Report of the MCAA Legislative Committee

Words: Paul Odom

Stimulus Legislation

(the American Recovery and Reinvestment Act of 2009, “ARRA”)

Signed into law on February 17, 2009, the ARRA aimed to provide an ‘economic stimulus’ for a sluggish economy by focusing on 1) creating and preserving jobs; 2) spurring economic activity through tax cuts, tax incentives, and direct aid; and 3) providing transparency and accountability for the use of funds.

The $787 billion legislation allocated $288 billion in various tax benefits, $275 billion for contracts, grants, and loans, and $224 billion for entitlements.

Congress now spends its time debating whether or not the stimulus was ‘successful’. However, job-creation and access to capital remain unresolved issues.

Healthcare Reform

H.R. 3590, the Patient Protection and Affordable Care Act (Senate bill)

Congress passed comprehensive healthcare reform legislation seeking to provide health insurance for the uninsured, guarantee access to affordable healthcare and reduce delivery costs, and reform the health insurance marketplace.

As more details and regulatory actions have come to light, it is clear that this legislation will be more complex, and have deeper ramifications on small business, than anyone thought. Of particular concern is whether or not it is cost-effective for employers to continue offering health care coverage in the face of mandates and fines.

Financial Services Regulatory Reform

(H.R. 4173, the Wall Street Reform and Consumer Protection Act)

Congress passed sweeping financial regulatory overhaul that seeks to punish bad actors on Wall Street and prevent future financial crises. The debate continues as to whether or not this bill would have prevented the MBS crisis, and whether or not it will prevent excessive risk-taking in the future. In an attempt to limit bank profits, many banks will now raise consumer and commercial banking fees (no more free checking accounts), and Congress awaits over 243 regulatory rulings that need to be made. It is uncertain how this legislation will impact Main Street.

Climate Change

H.R. 2454, the American Clean Energy and Security Act, “ACES”

The House-passed ‘cap-and-trade’ legislation seeks to reduce greenhouse gas emissions, lessen dependence on fossil fuels, encourage development and use of renewable energy sources, and create ‘green jobs’.

Senate Majority Leader Reid continues to push for Senate consideration of a cap-and-trade bill, either utility-specific or economy-wide. Many Members from both sides of the aisle are loathe to tackle this issue before the election, but a final decision on moving forward has not been made.

Budget/Appropriations

Neither the House nor the Senate passed a budget and are operating under a baseline number to divide between the various appropriations bill. The process is delayed even more than usual, and it is unlikely appropriations bills will be completed before the election.

Jobs/Economy

Congress has attempted to address the economy through small, focused measures that have not cleared both chambers–small business lending, extending tax breaks–but have passed an extension for unemployment benefits. House leaders are attempting to put together a manufacturing-focused package before November, but comprehensive legislation addressing taxes, the deficit, and spending reductions seems highly unlikely.

Estate Tax

Position
The Masonry Industry supports permanent repeal of the federal estate tax. The Masonry Industry also urges examination and consideration of proposals providing reasonable exemptions.

MCAA has been supportive of efforts to permanently repeal the estate tax, and short of that, has supported legislation (H.R. 3905) to increase the exemption level to $5 million, and reduce the rate to 35%, phased-in over ten years.

Update
The Senate is debating whether or not to include an estate tax fix in the current small business lending bill.

3% Withholding Tax

Position
The Masonry Industry opposes the 3% withholding tax. MCAA has met with Members of Congress to generate cosponsors and pass H.R. 275 (Meek-Herger) and S. 292 (Specter-Vitter), which would immediately repeal this requirement.

Update
MCAA continues attempting to find legislative vehicles in which to add S. 292, but given the lack of legislative activity this session, this issue likely won’t be resolved until next year at the earliest.

Alternative Minimum Tax

Background
The Individual Alternative Minimum Tax (AMT) operates parallel to the regular income tax, with different rates and definition of income and deductions. Although the AMT has historically applied to few taxpayers, the tax will grow rapidly over the next decade under current law. By 2010, the AMT will affect 33 million taxpayers — about one-third of all tax returns, up from 1 million in 1999.

Position
The Masonry Industry supports repeal of the AMT or appropriate indexing of the AMT to its original date of enactment or the date of enactment of the new AMT bill.

Update
Another temporary patch is unlikely, as most expect Congress to let the 2001 and 2003 tax cuts expire, resulting in tax increases. Tax cut extensions could surface in a lame-duck session, but the ‘cost’ of an AMT patch may prove too high to be dealt with.

Immigration Reform

Position
The Masonry Industry supports a comprehensive approach that includes provisions to secure our nation’s borders and creates a temporary guest worker program that meets the demand for labor and a process for addressing the undocumented currently employed in the U.S.

The Masonry Industry opposes immigration legislation that:
  • assigns liability for contractors who unknowingly use subcontractors that employ undocumented workers;

  • would make employers become the de facto “immigration police;”

  • fails to include a reasonable implementation period for electronic employee verification system (EEVS);

  • would include excessive debarment penalties for immigration violations;

  • implements a system that has not been thoroughly tested and revamped;

  • places a considerable financial strain on small business owners, due to the technological infrastructure;

  • does not provide liability protection for employers from discrimination lawsuits for an employer who relies on E-Verify information and subsequently denies employment to or fires a current employee who is later found eligible to work in the United States.
Update
While powerful congressional constituencies, such as pro-labor and pro-Hispanic interests, and the President, continue to battle over immigration reform policies, a reform bill is highly unlikely this year.

Military Construction

Background
The U.S. Army Corps of Engineers (USACE), faced with limited funding for military construction (MilCon) and charged with staying abreast of a rapidly transforming military, is favoring low initial-cost construction. The masonry industry continues to urge Congress to direct the Armed Services to incorporate life-cycle cost and other durability considerations heavily into design and construction protocols. The present policy of the Army Corps grossly undervalues life-cycle cost and durability as criteria for awarding construction contracts. This policy is costing the government billions of dollars long-term.

Update
The Army, faced with a force structure transformation that is arguably more acute than the Navy's, has been hard at work developing MilCon requirements and practices to ensure that facilities and infrastructure keep pace.

Consequently, the Army has embarked upon a policy of entrusting the construction, operation and maintenance of facilities that are supposed to last to civilian designers and contractors motivated to build cheaply. Conversely, the Navy has taken a more long-term view in its choice of materials. For example, it its Gulf Coast post-Katrina rebuild era, the Navy is rebuilding with a broad range of durable materials, including masonry, while the Army is choosing to rely upon modular/stick construction.

MCAA repeatedly has visited with John Conger, the Assistant Deputy Under Secretary of Defense for Installations & Environment, and Congressman Chet Edwards, Chairman of the MilCon Appropriations Subcommittee. MCAA has been told that language would be added to a bill forcing DOD to adopt a long-term life-cycle cost analysis. That language continues to be developed, and we hope for a positive resolve this year.

Summary

Given the highly partisan political climate, approaching mid-term elections, and budget concerns, Congress likely will be in ‘stall mode’ through the elections, and return in a lame-duck session to pass ‘must-pass’ bills (appropriations, perhaps tax credits, etc.) while punting on most remaining major issues.

The makeup for next Congress could prove more business-friendly and show a willingness to address important issues.
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