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web posted July 19, 1999

FTC: Hands off net privacy

In a blow to liberal groups, the Federal Trade Commission on July 13 urged Congress not to regulate Web sites' privacy practices.

The FTC report on Internet privacy, requested by Congress last year, states that few commercial sites have published data collection and use policies, but it's still too early to start regulating the Internet.

"Legislation to address on-line privacy is not appropriate at this time," the report says.

After weeks of fractious internal debate, the FTC commissioners voted 3-1 to approve the report, which is nonbinding but expected to be influential. It was presented to the House Commerce telecommunications subcommittee at a hearing.

Proponents of increased federal regulation were left hopping mad.

"We're very disappointed that the FTC has not recommended legislation," said Katharina Kopp, a policy analyst at the Center for Media Education. "They have waited long enough and have given industry plenty of time."

Regulatory enthusiasts have long said that tech companies have not moved quickly enough to set policies that limit what can be done with users' personal information. The FTC report cited some of these efforts, including Truste, sponsored by the CommerceNet Consortium and the Electronic Frontier Foundation; BBB OnLine, a project of the Council of Better Business Bureaus; and CPA WebTrust, sponsored by the American Institute of Certified Public Accountants.

Free-market proponents cheered the decision.

"The FTC made the right call, although it showed no sign of recognizing the importance of free flow of information in the economy," said Solveig Singleton, director of technology studies at the Cato Institute, who will testify Tuesday at the subcommittee hearing.

Both the pro-regulatory and pro-market forces have eagerly awaited the agency's recommendations in light of the impact from a June 1998 FTC report recommending new laws.

In the previous report, the agency said it "now recommends that Congress develop legislation placing parents in control of the on-line collection and use of personal information from their children."

Four months later, Congress passed the Child On-line Privacy Protection Act.

"The FTC was extremely influential in persuading Congress to pass a law protecting children. But now they seem to have decided that when you reach 13, you cease to have any privacy rights on-line," said Jason Catlett, CEO of JunkBusters, a group that has called for more industry restrictions.

The final report caps a four-week battle to decide whether new laws are appropriate. According to one FTC source, commissioner Mozelle Thompson last month sided with the proponents of new regulations -- which would have deadlocked the commission -- but then switched sides.

Commissioner Orson Swindle said that the report reached the correct conclusion -- that no additional laws are needed -- but that it understated the "substantial progress attributable to industry self-regulation."

In a separate one-page statement, Swindle said the report "only sparingly mentions the leadership on privacy issues" from firms such as IBM, Microsoft, and Disney.

Commissioner Sheila Anthony dissented, saying progress was far too slow, citing survey results showing that 93 to 99 percent of sites collected personal information but only 10 to 20 percent had privacy disclosure statements.

Kasich drops out of GOP race

Without ever officially getting started, Rep. John Kasich of Ohio abandoned his campaign for the Republican presidential nomination in 2000 on July 14, as well as any plans to seek re-election in the House. Kasich also endorsed Texas Gov. George Bush to be the GOP nominee.

"I wish I didn't have to be here today to tell you that I have now made the decision to not seek the nomination," he said.

Kasich said he got a great response from people in Iowa and New Hampshire but now was not the time for him to run for president. "I think you have to be mature enough in politics and in life to able to accept some disappointment," he said.

Kasich made his announcement in Columbus, Ohio Wednesday morning.

Kasich said Bush's message of "compassionate conservatism" was exactly what he believes. He said that when he hears Bush speak, it is very similar to what he would say.

"This business of compassionate conservatism, I wish I'd thought it up," he said.

The nine-term congressman, who is also chairman of the powerful House Budget Committee, said that he would not seek re-election to his House seat. He said he made that decision when he was re-elected last year.

"You got to know when to hold 'em, you got to know when to fold 'em, and you got to know when to renew yourself," he said.

But he did not close the door on future bids for political office, noting that the people of Iowa and New Hampshire "haven't seen the last of John Kasich."

Kasich, 47, made tax cuts and fiscal conservatism the theme of his campaign. As House Budget Committee chairman, he took a lead role in the GOP's plans to cut spending and balance the budget and has been a critic of government subsidies to business and industry, which he calls "corporate welfare."

Public TV outlet, Dems in cahoots for six years

Despite claims by Boston public broadcaster WGBH that its recent swapping of subscriber lists with the Democratic National Committee was a one-time administrative error, the station has actually been in business with the DNC since 1993.

Republicans, angry over reports that WGBH had a working relationship with the DNC, on July 14 canceled a planned vote that could have led to a major increase in spending for Corp. for Public Broadcasting, PBS' umbrella organization.

Now members of the House Telecommunications Subcommittee are busy finding ways to trim the subsidy, and they also want to hold a hearing that focuses WGBH's deal with the DNC.

"We are going to re-evaluate the funding levels and pare them down," said Ken Johnson, spokesman for subcommittee chairman Billy Tauzin (R-La.).

DNC press secretary Jenny Backus told Daily Variety that the relationship between WGBH and the political party began in November of 1993 when the station asked the politicians for 5 000 names to supplement its own mailing list.

WGBH made a second request in June of 1994 for an additional 3 900 names and a yet another request in July of the same year for another 3 900 names. At this point, WGBH owed the DNC more than 12 000 names from its mailing list which it repaid over the next five years.

In February of this year, the DNC approached WGBH with a request for 20 000 names to solicit donations. The station cut a deal with the DNC that included swapping 9 800 names and a straight payment for an additional 10 000 names. It is not clear how much the DNC paid for the 10 000 names on WGBH's mailing list, but the station's general manager Jon Abbott said the fee was probably "a few thousand dollars."

Several people in Washington predicted that WGBH was not the only station that traded mailing lists with the DNC. Asked if there was any record if the political party had similar relationships with other public broadcasting stations, Backus said she did not know for sure, "I would not be surprised."

Abbott said that the station began a policy against trading mailing lists with political parties or religious organization in late 1994. However, that policy was apparently ignored for several years. "It's against policy. It's not something we condone. We are embarrassed," said Abbott. He said the station is still reviewing old documents to get a solid grasp on all the facts.

Tauzin's spokesman Johnson said WGBH may have violated law governing its tax exempt status by selling its mailing list to the DNC. Republicans intend to amend the law authorizing the federal subsidy for the Corp. for Public Broadcasting to make sure it never happens again. "It's not going to be 'gee, we're sorry, we won't let it happen again.' It's going to be 'gee, we're sorry, you're going to jail.'"

House OKs Congress pay hike, doubling presidential salary

The House voted overwhelmingly on July 15 to give members of Congress a $4 600 pay raise in January and to double the next president's salary to $400 000.

Lawmakers voted 276-147 to increase their own pay, rolling up nearly 2-1 margins among Republicans and Democrats alike. They then voted 334-82 to reject an effort by conservatives trying to prevent the presidential pay boost.

The vote on legislators' salaries underlined the favorable political climate for the first raise since January 1998 and the second since 1993.

Not only do polls show Congress rated favorably by more than half the public, but its members serve during economic plenty and growing budget surpluses. While in past years the congressional pay question has often provoked heated battles, the issue came and went with scarcely a mention and as an obscure parliamentary vote.

The scant debate opened with Rep. Jim Kolbe, R-Arizona, saying he hoped lawmakers would support a procedural motion -- on a Treasury Department spending bill -- that in effect allowed the congressional pay raise. It ended moments later when Reps. Ken Lucas, D-Kentucky, and Ernie Fletcher, R-Kentucky., said they would oppose it.

"It looked like there was so much bipartisan support for the COLA, I didn't think anybody wanted to make it a major, controversial issue," Fletcher said in an interview later. COLA is shorthand for cost-of-living adjustment, the official name for the raise.

The $28 billion Treasury bill squeaked to passage by 210-209. Most Democrats opposed it because of spending cuts in the Internal Revenue Service and other agencies. GOP opposition was largely due to language requiring most federal employees' health plans to cover prescription contraceptives.

Even so, the potential volatility of the issue was reflected by the votes of the House's most vulnerable blocks of members. The 42 freshmen voted 26-15 against the raise, and one did not vote. And the 44 lawmakers elected by margins of 10 percent or less last November voted "no" by 30-13, and one didn't vote.

Most members of Congress earn $136 700 annually but leaders get more, with House Speaker Dennis Hastert, R-Ill., earning a top of $175 400. The increase will be 3.4 percent -- by law rounded to the nearest $100 -- pushing most lawmakers to $141 300 and Hastert to $181 400.

Under a 1989 law, lawmakers get an annual raise automatically unless they vote to deny it, a mechanism that has at times let them avoid taking politically risky votes. A formula in the law links the increase to the boost federal workers will receive, which President Clinton has proposed to be 4.4 percent.

To avoid a replay of past accusations that lawmakers gave themselves a raise in the dark of night, Hastert and House Minority Leader Dick Gephardt, D-Missouri, agreed to the roll-call vote. Both men voted for the boost, and party leaders had met repeatedly to make sure there would be broad bipartisan support.

Reps. Pete Sessions, R-Texas, and Mark Sanford, R-South Carolina, tried to kill the increase to the president's salary, arguing that presidents are already paid enough and that their perks, like free, sumptuous housing and travel are worth millions.

"We don't elect a king," Sanford said.

UN retreats from e-mail tax

A United Nations agency on July 16 backed away from a report in which it recommended Internet e-mail taxes to help developing nations.

In response to public outcry and congressional opposition, the United Nations Development Program said that it has "no plans" to levy taxes on anyone.

"Neither the United Nations nor UNDP has the mandate or power to create or administer any global taxation system," a spokesman said Thursday.

In the report published July 12, the agency proposed a tax of the equivalent of one US cent on every 100 emails that an individual might send.

"The Internet has the potential to offset inequalities in the global community, but if we don't take action it will only reinforce them," Kate Raworth, an economist and co-author of the Human Development Report.

Raworth noted that had this type of program been in place in 1996, it would have generated US$70 billion in development assistance that year.

The UNDP, which dispenses foreign aid, publishes the Human Development Report each year. It often recommends new taxes -- to no avail, so far.

So even critics of the UN aren't especially worried.

"It's purely an intellectual thing. They have absolutely no power to do anything they propose," said Ian Vásquez, director of the Cato Institute's Project on Global Economic Liberty.

"Every year they produce this report that has all these statistics that show things are getting better and better around the world. And every year they somehow take this report and make the case that more aid is needed than ever before," Vásquez said.

Although the UN can't levy taxes, its previous reports have been influential.

Raworth, the study's author, said the UNDP led a successful initiative in 1992 to urge governments and private donors to spend 20 percent of their aid budget on areas such as education and health care.

But the e-mail tax suggestion quickly drew fire from conservatives such as House Majority Leader Dick Armey (R-Texas).

"Every time you turn around, it seems there is another agency or bureaucracy looking to get its greedy mitts on the Internet through new taxes," he wrote in a letter sent to other congressmen on Wednesday.

The UN responded by trying to distance itself from the recommendations.

A UN media advisory said the annual report is an independent publication that is separate from and does not necessarily reflect the views of the UNDP.

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