OMBLegislative Report -- May 6, 1998

      TO:                 DIRECTOR FRANK RAINES
                    DEPUTY DIRECTOR JACK LEW
                    DEP. DIRECTOR FOR MANAGEMENT ED DESEVE
                    EXECUTIVE ASSOCIATE DIRECTOR JOSH GOTBAUM

FROM:       OMB LEGISLATIVE AFFAIRS

DATE:       MAY 6, 1998

,SUBJECT:           LEGISLATIVE REPORT

 ISTEA: Conferees met for 15 minutes this afternoon.  Shuster complained
 that the meetings on the House side which need to be happening in order to
 resolve the funding levels have not yet occurred; he expressed concern
 that the conference wonO,t be able to complete action by Memorial Day.
,The conferees then adopted a minor package of staff recommendations.    The
 conference will not meet again until next week.   Also today, House Ways &
 Means Chairman Archer announced he would vote against the ISTEA conference
 report (and declined to serve as a conferee) when Speaker Gingrich
 appointed Ways & Means conferees who are committed to extending the
 ethanol subsidy through 2006. Archer wants to let the subsidy expire in
 2000.

The House Science Committee held a hearing today to review the status of
NASA's Space Station program, and, in particular, the Administration's
response to: 1) A NASA commissioned independent report ("Chabrow report")
that claims the Station program is underfunded by $130 million -$250
million/yr, and 2) the continuing funding shortfall in Russia that is
delaying the delivery of the Service Module, a critical component for the
early assembly of Station. Witnesses included Duncan M09re (OSTP), Dan
Goldin (NASA), and Jay Chabrow (chairman of the independent cost,
assessment task group) .

'During questioning, Sensenbrenner was critical of OMB's statement for the
 record that additional cost growth for Station should be offset within
 NASA's budget. He was particularly bothered that human space flight was
 the area cited first for reduction, as he strongly supports this area. He
 asked Dr. Moore to identify specific offsets. Moore said the
 Administration would respond by June 15th, a deadline set in the recent
 supplemental, as to whether any additional funding is required for Station
 for FY,1999 and, if so, where the offsets will be.

 CONGRESS -- TODAY (5/6):
 SENATE:
 continued consideration of H.R. 2676 - IRS Reform Bill
         [SAP sent, 5/5: Administration supports passage, with modifications
         and has serious          concerns about costs]
 While under consideration, the Senate took.the following action on the
 bill:
 o Rejected (voice) Kennedy alternative amendment which would have paid for
 the bill by extending Superfund taxes.
 o Adopted (56-42) Roth amendment that allows taxpayers with incomes over
 $100,000 to convert their traditional IRAs to so-called Roth IRAs, which
 allow individuals to withdraw both contributions and investment earnings
 tax-free upon retirement.
'0 Rejected (25-74) Bond amendment that would have replaced language to
 establish a nine-member part-time IRS oversight board with provisions to
 create a five-member full-time IRS Board of Governors.

 HOUSE:


Passed (403-16) H.R. 1872 - Communications Satellite Competition and
Privatization Act of 1997      [No SAP]

Later this evening, the House plans to vote on the Riggs amendment and
complete action on H.R. 6 - Higher Education Amendments of 1998
         [SAP sent, 4/28 & Riley letter sent, 4/28 & 5/5: Senior advisers veto
        threat]

CONGRESS - TOMORROW (5/7):
SENATE:
On Thursday, convene at 9:30am to possibly complete action on H.R. 2676 -
IRS Reform Bill.
         [SAP sent, 5/5: Administration supports passage, with modifications
        and has serious         concerns about costs]

HOUSE:
Convene at 10:00am for legislative business.

H.R. 3694 - Intelligence Authorization Act for FY 1999
         [SAP pending: Administration supports]

The House is also expected to move to the Conference Report on HR 2646 -
Coverdell Education Savings Account conference report.

CONGRESS -- FRIDAY (5/8)
SENATE:
Session unlikely because Senate Democrats have an out-of-town weekend
retreat.

,HOUSE:
 Not in session

CONGRESS - LONG-RANGE SCHEDULE
SENATE:
Following completion of the IRS Reform Legislation, the Senate will
proceed to consideration of the Ag Resear~h conf. report.   Several
D&high-techD8 bills including slamming, Internet pornography, Internet
gambling, & Internet tax bill could be taken up the week of the 11th along
with floor action on HR 2646 - Coverdell Education Savings Account
conference report.  Tobacco and or DOD authorization could be the week of
the 18th. Also possible for May is an ISTEA conference report (Raines
letter sent 4/30; Slater letter sent 5/1), nuclear waste storage
legislation; and the Caribbean Basin Initiative enhancements.

HOUSE:
Rules Committee action on H.R. 10 - Financial Services Competition Act of
1997 has been postponed until next week (expected Tuesday, 5/12)
        [Treasury letter pending; SAP pending: Sect. of Treasury veto
                recommendation]

 Also next week, floor action is possible on HR 2646 - Coverdell Education
 Savings Account conference report. On the tentative House schedule is an
 ISTEA conference report (Raines letter sent 4/30; Slater letter sent 5/1),
'legislation on religious persecution, Internet taxation, Internet
 gambling, securities litigation reform, bankruptcy reform, preventing
 crimes against children, and the FY99 budget resolution.  Campaign finance
 is also possible May 15.
    t.