A substitute bill sponsored by Reps. Shays and Meehan passed the House of Representatives at 2:40 a.m. this morning by a vote of 240- 189. 198 Democrats and 41 Republicans voted for the bill. During the debate the sponsors entered colloquy language into the record that clarifies the FEC's role in defining exceptions to issue advocacy restictions for broadcasts that are "wholly unrelated to an election." The FEC will need to act within 90 days of the effective date of the law. (The colloquy language is not yet on the GPO website, but the text is included at the end of this alert).

"It is not Congress, but these overly restrictive Agency rules that are repressive, restrictive... [They] unnecessarily and improperly limit the participation of faith-based organizations." This statement, taken from the August White House report on barriers faith-based and community organizations face in applying for federal grants, appeared to lay the groundwork for regulatory, rather than legislative, changes to achieve the "charitable choice" component of the President's faith-based agenda.

President Bush sent a letter to Senate Majority Leader Tom Daschle (D-SD) and Minority Leader Trent Lott (R-MS) urging them to pass an "Armies of Compassion" bill before the end-of-the-year recess. The letter proposes a scaled-down version of H.R. 7, the controversial version of the faith-based initiative passed by the House earlier this year. (See OMB Watch position on H.R. 7). Bush is urging the Senate to consider three major components:

IRS notice 2001-69 exempts the value of donated leave time from taxation, as long as the donation occurs before January 1, 2003. This allows for tax-exempt donation of the cash value of leave days by employers, if an employee elects to donate leave time. Employees cannot, however, claim the value of the donated leave time as a charitable deduction. The IRS is seeking comments on this notice until February 1, 2002. Email comments to notice.comments@m1.irscounsel.treas.gov.