Industry Research

Industry Political Outlook: A Little More Balanced

LCT Staff
Posted on October 1, 2010

The expected Republican wave Nov. 2 could take the edge off some of the most harmful federal measures against chauffeured transportation.

CHICAGO — Directors of the NATIONAL LIMOUSINE ASSOCIATION heard their most upbeat political update in two years this week, as the pundits predict a shift to divided government in Washington, D.C. should Republicans win enough seats in either chamber of Congress Nov. 2.

If Republicans control one or both chambers of Congress with a Democrat in the White House, it increases the chances of slowing down costly mandates for business, countering administrative efforts to attack independent contractor businesses, and possibly allows for the extension of some version of Bush tax cut relief into 2011.

NLA board members heard those assessments Tuesday during a political presentation from NLA lobbyist Louie Perry, the vice president of Cornerstone Government Affairs based on Capitol Hill. Perry’s firm Cornerstone analyzes the federal political situation for the board each quarter.

CONGRESSIONAL DYNAMICS

A decisive Republican sweep will mean the party will attempt to tackle spending cuts and deficit reduction, while minimizing some of the more liberal Democratic initiatives that have hurt small businesses, Perry said. Long term, however, the U.S. faces historically unprecedented spending and debt levels, most of it stemming from promised entitlements that over the years have been expanded by Republicans and Democrats alike, Perry said.

As of this week, polling suggests Republicans are likely to gain 40-plus seats in the House of Representatives and are within three or four seats of gaining control of the Senate. That would give the House the minimum needed to shift control. Looking ahead to the 2012 and 2014 election cycles, Democrats will be defending more seats in the Senate than Republicans, as 2/3 of the seats in contention in those years are now held by Democrats, Perry said.

NLA AGENDA

With regards to the NLA’s legislative agenda, Perry foresees an atmosphere defined by gridlock, a divide on taxation, and businesses demanding less government intervention. He said the NLA will focus on:

• RIDE Act — A proposed amendment to the federal RIDE Act that would stymie unreasonable fees on chauffeured transportation providers at airports and transportation terminals. Senators Frank Lautenberg (D-NJ) and David Vitter (R-LA) have championed the bill in the Senate, while Rep. Laura Richardson, D-CA, has introduced HR 6301 in the House. However, several key pieces of legislation that could have carried the RIDE Act amendment as an amendment, such as the FAA Reauthorization Bill and the Highway bill, still remain in limbo, Perry said.

• Health Care Mandates — Priorities include reducing costly health care mandates and rolling back the onerous 1099 provision that makes businesses issue 1099s for all vendors with who they transact more than $600 in business. The administrative burden from that 1099 provision is just too costly for business.

• Independent Contractor debate — Action is unlikely on job killing Democratic-led bills regulating independent contractors, but still need to be closely monitored. Business that use independent contractors — including a significant share of the chauffeured transportation industry — have faced more aggressive regulations and audits in recent years, driven by Democratic-led federal agencies, strapped state governments, unions, and trial lawyers.

• Taxes on business — Debates over income, corporate, and inheritance taxes will intensify, with a Republican-led Congress possibly passing legislation that may be vetoed by President Obama.

• DOT — The Department of Transportation has implemented stricter rules banning all texting while driving in commercial vehicles and vehicles operated by employees of businesses. DOT could consider other rules for CMVs.

SMALL BIZ STEPS

On a positive note, Perry explained how a small business bill recently signed by President Obama offers small businesses some targeted tax breaks, increased lending limits for SBA loans, more generous deductions for business cell phone use, expanded equipment tax depreciation for 2010, and a ban on capital gains taxes for business investments held five years or longer.

OBSTACLES AHEAD?

While fresh blood in Washington, D.C. can improve the overall atmosphere and minimize damage, plenty of obstacles and dangers still lurk, Perry told board members. Among them:

• Federal budget cuts and reductions in revenue to states and local areas could lead to more strapped state and local governments raising excise taxes, fees at airports, and tolls along major roadways.

• While even President Obama has backed off the union-driven card check legislation, he could still pursue similar policies via administrative fiat through the National Labor Relations Board and the Department of Labor. The same could happen with labor and wage rules governing independent contractors.

• President Obama could still pursue economically destructive climate change and greenhouse gas policies through the EPA and other federal agencies.

— Martin Romjue, LCT Magazine

LCT Staff LCT Staff
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