 3 percent withholding tax on U.S. government contracts (H.R. 674). Repealing the 3% withholding requirement would relieve federal, state and local governments of the need to comply with significant, unfunded administrative burdens that the current rule, which is set to go into effect in January of 2013, would impose.

We expect H.R. 674 to go to the House floor the week of October 24. Stay tuned to this blog for updates on H.R. 674.