Report of the MCAA Legislative Committee

Words: Jim Cooper, Hank Johnson, Jerry Lewis, Jeff Miller, Patrick Murphy, Mike Rogers, Joe Wilson, Tom Cole, Kendrick Meek, Ben Chandler, Doug Lamborn, Walter Jones, Bill Shuster, Howard McKeon, John McHugh, Tom Latham, Dan Boren, Chet Edwards, Arlen Specter, Jo Bonner, David Obey, John Murtha, C.W. Young, Norman Dicks, Harold Rogers, Alan Mollohan, Frank Wolf, Marcy Kaptur, Jack Kingston, Peter Visclosky, Rodney Frelinghuysen, Nita Lowey, Todd Tiahrt, JosÃ Serrano, Zach Wamp, Rosa DeLauro

111th Congress, First Session Review

Healthcare Reform
The House and Senate continue to work with the Administration to pass a comprehensive healthcare reform bill that may include a ‘public option’ to guarantee health insurance to all Americans. The House may vote soon on H.R. 3200; the Senate is still working on draft legislation that may be marked up in committee on September 21.

While the only language seen thus far is the House bill, it does include some provisions that potentially could be harmful for small businesses:

Cost: Approximate cost for this bill is nearly $1 trillion over 10 years, further making our nation’s health system unsustainable and jeopardizing our future economy, which could lead to increased taxes.

Mandate: H.R. 3200 requires employers to offer healthcare, which meets the ‘minimum benefit’ standards to be set by the government, or pay an 8% payroll tax. Further, if employers currently offer employees health insurance, they must meet the premium contribution requirements set forth in the bill (72.5% for individuals and 65% for family plans). If the employer offers, and the employee declines, health insurance, the employer still pays the 8% payroll tax.

Surtax: The bill levies a surtax on married or joint adjusted gross income to raise approximately $544 billion to help offset the cost of the bill: 1.0% surtax on incomes from $350,000 to $500,000; 1.5% surtax on incomes between $500,000 and $1 million; and a 5.4% on incomes over $1 million, with surtaxes beginning in 2011.

Public Option/Insurance Exchange: An insurance exchange will be created to provide a venue for employers and employees to find health insurance plans. However, small businesses with more than 21 employees will not have access to the exchange. One insurance option on the exchange will be a ‘public option’, that will provide the essential minimum benefits as determined by the government. Not only does this raise concerns on the impact of private insurance plans, but it moves towards a ‘single payer’ system capable of providing limited coverage and rationed care. Under the public health insurance option, the government is empowered to implement rules that would restrict patients’ choice of physician and limit timely access to quality specialty care. The government acts as both the regulator of and participant in the healthcare market.

Three Percent Government Withholding Tax
Issue: The withholding requirement, added in the Conference Committee of the 2005 Reconciliation bill, without debate or inclusion in either the House or the Senate bills, is a sweeping mandate on federal, state and local governments to withhold 3 percent of payments for goods and services. The provision, effective in 2011, affects payments for goods and services under government contracts as well as payments to any person for a service or product provided to a government entity. MCAA has opposed this withholding tax and has urged Members of Congress to repeal this tax.

Update: H.R. 275, introduced by Congressman Kendrick Meek, would repeal the imposition of 3 percent withholding on certain payments made to vendors by government entities. The bill has 114 cosponsors and has been referred to the Ways and Means Committee. We have talked to the congressman and this bill has support in the House, as Ways and Means Chairman Rangel previously included this provision in House-passed language last Congress. He informs us we must work with the Senate to attach this provision in a year-end tax bill.

S. 292, the Withholding Tax Relief Act of 2009, introduced by Senator Specter, would repeal provisions of the Tax Increase Prevention and Reconciliation Act of 2005 requiring federal, state, and local governmental entities to withhold 3% of payments due to vendors providing goods and services to such entities. The bill has 11 cosponsors and has been referred to the Finance Committee.

Conclusion: House passage of this provision is expected. The Senate Finance Committee has been focused on healthcare reform and will soon address climate change. At some point they will deal with a tax package that may include AMT and estate tax patches. This could be a vehicle to pass the withholding issue. We must continue to add cosponsors and urge the Senate to clear this legislation.

Alternative Minimum Tax
Issue: 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. Last year, Congress approved a “patch” for the AMT. The patch increased the AMT exemption, which is basically a standard deduction for taxpayers hit by the alternative minimum tax. 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: The AMT was “patched” in 2007. The AMT was patched again in September 2008. No determination has been made about a patch for 2009, although it is likely to occur late in the year, possibly as part of a broad tax package. The AMT is unlikely to be fully repealed given the revenue it generates and increased government spending.

Conclusion: Congress likely will again address the AMT in a 1-year patch until the political will and offsets can be found in a broad tax reform package.

Estate Tax
Issue: Inheritance tax, estate tax and death tax are the names given to various taxes which arise on the death of an individual. The estate tax is a tax imposed on the transfer of the "taxable estate" of a deceased person. The masonry industry favors permanent repeal of the estate tax or the establishment of a reasonable exemption that gives employers and workers an opportunity to continue operations.

Update: Due to the costs of elimination to the federal government, in reduced revenues, it is highly unlikely that the estate tax will ever be completely repealed.

Conclusion: The tax cuts that reduced the estate tax are set to expire after 2009. Current law calls for zero estate tax in 2010 and reverting back to the old, pre-tax-cut rules in 2011. An idea that has been floated for Obama is to allow the cuts to expire, either bringing back the estate tax in 2011 with a $1 million exemption–the old rules–or keeping the 2009 exemption of $3.5 million but making sure the 2010 estate-tax holiday never happens. It is possible that the reduced estate tax could be extended for another year in an end-of-the-year tax package that also could address the AMT and, potentially, withholding.

E-Verify
Issue: E-Verify is a free, web-based system operated by the Department of Homeland Security (DHS) and the Social Security Administration (SSA). The system facilitates compliance with federal immigration laws and deters unauthorized individuals from attempting to work and helps employers avoid employing unauthorized aliens. The Federal Acquisition Regulation E-Verify (FAR E-Verify) began its roll out on Sept. 8.

Update: E-Verify applies to the following federal contractors:

Prime Contracts: Companies awarded federal prime contracts above $100,000 and have a performance period of over 120 days.

Subcontracts: The rule covers subcontractors only if a prime contract includes the clause. For subcontracts that flow from those prime contracts, the rule extends the E-Verify requirement to subcontracts for services or for construction with a value over $3,000.
Indefinite-Delivery/Indefinite-Quantity Contracts: Existing indefinite-delivery/indefinite-quantity contracts should be modified by Contracting Officers on a bilateral basis in accordance with FAR 1.108(d)(3), to include the clause for future orders if the remaining period of performance extends at least six months after the final rule effective date, and the amount of work or number of orders expected under the remaining performance period is substantial.

Exemptions from the E-Verify requirement:

Contracts that include only commercially available off-the-shelf (COTS) items (or minor modifications to a COTS item) and related services;

Prime Contracts of less than the simplified acquisition threshold ($100,000);

Prime Contracts less than 120 days; and

Contracts where all work is performed outside the U.S.

What does an employer have to do to comply with Federal Contractor E-Verify?

If you are new to E-Verify or have been enrolled for less than 90 days:
30 days

Companies awarded a federal contract or subcontract with the E-Verify clause after Sept. 8 will be required to enroll in E-Verify within 30 calendar days of the federal contract or subcontract award date.

90 days

After a company enrolls in E-Verify, the company has 90 days from the date on which the company enrolled with E-Verify to initiate verification queries for employees already on your staff who will be working on the contract and to begin using the system to verify newly hired employees.

3 days

After this 90-day phase-in period, the company will be required to initiate verification of each newly hired employee within three business days after his first date of paid employment.

If your company has been enrolled in E-Verify for more than 90 days:

You are required to continue to initiate verification of newly hired employees within three business days of their first day of paid employment, but you have 90 days from the contract award date to begin using E-Verify for each employee already on your staff who is assigned to the contract.

If you enrolled in E-Verify prior to Sept. 8, you will need to update your company profile on the E-Verify site after Sept. 8 and select the option indicating you are a federal contractor to ensure compliance.

NOTE: Covered federal contractors must use E-verify to confirm the work authorization of all new hires, regardless of whether the new hire will perform work on the federal contract, and all existing employees who perform work on the federal contract.

Conclusion: We are anticipating additional clarifications to the system and additional guidance. This regulation is here to stay in one form or another. DHS Secretary Janet Napolitano has announced the Administration’s continued support for FAR E-Verify regulation and the use of E-Verify to check employee work authorization. Congress also has pending legislation extending and possibly broadening the scope of E-Verify.

National Energy Policy / Climate Change
Issue: Rapidly increasing oil prices put a huge strain on the U.S. industrial base, which in turn negatively affected the average consumer. This forced the U.S. to seek alternative forms of energy. Adequate, affordable and reliable supplies of energy - especially natural gas - are essential to the near and long term growth of the U.S. economy. The U.S. government can do much more to help conserve energy in business by using passive solar and other energy efficient technologies, as well as supporting other means of energy exploration.

Update: The House has passed a ‘climate change / cap and trade’ bill, but the Senate has not yet proceeded on a bill. The Senate expects to introduce its own draft legislation at the end of September.

In addition to capping emissions, the House bill provides various carbon allowances to help emissions-heavy utilities meet the targeted reduction levels. The bill also includes various incentives and programs to encourage ‘green’ and energy-efficient construction and energy production.

Conclusion: The ‘greening’ of public buildings and schools was a centerpiece of the current economic stimulus package, and the climate change legislation is expected to include similar provisions to move away from a fossil fuels energy production system. How this legislation impacts the cost of energy and the increased costs for users has not been determined.

Immigration Reform
Issue: No immigration reform legislation was passed in the 110th Congress. There have been small rumors that immigration reform could be on the domestic agenda before the 2010 elections; however, this is a difficult issue that lacks clear consensus.
Update: Powerful congressional constituencies, such as pro-labor and pro-Hispanic interests, will battle over appropriate immigration reform policies. The Congressional Hispanic Caucus favors a comprehensive approach, and pro-labor constituencies are divided over what a guest-worker program should look like. While piecemeal legislation will be offered, it is unlikely piecemeal approaches will pass. Republicans and others may attempt to offer amendments dealing with certain aspects of immigration policy. While not a front-burner issue, and requiring a good amount of political will, efforts will be made to fashion a comprehensive immigration reform bill.

The following statement made by Senator Obama on the Senate floor, May 2007, gives insight into his immigration plan: “The time to fix our broken immigration system is now… We need stronger enforcement on the border and at the workplace… But for reform to work, we also must respond to what pulls people to America… Where we can reunite families, we should. Where we can bring in more foreign-born workers with the skills our economy needs, we should”

Conclusion: While behind-the-scene discussions may be taking place to determine the appetite for tackling immigration reform, the real discussion on this issue likely won’t occur until next year, and even then, resolution through passing a bill may be left until after the 2010 election.

Military Construction
Issue: 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, continues to favor 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, particularly that 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.

Conclusion: To have success on this issue we must continue to work with the applicable House and Senate Appropriations and Authorizations Committees, specifically the MilCon Subcommittees. We must work to provide a credible definition of life-cycle costs and work to have that definition implemented in appropriate legislation.

2008 Election Re-Cap and 2009 Early Preview

Senate Synopsis
In the hotly contested Senate races, Democrats gained 9 seats, bringing their total to 60. Republicans hold 40 seats.

The following is the list of new Democratic Senators and the percentages by which they won their seats:

Alaska
Colorado
Minnesota
New Hampshire
New Mexico
North Carolina
Oregon
Virginia

Begich
Udall, M
Franken
Shaheen
Udall, T
Hagan
Merkley
Warner

48%
53%
XX%
52%
61%
53%
49%
65%

House Synopsis
Many analysts predicted that House Republicans would lose a number of seats, with some predictions as high as the 30-40 seat loss range. In the end, House Democrats gained 20 seats, giving them a 256-177 vote advantage.

Very telling are the locations of Democrat seat pick-ups:
AL-2, AZ-1, CO-4, CT-4, FL-24, FL-8, ID-1, IL-11, MD-1, MI-7, MI-9, NC-8, NJ-3, NM-1, NM-2, NV-3, NY-13, NY-25, NY-29, OH-1, OH-15, OH-16, PA-3, VA-11, VA-2

Republicans picked up seats in FL-16, KS-2, LA-2, LA-6, and TX-22.

Presidential Synopsis
The Democratic Obama/Biden ticket convincingly won the 2008 presidential election with 52.9% of the popular vote and 365 electoral votes. The McCain/Palin GOP ticket lost with 45.7% of the popular vote and 173 electoral votes.

To put this in recent historical context, in the 2004 presidential election, Bush/Cheney won 286 electoral votes, while Kerry/Edwards lost the election with 252 electoral votes.

In the 2000 presidential election, Bush/Cheney won 271 electoral votes, while Gore/Lieberman lost the election with 267 electoral votes.

Gubernatorial Synopsis
Of the 11 gubernatorial elections, only one state changed party. Democrats picked up the governorship of Missouri, where Attorney General Jay Nixon beat Congressman Kenny Hulshof with 58% of the vote.

Democrats also maintained the open North Carolina seat, where Lt. Gov. Bev Perdue beat former Charlotte Mayor Pat McCrory with 50% of the vote.

So with the new makeup in the Administration and Congress, what does this mean for the legislative agenda in the 111th Congress, and particularly the agenda of the MCAA? It is anticipated that the various segments of the Democratic party will push for various policy items, with long laundry lists being pushed by Speaker Pelosi and many liberals, including climate change legislation, tax reform, alternative energy proposals, and healthcare reform.

President-elect Obama already has championed 5 platforms for a stimulus package to be considered immediately. These policy items include the following:

Making public buildings more energy efficient;

Funding for roads, bridges and other parts of the country’s physical infrastructure;

Repairing and modernizing schools;

Providing broadband access to more parts of the country;

Making sure all hospitals and doctor’s offices have access to patient’s electronic medical records.

In addition to this stimulus, Congress also will consider the reauthorizations of the highway bill, aviation bill, and defense programs, which is likely to include military housing. The annual Military Construction bill (MilCon) also will be considered, and some of the major policy reform bills could address items such as the estate tax, 3% withholding, AMT, workplace safety issues, and immigration.

We expect the 111th Congress to be active on a number of issues, and it is crucial that MCAA be prepared to participate in the policy crafting and amendment process by educating Members of Congress on our issues and identifying our champions on the Hill. The 111th Congress will present many opportunities for MCAA to advance our agenda, and we must be prepared to move quickly to take advantage of the early onslaught of legislation.

The Keelen Group looks forward to working with MCAA to score policy victories and we are always here to answer any questions.

House Committee Assignments of MCAA Relevance

Appropriations
David R. Obey, Wisconsin, Chairman
Jerry Lewis, California, Ranking Member
John P. Murtha, Pennsylvania
C.W. Bill Young, Florida
Norman D. Dicks, Washington
Harold Rogers, Kentucky
Alan B. Mollohan, West Virginia
Frank R. Wolf, Virginia
Marcy Kaptur, Ohio
Jack Kingston, Georgia
Peter J. Visclosky, Indiana
Rodney P. Frelinghuysen, New Jersey
Nita M. Lowey, New York
Todd Tiahrt, Kansas
JosÃ© E. Serrano, New York
Zach Wamp, Tennessee
Rosa L. DeLauro, Connecticut
Tom Latham, Iowa
James P. Moran, Virginia
Robert B.Aderholt, Alabama
John W. Olver, Massachusetts
Jo Ann Emerson, Missouri
Ed Pastor, Arizona
Kay Granger, Texas
David E. Price, North Carolina
Michael K. Simpson, Idaho
Chet Edwards, Texas
John Abney Culberson, Texas
Patrick J. Kennedy, Rhode Island
Mark Steven Kirk, Illinois
Maurice D. Hinchey, New York
Ander Crenshaw, Florida
Lucille Roybal-Allard, California
Dennis R. Rehberg, Montana
Sam Farr, California
John R. Carter, Texas
Jesse L. Jackson, Jr., Illinois
Rodney Alexander, Louisiana
Carolyn C. Kilpatrick, Michigan
Ken Calvert, California
Allen Boyd, Florida
Jo Bonner, Alabama
Chaka Fattah, Pennsylvania
Steve C. LaTourette, Ohio
Steven R. Rothman, New Jersey
Tom Cole, Oklahoma
Sanford D. Bishop Jr., Georgia
Marion Berry, Arkansas
Barbara Lee, California
Adam Schiff, California
Michael Honda, California
Betty McCollum, Minnesota
Steve Israel, New York
Tim Ryan, Ohio
C.A "Dutch" Ruppersberger, Maryland
Ben Chandler, Kentucky
Debbie Wasserman Schultz, Florida
Ciro Rodriguez, Texas
Lincoln Davis, Tennessee
John T. Salazar, Colorado

Armed Services
Ike Skelton, Missouri, Chairman
John M. McHugh, New York, Ranking Member
John Spratt, South Carolina
Roscoe G. Bartlett, Maryland
Solomon P. Ortiz, Texas
Howard P. “Buck” McKeon, California
Gene Taylor, Mississippi
Mac Thornberry, Texas
Neil Abercrombie, Hawaii
Walter B. Jones, North Carolina
Silvestre Reyes, Texas
W. Todd Akin, Missouri
Vic Snyder, Arkansas
J. Randy Forbes, Virginia
Adam Smith, Washington
Jeff Miller, Florida
Loretta Sanchez, California
Joe Wilson, South Carolina
Mike McIntyre, North Carolina
Frank A. LoBiondo, New Jersey
Ellen O. Tauscher, California
Rob Bishop, Utah
Robert A. Brady, Pennsylvania
Michael Turner, Ohio
Robert Andrews, New Jersey
John Kline, Minnesota
Susan A. Davis, California
Mike Rogers, Alabama
Jim Langevin, Rhode Island
Trent Franks, Arizona
Rick Larsen, Washington
Bill Shuster, Pennsylvania
Jim Cooper, Tennessee
Cathy McMorris Rodgers, Washington
Jim Marshall, Georgia
Michael Conaway, Texas
Madeleine Z. Bordallo, Guam
Doug Lamborn, Colorado
Dan Boren, Oklahoma
Rob Wittman, Virginia
Brad Ellsworth, Indiana
Mary Fallin, Oklahoma
Patrick Murphy, Pennsylvania
Duncan D. Hunter, California
Hank Johnson, Georgia
John Fleming, Louisiana
Carol Shea-Porter, New Hampshire
Mike Coffman, Colorado
Joe Courtney, Connecticut
Tom Rooney, Florida
David Loebsack, Iowa
Kirsten Gillibrand, New York
Joe Sestak, Pennsylvania
Gabrielle Giffords, Arizona
Niki Tsongas, Massachusetts
Glenn C. Nye, Virginia
Chellie Pingree, Maine
Larry Kissell, North Carolina
Martin T. Heinrich, New Mexico
Frank M. Kratovil, Maryland
Eric J. Massa, New York
Bobby Bright, Alabama

Education and Labor
George Miller, Chairman (CA-07)
Howard P. "Buck" McKeon, Ranking Member (CA-25)
Dale E. Kildee (MI-05)
Thomas E. Petri (WI-06)
Donald M. Payne (NJ-10)
Peter Hoekstra (MI-02)
Robert E. Andrews (NJ-01)
Robert C. Scott (VA-03)
Lynn C. Woolsey (CA-06)
RubÃ©n Hinojosa (TX-15)
Carolyn McCarthy (NY-04)
John F. Tierney (MA-06)
Dennis J. Kucinich (OH-10)
David Wu (OR-01)
Rush D. Holt (NJ-12)
Susan A. Davis (CA-53)
RaÃºl M. Grijalva (AZ-07)
Timothy H. Bishop (NY-01)
Joe Sestak (PA-07)
Dave Loebsack (IA-02)
Mazie Hirono (HI-02)
Jason Altmire (PA-04)
Phil Hare (IL-17)
Yvette Clarke (NY-11)
Joe Courtney (CT-02)
Carol Shea-Porter (NH-01)
Pedro Pierluisi (PR)
Marcia Fudge (OH-11)
Paul Tonko (NY-21)
Jared Polis (CO-2)
Gergorio Sablan (Northern Mariana Islands)
Dina Titus (NV-3)
Vacancy
Michael N. Castle (DE-At Large)
Mark E. Souder (IN-03)
Vernon J. Ehlers (MI-03)
Judy Biggert (IL-13)
Todd Russell Platts (PA-19)
Joe Wilson (SC-02)
John Kline (MN-02)
Cathy McMorris Rodgers (WA-05)
Tom Price (GA-06)
Rob Bishop (UT-01)
Brett Guthrie (KY-2)
Bill Cassidy (LA-6)
Tom McClintock (CA-4)
Duncan D. Hunter (CA-52)
Phil Roe (TN-1)

Report of the MCAA Legislative Committee

111th Congress, First Session Review

2008 Election Re-Cap and 2009 Early Preview

House Committee Assignments of MCAA Relevance

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