Weekly Legislative Update
October 24, 2022
Midterm Elections
With Election Day less than three weeks away and early voting having already started in a number of states, it’s a good time to analyze the likely outcome of the election and the resulting policy implications. According to expert, Dan Clifton, of Strategas Research Partners, our country’s economic volatility has created political volatility. Prior to 2008, our country had experienced a steady 3% GDP real growth for many years. Since then we’ve been hovering around a steady 2% real growth. There have been eight national elections during this period and the party in power has changed in seven out of eight of those elections. Mr. Clifton posits that the reduction in the GDP real growth has caused this political volatility. When we swing from party to party as we have been doing over the last decade plus, the result is that our policies also swing back and forth like a pendulum creating uncertainty for business and taxpayers. Experts further contend that these swings have also contributed to the lack of cooperation and compromise on the Hill – why try to come up with a compromise when it’s likely your party will be back in power in a few years and if you do compromise it can be held against you in the next primary?
As we know, midterms are usually a referendum on the then current President’s popularity, which at this point does not bode well for President Biden or his party. On average, in recent decades, the party in power loses an average of twenty-nine seats in the House due to the midterms. This year the Republicans only need to gain six seats to take control of the majority in the House. Unlike the House, over this same period, the party in power has only lost, on average, just one seat in the Senate. Only Franklin D. Roosevelt and George W. Bush saw their parties gain seats in the House during the midterm elections, and each were dealing with extraordinary situations. Additionally, typically Republicans gain three to six points in the polls from Labor Day to Election Day.
For those of you who care about the odds – the most recent betting models show the odds of Republicans gaining control of the House and Senate at being just slightly over 50% with the odds of Republicans controlling the House and the Democrats controlling the Senate hovering around 40%. Interestingly, if the election had been held in August, most pundits believed the Democrats would have held both the Senate and the House, but if the election were held today most of the experts believe the Republicans would take back the House but the Senate would remain 50-50. If the normal Republican gain between Labor Day and Election Day occurs this year, then the Senate will flip to the Republicans. An interesting rumor is that Senator Mitt Romney has chosen not to endorse Senator Mike Lee in the hope that the independent Evan McMullin will win allowing the two of them to control the Senate in the same way that Senators Joe Manchin and Kyrsten Sinema have done the last 2 years.
Different factors favor one party over the other – for instance, increased gas prices favor the Republicans while decreased gas prices favor the Dems. The Supreme Court’s decision overturning Roe v. Wade has led to what looks to be the largest voter mobilization of women under the age of 40 in our history. Experts have recently observed that when former President Trump is in the news Republican enthusiasm is dampened and conversely Democrats gain enthusiasm. Recent polls have identified inflation, jobs and the economy and immigration as the most important to voters going into this election. These issues tend to favor Republicans. Thus, the voters are seeing that their most important issues are in line with what is perceived to be Republican bread and butter issues.
As we saw during the 2006 presidential election, anything can happen that can significantly change the election (remember the FBI reopening the Clinton e-mail inquiry on October 28 and then clearing her 2 days before the election). So if gas prices go down, or President Biden’s approval rating goes up (somewhat unlikely at this point) or former President Trump is indicted (also unlikely at least before the election) or the pollsters have somehow ignored or failed to account for that massive group of new women voters under 40, or one of the Republican or Democrat contenders for the Senate makes a major mistake, then all of the above can change. As of now, though, the polls suggest that we are heading for a Republican takeover of the House and potentially the Senate.
Adding to this mix is that the vote in Pennsylvania will take a long time to be counted so it is unlikely we will know who will replace Senator Toomey on election night. In Georgia if neither candidate gets over 50 percent of the votes on November 8, which is quite possible, there will be a runoff on December 6th between the two top vote-getters - meaning it is conceivable we won’t know who controls the Senate until December!
In the unlikely event that there is a clean sweep by the Democrats, we would see an emphasis on the childcare credit, healthcare (expanded Medicaid), clean energy and infrastructure. These policies would require additional taxes to fund them. If the Republicans control the Senate (but not with 60 Senators) and the House, President Biden still remains. Perhaps some legislation would emerge where the Republicans would sweeten the deal enough for the President to sign off on it – for instance making some of the Trump tax cuts for individuals permanent rather than having them automatically expire on December 31, 2025 in exchange for legislation that would promote the childcare credit, expand healthcare, etc.
If we end up with a Republican House and a Democratic Senate then we’ll see a lot of gridlock, but an active Lame Duck session where we could see an improved childcare credit, an extension of the R & D tax credit, and other tax breaks for corporations.
Possible Upcoming Tax Legislation
In the event of an election outcome which maintains the current balance of power (50-50 Senate and slight advantage to the Democrats in the House) or results in a Republican controlled House with a Democrat controlled Senate, we can expect to see an end of year tax bill. This bill is likely to include the four year extension of approximately $45 billion worth of business-related tax breaks. These would include an extension of the research and development deduction, a write off for corporate debt costs and a tax break allowing companies to deduct all of their capital expenditures costs in a single year. In exchange, the Democrats would revive the childcare tax credit which expired at the end of last year.
A number of Senators would also like to see their bi-partisan retirement plan bill included in this bill. We have discussed this bill in prior Alerts. This retirement plan bill offers very little to those stable and profitable privately owned and small businesses that are already sponsoring retirement plans. It does, however, hurt many key small business employees and owners by forcing all extra contributions to 401(k) plans, known as “catch-up” contributions, to be after-tax rather than pre-tax as they can be now. This bill is very likely to actually cause older people who finally have the ability to contribute more for their retirement to decide not to because of the negative tax treatment which is exactly counter to the bill’s stated goal of increasing saving opportunities and incentivizing employees to contribute for their retirement.
Of course, TIA will be monitoring any developments on this front following the election and will continue to provide updates as they arise.
American Trucking Associations Victorious in Truck-Only Toll Fight
On Sept. 21, 2022, the United States District Court for the District of Rhode Island ruled that the state of Rhode Island’s truck-only tolling plan was unconstitutional.
The lawsuit came as the result of the American Trucking Associations (ATA) and three motor carriers filing a lawsuit against the state of Rhode Island. The state placed tolls on existing bridges which had been found structurally deficient.
These tolls were intended to raise revenue from trucks operating in interstate commerce as the state found that tractor trailers contributed the majority of the wear and tear on the state’s bridges.
TIA believes that investment in our nation’s roads and bridges is essential for the safe and efficient movement of passengers and freight, but these investments must be made soundly, and they should not penalize one user over another.
The truck only tolling plan from Rhode Island discriminated against trucks, and if it had won its lawsuit, it would have incentivized other states to follow suit.
You may view the decision by the U.S. District Court by clicking here.
U.S. Supreme Court Will Not Hear Challenge to CMS Vaccine Mandate
The Centers for Medicare & Medicaid Services (CMS) released a rule (“CMS Mandate”) requiring Medicare – and Medicaid – certified healthcare providers and suppliers to have all employees fully vaccinated, unless a medical or religious exemption is granted. This week, the U.S, Supreme Court declined to hear the latest legal challenge to the CMS Mandate.
While the CMS Mandate is still enforceable, the mandate for federal contractors remains blocked; additionally, OSHA has withdrawn the vaccine mandate for large employers.
NLRB Proposes Rule To Expand Standard For Determining Joint-Employer Status
On September 7, 2022, the National Labor Relations Board (NLRB) proposed a rule expanding the standard for determining joint-employer status under the National Labor Relations Act (NLRA).
This rule rescinds a 2020 final rule that set the definition of joint employer as an employer that exercises substantial direct and immediate control over the essential terms and conditions of employment.
The Board proposes to expand the definition of joint-employer status to include those that have indirect control over workers, and “share or codetermine those matters governing at least one of the employees’ essential terms and conditions of employment.”
The NLRB has identified the following types of small businesses or entities most likely to be impacted by this rule: contractors/subcontractors, temporary help service suppliers and users, franchisees, and labor unions. The NLRB estimates that small entities will spend one hour to read and understand this rule, at a cost of approximately $150 per entity.
Comments on this proposed rule are due on Nov. 7, 2022.
- Read and submit comments on proposed rule in the Federal Register.
- Read the press release from the NLRB.
Advocacy contact: Janis Reyes or (202) 798-5798.
Support TIA’s Government Affairs Efforts in Washington TopGolf Challenge
TIA has organized a golf outing at TopGolf Las Vegas to benefit TIA’s government affairs efforts. The fun-filled day will include reserved bays, two-hours of golf, food, drinks and fun!
TIA serves a vital role representing all aspects of the tire industry at the state and federal levels of government protecting its members’ interests. TIA takes leadership positions on legislative matters that could impact our member’s bottom line including taxes, general business and employment issues, right to repair laws, and health care reform.
Join us for a fun-filled afternoon of golf, laughter and networking for a worthy cause. There’s no pressure –whether you’re an avid golfer or have never swung a club, TopGolf is the spot for you. We hope you can join us for this afternoon of fun to support the association.
Sunday, October 30, 2022
2:00 p.m. – 4:00 p.m.
TopGolf Las Vegas
CLICK HERE for more information and sponsorship opportunities.
