The Senate continues to struggle with its original goal of passing by Christmas legislation that would expand health-care coverage to every American. Majority Leader Harry Reid (D-NV) thought he had reached the crucial threshold of 60 votes (which is required to invoke ?cloture,? which would end debate on the bill) and vote on final passage with a compromise that would have allowed individuals age 55-65 to buy into Medicare. Several senators, including Senators Joe Lieberman (I-CT) and Olympia Snowe (R-ME) balked at the proposal and the costs it would add to an already stressed program.
Negotiations will intensify over the weekend as Reid tries to please liberal and moderate members of his caucus with a modified public option, new authority for the Office of Personnel Management to negotiate coverage rates with private plans, and the latest cost estimate from the Congressional Budget Office, which is expected this weekend.
Another major hurdle Reid must clear is the issue of federal funding for abortions. As of press time, Senator Ben Nelson (D-NE) said he would not vote for the compromise language that had been presented to him on the sensitive topic. It is reported that Reid will file cloture motions to bring the debate to an end on Monday but he will only do so if he feels the vote is within his reach. If he does receive the mandatory 60 votes it could set up a final vote as late as Christmas Eve.
Meanwhile, House Speaker Nancy Pelosi (D-CA) has not ruled out accepting the potential Senate version of reform but will have to work hard to pull together opposing sides on the same issues that plague the Senate.
NACS Staff Contact: Julie Fields, (703) 518-4251
Estate Tax Will Lapse January 1, 2010
Earlier this week the Senate failed to pass a short-term extension of the current estate tax. On January 1, 2010, the estate tax penalty will disappear only to come back with a vengeance in 2011. Current law has reduced the estate tax from the 2001 Clinton era high of 55% with an exclusion of up to $1 million to a 2009 rate of 45%, with a $3.5 million exclusion. The recent proposal would have extended the 2009 rates to give Congress more time to consider a permanent program to tax the dead.
According to The Wall Street Journal: �?The political calculus for both sides will be dicey. Republicans believe they will have levrage next year for achieving their 35% rate, because Democrats must argue for a 45% rate at a time when the rate is zero.
?But at some point, Democrats believe they will gain the upper hand in bargaining. That is because Republicans, by resisting a deal on 45%, would risk allowing the rate to snap back to 55% in 2011 and beyond.
?Even if Congress moves quickly to pass an extension of the tax next year, there could be lingering confusion because of likely legal challenges, particularly if Congress attempts to make it retroactive to the beginning of the year.?
In the absence of political will to permanently repeal the estate tax, NACS is supporting legislation that would establish a permanent tax rate of 35% with a $5 million exemption that would be indexed for inflation. This is the proposal that Senators Blanche Lincoln (D-AR) and Jon Kyl (R-AZ) are pursuing in the Senate.
NACS Staff Contact: John Eichberger, (703) 518-4247
Climate Changing?
Not so fast. The international conference on global climate change being held in Copenhagen this week is far from reaching an agreement. According to reports, most of the challenge comes from bilateral discussions with China. A congressional delegation led by House Speaker Pelosi arrived this week and were told by the top U.S. negotiator that there remains a lot of work to be done. Of primary concern to many in Congress is international verification and equity ? if the U.S. is going to reduce emissions, will other countries like China, India and the developing world be held accountable to similar standards? The issue is of such importance that Congress has considered some sort of tariff on imports from countries that do not conform to international emissions targets.
Meanwhile, Senator John Kerry (D-MA) continues to work with other senators in an effort to re-craft the Senate climate proposal to attract enough support to pass the Senate. A very vague framework issued last week by the primary working group provided no indication how the bill will actually be implemented or affect the economy. It is generally expected that a bill will be introduced in February with a goal of getting comprehensive legislation to the President by Earth Day, April 22, 2010.
NACS will be meeting with influential Senate staff in early 2010 to advocate a delicate approach to emissions controls with a specific focus on economic implications on consumers and the businesses who serve them. In evaluating two key analyses of the House-passed legislation (one commissioned by the National Association of Manufacturers and the other completed by the Heritage Foundation), projections on the price of fuel and electricity are astounding. They range from increasing retail gasoline prices above the projected baseline for 2030-2035 between 20% to 58% and electricity prices for industrial users from 48% to 90%. This would mean that fuel prices in July 2008 would have ranged from $4.90 to $6.46 per gallon in 2030-2035 rather than the economically debilitating level of $4.08 that actually occurred. Electricity expenditures for convenience stores in 2008 would increase from an average of $40,547 per store to between $60,374 to $77,039. (These numbers are calculated to reflect the actual economic effect of the policies in constant 2008 dollars and do not account for inflation over the time period represented.) This type of increased energy cost would have serious consequences.
NACS Staff Contact: John Eichberger, (703) 518-4247
Senator Asks Important Questions of Visa, MasterCard CEOs
On Wednesday, Senator Richard Durbin (D-IL) sent letters directly to the CEO?s of Visa and MasterCard requesting answers to four vital questions retailers have been asking for years.
Durbin wrote: ?The nonpartisan GAO has released several reports on credit and debit card interchange fees, including a report issued on November 19, 2009. The November 2009 report indicates that interchange fee costs outweigh the benefits of card acceptance for many American merchants, and that rising interchange costs can lead to higher retail prices, which adversely impact consumer who pay with cash, checks, debit cards, or non-rewards credit cards.
?GAO?s findings make clear the need for changes in the system for interchange fees and restrictions that has been established for credit and debit card transactions. I have been concerned for some time that this interchange system includes anti-competitive elements that are unfair to many American businesses, taxpayers, and consumers.?
His questions focused on:
- Justification of rising rates when they remain stable in other countries
- Charging government agencies rates that are not higher than those they charge other businesses
- Choices for merchants to accept lower fee cards
- Explanations for the current fee structure in the United States versus other countries
Durbin requested that his questions be answered by February 1, 2010.
NACS Staff Contact: Lyle Beckwith, (703) 518-4220
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