The Senate just voted to pass the tax extenders bill, H.R. 6049, on a vote of 93-2. Rollcall votes here.

The bill is now the Baucus-Grassley substitute amendment, which includes tax provisions supported by the National Association of Manufacturers:

• A seamless extension of a strengthened R&D credit.
• An extension of deferral of U.S. tax on active business global financing income.
• An extension of the look-through rules for payments between related foreign corporations.

From Reuters:

WASHINGTON (Reuters) - The U.S. Senate on Tuesday approved a package to extend $18 billion in tax credits for using renewable energy sources like wind, solar and geothermal and also provide incentives to cut energy consumption.

Under the proposal, which will be part of a much bigger tax bill, the tax credit for producing electricity from wind would be extended for one year. The credit for other renewable sources, such as wave and ocean tide projects that generate power, would be extended for two years.

The residential and business tax breaks for solar energy would be extended for eight years.

Senate Majority Leader Reid described the bill as “half-offset” with added revenues — tax increases — which he hoped would be seen by House “pay-go” adherents as an acceptable compromise. Sen. Reid also emphasized the R&D tax credit was a two-year extension, rather than a single year. (Not permanent? Sigh. We’d also note that one of those years is the current one, going back to Jan. 1, 2008. But not to be churlish. It’s good, very good.)

AP story summarizes the entire legislation prior to passage.

I just got back from a productive visit with our friends with Arkansas Manufacturing Solutions (AMS) in Little Rock, offering a talk about the importance of manufacturing to our economy and the challenges we face. The AMS is one of many Manufacturing Extension Partnerships (MEPs) around the country that work with small manufacturers to help them acquire modern technology, have access to professional advice, obtain funding and export their products abroad. The MEPs are a profound blessing to manufacturing and our economy, so of course the bean counters in the Office of Management and Budget try to zero out the minimal federal funding they receive each year, and every year we (the NAM) fight to get it put back. But every dollar that goes to the MEPs generates many more in economic growth, new jobs and exports.

I don’t have space to recount all of the information I picked up down there. But a couple of stories stand out. Timothy J. Grant, Chairman, President and CEO of Actronix, described how his company brought production back to the U.S. from China, primarily because of concern about quality. Lee Morgan, President of Farr Air Pollution Control, described how his company almost went under and attributed much of the credit for their survival - and expansion - to the AMS. There was lots of talk about, and interest in, green manufacturing. And everyone there was grateful to Rep. Marion Berry (D-AR) for his ardent support of the MEP program.

Many thanks to Dan Curtis and Tovia Chan of the AMS for arranging this great meeting and inviting me to speak. I had a wonderful time, and as always happens on these trips, I came back wiser than I left.

From today’s The Hill, “Don’t let health IT legislation flatline“:

American manufacturers have a huge stake in health IT. Working Americans face soaring healthcare costs, and employers continue to struggle to provide health benefits. Health IT has the potential to save millions of dollars for working Americans. Technology has modernized the manufacturing industry by cutting waste on the shop floor, managing inventory more effectively and speeding delivery of products. Now it’s time for Congress to apply the same cutting-edge technology that has transformed manufacturing to our nation’s healthcare system.

The life-saving, cost-reducing benefits health IT legislation can deliver to the American public make its passage imperative this year. Next year, a new administration will take office and, in the shuffle, health IT legislation could stall, forcing Americans to wait even longer.

The NAM news release from a Capitol Hill presser on Tuesday is here.

The Senate Judiciary yesterday reported out two bills with implications for manufacturers and the economy at large, one good, one bad.

The good one is S. 3325, the Enforcement of Intellectual Property Rights Act. The bill creates an IP enforcement office within the Administration to develop a single joint strategy to fight counterfeiting and piracy. The bill also would allow Justice to bring civil actions to enforce copyright laws on behalf of private parties, of special interest to small and medium-sized manufacturers lacking the resources to pursue domestic and international counterfeiters.  

As our director of technology policy, Marc-Antony Signorino said:

NAM member companies understand and realize the damage that counterfeit and pirated products can impose on their businesses, their customers and our overall economic security. IP theft costs U.S. businesses $250 billion in lost revenue each year and has already cost the United States an estimated 750,000 jobs. In terms of health and safety, pirated products are vastly inferior to legitimate goods.  Commonly counterfeited items such automobile parts, airplane parts, food, medical devices, electrical supplies, and pharmaceuticals are making their way to consumers.

More from CNET News.  

The NAM’s full statement is in the extended entry below.

From Financial Week, “Surprise! Dem platform calls for a permanent R&D tax credit“:

The new Democratic Party platform, unveiled Monday evening in Denver, has been mostly lost in the hoopla surrounding the convention. But several planks in the platform should grab the attention of corporate finance execs. At the top of the list: making the research and development tax credit permanent.

The R&D tax credit has been extended in one-year iterations almost a dozen times since it was created in 1981. Several industries have backed making the credit permanent, saying that businesses need to be able to rely on the credit to effectively budget for research and development.

Jay Timmons, executive vice president for the National Association of Manufacturers, said in a phone interview from Denver that “this is an issue that the Democrats should own,” referring to the fact that a Democratic Congress passed the original law. “It is really part of their heritage.”

According to Mr. Timmons, he has spoken with several Blue Dog Democrats—a group of fiscal conservatives within the party—as well as other party officials during the convention about making the tax credit permanent, and has seen interest in the issue. “Both Democrats and Republicans want to make it permanent, and there’s one simple way to make that happen: just do it,” he said, adding that the R&D tax credit should be the first piece of legislation lawmakers propose when they come back from August recess.

The Democratic platform is available here.

Good report on the state of the play, or no-play, of the research and development tax credit by Brian Wingfield at Forbes, “No Developments.”

It’s favored by business groups, celebrated by presidential candidates and loved by politicians on both sides of the aisle, yet it can’t grab Washington’s attention.It’s the research and development tax credit, which lawmakers let expire at the end of last year in a partisan dispute over tax issues and how to pay for them. Businesses say that without it, other countries like Canada, Ireland and Australia–which have attractive R&D tax incentives–will lure research jobs away from the U.S.

“It’s a motherhood and apple pie issue,” says Monica McGuire, who’s lobbying for the credit on behalf of the National Association of Manufacturers and the much broader R&D Credit Coalition.

 The website of the R&D Credit Coalition is InvestinAmericasFuture.org.

The Heritage Foundation hosted FCC Commissioner Robert McDowell today at the weekly Blogger’s Luncheon, ostensibly to apologize for the FCC rapping Comcast on the knuckles, all in the name of Net Neutrality. Commissioner Deborah Taylor Tate joined Commissioner McDowell in voting against the majority in demonizing Comcast, as they saw that there was no evidence that Comcast actually did anything wrong. For those of you who have better things to do on a summer day than pay attention to the FCC, here’s a quick and dirty recap of the issue: Comcast network managers spotted a huge spike in bandwidth during a period of peak Internet usage, tracing it to kids downloading hundreds of megabytes of movies and music from BitTorrent, a media downloading site. Acting as traffic cops, Comcast decided to slow down the flow of bits from BitTorrent in favor of traffic from other applications and sites that are more dependant upon the speedy flow of bits, such as VoIP.

In the words of Net Neutrality pundits, they’ve committed the sin of Internet Discrimination. It would seem as if the FCC agrees as well. In a series of public hearings a la traveling road show, Comcast was held up for the masses to pelt them with rocks and garbage while yelling “burn the witch.” In a turn worthy of John Cleese and Eric Idle, the FCC on August 1 decided to do just that, and ordered Comcast to stop impeding traffic on the Internet and make transparent their policies to their customers, lest they be whacked with fines. Okay, maybe it wasn’t a burning per se, more like an uncomfortable stay in the sauna, but the intent was there.

But what did Comcast do to deserve this punishment? They violated the FCC’s Broadband Policy Principles. Let me reiterate the last part: PRINCIPLES. Not laws, not regulations, not rules, but principles (See ‘em here). They were developed with no public hearing, no notice of rule making, no due process. Legally speaking, they’re most likely unenforceable. The sad part is that Chairman Martin yelled “witch,” too.

But Comcast sinned, did they not? Phooey. In reality, they’ve practiced the virtue of Responsible Network Management. In their role as a traffic cop on their stretch of the Information Superhighway, they saw a bandwidth hog that would’ve backed up rush-hour traffic and they took it out of the HOV lane.

Commissioner McDowell said that this will be very easy for Comcast to appeal, as the FCC has no rules in place for this, thus no authority to enforce anything. Citing the “Brand X” Supreme Court Decision (stating that cable Internet companies provide “information services” governed by Title I of the Communications Act and are not “telecommunications services” under Title II), the cable companies are under no obligation to treat all traffic equally. That’s the law.

Talk to anyone who knows anything about network management and they’ll tell you that the Internet is ALL ABOUT discrimination – choosing which packet needs priority over another. For instance, it’s more important that VoIP packets get priority over a packet with part of the best sports clip ever filmed because a VoIP call requires complete synchronicity lest confusion, echoing and dead silence ruin the call. If my sport clip packet is delayed because of your VoIP packet got priority, the clip may download in 12 seconds instead of 10. That’s something I can live with.

But what if this is some kind of nefarious plot from Comcast to slow down the Internet sites that compete with them? Commissioner McDowell says to check out the Sherman Antitrust Act and the Clayton Act as your remedy. Tried and tested, it’s been around since 1890 and is reasonably sure to have the most evil of corporate malfeasors quaking in their Bruno Magli wingtips as soon as they see the summons.

Maybe in the end, the Comcast decision will be a good thing – if upheld, it’ll show Congress that the process works and the FCC is protecting the interests of the Internet consumer, and there’s no need for intrusive legislation. I suggested this to Commissioner McDowell, and he told me in so many words to go and click my ruby heels together (in a polite way, of course). “Appeasement doesn’t work,” were his exact words. Ah, well.

The Senate Judiciary Committee held a hearing today on the consumer benefits of protecting intellectual property. Two NAM-member companies were represented by witnesses, who offered testimony:

From Mr. Thurnau’s testimony:

Counterfeit parts and components for cars, trucks, buses and commercial vehicles pose a critical problem to the American economy and the supplier industry because of the wide range of counterfeit products manufactured and trafficked worldwide. Counterfeit goods cost motor vehicle suppliers at least $3 billion in the United States and $12 billion globally in lost sales. These losses correlate to at least 250,000 fewer motor vehicle supplier manufacturing jobs nationwide. Please note that these are conservative numbers based on a 1997 Federal Trade Commission study.

About 80 percent of all pirated goods seized at U.S. borders originate in China. And while it is clear in our industry that more pirated parts come from China than any other nation, we do face significant challenges from Russia, India and many other nations. The temptation might be to criticize the Chinese government for lack of intellectual property enforcement but our experience would say that is inaccurate and counterproductive. The counterfeiters that we deal with are for the most part rogue operators, criminals. The Chinese government pursues those criminals when our company presents evidence of our trademarks being violated. Enforcement issues are often caused by a lack of resources, particularly at the provincial and city level.

Wang Qishan, vice premier of the State Council of the People’s Republic of China, has an op-ed in today’s Wall Street Journal, “No More Chinese Knock-Offs,” detailing the government’s efforts to protect intellectual property rights. There’s a lot of work to do, that’s for sure.

Three hundred companies this week joined in a letter urging the U.S. Senate to get serious about tax incentives legislation, because the consequences of inaction are serious. Excerpt:

Important tax provisions, including the R&D tax credit and the deduction for state and local sales taxes, have already expired. Others, including critical renewable energy incentives, the Subpart F active financial services and look-through rules, the New Markets Tax Credit, and the incentive for domestic film production, expire at the end of this year. Large tax increases would fall on American companies and American workers if the expired and expiring provisions are not extended.

Failure by Congress to move quickly to extend these important provisions will bring investment in renewable energy and energy efficiency projects to a standstill, make it more difficult for U.S. companies to invest in critical R&D projects in this country, reduce private sector investment in business and economic development projects in distressed areas, and force many U.S.-based financial institutions to suffer a massive tax increase at a time when they can least afford it.

Many political disputes, mostly about revenue offsets but also about new provisions — a $1.6 billion tax break for trial lawyers, for example – led to the failure of a cloture vote on H.R. 6049, the Renewable Energy and Job Creation Act of 2008, i.e., the tax extenders bill. The vote was 50-44, so that’s quite a distance to overcome before passage.  This Congress Daily story covers the stickiests of the sticking points, still ending with an expression of optimism from the NAM’s Monica McGuire:

While the bill was currently in “political limbo,” recent movement demonstrates that lawmakers are concerned about the expiring provisions, said Monica McGuire, executive secretary of the R&D Credit Coalition. “I’m actually optimistic because there was a cloture vote today. In January, February, March, April, there wasn’t any talk about tax extenders. That raised my blood pressure,” she said.

More:

• Dow Jones, “US Companies Call for Passage of Tax Extenders Legislation“
• Detroit News: “GM, Ford urge Congress to extend R&D tax credit“
• San Jose Mercury News: “Extension of tax credits for renewables, R&D fails in Senate“