House Democratic conferees on H.R. 4213, the financial regulation bill, had pushed for language to unleash the Federal Trade Commission so it could go out and regulate as much federal commerce as it could get its hands on. The National Association of Manufacturers was one of 48 trade associations to join in a June 10 letter strongly objecting to the regulatory expansionism.

Fortunately, the Senate conferees showed little interest in turning a financial regulation bill into an “all things commercial regulation” bill. To summarize the back and forth at last night/this morning’s negotiations:

Chairman Henry Waxman (D-CA) of the House Energy and Commerce bill pressed hard for inclusion of the House language. After Senate conferees rejected his initial language, he offered a modified version that stripped out “aiding and abetting” and other enforcement provisions and asked for expanded rulemaking authority for the FTC with some extra tweaks for small firms. Again, the Senate rejected Chairman Waxman’s language. After 3 a.m., Chairman Frank said the House reluctantly accepted the reality of the Senate’s rejection and the conferees closed title 10, the consumer protection section.

Good, and thank you to the Senators.

And now, we’re sure Chairman Waxman will accept this setback and move on to other issues. The possiblity of unrestrained regulatory expansion by the FTC has receded into the background, never to worry us again.

More…
Dow Jones, “BANK BILL: FTC Misses Out On New Powers“

The conference committee on H.R. 4173 resumes at noon today (schedule), and far more than just expanded regulation of the financial services sector is under consideration. The House position in the negotiations is, let the Federal Trade Commission be unleashed!

From a June 10 letter to the conferees from 48 trade associations, including the National Association of Manufacturers.

The proposed expansion of FTC authority envisioned in H.R. 41731 would eliminate procedural safeguards that were imposed upon FTC rulemaking decades ago, after Congress determined the Commission had repeatedly overstepped its regulatory authority. These provisions couple unrestrained rulemaking authority with enforcement powers to seek civil penalties for unfair or deceptive acts or practices; to seek such penalties without coordinating with the Justice Department; and to pursue companies that allegedly provide “substantial assistance” in an FTC Act violation, even without actual knowledge of the violation. Granting such sweeping powers to the Commission would enable it to act essentially as an unelected legislature, governing industries and sectors that had nothing to do with the financial crisis.

Particularly given their potentially far-reaching effects, these provisions received remarkably little attention during the legislative process, largely overshadowed by debate about the creation of a new agency focused on consumer financial protection. The House Energy & Commerce Committee reported H.R. 4173 after very brief consideration in committee markup and without affording affected industries any opportunity to present their concerns regarding the included proposal for FTC expansion.

Another pending issue is the “proxy access” language, meant to expand the ability of outside activists — unions, environmentalist, single-issue groups — to force their political agendas onto publicly trade corporations contrary to the interests of the shareholders. Stephen M. Bainbridge, a UCLA corporate law professor, covers the issue at his Professor Bainbridge blog, an entry, “Gut Proxy Access.”

Conference Chairmen Frank and Dodd have posted a summary of last week’s actions here. More on what remains from The Washington Post, “Thorny issues remain as Congress negotiates financial regulatory overhaul,” and The Hill, “Lawmakers to tackle toughest issues remaining on Wall Street reform.”

The National Association of Manufacturers is a member of the PACE Coalition, which stands for Promote America’s Competitive Edge. Other groups in the coalition are the Business Roundtable, Information Technology Industry Council, National Foreign Trade Council, and U.S. Chamber of Commerce.

In a May 24 letter, the PACE Coalition expressed sharp opposition to the tax increases included in H.R. 4213, the tax extenders bill (plus tax increases, unemployment and COBRA extension, Medicare reimbursement rejiggering and state budget bailout). Excerpt from the letter:

The members of PACE, including the undersigned trade associations, advocate that the United States maintain a level playing field for taxation of international operations. The proposed $14 billion in proposed tax increases included in H.R. 4213 do entirely the opposite and unilaterally disadvantage U.S. companies. American global companies already struggle under a worldwide tax system and one of the highest corporate tax rates in the world. The proposed changes in the international tax rules will make a bad situation worse, making it even more difficult for American worldwide companies to compete.

Since PACE was formed in early 2009 Coalition members have urged policy makers to consider changes to our international tax laws in the broader context of tax reform that makes us more competitive and not use international tax increases as “pay fors” outside of that context. Moreover, “picking off” some international tax law changes in advance of tax reform would make pro-growth, pro-competitiveness reform more difficult, if not impossible.

The letter notes prominently that the groups support many of the pro-growth tax relief provisions in the bill.

House debate is expected to start this afternoon after the parties return from the weekly caucus meetings. More …

• Bloomberg, “IBM, Business Groups Oppose Job Bill Over Tax Raisers“
• Heritage Foundation, “Routine Tax Extenders Package Contains New Irresponsible Spending and Tax Hikes“
• The Hill, “Business Roundtable declares extender bill a job killer”
   

Fun juxtaposition of page one stories in USA TODAY today. There’s the ominous one about government overtaking the private sector as the driving force in the U.S. economy, “Private wages fall in historic pay shift.”

Paychecks from private business shrank to their smallest share of personal income in U.S. history during the first quarter of this year, a USA TODAY analysis of government data finds.

At the same time, government-provided benefits — from Social Security, unemployment insurance, food stamps and other programs — rose to a record high during the first three months of 2010.

Those records reflect a long-term trend accelerated by the recession and the federal stimulus program to counteract the downturn. The result is a major shift in the source of personal income from private wages to government programs.

But the dominant story on Page One is a more cheerful piece, “Twitter Power: Learning from ourselves, in real time.”

That Twitter has succeeded isn’t a shock; a time-pressed global culture was bound to pounce on the free service’s 140-character haiku format, and 114 million users have signed up to date, 40% of them Americans. What generates awe is the speed with which Twitter has taken a seat alongside Google and Facebook at the tech world’s grown-up table.

Once derided as a peddler of infantile missives (“My latte is cold!”), the service has revealed itself to be an accurate barometer of mass culture. Today, if something isn’t tweeted, did it happen?

“Twitter has become the world’s water cooler,” says Adam Ostrow, editor of the social media blog Mashable. “It’s a place where you can hear what millions are saying and feel, unbiased and in that moment.”

The Senate just this afternoon cleared final passage by a vote of 62 to 36 of a Jobs/Unemployment Benefits/Tax Extenders bill (H.R. 4213) that restores the proven tax incentive to keep jobs here in the United States and place our country in the global race for investment dollars. 

How does it keep jobs here?  The credit cuts the cost of doing R&D here in the United States.  More than 70 percent of credit dollars are attributable to R&D wages (remainder is used for supplies & materials).  What race?  The race that has 20 OECD countries, many of which are our major trading partners, offering an R&D tax incentive while the U.S. watches R&D drift offshore attracted by more generous and often permanent R&D tax incentives.

Manufacturers, which must be high-tech to survive in a fiercely competitive global market, are innovators, using R&D to develop new products and increase productivity.  Manufacturers lead innovation, create opportunity, and pursue progress.  R&D drives all three of these characteristics of a modern manufacturer.

Next step:  Congress should send ASAP to the President a tax bill that fully restores the R&D tax credit. 

Monica M. McGuire is senior policy director for taxation at the National Association of Manufactures and serves as executive secretary of the R&D Credit Coalition.