| MAY 2003 END TO NAVY VIEQUES TRAINING LIKELY . . . BUT NO LONGER "A DONE DEAL"
Puerto Rico’s Resident Commissioner in Washington, Anibal Acevedo Vila ("commonwealth party"/D), said this week that Navy and Marine Corps training at the Navy’s range on the island of Vieques, Puerto Rico ending by May 1, 2003 is "a done deal."
Acevedo was reacting to aides of U.S. Senate Armed Services Readiness Subcommittee Ranking Republican James Inhofe (OK) and of House of Representatives Armed Services Committee Member James Hansen (R-UT), who said that their bosses would question the Bush Administration’s goal of closing the range by May 1, 2003 because of the President’s threat to attack Iraq.
The two Republicans were key figures in writing the current law on the issue. It does not permit the range to be closed until the Secretary of the Navy determines that there is a replacement for the range that will provide at least equally good training. It also requires the Secretary to make the determination considering the advice of the top commanders of the Navy and the Marine Corps. ?
Navy Secretary Gordon England says he is determined to replace the range by May 1, 2003, a goal embraced by President Bush. A top military commander told WASHINGTON UPDATE that he expects the goal to be met because of England’s determination, but that he doesn’t know how it will be done.
England is currently reviewing a Center for Naval Analysis report on the options for replacing the range. Previous studies have not found a replacement that would equal the Vieques range training.
The range is the only location that the Navy and Marine Corps have on the eastern side of the United States for training using all of the tactics involved in amphibious combat invasions – Marines storming ashore while planes bomb and gunships fire. Other potential locations enable one or two of the tactics to be practiced but not all three.
The only potential for replacing the range with the required "equal or better" training would seem to be by changing the criteria for training from using all of the tactics used in amphibious combat invasions. The top commanders of the Navy and the Marine Corps have long held that such training is essential. It remains to be seen whether they will accept a proposal that would change the criteria. One possibility for doing so would use computer simulation for aspects of the training.
There is speculation that England has wanted to resolve the issue after this Congress goes out of active session. Two of the staunchest defenders of the Vieques range are retiring from Congress this year – Hansen and House Armed Services Committee Chairman Bob Stump (R-AZ). If the Congress is in session when a decision is made to close the range, Stump and Hansen would be able to cause problems for the decision.
If this has been England’s intent, he may have a harder time than he thought in avoiding Stump and Hansen. This Congress is still officially scheduled to complete its sessions by October 4 but almost certainly will meet later than that. There probably will be a post-November election session.
The May 1, 2003 goal was initially set by then President Clinton in an order negotiated with then Governor Pedro Rossello (statehood party/D). It was established as a legal requirement by a law enacted in 2000 that approved much of their agreement.
Acevedo and running mate Governor Sila Calderon ("commonwealth party"/no national party) were elected saying that a law was not an adequate guarantee of an end to training. Calderon then asked Bush to eliminate the referendum on Vieques that would have triggered the requirement and order an immediate end.
Bush asked the Congress to eliminate the referendum and the Congress agreed last year. But the Congress also passed a law that Bush signed that eliminated the requirement for the May 1, 2003 end to the training.
Calderon and Acevedo subsequently said Bush's May 1, 2003 goal is adequate. They have, however, continued to lobby the President to issue a formal order. ?
FUNDING FOR SOCIAL PROGRAMS MAY BE CONSIDERED IN CONGRESS
Increased funding for Puerto Rico needs in two major social programs could receive serious consideration by Congress this year. But the prospects for passage of the proposals are uncertain.
One would change the formula for federal payments for in-patient hospital services for Puerto Rico’s elderly. It currently is 50% of the rate that applies elsewhere in the U.S. and 50% lower local cost factors. The new formula would be 75% of the rate that applies elsewhere and 25% local cost factors.
The change would be phased in over the five years from 2004 to 2008. When phased in, it would provide an additional $25 million a year or so in Medicare program spending in Puerto Rico each year.
A proposal for an immediate increase was well on its way to approval in 2000 when it was reportedly blocked by then Senate Majority Leader Trent Lott (R-MS), an ally of Calderon and Acevedo.
The House approved the phase-in this year, but it is attached to legislation that would have Medicare provide prescription drug benefits. Both Democrats and Republicans say that they want to pass such a bill but they have competing proposals and have been unwilling to compromise.
Also a possibility is a bill that could increase funding for Puerto Rico in the Temporary Assistance for Needy Families (TANF) program by about $12.7 million a year. The bill is needed to reauthorize the nation’s primary welfare program.
The House this year rejected Acevedo’s request for a $68 million a year increase for Puerto Rico. The Senate Finance Committee subsequently proposed the $12.7 million increase.
TANF provides as much money as is needed to aid all needy families in the States but only limited amounts in Puerto Rico and the other territories.
Other measures in Congress that could benefit Puerto Rico this year include: further allocations of the federal commitment to fund Tren Urbano, a passenger rail system in the San Juan metropolitan area; funds to relocate residents of the Martin Pena canal area in San Juan; and further protections for the El Yunque National Forest.
POSSIBILITY OF TAX BILL WHICH COULD CARRY CALDERON PROPOSAL CONTINUES TO EVOLVE
The possibility of tax legislation to which Calderon’s top federal priority could be attached this year continued to evolve this week. The proposal would permanently exempt from taxation profits that companies in the States receive from manufacturing subsidiaries in Puerto Rico.
Congressional sources suggest an increasing potential for legislation to prevent manufacturers in the States from setting up shell companies in Caribbean island tax havens. Additionally, White House and key Republican congressional opposition developed to President Bush’s plan to propose legislation to boost the corporate stock market. Worsening economic news continued to fuel the momentum for such legislation. And Senate Majority Leader Tom Daschle (D-SD) suggested openness to acting on an ‘omnibus’ bill that would include tax provisions as well as measures needed to continue to fund government operations, probably in a post-election session.
Legislation addressing tax companies that try to avoid taxes by reincorporating in tax-free Caribbean islands could either be a major problem for Calderon’s proposal or the basis of an argument for it. The proposal could be seen as another tax incentive for businesses to move outside of the States or, at least, as inconsistent with legislation that is intended to help keep jobs in the U.S.
It could also, however, be seen as an incentive for a justifiable corporate move. The Calderon proposal is said to be intended to require that manufacturing be conducted in Puerto Rico. Puerto Rico is a U.S. territory. The proposal would provide an incentive for profits to be sent to the States.
These arguments do not outweigh the problems with the proposal – including that: it provides an incentive for companies to move plants and jobs from the States to Puerto Rico; the primary companies that would benefit do not need the tax exemption; the proposal would be used as a precedent by other areas in seeking tax exemptions; the proposal would be costly. But the arguments for the proposal, along with the importance of some of its supporters, means that it cannot be counted out of a bill dealing with international tax issues.
Bush, meanwhile, met with aides on the tax package that he said last month he would propose. No decisions were made, however, and there was discussion of not going forward with the idea. The package would provide incentives for stock market investments and some relief for investors who have had historic losses over the past year.
Bush’s chief economic adviser thinks it will insulate Republicans from the charge that Republicans have not done what they could to help the economy and investors. Treasury Department officials, however, say that the package will worsen the deficit that has returned and is skyrocketing under Bush. And Bush legislative advisors are concerned that the proposal would enable Democrats to say that Republicans are irresponsibly worsening the deficit to benefit wealthy investors and companies. The top Republican on the Senate Finance Committee, Charles Grassley (IA), has advised the White House not to propose the package unless Democrats commit in advance to supporting it.
DEMOCRATS STILL FAVORED FOR CONGRESS IN TOSS-UP ELECTION
Congressional campaign news continues to suggest that Democrats are more likely than Republicans to win control of the U.S. House of Representatives this November. Experts, however, are still unwilling to predict a shift of control from Republicans to Democrats.
Experts also consider Democrats to have the edge in increasing their majority in the Senate, although they are also unwilling to predict it at this stage of the campaign.
Democratic majorities in both houses of Congress would make it difficult for President Bush to accomplish his legislative agenda as moves toward seeking re-election in 2004.
It would also make it much more likely that Calderon could accomplish her major federal economic goals.
A national poll released by the Los Angeles Times this week said voters favored Democrats over Republicans for Congress by 47% to 39%. The Washington Post quoted a senior aide to President Bush as saying he was unwilling to predict Republican victories.
There are reports that Bush advisers think that Democratic majorities in Congress could benefit Bush’s re-election. The conventional wisdom has been that a Democratic Congress would hinder it by denying Bush accomplishments. The alternative theory holds that Bush will be better if he can blame Democrats for what they do and do not do through a Congress that they dominate.
In any case, Democratic majorities in both houses of Congress may not mean real Democratic control. Under Senate rules, 60 votes are needed in the 100 member Senate to act on legislation over the opposition of a single senator. Additionally, the current one seat Democratic margin is sometimes erased as a Democratic senator or two votes with Republicans on a particular issue.
Public concerns about the economy are the main national problem for Republicans in the campaign. The hesitation of experts to predict a Democratic majority in the House, however, is due to uncertainty about what will occur in the remaining two months until the election – with an improved economic outlook and an attack on Iraq presumably enhancing Republican chances. The hesitation to predict Democratic gains in the Senate is due to several individual races.
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