In our Alice in Wonderland world of today, the unasked, politically incorrect, but oh so relevant, question really is, how do we know that she or someone else didn’t produce this video rather than discover it as she claims?
With perception management and disinformation the flavors of the decade, anything and everything is possible now. Enduring enemies are worth billions in appropriations today, especially for those well connected insiders who get the gigantic no-bid guaranteed profit contracts.
Where, oh where, is the adult supervision we need so badly? Any ideas??
| | Leak Severed a Link to Al-Qaeda's Secrets
Firm Says Administration's Handling of Video Ruined Its Spying Efforts
By Joby Warrick, Washington Post Staff Writer, Tuesday, October 9, 2007
A small private intelligence company that monitors Islamic terrorist groups obtained a new Osama bin Laden
video ahead of its official release last month, and around 10 a.m. on Sept. 7, it notified the Bush administration of its secret acquisition. It gave two senior officials access on the condition that the officials not reveal they had it until the al-Qaeda
Within 20 minutes, a range of intelligence agencies had begun downloading it from the company's Web site. By midafternoon that day, the video and a transcript of its audio track had been leaked from within the Bush administration to cable television news and broadcast worldwide.
The founder of the company, the SITE Intelligence Group, says this premature disclosure tipped al-Qaeda to a security breach and destroyed a years-long surveillance operation that the company has used to intercept and pass along secret messages, videos and advance warnings of suicide bombings from the terrorist group's communications network.
"Techniques that took years to develop are now ineffective and worthless," said Rita Katz, the firm's 44-year-old founder, who has garnered wide attention by publicizing statements and videos from extremist chat rooms and Web sites, while attracting controversy over the secrecy of SITE's methodology. Her firm provides intelligence about terrorist groups to a wide range of paying clients, including private firms and military and intelligence agencies from the United States and several other countries.
The precise source of the leak remains unknown. Government officials declined to be interviewed about the circumstances on the record, but they did not challenge Katz's version of events. They also said the incident had no effect on U.S. intelligence-gathering efforts and did not diminish the government's ability to anticipate attacks.
While acknowledging that SITE had achieved success, the officials said U.S. agencies have their own sophisticated means of watching al-Qaeda on the Web. "We have individuals in the right places dealing with all these issues, across all 16 intelligence agencies," said Ross Feinstein, spokesman for the Office of the Director of National Intelligence.
But privately, some intelligence officials called the incident regrettable, and one official said SITE had been "tremendously helpful" in ferreting out al-Qaeda secrets over time.
The al-Qaeda video aired on Sept. 7 attracted international attention as the first new video message from the group's leader in three years. In it, a dark-bearded bin Laden urges Americans to convert to Islam and predicts failure for the Bush administration in Iraq
. The video was aired on hundreds of Western news Web sites nearly a full day before its release by a distribution company linked to al-Qaeda.
Computer logs and records reviewed by The Washington Post
support SITE's claim that it snatched the video from al-Qaeda days beforehand. Katz requested that the precise date and details of the acquisition not be made public, saying such disclosures could reveal sensitive details about the company's methods.
SITE -- an acronym for the Search for International Terrorist Entities -- was established in 2002 with the stated goal of tracking and exposing terrorist groups, according to the company's Web site. Katz, an Iraqi-born Israeli citizen whose father was executed by Saddam Hussein
in the 1960s, has made the investigation of terrorist groups a passionate quest.
"We were able to establish sources that provided us with unique and important information into al-Qaeda's hidden world," Katz said. Her company's income is drawn from subscriber fees and contracts.
Katz said she decided to offer an advance copy of the bin Laden video to the White House
without charge so officials there could prepare for its eventual release.
She spoke first with White House counsel Fred F. Fielding
, whom she had previously met, and then with Joel Bagnal, deputy assistant to the president for homeland security. Both expressed interest in obtaining a copy, and Bagnal suggested that she send a copy to Michael Leiter, who holds the No. 2 job at the National Counterterrorism Center.
Administration and intelligence officials would not comment on whether they had obtained the video separately. Katz said Fielding and Bagnal made it clear to her that the White House did not possess a copy at the time she offered hers.
Around 10 a.m. on Sept. 7, Katz sent both Leiter and Fielding an e-mail with a link to a private SITE Web page containing the video and an English transcript. "Please understand the necessity for secrecy," Katz wrote in her e-mail. "We ask you not to distribute . . . [as] it could harm our investigations."
Fielding replied with an e-mail expressing gratitude to Katz. "It is you who deserves the thanks," he wrote, according to a copy of the message. There was no record of a response from Leiter or the national intelligence director's office.
Exactly what happened next is unclear. But within minutes of Katz's e-mail to the White House, government-registered computers began downloading the video from SITE's server, according to a log of file transfers. The records show dozens of downloads over the next three hours from computers with addresses registered to defense and intelligence agencies.
By midafternoon, several television news networks reported obtaining copies of the transcript. A copy posted around 3 p.m. on Fox News
's Web site referred to SITE and included page markers identical to those used by the group. "This confirms that the U.S. government was responsible for the leak of this document," Katz wrote in an e-mail to Leiter at 5 p.m.
Al-Qaeda supporters, now alerted to the intrusion into their secret network, put up new obstacles that prevented SITE from gaining the kind of access it had obtained in the past, according to Katz.
A small number of private intelligence companies compete with SITE in scouring terrorists' networks for information and messages, and some have questioned the company's motives and methods, including the claim that its access to al-Qaeda's network was unique. One competitor, Ben Venzke, founder of IntelCenter, said he questions SITE's decision -- as described by Katz -- to offer the video to White House policymakers rather than quietly share it with intelligence analysts.
"It is not just about getting the video first," Venzke said. "It is about having the proper methods and procedures in place to make sure that the appropriate intelligence gets to where it needs to go in the intelligence community and elsewhere in order to support ongoing counterterrorism operations."
Shortly before Congressman Henry Hyde (R-IL) retired as Chairman of the House Committee on International Relations, I worked with one of his senior staff members to try to get an amendment introduced to Section 1334 of the Foreign Affairs Reform and Restructuring Act of 1998 (22 U.S.C. 6553) which created The Advisory Commission on Public Diplomacy. The proposed amendment would have required that at least one U.S. citizen living abroad in the private sector be named and always serve as a member of this advisory commission. The initiative, alas, failed and no such mandatory representation of the overseas American community exists today on this Commission.
As you can see below, the current Congress, under new leadership, has now come up with a different bright idea on how to improve the effectiveness of our Public Diplomacy efforts abroad. Legislation to be debated today includes a new proposal to reinforce the activities of Public Diplomacy Resource Centers abroad by, among other innovations, insuring that movies will be shown as part of the newly named Johnny Grant Film Series. Now that is nothing short of brilliant and a great new deployment of our public funds. The cakes will walk proudly again. Hooray.
Sic transit Gloria mundi!
| | U.S. HOUSE OF REPRESENTATIVES
FLOOR SCHEDULE FOR TUESDAY, OCTOBER 9, 2007 Item 14) H.R. 2553
– Public Diplomacy Resource Centers Act of 2007 (Rep. Watson – Foreign Affairs) HR 2553 IH
1st Session H. R. 2553
To amend the State Department Basic Authorities Act of 1956 to provide for the establishment and maintenance of existing libraries and resource centers at United States diplomatic and consular missions to provide information about American culture, society, and history, and for other purposes. IN THE HOUSE OF REPRESENTATIVES May 24, 2007
Ms. WATSON (for herself and Ms. ROS-LEHTINEN) introduced the following bill; which was referred to the Committee on Foreign Affairs A BILL
To amend the State Department Basic Authorities Act of 1956 to provide for the establishment and maintenance of existing libraries and resource centers at United States diplomatic and consular missions to provide information about American culture, society, and history, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE.
This Act may be cited at the `Public Diplomacy Resource Centers Act of 2007'. SEC. 2. UNITED STATES PUBLIC DIPLOMACY.
(a) Establishment and Maintenance of Libraries- Section 1(b)(3) of the State Department Basic Authorities Act of 1956 (22 U.S.C. 2651a(b)(3)) is amended--
(1) in subparagraph (D), by striking `and' at the end;
(2) in subparagraph (E), by striking the period at the end and inserting `; and'; and
(3) by adding at the end the following new subparagraph:
`(F) provide for the establishment of new and the maintenance of existing libraries and resource centers at or in connection with United States diplomatic and consular missions.'.
(b) Operation of Libraries-
(1) IN GENERAL- The Under Secretary for Public Diplomacy shall ensure that libraries and resource centers established and maintained in accordance with subparagraph (F) of section 1(b)(3) of the State Department Basic Authorities Act of 1956 (as added by section 2(a)(3) of this Act) are open to the general public to the greatest extent practicable, subject to policies and procedures established by the Under Secretary to ensure the safety and security of United States diplomatic and consular missions and of United States officers, employees, and personnel posted at such missions at which such libraries are located.
(2) JOHNNY GRANT FILM SERIES- The Under Secretary for Public Diplomacy shall ensure that such libraries and resource centers schedule public showings of American films that showcase American culture, society, values, and history. Such public showings shall be known as the `Johnny Grant Film Series'.
(c) Receipt of Donations- The Under Secretary for Public Diplomacy may accept donations that are made to the libraries and resource centers authorized under this Act if the Under Secretary determines that such receipt will not result in any cost to the Federal Government.
(d) Advisory Commission on Public Diplomacy
- The Advisory Commission on Public Diplomacy (authorized under section 1334 of the Foreign Affairs Reform and Restructuring Act of 1998 (22 U.S.C. 6553)) shall submit to the Committee on Foreign Affairs of the House of Representatives and the Committee on Foreign Relations of the Senate a report containing an evaluation of the functions and effectiveness of the libraries and resource centers that are authorized under this Act.
(e) Authorization of Appropriations- In addition to amounts that are otherwise authorized to be appropriated to the Department of State under the educational and cultural exchange programs account to carry out purposes similar to those required under this Act, there are authorized to the Under Secretary of Public Diplomacy such sums as may be necessary to carry out this Act.
Here is another pertinent observation on the sorry state of Congressional vigilance for the protection of their own rights under our noble Constitution. It is a shame that voters today also have such little knowledge anymore of what the Founders were trying to do, and the role that they foresaw for federal legislators.
Hooray for Mario, and others like him, who sound the trumpets to keep this sacred flame aglow.
Perhaps a quick note to your Congresspersons and Solons with a copy of Cuomo’s message might be a very useful few minutes of your time too.
| | How Congress Forgot Its Own StrengthBy MARIO M. CUOMO,
Op-Ed Contributor, New York Times, October 7, 2007. Mario M. Cuomo, the governor of New York from 1983 to 1995, practices law with Willkie Farr & Gallagher.
SENATORS Jim Webb
of Virginia and Hillary Clinton
of New York are right to demand that the president go before Congress to ask for a “declaration of war” before proceeding with an attack against Iran or any other nation. But there is no need for this demand to be put into law, as the two Democrats and their colleagues are seeking to do, any more than there is need for legislation to guarantee our right of free speech or anything else protected by the Constitution.
Article I, Section 8 already provides that only Congress has the power to declare war. Perhaps the founders’ greatest concern in writing the Constitution was that they might unintentionally create a president who was too much like the British monarch, whom they despised. They expressed that concern in part by assuring that the president would not have the power to declare war.
Because the Constitution cannot be amended by persistent evasion, this mandate was neither erased nor modified by the actions or inactions of timid Congresses that allowed overeager presidents to start wars in Vietnam and elsewhere without making a declaration.
Indeed, asking for more legislation now would imply that the Constitution doesn’t mean what it already says.
It would repeat the mistake made by Congress in 2002 when it tried to delegate to President Bush the non-delegable power that the founders chose to give to the legislative branch. Congress’s eagerness to shed the burden making the decision by passing resolutions that purportedly “authorized” the president to decide whether to start a war denied the nation the careful Congressional inquiry intended by the Constitution.
That deliberation might have revealed Iraq’s lack of complicity with Al Qaeda
and the nonexistence of the country’s alleged cache of nuclear weapons. The members of Congress would have had to vote specifically on going to war (instead of on allowing the president to make that decision), which would have assured closer scrutiny than they actually gave the question.
Proceeding with the proposed legislation would also create the likelihood of still another failed Democratic legislative effort, because it would probably not get enough votes from Republicans
to override a veto. Such a failure might have some political value as another reminder of the Republicans’ eagerness for war, but it would also remind voters that the Democrats have not been as effective as they promised in 2006 they would be.
Congress’s refusal to comply with Article I, Section 8 of the Constitution has led to a catastrophic aftermath. Such a tragedy should never be allowed to happen again. Rather than enact new legislation that would create constitutional ambiguity, the Democratic leadership in Congress should assert its strength by simply announcing it will allow no “resolutions” or “authorizations” purporting to delegate to the president Congress’s constitutional power to declare war against any other nation. Nor will there be any new war without Congress’s solemn deliberation and declaration of war.
The Democrats should go still further and announce that no money will be appropriated for any military action against another nation without a proper declaration of war. And this should be the position of the Democratic presidential candidates as well. How else can they make the case that they are less likely than President Bush to wage dangerous, improvident wars?
Talk to these folks about their thoughts on illegal immigration...
The native American Indians will give you an earful on what happens when you don't control your borders.
Whatever you might think of Hilary Clinton as a presidential candidate, and what could happen if she were to be elected to the highest office in our country, she promises to bring about some welcome changes to how the U.S. Government goes about its work in the field of science and technology.
We can only hope that such a policy based on reason, rather than other sources of inspiration, will eventually be embraced by all of the candidates of every party, because this would be of very great benefit to us all.
Here is an op-ed piece that takes a look at what Senator Clinton promises to do if she is elected. It is followed by a speech that she gave last week to the Carnegie Institution for Science, and some specific details of her intentions as announced on her campaign website.
Read and enjoy. And try to get something similar from your favorite candidates too.
| | Something good from Hillary
By Joel S. Hirschhorn, OpEdNews.com, October 5, 2007. Joel S. Hirschhorn is the author of “Delusional Democracy - Fixing the Republic Without Overthrowing the Government” (www.delusionaldemocracy.com). His current political writings have been greatly influenced by working as a senior staffer for the U.S. Congress and for the National Governors Association. He advocates a Second American Revolution, beginning with an Article V Convention to propose constitutional amendments. www.delusionaldemocracy.com Hillary Clinton wants to restore the Congressional Office of Technology Assessment that Gingrich killed.
Though I fear a Hillary Clinton presidency, yesterday she took a position that is terrific: ... And I will work to restore the Office of Technology Assessment in Congress. Back in the 1990s, this office was charged with just one task: tell us the truth about science. For decades, they cut through the myths and the spin on everything from Star Wars to AIDS prevention to solar technology. It's time we put them back in business. ...
Few Americans have heard of the Congressional Office of Technology Assessment. It was created by Congress in 1972 and became the fourth congressional support agency. It was designed to provide the House and Senate with independent, nonpartisan and thorough analysis of complex technical issues and policy options for addressing them.
I was a proud member of the senior OTA staff for 12 years. In 1995 under pressure from the pompous and nefarious Newt Gingrich the small agency was de-funded. There is now bipartisan interest among some members of Congress in reinstituting OTA. And that is a wonderful idea that all those hoping to see improved congressional behavior and policymaking should support.
First, it is important to understand why conservatives wiped out OTA. It had a budget of only about $22 million out of roughly $2 billion in annual expenditures for all congressional activities. Obviously, it was not about a major budget cutting objective. What conservatives hated about OTA was its true independence from congressional manipulation. Even more than the General Accountability Office, the Congressional Budget Office, and the Congressional Research Service, whose budgets were cut, OTA was designed to seek all perspectives on difficult and contentious issues and all of its results were openly published, except for a very few works that involved secret military information. Members of congress might delay publication or put their own spin on OTA report findings, but they could not prevent release of OTA findings and reports.
What Congress received from OTA represented the best thinking not only of OTA’s own subject matter experts that included many experienced Ph.D.s, but also the full range of experts in universities, think tanks, government and industry. Moreover, OTA staff routinely provided members and their staffs with fast turn-around technical assistance. We were like adjunct staff to members. Like others, I helped members design hearings on technical subjects, respond to their constituents for technical help, draft legislation, and testified about 50 times before Senate and House hearings in D.C. and in field hearings. A balanced, bipartisan board of Senators and Representatives provided oversight of OTA.
The army of industry lobbyists also had access to OTA staff and provided inputs. But conservatives wanted more. Gingrich wanted to silence this marvelous independent voice about all things scientific and technological. He wanted to create even more opportunities for special interest, bought-and-paid-for lobbyists to steer congressional thinking, oversight and legislation.
For first hand understanding of what OTA did, you can access its reports at www.wws.princeton.edu/~ota/
. With a staff of just 200, two-thirds of which were professional research staff, it produced over 750 reports in its 23 years of existence. The scope and breadth of OTA’s work was mind-boggling, and the remaining congressional support agencies have not replicated the depth of its work and the outreach of its staff. How amazing that at a time in history when government policy has had to address more and more terribly sophisticated and contentious technical issues, Congress lost this precious national resource. And make no mistake about OTA’s very positive impacts. Its work guided legislation, improved congressional oversight of agency activities, and helped reduce wasteful federal spending. Just as important, OTA informed Congress about issues likely to become important in the future so members could anticipate and act proactively.
Ironically, many nations sent people to visit and examine OTA and then established their own versions of this unique technology assessment agency that they still rely on. The abolishment of OTA by Gingrich was viewed with amazement and chagrin worldwide. Please write you Senators and Representatives in support of providing new funding for OTA that still legally exists on paper at least. Yes, there is too much wasteful federal spending. But OTA is a compelling case; the public would benefit enormously by the relatively small funding for OTA. The shame of conservative Republicans has been exposed in recent times because of their corrupt activities and reckless pro-industry spending. This should help people understand why Gingrich got rid of OTA. Now is the time to tell Congress to reinstitute OTA. OTA stood for truth and integrity, for good science and good thinking, for consideration of all relevant policy options, free from partisan biases. Members of Congress need such input. They need help in overseeing the many federal agencies that spend vast sums on scientific and technological projects. The President receives technical advice through the White House Office of Science and Technology Policy as well as from countless federal agencies, and Congress requires its own source.
Clearly, Gingrich wanted to eliminate good science and objective thinking from policymaking and George W. Bush has carried on that mindset. Worse, he has taken it to new outrageous levels by purposefully distorting and manipulating scientific information from federal employees.
Enough is enough.
I hope other presidential candidates echo Clinton's support for restoring OTA. SCIENTIFIC INTEGRITY AND INNOVATION
Hilary Clinton’s Remarks at the Carnegie Institution for Science, October 4, 2007
The Carnegie Institution for Science, as President Meserve just briefly recounted, has such a distinguished history. It has a record of supporting groundbreaking discoveries from Edwin Hubble's work in astronomy to more recent breakthroughs in our understanding of genetics and the function of RNA and as part of that work was honored with a Nobel Prize just a few years ago.
I could not imagine a more appropriate place to discuss our nation's commitment to scientific discovery and innovation. Nor could I imagine a more appropriate day. It is not a coincidence that we are doing this today. Fifty years ago today, in a remote, sparsely inhabited region of the former Soviet Union the world's first artificial satellite took flight. This hollow aluminum sphere named Sputnik -- which contained little more than a battery, radio transmitters, and an internal cooling system -- caught America off guard and changed the course of history. Sputnik transmitted a signal from orbit and through it the Soviet Union sent a signal to the world. Even ham radio operators could hear it: the Soviets had won the first leg of the space race.
Now many of you have probably known before you came today that this is the anniversary of Sputnik and I bet none of you bought an anniversary card. But I have been fascinated by Sputnik ever since I was a little girl and as I have moved on in life and become involved in the public service and public office holding of our nation, I have spent time reflecting on what Sputnik meant and what our nation did in response. Historic decisions were made in the days, months, and years following Sputnik and I think we had a great response as a nation. Less than two weeks after news of Sputnik swept the globe, President Eisenhower called a meeting of his Science Advisory Committee and asked for recommendations. He would come to rely on that panel for unvarnished, evidence-based scientific advice. Shortly after that first meeting, President Eisenhower addressed the nation. It was a sober yet optimistic assessment. Yes, the Soviets had made gains which carried implications for our security and our economy. Yes, we had work to do. But there was no reason to fear, because America, he said, stood at the ready to draw on our "voluntary heroism, sacrifice, and accomplishment when the chips are down." Then we set about proving it.
In February of 1958, four months after Sputnik's launch, America launched DARPA, the Defense Advanced Research Projects Agency. By July of that year, Congress passed the National Aeronautics and Space Act, creating NASA and ushering in the missions that would define the space race: Mercury and Gemini. In September 1958, President Eisenhower signed into law the National Defense Education Act to advance at every level our ability to compete and innovate: math and science education in primary and secondary schools, college loans, graduate fellowships, vocational training.
I remember as though it were yesterday when my 5th grade teacher Mrs. Kraus came into our classroom and told us we had to study math and science because the President said so. I was convinced President Eisenhower had called up Mrs. Kraus and told her "you tell those children and particularly that Hillary, who doesn't really like math that much, that her country needs her."
In 1961, President Kennedy created the Apollo project, and declared that our nation would land a man on the moon and return him safely to the earth by the end of the decade. By 1969 we had done it. By 1972, we had done it 12 times over. It was a national, bipartisan effort. It was a public, private partnership. We bolstered investment in research -- and encouraged children to learn math and science. We asked young people to become scientists and engineers -- and helped them pay for their degrees with new National Science Foundation fellowships. We believed that we could, by rolling up our sleeves and getting to work, do what we all knew we had to. Begin to demonstrate that America still was the leader in science and innovation. We set big goals. We didn't give in to our fears, we confronted them. We didn't deny tough facts, we responded to them. We didn't ignore big challenges, we met them. Once again, we proved, as President Eisenhower had predicted, that when the chips are down it is always a mistake to bet against America.
Fifty years ago, Sputnik marked the dawn of the Space Age and the beginning of a new era filled with new challenges. Fifty years later, there is no single, galvanizing event to steel our resolve and to lift our eyes to the heavens. The challenges we face are more complex and interconnected. From the rise of globalization to the threat of global warming. These challenges require big ideas and bold thinking.
But instead of fostering a climate of discovery and innovation, the Bush administration has declared war on science. The record is breathtaking: banning the most promising kinds of stem cell research, allowing political appointees to censor studies on climate change, muzzling global warming experts like Dr. James Hansen, overruling doctors and the FDA on emergency contraception, suppressing and manipulating data on mercury pollution, even delaying one report which found that 8 percent of women between 16 and 49 years of age have mercury levels in their blood that could harm future children, denying the risks of toxins like asbestos in the air after the 9/11 attacks, overruling scientists who sought to protect animals under the Endangered Species Act, eliminating scientific committees at the Department of Health and Human Services that did not parrot the politically accepted ideology -- or packing those committees with industry insiders, altering scientific tests on the lead content of children's lunch boxes -- and appointing a lead industry consultant to a key panel formed by the Centers for Disease Control, barring a USDA researcher from publishing or even discussing his work on antibiotic resistant bacteria, censoring government websites on breast cancer research, contraception, climate change, and so much else.
To paraphrase Stephen Colbert, this administration doesn't make decisions on facts. It makes facts based on decisions. And to further paraphrase - my predecessor, the extraordinary late Senator Daniel Patrick Moynahan, everyone is entitled to his own opinion but no one is entitled to his own facts. For six and half years under President Bush, it has been open season on open inquiry. They've tried to turn Washington into an evidence-free zone. And by ignoring or manipulating science, the Bush administration is putting our future at risk and letting our economic competitors get an edge in the global economy. Well, when I am President, I will end this assault on science. [Applause]
I will reaffirm our commitment to basic research, invest in clean energy, combat global warming, create the millions of jobs that I think come from doing both of those, reemphasize math and science education, and ensure that America is training the future innovators of our country. America will once again be the innovation nation.
What America achieved after Sputnik is a symbol of what Americans can do now as we confront a new global economy, new environmental challenges, and the promise of new discoveries in medicine. America led in the 20th century, and we saw the benefits of that. As Richard referenced, probably half of our Gross Domestic Product increase since the end of World War II can be traced to investments in science and research in both the public and the private sector, of course fueled by non profit organizations like the Carnegie Institution. With a renewed commitment to scientific integrity and innovation, I know we can lead in the 21st century.
First, when I am President, I will lift the current ban on ethical stem cell research. [Applause] In 2001, President Bush issued an Executive Order banning federal funding for some of the most promising avenues of stem cell research. And this year -- yet again -- he vetoed legislation to open up new lines of embryonic stem cells for federal funding. Every day, we are learning more about the opportunities this kind of research offers. Within these cells may lie the cures for Parkinson's disease, Alzheimer's, spinal cord injuries, diabetes, Huntington's and more. 100 million Americans live with these conditions -- and their families live with them too. The President's ban on stem cell funding amounts to a ban on hope. It's as if these families are invisible to their President. Meanwhile, our scientists and world class research institutions are hamstrung. One report found that researchers have had to set up duplicate systems and equipment to keep federally approved stem cell research efforts separate from the kind that the President has banned by Executive Order. In one lab, researchers use one kind of pen for federally funded research, and another for privately funded research.
One stem cell scientist at University of California at San Francisco was conducting research when the power went out -- including the power to the freezers that held the stem cells on which she has spent two years working. There was no back up power and the only freezers cold enough were federally funded. The result? Two years of research literally melting away. States have tried to pick up the slack, as have private individuals. But because states and private institutions are prohibited from doing this research in labs funded by federal dollars, even a penny of federal money disqualifies the labs. They've been forced to build new labs and buy new equipment. So instead of forging ahead on the science, we have spent money on redundancy and duplication. So far they've only been able to spend 15 percent of their funding on actual research. And some of our brightest minds are forced to head overseas to do their research.
Two renowned cancer researchers, for example, a husband and wife team, decided to leave the National Cancer Institute right here in our country for the Institute of Molecular and Cell Biology in Singapore. One half of the pair said this: "We wanted to be in a place where they are excited by science and things are moving upward." That should be America -- and it can be again. But today, countries from Singapore to the United Kingdom are filling the biotech gap that the President has created. One report recently found that the percentage of research papers on embryonic stem cell science authored by researchers in the United States has dropped from more than a third of all published to roughly one quarter in just three years. And that negative trend may continue.
When I'm President, therefore, one of my first acts will be to lift the ban on federal funding of embryonic stem cell research. But we have to go much further than that if we expect to restore scientific integrity.
Secondly, I will end the politicization of scientific research that has marked the Bush Administration and restore a climate of scientific integrity and innovation. We will no longer place ideology ahead of evidence. I'll reverse President Bush's recent directive which expands the power of political appointees in agencies and reduces the role of experts. I'll stop political appointees from manipulating scientific conclusions in government publications and prevent the suppression of public statements by government scientists. We'll commit to a national assessment on climate change that goes above and beyond any requirement in the law. And I'll demand that all agencies prevent political pressure from affecting scientific research and the free and open exchange of ideas.
As part of this effort, I will restore the integrity and independence of advisory committees and strengthen whistleblower protections for those who expose potential political interference. When I'm President, scientific integrity will not be the exception -- it will be the rule. That's why I've been fighting for these issues in the Senate. One particular battle that I led involved emergency contraception, known as Plan B, which can prevent unintended pregnancies. Two FDA commissioners -- both appointed by President Bush -- blocked Plan B from being sold over-the-counter for years, overruling the FDA's medical experts, advisors, and the recommendation of the American Medical Association. And so, teaming up with Senator Patty Murray, we blocked two successive Bush appointees for a new FDA commissioner until science not politics was allowed to guide decision making. I made it very clear I was not in any way dictating, suggesting, expecting any particular outcome, but I did not want the FDA politicized to achieve an outcome that was not based on the best that science and evidence had to offer. It should not take an act of Congress or an act of a Senator to get the President to listen to health experts on a matter of women's health.
I will also have an advisor for science in the White House who reports directly to the President. [Applause] And I will work to restore the Office of Technology Assessment in Congress. Back in the 1990s, this office was charged with just one task: tell us the truth about science. For decades, they cut through the myths and the spin on everything from Star Wars to AIDS prevention to solar technology. It's time we put them back in business. Third, when I'm President, we will again invest in research. That's a key to creating the jobs of the future, rebuilding the middle class, and meeting the challenges of the global economy. Here too, however, we're falling behind. Over the past twelve years, American investment in research and development has remained relatively static. China has doubled the share of its national wealth invested in R&D. The education pipeline, the source of future innovators, reveals the same trend. Between 1970 and 2000, America's global share of PhDs in science and engineering declined from 40 percent to 20 percent. The rate is expected to drop to 15 percent in the next 3 years.
At the same time, under the Bush administration, spending on basic and applied research has declined in real terms four years in a row. DARPA -- where basic research led to the precursors of the internet, the computer mouse, stealth technology, and so much more -- is putting less and less of its resources into truly revolutionary, ground-breaking research.
I've become troubled by this because, of course, we have very specific issues we have to address. The search for some technology to disable these horrific explosive devices that cause so much damage for our young men and women in uniform and innocent Iraqis and people in Afghanistan is a very important project but I think we can do both. We can do the more applied, specific research to try to solve a problem and we can continue to fund the more visionary research that we don't know where it will lead, but who knows, the next internet may come out of it. The private sector devotes only 5 percent of all its resources to basic research. And that is a change from 50 years ago and the years after that. Some of the great research breakthroughs came through private labs like Bell Labs and others and we have not only cut back on government funding but because of the pressures of the global market place, the pressures for quarterly returns, we have seen a cutback in research in the private sector as well.
The NIH budget was doubled between 1998 and 2003 and universities and researchers had high hopes for continued funding. In the years since, the rug has been pulled out from under them. The president's budget for 2008 actually cut funding for several departments. The consequences of unpredictable and declining resources are halted construction on new laboratories, fewer grants, uncertainty in current projects, and less support for the creative ideas of younger researchers. Nobel Prize winning biochemist Roger Kornberg recently said, "In the present climate especially, the funding decisions are ultraconservative. If the work that you propose to do isn't virtually certain of success, then it won't be funded. And of course, the kind of work that we would most like to see take place, which is groundbreaking and innovative, lies at the other extreme."
I visited Memorial Sloane Kettering about a year and half ago to meet with Dr. Harold E. Varmus another Nobel prize winner who led NIH with such distinction and his top staff. And at that time he very clearly said that the way that the grants and now being issued by the NIH means that it's less and less likely that young researchers like he was when he did the work that eventually won him the Nobel prize, could be funded. And since that time I've heard this across the country. I will increase support for basic and applied research by increasing the research budgets at the National Science Foundation, the Department of Energy's Office of Science, and the Department of Defense. We'll significantly increase funding over 10 years, with a greater emphasis on high-risk, high-return investments. That combined with the increases again in the NIH to kick start our innovative engine.
We'll invest more in multidisciplinary research, where the United States has a built-in advantage. No one commands the breadth and depth of excellence across different fields that we do. For instance, we should increase investments in non-health applications of bio-technology. One example: bacteria that could dramatically reduce the costs of cleaning up Superfund sites. I recently saw Craig Venter, who many of you know of or know, and his latest project is trying to create bacteria that will lead to a substitute for petroleum. Well, we don't know where this research will lead. That's the whole point and the excitement is letting loose our best minds.
The failure to modernize our health care system is also holding back research. I have proposed creating a health information technology infrastructure as part of my health care plan, the American Health Choices Plan. I think we can lower costs for everyone, and improve quality for everyone, and cover everyone. A health information technology infrastructure is estimated by the Rand Corporation to save us seventy-seven billion dollars a year. It will prevent errors, it will stop waste, it will cut costs, and it will save lives because it will create billions of new digital data points from which we can glean new observations.
I've also called for competitive prizes to encourage innovation. Back in 1957, President Eisenhower, when he met with his Scientific Advisory Committee again, wondered if there were a way to keep people as excited about science as they were about sports and competition. And this was back when reality entertainment meant playing in the neighborhood park. Why not encourage people to innovate through healthy competition?
We've also seen a decline in American leadership in space exploration and science. A recent survey by the National Academy of Sciences found that "the nation's Earth observation satellite programs, once the envy of the world, are in disarray." The National Oceanic and Atmospheric Administration has been forced to delay the launch of important climate and weather-monitoring satellites. These technologies are critical tools to study climate change: measuring the rates of melting ice, temperature and humidity changes, sea level variations. Meanwhile, NASA's budget for earth sciences has been cut by 30 percent and NASA climate scientists have been muzzled. Last year, the Bush administration went so far as to remove the following phrase, and I quote, "to understand and protect the home planet," end quote, from NASA's mission statement. It's no wonder, the Bush administration has shown little interest in the earth sciences mission of NASA -- and a hostile approach toward the study of climate change.
As President, part of my mission will be to reclaim our role as the innovation leader. I will pursue an ambitious agenda in space exploration and earth sciences. I'll fully fund NASA's earth sciences program, launch a new, comprehensive space-based study of climate change, and reverse the deep funding cuts that NASA's and FAA's aeronautics research and development budgets have endured in the last few years.
You know, this is personal for me because when I was in junior high school, I was just captivated by the space program. It caught my imagination. There was such a great burst of interest. I did my 8th grade science project on space medicine. Some of you know that I even wrote to NASA asking how I could apply to be an astronaut and got back an answer saying that they weren't taking women. (Laughter) I have lived long enough to see that change! (Applause)
But that great burst of activity led to so many people who are the PhDs, who are the scientific leaders, who have made such a difference to our public life and our private sector. A lot of them are reaching retirement age. They came into school in the 60's and the 70's motivated by this desire to innovate and in our government we're not finding the replacement for a lot of people. I know that at the Nuclear Regulatory Commission the workforce issue going forward is a very big one. So this is not just about let's have more scientists. This is how we run our economy and how our government retains or should I say regains competence to do what it needs to do for all of us. I think that we've got to make science research, technology, mathematics a career in those fields, exciting again.
I think it's possible to do that and I think the President, even a President who doesn't know very much herself can ignite that interest with other people who are playing the lead roles in demonstrating what it means for us to be the leaders again. We really need a television series about scientists, you know, the study of forensic science skyrocketed after all these CSI programs, so I'd like all of the scientists in this auditorium to start thinking. Make up a character that can light the same excitement in young people because lightbulb moments require electricity and we've got to look at this challenge comprehensively.
We still have a problem in women and minorities to enter science and engineering. And let's do a better job of replicating educational excellence in math and science from school to school. Congress recently passed into law the America Competes Act which contains two of my proposals. One would study promising practices in math and science education. We have to quit reinventing the wheel -- if something works in a school, especially where children come from disadvantaged backgrounds, to light their faces up, get them involved, let's replicate it. Let's work to do what we can to make sure that something happening in New York or Los Angeles is followed in Houston or Miami. [Applause]
And I think that one way we can help this is to create new fellowships at the National Science Foundation to allow math and science professionals to become teachers in high-need schools. A lot of people who as they are retiring or are mid-career are looking for some way to keep giving and they face the array of difficulties and obstacles to becoming teachers and I think we have to break through that barrier and give more people a chance to share their enthusiasm, their life's work with our young people.
I've also proposed tripling the number of National Science Foundation fellowships and increasing the size of each award. NSF fellowships were created in response to the space race. In the decades since, the number of grants has remained largely unchanged despite a three-fold increase from that time until now in the number of college students graduating with science and engineering degrees. We also, as we move toward comprehensive immigration reform have to once again open our colleges and universities to students from abroad who wish to study here and then hopefully stay here as part of the American innovation agenda. What is happening now is we're not accepting them and if we do accept them, we're not allowing them to stay and work. So we need to get the best minds from the world once again coming to America.
Fifth, we need an Apollo-like effort in clean, renewable energy. Last week, the President gave a speech in which he decided to address global warming -- seven years into his presidency. And what he found, unfortunately, is that the rest of the world has passed him by. He spoke of aspirational goals to reduce green house gas emissions while people around the world including right here in America actually aspire to tackle the problem.
For nearly seven years, the administration has dodged, denied, and dissembled on climate change. Scientists muzzled. Reports censored. According to a survey of the Union of Concerned Scientists from last year, nearly three quarters of climate scientists felt inappropriate interference with their research was going on. One particularly egregious example is that of Philip A. Cooney, the former chief of staff at the White House Council on Environmental Quality. A lawyer previously employed by the American Petroleum Institute, he had no scientific background. Nonetheless, he insisted on editing scientific documents on climate change to cast doubt and greater uncertainty than the experts felt warranted.
Meanwhile, the evidence has mounted. I traveled to the Alaskan Arctic as well as to the European Arctic with Senator McCain on two occasions over the last several years. We found ourselves in the northernmost inhabited place on earth, the island of Svalbard, in Norway. We met with scientists who'd been studying the Arctic and we listened to what they had to say. They are seeing first hand the impact of changing climates -- from invasive species to shifting weather patterns to melting polar ice. And then at Point Barrow in our most northern part of America in Alaska, we heard from the scientists who have been studying climate change there for 30 years. As the evidence mounts -- other countries are mounting a lead in the race to develop the next generation of energy technologies. Nations in Europe and elsewhere are working to meet the standards set by Kyoto and to create jobs in the process.
Germany, for example, has made major commitments to renewable energy, recently upping their targets to produce more than one quarter of their energy from renewable sources by 2030. Their approach has already paid dividends. In the last two years, employment in the German renewables sector rose by 50 percent to 235,000 jobs. They expect to create more than 400,000 jobs in renewables by 2020. As a German official recently told Congress, "solar power installations and wind turbines made in Germany are an export hit all over the world."
I believe America can retake the lead. Energy dependence and climate change represent the greatest innovation challenge and opportunity that Americans have faced in a generation -- we can create millions of green collar jobs. I have proposed a $50 billion Strategic Energy Fund, paid for in part by closing the tax subsidies and loopholes for the oil companies. [Applause]
It is almost impossible to imagine but you and I and all the taxpayers in America are still subsidizing companies that have made the largest profits in the history of the world. [Applause] And that no longer makes sense, and we've got to move now to take our resources and put them where we create a new market. It might have made sense when oil was ten dollars a barrel because it's expensive to explore, it's expensive to extract, but that no longer is needed. If we have smart legislative policy, we would have triggers on a lot of this. If the price of oil ever did fall again dramatically, and we did have to provide incentives, we could do so. But now what we are missing by failing to provide incentives for solar and wind and geothermal and hydrogen and bio-fuels and the whole array of renewable resources means that we are falling further and further behind.
The fund I have proposed would invest in technologies available right now to promote conservation, combat global warming, and end our dependence on foreign oil. It also funds an energy initiative modeled on DARPA, the Energy Advanced Research Projects Agency to bring together the best minds in the public and the private sectors to think outside the box -- and the tank -- to imagine new solutions. Winning the 21st century energy race is as important and potentially profitable as winning the 20th century space race. We can do this. [Applause]
The Strategic Energy Fund is only the beginning. In the coming weeks, I will outline in more detail my plans as President to move toward energy independence. Instead of leading the world in oil imports, we can lead in green technology exports. The country that split the atom can end our dependence on foreign oil and launch an energy revolution. We can call it Energy 2.0 because we've got everything it takes except we have not organized ourselves to make it happen.
When science is politicized, when the truth is subjugated by ideology, it's worse than wrong -- it's dangerous. Ending the war on science and once again valuing the ever-skeptical but always hopeful scientific enterprise is about more than our economy. It's about more than our security. It is about our democracy.
Vannevar Bush, no relation, among his many accomplishments as an advisor to Presidents beginning with Franklin Delano Roosevelt, as a pioneering scientist, as a leader who helped shape decades of science policy for our nation, also served as President of this institution. He authored a report at the close of World War II, requested by President Roosevelt but delivered to President Truman. In that report, Dr. Bush laid out his vision for the future of scientific progress in America proposing, for example, the National Science Foundation. He described science as the "endless frontier." What could be more American that?
I was heartened to learn that after Sputnik went up sales of telescopes and binoculars shot up as well. Actually in my house, my father went out and bought some binoculars, so we could be on the lookout for Sputnik. And my memory of that, of peering into the sky in our backyard in a suburb of Chicago, I don't think we ever saw it although my friends claim that they had seen it, was so exciting that somehow we were connected to what that meant. And it was not only a thrill for a young girl, but it really did start me thinking.
Fear is no match for the human desire to reach for the stars. And with the right leadership fear gives way to fortitude, to resolve, and to evidence-based action. The free and open exchange of ideas in America, along with our entrepreneurial spirit, our work ethic, and our values, has always been the wind against our backs. It was true in the space race for the 20th century. And it will be true again in the global innovation race of the 21st century. Thank you all very much. Thank you. Ending the War on Science
Hillary Clinton’s Agenda to Reclaim Scientific Innovation
October 4, 2007
On the 50th anniversary of the launch of Sputnik, Hillary Clinton today vowed to end the Bush Administration’s war on science and announced her agenda to promote scientific discovery in research, medicine and space exploration.
“For six and half years under this president, it’s been open season on open inquiry. And by ignoring or manipulating science, the Bush administration is letting our economic competitors get an edge in the global economy,” Clinton said.
“I believe we have to change course – and I know America is ready. What America achieved after Sputnik is a symbol of what America can do now as we confront a new global economy, new environmental challenges, and the promise of new discoveries in medicine. America led in the 20th century – and with new policies and a renewed commitment to scientific integrity and innovation, America is ready to lead in the 21st.”
Clinton said her administration would restore scientific integrity by supporting the independent work of government scientists, promoting innovation and medical research, and by returning to evidence-based decision-making.
Hillary will restore the federal government’s commitment to science by:
- Rescinding the ban on ethical embryonic stem cell research
- Banning political appointees from unduly interfering with scientific conclusions and publications
- Directing department and agency heads to safeguard against political pressure that threatens scientific integrity and to promote transparency in decision-making
- Appointing an Assistant to the President for Science and Technology Policy and strengthening the White House Office of Science and Technology Policy
- Reviving and enhancing the national assessment on climate change
- Enhancing American leadership in space through investments in exploration, earth sciences, and aeronautics research
- Pursuing a comprehensive innovation agenda, including establishing a $50 billion Strategic Energy Fund
### Hillary Clinton’s Agenda to Reclaim Scientific Innovation Hillary will restore the federal government’s commitment to science
by: Signing an Executive Order
Restoring the science advisor’s direct access to the President. Working to re-establish the Office of Technology Assessment. Protecting the integrity and independence of federal scientific advisory committees. Strengthening whistleblower protections for those who disclose potential instances of political interference with science. Hillary will enhance American leadership in space,
- Rescinds President Bush’s ban on ethical embryonic stem cell research and promotes stem cell research that complies with the highest ethical standards.
- Bans political appointees from altering or removing scientific conclusions in government publications without any legitimate basis for doing so, and prohibits unwarranted suppression of public statements by government scientists.
- Directs all department and agency heads to submit annual reports on the steps they have taken to (1) safeguard against instances of political pressure threatening scientific integrity; and (2) promote openness and transparency in decision-making.
- Reverses President Bush’s new directive that dramatically expands political appointees’ control over agency rulemaking.
- Revives and expands the national assessment on climate change, going above and beyond the requirements imposed by Congress.
Hillary will promote a nationwide commitment to innovation
- Pursuing an ambitious 21st century Space Exploration Program, by implementing a balanced strategy of robust human spaceflight, expanded robotic spaceflight, and enhanced space science activities.
- Developing a comprehensive space-based Earth Sciences agenda, including full funding for NASA’s Earth Sciences program and a space-based Climate Change Initiative that will help us secure the scientific knowledge we need to combat global warming.
- Promoting American leadership in aeronautics by reversing funding cuts to NASA’s and FAA’s aeronautics R&D budget.
by: Establishing a $50-billion Strategic Energy Fund
to invest in technologies to promote conservation, combat global warming, and reduce our dependence on foreign oil. Pursuing a comprehensive innovation agenda
to enhance the nation’s research capacity; help ensure we continue to have a premier science, engineering, technology and mathematics workforce; and upgrade our innovation infrastructure.
***** Restoring the Federal Government’s Commitment to Science
Sign an Executive Order that:
- Rescinds President Bush’s ban on ethical embryonic stem cell research. In 2001, President Bush issued an Executive Order banning federal funding for some of the most promising avenues of stem cell research. And this year – yet again – he vetoed legislation to open up new lines of embryonic stem cells for federal funding. Within these cells may lay the cures for Parkinson’s disease, Alzheimer’s disease, spinal cord injuries, diabetes, Huntington’s disease and more. One hundred million Americans live with these diseases – and their families live with them too. The President’s ban damages more than hope – it hurts our chances to lead the world in innovative new fields. Countries like Singapore and the United Kingdom are filling the biotech gap that this president has created, investing in research for cures and jobs of the future. As President, Hillary will end the ban and promote stem cell research that complies with the highest ethical standards.
- Ends political interference with science. Hillary will ban political appointees from altering or removing scientific conclusions in government publications without any legitimate basis for doing so, and prohibit unwarranted suppression of public statements by government scientists. President Bush’s political appointees have exercised unprecedented influence over the scientific content of government reports on global warming and other issues. In one particularly egregious case, the Chief of Staff for the White House Council for Environmental Quality – a lawyer with no scientific training – systematically edited and weakened government scientists’ conclusions on global warming. (Bush Aide Softened Greenhouse Gas Links to Global Warming, New York Times [June 8, 2005].) In another case, the Bush administration added statements to the National Cancer Institute website that suggested a link between abortion and breast cancer, when experts agreed that no such link existed. (Abortion and Breast Cancer, New York Times [Jan. 6, 2003].) Similarly, the EPA published reports on the environment and air pollution without information on or references to climate change, and political appointees reportedly added references to a study funded by the American Petroleum Institute questioning climate change evidence. Hillary will stop these and other practices once and for all, and will ensure that scientists play their proper role in ensuring that the public receives accurate information on matters of public interest.
- Promotes vigilance in protecting scientific integrity. Hillary will direct all department and agency heads to submit annual reports on the steps they have taken to (1) safeguard against instances of political pressure threatening scientific integrity; and (2) promote openness and transparency in decision-making. In a survey of government scientists conducted by the Union of Concerned Scientists, nearly half of all respondents perceived or personally experienced pressure to eliminate the words “climate change,” “global warming” and other similar terms for a variety of government communications. A full 87% perceived pressure on government scientists to make changes to their reports that altered the meaning of scientific findings. Dr. James E. Hansen, a climatology expert at NASA, spoke out about pressure by senior officials to minimize the impact of global warming. Hillary will ask all of her agency and department heads to provide a thorough accounting of any improper efforts to influence or suppress scientific conclusions and their efforts to prevent or deal with those instances.
- Restores expert-driven, evidence-based agency decision-making. Hillary will reverse President Bush’s new directive that political appointees exert total control over the development of agency rules. Earlier this year, President Bush issued a new Executive Order 13,422, which among other things mandates that each agency have a politically appointed “regulatory policy officer” to oversee the development of new agency rules and regulations. In previous Administrations, career civil servants and scientific experts often took the lead in generating these new rules. This new directive means that no rulemaking can begin without express permission from a political appointee. The regulatory policy officer also is charged with approving the agency’s overall regulatory plan. Previously, only the agency head could sign off on the regulatory plan, and there was no policy prohibiting rulemaking in the absence of the regulatory policy officer’s approval. Hillary will return to the longstanding practice of giving experts a central voice in agency rulemaking and will direct agencies to pursue evidence-based decisions. She will also review and where appropriate rescind other sections of this Executive Order.
- Revives and expands the national assessment on climate change. A 1990 Act of Congress requires the Executive Branch to issue a national assessment every four years outlining the most recent scientific data on climate change and global warming and its projected effects on the country's environment, economy, and public health. Despite this clear mandate, the Bush administration has not released an assessment in six and a half years – the last one was issued by the Clinton administration in 2000. In August, a federal court ruled that the administration had broken the law. The judge mandated that it complete an assessment by May 31, 2008. Hillary will not only comply with the Congressional directive – she would go further. Her Executive Order will expand the assessment to include not only the anticipated impacts of climate change, but also how U.S. regions and economic sectors can respond to climate change through mitigation and adaptation.
- Restore the science advisor’s role in the White House. President Clinton, and President George H.W. Bush before him, relied on the advice of an Assistant to the President for Science and Technology – a senior adviser who reported directly to the President. President Bush eliminated the position of Assistant to the President, and the credibility of the White House Office of Science and Technology Policy has suffered under accusations that the Administration has manipulated and politicized science. Hillary will once again name an Assistant to the President for Science and Technology, and will do so quickly so that he or she can help recruit top scientific talent into government. That individual will not have his or her advice filtered through political advisors, but instead will be empowered to speak candidly with the President on matters of science and technology policy. Hillary will also fully fund and fully staff the Office of Science and Technology Policy.
- Re-establish the Office of Technology Assessment. The Congressional Office of Technology Assessment (OTA) should be restored to provide authoritative and objective analysis of complex scientific and technical issues for the federal government. From 1972 to 1995, the OTA had been a small department in the federal government providing authoritative and objective analysis to Congress on science and technology issues. Hillary will encourage Congress to re-establish the OTA and ensure that we restore the role of evidence, not partisanship and ideology, to decision making.
- Protect the integrity and independence of federal scientific advisory committees. Roughly 1,000 federal advisory committees have been formed over the years to provide advice to the government on a range of issues, including scientific, medical, and technical matters. The Bush administration has been criticized by a number of organizations, including the National Academy of Sciences and the Union of Concerned Scientists, for making politically motivated appointments to these committees. A 2004 GAO investigation and report recommended a number of steps to enhance advisory committee independence. As President, Hillary will not allow political considerations to factor into selections; she will improve conflict-of-interest protections; and she would increase the transparency of committee recommendations. She will also enforce and build upon the scientific integrity provisions of the recently passed FDA reform bill.
Enhancing American Leadership in Space
- Strengthen whistleblower protections for those who disclose potential instances of political interference with science. Ensure that federal employees feel free to speak out when they see threats to scientific integrity.
- Pursue an Ambitious 21st century Space Exploration Program. Hillary is committed to a space exploration program that involves robust human spaceflight to complete the Space Station and later human missions, expanded robotic spaceflight probes of our solar system leading to future human exploration, and enhanced space science activities. She will speed development, testing, and deployment of next-generation launch and crew exploration vehicles to replace the aging Space Shuttle. And in pursuing next-generation programs, Hillary will capitalize on the expertise of the current Shuttle program workforce and will not allow a repeat of the “brain drain” that occurred between the Apollo and shuttle missions.
- Develop a comprehensive space-based Earth Sciences agenda. A National Academy of Sciences report found that “[a]t a time of unprecedented need, the nation’s Earth observation satellite programs, once the envy of the world, are in disarray.” (NAS final report of the Decadal Survey Panel, [January 2007].) Incredibly, the number of operating sensors and instruments on NASA satellites that observe the Earth is likely to drop by 35 percent by 2010 and 50 percent by 2015. Among other things, NASA’s Earth Sciences program is vital to our country’s – and the world’s – long-term efforts to confront climate change. Hillary will fully fund NASA’s Earth Sciences program and initiate a Space-based Climate Change Initiative to help us secure the scientific knowledge we need to combat global warming and to prepare for extreme climate events.
Promoting a Nationwide Commitment to Innovation
- Shore up American leadership in aeronautics. At the beginning of this year, President Bush requested roughly $554 million for NASA’s aeronautics research budget, down from more than $1 billion in 2004. The United States has enjoyed a positive trade balance in aeronautics and aerospace technologies that runs into the tens of billions, even as we’ve faced a growing overall trade deficit. To address the twin challenges of a declining skilled aeronautics workforce and increasing global competition in aeronautics, Hillary will make the financial investments in research and development necessary to shore up and expand our competitive edge. She will also work in partnership with industry to build technologies and capabilities that yield benefits far beyond aerospace.
- Establish a $50-billion Strategic Energy Fund. The Fund would finance an energy research agency that gathers the best minds from academia, the private sector, and government to devise ways to make the United States energy independent and reduce the threat of global warming. Oil companies would have the choice of either investing in alternative energy or contributing a portion of their earnings into the Fund. The Fund would also provide tax incentives for homeowners and businesses to make their houses and offices more energy efficient; provide gas station owners a tax credit for installing E85 (ethanol) pumps; provide loan guarantees for the commercialization of cellulosic biofuels; and provide incentives for the development of new technologies that contribute to a cleaner environment. By investing in alternative energy, we can create hundreds of thousands of well-paying new jobs in the United States.
- Pursue an innovation agenda. Hillary will aggressively implement her plan to renew the nation’s commitment to research; help create the premier science, engineering, technology and mathematics workforce; and upgrade our innovation infrastructure. She will increase the NIH budget by 50% over 5 years and aim to double it over 10 years. Since 2003, the National Institute of Health (NIH) budget has been largely flat, and President Bush proposed reducing it by 1.1% in 2008. She also will overhaul the R&D tax credit to make the U.S. a more attractive location for high-paying jobs, and increase support for the physical sciences and engineering by the National Science Foundation, the Department of Energy, and the Department of Defense.
As you prepare your letters and other missives to the Wall Street Journal, the White House, the Congress, etc, you might find the following chronological history of the evolution of U.S. taxation of overseas Americans of some use.
I have been assembling and playing with this for almost thirty years. Sadly there is not a whole lot to be happy about here.
We had a golden window of thirty-six years (1926-1962) during which U.S. citizens who were bona fide residents of a foreign country did not have to pay U.S. taxes on their foreign source income. We’ve subsequently been thrown into a dismal swamp for forty-five years to struggle on an unlevel playing field in international markets.
During the golden window period we were trade positive. Thanks to the subsequent swamp, we have now achieved the world’s largest and most chronic trade deficit.
Senator Grassley says our unique tax burden has nothing to do with this. The source of his wisdom is unclear but his conclusion is quite an interesting attitude for one of the most powerful Republican leaders of the Congress. With the Democrats playing Pay-Go, and our position high up on their sucker list too, this is not a very promising harbinger for positive change anytime soon.
Good luck with your pens and emails. All the very best and take care,
A BRIEF HISTORY OF U.S. LEGISLATION
AND COURT RULINGS CONCERNING
TAXATION OF THE INCOME OF U.S. CITIZENS
1913 – 2006
1913 The 36th State ratifies the Sixteenth Amendment to the Constitution thus rendering constitutional the establishment of an income tax. In October, 1913, the first income tax law is enacted requiring taxes to be paid on all "lawful" income. Less than 1% of the population is required to pay income taxes. Revenue Act of 1913.
1916 Congress amends the law to remove the ambiguous question of what taxing "lawful" income means, and substitutes instead "from whatever source derived". In the new law, all income is taxable even if it is earned by illegal means. This new language also becomes the basis on which the taxation of overseas source income is included. (Revenue Act of 1916).
1918 Efforts are made to exempt foreign source income from the U.S. taxation because of alleged competitive disadvantages suffered by American corporations operating branches abroad. (Hearings Before the House Committee on Ways and Means on the Revenue Act of 1918, 65th Congress, 2nd Session 648 (1918)).
A new revenue act is passed increasing taxes on incomes in excess of $1 million per year to a rate of 77%. The new act also introduces estate taxes and excess profits taxes. Still only 5% of the population has to pay income taxes. Americans working abroad are allowed to reduce their federal income tax liability with a tax credit equal to the amount of any foreign income taxes paid. Until 1918, all foreign taxes were treated as deductible expenses in the same manner as state and local taxes. (Revenue Act of 1918).
1921 Congress enacts a new tax law which is held to also apply to overseas Americans. Treasury Regulation No. 62 is issued applying the tax to overseas Americans under Article 3 of the Act, codified in Treasury Regulations, Section 1.1-l(b), T.D. 7332, 1975-1 C.B. 205,207. (Revenue Act of 1921).
A determined effort is made to exempt foreign income from U.S. tax in the case of U.S. Corporations that derive 80% of their income from foreign sources. The Treasury, Commerce and State Departments favor the exemption, but it runs into strong opposition in the Congress. This provision finally passes in the House, but is defeated in the Senate. (61 Congressional Record 7023, 7026 (1921)). The legislation is finally amended to provide for an exemption for corporate income earned in a U.S. possession but not remitted to the United States. (Revenue Act of 1921, Chapter 262, 42 Stat. 271 (1921)).
1924 In “Cook v Tait”, the Supreme Court upholds the Constitutionality of the taxation of Americans on their foreign earned income. The Court states:
"The principle was declared that the government, by its very nature, benefits the citizen and his property wherever found and, therefore, has the power to make the benefit complete. Or to express it another way, the basis of the power to tax was not and cannot be made dependent upon the situs of the property in all cases, if being in or out of the United States, and was not and cannot be made dependent upon the domicile of the citizen, that being in or out of the United States, but upon his relation as citizen to the United States and the relation of the latter to him as citizen. The consequence of the relations is that the native citizen who is taxed may have domicile, and the property from which his income is derived may have situs, in a foreign country and the tax be legal - the government having power to impose the tax." (Cook v. Tait, 265 U.S. 47(1924)).
1926 After expressions of great concern in the Congress about the competitive handicap caused to U.S. citizens and U.S. corporations abroad, legislation is enacted giving full exclusion of overseas income from U.S. taxation if an American citizen is absent from the United States more than six months in any calendar year. (Revenue Act of 1926, Chapter 27, Section 213(b)(14), 44 Stat. 9 (1926).
1932 Taxes are cut five times in the 1920's, but the onset of the depression creates a need for new revenues. In 1932, only $1.5 billion is collected compared to $5.5 billion in 1920. A new tax law is enacted raising tax rates and lowering exemption levels.
The foreign earned income exclusion is taken away from the gross income definition section and becomes codified in I.R.C. Section 116, Exclusion from Gross Income. The law expands the applicability of the foreign earned income exclusion by permitting profit derived from a trade or business into which both personal services and capital have been injected to be considered 20% income and eligible for exclusion. (Revenue Act of 1932, Chapter 209, Section 116(a), 47 Stat. 169, 204-05).
1934 Congress narrows the applicability of the foreign earned income exclusion by denying use of the exclusion for income paid by the United States or any federal agency. State Department employees overseas and other Federal employees on assignment abroad lose their tax exemptions. (Revenue Act of 1934, Chapter 277, Section 116(a), 48 Stat. 680, 712). (See also Senate Rep. No. 665, 72nd Congress, 1st Sess. 31 (1932)).
1936 Congress enacts a new tax law but retains the codified language of the 1934 Act. (Revenue Act of 1934, Ch. 277, Section 116(a), 49 Stat. 1648, 1689 (1936)).
1938 Congress enacts another new tax law but retains the codified language of the 1934 act. (Revenue Act of 1938, Chapter 289, Section 116(a), 52 Stat. 447, 498 (1938)).
1939 Total number of U.S. taxpayers is around 4 million. U.S. tax laws are first codified as an integral part of the U.S. Code – the Internal Revenue Code of 1939 (IRC 1939).
1941 The 1941 Revenue Act lowers exemptions and increases taxes on excess profits being made on the war effort. Internal revenue collection increases to $7.4 billion. (Revenue Act of 1941).
1942 The eligibility for exclusion of overseas income is tightened from the 6 months away from home rule to a "bona fide" residence rule for an entire tax year. (Revenue Act of 1942, Chapter 619, Section 148, 56 Stat. 798, 841-2 (1942)).
1945 Internal revenue collections rise to $45 billion from 43 million taxpayers.
1951 A new tax law is written and Congress reintroduces a "physical presence" rule on the basis of absence from the United States for 17 out of 18 months, and maintains the "bona fide" foreign residence alternative. (Senate Report No. 781, 82nd Congress, 1st Session 52-53 (1951).) (Revenue Act of 1951, chapter 521, Section 321, 65 Stat 452, 498 (1951)).
1953 Congress attempts to do away with the "physical presence" exclusion again, but settles for a $20,000 exclusion for 17 out of 18 month "physical presence" overseas Americans. Total exclusion for the bona fide foreign resident is unchanged. (Technical Changes Act of 1953, PL 83-287, Chapter 204, 67 Stat. 615 (1953)).
1954 Congress revises and organizes all tax laws into a single new Internal Revenue Code (IRC 1954). Tax laws enacted in the future will be amendments to the code. (Tax Act of 1954).
1962 Congress eliminates the total exclusion for a "bona fide" foreign resident. A $20,000 per year overseas earned income exclusion is established, rising to $35,000 after three years abroad. Tax creditm however, is given for taxes paid abroad even on excluded income. The Act also introduces separate rules for "unearned income" abroad, and Subpart F rules for controlled foreign corporations. (Revenue Act of 1962, PL 87-834, Chapter 11, 76 Stat. 960 (1962)). (See Conference Report No. 2508 of 1 October 1962).
1963 The OECD Model Tax Convention, is first published in 1963 and will be regularly updated, It is the basic reference manual used by both OECD and non-OECD countries for the negotiation, application and interpretation of bilateral tax treaties co-ordinating their direct tax systems.
1964 Congress reduces the exclusion for physical presence and bona fide residents to $20,000, rising to $25,000 after three years abroad.
1969 Congress enacts a new tax law lowering income tax rates for both individuals and private foundations. (Tax Reform Act of 1969).
1974 The House Ways and Means Committee proposes to abolish the foreign earned income exclusion and fully tax overseas income. (H.R. 17488, 93rd Congress, 2nd Session, Section 311(1974)).
1975 The House continues consideration of abolishing the foreign earned income exclusion. (H.R. 10612, 94th Congress, 1st Session, Section 1011(1975)).
1976 The Senate does not go along with the abolition of the foreign earned income exclusion, but accepts that the exclusion should be modified to "prevent abuse". (Senate Report No. 938, 94th Congress, 2nd Session 210 (1976)).
The Treasury Department produces a study of tax returns in 1968 and estimates that the revenue gain from enacting a total elimination of the foreign earned income exclusion would be $60 million. Enactment of the proposed 1976 Tax Reform Act is estimated to yield a gain of only about $40 million.
The Congressional Conference Committee Report on the Tax Reform Act of 1976 indicates an anticipated revenue gain of $44 million in 1977 and $38 million annually thereafter as a result of the amendments of section 911. When spread over an estimated 102,000 tax returns from abroad, the projected additional tax burden would amount to less than $500 per return. (H.R. Rep. No. 1515, 94th Congress, 2nd Session. 632 (1976)).
Congress decides to amend the tax law so that the overseas earned income exclusion will be reduced to $15,000 (off the bottom). Another important change is that henceforth no tax credit will be given for taxes paid abroad on excluded income, and there will be no exclusion for income received outside of the foreign country in which earned if one of the purposes is to avoid local income tax abroad. (Tax Reform Act of 1976, Publ L. No. 94-455, 90 Stat. 1520 (1976)).
The Tax Court holds in “McDonald v. Commissioner” that the market value of a Japanese apartment provided by an employer to a taxpayer was not excludable from the employee's income by reason of section 119 of the Tax Code. The court determined that the leasehold arrangement was primarily for the convenience of the employee, that occasional business use of the apartment did not make the lodging eligible as "business premises of the employer", and that acceptance of the lodging was not a "condition of employment" because it was not integrally related to the various facets of the employee's position. In addition, the court ruled that the value of the accommodations to the employee was the rental value (i.e. the local market value in Japan) of the apartment as negotiated by the employer and the Japanese landlord, rather than the price the employee would expect to pay for a similar apartment in the United States. (66 T.C. 223 (1976)).
The Tax Court rules in a second Japanese housing case, “Stephens v. Commissioner”, that the housing supplied by an employer to an employee was includable in the employee's gross income at its full local value, despite a specific finding that "quarters reasonably equivalent to (the taxpayer's) style of living were not available at American prices". (66 T.C. 226, (1976)).
1977 As he is leaving office, Treasury Secretary William Simon proposes a change to residence-based rules for taxing international flows of income including the taxation of Americans living abroad. ("Blueprint for Basic Tax Reform", Department of the Treasury, Washington, D.C., January 17, 1977, Chapter on International Considerations).
Following voluminous complaints from overseas Americans and their employers about the impact of the 1976 Tax Reform Act, Congress postpones the effective date from January, 1976 to 1 January, 1977. (Tax Reduction and Simplification Act of 1977, PL 95-30, Section 302, 91 Stat. 126 (1977)). Senator William Proxmire (D-Wis) gives his “Golden Fleece” award to the Treasury Department for having recommended this action.
1978 The General Accounting Office completes a two-part study of the impact of the Tax Reform Act changes. The first part is a non-scientific sampling of 367 firms employing Americans abroad. Eighty-five percent of the company officials surveyed believed that United States exports would decline by more than five percent as a result of the 1976 tax law and Tax Court decisions. The companies most severely affected were those operating in countries where living costs were high or where minimal taxes were imposed on foreigners. In the Middle East and Africa, Japan and Latin America tax increases were on average $4,700 per return.
The second part of the GAO study consisted of an econometric projection of the macro-economic effects of the Tax Reform Act changes and the 1976 Tax Court rulings. The GAO model assumed that there was a high in-elasticity of foreign demand for United States exports, and therefore the net effect of the 1976 changes would actually be an improvement in the U.S. balance of payments.
Because of the critical assumption of in-elasticity of demand for U.S. products, the GAO chooses not to base its recommendations on its own model and rather recommends to the Congress: "Because of the seriousness of the deteriorating United States international economic position, the relatively few policy instruments available for promoting United States exports and commercial competitiveness abroad, and uncertainties about the effectiveness of these, serious consideration should be given to continuing section 911-type incentives of the Internal Revenue Code, at least until more effective policy instruments are identified and implemented." (U.S. General Accounting Office, Doc. No. 78-13, Impact on Trade of Changes in Taxation of U.S. Citizens Employed Overseas (1978)).
The Treasury Department carries out a comprehensive study of the 1975 tax returns filed by overseas Americans and finds that the tax impact of the Tax Reform Act changes were far greater than the Treasury or the Members of Congress had anticipated. Based on the study of the 1975 data, the Treasury determines that the revenue gain from the Tax Reform Act amendments amounted to $381 million in 1977, rather than the $44 million that Treasury had estimated based upon its previous study in 1976 using 1968 tax return data. Further, the 1976 Tax Court decisions increased the burden on overseas taxpayers by an additional $65 million in 1976, yielding a total increase of $383 million over 1975 reporting practice, or an average $2,700 per return. (U.S. Department of the Treasury, Taxation of Americans Working Overseas 8 (1978)).
The House of Representatives proposes to repeal the 1976 changes in section 911 and reinstate computation of the earned income exclusion under the method in effect prior to the Tax Reform Act of 1976, but to limit the exclusion to persons who lived in countries other than Canada or Western Europe. (H.R. 13488, 95th Congress, 2nd Session (1978)).
The Senate approves a proposal, sponsored by Senator Abraham Ribicoff, which replaces the foreign earned income exclusion with specific deductions for certain excess foreign living costs, including excess foreign housing costs, educational costs, and cost of living. (S. 2115, 95th Congress, 2nd Session (1978)).
The Carter Administration introduces a proposal similar to the Senate bill, including deductions for excess foreign housing and education costs, and for the travel costs of one trip to the United States every other year, but not including a cost of living deduction. The Administration also proposes special rules for foreign moving expenses and for deferral while abroad of tax on the gain from selling a home. (BNA, Daily Tax Report, Nov. 8, 1977, at G-6)).
Congress finally votes for a total elimination of the overseas earned income exclusion to be replaced by the specific deductions along the lines of the Ribicoff proposal modified by the addition of several of the features of the Carter Administration's proposal including the deduction for one round trip voyage for a family to the United States (at the lowest cost economy fare) per year. (Foreign Earned Income Act of 1978, PL 95-615, Sections 201-210; 92 Stat. 3097 (1978)).
The Joint Tax Committee Staff estimates that the 1978 revenue cost of the Foreign Earned Income Act will be $412 million, compared with $194 million had the 1976 Act provisions applied that year, and $538 million had the law which had been in effect prior to the 1976 Act applied. For the overseas American taxpayer, the 1976 Tax Reform Act had added $344 million to taxes in 1978, and the 1978 Tax Act eliminated $116 million. If the pre-1976 Tax Laws would have still been in effect, and had the 1976 Tax Court rulings not been made, overseas Americans would have paid $228 million less than foreseen by the 1978 Tax Law changes. (Staff of Joint Committee on Taxation, 95th Congress, lst Session, General Explanation of the Foreign Earned Income Act of 1978 (Comm. Print 1979)).
The Court of Claims holds in “Adams v. United States” that the luxurious residence provided to the president of a Japanese subsidiary of an American oil company was excludable under section 119 of the Tax Code. The court stressed that for over 10 years the taxpayer had been required to live there as a condition of his employment and that certain rooms had been designed in whole or in part for business activities. The court also emphasizes that in Japan business success depends greatly on maintaining high social standing. (585 F. 2nd 1060 (Ct.Cl. 1978), 77-2 USTC Section 9609, 40 AFTR 2nd 5607 (J.Rep.,Ct.Cl 1977)).
The Tax Court also reaffirms the “McDonald” decision in “Bornstein v. Commissioner”, another Japanese housing case. The Tax Court denies the exclusion of housing allowances and easily distinguishes this decision from Adams on its facts. (37 TCM 1186, P-H T.C. Memo 78,278 (1978)).
1979 The President’s Export Council, headed by Reginald Jones, Chairman of General Electric, sends a letter on December 10th to President Jimmy Carter urging the abolition of the taxation of Americans living overseas. A special report on the negative consequences of this taxation, prepared by the Export Council, states:
“Americans at work overseas direct business to our domestic economy. If we are to increase exports in order to bring our trade accounts into balance, we must encourage more U.S. citizens to accept assignments with American business overseas. Concurrently, we must continue to be sensitive to the geo-political ramifications of having more Americans working abroad. Overseas employees of American business are seen as representatives of our country. Through their participation and visibility in international business affairs, they can function as goodwill ambassadors whose work exemplifies America's ideals and values.
“To achieve these benefits will require, among other things, that current tax laws bearing on foreign-earned income be changed. At present, our nation's tax policies discourage the employment of Americans overseas. Many American companies dong business overseas, especially in manpower-intensive industries, are sending American employees home in order to keep some vestige of market share.
“The principle underlying the taxation of Americans working in other countries should be to encourage, rather than discourage, employment with U.S. business overseas. The implementation of this principle through changes to the Internal Revenue Code will increase the number of U.S. citizens who are willing to work overseas, resulting in an increase in American exports.”
Export Council recommends: “Work should begin immediately to encourage enactment of a new tax law to put Americans working overseas on the same tax footing as citizens from competing industrial countries.”
1981 Congress reintroduces a $75,000 foreign earned income exclusion for "physical presence" and "bona fide" residents abroad (to rise by $5,000 per year until it reaches $95,000 in 1986). There are additional deductions or exclusions for excess cost of foreign housing. No tax credit will be given for taxes paid abroad on excluded income. There is no change in the full taxation of "unearned" income including retirement pensions earned abroad. (Economic Recovery Tax Act of 1981, PL 97-34, 95 Stat. 172 (1981)).
1982 The Treasury Department tells the Congress that it needs more enforcement power overseas to stop the drug trade. Congress enacts legislation which defines all overseas Americans as resident in the District of Columbia for certain legal purposes, including requests for information and the serving of summons. Overseas Americans are also to be subjected to a new form of request for the provision of documents pertaining to their work abroad. Failure to provide such documents, even in the case where providing them is against the law of the country of foreign residence, will subject the overseas American to civil and eventually criminal penalties in the United States. (Tax Act of 1982 Sections 336, 337 and 342 of the Act and sec. 7701 and new section 982 of the Code). (For legislative background see H.R. 4961 as reported by the Senate Finance Committee, sec. 372, 373 and 374; S. Rep. No. 97-494 (Vol. 1) July 12, 1982, p. 298+; and H. Rep. No. 97-760 (August 17, 1982), pages 590+).
1983 In “Rowe v. Internal Revenue Service”, a taxpayer suit to have the Foreign Earned Income Act of 1978 declared unconstitutional is dismissed with prejudice on the basis of res judicata. The suit repeated claims of the taxpayer which previously had been litigated and dismissed on the merits by the Court of Claims. The taxpayer had failed in two earlier attempts (summarized at 4 U.S.E.T. 6, 105-106 and 125) to have the 1978 Act declared unconstitutional because it gives foreign citizens a competitive advantage over U.S. citizens in working abroad. In this present case, the Court noted that, while it had jurisdiction over a tax refund suit under Section 1346(a)(1), venue is improper. Venue for a refund action is restricted by Section 1402(a)(1) to the federal district court where the plaintiff resides whereas the plaintiff in this case resides in Honduras. However, in an evident desire to compel the plaintiff to desist from further litigation, the court went beyond the venue determination to dismiss the action with prejudice on the basis of res judicata. The general rule of res judicata is that parties to a suit and those in privity with them are bound not only as to every matter which was offered and received to sustain or defeat the claim in a prior action but also as to any other admissible matter which might have been offered for that purpose. (Rowe v. Internal Revenue Service, 83-1 U.S.T.C. 9238 (D.D.C. 1983))
The Internal Revenue Service, in conducting audits overseas, attempts to make the definition of a "bona fide" resident contingent on the overseas taxpayer actually paying an income tax to the foreign country of "bona fide" residence. This practice, if sustained, will place taxpayers in countries where there is no local income tax in a worse tax position than they have ever been in before.
New IRS rules for taxation of Social Security Retirement benefits indicate that there will be a zero level of base income above which Social Security Benefits will be taxed (50% of the benefit will be taxable) for those who file as married filing separately. There is a dollar earnings base of about $20,000 for those filing a single return, and double this amount for married filing a joint return. This ruling will be especially harsh for overseas taxpayers married to aliens who have to file as married filing separately to exclude the non-resident alien spouse's income from taxation by the USA.
1985 Congressman Bill Alexander (D-Ark), Chief Deputy Majority Whip, introduces the "Overseas American Economic Competition Enhancement Act of 1985" (HR 2470), to eliminate the taxation of overseas Americans. He also introduces the "Overseas United States Citizen's Representation in Congress Act of 1985" (HR 2738) to create a seat in Congress for a Delegate to be elected by the overseas American community.
1986 Congress passes the “Tax Reform Bill of 1986” which introduces a number of significant changes affecting U.S. citizens resident abroad. The section 911 foreign earned income exclusion is reduced to $70,000. Separate foreign tax credit limitations are introduced for passive income, high withholding tax interest, etc. Source rules are introduced to treat income from sales of personal property as U.S. source income for U.S. persons if such income is not taxable in the country of residence. The U.S. dollar is deemed by statute to be the “functional currency” of U.S. citizens for transactions other than those of a “qualified business unit”. The new laws limit foreign tax credits for alternative minimum tax purposes to 90% of the alternative minimum tax before credits. This results in clear double taxation by legislative intent.
1987 Congressman Bill Alexander (D-Ark), Chief Deputy Majority Whip, introduces the "Overseas American Economic Competition Enhancement Act of 1987" (HR 2536), to eliminate the taxation of overseas Americans. He also introduces the "Overseas United States Citizen's Representation in Congress Act of 1987" (HR 2534) to create a seat in Congress for a Delegate to be elected by the overseas American community.
1988 Congress passes the “Technical and Miscellaneous Revenue Act of 1988” which eliminates the marital deduction for property passing from a U.S. citizen to a non U.U. citizen. An annual gift tax exclusion of $100,000 is introduced for gifts to non U.S. citizen spouses.
1989 Congressman Bill Alexander (D-Ark), Chief Deputy Majority Whip, introduces the "Overseas American Economic Competition Enhancement Act of 1989" (HR 1379), to eliminate the taxation of overseas Americans. He also introduces the "Overseas United States Citizen's Representation in Congress Act of 1989" (HR 1378) to create a seat in Congress for a Delegate to be elected by the overseas American community.
Congress passes the “Revenue Reconciliation Act of 1989” which creates a separate foreign tax credit category for lump sum distributions from foreign pension plans. The law also confirms the denial of marital deductions for property passing from U.S. citizen to non citizen spouse overrides existing treaty provisions for taxable years ending more than three years after enactment.
1990 Congress passes the “Revenue Reconciliation Act of 1990” which raises the maximum marginal tax rates and introduces “phase outs” of itemized deductions for higher income taxpayers.
“Revenue Ruling 90-79” declares that a loss on a foreign currency mortgage cannot be used to offset a taxable gain on the sale of a house in a foreign country. This is later upheld in court. In practice this works as follows: you borrow foreign currency to buy a house. You sell the house for less than you paid for it in the foreign currency. Yet, during the same time the dollar has appreciated so that the actual foreign currency loss looks like a dollar capital gain. You pay tax on the phantom income increase but cannot deduct the phantom loss. In reality you actually lost money, but you have to pay tax on a capital gain that never took place! Somehow this meets the cannons of tax fairness.
1991 Congressman Bill Alexander (D-Ark), Chief Deputy Majority Whip, introduces HR 2430 to “Amend the Internal Revenue Code of 1986” to eliminate citizenship based taxation of Americans living abroad. He also introduces HR 2428 to “Create the office of Delegate for United States Citizens Abroad.”
1992 Congressman Bill Alexander (D-Ark), Chief Deputy Majority Whip, and Congressman Ben Gilman (R-NY) co-sponsor HR 4562 to “Amend the Internal Revenue Code of 1986 to eliminate citizenship based taxation of Americans living abroad.” They also co-sponsor (HR 4560) to “Create the office of Delegate for United States Citizens Abroad.” Congressman Gilman later in the 1990s becomes Chairman of the House Committee on International Relations.
Congress passes the “Revenue Bill of 1992” which recognizes that Sec 988 of the 1986 Act, which established the U.S. dollar as the “functional currency” for individuals, had created an impossible administrative burden. Under the 1986 Act, an individual must measure gain or loss on each foreign currency transaction. The 1992 law provides for non-recognition of exchange gains in personal transactions for gains not exceeding $200. The burden on overseas taxpayers remains enormous and this provision is rarely if ever obeyed.
1993 Congress passes “The Revenue Reconciliation Bill of 1993” which raises the top regular tax rates from 31% by adding two new brackets of 36% and 39.6%. The act also raises the maximum alternative minimum tax rates from 26% to 28%. It increases the portion of social security benefits that are taxable from 50% to 85% for high income taxpayers (who are defined as those earning $34,000 as a single person an $44,000 for a couple). The act also increases the amount of income earned by controlled foreign corporations that is currently taxable to U.S. shareholders.
1996 Congress passes the “Small Business Job Protection Act of 1996” which significantly changes the taxation of foreign trusts with U.S. grantors and/or beneficiaries. Congress also passes the “Health Insurance Portability and Accountability Act of 1996” which states that individuals who have assets of $500,000 or more or income of more than $100,000 and who lose their U.S. nationality are deemed to have expatriated themselves for income tax avoidance purposes. Non U.S. citizens who have been long-term U.S. residents have comparable treatment.
1997 Congress passes the “Taxpayer Relief Act of 1997” which reduces taxes on long-term capital gains and estates. It also provides for a $500,000 exclusion of gain on the sale of a principal residence. The foreign earned income exclusion is increased by $2,000 per year (from 1998 to 2002) to a new maximum of $80,000 and indexes for cost of living increases after 2002.
2001 Congress passes the “Economic Growth and Tax Relief Reconciliation Act of 2001” which phases in certain deductions and benefits that have sunset provisions by 2011. Middle income taxpayers assume the burden for repealed estate tax provisions by now paying capital gains income tax on decedent’s built in gain.
2004 Legislation is introduced in the Senate to greatly increase the taxation of many overseas Americans by eliminating the Section 911 housing deductions and exclusions. This proposal receives strong support from Senator John Kerry (D-MA) and Senator John McCain (R-AZ) and passes by unanimous consent with no opposition in the Senate. It is defeated in the House of Representatives. In other tax legislation, Congress goes in the opposite direction and finally removes the 90% limit on foreign tax credits for Alternative Minimum Tax purposes.
2006 The Tax Increase Prevention and Reconciliation Act of 2005, Pub. L. No. 109-222, 120 Stat. 345 (TIPRA), enacted in May 2006, changes the maximum amount of foreign earned income and housing costs that may be excluded from gross income under section 911 of the Internal Revenue Code. It significantly increases the tax bill of thousands of U.S. expatriates and make it costlier for companies to place workers abroad. The law, which is retroactive to Jan. 1, raises the amount of income Americans may exclude from their taxable earnings from $80,000 to $82,400 — but beyond this new threshold, all foreign-earned compensation will be taxed at a much higher rate.