In a speech at the White House last week, the President noted that contributions to many charities have declined, and urged Congress to pass the CARE Act (S. 1924), the faith-based compromise bill sponsored by Sens. Joseph Lieberman (D-CT) and Rick Santorum (R-PA) as one way to address the problem. The bill has incentives for charitable giving, including a deduction for contributions by nonitemizers, and provisions for equal treatment of faith-based and other organizations in the federal grantmaking process. OMB Watch feels that the bill is far superior to the House version passed last year, but we have questioned whether the version of the nonitemizer in the CARE Act would generate enough new giving, given the cost in lost federal revenue, combined with the large tax cut of last summer. The Congressional Research Service (CRS) has issued a report that says it would generate only 12 cents in new giving for every dollar lost to the treasury. Of that amount, half would go to non-religious sacramental activity. The CRS report suggests there may be other ways of offering the non-itemizer that might be more efficient. Another Congressional report, however, from the Joint Committee on Taxation was critical of any type of non-itemizer. The President urged action in the Senate Finance Committee by Memorial Day. However, Committee Chair Max Baucus (D-MT) and Ranking Member Charles Grassely (R-IA) are said to be concerned about the cost of the nonitemizer, and may modify or eliminate the provision. However, because the White House continues to advocate for the non-itemizer deduction, the future remains unclear. If the CARE Act passed it would have to be reconciled with a much different version, (H.R. 7), passed by the House last July. That bill contains controversial charitable choice provisions that would allow direct funding of congregations and hiring discrimination based on religion for publicly funded staff positions. There may be room for compromise, however. Last week Health and Human Services Secretary Tommy Thompson told a House committee that he is opposed to discrimination with federal funds.