Net Operating Losses: Proposed Extension of Carryback Period

THE REPORT: Net Operating Losses: Proposed Extension of Carryback Period
LOCATION: RL34535


What do you Learn: With the American Economy in a deep slowdown, congress is examining the tax code on how businesses are reporting their losses so as to reduce their volatility in business cycles. One way this is done through the Net Operating Loss (NOI) carryback/carryforward provisions. Previously if a business has a loss they can carry back the loss for two years or add it to the next twenty years of tax returns. Generally, taxpayers wish to carry their losses backward because they can receive a refund. If the loss is incurred from causality, theft, or a Presidentially declared disaster then you can carry the loss back for three years. Farming is a five year carryback period for losses with Real Estate Investment Trusts are ineligible.

In the current Congress both American Recovery and Reinvestment Act and the recently passed new Worker, Homeownership, and Business Assistance Act P.L. 111-92 extend NOI's that were incurred in 2008 or 2009 (but not both) back to five years. Extending the provision another three years from the norm. On the fith year the loss is capped at 50% of the taxpayer's taxable income but this limitation does not apply to many small businesses.

Policywise, the report estimates that by making this change from the two to a five year carryback period the cost will be about $10.4 billion and according to the Congressional Budget Office produces a stimulus increase to the GDP for every $1 of NOI carryback there is up to a $0.40. The same rate does net more with targeted income tax cuts and government purchases.

However, with those benefits policymakers must wrestle with the "moral hazard" of their decision because economists note that it does cause investors to make much more risky investments and reduced revenue in to the treasury. Thus the conundrum in changing the carry back provision.

U.S. Fossil Fuel Resources: Terminology, Reporting, and Summary

THE REPORT: U.S. Fossil Fuel Resources: Terminology, Reporting, and Summary

LOCATION: R40872

What do you Learn: Since there is so much confusion about the state of the world's oil supply and other energy commodities. Policymakers are at a quandary are we at peak oil? Or is oil a natural process of the Earth? But before we can get to that point we need to have some baseline definitions about how much oil there is available for the 7.1 Billion Barrels of Oil, 23.2 Trillion cubic feet of Natural Gas, and 1.04 billion short tons of Coal that Americans consume each year. This report has that at its objective.

There are two basic terms that one must know to understand quantities of fossil fuel deposits. Proved Reserves and Undiscovered Resources. Proved Resources are deposits that in their discovered form are economically viable for extraction. They are such that they must be reported to the Securities and Exchange Commission are part of a corporation's capital assets. The second type of fossil fuel deposit is the category of undiscovered resources. They are those that are estimated to exist by the United States Geological Survey. There is a third term of "in place resources" but is seldom used because as they interestingly note that very little of a fossil deposit is ever extracted for commercial use. Those terms are important when looking at the newly discovered Bakken Oil formation in the Western US that there was a gap between the "in place oil" and that was economically viable for extraction.

Now how does this relate to current policy debates on Capitol Hill? Take This Press Release by Sen. Jim Inhofe notes when you add both the proved reserves and the recoverable resources one arrives at the figure of 167 billion barrels of oil. However, his opponents only look at the proved reserves figure of 21 billion barrels and claim that that is what this country has in terms of oil deposits. They go on to the specific components of how they arrive at those figure However they throw in this caveat "this is not a simple arithmetic exercise " since the there is fluctuation in the figures but nonetheless averages can be made.

Text and Multimedia Messaging: Emerging Issues for Congress

THE REPORT:Text and Multimedia Messaging: Emerging Issues for Congress

LOCATION: RL34632


WHAT DO YOU LEARN?: Congress is pondering is what do with all of those crazy teenagers and the rest of the population that loves to text on their cell phones. As of June 2009, 135 Billion text messages were being sent a month in aggregate by wireless customers in the United States. This report gives policymakers some introductory definitions of the 160 character pastime from what is SMS (Short Messaging Service) to what are Common Short Codes? (CSC's) They are the short number addresses used on tv shows like American Idol for a text message to reach its destination.



Basically the issues that face the wireless industry are placed into a "Diocletian Split" Are text and multimmedia messages regulated the same way you regulate phone messages whether it is phone to phone or based upon the devices email address? and Do you regulate the phone as you would electronic mail? The "same problem" "different platform" meme They use the example in the report spam sent between or from one phone does not fall under the legal defintion of spam however, if you send the message from the phone to the computer the message falls under the CAN-SPAM act.



The Report also goes in to detail about Distracted Driving while texting. 16% of all fatal automobile crashes were caused by distracted driving according to a DOT study. Senator Schumer and Rep. Carolyn MCarthy have both introduced the ALERT Drivers Act H.R. 3535 which stands for Avoiding Life Endangering and Reckless Texting by Drivers Act. It is now bottled up in committee on the house side. Currently 19 States and the District of Columbia have bans on Texting while driving.



Additionally noted, that the writer of this report believes "there is no evident reason" for messages on a computer to be treated differently under the CAN-SPAM ACT P.L. 108-187 . Specifically in the 111th congress S. 788 the m-Spam Act would regulate spam to mobile devices. Another major complaint of wireless subscribers about texting is their inability to disable texting.

The writer then addresses several other issues but then concludes by saying that the issues involving texting have not reached a crescendo for congress to get involved while some are being addressed by the wireless industry however, with 135 billion text messages being sent at $.10 a pop it is hard to see Congress not involved.

Temporary Extension of Unemployment Benefits: Emergency Unemployment Compensation (EUC08)

THE REPORT: Temporary Extension of Unemployment Benefits: Emergency Unemployment Compensation (EUC08)

LOCATION: RS22915

What do you learn? On December 26, 2009 The Emergency Unemployment Compensation program (EUC08) is set to expire. Eight times in our country's history ranging from the late 1950's to 2002 has the United States extended such benefits to unemployed individuals. The Current benefit is augmented by the stimulus bill giving each recipient an additional $25. The Congressional Research Service gives the reader a breakdown of the various levels of unemployment benefits and availbilty of the program is disseminated through various unemployment offices. The program is currently financed with general funds from the US Treasury

Tier 1: The benefits have basically a ceiling of only 20 weeks. Tier 2 provides an additional 14 weeks of benefits. Tier 3 though is a bit different only if you have worked in a state with an unemployment rate of 6% of higher are you eligible for an additional 13 weeks of benefits. Tier 4 continues the state unemployment rate meme that you have to have worked in a state with an unemployment rate of 8% or higher with a maximium of 53 weeks of benefits. CRS notes that there are very few recipients of Tier 4 benefits.

Currently, 111th Congress late in the session several bits of legislation are relevant. H.R. 291 introduced by Rep. McDermott would extend an additional $50 in the EUC08 program through the end of 2009. However, the real substance of the program will be determined basically by the consideration of H.R. 3458 which is moving through both the house and the Senate. The House verision taxes an employee $14 and requires an employers to report that to the National Directory of New Hires. The House creates a Tier 3 plan while the Senate version creates a Tier 4 plan. The President did ultimately sign HR 3458 in to law on November 6, 2009

The National Intelligence Council: Issues and Options for Congress

The Report: The National Intelligence Council: Issues and Options for Congress

Location: R40505

What do you learn:
Ever wonder how the National Intelligence Estimate is made? It is made at request of Congress, civilian and military policy makers from the National Intelligence Council (NIC) are 15 National Intelligence Officers (NIO's) that fall under geographic and policy areas and they serve at the pleasure of the Director of National Intelligence and by law they can be inside of another agency connected with the Intelligence community. The NIO are individuals who generally come from academia, foreign service, and retired military. They are not to provide public relations for the intelligence community but they can deliver policy addresses at Associations involved in foreign affairs .

The goal of forming the fore-runner of today's NIC (the Board of National Estimates within the CIA) was to avoid another Pearl Harbor. They published about 1500 NIE's but they missed the factors leading to the Cuban Missile Crisis. Later in the Clinton years the NIE was politicized to note the affects of Environmental Change on Security Policy and 9-11 was also missed by the board.

So what can Congress do? The report believes that Congress benefits from hearing from the council whether in closed or open session. The question has been raised should the NIO's be Senate confirmed? Critics worry that by doing that Congress would be making what should be non-partisan analysts very political in their judgment but it would provide valuable congressional oversight in the process. However, the report concludes by saying "all intelligence is an intellectual activity that inevitably carries with it some degree of uncertainty."

The Global Economic Downturn

The Report : The Global Economic Downturn and Protectionism

Location: R40461

What do you learn:
With the world economies projected to contract by 1.3% this year the first such decline noted in the last half century concerns are being raised that trade policy may turn to a protectionistic tone. Economists note we could be heading in to a cycle in which trade disputes cause policymakers to adopt such things as the Smoot-Hawley Tariff Act (which is still on the book) which raised tariffs to 60% rather than the 10% today. The Report analyzes are we in a similar situation today simpatico with the Great Depression and World War I. There are three three senerios that the report lays out. 1) low impact in which trade rules are followed 2) medium impact whereas subsidies from industries like the financial sector and the auto sector debilitate the global trading system. 3) high impact because of large trade imbalances between nations such as China and the US would our stimulus spending or other nation's stimulus spending cause "free-rider" resentment.

The low impact school which is the first school reviewed in the report believes that it is completely overstated that the world is going protectionistic. They note that the WTO with its 153 members sets policies unlike those in the 1930's for a world that has many more multinational corporations. The report pans the Gold standard and notes that the WTO records that there has been no increase in the number of Anti-dumping investigations. The "Low-Impacters" also note the "Buy American" provisions of the stimulus bill has had only a limited impact on the global trade system

The Medium impact school believes that the subsides and stimuluses of sectors like the financial and auto sectors will cause nations to forget their multi-national agreements weaken the global trade. The report notes, thus far during this downturn, $48 Billion world wide and $17.4 billion in the United States has been given to the auto sector. Also they give the example that, 68% of the Royal bank of Scotland is owned by the government of the United kingdom. More broadly trillions of dollars have been given by 26 countries to stimulate their economies from potential collapse. However, the report believes that cases are unlikely to be brought before the WTO because of the multi-national ownership of car firms. The financial sector rescue does not violate multi-national agreements and it could weaken the rules but yet it has been the genesis of much global cooperation to deal with the crisis.

The High Impact school ascribes that since there are countries that are saving more than those that aren't there is an imbalance of current account surpluses which the report notes at about $2 Trillion dollars, the problem can be remedied by declines in consumption or investment to reset trade. For the 5% that the US economy is going to decline, China will have to consume 17% more in GDP to make the system much more harmonious.

So what can Congress do? The Report recommends that A) Congress coordinate Stimulus programs with other governments and Treasury Secretary Tim Geitner has done so by recommending each G20 country to spend 2% of GDP on stimulus with the IMF playing a watch dog role if each country has followed that goal. B) That Trade Barriers need to have far more public scrutiny and that under previous crisises the tariffs lasted for decades because no one knew about them C) How we manage Trade through the WTO could provide a backstop from constituent pressure for tariffs and that dropping trade barriers may be the answer to the current crisis.

Ballast Water Management to combat invasive species

The Report: Ballast Water Management to Combat Invasive Species

Location: RL32344

What do you learn:
With the world's cargo ships traveling faster and much more efficiently species foreign species of plants and animals are being introduced into the ecosystem of the United States around such ports as the Great Lakes and San Francisco Bay. With introduction of Zebra Muscles in the 1980's and 230 non-native species Congress decided to act to stop the contamination from the Ballast Water.

There are several ways that you can achieve Ballast Water Management (BWM) in cargo ships. The most popular way to do it a ship operator can release the water in lower-salinity coastal water in open ocean water with a higher salinity level that will kill the organisms. That method does work but however, some organisms survive the higher level salinity levels in un-pumpable residual water and sediment remaining in the tanks as this process occurs. The second approach to BWM is treatment, which is being researched, such as filtration, separation, sterilization by things like ultraviolet light and ultrasound. The third method to accomplish this is by the "no-ballast-on-board" (NOBOB) situation. The ship in this method carries no ballast water but still large numbers of organisms can remain in the tanks.

Policy makers have wrestled with the fact the procedures will cost $400,000 per vessel vs. the $5 billion dollars in damage these species have done to the Great Lakes. Congress Passed in 1990 the Non indigenous Aquatic Nuisance Prevention and Control Act of 1990. It sets fourth a task force of several different agencies to find out where Ballast exchange could occur without environmental consequences and determine what regulations are needed other than the great lakes. In 1996, Congress then passed the National Invasive Species Act (NISA) which directs ships to account for their ballast water outside of the US economic zone which was not enforced mandatorily on a ship by ship basis. Currently according to the National Ballast Information Clearinghouse only 30.4% vessels are filling reports as they enter the US Exclusive Economic Zone. Critics point out the Act has failed to stop Invasive Organisms going into the Great lakes where the regulations are enforced the most over the longest time.