A monthly publication by and for members of
The Silver Users Association

This Month’s Newsletter is Sponsored by:

MARKET WATCH Month High Low Average January 2005 6.84 6.43 6.63 2004 8.21 5.51 6.67 back to top ASSOCIATION NEWS News: Press Releases: Please send us your press releases and/or company announcements, so that we can include them in SUA's monthly newsletter. Web Site: Take a look at the web site as it is undergoing a change http://www.silverusersassociation.org/directory/index.shtml. Meetings: SUA Spring Meeting Dates Set May 17-18 in Washington, DC at the Army-Navy Club. Anyone interested in sponsoring, please contact Paul Miller at pmiller@mwcapitol.com. 2005 International Zinc & Silver Conference Feb. 27- March 1, 2005 in Nevada PMA 2005 February 17-19, Orlando, FL MJSA Expo New York Mar. 6-8 JCK June 3-7 Las Vegas, NV Note: Please send us any updates to your company profile so that we can update our records and web site. back to top DEFICIT FIGURES RELEASED CBO said the federal government will run a $368 billion deficit in FY05, but when war costs are included that number is likely to reach about $400 billion. The $400 billion level would mark a slight improvement over FY04's final deficit of $412 billion. When measured as a percentage of GDP, the deficit would decline to 3 percent in FY05 from 3.6 percent the previous year. back to top MANUFACTURERS, RESTAURATEURS AND SMALL FIRMS ARE LINING UP IN FAVOR OF RESTRUCTURING SOCIAL SECURITY -- AND AVERTING HIGHER PAYROLL LEVIES (Article reprint from the Los Angeles Times by Tom Petruno) Some of the nation''s major business organizations are preparing to enter the fray over restructuring Social Security, spurred by concern that companies could get stuck with the bill if the system faces money shortfalls. The groups, including manufacturers, restaurant owners and small businesses, say they will spend millions of dollars to support President Bush''s efforts to create private Social Security investment accounts. Leaders say the campaign is being driven by fears that, without an overhaul, the government could resort to raising the Social Security payroll tax to bridge any funding gaps. "It is a job killer, particularly for small businesses," Dan Danner, senior vice president of public policy at the Washington-based National Federation of Independent Business, said of raising the payroll tax. He said his members "would come unglued at the prospect" of any tax increase as a solution to long-term funding of Social Security. Although there is vigorous debate over the long-term fiscal health of Social Security, concerns about a payroll tax hike are not far-fetched, according to business groups. The Social Security payroll tax has been raised 20 times since it was imposed in 1937. The levy, originally 2%, is now 12.4% -- half paid by employers, half by workers. Bush says the Social Security system faces insolvency without dramatic changes and has placed it at the top of his administration''s list of domestic priorities. As a cornerstone of his plan to bolster the program''s health, the president wants Congress to allow workers to divert a portion of their Social Security taxes to private investment accounts. Business groups could play a crucial role in championing the plan, which has met with vehement opposition from many Democrats, organized labor and some seniors groups, who view it as a first step toward shrinking the federal safety net for retirees. "They will definitely have a war chest now," said Roger Hickey, co-director of the Campaign for America''s Future, a Washington-based group that is battling the president''s plan. The support from business is coming at a crucial time. Many of Bush''s Republican allies in Congress have expressed reservations about tampering with Social Security, and the financial industry is keeping a low profile, chastened by critics'' portrayal of Wall Street as favoring private investment accounts for its own enrichment. Business leaders say Bush''s pledge to block any increase in the payroll tax to fix the program was key in winning their backing. "The president deserves the bipartisan support of the Congress and the strong backing of the business community" in addressing Social Security changes, John Engler, president of the National Assn. of Manufacturers, said in a recent open letter to members. The manufacturers group is the principal sponsor of the Alliance for Worker Retirement Security, a coalition seeking to revamp Social Security. On its website, the alliance lists the creation of private accounts as its No. 1 principle; No. 2 is to oppose a payroll tax increase. Danner of the independent business federation met with representatives of other business associations this month, a gathering organized by the Coalition for the Modernization and Protection of America''s Social Security, or Compass. The coalition is led by the Business Roundtable, a group of blue-chip U.S. companies including Coca-Cola Co., Exxon Mobil Corp. and IBM Corp. Compass was launched in 2002 to promote ideas for restructuring the Social Security system but has been mostly dormant for two years. Bush''s decision to move Social Security to the top of his action list has rejuvenated the group, said Derrick Max, who is coordinating the coalition''s activities. The group is planning a nationwide campaign of town hall meetings, direct mailings and local TV ads to get out its message, which includes support for private Social Security investment accounts, Max said. The coalition''s budget "will be a lot larger than in 2002," when it spent $5 million promoting its viewpoint, he said. Bush has flatly opposed the idea of boosting the payroll tax, as have Republican leaders in Congress. But business groups say they want to see changes to Social Security''s financial outlook that could reduce the likelihood that future administrations or Congresses would raise the 12.4% rate. "Businesses see an opportunity to be sure they aren''t faced with a tax increase down the road," Max said. A bipartisan commission that Bush appointed in 2001 to study Social Security''s future said private investment accounts could be key to bolstering younger workers'' retirement security. The commission assumed that, by investing some of their Social Security payroll taxes in stocks and bonds through private accounts, workers could earn higher returns than if the money was left in the system. Long term, that would allow the government to reduce workers'' Social Security benefits because the gains in private accounts would more than offset any cut in benefits, the commission said in its final report. For businesses, that prospect offers the hope that future administrations or Congresses will face less pressure to order a payroll tax increase to raise money for Social Security. AARP, the nation''s main lobby for older Americans, has opposed any changes to Social Security that would siphon payroll tax income from the program. "It''s the dedicated payroll tax that has kept Social Security strong all these years," said David Certner, AARP''s director of federal affairs. But many companies and entrepreneurs have long considered the payroll tax to be especially burdensome. Unlike with the corporate income tax, which is based on a company''s earnings, "you pay the payroll tax whether you make a profit or not," noted Danner, whose organization represents 600,000 small businesses. "It''s very hard on start-up companies," he said. Business groups say the payroll tax has over time stifled hiring. Engler of the National Assn. of Manufacturers said the group''s research found that payroll tax increases between 1984 and 1997 cost Americans 1 million jobs. The tax rate rose to the current 12.4% from 10.8% in that period. The amount of annual wages subject to the tax has risen to $90,000 this year from $37,800 in 1984. The manufacturers group said it had been joined by more than 40 other organizations and companies in the Alliance for Worker Retirement Security. Members include brokerage firm Edward Jones & Co., technology giant Hewlett-Packard Co. and the National Restaurant Assn. The restaurant association has been roused to action in part because the industry claims the largest U.S. workforce apart from government, said Rob Green, vice president of federal relations for the Washington-based group. Given the number of workers employed by restaurants, Green said, if payroll taxes were boosted, "you could dramatically impact restaurant profits." The idea of private Social Security investment accounts also has inherent appeal to many restaurateurs, he said. "A lot of them obviously are entrepreneurial people," Green said. "We like the concept of the ''ownership society.'' " Bush has used that phrase in touting private accounts and other proposals that would make "every citizen an agent of his or her own destiny," as the president said in his inaugural address Jan. 20. Many business groups say they have reserved judgment on other suggestions for revamping Social Security, such as changes in the way benefits are indexed to grow with inflation. "We want to see more information on what the proposals are," Danner said. Bush is expected to provide more details in his State of the Union speech Wednesday. But regarding the Social Security tax rate, there already is unanimity in business, Danner said: "Our guys do hate the payroll tax." back to top ADMINISTRATION'S BUDGET CALLS FOR $1.4 TRILLION IN TAX RELIEF OVER NEXT DECADE President Bush this morning sent Congress a $2.5 trillion fiscal 2005 budget proposal that includes a number of important tax proposals. Specific proposals addressed in the budget blueprint include: Permanent Tax Relief: The President proposes making permanent the tax cuts enacted from 2001 and 2003, at a cost of $1.1 trillion over 10 years. Specific tax cuts include the individual tax rate cuts, the lower tax rates on capital gains and dividends, increased expensing for small businesses and death tax repeal. R&D Tax Credit: A proposal to make permanent the Research and Experimentation tax credit, at a cost of $76.2 billion through 2015, is included in the budget. Savings Accounts: A revised version of earlier savings proposals calls for two new tax-deferred savings accounts, Retirement Savings Accounts and Lifetime Savings Accounts, that allow taxpayers to contribute after-tax dollars with tax-free investment income. The proposal is scored to raise $1.5 billion over 10 years when taxpayers convert existing IRAs into the new accounts. Pension Reform: The budget plan includes new restrictions for converting from a defined benefit to a cash balance pension plan as well as the db plan reforms unveiled by the Administration in January. Tax Reform: Even though "reform of the federal tax system" is the first item in the revenue proposals, the budget does not include any details. The President recently appointed a bipartisan panel to study the issue and the panel is scheduled to report to Treasury by July 31, 2005. The budget document states that the President "will continue to propose important policy initiatives," pending the outcome of fundamental tax reform. Revenue Raisers: The budget includes $2.6 billion in proposals to close tax loopholes and improve compliance, including a proposal to limit related party interest deductions, scored raise $1.6 billion through 2015. Click here to access a copy of Treasury's "Blue Book" that includes complete descriptions of all the tax provisions in the President's budget: http://www.treas.gov/offices/tax-policy/library/bluebk05.pdf back to top NEW LIST OF ITEMS SUBJECT TO TARIFF IF E.U. WINS WTO CHALLENGE The E.U. has suspended retaliatory tariffs against $4 billion of U.S. products as required by enactment of FSC/ETI repeal legislation in the American Jobs Creation Act (AJCA). But, the E.U. issued a new list of products that will be subject to a 14 percent retaliatory tariff if it wins a challenge on transition provisions in the AJCA. The list is at http://europa.eu.int/eur-lex/lex/LexUriServ/site/en/oj/2005/l_028/l_02820050201en00310040.pdf back to top SMALL BUSINESSES COULD SEE FEWER FEDERAL REGULATIONS House Small Business Committee Chair Don Manzullo (R-IL) and six colleagues yesterday introduced legislation to strengthen the federal Regulatory Flexibility Act (RFA) in order to better protect small businesses from burdensome federal regulations. It requires federal agencies to take a closer look at proposed regulations to make sure they are not burdensome to small employers, resulting in reduced regulatory costs for small businesses. HR 2345 strengthens and enhances the Regulatory Flexibility Act (RFA) to further protect the interests of small entities (small for-profit businesses; small non-profits; and small municipalities) in the federal administrative process. HR 2345 also gives the independent Chief Counsel at the Office of Advocacy of the SBA more authority and tools to challenge ill-conceived rules that would have a detrimental effect on small business. back to top THE CLEAR SKIES ACT OF 2005 MOVING TO MARKUP On Jan. 26, 2005, Fred Parady of OCI Chemical Corporation testified on behalf of the NAM before the Clean Air Subcommittee of the Senate Committee on Environment and Public Works (EPW)on S. 131, the Clear Skies Act of 2005. Sen. James Inhofe (R-OK) and George Voinovich (R-OH) introduced the bill on Mon., Jan. 24, 2005. If enacted into law, this NAM-supported legislation will reduce by 70 percent emissions of sulfur dioxide (SO2), nitrogen oxide (NOx) and mercury from the electric power generation sector by the year 2018. Unlike other multi-emissions legislation, the NAM-supported Clear Skies Act does not include provisions that would mandate expensive retrofits, limit trading mechanisms and compress statutory compliance timetables that would shift electricity investments from coal to natural gas. The maze of current regulations and litigation timetables also create a climate of business uncertainty with the potential for fuel switching. The NAM supports provisions that will neither mandate CO2 limits, nor create market conditions whereby power generators must choose already scarce natural gas over plentiful supplies of coal, and thereby foster an inflationary environment for consumers. Currently, the EPW panel's seven Democrats, along with Sen. James Jeffords (I-VT) and Lincoln Chafee (R-RI), have stated that they will not support S. 131 as written. This means that if a full committee vote were to occur today, a tie vote of nine-to-nine would block the bill from being reported out of committee and sent for a vote on the Senate floor. However, the NAM and its coalition partners are attempting to persuade Sen. Max Baucus (D-MT) and Thomas Carper (D-DE) to agree to moderate amendments to S. 131 in exchange for their support of the bill at the committee level. Chairman Inhofe has announced that his committee will markup S. 131 on Tues., Feb. 15, 2005. In parallel regulatory actions that mirror the pollution abatement goals of the Clear Skies Act, the EPA has issued a proposed rule to reduce mercury emissions and a Clean Air Interstate Rule (CAIR) that would further reduce SO2 and NOx emissions. The Administration has stated it will promulgate both rules by March 15. Although promulgation of the EPA's mercury and CAIR rules would accomplish similar emission reduction targets as the Clear Skies Act, the NAM favors a legislative solution in order to establish a climate of business and investment certainty, which are key to continue a healthy expansion of America's manufacturing base. back to top NEW SMALL BUSINESS OSHA LEGISLATION INTRODUCED The Silver Users Association announced its strong support for four bills related to workplace health and safety that were introduced today. All of these bills passed the U.S. House of Representatives last year with strong bipartisan support. "We want to say a special thanks to Representative Charlie Norwood (R-GA) for reintroducing his legislation and hope all four bills pass both the House and Senate during the 109th Congress. "These bills are a good start to the process of alleviating some of the regulatory burdens facing small businesses without sacrificing any safety and health protections," said Mike Merolla, President of the SUA. "This is exactly the type of reform that is necessary to keep American business competitive in our global economy. "Manufacturers, especially small ones, often face the tough task of trying to navigate the ambiguous provisions of the Occupational Safety and Health Act (OSH Act) and deal with its slanted 'due process' system without much success," Merolla said. "These bills are a good first step in bringing fairness to the OSH Act." The four bills introduced are: H.R. 739, H.R. 740, H.R. 741 and H.R. 742. back to top U.S. MANUFACTURING JOB LOSS NOT CAUSED BY OFFSHORING No one will deny the decrease in the U.S. manufacturing base and employment. It has seen steady declines since 1998, but a new report suggests that the cause of the decline is not the often blamed shift toward outsourcing jobs overseas. The Manufacturers Alliance/MAPI report - The Dynamic Nature of the U.S. Economy: The Churn of Firms and Jobs - said that although the sector's decline was "distressing," the data on factory openings and closings do "not support blaming manufacturing's woes on outsourcing and offshoring." From 1992 through 1998, more factories opened each year on average than closed. In the last five years, however, while the rate of closings remained the same, the rate of openings has declined. The report said if offshoring was the cause of the shrinking manufacturing base, the data would show an accelerated pace of plant closures. In fact, the cause is a lack of plant openings. Critics of the report said that the Manufacturers Alliance/MAPI used narrow definition of what was considered outsourcing and offshoring. back to top IRS TO INCREASE AUDITS IN 2005 Watch companies, the Internal Revenue Service (IRS) is coming. IRS announced this week that it plans to increase the number of tax payer audits in 2005 by utilizing existing resources and tools. The primary target for the audit expansions: mid-market corporations. IRS Large and Mid-Size Business (LMSB) Division Commissioner Deborah Nolan said many of these companies might have escaped audits in the past. Nolan also warned that audits of LMSB flowthrough partnerships are expected to increase as well. A key to the new strategy will be working closely with taxpayers to identify potential audit concerns earlier by using practices such as the Compliance Assurance Process, a recently initiated program aimed at reducing post-return examinations as a result of IRS and taxpayers engaging in continuous pre-filing issue resolution. IRS plans to use tools such as pre-filing agreements, the limited issue focused examination and fast track mediation and settlement programs to reduce audit cycles. back to top ASSOCIATION HEALTH PLAN LEGISLATION RE-INTRODUCED IN THE HOUSE Employer-Employee Relations Subcommittee Chairman Sam Johnson (R-TX) led a bipartisan group of legislators in introducing the Small Business Health Fairness Act (H.R. 525), legislation aimed at significantly expanding access to quality health care for uninsured working families across the country. The measure would create association health plans (AHPs), which would allow small businesses to band together and purchase quality health care at a lower cost for their workers. The bill, strongly supported by President Bush, was cosponsored by Education & the Workforce Committee Chairman John Boehner (R-OH), Rep. Nydia Velazquez (D-NY), and Rep. Albert Wynn (D-MD), among others. "More than 60 percent - over 24 million - of uninsured Americans work for small businesses," said Johnson. "Some of these people are offered insurance and turn it down because they can't afford their share of the rising cost of health care premiums." "This common-sense legislation puts small businesses on equal footing with large corporations and unions when it comes to providing health care to their employees," added Johnson. "If it's good enough for Fortune 500 companies and good enough for labor unions, then it should be good enough for small businesses and their employees." Approximately 45 million Americans lack health insurance today and studies indicate more than 60 percent of these uninsured Americans either work for a small business or are dependent upon someone who does. The House passed the bill last year by a vote of 252-162, with the support of 37 Democrats. President Bush supports the legislation, as do 93 percent of Americans according to the most recent poll conducted in March 2004 for Federation of American Hospitals. back to top CLASS-ACTION REFORM BILL BECOMES LAW On Feb. 18, President Bush signed into law the Class Action Fairness Act of 2005. This victory is a major step toward ending the jackpot justice that plagues our legal system. Most class-action cases will now be heard in federal courts, ending the practice of "forum-shopping" for state courts predisposed to trial lawyers' interests. We stand with you in working for further changes to a legal system that keeps all American manufacturers at a cost disadvantage relative to the competition. We can all feel proud of this well-earned victory. Thanks to the active involvement of SUA members like you, and advocacy by SUA policy experts, there is momentum for change in Washington. With your support, we will continue to work to reduce production costs in the United States, level the international playing field, promote investment and innovation, and develop the workforce we'll need in the years to come. To help keep the momentum going, please join the SUA in thanking those members of Congress who voted for the Class Action Fairness Act and letting those who voted against it know of your disappointment. Even better, I encourage you to share with your employees how your congressional delegation voted on this important issue. To see the actual vote, visit http://www.senate.gov/00009 for the Senate and www.house.gov/rollcallnumber for the House. back to top About SUA The Silver Users Association is a non-profit organization that was established in 1947 to represent the interests of companies that make, sell and distribute products and services in which silver is an essential component. The Washington Report is a member service of the Silver Users Association. If you want to be removed from this mailing list, please reply to this e-mail and include "unsubscribe" in the subject line plus your name and company.