- The Washington Times - Wednesday, September 18, 2002

Senate and White House negotiators were close late yesterday afternoon to reaching a final deal that would prevent Sen. Blanche Lincoln, Arkansas Democrat, from blocking a bill that is part of President Bush's faith-based initiative.

Mrs. Lincoln had been insisting that senators add to the bill a proposal some say would benefit corporations such as Arkansas-based Wal-Mart. But late yesterday afternoon, Lincoln spokesman Drew Goesl said a deal had been reached with the administration and that she was "prepared to release her hold" on the bill. A Republican Senate aide confirmed the statement.

The bill, which would increase the tax benefits of donating to faith-based or community charities, was ready to be brought to the Senate floor, and Mrs. Lincoln was the only remaining holdup, Senate aides said earlier yesterday.

The issue under negotiation involved efforts to help family-owned corporations whose family members want to donate some of their company stock holdings to a foundation but do not want to lose their control of the company.

Current law provides a "safe harbor," allowing this for donations of as much as 2 percent of corporate stock holdings.

Mrs. Lincoln's original proposal would have increased that to 5 percent.

Under a compromise she offered yesterday, an unlimited percentage of corporate stock could be donated initially, but the foundation would have to reduce it to the 2 percent limit within 10 years, a Senate Democratic aide said.

A Democratic aide said Mrs. Lincoln's goal was to "allow people to put more money into foundations through the vehicle of company stock."

Mr. Goesl said the White House indicated it would accept the compromise.

A Senate Republican aide said that as long as other Democrats do not raise concerns, it appears the bill is ready to advance to the Senate floor, with the new Lincoln proposal as part of a manager's amendment to the bill.

Earlier in the negotiations, a Bush administration official had strong words regarding Mrs. Lincoln's original proposal, calling it a "corporate special interest provision that she's trying to get passed; it's something that helps out Wal-Mart."

He said that raising the safe harbor on corporate donations from 2 percent to 5 percent was a way corporations would "basically be able to have their cake and eat it, too. You already get a nice [tax] deduction. But you're also able to count [the donation] as still part of your assets."

Mrs. Lincoln said her original proposal would benefit foundations, not corporations.

"I can't understand why anybody's got a problem with it," she said earlier yesterday.

She said her goal is to protect private philanthropic organizations from strenuous IRS regulations and allow them to spend the money they receive helping areas such as the Mississippi delta region.

The Bush administration has been urging action on the bill, which is the remaining part of the president's faith-based proposal. The comprehensive version of Mr. Bush's proposal was passed by the House last year but ran into problems because it contains the hotly debated "charitable choice" component, which would allow religious organizations to compete for a wide array of government grants. The Senate bill does not contain charitable choice.

The bill, among other things, allows those who do not itemize on their tax returns to deduct a portion of their charitable giving, allows tax-free donations from individual retirement accounts to charities and provides enhanced tax benefits to farmers or restaurants that donate excess food to charity. It would also establish government-matched savings accounts for low-income people.

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