The Foreign Sales Corporation (FSC) bill, which includes the NTRA’s legislation to eliminate a 30 percent withholding tax on winnings by foreign bettors and to reduce the capital gains holding period for horses from two years to one, has moved closer to conference.

On July 15, the Senate agreed by voice vote to go to conference on the bill and appointed conferees. The vote is the last procedural hurdle in the Senate for moving the bill to conference and puts the onus on the House to name its conferees and begin negotiations to resolve differences between the House and Senate versions of the FSC bill.

The process began with a Senate debate on two motions offered by Senators Mitch McConnell (R-KY), Mike DeWine (R-OH) and Edward M. Kennedy (D-MA) regarding the tobacco buyout, which was attached to the FSC bill in the House and has been the center considerable controversy.

The conference agreement will give Senate Democrats a significant say at the table by providing for a ratio of 11 Democrats to 12 Republicans on the conference committee.

The 12 Republican Senate conferees are Charles Grassley (Iowa), Jim Bunning (Ky.), Judd Gregg (N.H.), Orrin Hatch (Utah), Jon Kyl (Ariz.), Trent Lott (Miss.), Mitch McConnell (Ky.), Don Nickles (Okla.), Gordon Smith (Ore.), Olympia Snowe (Maine), Rick Santorum (Pa.), and Craig Thomas (Wyo.).

The 11 Democratic conferees are Sens. Max Baucus (Mont.), Jeff Bingaman (N.M.), John Breaux (La.), Kent Conrad (N.D.), Tom Daschle (S.D.), Bob Graham (Fla.), Tom Harkin (Iowa), Edward Kennedy (Mass.), Blanche Lincoln (Ark.), and John Rockefeller (W.Va.), plus Sen. Jim Jeffords, an Independent from Vermont.

NTRA will have considerable momentum for passage of the 30 percent withholding in that the primary supporters and authors of original provision (Sens. McConnell, Bunning and Lincoln) will be at the table for all FSC negotiations.

It remains unclear who the House conferees will be, but we anticipate that Rep. Jim McCrery (R-LA) – a longtime advocate for our 30 percent withholding legislation – will be among them. Reps. Bill Thomas (R-CA) and Charles B. Rangel (D-NY) will be lead House conferees on all tax portions. It is also possible that House Majority Leader Tom DeLay (R-TX) will be a conferee on all issues. Agriculture Committee Chairman Bob Goodlatte (R-VA) is likely to be a lead conferee on portions of the bill dealing with tobacco.

The presence of these conferees does not guarantee passage of our bill, but is a crucial step towards potential passage. Given the impending August recess, the bill would likely enter formal conference next week, whereupon staff will begin work on various technical issues. The bulk of negotiating will be done in September, with possible passage in late September or early October.

Congress will likely recess by October 10 to focus on the general election. There is a strong possibility of a lame duck session in late November or early December if President Bush is reelected. If FSC is not completed and there is a lame duck session, it could be considered for passage then.

Conferees from the House and the Senate are the only negotiators on the bill, not the “rank and file” members of the House or Senate. Once they have reached agreement and reconciled all the differences between the two bills (which are numerous and complex), they will produce a Conference Report. That Conference Report has to be passed by both the House and Senate. If it is passed by both, it goes to the President for signature of veto. The President would likely sign what is termed a jobs creation bill, especially this close to the election.