Next week begins Congress' lame duck session - the last chance for Democrats to push climate change, card check and immigration. The week will include leadership elections in the House and Senate, and Congress will reassemble after Thanksgiving to finish the session.

Legislation likely to be considered will be the Paycheck Fairness Act (which makes it easier to sue employers for discrimination based on pay disparities); Omnibus Appropriations bill(s) for fiscal 2011; extension of federal unemployment benefits; suspending cuts to Medicare reimbursement rates for physician services; extending the Bush tax cuts all or in part; extending the aviation and surface transportation programs; and potentially a vote on the debt commission recommendations (report to Congress is due Dec. 1). 

AGC's election Web page contains information on the impact of the election on the industry, as well as materials to help you navigate the changing political environment. The Web page also contains an audio recording of Tuesday's conference call hosted by AGC's chief executive officer, Steve Sandherr.

For more information, contact Jim Young at (202) 547-0133 or youngj@agc.org.

On Tuesday, voters across the country voted on ballot initiatives that will raise revenue for transportation, transit and other infrastructure programs. Despite the economic conditions, measures passed include increases in sales taxes, property taxes and vehicle registration fees to finance roads and transit projects. A number of school districts and localities issued increases in bonds for construction. (more…)

Republicans gained a net of 63 seats so far on Tuesday night, putting the House at 239 Republican seats, 186 Democratic seats, and 10 seats uncalled (list below).  The current Senate breakdown is 52 to 46 (Republicans picked up 6 so far) with 2 states - Washington and Alaska - yet to be finalized.

The AGC PAC contributed more than $1,000,000 to 252 candidates.  So far, AGC has contributed to 209 winners or a win percentage of about 83 percent.  That number will continue to be adjusted as the undecided races come in. (more…)

Still Counting and "Lame Duck" May Set Tone for Next Year

Click here to view the shift in power and AGC's projected changes in leadership.

The voting is over, but the counting continues.  Republicans have secured a majority in the U.S. House of Representatives and there is a smaller majority of Democrats in the U.S. Senate. This year's wave election may have also washed out the old saying that "all politics is local." The local voters were driven by national issues like health care and spending, and were fueled by national media that focused on party conflict. 

Incumbency and experience were the cause of significant losses for sitting Committee Chairs of the Budget, Armed Services and Transportation Committees. The conflict continued unabated when Nancy Pelosi (D-Calif.) issued a statement this morning celebrating the Democratic majority for "courageous action" and Jim DeMint (R-S.C.) issued a statement urging new members not to "fall into line."  

The Republican majority and shrinking Democratic numbers will alter the legislative and regulatory issues AGC members face during a lame duck and in the future. While the change in power is clear, what exactly will come of it is not. In the coming weeks and months, AGC will work to analyze and interpret events in Washington, D.C., and will keep you updated on what the changes in Congress mean in practical terms. Republicans will start the lame duck session with 42 instead of 41 senators as a result of special elections held in conjunction with the general election.  The 112^th Congress will require bipartisanship to pass even small issues. The tone will be set early in the Congress by the interaction between the leaders of both parties, both chambers and the president - in fact, it may be set during the lame duck session beginning November 15. 

Lame Duck

The lame duck agenda will include the funding for the rest of fiscal year 2011 (nine months worth of federal funding) and the extension of SAFETEA-LU and FAA authorization, as well as deciding how to handle the expiring tax cuts, extension of the Medicare doc fix and extension of unemployment benefits.  It could also include the confirmation of Jacob Lew as the new Office of Management and Budget director. They could also vote on a bill to block the imposition of the greenhouse gas rule and the Defense authorization.  The productivity of the lame duck will likely signal the productivity of the 112^th Congress.

Congress Overview

The closely divided Congress will contrast with the large majorities Democrats held after the 2008 election. Some of the new members bring with them their own agenda and an anti-establishment mentality that could impact how leaders in both parties try to corral votes. The outstanding question is this: Will there be more partisanship or more bipartisanship? The agenda will be dictated by what the lame duck does or does not accomplish.

Congress and the Administration may be able to work together on trade issues, education and deficit reduction. However, many members will be cognizant of the recent voter backlash against members of Congress who had moved more toward the center.

The parties will elect leaders and committee chairs during the lame duck. Click here to see a run-down on who AGC anticipates will be the Congressional leaders in the 112^th Congress.

Federal Construction Spending

Both Republicans and Democrats have pledged austerity. Republicans in Congress and President Obama have put some specifics to where they feel construction spending should be. In his FY 2011 budget, the president proposed holding spending close to $112 billion in 2011 and a  three-year discretionary funding freeze. For 2012, he has instructed departments to cut their spending by five percent more. The Republicans have pledged to impose a hard budget cap, and  hold spending at about 2008 levels (Congress appropriated a little more than $107 billion for construction in 2008, very close to where the Obama Administration would be with a five percent cut for 2012).  The lower spending levels and the hard budget cap envisioned by the Republicans will likely create a battle for funds in a zero sum world.  In addition, AGC envisions a significant fight among Republicans on how to handle or how to limit earmarks.  Fewer earmarks could result in fewer votes for construction spending legislation in the future.

Obama Administration Overview

With President Barack Obama now halfway through his first term, his reelection efforts start today. Leading up to Election Day this year, he said his major priorities for the next two years were overhauling the nation's immigration laws, passing energy, education, transportation and climate-change legislation, and shrinking the federal deficit. Even with both Houses of Congress, Obama had difficulty winning approval of the health care and financial reform bills, and he failed to pass cap and trade legislation.  His goals will now be even more challenging. The president will need to decide if he will work with or work against a divided Congress.  President Obama will probably continue to advance goals that do not rely as much on Congress, such as making greater use of the executive branch's regulatory machinery. However, much of his agenda could be scuttled by the economy, and based on the election results he will have to address the jobs situation before the larger social issues.

There are  19 days until the November 2 election. Congress has left a number of must pass bills undone.  They made time for Health Care, Financial Regulation Reform and Cap and Trade, but they failed to pass a budget or bills to fund the operation of the government for a full year.  They failed to settle on the best way to address expiring tax cuts and passed a number of short term extensions of significant infrastructure programs like Highways, Transit and the FAA construction program.  

Members of Congress will reassemble in the Capitol after the election to deal with two kinds of legislation: "Must Pass Bills" (bills that would cause a shutdown of government programs or other significant disruption if they were not passed) and "other" policy bills. 

The rules for legislation will not change in the lame duck.  Bills will continue to be written largely by the Senate. If the Senate can pass a bill the House will likely follow suit.  In addition to the three new senators, four Democrats and at least seven Republicans are retiring (not all voluntarily).  It is not clear that any of the retiring senators will significantly change their positions on legislation after Election Day. The Senate will likely remain significantly divided on big issues and make it very difficult to pass anything other than must pass measures.

There will be immediate personnel changes in the House and Senate.  The House will fill two vacancies (New York 29 and Indiana 3). Both are likely to go to Republicans.  These will have little impact on the operations of the House. The Senate will add three new senators with special elections in Illinois, Delaware and West Virgnia.  All three of these seats are currently held by Democrats. A Republican pick up in any of these three could effectively shut the door on issues like card check or new OSHA rules.

One big unknown is how President Obama will respond to the election.  The president's posture could have a significant impact on the productivity of the lame duck session. Below is a list of  legislative issues that impact the construction  industry that could be addressed during the lame duck; they are divided between "must pass," "almost must pass"  and "other."

MUST PASS

FY11 Appropriations Bill: The Continuing Resolution (CR) that provides funds to continue the operation of the federal government expires December 3.  The CR is necessary because Congress has failed to enact any of the 12 appropriations bills for FY 2011. Under the terms of the CR most government programs will continue to be funded at FY 2010 levels.  Congress intends to wrap up the 12 unfinished appropriations bills in a large omnibus during the lame-duck session. AGC continues to monitor discussions of limiting discretionary spending and its effect on construction programs. 

Bush Tax Cuts of 2001 & 2003: Without Congressional action, income tax rates, capital gains, dividend, and estate tax rates will increase on January 1, 2011.  Congress is contemplating three key scenarios: 1) a short-term compromise in which all tax cuts are extended for all taxpayers; 2) extend lower rates for individuals making $200,000 a year or less or couples making $250,000 a year or less; or 3) allow all taxes to go up next year, then consider a retroactive, permanent extension for all tax payers.  Congress also has to reach a consensus on rates for capital gains, dividends, and the estate tax.

Highway Extension: This is not a six year bill or any additional funding, this is just keeping the federal program operating after December 31.  Since SAFETEA-LU expired on September 30, 2009, the highway and transit program has been operating under short term extensions. The latest extension expires on December 31, 2010. Congress must take action during the lame duck session to at least extend authorization into next year. The Congressional Budget Office has projected that between the revenue coming in and the general fund reimbursement last March, the Highway Trust Fund is able to support current funding levels through 2011. Although the administration has made two high profile announcements about the need for a six-year bill and suggested that it be front-loaded with an additional $50 billion, the long-term reauthorization is unlikely to be considered until the new Congress convenes.

Aviation Extension: Not a multiyear bill, again, just keeping the program operating. The Federal Aviation Administration bill has been operating under short-term extensions since it expired in 2007. It remains unclear if Congress will be able to resolve a number of contentious issues in the legislation before it expires again. AGC is pushing for appropriate increases to the aviation user fee structure to meet airport capital investment needs while also providing for air traffic control modernization.

ALMOST MUST PASS

Debt Commission Recommendations: The National Commission on Fiscal Responsibility and Reform is a presidentially mandated Commission charged with identifying policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run. The Commission must vote on recommendations by December 1.  If and only if 14 of the 18 members of the Commission vote in favor of the recommendations, it will go to the Senate where Majority Leader Harry Reid has agreed to give the recommendations an up-or-down vote by end of 2010. House Speaker Nancy Pelosi has agreed that, if the Senate passes the recommendations, the House will then vote on them.

It is unclear if the Commission, which has been meeting since April, can get 14 of their members to support a package of recommendations.  They are still working out details on how it will present recommendations and whether members will vote on the package as a whole or hold separate votes on individual items.

DOD Authorization Bill: Congress is at substantial risk of failing to approve a Defense Authorization bill, which sets the priorities and directives of the Department of Defense, for the first time in 42 years. Since matters of national defense are often non-partisan in nature, this authorization bill typically receives bipartisan support and is regularly approved. However, Senate Democrats have sought to use the defense bill as a vehicle to address some controversial social issues in this legislation. In particular, one provision would remove the restrictions on abortions in military hospitals and another would repeal the "Don't Ask Don't Tell Policy." Senate Democrats also attempted to attach an immigration reform measure known as the "DREAM Act" in an attempt to address concerns that this Congress has not acted on immigration reform. Delays over these issues derailed multiple opportunities to pass this bill before Congress adjourned and have now pushed consideration into the lame duck session.

OTHER

Renewable Energy Bill: One of the first votes in the Senate in November will be a procedural vote on legislation to create incentives for natural gas vehicles and plug-in electric vehicle infrastructure.  Attempts may be made to enact a renewable energy standard (RES) that would require U.S. electricity to be produced by renewable energy sources.

Tax Extenders: Congress has yet to enact an extension of roughly $30 billion in tax incentives that expired at the end of 2009.  AGC is concerned that "extenders" legislation would be paid for, in part, by a tax hike on real estate partnership "carried interest."

Federal Unemployment Benefits: Two deadlines for individuals to file applications for Federal Emergency Unemployment Compensation and to qualify for the Federal Additional Compensation, the extra $25 weekly benefit amount on state and federal unemployment compensation, are set to expire on November 30 and December 7, respectively. 

Dream Act: The immigration bill, known as the Development, Relief, and Education for Alien Minors ACT (DREAM Act), could potentially be considered in the Senate but passage of any comprehensive bill is unlikely. The DREAM Act would give conditional permanent resident status to undocumented people who entered the U.S. before their 16^th birthday and are pursuing higher education or are part of the military. 

EPA Carbon Classification Delay: Congress may consider legislation that would delay pending U.S. Environmental Protection Agency regulation over greenhouse gas emissions from stationary sources for two years.  The first EPA greenhouse gas regulations are scheduled to take effect in 2011.

Mine Safety Bill: The Miner Safety and Health Act would make significant changes to both MSHA and OSHA. AGC opposes the legislation because it turns the clock back on well over 10 years of progress in improved workplace safety while creating a more adversarial relationship between employers and OSHA.  Negotiations are expected to resume on the bill that passed a House Committee earlier this year.   

Paycheck Fairness: The Paycheck Fairness Act is on the Senate calendar after the mid-term election. The bill limits defenses to Equal Pay Act claims and permits unlimited punitive and compensatory damages. This bill would limit employers to base pay decisions on factors like professional experience and local labor market rates.  Employees would have to specifically opt-out of class action lawsuits which would likely dramatically increase the size and penalties of class actions.  AGC has expressed our opposition to the bill to Congress.

Early voting for the November 2 mid-term election is now underway in a number of states.  News reports indicate that the number of voters who cast early ballots in this year's primary elections increased 50 percent over the 2006 midterm, a trend that is reshaping political campaigns across the country. State laws differ nationwide, and many of them are making it easier for individuals to vote if they cannot make it to the polls in November.

As you know, this election is very important for the construction industry and AGC encourages you to support pro-construction candidates running for federal office. To see if you are eligible or for more information on the rules for early voting in your state, visit the AGC website and enter your zip code. Additionally, the website includes the AGC voting record for incumbents in your state.

With just 26 days until Election Day, AGC PAC has contributed nearly $1,000,000 to candidates for federal office.  So far in the 2010 election cycle, AGC PAC contributed $998,796.30 to 251 Congressional candidates, including $230,250 (or 23 percent) to Democratic candidates and $768,546.30 (or 77 percent) to Republican candidates.   All contributions were sent to candidates that support elements of AGC's agenda, and candidates were vetted by the PAC Committee, the national staff and the Chapters. Most checks were delivered locally by AGC PAC contributors.  

As a reminder, AGC PAC needs to continue bringing in contributions so we can continue relationships or build brand new ones with the 112^th Congress.   Remember, every dollar counts and it will be important for AGC to have a war chest in the next presidential election cycle.

This week, AGC held its annual National & Chapter Leadership Conference in Washington, D.C., which brought chapter leaders together to discuss best practices and meet with Members of Congress to address AGC's top legislative issues.

During the meeting Polly Trottenberg, Assistant Secretary for Transportation Policy at the U.S. Department of Transportation, thanked AGC and all of its members for their public support of the infrastructure spending in the American Recovery and Reinvestment Act.  Assistant Secretary Trottenberg provided some details on President Obama's recent request for $50 billion, explaining that the funding would be added to the early years of a six-year surface transportation reauthorization bill in order to have a more immediate positive impact on construction employment. She also provided a glimpse of the administration's priorities for surface transportation reauthorization, which will be released in more detail next year.  These priorities include integration of high-speed rail on an equal footing into the surface transportation program; streamlining, modernizing and prioritizing surface transportation investments; consolidating more than 100 different programs; focusing on using performance measurement and race-to-the-top-style competitive pressures to drive investment toward better policy outcomes; and expanding investments in areas like safety, environmental sustainability, economic competitiveness and livability.

Senator Mike Johanns (R-Neb.) talked about his efforts to roll back the health care bill, oppose Democratic leaders' cap and trade scheme for greenhouse emissions, and repeal the 1099 reporting requirement in the massive health care bill. Johanns was the lead sponsor of repeal of the reporting requirement and made several references to the cost and burden on small employers if the provision remained.

Congressman John Kline (R-Minn.), the Ranking Member of the Education and Labor Committee, which has jurisdiction over many labor laws, health care, OSHA and pension issues, also addressed the group. Kline addressed his opposition to the so-called Employee Free Choice Act (Card Check) and the need for OSHA to work with employers to create safer worksites rather than just punishing them. Congressman Kline also talked about how Congress will have to address some of the problems facing multiemployer pension plans in the next Congress.

During the meeting, AGC members from across the country visited with nearly 150 Members of Congress and urged them to repeal three percent withholding, extend the expiring tax cuts and repeal the 1099 reporting requirement while explaining the need for a multi-year highway reauthorization bill.

With possibly only one legislative week left and 40 days before the November 2 election, both parties are positioning themselves to address major outstanding issues during a lame duck session of Congress. However, today the House did pass a Small Business Jobs Bill that provides construction incentives and business relief, and it now goes to President Obama for his signature. 

In the Senate, a campaign finance bill, the DISCLOSE Act, was rejected for the second time in three months. AGC opposed the bill and is considering it a Key Vote in its annual scorecard because the legislation will restrict free speech, increase confusion about campaign finance law and would not treat all participants in the political process equally (treats corporations and trade associations differently than labor unions).  

This week Senate Democrats failed to deliver on two major Election Day issues: the repeal of Don't Ask, Don't Tell, and the DREAM Act, which would allow a path to citizenship for illegal immigrants brought into this country as minors by their parents if they are paying taxes, attending college or serving in the U.S. military.

The expiring 2001 and 2003 tax cuts remain a controversial issue. Efforts to extend the tax cuts for the middle class only have broken down within the Democratic Party and it appears ever more likely that the issue will have to be resolved after the election, and prior to their expiration on December 31.

Another major piece of legislation outstanding is a bill to fund the federal government after September 30. Congress has been unable to pass the annual FY11 appropriations bills and a must-pass stopgap bill will likely be necessary. The bill is expected to be a short-term extension and avoid including controversial policy goals. The short-term extension would require Congress to come back after the election to continue to fund the federal government.

AGC continues to urge Congress and the White House to finish work on long-term transportation and water infrastructure spending bills, and keep income tax rates (especially the death tax) from soaring to help construction industry employment recover from millions of lost jobs. This action is expected during the few legislative days before the election or during a lame duck session. AGC believes the stopgap funding for transportation isn't providing the certainty companies need for hiring and growing. In addition, the prospect of a leap in taxes is deterring private investment.

With one eye toward the elections and the other toward the potential for a GOP-run House of Representatives, Republicans today released "A Pledge to America." The 48-page package is a response to interaction with voters and an overview on how a Republican Congress will tackle the biggest issues facing America today.

The plan takes a philosophical approach, talking thematically about creating jobs, improving international competitiveness and controlling spending. It includes a pledge to repeal health care, make Congress more transparent and more responsive, and improve national security. 

The package includes some AGC priorities, such as reducing red tape and repealing mandates like the 1099 requirement. It talks about repealing the Obama Health Care Bill and replacing it with reforms, and extending the Bush tax cuts. While it is not clear how the pledge's federal spending freeze would impact important construction programs, it does a good job laying out the significant issues that the 112^th Congress will have to face in the coming years.