Report of the MCAA Legislative Committee

Words: Paul Odom

111th Congress Review / Preview

Coming off the 2008 elections, Democrats enjoyed large majorities in the House, a filibuster-proof majority in the Senate, and control of the White House. The first policy output was a massive, nearly $800 billion stimulus plan. The House then proceeded to tackle other major policy issues, such as climate change, healthcare reform, and financial services regulatory reform. The Senate has legislated at a slower pace, but is poised to move healthcare reform, climate change, and regulatory reform as well.

With 2010 being an election year, a flurry of legislation is expected in the first half of the year, and then the political races will take precedence, with major legislative action minimal.

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.

The legislation has provided opportunities for contracts and grants across multiple industries, with a specific focus on infrastructure.

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’.

The Senate EPW Committee reported a bill out of committee (‘Kerry-Boxer’), but action has since stalled. Kerry is working with Lindsey Graham and others to find a ‘third-way’ bill that will balance the concerns of environmentalists, utilities, business, consumers, and resource groups (coal, nuclear, natural gas, etc.).

Healthcare Reform

(H.R. 3962, the Affordable Health Care for America Act; H.R. 3590, the Patient Protection and Affordable Care Act (Senate bill))

The House 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.

Among the many provisions of the House bill include the following:
  • Creation of an exchange for consumers to shop for public and private insurance plans

  • Inclusion of a public insurance option to compete with private insurance plans within the exchange

  • Non-discrimination for coverage, including pre-existing conditions

  • Limits variable rates due to health status, gender, or other factors

  • Proposes an essential benefit package that will serve as the basic benefit package for coverage in the exchange and will become the minimum quality standard for employer plans

  • Offers credits and subsidies to make coverage affordable

  • Individual and employer mandates to obtain/provide coverage

  • Various reforms aimed at cost-savings
The Senate passed H.R. 3590, which borrows from bills reported from the HELP and Finance Committees.

There are large differences in the Senate and House bills, and efforts at resolving the bills have come to a standstill.

Financial Services Regulatory Reform

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

In response to various financial crises, the House and Senate worked with the White House to enact various financial regulations to prevent another such crisis from occurring and provide additional consumer and investor protections.

The House passed H.R. 4173, which included provisions related to the following major issues:
  • Creates the Consumer Financial Protection Agency (CFPA) protecting consumers from abusive financial products and services

  • Addresses systemic risk to regulate large, interconnected firms that may pose a risk to the entire financial system should they collapse

  • Authority to unwind failing institutions without risk to taxpayers and the rest of the financial system

  • Non-binding votes on executive compensation allows regulators to ban certain compensation practices

  • SEC power to protect investors

  • Regulation of the derivatives markets

  • Mortgage reform and anti-predatory lending provisions aimed at mortgages

  • Credit rating agency oversight and reform

  • Registration requirements for hedge funds, private equity funds, and private pools of capital Creates a Federal Insurance Office to monitor the industry regulation
Senate Banking Committee Chairman Dodd released a draft bill and has since commissioned various members of the Committee to begin working outside the committee process to find bipartisan agreement on language that can be used as the Senate Committee bill.

Budget / Appropriations

As has been recent practice, the House completed their annual appropriations work by passing several individual bills and completing action through omnibus legislation, which was passed by the Senate.

Upon the President’s submission of the FY11 budget, which will include certain ‘funding freezes’, Congress will begin the budget and appropriations process for FY11.

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
Congress did not address the estate tax issue in 2009, resulting in a ‘limbo’ situation where there is no estate tax, in theory, for 2010. The estate tax will be back for 2011 at a rate of 55% on estates over $1 million.

Congress has pledged to address this issue in 2010, and will likely apply the fix retroactively.

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 is attempting to add S. 292 to the Senate ‘jobs bill’ currently being drafted. If this is unsuccessful, MCAA will make similar attempts to attach this bill to other ‘must-pass’ legislation, such as a tax bill or small business bill.

S. 292 has 13 cosponsors:

Sen Begich, Mark [AK]
Sen Bennett, Robert F. [UT]
Sen Brownback, Sam [KS]
Sen Burr, Richard [NC]
Sen Chambliss, Saxby [GA]
Sen Cochran, Thad [MS]
Sen Collins, Susan M. [ME]
Sen Inhofe, James M. [OK]
Sen Isakson, Johnny [GA]
Sen Murkowski, Lisa [AK]
Sen Roberts, Pat [KS]
Sen Vitter, David [LA]
Sen Voinovich, George V.

H.R. 275 has 133 cosponsors.

Alternative Minimum Tax (AMT)

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
Due to the amount of tax revenue generated from the AMT, it will be very difficult to ever completely repeal the AMT. It is extremely difficult to find another source of this much revenue or enough reduction in spending.

The AMT was “patched” in 2007 and again in 2008 (which extended the ‘patch’ through tax year 2009), where the income exemption rose to $69,950 for married couples filing jointly and surviving spouses and $46,200 for single taxpayers and heads of household. The patch also extended the type of nonrefundable personal credits taxpayers can use to avoid the AMT. Among these new credits are dependent-care credits and education credits.

Outside of comprehensive tax reform, Congress will again take a yearly ‘patch’ approach in an attempt to prevent the AMT from hitting additional taxpayers.

Immigration Reform

Background
In the past, legislation has been introduced in both the House and Senate that focuses solely on employer sanctions and would mandate that employers use Social Security numbers to verify their entire workforce, both existing and new employees. The new legislation does not take into account the unreliability of the current system or the high rate of errors produced by the system. Furthermore, there are no requirements for the system to be properly tested or revamped before implementation. Under the new legislation employers would be required to re-verify their entire workforce within four years of enactment. This will be an enormous administrative burden on employers and employees, particularly small business owners.

The Masonry Industry’s main concern with proposed legislation mandating that all employers must use the electronic verification system, E-Verify, is the potential negative impact this may have on small businesses.

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
Because this is a sensitive subject, and would require a heavy lift by Congress (a la healthcare reform), it is unlikely to be dealt with any time soon. Members who were supposed to introduce bills have postponed doing so.

While powerful congressional constituencies, such as pro-labor and pro-Hispanic interests, continue to battle over immigration reform policies, a piecemeal approach will be employed, although no results are expected.

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.

Position
The Masonry Industry urges Congress to direct the Armed Services to incorporate life cycle cost and other durability considerations heavily into design and construction protocols. The present policy, particularly that of the Army Corps, of 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 has secured an audience with John Conger, the Assistant Deputy Under Secretary of Defense for Installations & Environment and will be meeting with him to discuss this issue at-length.

MCAA also began working with Members on the MilCon Appropriations panels, and will coordinate efforts at DOD and in Congress to realize a positive policy outcome.

2010 Legislative Outlook

2010 is an election year for the House and certain Senators, so legislative activity, particularly on major or comprehensive bills, is expected to move at a quick pace during the first half of the year, and then slow down after the August recess ahead of November elections. However, the election results in Massachusetts may greatly alter the legislative scope.

A brief look at potential major legislation to be addressed includes the following:
  • Completion of healthcare reform legislation

  • Completion of financial services regulatory reform legislation

  • Climate Change / Energy legislation

  • Targeted job creation / stimulus legislation

  • Estate Tax Reform

  • Annual Budget and Appropriations

  • Discussions on immigration reform

  • Discussions on infrastructure legislation (highway bill, aviation bill)

  • Discussions on trade agreements

2010 Election Forecast

Democrats have seen a steady erosion of support from the public since last summer. Last fall, as the Healthcare Reform debate continued to boil, Democrats’ numbers among Independents fell through the floor. The November 2009 election of two GOP governors (VA and NJ) in seats previously held by Democrats (states Obama carried in 2008) should have been a more significant warning sign for National Democratic leaders. However, they continued to push a bill to overhaul the nation’s healthcare system despite the majority of the public being against it. This has cost them dearly.

The Democratic Party painted themselves into a terrible political situation when they were forced to compromise many of the core principals their base wanted in the healthcare reform bill, thus disappointing their base. Simply put, Democrats have allowed themselves to become so unpopular that they failed to win the Senate seat that Ted Kennedy held for 47 years one year to the day that Obama was inaugurated.

Democrats currently find themselves with an unmotivated party base because of unfulfilled promises. They are facing an opposition that they have enraged; all of the intensity and enthusiasm currently rests with Republicans and conservatives.

The stimulus bill that they promised would be the nation’s economic savior has done little to stimulate anything but the size of government. One year into Obama’s presidency we face a situation where banks will still not lend money to businesses to help grow the economy and we have double-digit unemployment.

One year ago today, every political analyst in the country thought it would be impossible for Democrats to lose the majority next fall. If GOP voter turnout matches the gubernatorial races of 2009 and the recent Massachusetts Senate race, Democrats will face a tidal wave election in 2010 that could sweep them out of power.

2010 Senate Races

Elections to the United States Senate will be held on November 2, 2010, for 36 of the 100 seats in the United States Senate. The Senate is currently composed of 57 Democrats, 41 Republicans, and two independents who caucus with the Democrats.

The partisan playing field for the 2010 Senate elections is even, with the Republicans defending 18 seats and the Democrats also defending 18 -- including two in New York, which has both a special election and a regularly scheduled election, and the Pennsylvania seat gained by Sen. Arlen Specter's April 2009 switch to the Democratic Party. There was one special election this cycle, to fill the Massachusetts seat vacated by the death of Democratic Sen. Edward M. Kennedy. That race was won by Republican Scott Brown.

Senate Synopsis

Retiring DEM (5 seats)
Christopher Dodd CT
Ted Kaufman DE
Roland Burris IL
Paul Kirk MA
Byron Dorgan ND

Retiring GOP (6 seats)
George LeMieux FL
Sam Brownback KS
Jim Bunning KY
Kit Bond MO
Judd Gregg NH
George Voinovich OH

GOP Incumbents (12 seats)
Richard Shelby AL
Lisa Murkowski AK
John McCain AZ
Johnny Isakson GA
Mike Crapo ID
Chuck Grassley IA
David Vitter LA
Richard Burr NC
Tom Coburn OK
Jim DeMint SC
John Thune SD
Bob Bennett UT

DEM Incumbents (14 seats)
Blanche Lincoln AR
Barbara Boxer CA
Michael Bennet CO
Daniel Inouye HI
Evan Bayh IN
Barbara Mikulski MD
Harry Reid NV
Kirsten Gillibrand NY
Chuck Schumer NY
Ron Wyden OR
Arlen Specter PA
Patrick Leahy VT
Patty Murray WA
Russ Feingold WI

2010 Senate Ratings


Source Safe DEM Likely DEM Leans DEM Tossup Leans GOP Likely GOP Safe GOP
The Cook Political Report
as of January 25, 2010		 WI
IN		 NY CA
CT		 AR
CO
IL
NV
PA
KY
MO
NH
OH		   FL
LA
NC		 GA
IA
DE
ND
CQ Politics
as of January 15, 2010		 WI
IN		 CA
NY
CT		 PA AR
CO
IL
NV
KY
MO
NH
OH		 DE
LA
NC		 FL
ND		 GA
IA
The Rothenberg Political Report
as of January 21, 2010		 CA
NY
WI
IN		 CT   CO
IL
PA
KY
MO
NH
OH		 AR
DE
NV
ND
NC		 FL
LA		 GA
IA


2010 House Races

The 2010 United States House of Representatives elections will be held on November 2, 2010, halfway through President Barack Obama's first term in office. Elections will be held for all 435 seats, representing the 50 U.S. states.

Big gains in 2006 and 2008 produced the Democrats' current 258-177 majority in the U.S. House. That gives the Democrats a 41-seat cushion against a reversal in fortune. But the party holding the White House typically loses seats in a midterm election year, and the recession -- and a conservative backlash to policies pursued by President Obama -- could make 2010 tougher than usual for the party in power.

House Synopsis

House members not seeking re-election in 2010:

Brian Baird (D-WA-3)
Gresham Barrett (R-SC-3)
Marion Berry (D-AR-1)
Roy Blunt (R-MO-7)
Henry Brown (R-SC-1)
Steve Buyer (R-IN-4)
Michael Castle (R-DE-AL)
Artur Davis (D-AL-7)
Nathan Deal (R-GA-9)
Mary Fallin (R-OK-5)
Bart Gordon (D-TN-6)
Paul Hodes (D-NH-2)
Peter Hoekstra (R-MI-2)
Mark Kirk (R-IL-10)
Kendrick Meek (D-FL-17)
Charlie Melancon (D-LA-3)
Dennis Moore (D-KS-3)
Jerry Moran (R-KS-1)
Adam Putnam (R-FL-12)
George Radanovich (R-CA-19)
Joe Sestak (D-PA-7)
John Shadegg (R-AZ-3)
Vic Snyder (D-AR-2)
John Tanner (D-TN-8)
Todd Tiahrt (R-KS-4)
Zach Wamp (R-TN-3)

2010 House Ratings

The following table rates the competitiveness of selected races from around the country according to noted political analysts. Races not included are currently considered safe for the incumbent's party. (Incumbents not running for re-election have parentheses around their name.)

District Incumbent Cook Rothenberg CQ Politics
AL-2Bright (D)TossupTossup/Tilts RTossup
AR-1Berry (D)Lean RTossupTossup
AR-2Snyder (D)Lean RTossupLeans D
CO-4Markey (D)TossupTossupTossup
FL-24Kosmas (D)Leans DTossup/Tilts DLeans D
FL-8Grayson (D)TossupTossup/Tilts RTossup
ID-1Minnick (D)TossupTossup/Tilts RTossup
IL-10(Kirk) (R)TossupPure TossupLeans D
IL-14Foster (D)Leans DTossup/Tilts DLeans D
IN-9Hill (D)TossupLeans DD Favored
KS-3Moore (D)TossupTossup/Tilts RTossup
LA-2Cao (R)TossupD FavoredD Favored
MD-1Kratovil (D)TossupTossup/Tilts RTossup
MI-7Schauer (D)TossupTossupLeans D
MN-6Bachmann (R)Lean RR FavoredTossup
MS-1Childers (D)TossupTossup/Tilts RLeans D
NH-1Shea-Porter (D)TossupPure TossupLeans D
NH-2(Hodes) (D)TossupPure TossupLeans D
NM-2Teague (D)TossupTossup/Tilts RTossup
NV-3Titus (D)TossupLeans DLeans D
OH-1Driehaus (D)TossupTossup/Tilts RTossup
OH-15Kilroy (D)TossupTossup/Tilts RTossup
PA-7(Sestak) (D)TossupPure TossupTossup
TN-8(Tanner) (D)TossupPure TossupTossup
VA-2Nye (D)TossupLeans DLeans D
VA-5Perriello (D)TossupTossup/Tilts RTossup
WA-3(Baird) (D)TossupTossupTossup


2010 Gubernatorial Races

There are 37 states that will elect governors in November 2010, with a near-even partisan split: The Democrats are defending their hold on 19 of those seats, while Republicans are the defenders in 18 states, including Utah, where there is a special election. State budget problems, greatly exacerbated by the recession, are creating political difficulties for incumbents of both parties.

Gubernatorial Synopsis

Incumbent Elections
Beebe (D-AR)
Brewer (R-AZ)
Culver (D-IA)
Gibbons (R-NV)
Heineman (R-NE)
Herbert (R-UT)
Lynch (D-NH)
O'Malley (D-MD)
Otter (R-ID)
Parnell (R-AK)
Paterson (D-NY)
Patrick (D-MA)
Perry (R-TX)
Quinn (D-IL)
Strickland (D-OH)

Open Seat Elections
AL Open (Riley, R)
CA Open (Schwarzenegger, R)
CO Open (Ritter, D)
CT Open (Rell, R)
FL Open (Crist, R)
GA Open (Perdue, R)
HI Open (Lingle, R)
KS Open (Parkinson, D)
ME Open (Baldacci, D)
MI Open (Granholm, D)
MN Open (Pawlenty, R)
NM Open (Richardson, D)
OK Open (Henry, D)
OR Open (Kulongoski, D)
PA Open (Rendell, D)
RI Open (Carcieri, R)
SC Open (Sanford, R)
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