Split Likely to Take Internet Bill Off-Line

Posted April 23, 2004 at 4:39pm

Events appear to be conspiring against the once popular notion of keeping Internet connections free from taxation.

Opposed by a bipartisan cadre of former governors who now serve as Senators, the chamber’s debate this week on a Sen. George Allen (R-Va.) bill to bar states from taxing Internet access may be destined to die of filibuster, as so many other measures have this year.

Even a last-minute compromise bill from Senate Commerce, Science and Transportation Chairman John McCain (R-Ariz.) could stall out given that Democrats appear poised to continue their strategy of using every Senate legislative vehicle for their social policy agenda — including a measure to increase the minimum wage and a proposal to extend unemployment benefits.

Adding to that is the reluctance of many Senators on both sides of the aisle to vote on the bill, given that pressure from current state governors facing increasing budget crises has made many otherwise happy opponents of taxation fear having to vote on the measure.

“The hesitation of Members to vote on this issue is a very good example of my boss’s position,” said Alexia Poe, spokeswoman for lead opponent Sen. Lamar Alexander (R-Tenn.). “He sees this as an intersection of the Republican principles of lower taxes and federalism.”

A knowledgeable Senate Democratic aide agreed, “People don’t want to take a vote. … You’re either going to hear from your governors because of their position against this, or you’ll be accused of taxing the Internet.”

But Allen spokesman John Reid said, for Republicans like Alexander, keeping taxes low should trump state interests and governors are seeking the wrong remedy for their states’ budgetary woes.

“Republicans have to decide whether they are for protecting the consumer from higher taxes,” said Reid. “Additional taxes are not the way to deal with budget problems.”

Allen and Alexander have been at odds since last year, when the most recent moratorium on Internet access taxes expired.

Though Alexander and his supporters, including Sen. Tom Carper (D-Del.), offered to allow a two-year extension of the most recent moratorium, Allen argued last year that the current law was insufficient to prevent states and localities from finding loopholes to tax transactions between Internet service providers, among other things.

Allen’s bill would update the types of technologies and Internet connections that states would not be able to tax, while Alexander has argued that the definition is so vague it could apply to currently legal taxes on telephone connections. The complicated interrelation between Internet connections and phone lines has fueled the debate.

Alexander and Carper have continued to push the notion of a new two-year moratorium and plan to offer their proposal as an amendment this week.

Both sides agree Allen will likely succeed in getting the 60 votes necessary to avoid an initial filibuster during today’s vote to invoke cloture, or limit debate, on a routine motion to proceed to the bill.

But Reid still lashed out at Carper and Alexander for forcing the procedural vote.

“The line has been that Senators Carper and Alexander are interested in a compromise, but if that were true, why are they forcing us to invoke cloture in bringing up the bill?” Reid asked.

Poe retorted that Alexander “has been at the table since the beginning of this discussion. … It’s not fair to say we’re unwilling to compromise.”

Still, it appears that the McCain proposal — expected to be unveiled next week — does not sit well with opponents of Allen’s bill.

“All we’ve seen is a one-page summary of their so-called compromise,” said Carper spokesman Bill Ghent. “For us to be able to comment on the merits of this so-called proposal, we would have to see the legislative language.”

Ghent cautioned that even the summary raised some “serious concerns” for Carper, because it appears to adopt Allen’s proposed redefinition of Internet access. That has been a non-starter for both Carper and Alexander.

But a senior Senate GOP aide said McCain’s proposal could be the bill’s saving grace.

“If it’s as described, it may be a profitable bed for a final compromise,” the aide said.

Meanwhile, Carper and Alexander appear to be focusing their efforts on defeating a likely cloture vote later in the week on bringing debate on the bill to a close.

Democrats may be more likely to vote in bloc against that motion, because the minimum wage and unemployment insurance amendments would no longer be allowable following the cloture vote.

That dynamic “will cause cloture to fail even more than it already would,” said the Senate Democratic aide. “The failure of cloture is certainly a safe bet for us.”

Carper agreed in an interview Thursday.

“If we get on the bill, it could well be hard to get off of it,” he said.

Those warnings appear designed to test Senate Majority Leader Bill Frist’s (R-Tenn.) willingness to stay on the bill for longer than a week if necessary. Frist, this year, has rarely allowed a measure to take up more than three or four days of floor time, before pulling it from floor consideration.

But the senior Senate GOP aide said opponents of Allen’s bill should not draw “false comfort” from the notion that Frist will pull the bill prematurely.