August 1999

• The GOP gamble

• Appropriators reject 'secret science,' vote to implement Shelby amendment

• Kelly introduces water infrastructure reauthorization bill

• Under pressure, EPA ends Transportation Partners Program

• Shuster, Oberstar push Senate on FAA bill

• AED estate tax push makes national news

It's fortunate that Congress has gone home. During the last few weeks before the August recess, the whole political spectrum was being turned on its head. Long-time liberal spenders in the Democratic party were condemning the traditionally penny-pinching Republicans as being fiscally irresponsible. Republicans threw caution to the wind and went full speed ahead with their efforts to pass a $792 billion tax cut.

The problem is that the GOP has sounded the fiscal responsibility theme for so long that Americans have actually started listening. The Democrats have seized on this lingering fear and taken advantage of the GOP tax initiative to proclaim themselves the party of fiscal responsibility. The comments of Joe Moakley, the ranking Democrat on the House Rules Committee are typical: "Republicans want to raid the Social Security and Medicare Trust Funds and give a huge tax break back to those fat cats. Democrats, on the other hand, want to save the surplus."

But who are the fat cats Moakley's referring too? Who are the "special interests" that critics claim benefit from this bill? They're the American people: married couples, family business owners, investors, recent college graduates, etc. The real story on the GOP tax bill is that it's a cautious proposal that simultaneously addresses many of the inequities in the current tax code. Here's a quick overview:

Estate tax repeal. The bill repeals the estate tax by phasing it out over 10 years. After that time, heirs would have to pay capital gains taxes on the property they inherit, but only when and if that property is sold. The taxes would be based upon the appreciation of the asset from the time it was acquired by the decedent. A unified credit provision would allow heirs to inherit and sell some property tax free.

Capital gains tax relief. The capital gains rate structure would be simplified,and the individual rate is reduced from 20% to 18% beginning in 1999. The lowest capital gains rate would be reduced from 10% to 8%.

Across the board rate reduction. All marginal tax rates would be reduced by one point. Additionally, the new 14% tax bracket would be extended upwards to include millions of Americans who are now paying taxes in the 28% bracket. Senate budget experts estimate that when fully phased in, this provision alone will save a family of four with an adjusted gross income of $80,000 almost $3,000 per year.

Marriage penalty relief. The bill addresses the marriage penalty issue by doubling the standard deduction for married couples filing jointly and doubling the 15% tax bracket to include a couple's combined income.

Retirement savings incentives. The contribution limit for all IRAs would be increased to $5,000 by 2006. The limit would be indexed after 2008. The amount that individuals can contribute to 401(k) plans is also increased.

Republicans contend that their proposal is fiscally responsible. The projected budget surplus is $3.3 trillion over the period in question. Their tax proposal spends only $792 billion.

Both parties consider this issue a defining one. It's interesting that in the Senate the proposal passed by only one vote, while in the House there were only six defections from the Democratic position and five from the Republicans. This party differentiation may become blurred when congressional leaders start working toward a compromise after the President's veto.

On July 13, the House Appropriations Committee voted 33 to 25 to reject a proposal by Reps. David Price (D-NC) and Jim Walsh (R-NY) that would have blocked implementation of the Shelby amendment for one year. Enacted into law last Fall, the Shelby amendment requires that the public be given access through the Freedom of Information Act to data generated by federally-funded researchers.

In years past, this "secret science" has not been made available for public review, despite the fact that it has been used to generate federal policies and regulations, including the Environmental Protection Agency's new particulate matter standards. Codified last year, those regulations threaten to bring road construction around the country to a grinding halt.

Through the Transportation Construction Coalition, AED has been leading the construction industry's lobbying efforts to protect the Shelby amendment and prevent the use of secret science in federal policymaking. The TCC is a coalition made up of 27 construction industry associations and unions chaired jointly by the American Road and Transportation Builders Association and the Associated General Contractors of America. AED Washington staff chair the TCC's environmental subgroup and coordinated a lobbying push by TCC members on the eve of the Appropriations Committee vote.

AED's Obadal testifies before House subcommittee

As part of AED's efforts to protect the Shelby amendment, on July 15 AED Washington Counsel Tony Obadal testified before the House Government Reform Committee's Government Management, Information and Technology Subcommittee. The focus of the hearing was HR 88, a bill introduced earlier this year by Rep. George Brown, Jr. (D-FL) that would repeal the Shelby amendment outright.

Testifying with Obadal against HR 88 were Prof. Jim O'Reilly, a noted expert on the Freedom of Information Act; Jim Miller, President Ronald Reagan's budget director; and Bill Kovacs, vice president for environmental and regulatory affairs for the U.S. Chamber of Commerce. Observers agreed that the hearing created a solid record in support of the Shelby amendment that will make it very difficult to move HR 88 through the Government Reform Committee.

By a sad coincidence, Rep. Brown died on July 15, the day the subcommittee was gathering testimony on his bill. It's unclear at this point who, if anyone, will pick up the mantle and continue Brown's fight against open government.

Now on to the Senate

With our important victories in the House behind us, the battleground now shifts to the Senate. Sen. Daniel Patrick Moynihan (D-NY) introduced legislation earlier this month that would not only repeal the Shelby amendment but also would expand exceptions in the Freedom of Information Act and would make changes to the Federal Rules of Civil Procedures and Federal Rules of Evidence to prevent scientific research data from being used in federal court. Although no one is giving the Moynihan bill (S 1437) much chance of success, we're not taking any chances and have already begun marshaling our forces in opposition to the proposal. AED members are encouraged to contact their senators in opposition to Moynihan's closed government bill.

OMB continues Shelby amendment implementation process

There's also action on the secret science issue at the Office of Management and Budget. On August 11, OMB published its revised proposal to implement the Shelby amendment in the Federal Register. OMB had been dragging its feet, apparently waiting to see whether efforts to use the appropriations process to block the Shelby amendment would succeed. They didn't. Now the Clinton administration is trying to water down the Shelby amendment through the implementation process.

Although the Shelby amendment clearly says that "all data" produced under a federal grant or award has be made available to the public, the OMB proposal limits the Shelby law's applicability to data that is used to develop a formal regulation. This limitation neglects the fact that agencies can use - and misuse - data in many ways unrelated to the regulatory process (for example in damaging reports, studies, and guidance material).

The OMB has also proposed limiting the Shelby amendment's applicability to those regulations that cost the economy $100 million or more and wants to give individual researchers wide discretion in determining what parts of their research should be turned over for public review. This would in essence make every researcher an FOIA officer and prevent any effective public oversight of the science that the government uses to develop the regulations that affect every aspect of our lives.

A recent study paints a dire picture of our nation's water infrastructure situation. It suggests that our nation has approximately $300 billion in water and sewer infrastructure needs over the next 20 years. We're a long way from solving the problem, but a bill introduced by Rep. Sue Kelly (R-NY) earlier this month would help us take a small but important step in that direction.

Proposal would authorize $3 billion per year for construction programs

The Clean Water Infrastructure Financing Act of 1999 (HR 2720), introduced by Rep. Kelly on August 5, would, among other things, authorize $3 billion for the Clean Water Act State Revolving Fund each year through the end of Fiscal Year 2004. The SRF program provides seed money to states for infrastructure projects which the states must then match with financial contributions of their own. The requirement that states add money to the funds provided by the federal government means that, as a practical matter, the actual value of the investment that results from the SRF program is several times the congressionally authorized level.

In a major victory for the road construction community, the Environmental Protection Agency told House National Economic Growth, Natural Resources, and Regulatory Affairs Subcommittee Chairman David McIntosh (R-IN) in a letter that it was ending the Transportation Partners Program.

Over the last several years the EPA has used the TPP to coordinate and subsidize the activities of anti-road activists around the country. Ending the TPP program was therefore one of AED's highest priorities for the 106th Congress, and our association took a leading role in bringing the Transportation Partners Program to the attention of the highway construction community and pro-growth lawmakers on Capitol Hill.

In the letter to Congress, EPA wrote that the Transportation Partners Program would be eliminated and replaced by "a more balanced program" called the Transportation and Environment Network, which pro-highway groups would be invited to join. EPA also said that it would no longer provide funds to organize the Partners network or the anti-road TransAct web site.

Does that mean that we're done with the issue? Absolutely not! And we're not the only ones. Rather than rolling over and accepting EPA's explanations and promises, McIntosh sent a letter to EPA on August 10 requesting additional information about the EPA's new program (called "the Transportation and Environment Network"), He also requested answers to questions he asked EPA about the TPP program in an earlier letter that the agency had failed to answer.

McIntosh still wants EPA to explain what its legal authority is for agency efforts to "reduce vehicle miles traveled" nationwide. He also wants EPA to give more detailed information about the anti-road and litigation activities of members of the Transportation Partners Program and other environmental groups and to explain the details of another EPA initiative-- the Smart Growth Network (part of EPA's anti-sprawl initiative).

House Transportation & Infrastructure Committee Chairman Bud Shuster (R-PA) and T&I Committee Ranking Member Jim Oberstar (D-MN) scored an important victory on August 5 in their fight to provide much-need airport construction funding increases.

The two convinced their colleagues in the House to reject a Senate proposal to extend the authorization for FAA programs for another two months and replace the two-month extension in the Senate bill with the language of the Aviation Investment & Reform Act for the 21^st Century. AIR-21, which first passed the House on June 15, would more than double the amount authorized for airport construction programs to $4.35 billion annually by 2004 and would protect Airport & Airway Trust Fund revenues from being raided for other government programs.

The lapse in FAA programs resulting from Shuster's unwillingness to buckle under and pass another short-term extension bill puts pressure on the Senate to begin negotiating in earnest on the terms of the final FAA legislation. The Shuster-Oberstar parliamentary maneuver will also force the Senate to go to conference on the FAA bill when lawmakers return from their August recess.

AED's joint lobbying campaign with the Associated General Contractors and the Construction Industry Manufacturers Association to repeal the estate tax is getting national media attention.

On July 16, the front page of the Wall Street Journal noted that construction industry groups sent reporters and lawmakers "toy construction vehicles as part of a 'Demolish the Death Tax' push against the estate tax, which it says hurts family-owned businesses." And on the July 28 a Journal editorial cited AED's 1995 study about the impact of the estate tax on family businesses in support of their position that the tax should be repealed.