Taxes, Energy, Sovereign Wealth On Washington's Agenda


While political reporters like me are largely focused on the 2008 presidential race, our dysfunctional governmental apparatus in Washington continues laboring, however haltingly, in search of some tangible accomplishments. And some of them would have significant impact on Wall Street and the business community more broadly.

Here are a few highlight from my Washington Wire column in this morning's Wall Street Journal:

--TAXES: SENATE DEMOCRATS aim to pass alternative-minimum-tax relief in December.
Republicans are balking at finding $50 billion in new revenue to cover the cost of the measure, as is required under "pay as you go" budget rules. Though House Democrats have insisted on such offsets in the name of "fiscal responsibility," Senate counterparts are likely to abandon the search for new revenue in a bid to secure a filibuster-proof 60-vote majority. The reason: prolonged squabbling between chambers could backfire. Without fix, 23 million more Americans could get hit by the AMT or see their tax refunds delayed. "The stakes are pretty high here," says a Republican tax aide.

--ENERGY: House Speaker Nancy Pelosi is pushing for action next week on a compromise energy bill. Tensions have escalated as both parties seize on high gasoline prices. Republicans accuse Democrats of failing to act, while Democrats counter that Bush's party has blocked attempts to ease dependence on foreign oil. Democratic leaders aim to raise fuel-economy standards and boost production of biofuels, while lobbyists for solar and wind producers worry that amendments promoting renewable energy might get shunted aside. Washington fetes planned by Southern Co. and Edison Electric Institute next week highlight industry concerns as debate reaches a peak.

--CAPITAL MARKETS: The U.S. Chamber is ramping up spending on separate advocacy drives to reduce regulation on capital markets and increase intellectual-property protection. Chamber official David Hirschmann will lead both efforts, which are modeled on a $40 million legal-reform coalition.

--SOVEREIGN WEALTH FUNDS. SEC Chairman Cox is sounding alarm about foreign investment in financial institutions. While Congress often embraces such investment, the Republican SEC chief will raise concerns in speech next week. Cox plans to discuss how the increase in investments by foreign-government investment funds, which manage between $2 trillion and $3 trillion in assets, may "fundamentally change how markets work." Cox says they could particularly affect U.S. regulatory structure. When so-called sovereign-wealth funds invest, he reasons, there's added risk of self-dealing or insider-trading. His stance breaks with administration and IMF, which has agreed only to study the phenomenon.

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