Tuesday, March 15, 2005

The Legislative Cycle--Changing Two Entity Rule

So Bush proposes to change the two entity rule. How does he do that? There are at least three options:

1 Change "two" to "zero"--i.e., says that a person who receives payments individually can receive no payments through entities, while a person who has a 50 percent or smaller share of an entity can receive up to $250K

2 Change to provide that a person shall be combined with each entity in which he or she has at least a 10 percent share.

3 Change to "attribution". This is an approach we did a fair amount of work on in 1990 as the farm bill was under consideration.

Let me digress. What happens to the bureaucrats while Congress is considering legislation depends on the political situation, i.e., are the staffers on the Hill and the bigshots in the ivory tower (the USDA administration building--the assistant secretaries and above) talking to each other? If they are, ideas floated on the Hill will waft down Independence to 12th and Independence, then through the bureaucracy. The bureaucrats try to figure out what the draft means, what problems there might be, and what would need to be done to implement it. Usually there are significantly different approaches between House and Senate to worry about.

(My memory is that in 1995, with the farm bill, there was little communication, Newt having just taken over the House. Otherwise, there's usually good discussion.)

So in 1990 we were worrying about attribution, meaning roughly that the payments made to entities would be attributed back to the "warm bodies"/individuals according to their ownership share.

I'll be curious to see what approach is used this year (assuming Bush can push the proposal into legislative form).

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