BUSH’S BUDGET PLAN KEEPS FASHION INTACT

Byline: Joanna Ramey / Kristi Ellis

WASHINGTON — President Bush sent Congress details of his proposed $1.96 trillion 2002 budget on Monday, and it looks like federal programs affecting the business of fashion emerged largely intact.
The White House is touting the blueprint, which now undergoes congressional scrutiny and changes, as fiscally conservative. The budget makes several cutbacks, while increasing overall spending by 5.6 percent against 2001.
On Bush’s wish list:
Increasing the Federal Trade Commission’s Bureau of Consumer Protection, with oversight of Internet businesses, by 6.4 percent, to $82.8 million. The office has been key in forging Internet privacy legislation and curbing Web advertising practices to protect sharing consumer information.
Maintaining workplace inspections, including at garment contractors. The budget calls for a 1.6 percent increase to $168.1 million in the Wage and Hour Division’s budget. While the agency’s garment industry strategy hasn’t yet been detailed, the budget plan does cite a goal of increasing garment contractor compliance in Los Angeles to 45 percent from the current 33 percent.
Extending for one year the Work Opportunity Tax Credit, which expires in December and is widely used by retailers. Employers are reimbursed 25 percent on the first $6,000 in wages paid workers from disadvantaged groups like Vietnam War veterans, the disabled and students during the summer.
Spending $130 million underwriting a new U.S. Customs Service cargo processing computer. The current system is antiquated and prone to breakdowns, leaving incoming cargo periodically stranded at U.S. ports.
The proposed funding for the new computer is particularly significant, since the Clinton administration had sought a cargo user fee to pay for the system, a move apparel and textile importers, retailers and other businesses protested. Congress last year ended up bucking Clinton and giving Customs an initial $130 million in direct funding toward the computer.
Although grateful the Bush administration thinks a new computer is important, Jonathan Gold, director of international trade policy at the International Mass Retail Association, said $130 million isn’t enough. At this funding rate, “it will take about 14 years to build this thing,” Gold said, estimating the final price tag at $2 billion. New computer supporters want $330 million for 2002.
The Customs computer is one of a legion of projects and programs vying for federal dollars that the Bush administration would rather save for a $1.6 trillion tax cut, which retailers support as a means to boost consumer spending. The tension between tax cuts and pet projects will likely mean trade-offs in Congress.
However, Bush has already threatened to veto spending measures that exceed his limits. At the same time, the Senate has signaled that it thinks Bush’s tax cut is too steep. Last week, in a non-binding vote, the chamber supported a $1.25 trillion tax cut.
“Given the dynamics of the situation, Congress can’t fund everything,” said Scott Cahill, vice president of government and industry affairs at the National Retail Federation.
Cahill said he expects Congress to increase the budget in some areas — and he hopes that the new Customs computer falls in that category — while reaching a tax cut somewhere between what the President and House want and the limits sought by the Senate.
“This is the Washington scenario,” Cahill said.

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