Senate Finance Chairman Max Baucus (D-MT) last week revealed his plan for tax reform including limited extension of Bush-era tax cuts and some reversion to higher tax rates. Baucus would extend the reduced rates for middle-income tax brackets but allow the top two tax brackets to increase back to Clinton-era levels. Taxpayers in middle income brackets would see a permanent extension of the 15 percent capital gains tax rate while individuals in the top two brackets would see capital gains taxes increase to 20 percent. Baucus also proposes to permanently fix the Alternative Minimum Tax (AMT) to prevent 20 million taxpayers from being subject to the higher rates. Notably, Baucus does not extend Obama's "Making Work Pay" credit that was included in the recently passed stimulus package and in the President's 2010 Budget.

Debate over the estate tax heated up this week with a bipartisan group of senators supporting a new plan to reduce the impact of the tax. Both Senate Finance Chairman Max Baucus' recent tax plan and Obama's budget call for the estate tax to be frozen at 2009 levels. This would mean a 45 percent tax on estates valued at $3.5 million. Sen. Blanche Lincoln (D-AR) and Sen. Jon Kyl (R-AZ), both members of the Finance Committee, have jointly introduced an amendment to the budget that would increase the exemption to $5 million and reduce the tax rate to 35 percent. Lincoln and Kyl have the support of Finance Committee Ranking Member Charles Grassley (R-IA) and a group of moderate Democrats including Sen. Ben Nelson (D-NE), Sen. Mark Pryor (D-AR), and Sen. Mary Landrieu (D-LA). Printing Industries, as a member of the Family Business Estate Tax Coalition, offered its thanks along with support for the proposal in a letter this week. While the budget is non-binding, strong bipartisan support for the amendment will set the stage for later debate over tax legislation.

This week the Government Withholding Relief Coalition sent a two letters offering support for House and Senate bills to repeal the 3 percent government withholding requirement. The House bill, H.R. 275, is sponsored by Rep. Kendrick Meek (D-FL) and Rep. Wally Herger (R-CA), while the Senate companion, S. 292, is sponsored by Sen. Arlen Specter (R-PA). The withholding requirement currently goes into effect after December 31, 2011. Congress backed up the implementation date for withholding multiple times because of its impact on business but lawmakers have been reluctant to eliminate the requirement because of the effect it would have on the long-term deficit calculations.

The Printing Industries-supported LIFO Coalition advocates for continued Congressional support for the last in first out method of accounting. To help understand LIFO and why this common accounting method is under attack, the Coalition has prepared a short presentation. LIFO repeal is included in the President's 2010 Budget and has been included in various Congressional tax proposals in recent years.

Yesterday, a cross-section of industries rallied on Capitol Hill to seek substantial changes to the CPSIA. Affected business owners from across the country came to Washington to make the case that the expansive legislation is leading them to shut down their production. The website highlighting the rally features pictures of the many products that have been removed from shelves or ceased production since the CPSIA went into effect at the beginning of February. The rally was also attended by representatives from the publishing industry and members of Congress supportive of restructuring the bill.

The Senate Energy and Natural Resources Committee this week marked up a number of energy-related provisions including S. 661, Restoring America's Manufacturing Leadership through Energy Efficiency. The bill would establish programs and partnerships to improve industrial energy efficiency. The bill provides new financing mechanisms to help the industry retool and implement new technologies that reduce energy usage and emissions. The bill has bipartisan support including three Republicans: Sen. Susan Collins (R-ME), Sen. Olympia Snowe (R-ME), and Sen. Lisa Murkowski (R-AK).

Attempts in the U.S. Senate to speed a climate change bill through the legislative process were dealt a blow yesterday when Sen. Mike Johanns (R-NE) successfully attached an amendment to the 2010 budget. Johanns amendment, which passed 67-31, would bar the use of the reconciliation procedure to consider a carbon cap and trade program. Reconciliation would prevent filibusters of legislation and require only a fifty-one-vote margin to pass. It is intended to be used for votes on legislation that have a direct impact on the nation's budget. Democratic leadership has stated that cap and trade legislation would in turn generate revenue to pay for President Obama's health care reform proposal, which, in turn, would constitute entitlement reform and have a positive impact on the budget. The strong, bipartisan vote on the Johanns amendment sends a message that a majority of Senators reject this notion, and support using regular procedure to consider the climate change issue. Of note, Senator Byrd (D-WV), considered a scholar of Senate procedure, voted in support of the Johanns amendment.

On the House side, the Energy and Commerce Committee this week introduced a lengthy energy and climate change proposal. The 600-page draft from Chairman Henry Waxman (D-CA) and Subcommittee on Energy and Environment Chairman Edward Markey (D-MA) contains four principle sections: clean energy, energy efficiency, global warming, and transitioning to a low-carbon economy. The plan calls for a carbon cap and trade program that would reduce emissions by 83 percent of 2005 levels by 2050. The plan calls for energy companies to produce 25 percent of their electricity from renewable sources by 2025. Speaker Nancy Pelosi (D-CA) this week called for a bill to move through the House within six months, a fairly strict deadline considering the current focus on health care reform. Democratic leadership may look to move both health reform and climate change legislation together since Senate Majority Leader Harry Reid recently indicated that funds generated by the climate program could pay for health care reform.

The San Francisco Board of Supervisors this week passed 9-2 a non-binding resolution encouraging the State of San Francisco and the U.S. Congress to institute a "Do Not Mail" registry. While the resolution passed, the Mail Moves America Coalition and Printing Industries of Northern California put a great deal of effort into educating supervisors about the economic repercussions on restrictions on direct mail. The resolution awaits the signature of the mayor who will then forward it to the appropriate federal and state legislators. Proponents of do not mail had a number of advantages including the political slant of the board and the San Francisco location of the primary organization pushing do not mail, Forest Ethics. Passage of the resolution may present opportunities to educate lawmakers about the importance of direct mail to the California economy where 400,000 jobs are directly or indirectly made possible by advertising mail.

In a sign that EFCA lobbying continues following Senator Specter's announcement that he, as they key swing vote, would not support EFCA in its current form at this time, this week the Service Employees International Union invited three cast members of the television program "West Wing" to lobby in support of EFCA. Actors Martin Sheen, Bradley Whitford, and Richard Schiff appeared at a rally along with Sen. Barbara Boxer (D-CA) and Rep. Rob Andrews (D-NJ) to urge passage of the bill. The Coalition for a Democratic Workplace noted that the three actors belong to a union-the Screen Actors Guild-that uses the secret ballot to vote for its leadership. While organized labor is trying to use Hollywood star power to push EFCA, the bill, as currently written, lacks enough sponsors to pass the Senate.

This week Secretary of Health and Human Services nominee Gov. Kathleen Sebelius (D-KS) appeared before two Senate committees in confirmation hearings. Though it was revealed that Sebelius had "tax troubles," she is expected to receive the approval of the committees and the Senate as a whole. Before serving as governor, Sebelius served two terms as Kansas Insurance Commissioner. During her confirmation Sebelius argued for the urgency of health care reform stating, "Inaction is not an option. The status quo is unacceptable and unsustainable."

Yesterday, the Senate Committee on Small Business and Entrepreneurship unanimously confirmed Karen Gordan Mills to lead the Small Business Administration (SBA). Mills is a venture capitalist who will head up the administration's recently announced plan to unfreeze capital markets for small businesses across the country. In related news, the committee revised its website to reflect new Chairman Mary Landrieu (D-LA). Landrieu was recently reelected and takes over from Sen. John Kerry (D-MA).

The March 31 special election for New York's 20^th District is still too close to call. At press time, reports indicated Scott Murphy (D) was holding a slim twenty-five vote lead over James Tedisco (R). With nearly 6,000 remaining absentee ballots to count, and more expected to come in within the next two weeks, the race will remain in doubt until mid-April. The race has been closely watched as the district is highly competitive. While Republicans hold the majority of party registration in the district, it voted for President Obama and a now-Senator Kirsten Gillibrand (D) in the 2008 election.

Rep. Peter Hoekstra (R) announced that he will step down from his seat to run for governor in 2010. Hoekstra has served the 2^nd District, which favors Republicans, since 1993. Hoekstra served as a chairman and a ranking member of the House Select Committee on Intelligence.

Sen. Norm Coleman (R) faced a setback to his legal challenge to the November election results this week when the three-judge panel ruled that only 400 absentee ballots would be opened and considered. With Coleman trailing Al Franken (D) by 225 votes in the official results, it seems unlikely that the ballots would reverse the result. The judges have yet to rule on a number of other issues related to the case including double-counted ballots and ballots found after Election Day.

"This was one of the biggest votes of the year,"

--Senate Republican Conference Chairman Lamar Alexander (R-TN) on the Johanns amendment

"There is an inevitability to this that everyone has to understand,"

-- Speaker Nancy Pelosi (D-CA) stressing the need for climate change legislation