Magazine article National Defense

Debate Continues on Export Reform, Y2K Liability

Magazine article National Defense

Debate Continues on Export Reform, Y2K Liability

Article excerpt

This spring has been an active legislative session and the summer is showing no signs of letting up. Following is a summary of key developments.

Budget Process Overhaul

Representative Jim Nussle (R-Iowa) introduced HR 853, the "Comprehensive Budget Process Reform Act of 1999." This legislation seeks to overhaul the Congressional Budget Act of 1974, providing for an annual joint budget resolution, rather than a concurrent resolution, thus making it a law, requiring the president's signature. In the event that Congress and the president fail to agree on annual appropriation measures by October 1, the continuing budget resolution would automatically kick-in. The Appropriations Committees oppose the automatic continuing resolution, because it limits incentives for Congress and the administration to settle their differences. This legislation cleared the House Budget Committee and is on the calendar of the House Appropriations and Rules Committees.

Defense Bills

The Senate and House Armed Services Committees approved defense authorization bills that were $8.3 billion greater than the administration's request. The bills also cleared the House and Senate, respectively, and are on track for conference to settle final differences before the August recess. The Senate has approved its defense appropriation bill, providing roughly $2.2 billion less than the amount authorized. As of June 18, the House has yet to pass its defense appropriation bill. The House Appropriation Committee expects to take action on its version of the fiscal 2000 defense appropriation before the August recess. Because of competing interests in the administration and Congress, it is possible that the appropriation bills may not be signed until later this year, thus requiring use of continuing budget resolutions.

Defense Exports Reform

Recently, House Oversight Subcommittee Chairman Amo Houghton (R-N.Y. and Rep. Sander Levin (D-Mich.) introduced HR 2018, the International Tax Simplification for American Competitiveness Act of 1999. Section 303 of this bill is meant to rectify a perceived tax inequity for U.S. defense exports. Specifically, section 303 repeals Internal Revenue Code Section 923 (a) (5), which reduces the Foreign Sales Corporation (FSC) benefits available to companies that sell military goods abroad to 50 percent of the benefits available to other exporters. A similar bill offered by Rep. Sam Johnson (R-Texas), HR 796-the Defense Jobs and Trade Promotion Act of 1999-has strong bipartisan support in the Congress which is identical to Section 303, striking the FSC provision. In addition, Sens. Connie Mack (R-Fla. and Dianne Feinstein (D-Calif.) introduced a companion bill, S. 1165, which has been well received. NDIA, which provided testimony in support of the repeal, looks for a favorable outcome.

Y2K Liability

The Senate passed Sen. John McCain's (R-Ariz.) bill S. 96, the "Y2K Act". This litigation reform legislation has several provisions, such as establishing a 90day waiting period for filing a Y2K lawsuit to recommend parties to correct and mitigate Y2K related errors, encouraging alternative dispute resolution, establishing proportional liability, preserving contract rights; imposing punitive damage caps for small businesses, exempting municipalities and governmental entities from punitive damages, and preserving the state evidentiary standards for claims such as fraud. …

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