There are two ways to look at 2016 from a political standpoint. President Obama will be looking for a few crowning accomplishments in the final year of his two-term presidential saga, and what better way to go out on a high note than to sign off on some bipartisan legislation?
If you listen closely enough, you can actually hear Republican eyes rolling.
The second path, espoused by pessimists (but ultimately more realistic) is that because a presidential election looms in November, not much is going to be accomplished. Campaigning will take the place of any actual legislation getting pushed through. There are a couple of items that are extremely likely to see activity post-election (more on this shortly) but, in the interim, the printing industry’s interests can be promoted on a couple of fronts.
As always, we turn to the printing industry’s leading legislative advocate/veteran lobbyist Lisbeth Lyons—the vice president of government affairs for Printing Industries of America (PIA)—for the lowdown on what hot button topics will be pursued during the weeks and months leading up to the presidential election.
Patent Troll Legislation
Step aside, postal reform. The printing industry has a new darling in the cause du jour department. We teased you last year with promises of a surefire bipartisan fix to the technology squatting but, once again, trial lawyers and pharmaceutical firms managed to throw up roadblocks on the path to a legislative solution.
A patent troll is like a cavity; given time, it will painfully remind you that it cannot be ignored. In November, a non-practicing entity called High Quality Printing Inventions launched more than 30 patent infringement lawsuits against printing businesses whose bread-and-butter workflow platforms are Web-enabled and customized. Angstrom Graphics, Deluxe Corp., Shutterfly, PrintingForLess and Cimpress (VistaPrint) were among the list of recipients of the infringement claims, filed only days before Thanksgiving. Nice touch.
Lyons points out that both the House and Senate have expressed interest on voting in the early part of 2016, and President Obama is already on record in favor of squashing the patent troll practices hampering companies of all sizes. “Big pharmaceutical companies, especially, have been blocking it because of the impact it may have on their patent business,” Lyons says. “Congress will pass something…I just don’t know how watered down it will be.”
The PIA is aligning itself with United for Patent Reform, a business lobby that is pressing lawmakers to take action on reform legislation (S.1137/H.R. 9). Senators Chuck Schumur (D-N.Y.) and John Cornyn (R-Texas) are both throwing their weight behind the cause. International issues in the second half of 2015 may have been the distraction that prevented a bill from realization last year.
Since advertising is considered an ordinary business expense, it can be deducted, thus lowering a company’s taxable income. However, one of the unfortunate elements of tax reform measures that were kicked around in 2015 involved revenue raisers, particularly one that would eliminate the 100 percent tax deductibility of advertising.
The printing industry becomes an unfortunate casualty under such a scenario. In the event clients are not allowed to deduct their advertising expenses, it stands to reason that they would soon budget less for their print spending. If passed, this could be extremely painful for the printing industry.
As a sidelight to the pressures being brought to bear, the American Medical Association’s board of directors passed a resolution calling on Congress to ban advertising for pharmaceuticals. While on the campaign trail last fall, Hillary Clinton echoed that sentiment in response to the pharmaceutical industry’s massive price-gouging tactics with a number of drugs. Another easy target is companies that target junk food to children under the age of 13, which obviously helps contribute to childhood obesity.
“Obviously, we don’t take a position on these issues, but we bear the brunt if there’s an effort to eliminate the tax deductible for advertising or ban the advertising altogether,” Lyons says.
The last proposals advanced to the House Ways and Means Committee and the Senate Finance Committee both called for the elimination of advertising deductibility as a way of helping to pay for a comprehensive tax reform package. Though those proposals died quietly, it is one of the post-election priorities that is bound to gain traction.
Lyons believes it is critical for PIA members, especially those with facilities located in districts represented by influential Ways and Means Committee members (where all tax proposals must originate), to communicate the unintended consequences of eliminating the deductions. “Hopefully, we can take this off the table as a potential revenue raiser going forward,” she adds.
Postal Reform is the legislative equivalent to Waiting for Godot…a lot of talk but no appearance. A reform bill passed the House in 2013, but S.1486—championed by Senators Tom Carper (D-Del.) and Tom Coburn (R-Okla.)—failed miserably. Nothing is imminent in terms of reform, but the U.S. Postal Service rate-setting aspect could be getting attention shortly.
Not a lot of positives emerged in 2015 on this front, but it wasn’t for a lack of effort. The USPS, its labor unions and industry stakeholders (represented by the Coalition for a 21st Century Postal Service) formed a task force of sorts—in recognition of Congress’ inability to push through a reform package—to see if there were any legislative fixes that might help. So the power trio looked at a possible financial stabilization package, one that didn’t include “third rail issues” such as Saturday delivery and postal facility closures. Instead, they tackled the current prefunding retiree health care benefits requirement, along with rate-setting methodologies.
In November, the tripartite finally threw its hands up in surrender. No consensus could be reached, particularly in regards to rate setting. They learned what Congress already knew…reform is truly a four-letter word.
But just when you thought all hope was lost, the last reform package pushed through by Congress in 2006 called for a postal regulatory review in 10 years on the rate-setting process. The exigency rate increase is due to go away in 2016, so efforts will be made by USPS to keep them intact, while mailers will seek to sustain the rollback.
“We saw two choices,” Lyons notes. “Do we try to push legislation that would help give the Postal Service financial stabilization heading into that 2017 review—the idea being that the healthier the Postal Service was financially, the less likely the PRC [Postal Regulatory Commission] would be to substantially change and raise the rates going forward? Or is it better to stay with the status quo and leave the next big battle to the PRC case? That’s ultimately where the industry was split on that question. The Coalition for a 21st Century Postal Service said the status quo remained their position.”
Jim Andersen, CEO of IWCO Direct, the Chanhassen, Minnesota-based mailing juggernaut, believes solidarity will go a long way toward ensuring that the USPS can enter the 2017 review in good shape.
“As we move toward the PRC review of the postage rate-making process, postal stakeholders (USPS, its labor unions and the mailing/printing/paper industry) need to find common ground on postal reform legislation that will ensure the Postal Service is in a strong, stable financial position going into this review,” he says. “Of primary importance to the industry will be the continuation of the inflation-based rate cap system that has proven effective in controlling the growth of postal costs and allowing mail to retain its important role in marketing and other communications.”
Paper Option Advocacy
This initiative is not so much an actionable item as it is a game of “Whack-A-Mole,” according to Lyons. The paper advocacy group Consumers for Paper Options is made up of paper and printing concerns like the PIA (and its affiliates), the American Forest & Paper Association (AF&PA), the Envelope Manufacturers Association, RR Donnelley and Hallmark. Its goal is to ensure the federal government is held accountable for the cost benefit approach to transitioning from paper to Internet-only resources. Thus, whenever some agency cries out “Go paperless,” the Consumers for Paper Options is there to tamp down often needless and unfounded concerns.
One example was a response to the Internal Revenue Service, which eliminated the printing and mailing of tax preparation booklets to taxpayers. That left taxpayers who relied on the mailed materials in the past having to pay Uncle Sam in order to receive a copy from the Government Publishing Office (GPO).
The Consumers for Paper Options backed a bill, “The Personal Access to Paper Election Reform (PAPER) Act,” which amends the Internal Revenue Code of 1986 to require the Secretary of the Treasury to mail paper forms and instructions to people who filed a paper return for the preceding tax year.
“This bill shows our common sense approach to the forms,” Lyons says. “We’re not saying the IRS has to print everything for everyone in perpetuity, but this bill covers taxpayers who previously filed by mail. They made a choice to interact with the government by mail and should be allowed to continue that without being penalized.”
Another case related to the elimination of paper documents cropped up with the Securities and Exchange Commission (SEC), which is in the process of eliminating the mandate for mutual funds to mail shareholder reports and other financial info to investors. The new rule would allow them to satisfy SEC requirements by making shareholder reports and quarterly portfolio holdings available online.
In joint comments with the Consumer Action and the National Consumers League, the groups pointed to SEC research that concluded an overwhelming majority of American investors prefer to receive shareholder reports in paper form. Meanwhile, only a small percentage has opted into digital delivery.
The Consumers for Paper Options was also able to beat back an effort by the Food and Drug Administration, which sought to eliminate drug package inserts that are furnished to health care providers (doctors, pharmacies and hospitals). These efforts, in tandem with aid from the new paper and packaging caucuses in the House and Senate, will greatly augment the printing industry’s interests on Capitol Hill.
“With these paperless initiatives, most of these agencies are not…taking into account the impact on citizens and the downstream impact on the economy,” Lyons remarks. PI