The '96 vote & you

Let's start with the economy. For both parties, it is, after all, "still the economy, stupid." And, as Gerry Cerasale, the Direct Marketing Association's head of government relations, says, "They are going to be looking for money."

Whether Bill Clinton retains or the GOP retakes the White House, you shouldn't be surprised if Congress and the president try to move money from the U.S. Postal Service's $55 billion budget into the nation's general budget, because 26 years after postal reform, the USPS is a relatively-efficient, basically apolitical cash cow.

The biggest chunk to worry about is $11.6 billion in theoretic postal retiree liability. This gibberish can only make sense in the context of a Byzantine federal budget. Basically, the federal government carries $11.6 billion as a liability for accrued benefits payable to postal employees who are not yet eligible to receive them. Since the money is not yet due, the item is really in the nature of a reserve.

This $11.6 billion is part of the federal budget's deficit. It could be eliminated in one fell swoop by requiring the USPS to pay it into the federal treasury. Never mind that the actual payments will not be due to retirees for years. In a world where illusions matter more than reality, a paper deficit reduction works as well as a real one.

The effect would be that the USPS would have to write a $11.6 billion check. The primary place to recover that payment would be from mailers, and the USPS would need to recover it over a relatively short period of time. That would mean one hell of a rate increase.

The USPS budget isn't the only place politicians have their sights trained. In the last two Congresses there have been proposals to eliminate 100% deductibility of advertising expenses, and the proposal would probably re-emerge if a Dole administration really cut individual taxes by 15%. The Dole tax-reduction plan targets individuals, not corporations.

Mark Micali, a vice president in the Direct Marketing Association's Washington office, says the most probable proposal would limit the deductibility of advertising to 80% of the actual amount spent in the first year with the remaining 20% amortized over four years.

Another proposal, introduced in 1995, would have limited advertising expense deductions to 90% of the actual expenditure. These proposals stand a better chance of becoming law under Dole than Clinton, for two reasons.

First, Dole would have to stretch to meet his 15% individual tax-cut proposal while still proposing a budget that comes close to cutting the deficit. And if he's anything, Dole is a deficit hawk.

Second, if Dole wins, it's a good bet the House and Senate would be Republican, too. It would be very difficult to stop tax-cut and deficit-reduction proposals if the same party controls the White House and Capitol Hill.

If Clinton wins, you can be sure he'll try to lower the deficit, and he might even raise taxes. Since he hasn't proposed an across-the-board tax cut and isn't quite as fearful of the deficit as Dole is, his proposals will probably be less draconian.

But it looks as i,f the GOP will retain control of the House and the Senate. Even with a Clinton victory, it's unlikely the Republicans could lose both houses. It's much easier for business lobbyists to block ideas--sometimes bad ones, sometimes good ones--when the two ends of Pennsylvania Avenue are in different hands.

In some financial issues, a second Clinton administration might gore direct marketers. For example, Clinton called for campaign-finance reform in his acceptance speech. Prior campaign-finance proposals by Congress provided reduced-rate postage for candidates; they did not provide funding for these discounts, although the USPS estimated they would cost $350 million.

Since the Postal Service must break even, it would have to recover that money from its customers --including major mailers.

Advertising Regulation

Advertising--although not the direct mail variety--made it to the Democratic Convention. President Clinton and Vice President Gore all but declared war on the cigarette industry, promising severe restrictions on its advertising.

The tobacco industry, with staunch support from the advertising and magazine industries, was quick to fight back, reminding the Democratic ticket that the First Amendment bars prohibitions on truthful advertising for legal products. The cigarette companies have built customer databases for years. If their advertising is forced out of general media and moves to targeted, then regulators may follow.

Changes in other forms of advertising regulation are less predictable. Since Federal Trade Commission members' terms do not coincide with presidential elections, change in that agency tends to lag a bit behind changes in the White House.

Clinton has made two appointments to the FTC. His FTC chairman is Robert Pitofsky, probably one of the best-qualified chairman the commission has ever had.

Pitofsky's resume includes stints as the staff head of consumer protection at the FTC and Dean of Georgetown University's Law School. He is one of the top antitrust lawyers in the country, and his FTC term has thus far included solid law enforcement, attention to the changes caused by an increasingly global economy and thoughtful jawboning of Internet-related issues.

Clinton's other FTC appointee is Christine Varney, his former cabinet secretary. Varney has spearheaded efforts to understand the Internet and to regulate it appropriately.

The Clinton FTC wrote the Telemarketing Sales Rule. Industry members uniformly agreed that while the first version of it was too strict, the FTC really listened to telemarketers' input and crafted a reasonable rule. Pitofsky and Varney were very much part of that process. Presumably, the same general approach would continue in a second Clinton term.

Consumer protection is often bipartisan, so you can be pretty sure a Dole presidency wouldn't make radical changes to the FTC, particularly on its consumer protection side. Before she married the former Kansas senator, Elizabeth Hanford Dole was herself an FTC commissioner; she knows how the agency works and she understands its role. If Dole wins in November, it'll be interesting to see if the FTC becomes more high-profile because of the new First Lady.

Privacy and the Internet

To a degree, concerns about privacy tend to be bipartisan. We saw that this year when Democratic Congressman Edmund Markey introduced legislation dealing with online privacy, while Republican Bob Franks proposed a ban on mailing lists with data about children.

Both lawmakers appeared at an FTC hearing on online privacy in general and solicitation of data on children in particular.

A separate bill that passed the House of Representatives and awaits Senate action would severely curtail market researchers' ability to ask minors questions about their personal or family habits. That bill began as part of the Contract With America.

No matter who wins, the next administration doubtless will have to address a range of Internet matters.

Some of them will be guised as privacy-related but will have more to do with consumer protection and basic fair play. In particular, watch for regulation of marketing to children and collecting information from and about them.

There are bound to be attempts at regulating privacy and the Internet in the next four years. The real suspense is whether new bills are reasonable and rational, and whether we'll be governed by people who understand the technology.

On the eve of the presidential election four years ago, I attended a speech given by Sen. Robert Kerrey of Nebraska before the Software Publishers Association. After cataloging an array of policy issues involving software and new technologies, Kerrey ended his speech by saying: "I have good news and I have bad news. The bad news is there are only two guys in the Senate who understand this stuff. The good news is they're Al Gore and me."

Gore has been in charge of technology in the Clinton administration and would probably head it again should Clinton be reelected. We could do worse.

One of the first-term Clinton-Gore administration's early moves was the establishment of task forces to examine issues such as privacy and copyright in an online world. On the whole, these task forces did a good job.

Postal Reform

We just might see real postal reform in the next four years. It's not high on the Dole and Clinton agendas, but with the USPS facing heavier competition, its current rate-making scheme is growing more and more obsolete.