Modified “Tax Extenders” Bill Passes House with Disaster Provisions Intact
On a 215-204 vote, the House passed a modified version of legislation to extend a variety of tax cuts and social spending programs after a series of earlier modifications failed to satisfy objections by fiscal conservatives. Democratic leaders pared back the legislation to an estimated total of $113 billion in an effort to satisfy Blue Dog Democrats who were concerned about adding to the deficit. The bill (HR 4213) includes an extension through Nov. 30, ’10, of expanded unemployment benefits, a one-year extension of tax breaks that expired at the end of ’09 and a 19-month extension, through ’11, of current Medicare payment rates for physicians.
The House leaders also retained a provision that would authorize an estimated $1.5 billion in disaster payments to assist farmers who suffered ’09 crop losses. The provision, which has survived all modifications to the legislation made to date, was co-authored and has been championed by Senate Agriculture Committee Chairman Lincoln (D-AR) and Sens. Cochran (R-MS) and Wicker (R-MS) as well as Reps. Childers (D-MS) and Berry (D-AR).
Efforts to reach a compromise that could be approved by both the House and Senate before the Memorial Day recess failed. The Senate will take up the House-passed version when it returns on June 7.
To reduce the estimated cost, the extensions of unemployment benefits and the Medicare “doc fix,” were shortened, and extensions of Medicaid assistance to the states and expanded COBRA health insurance subsidies for jobless workers were dropped entirely. The new version retains other provisions of the earlier legislation, such as a summer jobs initiative, Build America Bonds assistance for state and local governments, and funding for legal settlements of class action suits brought by Native Americans and black farmers.
The bill is partially offset under pay-as-you-go principles, but the “doc fix” and unemployment benefits extension would add to the deficit. The offsets include a change in the tax treatment of the “carried interest” earned by real estate investors, venture capitalists and private equity managers. The bill would place new limits on companies’ ability to use foreign tax credits because the Democrats say that current tax law provides an incentive to move jobs to foreign countries.
Congress Weighing Rescission Authority Proposal
The administration sent a proposal for “enhanced rescission authority” to Congress.
The proposed legislation would give the President 45 working days after a bill is enacted to send Congress the administration’s package of funding cut. The legislation would require Congress to vote on the proposed package of spending cuts within 25 working days. It would be an up-or-down vote with no amendments. The House would vote first.
Administration officials indicated that the legislation would apply only to discretionary funding and some funding authorized outside the appropriations process, administration officials said, but would not affect entitlement programs like Medicare and Social Security. In essence, it is a compromise between current budget procedures and the line-item veto, which the Supreme Court ruled to be unconstitutional in ’88.
Earlier this month, Senate Budget Committee Chairman Conrad (D-ND) noted he has opposed past efforts to grant a president this power because it could be used for political purposes by singling out spending of its opponents. House Republican leaders argued the President already has the authority to send Congress proposed spending cuts, although they can be ignored. The proposal received the support of House Budget Committee Chairman Spratt (D-SC), who said he would introduce the bill.
President George W. Bush forwarded Congress a similar proposal that the House passed 247-172 in ’06. Senate Republicans forced a vote on the issue in ’07, but it was rejected 49-48, with 60 votes needed. President Obama’s proposal is supported by the 54-member House Democratic Blue Dog Coalition, which incorporated the concept in its “Blueprint for Fiscal Reform.” Similar proposals already have been introduced in the 111th Congress by Rep. Ryan (R-WI) (HR 1294) and Sen. Feingold (D-WI) (S 524).
Murkowski Reaches Deal for Vote on EPA Rules
Sen. Murkowski (R-AK) reached an agreement with Majority Leader Reid (D-NV) for a vote by June 10 on her resolution (S J Res 26) that would block EPA’s authority to regulate greenhouse gas emissions.
The resolution would overturn the EPA’s December finding that greenhouse gases qualify as pollutants under the Clean Air Act. That decision triggered a requirement that the agency move to regulate greenhouse gases and has been used as leverage in the debate over climate change legislation. While the EPA set out to regulate only mobile sources (motor vehicles), the overlapping triggers within the Clean Air Act will immediately extend the agency’s regulatory reach to stationary sources as well – giving it authority to regulate all greenhouse gas emissions. Nationwide, the EPA has estimated that some six million buildings, facilities, farms, landfills and other establishments ultimately will be covered by these regulations. According to EPA, some 3.9 million single family homes would be regulated at the Clean Air Act’s explicit statutory thresholds.
Through the “tailoring rule,” EPA is seeking to raise the Clean Air Act’s regulatory threshold for greenhouse gas emissions to at least 25,000 tons per year – a hundredfold increase from the statute’s current triggers. As a federal agency, however, the EPA has no authority to make an arbitrary change to the plain language of the law. It is expected that the “tailoring rule” will be challenged in court.
It is far from certain that Sen. Murkowski can garner the 51 votes needed to adopt the resolution, but her spokesman said she would take it to the floor with or without the votes to succeed. Republicans hope to put Democrats in the difficult spot of voting for what could be characterized as big-government regulation that will further harm the economy. Three Democrats have cosponsored Sen. Murkowski’s resolution, and Sen. Rockefeller IV (D-WV) has introduced separate legislation to delay EPA regulation for two years.
The Obama administration has said that it would prefer that Congress pass climate change legislation, rather than the administration restricting emissions through regulation. However, the White House also has made it clear that it will proceed to impose regulation if Congress does not act, and has held out that possibility as a way to spur Congress to move legislation. Even if Murkowski’s resolution were to be adopted by the Senate, it would face a tougher time in the House and a certain presidential veto. Rejection of the resolution would allow the EPA to proceed with regulation.
Textile Industry Applauds Enforcement Legislation
Congressional leaders announced the introduction of the Textile Enforcement and Security Act of 2010 (TESA)(HR5393). The legislation, introduced by Reps. Kissell (D-NC) and Jones (R-NC) with 22 co-sponsors, is the first ever textile specific customs enforcement legislation to be introduced in Congress. The legislation was unveiled during a press conference featuring the co-authors and several co-sponsors. Anderson Warlick, CEO of Parkdale Mills and a NCC vice president, also spoke and emphasized the importance of enhanced enforcement of US trade laws to the textile industry and its ability to compete.
Dan Nation, Parkdale Mills, said, “A decade ago Parkdale Mills employed more than 4,000 workers throughout the Southeast. Today, we employ just half of those employees and I can testify with absolute certainty that Parkdale Mills was forced to lay off at least half of those employees due to illegal shipments of yarn entering into the United States through CAFTA and other preference regions.”
The US textile industry is the third largest exporter of textile products in the world, with more than $13 billion in exports last year. With the majority of these exports going to free trade agreement (FTA) and preference program partners, the industry relies heavily on strong customs enforcement for its livelihood. During the last decade, the industry has seen a disturbing increase of fraudulent activity; from front companies posing as US companies, to undervalued goods, to illegal preference and free trade agreement claims.
The Textile Enforcement and Security Act of 2010 seeks to address these issues and close the loopholes currently being used by illegal and fraudulent players by providing US Customs with additional resources and expanded authority to better target these players. The bill includes provisions to:
Establish an electronic verification of textile and apparel imports;
Allow the Dept. of Homeland Security to use fines and penalties to help pay for investigations and training;
Increase staff at high volume ports for textiles and apparel imports; and
Establish a nonresident importer program to ensure that resident agents are held accountable for products imported under their name.
National Council of Textile Organizations President Cass Johnson said, “This is a case where our U.S. government needs to really evaluate our border security and import verification systems. By better targeting these shipments and players through an effective risk assessment program, you can better facilitate trade and properly manage enforcement.”
NCC Chairman Eddie Smith said, “Too many hardworking men and women in the U.S. textile and apparel industry have lost their jobs to unfair trade practices like customs fraud. For the 400,000 Americans still working in the sector, cracking down on customs fraud would send a strong signal that Congress is serious about jobs.”
NCC Responds to WSJ Editorial Misinformation
NCC sent a letter to the editor in response to the misinformation contained in a May 21 Wall Street Journal (WSJ) editorial about the US-Brazil WTO case. The letter was drafted from a more detailed response document the NCC prepared and sent to its leadership. That document is on the NCC’s website at http://www.cotton.org/issues/2010/wsjrespond.cfm.
In the letter sent to the newspaper, the NCC pointed out that the WSJ was “quick to focus on ’09 government payments without clarifying that the payments were elevated because of low prices stemming from the global recession.” It said the WSJ editorial failed to note that the WTO found no fault with a significant portion of the payments made to US cotton. Also, spending on the cotton provisions involved in the dispute likely will be zero for the ’10 crop.
The NCC letter also noted the inaccuracy in the WSJ editorial’s description of the temporary fund established as part of the negotiated solution between the United States and Brazil. The funds are not payments to Brazilian growers, the letter noted, as the US-Brazil agreement explicitly forbids payments to Brazilian farmers -- thus the fund will be used only for capacity building and technical assistance projects and lasts only until Congress can address legislative changes to the programs in question.
Contrary to the WSJ description, the NCC letter clarified that the WTO did not rule that cotton programs under the current ’08 farm bill violate trade commitments but that a WTO panel found fault with selected cotton provisions in the now-expired ’02 farm bill along with the export credit guarantee programs for essentially all commodities.
“Amazingly, the editorial does not even mention the export credit programs even though the vast majority of possible trade retaliation is associated with this program,” the NCC letter stated. “The truth is that the United States has protected U.S. jobs by negotiating a suspension in retaliation while Congress works to address program changes as part of the 2012 farm bill.”
EPA Challenged to Strict Data Quality Rules
The EPA is facing growing calls from industry, GOP lawmakers and the White House budget office to apply strict Data Quality Act (DQA) requirements to agency science - a push that could make it difficult for the agency to use some scientific data to justify stringent new chemical safety, cleanup and climate policy decisions.
The DQA requires EPA and other federal agencies to ensure that scientific and other data used to develop policy stances are objective, reproducible and peer-reviewed. The law requires agencies to accept and respond to petitions to correct allegedly flawed data used in rulemakings and other decisions.
However, the new push to force agencies to follow the DQA requirements could face hurdles as thus far courts largely have rejected industry efforts to enforce the law. Another hurdle, say public health advocates who oppose the law’s application, is that the Obama Administration is unlikely to enforce DQA requirements in the same way the Bush Administration did.
The Office of Management and Budget recently called on EPA to follow DQA guidelines when peer reviewing chemical risk assessments for the agency's Integrated Risk Information System database, which could require peer reviewers to ensure that any recommendations and scientific data under consideration meets strict standards for objectivity and reproducibility.
House Republicans are reiterating past calls for EPA to apply DQA requirements to its climate risk finding, which EPA in the past has rejected.
US Mill Use Climbs
According to the Commerce Dept., April (four-week month) total cotton consumption in domestic mills was 130.2 million pounds for a seasonally adjusted annualized rate of 3.46 million bales (480-lb). Last April’s annualized rate was 3.18 million bales.
The March (five-week month) estimate of domestic mill use of cotton was raised by 467,000 pounds to 155.8 million pounds. The revised seasonally adjusted annualized rate of consumption for March is 3.37 million bales. This is higher than last year’s March annualized rate of 3.12 million bales.
Based on Commerce estimates from Aug. 2, ’09, through May 1, ’10, projected total pounds consumed during crop year ’09-10 would be 1.6 billion pounds or 3.37 million bales. USDA’s latest estimate of ’09-10 crop year mill use is 3.40 million bales.
Preliminary May domestic mill use of cotton and revised April figures will be released by Commerce on June 24.
Sales, Shipments Continue Healthy Pace
Net export sales for the week ending May 20 were 250,700 bales (480-lb). This brings total ’09-10 sales to approximately 12.2 million bales. Total sales at the same point in the ’08-09 marketing year were approximately 13.3 million bales. Total new crop (’10-11) sales are 1.3 million bales.
Shipments for the week were 298,700 bales, bringing total exports to date to 9.0 million bales, compared with the 10.1 million bales at the comparable point in the ’08-09 marketing year.
Effective May 28-June 3, ’10
Adjusted World Price, SLM 11/16
74.22 cents
*
Fine Count Adjustment ('09 Crop)
0.00 cents
Fine Count Adjustment ('10 Crop)
0.00 cents
Coarse Count Adjustment
0.00 cents
Marketing Loan Gain Value
0.00 cents
Import Quotas Open
11
Special Import Quota (480-lb bales)
756,927
ELS Payment Rate
0.00 cents
*No Adjustment Made Under Step I
Five-Day Average
Current 5 Lowest 3135 CFR Far East
91.26 cents
Forward 5 Lowest 3135 CFR Far East
84.31 cents
Coarse Count CFR Far East
NA
Current US CFR Far East
90.70 cents
Forward US CFR Far East
86.70 cents
'09-10 Weighted Marketing-Year Average Farm Price
Year-to-Date (August-April)
61.75 cents
**
**August-July average price used in determination of counter-cyclical payment
