AAF Government Report

February 26, 2010

Clark Rector Jr., Executive Vice President – Government Affairs
Alaina Flaherty, Federation Intern

PA Governor Cuts Tax Exemptions

Pennsylvania Governor Edward Rendell recently released his proposed 2010-11 budget. In it he proposes removing 73 sales tax exemptions, including the exemption for advertising. The announced budget has yet to be introduced as legislation and so there has been little reaction to it from lawmakers.

AAF has alerted its Pennsylvania members to the proposal and urged them to contact lawmakers in opposition to any effort to tax advertising and educate them as to the negative economic consequences of such a tax such as the loss of advertising revenue and jobs in the state.
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FTC Aims to Expand Authority

On February 4, the Senate Committee on Commerce, Science and Transportation conducted a hearing to discuss proposed changes in industry-wide rulemaking authority at the Federal Trade Commission. FTC Chairman Jon Leibowitz was the only witness in at the hearing.

The changes under discussion would do away with the “Magnusson-Moss” rulemaking procedures the Commission has been using for over 30 years and replace them with rulemaking authority under the Administrative Procedure Act (APA). The changes would do away with the current requirement that the agency demonstrate a practice is prevalent in the industry, and gauge the economic impact before enacting rules. It would also severely limit the opportunity for business and consumer comment on proposed rules. The Chairman also asked for the ability to seek immediate civil penalties for deceptive acts, independent litigation authority, and the authority to prosecute actors charged with aiding and abetting under the FTC Act.

The Chairman asserted that the FTC needs the new authority to better protect consumers. However, under questioning he was unable to cite a current problem that needs to be addressed, nor a past problem that the agency could not address under the current Magnusson-Moss procedures.

The changes have already passed the House of Representatives in an addition to legislation creating a Consumer Financial Protection Agency.
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FCC Plans on National Broadband

FCC Chairman Julius Genachowski has unveiled his plans to have national broadband by 2020. His plan centered on the idea of 100 megabit per second (Mbps) broadband being available to 100 million households within 10 years. The Chairman also said that by 2020, 90 percent of the population should have broadband access and all high school graduates need to be digitally literate.

Genachowski expressed in his speech that a national broadband plan is the foundation for economics, innovation and democracy in the 21st century. A study conducted by the FCC found that there are three main reasons people do not have broadband: lack of affordability, lack of digital literacy and a perceived lack of relevance. The FCC will formally introduce a technology blueprint for the program at a public meeting on March 16.

The Chairman’s complete speech can be found here
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Vilsack Pushes for School Lunch Reform

Agriculture Secretary Tom Vilsack recently spoke to the National Press Club and urged Congress to swiftly reauthorize the Child Nutrition Act. He identified this as a crucial aspect of First Lady Michelle Obama’s plan to end childhood obesity within one generation through her “Let’s Move” campaign. The Act must be reauthorized every five years.

The Department of Agriculture has begun a complete review of its protocols to enhance the safety and quality of food served to children. For many children, a majority of their daily calories comes from federal nutrition programs. The FY11 budget calls for a $1 billion per year increase on spending for programs such as this and special nutrition programs like WIC.

The Secretary’s remarks can be found here
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Microsoft and Yahoo Partnership Approved

The ten-year search partnership between Microsoft and Yahoo has been approved by both the US Department of Justice and the European Commission. The partnership was approved without restrictions and is on track to be completed by 2012. Each company will represent different advertising segments for customers.

In a joint statement the companies said, “Yahoo!’s sales team will exclusively represent and support high-volume advertisers, search engine optimization and search engine marketing agencies, and resellers and their clients. Microsoft will represent and support self-service advertisers.”
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Utah Targets Deceptive Advertising

A Utah Senate committee has unanimously passed a bill to create stricter laws for deceptive advertising. HB97, which already passed through the House, adds more definitive language to current laws describing how a business can advertise “going out of business sales.” The bill is targeted at those companies who run going out of business sales when they know that they will stay open, not those who run a sale which then enables them to stay open.

Rep. Marie Poulson, D-Cottonwood Heights, the bill’s sponsor, believes it will help to “create a transparent marketplace. It helps the consumer because they can trust the places they go and it helps the businesses because they can be trusted.”
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