Our dear friend at The Washington Post, Steven Pearlstein today challenges the President to drive a stake “…through the heart of the anti-tax monster that has cast a menacing shadow over American politics for the past 30 years. The idea that it is bad to raise any tax on any taxpayer at any time under any circumstances is a pernicious fallacy that is so ingrained in political conversation that it prevents the country from addressing its most pressing problems.”

Since September of 2009, President Obama has signed into law $670 billion in permanent tax increases. Our take? Challenge met.

The Senate is currently debating a bill (H.R. 5297) that would extend bonus depreciation and expand a small business loan program. The Manufacturers have no problem with these provisions, and in fact, we’ve been on the record supporting both.*

Unfortunately, this isn’t enough for some folks. To be honest, it gets a little tiring to hear rhetoric claiming that we are “leaving small business behind” or that “small business is being held hostage by partisan politics.” The reality is that passing this bill at a time when small businesses are facing trillions of dollars in new taxes in less than six months is sort of like buying new furniture for someone facing foreclosure. 

In a recent survey conducted by RSM McGladrey, more than 85 percent of small- and medium-sized manufacturers said they were concerned about increased tax rates –- with 61 percent reporting they were very concerned.  By not acting, Congress will be increasing the top rates for small business owners to nearly 40 percent, increasing the estate tax to 55 percent, and nearly tripling the tax on dividend income.  One can logically ask: Exactly who is leaving small business owners behind?

* The National Association of Manufacturers joined this coalition letter and this one in support of extended bonus depreciation. The NAM is a member of the Small Business Access to Credit Coalition, which last week sent this letter to the Senate urging support for extending and improving SBA loan programs.

The U.S. Treasury Department on Thursday released its semiannual Report to Congress on International Economic and Exchange Rate Policies and concluded that the renminbi remains undervalued, but did not cite China for currency manipulation. The reason, of course, was China’s June 19th announcement that it would allow its exchange rate to be more responsive to market forces. The report went on to say that “What matters is how far and how fast the renminbi appreciates…We will closely and regularly monitor the appreciation of the renminbi.”

The National Association of Manufacturers has long held that the Chinese currency is a major factor in our trade imbalance with China and was a contributing factor to the global imbalances that have yet to be fully righted after the recent financial crisis. We have urged the Administration to engage with our trading partners and use every multilateral opportunity to press China to end its persistent currency undervaluation. We have also worked with our counterpart organizations in other countries to make the same case to their governments.

This is exactly what happened in recent months as governments from around the globe spoke out about the need for China to allow for a more market-determined currency value. Recognizing that is also in its own interest, China took the important step of moving away from its dollar peg in June. But Secretary Geithner is correct — how much China allows the renminbi to appreciate is key. The next Treasury report is due to Congress in October, and that is ample time to see enough movement in the currency to determine if the Chinese government is serious about correcting its significant undervaluation. Treasury is monitoring and we are all watching.

Yesterday, the White House released the President’s Memorandum on spectrum policy and, in a refreshing change, it looks as if it’s actually geared to encourage investment. 

Thanks to every new gadget from Apple, Microsoft and Google, consumers are inhaling wireless spectrum as they demand more and more mobile broadband applications. The downside is that as more devices compete for a finite amount of spectrum, fewer opportunities to create innovative products and technologies will arise, thus limiting job growth and investment.  By signing the Presidential Memorandum, not only has President Obama doubled the amount of spectrum available for commercial purposes, but he’s set in motion a plan that has the potential to raise tens of billions of dollars that can go into public safety and infrastructure investments that will create jobs.  And we like jobs.

The plan calls for setting up an auction that will release 500 MHz of Federal and nonfederal spectrum over the next 10 years for both mobile and fixed wireless broadband use.  In addition, the FCC would be responsible for reorganizing how spectrum bands are released, so that they’ll be used for their most productive – and lucrative – use. 

The auction proceeds will then be funneled into various good ideas, such as the creation of an interoperable wireless broadband network for public safety use, investment in growth-enhancing infrastructure like NextGen air traffic control, high-speed rail, and Smart Grid,  and even – gasp – deficit reduction.

With the sudden surge of raw capitalism surrounding mobile broadband, it seems as if 44 is trying to put a new dust jacket on Hayek: The Road to Surfdom.

When Julius Caesar crossed the Rubicon in 49 AD with his legions in tow, defying the Senates’ prohibitions on generals entering Italy proper with their troops, he uttered the famous words “the die is cast” (alea iacta est, to be specific).  Caesar being Caesar, he probably did so through gritted teeth, his sword to his breast, with his flinty stare focused firmly on the Capitoline Hill.

Two thousand years later a different die was cast, by another Julius with his eye on another Capitol Hill crossing his own Rubicon, and defying the will of another Senate.  At today’s Open FCC Meeting, Chairman Julius Genachowski led the Commission in voting in favor of moving forward with opening a proceeding that will inevitably redefine how the FCC regulates broadband services by imposing common carrier rules to the Internet.

Of course, what’s at stake with the roll of today’s die is a bit different from Caesar’s toss: with Old Julius, it was only the fate of Roman Empire.  Today’s stakes are far bigger – the fate of the nation’s information structure.  Why is this bigger you ask?  Let’s put it this way: the manufacturers who build the networks, the manufacturers who own the networks, the manufacturers who rely on new networks being built, could all see up to $62 billion in broadband investment dry up, costing over half-a million jobs.

According to a study released by New York Law School, the report estimates that if New Julius’s “Third Way” broadband plan is instituted, broadband providers and related industries may cut their investments by 10 percent to 30 percent from 2010 to 2015 in response to additional regulation. At 30 percent, the economy might sustain an $80 billion hit, according to Charles Davidson, director of the law school’s Advanced Communications Law & Policy Institute, which released the report on June 16.

What about the pesky Senate?  New Julius is facing his own dilemma as 282 Members of Congress, including 77 Democrats demanded the FCC leave its troops at the banks of the…er…drop its plan to reclassify broadband and allow Congress to do what it was elected to do. But, hey, Congress knew about the National Broadband Plan, and that was blessed by the President. Who we hear was elected by lots of people, too.

Unless Congress decides to defund the FCC, there will be a pretty quick process in which rounds of comments, reply comments, notices of proposed rules, and more comments are flitted through in less than six months.  In fact, the first round of comments are due July 15, reply comments due August 12. And again, unless Congress defunds the FCC, it’s highly probable that New Julius will get his way, only to find that the litigious Visigoths of industry will be banging down the doors of the Commission.

How is this going to end?  Hopefully better for New Julius than it did for Old Julius.  We’d be happy if he just crossed back over the Potomac and dropped his cockamamie plan over the Memorial Bridge.

Internet denizens across America will be watching today as the FCC takes the first big step in granting itself the authority to regulate the Internet.  An act, we’d like to add, that is something many manufacturers will be viewing with the same interest as, say, watching someone eat their own foot.  By that, I mean mostly in horror, aghast that such an overt exercise of power would be done at all, figuratively and literally cannibalizing our nation’s best means of moving forward.

This all comes in the wake of the DC Circuit’s Comcast decision that held the FCC didn’t have the authority to chastise Comcast for violating rules that were never actually…um…rules. FCC Chairman Julius Genachowski has been wracking the collective brains of his attorneys to figure out how he can get that authority.  Without having to go to Congress, that is, because they might disagree.  Well, that’s not true; they do disagree.  As a matter of fact, more than 77 Democratic Members of Congress – including Commerce Chairman Emeritus John Dingell who authored the Telecom Act of 1996 – have publicly disagreed with Chmn. Genachowski and asked him not to move forward with this scheme.

It seems as if Congress has this quaint idea that a light regulatory touch on the Internet might have something to do with its phenomenal success and growth, and that regulating it will just stifle innovation and economic growth. 

The FCC extravaganza today is the first salvo in the war: The Commission will publicly ponder the issue and then vote on whether or not they’ll issue a Notice of Inquiry to begin the process of locking down the Internet.  Of course, it’ll pass on party lines by a vote of 3-2 which, for an esoteric issue, will post a higher score than most World Cup matches this week.

Here’s the info for today’s meeting.

It looks like today Senators will get an opportunity to vote on a fiscally responsible, pro-growth tax extenders package — an amendment (No. 4333) sponsored by Sen. John Thune (R-SD) to H.R. 4213, the American Jobs and Closing Tax Loopholes Act.

Unfortunately, it’s not likely to garner enough votes. That’s too bad too because it’s an alternative that would extend manufacturing priorities without raising taxes. According to CBO, the Thune substitute cuts taxes by $26 billion, reduces spending by over $100 billion and reduces the deficit by $55 billion. Unfortunately politics are likely to keep the bill from going any further than today’s vote.

I’m gearing up to be one of the sixteen people, on three panels, speaking before the U.S. International Trade Commission (ITC) on China and Intellectual Property Rights (IPR) and Indigenous Innovation issues.  I plan to cover the following points tomorrow during tomorrow’s hearing:

• IPR is a huge priority issue for American manufacturers across the board; it is not a niche issue affecting only a few sectors or a few large companies.  American manufacturers, both small and large, depend on patents, trademarks, copyrights, and strong enforcement to protect our innovations, to bolster American global competitiveness, and to create good jobs here at home. 
• China is ground zero for IPR counterfeiting and piracy — 80 percent of IPR seizures by DHS agents in Fiscal Year 09 were from China.
• Such behavior on IPR, by China or anyone else, is unacceptable.  It is particularly unacceptable from an emerging global economic power such as China which has been a major beneficiary from the open rules-based global trading system.
• Similarly, China’s new “Indigenous Innovation” policy is also a concern for U.S. manufacturers.  Promoting innovation in China or anywhere else is not an excuse to discriminate against American goods or technologies.

Shaun Donnelly is Senior Director, International Business Policy, for the NAM.

In the oddest twist of fate, manufacturers, telecoms and consumers are all breathing a sigh of relief upon hearing that both the House and Senate Commerce Committees are contemplating a rewrite of telecommunications law to acknowledge the existence of the Internet. Ah, sweet, sweet regulation!

As you’ll remember, the FCC received a judicial noogie* from the DC Circuit when it ruled the FCC didn’t have the authority to chastise Comcast for steering Internet bandwidth away from poor, defenseless children who were stealing movies and music on BitTorrent, and instead diverting it to evil doers implicated in healthcare, education, global commerce and other nefarious, high-bandwidth practices. Nevertheless, FCC Julius Genachowski decided that he’d give himself the authority to regulate the Internet by rejiggering Title II of the Telecom Act by reclassifying it as a telecommunications service, as opposed to a data service.

Well, following hot on the heels of letters from 74 House Democrats and 37 Senate Republicans, House Energy and Commerce Chairman Henry Waxman and Senate Commerce Chair John Rockefeller announced that they’ll develop proposals to update the Communications Act, starting in June.

Gentlemen, you get the humble thanks of a grateful manufacturing sector. The FCC’s proposed boot-strapping of regulatory authority would’ve only served to chill broadband deployment and investment in the telecom sector, with manufacturers and consumers getting the short end of the stick. Of course, there’ll be concern over whether or not net neutrality provisions will be foisted upon network managers, but at least through a legitimate legislative process, everyone will have the opportunity to be heard. And Mr. Chairmen, you have our deepest appreciation.

* It’s a legal term of art. Really, it’s in Black’s Law Dictionary.

So now that the courts have said that the FCC doesn’t have the authority to regulate the Internet under the Comcast decision, Chairmen Waxman and Rockefeller sent FCC Chairman Julius Genachowski a nice note saying they’re too busy to determine what needs to be done, so Julius should go on ahead without them and give himself the authority to start serving up the net neutrality. Despite telling The Washington Post that they wouldn’t dream of starting in as it would ruin their appetite…

The sources said Genachowski thinks “reclassifying” broadband to allow for more regulation would be overly burdensome on carriers and would deter investment.

…FCC Chairman Genachowski told his chefs to start whipping up a banquet and ring the dinner gong on Thursday. That’s when we all found out (and the WaPo to their great chagrin) that net neutrality was not only back on the menu, but it was the main course.

The ethics of using disinformation aside (although I guess we are technically at war…), the FCC’s new Rube Goldberg plan posing as a “Third Way” to regulate without the express consent of Congress seems like a somewhat obvious power grab to effectuate a pretty specific political end, sound network management and engineering principles be damned.

Who knew this would leave us all longing for the days (and weeks, and months, and years) when the 1996 Telecom Act was worked out, where Congress actually decided what the FCC’s authority was? And not to get too nostalgic, but that was when Congress intentionally excluded broadband Internet access from Title II –- choosing not to travel down the Third-Way highway.