AED Washington Insights Newsletter
February 2010
Prepared by Christian A. Klein, AED Vice President of Government Affairs
and the AED Washington team
In this Issue:
Sign up now to attend the AED 2010 Government Affairs Conference – help move the needle on critical legislative issues
Over the past year we've seen an unprecedented surge in member involvement in AED's Government Affairs Program. Scores of companies have participated in our Start Us Up USA! events and distributors have sent thousands of grassroots letters, faxes, and e-mails to lawmakers in an effort to move the needle on key legislation. Now there's another great way to get involved in AED's advocacy for the industry: Come to Washington for AED's 2010 Spring Government Affairs Conference.
Whether you're a political junkie or just someone who understands the impact developments in Washington, D.C., have in the real world, the AED meeting on April 14 and 15 in the nation's capital is for you.
The conference will feature briefings by prominent members of Congress, association and industry leaders, and political pundits on key issues and the 2010 elections. Highway and water infrastructure investment, tax issues, health care reform, labor, and environmental issues will be front and center.
As always, attendees will spend most of the second day of the meeting on Capitol Hill, taking the equipment industry's message directly to lawmakers and getting personally engaged in the legislative process. This year's conference will also include receptions in the new Capitol Visitors' Center and on the John Deere Washington office roof deck, as well as meals, and plenty of networking with other equipment distribution leaders.
And did we mention that attendance is free for AED members? You pay for your hotel and airfare, and we pick up all other costs.
With all that in mind, we hope you'll join us for what's become the construction equipment industry's premier annual public policy event.
View the draft meeting agenda here: http://www.aednet.org/government/pdf-2010/2010-GAC-Agenda.pdf
Register here: http://www.aednet.org/government/government-affairs-conference-register.cfm
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AED mourns passing of former Washington Counsel Tony Obadal
Anthony J. Obadal passed away on Feb. 13, 2010, at the age of 77. He served as AED Washington Counsel for more than three decades and played a central role in the establishment of AED's Government Affairs Program. In the early 1970s, Obadal set up the AED Washington Office both to represent the interests of equipment distributors in the nation's capital and to help AED members get more involved in the policy process at the grassroots level. Shortly after his retirement in 2002, Obadal received the AED Democracy Award for his lifetime of service to the association.
"Tony was a great advocate for the equipment industry, a larger-than-life personality, and a good friend," AED President and CEO Toby Mack said. "He deserves much of the credit for our association's elevated political visibility in Washington, D.C., and the increased political activism of our members around the country."
In addition to his work for AED, Obadal served a number of other association clients through his law firm, including the Aeronautical Repair Station Association, the American Concrete Pipe Association, the American Concrete Pressure Pipe Association, the National Contractors Association, and the National Stone, Sand & Gravel Association. Before entering private practice, Obadal served as Court of Appeals attorney for the National Labor Relations Board and as labor counsel for the U.S. Chamber of Commerce.
Obadal was also involved in a number of community and professional organizations over the years. He was a past Chairman of the Board of the Westminster School in Annandale, Va., served on the legal advisory board of the National Legal Center for the Public Interest, the board of The Road Information Program, and as a board member and president of the Thomas More Society of America.
Since retiring from the law firm of Obadal, Filler, MacLeod & Klein, PLC, Obadal and his wife Nancy lived in Williamsburg, Va., where he served on the James City County Planning Commission.
Despite all his professional accomplishments, his greatest satisfaction and pride was in his family. Survivors include his wife of 48 years, Nancy, four children: Nancy Bryant of Atlanta, Kirsten Obadal of Alexandria, Katie Lyons of Herndon, Michael Obadal of Newport News, and nine grandchildren.
A Mass of Christian Burial was held at St. Bede's Catholic Church in Williamsburg, Va., on Tuesday, Feb. 16 at 1 p.m. In lieu of flowers, memorial donations may be made to The Lionheart School, 180 Academy Street, Alpharetta, Georgia 30009 (http://www.thelionheartschool.com/).
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Senate approves jobs bill with highway program extension, funding
When Democrats and Republicans come together it is amazing what can happen. On Feb. 24, the Senate approved a jobs bill offered by Senate Majority Leader Harry Reid (D-NV) with bipartisan support, 70-28, with 13 Republicans crossing party lines to support the measure.
The legislation includes an extension of the federal surface transportation program (SAFETEA-LU) through the end of calendar year 2010 at this year's investment levels and provides an additional $19.8 billion so the Highway Trust Fund can meet its obligations until the end of 2010. The jobs bill also restores lost contract (spending) authority from the $8.7 billion rescission SAFETEA-LU required on Sept. 30, 2009. And as a bonus, the package also contains an extension of higher Sec. 179 expensing levels, an AED priority.
A medium-term extension will provide much needed stability and certainty for the highway program through this year and ensure that states do not run out of money at the height of the summer construction season – at the same time, AED continues the push for a new multiyear highway bill with substantial new funding (see below for an update on highway reauthorization).
At the beginning of the week, it appeared that Republicans might succeed in blocking the Senate from even considering the Reid jobs proposal. After a befuddling legislative maneuver by Reid (rejecting a bipartisan bill written by Senate Finance Committee leaders Max Baucus (D-MT) and Chuck Grassley (R-IA)), and with many Republican senators either weary about supporting more government spending or playing politics with our nation's infrastructure, the Reid jobs bill was in serious jeopardy.
As a result, AED issued an action alert calling on distributors to participate in a grassroots e-mail campaign on aedaction.org to urge senators to support the cloture motion (a procedural hurdle requiring 60 votes) on the Reid jobs bill. The alert generated over 150 e-mails from across the country.
Additionally, AED President and CEO Toby Mack sent a letter to senators pushing them to support cloture on the Reid jobs bill. Mack said, "The multiple short-term extensions the highway program has been operating under since September are creating unprecedented market uncertainty in the construction industry and have wreaked havoc on state Departments of Transportation (DOTs)." Fortunately, the cloture motion succeeded (62-30) thanks to the support of five Republicans (Sens. Olympia Snowe (R-ME), Susan Collins (R-ME), Christopher Bond (R-MO), Scott Brown (R-MA), and George Voinovich (R-OH)).
The House must now approve the Senate jobs bill before it can reach the president's desk to be signed into law. With the most recent SAFETEA-LU extension expiring on Feb. 28, the House must act quickly or Congress will need to enact another short-term extension until the House can consider the Senate jobs bill. As Insights went to press, House Democratic leadership was torn between approving the Senate jobs bill as is or to attempt to amend it and send the legislation (with amendment) back to the Senate.
Reid commits to Senate consideration of a highway bill in 2010
In exchange for crossing party lines and supporting Majority Leader Harry Reid's jobs proposal, Sen. George Voinovich (R-OH) extracted a commitment from Reid to bring a multiyear highway bill to the Senate floor by the end of the year. According to Voinovich, Reid "gave me his commitment that he will bring the reauthorization of a multiyear surface transportation bill to the floor for a vote this year."
Of course, a commitment in Washington is not written in stone and anything can happen. However, Reid's assurance to Voinovich is definitely good news for the equipment industry. Word around the Hill is that if this Congress does consider a new multiyear highway bill it will be during a lame duck session (the time period between the midterm elections and the swearing-in of a new Congress).
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Urgent: If you value what AED does in Washington, we need your help
There are many organizations looking for money for one reason or another. Times are tough. And the work must go on. However, without the necessary resources, the team looking out for the interests of equipment distributors and the equipment industry in Washington will be operating at a great disadvantage. AED's WEF fundraising campaign ends this month. If you've been putting it off, this is your last opportunity to contribute to AED's Washington Education Fund (WEF) and to invest in the future of your company and the industry.
The AED WEF is the account that supports AED's lobbying and grassroots development activities. As you know, AED's Washington office works tirelessly on behalf of equipment distributors to strengthen markets and improve business conditions. Unfortunately, we can't help your bottom line if you don't help ours.
As of Feb. 25, we've received $24,800 in pledges from 32 AED member companies. While we're extremely grateful to the companies listed below for stepping up and supporting the WEF, we're a long way from our $35,000 fundraising goal.
What happens if we do not raise $35,000 for the WEF? Activities will be cut. If you sent one of the more-than-3,000 messages on aedaction.org in the past year, it could be your last. If you enjoyed a government affairs presentation at your local group meeting, you might not see us again anytime soon. If you care about card check, health care reform, water infrastructure, highways, or LIFO repeal, we may have to withdraw our coalition support.
Also, remember that AED's annual Government Affairs Conference (GAC) meeting is being funded out of the WEF in 2010. Whether or not you attend the meeting, the AED members who make the trek to Capitol Hill are doing so on the industry's behalf. Cutting back on the Government Affairs Conference means you will lose the most valuable advocate of all –equipment distributors who volunteer their time to promote the industry's legislative priorities before Congress.
No contribution is too small and WEF contributions may be made with corporate funds. When we reach our fundraising goal we can stop wasting time soliciting contributions to the WEF and get back to being your voice in the nation's capital. Please do your part and pledge your support today at http://www.aednet.org/government/wef.cfm
Thanks to all the equipment industry leaders who supported AED WEF so far in 2010:
Champion ($2,500)
Yancey Bros. Co.
Patron ($1250)
Brandeis Machinery & Supply Company
Caterpillar Inc.
Kirby-Smith Machinery, Inc.
Ohio CAT
Stowers Machinery Corp.
Unified Equipment Resources
Vermeer Equipment of Texas
Whayne Supply Co.
Donor ($750)
Arnold Machinery Co.
Clyde/West, Inc.
Cowin Machinery Industrial, LLC
Doyle Equipment Company ($1000)
Hoffman Equipment Co. ($1000)
Michigan CAT ($1000)
Miller-Bradford & Risberg, Inc.
West Virginia Tractor Company
Friend ($350)
Alban Tractor Co., Inc.
Berry Companies, Inc.
Cate Equipment Company
Faris Machinery Company ($500)
Garden State Bobcat, Inc.
H.O.Penn Machinery Company, Inc.
Leppo Rents/BobCat of Akron
Lowe Manufacturing Company, Inc.
McCann Industries, Inc.
Metrolift, Inc.
Power Equipment Co.
Rockland Manufacturing Co.
Stephenson Equipment, Inc.
Vermeer Midsouth, Inc.
Walsh Equipment ($500)
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It's budget time! Administration submits budget proposal to Congress
On Feb. 1, the Obama administration sent the president's $3.83 trillion budget proposal to Congress causing the usual stir on Capitol Hill, as lawmakers, bureaucrats, and special interests combed through the large document. The proposal spells out budget priorities for fiscal year (FY) 2011 and beyond, as well as program changes in the current fiscal year.
The budget and related documents released by the White House are significant not so much because they reflect what will happen, but rather what the administration wants to happen. Congress can (and often does) reject the president's proposals, but the budget serves as a benchmark for the administration's priorities.
After you dig under the all the projected debt and deficits overshadowing the budget, there are many proposals that could have a direct impact (some good, some bad) on equipment and construction markets. The Obama budget would:
- Delay consideration of a new, multiyear highway bill by encouraging Congress to extend the current authorization through March 2011
- Allocate $4 billion for the creation of National Infrastructure Innovation and Finance Fund to invest in projects of "regional or national significance"
- Cut funding for the Clean Water State Revolving Funding (SRF) and Safe Drinking Water SRF, which respectively support federal sewer and drinking water infrastructure investment; Clean Water SRF funding would fall from $2.1 billion this year to $2 billion in 2011 and Drinking Water SRF investment would fall from $1.387 in FY 2010 to $1.287 in FY 2011 (note that the 2010 appropriated levels are significantly more than the $682 million and $829 provided respectively for the Clean Water and Safe Drinking Water SRFs in 2009 [exclusive of ARRA funding])
- Reinstate the 50 percent depreciation bonus and $250,000 Sec. 179 small business expensing level for 2010
- Support $17.5 billion in Small Business Administration 7(a) loan guarantees and would provide $7.5 billion in guaranteed lending for commercial real estate development and heavy machinery purchases (it is still unclear how the administration defines "heavy machinery")
- Repeal the last in, first out (LIFO) inventory accounting method, which is used by roughly one-third of AED members – LIFO repeal would cost the equipment distribution industry alone close to a $1 billion in retroactive tax liability
- Expand the 28-percent rate and reinstate the 36 percent 39.6 percent rates for married couples earning more than $250,000 and individuals earning more than $200,000. The budget would also reinstate the personal exemption phase out and limitation on itemized deductions, and impose a 20-percent tax rate on capital gains and dividends for taxpayers in those income categories.
Again, the budget proposal is merely that – a proposal. There is nothing binding and it is just a blueprint of what the administration would like to do. Congress will accept some parts of the budget and reject others. Rest assured, AED will continue to monitor all proposals that impact the equipment industry, supporting the policies that will spur economic growth and create jobs in our industry, while opposing those that will be detrimental. To view the full budget, visit http://www.whitehouse.gov/omb/budget/fy2011/assets/budget.pdf
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U.S. agrees to waive "Buy American" requirement for Canada
On Feb. 12, the U.S. and Canadian governments reached an agreement to exempt Canada from the burdensome "Buy American" requirements included in the American Recovery and Reinvestment Act (ARRA) through 2011 and allow greater access for U.S. companies to Canadian markets.
During the ARRA debate, AED aggressively lobbied Congress to prevent construction equipment from being covered by the Buy American requirements. Since ARRA's enactment, AED has worked with the Department of Transportation and the Environmental Protection Agency to ensure that the law is not misinterpreted to apply to equipment used "on" stimulus projects.
Despite AED's efforts, however, the provision is causing significant delays in construction projects that otherwise qualify for ARRA funding. Since ARRA's enactment last year, projects across the country had difficulty getting "American-made" certifications for specialty products not readily available in the market, causing undue delay.
AED commends the administration for recognizing the impediments ARRA's Buy American provision has had on project implementation and for gaining greater access to Canadian markets for U.S. businesses. To us, it's further recognition of the fact that it was a bad idea to begin with! To read the agreement in its entirety, visit http://www.ustr.gov/webfm_send/1638
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Senate defeats Becker nomination to NLRB, deals blow to labor unions
As often happens, when an administration is unable to accomplish its goals legislatively, it turns to other means to implement policy priorities. Labor unions have become increasingly frustrated with Congress's unwillingness to consider the Employee Free Choice Act (EFCA or "card check") and are turning to the rulemaking process at federal agencies to attempt to implement many of the policies embodied in EFCA.
However, on Feb. 9, the Senate dealt labor unions a major blow by rejecting the nomination of Craig Becker, one of President Obama's nominees to serve on the National Labor Relations Board (NLRB). Becker, an attorney for the AFL-CIO and the Service Employees International Union (SEIU), had written and spoken extensively that the goals of EFCA could be accomplished by the NLRB without congressional action.
Becker was unable to garner the 60 votes needed to break a Republican filibuster. Democratic Sens. Blanche Lincoln (D-AR) and Ben Nelson (D-NE) joined a united Republican front in opposition to Becker. Unions are now pressuring Obama to circumvent the Senate and give Becker a recess appointment. Under the Article II, Section 2 of the U.S. Constitution, the president is given the authority to fill federal vacancies subject to Senate confirmation when the chamber is in recess.
Early indications are that the administration does not intend to give Becker a recess appointment. However, the situation can change and the enormous pressure by labor unions might convince Obama to use his power to appoint Becker. As a member of the steering committee of the Coalition for a Democratic Workplace, AED is playing a leading role in efforts to defeat EFCA and will continue to oppose any legislation, regulations, or nominations that make it easier for unions to organize in the workplace.
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Chamber seeks to put brakes on EPA emissions standards
The business community, led by the U.S. Chamber of Commerce, is challenging findings by the Environmental Protection Agency (EPA) that will allow the agency to proceed to create greenhouse gas emission standards. Stressing the potential costs to businesses and consumers, the Chamber is filing a formal petition in federal court to challenge the process used by the EPA to reach its conclusions.
In December 2009, the EPA issued two findings, both focused on greenhouse gas emissions. The first, an "endangerment finding," determined that the public health of "current and future generations" is threatened by the accumulation of greenhouse gases. The second, a "cause finding," stated greenhouse gas emissions from motor vehicles and engines contribute to the public health threat.
The EPA's conclusions permit unelected bureaucrats and Obama administration appointees to regulate greenhouse gas emissions through agency rulemaking, rather than Congress dealing with the climate change issue using the legislative process.
Environmental groups, frustrated by Congress's inaction on climate change legislation, lauded the EPA findings. However, the Chamber and other business groups, while supporting the goal of reducing greenhouse gas emissions in the atmosphere, assert that the process used by the EPA to reach its conclusions was flawed and will result in harmful and burdensome regulations.
AED, along with our industry partners, is closely monitoring the climate change debate and developments surrounding the new emissions standards from EPA. A failure by the agency to adequately consider the impact of regulations could result in burdensome costs for the equipment industry during unprecedented bad economic times.
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Obama makes nuclear power a priority
In a break with many in his own party, President Obama announced $8.33 billion in loan guarantees to construct two new nuclear reactors near Waynesboro, Ga., over 30 years after the Three Mile Island accident.
According to the administration, 3,500 construction jobs will be created by the Waynesboro project. However, nuclear projects, such as that in Waynesboro, are anything but "shovel ready." Plans must still be approved by the Nuclear Regulatory Commission (a process which can take several years), and nuclear plant construction often encounters cost overruns and construction problems.
The $8.33 billion nuclear loan guarantee is the first in what is expected to be $54 billion worth of loans to construct new reactors. Seven to 10 nuclear reactors are anticipated to be funded through the program.
Obama's announcement of expanded federal loan guarantees for nuclear power plants did not come without controversy. As expected, environmental groups continue to question the safety of nuclear power, preferring investments in wind and solar energy. Fiscal conservatives are concerned that the loans are essentially a federal subsidy that forces taxpayers to assume a large risk because of the high default rates on loans for nuclear construction. And, of course, there is still no consensus on how to deal with nuclear waste.
Overall, Obama's plan to expand the country's nuclear program was praised by the political center as a job creator and a clean energy source, which will help reduce the nation's dependence on foreign oil. AED will continue to monitor the expansion of the nuclear loan guarantee program, as it could be a significant market opportunity for equipment distributors.
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