In This Issue House Passes FY 2001 Supplemental Appropriations Bill Making the Tax Cut Permanent Revised (Realistic) Estimates of New Tax Bill GDP - What A Difference A Point Makes… Fiscal Survey of States President Bush Has GPRA on His Mind Nonprofit Sector Supreme Court Upholds Party Spending Limits, Boosts Reform Efforts Bush Changes Direction on Faith Based Program Charitable Giving Legislation Still Limping Along IRS Rules on Fundraising Letters Regulatory Issues "Contractor Responsibility" Still in Limbo Roll Back of Energy Efficiency Standard Challenged Access to Information Day 1 for 508 Accessibility Guidelines New Freedom Initiative FOIA Requests and Vanishing Acts at Government Agencies A .us for All? SIDE BAR: Taxes: The Rich Keep Getting Richer; And The Poor Get Poorer Nonprof Sector: Nonprofits Opposing Repeal of the Estate Tax; REGS:Oppose John Graham's Nomination to OIRA Administrator Announcements: U.S. Dept. of Education CTC Program Issues Request for Proposals Fiscal Year 2001 Supplemental Appropriations Bill Passes House Across-The-Board Cuts To Discretionary Programs Considered By a vote of 381 to 47, the House passed a supplemental appropriations bill, primarily for military programs, in the amount of $6.54 billion for fiscal year 2001 (HR 2216). About $1 billion is for cleaning up flooding and other natural disasters, fighting forest fires, providing energy assistance to low-income families, and paying for the cost of the tax cut rebate. $473 million was designated "emergency" spending, which is not subject to offsets required under budget rules. An amendment was considered but rejected that would have restored some previously cut funds to the Federal Emergency Management Agency (FEMA) for disaster relief by imposing a 0.33 percent across-the-board-cut in all of FY 2001 non-defense discretionary funds -- over $1 billion in cuts to domestic programs (well over the $389 million to be allocated back to FEMA). The bill now goes to the Senate for consideration. The difficult passage of the supplemental bill portends a contentious appropriations process since spending will be so limited by the cost of the President's tax cut. Back to Top Making the Tax Cut Permanent A bill (HR 2212) was introduced in the House on June 19 to make the income tax marginal rate reductions contained in the President's large tax bill permanent. (Remember, all the provisions of the bill are due to expire on December 31, 2011.) We can anticipate continued efforts in the House, at least, to make some or all of the big tax bill permanent. On the other hand, given that the tax bill is now estimated to cost far more than $1.3 trillion (See related article, this issue) over 10 years, and we enter the contentious appropriations season, maybe we can expect some bills to roll back portions of the tax bill as offsets to necessary spending? Chart: US Budget Summary Chart: On-Budget Summary Chart: US Budget Surpluses and Deficits All charts from Monthly Treasury Statement, Department of the Treasury, Financial Management Service. Back to Top Revised, (Realistic) Estimates of the New Tax Bill At the request of Rep. Charles Rangel (D-NY), the Joint Committee on Taxation (JCT) released a preliminary report June 14 that reveals the enormous additional costs of the recently-signed tax bill, HR 1836. The analysis shows the revenue loss of the tax cut from 2001-2011 to be $1.81 trillion -- not $1.35 trillion. The new JCT estimate takes into account many of the gimmicks used to constrain the cost. For example, JCT scores all 10 years as normally required, instead of the arbitrary sunset after the 9th year. JCT also calculates the cost of changing the Alternative Minimum Tax (AMT), which must be changed if Congress does not want families to have to pay more in taxes than before the tax cut bill passed. Finally, JCT extends a number of popular provisions that are scheduled to expire, such as the Research and Development tax credit and the recently enacted tuition tax credits. Total cost over the ten year window – $466.8 billion. This report substantiates what opponents of the tax cut have been explaining for the past 2 months -- this tax cut is deeply flawed. Sen. Kent Conrad (D-ND), the new chair of the Budget Committee, has been saying his numbers indicate that the tax cut will mean dipping into either the Medicare or Social Security trust funds by 2003. Sen. Robert Byrd (D-WV) explained in the Washington Post on June 14 that appropriators now face a "stacked deck" (even for FY 2002, when the costs of the tax cut are still relatively low) in which they will try to meet the President's spending requests while fitting within the $661 billion limit imposed by the budget resolution (see June 11 Watcher article). While tax scoring is extremely complex, it is easier to see over a ten year period how the tax cut bill greatly limits policy options. The table below shows how quickly we use up the $2.7 trillion in budget surplus that the Congressional Budget Offices says will exist over the next 10 years. The tax bill eats up $1.3 plus the additional $500 billion as re-scored by JCT. If the President wins his tax cuts for charity, health and long-term care, that’s another $200 billion. Prescription drugs is another $500 billion at a minimum. Debt service on the tax cuts is $700 billion. Already we have exceeded the surplus. And that doesn’t count:

• Any spending increases for education, defense, disaster relief, environmental clean-ups, or other programs that have already been discussed and for which there is bipartisan support;
• Any new initiatives such as for health care for the uninsured or long-term care;
• Business tax cuts such as capital gains tax cuts and corporate tax cuts;
• Energy-related tax relief; or
• Changes in Social Security such as the President’s plan to privatize it.

The difficulty that appropriators are now facing helps to force the question of the nation's priorities that ought to be at the center of any fiscal policy discussion. It is unfortunate, however, that this questioning didn't really occur before the tax cut was passed. Many of the spending priorities are shared by members of both parties and Congress must decide how it will address the real world limits on the budget. This puts renewed pressure on Congress to repeal some parts of the tax cut, as suggested in an editorial in today's Washington Post. If today's Congress doesn't deal with the problem, future Congresses will be forced to. The Ever Shrinking Surplus Prepared by the Committee on Ways and Means Democratic Staff, Charles B. Rangel, Ranking Member Back to Top GDP - What A Difference A Point Makes… In order to make determinations of how much of a federal budget surplus or deficit we can expect over the next ten years, or the financial status of the Social Security Trust Fund and how soon in the future it will be depleted, estimators must start with a projection of how much the economy is expected to grow. That only makes sense. What may not make sense is that widely-varying estimates of the rate of growth are used for different projections. One of the most striking is the difference between the pessimistic estimates of economic growth used by the Social Security (OASDI) Trustees to determine when the Social Security Trust Fund will become insolvent and the more optimistic estimates of economic growth used by the Congressional Budget Office (CBO) used in determining the amount of the surplus. Since estimates of the budget surplus are based on projections of GDP (in addition to other factors like anticipated unemployment and inflation rates, or, in the case of Social Security, factors like average earnings assumptions), any changes in the determination of future GDP will affect the amount of budget surpluses. This points out the unreliability of surplus estimates as well as the potential problems with allocating the bulk of the surplus now for the tax expenditures throughout the next ten years. While it is not the subject of this article, it is important to remember, especially with all the recent discussions about "saving" Social Security, that the Social Security Trustees' estimates, based on pessimistic rates of GDP growth, make the insolvency of the Social Security Trust Fund arrive more rapidly than if more generous estimates of GDP were used. For more on that issue, read an analysis arguing against privatization of Social Security written by a San Francisco Bay Area Young Democrat. In other words, one small change in actual GDP growth can dramatically affect the actual budget surplus or the actual state of the Social Security Trust Fund, and yet policy decisions using these estimates are made every day. CBO's last "Budget and Economic Outlook: Fiscal Years 2002-2011" was issued in January 2001. CBO will issue an update in July. CBO also issues monthly "Budget Reviews." (The Office of Management and Budget (OMB) does a similar report in January and July, which is usually comparable to CBO's report, although OMB uses some different assumptions making the reports vary slightly). The Social Security "Old Age and Survivors Disability Insurance" (OASDI) Trustees Report comes out yearly. The GDP assumptions below are taken from the January 2001 CBO report and this year's OASDI Trustees' Report, issued in March 2001. You can see that the some of the estimates are a full percentage point apart. OMB, in its budget submission for FY 2001, demonstrates just how sensitive a 1 percentage difference can be. For example, if GDP is 1 percent lower than estimated in 2001, then over the eleven years from 2001 to 2011, the surplus will be almost $66 billion less. Even more startling, if GDP is 1% less throughout the eleven years, the surplus drops by an astonishing $545 billion. Differences Between CBO and OASDI Estimates of GDP Growth Back to Top Fiscal Survey of States The economic slowdown has started to have a large impact on states, according to a recent report by the National Governors Association and the National Association of State Budget Officers. The June Fiscal Survey of States, which is reported biannually, provides a snapshot of state expenditures, revenues, and year-end balances for fiscal years 2000, 2001, and 2002. According to the report, "Many states face a widening gap between revenues and expenditures... [S]tates have had to make downward adjustments to their fiscal 2001 revenue estimates and fiscal 2002 forecasts." Some key points from the report:

• By 2002 states will have the smallest increase in state general fund spending since 1993. Elementary and secondary education, along with Medicaid, dominate state spending.
• Revenues have declined. The largest decline will be coming in as the federal estate tax is phased out. By 2003, states are projecting a loss of $1.8 billion; over 10 years it will be between $50 billion and $100 billion.
• While year-end balances are still healthy, according to the authors, they will be "lower than they have been in the past seven years. In 2000, year-end balances were 10.1%. They are projected to drop to 7.2% in 2001 and 5.9% in 2002. In other words, within a two-year period there has been a nearly 50% drop. (The balance as a percent of expenditures includes "rainy day" funds.)

Below is the year-end balances as a percentage of expenditures for each state for fiscal year 2000 and 2001. The pie graph shows that the percentage has declined for 39 states (13 by 5% or more), stayed the same for 3 states, and increased for 10 states (only 1 state by 5% or more). Chart: State Balances as Percent of Expenditures Difference Between FY2000 and FY2001 Source: Fiscal Survey of States, June 2001. Table: State Balances Source: Fiscal Survey of States, June 2001. Back to Top President Bush Has GPRA on His Mind What is GPRA? The Government Performance and Results Act (GPRA), passed in 1993, received broad bipartisan support. It was meant to address a range of concerns about government accountability and performance. Its goals were to improve the confidence of Americans in federal government, focus on the actual results of government activity and services, support congressional oversight and decision-making, and improve the managerial and internal workings of agencies within the federal government. GPRA, also called the "Results Act," was designed to focus agencies on actual results or outcomes, rather than just measuring the agency's activities. While GPRA has followed on the heels of a number of efforts throughout the past fifty years to improve the workings of the federal government, it is unique in its requirement that agency "results" be integrated into the budgetary decision-making process.

• A strategic plan containing a comprehensive mission statement and description of the agency's goals and objectives. This is the only part of the process that requires outside consultation with those who have a stake in the agency's operations and are potentially affected by the plan.
• A performance plan that is submitted with an agency's budget request in September. These plans must include the performance goals and indicators and a description of how the results will be verified and validated. The performance plan is to be linked to the budget-the goals must be based on the funding that is expected to be available to reach those targets.
• A performance report showing how well the agency achieved the previous year's goals. The first performance report was due March 31, 2000.

In addition to the individual agency plans, a Government Wide Performance Plan created from agency strategic and performance plans is required to be made part of the President's yearly budget submissions. GovExec.com maintains links to individual agency plans and reports as well as General Accounting Office reports. Agencies have been struggling since 1997 to meet the requirements of GPRA. Periodic and usually fairly dismal reports on their progress have been issued with some frequency by the General Accounting Office (GAO) and outside research groups. See the latest report. --> One goal of GPRA was for agencies to develop performance-based budgets. Pilot performance budgeting projects were scheduled to begin in FY 1998, but OMB delayed the process because of its assessment that the agencies' financial management systems were not up to the task. In April 2001, President Bush announced that agencies will be required to submit performance-based budgets for some of their programs during FY 2003. During a hearing before a House Government Reform subcommittee on Tuesday, June 20, 2001, OMB Deputy Director Sean O'Keefe emphasized the Bush Administration's commitment to a "results-oriented" government. Earlier in the month, OMB Chief, Mitch Daniels, more directly urged that GPRA be used to cut funding during the appropriations process for programs that were failing to achieve "results." (For further analysis of GPRA goals, see OMB Watch's "What is GPRA?".) Why should the linking of GPRA goals with agency budgets be of concern to nonprofits? Why Should Nonprofits Care about GPRA? While improving the operations of government, as well as the perceptions of citizens about government's ability to do a good job are important goals, we have concerns about both the difficulties faced by agencies in demonstrating results in quantifiable ways as well as GPRA being used in the budget process. Here are a few:

• It is often difficult to establish cause and effect. For instance, in the area of welfare reform, many commentators have suggested that a major reason for its "success" is the booming economic climate in the United States, not a function of the actual program. Outside influences may contribute to an outcome. Conversely, outside influences can also negate an agency's best efforts to achieve a goal. Some results are intangible or may have positive effects that were not anticipated or measured in terms of the service provided. Many government programs have benefits that cut across particular missions or goals. For instance, providing breakfast to schoolchildren as a part of a nutrition program may also have a beneficial effect on children's learning ability. Providing health or education services may positively affect family stability, or drug reduction, or even such important but difficult to measure qualities like self-esteem. If these programs are measured strictly by the programmatic results they set out to achieve, some might even be "failures" while still providing important benefits.
• Many government programs are administered as block grants to States and nonprofit service providers, who are not bound by GPRA reporting requirements. In many instances, then, federal agencies are required to show results for activities over which they have little control and for which they may lack consistent data. Besides the lack of good data, in some cases there is a lack of baseline information from which to measure results.
• Some results will not be apparent for years. Efforts at restoring the heath of the ecosystem don't fit clearly into yearly budget cycles. In doing research, getting results may require lots of seemingly wasted time of testing and discarding hypotheses before a result can be documented. In these situations, output measures might be necessary to show what an agency is doing to accomplish a goal, even if the outcomes will not be immediately evident. However, agencies have been strongly encouraged to focus on measurable outcomes.
• The emphasis on specific and quantifiable outcomes in GPRA could lead to a shift away from broader values and concerns that could have detrimental effects on the environment, health and safety, and consumers.
• Unfortunately, as GPRA implementation has proceeded some have used it to advance ideological goals-for example, to privatize, to downsize, or to cut agency budgets.
• The budget process is highly politicized. Arguably, appropriation and authorization decisions are based more on political considerations and well-funded interest group influence than the agency justification of its efforts. One recurring viewpoint is that Congress will only use GPRA as a means for punishing agencies and not in the more constructive ways envisioned by the Act. This emphasis on using GPRA to punish could easily lead to performance goals that are set so low that meeting them will be a given, rather than setting goals that are high and striving to achieve them, and sometimes failing. If failure to achieve goals s used as a reason to cut budgets, the only performance report will be a good performance report, yet it will be meaningless in terms of the original purpose.

For more information, see OMB Watch's Government Performance website. Back to Top Supreme Court Upholds Party Spending Limits, Boosts Reform Efforts A June 25 Supreme Court ruling that upheld the constitutionality of party spending limits could bolster campaign finance reform efforts in the House of Representatives and strengthen arguments that a ban of soft money would be constitutional. The case, Federal Election Commission v. Colorado Republican Federal Campaign Committee, dealt with hard money expenditures by parties that are coordinated with individual campaigns. In a related 1996 case the court held that independent expenditures by parties could not be restricted because parties spend money before candidates are selected and without any arrangement with nominees. The issue of coordinated expenditures was sent back to the lower courts for consideration, and they ruled in favor of the party. The Federal Election Commission (FEC) appealed and the Supreme Court agreed with them, holding that coordinated expenditures are different because they create an opportunity for donors to circumvent individual and PAC contribution limits in the Federal Election Campaign Act. The Colorado Republican committee argued that limits on expenditures could only be justified by the need to avoid corruption, and that parties cannot corrupt their own candidates. The 5-4 opinion rejected this argument as a "refusal to see how the power of money actually works in the political structure," noting that in addition to electing candidates, parties act as "agents for spending on behalf of those who seek to produce obligated officeholders." The timing of the ruling will help move consideration of campaign finance reform in the House, since House Administration Committee Chair Robert Ney (R-OH) had said committee markup of the 23 reform bills that have been referred to his committee would not begin until after the court ruled. The committee held a hearing June 21 and another is scheduled for June 28. Rep. Ney is working to create an alternative to the Shays-Meehan campaign finance reform bill, which includes a ban of soft money contributions to parties and broadcasts that mention federal candidates within 60 days of an election. Support of the Shays-Meehan bill could be weakened if it moves forward in its current form. Members of the Congressional Black Caucus have raised questions about the soft money ban, which is often used for get-out-the-vote efforts, citing evidence of voter disenfranchisement in the Presidential election. Others, including OMB Watch, have said the restrictions on issue advocacy are too broad, sweeping in communications that are not related to elections or are nonpartisan efforts to educate voters. OMB Watch has proposed amendments that would narrow restrictions on issue advocacy to paid advertising that is meant to influence elections. For more information see the June 11 OMB Watcher. Back to Top Bush Changes Direction on Faith Based Program With Congressional Republicans telling the administration that the current form of charitable choice does not have bipartisan support and will not pass, the Bush administration has begun tinkering with what it finds acceptable under its faith-based initiative. Some of the changes will help to address various issues, but the proposals still remain vague and leave many concerns unaddressed. Nonetheless, the Bush administration is putting a lobby campaign into high gear to allow direct federal grants to religious congregations for the provision of social services. The administration worked with House aides to add three clarifications to the initiative. The first change would impose on congregations the same accountability that applies to all federal grantees accepting federal funds. While the details of the Bush plan are not available, grantees that receive $300,000 or more in federal awards in a year must comply with OMB Circular A-133. Circular A-133 requires organizations to conduct a single-entity or program-specific audit. For awards of less than $300,000, the nonprofit must make records available to the agency, Inspector General, General Accounting Office, or other federal entity for audits or review. The second change would explicitly allow any individual who objects to a religious component of a social program to not participate in that component, but still receive the social service, which is current law. If there is not a secular alternative, it would require the state or local government to create such an alternative. The downside is that this may end up costing more money even though the faith-based initiative provides no additional resources. The third change is language that specifies that direct government grants for social programs must go into separate accounts from private church funds. This provision could prove to be far more complex than it sounds, as segregating funds for services could lead to complete program segregation (similar situations arose in federally-funded clinics that provided abortions in the wake of the 1991 Supreme Court decision in Rust v. Sullivan). The Justice Department testified on the need to insure that federal funds are not commingled with private funds used for religious purposes. This may prove very difficult since many of the faith-based services intentionally tie religious messages in the delivery of services. What is not addressed is the issue of hiring discrimination. House Judiciary Committee Chair James Sensenbrenner (R-WI) notes that as written, the bill opens up the possibility of lawsuits against cities and states that contract with the religious organization for services for these reasons. He argues that the bill could permit an atheist to sue if rejected for a job by the Catholic Church, for example. He point is reinforced by the testimony of several witnesses at congressional hearings. Religious social program managers have said that they only hire members of their faith, and would not accept federal money if it meant they could not discriminate in hiring. Other criticisms of the charitable choice initiative remain unaddressed. The American Federation of State, County and Municipal Employees (AFSCME) makes the point (see testimony at a June 14th congressional hearing) that the very concept of government turning over the responsibilities of the "social safety net" to private entities could lead to serious public harm. Others have added that it creates unneeded competition, especially since no new resources are being provided to address social problems. And many agree that it imposes an unfounded mandate on states and localities. The charitable choice initiative in H.R. 7 (which also contains incentives for charitable giving) was supposed to be marked up in both the House Judiciary and Ways and Means Committees last week, but was delayed. The White House and House Republican leadership are lobbying hard for the measure. But rank and file Republicans, such as Sensenbrenner, argue that it needs numerous changes. Conservatives, however are unlikely to support many changes. Rep. J.C. Watts, a cosponsor of the bill, said he is open to negotiations on technical aspects of the bill, "but I´m not going to compromise on principles in the bill." The fate of this initiative is also unclear in the Senate, where Senator Santorum (R-PA), an early champion of the plan, has left it out of his charitable giving bill (S. 27). Santorum has joined with Harris Wofford, the Democrat he defeated for the Senate, to launch a campaign to promote faith-based participation in the delivery of social services. Wofford has agreed to be chair of the new Working Group on Human Needs and Faith-Based/Community-Based Initiatives. Back to Top Charitable Giving Legislation Limping Along The tax cuts just signed into law will have long term impact on nearly all other federal fiscal policies. Not only will spending on federal programs be limited by the tax cuts, but so will other tax proposals including those dealing with charitable giving. A number of tax bills have been introduced to help charities. OMB Watch has prepared a handy chart providing a summary of the main provisions of major tax bills. The major charitable giving initiatives, such as deductions for individuals who do not itemize on taxes and the option to rollover Individual Retirement Accounts to charities without facing capital gains taxes, are likely on hold, although organizations like Independent Sector are hopeful to get them passed this year. The hurdles for passage this year include:

• Finding offsets. The non-itemizer deduction costs $85 billion over 10 years ($65 billion if a $500 floor is used). The cost can be reduced by modifying the proposal (e.g., phase it in over a longer period of time). But additional modifications will also water down the value of the proposal. Either way, it is likely to be expensive, and the tax cuts just passed ate up most of the possible resources. The alternative is to cut direct spending programs (e.g., Medicaid) or find offsetting revenues. The IRA rollover is far less expensive, roughly $3.8 billion over 10 years. It is possible, depending on surplus estimates expected this July, that offsets could be found for this proposal.
• Linkage to faith-based initiative. Both the non-itemizer and the IRA rollover have been linked to the highly controversial faith-based initiative proposed by President Bush. As "charitable choice" has become a lightening rod issue (see related story), it has made it extremely difficult to move the charitable giving proposals. The Senate, however, has not linked the two tax proposals to charitable choice, leaving open a possibility to get something done this year.
• Criticism of the tax proposals. While few people in Congress oppose the non-itemizer or IRA rollover, there also are few champions. On the non-itemizer, some are beginning to wonder whether it will generate many new contributions. Despite a PricewaterhouseCoopers study commissioned by Independent Sector showing that the non-itemizer deduction will generate significant new giving, many believe that it will not generate much. Moreover, it will create opportunities for fraud, which is one reason the non-itemizer deduction was curtailed previously. These criticisms can easily be overcome, but strong leadership will be needed.
• Priorities. In a meeting convened by OMB Watch recently, several groups began to question whether expensive charitable giving initiatives, such as the non-itemizer, are worth the cost. They argued that such large sums of money should be put into direct spending programs targeted to low-income families. Until the provisions from the ill-advised tax cut can be undone, there will increased pressures to reduce federal spending. Passage of the non-itemizer will increase these pressures.

Despite these hurdles, OMB Watch remains supportive of these charitable giving provisions and believes they should pass even if not this year. However, OMB Watch remains opposed to the charitable choice provisions in H.R. 7, the Community Solutions Act. Accordingly, if the only vehicle for consideration of charitable giving remains the faith-based initiative, then support for charitable giving initiatives should be put on hold until it can be untangled from the faith-based initiative. Regardless of viewpoint about charitable choice, the President did a disservice in linking charitable giving and faith-based issues. Charitable giving initiatives should be debated on its own separate from faith-based issues. Back to Top IRS Rules Fundraising Letters Violate Ban On Electioneering Heritage Foundation Identified as Charity Involved A recent report in Tax Analysts identifies the conservative Heritage Foundation as the subject of an IRS Technical Advice Memorandum (TAM) finding that a direct mail fundraising drive using a candidate's signature and letterhead constituted intervention in an election by a 501 (c) (3) organization. The TAM does not identify the parties involved, but the description of facts mirrors those cited in a Miami Herald article that reported on the story. In 1996, Rep. David Skaggs (D-CO) asked for an investigation of the report that Heritage and other groups were helping former Sen. Robert Dole, then a Presidential candidate, by supplying him with names and addresses for campaign fundraising in exchange for his signature on Heritage fundraising letters. The IRS opinion (TAM 200044038) found that "X" intervened in an election because the fundraising letters, written by "A" (Dole), went well beyond praising the work of "X", and included "politically loaded words" and statements similar to those made in his campaign. The letter was also critical of his opponent. This is true regardless of the charity's purpose in sending out the letters, since they distributed the letters. The Dole campaign received over 2.5 million names and addresses in exchange for his signature on the letter. The Heritage Foundation netted $188,000 in donations. The IRS held that Heritage managers would not be subject to excise tax penalties because they relied on the advice of counsel, who reviewed the text of the letter before it was sent. Back to Top "Contractor Responsibility" Still in Limbo The Bush administration held a public meeting last Monday on its HREF="http://a257.g.akamaitech.net/7/257/2422/14mar20010800/frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=2001_register&docid=01-8122-filed.pdf">proposed repeal of a rule (completed at the end of the Clinton administration) that promotes greater accountability for federal contractors -- to make sure they comply with important public protections. The HREF="http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=2000_register&docid=00-32429-filed.pdf">"contractor responsibility" rule, as it's called, simply clarified a long-standing requirement that prospective contractors "have a satisfactory record of integrity and business ethics," specifying that this includes a company's record of complying with the law (including tax laws, labor laws, employment laws, environmental laws, antitrust laws and consumer protection laws). This is plain common sense (see OMB Watch's testimony). Businesses that consistently flout the laws of the land should not be rewarded with taxpayer dollars. The AFL-CIO has set up a special, comprehensive web site where you can express support for the contractor responsibility rule directly to the Bush administration. Comments must be submitted by July 6, 2001, to be considered. Letters should be sent to: General Services Administration, FAR Secretariat (MVP), 1800 F St., NW, Room 4035, ATTN: Laurie Duarte, Washington, DC 20405. Comments may also be submitted electronically to farcase.2001-014@gsa.gov. Back to Top Roll Back of Energy Efficiency Standard Challenged An administration decision to roll back energy efficiency standards for air conditioners and heat pumps is being challenged in court by the attorneys general of California, Connecticut, and New York, along with the Natural Resources Defense Council, the Consumer Federation of America and the Public Utility Law Project. This challenge, filed in U.S. District Court for the Southern District of New York, alleges that the administration illegally delayed and weakened the new standards (completed at the end of the Clinton administration), violating the National Appliance Energy Conservation Act of 1987, which prohibits any weakening of energy efficiency standards once they are set. The Bush roll back came at the same time the administration was declaring an energy crisis. HREF="http://www.nrdc.org/media/default.asp#0619energy">Yet according to NRDC, the decision to lower the standards means that "peak electric demand in the United States would increase by 18,000 MW by 2030. That is an increase that would require the construction of 60 average-sized (300 MW) power plants. Total annual electricity consumption by U.S. households would increase by 11 billion kilowatt hours by 2020, equivalent to the total annual power used by 1.1 million households. Cumulatively, over the period from 2006 to 2030, U.S. consumers would pay a total of $18.4 billion more to run air conditioners. Finally, the nation would emit another 45 million metric tons of carbon (the equivalent of carbon emissions from 30 million cars for one year)." Back to Top Day 1 for 508 Guidelines As of today, June 25, 2001, all federal executive branch agencies are to begin to ensure that their electronic and information technology tools and systems -- including web sites -- are accessible and usable by persons with disabilities, whether federal employees or members of the general public. After this date, any agency purchasing or implementing technology not meeting the requirements set forth under the Electronic and Information Technology Accessibility Standards, developed under the Section 508 guidelines of the 1998 Rehabilitation Act Amendments, is open to legal action by employees and members of the public to correct deficiencies in access -- but not to receive punitive compensation. As noted in the April 30 OMB Watcher, agencies will be required, as of June 25, to follow Section 508 standards on contracts awarded and signed, even if they are solicited and negotiated before then. Agencies can, however, claim exemption from Section 508 standards before they sign contracts, due to circumstances such as an "undue burden" (which, although still vague, does require documentation), and the technology's utilization for national security functions. Though it was widely expected that not every federal agency website would be made accessible as of that date, there is a perception that the deadline serves as more of starting point, rather than the end, of federal planning to meet the requirements in an effort to accommodate broader public needs. As a follow-up, the Information Technology Industry Council announced that it is working on an Internet-based product accessibility template to help agencies evaluate the accessibility of their technology to persons with disabilities. President Bush recently stated that, "when the Americans with Disabilities Act was signed in 1990, our nation made a promise we will no longer underestimate the abilities of Americans with disabilities. We will treat Americans with disabilities as people to be respected, rather than problems to be confronted." The remarks came during a June 19 visit to the Department of Defense's Computer/Electronic Accommodations Program Technology Evaluation Center, which tests assistive technology for federal employees within the department and other agencies. Back to Top New Freedom Initiative On June 19, President Bush signed an executive order as part of his New Freedom Initiative, an $8.6 billion package to help people with disabilities by, "increasing access to assistive technologies, expanding educational opportunities, increasing the ability of Americans with disabilities to integrate into the workforce, and promoting increased access into daily community life." The initiative calls for:

• $5 million to facilitate small business compliance with ADA, including the hiring of persons with disabilities, as well as increasing funding for the Department of Labor's Office of Disability Employment Policy
• $20 million for research and development around assistive technologies
• $20 million for an Access to Telework fund, offering matching grants to states, for low-interest loan guarantees to help disabled workers buy computer equipment for telecomm uniting, and $40 million in matching funds for loans to help make assistive technology available for individuals with disabilities.

The June 19 executive order directs agencies to work closely with states to ensure that community-based services are offered as an alternative to institution-based services for persons with mental disabilities. This compliance is mandated under the U.S. Supreme Court's 1999 bin/getcase.pl?court=US&navby=case&vol=000&invol=98-536">Olmstead v L.C. decision. In Olmstead, the Court held that states providing services to people with mental disabilities only in institutions, when community-based alternatives were available, was a form of discrimination under the Americans with Disabilities Act -- especially if professional treatment providers deem such community-based services appropriate, the individuals themselves preferred such services, and the services could be supported with existing state resources. The Court's ruling also proposed two means for states to comply with the ADA in this area: a working plan that addresses the placement of individuals in less-restrictive settings for services, and a waiting list for community-based services ensuring a reasonable period of time in which services are offered and delivered. More information on the state efforts and legislative activity around Olmstead compliance is available on the National Conference of State Legislators website. Back to Top Government Messing Around With Public Information Over the last several months, government information has been becoming more and more elusive. It's happened at the Health Care Financing Administration (HCFA), the Federal Election Commission (FEC) and the Department of Defense (DoD). And although some of these problems have been brought to the attention of both the National Archives and OMB, it is not clear that either will take any actions against the agencies involved. Indeed, to do so would expose the appalling lack of policy on these matters and both agencies' failures to come to terms with electronic messages and records and to provide clear guidance to agencies. Below is a list of some of the disappearing acts now playing at government agencies.

• HHS - June 2001 Thomas Scully, the new head of the HCFA, announced an agency plan to release more information about nursing homes, health maintenance organizations and other providers that serve Medicare recipients. Shortly thereafter an agency spokesman insisted there was no such plan, and Health and Human Services (HHS) Secretary Tommy Thompson said the issue was being addressed but did not want anyone to think the idea involved "ratings."
• FEC - May 2001 The FEC removed from the public record all the files of an investigation of coordinated campaign activity between the AFL-CIO and the Democratic Party. The investigation had been dropped last year and the records had undergone lengthy staff review to cull out confidential materials. In May, the FEC made 6,024 pages public but four days later, without giving any public notice or explanation, pulled all the records from public access. According to George Lardner of the Washington Post, the Democratic National Committee's (DNC) general counsel, Joseph E. Sandler, said the withdrawal was prompted by vigorous complaints from the DNC and the AFL-CIO and their belief that some of the material is exempt from disclosure under the Freedom of Information Act (FOIA). In a follow-up story on June 21, Lardner wrote that internal FEC papers obtained by the Washington Post through FOIA reveal that the Commission has rejected demands by the DNC and the AFL-CIO to suppress the vast majority of the records of the investigation. The FEC is considering narrower requests to shield some records that the DNC claims would reveal the Party's methods for identifying and getting out the Democratic vote.
• Defense Dept. - June 2001 According to an Associated Press report in early June, the Department of Defense (DoD) Inspector General's Office, the Pentagon agency charged with rooting out fraud, destroyed documents and substituted fakes to win a passing grade in an audit of its own operations, according to an internal inquiry. The document destruction cost the government thousands of dollars last year. The archive of messages for a DoD webmasters list were destroyed -— apparently without a records schedule having been created for the list and its messages, and certainly without the permission of the National Archives. Making the destruction even more egregious is the fact that this archive of messages had been requested under FOIA and the request denied. A Wed, May 23, 2001 posting raises legitimate concerns about liability, resources and exposure of vulnerabilities, but, in the end, the decision was made that "in assessing risks and benefits, it appears that retaining the archive is or will become more of a liability than a benefit, despite its value to individual members. Thus, we have come to the difficult decision that the archive needs to be shutdown, all postings deleted, and all backups of those archives destroyed." And so they were. Although this action has been brought to the attention of both the National Archives and OMB, it is not clear that either will take any actions against the agency. Indeed, to do so would expose the appalling lack of policy on these matters and both agencies' failures to come to terms with electronic messages and records and to provide clear guidance to agencies. -->

And a recent struggle for information between the National Archives and the Bush administration involves the memos and papers of former president Ronald Reagan. A June 7 AP story and a June 10, 2001 Washington Post story by George Lardner revealed that the Bush administration is holding up release of 68,000 pages of presidential records that offer an insider's view of how decisions were made in the Reagan White House. The Presidential Records Act of 1978 was enacted following Watergate and former President Nixon's attempt to hold on to his papers and tape recordings. Nixon said they were personal property. The act made presidential records government property, beginning with President Reagan's. The law also put a 12-year hold on a category of records containing "confidential communications requesting or submitting advice between the president and his advisers, or between such advisers." The confidential memos, letters and briefing papers passed among Ronald Reagan and his top advisers were to have come out in January of this year. However, two days before President Reagan left office, he issued an executive order that gave him as "former president" and "the incumbent president" in twelve-year's time the right to take 30 days to review these papers and to invoke executive privilege for any and all of the documents. In late February, the National Archives gave the White House the 30-day notice. At the end of the 30 days, the White House ordered a 90-day extension — until June 21. On June 6, the White House Counsel ordered another 10-week delay — until August 31. The delays are to permit the President to decide whether to invoke "a constitutionally based privilege or take other appropriate action." Legally, the documents can no longer be withheld by provisions in either the Presidential Records Act or the Freedom of Information Act, but Reagan's executive order is being used to nullify the Presidential Records Act. According to the AP, White House officials say the Reagan documents are the first that would have been released under a presidential records law passed in 1978. They say care must be taken to make sure it's done right. But historians think President Bush is worried about what some of his top aides might have written when they worked for Reagan in the 1980s. As the story notes, Secretary of State Colin Powell was on Reagan's national security team; Budget Director Mitchell Daniels Jr. was Reagan's political director; and Chief White House economist Lawrence Lindsey was on Reagan's Council of Economic Advisers. White House chief of staff Andrew Card, Interior Secretary Gale Norton and Ken Dam, nominated for the No. 2 job at Treasury, all also worked for Reagan. And George Herbert Walker Bush was Reagan's Vice President. Back to Top A .us for All? On June 13, the U.S. Department of Commerce's National Telecommunications and Information Administration (NTIA) issued a notice of inquiry (NOI) regarding the management and administration of the .us namespace. This is one of the nearly 250 ccTLDs (country code top-level domains), which, since 1994, have been recognized as public resources for the countries to which they are assigned. The domain is currently overseen by Network Solutions -- subsidiary of Internet registrar VeriSign and the exclusive operator for the .com, .net, and .org domain name registries until 2007-- under contract with the U.S. Department of Commerce. Beginning in 1997, the Commerce Department undertook a review of options for improving the operation of the .us domain space. Because it was largely created to give municipal government, schools, and libraries a means to be easily identified online in a less-generic manner than .org or .com domains, it entailed a non-commercial identity. This made it less attractive to the growing number of .com registrars, and therefore less of a priority in the grand scheme of Internet governance. The Commerce Department decided to issue a notice of inquiry (NOI) in August 2000 to gather input on what should be done with the namespace. The comments period ran less than two months, offering only a short time window for public comments and input, especially from current registrants and public stakeholders, and with limited outreach or education by NTIA as to the impact of the domain transfer. In an October 2, 2000 set of joint comments endorsed by 19 organizations, the Media Access Project and the Benton Foundation proposed a set of principles regarding the management of .us, stating that it should be considered a resource created with public funds, supportive of commercial and non-commercial development of the space, to be used to promote public discourse and democratic principles, with the revenue it derives to be applied toward addressing the digital divide. As a follow-up to the NOI, an expanded roster of that coalition asked NTIA on February 1, to explore the possibility of .us management by a public interest or nonprofit entity, a proposal rejected by the agency on May 30. The next day, the agency issued notice of intent stating that it would propose a request for quotes (RFQ) regarding administration and maintenance of the .us space. The formal RFQ was issued on June 11, quickly raising concerns among a range of public interest advocates. In addition to not including any language guaranteeing the principles sought by the coalition, the RFQ suggests a bias towards developing the .us as yet another commercial domain opportunity. In addition to notifying bidders that commercial trademark holders have first pick of the best domain names, the RFQ essentially would allow the successful bidder to not only impose fees on existing registrants for what has been a free process, but also requires the bidders to agree to bring .us maintenance into accordance with procedures outlined under the Internet Corporation for Assigned Names and Numbers (ICANN) -- the international body that maintains domain name policies for the Internet. ICANN, for example, requires disputes between name holders to be subject to arbitration. Federal agencies, "may not require any person to consent to arbitration as a condition of entering into a contract or obtaining a benefit," under the Administrative Dispute Resolution Act. A further legal question arises because in moving managerial authority of .us from state government, agencies, and public interest partnerships -- and placing it into the hands of a private vendor subject to rules of an international nonprofit entity -- the federal government might, in fact, encroach upon state sovereignty, especially since the vendor has no obligation, or incentive, to be accountable to its registrants -- or the public directly. There is at least some interest in Congress in slowing down, if not halting, the RFQ process. According to a a1af84585816a8785256a700011c255?OpenDocument&Highlight=2,coble">June 19 Bureau of National Affairs article (link requires BNA subscriber password), Reps. Howard Coble (R-NC) and Howard Berman (D-CA), the chair and ranking member of the House Judiciary Committee's Subcommittee on Courts, The Internet, and Intellectual Property, sent a letter on June 14 to Commerce Secretary Donald Evans, asking NTIA to reconsider its RFQ process until concerns around public vulnerability around to cybercrime and fraud, protections for existing copyright and trademark holders, and the impact of revenue from the RFQ on the 2002 fiscal year budget. All of these concerns, however, obscure the consideration about the loss, or mutation, of what is now a potentially viable public resource into another commercially exploited part of the Internet. Its value rests in the ability of local governments, schools, and libraries, and public-private partnerships to establish a visible, easy-to-find space on the online, in a way that can be consistently identified and associated with public interest and public-oriented. Back to Top The Rich Just Keep On Getting Richer The top 1% of American households paid 23% of all federal taxes in 1997, a growth rate of 48% over the period from 1979 to 1997. However, the reason for that increase is that the wealthiest were getting wealthier and thus having a higher income on which to pay taxes. The actual effective tax rate paid by the top 1% declined-from 37.3% in 1979 to 33.3% in 1997. The richest 1% paid more taxes but only because of higher incomes-their actual tax rate dropped. The after-tax income of the wealthiest grew dramatically-from $263,700 to $677,900, a 157% increase. And The Poor Get Poorer During the same period, the poorest 20% of American household had after-tax income that fell by $100. Read the CBO report and a Center on Budget and Policy Priorities analysis. Nonprofits To Preserve the Estate Tax The coalition Nonprofits to Preserve the Estate Tax met last we