Scores of LBM dealers, distributors, and window and door manufacturers appealed in person on Capitol Hill today for Congressional action in favor of home retrofitting incentives, against Democrats' health care proposals, and for permanent estate tax relief. Their visits followed a Louisiana Republican senator's warning that the Obama administration threatens small business and a political analyst's prediction that Democrats could lose up to 30 House seats and up to eight Senate seats in the November elections.
The trips to Congress highlighted the first-ever joint spring conference for three organizations: the Natonal Lumber and Building Material Dealers Association (NLBMDA), the North American Building Material Distribution Association (NBMDA), and the Window & Door Manufacturers Association (WDMA).
The talking points NLBMDA distributed led off with general support for--but also concern with--Homestar, the energy-efficiency retrofit program that President Barack Obama unveiled recently (story) and that is now being considered in Congress. The program is widely regarded as a way to boost employment, and thus it enjoys a strong tailwind.
NLBMDA said it backs "effective energy-efficiency retrofitting incentives," such as those proposed in Homestar, but the association cautioned that any federal program giving incentives to people for making energy-efficient retrofits to their homes "must enable retailers and contractors of all sizes to fully participate in the program, and ensure that small and independent retailers are not put at a competitive disadvantage." This emphasis stems in part from concerns that Homestar could end up benefiting solely the big-box stores and not independent LBM dealers.
NLBMDA also used its support of job-creating energy retrofit programs as a reason to call for Congress to urge the Environmental Protection Agency to delay enforcement of a rule setting new standards for renovating, repairing, and painting homes where there's a danger of dust from lead paint. The rule is scheduled to take effect April 22. NLBMDA joined with several other groups last week in urging that delay (story), arguing that EPA lacks the adequate preparation needed to enforce the change.
Sen. David Vitter, R-La., has been a strong proponent of a delay, a point he stressed during his keynote remarks this morning. The EPA rules are "completely unrealistic," Vitter said, and if they go into effect on April 22 they threaten to kill any job-creation benefits from Homestar.
While WDMA also supports Hometar, its greater concern is the American Recovery and Reinvestment Act (ARRA), which among other things provided tax credits for the purchase of doors, windows, and skylights that met certain energy efficiency standards. (See stories in ProSales' October edition.) The qualifying language in that act "caused confusion for consumers and retails and reduced the credit's effectiveness at boosting job creation," WDMA said. It urges that the credit should be tied to 2010 Energy Star standards, which vary by region, "rather than the arbitrary one-size-fits-all approach mandated under ARRA." The Senate already is moving in this direction, but there are indications that not all window manufacturers back the WDMA's position.
WDMA, like NLBMDA, supports consumer incentives for retrofits like Homestar. But it said a draft of the Homestar legislation now in the Senate ought to be tied to 2010 Energy Star rules. And related legislation for commercial and multifamily buildings needs to include doors and skylights, it added. Finally, WDMA joined with NLBMDA in seeking delay of the EPA's lead rule.
As for health care, NLBMDA recommends Congress "start over on meaningful health care reform that lowers costs and increases small-business access to quality health care for our employees." It specifically dislikes sections in President Barack Obama's proposal that would mandate businesses issue IRS 1099 forms to every company from which it buys at least $200 in goods and services, and an increase in the Mediare Hospital Insurance trust portion of the payroll tax to 2.35% from 1.45% on wage or self-employment income over $200,000 for individual returns and $250,000 for joint returns. What tax credits exist for small business are too narrowly crafted to expire too soon, NLBMDA adds.
Vitter attacked Democratic plans to pass the health care reform bill under rules reserved for reconciling legislation passed by both houses of Congress. Reconciliation measures require only a simple majority to pass rather than the 60 votes needed to defeat a filibuster. Using the reconciliation process "was never intended to remake one-sixth of the economy," he said, referring to health care's size in the gross domestic product. "It really is a complete abuse of the process."
Vitter said the actual legislation "not only misses the mark, it moves us in the wrong direction."
Estate tax relief is the hardy perennial in NLBMDA's garden of Congressional wishes. In 2001, Congress voted to phase out the estate tax over the coming years and repeal it entirely in 2010. But that action expires on Dec. 31, and unless Congress acts, the estate tax will return in 2011. At that point, estates over $1 million will face a 55% tax rate.
"The building supply industry is comprised of many multi-generational, family-owned businesses whose continued existence is at risk if the estate tax is not permanently reformed before it returns at unacceptably high levels in 2011," NLBMDA says. It urges permanent estate tax relief, and barring that, a permanent move toward a $5 million exemption level, indexed to inflation, at a tax rate of 35% or less.
Veteran political analyst Charles Cook said the Obama administration most likely erred last summer when it kept trying to reform health care once the unemployment rate started to rise and the recession deepened. While President Obama remains popular with about half of all voters, that love--or even that support--doesn't extend to Democrats in Congress, he said. That dislike, combined with the historical tendency to vote in midterm elections against the party in power, makes it possible that the Democrats could lose 28 to 30 seats in the House and six to eight seats in the Senate. That would be enough of a decline to move it from a comfortable to a narrow majority in both chambers.