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AED Washington Insights Newsletter

AED Washington Insights

October 2010

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Prepared by Christian A. Klein, AED Vice President of Government Affairs
and the AED Washington team

In this Issue:


AED 2010 Election Preview: Races to Watch and What's at Stake

With just days remaining until Election Day 2010, Washington is abuzz about the makeup of the 112th Congress. Whether the Republicans gain control of one, both, or neither chamber is still up in air. However, just about everyone agrees, the GOP will pick up a significant number of seats.

It is hard to believe that just two years ago Democrats rode a tidal wave of voter frustration to control Congress and the White House. How quickly things can change in politics! With a floundering economy, significant uncertainty, and a growing federal government, voters are frustrated with the current situation. That does not bode well for the party in control.

Earlier this year, aware of the unprecedented opportunity to shape the next Congress, AED's board of directors settled on an aggressive election year strategy that would put the equipment industry in the center of the action. AED maximized its resources by focusing special attention on a number of key races. The strategy appears to have worked, with candidates backed by AED poised to win close contests across the country.

AED PAC
AED PAC has been an important player in key contests, delivering financial support to pro-growth candidates. This involvement gives AED members a stake in their outcome and a share in the victory. Because of the support from AED PAC contributors, AED is involved in more than 50 House and Senate races (view those backed by AED). A scorecard of 10 tight campaigns where AED actively engaged candidates is below. On Election Day, the talking heads will be focused on these contests as their outcome is likely to determine which party controls the House and Senate. As the returns come in, use this scorecard to monitor the results and know that, through AED, you're playing in the big game.

Candidate State and District Race Summary* Polls
Close**
Result
W/L
Mark Kirk (R) Illinois - Senate Giannoulias vs. Kirk 8:00 PM  
Rob Portman (R) Ohio - Senate Portman vs. Fisher 7:30 PM  
Pat Toomey (R) Pennsylvania – Senate Sestak vs. Toomey 8:00 PM  
Steve Chabot (R) Ohio – 1 Chabot vs. Driehaus 7:30 PM  
Charles Djou (R) Hawaii - 1 Djou vs. Hanabusa 12:00 AM  
Sean Duffy (R) Wisconsin – 7 Duffy vs. Lassa 9:00 PM  
Michael Fitzpatrick (R) Pennsylvania – 8 Fitzpatrick vs. Murphy 8:00 PM  
Cory Gardner (R) Colorado – 4 Gardner vs. Markey 9:00 PM  
Pat Meehan (R) Pennsylvania – 7 Meehan vs. Lentz 8:00 PM  
Steve Stivers (R) Ohio – 15 Stivers vs. Kilroy 7:30 PM  


* Summary information from www.realclearpolitics.com ** All times EST

The Senate
Democrats currently hold 59 Senate seats to the Republicans 41. To control the upper chamber, the GOP needs to win 10 of the 11 competitive Democratic seats up for grabs this year (Illinois, Nevada, North Dakota, Arkansas, Delaware, Indiana, Pennsylvania, Colorado, Wisconsin, Washington, and California). Additionally, the GOP must successfully defend all competitive Republican seats (Kentucky, Ohio, Missouri, and Florida).

Based on current polling (which changes almost hourly), if the elections were held today, the Democrats would maintain a 51-49 majority. Remember, even with a Senate split 50/50, Democrats would retain control because the tiebreaker is the President of the Senate, Vice President Joe Biden. However, Republicans are poised to see their influence surge in the Senate and will have a stronger hand in shaping policy. The Senate rules, which essentially require a super majority to take care of major business, will make it fairly easy for Republicans to halt the Obama agenda.

The House
On the House side, the GOP's prospects look even better. House Democrats currently have 255 members to the Republicans' 178 (two House seats are vacant). To win, the GOP needs to pick up 39 more seats. According to pundit extraordinaire Charlie Cook, 38 Democratic seats are toss ups (where either party's candidate could win) and 30 races for Democratic seats "lean Democrat" (where Democratic control is in doubt). In stark contrast, only two Republican-held seats are toss-ups and only three "lean Republican." What's more, of the 20 seats that "lean Republican", 17 are held by Democrats!

The math, atmospherics, and momentum favor the GOP. Among other things, Republicans have led in congressional generic ballot polls all year (as the Democrats did in 2008) and GOP turnout in primaries has surged this year to exceed Democratic participation for the first time in 80 years. It all adds up to a reasonable presumption that Republicans will control the House next year.

The Stakes
The construction equipment industry has a ton at stake in the next Congress. Over the last two years, lawmakers have been unable to reach a consensus on any sort of substantial investment in our nation's infrastructure. As a result, uncertainty has reigned in equipment markets. Further complicating this picture is indecision over the tax code as the Bush-era tax cuts expire and implications of the new health care law come into focus.

On highway investment, AED will make an early push for rapid congressional action on a new multi-year highway bill. Highway reauthorization legislation is critical to equipment markets because it establishes a predictable, long-term blueprint for federal surface transportation spending. In fact, a 2008 study conducted on behalf of AED found that each dollar of highway spending creates 6.4 cents in equipment market opportunity (equipment purchase, rental, leasing, and product support).

A political shift on Capitol Hill will have substantial impact on the highway debate. Infrastructure advocates will no doubt encounter challenges from new Tea Party Republicans, who have expressed hostility to government spending and federal taxes on the campaign trail. The challenge for our industry will be help these new members of Congress understand that there is a difference between investment in long-term infrastructure improvements and wasteful spending, just as there is a difference between taxes and user fees like the federal gas tax.

AED will also push for water infrastructure investment in the next Congress. According to a 2009 National Utility Contractors Association (NUCA) study, each dollar invested in sewers and drinking water systems yields 12 cents in equipment market opportunity. Legislation to increase sewer and drinking water construction programs has received bipartisan support during the current Congress; unfortunately, lawmakers have not come to a final consensus.

Furthermore, dozens of tax provisions expire at the end of the year, which is making it difficult for businesses to plan. Congress will likely address many of these issues during the lame duck. Additionally, without action by the end of the year, the estate tax will return on Jan. 1, 2011 with a $1 million exemption and a prohibitive 55 percent top rate, which will put further pressure on the capital-intensive family business-dominated construction industry. Legislation to restore certainty to the tax code will return to the forefront at the start of the 112th Congress and AED will be there fighting for a pro-growth low tax agenda.

In the likely event that the Democrats grow frustrated with a stalled agenda on Capitol Hill, the Obama administration will turn to regulations and executive orders to implement key policy priorities. The next Congress, particularly committee chairs, will be responsible for conducting oversight of key agencies and departments, such as the Occupational Safety & Health Administration, the Environmental Protection Agency, the National Labor Relations Board, and the Department of Labor.

With so much at stake on Capitol Hill next year, AED's engagement in the elections is essential to the future of the construction equipment industry. From writing letters to candidates urging their support for the Start Us Up USA! Infrastructure Campaign Pledge, to contributing to AED PAC, participation by members and distributors has played a key role in AED's election year strategy.



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AED Wins! Depreciation Bonus, Sec. 179 Provisions Signed into Law

AED won a key legislative victory when President Obama signed the Small Business Jobs Act (H.R. 5297). The legislation included two provisions considered top policy priorities for AED: reinstatement of the depreciation bonus for 2010 and an increase in Sec. 179 expensing levels to $500,000 (with a phase-out threshold of $2 million) for 2010 and 2011.

AED had been fighting for reinstatement of the depreciation bonus throughout the year, leading an ad-hoc coalition of business groups in support of the capital investment incentive. Additionally, the legislation creates a lending fund for small businesses, which could result in increased credit for equipment distributors.

For information on how to take advantage of this new law, visit depreciationbonus.org, a website operated and maintained by AED. As part of our efforts to educate distributors and their customers about the law, AED has designed new depreciation bonus brochures on which you can print your company's logo. Look for info in the mail and on the website.

A special thank you goes out to all who took the time to contact Congress about the depreciation bonus and the impact reinstatement would have on your company. We could not have done it without you!



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Start Us Up USA! Infrastructure Campaign Pledge Effort Running Strong

With the midterm elections just two weeks away, AED is redoubling efforts to get congressional candidates to commit to strong federal infrastructure programs and make highway and water construction bills top priorities. We need your help. Please take a moment to send an email to candidates in your area asking them to take the Start Us Up USA! infrastructure campaign pledge. It's fast and easy. Just visit AED's grassroots communications site, AEDaction.org.

AED and the Association of Equipment Manufacturers (AEM) launched the pledge effort to convince U.S. House and Senate candidates to commit to making passage of surface transportation and water infrastructure legislation a top priority in the next Congress. Such programs would create jobs, spur economic growth, ensure the country's global competitiveness, protect public safety and the environment, and create a better quality of life for every American.

So far, nearly 65 candidates from around the country have signed the Start Us Up USA! infrastructure campaign pledge. However, we need your help to get more signatures and to ensure that the next Congress is full of pro-infrastructure lawmakers.

To see who has signed, go to:
http://www.startusupusa.com/campaign_pledge.cfm

To send an email to candidates in your area asking them to sign the pledge, go to:
http://capwiz.com/aedaction/issues/alert/?alertid=15925501

Better yet, download the pledge and fax, email, or hand deliver it to House and Senate candidates from your area (contact information at www.congress.org/election). AED's Washington staff can help coordinate face-to-face meetings with candidates. Just contact AED Director of Government Affairs Daniel Fisher at 703.739.9513 or dfisher@aednet.org.

Start Us Up USA! Tells Gubernatorial Candidates to "Start Us Up"!
On September 27, as part of the Start Us Up USA! campaign's continuing efforts to improve the economic conditions in the construction equipment industry, AED and AEM sent letters to gubernatorial candidates across the country. The letter urged them, if elected, to work with their legislatures and congressional delegations to make surface transportation and water infrastructure investment a top priority.

To read the letter sent to gubernatorial candidates, click here.

To read the press release, click here.



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Obama Touts Economic Impact of Highway Investment

Building off his Labor Day announcement for modernizing and rebuilding America's roads, railways, and runways, (fact sheet) President Obama held a White House meeting on the economic impact of infrastructure investment.

Joining the president were Treasury Secretary Tim Geithner, Transportation Secretary Ray LaHood, and former Transportation Secretaries Norman Mineta and Samuel Skinner. Several governors and mayors were also present. The centerpiece of the discussion was a new report on infrastructure investment from the Treasury Department and the Council of Economic Advisers highlighting the positive economic impact infrastructure investment achieves by raising our nation's economic output, enhancing America's global economic competitiveness, and creating good jobs for the middle class.

The report found that spending on surface transportation networks is a high value proposition due to low construction costs from underutilized resources. It would also provide an immediate boost to the economy as 80 percent of the jobs created by such expenditures are in the hard hit construction, manufacturing, and retail trade sectors.

"This new study reinforces what AED has been saying for years about the critical connection between infrastructure investment, the nation's economic future, and the health of the construction equipment industry," AED President Toby Mack said. "We're pleased to see the White House's new focus on infrastructure and look forward to working with President Obama and Congress in the months ahead to finish new highway, water, and airport bills and restore some sense of certainty to equipment markets."



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Camp Aims to Reduce Small Business Income Tax

Rep. Dave Camp (R-MI), along with House Minority Whip Rep. Eric Cantor (R-VA), introduced legislation (H.R. 6168) that would allow small companies (those employing less than 500 people), to deduct 20 percent of their business income from their taxes.

While the bill will not see any action in this Congress due to the limited time remaining on the congressional calendar, it offers valuable insight into the legislative priorities of a Republican controlled House. Camp is the senior GOP member on the Ways & Means Committee, which has jurisdiction over tax and revenue measures. Consequently, he will be in charge of the chamber's tax agenda if the Republicans take control of the House.

Stay tuned for progress on this and other pro-growth tax proposals in the coming months.



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AED tells IRS: Repeal Onerous Tax Provision in Health Care Reform

The only way to mitigate the onerous 1099 tax-reporting requirement in the new health care law is to work with Congress to repeal the mandate, AED told the Internal Revenue Service (IRS) in comments submitted by a coalition of trade associations representing small businesses.

In 2012, companies will be required to report almost every transaction with an outside vendor totaling over $600 on an IRS Form 1099, forcing small business owners to spend more time and money filling out forms, collecting information, and answering questions from the IRS. Initiatives in Congress to repeal the new 1099 requirements have been unsuccessful thus far. However, renewed efforts are expected early next year.

AED joined the Small Business Coalition for Affordable Healthcare, of which we are an active member, in submitting the comments. View the full comments here:
http://www.bipac.net/hccoalition/Coalition_1099_Comments2.pdf



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New Report Highlights Need for Highway Investment

A new report from The Road Information Program, (TRIP) a non-partisan, national transportation research group, highlights the need for investment in our nation's highways through a multi-year highway bill. AED is an active member of TRIP.

According to TRIP's report, 24 percent of the nation's major metropolitan roads are in poor condition, costing the average motorist over $400 a year. TRIP concludes that the situation will only get worse until Congress enacts a long-term surface transportation plan.

To view a press release summarizing the new TRIP report, visit here.



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Airport Capacity Needed: Flight Delays Put $33 Billion Dent in Economy

In yet another example of how a deteriorating and inadequate transportation infrastructure costs American consumers, a new Federal Aviation Administration commissioned study finds that domestic flight delays put a $32.9 billion hole in the U.S. economy. Such costs show the need for more investment in airport and runway construction to relieve congested airports. AED has been urging Congress for years to provide substantial funding for new airport capacity.

In addition to the direct costs to the airline industry and its customers, flight delays have indirect effects on the U.S. economy, the report said. Inefficiency in air transportation increases the cost of doing business for other sectors, making the associated businesses less productive. The study estimated that delays reduced the 2007 U.S. gross domestic product by $4 billion.

To view the press release from researchers at the University of California, Berkeley, visit here.

To view the complete study, visit here.



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