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Saturday, February 5, 2011

Lawmakers Rally Lobbyists in 'Call To Arms' For Upcoming Spending Fight


Senate Appropriations Subcommittee Urged Lobbyists to Push for Continued Funding

By JONATHAN KARL & MATTHEW JAFFE

Feb. 4, 2011

As Congress prepares to make deep spending cuts, an army of lobbyists is gearing up to fight back.
In an e-mail obtained by ABC News, a top staffer for the key Senate Appropriations subcommittee called for a meeting of lobbyists and interest groups that would be affected by expected cuts to the Labor and Heath and Human Services budget. The Jan. 24 meeting was attended by approximately 400 people, sources told ABC, and served as a "call to arms" for those determined to fight Republican budget cuts.
"One thing everyone should be able to agree on now is that a rising tide lifts all boats, and that a higher [Labor, Health & Human Services] allocation improves the chances for every stakeholder group to receive more funding," the committee staffer for Sen. Tom Harkin, D-Iowa, wrote in an e-mail inviting people to the meeting.
The meeting is in contrast to the rampant calls all over Capitol Hill to cut federal spending. For instance, a recent proposal from Sen. Rand Paul, R-Ky., called for an 83 percent cut in funding for the Department of Education.
If education is subjected to far greater cuts than defense, for example, then groups in that sector have cause for concern. Cue the lobbying effort.
"Everyone who was there was desperately concerned and very appreciative of being in a room seeing so many people like them who are also concerned," said a source who attended the meeting.
"We obviously have to cut the budget deficit and address the debt problem, but are we going to do that on the backs of the poor, the unemployed, those without child care, et cetera? That's the kind of thing that could halt the economic recovery in its tracks."
Another source familiar with the meeting said Democrats used the meeting as "an attack on House Republicans."
"They said these evil House Republicans are here and they're going to kill all these programs that support little kids, senior citizens, and health care," the source said. "They're trying to instill the fear of God that Republicans are basically going to blow up all these programs, kill these programs, defund them."
"It seemed to me like they are trying to build momentum to push the Republicans back on their promises on funding levels and I think to their credit they were reaching out to a vast number of organizations to build a coalition of people who are willing to take action against whatever may come out of the House."
The funding fight looks set to take center stage in the coming weeks. President Obama is planning to submit his budget proposal for fiscal year 2012 on Feb. 14.

The States Can't Afford ObamaCare


Behind this week's ruling by U.S. District Court Judge Roger Vinson overturning ObamaCare on constitutional grounds, there is a deeper economic reality. The states can't afford it. That's a primary reason why 26 states joined in the Florida lawsuit to nullify the federal law. It also would be a good reason for the Supreme Court to uphold Judge Vinson's ruling.
For decades, the federal government has presumed increasingly to make policy in health, education, welfare, business regulation, law enforcement and other areas beyond the powers enumerated in the Constitution. Up until recently, the courts have largely viewed this intrusion benignly, partly because the states have acquiesced, bargaining their sovereignty away in return for federal aid.
This once-happy marriage is on the rocks. While designing the Patient Protection and Affordable Care Act, the Pelosi-Reid-Obama troika tried desperately to present a façade of federal fiscal prudence where none actually existed—so they off-loaded massive costs on the states. By opening Medicaid to applicants 33% above the poverty line in 2014, ObamaCare could expand Medicaid enrollment by as much as 25%, according to the plaintiffs in the Florida suit. Medicaid, also rife with fraud in part because of its hybrid federal-state management, is already one of the biggest items in state budgets.
Thanks to the recession and their own spending excesses, nearly all states are suffering budget shortfalls, some to the point where there is no clear idea where the money will come from to meet pension and bond obligations, let alone operating expenses. The prospect of adding a further huge burden down the line, even with Washington kicking in over half the cost, is appalling.
The 26 states party to the Florida suit were saying, in essence: enough! Washington can borrow from the Chinese or call on the Federal Reserve to buy its bonds. But states' only recourse in a budgetary bind is further painful cuts in services.
Chad Crowe
This resistance to a further broadening of the partnership with Washington has heavy grass-roots support. The tea party uprising was a reaction to state as well as federal spending excesses. Voters in November punished the Democratic Congress but even more emphatically banished Democrats from state houses. Republicans now have the most state legislature seats since 1928. They netted five governorships, and the 29 they now hold could grow to 33 or even 36 in 2011 and 2012 if present voting trends continue.
Republican governors and state legislators are increasingly reasserting their claims to state sovereignty. Texas, for example, is disputing the Environmental Protection Agency's right to deny emission permits to Texas industries. Arizona and other states are at war with Washington over immigration policy.
States bucking Washington got their first real satisfaction in December. That's when U.S. District Court Judge Henry Hudson ruled in a suit brought by Virginia that the Constitution's Commerce Clause does not grant the federal government the power to compel individuals to buy health insurance. The 26 states who were plaintiffs in the Florida case raised this issue, and Judge Vinson ruled in their favor.
But these states went further. They argued that it also is unconstitutional for the federal government to coerce the states into spending money on federally designed projects, or, in other words, to essentially assume control over state budgets. ObamaCare does that, the states argued, with its requirement that the states foot a large share of the bill for the Medicaid expansion.
Judge Vinson didn't buy that argument. Instead he sided with the government lawyers, who argued in response that since states are free to withdraw from Medicaid if they so choose, nobody is forcing them to do anything.
Technically, that's true. Yet notwithstanding Judge Vinson's ruling, there is considerable practical merit in the states' position. For one thing, federal taxes levied on the incomes of citizens in states that withdrew would simply go to support Medicaid elsewhere. These citizens would not only get nothing in return for their taxes—they would also be stuck with the cost of alternative ways to provide health care for the poor.
The plaintiffs who brought the suit heard by Judge Vinson explained: "In Fiscal Year 2010-11, Florida will spend about $20 billion on Medicaid, toward which the federal government will contribute approximately $13 billion. For Florida now to opt out of Medicaid and itself provide the same $20 billion in benefits would consume more than half its tax revenues, not counting the significant costs associated with administering such a program."
States that have looked at the option of dropping out of Medicaid have usually stepped back in horror at what that would entail—nursing homes closing their doors, emergency rooms at hospitals overwhelmed, heart-wrenching stories in the newspapers about victims of the cutbacks. Even so, some are mulling alternatives. Indiana Gov. Mitch Daniels, for example, recently asked other Republican governors if it might be feasible for states to band together to set up their own health-insurance pool for low-income residents.
The states are also aware that other programs in which they've partnered with the feds are not likely to remain as lush a source of federal funding as in the past. The Republicans who now control the House are looking for ways to cut federal spending in recognition of the fact that the federal government is also in dangerous straits with its projected $1.5 trillion 2011 deficit and soaring national debt. Federal aid to education, for example, will be a prime target for spending cuts.
The framers of ObamaCare seem to have been too clever by half in their attempt to shift costs to the states. However the courts may eventually rule, you can't get blood out of a turnip.
Mr. Melloan, a former columnist and deputy editor of the Journal editorial page, is author of "The Great Money Binge: Spending Our Way to Socialism" (Simon & Schuster, 2009).

The Tax Bowl



We won't predict the winner of this Sunday's Super Bowl between the Pittsburgh Steelers and Green Bay Packers. But we can report this much: The Steelers will get to keep a lot more of their season earnings, though both team's players would be a lot richer if they played all of their home games in Dallas.
Take the Packers' fleet-footed quarterback Aaron Rodgers. He made $8.6 million in 2009, according to USA Today's database of player salaries. Of that, we calculate he paid roughly $680,000 in state and $3.1 million in federal income and payroll taxes. Steeler quarterback Ben Roethlisberger didn't earn as much, but he got to keep a relatively larger chunk of his haul—$4.6 million of his $7.7 million salary. (This excludes taxes paid to states that tax players visiting on away games.)
Unlike Wisconsin, which has a graduated income tax that charges top earners 7.75% on earnings over $220,000, Pennsylvania has a 3% flat rate. Even football players can behold the merit of a flat tax. Of course, both players would keep a lot more of their earnings if like quarterback Tony Romo (salary: $625,000) they played for the Cowboys since Texas levies no state income tax. On the other hand, Packer and Steeler fans will pay if they travel to Texas for the game since Texas's beer tax is more than twice as high as their home state's.
It's also worth noting that Messrs. Rodgers and Roethlisberger will save roughly $750,000 combined this year (if their salaries stay the same) thanks to the extension of the Bush tax cuts. This ought to console Sunday's loser.

The 1099 Repudiation



A revealing debate over one of Washington's dumbest ideas.


Democrats now claim that the infamous 1099 business reporting mandate that the Senate repealed this week was an accident, as if they were as surprised as everyone else to learn that this destructive provision had crept by itself into law. The truth is that the 1099 rule emerged from the same core ideology as ObamaCare, and its overwhelming repudiation by Democrats may be an important inflection point in the health-care debate.
The 1099 rule is the first of the ballast to go over the side, and Democrats hope that such "improvements" will be enough to ride out the public storm. Then again, they also claimed that voters would learn to love ObamaCare once it had been stuffed through Congress, among many other misjudgments. The political history is revealing and instructive.
Associated Press
Sen. Kent Conrad, left, talks to Senate Finance Committee Chairman Max Baucus, right, during a Senate Finance Committee hearing on health care reform .
Less than a year ago, liberals couldn't see how anyone could possibly object to a rule requiring businesses to file 1099 tax forms with the Internal Revenue Service every time they spent more than $600 with a single vendor. Yes, this would result in a vast new paperwork and accounting burden for 30 million businesses and hit start-ups hardest, not to mention farms, charities and churches. But Democrats saw IRS surveillance of nearly all business-to-business transactions as merely an exercise in good government.
The point was to close the "tax gap," the largely mythological difference between the estimated taxes due under the business tax code and what the IRS actually collects. During the Bush years, Democrats and more than a few Republicans convinced themselves that businesses were cheating the government out of revenues through deliberate under-reporting and various tax shelters.
This notion prevailed at the Senate Finance Committee under both Democratic Chairman Max Baucus and Republican Chairman Chuck Grassley. Budget Chairman Kent Conrad was another evangelist. In its first budget, the Obama White House promised "robust" tax compliance enforcement "to narrow the annual tax gap of over $300 billion," in contrast to the lethargy of its predecessor.
The 1099 ObamaCare footnote thus received no scrutiny at first because it was so mundane. Everyone in Washington agreed that corporations were stealing billions of dollars every year that rightfully belonged to Congress to spend. (The issue only blew up when the IRS's National Taxpayer Advocate Nina Olson, followed by the GOP and the business lobby, made it a priority last summer.)
In the same Washington mindset, the 1099 mandate doesn't impose any more of a reporting burden than a European-style value-added tax. And it doesn't create any more of a drag on economic growth than the higher income tax rates that liberals believe don't matter either. As recently as September, Treasury Secretary Tim Geithner and Health and Human Services Secretary Kathleen Sebelius were still defending the 1099 rule as a good-faith "bipartisan provision to close the tax gap."
At that point, the White House was attempting to head off out-and-out 1099 repeal, and the duo did endorse arbitrary carve-outs for the smallest businesses—but these only made the provision more complex and onerous. House and Senate leaders tried similar gambits, while tying such half-measures to other business tax increases to scare off Republicans and give Democrats a way to tell voters they'd supported repeal.
The day after the election, President Obama deflected questions about the role health care played in the rout by offering the 1099 sacrificial lamb. He called it "counterproductive" and something "I think we can tweak and make improvements on the progress that we've made." He also mentioned it in the State of the Union, and total repeal sailed through the Senate on Wednesday, 81 to 17.
The mystery is the 17 Democrats who continue to think this is a good idea—even authors Messrs. Baucus and Conrad voted to heave it over the side. One of the 17 is Tom Carper of Delaware, which is home to thousands of small businesses. Does he think Christine O'Donnell is going to be his 2012 opponent? And what about New York's Kirsten Gillibrand?
The larger political question is whether voters will be satisfied by this or that "improvement" to ObamaCare. The White House is trying to outflank public opposition with a controlled burn, but wildfires often move in surprising and unmanageable directions.

Government Grants Airport Screeners Union Rights


WASHINGTON—The government will grant collective bargaining rights to the nation's 40,000 airport screeners, the head of the largest federal workers union said Friday.
John Gage, president of the American Federation of Government Employees, told the Associated Press he was informed of the decision at a meeting with John Pistole, head of the Transportation Security Administration.
TSA workers have tried for nearly a decade to win the same union protections as other federal employees, but Republican opponents have balked over worries that union demands could jeopardize national security or slow response times in a crisis.
Union officials call those arguments an insult to the hundreds of thousands of public safety officers that already have collective bargaining rights, including Border Patrol agents, firefighters and the Capitol police.
"Today marks the recognition of a fundamental human right for 40,000 patriotic federal employees who have been disenfranchised since the inception of the agency," Mr. Gage said.
Mr. Pistole had spent months studying the unionization issue since he was confirmed to the post in June. The move comes just days after Mr. Pistole said the agency would not hire private contractors to screen airline passengers, despite calls to do so from some Republican lawmakers and frustrated passengers.
When the agency was created in 2001, it was excluded from regulations that give other federal workers the right to union protections. The law gave the TSA administrator the authority to decide whether collective bargaining should be allowed, and under the administration of President George W. Bush it was always prohibited.
President Barack Obama had pledged to get the screeners collective bargaining rights during his campaign. But the effort was delayed after Obama's first two choices to run the agency dropped out during their confirmation processes.
Earlier this week, Sen. Roger Wicker (R., Miss.) offered an amendment to the FAA authorization bill that would bar the screeners from gaining union rights.
"Burdensome and costly union demands could limit the ability of those responsible for security at some of the most high-risk targets to do their job," Mr. Wicker said. "The FBI, the CIA and the Secret Service do not have collective bargaining rights for good reason."
The Federal Labor Relations Authority has already set union elections at the TSA to begin in early March. TSA employees will choose between AFGE and the National Treasury Employees Union for representation.
AFGE already has more than 12,000 dues-paying members among the screeners' ranks, but the union has not been allowed to bargain on behalf of its members.