Budget Watch

A newsletter covering budget reform and the latest news and views on the federal budget, published by The National Center for Public Policy Research, 501 Capitol Court, N.E., Washington, D.C. 20002 (202) 543-4110, Fax (202) 543-5975, and the Small Business Survival Foundation, 1320 18th St. NW, Washington, D.C. 20036 (202) 785-0238, Fax (202) 822-8118.

Issue # 12 - September 27, 1995 * David A. Ridenour and Karen Kerrigan, Editors

Hill Watch: Update on Budgetary Issues on Capitol Hill

Dole May Save Taxpayer-Financed "Welfare for Lobbyists"

Dole -- Elizabeth Hanford Dole, that is -- has come to the rescue of "welfare for lobbyists," the taxpayer-financed government grants given to organizations that engage in lobbying activities. Mrs. Dole, wife of Senate Majority leader and presidential hopeful Robert Dole, is President of the American Red Cross, a group that has taken the lead in opposing legislation sponsored by Representatives Ernest Istook (R-OK), Bob Ehrlich (R-MD) and David McIntosh (R-IN) that would sharply curtail political activities by groups receiving government grants. The Istook-Ehrlich-McIntosh proposal, which passed the House and is now part of the Treasury-Postal Appropriations bill (H.R. 2020), would, among other things, limit expenditures on political advocacy by government grantees to 5% of their net operating budgets. Each year, the federal government gives an estimated $39 billion to groups that may lobby either directly or indirectly, providing the stimulus to greater government spending across the board -- all at taxpayer expense. The Red Cross' well-orchestrated and well-financed campaign against the reform measure, supporters say, will make the task of passage more difficult. In the Senate, special exemptions for tax-exempt non-profits such as those with 501(c)(3) tax status, may be added to Istook-Ehrlich-McIntosh to placate the Red Cross. But such changes would render the bill virtually meaningless: Among the groups possessing 501(c)(3) tax status are the Planned Parenthood Federation of America, the Environmental Defense Fund, the Natural Resources Defense Council, and the Child Welfare League of America -- organizations well-known for their political activities. Other groups engaged in political advocacy activities have 501(c)(3) sister organizations through which they can funnel government grants. Balanced budget advocates are urging calls to Senator Jim Jeffords (R-VT) and Mark Hatfield (R-OR) in support of the Istook-Ehrlich-McIntosh proposal and against weakening amendments. Balanced budget advocates also are advising supporters to place calls to Senator Robert Dole (R-KS), given Elizabeth Dole's prominent role in the anti-reform effort.

Administration Watch: Where the Clinton Administration Stands on Budget Issues

Administration's Plan for Direct Loans to Students "Deader Than Elvis"

The Clinton Administration's plan for a government take-over of student loans now appears deader than Elvis thanks in part to the Senate Labor and Human Resources Committee which took up the student loan issue yesterday (September 26). The panel approved a measure sponsored by Committee Chairman Nancy Landon Kassebaum (R-KS) that would limit direct loans from the federal government to 20% of the total student loan volume -- down from the current level of 30%. While the measure falls far short of what many budget cutters had hoped for -- outright abolition of the program -- it did lay to rest the Administration's plan for a government take-over of 100% of student loans. According to Representative Ernest Istook (R-OK) in a May 23 statement before the Committee on Economic and Educational Opportunities, President Clinton's plan, if approved, would add $118 billion to the national debt by the year 2000 and close to $350 by 2014 (see chart). The Administration no doubt will use the vote -- much as it did the vote on the school lunch program -- to argue that Congress is picking on the underprivileged. Here are some facts about the direct loan program: 1.) Students pay a high price for direct lending. According to Michael Fumento, writing for Investor's Business Daily, a student borrowing the maximum amount allowed ($88,000) would pay $39,323 more in interest on a direct loan than a conventional loan. This is because students have 25 years to repay direct loans versus only 10 years with other loans. 2.) The federal government is a poor administrator of loans. The Department of Education cannot account for 15% of the direct loans it disbursed in 1994. This means it doesn't know to whom it lent $100 million. 3.) The public supports ending the direct loan program. Seventy-two percent of the general public and 74% of students with student loans believe the loans should be offered through the private sector rather than the government, according to a poll conducted by Luntz Research.

Call to Action: How to Promote a Balanced Budget

Balanced Budget Rally to be Held September 28 at 6:30 A.M., Room 2451 Rayburn

There will be a rally in support of a balanced budget September 28th at 6:30 A.M in Room 2451 Rayburn. Contact Elizabeth or Charlotte at (703)812-2000 for more information.

Small Business Survival Foundation
1320 18th Street, N.W.
Washington, D.C. 20036
(202)785-0238
Fax: (202)822-8118

The National Center for Public Policy Research
501 Capitol Ct NE
Washington, D.C. 20002
(202) 543-4110
Fax: (202)543-5975
E-mail [email protected]

Nothing written here should be construed as an attempt to help or hinder legislation before the U.S. Congress.

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