Bloomberg, “Congress Cuts Big Business Tax Break in Stimulus Bill“:

Feb. 11 (Bloomberg) — House and Senate negotiators all but eliminated the biggest tax cut for businesses in the compromise agreement on an economic stimulus bill, Senator Max Baucus of Montana said.

The provision, a top priority of business groups including the National Association of Manufacturers and the U.S. Chamber of Commerce, would let companies convert losses into tax refunds.

The provision is the “net operating loss” relief, enumerated as a priority for manufacturers in the NAM’s recent “Key Vote” letter on H.R. 1. More from the Bloomberg story:

Monica McGuire, senior policy director in charge of taxation for the manufacturers’ association, said omitting the provision would diminish the legislation’s stimulus effect.

What McGuire termed the “gutting” of the relief provision “doesn’t contribute to an effective recovery package,” she said. “Restoring adequate tax relief for struggling companies is about helping a diverse range of industries from manufacturing to retail; no plants, no workers.”

So report multiple sources, including The New York Times, “Congress Appears Close to Agreement on Stimulus“:

WASHINGTON — After a lightning round of negotiations with the Obama administration, Congressional leaders closed in on a $789 billion economic stimulus package Wednesday afternoon that would pare back Democrats’ proposed spending on education and health programs in favor of tax cuts needed to win crucial Republican votes in the Senate.

Mike Campbell, chairman of the NAM’s board of directors, participated in a news conference this morning with Democratic Senators Jack Reed of Rhode Island and Sherrod Brown of Ohio and other supporters of the stimulus package, H.R. 1. As he said:

“Manufacturers recognize that immediate action is needed to address the unprecedented challenges faced by all sectors of the economy,” Campbell said. “Consequently, we strongly support efforts to advance legislation that combines timely, targeted tax incentives and increased investment in areas critical to U.S. competitiveness. A balanced tax and investment package designed to help job providers and the people who depend on them will help get our nation’s economy back on track and ensure job creation and sustainable economic growth.”

We’ve put the entire news release from the Senate Democrats in the extended entry.

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From the Wall Street Journal, “Stimulus’s Winners and Losers”

WASHINGTON — Home builders, new-car buyers and manufacturers are among the major winners in a $838 billion economic-rescue bill passed in the Senate Tuesday while state governments and generously paid corporate executives will be the losers.

The Senate’s economic stimulus package contains several major amendments and saw an overhaul last week when Senate Democrats agreed to changes pushed by Sens. Susan Collins (R., Maine) and Ben Nelson (R., Neb.).

And…

Manufacturers, home builders and firms in other sectors that were unprofitable in 2008 and 2009 would gain the ability under the Senate bill to turn their losses into tax refunds. The bill allows them to use those losses to offset tax liability as far back as 2003.

The Senate provision is slightly more generous than a similar 5-year net operating loss carryback provision in the House bill. It would allow firms to carry back 100% of losses, while only 90% of losses would be eligible for the 5-year carryback under the House bill.

“Manufacturing is general is a cyclical industry, so net carryback loss is very important,” said Dorothy Coleman, vice president of tax and domestic economic policy at the National Association of Manufacturers. “Typically any industry that is cyclical would benefit from this.”

The Senate has begun voting on final passage of H.R. 1, the American Recovery and Reinvestment Act, the stimulus bill. (Readthestimulus.org) UPDATE: Passes 61-37. Roll call vote here.

Senate Majority Leader Harry Reid, in his final floor statment before the votes, noted support for the bill from a variety of groups, including the National Association of Manufacturers, the Chamber, and the AFL-CIO.

The Hill reported on support for the bill from business groups today, “Business groups that sought tax cuts now back centrist-brokered stimulus.” Excerpt:

“Unless significant changes are made, we will key-vote the bill that comes to a vote in the Senate” on Tuesday, said Dorothy Coleman, NAM’s vice president for tax and domestic economic policy.

NAM, which has come under attack from some Democrats for being tied too closely to the GOP, did not score the vote last week in the House.

Coleman also said that she wished more Republicans would be drawn to the stimulus and end up for voting for it.

“I hope so. We are in extraordinary times. We feel a balanced spending and tax relief package to revitalize our economy is needed. All of our members are on the frontlines of this crisis and are very eager to see some help from Washington,” Coleman said.

Tax cuts geared toward businesses, along with increased federal spending on infrastructure in the Senate bill, have attracted business  support.

The NAM did, indeed, “Key Vote” the bill. NAM Executive Vice President Jay Timmons sent a Key Vote letter to the Senate this morning.  You can read the letter in the extended entry immediately below:

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President Obama’s comments to ABC’s Charlie Gibson on the ill-advised “Buy American” provisions in the stimulus bill are getting some notice. From the transcript (and the paranthetical “not” corrects a misstatement as acknowledged by the White House):

CHARLES GIBSON: A couple of quick questions. There are “Buy America” provisions in this bill. A lot of people think that could set up a trade war, cost American jobs. You want them out?

PRESIDENT OBAMA: I want provisions that are [not] going to be a violation of World Trade Organization agreements or in other ways signal protectionism. I think that would be a mistake right now. That is a potential source of trade wars that we can’t afford at a time when trade is sinking all across the globe.

CHARLES GIBSON: What’s in there now? Do you think that does that? Do you want it out?

PRESIDENT OBAMA: I think we need to make sure that any provisions that are in there are not going to trigger a trade war.

The NAM’s letter to the Senate cited below includes a statement in opposition to the Buy American provisions. The Sun newspapers in Canada regarded the item as newsworthy, reported across the nation in, “Buy American’ clause will backfire, U.S. leaders warned.”

Getting even more attention was a letter from Canada’s ambassador to the United States, as reported in The Globe and Mail:

In a letter to Harry Reid and Mitch McConnell, the respective leaders of the Democrats and Republicans in the Senate, Ambassador Michael Wilson asks legislators to refrain from bringing in new laws that would restrict trade, lest they lead to similar actions by other nations.

“A negative precedent set here in the United States can have repercussions around the globe and could provoke debilitating beggar-thy-neighbour policies,” said the letter, a copy of which was obtained by The Globe and Mail.

At one point, he warns that legislation in Congress that would force officials to direct infrastructure spending to U.S. firms could undermine the United States’ ability to dissuade others from also undertaking protectionist measures.

“We are concerned about contagion, that is, other countries also following protectionist policies. If Buy American becomes part of the stimulus legislation, the United States will lose the moral authority to pressure others not to introduce protectionist policies,” he writes.

“A rush of protectionist actions could create a downward spiral like the world experienced in the 1930s.”

We should note that the U.S. and Canadian economies are closely integrated. In fact:

The two nations share the world’s largest and most comprehensive trading relationship, which supports millions of jobs in each country. In 2007, total trade between the two countries exceeded $560 billion. The two-way trade that crosses the Ambassador Bridge between Detroit, Michigan and Windsor, Ontario equals all U.S. exports to Japan. Canada’s importance to the U.S. is not just a border-state phenomenon: Canada is the leading export market for 36 of the 50 U.S. States, and ranked in the top three for another 10 States. In fact, Canada is a larger market for U.S. goods than all 27 countries of the European Community combined, whose population is more than 15 times that of Canada.

From the U.S. Embassy site in Ottawa.

While most of the national media concentrates on the troubles with President Obama’s Cabinet, the Washington Post leads with the BIG NEWS.

From “Senate Lacks Votes to Pass Stimulus“:

Senate Democratic leaders conceded yesterday that they do not have the votes to pass the stimulus bill as currently written and said that to gain bipartisan support, they will seek to cut provisions that would not provide an immediate boost to the economy.

The legislation represents the first major test for President Obama and an expanded Democratic Congress, both of which have made economic recovery the cornerstone of their new political mandate. The stimulus package has now tripled from its post-election estimate of about $300 billion, and in recent days lawmakers in both parties have grown wary of the swelling cost.

Moderate Republicans are trying to trim the bill by as much as $200 billion, although Democrats working with those GOP senators have not agreed to a specific figure.

We respectfully suggest a course of action,  a stimulus plan that embraces the provisions identified by the National Association of Manufacturers as having the most beneficial effect on the manufacturing sector and the economy in general.

NAM President and CEO John Engler sent a letter to Senate leadership Monday identifying top priorities for effective economic stimulus. Text follows:

Dear Leader Reid, Leader McConnell, Senator Durbin, and Senator Kyl:

The National Association of Manufacturers (NAM) is gratified by the commitment of the bipartisan, bicameral Congressional leadership and the Obama Administration to move quickly on a legislative package to help get America working again. Manufacturers recognize that immediate action is needed to address the unprecedented challenges faced by all sectors of the economy.

NAM members believe a balanced, fiscally responsible tax and investment package designed to help job providers and the people who depend on them, will go a long way to spur economic revitalization. To this end, we strongly support a number of provisions in the American Recovery and Reinvestment Act (S. 1) scheduled for debate this week and encourage you to consider additional changes that will ensure that the tax and investment provisions have an immediate and direct impact on our economy. Legislation that combines timely, targeted tax incentives and increased investment in areas critical to our competitiveness will help get our nation’s economy back on track and ensure job creation and sustainable economic growth.

In particular, the NAM supports the following measures:

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A quick look around at news and commentary as the Senate begins debate on H.R. 1, the American Recovery and Reinvestment Act. It appears the Senate may be moving toward more stimulus, less long-term, grand-scale reordering of the relationship between citizens and the government.

Robert Samuelson, Washington Post, “Too Little Bang for The Bucks,” which uses proposals to finance the “smart grid” electrical infrastructure as an illustration to make these points:

The decision by Obama and Democratic congressional leaders to load the stimulus with so many partisan projects is politically shrewd and economically suspect. The president’s claims of bipartisanship were mostly a sham, as he skillfully maneuvered Republicans into a no-win position: Either support a Democratic program, or oppose it — and seem passive and uncaring.

But the result is that the stimulus, as an act of economic policy, is hobbled. A package so large can be defended only because the economy is so weak — and seems to be getting weaker by the moment. The central purpose is simple: halt downward momentum. Perhaps some of the out-year spending might ultimately prove useful. But the immediate need is for the stimulus package to stimulate — now. It needs to be front-loaded; it isn’t.

Byron York, National Review, The Corner, “The Future of Stimulus“:

Have spent some time today [Sunday] talking to Republican and Democratic members of the Senate, as well as political strategists, about what is coming with the stimulus bill.  The first thing is that the Republican critique of the bill, as passed by the House, has taken hold among some moderate Democrats — or, at least, they share many of the Republicans’ reservations.  Those Democrats simply will not support the bill if it comes up in the Senate in the same form in which it passed the House.  They want to see a lot — a lot — of spending taken out of the bill, spending that they might actually support were it in a normal appropriations bill but which they believe has no place in the stimulus package

Kevin Hassett, American Enterprise Institute, in Bloomberg, “Enjoy Stimulus Now, Pay Your $14,000 Share Later“:

When the stimulus package, the SCHIP expansion and whatever else our representatives in Washington dream up are on the books, it seems likely that the deficit for this year will approach $1.7 trillion. This is an enormous swing in the U.S. fiscal condition.

Under President George W. Bush — a big spender in his own right — the federal budget deficit reached a record $455 billion in fiscal 2008, more than double a year earlier. Government bailouts of banks and other industries that started under Bush, and may accelerate under President Barack Obama, will help push the deficit toward that $1.7 trillion mark.

That is $1.7 trillion in future taxes. Nobody knows exactly when the tax hike will come. It might even be that we shall try to foist the costs on our children. Still, those planning their financial futures should account for the dramatically higher taxes that will be the result of this year’s policies.

And here’s the text of President Obama’s Saturday radio address to the nation.

Stimulus or simulacrum? That’s the debate continuing in Congress this week, as the Senate takes up H.R. 1, The American Recovery and Reinvestment Act of 2009. In related news, President Obama will speak at the National Prayer Breakfast on Thursday.

The NAM on Wednesday brings in manufacturers from around the county, visiting their elected representatives on Capitol Hill to express opposition to the Employee Free Choice Act. For more, see the NAM’s EFCA Toolkit, and “Stop the Employee FORCED Choice Act.”

The Senate convenes at 2 p.m. today and begins debate on the stimulus bill. At 6:15 p.m., the Senate votes on the nomination of Eric Holder to be Attorney General. Democrats go on retreat Wednesday, and President Obama will join them for remarks.

The House meets in pro forma today, for suspensions on Tuesday, and on Wednesday, it looks like another run at S. 352, The DTV Delay Act; the Senate amendments to H.R. 2, CHIP expansion; and the consolidated appropriations act, taking care of all those appropriations bills that didn’t get finished in the 1110th. House Democrats on Thursday and Friday hold their regular caucus retreat in Williamsburg.  For the Weekly Leader, go here.

House Hearings: House Financial Services holds a hearing Tuesday, “Promoting Bank Liquidity and Lending Through Deposit Insurance, Hope for Homeowners, and other Enhancements.” On Wednesday, there’s a markup: “To Promote Bank Liquidity and Lending through Deposit Insurance, the HOPE for Homeowners Program, and other Enhancements.” On Thursday, the Judiciary Subcommittee on Commercial and Administrative Law, a hearing, “Midnight Rulemaking: Shedding Some Light.” Small Business on Thursday, “Health Care Reform in a Struggling Economy: What is on the Horizon for Small Business?” Also Thursday, Energy Independence and Global Warming, “Roadmap from Pozan to Copenhagen–Preconditions for Success.” For the full list of House hearings, see Friday’s Daily Digest.

Senate Hearings: Senate Banking holds a hearing Wednesday on modernizing the U.S. financial regulatory system. On Thursday, Banking’s subject is TARP.  The HELP Committee on Thursday considers implementing best patient care practices. For list of all scheduled hearings, go here. The Senate Finance Committee privately considers HHS Nominee Tom Daschle’s taxes and transportation.

Executive Branch: From Friday’s White House press briefing by Robert Gibbs: “The President — and I apologize, this is going to be somewhat oblique — will have meetings and announcements here at the White House Monday, Tuesday, Wednesday and Friday.” News accounts says Congressional leaders head to the White House today to meet with the President and Vice President.

Economic Reports: On Friday, the Bureau of Labor Statistics announces January employment data. For more, see Briefing.com’s report of the week ahead.

The NAM’s President and CEO, John Engler, was in NYC Wednesday for business and included several meetings with the media in his day. Here are two video interviews with Roger Parloff, senior editor of Fortune.

• Stimulus hazards*
• Wall Street’s confidence crisis*

From “Stimulus hazards”:  

We think in the package, the stimulus package, the infrastructure investments are solid, could be more of them. They need to be focused on what will work to improve America’s competitiveness long term. We certainly think some of the tax cuts are helpful; they should be permanent and send a real positive signal about our intent to compete.

There’s a lot of spending in there that I would say is suspect. When you get $800-billion-plus in one spot, a lot of people are going to be reaching their hands in, hoping for a share of that. What we’ve got to be focused on, is with the long-term debt that we’ve got in the entitlement programs, with the deficit in the national budget and the deficits in the state level, the money we spend better be targeted well.

John Engler, president of the National Association of Manufacturers, sent a letter to the U.S. House yesterday expressing support for many of the provisions of H.R. 1, the American Recovery and Reinvestment Act of 2009, i.e., the stimulus legislation. The tax provisions would indeed aid economic recovery, and there other areas that — energy and research, for example — where more can be done.

That letter is here. The conclusion:

The NAM recognizes that action by the House of Representatives will be a significant step.
We urge you to move expeditiously to address our economic crisis. Throughout the debate in the
House and Senate, we are committed to working with you to strengthen the American Recovery
and Reinvestment Act with additional provisions that will also create jobs and have a highly
beneficial impact on our economy, including needed pension changes, additional tax relief to
accelerate clean coal technologies, incentives to bring foreign earnings back to the United States,
expansion of domestic energy resources, such as offshore exploration, and expansion of our
nuclear energy infrastructure.

Engler appeared on Bloomberg-TV today discussing the stimulus legislation. We have sound clips from the interview, Clip 1 and Clip 2.