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The 112th Congress: Gridlock for Sure, But Some Good News

Originally published: 01.01.11 by Charlie McCrudden


Healthcare ‘re-reform’ at top of Republican agenda, and regulatory agencies will stay on track.

As we all remember from our grade-school civics class, the legislative branch writes the laws, and the executive branch enforces them. So when people vent about what they see coming out of “Washington,” don’t assume they are talking about Congress.

The source of frustration could be one of the hundreds of federal agencies charged with promulgating the laws into rules and regulations. Federal regulatory agencies take their direction from the occupant of the White House.

One of the perks of winning a presidential election is the ability to place thousands of appointees in powerful positions throughout the federal government.

When Barack Obama won the presidency — and Democrats took firm control of the House and Senate — the agenda of the federal government and Congress took a dramatic left turn. Two years later, that agenda has been derailed at one end of Pennsylvania Avenue, but not the other.

What to Expect From Congress

Last month’s lame duck session temporarily cleared a backlog of legislative issues important to the small business community in passing the massive tax-extenders bill. But by the end of 2012, Congress will have to revisit another extension of the Bush tax cuts, the Estate Tax, the Alternative Minimum Tax, and other tax incentives that will expire in 2013. And you can be sure ACCA will be calling on Congress to restore

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the 25c energy tax credits to the $1,500 level.

No one expects the newly installed 112th Congress to be able to accomplish much. The election results ensured gridlock. Presidential politics and the 2012 elections will limit the Congressional agenda.

However, the new Congressional dynamics could yield some wins for the hvacr community:

Healthcare-Reform Redux: Capitol Hill watchers expect House Republicans to use their majority to dismantle the Obama healthcare bill. Small businesses, in particular, are calling for Congress to pass legislation abolishing the pending 1099 reporting mandate.

This new law, which would take effect in 2012, would require all businesses to file a 1099 tax form to the IRS for all vendors to whom they pay $600 or more for goods or merchandise in a year, not just individuals hired as independent contractors. Businesses will also have to send copies of the form to their vendors, suppliers, and contractors.

As you can imagine, this new law would create a paperwork nightmare for small businesses. Think of all the time it would take to collect names, addresses, and taxpayer identification numbers in order to comply. ACCA was one of the few trade associations to recognize the problems with this seemingly small provision in the healthcare bill and made it the foundation of our opposition.

Redirected Energy: Don’t expect to see legislation that makes broad, sweeping changes to the nation’s energy policy or enacting a cap-and-trade plan to control greenhouse gases. But this Congress almost certainly will look at opening up new sources for oil and natural gas, a standard for utilities dictating how much of their power must be generated by renewable sources, and the development of a smart grid. And it might even target efficiency incentives for vehicles and buildings.

If Congress looks at energy legislation, ACCA will be working to pass a practical and attractive incentive for commercial building owners to make energy-efficient retrofits. The current Commercial Building Tax Deduction and other incentives aren’t doing the job.

Keep on Truckin’: One issue that hvacr contractors may not realize they have an interest in is enactment of a multi-year highway reauthorization bill. It makes sense that an industry so dependent on a fleet of vehicles would be a stakeholder in seeing more capacity on our nation’s roads. However, these upgrades could come at a cost, and if higher gas taxes are proposed to fund highway reauthorization, ACCA will be on top of monitoring such a proposal.

On the Regulatory Front

For the next two years, President Obama still controls the agenda of those hundreds of agencies that make up the federal government. What has become apparent over the last two years is the Administration’s use of the regulatory agencies to push its agenda.

On climate change, when the House bill died in the Senate, the EPA came out with an endangerment ruling that would give the agency power to regulate greenhouse-gas emissions. When the Employee Free Choice Act lost traction, Obama made a recess appointment of two Democrats to the National Labor Relations Board, changing the current ratio on the five-member board to three Democratic appointees and one Republican appointee.

The lone Republicans term expired in August, and only three members are required for a quorum in cases before the Board. Members of the hvacr industry are anxiously awaiting pending rules at the Department of Energy (DOE). The current minimum energy-efficiency standards for residential central air conditioners and heat pumps, and residential furnaces are under review.

DOE could either leave them alone or raise them. Any increase in the minimum SEER and EER, or HSPF ratings; or AFUE ratings would have to be economically justified, technologically feasible, and result in demonstrative energy savings. One aspect of this rulemaking under consideration is the creation of regional standards for these appliances.

Central AC Rule must be finalized by June 2011 and take effect on June 16, 2016. The Residential Furnace Rule must be finalized by June 30, 2011, under a remand agreement from a 2007 final rule that was challenged. The rule would go into effect in November of 2015.

Your Public Servants at Work

In a two-year session of Congress you can expect to see more than 10,000 bills introduced between the House and Senate. On average, less than 5% ever become law. And of those that do, the majority are non-controversial measures that name public buildings or recognize individuals or organizations for a significant action or milestones.

So far in the 111th Congress (2009-2010), 291 bills have been signed into law, and 56 named U.S. Post Offices. The Federal Register, “the official daily publication for rules, proposed rules, and notices of Federal agencies and organizations, as well as executive orders and other presidential documents” tops out at more than 75,000 pages in one year.

For as busy as Congress and federal regulatory agencies seem to be, U.S. small businesses owners — probably the world’s experts on what it really means to be busy — are often left wondering why “Washington” takes so long to provide concrete resolutions that will enable them to plan for and operate strong, profitable companies.

Will this be the case for the next two years? Of course, we can’t say for sure. However, President Obama, criticized for ignoring the business community throughout the first two years of his presidency, appears to be on the verge of working more closely with typical Republican allies.

The best evidence of that came during the lame duck session in December when he bypassed his own party’s Congressional leadership and negotiated directly with Senate and House Republicans on extending several expiring tax incentives. While it angered his fellow Democrats, Obama shrewdly settled the issue of extending the popular tax cuts before the next Congress, when Republicans would take control of the House and become a stronger force in the Senate. 

Charles McCrudden is Vice President/Government Relations for the Air Conditioning Contractors of America, www.acca.org. He can be reached at charlie.mccrudden@acca.org.

 


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