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Marketers Fight the D.C. Squeeze

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NEW YORK Did you ever think the next sale of Trojans or e.p.t. would help fund President Obama's healthcare reforms? While Congress has backed off on taxing such products after pressure from Republicans and a flurry of behind-the-scenes industry lobbying, it still has marketers fully in its sights. The sparring over taxation and advertising regulations has only just begun.

So far, marketers appear to be faring well in what American Advertising Federation's evp of government affairs Clark Rector described "as busy a time as I can recall in quite a few years." Given the activist bent of the Obama administration and the Democratically controlled Congress, he added, "the  thinking is that the business community is under fire and marketing tends to be the most visible face of that."

Last week, manufacturers of everyday consumer items such as condoms and home pregnancy tests were nearly included in proposed tax legislation for "medical device manufacturers" under a bill pushed by Senate Finance Committee chairman Max Baucus, (D, Mont.) to help fund comprehensive healthcare. Baucus' committee reconsidered as the tax on items $100 or less would likely have resulted in higher prices, which consumers could perceive as a stealth tax.

Less high profile than funding issues for healthcare reform are regulatory ramifications arising from a proposal to create the Consumer Financial Protection Agency. Intended to protect consumers from predatory lending practices, critics claimed the sweeping, vaguely defined legislation would impact businesses beyond banks and weaken the Federal Trade Commission.

"This is one of the most important pieces of legislation facing the ad industry right now," said Dan Jaffe, evp of government relations at the Association of National Advertisers. "It's a very broad law that affects every player in the advertising community: advertisers, agencies, media and the FTC -- the major regulator we have a long history with."

Proponents of that proposal claim the American business lobby, led by the U.S. Chamber of Commerce, has been waging a scare campaign. But in releasing draft legislation of the bill last Friday, Rep. Barney Frank (D-Mass.), head of the House Financial Services Committee drafting the legislation, bowed to the fierce opposition of business interest groups and scaled back.

Two weeks ago, one of Senator Baucus's Democratic colleagues on the Senate Finance Committee, Sen. Bill Nelson (D-Fla.) published a letter in the St. Petersburg Times vowing to reintroduce an amendment to eliminate the tax deductibility of pharmaceutical TV advertising to help finance healthcare, an idea House Ways and Means chairman Charles Rangel (D-N.Y.), floated earlier this summer then dropped. Nelson himself has gone curiously quiet on his promise -- his office has not responded to requests for clarification -- while groups like the ANA declare the effort dead.

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