The Joint Committee on Taxation released a report recently showing a smaller than expected effect of the oft delayed corporate tax bill, HR 4520. According to the report, more than 95% of manufacturing firms will receive only from zero to $50,000 in benefits. Senator Jay Rockefeller (D-West Virginia) used the opportunity to urge colleagues to alter the bill to include a tax credit for health insurance that more firms could claim.

The manufacturing tax credit had been the single element of both bills expected to survive easily through the process. The JCT's report complicates this, as does the inability of both sides to get to conference. The administration has been pushing against the targeted tax proposal in favor of an approach that would benefit all sectors rather than just the manufacturing area.

Each month of delay results in an increase in European Union trade sanctions by an additional percentage point on a variety of U.S. products. The sanctions have already risen to 10 percentage points at the beginning of the month of August.

Congressman Bill Lipinski, an Illinois Democrat has said that he will not seek re-election this year. Rep. Lipinski, a senior member of the Transportation and Infrastructure Committee has removed his name from the November ballot and is now backing his son Dan as his successor.

Today Defense Secretary Donald Rumsfeld urged caution at a meeting of the Senate Armed Services Committee with respect to reorganizing the budgetary authority of the intelligence community (IC). Currently, the Department of Defense (DoD) controls over 80% of the roughly $40 billion spent on intelligence work annually. Several former DoD secretaries testified as well urging that the department retain control of the intelligence budget.

Acting Director of Central Intelligence (DCI), John McLaughlin, along with several other members of Congress, support the creation of a new post which would have complete budgetary powers as well as hiring and firing abilities. Currently the DCI has complete control over the CIA, but can only advise regarding the budgets of the other intelligence agencies (DIA, NSA, NRO, etc.) in the IC.

Senator Pat Roberts (R-Kansas), chairman of the Senate Intelligence Committee, indicated yesterday that his group has already drafting a bill which would formally empower a new National Intelligence Director with full budgetary and personnel power over the entire IC.

So far, the White House has refused to back either the Pentagon or the CIA, saying merely that they have ruled nothing out.

With a faltering economy as the backdrop, Democrats and Republicans remain at odds over the reauthorization of the largest federal jobs-training program. In 1998, both houses agreed to consolidate more than 60 jobs-training programs. Now, the original law is up for reauthorization. Currently, both the House and Senate have passed reauthorization measures (HR 1261 and S 1627), but Senate Democrats have refused to allow the bills to move to conference. The bill will likely remain stalled so long as Democrats insist language from the Senate bill concerning consolidation of funding replaces the House language. Democrats have charged that the language in the House version gives undue power and authority to governors. Also, the House language would allow federal funding to be provided to faith-based organizations that discriminate in hiring based on religion. The Senate version bars such organizations from receiving federal funds.

Democrats' insistence on the Senate version has led House Republicans to charge that they are not committed to providing aid to American workers. Democrats have responded by saying that the Republican measures have little to do with job-training programs.

Some Democrats say that if Congress returns for a lame-duck session after the November elections, they feel they have the votes to defeat the Central American Free Trade Agreement (CAFTA).

Supporters of CAFTA appear to believe that with the recent spate of pro-trade votes involving South Africa, Morocco and Australia, CAFTA will pass.

But opponents of CAFTA say that there aren't enough trade-friendly Democratic votes to offset the Republicans who oppose the bill because of its potential impact on citrus, sugar and textile industries in their states.

Senate GOP leadership appears to have settled on a strategy for moving the 12 remaining spending bills for fiscal 2005 before the November election. If the plan is successful, it may well eliminate the need for a post-election "lame duck" session. Democrats have already indicated their desire to slow down this rush to complete the appropriations measures.

The leadership strategy revolves around using the Homeland Security Appropriation bill as a vehicle for an omnibus spending measure that would include all the other appropriations bills, except Defense, which has already been signed into law. The disciplinary tool most valuable to the leadership will be the little-noticed provision in the Defense Appropriation bill that sets in statute spending caps for fiscal 2005. This provision has the same effect as passage of a Budget Resolution, i.e. it allows the leadership to push aside amendments that would cause the total spending in the bill to exceed the caps. In essence, this means that 50 votes are all that will be required to stop amendments. In the absence of this provision, 60 votes would have been needed.

Carrying out this strategy will require the Senate Appropriations Committee to complete mark-up on nine appropriations bills in September. The plan would then be to attach the committee reports to the House-passed Homeland Security bill and bring that to the floor of the Senate. If the Senate passes that omnibus bill, a conference with the House would be in order.

If leaders stick with this plan, the Appropriations Committee will hit the ground running on September 7 when Congress returns. Peyser Associates will be running right alongside.

With heavy pressure on Congress to take swift action on the September 11 commission’s proposals, many legislators have been called back to Washington during the summer recess for committee hearings and meetings.

Defense Department (DoD) officials have returned to Washington in order to defend the Pentagon’s priorities in order to retain control of intelligence operations. The department currently controls more than 80% of the estimated $40 billion annual intelligence budget. On Tuesday and Wednesday senior military leaders will appear before a panel of the House Armed Services Committee. The DoD’s supporters believe the commission’s proposals should be slowly and thoroughly scrutinized, rather than rapidly implemented. Although the creation of a national intelligence director (NID) has already been endorsed by the Bush administration, debate as to whether the NID would gain full control over the various intelligence agencies budgets or merely "input" into the budget process, has yet to conclude. The 9/11 commission strongly advised that the NID would retain full control, but as this would shift power away from the Pentagon, many key players remain opposed to such a move. In the past the Pentagon has fought successfully to deny the current Director of Central Intelligence (DCI) budgetary and personnel control over the various agencies the DCI heads.

70 to 100 House Democrats are also expected to return to Washington for a mid-recess caucus meeting on Tuesday. Minority Leader Nancy Pelosi of California hopes to use this meeting to pressure Republicans to act on the commission findings and plan a response to the commission’s challenge. The commission’s recommendations on restructuring intelligence oversight will be difficult to implement because they require changing jurisdictional lines, which will incite turf battles in Congress. Currently, several different congressional panels have control over various security/intelligence groups within the executive branch. Streamlining the review process to one or two panels would enable Congress to exercise both authorizing and appropriating abilities.