Capital Formation Newsletter
January-February, 2007, Vol. 32, N0. 1

Finance Committee Chairman Baucus Outlines Tax, Trade, Energy Agenda

International Council for Capital Formation Hosts Washington, UN Forums

ACCF President Mark Bloomfield Interviewed by BBC

ACCF Policy Evening Focuses on New Congress

ACCF Policy Evening Welcomes Congressional “Blue Dogs”

(PDF Version)

Finance Committee Chairman Baucus Outlines Tax, Trade, Energy Agenda

“When you start a race, you need to know how far away the goal is,” Senator Max Baucus (D-MT), Chairman of the Finance Committee, told ACCF supporters on February 6 at the first ACCF Capital Formation Forum of 2007. At the forum, Chairman Baucus discussed the tough road ahead to reach the tax, trade and energy policy objectives he hopes to achieve. Turning first to tax issues, the Finance Committee Chairman discussed the outlook for Congressional action on the alternative minimum tax (AMT) for individuals. On January 4, 2007 Senator Baucus and fellow Finance Committee members Charles Grassley (R-IA), Charles Schumer (D-NY), Jon Kyl (R-AZ) and Mike Crapo (R-ID) introduced legislation that would repeal the AMT. The AMT is imposing an increasing burden on middle-income families, Senator Baucus said. “If Congress does not act, in 2007 the AMT will hit middle-income families making $60,000 a year with three kids.” The AMT was originally enacted to ensure that a handful of millionaires did not eliminate all taxes through excessive deductions.

“Repealing the AMT does not come without cost,” Senator Baucus warned. “I am committed to finding reasonable offsets. I don’t want a tax system unfairly placing a higher burden on millions of middle-income families with children, but it doesn’t serve those families well if our budget deficit is significantly worse as a result.”

The minimum wage increase bill is another important issue pending in Congress. The Senate version of the legislation, adopted by a 94-3 vote on February 1, raised the minimum wage, but also included $8 billion in small business tax breaks and accompanying revenue offsets. The House-passed minimum wage hike bill, passed in early January, did not include tax provisions. “The House and the Senate don’t agree on what kind of a race we’re in,” Chairman Baucus, a dedicated marathon runner, commented, adding that he believes that small business tax incentives approved in the Senate version of the legislation are necessary to move the minimum wage bill through the Senate.

Energy and climate policy issues are also on Senator Baucus’s agenda this year. Energy security and the cost of energy are of great concern to many, he noted. He thinks the case has been made that the U.S. must “do something” on climate policy and favors a “cap and trade” approach. He cautioned that the U.S. must learn from the European experience with carbon caps and “do it right” since cap and trade is easy in theory but harder in practice. The Finance Committee is planning to hold hearings in late February to explore various approaches to energy and climate policy.

Looking to the many challenges ahead, Chairman Baucus concluded, “In a race, you need a running buddy to help you reach the finish line. I hope I can count on your help to reach the goals we’ve set.”

International Council for Capital Formation Hosts Washington, UN Forums

The International Council for Capital Formation held a panel discussion in Washington, DC on February 13 with experts from the Bush Administration, Australia and Japan to discuss the technology-based solutions of the Asia-Pacific Partnership (AP6) for reducing greenhouse gas emissions as an alternative to Kyoto-style caps being debated on Capitol Hill.

“AP6 is a bipartisan, consensus-based approach to addressing air pollution and reducing greenhouse gases,” ICCF Managing Director Margo Thorning explained to participants. “Unlike the Kyoto Protocol, whose unrealistic carbon emissions caps are stifling growth and investment in countries that have signed the agreement, AP6 allows for continued economic growth in both developed and developing economies like China and India while reducing air pollution and greenhouse gases like CO2.”

The ICCF released a new report at the forum that concludes that the environmental benefits of AP6 can substantially exceed the impact of the Kyoto Protocol in reducing greenhouse gas emissions. By 2012, if India and China adopt current U.S. technology for new investment, global greenhouse gas emissions would be reduced by 2.6 billion tons compared to only 0.6 billion tons if the 15 major EU countries met their Kyoto Protocol emission reduction targets. The study, The Asia-Pacific Partnership: Its Role in Promoting a Positive Climate for Investment, Economic Growth and Greenhouse Gas Reductions, by CRA International, is available at www.iccfglobal.org. Speakers at the briefing were the Honorable James L. Connaughton, chairman, Council on Environmental Quality; Ambassador Alan Oxley, chairman, World Growth; and Professor Mitsutsune Yamaguchi, professor of economics, Teikyo University. Dr. Thorning moderated the session.

In concert with the Australian think tank World Growth, the ICCF co-hosted a discussion at the United Nations on February 22 on Climate Change: Advancing Clean Development and Energy through Partnerships. The event convened leading experts from government and the private sector to discuss the challenges of climate change. Ambassador Joseph Verner Reed, UN Under-Secretary General, welcomed participants. Speakers at the session were His Excellency Mr. Liu Zhenmin, UN Deputy Permanent Representative of the People’s Republic of China; Dr. Harlan L. Watson, senior climate negotiator and special representative, U.S. Department of State; and Dr. Thorning. Ambassador Oxley moderated the discussion. Speakers focused on how the Asia-Pacific Partnership could accelerate clean development and energy and how partnerships between developed and developing countries could foster investment for new, more efficient technologies.

ACCF President Mark Bloomfield Interviewed by BBC

ACCF President and CEO Mark Bloomfield gave a U.S. perspective on the economic challenges facing the Bush Administration and the 110th Congress for the popular BBC news program, “World Have Your Say,” on January 9, 2007. The interview was part of a new BBC series on world economic challenges airing during January. Mr. Bloomfield noted that he thought President Bush and the new Congress could make substantial progress on many of the important economic issues facing the U.S. in the months ahead, but added that “real progress requires a willingness on the part of both the Administration and the leadership of the new Congress to work together to find a path forward.”

ACCF Policy Evening Focuses on New Congress

On February 13, the ACCF held its 147th Economic Policy Evening. The first policy evening of the new year focused on Senators, New Democrats & Blue Dogs: Where Goeth Economic Policy? Pictured left to right: 1) ACCF president and CEO Mark Bloomfield and Senator Mary Landrieu (D-LA); 2) Senator Robert Bennett (R-UT) and Edward Luce, Washington Bureau Chief, The Financial Times; 3) Representative Allyson Y. Schwartz (D-PA); Lori Montgomery, The Washington Post, Senator Landrieu, and Senator Bennett; 4) Hon. Kyle E. McSlarrow, president and CEO, National Cable & Telecommunications Association, and Representative Melissa L. Bean (D-IL); 5) Wes Coulam, vice president, Government Relations, Morgan Stanley, and Representative Dan Boren (D-OK); and 6) Mr. McSlarrow, Dr. Margo Thorning, ACCF senior vice president and chief economist, and M. Thomas Davis, staff vice president, Strategic Planning, General Dynamics.

ACCF Policy Evening Welcomes Congressional “Blue Dogs”

 The ACCF held its 148th Economic Policy Evening on February 27 in Washington, DC. The focus of the session was on The Congressional “Blue Dogs:” How Will They Affect Economic Policy? Pictured at the session, left to right, are: 1) ACCF president & CEO Mark Bloomfield and former Congressman Charles W. Stenholm, founder of the Blue Dogs; 2) Robert D. Novak, nationally syndicated political columnist, and Jim Angle, chief Washington correspondent, Fox News; 3) Rae Cronmiller (top right), environmental counsel, National Rural Electric Cooperative Association, Congressman Dennis Moore (D-KS), co-chair for policy for the Blue Dogs, and former Congressman Jim Greenwood, president and CEO, Biotechnology Industry Association; 4) Gerald F. Seib, Washington bureau chief, Wall Street Journal, Mr. Stenholm, and James C. May, president & CEO, Air Transport Association; 5) Congressman Tim Mahoney (D-FL), Mr. Novak, and Frederick L. Webber, former president and CEO, Alliance of Automobile Manufacturers; and 6) Mr. Cronmiller and Dr. Margo Thorning, ACCF senior vice president and chief economist.