2011 Legislative Agenda : Capitol Watchdogs Wanted
What could possibly be worse to read about than something that was hot in the news only a few weeks ago? Well, that's the tough thing about Congress' lame duck session: It concludes after press time for our January issue, and any legislation that gets pushed through during the session has been well documented by this point.
But, this is the January issue. Who wants to do a New Year's resolution in February, right? It's the perfect month to look at what's on the legislative agenda for 2011. At press time, President Obama hammered out an extension of the Bush-era tax cuts (reportedly the estate tax exemption would be up to $5 million for individuals, $10 million for couples, and at a tax rate of 35 percent).
But, there are some long-term projects of great importance to the printing industry, and we'll take a look at each of these items and the prognosis for anything happening in 2011.
As usual, we will turn to our printing industry advocacy guru/ lobbyist/vice president of Government Affairs at the Printing Industries of America (PIA), Lisbeth Lyons, for her take on each of the talking points. She will illustrate the PIA's position on each matter and provide expert analysis on what we might expect to happen from a legislative standpoint.
It's not that we're completely overlooking the significance of the Do Not Mail lobby, which is channeling its efforts toward progressive cities like Seattle and San Francisco. But the United States Postal Service (USPS) is in need of another financial overhaul.
Mr. ZIP suffered an $8.5 billion loss in 2010, but that total included a $5.5 billion payment to the retiree health benefits fund and a $2.5 billion non-cash workers compensation adjustment. Considering the 6.6 percent decline in mail volume, the loss of $500 million must be viewed as a rousing success.
The USPS has done a strong job of reeling in its costs, but many people believe it can do better as the new Postmaster General, Patrick Donahoe, gets his feet wet. The denial of the USPS' exigent price increase request, if nothing else, set off SOS flares that lawmakers clearly saw. At press time there were two pieces of legislation proposed that, while containing two fairly different road maps, boasted the same destination.
The first one was introduced by Sen. Tom Carper (D-DE), the second by someone very familiar to the print lobby, Sen. Susan Collins (R-ME). The former bill, a.k.a. the Postal Operations Sustainment and Transformation (POST) Act of 2010, has the support of Donahoe. It provides several outlets for cost-cutting, including the elimination of one day of delivery and the option to close down poorly performing facilities. Collins' bill does not contain such provisions.
The big tamale is in both bills—repurposing the overpayment of the pension fund, which is roughly $50 billion to $75 billion. A recalculation of the pension funding that includes diverting the surplus to the health benefits fund would presumably set the USPS on the road to recovery.
Some reform that would build upon the Postal Enhancement Accountability Act of 2006 is realistic this year. It's a matter of hashing out some characteristics that will entail the USPS of tomorrow.
"We don't expect five-day delivery to go anywhere in the next year, because there isn't a big flow of support for it in either party," Lyons says.
While getting into new lines of business may seem a logical route, a major paradigm shift to banking and insurance (commonly transacted at international postal services) is unlikely due to federal regulatory constraints. Sundry offerings along the lines of the USPS' greeting card business are more realistic.
Consumer Products Safety Improvement Act (CPSIA)
This is a big mess. The CPSIA was a bill created to pacify the masses after a slew of toys manufactured in China were found to have dangerous levels of lead. Now, anything that a child 12 and under may touch must undergo expensive, advance testing. Apparently, no one bothered to come up with testing and certification tolerances, so a one-year stay was implemented for 2010. Presumably, the testing for the 300 parts-per-million (ppm) content will begin next month, as Lyons doesn't believe another stay is in the offering.
"The testing requirements are still up in the air as to how they will be interpreted, what companies would need to do and what the specific liability of printers would be," notes Lyons, who believes the law needs to be gutted and changed to a risk-based assessment configuration. Risk assessment data would demonstrate that given products do not historically, or cannot, have lead in them.
Some industries have been seeking "one-off" product exemptions, which wasn't met with any success. Lyons believes that with key incoming senators from manufacturing states joining the Congressional fold, it will provide an ideal educational opportunity for the printing industry to gain staunch allies as it seeks remedies for relief, primarily risk assessment.
(Note: At press time, PIA joined forces with the Association of American Publishers and Book Manufacturers Institute in filing an appeal with CPSC for another stay of six months or a year.)
The Golden Child of the Obama Administration is the Patient Protection and Affordable Care Act of 2010. Its evil step-brother is the Form 1099 requirement. At press time, businesses everywhere were lobbying hard for something to be done that would kill this paperwork demon.
Businesses have always been on the hook to send out 1099s for service payments of $600 or more during the year. Unless the new beast is slain in 2011, businesses will be required to send out 1099s for payments of $600 or more for property or gross proceeds.
Essentially, 1099s would go out to every vendor that is paid $600 and above. The language was included in the healthcare law, with the expectation that it would provide $19 billion in revenues across a 10-year stretch.
"This was, in effect, designed to close the tax gap and to make sure all of these vendors were paying taxes," Lyons explains. "The estimated revenue from the taxes currently not being collected would go to fund healthcare. That has come under huge fire, and the small business lobby has risen to the occasion."
Senators Mike Johanns (R-NE), Bill Nelson (D-FL) and the Senate Finance Chair, Max Baucus (D-MT), each peddled amendments (Baucus' was a repeal) that were shot down. However, since the requirements don't kick in until 2012, there remained ample time to find a wooden stake (as well as the 1099's heart).
Republicans now have control over the House of Representatives, but Democrats still have a grasp on the Senate and, of course, the Big Chair. Thus, it will be difficult for Republicans—the assumed supporter of industry interests—to be able to effect change over the next couple of years. But one tool in the lobbyist toolbelt is the role of oversight for regulatory agencies.
Lyons points out that legislative foes that have been vanquished or died on the vine—environmental's Cap and Trade, unionized labor's Card Check, to name two—can come in through the back door via regulatory agencies. That is why oversight of agencies such as the Environmental Protection Agency (EPA) and the National Labor Relations Board (NLRB) is so vital.
"Part of the strategy is to let people know what's happening at these regulatory agencies," Lyons comments. "For example, how does it impact climate change? We know Cap and Trade won't go through legislatively, but the EPA will try to achieve the same end through various rules and regulatory actions, like declaring greenhouse gases a public hazard. That opens the door for EPA to regulate carbon.
"The same goes with Card Check," she adds. "The NLRB can take certain measures, pass pieces like quickee elections, which would shorten the amount of time that employers have to educate their employees on the decision to join a union. Internet voting for union elections would have the same negative consequences that you would see with Card Check. Someone can watch you on the Internet like someone could come to your house and sign you on a card."
Lyons believes the Obama Administration is going to have to take a regulatory approach to accomplishing various aspects of its agenda since the Republican led House of Representatives is now able to block bills legislatively.
One of the current hot-button topics for printers is their inability to secure financing for capital expenditures. The access to credit route has primarily been Small Business Association (SBA) loans, which the industry lobbyist says isn't nearly helpful enough. The Wall Street financial bill, she believes, could offer some solutions in the near future. She cites, as an example, the small business protections that were built into the rule-making procedures of the new Consumer Financial Protection Bureau.
The key, according to Lyons, is creating an environment that would encourage community banks and credit unions to increase small-business lending, perhaps via regulatory changes that would provide more flexibility to lenders. Alternatives to legislation could provide some avenue to access for printers.
The news that Obama was extending bonus depreciation for new capital equipment purchases was welcome news in the graphic arts industry. However, many printers would also like to see bonus depreciation extended, to some degree, to companies that acquire and install used equipment.
Workforce development is another concern for printers, particularly with a worker pool that is getting long in the tooth. Vocational programs at the high school level are dwindling. Lyons is confident that some kind of bipartisan initiative could provide educational reforms that would increase the skill level of the printing workforce. PI