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September 2006
by James C. Musser, ASBA Washington Representative

New legislation has passed to help provide more accountability in the federal budget process. Good news also has come from the economic front this month. These items and more go into this month’s roundup of news from our nation’s capital.

Budget: In an effort to bring more openness and accountability to the spending process the House passed legislation to make it more difficult to hide pork spending for pet projects. On a vote of 245-171 the House passed the measure which will require Members to put their names on spending for special projects in their home districts. In debate, many Members made reference to the infamous “bridge to nowhere” that was ultimately stripped from last year’s Senate Transportation Appropriation Bill after much outrage.

The rule change applies only to the House and will have to be renewed each Congress. The new rule requires that all money earmarked by a Member in a spending bill passed by the Appropriations Committee must clearly list the project request and the requesting Member’s name. The Republican initiative was denounced by House Minority Leader Nancy Pelosi (D-CA) who said the bill was a “political gimmick” in an election year. Rules Committee Chairman David Drier (R-CA), sponsor of the bill, said, “We are blowing away the fog of anonymity so the public can have a clear picture of what the projects are, how much they cost and who is sponsoring them.”

The House and Senate also passed legislation that will create a web-accessible database of the billions of dollars awarded each year for government contracts and grants. President Bush has announced that he will sign the bill.

Economy: Stronger than expected revenue growth from the continuing strong growth in the economy resulted in a record one-day tax receipt for the Federal Treasury. The U.S. Treasury reported the highest single day of tax receipts on September 15, 2006 with taxes flowing into the government’ coffers in the sum of $85.5 billion. This news helps to account for the dramatic drop in the Federal Budget Deficit which the non-partisan Congressional Budget Office projects to be $260 billion or 2% of GDP. The deficit is $58 billion less than last year and $112 billion less than originally projected for this year. The deficit ran higher than 2% of GDP every year but one from 1977 until 1996.

The recent decline in oil prices is having a salutary effect on inflation and the Federal Reserve Open Market Committee which sets interest rates left the current rate unchanged at its September meeting. While the Fed has indicated that there is still potential danger from inflation, it is watching the economy closely to avoid over-correcting for inflation by raising rates too much. Job growth was steady adding 128,000 new jobs and unemployment also head steady at 4.7%, which also was consistent with low inflation.

SBA: Finally, congratulations to SBA Minority Small Business of the Year, DEI Services Corporation of Winter Park Florida. DEI Services, a defense contractor, is headed by Mr. Jose Diaz. The firm was named the SBA Minority Business of the Year at the 24th National Minority Enterprise Development Conference in Washington, D.C.

ASBA will continue to closely monitor all of the developments in our nation’s capital and report on any issues that might have an impact on small businesses and the people who run them.

James C. Musser, Esq. is a legislative consultant based in Falls Church, Virginia. His reports are updated monthly.