Capital Formation Newsletter
November-December 2005, Vol. 30, N0. 6

Rep. Jim McCrery Speaks at ACCF Association Council Fall Meeting

2005 ACCF Association Council Members

ACCF in the News...

Dr. Bernanke at ACCF Economic Policy Evening

ACCF Hosts 139th Economic Policy Evening

(PDF Version)

Rep. Jim McCrery Speaks at ACCF Association Council Fall Meeting

We’re headed for a ‘tax Armageddon’ in 2010 with a number of expiring tax provisions competing for limited dollars," Representative Jim McCrery (R-LA) warned members of the ACCF Association Council at their November 15 meeting. The Louisiana Congressman is a senior member of the House Ways and Means Committee and Chairman of its Subcommittee on Social Security.

“I don't expect the out-year Federal budget situation to be any better in 2010 than it is today unless changes in Social Security and Medicare can be made,” he said.

Rep. Jim McCrery and ACCF President and CEO Mark Bloomfield discuss the outlook for tax reform at the ACCF Association Council meeting.

Turning to the prospects for long-term tax reform, Congressman McCrery said that President Bush is to be commended for raising the visibility of tax reform as a goal for policy-makers and the nation by establishing an Advisory Panel on Tax Reform charged with submitting revenue neutral policy options for reforming the Federal tax code. He added that given the current political situation, he doesn't expect any tax reform plan to pass in the next year or two.

“I like the trend,” he said. “There are some good things in the plan, but it would be very dicey politically to tackle some of the reform proposals the panel recommended.”

On the more immediate tax and budget situation, Congressman McCrery said he expected the House to resolve its five-year deficit-reduction bill before it recessed for the Thanksgiving holiday. On the tax side, he said he thought the final measure would include most of the expiring tax provisions through the end of the 2010 budget window, tax breaks for hurricane damaged areas, and some “cats and dogs.” He also touched on the still immense problems facing his home state of Louisiana and its neighbor Mississippi in the wake of Hurricane Katrina.

During the morning session, ACCF Association Council members discussed the outlook for various capital formation policy issues. The agenda included tax policy measures such as the extension of the dividend/capital gains tax rates, tax reform, estate tax reform, and retirement policy; the outlook for energy/climate policy; the impact of the Sarbanes-Oxley bill; telecom deregulation; and other saving and investment policy issues of concern to ACCF members.

The nearly 40-member ACCF Association Council meets several times each year to review timely capital formation legislation and proposals and to help shape the ACCF's economic research and education agenda. Co-Chairmen of the Association Council are Red Cavaney, President & CEO, American Petroleum Institute; Marc Lackritz, President, Securities Industry Association; and J. Stephen Larkin, President, The Aluminum Association. Messrs. Cavaney, Lackritz and Larkin are ACCF Board members.

ACCF Association Council members and guests hear Rep. Jim McCrery discuss the outlook for tax policy this year. Seated left to right are J. Stephen Larkin, President, The Aluminum Association, and an ACCF Board member; Joseph M. McGuire, President, Association of Home Appliance Manufacturers; Jonathan T. Mack, President, Associated Equipment Distributors; Christian A. Klein, Managing Member, Obadal, Filler, MacLeod & Klein, PLC; and Ronald D. Clements, Managing Director, Governmental Affairs, and Senior Director, Tax Policy, Edison Electric Institute.

ACCF Senior Vice President and Chief Economist Dr. Margo Thorning and Steven A. Wechsler, President and Chief Executive Officer, National Association of Real Estate Investment Trusts, and a member of the ACCF’s Board of Directors, discuss tax policy issues raised at the Association Council meeting.

2005 ACCF Association Council Members

ACCF in the News...

ACCF Commentary in The Hill

As Congressional tax and budget committees worked on the tax and spending provisions of the 2006 Federal budget, an ACCF commentary, “Don’t Let the Sun Set on U.S. Saving and Investment,” by ACCF President and CEO Mark Bloomfield, appeared in the November 17, 2005 issue of the Capitol Hill newspaper, The Hill. The ACCF commentary calls for extending the 15 percent tax rate on dividends and capital gains through 2010 to provide certainty for savers and investors and help stabilize financial markets. To read the ACCF commentary, click here.

ACCF Letter to the Editor in the Boston Globe

On December 3, 2005, The Boston Globe published “A lesson from Blair on emissions pact,” by Dr. Margo Thorning, ACCF senior vice president and chief economist. Citing British Prime Minister Tony Blair’s recent comment, “The truth is no country is going to cut its growth or consumption substantially in the light of a long-term environmental problem,” Dr. Thorning warned that proponents of the regional greenhouse gas initiative should have considered the harsh economic impact of the initiative before agreeing to limit power plant emissions. A recent study by the economic consulting firm Charles River Associates found that Massachusetts would see a fall in household consumption, a loss in jobs, a reduction in gross state product and a decline in state budget receipts under the regional proposal. To read Dr. Thorning's letter, click here.

Listen to Tony Blair

For those in Albany gung ho about the Regional Greenhouse Gas Initiative (i.e., Gov. George Pataki, the environmental community and public interest groups), a group out of Washington, D.C., says they should listen to British Prime Minster Tony Blair for a reality check.

The American Council for Capital Formation said Blair's recent concern over the Kyoto Protocol, an international treaty aimed at reducing greenhouse gases and carbon dioxide emissions, is also a warning for RGGI (pronounced reggie), which was proposed by Pataki in 2003.

Like Kyoto, RGGI would institute a ‘cap-and-trade’ program for power plants that would limit overall pollution emissions, but allow individual plants to trade emission credits. Blair has said he doesn't think countries will be able to cut their growth or their consumption. The council believes a cap-and-trade program would limit consumer spending and hurt the economy. Instead, the group wants governments to ‘accelerate’ the use of clean energy and related technologies.”

- Albany Times Union, December 4, 2005

ACCF Says Tax Debate Should Focus on Economic Impact

Lawmakers also must consider the impact of tax cuts on the economy. Although the wealthy have the most at stake, supporters of the alternative minimum tax fix and the investment tax breaks are each battling to cast their position as most beneficial for the middle class, says Mark Bloomfield, president of the American Council for Capital Formation, a Washington-based group that is lobbying for the dividend tax break. ‘The easiest thing to do is try to characterize your tax cut as more middle-class than the other, because the middle class is the politically powerful group in America,’ he says.”

- Bloomberg News, December 5, 2005

ACCF Speaks Out at COP 11

"… Margo Thorning, senior vice president for the free-market American Council for Capital Formation and managing director of the International Council for Capital Formation, said many European countries would not be able to meet their emissions targets (required under the Kyoto Protocol) unless they adopted ‘stringent new measures that the governments don’t have the political will to do”

- The Washington Post, December 10, 2005

Dr. Bernanke at ACCF Economic Policy Evening

The Honorable Ben S. Bernanke, nominated by President George W. Bush to succeed Federal Reserve Board Chairman Alan Greenspan when he steps down early in 2006, met with ACCF officers and guests at the July 19 ACCF Economic Policy Evening. Dr. Bernanke is currently serving as Chairman of President Bush's Council of Economic Advisers.

Dr. Ben S. Bernanke, Chairman, President Bush's Council of Economic Advisers, and Mark Bloomfield, ACCF President and CEO, American Council for Capital Formation, at July 19 ACCF Economic Policy Evening.

ACCF Hosts 139th Economic Policy Evening

On November 28, the American Council for Capital Formation held its 139th ACCF Economic Policy Evening. The evening’s discussion concentrated on The Role of Annuities in U.S. Retirement Policy. Guests included key economic policymakers from the Bush Administration, top journalists and private sector leaders. For more information on ACCF Economic Policy Evenings, click here.

Ann L. Combs, Assistant Secretary, Employee Benefits Security Administration, U.S. Department of Labor.	Dr. Katherine Baicker, Member, President Bush’s Council of Economic Advisers.	Mark R. Thresher, President and Chief Operating Officer, Nationwide Financial

David R. Odenath, Jr., President, Prudential Annuities, Dr. Mark J. Warshawsky, Assistant Secretary for Economic Policy, U.S. Department of the Treasury, and David Wessel, Deputy Bureau Chief, Wall Street Journal.

Albert B. Crenshaw, Financial Reporter, Washington Post, and Gov. Frank Keating, President and CEO, American Council of Life Insurance.

Mark Bloomfield, President and CEO, American Council for Capital Formation, and Christopher Swann, U.S. Economic Correspondent, Financial Times.