Page 1: SCHEDULE FOR THE WEEK OF JUNE 8, 1992 TODAY, TUESDAY, JUNE 9 THE SENATE WILL RECONVENE AT 2:15 P.M., AND CONDUCT A ROLL CALL VOTE ON THE KENNEDY MOTION TO TABLE THE GRAHAM (OF FLORIDA) MOTION TO RECOMMIT THE CONFERENCE REPORT ON ALCOHOL, DRUG ABUSE AND MENTAL HEALTH ADMINISTRATION, BACK TO THE CONFERENCE COMMITTEE. IF THE MOTION TO RECOMMIT IS TABLED, THE SENATE WILL PROCEED IMMEDIATELY TO A ROLL CALL VOTE ON THE MOTION TO INVOKE CLOTURE ON THE CONFERENCE REPORT. IF CLOTURE IS INVOKED, IT IS EXPECTED THAT THE SENATE WILL ADOPT THE CONFERENCE REPORT, PRIOR TO THE ADJOURNMENT OF THE SENATE THIS EVENING. THEREFORE, VOTES WILL OCCUR. BY A PREVIOUS CONSENT, FOLLOWING THE DISPOSITION OF THE CONFERENCE REPORT, THE SENATE WILL BEGIN CONSIDERATION OF THE STRIKER REPLACEMENT BILL. IT IS ANTICIPATED THAT A CLOTURE PETITION WILL BE FILED THIS EVENING ON THE STRIKER REPLACEMENT BILL. THEREFORE, A CLOTURE VOTE WILL OCCUR ON THURSDAY, UNDER THE PROVISIONS OF RULE 22. WEDNESDAY, JUNE 10 RESUME CONSIDERATION OF THE STRIKER REPLACEMENT BILL. ROLL CALL VOTES ARE NOT EXPECTED TO OCCUR DURING WEDNESDAY'S SESSION. THURSDAY, JUNE 11 THE SENATE IS EXPECTED TO CONDUCT A ROLL CALL VOTE ON THE MOTION TO INVOKE CLOTURE ON THE STRIKER REPLACEMENT BILL. IF CLOTURE IS NOT INVOKED, IT IS ANTICIPATED THAT THE BILL WILL BE RETURNED TO THE CALENDAR. FOLLOWING THE STRIKER REPLACEMENT BILL, THE SENATE CAN BE EXPECTED TO CONSIDER ANY OF THE FOLLOWING: SUPPLEMENTAL APPROPS. CONF. REPORT (IF RECEIVED FROM THE HOUSE) S. 1985, THE BANKRUPTCY BILL S. 2733, THE GOVERNMENT-SPONSORED ENTERPRISES BILL THEREFORE, VOTES WILL OCCUR DURING THURSDAY'S SESSION OF THE SENATE. FRIDAY, JUNE 12 THE SENATE IS EXPECTED TO BE IN SESSION ON FRIDAY, HOWEVER, VOTES ARE NOT EXPECTED TO OCCUR PAST THE HOUR OF 2:00 P.M. OR SO. Page 2: POLICY LUNCHEON AGENDA Tuesday, June 9, 1992 Schedule: Pending: Conference Report on ADAMHA -- Senator Graham motion to recommit. Senator Kennedy will move to table after lunch. If Kennedy prevails, immediate vote on cloture on Conference Report. We expect final passage later this afternoon. Senator Hatch may want to comment. Upcoming: Striker Replacement. Cloture will be filed. Vote on Thursday. Strongly urge vote against cloture. Senator Hatch may want to comment. Hope for no votes on Friday so we can head south to the tournament. Handwritten on page: Jesse Other Issues: 1. Unemployment, Extenders, Luxury Tax, Enterprize Zones -- Packwood/Dole will have package to introduce tomorrow. Hope you'll join in. Lets show we are out in front. 2. Motor Voter -- Coming before House soon. We assume we can sustain veto. I'll be asking Howard to check with each of you. 3. · Bankruptcy · Government Sponsored Enterprises · Balanced Budget -- All likely to come up prior to July recess. Page 3: CSK-Draft-6/9/92 Sen. Ted Stevens contact: Chuck Konigsberg (4-3699) Balanced Budget Amendment Waiver for Military Conflicts, Recessions and Natural Disasters. Amendment to Simon-Thurmond-Stenholm Language: Section 4. The Congress may waive the provisions of this article for any fiscal year in which a declaration of war is in effect; (crossed out: “The provisions of this article may be waived for any fiscal year in which the United States is engaged in military conflict which causes an imminent and serious military threat to national security”) or for which the Congress foresees a serious, imminent, and major military conflict; finds a serious decline in economic activity; or finds that the United States has sustained a catastrophic natural disaster, and so declares by a joint resolution, adopted by a majority of the whole number of each House of Congress, which becomes law. EXPLANATION: · MILITARY CONFLICTS: Amendment would broaden the majority waiver for military conflicts to include situations where the U.S. is not yet "engaged" in military conflict, but instead "foresees" a conflict. The language "serious, imminent, and major" prevents this waiver from becoming a loophole for circumventing the super- majority impediment to deficit spending. · RECESSIONS: Amendment provides a waiver for periods in which the Congress makes a finding of a "serious decline in economic activity", which is intended to mean a recession or depression. The waiver would permit a majority, rather then a super-majority to enact temporary deficit spending measures to stimulate economic recovery. The word "decline" is intended to mean that the economy would have to be contracting, i.e., below 0% growth for at least two quarters during a fiscal year; this restriction prevents the waiver from becoming a loophole. Specific details would be provided by implementing legislation. · NATURAL DISASTERS: Amendment provides a waiver for "catastrophic natural disasters" so that emergency spending for major disasters, such as severe earthquakes affecting a large area, will not require a super-majority. Specific details of the magnitude of disasters to be covered would be provided by implementing legislation, but legislative history should emphasize that only the most catastrophic and widespread disasters should warrant a waiver, such as a major earthquake in California, or along the New Madrid fault. . In general, these waivers make the Balanced Budget Amendment stronger, by making it more realistic. Failure to include these waivers could prevent essential expenditures in times of military, economic, or natural peril or could force evasion of the Balanced Budget requirement, thereby demeaning the stature of the Constitution. -- See Reverse Side – Page 4: CSK-Draft-6/9/92 Sen. Ted Stevens contact: Chuck Konigsberg (4-3699) Preserving the Balance of Powers Under the Balanced Budget Amendment Amendment to Simon-Thurmond-Stenholm Language: Section 7: (crossed out: “The Congress shall enforce and implement this article by appropriate legislation.”) This article shall be enforced solely as provided by legislation enacted pursuant to this article; but the President shall enforce the limitation on debt provided by section 2. (Section 2 provides: The limit on the debt of the United States held by the public shall not be increased unless three-fifths of the whole number of each House shall provide by law for such an increase by a rollcall vote.) EXPLANATION: · The current Simon-Thurmond-Stenholm draft requires Congress to enact implementing legislation, but does not preclude the President and Judiciary from asserting new constitutionally derived enforcement powers. This threatens to unsettle the time-tested balance of powers between the three branches of government. · The proposed substitute language, by limiting enforcement "solely" to implementing legislation, absolutely precludes any implication of constitutionally-derived judicial enforcement powers or presidential impoundment powers to enforce this Article. However, Congress could grant limited presidential or judicial enforcement powers through implementing legislation, if Congress determines that would be appropriate. · The substitute language also protects the constitutional "teeth" provided by the debt provision in section 2, by requiring Executive Branch enforcement in the limited area of issuing Treasury debt. -- See Reverse Side – Page 5: Legislative Notice Editor, Judy Gorman Prinkey June 8, 1992 No. 74 U.S. Senate Republican Policy Committee Don Nickles, Chairman Kelly D. Johnston, Staff Director S. 55 - Workplace Fairness Act Calendar No. 164 Reported: From the Committee on Labor and Human Resources, with an amendment in the nature of a substitute, on July 18, 1991, on a straight party vote of 10-7. Minority views were filed by all seven Committee Republicans [Hatch, Kassebaum, Jeffords, Coats, Thurmond, Durenberger and Cochran]. S. Rept. 102-111. NOTEWORTHY · Under a unanimous consent agreement entered on June 4, the Senate will proceed to S. 55 following disposition of the conference report accompanying S. 1306, the Alcohol, Drug Abuse, and Mental Health Administration Reorganization. A series of votes on that conference report is scheduled to occur beginning at 2:15 p.m. on Tuesday, June 9. · S. 55 would prohibit employers from permanently replacing workers engaged in economic strikes, so long as the striking workers belong to a collective bargaining unit that is either represented by a labor union or that is seeking union representation. BACKGROUND The National Labor Relations Act (NLRA) and the Railway Labor Act (RLA) recognize two kinds of strikes -economic strikes and unfair labor practice strikes. Economic strikes are undertaken to secure such things as higher wages, better working conditions and improved employee benefits. Unfair labor practice strikes are organized to protest illegal employment practices, such as restraining employees from joining or forming a union. An employer may temporarily replace workers who are engaged in an unfair labor practice strike. But once the strike is over, these temporary replacements must be dismissed to make room for returning strikers. The same rules apply to "lock-outs." The rules are different for economic strikers. Although they retain the right to be reinstated in vacant positions, an employer need not terminate replacement workers to make room for returning economic strikers. Page 6: The Supreme Court has recognized this right of employers to replace economic strikers for more than half a century. Its most important ruling came in 1938, in the case of Mackay Radio and Telegraph Co. v. the National Labor Relations Board. The Mackay court established the doctrine that employers can replace economic strikers, and this understanding of the NLRA and RLA has prevailed ever since. S. 55 would reverse this ruling and others in its line. The bill would permit employers to hire temporary replacements for economic strikers, just as they can in "lock-outs" and in strikes over unfair labor practices. These temporary replacements would themselves be subject to replacement by returning strikers if the strikers belonged to a collective bargaining group that: 1) was represented by a labor union; or 2) was seeking union representation. Under S. 55, non-union economic strikers could be permanently replaced, just as they can be under current law. The House passed its version of the striker replacement bill (H.R. 5) on July 17, 1991, by a vote of 247-182. The vote was 39 short of a two-thirds majority needed to override a threatened Presidential veto. Before passing the bill, the House overwhelmingly rejected an amendment that would prohibit employers from hiring permanent replacements only during economic strikes that lasted eight weeks or less. The amendment, sponsored by Rep. Bill Goodling (R-PA), was defeated by 28-399. BILL SUMMARY · Amends the National Labor Relations Act and the Railway Labor Act to make it an unfair labor practice to replace permanently a striking worker whose collective bargaining unit either is represented by a labor union or is seeking union representation. · Further amends federal labor law to make it an unfair labor practice to withhold or deny any employment right or privilege to a striking unionized worker out of preference for a worker who did not participate in the strike or who returned to work before the strike ended. COSTS CBO estimates that enactment of S. 55 would not increase the federal budget. 2 Page 7: MINORITY VIEWS Senators Hatch, Cochran, Kassebaum, Durenberger, Thurmond, Jeffords and Coats "S. 55 overturns more than 50 years of well-established principles of labor law and may actually harm the working men and women in this country as well as the economy in general. If enacted, this bill would change longstanding labor policy by substantially altering the balance in labor relations that has been part of this country's legal framework for the last 53 years and has given us a collective bargaining system that works. "Proponents argue that S. 55 is needed to restore the balance in collective bargaining and to protect the rights of workers. In fact, this bill would have just the opposite effect. It would significantly tilt the balance in favor of organized labor by limiting the ability of employers to operate during a strike and by favoring striking employees over those who choose to exercise their statutory right not to strike … "Employees have the right to strike under current law - the ultimate collective bargaining weapon that unions can bring to bear on an employer's business. What proponents are now seeking legislatively is not protection of the right to strike, but the ability to force employers to accept union demands at the bargaining table, whether reasonable or unreasonable. Overturning the Mackay doctrine threatens to change the collective bargaining process in a way that would give unions control over the terms and conditions of employment free from the market forces of supply and demand … "If S. 55 became law, it would insulate striking employees from the risks that traditionally have acted as a check on the voluntary decision to strike over economic issues and would free organized workers to command a price for their labor without regard to the market forces of supply and demand … "The result ... would likely mean an increased number of strikes, an increased risk of anti-competitive collective bargaining agreements, or both … "The argument that the 1980s has seen the use of replacements become the 'standard practice' and that the need for this legislation is dictated 'by the tremendous growth in the hiring of permanent replacements in the 1980s' is. . . not confirmed by the data. Most notably, in a recent report by the General Accounting Office - requested by the bill's sponsors - the GAO found that, in 1985, only four percent of striking employees were replaced by Mackay replacements … "The right to strike is not absolute and must, under some circumstances, yield to the rights of others. The right to strike was never intended to make strikers the owners of their jobs." 3 Page 8: ADMINISTRATION POSITION No Statement of Administration Policy was available at press time. But a fact sheet issued on June 5 by the Labor Department stated: "The Administration strongly opposes S. 55, the 'Striker Replacement' legislation. If the Congress passes such a bill, the President's senior advisers would recommend a veto." POSSIBLE AMENDMENTS McCain. Pertaining to the right to work. McConnell. Pertaining to "soft money." Nickles. Pertaining to economic impact of striker replacement legislation. Nickles. Congressional coverage. Staff Contact: Doug Badger, 224-2946 Keep up with Senate Floor proceedings - watch RPC TV, Senate cable channel 26, or call RPC's phone hotline at 224-6888. 4 Page 9: Poll Watch A Review of Recent National Polling Data From the Office of the GOP Conference Secretary Bob Kasten, Secretary Bill Canfield, Staff Director Rick Dearborn, Deputy 202-224-3496 Contents 6/9/92 1) Perot with 13 Point Lead; Bush & Clinton Tied (TIME/CNN Poll: 974 RVs surveyed 6/3-4; margin of error +/- 3.1%; rel. CNN 6/6) 2) California Poll: Voter Commitment (The California Poll: 1,355 RVs surveyed 5/27-30; margin of error +/- 2.8%) 3) Perot, the Parties & Politics (Newsweek/Gallup Poll: 753 RVs surveyed 6/4-5; margin of error +/- 4%) 4) Describe Your Political Views (Newsweek Poll: 6/15 issue) 5) Revolt of the "Center" (Gordon Black Poll: 1,604 RVs in 3rd week of May; margin of error +/- 2.5%; rel. 6/4) 6) California Exit Polls: Perot's Ten Gallon Shadow (VRS Poll: 2,083 Dems & 1,010 GOPers surveyed at the polls; margin of error +/- 3%) Page 10: 1 1) PEROT WITH 13 POINT LEAD; BUSH & CLINTON TIED (Time/CNN Poll: 974 RVs surveyed 6/3-4; margin of error +/- 3.1%; rel. CNN 6/6) 3-Way Race Certain of Your Vote? 2-Way Race Fav/Unfav 4/92 FAV Bush 24% 65% Bush 35% 36%/51% 54% Clinton 24 72 Clinton 38 35/40 37 Perot 37 57 Perot 40/-- 30 Q: “Does Bush deserve re-election?” Yes 33% No 61 Q: “Is Bush strong leader?” NOW 4/92 Yes 45% 60% 2) CALIFORNIA POLL: VOTER COMMITMENT (The California Poll: 1,355 RVs surveyed 5/27-30; margin of error +/- 2.8%; rel. S.F. Chron. 6/2) 3-Way 5/27-30 5/6-9 Perot 38% 37% Bush 25 31 Clinton 25 25 Undec. 12 7 Supporters of Q: “How committed?” Perot Bush Clinton Very Sure about choice.. 57% 67% 63% Might change their mind before November… 43 33 37 Supporters of Basis of Preference Perot Bush Clinton For candidate 39% 66% 43% Anti other candidates 55 29 52 Page 11: 2 3) PEROT, THE PARTIES & POLITICS (Newsweek/Gallup Poll: 753 RVs surveyed 6/4-5; margin of error +/- 4%; rel. Newsweek 6/15) Q: “Perot voters only most important reason?” Leadership 24% Issues 12 Candidates 52 Q: “If Perot can’t win & your vote for him helps Bush, are you…” Less likely for Pero 38% Not less likely 52 Q: “If Perot can’t win & your vote for him helps Clinton, are you…” Less likely for Perot 39% Not less likely 51 Q: Perot’s hiring of Rollins/Jordan shows Perot an ordinary pol.? Yes 35% No 42% Make you more/less likely to vote for him? ALL Perot More likely 15% 22% Less likely 6 1 Not much diff. 74 73 “How important is it that the President be from one of 2 parties?” ALL Bush Clinton Perot Very important 20% 25% 36% 6% Somewhat important 26 33 23 20 Not too important 23 18 19 31 Not imp. at all 29 21 21 42 “Does Perot need to say a lot more or do you understand him?” ALL Bush Clinton Perot Say more 70% 75% 70% 67% Understand him 25 18 27 31 “How do these stories so far make you feel about Perot?” Better Worse No Diff. Need info Attempts to leave Navy early… 3% 13% 47% 31% Connections to Nixon Administration… 6 10 36 42 What says/doesn’t say re: the deficit… 12 6 14 63 Position on gays… 5 9 17 65 Standards & dress code for his workers… 17 11 29 30 Efforts to find Vietnam servicemen… 47 2 18 27 His position on abortion… 19 6 20 44 Page 12: 3 4) DESCRIBE YOUR POLITICAL VIEWS (Newsweek Poll: rel. 6/15) “How would you describe your political views?” ALL Voters Bush Voters Clinton Voters Perot Voters Very conservative 8% 13% 4% 4% Conservative 26 36 14 25 Moderate 44 38 46 50 Liberal 14 8 23 16 Very liberal 4 2 6 3 “Likelihood of voting” Total Bush Clinton Perot Most likely (self perception) 86% 86% 81% 90% Less likely (self perception) 12 12 16 9 5) REVOLT OF THE CENTER (Gordon S. Black Poll: 1,604 RVs in 3rd week of May; margin of error +/- 2.5%; rel. 6/4 3-Way Match-up Northeast South Great Lakes Central (incl. TX) West Bush 36% 35% 40% 40% 41% 26% Perot 34 35 24 32 37 42 Clinton 24 23 32 22 19 24 Undec. 6 7 4 6 6 8 Discontent and Anger Felt Towards… ALL Perot Voters New Party Voters President/Administration 64% 82% 83% U.S. Senate 72 78 82 House of Representatives 69 75 80 Democratic Party 59 68 70 Republican Party 60 76 75 Governor/Administration 50 50 53 Party ID DEM GOP IND Perot Voters 28% 29% 39% New Party voters 30 31 35 Ideology CONS MID-ROAD LIB Bush 50% 34% 22% Clinton 14 23 41 Perot 32 36 32 New Party 28 51 19 CORE NEW PARTY (50%) WANT NEW PARTY (57%) ANGRY AT BOTH PARTIES (57%) Perot 58% 44% 48% Bush 20 28 25 Clinton 19 23 22 Page 13: 4 6) CALIFORNIA EXIT POLL: PEROT’S TEN GALLON SHADOW (VRS Poll: 2,083 Dems and 1,010 GOPers surveyed at the CA polls through 11pm PDT; margin of error +/- 2.5-3%; rel. W. Post 6/3) DEMOCRATS REPUBLICANS 3-Way Match-up % VTRS CLI BRO TSO % VTRS BUSH BUCH Bush 7% 18% 62% 14% 49% 87% 12% Clinton 48 63 31 5 3 -- -- Perot 36 25 47 9 42 44 30 Won’t vote 6 4 84 8 2 -- -- Describe your vote DEMOCRATS REPUBLICANS %VTRS CLI BRO TSO % VTRS BUSH BUCH Strongly favor my candidate… 31 40 45 4 26 71 13 Like cand. w/reservations 40 54 39 4 43 80 14 Dislike others 27 26 48 14 29 44 42 If Perot had been on ballot Brown 27 3 96 0 Clinton 31 94 4 1 Perot 33 31 40 9 Tsongas 4 -- -- -- Reason for Urban Unrest DEMOCRATS REPUBLICANS % VTRS CLI BRO TSO % VTRS BUSH BUCH Breakdown of family values… 35 36 43 12 70 68 22 Govt. neglect of cities… 59 46 43 4 24 59 24 DEMOCRATS REPUBLICANS % VTRS CLI BRO TSO % VTRS BUSH BUCH Better Govt. w/new people: Agree… 54 41 43 5 49 50 32 Disagree… 42 44 42 9 47 83 12 DEMOCRATS REPUBLICANS % VTRS CLI BRO TSO % VTRS BUSH BUCH Should DEM/GOP Platform: Support legal abortion… 66 43 43 7 48 63 21 Oppose legal abortion 12 41 44 8 25 71 23 No official stand 20 41 42 4 25 65 25 Three-way match-up among all voters (USA Today 6/3) Perot 39% Clinton 29% Bush 25% Expect Bush to win in November (USA Today 6/3) Democrats 29% Republicans 62% Page 14: Handwritten at top of page: UI 4.0 Bill, Enterprize Zone, Weed & (illegible) 500 (illegible) year MAJOR DIFFERENCES AMONG ENTERPRISE ZONE PROPOSALS ITEM PRESIDENT’S BUDGET PRESIDENT’S NEW PROPOSAL (An Entitlement Program) VETOED BILL (A Demonstration Program) Number of Zones Up to 50 zones. All areas meeting certain objective criteria are eligible. Up to 35 zones. Area Size of Zones No maximum size. Presumably, would be at least as large as one census tract. No maximum size. Presumably, would be at least as large as one census tract. Urban zone size cannot exceed 12 square miles; rural zone size cannot exceed 10,000 square miles (all in one State). Designation Period Designated over a 4-year period. Designation generally effective for 25 years. No designation period specified. Presumably, all areas meeting the criteria could become zones immediately and zone status would last 25 years. Designated over a 3-year period. Designation generally effective for 15 years. Urban/Rural At least 1/3 of zones must be rural. No rural set-aside. Contemplates rural and Indian zones. 10 urban zones and 25 rural zones. One of the rural zones must be on an Indian reservation. (Because each urban zone receives a greater amount of incentives each year than each rural zone, the total benefit for all the urban zones is equivalent to the total benefit for all the rural zones.) Selection Process State and local governments nominate areas. Secretary of HUD designates zones from the pool of eligible nominated areas based on subjective factors such as the strength of commitment to the area by State and local governments and by private entities. Entitlement program. No details on how it would be certified that an area meets the objective eligibility criteria. State and local governments nominate areas. Secretary of HUD designates urban zones; Secretary of Agriculture (with Secretary of Commerce) designates rural zones. Zones are designated from the pool of eligible nominated areas based on subjective factors and on average ranking with respect to poverty and unemployment (or out-migration). Page 15: ITEM PRESIDENT’S BUDGET PRESIDENT’S NEW PROPOSAL (An Entitlement Program) VETOED BILL (A Demonstration Program) Selection Criteria (Urban) 1. Continuous boundary 2. Populations of at least 4,000 (or at least 1,000 if in an SMSA with less than 50,000 people). 3. Pervasive poverty and distress. 4. Located in a jurisdiction eligible for assistance under sec. 119 of 1974 Housing Act. 5. Unemployment of at least 1.5 times the national rate. 6. Poverty rate of at least 20% for each census tract. 7. Either (a) 70% of households have incomes below 80% of local median, or (b) population declined at least 20% between 1970 and 1980. 8. State and local governments agree to follow specified course of action to reduce employment burdens in zone. Not specified. 1. No more than 12 square miles. 2. Area consists of not more than 3 noncontiguous parcels. 3. Located within one State. 4. Population of at least 4,000. 5. Pervasive poverty and distress. 6. Unemployment of at least 1.5 times national rate. 7. Poverty rates of at least 20% in each of 90% of area’s census tracts. 8. State and local governments agree to follow specified course of action. Selection Criteria (Rural) 1. Continuous boundary. 2. Population of at least 1,000. 3. Pervasive poverty and distress. 4. Located within jurisdiction eligible for assistance under sec. 119 of 1974 Housing Act. 5. One of the following: (a) Unemployment of at least 1.5 times national rate, (b) poverty rate of at least 20% for each census tract, (c) 70% of households have incomes below 80% of local median, or (d) population declined at least 20% between 1970 and 1980. 6. State and local governments agree to follow specified course of action. Not specified. Unclear whether different criteria would be used for rural than for urban. 1. No more than 10,000 square miles. 2. Located in not more than 4 contiguous counties. 3. Area consists of not more than 3 noncontiguous parcels. 4. Within one State (except for Indian zones). 5. Population of at least 1,000. 6. General economic distress. 7. Two of the following: (a) Unemployment of at least 1.5 times national rate, (b) poverty rates of at least 20% in each of 90% of area’s census tracts, (c) a specified decline in employment as measured by wages, or (d) population declined at least 10% between 1970 and 1980. 8. State and local government course of action. Page 16: ITEM PRESIDENT’S BUDGET PRESIDENT’S NEW PROPOSAL (An Entitlement Program) VETOED BILL (A Demonstration Program) Annual Limit on Incentives No dollar limit on benefits per zone. No dollar limit on benefits per zone. Each zone is subject to an annual overall limit on the amount of tax incentives that can be provided to it. Urban zones generally have an annual cap of $13 million; rural zones generally have an annual cap of $5 million. The annual limit, in certain circumstances, can be increased by up to an additional 10 percent. Allocating Official None. None. Local official allocates incentives and ensures that annual limit is not exceeded. Investor Level Incentives $50,000 annual up-front expensing by an individual for contributions to the capital of certain zone corporations (subject to $250,000 lifetime limit). 1. Capital gains relief – zero capital gains for investments in certain zone businesses. Not limited to individuals. 2. Ordinary loss deduction for investments in certain zone businesses. 3. $50,000 up-front expensing available in addition to items 1 and 2 for individuals who live in or work in zone; other individuals can elect expensing in lieu of items 1 and 2. 4. Passive loss limits do not apply to first $10,000 per year of losses from investment in zone businesses. $25,000 annual up-front expensing by an individual for contributions to the capital of certain zone corporations (subject to $250,000 lifetime limit). Business Level Incentives Zero capital gains for tangible personal and real zone property used in a zone business for at least 2 years. (Applies for both regular and AMT purposes). 1. Zero capital gain applies to tangible and intangible assets (for both regular and AMT purposes). 2. Ordinary loss deductions for investments in zone assets. 3. Increased small business up-front expensing to $20,000. 4. Tax-exempt financing for certain zone businesses to buy tangible property (subject to bond volume cap). Additional first-year depreciation allowance equal to 25% of adjusted basis of certain zone property (i.e., an investment tax allowance). Employment Incentives Low-income zone employees receive 5% refundable tax credit with respect to wages. Expand EITC to certain low-income zone employees without children. 7.5 percent nonrefundable tax credit for wages paid by small zone employers. Other Incentives None. Exclude capital gain on sale of zone home. (Possible $200,000 gain threshold) None. Page 17: Draft II June 9, 1992 POSSIBLE PACKAGE REVENUE LOSERS 1. Unemployment. · Dole-Packwood bill which extend benefits through March 6th of next year. June 14 - January 2 -- 20 or 13 weeks January 3 - March 6 -- 10 or 7 weeks Estimate: $2.5 billion. 2. Extenders. 6 month extension: Employer/educational assistance Group Legal Mortgage Revenue Bonds Small Issue Manufacturing Bonds Orphan Drug Credit 12 month extension: R&E Credit Low Income Housing Targeted Jobs Tax Credit Total Estimate: $3.0 billion 3. Health. Permanent/Expansion: Self-employed Health Deduction phased into 100% over 5 years. Estimate: $4.0 billion 4. Luxury Tax. · Repeal everything, effective January 1, 1992, except autos which is effective the date of introduction. Estimate: $1.8 billion 5. Enterprise Zones. Revised Administration proposal. Estimate of Administration plan: $2.3 billion. ESTIMATE TOTAL OF PACKAGE: $13.6 billion Page 18: REVENUE RAISERS · The entire package would be financed by a number of tax provisions within the jurisdiction of the Committee: · Mark to market for securities dealers -- $3.5 billion · Prohibit double dipping by thrifts -- $695 million · Individual estimated tax safe-harbor -- $5.4 billion · Taxable years of partnerships -- $182 million · Revise rules for charitable contributions -- $636 million · HI tax for state and locals -- $8.1 billion Page 19: COMMITTEE ON COMMITTEE SUGGESTIONS DURING THE COURSE OF DISCUSSION THE COMMITTEE MADE THE FOLLOWING SUGGESTIONS FOR CONFERENCE RULES CHANGES: 1) SENIORITY FOR SENATORS SHALL DATE FROM THE CONSTITUTIONAL TIME OF THE CONVENING OF CONGRESS) JANUARY 3RD, AND APPOINTMENT TO FILL AN UNEXPIRED TERM PRIOR TO THAT TIME SHALL NOT AFFECT THE SENIORITY OF A MEMBER UNDER ANY CIRCUMSTANCES IF VACANCY OCCURS BETWEEN THE NOVEMBER ELECTION DATE AND THE CONVENING OF CONGRESS ON JANUARY 3RD. IN THOSE CASES WHEN A SENATOR IS APPOINTED TO FILL A VACANCY OR ELECTED TO THE SENATE IN A SPECIAL ELECTION TO FILL AN UNEXPIRED TERM PRIOR TO THE NOVEMBER ELECTION, THAT SENATOR SHALL HAVE SENIORITY OVER ANY NEW SENATOR ELECTED IN THE NOVEMBER ELECTIONS. 2 ) THE COMMITTEE SUGGESTED A CLARIFICATION FOR SENIORITY OF A CLASS OF FRESHMEN SENATORS: IF ALL PRIOR SERVICE CONSIDERATIONS ARE EQUAL SENATORS CONFERENCE SENIORITY AND POSITION FOR SELECTION OF COMMITTEES SHOULD BE DETERMINED BY DRAWING. THE RESULTING ORDER OF THAT DRAWING SHOULD THEN BE CONSIDERED THROUGHOUT THE COMMITTEE SELECTION PROCESS. THE COMMITTEE ALSO HAD SEVERAL SUGGESTIONS WITH RESPECT TO STREAMLINING THE COMMITTEE SELECTION PROCESS: 1) TIME REQUIREMENTS - IF A SENATOR IS PRESENTED WITH SELECTION OPTIONS PRIOR TO NOON, THAT SENATOR MUST NOTIFY THE COMMITTEE OF THEIR DECISION BY THE CLOSE OF BUSINESS THAT SAME DAY (5 P.M. EST). IF A SENATOR IS PRESENTED WITH SELECTION OPTIONS AFTER NOON, THEN A DECISION MUST BE MADE BY NOON ON THE NEXT BUSINESS DAY. 2) SENATORS SHOULD DESIGNATE A STAFFER AS THE CONTACT FOR COMMITTEE ON COMMITTEE MATTERS. A BRIEF DISCUSSION OF WHETHER OR NOT THAT STAFFER COULD MAKE A FINAL DECISION FOR A SENATOR IN THE EVENT A SENATOR COULDN'T BE REACHED WAS NOT RESOLVED BY THE COMMITTEE. SENATOR MACK EXPRESSED STRONG RESERVATIONS ABOUT CHARGING A STAFFER WITH SUCH A RESPONSIBILITY. 3) SENATORS SHOULD DESIGNATE WHICH COMMITTEE THEY WISH TO RELINQUISH AS THEIR THIRD "A" COMMITTEE. THIS DESIGNATION IF NOT STATED IN A LETTER THIS WOULD BE UNDER THE SAME TIME CONSTRAINTS AS SUGGESTED ABOVE.