Just as our children return to school to acquire the skills, knowledge and experience to enter the job market, so too does Congress and state legislatures return to work to create the environment to stimulate job growth.
The Federal Agenda
In Washington, Congress returns to an agenda that will focus on the “deficit debate,” that Democrats will insist must also include measures to create jobs. According to Congressional Quarterly, “Democrats, especially in the House, are pushing for the Joint Select Committee on Deficit Reduction to include jobs initiatives in the legislation that the panel is directed to produce by Nov. 23. Republicans are likely to oppose such proposals, particularly if the cost would add to the federal government’s $14 trillion debt.” In fact, Rep. John Larson (D-Conn) has a bill to expand the panel’s mandate to include jobs.
The 12-member bipartisan panel, created by the debt limit increase law (PL 112-25), is charged with finding ways to trim the deficit by at least $1.2 trillion over a decade. The committee is also free to seek additional savings. The committee is already limited with already established discretionary spending caps and as a result, are expected to focus on finding additional reductions through savings in entitlement programs (ex. Medicare, Medicaid) and tax changes. They will have their first meeting on September 8, the same day the President will speak to Congress laying out the Administration’s jobs plan. They have until January 15 to enact at least $1.2 trillion in deficit reduction, or across-the-board spending cuts will be triggered.
Congress also will consider a number of regulatory changes to stimulate jobs and reduce the regulatory hurdles of doing business. In fact, in August, House Majority Leader Eric Cantor (R-VA) sent a memo on what those changes will be. The President outlined 7 regulatory changes he wants, including 4 EPA rules and 3 transportation rules. This includes:
- A delayed EPA rule restrictions hazardous emissions by coal- and oil-fired electric utility steam generators, at $10 billion.
- New emissions standards for emissions by major industrial and commercial boilers, $3 billion.
- Standards for disposal of coal ash from power plants, $0.6 billion to $1.5 billion.
- New vehicle safety regulations for rear view mirrors, $2 billion.
- Electronic on-board recorders and documents for supporting restrictions on the hours that commercial truck drivers can operate their vehicles, $2 billion.
- New hours of service rules for commercial truck drivers, $1 billion.
Republicans are focused on changing some labor regulations Finally Congress will try to work on a few bills dealing with transportation and infrastructure, extensions of the Federal Aviation Administration and surface transportation programs. The FAA authorization was quickly extended before Congress left for the summer until September 16 and it seems likely will be extended again as Congress will not have enough time to consider something else. A sticking point in the authorization deals with the right of airline and railroad workers to unionize. Also, subsidies to airlines flying into small airports remain a concern. If Congress fails to act, we can expect some shutdowns of non-essential government workers at airports, as well as a number of key construction projects put on hold.
As for any movement on projects, the current extension expires September 30 and neither chamber has a bill. As a result, states will not be reimbursed for various highway and transit projects and some may even suspend the work completely.
Other issues Congress will focus on this Fall, include:
- Alternative Minimum Tax – if current exemptions expire at the end of this year, many middle and upper-middle class tax payers will see their taxes rise.
- Defense Authorization – There are a number of questions lingering with the Defense Authorization bill which the Senate still has not acted upon, including: pay for our soldiers, potential upgrades for tanks, trials for terrorists detained at Guantanamo Bay, potential updates to use of military force and alternatives for the F-35 engine.
- Doc Reimbursements – Doctors who take medicare patients are scheduled to have their reimbursement rates cuts unless Congress fixes it and fixes it for the long term… not another short term fix. Unless fixes, physicians may choose not to treat Medicare patients.
- Education Left Behind – Despite some action on re-authorizing education policy in this country, the law (PL 107-110) expired four years ago, with no measures emerging yet in the Senate. If Congress fails to act on implementing new education policies, states will be forced to have all their students be 100 percent proficient in math and reading by 2014 under the existing law or their schools will be labeled failures and be forced to undergo costly restructuring unless the state receives a waiver from the Secretary of Education.
- Payroll Tax Deductions – Payroll tax for Social Security was reduced for employees with the employer half unchanged. Self-employed individuals also were reduced. Unless changed, the employee half of the Social Security Tax will increase from 4.2 percent to 6.2.
- Taxes – Some tax breaks extended under a 2010 tax law expire at the end of this year. This includes tax breaks for R&D.
- Trade – Congress has yet to approve trade agreements with South Korea, Colombia and Panama. The issue is how to help American workers displaced by trade. Look out for a new trade agreement between Canada and the EU and how we can take advantage of that in Michigan.
While there is agreement between Democrats and Republicans that economic growth and job creation are crucial issues to move forward on, the government’s role in that effort is up for debate. The Democrats want new programs or tax breaks to promote growth while Republicans want regulatory changes and reduce tax burdens on business.
If you can think of any changes to the tax code or ways to improve existing regulations, please contact us at www.fraserlawfirm.com.