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Halt Cuts in Budget, Education Chiefs Ask
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Halt Cuts in Budget, Education Chiefs Ask

BY Dan Kane

The Senate gave educators and economic development experts an opportunity Monday to plead for no more budget cuts in the next two years, but they had to share the floor with about 60 people from an anti-tax group who showed up to oppose any tax hikes. Senate budget writers allowed several members from North Carolina Citizens for a Sound Economy to make their case that the state should rein in spending, instead of adopting a lottery or raising taxes. About 25 school superintendents joined an equal number of community college presidents and several UNC chancellors to impress upon legislators that further budget cuts would reverse the gains they have made in student performance and in training workers in a tough economy. All three systems are seeing rising numbers of students, but the money they get for enrollment growth is ending up supplanting budget cuts. "We cannot sustain cuts at this magnitude and provide for the increased numbers of students who are coming here," said UNC President Molly Broad. But Dennis Riddell, a member of the anti-tax group, said that the state has yet to get serious about curbing spending in tough times. Riddell, 46, a father of eight from Alamance County, said he has had to cut his expenses to get by, and the state should too. "If that's proper for a family, I don't think it's foolish for the state," Riddell said. Others contended that raising taxes would hurt an economic recovery. They said a lottery for education, as Gov. Mike Easley has advocated, would send the wrong message to children. One speaker, Andrea Harris, president of the N.C. Institute of Minority Economic Development, said the Senate should eliminate corporate tax breaks. The hearing came as Senate and House budget writers remain deadlocked over passing a budget. The House's latest $ 14.8 billion plan includes cuts to health and human services, education and other services that senators say would cause too much harm. The Senate has produced a $ 15.1 billion plan that doesn't cut as deeply, but doesn't cover what Senate budget analysts project as a $ 628 million shortfall in revenues for the fiscal year that begins July 1. Those analysts say the Senate could need to plug a $ 1.5 billion hole in the budget's second year. Senate Democratic leaders have suggested that a lottery or an increase in the tobacco or alcoholic beverage taxes would help solve the problem. But House leaders say they can't raise more revenues, and they are using $ 510 million in one-time federal budget relief money to get by. Only a few House members trickled in to listen in on the hearing. Two said what they heard wasn't going to help break the impasse. "It didn't change my mind," said House Republican Leader Joe Kiser, who sits on a committee of House and Senate members negotiating a compromise budget. "We just don't have the votes in the House to do what the Senate wants us to do, and we keep telling them that." About half of the Senate showed up for the hearing. Those who spoke tended to challenge the viewpoints of the anti-tax advocates. One speaker noted that she received a sound education in the 1960s though she sat in classrooms of 30 or more students. Sen. Walter Dalton, a Rutherfordton Democrat and Appropriations co-chairman, responded that education took up 70 percent of the state budget then, compared with 58 percent today. Dalton closed the hearing with a history lesson about one of his district's favorite sons, the late Gov. O. Max Gardner. Dalton credited Gardner for helping create the state's first sales tax, which Dalton said helped keep the schools open during the Depression. "I hope we keep the same kind of priorities he had, because education and economic development go hand in hand," Dalton said. "As I said before, we're not doing a two-year budget. We're doing a 20-year budget."

01/01/2003
Educators Upset Over Cuts
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Educators Upset Over Cuts

BY David Rice

Education leaders told state senators yesterday that they can't handle more cuts in public education. Anti-tax activists told them that taxpayers can't handle more tax increases. The senators charged with balancing the state budget said that they don't have an easy answer for the state's budget troubles. Without an increase in cigarette or alcohol taxes or a state lottery, Senate leaders say they must cut an additional $600 million from the state's $15 billion budget - $300 million of it from education - to meet worsening revenue projections for 2003-04 and 2004-05. "We've still got to cut around $600 million out of that," said Senate Majority Leader Tony Rand, D-Cumberland. After three consecutive years of budget cuts, education leaders said they can't keep additional cuts from affecting classrooms. Jim Causby, the superintendent of the Johnston County schools, said that a $25 million cut in the Senate's version of the budget would eliminate more than 1,000 teacher assistants, and a $25 million cut in the House budget would eliminate more than 500 vocational education teachers. Dr. Stuart Fountain, a member of the state community-college board, said that faculty salaries are already abysmal at community colleges. "If these new cuts do take place, we're talking about 3,400 additional (class) sections that will not be offered," Fountain said. Molly Broad, the president of the University of North Carolina system, said that the system has had an enrollment increase of 14,200 students over the past two years, with 5,500 more students expected this fall. "That is bigger than the entire enrollment of 10 of our 16 campuses. This is unprecedented enrollment growth," Broad said. "It is no longer achievable for us to protect classroom instruction. Each round of cuts has made it more difficult." Cynthia McKinney, the president of the N.C. Association of Educators, told the senators that the 70,000-teacher group supports the call for more revenues. "It is not OK to cut $600 million from the general fund, or $300 million from education," McKinney said. "We should not pit teacher assistants against vocational teachers.... We need more revenue for public education." Legislators face a June 30 deadline to extend $384 million worth of sales and income taxes that are already part of both the House and Senate budgets. Both those taxes are currently scheduled to expire with the end of the fiscal year. But 70 activists from Citizens for a Sound Economy, a statewide anti-tax group, told the Senate members that they oppose any new taxes and a state lottery. Members of the group wore stickers that said "Kids Yes, Lottery No" and "Don't Raise My Taxes." "My budget was cut last year, too," said Jonathan Hill, the group's state director. "When you raised taxes, my budget was cut." "If you don't have it, don't spend it," said Lynnelle Alsup, a member from Surry County. "And stop asking the citizens of North Carolina for more and more and more." Members of the group voiced their opposition to a lottery as well. "I smell the lottery rat around here somewhere," said Dennis Riddell of Alamance County. "A lottery sends the wrong signal to the children of North Carolina.... It would be a disservice for the state of North Carolina to resort to a numbers racket." Roy Cordato of the conservative John Locke Foundation challenged legislators to put a tax increase to a vote of the public as they have proposed to do with a lottery. "Offer voters the same courtesy with respect to any tax increases you may propose," Cordato said. But the Rev. Mark Creech of the N.C. Christian Action League said that he could support higher taxes on cigarettes and alcohol instead of a lottery, saying that alcohol-related accidents cost the state $3.7 billion a year. "Cigarette smoking and alcohol cost us all a great deal of money," he said. "If people are going to participate in the vice, they ought to have to pay the price." Sen. Walter Dalton, D-Rutherford, a co-chairman of the Senate budget committee, said he hopes legislators have the courage that Gov. O. Max Gardner did during the Depression, when he implemented North Carolina's sales tax. "That wouldn't be popular with many people. But in doing that, he kept the schools of North Carolina open," Dalton said. Still, Republican budget and finance leaders in the state House continued to insist that the House would not support increased taxes or a lottery. "We've told them and our speakers have told them that we don't have the votes to do additional revenue," said Rep. Julia Howard, R-Davie, a co-chairwoman of the Finance Committee. "There is no will to do sin taxes, and I don't know that the numbers are there to do a lottery."

01/01/2003
U.S. Representative Spencer Bachus (R-AL) Holds Hearing on the Fair Credit Reporting Act
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U.S. Representative Spencer Bachus (R-AL) Holds Hearing on the Fair Credit Reporting Act

01/01/2003
Numerous Groups Back Verizon In Appeal of RIAA DMCA Subpoena
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Numerous Groups Back Verizon In Appeal of RIAA DMCA Subpoena

BY Dugie Standeford

The U.S. Appeals Court, D.C. should either strike down Sec. 512(h) of the Digital Millennium Copyright Act (DMCA) as unconstitutional or read it to permit subpoenas forcing disclosure of the identity of alleged Internet infringers only in the course of a pending copyright case, 45 business and consumer groups said May 16. In an amicus brief filed in RIAA v. Verizon Internet Services, the groups -- which included ISPs, privacy advocates and consumer organizations - - said the key issue in the bitterly contested litigation between RIAA and Verizon was "whether fundamental First Amendment anonymity and privacy rights can be trampled with an unreviewed subpoena that is issued based on hastily generated paperwork and rests merely on a 'good-faith' allegation of copyright infringement." Although Verizon at first attacked Sec. 512(h) on other grounds, most recently it has insisted that the statute is unconstitutional on 2 grounds: (1) It authorizes federal courts to issue process in the absence of a case or controversy, in violation of Article III. (2) It abridges Internet users' free speech rights. However, the U.S. Dist. Court, D.C., ruled last month that neither argument had merit (WID April 25 p1). The court stayed both its order requiring Verizon to provide information on the subscriber named in the first subpoena and another order denying the ISP's motion to quash the 2nd subpoena, allowing the company to seek relief from the appellate court. The 45 amici criticized the lower court decision on several grounds. First, they said, there was no basis for the First Amendment analysis that because alleged copyright infringement was the expression targeted by Sec. 512(h), the First Amendment provided minimal protection: "Proven infringement of copyrights is not protected by the First Amendment, but allegations of copyright infringement are inherently no more reliable than allegations of obscenity, defamation or other types of unprotected speech." Copyright law necessarily implicates free speech, amici said, because it places significant restrictions on public debate and expression of ideas. The groups said, the court was wrong to suggest that Sec. 512(h) didn't directly affect political and other speech entitled to First Amendment protection by forcing disclosure of someone's identity and to "bless" the statute's "supposed procedural safeguards" as adequate to protect a user's speech and rights of association. The DMCA subpoena violates the Fifth Amendments's Due Process Clause, the groups said, because it: (1) Substantially affects private interests such as privacy and the right to anonymous speech. (2) Carries a substantial risk of being either misused or mistakenly applied to Internet users who aren't involved in infringement. (3) Wouldn't offend the legitimate interests of the govt. and content owners if additional safeguards were put in place. (4) Fails to require notice to individuals whose personal information is subpoenaed, give them an opportunity to be heard and to require prior judicial determination before process is issued. "After canvassing the area, the consumer amici cannot find a single state of federal statute or rule that permits a court subpoena to impinge upon First Amendment rights without either a lawsuit being filed (also required by Article III) or prior court approval," the groups wrote. To sidestep the "case or controversy" problem, they said, the appeals court should interpret Sec. 512(h) as "creating a supplemental subpoena procedure" that applies only in pending copyright infringement suits. Last week, Public Citizen urged the appeals court to make RIAA and Verizon follow the same procedures to protect Internet anonymous speech that courts had required in other cases (WID May 19 p8). On May 16 the D.C. Circuit gave RIAA until June 13 to file its brief and until June 20 to file its amici. Verizon's reply is due July 3, final briefs July 11. The case is set for oral argument Sept. 16 at 9:30 a.m. Business and consumer groups signing the joint filing include the Alliance for Public Technology, American Assn. of Law Libraries, American Civil Liberties Union, American Civil Liberties Union Capital Area, American Legislative Exchange Council, American Library Assn., Assn. of Research Libraries, Caprica Internet Services, Citizens for a Sound Economy Foundation, Competitive Enterprise Institute, Computer & Communications Industry Assn., Computer Professionals for Social Responsibility, Consumer Action, Consumer Federation of America, Consumers Union, DigitalConsumer.org, Digital Future Coalition, Electronic Frontier Foundation, Electronic Privacy Information Center, European Internet Industry Assn., Frontier & Citizens Communications Cos., InKeeper Co., Media Access Project, Mercury Network Corp., National Assn. of Consumer Agency Administrators, National Coalition Against Domestic Violence, National Consumers League, National Grange of the Order of Patrons of Husbandry, N.Y. State Telecommunications Assn. Inc.,e Pacific Research Institute, Privacy Rights Clearinghouse, Privacyactivism, Progressive Internet Action, Public Knowledge, SBC Internet Services, Southern Star, SticNet LP, Tex. Internet Service Providers Assn., U.S. Internet Industry Assn., U.S. Internet Service Provider Assn., U.S. Telecom Assn., Utility Consumers Action Network, Wash. Assn. of Internet Service Providers, WiredSafety.Org, and ZZAPP Internet Services.

01/01/2003
Insurer Stops Sale of Auto Policies W.Va.
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Press Release

Insurer Stops Sale of Auto Policies W.Va.

From the Charleston Gazette January 1, 2003, Wednesday Copyright 2003 Charleston Newspapers Their motto says, "Like a good neighbor, State Farm is there," but that's no longer true for state residents looking to buy auto insurance. Effective Dec. 16, the state's largest insurer stopped writing new auto policies in West Virginia, company officials said. State Farm insures about one of every three drivers in the state.

01/01/2003
Creating Jobs and Generating Economic Growth
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Press Release

Creating Jobs and Generating Economic Growth

I have spoken with many people in Southern Wisconsin who are worried about losing their jobs. Others have already been laid off and have been struggling to make ends meet. Nearly 23,000 Wisconsin workers have been affected by job cuts, and areas of Wisconsin - especially portions of the First Congressional District - are experiencing unemployment rates that are even higher than the national average.

01/01/2003
Halt cuts in budget, education chiefs ask
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Press Release

Halt cuts in budget, education chiefs ask

The Senate gave educators and economic development experts an opportunity Monday to plead for no more budget cuts in the next two years, but they had to share the floor with about 60 people from an anti-tax group who showed up to oppose any tax hikes. Senate budget writers allowed several members from North Carolina Citizens for a Sound Economy to make their case that the state should rein in spending, instead of adopting a lottery or raising taxes.

01/01/2003
Citizens for a Sound Economy Holds a Luncheon Briefing
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Citizens for a Sound Economy Holds a Luncheon Briefing

ORGANIZATION: Citizens for a Sound Economy holds a luncheon briefing on "What does America Actually Think about the President's Economic Plan?" TIME: 12:30 p.m. LOCATION: 1302 Longworth House Office Building CONTACT: RSVP to Paul Hilliar, 202-942-7658; e-mail, philliar@cse.org; Members of the public should contact, Brenna Hapes, 202-942-7629; e-mail, bhape@cse.org; http://www.cse.org PARTICIPANTS: Ed Goeas, president, The Tarrance Group and Paul Beckner, president, Citizens for a Sound Economy

01/01/2003
Tort Reform's Magic Number
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Tort Reform's Magic Number

BY Marcia Coyle

With Republicans now controlling both houses of Congress, everything old is new again in the battle over tort reform. Several past proposals--to cap medical malpractice awards and restrict class actions, for example--will be reintroduced in the upcoming session. But even proponents of these measures recognize that GOP control can't guarantee ultimate success, since the party's tiny Senate majority won't be able to bring a bill to a vote in that chamber without Democratic help. At least tort reform proposals are less likely to get killed in a Senate committee, says Matthew Webb, director of legal reform policy at the U.S. Chamber of Commerce. In particular, he's cheered by Orrin Hatch's return as Senate Judiciary Committee chairman. However, Webb notes that in order to avoid a filibuster, "the issue in the Senate, like always, is getting 60 votes, and that hasn't changed." Thus any tort reform accomplishments will have to be bipartisan. Still, in the November passage of the bill that created the Department of Homeland Security, the GOP demonstrated its willingness to push for tort limits whenever the opportunity arises. Senate Democrats were unable to strip the bill of several business-friendly provisions already approved by the House. Among other things, the Homeland Security Act eliminates punitive damages in suits against companies that make antiterrorism technology, requires physical injury as a prerequisite to any recovery, and reduces damages by the amount of collateral source compensation. Federal contractors for antiterrorism technology will also enjoy the government's sovereign immunity in product liability actions, provided that the contractors comply with specifications and inform the government of all known risks. Additionally, the law limits the legal liability of manufacturers of thimerosal, a mercury-based additive used in vaccines that is alleged to cause autism in children. Given that all of these provisions stayed intact in a bill passed by the old Democrat-controlled Senate, tort reform proponents hope that their other pet proposals will fare equally well in the new Congress. Key among these is Representative James Greenwood's medical malpractice bill, which the Pennsylvania Republican plans to reintroduce in the upcoming session. Capping Malpractice Damages Greenwood's bill, dubbed the Help Efficient, Accessible, Low-cost, Timely Healthcare [HEALTH] Act, already cleared the House last September. It would cap punitive damages in med mal suits at $250,000, and eliminate punitives entirely in actions against the manufacturer or distributor of a medical product that complies with Food and Drug Administration standards. The bill, backed by the U.S. Chamber of Commerce, the American Medical Association, and other business groups, would also limit lawyers' contingency fees to 15 percent of any amount in excess of $600,000. And it would eliminate joint and several liability in favor of proportional liability. But even if the House okays Greenwood's measure for a second time, it will face a tough battle in the Senate, predicts Carlton Carl. A spokesman for the Association of Trial Lawyers of America, Carl notes that the Senate considered a "less draconian" medical malpractice proposal last summer that nonetheless went down to defeat, 57 to 42. The ATLA official adds, "I didn't see that many votes changing on November 5." However, Webb at the U.S. Chamber of Commerce remains optimistic about the changes for both medical malpractice legislation and class action legislation, which is another priority for his group. "There's a very good possibility of [either] or both of them happening next year," he says. Like the medical malpractice bill, class action legislation passed the House last year only to go nowhere in the Democrat-controlled Senate. The intent behind the various proposals was to require most class actions to be filed in federal courts. Webb predicts "fairly quick" action in the new Congress, adding, "We've been doing a very aggressive effort to get to 60 votes." But Jason Thomas, a staff analyst at the conservative Citizens for a Sound Economy, still considers class action legislation "a long shot." The one bill that the business lobby doesn't want to see reintroduced in the new Congress is the Patients' Bill of Rights, which would establish a limited right to sue HMOs. Though the bill passed the House in August 2001, it fell into a legislative black hole after the September 11 attacks that year. ATLA's Carl says that his association will continue to push for the bill. "But will it pass?" he asks. "I don't know." As with every other question about tort reform, the answer will depend on which side can reach the Senate's magic number.

01/01/2003
"Death tax" deception
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"Death tax" deception

BY Hunter, Rosie; Collins, Chuck

The federal estate tax, or "death tax," isn't dead yet, but a powerful clique of wealthy families and interest groups will stop at nothing to kill it. Their move ment makes small business owners and family farmers its poster boys. But those who stand to gain the most from repeal are a few thousand very wealthy households. The effort to turn the public against the estate tax, and ultimately abolish it, is a case study in conservative movement tactics-the campaign uses distorted facts, dirty tricks, and front groups, and it's bent on repealing the nation's only tax on inherited wealth. The decade-long public relations and lobbying campaign seemed to pay off when President George W. Bush signed his $ 1.35 trillion tax cut into law in 2001. The bill included a gradual phase-out of the estate tax over ten years (see sidebar). But because the tax bill--a bizarre assortment of delayed activation dates and gimmicks that money guru Jane Bryant Quinn called "a contemptible piece of consumer fraud"--was structured to "sunset" at the end of 2010, the estate tax will be fully repealed for only one year, after which tax rules revert back to what they were before passage of the bill. The anti-estate tax lobby is now pushing hard to make repeal permanent. With Republicans back in control of both houses of Congress, repeal proponents on both sides of the aisle are emboldened. And they understand that they must move quickly because as the budget deficit grows, permanent repeal will become politically more difficult to justify. Can this juggernaut be stopped? Perhaps, but only if progressives take a hard look at the anti-estate tax campaign, debunk its claims-and its "grassroots" facade--and then organize like never before. THE CASE FOR PRESERVING AN ESTATE TAX Abolishing the estate tax would further concentrate the nation's wealth in the hands of the super-rich at a time when the distribution of wealth is already more unequal than at any point since the 1920s. It would also drain resources from strapped states and charities. Among the pressing budgetary reasons to preserve the tax are these: * Making the repeal of the estate tax permanent would contribute to a fiscal train wreck, draining government coffers of $ 850 billion between 2011 and 2021. * Repeal would eliminate one of the few progressive taxes in our federal system, resulting in the transfer of hundreds of billions of dollars to the trust funds of the nation s wealthiest families while shifting the burden of taxation (or cuts in services) onto those less able to pay. * States--already straining to balance their budgets-stand to lose $ 9 billion a year in state-linked revenue by 2010 as a result of the planned estate tax phase out. * Estate tax repeal would also shrink charitable giving and bequests, particularly from estates in excess of $ 20 million. Without the incentives provided by the estate tax (which encourages charitable bequests during life, in anticipation of the tax, as well as at death), the Treasury Department estimates that charitable giving may decline as much as $ 6 billion a year. But the estate tax was meant to do more than bolster budgets and aid charities. From its inception, it was meant to ward off the emergence of a hereditary aristocracy in the United States. Established in 1916, the tax was a populist response to the excesses of the Gilded Age. President Theodore Roosevelt justified it by arguing that society has a claim upon the fortunes of its wealthy. Roosevelt pointed out that most great civilized countries have an income tax and an inheritance tax. In my judgment both should be part of our system of federal taxation." Such taxation, he noted, should "be aimed merely at the inheritance or transmission in their entirety of those fortunes swollen beyond all healthy limits." A number of modern-day millionaires--who are themselves subject to the tax--understand its historical importance. As part of the opposition to repeal, over 1,200 wealthy individuals signed a petition calling for preserving-but reforming-the tax. The signers (who include William H. Gates, Sr., George Soros, and Ted Turner) argue that the tax is an essential means to moderate the excessive build-up of hereditary wealth and power. Investor Warren Buffett argued in the New York Times that repealing the estate tax would be comparable to "choosing the 2020 Olympic team by picking the eldest sons of the gold-medal winners in the 2000 Olympics...Without the estate tax, you in effect will have an aristocracy of wealth, which means you pass down the ability to command the resources of the nation based on heredity rather than merit." Petition-signers and other activists say they support raising the cap on exemptions to further reduce the already-miniscule number of small businesses and farms affected by the tax. For som e, the call to raise exemption levels is in part tactical--a means to gain congressional support for tax preservation. THE PUSH FOR REPEAL How did legislation benefiting only a narrow slice of the wealthiest Americans advance so far? Who is behind the push to abolish the estate tax? Repeal backers describe their movement as "grassroots," but peek behind the curtain and you find a well-funded public relations, lobbying, media, and research apparatus (led by sophisticated operatives, many with deep connections to the Republican Party). In the early 1990s, a group including the heirs to the Mars and Gallo family fortunes embarked on a long-term effort to eliminate the tax. They enlisted the help of Patricia Soldano, an Orange County, California, advisor to wealthy families. She formed a lobbying organization (the "Policy and Taxation Group") to provide an "outlet" for wealthy families "interested in communicating their concerns to members of Congress." Soldano channeled funds to congressional backers of repeal and hired the powerful lobbying firm Patton Boggs. By the mid-1990s, Soldano's outfit and other early pro-repeal groups had joined together with a veritable anti-tax industry of think tanks, lobbying firms, and interest groups in Washington, D.C. to form a powerful "death tax elimination" lobby. Conservative think tanks, including the Heritage Foundation and the libertarian National Center for Policy Analysis, produced "policy backgrounders" criticizing the estate tax, and made the requisite opeds and TV appearances as well. The antigovernment group Citizens for a Sound Economy encouraged its members to lobby their senators and representatives against the tax. Other groups involved in the anti-estate tax crusade include the private campaign organization Club for Growth; the political arm of the libertarian Cato Institute; the American Conservative Union; Grover Norquist's Americans for Tax Reform; and the 60 Plus Association, a self-styled conservative alternative to the American Association of Retired Persons. At the center of the lobbying effort is the Nati onal Federation of Independent Businesses (NFIB), a business trade association and one of the most influential organizations in Washington. The NFIB's lobbying web site sends faxes to Congress urging estate tax repeal. In 1993, U.S. Representative Christopher Cox (R-Calif.) introduced the first repeal legislation with just 29 cosponsors. Soon, Sen. Jon Kyl (R.Ariz.) became a chief ally, along with Reps. Jennifer Dunn (R-Wash.) and John Tanner (D-Tenn.). Within a year, elimination of the "death tax" occupied a central plank of the G.O.P.'s 1994 "Contract with America." By 1998, repeal legislation had over 206 House sponsors including the entire Republican leadership. At NFIB's 2002 Small Business Summit, Bush strategist Karl Rove said "the NFIB and the Bush administration work hand-in-hand because we see eye-to-eye." Referring to NFIB's failed effort in June 2002 to make the repeal of the estate tax permanent, Rove assured his audience, "Don't look at it as a defeat. This is a war, and we need to make an ongoing commitment to winning the effort to repeal the death tax." DEATH TAX LINGO In perhaps its greatest public relations feat, the pro-repeal lobby has managed to portray the estate tax as a "death tax" on most Americans. The phrase suggests a tax imposed upon death itself, although over 98% of those who die go untaxed. The "death tax" label has proven a major asset to the campaign, yet its authorship is disputed. James L. Martin, president of the 60 Plus Association and Bush family friend, credits himself. Rep. Dunn credits Seattle Times publisher Frank Blethen. Whatever the origin of the tag, Republican pollster Frank Luntz masterminded its widespread use. Luntz urged conservative legislators and candidates to exclusively call the estate tax a "death tax," and in a 1994 memo he suggested legislators hold anti-estate tax press conferences at local funeral homes. Republicans employ the "death tax" label so effectively that the term is now used in the mainstream press. Martin has thought up plenty of other labels for the tax as well, including "grim-reaper's tax," "grave robber's tax," "cruelest tax," "pine-box tax," and "success tax." Martin travels the country to spread the word that "taxing cadavers is gross public policy," and to ask the public, "Should Uncle Sam, rather than a blood relative, be the first in line when you die?" At one point Martin ran a contest to generate new catch phrases; the winner--"last--grasp tax"--got $ 100. Martin, Luntz, and other Republican spin-doctors recognize that success hinges on how the debate is framed. Martin told The American Prospect, "it's all a matter of marketing." DECEPTIION DOWN ON THE FARM Pro-repeal literature is packed with claims that the estate tax forces working farmers to sell their farms. When Congress passed legislation to repeal the tax in 2000, it delivered the bill to President Bill Clinton on a tractor to symbolize the "down on the farm" effects of the bill. On the campaign trail later that year, George W. Bush declared, "To keep farms in the family, we are going to get rid of the death tax!" Starting in the spring of 2001, a number of investigative reports began to question the veracity of these claims. They found that stories of farmers losing the farm to the estate tax are so rare that experts and investigators have been unable to find any real examples. Neil Harl, an Iowa State University economist whose tax advice has made him a household name among Midwest farmers, said he searched far and wide but never found a case in which a farm was lost because of estate taxes. "It's a myth," said Mr. Harl, "M-Y-T-H." The New York Times reported that when the pro-repeal American Farm Bureau Foundation was challenged to produce one real case of a farm that was lost because of the estate tax, it could not cite a single example. In April 2001, the Bureau's president sent an urgent memo to its affiliates stating, "it is crucial for us to be able to provide Congress with examples of farmers and ranchers who have lost farms... due to the death tax." Still, no examples were forthcoming. DISABLED AMERICANS AGAINST THE DEATH TAX? In early 2001, Responsible Wealth (a project of the popular education organization United for a Fair Economy) initiated the petition of wealthy individuals calling for preservation of the tax. The petition prompted a swift counterattack by the pro-repeal lobby, which issued a barrage of advertising and media events to undermine the Responsible Wealth effort. One example provides an illustration of pro-repeal tactics. In March of 2001, full-page advertisements appeared in several daily newspapers around the country including the Wall Street Journal and the Washington Times. The advertisements were produced by a new organization, dubbed "Disabled Americans for Death Tax Relief." Its leader, a young woman from Austin, Texas, named Erin O'Leary, claimed she had just formed the organization two weeks earlier and already had over 1,000 members. O'Leary was "deeply offended by the callous and heartless comments made by 125 so-called 'millionaire' signers of the Responsible Wealth ad that appeared in the New York Times." She alleged that there are "2.5 million disabled people who are family members of millionaires, a number that would grow to 8 million over the next thirty years," and that with rising medical costs, these individuals needed their inheritances. The text of the advertisement continued: In order to live a full life, these Americans may require medical help, nursing and living assistance far beyond that which is covered by medical insurance. Warren Buffet, Bill Gates, Sr. and George Soros believe that these people should be denied full financial help from their parents. The "Disabled Americans" stunt was the creation of conservative communications maven Craig Shirley (whose public relations firm represents the National Rifle Association, the Heritage Foundation, and the Republican National Committee). Fox News and several conservative talk shows kept O'Leary busy with interviews, but most other news media recognized O'Leary's advertisement for the charade that it was. Disabilities experts responded, including author Marta Russell, who felt that "using disabled people to front for the interests of the wealthiest members of our society is an outrage and a disgrace." Russell disputed the claim that millions of disabled people could be adversely affected by the tax. O'Leary's figures made no sense given the economic profile of the disabled population in this country. The disabled are one of this country's poorest groups, and highly dependent on the very tax-funded social services that repeal of the estate tax could put at risk. SHAPING PUBLIC PERCEPTION Print and radio advertisements are key weapons both in molding public perception and attacking members of Congress who vote against full repeal. The owner of the Seattle Times, Frank Blethen, sees estate tax repeal as his personal crusade. (Blethen believes that the estate tax is responsible for the decline of family-owned newspapers.) He started a website and organizes an annual "Death Tax Summit" in Washington, D.C., to mobilize other independent newspapers and business groups to lobby Congress. Blethen has used the Seattle Times as a vehicle for his anti-estate tax cause, both on the editorial page and through advertisements, stirring concerns from the paper's editors about his lack of impartiality. Further, he circulated the anti-death tax ads he developed to other newspaper owners; they were published in over one hundred independent newspapers nation-wide. The estate tax is also a favorite issue for conservative groups seeking to exercise political influence through issue ads. In the months prior to the 2002 election, pro-repeal organizations ran estate tax issue ads in South Dakota, Missouri, Minnesota, Iowa, and Arkansas. In Missouri, the United Seniors Association and Americans for Job Security (phony grassroots organizations fronting for corporate interests) targeted former Senator Jean Carnahan's position on the estate tax. In Minnesota, Americans for Job Security ran full-page newspaper ads attacking the late Senator Paul Wellstone for voting against full repeal, and flew a banner at the Minnesota state fair: "Wellstone Quit Taxing the Dead!" DIVIDING DIVERSE CONSTITUENCIES Another pro-repeal strategy has been to thwart progressive and diverse groups that might be inclined to preserve the estate tax. Over the past five years, pro-repeal forces worked to convince the public that the estate tax is particularly detrimental to women and people of color as well as farmers. In doing so, they spin an illusion of a rainbow coalition in opposition to the tax. For example, the NFIB and front group called the Small Business Survival Coalition recently organized press conferences with women business owners and alleged that "women--not men--are the chief victims of the tax" because women generally outlive men. They mobilized women's business organizations including Women Impacting Public Policy and the National Association of Women Business Owners in support of repeal. But claims that the estate tax burdens women business owners are misleading. The great majority of all businesses fall below the taxable level (see sidebar). Relatively few businesses of any kind face the tax, and because women-owned (and minority-owned) businesses are smaller than average, they are affected even more rarely. As for the argument that women outlive men, the only families subject to the tax are those who own assets at least 20 times greater than the net worth of the median family. Therefore few widows lose any inheritance to the estate tax. And those who do are among the wealthiest 2% of households, not hard luck cases. On the other hand, women--and people of color--benefit disproportionately from social programs (including small business loans and education spending) funded by the tax. Anti-estate tax groups have similarly put forward minority business groups, such as the Hispanic Business Roundtable and the National Black Chamber of Commerce, as visible allies. Frank Blethen enlists minority-owned newspapers in opposing the tax. He tells readers of the newsletter that it is important to "educate" members of Congress that the estate tax is "a minority and female-owned business issue and an environmental issue." In April 2001, billionaire Robert Johnson of Black Entertainment Television and a group of other African-American business people ran ads in the New York Times and the Washington Post. Johnson invoked race in his ads, claiming to speak for African Americans broadly. The ads asserted that the estate tax unfairly takes wealth away from the black community and that repeal would help African Americans gain economic power. Although there are no statistics available on the number of African Americans subject to the estate tax, African Americans are clearly far less likely than white people to inherit fortunes large enough to face taxation. The median net worth for African-American households (excluding homeownership) is $ 1,200, compared to $ 37,600 for white households. (The median Hispanic household is lower still, with zero net worth.) One in four African-American households own no positive wealth at all, compared with one in seven white households. And there are only two African Americans on the Forbes 400: Oprah Winfrey and Robert Johnson himself. Nevertheless, President Bush moved quickly to quote Johnson in his speech to the Council of Mayors, saying "as Robert Johnson of Black Entertainment Television argues, the death tax...weighs heavily on minorities." Soon after, Bush tried to convince the members of the National Council of La Raza, a major Latino advocacy group, to join him in supporting estate tax repeal. Bush described a Mexican-American taco-shop owner who said he wanted "to get rid of the death tax so I can pass my business from one generation to the next." It turned our, as even the Wall Street Journal noted, the taco shop Bush described was valued at $ 300,000, far below the over $ 1 million exemption the current law allows owners of businesses. George W. got it wrong. The taco shop would pass to heirs untaxed, just as the vast majority of small businesses do. Like the allegations about small farms and family enterprises, pro-repeal forces repeat these allegations about women and people of color over and over through their media work and lobbying efforts. A principal tactic of the campaign has been to get the minnows to front for the whales. But the truth is, few or no folks are losing their taco shops--or their farms--to the estate tax. In fact, in 1998, only 776 estates where family-owned business assets represented over half the value of the estate were "taxable" under estate tax rules, out of 47,482 total taxable estates, and 2.3 million individual deaths. So the great majority of estates taxed under the estate tax are not estates built on family-owned businesses and farms, but other forms accumulated wealth--stock investments, nonproductive assets, fourth homes, art collections, luxury items, etc. ALL OR NOTHING REPEAL The architects of the repeal effort are zealots. They advocate nothing short of complete repeal and consistently oppose any reform or compromise. They understand that partial reform will not benefit the principal patrons of the repeal effort-the very wealthy interests who bankroll the campaign would not be covered by exemptions. (Their wealth is so great it would exceed even a very high cap.) But this strategy may backfire when the groups that have bought into the misrepresentations realize that, rather than family farmers or small business owners, the vast majority of whom will never owe any estate tax, the windfall of estate tax repeal will go to the heirs and heiresses of the country's 3,000 wealthiest estates. This elite group will inherit billions in appreciated stock and real estate, enormous capital gains that have never been subject to taxation. The Wall Street Journal has estimated that George W. Bush's heirs alone would stand to gain from $ 6 to $ 12 million if the tax is repealed, assuming his estate remains the same size up to his death. Cheney's heirs would save between $ 10 and $ 45 million. And the heirs of the Gallos and Marses stand to make even more. CONCLUSION In the bid to eliminate the estate tax, anti-repeal forces have used slick advertising, explicit falsehoods and deception. But we should not have to endure the triple whammy of lost federal revenue, state revenue and charitable giving in order to give a handful of millionaires and billionaires a tax break, no matter how well disguised in a misinformation campaign. With Republicans back in control of the U.S. Senate, the push is already on to permanently repeal the federal estate tax. For now, even with their new majority and Democratic party supporters, repeal proponents fall short of the 60 votes they need under budget rules that expire in April 2003. If the budget rules are not extended, however, they will be able to advance their anti-estate tax agenda with only a simple majority. This juggernaut can be stopped, but time is running out. RELATED ARTICLE: The estate tax: the basics The federal estate tax is the only tax on accumulated wealth in the United States, It is a transfer tax, levied at the time of death when assets transfer to heirs. It falls on the country's wealthiest households--less than 2% of all estates--but still generates significant revenue (currently $ 30 billion annually, or about 9% of the non-military discretionary budget). Under the 2001 tax cut, the amount of wealth exempted from the estate tax rises from $ 1 million ($ 2 million for a couple) to $ 3.5 million in 2009 ($ 7 million for a couple). As a result, the number of households subject to the estate tax will shrink from 50,000 to about 6,000 a year. Even at its current level, the estate tax affects only a small percentage of businesses and farms. This is in part because family-owned businesses and small farms receive special treatment under the tax, including large deductions when the business or farm represents at least 50% of the estate, and assessments that reduce the estimated value of assets. These special rules frequently allow family-owned businesses and farms to pass on $ 5 to $ 8 million, tax-free, to heirs. Those family-owned businesses that are subject to the estate tax rarely pay the top marginal rate, and are given a generous 14-year payment schedule. The estate tax is a graduated tax with a rate structure that starts at 32% and increases to a top rate of 55% on estates exceeding $ 3 million. The 2001 tax bill reduces the top rate to 45% between now and 2009. The "effective rate," the percentage of the total value of the estate actually paid in taxes, averages about 30%. Rosie Hunter is a researcher with United for a Fair Economy in Boston. Chuck Collins is thc Program Director at United for a Fair Economy and co-author, with William H. Gates, Sr., of Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes (Beacon Press, January 2003). For information on how to get involved in efforts to preserve the estate tax, go to .

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