As 2015 concludes, the most accurate word to describe the year is “chaotic.” Republicans took control of the Senate, maintained a large House majority and faced a lame-duck president in the White House. There had been reason for optimism as the GOP hoped to demonstrate its ability to govern and the Obama administration wanted to chalk up accomplishments to burnish the president’s legacy. Nonetheless, Republican infighting, a stubborn administration and House GOP leadership turmoil quickly defined 2015 by inaction and incompetence. However, amid the disorder, lawmakers did make progress on several equipment industry priorities, including enacting a multiyear surface transportation bill and restoring stability to the federal budget situation, which is a positive step to stabilizing the Clean Water and Drinking Water State Revolving Fund programs.
Entering 2016 with a new House Speaker at the helm, the House and Senate up for grabs and the presidential election heating up, AED is positioning itself to chalk up more legislative accomplishments, while elevating the equipment distribution industry’s voice in the political process.
Here’s what the association will be focusing on in 2016:
Increasing Surface Transportation Investments
At the end of 2015, Congress was poised to finally complete work on a multiyear surface transportation bill. Once financed, the good news is the new law provides at least three years (and up to three more if additional revenue is identified) of stable funding, sustaining roughly $2.4 billion in equipment market activity and 4,000 dealership jobs annually. Unfortunately, lawmakers did not provide the robust investment needed to rebuild the country’s crumbling surface transportation infrastructure and spur economic growth.
Consequently, AED and its construction industry allies will continue to urge Congress to look for opportunities to provide new revenues to restore long-term certainty to the Highway Trust Fund (HTF). Whether increasing the federal gas tax, which has been stuck at 18.4 cents per gallon since the early 1990s, using revenues associated with increased energy production and development or public-private partnerships, all options should be on the table.
Moreover, Congress needs to understand, while better than inaction, the latest reauthorization does not alleviate the HTF’s woes. The industry welcomes the certainty but must remain engaged to push lawmakers to identify new, robust revenue streams of long-term infrastructure investment.
Encourage Capital Investment & Growth through Tax Reform
With House Speaker Paul Ryan at the helm, expect comprehensive tax reform to be front and center in 2016. Ryan — a tax policy wonk and former House Ways and Means Committee chairman — is likely to make tax issues a top agenda item. Equipment distributors must be diligent for both threats and opportunities during the process.
With compliance costs constantly increasing, lawmakers must restore certainty and simplicity to the tax code. First, encouraging capital investment by business should be an overriding tax reform objective. To that end, Congress should pass tax reform that simultaneously benefits corporations and pass-through entities to ensure all businesses benefit from improvements to the Internal Revenue Code. Additionally, lawmakers should abandon the year-end tradition of reinstating expired business tax provisions, or tax extenders, and make increased Sec. 179 expensing levels and bonus depreciation a permanent part of the tax code.
Finally, equipment distributors must be aware of efforts that could stifle growth in the capital intensive, small-business-dominated equipment industry. AED will urge lawmakers to reject proposals to extend cost recovery periods while protecting pro-investment tax policies such as Sec. 1031 like-kind exchanges and last in, first out (LIFO) accounting.
Ensure Needed Investment in Water Infrastructure Programs
Government and industry studies have estimated the nation’s water infrastructure needs over the next two decades to be in the hundreds of billions of dollars. The American Society of Civil Engineers gave the nation’s drinking water and wastewater infrastructure a D-, the lowest grade of any infrastructure category. Investment in these projects is a win-win for everyone, including government.
AED will continue to encourage Congress to preserve and increase funding for the Clean Water and Safe Drinking Water State Revolving Funds, which have faced dramatic cuts over the past five years. Lawmakers must also adopt alternative financing mechanisms, such as approving the Sustainable Water Infrastructure Investment Act (H.R. 499). The legislation would lift the state volume cap on private activity bonds for water infrastructure projects. The proposal has attracted significant bipartisan support and, if enacted, will attract billions of dollars of private investment to water infrastructure projects.
Declare America’s Energy Independence
The boom in shale energy supply has made the U.S. one of the world’s foremost oil producing nations. Unfortunately, antiquated laws and the executive branch’s regressive energy policy block the country’s producers, as well as the thousands of businesses that support the supply chain.
In October, the House passed legislation to lift the 1970s era crude oil export ban (H.R. 702). If enacted, H.R. 702 will expand U.S. producers’ overseas oil markets, substantially increasing domestic output and creating greater demand for equipment used to support oil exploration and production. The Energy Equipment & Infrastructure Alliance, of which AED is a founding member, estimates that allowing U.S. producers to export crude could create as much as $47 billion per year in additional energy supply chain economic activity (i.e., equipment sales, rental, and product support, labor, construction contracting services and materials sales) while reducing the price Americans pay at the gasoline pump.
The White House has already indicated its opposition, but the association and its allies will continue to advocate to open U.S. crude oil markets, while also urging executive action to approve the long-pending Keystone XL pipeline project and prevent the federal government from overregulating shale energy development.
Rein In Out-of-Control Bureaucracy
AED is alarmed by the slew of new regulations that threaten to drive up costs of doing business with minimal social benefit. AED will continue to pressure lawmakers to assert oversight authority over executive branch agencies and departments, such as the National Labor Relations Board, Occupational Safety and Health Administration, Department of Labor and Environmental Protection Agency (EPA).
The recently promulgated “waters of the U.S.” (WOTUS) rule is one example of blatant administration overreach and congressional circumvention. The new regulation dramatically expands the EPA’s Clean Water Act jurisdiction, effectively requiring private landowners to obtain federal permits to develop land around “waters” as small as drainage ditches, seasonal streams and small ponds. In practice, this allows the EPA to regulate development, farming, mining and other activity in large swathes of the country.
While the House approved legislation mandating the rule’s withdrawal, the U.S. Court of Appeals for the 6th Circuit issued a nationwide stay against its enforcement. Judicial resolution could take several years, so AED is urging the lawmakers to finish the job and force the EPA to withdraw its onerous and burdensome final rule.
The WOTUS rulemaking is merely an egregious example of regulatory abuse by the Obama administration. Equipment distributors must continue to pressure Congress to assert its oversight authority and take action to prevent unnecessary rules from all federal agencies.
Support Technical Workforce Development
Across American industry, employers plan to grow businesses and add workers over the coming years. Unfortunately, a lack of qualified personnel dampens these growth aspirations. Studies indicate nearly two thirds of manufacturing jobs — and countless openings in other sectors — will go unfilled unless the gap in needed technical skills is closed.
Construction equipment distributors particularly feel the pressure: Nine out of ten respondents to AED’s 2014 Business Outlook Survey indicated they were actively trying to fill mechanic positions and nearly 80% expected to grow their overall workforce in the next year. Considering these plans for expansion, survey participants rated “finding new talent” as the most important challenge in terms of impact on their business. Finding the right people matters.
For Americans, the pathway to high-growth, high-demand careers should no longer exclusively be through four-year degrees. Through career and technical education (CTE) programs and the expansion of science, technology, engineering and math (STEM) initiatives beyond traditional academic disciplines, policymakers can create robust talent pipelines to support the core construction, manufacturing and industrial jobs that are the foundation of the economy.
Responsive federal workforce policy should provide states and communities with the tools necessary to stimulate the growth of skills that put students into jobs. Congress must prioritize technical education for every school program — from early and secondary education through college and technical schools — to empower states to support needed skills and connect local business with local talent.
Many Voices, One Message
AED is the voice of the equipment industry in Washington, D.C., but it cannot work alone. The industry is strongest when we are not just one voice in the nation’s capital, but a chorus of thousands singing in unison around the country. With that in mind, here are some things that would help advance the interests of equipment distributors:
The bottom line is that the equipment industry’s 2015 agenda in Washington is all about your bottom line. Our policy success depends on your engagement. We are looking forward to working with you and distributors throughout the country to get the job done.