Washington Watch
November 2008
Elections Breakdown: President-Elect Obama and the New Congress
Americans have chosen a new president, placing their faith in Illinois Senator Barack Obama to lead the country for the next four years. Obama won the election with at least 364 electoral votes. Missouri is now the only state that has not officially declared a winner of their 11 electoral votes. Senator John McCain leads by less than a 5,000 vote margin of the over 2.8 million votes cast.
It was an election of historic importance, as Senator Obama becomes the first African-American elected President. Differences of opinion will still occur, but now is the time to change the tenor of the debate. It is time to work together to move our state and nation forward. Now it’s incumbent upon everyone to work together to create policies to make our country stronger.
America has spoken, and the future awaits. To President-elect Obama, we send our sincere and best wishes for a successful Presidency. To Senators and Representatives, returning and newly arriving, congratulations. To Arkansas’s Congressional Delegation, we say call on us. Arkansas’s business community wants you to succeed in the responsibilities you have accepted and earned, and in doing so, to move our state and nation forward.
In Congress: As of this writing, in the U.S. House of Representatives Democrats have won at least 256 seats; Republicans 174. Of the races that have been called, Democrats have picked up 21 Republican seats; Republicans have picked up 4 Democratic seats for a net gain of 20 Democrats so far. Four races are still to be determined: Alaska – At Large, California – 4, Ohio – 15, and Virginia – 5. Also undetermined is Louisiana’s 4th District seat which will be decided by a December run-off.
In the U.S. Senate Democrats will hold a minimum of 57 seats in the 111th Congress, Republicans will have a minimum of 40 and three races are still undetermined. In Georgia, incumbent Senator Saxby Chambliss (R) leads his opponent, Jim Martin (D) by three points, 49.8% to 46.8% but since he did not hit the 50% threshold established by Georgia election law, the two candidates go on to a high-stakes December 2 run-off election. In Minnesota, incumbent Senator Norm Coleman (R) leads Al Franken (D) by 221 votes. Minnesota law calls for an automatic recount when the margin is within 500 votes; a recount is expected to begin mid-November and will take several weeks to complete as every ballot is examined by hand. Lastly, in Alaska, Senator Ted Stevens (R) maintains a small lead over Mark Begich (D) with 99% of precincts reporting, but that lead is shrinking. Should Stevens win reelection, his Senate colleagues will decide whether he will be allowed to remain in the Senate, since he was recently convicted on seven counts related to failure to report $250,000 in gifts on his financial disclosure forms.
Labor Groups, Lobbies Preparing Broad Agenda
The Hill reported "Labor groups and Democratic lobbies across Washington are drawing up a broad liberal agenda they hope to enact with strengthened majorities in Congress and Democratic control of the White House." Labor groups in particular "spent heavily on the election in key battleground states and are planning to push for a series of economic changes, including immediate efforts on an economic stimulus package that focuses on infrastructure and increased money for healthcare to the states." The groups' "top priority" is "passing the Employee Free Choice Act (EFCA), legislation that they argue would make it easier for employees to form a union." However, EFCA is "still likely to come up short," as analysts say it lacks enough Senate support. Still, "business groups are girding for a tough battle." NAM President John Engler said, "Hopefully it won't be the starting point."
Still, Workforce Management reported the EFCA "has new momentum." Obama "will confront a long list of urgent problems when he is inaugurated on January 20, and it's not clear how high the unionization bill will rise on his 'to do' list. Obama did embrace it during his campaign, however." The article notes, "Critics argue that the bill undermines workplace democracy and is designed to bolster union membership, which stands at about 12 percent of the U.S. workforce." Regarding the increased Democratic legislative majority, Engler said, "There's no question it's going to be a tough battle in the Senate." He "also pointed out that in 2007, unions won 50 to 60 percent of organizing votes." Engler added, "This is about winning 100 percent by not having an election."
The Los Angeles Times noted "The polls had barely closed when interest groups and factions started flooding the capital with their wish lists" for the coming administration's legislative agenda in the coming year. The Times added that "labor leaders, who poured money and resources into Obama's election, are pushing hard for legislation to make union organizing easier." However, "that would be a tough fight that could undercut Obama's goal of fostering bipartisanship, because the bill is bitterly opposed by the business community." NAM President John Engler said, "I would hope other priorities would come up first. ... This isn't the place to start, if we are going to talk about working together."
The Miami Herald reported "After years of playing offense, big business is getting ready for the less familiar role of playing defense following President-elect Barack Obama's victory and legislative gains by other Democrats." Even so, "There are many areas of potential cooperation," NAM President John Engler said in what the Herald characterizes as "an optimistic morning-after news conference." Engler said that EFCA was "certainly not the issue to build a relationship," and suggested "that Obama and Democrats will need big business to help turn around the economy. He identified Virginia's Democratic senator-elect, Mark Warner, a pro-business centrist, as a Democrat he'll be lobbying to block the card-check measure."
Additionally, the Wall Street Journal reported "The weak economy, congressional races that empowered moderates and President-elect Barack Obama's choice of business-friendly advisers suggest Democrats will go slow on controversial labor and regulatory issues." In the near future, "Congress is expected to start crafting an economic-stimulus bill, which has the qualified support of the Bush administration, depending on what it includes." But while "some Democrats say the bill could include incentives for alternative-energy initiatives," they add that "anything more controversial...likely won't be included." According to the Journal, National Association of Manufacturers President John Engler "drew a line in the sand at any effort to implement the Employee Free Choice Act," and "said his group would fight any effort by an Obama Environmental Protection Agency to regulate as a pollutant carbon-dioxide emissions from power and other industries."
Concerned About EFCA? Make Plans to Attend the Upcoming Arkansans FOR the Secret Ballot Meeting
The steering committee of the coalition "Arkansans for the Secret Ballot" will meet at 2 p.m. on Wednesday, November 19, in the State Chamber/AIA conference room at 1200 W. Capitol in Little Rock. The purpose of this meeting will be to assess the coalition's ongoing strategy for defeating the so-called Employee Free Choice Act. Now that we have a clearer picture of the U.S. Senate composition, we see the heightened importance of swaying Senators Pryor and Lincoln's undecided votes.
This is a very important meeting and all coalition members, as well as those who are interested in joining the coalition, are encouraged to attend.
The Employee Free Choice Act is dangerous and wrongful legislation that threatens to overturn more than 70 years of precedent in labor relations. If passed, the act would effectively revoke workers' rights to a private ballot vote when determining union representation. It would weaken business in Arkansas and around the nation, creating additional challenges and new burdens as we seek to create more jobs in America.
As members of Arkansas’s business community who are opposed to this measure, it is our duty to persuade members of Arkansas' Congressional Delegation to vote against EFCA. We ask you to write at least one letter to both of Arkansas' senators and to the U.S. House member who represents your district by December 1, 2008. Instructions and tips for letter writing are available online at www.yoursecretballot.com or by phone at 501-975-8344.
It is important that you provide us with copies of letters you send so that we can evaluate our activities and grassroots lobbying efforts. Please fax your letters to 501-975-6045.
All State Chamber/AIA members are strongly encouraged to spread the word about this issue to fellow members of the business community as well as to employees. It is vitally important that our members of Congress hear the business perspective on this issue. We thank you for your efforts, and look forward to hearing from you soon as we continue to work to preserve workers' rights to a secret ballot.
The EPA Accepts Comments on Regulation of Greenhouse Gases
The EPA is accepting comments on an Advanced Notice of Proposed Rulemaking (ANPR) on the question of whether or not carbon emissions constitute an “endangerment” to the environment and public health through Nov. 28, 2008. This could trigger regulation of carbon emissions under a variety of programs under the Clean Air Act (CAA). Although not yet a proposed rule, the ANPR will solicit information and comments that could lay the groundwork for future regulatory actions on carbon emissions.
By way of background, this latest action is a response to last year’s Supreme Court decision in Massachusetts v. the EPA that characterized carbon as a “pollutant” under the CAA, and remanded to EPA the issue of whether or not carbon emissions constitute an “endangerment.” The next Administration will move forward on the “endangerment” issue based in large part on the type of information it receives pursuant to the ANPR.
The impact of greenhouse gas regulation by the EPA could be extremely far-reaching. Any existing building that emits 250 tons of carbon per year would be obligated to obtain a Prevention of Significant Deterioration (PSD) permit to make any modifications to their structure. For traditional pollutants, like particulate matter or sulfur dioxide, the Clean Air Act's PSD thresholds are high enough that permitting typically only applies to large emitters. However, CO2 is emitted by a wide range of activities and would thus subject thousands of previously-unregulated buildings to PSD permitting for new construction and building modification.
For a detailed overview of the landmark Supreme Court case Massachusetts vs. EPA, click HERE to link to a Pew Center report.
For more information about the EPA Advanced Notice of Proposed Rulemaking and how to submit your comments, click HERE .
Article Considers Impact of Obama Presidency on Different Industries
Bloomberg News reported on the impact an Obama administration may have on a variety of industries, including automakers, healthcare providers, drug makers, energy companies, and construction companies, among others. "The Democratic president-elect will create corporate winners and losers as he tries to carry out his promise to produce jobs, expand health-care coverage, and increase the use of alternative energy, all while cutting taxes." However, Obama's plans "may collide with the reality of a federal government operating under a record budget deficit and an economic crisis that has drawn more cries for federal aid beyond the $700 billion bailout already approved by Congress." GE Chief Executive Officer Jeffrey Immelt expressed concern about Obama creating barriers to free trade, but added that since the campaign was financed "mainly through grass-roots contributions," Obama has the "opportunity to be completely his own man when he gets into the White House."
The Wall Street Journal reported "Rising Democratic power in Washington is likely to usher in a drive for tighter financial regulation, increased social spending and more labor-friendly policies amid a more challenging climate for business." Both "business leaders and lobbyists" have been "expressing hope that Democrats" will not "raise taxes in the middle of an economic decline or erect significant new barriers to trade." And, "with Democrats committed to aggressive efforts to curb oil consumption and put the U.S. on track to reduce emissions of greenhouse gases, business hostility to proposals to cap emissions is giving way to efforts by industries...to profit from a green tilt in government policy." General Electric Executive Officer Jeffrey Immelt recently said, "If you think we won't get more regulation in places other than financial services, you're nuts." However, Immelt added that "the heightened regulation 'could be a catalyst for positive change. ... It doesn't have to be a negative.'"
Pelosi Says House to Vote on Auto Industry Bailout
The Washington Post reported that the House "will convene next week to vote on a plan to provide emergency cash to the nation's battered automobile industry, Speaker Nancy Pelosi (D) said, but a federal bailout for Detroit faces an uphill battle in the Senate and an uncertain fate at the White House." Pelosi said in a written statement that "the failure of one of the car companies 'would have a devastating impact on our economy' and that Congress must 'provide emergency and limited financial assistance' by adding the industry to the Treasury Department's $700 billion economic rescue program, which was designed to stabilize the U.S. banking system." Pelosi "did not spell out details of the proposal but designated House Financial Services Committee Chairman Barney Frank (D-MA), a key architect of the Treasury program, to work with lawmakers in both chambers to craft the measure."
The Detroit Free Press reported Michigan Sen. Carl Levin (D) "said the amendment to the $700 billion financial industry bailout would specify $25 billion in loans to help automakers survive the economic downturn." While the "request for an additional $25 billion for health care costs of retirees is not in Levin's draft, the UAW (United Auto Workers) said it would continue to press for those loans as well."
Bloomberg News added that Pelosi asked for "'immediate action' to give automakers additional aid as shares of General Motors Corp. hit their lowest level since 1943." Pelosi noted, however, that "any aid to the automakers would come with conditions. She didn't specify the level of assistance she supports, but said it should come from the $700 billion Congress authorized the Treasury to use to help stabilize the financial services industry."
The AP reported four days "after dismal financial reports from General Motors Corp. and Ford Motor Co., Pelosi backed legislation to make the automakers eligible for help under the $700 billion bailout measure that cleared Congress in October." Senate Majority Leader Harry Reid, D-NV, "also supports help for the industry, and he issued a statement saying Democrats were 'determined to pass legislation that will save the jobs of millions' as part of a postelection session."
The Wall Street Journal reported that the Democratic congressional leaders "said Tuesday they will push legislation next week to use the $700 billion Wall Street rescue fund to bail out Detroit auto makers, and President-elect Barack Obama ordered his transition team to look at ways to aid the car industry even before his inauguration." The moves "come as General Motors Corp. has warned that it could face a debilitating cash shortage by year's end. On Tuesday, GM stock fell an additional 13%."
US Unemployment Rate Surges to 6.5 Percent
The Detroit Free Press /Bloomberg News last weekend reported that the US unemployment rate "rose to the highest level since 1994 as companies slashed payrolls, setting the stage for the steepest economic decline in decades and a tough start for Barack Obama's presidency." The jobless "rate rose to 6.5% in October from 6.1% the previous month, the Labor Department reported Friday. Employers fired 240,000 workers after a loss of 284,000 in September." The "surge in unemployment, coupled with other signs the economy nosedived last month, puts pressure on Obama to quickly name his economic team and spell out his planned remedies. It may also spur congressional Democrats to enact in coming weeks a second fiscal stimulus package."
The Wall Street Journal added that President-elect Obama "called Friday for extended unemployment benefits and a 'rescue plan for the middle class' as new employment figures signaled that the economic crunch is worsening." Obama said "a fiscal-stimulus plan to support the economy was 'long overdue' and said he wants a package 'sooner rather than later.' Lawmakers are considering a package of measures worth as much as $100 billion when Congress reconvenes later this month." Obama said, "If it does not get done in the lame-duck session, it will be the first thing I get done as president of the United States." The Journal added that the "jobs report showed pervasive weakness in the economy, with few sectors spared layoffs."
The Atlanta Journal-Constitution noted that the "bad news has momentum. September's numbers were also revised downward," the Bureau of Labor Statistics said. "Roughly 1.2 million jobs have been lost this year, more than half of them in the past three months." Hardest hit "are younger workers, said Dean Baker, co-director of the Center for Economic and Policy Research. For workers aged 20 to 24, the unemployment rate in October was 10.6 percent -- more than twice as high as the rate for workers over 45 years old."
Usury Rate Causes Problems for Some
Problems with usury in Arkansas are a topic of conversation in Washington, D.C. The State’s congressional delegation is working with several constituents to try to enact legislation to place in-state lenders who are at a competitive disadvantage due to the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, on a level playing field with out-of-state lenders.
As background, in 1927, the McFadden Act sought to give national banks competitive equality with state-chartered banks by allowing national banks to branch to the extent permitted by state law. The McFadden Act specifically prohibited intrastate branching by allowing a national bank to branch only within the state in which it is situated. In 1956, the Douglas Amendment to the Bank Holding Company Act prohibited interstate bank acquisitions unless expressly authorized by state statute. The Douglas Amendment grew from concerns that holding companies were bypassing the law by acquiring subsidiary banks in various states and operating them as though they were branches.
In 1994, the Riegle-Neal Interstate Banking and Branching Efficiency Act repealed the provision of the McFadden Act prohibiting intrastate branching and repealed the Douglas Amendment, allowing nationwide banking regardless of state law. Five years later, the Gramm-Leach Bliley Financial Modernization Act gave domestic banks the authority to charge the same interest rates as the host state of interstate bank branches.
As a result, out-of-state lenders are allowed to import their home state interest rates across state lines, and neither nationally-chartered nor state-chartered banks are bound by state laws regarding interest rates. Other in-state lenders (automobile dealers, furniture dealers, jewelry stores, student loan authorities, etc.) argue this places them at a competitive disadvantage and are seeking federal assistance to change the situation.
World Faces Growing Energy Uncertainty and Rising Costs, Report Finds
The Wall Street Journal reported "The world faces mounting uncertainty and escalating costs on the energy front in the years ahead, as companies scramble to find new pockets of oil and squeeze more production from aging fields," according to an annual report from the International Energy Agency (IEA) that the Journal characterizes as "largely gloomy." The report found that "more investment will be needed in oil exploration, production and power generation," and that "the recent slump in oil prices won't last." Moreover, the report found that "current global trends in energy supply and consumption are patently unsustainable." The agency predicted that "oil prices could top $200 a barrel by 2030." In order to stay ahead of "rising energy demand and decrepit infrastructure, companies will have to invest over $26 trillion between now and 2030, with over half of that going to increased power generation and distribution."
The New York Times noted that the IEA "expects prices to average more than $100 a barrel through 2015, and possibly rise to $200 a barrel by 2030. The findings are part of the agency's annual World Energy Outlook..." The IEA also "said that big new investments would be required in coming decades to meet growing energy needs. Oil and gas investments of $8.4 trillion will be required through 2030, or about $350 billion a year on average."
Employer Groups Push For Funding Delay to Pension Protection Act
Workforce Management reported, "Employer groups are warning Congress that many corporate pension plans could be frozen or terminated unless the pension funding requirements of the 2006 Pension Protection Act are delayed at least through next year." In a "letter to House Ways and Means Committee Chairman Charles Rangel (D-NY), and Rep. Jim McCrery, (R-La), the ranking Republican member of the committee," the coalition argued, "The drop in the value of pension plan assets coupled with the current credit crunch has placed plan sponsors in an untenable position." The letter added, "These large funding obligations will, if not modified, divert assets away from job retention, job creation and needed business investments, thus increasing the number of Americans who are unemployed and slowing our economic recovery." Workforce Management noted, "The coalition includes the American Benefits Council, the National Association of Manufacturers and the U.S Chamber of Commerce."
