House Members Address Industry Issues

May 10, 2002
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WASHINGTON, DC — At the Campaign for Quality Construction, National Issues Conference, sponsored by the Mechanical Contractors Association of America (MCAA), National Electrical Contractors Association (NECA), and Sheet Metal and Air Conditioning Contractors’ National Association (SMACNA), two members of Congress spoke about national legislative issues that concern these union contractors.

U.S. Representative Rob Andrews (left) discusses debt and interest rates. U.S. Representative Jim McCrery (right) tackles some tax issues.

THE REPUBLICAN VIEW

At a breakfast meeting on Capitol Hill, Representative Jim McCrery (R-LA), a member of the House Ways and Means Committee, remarked, “It’s going to be an interesting year. It’s already interesting.”

Looking at the current lineup in Congress, he noted that Republicans only have a six-seat margin in the House. Democrats have a slim one-seat margin in the Senate. With the two bodies controlled by different parties and holding a very narrow advantage in each case, President Bush, he said, is trying to bridge differences.

McCrery commented that he was trying to put the finishing touches on a Medicare bill just before the terrorist attacks occurred. “As a result of September 11, the focus of everybody shifted rather dramatically.”

Now that the executive branch has the tools needed to deal with terrorism, he said, Congress is reaching back and pulling some of these formerly important issues off of the back burner.

The appropriations process will take the most time, stated McCrery. The House has passed a budget. The Senate has not passed a budget, and probably won’t pass one this year. “They will be operating without any constraints.”

Congress will probably be passing some continuing resolutions soon to keep spending at last year’s levels for various programs.

ENERGY BILL

Regarding the energy bill, the Ways and Means Committee wrote the tax portion of the House version of the bill, he said. “I’m hopeful that in the House-Senate conference [to iron out differences], the final energy legislation will include tax incentives for efficiency to help your businesses.”

Addressing the alternative minimum tax, a concern of smaller contractors, McCrery said, “We recognize that sooner or later we’re going to have to do something about the individual alternative minimum tax.” He said it’s encompassing a lot more people that it was never intended to affect.

Would a flat tax solve our current problems, a contractor asked.

“A flat tax would be an attractive alternative to the current system,” answered McCrery. “So would a value-added tax or a national sales tax.”

But you can’t get enough support for any one system, he emphasized, because different special interests don’t want to lose any of the tax breaks that they have now.

THE DEMOCRATIC OUTLOOK

Representative Rob Andrews (D-NJ), a member of the Education and the Workforce Committee, noted that he appreciated the “terrific job training” that the assembled contractors provide.

Jumping on another tax issue, he stated that he supports the permanent repeal of the estate tax. “You’re taxed on your income when you make it,” he said. “You shouldn’t be taxed on it when you die.”

One issue that concerns Andrews is that mortgage interest rates are not as low as they could be. There’s an inflation premium that’s being built in by lenders because of the heavy borrowing that the federal government has been doing. The current rate should be around 5%, he said. Instead, it’s around 7%.

For 30 years, the federal government was taking money out of Social Security to pay its bills, stated Andrews. “By fiscal year 2000, we stopped doing that.” The government had a surplus; it was taking in $107 for every $100 being spent.

Now, we are back to deficit spending again, he asserted. Part of this is the effects of Sept. 11. But he also believes that the Bush administration cut income taxes too much too soon because “We were flush with the surplus.”

With the present policy, by 2015, we’ll be paying out more in Social Security benefits than the amount of taxes we are bringing in, Andrews said. So the government will either have to increase FICA taxes, which impact both employers and employees, or borrow more to pay out Social Security benefits. This is the reason why we have the premium on mortgage interest rates, he declared, because the financial markets are anticipating more borrowing by the federal government down the road.

If mortgages were at 5%, and long-term interest rates were likewise lower, “There would be a lot more development and a lot more business for everybody.”

The federal government built up a $5 trillion debt during 1981-91 and we still haven’t paid down that debt much, he noted. “And there’s not much talk about it now.”

Republicans must realize that taxes cannot be cut back so sharply, he said, and Democrats cannot say yes to funding every program. “We should not spend more than we take in.”

We must have fiscal responsibility or we’ll be in serious trouble, maintained Andrews. Rather than take partisan, uncompromising positions, he said, “We need centrist Republicans and centrist Democrats.”

Sidebar: National Mold Legislation May Be Next

WASHINGTON, DC — The word going around Capitol Hill these days is that “Mold is gold.”

That’s what Katherine Gardner, director of special projects for Senator Dianne Feinstein (D-CA), has been hearing. Lawyers have found an issue that has the potential to generate huge awards in court for plaintiffs with mold problems and possibly create an enormous headache for contractors.

At the Campaign for Quality Construction, National Issues Conference, contractors attended meetings with staff members of their Senate and House legislators to discuss face-to-face the issues of importance to them, including permanent estate tax repeal, the need for adequate insurance coverage for losses due to terrorism, changes to the corporate and individual alternative minimum tax, and others. One of those “others” was mold liability.

One of the contractors noted that mold is a serious industry concern, especially since California has adopted state legislation on mold and is attempting to set guidelines, but a definition of threshold limits has yet to be formulated.

At a meeting with Theresa Lavery, legislative assistant to Representative Joe Barton (R-TX), she told the contractors present that there is no proposed national legislation on this subject right now, but she acknowledged that mold is a growing problem.

The News, however, has learned that mold legislation appears to be on the way on the national level. Representative John Conyers (D-MI) is preparing a bill that he plans to introduce called the “United States Toxic Mold Safety and Protection Act.” The bill will call for the Environmental Protection Agency (EPA) to spell out guidelines on what levels of toxic mold are acceptable and what levels are dangerous.

Staffer Joel Segal told The News, “Representative Conyers will be presenting the bill within three to four weeks.” Details of this proposed mold legislation will be reported in an upcoming issue.

— Greg Mazurkiewicz

Publication date: 05/13/2002

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