DECISION TIME

Nov 01, 2004 10:30 PM  By

You need to dig deep to determine whether a second George W. Bush presidency or a John Kerry presidency would be best for catalog businesses. The key political issues of concern to catalogers — use taxes, postal affairs, privacy regulation — obviously aren’t commanding the same attention as the war in Iraq, terrorism, or unemployment rates.

“From what I’ve seen or read, neither one of them will have a pronounced affect on anything that will have a material impact on our business one way or another,” says Mike Muoio, president of the Oshkosh, WI-based Miles Kimball gift catalog division of Blyth.

But a closer look does uncover some differences at where the candidates stand on some of the catalog issues.

TAXES

Both Bush and Kerry have spoken out in favor of extending the moratorium to temporarily ban state and local governments from imposing taxes on Internet access fees. The moratorium inposed by the Internet Tax Freedom Act of 1998 expired in November 2003. A Senate version of an extension of the moratorium passed in April would extend it another four years. But if the House of Representatives doesn’t pass a version this year, state legislatures could start taxing Internet access. While that in and of itself isn’t a threat to direct marketers, the ability to tax Web access is seen by legislators, lobbyists, and others as a gateway to enabling states to charging use taxes on purchases made online, even if the online merchant doesn’t have nexus, or a physical presence, in the same state or municipality in which the customer lives.

President Bush signed off on the temporary moratorium in 2001 and said this year that he’d like the ban to become permanent. Kerry was one of 11 senators who sponsored the original Internet Tax Freedom Act in 1997, although he missed the April vote on the Internet Tax Nondiscrimination Act (S.150), which would extend the ban, because he was campaigning.

Kerry, in fact, hasn’t been as vocal in his campaign speeches on the future of the Internet as Bush has. But in May Kerry tapped Apple Computer CEO Steve Jobs as an informal adviser on technology issues.

Meanwhile, Bush stated this year that he would like to see high-speed Internet access available to all Americans by 2007. In April, Bush asked federal agencies to enable broadband providers to run high-speed lines across federal computer systems.

Still, the Internet access tax collection issue is “kind of a wash” between the two candidates, says Jerry Cerasale, senior vice president, government affairs, for the Direct Marketing Association. “Neither has been in the forefront of Internet-related caucuses, and I don’t see either one pushing it.”

POSTAL REFORM

President Bush received high marks for creating the Presidential Commission on the Postal Service in December 2002. Although by early October it looked like efforts to reform the U.S. Postal Service and update the 34-year-old law governing its operations would likely have to wait at least another year, Congress at least knows Bush backs reform.

“Clearly the president knows there’s an issue with the Postal Service that needed to be addressed,” says Gene Del Polito, president of the Arlington, VA-based Association for Postal Commerce, a mailing industry trade group. “He did initiate the commission.”

But nearly 10 years since the first postal reform bill was introduced, this year’s reform bills in the House and Senate have been riddled with contradictions. “Bush’s staff has been digging in its heels and saying that it has looked at both bills and they don’t produce any measurable reform,” Del Polito says. “Therefore, Bush won’t approve them.”

It’s worth noting that Kerry’s running mate, John Edwards, has an interest in postal affairs: His mother once worked as a postal carrier to ensure that the family had health insurance. “Even though postal isn’t at the forefront of the presidential campaign,” says Cerasale, “Edwards knows where postal workers stand.”

Earlier this year, Edwards addressed members of the American Postal Workers Union (APWU), which represents nearly half of all postal workers, and announced that he agreed with the APWU’s position regarding the amount of postal work-sharing discounts that the USPS should give to mailers. The APWU — which formally backs the Kerry-Edwards ticket — says that the discounts should not exceed the amount of actual savings acrued by the Postal Service as a result of work-sharing. A number of postal rates, including automated flats (including most Standard Mail catalogs), carry work-sharing discounts of more than 100%. If the union’s position were to be worked into the current system of postal rate-making, postal costs could skyrocket.

What’s more, like other unions, the APWU and other postal unions have grappled with postal management during contract negotiations over higher pay. And because labor accounts for 80% of postal costs, pay increases have typically contributed to postage increases. The USPS and the APWU agreed on a new contract in December 2001; postal rates were increased in 2002.

“In the short term, I suppose one could try to make the argument that the Kerry-Edwards anti-privatization, anti-layoff, pro-union postal plan could be beneficial to catalog businesses in the sense that a government-subsidized USPS would be, in effect, a form of corporate welfare,” says Sam Ryan, senior fellow for the Lexington Institute, an Arlington, VA-based government think tank.

But in the long term, Ryan says, “it’s hard to see how a bankrupt and inefficient USPS will be beneficial to big mailers.” Without substantial cost-cutting reform, coupled with improved productivity, he contends, “I don’t see how the Postal Service can remain self-sufficient for too long. Ultimately that would likely mean massive rate hikes, which would spell trouble for big mailers.” The Bush postal plan for reform would help keep prices under control, he says.

THE PRIVACY PREDICAMENT

Bush and Kerry agree on many privacy-related issues of interest to catalogers. The broadest-sweeping privacy measure in recent years, the USA Patriot Act, gives the FBI access to consumer records if the government suspects terrorism activity. Kerry voted in favor of the measure, which Bush signed into law less than two months after the 9/11 terrorist attacks.

But now Bush says that the Patriot Act doesn’t go far enough and that he would like to see it expanded. Conversely, Kerry cosponsored the Safe Act (S.1709), which seeks to restrict some of the provisions that could be abused, such as wiretaps and library and bookstore searches.

As for privacy issues closer to home for catalogers, Kerry — like most of his fellow senators — backed the Federal Trade Commission’s creation of a do-not-call registry last year, so he and Bush are in relative agreement there. In addition, Kerry was one of the sponsors of the Online Personal Privacy Act (S.2201), introduced in 2002 but not passed, which was modeled on some of the European Union’s privacy directives. It classified data as either sensitive (medical, financial) or nonsensitive. Consumers must opt in before a company can use or collect sensitive information, while nonsensitive information is subject to opt-out standards

As for the issue of e-mail privacy, “it’s difficult for either candidate to rail against ad clutter during an election year given that both parties are responsible for their fair share of intrusive advertising,” points out Alan Chapell, president of New York-based privacy and data collection strategies consulting and research firm Chapell & Associates. Chapell notes that more than 1.25 billion political e-mails will reach the inboxes of registered voters this year.

Of course, deciding which candidate would make the better president isn’t simply a matter of weighing where they stand regarding industry-specific issues. A candidate who is in favor of overhauling the Postal Service and banning use taxes, for instance, might not make the most beneficial president if he implemented economic policies that led to rampaging inflation and unemployment. Likewise, policies that may benefit certain businesses (say, suppliers of defense equipment) may hurt other companies (such as marketers of recreational supplies). And then there are the issues that extend beyond business. For some voters, such as Barbara Banks, director of marketing for new trip development for Berkeley, CA-based cataloger Wilderness Travel, “the choice between candidates transcends party politics — it really represents a choice between two very different world views.”

CATALOGERS CAST THEIR VOTE

“I’m not a big fan of Bush but he’s kind of the lesser of two not such good choices right now,” says Todd Melinn, chief operating officer of Ontario, CA-based Active Mail Order, a cataloger of skateboard gear and apparel for teens. Melinn thinks the president is more pro-business than Kerry.

“The choice between candidates transcends party politics — it really represents a choice between two very different world views,” says Barbara Banks, director of marketing for new trip development for Berkeley, CA-based travel cataloger Wilderness Travel. Banks says she will vote for Kerry because of his promise of a lower deficit, more international cooperation, an exit strategy for Iraq, and a true war on terrorism.

Rich Gorman, CEO of Key West, FL-based skincare cataloger Key West Aloe, is backing Bush. “There is a better track record with George Bush on supporting small to midsize firms — and I’d say most catalogs are just that,” says Gorman.

“I believe [President Bush] has helped, not hurt, the economic recovery after Sept 11 move along at a greater pace than whatever alternatives existed during the previous election,” says Brian Wright, vice president of enthusiast sales and marketing at St. Paul, MN-based MBI Publishing Co. “No doubt John Kerry would bring new thoughts and initiatives to the people, but I don’t see the majority of those focusing around an increase in the business we’re in: generating commerce.”

“I’m voting for John Kerry,” says Neil Diboll, president/senior ecologist of Westfield, WI-based horticultural cataloger Prairie Nursery. “First of all, I think he will restore fiscal responsibility to government spending. I think that he will also restore our relations with our allies for a multilateral foreign policy, which, number one, will help reduce military adventures, and, number two, will help us share the costs of any military actions.”

“I will not ever vote for a Republican, number one, and number two, I can’t stand Bush, so I’ll vote for Kerry,” says Irene Schmoller, owner of Safford, AZ-based yarn and knitting supplies marketer Cotton Clouds. “I don’t believe that Bush has the best interests of small businesses in mind, although that’s what makes up most businesses in America. He seems more interested in larger corporations.”

“I quite candidly support the president, and I’d like to see many of his policies implemented. I’d like to see tax relief, which would act as a phenomenal stimulus to the economy,” says Arnie Zaslow, executive vice president of Wyncote, PA-based ATD-American Co., a mailer of office products for governments and other institutional buyers. Zaslow says he also would like to see less control and regulatory power given to federal agencies such as the Federal Trade Commission.

How They Voted…

The senators up for reelection in 2004 almost unanimously backed bills limiting the proliferation of spam and extending a ban on the taxation of e-commerce, both influential to catalogers. Roll call votes for the two bills produced only three “no votes,” or absences.

S.877: Can-Spam Act of 2003 (Limits transmission of unsolicited commercial e-mail)

S.150: Internet Tax Nondiscrimination Act of 2003 (Creates a moratorium on Internet access taxes and on multiple and discriminatory taxes on electronic commerce)

State Senator up for reelection S.877 S.150
AL Richard Shelby (R) Yea Yea
AK Lisa Murkowski (R) Yea Yea
AZ John McCain (R) Yea Yea
AR Blanche Lincoln (D) Yea Yea
CA Barbara Boxer (D) Yea Yea
CT Christopher Dodd (D) Yea Yea
HI Daniel Inouye (D) No vote Yea
ID Mike Crapo (R) Yea Yea
IN Evan Bayh (D) Yea Yea
IA Charles Grassley (R) Yea Yea
KS Sam Brownback (R) Yea Yea
KY Jim Bunning (R) Yea No vote
MD Barbara Mikulski (D) Yea Yea
MO Christopher S. Bond (R) Yea Yea
NV Harry Reid (D) Yea Yea
NH Judd Gregg (R) Yea Yea
NY Charles Schumer (D) Yea Yea
ND Byron Dorgan (D-NPL) Yea Yea
OH George Voinovich (R) Yea Yea
OR Ron Wyden (D) Yea Yea
PA Arlen Specter (R) Yea Yea
SD Tom Daschle (D) Yea Yea
UT Robert Bennett (R) Yea No vote
VT Patrick Leahy (D) Yea Yea
WA Patty Murray (D) Yea Yea
WI Russ Feingold (D) Yea Yea

Key Bills: Who Sponsored What

INTERNET TAX NONDISCRIMINATION ACT

1/7/03 by Sen. Ron Wyden (D-OR) S.52

1/7/03 by Rep. Christopher Cox (R-CA) H.R.49

DESCRIPTION

Seeks to permanently ban taxes on Internet access and multiple or discriminatory taxes on electronic commerce, and to repeal the ban exception for a tax on the sale or use of Internet services that was generally imposed and actually enforced prior to Oct. 1, 1998.

STATUS

S.52: Read twice and referred to the Committee on Commerce, Science, and Transportation 1/7/03; H.R.49: Passed by House 9/17/03; read the first time in Senate and placed on Legislative Calendar under “read the first time” 9/17/03; read the second time and placed on Legislative Calendar under general orders 9/18/03.

INTERNET TAX NONDISCRIMINATION ACT OF 2003

1/13/03 by Sen. George Allen (R-VA) S.150

DESCRIPTION

Seeks to extend for four years the moratorium on taxes on Internet access and multiple or discriminatory taxes on electronic commerce imposed by the Internet Tax Freedom Act.

STATUS

Passed by Senate 4/29/04; held at House desk 4/30/04.

CAN-SPAM ACT OF 2003

4/10/03 by Sen. Conrad R. Burns (R-MT) S.877

DESCRIPTION

Regulates interstate commerce by imposing limitations and penalties on the transmission of unsolicited commercial electronic mail via the Internet.

STATUS

Passed by Senate 11/25/03; passed by House 12/8/03; signed by President Bush 12/16/03 and became Public Law No. 108-187.

SAFEGUARD AGAINST PRIVACY INVASIONS ACT

7/25/03 by Rep. Mary Bono (R-CA) H.R. 2929

DESCRIPTION

Seeks to prohibit the transmission of spyware programs through the Internet unless the user consents to the transmission in response to a clear and conspicuous request or through an affirmative request for such transmission; prohibits use of spyware programs for collecting personally identifiable information unless notice is provided.

STATUS

Referred to Committee on Energy and Commerce 7/25/03; referred to Subcommittee on Commerce, Trade and Consumer Protection 8/8/03; ordered to be reported (amended) by the yeas and nays, 45-5, 6/24/04; reported (amended) by the Committee on Energy and Commerce 7/20/04; placed on Union Calendar 7/20/04.

STREAMLINED SALES AND USE TAX ACT

9/25/03 by Rep. Ernest J. Istook Jr. (R-OK) H.R.3184

10/15/03 by Sen. Michael B. Enzi (R-WY) S.1736

DESCRIPTION

Seeks to authorize states to require remote sellers to collect and remit the sales and use taxes on remote sales to purchasers located in those states; promotes the simplification and fairness in the administration and collection of sales and use taxes.

STATUS

H.R.3184: Referred to Committee on the Judiciary 9/25/03; referred to Subcommittee on Commercial and Administrative Law 10/22/03; S.1736: Read twice and referred to the Committee on Finance 10/15/03.

CHILDREN’S LISTBROKER PRIVACY ACT

3/3/04 by Sen. Ron Wyden (D-OR) S.2160

7/22/04 by Rep. Darlene Hooley (D-OR) H.R.4955

DESCRIPTION

Seeks to make it unlawful to sell personal information about an individual the seller knows to be a child and to purchase personal information about an individual identified by the seller as a child for the purpose of marketing to that child.

STATUS

S.2160: Read twice and referred to the Committee on Commerce, Science, and Transportation 3/3/04; H.R.4955: Referred to the Committee on Energy and Commerce 7/22/04; referred to the Subcommittee on Commerce, Trade and Consumer Protection 7/22/04.

POSTAL ACCOUNTABILITY AND ENHANCEMENT ACT

5/12/04 by Rep. John M. McHugh (R-NY) H.R.4341

5/20/04 by Sen. Susan M. Collins (R-ME) S.2468

DESCRIPTION

Seeks to ensure postal rate increases do not exceed the annual change in the Consumer Price Index; to combine market mechanisms with commission regulation to govern the rates of competitive products; to require the Postal Service to offer only postal services; to apply customs laws equally to postal and private shipments.

STATUS

H.R.4341: Referred to House Committee on Government Reform 5/12/04; referred sequentially to the Committee on the Judiciary for a period ending not later than 9/28/04 for consideration of such provisions of the bill as fall within the jurisdiction of that committee on 9/8/04; S. 2468: Read twice and referred to Committee on Governmental Affairs 5/20/04; placed on Senate Legislative Calendar under General Orders 8/25/04.

INTERNET SPYWARE (I-SPY) PREVENTION ACT OF 2004

6/23/04 by Rep. Bob Goodlatte (R-VA) H.R. 4661

DESCRIPTION

Seeks to prohibit intentionally accessing a protected computer without authorization, or exceeding authorized access, by causing a computer program or code to be copied onto the protected computer and intentionally using that program or code; to prohibit obtaining or transmitting personal information with the intent to defraud or injure a person or cause damage to a protected computer, or to impair the security protection of that computer.

STATUS

Referred to House Committee on the Judiciary 6/23/04; ordered to be reported (amended) by voice vote 9/8/04.